1996 ANNUAL REPORT - Morningstar, Inc.

1996 ANNUAL REPORT

Brought to you by Global Reports

DANONE 7, RUE DE TÉHÉRAN 75008 PARIS, FRANCE - TEL. (33) 1 44 35 20 20 - FAX (33) 1 42 25 67 16

DANONE is on the Web at: http://www.danonegroup.com

DANONE Group publishes the following documents: Annual Report (Fr./Eng.), Letter to Shareholders (French only),

and COB and offering circulars.

To obtain these or any other information, please contact:

DANONE Group - Investor Relations - 7, rue de Téhéran - 75008 PARIS, France - Tel: (33) 1 44 35 20 76 - Fax: (33) 1 45 63 88 22


CONTENTS

THE DANONE GROUP PAGE 2

GROUP MANAGEMENT PAGE 3

STRATEGY PAGE 4

MANAGEMENT REPORT PAGE 8

HUMAN RESOURCES PAGE 12

DAIRY PRODUCTS PAGE 18

GROCERY PRODUCTS PAGE 22

BISCUITS PAGE 26

BEVERAGES PAGE 28

CONTAINERS PAGE 34

INTERNATIONAL PAGE 36

CONSOLIDATED FINANCIAL STATEMENTS PAGE 42

INFORMATION ON DANONE GROUP’S PARENT COMPANY PAGE 56

MAIN GROUP COMPANIES PAGE 60

ORGANIZATION CHART PAGE 64

HEADS OF SUBSIDIARIES AND DEPARTMENTS INSIDE BACK COVER


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DANONE IS THE LEADING MULTI-PRODUCT FOODGROUP IN FRANCE, ITALY AND SPAIN, RANKINGTHIRD IN EUROPE AND SEVENTH IN THE WORLD.

Consolidated sales:FF29.6 billion

World leader in dairy

products, including

yogurts, yogurt-style

cheeses and dairy

desserts.

DAIRY PRODUCTS


No. 1 in Europe in sauces

and condiments.

No. 2 in pasta products.

No. 3 in ready-to-serve

dishes (refrigerated,

frozen and shelf-stable).

GROCERY PRODUCTS

Consolidated sales:FF17 billion

World leader in biscuits.

BISCUITS


Second largest brewer

in Europe.

BEER


No. 2 worldwide.

MINERAL WATER


No. 2 in Europe in glass

containers.

CONTAINERS

2


BOARD OF DIRECTORS

ANTOINE RIBOUD HONORARY CHAIRMAN

FRANCK RIBOUDCHAIRMAN

MICHEL DAVID-WEILL VICE-CHAIRMAN

PHILIPPE LENAINVICE-CHAIRMAN ANDCHIEF OPERATING OFFICER

UMBERTO AGNELLIYVES BOËLYVES CANNAC NICHOLAS CLIVE WORMSPHILIPPE CORBIÈRELUCA FOSSATIJEAN GANDOIS XAVIER GARDINIER FRANCIS GAUTIERJEAN-CLAUDE HAAS PHILIPPE JAECKINCHRISTIAN LAUBIEGEORGES LECALLIERJACQUES NAHMIASBERTRAND ROQUEEDOUARD DE ROYÈRE JÉRÔME SEYDOUX YVES THÈVESJACQUES VINCENT

HONORARY DIRECTORS

DANIEL CARASSO HONORARY CHAIRMAN

RENAUD GILLETPIERRE LAMBERTINPAUL LEPERCQ

STRATEGY AND NOMINATION

ADVISORY COMMITTEE

ANTOINE RIBOUD,CHAIRMANUMBERTO AGNELLIYVES BOËL DANIEL CARASSOMICHEL DAVID-WEILLLUCA FOSSATIJEAN GANDOISCHRISTIAN LAUBIEPHILIPPE LENAINFRANCK RIBOUDEDOUARD DE ROYÈREJÉRÔME SEYDOUX

COMPENSATION COMMITTEE

MICHEL DAVID-WEILL,CHAIRMAN

YVES BOËL PAUL LEPERCQJEAN GANDOIS

AUDIT COMMITTEE

JEAN-CLAUDE HAAS, CHAIRMAN

NICHOLAS CLIVE WORMSPAUL LEPERCQ

STATUTORY AUDITORS

AUDITORS:BEFEC-PRICE WATERHOUSEMAZARS & GUÉRARD

ALTERNATE AUDITORS:DENIS GRISONMARC CHAUVEAU

GENERAL MANAGEMENT

FRANCK RIBOUDCHAIRMAN AND CHIEF EXECUTIVE OFFICER

PHILIPPE LENAINVICE-CHAIRMAN ANDCHIEF OPERATING OFFICER

CHRISTIAN LAUBIESENIOR EXECUTIVE VICE PRESIDENT

JACQUES VINCENTSENIOR EXECUTIVE VICE PRESIDENT

PHILIPPE JAECKINEXECUTIVE VICE PRESIDENT

GEOFFROY PINONCELYEXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENTS,

DIVISION:

FINANCECHRISTIAN LAUBIE

HUMAN RESOURCES JEAN-RENÉ BUISSON

AMERICAS - AFRICA CLAUDE LE GOUISPATRICK GOURNAY

ASIA - PACIFICSIMON ISRAEL

BEVERAGESMAURICE DE KERVENOAËL

BISCUITS EUROPEDIDIER ERNST

CHILLED AND FROZEN READY-TO-SERVE DISHESPIERRE BARDON

CONTAINERSJACQUES DEMARTY

DAIRY PRODUCTS EUROPEJAN BENNINK

EXPORTRENÉ ANTOINE

GROCERY PRODUCTS - PASTA ANDCANNED READY-TO-SERVE DISHESGEOFFROY PINONCELY

SPECIAL ADVISER TO THE CHAIRMANHENRI GISCARD D’ESTAING

From left to right:

Philippe Jaeckin Jan Bennink Geoffroy Pinoncely Pierre Bardon Claude Le Gouis Jean-René Buisson Didier Ernst Jacques Vincent Henri Giscard d’Estaing Maurice de Kervenoaël Franck Riboud Jacques Demarty Patrick Gournay Philippe Lenain Simon Israel Christian Laubie René Antoine

GROUP MANAGEMENT

3


STRATEGYIN 1996, DANONE GROUP ACHIEVED ITS KEY FINANCIAL OBJECTIVES WITH RISES IN NET INCOMEAND OPERATING MARGIN. SALES ROSE 5.7% TO FF84 BILLION, WHILE OPERATINGINCOME ROSE 6.5% AND NET INCOME 8%. OPERATING MARGIN THUS IMPROVED, FOLLOWINGFOUR YEARS OF DECLINE DUE TO THE ECONOMICSLOWDOWN IN EUROPE. AS A PERCENTAGE OFSALES, OPERATING INCOME ROSE FROM 8.8% IN1995 TO 8.9% IN 1996, MARKING A TURNAROUND INTHE PREVIOUS TREND. THIS IMPROVEMENT WAS DUE PARTLY TO COST-CUTTING BY ALL EUROPEAN ENTITIES, AND PARTLYTO EXPANSION OF INTERNATIONAL BUSINESS.

4


Group strategy is built on fivepriorities:- focus on a limited number ofcore businesses- pooling of strengths and deve-lopment of synergies within theGroup- internationalization- enhancing profitability and share-holder value- commitment to fundamentalcorporate values and adoption ofmanagement criteria in accordancewith these values.

Four core businessesfor Danone Group

Danone Group has opted to focushuman and financial resources on four core activities whichcontribute to both profitability inEurope and international growth.

Health foods, represented prin-cipally by dairy products includingyogurts, yogurt-style cheeses anddairy desserts, but also infantfoods and diet specialties foradults, benefit from a broad trendin consumer preferences whichincreasingly reflect concern forhealth and well-being. Businessin this area contributes over FF33 billion to consolidated sales.Danone is the world’s largest pro-ducer of fresh dairy products.

Snack foods also play a grow-ing role in modern eating habits,as consumers increasingly preferto grab a quick bite here andthere rather than sit down to a traditional meal. Main productsare biscuits, bakery products andpackaged cakes. Sales in this areatotal approximately FF17 billion,and Danone Group is the world’sleading producer of biscuits.

Beverage activities are mainly inbeer, bottled waters and fruitjuices. They stand to benefit fromthe worldwide trend to drinkswhich are either alcohol-free orhave only low alcohol content.Group sales in this area totalnearly FF15 billion.

Convenience foods are in tunewith growing demand for ready-to-serve and easy-to-use prod-ucts, which are part and parcel ofmodern-day life. Products in thisarea, which represent sales ofFF13 billion, cover a wide range:sauces and condiments, as wellas canned, chilled and frozenready-to-serve dishes. Theirdiversity, reflecting in particulardifferences in products from onecountry to another, means thatbusiness of this kind plays a smaller role than others in theGroup’s international expansion.

These four categories of businessare not independent; on thecontrary, they increasingly com-plement each other. Reflectingthis, a number of new productscombine expertise from pre-viously distinct areas. Examplesinclude “Minute Maid Danone”, arefrigerated fruit juice range soonto be launched in Europe andLatin America, “Prince Coeur deLait” refrigerated dairy-creambiscuits and “Blédina Danone”refrigerated infant foods.

New emphasis oncross-company ties

Apart from this focus on four corebusinesses, representing thefoundations of its production andmarketing competence, DanoneGroup is stepping up efforts todevelop synergies between differ-ent types of activity. This is illustrated by a number ofjoint initiatives in direct market-ing. Examples include the “Bingodes marques’’ promotionalcontest bringing together 16brands and 40 products, “Danoé”magazine, now distributed to two million French consumers,and pooling of consumer data filesassembled by group companies. Similarly, a major drive is underway to improve purchasing terms– for packaging, raw materials,equipment and services – and cutcosts throughout the Group. These efforts to pool sales andproduction resources are in addi-tion to the unity long achieved infinancial and human resourcemanagement.The best illustration of this newemphasis on cross-company tiesis the use of the “Danone” brand.Originally applied only to dairyproducts, this is now not only thebanner for the Group as a wholebut also the main brand for biscuitsin Asia, as well as the name of amineral water sold in the UnitedStates. Sales under the “Danone”label have risen from FF10 billionten years ago to nearly FF23 bil-lion today, and continuing growthis expected to boost this to FF40billion five years hence.

International expansionstrides ahead

Sales outside western Europesurged from FF3.6 billion in 1992to FF15 billion in 1996. In thatyear alone, international businesswas up 33%, driven by a combi-nation of acquisitions and organicgrowth that was five times quick-er than in western Europe. Thismade a significant contribution tothe Group’s overall growth.

Danone Group is now the leadingproducer of biscuits in Asia andleading producer of fresh dairyproducts in South America. Intwo years, it has doubled the sizeof its operations in Latin America,and quadrupled its presence inChina. International business nowaccounts for 18% of total sales,compared with only 5% in 1992,and this proportion is expected toquickly reach 25 or 30%, thus pro-viding much of the momentumfor the Group as a whole.

Improved profitability,a major priority

Rises in net income and oper-ating margin are the reward forefforts of two kinds:- in Europe, cost-cutting com-bined with the benefits of inno-vation and new product launchesto raise margins- international expansion to reach critical mass and achieve steadyimprovements in margins on fast-expanding markets. The Group was thus able toreport an 8% rise in net incomefrom 1995 to 1996. Increasing shareholder value is ofprime importance to DanoneGroup, which is reviewing its cur-rent business mix and perma-nently monitors and analyzesacquisition opportunities. Return on capital employed isnow a key measure of perform-ance and is used to determinebonuses for senior managementat corporate and divisional level.

Commitment to fundamental corporatevalues

The Group is committed to a setof fundamental values and a mis-sion statement drawn up afterbroad consultation throughoutthe Group. These values, present-ed in this report, have takenconcrete shape in a wide varietyof initiatives. At the same time, there havebeen some adjustments to organ-ization following the decision ofthe Board of Directors to set up anumber of committees and reor-ganize some already existing.

Three committees will now assist the Board of Directors in pre-paring meetings:- the Strategy and NominationsAdvisory Committee, presided byMr. Antoine Riboud, with 12members- the Audit Committee, with threemembers- the Compensation Committeewith four members.

The members of the last twocommittees are all non executives.

The Board of Directors has alsodrawn up a code of businessconduct which has been distributedthroughout the Group worldwide.

Franck Riboud

5


DANONE CORPORATE IDENTITYTHE TERM CULTURE EXTENDS BEYOND BROADCONCEPTS SUCH AS HISTORY, LANGUAGE AND LIFESTYLE, TO INCLUDE THE MANY DETAILS OF EVERY-DAY LIFE – IN PARTICULAR, PREFERENCES IN TASTE,AROMA AND FOOD PRODUCTS. SOCIAL GROUPS AROUND THE GLOBE ARE DEFINEDIN PART BY THEIR CULINARY PREFERENCES AND HABITS. A WORLDWIDE CORPORATION LIKE DANONEMUST OBVIOUSLY RESPECT THIS DIVERSITY, EVEN ASIT IMPOSES THE SAME HIGH STANDARDS WHEREVERIT DOES BUSINESS. IN PRACTICAL TERMS, THISMEANS ADAPTING PRODUCTS TO MEET THE EXPEC-TATIONS OF CONSUMERS FROM DIFFERENT AGEGROUPS, COUNTRIES AND CULTURES. FOR CONSUMERS EVERYWHERE, THE DANONE NAMEIS ASSOCIATED WITH HEALTHY EATING. IN EUROPE,BOTH EASTERN AND WESTERN, ASIA AND LATINAMERICA, THIS MEANS FITNESS, GENERAL WELL-BEING, AND FOOD PRODUCTS OFFERING A GUARAN-TEE OF THE VERY HIGHEST QUALITY. BUT THE DANONE IMAGE IS MORE THAN PHYSICAL HEALTH: IT IS ALSO THE GOOD TIMES SHARED WITH FAMILYAND FRIENDS, GAMES, PICNICS, AND ALL THEPLACES PEOPLE LIKE TO MEET.FOR DANONE, EACH PRODUCT IS THE FINAL STAGE IN THE PROCESS OF GETTING FOOD FROM THE PRO-DUCER TO THE CONSUMER. EACH STAGE IS EQUALLYIMPORTANT, WHICH IS WHY IT DEVOTES AS MUCHENERGY TO SELECTING PREMIUM INGREDIENTS ASTO DESIGNING APPROPRIATE PACKAGING.

6


MANAGEMENT REPORTDESPITE THE PERSISTENT WEAKNESS OF CONSUMPTION IN EUROPE, 1996 SAW A RISE IN PRICESFOR DANONE GROUP PRODUCTS – THE REWARD FOR A MAJOR COMMITMENT TO INNOVATION. DURING THE YEAR, THE GROUP ALSO PURSUED A WIDE-RANGING DRIVE TO CUT COSTS IN PRODUCTION,LOGISTICS AND SALES. Sales rose 5.7% to FF83.9 billion, or +2.7% at constant structure and exchange

rates, while operating income increased 6.5% and net income 8% to FF3.4 bil-lion. For the first time in four years, the negative trend in operating margin turned around, providing a first indication of the success of measures adopted. Earnings per share amounted to FF46.33 and cash flow from operations toFF7.9 billion. Acquisitions continued, both with a view to significantly increas-ing Group presence on emerging markets and to completing acquisitionsundertaken in previous years.

FINANCIAL HIGHLIGHTS (FF MILLION) 1995 1996 CHANGE 1995 / 1996 DATA IN ECU-1996 (MILLION)

NET SALES 79,450 83,940 + 5.7%* 12,914

OPERATING INCOME 7,018 7,478 + 6.5% 1,151

NET INCOME 2,133** 3,382 + 8.0% 520

OPERATING CASH FLOW 7,424 7,951 + 7.1% 1,223

CAPITAL EXPENDITURE 4,103 4,484 + 9.3% 690

STOCKHOLDERS’ EQUITY 36,254 40,383 + 11.4% 6,213

MARKET CAPITALIZATION (DECEMBER 31) 57,392 52,511 - 8,079

FF ECU

FULLY-DILUTED EARNINGS PER SHARE 30.96*** 46.33 + 6.0% 7.13

NET DIVIDEND PER SHARE 16.00 17.00 + 6.3% 2.62

WORKFORCE 73,823 81,579 + 10.5% -

*+2.7% at comparable structure and exchange rates. **after a restructuring charge of FF997 million. ***impact of 1995 restructuring charge: FF12.70 1 ECU = FF6.50

8


Price improvementsdrive organic growth

Sales rose 5.7% from FF79,450million in 1995 to FF83,940 millionin 1996. The rise at constant struc-ture and exchange rates was 2.7%or FF2,165 million. Significantly,unit growth was only 0.6%, com-pared with 2.1% in prices.

Trends differed from sector to sec-tor. The sharpest unit growthrates were 3% in biscuits, 2.3% ininternational business, 2.2% ingroceries and 2% in containers. Incontrast, volumes declined 3% inbeer and 4% in mineral waters asa result of unfavorable weather.Volumes were also down 1% infresh dairy products.

Changes in exchange rates, nota-bly for the dollar, peseta and lira,had a favorable impact equal to arise of 1.5% in sales or FF1,200million, while acquisitions andfirst-time consolidation of compa-nies added 2.5% or FF1,982 mil-lion. Changes in structure workedin the other direction: a number ofsecondary businesses were ex-cluded from sales, being accountedfor only under additional income,while recurrent promotionalexpense was deducted from thetotal. Together, these factors re-duced sales by 1% or FF857 million.

In terms of geographical break-down, sales growth (+1.6%) atconstant structure and exchangerates was generally weak inEurope, with sales showing aslight increase in France andSpain and a somewhat steeperrise in Italy, while there was adecline in Germany. Internationalbusiness – i.e., outside westernEurope – rose five times morequickly, putting on 7.9%.

WESTERN EUROPE +1.6%

DAIRY PRODUCTS +1.9%

GROCERY PRODUCTS - PASTA +1.3%

BISCUITS +4.1%

BEER +1.8%

MINERAL WATER -3.7%

CONTAINERS +2.2%

INTERNATIONAL +7.9%

GROUP TOTAL +2.7%

General improvementin margins

Fresh dairy products benefitedfrom favorable price trends de-spite more moderate marketgrowth. Operating income rose ahealthy 7.4% thanks to a combina-tion of lower prices for some rawmaterials, productivity gains, inparticular at Italian subsidiaryGalbani, and a good product mix.Operating margin thus increasedfrom 9.6% in 1995 to 10.2% in 1996.

Grocery products and pasta bene-fited from relatively favorablemarket trends for sauces andcondiments, infant and diet foods,and chilled and frozen ready-to-serve dishes. However conditionswere difficult, especially inFrance, for pasta and canneddishes, as a result of commercialproblems relating to the merger ofPanzani and William Saurin. Thedecline in earnings from this busi-ness segment exceeded gains inothers. As a result, overall oper-ating income fell 2.8% and oper-ating margin edged down from6.4% in 1995 to 6.3% in 1996.

Biscuits benefited from favorableprice trends thanks to productinnovation and restructuring ofoperations in France, northernEurope and the UK. In addition,sales of Greek subsidiaryPapadopolous were consolidatedfor the first time. Operatingincome rose 11.4% and operatingmargin edged up from 6.7% in1995 to 7% in 1996.

Beer sales were subject to wideswings. An unusually cool sum-mer brought a fall in volumes inmost European countries, butDecember sales in France surgedas retailers stocked up massivelyahead of the rise in excise onJanuary 1, 1997. All told, a 3%decline in unit growth volumesresulted in an 8% decline in oper-ating income, while operatingmargin fell from 13% in 1995 to11.7% in 1996.

Mineral water sales, down 4% inunit terms, also suffered from thecool weather, but margins bene-fited from a sharp decline in pricesfor PET and PVC used for pack-aging. Operating income thus rose5.5% and operating margin from12.4% in 1995 to 13.6% in 1996.

The containers division reapedthe rewards of productivity gainsin previous years. A decline insales of beer and soft drinks, theresult of cool weather, was offsetby orders from producers ofchampagne and spirits.

DAIRY PRODUCTS 25.7%

GROCERY PRODUCTS - PASTA 18.3%

BISCUITS 14.6%

BEER 8.7%

MINERAL WATER 8.0%

CONTAINERS 7.3%

INTERNATIONAL 17.4%

SALES BY BUSINESS DIVISION

FRANCE 41.5%

ITALY 13.0%

SPAIN 9.2%

GERMANY 5.7%

OTHER WESTERN EUROPEAN COUNTRIES 12.2%

EASTERN EUROPE 1.5%

NORTH AMERICA 5.7%

LATIN AMERICA 5.6%

ASIA-PACIFIC 5.0%

OTHER 0.6%

SALES BY MARKET



BISCUITS 20.0%

BEVERAGES 18.3%

CONTAINERS 7.4%

SALES BY BUSINESS SEGMENT

DANONE SHARE PRICE AND THE PARIS MARKET (FF)

1992 1993 1994 1995 1996 1997

1400

1200

1000

800

600

DANONE

CAC 40

9


Operating income rose 10.2% andoperating margin increased from 10%in 1995 to 11.2% in 1996.

International sales include for thefirst time sales of dairy product sub-sidiaries in eastern Europe, Argentinaand China, biscuits and beer inChina, and mineral water inArgentina. Trends in existing busi-nesses varied. Declines in Argentinaand, to a lesser extent, the US werealmost offset by good performancesin Mexico, Brazil, Canada and Asia.Earnings for 1996 were adverselyaffected by the launch of “Dannon”mineral water in a large part of theUS. Operating income rose 42% over-all and operating margin improvedfrom 5.6% in 1995 to 6% in 1996.

All told, Group operating incomerose 6.5% from FF7,018 million in1995 to FF7,478 million in 1996, whileoperating margin was up from 8.8%to 8.9%.

An 8% rise in net income

Despite high investment, net interestexpense eased from FF1,254 millionin 1995 to FF1,245 million in 1996,thanks to the decline in interest rates.The average rate of corporate incometax borne by the Group rose from37.7% to 38.4%, mainly as a result ofrises in income in high-tax countriessuch as Italy. Minority interests haveincreased slightly at constant struc-ture, thus excluding the impact ofrestructuring provision in 1995.Income from companies accountedfor by the equity method rose sharplyas a result of improved earnings insome companies, as well as inclusionof new businesses – Clover in SouthAfrica and Aymoré in Brazil.

Net income showed a rise of 8% fromFF3,130 million (excluding restruc-turing provisions) in 1995 to FF3,382million in 1996. Earnings per sharerose 6% to FF46.33.

Investment reaches newhigh

Cash flows from operations increased7.1% from FF7,424 million in 1995 toFF7,951 million in 1996. Free cashflow – i.e., after capital spending –amounted to FF3,467 million.

Capital expenditure totalled FF4,484million, up from FF4,103 million in1995. Main investments included thelaunch of a new PET bottle for Volvicin France, construction of a newDannon factory at West Jordan, Utah,in the US, modernization of Diépal’splant in Steenvoorde, France, andextensions to biscuit and dairy prod-uct plants in France as well as to biscuit facilities in Germany.

In addition, new equipment was installed at three container-divisionsites in France.

Net investment in subsidiaries andaffiliates rose from FF3,990 million in1995 to a new record of FF7,480 mil-lion. This reflected total outlays ofFF4,300 million to buy out minorityinterests in Panzalim in France, Galbaniin Italy and San Miguel in Spain, whileacquisitions outside western Europereached FF2,254 million, comparedwith FF1,738 million in 1995.

Acquisitions for interna-tional expansion

A number of new acquisitions weremade in 1996, with the focus onemerging markets in China, Brazil,Argentina and South Africa. This wasalso the case, albeit to a lesserextent, in Israel and Morocco.

Danone Group thus acquired 36% ofClover, South Africa’s leading pro-ducer of dairy products with annualsales equal to FF2.4 billion. Otherpurchases included 20% of the dairyproducts division of Strauss, Israel’sleading firm in this sector with salesof FF750 million, and 20% of CentraleLaitière, an ONA subsidiary which isthe largest dairy product company inMorocco with sales of FF1.3 billion.

In China, the Group made its biggestsingle acquisition in the country todate: a controlling interest in thedairy division of Wahaha, China’s lead-ing producer of dairy-based bever-ages with sales of FF530 million.Wahaha is one of the few Chinesecompanies distributing products andfamiliar to consumers throughout thevast domestic market. Two brewerswere also purchased: Haomen, sectorleader in the northern province ofHebei, and Wuhan Dongxihu, leaderin the central province of Hubei.Together, these serve a population of100 million and generate annualsales of around FF400 million. Thesethree acquisitions double DanoneGroup’s presence in China.

In Latin America, it acquired an inter-est in Aymoré, which reports annualsales of FF550 million, consolidatingits position on the Brazilian biscuitmarket. Danone also took control ofAguas Minerales, Argentina’s leadingmineral-water company with sales ofFF150 million. In 1997, DanoneGroup’s 1995 joint venture withMastellone, Argentina’s leading dairyproduct company, currently represent-ing sales of FF1 billion, was extendedto include yogurt. As a result, Danone will become the top producerof dairy products in both North andSouth America, with operations inCanada, the United States, Mexico,Brazil and Argentina.

Rise in debt

The net financial borrowing ofDanone Group rose FF4.6 billion,from FF17 billion at the end of 1995to FF21.6 billion at the end of 1996.Much of this was due to the acquisi-tion of minority interests in Panzalimfor FF3 billion at the end of the year.The debt/equity ratio at year endstood at 30% if convertible bonds areincluded in equity.

Danone Group uses financial instru-ments to hedge against exchange-rate and interest-rate risks arisingfrom its industrial and commercialoperations. The net exposure of allsubsidiaries is managed on a central-ized basis by the Group financedepartment in accordance with theaims and principles laid down bygeneral management.

In concrete terms, exposure of sub-sidiaries to exchange-rate risk result-ing from commercial transactions inforeign currencies is first netted, andthe resulting net exposure is hedgedwith quality counterparties, mainlythrough forward contracts andoptions. As regards interest-rate risk,the Group’s finance departmentsuses swaps, caps, floors and Piborfutures to strike an overall balancebetween fixed and floating rates forthe Group’s net debt, in line withmanagement policy.

A difficult year on thestock market

In 1996, Danone shares fell 11.6%,while the CAC 40 index rose 23.7%.The low point for the year was FF677in September.

This mainly reflected investors’doubts on the Group’s capacity toreturn to satisfactory rates of earn-ings growth, given its focus onWestern Europe where consumptionremains slack and competition isfierce.

However, since the beginning of1997, Danone shares have picked up26.7%, with gains driven in particularby the announcement of 1996 earn-ings, while the CAC 40 index rose17.2% over the same period. Thepeak since the beginning of the yearwas FF955 and the low FF712. OnMarch 14, it closed at FF906 repre-senting market capitalization ofFF65.8 billion, which places Danonenumber eleven on the Paris Bourse.

Recent developments

The Group has acquired a 50% inter-est in Hayat, Turkey’s leading produc-er of bottled water, within the frame-work of a joint venture in partnershipwith the Sabanci group. Hayat reported sales of approximately FF90 million in 1996.

Outlook

The earnings improvement achievedin 1996 should continue in 1997thanks to more favorable trends insales prices backed by increasedcommitment to product innovationand significant productivity gains.Prices for raw materials including inparticular grain and plastics shouldalso remain on a favorable track. In addition, the impact of currencytranslation could be positive for theGroup. On current projections, the overall effect of shifts in interestrates should be neutral.

10


BREAKDOWN OF GROUP SALES AND INCOME (FF MILLION)

SALES OPERATING INCOME CASH FLOW

1992 1993 1994 1995 1996 1992 1993 1994 1995 1996 1992 1993 1994 1995 1996

EUROPE

DAIRY PRODUCTS 23,041 22,067 22,624 21,895 22,239 2,412 2,123 2,181 2,103 2,259 2,644 2,447 2,362 2,275 2,404

GROCERY PRODUCTS - PASTA 13,081 13,142 14,689 16,020 15,835 1,027 970 940 1,025 996 1,058 1,028 1,070 1,135 1,023

BISCUITS 13,457 12,949 12,837 11,750 12,651 1,126 862 807 792 882 1,191 1,061 964 1,028 1,039

BEER 6,552 6,395 7,222 7,423 7,548 899 808 912 962 885 1,269 1,203 1,265 1,321 1,193

MINERAL WATER 5,716 5,898 7,000 7,155 6,891 898 955 1,060 890 939 1,010 1,058 1,186 1,073 1,124

CONTAINERS 7,046 6,663 6,368 6,356 6,278 730 556 624 638 703 893 487 785 809 859

SUB-TOTAL EUROPE 68,893 67,114 70,740 70,599 71,442 7,092 6,274 6,524 6,410 6,664 8,065 7,284 7,632 7,641 7,642

INTERNATIONAL 3,605 4,608 7,804 11,279 14,999 111 180 387 636 903 38 350 431 653 1,005

INTRA-GROUP SALES (1,658) (1,614) (1,724) (2,428) (2,501) - - - - - - - - - -

UNALLOCATED INCOME - - - - - (86) (103) (185) (28) (89) (704) (943) (912) (870) (696)

TOTAL 70,840 70,108 76,820 79,450 83,940 7,117 6,351 6,726 7,018 7,478 7,399 6,691 7,151 7,424 7,951

Data for fiscal years 1992 to 1994 cannot be strictly compared with those of 1995/1996 because of a new definition of sales and a more accurate allocation of “unallocated income”.

EARNINGS PER SHARE 1992 1993 1994 1995 1996

NUMBER OF SHARES OUTSTANDING AT YEAR-END 63,787,531 67,889,802 69,685,276 71,295,796 72,639,149

NUMBER OF SHARES USED TO CALCULATE EPS 62,541,044 64,490,937 68,136,657 69,717,356 71,120,542

EPS (FULLY DILUTED) (FF) 55.60 50.96 50.33 30.96 46.33

NET DIVIDEND (FF) 15.00 15.50 16.00 16.00 17.00

TOTAL DIVIDEND:

(INCLUDING FRENCH TAX CREDIT) (FF) 22.50 23.25 24.00 24.00 25.50

STOCKMARKET DATA 1992 1993 1994 1995 1996

MARKET CAPITALIZATION AT DECEMBER 31 (FF MILLION) 60,658 63,429 52,124 57,392 52,511

AVERAGE DAILY TRADING VOLUME (THOUSANDS OF SHARES) 104.1 142.6 137.1 155 165.4

HIGH ( FF ) 1,085 1,010 1,002 889 830

LOW ( FF ) 902 823 685 708 677

OPENING PRICE ON LAST TRADING DAY OF THE YEAR (FF) 943 960 760 800 725

YIELD: DIVIDEND (INCL. TAX CREDIT)/YEAR’S CLOSING PRICE 2.4% 2.4% 3.2% 3.0% 3.5%

1996/1997 ACQUISITIONS

COMPANY COUNTRY DIVISION TYPE OF TRANSACTION

GALBANI ITALY DAIRY PRODUCTS INCREASE IN STAKE

SAN MIGUEL SPAIN BEER INCREASE IN STAKE

BE INTERNATIONAL FOODS UK GROCERY PRODUCTS INCREASE IN STAKE

PANZALIM FRANCE GROCERY PRODUCTS FINAL ACQUISITION

DANONE S.A. ARGENTINA INTERNATIONAL (DAIRY PRODUCTS) ACQUISITION

HAOMEN BREWERY CHINA INTERNATIONAL (BEER) ACQUISITION

CLOVER SA LTD SOUTH AFRICA INTERNATIONAL (DAIRY PRODUCTS) CONTROLLING INTEREST

LPC BRAZIL INTERNATIONAL (DAIRY PRODUCTS) INCREASE IN STAKE

AGUAS MINERALES SA ARGENTINA INTERNATIONAL (MINERAL WATER) ACQUISITION

AYMORE BRAZIL INTERNATIONAL (BISCUITS) CONTROLLING INTEREST

HANGZHOU WAHAHA CHINA INTERNATIONAL (DAIRY PRODUCTS) ACQUISITION

CENTRALE LAITIERE MOROCCO INTERNATIONAL (DAIRY PRODUCTS) CONTROLLING INTEREST

WUHAN DONGXIHU BREWERY CHINA INTERNATIONAL ACQUISITION

STRAUSS ISRAEL INTERNATIONAL (DAIRY PRODUCTS) CONTROLLING INTEREST

HAYAT TURKEY INTERNATIONAL (MINERAL WATER) JOINT VENTURE

11


HUMAN RESOURCES: THE GROUP’S RAPID INTER-NATIONAL EXPANSION AND AMBITIOUS GROWTHTARGETS MAKE HUMAN RESOURCES MORE VITALTHAN EVER. IN 1996, A NUMBER OF STEPS WERE TAKEN TO MEET THESE NEW CHALLENGES AND ADJUST TO THE RISE IN THE WORKFORCE, WITH AGENERAL REVIEW LEADING TO A DEFINITION OFNEW PRIORITIES FOR THE YEARS AHEAD. THESE INCLUDE DEVELOPING SKILLS, IMPROVING ORGANIZATION, ENSURING SMOOTH LABOR RELATIONS, AND MOVING TO ENSURE QUICKER INTERNATIONALIZATION OF STAFF.



BISCUITS 15.0%

BEER 4.9%

MINERAL WATER 4.6%

CONTAINERS 8.6%

INTERNATIONAL 37.6%

OTHER 0.6%

GROUP EMPLOYEES BY DIVISION

FRANCE 31.3%

ITALY 9.5%

SPAIN 7.5%

REST OF EUROPE 13.9%

EASTERN EUROPE 2.9%

ASIA-PACIFIC 22.6%

NORTH AND SOUTH AMERICA 12.3%

GROUP EMPLOYEES BY GEOGRAPHICAL AREA

12


Developing skills andreshaping organizationfor optimum efficiency

Professional know-how is the basisof competitiveness and efficiency. Inrecognition of this, commitment totraining was even more in evidencein 1996. There was a particular focuson continued upgrading of interna-tional management programs,which have been attended by 500staff members from all parts of theworld. In addition, a number of newinitiatives were taken: - specially designed programs tomeet needs in emerging markets,with areas covered including market-ing in China and sales, productionand administration in easternEurope- innovative programs for adminis-trative and production staff. To taketwo examples, French employeeswere given the opportunity to gainnew educational qualifications inrecognition of their professionalexpertise, while safety training wasa systematic priority for newlyacquired businesses. In 1996, Danone Group launched anoverhaul of organization. Prioritiesincluded a more customer-orientedapproach in sales and administra-tion, upgrading of IT systems, andgreater flexibility in production andproduction cycles. In each area,human resource departments atgroup level and in individual subsi-diaries were an important source ofmomentum, making essential contri-butions, for example, to the mod-ernization drive in Galbani’s salesstructures, and to the reorganizationof production at the three plants ofSpanish brewer San Miguel.

Promoting smooth laborrelations

The statement “Business successcan only be lasting if it is also a suc-cess in terms of labor relations”,underscores Danone Group’s con-tinuing commitment to this dualgoal. In 1996, this philosophy tookconcrete shape in three areas in par-ticular: solutions adopted for over-staffing; youth training and employ-ment; and commitment to corporatecitizenship.Productivity gains are a businessimperative and can involve a needfor staff cuts. When this happens inDanone Group companies, humanresource departments move quicklyto apply a founding principle of theGroup, which is to help eachemployee find a new job, either inanother part of the Group or withanother employer. In France, a solu-tion has been found for 96% of allemployees affected by suchchanges.

For Group companies, involvementin the community is an importantway to build local ties, while corpo-rate culture gains as staff membersrally to a common cause. In 1996,job search and creation schemesand business development pro-grams were extended outsideFrance – an example being recon-version of the Danone site atUlzama in Spain – while a numberof new projects were launched.These included: - construction of children’s nurseriesin eastern Europe- creation of the KronenbourgFoundation, which contributes tothe development of troubled urbanand rural areas in France by helpingset up neighborhood shops- launch of the “BSN Initiatives”program by BSN Emballage to helpsmall-business creation in France.While Danone Group clearly cannotremedy the painful problem ofyouth unemployment on its own, itbelieves that it should set anexample whenever possible in allthe countries where it operates.Since its own capacity to employyoung people is necessarily limited– although 200 joined the Group inwestern Europe during 1996 – themain focus is thus on training andapprenticeship schemes. These involve: - acceptance of interns on job-training programs in countrieswhere these exist; in France 500young people were accepted in 1996 - training for school dropouts (inSpain, the UK and Ireland)- training for young graduates inAsia and eastern Europe, in particu-lar the Czech Republic, with aroundone hundred benefiting in 1996. Danone Group aims to step up itsefforts in this area in 1997, withplans to offer some 2,000 youngpeople – equal to 2% of its total staff– a job, an internship or other training.

Internationalization ofhuman resources

Danone Group’s rapid internationalexpansion poses a number of strate-gic challenges in the field of humanresources. In particular, ways mustbe found to recruit the best avail-able managers on emerging mar-kets, and to ensure that all groupcompanies share the same cultureand methods of operation. In re-sponse to these challenges, and toadapt to the new size of the groupand the growing importance of cer-tain geographical areas, the corpo-rate Human Resource Departmentintroduced a number of organiza-tional changes at the end of 1996.These involved in particular alloca-tion of additional resources to LatinAmerica.

In emerging economies, the short-age of high-level managers com-bining technical expertise and thecapacity to adapt to the DanoneGroup culture has led to the adop-tion of special measures in additionto expatriation programs — 350Danone executives are currentlyworking away from their homecountry. These measures include:- internships for young managersfrom Asia and eastern Europe- partnerships with universities,notably in Shanghai, patterned afterarrangements already existing inEurope.

Finally Danone Group has begunrounding out and extending proce-dures to ensure that newly acquiredsubsidiaries adopt its methods ofoperation, values and culture. Theseinclude in particular the develop-ment of intensive programs for themanagers of new subsidiaries and,as was recently the case inArgentina, training in evaluation ofskills and management of change.

13


CROSS-COMPANY MARKETING INITIATIVESWORLDWIDE PROMOTION OF THE “DANONE” BRAND AND THE SEARCH FOR NEW FORMS OF COMMUNICATIONS WITH CONSUMERS LED TO A VARIETY OF CROSS-COMPANY MARKETING INITIATIVES IN 1996.

1998 World Cup – cross-company

marketing enters the international

arena

Internationally, the first major initia-tive was the partnership agreementsigned in September with the FrenchCommittee for the Organization of theFootball World Cup. “Danone” freshdairy products will be officially asso-ciated with the 1998 World Cup to beheld in France, placing it among thevery few brands represented in whatis the world’s greatest media event,expected to represent an accumulatedtotal of 37 billion TV contacts.

A clear message on product safety

and health, 24 hours a day

In response to constant shifts inconsumer attitudes and relatedexpectations of major brands, at theend of 1996 Danone set up France’sfirst consumer advice line, “DanoneConseils”. Representing all Groupcompanies in France, this service isaccessible 24 hours a day, seven daysa week. Consumers phoning in canget advice on all aspects of nutritionfrom counsellors who include expertdieticians.

“Danoé”: representing Danone

brands in two million French homes

“Danoé”, a quarterly magazine de-voted to Danone brands which firstappeared in 1995, reflects a similaremphasis on direct communications.It currently circulates to two millionFrench households – out of a total ofsome 20 million – covered by aconsumer database built up over thepast two years. This makes it themost widely read family magazine ofits type in France. Similarly, Danone’s“Bingo” promotional game represent-ing all the Group’s French companiesand “Gran Premio Grandi Marche”,the Italian equivalent, scored suc-cesses once again in 1996.

Wherever people like to eat

More generally, Danone Group isintent on rapidly expanding the pres-ence of its key brands whereverpeople eat away from home or expectfood to be available. To this end, atask force has been set up to makethe most of potential for synergiesbetween different group activities.The same team will also be respon-sible for the development of elec-tronic home shopping, a fast-growingfield in which ever more experimentsare under way around the world.Another example of moves in thisdirection was the signature in early1997 of an agreement with theFuturoscope theme park, a favoriteattraction with French families.

'1994 IS

L T

M

W O R L D C U P

OFFICIAL FRESH DAIRY PRODUCTS

14


ENVIRONMENTRESPECT FOR THE ENVIRONMENT IS A CORE VALUE OF DANONE GROUP. IN KEEPING WITH THISCOMMITMENT, MAJOR PROGRAMS HAVE BEEN SET UP IN THREE AREAS: PACKAGING, INDUSTRIALSITES, AND DEVELOPMENT OF ENVIRONMENTALAWARENESS AMONG SUPPLIERS OF AGRICULTURALPRODUCTS.

RESEARCH AND DEVELOPMENTIN 1996, DANONE GROUP INCREASED RESEARCH AND DEVELOPMENT EXPENDITURES 6.7% FROM THEPREVIOUS YEAR TO A TOTAL OF FF667 MILLION, WHILE THE NUMBER OF STAFF INVOLVED REACHED1,128 WORLDWIDE.

Research is organized around five

major programs conducted by the

group in association with private and

public sector bodies — one is de-

voted to taste, texture and perception,

a second to food safety, a third to

molecular biology and biotechnology,

a fourth to process engineering, and

the fifth to nutrition.

Food safety, a growing concern forboth consumers and the food indus-try as a whole, is the top priority andDanone is intent on consolidating itsknow-how in this field. In this regard,a number of 1996 projects focusedon agrochemicals — studying, forexample, their impact on crops aswell as the effects of veterinary treat-ment on raw materials used in theindustry. Findings will lead to thedefinition of even stricter requirementsfor suppliers, as well as rules on thetraceability of raw materials and thesafety of production processes.

Research also continued in toxi-cology, in particular the causes ofchanges in food on contact with differ-ent types of packaging. In microbio-logy, the focus was on rapid detec-tion and monitoring of microorganisms such as bacteria andviruses, as well as the reactions ofpathogens to different types of environment.

Danone Group has long been in-volved in the creation and operationof organizations for the recycling ofpackaging. In 1996, it took this onestep further by teaming up with othercompanies to found a PackagingCouncil. The Council’s goals are theadoption of a code of conduct toreduce the quantity of packaging atsource, and promotion of publicinformation. Also in 1996, Frenchauthorities renewed approval for sixyears of the Eco-Emballages andAdelphe collection and processingprograms, confirming the viability of

this approach to the disposal of house-hold waste. Finally, glass recycling inFrance showed a further increase of4% on the previous year.Europe-wide, similar bodies were setup in Spain and Portugal, and theactivities of existing entities wereexpanded.

Action plans resulting from the circu-lation of the Danone Group’s corpo-rate Charter for the Environmentconcerned 140 industrial sites aroundthe world. In each case, managementreviewed the current status of the

site, then drew up plans for improve-ments, in particular concerning theuse of natural resources, water andenergy, and waste treatment. In 1997,the drive to increase awareness ofenvironmental issues at Group pro-duction sites will be further extendedand systematically promoted.Progress to date illustrates the com-patibility of environmental qualitywith efforts to raise productivity.

Danone Group is aware of the needto extend its commitment to itssources of supply. It thus promotes

rational farming methods that recon-cile profitability with product qualityand respect for the environment.Danone Group supports theEuropean Integrated Farming initia-tive through industry associationFARRE – Forum de l’AgricultureRaisonnée Respectueuse del’Environnement, or forum for ratio-nal farming and respect for the envi-ronment. Looking ahead, it is alsocontinuing to explore possibilitiesoffered by biotechnology.

15


DANONE INSTITUTESATTITUDES TO NUTRITION VARY ENORMOUSLY, REFLECTING CONSUMERS' AGE AND SOCIETY: CHILDREN, TEENAGERS AND THE ELDERLY TAKE RADICALLY DIFFERENT APPROACHES TO NUTRITION,AS DO PEOPLE IN, FOR EXAMPLE, ASIA AND NORTHAMERICA.REFLECTING THIS DIVERSITY, THE FIRST DANONEINSTITUTE—SET UP IN FRANCE IN 1991— WASFOLLOWED BY SEVEN MORE, IN SPAIN, ITALY,BELGIUM, GERMANY, THE CZECH REPUBLIC, POLANDAND THE UNITED STATES.THESE INSTITUTES SPONSOR RESEARCH INTO HEALTHY EATING, DISSEMINATE THEIR FINDINGS TO RAISE PUBLIC AWARENESS OF THE IMPORTANCEOF DIET AND FITNESS, AND PROMOTE FOOD QUALITY IN GENERAL. AFTER FOCUSING INITIALLY ON INFANTS AND CHILDREN, THE INSTITUTE IS NOW TURNING TO SENIOR CITIZENS' NEEDS. AT THE END OF 1997, THE FIRST DANONE INTERNATIONAL NUTRITIONPRIZE WILL BE AWARDED TO A RESEARCHER WHOSEWORK HAS MADE A MAJOR CONTRIBUTION TO HUMAN NUTRITION.

16


DAIRY PRODUCTS: DANONE GROUP IS THE WORLD’SLARGEST PRODUCER OF FRESH DAIRY PRODUCTS– YOGURTS, YOGURT-STYLE CHEESES AND DAIRYDESSERTS – SOLD UNDER THE “DANONE” NAME.WORLDWIDE SALES REVENUES TOTALLED FF29.6 BILLION IN 1996. IN EUROPE, WHERE IT ISALSO INDUSTRY LEADER, SALES REVENUES CAMETO FF22.2 BILLION.

YOGURT-STYLE CHEESES AND FRESH ITALIAN CHEESES 32.1%

YOGURTS 31.2%

DESSERTS 13.6%

MATURED ITALIAN CHEESES 11.5%

DRINKS 2.0%

OTHER 9.6%

EUROPEAN OPERATIONS ONLY

(FF MILLION) 1992 1993 1994 1995 1996

SALES 23,041 22,067 22,624 21,895 22,239

OPERATING INCOME 2,412 2,123 2,181 2,103 2,259

OPERATING CASH FLOW 2,644 2,447 2,362 2,275 2,404

CAPITAL EXPENDITURE 1,079 785 750 964 755

WORKFORCE 15,662 15,017 14,365 13,797 13,179

SALES BY PRODUCT

DATA FOR FISCAL YEARS 1992 TO 1994 CANNOT BE STRICTLY COMPARED WITH THOSE OF 1995/1996 BECAUSE OF A NEW

DEFINITION OF SALES AND A MORE ACCURATE ALLOCATION OF “UNALLOCATED INCOME”.

18


19


In 1996, increasing efforts were put

into the development of products

designed for Europe-wide distribu-

tion. Despite slack growth in market

volumes, sales prices were much

more favorable than in the previous

year. Earnings also got a lift

from productivity gains in most

companies, particularly at Italian

subsidiary Galbani.

Sales and earnings

Division sales rose 1.6% to FF22.2billion in 1996, while at constantstructure and exchange rates therewas a 1.9% increase. Sales rose inmost areas, except in Germany andAustria. At Galbani, the eliminationof some secondary lines from itsproduct range slowed sales growth.

Operating income climbed 7.4% andoperating margin 0.6 of a percent-age point thanks to improved salesprices. Productivity gains also helped,notably at Galbani, which continuedrestructuring of production andlogistics while narrowing the focusof marketing efforts to strategiclines. In Spain, Danone began re-organizing distribution, contractinglogistics out in some parts of thecountry and revamping its salesforce. In France, industrial restruc-turing, in particular closure of plantsat Seclin and Strasbourg, was heldup, mainly for legal reasons, in1996, but will go ahead in 1997.

At the same time, raw materialcosts, mostly for packaging, werelower in 1996 than in 1995. Finally,previously smaller operations suchas those of Danone in Portugal andthe Netherlands made a more sig-nificant contribution to earnings.

Market trends and newproducts

Volume growth was generally mod-erate on Danone’s core Europeanmarkets during 1996, with slightdeclines in France and Italy offset bymodest rises in Germany, Spain andBelgium. However vigorous market-ing by Group companies brought animprovement in sales prices and asa result sales revenues rose morequickly than in 1996. Europe-wide,market share changed little,although in Italy it increased, consoli-dating Danone’s market leadership.

Innovation and growth were most inevidence in products including fruityogurts, desserts, specialties forchildren, and lines aimed at thehealth conscious. In these segmentsnew launches and relaunches madea significant contribution to rises insales and earnings. “Danone etFruits” in France, “Jahreszeit” inGermany and “Danone Frutas” inPortugal strengthened the Group’spositions on the market for fruityogurts.

Additions to the “Entremets CharlesGervais” range of traditional des-serts were well received in France,as were “Tiramisù”, “CrèmeCaramel” and “Profiterolles” linesin Italy, and the new “Dany Sahne”range in Germany.

In children’s products, a fast-expanding segment, the biglaunches of the year were “KidCréation” in France, “Mi PrimerDanone” in Spain and “JuniorSuper Coppa” in Italy.

Growth was brisk in health foodsthanks to the success of “Actimel”,launched in yogurt and drink for-mats in Germany during 1996, aswell as to the continuation of strongperformances in Belgium and, evenmore, Spain, with “CholesterolControl” doing particularly well.

Low-cal lines including “Taillefine”in France, “Vitasnella” in Italy,“Desnatado” in Spain and “CorposDanone” in Portugal scored furthergains.

The launch of new yogurt mousseproducts in Spain and France wasanother success in 1996.

In Italy, demand for cheese wassteady in volume during 1996 andGalbani held onto its share of themarket. The company narrowed itsfocus to strategic lines with freshlaunches of revamped “Galbanino”lines and “Vallelata” mozzarella proving a big success. Sales of tradi-tional cheeses under the “SelezioneGalbani” name remained on the rise.

Galbani’s pork products continuedto make headway on a steadydomestic market and exports wereup 5%.

20


21


GROCERY PRODUCTS: EUROPE’S LARGEST PRODUCER OF SAUCES AND CONDIMENTS, DANONEGROUP ALSO RANKS SECOND EUROPE-WIDE INPASTA, AND THIRD IN CANNED, REFRIGERATED ANDFROZEN READY-TO-SERVE DISHES. IN 1996, SALES OF GROCERY PRODUCTS TOTALLED FF15.8 BILLION,OR FF21 BILLION IF AFFILIATES STAR AND STARLUXARE INCLUDED.

READY-TO-SERVE DISHES AND COOKING PREPARATIONS 39.3%

SAUCES AND CONDIMENTS 22.5%

DIET AND BABY FOODS 16.4%

PASTA 15.8%

OTHER 6.0%


(FF MILLION) 1992 1993 1994 1995 1996

SALES 13,081 13,142 14,689 16,020 15,835

OPERATING INCOME 1,027 970 940 1,025 996


CAPITAL EXPENDITURE 551 525 420 481 485

WORKFORCE 8,978 8,862 11,297 11,030 10,265

SALES BY PRODUCT



22


23


24


During the year, trends were satisfac-

tory for sauces and condiments,

infant foods and adult diet foods.

Major restructuring in the field of fro-

zen and refrigerated ready-to-serve

dishes was designed to make

“Marie” France’s leading brand for

this type of products. However, the

year proved difficult for canned

ready-to-serve dishes in France and

for pasta, which experienced difficult

trading conditions.

Sales and earnings

Division sales declined 1.2% toFF15.8 billion in 1996, but showed arise of 1.3% at constant structure andexchange rates. Operating incomedeclined 2.8% overall. Good perform-ances from infant foods and saucesdid not suffice to offset lower earn-ings on pasta and ready-to-servedishes. As a result, there was a slightdecline in operating margin.

A number of steps were taken toimprove productivity, in production,logistics and sales, as well as admini-stration and portfolios of productsand brands. In pasta and ready-to-serve dishes, Panzani and WilliamSaurin merged, while restructuringcontinued in Germany, in particularat the Seesen factory, and in Spain,where format and prices of the“La Familia” and “Ardilla” rangeswere brought into line. In sauces andcondiments, completion of the mergerof Liebig Maille with Amora broughtmajor savings. Turning to operationsin the UK, HP Foods merged with BE International and headquarters atMarket Harborough closed. HP’s canned foods business was soldto British group Hillsdown at the beginning of the year.

In refrigerated and frozen ready-to-serve dishes, the merger of Fréalimwith Générale Traiteur is to be fol-lowed by that of Gorcy and Vivagel in1997, making for greater overall com-petitiveness in frozen foods.

The “Marie” brand has replaced“Honoré Janin Traiteur” for refriger-ated ready-to-serve dishes and“Liebig” for soups, while the“Stoeffler” brand for Alsatian special-ties has been replaced by “La Tabledu Maître Kanter” with an eye onsynergies with the Group’s well-known “Kanterbräu” beer.

Finally, in Italy, Star continued rede-ployment to focus on core products –sauces, cooking preparations andinfant foods.

Markets trends and newproducts

Sauces, condiments and cooking

preparations

French demand for sauces, condi-ments and cooking preparationsremained on the rise in 1996, andLiebig Maille Amora increased itsshare of the market for “moderncondiments”, in particular mayon-naises. “Traditional condiments”, inparticular vinegar, fared less well, butthe “Pur Soup” range of vacuum-packed long shelf-life soups made astrong showing.

The Group’s range of heat-and-servesauces was rounded out with thelaunch of Amora’s “Goûtez leMonde” range. A full line-up of refrig-erated sauces including sauce tartare,sauce béarnaise and mayonnaiseswas also put on the market.

In the UK, market share of “HP”brand brown sauce and “Amoy”brand Asian specialties headed upwhile “Lea & Perrins” demonstratedits flair with the launch of its “5-minute marinade”.

Diet and infant foods

The number of births in France roseby nearly 10,000 in 1996, lendingadded momentum to sales alreadyboosted by innovative new productsthat included the “Blédina Danone”range of refrigerated dairy products,a big success. At the same time,innovations from earlier years,

including “Blédilait” formula,“Blédichef” heat-and-serve special-ties, and “Blédidéj” cereals, contin-ued to gain ground.

In Spain, sales of baby foods in glassjars and “Blédina” formula showed avigorous rise.

In Italy, Star launched a number ofnew products including “Latte Bravo”under its “Mellin” brand, whichconsolidated its overall position inthe course of the year.

In Belgium, infant foods in glass jarsswitched from the “Blédina” to the“Danone” brand at the end of theyear.

Trends were also firm on the Frenchmarket for diet foods and the“Gayelord Hauser” brand did verywell. Its product offering widenedduring the year with the launch of the“Athlon” high-energy sports drinkand “Bio Vivre” products, a range ofnatural-agriculture products takenover by the Group.

Pasta

The Group’s share of a slightly largerEuropean market showed a moderatedecline.

Despite considerable competitivepressure, Panzani held onto its posi-tion on the French market and suc-cessfully launched “Maestria” quick-cooking pasta and “Pâtes Fantaisies”.

In Germany, the “Birkel no. 1” rangemade further progress, improving theGroup’s market position.

In Italy, “Agnesi” consolidated itsposition at the top end of the market,and its “Flora” range of pre-cookedrice made a highly satisfactory showing.

Finally, in Spain, 1996 saw the launchof the “Fantasia” range, while“Ardilla” and “La Familia” pooledcommunications and adopted a jointmarketing strategy.

Ready-to-serve dishes

French demand for frozen and refrig-erated ready-to-serve dishes contin-ued rising in 1996, although growthslowed to 4.5% and 15%, respec-tively. In product innovation, high-lights included the launch of“Panzani” fresh pasta sold withaccompanying sauces, and the“Panini” range of frozen Italian-stylesandwiches. In addition, a number ofextensions to ranges of snacks, pizzas and ready-to-serve dishes werelaunched under the “Marie” name.

In Spain, “La Cocinera” increased itsmarket share, partly thanks to thelaunch of a number of new dishes.During the year, the Spanish marketfor ready-to-serve dishes grew 7%.

Conditions were tougher for cannedready-to-serve dishes in both France,where demand showed a significantdecline, and Germany, where sales ofbeef products suffered from fearsover BSE. A major drive was under-taken to adapt recipes to consumerexpectations.

25


BISCUITS: DANONE GROUP IS THE WORLD’S LARGEST PRODUCER OF BISCUITS, WITH SALES REVENUES OF FF17 BILLION. THE GROUP ALSORANKS FIRST IN EUROPE, WHERE 1996 SALES REVENUES CAME TO FF12.7 BILLION.

COOKIES AND SWEET SNACKS 61.2%

SAVORY SNACKS 13.7%

CRISPBREADS AND CRACKERS 13.4%

PACKAGED CAKES 4.6%

CONFECTIONERY AND OTHER 7.1%


(FF MILLION) 1992 1993 1994 1995 1996

SALES 13,457 12,949 12,837 11,750 12,651

OPERATING INCOME 1,126 862 807 792 882

OPERATING CASH FLOW 1,191 1,061 964 1,028 1,039


WORKFORCE 13,801 13,265 12,051 11,634 12,249

SALES BY PRODUCT



26


After systematically reinvesting pro-

ductivity gains in product revamping

over the three previous years, in 1996

the Group turned its attention to

innovation. Improved sales volumes

and price trends brought a fresh rise

in operating margin.

Sales and earnings

European biscuit sales were up 7.7%to FF12.7 billion in 1996, while theincrease at constant structure andexchange rates was 4.1%. Operatingincome rose 11.4% and operatingmargin 0.3 of a percentage point.

In France, the merger of LU and Belinled to significant savings with the clo-sure of one head office and imple-mentation of joint industrial and salesorganization. Similarly, the “LU”brand is to be gradually extended toall French ranges of sweet and savorybiscuits and pastries. Administrativeresources were also pooled for enti-ties operating in Belgium, theNetherlands, Germany and Austria.The Amstetten factory in Austria wasclosed and related production sharedbetween units in Germany and Spain.In the UK and Ireland, restructuringbegun in the previous year continued,involving in particular the transfer ofthe head office from Reading toLiverpool, and changes in the alloca-tion of production to British and Irishunits.

Market trends and product innovation

The European market for sweet bis-cuits rose 1% in volume and 3% invalue, while that for savory biscuitsrose 4% in volume and 5% in value.Danone Group’s share of both mar-kets was steady.

In France, its share of the market wassteady in value terms despite difficul-ties in the first half resulting fromdelays in listing of some productsthrough one retail chain. Marketshare rose in the UK thanks to goodsecond-half performance for crackersand countlines, as well as in Italy,Spain and Germany for sweet bis-cuits. In contrast, sales were disap-pointing in Belgium and Ireland.

Product innovation focused on single-serve snack items, breakfast productsand products for children, togetherrepresenting the fastest growing seg-ments of the European market.

In sweet snacks, launches included“Fondant Citron” pastries andsnack-bar versions of “Pim’s” and“Petit Ecolier Choco Tendre” inFrance, as well as a revamped versionof the “Club” snack bar in the UK.

In savory snacks, the main launchwas “Big Bang” in France, while inItaly sales of the “Cipster” range surged ahead, with new additions“Cipster Mais” and “Cipgrill” providingfresh impetus. The “Tuc” range continued to do well in Belgium andGermany.

Breakfast products made a healthycontribution to business growth forcompanies operating in Italy andSpain. In Italy, the “Oro” range gained from the additions of “Oro Più”and “Oro Ciok”, while in Spain“Yayitas Desayuno”, aimed at the topof the market, continued to makehighly satisfactory progress.

A number of new products for chil-dren were launched on the Frenchmarket during the year, including“Mikado Trio” snacks and “Prosper”gingerbread teddy bears. Yet themain event was the introduction of a new-style refrigerated biscuit.Marketed under the name “PrinceCoeur de Lait”, this product is theresult of cooperation between theGroup’s dairy product and biscuitdivisions.

Single-pack “Captain Choc” children’ssnacks and “Mini Napolitain” cakesalso gained ground in 1996. In thesame segment of the German market,the new “Prinzenrolle Schoko-Vanile”rounded out the range of filled bis-cuits.

New geographical markets were alsoopened for existing products. Anexample was the French launch of“Premium”, marketed by Heudebertand produced in Italy, which repre-sents a highly promising new depar-ture in bakery products.

In Germany, the launch of “KleineHerzen”, familiar to French customersas “Petits Coeurs”, and “Goldblätter”– “Feuilleté Doré“ in France – strengthened Group positions at thetop end of the market.

27


BEVERAGES: DANONE GROUP IS EUROPE’S SECONDLARGEST BREWER, WITH SALES OF FF7.5 BILLION.THE GROUP IS ALSO THE WORLD’S SECOND LARGEST PRODUCER OF MINERAL WATER, GENERATING SALES REVENUES OF FF7.9 BILLIONINCLUDING FF6.9 BILLION IN EUROPE.ALL TOLD, BEVERAGES REPRESENTED SALESOF FF14.4 BILLION IN 1996 (NEARLY FF20 BILLIONINCLUDING UNCONSOLIDATED AFFILIATES).

28


STANDARD BEERS 70.9%

PREMIUM AND SPECIALTY BEERS 22.1%

NON-ALCOHOLIC BEERS AND OTHER 7.0%

BEER: EUROPEAN OPERATIONS ONLY

(FF MILLION) 1992 1993 1994 1995 1996

SALES 6,552 6,395 7,222 7,423 7,548

OPERATING INCOME 899 808 912 962 885



WORKFORCE 3,715 3,373 4,405 4,237 3,979

SALES BY PRODUCT


DEFINITION OF SALES AND A MORE ACCURATE ALLOCATION OF “UNALLOCATED INCOME”.29


In 1996, weather was exceptionally

unfavorable, especially during the

summer months, which are usually

the best for drink sales, and, in

particular, for beer.

At the beginning of 1997, beer and

mineral operations in Europe were

brought together in a single bever-

age division. This should make for

significant synergies in purchasing,

logistics and marketing.

Sales and earnings

Beer sales rose 1.7% to FF7.5 billion,although volumes were down 3%from the previous year. Operatingincome declined 8%, and operatingmargin was down 1.3 percentagepoints.

Shortfalls in volumes and earningsdue to a very poor summer seasonwere not offset despite theDecember surge in French sales, asretailers stocked up ahead of theJanuary 1997 rise in excise.

Mineral water sales declined 3.7% toFF6.9 billion due to cool weather inFrance and, even more, the end of athree-year drought in Spain.However a fall in prices for PET andPVC, the raw materials for bottles,buoyed operating income, whichrose 5.5%. Operating margin was up1.2 percentage points over the sameperiod.

In a number of cases, reorganizationbrought savings in production andadministration costs. Thus in Spain,“Font Vella” and “Lanjarón” pooledadministration, while in Italy a sig-nificant decline in overheads atItalaquae brought a rally in earnings.


France

On the structurally stable Frenchmarket, beer sales suffered from anexceptionally cool summer, but thiswas partly offset at the end of theyear as retailers stocked up ahead ofa rise in excise taking effect onJanuary 1, 1997. This will probablylead to a rise in retail prices.

Volumes sold to hotels, cafés andrestaurants declined, but there wasan increase in supermarket busi-ness. Overall, market share of the“Kronenbourg” brand sufferedsome erosion. The 1995 merger ofthe “Kronenbourg” and“Kanterbräu” ranges steadied thelatter’s share of café business andwon back positions in food outlets.

As regards product innovation, “K”beer launched in 1995 continued togain ground, while “La Réserve duMaître Kanter” and “1664” premiumlager were brought out in new 75-centiliter bottles. Finally, a new ciderproduced on the basis of brewerytechniques was tested in cafés.

The French market for mineral watershowed a modest rise in 1996, when“Evian” further increased its sharein still water, while “Volvic” suffereda slight decline.

During the year, the use of PET crush-able bottles was extended to theentire “Evian” range, while prepara-tions were made for the launch of asimilar bottle for “Volvic” in 1997.

Demand for sparkling water showedpractically no increase, mainlybecause of the cool weather, whilethe Group’s overall market shareheld steady, with a continued rise insales of “Salvetat” and “Arvie” off-setting a decline for “Badoit”.

Exports of “Evian” and “Volvic” toother parts of Europe continuedupwards, especially in Germanywhere Group sales now total 130million liters. Trends were also favorable for Group brands in the UK and Switzerland.

Spain

Mainly as a result of the weather,the Spanish beer market contracted3.5% overall, with sales to cafés,hotels and restaurants showing thesteepest declines. Home consump-tion was more resilient.

San Miguel continued marketingefforts, renewing existing rangeswith innovations such as the intro-duction of screw-top bottles, andlaunching new products including inparticular “Ice Beer”. Despite this, itsuffered a slight decline in marketshare. Mahou kept pace with markettrends.

Turning to mineral water, marketvolumes were down 12%, the firstdecline in several years. This reflect-ed the end of a chronic drought inthe south of the country which hadinflated demand in previous years.“Font Vella” increased its share ofthe national market for still waters,while “Lanjarón” strengthenedregional positions in Andalusia andLevante. “Font Picant” sparklingwater doubled sales, consolidatingthe Group position in the sectoralready held through “Fonter”.

Italy

The Italian beer market contracted6% in 1996 as cool weather discour-aged domestic customers and kept

tourists away. “Peroni” suffered adecline in market share, particularlyin cafés, restaurants and hotels, as aresult of fierce competition.

Mineral water markets showed aslight increase in volume, but pricesremained under pressure. Againstthis backdrop, “Italaquae” made anexcellent showing, increasing itsmarket share thanks to a good per-formance from its top “Ferrarelle”brand, as well as a marked recoveryin sales of “Boario” and the suc-cessful launch of lower-priced“Santagata” in the previous year.

Belgium

The structural decline in the Belgianmarket continued, exacerbated bycool weather and a rise in excise.

In these difficult conditions, AlkenMaes held onto market share forcore “Maes” and “Cristal” brands,while the success of specialty beers“Blanche de Bruges” and“Grimbergen” was confirmed. Themain innovation of the year was thelaunch of ice beer “Maes Cool”which helped update the overallimage of the “Maes” brand on itsmarket.

30


STILL WATER 66.6%

SPARKLING WATER 30.3%

HOTEL, LEISURE AND OTHER 3.1%

MINERAL WATER: EUROPEAN OPERATIONS ONLY

(FF MILLION) 1992 1993 1994 1995 1996

SALES 5,716 5,898 7,000 7,155 6,891

OPERATING INCOME 898 955 1,060 890 939



WORKFORCE 3,189 4,088 3,965 3,900 3,726

SALES BY PRODUCT


DEFINITION OF SALES AND A MORE ACCURATE ALLOCATION OF “UNALLOCATED INCOME”.31


THE KRONENBOURG FOUNDATIONIN DEPRESSED URBAN AND RURAL AREAS,COMMUNITY LIFE IS MORE IMPORTANT THAN EVER. HERE THE SIMPLE INITIATIVES TAKEN DAILY BYMEN AND WOMEN COMMITTED TO IMPROVINGEVERYONE'S LOT CAN OFFER MUCH-NEEDED HOPE.BEER IS A TRADITIONAL PART OF SOCIAL INTERACTION. THE KRONENBOURG BREWERIES SUPPORTCOMMUNITY WORK THROUGH A FOUNDATION THATHELPS YOUNG PEOPLE IN DIFFICULTY FIND A PLACEIN SOCIETY. THIS FOUNDATION PROVIDES FINANCIALCONTRIBUTIONS, BUT ALSO EXPERT INPUT AND ADVICE TO HELP BENEFICIARIES OPEN A CAFÉ IN ALESS-FAVORED NEIGHBORHOOD, SET UP A LOCALSHOP TO BREATH FRESH LIFE INTO A VILLAGE, ORFOUND A RESTAURANT STAFFED BY PEOPLE IN DIFFICULT STRAITS. THE KRONENBOURGFOUNDATION HAS ALREADY LENT ITS SUPPORT TOMORE THAN TEN SUCH PROJECTS.

32


CONTAINERS: DANONE GROUP IS EUROPE’S SECONDLARGEST PRODUCER OF GLASS BOTTLES AND JARS.IN 1996, SALES REVENUES TOTALLED FF6.3 BILLION.PRODUCTION IS CENTERED ON FRANCE, SPAIN ANDTHE NETHERLANDS.

BOTTLES 73.5%

JARS 17.7%

TABLE GLASSWARE AND OTHER 8.8%

(FF MILLION) 1992 1993 1994 1995 1996

SALES 7,046 6,663 6,368 6,356 6,278


OPERATING CASH FLOW 893 487 785 809 859


WORKFORCE 9,023 7,834 7,596 7,468 7,035

SALES BY PRODUCT



34


On some markets, notably soft

drinks and beer, unusually cool

summer weather hurt demand for

bottles. However this was offset

by strong demand for wine

bottles, food jars and, even more,

champagne bottles.

Despite a squeeze on prices, the

high proportion of sales at the

upper end of the market and

significant productivity gains

allowed a further improvement in

operating margin.

Sales and earnings

Sales dipped 1.2% to FF6.3 billionin 1996, reflecting in particular thesale early in the year of glasstableware operations of Frenchsubsidiary VMC to Bormioli Roccoin Italy. At constant structure andexchange rates, sales were up2.2%. Operating income rose10.2%, driven by major productivegains, particularly in Spain, andoperating margin was up 1.2 per-centage points. During the year,productivity drives were alsoconducted at VMC and Verdômein France, as well as in theNetherlands.


France

The overall rise in French demandfor glass bottles during 1996 wasthe result of contrasting trends.On the one hand, there was asharp rise in orders for cham-pagne bottles – which will be onthe shelves in the year 2000 –while on the other, there was adecline in demand for beer andsoft-drink bottles.

The Group nonetheless held ontoits share of the market.Development projects focused onreducing bottle weight continuedin response to a basic trend indemand, which was also behindthe launch of the “Optima” rangein the previous year. All told, 60new bottle designs were put onthe market. Export sales to neigh-boring countries were also on afavorable track.

Turning to food jars, prices cameunder strong competitive pres-sure, notably from foreign pro-ducers. Despite this, VMC madesatisfactory progress on exportmarkets.

Spain

The Spanish market for glasscontainers grew nearly 4% in1996, reflecting vigorous demandfor wine bottles, notably frommakers of sparkling wines such asCavas, as well as for food jars.Group business expanded in stepwith the market.

The Netherlands

In the Netherlands, orders forfood jars were on the rise, butdemand for bottles in the beerand spirits sector declined.Vereenigde Glasfabrieken per-formed in line with the market inthese areas, while at the sametime reporting a sharp rise instemware sales thanks to im-proved sales targeting. During theyear, the company developed 90new bottle designs.

35


36

INTERNATIONAL: GROUP BUSINESS OUTSIDE WESTERN EUROPE REPRESENTED A TOTAL OF FF15 BILLION IN 1996, INCLUDING FF7.4 BILLIONFROM DAIRY PRODUCTS, FF4.7 BILLION FROM BISCUITS, FF1.7 BILLION FROM BEVERAGES AND FF1.2 BILLION FROM SAUCES AND OTHER PRODUCTS.THIS INTERNATIONAL BUSINESS, WHICH NOW REPRESENTS 18% OF GROUP SALES, IS CONDUCTEDBY THREE OPERATING DIVISIONS, ONE RESPONSIBLEFOR THE ASIA-PACIFIC REGION (SALES FF3.6 BILLION),ANOTHER FOR NORTH AND SOUTH AMERICA ANDAFRICA, REPRESENTING SALES OF FF7.8 BILLION,AND THE THIRD FOR EXPORTS (SALES FF2.5 BILLION).EASTERN EUROPE (SALES FF1.3 BILLION) IS ALSO INCLUDED.


BISCUITS 31.3%

BEVERAGES 11.5%

OTHER 7.9%

(FF MILLION) 1992 1993 1994 1995 1996

SALES 3,605 4,608 7,804 11,279 14,999


OPERATING CASH FLOW 38 350 431 653 1,005

CAPITAL EXPENDITURE 140 211 488 656 1,035

WORKFORCE 3,251 3,527 14,063 21,313 30,692

SALES BY BUSINESS SEGMENT




NORTH AMERICA 30.3%

LATIN AMERICA 30.6%

ASIA-PACIFIC 26.2%

EASTERN EUROPE 9.2%

AFRICA 3.7%

INTERNATIONAL SALES BY GEOGRAPHICAL ZONE

37


International sales rose 33% in 1996,

driven by a string of acquisitions as

well as first consolidation of a num-

ber of other companies in eastern

Europe, China and Argentina. This

was in addition to 7.9% growth in

existing business, which, while

moderate, was five times quicker

than in western Europe. International

sales thus showed a fourfold rise in

just five years. During 1996, manage-

ment structures in Asia were en-

hanced, with operational headquarters

for the region set up in Singapore.

Sales and earnings

Operating income rose 42% and op-erating margin 0.4 of a percentagepoint. The rise was limited by costsarising from the launch of “Dannon”brand mineral water in the US.

These results reflect relatively steadyperformances from existing opera-tions in North and South Americaand in Asia, as well as a healthy newcontribution from dairy product op-erations in eastern Europe.

Major productivity gains at Bagley inArgentina offset the effects of reces-sion, while marketing and sales wererevamped to achieved a better fitwith the market.


Dairy products

After several years of robust growth,the US market for dairy products slowed in 1996, with demand up onlyaround 3%. At the same time, compe-tition heated up in low-calorie prod-ucts. Initiatives during the year included extension of the “DoubleDelights” range and the launch of“Sprinkl’ins Magic Crystals”, ayogurt especially for children.

In Brazil, market growth was moremoderate following the surge of theprevious year, and Danone was ableto consolidate its position. At thesame time, production on a sub-contracted basis got under way in thecountry’s Nordeste, now undergoingrapid development.

With Argentina suffering from a deeprecession, demand for dairy productsheld steady. Danone Group beganreorganizing marketing of yogurt-style cheeses and desserts in its firstjoint venture in the run-up to theextension of this to “La Serenisima”yogurt range in 1997. Major productlaunches in the course of 1996 included“Casancrem dulce de leche” cheesespread and “Budin de Manzana”dessert.

In Canada, where market growth alsoslowed, the Group turned in a goodperformance, recapturing its topposition thanks to new products launched under the “Danone” name,notably the “Passion” range.Production capacity is being expanded.

In Mexico, where the economy gotback onto a firmer track, the marketgrew 5%, but Danone suffered adecline in its share following the arri-val of new competitors.

In eastern Europe, demand for dairyproducts soared. Danone also suc-ceeded in increasing its share of mar-kets in all countries in the area, whileat the same time raising sales pricesand expanding ranges. Strongest per-formances were in Poland, the CzechRepublic, Slovakia and Hungary.Bulgarian business, in contrast, suf-fered a sharp decline, reflecting theseverity of the country’s economictroubles.

In Japan, the focus for the “Danone”brand in 1996 was on cutting costs inpurchasing, production and distribu-tion.

In China, sales of “Wahaha” milk-based fruit drinks showed a vigorous41% rise during the year.

Biscuits

The biscuit market in Argentina grewaround 2.5% in 1996, but as a resultof the recession demand focused onlower-price ranges. Competition wasfierce, and Bagley suffered a slightdecline in market share, but reorgani-zation of sales and a major programto introduce existing products ofother Group companies should meana rapid return to satisfactory busi-ness growth. In 1996, launches in-cluded “Rex Pizza” savory snacks and“Petits Coeurs” sweet biscuits, bothusing recipes from European units.

In Brazil, where demand for biscuitsincreased 3%, Campineira’s share ofthe market declined slightly whileAymoré’s rose.

New Zealand subsidiary Griffinsbrought out a large number of newproducts and significantly improvedmarket share in the savory snackssegment.

In India, Britannia consolidated itsmarket leadership with a 25% rise inbiscuit sales, rewarding renewal ofcore ranges as well as innovation. Itspackaged cakes business did particular-ly well, with market share doubling.

In Indonesia, biscuit production launched under the “Danone” nameat the end of 1995 beat targets andplans are now being made to increasecapacity.

In Malaysia, where a large number ofproducts have also been put underthe “Danone” name, a major drivewas undertaken to increase marketshare in major retailing chains.

In China, units in Shanghai andJiangmen have adopted the“Danone” brand for their production,and distribution has been extendedto Beijing. A major program toenhance quality and productivity gotunder way at the Jiangmen plant.

Despite political uncertainties, theGroup consolidated its market leader-ship in Pakistan, with sales showing avigorous rise during the year.

In the Czech Republic and Slovakia,biscuit business was highly satisfac-tory, thanks in particular to renewalof some core products, launches ofnew snacks, and very successfulexport sales.

In Russia, Bolshevik had a difficultyear against a backdrop of persistentweakness in consumer demand.

Biscuit exports rose 14%, with much ofthe impetus coming from the launch ofthe new “LU” international range inthe US, Southeast Asia and Scandinavia.

Beverages

The main highlight of the year wasthe launch of “Dannon” brand bot-tled mineral water in the easternUnited States. This consolidates theGroup’s leadership on the fast-growing US market, where “Evian”ranks first. “Dannon Natural SpringWater” won an 11% share of super-market sales and took the lead in fiveMidwestern states. Distribution is tobe extended to other parts of thecountry in 1997.

In Canada, sales of “Aquaterra” wereon the rise, particularly in the homeand office delivery sector in Ontarioand Quebec.

In Mexico, “Bonafont” mineral waterincreased its share of a market whichgrew around 3%, and distribution wasput on a nationwide basis.

In Argentina, where demand wassteady, “Villa del Sur” was offered innew crushable plastic bottles at theend of the year.

In China, the Group began reorganiz-ing the operations of two large brew-eries bought in the course of the year – Haomen in the north andDongxihu in the center. Anotherdevelopment was HangzhouWahaha’s move into bottled waters.This appeared to be proving a greatsuccess after only a few months,thanks in particular to the company’snationwide distribution network.

Turning to exports, the “Evian” and“Volvic” brands consolidated theirfirst and second rankings worldwide,with sales growth in North Americaand Asia providing much of the impe-tus. In contrast, Japanese sales weredisappointing as a result of unusuallycool summer weather. In beer, whereexports have been refocused onEurope, sales were up 4% and the“Kronenbourg 1664” franchise in theUK continued to show satisfactorygrowth, with volumes up 8% to840,000 hectoliters.

Other businesses

Sales of Hong-Kong based “Amoy”sauces and frozen foods showed ahighly satisfactory rise on bothdomestic and export markets.

Best extended its frozen snack rangesin New Zealand and Australian mar-kets, now the company’s main focusfollowing cutbacks in export busi-ness.

Exports of “Maille” and “Lea &Perrins” sauces showed further risesof 16% and 8%, respectively, drivenby strong performances in Canada,Japan and Southeast Asia. Exportsales of “Agnesi” pasta surged 28%thanks to breakthroughs in Japan andArgentina.

Finally, exports of infant foods showed a healthy rise, and full rangeswere launched under the “Danone”name in China, Russia and Vietnam.

38


39


DANONE'S CHARTER FOR THE ENVIRONMENTIN 1996, THE DANONE GROUP FORMALIZEDEXISTING ENVIRONMENTAL POLICIES IN A CORPORATECHARTER FOR THE ENVIRONMENT, APPLICABLE TOGROUP PLANTS WORLDWIDE. THIS GOES WELLBEYOND A STATEMENT OF INTENT, SETTING OUT AFRAMEWORK TO MAKE THE MOST OF INITIATIVESALREADY LAUNCHED IN DIFFERENT BUSINESS AREAS. DANONE HAS BEEN ACTIVELY ENGAGED IN PROTECTING THE ENVIRONMENT FROM THE START;AN EARLY EXAMPLE WAS THE 1969 “VACANCESPROPRES” CAMPAIGN IN FRANCE, AIMED ATREDUCING LITTER BY EQUIPPING HOLIDAY SITESWITH TRASH CONTAINERS. IT IS NOW TIME TO BROADEN THIS COMMITMENT TO INCLUDE ALL STAGES OF BUSINESS, FROMPRODUCT DESIGN TO DISPOSAL OF PACKAGING,AS WELL AS PRESERVATION OF NATURALRESOURCES, IN PARTICULAR WATER AND ENERGY.

40


CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME (ALL AMOUNTS IN MILLIONS OF FRENCH FRANCS) NOTES 1996 1995

NET SALES 83,940 79,450

COST OF GOODS SOLD (47,523) (45,494)

SELLING EXPENSES (21,896) (20,235)

GENERAL AND ADMINISTRATIVE EXPENSES (5,005) (4,655)

RESEARCH AND DEVELOPMENT EXPENSES (667) (625)

OTHER INCOME AND EXPENSE 21 (1,371) (1,423)

OPERATING INCOME 7,478 7,018

NON-RECURRING ITEMS 2 - (1,800)

INTEREST EXPENSE (NET) 22 (1,245) (1,254)

INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTERESTS 6,233 3,964

PROVISION FOR INCOME TAXES 23 (2,395) (1,496)

INCOME BEFORE MINORITY INTERESTS 3,838 2,468

MINORITY INTERESTS (614) (437)

EQUITY IN NET EARNINGS OF AFFILIATED COMPANIES 158 102

NET INCOME 3,382 2,133

PER SHARE INFORMATION (NOTE 1.R) (ALL AMOUNTS IN FRENCH FRANCS, EXCEPT NUMBER OF SHARES)

AVERAGE NUMBER OF SHARES USED IN CALCULATING EARNINGS PER SHARE 71,120,542 69,717,356

EARNINGS PER SHARE 47.55 30.59

FULLY DILUTED EARNINGS PER SHARE 46.33 30.96

The notes on pages 45 to 55 are an integral part of the consolidated financial statements.

42


CONSOLIDATED BALANCE SHEETS AT DECEMBER 31 (ALL AMOUNTS IN MILLIONS OF FRENCH FRANCS) NOTE 1996 1995

ASSETS

PROPERTY, PLANT AND EQUIPMENT 5 56,603 52,021

LESS: ACCUMULATED DEPRECIATION (32,398) (30,021)

24,205 22,000

BRAND NAMES 6 12,030 11,491

OTHER INTANGIBLE ASSETS 1,323 1,211

13,353 12,702

GOODWILL 6 22,810 18,651

LONG-TERM LOANS 1,608 1,003

LONG-TERM INVESTMENTS 7 3,278 4,080

EQUITY IN AFFILIATED COMPANIES 8 2,657 2,009

OTHER ASSETS 904 868

8,447 7,960

NON-CURRENT ASSETS 68,815 61,313

INVENTORIES 9 6,940 6,845

TRADE ACCOUNTS AND NOTES RECEIVABLE 10 13,693 13,039

OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES 4,748 4,165

SHORT-TERM LOANS 994 781

MARKETABLE SECURITIES 11 3,257 4,813

CASH AND CASH EQUIVALENTS 2,424 2,212

CURRENT ASSETS 32,056 31,855

TOTAL ASSETS 100,871 93,168

LIABILITIES AND SHAREHOLDERS’ EQUITY

CAPITAL STOCK (PAR VALUE FF 10 PER SHARE) 12 726 713

CAPITAL SURPLUS 12 17,450 16,547

RETAINED EARNINGS 12 25,814 23,655

TRANSLATION ADJUSTMENTS (2,986) (4,228)

TREASURY STOCK (621) (433)

SHAREHOLDERS’ EQUITY 40,383 36,254

MINORITY INTERESTS 4,846 5,259

CONVERTIBLE BONDS 14 7,305 7,305

LONG-TERM DEBT 15 16,230 10,875

RETIREMENT INDEMNITIES, PENSIONS AND POST-RETIREMENT HEALTHCARE BENEFITS 16 2,693 2,593

PROVISIONS AND LONG-TERM LIABILITIES 17 4,613 4,843

NON-CURRENT LIABILITIES 76,070 67,129

TRADE ACCOUNTS AND NOTES PAYABLE 11,454 11,050

ACCRUED EXPENSES AND OTHER LIABILITIES 9,626 9,149

SHORT-TERM DEBT AND BANK OVERDRAFTS 3,721 5,840

CURRENT LIABILITIES 24,801 26,039

TOTAL LIABILITIES 100,871 93,168


43


CONSOLIDATED STATEMENTS OF CASH FLOWS (ALL AMOUNTS IN MILLIONS OF FRENCH FRANCS) 1996 1995

NET INCOME 3,382 2,133

MINORITY INTERESTS IN NET INCOME OF CONSOLIDATED SUBSIDIARIES 614 437

INCOME FROM EQUITY INVESTEES (158) (102)

DEPRECIATION AND AMORTIZATION 4,444 4,265

GAINS ON SALE OF NON-CURRENT ASSETS (107) (16)

OTHER (224) 707

CASH FLOWS FROM OPERATIONS 7,951 7,424

(INCREASE) / DECREASE IN INVENTORIES 273 (289)

NET VARIATION IN TRADE ACCOUNTS AND OTHER RECEIVABLE (135) (758)

NET VARIATION IN TRADE ACCOUNTS AND OTHER PAYABLE (79) 790

OTHER VARIATIONS (63) (21)

CHANGE IN WORKING CAPITAL (4) (278)

CASH FLOWS FROM OPERATING ACTIVITIES 7,947 7,146

ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT (4,484) (4,103)

INVESTMENTS IN SUBSIDIARIES AND AFFILIATED COMPANIES (7,480) (3,990)

PROCEEDS FROM THE SALE OF BUSINESSES AND OTHER INVESTMENTS 790 391

CASH FLOWS FROM INVESTING ACTIVITIES (11,174) (7,702)

INCREASE IN CAPITAL AND CAPITAL SURPLUS 916 1,114

DECREASE IN TREASURY STOCK (193) (19)

DIVIDENDS PAID TO GROUPE DANONE SHAREHOLDERS AND TO MINORITY SHAREHOLDERS IN CONSOLIDATED COMPANIES (1,441) (1,329)

NET INCREASE IN LONG-TERM DEBT 6,821 254

NET INCREASE IN LONG-TERM LOANS AND OTHER ASSETS (784) (2)

NET CHANGE IN SHORT-TERM DEBT (3,857) 2,095

NET CHANGE IN MARKETABLE SECURITIES 1,844 (1,046)

CASH FLOWS FROM FINANCING ACTIVITIES 3,306 1,067

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 133 88

INCREASE IN CASH AND CASH EQUIVALENTS 212 599

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,212 1,613

CASH AND CASH EQUIVALENTS AT END OF YEAR 2,424 2,212

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (EXCLUDING MINORITY INTERESTS)

NUMBER OF SHARES AMOUNTS IN MILLIONS OF FRENCH FRANCS

ISSUED EXCLUDING CAPITAL CAPITAL RETAINED TRANSLATION TREASURY SHAREHOLDERS’ EQUITY

TREASURY STOCK STOCK SURPLUS EARNINGS ADJUSTMENTS STOCK ATTRIBUTABLE TO THE GROUP

BALANCE AT DECEMBER 31, 1994 69,685,276 68,896,841 697 15,449 22,644 (3,345) (377) 35,068

CAPITAL STOCK ISSUES 1,610,447 1,610,447 16 1,098 1,114

CONVERSION OF DEBENTURES 73 73 -

NET INCOME FOR 1995 2,133 2,133

DIVIDENDS PAID (1,128) (1,128)

TRANSLATION ADJUSTMENTS (883) (883)

CHANGE IN TREASURY STOCK (60,617) (56) (56)

GAIN ON DISPOSAL OF TREASURY STOCK 6 6


CAPITAL STOCK ISSUES 1,343,321 1,343,321 13 903 916

CONVERSION OF DEBENTURES 32 32 -

NET INCOME FOR 1996 3,382 3,382

DIVIDENDS PAID (1,223) (1,223)

TRANSLATION ADJUSTMENTS 1,242 1,242

CHANGE IN TREASURY STOCK (262,482) (188) (188)



44


Report of independent accountants

To the shareholders of GROUPE DANONE

We have audited the accompanying consolidated balance sheets of GROUPE DANONE and its subsidiaries (together, the “Group”) as of December 31, 1996 and 1995and the related consolidated statements of income, of cash flows, and of changes in shareholders’ equity for the years then ended.These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based onour audits.We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence sup-porting the amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the consolidated financial statements audited by us present fairly, in all material respects, the financial position of the DANONE Group as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with the accounting principles described in Note 1.

March 17, 1997

The Statutory Auditors

MAZARS & GUERARD

D. Batude Y. Robin P. Seurat

NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS

NOTE 1 - Summary of significant accounting policies

A. BASIS OF CONSOLIDATION

The consolidated financial statements of GROUPE DANONE (the “Company”)and subsidiaries (together, the “Group”) have been prepared in accordancewith current French accounting principles. These principles do not significantlydiffer from the valuation methods prescribed by accounting principles gener-ally accepted in the United States of America, which the Group uses as a refer-ence in view of the international nature of its activities, with the exception thatbrands are not amortized.Had accounting principles generally accepted in the United States of Americabeen fully applied, net income for 1996 would have been FF289 million lower(1995: FF259 million), and would have then amounted to FF3,093 million atDecember 31, 1996 (FF1,874 million at December 31, 1995).All material subsidiaries in which the Group holds, directly or indirectly, acontrolling interest are consolidated by including all assets, liabilities andincome statement items of the related subsidiaries after elimination of inter-company transactions and results. Shareholders’ equity excludes minorityinterests in consolidated companies, which are presented as a separate captionin the consolidated balance sheet.Material affiliated companies in which the Group exercises, directly or indirect-ly, significant influence, are included in the consolidation using the equitymethod of accounting. Under the equity method, the Group recognizes asincome its proportionate share of the investee’s net income resulting in anincrease to the equity investments and reduces such investment by the amountof dividends received.In 1996, of the 156 companies included in the consolidation (1995: 141), 142 arefully consolidated (1995: 130) and 14 accounted for under the equity method(1995: 11). A list of subsidiary and equity investee companies included in the

consolidation at December 31, 1996, and of newly consolidated and de-consolidated companies, is shown in Note 27. For companies acquired (or disposed of) during the year, only results for theperiod subsequent to the date of acquisition (or prior to the date of disposal)are included in the consolidated statement of income.All significant intercompany accounts and transactions (including dividends)are eliminated in consolidation.

B. FOREIGN CURRENCY TRANSLATION

Transactions denominated in foreign currencies

Accounts receivable and payable denominated in foreign currencies are gener-ally recorded at the year-end exchange rate. Foreign exchange gains and losses resulting from the remeasurement of accounts receivable and payablestated in foreign currencies and from settlement of such balances during theyear are recognized in the income statement under “Other income andexpense”, except those arising from intercompany transactions of a long-terminvestment nature which are shown as a separate component of retained earn-ings under “Translation adjustments”.Translation of financial statements of foreign operations

General:

• balance sheet items are translated into French francs at the official year-endexchange rate

• income statement items are translated at the average exchange rate for theyear for each currency

• exchange differences arising from the translation of the accounts of foreigncompanies into French francs are included in retained earnings under the head-ing “Translation adjustments” until the related foreign investments are sold orliquidated.Where the functional currency is not the local currency (highly inflationarycountries, or companies with the French franc as functional currency), thetranslation of the financial statements of such companies differs from that de-scribed above in the following respects:

• in the balance sheet: capital and intangible assets, long-term investments andshareholders’ equity are translated at the appropriate historical exchange rates

45


in the statement of income: depreciation and amortization, allowances forimpairment of long-term investments, and capital gains and losses are trans-lated at the appropriate historical exchange rates.

C. INTANGIBLE ASSETS

Goodwill

The excess of the acquisition cost of a subsidiary over the Group’s share in theacquired company’s net assets at the date of acquisition is allocated to the appro-priate balance sheet items based on the fair value of the assets acquired, includingbrands when relevant, and the liabilities assumed.The remaining unallocated amount is recorded as goodwill on the balance sheet.Goodwill is amortized over a period not exceeding forty years on a basis whichtakes into consideration, as fairly as possible, the assumptions, objectives andprospects existing when the acquisition was made. Management periodically eval-uates whether changes have occurred that would require revision of the estimateduseful lives of the assigned goodwill or would result in an impairment. In makingsuch an evaluation, management estimates the expected future undiscounted cashflows of the business to which the goodwill relates.

Brands and other intangible assets

The brands which have been separately identified are only premium brands,with a value that is substantial and considered to be of a long-term nature, sus-tained by advertising expenses.The valuation of these brands is determined with the assistance of specializedconsultants, taking into account various factors including brand recognitionand earnings contribution. These brands, which are legally protected, are notamortized. In the event that the recorded value of a brand becomes perma-nently impaired, an allowance would be charged to income.Purchased goodwill (“fonds de commerce”), licenses, patents and leaseholdrights are recorded at cost. They are amortized on a straight-line basis overtheir estimated useful lives, not exceeding forty years.

D. PROPERTY, PLANT AND EQUIPMENT

Land, buildings, plant and equipment are recorded at historical cost. Depreciationis charged on a straight-line basis over estimated useful lives as follows:

• rental property: 50 years

• buildings: 15 to 40 years

• machinery and equipment: 8 to 15 years

• other: 3 to 10 years.Significant acquisitions under capital leases are treated as installment pur-chases; they are capitalized on the basis of the discounted value of future leasepayments and depreciated over their estimated useful lives.Interest on funds borrowed in order to finance capital investment programsprior to their completion is treated as a component of the cost of the relatedassets.Consigned containers are recorded at cost. Depreciation is provided on astraight-line basis, based on available statistics for each company, over theshortest of the following estimated useful lives:

• the physical useful life, taking into account the internal and external breakagerates, and wear and tear;

• the commercial useful life, taking into account planned or likely modificationsto containers.Changes in consignment rates (defined as the refundable rate per container)are recorded through an adjustment to the liability for deposits received forcontainers on consignment offset by an adjustment to the carrying value ofconsigned containers. Any loss arising on changes in consignment rates ischarged to income over the life of containers involved.

E. LONG-TERM INVESTMENTS

Long-term investments represent shares held in non-consolidated companies.They are carried at cost (which includes acquisition costs, net of tax), and afterdeduction of appropriate provisions. Dividends are recorded as income whenreceived.

F. INVENTORIES

Inventories are stated at the lower of cost or market value. Cost is primarilydetermined using the weighted average method.

G. MARKETABLE SECURITIES

Marketable securities are carried at the lower of cost or market value. At theend of 1996 and 1995, the cost approximates the market value.

H. CASH AND CASH EQUIVALENTS

Cash equivalents consist of highly liquid investments, debt instruments andtime deposits with a maturity of three months or less at date of purchase. Cashequivalents are carried at cost which approximates the market value.

I. TREASURY STOCK

GROUPE DANONE’s capital stock held by consolidated Group companies isshown as a reduction of total shareholders’ equity under “Treasury stock”, athistorical cost.

J. GRANTS AND SUBSIDIES

Capital investment grants are included in the balance sheet under “Provisionsand long-term liabilities”. They are released to income (as “Other income”) ona straight-line method over the estimated useful lives of the related fixedassets. Other grants and subsidies are included in “Other income” in the yearin which the Group becomes entitled to receive them.

K. DEFERRED INCOME TAXES

Deferred income taxes are recognized for all differences between the tax basisof assets and liabilities and their carrying values for financial reporting pur-poses, except those differences related to:

• goodwill

• brand names, because these assets, although identifiable, cannot be soldseparately

• unremitted earnings of equity investees, because management believes thattheir taxation would not be significant at Group level.Provision is made for irrecoverable withholding taxes on foreseen distributionsby consolidated companies. Tax credits available to certain consolidated com-panies on foreseen distributions are also taken into account. Tax rates appli-cable to future periods are used to calculate year-end deferred income taxes.Deferred tax assets are reduced by a valuation allowance when it is estimatedthat it is more likely than not that such benefit will not be realized.

L. RETIREMENT INDEMNITIES, PENSION COSTS AND POST-RETIREMENT

HEALTHCARE BENEFITS

The Group’s projected benefit obligations relating to defined benefit pensionand retirement indemnity schemes are calculated using actuarial assumptionswhich take into account the economic situation of each country. These obliga-tions are covered either by plan assets to which the Group contributes or byprovisions recorded in the balance sheet over the period the rights are acquired.The Group’s obligations relating to post retirement benefits are recognizedover the period the benefits are earned. Accrued obligations are based onactuarial valuations which take into account assumptions regarding mortalityand future healthcare cost trends.

M. FINANCIAL INSTRUMENTS

The Group uses derivative financial instruments, mainly through specializedsubsidiaries, for the purpose of hedging currency and interest rate exposureswhich exist as part of ongoing business operation. As a policy, the Group doesnot engage in speculative or leveraged transactions, nor does the Group holdor issue financial instruments for trading purposes.The Group enters into interest rate swap agreements to manage its interestrate exposure. Any interest rate differential is recognized as an adjustment tointerest expense over the term of the related underlying debt.With respect to exchange rate exposure which relates to operating activities,the Group enters into forward exchange contracts and options; gains andlosses resulting from these instruments are recognized over the same period as the underlying hedged transactions.Financial instruments that do not meet accounting criteria qualifying them as hedges are recorded at fair market value, and changes in fair value arereflected in the income statement.

N. NET SALES

Net sales are stated net of discounts, except for one-off promotional discountswhich are treated as selling expenses.

O. ADVERTISING EXPENSES

Advertising costs are charged to expense as incurred.

P. RESEARCH AND DEVELOPMENT

Research and development costs are charged to expense as incurred.

Q. NON-RECURRING ITEMS

Non-recurring income and expense comprise material items which because oftheir unusual or non-recurring nature cannot be considered as inherent to theoperating activities of the Group, such as capital gains and losses on disposals ofcompanies, restructuring costs or exceptional write-downs of intangible assets.

•

46


R. EARNINGS PER SHARE

“Earnings per share” is based on the weighted average number of shares out-standing during the year after deducting the Group’s interest in treasury stockheld by consolidated subsidiaries.“Fully diluted earnings per share” is based on the average number of sharesoutstanding after conversion of all common stock equivalents and convertibledebentures and taking into account the related theoretical reduction in interestcharges.

S. RECLASSIFICATION OF FINANCIAL STATEMENTS

Certain amounts in the 1995 accompanying financial statements have beenreclassified from previously issued financial statements to conform to the 1996presentation.

NOTE 2 - Non-recurring items

During 1995, the Group carried out a Europe-wide productivity review, by coun-try and by market, related to streamlining initiatives. As a result of this review,a non-recurring charge of FF1,800 million was recorded. This charge coveredvoluntary early retirement initiatives, redundancy and other benefits paymentsto some employees, allowances needed to write down factories and plants tomarket value, and ancillary costs.After minority interests and taxes, this non-recurring charge reduced netincome by FF997 million, and fully diluted earnings per share by FF12.74.

NOTE 3 - Investments in subsidiaries and affiliatedcompanies

In 1996, the main investments in subsidiaries and affiliated companies com-prise:

• the acquisitions of Aguas Minerales (mineral water in Argentina), Haomen,Wahaha and of Wuhan Dongxihu (respectively beer, dairy beverages and beer)in the People’s Republic of China

• the acquisition of non-controlling interests in Aymoré (biscuits in Brazil),Clover (fresh dairy products in South Africa), and Strauss (fresh dairy productsin Israel)

• additional interests in Galbani, San Miguel, Panzalim, Alken-Maes, BE International Foods, Bonafont and in beer and other beverage distribution companies.In 1995, major investments included the acquisitions of Jiangmen DanoneBiscuits (People’s Republic of China), Danone SA (Argentina), and Bonafont(Mexico), and the additional interests in Galbani, Star, Starlux, VereenigdeGlasfabrieken, Cokoládovny, San Miguel, LPC, BE International Foods, Best andPapadopoulos.

NOTE 4 - Proforma financial data

The comparison of 1996 and 1995 results is affected by:

• changes in companies included in the consolidation- first consolidation from January 1, 1996 of Danone S.A. (Argentina), AguasMinerales, Haomen, Wahaha, Jiangmen Danone Biscuits, Papadopoulos and freshdairy product subsidiaries in Central Europe (Poland, Bulgaria, Czech Republicand Hungary)- consolidation for the first year of the following equity affiliates: Aymoré, Clover,Bolshevik and Delta Dairy- increase in the Group’s interest in Galbani, San Miguel, Alken-Maes and BEInternational Foods- various divestitures (HP Foods’ canning business, VMC’s glassware activity, andVillecomtal’s milk production)

• exchange-rate fluctuations

• a significant non-recurring restructuring charge in 1995 (please refer to Note 2).

The 1995 unaudited proforma figures given below are presented on the basis ofthe same Group structure and exchange rates as for 1996. They are thereforecomparable with the 1996 figures, but not necessarily indicative of actual results:

PRO FORMA (ALL AMOUNTS IN MILLIONS OF FRENCH FRANCS) 1996 1995

NET SALES 83,940 81,776

OPERATING INCOME 7,478 7,244

NET INCOME BEFORE NON-RECURRING ITEMS 3,382 3,153

FULLY DILUTED EARNINGS PER SHARE (IN FRENCH FRANCS) 46.33 43.99

NOTE 5 - Property, plant and equipment

(ALL AMOUNTS IN MILLIONS OF FRENCH FRANCS) 1996 1995

LAND 1,766 1,556

BUILDINGS 13,410 12,394

MACHINERY AND EQUIPMENT 34,362 31,637

CONSIGNED CONTAINERS 2,197 2,078

VEHICLES, OFFICE FURNITURE AND OTHER 3,061 2,765

CAPITAL ASSETS IN PROGRESS 1,807 1,591

TOTAL 56,603 52,021

LESS ACCUMULATED DEPRECIATION (32,398) (30,021)

NET PROPERTY, PLANT & EQUIPMENT 24,205 22,000

NOTE 6 - Intangible assets


GOODWILL 26,536 21,838

BRAND NAMES 12,030 11,491

OTHER 3,538 3,379

TOTAL GROSS INTANGIBLE ASSETS 42,104 36,708

LESS ACCUMULATED AMORTIZATION: GOODWILL (3,726) (3,187)

OTHER INTANGIBLE

ASSETS (2,215) (2,168)

ACCUMULATED AMORTIZATION (5,941) (5,355)

NET INTANGIBLE ASSETS 36,163 31,353

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Goodwill


NET BOOK VALUE AT JANUARY 1 18,651 17,541

ADDITIONS DURING THE YEAR 4,742 1,623

AMORTIZATION (583) (513)

NET BOOK VALUE AT DECEMBER 31 22,810 18,651

Increases during the year mainly result from newly consolidated companies(refer to Note 4).The current year amortization charge of FF583 million is recorded under theheading “Other income and expense” as regards FF513 million (FF466 millionin 1995) for fully consolidated companies and under “Equity in net earnings ofaffiliated companies” as regards FF70 million (FF47 million in 1995) for compa-nies accounted for under the equity method.Goodwill in the amount of FF2,524 million and FF 1,722 million at the end of1996 and 1995, respectively, related to equity investees.

Brand names

The variation in brand names mainly results from the effect of exchange rates.

NOTE 7- Long-term investments in non-consolidatedcompanies


ACQUIRED PREVIOUS YEAR-END, AND CONSOLIDATED

AT THE BEGINNING OF SUBSEQUENT YEAR 771 1,866

SUBSIDIARIES (MORE THAN 50% OWNED) 1,184 822

AFFILIATES (20% TO 50% OWNED) 164 385

OTHER INVESTMENTS (LESS THAN 20% OWNED) 1,159 1,007

NET LONG-TERM INVESTMENTS 3,278 4,080

Excluding the investments in subsidiaries or affiliates acquired near 1996 year-end and consolidated at the beginning of 1997 (Wuhan Dongxihu and Strauss),net long-term investments in non-consolidated subsidiaries and affiliatesmainly comprise investments in companies that are not consolidated due totheir size, in particular, beer and other beverage distribution companies.

NOTE 8 - Equity in affiliated companies


NET BOOK VALUE AT JANUARY 1 2,009 1,988

NEW AFFILIATED COMPANIES 695 9

NET EARNINGS 158 102

DIVIDENDS PAID (155) (138)

OTHER (50) 48

NET BOOK VALUE AT DECEMBER 31 2,657 2,009

Other changes result from movements in exchange rates, and in the companiesincluded in the consolidation (refer to Note 4).Significant information for companies dealt with under the equity method is asfollows (figures are for 100% of the companies involved):


NET SALES:

• WESTERN EUROPE 9,540 9,136

• INTERNATIONAL 5,890 2,046

NET INCOME 767 537

SHAREHOLDERS’ EQUITY 9,762 7,341

NOTE 9- Inventories


GOODS PURCHASED FOR RESALE 594 515

RAW MATERIALS AND SUPPLIES 2,231 2,233

SEMI-FINISHED GOODS AND WORK IN PROCESS 618 573

FINISHED GOODS 3,381 3,445

NON-RETURNABLE CONTAINERS 383 354

LESS ALLOWANCES (267) (275)

NET INVENTORIES 6,940 6,845

NOTE 10 - Trade accounts and notes receivable


TRADE ACCOUNTS RECEIVABLE 14,360 13,561

LESS ALLOWANCE FOR DOUBTFUL

RECEIVABLE (667) (522)

NET TRADE RECEIVABLE 13,693 13,039

OF WHICH UNMATURED DISCOUNTED BILLS 30 49

NOTE 11 - Marketable securitiesMarketable securities mainly consist of shares in mutual funds with a portfoliomade up as follows:

1996 1995

SHORT-TERM DEPOSITS AND OTHER CASH EQUIVALENTS 70% 79%

GOVERNMENT BONDS AND BORROWINGS (WITH MATURITY BEYOND THREE MONTHS) 30% 21%

NOTE 12- Increases in capital stock and capital surplus and retained earnings


DIVIDENDS CONVERTED INTO THE COMPANY’S SHARES 828 829

CONVERSION OF DEBENTURES AND OTHER CHANGES 88 285

TOTAL 916 1,114

Due to the effect of consolidation adjustments to the financial statements ofconsolidated companies and of the laws in force in the different countrieswhere the Company operates, the amount legally distributable by each sub-sidiary may be different from the amount of its reported retained earnings.In accordance with French law, dividends cannot exceed the total of the profitof the year and distributable earnings. As of December 31, 1996, accumulateddistributable earnings amount to FF3,443 million.

NOTE 13 - Stock options

Under the Company’s stock option plans, officers and other employees may begranted by the Board of Directors options to subscribe to newly issued sharesof the Company’s common stock. Stock options are granted at an exercise priceno less than the minimum value authorized under French law and expire notlater than 6 years from the date of grant.The May 30, 1990, May 21, 1992 and May 11, 1995, Annual General Meetings ofShareholders authorized the Board of Directors to grant stock options, during a period of three years and up to a limit of 1 % of the share capital of GROUPEDANONE.

48


The December 31, 1996 active stock option plans are summarized below:

YEAR OF ISSUE RANGE OF SUBSCRIPTION PRICE OUTSTANDING AND EXERCISABLE OF PLAN (IN FRENCH FRANCS) OPTIONS AT DECEMBER 31, 1996

1992 781-801 300 105

1993 703-743 196 950

1994 646-768 165 000

1995 600-779 414 580

1996 650-723 373 500

TOTAL 1,450,135

The following table summarizes transactions during 1996 and 1995, includingbalances from previous plans:

(NUMBER OF SHARES) 1996 1995

OPTIONS EXERCISABLE AT JANUARY 1 1,142,868 1,086,933

OPTIONS GRANTED 373,500 437,500

OPTIONS EXERCISED (18,220) (298,534)

OPTIONS EXPIRED NON EXERCISED (48,013) (83,031)

NUMBER OF OPTIONS EXERCISABLE AT DECEMBER 31 1,450,135 1,142,868

NOTE 14 - Convertible bonds

Convertible bonds represent:

• the FF3,306 million ten-year debt issued by the Company in January 1990.These bonds bear interest at an annual rate of 6.6% and may be converted atany time, at the rate of 1.1 ordinary share per bond

• the FF4,000 million eight-year debt issued by the Company in October 1993.These bonds were issued at their principal amount of FF1,015 each. They bearinterest at an annual rate of 3% and offer a yield to maturity on the issue dateof 5.25%, taking into account a 2.25% redemption premium. This premium,which is charged to income on a straight-line basis over the life of the debt, willbe paid only if bonds are not converted. The bonds mature on January 1, 2002,subject to the option available to the Group to redeem the bonds early if theshare price passes certain thresholds. The bonds may be converted at any time,at the rate of one ordinary share per bond.

NOTE 15 - Long-term debt

CLASSIFICATION BY NATURE (IN MILLIONS OF FRENCH FRANCS) 1996 1995

DEBENTURES (AVERAGE YEAR-END

INTEREST RATE: 7.3% - 1995: 8.6%) 6,652 4,554

BANK LOANS, OTHER DEBT AND EMPLOYEE PROFIT-SHARING

DEBT (AVERAGE YEAR-END INTEREST RATE: 4% - 1995: 5%) 11,074 8,283

LESS SHORT-TERM PORTION (1,496) (1,962)

TOTAL 16,230 10,875

CLASSIFICATION BY YEAR OF MATURITY AND BY CURRENCY (IN MILLIONS OF FRENCH FRANCS)

1996 1995

YEAR OF MATURITY AMOUNT YEAR OF MATURITY AMOUNT

1998 448 1997 1,504

1999 2,152 1998 373

2000 523 1999 1,841

2001 432 2000 498

2002-2006 529 2001-2005 633

AFTER 2006 12,057 AFTER 2005 5,806

NO FIXED MATURITY 89 NO FIXED MATURITY 220

TOTAL 16,230 TOTAL 10,875

CURRENCY

FRENCH FRANCS 16,012 10,439

ITALIAN LIRA 72 90

SINGAPORE DOLLAR 66 -

US DOLLAR 22 29

BELGIAN FRANC 20 21

SPANISH PESETA 15 61

POUND STERLING 6 136

DUTCH GUILDER 4 26

IRISH POUND - 21

OTHER 13 52

TOTAL 16,230 TOTAL 10,875

As part of the long-term commitments from lenders, the Group utilized theequivalent of FF8,281 million at December 31, 1996 (FF5,803 million atDecember 31, 1995). This utilization is classified as long-term debt.At December 31, 1996, the Group held commitments from banks and otherfinancial institutions for approximately FF11,510 million (FF16,308 million atDecember 31, 1995) in connection with medium-term lines of credit over andabove the debt recorded in the balance sheet at that date.

NOTE 16 - Retirement indemnities, pensions andpost-retirement healthcare benefits

The Group contributes to retirement benefit schemes in conformity with thelaws and usual practices of countries where the Group operates. As a result ofcontributions paid under such schemes to private or state sponsored pensionfunds, the companies have no actuarial liability.The Group is also responsible for supplementary retirement schemes, contrac-tual commitments for termination indemnities and post-retirement healthcare.The related actuarial commitments are taken into account either through thepayment of contributions to externally managed funds, or through provisions.

French companies

The commitments of French companies are calculated in conformity with SFAS 87,based on the following key actuarial assumptions:

• personnel turnover and mortality

• retirement age: between 60 and 65 years, depending upon each employee’scategory

• discount rate applied: 5%

• salary growth rate: between 3% and 5% depending on the age and categoryof each employee.

Non-French companies

The present value of non-French companies’ obligations is determined on thebasis of recent actuarial valuations, using actuarial assumptions which reflectthe legal, economic and monetary circumstances in each country.

49


The following table reconciles the funded status of the companies’ plans withthe provision recorded in the consolidated balance sheet at December 31, 1996.


FRANCE OTHER TOTAL TOTAL

COUNTRIES

PROJECTED BENEFIT

OBLIGATION 1,653 3,689 5,342 4,839

FAIR VALUE OF PLAN ASSETS 353 2,140 2,493 2,120

PROJECTED BENEFIT OBLIGATION

IN EXCESS OF PLAN ASSETS 1,300 1,549 2,849 2,719

ACTUARIAL GAINS AND (LOSSES) 255 (99) 156 126

ACCRUED PENSION COST RECOGNIZED

IN THE FINANCIAL STATEMENTS 1,045 1,648 2,693 2,593

The net periodic pension cost for 1996, which amounts to FF107 million, includesan amortization charge of approximately FF28 million in respect of the unrecog-nized net losses.

NOTE 17- Provisions and long-term liabilities


RESTRUCTURING 1,526 2,408

LONG-TERM ACCRUED LIABILITIES 1,541 1,260

CONSIGNED CONTAINERS 1,005 969

NET DEFERRED TAX LIABILITY - LONG TERM 362 80

CAPITAL INVESTMENT GRANTS 179 126

TOTAL 4,613 4,843

Restructuring

Movements in the provision for restructuring are as follows:


BALANCE AS AT JANUARY 1 2,408 903

CHARGE - 1,800

UTILIZATION (978) (685)

AMOUNTS RECORDED IN CONNECTION WITH PURCHASE

ACCOUNTING FOR ACQUIRED BUSINESSES 53 414

TRANSLATION DIFFERENCE 43 (24)

BALANCE AS AT DECEMBER 31 1,526 2,408

Long-term accrued liabilities

Long-term accrued liabilities mainly include:

• the claims reserves established by Danone Ré, the Group’s reinsurance company

• the 2.25% redemption premium accrued over the eight-year life of the FF4,000 million convertible bonds issued in October 1993 (also refer to Note 14)

• various provisions estimated necessary to cover the risks and charges incur-red in the normal course of business.

NOTE 18 - Currency, interest-rate and counterpartyrisk exposure

The Group uses financial instruments to manage exposure to currency and inter-est rate risks incurred in the normal course of business. However, it is Grouppolicy not to trade on financial markets for purposes other than hedging.

Interest-rate exposure

The financing of all Group subsidiaries is centralized and managed by theTreasury department, which uses financial instruments to reduce the Group’snet interest-rate exposure. The main instruments used are interest-rate swaps,negotiated with major financial institutions.

The notional amounts and related maturity date of these instruments are indi-cated below:


INTEREST RATE SWAPS, WITH A REMAINING TERM AT DECEMBER 31:

• BELOW 1 YEAR 3,325 4,443

• BETWEEN ONE AND FIVE YEARS 5,105 3,715

• ABOVE FIVE YEARS 1,300 1,800

INTEREST RATE CAPS AND FLOORS:

• “TUNNEL” 5,050 -

• OPTIONS AND CAPS PURCHASED 1,900 2,300

FUTURES - 7,725

SWAPTIONS - 200

The accounting treatment used for these instruments is disclosed in Note 1.M.Taking into account these hedging instruments, 42% (37% at December 31, 1995)of the Group’s net consolidated debt, amounting to around FF21.6 billion (including convertible bonds) is at fixed interest rates at December 31, 1996.

At December 31, 1996, the combined fair value of the Group’s net consolidateddebt and these hedging instruments is FF550 million below the book value ofthe debt.

Currency exposure

The Group’s operations around the world are carried out by subsidiaries whichtrade primarily in their home country. Consequently, the Group’s exposure tocurrency risks in its operating activities is low. The Group’s Treasury depart-ment uses financial instruments to reduce net exposure to currency risk, after netting the currency positions arising from the combined firm and budget-ed operating transactions of all subsidiaries. The main instruments used areforward exchange contracts and purchases of currency options, entered intowith major financial institutions.The contractual amounts of the Group’s forward and options currency amountsare summarized below. Foreign currency amounts are translated at currentrates at the reporting date:


FORWARD (PURCHASES) / SALES:

US DOLLAR 535 95

POUND STERLING 511 349

ITALIAN LIRA (729) 232

BELGIAN FRANC (1,737) (1,841)

SWISS FRANC 377 436

OTHER 223 207

TOTAL FORWARDS: (820) (522)

INCLUDING: FORWARD PURCHASES (5,441) (4,960)

FORWARD SALES 4,621 4,438

CURRENCY OPTIONS PURCHASED (260) (232)

TOTAL CURRENCY HEDGING INSTRUMENTS (1,080) (754)

The accounting treatment used for these instruments is described in Note 1.M.

Translation exposure

The Group’s international expansion is such that movements in exchange rateshave an accounting impact on the translation into French francs of approxi-mately 55% of net sales and 50% of operating income generated by non-Frenchsubsidiaries. The impact on the Group’s net sales of a 1% change in the Frenchfranc against all other currencies would be in the region of FF500 million.

50


Concentration of counterparty risk

The Group considers that its exposure to concentration of credit risk is limited,due to the large number of customers located in diverse geographic areas, andthat there is no pronounced dependence of the Group on one single customer,one supplier or any supplying agreement.

NOTE 19 - Personnel and remuneration

Group personnel costs (including payroll taxes and related charges) for 1996amounted to FF14,474 million (1995: FF13,990 million), of which FF29 million(1995: FF28 million) represent remuneration paid to executive management ofthe Group.Group personnel at December 31, 1996 and 1995 comprised the following:


FRANCE 25,592 26,518

REST OF WESTERN EUROPE 25,295 25,992

INTERNATIONAL 30,692 21,313

TOTAL 81,579 73,823

On a comparable basis, Group personnel would have been 81,579 and 84,049respectively as at December 31, 1996 and 1995.

NOTE 20 - Depreciation and amortization


CAPITAL ASSETS (3,579) (3,435)

INTANGIBLE ASSETS (352) (364)

GOODWILL (513) (466)

TOTAL (4,444) (4,265)

The depreciation and amortization charges for capital and intangible assetshave been allocated to the various lines of the consolidated statements ofincome by function. The amortization charge for goodwill included in this tablerelates only to goodwill of fully consolidated companies.

NOTE 21- Other income and (expense)


EMPLOYEE PROFIT-SHARING (797) (855)

FOREIGN EXCHANGE GAINS AND LOSSES 11 (27)

GOODWILL AMORTIZATION (513) (466)

OTHER (72) (75)

TOTAL (1,371) (1,423)

NOTE 22 - Interest expense - net


INTEREST EXPENSE (1,772) (1,725)

INTEREST INCOME 549 537

EXCHANGE GAIN OR LOSS (22) (66)

TOTAL (1,245) (1,254)

Interest paid amounts to respectively FF1,155 million and FF1,164 million forthe years ended December 31, 1996 and 1995.

NOTE 23 - Income taxesIncome tax expense

Income tax expense consists in:


CURRENT INCOME TAXES (2,299) (2,142)

DEFERRED INCOME TAXES, NET INCOME / (EXPENSE) (96) 646

TOTAL (2,395) (1,496)

GROUPE DANONE files, for most of its French subsidiaries in which the Groupowns, directly or indirectly, more than 95% of the share capital, consolidated taxreturns which, to a certain extent and under certain conditions, enable the offsetof taxable profit against tax losses. The subsidiaries which elected to participatein the French Group tax consolidation have signed a tax-sharing agreement withthe Company, in conformity with the regulations formulated by the French taxauthorities.Current income taxes represent the amount of taxes for the year, paid orpayable in a short-term period to the tax authorities. These amounts are com-puted according to the rules and rates applicable in the countries where theGroup operates, taking into account the consolidated tax return applicable tothe majority of the French subsidiaries in the Group.The Group made income tax payments of approximately FF2,475 million andFF2,527 million in 1996 and 1995, respectively.

Analysis of income tax expense

The effective tax rate resulting is 38.4% in 1996, compared with 37.7% in 1995. Itdiffers from the French statutory tax rate for the following reasons:

(PERCENTAGES OF INCOME BEFORE TAX AND MINORITY INTERESTS) 1996 1995

STATUTORY TAX RATE IN FRANCE 36.66 36.66

EFFECT OF FOREIGN TAX RATE DIFFERENTIAL 1.42 0.47

EFFECT OF PERMANENT AND TIMING DIFFERENCES:

• AMORTIZATION OF GOODWILL AND BRAND NAMES 1.74 2.28

• OTHER DIFFERENCES (1.40) (1.67)

EFFECTIVE INCOME TAX RATE 38.42 37.74

Deferred income taxes

Deferred income taxes mainly arise from the differences between the book andtax basis of assets and liabilities, as explained in Note 1.K. The significant compo-nents of deferred tax assets and liabilities on the balance sheet were as follows:


DEFERRED TAX ASSETS - ON TIMING DIFFERENCES:

• RETIREMENT BENEFITS 385 412

• RESTRUCTURING PROVISIONS 271 593

• OTHER TIMING DIFFERENCES 5 30

DEFERRED TAX ASSETS ON TAX LOSS CARRY FORWARDS:

• GROSS AMOUNT 266 429

• LESS VALUATION ALLOWANCE FOR CARRY FORWARDS (186) (254)

TOTAL DEFERRED TAX ASSETS - LONG TERM 741 1,210

DEFERRED TAX LIABILITIES - ON TIMING DIFFERENCES:

• DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT (1,044) (1,230)

• CAPITALIZED INTERESTS (59) (60)

• TOTAL DEFERRED TAX LIABILITIES - LONG TERM (1,103) (1,290)

NET LONG TERM DEFERRED TAX - LIABILITY (362) (80)

Net short-term deferred tax assets amounting to FF191 million as of December 31, 1996 (net short-term liabilities of FF24 million as of December 31, 1995) are almost exclusively related to differences between statutory and taxable income of subsidiaries.

51


NOTE 25 - Financial information by division

(IN MILLIONS OF FRENCH FRANCS) 1996

DAIRY GROCERY BISCUITS BEER MINERAL CONTAINERS TOTAL INTER- TOTAL

PRODUCTS PRODUCTS-PASTA WATER EUROPE NATIONAL DIVISIONS

GROSS SALES 23,886 16,694 14,030 7,593 6,918 6,876 75,997 15,239 91,236

SALES WITHIN THE DIVISION (1,647) (859) (1,379) (45) (27) (598) (4,555) (240) (4,795)

NET DIVISIONAL SALES 22,239 15,835 12,651 7,548 6,891 6,278 71,442 14,999 86,441

SALES WITHIN THE GROUP (86) (355) (387) (108) (456) (1,018) (2,410) (91) (2,501)

NET SALES OUTSIDE THE GROUP 22,153 15,480 12,264 7,440 6,435 5,260 69,032 14,908 83,940

OPERATING INCOME 2,259 996 882 885 939 703 6,664 903 7,567

CAPITAL EXPENDITURES 755 485 602 617 447 506 3,412 1,035 4,447

CASH FLOW FROM OPERATIONS 2,404 1,023 1,039 1,193 1,124 859 7,642 1,005 8,647

TOTAL ASSETS 21,771 16,024 17,712 8,602 8,294 4,787 77,190 12,127 89,317

TOTAL DIVISIONS UNALLOCATED ITEMS TOTAL GROUP

OPERATING INCOME 7,567 (89) 7,478

CAPITAL EXPENDITURES 4,447 37 4,484

CASH FLOW FROM OPERATIONS 8,647 (696) 7,951

TOTAL ASSETS 89,317 11,554 100,871


DAIRY GROCERY BISCUITS BEER MINERAL CONTAINERS TOTAL INTER- TOTAL

PRODUCTS PRODUCTS-PASTA WATER EUROPE NATIONAL DIVISIONS

GROSS SALES 23,342 17,045 13,328 7,463 7,190 6,929 75,297 11,348 86,645

SALES WITHIN THE DIVISION (1,447) (1,025) (1,578) (40) (35) (573) (4,698) (69) (4,767)

NET DIVISIONAL SALES 21,895 16,020 11,750 7,423 7,155 6,356 70,599 11,279 81,878

SALES WITHIN THE GROUP (30) (339) (310) (128) (478) (1,087) (2,372) (56) (2,428)

NET SALES OUTSIDE THE GROUP 21,865 15,681 11,440 7,295 6,677 5,269 68,227 11,223 79,450

OPERATING INCOME 2,103 1,025 792 962 890 638 6,410 636 7,046

CAPITAL EXPENDITURES 964 481 444 601 507 424 3,421 656 4,077

CASH FLOW FROM OPERATIONS 2,275 1,135 1,028 1,321 1,073 809 7,641 653 8,294

TOTAL ASSETS 19,260 14,122 16,750 8,027 8,735 4,787 71,681 7,383 79,064

TOTAL DIVISIONS UNALLOCATED ITEMS TOTAL GROUP

OPERATING INCOME 7,046 (28) 7,018

CAPITAL EXPENDITURES 4,077 26 4,103

CASH FLOW FROM OPERATIONS 8,294 (870) 7,424

TOTAL ASSETS 79,064 14,104 93,168

Tax loss carry-forwards

At December 31, 1996, certain subsidiaries which are not member of the FrenchGroup tax consolidation had unrecognized tax loss carry-forwards of FF79 mil-lion.

NOTE 24 - Commitments and contingencies

Commitments relating to investments in subsidiaries

GROUPE DANONE will increase its direct shareholding in San Miguel toapproximately 70% in 1997, by way of one public offer for stocks scheduled forJune 1997. The Group has also entered into commitments to increase its inter-est in certain subsidiaries, and in particular to acquire the entire capital stock ofGalbani.The investments related to these commitments represent approximately FF2 billion.GROUPE DANONE has also entered into agreements to purchase interests heldby third-party shareholders in certain consolidated subsidiaries, should theseshareholders wish to sell their interests. In any event, the potential cost of pur-chasing these shares will be dependent upon the rate of return and the finan-

cial situation of the subsidiary in question. No material investment under theseagreements is planned for 1997.

Commitments backed by collateral given in respect of long-term debt

At December 31, 1996, long-term debt amounting to FF16 million was securedagainst collateral (December 31, 1995: FF89 million).

Non-cancelable leases

As at December 31, 1996, the Group had non-cancelable lease commitmentsamounting to FF664 million in respect of the years from 1997 through 2000, andof FF548 million in respect of subsequent years.Commitments received in respect of non-cancelable sub-leases amounted toFF3 million.

52


NOTE 26 - Activities of divisions by geographical area


FRANCE REST OF WESTERN TOTAL WESTERN INTERNATIONAL TOTAL

EUROPE EUROPE

TOTAL SALES BY GEOGRAPHICAL AREA OF ORIGIN 41,376 34,621 75,997 15,239 91,236

INTRA-GROUP SALES WITHIN GEOGRAPHICAL AREAS (3,228) (1,199) (4,427) (240) (4,667)

NET SALES BY GEOGRAPHICAL AREA OF ORIGIN 38,148 33,422 71,570 14,999 86,569

INTRA-GROUP SALES BETWEEN GEOGRAPHICAL AREAS (1,441) (1,097) (2,538) (91) (2,629)

NET SALES OUTSIDE THE GROUP 36,707 32,325 69,032 14,908 83,940

OPERATING INCOME 3,889 2,775 6,664 903 7,567

CAPITAL EXPENDITURES 2,006 1,406 3,412 1,035 4,447


TOTAL ASSETS 48,672 28,518 77,190 12,127 89,317


FRANCE REST OF WESTERN TOTAL WESTERN INTERNATIONAL TOTAL

EUROPE EUROPE

TOTAL SALES BY GEOGRAPHICAL AREA OF ORIGIN 41,938 33,359 75,297 11,348 86,645

INTRA-GROUP SALES WITHIN GEOGRAPHICAL AREAS (3,416) (1,158) (4,574) (64) (4,638)

NET SALES BY GEOGRAPHICAL AREA OF ORIGIN 38,522 32,201 70,723 11,284 82,007

INTRA-GROUP SALES BETWEEN GEOGRAPHICAL AREAS (1,491) (1,005) (2,496) (61) (2,557)

NET SALES OUTSIDE THE GROUP 37,031 31,196 68,227 11,223 79,450

OPERATING INCOME 3,939 2,471 6,410 636 7,046

CAPITAL EXPENDITURES 2,059 1,362 3,421 656 4,077

OPERATING CASH FLOW 4,953 2,688 7,641 653 8,294

TOTAL ASSETS 46,070 25,611 71,681 7,383 79,064

Exports by French companies of the Danone Group amounted to FF3,505 million in 1996, compared with FF3,735 million in 1995.

Companies consolidated for the first time in 1996

INTERNATIONAL OTHER

DANONE HUNGARY JINJADANONE POLANDDANONE SLOVAKIA BISCUITS

DANONE CZECH REPUBLIC BOLSHEVIKDANONE SERDIKA PAPADOPOULOSMILDESAYMORE DAIRY PRODUCTS

CLOVER DANONE UKDANNON WATER DELTA DAIRYDANONE ARGENTINADIB AUSTRALIAHAOMENJIANGMENAGUAS MINERALESWAHAHA

Companies no longer consolidated at December 31, 1996

DANPAL merged with DANONE Portugal

WILLIAM SAURIN merged with PANZANI and renamed PANZANI-WILLIAM SAURIN

AMORA and SEGMA LIEBIG MAILLE merged and renamed LIEBIG MAILLE AMORA

LU and BELIN merged and renamed BELIN LU BISCUITS FRANCE

BORMIOLI ROCCO Group’s interest reduced below 20%

NOTE 27 - Companies consolidated at December 31, 1996

53


Fully consolidated companies

COMPANY COUNTRY CONTROL GROUP’S

INTEREST

GROUPE DANONE SA FRANCE PARENT COMPANY

DAIRY PRODUCTS

DANONE FRANCE 100.00 100.00

LAITERIE DE VILLECOMTAL FRANCE 50.20 50.20

DANONE GERMANY 100.00 99.88

DANONE AUSTRIA 100.00 99.93

DANONE BELGIUM 100.00 100.00

DANONE NETHERLANDS 100.00 100.00

DANONE ITALY 100.00 99.77

GALBANI ITALY 90.00 90.00

DANONE SPAIN 55.72 55.72

ILTESA SPAIN 75.65 42.15

DANONE PORTUGAL 96.00 52.91

DANONE UK UK 100.00 100.00

GROCERY PRODUCTS - PASTA

PANZANI WILLIAM SAURIN FRANCE 100.00 100.00

SEMOULERIE DE BELLEVUE FRANCE 100.00 100.00

GENERALE TRAITEUR FRANCE 100.00 100.00

STOEFFLER FRANCE 100.00 100.00

DIEPAL FRANCE 100.00 100.00

NUTRIPHARM ELGI FRANCE 100.00 100.00

LIEBIG MAILLE AMORA FRANCE 100.00 100.00

COMALIM FRANCE 100.00 100.00

CONSERVERIE DU LANGUEDOC FRANCE 100.00 100.00

GORCY FRANCE 100.00 100.00

JULIEN MACK FRANCE 100.00 100.00

SOULIE RESTAURATION FRANCE 50.00 50.00

COFRALIM FRANCE 100.00 100.00

SADIFROID FRANCE 100.00 100.00

AGNESI ITALY 99.97 91.63

LIEBIG BENELUX BELGIUM 100.00 89.32

BIRKEL SONNEN BASSERMANN GERMANY 100.00 99.88

LA FAMILIA SPAIN 92.60 92.60

PYCASA SPAIN 100.00 100.00

HP FOODS UK 100.00 100.00

BE INTERNATIONAL FOODS UK 100.00 100.00

LEA & PERRINS USA 100.00 100.00


INTEREST

BISCUITS

BELIN LU BISCUITS FRANCE FRANCE 100.00 100.00

HEUDEBERT FRANCE 100.00 100.00

GENERALE BISCUIT GLICO FRANCE FRANCE 50.00 50.00

COMPAGNIE FINANCIERE BELIN FRANCE 100.00 100.00

SA DES BISCUITS BELIN FRANCE 100.00 100.00

VANDAMME PIE QUI CHANTE FRANCE 100.00 100.00

GENERAL BISCUITS BELGIË BELGIUM 99.55 99.55

GENERAL BISCUITS NEDERLAND NETHERLANDS 100.00 99.55

GENERAL BISCUITS GERMANY 100.00 100.00

GENERAL BISCUITS ÖSTERREICH AUSTRIA 100.00 100.00

GENERAL BISCUITS ESPAÑA SPAIN 100.00 100.00

SAIWA ITALY 100.00 100.00

NEWCO ITALY 100.00 100.00

JACOB’S BAKERY UK 100.00 100.00

W.&.R. JACOB IRELAND 100.00 100.00

PAPADOPOULOS GREECE 60.00 60.00

BEER

BRASSERIES KRONENBOURG FRANCE 100.00 100.00

SOFID (Sté de Financement

et de Développement) FRANCE 100.00 100.00

BRASSERIES ALKEN-MAES BELGIUM 99.64 99.64

SAN MIGUEL SPAIN 58.05 65.76

MINERAL WATER

SA DES EAUX MINERALES D’EVIAN FRANCE 100.00 100.00

SEAT (Sté d’Exploitation

d’Activités Touristiques) FRANCE 100.00 100.00

VOLVIC FRANCE 100.00 100.00

FONT VELLA SPAIN 94.26 77.26

AGUAS DE LANJARÓN SPAIN 95.00 78.00

ITALAQUAE ITALY 100.00 91.01

CONTAINERS

VERRERIES SOUCHON NEUVESEL FRANCE 100.00 100.00

VMC FRANCE 99.74 99.74

VEREENIGDE GLASFABRIEKEN NETHERLANDS 100.00 100.00

BSN VIDRIO ESPAÑA SPAIN 100.00 100.00

VERDOME FRANCE 100.00 100.00

54



INTEREST

INTERNATIONAL

DANNON COMPANY USA 100.00 89.32

LPC INDUSTRIAS ALIMENTICIAS BRAZIL 100.00 100.00

DANONE DE MEXICO MEXICO 100.00 100.00

DANONE Inc. CANADA 100.00 100.00

AQUATERRA CANADA 86.40 86.40

BAGLEY ARGENTINA 53.91 53.91

DANONE ARGENTINA 51.00 51.00

CAMPINEIRA BRAZIL 50.00 50.00

DANNON WATER USA 100.00 89.32

GBE USA USA 100.00 100.00

DANONE INTERNATIONAL BRANDS (DIB)

PARIS FRANCE 100.00 100.00

DIB WEST INDIES / GUIANA FRANCE 100.00 100.00

DIB ASIA-PACIFIC HONG KONG 100.00 100.00

DIB AUSTRALIA AUSTRALIA 100.00 100.00

DIB CANADA CANADA 100.00 100.00

DIB HUNGARY HUNGARY 100.00 100.00

DIB JAPAN JAPAN 100.00 100.00

DIB MEXICO MEXICO 100.00 100.00

DIB INDIAN OCEAN FRANCE 100.00 100.00

DIB PORTUGAL PORTUGAL 100.00 100.00

DIB SWEDEN SWEDEN 100.00 100.00

DISTRIMARCA SWITZERLAND 100.00 100.00

GBE CANADA CANADA 100.00 100.00

GRIFFIN’S FOODS NEW ZEALAND 100.00 84.50

BEST CORPORATION NEW ZEALAND 100.00 84.50

BRITANNIA INDUSTRIES INDIA 38.71 17.20

CONTINENTAL BISCUITS PAKISTAN 49.47 41.80

DANONE BRANDS SINGAPORE SINGAPORE 100.00 84.50

BRITANNIA BRANDS MALAYSIA MALAYSIA 100.00 84.50

AMOY HONG KONG 100.00 84.50

SHANGHAI DANONE BISCUITS FOODS CHINA 60.00 50.70

HAOMEN CHINA 70.00 59.15

JIANGMEN DANONE BISCUITS CHINA 68.00 57.46

AGUAS MINERALES ARGENTINA 50.00 50.00

WAHAHA CHINA 51.00 27.93

DANONE HUNGARY 100.00 100.00

DANONE POLAND 100.00 100.00

MILDES POLAND 99.94 99.94

DANONE SERDIKA BULGARIA 50.40 50.40

DANONE SLOVAKIA 100.00 92.33

DANONE CZECH REP. 92.33 92.33

OTHER

CIE GERVAIS DANONE FRANCE 100.00 100.00

GENERALE BISCUIT FRANCE 100.00 100.00

COFINDA FRANCE 100.00 100.00

DANONE FINANCE FRANCE 100.00 100.00


INTEREST

FINALIM 3 FRANCE 100.00 100.00

FINALIM 4 FRANCE 100.00 100.00

GAAP FRANCE 100.00 100.00

ALFABANQUE FRANCE 100.00 100.00

PANZALIM FRANCE 100.00 100.00

SETEC - SOBELPAR PORTUGAL 100.00 100.00

DANONE RE LUXEMBOURG 100.00 100.00

DANONE FINANCE BENELUX BELGIUM 100.00 93.83

COFIVE (COMPAGNIE FINANCIÈRE

ET VERRIÈRE) BELGIUM 100.00 99.96

MECANIVER BELGIUM 89.32 89.32

SELBA NETHERLANDS 100.00 100.00

SIFIT ITALY 100.00 98.21

SCIA ITALY 92.97 91.31

SOGEPA ITALY 99.68 99.68

DANONE HOLDINGS UK UK 100.00 100.00

DANONE HOLDING GERMANY 100.00 100.00

DANONE FOODS USA 100.00 89.32

ABI HOLDINGS UK 50.00 42.25

AB INTERNATIONAL UK 100.00 42.25

BRITANNIA BRANDS UK 100.00 84.5

BHPL SINGAPORE 73.28 73.28

DANONE ASIA SINGAPORE 96.47 84.50

JINJA CHINA 64.80 54.76

BRITANNIA BRANDS KUAN SINGAPORE 100.00 84.50

KUAN ENTERPRISES SINGAPORE 100.00 84.50

PEERLESS BRANDS SINGAPORE 100.00 84.50

BANNATYNE ENTERPRISES SINGAPORE 100.00 84.50

DOW BIGGIN ENTERPRISES SINGAPORE 100.00 84.50

NACUPA ENTERPRISES SINGAPORE 100.00 84.50

SPARGO ENTERPRISES SINGAPORE 100.00 84.50

VALLETORT ENTERPRISES SINGAPORE 100.00 84.50

Companies accounted for under the equity method

SYG FRANCE 50.00 50.00

DELTA DAIRY GREECE 20.00 20.00

FERICO FRANCE 50.00 50.00

SOCIETE FONCIERE ET COMMERCIALE

DU SILO DE LA MADRAGUE FRANCE 100.00 100.00

STAR ITALY 50.00 50.00

STARLUX SPAIN 50.00 50.00

BOLSHEVIK RUSSIA 86.60 86.60

COKOLÁDOVNY CZECH REP. 40.00 40.00

MAHOU SPAIN 33.34 33.34

PERONI ITALY 24.50 24.39

AYMORE BRAZIL 25.00 25.00

CALPIS AJINOMOTO DANONE JAPAN 25.00 25.00

CLOVER SOUTH AFRICA 36.26 36.26

FIMEPAR ITALY 20.00 18.39

55


Shares and ownership

Main shareholders

Main shareholders are:

% OF SHARES HELD, % OF VOTING

DIRECTLY OR INDIRECTLY RIGHTS HELD

CONCERT GAZ ET EAUX, EURAFRANCE,

SOPAGECO, LA FRANCE INSURANCE COMPANIES 5.77 9.41

CONCERT IFIL, SAINT-LOUIS 5.75 8.17

FINDIM (FOSSATI FAMILY) 4.82 7.08

UAP 3.68 4.62

Double voting rights are attached to fully paid-up shares registered in the samename for at least two years. At December 31, 1996, BLANRIM, SELBA HOLDING and DANONE S.A. (Spain),indirect subsidiaries of GROUPE DANONE, together held 1.59% of the company’s capital.

Restrictions to voting rights

Company by-laws limit the voting rights of individual shareholders at GeneralMeetings to 6% in the case of simple voting rights and 12% in that of doublevoting rights. These restrictions cease to apply in the event that a shareholder,acting alone or in concert, acquires more than two-thirds of the company’s capital by means of a cash or stock offer.

Authorization to buy and sell company shares on the stock market

As authorized by a resolution of the Annual General Meeting of Shareholders on May 7, 1996, your company acquired 249,503 of its own shares, with a nomi-nal value of FF10 each, for an average price of FF740.58 a share. Transactioncosts, including all taxes and levies, totaled FF725,369. At December 31, 1996,your company still held these shares.

Stock options

Information concerning stock options granted by the Board of Directors appears in Note 13 to the consolidated financial statements.

Share capital

Capital stock is represented by shares with a nominal value of FF10 each:

OUTSTANDING SHARES AT JANUARY 1, 1996 71,295,796

SHARES ISSUED DURING THE YEAR 1,343,353

OUTSTANDING SHARES

AT DECEMBER 31, 1996 72,639,149

Allocation of income and dividends

Amount of dividends

The total dividend has been set at FF1,234,865,533, representing a net dividendper share of FF17.00, to which may be added a tax credit (avoir fiscal) of FF8.50.As a result, allocation of earnings is as set out in the table below (third resolu-tion of the Annual General Meeting).

EARNINGS TO BE ALLOCATED (FRENCH FRANCS)

INCOME FOR THE YEAR 1,411,667,758

RETAINED EARNINGS 2,030,908,587

TOTAL 3,442,576,345

ALLOCATION

LEGAL RESERVE 1,343,353

DIVIDENDS 1,234,865,533

RETAINED EARNINGS 2,206,367,459

TOTAL 3,442,576,345

Payment of dividends

Shareholders will receive dividends in cash, under conditions set down in thethird resolution of the Annual General Meeting.

Dividends paid in the three preceding financial years

Dividends paid out for the three preceding financial years were as shown below.

(FRENCH FRANCS) 1993 1994 1995

DIVIDENDS PAID 1,052,291,931.00 1,114,964,416.00 1,140,732,736.00

DIVIDEND

PER SHARE 15.50 16.00 16.00

TAX CREDIT (TAX ALREADY PAID

TO THE FRENCH TREASURY) 7.75 8.00 8.00

TOTAL REMUNERATION PER SHARE 23.25 24.00 24.00

A portion of the dividend out of 1995 income was paid in the form of 1,201,505 shares issued at a price of FF689.00 per share, while the balance,amounting to FF339.5 million, was paid in cash.

Statutory auditors

Report of the statutory auditors on the financial statements of the Danone

Group’s parent company

The statutory auditors Mazars & Guérard and Befec-Price Waterhouse reportedon the statutory financial statements of the Danone Group’s parent companywithout qualification.

Special report of the statutory auditors on transactions subject to particular

provisions of the law

The statutory auditors made the usual legally required report on certain trans-actions between GROUPE DANONE and certain companies belonging to theDanone Group, all of which had been previously authorized by the Board ofDirectors (see resolution 1 of the Annual General Meeting).

DANONE GROUP’S PARENT COMPANY

IMPORTANTThe financial statements of GROUPE DANONE, the parent company of the Danone Group, provide only a partial view of the financial position of the Danone Group as a whole. This is described in the consolidated financial statements included in the present report. The information below thus represents no more than a summary of themost significant facts and figures drawn from GROUPE DANONE parent company’s financial statements, and those most immediately useful to readers. Full financial statements and related documents are available from:Danone Group - Investor Relations - 7 rue de Téhéran - 75381 Paris Cedex 08 - France - Tel. (+33/1) 44 35 20 76 - Fax (+33/1) 45 63 88 22

56


Summary of annual financial statements of theDanone Group’s parent company

The company’s balance sheet and statement of income are drawn up in com-pliance with relevant French laws and regulations, and in accordance with generally accepted accounting principles, consistently applied.

Summarized statements of income

Net income for 1996 amounts to FF1,411.7 million, made up of financial incomeof FF1,201.5 million, less an operating loss of FF501.7 million, plus miscella-neous items totaling FF711.9 million.

(MILLIONS OF FRENCH FRANCS) 1996 1995

OPERATING LOSS (501.7) (441.1)

FINANCIAL INCOME 1,201.5 1,242.6

MADE UP OF: DIVIDENDS RECEIVED FROM AFFILIATES 1,823.3 1,652.6

INTEREST PAYMENTS FROM AFFILIATES 106.5 82.9

OTHER FINANCIAL INCOME AND EXPENSE (728.3) (492.9)

EXCEPTIONAL ITEMS AND TAX 711.9 680.1

NET INCOME FOR THE YEAR 1,411.7 1,481.6

Summarized balance sheets

After allocation of income, balance sheets at December 31, 1996 and 1995 are as set out below.

(MILLIONS OF FRENCH FRANCS) 1996 1995

ASSETS

TANGIBLE AND INTANGIBLE ASSETS 55.7 47.7

INVESTMENTS 32,641.5 31,338.5

CASH AND MARKETABLE SECURITIES 2,812.0 3,369.5

OTHER 4,116.1 1,405.7

TOTAL ASSETS 39,625.3 36,161.4

LIABILITIES AND SHAREHOLDERS’ EQUITY

SHAREHOLDERS’ EQUITY 23,433.8 22,359.0

PROVISIONS FOR RISKS AND CHARGES 202.5 182.6

FINANCIAL DEBT 14,220.0 12,080.6

OTHER 1,769.0 1,539.2

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 39,625.3 36,161.4

Notes to principal balance sheet items appear below.

Investments

At December 31, 1996 these include:

(MILLIONS OF FRENCH FRANCS) GROSS AMOUNT DEPRECIATION NET AMOUNT

INVESTMENTS IN AFFILIATES 32,467.0 200.0 32,267.0

ADVANCES

TO AFFILIATES 51.3 -- 51.3

OTHER LONG-TERM

INVESTMENTS 325.3 2.1 323.2

TOTAL

INVESTMENTS 32,843.6 202.1 32,641.5

The gross amount of investments in affiliates and of other securities is theacquisition cost excluding incidental expenses, except in the case of invest-ments made prior to December 31, 1976, reevaluated in the amount of FF151 million at December 31, 1996. If the year-end valuation of an asset is lower than the gross amount, a provi-sion for depreciation is set aside in an amount equal to the difference. Year-endvaluation takes into account not only the portion of equity represented by theinvestment in an affiliate, but also the financial and business potential of thataffiliate.

The gross amount of total investments increased from FF31,540.8 million atDecember 31, 1995 to FF32,843.6 million at December 31, 1996. This increase ofFF1,302.8 million principally results from increased interests in certain subsi-diaries, notably Galbani.

Shareholders’ equity

Shareholders’ equity after distribution of income increased by FF1,074.8 millionfrom FF22,359.0 million at December 31, 1995 to FF23,433.8 million at December 31, 1996. This resulted from the transactions set out below.

(MILLIONS OF FRENCH FRANCS) CAPITAL PREMIUMS OTHER TOTAL

STOCK

PAYMENT IN SHARES

OF A PORTION OF THE DIVIDEND

OUT OF 1995 INCOME 12.0 815.8 827.8

CAPITAL INCREASE RESULTING FROM

EMPLOYEE STOCK OWNERSHIP SCHEME 1.2 76.1 77.3

CONVERSION OF BONDS,

EXERCISE OF GROUPE DANONE

STOCK OPTIONS 0.2 11.1 11.3

ALLOCATION TO EQUITY

OF 1996 INCOME 176.8 176.8

OTHER (18.4) (18.4)

TOTAL FOR THE FINANCIAL YEAR 13.4 903.0 158.4 1,074.8

Financial debt

Financial debt at December 31, 1996 includes the following items:

(MILLIONS OF FRENCH FRANCS)

CONVERTIBLE BONDS 7,304.9

OTHER BONDS OUTSTANDING 6,271.9

LOANS AND OTHER AMOUNTS DUE TO BANKS 120.7

MISCELLANEOUS BORROWING AND FINANCIAL DEBT 522.5

TOTAL FINANCIAL DEBT 14,220.0

More detailed information concerning bonds and other financial debt is given in Notes 14 and 15 to the consolidated financial statements.

57


RESOLUTIONS

SUMMARY OF RESOLUTIONS SUBMITTED TO THE ANNUAL GENERALMEETING OF SHAREHOLDERS

FIRST RESOLUTION

Approval of the transactions included in the Statutory Auditors’ special report,drawn up in compliance with article 103 of the Law dated July 24, 1966.

SECOND RESOLUTION

Approval of the statutory financial statements of GROUPE DANONE for thefinancial year 1996.

THIRD RESOLUTION

Allocation of income and dividend distribution. Net income for the year amounts to FF1,411,667,757.78 and a total dividend ofFF1,234,865,533.00 is to be paid out of the distributable amount. This net dividend of FF17.00 per share carries with it a tax credit (avoir fiscal) ofFF8.50. The ex-dividend date is May 20, 1997, and dividends will be payable incash as of the same date. The related coupon is number 45.

FOURTH RESOLUTION TO NINTH RESOLUTION

Renewal for three years of the Board membership of Messrs: Yves Cannac 4th

Xavier Gardinier 5thChristian Laubie 6thGeorges Lecallier 7thPhilippe Lenain 8thJérôme Seydoux 9th

TENTH RESOLUTION

Renewal for three years of the Board membership of Mr. Jean-Claude Haas, in keeping with the provisions of Article 15-II of company by-laws.

ELEVENTH RESOLUTION

Maintenance of the Board membership of Mr. Yves Boël, in keeping with theprovisions of article 15-II of company by-laws, until the close of the OrdinaryGeneral Meeting approving the 1998 accounts.

TWELFTH RESOLUTION

Approval of the co-optation of Mr. Jacques Vincent as Board member, until theclose of the Ordinary General Meeting approving the 1998 accounts.

THIRTEENTH RESOLUTION

Authorization to issue bonds and subordinated loans over a period of five yearsand up to a maximum amount of FF5 billion.

FOURTEENTH RESOLUTION

Authorization for the company to trade in its own shares on the stock market,and to use part or whole of them to grant stock options to employees or offi-cers. The company may not acquire more than 3,000,000 of its own shares at aprice which may not exceed FF1,200 per share. The company may not sell itsown shares at a price below FF600 each.

FIFTEENTH RESOLUTION

Powers to be vested in the Board of Directors for the execution of formalities.

58


(FF MILLION) 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

• SUMMARY OF OPERATIONS

CONSOLIDATED SALES (1) 33,623 37,156 42,177 48,669 52,897 66,069 70,840 70,108 76,820 79,450 83,940

OPERATING INCOME 2,724 3,296 4,527 5,022 5,675 6,701 7,117 6,351 6,726 7,018 7,478

AS A % OF SALES (2) 8.1 8.9 10.7 10.3 10.7 10.1 10.0 9.1 8.8 8.8 8.9

NET INCOME 1,081 1,550 2,189 2,698 3,091 3,445 3,638 3,422 3,527 2,133 3,382

• CASH FLOW AND CAPITAL EXPENDITURES

OPERATING CASH FLOW 3,160 3,378 4,249 4,330 4,961 6,918 7,399 6,691 7,151 7,424 7,951

CAPITAL EXPENDITURES 2,155 2,371 2,403 2,933 3,022 3,358 3,597 3,063 3,573 4,103 4,484

FREE CASH FLOW (3) 1,005 1,007 1,846 1,397 1,939 3,560 3,802 3,628 3,578 3,321 3,467

• FINANCIAL POSITION

SHAREHOLDERS' EQUITY 8,718 13,850 15,700 18,908 22,497 26,257 27,778 31,914 35,068 36,254 40,383

NET DEBT (4) 4,829 4,356 5,329 17,349 12,901 8,444 10,313 8,649 8,517 9,690 14,270

NET GEARING RATIO (%) (5) 55 31 34 91 50 29 33 22 20 22 30

TOTAL ASSETS 28,061 34,349 38,839 56,309 59,303 70,188 71,712 78,777 87,181 93,168 100,871

• STOCKMARKET DATA *

YEAR-END OPENING PRICE (FF) 395 394 589 704 645 915 943 960 760 800 725

NUMBER OF SHARES IN ISSUE (DEC. 31) 39,663,160 52,036,030 52,100,710 54,713,601 55,551,466 57,010,992 63,787,531 67,889,802 69,685,276 71,295,796 72,639,149

MARKET CAPITALIZATION (DEC. 31) 17,253 22,584 33,309 42,348 39,594 58,881 60,658 63,429 52,124 57,392 52,511

• EARNINGS PER SHARE (FF)

EPS (FULLY DILUTED) 24.50 30.90 37.90 45.20 48.50 53.30 55.60 50.96 50.33 30.96 46.33

EPS BEFORE GOODWILL AMORTIZATION 25.47 32.92 40.05 47.90 52.28 57.45 59.82 56.50 56.68 37.51 53.71

TOTAL DIVIDEND (INCLUDING FRENCH TAX CREDIT) 9.54 11.59 13.64 15.68 17.73 19.77 22.50 23.25 24.00 24.00 25.50

• WORKFORCE

TOTAL WORKFORCE 42,780 41,285 42,234 49,693 45,254 59,158 58,063 56,419 68,181 73,823 81,579

FRANCE 26,841 25,186 24,263 26,980 24,947 26,551 25,741 24,910 26,729 26,518 25,592

OUTSIDE FRANCE 15,939 16,099 17,971 22,713 20,307 32,607 32,322 31,509 41,452 47,305 55,987

(1) Data for fiscal years 1986 to 1994 cannot be strictly compared with those of 1995/1996 because

of a new definition of sales

(2) The 1995 and 1996 operating margin cannot be compared with those of the previous years

because of an accounting change related to sales

(3) Cash flows from operations - capital expenditures

(4) (long term debt excluding convertible bonds + short term debt and bank overdrafts) - (cash +

marketable securities)

(5) Net debt / (shareholders' equity + convertible bonds)

* Adjusted after the 10-for-1 stock split of 1989 and the 1-for-10 bonus issue of 1992

** excluding non-recurring items

ELEVEN-YEAR SELECTED FINANCIAL DATA

59


Dairy Products

DANONE SA

C/ Buenos Aires, 2108029 Barcelona (Spain)Tel.: (34) 3 291 20 00Fax: (34) 3 419 42 13Group stake: 55.7%Sales: Ptas 99,277 million (including Iltesa)Business: yogurts, yogurt-style cheeses, dessertsPlants: Parets del Valles (Barcelona), Seville,Salas (Asturias), Aldaya (Valencia), Tres Cantos(Madrid)Workforce: 3,033Main brands: Danone, Dan’Up, Petit Suisse,Gervais, Bio, La Copa, Combi, Actimel, Mi Primer Danone

N.V. DANONE S.A.

Avenue de Broqueville, 12B-1150 Bruxelles (Belgium)Tel.: (32) 2 776 68 11 Fax: (32) 2 762 84 52Group stake: 100%Sales: BF 5,416 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlant: RotselaarWorkforce: 429Main brands: Danone, Danette, Dan’Up, Bio,Cottage Cheese, Breakfast, Petit Gervais,Folie’s, Actimel

DANONE

126, rue Jules Guesde - BP 63 92302 Levallois Perret Cedex (France)Tel.: (33) 1 40 87 20 00Fax: (33) 1 40 87 23 60Group stake: 100%Sales: FF 6,474 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlants: St Just Chaleyssin, Ferrières-en-Bray,Neufchâtel, Seclin, Strasbourg, Le Molay-Littry,Bailleul, VillecomtalWorkforce: 2,571Main brands: Danone, Bio, Velouté, Taillefine,Jockey, Danette, Folie’s, Danone et Fruits,Flandise, Dany, Charles Gervais

DANONE SpA

Via Fabio Filzi, 2520124 - Milano (Italy)Tel.: (39) 2 67 50 31Fax: (39) 2 67 07 14 71Group stake: 99.8%Sales: Lit 352 billionBusiness: yogurts, yogurt-style cheeses, dessertsPlant: Casale CremascoWorkforce: 322Main brands: Danone, Danette, Danone Junior,Due Bonta, Coppabianca, Dany, Dan’Up,Vitasnella, Bio

DANONE PORTUGAL S.A.

Rua dos Arneiros, 641500 Lisboa (Portugal)Tel.: (351) 1 716 13 50Fax: (351) 1 716 12 88Group stake: 52.9%Sales: Esc 11,811 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlant: Castelo BrancoWorkforce: 359Main brands: Danone, Bio, Dan’Up, Gervais,Combi, B-COOL, Petit Danone, Kid

DANONE NEDERLAND B.V.

Panovenweg, 10NL - 4004 Je Tiel (Netherlands)Tel.: (31) 344 639 800Fax: (31) 344 611 018Group stake: 100%Sales: Fl 54 millionBusiness: distribution of fresh dairy productsWorkforce: 30Main brands: Danone, Hüttenkäse, Obstgarten,Actimel

GALBANI

Via Fabio Filzi, 2520124 Milano (Italy)Tel. : (39) 2 66 99 61Fax: (39) 2 66 99 64 60Group stake: 90%Sales: Lit 2,327 billionBusiness: cheeses, fresh cheeses, pork productsPlants: Bozzolo, Casalbuttano, CasaleCremasco, Certosa, Corteolona, Chilivani,Langhirano, MelzoWorkforce: 5,284Main brands: Galbani, Galbanino, SelezioneGalbani, Casa Romagnoli, Bel Paese, Galbi,Santa Lucia, Dolcelatte, Vallelata, Certosa

DANONE GmbH

Heinrich Wieland Strasse 170D-81735 München (Germany)Tel.: (49) 89 62 73 30Fax: (49) 89 62 73 33 65Group stake: 99.9%Sales: DM 606 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlants: Ochsenfurt, Rosenheim, HagenowWorkforce: 808Main brands: Danone, Gervais, Dany + Sahne,Obstgarten, Hüttenkäse, Fruchtzwerge,Jahreszelt, Actimell

DANONE Ges.mbH Austria

Salzachweg 1A-5061 Salzburg Elsbethen (Austria)Tel. : (43) 662 623 1720Fax: (43) 662 625 781Group stake: 99.9%Sales: Sch 546 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlant: Tirol Milch (licensing)Workforce: 36Main brands: Danone, Obstgarten,Fruchtzwerge, Dany+Sahne, Jockey, Viva,Gervais, Fjord, Actimell

Grocery products, pastaand ready-to-serve dishes

LIEBIG MAILLE AMORA

48, quai Nicolas Rolin - BP 67021017 Dijon Cedex (France)Tel.: (33) 3 80 44 44 44Fax: (33) 3 80 44 44 50Group stake: 100%Sales: FF 2,323 millionBusiness: mustards and condiments, sauces(mayonnaise, ketchup, salad dressing), vinegar,gherkins, spices, soups, stocksPlants: Dijon, Chevigny-St-Sauveur, Le Pontet,Appoigny, Vitrolles, CarvinWorkforce: 1,080Main brands: Amora, Aussage, Dessaux,Savora, Maille, Liebig, PurSoup, Marie

DIEPAL-NSA

383, rue Philippe Héron - BP 43269654 Villefranche-sur-Saône Cedex(France)Tel.: (33) 4 74 62 63 64Fax: (33) 4 74 62 63 32Group stake: 100%Sales: FF 2,672 millionBusiness: baby foods, health foods, clinicalnutritionPlants: Villefranche-sur-Saône, Brive, Ris-Orangis, SteenvoordeWorkforce: 1,510Main brands: Blédina, Blédine, Blédilait,Blédidej’, Blédisoup, Blédichef, Alma deBlédina, Gallia, Farigallia, Diargal,Phosphatine, Gayelord Hauser, Pouss’suc, Kara, Jacquemaire Santé, Biovivre, Athlon

GENERALE TRAITEUR

41, quai Fulchiron69321 Lyon Cedex 05 (France)Tel.: (33) 4 72 56 47 00Fax: (33) 4 72 56 47 93Group stake: 100%Sales: FF 958 millionBusiness: ready-to-serve dishes, refrigeratedpastry doughs, pies, quenelles, fresh pasta,ethnic specialtiesPlants: Lorette, Sablé-sur-Sarthe, Viriat, Briec de l’OdetWorkforce: 989Main brands: Marie, Panzani, Luang

HP FOODS Ltd

Grafton House1371 Mollison AvenueEnfield Middlesex EN3 7JZ (United Kingdom)Tel.: (44) 990 326 663Fax: (44) 990 134 881Group stake: 100%Sales: £ 68 millionBusiness: brown sauces and Asian specialtiesPlants: Aston Cross, Worcester, BostonWorkforce: 292Main brands: HP, Lea & Perrins, Amoy, Rajah,Daddies

LIEBIG BENELUX S.A.

Vesten 55B-9120 Beveren (Belgium)Tel.: (32) 3 750 39 63Fax: (32) 3 755 35 01Group stake: 89.3%Sales: BF 1,825 millionBusiness: distribution of condiments, soupsand stocks, package bread products, pasta,baby foodsWorkforce: 90Main brands: Liebig, Blédina/Danone, Panzani,Amora, Fali, William Saurin

MARIE SURGELES FRANCE

29, rue Eugène Hénaff94782 Vitry-Sur-Seine Cedex (France)Tel.: (33) 1 47 18 50 00Fax: (33) 1 47 18 50 66Group stake: 100%Sales: FF 1,846 millionBusiness: frozen ready-to-serve dishesPlants: Mirebeau, Airvault, Saint-Méloir, ChacéWorkforce: 1,422Main brands: Marie, Gorcy

STAR SpA

Via Matteotti, 14220041 Agrate Brianza (Milano) (Italy)Tel.: (39) 39 68 381Fax: (39) 39 68 38 346Group stake: 50%Sales: Lit 918 billionBusiness: sauces, condiments, margarine,olive oil, stocks, canned tuna, herb tea, tomatoproducts, ready-to-serve dishes and cookingpreparations, baby foodsPlants: Agrate Brianza (Milano), Carnate(Milano), Corcagnano (Parma), Sarno (Salerno)Workforce: 1,563Main brands: Star, Mellin, Olita, Foglia d’Oro,Sogni d’Oro, Pummaro, Polpabella, Sugo Casa,Tutto Qui, Tigullio, Pomoidee, Grand’Italia

STARLUX S.A.

Vial Congost, s/n08160 Montmelo (Barcelona) (Spain)Tel.: (34) 3 571 96 00Fax: (34) 3 568 46 56Group stake: 50%Sales: Ptas 27,466 millionBusiness: stocks, chocolate spreads, sauces,health foods and baby foods, herb teaPlants: Montmelo (Barcelona), Miajadas(Caceres)Workforce: 623Main brands: Starlux, Nocilla, Grand’Italia,Blédina, Sueños de Oro, Mesura

AGNESI SpA

Via T. Schiva, 8018100 Imperia (Italy)Tel.: (39) 183 70 31Fax: (39) 183 70 33 81 Group stake: 91.7%Sales: Lit 264 billionBusiness: pasta, stocks, ricePlants: Imperia, Mantova, Pordenone, RiminiWorkforce: 505Main brands: Agnesi, Ponte, Liebig, Festaiola,Flora, Tomadini, Margherita

BSB Nahrungsmittel GmbH

Postfach 1220, Birkelstrasse D -71366 Weinstadt-Endersbach (Germany)Tel.: (49) 71 51 60 10Fax: (49) 71 51 60 14 18Group stake: 99.9%Sales: DM 364 millionBusiness: pasta, ready-to-serve dishes, soups,packaged bread productsPlants: Endersbach, Seesen, Mannheim,Kitzingen, UlmWorkforce: 852Main brands: Birkel, Schüle, 7 Hühnchen,Sonnen, Nudel up, Minuto, Sonnen-Bassermann, Leicht & Cross

PANZANI WILLIAM SAURIN

4, rue Boileau - BP 645269413 Lyon Cedex 06 (France)Tel.: (33) 4 72 82 23 01Fax: (33) 4 72 82 23 09/49Group stake: 100%Sales: FF 4,465 million Business: pasta, ready-to-serve dishes, sauces,pet foodsPlants: Marseille-La Montre, Nanterre, Pouilly-sur-Serre, Plaisance-du-Gers, Bedarrides,Lagny, Saint-Marcel, BussyWorkforce: 2,448Main brands: Panzani, William Saurin, Garbit,Spagheto, Petitjean, Mac’Ani

MAIN GROUP COMPANIES

60


LA COCINERA S.A.

Carretera de Loeches, 4928850 Torrejon de Ardoz - Madrid (Spain)Tel.: (34) 1 660 49 00Fax: (34) 1 660 48 80Group stake: 100%Sales: Ptas 9,461 millionBusiness: frozen ready-to-serve dishesPlant: Torrejon de Ardoz (Madrid)Workforce: 299Main brand: La Cocinera

LA FAMILIA S.A.

Frédéric Mompou, 508960 Sant Just Desvern (Barcelona)(Spain)Tel.: (34) 3 473 34 14Fax: (34) 3 473 41 64Group stake: 92.6%Sales: Ptas 4,962 millionBusiness: pasta, ricePlants: Sant Cugat de Sesgarrigues(Barcelona), Tordesillas (Valladolid), Terrassa(Barcelona)Workforce: 191Main brands: La Famillia, Ardilla

Biscuits

BELIN LU BISCUITS FRANCE

Avenue Ambroise Croizat - BP 4391002 Evry Cedex (France)Tel.: (33) 1 60 76 72 00Fax: (33) 1 60 76 77 99Group stake: 100%Sales: FF 4,495 millionBusiness: biscuits, sweet and savory snacksPlants: Evry, Cestas, Château-Thierry, La HayeFouassière, Calais, CharlevilleWorkforce: 2,965Main brands: Crackers Belin, Chipster, Pépito,Petits Coeurs, Guet-Apens, Calèche, Palmito,Kango, Booggy, Résille d’Or, Petit Exquis, LU,Brun, Prince, Pim’s, TUC, Hello, Barquettes,Petit Ecolier, Mikado, Paille d’Or, Véritable PetitBeurre

GENERAL BISCUITS BELGIË NV

De Beukelaer-Pareinlaan 1B-2200 Herentals (Belgium)Tel.: (32) 1 424 12 11Fax: (32) 1 422 56 84Group stake: 99.6%Sales: BF 8,666 millionBusiness: biscuits, snacks, packaged breadproductsPlants: Herentals, BeverenWorkforce: 1,611Main brands: De Beukelaer, LU, Belin, Heudebert,Prince, Bastogne, Pim’s, Cha-Cha, TUC

GENERAL BISCUITS ESPAÑA

Coll de la Manya, s/n08400 Granollers (Barcelona) (Spain)Tel.: (34) 3 849 14 11Fax: (34) 3 840 14 78Group stake: 100%Sales: Ptas 10,775 millionBusiness: biscuits, packaged bread productsPlants: Granollers, La RocaWorkforce: 343Main brands: LU, Principe, Dinosaurus, MarieLu, Yayitas, Chapata

GENERAL BISCUITS GmbH

Arnoldstrasse, 62D-47906 Kempen (Germany)Tel.: (49) 2152 141 0Fax: (49) 2152 141 312Group stake: 100%Sales: DM 253 millionBusiness: biscuitsPlant: KempenWorkforce: 426Main brands: De Beukelaer/LU, Prinzen, TUC,Pim’s, Butterkeks, Mikado

GENERAL BISCUITS NEDERLAND B.V.

Bessemerstraat 19-213316 GB Dordrecht (Netherlands)Tel.: (31) 786 524 524Fax: (31) 786 515 158Group stake: 99.6%Sales: Fl 159 millionBusiness: biscuits and snacksPlant: DordrechtWorkforce: 280Main brands: Liga, LU, TUC, Prince, De Beukelaer

GENERAL BISCUITS ÖSTERREICH

Industriestrasse 2A-3300 Amstetten (Austria)Tel.: (43) 74 72 68 251Fax: (43) 74 72 68 251 226Group stake: 100%Sales: Sch 196 millionBusiness: distribution of biscuits and packagedbread productsWorkforce: 84Main brands: De Beukelaer/LU, Prinzenrolle,De Beukelaer Butterkeks

HEUDEBERT

4-6, rue Edouard Vaillant - BP 5091207 Athis-Mons (France)Tel.: (33) 1 69 54 10 10Fax: (33) 1 69 54 10 05Group stake: 100%Sales: FF 1,031 millionBusiness: packaged toasted bread, packagedbread products, granola bars, Swedish-stylecrispbreadsPlants: Granville, Toulouse, VervinsWorkforce: 780Main brands: Heudebert, Pelletier, Grany, P’titGrillé, Crackers de table

IRISH BISCUITS Ltd

Belgard Road, TallaghtDublin 24 (Ireland)Tel.: (353) 1 451 1111Fax: (353) 1 451 1898Group stake: 100%Sales: IR£ 66 millionBusiness: biscuits and distribution of otherfood productsPlant: TallaghtWorkforce: 674Main brands: Jacob’s, Bolands

THE JACOB’S BAKERY Ltd

Long Lane, AintreeLiverpool L9 7BQ (UK)Tel.: (44) 151 525 3661Fax: (44) 151 530 3444Group stake: 100%Sales: £ 179 millionBusiness: sweet biscuits, savory snacks, chocolate cookies, savory biscuitsPlants: Wigston (Leicester), Aintree (Liverpool)Workforce: 1,655Main brands: Jacob’s, Twiglets, Club, Ritz

SAIWA SpA

Via A. Cecchi, 616129 Genova (Italy)Tel.: (39) 10 53 92 1Fax: (39) 10 53 92 365Group stake: 100%Sales: Lit 358 billionBusiness: biscuits, wafers, savoury snacks,bread substitutesPlants: Locate-Triulzi (Milano), Capriata d’Orba(Alessandria)Workforce: 1,065Main brands: Oro Saiwa, Oro Più, Premium,Pansaiwa, Cipster, Cipgrill, Ritz, TUC, Vafer,Urra, Pasticceria Saiwa, Prince

VANDAMME-PIE QUI CHANTE

1, avenue Charles Guillain - BP 8959635 Wattignies Cedex (France)Tel.: (33) 3 20 18 31 31Fax: (33) 3 20 18 31 00Group stake: 100%Sales: FF 1,589 millionBusiness: pastries, biscuits, confectioneryPlants: Besançon, Jussy, Marcq-en-Baroeul,Wattignies, Champagnac de BelairWorkforce: 1,466Main brands: La Pie Qui Chante, Carambar,Vandamme, Jean Ducourtieux, LU, Prosper,Captain Choc, Napolitain

PAPADOPOULOS

26 P Ralli Avenue1810 Athens (Greece)Tel.: (30) 1 347 09 70Fax: (30) 1 342 12 25Group stake: 60%Sales: Drachma 16,675 millionBusiness: biscuits Plant: AthensWorkforce: 900Main brand: Papadopoulos

Beverages

ALKEN-MAES

Waarloosveld 10 B-2550 Waarloos (Belgium)Tel.: (32) 1 530 90 11Fax: (32) 1 531 41 91Group stake: 99.7%Sales: BF 5,642 millionBusiness: beer, non-alcoholic beer, soft drinksBreweries: Waarloos, Alken, Jumet, KobbegemWorkforce: 817Main brands: Maes, Kronenbourg, Cristal,Grimbergen, Tourtel, Mort Subite, Cuvée del’Ermitage, Zulte, Judas, Blanche de Bruges,Ciney

BIRRA PERONI INDUSTRIALE

Via R.Birolli, 800155 Roma (Italy)Tel.: (39) 6 22 54 41Fax: (39) 6 22 88 430Group stake: 24.4%Sales: Lit 479 billion Business: beer, non-alcoholic beerBreweries: Bari, Battipaglia, Napoli, Padova,RomaWorkforce: 1,028Main brands: Peroni, Nastro Azzurro,Kronenbourg, Wührer, Tourtel, Crystall, Bud

KRONENBOURG

68, route d’Oberhausbergen - BP 1367037 Strasbourg Cedex (France)Tel.: (33) 3 88 27 44 88Fax: (33) 3 88 27 42 06Group stake: 100%Sales: FF 5,221 millionBusiness: beer, non-alcoholic beer, beer-baseddrinksBreweries: Strasbourg, Obernai,Champigneulles, RennesWorkforce: 2,145Main brands: Kronenbourg, K., Kanterbräu,1664, Gold, Force 4, Tourtel, Wel Scotch,Grimbergen, Blanche de Bruges, X-Cider, Bud,Carlsberg, Tuborg

MAHOU S.A.

Paseo Imperial, 3228005 Madrid (Spain)Tel.: (34) 1 559 31 78Fax: (34) 1 542 47 62Group stake: 33.3%Sales: Ptas 51 000 millionBusiness: beer, non-alcoholic beer Breweries: Madrid, AloveraWorkforce: 1,325Main brands: Mahou Cinco Estrellas, MahouClasica, Laiker

SAN MIGUEL

Urgell, 24008036 Barcelona (Spain)Tel.: (34) 3 227 23 00Fax: (34) 3 419 35 71Group stake: 65.8%Sales: Ptas 35,745 millionBusiness: beer, non-alcoholic beerBreweries: Burgos, Lerida, MalagaWorkforce: 1,017Main brands: San Miguel, Extra, San Miguel 1516, Kristell, Oldburg, San Miguel IceBeer, San Miguel Nostrum

EVIAN

22, avenue des Sources - BP 8774503 Evian Cedex (France)Tel.: (33) 4 50 26 80 80Fax: (33) 4 50 26 80 66Group stake: 100%Sales: FF 3,279 millionBusiness: still and sparkling mineral water,skin-care sprayPlants: Amphion, St-Galmier, La Salvetat-sur-AgoutWorkforce: 1,473Main brands: Evian, Badoit, Salvetat,Brumisateur

FONT VELLA S.A.

Avenida Diagonal, 615, 5°08028 Barcelona (Spain)Tel.: (34) 3 419 44 50Fax: (34) 3 410 74 29Group stake: 77.3%Sales: Ptas 13,886 millionBusiness: still and sparkling mineral waterPlants: Amer (Girona), San Hilario (Girona)Workforce: 293Main brands: Font Vella, Fonter, Font Lys, FontPicant, Fonteforte

ITALAQUAE SpA

Via Appia Nuova, 70000179 Roma (Italy)Tel.: (39) 6 78 05 41Fax: (39) 6 78 58 564Group stake: 91%Sales: Lit 362 billionBusiness: still and sparkling mineral waterPlants: Boario, RiardoWorkforce: 586Main brands: Ferrarelle, Boario, Santagata,Acqua di Nepi

AGUAS DE LANJARÓN

c/Nueva de la Virgen, 2518005 Granada (Spain)Tel.: (34) 58 52 05 00Fax: (34) 58 52 07 00Group stake: 78%Sales: Ptas 5,814 millionBusiness: still mineral watersPlants: Moratalla (Murcia), Reus (Tarragona),Lanjarón (Granada)Workforce: 166Main brands: Lanjarón, Neval, Fontdalt

61


VOLVIC

60, boulevard du Maréchal Joffre - BP 4192340 Bourg-la-Reine (France)Tel.: (33) 1 46 11 88 88Fax: (33) 1 46 11 88 89Group stake: 100%Sales: FF 1,425 millionBusiness: still and carbonated watersPlants: Chancet, AugnatWorkforce: 772Main brands: Volvic, Arvie, Volvic Fruit

Containers

BSN VIDRIO ESPAÑA S.A.

Calle de la Retama n°7. Planta 6°.28045 Madrid (Spain)Tel.: (34) 1 506 53 00Fax: (34) 1 506 53 53Group stake: 100%Sales: Ptas 14,197 millionBusiness: glass bottles, plastishield bottles,jarsPlants: Alcala de Guadaira (Sevilla), Castellardel Valles (Barcelona)Workforce: 741Main brand: BSN Vidrio España

N.V. VEREENIGDE GLASFABRIEKEN

Buitenhavenweg 114-116, Postbus 463100 AA Schiedam (Netherlands)Tel.: (31) 10 42 60 200Fax: (31) 10 42 70 451Group stake: 100%Sales: Fl 551 millionBusiness: glass bottles, glass jars, glassware,glass tableware, other containersPlants: Lelystad, Leerdam, MaastrichtWorkforce: 1,822Main brands: Royal Leerdam, VG

VERDÔME

21, avenue Edouard Vaillant - BP 2563290 Puy-Guillaume (France)Tel.: (33) 4 73 51 60 60Fax: (33) 4 73 51 60 99Group stake: 100%Sales: FF 651 millionBusiness: glass bottlesPlant: Puy-GuillaumeWorkforce: 497Main brand: Verdôme

BSN EMBALLAGE

64, boulevard du 11 novembre 1918 - BP 1228 - 69611 Villeurbanne Cedex(France)Tel.: (33) 4 72 82 51 71Fax: (33) 4 72 82 52 38Group stake: 100%Sales: FF 3,095 millionBusiness: glass bottles (beer, wine, spirits,champagne, sparkling wine, soft drinks)Plants: Gironcourt, Vayres, Wingles, Labégude,Veauche, ReimsWorkforce: 2,906Main brand: BSN Emballage

VMC

41, rue Pierre Maître - BP 6751053 Reims Cedex (France) Tel.: (33) 3 26 87 96 00Fax: (33) 3 26 87 58 90Group stake: 99.7%Sales: FF 888 millionBusiness: glass tableware, glass jars for foodproducts, glass containersPlants: Givors, ReimsWorkforce: 1,069Main brands: VMC, Le Parfait

Asia-Pacific

CALPIS AJINOMOTO DANONE Co Ltd

Ebisu-Minami CG Bldg. 3F2-4-1, Ebisu-Minami, Shibuya-kuTokyo 150 (Japan)Tel.: (81) 3 5722 52 80Fax: (81) 3 5722 52 83Group stake: 25%Sales: Y10,370 millionBusiness: yogurts, yogurt-style cheeses,desserts, milk-based drinksPlant: KawasakiWorkforce: 218Main brands: Danone, Petit Danone, Calpis Kids

AMOY FOOD Ltd

11-15 Dai Fu StreetTai Po Industrial Estate, Tai PoNew Territories (Hong Kong)Tel.: (852) 2665 66 33Fax: (852) 2665 68 38Group stake: 84.5%Sales: HK$ 442 millionBusiness: Asian sauces, frozen Dim Sum Plants: Tai Po (Hong Kong),Shenzhen (China)Workforce: 1,495Main brands: Amoy, Royal Dragon

BRITANNIA INDUSTRIES Ltd

Britannia Gardens, Airport RoadVimanapura, Bangalore 560 017 (India)Tel.: (91) 80 527 8585Fax: (91) 80 526 6063Group stake: 17.2%Sales: Indian Rupees 6,466 millionBusiness: biscuits, packaged bread productsand cakesPlants: Calcutta, Madras, Bombay, DelhiWorkforce: 5,709Main brand: Britannia

CONTINENTAL BISCUITS LIMITED

1st Floor, PIDC HouseDr. Ziauddin Ahmed RoadKarachi - 75530 (Pakistan)Tel.: (92) 21 5681 498Fax: (92) 21 5683 378Group stake: 41.8%Sales: Pak.Rupees 589 millionBusiness: biscuitsPlant: SukkurWorkforce: 523Main brands: LU, Prince, TUC, Gala, Candi

BRITANNIA BRANDS (MALAYSIA) SDN

BHD

126 A Jalan Skudai81200 Tampoi, Johor Bahru (Malaysia)Tel.: (60) 7 237 5545Fax: (60) 7 236 7094Group stake: 84.5%Sales: Ringgit 117 millionBusiness: manufacturing of biscuits, distributionof Danone Group BrandsPlant: Johor BahruWorkforce: 1,292Main brands: Danone, Jacob’s, Thye Hong,Volvic, Agnesi, Maille, LU Silver Range

SHANGHAI GENERAL BISCUITS FOODS

Co Ltd

440 Cao Bao RoadShanghaï 200233 (China)Tel.: (86) 21 6482 3280Fax: (86) 21 6475 2874Group stake: 50.7%Sales: Yuans 183 millionBusiness: biscuitsPlant: ShanghaiWorkforce: 668Main brand: Danone

JIANGMEN DANONE BISCUITS Co Ltd

47 Jian She RoadJiangmen Guangdong 530 000 (China)Tel.: (86) 750 335 4152Fax: (86) 750 335 1204Group stake: 57.5%Sales: Yuans 219 millionBusiness: biscuitsPlants: TangshanWorkforce: 1,504Main brands: Danone, Yingfeng

HANGZHOU WAHAHA Co Ltd

160 Qingtai StreetHangzhou Zhejiang 310 009 (China)Tel.: (86) 571 702 6360/706 7560Fax: (86) 571 781 6540Group stake: 27.9%Sales: Yuans 840 millionBusiness: milk-based drinksPlant: Hangzhou Workforce: 3,322Main brands: Wahaha

TANGSHAN UNITED EUROPEAN

& HAOMEN BREWERY Co Ltd

Haomen Road, Yutian County, Tangshan CityHebei Province, 064100 ChinaTel.: (86) 315 611 2273Fax: (86) 315 611 0893Group stake: 59.2%Sales: Yuans 208 millionBusiness: beerPlant: TangshanWorkforce: 1,995Main brand: Haomen

WUHAN EURO DONGXIHU BREWERY Co Ltd

Dongxihu, Yanjiadu, WuhanHubei Province, 43007 ChinaTel.: (86) 27 389 1851Fax: (86) 27 389 2932Group stake: 50.7%Sales: Yuans 366 millionBusiness: beerPlant: WuhanWorkforce: 3,760Main brands: Xing Ying Ge

GRIFFIN’S FOODS Ltd

17 Sultan Street, P.O. Box 11-221Ellerslie, Auckland (New Zealand)Tel.: (64) 9 579 9900Fax: (64) 9 579 9901Group stake: 84.5%Sales: NZ $ 220 millionBusiness: biscuits, sauces, snacksPlants: Lower Hutt, Papakura, WiriWorkforce: 904Main brands: Griffin’s, ETA

Export

DANONE INTERNATIONAL BRANDS PARIS

26, rue Treilhard75008 Paris (France)Tel.: (33) 1 44 35 20 20Fax: (33) 1 42 89 40 18Group stake: 100%Sales: FF 749 millionBusiness: export of Group’s internationalbrandsWorkforce: 104Main brands: Evian, Volvic, Maille, HP, Lea & Perrins, LU, Jacob’s

GREAT BRANDS OF EUROPE

208 Harbor DriveStamford, CT 06902 (USA)Tel.: (1) 203 425 17 00Fax: (1) 203 425 19 00Group stake: 100%Sales: US$ 182 millionBusiness: marketing of mineral water and foodproductsWorkforce: 169Main brands: Evian, Volvic, LU, Agnesi,Dannon Natural Spring Water, Maille, Lea & Perrins, HP Sauces

DANONE INTERNATIONAL BRANDS

ASIA-PACIFIC

11-15 Dai Fu StreetTai Po Industrial Estate, Tai Po,N.T. (Hong Kong)Tel.: (852) 2663 1012Fax: (852) 2663 3960Group stake: 100%Sales: HK$ 205 millionBusiness: distribution of Group’s internationalbrandsWorkforce: 118Main brands: Evian, Volvic, LU, Jacob’s,Agnesi, Galbani, Maille, Amora, Lea & Perrins,Danone

62


North and South America

DANONE SA

Intercontinental PlazaMoreno 877 - Piso 141080 Buenos Aires (Argentina)Tel.: (54) 1 341 4000Fax: (54) 1 318 5098Group stake: 51%Sales: Argentinian Pesos 108 million (yogurt-style cheeses and desserts only)Business: yogurts, yogurt-style cheeses, desserts, milk-based drinksPlants: Longchamps, CanuelasWorkforce: 350Main brands: La Serenisima, Casanto

DANONE DE MEXICO, S.A. DE C.V.

Circuito Centro Cívico 27Ciudad Satélite 53100 Naucalpan de JuarezEstado de Mexico (Mexico)Tel.: (52) 5 729 82 00Fax: (52) 5 562 79 31Group stake: 100%Sales: US$ 122 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlants: Huehuetoca, IrapuatoWorkforce: 1,156Main brands: Danone, Danonino, Dany,Danfrut, Dan’Up, Energito

THE DANNON COMPANY

120 White Plains RoadTarrytown, NY 10591- 5536 (USA)Tel.: (1) 914 366 9700Fax: (1) 914 366 2805Group stake: 89.3%Sales: US$ 547 millionBusiness: yogurts, frozen yogurtsPlants: Minster (Ohio), Fort Worth (Texas),West Jordan (Utah)Workforce: 886Main brands: Dannon Fruit on the Bottom,Dannon Light, Dannon Blended, DannonSprinkl’Ins, Dannon Danimals, Dannon Plain,Dannon Double Delights, Dannon Chunky Fruit, Dannon Light Duets

DANONE Inc.

100, rue de LauzonBoucherville, Québec J4B 1E6 (Canada)Tel.: (1) 514 655 7331Fax: (1) 514 655 2201Group stake: 100%Sales: Can $ 80 millionBusiness: yogurts, cream, cottage cheesesPlant: BouchervilleWorkforce: 344Main brands: Delisle, Silhouette (Danone),Petit Danone, Danone Passion, Danone Vitalité

LPC INDUSTRIAS ALIMENTICIAS SA

Av. Maria Coelho Aguiar, 215 - Bloco D - 8°Centro Empresarial de São Paulo05804-900 - São Paulo/SP (Brazil)Tel.: (55) 11 3741 9105/06Fax: (55) 11 3741 9059Group stake: 100%Sales: US $ 260 millionBusiness: yogurts, yogurt-style cheeses,desserts, requeijãoPlants: Bauru (São Paulo), Poços de Caldas(Minas Gerais), São José do Rio Pardo (SãoPaulo)Workforce: 1,803Main brands: Danone, Dan’Up, Danette,Danoninho, Corpus, Agite

BAGLEY S.A.

Avenida Montes de Oca 1691270 Buenos Aires (Argentina)Tel.: (54) 1 300 0279Fax: (54) 1 300 1288Group stake: 53.9%Sales: Argentinian Pesos 243 millionBusiness: salted and sweet biscuits , snacksPlants: Buenos Aires, Villa Mercedes (San Luis)Workforce: 3,113Main brands: Bagley, Criollitas, Traviata, Rex,Kesitas, Opera, Blanco y Negro

Cia. CAMPINEIRA DE ALIMENTOS

Rodovia Campinas Barao Geraldo, km 114CEP 13001-970 - Campinas SP (Brazil)Tel.: (55) 192 41 8799Fax: (55) 192 41 5566Group stake: 50%Sales: US $ 111 millionBusiness: biscuits, confectioneryPlants: Campinas (SP)Workforce: 1,611Main brands: Triunfo, Ritz, Topsy, Klep’s

AGUAS MINERALES S.A.

Avda. Juan B. Justo 1015(1425) Buenos Aires (Argentina)Tel.: (54) 1 775 0991Fax: (54) 1 775 0992Group stake: 50%Sales: Argentinian Pesos 30 million Business: still mineral waterPlants: ChascomúsWorkforce: 196Main brands: Villa del Sur, San Francisco

AQUATERRA CORPORATION

1200 Britannia Road EastMississauga, Ontario L4W 4T5 (Canada)Tel.: (1) 905 795 6500Fax: (1) 905 670 3628Group stake: 86.4%Sales: Can $ 48 million Business: still mineral waterPlants: Mississauga (Ontario), Ville SaintLaurent (Quebec), Chicoutimi (Quebec)Workforce: 227Main brands: Crystal Springs, Labrador

Eastern Europe

COKOLÁDOVNY A.S.

Modranska 27143 20 Praha 4, Modrany (Czech Republic)Tel.: (42) 2 61 32 11 11Fax: (42) 2 61 32 24 47Group stake: 40%Sales: Kcs 10,680 millionBusiness: biscuits, chocolate, confectioneryPlants: Opavia, L.S, Deli, Zora, Melartos,Kolonada, Orion, Sfinx, Marysa, Lipo, SojaWorkforce: 6,368Main brands: Opavia (Piskoty, Disko, Be-Be,Fidorka, Tatranki, Zlaté Oplatky, Bravo), LU(Prince), Orion, Sfinx

DANONE Kft

H-1656 Budapest, Pf.115. (Hungary)Tel: (36) 1 260 33 77Fax: (36) 1 261 82 94Group stake: 100%Sales: Hungarian Forints 8,603 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlants: Keletpest (Budapest), MarcaliWorkforce: 514Main brands: Danone, Kefir, Tejfol, Turorudi,Danette, Kid

DANONE Sp.zoo

ul. Redutowa 9/2301 - 103 Warszawa (Poland)Tel: (48) 22 37 92 30Fax: (48) 22 36 17 38Group stake: 100%Sales: P Zloty 415 millionBusiness: yogurts, yogurt-style cheeses, desserts, snacksPlants: Warsawa, BierunWorkforce: 1,594Main brands: Danone, Mildes

DANONE AS

Konopistska 905256 37 Benesov u Prahy (Prague)(Czech Republic)Tel: (42) 301 51 111Fax: (42) 301 23 175Group stake: 92.3%Sales: Kcs 1,115 millionBusiness: yogurts, yogurt-style cheeses, dessertsPlant: BenesovWorkforce: 447Main brands: Danone, Bio, Bily, Danette, PetitDanone, Kid, Snack

EXCHANGE RATES (average 1996 rates)

1 BF = FF 0.165

1 DM = FF 3.40

1 Dra = FF 0.02124

1 Can $ = FF 3.75

1 US $ = FF 5.12

1 HK $ = FF 0.662

1 NZ $ = FF 3.53

1 Singapore $ = FF 3.64

1 Esc = FF 0.03319

1 Fl = FF 3.03

1 Hungarian Forint = FF 0.0341

1 Lit = FF 0.00333

1 IR£ = FF 8.23

1 Kc = FF 0.1891

1 £ = FF 8.04

1 Argentinian Peso = FF 5.12

1 Pta = FF 0.04032

1 Polish zloty = FF 1.89

1 Ringgit = FF 2.03

1 Indian Rupee = FF 0.145

1 Pakistan Rupee = FF 0.141

1 Sch = FF 0.48

1 Yen = FF 0.04692

1 Chinese Yuan = FF 0.615

63


INTERNATIONAL

ASIA PACIFIC

CHINAGuangzhou Danone Yogurt Co.42.3%Hangzhou Wahaha Group Corp.27.9%Haomen Brewery 59.2%Jiangmen Danone Biscuits Co.57.5%Shanghai Amoy Foods Co. 50.7%Shanghai Danone Yogurt Co.59.9%Shanghai Danone Biscuits FoodsCo.Ltd 50.7%Wuhan Dongxihu Brewery 50.7%Amoy 84.5%

INDIABritannia Industries Ltd 17.2%

INDONESIAPT Danone Biscuits 47.4%

JAPANCalpis Ajinomoto Danone 25%

MALAYSIABritannia Brands Malaysia 84.5%

NEW ZEALANDBest Corporation 84.5%Griffin’s Foods 84.5%

PAKISTANContinental Biscuits 41.8%

AMERICAS - AFRICA - MIDDLE EAST

ARGENTINAAguas Minerales 50%Bagley 53.9%Danone SA 51%

BRAZILAymoré 25%Campineira de Alimentos 50%LPC Industrias Alimenticias 100%

CANADADanone Inc. 100%Aquaterra Corporation 86.4%

ISRAELStrauss Dairy 20%

MEXICOBonafont 100%Danone de Mexico 100%

MOROCCOCentrale Laitière 20%

SOUTH AFRICAClover S.A. Ltd 36.3%

TURKEYDanonesa 50%

UNITED STATESThe Dannon Co. 89.3%

EASTERN EUROPE

BULGARIADanone Serdika 50.4%

CZECH REPUBLICDanone a.s. 92.3%Cokoládovny a.s. 40%

HUNGARYDanone Kft 100%

POLANDDanone Sp zoo 100%

RUSSIABolshevik 86.6%

EXPORT

FRANCEDanone International Brands Paris (DIB) 100%DIB West Indies-Guiana 100%DIB Indian Ocean 100%

CANADADIB Canada 100%Great Brands of Europe (GBE)Canada 100%

CHINA (HONG KONG)DIB Asia-Pacific 100%

HUNGARYDIB Hungary 100%

MEXICODIB de Mexico 100%

PORTUGALDIB Portugal 100%

SWITZERLANDDistrimarca 100%

UNITED STATESGreat Brands of Europe (GBE)100%

WESTERN EUROPE

DAIRY PRODUCTS

AUSTRIADanone Ges.mbH Austria 99.9%

BELGIUMN.V. Danone S.A. 100%

FRANCEDanone 100%Minute Maid Danone 50%

GERMANYDanone GmbH 99.9%

GREECEDelta Dairy 20%

ITALYDanone SpA 99.8%Galbani 90%

NETHERLANDSDanone Nederland B.V. 100%

PORTUGALDanone Portugal S.A. 52.9%

SPAINDanone S.A. 55.7%

UNITED KINGDOMDanone 100%

GROCERY PRODUCTS, PASTAAND READY-TO-SERVE DISHES

BELGIUMLiebig Benelux 89.3%

FRANCEDiépal NSA 100%Générale Traiteur 100%Liebig Maille Amora 100%Marie Surgelés France 100%Panzani William Saurin 100%Stoeffler 100%

GERMANYBirkel Sonnen Bassermann 99.9%

ITALYAgnesi SpA 91.7%Gelax 90%Star 50%

SPAINLa Cocinera S.A. 100%La Familia 92.6%Starlux 50%

UNITED KINGDOMHP Foods 100%

UNITED STATESLea & Perrins 100%

BISCUITS

AUSTRIAGeneral Biscuits Österreich 100%

BELGIUMGeneral Biscuits België 99.6%

FRANCELU 100%Heudebert 100%Vandamme-Pie Qui Chante 100%

GERMANYGeneral Biscuits GmbH 100%

GREECEPapadopoulos 60%

IRELANDIrish Biscuits 100%

ITALYSaiwa 100%

NETHERLANDSGeneral Biscuits Nederland 99.6%

SPAINGeneral Biscuits España 100%

UNITED KINGDOMThe Jacob’s Bakery 100%

BEVERAGES

BELGIUMAlken Maes 99.7%

FRANCEEvian 100%Kronenbourg 100%SEAT 100%SMDA 100%Volvic 100%

ITALYBirra Peroni Industriale 24.4%Italaquae 91%

SPAINAguas de Lanjarón 78%Font Vella 77.3%Mahou 33.3%San Miguel 65.8%

CONTAINERS

FRANCEBSN Emballage 100%Verdôme 100%VMC 99.7%

NETHERLANDSVereenigde Glasfabrieken 100%

SPAINBSN Vidrio España 100%

DANONE GROUP’S ORGANIZATION CHART (APRIL 1997)

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64


R. ABRAMSLEA & PERRINS, USA

S. ALAGHBRITANNIA INDUSTRIES, INDIA

C. BARABINOSAIWA, ITALY

D. BAROINMANAGEMENT AND ORGANIZATIONDEVELOPMENT, GROUP

J. BENNINKGALBANI, ITALY

M. BERGERBISCUITS EASTERN AND CENTRALEUROPE

I. BERTOLANISTARLUX, SPAIN

J. BISMUTHMEDIA AND MARKET RESEARCH,GROUP

C. BLANCADMINISTRATION AND TAX, GROUP

G. BRUNEAUPURCHASING, CONTAINERS DIVISION

Y. BUCHSENSCHUTZEUROPEAN SPRINGS EVIAN, FRANCE

G. CALLEJONSEMOULERIES DE BELLEVUE,FRANCE

G. CASALADAIRY PRODUCTS NORTHERN EUROPE DANONE, FRANCE

G. COSTANTINIVOLVIC, FRANCE

D. D’OLEONCORPORATE COMMUNICATIONS,GROUP

E. DE LA BAUMEMERGERS AND ACQUISITIONS,GROUP

V. DE NOCEDANONE SERVICES, BRAZIL

J.P. DEFFISFONT VELLA, SPAIN

L. DELABYLEGAL, GROUP

J. DEL OLMOLA FAMILIA, SPAIN

T. DERVILLELIEBIG MAILLE AMORA, FRANCE

J.M. DETREZVANDAMME PIE QUI CHANTE,FRANCE

J.P. DOLYDANONE SERVICES AND HUMANRESOURCES, ARGENTINA

P. DUBERTHUMAN RESOURCES EUROPE

J.C. DUHEMGENERALE TRAITEUR, FRANCE

C. ELMALEHGROUP CONTROLLER

L. FAHP FOODS , UNITED KINGDOM

C. FELTRINVMC, FRANCE

E. FLEURIOTPROJECT “GROWTH”, GROUP

D. FREEDMANJACOB’S, UNITED KINGDOM

A. FREMONTLAITERIE DE VILLECOMTAL, FRANCE

C. GARCIA MARTOSBSN VIDRIO ESPAÑA, SPAIN

X. GAUDIODANONE, ITALY

H. GIRAUDMERGERS AND ACQUISITIONS, EASTERN EUROPE, NORTH AND SOUTH AMERICA

F. GLAIZALAGNESI, ITALY

P. GUERAULTMARIE SURGELÉS FRANCE

J. HARDYBISCUITS DIVISION’S REPRESENTATIVE

A. HAVERMANSVEREENIGDE GLASFABRIEKEN, THE NETHERLANDS

W. HILDENBRANDBIRKEL SONNEN BASSERMANN, GERMANY

J.C. HORENFINANCE, GROUP

T. HOUILLONDANONE INC., CANADA

B. HOURSDANONE GmbH, GERMANY

J. IOFFEBOLSHEVIK, RUSSIA

P.L. JACOBAGUAS MINERALES, ARGENTINA

J.C. JACOMINBRITANNIA BRANDS, MALAYSIA

J.J. JARROSSONLU, FRANCE

C. JOLYLA COCINERA, SPAIN

L. JUBERTDIEPAL NSA, FRANCE

A. KARDASZEWICZDANONE Sp zoo, POLAND

M. KOPECKYDANONE’S REPRESENTATIVE ATCOKOLÁDOVNY, CZECH REPUBLIC

T. KUNZDANONE DE MEXICO, MEXICO

G. LALOIPANZANI WILLIAM SAURIN, FRANCE

A. LANDDANONE BISCUITS NORTH, EUROPE

B. LAPEYREGENERAL BISCUITS ESPAÑA, SPAIN

T. LEPRATBSN EMBALLAGE, FRANCE

P. MARCOUDANONE ’S REPRESENTATIVE ATMAHOU, SPAIN

G. MAUERHOFERDAIRY PRODUCTS, EASTERN AND CENTRAL EUROPE

W. MC CONNELLIRISH BISCUITS, IRELAND

M. MENUMINUTE MAID DANONE, FRANCE

C. MERCIERRESEARCH, GROUP

G. MICHELEAUSTOEFFLER, FRANCE

C. NEUDANONE, BELGIUM

R. NGAMOY AND SAUCES OPERATIONS,CHINA

R. ORTIZMARIE SURGELÉS FRANCE

F. PALANTONIGRIFFIN’S FOODS, NEW ZEALAND

O. PICOTMERGERS AND ACQUISITIONS,READY-TO SERVE DISHES

P. QINBEER EAST ASIADONG XI HU, CHINA

P. RAMBAUDMARKETING STRATEGIC DEVELOPMENT & NEW CONSUMPTION, GROUP

M. RIBEIRO MACHADOLPC, BRAZIL

J. ROBLES GONZALEZDANONE, SPAIN AND PORTUGAL

E. RODRIGUESDANONE OPERATIONS IN BRAZIL

M. RODRIGUEZGREAT BRANDS OF EUROPE, USA

F. SALAMONDANONE, ARGENTINA

F. SAN JUAN GARCIASAN MIGUEL, SPAIN

M. SARDINITALAQUAE, ITALY

A. SERFATYELIDIS, FRANCE

G. SERRALUNGASTAR, ITALY

L. SLEURSLIEBIG BENELUX, BELGIUM

Y. SONNOISDANONE INTERNATIONAL BRANDS,EUROPE AND SOUTH AMERICA

A. SPAGNOLOTHE DANNON COMPANY INC., USA

P. TOURRETTEDANONE OPERATIONS IN CHINA

F. VALLEJOBONAFONT, MEXICO

J.W. VAN BUSSELKRONENBOURG, FRANCE

R. VAXELAIREALKEN MAES, BELGIUM

Y. VIVARELINTERNATIONAL RELATIONS ANDMERGERS AND ACQUISITIONS,GROUP

C. WALKERHEUDEBERT, FRANCE

L. WIEDEMANNGENERAL BISCUITS ÖSTERREICH,AUSTRIA

E. ZUCCHIBAGLEY, ARGENTINA

T. ZURCHERTRADE AND SALES, GROUP

HEADS OF SUBSIDIARIES AND DEPARTMENTS


1996 ANNUAL REPORT - Morningstar, Inc.

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Transcript of 1996 ANNUAL REPORT - Morningstar, Inc.