**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 20-F**

 

| **(Mark One)**                                                                                                                                                                                                            |                                                                                                |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                      |
| **o**                                                                                                                                                                                                                     | **REGISTRATION STATEMENT PURSUANT TO  SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934** |
| **OR**                                                                                                                                                                                                                    |
| **ý**                                                                                                                                                                                                                | **ANNUAL REPORT PURSUANT TO SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**           |
| **For the fiscal year ended: December 31, 2002**                                                                                                                                                                     |
| **OR**                                                                                                                                                                                                                    |
| **o**                                                                                                                                                                                                                     | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**       |
| **For the transition period  from               to               ** |
| **Commission file number 333-11768**                                                                                                                                                                                      |

 

**BUHRMANN NV**

(Exactname of Registrant as specified in its charter)

 

**THE NETHERLANDS**

(Jurisdictionof incorporation or organization)

 

**Hoogoorddreef 62, 1101 BE Amsterdam ZO, The Netherlands**

(Addressof principal executive offices)

 

Securities registered or to be registeredpursuant to Section 12(b) of the Act.

 

| **Title of each class**                                               |   | **Name of each exchange on which registered** |
|-----------------------------------------------------------------------|--------|-----------------------------------------------|
| **American Depositary Shares, each representing  one Ordinary Share** |   | **New York Stock Exchange***                  |
|                                                                  |   |                                          |
| **Ordinary Shares at a par value of  EUR 1.20 per share each**   |   |                                          |

 

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*** TheRegistrant’s Ordinary Shares are not listed for trading.**

 

Securities registered or to be registeredpursuant to Section 12(g) of the Act.

**None**

(titleof class)

 

Securities for which there is a reporting obligationpursuant to Section 15(d) of the Act.

 

**121⁄4% Senior Subordinated Notes due2009**

 

Indicate the number of outstanding shares of each ofthe issuer’s classes of capital or common stock as of the close of the periodcovered by the annual report.

 

**132,628,061 Ordinary Shares53,281,979 Preference Shares A0 Preferences Shares B39,280 Preference Shares C**

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter periodthat the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

 

Yes                            ý                                                                                    No                                o

Indicate by check mark which financial statement itemthe registrant has elected to follow.

Item 17          o                                                                                    Item 18          ý

 

 

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**TABLE OF CONTENTS**

 
| PART I    |                                                                          |
|-----------|-------------------------------------------------------------------------------|
|      |                                                                          |
| ITEM 1    | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                         |
|      |                                                                          |
| ITEM 2    | OFFER STATISTICS AND EXPECTED TIMETABLE                                       |
|      |                                                                          |
| ITEM 3    | KEY INFORMATION                                                               |
|      |                                                                          |
| ITEM 4    | INFORMATION ON THE COMPANY                                                    |
|      |                                                                          |
| ITEM 5    | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                  |
|      |                                                                          |
| ITEM 6    | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                    |
|      |                                                                          |
| ITEM 7    | MAJOR SHAREHOLDERS AND RELATED PARTY  TRANSACTIONS                            |
|      |                                                                          |
| ITEM 8    | FINANCIAL INFORMATION                                                         |
|      |                                                                          |
| ITEM 9    | THE OFFER AND LISTING                                                         |
|      |                                                                          |
| ITEM 10   | ADDITIONAL INFORMATION                                                        |
|      |                                                                          |
| ITEM  11  | QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   |
|      |                                                                          |
| ITEM  12  | DESCRIPTION  OF SECURITIES OTHER THAN EQUITY SECURITIES                       |
|      |                                                                          |
| PART II   |                                                                          |
|      |                                                                          |
| ITEM 13   | DEFAULTS, DIVIDEND ARREARAGES AND  DELINQUENCIES                              |
|      |                                                                          |
| ITEM  14  | MATERIAL  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
|      |                                                                          |
| ITEM 15   | CONTROLS AND  PROCEDURES                                                      |
|      |                                                                          |
| ITEM  16B | CODE  OF ETHICS                                                               |
|      |                                                                          |
| ITEM  16C | PRINCIPAL  ACCOUNTANT FEES AND SERVICES                                       |
|      |                                                                          |
| PART III  |                                                                          |
|      |                                                                          |
| ITEM 17   | FINANCIAL STATEMENTS                                                          |
|      |                                                                          |
| ITEM 18   | FINANCIAL STATEMENTS                                                          |
|      |                                                                          |
| ITEM 19   | EXHIBITS                                                                      |

 

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**EXPLANATORY NOTE**

 

Unless the context otherwise requires, theterms “Buhrmann”, “the Company”, “us”, “our” and “we” as used in this annualreport refer to Buhrmann NV and its subsidiaries as a combined entity, exceptwhere we make clear that such term means only the parent company.

 

Unless otherwise specified or the contextrequires, references in this annual report to: “Dutch guilders,” and “NLG” areto the lawful currency of the Netherlands prior to January 1, 2002;“euros” and “EUR” are to the single currency introduced at the start of the thirdstage of the European Economic and Monetary Union; “US dollars,” “US$,” “$” and“USD” are to the lawful currency of the United States of America; “GBP” are tothe lawful currency of the United Kingdom; “US” are to the United States ofAmerica; and “UK” are to the United Kingdom. We publish our Consolidated Financial Statements in euros.  Solely for your convenience, this annualreport contains translations of certain euro amounts into US dollars atspecified rates.  These translations arenot audited and should not be construed as representations that the euroamounts actually represent the US dollar amounts or could be converted into USdollars. Unless otherwise indicated, the US dollar/euro translations have beenmade at historical rates which were in effect on the date of the occurrence oron the date of calculation in respect of the referenced item.

 

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFEHARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF1995.  Statements contained or incorporatedby reference in this annual report that are not based on historical fact are“forward-looking statements” within the meaning of the Private SecuritiesLitigation Reform Act of 1995.

 

Forward-looking statements may be identified byuse of forward-looking terminology such as “believe”, “intend”, “may”, “will”,“expect”, “estimate”, “anticipate”, “continue”, or similar terms, variations ofthose terms or the negative of those terms. Actual results of our business and operations could differ materiallyfrom those suggested by the forward-looking statements.  For a description of factors that couldaffect the matters discussed in such forward-looking statements, see the riskfactors listed in “Item 3 – Key Information.”

 

1

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##### **ITEM 1** IDENTITY OF DIRECTORS, SENIOR MANAGEMENT ANDADVISERS

 

Not applicable

 

**ITEM 2****OFFER STATISTICS AND EXPECTED TIMETABLE**

 

Not applicable

 

2

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##### **ITEM 3**: KEY INFORMATION

 

**Selected Financial Data**

 

The following tables present selected financialdata for Buhrmann as of and for the years ended December 31, 1998, 1999,2000, 2001 and 2002. The financial information has been prepared in accordancewith Dutch GAAP. Reference is made to Note 32 of the Notes to the ConsolidatedFinancial Statements, discussing the differences between Dutch GAAP and US GAAPwhich materially affect reported net result, basic and diluted net result perOrdinary Share and Group equity. Additionally, reference is made to Item 4“Information on the Company” for information about material acquisitions andconsolidations affecting the periods presented below.

 

These tables should be read in conjunction withItem 5 “Operating and Financial Review and Prospects” and the ConsolidatedFinancial Statements, and the related Notes thereto, of Buhrmann, includedelsewhere in this annual report. 

 

**Statement ofIncome:**

 
|                                                             |   | **Year Ended December 31,** |       |
|------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                             |   | **1998**                         |       | **1999** |   | **2000** |   | **2001** |   | **2002** |   | **2002** |   |
|                                                             |   | **(in millions of euro)**        |       | **(in millions of  US dollars (5))** |   |
| *Amounts in  accordance with Dutch GAAP*                         |   |                             | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |   | ** ** |
| Net sales                                                        |   | 4,281                            |       | 5,283 |   | 9,603 |   | 10,408 |   | 9,948 |   | 10,432 |   |
| Costs of trade goods sold                                        |   | (3,222                           | )          | (3,949 | ) | (7,004 | ) | (7,702 | ) | (7,392 | ) | (7,752 | ) |
| Other costs of sales                                             |   | (121                             | )          | (145 | ) | (258 | ) | (310 | ) | (303 | ) | (318 | ) |
| Added value                                                      |   | 938                              |       | 1,189 |   | 2,341 |   | 2,396 |   | 2,253 |   | 2,362 |   |
| Labor costs                                                      |   | (522                             | )          | (657 | ) | (1,246 | ) | (1,390 | ) | (1,330 | ) | (1,395 | ) |
| Other operating costs                                            |   | (225                             | )          | (267 | ) | (436 | ) | (489 | ) | (467 | ) | (489 | ) |
| Depreciation, amortization and impairment                        |   | (42                              | )          | (65 | ) | (168 | ) | (176 | ) | (757 | ) | (794 | ) |
| Operating result                                                 |   | 149                              |       | 200 |   | 491 |   | 341 |   | (301 | ) | (316 | ) |
| Net financing costs                                              |   | (19                              | )          | (46 | ) | (221 | ) | (210 | ) | (199 | ) | (208 | ) |
| Result from operations before taxes                              |   | 130                              |       | 154 |   | 270 |   | 131 |   | (500 | ) | (524 | ) |
| Taxes                                                            |   | (23                              | )          | (31 | ) | (55 | ) | (24 | ) | (18 | ) | (19 | ) |
| Results from participations and other financial results          |   | 5                                |       | 12 |   | 5 |   | (3 | ) | 16 |   | 17 |   |
| Minority interests                                               |   | (6                               | )          | (1 | ) | (9 | ) | (9 | ) | (12 | ) | (13 | ) |
| Result from continuing operations before extraordinary items     |   | 106                              |       | 134 |   | 211 |   | 95 |   | (514 | ) | (539 | ) |
| Result from discontinued operations                              |   | 39                               |       | 3 |   | — |   | — |   | — |   | — |   |
| Result on disposal of discontinued operations                    |   | 544                              |       | (119 | ) | (3 | ) | — |   | — |   | — |   |
| Extraordinary result from discontinued operations                |   | (29                              | )          | — |   | — |   | — |   | — |   | — |   |
| Extraordinary result from continuing operations                  |   | (136                             | )          | 65 |   | 13 |   | (40 | ) | (74 | ) | (78 | ) |
| Net result                                                       |   | 524                              |       | 83 |   | 221 |   | 55 |   | (588 | ) | (617 | ) |
|                                                             |   |                             | * *   |   | * * |   | * * |   | * * |   | * * |   | * * |
| *Amounts  with US GAAP adjustments*                              |   |                             | * *   |   | * * |   | * * |   | * * |   | * * |   | * * |
| Net sales                                                        |   | 4,269                            |       | 5,271 |   | 9,595 |   | 10,436 |   | 9,955 |   | 10,439 |   |
| Operating result (1)                                             |   | 126                              |       | 138 |   | 362 |   | 195 |   | (757 | ) | (794 | ) |
| Result from operations before taxes (1)                          |   | 137                              |       | 164 |   | 139 |   | 12 |   | (960 | ) | (1,007 | ) |
| Result from continuing operations before extraordinary items (1) |   | 104                              |       | 192 |   | 118 |   | 35 |   | (942 | ) | (988 | ) |
| Net result (1)                                                   |   | 471                              |       | 25 |   | 87 |   | 35 |   | (942 | ) | (988 | ) |

 

3

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**Balance Sheet Data (at period end):**

 
| *Amounts in  accordance with Dutch GAAP* |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Total assets                             |   | 2,119  |   | 5,508  |   | 6,418  |   | 7,117  |   | 5,409  |   | 5,672  |   |
| Long-term debt                           |   | 217    |   | 1,898  |   | 2,070  |   | 2,059  |   | 1,678  |   | 1,760  |   |
| Group equity                             |   | 873    |   | 1,543  |   | 1,948  |   | 2,671  |   | 1,811  |   | 1,899  |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Amounts  with US GAAP adjustments*      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total assets(2)                          |   | 2,883  |   | 6,130  |   | 7,127  |   | 7,701  |   | 5,607  |   | 5,880  |   |
| Group equity                             |   | 1,709  |   | 2,374  |   | 2,574  |   | 3,157  |   | 1,910  |   | 2,003  |   |

 

4

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|                                                                                                                                                       |   | **Year Ended December 31,**           |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                                                                                       |   | **1998**                                   |   | **1999** |   | **2000** |   | **2001** |   | **2002** |   |
|                                                                                                                                                       |   | **(in  euro, unless otherwise indicated)** |   |
| **Other Data:**                                                                                                                                            |   |                                       |   |
|                                                                                                                                                       |   |                                       |   |
| *Amounts in  accordance with Dutch GAAP*                                                                                                                   |   |                                       |   |   |   |   |   |   |   |   |   |
| Depreciation (in millions of euro)                                                                                                                         |   | 40                                         |   | 55 |   | 113 |   | 109 |   | 114 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Operating result before amortization and impairment of goodwill (3)                                                                                        |   | 151                                        |   | 210 |   | 546 |   | 408 |   | 342 |   |
| Amortization of goodwill (in millions of euro)                                                                                                             |   | (2                                         | )      | (10 | ) | (55 | ) | (67 | ) | (70 | ) |
| Impairment of goodwill (in millions of euro)                                                                                                               |   | —                                     |   | — |   | — |   | — |   | (573 | ) |
| Operating result                                                                                                                                           |   | 149                                        |   | 200 |   | 491 |   | 341 |   | (301 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Capital expenditures (in millions of euro)                                                                                                                 |   | 56                                         |   | 75 |   | 122 |   | 127 |   | 107 |   |
| Capital stock - Ordinary (in millions of euro)                                                                                                             |   | 86                                         |   | 110 |   | 116 |   | 157 |   | 158 |   |
| Number of Ordinary Shares outstanding at year-end (in thousands)                                                                                           |   | 76,364                                     |   | 96,394 |   | 102,544 |   | 131,835 |   | 132,628 |   |
| Dividend declared in euro per Ordinary Share                                                                                                               |   | 0.60                                       |   | 0.60 |   | 0.60 |   | 0.16 |   | 0.07 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Result per Ordinary Share from continuing operations before  extraordinary items and before amortization and impairment of goodwill basic  (3)             |   | 1.00                                       |   | 1.64 |   | 2.35 |   | 1.03 |   | 0.74 |   |
| Amortization and impairment of goodwill per Ordinary Share basic                                                                                           |   | (0.01                                      | )      | (0.13 | ) | (0.55 | ) | (0.54 | ) | (4.88 | ) |
| Result per Ordinary Share from continuing operations before  extraordinary items basic                                                                     |   | 0.99                                       |   | 1.51 |   | 1.80 |   | 0.49 |   | (4.14 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Result per Ordinary Share from continuing operations before  extraordinary items and before amortization and impairment of goodwill fully  diluted (3) (6) |   | 0.99                                       |   | 1.55 |   | 2.10 |   | 1.02 |   | 0.74 |   |
| Amortization and impairment of goodwill per Ordinary Share fully  diluted                                                                                  |   | (0.01                                      | )      | (0.12 | ) | (0.46 | ) | (0.46 | ) | (4.15 | ) |
| Result per Ordinary Share from continuing operations before  extraordinary items fully diluted (6)                                                         |   | 0.98                                       |   | 1.43 |   | 1.64 |   | 0.49 |   | (4.14 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Net result per Ordinary Share basic                                                                                                                        |   | 5.44                                       |   | 0.84 |   | 1.90 |   | 0.17 |   | (4.70 | ) |
| Net result per Ordinary Share fully diluted (6)                                                                                                            |   | 5.32                                       |   | 0.82 |   | 1.72 |   | 0.17 |   | (4.70 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| In millions of euro:                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| Net cash provided (used) by operating activities                                                                                                           |   | 86                                         |   | 52 |   | 66 |   | 469 |   | 258 |   |
| Net cash provided (used) by investing activities                                                                                                           |   | 1,206                                      |   | (1,189 | ) | (317 | ) | (766 | ) | (138 | ) |
| Net cash provided (used) by financing activities                                                                                                           |   | (1,494                                     | )      | 1,153 |   | 163 |   | 420 |   | (208 | ) |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| *Dividend  in USD declared per Ordinary Share(4)*                                                                                                          |   | 0.71                                       |   | 0.71 |   | 0.71 |   | 0.19 |   | 0.08 |   |
|                                                                                                                                                       |   |                                       |   |   |   |   |   |   |   |   |   |
| *Amounts  with US GAAP adjustments*                                                                                                                        |   |                                       |   |   |   |   |   |   |   |   |   |
| Operating result before restructuring and integration expenses and  before amortization and impairment of goodwill (1) (3)                            |   | 150                                        |   | 215 |   | 527 |   | 420 |   | 357 |   |
| Amortization of goodwill                                                                                                                                   |   | (24                                        | )      | (29 | ) | (59 | ) | (73 | ) | — |   |
| Impairment of goodwill                                                                                                                                     |   | —                                     |   | — |   | — |   | — |   | (1,013 | ) |
| Operating result before restructuring and integration expenses (1) (3)                                                                                     |   | 126                                        |   | 186 |   | 468 |   | 347 |   | (656 | ) |
| Restructuring and integration expenses                                                                                                                     |   | —                                     |   | (48 | ) | (106 | ) | (152 | ) | (101 | ) |
| Operating result (1)                                                                                                                                       |   | 126                                        |   | 138 |   | 362 |   | 195 |   | (757 | ) |

 

5

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(1)               SeveralUS GAAP adjustments have been made to operating result under Dutch GAAP tocomply with US GAAP. These adjustments have been made to recognize goodwill onacquisitions that was previously written off to equity, to adjust goodwill forrestructuring and integration provisions that did not qualify under US GAAP, toreverse these restructuring and integration provisions and other provisions notallowed under US GAAP, to amortize intangible assets, to write-off capitalizedsoftware, to add extraordinary items to operating income, to record derivativeinstruments at fair value, to recognize additional pension assets, to reverserevenue deferred under US GAAP and in 2002 to reverse amortization and adjustimpairment of goodwill and to reverse write-off of financing fees. Theextraordinary items classified as such under Dutch GAAP mainly consist ofprovisions for restructuring and integration costs, losses on the sale ofbusinesses, a provision for excess costs that will be incurred on a softwaredevelopment project and a repayment from the Buhrmann pension fund. Under USGAAP these items did not qualify to be classified as extraordinary.

 

(2)               SeveralUS GAAP adjustments have been made to total assets under Dutch GAAP to complywith US GAAP. These adjustments have been made to recognize goodwill onacquisitions that was written off to equity under Dutch GAAP, to adjustgoodwill for restructuring and integration provisions not allowed under USGAAP, to recognize intangible assets, to expense software costs which do notqualify for capitalization under US GAAP, to recognize the gain (loss) onavailable-for-sale securities, to recognize deferred tax assets under US GAAP,to recognize additional pension assets and in 2002 to reverse amortization andadjust impairment of goodwill and to reverse write-off of financing fees.

 

6

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(3)               Operatingresult before restructuring and integration expenses as well as beforeamortization and impairment of goodwill are included because managementbelieves each is a useful indicator of performance of the Company. Managementbelieves that by excluding restructuring and integration expenses andamortization and impairment of goodwill from operating result, comparability isenhanced because under Dutch GAAP restructuring and integration expenses arepresented as extraordinary expenses whereas under US GAAP they are presented asoperating expenses. In addition, as of 2002 goodwill is no longer amortizedunder US GAAP but tested annually for impairment. Operating result beforerestructuring and integration expenses as well as before amortization andimpairment of goodwill should not be considered as a substitute for operatingresult, net result, cash flow or other statements of operations or cash flowcomputed in accordance with Dutch GAAP or US GAAP or as a measure of theCompany’s result of operations or liquidity. Operating result beforerestructuring and integration expenses under US GAAP is calculated by adding tooperating result, restructuring and integration expenses of EUR 101million, EUR 152 million, EUR 106 million and EUR 48 million forthe years ended December 31, 2002, 2001, 2000 and 1999 respectively. Therewere no restructuring and integration expenses in the year endedDecember 31, 1998. Under Dutch GAAP, restructuring and integrationexpenses are not included in operating result but rather in extraordinaryresult. Operating result before restructuring and integration expenses and beforeamortization and impairment of goodwill is calculated by adding to operatingresult before restructuring and integration expenses, amortization andimpairment of goodwill as shown in the tables above.

 

(4)               Thedividend was translated from euros to US dollar at the May 31, 2003 Noon Buying Rate (as defined below in “ExchangeRates”) for cable transfers of 1 euro = 1.1766 US dollar.

 

(5)               Certaineuro amounts have been translated into United States dollars at the rate atDecember 31, 2002 of EUR 0.9536 to the United States dollar. Suchtranslations should not be construed as representation that the euro amountsrepresent, or have been or could be converted into, United States dollars atthat or any other rate.

 

(6)               Amathematical calculation of result from continuing operations beforeextraordinary items and before amortization and impairment of goodwill perOrdinary Share on fully diluted basis would be EUR 0.76 in 2002. Resultfrom continuing operations before extraordinary items and after amortizationand impairment of goodwill per Ordinary Share on fully diluted basis would beEUR 3.39 negative in 2002 and EUR 0.56 positive in 2001. Net resultper Ordinary Share on fully diluted basis would be EUR 3.87 negative in2002 and EUR 0.28 positive in 2001. Under Dutch GAAP, in case fullydiluted earnings per share figures are higher than basic earnings per sharefigures, fully diluted earnings per share figures should be adjusted downwardsto basic earning per share figures.

 

7

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**Exchange Rates**

 

The historical financialinformation for Buhrmann included in this annual report for all time periodsending before January 1, 1999 was originally stated in Dutch guilders(NLG). In January 1999, Buhrmann started reporting in euro. The historicalfinancial information stated in NLG has been converted into euro using a rateof NLG 2.20371 to the euro. On May 31, 2003 the Noon Buying Rate for eurosfor cable transfers in US dollar was 1.1766.

 

The following table setsforth, for the periods indicated, certain information regarding the Noon BuyingRate for the Dutch guilder (1998) and the euro (1999–2002). The term “NoonBuying Rate” means the noon buying rate in New York City for cable transfersinto foreign currencies as certified for customs purposes by the FederalReserve Bank of New York for 1998 to 2002.

 

Noon Buying Rates forDutch guilders

 
|     |   | **Dutch guilder per US dollar** |   |
|----------|--------|---------------------------------|--------|
| **Year** |   | **Year end**                    |   | **Average** |   | **High** |   | **Low** |   |
| 1998     |   | 1.8770                          |   | 1.9825 |   | 2.0890 |   | 1.8142 |   |

 

Noon Buying Rates for euro

 
|     |   | **US dollar per euro** |   |
|----------|--------|------------------------|--------|
| **Year** |   | **Year end**           |   | **Average** |   | **High** |   | **Low** |   |
| 1999     |   | 1.0070                 |   | 1.0588 |   | 1.1812 |   | 1.0016 |   |
| 2000     |   | 0.9388                 |   | 0.9207 |   | 1.0335 |   | 0.8270 |   |
| 2001     |   | 0.8901                 |   | 0.8909 |   | 0.9535 |   | 0.8370 |   |
| 2002     |   | 1.0485                 |   | 0.9495 |   | 1.0485 |   | 0.8594 |   |

 

Theaverage Noon Buying Rate for each year is calculated by using the average of theNoon Buying Rates on the last day of each month during the year.

 

In determining earningsoriginally stated in foreign currencies, Buhrmann used an average of dailyexchange rates of the respective currency versus the euro. For the balancesheet, Buhrmann used the exchange rates of the last business day of thereported period. The following table shows the applicable rates used for suchpurposes for the periods indicated:

 
|                          |   | **Balance sheet as of   December 31, 2000** |   | **Income statement  year ended  December 31, 2000** |   |
|-------------------------------|--------|--------------------------------------------------|--------|----------------------------------------------------------|--------|
| Australian Dollar per euro    |   | 1.6770                                           |   | 1.5893                                                   |   |
| Canadian Dollar per euro      |   | 1.3965                                           |   | 1.3712                                                   |   |
| Great Britain Pound per euro  |   | 0.6241                                           |   | 0.6094                                                   |   |
| United States Dollar per euro |   | 0.9305                                           |   | 0.9240                                                   |   |

 

8

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|                          |   | **Balance sheet as of  December 31, 2001** |   | **Income statement  year ended  December 31, 2001** |   |
|-------------------------------|--------|-------------------------------------------------|--------|----------------------------------------------------------|--------|
| Australian Dollar per euro    |   | 1.7270                                          |   | 1.7325                                                   |   |
| Canadian Dollar per euro      |   | 1.4077                                          |   | 1.3868                                                   |   |
| Great Britain Pound per euro  |   | 0.6080                                          |   | 0.6218                                                   |   |
| United States Dollar per euro |   | 0.8813                                          |   | 0.8955                                                   |   |

 
|                          |   | **Balance sheet as of  December 31, 2002** |   | **Income statement  year ended  December 31, 2002** |   |
|-------------------------------|--------|-------------------------------------------------|--------|----------------------------------------------------------|--------|
| Australian Dollar per euro    |   | 1.8556                                          |   | 1.7365                                                   |   |
| Canadian Dollar per euro      |   | 1.6550                                          |   | 1.4828                                                   |   |
| Great Britain Pound per euro  |   | 0.6505                                          |   | 0.6287                                                   |   |
| United States Dollar per euro |   | 1.0487                                          |   | 0.9448                                                   |   |

 

The following table sets forth the high and low NoonBuying Rate for the euro of each of the monthly periods indicated (US dollarper euro):

 
| **Month**          |   | **High** |       | **Low** |       |
|--------------------|--------|----------|------------|---------|------------|
|               |   |     | ** ** |    | ** ** |
| December 2002 |   | 1.0485   |       | 0.9927  |       |
| January 2003  |   | 1.0861   |       | 1.0361  |       |
| February 2003 |   | 1.0875   |       | 1.0708  |       |
| March 2003    |   | 1.1062   |       | 1.0545  |       |
| April 2003    |   | 1.1180   |       | 1.0621  |       |
| May 2003      |   | 1.1853   |       | 1.1200  |       |

 

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**Risk Factors**

 

The key risks relating to our business andindustry are included below. Additional risks of which we are presently notaware or that we currently deem immaterial may also impair our business.

 

**Risks Relating to Our Business**

 

***Buhrmannhas material debt***

Buhrmann has indebtednessthat is material in relation to its shareholders’ equity. A substantial portionof Buhrmann’s cash flow from operations is dedicated to the payment ofprincipal and interest on Buhrmann’s debt. Buhrmann’s indebtedness could haveimportant consequences, including that: 

• Buhrmann’s ability toobtain additional financing for working capital, capital expenditures,acquisitions, or general corporate purposes may be impaired;

• certain of Buhrmann’s borrowingsare and will continue to be at variable rates of interest, which exposesBuhrmann to the risk of increasing interest rates;

• a substantial part ofBuhrmann’s assets has been pledged to secure Buhrmann’s obligations under theSenior Credit Facility and in connection with its securitization program (seeItem 5 “Operating and Financial Review and Prospects -Liquidity and CapitalResources”) and will be unavailable to secure other debt;

• Buhrmann may be moreleveraged than certain of its competitors, which may place Buhrmann at acompetitive disadvantage.

 

Buhrmann’s ability tomake scheduled payments or to refinance its obligations with respect to itsindebtedness will depend on Buhrmann’s financial and operating performance,which, in turn, is subject to prevailing economic conditions and to certainfinancial, business and other factors beyond its control. Buhrmann’s operatingperformance, cash flow and capital resources may not be sufficient for paymentof its debt in the future. If Buhrmann’s cash flow and capital resources areinsufficient to fund its debt service obligations, Buhrmann may be forced toreduce or delay scheduled expansion and capital expenditures, sell materialassets or operations, obtain additional capital or restructure its debt. In theevent that Buhrmann is required to dispose of material assets or operations orrestructure its debt to meet its debt service and other obligations, the termsof any such transaction may not be as advantageous to Buhrmann as theyotherwise might be.

 

###### ***Buhrmann isrestricted by the terms of its debt***

The terms of such debtlimit Buhrmann’s flexibility in operating its business. In particular, theseagreements limit Buhrmann’s ability to, among other things, incur other debt,pay dividends, make investments and enter into certain corporate transactions.The Senior Credit Facility (see Item 5 “Operating and Financial Review andProspects – Liquidity and Capital Resources”), also requires Buhrmann to meetcertain financial ratios and tests. Buhrmann may not be able to do so forreasons beyond its control. If Buhrmann fails to comply with the obligations inthe Senior Credit Facilit**y,**there could be an event of default underthe Senior Credit Facility. This may cause Buhrmann to renegotiate the terms ofthe Senior Credit Facility which may lead to an increase of interest expensesand may further restrict Buhrmann’s ability to operate its business, includingthe payment of dividends. In addition, if an event of default occurs, thelender under the Senior Credit Facility could declare the debt under thatagreement immediately due and payable, and seek to foreclose on Buhrmann’sassets that secure the Senior Credit Facility. If there is a default under theSenior Credit Facility, Buhrmann may not have sufficient assets to repay thedebt under that facility and other debt.

 

In addition, otherfunding instruments such as the Accounts Receivable Securitization Program, theHigh Yield Bond and the Preference Shares C have certain restrictions attached.

 

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***Buhrmannmay not be able to manage its growth effectively***

Challenges which mayresult from organic growth as well as growth through acquisitions includeBuhrmann’s ability to:

• improve the efficiencyof growing operations;

• manage efficiently theoperations and employees of expanding businesses;

• retain, respectivelyhire, enough qualified personnel to staff new or expanded operations;

• maintain the customerbase respectively the value sold to existing customers;

• assess the value,strength and weaknesses of acquisition candidates.

 

Buhrmann cannot ensurethat it will be able to adequately address these concerns. Buhrmann’s failureto address these concerns could lead to a material adverse effect on itsbusiness, financial condition and results of operations. Due to operational andfinancial leverage, a reduction in growth can affect results significantly.

 

***Cost reductionprograms***

##### **In thecourse of 2002, Buhrmann implemented cost reduction programs, including areduction in the number of staff. Buhrmann expects that these programs willresult in structural cost savings and will improve Buhrmann’s operatingresults. However, this expectation involves a number of assumptions anduncertainties, and as a result, Buhrmann may not achieve the expected benefits.Buhrmann recorded extraordinary charges in 2002 for these cost reductionprograms. Buhrmann cannot assure that additional charges for cost reductionprograms will not be required in the future as well.**

 

***Adversedevelopments in equity and bond markets may require Buhrmann to make additionalcontributions to its pension funds***

Buhrmann has a number of defined benefit planswhich are insured in separate trusts (pension funds). Local law or specificarrangements with these pension funds require a minimum funding level ofbenefit obligations of these pension funds. The funding levels are calculatedbased on certain assumptions, including expected return on plan assets.Declining returns on equity and bond markets may require Buhrmann to makeadditional contributions to these pension funds in order to meet the minimumfunding levels which may adversely affect Buhrmann’s results of operations andfinancial position.

##### ** **

***Buhrmannmay overestimate the benefits from acquisitions and may incur unknownliabilities in connection with acquisitions***

Statements regarding theexpected earnings potential, the anticipated operating efficiencies, costsavings and other benefits Buhrmann expects to realize from acquired businessesare forward-looking statements. Actual results for the combined operationscould differ materially from results anticipated depending upon, among otherthings:

 

• the combined futuresales levels and operating results;

• the ability to maintainpresent efficiency levels;

• unforeseen costs andexpenses incurred in connection with the integration of the acquired businessesinto Buhrmann’s operations and other business;

• economic or competitiveuncertainties and contingencies, and 

• existence of risks oroccurrence of material adverse events which Buhrmann has been unable toidentify.

 

Buhrmann has madeacquisitions which have certain attendant risks (see Item 5 “Operating andFinancial Review and Prospects – Acquisitions and Divestments”).Buhrmann may incur undisclosed or otherwise unforeseen financial, commercial,tax, pension, litigation, environmental or other liabilities in connection withsuch acquisitions, or Buhrmann may have underestimated the liabilities of whichit is aware. If such liabilities materialize or are greater than Buhrmannestimates, they could result in a material adverse effect on Buhrmann’sbusiness, financial condition and results of operations.

 

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***Buhrmannmay be required to indemnify purchasers of the businesses that Buhrmann soldfor pre-sale liabilities***

Buhrmann has divestedvarious subsidiaries and divisions, some of which were substantial (see Item 4“Information on the Company – History and Development of the Company” and Item5 “Operating and Financial Review and Prospects – Acquisitions andDivestments”). In connection with these divestments, Buhrmann has agreed toindemnify the purchasers against various potential liabilities, such asenvironmental liabilities and liabilities related to taxes. Buhrmann hasestablished reserves for such potential liabilities that Buhrmann believes areadequate. However, Buhrmann cannot assure that these reserves will in fact besufficient to cover these potential liabilities. The lack of adequate reservescould have a material adverse effect on Buhrmann’s business, financialcondition and results of operations.

 

***Buhrmann’sexposure to exchange rate fluctuations may affect its reported results ofoperations and financial condition***

A significant portion of Buhrmann’s subsidiariesconduct their activities in currencies other than the euro which is Buhrmann’sreporting currency. The position in relation to the US dollar is in particularrelevant. In 2002, approximately 45% of Buhrmann’s revenues and 55% of Buhrmann’soperating result before depreciation and amortization and impairment ofgoodwill were denominated in US dollar. This results in foreign exchangetranslation exposure when results of these subsidiaries are translated intoeuro in Buhrmann’s Consolidated Financial Statements. Under the Company’sforeign exchange policy, translation risks in these subsidiaries are, ingeneral, not hedged. This means that fluctuations in exchange rates may positivelyor negatively affect results of operations reported in euro. For example, a 10%change in the USD/EUR exchange rate affects net result from ordinaryoperations before amortization and impairment of goodwill by approximately 5%.

 

Of Buhrmann’s external long-term debt at December 31, 2002, 64% wasdenominated in US dollars, 26% in euro and 10% in British Pounds Sterling.Buhrmann finances its subsidiaries predominantly through internal debt denominatedin local currencies.  AlthoughBuhrmann enters into forward foreign exchange and currency swap contracts tominimize the exposure of exchange rate fluctuations on its net financingposition, exchange rate fluctuations may lead to currency translation adjustmentswhich may have a direct impact, positive or negative, on Buhrmann’s Groupequity and may also positively or negatively affect net result reported ineuro.

 

***Inabilityto maintain and update its information systems effectively could disruptBuhrmann’s business processes***

Buhrmann needs tomaintain and consistently upgrade sophisticated information systems to grow itsbusinesses and achieve operating efficiencies. If Buhrmann fails to do so, itsinformation systems may not function correctly or efficiently, which could havean adverse effect on Buhrmann’s ability to perform administrative functions andprocess and distribute customer orders, and prevent Buhrmann from realizinganticipated cost savings. This in turn would have an adverse impact onBuhrmann’s results of operations. If Buhrmann fails to implement informationtechnology improvements within the anticipated time frame, such failure couldhave a material adverse effect on Buhrmann’s business, financial condition andresults of operations.

 

**Risks Relating to Our Industry**

 

***Thedemand for Buhrmann’s products and services relates to the number of whitecollar workers employed by Buhrmann’s customers***

An interruption of growthin the markets where Buhrmann’s customers operate may have an adverse effect onBuhrmann’s operating results. The demand for Buhrmann’s products and services,most notably in office products, relates to the number of white collar workersemployed by Buhrmann’s customers. A reduction of white collar workers atBuhrmann’s customers base may adversely affect Buhrmann’s operating results.

In addition, Buhrmann’scustomers may, on short term notice, postpone or reduce spending on Buhrmann’sproducts and services per white collar worker. Customers may also, on shortterm notice, substitute certain of Buhrmann’s 

 

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products and services forits other - lower margin - products and services. Any such postponement,reduction or substitution may also adversely affect Buhrmann’s operatingresults.

 

***Fluctuationsin paper prices may adversely affect Buhrmann’s gross margins and operatingresults***

Buhrmann’s results andworking capital for the Paper Merchanting Division are sensitive to paper pricefluctuations. Several factors contribute towards the volatility of paperprices, including the length of the supply chain and the level of utilizationof pulp and paper making capacity and the timing and scale of new capacityinvestments. Decreases in market price generally cause a decrease in the grossmargins per ton of Buhrmann’s paper merchanting subsidiaries. The volatility ofpaper prices may also have an impact on margins, since there is generally atime lag before price movements pass through the markets to our customers. A 1%change in paper prices normally results in may lead to an approximately 2%change in the operating result in 2002 of the Paper Merchanting Division.

 

***Buhrmanncould lose market share and profit margins due to increased competitivepressures***

Each of Buhrmann’sdivisions operates in a highly competitive market. Many of Buhrmann’scompetitors offer the same or similar products that Buhrmann offers to the samecustomers or potential customers. Some of Buhrmann’s competitors may haveadvantages over Buhrmann, including greater financial resources, bettertechnical capabilities, better marketing capabilities, the ability to adaptmore quickly to changing customer requirements, greater name recognition andthe ability to devote greater resources to developing, promoting and sellingtheir products. Also, new entrants in Buhrmann’s markets such as new internetbased businesses, may alter the competitive landscape to Buhrmann’sdisadvantage. If Buhrmann’s competitors successfully exploit these advantages,they could force Buhrmann to lower its prices or may cause Buhrmann to sellfewer of its products, either of which could adversely affect Buhrmann’s business,financial condition and results of operations.

 

***IfBuhrmann’s contract with Heidelberger were to be terminated, or Heidelbergerwere to cease operations, Buhrmann could lose most of its Graphic SystemsDivision’s revenues***

Buhrmann’s GraphicsSystems Division is the exclusive distributor of printing equipmentmanufactured by Heidelberger in a number of countries. The Graphics SystemsDivision derives its revenues primarily from sales of such equipment. Theexclusive distribution agreement runs until June 30, 2008 but may beterminated earlier by either party for cause. If Heidelberger were to terminatethe distribution agreement or cease operations (without a successor),Buhrmann’s business, financial condition and results of operations may be adverselyaffected.

 

**Forward-LookingStatements**

This document contains certain forward-lookingstatements concerning Buhrmann’s future operations, economic performances,financial conditions and financing plans, including such things as businessstrategy and measures to implement strategy, competitive strengths, goals,expansion and Buhrmann’s business and operations and references to futuresuccess. These statements are based on certain assumptions and analyses made byBuhrmann in light of its experience and its perception of historical trends,current conditions and expected future developments as well as other factors itbelieves are appropriate under the circumstances. However, whether actualresults and developments will conform with Buhrmann’s expectations andpredictions is subject to a number of risks and uncertainties, including, amongother things, the risk factors discussed above. Consequently, all of theforward-looking statements made in this document are qualified by thesecautionary statements, and there can be no assurance that the actual results ordevelopments anticipated by Buhrmann will be realized or, even if substantiallyrealized, that they will have the expected consequences for or effects onBuhrmann and its subsidiaries or their business or operations.

 

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**ITEM 4:****INFORMATION ON THE COMPANY**

 

**HISTORY AND DEVELOPMENT OF THE COMPANY**

 

**Company History**

 

Buhrmann N.V. was incorporated in 1875 underthe name Koninklijke Nederlandsche Papierfabrieken N.V. (KNP). Upon KNP’smerger in 1993 with Bührmann-Tetterode N.V. and VRG-Groep N.V., the combinedcompany N.V. Koninklijke KNP BT (“KNP BT”) was formed. KNP BT was active inthree main areas: paper manufacturing, packaging, and business services and distribution.In April 1997, KNP BT divested its protective and flexible packagingactivities for EUR 454 million to Tenneco, Inc. In December 1997, KNPBT sold its paper manufacturing subsidiary, KNP LEYKAM, to Sappi Limited(“Sappi”), a South African paper group. In consideration for the sale of KNPLEYKAM, KNP BT received EUR 335 million in the form of loan notes (soldimmediately following the closing for EUR 307 million in cash) and 44.6million shares in Sappi. Buhrmann sold these shares in two tranches; 31.5million as part of a global offering by Sappi in November 1999, and inFebruary 2001 the remaining 13.1 million. In June 1998, the remainderof the packaging business (Kappa) was sold for EUR 1.4 billion to twoventure capital groups, CVC and Cinven.

 

In August 1998, KNP BT was renamedBuhrmann N.V. and focused on the business services and distribution activity.

 

In October 1999, Buhrmann acquired 100% ofthe outstanding capital stock of Corporate Express, Inc. The acquisition andthe related refinancing costs amounted to approximately USD 2.6 billion, raisedby means of a Senior Credit Facility in the amount of USD 1.9 billion (see Item5 “Operating and Financial Review and Prospects – Capital Resources”), theissue of USD 350 million 121⁄4% Senior Subordinated Notes due 2009 (the “ 121⁄4%Notes”) and the issue of Preference Shares C in the amount of USD 350 million.The acquisition of Corporate Express provided Buhrmann with significantlyincreased scale, a good platform for growth, an improved information technologysystem and an experienced US-based management team. In November 2000,Buhrmann issued EUR 300 million of Ordinary Shares; the proceeds were usedto reduce acquisition debt obtained in connection with the acquisition ofCorporate Express.

 

In the first half of 2000, Buhrmann divestedits Information Systems Division (comprising value added resellers of personalcomputers, computer networks, peripheral equipment and related services, aswell as an IT training business), which was no longer considered a corebusiness. The value added resellers, operating under the names of Info’Productsand Allium, were sold in May 2000 to a newly formed subsidiary ofSpecialist Computer Holdings plc of Great Britain, a large privately ownedtechnology group. A portion of the consideration was financed by Buhrmannthrough loan notes, the principal of which was repaid in May 2002.

 

In June 2000, Buhrmann issued EUR 123million of Ordinary Shares to fund the Company’s general acquisition program.

 

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In April 2001, the office suppliesdivision of Samas Groep NV was acquired for EUR 321 million in cash and inMay 2001 the North American office products business of US Office ProductsCompany (USOP) was acquired for USD 172 million (EUR 193 million) in cash.The integration of the Samas office supplies division in Europe and the USOPoffice products business in North America was finalized in the course of 2002and expanded Buhrmann’s market scope in those two regions. Synergies have beenrealized from the integration of administrative, marketing, and supportservices functions, improved purchasing scale benefits, and the rationalizationof warehouses and distribution facilities. The Samas and USOP acquisitions werefinanced partly by means of additional debt under the Senior Credit Facilityand partly by means of an issue of Ordinary Shares in March 2001 whichraised EUR 665 million, net of expenses. A precondition for approval bythe European Commission of the acquisition of the Samas office suppliesdivision was the sale of the office products division of Buhrmann’s thenexisting Dutch office products subsidiary. This sale was effected inNovember 2001.

 

In September 2001, Buhrmann listedAmerican Depository Shares (ADSs), representing its Ordinary Shares, on the NewYork Stock Exchange. The ADSs are quoted under the symbol “BUH”. The ADSs,evidenced by American Depositary Receipts (ADRs), each represent one OrdinaryShare of Buhrmann N.V. Buhrmann’s primary listing of Ordinary Shares remains atEuronext NV in Amsterdam, quoted under the symbol “BUHR”.

 

The legal name of the Company is Buhrmann N.V.(Naamloze Vennootschap). It is incorporated under the laws of the Netherlandsand has its statutory seat in Maastricht (the Netherlands). Our registeredoffice address is Hoogoorddreef 62, 1101 BE Amsterdam ZO, the Netherlands andour telephone number is +31 20 6511111.

 

Our agent in the United States for service ofprocess in connection with our 121⁄4% Notes is CT Corporation, 111 Eighth Avenue,New York, NY 10011. The transfer agent, registrar and depositary for the ADSsis The Bank of New York, located at 101 Barclay Street, New York, NY 10286.

 

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**RecentDevelopments**

 

On June 18, 2003,Buhrmann announced that it had been approached regarding a possible sale of itsPaper Merchanting Division to PaperlinX Limited. The Australia-basedmerchanting and paper production group has offered Buhrmann EUR 746million (on a debt free and cash-free basis).

 

The envisaged sale of the Paper MerchantingDivision is subject, amongst other things, to completion of due diligence byPaperlinX, regulatory approvals, the consent of Buhrmann’s banking syndicate,negotiation of a definitive sale and purchase agreement, completion of workscouncil and trade union consultation procedures and the approval of Buhrmannshareholders.

 

It is expected that a sale and purchaseagreement will be entered into with the subsequent completion of thetransaction anticipated in the third quarter of 2003.

 

Following the execution of a sale and purchaseagreement, the transaction, together with the revised terms of the PreferenceShares C will subsequently be submitted to Buhrmann’s shareholders forapproval.

 

Buhrmann has secured the required consent ofthe holders of Preference Shares C (see Item 10 “Additional Information-Articles of Association of Buhrmann NV- Preference Shares C”) for the proposedtransaction. Contingent on the completion of the sale of the Paper MerchantingDivision, these shareholders have been offered the following revisions of theterms of the Preference Shares C:

 
|                                                                                                                            |   | **Existing terms** |   | **Revised terms**                                                       |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|-------------------------------------------------------------------------|--------|
| Initial conversion rate (1)                                                                                                     |   | EUR 18.1125   |   | EUR 13.00                                                          |   |
| Date of cancellation or repurchase of the shares at 100% of the  liquidation preference (USD 10,000, plus accrued dividend) (2) |   | October 2011  |   | October 2010                                                       |   |
| Annual dividend (3)                                                                                                             |   | 5.5%               |   | 2004 and 2005: 6.0%  2006, 2007 and 2008:  6.5%  2009: 7.5%  2010: 8.5% |   |
| Cancellation or repurchase right if trading price of Ordinary Shares  exceeds conversion price under certain conditions (4)     |   | 150%               |   | 125%                                                                    |   |

 

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(1) Conversion price as defined in Article 34of the Articles of Association of Buhrmann N.V.

(2) The twelfth anniversary ofIssue Date per Article 34 of the Articles of Association of Buhrmann N.V. shallbecome the eleventh anniversary of Issue Date.

(3)The dividend of 5.5% per Article 33 of the Articles of Association of BuhrmannN.V. shall be replaced with the schedule set out in the table and the rates setout in the table will apply to calendar years.

(4) In Article 14, paragraph 2c (ii) A (i) of the Articles of Association the clause “150% of the thenprevailing Conversion Price” shall be replaced with “125% of the thenprevailing Conversion Price”.

 

As a consequence of the reduced initialconversion rate under the revised terms set out above, the Preference Shares C,if converted, would convert into approximately 34 million Ordinary Shares peryear-end 2003, as compared to approximately 24 million Ordinary Shares peryear-end 2003 under the existing terms.

 

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**Business Overview**

 

***Introduction***

Buhrmann is a majorglobal distributor of office products, paper and graphic systems for thebusiness market. Stemming from the notion that every successful productrepresents added value to its users, it is our role to increase theavailability of these products in an optimum way. Buhrmann offers producersdistribution capacity, efficiency in logistics, speed of delivery, and productintegrity to the point of delivery. A combination of state-of-the-art information technologyand advanced logistic infrastructure allows Buhrmann to distribute more products, faster and more efficiently to awider group of users. At the same time we are able to serve end-users bysupplying them with a wider selection of products, at lower procurement costs,more quickly and with greater flexibility. By getting the right productsdelivered to the right places atthe right time, we provide a service of economic importance. Offeringdistribution capacity means that manufacturers can increase production to an optimum level,have better capacity utilization, and earn their investments back more quickly.In turn, consumers benefit from the increased availability of wider ranges ofproducts, which can be offered at a lower price per unit.

 

Buhrmann generated salesin the year 2002 of EUR 9.9 billion. Buhrmann’s activities are groupedinto three segments: Office Products, Paper Merchanting and Graphic Systems. The Office Products Divisions’ customer base isspread over many industries and sectors including governmental agencies; mostof these customers are large- or medium-sized. The Paper Merchanting andGraphic Systems Divisions depend primarily on graphic markets in Europe.Buhrmann’s overall concentration of customers is very low (no customerrepresents more than 1 % of Group sales) and customer turnover is historicallymodest. Goods and services are sourced from many different suppliers with theexception of Graphic Systems which distributes primarily printing equipmentfrom one supplier exclusively (Heidelberger) and the desk-top softwarebusiness, ASAP, for which more than half the sales value is derived from onesoftware publisher (Microsoft).

 

At the end of 2002,Buhrmann had approximately 25,000 employees in 30 countries.

 

 

***Office Products***

Combined, Buhrmann’s Office Products Divisionsare the world’s market leaders in the business-to-business distribution ofoffice products, based on revenue. We operate in North America, Europe,Australia/New Zealand and, through a joint marketing alliance, in Asia underthe global brand name Corporate Express. A widespread proprietary distributionnetwork enables us to provide service capacity to both local customers and organizationswith an international presence. Technologically advanced infrastructure andon-line ordering tools enable our customers to realize valuable efficiencygains in their procurement processes. The product range is broad with over50,000 items, including the following product categories:

 

•                       Traditional consumableoffice supplies such as pencils, pens, paper clips, paper and writing pads;

•                       Consumable computerproducts such as toner and inkjet cartridges, magnetic media products, CDs, anddiskettes;

•                       Office furniture suchas desks, filing cabinets and chairs;

•                       Desktop softwareproducts such as anti-virus applications and CD label printing software;

•                       Digital printingequipment and services, including copiers;

•                       Print and formsmanagement services such as business cards, general business forms, labels anddirect mail;

•                       Customized corporategifts and promotional items such as caps and mugs;

•                       Janitorial equipmentand supplies such as paper towels, liquid soap and dusters;

•                       Safety equipment andsupplies such as pad-locks and fire extinguishers;

•                       Break room suppliessuch as coffee, plastic cups and chewing gum.

 

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***Paper Merchanting***

Buhrmann is Europe’s leadingdistributor of paper and related products to the graphic, office and displaymarkets, basedon tons of paper sold. Annually, Buhrmann distributes over two million tons ofpaper to different types ofprinters, publishers, sign makers and office market users, predominantly in Europe. This ranges from paperfor copiers and laser and inkjet printers to large sheets for printing presses.In addition to paper, Buhrmann distributes a large range of packagingmaterials and self-adhesive and syntheticmaterials for the display and digital print market. These products are used forlettering on building signs, as well as advertising slogans on buses, trainsand aircraft.

 

Buhrmann’s aim is to excel in providingvalue-added services to customers who require a diversity of high-quality paperproducts for printing time-sensitive publications. Buhrmann is a pioneer inbranding in the European paper industry with a growing portfolio of proprietarybrand names (Hello, Motif, ON, Core and IBM).

 

***Graphic Systems***

Buhrmann is the largest distributor of graphic equipment (such asprinting presses), printing materials, and related services to the graphic artsindustry in the Netherlands, Belgium, Luxembourg, Italy, Spain and Greece, based on revenue. The product range is led by the industry-leading Heidelbergprinting presses. Buhrmann is a total solutions provider offering state-of-the artpre-press, press, and post-press equipment, as well as services, supplies andspare parts.

 

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**Business Strategy**

 

***Our business***

As an international business services anddistribution group, our focus is exclusively on the marketing and distributionof products and services in the business-to-business markets. We strive towardsleading market positions in product categories with limited disintermediationrisk. We aim to grow both organically and by acquisitions.

 

A number of core principles guide the pursuit ofour vision:

• A ‘best in class’distribution infrastructure with a broad geographic scope;

• The relentlesspursuit of superior customer service;

• A wide range of highquality products;

• Technologicalleadership, including significant eCommerce expertise;

• Dedicated,experienced management and staff;

• Commitment to thehighest ethical, sustainability, corporate governance and social responsibility

standardsand practices.

 

The markets we target are those in developedcountries with a high Gross Domestic Product (GDP) per capita.

We do not pursue manufacturing and retailingactivities, as we operate as a distributor. In selecting areas of

operation, we focus particularly on markets withthe following attributes:

 

• A large number of suppliers with a wide varietyof products that require our product assortment consolidation services;

• A broad spread andnumber of customers, resulting in a relatively low concentration of businessper customer;

• Theopportunity to deliver appreciable added-value to both our suppliers andcustomers through our distribution services function; and

• The potential tocreate significant competitive advantages in operational and procurement costs,as well as in customer service.

 

Creating leading positions in these marketsenables us to capitalize on our considerable scale advantages and cost

efficiencies. Accordingly, we strive to be theleading distributor in our regional markets.

 

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***Growth strategy***

On the basis of our recent regular strategyreview we are maintaining the chosen strategic direction of the Buhrmann Group.This is underpinned by an additional number of opportunities for improvementand renewed sustainable growth.

 

• Inour core Office Products business segment aimed at strategic and largeaccounts, we will continue to consolidate our prominent market positions, whilewe increase our global contract business. We provide office products sourcingcoverage for these global customers who operate in our North-American, Europeanand Australasian markets;

• Inthe graphic arts industry in Europe we aim to enhance the profitability of ourPaper Merchanting business by continuing to focus on purchasingrationalization, while further strengthening our product range diversification byincreasing our presence in the display materials market. In our Graphic Systemsbusiness we will continue to build on its services, supplies and spare partsoffer and the further introduction of digital printing equipment;

• Wewill continue to pursue integrated branding strategies aimed at strengthening our group brands offer,in order to underpin the clear benefits we deliver to our customers in terms ofservice and product assortment, while at the same time supporting our goalswith regard to margin management;

• Ourinvestments in eCommerce and internal systems will continue to yieldoperational efficiencies and will continue to help us differentiate ourselvesfrom competitors. Our office products platforms in North America, Europe andAustralia provide customers with sophisticated business-to-businesscapabilities with a business-to-consumer ease of use that improve the customers’overall ability to fulfill and track orders as well as to reduce their supplychain expenses;

• Wewill employ the flexibility of our state-of-the-art operating and distribution systems in deliveringmore value added services to our customers. In Paper Merchanting, for example,we can help our customers manage their inventories more effectively with oureCommerce platform and highly responsive distribution capabilities. Customerscan order what they need when they need it, and reduce their need to carrylarger inventories of paper stock;

· We will offer a broader range of products and servicesto our existing office supplies customer base. They have already experiencedthe benefits that we bring to their non-production supply chain management. We will focus on further extensions to our product offering, such as janitorialand break room supplies;

• Weare stepping up our efforts to reach out to small and medium-sized office supplies customers whocan greatly benefit from a total supply solution. We believe that we cansignificantly help these customers fulfill their sourcing needs in addition tolowering their overall supply chain costs.

 

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**Industry Trends**

 

***Globalization/outsourcing***

Our customers are increasingly concentratingtheir purchase volumes of office products, paper or related products, while thecustomers expect delivery and services rendered to multiple locations. Inaddition, customers concentrate on their key processes, while they outsource non-strategictasks. This trend has contributed to the formation of our global officeproducts business.

 

***Size and scale/consolidation***

In order to service our customers, extensivelogistical, sales and information technology infrastructure is required. In addition,purchasing volumes determine largely how attractive products can be sourced.These factors underlie the economies of scale of our business model, hence thetrend in our industry for the formation of larger entities both in OfficeProducts and Paper Merchanting.

 

***Internet/eCommerce***

Due to the low value per order, high ordervolume, dispersed ordering points at our customers, extensive assortments andrelatively high administrative costs, our business model is suitable foreCommerce developments. This has resulted in significant growth of volumes soldover the internet.

 

***Service***

Notwithstanding the importance of attractivepricing and ease of ordering, service in terms of quick and complete deliveryis essential in our industry.

 

**Seasonality**

Sales in Office Products primarily relate tooffice employees at work in the office. Sales in Paper Merchanting primarilyrelate to printers running their printing presses. Therefore, our sales arespread more or less in accordance with the effective working days in a quarter.Discretionary items such as software or furniture are typically negotiated atmonth or quarter ends. For Graphic Systems, historically, most printing pressesare sold in the last quarter of the fiscal year which is driven by fiscalbenefits related to purchasing capital goods for our customers. In a generalsense, profitability tracks sales development.

 

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**Divisions**

Buhrmann’s three businessactivities are organized into five divisions. These are the three OfficeProducts Divisions of North America, Europe and Australia, the PaperMerchanting Division and the Graphic Systems Division. For reporting purposes,the Office Products Divisions Europe and Australia are combined. Therefore,both of them are addressed together in this section.

 

**Office Products North America**

 

Key figures (in millionsof euro, except number of employees)

 
|                                                                     |   | **2002** |   | **2001** |   | **2000** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Net sales                                                                |   | 4,931    |   | 5,221    |   | 4,703    |   |
| Operating result before amortization andimpairment of goodwill (EBITA) * |   | 197      |   | 242      |   | 333      |   |
| Number of employees at year-end                                          |   | 12,211   |   | 14,240   |   | 13,262   |   |

 

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* theuse of EBITA is explained in Item 5 “Operating and Financial Review andProspects”.

 

###### ***General***

The Office Products North America Divisionoperates under the name Corporate Express and is a leading full-servicedistributor of office products and related services to businesses in the UnitedStates and Canada.Corporate express manages a dynamic assortment of about 50,000 items, itsproduct range encompasses office products, computer and imaging supplies,furniture, desktop software, promotional marketing products, forms managementservices, and, expanded in 2002, facility, break room and safety supplies.

 

The USOP acquisition in May 2001 (see“Company History” above) improved the market leadership position of CorporateExpress, because it immediately provided direct access to a growing market ofmedium-sized businesses in the United States. The integration of theacquired USOP activities was completed in 2002 and enabled Corporate ExpressNorth America to realize significant synergies in the area of consolidation of Corporate Express’ and USOP’s warehousesand distribution facilities as well as administrative, marketing and supportservices functions. In addition, Corporate Express is realizing synergies fromimproved purchasing scale benefits.  Corporate ExpressNorth America’s strategic and large account customer base includes asignificant number of Fortune 1000 companies as well as major buyers’co-operatives and governmental entities. It is also increasingly expanding itsservice for small to medium-sized companies across the United States andCanada. Its distribution network encompasses more than 180 office productlocations (including 38 distribution centers), 33 specialty business locations(including 8 distribution centers) and approximately 1,700 office productsdelivery vehicles which helps provide its customers with excellent levels ofnext business day delivery services.The Division’s head office is located inBroomfield, Colorado.

 

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##### **Industry overview**

Corporate Express North America operatesprimarily as a contract distributor. Contract distributors typically servemedium and large-size business customers through the use of a customized,contracted product catalogue and a direct sales organization. They typicallystock certain products in distribution centers and deliver these products tocustomers on the next business day. The major contract stationers carry asignificant proportion of their merchandise in-stock, relying only uponwholesaler intermediaries for inventory backup and increased product breadth,while smaller contract distributors carry a much smaller portion of theirmerchandise in stock.

 

The non-store officeproducts distribution industry in the United States has been rapidlyconsolidating and as a result of this consolidation, the number of independent,midsize office products contract distribution companies has declinedsignificantly. Large companies, such as Corporate Express, serving a broadrange of customers, have acquired many of these smaller businesses.

 

A reason for such consolidation is that medium-and large-size companies, the market segment in which Corporate Express NorthAmerica operates, are increasingly opting to use a single national supplier.Central purchasing of office products and services provides several advantagesfor customers. For example, a customer could take advantage of the economies ofscale Corporate Express offers and achieve uniformity in its office productsservices and distribution company-wide while reducing its procurement processcosts by dealing with one supplier and uniform system.

 

***Strategy***

In order to address themarket conditions in the US office products industry, Buhrmann has supplementedinternal growth with acquisitions, acquiring a large number of office productdistributors in the United States. The practice has been to integrate acquiredcompanies into the overall infrastructure with a goal of improving purchasingpower and reducing selling, administrative and other costs. In the comingyears, Corporate Express North America will strive to grow organically andcontinue to improve quality, lower operating costs and enhance margins,potentially supported by small acquisitions. To reduce costs, Corporate ExpressNorth America is further centralizing and/or regionalizing certainadministrative functions as well as increasingly automating the distributioncenters and integrating the branch offices.

 

Future organic growth will also have to comefrom selling more products and services to existing customers.

Corporate Express North America will expand itsproduct and services range to help them reduce the number of vendors from whomthey need to order. Over 75% of surveyed customers have said that they havestrong desire to purchase a broader range of products from Corporate Express. To respond to thisneed, CorporateExpress North America added an expanded offer of janitorial, sanitary, safety and break roomproducts to its growing range. With regard to new customers, Corporate Express NorthAmerica willalso be focusing on serving an increased number of small to medium-sized firms.Its eCommerce systems and total supplier capabilities are very valuable to thesepotential customers, who in many cases do not have established supply chainprocedures.

 

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***E-commerce***

E-commerce sales, as a percentage of total sales of the Division,increased significantly and are expected to grow in the years to come.

 

Customer service was considerably enhancedduring 2002 through the implementation of new “E-Way”, the Division’s next generation electronic commerce ordering and fulfillmentsystem. In addition to reducing the Division’s cost of sales, this system alsogreatly helps its customers to control their costs. E-way is linked to internalenterprise systems and greatly enhances the Division’s customers’ supply chainmanagement as if it were an in-house capability. E-way provides customers withexpanded access to information about order status and centralized, consolidatedinvoicing.

 

The Division plans to continue to participate in third-party procurementselling models and integrate next-generation ordering systems with its customers’electronic procurement platforms. The Division will continue to integrate itsInternet technologies with its back-end infrastructure systems to better serveits customers by receiving, fulfilling and delivering orders as efficiently aspossible.

 

***Sales and marketing***

Customer service continues to be the hallmark ofCorporate Express North America. In a customer survey conducted late in 2002,over 10,000 customers gave Corporate Express unsurpassed satisfaction ratingsincluding exceptional performance in the areas of delivery services, orderpackaging, on-time deliveries, customer service, sales representatives, billingaccuracy and billing services.

 

The marketing strategy is designed to increase the customer base oflarge and medium-sized businesses and institutions by demonstrating tocustomers and potential customers that the total overall cost of managing theiroffice products needs can be reduced by focusing on process cost reduction.

 

Corporate Express North America works with customers to simplify andreduce the costs of the office product procurement process by providingservices such as customized and tailored catalogues, electronic as well aspaper requisition forms, EDI and Internet ordering.

 

Corporate Express North America markets its productsand services to customers using Corporate Express’ Office and Computer ProductsCatalogue. Many of the office products offered in this catalogue are kept instock at Corporate Express’ distribution centers. Additionally, CorporateExpress North America is linked electronically to certain suppliers so thatitems not in stock can be delivered to a customer on a next-day basis and itsinventory levels can be better managed. In addition to the catalogue, CorporateExpress North America produces a substantial number of customized andpromotional catalogues.

 

Corporate Express North America markets andsells its products and services to both contract and non-contract businesscustomers through a network of national account managers and local employeesales representatives. Contract customers enter into agreements with CorporateExpress North America setting prices for certain products over an agreed timeperiod. The primary responsibility and priority of the national accountmanagers is to acquire, retain and increase sales of Corporate Express’ rangeof products and services to large, multiple - location customers. The localsales force is generally commission-based and is organized within each of themajor product categories. Corporate Express North America is focusing onexpanding its national account customer base to increase the cross-sellingopportunities among its various product lines.

 

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***Logisticsand Purchasing***

Corporate Express NorthAmerica receives orders through its E-Way eCommerce tool and through itsElectronic Data Interchange systems, or EDI, as well as by traditionaltelephone and fax order methods.  Afteran order has been placed with Corporate Express, a picking document is createdfor those items in stock and routed to the appropriate distribution center fororder fulfillment. At the same time, Corporate Express’ EDI system transmitsthose portions of the orders not in stock to Corporate Express’ vendors.Corporate Express North America is able to acquire many items not in its owninventory on the same day and to combine such items with the in-stock items toyield a first time fill rate in the United States exceeding 99%. This meansthat over 99% of the office products ordered are delivered to the customerwithin 24 hours.

 

Corporate Express North America’s, largerdistribution centers typically have in stock approximately 10,000 Stock KeepingUnits, or SKUs, of office supplies. These are the most popular items containedin Corporate Express’ catalogue in both printed and electronic versions whichprovide a comprehensive selection of more than 13,000 items in the corecategories of office and computer supplies. Corporate Express North Americaoffers manufacturers name brands, as well as its own “EXP” private label. Alarge majority of these items are maintained in inventory in the distributioncenters. Corporate Express North America also has access, through EDI and othersupplier ordering systems, to over 50,000 additional SKUs of office products,computer supplies and catalogue furniture from wholesalers and other suppliers,enabling it to provide its customers with immediate access to a broad range ofproducts, including those not stocked at its facilities.

 

The distribution centers generally have alogistical reach of up to approximately four to five hours by truck in anydirection and Corporate Express North America uses a combination of their ownvehicles and third-party delivery services to deliver office products. Corporate Express North America intends tocontinue to invest aggressively in enhanced warehouse and distributiontechnology in order to improve customer service capabilities. Technologies such as‘pick-to-voice’ (automated voice picking technology) in its distribution centers increase our abilityto assemble multi-line orders accurately and efficiently. Another example is‘RoadNet’ for its vehicles, which directs deliveries in the timeliest manner.During 2002, two new technologically advanced distribution centers went on linein two of Corporate Express NorthAmerica’s biggestmarket areas – the New York and Los Angeles metropolitan areas.

 

Corporate Express NorthAmerica purchases a large majority of the products in volume directly frommanufacturers or major office products wholesalers, who deliver the merchandiseto each of the distribution centers. To maximize purchasing power, CorporateExpress North America’s purchasing strategy has been to establish preferredrelations with certain suppliers with whom it can capitalize on purchasingeconomies. This “preferred supplier” strategy creates advantageous pricingrelationships and has led to competition among suppliers for inclusion in thisgroup. In addition, the office products sold under the EXP brand name are beingsourced. The EXP product line consists of some 515 large volume products whichrepresent an offering to customers of high quality merchandise at attractivepricing.

 

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***Competition***

Corporate Expressoperates in North America in a highly competitive environment, which hasresulted in the requirement to continuously improve service offerings tocustomers in order to maintain gross profit margins per customer. The primarycompetitive factors in the US office products distribution industry areservice, including IT and eCommerce capabilities, price and product offerings.

 

Corporate Express’principal competitors in the United States, which vary in the different regionsin which Corporate Express operates, are national office products distributors,traditional contract stationers and direct mail order companies. CorporateExpress’ target market is large and medium-sized businesses and institutions.Buhrmann believes that large value-added office products distributors, such asCorporate Express, can provide the lowest total overall cost of managing itscustomers’ office products needs, high levels of service, convenience and rapiddelivery.

 

***Informationtechnology***

Corporate Express NorthAmerica is using EDI, reporting and other information technology systemsdesigned to decrease response times and error rates and improve customerservice, and has several operating systems to enhance its operations. ItseCommerce tool E-Way generates an increasing amount of fully automated orders,reducing costs for both the customers and Corporate Express. This system islinked to the general order entry system which is part of the ERP (Enterprise Resource Planning) system called ISIS used in the United Statesnationwide. Key features of the ISIS system are the use of three-tier clientserver architecture that allows customers and suppliers to better communicatewith Corporate Express and a relational database designed to handle customerinquiry, data warehouse and management information applications.

 

Corporate Express NorthAmerica also provides its customers with billing and usage information in hardcopy or magnetic tape, cartridge or diskette media, in each case designed to aparticular customer’s specifications. Customized cost center billing gives thecustomer the ability to analyze and rationalize its ordering and usage ofoffice supplies and to use such information for budgeting purposes.

 

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**Office Products Europe and Australia**

 

Key figures (inmillions of euro, except number of employees)

 
|                                                                     |   | **2002** |   | **2001** |   | **2000** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Net sales                                                                |   | 1,540    |   | 1,496    |   | 1,330    |   |
| Operating result before amortization andimpairment of goodwill (EBITA) * |   | 64       |   | 53       |   | 41       |   |
| Number of employees at year-end                                          |   | 6,023    |   | 6,228    |   | 6,100    |   |

 

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* theuse of EBITA is explained in Item 5 “Operating and Financial Review andProspects”.

 

***General***

All of Buhrmann’soffice products businesses in Europe now operate under the Corporate Expressbrand name. Based on 2002sales, CorporateExpress is among the leaders in business-to-business distribution of officeproducts in Europe. It offers its customers a full range of office products including officesupplies (such as computer supplies, stationery and office paper), officefurniture, copiers and business machines and provides services relating tobusiness forms. Corporate Express is not only selling “branded” products but isalso selling private label products

 

Corporate Express’ position was enhanced by the acquisition inApril 2001 of the office supplies division of Samas (see “Company History”above), which strengthened its market position in the Benelux, the UnitedKingdom, Ireland and Germany. During 2002, the integration of the acquired Samasbusinesses was completed. A major part of the integration activity took placein the United Kingdom, and consisted of migrating two IT systems and 6,000customers into one system as well as consolidating five logistic centers intoone location in Birmingham (which has been completed ahead of schedule). The larger scale that the Samas office suppliesacquisition provides will foster margin improvement in Europe as CorporateExpress combines its increased purchasing volumes by integration and byemphasizing pan-European products rather than local ones. Increased integrationefforts in the logistics area also yields margin improvements. Improvements ineconomies of scale in Corporate Express Europe’s warehouses and investments intechnology to automate its processes reduced overall costs per orderline andalso provided an increased ability to satisfy its customers with on-time,error-free, complete deliveries.

 

Corporate ExpressEurope holds significant market positions in most Western European countries.Elsewhere in Europe, Corporate Express has partnerships to serve internationalcustomers. CorporateExpress operates across Europe with 13 distribution centers and 120 salesoffices and had approximately 4,400employees at the end of 2002.

 

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Also operating under thename of Corporate Express is the Office Products Australia Division. Buhrmann owns a

52 percent interest in Corporate Express Australia Ltd, which is listedon the Australian Stock Exchange, the remaining shares are held by publicshareholders.  Corporate Express is the number one business-to-business officeproducts distributor in Australia and number two in this market in New Zealand,based on 2002 sales. Corporate Express Australia serves its customers from 28sales and distribution centers and had approximately1,700 employees at the end of 2002. Corporate Express Australia is successful as asingle-source supplier for large to medium-sized customers with regard to alltheir non-production supply needs. As such, it is a powerful agent forimprovement in our customers’ supply chain cost structure. More specifically, Corporate Express Australia supports its customerswith:

•                       Innovative eCommerceordering solutions;

•                       Comprehensivenation-wide distribution;

•                       Consolidated billingand reporting;

•                       Pro-active accountmanagement;

•                       Flexible and timelydelivery solutions;

•                       Cost-saving productsmarketed under our own brand name;

•                       Procurement processmanagement tools.

 

The private label brand,“EXP” available throughout Australia and New Zealand provides customers withhigh quality, cost saving product alternatives.

 

Corporate Express Australia completed sixacquisitions in 2002 adding EUR 25 million to annualized sales. Theseacquisitions improved the regional coverage as well as adding to the productrange offered to customers.

 

***Industryoverview***

The office productsbusiness in Europe and Australia are following similar trends to those seen inthe United States in recent years. The industry in Europe is fragmented and isbeing consolidated by major office product suppliers. As in the United States,large contract stationers are establishing customer relationships with mediumand large corporations that are seeking to lower the cost of procurement foroffice supplies. In addition, there is growing interest, particularly inEuropean markets, in multinational relationships between large globalcorporations and the major contract stationers with international operations,such as Corporate Express.

 

Buhrmann believes thereare several advantages for customers that use central purchasing of officeproducts, including office supplies, office furniture, business machines andservices. For example, a customer could take advantage of the economies ofscale offered by larger suppliers and achieve uniformity in its office productsservices and distribution company-wide while reducing procurement process costsby linking on to the electronic order systems.

 

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***Strategy***

In order to realize thenecessary volume in the European market, which is needed to take maximumadvantage of economies of scale, Corporate Express Europe will continue tofocus on organic growth. Its practice has been to integrate acquired companiesinto its overall infrastructure with the objective to reduce selling,administrative and logistic costs in the long-term. However, in the short-term,such acquisitions have sometimes created and could create additional costs, asexisting systems are kept operational while new systems are implemented.Corporate Express Europe expects to generate further cost savings by furtherintegrating sales and back offices.

 

As larger customers are increasingly seekinginternational contracts Corporate Express will further centralize certain functions, such aspurchasing, international account management, international product managementand eCommerce management on a European level. These customers want to reduce the number oftheir suppliers and accordingly are looking to Corporate Express to broaden itsproduct and service range, for example in the area of forms management. Thiswill help Corporate Express to become a single-source supplier for more of itscustomers.

 

Corporate Express Europe believes that themedium-sized and small businesses market segments provide attractive growthopportunities. Therefore Corporate Express Europe will increase its focus onsmall to medium-sized customers.

 

Branding is a key strategic priority forCorporate Express Europe. It has introduced ‘Corporate Express’ as its

own brand for essential office products. Thisbrand will comprise more than 1,000 European products in addition

to many local items. With a quality equivalentto manufacturers’ brands, products sold under its corporate brand offer itscustomers value for money. In general, office products enjoy very little brandawareness. By putting its own name and corporate identity on a selection ofpremium quality office supplies, it aims to capitalize on the high servicelevel and other positive attributes associated with Corporate Express. At thesame time, this will contribute to meeting its margin objectives.

 

Corporate Express Australia’s growth strategyfocuses on expanding its product range to gain more of its existing customers’business. In addition, Corporate Express Australia will be increasing effortsto expand its customer base by focusing on the small to medium-sizedenterprises market segment. Corporate Express Australia will continue to makeacquisitions to expand its geographic coverage and product range. All theseefforts are aligned to reinforce Corporate Express’ position as the pre-eminentsingle-source supplier of office products in Australia and New Zealand.

 

***Sales and marketing***

Corporate Express Europefocuses its marketing efforts on medium to large-sized accounts.  A tailored approach is used to reach thesecustomers through different channels using electronic and printed catalogues of its productsand services. Corporate Express works with customers to try to simplify andreduce the costs of the office product procurement process by providingservices such as customized and tailored catalogues and electronic ordering andproduct information systems. In addition, a substantial number of promotionalcatalogues are produced.

 

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Corporate Express runs aEuropean catalogue which contains a range of approximately 3,000 commonproducts. These products are included in the country catalogues together with1,500-2,000 additional products, which are specific for the local markets and forcustomers. The catalogue is also available in Corporate Express Europe’seCommerce Internet tool as well as on CD-ROM. Corporate Express developed a newcatalogue that will be used by its international customers throughout Europe.Corporate Express believes that the new catalogue will be helpful to itsinternational customers, in that the customers will have a uniform cataloguefull of items available for immediate delivery to any of the customers’European locations.

 

Corporate Express Europehas established dedicated sales organizations through which it marketsits products and services for each of its different market segments. For example, aninternational account department is established to service large, internationalcompanies, while individual countries have both large account and regionalsales forces, addressing the different market segments.

 

Corporate Express Europekeeps most of the office products it offers in its catalogues in stock at itsdistribution centers. Additionally, Corporate Express Europe maintainselectronic links to certain suppliers so that items not in stock can bedelivered to a customer on a next-day basis, enabling Corporate Express Europeto deal efficiently with working capital and warehouse capacity.

 

Maximizing its unique geographic infrastructure,linked via one computer system and with outlets located throughout Australia,Corporate Express Australia is able to offer customers a common nationalservice. A specialist National Accounts Team, offering a unique service unmatchedwithin the industry, manages these national customers. Corporate ExpressAustralia is employing new sales channels such as telemarketing and direct mailto reach customers efficiently.

 

***Logisticsand Purchasing***

Corporate Express Europereceives orders through EDI, as well as by traditional telephone and fax.Orders are routed to the warehouse to be picked and packed. Corporate ExpressEurope achieves an average first order fill ratio of over 95% (i.e., over 95%of orders are delivered complete the first time). The distribution centers usedifferent technologies for picking orders. Corporate Express Europe has decidedto change or replace methods and systems for those distribution centers thathave become obsolete or inefficient operations or for which the capacity mustbe extended in order to serve higher volumes. A new distribution center isunder construction in the Netherlands in order to solve capacity limitationsand to increase productivity and service levels. In the United Kingdom,Corporate Express has concentrated all its logistic operations in Birmingham bydoubling its capacity there. All other distribution centers in the UnitedKingdom have been closed. Corporate Express Europe is constantly reviewing theefficiency and effectiveness of its warehouses.

 

The new distributioncenters use latest technologies such as smart conveyor belts, automatic barcode scanning, (pallet) flow racks, wave-based order picking and weight checks,all with the objective of achieving high quality and efficiency. CorporateExpress Europe is standardizing warehouse management systems in its operatingcompanies which is expected to improve the operational control of all the pickand pack activities as well as all resource management activities. CorporateExpress Europe employs a number of different transportation options, such asdelivery by truck and parcel services, depending on the size of the order andthe location of the customer.

 

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Corporate Expresspurchases most of its products in high volume directly from manufacturers whodeliver the merchandise to distribution centers. Corporate Express Europe’sgoal has been to establish strong relationships with preferred suppliers with aview to achieving both lower prices and lower inventory levels as a result ofthe suppliers’ willingness to provide prompt delivery out of their inventory.Corporate Express Europe has accomplished this by entering into agreements topurchase large quantities from certain suppliers on a centralized basis. It isthus able to negotiate favorable discounts and rebates that apply to purchasesby all of Corporate Express Europe’s operations.

 

Corporate ExpressEurope’s strategy has led to competition among certain suppliers to be chosenas one of its suppliers. As a result, Corporate Express Europe will considerfurther consolidating its purchases from key suppliers to increase itsimportance to those suppliers, thereby increasing its bargaining power with itslargest suppliers.

 

Major rationalization hasbeen achieved in supply partners in Australia and New Zealand. Suchrationalization has resulted in greater trading with major suppliers, SKUrationalization, dramatically increased focus of total support along withimproved servicing and financial rewards. Corporate Express Australia sees aneven greater future with its strategic suppliers in moving forward together andfurther increasing trading, communication, and alignment in the areas of supplychain management. An effective and seamless supply chain will further increaseservice levels, while eliminating unnecessary cost and duplication.

 

***Competition***

Corporate Express Europeoperates in a highly competitive environment. Its competitors in officeproducts include national office products distributors, traditional contractstationers, direct mail order companies and, to a lesser extent, officeproducts superstores and stationery stores.

 

Except for priceefficiency, the most significant competitive factor in the office productsdistribution industry in Europe is service level (in particular, delivery speedand reliability). A relatively new element in the competitive environment isthe power of eCommerce. Having the ability to offer a wide variety of productsthrough the internet can give a company in the industry a certain competitiveadvantage. Corporate Express Europe offers a wide variety of products andservices, and frequently competes against companies that focus on only a fewproducts or categories of products.

 

Corporate ExpressEurope’s target market is medium and large-sized businesses and otherinstitutions. It believes that existing customers and potential customers inthis market prefer to deal with large value added office products distributors,such as Corporate Express, which can provide customers the lowest total overall(procurement) costs of managing their office products needs, high levels ofservice, convenience and rapid delivery.

 

***Informationtechnology***

Corporate Express Europecurrently uses a variety of national ERP systems, sales, order entry andwarehouse management applications as a result of the different systems used bythe numerous businesses it acquired over the last few years.

 

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Corporate Express Europeuses the SyntraNet Internet solution, which allows for the on-line placement oforders. The office products industry is witnessing strong growth in the numberof electronic orders. The option of placing orders on-line supplements theother common methods of placing orders such as by telephone, fax and PC-basedremote order entry. In 2003, a new state-of-the-art eCommerce platform will beintroduced in which the multipleplatforms from the former Samas office supplies and Corporate Express Europeoperating units are integrated into a common, shared platform. This platformwill offer aspecific solution for all segments of the market from the largest to thesmallest customer.

 

Corporate Express Europehas introduced a new catalogue database management system, which enables CorporateExpress Europe to produce catalogues in a flexible and efficient manner. Inparticular, Corporate Express Europe is able to produce customer specificcatalogues that can be viewed and printed at the customers’ premises bysalespeople using special software on their laptop computers.

 

Corporate ExpressAustralia introduced the third generation of its Internet ordering site,NetXpress.biz in 2002 whichprovides an even more sophisticated business-to-business Internet tool. One of the featuresof this system is that customers can customize the web site to the extent thatit looks like their own internal system. ECommerce sales continue to rise ascustomers increasingly turned to this very efficient manner of ordering andtracking their supply needs. Customers using the web are able to increase expenditurecontrol via user log-in and tailored product selection. They are also able tospeed up their ordering process by viewing stock availability and pricing.  E-commerce salesaccounted for 34% of total sales for 2002, up from 28% last year.

 

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**Paper Merchanting**

 

Key figures (in millions of euro, except number of employees)

 
|                                                                     |   | **2002** |   | **2001** |   | **2000** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Net sales                                                                |   | 2,988    |   | 3,126    |   | 3,014    |   |
| Operating result before amortization andimpairment of goodwill (EBITA) * |   | 74       |   | 93       |   | 130      |   |
| Number of employees at year-end                                          |   | 5,411    |   | 5,519    |   | 5,666    |   |

 

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* theuse of EBITA is explained in Item 5 “Operating and Financial Review andProspects”.

 

***General***

Buhrmann’s Paper Merchanting Division purchases awide range of paper products directly from manufacturers and sells them to different types of printers, publishers, signmakers and office market users in 25 countries, most of which are in Europe.Outside Europe, the Division maintains operations in the United States, SouthAfrica and Southeast Asia. The market,which is becoming increasingly pan European, requires strong local or regionallogistic services since customers need reliable service for relatively smallorders to produce (very often) time sensitive publications. In terms ofproducts, the Division focuses on high quality paper grades and specialities,with the goal of increasing the net operating result per ton of goods sold. Keysuccess factors in this business include purchasing power (bulk buyingdiscounts), regional market share (utilization of local warehouses), productrange (one-stop shopping) and reliability of deliveries (time sensitivepublications).

 

***Industryoverview***

Buhrmann estimates that the European market for paper and relatedproducts is 28 million tons, with approximately 50 percent distributed frompaper merchants directly to end customers and 50 percent by paper mills to endcustomers. The latter sales mainly comprise high volume end-user customerssuch as magazine and newspaper publishers and mail order catalogues. Paper merchants on the other hand play asignificant role in the distribution of the higher value-added products fortime-sensitive publications where product assortment, advice and service are thekey differentiating factors. Buhrmann believes its Paper Merchanting Divisionis the market leader in this sector of the paper industry.

 

The European graphicindustry remains highly fragmented. Although a process of consolidation isunderway, printers are typically small companies. Ninety percent of printers inEurope employ fewer than ten people. These companies do not need largequantities of paper at once, as it is not efficient for them to hold largestocks. This means that customers place a large number of relatively smallorders for paper. Paper merchants need up to date, highly efficient logisticalsystems to fulfill these orders correctly and on time. These logistical systemsrequire substantial investment. The know-how currently available in the fieldof logistics and information technology makes it increasingly possible toorganize order entry, administration and invoicing in one location and yetdistribute the product locally.

 

Customers are increasingly employing purchasingpatterns that favor rapid delivery of small quantities of paper from a wideassortment of products and services. In addition, customers are requiring newlevels of service, such as cutting sheets to specific lengths in the displaymarket. Digital printing technologies are bringing a whole new class ofcustomers to Buhrmann, as well as creating growth opportunities with existingcustomers.

 

***Strategy***

 

The Paper Merchanting Division serves four majormarkets through customer-oriented segment-specific

 

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business units: the commercial print market, theoffice market, the display market, and the packaging market.  Paper delivered to commercial printers isused in the production of high quality publications such as fashion magazines,automobile marketing materials, art books, and corporate publications such asannual reports. Office papers for use in copiers and desktop printers are soldto the office market, either directly to end-users or to resellers. Thissegment has maintained a growth rate that was higher than GDP development.Display products include materials used by screen printers to createadvertising billboards, posters and the lettering and designs for shop windows,buses, aircraft and a number of other point-of-sale applications. The packagingconsumables business is a niche market with significant growth potential, withboth existing and new customers.

 

The Paper Merchanting Division will continue to pursue its strategy toincrease profit margins, based on four pillars: retain existingcustomers and increase market share through offering superior customer service,the growth of sales under our own group brands, the growth of sales inprofitable niches such as the display and packaging markets, and the increaseof operational efficiencies by expanding sophisticated eCommerce solutions and bycontrolling internal costs.

 

The Paper Merchanting Division has been a pioneer in branding in the European paperindustry. This strategy differentiates it from our competition and helps us toimprove margins and consolidate our assortment. Its  ‘Hello’ brand remains the number one recognized coated wood-freepaper in Europe (source: Opticom International Research 2002). ‘Hello’ is apremium brand that offers printers a wide range of coating surfaces. In 2002,the Division introduced ‘Core’ as a basic value brand of essential coatedpapers which provides printers with a less comprehensive service offer comparedto the flagship brand ‘Hello’, and a different value proposition. ‘ON’, the Division’swood-free premium uncoated paper continued to gain customer loyalty anddisplayed fast growth. In office papers, our ‘Motif’ and licensed ‘IBM’ papersoffer sound customer value propositions to the office market. The Division’sproprietary branded sales in 2002 rose significantly as a percentage of totalDivision sales compared to the previous year.

 

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Established trends in the industry favor papermerchants, indicating a growing need for faster deliveries of smallerquantities of specialized goods. As a market leader, the Paper MerchantingDivision is well positioned to tap into the wide array of new opportunities. Inthe commercial print market the growth of smaller web-offset presses is drivenby automatic make-ready and computer-to-plate systems. On the sheet-fed offsetside the same drivers are bringing economic order quantities down. New digitalprinting presses are leading to entirely new customers and to entirely newopportunities with existing customers in all business units of the PaperMerchanting Division. The Division’s opportunity is to capitalize on itsreputation for high service levels, technical assistance, stable local marketoperations and strong portfolio of exclusive brands. With this strategy, thecompany can grow its preferred partner status with all its customers.

 

***Sales and marketing***

Sales activities areorganized in a decentralized way, based on the local structure of the operatingcompanies. Sales are made by both field sales people and tele-sales staff, andin the larger companies sales methods are targeted by customer type. Localmarketing activities are organized at operating company level. However, acentral marketing strategy is applied to the Division’s brands which todayalready forms a considerable part of each merchant’s local assortment.

 

***Logisticsand purchasing***

In 2002, thePaper Merchanting Division distributed 2.5 million tons of paper in 25 countries through its network of 38 operating companies (each with their own central warehouse), 247 customer serviceoffices and 146 distribution centers which have cross-docking facilities and somestorage capacity. Of the major warehouses, four are fully automated warehouses,and two have partial automation. Several are equipped with radio frequencysystems, which allow speedy and accurate communication between order pickersand the warehouse control systems. Individual operating companies handlepurchasing at the operational level and all are equipped with real-time order entry,credit control and order processing systems. The role of division managementinvolves seeking strategic opportunities to align the objectives of majorsuppliers with individual merchants, acting as a central reservoir of marketintelligence and facilitating intra-group relations.

 

There are twomain methods of sale in the paper merchanting business: indent sales and stock(or warehouse) sales.

 

**Indent sales**

Indent sales aretypically larger volume orders (usually larger than 5 tons) with a deliverytime of several days or weeks, and often of a non-standard size orspecification. Such customer orders are placed by the merchant with theappropriate manufacturer and subsequently delivered directly to the customerfrom the paper mill. In this sector of business the merchant conducts theselling, administrative, service and purchasing activity and carries the creditrisk, but has no inventory risk. Gross margins are therefore lower than in thestock sales sector.

 

**Stock or warehouse sales**

Stock orwarehousing sales occur where customers order stock from the merchantfrequently (average order size of around 250kg) where they require same ornext-day delivery. The merchant typically carries 5,000-10,000 line items instock, to meet the very wide range of products required by the merchant’scustomers. Gross margins are higher than in the indent sales sector, sincecustomers are prepared to remunerate for these services.

 

The volume split ofbusiness between indent and stock sales has changed little over recent years and in mostcountries in which the Paper Merchanting Division operates, is about 50:50. Although theconsolidation of publishers and major (often reel-fed) printers increasinglytends to favor buying directly from paper mills, the 

 

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growth ofprint-on-demand, office printing/copying, and the requirement for fasterservice favors the merchant channel, as does the continued fragmentation of theend-users market.

 

***Competition***

Individual companiestypically have strong market positions in specific markets. Buhrmann estimatesthat, based on tons of paper sold, its Paper Merchanting Division is the marketleader in the Netherlands and the United Kingdom and is among the leadingmerchants in Austria, Belgium, France, Germany, Italy and Ireland.

 

***Information technology***

Technology is a major enabler for operational efficiency. The Divisionshas developed an eCommerce tool to connect with suppliers and customers. This eCommerce tool whichit shares with the Graphic Systems Division was rolled out in 2002 to eight of its operating companies that togetherrepresent 57% of the Paper Merchanting Division’s sales. The Division plans to add more operatingcompanies in 2003. Sales forcesacross Europe are working hard to familiarize customers with the benefits ofmaking smaller, recurring orders on-line. The Division’s experience is thatthis tool is particularly effective in driving business when we are able tointegrate it with its customers’ estimating and purchasing software systems. The Division is also leading the developmentof a European eCommerce platform to link large paper mills and paper merchantsto improve supply chain efficiencies, progressively reducing our purchasingcosts and driving down inventories.

 

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**Graphic Systems**

 

Key figures (inmillions of euro, except number of employees)

 
|                                                                     |   | **2002** |   | **2001** |   | **2000** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Net sales                                                                |   | 489      |   | 565      |   | 556      |   |
| Operating result before amortization andimpairment of goodwill (EBITA) * |   | 23       |   | 38       |   | 50       |   |
| Number of employees at year-end                                          |   | 1,139    |   | 1,176    |   | 1,198    |   |

 

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* theuse of EBITA is explained in Item 5 “Operating and Financial Review andProspects”.

 

***General***

Buhrmann’s Graphic Systems Division suppliesconsumables, graphic equipment (pre-press systems, printing presses, folding,cutting and binding machines) and provides service and maintenance for thegraphic industry in Belgium, Greece, Italy, Luxembourg, the Netherlands andSpain. The Division maintains and services an installed machine base that isvalued at approximately EUR 5.6 billion. Some 8,000 different consumablesare offered, ranging from offset plates to printing inks. The Division sellseach product under its manufacturer’s brand name.

 

The Graphic Systems Division is an exclusive agentfor Heidelberger, the largest manufacturer of printing equipment in the world,but also sells related products. In October 2002, Buhrmann and Heidelbergcelebrated the 75th anniversary of their relationship. InDecember 2002,Buhrmann reached an agreement with Heidelberg on thecontinuation of Buhrmann’s distribution rights in the six European countriesmentioned above. The new contract, which is included as Exhibit 4.14 to thisannual report on Form 20-F, takes effect as of July 1, 2003 and runs forfive years.

 

Heidelberger productsaccount for approximately 70% of the Division’s sales. The emergence of newtechnologies has led to more streamlined and simplified printing processes. Theapplication of these new technologies allows information to be transferreddirectly from the computer to the print-plate and via the printer to thefinishing equipment where the cutting, folding and binding takes place. Tocomplement the range of Heidelberger printing presses, Heidelberger alsosupplies high quality digital printers for the commercial printing andcorporate environment. The Division distributes these digital printers mainlyto the graphic arts market, which are able to diversify the product offeringsand enhance the flexibility of the print capacity.

 

The Graphic Systems Division experiences morecyclicality in its results than Buhrmann’s other divisions because asubstantial part of its sales consists of capital goods, such as printingpresses, and thus is more directly susceptible to changes in the generaleconomic climate.

 

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***Industry overview***

The market for graphicsystems consists of three basic categories: sales of pre-presses, printing andfinishing machinery, services (on call and on contract), and sales of printconsumables. Approximately 85% of the sales are attributable to distributionactivities, and approximately 15% of the sales are a result of providingservices. Buhrmann operates in Belgium, Greece, Italy, Luxembourg, theNetherlands and Spain as the exclusive distributor for Heidelberg.

 

The distribution of graphic systems is a fairlycyclical business, depending on the economic environment and technologicalchanges. Offset printing accounts for a significant portion of the market andhas grown at a steady rate of 2 to 3% per annum over the last decade. Theexisting population of printing presses historically needs to be replaced oradapted to directly receive digitized information. Since there are leadtimes between ordering and installing the equipment, an economic upswing doesnot immediately correlate with sales for the Division. Also, the major tradeshow for the graphic arts industry – DRUPA – is held only once every fouryears. This event usually results in increased sales of printing equipmentbecause new technology is showcased or expected to be shown at this fair. Thenext DRUPA will be in May 2004. Buhrmann expects that the combination ofimprovements in the economy and the impact of the DRUPA fair will favorablyaffect sales in 2004.

 

The majority ofprinthouses in Europe are small companies employing no more than 20 people. Bytradition, printers handle all the steps of the printing process (pre-press,printing, assembling and mailing) under one roof. Few printers specialize, forexample, as a service bureau (essentially for pre-press), as a bindery or as aprint center (handling low quality and short run print).

 

***Strategy***

Following a restructuringof the Graphic Systems Division in 1998 and a number of divestments, theDivision is concentrating on the distribution and service of graphic equipmentin six European countries. TheDivision continues its focus on reducing the cyclical nature of the graphicequipment business through expansion of its services contracts, supplies and spareparts businesses:

 

• Services, such as equipmentmaintenance/upgrading and customer training;

• Supplies stands for consumables used in theprinting process, such as inks, plates and films;

• Spare parts for printing presses and othergraphic machinery; together called the “3 Ss”.

 

As a benchmark, the gross margin of the “3 Ss” is now covering 58% of the total cost of theentire Graphic Systems Division, compared to 53% in 2001. The Divisions intendsto grow its business by expanding the range of its offering in the “3s”.

 

In line with the Division’s focus on reducingthe impact of the cyclical nature of the offset printing press business, thedivision will continue to invest in the digital printing segment. The digitalmarket is a new channel for the Division, primarily comprised of corporatecustomers who do large amounts of in-house printing. The Division will servethis market with a state-of-the-art direct color imaging system brandedNexPress, which is a joint development product of Heidelberg and Kodak, as wellas providing service, technical support, and consumable supplies. Directimaging technology enables personalized printing – a significant benefit fordirect marketers – providing high quality, smaller print run quantities andvery fast print job turnaround.

 

In 2002, the Division made an interactiveinternet sales system available for the sale of its supplies. This advancedsales application tool is contributing to an increase in sales of supplies.

 

The underlying strategic goal is to remain Heidelberger’spreferred distribution channel to the graphic arts market in Europe.

 

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***Sales andmarketing***

The Graphic Systems Division’s marketing strategyfocuses on the selling and servicing of total printshop solutions, from equipment to trainingto service and support, to consumables/supplies. Heidelberger’s willingness to give exclusivedistribution rights results in part from the value the Division adds throughcustomer knowledge, the training and support programs. In addition, thecustomer relationships that the Division has maintained over the years areparticularly important in marketing investment goods such as printing systems.The Division’s customer base is comprised of print shops and related specializedservice bureaus. The sales cycle of printing equipment is lengthy and canspread over several years. Sales are generated through the sales force.Customer dedicated sales managers receive commissions on sales, providing anincentive for meeting sales targets.

 

***Logisticsand Purchasing***

The Graphic SystemsDivision has six main logistics centers, located in Amsterdam, Athens,Barcelona, Brussels, Milan and Rome. These centers stock spare parts, graphicconsumables and smaller equipment. Shipping is mainly through third-partydelivery services. Large printing presses are shipped directly fromHeidelberger to the customers.

 

The Graphic SystemsDivision purchases its products directly from Heidelberger and othermanufacturers. Annual purchasing volumes are agreed with vendors and updatedmonthly. Delivery lead-time (between purchase and delivery to the customer) forlarge presses can be up to six months. To reduce the exposure during thisperiod, the Division often requires a down payment from the customer prior topurchasing the printing press from Heidelberger (or from any othermanufacturer). If a customer cancels its order prior to delivery, the Divisioncan be required to purchase the printing press. To this point, this hasoccurred only incidentally and the contractual compensation from the customerhas been sufficient to cover the lack of profit.

 

***Competition***

The Graphic SystemsDivision’s competitors are the sales and marketing operations of other printingpress manufacturers. Competition is primarily with respect to product quality,pricing, service and sales coverage. The Division has participated in thegraphic arts markets for more than 75 years and has achieved a high marketpenetration in such markets. Graphic equipment sold by the Division can befound in print shops throughout the markets in which it operates. Good customerdatabase management and printing knowledge combined with high quality serviceand equipment provide entrance barriers in these markets. The consumablesmarket (film, plates and ink) is more fragmented and characterized by manysmall orders to be delivered on very short notice.

 

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***Informationtechnology***

Printing systems havebecome increasingly complex due to built-in functionalities and integratedexpert guidance is needed to understand the benefits of one equipment offeringversus another. The Graphic Systems Division employs sophisticated simulationtools to allow the customers to select the investment and machine configurationsappropriate for them.

 

Each operating companyhas an Internet website that is linked to the worldwide Buhrmann andHeidelberger networks. Anin-house eCommerce platform has been developed in close co-operation with thePaper Merchanting Division. Besides supplies, the services and spare partsbusiness will be migrated to the new eCommerce platform which enableslower-cost sales growth and greater efficiency in ordering, servicing anddistribution.

 

**Risk control**

 

Buhrmann has a Management Charter in place thatdescribes most of the responsibilities and authority levels for the divisionaland operational managers, including instructions with respect to risk control.Adherence to the Management Charter and Buhrmann’s policies is being monitoredat various levels in the organization. There are also procedures forauthorizing investments and acquisitions. Buhrmann uses a comprehensivemanagement reporting system to monitor the Company’s performance. Thiscomprises a coherent set of instruments, which cover adoption of strategy,portfolio analysis, budgeting and reporting of current results, as well asprojected results. Reporting of actual results takes place on a monthly basisand covers not only results, but also balance sheet and cash flow information. Themanagement of risks associated with business activities, and compliance withlocal legislation and regulations is, in principle, the responsibility of localoperational management. A system of authority limits for divisional and localoperational management has been established. Besides requesting the relevantmanager to obtain approval from a higher level of authority for a number ofmatters, the system also triggers a flow of information to senior management ofBuhrmann. The adequacy of the design and proper functioning of the internalcontrol systems at the operating companies are periodically investigated by ourinternal audit department who reports its findings to division management, theExecutive Board and the Audit Committee. Actions required to be taken pursuantto the reports are monitored by the same bodies. Operational and financialrisks and the effectiveness of our internal control systems are evaluated bythe Executive Board on an ongoing basis. Regularly, business reviews arecarried out by senior management and the Executive Board. The Audit Committeeof the Supervisory Board monitors adherence to the Company’s financial policy,the quality of the financial reporting and the effectiveness of it’s internalcontrol systems and reviews the way in which the Executive Board is managingand monitoring the financial risks. The external auditors report on findings oninternal control as part of the audit of the Consolidated Financial Statements.

 

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**Environmental**

 

We are subject to foreign, federal, state andlocal laws, regulations and ordinances that (1) govern activities or operationsthat may have adverse environmental effects, such as discharges to air andwater as well as handling and disposal practices for solid and hazardouswastes, and (2) impose liability for the costs of cleaning up, and certaindamages resulting from, sites of past spills, disposals or other releases ofhazardous substances.

 

Our custom form and pressure-sensitive label businessesoperate printing facilities which may generate hazardous waste, and we operatea fleet of vehicles, the maintenance and fuelling of which may also generatehazardous waste.  We are not aware ofany environmental conditions or other liabilities relating to present or pastoperations that would be likely to have a material adverse effect on ourfinancial condition or results of operations. However, there can be no assurance that environmental liabilities whichmay arise in the future will not have a material adverse effect on ourfinancial condition or results of operations.

 

***Office Products***

Our office products companies began toformulate an environmental policy plan in 1999.  This plan covers a number of areas. In-house environmentalprotection is aimed at further improving environmental awareness within ouroffice products companies and in the systems employed to minimize theenvironmental impact. In the field of logistics, attention is given to theoptimization of transport routes, efficient use of materials and the return oftoners, pallets and packaging materials. We enable and encourage our customersto use environmentally friendly products by offering an extensive range ofsustainable, or “green” products. In order to help our customers identify them,we use icons in catalogues as well as identifying labels, such as “EarthSaverâ“ in the US, and we have issued a number of dedicated publications tosupport the awareness of these initiatives.

 

Our operating companies in various countries have continued to step upefforts to recycle and re-use, for example, copier and printer ink and tonercartridges. A number of them have established alliances with charities (such asUNICEF) to stimulate recycling by making monetary donations per returnedcartridge to these selected charities. Our Office Products North AmericaDivision, for example, established a relationship with Special Olympics USAwhereby we encourage customers to recycle inkjet cartridges. For everyrecyclable cartridge returned, Corporate Express will make a donation toSpecial Olympics.

 

Our Office Products North America Divisionimplemented dynamic routing systems which further increased the efficiency ofour distribution processes, while at the same time reduced fuel consumption andcarbon emission.

 

***Paper Merchanting***

The paper producers supplying our papermerchants have been conducting a pro-active policy for many years now in orderto reduce the impact on the environment as far as possible. Partly at theinstigation of our merchanting organization, the paper industry has for manyyears been actively engaged in further optimizing its sustainable forestryactivities, using its raw materials and energy more efficiently in the millsand handling waste water safely. Given the importance of a responsible approachtowards the use of natural resources and environmentally friendly productionmethods in the industry, Buhrmann’s Paper Merchanting Division chooses toselect as its business partners suppliers that comply with sustainabilitystandards. Paper producers are subject to independent environmental complianceand wood supply audits. For example, our paper laboratory at Proost &Brandt in the Netherlands offers environmentally conscientious customers of ourPaper Merchanting Division scientific analyses of paper products. Ourdistribution companies are also to respond flexibly and swiftly to marketrequirements, such as the increasing demand for recycled paper or paperproduced from chlorine-free bleached pulp.

 

The Paper Merchanting Division is pursuing thefurther increase of the efficiency of its distribution processes, while at thesame time aiming to reduce fuel consumption and carbon emissions. Robert Horne(one of our paper 

 

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merchanting subsidiaries in the UK) for example,introduced double-deckers in May 2001 which, as of mid-December 2002,saved approximately 521,000 miles in transportation and also reduced carbonemissions by an estimated 900 tonnes.

 

***Graphic Systems***

A breakthrough in more environmentally friendlyprinting was achieved within our Graphic Systems Division, which was among thefirst to introduce a methodology for entirely alcohol-free printing asdeveloped by our main supplier, Heidelberger. This methodology enables printersto switch to environmentally sustainable production, while also significantlylimiting the use of toxic chemicals used for the cleansing of printingequipment. In addition to limiting environmental exposure, this practice willbenefit the health and safety of workers in the graphics industry.

 

**ORGANIZATION**

 

Buhrmann NV is the ultimate parent company forthe subsidiary companies that conduct its business on a worldwide basis. Allsignificant subsidiaries are wholly owned, except for our Australian and New Zealandsubsidiaries (Corporate Express Australia Ltd and Corporate Express New ZealandLtd), in which Buhrmann owns a 52% interest. A list of significant subsidiariesis included as exhibit 8.1.

 

**PROPERTY, PLANT AND EQUIPMENT**

 

We lease our principal executive offices, whichare located at Hoogoorddreef 62, 1101 BE Amsterdam ZO, the Netherlands. We ownand lease additional properties in the United States and Europe for use in theordinary course of business, which includes numerous sales offices, distributioncenters and warehouses. Land and buildings had a book value of EUR 262million at December 31, 2002.  Manyof our leases contain options to renew and/or purchase the property. We do notown or lease any physical property which is considered material to us as awhole.

 

We periodically reasses the adequacy of ourfacilities and acquire or lease new properties as is necessary to provideadequate facilities for our business. We believe that our facilities areadequate for our current level of business. We are considering closing andselling or subleasing****certain of our existing facilities,including the facilities we acquired rights to through acquisitions (see Item 5“Operating and Financial Review and Prospects – Acquisitions and Divestments”),as part of the integration and rationalization process.

 

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**ITEM 5****: OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

 

The information in this section should be read inconjunction with, and is qualified by reference to, our Consolidated FinancialStatements and the Notes thereto included elsewhere in this annual report. OurConsolidated Financial Statements have been prepared in accordance with DutchGAAP, which in certain aspects differs from US GAAP. For a discussion of theprincipal differences between Dutch GAAP and US GAAP which affect thedetermination of our net result and group equity, see Note 32 to ourConsolidated Financial Statements.

 

Operating result under US GAAP amounted to aloss of EUR 757 million in 2002 compared to a loss of EUR 301 millionunder Dutch GAAP and in 2001 an income of EUR 195 million under US GAAPcompared to an income of EUR 341 million under Dutch GAAP. Amortizationand impairment of goodwill in 2002 amounted to EUR 1,013 million under USGAAP and EUR 643 million under Dutch GAAP and in 2001 EUR 73 millionunder US GAAP and EUR 67 million under Dutch GAAP. Operating result beforeamortization and impairment of goodwill amounted to an income under US GAAP ofEUR 256 million in 2002 compared to an income of EUR 342 millionunder Dutch GAAP and in 2001 an income of EUR 268 million under US GAAPcompared to an income of EUR 408 million under Dutch GAAP.

 

A significant difference in classification betweenDutch GAAP and US GAAP is the classification of expenses relating torestructuring measures, integration of acquired companies and write-offs on ITsystems and distribution facilities which under Dutch GAAP are classified asextraordinary expenses and under US GAAP as operating expenses. Excluding theaforementioned restructuring and integration expenses, which were under US GAAPEUR 101 million in 2002 and EUR 152 million in 2001, operating resultamounted to a loss of EUR 656 million under US GAAP in 2002 compared to aloss of EUR 301 million under Dutch GAAP and in 2001 an income ofEUR 347 million under US GAAP compared to an income of EUR 341million under Dutch GAAP. Operating result before amortization and impairmentof goodwill of EUR 1,013 million under US GAAP and EUR 643 millionunder Dutch GAAP in 2002  and excludingthe aforementioned expenses that are classified as extraordinary under DutchGAAP, amounted to an income of EUR 357 million under US GAAP compared toan income of EUR 342 million under Dutch GAAP. In 2001, operating resultbefore amortization and impairment of goodwill of EUR 73 million under USGAAP and EUR 67 million under Dutch GAAP and excluding the aforementionedexpenses that are classified as extraordinary under Dutch GAAP, amounted to anincome of EUR 420 million under US GAAP compared to an income ofEUR 408 million under Dutch GAAP.

 

Buhrmann believes that by excluding expenses relatingto restructuring measures, integration of acquired companies and write-offs onIT systems and distribution facilities and by excluding amortization andimpairment of goodwill from operating result, comparability is enhanced becauseunder Dutch GAAP these expenses are presented as extraordinary expenses whereasunder US GAAP they are presented as operating expenses. In addition, as of 2002goodwill is no longer amortized under US GAAP but tested annually forimpairment. Operating result before restructuring and integration expenses aswell as before amortization and impairment of goodwill should not be consideredas a substitute for operating result, net result, cash flow or other statementsof operations or cash flow computed in accordance with Dutch GAAP or US GAAP oras a measure of the Company’s result of operations or liquidity.

 

Under US GAAP net result in 2002 was a loss ofEUR 941 million and in 2001 an income of EUR 35 million. Under DutchGAAP net result in 2002 was a loss of EUR 588 million and an income ofEUR 55 million in 2001.

 

**Critical accounting policies**

 

The preparation of financial statements inaccordance with accounting principles generally accepted in the Netherlands andin the United States of America requires management to make estimates andassumptions that affect the reported amounts of assets, liabilities, revenueand expenses, and related disclosure of contingent assets and liabilities.Buhrmann bases its estimates on historical experience which are evaluated on anon-going basis. If actual amounts are ultimately different than previouslyestimated, the revisions are included in the Company’s results for the period inwhich the actual amounts become known. Buhrmann believes that the accountingpolicies 

 

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that are both important in determiningfinancial conditions and results of operations and require the most difficult,subjective judgments, relate to: impairment and amortization of goodwill;impairment and depreciation of tangible fixed assets; accounting for legalproceedings; deferred taxes; provision for uncollectable accounts receivable;rebates from suppliers;valuation of inventories; provisions for restructuringand integration; currency translation and exchange differences on loans andcurrency swaps; and accounting for pensions. Buhrmann’s accounting policies,including the aforementioned critical accounting policies, are discussed in theNotes to the Consolidated Financial Statements in Item 18, including Note 32which discusses the differences between Dutch GAAP and US GAAP.

 

***Impairment of goodwill***

Goodwill is tested for impairment at least onceannually or more frequently if changes in circumstances indicate that animpairment may have occurred. Under the impairment test under Dutch GAAP, thefair value of the cash-generating unit that contains the goodwill is comparedto its book value, including the goodwill. Under Dutch GAAP, any excess of bookvalue over fair value is recorded as an impairment of goodwill, if theimpairment is expected to be permanent. The fair value of the cash-generatingunit is calculated based on discounted future cash flows and residual values.Under US GAAP, a two-step process is performed to analyze whether or notgoodwill has been impaired. Step one is to test for potential impairment, andrequires that the fair value of the reporting unit be compared to its bookvalue including goodwill. The fair value of the reporting unit is calculatedbased on discounted future cash flows and residual values as under Dutch GAAP.If the fair value is higher than the book value, no impairment is recognized.If the fair value is lower than the book value, a second step is performed. Thesecond step is to measure the amount of impairment loss, if any, and requiresthat assets and liabilities, including unrecognized intangible assets such asbrand names and customer and supplier relationships, be assigned fair values ina hypothetical purchase price allocation to determine the implied fair value ofgoodwill. This fair value is then compared to the carrying value of goodwill.If the implied fair value is lower than the carrying value, an impairment mustbe recorded for the difference.

 

In 2002, Buhrmann recorded an impairment chargeon goodwill of EUR 573 million under Dutch GAAP and EUR 1,012 millionunder US GAAP. The Company’s judgments relating to the expected future cashflows, residual values and the fair value of assets and liabilities includingunrecognized intangible assets are affected by factors such as changes ineconomic conditions and changes in operating performance. These factors maychange over time and may cause the Company to record additional impairmentcharges which may adversely impact operating result and net result. Theimpairment charge is sensitive to the discount rate chosen. The discount rateis reflecting the risk inherent to the Company’s business and the normativefinancing profile as apparent in the industry. A 0.5% higher discount ratewould have resulted in an approximately EUR 160 million higher impairmentcharge under both Dutch GAAP and US GAAP. Conversely, a 0.5% lower discountrate would have resulted in an approximately EUR 180 million lowerimpairment charge under both Dutch GAAP and US GAAP. As almost the full amountof the impairment charge is not tax deductible, the higher or lower amount ofimpairment would impact net result almost fully.

 

***Amortization of goodwill***

Under US GAAP, as of January 1, 2001goodwill is no longer amortized. Under Dutch GAAP, goodwill is amortized overthe expected economic life. The assessment of the economic life is based on theconsideration that a permanent advantage is being realized. Consequently, themaximum amortization period of 40 years, as allowed under Dutch GAAP, has beenapplied. The table below demonstrates the impact to amortization charge in theevent that the economic life is less than originally assessed by showing the amountby which the amortization charge of EUR 70 million in 2002 would beincreased (amounts in millions of euro):

 

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| **Revised  economic  life:** |   | **Increase in  amortization  charge (annualized):** |   |
|------------------------------|--------|-----------------------------------------------------|--------|
|                         |   |                                                |   |
| 30 years                     |   | 23                                                  |   |
| 20 years                     |   | 70                                                  |   |
| 10 years                     |   | 210                                                 |   |

 

As almost the full amount of this amortizationcharge is not tax deductible, the above additional charges would impact netresult almost fully.

 

***Impairment and depreciation of tangiblefixed assets***

When facts and circumstancesindicate that the carrying value of long-lived assets may be impaired, anevaluation of recoverability is performed by comparing the carrying value ofthe assets to their fair values to determine if an impairment needs to berecorded.  Fair values are estimatedbased on projected******discounted future cash flows under Dutch GAAPand undiscounted future cash flows under US GAAP. Under Dutch GAAP, animpairment charge is only recorded if the impairment is expected to bepermanent. In 2002, the Company recorded impairment losses on IT, distributioninfrastructure and other long-lived assets of EUR 51 million. The Company’s judgments relating to theexpected useful lives of tangible fixed assets and its ability to realize cashflows in excess of the carrying value of these assets are affected by factorssuch as the ongoing maintenance and improvements of these assets, changes ineconomic conditions and changes in operating performance. These factors maychange over time and may cause the Company to record impairment charges whichmay adversely impact operating result and net result.

 

***Legal proceedings***

Buhrmann is involved in various legal andregulatory proceedings arising in the normal course of its business.  Buhrmann may accrue for the estimatedprobable costs to resolve these proceedings. The accruals are determined inconsultation with in-house and outside counsels and are based on the analysisof potential results, assuming a combination of litigation and settlementstrategies. Operating result and net result could be materially affected bychanges in our assumptions or the effectiveness of our strategies relating tothese proceedings.

 

***Deferred taxes***

Buhrmann has aconsiderable amount of loss-carryforwards. For these loss-carryforwards and fortemporary differences inthe valuation of assets and liabilities for reporting and fiscal purposes,deferred tax assets and liabilities are recognized. Buhrmann records valuationallowances to reduce deferred tax assets to the amount the deferred tax assetsare likely to be realized. In determining these valuation allowances anddeferred tax liabilities, Buhrmann’s assessment of future taxable income, taxplanning strategies and the possibility that prior year tax returns will bechallenged by the tax authorities, are factors taken into account. Thesefactors are determined in consultation with in-house and outside tax experts.If actual future taxable income is different than originally assessed, if taxplanning strategies fail to materialize or if the possibility that prior yeartax returns will be challenged turn out to be different than originallyassessed, the valuation allowances on deferred tax assets and the deferred taxliabilities may have to be adjusted which may affect Buhrmann’s reported taxexpense and net result in future years.

 

***Provision for uncollectable accounts receivable***

Buhrmann records provisions for uncollectableaccounts receivables. These provisions are based on historical informationtaking into account current and expected market conditions, assessment ofservice disputes with customers as well as estimates of potentialnon-collection of the receivables. If the financial condition of Buhrmann’scustomers were to deteriorate causing an impairment of their ability to makepayments, additional provisions for uncollectability may be required whichaffect operating result and net result.

 

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***Rebates from suppliers***

Buhrmann receives various types of rebates fromsuppliers, most of which are based on purchased volumes or on the inclusion ofcertain products in Buhrmann’s assortment (catalogue) or received for enteringinto a contract with a certain supplier. Volume based rebates are settled inarrears, usually on a quarterly or annual basis.  Buhrmann accrues volume based supplier rebates on the basis ofprudently estimated volumes for the reporting period and if the rebates areexpected to be received within nine months after year-end or longer if apayment schedule is agreed with the suppliers. Rebates received or accruedrelating to unsold goods at balance sheet date are deducted from the value ofthe related inventories and are not included in income. The unearned rebates atbalance sheet date are recognized in income in the following year when the relevantinventories are sold to third parties. Rebates received for entering into acontract with suppliers are recorded as income evenly over the contract period,with a maximum of three years. No provisions for collection risk are recordedunless specific events indicate that collection of the rebates is less certaineither due to a credit event at the supplier or a dispute on the actual rebateamount.

Actual rebates received could be different thanoriginally accrued which could impact operating result and net result.

 

***Valuation of inventories***

Inventories are valuedat historic cost or at management’s best estimate of lower market value ifapplicable. Historic costincludes the purchase price, net of volume related rebates and cash discountsreceived from suppliers, duties, insurance and in-bound transportation costs.Overhead costs are not included inhistoric cost due to immateriality. In addition, a provision for obsolesence isrecorded based on historical information, taking into account current and expectedmarket conditions. If actual market conditions are less favorable thanoriginally expected, additional markdowns or additional provisions forobsolesence may be required which may have an adverse affect on operatingresult and net result.

 

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***Provisions for restructuring andintegration***

Buhrmann recordsprovisions for integration and restructuring relating to the integration ofacquired businesses and cost saving restructuring measures. These provisionsare based on Buhrmann’sbest estimate of costs to be incurred for, among other things, severancepayments, termination fees and penalties for rental and other contracts. Ifactual costs are different than originally estimated, the provisions forrestructuring and integration may be insufficient which could affect operatingresult and net result. Furthermore, additional restructuring measures may benecessary depending on changes in economic conditions and operating performancewhich may result in additional provisions which in turn may affect operatingresult and net result. Buhrmann records a restructuring provision under US GAAPunder the same guidelines as Dutch GAAP, except that communication to theaffected employees must occur prior to period-end under US GAAP and under DutchGAAP prior to the publication date of the financial statements.

 

***Currency translation and exchange differences on loans and currencyswaps***

In principle, currency translation and exchangedifferences on loans (intercompany and external third party loans) and currencyswaps are recorded in income. Translation and exchange differences onintercompany loans extended by a Group company (including the parent) toanother Group company are recorded directly in shareholders’ equity insofar asthese loans are designated as permanently invested.

 

The designation of loans as permanentlyinvested requires certain subjective judgments from management as to, amongother things, the intended renewal of loans at maturity and hedgeeffectiveness.

 

***Pensions***

Buhrmann’s operating companies in Europe offera variety of defined benefit plans, in addition to government schemes, as partof the remuneration package. In countries like the Netherlands and the UnitedKingdom, these defined benefit plans are insured in separate trusts (pensionfunds) to which Buhrmann makes contributions.

 

Under Dutch GAAP, these pension funds are notincluded in the Consolidated Financial Statements. The periodically paidcontributions to these pension funds are expensed when incurred. In case theCompany is obligated to make additional contributions to the pension plans inorder to meet minimum funding levels, as required by local law or specificarrangements, an accrual is recorded. The funding levels are based on, among other things, actuarialassumptions and market value of the pension funds’ assets. Actual circumstancescould change the impact of these assumptions which could result in additionalcontributions which could have an adverse affect on Buhrmann’s operating resultand net result.

 

Under US GAAP, the Company accounts forpensions in accordance with SFAS No. 87 under which pension expense and relatedplan assets and benefit obligations are based on a specific methodology thatreflects the concepts of accrual accounting. SFAS No. 87 requires re-adjustmentof the significant actuarial assumptions annually to reflect current market andeconomic conditions. Amounts are reflected in the income statementsystematically over the service lives of the employees covered by the plan.Amounts expensed are typically different from amounts funded. Application ofSFAS No. 87 requires that management makes use of assumptions regardingdiscount rate, expected return on plan assets and rates of compensation, statepension and pension increases in assessing plan assets and benefit obligations.Actual circumstances could change the impact of these assumptions giving riseto different plan assets and benefit obligations, reflected as additionalincome or expense which could affect Buhrmann’s operating result and netresult.

 

47

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**Forward-looking statements**

This discussion contains certainforward-looking statements that involve risks, uncertainties and assumptions.As a result of many factors, including those set forth under “Risk Factors” inItem 3 and elsewhere in this document, our actual results may differ materiallyfrom those anticipated in these forward-looking statements. We assume noobligation to update the forward-looking statements of such factors.

 

***Overview***

As an internationalbusiness services and distribution group, Buhrmann is a major globaldistributor of office products, paper and graphic systems for the businessmarket. Buhrmann’s activities are grouped into three segments: Office Products,Paper Merchanting and Graphic Systems. Witin Office Products, there are threedivisions: North America, Europe and Australia. For reporting purposes, the Office Products Europe and Office ProductsAustralia Divisions are combined. The Office Products Divisions’ customer baseis spread over many industries and sectors including governmental agencies;most of these customers are large- or medium-sized. The Paper Merchanting andGraphic Systems Divisions depend primarily on graphic markets in Europe.

 

**Major events**

 

The following events substantially affected theConsolidated Financial Statements in 2002 and 2001:

 

2002

 

In December, extraordinary charges ofEUR 111 million before tax were taken for restructuring plans whichinclude further reductions in the workforce and write-offs of redundant ITsystems and distribution facilities.

 

In December, an impairment charge on goodwillof EUR 573 million was recorded.

 

The year-end exchange rate of the US dollaragainst the euro was 19% lower and the average exchange rate was 6% lowercompared to 2001.

 

2001

 

In March, Buhrmann raised EUR 665 million,net of expenses, through an issue of Ordinary Shares. The share issue wasprimarily done for funding the acquisitions of the office supplies divisions ofSamas Groep NV US Office Products Company (USOP).

 

In April, the office supplies division of Samaswas acquired for a debt-free price of EUR 321 million in cash. This acquisition resulted in goodwill ofEUR 290 million.

 

In May, Corporate Express, Inc. acquired theassets of USOP’s North American office products business. The purchase pricefor the USOP business was USD 172 million (EUR 193 million) in cash. Thisacquisition resulted in goodwill of USD 151 million (EUR 144 million).

 

In May, extraordinary expenses of EUR 86 millionbefore tax were recorded in connection with cost reduction measures, includinga reduction in the work force principally in North America and in Europe, andfor expenses relating to the integration of the office supplies divisions ofSamas and USOP.

 

In 2000 no events took place that substantiallyaffected the Consolidated Financial Statements.

 

48

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**Acquisitions and Divestments**

 

***Acquisitions***

 

In the course of 2001, Buhrmann made major acquisitionsand divestments which affect comparability as these acquisitions anddivestments are included for the full year in the 2002 Consolidated FinancialStatements. In April 2001, Buhrmann acquired the office supplies divisionof Samas and in May 2001 Buhrmann acquired the North American officeproducts activities of USOP. In 2002 and 2000, no major acquisitions ordivestments took place.

 

Buhrmann has realized synergies as a result ofthe integration of the acquired Samas and USOP activities which was completedin the course of 2002. The synergies connected with these integrations relateto favorable sourcing capabilities and scale-of-operation efficiencies, such asthe consolidation of warehouses and distribution facilities.

 

In 2002, 2001 and 2000 a number of smalleracquisitions and divestments were made.

 

In 2002, total spending on acquisitions amounted to EUR 10 million,excluding assumption of debt, in 2001 EUR 578 million and in 2000EUR 113 million.

 

The following table lists per division sustantiallyall of Buhrmann’s acquisitions since the beginning of 2000 through 2002.

*** ***
| **Acquired Business**                                                  |   | **Year** |   | **Division**                   |   | **Country**                                                                    |
|------------------------------------------------------------------------|--------|----------|--------|--------------------------------|--------|--------------------------------------------------------------------------------|
| North American office products activitiesof US Office Products Company |   | 2001     |   | Office Products North  America |   | United States                                                                  |
| Office supplies divisionSamas - Groep NV                               |   | 2001     |   | Office Products Europe         |   | The Netherlands, Belgium,  Luxembourg, Germany, the United Kingdom and Ireland |
| ANFA                                                                   |   | 2000     |   | Office Products Europe         |   | France                                                                         |
| Windscreen                                                             |   | 2002     |   | Office Products Australia      |   | Australia                                                                      |
| Jupiter                                                                |   | 2002     |   | Office Products Australia      |   | Australia                                                                      |
| Transcript                                                             |   | 2002     |   | Office Products Australia      |   | Australia                                                                      |
| Storewide Office National                                              |   | 2001     |   | Office Products Australia      |   | Australia                                                                      |
| Allied Office Products                                                 |   | 2001     |   | Office Products Australia      |   | Australia                                                                      |
| Graphico Office Choice                                                 |   | 2001     |   | Office Products Australia      |   | Australia                                                                      |
| Ambassador Stationary                                                  |   | 2000     |   | Office Products Australia      |   | Australia                                                                      |
| Promotif Marketing                                                     |   | 2000     |   | Office Products Australia      |   | Australia                                                                      |
| QCS                                                                    |   | 2000     |   | Office Products Australia      |   | Australia                                                                      |
| Joy Hunt                                                               |   | 2000     |   | Office Products Australia      |   | Australia                                                                      |
| Erivier                                                                |   | 2001     |   | Paper Merchanting              |   | Belgium                                                                        |
| Papernet Scandinavia                                                   |   | 2001     |   | Paper Merchanting              |   | Denmark                                                                        |
| Udesen Grafisk Fagcenter                                               |   | 2001     |   | Paper Merchanting              |   | Denmark                                                                        |
| Finpapperspecialisten                                                  |   | 2000     |   | Paper Merchanting              |   | Sweden, Denmark, Finland                                                       |
| Precision Publishing Papers                                            |   | 2000     |   | Paper Merchanting              |   | United Kingdom                                                                 |
| Wilhelm                                                                |   | 2000     |   | Paper Merchanting              |   | Germany                                                                        |
| Williaam Cox                                                           |   | 2000     |   | Paper Merchanting              |   | United Kingdom                                                                 |

 

49

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| **Acquired Business**           |   | **Year** |   | **Division**      |   | **Country**     |
|---------------------------------|--------|----------|--------|-------------------|--------|-----------------|
| Krijt Krommenie                 |   | 2000     |   | Paper Merchanting |   | The Netherlands |
| Ropapin                         |   | 2000     |   | Paper Merchanting |   | The Netherlands |
| Christian Christensen &  Co |   | 2000     |   | Paper Merchanting |   | Denmark         |
| Union Papelera                  |   | 2000     |   | Paper Merchanting |   | Spain           |
| Caledonia                       |   | 2000     |   | Paper Merchanting |   | Italy           |
| Grafiskt Papper                 |   | 2000     |   | Paper Merchanting |   | Sweden          |

 

50

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***Divestments***

At the end of 1999, Buhrmann sold part of itsInformation Systems Division (comprising value added resellers of personalcomputers, computer networks, peripheral equipment and related services, aswell as an IT training business), as it was no longer considered core business.In May 2000, Buhrmann sold the remaining part of this former division toSpecialist Computer Holdings plc of Great Britain, a large privately ownedtechnology group. Buhrmann financed a portion of the consideration through loannotes issued by the purchaser. Compu’Train, the IT training unit , was soldseparately in February 2000.

 

In addition, Buhrmann has divested severalsmaller non-core businesses. In 2000, the Call Center Services of CorporateExpress in North America were sold. In early 2001, the IT and Telecom Unit ofCorporate Express in the Netherlands was sold and in June 2001 the sale ofNPO Sistemi S.p.A., the value added reseller business of Corporate ExpressItaly, was completed. A precondition for approval from the European Commissionfor the Company’s acquisition of the Samas office supplies division was thesale of Buhrmann’s Dutch subsidiary Corporate Express Nederland BV (Zwolle).This sale was affected in November 2001, but the name was retained byBuhrmann.

 

The following table lists Buhrmann’ssignificant divestments since the beginning of 2000 through 2002:

 
| **Divested Business**           |   | **Year** |
|---------------------------------|--------|----------|
| Corporate Express Nederland  BV |   | 2001     |
| NPO Sistemi S.p.A.              |   | 2001     |
| Call Center Services            |   | 2000     |
| Compu’ Train               |   | 2000     |
| Information Systems Division    |   | 2000     |

 

51

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**RESULTS OF OPERATIONS**

 

The following table sets forth, for the periodsindicated, net sales, added value and operating result by Buhrmann’s divisionsas well as net sales and operating result by geographic region.

 
|                                                            |   | **Year ended December 31,** |       |
|-----------------------------------------------------------------|--------|----------------------------------|------------|
|                                                            |   | **2002**                         |       | **2001** |   | **2000** |   |
|                                                            |   | **(in millions of euro)**        |       |
| **SUMMARY BY  DIVISION**                                        |   |                             | ** ** |   | ** ** |   | ** ** |
| **Net Sales:**                                                  |   |                             |       |   |   |   |   |
| Office products North America                                   |   | 4,931                            |       | 5,221 |   | 4,703 |   |
| Office products Europe and Australia                            |   | 1,540                            |       | 1,496 |   | 1,330 |   |
| Paper Merchanting                                               |   | 2,988                            |       | 3,126 |   | 3,014 |   |
| Graphic Systems                                                 |   | 489                              |       | 565 |   | 556 |   |
| Total                                                           |   | 9,948                            |       | 10,408 |   | 9,603 |   |
|                                                            |   |                             |       |   |   |   |   |
| **Added  Value:**                                               |   |                             |       |   |   |   |   |
| Office products North America                                   |   | 1,261                            |       | 1,388 |   | 1,354 |   |
| Office products Europe and Australia                            |   | 413                              |       | 398 |   | 357 |   |
| Paper Merchanting                                               |   | 461                              |       | 475 |   | 487 |   |
| Graphic Systems                                                 |   | 118                              |       | 135 |   | 143 |   |
| Total                                                           |   | 2,253                            |       | 2,396 |   | 2,341 |   |
|                                                            |   |                             |       |   |   |   |   |
| **Operating  Result:**                                          |   |                             |       |   |   |   |   |
| Office products North America                                   |   | 197                              |       | 242 |   | 333 |   |
| Office products Europe and Australia                            |   | 64                               |       | 53 |   | 41 |   |
| Paper Merchanting                                               |   | 74                               |       | 93 |   | 130 |   |
| Graphic Systems                                                 |   | 23                               |       | 38 |   | 50 |   |
| Corporate                                                       |   | (16                              | )          | (18 | ) | (8 | ) |
| Operating result before amortization and impairment of goodwill |   | 342                              |       | 408 |   | 546 |   |
| Amortization of goodwill                                        |   | (70                              | )          | (67 | ) | (55 | ) |
| Impairment of goodwill                                          |   | (573                             | )          | — |   | — |   |
| Total                                                           |   | (301                             | )          | 341 |   | 491 |   |

 

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|                                                            |   | **Year ended December 31,** |       |
|-----------------------------------------------------------------|--------|----------------------------------|------------|
|                                                            |   | **2002**                         |       | **2001** |   | **2000** |   |
|                                                            |   | **(in millions of euro)**        |       |
| **SUMMARY BY  GEOGRAPHIC REGION**                               |   |                             | ** ** |   | ** ** |   | ** ** |
| **Net Sales:**                                                  |   |                             |       |   |   |   |   |
| United States                                                   |   | 4,665                            |       | 4,952 |   | 4,424 |   |
| United Kingdom                                                  |   | 1,251                            |       | 1,294 |   | 1,183 |   |
| The Netherlands                                                 |   | 961                              |       | 995 |   | 916 |   |
| Rest of EMU members                                             |   | 2,111                            |       | 2,243 |   | 2,252 |   |
| Rest of Europe                                                  |   | 281                              |       | 273 |   | 223 |   |
| Rest of the World                                               |   | 679                              |       | 651 |   | 605 |   |
| Total                                                           |   | 9,948                            |       | 10,408 |   | 9,603 |   |
|                                                            |   |                             |       |   |   |   |   |
| **Operating  Result:**                                          |   |                             |       |   |   |   |   |
| United States                                                   |   | 179                              |       | 224 |   | 314 |   |
| United Kingdom                                                  |   | 32                               |       | 28 |   | 37 |   |
| The Netherlands                                                 |   | 27                               |       | 27 |   | 40 |   |
| Rest of EMU members                                             |   | 31                               |       | 63 |   | 70 |   |
| Rest of Europe                                                  |   | 6                                |       | 6 |   | 12 |   |
| Rest of the World                                               |   | 67                               |       | 60 |   | 73 |   |
| Operating result before amortization and impairment of goodwill |   | 342                              |       | 408 |   | 546 |   |
| Amortization of goodwill                                        |   | (70                              | )          | (67 | ) | (55 | ) |
| Impairment of goodwill                                          |   | (573                             | )          | — |   | — |   |
| Total                                                           |   | (301                             | )          | 341 |   | 491 |   |

 

**Use of EBITA**

Buhrmann evaluates operating performance based onseveral factors, including its primary financial measure of operating resultbefore amortization and impairment of goodwill (EBITA). Buhrmann believes EBITAto be an important indicator of the operational strength and performance of itsbusiness, including the ability to generate cash to repay long-term debt. Inaddition, EBITA eliminates the uneven effect across all the Company’s businesssegments of amortization of goodwill which under Dutch GAAP was written-offdirectly to shareholders’ equity prior to January 1, 1997. However, EBITAshould be considered in addition to and not as a substitute for, operatingresult, net result and other primary financial measures of performance.

 

53

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**Results of operations - year ended December 31, 2002compared to year ended December 31, 2001**

 

Nearly every segment of our business waschallenged by unfavorable economic circumstances as our customers reducedspending on office products and graphic products and supplies. In our largestmarket –the United States – approximately 75% of our existing customerspurchased less office products in 2002 than in the previous year.

 

In order to cope with this environment, wediligently explored opportunities to conserve resources and to help the companyto continue to generate a positive cash flow.

 

In the fourth quarter of 2002, we started theimplementation of further restructuring initiatives in the wake of continueduncertainties regarding overall business activity in our major markets. We tookan extraordinary charge of EUR 111 million before tax in the fourthquarter of 2002 to account for the actions which include restructurings, aswell as write-offs of redundant IT assets and distribution facilities.

 

In addition – and perhaps more importantly – wetook the following further decisive actions throughout the year to enhance thecompetitive strengths of the Company:

 

• we continued to refine our world-classbusiness-to business distribution infrastructure that enables us to offersuperior customer service. This provides us with a tangible competitiveadvantage. In many cases, our businesses improved market positions;

• our operational efficiency, particularly in ouroffice products businesses, improved significantly during the year, which putsour Company in an excellent position to benefit from a future economic upturn;

• our Paper Merchanting Division continued todemonstrate the economic importance of its customer service orientation bysimultaneously gaining more market share and improving margins while theoverall market volume slightly decreased;

• we completed the integration of the acquiredUSOP activities and the office supplies division of Samas, ahead of schedule;

• our eCommerce initiatives continued to makeprogress. Our new E-way platform for our US office supplies customers becamefully operational in the third quarter of 2002. The Paper Merchanting andGraphic Systems Divisions continued the roll-out of our eCommerce initiativeduring the year. Buhrmann’s total eCommerce sales in 2002 increased to anannual run-rate of about EUR 1.5 billion;

• we continued to make progress in managing ourworking capital by reducing the number of days receivables were outstanding andincreasing inventory turnover. Average working capital decreased from 13.3% to12.9% of sales.

 

54

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***Consolidated results***

 

In the course of 2001, Buhrmann made majoracquisitions and divestments which affect comparability as these

acquisitions and divestments are included forthe full year in the 2002 Consolidated Financial Statements. InApril 2001, the office supplies division of Samas was acquired and inMay 2001, Buhrmann acquired the North American office products activitiesof USOP. In November 2001, the sale of Corporate Express Nederland B.V.(Zwolle) was completed.

 

The results of operations measured in euro in2002 were also substantially affected by the 6% lower average exchange rateof the US dollar against the euro in 2002 compared to 2001.  The changes at constant rates, as set forthin the tables below, exclude theeffect of currency exchange rate movements.

 

***Net sales; added value; operating result***

In millions of euro

 
|                                                                     |   | **2002** |   | **2001** |   | **change in  EUR** |   | **change at  constant rates** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|-------------------------------|--------|
| Net sales                                                                |   | 9,948    |   | 10,408   |   | (4.4               | )%     | (1.6                          | )%     |
| Added value                                                              |   | 2,253    |   | 2,396    |   | (6.0               | )%     | (2.9                          | )%     |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 342      |   | 408      |   | (16.2              | )%     | (13.4                         | )%     |
| Amortization of goodwill                                                 |   | (70      | )      | (67      | )      | 4.5                | %      | 6.1                           | %      |
| Impairment of goodwill                                                   |   | (573     | )      | —   |   | —             |   | —                        |   |
| Operating result                                                         |   | (301     | )      | 341      |   | —             |   | —                        |   |
|                                                                     |   |     |   |     |   |               |   |                          |   |
| Added value as a percentage of net sales                                 |   | 22.6     | %      | 23.0     | %      |               |   |                          |   |
| EBITA as a percentage of net sales                                       |   | 3.4      | %      | 3.9      | %      |               |   |                          |   |
| Operating result as a percentage of   net sales                     |   | (3.0     | )%     | 3.3      | %      |               |   |                          |   |

 

***Net sales.*** As stated earlier, adverse economic conditionsnegatively affected our 2002 results, resulting in a net sales decrease of 4.4%to EUR 9,948 million in 2002 from EUR 10,408 million in 2001 for theBuhrmann Group.  At constant rates, net sales decreased by 1.6%. The organic decline(excluding the effects of acquisitions, divestments and currency exchange ratemovements) was 2%. With the notableexception of our software business, ASAP, our North American and EuropeanOffice Products Divisions experienced reduced demand from customers, whocontinued to reduce overall employee headcounts as well as per capita spendingon office products during 2002. The continued slowdown in advertising anddirect marketing expenditure resulted in reduced spending by customers of ourPaper Merchanting and Graphic Systems Divisions. Our Australian Office ProductsDivision, however, enjoyed excellent sales growth in 2002 compared to 2001.

 

***Added value.*** In 2002, total added value decreased as aresult of lower net sales and changes in the sales mix. The full yearconsolidation in 2002 of the businesses acquired in 2001 had a positive effecton added value. The net effect was a decrease in added value of 6.0% toEUR 2,253 million in 2002 from EUR 2,396 million in 2001. Measured atconstant exchange rates, the decline in added value in 2002 compared to 2001was 2.9%.

 

55

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***Operating result.*****Operatingresult before amortization and impairment of goodwill decreased by 16.2% toEUR 342 million in 2002 from EUR 408 million in 2001. Measured atconstant exchange rates, the operating result before amortization and impairmentof goodwill decreased by 13.4% in 2002. Operating costs (excluding depreciationof tangible fixed assets and amortization and impairment of goodwill) decreasedby EUR 82 million in 2002 compared to 2001. At constant rates the decreasewas EUR 22 million. This operating result has been achieved as costsavings resulting from the successful integration of acquired businesses andadditional restructuring measures have partly offset the effects of lower salesvolumes and a sales mix that included a larger proportion of lower-marginproducts. Depreciation costs of tangible fixed assets increased by 4.6% mainlydue to the full year consolidation of the aforementioned acquisitions and areduction in 2001 following the reassessment of the useful lives of sometangible assets in the Paper Merchanting Division.

 

Amortization costs of goodwill were EUR 70million in 2002 compared to EUR 67 million in 2001. Following the outcomeof the annual impairment test, an impairment of EUR 573 million on theremaining goodwill was recorded in the fourth quarter of 2002. Buhrmann’ssolvency ratio (group equity as a percentage of total assets) remains wellabove 30%. The write-down reflects the recent business performance, which islower than expected when the relevant acquisitions were made. These include acquired businesses in our OfficeProducts Divisions, both in Europe and in the US, and in the Paper MerchantingDivision. Inaddition, reduced visibility concerning future performance has led to a higherdiscount factor (cost of capital) for calculating the fair value of thebusiness.

 

Operating result after amortization andimpairment of goodwill was a loss of EUR 301 million in 2002 compared

to an income of EUR 341 million in 2001.

 

***Financial incomeand expense; Minority interests; Taxation***

in millions of euro

 
|                                                     |   | **2002** |   | **2001** |   |
|----------------------------------------------------------|--------|----------|--------|----------|--------|
|                                                     |   |     |   |     |   |
| Net financing costs                                      |   | (199     | )      | (210     | )      |
| Results from participations and  other financial results |   | 16       |   | (3       | )      |
| Minority interests                                       |   | (12      | )      | (9       | )      |
| Tax  expense on result from operations                   |   | (18      | )      | (24      | )      |
| **Total**                                                |   | **(213** | **)**  | **(246** | **)**  |

 

***Net financing costs.*** Net financing costs consist primarily ofinterest costs and amortization of capitalized financing fees, relatingprimarily to the Senior Credit Facility entered into in 1999 to fund the mergerwith Corporate Express and the securitization program. Net financing costsdecreased by 5.4% to EUR 199 million in 2002 from EUR 210 million in2001. Lower interest margins following the expansion of the securitizationprogram with the issue of Medium Term Notes, lower average interest-bearingdebt, lower overall interest rates and foreign currency exchange gains causednet financing cost to decrease. Lower interest was partly offset by an increasein amortization of financing fees to EUR 22 million in 2002 from EUR 16 million in 2001, mainly dueto a write-off in connection with early redemption of debt.

 

***Results fromparticipations and other financial results.***A number of incidentalitems, such as the release of a provision for uncollectibility of loan notesrelated to the sale of the Information Systems Division, resulted inEUR 16 million income under results from participations and otherfinancial results.

 

***Minority interests.*** Minority interestsmainly represents the 48% share of third parties in the result of Corporate ExpressAustralia Ltd.

 

***Tax expense on result fromoperations.*****The effective tax rateamounted to 12.2% in 2002, compared to 11.8% in 2001, and is below Buhrmann’sweighted average statutory tax rate of 25.6% in 2002, compared to 26.2% in2001,  due to changes in valuationallowances, predominantly related to the valuation of losses carried forward,exempt income, non-deductible expenses and incentives. Tax expense in 2002benefited from changes in the composition of 

 

56

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the geographic distribution of taxable earningsand finalized tax audits leading to a release of allowances which were recordedin previous years and which are no longer deemed necessary.

 

***Result fromcontinuing operations;  extraordinaryresult from continuing operations***

in millions of euro

 
|                                                                                                             |   | **2002** |   | **2001** |       |
|------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------|------------|
|                                                                                                             |   |     |   |     |       |
| Result from continuing operations before  extraordinary items and before amortization and impairment of goodwill |   | 129      |   | 162      |       |
| Amortization and impairment of goodwill                                                                          |   | (643     | )      | (67      | )          |
| Result from continuing operations before  extraordinary items                                                    |   | (514     | )      | 95       |       |
| Extraordinary result from continuing operations                                                                  |   | (74      | )      | (40      | )          |
| Net  result                                                                                                      |   | **(588** | **)**  | **55**   | ** ** |

 

***Result from continuing operations before extraordinary items.***Result from continuingoperations before extraordinary items was a loss of EUR 514 million in2002 compared to an income of EUR 95 million in 2001. Result fromcontinuing operations before amortization and impairment of goodwill (cashearnings) was an income of EUR 129 million in 2002 compared toEUR 162 million in 2001, a reduction of 20.2%. Per Ordinary Share, fullydiluted result from continuing operations before amortization and impairment ofgoodwill decreased by 27.5% to EUR 0.74 in 2002 from EUR 1.02 in2001.

 

***Extraordinaryresult from continuing operations.*****Extraordinary result from continuing operationswas a loss of EUR 74 million in 2002 compared to EUR 40 million in2001.

 

Extraordinary result from continuing operationsin 2002 consisted of extraordinary income of EUR 10 million andextraordinary losses of EUR 113 million and a related tax gain ofEUR 29 million. Extraordinary income relates to a release ofEUR 10 million of a provision for warranties relating to divestedcompanies in previous years which were settled in 2002. Extraordinary losses in2002 includes a charge of EUR 111 million relating to both restructuringmeasures and write-offs on IT and distribution infrastructure. Therestructuring aims to achieve operational cost reductions in both the OfficeProducts Divisions in North America and Europe as well as the Paper MerchantingDivision. It concerns a net headcount reduction of about 1,100 fulltimeemployees.

 

Extraordinary result from continuing operationsin 2001 consisted of extraordinary income of EUR 20 million, extraordinarylosses of EUR 86 million and a related tax gain of EUR 26 million. InFebruary 2001, Buhrmann sold its remaining interest in Sappi Limited.After the settlement of hedging and other transaction costs, this resulted inextraordinary income of EUR 20 million. Extraordinary expense in 2001consisted of expenses relating to cost reduction measures, including areduction in the workforce, of EUR 45 million and EUR 41 million forexpenses relating to the integration of the office supplies divisions of USOPand Samas that did not qualify as goodwill and for certain expenses relating tothe sale of Corporate Express Nederland BV.

 

***Net result.***Consequently, net result was a loss ofEUR 588 million in 2002 compared to an income of EUR 55 million in2001.

 

57

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**Office Products North America**

 

Key figures inmillions of euro

 
|                                                                     |   | **2002** |   | **2001** |   | **change in  EUR** |   | **change at  constant rates** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|-------------------------------|--------|
| Net sales                                                                |   | 4,931    |   | 5,221    |   | (5.5               | )%     | (0.5                          | )%     |
| Added value                                                              |   | 1,261    |   | 1,388    |   | (9.1               | )%     | (4.1                          | )%     |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 197      |   | 242      |   | (18.7              | )%     | (14.3                         | )%     |
| Amortization of goodwill                                                 |   | (48      | )      | (48      | )      | —             |   | (5.4                          | )%     |
| Impairment of goodwill                                                   |   | (423     | )      | —   |   | —             |   | —                        |   |
| Operating result                                                         |   | (274     | )      | 194      |   | —             |   | —                        |   |
|                                                                     |   |     |   |     |   |               |   |                          |   |
| Added value as a percentage of net sales                                 |   | 25.6     | %      | 26.6     | %      |               |   |                          |   |
| EBITA  as a percentage of net sales                                      |   | 4.0      | %      | 4.6      | %      |               |   |                          |   |
| Operating result as a percentage of net sales                            |   | (5.5     | )%     | 3.7      | %      |               |   |                          |   |

 

***Net sales.*****In theOffice Products North America Division, net sales decreased by 5.5% toEUR 4,931 million in 2002 from EUR 5,221 million in 2001. At constantrates, sales were almost level, posting a 0.5% decline. When comparing sales,the acquisition of the USOP activities in mid-May 2001 should be takeninto account. In 2002, the organic sales growth was nil. Sales of officesupplies declined, whereas the demand in sales of computer supplies and desktopsoftware increased in 2002. Within office supplies and furniture, weexperienced a lower demand from our existing customers, which can be attributedto the negative economic conditions in the United States and Canada, whichcould not be compensated by our new account wins. Furthermore, within officesupplies, sales volumes of computer supplies increased markedly, while sales offurniture along with other higher margin discretionary items decreased, due inpart to cost-cutting measures by strategic account customers. In response tothe lower demand for office products, the division has reduced inventories,which had led to both a reduction in capital employed and a consequent decreasein volume related rebates from our suppliers. Another activity that didincrease sales, however, was the Division’s software business ASAP, which canbe attributed in part to strong promotions by a software supplier during theyear.

 

***Added value.***In the Office Products North America Division,added value decreased by 9.1% to EUR 1,261 million in 2002 fromEUR 1,388 million in 2001. Excluding currency translation effects, thedecrease was 4.1%. The percentage of lower margin software and computersupplies sales increased relative to sales of furniture and other higher margindiscretionary items compared to 2001. The proportion of contract salesincreased and, in addition, strategic and large-account customers accounted foran increasingly large portion of the Division’s sales. As a consequence, thegross margin was lower. In general, gross margins for individual products andservices were relatively stable. Apart from the pressure on the overall grossmargin, the decrease in volume related supplier rebates and higher allowancespaid to our customers had an adverse effect on added value. This was partlyoffset by the full year consolidation in 2002 of the previously acquired USOPbusiness.

 

58

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***Operating resultbefore amortization and impairment of goodwill.*****In theOffice Products North America Division, operating result beforeamortization and impairment of goodwill decreased by 18.7% toEUR 197 million in 2002 from EUR 242 million in 2001. Adjusted forcurrency translation effects, the decrease is 14.3%. Lower added value was onlypartly compensated by a decrease of more than 7% in labor and other operatingcosts compared to 2001. Significant synergy savings were realized through thesuccessful integration of the acquired USOP business, which was completed inthe course of 2002 and the implementation of the restructuring programannounced in May 2001. Total operating costs including depreciation improvedas a percentage of sales from 21.9% in 2001 to 21.6% in 2002.

 

**Office Products Europe and Australia**

 

Key figures inmillions of euro

 
|                                                                     |   | **2002** |   | **2001** |   | **change in  EUR** |   | **change at  constant rates** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|-------------------------------|--------|
| Net sales                                                                |   | 1,540    |   | 1,496    |   | 2.9                | %      | 3.2                           | %      |
| Added value                                                              |   | 413      |   | 398      |   | 3.6                | %      | 3.9                           | %      |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 64       |   | 53       |   | 20.3               | %      | 20.6                          | %      |
| Amortization of goodwill                                                 |   | (15      | )      | (13      | )      | 14.3               | %      | 12.8                          | %      |
| Impairment of goodwill                                                   |   | (124     | )      | —   |   | —             |   | —                        |   |
| Operating result                                                         |   | (75      | )      | 40       |   | —             |   | —                        |   |
|                                                                     |   |     |   |     |   |               |   |                          |   |
| Added value as a percentage of net sales                                 |   | 26.8     | %      | 26.6     | %      |               |   |                          |   |
| EBITA as a percentage of net sales                                       |   | 4.2      | %      | 3.6      | %      |               |   |                          |   |
| Operating result as a percentage of net sales                            |   | (4.9     | )%     | 2.7      | %      |               |   |                          |   |

 

***Net sales.*****Net salesin the Office Products Europe and Australia Divisions combined increased by2.9% to EUR 1,540 million in 2002 from EUR 1,496 million in 2001.Measured at constant exchange rates, the increase amounted to 3.2%. This ismainly due to the full year consolidation in 2002 of the acquired office suppliesdivision of Samas-Groep in April 2001. Organically, sales in the OfficeProducts Europe and Australia Divisions combined were approximately 2% lowerthan last year.

 

 InEurope, sales declined by about 7% organically. As with other BuhrmannDivisions, Corporate Express Europe experienced lower business volumes becauseof the continuing economic slowdown. Many large customers considerablydecreased their white-collar headcount and further reduced their operatingcosts by restricting their  consumptionof office supplies. The declineparticularly occurred in countries in which we depend to a major extent on thelarge-account customers market segment. This is especially the case in Germany,the UK and the Netherlands. In other European countries we have a strongposition in the customer segment of medium-sized companies. Here our operationscontinued to enjoy healthy sales growth.

 

59

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Our Australian/New Zealand based OfficeProducts Division again recorded excellent profitability on buoyantsales levels, though signs of weakening in the Australian economy began to putpressure on the still robust earnings growth in second half of the year. Net sales in this Division increased by 18.6% toEUR 419 million in 2002 from EUR 353 million in 2001 with organicgrowth accounting for about 14% of the increase and acquisitions for about 5%. The company completedsix acquisitions for the year, adding EUR 25 million in annualized sales.These acquisitions improved regional coverage as well as added to the productrange offered to customers.

 

***Added value.***Added value in the Office Products Europe andAustralia Divisions combined increased by 3.6% to EUR 413 million in 2002from EUR 398 million in 2001, or 3.9% measured at constant exchange rates.This increase is predominantly a result of the sales growth in Australia andthe full year consolidation in 2002 of the acquired Samas business. In theOffice Products Europe Division, the gross margin increased as a result of thefurther penetration of products sold under its own corporate brand and the useof customer profitability analyses. Overall gross margins for individual products and services wererelatively stable. Added value was negatively impacted by an increase in deliveryexpenses.

 

***Operating resultbefore amortization and impairment of goodwill.*****Operatingresult beforeamortization and impairment in the Office Products Europe and AustraliaDivisions combined increased by 20.3% to EUR 64 million in 2002 fromEUR 53 million in 2001. Adjusted for currency translation effects, theimprovement amounted to 20.6%. The increase is attributable to the increase inadded value, whereas labor and other operating costs increased by only 1.9%,despite the full year consolidation in 2002 of the acquired Samas activities in2001. This is primarily due to synergy savings realized by the successfulintegration of the Samas activities, which was completed in the course of 2002,and by cost savings as a result of restructuring measures, which were taken in2001 and fully affected in 2002. Depreciation costs increased by 13.4% in 2002compared to 2001, predominantly as a result of the full year consolidation ofthe acquired Samas activities.

 

60

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**Paper Merchanting**

 

Key figures inmillions of euro

 
|                                                                     |   | **2002** |   | **2001** |   | **change in  EUR** |   | **change at  constant rates** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|-------------------------------|--------|
| Net sales                                                                |   | 2,988    |   | 3,126    |   | (4.4               | )%     | (3.8                          | )%     |
| Added value                                                              |   | 461      |   | 475      |   | (2.9               | )%     | (2.1                          | )%     |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 74       |   | 93       |   | (21.0              | )%     | (20.7                         | )%     |
| Amortization of goodwill                                                 |   | (3       | )      | (3       | )      | 0                  | %      | 0                             | %      |
| Impairment of goodwill                                                   |   | (26      | )      | —   |   | —             |   | —                        |   |
| Operating result                                                         |   | 45       |   | 90       |   | (50.0              | )%     | (51.8                         | )%     |
|                                                                     |   |     |   |     |   |               |   |                          |   |
| Added value as a percentage of net sales                                 |   | 15.4     | %      | 15.2     | %      |               |   |                          |   |
| EBITA as a percentage of net sales                                       |   | 2.5      | %      | 3.0      | %      |               |   |                          |   |
| Operating result as a percentage of net sales                            |   | 1.5      | %      | 2.9      | %      |               |   |                          |   |

 

***Net sales.*****Net salesin the Paper Merchanting Division decreased by 4.4% to EUR 2,988 millionin 2002 from EUR 3,126 million in 2001. Measured at constant exchangerates, the decrease amounted to 3.8%. The negative economic conditions that began in2001 continued throughout 2002. Low levels of advertising and direct marketingactivity adversely affected demand for paper in the commercial print segment.This was particularly the case for coated paper, which accounts forapproximately 50% of this segment. The display business segment suffered asadvertising screen-printing activity was lower and point-of-sale materialsprinting declined. The sales volume in the office paper market increased,whereas it declined in the secondary packaging market. In this adverseenvironment, Buhrmann increased its market share by maintaining excellentcustomer service levels – the primary variable in the paper merchantingbusiness. The Division’s branding strategy is also a clear contributor toincreasing customer loyalty. Overall Buhrmann tonnage shipped was slightlylower compared with the year earlier in a market where industry tonnage wasdown by 5%.  Average paper prices were almost 4% lower thanin 2001. Organically, sales were also 4% lower than last year. The sales mixbetween ‘stock’ and lower priced ‘indent’ (paper ordered through merchants butdelivered directly from the mills) was stable in 2002.

 

***Added value.***Added value in the Paper Merchanting Divisiondecreased by 2.9% to EUR 461 million in 2002 from EUR 475 million in2001. Measured at constant exchange rates, the decline was 2.1%. This decreasewas due to lower average paper prices while gross margins were slightly higherin 2002 compared to 2001. In order to improve profitability, the Division hasinitiated actions to address specific business areas that yield unsatisfactoryreturns. In addition, the strategy aimed at increasing the share of paper salesunder Buhrmann’s group brands is contributing to maintaining or improving grossmargins.

 

***Operating resultbefore amortization and impairment of goodwill.*****Operatingresult beforeamortization and impairment in the Paper Merchanting Division decreasedby 21.0% to EUR 74 million in 2002 from EUR 93 million in 2001.Adjusted for currency translation effects, the decline was 20.7%. The decreaseis due to lower added value. Labor and other operating costs were comparablewith 2001 as savings achieved through controlling internal costs and modestheadcount reduction programs were more or less offset by cost inflation.

 

61

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**Graphic Systems**

 

Key figures inmillions of euro

 
|                                                                     |   | **2002** |   | **2001** |   | **change in  EUR** |   | **change at  constant rates** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|-------------------------------|--------|
| Net sales                                                                |   | 489      |   | 565      |   | (13.6              | )%     | (13.6                         | )%     |
| Added value                                                              |   | 118      |   | 135      |   | (12.5              | )%     | (12.5                         | )%     |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 23       |   | 38       |   | (39.0              | )%     | (39.0                         | )%     |
| Amortization and impairment of goodwill                                  |   | —   |   | —   |   | —             |   | —                        |   |
| Operating result                                                         |   | 23       |   | 38       |   | (39.0              | )%     | (39.0                         | )%     |
|                                                                     |   |     |   |     |   |               |   |                          |   |
| Added value as a percentage of net sales                                 |   | 24.2     | %      | 23.9     | %      |               |   |                          |   |
| EBITA as a percentage of net sales                                       |   | 4.7      | %      | 6.7      | %      |               |   |                          |   |
| Operating result as a percentage of net sales                            |   | 4.7      | %      | 6.7      | %      |               |   |                          |   |

 

***Net sales.*****Net salesin the Graphic Systems Division decreased by 13.6% to EUR 489 million in2002 from EUR 565 million in 2001. The continuing economic malaise affected theDivision’s customer base in 2002 as reduced advertising and direct marketingprograms hurt the demand for printing. Accordingly, printers avoided makingcapital expenditures on printing presses. The Graphic Systems Division experiences more cyclicality in its resultsthan Buhrmann’s other divisions as the sale of capital goods such as printingpresses is more susceptible to changes in the general economic climate.

 

Sales of services, supplies and spare parts (‘3Ss’) further increased which has partly offset the decline in the sale ofmachinery. The strategic significance of the ‘3s’ activities is to make the resultsof our entire graphic business less sensitive to the traditional economic cyclethan the printing press market.******As a benchmark, the gross margin of this business isnow covering 58% of the total cost of the entire Graphic Systems Division, up 5percent from 53% in 2001.

 

***Added value.*** Added value in the Graphic Systems Divisiondecreased by 12.5% to EUR 118 million in 2002 from EUR 135 million in2001. The increased contribution of the ‘3Ss’ business, which have higher margins,and lower inventory provisions following increased inventory turns of offsetprinting equipment, could not compensate for the decrease in added value ofmachinery.

 

***Operating resultbefore amortization and impairment of goodwill.*****In theGraphic Systems Division, operating result before amortization and impairment decreasedby 39.0% to EUR 23 million in 2002 from EUR 38 million in 2001. Thisdecrease is a result of a decline in added value while labor, other operating,and depreciation costs, slightly increased. The investments associated withthis year’s launch of the NexPress digital printing press caused an increase inoperating costs. Excluding these investments, the Division’s costs would havebeen lower than in 2001 as the total number of staff was further reduced toadjust to the lower levels of business activity.

 

62

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**Corporate**

Corporate operatingexpenses  not allocated to**the Divisions**were EUR 16 millionin 2002 compared to EUR 18 million in 2001. The decrease in 2002 is mainlya result of incidental gains such as insurance benefits and some propertygains.

 

63

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**Results of operations - year ended December 31, 2001compared to year ended December 31, 2000**

 

In 2000 and 2001, Buhrmann made acquisitionsand divestments that affect comparability with other years, most notably theacquisition of the office supplies division of Samas-Groep NV inApril 2001 and the acquisition of the North American office productsactivities of USOP in May 2001. The Information Systems Division, whichwas sold in May 2000, has been treated as discontinued operations for theyears presented.

 

**Consolidated results**

 

***Net sales; added value; operating result***

In millions of euro

 
|                                                                     |   | **2001** |   | **2000** |   | **change in  EUR** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|
| Net  sales                                                               |   | 10,408   |   | 9,603    |   | 8.4                | %      |
| Added value                                                              |   | 2,396    |   | 2,341    |   | 2.3                | %      |
| Operating result before amortization and impairment of goodwill  (EBITA) |   | 408      |   | 546      |   | (25.3              | )%     |
| Amortization and impairment of goodwill                                  |   | (67      | )      | (55      | )      | 21.8               | %      |
| Operating result                                                         |   | 341      |   | 491      |   | (30.5              | )%     |
|                                                                     |   |     |   |     |   |               |   |
| Added value as a percentage of net sales                                 |   | 23.0     | %      | 24.4     | %      |               |   |
| EBITA as a percentage of net sales                                       |   | 3.9      | %      | 5.7      | %      |               |   |
| Operating result as a percentage of net sales                            |   | 3.3      | %      | 5.1      | %      |               |   |

 

***Net sales.*** Net sales in 2001 were EUR 10,408million, compared with EUR 9,603 million in 2000, an increase of 8.4%.Excluding translation differences (most notably the US dollar), net salesincreased by 7.4%. This increase was attributable to the impact of the USOP andSamas acquisitions; our organic sales were level with last year. Slowingeconomies in North America and Europe resulted in lower than anticipated salesof office products as our customers reduced their number of white-collarworkers and also reduced spending on office products per capita. A slowdown inadvertising and direct marketing activities due to negative economic conditionsreduced spending by our paper merchanting and graphic systems customers.

 

***Added value.*****In 2001,added value increased as a result of acquisitions but this positive effect waspartly offset by changes in the sales mix as the portion of sales from productsand services with lower margins increased. Gross margins for individualcategories of products and services remained relatively stable. Added value was negatively impacted by anincrease in delivery costs. The net effect of these and other factorswas an increase in added value of 2.3% to EUR 2,396 million in 2001 fromEUR 2,341 million in 2000.

 

64

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***Operating result.*****Operatingresult decreased by 30.5% to EUR 341 million in 2001 from EUR 491million in 2000. Labor and other operating costs increased by 12% due toacquisitions, as well as wage and other price increases, partly offset by thebenefits from integration and restructuring carried out. Depreciation andamortization of goodwill increased by 5% mainly due to acquisitions. Lowersales volumes, a shift in the sales mix towards a larger proportion of lowermargin product categories, and a lower capacity utilization of ourinfrastructure had a negative impact upon our operating result. Operatingresult before amortization of goodwill declined to EUR 408 million in 2001from EUR 546 a year earlier.

 

We have realized cost savings as a result of theintegration of recent acquisitions. These cost savings relate primarily topurchasing, facilities consolidation (e.g. reductions in rent expense), payrolland other occupancy costs. In the United States, the integration of warehousesand distribution facilities was 95% complete by December 2001 and we aremaking adequate progress in Europe.

 

***Financial income and expense; Minority interests; Taxation***

in millions of euro

 
|                                   |   | **2001** |   | **2000** |   |
|----------------------------------------|--------|----------|--------|----------|--------|
|                                   |   |     |   |     |   |
| Net financing costs                    |   | (210     | )      | (221     | )      |
| Results from participations            |   | (3       | )      | 5        |   |
| Minority interests                     |   | (9       | )      | (9       | )      |
| Tax  expense on result from operations |   | (24      | )      | (55      | )      |
| **Total**                              |   | **(246** | **)**  | **(280** | **)**  |

 

***Net financingcosts.*****Net financing costs decreased by 5% toEUR 210 million in 2001 from EUR 221 million in 2000. Lower interestmargins due to the securitization program, lower average interest bearing debt(mainly due to a favorable cash flow development) and lower interest ratescaused net financing costs to decrease, partly offset by an increase inamortization of financing fees to EUR 16 million in 2001 from EUR 14million in 2000.

 

***Results from participations.***Results fromparticipations in 2001 comprise of the result of the office products divisionof Corporate Express Nederland BV from April to when it was sold inNovember. In 2000, the results from participations related to the dividend fromSappi Limited, in which Buhrmann had an interest until it was sold inFebruary 2001.

 

***Minority interests.*** Minority interestsmainly represents the 48% share of third parties in the result of CorporateExpress Australia Ltd.

 

***Tax expense onresult from  operations.*****Buhrmann’seffective tax rate (taxes as a percentage of result from operations beforeamortization of goodwill and taxes) was 12% in 2001, compared to 17% in 2000.Of the 5% decrease of the effective tax rate in 2001, 4% was due to a releaseof EUR 7 million of allowances which were recorded in previous years andwhich were no longer deemed necessary.

 

65

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***Result fromcontinuing operations; discontinued operations; extraordinary result***

 

in millions of euro

 
|                                                                                              |   | **2001** |       | **2000** |       |
|---------------------------------------------------------------------------------------------------|--------|----------|------------|----------|------------|
|                                                                                              |   |     |       |     |       |
| Result from continuing operations before  extraordinary items and before amortization of goodwill |   | 162      |       | 266      |       |
| Amortization of goodwill                                                                          |   | (67      | )          | (55      | )          |
| Result from continuing operations before  extraordinary items                                     |   | 95       |       | 211      |       |
| Result  on disposal of discontinued operations                                                    |   | —   |       | (3       | )          |
| Extraordinary result from continuing operations                                                   |   | (40      | )          | 13       |       |
| Net  result                                                                                       |   | **55**   | ** ** | **221**  | ** ** |

 

***Result from continuing operations before extraordinary items.***Result from continuingoperations before extraordinary items was an income of EUR 95 million in2001 compared to an income of EUR 211 million in 2000. Result fromcontinuing operations before extraordinary items and before amortization of goodwill(cash earnings) was an income of EUR 162 million in 2001 compared toEUR 266 million in 2000, a reduction of 39.1%.

 

***Result on disposal of discontinued operations******.***This relates to thefinalization of the sale of the Information Systems Division in 2000. Therewere no discontinued operations in 2001.

 

***Extraordinaryresult from continuing operations.*****Extraordinary result from continuing operationswas a net loss of EUR 40 million in 2001, compared to an income ofEUR 13 million in 2000.

Extraordinary result in 2001 consisted ofextraordinary income of EUR 20 million, extraordinary losses ofEUR 86 million and a related tax gain of EUR 26 million. InFebruary 2001, Buhrmann sold its remaining interest in Sappi Limited.After the settlement of hedging and other transaction costs, this resulted in apositive cash flow of EUR 75 million and extraordinary income ofEUR 20 million. Extraordinary expense in 2001 consists of expensesrelating to cost reduction measures, including a reduction in the workforce, ofEUR 45 million and EUR 41 million for expenses relating to theintegration of the office supplies divisions of USOP and Samas that did notqualify as goodwill and for certain expenses relating to the sale of CorporateExpress Nederland BV.

 

Extraordinary result in 2000 consisted ofextraordinary income of EUR 31 million, extraordinary losses of

EUR 11 million and related tax losses ofEUR 7 million. Extraordinary income in 2000 consisted of a repayment fromthe Company’s pension fund in the Netherlands. The extraordinary expense ofEUR 11 million was predominantly the result of divestments of non-coreactivities.

 

66

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**Office Products North America**

 

Key figures inmillions of euro

 
|                                                                     |   | **2001** |   | **2000** |   | **change in  EUR** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|
| Net sales                                                                |   | 5,221    |   | 4,703    |   | 11.0               | %      |
| Added value                                                              |   | 1,388    |   | 1,354    |   | 2.5                | %      |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 242      |   | 333      |   | (27.3              | )%     |
| Amortization and impairment of goodwill                                  |   | (48      | )      | (44      | )      | 9.1                | %      |
| Operating result                                                         |   | 194      |   | 289      |   | (32.9              | )%     |
|                                                                     |   |     |   |     |   |               |   |
| Added value as a percentage of net sales                                 |   | 26.6     | %      | 28.8     | %      |               |   |
| EBITA as a percentage of net sales                                       |   | 4.6      | %      | 7.1      | %      |               |   |
| Operating result as a percentage of net sales                            |   | 3.7      | %      | 6.1      | %      |               |   |

 

***Net sales.*****Net salesincreased by 11.0% to EUR 5,221 million in 2001 from EUR 4,703million in 2000.  The increase can beattributed primarily to the USOP acquisition that occurred in May 2001.The increase in the average exchange rate of the US dollar against the Euro hadan additional positive effect. Organic sales were level with last year, as astrong increase in software sales was offset by a decline within the officesupplies business.

 

The economic slowdown in our markets in NorthAmerica that began late in the first quarter of the year deepened as the year progressedand was significantly exacerbated by the events of September 11. Theoffice products business was negatively affected by a reduction in the numberof white-collar workers employed by our North American customers and areduction in spending per capita. This was particularly the case on the westcoast of the United States, as large technology, media and telecoms customerstrimmed their organizations in response to the sudden interruption in growth intheir markets. In addition, there were some specific adverse effects for thespecialty products business. The airline tag segment of the forms managementbusiness was severely curtailed. This business area was also affected by theanthrax scare that impacted its direct mail business. Promotional marketingbusiness volume was reduced because many companies cancelled promotionalevents.

 

***Added value.***Added value in the Office Products NorthAmerica Division increased by 2.5% to EUR 1,388 million in 2001 fromEUR 1,354 million in 2000. This increase is attributable to the USOPacquisition. Added value was adversely affected by the change in the sales mixpredominantly from office supplies to lower margin software products.

 

***Operating resultbefore amortization of goodwill.*****Operating result before amortization ofgoodwill decreased by 27.3% to EUR 242 million in 2001 from EUR 333million in 2000. This is mainly a result of the adverse effect of the change insales mix on added value. The increase in labor, other operating anddepreciation costs is mainly attributable to the consolidation of USOP. In thecourse of the year, cost reduction measures were implemented, including areduction in the number of staff, which resulted in structural cost savings. Inaddition, we are realizing favorable synergies from the integration of the USOPacquisition. These actions lessened the impact of the negative economicenvironment.

 

67

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**Office Products Europe and Australia**

 

Key figures inmillions of euro

 
|                                                                     |   | **2001** |   | **2000** |   | **change in  EUR** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|
| Net  sales                                                               |   | 1,496    |   | 1,330    |   | 12.5               | %      |
| Added value                                                              |   | 398      |   | 357      |   | 11.5               | %      |
| Operating result before amortization and impairment of goodwill  (EBITA) |   | 53       |   | 41       |   | 29.3               | %      |
| Amortization and impairment of goodwill                                  |   | (13      | )      | (8       | )      | 62.5               | %      |
| Operating result                                                         |   | 40       |   | 33       |   | 21.2               | %      |
|                                                                     |   |     |   |     |   |               |   |
| Added value as a percentage of net sales                                 |   | 26.6     | %      | 26.8     | %      |               |   |
| EBITA as a percentage of net sales                                       |   | 3.6      | %      | 3.1      | %      |               |   |
| Operating result as a percentage of net sales                            |   | 2.7      | %      | 2.5      | %      |               |   |

 

***Net sales.*****Net salesin the combined Office Products Europe and Australia Division increased by12.5% to EUR 1,496 million in 2001 from EUR 1,330 million in 2000.The increase is mainly a result of the acquisition of the office suppliesdivision of Samas and strong sales growth in Australia, partly offset by anegative translation impact caused by a weaker Australian dollar.

 

In the Office Products Europe Division totalsales increased to EUR 1,143 million in 2001 from EUR 1,020 millionin 2000. The Samas acquisition had a significant positive effect on thisDivision’s sales growth in 2001, while sales were negatively affected by theeconomic slowdown. The overall organic sales showed a decline of 2%. In theoffice supplies segment of the business, however, organic sales increased by 2%compared to the previous year. In Germany, a strong e-commerce strategyprovided healthy sales growth in office supplies there, which was partly offsetby a decline in furniture and copier sales. In addition, the Benelux, France,Austria and Ireland recorded good sales performances in office supplies.

 

Corporate Express Australia continued itsrobust sales performance as it had an excellent year with sales increasing toEUR 353 million in 2001 compared to EUR 310 million in 2000. Organicsales growth was 26%. The weakening of the Australian dollar versus the eurohad a negative effect on sales reported in euro.

 

***Added value.***Added value in the Office Products Europe andAustralia Division increased by 11.5% to EUR 398 million in 2001 fromEUR 357 million in 2000. This increase is due to the acquisition of theoffice products business of Samas and the continuing good performance of theAustralian operations.

 

***Operating resultbefore amortization of goodwill.*****Operating result before amortization ofgoodwill increased by 29.3% to EUR 53 million in 2001 from EUR 41million in 2000. The increase is attributable to the acquisition of the officesupplies division of Samas and the continuing good performance of theAustralian operations. The negative effects of the economic slowdown in our marketswere somewhat offset by realized synergies from the integration of the Samasoffice supplies acquisition and an implemented cost reduction program.

 

68

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**Paper Merchanting**

 

Key figures inmillions of euro

 
|                                                                     |   | **2001** |   | **2000** |   | **change in  EUR** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|
| Net sales                                                                |   | 3,126    |   | 3,014    |   | 3.7                | %      |
| Added value                                                              |   | 475      |   | 487      |   | (2.5               | )%     |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 93       |   | 130      |   | (28.5              | )%     |
| Amortization and impairment of goodwill                                  |   | (3       | )      | (3       | )      | —             |   |
| Operating result                                                         |   | 90       |   | 127      |   | (29.1              | )%     |
|                                                                     |   |     |   |     |   |               |   |
| Added value as a percentage of net sales                                 |   | 15.2     | %      | 16.2     | %      |               |   |
| EBITA as a percentage of net sales                                       |   | 3.0      | %      | 4.3      | %      |               |   |
| Operating result as a percentage of net sales                            |   | 2.9      | %      | 4.2      | %      |               |   |

 

***Net sales.*****Net salesin the Paper Merchanting Division increased by 3.7% to EUR 3,126 millionin 2001 from EUR 3,014 million in 2000. Despite lower volumes, salesincreased, mostly due to higher overall paper prices, which were partly offsetby a shift in the sales mix from ‘stock’ to lower priced ‘indent’ (paperordered through merchants, but delivered directly from the mills) and due toacquisitions in 2001 and 2000. On a comparable basis, volumes for the full yeardecreased by 4%. The overall full-year paper price level was 5% higher than full-year2000. Organic sales, which excludes the impact of acquisitions and translationdifferences, were on the same level as last year.

 

The adverse economic conditions of our marketsin 2001 and their immediate negative effect on advertising and direct marketingspending contributed to lower commercial print sales by Buhrmann. The declinewas particularly felt in the coated paper category, which accounts forapproximately 65% of this business unit’s sales. The display business unitsuffered from the apparent reduction in point-of-sale material ordered byretail companies. The office market maintained its strong sales pattern in2001, showing good growth in sales via re-sellers as well as directly to largecorporations. The packaging market showed a healthy growth for the thirdconsecutive year.

 

***Added value.***Added value decreased by 2.5% to EUR 475million in 2001 from EUR 487 million in 2000. The decrease was due to theadverse change in product mix from stock sales to lower margin indent sales,whereby paper is delivered directly from the paper mills. While the papermerchant continues to be responsible for all selling and administrationactivities, this type of delivery negatively affects our margins. Indent salestypically occur when over-capacity enables the paper mills to offerquicker-than-normal deliveries. Indent sales should decrease in favor of stocksales once demand recovers. Pricing discipline and continuous efforts toimprove the product mix partially offset the effect of negative volume and salesmix development.

 

***Operating resultbefore amortization of goodwill.*****Operating result before amortization ofgoodwill decreased by 28.5% to EUR 93 million in 2001 from EUR 130million in 2000. This decrease is due to the lower added value and an increasein labor, other operating and depreciation costs, mainly resulting from thefull year impact of the various acquisitions. Cost reductions and operationalefficiencies partially offset the decrease in operating result.

 

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**Graphic Systems**

 

Key figures inmillions of euro

 
|                                                                     |   | **2001** |   | **2000** |   | **change in  EUR** |   |
|--------------------------------------------------------------------------|--------|----------|--------|----------|--------|--------------------|--------|
| Net sales                                                                |   | 565      |   | 556      |   | 1.6                | %      |
| Added value                                                              |   | 135      |   | 143      |   | (5.6               | )%     |
| Operating  result before amortization and impairment of goodwill (EBITA) |   | 38       |   | 50       |   | (24.0              | )%     |
| Amortization and impairment of goodwill                                  |   | —   |   | —   |   | —             |   |
| Operating result                                                         |   | 38       |   | 50       |   | (24.0              | )%     |
|                                                                     |   |     |   |     |   |               |   |
| Added value as a percentage of net sales                                 |   | 23.9     | %      | 25.7     | %      |               |   |
| EBITA as a percentage of net sales                                       |   | 6.7      | %      | 9.0      | %      |               |   |
| Operating result as a percentage of net sales                            |   | 6.7      | %      | 9.0      | %      |               |   |

 

***Net sales.*****Net salesin the Graphic Systems Division increased by 1.6% to EUR 565 million in2001 from EUR 556 million in 2000. The economic downturn effects of 2001negatively affected our customers. Printing levels were reduced as advertisingand direct marketing programs and expenditures were scaled down and as aresult, our customers were reluctant to make capital equipment purchases.  Non-machinery activities, such as supplies,services and spare parts (“3 Ss”) were largely responsible for the slightgrowth in sales in the Graphic Systems Division.

 

***Added value.*** Added value decreased by 5.6% to EUR 135million in 2001 from EUR 143 million in 2000. Added value decreased due tooverall lower margins, partly offset by an increase in sales of the “3 Ss”,which have higher margins.

 

***Operating resultbefore amortization of goodwill.*****Operating result before amortization ofgoodwill decreased by 24.0% to EUR 38 million in 2001 from EUR 50million in 2000. This decrease is a result of a decline in added value andmodest increases in labor and other operating and depreciation costs, which arepredominantly fixed. In 2001, the gross margin of the “3 Ss” covered 53 % oftotal cost of the entire Graphic Systems Division, up from 52% in 2000.

 

**Corporate**

Corporate operatingexpenses  not allocated to**the Divisions increased fromEUR 8 million in 2000 to EUR 18 million in 2001, mainly due tonon-recurring gains in 2000 which were absent in 2001. These gains relate toreleases of allowances for uncollectable accounts receivable and provisions forpensions.

 

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**LIQUIDITY AND CAPITAL RESOURCES**

 

**Liquidity**

 

Buhrmann’s liquidity requirements ariseprimarily from the need to fund the expansion of its business, working capitalrequirements, capital expenditure and restructuring.

 

We have a USD 350 million working capital facility under the SeniorCredit Facility (see Capital Resources, Financing activities below) which ismainly used to fund the fluctuation in working capital that the Companyexperiences in the ordinary course of its business. At December 31, 2002,an amount of EUR 44 million was drawn under the working capital facility.This facility is a revolving credit facility and is available untilOctober 2005.

 

Under Buhrmann’s Accounts Receivable Securitization Program, there is a potentialfor issuing asset backed commercial paper (Short-Term Notes) up to EUR 50million in addition to theoutstanding EUR 260 million of borrowings under the program (see” Capital Resources - FinancingActivities” below).

 

At December 31, 2002, committed creditlines available amounted to EUR 245 million. Buhrmann believes that its operating cash flowsand available credit facilities will be sufficient to fund its working capital,capital expenditures, restructuring and other current financial obligations in2003.

 

**Capital Resources**

 

***Cash flowanalysis***

 

*Cash flow from operating activities:*

Cashflow from operating activities was EUR 258 million in 2002 compared toEUR 469 million in 2001.

 

The decrease in cash flow from operatingactivities is predominantlydue to lower operating result. In 2002, working capital was further reducedwhich had a positive impact on cash flow from operating activities. Averageworking capital as a percentage of net sales decreased from 13.3% in 2001 to12.9% in 2002 as accounts receivable and inventories continued to be reducedwhich was partly offset by lower trade payables.

 

Lower interest payments and profit tax paymentsin 2002 compared to 2001 had a positive impact on cash flow from operatingactivities. Interest payments were lower due to lower interest marginsfollowing the expansion of the securitization program with the issue of MediumTerm Notes, lower average interest-bearing debt and lower overall interestrates. Profit tax payments were lower due to the deterioration of results.

 

Cash flow from operating activities includesEUR 29 million of cash expenditure relating to cost saving restructuringmeasures taken in 2001 and 2002. In 2003, Buhrmann expects to pay the remainingliability of EUR 60 million in connection with these cost savingrestructuring measures.

 

*Cash flow from investingactivities:*

Cash flow from investing activities wasEUR 138 million negative in 2002 compared to EUR 766 million negativein 2001.

 

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Capital expenditure amounted to EUR 107 million in 2002 compared toEUR 127 million in 2001. At December 31, 2002, Buhrmann hadinvestment commitments of EUR 26 million, payable in 2003. Buhrmannexpects to incur a level of capital expenditure over the next few years ofapproximately EUR 100 million per year, subject to unforeseencircumstances. A significant portion of our capital expenditure represents thedevelopment of IT, eCommerce and logistics systems. Buhrmann is committed to investing further inthese systems.

 

Cash used for acquisitions was EUR 9million in 2002 compared to EUR 578 million in 2001. In 2001, thisincludes the acquisition of the office supplies companies of Samas(EUR 321 million) and the North American office products activities ofUSOP (EUR 193 million).

 

Divestment proceeds in 2002 were EUR 68 million compared toEUR 147 million in 2001.  In 2002,this includes the proceeds of an early redemption of loan notes which we received aspart of the consideration for the sale of the Information Systems Division in2000.  In 2001, the interest in Sappi (EUR 75 million) was sold aswell as NPO Sistemi (EUR 30 million) and the office products activities ofCorporate Express Nederland BV (EUR 22 million of which EUR 5 millionwas received in January 2002).

 

Payments for integration of acquisitionsamounted to EUR 90 million in 2002 compared to EUR 208 million in2001. These payments relate predominantly to the integration of the acquiredSamas and USOP businesses.  Buhrmannexpects to pay the remaining liability of EUR 39 million in 2003.

 

The resulting available cash flow operations after giving effect toinvestment activities was EUR 120 million positive in 2002 compared toEUR 297 million negative in 2001.

 

*Cash flowfrom financing activities:*

Cash flow from financing activities wasEUR 208 million negative in 2002 compared to EUR 420 million positivein 2001.

 

In 2001, an issue of Ordinary Shares raisedEUR 665 million, net of expenses, part of which was used to finance theacquisition of the North American office products assets of USOP. In 2002, noshare issuances took place.

 

In 2001, EUR 407 million additionallong-term debt was drawn of which EUR 357 million was used to finance theacquisition of the Samas office supplies activities. No additional debt wasdrawn in 2002.

 

In 2002, Buhrmann paid cash dividends on itsPreference Shares A of EUR 14 million and on its Ordinary SharesEUR 11 million for the year ended December 31, 2001. The cashdividend for the year ended December 31, 2002, payable in 2003, onPreference Shares A will amount to EUR 11 million. The dividend onOrdinary Shares for the year ended December 31, 2002 will be entirely paidin shares.

 

Total repayment of long-term debt wasEUR 162 million in 2002 and EUR 577 million in 2001. In 2002, thisincludes a repayment of EUR 71 million funded out of the proceeds of the aforementioned early redemption ofloan notes and a voluntaryrepayment of EUR 100 million out of other positive available cashflow.  Repayment of long-term debt in2001 includes part of the proceeds of the sale of the Sappi shares (EUR 68million), the share issue in March 2001 (EUR 118 million) and theaccounts receivable securitization program (EUR 82 million).

 

The resulting net cash flow was EUR 88million negative in 2002 compared to EUR 123 million positive in 2001.

 

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***Financingactivities***

Buhrmann incurred substantial indebtedness inconnection with the acquisition of Corporate Express in October 1999 whichwas partly funded through the Senior Credit Facility and the issuance of the121⁄4% Notes. The Senior  Credit Facilityand the indenture for the 121⁄4% Notes impose certain restrictions on Buhrmannand certain of its subsidiaries, including restrictions on the ability to incuradditional indebtedness. Also, Buhrmann isrequired to apply a percentage of the proceeds of any equity offering and saleof assets to the prepayment of debt under the facility. Under the SeniorCredit Facility, Buhrmann must also comply with certain financial maintenancecovenants. Buhrmann was in compliance with these financial covenants atDecember 31, 2002. It is noted that among other things, the operatingresult before depreciation of tangible fixed assets and amortization andimpairment of goodwill (EBITDA) used for banking covenant calculation purposesmay differ significantly from the EBITDA as published in the ConsolidatedFinancial Statements due to specific contractual definitions. Also, profit andloss items are calculated on a rolling four-quarterly basis. If Buhrmann fails to comply with the covenants inthe Senior Credit Facilit**y,**there could be an event of default underthe Senior Credit Facility. In addition, the lenders under the Senior CreditFacility could demand repayment of the debt under the Senior Credit Facility,and seek to foreclose on Buhrmann’s assets that secure the Senior CreditFacility. Buhrmann can on occasion obtain consent from its lenders toamend certain terms and conditions of the Senior Credit Facility, which mayinvolve additional fees.  OnDecember 3, 2002, Buhrmann agreed the most recent amendment (see exhibit4.9 to this annual report on Form 20-F), primarily related to covenants, such as consolidatedleverage ratios and consolidated net cash interest coverage ratios, to ensure sufficient, financial flexibility. As part of theagreed amendment, the applicableinterest margins as laid down in the pricing grid have been increased by 0.5%and a number of restrictions were accepted aiming to retain cash in theCompany. Fees paid upfront amounted to EUR 4 million including advisorycosts.

 

The Senior Credit Facility consists of Termloans A, and Term loans B with tranches in EUR and USD plus a workingcapital facility of USD 350 million. The indebtedness under the Senior CreditFacility is secured by a pledge of the assets of Buhrmann, all of the assets ofits existing and future operating companies in the United States and thegreater part of its operating companies outside the United States. Borrowingsunder the Senior Credit Facility bear interest at floating rates related toLIBOR for the relevant currency for varying fixed interest periods. The interest ratemargins vary with the leverage ratio (pricing grid). Over 2002 these marginsfluctuated for both the working capital facility and the Term loans A between2.375% and 3.25% and for the Term loans B between 3.25% and 4.0%.  Theworking capital facility carries a fee of 0.50% for the undrawn balance.

 

During 2002, an amount of EUR 171 millionwas redeemed early on the Term Loans A and B, funded primarily outof the positive available cash flow which includes EUR 71 million ofproceeds out of the early redemption of loan notes which we received as part ofthe consideration for the sale of the Information Systems Division in 2000. Atyear-end 2002, the outstandings under the Term Loans A and B amounted toEUR 1,098 million including mandatory redemptions in 2003 of EUR 61million.

 

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At December 31, 2002, the Term loan A hadan amount outstanding of EUR 587 million compared to EUR 789 millionin 2001. Contractual redemptions on the Term loans A will have a total ofEUR 59 million in 2003 with the final redemption in 2005. The Term Loans Bhad an amount outstanding at the end of 2002 EUR 511 million compared toEUR 605 million in 2001. Contractual redemptions on the Term Loans B willbe EUR 2 million in 2003 with a final redemption in 2007. AtDecember 31, 2002 an amount of EUR 44 million was drawn under theworking capital facility.  Buhrmann mayprepay indebtedness under the Senior Credit Facility at any time.

 

The 121/4% Notes are issued for the amount of USD 350 million, witha coupon of 12.25%, payable semi-annually. This loan must be redeemed onNovember 1, 2009. Buhrmann has the option to redeem the notes sooner, butnot before November 1, 2004. Thereafter, all or a portion of the notes canbe redeemed at contractual rates above par.

 

Buhrmann has an Accounts Receivable Securitization Program under whichfunds are raised by pledging accounts receivable from subsidiaries in theNetherlands, UK and USA as security for short-term and medium-term borrowings.The accounts receivable are sold to Buhrmann Silver SA and Buhrmann Silver USLLC, which in turn pledge the accounts receivable to third-party dedicatedentities as security for short-term borrowings in the form of Short Term Notesand starting in 2002 also in the form of Medium Term Notes. The transactionswith regard to this program are further explained under “Accounts ReceivableSecuritization Program” below. The Short Term Notes are issued in EUR, GBP andUSD, reflecting the currency of the pledged receivables. The amount of ShortTerm Notes outstanding against the receivables pledged, fluctuate as a resultof liquidity requirements, advance rates calculated and invoices outstanding.The maximum amount of Short Term Notes outstanding during 2002 was EUR 379million. To ensure availability of re-financing for the notes, a back-upliquidity facility has been arranged. At December 31, 2001, an amount ofEUR 290 million of Short Term Notes was issued and at December 31,2002 no Short Term Notes were issued. In July 2002, the securitizationprogram was extended with the issue of Medium Term Notes. The Medium Term Notesare issued in GBP and USD and will mature in 2007. Fees incurred upfrontamounted to EUR 9 million including advisory costs.  At December 31, 2002, GBP 107 millionand USD 100 million of Medium Term Notes were issued. The program deliversfunding at attractive rates and at the same time diversifies sources of capitaland increases financial flexibility. Both receivables and borrowings related tothis program are included in the Consolidated Balance Sheet. The proceeds areused to reduce long-term borrowings and drawings can only be used forredemption of the Term Loans A and B under the Senior Credit Facility. AtDecember 31, 2002, accounts receivables of EUR 563 million werepledged under this program. The average interest margin, including issuerscost, is approximately 0.67% over LIBOR.

 

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As at December 31, 2002, Buhrmann isrequired to make the following scheduled long-term debt payments:

 

*Total Payment Amount*

*(in millions of euro)*

Year

 
| 2003       |   | 68    |   |
|------------|--------|-------|--------|
| 2004       |   | 235   |   |
| 2005       |   | 347   |   |
| 2006       |   | 249   |   |
| 2007       |   | 510   |   |
| After 2007 |   | 337   |   |
| Total      |   | 1,746 |   |

 

Of the long-term debt at December 31,2002, 64% was issued in USD, 26% in euro and 10% in GBP. Buhrmann aims to incurdebt by currency in accordance with the proportion of the main currencies inforecasted operating result before depreciation and amortization and impairmentof goodwill (EBITDA). Forward foreign exchange and currency swaps are used toadjust the currency profile to the desired profile. After hedging with theseswaps the currency profile of the long-term debt at December 31, 2002 was64% in USD, 29% in euro, 4% in GBP and 3% in other currencies. For moreinformation about our hedging policies and forward foreign exchange andcurrency swaps, we refer to Item 11 “Quantitative and Qualitative Disclosureabout Market Risk”.

 

Buhrmann has entered into a series of interestrate hedging agreements, the purpose of which is to limit Buhrmann’s interestcost with respect to its long-term debt, of which 81% was issued at variableinterest rates and 19% at fixed interest rates at December 31, 2002. Theprincipal hedging agreements are a series of interest rate swaps (in euro andUS dollars) with a total principal of EUR 1,388 million atDecember 31, 2002 for appropriate maturities. These swaps adjusted theinterest rate profile of the long-term debt at December 31, 2002 to 81%fixed and 19% variable. For more information about our hedging policies andinterest rate swaps, we refer to Item 11 “Quantitative and QualitativeDisclosure about Market Risk”.

 

Buhrmann also purchases various financialinstruments and enters into certain agreements in the ordinary course ofbusiness in order to hedge price and foreign currency risks arising from thepurchase of raw materials and the sale of its products.

 

Buhrmann US Inc. is the principal borrowerunder the Senior Credit Facility and the issuer of the 121⁄4% Notes for theBuhrmann group. Proceeds from borrowings received by Buhrmann US Inc. are usedto finance the Group.

 

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***Accounts Receivable Securitization Program***

The transactions relating to the accounts receivable securitizationprogram are as follows:

 

The Buhrmann operating companies in the UnitedKingdom, the Netherlands and the United States that sell their accountsreceivable into Buhrmann’s securitization program are called the Originators.The Dutch and UK Originators sell their receivables on a true sale basis to theEuropean Receivables Warehouse: Buhrmann Silver SA. Buhrmann Silver SA (awholly owned Buhrmann subsidiary) sells the receivables onward to the EuropeanMaster Purchaser Silver Securitisation BV. Silver Securitisation BV is aseparate company of which the shares are held by a Stichting (Dutch Foundation)which is controlled by a board independent from Buhrmann. Silver SecuritisationBV holds the European receivables and issues Buhrmann Notes with thereceivables as security to the investors in these Notes. Investors in the Notesare Rheingold no 11 Ltd (a Jersey company sponsored by Deutsche Bank AG) asInitial Buhrmann Note Purchaser and Silver Funding Ltd as MTN issuer. Theshares of Silver Funding are held by the Silver Funding Charitable Trust whichis controlled by a board that is independent from Buhrmann.

 

In the United States the US Originators selltheir receivables to the US Master Purchaser: Buhrmann Silver US LLC, which isa partnership with the US Originators as partners.  The US Master Purchaser issues Buhrmann US Notes to both theInitial Buhrmann Notes Purchaser and the MTN Issuer. The US Master Purchaserand the European Master Purchaser have issued a cross guarantee on theirrespective receivables.

 

With the Buhrmann Notes and Buhrmann US Notesas collateral, Rheingold no 11 Ltd and Silver Funding Ltd raise funds in themarket. Rheingold no 11 issues Commercial Paper (Short Term Notes) through theCP Issuer Rheingold Securitisation Ltd. Silver Funding Ltd has issued MediumTerm Notes, which are listed on the Luxembourg Stock Exchange, in GBP, USD andEUR. As the EUR denominated notes have the USD pool as their primarycollateral, the Notes outstanding in EUR have been swapped to USD untilthe maturity of the Notes.

 

Buhrmann Stafdiensten BV (a Dutch Buhrmanncompany) services the program.

 

The receivables soldby the Originators to Buhrmann Silver SA and Buhrmann Silver US LLC are included in Buhrmann’s Consolidated BalanceSheet, both under Dutch GAAP and US GAAP. Also the Buhrmann Notes issued by Silver Securitisation BV and the Buhrmann USNotes issued by Buhrmann Silver US LLC are includedin Buhrmann’s Consolidated Balance Sheet, both under Dutch GAAP and US GAAP.

 

**Research and development**

Buhrmann’s policy is to expense costs ofresearch as incurred and to capitalize costs of development. Costs of researchwere insignificant in the years 2002, 2001 and 2000.

 

**Inflation**

Cost inflation has been in line with thegeneral economic conditions at around 3% in Buhrmann’s primary US and Europeanmarkets for each of the last three fiscal years.

 

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**ContractualObligations, Contingent Liabilities, Commitments and Guarantees**

 

The table below presents our on- and offbalance sheet contractual cash obligations as at December 31, 2002 (inmillions of euro).

 
|                                         |   | **Payments due by period** |   |
|----------------------------------------------|--------|----------------------------|--------|
|                                         |   | **Total**                  |   | **Less  than  1 year** |   | **1-3  years** |   | **3-5  years** |   | **More  than  5 years** |   |
| Total gross borrowings                       |   | 1,746                      |   | 68 |   | 582 |   | 759 |   | 337 |   |
| Rent and Operating Leases                    |   | 646                        |   | 107 |   | 167 |   | 114 |   | 258 |   |
| Investment obligations                       |   | 26                         |   | 26 |   | — |   | — |   | — |   |
| Other contractual obligations and guarantees |   | 83                         |   | 28 |   | 43 |   | 11 |   | 1 |   |
| Total contractual cash obligations           |   | 2,501                      |   | 229 |   | 792 |   | 884 |   | 596 |   |

 

Total gross borrowings of EUR 1,746million in total at December 31, 2002 is further detailed under “FinancingActivities” above.

 

Rent and Operating Leases of EUR 646million in total at December 31, 2002 relate to certain distributionfacilities, equipment and offices that the Company leases under non-cancelableoperating leases.

 

Investment obligations of EUR 26 millionin total at December 31, 2002 mainly relate to the development of IT, eCommerce and logisticssystems.

 

Other contractual obligations and guarantees of EUR 83 million in total atDecember 31, 2002 mainly relate to repurchase guarantees concerning graphic machines soldto customers and financed by external financing companies. Should the customerbe declared in default, the respective financing company has a right of recourseagainst Buhrmann, which, in general, will be lower than market value. Theamount included in the table is the maximum exposure under these guarantees.

 

In addition, the Company had certain contingentliabilities, commitments and guarantees which are not included in the tableabove and which are discussed below.

 

Buhrmann’s operating companies inEurope offer a variety of defined benefit plans, in addition to Governmentschemes, as part of the remuneration package. In countries like the Netherlandsand the United Kingdom, the defined benefit plans are separated from Buhrman in pension funds towhich Buhrmann makes contributions. For its employees in the United States,Buhrmann sponsors several defined contribution plans and a defined benefitplan  with a relatively small number ofparticipants. Depending on specific financing arrangements and funding levels,Buhrmann may incur liablities for certain deficits which amount to USD 3.9million at December 31, 2002. No provisions were recorded in the balance sheet atDecember 31, 2002 in connection with this liability.

 

Buhrmann has entered into a number of forwardforeign exchange and currency swap contracts and interest rate swap contractswhich had an estimated negative market value of EUR 77 million at December 31,2002. The estimated market value of the outstanding forward foreign exchangeand currency swap contracts and interest rate swap contracts indicates how muchBuhrmann would have to pay as per the balance sheet date in exchange fortermination of these contracts without further commitments.

 

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Buhrmann has indemnification commitmentsrelated to divestment of businesses which include indemnification for theimposition of additional taxes due to either a change in the tax law or anadverse interpretation of the tax law. For these indemnification commitments, aprovision of EUR 18 million is included in the balance sheet atDecember 31, 2002. This provision is calculated based on the expectedpayments to be made under these indemnification commitments. The estimatedmaximum amount of these commitments is EUR 25 million and will expirelatest on December 31, 2009.

 

Buhrmann has issued certain performanceguarantees, usually in the form of standby letters of credit, to an estimatedmaximum amount of EUR 10 million at December 31, 2002. The major partof these guarantees expire latest on December 31, 2004.

 

Buhrmann has issuedguarantees of the indebtedness of a third party to a maximum amount ofEUR 2 million at December 31, 2002.

 

##### **Variable Interest Entities**

 

FASB Interpretation No. 46 (FIN 46)“Consolidation of Variable Interest Entities” requires certain disclosures ofvariable interest entities and, as of January 1, 2003, the consolidationof certain of these variable interest entities. Buhrmann is assessing theimpact of FIN 46, see “New Accounting Pronouncement” below.

 

Based on a preliminary review, Buhrmann hasdetermined that at December 31, 2002 it had a variable interest in SilverSecuritisation BV, Rheingold no 11 Ltd and Silver Funding Ltd, as describedunder “Accounts Receivable Securitization Program” above. In the course of2003, Buhrmann acquired a variable interest in an entity in Europe to whichBuhrmann sells graphic machines which are then leased by this entity toBuhrmann’s customers. This entity is a third party leasing company and hastransactions with various other parties. Buhrmann’s exposure to the losses ofthis entity does not exceed EUR 500,000. Total sales by Buhrmann to thisentity were EUR 3 million until May 31, 2003. In addition, in thecourse of 2003, Buhrmann acquired a variable interest in an entity in Europe towhich Buhrmann sells copiers which are then leased by this entity to Buhrmann’scustomers. Buhrmann is the only party that has sales to this entity which wereEUR 7 million until May 31, 2003. Buhrmann’s exposure to the lossesof this entity does not exceed 5% of the fair value of the copiers that weresold to this entity.

 

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**NEW ACCOUNTING PRONOUNCEMENTS**

 

**Dutch GAAP**

In 2002 and 2001, Buhrmann incurred EUR 113million and EUR 86 million respectively of expenses relating torestructuring measures and integration of acquisitions which were under DutchGAAP presented as extraordinary expenses and as operating expenses under USGAAP. Under the new Guidelines for Annual Reporting applicable in theNetherlands effective as of January 1, 2003, these expenses do nolonger meet the definition of extraordinary and would under Dutch GAAP beclassified as exceptional operating expenses.

 

In addition, under thenew Guidelines for Annual Reporting applicable in the Netherlands effective asof January 1, 2003, revenue with respect to the sale of machines in theGraphic Systems Division, that are shipped subject to installation and theinstallation is a significant part of the sales contract, can only berecognized when the installation has been completed. Until January 1,2003, Buhrmann recognized, under Dutch GAAP, sales of graphic machines at thepoint of delivery.  The full year effecton sales and operating result in 2003 is estimated to be EUR 35 millionand EUR 8 million respectively.

 

**US GAAP**

In June 2001, the FASB issued SFAS No.143, “Accounting for Asset Retirement Obligations”. This statementrequires that the fair value of the liability for an asset retirementobligation be recognized in the period in which it is incurred if a reasonableestimate of fair value can be made.  Associated asset retirement costs arecapitalized as part of the carrying amount of the long-lived asset.  Thisstatement became effective for Buhrmann as of January 1, 2003. Buhrmanndoes not expect the adoption of this statement to have a material impact on itsconsolidated results of operations, financial position or cash flows.

 

In April 2002, the FASB issuedSFAS No. 145, “Recission of SFAS No. 4, 44, and 64, amendment ofSFAS No. 13, and technical corrections”. This statement amends existing guidance on reporting gains and losses onthe extinguishment of debt to prohibit the classification of the gain or lossas extraordinary, as the use of such extinguishments have become part of therisk management strategy of many companies. Buhrmann does not expect theadoption of  this statement to have amaterial impact on its consolidated results of operations, financial positionor cash flows.

 

In June 2002, the FASB issued SFASNo. 146, “Accounting for Costs Associated with Exit or DisposalActivities”. This statement requires that a liability for a cost associatedwith an exit or disposal activity be recognized and initially measured at fairvalue in the period in which the liability is incurred. This statement is  effective prospectively for exit or disposalactivities initiated after December 31, 2002. Buhrmann does not expect theadoption of this statement to have a material impact on its consolidatedresults of operations, financial position or cash flows.

 

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In November 2002, the FASB issued FASBInterpretation No. 45 (FIN 45), “Guarantors Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers.” FIN 45 clarifies the requirements of a guarantor’s accounting for anddisclosure of certain issued and outstanding guarantees. It also clarifies thatat the time a company issues a guarantee the company must recognize thatinformation in its interim and annual financial statements. The initialrecognition and measurement provisions of FIN 45 are applicable on a prospectivebasis to guarantees issued or modified after December 31, 2002. Thedisclosure requirements of FIN 45 are effective for financial statements endingafter December 15, 2002. Buhrmann is currently reviewing the impact of theadoption of FIN 45 on its consolidated results of operations, financialposition and cash flows.

 

In November 2002, the EITF reached a Consensus on IssueNo. 02-16, “Accounting by a Customer (including a Reseller) for CertainConsideration Received from a Vendor” (“EITF 02-16”). EITF 02-16 addresses theaccounting and income statement classification for consideration given by avendor to a retailer in connection with the sale of the vendor’s products orfor the promotion of sales of the vendor’s products. The EITF concluded that suchconsideration received from vendors should be reflected as a decrease in pricespaid for inventory and recognized in cost of sales as the related inventory issold, unless specific criteria are met qualifying the consideration fortreatment as reimbursement of specific, identifiable incremental costs. Asclarified by the EITF in January 2003, this issue is effective forarrangements with vendors initiated on or after January 1, 2003. Buhrmannis currently reviewing the impact of the adoption of EITF 02-16 on itsconsolidated results of operations, financial position and

cash flows.

 

In December 2002, the FASB issued SFAS No.148, “Accounting for Stock-Based Compensation - Transition and Disclosure, anAmendment of FASB Statement No. 123”.  SFAS No. 148 amends SFAS No. 123“Accounting for Stock-Based Compensation”, to provide alternative methods oftransition for a voluntary change to the fair value based method of accountingfor stock-based employee compensation.  In addition, SFAS No. 148 amends thedisclosure requirements of SFAS No. 123 to require prominent disclosures inboth annual and interim financial statements about the method for accountingfor stock-based employee compensation and the effect of the method used onreported results.  SFAS No. 148 became effective for Buhrmann as ofJanuary 1, 2003. SFAS No. 148 has no material impact on Buhrmann’sconsolidated results of operations, financial position or cash flows, asBuhrmann does currently not plan to adopt the fair value method of accountingfor stock options.

 

In January 2003, the FASB issued FASBInterpretation No. 46 (FIN 46), “Consolidation of Variable InterestEntities, an interpretation of ARB No. 51”. FIN 46 addresses consolidationby business enterprises of variable interest entities, which are entitiessubject to consolidation according to the provisions of FIN 46. For interestsacquired on or after February 1, 2003, FIN 46 applies immediately. Forexisting interests as of January 31, 2003, FIN 46 is effective onJuly 1, 2003. Buhrmann is currently reviewing the impact of the adoptionof FIN 46 on its consolidated results of operations, financial position andcash flows.

 

In January 2003, the Emerging Issues Task Force (“EITF”) reachedconsensus on Issue No. 00-21, “Revenue Arrangements with MultipleDeliverables”. EITF 00-21 provides guidance on how to determine whether anarrangement involving multiple deliverables requires that such deliverables beaccounted for separately. EITF 00-21 allows for prospective adoption forarrangements entered into after June 15, 2003 or adoption via a cumulativeeffect of a change in accounting principal. Buhrmann is currently reviewing theimpact of the adoption of EITF 00-21 on its consolidated results of operations,financial position and cash flows.

 

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**Recentdevelopments**

In February and March 2003, Buhrmannreceived indemnity payments of EUR 79 million in total as a result of a decision rendered inarbitration proceedings initiated by Buhrmann against Ipfo Bail S.A (formerlynamed Locafrance S.A.).  This resultedin a net income of EUR 58 million, after deduction of expenses, which wasrecorded in the first quarter of 2003. These proceeds were used to repaylong-term debt.

 

In April 2003, Buhrmann reached an agreementabout the sale of its subsidiary DocVision BV. This sale was completed and resulted in a book profit of EUR 6million which was recorded in the second quarter of 2003. Docvision had salesof EUR 23 million in 2002. Buhrmann is assessing the book result on thesale of Docvision under US GAAP.

 

On June 18,2003, Buhrmann announced that it had been approached regarding a possible saleof its Paper Merchanting Division to PaperlinX Limited. The Australia-basedmerchanting and paper production group has offered Buhrmann EUR 746million (on a debt free and cash-free basis).

 

The envisaged sale of the Paper MerchantingDivision is subject, amongst other things, to completion of due diligence byPaperlinX, regulatory approvals, the consent of Buhrmann’s banking syndicate,negotiation of a definitive sale and purchase agreement, completion of workscouncil and trade union consultation procedures and the approval of Buhrmannshareholders.

 

It is expected that a sale and purchaseagreement will be entered into with the subsequent completion of thetransaction anticipated in the third quarter of 2003.

 

Following the execution of a sale and purchaseagreement, the transaction will subsequently be submitted to Buhrmann’sshareholders for approval.

 

The envisaged sale of the Paper MerchantingDivison will result in a book loss before tax that is preliminary estimated tobe EUR 120 million under Dutch GAAP. This includes an estimatedEUR 50 million non-cash tax charge. As a consequence of applying theproceeds from the envisaged sale of the Paper Merchanting Division to reducedebt, it is foreseen that in addition to the book loss, a loss of EUR 60million (of which EUR 40 million cash) will be incurred under Dutch GAAPdue to unwinding of interest rate swaps and a write-off of related capitalizedfinancing fees. Buhrmann is assessing the book result on the envisaged sale ofthe Paper Merchanting Division under US GAAP.

 

**Trend information**

Given the continued uncertaineconomic and political situation Buhrmann refrains from giving an earningsforecast for the full year 2003.

 

The rate of decline in officeproducts sales in North America and Europe is slowing down. In papermerchanting, Buhrmann does not see any short-term recovery of advertisingspend. Buhrmann expects the result in graphic systems in 2003 to be below 2002.The implemented cost reduction measures in 2001 and 2002 are expected to have apositive effect on earnings development.

 

Buhrmann expects acontinuation of positive available cash flow in 2003 which will contribute to acontinued decline in net debt.

 

In the period January 1,2003 to May 31, 2003, the exchange rate of the US dollar against the eurodeclined by 12% which had a negative impact on Buhrmann’s result of operations.

 

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**ITEM 6****: DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES**

 

Buhrmann has a two-tiered board structure,consisting of a Supervisory Board, with seven non-executive Members, and anExecutive Board with five executive Members as of June 1, 2003.

 

**Supervisory Board**

The Supervisory Board is responsible forsupervising and advising the Executive Board. In doing so, the SupervisoryDirectors are guided by the interests of the Company and its businesses.Internal rules govern the allocation of tasks and working methods of theSupervisory Board.****The Members of theSupervisory Board are appointed by the General Meeting of Shareholders on theproposal of the Supervisory Board. Underthe terms of a share purchase agreement, dated October 28, 1999, amongBuhrmann on the one hand and Apollo and Bain on the other hand, it has been agreedthat under certain conditions, the Company will nominate and cause theappointment to the Supervisory Board of two individuals, one proposed by eachof Apollo and Bain (see Item 7“Major Shareholders and Related Party Transactions – Apollo and Bain – Boardrepresentation”). Aresolution to appoint or to remove a Member of the Supervisory Board other thanon the proposal of the Supervisory Board requires a majority of at leasttwo-thirds of the votes cast representing more than one-third of the issuedcapital. The remuneration of the Members of the Supervisory Board is determinedby the General Meeting of Shareholders. The Supervisory Board has established a profile for  individual Members and the composition ofthe Supervisory Board. Pursuant to the profile, the Supervisory Board canconsist of at least four non-executive Members (currently seven) and not morethan eight Members, their number being fixed by the Supervisory Board. TheMembers of the  Supervisory Board shallbe in majority independent (and are currently all independent).

 

The Members of the Supervisory Board as ofDecember 31, 2002 were as follows:

 
| **Name**                    |   | **Age** |   | **Principal Occupation**                                                                                       |   | **Year of  Appointment** |
|-----------------------------|--------|---------|--------|----------------------------------------------------------------------------------------------------------------|--------|--------------------------|
| P.C. van den Hoek, Chairman |   | 64      |   | Lawyer                                                                                                         |   | 1993                     |
| A.G. Jacobs, Vice Chairman  |   | 67      |   | Former Chairman of the  Executive Board of ING Groep NV                                                        |   | 1998                     |
| R.C. Gay                    |   | 51      |   | Managing Director of Bain  Capital, Inc.                                                                       |   | 1999                     |
| J. Peelen                   |   | 63      |   | Former Member of the  Executive Committee of Unilever and Member of Unilever Board                             |   | 1999                     |
| A.P. Ressler                |   | 42      |   | Managing Partner of Apollo  Advisors, L.P.                                                                     |   | 1999                     |
| G.H. Smit                   |   | 55      |   | Former Chairman of the  Executive Board of Vedior NV and currently Managing Director of Trifinance  Holding BV |   | 1998                     |
| R. Zwartendijk              |   | 63      |   | Former Member of the  Executive Board of Koninklijke Ahold NV                                                  |   | 1999                     |

 

*P.C. Van den Hoek* Mr. Van den Hoek was appointed in 1993. His current term of officeexpires in 2004. His nationality is Dutch. Heis a lawyer with Stibbe in Amsterdam and currently holds SupervisoryDirectorships in AON Groep Nederland BV,ASM International NV (Chairman), Ballast Nedam NV (Chairman), EuronextAmsterdam NV, Het Financieele Dagblad Holding BV (Chairman), Robeco Groep NV (Chairman), Robeco NV (Chairman),Rolinco NV (Chairman), Rorento NV (Chairman) and Wavin BV (Chairman).

 

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*A.G. Jacobs* Mr. Jacobs was appointed in 1998. His current term of office expires in2004. His nationality is Dutch. He was formerly Chairman of the Executive Boardof ING Groep NV. He currently holds Supervisory Directorships in Euronext NV, IHC Caland NV, Imtech NV (Chairman), INGGroep NV,  Johan Enschedé BV(Chairman), NV Koninklijke NederlandschePetroleum Maatschappij (Chairman) and VNU NV.

 

*R.C. Gay* Mr. Gay was appointed in 1999. His first term ofoffice expired in 2003. At theAnnual General Meeting of Shareholders, which was held on April 29, 2003,Mr. Gay was re-appointed as Member of theSupervisory Board. His current term of office expires in 2007. He is a ManagingDirector of Bain Capital, Inc. His nationality is American. He currently holdsSupervisory Directorships in Alliance Laundry, IHF Capital, Maxim Crane andNutraceutical, Inc. Mr. Gay was named to the Supervisory Board under theterms of the October 1999 stock purchase agreement between and amongBuhrmann, Apollo and Bain.

 

*J. Peelen* Mr. Peelen was appointed in 1999. Hiscurrent term of office expires in 2006. Hewas formerly a Member of the Executive Committee of Unilever withresponsibility for personnel, and a Member of the Executive Board of UnileverNV. His nationality is Dutch. He currently holds Supervisory Directorships inAlbron BV, Arcadis NV, Friesland Coberco Dairy Foods Holding NV and VVVA GroepBV.

 

*A.P. Ressler* Mr. Ressler was appointed in 1999. His first termof office expired in 2003. At theAnnual General Meeting of Shareholders, which was held on April 29, 2003,Mr. Ressler was re-appointed as Member of the Supervisory Board. His current term of office expires in 2007. He is aFounder/Partner of Apollo Advisors, L.P., Lion Advisors, L.P. and AresManagement, L.P. His nationality is American. He currently holds SupervisoryDirectorships in Allied Waste Industries, Inc. Mr. Ressler was named tothe Supervisory Board under the terms of the October 1999 stock purchaseagreement between and among Buhrmann, Apollo and Bain.

 

*G.H. Smit* Mr. Smit was appointed in 1998. His current termof office expires in 2005. He was formerly Chairman of the Executive Board ofVedior NV. His nationality is Dutch. He currently holds SupervisoryDirectorships in Endemol BV and Transavia Airlines CV.

 

*R. Zwartendijk* Mr. Zwartendijk was appointed in 1999. Hiscurrent term of office expires in 2005. He was formerly Member of the ExecutiveBoard of Koninklijke Ahold NV. His nationality is Dutch. He currently holdsSupervisory Directorships in Blokker Holding BV (Chairman), InnoConcepts NV,Koninklijke Numico NV (Chairman), Lincoln Snacks Company, Nutreco Holding NV(Chairman), Randstad Holding NV and Telepanel Systems, Inc.

 

The Supervisory Board has established twocommittees, an Audit Committee and a Compensation, Nominating and CorporateGovernance Committee. These committees advise the plenary Supervisory Board.Their purpose, authority and responsibility are laid down in a Charter (seeexhibit 11.2 and 11.3) for each of the committees.

 

As of December 31, 2002, the Members ofthe Audit Committee were P.C. van den Hoek, A.G. Jacobs and G.H. Smit. As ofDecember 31, 2002, the Members******of the Compensation, Nominating andCorporate Governance Committee were P.C. van den Hoek, J. Peelen and R.Zwartendijk.

 

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**Executive Board**

 

The Executive Board is responsible for themanagement of Buhrmann and its businesses. Each of the Executive Board Membershas a specific area of responsibility as part of an allocation of tasksapproved by the Supervisory Board. The Members, who are Buhrmann employees, are appointed by theGeneral Meeting of Shareholders on the proposal of the Supervisory Board. Aresolution to appoint or to remove a Member of the Executive Board other thanon the proposal of the Supervisory Board requires a majority of at leasttwo-thirds of the votes cast representing more than one third of the issuedcapital. The remuneration and other conditions of employment of the Members ofthe Executive Board are determined by the Supervisory Board.

 

The Members of the Executive Board as ofDecember 31, 2002 are as follows:

 
| **Name**           |   | **Age** |   | **Position**                                                                                    |   | **Year Joined  Company** |
|--------------------|--------|---------|--------|-------------------------------------------------------------------------------------------------|--------|--------------------------|
| Frans H.J. Koffrie |   | 51      |   | Chairman of the Executive  Board; President and Chief Executive Officer                         |   | 1988                     |
| Rudi De Becker     |   | 56      |   | Member of the Executive Board; President of the Office Products  Europe Division                |   | 2001                     |
| George Dean        |   | 56      |   | Member of the Executive  Board; President of the Paper Merchanting Division                     |   | 1990                     |
| Mark S. Hoffman    |   | 50      |   | Member of the Executive  Board; President and CEO of the Office Products North America Division |   | 1997                     |
| Floris F. Waller   |   | 44      |   | Member of the Executive  Board; Chief Financial Officer                                         |   | 1999                     |

 

*Frans H.J. Koffrie*Mr. Koffrie joined Buhrmann in 1988 and was appointed Chairman of theExecutive Board in 1998. Mr. Koffrie is a director of Buhrmann US Inc. From1993, he served as a Member of the Executive Board of KNP BT. In 1990, he wasappointed to the Executive Board of VRG where he had served as a managingdirector of the Business Systems division since 1988.  From 1975 to 1988, Mr. Koffrie worked for Triumph-Adler NederlandBV and from 1971 to 1975 for Vroom en Dreesmann. Mr. Koffrie currently holdsSupervisory Directorships in Libertel NV and Wessanen NV, two Dutch publiccompanies. Mr. Koffrie has a masters degree in economics from the University ofAmsterdam, and a bachelors degree in law from Erasmus University, Rotterdam.

 

*Rudi De Becker* Mr. De Becker joined Buhrmann in 2001 as President of the OfficeProducts Europe Division. At the Annual General Meeting of Shareholders onMay 2, 2002, Mr. De Becker was appointed as a Member of the ExecutiveBoard of Buhrmann. Prior to this, Mr. De Becker had been a Member of theExecutive Board of Samas Groep NV since 1998 and held senior managementpositions on an European level with Black and Decker and Xerox Corporation. Hewas previously active in management consulting with Booz, Allen & Hamiltonand McKinsey. Mr. De Becker holds a master’s degree in economics and an MBAfrom the University of Ghent, Belgium.

 

*George Dean* Mr. Dean joined Buhrmann in 1990 and was appointed as a Member of theExecutive Board in 1998.  Mr. Dean is adirector of Buhrmann US Inc*.*****He had been on the ExecutiveBoard of KNP BT Distribution and President of our Paper Merchanting Divisionsince 1995.  From 1990 to 1995, Mr. Deanwas managing director of Howard Smith Papers. From 1969 to 1990 he worked in the Wiggins Teape Group.  Mr. Dean has a degree in chemicalengineering from the University of Edinburgh.

 

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*Mark S. Hoffman* Mr. Hoffman was appointedPresident and Chief Executive Officer of Buhrmann’s Office Products NorthAmerica Division in 2001. At the Annual General Meeting of Shareholders onMay 2, 2002, Mr. Hoffman was appointed as a Member of the Executive Boardof Buhrmann. Mr. Hoffman is a director of Buhrmann US Inc*.*Upon the closing of the merger withCorporate Express, Mr. Hoffman became President of North American officeproducts.  Mr. Hoffman joined CorporateExpress as President of North American Operations during 1997. Before Mr.Hoffman joined Corporate Express, he served as President, Chief ExecutiveOfficer and a director of APS Holdings, Inc. from August 1992 toMarch 1997.  Mr. Hoffman was VicePresident Planning and Development at W.W. Grainger, Inc., from April 1991to July 1992.  From 1987 toApril 1991, he was with TRW, Inc., a manufacturer of automotive parts andother products and a provider of information system services, in variousexecutive capacities, including Vice President and General Manager of TRW,Inc.’s Asia Pacific steering and suspension operations and Managing Director ofTRW Products, Ltd.

 

*Floris F. Waller* Mr. Waller joined Buhrmann in 1999 and was appointed Chief FinancialOfficer and a Member of the Executive Board in that year*.*****Mr.Waller is a director of Buhrmann US Inc. Before joining Buhrmann, he wasTreasurer of the European Region for Unilever NV, which he joined in 1984.  He has also held a number of positionswithin Unilever in the Netherlands, Switzerland and the United States. Mr.Waller has a masters degree in economics from Erasmus University, Rotterdam andis a fully qualified accountant.

 

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**Compensation**

 

The compensation in 2002 for Members of the ExecutiveBoard was as follows (in thousands of euro):

 
|               |   | **Salary** |   | **Pension  charges** |   |
|--------------------|--------|------------|--------|----------------------|--------|
|               |   |       |   |                 |   |
| F.H.J. Koffrie     |   | 545        |   | 169                  |   |
| R.W.A. de Becker * |   | 212        |   | 247                  |   |
| G. Dean            |   | 408        |   | 258                  |   |
| M.S. Hoffman *     |   | 423        |   | 19                   |   |
| F.F. Waller        |   | 295        |   | 103                  |   |
| Total              |   | 1,883      |   | 796                  |   |

 

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*** **The compensation for Mr De Becker and Mr Hoffman relates to the periodas of May 2, 2002 when they were appointed as Members of the ExecutiveBoard.

 

The remuneration reported relates to the periodof membership of the Executive Board.

 

Compensation (including bonuses) for theExecutive Board is determined by the Supervisory Board (as advised by theCompensation, Nomination and Corporate Governance Committee). Salary in thecompensation table does not include bonuses. Bonuses are awarded forperformance against financial targets of which the internal annual budget isthe most relevant. For Messrs. Koffrie and Waller,  the performance of the total Buhrmann Group is the determiningfactor, while for Messrs. De Becker and Dean 50% of the bonus calculation is related to Group targets and 50% to therespective division targets. The bonus of Mr. Hoffman relates entirely to theperformance of Buhrmann’s North American Office Products business. As during2002 the various targets were not achieved, no bonuses were awarded.

 

The Members of the Executive Board have pensionplans for retirement at the age of 65. These pension plans  are defined contribution plans. In addition,Dutch Members of the Executive Board participate in an early retirement planwhich gives them the right to retire at the age of 60. The Company has notinsured the early retirement plan. Pension premiums in the compensation tablerepresent pension premiums paid for the defined contribution pension plans andthe annual charge to net result relating to the liability in the Company’sbalance sheet regarding the early retirement plan.

 

In addition, North American based executives, including Mr. Hoffman,participate in a long-term incentive scheme designed specifically for theOffice Products North America Division. Under this incentive arrangement, Mr.Hoffman can earn once every three years a bonus of maximum 2.5 times his annualbase salary subject to achievement of his performance conditions. In respect ofthe three-year period 2000 to 2002, a bonus of USD 1,093,700 was paid to Mr.Hoffman in 2003, of which USD 493,700 was accrued at December 31, 2002.  This bonus is not included in thecompensation table.

 

Buhrmann’s form of employment contract forNetherlands based Executive Board Members provides such Members with compensation in the form of a base salary andbonus which are reviewed and determined annually by the Supervisory Board. Inthe event of occupational disability, Buhrmann is required, in accordance withDutch law, to guarantee 100% of any such Executive Board Member’s salary for aperiod of two years after which time the Member will receive an adjusteddisability pension based on a predetermined schedule.  If an Executive Board Member’s employment is terminated or theMember resigns as a result of a change in control, such member is 

 

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entitled to: (1) receipt of a lump sum paymentequal to three times the executive’s salary during the last full calendar yearprior to such termination or resignation; and (2) the accumulation of pensionbenefits for a three year period.

 

The compensation in 2002 for Members of theSupervisory Board was as follows (in thousands of euro):

 
|              |   | **Salary** |   |
|-------------------|--------|------------|--------|
|              |   |       |   |
| P.C. van den Hoek |   | 58         | (1)(2) |
| A.G. Jacobs       |   | 43         | (1)(2) |
| R.C. Gay          |   | 28         |   |
| K. de  Kluis (3)  |   | 10         | (2)    |
| J. Peelen         |   | 30         | (2)    |
| A.P. Ressler      |   | 28         |   |
| G.H. Smit         |   | 30         | (2)    |
| R. Zwartendijk    |   | 30         | (2)    |
| Total             |   | 257        |   |

 

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(1)          including (pro rata)remuneration received as member of the Supervisory Board of Buhrmann NederlandHolding B.V.

(2)          including remunerationof the Audit Committee and the Compensation,Nominating and Corporate Governance Committee membership.

(3)          Mr de Kluis retired from the Supervisory Board onMay 2, 2002.

 

**Ownership of Securities**

 

Of the Members of the Executive Board, only thefollowing persons held Ordinary Shares in Buhrmann at June 1, 2003 as setforth below:

 
|           |   | **Ordinary  Shares** |       |
|----------------|--------|----------------------|------------|
| F.H.J. Koffrie |   | 50,595               |       |
| M.S. Hoffman   |   | 50,000               |       |
| F.F. Waller    |   | 3,098                |       |
|           |   | **103,693**          | ** ** |

 

Of the Members of the Supervisory Board, onlythe following persons held Ordinary Shares and depositary receipts ofPreference Shares A in Buhrmann at June 1, 2003 as set forth below:

 
|              |   | **Ordinary  Shares** |   | **Depositary  receipts of  Preference  Shares A** |       |
|-------------------|--------|----------------------|--------|---------------------------------------------------|------------|
| P.C. van den Hoek |   | 31,057               |   | 0                                                 |       |
| A.G. Jacobs       |   | 945                  |   | 411                                               |       |
|              |   | **32,002**           |   | **411**                                           | ** ** |

 

Members of the Executive Board and theSupervisory Board individually and in the aggregate own less than one percentof Ordinary Shares and (depositary receipts of ) Preference Shares A inBuhrmann.

 

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**Option Plan**

 

There is a share option plan in place formanagers of the Company.

 

The option plan is designed as an incentive, limited to managers workingwithin the Group. There are approximately 450 managers eligible. The maximumpercentage of option rights that may be granted under the plan in any year is1.25% of the number of outstanding Ordinary Shares. This reflects therequirements of the business given our geographic spread (in particular theUnited States of America) and specific human resource management needs forcritical business activities. The number of options granted is based on theindividual’s  contribution to Groupresults.

 

In addition, the number of options that can begranted under the plan to any individual manager is capped at the maximumnominal value (based on the number of shares to which the option right relates,multiplied by the option exercise price) which can not exceed an amount equalto twice the base salary of the relevant individual. The options have a term offive years and can be exercised only after three years from the date of grant.The exercise price for option rights is the closing price of Buhrmann’sOrdinary Shares on the first trading day (on which day Buhrmann’s OrdinaryShares are quoted ex-dividend) after the annual meeting of shareholders.

Those entitled to options are bound by internalregulations designed to prevent insider trading. Options granted are inprinciple hedged by purchasing the shares required on or close to the grantdate. Options may not be hedged if the financial position gives rise to adecision not to purchase the shares required. Considerations for evaluating thefinancial position are the growth prospects and its required financing, as wellas the capital structure of the Group. On the basis thereof it was decided notto purchase shares for this purpose in 2002 and 2001.

 

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At the end of 2002, the Members of theExecutive Board held option rights on 460,000 Buhrmann Ordinary Shares:

 
|             |   | **January 1,  2002** |       | **Granted  in 2002** |       | **Exercised  in 2002** |       | **Lapsed in  2002** |   | **Outstanding  at Decem-  ber 31, 2002** |       | **Option  exercise  price in euro** |       | **Exercisable  until** |       |
|------------------|--------|---------------------------|------------|----------------------|------------|------------------------|------------|---------------------|--------|------------------------------------------|------------|-------------------------------------|------------|------------------------|------------|
|             |   |                      |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| F.H.J. Koffrie   |   | 100,000                   |       |                 |       | —                 |       | (100,000            | )      | —                                   |       | 16.74                               |       | 08.04.2002             |       |
|             |   | 25,000                    |       |                 |       | —                 |       |                |   | 25,000                                   |       | 15.40                               |       | 11.04.2004             |       |
|             |   | 40,000                    |       |                 |       | —                 |       |                |   | 40,000                                   |       | 32.94                               |       | 16.04.2005             |       |
|             |   | 40,000                    |       |                 |       | —                 |       |                |   | 40,000                                   |       | 24.52                               |       | 19.04.2006             |       |
|             |   | —                    |       | 55,000               |       | —                 |       |                |   | 55,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 205,000                   |       | 55,000               |       | —                 |       | (100,000            | )      | 160,000                                  |       |                                |       |                   |       |
|             |   |                      |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| R.W.A. de Becker |   | 10,000                    |       |                 |       | —                 |       | —              |   | 10,000                                   |       | 19.61                               |       | 19.04.2006             |       |
|             |   | —                    |       | 30,000               |       | —                 |       | —              |   | 30,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 10,000                    |       | 30,000               |       | —                 |       | —              |   | 40,000                                   |       |                                |       |                   |       |
|             |   |                      |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| G. Dean          |   | 30,000                    | *          |                 |       | —                 |       | (30,000             | )      | —                                   |       | 16.74                               |       | 08.04.2002             |       |
|             |   | 20,000                    |       |                 |       | —                 |       |                |   | 20,000                                   |       | 15.40                               |       | 11.04.2004             |       |
|             |   | 25,000                    |       |                 |       | —                 |       |                |   | 25,000                                   |       | 26.35                               |       | 16.04.2005             |       |
|             |   | 27,500                    |       |                 |       | —                 |       |                |   | 27,500                                   |       | 19.61                               |       | 19.04.2006             |       |
|             |   | —                    |       | 35,000               |       | —                 |       |                |   | 35,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 102,500                   |       | 35,000               |       | —                 |       | (30,000             | )      | 107,500                                  |       |                                |       |                   |       |
|             |   |                      |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| M.S. Hoffman     |   | 15,000                    |       |                 |       | —                 |       | —              |   | 15,000                                   |       | 26.35                               |       | 16.04.2005             |       |
|             |   | 17,500                    |       |                 |       | —                 |       | —              |   | 17,500                                   |       | 19.61                               |       | 19.04.2006             |       |
|             |   | —                    |       | 50,000               |       | —                 |       | —              |   | 50,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 32,500                    |       | 50,000               |       | —                 |       | —              |   | 82,500                                   |       |                                |       |                   |       |
|             |   |                      |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| F.F. Waller      |   | 20,000                    |       |                 |       | —                 |       |                |   | 20,000                                   |       | 32.94                               |       | 16.04.2005             |       |
|             |   | 20,000                    |       |                 |       | —                 |       |                |   | 20,000                                   |       | 24.52                               |       | 19.04.2006             |       |
|             |   | —                    |       | 30,000               |       | —                 |       |                |   | 30,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 40,000                    |       | 30,000               |       |                   |       |                |   | 70,000                                   |       |                                |       |                   |       |
|             |   |                      |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| **Total**        |   | **390,000**               | ** ** | **200,000**          | ** ** |                   | ** ** | **(130,000**        | **)**  | **460,000**                              | ** ** |                                | ** ** |                   | ** ** |

 

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* In addition, Mr Dean had the right to be compensatedfor the increase in value with respect to 30,000 shares, which right wasgranted in 1997 and lapsed in April 2002.

 

TheMembers of the Supervisory Board do not participate in the Buhrmann OptionPlan.

 

89

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**Employees**

 
|                                                         |   | **2002**  |       | **2001**  |       | **2000**  |       |
|--------------------------------------------------------------|--------|-----------|------------|-----------|------------|-----------|------------|
|                                                         |   |      |       |      |       |      |       |
| Average number of employees                                  |   | 25,984    |       | 27,443    |       | 25,782    |       |
|                                                         |   |      |       |      |       |      |       |
| *Number of  employees per division at year end:*             |   |      |       |      |       |      |       |
| Office Products North America                                |   | 12,211    |       | 14,240    |       | 13,262    |       |
| Office Products Europe and Australia                         |   | 6,023     |       | 6,228     |       | 6,100     |       |
| Paper Merchanting                                            |   | 5,411     |       | 5,519     |       | 5,666     |       |
| Graphic Systems                                              |   | 1,139     |       | 1,176     |       | 1,198     |       |
| Corporate Headquarters                                       |   | 74        |       | 72        |       | 70        |       |
| Total                                                        |   | 24,858    |       | 27,235    |       | 26,296    |       |
|                                                         |   |      |       |      |       |      |       |
| *Number of  employees per geographical region**at year end:* |   |      |       |      |       |      |       |
| United States                                                |   | 11,517    |       | 13,496    |       | 12,412    |       |
| United Kingdom                                               |   | 2,161     |       | 2,458     |       | 2,294     |       |
| The Netherlands                                              |   | 2,373     |       | 2,490     |       | 2,560     |       |
| Rest of EMU members                                          |   | 5,158     |       | 5,220     |       | 5,526     |       |
| Rest of Europe                                               |   | 953       |       | 990       |       | 1,056     |       |
| **Rest of the world**                                        |   | **2,696** | ** ** | **2,581** | ** ** | **2,448** | ** ** |
| Total                                                        |   | 24,858    |       | 27,235    |       | 26,296    |       |

 

A continued slowdown in business activities in2002 necessitated further adjustment to Buhrmann’s cost base.  Following a period of post-mergerintegration, 2002 was a year of maximizing efficiencies, and difficultdecisions were made to streamline the organization, resulting in a reduction inemployment by about 2,300 full time employees at year-end. In addition, thereorganization we announced towards the end of 2002 will affect another 1,100positions.

 

**Labor Relations**

 

Buhrmann estimates that in 2002 less than 5% ofour workforce in the European countries was covered under collective bargainingagreements. In Europe, our staff in the distribution centers are in generalrepresented by trade unions. Buhrmann has various local and European workscouncils. These works councils primarily serve an advisory role.

 

Buhrmann is also required by Dutch law toconsult with the works councils in some decision-making processes if theyaffect operations in the Netherlands.

 

In the United States, approximately 800employees are currently covered by collective bargaining agreements, which is7% of the workforce in the United States. The primary union in the United States is the Teamsters.

 

Neither Buhrmann nor any of its subsidiaries oraffiliates has recently experienced labor actions or disruptions that had amaterially adverse impact on its operations. In general, Buhrmann believes thatthe work climate is stable throughout the Company.

 

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##### **ITEM 7**: MAJOR SHAREHOLDERS AND RELATED PARTYTRANSACTIONS

 

Buhrmann NV has an authorized share capital of610,000,000 shares, divided into 250,000,000 Ordinary Shares, 54,940,000Preference Shares A, 305,000,000 Preference Shares B and 60,000 PreferenceShares C. The Ordinary Shares may, at the option of the shareholder, be bearershares or registered shares. The Preference Shares A and B can only beregistered shares. The Preference Shares C are registered shares, but may undercertain conditions be bearer shares. On June 1, 2003, the issued andpaid-in share capital was divided into 190,015,293 issued shares, consisting of136,691,918 Ordinary Shares, 53,281,979 Preference Shares A, no PreferenceShares B, and 41,396 Preference Shares C, all of which have been fully paid up.

 

As of April 30, 2003, 1,509,982 OrdinaryShares were held in the form of ADS’s by 6 registered ADR holders.

 

The Preference Shares A are held by StichtingAdministratiekantoor Preferente Aandelen Buhrmann NV, which we refer to as the“Trust Office”, accounting for approximately 29% of the issued share capital ofBuhrmann NV as at June 1, 2003. The Trust Office has issued depositaryreceipts against the Preference Shares A, which depositary receipts are listed onthe Amsterdam Stock Exchange.  Theholders of the depositary receipts receive all of the economic benefits whichattach to ownership of the Preference Shares A.

 

At June 1, 2003, 67% of the PreferenceShares C were held by Apollo and 33% were held by Bain, see “Related PartyTransactions” below.

 

See Item 10 “Additional Information – Articles ofAssociation” for a discussion of the voting rights relating to our differentclasses of shares.

 

Under Dutch law any person,

•who acquires or disposes of an interest in the capital or the voting rights ofa Dutch public limited company that has an official listing on a stock exchangewithin the European Economic Area; and

• whosepercentage of capital interest or voting rights falls within a differentpercentage range than the percentage range held before the acquisition ordisposal

must give written notice of that acquisition ordisposal and the resulting percentage range thereafer. The specified percentageranges are 0-5%, 5-10%, 10-25%, 25-50%, 50-66 2/3% and over 66 2/3%.

 

As the notices provided to us do not includethe class of shares held by the entity, but rather just the percentage of allvoting shares held, we are not able to accurately identify the number ofOrdinary Shares and depositary receipts of Preference Shares A held. As ofJune 1, 2003, we had received notice from the following entities of aninterest of 5% or more in our Ordinary Shares and Preference Shares A and C:

 

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| **Entity**                                               |   | **% of Total  Shares (1)** |   |
|----------------------------------------------------------|--------|----------------------------|--------|
| AEGON NV                                                 |   | 5.18                       |   |
| Apollo Investment Fund IV, L.P. (potential interest) (2) |   | 8.8                        |   |
| Cobepa NV                                                |   | 5.2                        |   |
| Dexia SA                                                 |   | 5.1                        |   |
| Fortis Utrecht NV                                        |   | 6.3                        |   |
| ING Groep NV                                             |   | 10.02                      |   |
| NIB Capital NV                                           |   | 7.6                        |   |

 

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(1)Calculated on basis of total number of outstanding Ordinary Shares, PreferenceShares A and Preference Shares C.

(2)Calculated on a fully converted basis. See “Related Party Transactions – Apolloand Bain” below.

 

The information provided in the table above isbased on notifications by these entities and is as of the date of eachrespective notice. As a matter of Dutch law, shareholders are not required toprovide us regularly with updated notifications.  As a result, unless we receive such notifications, we are not,nor would be likely to be, aware of any significant changes in the ownership ofour Ordinary Shares and Preference Shares A and C.  Nevertheless, under the U.S. federal securities laws, any personwho acquires, directly or indirectly, the beneficial ownership of  more than 5% of our Ordinary Shares or ADS’swill be required to file certain reports with the SEC. To date, no suchnotifications have been filed.

 

The Company’s major shareholders do not haveany special voting rights, except Apollo and Bain which is explained in Item 10“Additional Information- Articles of Association of Buhrmann NV- Preference Shares C”.

 

We are not aware of any corporation or foreigngovernment which could be deemed to directly or indirectly own or controlBuhrmann NV.

 

Buhrmann believes that at December 31,2002, approximately 16% of Buhrmann’s Ordinary Shares were held in the UnitedStates (approximately 21 million shares, all held by institutional investors).This is based on a third party investigation relating to the geographicalspread of Buhrmann’s Ordinary Shares. This investigation is made once a yearand the latest available information is as at September 30, 2002.

 

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**Related PartyTransactions**

 

***Apollo and Bain***

 

On October 28, 1999, affiliates of Apolloand affiliates of co-investor Bain purchased a total of  35,000 Preference Shares C for an aggregatepurchase price of USD 350 million. The Apollo group purchased 23,500 PreferenceShares C for a purchase price of USD 235 million and the Bain group purchased11,500 Preference Shares C for a purchase price of USD 115 million, including300 Preference Shares C purchased by Peder Smedvig Capital AS for a purchaseprice of USD 3 million. Apollo and Bain have each designated one representativeto be appointed to Buhrmann NV’s Supervisory Board, and  have other special rights both as holders ofPreference Shares C and under the stock purchase agreement.  In the aggregate, Preference Shares Caccount for less than one percent of the vote on matters to be voted on by shareholdersof Buhrmann NV.  The Preference Shares Care convertible at the option of their holders into Ordinary Shares (see Item10 “Additional Information- Articles of Association of Buhrmann NV- PreferenceShares C”). If Apollo and Bain had converted all of their Preference Shares Cinto Ordinary Shares at December 31, 2002, the number of Ordinary Sharesheld by Apollo and Bain would represent approximately 9% and 5% respectively ofthe outstanding Ordinary Shares after conversion at December 31, 2002.

 

Certain of the material rights of Apollo andBain which exist under the stock purchase agreement are summarized below (andare qualified by reference to the Stock Purchase Agreement which is filed asExhibit 4.1 to this annual report on Form 20-F).

 

On June 18, 2003, Buhrmann announced thatit had been approached regarding a possible sale of its Paper MerchantingDivision to PaperlinX Limited. Buhrmann has secured the required consent ofApollo and Bain for the proposed transaction. Contingent on the completion ofthe sale of the Paper Merchanting Division, a number of  revisions to the stock purchase agreementhave been offered which are listed in Item 4 “Information on the Company – Recent Developments”.

 

***BoardRepresentation***

 

So long as the Apollo holders and the Bainholders hold 75% of their initial investment, Buhrmann NV will nominate andpropose to the shareholders’ meeting the appointment to Buhrmann NV’sSupervisory Board of two people, one proposed by each of the Apollo holders andthe Bain holders.  If either the groupof Apollo holders or the group of Bain holders hold at least 75% of theirinitial investment and the other group holds an amount of shares that is lessthan this percentage, Buhrmann NV will nominate and propose to theshareholders’ meeting the appointment to Buhrmann NV’s Supervisory Board of oneperson proposed by the Apollo holders or the Bain holders.  In addition, if neither the Apollo holdersnor the Bain holders hold 75% of their initial investment, but together theApollo holders and the Bain holders hold 50% of their combined initialinvestment, Buhrmann NV will nominate and propose to the shareholders’ meetingthe appointment to Buhrmann NV’s Supervisory Board of one person proposedjointly by the Apollo holders and the Bain holders.

 

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***Special Covenants***

 

So long as the Apollo holders or the Bainholders have the right to nominate and propose to the shareholders’ meeting theappointment to Buhrmann NV’s Supervisory Board of at least one person, Buhrmann NV is required toobtain the consent of the holders of a majority of the Preference Shares C, orthe Ordinary Shares into which the Preference Shares C are convertible, held bythe Apollo holders or the Bain holders before it can take certain actions.These actions include making acquisitions and divestments for values over acertain amount, declaring or paying any dividends on Ordinary Shares if theaggregate value of all dividends paid or payable by Buhrmann NV exceed 35% of BuhrmannNV’s consolidated net income and, subject to certain exceptions, issuing anyequity securities of Buhrmann NV or its subsidiaries.

 

If the Apollo holders or the Bain holders failto give consent to one of these actions during the two years after the date thePreference Shares C are issued, Buhrmann NV has an option to redeem all, butnot less than all, of the Preference Shares C, or the Ordinary Shares intowhich the Preference Shares C are convertible, subject to the followingconditions:

• Theoption must be exercised within a stated period of time following the date onwhich the proposed action is scheduled to take place; and

• Theredemption price would result in a 20% annualized internal rate of return forthe Preference Shares C if the Preference Shares C had been outstanding for twoyears.

 

If the Apollo holders or the Bain holders failto give consent to one of these actions after the first two years after thedate the Preference Shares C are issued, Buhrmann NV has a similar redemptionoption for a price that would result in a 20% annualized internal rate ofreturn for the Preference Shares C for the period for which the PreferenceShares C were outstanding.

 

***Standstill;Lock-up***

 

In return for being granted the special rightsdescribed above, the Apollo holders and the Bain holders have agreed to certainstandstill and lock-up provisions.  Solong as the Apollo holders and the Bain holders own Preference Shares C orOrdinary Shares of Buhrmann NV into which the Preference Shares C areconvertible, each of the Apollo holders and the Bain holders has agreed that itwill not purchase any additional equity interest in Buhrmann NV.

 

94

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**Interest of management in certain transactions**

 

The following table sets forth the amounts oustandingduring the year 2002 and as at June 1, 2003 of loans extended to Membersof the Executive Board (in thousands of euro):

 
|             |   | **Principal** |   | **Interest** |   | **Outstan-  ding as at  December 31,  2001** |   | **Extended  in 2002** |   | **Repaid in  2002** |   | **Outstan-  ding as at  December 31,  2002** |   | **Outstan-  ding as at  June 1,  2003** |   |
|------------------|--------|---------------|--------|--------------|--------|---------------------------------------------------|--------|-----------------------|--------|---------------------|--------|---------------------------------------------------|--------|----------------------------------------------|--------|
| F.H.J.  Koffrie: |   |          |   |         |   |                                              |   |                  |   |                |   |                                              |   |                                         |   |
| 1997             |   | 80            |   | 4.60         | %      | 7                                                 |   | —                |   | 7                   |   | —                                            |   | —                                       |   |
| 1999             |   | 46            |   | 4.00         | %      | 23                                                |   | —                |   | 9                   |   | 14                                                |   | 10                                           |   |
| 2000             |   | 25            |   | 5.00         | %      | 18                                                |   | —                |   | 5                   |   | 13                                                |   | 11                                           |   |
| 2001             |   | 16            |   | 5.25         | %      | 15                                                |   | —                |   | 3                   |   | 12                                                |   | 10                                           |   |
| 2002             |   | 78            |   | 5.25         | %      | —                                            |   | 78                    |   | 6                   |   | 72                                                |   | 65                                           |   |
|             |   |          |   |         |   | 63                                                |   | 78                    |   | 30                  |   | 111                                               |   | 96                                           |   |
|             |   |          |   |         |   |                                              |   |                  |   |                |   |                                              |   |                                         |   |
| F.F.  Waller:    |   |          |   |         |   |                                              |   |                  |   |                |   |                                              |   |                                         |   |
| 2000             |   | 13            |   | 5.00         | %      | 9                                                 |   | —                |   | 3                   |   | 6                                                 |   | 5                                            |   |
| 2001             |   | 8             |   | 5.25         | %      | 7                                                 |   | —                |   | 1                   |   | 6                                                 |   | 5                                            |   |
| 2002             |   | 43            |   | 5.25         | %      | —                                            |   | 43                    |   | 4                   |   | 39                                                |   | 36                                           |   |
|             |   |          |   |         |   | 16                                                |   | 43                    |   | 8                   |   | 51                                                |   | 46                                           |   |
|             |   |          |   |         |   |                                              |   |                  |   |                |   |                                              |   |                                         |   |
| Total            |   |          |   |         |   | 79                                                |   | 121                   |   | 38                  |   | 162                                               |   | 142                                          |   |

 

These loans have been granted by the Company withinthe context of the Buhrmann option plan and serve to finance the upfront Dutchincome tax which is due by the optionees on the basis of the option grant. Theyare repaid over a period of five years.

 

No loans have beenextended to Members of the Supervisory Board.

 

95

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**ITEM 8****: FINANCIAL INFORMATION**

 

Our Consolidated Financial Statements areincluded in Item 18 of this annual report.

 

**Legal proceedings**

 

***Buhrmann ISD GroupeS.A. / Ipfo Bail S.A. - Arbitration***

The Buhrmann Group was involved as plaintiff inFrench arbitration proceedings, initiated in 1994 against the French companyIpfo Bail S.A (formerly named Locafrance S.A.). The claim related to theacquisition by the Buhrmann Group from Ipfo Bail S.A. of all of the shares ofthe French company Agena S.A. in 1991. The claim was based on misrepresentationof the financial position of the company in the closingbalance sheet at the time of the acquisition. On the basis of the decisionrendered in these arbitration proceedings, Buhrmann received indemnity paymentstotalling EUR 79 million in February and March 2003,  resulting in a net income of EUR 58million, after deduction of expenses.

 

***Deutsche Papier /Bundeskartellamt***

In June 2002, the German competitionauthorities (the Bundeskartellamt or “BKA”) launched an investigation against anumber of German paper merchants, among which is Buhrmann’s subsidiary DeutschePapier Vertriebs GmbH, alleging a violation of anti-trust rules inGermany.  The potential maximum fine forthe alleged violation is EUR 500,000 plus three times the surplus profitresulting from the violation of the anti-trust rules. The fine has not yet beenimposed by the BKA but based on the BKA’s initial assessment of surplus profit,the maximum fine would be approximately EUR 25 million. A third party investigation into the alleged surplusprofit substantiated Buhrmann’s position that there has been no or at the mosta minor surplus profit in the challenged period. Based on the foregoing,Buhrmann believes that if a fine would be applicable at all, it will not exceedEUR 5 million.

 

***Other***

Buhrmann is involved invarious other routine legal and regulatory proceedings incidental to theconduct of its business. Buhrmann does not believe that any of these legal orregulatory proceedings will have a material adverse effect on its financial conditionor results of operations.

 

96

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**Dividend Policy**

 

The dividend policy ofBuhrmann is aimed at achieving an average long-term pay-out rate of around 35%of the net profit from ordinary operations after deduction of the dividend onthe preference shares. This dividend can be paid either in new Ordinary Sharesdebited to the share premium reserve, or in cash, at the option of theshareholder.

 

The following table setsout, for the years indicated, the dividends in euro declared by Buhrmann inrespect of its Ordinary Shares.

 
| **Dividend perFinancial Year** |   | **Share** |   |
|--------------------------------|--------|-----------|--------|
| 1999                           |   | 0.60      |   |
| 2000                           |   | 0.60      |   |
| 2001                           |   | 0.16      |   |
| 2002 (*)                       |   | 0.07      |   |

 

----

(*) For calculation of the dividend pay-out,Buhrmann decided to exclude not only the extraordinary items, but also thegoodwill impairment. The dividend was paid entirely in shares on May 16, 2003. For shareholders whoexpressed the wish to receive a cash amount, the Company sold the shares inwhich the stock dividends were converted. These shareholders then received acash amount of EUR 0.07 gross per Ordinary Share. A total number of4,063,857 Ordinary Shares were issued for this purpose.

 

Dividend payments may besubject to Netherlands statutory withholding taxes.

 

**Significant Changes**

 

Except as otherwise disclosed in this annualreport, there have been no material changes in Buhrmann’s financial positionsince December 31, 2002.

 

97

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##### **ITEM 9** THE OFFER AND LISTING

 

Our Ordinary Shares are listed in Amsterdam onEuronext Amsterdam N.V. which is the principal trading market for our OrdinaryShares. Our Ordinary Shares are also listed on the New York Stock Exchange, orNYSE, trading in the form of American Depositary Shares, or ADSs, evidenced byADRs. Each ADS represents one Ordinary Share. We have a sponsored ADR facility with the Bank of New York asdepositary. The ADSs have been listed on the New York Stock Exchange sinceSeptember 20, 2001.

 

The following table sets forth, for the periodsindicated, the per share high and low closing market prices of our OrdinaryShares on the Euronext Amsterdam and of our ADSs on the NYSE.

 
|                                      |   | **Ordinary  Shares  (in euro)** |   | **ADSs  (in dollars)** |   |
|-------------------------------------------|--------|---------------------------------|--------|------------------------|--------|
|                                      |   | **High**                        |   | **Low**                |   | **High** |   | **Low** |   |
| Fiscal Year Ended                         |   |                            |   |                   |   |   |   |   |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| December 31,  2002                   |   | 15.83                           |   | 2.40                   |   | 13.59 |   | 2.43 |   |
| December 31, 2001                    |   | 33.00                           |   | 5.33                   |   | 11.40 |   | 5.40 |   |
| December 31, 2000                    |   | 35.00                           |   | 16.58                  |   | NA |   | NA |   |
| December 31, 1999                    |   | 19.95                           |   | 10.30                  |   | NA |   | NA |   |
| December 31, 1998                    |   | 26.19                           |   | 12.93                  |   | NA |   | NA |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| Fiscal Year Ended December 31, 2001  |   |                            |   |                   |   |   |   |   |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| First Quarter                             |   | 33.00                           |   | 25.65                  |   | NA |   | NA |   |
| Second Quarter                            |   | 30.26                           |   | 10.00                  |   | NA |   | NA |   |
| Third Quarter                             |   | 11.25                           |   | 5.33                   |   | 6.15 |   | 5.40 |   |
| Fourth Quarter                            |   | 13.00                           |   | 5.86                   |   | 11.40 |   | 5.60 |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| Fiscal Year Ending December 31, 2002 |   |                            |   |                   |   |   |   |   |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| First Quarter                             |   | 15.83                           |   | 11.65                  |   | 13.59 |   | 10.20 |   |
| Second Quarter                            |   | 15.14                           |   | 8.90                   |   | 13.39 |   | 8.92 |   |
| Third Quarter                             |   | 9.86                            |   | 5.07                   |   | 9.89 |   | 5.35 |   |
| Fourth Quarter                            |   | 5.30                            |   | 2.40                   |   | 5.46 |   | 2.43 |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| Fiscal Year Ending December 31, 2003 |   |                            |   |                   |   |   |   |   |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| First Quarter                             |   | 5.00                            |   | 1.97                   |   | 5.42 |   | 2.15 |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| Calendar Month                            |   |                            |   |                   |   |   |   |   |   |
|                                      |   |                            |   |                   |   |   |   |   |   |
| December 2002                        |   | 5.08                            |   | 4.09                   |   | 5.25 |   | 4.24 |   |
| January 2003                         |   | 5.00                            |   | 3.36                   |   | 5.42 |   | 3.64 |   |
| February 2003                        |   | 3.50                            |   | 2.41                   |   | 3.92 |   | 2.73 |   |
| March 2003                           |   | 2.66                            |   | 1.97                   |   | 2.96 |   | 2.15 |   |
| April 2003                           |   | 3.18                            |   | 2.03                   |   | 3.65 |   | 2.35 |   |
| May 2003                             |   | 3.63                            |   | 2.85                   |   | 4.20 |   | 3.22 |   |

 

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**ITEM 10****ADDITIONAL INFORMATION**

 

**Articles of Association of Buhrmann NV**

 

Following is a description of the materialprovisions of our Articles of Association pertaining to the rights andrestrictions applicable to our Ordinary and Preference Shares. This descriptionis only a summary and does not purport to be complete and is qualified in itsentirety by reference to our Articles of Association filed as Exhibit 1.1 tothis annual report on Form 20-F.

 

***General***

Buhrmann was incorporatedunder Dutch law on January 6, 1875 as a public limited liability company *(naamlozevennootschap).* The Buhrmann Articles of Association were lastamended by a notarial deed dated July 4, 2002.  The object of Buhrmann is the participation in, management of,financing of and rendering services to other companies or enterprises, more specificallysuch companies or enterprises which are active in the area of distribution ofgraphical and office systems, graphical paper, etc. and, generally, thecarrying out of such activities which, in the broadest meaning of the word, areconnected with the above described objects or are conducive thereto.

 

Buhrmann has its headoffice at Hoogoorddreef 62, (1101 BE) Amsterdam and its registered seat inMaastricht. Buhrmann is registered with the Trade Register of the Chamber ofCommerce of Amsterdam under file number 33250021.

 

***ShareCapital***

Buhrmann’s currentauthorized share capital amounts to EUR 732,000,000, divided into250,000,000 Ordinary Shares, 54,940,000 Preference Shares A, 305,000,000Preference Shares B and 60,000 Preference Shares C, each with a nominal valueof EUR 1.20 per share. The Ordinary Shares may, at the option of theBuhrmann shareholders, be bearer shares or registered shares. The PreferenceShares A and B are registered shares. The Preference Shares C are registeredshares, but may under certain circumstances be bearer shares.

 

On June 1, 2003, theissued and paid-in share capital was divided over 190,015,293 issued shares,consisting of 136,691,918 Ordinary Shares, 53,281,979 Preference Shares A and 41,396 Preference Shares C,all of which have been fully paid up. There are currently no Preference SharesB outstanding.

 

***Votingrights***

Annual general meetingsof shareholders are held within six months of the end of the financial year,for the purpose of, among other things, adopting the annual accounts.Extraordinary general meetings of shareholders may be convened by the ExecutiveBoard or the Supervisory Board. General meetings of shareholders are held inAmsterdam. Each shareholder is entitled to attend a general meeting of shareholdersin person or be represented by written proxy, address the meeting and exercisevoting rights with due observance of the provisions of the Articles ofAssociation. Each share in Buhrmann’s capital is entitled to one vote. Unlessthe Articles of Association or mandatory law provides otherwise, allshareholders’ resolutions require an absolute majority of the votes. Meetingsof holders of a separate class of shares will be convened by the ExecutiveBoard or the Supervisory Board, as frequently as necessary.

 

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***PreferenceShares A***

As of June 1, 2003,all Preference Shares A had been taken into administration in StichtingAdministratiekantoor Preferente Aandelen Buhrmann (“Trust Office”), againstwhich depositary receipts with limited convertibility were issued. The TrustOffice was established under Dutch law in May 1994, and has its registeredseat in Maastricht.

 

The purpose of the TrustOffice is to acquire and administer Preference Shares A for which it issuesdepositary receipts by way of title and for administrative purposes. Theholders of the depositary receipts receive all of the economic benefits whichattach to ownership of the Preference Shares A and they are authorized toattend and speak at the general meeting of shareholders. The depositaryreceipts can be exchanged for Preference Shares A in accordance with theprovisions of the Articles of Association, subject to certain limitations. Thedepositary receipts are listed on Euronext NV, Amsterdam.

 

 The Trust Office exercises the voting rightsattached to the Preference Shares A in a manner which safeguards the interestsof Buhrmann, the companies affiliated with Buhrmann in a group and everybodyinvolved with the group as effectively as possible. The holders of PreferenceShares A vote together with the holders of Ordinary Shares as one class. The Trust Office votes in accordance with thedecision of a majority of the board of the Trust Office. The board of the Trust Office comprises fivemembers: two members A, two members B and one member C. The members A areappointed by the board of the Trust Office. The member C is appointed by theSupervisory Board. The two members B are appointed by the holders of depositoryreceipts representing Preference Shares A. As at June 1, 2003, thesemembers are Messrs. R.A.H. van der Meer and W.O. Wentges. The other members ofthe Trust Office are Messrs. A.A. Loudon, L.C. van Wachem and P.C. van denHoek. In the collective opinion of the Executive Board of Buhrmann andthe Directors of the Trust Office, the Trust Office Directors are in compliancewith the independence requirements of the Listing Rules of Euronext NV,Amsterdam.

 

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On March 25, 2003, a meeting of holders ofdepositary receipts was held. At this meeting changes to the administrationconditions were decided in such a way, subject to certain limitations, that theholders of depositary receipts are now entitled to vote in the shareholders’meeting and that the number of voting rights attached to the (depositaryreceipts of the) Preference Shares A is based on the stock market price of thedepositary receipts in relation to the stock market price of the OrdinaryShares as follows:

 

(i)                                     The voting rights attached to the Preference SharesA held by the Trust Office that can be exercised at a general meeting ofshareholders of the Company, is related to the value of the Preference Shares Ain proportion to the value of the Ordinary Shares in the capital of theCompany. The voting right is calculated on the basis of the total value (basedon the stock market price of a depositary receipt) of the Preference Shares Aheld by the Trust Office, divided by the stock market price of one OrdinaryShare. The stock market price shall be the closing price of the last stockmarket trading day of the month prior to the month in which the general meetingof shareholders is convened. The outcome of this calculation is rounded off asusual to whole numbers, which rounded off amount shall reflect the number ofvotes the Trust Office may cast.

 

(ii)                                  The Trust Office shall at such request of aholder of depositary receipts grant a written proxy, with the power ofsubstitution, to exercise the voting rights attached to the shares in exchangefor which the depositary receipts were issued that are held by the holder. Thenumber of shares a holder of depositary receipts, as proxy of the trust office,may cast is related to the capital interest of the depositary receipts held bythe holder of the depositary receipts in proportion to the value of theOrdinary Shares, and is calculated on the basis of the provisions set out inthe last preceding paragraph. A holder of depositary receipts thus authorizedmay exercise the voting right at his own discretion.

 

(iii)                               The proxies to be granted to the holders of thedepositary receipts may be refused by the Trust Office in the event:a) of a public bid,

b) of a shareholder holding25% of the issued share capital, and

c) the Trust Office deems the grantingof such proxy incompatible with the interests of the Company.

 

***PreferenceShares B***

As of June 1, 2003,no Preference Shares B had been issued. A put and call option agreement hasbeen signed between Stichting Preferente Aandelen Buhrmann NV and the Companyrelating to Preference Shares B. Pursuant to this agreement, under certain circumstances, Buhrmann hasthe right (and, under certain circumstances, the obligation) to issue and sellto the Stichting Preferente Aandelen Buhrmann, Preference Shares B, up to amaximum amount equal to the share capital of Buhrmann other than in the form ofPreference Shares B, minus one. Once any Preference Shares B are issued toStichting Preferente Aandelen Buhrmann, Buhrmann has the right to repurchasefrom Stichting Preferente Aandelen Buhrmann such Preference Shares B at theirissue price plus accrued and unpaid dividends, if any. Stichting PreferenteAandelen Buhrmann has the right to require Buhrmann to repurchase thePreference Shares B held by it. Each Preference Share B is entitled to one voteon all matters to be voted upon generally by the holders of the OrdinaryShares, and the holders of Preference shares B vote together with the holdersof Ordinary Shares as one class. The holders of Preference Shares B areentitled to vote separately as a class on any amendment to the Articles ofAssociation that adversely affects the holders of the Preference Shares B.Stichting Preferente Aandelen Buhrmann will exercise its voting rights attachedto such Preference Shares B in accordance with its purpose. The purpose ofStichting Preferente Aandelen Buhrmann is to safeguard the interests ofBuhrmann, the enterprise connected therewith and all interested parties inBuhrmann, so as to exclude, as far as possible, influences which couldthreaten, among other things, the continuity, independence and identity ofBuhrmann. The aim of the Preference Shares B is to provide a protective measureagainst unfriendly take-over bids. As of December 31, 2002 the Board ofStichting Preferente Aandelen Buhrmann comprises: A.L. Asscher 

 

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(Chairman), P. Bouw, J.F.van Duyne, A.G. Jacobs and K. Vuursteen. Each Board Member is entitled to castone vote. In the collective opinion of the Executive Board of Buhrmann NV andthe Directors of Stichting Preferente Aandelen Buhrmann NV, the conditions withregard to the independence of the Directors of Stichting Preferente AandelenBuhrmann NV, as referred to in appendix X of the listing rules of Euronext NV,Amsterdam, have been complied with.

 

***PreferenceShares C***

An aggregate of 35,000Preference Shares C were issued to two U.S. venture capital groups, ApolloInvestment Fund IV and Bain Capital Fund VI, on October 28, 1999, at theoccasion of the closing of the acquisition of Corporate Express. EachPreference Share C has a nominal value of EUR 1.20 per share.

 

On June 18, 2003, Buhrmann announced thatit had been approached regarding a possible sale of its Paper MerchantingDivision to PaperlinX Limited. Contingent on the completion of the sale of thePaper Merchanting Division, a number of revisions to the terms regarding thePreference Shares C, as described below, have been offered which are describedin Item 4  “Information on the Company –Recent Developments”.

 

*Conversion*

The Preference Shares Care convertible, at the option of the holders, in whole or in part, intoOrdinary Shares. The initial conversion rate amounted to EUR 18.1125(converted into US dollar as set forth in the Articles of Association). ThePreference Shares C are subject to anti-dilution protections, which can lead toan adjustment of the conversion price in case of share issuances subject tocertain exceptions as described in the Articles of Association. In addition,the conversion price shall be reduced annually with an amount equal to 50% ofthe dividend distributed on Ordinary Shares. Following the dividend paid inApril 2000, May 2001 and May 2002 in respect of the financialyears 1999, 2000 and 2001 respectively, each Preference Share C is convertibleinto a number of Ordinary Shares equal to the liquidation preference divided byEUR 17.8125, EUR 17.5125 and EUR 17.4325, respectively. Afterthe dividend  for the fiscal year 2002,payable in May 2003, the conversion rate decreased to EUR 17.3975.The liquidation preference of each Preference Share C is USD 10,000, plusaccrued dividends (“The Liquidation Preference”).

 

*Ranking*

The Preference Shares Chave a preference with regard to dividend distributions and rights duringliquidation and dissolution in respect of all existing and future series ofOrdinary and Preference Shares, provided that they rank equal to the PreferenceShares A. As long as there are outstanding Preference Shares C, Buhrmann maynot repurchase or cancel Ordinary Shares and/or other Preference Shares, exceptfor Preference Shares B, without the prior approval of the meeting of holdersof Preference Shares C.

 

*Voting*

Each Preference Share Cis entitled to one vote on all matters to be voted upon generally by theholders of Ordinary Shares, and the holders of Preference Shares C votetogether with the holders of Ordinary Shares as one class. Amendments of theArticles of Association that will affect the rights of Preference Shares C willrequire specific approval of the holders of Preference Shares C.

 

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*Redemption*

If after four years after the Preference Shares Cwere issued the closing price of the Ordinary Shares is at any time at or above150% of the then prevailing conversion price for the Preference Shares C for aperiod of 30 consecutive trading days, Buhrmann may cancel or repurchase alloutstanding Preference Shares C. The amount per Preference Share C to be paidwill be, in the event that such cancellation or repurchase takes place (1)after the fourth anniversary but on or before the fifth anniversary of theissuance of the Preference Shares C, 105.50% of the Liquidation Preference”;(2) after the fifth anniversary but on or before the sixth anniversary of theissuance of the Preference Shares C, 102.75% of the Liquidation Preference; and(3) following the sixth anniversary of the issuance of the Preference Shares C,100% of the Liquidation Preference”. On the twelfth anniversary of the issuedate, Buhrmann has the right, in its sole discretion, to cancel or repurchasethe Preference Shares C at 100% of the Liquidation Preference. In addition, onthe twelfth anniversary of the issue date, the holders of the Preference SharesC can request that Buhrmann cancel or repurchase the Preference SharesC at 100% ofthe Liquidation Preference. If Buhrmann elects not to follow such request, theconversion price will be reduced to the lower of (a) 50% of the then currentconversion price, or (b) 50% of the then current market price of BuhrmannOrdinary Shares. If there is a change of control (as such term is defined in the Articlesof Association) of Buhrmann or the office products business of Buhrmann in theUnited States, the holders of the Preference Shares C can request that Buhrmanncancel or repurchase all of the outstanding Preference Shares C at 101% of theLiquidation Preference.

 

***Dividends***

The proposed dividend fora financial year must be approved by the annual general meeting ofshareholders, which is typically held in April or May of thefollowing financial year. The dividend is paid after this meeting. Dividendpayments are allowed only to the extent that the shareholders’ equity is inexcess of the sum of the paid-up capital and any reserves required under Dutchlaw. Under the Articles of Association, the dividend with respect to thePreference Shares A and Preference Shares C must be paid first from the profitsearned in any given financial year before any dividend will be paid to anyother class of shares.

 

The annual dividend onthe Preference Shares C is equal to 5.5% of the Liquidation Preference of suchshares, subject to adjustment under certain circumstances as set forth in theArticles of Association. The annual dividend on the Preference Shares C foreach year up to and including 2002 will be distributed in the form ofadditional Preference Shares C. The annual dividend on the Preference Shares Cfor any financial year after 2002 may, at the option of Buhrmann, bedistributed in cash or in the form of additional Preference Shares C.

 

The dividend on thePreference Shares A is determined for a period of eight years on the basis of adividend percentage equivalent to 1.25 percent more than the mathematicalaverage of the average effective yield on government loans with a term ofseven-to-eight years, as calculated by the Central Office for Statistics, andpublished in the Official Stock Exchange List of Euronext Amsterdam, on thelast ten stock market trading days prior to the day of determination. Thedividend thus determined is calculated on the issue price of EUR 3.40355per share and is rounded up to the nearest whole cent. For the period ending onDecember 31, 2001 the dividend amounted to EUR 0.27 per share. Forthe years 2002 until and including 2009 the dividend has been set atEUR 0.21 per share.

 

On the Preference(protection) Shares B a dividend shall be paid, the percentage of which – to becalculated over the paid up part of the nominal value – is equal to therepo-rate of the European Central Bank, decreased or increased by a discount orupcount, with a maximum of three percentage points, to be determined by theExecutive Board under the approval of the Supervisory Board, averaged over thenumber of days over which the payment is made.

 

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The Executive Boarddetermines - subject to the approval of the Supervisory Board - which part ofthe profit remaining after payment of the dividends on the Preference Shareswill be allocated to the reserves. Any part of the profit remaining thereaftershall be paid as a dividend on the Ordinary Shares. The Executive Board maydecide to pay an interim dividend. The decision is subject to the approval ofthe Supervisory Board.

 

If , over any year, a losshas been suffered, the general meeting may, on the proposal of the ExecutiveBoard which has been approved by the Supervisory Board, resolve to clear theloss and/or to make distributions to shareholders, to the debit of thedistributable part of the capital and reserves, provided that no charge may bemade to the share premium reserves A and C.

 

The amount of dividends,if any, paid to the holders of the Ordinary Shares will be determined inaccordance with the Articles of Association as described above, and in light ofexisting conditions, including earnings, financial conditions and requirementsand other relevant factors.

 

***Capitalreduction***

Upon the proposal of theExecutive Board and subject to the approval of the Supervisory Board, thegeneral meeting of shareholders may resolve to reduce Buhrmann’s issued sharecapital by cancellation of shares or by reducing the nominal value of theshares through amendment of the Articles of Association, subject to certainstatutory provisions and the provisions of the Articles of Association.

 

***GlobalNote and transfer***

Ordinary Shares may beissued in registered or bearer form. All Ordinary Shares issued in bearer formare represented by one single share certificate (“the Global Note”). The GlobalNote has an appendix which states the number of shares represented by theGlobal Note. This appendix forms an inseparable part of the Global Note.Changes to the number of outstanding bearer shares will be recorded on theappendix to the Global Note by Nederlandse Centraal Instituut voor GiraalEffectenverkeer B.V. (“Necigef”), which is authorized to do so by the Company.The Global Note is deposited with Necigef for safe custody and may be traded onEuronext Amsterdam. The Global Note is transferable through the book-entrytransaction system of Ordinary Shares in bearer form may be converted intoOrdinary Shares in registered form, and vice versa. No Global Note shall beissued for Ordinary Shares in registered form. Entries shall be made in theshareholders’ register of the names and addresses of all holders of registeredshares. Such register must also include the number of shares held by eachshareholder. The transfer of registered shares held by each registeredshareholder requires a deed of transfer, signed by the transferor and signed orotherwise accepted by the transferee and, if Buhrmann is not a party to thetransfer, a written acknowledgement by Buhrmann or service of the deed oftransfer on Buhrmann. No approvals are required for a transfer of OrdinaryShares.

 

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***Issueof Shares; Pre-emptive rights***

The authority to issueOrdinary Shares and Preference Shares B has partly been delegated by thegeneral meeting of shareholders to the Executive Board pursuant to a resolutiondated April 29, 2003. The Executive Board, with the consent of theSupervisory Board, is generally authorized to issue Ordinary Shares up to amaximum of 10% of the issued share capital in the form of Ordinary Shares, andup to a maximum of 30% of the issued share capital in the form of OrdinaryShares in the event of an issue for reasons of a merger or an acquisition. TheExecutive Board is authorized to issue Preference Shares B up to a maximum of100% of the issued share capital in the form of Ordinary Shares, PreferenceShares A and Preference Shares C. For these purposes, issuances of OrdinaryShares and/or Preference Shares B include the granting of rights to subscribefor shares (including convertible debt options and warrants). The authority ofthe Executive Board to issue Ordinary Shares and Preference Shares B willterminate on October 28, 2004 unless extended by a resolution of thegeneral meeting of shareholders. The prior approval of the Supervisory Boardwill be required for any Executive Board resolution to issue Ordinary Sharesand/or Preference Shares B.

 

Except for (i) issuancesof Ordinary Shares in exchange for non-cash consideration or (ii) issuances toemployees of Buhrmann or any of its subsidiaries, or (iii) in the event of a legalmerger or legal split-up of Buhrmann, Buhrmann shareholders have *pro rata*pre-emptiverights to subscribe to new issuances of Ordinary Shares. These pre-emptiverights may, subject to the prior approval of the Supervisory Board, berestricted or excluded by the corporate body that is authorized to issueshares.

 

At the annual generalmeeting of shareholders of Buhrmann on April 29, 2003 the Executive Boardwas authorized to restrict or exclude such pre-emptive rights in the event ofissuances of or granting of rights to acquire Ordinary Shares up toOctober 28, 2004, subject to the prior approval of the Supervisory Board.Buhrmann shareholders do not have pre-emptive rights in respect of PreferenceShares.

 

***Restriction onNon-Dutch Shareholders’ Rights***

Under our Articles of Association, there are nolimitations on the rights of non-resident or foreign shareholders to hold orexercise voting rights in respect of our securities, and we are not aware ofany such restrictions under Dutch corporate law.

 

***Disclosure ofshareholder ownership***

Dutch law requires public disclosure to asupervising government agency and the company involved with respect to theownership of listed shares when the following thresholds are passed: 5%, 10%,25%, 50% and 66 2/3%.

 

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##### ***Executive Board and SupervisoryBoard***

The responsibility for the conduct of Buhrmann’s business is entrustedto the Executive Board under the supervision of the Supervisory Board.

 

(i)        *Executive Board*

The members of the Executive Board are appointed bythe general meeting of shareholders on the proposal of the Supervisory Board. Aresolution to appoint or to remove a member of the Executive Board other thanon the proposal of the Supervisory Board requires a majority of at leasttwo-thirds of the votes cast representing more than one-third of the issuedcapital. The remuneration and other conditions of employment of the members ofthe Executive Board are determined by the Supervisory Board.

 

(ii)     *Supervisory Board*

The members of the Supervisory Board are appointed bythe general meeting of shareholders on the proposal of the Supervisory Board. Aresolution to appoint or to remove a member of the Supervisory Board other thanon the proposal of the Supervisory Board requires a majority of at leasttwo-thirds of the votes cast representing more than one-third of the issuedcapital. The remuneration of the members of the Supervisory Board is determinedby the general meeting of shareholders. A member of the Supervisory Board must retire not later than on the dayon which the general annual meeting of shareholders is held in the financialyear in which the Member reaches the age of seventy.

 

***Annualaccounts and discharge***

Within five monthsfollowing the end of each financial year, the Executive Board must prepareannual accounts accompanied by an annual report. This period may be extended bythe general meeting of shareholders on account of special circumstances for upto six months. The annual accounts and annual report must, within the sameperiod, be submitted to the Supervisory Board, which will present a report tothe general meeting of shareholders. The annual accounts and the annual reportwill be available to shareholders from the date of the notice convening Buhrmann’sannual general meeting of shareholders. The annual accounts must be adopted bythe general meeting of shareholders. After distribution of dividends in respectof the Preference Shares and subject to prior approval of the SupervisoryBoard, the Executive Board may determine which part of the profits shall bereserved.

 

The general meeting ofshareholders may discharge the members of the Executive Board and of theSupervisory Board from liability in respect of the exercise of their dutiesduring the financial year concerned. Such discharge is subject to mandatoryprovisions of Dutch law, including those relating to liability of members ofthe supervisory boards and management boards upon bankruptcy of a company.Moreover, this discharge does not extend to actions or omissions not disclosedin or apparent from the adopted annual accounts if these actions or omissionswere concealed by the director concerned, while the discharging shareholderscould not have known about these actions or omissions.

 

***Amendmentof the Articles of Association and dissolution***

Pursuant to a proposal ofthe Executive Board and subject to the approval of the Supervisory Board, thegeneral meeting of shareholders may amend the Articles of Association ordissolve Buhrmann. Any amendment to the Articles of Association that adverselyaffects the holders of the Preference Shares C is subject to prior approval ofthe general meeting of the holders of Preference Shares C, which approval mustbe granted with a majority of 90% of the votes cast.

 

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**American Depositary Shares**

 

We incorporate byreference the disclosure regarding our American Depositary Share programincluded in the Registration Statement on Form 8-A, as filed with the Securitiesand Exchange Commission on August 28, 2001.

 

**Material Contracts**

 

In July 2002, the Buhrmann operating companies inthe United Kingdom, the Netherlands and the United States entered into variouscontracts relating to Buhrmann’s accounts receivable securitization programincluding: (1) the Dutch Master Receivables Purchase Agreement, amended andrestated on July 18, 2002 between Buhrmann-Ubbens BV, Proost and BrandtBV, Buhrmann Silver S.A., Buhrmann Securitisation B.V., Deutsche TrusteeCompany Limited and Buhrmann N.V.; (2) the US Contribution Agreement, amendedand restated on July 18, 2002 between Corporate Express Office Products,Inc., Corporate Express of Texas, Inc., Burhmann Silver US LLC, Buhrmann N.V.and Deutsche Trustee Company Limited; (3) the English Originator Notice ofIntention to Make Offers to Sell, given on July 18, 2002 by Robert HorneGroup PLC, The Howard Smith Paper Group Limited and The M6 Paper Group Limitedto Buhrmann Silver S.A.; (4) the Master Definitions and Framework Deed, amendedand restated July 18, 2002 between various parties in the securitizationprogram; and (5) the English Standard Terms and Conditions, amended andrestated July 18, 2002 between various parties in the securitizationprogram.  For a summary of the principalterms of the accounts receivable securitization program, see “AccountsReceivable Securitization Program” in Item 5 in this annual report on Form20-F.

 

On December 10, 2002,  Buhrmann NV and Heidelberger DruckmaschinenAktiengesellschaft entered into a Distributor Agreement which extendsBuhrmann’s right to sell and service certain Heidelberg products in the Netherlands, Belgium, Luxemburg, Italy,Greece and Spain. The agreement takes effect as of July 1, 2003 and applies forfive years. After the five yearsperiod, the agreement will continue to be in effect unless terminated by aneighteen months prior written notice by one of the parties. This agreement isfiled as Exhibit 4.14 to this annual report on Form 20-F.

 

**Exchange Controls**

 

There are currently no limitations, eitherunder the laws of the Netherlands or in the Articles of Association of BuhrmannNV, on the rights of non-residents to hold or vote Ordinary Shares.  Cash distributions, if any, payable in euroson Ordinary Shares may be officially transferred from the Netherlands andconverted into any other currency without Dutch legal restrictions.  However, for statistical purposes, any suchpayments and transactions which exceed EUR 10,000 must be reported to theDutch Central Bank.  In addition, nopayments, including dividend payments, may be made to jurisdictions subject tocertain sanctions, adopted by the government of the Netherlands, implementingresolutions of the Security Council of the United Nations or regulations of theEuropean Union.

 

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**Taxation**

 

The information set out below is only a summaryof certain material US tax consequences of an investment in Buhrmann’s 121⁄4%Notes, American Depositary Shares and  Ordinary Shares and of the principle Dutchtax consequences of an investment in Ordinary Shares.

 

US and Dutch taxation may change from time totime. Investors should consult their professional advisors as to the taxconsequences of an investment in the 121⁄4% Notes, American Depositary Shares and Ordinary Shares, including theeffect of tax laws of any other jurisdiction.

 

**US Federal Income Taxation**

 

The following discussiondescribes the material US federal income tax considerations of an investment inthe 121⁄4% Notes, American Depositary Shares or Ordinary Shares.  For purposes of this discussion, a “USHolder” means a beneficial owner of a 121⁄4% Note, American Depositary Share orOrdinary Share that is, for US federal income tax purposes, (i) an individualwho is a citizen or resident of the United States, (ii) a corporation, or otherentity treated as a corporation for US tax purposes, created or organized in orunder the laws of the United States, any State or the District of Columbia,(iii) an estate the income of which is includable in gross income for USfederal income tax purposes regardless of its source, or (iv) a trust theadministration over which a US court can exercise primary supervision and forwhich one or more US persons have the authority to control all substantial decisions.  If a partnership holds 121⁄4% Notes, American Depositary Shares orOrdinary Shares, the US federal income tax treatment of a partner generallywill depend upon the status of the partner and the activities of thepartnership.  Partners of partnershipsholding 121⁄4% Notes, American Depositary Shares or Ordinary Shares shouldconsult their own tax advisors.  Except as otherwise provided, the discussionbelow deals only with US Holders who hold the 121⁄4% Notes, American DepositaryShares or Ordinary Shares as capital assets within the meaning of Section 1221of the Internal Revenue Code of 1986, as amended (the “Code”).

 

This discussion also does not deal with personswho may be subject to special treatment under the US tax laws (including,without limitation, insurance companies, tax-exempt organizations, individualretirement accounts and other tax-deferred accounts, financial institutions,broker-dealers, corporations that own (or are deemed to own) 10% or more (byvote and value) of the stock of Buhrmann NV, persons that will hold a 121⁄4%Note, American Depositary Share or Ordinary Share through a partnership orother pass-through entity, an entity (and the beneficial owners thereof) thatis a “conduit entity” holding a 121⁄4% Note,American Depositary Share or Ordinary Share as part of a “conduit financingarrangement” within the meaning of the Treasury Regulations promulgated underthe authority of Section 7701(l) of the Code, persons whose “functionalcurrency” is not the US dollar, individuals who are subject to Section 877 ofthe Code and persons that will hold a 121⁄4% Note,American Depositary Share or Ordinary Share as a position in a “straddle,”“hedge,” “constructive sale transaction” or “conversion transaction”. Thissummary also does not discuss tax consequences under state, local or foreigntax laws.

 

This summary is based onthe Code, Treasury Regulations promulgated thereunder, and judicial andadministrative interpretations thereof, all as in effect on the date hereof andall of which are subject to change, which change may be retroactive and mayaffect the tax consequences described herein. This discussion is not binding on the IRS or the courts.  No ruling has been sought or will be soughtfrom the IRS with respect to the positions and issues discussed herein, andthere can be no assurance that the IRS will not take a different positionconcerning the tax consequences of the purchase, ownership or disposition ofthe 121⁄4% Notes, American Depositary Shares or Ordinary Shares or that any suchposition would not be sustained. Investors in 121⁄4% Notes, American Depositary Shares or Ordinary Sharesshould consult their own tax advisors with regard to the application of the USfederal 

 

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income tax laws to theirparticular situations as well as any tax consequences arising under the laws ofany state, local or foreign taxing jurisdiction.

 

***121⁄4%Notes***

 

*Payments of interest*.  A US Holder will be required to reportinterest on a 121⁄4% Note as ordinary interest income for US federal income taxpurposes at the time it accrues or is received in accordance with such holder’sregular method of tax accounting.

 

Should a default occurunder the terms of the Indenture and a payment of interest or penalty be requiredfrom a foreign guarantor and foreign taxes must be withheld by such guarantoror paid by the US Holder with respect to such payment of interest or penalty,the foreign guarantor would, with certain exceptions, be liable for the paymentof additional amounts so that the US Holder would receive the same amountspayable had no such withholding taxes been imposed (additional amounts). Ifadditional amounts are paid due to the imposition of foreign withholding taxes,the US Holder will be treated as having actually received the amount of foreigntaxes withheld by the foreign Guarantor with respect to a 121⁄4% Note, and asthen having paid over such withheld taxes to the foreign taxingauthorities.  As a result, the amount ofinterest income included in gross income for US federal income tax purposes bya US Holder with respect to a payment of interest may be greater than theamount of cash actually received by the US Holder with respect to suchpayment.  Subject to certainlimitations, a US Holder would generally be entitled to a credit against itsUnited States federal income tax liability, or a deduction in computing itsUnited States federal taxable income, for the foreign withholding taxeswithheld by the foreign guarantor and paid over to the foreign taxing authoritiesor for any taxes paid directly to the foreign taxing authorities.

 

*Market discount*.  If a US Holder purchases, subsequent to itsoriginal issuance, a 121⁄4% Note for an amount that is less than its principalamount, the amount of the difference generally will be treated as “marketdiscount,” unless such difference is less than a specified de minimisamount.  Under the market discount rulesgenerally, a US Holder will be required to treat any principal payment on, orany gain on the sale, exchange, retirement or other disposition of, a 121⁄4% Noteas ordinary income to the extent of the accrued market discount that has notpreviously been included in income.  Inaddition, a US Holder may be required to defer, until the maturity date of the121⁄4% Note or its earlier disposition in a taxable transaction, the deduction ofall or a portion of the interest expense on any indebtedness incurred orcontinued to purchase or carry such Note. Any market discount will be considered to accrue ratably during the periodfrom the date of acquisition to the maturity date of the Note, unless the USHolder elects to accrue under a constant yield method.  A US Holder may elect to include marketdiscount in income currently as it accrues (under either the ratable or constantyield method), in which case, the rule described above regarding deferral ofinterest deductions will not apply. This election to include currently, once made, applies to all marketdiscount obligations acquired in or after the first taxable year to which theelection applies and may not be revoked without the consent of the IRS.  Other rules may apply if a US Holder hasmade an election to treat all interest received on the 121⁄4% Notes under theconstant yield method.

 

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*Bond premium*.  If a US Holder purchases a 121⁄4% Note for anamount that exceeds the sum of all amounts payable on the instrument after thepurchase date (other than stated interest), the 121⁄4% Note has “bond premium.”  A US Holder may elect to amortize such bondpremium over the remaining term of such 121⁄4% Note (or if it results in asmaller amount of amortizable bond premium, until an earlier call date) using aconstant yield method.  If bond premiumis amortized, the amount of interest that must be included in the US Holder’sincome for each period ending on an interest payment date or at the statedmaturity, as the case may be, will be reduced by the portion of premiumallocable to such period based on the 121⁄4% Note’s yield to maturity.  If such an election to amortize bond premiumis not made, a US Holder must include the full amount of each interest paymentin income in accordance with its regular method of accounting and will receivea tax benefit from the premium only in computing such US Holder’s gain or lossupon the sale or other disposition or payment of the principal amount of the121⁄4% Note. An election to amortize premium will apply to amortizable bondpremium on all obligations, the interest on which is includable in the US Holder’sgross income, acquired in or after the first taxable year to which the electionapplies and may not be revoked without the consent of the IRS.

 

*Sale, exchange and retirement of121⁄4%  Notes*.  Upon the sale, exchange or retirement of a121⁄4% Note, a US Holder will recognize gain or loss equal to the differencebetween the amount realized on such sale, exchange or retirement and the USHolder’s adjusted tax basis in the 121⁄4% Note. A US Holder’s adjusted tax basis in a 121⁄4% Note will, in general, equalthe holder’s purchase price for the 121⁄4% Note increased by amounts includablein income as market discount (if the US Holder elects to include marketdiscount on a current basis) and reduced by any bond premium amortized by suchUS Holder.  The amount realized by a USHolder will equal the amount received. Gain or loss recognized by a US Holder on the sale, exchange orretirement of a 121⁄4% Note will be capital gain or loss (except to the extentdescribed above under “-Market discount” or attributable to accrued but unpaidinterest) and generally will be long-term if held more than one year.  Generally, for US Holders who areindividuals, long-term gain will be subject to tax at a preferential rate.  The distinction between capital gain or lossand ordinary income or loss is also important in other contexts, for example,for purposes of the limitations on a US Holder’s ability to offset capitallosses against ordinary income.

 

*Payments by foreign guarantors*.  Shoulda default occur and a payment of interest or penalty be required from BuhrmannNV, Buhrmann International BV or another guarantor that is a Netherlandscorporation or from Buhrmann Europcenter NV, no Netherlands (or Belgian in thecase of Buhrmann Europcenter NV) withholding tax would be due on such paymentto a US Holder. Withholding tax may be due to a foreign country with respect toany such payment by any other foreign guarantor.

 

***AmericanDepositary Shares and Ordinary Shares***

 

This section is based in part onrepresentations of the depositary and the assumption that each obligation inthe deposit agreement and any related agreement will be performed in accordancewith its terms.

 

*Ownership of American Depositary Shares in General*.  Abeneficial owner of American Depositary Shares will be treated as thebeneficial owner of the Ordinary Shares represented by such American DepositaryShares for US federal income tax purposes.

 

*Dividends on American DepositaryShares or Ordinary Shares*.  The grossamount of any distribution by Buhrmann NV of cash or property (other thancertain distributions, if any, of Ordinary Shares distributed pro rata to allshareholders of Buhrmann NV) with respect to American Depositary Shares orOrdinary Shares will be includable in income by a US Holder as dividend incomeat the time of receipt, which, for a holder of American Depositary Shares,generally will be the date of receipt by the depositary, to the extent suchdistributions are made from the current or accumulated earnings and profits ofBuhrmann NV as determined under US federal income tax principles.  Such a dividend will not be eligible for thedividends received deduction generally allowed to corporate 

 

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shareholders.  To the extent, if any, that the amount ofany distribution by Buhrmann NV exceeds Buhrmann NV’s current and accumulatedearnings and profits as determined under US federal income tax principles, itwill be treated first as a tax-free return of the US Holder’s adjusted taxbasis in the American Depositary Shares or Ordinary Shares and thereafter ascapital gain.  Notwithstanding theforegoing, Buhrmann NV does not intend to maintain calculations of earnings andprofits as determined under US federal income tax principles.

 

Includable distributions paid in euros,including any Dutch withholding taxes, will be included in the gross income ofa US Holder in a US dollar amount calculated by reference to the exchange ratein effect on the date of receipt, regardless of whether the euros are convertedinto US dollars at that time. If euros are converted into US dollars on thedate of receipt, a US holder generally should not be required to recognize anyforeign exchange gain or loss.

 

*Sale or Exchange of AmericanDepositary Shares or Ordinary Shares*.  A USHolder generally will recognize gain or loss on the sale or exchange ofAmerican Depositary Shares or Ordinary Shares equal to the difference betweenthe amount realized on such sale or exchange and the US Holder’s adjusted taxbasis in the American Depositary Shares or Ordinary Shares.  Gain or loss recognized by a US Holder onthe sale or exchange of an American Depositary Share or Ordinary Sharegenerally will be capital gain or loss and generally will be long-term if heldmore than 1 year.  Generally, for USHolders who are individuals, long-term gain will be subject to tax at apreferential rate.  The distinctionbetween capital gain or loss and ordinary income or loss is also important inother contexts; for example, for purposes of the limitations on a US Holder’sability to offset capital losses against ordinary income.

 

*Foreign Tax Credit Considerations*.  For purposes of the US foreign tax creditlimitations, dividends on the American Depositary Shares or Ordinary Shareswill be foreign source income and will generally be “passive income” (or“financial services income” in the hands of certain persons engaged infinancial businesses).  In general, forforeign tax credit limitation purposes, gain or loss realized upon sale orexchange of the American Depositary Shares or Ordinary Shares by a US Holderwill be US source income or loss, as the case may be.  Subject to certain complex limitations, including holding periodrequirements, a US Holder will generally be entitled to a credit against its USfederal income tax liability or a deduction in computing its US federal taxableincome in respect of any Dutch taxes withheld by Buhrmann NV.

 

US Holders should consulttheir tax advisors as to the consequences of Dutch withholding taxes and theavailability of a foreign tax credit or deduction.

 

*Passive Foreign Investment Company Considerations*.  TheCode provides special anti-deferral rules regarding certain distributionsreceived by United States persons with respect to, and sales and otherdispositions, including pledges, of stock of, a “passive foreign investmentcompany” (“PFIC”).  A foreigncorporation, such as Buhrmann NV, will be treated as a PFIC for any taxableyear if 75% or more of its gross income for the taxable year is passive incomeor the average percentage of its assets, by value, that produce or are held forthe production of passive income is at least 50%.  Buhrmann NV believes that it was not a PFIC for the taxable yearended December 31, 2002 and, furthermore, expect to conduct its affairs insuch a manner so that it will not meet the criteria to be considered a PFIC inthe foreseeable future.

 

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***Informationreporting requirements and backup withholding tax***

 

A US Holder (other thanan “exempt recipient,” including a corporation and certain other persons who,when required, demonstrate their exempt status) may be subject to backupwithholding at a rate of 30% (subject to phased-in rate reductions until therate equals 28% for payments in 2006 and thereafter) on, and to informationreporting requirements with respect to, payments of principal or interest on,and to proceeds from the sale, exchange or retirement of, 121⁄4% Notes and withrespect to dividends on, and to proceeds from the sale or exchange of, AmericanDepositary Shares or Ordinary Shares. In general, if a non-corporate US Holder subject to informationreporting fails to furnish a correct taxpayer identification number orotherwise fails to comply with applicable backup withholding requirements,backup withholding may apply.  Thebackup withholding tax is not an additional tax and may be credited against aUS Holder’s regular US federal income tax liability or refunded by the IRSwhere applicable.

 

**Netherlands taxation for Non-Resident Holders of Ordinary Shares**

 

Thistaxation summary solely addresses the principal Dutch tax consequences of theacquisition, the ownership and disposition of Ordinary Shares Buhrmann. It is ageneral summary that does not apply to certain categories of investors and itdoes not discuss every aspect of taxation that may be relevant to a particularholder of Ordinary Shares under special circumstances or who is subject tospecial treatment under applicable law. This summary also assumes that Buhrmannis organized, and that its business will be conducted, in the manner outlinedin this Annual Report.  Any potentialinvestor should consult his own tax adviser for more information about the tax consequences of acquiring, owning anddisposing of Ordinary Shares.

 

Unlessstated otherwise, this summary is based on the tax laws of the Netherlands asthey are in force and in effect on the date of this Annual Report. These lawscould change and a change could be effective retroactively. This summary willnot be updated to reflect changes in laws and if such occurs, the informationin this summary could become invalid.

 

This is a general summary and the taxconsequences described may not apply to each holder of shares. Any potentialinvestor should consult his own tax advisor for more information about the taxconsequences of acquiring, owning and disposing of Ordinary Shares inparticular circumstances.

 

Wehave not addressed every potential tax consequence of an investment in OrdinaryShares under the laws of the Netherlands.

 

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##### **General**

 

Thesummary of certain Dutch taxes set out in this section ‘Dutch taxation ofnon-resident holders of Ordinary Shares’ only applies to a holder of OrdinaryShares who is a Non-Resident Holder of Ordinary Shares.

 

Aholder of Ordinary Shares is a Non-Resident Holder of Ordinary Shares if:

• he is neither resident, nor deemed to beresident, in the Netherlands for purposes of Dutch taxation and, in the case ofan individual, has not elected to be treated as a resident of the Netherlandsfor Dutch income tax purposes; and

• in the case of anindividual, he neither is nor has been, nor is deemed to be nor has been deemedto be an employee of Buhrmann nor of any entity related to Buhrmann; and

•    his Ordinary Shares do not form part, and are notdeemed to form part, of a substantial interest *(aanmerkelijk belang)*inBuhrmann, unless such interest forms part of the assets of an enterprise.

 

Ifa person holds an interest in Buhrmann, such interest forms part or is deemedto form part of a substantial interest in Buhrmann if any one or more of thefollowing circumstances is present:

 

• he alone or, in the caseof an individual, together with his partner *(partner)*has, directly or indirectly, theownership of shares of Buhrmann representing 5% or more of the total issued andoutstanding capital (or the issued and outstanding capital of any class ofshares) of Buhrmann, or rights to acquire, directly or indirectly, shares,whether or not already issued, that represent 5% or more of the total issuedand outstanding capital (or the issued and outstanding capital of any class ofshares) of Buhrmann, or the ownership of profit participating certificates *(winstbewijzen)*that relate to 5% or more of the annual profit of Buhrmann or to 5%or more of the liquidation proceeds of Buhrmann.

 

• his partner or any of hisrelatives by blood or by marriage in the direct line (includingfoster-children) of him or of his partner has a substantial interest inBuhrmann.

 

•    his shares, profit participating certificates orrights to acquire shares or profit participating certificates in Buhrmann havebeen acquired by him or are deemed to have been acquired by him under anon-recognition provision.

For purposes of the above, aperson who is only entitled to the benefits from shares or profit participatingcertificates (for instance a holder of a right of usufruct) is deemed to be aholder of shares or profit participating certificates, as the case may be, andhis entitlement to benefits is considered a share or a profit participatingcertificate, as the case may be.

 

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##### **Taxes on income and capital gains**

 

ANon-Resident Holder of Ordinary Shares will not be subject to any Dutch taxeson income or capital gains in respect of dividends distributed by Buhrmann(other than the dividend withholding tax described below) or in respect of anygain realized on the disposal of Ordinary Shares, unless:

•    he derives profits from an enterprise, whether as an entrepreneur orpursuant to a co-entitlement to the net worth of an enterprise, other than asan entrepreneur or a shareholder, which enterprise is either managed in theNetherlands or, in whole or in part, carried on through a permanent establishmentor a permanent representative in the Netherlands and his Ordinary Shares areattributable to that enterprise; or

•    in the case of an individual) he derives benefitsfrom Ordinary Shares that are taxable as benefits from miscellaneous activitiesin the Netherlands *(resultaat uit overige werkzaamheden in Nederland*).

 

Theconcept “dividends distributed by Buhrmann” as****used in this sectionincludes, but is not limited to, the following:

•    distributions in cash or in kind, deemed and constructive distributions(including, as a rule, consideration for the repurchase of Ordinary Shares byBuhrmann (other than a repurchase as a temporary investment) in excess of theaverage capital recognized as paid-in for Dutch dividend withholding taxpurposes), and repayments of capital not recognized as paid-in for Dutchdividend withholding tax purposes;

•    liquidation proceeds and proceeds of redemption of Ordinary Shares inexcess of the average capital recognized as paid-in for Dutch dividendwithholding tax purposes;

•    the par value of Ordinary Shares issued by Buhrmann to a holder ofOrdinary Shares or an increase of the par value of Ordinary Shares, as the casemay be, to the extent that it does not appear that a contribution, recognizedfor Dutch dividend withholding tax purposes, has been made or will be made; and

•    partial repayment of capital, recognized as paid-infor Dutch dividend withholding tax purposes, if and to the extent that thereare net profits *(zuivere winst*), unless (a) the general meeting of shareholdersof Buhrmann has resolved in advance to make such repayment and (b) the parvalue of the shares concerned has been reduced by an equal amount by way of anamendment to the articles of association of Buhrmann.

 

ANon-Resident Holder of Ordinary Shares may, *inter alia*, derive benefits from OrdinaryShares that are taxable as benefits from miscellaneous activities in theNetherlands in the following circumstances:

•    if his investment activities go beyond the activitiesof an active portfolio investor, for instance in case of the use of insiderknowledge *(voorkennis)*or comparable forms of special knowledge; or

•    if he makes Ordinary Shares available or is deemed tomake Ordinary Shares available, legally or in fact, directly or indirectly, toa connected person *(verbonden persoon)* as described inarticles 3.91 and 3.92 of the Dutch Income Tax Act 2001;

ifsuch activities are performed or deemed to be performed in the Netherlands.

 

##### **Dividend withholding tax**

 

Dividendsdistributed by****Buhrmann to a Non-Resident Holder of Ordinary Shares aregenerally subject to a withholding tax imposed by the Netherlands at a rate of25%. See the sub-section “Taxes on income and capital gains” for a descriptionof the concept “dividends distributed by****Buhrmann”.

 

If a double tax treaty isin effect between The Netherlands and the country of residence of a Non-Resident holder of shares, such holder may be eligible for a full or partialrelief from the Dutch dividend withholding tax, provided that such relief isduly claimed. Pursuant todomestic rules to avoid dividend stripping, dividend withholding tax reliefwill only be available to the beneficial owner (*uiteindelijkgerechtigde*) of dividends distributed by X. The Netherlandstax authorities have taken the position that this beneficial ownership test canalso be applied to deny

 

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relief from Netherlands dividend withholdingtax under double tax treaties and the tax arrangement for the Kingdom of TheNetherlands.

 

If a Non-Resident Holder of Ordinary Shares isresident in the Netherlands Antilles or Aruba or in a member state of theEuropean Union or in a country that has concluded a double tax treaty with theNetherlands, Buhrmann is not required to withhold Dutch dividend withholdingtax from a dividend distributed by Buhrmann to such Holder of Ordinary Sharesto the extent that the temporary special distribution tax, discussed below inthe section “Distribution tax”, applies to the distribution.

 

Under the convention of December 18, 1992,between the Kingdom of the Netherlands and the United States of America for theAvoidance of Double Taxation and the prevention of Fiscal Evasion with respectto Taxes on Income (the “U.S./NL Income Tax Treaty”), the Dutch dividend withholdingtax rate on dividends paid by Buhrmann on Ordinary Shares held by aNon-Resident Holder of Ordinary Shares who is resident in the United States andwho is entitled to the benefits of the U.S./NL Income Tax Treaty will generallybe reduced to 15%. The U.S./NL Income Tax Treaty provides for a completeexemption for dividends received by exempt pension trusts and exemptorganizations, as defined therein. Except in the case of exempt organizations,the reduced dividend withholding tax rate under the U.S./NL Income Tax Treatymay be available at source, upon payment of a dividend in respect of suchOrdinary Shares, provided that the holder thereof or, if applicable, the payingagent, has supplied Buhrmann with the appropriate Dutch tax forms in accordancewith the Dutch implementation regulations under the U.S./NL Income Tax Treaty.If such forms are not duly and timely supplied, Buhrmann generally will berequired to withhold the dividend withholding tax at the Dutch statutory rateof 25%. In such case, a Non-Resident Holder of Ordinary Shares who is residentin the United States and who is entitled to the benefits of the U.S./NL IncomeTax Treaty may obtain a refund of the difference between the amount withheldand the amount that the Netherlands was entitled to levy in accordance with theU.S./NL Income Tax Treaty by filing the appropriate forms with the Dutch taxauthorities within the term set therefor.

 

*Reduction.*IfBuhrmann has received a profit distribution from a foreign entity, or arepatriation of foreign branch profit, that is exempt from Dutch corporateincome tax and that has been subject to a foreign withholding tax of at least5%, Buhrmann may be entitled to a reduction of the amount of Dutch dividendwithholding tax withheld that must be paid over to the Dutch tax authorities inrespect of dividends distributed by****Buhrmann.

 

Non-Resident holders of shares are urged toconsult their tax advisors regarding the general creditability or deductibilityof Dutch dividend withholding tax and, in particular, the impact to suchinvestors of Buhrmann’s potential ability to receive a reduction as meant inthe previous paragraph.

 

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***Gift and inheritance taxes***

 

Aperson who acquires Ordinary Shares as a gift (in form or in substance) or whoacquires or is deemed to acquire Ordinary Shares on the death of an individual,will not be subject to Dutch gift tax or to Dutch inheritance tax, as the casemay be, unless:

•thedonor or the deceased is resident or deemed to be resident in the Netherlandsfor purposes of gift or inheritance tax, as the case may be; or

•theOrdinary Shares are or were attributable to an enterprise or part of anenterprise that the donor or the deceased carried on through a permanentestablishment or a permanent representative in the Netherlands at the time ofthe gift or of the death of the deceased; or

•thedonor makes a gift of shares, then becomes a resident or deemed resident of theNetherlands, and dies as a resident or deemed resident of the Netherlandswithin 180 days after the date of the gift.

 

Ifthe donor or the deceased is an individual who holds Dutch nationality, he willbe deemed to be resident in the Netherlands for purposes of Dutch gift andinheritance taxes if he has been resident in the Netherlands at any time duringthe ten years preceding the date of the gift or his death. If the donor is anindividual who does not hold Dutch nationality, or an entity, he or it will bedeemed to be resident in the Netherlands for purposes of Dutch gift tax if heor it has been resident in the Netherlands at any time during the twelve monthspreceding the date of the gift.

 

Furthermore,in exceptional circumstances, the donor or the deceased will be deemed to beresident in the Netherlands for purposes of Dutch gift and inheritance taxes ifthe beneficiary of the gift, or all beneficiaries under the estate jointly, asthe case may be, make an election to that effect.

 

***Distributiontax***

 

Buhrmann is subject to atemporary special distribution tax at a rate of 20% to the extent thatdividends distributed by****Buhrmann during the period fromJanuary 1, 2001 up to and including December 31, 2005 are classifiedas “excessive”. For purposes of this distribution tax, dividends distributed by****Buhrmannare considered to be “excessive” to the extent that, during a particularcalendar year, the total thereof exceeds the highest of the following threeamounts:

•                  4% of the marketcapitalization of Buhrmann at the beginning of the relevant calendar year;

•                  twice the amount of theaverage annual dividends (exclusive of extraordinary distributions) distributedin the three calendar years immediately preceding January 1, 2001; and

•                  Buhrmann’s consolidatedcommercial results for the preceding book year, subject to certain adjustments.

 

See the section “Dutchtaxation of non-resident holders of Ordinary Shares - Taxes on income andcapital gains” for a description of the concept “dividends distributed by****Buhrmann”.

 

The special distributiontax will not be due if and to the extent the aggregate of dividends distributedby****Buhrmannduring the period from January 1, 2001 up to and includingDecember 31, 2005 exceeds the fair market value of the assets at the endof the book year ending on December 31, 2000, net of liabilities andprovisions and reduced by the paid-in capital. The special distribution taxwill be reduced in proportion to the percentage of the shares that were held,at the time of the “excessive” distribution, during an uninterrupted period ofthree years, by individuals or entities (other than investment institutions *(beleggingsinstellingen)*as defined in the Dutch Corporate Income Tax Act 1969) holding atleast 5% of the nominal paid-in capital, provided such shareholders areresident in The Netherlands, The Netherlands Antilles or Aruba, or in a memberstate of the EU, or in a country that has concluded a double tax treaty withThe Netherlands. The special distribution tax is not a withholding tax; it isimposed directly on****Buhrmann. Therefore, if it is reducedbecause certain shareholders own at least 5% of the nominal paid-in capital,

 

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Buhrmann will receive thebenefit of the reduction and it will inure indirectly not only to theshareholders whose shareholdings caused the reduction to apply.

 

***Capitaltax***

 

Buhrmann is subject toDutch capital tax at a rate of 0.55% on any contribution received in respect ofOrdinary Shares.

 

***Other taxes and duties***

 

NoDutch registration tax, transfer tax, stamp duty or any other similardocumentary tax or duty will be payable in the Netherlands in respect of or inconnection with the subscription, issue, placement, allotment or delivery ofOrdinary Shares.

 

**Documents on Display**

 

Copies of the annual reports on Form 20-F ofBuhrmann N.V. and documents referred to within this Form 20-F are available forinspection upon request at the Buhrmann Corporate Centre at Hoogoorddreef 62,1101 BE Amsterdam ZO, the Netherlands (tel. +31-20-651 11 11) and the SEC’spublic reference room located at 450 Fifth Street, NW, Washington DC, 20549. Inaddition, Buhrmann’s SEC filings are also available through the SEC’s websitewww.sec.gov.

 

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## **ITEM 11  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK**

 

Buhrmann is exposed tofinancial market risks including adverse changes in interest rates and currencyexchange rates and availability of short-term liquidity. Buhrmann’s financialpolicy is designed to mitigate these risks by restricting the impact ofinterest and currency movements on its financial position while safeguardingits liquidity.

 

The aim is to obtain acapital structure which enables Buhrmann to achieve its strategic objectives.The degree of flexibility of the capital structure, the financing of workingcapital fluctuations and costs of financing are among the factors taken intoconsideration.

 

With respect to the levelof debt financing, Buhrmann focuses on projected interest cover on a cash basis(operating result before depreciation of tangible fixed assets and amortizationand impairment of goodwill/interest on cash basis) and on the relationship (the“leverage”) between borrowings and total enterprise value (marketcapitalization of shareholders’ equity plus interest-bearing debt). Theobjective is to restrict the interest coverage to a minimum of 3 and averagemarket value based leverage over time to a maximum of 50%. In addition,consideration is given to the development of specific capital ratios, of whichtotal debt over operating result before depreciation of tangible fixed assetsand amortization and impairment of goodwill is the most relevant.

 

Buhrmann aims to incur debt by currency afterhedges in proportion to the forecasted split of operating result before depreciationof tangible fixed assets and amortization and impairment of goodwill over themain currencies (USD, EUR and GBP). Forward foreign exchange and currencyswap contracts are used to adjust the currency profile of the loans issuedtowards the desired position, in order to achieve the hedging as per policy.Valuation of these contracts at year-end against the prevailing market pricesthen obtained matches the valuation of the underlying financing source.

 

The operations of subsidiaries are predominantlyfinanced through internal debt denominated in local currencies. In general, theremaining translation risk in these subsidiaries is not covered. This is based on theassumption that the investments in subsidiaries are long-term investments.

 

Regarding currency risk exposure on tradingtransactions (transaction risk), it is the policy to cover these risks on atransaction basis as much as possible to protect the operational margins inlocal currency terms. Currency forward contracts with terms up to one year areused to cover these risks. The occurrence of these exposures is relatively lowas most business activities are conducted locally in local currencies. Valuation of thesecontracts at year-end at the prevailing rate matches the valuation of thecommercial transaction concerned.

 

Buhrmann’s interest policy is designed to restrictthe impact of fluctuations in interest rates and to keep the interest burden aslow as possible. Interest swaps are used to a significant degree to adjust thefixed interest or floating interest nature of the financing towards therequired profile.

 

Financial instruments are only used to hedgeagainst financial market risks. No speculative positions are entered into. These financialinstruments are not used for trading purposes.

 

Currency and interest swap contracts are enteredinto by Buhrmann NV, Buhrmann US, Inc. and Buhrmann Europcenter NV who act asthe main financing companies for the Group. The Treasury function does notoperate under an own profit objective but does pursue benefits of scale andefficiency as well as provide in-house services in the area of financiallogistics.  For the securitization program, BuhrmannSilver SA and Buhrmann US LLC act as financing companies.

 

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Buhrmann’s loans and borrowings as ofDecember 31, 2002 are included in the table below. This table providesinformation about the cash flows, fair value, weighted average interest rate,maturity and contract terms of Buhrmann’s debt which includes both variable andfixed rate debt. Foreign currencies have been translated at the applicable eurorates at December 31, 2002.

 

For cash, accounts receivable, other short-termassets, accounts payable, accrued liabilities and other short-term liabilities,the carrying value of these financial instruments approximates their fair valueowing to the short-term maturities of these assets and liabilities.

 
| **(in millions of euro)**    |   | **2003** |       | **2004** |       | **2005** |       | **2006** |       | **>2006** |       | **TOTAL** |       | **Fair  Value** |       |
|------------------------------|--------|----------|------------|----------|------------|----------|------------|----------|------------|--------------|------------|-----------|------------|-----------------|------------|
| **Fixed rate debt:**         |   |     | ** ** |     | ** ** |     | ** ** |     | ** ** |         | ** ** |      | ** ** |            | ** ** |
| 12 1⁄4% Notes             |   | 0        |       | 0        |       | 0        |       | 0        |       | 334          |       | 334       |       | 312             |       |
| Interest rate                |   | —   |       | —   |       | —   |       | —   |       | 12.25        | %          | —    |       | —          |       |
| Other                        |   | 0        |       | 0        |       | 0        |       | 0        |       | 3            |       | 3         |       | 3               |       |
| **Total fixed rate debt**    |   | **0**    | ** ** | **0**    | ** ** | **0**    | ** ** | **0**    | ** ** | **337**      | ** ** | **337**   | ** ** | **315**         | ** ** |
|                         |   |     |       |     |       |     |       |     |       |         |       |      |       |            |       |
| **Variable rate debt:**      |   |     |       |     |       |     |       |     |       |         |       |      |       |            |       |
| Securitized Notes            |   | 0        |       | 0        |       | 0        |       | 0        |       | 260          |       | 260       |       |            |       |
| Term Loans A                 |   | 59       |       | 230      |       | 298      |       | 0        |       | 0            |       | 587       |       |            |       |
| Term Loans B                 |   | 2        |       | 5        |       | 5        |       | 249      |       | 250          |       | 511       |       |            |       |
| Overdrafts + Others          |   | 7        |       | 0        |       | 44       |       | 0        |       | 0            |       | 51        |       |            |       |
| **Total variable rate debt** |   | **68**   | ** ** | **235**  | ** ** | **347**  | ** ** | **249**  | ** ** | **510**      | ** ** | **1,409** | ** ** |            | ** ** |
|                         |   |     | ** ** |     | ** ** |     | ** ** |     | ** ** |         | ** ** |      | ** ** |            | ** ** |
| **Total debt**               |   | **68**   | ** ** | **235**  | ** ** | **347**  | ** ** | **249**  | ** ** | **847**      | ** ** | **1,746** | ** ** |            | ** ** |

 

The fair values of Buhrmann’s fixed rate loans havebeen estimated based on applicable market interest rates available to Buhrmannfor instruments of a similar nature and maturity. The fair value of variablerate debt approximates the carrying value.

 

**Interest raterisks**

 

Buhrmann’s policy is to incur a certain minimumlevel of fixed rate debt in relation to the interest cover. Interest rate swapsare used to adjust the interest profile of the loans towards the desiredposition, in order to achieve the hedging as per policy.

 

At December 31, 2002, approximately 81% ofthe interest bearing debt was, after taking into account the effect of interestrate swaps, at fixed interest rates. The average blended effective interest rate(including margin, currency and hedging effects) was approximately 8.6% in2002.

 

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**Buhmann’s Interest Rate Swap contractsat December 31, 2002**

 

IRS in EUR; Buhrmann paysfixed and receives 3 month LIBOR

 
| **Maturity** |   | **Notional amount  (in millions of euro)** |   | **Average interest********rate in%** |   | **Fair value  (in millions of euro)** |   |
|--------------|--------|--------------------------------------------|--------|--------------------------------------|--------|---------------------------------------|--------|
| <1 year   |   | 150                                        |   | 4.47                                 |   | (2                                    | )      |
| <2 years  |   | 150                                        |   | 4.80                                 |   | (6                                    | )      |
| <4 years  |   | 200                                        |   | 5.29                                 |   | (10                                   | )      |
| <5 years  |   | 125                                        |   | 5.18                                 |   | (9                                    | )      |
| Subtotal A   |   | 625                                        |   |                                 |   | (27                                   | )      |

 

IRS in USD; Buhrmann pays fixed and receives 3 monthLIBOR

 
| **Maturity**  |   | **Notional amount  (in millions of euro)** |       | **Average interest  rate in %** |   | **Fair value  (in millions of euro)** |   |
|---------------|--------|--------------------------------------------|------------|---------------------------------|--------|---------------------------------------|--------|
| <1 year    |   | 215                                        |       | 6.54                            |   | (11                                   | )      |
| <2 years   |   | 381                                        |       | 4.53                            |   | (20                                   | )      |
| <3 years   |   | 95                                         |       | 6.54                            |   | (11                                   | )      |
| <5 years   |   | 72                                         |       | 5.64                            |   | (8                                    | )      |
| Subtotal B    |   | 763                                        |       |                            |   | (50                                   | )      |
|          |   |                                       |       |                            |   |                                  |   |
| **Total A+B** |   | **1,388**                                  | ** ** |                            |   | **(77**                               | **)**  |

 

## **Currency rate risks**

 

Buhrmann’s operations are conducted by entities inmany countries and, accordingly, Buhrmann’s results of operations are subjectto currency translation risk and currency transaction risk. Currencyinstruments are used to hedge against exchange rate risks resulting frombusiness activities and financing arrangements in foreign currencies.

 

Currency forwardcontracts with terms up to one year are used to cover exchange rate risksresulting from business activities. The policy is to cover these risks. Given the volatility of currency exchangerates, there can be no assurance that Buhrmann will be able to effectivelymanage its currency transaction risks or that any volatility in currencyexchanges rates will not have a material adverse effect on Buhrmann’s financialconditions or results of operations.

 

Buhrmann generally attempts to cover a portionof its currency translation risk by financing its operations in subsidiariesthrough internal debt denominated in local currencies In general, the remainingtranslation risk is not covered. This isbased on the assumption that the investments in subsidiaries are long-terminvestments. However, this risk is monitored and reviewed periodicallyand if this risk is deemed to be too high, Buhrmann will consider hedgesagainst this risk wherever possible. The economic currency risk is limited, asoperating companies generally operate on local markets with local competitors.

 

120

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**Buhrmann’s forward foreign exchange andcurrency swap contracts at December 31, 2002**

 
| **Contract**     |   | **Maturity** |   | **Weighted average  contractual  exchange rate** |       | **Notional amount (in  millions of euro)** |       | **Fair value  (in millions of euro)** |       |
|------------------|--------|--------------|--------|--------------------------------------------------|------------|--------------------------------------------|------------|---------------------------------------|------------|
| sell EUR/buy USD |   | <1 year   |   | 1.02                                             |       | 104                                        |       | (3                                    | )          |
| sell GBP/buy EUR |   | <1 year   |   | 0.64                                             |       | 35                                         |       | 0                                     |       |
| sell USD/buy EUR |   | <1 year   |   | 1.00                                             |       | 95                                         |       | 5                                     |       |
| sell EUR/buy GBP |   | <1 year   |   | 0.64                                             |       | 114                                        |       | (1                                    | )          |
| Other            |   | <1 year   |   | —                                           |       | 68                                         |       | 0                                     |       |
|             |   |         |   |                                             |       |                                       |       |                                  |       |
| **Total**        |   |         |   |                                             | ** ** | **416**                                    | ** ** | **1**                                 | ** ** |

 

The estimated market value of the outstanding currencyand interest swap contracts indicates how much would be paid or received inexchange for termination of the contracts without further commitments as perthe balance sheet date.

 

121

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**ITEM 12: DESCRIPTION OF SECURITIES OTHER THAN EQUITYSECURITIES**

 

Not applicable.

 

**ITEM 13: DEFAULTS****, DIVIDEND ARREARAGES AND DELINQUENCIES**

 

None.

 

**ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITYHOLDERS AND USE OF PROCEEDS**

 

On March 25, 2003, a meeting of holders ofdepositary receipts of Preference Shares A was held. At this meeting changes tothe administration conditions were decided in such a way, subject to certainlimitations, that the holders of depositary receipts of Preference Shares A arenow entitled to vote in the shareholders’ meeting and that the number of votingrights attached to the (depositary receipts of the) Preference Shares A isbased on the stock market price of the depositary receipts in relation to thestock market price of the Ordinary Shares, see Item 10 “Additional Information-Articles of Association of Buhrmann NV-Preference Shares A”.

 

There have been no other material modifications to therights of security holders.

 

122

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**ITEM 15:CONTROLS AND PROCEDURES**

##### ** **

The Company maintains disclosure controls andprocedures that are designed to ensure that information required to bedisclosed in the Company’s Exchange Act reports is recorded, processed,summarized and reported within the time periods specified in the SEC’s rulesand forms, and that such information is accumulated and communicated to the Company’smanagement, including its Chief Executive Officer and Chief Financial Officer,as appropriate, to allow timely decisions regarding required disclosure. Indesigning and evaluating the disclosure controls and procedures, managementrecognized that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving the desiredcontrol objectives, and in this connection management necessarily was requiredto apply its judgment in evaluating the cost-benefit relationship of possiblecontrols and procedures.

 

Within 90 days prior to the date of this report, theCompany carried out an evaluation, under the supervision and with theparticipation of the Company’s management, including the Company’s Chief ExecutiveOfficer and the Company’s Chief Financial Officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedures. Basedon the foregoing, the Company’s Chief Executive Officer and Chief FinancialOfficer concluded that the Company’s disclosure controls and procedures wereeffective.

 

There have been no significant changes in theCompany’s internal controls or in other factors that could significantly affectthe internal controls subsequent to the date the Company completed itsevaluation.

 

123

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**ITEM 16B: CODE OF ETHICS**

 

Buhrmann has a code of business principles and code ofethics which applies to all employees of the Buhrmann Companies worldwide,including Buhrmann’s principal executive office, principal financial officer,principal accounting officer or controlller and other persons performingsimilar functions. A copy of our business principles and code of ethics isincluded as exhibit 11.1 to this annual report on Form 20-F.  On February 27, 2003, we amended ourcode of business principles and code of ethics in order to reflect recent SECrule adoptions under Sarbanes-Oxley and proposed New York Stock Exchange Rules.

 

**ITEM 16C:PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

In 2002 and 2001, Buhrmann paid toPricewaterhouseCoopers Accountants NV, our principal accountant, the followingfees (in millions of euro):

 
|               |   | **2002** |   | **2001** |   |
|--------------------|--------|----------|--------|----------|--------|
| Audit fees         |   | 4.3      |   | 4.7      |   |
| Audit-related fees |   | 2.0      |   | 5.0      |   |
| Tax fees           |   | 0.2      |   | 1.0      |   |

 

Audit-related fees in 2002 mainly relate toservices in connection with the accounts receivable securitization program andthe filing of Form 20-F. In 2001, audit-related fees mainly relate to duedilligence and assurance work for acquisitions and the filing of Form 20-F.

 

Tax fees relate to tax compliance services.

 

**Policyregarding External Auditor Indepence and Services**

 

Under the Buhrmann Policy regarding ExternalAuditor Indepence and Services (as amended June 24, 2003), the externalauditors are only allowed to provide permissible audit services, audit-relatedservices and non-audit services that are pre-approved by the Audit Committee(except as otherwise set forth below). The Audit Committee annually reviews thelist of permissable services and may add or subtract from the list from time totime.

 

Permissable audit services include:

•statutory audits or financial audits for subsidiaries or affiliates of theCompany, including issuing the audit opinion for group reporting purposes andon the statutory financial statements;

•issuing the audit opinion on the Form 20-F, and other services associated withSEC registration statements, periodic reports and other documents filed withthe SEC;

 

Permissable audit-related services include duediligence work, audits on divestments and acquisitions and advice on accountingpolicies.

 

124

----

 

Permissable non-audit services include:

• risk management advisory services (such asassessment and testing of security controls);

•treasury advisory services;

 

These non-audit services require thepre-approval of the Audit Committee unless:

(i)                                     theaggregate amount of all such services provided constitutes no more thanEUR 250,000 in any fiscal year;

(ii)                                  such services were not recognized by theCompany at the time of the engagement to be non-audit services; and

(iii)                               such services are promptly brought to theattention of the Audit Committee and approved by the Audit Committee prior tothe completion of the audit.

 

125

----

 

**ITEM 17: FINANCIAL STATEMENTS**

 

Not applicable

 

**ITEM 18FINANCIAL STATEMENTS**

 

See pages F-1 through F-82 incorporated by reference herin.

 

126

----

 

##### **ITEM 19: EXHIBITS**

 
| **Exhibit  Number** |   | **Description of Exhibits**                                                                                                                                                                                                                                                                                                                                        |
|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1                 |   | Articles of Association of  Buhrmann NV, as amended, dated July 4, 2002.                                                                                                                                                                                                                                                                                      |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *2.1                |   | Indenture, dated as of  October 29, 1999 for the 121⁄4% Senior Subordinated Notes due 2009 among  Buhrmann US Inc., as issuer, Buhrmann NV and the other guarantors listed  therein and The Bank of New York, as trustee (including form of note).                                                                                                         |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *2.2                |   | First Supplemental  Indenture, dated as of January 31, 2000 for the 121⁄4% Senior Subordinated  Notes due 2009 among the Additional Guarantors, the Guarantors under the  Indenture, Buhrmann US Inc. and The Bank of New York, as Trustee.                                                                                                                |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *2.3                |   | Registration Rights  Agreement, dated October 29, 1999 for the 121⁄4% Senior Subordinated Notes  due 2009 among Buhrmann US Inc, Buhrmann NV and the other guarantors listed  therein and Deutsche Bank Securities Inc., Paribas Corporation and ABN AMRO  Incorporated as initial purchasers.                                                             |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *2.4                |   | Guarantee of the 121⁄4% Senior  Subordinated Notes due 2009, dated October 29, 1999 among the German  Guarantors listed therein.                                                                                                                                                                                                                           |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *4.1                |   | Stock Purchase Agreement,  dated as of September 3, 1999 by and between Buhrmann NV, Apollo  Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P. and Bain Capital  Fund VI, L.P.                                                                                                                                                                      |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *4.2                |   | Amendment No. 1 to Stock  Purchase Agreement, dated October 26, 1999 among Buhrmann NV, Apollo  Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P. and Bain Capital  Fund VI, L.P.                                                                                                                                                                   |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *4.3                |   | Purchase Agreement, dated  October 26, 1999 for the 121⁄4% Senior Subordinated Notes due 2009 by and  among Buhrmann NV, Buhrmann US Inc. and Deutsche Bank Securities Inc.,  Paribas Corporation and ABN AMRO Incorporated as initial purchasers.                                                                                                         |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| *4.4                |   | Credit Agreement, dated  October 26, 1999 by and among Buhrmann NV, as guarantor, Buhrmann US  Inc., as Borrower, various lenders, Deutsche Bank Securities Inc., as Lead  Lender and Sole Book Manager, Paribas, as Syndication Agent, ABN AMRO Bank  N.V., as Documentation Agent, and Bankers Trust Company, as Administrative  Agent.                     |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| **4.5               |   | First Amendment to Credit  Agreement, dated August 4, 2000, by and among Buhrmann NV, as guarantor,  Buhrmann US Inc., as Borrower, various lenders, Deutsche Bank Securities  Inc., as Lead Lender and Sole Book Manager, Paribas, as Syndication Agent,  ABN AMRO Bank N.V., as Documentation Agent, and Bankers Trust Company, as  Administrative Agent.   |
|                |   |                                                                                                                                                                                                                                                                                                                                                               |
| **4.6               |   | Second Amendment to Credit  Agreement, dated January 26, 2001 by and among Buhrmann NV, as  guarantor, Buhrmann US Inc., as Borrower, various lenders, Deutsche Bank  Securities Inc., as Lead Lender and Sole Book Manager, Paribas, as  Syndication Agent, ABN AMRO Bank N.V., as Documentation Agent, and Bankers  Trust Company, as Administrative Agent. |

 

127

----

 
| **Exhibit  Number** |   | **Description of Exhibits**                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ***4.7              |   | Third Amendment to Credit  Agreement, dated October 4, 2001 by and among Buhrmann NV, as guarantor,  Buhrmann US Inc., as Borrower, various lenders, Deutsche Bank Securities  Inc., as Lead Arranger and Sole Book Manager, Paribas, as Syndication Agent,  ABN AMRO Bank N.V., as Documentation Agent, and Bankers Trust Company, as  Administrative Agent.                                  |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| ***4.8              |   | Fourth Amendment to Credit  Agreement, dated December 3, 2001 by and among Buhrmann NV, as  guarantor, Buhrmann US Inc., as Borrower, various lenders, Deutsche Bank  Securities Inc., as Lead Arranger and Sole Book Manager, Paribas, as  Syndication Agent, ABN AMRO Bank N.V., as Documentation Agent, and Bankers  Trust Company, as Administrative Agent.                                |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.9                 |   | Fifth  Amendment to Credit Agreement, dated as of December 2, 2002, by and  among Buhrmann N.V., as guarantor,, Buhrmann US Inc., as Borrower, various  lenders, Deutsche Bank Securities Inc. , as lead arranger and Sole Book  Manager, BNP Paribas, as Syndication Agent , ABN AMRO BANK N.V., as  Documentation Agent, and Deutsche Bank Trust Company Americas, as  Administrative Agent. |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| *4.10               |   | Guaranty, dated as of  October 26, 1999 made by each of the guarantors party thereto.                                                                                                                                                                                                                                                                                                          |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| *4.11               |   | Pledge Agreement, dated as  of October 26, 1999 made by each of the pledgors party thereto to  Bankers Trust Company, as Collateral Agent for the benefit of the secured  creditors under the senior credit facility for the benefit of the secured  creditors under the senior credit facility.                                                                                               |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| *4.12               |   | Security Agreement, dated as of October 26, 1999  among Buhrmann NV, Buhrmann US Inc., certain subsidiaries and affiliates of  Buhrmann US Inc. and Bankers Trust Company as Collateral Agent.                                                                                                                                                                                                 |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| *4.13               |   | Master Agreement, dated  March 1, 1994 between Heidelberger Druckmaschinen Aktiengesellschaft  (Heidelberg) and NV Koninklijke KNP BT (KNP BT), effective until  June 30, 2003.                                                                                                                                                                                                           |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.14                |   | Distributor Agreement, dated  December 10, 2002 between Heidelberger Druckmaschinen Aktiengesellschaft  (Heidelberg) and Buhrmann NV, effective as of July 1, 2003.                                                                                                                                                                                                                       |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| ****4.15            |   | Deposit  Agreement, dated as of December 21, 1993, Amended and Restated as of  September 20, 2001 by and among Buhrmann NV and The Bank of  New York as Depositary and Owners and  Holders of American Depositary   Receipts.                                                                                                                                                   |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.16                |   | Form of employment contract  for Members of the Executive Board.                                                                                                                                                                                                                                                                                                                                    |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.17                |   | Dutch Master Receivables  Purchase Agreement, amended and restated on July 18, 2002 between  Buhrmann-Ubbens  BV, Proost and Brandt  BV, Buhrmann Silver S.A, Buhrmann Securitisation B.V., Deutsche Trustee Company  Limited and Buhrmann N.V.                                                                                                                                           |
|                |   |                                                                                                                                                                                                                                                                                                                                                                                                |
| 4.18                |   | US Contribution Agreement,  amended and restated on July 18, 2002 between Corporate Express Office  Products, Inc. , Corporate Express of Texas, Inc., Burhmann Silver US LLC,  Buhrmann N.V. and Deutsche Trustee Company Limited.                                                                                                                                                            |

 

128

----

 
| 4.19   |   | English Originator Notice of  Intention to Make Offers to Sell, given on July 18, 2002 by Robert Horne  Group PLC, The Howard Smith Paper Group Limited and The M6 Paper Group  Limited to Buhrmann Silver S.A. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                 |
| 4.20   |   | Master Definitions and  Framework Deed, amended and restated July 18, 2002 between various  parties in the securitization program.                                                                              |
|   |   |                                                                                                                                                                                                                 |
| 4.21   |   | English Standard Terms and  Conditions, amended and restated July 18, 2002 between various parties  in the securitization program.                                                                              |
|   |   |                                                                                                                                                                                                                 |
| 8.1    |   | List of significant  Subsidiaries of Buhrmann NV.                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                 |
| 11.1   |   | Business  Principles and Code of Ethics of Buhrmann NV, as amended and restated  February 27, 2003.                                                                                                             |
|   |   |                                                                                                                                                                                                                 |
| 11.2   |   | Audit Committee Charter, as amended and restated on  June 24, 2003.                                                                                                                                             |
|   |   |                                                                                                                                                                                                                 |
| 11.3   |   | Compensation, Nominating and  Corporate Governance Committee Charter.                                                                                                                                                |
|   |   |                                                                                                                                                                                                                 |
| 12.1   |   | Certifications of Buhrmann’s  Chief Executive Officer and Chief Financial Officer pursuant to Section 906  of the Sarbanes-Oxley Act.                                                                           |

 

----

*         Incorporated by reference to RegistrationStatement of Buhrmann NV on Form F-4 dated March 31, 2000, File No.333-11768.

**       Incorporated by referenceto Annual Report of Buhrmann NV on Form 20-F dated June 26, 2001, File No. 333-11768.

***    Incorporated by reference toAnnual Report of Buhrmann NV on Form 20-F dated May 17, 2002, File No. 001-16663.

****  Incorporated by reference to Post Effective Amendment No. 1 to the Form F-6Registration Statement filed with the Securities and Exchange Commission onAugust 24, 2001.

 

129

----

 

**SIGNATURES**

 

The registrant hereby certifies that it meets all ofthe requirements for filing on Form 20-F and that it has duly caused andauthorized the undersigned to sign this annual report on its behalf.

 
|   | BUHRMANN NV                     |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | /s/ Frans H.J. Koffrie |   |
|   |                            |
|   | Name: Frans H.J. Koffrie        |
|   | Title: Chief Executive  Officer |
|   |                            |
|   |                            |
|   | By:                             | /s/  Floris F. Waller |   |
|   |                            |
|   | Name: Floris F. Waller          |
|   | Title: Chief Financial  Officer |

 

Dated: June 27, 2003

 

130

----

 

**CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

I, Frans H.J. Koffrie, certify that:

 

1.          I havereviewed this annual report on Form 20-F of Buhrmann NV (the “registrant”);

 

2.          Basedon my knowledge, this annual report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this annual report;

 

3.          Basedon my knowledge, the financial statements, and other financial informationincluded in this annual report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, andfor, the periods presented in this annual report;

 

4.          Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

a.           designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this annual report isbeing prepared;

 

b.          evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this annual report (the “Evaluation Date”); and

 

c.           presented in this annual report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5.          Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a.           allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b.          anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.          Theregistrant’s other certifying officers and I have indicated in this annualreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

Dated: June 27, 2003

 

 
| /s/ Frans H.J. Koffrie  |   |
|-------------------------|--------|
|                    |
| Frans H.J. Koffrie      |
| Chief Executive Officer |

 

131

----

 

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

 

I, Floris F. Waller, certify that:

 

1.          I havereviewed this annual report on Form 20-F of Buhrmann NV (the “registrant”);

 

2.          Basedon my knowledge, this annual report does not contain any untrue statement of amaterial fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this annual report;

 

3.          Basedon my knowledge, the financial statements, and other financial informationincluded in this annual report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this annual report;

 

4.          Theregistrant’s other certifying officers and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and have:

 

a.          designed such disclosure controls and proceduresto ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this annual report is being prepared;

 

b.         evaluated the effectiveness of the registrant’sdisclosure controls and procedures as of a date within 90 days prior to thefiling date of this annual report (the “Evaluation Date”); and

 

c.           presented in this annual report our conclusionsabout the effectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

 

5.          Theregistrant’s other certifying officers and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee ofregistrant’s board of directors (or persons performing the equivalentfunction):

 

a.           allsignificant deficiencies in the design or operation of internal controls whichcould adversely affect the registrant’s ability to record, process, summarizeand report financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b.          anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls; and

 

6.          Theregistrant’s other certifying officers and I have indicated in this annualreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

Dated: June 27, 2003

 

 
| /s/ Floris F. Waller    |   |
|-------------------------|--------|
|                    |
| Floris F. Waller        |
| Chief Financial Officer |

 

132

----

 

**ITEM 18 FINANCIAL STATEMENTS**

 

The following Consolidated FinancialStatements, together with the report of PricewaterhouseCoopers AccountantsN.V., independent accountants, are filed as part of this annual report:

 
| Report of Independent  Accountants                                                                                                     |
|----------------------------------------------------------------------------------------------------------------------------------------|
| Consolidated Financial  Statements:                                                                                                    |
| Consolidated  Statements of Income for the years ended December 31, 2002,  December 31, 2001 and December 31, 2000      |
| Consolidated  Balance Sheets as of December 31, 2002 and December 31, 2001                                                   |
| Consolidated  Statements of Cash Flows for the years ended December 31, 2002,  December 31, 2001 and December 31, 2000  |
| Consolidated  Statement of Group Equity for the years ended December 31, 2002,  December 31, 2001 and December 31, 2000 |
| Notes to  Consolidated Financial Statements                                                                                            |
| Guarantor  information                                                                                                                 |

 

The listed financial statements contain thefinancial position, results of operations and cash flow for the consolidatedand combined entities that include the non - guarantor subsidiaries as well asthe issuer and its guarantors. See Note 35 for the financial position, resultsof operations and cash flows of the issuer and its guarantors.

 

F-1

----

 

**REPORT OF INDEPENDENT ACCOUNTANTS**

 

 

To the Board of Directors and to theShareholders of Buhrmann NV.

 

 

In our opinion the accompanying ConsolidatedBalance Sheets and the related Consolidated Statements of Income, of Cash Flowsand of Group Equity present fairly, in all material respects, the financialposition of Buhrmann NV as at December 31, 2002 and 2001 and the resultsof its operations and cash flows for the years ended December 31, 2002, 2001and 2000 in conformity with accounting principles generally accepted in theNetherlands. These Consolidated Financial Statements are the responsibility ofthe Company’s management; our responsibility is to express an opinion on theseConsolidated Financial Statements based on our audits. We conducted our auditsof these statements in accordance with auditing standards generally accepted inthe Netherlands and the United States of America which require that we plan andperform our audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for theopinion expressed above.

 

Accounting principles generally accepted in theNetherlands vary in certain significant respects from accounting principlesgenerally accepted in the United States of America. The application of thelatter would have affected the determination of consolidated net income for theyears ended December 31, 2002, 2001 and 2000 and the determination ofconsolidated group equity at December 31, 2002 and 2001, respectively tothe extent summarized in Note 32 to the Consolidated  Financial Statements.

 

Amsterdam, February 27, 2003, except forNote 31 as to which the date is June 24, 2003.

 

PricewaterhouseCoopers Accountants N.V.

 

F-2

----

 

**Buhrmann NV**

**Consolidated Statements of Income**

**for the years ended December 31, 2002, 2001 and2000**

*In millions of euro*

 
|                                                                                                                                                                                         |   | **2002**   |       | **2001**   |       | **2000**   |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|------------|------------|------------|------------|
|                                                                                                                                                                                         |   |       | ** ** |       | ** ** |       | ** ** |
| **Net sales**                                                                                                                                                                                |   | **9,948**  | ** ** | **10,408** | ** ** | **9,603**  | ** ** |
|                                                                                                                                                                                         |   |       |       |       |       |       |       |
| Costs of trade goods sold                                                                                                                                                                    |   | (7,392     | )          | (7,702     | )          | (7,004     | )          |
| Other costs of sales                                                                                                                                                                         |   | (303       | )          | (310       | )          | (258       | )          |
|                                                                                                                                                                                         |   | **(7,695** | **)**      | **(8,012** | **)**      | **(7,262** | )          |
| **Added value**                                                                                                                                                                              |   | **2,253**  | ** ** | **2,396**  | ** ** | **2,341**  | ** ** |
|                                                                                                                                                                                         |   |       |       |       |       |       |       |
| Labor costs                                                                                                                                                                                  |   | (1,330     | )          | (1,390     | )          | (1,246     | )          |
| Other operating costs                                                                                                                                                                        |   | (467       | )          | (489       | )          | (436       | )          |
| Depreciation of tangible fixed assets                                                                                                                                                        |   | (114       | )          | (109       | )          | (113       | )          |
| Amortization of goodwill                                                                                                                                                                     |   | (70        | )          | (67        | )          | (55        | )          |
| Impairment of goodwill                                                                                                                                                                       |   | (573       | )          | —     |       | —     |       |
| **Operating  costs**                                                                                                                                                                         |   | **(2,554** | **)**      | **(2,055** | **)**      | **(1,850** | **)**      |
|                                                                                                                                                                                         |   |       |       |       |       |       |       |
| **Operating  result**                                                                                                                                                                        |   | **(301**   | **)**      | **341**    | ** ** | **491**    | ** ** |
| Net financing costs                                                                                                                                                                          |   | (199       | )          | (210       | )          | (221       | )          |
|                                                                                                                                                                                         |   |       |       |       |       |       |       |
| **Result from  operations before taxes**                                                                                                                                                     |   | **(500**   | **)**      | **131**    | ** ** | **270**    | ** ** |
| Taxes                                                                                                                                                                                        |   | (18        | )          | (24        | )          | (55        | )          |
| Results from participations and other financial results                                                                                                                                      |   | 16         |       | (3         | )          | 5          |       |
| Minority interests                                                                                                                                                                           |   | (12        | )          | (9         | )          | (9         | )          |
|                                                                                                                                                                                         |   |       |       |       |       |       |       |
| **Result from  continuing operations before extraordinary items**                                                                                                                            |   | **(514**   | **)**      | **95**     | ** ** | **211**    | ** ** |
| Result on disposal of discontinued operations (Note 28)                                                                                                                                      |   | —     |       | —     |       | (3         | )          |
| Extraordinary result from continuing operations (less income tax gain  of EUR 29 million in 2002 and EUR 26 million in 2001 and an income  tax loss of EUR 7 million in 2000) |   | (74        | )          | (40        | )          | 13         |       |
|                                                                                                                                                                                         |   |       |       |       |       |       |       |
| **Net result**                                                                                                                                                                               |   | **(588**   | **)**      | **55**     | ** ** | **221**    | ** ** |

 

Theaccompanying notes are an integral part of these Consolidated FinancialStatements

 

F-3

----

 

**Buhrmann NV**

**Consolidated Balance Sheets as of December 31,2002 and 2001**

**(before appropriation of current year profit)**

*In millions of euro*

 
|                                                    |   | **December 31,** |       |
|---------------------------------------------------------|--------|-----------------------|------------|
|                                                    |   | **2002**              |       | **2001** |   |
| **ASSETS**                                              |   |                  | ** ** |   | ** ** |
| **Fixed  assets**                                       |   |                  |       |   |   |
| Intangible fixed assets                                 |   | 1,788                 |       | 2,684 |   |
| Tangible fixed assets                                   |   | 592                   |       | 713 |   |
| Financial fixed assets                                  |   | 481                   |       | 635 |   |
|                                                    |   | **2,861**             |       | **4,032** | ** ** |
| **Current  assets**                                     |   |                  |       |   |   |
| Inventories of trade goods                              |   | 683                   |       | 756 |   |
| Accounts receivable                                     |   | 1,507                 |       | 1,826 |   |
| Other receivables                                       |   | 321                   |       | 404 |   |
|                                                    |   | **2,511**             |       | **2,986** | ** ** |
| Cash and cash equivalents                               |   | 37                    |       | 99 |   |
|                                                    |   |                  |       |   |   |
| **Total  assets**                                       |   | **5,409**             | ** ** | **7,117** | ** ** |
|                                                    |   |                  |       |   |   |
| **GROUP  EQUITY AND LIABILITIES**                       |   |                  |       |   |   |
| **Group  equity**                                       |   |                  |       |   |   |
| Ordinary Shares                                         |   | 158                   |       | 157 |   |
| Preference Shares                                       |   | 64                    |       | 64 |   |
| Additional paid in capital                              |   | 2,034                 |       | 1,993 |   |
| Other reserves                                          |   | 102                   |       | 379 |   |
| Undistributed profit                                    |   | (588                  | )          | 41 |   |
| Minority interests                                      |   | 41                    |       | 37 |   |
|                                                    |   | **1,811**             |       | **2,671** | ** ** |
| **Commitments  and contingencies (see Note 24 and 26)** |   |                  |       |   |   |
|                                                    |   |                  |       |   |   |
| **Provisions**                                          |   |                  |       |   |   |
| Pensions                                                |   | 26                    |       | 25 |   |
| Deferred taxes                                          |   | 221                   |       | 340 |   |
| Other                                                   |   | 90                    |       | 80 |   |
|                                                    |   | **337**               |       | **445** | ** ** |
| **Long-term  liabilities**                              |   |                  |       |   |   |
| Subordinated loans                                      |   | 334                   |       | 397 |   |
| Other loans                                             |   | 1,344                 |       | 1,662 |   |
|                                                    |   | **1,678**             |       | **2,059** | ** ** |
| **Current  liabilities**                                |   |                  |       |   |   |
| Loans                                                   |   | 68                    |       | 44 |   |
| Bank overdrafts                                         |   | 26                    |       | — |   |
| Accounts payable                                        |   | 1,064                 |       | 1,340 |   |
| Other liabilities                                       |   | 425                   |       | 558 |   |
|                                                    |   | **1,583**             |       | **1,942** | ** ** |
|                                                    |   |                  |       |   |   |
| **Total group  equity and liabilities**                 |   | **5,409**             | ** ** | **7,117** | ** ** |

 

Theaccompanying notes are an integral part of these Consolidated FinancialStatements

 

F-4

----

 

**Buhrmann NV**

**Consolidated Statements of Cash Flowsfor the years ended December 31 2002, 2001 and 2000**

*In millions of euro*

* *
|                                                            |   | **2002** |       | **2001** |       | **2000** |       |
|-----------------------------------------------------------------|--------|----------|------------|----------|------------|----------|------------|
| **Cash flow  from operating activities**                        |   |     |       |     |       |     |       |
| *Cash flow  from operations*                                    |   |     |       |     |       |     |       |
| Operating result                                                |   | (301     | )          | 341      |       | 491      |       |
| *Adjustments  for:*                                             |   |     |       |     |       |     |       |
| Depreciation, amortization and impairment                       |   | 757      |       | 176      |       | 168      |       |
| Addition to/(release of) provisions                             |   | 1        |       | 13       |       | (29      | )          |
| *(Increase)/decrease  in working capital*:                      |   |     |       |     |       |     |       |
| (Increase)/decrease inventories                                 |   | 11       |       | 85       |       | (106     | )          |
| (Increase)/decrease accounts receivable                         |   | 195      |       | 208      |       | (230     | )          |
| Increase/(decrease) accounts payable                            |   | (172     | )          | (19      | )          | 207      |       |
| (Increase)/decrease other receivables and  liabilities          |   | 18       |       | (67      | )          | (165     | )          |
| Net (increase)/decrease in working capital                      |   | 52       |       | 207      |       | (294     | )          |
| *Net cash flow from operations*                                 |   | *509*    | * *   | *737*    | * *   | *336*    | * *   |
|                                                            |   |     |       |     |       |     |       |
| *Other  operational payments*                                   |   |     |       |     |       |     |       |
| Interest paid                                                   |   | (184     | )          | (202     | )          | (211     | )          |
| Profit taxes paid                                               |   | (16      | )          | (27      | )          | (39      | )          |
| Payments charged to provisions                                  |   | (51      | )          | (39      | )          | (20      | )          |
|                                                            |   | *(251*   | *)*        | *(268*   | *)*        | *(270*   | *)*        |
| **Net cash  provided by operating activities**                  |   | **258**  | ** ** | **469**  | ** ** | **66**   | ** ** |
|                                                            |   |     |       |     |       |     |       |
| **Cash flow  from investing activities**                        |   |     |       |     |       |     |       |
| Net investments in tangible fixed assets                        |   | (107     | )          | (127     | )          | (122     | )          |
| Acquisition of Group companies and participations               |   | (9       | )          | (578     | )          | (113     | )          |
| Payments related to integration of acquired Group companies     |   | (90      | )          | (208     | )          | (158     | )          |
| Divestment of Group companies and participations                |   | 68       |       | 147      |       | 76       |       |
|                                                            |   |     |       |     |       |     |       |
| **Net cash  used in investing activities**                      |   | **(138** | **)**      | **(766** | **)**      | **(317** | **)**      |
|                                                            |   |     |       |     |       |     |       |
| **Cash flow  from financing activities**                        |   |     |       |     |       |     |       |
| Ordinary Shares issued (see Note 17)                            |   | —   |       | 665      |       | 172      |       |
| Dividend payments (see Note 17)                                 |   | (25      | )          | (60      | )          | (53      | )          |
| Surplus pension fund                                            |   | —   |       | —   |       | 31       |       |
| Payment to and repurchase of interests of minority shareholders |   | (5       | )          | (2       | )          | (2       | )          |
| Paid financing fees (see Note 14)                               |   | (16      | )          | (13      | )          | —   |       |
| Drawn long-term debt (see Note 20)                              |   | —   |       | 407      |       | 222      |       |
| Repayment of long-term debt (see Note 20)                       |   | (162     | )          | (577     | )          | (207     | )          |
|                                                            |   |     |       |     |       |     |       |
| **Net cash  provided by financing activities**                  |   | **(208** | **)**      | **420**  | ** ** | **163**  | ** ** |
|                                                            |   |     |       |     |       |     |       |
| **(Decrease)/increase  in liquid funds (see Note 27)**          |   | **(88**  | **)**      | **123**  | ** ** | **(88**  | **)**      |

 

Theaccompanying notes are an integral part of these Consolidated FinancialStatements

 

F-5

----

 

**Buhrmann NVConsolidated Statements of Group Equityfor the years ended December 31, 2002, 2001 and 2000**

*In millions of euro, except numberof shares**(inthousands)*

 

 
|                                                           |   | **Ordinary Shares**  |   | **Prefe-  rence********Shares A** |   | **Prefe-  rence  Shares C** |   | **Issued and********Paid-in********Capital** |   | **Additional********paid in********capital** |   | **Other********Reserves** |   | **Undistri-  buted profit** |   | **Minority  interest  in group********companies** |   | **Total********group********equity** |   |
|----------------------------------------------------------------|--------|----------------------|--------|-----------------------------------|--------|-----------------------------|--------|----------------------------------------------|--------|----------------------------------------------|--------|---------------------------|--------|-----------------------------|--------|---------------------------------------------------|--------|--------------------------------------|--------|
| **Issued**                                                     |   | **In deposit**       |
|                                                           |   | **Number of shares** |   |                              |   |                        |   |                                         |   |                                         |   |                      |   |                        |   |
| December 31, 1999                                         |   | 96,394               |   | (1,605                            | )      | 53,282                      |   | 35                                           |   | 171                                          |   | 1,194                     |   | 75                          |   | 72                                                |   | 31                                   |   | 1,543 |   |
| Dividend Ordinary Shares 1999                                  |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | (39                                               | )      | —                               |   | (39 | ) |
| Profit appropriation 1999                                      |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 33                          |   | (33                                               | )      | —                               |   | — |   |
| Option exercised                                               |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 16                          |   | —                                            |   | —                               |   | 16 |   |
| Re-issued in connection with exercised option rights           |   | —               |   | 1,094                             |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | —                               |   | — |   |
| Issued shares                                                  |   | 4,100                |   | —                            |   | —                      |   | —                                       |   | 4                                            |   | 153                       |   | (3                          | )      | —                                            |   | —                               |   | 154 |   |
| Issued shares for stock dividend                               |   | 2,050                |   | (19                               | )      | —                      |   | —                                       |   | 2                                            |   | —                    |   | —                      |   | —                                            |   | —                               |   | 2 |   |
| Acquisition/disposal                                           |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | (3                                   | )      | (3 | ) |
| Result 2000                                                    |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | 221                                               |   | —                               |   | 221 |   |
| Dividend  Preference Shares A 2000                             |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | (14                                               | )      | —                               |   | (14 | ) |
| Minority share                                                 |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | 8                                    |   | 8 |   |
| Dividend minority share                                        |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | (2                                   | )      | (2 | ) |
| Translation differences (net of taxes)                         |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 64                          |   | —                                            |   | (2                                   | )      | 62 |   |
| December 31, 2000                                         |   | 102,544              |   | (530                              | )      | 53,282                      |   | 35                                           |   | 177                                          |   | 1,347                     |   | 185                         |   | 207                                               |   | 32                                   |   | 1,948 |   |
| Dividend Ordinary Shares C 2000                                |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   |                        |   | (46                                               | )      | —                               |   | (46 | ) |
| Profit appropriation 2000                                      |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 161                         |   | (161                                              | )      | —                               |   | — |   |
| Option exercised                                               |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 1                           |   | —                                            |   | —                               |   | 1 |   |
| Re-issued in connection with exercised option rights           |   | —               |   | 37                                |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | —                               |   | — |   |
| Redenomination face value shares                               |   | —               |   | —                            |   | —                      |   | —                                       |   | 13                                           |   | (13                       | )      | —                      |   | —                                            |   | —                               |   | — |   |
| Issued shares                                                  |   | 27,600               |   | —                            |   | —                      |   | —                                       |   | 29                                           |   | 659                       |   | (25                         | )      | —                                            |   | —                               |   | 663 |   |
| Issued shares for stock dividend                               |   | 1,691                |   | (16                               | )      | —                      |   | 2                                            |   | 2                                            |   | —                    |   | —                      |   | —                                            |   | —                               |   | 2 |   |
| Purchase  shares                                               |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   |                                              |   | (3                                   | )      | (3 | ) |
| Result 2001                                                    |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | 55                                                |   | —                               |   | 55 |   |
| Dividend Preference Shares A 2001                              |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   |                        |   | (14                                               | )      | —                               |   | (14 | ) |
| Minority share                                                 |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | 9                                    |   | 9 |   |
| Translation differences (net of taxes)                         |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 57                          |   | —                                            |   | (1                                   | )      | 56 |   |
| December 31, 2001                                         |   | 131,835              |   | (509                              | )      | 53,282                      |   | 37                                           |   | 221                                          |   | 1,993                     |   | 379                         |   | 41                                                |   | 37                                   |   | 2,671 |   |
| Reclassification Additional paid-incapital Preference Shares C |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | 42                        |   | (42                         | )      | —                                            |   | —                               |   | — |   |
| Dividend Ordinary Shares 2001                                  |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   |                        |   | (10                                               | )      | —                               |   | (10 | ) |
| Profit appropriation 2001                                      |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 31                          |   | (31                                               | )      | —                               |   | — |   |
| Issued shares                                                  |   | —               |   | —                            |   | —                      |   | —                                       |   | 1                                            |   | (1                        | )      | —                      |   | —                                            |   | —                               |   | — |   |
| Issued shares for stock dividend                               |   | 793                  |   | (6                                | )      | —                      |   | 2                                            |   | —                                       |   | —                    |   | —                      |   | —                                            |   | —                               |   | — |   |
| Purchase  shares                                               |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   |                                              |   | (5                                   | )      | (5 | ) |
| Result 2002                                                    |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | (588                                              | )      | —                               |   | (588 | ) |
| Dividend Preference Shares A 2002                              |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | (11                         | )      | —                                            |   | —                               |   | (11 | ) |
| Dividend Preference Shares C 2002                              |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | (21                         | )      | —                                            |   | —                               |   | (21 | ) |
| Preference Shares C to be issued                               |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | 21                          |   | —                                            |   | —                               |   | 21 |   |
| Minority share                                                 |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | —                      |   | —                                            |   | 12                                   |   | 12 |   |
| Translation differences (net of taxes)                         |   | —               |   | —                            |   | —                      |   | —                                       |   | —                                       |   | —                    |   | (255                        | )      | —                                            |   | (3                                   | )      | (258 | ) |
| December 31, 2002                                         |   | 132,628              |   | (515                              | )      | 53,282                      |   | 39                                           |   | 222                                          |   | 2,034                     |   | 102                         |   | (588                                              | )      | 41                                   |   | 1,811 |   |
|                                                                |        |                      |        |                                   |        |                             |        |                                              |        |                                              |        |                           |        |                             |        |                                                   |        |                                      |        |  |  |  |

 

Dividend on cumulative preference shares A ofEUR 11 million and C of EUR 21 million are included in equityconsidering their cumulative nature.

 

The accompanying notes are an integral part of theseConsolidated Financial Statements

 

F-6

----

 

**BUHRMANN NV**

**Notes to Consolidated FinancialStatements**

 

**1. Business**

 

Buhrmann NV and its subsidiaries (“theCompany”), headquartered in the Netherlands, are engaged in supplying officeproducts and office furniture, distributing paper to the graphic industry andto the office market. The Company also supplies and maintains pre-presssystems, printing presses and folding, cutting and binding machines.

 

Following the sale of the packaging activitiesin 1998, the Company began to concentrate fully on its service and distributionactivities. Consequently a US company in the office product industry, CorporateExpress Inc., was acquired with effect from October 28, 1999.

 

In February 2000 agreement was reached onthe sale of the Information Systems Division. The divestments are furtherdescribed in Note 28.

 

In April 2001, the Company acquired theoffice supplies division of Samas-Groep NV and in May 2001 substantiallyall of the assets of the North American office products business of US OfficeProducts Company (USOP) were acquired. The Samas and USOP acquisitions areincluded in the Consolidated Financial Statements for 2001 as of the respectivedate of acquisition, which has an impact on comparability of, among others,Consolidated Statements of Income and Cash Flows.

 

The Company has activities in the Netherlands,USA, United Kingdom, Germany, Italy, France, Australia, Canada, Austria,Belgium, the Czech Republic, Denmark, Greece, Hungary, Ireland, Luxembourg,Poland, Portugal, Slovakia, Slovenia, South Africa, Spain, Sweden and inseveral countries in Asia.

 

**2. Summary of significant accounting policies**

 

**Basis of presentation**

 

The accompanying Consolidated Financial Statements are presented in euroand are based on the historical cost convention prepared in accordance withaccounting principles generally accepted in the Netherlands (“Dutch GAAP”) and comply with thefinancial reporting requirements included in Part 9, Book 2 of the NetherlandsCivil Code.

 

These standards vary in certain materialrespects from accounting principles generally accepted in the United States(“US GAAP”). See Note 32 for a summary of differences between Dutch GAAP and USGAAP as applicable to Buhrmann NV.

 

These Consolidated Financial Statements differin certain respects from the Consolidated Financial Statements and disclosuresincluded in the Buhrmann NV Annual Report 2002 furnished to Buhrmann’sshareholders. Among other things, the parent company balance sheet and incomestatement and related disclosures are not included in these ConsolidatedFinancial Statements. In addition, certain reclassifications have been made andadditional footnote disclosures have been added in order for these ConsolidatedFinancial Statements to comply with the reporting and disclosure requirementsof the US Securities and Exchange Commission.

 

Unless otherwise stated in the following notes,assets and liabilities are shown at face value.

 

Where necessary, the assets have been reduced byprovisions to reflect permanent diminutions in value.

 

F-7

----

 

**Use of estimates**

 

The Consolidated Financial Statements areprepared in conformity with generally accepted accounting principles in theNetherlands and, accordingly, include amounts that are based on management’sbest estimate and judgments particularly in the areas of impairment andamortization of goodwill and tangible fixed assets, accounting for legalproceedings, deferred taxes, provisions for uncollectable accountsreceivable,  provisions forrestructuring and integration and accounting for pensions.  Actual results could differ from theseestimates.

 

**Consolidation policies**

 

The consolidation of Buhrmann includes BuhrmannNV and the companies in which it can exert a controlling influence on thecommercial and financial policy (Group companies).

 

Group companies are fully consolidated.Minority interests in equity and results of Group companies are shownseparately.

 

Divested businesses that meet the definition ofdiscontinued operation are deconsolidated retrospectively. Divested businessesthat do not meet the definition of discontinued operation are consolidated incontinuing operations until the moment of divestment.

 

The assets and liabilities of foreign Groupcompanies are translated at the rates prevailing at the Balance Sheet date. Theresulting translation differences are recorded directly in shareholders’equity. Translation differences, net of related taxation, arising fromlong-term loans to Group companies which are regarded as permanently invested,are also recorded directly in shareholders’ equity. Profit and loss accounts offoreign Group companies are translated at the average rates for the reportingperiod.

 

The results and cash flows of Group companiesacquired or disposed of by the Group have been reflected from the date ofacquisition or until the date of disposal. This also applies to the results ofparticipations. When Group companies and participations are acquired, the differencebetween the acquisition price and the net asset value is recorded as goodwilland is amortized over the expected economic life with a maximum of forty years.From the date a Group company or participation is divested, the differencebetween the (estimated) realizable value and the net asset value, including thebook value of capitalized goodwill, is included in income.

 

**Presentation**

 

From 2002, cash, deposits, accruals for incometax and interest are no longer included in working capital (see Note 16). Thenet effect on working capital at December 31, 2001 was a decrease ofEUR 95 million.

 

In 2002 and 2001, Buhrmann incurred EUR 113million and EUR 86 million of expenses relating to restructuring measuresand integration of acquisitions which were presented as extraordinary expenses.Under the new Guidelines for Annual Reporting applicable in the Netherlandseffective as of January 1, 2003, these expenses do no longer meet thedefinition of extraordinary but would be classified as exceptional operatingexpenses (see Note 9).

 

F-8

----

 

**Foreigncurrencies**

 

Accounts receivable, cash and deposits andliabilities denominated in foreign currencies are translated at the ratesprevailing at the balance sheet date, unless these are reflected in currencyforward contracts. In such cases, valuation occurs using a currency forwardrate. The resulting translation differences are included in income.

 

The following translation rates against theeuro have been used (main currencies only):

 
| **Currency per********1 euro** |   | **December 31,  2002** |   | **Average  2002** |   | **December 31,  2001** |   | **Average  2001** |   | **December 31,  2000** |   | **Average  2000** |   |
|--------------------------------|--------|-----------------------------|--------|-------------------|--------|-----------------------------|--------|-------------------|--------|-----------------------------|--------|-------------------|--------|
|                           |   |                        |   |              |   |                        |   |              |   |                        |   |              |   |
| AUD                            |   | 1.8556                      |   | 1.7365            |   | 1.7270                      |   | 1.7325            |   | 1.6770                      |   | 1.5893            |   |
|                           |   |                        |   |              |   |                        |   |              |   |                        |   |              |   |
| CAD                            |   | 1.6550                      |   | 1.4828            |   | 1.4077                      |   | 1.3868            |   | 1.3965                      |   | 1.3712            |   |
|                           |   |                        |   |              |   |                        |   |              |   |                        |   |              |   |
| GBP                            |   | 0.6505                      |   | 0.6287            |   | 0.6080                      |   | 0.6218            |   | 0.6241                      |   | 0.6094            |   |
|                           |   |                        |   |              |   |                        |   |              |   |                        |   |              |   |
| USD                            |   | 1.0487                      |   | 0.9448            |   | 0.8813                      |   | 0.8955            |   | 0.9305                      |   | 0.9240            |   |

 

**Policies for****theConsolidated Statement of Income**

 

**Net sales**

Net sales represent the invoiced value, net ofsales tax, of deliveries and services to third parties, less discounts and volume rebates tocustomers and commissions toagents.

 

Sales of services are recognized in the periodin which the services are rendered.

 

The Company has five divisions: Office ProductsNorth America, Office Products Europe, Office Products Australia, PaperMerchanting and Graphic Systems. For reporting purposes, the Office ProductsEurope and Australia Division are combined.

 

The Office Products divisions sell office andcomputer products as well as service contracts related to these products. Thesales of office and computer products are recognized at the point of deliveryas there are no future performance obligations for these items.

 

The sales in the Paper Merchanting Divisioncomprise of paper to printers, publishers and the office market. The sales ofthese products are recognized at the point of delivery to the customer inaccordance with the shipping terms.

 

The Graphic Systems Division sells machines,material and the related services to printers. The sales are recognized whenthe risk of ownership passes to the customer which usually is at the shippingpoint, taking into account any future performance obligations by the Company.

 

**Cost of trade goods sold**

Cost of trade goods sold represents the purchaseprice of trade goods sold, net of rebates, cash discounts received fromsuppliers and net catalogue contributions from suppliers, including duties,insurance and in-bound transportation costs.

 

**Other cost of sales**

Other costs of salesmainly comprise out-bound, third party delivery expenses as well as expensesrelating to  uncollectable accountsreceivable, obsolete inventories and temporary personnel.

 

F-9

----

 

**Added value********Added value is arrived atby subtracting cost of trade goods sold and other cost of sales from net sales.

 

**Advertising costs**

Advertising costs are expensed as incurred.

 

**Research  anddevelopment**

This mainly relates to eCommerce. Costs ofdevelopment are capitalized and included in tangible fixed assets. Costs ofresearch are expensed as incurred and included in labor and other operatingcosts. Costs of research are insignificant.

 

**Environmentalexpenditures**

Environmental expenditures that relate tocurrent operations are expensed as incurred.

 

**Results from participations and other financial results**

These include:

•                  Results of associated companies determined inaccordance with Buhrmann’s accounting policies. For these companies, theproportionate share in the result is shown.

•                  Dividends received from other participations.

•                  Result on the sale of participations.

 

**Taxation**

The amount of tax included in the ConsolidatedStatements of Income is based on pre-tax reported income and calculated atcurrent local tax rates, taking into account timing differences and thelikelihood of realization of deferred tax assets and liabilities, in connectionwith which valuation allowances are recorded.

 

Deferred tax assets and liabilities are providedfor temporary differences in the valuation of assets and liabilities forreporting and fiscal purposes and for loss carryforwards.

 

Deferred taxes are stated at nominal value andare determined using the local tax rates prevailing on the balance sheet date.Within tax groups, where the exercise periods permit, deferred tax assets andliabilities are netted. Resulting deferred tax assets are included in theBalance Sheet under ‘Financial fixed assets’, insofar as realization is morelikely than not. The realizability is dependent upon the generation of futuretaxable income. Resulting deferred tax liabilities are included under‘Provisions’.

 

No withholding taxes are provided for theundistributed earnings of foreign subsidiaries.

 

**Extraordinary income and expense**

Profits and losses that are of a non-recurringnature and that are not directly related to normal business operations aretreated as extraordinary. This includes reorganization expenses of existingoperations, expenses related to the integration of acquired companies that didnot qualify as goodwill and result on the sale of divested companies. From 2003onwards, these expenses will be included in operating result as exceptionalexpenses (see Note 2 under Presentation).

 

F-10

----

 

**Policies for the Consolidated Balance Sheet**

 

**Intangible fixed assets**

Goodwill paid after December 31, 1996 isrecorded under this heading. The period of amortization depends on the expectedeconomic life of goodwill with a maximum of forty years. No other intangiblefixed assets are recognized.

 

At least annually a goodwill impairment test isperformed to determine if a write-off for permanent diminution in value needsto be recorded. Under the impairment test, the fair value is calculated for therelevant entity carrying the goodwill based on discounted future cash flows.The fair value is compared to the book value of the entity, including allocatedgoodwill. In case the fair value is below the book value, the difference willbe charged to income as an impairment.

 

Prior to January 1, 1997 goodwill waswritten off directly to Group equity.

 

**Tangiblefixed assets**Tangible fixed assets are valued at purchase price less the relevant lineardepreciation over its expected average economic life.

 

The depreciation rates are as follows:

 
| Land                  |   | No depreciation |   |
|-----------------------|--------|-----------------|--------|
| Buildings             |   | 3 - 7%          |   |
| Plant and equipment   |   | 5 - 10%         |   |
| E-commerce software   |   | 20-33%          |   |
| Other fixed equipment |   | 10 - 33%        |   |

 

The Company periodically evaluates the carryingvalue of tangible fixed assets to be held and used when events andcircumstances warrant such a review. The carrying value of a tangible fixedasset is considered impaired when the anticipated discounted cash flows fromsuch an asset is less than its carrying value. In that event, a loss isrecognized based on the amount by which the carrying value exceeds thediscounted cash flow value of the tangible fixed asset if the impairment isdeemed to be permanent. The cash flows are for this purpose discounted at arate commensurate with the risk involved. Repairs and maintenance costs areexpensed as incurred.

 

**Financialfixed assets**This item includes:

•             Participations, which consist of associatedcompanies and other companies. Associated companies are participations in whichBuhrmann can exert significant influence on the commercial and financialpolicy. These companies are valued at net equity value. Other companies areinvestments in which Buhrmann is unable to exert influence of significance.These companies are valued at cost price or long-term lower market value.

•             Long-term receivables from participations.

•             Costs related to financing. These costs arecapitalized and amortized based on repayment of the related loans.

•             Deferred taxes insofar as they are long-term innature (see Taxation).

 

F-11

----

 

**Financial instruments**

Carrying amounts of the Company’s cash and cashequivalents, participations, accounts receivable, accounts payable, otherreceivables, other liabilities and bank overdrafts approximate fair value dueto their short term maturities. Information about the fair value of theCompany’s long-term loans is included in Note 20.

 

Gains and losses on derivative financialinstruments, including forward foreign exchange, currency and interest swaps,that meet the criteria for hedge accounting, including those on terminatedcontracts, are deferred and included in income in the same period that thehedged transaction is realized. Realized gains and losses and unrealized losseson derivative financial instruments not meeting the criteria for hedgeaccounting treatment are included in income. Any differences between amountspaid or received on interest rate swap agreements are recognized as adjustmentsto interest expense over the life of each swap, thereby adjusting the interestrate on the hedged obligation. In the event that the hedged transactionterminates, the deferred gains or losses on the associated derivative will berecorded in the Consolidated Statement of Income. Information about theestimated fair value of the Company’s derivative financial instruments isincluded in Note 20. The estimated fair value of derivative financialinstruments is determined using quoted market prices, or market pricing models.

 

**Inventories**Inventories of tradegoods are valued at historic cost which includes the purchase price, net ofvolume related rebates and cash discounts received from suppliers, duties,insurance and in-bound transportation costs. Overhead costs are not included in historic cost due to immateriality.If the market value of trade goods is lower than the historic cost, valuationtakes place at market value. A provision for obsolescence is recorded if deemednecessary.

 

**Accountsreceivable**Accounts receivable arestated atface value less a provision for uncollectability, if deemed necessary.

 

**Cash and cash equivalents**

The Company considers all highly liquidinstruments with a maturity of three months or less to be cash and cashequivalents.

 

**Minority interests**Minority interests inGroup companies are included at net asset value or at market value if theminority interest can be acquired at that value.

 

**Provisions**

The provision for pension relates to insuredand uninsured defined benefit plans, both accrued at actuarial value. Mostdefined benefit plans are insured in separate trusts (pension funds) to whichthe Company makes contributions. An accrual is recorded if additionalcontributions must be committed to meet minimum funding levels ofthese pension plans as defined by local law. The exact amount of the accrualdepends on the level of underfunding and the specific financing arrangements.

 

The provision for deferred taxes is stated atface value of the estimated net liability (see Taxation).

 

Other provisions include integration andreorganization accruals following acquisitions, divestments and restructuringof the business as well as provisions for product warranties.

 

F-12

----

 

**Policies for the Consolidated Statement of Cash Flows**The ConsolidatedStatement of Cash Flow is derived from the Consolidated Statement of Income andother changes between the opening and closing balance sheets in localcurrencies (the indirect method), translated at average exchange rates. Thechanges in provisions include movements in provisions for accounts receivableand inventories.

 

The net cash flow is recorded net of theeffects of acquisitions and divestments on liquid funds or short-term debt tocredit institutions.

 

**3. Significant Acquisitions and Divestments**

 

**Acquisitions**

 

All of the Companies major acquisitions wereaccounted for as purchases with the results of operations of the acquiredcompanies included in the Consolidated Statement of Income from the date ofacquisition. On and after January 1, 1997, goodwill is no longer writtenoff directly to Group equity but is capitalized and amortized over astraight-line basis with a maximum of forty years.

 

The Company’s business was significantlyaffected by the acquisition in October 1999 of Corporate Express, aleading global supplier of office and computer supplies, office furniture,imaging and computer graphic supplies and computer desktop software to largecorporations. The aggregate consideration that the Company paid for all of theoutstanding capital stock of Corporate Express was approximately EUR 2.3billion including assumed debt of approximately EUR 1.2 billion.  The total amount of goodwill paid for thisacquisition was EUR 1,771 million.

 

In May 2000, theCompany acquired ANFA, a Frenchdistributor of office products for an amount of EUR 46 million. Inaddition, the Company made a number of smaller acquisitions in 2000, mainly inthe Paper Merchanting Division. The total amount paid for all acquisitions,other than ANFA was EUR 67 million. The total amount of goodwill paid forthe acquisitions in 2000 was EUR 101 million which is amortized over fortyyears.

 

In April 2001, theoffice supplies division of Samas-Groep NV was acquired for a debt-free priceof EUR 321 million in cash. All of the operations of the Samas office supplies division in theNetherlands, Belgium, Luxembourg, Germany, the United Kingdom and Ireland weretransferred to Buhrmann. More than 90percent of the sales of this division were generated in the Netherlands and theUnited Kingdom. In April 2002, the Company finalized the process ofdetermining the goodwill. The final total amount of goodwill paid for thisacquisition was EUR 290 million, which is amortized in forty years, and isdetermined as follows (in millions of euro):

 

F-13

----

 

| Purchase price                                                               |   | 321    |   |
|------------------------------------------------------------------------------|--------|--------|--------|
| Less cash acquired                                                           |   | (13    | )      |
| Transaction costs                                                            |   | 7      |   |
| Total purchase price                                                         |   | 315    |   |
| Less historical combined net assets, excluding existing goodwill &  cash |   | (50    | )      |
| Excess of total purchase price over historical net assets                    |   | 265    |   |
|                                                                         |   |   |   |
| Integration provisions                                                       |   | 8      |   |
| Fair value adjustments to the historical combined net assets                 |   | 17     |   |
| Goodwill                                                                     |   | 290    |   |
|                                                                         |   |   |   |
| Historical combined net assets:                                              |   |   |   |
| Net Equity                                                                   |   | 63     |   |
| Net Goodwill                                                                 |   | — |   |
| Cash                                                                         |   | (13    | )      |
| Net                                                                          |   | 50     |   |

 

In May 2001,Corporate Express, Inc. acquired from US Office Products Company (USOP) theassets of its North American office products business. USOP offered a full range of office products,including traditional office products, office furniture, computer supplies andaccessories, business forms and software. Thepurchase price for the USOP business was USD 172 million (EUR 193 million)in cash. In May 2002, the Company finalized the process ofdetermining the goodwill. The final total amount of goodwill paid for thisacquisition was USD 151 million (EUR 144 million) which is amortized inforty years, and is determined as follows (inmillions of US dollars):

 

| Purchase price                                                               |   | 172    |   |
|------------------------------------------------------------------------------|--------|--------|--------|
| Less cash acquired                                                           |   | — |   |
| Transaction costs                                                            |   | 15     |   |
| Total purchase price                                                         |   | 187    |   |
| Less historical combined net assets, excluding existing goodwill &  cash |   | (149   | )      |
| Excess of total purchase price over historical net assets                    |   | 38     |   |
|                                                                         |   |   |   |
| Integration provisions                                                       |   | 105    |   |
| Fair value adjustments to the historical combined net assets                 |   | 8      |   |
| Goodwill                                                                     |   | 151    |   |
|                                                                         |   |   |   |
| Historical combined net assets:                                              |   |   |   |
| Net Equity                                                                   |   | 149    |   |
| Net Goodwill                                                                 |   | — |   |
| Cash                                                                         |   | — |   |
| Net                                                                          |   | 149    |   |

 

In addition, the Companymade a number of smaller acquisitions in 2001. The amount paid for allacquisitions in 2001 was EUR 535 million and resulted in EUR 457million of goodwill.

 

In 2002, a number ofsmall acquisitions were made for which a total amount of EUR 10 millionwas paid in 2002. These acquisitions resulted in goodwill of EUR 15million in total.

 

F-14

----

 

**Divestments**

 

In May 2000 the sale of the InformationSystems Division was completed. For details see Note 28.

 

A precondition forapproval of the European Commission of the acquisition of the Samas officesupplies division was the sale of the office products division of Buhrmann’ssubsidiary Corporate Express Nederland BV. This sale was effected inNovember 2001 at a debt-free price of EUR 22 million in cash.

 

In June 2001,Buhrmann sold its Italian ict-reseller, NPO Sistemi S.p.A. based in Milan, tothe company’s management at a debt-free price of EUR 30 million in cash.This transaction resulted in a loss of EUR 3 million.

 

In 2002, there were no major divestments.

 

**Pro-forma summary**

 

The following unaudited pro forma summarypresents the consolidated results of operations of the Group as if the Samasand USOP acquisitions had occurred at January 1 of the respective years, for each acquisition separately, andincludes the consequences of financing. The expensesrelating to the integration of the office supplies divisions of USOP and Samasof EUR 41 million that were recorded in 2001 as extraordinary expenseshave also been included in the pro forma results for 2000 as extraordinaryexpenses, for each acquisition separately. Synergy benefits have notbeen included. This pro forma summary does not necessarily reflect the resultsof operations as they would have been if the acquisition had been completed asof the beginning of the periods and is not necessarily indicative of futureresults (in millions of euro).

 

| **Buhrmann + Samas**                                             |   | **2001** |       | **2000** |       |
|------------------------------------------------------------------|--------|----------|------------|----------|------------|
|                                                             |   |     | ** ** |     | ** ** |
| Net sales                                                        |   | 10,516   |       | 9,972    |       |
| Net result from continuing operations before extraordinary items |   | 99       |       | 217      |       |
| Discontinued operations                                          |   | —   |       | (3       | )          |
| Extraordinary result from continuing operations                  |   | (40      | )          | (3       | )          |
| Net result                                                       |   | 59       |       | 211      |       |

 

| **Buhrmann + USOP**                                              |   | **2001** |       | **2000** |       |
|------------------------------------------------------------------|--------|----------|------------|----------|------------|
|                                                             |   |     | ** ** |     | ** ** |
| Net sales                                                        |   | 10,890   |       | 10,804   |       |
| Net result from continuing operations before extraordinary items |   | 94       |       | 211      |       |
| Discontinued operations                                          |   | —   |       | (3       | )          |
| Extraordinary result from continuing operations                  |   | (40      | )          | (1       | )          |
| Net result                                                       |   | 54       |       | 207      |       |

 

F-15

----

 

**Notes to theConsolidated Statements of Income**

 

in millions of euro, unless stated otherwise

 

**4. Labor costs**

 
|                                                                                                                                                                                                                    |   | **2002**   |       | **2001**   |       | **2000**   |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------|------------|------------|------------|------------|------------|
|                                                                                                                                                                                                                    |   |       |       |       |       |       |       |
| Wages and salaries                                                                                                                                                                                                      |   | (1,113     | )          | (1,181     | )          | (1,064     | )          |
| Social security contributions                                                                                                                                                                                           |   | (188       | )          | (182       | )          | (162       | )          |
| Pension schemes                                                                                                                                                                                                         |   | (29        | )          | (27        | )          | (20        | )          |
| **Total**                                                                                                                                                                                                               |   | **(1,330** | **)**      | **(1,390** | **)**      | **(1,246** | **)**      |
| Pension schemes include defined contribution  plans (EUR 18 million in 2002 and 2001 and EUR 14 million in 2000) and  defined benefit plans (EUR 11 million in 2002, EUR 9 million in 2001 and EUR  6 million in 2000). |   |       |       |       |       |       |       |
| **Average  number of employees**                                                                                                                                                                                        |   | **25,984** | ** ** | **27,443** | ** ** | **25,782** | ** ** |
|                                                                                                                                                                                                                    |   |       |       |       |       |       |       |
| **Number of employees per division at year end**                                                                                                                                                                        |   |       |       |       |       |       |       |
| Office Products North America                                                                                                                                                                                           |   | 12,211     |       | 14,240     |       | 13,262     |       |
| Office Products Europe and Australia                                                                                                                                                                                    |   | 6,023      |       | 6,228      |       | 6,100      |       |
| Paper Merchanting                                                                                                                                                                                                       |   | 5,411      |       | 5,519      |       | 5,666      |       |
| Graphic Systems                                                                                                                                                                                                         |   | 1,139      |       | 1,176      |       | 1,198      |       |
| Holdings                                                                                                                                                                                                                |   | 74         |       | 72         |       | 70         |       |
| **Total**                                                                                                                                                                                                               |   | **24,858** | ** ** | **27,235** | ** ** | **26,296** | ** ** |
|                                                                                                                                                                                                                    |   |       |       |       |       |       |       |
| **Number of employees per geographical region at year  end**                                                                                                                                                            |   |       |       |       |       |       |       |
|                                                                                                                                                                                                                    |   |       |       |       |       |       |       |
| United States                                                                                                                                                                                                           |   | 11,517     |       | 13,496     |       | 12,412     |       |
| United Kingdom                                                                                                                                                                                                          |   | 2,161      |       | 2,458      |       | 2,294      |       |
| The Netherlands                                                                                                                                                                                                         |   | 2,373      |       | 2,490      |       | 2,560      |       |
| Rest of EMU members                                                                                                                                                                                                     |   | 5,158      |       | 5,220      |       | 5,526      |       |
| Rest of Europe                                                                                                                                                                                                          |   | 953        |       | 990        |       | 1,056      |       |
| Rest of the World                                                                                                                                                                                                       |   | 2,696      |       | 2,581      |       | 2,448      |       |
| **Total**                                                                                                                                                                                                               |   | **24,858** | ** ** | **27,235** | ** ** | **26,296** | ** ** |

 

F-16

----

 

**5. Other operating costs**

 
|                       |   | **2002** |   | **2001** |   | **2000** |   |
|----------------------------|--------|----------|--------|----------|--------|----------|--------|
|                       |   |     |   |     |   |     |   |
| Rent and maintenance costs |   | (140     | )      | (144     | )      | (134     | )      |
| General management costs   |   | (209     | )      | (221     | )      | (188     | )      |
| Other operating costs      |   | (124     | )      | (127     | )      | (120     | )      |
| Other operating income     |   | 6        |   | 3        |   | 6        |   |
| **Total**                  |   | **(467** | **)**  | **(489** | **)**  | **(436** | **)**  |

 

Advertising costs (net) during the years endedDecember 31, 2002, 2001 and 2000 were EUR 18 million, EUR 18million and EUR 20 million respectively.

 

**6. Net financing costs**

 
|                                        |   | **2002** |   | **2001** |   | **2000** |   |
|---------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                        |   |     |   |     |   |     |   |
| Interest charges                            |   | (182     | )      | (195     | )      | (207     | )      |
| Amortization of capitalized financing costs |   | (22      | )      | (16      | )      | (14      | )      |
| Translation differences                     |   | 5        |   | 1        |   | —   |   |
| **Total**                                   |   | **(199** | **)**  | **(210** | **)**  | **(221** | **)**  |

 

**7. Results from participations and other financial results**

Results fromparticipations and other financial results in 2002 comprise the share in theresult of a 25%participation in an Italian paper merchant of EUR 3 million and therelease of EUR 13 million of a provision for uncollectability of loan notes. The loannotes were early redeemed in 2002 (see Note 28). In 2001, results from participations and other financialresults comprise the result of the office products division of CorporateExpress Nederland BV (Zwolle) from April to when it was sold in November. In 2000 this item mainly comprise the dividend from Sappi Limitedin which Buhrmann had an interest until it was sold in February 2001.

 

F-17

----

 

**8. Incometaxes**

 

Buhrmann’s international operations are subjectto income taxes of different jurisdictions with varying statutory tax rates.

 

Buhrmann’s effective tax rate was 12.2% in 2002,compared to 11.8% in 2001. The effective tax rate is determined based on theratio of taxes on result from continuing operations to the amount of resultfrom continuing operations before amortization and impairment of goodwill asamortization and impairment of goodwill are not tax deductable. For reportingpurposes, total tax as per Consolidated Statement of Income has been allocatedbetween the Netherlands and abroad.

 
| **Result from continuing operations  before amortization  of goodwill and taxes:** |   | **2002** |       | **2001** |       | **2000** |       |
|------------------------------------------------------------------------------------|--------|----------|------------|----------|------------|----------|------------|
|                                                                               |   |     |       |     |       |     |       |
| Ordinary activities:                                                               |   |     |       |     |       |     |       |
| Netherlands                                                                        |   | 86       |       | 108      |       | 80       |       |
| Foreign                                                                            |   | 57       |       | 90       |       | 245      |       |
|                                                                               |   | 143      |       | 198      |       | 325      |       |
| Extraordinary items:                                                               |   |     |       |     |       |     |       |
| Netherlands                                                                        |   | 5        |       | 12       |       | 17       |       |
| Foreign                                                                            |   | (108     | )          | (78      | )          | —   |       |
|                                                                               |   | (103     | )          | (66      | )          | 17       |       |
|                                                                               |   |     |       |     |       |     |       |
| Total                                                                              |   | 40       |       | 132      |       | 342      |       |
|                                                                               |   |     | ** ** |     | ** ** |     | ** ** |
| **Income  taxes on:**                                                              |   |     |       |     |       |     |       |
|                                                                               |   |     |       |     |       |     |       |
| Result from ordinary activities:                                                   |   |     |       |     |       |     |       |
| Netherlands                                                                        |   | (16      | )          | (33      | )          | (3       | )          |
| Foreign                                                                            |   | (2       | )          | 9        |       | (52      | )          |
|                                                                               |   | (18      | )          | (24      | )          | (55      | )          |
|                                                                               |   |     |       |     |       |     |       |
| Result from extraordinary items:                                                   |   |     |       |     |       |     |       |
| Netherlands                                                                        |   | 1        |       | 1        |       | (7       | )          |
| Foreign                                                                            |   | 28       |       | 25       |       | —   |       |
|                                                                               |   | 29       |       | 26       |       | (7       | )          |
|                                                                               |   |     |       |     |       |     |       |
| Total                                                                              |   | 11       |       | 2        |       | (62      | )          |
|                                                                               |   |     |       |     |       |     |       |
| Current                                                                            |   | (26      | )          | (17      | )          | (37      | )          |
| Deferred                                                                           |   | 37       |       | 19       |       | (25      | )          |
| Total income taxes                                                                 |   | 11       |       | 2        |       | (62      | )          |

 

There were no benefits recognized in 2002 fromthe release of valuation allowances on deferred tax assets for operating losscarry-forward.

 

F-18

----

 

A reconciliation fromBuhrmann’s Dutch statutory tax rate to its weighted average statutory tax rateand effective tax rate isas follows:

 
|                                                                   |   | **2002** |   | **2001** |   | **2000** |   |
|------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                                                   |   |     |   |     |   |     |   |
| Statutory tax rate in the Netherlands                                  |   | 34.5     | %      | 35.0     | %      | 35.0     | %      |
| Tax rate differential resulting from geographical mix *                |   | (8.9     | )%     | (8.8     | )%     | (1.8     | )%     |
| Weighted average statutory tax rate                                    |   | 25.6     | %      | 26.2     | %      | 33.2     | %      |
| Changes in deferred tax assets and allowances                          |   | (5.3     | )%     | (6.6     | )%     | (10.9    | )%     |
| Other (including exempt income, non-deductibleexpenses and incentives) |   | (8.1     | )%     | (7.8     | )%     | (5.4     | )%     |
| **Effective  tax rate**                                                |   | 12.2     | %      | 11.8     | %      | 16.9     | %      |

 

----

*  in a numberof countries respectively tax units, specific tax loss carry-forwards are keptwhich have not been valued, often due to the specific circumstances under which they can be utilized .

 

**9. Extraordinary result from continuing operations**

 
|                            |   | **2002** |   | **2001** |   | **2000** |   |
|---------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                            |   |     |   |     |   |     |   |
| Extraordinary income            |   | 10       |   | 20       |   | 31       |   |
| Extraordinary expense           |   | (113     | )      | (86      | )      | (11      | )      |
| Extraordinary result before tax |   | (103     | )      | (66      | )      | 20       |   |
| Taxes                           |   | 29       |   | 26       |   | (7       | )      |
| Extraordinary result net        |   | (74      | )      | (40      | )      | 13       |   |

 

Extraordinary income in 2002 of EUR 10 million consists of arelease of a provision for warranties relating to divested companies which weresettled in 2002. Extraordinary expense in 2002 of EUR 113 million includesa charge of EUR 111 million relating to both restructuring measures ofEUR 60 million and non-cash write-offs on IT, distribution infrastructureand some other assets of EUR 51 million. Additional information about therestructuring measures is included in Note 18.

 

In 2001, Buhrmann soldits remaining interest in Sappi Limited. After the settlement of hedging andother transaction costs, this resulted in a positive cash flow of EUR 75million and extraordinary income of EUR 20 million. The extraordinaryexpense in 2001 of EUR 86 million consists of expenses relating to costreduction measures, including a reduction in the workforce, of EUR 45million and EUR 41 million for expenses relating to the integration of theoffice supplies divisions of USOP and Samas that did not qualify as goodwilland for certain expenses relating to the sale of Corporate Express NederlandBV.

 

Extraordinary income in 2000 of EUR 31million related to a repayment from the Buhrmann pension fund in theNetherlands. Extraordinary expense in 2000 was the result of divestments ofnon-core activities.

 

F-19

----

 

**10.Remuneration and loans Members of the Executive Board and Supervisory Board**

 

**Remuneration of Members of theExecutive Board (in thousands of euro):**

 
|               |   | **Salary** |   | **Bonus** |   | **Pension charges** |   |
|--------------------|--------|------------|--------|-----------|--------|---------------------|--------|
|               |   | **2002**   |   | **2001**  |   | **2002**            |   | **2001** |   | **2002** |   | **2001** |   |
|               |   |       |   |      |   |                |   |   |   |   |   |   |   |
| F.H.J. Koffrie     |   | 545        |   | 545       |   | —              |   | — |   | 169 |   | 171 |   |
| R.W.A. de Becker * |   | 212        |   | —    |   | —              |   | — |   | 247 |   | — |   |
| G. Dean            |   | 408        |   | 408       |   | —              |   | — |   | 258 |   | 265 |   |
| M.S. Hoffman *     |   | 423        |   | —    |   | —              |   | — |   | 19 |   | — |   |
| R.L. King**        |   | —     |   | 699       |   | —              |   | — |   | — |   | 6 |   |
| F.F. Waller        |   | 295        |   | 295       |   | —              |   | — |   | 103 |   | 103 |   |
| Total              |   | 1,883      |   | 1,947     |   | —              |   | — |   | 796 |   | 545 |   |

 

----

*  Mr de Beckerand Mr Hoffman were appointed on May 2, 2002

**  MrKing retired from the Executive Board on October 8, 2001

 

The remuneration reported relates to the periodof membership of the Executive Board.

 

Compensation (including bonuses) for theExecutive Board is determined by the Supervisory Board (as advised by theCompensation, Nomination and Corporate Governance Committee). Bonuses areawarded for performance against financial targets of which the internal annualbudget is the most relevant. For Messrs. Koffrie and Waller, the performance ofthe total Buhrmann Group is the determining factor, while for Messrs. de Beckerand Dean 50% of the bonus calculation is related to Group targets and 50% tothe respective division targets. The bonus of Mr. Hoffman entirely relates tothe performance of Buhrmann’s North American Office Products business. Sinceover 2002 the various targets were not achieved, no bonuses were awarded.

 

The Members of the Executive Board have pension plansfor retirement at the age of 65. These pension plans  are defined contribution plans. In addition, Dutch Members of theExecutive Board participate in an early retirement plan which gives them theright to retire at the age of 60. The Company has not insured the earlyretirement plan. Pension premiums in the compensation table represent pensionpremiums paid for the defined contribution pension plans and the annual chargeto net result relating to the liability in the Company’s balance sheetregarding the early retirement plan.

 

Inaddition, North American based executives, including Mr. Hoffman, participatein a long-term incentive scheme designed specifically for the Office ProductsNorth America Division. Under this incentive arrangement, Mr. Hoffman can earnonce every three years a bonus of maximum 2.5 times his annual base salarysubject to achievement of his performance conditions. In respect of  the three year period 2000 to 2002, a bonusof USD 1,093,700 was paid to Mr. Hoffman in 2003, of which USD 493,700 wasaccrued at December 31, 2002. This bonus is not included in thecompensation table above.

 

F-20

----

 

Loans totaling EUR 162 thousand (2001:EUR 79 thousand) were extended to Members of the ExecutiveBoard at the end of2002. These loans are repaid over a period of five years. They have beengranted by the Company within the context of the Buhrmann option plan and serveto finance the upfront Dutch income tax which is due by the optionees on thebasis of the option grant. Specification (in thousands of euro):

 
|            |   | **Principal** |   | **Interest** |   | **Outstanding  as at Decem-********ber 31, 2001** |       | **Extended  in 2002** |       | **Repaid  in 2002** |       | **Outstanding  as at  Decem-  ber 31, 2002** |       |
|-----------------|--------|---------------|--------|--------------|--------|--------------------------------------------------------|------------|-----------------------|------------|---------------------|------------|---------------------------------------------------|------------|
| F.H.J. Koffrie: |   |          |   |         |   |                                                   |       |                  |       |                |       |                                              |       |
| 1997            |   | 80            |   | 4.60         | %      | 7                                                      |       | —                |       | 7                   |       | —                                            |       |
| 1999            |   | 46            |   | 4.00         | %      | 23                                                     |       | —                |       | 9                   |       | 14                                                |       |
| 2000            |   | 25            |   | 5.00         | %      | 18                                                     |       | —                |       | 5                   |       | 13                                                |       |
| 2001            |   | 16            |   | 5.25         | %      | 15                                                     |       | —                |       | 3                   |       | 12                                                |       |
| 2002            |   | 78            |   | 5.25         | %      | —                                                 |       | 78                    |       | 6                   |       | 72                                                |       |
|            |   |          |   |         |   | 63                                                     |       | 78                    |       | 30                  |       | 111                                               |       |
|            |   |          |   |         |   |                                                   |       |                  |       |                |       |                                              |       |
| F.F. Waller:    |   |          |   |         |   |                                                   |       |                  |       |                |       |                                              |       |
| 2000            |   | 13            |   | 5.00         | %      | 9                                                      |       | —                |       | 3                   |       | 6                                                 |       |
| 2001            |   | 8             |   | 5.25         | %      | 7                                                      |       | —                |       | 1                   |       | 6                                                 |       |
| 2002            |   | 43            |   | 5.25         | %      | —                                                 |       | 43                    |       | 4                   |       | 39                                                |       |
|            |   |          |   |         |   | 16                                                     |       | 43                    |       | 8                   |       | 51                                                |       |
|            |   |          |   |         |   |                                                   |       |                  |       |                |       |                                              |       |
| **Total**       |   |          |   |         |   | **79**                                                 | ** ** | **121**               | ** ** | **38**              | ** ** | **162**                                           | ** ** |

 

Information about the option rights andshareholdings held by the Members of the Executive Board is included in Note23.

 

**Remunerationof Members of the Supervisory Board**

 

Remuneration to Members of the Supervisory Board amounted toEUR 257 thousand (2001: EUR 270 thousand). The remuneration ofMembers of the Supervisory Board is not dependent upon Buhrmann’s result.Specification (in thousands of euro):

 
|              |   | **2002** |       | **2001** |       |
|-------------------|--------|----------|------------|----------|------------|
| P.C. van den Hoek |   | 58       | (1)(2)     | 55       | (2)        |
| A.G. Jacobs       |   | 43       | (1)(2)     | 41       | (2)        |
| R.C. Gay          |   | 28       |       | 28       |       |
| K. de Kluis (3)   |   | 10       | (2)        | 30       | (2)        |
| J. Peelen         |   | 30       | (2)        | 28       |       |
| A.P. Ressler      |   | 28       |       | 28       |       |
| G.H. Smit         |   | 30       | (2)        | 30       | (2)        |
| R. Zwartendijk    |   | 30       | (2)        | 30       | (2)        |
| **Total**         |   | **257**  | ** ** | **270**  | ** ** |

 

----

(1) including (pro rata)remuneration received as member of the Supervisory Board of Buhrmann NederlandHolding B.V.

 

(2) including remunerationof the Audit Committee and the Compensation,Nominating and Corporate Governance Committee membership.

 

(3) Mr de Kluis retiredfrom the Supervisory Board on May 2, 2002.

 

F-21

----

 

Information about the shareholdings held by theMembers of the Supervisory Board is included in Note 23.

 

F-22

----

 

**11. Earnings per share**

 

Basic earnings per share are computed bydividing result after deduction of dividend on Preference Shares by theweighted average number of Ordinary Shares outstanding for the periods underreview. Dividends paid to holders of Preference Shares A and C of EUR 32million, EUR 34 million and EUR 33 million in 2002, 2001 and 2000respectively, were deducted for the years presented. Fully diluted earnings pershare assume that any dilutive convertible securities were converted at thebeginning of each year and all options outstanding at the end of the year wereexercised, insofar as the average marketprice was higher than the averageexercise price during the financial year of all outstanding options combined.

 

The computation of basic and fully dilutedearnings per Ordinary Share is as follows (in millions of euro, except per sharedata): 

 
|                                                                                                                                                                     |   | **2002** |   | **2001** |   | **2000** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **Computation basic earnings per share**                                                                                                                                 |   |     |   |     |   |     |   |
| Net result                                                                                                                                                               |   | (588     | )      | 55       |   | 221      |   |
| Less dividends on Preference Shares A and C                                                                                                                              |   | (32      | )      | (34      | )      | (33      | )      |
| Net result after deduction of dividend on Preference  Shares                                                                                                             |   | (620     | )      | 21       |   | 188      |   |
| Discontinued operations                                                                                                                                                  |   | —   |   | —   |   | 3        |   |
| Extraordinary result from continuing operations                                                                                                                          |   | 74       |   | 40       |   | (13      | )      |
| Result from continuing operations before  extraordinary items after deduction of dividend on Preference Shares                                                           |   | (546     | )      | 61       |   | 178      |   |
| Amortization and impairment of goodwill                                                                                                                                  |   | 643      |   | 67       |   | 55       |   |
| Result from continuing operations before  extraordinary items and amortization and impairment of goodwill and after  deduction of dividend on Preference Shares          |   | 97       |   | 128      |   | 233      |   |
|                                                                                                                                                                     |   |     |   |     |   |     |   |
| Weighted average number of Ordinary Shares  outstanding (thousands)                                                                                                      |   | 131,818  |   | 123,760  |   | 98,790   |   |
|                                                                                                                                                                     |   |     |   |     |   |     |   |
| **Basic earnings per share**                                                                                                                                             |   |     |   |     |   |     |   |
| Result from continuing operations before  extraordinary items and amortization and impairment of goodwill                                                                |   | 0.74     |   | 1.03     |   | 2.35     |   |
| Result from continuing operations before  extraordinary items after amortization and impairment of goodwill                                                              |   | (4.14    | )      | 0.49     |   | 1.80     |   |
| Net result                                                                                                                                                               |   | (4.70    | )      | 0.17     |   | 1.90     |   |
|                                                                                                                                                                     |   |     |   |     |   |     |   |
| **Computation fully diluted earnings per share**                                                                                                                         |   |     |   |     |   |     |   |
| Net result                                                                                                                                                               |   | (588     | )      | 55       |   | 221      |   |
| Less dividend on Preference Shares A                                                                                                                                     |   | (11      | )      | (14      | )      | (14      | )      |
| Net result after deduction of dividend on  Preference Shares after assuming dilution                                                                                     |   | (599     | )      | 41       |   | 207      |   |
| Discontinued operations                                                                                                                                                  |   | —   |   | —   |   | 3        |   |
| Extraordinary result from continuing operations                                                                                                                          |   | 74       |   | 40       |   | (13      | )      |
| Result from continuing operations before  extraordinary items and after deduction of dividend on Preference Shares  after assuming dilution                              |   | (525     | )      | 81       |   | 197      |   |
| Amortization and impairment of goodwill                                                                                                                                  |   | 643      |   | 67       |   | 55       |   |
| Result from continuing operations before  extraordinary items and amortization of goodwill and after deduction of  dividend on Preference Shares after assuming dilution |   | 118      |   | 148      |   | 252      |   |

 

F-23

----

 
|                                                                                                       |   | **2002** |   | **2001** |   | **2000** |   |
|------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Computation weighted average number of Ordinary  Shares outstanding on fully diluted basis (in thousands): |   |     |   |     |   |     |   |
| Weighted average number of Ordinary Shares  outstanding                                                    |   | 131,818  |   | 123,760  |   | 98,790   |   |
| Conversion of Preference Shares C                                                                          |   | 23,157   |   | 21,893   |   | 20,403   |   |
| Exercise of option rights                                                                                  |   | 0        |   | 0        |   | 424      |   |
|                                                                                                       |   | 154,975  |   | 145,653  |   | 119,617  |   |

 
| **Fully diluted earnings per share *  (in euro)**                                                           |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Result from continuing operations before  extraordinary items and amortization and impairment of goodwill   |   | 0.74   |   | 1.02   |   | 2.10   |   |
| Result from continuing operations before  extraordinary items after amortization and impairment of goodwill |   | (4.14  | )      | 0.49   |   | 1.64   |   |
| Net result                                                                                                  |   | (4.70  | )      | 0.17   |   | 1.72   |   |

 

----

* A mathematicalcalculation of result from continuing operations before extraordinary items and amortizationand impairment of goodwill per Ordinary Share on fully diluted basis would beEUR 0.76 for 2002. Result from continuing operations before extraordinary items afteramortization and impairment of goodwill per Ordinary Share on fully diluted basis wouldbe EUR 3.39 negative for 2002 (EUR 0.56 for 2001). Net result perOrdinary Share on fully diluted basis would be EUR 3.87 negative(EUR 0.28 for 2001). Under Dutch accounting guidelines, in case fullydiluted earnings per share figures are higher than basic earnings per sharefigures, fully diluted earnings per share figures should be adjusted downwardsto basic earning per share figures.

 

Result from continuing operations beforeextraordinary items and amortization and impairment of goodwill is statedbecause management believes it is a useful indicator of performance of theCompany. Result from continuing operations before extraordinary items andamortization and impairment of goodwill should not be considered as asubstitute for operating income, net income, cash flow or other statements ofoperations or cash flow computed in accordance with Dutch GAAP or as a measureof the Company’s result of operations or liquidity.

 

F-24

----

 

**Notes to the Consolidated Balance Sheet**

in millions of euro, unless stated otherwise

 

**12. Intangible fixed assets**

This consists of goodwill. The movements are asfollows:

 
|                              |   | **2002**  |       | **2001**  |       | **2000**  |       |
|-----------------------------------|--------|-----------|------------|-----------|------------|-----------|------------|
|                              |   |      |       |      |       |      |       |
| *Book value at beginning of year* |   | 2,684     |       | 2,195     |       | 1,883     |       |
|                              |   |      |       |      |       |      |       |
| Acquisition/disposal              |   | 37        |       | 457       |       | 252       |       |
| Amortization                      |   | (70       | )          | (67       | )          | (55       | )          |
| Impairment                        |   | (573      | )          | —    |       | —    |       |
| Translation differences           |   | (290      | )          | 99        |       | 115       |       |
| **Book value at end of year**     |   | **1,788** | ** ** | **2,684** | ** ** | **2,195** | ** ** |

 

Acquisition/disposal in 2002 includes the adjustments on goodwill relating tothe acquisition in 2001 of the office supplies division of Samas and the NorthAmerican office products activities of US Office Products (see Note 3) andgoodwill related to acquisitions in Australia in 2002. The goodwill paid forcompanies acquired is (generally) amortized over a period of 40 years. Theassessment of the economic life is based on the consideration that a permanentadvantage is being realized. This is based on the following characteristics ofthe business:

 

• The high entry barriersand sales and information technology to acquire a major position in the relevant markets. Thisis explained by a combination of high customer loyalty, the extensiveness ofthe distribution network and the substantial benefits of scale in purchasing;

• The relatively low investment required tosubsequently maintain established market positions;

• The large number of suppliers and customers,none of whom individually has a major impact on Buhrmann.

 

At least annually a goodwill impairment test isperformed to determine if a write-off for permanent diminution in value needsto be recorded. Under the impairment test, the fair value is calculated basedon discounted future cash flows, which is compared to the book value, includinggoodwill. A reduced level of profitability in 2002 and reduced visibilityconcerning future performance resulting in a higher cost of capital, caused adecline in the calculated fair value of our businesses. As the fair value ofthe relevant businesses was lower than the book value, an impairment ofgoodwill in the amount of EUR 573 million in total was recognized (OfficeProducts North America EUR 423 million, Office Products EuropeEUR 124 million and Paper Merchanting EUR 26 million).

 

F-25

----

 

**13. Tangible fixed assets**

** **

The movements in tangiblefixed assets are as follows:

 
|                                  |   | **Total** |       | **land and  buildings** |       | **Plant and  machinery** |       | **Other fixed  assets** |       | **Fixed assets  in process** |       |
|---------------------------------------|--------|-----------|------------|-------------------------|------------|--------------------------|------------|-------------------------|------------|------------------------------|------------|
|                                  |   |      |       |                    |       |                     |       |                    |       |                         |       |
| *Book value December 31, 2001*   |   | 713       |       | 296                     |       | 142                      |       | 194                     |       | 81                           |       |
|                                  |   |      |       |                    |       |                     |       |                    |       |                         |       |
| Net investments                       |   | 107       |       | 5                       |       | 23                       |       | 109                     |       | (30                          | )          |
| Depreciation                          |   | (114      | )          | (15                     | )          | (31                      | )          | (68                     | )          | —                       |       |
| Permanent value adjustments           |   | (45       | )          | (4                      | )          | —                   |       | (15                     | )          | (26                          | )          |
| Transfer                              |   | —    |       | 4                       |       | —                   |       | (4                      | )          | —                       |       |
| Reclassification                      |   | —    |       | (13                     | )          | (11                      | )          | 33                      |       | (9                           | )          |
| Translation differences               |   | (69       | )          | (24                     | )          | (15                      | )          | (23                     | )          | (7                           | )          |
| **Book value December 31, 2002** |   | **592**   | ** ** | **249**                 | ** ** | **108**                  | ** ** | **226**                 | ** ** | **9**                        | ** ** |
|                                  |   |      |       |                    |       |                     |       |                    |       |                         |       |
| Cumulative depreciation               |   | 659       |       | 143                     |       | 198                      |       | 318                     |       | —                       |       |
| Historic cost                         |   | 1,251     |       | 392                     |       | 306                      |       | 544                     |       | 9                            |       |

 

Permanent value adjustments includes write-offsof redundant IT investments and distribution facilities in the United Statesand Europe (see Note 9).

 

The reclassification was not recorded inBuhrmann’s Annual Report 2002 and relates to software.

 

Depreciation cost in 2001 was EUR 109million  and in 2000 EUR 113million. Depreciation cost in 2001 includes a reduction of EUR 5 millionin connection with a reassesment of the useful lives of some tangible fixedassets.

 

**14. Financial fixed assets**

** **

The movements infinancial fixed assets are as follows:

 
|                                                    |   | **Total** |       | **Partici-  pations** |       | **Other  receivables** |       | **Capitalized  Financing  costs** |       | **Deferred  taxes** |       |
|---------------------------------------------------------|--------|-----------|------------|-----------------------|------------|------------------------|------------|-----------------------------------|------------|---------------------|------------|
|                                                    |   |      |       |                  |       |                   |       |                              |       |                |       |
| *Book value December 31, 2001*                     |   | 635       |       | 15                    |       | 99                     |       | 103                               |       | 418                 |       |
|                                                    |   |      |       |                  |       |                   |       |                              |       |                |       |
| Result from participations and other financial  results |   | 16        |       | 3                     |       | 13                     |       | —                            |       | —              |       |
| Consolidation/deconsolidation                           |   | (1        | )          | (2                    | )          | 1                      |       | —                            |       | —              |       |
| Investments/capitalized costs                           |   | 15        |       | 2                     |       | —                 |       | 13                                |       | —              |       |
| Early redemption                                        |   | (76       | )          | —                |       | (76                    | )          | —                            |       | —              |       |
| Transfers deferred tax liabilities                      |   | (51       | )          | —                |       | —                 |       | —                            |       | (51                 | )          |
| Transfer to short-term                                  |   | (2        | )          | —                |       | —                 |       | —                            |       | (2                  | )          |
| Tax receipt                                             |   | (6        | )          | —                |       | —                 |       | —                            |       | (6                  | )          |
| Amortization of financing costs                         |   | (22       | )          | —                |       | —                 |       | (22                               | )          | —              |       |
| Addition in benefit of result                           |   | 53        |       | —                |       | 2                      |       | —                            |       | 51                  |       |
| Translation differences                                 |   | (80       | )          | —                |       | (1                     | )          | (14                               | )          | (65                 | )          |
| **Book value December 31, 2002**                   |   | **481**   | ** ** | **18**                | ** ** | **38**                 | ** ** | **80**                            | ** ** | **345**             | ** ** |

 

Other receivables per December 31, 2001includes loan notes, which were received as part of the consideration of thesale by Buhrmann of its Information Systems Division in 2000 (see Note 28). InMay 2002 these

 

F-26

----

 

loan notes were redeemed early at nominal valueresulting in the release of a provision for uncollectability. The balance perDecember 31, 2002 mainly comprises capitalized fees related to legalproceedings (see Note 25) and some remaining long-term receivables resultingfrom acquisitions and divestments.

 

During 2002, EUR 13 million of financingfees were capitalized. These fees are related to the trade receivablessecuritization program and amendments to the Senior Secured Credit Facility (see Note 20).  As a result of early repayments of long-termdebt, a pro rata write-off of capitalized financing fees of EUR 6 millionwas recorded in net financing costs.

 

Deferred tax assets are detailed in Note 19.

 

**15. Receivables**

 
|                                |   | **December 31, 2002** |   | **December 31, 2001** |       |
|-------------------------------------|--------|----------------------------|--------|----------------------------|------------|
|                                |   |                       |   |                       | ** ** |   |   |   | ** ** |
| *Accounts   receivable*        |   |                       |   | 1,507                      |       |   |   | 1,826 |   |
|                                |   |                       |   |                       |       |   |   |   |   |
| *Other receivables*                 |   |                       |   |                       |       |   |   |   |   |
| Accrued income                      |   | 199                        |   |                       |       | 272 |   |   |   |
| Receivables working capital related |   | 96                         |   |                       |       | 108 |   |   |   |
| Receivables non-working capital     |   | 26                         |   |                       |       | 24 |   |   |   |
|                                |   |                       |   | 321                        |       |   |   | 404 |   |
| **Total receivables**               |   |                       |   | **1,828**                  | ** ** |   |   | **2,230** | ** ** |

 

Of the total receivables of EUR 1,828million, an amount of EUR 1 million will mature after more than one year(2001: EUR 3 million).

 

As per December 31, 2002, accountsreceivable of EUR 563 million were pledged under the accounts receivablesecuritization program (2001 EUR 452 million). These receivables andrelated borrowings are included in the Consolidated Balance Sheet (seeNote 20).

 

Accrued income consists mainly of accruedsupplier rebates and catalogue income.

 

The movements in the allowance for doubtfulaccounts receivable are shown in Note 34.

 

F-27

----

 

**16. Working Capital**

 
|                              |   | **December 31,** |       |
|-----------------------------------|--------|-----------------------|------------|
|                              |   | **2002**              |       | **2001** |   |
| **Working  Capital**              |   |                  | ** ** |   | ** ** |
| Inventory                         |   | 683                   |       | 756 |   |
| Accounts receivable               |   | 1,507                 |       | 1,826 |   |
| Accrued income                    |   | 199                   |       | 272 |   |
| Other working capital receivables |   | 96                    |       | 108 |   |
| Accounts payable                  |   | (1,064                | )          | (1,340 | ) |
| Other working capital liabilities |   | (318                  | )          | (390 | ) |
|                              |   | **1,103**             |       | **1,232** | ** ** |

 

The comparative number for 2001 has beenrestated (see Note 2 under Presentation).

 

**17. Issuedand Paid in Capital and Additional Paid-in Capital**

 

Buhrmann NV’s authorizedshare capital at December 31, 2002 amounted to EUR 732,000,000,divided into 250,000,000 Ordinary Shares, 54,940,000 Preference Shares A,305,000,000 Preference Shares B and 60,000 Preference Shares C, with a facevalue of EUR 1.20 each. The Ordinary Shares may, at the option of theBuhrmann shareholders, be bearer shares or registered shares. The PreferenceShares A and B are registered shares. The Preference Shares C are registeredshares, but may under certain circumstances be bearer shares.

 

At December 31, 2002, theissued and paid-in share capital was divided over 185,949,320 issued shares,consisting of 132,628,061 Ordinary Shares, 53,281,979 Preference Shares A and39,280 Preference Shares C, all of which have been fully paid up. There arecurrently no Preference Shares B outstanding.

 

At December 31, 2002, a total number of515,418 Ordinary Shares were held in deposit in connection with the Option Plan(see Note 23).  The carrying amountwas EUR 13 million at December 31, 2002.

 

On March 27, 2001, 24 million OrdinaryShares were issued with a face value of NLG 2.50 each at a price of

EUR 25 per share. On March 30, 2001,an additional 3.6 million Ordinary Shares were issued at the same price. Thetotal proceeds amounted to EUR 665 million, net of expenses.

 

On June 12, 2001, the face value of allshares was redenominated from NLG 2.50 to EUR 1.20. This resulted in anincrease of issued and paid-in capital of EUR 13 million which was chargedagainst additional paid-in capital.

 

F-28

----

 

Issued and paid- incapital and additional paid in capital can be specified as follows (in millionsof euro):

 

*As of December 31, 2002*

 
|                |   | **Issued and********paid- in capital** |   | **Additional********paid- in capital** |   |
|---------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
|                |   |                                   |   |                                   |   |
| Ordinary Shares     |   | 158                                    |   | 1,539                                  |   |
| Preference Shares A |   | 64                                     |   | 163                                    |   |
| Preference Shares C |   | 0                                      |   | 332                                    |   |
|                |   | 222                                    |   | 2,034                                  |   |

 

*As of December 31, 2001*

 
|                |   | **Issued and  paid- in capital** |   | **Additional********paid- in capital** |   |
|---------------------|--------|----------------------------------|--------|----------------------------------------|--------|
|                |   |                             |   |                                   |   |
| Ordinary Shares     |   | 157                              |   | 1,540                                  |   |
| Preference Shares A |   | 64                               |   | 121                                    |   |
| Preference Shares C |   | 0                                |   | 332                                    |   |
|                |   | 221                              |   | 1,993                                  |   |

 

*As of December 31, 2000*

 
|                |   | **Issued and  paid- in capital** |   | **Additional********paid- in capital** |   |
|---------------------|--------|----------------------------------|--------|----------------------------------------|--------|
|                |   |                             |   |                                   |   |
| Ordinary Shares     |   | 116                              |   | 894                                    |   |
| Preference Shares A |   | 61                               |   | 121                                    |   |
| Preference Shares C |   | 0                                |   | 332                                    |   |
|                |   | 177                              |   | 1,347                                  |   |

 

The additional paid-in capital for commercialand tax purposes is almost equal. The additional paid-in capital resulting fromPreference Shares A and C can only be paid to the holders of these shares.

 

***Votingrights***

Annual general meetingsof shareholders are held within six months of the end of the financial year,for the purpose of, among other things, adopting the annual accounts.Extraordinary general meetings of shareholders may be convened by the ExecutiveBoard or the Supervisory Board. General meetings of shareholders are held inAmsterdam. Each shareholder is entitled to attend a general meeting ofshareholders in person or be represented by written proxy, address the meetingand exercise voting rights with due observance of the provisions of theArticles of Association. Each share in Buhrmann’s capital is entitled to one vote.Unless the Articles of Association or mandatory law provides otherwise, allshareholders’ resolutions require an absolute majority of the votes. Meetingsof holders of a separate class of shares will be convened by the ExecutiveBoard or the Supervisory Board, as frequently as necessary.

 

***PreferenceShares A***

As of December 31,2002, 53,281,979 Preference Shares A had been taken into administration inStichting Administratiekantoor Preferente Aandelen Buhrmann (“Trust Office”),against

 

F-29

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which depository receiptswith limited convertibility were issued. The Trust Office was established underDutch law in May 1994, and has its registered seat in Maastricht.

 

The Trust Officeexercises the voting rights attached to the Preference Shares A in a mannerwhich safeguards the interests of Buhrmann, the companies affiliated withBuhrmann in a group and everybody involved with the group as effectively aspossible. The holders of Preference Shares A vote together with the holders ofOrdinary Shares as one class. The Trust Office votes in accordance with the decision of a majority ofthe board of the Trust Office.

 

On March 25,2003, a meeting of holders of depositary receipts was held. At this meetingchanges to the administration conditions were decided in such a way, subject tocertain limitations, that the holders of depositary receipts are now entitledto vote in the shareholders’ meeting and that the number of voting rightsattached to the (depositary receipts of the) Preference Shares A is based onthe stock market price of the depositary receipts in relation to the stockmarket price of the Ordinary Shares

 

***PreferenceShares B***

As of December 31,2002 no Preference Shares B had been issued. A put and call option agreementhas been signed between Stichting Preferente Aandelen Buhrmann NV and theCompany relating to Preference Shares B.

 

Pursuant to thisagreement, under certain circumstances, Buhrmann has the right (and, undercertain circumstances, the obligation) to issue and sell to the StichtingPreferente Aandelen Buhrmann, Preference Shares B, up to a maximum amount equalto the share capital of Buhrmann other than in the form of Preference Shares B,minus one. Once any Preference Shares B are issued to Stichting PreferenteAandelen Buhrmann, Buhrmann has the right to repurchase from StichtingPreferente Aandelen Buhrmann such Preference Shares B at their issue price plusaccrued and unpaid dividends, if any. Stichting Preferente Aandelen Buhrmannhas the right to require Buhrmann to repurchase the Preference Shares B held byit. Each Preference Share B is entitled to one vote on all matters to be votedupon generally by the holders of the Ordinary Shares, and the holders ofPreference shares B vote together with the holders of Ordinary Shares as oneclass. The holders of Preference Shares B are entitled to vote separately as aclass on any amendment to the Articles of Association that adversely affectsthe holders of the Preference Shares B. Stichting Preferente Aandelen Buhrmannwill exercise its voting rights attached to such Preference Shares B inaccordance with its purpose. The purpose of Stichting Preferente AandelenBuhrmann is to safeguard the interests of Buhrmann, the enterprise connectedtherewith and all interested parties in Buhrmann, so as to exclude, as far aspossible, influences which could threaten, among other things, the continuity,independence and identity of Buhrmann. The aim of the Preference Shares B is toprovide a protective measure against unfriendly take-over bids.

 

F-30

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***PreferenceShares C***

An aggregate of 35,000Preference Shares C were issued to two U.S. venture capital groups, ApolloInvestment Fund IV and Bain Capital Fund VI, on October 28, 1999, at theoccasion of the closing of the acquisition of Corporate Express. EachPreference Shares C has a nominal value of EUR 1.20 per share.  On June 18, 2003, Buhrmann announced that ithad been approached regarding a possible sale of its Paper Merchanting Divisionto PaperlinX Limited.  Contingent on thecompletion of the sale of the Paper Merchanting Division, a number of revisionsto the terms regarding the Preference Shares C, as described below, have beenoffered (see Note 31).

 

*Conversion*

The Preference Shares Care convertible, at the option of the holders, in whole or in part, intoOrdinary Shares. The initial conversion rate amounted to EUR 18.1125(converted into US dollar as set forth in the Articles of Association). ThePreference Shares C are subject to anti-dilution protections, which can lead toan adjustment of the conversion price in case of share issuances subject tocertain exceptions as described in the Articles of Association. In addition,the conversion price shall be reduced annually with an amount equal to 50% ofthe dividend distributed on Ordinary Shares. Following the dividend paid inApril 2000, May 2001 and May 2002 in respect of the financialyears 1999, 2000 and 2001 respectively, each Preference Share C is convertibleinto a number of Ordinary Shares equal to the liquidation preference divided byEUR 17.8125, EUR 17.5125 and EUR 17.4325, respectively. Afterthe dividend for the fiscal year 2002, payable in May 2003, the conversionrate will decrease to EUR 17.3975. The liquidation preference of eachPreference Share C is USD 10,000, plus accrued dividends (“The LiquidationPreference”).

 

*Ranking*

The Preference Shares Chave a preference with regard to dividend distributions and rights duringliquidation and dissolution in respect of all existing and future series ofOrdinary and Preference Shares, provided that they rank equal to the PreferenceShares A. As long as there are outstanding Preference Shares C, Buhrmann maynot repurchase or cancel Ordinary Shares and/or other Preference Shares, exceptfor Preference Shares B, without the prior approval of the meeting of holdersof Preference Shares C.

 

*Voting*

Each Preference Share Cis entitled to one vote on all matters to be voted upon generally by theholders of Ordinary Shares, and the holders of Preference Shares C votetogether with the holders of Ordinary Shares as one class. Amendments of theArticles of Association that will affect the rights of Preference Shares C willrequire specific approval of the meeting of holders of Preference Shares C.

 

*Redemption*

If after four years after the Preference Shares Cwere issued the closing price of the Ordinary Shares is at any time at or above150% of the then prevailing conversion price for the Preference Shares C for aperiod of 30 consecutive trading days, Buhrmann may cancel or repurchase alloutstanding Preference Shares C. The amount per Preference Share C to be paidwill be, in the event that such cancellation or repurchase takes place (1)after the fourth anniversary but on or before the fifth anniversary of theissuance of the Preference Shares C, 105.50% of the Liquidation Preference”;(2) after the fifth anniversary but on or before the sixth anniversary of theissuance of the Preference Shares C, 102.75% of the Liquidation Preference; and(3) following the sixth anniversary of the issuance of the Preference Shares C,100% of the Liquidation Preference”. On the twelfth anniversary of the issuedate, Buhrmann has the right, in its sole discretion, to cancel or repurchasethe Preference Shares C at 100% of the Liquidation Preference. In addition, onthe twelfth anniversary of the issue date, the holders of the Preference SharesC can request that Buhrmann cancel or repurchase the Preference SharesC at 100% ofthe Liquidation Preference. If Buhrmann elects not to follow such request, theconversion price will be reduced to the lower of (a) 50% of the then currentconversion price, or (b) 50% of the then current market price of BuhrmannOrdinary Shares. If there is a change of control (as such term is defined in the Articlesof Association) of Buhrmann or the office products business of Buhrmann in theUnited States, the holders of the Preference Shares C can request that Buhrmanncancel or repurchase all of the outstanding Preference Shares C at 101% of theLiquidation Preference.

 

F-31

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***Dividends***

The proposed dividend fora financial year must be approved by the annual general meeting ofshareholders, which is typically held in April or May of thefollowing financial year. The dividend is paid after this meeting. Dividendpayments are allowed only to the extent that the shareholders’ equity is inexcess of the sum of the paid-up capital and any reserves required under Dutchlaw. Under the Articles of Association, the dividend with respect to thePreference Shares A and Preference Shares C must be paid first from the profitsearned in any given financial year before any dividend will be paid to anyother class of shares.

 

The annual dividend onthe Preference Shares C is equal to 5.5% of the Liquidation Preference of suchshares, subject to adjustment under certain circumstances as set forth in theArticles of Association. The annual dividend on the Preference Shares C for eachyear up to and including 2002 will be distributed in the form of additionalPreference Shares C. The annual dividend on the Preference Shares C for anyfinancial year after 2002 may, at the option of Buhrmann, be distributed incash or in the form of additional Preference Shares C.

 

The dividend on thePreference Shares A is determined for a period of eight years on the basis of adividend percentage equivalent to 1.25 percent more than the mathematicalaverage of the average effective yield on government loans with a term ofseven-to-eight years, as calculated by the Central Office for Statistics, andpublished in the Official Stock Exchange List of Euronext Amsterdam, on thelast ten stock market trading days prior to the day of determination. The dividendthus determined is calculated on the issue price of EUR 3.40355 per shareand is rounded up to the nearest whole cent. For the period ending onDecember 31, 2001 the dividend amounted to EUR 0.27 per share. Forthe years 2002 until and including 2009 the dividend has been set atEUR 0.21 per share.

 

On the Preference(protection) Shares B a dividend shall be paid, the percentage of which – to becalculated over the paid up part of the nominal value – is equal to therepo-rate of the European Central Bank, decreased or increased by a discount orupcount, with a maximum of three percentage points, to be determined by theExecutive Board under the approval of the Supervisory Board, averaged over thenumber of days over which the payment is made.

 

The Executive Boarddetermines - subject to the approval of the Supervisory Board - which part ofthe profit remaining after payment of the dividends on the Preference Shareswill be allocated to the reserves. Any part of the profit remaining thereaftershall be paid as a dividend on the Ordinary Shares. The Executive Board maydecide to pay an interim dividend. The decision is subject to the approval ofthe Supervisory Board.

 

If, over any year, a losshas been suffered, the general meeting may, on the proposal of the ExecutiveBoard which has been approved by the Supervisory Board, resolve to clear theloss and/or to make distributions to shareholders, to the debit of thedistributable part of the capital and reserves, provided that no charge may bemade to the share premium reserves A and C.

 

The amount of dividends,if any, paid to the holders of the Ordinary Shares will be determined inaccordance with the Articles of Association as described above, and in light ofexisting conditions, including earnings, financial conditions and requirementsand other relevant factors.

 

F-32

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**18. Provisions**

 

The movements inprovisions are as follows:

 
|                                                         |   |      |       |         |       |                |       | **Other provisions**               |       |
|--------------------------------------------------------------|--------|-----------|------------|--------------|------------|---------------------|------------|------------------------------------|------------|
|                                                         |   | **Total** |       | **Pensions** |       | **Deferred  taxes** |       | **Integration and  restructuring** |       | **Product  warranties** |   | **Other** |   |
|                                                         |   |      |       |         |       |                |       |                               |       |   |   |   |   |
| *Position at December 31, 2001*                         |   | 445       |       | 25           |       | 340                 |       | 38                                 |       | 5 |   | 37 |   |
|                                                         |   |      |       |         |       |                |       |                               |       |   |   |   |   |
| Utilization                                                  |   | (21       | )          | (3           | )          | —              |       | —                             |       | (5 | ) | (13 | ) |
| Additions charged to result:                                 |   |      |       |         |       |                |       |                               |       |   |   |   |   |
| • operating result                                 |   | 21        |       | 2            |       | 14                  |       | —                             |       | 5 |   | — |   |
| • Extraordinary result from continuing  operations |   | 47        |       | —       |       | —              |       | 57                                 |       | — |   | (10 | ) |
| Additions set up through goodwill                            |   | 23        |       | 2            |       | —              |       | 21                                 |       | — |   | — |   |
| Transfer to current liabilities                              |   | (97       | )          | —       |       | (26                 | )          | (66                                | )          | (2 | ) | (3 | ) |
| Transfer deferred tax assets                                 |   | (51       | )          | —       |       | (51                 | )          | —                             |       | — |   | — |   |
| Transfer provisions                                          |   | —    |       | —       |       | (34                 | )          | —                             |       | — |   | 34 |   |
| Translation differences                                      |   | (30       | )          | —       |       | (22                 | )          | (8                                 | )          | — |   | — |   |
|                                                         |   |      | ** ** |         | ** ** |                | ** ** |                               | ** ** |   | ** ** |   | ** ** |
| **Position at December 31, 2002**                       |   | **337**   | ** ** | **26**       | ** ** | **221**             | ** ** | **42**                             | ** ** | **3** | ** ** | **45** | ** ** |

 

The provision for pensions at December 31,2002 and 2001 primarily relates to obligations regarding uninsured definedbenefit plans. Operating companies in Europe offer a variety of defined benefitplans, in addition to government schemes, as part of the remuneration package.In countries like the Netherlands and the United Kingdom, the defined benefitplans are insured in separate trusts (pension funds). Premiums and othercontributions paid to these funds are included in labor costs. In case these(non-consolidated) funds require additional contributions due to certainobligations in relation to minimum funding requirements, a provision isrecorded.

 

Deferred taxes are detailed in Note 19.

 

Provisions for integration and restructuringmainly relate to the integration of the acquired businesses of Samas and USOPand cost saving restructuring measures in the office products operations inNorth America and Europe as well as paper merchanting operations in Europe. Thebalance at December 31, reflects amounts payable after more than one year.Amounts payable within one year are transferred to current liabilities. In2002, Buhrmann introduced additional restructuring plans in the wake ofcontinued uncertainties regarding overall business activity in its majormarkets. These plans include reductions in the number of staff of approximately1,100 in total, especially in back-office and support functions. Under theplans, Buhrmann accrued in 2002 EUR 60 million before tax.

 

The provision for product warranties relates topotential liabilities in the event products delivered or services rendered donot meet the agreed qualities, in those cases that the guarantee period has notexpired yet.  The additions charged to resultonly relate to warranties issued during 2002 and are calculated as a percentageof net sales. This percentage is based on past experience.

 

Other provisions include primarily warrantiesregarding divestments.

 

F-33

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**19. Deferred taxes**

 

The components ofdeferred tax assets and deferred tax liabilities are as follows:

 
|                                               |   | **December 31** |   |
|----------------------------------------------------|--------|----------------------|--------|
|                                               |   | **2002**             |   | **2001** |   |
| *Deferred tax assets*                              |   |                 |   |   |   |
| Restructuring and integration provisions           |   | —               |   | 122 |   |
| Tax loss carryforwards                             |   | 565                  |   | 512 |   |
| Nominal deferred tax asset                         |   | 565                  |   | 634 |   |
|                                               |   |                 |   |   |   |
| Valuation allowances                               |   | (220                 | )      | (216 | ) |
| Deferred tax asset (under Financial Fixed  Assets) |   | 345                  |   | 418 |   |
|                                               |   |                 |   |   |   |
| *Deferred tax liabilities*                         |   |                 |   |   |   |
| Fixed assets                                       |   | (114                 | )      | (150 | ) |
| Other                                              |   | (107                 | )      | (190 | ) |
| Deferred liabilities (under Provisions)            |   | (221                 | )      | (340 | ) |
|                                               |   |                 |   |   |   |
| Total                                              |   | 124                  |   | 78 |   |

 

Buhrmann has operating loss carryforwards atDecember 31, 2002 of approximately EUR 1,427 million. Expiration isapproximately as follows (in millions of euro):

 
| 2004 to 2017              |   | 68    |   |
|---------------------------|--------|-------|--------|
| 2018 to 2021              |   | 393   |   |
| Beyond 2021 and unlimited |   | 966   |   |
|                      |   | 1,427 |   |

 

F-34

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**20. Long-term liabilities**

 
|                                |   | **December 31, 2002** |   | **December 31, 2001** |       |
|-------------------------------------|--------|----------------------------|--------|----------------------------|------------|
|                                |   | **Total**                  |   | **> 5 years**           |       | **Total** |   | **> 5 years** |   |
| Subordinated loans:                 |   |                       |   |                       |       |   |   |   |   |
| High Yield Bond (USD 350 million)   |   | 334                        |   | 334                        |       | 397 |   | 397 |   |
|                                |   |                       |   |                       |       |   |   |   |   |
| Other loans:                        |   |                       |   |                       |       |   |   |   |   |
| Term Loans A                        |   | 528                        |   | —                     |       | 757 |   | — |   |
| Term Loans B                        |   | 509                        |   | —                     |       | 603 |   | 293 |   |
| Revolver (USD 350 million facility) |   | 44                         |   | —                     |       | — |   | — |   |
| Securitized notes                   |   | 260                        |   | —                     |       | 290 |   | 290 |   |
| Other                               |   | 3                          |   | 3                          |       | 12 |   | 4 |   |
|                                |   | **1,678**                  |   | **337**                    | ** ** | **2,059** | ** ** | **984** | ** ** |

 

**High YieldBond**

A 10-year SEC registered, subordinated bondloan was issued in 1999 for the amount of USD 350 million, with a coupon of12.25%, payable semi-annually. This loan must be redeemed on November 1,2009. Buhrmann has the option to redeem this loan sooner, but not beforeNovember 1, 2004. Thereafter, the whole loan, or part of it, can beredeemed at contractual rates above par. The market value of the High YieldBond at December 31, 2002 amounted to USD 327 (EUR 312 million) andat December 31, 2001 to USD 350 million (EUR 397 million).

 

**Senior Secured Credit Facility (Term loans A, B and Revolver)**

The Senior Secured Credit Facility wasoriginally arranged in 1999. Meanwhile amendments have been passed to adjustsome of the terms and conditions in relation to acquisitions, financingtransactions and covenant levels. The facility consists of ‘Term Loans A’, and‘Term Loans B’ with tranches in EUR and USD plus a working capitalfacility of USD 350 million (Revolver). The security provided for the SeniorSecured Credit Facility is a pledge on the assets of Buhrmann NV, all itsexisting and future operating companies in the United States and the greaterpart of its operating companies outside the United States. The interest ratemargins vary with the leverage ratio (pricing grid). Over 2002 these marginsfluctuated for both the Working capital facility and the Term Loans A between2.375% and 3.25% and for the Term Loans B between 3.25% and 4.0%. The workingcapital facility carries a 0.50% charge for the undrawn balance. During 2002,EUR 171 million was redeemed early on the Term Loans A and B.

 

The interest rates in effect atDecember 31, 2002 and 2001 were as follows:

 
|            |   | **2002** |   | **2001** |   |
|-----------------|--------|----------|--------|----------|--------|
|            |   |     |   |     |   |
| Term loan A USD |   | 4.909    | %      | 4.625    | %      |
| Term loan B USD |   | 5.659    | %      | 5.500    | %      |
|            |   |     |   |     |   |
| Term loan A EUR |   | 6.486    | %      | 5.884    | %      |
| Term loan B EUR |   | 7.235    | %      | 6.759    | %      |
|            |   |     |   |     |   |
| Revolver USD    |   | —   |   | —   |   |
| Revolver EUR    |   | 6.310    | %      | —   |   |

 

F-35

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The Senior Secured Credit Facility is subjectto a variety of conditions as is customary for these types of facilities andthe financial position of Buhrmann. For example, specific financial ratios aremonitored by the lenders such as:

 
| Interest coverage ratio : |   | EBITDA/Cash interest expense                  |
|---------------------------|--------|-----------------------------------------------|
| Fixed charge ratio:       |   | EBITDA + rent + lease  expenses/Fixed charges |
| Leverage ratio:           |   | Indebtedness/EBITDA                           |

 

It is noted that among other things, the EBITDA(operating result before depreciation of tangible fixed assets and amortizationand impairment of goodwill) used for banking covenant calculation purposes maydiffer significantly from the EBITDA as published in these Financial Statementsdue to specific contractual definitions. Also, income items are calculated on arolling twelve months basis. More detailed information on the covenants isavailable on the website www.Buhrmann.com (among other things within the pressreleases related to financing). On December 3, 2002, Buhrmann agreed themost recent amendment, primarily related to covenants, to ensure sufficient, financialflexibility. In exchange, the applicable interest margins as laid down in thepricing grid have been increased by 0.5% and some clauses have additionalrestrictions aiming to retain cash in the Company. Fees paid upfront amountedto EUR 4 million including advisory costs. These fees have beencapitalized and will be amortized over the remaining life-time of the facility(see Note 14).

 

The market value of the Senior Secured CreditFacility is primarily determined by credit status. Interest rate developmentshave a limited influence since these loans have a floating interest. Althoughthese loans are not traded publicly, market values can be indicated by theagent of the bank syndicate. The market value has moved generally within a 10%range below the book value.

 

**Short Term and Medium TermSecuritized Notes**

 

The Company has an accounts receivablesecuritization program under which funds are raised by pledgingaccounts receivablefrom subsidiaries in the Netherlands, UK and USA as security for short-term andmedium-termborrowings. The accounts receivable are sold to Buhrmann Silver SA and BuhrmannSilver US LLC,which in turn pledge the accounts receivable to third-party dedicated entitiesas security for short-term borrowings in the form of short-term notes andstarting in 2002 also in the form of medium-term notes. The short-term notesare issued in EUR, GBP and USD, reflecting the currency of the pledgedreceivables. The amount of short-term notes outstanding against the receivablespledged, fluctuate as a result of liquidity requirements, advance rates calculated andinvoices outstanding. The maximum amount of short-term notes outstanding during 2002 wasEUR 379 million. To ensure availability of re-financing for the notes, a back-upliquidity facility has been arranged. At December 31, 2001, an amount ofEUR 290 million of short-term notes was issued and at December 31, 2002 noshort-term notes were issued. In July 2002, the securitization program wasextended with the issue of medium-term notes. The medium-term notes are issued in GBP and USDand will mature in 2007. Fees incurred upfront amounted to EUR 9 million includingadvisory costs. These fees were capitalized and are amortized over the remaininglife-time of the facility (see Note 20). At December 31, 2002, GBP 107million and USD 100 million of medium-term notes were issued.

 

F-36

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The program delivers funding at attractive ratesand at the same time diversifies sources of capital andincreases financialflexibility. Both receivables and borrowings related to this program areincluded in the Consolidated Balance Sheet. The proceeds are used to reducelong-term borrowings and drawings can only be used for redemption of the Term Loans Aand B under the Senior Secured Credit Facility. At December 31, 2002, accounts receivableof EUR 563 million were pledged under this program. In addition to theoutstanding EUR 260 million of borrowings under the program, there is apotential forissuing asset backed commercial paper (short-term notes) to an amount ofEUR 50 million. The average interest margin, including issuers cost, isapproximately 0.67% over LIBOR.

 

The market value of these notes, due to thenature of the program, approximates the bookvalue.

 

**Breakdown of long-term debt by currency**

 
|                                                     |   | **December 31,** |       |
|----------------------------------------------------------|--------|-----------------------|------------|
|                                                     |   | **2002**              |       | **2001** |   |
| As issued:                                               |   |                  |       |   |   |
| EUR                                                      |   | 435                   |       | 569 |   |
| USD                                                      |   | 1,076                 |       | 1,331 |   |
| GBP                                                      |   | 167                   |       | 159 |   |
|                                                     |   | **1,678**             |       | **2,059** | ** ** |
|                                                     |   |                  |       |   |   |
| After hedging with forward exchange and currency  swaps: |   |                  | ** ** |   | ** ** |
| EUR                                                      |   | 479                   |       | 527 |   |
| USD                                                      |   | 1,082                 |       | 1,349 |   |
| GBP                                                      |   | 69                    |       | 137 |   |
| Other currencies                                         |   | 48                    |       | 46 |   |
|                                                     |   | **1,678**             |       | **2,059** | ** ** |

 

Buhrmann aims to incur debt by currency afterhedges approximately in proportion to the forecasted split of operating resultbefore depreciation of tangible fixed assets and amortization and impairment ofgoodwill over the major currencies. Forward foreign exchange and currency swapsare used to adjust the currency profile of the loans issued towards the desiredposition in order to achieve the hedging as per policy.

 

**Buhrmann’s forward foreign exchangeand currency swap contracts at December 31, 2002**

 
| **Contract**     |   | **Maturity** |   | **Weighted average  contractual exchange rate** |   | **Notional  amount** |   | **Market value** |       |
|------------------|--------|--------------|--------|-------------------------------------------------|--------|----------------------|--------|------------------|------------|
| Sell EUR/buy USD |   | < 1 year  |   | 1.02                                            |   | 104                  |   | (3               | )          |
| Sell GBP/buy EUR |   | < 1 year  |   | 0.64                                            |   | 35                   |   | 0                |       |
| Sell USD/buy EUR |   | < 1 year  |   | 1.00                                            |   | 95                   |   | 5                |       |
| Sell EUR/buy GBP |   | < 1 year  |   | 0.64                                            |   | 114                  |   | (1               | )          |
| Other            |   | < 1 year  |   |                                            |   | 68                   |   | 0                |       |
|             |   |         |   |                                            |   | **416**              |   | **1**            | ** ** |

 

The total market value at December 31,2002 of the forward foreign exchange and currency swap contracts was EUR 1million positive (2001: EUR 3 million negative).

 

F-37

----

 

**Breakdown oflong-term debt by interest profile**

 
|                                           |   | **December 31, 2002** |   |
|------------------------------------------------|--------|----------------------------|--------|
|                                           |   | **Fixed**                  |   | **%** |   | **Floating** |   | **%** |   |
|                                           |   |                       |   |   |   |   |   |   |   |
| Subordinated private loans and bank overdrafts |   | 334                        |   | 20 |   | — |   | — |   |
| Private loans and bank overdrafts              |   | 3                          |   | 0 |   | 1,341 |   | 80 |   |
|                                           |   | 337                        |   | 20 |   | 1,341 |   | 80 |   |
| Interest swaps > 1 year                     |   | 1,023                      |   |   |   | (1,023 | ) |   |   |
| **Total**                                      |   | **1,360**                  |   | 81 | ** ** | **318** | ** ** | **19** | ** ** |

 

Our policy is to incur a certain minimum levelof fixed rate debt in relation to the interest cover.  Interest rate swaps are used to adjust the interest profile ofthe loans towards the desired position in order to achieve the hedging as perpolicy.

 

**Buhrmann’s Interest Rate Swap(IRS) contracts at December 31, 2002**

 

IRS in EUR; Buhrmann paysfixed and receives 3 month LIBOR:

 
| **Maturity** |   | **Notional  amount** |   | **Average interest********rate in %** |   | **Fair value** |   |
|--------------|--------|----------------------|--------|---------------------------------------|--------|----------------|--------|
| < 1 year  |   | 150                  |   | 4.47                                  |   | (2             | )      |
| < 2 years |   | 150                  |   | 4.80                                  |   | (6             | )      |
| < 4 years |   | 200                  |   | 5.29                                  |   | (10            | )      |
| < 5 years |   | 125                  |   | 5.18                                  |   | (9             | )      |
| Subtotal A   |   | 625                  |   |                                  |   | (27            | )      |

 

IRS in USD; Buhrmann paysfixed and receives 3 month LIBOR:

 
| **Maturity**  |   | **Notional  amount** |       | **Average interest  rate in %** |   | **Fair value** |       |
|---------------|--------|----------------------|------------|---------------------------------|--------|----------------|------------|
| < 1 year   |   | 215                  |       | 6.54                            |   | (11            | )          |
| < 2 years  |   | 381                  |       | 4.53                            |   | (20            | )          |
| < 3 years  |   | 95                   |       | 6.54                            |   | (11            | )          |
| < 5 years  |   | 72                   |       | 5.64                            |   | (8             | )          |
| Subtotal B    |   | 763                  |       |                            |   | (50            | )          |
|          |   |                 | ** ** |                            |   |           | ** ** |
| **Total A+B** |   | **1,388**            | ** ** |                            |   | **(77**        | **)**      |

 

The total market value at December 31, 2002of the interest rate swap contracts was EUR 77 million negative (2001:EUR 54 million negative).

 

The estimated market value of the outstandingcurrency and interest swap contracts indicates how much would be paid orreceived in exchange for termination of the contracts without furthercommitments as per the balance sheet date, and is included in the tables above.

 

F-38

----

 

**Effective interest rate**

The average blended effective interest rate(including margin, currency and hedging effects) was approximately 8.6% in 2002and 8.5% in 2001.

 

**Repayment schedule for long-term debt**

 
|       |   | **Year** |   | **Term  Loans A** |       | **Term  Loans B** |       | **Other** |       | **Total  Redemption** |       |
|------------|--------|----------|--------|-------------------|------------|-------------------|------------|-----------|------------|-----------------------|------------|
| Short-term |   | 2003     |   | 59                |       | 2                 |       | 7         |       | 68                    |       |
|       |   |     |   |              |       |              |       |      |       |                  |       |
| Long-term  |   | 2004     |   | 230               |       | 5                 |       | —    |       | 235                   |       |
|       |   | 2005     |   | 298               |       | 5                 |       | 44        |       | 347                   |       |
|       |   | 2006     |   | —            |       | 249               |       | —    |       | 249                   |       |
|       |   | 2007     |   | —            |       | 250               |       | 260       |       | 510                   |       |
|       |   | 2008     |   | —            |       | —            |       | —    |       | —                |       |
|       |   | 2009     |   | —            |       | —            |       | 337       |       | 337                   |       |
|       |   |     |   | 528               |       | 509               |       | 641       |       | 1,678                 |       |
|       |   |     |   |              | ** ** |              | ** ** |      | ** ** |                  | ** ** |
| **Total**  |   |     |   | 587               |       | 511               |       | 648       |       | 1,746                 |       |

 

The installments in 2003 of EUR 61 millionfor both Term Loans A and B fall due in September and December. Otherincludes the Revolver (EUR 44 million), the Medium-Term Notes(EUR 260 million) and the High Yield Bond (EUR 334 million). Cashavailable at year-end 2002 was EUR 37 million and committed credit linesavailable amounted to EUR 245 million. There were no short-term securitizednotes outstanding at December 31, 2002. The average remaining term oflong-term debt is approximately 4 years.

 

**21. Other liabilities**

 
|                                                                       |   | **December 31,** |       |
|----------------------------------------------------------------------------|--------|-----------------------|------------|
|                                                                       |   | **2002**              |       | **2001** |   |
|                                                                       |   |                  |       |   |   |
| Taxes and social security contributions                                    |   | 104                   |       | 121 |   |
| Advance payments on orders                                                 |   | 9                     |       | 11 |   |
| Short-term provisions                                                      |   | 5                     |       | 7 |   |
| Accrued liabilities                                                        |   | 200                   |       | 251 |   |
| Other working capital liabilities                                          |   | 318                   |       | 390 |   |
|                                                                       |   |                  |       |   |   |
| Other non-working capital liabilities                                      |   | 30                    |       | 28 |   |
| Short-term provisions acquisition and  restructuring related (see Note 18) |   | 66                    |       | 126 |   |
| Dividend Preference Shares A                                               |   | 11                    |       | 14 |   |
| **Total**                                                                  |   | **425**               | ** ** | **558** | ** ** |

 

Accrued liabilities consist mainly of accruedrent, interest and labor costs such as over-time wage and salary, bonuses andvacation benefits.

 

F-39

----

 

**22. Credit risks**

 

As of December 31, 2002 and 2001 theCompany’s accounts include cash and accounts receivable, which are denominatedin currencies other than the euro. Realization of such amounts is subject tothe risk of fluctuations in foreign exchange rates relative to the euro.

 

Management believes it has adequately providedfor the collection risk in the Company’s accounts receivable, which for asubstantial part are insured, by recording an allowance for doubtful accounts,which reduces such amounts to their net realizable value.

 

Because the Company deals only with majorcommercial banks with high-quality credit ratings, it does not anticipatenon-performance by any of these counterparties. The Company has deposited itscash and cash equivalents with reputable financial institutions and believesthe risk of loss to be remote.

 

F-40

----

 

**23. Optionplan**

 

At the end of 2002, 3,936,111 unexercisedpersonnel options on shares in Buhrmann remained, at an average price ofEUR 18.79. The latest exercise date of these options is in 2007.

 

The option plan is designed as an incentive, limited to managers workingwithin the Group. There are approximately 450 managers eligible. The maximumpercentage of option rights that may be granted under the plan in any year is1.25% of the number of outstanding Ordinary Shares. This reflects therequirements of the business given our geographic spread (in particular theUnited States of America) and specific human resource management needs forcritical business activities. The number of options granted is based on theindividual’s contribution to Group results.

 

In addition, the number of options that can begranted under the plan to any individual manager is capped at the maximumnominal value (based on the number of shares to which the option right relates,multiplied by the option exercise price) which cannot exceed an amount equal totwice the base salary of the relevant individual. The options have a term offive years and can be exercised only after three years from the date of grant.The exercise price for option rights is the closing price of Buhrmann’sOrdinary Shares on the first trading day on which day Buhrmann’s OrdinaryShares are quoted ex-dividend after the annual meeting of shareholders.

 

Those entitled to options are bound by internalregulations designed to prevent insider trading. Options granted are inprinciple hedged by purchasing the shares required on or close to the grantdate. Options may not be hedged if the financial position gives rise to adecision not to purchase the shares required. Considerations for evaluating thefinancial position are the growth prospects and its required financing, as wellas the capital structure of the Group. On the basis thereof it was decided notto purchase shares for this purpose in 2002 and 2001. A total number of 515,418purchased shares were held in deposit for this purpose at December 31,2002.

 

The market price of the option rights wasestimated on the basis of the Black & Scholes option price determinationmodel, based on the following assumptions:

 

|                            |   | **2002** |   | **2001** |   | **2000** |   |
|---------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                            |   |     |   |     |   |     |   |
| Expected dividend yield         |   | 2.3      | %      | 2.3      | %      | 2.3      | %      |
| Expected share price volatility |   | 65       | %      | 55       | %      | 50       | %      |
| Risk-free interest rate         |   | 4.5      | %      | 4.5      | %      | 5.0      | %      |
| Expected term                   |   | 4  years |   | 4  years |   | 4  years |   |

 

The pro-forma remuneration cost of the optionrights assigned to management is EUR 6 million for 2002(EUR 6 millionfor 2001 and EUR 2 million for 2000). The annual remuneration cost is calculatedby taking the economic cost of the options granted over the last three yearsspread evenly over the blocked exercise period (vesting) of three years.Expected dividend yield and share price volatility are based on historic trackrecords at the date of granting the options. These assumptions were usedexclusively for this calculation and do not necessarily provide an indicationof expectations of management regarding developments in the future.

 

F-41

----

 

At the end of 2002, the Members of the Executive Board held optionrights on 460,000 Buhrmann Ordinary Shares which is summarized in the followingtable:

 
|             |   | **January 1,********2002** |       | **Granted  in 2002** |       | **Exercised  in 2002** |       | **Lapsed in  2002** |   | **Outstanding  at Decem-  ber 31, 2002** |       | **Option  exercise  price in euro** |       | **Exercisable  until** |       |
|------------------|--------|---------------------------------|------------|----------------------|------------|------------------------|------------|---------------------|--------|------------------------------------------|------------|-------------------------------------|------------|------------------------|------------|
|             |   |                            |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| F.H.J. Koffrie   |   | 100,000                         |       |                 |       | —                 |       | (100,000            | )      | —                                   |       | 16.74                               |       | 08.04.2002             |       |
|             |   | 25,000                          |       |                 |       | —                 |       |                |   | 25,000                                   |       | 15.40                               |       | 11.04.2004             |       |
|             |   | 40,000                          |       |                 |       | —                 |       |                |   | 40,000                                   |       | 32.94                               |       | 16.04.2005             |       |
|             |   | 40,000                          |       |                 |       | —                 |       |                |   | 40,000                                   |       | 24.52                               |       | 19.04.2006             |       |
|             |   | —                          |       | 55,000               |       | —                 |       |                |   | 55,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 205,000                         |       | 55,000               |       | —                 |       | (100,000            | )      | 160,000                                  |       |                                |       |                   |       |
|             |   |                            |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| R.W.A. de Becker |   | 10,000                          |       |                 |       | —                 |       | —              |   | 10,000                                   |       | 19.61                               |       | 19.04.2006             |       |
|             |   | —                          |       | 30,000               |       | —                 |       | —              |   | 30,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 10,000                          |       | 30,000               |       | —                 |       | —              |   | 40,000                                   |       |                                |       |                   |       |
|             |   |                            |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| G. Dean          |   | 30,000                          | *          |                 |       | —                 |       | (30,000             | )      | —                                   |       | 16.74                               |       | 08.04.2002             |       |
|             |   | 20,000                          |       |                 |       | —                 |       |                |   | 20,000                                   |       | 15.40                               |       | 11.04.2004             |       |
|             |   | 25,000                          |       |                 |       | —                 |       |                |   | 25,000                                   |       | 26.35                               |       | 16.04.2005             |       |
|             |   | 27,500                          |       |                 |       | —                 |       |                |   | 27,500                                   |       | 19.61                               |       | 19.04.2006             |       |
|             |   | —                          |       | 35,000               |       | —                 |       |                |   | 35,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 102,500                         |       | 35,000               |       |                   |       | (30,000             | )      | 107,500                                  |       |                                |       |                   |       |
|             |   |                            |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| M.S. Hoffman     |   | 15,000                          |       |                 |       | —                 |       | —              |   | 15,000                                   |       | 26.35                               |       | 16.04.2005             |       |
|             |   | 17,500                          |       |                 |       | —                 |       | —              |   | 17,500                                   |       | 19.61                               |       | 19.04.2006             |       |
|             |   | —                          |       | 50,000               |       | —                 |       | —              |   | 50,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 32,500                          |       | 50,000               |       | —                 |       | —              |   | 82,500                                   |       |                                |       |                   |       |
|             |   |                            |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| F.F. Waller      |   | 20,000                          |       |                 |       | —                 |       |                |   | 20,000                                   |       | 32.94                               |       | 16.04.2005             |       |
|             |   | 20,000                          |       |                 |       | —                 |       |                |   | 20,000                                   |       | 24.52                               |       | 19.04.2006             |       |
|             |   | —                          |       | 30,000               |       | —                 |       |                |   | 30,000                                   |       | 13.69                               |       | 05.05.2007             |       |
|             |   | 40,000                          |       | 30,000               |       |                   |       |                |   | 70,000                                   |       |                                |       |                   |       |
|             |   |                            |       |                 |       |                   |       |                |   |                                     |       |                                |       |                   |       |
| **Total**        |   | **390,000**                     | ** ** | **200,000**          | ** ** |                   | ** ** | **(130,000**        | **)**  | **460,000**                              | ** ** |                                | ** ** |                   | ** ** |

 

----

* In addition, Mr Dean had the right to becompensated for the increase in value with respect to 30,000 shares, whichright was granted in 1997 and lapsed in April 2002.

 

The Members of the Supervisory Board do notparticipate in the Buhrmann Option Plan.

 

F-42

----

 

**Ownership of Securities by Members of the Executive Board andSupervisory Board**

 

The Members of the Executive Board held thefollowing numbers of shares in Buhrmann at December 31, 2002:

 
|           |   | **Ordinary  Shares** |   |
|----------------|--------|----------------------|--------|
| F.H.J. Koffrie |   | 50,595               |   |
| M.S. Hoffman   |   | 50,000               |   |
| F.F. Waller    |   | 3,035                |   |
|           |   | **103,630**          |   |

 

The Members of the Supervisory Board held thefollowing numbers of shares in Buhrmann at December 31, 2002:

 
|              |   | **Ordinary  Shares** |   | **Depositary  receipts of  Preference  Shares A** |       |
|-------------------|--------|----------------------|--------|---------------------------------------------------|------------|
| P.C. van den Hoek |   | 30,423               |   | 0                                                 |       |
| A.G. Jacobs       |   | 926                  |   | 411                                               |       |
|              |   | **31,349**           |   | **411**                                           | ** ** |

 

F-43

----

 

Specified statement of all options outstanding(including option rights held by the Members of the Executive Board)

 
|                                     |   | **Number of outstanding option rights** |       | **Average  exercise price** |       | **Term**           |       |
|------------------------------------------|--------|-----------------------------------------|------------|-----------------------------|------------|--------------------|------------|
|                                     |   |                                    |       |                        |       |               |       |   |   |
| Granted in 1997*:                        |   |                                    |       |                        |       |               |       |   |   |
| Balance at the end of 2001               |   | 191,650                                 |       |                        |       |               |       |   |   |
| Lapsed in 2002                           |   | (191,650                                | )          |                        |       |               |       |   |   |
| Outstanding at the end of 2002           |   |                                    |       | —                      |       | —             |       | — |   |
|                                     |   |                                    |       |                        |       |               |       |   |   |
| Granted in 1999**:                       |   |                                    |       |                        |       |               |       |   |   |
| Balance at the end of 2001               |   | 538,000                                 |       |                        |       |               |       |   |   |
| Lapsed in 2002                           |   | (78,500                                 | )          |                        |       |               |       |   |   |
| Outstanding at the end of 2002           |   |                                    |       | 459,500                     |       | EUR 15.61     |       | 2004 |   |
|                                     |   |                                    |       |                        |       |               |       |   |   |
| Granted in 2000:                         |   |                                    |       |                        |       |               |       |   |   |
| Balance at the end of 2001               |   | 979,302                                 |       |                        |       |               |       |   |   |
| Lapsed in 2002                           |   | (77,581                                 | )          |                        |       |               |       |   |   |
| Outstanding at the end of 2002           |   |                                    |       | 901,721                     |       | ***EUR 27.35  |       | 2005 |   |
|                                     |   |                                    |       |                        |       |               |       |   |   |
| Granted in 2001:                         |   |                                    |       |                        |       |               |       |   |   |
| Balance at the end of 2001               |   | 1,167,958                               |       |                        |       |               |       |   |   |
| Lapsed in 2002                           |   | (99,784                                 | )          |                        |       |               |       |   |   |
| Outstanding at the end of 2002           |   |                                    |       | 1,068,174                   |       | ***EUR 20.04  |       | 2006 |   |
|                                     |   |                                    |       |                        |       |               |       |   |   |
| Granted in 2002:                         |   |                                    |       |                        |       |               |       |   |   |
| Granted in May 2002                 |   | 1,563,928                               |       |                        |       |               |       |   |   |
| Lapsed in 2002                           |   | (57,212                                 | )          |                        |       |               |       |   |   |
| Outstanding at the end of 2002           |   |                                    |       | 1,506,716                   |       | ***EUR 13.75  |       | 2007 |   |
|                                     |   |                                    |       |                        |       |               |       |   |   |
| **Total outstanding at the end of 2002** |   |                                    | ** ** | **3,936,111**               | ** ** | **EUR 18.79** | ** ** |   | ** ** |

 

----

* inaddition, a number of managers had the right to be compensated for the increasein value with respect to a total of 44,500 Ordinary Shares, on the basis of anaverage exercise price of EUR 16.74. This right was only granted in 1997and lapsed in 2002.

 

** no option rights were granted in 1998.

 

***under Dutch fiscal rules, management receiving options can elect to accept a25% higher exercise price. The base exercise price was set at EUR 13.69 in2002, EUR 19.61 in 2001 and EUR 26.35 in 2000, equaling stock priceat close of business on the Amsterdam Stock Exchanges on May 6, 2002,April 20, 2001 and April 17, 2000 respectively. The EUR 13.75 in2002, EUR 20.04 in 2001 and EUR 27.35 in 2000, are the weighted averageexercise prices as actually achieved following acceptance of the grant bymanagement involved.

 

The Company extends interest-bearing loans tothe Dutch optionees to finance their upfront tax obligations resulting from theoption grant and which are due at the date of grant. The loans of Members of the Executive Board extended within thiscontext are listed in Note 10.

 

F-44

----

 

**24. Commitments not included in theBalance Sheet**

 
|                                                     |   | **December 31, 2002** |       | **December 31, 2001** |       |
|----------------------------------------------------------|--------|----------------------------|------------|----------------------------|------------|
|                                                     |   |                       |       |                       |       |   |   |   |   |
| *Rental and operational lease commitments (see Note 26)* |   |                       |       |                       |       |   |   |   |   |
| These are due as follows:                                |   |                       |       |                       |       |   |   |   |   |
| Within 1 year                                            |   | 107                        |       |                       |       | 91 |   |   |   |
| After 1 year but within 5 years                          |   | 282                        |       |                       |       | 230 |   |   |   |
| After 5 years                                            |   | 257                        |       |                       |       | 161 |   |   |   |
|                                                     |   |                       |       | 646                        |       |   |   | 482 |   |
|                                                     |   |                       |       |                       |       |   |   |   |   |
| *Repurchase guarantees*                                  |   |                       |       |                       |       |   |   |   |   |
| These lapse as follows:                                  |   |                       |       |                       |       |   |   |   |   |
| Within 1 year                                            |   | 21                         |       |                       |       | 25 |   |   |   |
| After 1 year but within 5 years                          |   | 51                         |       |                       |       | 62 |   |   |   |
| After 5 years                                            |   | 1                          |       |                       |       | 4 |   |   |   |
|                                                     |   |                       |       | 73                         |       |   |   | 91 |   |
|                                                     |   |                       |       |                       |       |   |   |   |   |
| *Investment commitments*                                 |   |                       |       |                       |       |   |   |   |   |
| Within 1 year                                            |   |                       |       | 26                         |       |   |   | 51 |   |
|                                                     |   |                       |       |                       |       |   |   |   |   |
| *Other commitments*                                      |   |                       |       |                       |       |   |   |   |   |
| These lapse as follows:                                  |   |                       |       |                       |       |   |   |   |   |
| Within 1 year                                            |   | 7                          |       |                       |       | 3 |   |   |   |
| After 1 year but within 5 years                          |   | 3                          |       |                       |       | — |   |   |   |
|                                                     |   |                       |       | 10                         |       |   |   | 3 |   |
| **Total commitments**                                    |   |                       | ** ** | **755**                    | ** ** |   | ** ** | **627** | ** ** |

 

Rental and operational lease commitments areprimarily related to distribution facilities and offices.

 

Repurchase guarantees concern graphic machinessold to customers, and financed by external financing companies. Should the customerbe declared in default, the respective financing company has a right ofrecourse against Buhrmann at book value, which, in general, will be lower thanmarket value. Buhrmann monitors the development of the market value of therespective machines. If there is reason to do so, a provision will be recorded.The amount stated here indicates the maximum exposure under these guarantees.

 

Investment commitments relate to expenditure onprojects, such as the development of IT systems.

 

In addition, the Company had certain contingentliabilities, commitments and guarantees which are not included in the tableabove and which are discussed below.

 

Buhrmann’s operating companies inEurope offer a variety of defined benefit plans, in addition to Governmentschemes, as part of the remuneration package. In countries like the Netherlandsand the United Kingdom, the defined benefit plans are separated from Buhrman in pension funds towhich Buhrmann makes contributions. Depending on specific financing arrangements and funding levels,Buhrmann may incur liabilities for certain deficits which amount to USD 3.9million at December 31, 2002.  Noprovisions were recorded in the balance sheet at December 31, 2002 inconnection with this liability.

 

Buhrmann has entered into a number of forwardforeign exchange and currency swap contracts and interest rate swap contractswhich had an estimated negative market value of EUR 77 million atDecember 31, 2002 and which are not included in the table above. Theestimated market value of the outstanding forward foreign exchange and currencyswap contracts and interest rate swap

 

F-45

----

 

contracts indicates how much Buhrmann wouldhave to pay as per the balance sheet date in exchange for termination of thesecontracts without further commitments.

 

Buhrmann has indemnification commitments related todivestment of businesses which include indemnification for the imposition ofadditional taxes due to either a change in the tax law or an adverseinterpretation of the tax law. For these indemnification commitments, aprovision of EUR 18 million is included in the balance sheet atDecember 31, 2002. This provision is calculated based on the expectedpayments to be made under these indemnification commitments. The estimatedmaximum amount of these commitments is EUR 25 million and will expirelatest on December 31, 2009.

 

Buhrmann has issued certain performance guarantees,usually in the form of standby letters of credit, to an estimated maximum amountof EUR 10 million at December 31, 2002. The major part of theseguarantees expire latest on December 31, 2004.

 

Buhrmann has issuedguarantees of the indebtedness of a third party to a maximum amount ofEUR 2 million at December 31, 2002.

 

F-46

----

 

**25. Legal proceedings**

 

***Buhrmann ISD GroupeS.A. / Ipfo Bail S.A. - Arbitration***

The Buhrmann Group was involved as plaintiff inFrench arbitration proceedings, initiated in 1994 against the French companyIpfo Bail S.A (formerly named Locafrance S.A.). The claim related to theacquisition by the BuhrmannGroup from Ipfo Bail S.A. of all of the shares of the French company Agena S.A.in 1991. The claim was based on misrepresentation of the financial position ofthe company in the closing balance sheet at the time ofthe acquisition. On the basis of the decision rendered in these arbitrationproceedings, Buhrmann received indemnity payments totalling EUR 79 millionin February and March 2003, resulting in a net income of EUR 58 million, after deduction ofexpenses.

 

***Deutsche Papier /Bundeskartellamt***

In June 2002, the German competitionauthorities ( the Bundeskartellamt or “BKA”) launched an investigation againsta number of German paper merchants, among which is Buhrmann’s subsidiaryDeutsche Papier Vertriebs GmbH, alleging a violation of anti-trust rules inGermany.  The potential maximum fine forthe alleged violation is EUR 500,000 plus three times the surplus profitresulting from the violation of the anti-trust rules. The fine has not yet beenimposed by the BKA but based on the BKA’s initial assessment of surplus profit,the maximum fine would be approximately EUR 25 million. A third party investigation into the allegedsurplus profit substantiated Buhrmann’s position that there has been no or atthe most a minor surplus profit in the challenged period. Based on theforegoing, Buhrmann believes that if a fine would be applicable at all, it willnot exceed EUR 5 million.

 

***Other***

Buhrmann is involved invarious other routine legal and regulatory proceedings incidental to theconduct of its business. Buhrmann does not believe that any of these legal orregulatory proceedings will have a material adverse effect on its financialcondition or results of operations.

 

**26. Lease commitments**

 

The Company leases certain distributionfacilities, equipment and offices under non-cancelable operating leases. Futureminimum lease payments under all non-cancelable operating leases are asfollows:

 
|                             |   | **December 31,** |   |
|----------------------------------|--------|-----------------------|--------|
|                             |   | **2002**              |   | **2001** |   |
|                             |   |                  |   |   |   |
| Within 1 year                    |   | 107                   |   | 91 |   |
| After 1 year but within 2 years  |   | 91                    |   | 78 |   |
| After 2 years but within 3 years |   | 76                    |   | 66 |   |
| After 3 years but within 4 years |   | 62                    |   | 49 |   |
| After 4 years but within 5 years |   | 53                    |   | 37 |   |
| After 5 years                    |   | 257                   |   | 161 |   |
| Total                            |   | 646                   |   | 482 |   |

 

Lease expenses for non-cancelable operating leases for distributionfacilities and offices charged tothe income statement during the periods ended December 31, 2002, 2001 and2000 were EUR 58 million, EUR 59 million and EUR 41 millionrespectively.

 

F-47

----

 

**27. Notes to the Consolidated Statement of Cash Flows**

 
| **in  millions of euro**                              |   | **2002** |       | **2001** |       | **2000** |       |
|-------------------------------------------------------|--------|----------|------------|----------|------------|----------|------------|
|                                                  |   |     |       |     |       |     |       |
| **Net cash  flow: link with balance sheet movements** |   |     | ** ** |     | ** ** |     | ** ** |
| *Liquid  funds at beginning of year*                  |   |     |       |     |       |     |       |
| Bank overdrafts                                       |   | —   |       | (104     | )          | (2       | )          |
| Cash and deposits                                     |   | 99       |       | 57       |       | 74       |       |
|                                                  |   | 99       |       | (47      | )          | 72       |       |
| Translation differences                               |   | —   |       | (1       | )          | 2        |       |
| Short-term liabilities purchased and disposed of      |   | —   |       | 24       |       | (33      | )          |
|                                                  |   | 99       |       | (24      | )          | 41       |       |
| *Liquid  funds at end of year*                        |   |     |       |     |       |     |       |
| Bank overdrafts                                       |   | (26      | )          | —   |       | (104     | )          |
| Cash and deposits                                     |   | 37       |       | 99       |       | 57       |       |
|                                                  |   | 11       |       | 99       |       | (47      | )          |
|                                                  |   |     |       |     |       |     |       |
| **Increase/(decrease)  in liquid funds**              |   | **(88**  | **)**      | **123**  | ** ** | **(88**  | **)**      |

 

**28. Discontinued operations**

 

The following operations are reflected asdiscontinued operations for all periods presented, in accordance with US GAAP.

 

In May 2000, the sale of the InformationSystems Division was completed. Net sales of discontinued operations amountedto EUR 194 million in 2000. The sale of the Information Systems Divisionresulted in a bookloss of EUR 123 million (EUR 1.29 per share) ofwhich EUR 120 million was recorded in 1999. In consideration of this salethe Company received cash of EUR 57 million and loan notes of EUR 73million. These loan notes were early redeemed in May 2002 (see Note 14).

 

Liabilities of discontinued operations to beretained by the Company as of December 31, 2002 amounted to EUR 22million (2001: EUR 35 million) which is included in the Company’sConsolidated Balance Sheet.

 

F-48

----

 

**29. Segment Information**

 

The operations of the Buhrmann Group consist offive divisions. Office Products North America supplies office products andoffice furniture to large and medium-sized companies. Office Products Europeand Australia are combined for reporting purposes. These divisions aresuppliers and service providers in the field of office products, officefurniture, post-room equipment, copiers, faxes, telecommunications andfacilities management. The Paper Merchanting Division distributes paper toprinters, publishers and to the office market mainly in Europe. The GraphicSystems Division supplies pre-press systems, printing presses, folding, cuttingand binding machines in six European countries and also provides service and maintenancefor its customers.

 

Corporate items are not allocated to thedivisions and include costs incurred by the Corporate Head office as well ascosts and assets relating to geographical holding companies.

 

**Operating segments 2002**

 
| **in  millions of euro**                                        |   | **Office********Products********North  America** |       | **Office********Products********Europe/  Australia** |       | **Paper********Merchan-  ting** |       | **Graphic********Systems** |       | **Sub********total** |       | **Eli-********mina-********tions** |       | **Corpo-  rate********items** |       | **Total** |       |
|-----------------------------------------------------------------|--------|--------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------|------------|----------------------------|------------|----------------------|------------|------------------------------------|------------|-------------------------------|------------|-----------|------------|
|                                                            |   |                                             |       |                                                 |       |                            |       |                       |       |                 |       |                               |       |                          |       |      |       |
| Year ended December 31, 2002                               |   |                                             | ** ** |                                                 | ** ** |                            | ** ** |                       | ** ** |                 | ** ** |                               | ** ** |                          | ** ** |      | ** ** |
| Sales, external                                                 |   | 4,931                                            |       | 1,540                                                |       | 2,988                           |       | 489                        |       | 9,948                |       |                               |       |                          |       | 9,948     |       |
| Depreciation                                                    |   | (69                                              | )          | (20                                                  | )          | (21                             | )          | (4                         | )          | (114                 | )          |                               |       | —                        |       | (114      | )          |
| Operating result before amortization and impairment of goodwill |   | 197                                              |       | 64                                                   |       | 74                              |       | 23                         |       | 358                  |       |                               |       | (16                           | )          | 342       |       |
| Amortization and impairment of goodwill                         |   | (471                                             | )          | (139                                                 | )          | (29                             | )          | —                     |       | (639                 | )          |                               |       | (4                            | )          | (643      | )          |
| Operating result                                                |   | (274                                             | )          | (75                                                  | )          | 45                              |       | 23                         |       | (281                 | )          |                               |       | (20                           | )          | (301      | )          |
| Total assets                                                    |   | 2,928                                            |       | 695                                                  |       | 1,129                           |       | 240                        |       | 4,992                |       | (12                                | )          | 429                           |       | 5,409     |       |
| Capital expenditure                                             |   | 62                                               |       | 21                                                   |       | 19                              |       | 5                          |       | 107                  |       |                               |       |                          |       | 107       |       |

 

F-49

----

 

**Operating segments 2001**

 
| **in  millions of euro**                         |   | **Office********Products********North  America** |       | **Office********Products********Europe/  Australia** |       | **Paper********Merchan-  ting** |       | **Graphic********Systems** |       | **Sub********total** |       | **Eli-********mina-********tions** |       | **Corpo-  rate********items** |       | **Total** |       |
|--------------------------------------------------|--------|--------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------|------------|----------------------------|------------|----------------------|------------|------------------------------------|------------|-------------------------------|------------|-----------|------------|
|                                             |   |                                             |       |                                                 |       |                            |       |                       |       |                 |       |                               |       |                          |       |      |       |
| Year ended December 31, 2001                |   |                                             | ** ** |                                                 | ** ** |                            | ** ** |                       | ** ** |                 | ** ** |                               | ** ** |                          | ** ** |      | ** ** |
| Sales, external                                  |   | 5,221                                            |       | 1,496                                                |       | 3,126                           |       | 565                        |       | 10,408               |       |                               |       |                          |       | 10,408    |       |
| Depreciation                                     |   | (71                                              | )          | (17                                                  | )          | (19                             | )          | (4                         | )          | (111                 | )          |                               |       | 2                             |       | (109      | )          |
| Operating result before amortization of goodwill |   | 242                                              |       | 53                                                   |       | 93                              |       | 38                         |       | 426                  |       |                               |       | (18                           | )          | 408       |       |
| Amortization and impairment of goodwill          |   | (48                                              | )          | (13                                                  | )          | (3                              | )          | —                     |       | (64                  | )          |                               |       | (3                            | )          | (67       | )          |
| Operating result                                 |   | 194                                              |       | 40                                                   |       | 90                              |       | 38                         |       | 362                  |       |                               |       | (21                           | )          | 341       |       |
| Total assets                                     |   | 4,203                                            |       | 1,066                                                |       | 1,261                           |       | 242                        |       | 6,772                |       | (12                                | )          | 357                           |       | 7,117     |       |
| Capital expenditure                              |   | 87                                               |       | 14                                                   |       | 21                              |       | 5                          |       | 127                  |       |                               |       |                          |       | 127       |       |

 

**Operating segments 2000**

 
| **in  millions of euro**                         |   | **Office********Products********North  America** |       | **Office********Products********Europe/  Australia** |       | **Paper********Merchan-  ting** |       | **Graphic********Systems** |       | **Sub********total** |       | **Eli-********mina-  tions** |       | **Corpo-  rate********items** |       | **Total** |       |
|--------------------------------------------------|--------|--------------------------------------------------|------------|------------------------------------------------------|------------|---------------------------------|------------|----------------------------|------------|----------------------|------------|------------------------------|------------|-------------------------------|------------|-----------|------------|
|                                             |   |                                             |       |                                                 |       |                            |       |                       |       |                 |       |                         |       |                          |       |      |       |
| Year ended December 31, 2000                |   |                                             | ** ** |                                                 | ** ** |                            | ** ** |                       | ** ** |                 | ** ** |                         | ** ** |                          | ** ** |      | ** ** |
| Sales, external                                  |   | 4,703                                            |       | 1,330                                                |       | 3,014                           |       | 556                        |       | 9,603                |       |                         |       |                          |       | 9,603     |       |
| Depreciation                                     |   | (71                                              | )          | (17                                                  | )          | (18                             | )          | (3                         | )          | (109                 | )          |                         |       | (4                            | )          | (113      | )          |
| Operating result before amortization of goodwill |   | 333                                              |       | 41                                                   |       | 130                             |       | 50                         |       | 554                  |       |                         |       | (8                            | )          | 546       |       |
| Amortization and impairment of goodwill          |   | (44                                              | )          | (8                                                   | )          | (3                              | )          | —                     |       | (55                  | )          |                         |       | —                        |       | (55       | )          |
| Operating result                                 |   | 289                                              |       | 33                                                   |       | 127                             |       | 50                         |       | 499                  |       |                         |       | (8                            | )          | 491       |       |
| Total assets                                     |   | 3,712                                            |       | 791                                                  |       | 1,304                           |       | 237                        |       | 6,044                |       | (6                           | )          | 380                           |       | 6,418     |       |
| Capital expenditure                              |   | 85                                               |       | 8                                                    |       | 25                              |       | 3                          |       | 121                  |       |                         |       | 1                             |       | 122       |       |

 

F-50

----

 

**30. Enterprise wide disclosures**

 
| **in millions of euro**              |   | **United  States** |       | **United********Kingdom** |       | **The  Nether-  lands** |       | **Rest of  EMU  members** |       | **Rest of  Europe** |       | **Rest of  the  world** |       | **Total** |       |
|--------------------------------------|--------|--------------------|------------|---------------------------|------------|-------------------------|------------|---------------------------|------------|---------------------|------------|-------------------------|------------|-----------|------------|
|                                 |   |               | ** ** |                      | ** ** |                    | ** ** |                      | ** ** |                | ** ** |                    | ** ** |      | ** ** |
| **Sales by  country of destination** |   |               |       |                      |       |                    |       |                      |       |                |       |                    |       |      |       |
| Year ended December 31, 2002    |   | 4,665              |       | 1,251                     |       | 961                     |       | 2,111                     |       | 281                 |       | 679                     |       | 9,948     |       |
| Year ended December 31, 2001    |   | 4,952              |       | 1,294                     |       | 995                     |       | 2,243                     |       | 273                 |       | 651                     |       | 10,408    |       |
| Year ended December 31, 2000    |   | 4,424              |       | 1,183                     |       | 916                     |       | 2,252                     |       | 223                 |       | 605                     |       | 9,603     |       |
|                                 |   |               | ** ** |                      | ** ** |                    | ** ** |                      | ** ** |                | ** ** |                    | ** ** |      | ** ** |
| **Long lived  assets***              |   |               |       |                      |       |                    |       |                      |       |                |       |                    |       |      |       |
| Year ended December 31, 2002    |   | 1,538              |       | 124                       |       | 100                     |       | 118                       |       | 36                  |       | 464                     |       | 2,380     |       |
| Year ended December 31, 2001    |   | 2,304              |       | 227                       |       | 104                     |       | 298                       |       | 51                  |       | 413                     |       | 3,397     |       |

 

----

*long-lived assets includeproperty, plant and equipment and intangible fixed assets

 

F-51

----

 

**31.Subsequent Events**

 

On June 18,2003, Buhrmann announced that it had been approached regarding a possible saleof its Paper Merchanting Division to PaperlinX Limited. The Australia-basedmerchanting and paper production group has offered Buhrmann EUR 746million (on a debt free and cash-free basis).

 

The envisaged sale of the Paper MerchantingDivision is subject, amongst other things, to completion of due diligence byPaperlinX, regulatory approvals, the consent of Buhrmann’s banking syndicate,negotiation of a definitive sale and purchase agreement, completion of workscouncil and trade union consultation procedures, and the approval of Buhrmannshareholders.

 

It is expected that a sale and purchaseagreement will be entered into with the subsequent completion of thetransaction anticipated in the third quarter of 2003.

 

Following the execution of a sale and purchaseagreement, the transaction, together with the revised terms of the preferenceshares C will subsequently be submitted to Buhrmann’s shareholders forapproval.

 

Buhrmann has secured the required consent ofthe holders of Preference Shares C (see Note 17).  Contingent on the completion of the sale of the Paper MerchantingDivision, these shareholders have been offered the following revisions of theterms of the Preference Shares C:

 
|                                                                                                                             |   | **Existing terms** |   | **Revised terms**         |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|---------------------------|
| Initial conversion rate (1)                                                                                                      |   | EUR 18.1125        |   | EUR 13.00                 |
| Date of cancellation or  repurchase of the shares at 100% of the liquidation preference (USD 10,000,  plus accrued dividend) (2) |   | October 2011       |   | October 2010              |
| Annual dividend (3)                                                                                                              |   | 5.5%               |   | 2004 and 2005: 6.0%       |
|                                                                                                                             |   |               |   | 2006, 2007 and 2008: 6.5% |
|                                                                                                                             |   |               |   | 2009: 7.5%                |
|                                                                                                                             |   |               |   | 2010: 8.5%                |
|                                                                                                                             |   |               |   |                      |
| Cancellation or repurchase  right if trading price of Ordinary Shares exceeds conversion price under  certain conditions (4)     |   | 150%               |   | 125%                      |

 

----

(1)     Conversion price as defined in Article 34 ofthe Articles of Association of Buhrmann N.V.

(2)     The twelfth anniversary of Issue Date perArticle 34 of the Articles of Association of Buhrmann N.V. shall become theeleventh anniversary of Issue Date.

(3)     The dividend of 5.5% per Article 33 of theArticles of Association of Buhrmann N.V. shall be replaced with the scheduleset out in the table and the rates set out in the table will apply to calendaryears.

(4)     In Article 14, paragraph 2 c (ii) A (i) of theArticles of Association the clause “150% of the then prevailing ConversionPrice” shall be replaced with “125% of then prevailing Conversion Price”.

 

As a consequence of the reduced initialconversion rate under the revised terms set out above, the Preference Shares C,if converted, would convert into approximately 34 million Ordinary Shares peryear-end 2003, as compared to approximately 24 million Ordinary Shares peryear-end 2003 under the existing terms.

 

The envisaged sale of the Paper MerchantingDivison will result in a book loss before tax that is preliminary estimated tobe EUR 120 million under Dutch GAAP. This includes an estimatedEUR 50 million non-cash tax charge. As a consequence of applying theproceeds from the envisaged sale of the Paper Merchanting Division to reducedebt, it is foreseen that in addition to the book loss, a loss of EUR 60million (of which EUR 40 million cash) will be incurred under Dutch GAAPdue to unwinding of interest rate swaps and a write-off of related capitalizedfinancing fees. Buhrmann is assessing the book result on the envisaged sale ofthe Paper Merchanting Division under US GAAP.

 

F-52

----

 

**32. Summary of differences between generally acceptedaccounting principles in the Netherlands and generally accepted accountingprinciples in the United States**

 

The Company’s Consolidated Financial Statementshave been prepared in accordance with generally accepted accounting principlesin the Netherlands (Dutch GAAP), which differ in certain significant respectsfrom generally accepted accounting principles in the United States (US GAAP).The effect of the application of US GAAP to net result and Group equity is setout in the tables below.

 

Certain differences between Dutch GAAP and USGAAP reporting requirements lead to reconciling items set out below. Otheritems relate only to the disclosure of additional information. These items arenoted as US GAAP additional disclosures.

 

In millions of euro

 
|                            |                                      |     | **2002** |   | **2001**   |    | **2000**   |   |
|---------------------------------|-------------------------------------------|----------|----------|--------|------------|---------|------------|--------|
|                            |                                      |     |     |   |       |    |       |   |
| **Net result under Dutch GAAP** |                                      | **(588** | **)**    | **55** | ** ** | **221** | ** ** |
| a)                              | Goodwill amortization                     |     | 70       |   | (6         | )       | (4         | )      |
| a)                              | Goodwill impairment                       |     | (439     | )      | —     |    | —     |   |
| b)                              | Intangible fixed assets  amortization     |     | (6       | )      | (8         | )       | (8         | )      |
| c)                              | Discontinued operations                   |     | —   |   | —     |    | (28        | )      |
| d)                              | Restructuring and  integration provisions |     | 7        |   | (66        | )       | (112       | )      |
| e)                              | Capitalized software  provision           |     | (1       | )      | (2         | )       | (11        | )      |
| f)                              | Derivatives                               |     | (7       | )      | 10         |    | (7         | )      |
| g)                              | Pension                                   |     | 27       |   | 26         |    | (9         | )      |
| h)                              | Financing fees                            |     | 3        |   | —     |    | —     |   |
| i)                              | Revenue recognition                       |     | 1        |   | (2         | )       | (2         | )      |
| j)                              | Other                                     |     | (1       | )      | (2         | )       | (3         | )      |
| k)                              | Deferred taxes                            |     | (7       | )      | 30         |    | 50         |   |
|                            |                                      |     |     |   |       |    |       |   |
| **Net result under US GAAP**    |                                      | **(941** | **)**    | **35** | ** ** | **87**  | ** ** |

 
|                              |                                               | **December 31,** |       |
|-----------------------------------|----------------------------------------------------|-----------------------|------------|
|                              |                                               | **2002**              |       | **2001** |   |
|                              | ** **                                         |                  | ** ** |   | ** ** |
| **Group equity under Dutch GAAP** |                                               | **1,811**             | ** ** | **2,671** | ** ** |
| a)                                | Goodwill at cost, net of  accumulated amortization |                  | (172       | ) | 168 |   |
| b)                                | Intangible fixed assets                            |                  | 86         |   | 101 |   |
| d)                                | Restructuring and  integration provisions          |                  | 30         |   | 12 |   |
| f)                                | Derivatives - Other  Comprehensive Income          |                  | (67        | ) | (51 | ) |
| f)                                | Derivatives                                        |                  | (10        | ) | (3 | ) |
| g)                                | Pension, including  additional minimum liability   |                  | 130        |   | 152 |   |
| h)                                | Financing fees                                     |                  | 3          |   | — |   |
| i)                                | Revenue recognition                                |                  | (41        | ) | (42 | ) |
| j)                                | Other                                              |                  | (3         | ) | (1 | ) |
| k)                                | Deferred taxes                                     |                  | 143        |   | 150 |   |
|                              |                                               |                  |       |   |   |
| **Group equity under US GAAP**    |                                               | **1,910**             | ** ** | **3,157** | ** ** |

 

F-53

----

 

***a) Goodwill***

 

Thisitem consists of the following:

 

i)                      For acquisitions occurring prior toJanuary 1, 1997, goodwill was directly written off to Group equity underDutch GAAP. Under US GAAP this goodwill is capitalized and amortized over theestimated useful life of forty years.

ii)                   Buhrmann repurchased the outstanding public 30%minority share of its former US subsidiary, BT Office Products Inc. (BTOPI) inOctober 1998. Under Dutch GAAP this transaction was accounted for as arepurchase of Group equity and was shown as a movement in Group equity. UnderUS GAAP, the accounting treatment is to consider the surplus paid over fairvalue of net assets as goodwill.

iii)                On November 1, 1999, Buhrmann purchasedall the outstanding shares of Corporate Express Inc. Certain fair valueadjustments, including provisions for restructuring and integration, which weremade for Dutch GAAP purposes, did not qualify for US GAAP. This lead to a loweramount of goodwill under US GAAP. In addition, for US GAAP purposes only,certain intangible assets (the workforce, Corporate Express brandname andsoftware) were valued and recognized separately from goodwill, see point b)below. Under Dutch GAAP these intangible assets are included in goodwill.Furthermore deferred taxes on certain of the above-mentioned fair value adjustmentsand certain valuation allowances on deferred tax assets that did not qualifyfor US GAAP which resulted in differences in goodwill under US GAAP compared toDutch GAAP.

iv)               With the Samas and USOP acquisitions inApril and May 2001, some provisions for redundancy payments foremployees were recorded and included in goodwill under Dutch GAAP whereas underUS GAAP these payments are expensed over the period these employees are workingfor Buhrmann. As of January 1, 2001, the rules regarding restructuring andintegration provisions under Dutch GAAP are practically the same as under USGAAP. Consequently there were no other fair value adjustments than theprovisons for redundancy payments regarding the Samas and USOP acquisitions.

 

The net effect of the items mentioned above wasa higher gross amount of goodwill under US GAAP of EUR 271 million atDecember 31, 2001 and EUR 300 million at December 31, 2002.  Some of this goodwill is denominated in USdollars and was amortized over its estimated useful life of forty years untilDecember 31, 2001. Amortization expense on this goodwill was EUR 6million in 2001 and EUR 4 million in 2000. Accumulated amortization wasEUR 103 million at December 31, 2001.

 

As of January 1,2002, goodwill is no longer amortized under US GAAP. On January 1, 2002, SFAS No. 142 “Goodwilland Other Intangible Assets” became effective. SFAS No. 142 eliminates the amortization of goodwill and otherintangible assets with indefinite lives. However, SFAS No. 142 requiresgoodwill and other intangible assets to be tested at least once annually forimpairment. Separable other intangible assets that are not deemed to haveindefinite lives will continue to be amortized over their useful lives. SFASNo. 142 requires that the useful lives of separable other intangible assets bereassessed and the remaining amortization periods adjusted. The adoption ofSFAS No. 142 resulted in the elimination of amortization of goodwill in 2002under US GAAP which was EUR 70 million under Dutch GAAP.

 

SFAS No. 142 required that within six monthsafter its adoption, goodwill must be initially tested for impairment. Buhrmanndetermined that the adoption of SFAS No. 142 did not result in an initialimpairment of goodwill. Under the impairment test under Dutch GAAP, the fairvalue of the cash-generating unit that contains the goodwill is compared to itsbook value, including the goodwill. Under Dutch GAAP, any excess of book valueover fair value is recorded as an impairment of goodwill, if the impairment isexpected to be permanent. The fair value of the cash-generating unit iscalculated based on discounted future cash flows and residual values. Under USGAAP, a two-step process is performed to analyze whether or not goodwill hasbeen impaired. Step one is to test for potential

 

F-54

----

 

impairment, and requires that the fair value ofthe reporting unit be compared to its book value including goodwill. The fairvalue of the reporting unit is calculated based on discounted future cash flowsand residual values as under Dutch GAAP. If the fair value is higher than thebook value, no impairment is recognized. If the fair value is lower than thebook value, a second step is performed. The second step is to measure theamount of impairment loss, if any, and requires that assets and liabilities,including unrecognized intangible assets such as brand names and customer andsupplier relationships, be assigned fair values in a hypothetical purchaseprice allocation to determine the implied fair value of goodwill. This fairvalue is then compared to the carrying value of goodwill. If the implied fairvalue is lower than the carrying value, an impairment must be recorded for thedifference.

 

In accordance with SFAS No. 142, Buhrmann performedan annual impairment test on goodwill as at December 31, 2002. A reduced level ofprofitability in 2002 and reduced visibility concerning future performanceresulting in a higher cost of capital, caused a decline in the calculated fairvalue of our businesses which resulted in an impairment of goodwill ofEUR 573 million under Dutch GAAP at December 31, 2002. Under US GAAPthe impairment was EUR 439 million higher compared to Dutch GAAP.  This is predominantly a result of the higheramount of goodwill previously capitalized under US GAAP, as explained above,for EUR 248 million and the valuation of unrecognized intangible assets(brandnames and customer and supplier contracts) for EUR 124 million.

 

**b) Intangibleassets**

 

With the acquisition of Corporate Express inOctober 1999, certain intangible assets were valued and recognizedseparately from goodwill under US GAAP. These include the workforce (USD 10million), the Corporate Express brandname (USD 75 million) and software (USD 20million). These intangibles are amortized over their estimated useful lives of4, 40 and 7 years respectively.

 

Under SFAS No. 142 “Goodwill and OtherIntangible Assets”, the workforce does no longer not meet the criteria forseparate recognition and the bookvalue therof was reclassified to goodwill atJanuary 1, 2002.

 

The amortization expense of the CorporateExpress Brandname was USD 2 million in 2002 and the accumulated amortization atDecember 31, 2002 USD 5 million.  Theannual amortization expense of the Corporate Express Brandname will be USD 2million in the next 5 years.

 

The amortization expense of the software wasUSD 3 million in 2002 and the accumulated amortization at December 31, 2002 USD9 million.  The annual amortizationexpense of the software will be USD 3 million until the year 2005.

 

***(c) Discontinuedoperations***

 

During 1999, the Company disposed of a portionof the Information Systems Division and sold the remainder of this division inMay 2000. At December 31, 1999, the Company had received notificationfrom interested parties that the price to be paid for the remainder of theInformation Systems Division was significantly lower than the net book value.As a result, for Dutch GAAP, the Company recorded a provision atDecember 31, 1999 to accrue for the expected bookloss on the net assetsand the costs associated with the disposal of the remainder of the InformationSystems Division. Included in this provision was a general provision forEUR 28 million, which did not qualify under US GAAP.  This provision was reversed for US GAAPpurposes in 1999, which consequently lead to a loss under US GAAP ofEUR 28 million in 2000.

 

**(d)Restructuring and integration provisions**

 

Until 2000, under Dutch GAAP when a decisionwas made to restructure part of the Company’s business, provisions were madefor redundancies as well as other closing, integration and moving costs.  Under US GAAP only costs that qualify asexit costs and therefore do not relate to the ongoing operations of the Companymay be provided for. In addition, a number of specific criteria must be metbefore these costs can qualify as exit costs and can be recognized as anexpense. Among these is the requirement that all the significant actions to betaken as part of the reorganization must be identified along with theirexpected completion dates and the exit program must be approved andcommunicated by the balance sheet date. Costs that do not qualify as exit costsare expensed when the obligation exists to pay cash or otherwise sacrificeassets. As of January 1, 2001 practically the same rules apply under DutchGAAP except that Dutch GAAP requires the restructuring plan to be communicatedby the publication date of the Financial Statements.

 

F-55

----

 

Following the acquisition in October 1999of Corporate Express and subsequent integration, the Company’s office productactivities in the US and Europe underwent a restructuring. As explained in itema) Goodwill above, at the time of acquisition, under Dutch GAAP somerestructuring and integration provisions were recorded, and included ingoodwill, that did not qualify for USGAAP. As a consequence, some restructuringand integration payments in the years after the acquisition were expensed underUS GAAP whereas under Dutch GAAP these payments were deducted from theprovisions. In 2002 an amount of EUR 9 million was expensed under US GAAP,EUR 71 million in 2001 and EUR 106 million in 2000.

 

This item also includes redundancy payments toformer USOP employees of EUR 2 million in 2002 and EUR 5 million in2001 which were expensed under US GAAP and for which under Dutch GAAPprovisions were recorded at the time of acquisition in 2001 as part ofgoodwill.

 

In addition, in 2001 and 2002 the Companyintroduced additional restructuring plans for its office products operations inNorth America and Europe as well as its papermerchating operations in Europe.Under Dutch GAAP an accrual of EUR 45 million was recorded in connectionwith these restructuring plans of which EUR 10 million did not qualify forUS GAAP for recognition in 2001 and was, as a consequence, expensed under USGAAP in 2002. In 2002 Buhrmann accrued EUR 60 million under Dutch GAAP forthe additional restructuring plans and EUR 51 million for non-cash write-offson IT, distribution infrastructure and some other assets.  Under US GAAP, EUR 28 million of thisaccrual, mainly related to the restructuring plans, did not qualify forrecognition in 2002 and as a consequence will be expensed in subsequent years,predominantly in 2003.

 

***(e) Capitalized software provision***

 

The Company’s former US subsidiary, BT OfficeProducts Inc. initiated Project Millennium, a project designed to create acommon system platform for numerous processes in the Company, includingdistribution, warehousing, order entry, financing and human resources. In 1998,under Dutch GAAP provisions were recorded for future expenses related toProject Millennium which did not qualify for US GAAP and were thus reversed. In2002, EUR 1 million of these provisions were utilized and thereforeexpensed under US GAAP (2001: EUR 2 million, 2000: EUR 11 million).

 

***(f) Derivatives***

 

The amount of EUR 67 million negative inAccumulative Other Comprehensive Income at December 31, 2002 is the marketvalue of interest rate swaps which are designated as cash flow hedges asdefined under SFAS No. 133 “Accounting forDerivative Instruments and Hedging Activities” which became effectiveJanuary 1, 2001. The adoption of SFAS No. 133 resulted in a cumulative pre-tax reduction of OtherComprehensive Income of EUR 13 million(EUR 8 million net of tax). In 2002 an amount of EUR 16 million wasrecorded as a reduction to Other Comprehensive Income and in 2001 anamount of EUR 38 million. In 2002 aloss of EUR 5 million related to hedge ineffectiveness was recorded. In2001 no gain or loss related to hedge ineffectiveness was recorded. Theinterest rate swaps were entered into to hedge variable rate debt to fixedrate. The amount of EUR 67 million recorded in Other ComprehensiveIncome at December 31, 2002 will affect earnings when the variable rateinterest for the periods being hedged affect earnings. An amount of EUR 31million is expected to be reclassified to earnings in 2003.  The reduction of Group Equity under US GAAPof EUR 10 million as at December 31, 2002 is the market value of theinterest rate swaps for which no hedge accounting is applied.

 

The EUR 7 million loss under US GAAP in2002 consists of a loss of EUR 5 million due to hedge ineffectiveness oninterest rate swaps for which hedge accounting is applied and a loss ofEUR 2 million on interest rate swaps for which no hedge accounting isapplied. The EUR 10 million gain under US GAAP in 2001 consists of a lossof EUR 3 million on interest rate swaps for which no hedge accounting isapplied, a gain of EUR 6 million on currency swaps for which no hedgeaccounting is applied and a gain of EUR 7 million on the sale of a ‘zerocost collar’ that

 

F-56

----

 

was taken out to safeguard the value ofBuhrmann’s 5% interest in Sappi Limited. The interest in Sappi and the ‘zerocost collar’ were sold in 2001. As part ofthe collar was already sold in 2000 and the loss thereon of EUR 7 milliondeferred under Dutch GAAP only, the gain on the sale in 2001 was EUR 7million higher under US GAAP.

 

F-57

----

 

***(g) Pension***

 

Buhrmann has defined benefit plans forsubstantially all its employees in Europe. For its employees in the UnitedStates, Buhrmann sponsors several defined contribution plans. The benefits arein general based on years of service and average salary.

 

With regard to the defined benefit plans, underUS GAAP, SFAS 87 requires re-adjustment of the significant actuarialassumptions annually to reflect current market and economic conditions.Additionally, only those accumulated gains or losses arising in the plan from adifference between the actual experience of the plan and the actuarialassumptions made, falling outside ten percent of the greater of the projectedbenefit obligation or the market value of the assets, are being amortized.

 

This method significantly differs from theaccounting under Dutch GAAP, whereby a provision for pensions, which relatesprimarily to non-reinsured pension entitlements, past-service premiums fallingdue in the future and commitments to former employees, is accrued at itspresent value. In accordance with SFAS 87, the excess of plan assets overprojected benefit obligation, as of January 1, 1989, the transition dateis recognized as a part of periodic pension costs on a prospective basis.

 

Under US GAAP, SFAS 132 requires thefollowing disclosures by an employer that sponsors one or more defined benefitpension plans.

 
| **In  millions of euro**                         |   | **2002** |   | **2001** |   | **2000** |       |
|--------------------------------------------------|--------|----------|--------|----------|--------|----------|------------|
| **Net periodic  pension cost**                   |   |     |   |     |   |     |       |
| Service cost                                     |   | (14      | )      | (13      | )      | (11      | )          |
| Interest cost                                    |   | (41      | )      | (36      | )      | (34      | )          |
| Expected return on plan assets                   |   | 60       |   | 59       |   | 60       |       |
| Settlement / curtailment gain                    |   | 1        |   | 2        |   | —   |       |
| Net amortization and deferral and other expenses |   | (16      | )      | (13      | )      | (11      | )          |
| Net periodic pension costs under US GAAP         |   | **(10**  | **)**  | **(1**   | **)**  | **4**    | ** ** |

 

F-58

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|                                               |   | **December 31,** |       |
|----------------------------------------------------|--------|-----------------------|------------|
|                                               |   | **2002**              |       | **2001** |   |
| **Change in  projected benefit obligation:**       |   |                  |       |   |   |
| Benefit obligation at beginning of year            |   | **(687**              | **)**      | **(565** | **)** |
| Service cost                                       |   | (14                   | )          | (13 | ) |
| Interest cost                                      |   | (41                   | )          | (36 | ) |
| Plan participant’s contributions              |   | (3                    | )          | (3 | ) |
| Amendments                                         |   | (12                   | )          | (25 | ) |
| Actuarial gain/(loss)                              |   | (37                   | )          | (70 | ) |
| Benefits paid                                      |   | 30                    |       | 28 |   |
| Other (including currency translation adjustments) |   | 8                     |       | (3 | ) |
| **Projected benefit  obligation at end of year**   |   | **(756**              | **)**      | **(687** | **)** |
|                                               |   |                  |       |   |   |
| **Change in  plan assets:**                        |   |                  |       |   |   |
| Fair value of plan assets at beginning of year     |   | **798**               | ** ** | **751** | ** ** |
| Actual return on plan assets                       |   | (38                   | )          | 33 |   |
| Employer contribution                              |   | 10                    |       | 6 |   |
| Plan participants’ contributions              |   | 3                     |       | 3 |   |
| Amendments                                         |   | 11                    |       | 29 |   |
| Benefits paid                                      |   | (30                   | )          | (27 | ) |
| Other (including currency translation adjustments) |   | (7                    | )          | 3 |   |
| **Fair value  of plan assets at end of year**      |   | **747**               | ** ** | **798** | ** ** |

 
|                                             |   | **December 31,** |       |
|--------------------------------------------------|--------|-----------------------|------------|
|                                             |   | **2002**              |       | **2001** |   |
|                                             |   |                  |       |   |   |
| **Funded  Status**                               |   | **(9**                | **)**      | **111** | ** ** |
| Unrecognized transition cost                     |   | (8                    | )          | (16 | ) |
| Unrecognized prior service cost                  |   | (4                    | )          | (4 | ) |
| Unrecognized net actuarial (gain)/loss           |   | 191                   |       | 54 |   |
| Other pension arrangements                       |   | (10                   | )          | (11 | ) |
| **Prepaid/(accrued)  benefit cost**              |   | **160**               | ** ** | **134** | ** ** |
|                                             |   |                  | ** ** |   | ** ** |
| **Additional  minimum liability at end of year** |   | 51                    |       | 1 |   |
| Intangible asset                                 |   | —                |       | — |   |
| **Reduction  to equity**                         |   | **51**                | ** ** | **1** | ** ** |

 

F-59

----

 

**Weighted average assumptions**

 
|                           |   | **2002** |   | **2001** |   | **2000** |   |
|--------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                           |   |     |   |     |   |     |   |
| Discount rate                  |   | 5.5      | %      | 6.0      | %      | 6.2      | %      |
| Expected return on plan assets |   | 7.0      | %      | 7.7      | %      | 7.9      | %      |
| Rate of compensation increase  |   | 3.1      | %      | 3.6      | %      | 3.6      | %      |
| Increase of state pension      |   | 2.1      | %      | 2.6      | %      | 2.5      | %      |
| Pension increases              |   | 2.1      | %      | 2.5      | %      | 2.6      | %      |

 

The retirement plans in Germany and Italy arenon-contributory defined benefit plan covering substantially all employees.Benefits for retired employees or their beneficiaries of the plans are basedprimarily on years of service and amounts per year of service.

 

The aggregate projected benefit obligation andfair value of plan assets at December 31, 2002, of the pension plans of whichthe benefit obligation exceeds the fair value of plan assets, was EUR 212million and EUR 126 million respectively.

 

***(h) Financing fees***

 

This item relates to a write-off of capitalizedfinancing fees which was recorded under Dutch GAAP in 2002 as a result of earlyrepayments of long-term debt. This write-off did not qualify under US GAAP.

 

***(i) Revenuerecognition***

 

This item includes revenues with respect tographic machines sold to customers, and financed by external financingcompanies and for which repurchase guarantees exist. Should the customer bedeclared in default, the respective financing company has a right of recourseagainst Buhrmann. Under US GAAP these types of revenues can only be recognizedwhen the right of recourse has ended.

 

This item also includes sales of graphic machines of whichinstallation has not yet occurred and/or not all performance obligations havebeen completed, in accordance with StaffAccounting Bulletin No. 101 “Revenue Recognition in Financial Statements” (“SAB101”), issued by the staff of the Securities and Exchange Commission inDecember 1999. Under Dutch GAAP sales are in general recognizedwhen delivery takes place.

 

***(j) Other***

 

This category of reconciling items is other USGAAP adjustments related to subsidiaries of the Company.

 

***(k) Deferred taxes***

 

The Company recorded under Dutch GAAP valuationallowances on deferred tax assets for operating loss carryforwards. Under USGAAP, of these valuation allowances EUR 141 million at December 31,2002 and EUR 163 million at December 31, 2001 did not qualify andwere thus reversed. The effect on net result under US GAAP was a loss ofEUR 4 million in 2002, a gain of EUR 10 million in 2001 and nil in2000.

 

Furthermore, deferred taxes on US GAAPadjustments positively affected Group equity under US GAAP in the amount ofEUR 2 million at December 31, 2002 and negatively EUR 13 millionat December 31, 2001. The effect on net result under US GAAP was a loss ofEUR 3 million in 2002, a gain of EUR 20 million in 2001 and a gain ofEUR 50 million in 2000.

 

F-60

----

 

The components of deferred tax under USGAAP isas follows:

 

In millions of euro

 
|                                     |   | **December 31,** |   |
|------------------------------------------|--------|-----------------------|--------|
|                                     |   | **2002**              |   | **2001** |   |
| *Deferred tax assets*                    |   |                  |   |   |   |
| Restructuring and integration provisions |   | 6                     |   | 126 |   |
| Derivatives                              |   | 29                    |   | 21 |   |
| Tax loss carryforwards                   |   | 565                   |   | 512 |   |
| Nominal deferred tax asset               |   | 600                   |   | 659 |   |
|                                     |   |                  |   |   |   |
| Valuation allowances                     |   | (79                   | )      | (53 | ) |
| Deferred tax asset                       |   | 521                   |   | 606 |   |
|                                     |   |                  |   |   |   |
| *Deferred tax liabilities*               |   |                  |   |   |   |
| Fixed assets                             |   | (114                  | )      | (150 | ) |
| Pension                                  |   | (47                   | )      | (54 | ) |
| Other                                    |   | (93                   | )      | (174 | ) |
| Deferred liabilities                     |   | (254                  | )      | (378 | ) |
|                                     |   |                  |   |   |   |
| Total                                    |   | 267                   |   | 228 |   |

 

**US GAAP Additional Disclosures**

 

***Restructuring and integration plans***

 

As a consequence of the acquisition andsubsequent integration of the businesses of Corporate Express in 2000 and ofSamas and USOP in 2001 and as a result of a slow down in its markets in 2001,the Company introduced restructuring and integration plans for its officeproducts operations in North America and Europe. The restructuring andintegration plans include reductions in the number of staff , closure andconsolidation of sales offices and distribution centers, the closure of theBTOPI headoffice in Chicago, the migration of Corporate Express’ order processing system ISIS into former BTOPI (Buhrmann’s former US subsidiary)warehouses and the harmonization of systems. In 2002, the integration plans ofthe acquired Samas and USOP businesses were finalized. This lead to anincrease, under US GAAP, in restructuring provisions of EUR 7 millionwhich was set-up through income and a EUR 9 million increase inintegration provisions which was set-up through goodwill.

 

In 2002, Buhrmann introduced additionalrestructuring plans for mainly its office products operations in North Americaand Europe as well as paper merchanting operations in Europe, in the wake ofcontinued uncertainties regarding overall business activity in its majormarkets (see Note 18 for further details). Under the plans, Buhrmann accrued in2002 EUR 43 millionthrough income under US GAAP.

 

The restructuring lead to a reduction in theworkforce, especially in back-office and support functions, of about 2,300 fulltime employees in 2002.

 

 

F-61

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The movements in the restructuring provisionsin 2002 under US GAAP was as follows:

 
| **(in  millions of euro)**             |   | **Employee  costs** |       | **Write-down of  assets** |       | **Lease termination  and other closing  costs** |       | **Total** |       |
|----------------------------------------|--------|---------------------|------------|---------------------------|------------|-------------------------------------------------|------------|-----------|------------|
| Balance at December 31, 2001      |   | 29                  |       | 1                         |       | 22                                              |       | 52        |       |
| Set-up                                 |   | 25                  |       | 2                         |       | 18                                              |       | 45        |       |
| Cash utilization                       |   | (29                 | )          | —                    |       | (13                                             | )          | (42       | )          |
| Transfer to assets                     |   | —              |       | (2                        | )          | —                                          |       | (2        | )          |
| Currency translation                   |   | (2                  | )          | —                    |       | (1                                              | )          | (3        | )          |
| **Balance at  December 31, 2002** |   | **23**              | ** ** | **1**                     | ** ** | **26**                                          | ** ** | **50**    | ** ** |

 

The movements in the integration provisions in2002 under US GAAP was as follows:

 
| **(in  millions of euro)**             |   | **Employee  costs** |       | **Write-down of  assets** |       | **Lease termination  and other closing  costs** |       | **Total** |       |
|----------------------------------------|--------|---------------------|------------|---------------------------|------------|-------------------------------------------------|------------|-----------|------------|
| Balance  at December 31, 2001     |   | 20                  |       | 10                        |       | 33                                              |       | 63        |       |
| Set-up                                 |   | 10                  |       | —                    |       | 4                                               |       | 14        |       |
| Cash utilization                       |   | (19                 | )          | —                    |       | (24                                             | )          | (43       | )          |
| Transfer to assets                     |   | —              |       | (4                        | )          | —                                          |       | (4        | )          |
| Currency translation                   |   | (2                  | )          | (1                        | )          | (2                                              | )          | (5        | )          |
| **Balance at  December 31, 2002** |   | **9**               | ** ** | **5**                     | ** ** | **11**                                          | ** ** | **25**    | ** ** |

 

***Stock Options***

 

For details about the Company’s Stock OptionPlans see Note 23 of the Consolidated Financial Statements.

 

If the Company had elected to recognizecompensation expense based on the fair value of the stock options at grant dateas allowed by SFAS 123, “Accounting for Stock Based Compensation,”compensation expense of EUR 6 million for the year ended December 31,2002 would have been recorded, EUR 6 million for the year endedDecember 31, 2001 and EUR 2 million for the year endedDecember 31, 2000.

 

Net result would have been reduced to the proforma amounts indicated below:

 

In millions of euro, except per share data

 
|                                     |   | **2002** |   | **2001** |   | **2000** |   |
|------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| **US GAAP net  result:**                 |   |     |   |     |   |     |   |
| As reported                              |   | (941     | )      | 35       |   | 87       |   |
| Pro forma                                |   | (947     | )      | 29       |   | 85       |   |
|                                     |   |     |   |     |   |     |   |
| **US GAAP  basic net result per share:** |   |     |   |     |   |     |   |
| As reported                              |   | (7.38    | )      | 0.01     |   | 0.55     |   |
| Pro forma                                |   | (7.43    | )      | (0.04    | )      | 0.53     |   |

 

F-62

----

 

***Operating result and result fromoperations under US GAAP presentation***

 

Under Dutch GAAP, certain non-recurring itemswere classified as extraordinary income or expenses. Under US GAAP none of theseitems met the criteria to be classified as such and thus were included inoperating result. The income statement presented in the US GAAP format wouldresult in a reclassification of extraordinary items to operating result orresult from operations, as these items are neither unusual nor infrequentaccording to the US GAAP definition.

 

The office products division of CorporateExpress Nederland BV was sold in October 2001. Under Dutch GAAP theoperating result of this division from April 2001 to October 2001 ofEUR 3 million negative is included in other financial results. Theoperating result of this division for this period would under US GAAP beincluded in operating result.

 

Operating result and result from operationsbefore taxes under US GAAP is as follows (in millions of euro):

 
|                                |   | **2002** |   | **2001** |   | **2000** |   |
|-------------------------------------|--------|----------|--------|----------|--------|----------|--------|
|                                |   |     |   |     |   |     |   |
| Operating result                    |   | (757     | )      | 195      |   | 362      |   |
| Result from operations before taxes |   | (960     | )      | 12       |   | 139      |   |

 

F-63

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***Earnings per share***

 

Basic earnings per share are computed bydividing result after deduction of dividend on Preference Shares by theweighted average number of Ordinary Shares outstanding for the periods underreview. Dividends paid to holders of Preference Shares A and C of EUR 32million, EUR 34 million and EUR 33 million in 2002, 2001 and 2000respectively, were deducted for the years presented. Fully diluted earnings pershare assume that any dilutive convertible securities were converted at thebeginning of each year and all options outstanding at the end of the year wereexercised, insofar as the average marketprice was higher than the averageexercise price during the financial year of all outstanding options combined.

 

The computation of basic and fully dilutedearnings under US GAAP per Ordinary Share is as follows (in millions of euro,except per share data):

 
|                                                                                                                                        |   | **2002** |   | **2001** |       | **2000** |       |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------|------------|----------|------------|
| **Computation basic earnings per share**                                                                                                    |   |     |   |     |       |     |       |
| Net result                                                                                                                                  |   | (941     | )      | 35       |       | 87       |       |
| Less dividends on Preference Shares A and C                                                                                                 |   | (32      | )      | (34      | )          | (33      | )          |
| Net result after deduction of dividend on Preference  Shares                                                                                |   | (973     | )      | 1        |       | 54       |       |
| Discontinued operations                                                                                                                     |   | —   |   | —   |       | 30       |       |
| Result from continuing operations before  extraordinary items after deduction of dividend on Preference Shares                              |   | (973     | )      | 1        |       | 84       |       |
|                                                                                                                                        |   |     |   |     |       |     |       |
| Weighted average number of Ordinary Shares  outstanding (thousands)                                                                         |   | 131,818  |   | 123,760  |       | 98,790   |       |
|                                                                                                                                        |   |     |   |     |       |     |       |
| **Basic earnings per share**                                                                                                                |   |     |   |     |       |     |       |
| Result from continuing operations before  extraordinary items                                                                               |   | (7.38    | )      | 0.01     |       | 0.85     |       |
| Discontinued operations                                                                                                                     |   | —   |   | —   |       | (0.30    | )          |
| Net result                                                                                                                                  |   | (7.38    | )      | 0.01     |       | 0.55     |       |
|                                                                                                                                        |   |     |   |     |       |     |       |
|                                                                                                                                        |   | **2002** |   | **2001** | ** ** | **2000** | ** ** |
| **Computation fully diluted earnings per share**                                                                                            |   |     |   |     |       |     |       |
| Net result                                                                                                                                  |   | (941     | )      | 35       |       | 87       |       |
| Less dividends on Preference Shares A and C                                                                                                 |   | (32      |   | (34      | )          | (33      | )          |
| Net result after deduction of dividend on  Preference Shares after assuming dilution                                                        |   | (973     | )      | 1        |       | 54       |       |
| Discontinued operations                                                                                                                     |   | —   |   | —   |       | 30       |       |
| Result from continuing operations before  extraordinary items and after deduction of dividend on Preference Shares  after assuming dilution |   | (973     | )      | 1        |       | 84       |       |
|                                                                                                                                        |   |     |   |     |       |     |       |
| Computation weighted average number of Ordinary  Shares outstanding on fully diluted basis (in thousands):                                  |   |     |   |     |       |     |       |
| Weighted average number of Ordinary Shares  outstanding                                                                                     |   | 131,818  |   | 123,760  |       | 98,790   |       |
| Exercise of option rights                                                                                                                   |   | 0        |   | 0        |       | 424      |       |
|                                                                                                                                        |   | 131,818  |   | 123,760  |       | 99,214   |       |
|                                                                                                                                        |   |     |   |     |       |     |       |
| **Fully diluted earnings per share**                                                                                                        |   |     |   |     |       |     |       |
| Result from continuing operations before  extraordinary items                                                                               |   | (7.38    | )      | 0.01     |       | 0.85     |       |
| Discontinued operations                                                                                                                     |   | —   |   | —   |       | (0.30    | )          |
| Net result                                                                                                                                  |   | (7.38    | )      | 0.01     |       | 0.54     |       |

 

F-64

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In the years ended December 31, 2002, 2001and 2000, the conversion of 39,280 respectively 37,268 and 35,336 PreferenceShares C outstanding were not included in the calculation of diluted earningsper share because it would have an anti-dilutive effect on net result perOrdinary Share. The number of Ordinary Shares that would arise after conversionof the Preference shares C at December 31, 2002, 2001 and 2000 was 23,147respectively 21,893 and 20,403. The dividend on Preference Shares C wasEUR 21 million, EUR 20 million and EUR 19 million for 2002, 2001and 2000 respectively.

 

In the year ended December 31, 2002 and2001 option rights exercisable were not included in the calculation of dilutedearnings per share because they would have an anti-dilutive effect on netresult per Ordinary Share.

 

***Consolidated Statements ofComprehensive Income***

In millions of euro

 

The calculation of Comprehensive Income is asfollows:

 
|                                                  |   | **2002**   |   | **2001** |       | **2000** |       |
|-------------------------------------------------------|--------|------------|--------|----------|------------|----------|------------|
|                                                  |   |       |   |     |       |     |       |
| Net Result US GAAP                                    |   | (941       | )      | 35       |       | 87       |       |
| Other comprehensive income net of tax:                |   |       |   |     |       |     |       |
| Foreign currency translation adjustments              |   | (247       | )      | 54       |       | 65       |       |
| Unrealized gains and losses on marketable securities  |   | —     |   | (45      | )          | (30      | )          |
| Unrealized gains and losses on derivative instruments |   | (11        | )      | (12      | )          | 27       |       |
| Minimum pension liability                             |   | (35        | )      | —   |       | —   |       |
| **Comprehensive  Income**                             |   | **(1,234** | **)**  | **32**   | ** ** | **149**  | ** ** |

 

Foreign currency translation adjustmentsincludes a tax expense of EUR 25 million (in 2001 a tax benefit ofEUR 9 million and in 2000 a tax benefit of EUR 6 million). Unrealizedgains and losses on derivative instruments in 2002 includes a tax benefit ofEUR 5 million (2001: EUR 21 million and 2000: nil). Minimum pensionliability in 2002 includes a tax benefit of EUR 16 million.

 

F-65

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***Consolidated Statement of Cash Flows***

 

As permitted under Dutch GAAP changes in bankoverdrafts as shown in Note 27 include changes in short term borrowings. UnderUS GAAP changes in bank overdrafts should be included in financing activities.

 

Cash paid for acquisitions in the cash flowstatement represents the total cash paid for the acquired company (i.e., notnet of cash received). Similarly cash received for divestments in the cash flowstatement represent the total cash receipt. The cash received/disposed of aspart of acquisitions/ disposals is included in the change of cash and cashequivalents as shown in Note 27. Under US GAAP, cash paid for acquisitionsshould be shown net of cash received in investing activities. Similarly, cashconsideration received for divestments should be shown net of cash disposed ofin investing activities.

 

Under US GAAP, costs related to the integrationof Group companies are expensed as incurred and are classified within operatingactivities, whereas under Dutch GAAP, payments for these costs are includedwithin investing activities.

 

Under US GAAP the categories of the cash flowstatement would be as follows (in millions of euro):

 
|                                                            |   | **2002** |   | **2001** |   | **2000** |   |
|-----------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|
| Net cash provided by (used in) operating activities             |   | 168      |   | 261      |   | (92      | )      |
| Net cash used in investing activities                           |   | (48      | )      | (534     | )      | (159     | )      |
| Net cash provided by financing activities                       |   | (182     | )      | 316      |   | 265      |   |
| (Decrease)/increase in liquid funds                             |   | (62      | )      | 43       |   | 14       |   |
|                                                            |   |     |   |     |   |     |   |
| *(Increase)/decrease  in working capital*:                      |   |     |   |     |   |     |   |
| (Increase)/decrease inventories                                 |   | 11       |   | 85       |   | (106     | )      |
| (Increase)/decrease accounts receivable                         |   | 195      |   | 208      |   | (230     | )      |
| Increase/(decrease) accounts payable                            |   | (172     | )      | (19      | )      | 207      |   |
| (Increase)/decrease other receivables and  liabilities          |   | 17       |   | (64      | )      | (163     | )      |
|                                                            |   | 51       |   | 210      |   | (292     | )      |
| *Non- cash  investing activities:*                              |   |     |   |     |   |     |   |
| Assets and liabilities (net) acquired in a business combination |   | —   |   | 203      |   | 35       |   |
|                                                            |   |     |   |     |   |     |   |
| *Non- cash  financing activities:*                              |   |     |   |     |   |     |   |
| Redenomination  par value shares                                |   | —   |   | 13       |   | —   |   |

 

F-66

----

 

***Variable InterestEntities***

 

FASB Interpretation No. 46 (FIN 46)“Consolidation of Variable Interest Entities” requires certain disclosures ofvariable interest entities and, as of January 1, 2003, the consolidationof certain of these variable interest entities. Buhrmann is assessing theimpact of FIN 46, see “New Accounting Pronouncement” below.

 

Based on a preliminary review, Buhrmann hasdetermined that at December 31, 2002 it had a variable interest in SilverSecuritisation BV, Rheingold no 11 Ltd and Silver Funding Ltd, as describedunder “Accounts Receivable Securitization Program” above. In the course of2003, Buhrmann acquired a variable interest in an entity in Europe to whichBuhrmann sells graphic machines which are then leased by this entity toBuhrmann’s customers. This entity is a third party leasing company and hastransactions with various other parties. Buhrmann’s exposure to the losses ofthis entity does not exceed EUR 500,000. Total sales by Buhrmann to thisentity were EUR 3 million until May 31, 2003. In addition, in thecourse of 2003, Buhrmann acquired a variable interest in an entity in Europe towhich Buhrmann sells copiers which are then leased by this entity to Buhrmann’scustomers. Buhrmann is the only party that has sales to this entity which wereEUR 7 million until May 31, 2003. Buhrmann’s exposure to the lossesof this entity does not exceed 5% of the fair value of the copiers that weresold to this entity.

 

**33. New accounting pronouncements**

 

**Dutch GAAP**

In 2002 and 2001, Buhrmann incurred EUR 113million and EUR 86 million respectively of expenses relating torestructuring measures and integration of acquisitions which were under DutchGAAP presented as extraordinary expenses and as operating expenses under USGAAP. Under the new Guidelines for Annual Reporting applicable in theNetherlands effective as of January 1, 2003, these expenses do no longermeet the definition of extraordinary and would under Dutch GAAP be classifiedas exceptional operating expenses.

 

In addition, under thenew Guidelines for Annual Reporting applicable in the Netherlands effective asof January 1, 2003, revenue with respect to the sale of machines in theGraphic Systems Division, that are shipped subject to installation and theinstallation is a significant part of the sales contract, can only berecognized when the installation has been completed. Until January 1,2003, Buhrmann recognized, under Dutch GAAP, sales of graphic machines at thepoint of delivery.  The full year effecton sales and operating result in 2003 is estimated to be EUR 35 millionand EUR 8 million respectively.

 

**US GAAP**

In June 2001, the FASB issued SFAS No. 143,“Accounting for Asset Retirement Obligations”. This statement requiresthat the fair value of the liability for an asset retirement obligation berecognized in the period in which it is incurred if a reasonable estimate offair value can be made.  Associated asset retirement costs are capitalizedas part of the carrying amount of the long-lived asset.  This statementbecame effective for Buhrmann as of January 1, 2003. Buhrmann does notexpect the adoption of this statement to have a material impact on itsconsolidated results of operations, financial position or cash flows.

 

In April 2002, the FASB issued SFAS No. 145,“Recission of SFAS No. 4, 44, and 64, amendment of SFAS No. 13, andtechnical corrections”.  This statementamends existing guidance on reporting gains and losses on the extinguishment ofdebt to prohibit the classification of the gain or loss as extraordinary, asthe use of such extinguishments have become part of the risk managementstrategy of many companies. Buhrmann does not expect the adoption of  this statement to have a material impact onits consolidated results of operations, financial position or cash flows.

 

In June 2002, the FASB issued SFAS No. 146,“Accounting for Costs Associated with Exit or Disposal Activities”. Thisstatement requires that a liability for a cost associated with an exit ordisposal activity be recognized and initially measured at fair value in theperiod in which the liability is incurred. This statement is effectiveprospectively for exit or disposal activities initiated after December 31,2002. Buhrmann does not

 

F-67

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expect the adoption of this statement to have amaterial impact on its consolidated results of operations, financial positionor cash flows.

 

In November 2002, the FASB issued FASBInterpretation No. 45 (FIN 45), “Guarantors Accounting and DisclosureRequirements for Guarantees, Including Indirect Guarantees of Indebtedness ofOthers.” FIN 45 clarifies the requirements of a guarantor’s accounting for anddisclosure of certain issued and outstanding guarantees. It also clarifies thatat the time a company issues a guarantee the company must recognize thatinformation in its interim and annual financial statements. The initialrecognition and measurement provisions of FIN 45 are applicable on aprospective basis to guarantees issued or modified after December 31, 2002.The disclosure requirements of FIN 45 are effective for financial statementsending after December 15, 2002. Buhrmann is currently reviewing the impact of the adoption of FIN 45 onits consolidated results of operations, financial position and cash flows.

 

In November 2002, the EITF reached a Consensus on IssueNo. 02-16, “Accounting by a Customer (including a Reseller) for CertainConsideration Received from a Vendor” (“EITF 02-16”). EITF 02-16 addresses theaccounting and income statement classification for consideration given by avendor to a retailer in connection with the sale of the vendor’s products orfor the promotion of sales of the vendor’s products. The EITF concluded thatsuch consideration received from vendors should be reflected as a decrease inprices paid for inventory and recognized in cost of sales as the relatedinventory is sold, unless specific criteria are met qualifying theconsideration for treatment as reimbursement of specific, identifiableincremental costs. As clarified by the EITF in January 2003, this issue iseffective for arrangements with vendors initiated on or after January 1,2003. Buhrmann is currently reviewing the impact of the adoption of EITF 02-16on its consolidated results of operations, financial position and cash flows.

 

F-68

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In December 2002, the FASB issued SFAS No. 148,“Accounting for Stock-Based Compensation - Transition and Disclosure, anAmendment of FASB Statement No. 123”.  SFAS No. 148 amends SFAS No. 123“Accounting for Stock-Based Compensation”, to provide alternative methods oftransition for a voluntary change to the fair value based method of accountingfor stock-based employee compensation.  In addition, SFAS No. 148 amendsthe disclosure requirements of SFAS No. 123 to require prominent disclosures inboth annual and interim financial statements about the method for accountingfor stock-based employee compensation and the effect of the method used onreported results.  SFAS No. 148 became effective for Buhrmann as ofJanuary 1, 2003. SFAS No. 148 has no material impact on Buhrmann’sconsolidated results of operations, financial position or cash flows, asBuhrmann does currently not plan to adopt the fair value method of accountingfor stock options.

 

In January 2003, the FASB issued FASBInterpretation No. 46 (FIN 46), “Consolidation of Variable InterestEntities, an interpretation of ARB No. 51”. FIN 46 addresses consolidationby business enterprises of variable interest entities, which are entitiessubject to consolidation according to the provisions of FIN 46. For interestsacquired on or after February 1, 2003, FIN 46 applies immediately. Forexisting interests as of January 31, 2003, FIN 46 is effective onJuly 1, 2003. Buhrmann is currently reviewing the impact of the adoptionof FIN 46 on its consolidated results of operations, financial position andcash flows.

 

In January 2003, the Emerging Issues Task Force (“EITF”) reachedconsensus on Issue No. 00-21, “Revenue Arrangements with MultipleDeliverables”. EITF 00-21 provides guidance on how to determine whether anarrangement involving multiple deliverables requires that such deliverables beaccounted for separately. EITF 00-21 allows for prospective adoption forarrangements entered into after June 15, 2003 or adoption via a cumulativeeffect of a change in accounting principal. Buhrmann is currently reviewing theimpact of the adoption of EITF 00-21 on its consolidated results of operations,financial position and cash flows.

 

F-69

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**34. Valuation and Qualifying accounts**

 
| **In  millions of euro**                   |   | **Balance at  the********beginning of********the period** |       | **Charges to********costs and********expenses** |       | **Utilization/  release** |       | **Charged to********other********accounts *** |       | **Balance at********the end of********the period** |       |
|--------------------------------------------|--------|-----------------------------------------------------------|------------|-------------------------------------------------|------------|---------------------------|------------|-----------------------------------------------|------------|----------------------------------------------------|------------|
| **Year ended  December 31, 2002**     |   |                                                      | ** ** |                                            | ** ** |                      | ** ** |                                          | ** ** |                                               | ** ** |
| Allowance for doubtful accounts receivable |   | 58                                                        |       | 29                                              |       | (31                       | )          | (5                                            | )          | 51                                                 |       |
| Inventory obsolescence reserve             |   | 56                                                        |       | 13                                              |       | (14                       | )          | (4                                            | )          | 51                                                 |       |
|                                       |   |                                                      |       |                                            |       |                      |       |                                          |       |                                               |       |
| **Year ended  December 31, 2001**     |   |                                                      |       |                                            |       |                      |       |                                          |       |                                               |       |
| Allowance for doubtful accountsreceivable  |   | 53                                                        |       | 25                                              |       | (24                       | )          | 4                                             |       | 58                                                 |       |
| Inventory obsolescence reserve             |   | 51                                                        |       | 13                                              |       | (11                       | )          | 3                                             |       | 56                                                 |       |
|                                       |   |                                                      |       |                                            |       |                      |       |                                          |       |                                               |       |
| **Year ended  December 31, 2000**     |   |                                                      |       |                                            |       |                      |       |                                          |       |                                               |       |
| Allowance for doubtful accountsreceivable  |   | 74                                                        |       | (3                                              | )          | (16                       | )          | (2                                            | )          | 53                                                 |       |
| Inventory obsolescence reserve             |   | 55                                                        |       | 15                                              |       | (18                       | )          | (1                                            | )          | 51                                                 |       |

 

----

*Includes effect of acquisitions and disposals and foreign currency translationadjustments

 

**35. Supplemental Guarantor Information**

 

As part of the Credit Agreement of the SeniorSubordinated Notes as well as the Senior Secured Credit Facility, Buhrmann NVand certain subsidiaries of Buhrmann NV act as guarantors. Presented below isconsolidating information for Buhrmann US Inc. the issuer of the debt, BuhrmannNV the parent guarantor of the debt, the guarantor subsidiaries of Buhrmann NV(listed below), and the non-guarantor subsidiaries of Buhrmann NV. All of thesubsidiary guarantors are wholly owned subsidiaries of Buhrmann NV. Pursuant tothe indentures and the notes, Buhrmann NV and their subsidiary guarantorsjointly, severally, fully and unconditionally guarantee Buhrmann US Inc’s debtsecurities.

 

Most reconciling items from Dutch GAAP to USGAAP as detailed in Note 32 are related to the operating activities of theguarantors. The US GAAP adjustment to the guarantor column would reduce netresult for the year 2002 by EUR 357 million and would increasenon-guarantor net result by EUR 4 million (2001: reduction of EUR 28million and increase of EUR 8 million respectively, 2000: reduction ofEUR 106 million and EUR 28 million respectively). The US GAAPadjustment would increase the guarantor equity at December 31, 2002 byEUR 104 million and decrease non-guarantor equity by EUR 5 million(2001: increase of EUR 497 million and decrease of EUR 11 millionrespectively).

 

F-70

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GUARANTORS as of December, 31 2002

 

**a) U.S.A.**

 

ASAP Software Express, Inc.

BTOP USA Corp.

BTOPI Holding (U.S.)

Buhrmann Swaps, Inc.

Corporate Express Delivery Systems - Expedited,Inc. 

Corporate Express Document & PrintManagement Inc.

Corporate Express of Texas, Inc.

Corporate Express Office Products, Inc.

Corporate Express Philadelphia Real Estate,Inc.

Corporate Express Promotional Marketing, Inc.

Corporate Express Real Estate, Inc.

Corporate Express, Inc.

Distribution Resources Co.

Kelly Paper Company

License Technologies Group, Inc.

Moore Labels, Inc.

 

**b) The Netherlands**

 

Brabantse Poort B.V.

Buhrmann Financieringen B.V. (f/k/a KNP BTFinancieringen B.V.)

Buhrmann Fined B.V. (f/k/a Finbelco B.V.)

Buhrmann II B.V. (f/k/a KNP BT II B.V.)

Buhrmann International B.V.

Buhrmann Nederland B.V.

Buhrmann Nederland Holding B.V. (f/k/aScadisbel B.V.)

Buhrmann Office Products Austria B.V.

Buhrmann Office Products Nederland BV (f/k/aCorporate Express Benelux B.V.) 

Buhrmann Stafdiensten B.V.

Bührmann-Ubbens B.V.

Corporate Express Document Automatisering B.V.

Corporate Express Europe B.V. (f/k/a BT OfficeProducts Europe B.V.)

Corporate Express Holding B.V.

DocVision B.V.

Driem Papier BV

KNP Nederland (Holding) B.V.

KNP Nederland B.V.

Papiermaatschappij Amsterdam-West B.V.

Proost en Brandt B.V.

Rhosili Amsterdam C.V.

Tetterode-Nederland B.V.

Tricom Paper International BV

Velpa Enveloppen BV

VRG Insurances B.V.

Wapen van Amsterdam BV, Het

 

F-71

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**c) Germany**

 

Buhrmann Beteiligungen Deutschland GmbH

Buhrmann Holding GmbH & Co. KG

Buhrmann Holding Verwaltungs GmbH 

Corporate Express Deutschland GmbH (f/k/aBuhrmann Office Products Deutschland GmbH)

Corporate Express Deutschland GmbH & Co.Vertriebs KG (f/k/a Buhrmann Office Products GbmH & Co. Vertriebs KG)

Corporate Express Verwaltungs GmbH (f/k/aBuhrmann Office Products Verwaltungs GbmH)

Deutsche Papier Grundstücks GmbH & Co. KG

Deutsche Papier Holding GmbH

Deutsche Papier Vertriebs GmbH

FSMA Verwaltungs-und Beteiligungs GmbH

Joseph Fröhlen Papiergrosshandlung – WilliReddemann Import Export GmbH

 

**d) England**

 

Adhesive and Display Products Ltd.

Buhrmann Paper UK Ltd.

Buhrmann UK Ltd.

Contract Paper Ltd.

Copygraphic Plc.

Corporate Express (Holdings) Ltd.

Corporate Express Ltd.

Corporate Express UK Ltd.

Howard Smith Paper Ltd.

Pinnacle Film & Board Sales Ltd.

Ramchester Furnishings International Ltd.

Robert Horne Group Plc. 

Robert Horne Paper Company Ltd. 

Savory Paper Ltd.

The Howard Smith Paper Group Ltd.

The M6 Paper Group Ltd.

Trade Paper Ltd.

W. Lunnon & Company Ltd.

 

**e) Belgium**

 

Buhrmann Europcenter N.V.

 

F-72

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**Buhrmann NV Consolidated Statement of IncomeDecember 31, 2002**

*In millions of euro*

 
|                                                              |   | **Guarantor**       |       | **Non-  guarantor  Subsidiaries** |       |             |       |     |             |
|-------------------------------------------------------------------|--------|---------------------|------------|-----------------------------------|------------|------------------|------------|----------|------------------|
|                                                              |   | **Issuer  of debt** |       | **Parent**                        |       | **Subsidiaries** |       |     | **Eliminations** |   | **Total** |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Net sales                                                         |   | —              |       | —                            |       | 7,670            |       | 2,278    |             | — |   | 9,948 |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Costs of trade goods sold                                         |   | —              |       | —                            |       | (5,659           | )          | (1,733   | )                | — |   | (7,392 | ) |
| Other costs of sales                                              |   | —              |       | —                            |       | (230             | )          | (73      | )                | — |   | (303 | ) |
| **Added value**                                                   |   | **—**          | ** ** | **—**                        | ** ** | **1,781**        | ** ** | **472**  | ** **       | **—** | ** ** | **2,253** | ** ** |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Labor costs                                                       |   | —              |       | —                            |       | (1,084           | )          | (246     | )                | — |   | (1,330 | ) |
| Other operating costs                                             |   | (1                  | )          | —                            |       | (359             | )          | (107     | )                | — |   | (467 | ) |
| Depreciation, amortization and impairment                         |   | —              |       | —                            |       | (572             | )          | (185     | )                | — |   | (757 | ) |
| **Operating costs**                                               |   | **(1**              | **)**      | **—**                        | ** ** | **(2,015**       | **)**      | **(538** | **)**            | **—** | ** ** | **(2,554** | **)** |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Operating result**                                              |   | **(1**              | **)**      | **—**                        | ** ** | **(234**         | **)**      | **(66**  | **)**            | **—** | ** ** | **(301** | **)** |
| Net financing costs                                               |   | 160                 |       | 28                                |       | (412             | )          | 25       |             | — |   | (199 | ) |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Result from operations before taxes**                           |   | **159**             | ** ** | **28**                            | ** ** | **(646**         | **)**      | **(41**  | **)**            | **—** | ** ** | **(500** | **)** |
| Taxes                                                             |   | (62                 | )          | (9                                | )          | (8               | )          | 61       |             | — |   | (18 | ) |
| Results from participations and other financial results           |   | —              |       | —                            |       | 16               |       | —   |             | — |   | 16 |   |
| Minority interest                                                 |   | —              |       | —                            |       | —           |       | (12      | )                | — |   | (12 | ) |
| Result subsidiaries                                               |   | (363                | )          | (533                              | )          | —           |       | —   |             | 896 |   | — |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Result from continuing operations before  extraordinary items** |   | **(266**            | **)**      | **(514**                          | **)**      | **(638**         | **)**      | **8**    | ** **       | **896** | ** ** | **(514** | **)** |
| Extraordinary result continued operations                         |   | —              |       | —                            |       | (69              | )          | (5       | )                | — |   | (74 | ) |
| Extraordinary result subsidiaries                                 |   | (63                 | )          | (74                               | )          | —           |       |     |             | 137 |   | — |   |
| **Net result**                                                    |   | **(329**            | **)**      | **(588**                          | **)**      | **(707**         | **)**      | **3**    | ** **       | **1,033** | ** ** | **(588** | **)** |

 

F-73

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**Buhrmann NV Consolidated Statement of IncomeDecember 31, 2001**

*In millions of euro*

 
|                                                              |   | **Guarantor**       |       | **Non-  guarantor  Subsidiaries** |       |             |       |     |             |
|-------------------------------------------------------------------|--------|---------------------|------------|-----------------------------------|------------|------------------|------------|----------|------------------|
|                                                              |   | **Issuer  of debt** |       | **Parent**                        |       | **Subsidiaries** |       |     | **Eliminations** |   | **Total** |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Net sales                                                         |   | —              |       | —                            |       | 8,098            |       | 2,310    |             | — |   | 10,408 |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Costs of trade goods sold                                         |   | —              |       | —                            |       | (5,931           | )          | (1,771   | )                | — |   | (7,702 | ) |
| Other costs of sales                                              |   | —              |       | —                            |       | (238             | )          | (72      | )                | — |   | (310 | ) |
| **Added value**                                                   |   | **—**          | ** ** | **—**                        | ** ** | **1,929**        | ** ** | **467**  | ** **       | **—** | ** ** | **2,396** | ** ** |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Labor costs                                                       |   | —              |       | —                            |       | (1,150           | )          | (240     | )                | — |   | (1,390 | ) |
| Other operating costs                                             |   | (1                  | )          | —                            |       | (389             | )          | (99      | )                | — |   | (489 | ) |
| Depreciation and amortization                                     |   | —              |       | —                            |       | (146             | )          | (30      | )                | — |   | (176 | ) |
| **Operating costs**                                               |   | **(1**              | **)**      | **—**                        | ** ** | **(1,685**       | **)**      | **(369** | **)**            | **—** | ** ** | **(2,055** | **)** |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Operating result**                                              |   | **(1**              | **)**      | **—**                        | ** ** | **244**          | ** ** | **98**   | ** **       | **—** | ** ** | **341** | ** ** |
| Net financing costs                                               |   | 156                 |       | 91                                |       | (468             | )          | 11       |             | — |   | (210 | ) |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Result from operations before taxes**                           |   | **155**             | ** ** | **91**                            | ** ** | **(224**         | **)**      | **109**  | ** **       | **—** | ** ** | **131** | ** ** |
| Taxes                                                             |   | (61                 | )          | (28                               | )          | 125              |       | (60      | )                | — |   | (24 | ) |
| Other financial results                                           |   | —              |       | —                            |       | —           |       | (3       | )                | — |   | (3 | ) |
| Minority interest                                                 |   | —              |       | —                            |       | —           |       | (9       | )                | — |   | (9 | ) |
| Result subsidiaries                                               |   | (76                 | )          | 32                                |       | —           |       | —   |             | 44 |   | — |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Result from continuing operations before  extraordinary items** |   | **18**              | ** ** | **95**                            | ** ** | **(99**          | **)**      | **37**   | ** **       | **44** | ** ** | **95** | ** ** |
| Extraordinary result continued operations                         |   | —              |       | —                            |       | (12              | )          |     |             | (28 | ) | (40 | ) |
| Extraordinary result subsidiaries                                 |   | (23                 | )          | (40                               | )          | —           |       |     |             | 63 |   | — |   |
| **Net result**                                                    |   | **(5**              | **)**      | **55**                            | ** ** | **(111**         | **)**      | **37**   | ** **       | **79** | ** ** | **55** | ** ** |

 

F-74

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**Buhrmann NV Consolidated Statement of IncomeDecember 31, 2000**

*In millions of euro*

 
|                                                              |   | **Guarantor**       |       | **Non-  guarantor  Subsidiaries** |       |             |       |     |             |
|-------------------------------------------------------------------|--------|---------------------|------------|-----------------------------------|------------|------------------|------------|----------|------------------|
|                                                              |   | **Issuer  of debt** |       | **Parent**                        |       | **Subsidiaries** |       |     | **Eliminations** |   | **Total** |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Net sales                                                         |   | —              |       | —                            |       | 7,225            |       | 2,378    |             | — |   | 9,603 |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Costs of trade goods sold                                         |   | —              |       | —                            |       | (5,183           | )          | (1,821   | )                | — |   | (7,004 | ) |
| Other costs of sales                                              |   | —              |       | —                            |       | (209             | )          | (49      | )                | — |   | (258 | ) |
| **Added value**                                                   |   | **—**          | ** ** | **—**                        | ** ** | **1,833**        | ** ** | **508**  | ** **       | **—** | ** ** | **2,341** | ** ** |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Labor costs                                                       |   | —              |       | —                            |       | (1,009           | )          | (237     | )                | — |   | (1,246 | ) |
| Other operating costs                                             |   | (1                  | )          | —                            |       | (340             | )          | (95      | )                | — |   | (436 | ) |
| Depreciation and amortization                                     |   | —              |       | —                            |       | (142             | )          | (26      | )                | — |   | (168 | ) |
| **Operating costs**                                               |   | **(1**              | **)**      | **—**                        | ** ** | **(1,491**       | **)**      | **(358** | **)**            | **—** | ** ** | **(1,850** | **)** |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Operating result**                                              |   | **(1**              | **)**      | **—**                        | ** ** | **342**          | ** ** | **150**  | ** **       | **—** | ** ** | **491** | ** ** |
| Net financing costs                                               |   | 123                 |       | 46                                |       | (354             | )          | (36      | )                | — |   | (221 | ) |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Result from operations before taxes**                           |   | **122**             | ** ** | **46**                            | ** ** | **(12**          | **)**      | **114**  | ** **       | **—** | ** ** | **270** | ** ** |
| Taxes                                                             |   | (50                 | )          | (13                               | )          | 52               |       | (44      | )                | — |   | (55 | ) |
| Other financial results                                           |   | —              |       | —                            |       | 5                |       | —   |             | — |   | 5 |   |
| Minority interest                                                 |   | —              |       | —                            |       | —           |       | (9       | )                | — |   | (9 | ) |
| Result subsidiaries                                               |   | 29                  |       | 178                               |       | —           |       | —   |             | (207 | ) | — |   |
|                                                              |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| **Result from continuing operations before  extraordinary items** |   | **101**             | ** ** | **211**                           | ** ** | **45**           | ** ** | **61**   | ** **       | **(207** | **)** | **211** | ** ** |
| Discontinued operations:                                          |   |                |       |                              |       |             |       |     |             |   |   |   |   |
| Result on disposal discontinued operations                        |   | —              |       | (3                                | )          | —           |       | (3       | )                | 3 |   | (3 | ) |
| Extraordinary result continued operations                         |   | —              |       | —                            |       | 20               |       | (7       | )                | — |   | 13 |   |
| Extraordinary result subsidiaries                                 |   | —              |       | 13                                |       | —           |       | —   |             | (13 | ) | — |   |
| **Net result**                                                    |   | **101**             | ** ** | **221**                           | ** ** | **65**           | ** ** | **51**   | ** **       | **(217** | **)** | **221** | ** ** |

 

F-75

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**Buhrmann NVConsolidated Balance Sheet December 31, 2002**

*In millions of euro*

 
|                              |   | **Guarantor**       |       | **Non-  guarantor  Subsidiaries** |       |             |       |      |             |
|-----------------------------------|--------|---------------------|------------|-----------------------------------|------------|------------------|------------|-----------|------------------|
|                              |   | **Issuer of  debt** |       | **Parent**                        |       | **Subsidiaries** |       |      | **Eliminations** |   | **Total** |   |
| **Fixed  assets**                 |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Intangible fixed assets           |   | —              |       | —                            |       | 1,673            |       | 115       |             | — |   | 1,788 |   |
| Tangible fixed assets             |   | —              |       | —                            |       | 460              |       | 132       |             | — |   | 592 |   |
| Financial fixed assets            |   | 72                  |       | —                            |       | 371              |       | 38        |             | — |   | 481 |   |
|                              |   | 72                  |       | —                            |       | 2,504            |       | 285       |             | — |   | 2,861 |   |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Group  Participations**         |   | —              |       | 295                               |       | —           |       | —    |             | (295 | ) | — |   |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Current  assets**               |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Inventories                       |   | —              |       | —                            |       | 485              |       | 198       |             | — |   | 683 |   |
| Accounts receivable               |   | —              |       | —                            |       | 1,007            |       | 501       |             | (1 | ) | 1,507 |   |
| Other receivables                 |   | —              |       | 34                                |       | 243              |       | 73        |             | (29 | ) | 321 |   |
|                              |   | —              |       | 34                                |       | 1,735            |       | 772       |             | (30 | ) | 2,511 |   |
| Cash                              |   | —              |       | —                            |       | 66               |       | 10        |             | (39 | ) | 37 |   |
| **Total  assets**                 |   | **72**              | ** ** | **329**                           | ** ** | **4,305**        | ** ** | **1,067** | ** **       | **(364** | **)** | **5,409** | ** ** |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Group  equity**                 |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Ordinary Shares                   |   | —              |       | 158                               |       | —           |       | —    |             | — |   | 158 |   |
| Preference Shares                 |   | —              |       | 64                                |       | —           |       | —    |             | — |   | 64 |   |
| Additional paid in capital        |   | —              |       | 2,034                             |       | —           |       | —    |             | — |   | 2,034 |   |
| Other reserves                    |   | 1,682               |       | 102                               |       | (1,897           | )          | 510       |             | (295 | ) | 102 |   |
| Undistributed profit              |   |                |       | (588                              | )          |             |       |      |             |   |   | (588 | ) |
| Minority interest                 |   | —              |       | —                            |       | —           |       | 41        |             | — |   | 41 |   |
|                              |   | 1,682               |       | 1,770                             |       | (1,897           | )          | 551       |             | (295 | ) | 1,811 |   |
| **Provisions**                    |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Pensions                          |   | —              |       | —                            |       | 17               |       | 9         |             | — |   | 26 |   |
| Deferred taxes                    |   | 3                   |       | 30                                |       | 186              |       | 2         |             | — |   | 221 |   |
| Other                             |   | —              |       | —                            |       | 54               |       | 36        |             | — |   | 90 |   |
|                              |   | 3                   |       | 30                                |       | 257              |       | 47        |             | — |   | 337 |   |
| **Long term  liabilities**        |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Subordinated loans and loans      |   | 1,357               |       | —                            |       | 52               |       | 269       |             | — |   | 1,678 |   |
| Intercompany financing            |   | (3,094              | )          | (1,482                            | )          | 4,846            |       | (270      | )                | — |   | — |   |
|                              |   | (1,737              | )          | (1,482                            | )          | 4,898            |       | (1        | )                | — |   | 1,678 |   |
| **Current  liabilities**          |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Current portion long term loans   |   | 60                  |       | —                            |       | 1                |       | 6         |             | 1 |   | 68 |   |
| Bank overdrafts                   |   | 44                  |       | —                            |       | 14               |       | 7         |             | (39 | ) | 26 |   |
| Accounts payable                  |   | —              |       | —                            |       | 730              |       | 335       |             | (1 | ) | 1,064 |   |
| Other liabilities                 |   | 20                  |       | 11                                |       | 302              |       | 122       |             | (30 | ) | 425 |   |
|                              |   | 124                 |       | 11                                |       | 1,047            |       | 470       |             | (69 | ) | 1,583 |   |
| **Group  Equity and liabilities** |   | **72**              | ** ** | **329**                           | ** ** | **4,305**        | ** ** | **1,067** | ** **       | **(364** | **)** | **5,409** | ** ** |

 

F-76

----

 

**Buhrmann NV Consolidated BalanceSheet December 31, 2001**

*In millions of euro*

 
|                              |   | **Guarantor**       |       | **Non-  guarantor  Subsidiaries** |       |             |       |      |             |
|-----------------------------------|--------|---------------------|------------|-----------------------------------|------------|------------------|------------|-----------|------------------|
|                              |   | **Issuer of  debt** |       | **Parent**                        |       | **Subsidiaries** |       |      | **Eliminations** |   | **Total** |   |
| **Fixed  assets**                 |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Intangible fixed assets           |   | —              |       | —                            |       | 2,460            |       | 224       |             | — |   | 2,684 |   |
| Tangible fixed assets             |   | —              |       | —                            |       | 574              |       | 139       |             | — |   | 713 |   |
| Financial fixed assets            |   | 33                  |       | —                            |       | 501              |       | 101       |             | — |   | 635 |   |
|                              |   | 33                  |       | —                            |       | 3,535            |       | 464       |             | — |   | 4,032 |   |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Group  Participations**         |   | —              |       | 956                               |       | —           |       | —    |             | (956 | ) | — |   |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Current  assets**               |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Inventories                       |   | —              |       | —                            |       | 556              |       | 200       |             | — |   | 756 |   |
| Accounts receivable               |   | —              |       | —                            |       | 1,285            |       | 545       |             | (4 | ) | 1,826 |   |
| Other receivables                 |   | —              |       | 68                                |       | 345              |       | 51        |             | (60 | ) | 404 |   |
|                              |   | —              |       | 68                                |       | 2,186            |       | 796       |             | (64 | ) | 2,986 |   |
| Cash                              |   | —              |       | —                            |       | 117              |       | 13        |             | (31 | ) | 99 |   |
| **Total  assets**                 |   | **33**              | ** ** | **1,024**                         | ** ** | **5,838**        | ** ** | **1,273** | ** **       | **(1,051** | **)** | **7,117** | ** ** |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Group  equity**                 |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Ordinary Shares                   |   | —              |       | 157                               |       | —           |       | —    |             | — |   | 157 |   |
| Preference Shares                 |   | —              |       | 64                                |       | —           |       | —    |             | — |   | 64 |   |
| Additional paid in capital        |   | —              |       | 1,993                             |       | —           |       | —    |             | — |   | 1,993 |   |
| Other reserves                    |   | 2,395               |       | 379                               |       | (2,035           | )          | 596       |             | (956 | ) | 379 |   |
| Undistributed profit              |   |                |       | 41                                |       |             |       |      |             |   |   | 41 |   |
| Minority interest                 |   | —              |       | —                            |       | —           |       | 37        |             | — |   | 37 |   |
|                              |   | 2,395               |       | 2,634                             |       | (2,035           | )          | 633       |             | (956 | ) | 2,671 |   |
| **Provisions**                    |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Pensions                          |   | —              |       | —                            |       | 15               |       | 10        |             | — |   | 25 |   |
| Deferred taxes                    |   | 4                   |       | 8                                 |       | 326              |       | 2         |             | — |   | 340 |   |
| Other                             |   | —              |       | —                            |       | 62               |       | 18        |             | — |   | 80 |   |
|                              |   | 4                   |       | 8                                 |       | 403              |       | 30        |             | — |   | 445 |   |
| **Long term  liabilities**        |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Subordinated loans and loans      |   | 1,757               |       | —                            |       | 133              |       | 169       |             | — |   | 2,059 |   |
| Intercompany financing            |   | (4,180              | )          | (1,632                            | )          | 5,876            |       | (64       | )                | — |   | — |   |
|                              |   | (2,423              | )          | (1,632                            | )          | 6,009            |       | 105       |             | — |   | 2,059 |   |
| **Current  liabilities**          |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Current portion long term loans   |   | 33                  |       | —                            |       | 6                |       | 5         |             | — |   | 44 |   |
| Bank overdrafts                   |   | —              |       | —                            |       | 31               |       | —    |             | (31 | ) | — |   |
| Accounts payable                  |   | —              |       | —                            |       | 998              |       | 346       |             | (4 | ) | 1,340 |   |
| Other liabilities                 |   | 24                  |       | 14                                |       | 426              |       | 154       |             | (60 | ) | 558 |   |
|                              |   | 57                  |       | 14                                |       | 1,461            |       | 505       |             | (95 | ) | 1,942 |   |
| **Group  Equity and liabilities** |   | **33**              | ** ** | **1,024**                         | ** ** | **5,838**        | ** ** | **1,273** | ** **       | **(1,051** | **)** | **7,117** | ** ** |

 

F-77

----

 

**Buhrmann NVConsolidated Balance Sheet December 31, 2000**

*In millionsof euro*

 
|                              |   | **Guarantor**       |       | **Non-  guarantor  Subsidiaries** |       |             |       |      |             |
|-----------------------------------|--------|---------------------|------------|-----------------------------------|------------|------------------|------------|-----------|------------------|
|                              |   | **Issuer of  debt** |       | **Parent**                        |       | **Subsidiaries** |       |      | **Eliminations** |   | **Total** |   |
| **Fixed  assets**                 |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Intangible fixed assets           |   | —              |       | —                            |       | 1,933            |       | 262       |             | — |   | 2,195 |   |
| Tangible fixed assets             |   | —              |       | —                            |       | 482              |       | 146       |             | — |   | 628 |   |
| Financial fixed assets            |   | 51                  |       | —                            |       | 314              |       | 122       |             | — |   | 487 |   |
|                              |   | 51                  |       | —                            |       | 2,729            |       | 530       |             | — |   | 3,310 |   |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Group  Participations**         |   | —              |       | 832                               |       | —           |       | —    |             | (832 | ) | — |   |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Current  assets**               |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Inventories                       |   | —              |       | —                            |       | 550              |       | 234       |             | — |   | 784 |   |
| Accounts receivable               |   | —              |       | —                            |       | 1,243            |       | 626       |             | (1 | ) | 1,868 |   |
| Other receivables                 |   | —              |       | 1                                 |       | 329              |       | 73        |             | (4 | ) | 399 |   |
|                              |   | —              |       | 1                                 |       | 2,122            |       | 933       |             | (5 | ) | 3,051 |   |
| Cash                              |   | —              |       | —                            |       | 57               |       | 24        |             | (24 | ) | 57 |   |
| **Total  assets**                 |   | **51**              | ** ** | **833**                           | ** ** | **4,908**        | ** ** | **1,487** | ** **       | **(861** | **)** | **6,418** | ** ** |
|                              |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| **Group  equity**                 |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Ordinary Shares                   |   | —              |       | 116                               |       | —           |       | —    |             | — |   | 116 |   |
| Preference Shares                 |   | —              |       | 61                                |       | —           |       | —    |             | — |   | 61 |   |
| Additional paid in capital        |   | —              |       | 1,347                             |       | —           |       | —    |             | — |   | 1,347 |   |
| Other reserves                    |   | 1,980               |       | 185                               |       | (1,823           | )          | 675       |             | (832 | ) | 185 |   |
| Undistributed profit              |   |                |       | 207                               |       |             |       |      |             |   |   | 207 |   |
| Minority interest                 |   | —              |       | —                            |       | —           |       | 32        |             | — |   | 32 |   |
|                              |   | 1,980               |       | 1,916                             |       | (1,823           | )          | 707       |             | (832 | ) | 1,948 |   |
| **Provisions**                    |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Pensions                          |   | —              |       | —                            |       | 16               |       | 9         |             | — |   | 25 |   |
| Deferred taxes                    |   | 8                   |       | —                            |       | 236              |       | (1        | )                | — |   | 243 |   |
| Other                             |   | —              |       | —                            |       | 91               |       | 23        |             | — |   | 114 |   |
|                              |   | 8                   |       | —                            |       | 343              |       | 31        |             | — |   | 382 |   |
| **Long term  liabilities**        |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Subordinated loans and loans      |   | 1,789               |       | —                            |       | 18               |       | 263       |             | — |   | 2,070 |   |
| Intercompany financing            |   | (3,805              | )          | (1,097                            | )          | 5,111            |       | (209      | )                | — |   | — |   |
|                              |   | (2,016              | )          | (1,097                            | )          | 5,129            |       | 54        |             | — |   | 2,070 |   |
| **Current  liabilities**          |   |                |       |                              |       |             |       |      |             |   |   |   |   |
| Current portion long term loans   |   | —              |       | —                            |       | 27               |       | 64        |             |   |   | 91 |   |
| Bank overdrafts                   |   | 47                  |       | —                            |       | —           |       | 81        |             | (24 | ) | 104 |   |
| Accounts payable                  |   | —              |       | —                            |       | 905              |       | 340       |             | (1 | ) | 1,244 |   |
| Other liabilities                 |   | 32                  |       | 14                                |       | 327              |       | 210       |             | (4 | ) | 579 |   |
|                              |   | 79                  |       | 14                                |       | 1,259            |       | 695       |             | (29 | ) | 2,018 |   |
| **Group  Equity and liabilities** |   | **51**              | ** ** | **833**                           | ** ** | **4,908**        | ** ** | **1,487** | ** **       | **(861** | **)** | **6,418** | ** ** |

 

F-78

----

 

**Buhrmann NV Consolidated Statement of Cash FlowsDecember 31, 2002**

*In millions of euro*

 
|                                                            |   | **Guarantor**       |       | **Non-  guarantor  Subsidia-  ries** |       |                |       |     |                |
|-----------------------------------------------------------------|--------|---------------------|------------|--------------------------------------|------------|---------------------|------------|----------|---------------------|
|                                                            |   | **Issuer  of debt** |       | **Parent**                           |       | **Subsidia-  ries** |       |     | **Elimina-  tions** |   | **Total** |   |
|                                                            |   |                |       |                                 |       |                |       |     |                |   |   |   |   |
| **Cash flows  from operating activities**                       |   |                | ** ** |                                 | ** ** |                | ** ** |     | ** **          |   | ** ** |   | ** ** |
| Operating result                                                |   | (1                  | )          | —                               |       | (233                | )          | (67      | )                   | — |   | (301 | ) |
| Adjustments for:                                                |   |                |       |                                 |       |                |       |     |                |   |   |   |   |
| Depreciation, amortization and impairment                       |   | —              |       | —                               |       | 570                 |       | 187      |                | — |   | 757 |   |
| Addition to/(release of) provisions                             |   | —              |       | —                               |       | (8                  | )          | 9        |                | — |   | 1 |   |
| (Increase)/decrease working capital                             |   | 1                   |       | (1                                   | )          | 48                  |       | 4        |                | — |   | 52 |   |
| Other operational receipts/(payments):                          |   |                |       |                                 |       |                |       |     |                |   |   |   |   |
| Interest paid                                                   |   | 197                 |       | 59                                   |       | (460                | )          | 20       |                | — |   | (184 | ) |
| Profit tax paid                                                 |   | —              |       | —                               |       | 34                  |       | (50      | )                   | — |   | (16 | ) |
| Payments charged to provisions                                  |   | —              |       | —                               |       | (40                 | )          | (11      | )                   | — |   | (51 | ) |
| **Net cash  provided by operating activities**                  |   | **197**             | ** ** | **58**                               | ** ** | **(89**             | **)**      | **92**   | ** **          | **—** | ** ** | **258** | ** ** |
|                                                            |   |                | ** ** |                                 | ** ** |                | ** ** |     | ** **          |   | ** ** |   | ** ** |
| **Cash flows  from investing activities**                       |   |                | ** ** |                                 | ** ** |                | ** ** |     | ** **          |   | ** ** |   | ** ** |
| Net investments in tangible fixed assets                        |   | —              |       | —                               |       | (85                 | )          | (22      | )                   | — |   | (107 | ) |
| Acquisition of group companies and participations               |   | —              |       | —                               |       | 11                  |       | (20      | )                   | — |   | (9 | ) |
| Payments related to integration of Group companies              |   | —              |       | —                               |       | (86                 | )          | (4       | )                   | — |   | (90 | ) |
| Divestment of Group companies and participations                |   | —              |       | —                               |       | 6                   |       | 62       |                | — |   | 68 |   |
| **Net cash  provided by investing activities**                  |   | **—**          | ** ** | **—**                           | ** ** | **(154**            | **)**      | **16**   | ** **          | **—** | ** ** | **(138** | **)** |
|                                                            |   |                |       |                                 |       |                |       |     |                |   |   |   |   |
| **Cash flows  from financing activities**                       |   |                |       |                                 |       |                |       |     |                |   |   |   |   |
| Dividend payments                                               |   | —              |       | (25                                  | )          | —              |       | —   |                | — |   | (25 | ) |
| Payment to and repurchase of interests of minority shareholders |   | —              |       |                                 |       |                |       | (5       | )                   | — |   | (5 | ) |
| Paid financing fees                                             |   | (16                 | )          | —                               |       | —              |       | —   |                | — |   | (16 | ) |
| IC Loans                                                        |   | (59                 | )          | (33                                  | )          | 316                 |       | (224     | )                   | — |   |   |   |
| Repayment of long-term debt                                     |   | (167                | )          | —                               |       | (107                | )          | 112      |                | — |   | (162 | ) |
| **Net cash  used by financing activities**                      |   | **(242**            | **)**      | **(58**                              | **)**      | **209**             | ** ** | **(117** | **)**               | **—** | ** ** | **(208** | **)** |
|                                                            |   |                |       |                                 |       |                |       |     |                |   |   |   |   |
| **(Decrease)/Increase  liquid funds**                           |   | **(45**             | **)**      | **—**                           | ** ** | **(34**             | **)**      | **(9**   | **)**               | **—** | ** ** | **(88** | **)** |

 

F-79

----

 

**Buhrmann NV Consolidated Statement of Cash Flows December 31,2001**

*In millions of euro*

 
|                                                            |   | **Guarantor**       |       | **Non-  Guarantor** |       |                |       |                |       |
|-----------------------------------------------------------------|--------|---------------------|------------|---------------------|------------|---------------------|------------|---------------------|------------|
|                                                            |   | **Issuer  of debt** |       | **Parent**          |       | **Subsidia-  ries** |       | **Subsidia-  ries** |       | **Elimina-  tions** |   | **Total** |   |
|                                                            |   |                |       |                |       |                |       |                |       |   |   |   |   |
| **Cash flows  from operating activities**                       |   |                | ** ** |                | ** ** |                | ** ** |                | ** ** |   | ** ** |   | ** ** |
| Operating result                                                |   | (1                  | )          | —              |       | 244                 |       | 98                  |       | — |   | 341 |   |
| Adjustments for:                                                |   |                |       |                |       |                |       |                |       |   |   |   |   |
| Depreciation and amortization                                   |   | —              |       | —              |       | 146                 |       | 30                  |       | — |   | 176 |   |
| Addition to/(release of) provisions                             |   | —              |       | —              |       |                |       | 13                  |       | — |   | 13 |   |
| (Increase)/decrease working capital                             |   | (11                 | )          | —              |       | 155                 |       | 63                  |       | — |   | 207 |   |
| Other operational receipts/(payments):                          |   |                |       |                |       |                |       |                |       |   |   |   |   |
| Interest paid                                                   |   | 171                 |       | 79                  |       | (464                | )          | 12                  |       | — |   | (202 | ) |
| Profit tax paid                                                 |   | —              |       | —              |       | (19                 | )          | (8                  | )          | — |   | (27 | ) |
| Payments charged to provisions                                  |   | —              |       | —              |       | (28                 | )          | (11                 | )          | — |   | (39 | ) |
| **Net cash  provided by operating activities**                  |   | **159**             | ** ** | **79**              | ** ** | **34**              | ** ** | **197**             | ** ** | **—** | ** ** | **469** | ** ** |
|                                                            |   |                | ** ** |                | ** ** |                | ** ** |                | ** ** |   | ** ** |   | ** ** |
| **Cash flows  from investing activities**                       |   |                | ** ** |                | ** ** |                | ** ** |                | ** ** |   | ** ** |   | ** ** |
| Net investments in tangible fixed assets                        |   | —              |       | —              |       | (102                | )          | (25                 | )          | — |   | (127 | ) |
| Acquisition of group companies and participations               |   | —              |       | —              |       | (578                | )          | —              |       | — |   | (578 | ) |
| Payments related to integration of Group companies              |   | —              |       | —              |       | (208                | )          | —              |       | — |   | (208 | ) |
| Divestment of Group companies and participations                |   | —              |       | —              |       | 147                 |       | —              |       | — |   | 147 |   |
| **Net cash  provided by investing activities**                  |   | **—**          | ** ** | **—**          | ** ** | **(741**            | **)**      | **(25**             | **)**      | **—** | ** ** | **(766** | **)** |
|                                                            |   |                |       |                |       |                |       |                |       |   |   |   |   |
| **Cash flows  from financing activities**                       |   |                |       |                |       |                |       |                |       |   |   |   |   |
| Ordinary Shares issued                                          |   | —              |       | 665                 |       | —              |       | —              |       | — |   | 665 |   |
| Dividend payments                                               |   | —              |       | (60                 | )          | —              |       | —              |       | — |   | (60 | ) |
| Payment to and repurchase of interests of minority shareholders |   | —              |       |                |       |                |       | (2                  | )          | — |   | (2 | ) |
| Paid financing fees                                             |   | —              |       | —              |       | (13                 | )          | —              |       | — |   | (13 | ) |
| IC Loans                                                        |   | (112                | )          | (684                | )          | 920                 |       | —              |       | — |   |   |   |
| Drawn long-term debt                                            |   | —              |       | —              |       | 407                 |       | —              |       | — |   | 407 |   |
| Repayment of long-term debt                                     |   | —              |       | —              |       | (577                | )          | —              |       | — |   | (577 | ) |
| **Net cash  used by financing activities**                      |   | **(112**            | **)**      | **(79**             | **)**      | **737**             | ** ** | **(2**              | **)**      | **—** | ** ** | **420** | ** ** |
|                                                            |   |                |       |                |       |                |       |                |       |   |   |   |   |
| **(Decrease)/Increase  liquid funds**                           |   | **47**              | ** ** | **—**          | ** ** | **30**              | ** ** | **46**              | ** ** | **—** | ** ** | **123** | ** ** |

 

F-80

----

 

**Buhrmann NV Consolidated Statement of Cash FlowsDecember 31, 2000**

*In millions of euro*

 
|                                               |   | **Guarantor**       |       | **Non-  guarantor  Subsidia-  ries** |       |                      |       |    |                |
|----------------------------------------------------|--------|---------------------|------------|--------------------------------------|------------|---------------------------|------------|---------|---------------------|
|                                               |   | **Issuer  of debt** |       | **Parent**                           |       | **Subsidia-********ries** |       |    | **Elimina-  tions** |   | **Total** |   |
|                                               |   |                |       |                                 |       |                      |       |    |                |   |   |   |   |
| **Cash flows  from operating activities**          |   |                | ** ** |                                 | ** ** |                      | ** ** |    | ** **          |   | ** ** |   | ** ** |
| Operating result                                   |   | (1                  | )          | —                               |       | 345                       |       | 146     |                | 1 |   | 491 |   |
| Adjustments for:                                   |   |                |       |                                 |       |                      |       |    |                |   |   |   |   |
| Depreciation and amortization                      |   | —              |       | —                               |       | 145                       |       | 22      |                | 1 |   | 168 |   |
| Addition to/(release of) provisions                |   | —              |       | —                               |       | (29                       | )          | —  |                | — |   | (29 | ) |
| (Increase)/decrease working capital                |   | 33                  |       | —                               |       | (269                      | )          | (58     | )                   | — |   | (294 | ) |
| Other operational receipts/(payments):             |   |                |       |                                 |       |                      |       |    |                |   |   |   |   |
| Interest paid                                      |   | 112                 |       | 46                                   |       | (355                      | )          | (14     | )                   | — |   | (211 | ) |
| Profit tax paid                                    |   | —              |       | —                               |       | (27                       | )          | (12     | )                   | — |   | (39 | ) |
| Payments charged to provisions                     |   | —              |       | —                               |       | (20                       | )          | —  |                | — |   | (20 | ) |
| **Net cash  provided by operating activities**     |   | **144**             | ** ** | **46**                               | ** ** | **(210**                  | **)**      | **84**  | ** **          | **2** | ** ** | **66** | ** ** |
|                                               |   |                | ** ** |                                 | ** ** |                      | ** ** |    | ** **          |   | ** ** |   | ** ** |
| **Cash flows  from investing activities**          |   |                | ** ** |                                 | ** ** |                      | ** ** |    | ** **          |   | ** ** |   | ** ** |
| Investments in tangible fixed assets               |   | —              |       | —                               |       | (105                      | )          | (17     | )                   | — |   | (122 | ) |
| Acquisition of group companies and participations  |   | —              |       | —                               |       | (113                      | )          | —  |                | — |   | (113 | ) |
| Payments related to integration of Group companies |   | —              |       | —                               |       | (158                      | )          | —  |                | — |   | (158 | ) |
| Divestment of group companies and participations   |   | —              |       | —                               |       | 76                        |       | —  |                | — |   | 76 |   |
| **Net cash  provided by investing activities**     |   | **—**          | ** ** | **—**                           | ** ** | **(300**                  | **)**      | **(17** | **)**               | **—** | ** ** | **(317** | **)** |
|                                               |   |                |       |                                 |       |                      |       |    |                |   |   |   |   |
| **Cash flows  from financing activities**          |   |                |       |                                 |       |                      |       |    |                |   |   |   |   |
| Ordinary Shares issued                             |   | —              |       | 172                                  |       | —                    |       | —  |                | — |   | 172 |   |
| Dividend payments                                  |   | —              |       | (53                                  | )          | —                    |       | —  |                | — |   | (53 | ) |
| Surplus Pension Fund                               |   | —              |       | —                               |       | 31                        |       | —  |                | — |   | 31 |   |
| Payment to minority shareholders                   |   | —              |       | —                               |       | —                    |       | (2      | )                   | — |   | (2 | ) |
| IC Loans                                           |   | (191                | )          | (165                                 | )          | 568                       |       | (212    | )                   | — |   | — |   |
| Repayment (Drawn) long term debt (net)             |   | —              |       | —                               |       | (136                      | )          | 151     |                | — |   | 15 |   |
| **Net cash  used by financing activities**         |   | **(191**            | **)**      | **(46**                              | **)**      | **463**                   | ** ** | **(63** | **)**               | **—** | ** ** | **163** | ** ** |
|                                               |   |                |       |                                 |       |                      |       |    |                |   |   |   |   |
| **(Decrease)/Increase  liquid funds**              |   | **(47**             | **)**      | **—**                           | ** ** | **(47**                   | **)**      | **4**   | ** **          | **2** | ** ** | **(88** | **)** |

 

F-81

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