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(Mark One) | ||
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended March 31, 2006 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report For the transition period from to | ||
Commission file number 1-15240 |
The Netherlands | Atrium, 8th floor | |
(Jurisdiction of incorporation or organization) | Strawinskylaan 3077 | |
1077 ZX Amsterdam, The Netherlands | ||
(Address of principal executive offices) |
Title of each class: | Name of each exchange on which registered: | |
Common stock, represented by CHESS Units of Foreign Securities | New York Stock Exchange* | |
CHESS Units of Foreign Securities | New York Stock Exchange* | |
American Depositary Shares, each representing five units of CHESS Units of Foreign Securities | New York Stock Exchange |
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Item 1. | Identity of Directors, Senior Management and Advisers |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
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Fiscal Years Ended March 31, | ||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||
(In millions, except sales price per unit and per share data) | ||||||||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||||
Net Sales | ||||||||||||||||||||||
USA Fiber Cement | $ | 1,218.4 | $ | 939.2 | $ | 738.6 | $ | 599.7 | $ | 444.8 | ||||||||||||
Asia Pacific Fiber Cement(1) | 241.8 | 236.1 | 219.8 | 174.3 | 141.7 | |||||||||||||||||
Other(2) | 28.3 | 35.1 | 23.5 | 9.6 | 5.2 | |||||||||||||||||
Total net sales | $ | 1,488.5 | $ | 1,210.4 | $ | 981.9 | $ | 783.6 | $ | 591.7 | ||||||||||||
Operating (loss) income(3) | $ | (434.9 | ) | $ | 196.2 | $ | 172.2 | $ | 128.8 | $ | 46.8 | |||||||||||
Interest expense | (7.2 | ) | (7.3 | ) | (11.2 | ) | (23.8 | ) | (18.4 | ) | ||||||||||||
Interest income | 7.0 | 2.2 | 1.2 | 3.9 | 2.4 | |||||||||||||||||
Other (expense) income(4) | — | (1.3 | ) | 3.5 | 0.7 | (0.4 | ) | |||||||||||||||
(Loss) income from continuing operations before income taxes | (435.1 | ) | 189.8 | 165.7 | 109.6 | 30.4 | ||||||||||||||||
Income tax expense | (71.6 | ) | (61.9 | ) | (40.4 | ) | (26.1 | ) | (3.1 | ) | ||||||||||||
(Loss) income from continuing operations | $ | (506.7 | ) | $ | 127.9 | $ | 125.3 | $ | 83.5 | $ | 27.3 | |||||||||||
Net (loss) income | $ | (506.7 | ) | $ | 126.9 | $ | 129.6 | $ | 170.5 | $ | 30.8 | |||||||||||
(Loss) income from continuing operations per common share — basic | $ | (1.10 | ) | $ | 0.28 | $ | 0.27 | $ | 0.18 | $ | 0.06 | |||||||||||
Net (loss) income per common share — basic | $ | (1.10 | ) | $ | 0.28 | $ | 0.28 | $ | 0.37 | $ | 0.07 | |||||||||||
(Loss) income from continuing operations per common share — diluted | $ | (1.10 | ) | $ | 0.28 | $ | 0.27 | $ | 0.18 | $ | 0.06 | |||||||||||
Net (loss) income per common share — diluted | $ | (1.10 | ) | $ | 0.28 | $ | 0.28 | $ | 0.37 | $ | 0.07 | |||||||||||
Dividends paid per share | $ | 0.10 | $ | 0.03 | $ | 0.05 | $ | 0.08 | $ | 0.05 | ||||||||||||
Return of capital per share | $ | — | $ | — | $ | 0.15 | $ | 0.20 | $ | 0.05 | ||||||||||||
Weighted average number of common shares outstanding | ||||||||||||||||||||||
Basic | 461.7 | 458.9 | 458.1 | 456.7 | 438.4 | |||||||||||||||||
Diluted | 461.7 | 461.0 | 461.4 | 459.4 | 440.4 | |||||||||||||||||
Consolidated Cash Flow Information: | ||||||||||||||||||||||
Cash flows provided by operating activities | $ | 240.6 | $ | 219.8 | $ | 162.6 | $ | 64.8 | $ | 76.6 | ||||||||||||
Cash flows (used in) provided by investing activities | $ | (154.0 | ) | $ | (149.2 | ) | $ | (58.0 | ) | $ | 237.9 | $ | (77.2 | ) | ||||||||
Cash flows provided by (used in) financing activities | $ | 116.5 | $ | 28.2 | $ | (87.9 | ) | $ | (279.4 | ) | $ | (40.8 | ) | |||||||||
Other Data: | ||||||||||||||||||||||
Depreciation and amortization(5) | $ | 45.3 | $ | 36.3 | $ | 36.4 | $ | 27.4 | $ | 23.5 | ||||||||||||
Adjusted EBITDA(6) | $ | (389.6 | ) | $ | 232.5 | $ | 208.6 | $ | 156.2 | $ | 70.3 | |||||||||||
Capital expenditures(7) | $ | 162.8 | $ | 153.0 | $ | 74.1 | $ | 90.2 | $ | 50.8 | ||||||||||||
Volume (million square feet)(8) | ||||||||||||||||||||||
USA Fiber Cement | 2,182.8 | 1,855.1 | 1,519.9 | 1,273.6 | 988.5 | |||||||||||||||||
Asia Pacific Fiber Cement(1) | 368.3 | 376.9 | 362.1 | 349.9 | 320.7 | |||||||||||||||||
Average sales price per unit (per thousand square feet) | ||||||||||||||||||||||
USA Fiber Cement | $ | 558 | $ | 506 | $ | 486 | $ | 471 | $ | 450 | ||||||||||||
Asia Pacific Fiber Cement(1) | A $ | 872 | A $ | 846 | A $ | 862 | A $ | 887 | A $ | 861 |
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Fiscal Years Ended March 31, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(In millions, except sales price per unit and per share data) | ||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Net current assets(9) | $ | 150.8 | $ | 180.2 | $ | 195.9 | $ | 159.4 | $ | 115.1 | ||||||||||
Total assets | $ | 1,445.4 | $ | 1,088.9 | $ | 971.2 | $ | 851.8 | $ | 968.0 | ||||||||||
Long-term debt(10) | $ | 121.7 | $ | 147.4 | $ | 165.0 | $ | 165.0 | $ | 325.0 | ||||||||||
Common stock | $ | 253.2 | $ | 245.8 | $ | 245.2 | $ | 269.7 | $ | 205.4 | ||||||||||
Shareholders’ equity | $ | 94.9 | $ | 624.7 | $ | 504.7 | $ | 434.7 | $ | 370.7 |
(1) | Asia Pacific Fiber Cement includes all fiber cement manufactured in Australia, New Zealand and the Philippines and sold in Australia, New Zealand and Asia. | |
(2) | Includes fiber cement manufactured and sold in Chile (for fiscal year 2002 to July 2005 only), fiber reinforced concrete pipes manufactured and sold in the United States, fiber cement operations in Europe and a roofing pilot plant in the United States. Also includes general corporate income in fiscal year 2002 comprised primarily of rental income from subleasing office space in Sydney, Australia. Our Chilean business was sold in July 2005. Our roofing pilot plant was closed and the business ceased operations in April 2006. See Item 4, “Information on the Company — Capital Expenditures and Divestitures,” Item 4 “Information on the Company — Recent Developments” and Note 14 to our consolidated financial statements in Item 18. | |
(3) | For fiscal years 2006 and 2005, operating (loss) income includes Special Commission of Inquiry and other related expenses of $17.4 million and $28.1 million, respectively. In addition, operating loss in fiscal year 2006 includes $715.6 million related to the establishment of the asbestos provision and $13.4 million related to the impairment of our former roofing plant. |
Operating (loss) income also includes restructuring and other operating income/expenses as follows: (i) for fiscal year 2006, an $0.8 million loss related to the disposal of our Chilean fiber cement business; (ii) for fiscal year 2005, $6.0 million consisting of a settlement loss of $5.3 million related to an employee retirement plan and a $0.7 million loss on the sale of land in Sacramento, California; (iii) for fiscal year 2004, $2.1 million expense primarily related to an increase in cost provisions for our Australian and New Zealand business; (iv) for fiscal year 2003, $1.0 million income related to the settlement of a terminated derivative contract; and (v) for fiscal year 2002, $12.6 million expense related to the roofing Class Action Settlement Agreement in the United States, $7.4 million expense associated with the corporate reorganization and $8.1 million expense related to the decrease in fair value of derivative contracts. |
(4) | Consists primarily of the following: (i) for fiscal year 2005, the $1.3 million expense consisted of a $2.1 million impairment charge that we recorded on an investment in a company that filed a voluntary petition for reorganization under Chapter 11 of the U.S. bankruptcy code, partly offset by a $0.8 million gain on a separate investment; (ii) for fiscal year 2004, the net gain achieved after accounting for income items, including a $4.5 million profit on the sale of our New Zealand property, was partially offset by expense items, including $3.2 million primarily due to a capital duty fee paid in conjunction with our Dutch corporate structure; (iii) for fiscal year 2003, investment income of $0.7 million; and (iv) for fiscal year 2002, investment expenses of $0.4 million. | |
(5) | Information for depreciation and amortization is for continuing businesses only. |
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(6) | Adjusted EBITDA represents income from continuing operations before interest income, interest expense, income taxes, other nonoperating expenses, described in footnote four above, net, and depreciation and amortization charges as follows: |
Fiscal Years Ended March 31, | |||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Net cash provided by operating activities | $ | 240.6 | $ | 219.8 | $ | 162.6 | $ | 64.8 | $ | 76.6 | |||||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities, net | (791.3 | ) | (61.2 | ) | (51.1 | ) | 62.1 | (41.1 | ) | ||||||||||||
Change in operating assets and liabilities, net | 44.0 | (31.7 | ) | 18.1 | 43.6 | (4.7 | ) | ||||||||||||||
Net (loss) income | (506.7 | ) | 126.9 | 129.6 | 170.5 | 30.8 | |||||||||||||||
Loss (income) from discontinued operations | — | 1.0 | (4.3 | ) | (87.0 | ) | (3.5 | ) | |||||||||||||
Income tax expense | 71.6 | 61.9 | 40.4 | 26.1 | 3.1 | ||||||||||||||||
Interest expense | 7.2 | 7.3 | 11.2 | 23.8 | 18.4 | ||||||||||||||||
Interest income | (7.0 | ) | (2.2 | ) | (1.2 | ) | (3.9 | ) | (2.4 | ) | |||||||||||
Other expense (income) | — | 1.3 | (3.5 | ) | (0.7 | ) | 0.4 | ||||||||||||||
Depreciation and amortization | 45.3 | 36.3 | 36.4 | 27.4 | 23.5 | ||||||||||||||||
Adjusted EBITDA | $ | (389.6 | ) | $ | 232.5 | $ | 208.6 | $ | 156.2 | $ | 70.3 | ||||||||||
Adjusted EBITDA is not a measure of financial performance under U.S. GAAP and should not be considered an alternative to, or more meaningful than, income from operations, net income or cash flows as defined by U.S. GAAP or as a measure of our profitability or liquidity. Not all companies calculate Adjusted EBITDA in the same manner as we have and, accordingly, Adjusted EBITDA may not be comparable with other companies. We have included information concerning Adjusted EBITDA because we believe that this data is commonly used by investors to evaluate the ability of a company’s earnings from its core business operations to satisfy its debt, capital expenditure and working capital requirements. To permit evaluation of this data on a consistent basis from period to period, Adjusted EBITDA has been adjusted for noncash charges such as goodwill and asset impairment charges, as well as nonoperating income and expense items. See our consolidated financial statements and our discussion under “Operating and Financial Review and Prospects” for further information to assist in identifying and evaluating trends in Adjusted EBITDA. |
(7) | Information for capital expenditures includes both cash and credit purchases, and is for continuing businesses only. | |
(8) | Fiber cement volume is measured in5/16” thick square feet, which are referred to as standard feet. | |
(9) | Total current assets less total current liabilities. |
(10) | Includes current portion of long-term debt. |
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• | changing political and economic conditions; | |
• | changing laws and policies; | |
• | the general hazards associated with the assertion of sovereign rights over certain areas in which we conduct our business; and | |
• | laws limiting or conditioning the right and ability of subsidiaries and joint ventures to pay dividends or remit earnings to affiliated companies. |
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• | expectations that the conditions precedent to the Final Funding Agreement will be satisfied; | |
• | expectations about payments to a special purpose fund for the compensation of proven asbestos-related personal injury and death claims; | |
• | expectations concerning the Australian Tax Office amended assessment; | |
• | expectations that our credit facilities will be extended or renewed; | |
• | projections of our results of operations or financial condition; | |
• | statements regarding our plans, objectives or goals, including those relating to competition, acquisitions, dispositions and our products; | |
• | statements about our future performance; and | |
• | statements about product or environmental liabilities. |
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Item 4. | Information on the Company |
• | the formation of JHNV; | |
• | the transfer to subsidiaries of JHNV of all of our fiber cement businesses, our U.S. gypsum wallboard business, our Australian and New Zealand building systems business and our Australian windows business, all of which, except for fiber cement, were subsequently sold; | |
• | a debt financing, consisting of an issuance of notes to U.S. purchasers, and the arrangement of an Australian credit facility; and | |
• | the relocation of most of our senior executives and managers to our operational headquarters in the United States. |
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• | the issuance of shares of JHI NV common stock represented by CUFS to substantially all ABN 60 shareholders in exchange for their shares of ABN 60 common stock pursuant to an approved Australian scheme of arrangement; | |
• | the transfer by ABN 60 of all of the outstanding shares of JHNV (which directly or indirectly held substantially all of the assets of the James Hardie Group at that time) to JHI NV; | |
• | a capital reduction and payment of a dividend by ABN 60 to its then sole shareholder, JHI NV; | |
• | the issuance by ABN 60 of 100,000 partly-paid ordinary shares to JHI NV for a total issue price approximately equal to the market value of the James Hardie Group immediately prior to the scheme’s implementation (which equaled approximately A$1.9 billion). There was an initial subscription price paid of A$50 per partly-paid ordinary share (that is, for a total subscription price for such shares of A$5 million), and the remainder was left uncalled. A partly-paid share is a share that is issued with only part of its value paid by the owner of the share. The partly-paid shares were issued by ABN 60 to enable it to call on JHI NV for funds in the future if ABN 60 needed such funds to maintain its solvency; | |
• | the listing of the shares of JHI NV represented by CUFS on the Australian Stock Exchange and the listing of ADRs, representing CUFS, which in turn represent shares of JHI NV, on the New York Stock Exchange; and | |
• | the establishment of a Dutch financing subsidiary, James Hardie International Finance B.V., or JHIF BV. |
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![REORGANIZATION DIAGRAM](https://capedge.com/proxy/20-F/0000950137-06-010539/a19156a1915605.gif)
• | JHI NV and ABN 60 cancelled the partly-paid shares. The decision to cancel the partly-paid shares was taken by the directors of ABN 60 who did so based on a determination that the reduction in capital would not materially prejudice ABN 60’s ability to pay its creditors, including Amaba and Amaca, which, under the terms of the Deed of Covenant and Indemnity, were creditors of ABN 60 only to the extent of the limited financial obligations under that Deed. The directors of ABN 60, after due consideration of ABN 60’s financial position, determined that the reduction in capital would not materially prejudice ABN 60’s ability to pay its creditors; | |
• | ABN 60 transferred control of all of its non-operating subsidiaries to RCI Holdings Pty Ltd, a wholly owned subsidiary of JHI NV, to distinguish between the operating group of companies and non-operating subsidiaries; and | |
• | Following the consolidation of the operating assets of the James Hardie Group under JHI NV and JHNV in fiscal year 2003, the principal activity of ABN 60 was paying amounts in accordance with the Deed of Covenant and Indemnity. At that time, the cash position of the Company had improved significantly as a result of the sale of the Company’s Gypsum business in the United States and the impending sale of a gypsum mine in Nevada. On March 31, 2003, following a review of all available options to address this issue and after a thorough review had been conducted to determine that the funds available to ABN 60 would be sufficient to meet the claims of all creditors, the shares in ABN 60 were transferred to a newly established company named the ABN 60 Foundation. ABN 60 Foundation was established to be the sole shareholder of ABN 60. ABN 60 is managed by independent directors and operates entirely independently of the Company. |
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![CORPORATE STRUCTURE DIAGRAM](https://capedge.com/proxy/20-F/0000950137-06-010539/a19156a1915606.gif)
Australian Taxation Office Assessment |
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ATO Decision on Tax Deductibility of SPF and Related Matters |
Debt Facilities |
Closure of Roofing Pilot Plant |
Special Commission of Inquiry and Related Developments |
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Disposal of Chile Business |
Board and Management Changes |
2006 Annual General Meeting |
Election of Members of the Supervisory and Joint Boards |
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Supervisory Board Remuneration |
Supervisory Board Share Plan |
• | Participation by members of the Supervisory Board in the SBSP 2006 is not mandatory, and no holding lock applies to any shares acquired under the SBSP 2006; | |
• | The SBSP 2006 allows us to issue new shares or acquire shares on the market on behalf of the participant; | |
• | We will not provide any loans in relation to the issue or purchase of shares under the SBSP 2006; | |
• | The number of shares issued or transferred to a member of the Supervisory Board will be determined by dividing the amount which the member elects to apply under the SBSP 2006 (net of any applicable taxes) by the market price (defined below); | |
• | The total remuneration of a Supervisory Board member will take into account any participation in the SBSP 2006. Accordingly, the maximum amount of his or her participation will be determined by the maximum remuneration payable to them. Therefore, the maximum number of shares that may be issued under the SBSP 2006 to all participants in any single year is equal to the aggregate remuneration payable to members of the Supervisory Board pursuant to Article 25 of our Articles of Association, divided by the market price (defined below); | |
• | Where new shares are issued under the SBSP 2006, the market price is the average of the closing prices for CUFS on the ASX during the period of five business days preceding the day of issue of the shares. Where shares are purchased on the market, the market price is the price at which the relevant CUFS are acquired; | |
• | The SBSP 2006 is administered by the Managing Board and is governed by the laws of The Netherlands. The Managing Board may at any time vary or terminate the SBSP 2006 by resolution (subject to any applicable ASX listing rule requirements); | |
• | Shares under the SBSP 2006 will be issued no later than three years after the passing of the resolution approving the SBSP 2006; and | |
• | Any new member of the Supervisory Board will not be issued new shares under the SBSP 2006 until further shareholder approval is obtained pursuant to relevant ASX listing rules. However, any new member of the Supervisory Board appointed prior to the next Annual General Meeting may participate in the SBSP 2006 by the Company acquiring shares on the market (which does not require shareholder approval under ASX listing rules). |
• | Within the six-year period up to August 2012, members of the Supervisory Board must accumulate a minimum of 1.5 times their annual remuneration (excluding fees for Committee or Deputy Chairmanship) in share ownership (either personally or through a personal superannuation or pension plan); |
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• | Within the six-year period up to August 2012, the Chairman must accumulate a minimum of twice her or his annual remuneration in share ownership (either personally or through a personal superannuation or pension plan); | |
• | Newly-appointed members of the Supervisory Board will have six years from the date of joining the Supervisory Board to satisfy the minimum share ownership requirements mentioned above; | |
• | No director will be required to apply more than 50% of their fees, on a post-tax basis, over a six-year period toward satisfying the minimum share ownership requirements mentioned above; | |
• | Failure to comply (as determined by the Supervisory Board) with the minimum share ownership requirements mentioned above will not automatically result in a director being obliged to resign as a member of the Supervisory Board or Joint Board, but levels of director shareholding will be disclosed in our annual reports and thus our shareholders will be able to monitor such compliance; and | |
• | The minimum share ownership requirements mentioned above will not form part of the rules of the SBSP 2006 and are subject to change by the Supervisory Board from time to time. |
Long Term Incentive Plan |
• | the establishment of a plan, to be called the James Hardie Industries N.V. Long Term Incentive Plan 2006, which we refer to as the LTIP, to provide incentives to members of our Managing Board and to certain members of our management, which we refer to as Executives; and | |
• | in accordance with certain LTIP rules, the issue of certain options or other rights over, or interests in, ordinary fully-paid shares in the Company, which we refer to as Shares, the issue and/or transfer of Shares under them, and the grant of cash awards to members of our Managing Board and to Executives. |
• | participation in the LTIP to a maximum of 1,000,000 options by Mr. Louis Gries; | |
• | acquisition accordingly by Mr. Gries of Shares up to the stated maximum; | |
• | participation in the LTIP to a maximum of 155,000 options by Mr. Russell Chenu; | |
• | acquisition accordingly by Mr. Chenu of Shares up to the stated maximum; | |
• | participation in the LTIP to a maximum of 263,000 options by Mr. Benjamin Butterfield; and | |
• | acquisition accordingly by Mr. Butterfield of Shares up to the stated maximum. |
Renewal of Authority for the Company to Acquire its Own Shares |
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Renewal of Rights Relating to Takeover Provisions |
• | the acquisition of control over CUFS or Shares takes place in an efficient, competitive and informed market; | |
• | each holder of any Shares or CUFS and also the members of the Managing Board, Joint Board, and Supervisory Board know the identity of any person who proposes to acquire a substantial interest in the Company, and are given reasonable time and enough information to consider and assess the merits of a proposal to acquire a substantial interest in the Company; and | |
• | as far as practicable, the holders of Shares or CUFS all have a reasonable and equal opportunity to participate in benefits accruing through a proposal to acquire a substantial interest in the Company. |
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Fiscal Year Ended March 31, | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(In millions) | ||||||||||||||
Continuing Operations | ||||||||||||||
USA Fiber Cement | $ | 1,218.4 | $ | 939.2 | $ | 738.6 | ||||||||
Asia Pacific Fiber Cement | 241.8 | 236.1 | 219.8 | |||||||||||
Other | 28.3 | 35.1 | 23.5 | |||||||||||
Total Continuing Operations | $ | 1,488.5 | $ | 1,210.4 | $ | 981.9 | ||||||||
Discontinued Operations | ||||||||||||||
Building Systems (New Zealand) | $ | — | $ | — | $ | 2.9 | ||||||||
Total Discontinued Operations | $ | — | $ | — | $ | 2.9 | ||||||||
Total (Continuing and Discontinued Operations) | $ | 1,488.5 | $ | 1,210.4 | $ | 984.8 | ||||||||
U.S. Housing Industry, Fiber Cement Industry and Pipe Industry |
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International Fiber Cement Industry |
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• | enhance our current products; | |
• | develop new products for specific markets or applications; and | |
• | create or improve manufacturing platforms and processes. |
• | continue to lower the capital cost of each unit of production at new plants by learning from past projects and through continuing innovation in engineering; | |
• | reduce operating costs at each plant by improving manufacturing processes, raw materials yields and machine productivity; and | |
• | use our proprietary product formulations and process technologies to create lightweight and durable products for all climates. |
Environmental Regulation |
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• | the Resource Conservation and Recovery Act; | |
• | the Comprehensive Environmental Response, Compensation and Liability Act; | |
• | the Clean Air Act; | |
• | the Occupational Safety and Health Act; | |
• | the Emergency Planning and Community Right to Know Act; | |
• | the Clean Water Act; | |
• | the Safe Drinking Water Act; | |
• | the Surface Mining Control and Reclamation Act; | |
• | the Toxic Substances Control Act; | |
• | the National Environmental Policy Act; and | |
• | the Endangered Species Act, |
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Jurisdiction of | ||||
Name of Company | Establishment | |||
James Hardie Aust Holdings Pty Ltd. | Australia | |||
James Hardie Austgroup Pty Ltd. | Australia | |||
James Hardie Australia Management Pty Ltd. | Australia | |||
James Hardie Australia Pty Ltd. | Australia | |||
James Hardie Building Products Inc. | United States | |||
James Hardie Europe B.V | Netherlands | |||
James Hardie Fibre Cement Pty Ltd. | Australia | |||
James Hardie International Finance B.V | Netherlands | |||
James Hardie International Finance Holdings Sub I B.V | Netherlands | |||
James Hardie International Finance Holdings Sub II B.V | Netherlands | |||
James Hardie International Holdings B.V | Netherlands | |||
James Hardie N.V. | Netherlands | |||
James Hardie New Zealand Limited | New Zealand | |||
James Hardie Philippines Inc. | Philippines | |||
James Hardie Research (Holdings) Pty Ltd. | Australia | |||
James Hardie U.S. Investments Sierra Inc. | United States | |||
N.V. Technology Holdings A Limited Partnership | Australia | |||
RCI Pty Ltd. | Australia |
Capital Expenditures |
Fiscal Years Ended March 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(In millions) | |||||||||||||
USA Fiber Cement | $ | 154.5 | $ | 144.8 | $ | 56.2 | |||||||
Asia Pacific Fiber Cement | 6.6 | 4.1 | 8.4 | ||||||||||
Chile, U.S. Pipes, U.S. Roofing and Europe(1) | 1.7 | 4.1 | 9.5 | ||||||||||
Total Capital Expenditures | $ | 162.8 | $ | 153.0 | $ | 74.1 | |||||||
(1) | In July 2005, we sold our fiber cement business located in Chile. See Note 14 to our consolidated financial statements in Item 18. In April 2006, we closed our roofing pilot plant located in Fontana, California. For more information on these two discontinued operations in Chile and California, see Item 4, “Information on the Company — Recent Developments.” |
• | the commencement of construction of a new fiber cement manufacturing plant in Pulaski, Virginia at a total estimated cost of $98.0 million. Construction of the plant began in March 2005. The plant will |
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include two manufacturing lines, each with an annual design capacity of 300 million square feet. At the end of fiscal year 2006, we completed construction on the first manufacturing line and, in April 2006, we commenced commercial production on this line. The plant produces external siding and interior backerboard products for new residential construction, repair and remodel and manufactured housing markets. As of March 31, 2006, we have incurred $89.3 million related to the construction of our Pulaski, Virginia plant; | ||
• | the continued implementation of our ColorPlus® strategy. This strategy includes constructing additional ColorPlus® coating capacity inside our existing plants. In fiscal year 2006, we completed construction of, and commenced production on, a new ColorPlus® line at our Blandon, Pennsylvania plant. In addition, we began construction on new ColorPlus® coating lines at our Reno, Nevada and Pulaski, Virginia plants. As of March 31, 2006, we have incurred $44.7 million related to our ColorPlus® strategy; | |
• | the addition of a new fiber cement plant in Reno, Nevada at a cost of $58.0 million, which occurred during fiscal years 2006, 2005 and 2004; | |
• | the addition of a new trim line at our Peru, Illinois plant. As of March 31, 2005, we were in pre-production and in fiscal year 2006 we commenced theramp-up of this new trim line. As of March 31, 2006, we incurred a total cost of $58.5 million related to the construction of this new trim line. These expenditures occurred during fiscal years 2006, 2005 and 2004; | |
• | upgrades to our Blandon, Pennsylvania plant at a cost of approximately $17.1 million, which occurred during fiscal years 2005, 2004 and 2003; and | |
• | the addition of a panel production line at our Waxahachie, Texas plant at a cost of $26.5 million, which occurred during fiscal years 2004 and 2003. |
• | the second manufacturing line at our Pulaski, Virginia plant, discussed above, at an estimated cost of $12.0 million; and | |
• | the continued implementation of our ColorPlus® strategy, discussed above, at an estimated cost of $12.5 million. |
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Divestitures |
Building Systems |
Disposal of Chile Business |
ABN 60 |
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Plants and Process |
Committed | |||||||||||||||
Existing | Additional | Total | |||||||||||||
Annual Design | Design | Planned Design | |||||||||||||
Location | Capacity(1) | Capacity(1) | Capacity(1) | ||||||||||||
Fiber Cement Flat Sheet (in million square feet) | |||||||||||||||
United States | |||||||||||||||
Fontana, California | 180 | — | 180 | ||||||||||||
Plant City, Florida | 300 | — | 300 | ||||||||||||
Cleburne, Texas | 500 | — | 500 | ||||||||||||
Tacoma, Washington | 200 | — | 200 | ||||||||||||
Peru, Illinois | 560 | — | 560 | ||||||||||||
Waxahachie, Texas | 360 | — | 360 | ||||||||||||
Blandon, Pennsylvania | 200 | — | 200 | ||||||||||||
Summerville, South Carolina | 190 | — | 190 | ||||||||||||
Reno, Nevada | 300 | — | 300 | ||||||||||||
Pulaski, Virginia(2) | 300 | 300 | 600 | ||||||||||||
Total United States | 3,090 | 3,390 | |||||||||||||
Australia | |||||||||||||||
Sydney, New South Wales(3) | 200 | — | 200 | ||||||||||||
Brisbane, Queensland (Carole Park)(3)(4) | 160 | — | 160 | ||||||||||||
Total Australia | 360 | 360 | |||||||||||||
New Zealand | |||||||||||||||
Auckland(3) | 75 | — | 75 | ||||||||||||
The Philippines | |||||||||||||||
Manila | 145 | — | 145 | ||||||||||||
Total Fiber Cement Flat Sheet | 3,670 | 3,970 | |||||||||||||
Fiber Reinforced Concrete Pipes(in tons)(5) | |||||||||||||||
Plant City, Florida (pipes) | 100,000 | — | 100,000 | ||||||||||||
Brisbane, Queensland (Meeandah)(3)(4) | 50,000 | — | 50,000 | ||||||||||||
Total Fiber Reinforced Concrete Pipes | 150,000 | 150,000 |
(1) | Annual design capacity is based on management’s historical experience with our production process and is calculated assuming continuous operation, 24 hours per day, seven days per week, producing 5/16” thickness siding at a target operating speed. Plants outside the United States produce a range of thicker products, which negatively affect their outputs. Actual production is affected by factors such as product mix, batch size, plant availability and production speeds and is usually less than annual design capacity. |
(2) | Our plant in Pulaski, Virginia will feature two manufacturing lines with a total annual design capacity of 600 million square feet (300 million per line). Currently only one line is complete. |
(3) | Prior to March 2004, the land and buildings on which these facilities are located were leased on a long-term basis from Amaca Pty Limited. In March 2004, various subsidiaries of Multiplex Property Trust (which we collectively refer to as Multiplex) an unrelated third party, acquired the land and buildings related to these four fiber cement manufacturing facilities from Amaca. Prior to July 2005, the land and |
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buildings on which these facilities are located was leased on a long-term basis from Multiplex. In July 2005, unrelated third parties, Penrose Land Trustee No. 1 Limited and Penrose Land Trustee No. 2 Limited (which we collectively refer to as the Penrose Land Trust) acquired from Multiplex the land and buildings related to our fiber cement manufacturing facilities in Auckland. | |
(4) | There are two manufacturing plants in Brisbane. Carole Park produces only flat sheets and Meeandah produces only pipes and columns. |
(5) | Pipe and column capacity is measured in tons rather than million square feet. |
Capacity | ||||
Country | Utilization(1) | |||
United States | 84 | % | ||
Australia | 56 | % | ||
New Zealand | 75 | % | ||
Philippines | 82 | % |
(1) | Capacity utilization is based on design capacity. Design capacity is based on management’s estimates, as described above. No accepted industry standard exists for the calculation of fiber cement manufacturing facility capacities. |
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Mines |
Commitment to Provide Funding on a Long-Term Basis in Respect of Asbestos-Related Liabilities of Former Subsidiaries |
• | the establishment of the SPF to provide compensation to Australian asbestos-related personal injury claimants with proven claims against the Former James Hardie Companies; | |
• | initial funding of approximately A$154 million provided by the Performing Subsidiary to the SPF, calculated on the basis of an actuarial report prepared by KPMG Actuaries Pty Ltd, or KPMG Actuaries, as of March 31, 2006. That report provided an estimate of the discounted net present value of all present and future Australian asbestos-related personal injury claims against the Former James |
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Hardie Companies of A$1.52 billion ($1.14 billion). | ||
• | subject to the cap described below, an annual contribution in advance to top up the funds in the SPF to equal the actuarially calculated estimate of expected Australian asbestos-related personal injury claims against the Former James Hardie Companies for the following three years, to be revised annually (so as to create a rolling cash “buffer” in the SPF); | |
• | a cap on the annual payments made by the Performing Subsidiary to the SPF, initially set at 35% of the Company’s free cash flow (defined as cash from operations in accordance with U.S. GAAP in force at the date of the Final Funding Agreement) for the immediately preceding financial year, with provisions for the percentage to decline over time depending upon the Company’s financial performance (and therefore the contributions already made to the SPF) and the claims outlook; | |
• | an initial term of approximately 40 years, at the end of which time the parties may either agree upon a final payment to be made by the Company in satisfaction of any further funding obligations, or have the term automatically extended for further periods of 10 years until such agreement is reached or the relevant asbestos-related liabilities cease to arise; | |
• | the entry by the parties and/or others into agreements ancillary to or connected with the Final Funding Agreement, which we collectively refer to as the Related Agreements; | |
• | no cap on individual payments to asbestos claimants; | |
• | the Performing Subsidiary’s payment obligations are guaranteed by JHI NV; | |
• | the SPF’s claims to the funding payments required under the Final Funding Agreement will be subordinated to the claims of the Company’s lenders; and | |
• | the compensation arrangements will extend to members of the Baryulgil community for asbestos-related claims arising from the activities of a former subsidiary of ABN 60, as described below. |
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Key Events During and Since 2001 Leading to the Signing of the Final Funding Agreement |
Separation of Amaca Pty Ltd, Amaba Pty Ltd and ABN 60 |
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Potential for Claims Against the Former James Hardie Companies to be Made Against the Company |
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Special Commission of Inquiry |
• | speedy, fair and equitable compensation for all existing and future claimants, including objective criteria to reduce superimposed inflation. Superimposed inflation is inflation in claim awards above the underlying rate of inflation and is sometimes called judicial inflation; | |
• | contributions to be made in a manner which provide certainty to claimants as to their entitlement, the scheme administrator as to the amount available for distribution, and the proposed contributors (including the Company) as to the ultimate amount of their contributions; | |
• | significant reductions in legal costs through reduced and more abbreviated litigation; and | |
• | limitation of legal avenues outside of the scheme. |
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Principal Findings in Favor of the Company |
• | the establishment of the Foundation was legally effective and causes of action which the Foundation, Amaba or Amaca might have against the James Hardie Group, its officers and advisers would be unlikely to result in any significant increase in the funds of Amaba, Amaca or the Foundation (putting this finding conversely, the Company is unlikely to face any significant liability to the Foundation, Amaba or Amaba as a result of the then current causes of action of such entities against the current members of the James Hardie Group); | |
• | there was no finding that JHI NV had committed any material breach of any law as a result of the separation and reorganization transactions which took place in 2001; | |
• | many of the allegations and causes of action put forward by lawyers for the Foundation, Amaba and Amaca were “speculative;” and | |
• | the SCI rejected the suggestion that JHI NV had engaged in misleading or deceptive conduct or attempted to pervert the course of justice or obtained court orders by fraud in relation to the 2001 Reorganization due to the fact that neither the reorganization scheme documents prepared in 2001 nor the submissions or materials presented to the court for the 2001 Reorganization referred to the possibility of the partly-paid shares being cancelled (the shares were cancelled in 2003). |
Other Principal Findings Relevant to the Company |
• | as a practical (but not legal) matter, if the “right” amount (and not merely the minimum amount) of funding was not provided to the Foundation, the Company would face potential legislative, customer, union and public action to apply legislative and boycott measures and public pressure to ensure that the Company met any significant funding shortfall; and | |
• | the directors of ABN 60 at the time of the cancellation of the partly-paid shares (Messrs. Morley and Salter) effectively followed the instructions of JHI NV in relation to the cancellation. As a result, it might be concluded that JHI NV was a shadow director of ABN 60 at that time. However, while expressing some reservations about what occurred, the SCI did not find that the ABN 60 directors (including JHI NV as a shadow director) breached their duties in undertaking the cancellation. |
Principal Findings Against ABN 60 (formerly called JHIL) |
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Principal Findings Against Mr. Macdonald and Mr. Shafron |
• | alleged false and misleading conduct associated with a February 16, 2001 press release, particularly regarding a statement that the Foundation was “fully funded” in contravention of New South Wales and Commonwealth legislation prohibiting false or misleading conduct; | |
• | allegedly breaching their duties as officers of ABN 60 by encouraging the board of directors of ABN 60 to act on the Trowbridge report, dated February 13, 2001 (which we refer to as the Trowbridge Report), in forming a view that the Foundation would be “fully funded”; and | |
• | criticisms, falling short of findings of contraventions of law, based on their respective roles in the separation and reorganization transactions. These included criticisms relating to their development, control over, reliance on and use of the Trowbridge Report, despite (in the SCI’s view) their knowledge of its limitations. |
Other Relevant Findings |
Findings Relating to Funding Shortfall |
Events Following the SCI Findings |
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Heads of Agreement |
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Extension of Heads of Agreement to Cover Baryulgil Claims |
Interim Funding and ABN 60 Indemnity |
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Releases From Civil Liability |
Actuarial Study; Claims Estimate |
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Claims Data |
Years Ended | ||||||||
March 31, | ||||||||
2006 | 2005 | |||||||
Australia | 556 | 712 | ||||||
New Zealand | — | — | ||||||
Unknown-Court Not Identified(1) | 20 | 36 | ||||||
USA | 1 | 1 |
(1) | The “Unknown — Court Not Identified” designation reflects that the information for such claims had not been, as of the date of publication, entered into the database which the Foundation maintains. Over time, as the details of “unknown” claims are provided to the Foundation, the Company believes the database is updated to reflect where such claims originate. Accordingly, the Company understands the number of unknown claims pending fluctuates due to the resolution of claims as well as the reclassification of such claims. |
Australia | ||||||||||||
Years Ended March 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of claims filed | 346 | 489 | 379 | |||||||||
Number of claims dismissed | 97 | 62 | 119 | |||||||||
Number of claims settled or otherwise resolved | 405 | 402 | 316 | |||||||||
Average settlement amount per claim | A$ | 151,883 | A$ | 157,594 | A$ | 167,450 | ||||||
Average settlement amount per claim | $ | 114,322 | $ | 116,572 | $ | 116,127 |
Unknown — Court Not Identified | ||||||||||||
Years Ended March 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of claims filed | 6 | 7 | 1 | |||||||||
Number of claims dismissed | 10 | 20 | 15 | |||||||||
Number of claims settled or otherwise resolved | 12 | 2 | — | |||||||||
Average settlement amount per claim | A$ | 198,892 | A$ | 47,000 | A$ | — | ||||||
Average settlement amount per claim | $ | 149,706 | $ | 34,766 | $ | — |
USA | ||||||||||||
Years Ended March 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of claims filed | — | — | — | |||||||||
Number of claims dismissed | — | 3 | 1 | |||||||||
Number of claims settled or otherwise resolved | — | 1 | — | |||||||||
Average settlement amount per claim | A$ | — | A | $228,293 | A$ | — | ||||||
Average settlement amount per claim | $ | — | $168,868 | $ | — |
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As of March 31, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Number of open claims at beginning of year | 749 | 743 | 814 | 671 | 569 | |||||||||||||||
Number of new claims | 352 | 496 | 380 | 409 | 375 | |||||||||||||||
Number of closed claims | 524 | 490 | 451 | 266 | 273 | |||||||||||||||
Number of open claims at year-end | 577 | 749 | 743 | 814 | 671 | |||||||||||||||
Average settlement amount per settled claim | A | $153,236 | A | $157,223 | A | $167,450 | A | $201,200 | A | $197,941 | ||||||||||
Average settlement amount per settled claim | $115,341 | $116,298 | $116,127 | $112,974 | $101,603 | |||||||||||||||
Average settlement amount per case closed | A | $121,945 | A | $129,949 | A | $117,327 | A | $177,752 | A | $125,435 | ||||||||||
Average settlement amount per case closed | $ 91,788 | $ 96,123 | $ 81,366 | $ 99,808 | $ 64,386 |
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SCI and Other Related Expenses |
Years Ended | ||||||||
March 31, | ||||||||
2006 | 2005 | |||||||
(In millions) | ||||||||
SCI | $ | — | $ | 6.8 | ||||
Internal investigation | — | 4.9 | ||||||
ASIC investigation | 0.8 | 1.2 | ||||||
Severance and consulting | 0.1 | 6.0 | ||||||
Resolution advisory fees | 9.8 | 6.4 | ||||||
Funding advice | 2.9 | 0.6 | ||||||
Other | 3.8 | 2.2 | ||||||
Total SCI and other related expenses | $ | 17.4 | $ | 28.1 | ||||
Australian Securities and Investments Commission Investigation |
Financial Position of the Foundation |
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Tax Contingencies |
Australian Taxation Office Assessment |
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$ | A$ | |||||||
(In millions) | ||||||||
Primary tax after allowable credits | $ | 129.5 | A | $172.0 | ||||
Penalties(1) | 32.4 | 43.0 | ||||||
General interest charges | 122.7 | 163.0 | ||||||
Total amended assessment | $ | 284.6 | A | $378.0 | ||||
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Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
The Company and the Building Product Markets |
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Accounting for Contingencies |
Accounting for Asbestos-Related Payments |
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Sales |
Accounts Receivable |
Inventory |
Accrued Warranty Reserve |
Accounting for Income Tax |
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Fiscal Years Ended March 31, | ||||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||||
Net sales: | ||||||||||||||||||||||||||
USA Fiber Cement | $ | 1,218.4 | 81.9 | % | $ | 939.2 | 77.6 | % | $ | 738.6 | 75.2 | % | ||||||||||||||
Asia Pacific Fiber Cement | 241.8 | 16.2 | 236.1 | 19.5 | 219.8 | 22.4 | ||||||||||||||||||||
Other(1) | 28.3 | 1.9 | 35.1 | 2.9 | 23.5 | 2.4 | ||||||||||||||||||||
Total net sales | 1,488.5 | 100.0 | 1,210.4 | 100.0 | 981.9 | 100.0 | ||||||||||||||||||||
Cost of goods sold | (937.7 | ) | (63.0 | ) | (784.0 | ) | (64.8 | ) | (623.0 | ) | (63.4 | ) | ||||||||||||||
Gross profit | 550.8 | 37.0 | 426.4 | 35.2 | 358.9 | 36.6 | ||||||||||||||||||||
Selling, general and administrative expenses | (209.8 | ) | (14.1 | ) | (174.5 | ) | (14.4 | ) | (162.0 | ) | (16.5 | ) | ||||||||||||||
Research and development expenses | (28.7 | ) | (1.9 | ) | (21.6 | ) | (1.8 | ) | (22.6 | ) | (2.3 | ) | ||||||||||||||
SCI and other related expenses | (17.4 | ) | (1.2 | ) | (28.1 | ) | (2.3 | ) | — | — | ||||||||||||||||
Impairment of roofing plant | (13.4 | ) | (0.9 | ) | — | — | — | — | ||||||||||||||||||
Asbestos provision | (715.6 | ) | (48.1 | ) | — | — | — | — | ||||||||||||||||||
Other operating expense | (0.8 | ) | — | (6.0 | ) | (0.5 | ) | (2.1 | ) | (0.3 | ) | |||||||||||||||
Operating (loss) income | (434.9 | ) | (29.2 | ) | 196.2 | 16.2 | 172.2 | 17.5 | ||||||||||||||||||
Interest expense | (7.2 | ) | (0.5 | ) | (7.3 | ) | (0.6 | ) | (11.2 | ) | (1.1 | ) | ||||||||||||||
Interest income | 7.0 | 0.5 | 2.2 | 0.2 | 1.2 | 0.1 | ||||||||||||||||||||
Other (expense) income | — | — | (1.3 | ) | (0.1 | ) | 3.5 | 0.4 | ||||||||||||||||||
(Loss) income from continuing operations before income taxes | (435.1 | ) | (29.2 | ) | 189.8 | 15.7 | 165.7 | 16.9 | ||||||||||||||||||
Income tax expense | (71.6 | ) | (4.8 | ) | (61.9 | ) | (5.1 | ) | (40.4 | ) | (4.1 | ) | ||||||||||||||
(Loss) income from continuing operations | $ | (506.7 | ) | (34.0 | )% | $ | 127.9 | 10.6 | % | $ | 125.3 | 12.8 | % | |||||||||||||
(1) | Includes sales of fiber cement in Chile (fiscal year 2004 through July 2005 only), fiber reinforced concrete pipes in the United States, a roofing pilot plant in the United States and fiber cement operations |
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in Europe. Our Chilean business was sold in July 2005. Our roofing pilot plant ceased operations in April 2006. See Item 4, “Information on the Company — Capital Expenditures and Divestitures” and Note 14 to our consolidated financial statements in Item 18. |
Fiscal Years Ended March 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
USA Fiber Cement | $ | 342.6 | $ | 241.5 | $ | 195.6 | ||||||
Asia Pacific Fiber Cement | 41.7 | 46.8 | 37.6 | |||||||||
Research and Development | (15.7 | ) | (17.5 | ) | (17.6 | ) | ||||||
Other(1) | (26.5 | ) | (11.8 | ) | (15.9 | ) | ||||||
Total segment operating income | 342.1 | 259.0 | 199.7 | |||||||||
General Corporate | (61.4 | ) | (62.8 | ) | (27.5 | ) | ||||||
Asbestos provision | (715.6 | ) | — | — | ||||||||
Total operating (loss) income | $ | (434.9 | ) | $ | 196.2 | $ | 172.2 | |||||
(1) | Includes impairment charge of $13.4 million in fiscal year 2006 related to the closure of our roofing pilot plant. See Item 4, “Information on the Company — Recent Developments.” |
Year Ended March 31, 2006 Compared to Year Ended March 31, 2005 |
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Year Ended March 31, 2005 Compared to Year Ended March 31, 2004 |
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Building Systems |
ABN 60 |
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Disposal of Chile Business |
Inventory Costs |
American Jobs Creation Act |
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Exchanges of Non-Monetary Assets |
Share-Based Payment |
Conditional Asset Retirement Obligations |
Accounting Changes and Error Corrections |
Uncertain Tax Positions |
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At March 31, 2006 | ||||||||||||
Effective | Principal | |||||||||||
Description | Interest Rate | Total Facility | Outstanding | |||||||||
(In millions) | ||||||||||||
US$ notes, fixed interest, repayable annually in varying tranches from November 2006 through November 2013 | 7.16 | % | $ | 121.7 | $ | 121.7 | ||||||
US$ 364-day facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until June 2007 | 5.41 | % | 110.0 | 81.0 | ||||||||
US$ term facilities, can be drawn in US$, variable interest rates based on LIBOR plus margin, can be repaid and redrawn until December 2006 | 5.27 | % | 245.0 | 100.0 | ||||||||
Total | $ | 476.7 | $ | 302.7 | ||||||||
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• | existing cash and unutilized committed facilities; | |
• | net operating cash flow during the current year; | |
• | an extension of the term of existing credit facilities; and | |
• | the addition of proposed new funding facilities. |
Cash Flow — Year Ended March 31, 2006 compared to Year Ended March 31, 2005 |
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Cash Flow — Year Ended March 31, 2005 compared to Year Ended March 31, 2004 |
Capital Requirements and Resources |
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Capital Expenditures |
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Contractual Obligations |
Payments Due | |||||||||||||||||||||
During Fiscal Year Ending March 31, | |||||||||||||||||||||
Total | 2007 | 2008 to 2009 | 2010 to 2011 | Thereafter | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Long-term Debt(1) | $ | 121.7 | $ | 121.7 | $ | — | $ | — | $ | — | |||||||||||
Interest on Long-term Debt | 10.4 | 10.4 | — | — | — | ||||||||||||||||
Operating Leases | 142.8 | 15.8 | 26.3 | 22.0 | 78.7 | ||||||||||||||||
Purchase Obligations(2) | 22.2 | 22.2 | — | — | — | ||||||||||||||||
Total | $ | 297.1 | $ | 170.1 | $ | 26.3 | $ | 22.0 | $ | 78.7 | |||||||||||
(1) | Under the terms of theU.S.-dollar non-collateralized notes agreement (fixed-rate debt), prepayment was permitted and on April 28, 2006, we issued a notice to all noteholders to prepay in full all outstanding notes on May 8, 2006. On May 8, 2006, theU.S.-dollar non-collateralized notes were prepaid in full, including a make-whole payment of $6.0 million. |
(2) | Purchase Obligations are defined as agreements to purchase goods or services that are enforceable and legally-binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions. Purchase obligations listed above primarily represent commitments for capital expenditures, the majority of which relate to the construction of the plant we are building in Pulaski, Virginia. |
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Item 6. | Directors, Senior Management and Employees |
Board Structure |
Managing Board |
Members |
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Responsibilities |
• | the general affairs, operations and finance of the Company; and | |
• | ensuring the implementation of our goals, strategy and policies, to achieve results. |
Supervisory Board |
Members |
• | such member(s) retire no later than the end of the first General Meeting following their appointment; and | |
• | the number of the members of the Supervisory Board appointed by the Supervisory Board at any given time does not exceed one-third of the aggregate number of members of the Supervisory Board as fixed by the Supervisory Board. |
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Responsibilities |
• | supervising the policy and actions pursued by the Managing Board; | |
• | supervising the general course of our affairs and the business enterprise we operate; and | |
• | advising the Managing Board. |
Joint Board |
Members |
Responsibilities |
Processes |
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Qualifications |
Independence |
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• | undertaken to advise the Joint Board of any change in their circumstances that could affect their independence; and | |
• | completed a comprehensive questionnaire that confirms their independence. |
Director Orientation |
• | visits to our facilities, meetings with management and customers; | |
• | reviews of financial position, strategy, operating performance and risk management; | |
• | a review of his or her rights, duties and responsibilities; and | |
• | a discussion of the role of Supervisory Board Committees. |
Remuneration |
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Indemnification |
Management Succession |
Audit Committee |
Members and Independence |
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Purpose, Duties and Responsibilities |
• | the identification of strategic, operational and financial risks; | |
• | the establishment of effective systems to monitor, assess, prioritize, mitigate and manage risk; and | |
• | reporting systems for monitoring compliance with risk policies. |
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Meetings |
Communications |
Access and Advisors |
Standards |
Charter |
Annual Review |
Conflicts of Interest |
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Reporting |
Special Reviews |
Annual Information Meeting |
Certifying Financial Reports |
Audit Committee’s Risk Management Subcommittee |
Nominating and Governance Committee |
Members and Independence |
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Purpose, Duties and Responsibilities |
Outside Advisors |
Meetings |
Report |
Remuneration Committee |
Members and Independence |
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Purpose, Duties, and Responsibilities |
• | administers and makes recommendations on the Company’s incentive compensation and equity-based remuneration plans; | |
• | reviews the remuneration of Supervisory Board Directors for service on the Supervisory Board and Board committees; | |
• | reviews the remuneration policy for members of the Managing Board; and | |
• | makes recommendations to the Supervisory Board on the Company’s recruitment, retention and termination policies and procedures for senior management. |
Subcommittees |
Outside Advisors |
Meetings |
Report |
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Policies and Programs |
• | Risk Management; | |
• | Business Conduct and Ethics; | |
• | Ethics Hotline (Whistleblower); | |
• | Continuous Disclosure and Market Communication; | |
• | Insider Trading; and | |
• | Corporate Governance Principles. |
Risk Management |
• | the principal strategic, operational and financial risks are identified; | |
• | effective systems are in place to monitor and manage risks; and | |
• | reporting systems, internal controls and arrangements for monitoring compliance with laws and regulations are adequate. |
• | established policies and procedures in relation to treasury operations, including the use of financial derivatives; | |
• | issued and revised standards and procedures in relation to environmental and health and safety matters; | |
• | implemented and maintained training programs in relation to legal issues such as trade practices/antitrust, trade secrecy, and Intellectual Property protection; and | |
• | issued procedures requiring that significant capital and recurring expenditure is approved at the appropriate levels. |
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Business Conduct and Ethics |
Ethics Hotline (Whistleblower) |
Continuous Disclosure and Market Communication Policy |
Communication |
• | management briefings and presentations to accompany quarterly results, which are accessible on a live webcast and teleconference; |
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• | audio webcasts of other management briefings and view webcasts of the shareholder information meeting; | |
• | a comprehensive Investor Relations website that displays all Company announcements and notices as soon as they have been cleared by the ASX, as well as all major management and road show presentations; | |
• | United States and Australian site visits and briefings on strategy for investment analysts; | |
• | ane-mail alert service to advise investors and other interested parties of announcements and other events; and | |
• | equality of access for shareholders, investment analysts and the media to briefings, presentations and meetings. |
Shareholders’ Participation |
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Insider Trading |
Corporate Governance Principles |
Updated Information |
Recent Developments |
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Name | Age | Position | Term Expires | |||||||
Supervisory Board | ||||||||||
Meredith Hellicar | 52 | Chairman of the Joint Board and Chairman of the Supervisory Board | 2009 | |||||||
John Barr | 59 | Deputy Chairman of the Joint Board and Deputy Chairman of the Supervisory Board | 2007 | |||||||
Michael Brown | 60 | Member of the Joint Board and the Supervisory Board | 2008 | |||||||
Michael Gillfillan | 58 | Member of the Joint Board and the Supervisory Board | 2009 | |||||||
James Loudon | 63 | Member of the Joint Board and the Supervisory Board | 2008 | |||||||
Donald McGauchie | 56 | Member of the Joint Board and the Supervisory Board | 2009 | |||||||
Managing Board | ||||||||||
Louis Gries | 52 | Chief Executive Officer, Member of the Joint Board and Chairman of the Managing Board | ||||||||
Russell Chenu | 57 | Chief Financial Officer and Member of the Managing Board | ||||||||
Benjamin Butterfield | 46 | General Counsel, Member of the Managing Board and Company Secretary |
Other Senior Leadership Team Officers | Age | Position | ||||
Steve Ashe | 46 | Vice President — Investor Relations | ||||
Peter Baker | 55 | Executive Vice President — Australia | ||||
James Chilcoff | 42 | Vice President — International Business | ||||
Mark Fisher | 35 | Vice President — Research and Development | ||||
Grant Gustafson(1) | 44 | Vice President — Interiors and Business Development | ||||
Nigel Rigby | 39 | Vice President — Emerging Markets | ||||
Robert Russell | 40 | Vice President — Established Markets | ||||
Cathy Wallace(2) | 50 | Vice President — Global Human Resources |
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Former Directors and Senior Leadership Team Officers | ||||||
Peter Cameron(3) | 54 | Former Member of the Joint Board and Supervisory Board | ||||
Gregory Clark(4) | 63 | Former Member of the Joint Board and the Supervisory Board | ||||
W. (Pim) Vlot(5) | 41 | Former Interim Member of the Managing Board and Former Company Secretary | ||||
Donald Merkley(6) | 43 | Former Executive Vice President — Research and Development | ||||
David Merkley(7) | 43 | Former Executive Vice President — Engineering and Process Development |
(1) | Mr. Gustafson joined us as a Vice President in April 2006. |
(2) | Ms. Wallace joined us as a Vice President in September 2005. |
(3) | On January 19, 2006, Mr. Cameron resigned from our Joint and Supervisory Boards and from the Nominating and Governance Committee for health reasons. Mr. Cameron died in February 2006. |
(4) | On May 9, 2006, Dr. Clark resigned from our Joint Board, Supervisory Board, Audit Committee and Nominating and Governance Committee. |
(5) | Mr. Vlot’s temporary employment agreement, as amended, provided that unless an indefinite contract was negotiated, the contract would automatically terminate on June 30, 2005. The agreement expired by its terms on June 30, 2005. |
(6) | On December 19, 2005, Mr. Donald Merkley resigned from his position as Executive Vice President — Research and Development and from the Company. |
(7) | On September 1, 2006, Mr. David Merkley resigned from his position as Executive Vice President — Engineering and Process Development and from the Company. |
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Former Directors |
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Former Senior Leadership Team Officers |
Fiscal Years Ended | |||||||||||||
March 31, | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
Fiber Cement United States and Canada | 2,150 | 1,820 | 1,722 | ||||||||||
Fiber Cement Australia | 402 | 424 | 459 | ||||||||||
Fiber Cement New Zealand | 170 | 147 | 161 | ||||||||||
Fiber Cement Philippines | 202 | 211 | 225 | ||||||||||
Pipes (United States and Australia) | 129 | 162 | 178 | ||||||||||
Fiber Cement Europe | 58 | 31 | 37 | ||||||||||
Roofing (United States) | 24 | 19 | 18 | ||||||||||
Fiber Cement Chile | — | 139 | 122 | ||||||||||
Research & Development, including Technology | 118 | 131 | 117 | ||||||||||
General Corporate | 50 | 38 | 34 | ||||||||||
Total Employees | 3,303 | 3,122 | 3,073 | ||||||||||
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Remuneration |
Primary | Equity | Post-employment | |||||||||||||||
Directors’ | JHI NV | ||||||||||||||||
Name | Fees | Stock(1) | Superannuation(2) | Total | |||||||||||||
US$ | US$ | US$ | US$ | ||||||||||||||
Non-Executive Directors | |||||||||||||||||
M. Hellicar | |||||||||||||||||
Fiscal year 2006 | $ | 178,777 | $ | 20,000 | $ | 17,890 | $ | 216,667 | |||||||||
Fiscal year 2005 | 128,750 | 20,000 | 13,388 | 162,138 | |||||||||||||
J. D. Barr | |||||||||||||||||
Fiscal year 2006 | 51,100 | 10,000 | — | 61,100 | |||||||||||||
Fiscal year 2005 | 60,000 | 10,000 | — | 70,000 | |||||||||||||
M. R. Brown | |||||||||||||||||
Fiscal year 2006 | 50,598 | 10,000 | 5,454 | 66,052 | |||||||||||||
Fiscal year 2005 | 60,000 | 10,000 | 6,300 | 76,300 | |||||||||||||
M. J. Gillfillan | |||||||||||||||||
Fiscal year 2006 | 51,100 | 10,000 | — | 61,100 | |||||||||||||
Fiscal year 2005 | 55,000 | 10,000 | — | 65,000 | |||||||||||||
J. R. H. Loudon | |||||||||||||||||
Fiscal year 2006 | 47,767 | 10,000 | — | 57,767 | |||||||||||||
Fiscal year 2005 | 40,000 | 20,000 | — | 60,000 | |||||||||||||
D. G. McGauchie | |||||||||||||||||
Fiscal year 2006 | 50,598 | 10,000 | 5,454 | 66,052 | |||||||||||||
Fiscal year 2005 | 55,000 | 10,000 | 5,850 | 70,850 |
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Primary | Equity | Post-employment | |||||||||||||||
Directors’ | JHI NV | ||||||||||||||||
Name | Fees | Stock(1) | Superannuation(2) | Total | |||||||||||||
US$ | US$ | US$ | US$ | ||||||||||||||
Former Non-Executive Directors | |||||||||||||||||
P. Cameron(3) | |||||||||||||||||
Fiscal year 2006 | 30,000 | 25,000 | 4,950 | 59,950 | |||||||||||||
Fiscal year 2005 | 40,000 | 20,000 | 5,400 | 65,400 | |||||||||||||
G. J. Clark(4) | |||||||||||||||||
Fiscal year 2006 | 51,100 | 10,000 | — | 61,100 | |||||||||||||
Fiscal year 2005 | 50,000 | 10,000 | — | 60,000 | |||||||||||||
Total Compensation for Non-Executive Directors | |||||||||||||||||
Fiscal year 2006 | $ | 511,040 | $ | 105,000 | $ | 33,748 | $ | 649,788 | |||||||||
Fiscal year 2005 | $ | 488,750 | $ | 110,000 | $ | 30,938 | $ | 629,688 |
Post- | |||||||||||||||||||||||||||||||||
Primary | employment | Equity | Other | ||||||||||||||||||||||||||||||
Super- | Relocation | �� | |||||||||||||||||||||||||||||||
annuation | and | ||||||||||||||||||||||||||||||||
Noncash | and 401(k) | Expatriate | |||||||||||||||||||||||||||||||
Name | Base Pay | Bonuses(5) | Benefits(6) | Benefits | Options(7) | Benefits | Severance | Total | |||||||||||||||||||||||||
US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||||||||
Executive Directors | |||||||||||||||||||||||||||||||||
L. Gries | |||||||||||||||||||||||||||||||||
Fiscal year 2006 | $ | 740,385 | $ | 1,890,363 | $ | 42,657 | $ | 10,478 | $ | 717,218 | $ | 110,774 | $ | — | $ | 3,511,875 | |||||||||||||||||
Fiscal year 2005 | 576,654 | 1,160,452 | 136,012 | 13,000 | 233,155 | — | — | 2,119,273 | |||||||||||||||||||||||||
R. Chenu | |||||||||||||||||||||||||||||||||
Fiscal year 2006 | 564,546 | 159,832 | 18,558 | 50,809 | 62,736 | 70,454 | — | 926,935 | |||||||||||||||||||||||||
Fiscal year 2005(8) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||
B. Butterfield | |||||||||||||||||||||||||||||||||
Fiscal year 2006 | 311,250 | 450,450 | 30,410 | 9,913 | 128,369 | 215,717 | — | 1,146,109 | |||||||||||||||||||||||||
Fiscal year 2005(9) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||
Former Executive Director | |||||||||||||||||||||||||||||||||
P. Vlot(10) | |||||||||||||||||||||||||||||||||
Fiscal year 2006 | 17,250 | — | — | — | — | — | 60,880 | 78,130 | |||||||||||||||||||||||||
Fiscal year 2005 | 136,436 | — | — | 3,619 | — | — | — | 140,055 | |||||||||||||||||||||||||
Total Compensation for Executive Directors | |||||||||||||||||||||||||||||||||
Fiscal year 2006 | $ | 1,633,431 | $ | 2,500,645 | $ | 91,625 | $ | 71,200 | $ | 908,323 | $ | 396,945 | $ | 60,880 | $ | 5,663,049 | |||||||||||||||||
Fiscal year 2005 | $ | 713,090 | $ | 1,160,452 | $ | 136,012 | $ | 16,619 | $ | 233,155 | $ | — | $ | — | $ | 2,259,328 |
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Post- | |||||||||||||||||||||||||||||
Primary | employment | Equity | Other | ||||||||||||||||||||||||||
Relocation | |||||||||||||||||||||||||||||
Allowances | |||||||||||||||||||||||||||||
and Other | |||||||||||||||||||||||||||||
Noncash | 401(k) | Non- | |||||||||||||||||||||||||||
Name | Base Pay | Bonuses(5) | Benefits(6) | Benefits | Options(7) | recurring(11) | Total | ||||||||||||||||||||||
US$ | US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||||||
Current Executive Officers | |||||||||||||||||||||||||||||
J. Chilcoff | |||||||||||||||||||||||||||||
Fiscal year 2006 | $ | 290,385 | $ | 418,231 | $ | 13,899 | $ | 13,269 | $ | 157,409 | $ | 113,038 | $ | 1,006,231 | |||||||||||||||
Fiscal year 2005 | 234,231 | 259,688 | 31,956 | 12,000 | 27,172 | 104,971 | 670,018 | ||||||||||||||||||||||
M. T. Fisher | |||||||||||||||||||||||||||||
Fiscal year 2006 | 260,962 | 376,467 | 30,039 | 14,242 | 191,791 | — | 873,501 | ||||||||||||||||||||||
Fiscal year 2005 | 215,770 | 262,062 | 50,301 | 12,946 | 107,084 | 17,438 | 665,601 | ||||||||||||||||||||||
N. Rigby | |||||||||||||||||||||||||||||
Fiscal year 2006 | 260,962 | 356,419 | 32,919 | — | 159,020 | 1,257 | 810,577 | ||||||||||||||||||||||
Fiscal year 2005(12) | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
R. P. Russell | |||||||||||||||||||||||||||||
Fiscal year 2006 | 260,962 | 374,403 | 35,100 | 14,338 | 195,253 | 10,192 | 890,248 | ||||||||||||||||||||||
Fiscal year 2005 | 233,751 | 234,542 | 32,366 | 12,833 | 111,733 | — | 625,225 | ||||||||||||||||||||||
Former Executive Officers | |||||||||||||||||||||||||||||
David Merkley(13) | |||||||||||||||||||||||||||||
Fiscal year 2006 | $ | 323,826 | $ | 761,679 | $ | 24,315 | $ | 14,372 | $ | 258,299 | $ | 7,306 | $ | 1,389,797 | |||||||||||||||
Fiscal year 2005 | 303,769 | 475,573 | 87,978 | 13,000 | 192,269 | — | 1,072,589 | ||||||||||||||||||||||
Donald Merkley(14) | |||||||||||||||||||||||||||||
Fiscal year 2006 | 254,800 | 16,515 | 15,222 | 8,540 | 708,790 | 75,829 | 1,079,696 | ||||||||||||||||||||||
Fiscal year 2005 | 334,000 | 521,656 | 65,245 | 13,000 | 195,177 | — | 1,129,078 | ||||||||||||||||||||||
Total Compensation for Executive Officers | |||||||||||||||||||||||||||||
Fiscal year 2006 | $ | 1,651,897 | $ | 2,303,714 | $ | 151,494 | $ | 64,761 | $ | 1,670,562 | $ | 207,622 | $ | 6,050,050 | |||||||||||||||
Fiscal year 2005 | $ | 1,321,521 | $ | 1,753,521 | $ | 267,846 | $ | 63,779 | $ | 633,435 | $ | 122,409 | $ | 4,162,511 |
(1) | The annual allocation to non-executive directors of JHI NV stock to the value of $10,000 was approved by shareholders at the Annual General Meeting held on July 19, 2002. The non-executive directors can elect to take additional stock in lieu of fees. | |
(2) | The superannuation benefits include Australian-mandated 9% superannuation guarantee contributions on the Australian directors’ total fees. | |
(3) | On January 19, 2006, Mr. Cameron resigned from the Joint and Supervisory Boards and from the Nominating and Governance Committee for health reasons. | |
(4) | On May 9, 2006, Dr. Clark resigned from our Joint Board, Supervisory Board, Audit Committee, and Nominating and Governance Committee. | |
(5) | Includes all incentive amounts paid in the year indicated, including the portion of any incentive awarded for performance in the indicated year that was paid in that year, as well as, any performance incentive amounts realized as a result of prior years’ performance and paid in the applicable year as a result of our achievement of predetermined financial targets pursuant to the terms of our Economic Profit Incentive Plan. See “Other Compensation: Economic Profit Incentive Plan” for a summary of the terms of our Economic Profit Incentive Plan. | |
(6) | Includes the aggregate amount of all noncash benefits received by the executive in the year indicated. Examples of noncash benefits that may be received by our executives include medical and life insurance benefits, car and airfare allowances, membership in executive wellness programs, long service leaves, and tax services. |
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(7) | Options are valued using the Black-Scholes option-pricing model and the fair value of options granted are included in compensation during the period in which the options vest. The weighted average assumptions and weighted average fair value used for grants in fiscal year 2006 were as follows: 1.2% dividend yield; 27.4% expected volatility; 4.8% risk free interest rate; 3.3 years of expected life; and A$1.35 weighted fair value at grant date. The Company’s Shadow Stock Plan and non-US based Employee Stock Plan were terminated at the end of February 2005 and the value on that day of all the outstanding shares of these plans were paid to participants. | |
(8) | Mr. Chenu only became a member of the Managing Board during fiscal year 2006, following his election by shareholders at the annual meeting held on August 22, 2005. | |
(9) | Mr. Butterfield only became a member of the Managing Board during fiscal year 2006, following his election by shareholders at the annual meeting held on August 22, 2005. |
(10) | On June 30, 2005, Mr. Vlot’s temporary employment agreement expired by its terms. |
(11) | Other non-recurring includes cash paid in lieu of vacation accrued, as permitted under our U.S. vacation policy and California law. |
(12) | Mr. Rigby’s fiscal year 2005 remuneration did not place him among the Company’s most highly remunerated executives. |
(13) | On September 1, 2006, Mr. David Merkley resigned from the Company. |
(14) | On December 19, 2005, Mr. Donald Merkley resigned from the Company. Beginning in calendar 2006, he will receive as severance payment 18 monthly payments equal in total to his most recent annual salary and average bonus over the last three years. He will continue vesting in his stock options until the end of his post-employment consulting agreement with the Company. All of the expense associated with his stock options was recorded during fiscal year 2006. Mr. Merkley received cash of $75,829 as payment for his accrued vacation time and this amount is recorded as Other Non-Recurring in this table. |
Chief Executive Officer |
Components | Details | |
Length of contract | Three year term, commencing February 10, 2005. Term is automatically extended on 9th day of each February for an additional one year unless either party notifies the other, 90 days in advance of the automatic renew date, that it does not want the term to renew. | |
Base salary | $750,000 per year. Salary will be reviewed annually by the JHI NV Board in April. |
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Components | Details | |
Short-term incentive | Annual incentive target is 100% of annual base salary: | |
— 80% of this incentive target is based on the Company meeting or exceeding aggressive performance objectives; and | ||
— 20% of this incentive target is based on the CEO meeting or exceeding personal performance objectives. | ||
The Remuneration Committee recommends the Company’s and CEO’s performance objectives, and the performance against these objectives, to the Supervisory Board for approval. If the Company’s performance exceeds the annual objective, the CEO realizes an incentive greater than his target incentive, but only one-third of the excess incentive is paid to the participant at the end of the fiscal year. The remaining two-thirds is then deposited with a notional bank and is paid to the CEO over the following two years if the Company’s objectives are met in these years, or is reduced if the Company’s objectives are not met. | ||
Long-term incentive | The banking mechanism of the annual incentive plan is considered a long-term incentive. Upon the approval of the shareholders, stock options with performance hurdles will be granted each year. The recommended number of options to be granted will be appropriate for this level of executive in the U.S. | |
Defined Contribution Plan | The CEO may participate in the 401(k) defined contribution plan up to the annual IRS limit. The Company will match his contributions into the plan up to the annual IRS limit. | |
Resignation | The CEO may cease his employment with the Company by providing written notice. | |
Termination by James Hardie | The Company may terminate the CEO’s employment for cause or not for cause. If the Company terminates the employment, not for cause, or the CEO terminates his employment “for good reason” the Company will pay the following: | |
a. amount equivalent to 1.5 times the annual base salary at the time of termination; or | ||
b. amount equivalent to 1.5 times the executive’s Average Annual Incentive actually paid in up to the previous three fiscal years as CEO. | ||
Post-termination Consulting | The Company will request the CEO, and the CEO will agree, to consult to the Company upon termination for a minimum of two years, as long as he maintains the Company’s non-compete and confidentiality agreements, and he will receive his annual base salary and annual target and non-compete. |
Chief Financial Officer |
Components | Details | |
Length of contract | Fixed period of two and a half (2.5) years concluding October 5, 2007. | |
Base salary | A$750,000 per year. | |
Short-term incentive | Annual incentive target is 33% of annual base salary based on the CFO meeting or exceeding personal performance objectives. |
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Components | Details | |
Long-term incentive | Upon the approval of the shareholders, stock options with performance hurdles will be granted each year. The recommended number of options to be granted will equal one-third of the executive’s base salary. | |
Superannuation | The Company will contribute 9% of gross salary to Superannuation in the executive’s name. | |
Resignation or Termination | The Company or CFO may cease the CFO’s employment with the Company by providing three months’ notice in writing. | |
Redundancy or material change in role | If the position of CFO is determined to be redundant or subject to a material adverse change the Company or the CFO may terminate the CFO’s employment. The Company will pay the CFO a severance payment equal to the greater of 12 months’ pay or the remaining proportion of the term of the contract. |
Company Secretary and General Counsel |
Components | Details | |
Length of contract | Indefinite. | |
Base salary | $315,000 per year. | |
Short term incentive | Annual incentive target is 65% of annual base salary: | |
— 80% of this incentive target is based on the Company meeting or exceeding aggressive performance objectives; and | ||
— 20% of this incentive target is based on the General Counsel and Company Secretary meeting or exceeding personal performance objectives. | ||
The CEO recommends the General Counsel and Company Secretary’s performance objectives and the performance against these objectives, to the Remuneration Committee and the Supervisory Board for approval. The Company’s objectives are set by the Remuneration Committee’s recommendation to the Supervisory Board. If the Company’s performance exceeds the annual objective, the executive realizes a incentive greater than his target incentive, but only one-third of the excess incentive is paid to the participant at the end of the fiscal year. The remaining two-thirds is then deposited with a notional bank and is paid to the General Counsel and Company Secretary over the following two years if the Company’s objectives are met in these years, or is reduced if the Company’s objectives are not met. | ||
Long-term incentive | The banking mechanism of the annual incentive plan is considered a long-term incentive. Upon the approval of the shareholders, stock options with performance hurdles will be granted each year. The recommended number of options to be granted will be appropriate for this level of executive in the United States. | |
Defined Contribution Plan | Since the General Counsel and Company Secretary may not participate in the U.S. 401(k) defined contribution plan up to the annual IRS limit while he is on assignment to The Netherlands, the Company will provide a payment up to the annual IRS limit directly to the executive. | |
Resignation or Termination | The General Counsel and Company Secretary may cease his employment with the Company by providing written notice. |
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Components | Details | |
Termination by James Hardie | The Company may terminate the General Counsel and Company Secretary’s employment for cause or not for cause. | |
Post-termination Consulting | The Company will request the General Counsel and Company Secretary, and he will agree, to consult to the Company upon termination for a minimum of two years, as long as he maintains the Company’s non-compete and confidentiality agreements, and he will receive his annual base salary in exchange for this consulting and non-compete. |
Benefits Contained in Contracts for CEO, CFO and Company Secretary and General Counsel |
Components | Details | |
International Assignment | The executives receive additional benefits due to international assignment: housing allowance, expatriate Goods and Services allowance, moving and storage. | |
Other | Tax Equalization:The Company covers the extra personal tax burden for Managing Board Directors based in The Netherlands. | |
Tax Advice:The Company will pay the costs of filing the executives’ income tax returns to the required countries. | ||
Health, Welfare and Vacation Benefits:The executives are eligible to receive all health, welfare and vacation benefits offered to all U.S. employees. They are also eligible to participate in the Company’s Executive Health and Wellness program. | ||
Business Expenses:The executives are entitled to receive reimbursement for all reasonable and necessary travel and other business expenses they incur or pay for in connection with the performance of their services under this Agreement. | ||
Automobile:The Company will either purchase or lease an automobile for business and personal use by the executives, or, in the alternative, the executives will be entitled to an automobile lease allowance not to exceed $750 per month. Unused allowance or part thereof will be paid to the executives. |
Other Executive Officer Employment Contracts |
Components | Details | |
Length of contract | Indefinite. | |
Base salary | Base salary is subject to Remuneration Committee approval and reviewed annually in May for increase effective July 1. | |
Short-term incentive | An annual incentive target is set at a percentage of the executive’s salary. Targets typically range from 55-90%; 80% of this incentive target is based on the Company meeting or exceeding aggressive performance objectives; 20% of this incentive target is based on the executive meeting or exceeding personal performance objectives. |
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Components | Details | |
The CEO recommends the executive’s performance objectives and the performance against these objectives, to the Remuneration Committee and Supervisory Board for approval. The Company’s objectives are set by the Remuneration Committee’s recommendation to the Supervisory Board. If the Company’s performance exceeds the annual objective, the executive realizes a incentive greater than his target incentive, but only one-third of the excess incentive is paid to the participant at the end of the fiscal year. The remaining two-thirds is then deposited with a notional bank and is paid to the executive over the following two years if the Company’s objectives are met in these years, or is reduced if the Company’s objectives are not met. | ||
Long-term incentive | The banking mechanism of the annual incentive plan is considered a long term incentive. Upon the approval of our Supervisory Board, stock options have been granted each year under the JHI NV 2001 Equity Incentive Plan. It is anticipated that upon the approval of our Supervisory Board, equity will be granted under a new plan in the future. | |
Defined Contribution Plan | The executive may participate in the U.S. 401(k) defined contribution plan up to the annual IRS limit. The Company will match the executive’s contributions into the plan up to the annual IRS limit. | |
Resignation | The executive may cease his employment with the Company by providing written notice. | |
Termination by James Hardie | The Company may terminate the executive’s employment for cause or not for cause. In the case of one executive, if the Company terminates the employment, not for cause, or the executive terminates his employment “for good reason” then the Company may pay up to: | |
a. an amount equivalent to 1.5 times the annual base salary at the time of termination; or | ||
b. amount equivalent to 1.5 times the executive’s Average Annual Incentive actually paid in the previous three fiscal years. | ||
Post-termination Consulting | Depending on the executive’s individual contract, the Company may, or may be required to, request the executive, and the executive will agree, to consult to the Company for two years upon termination in exchange for the payment as designated in the individual’s contract, as long as the executive maintains the Company’s non-compete and confidentiality agreements. The payment amount ranges from the executive’s annual base salary to the annual base salary plus annual target incentive as of the termination date. | |
Other | Health, Welfare and Vacation Benefits:The executive is eligible to receive all health, welfare and vacation benefits offered to all U.S. employees. The executive is also eligible to participate in the Company’s Executive Health and Wellness program. | |
Business Expenses:The executive is entitled to receive reimbursement for all reasonable and necessary travel and other business expenses he or she incurs or pays in connection with the performance of his or her services under this Agreement. |
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Components | Details | |
Automobile:The Company will either lease an automobile for business and personal use by the executive, or, in the alternative, the executive will be entitled to an automobile lease allowance not to exceed $750 per month. Unused allowance or part of this will be paid to the executive. | ||
International Assignment | Executives who are on assignment in countries other than their own receive additional benefits which may include tax equalization payment and tax advice, a car in the country they are assigned to, and financial assistance with housing, moving and storage. |
Number of | ||||||||
Shares | ||||||||
Beneficially | Percent of | |||||||
Name | Owned(1) | Class(2) | ||||||
Current Directors and Executive Officers | ||||||||
Meredith Hellicar | 11,566 | * | ||||||
John Barr(3) | 22,826 | * | ||||||
Michael Brown | 14,727 | * | ||||||
Michael Gillfillan(4) | 54,727 | * | ||||||
James Loudon | 6,355 | * | ||||||
Donald McGauchie(5) | 9,569 | * | ||||||
Louis Gries | 1,154,719 | * | ||||||
Russell Chenu | 38,250 | * | ||||||
Benjamin Butterfield | 45,000 | * | ||||||
James Chilcoff | 356,570 | * | ||||||
Mark Fisher | 345,396 | * | ||||||
Nigel Rigby | 108,503 | * | ||||||
Robert Russell | 249,634 | * | ||||||
Former Directors and Executive Officers | ||||||||
Peter Cameron(6) | 15,613 | * | ||||||
Gregory Clark | 14,116 | * | ||||||
David Merkley | 325,000 | * | ||||||
Donald Merkley | 739,588 | * | ||||||
Pim Vlot | — | * |
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* | Indicates that the individual beneficially owns less than 1% of our shares of common stock. |
(1) | Since the Supervisory Board Share Plan, or SBSP, was approved at the 2002 Annual General Meeting, four general allotments have been made to non-executive directors. The number of beneficial shares includes the following SBSP allotments: |
Shares Allotted under SBSP | ||||||||||||||||
November 22, | December 3, | August 22, | August 27, | |||||||||||||
Name | 2005(a) | 2004(b) | 2003(c) | 2002(d) | ||||||||||||
Meredith Hellicar | 1,515 | 2,117 | 2,225 | 2,948 | ||||||||||||
John Barr | 758 | 1,068 | — | — | ||||||||||||
Michael Brown | 758 | 1,068 | 1,260 | 1,641 | ||||||||||||
Michael Gillfillan | 758 | 1,068 | 1,260 | 1,641 | ||||||||||||
James Loudon | 758 | 2,117 | 1,839 | 1,641 | ||||||||||||
Donald McGauchie | 758 | 1,068 | 1,743 | — | ||||||||||||
Former Directors | ||||||||||||||||
Peter Cameron | 1,894 | 2,117 | 5,602 | — | ||||||||||||
Gregory Clark | 758 | 1,068 | 5,602 | 6,688 | ||||||||||||
Alan McGregor | — | — | 1,260 | 1,641 |
(a) | Each participant’s November 22, 2005 mandatory participation of 758 shares is subject to a two-year escrow period ending November 22, 2007. In the case of Peter Cameron, the escrow was released after he died in February 2006. | |
(b) | Each participant’s December 3, 2004 mandatory participation of 1,068 shares is subject to a two-year escrow period ending on December 4, 2006. In the case of Peter Cameron, the escrow was released after he died in February 2006. | |
(c) | Each participant’s August 22, 2003 mandatory participation of 1,260 shares were subject to a two-year escrow period until they were released on August 22, 2005. | |
(d) | Each participant’s August 27, 2002 mandatory participation of 1,641 shares were subject to a two-year escrow period until they were released on August 27, 2004. |
(2) | Based on 463,326,011 shares of common stock outstanding at August 31, 2006 (all of which are subject to CUFS). |
(3) | As of August 31, 2006, 21,000 shares were held in a trust, of which Mr. Barr and his wife are trustees. |
(4) | As of August 31, 2006, 50,000 shares were held in a trust, of which Mr. Gillfillan and his wife are trustees. |
(5) | As of August 31, 2006, 6,000 shares were held for the McGauchie Superannuation Fund for which Mr. McGauchie is a trustee. |
(6) | As of August 31, 2006, 6,000 shares were held by Mr. Cameron’s wife and 9,613 shares were held by Mr. Cameron’s estate. |
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Number of Shares | ||||||||||
Underlying | ||||||||||
Name | Options Owned | Exercise Price | Expiration Date | |||||||
Current Executive Officers | ||||||||||
Louis Gries | 40,174 | (1,2) | A$ | 3.1321/share | (3,4,5) | November 2009 | ||||
175,023 | (1,6) | A$ | 3.0921/share | (3,4,5) | November 2010 | |||||
324,347 | (7) | A$ | 5.0586/share | (4,5) | December 2011 | |||||
325,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | |||||
325,000 | (9) | A$ | 7.05/share | December 2013 | ||||||
1,000,000 | (10) | A$ | 8.53/share | November 2015 | ||||||
Russell Chenu | 93,000 | (11) | A$ | 6.30/share | February 2015 | |||||
90,000 | (10) | A$ | 8.53/share | November 2015 | ||||||
Benjamin Butterfield | 180,000 | (11) | A$ | 6.30/share | February 2015 | |||||
230,000 | (10) | A$ | 8.53/share | November 2015 | ||||||
James Chilcoff | 40,174 | (1,2) | A$ | 3.1321/share | (3,4,5) | November 2009 | ||||
92,113 | (1,6) | A$ | 3.0921/share | (3,4,5) | November 2010 | |||||
68,283 | (7) | A$ | 5.0586/share | (4,5) | December 2011 | |||||
111,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | |||||
180,000 | (14) | A$ | 5.99/share | December 2014 | ||||||
190,000 | (13) | A$ | 8.90/share | December 2015 | ||||||
Mark Fisher | 92,113 | (1,6) | A$ | 3.0921/share | (3,4,5) | November 2010 | ||||
68,283 | (7) | A$ | 5.0586/share | (4,5) | December 2011 | |||||
74,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | |||||
132,000 | (9) | A$ | 7.05/share | December 2013 | ||||||
180,000 | (14) | A$ | 5.99/share | December 2014 | ||||||
190,000 | (13) | A$ | 8.90/share | December 2015 | ||||||
Nigel Rigby | 20,003 | (7) | A$ | 5.0586/share | (4,5) | December 2011 | ||||
27,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | |||||
33,000 | (9) | A$ | 7.05/share | December 2013 | ||||||
180,000 | (14) | A$ | 5.99/share | December 2014 | ||||||
190,000 | (13) | A$ | 8.90/share | December 2015 | ||||||
Robert Russell | 27,634 | (1,6) | A$ | 3.0921/share | (3,4,5) | November 2010 | ||||
111,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | |||||
132,000 | (9) | A$ | 7.05/share | December 2013 | ||||||
180,000 | (14) | A$ | 5.99/share | December 2014 | ||||||
190,000 | (13) | A$ | 8.90/share | December 2015 | ||||||
Former Executive Director and Officers | ||||||||||
David Merkley | 200,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | ||||
250,000 | (9) | A$ | 7.05/share | December 2013 | ||||||
172,500 | (12) | A$ | 5.99/share | December 2014 | ||||||
190,000 | (13) | A$ | 8.90/share | December 2015 | ||||||
Donald Merkley | 48,209 | (1,2) | A$ | 3.1321/share | (3,4,5) | November 2009 | ||||
138,170 | (1,6) | A$ | 3.0921/share | (3,4,5) | November 2010 | |||||
170,709 | (7) | A$ | 5.0586/share | (4,5) | December 2011 | |||||
200,000 | (8) | A$ | 6.4490/share | (5) | December 2012 | |||||
250,000 | (9) | A$ | 7.05/share | December 2013 | ||||||
230,000 | (14) | A$ | 5.99/share | December 2014 | ||||||
190,000 | (13) | A$ | 8.90/share | December 2015 | ||||||
Pim Vlot | — |
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(1) | This nonqualified stock option to purchase shares of our common stock was granted on October 19, 2001 under our 2001 Equity Incentive Plan in exchange for the termination of an award of shadow stock covering an equal number of shares of JHIL common stock. See “Equity Plans — 2001 Equity Incentive Plan” under Item 6. |
(2) | All options vested and became exercisable in November 2004. | |
(3) | The exercise price reflects an A$0.0965 per share price reduction due to a capital return paid to shareholders in December 2001. | |
(4) | The exercise price reflects an A$0.3804 per share price reduction due to a capital return paid to shareholders in November 2002. | |
(5) | The exercise price reflects an A$0.2110 per share price reduction due to a capital return paid to shareholders in November 2003. | |
(6) | All options vested and became exercisable in November 2005. | |
(7) | Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in December 2004. | |
(8) | Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in December 2005. | |
(9) | Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three installments: 25% on December 5, 2004; 25% on December 5, 2005; and 50% on December 5, 2006. |
(10) | Granted under the Managing Board Transitional Stock Option Plan. Options vest and become exercisable on the first business day on or after November 22, 2008 if the following conditions are met: 50% vest if our total shareholder return, or TSR, is equal to or above the Median TSR and an additional 2% of the options shall vest for each 1% increment that the Company’s TSR is above the Median TSR. If any options remain unvested on the last business day of each six month period between November 22, 2008 and November 22, 2010, we will reapply the vesting criteria to those options on that business day. |
(11) | Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three installments: 25% on February 22, 2006; 25% on February 22, 2007; and 50% on February 22, 2008. |
(12) | Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable: 33% on December 14, 2006; and 67% on December 14, 2007. |
(13) | Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three installments: 25% on December 1, 2006; 25% on December 1, 2007; and 50% on December 1, 2008. |
(14) | Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three installments: 25% on December 14, 2005; 25% on December 14, 2006; and 50% on December 14, 2007. |
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2001 Equity Incentive Plan |
Options Outstanding as of | |||||||||
Number of | August 31, | ||||||||
Share Grant Date | Options Granted | 2006 | |||||||
October 2001(1) | 5,468,829 | 1,030,863 | |||||||
December 2001 | 4,248,417 | 1,270,724 | |||||||
December 2002 | 4,037,000 | 2,064,800 | |||||||
December 2003 | 6,179,583 | 3,857,720 | |||||||
December 2004 | 5,391,100 | 4,445,350 | |||||||
February 2005 | 273,000 | 273,000 | |||||||
December 2005 | 5,224,100 | 5,186,100 | |||||||
March 2006 | 40,200 | 40,200 | |||||||
Total outstanding | 18,168,757 | ||||||||
(1) | Awarded to our employees on October 19, 2001 in exchange for the cancellation of JHIL shadow stock awards under the JHIL Key Management Equity Incentive Plan. |
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Stock Appreciation Rights Plans |
Supervisory Board Share Plan |
Managing Board Transitional Stock Option Plan |
Economic Profit Incentive Plan |
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401(k) Plan |
James Hardie Australia Superannuation Plan |
Director Retirement Benefits |
Item 7. | Major Shareholders and Related Party Transactions |
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Shares | Percentage of | |||||||
Beneficially | Shares | |||||||
Shareholder | Owned | Outstanding | ||||||
Commonwealth Bank of Australia (and subsidiaries) | 54,916,592 | 11.90% | ||||||
Lazard Asset Management Pacific Co. | 46,309,135 | 9.99% | ||||||
Schroder Investment Management Australia Limited | 35,496,683 | 7.66% | ||||||
The Capital Group Companies, Inc. | 32,960,346 | 7.12% | ||||||
National Australia Bank Limited Group | 28,198,184 | 6.15% | ||||||
Concord Capital Ltd. | 23,646,400 | 5.10% |
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Existing Loans to our Directors and Directors of our Subsidiaries |
Payments Made to Directors and Director-Related Entities of JHI NV |
Item 8. | Financial Information |
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Item 9. | Listing Details |
Period | High | Low | |||||||||||||||
(A$) | (US$) | (A$) | (US$) | ||||||||||||||
Fiscal year ended: | |||||||||||||||||
March 31, 2006 | 9.81 | 7.38 | 5.49 | 4.13 | |||||||||||||
March 31, 2005 | 7.23 | 5.35 | 4.95 | 3.66 | |||||||||||||
March 31, 2004 | 8.04 | 5.58 | 5.84 | 4.05 | |||||||||||||
March 31, 2003 | 7.06 | 3.96 | 5.56 | 3.12 | |||||||||||||
March 31, 2002 | 6.77 | 3.47 | 4.19 | 2.15 | |||||||||||||
Fiscal quarter ended: | |||||||||||||||||
June 30, 2006 | 9.95 | 7.43 | 7.12 | 5.32 | |||||||||||||
March 31, 2006 | 9.81 | 7.25 | 8.11 | 6.00 | |||||||||||||
December 31, 2005 | 9.03 | 6.72 | 7.65 | 5.69 | |||||||||||||
September 30, 2005 | 9.44 | 7.17 | 7.40 | 5.62 | |||||||||||||
June 30, 2005 | 7.75 | 5.96 | 5.49 | 4.22 | |||||||||||||
March 31, 2005 | 7.23 | 5.63 | 5.79 | 4.49 | |||||||||||||
December 31, 2004 | 6.77 | 5.09 | 5.50 | 4.13 | |||||||||||||
September 30, 2004 | 6.30 | 4.52 | 4.95 | 3.55 | |||||||||||||
June 30, 2004 | 6.88 | 4.92 | 5.22 | 3.73 | |||||||||||||
Month ended: | |||||||||||||||||
August 31, 2006 | 7.05 | 5.39 | 6.31 | 4.82 | |||||||||||||
July 31, 2006 | 7.85 | 5.90 | 6.56 | 4.93 | |||||||||||||
June 30, 2006 | 8.59 | 6.35 | 7.12 | 5.26 | |||||||||||||
May 31, 2006 | 9.54 | 7.32 | 8.13 | 6.24 | |||||||||||||
April 30, 2006 | 9.95 | 7.32 | 9.18 | 6.76 | |||||||||||||
March 31, 2006 | 9.81 | 7.12 | 8.67 | 6.30 |
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Period | High | Low | |||||||
(US$) | (US$) | ||||||||
Fiscal year ended: | |||||||||
March 31, 2006 | 36.36 | 21.54 | |||||||
March 31, 2005 | 27.21 | 18.10 | |||||||
March 31, 2004 | 28.50 | 18.25 | |||||||
March 31, 2003 | 19.95 | 15.29 | |||||||
March 31, 2002 | 17.95 | 11.10 | |||||||
Fiscal quarter ended: | |||||||||
June 30, 2006 | 36.80 | 25.90 | |||||||
March 31, 2006 | 35.59 | 30.51 | |||||||
December 31, 2005 | 34.80 | 29.60 | |||||||
September 30, 2005 | 36.36 | 27.70 | |||||||
June 30, 2005 | 30.00 | 21.54 | |||||||
March 31, 2005 | 27.21 | 22.60 | |||||||
December 31, 2004 | 26.52 | 20.50 | |||||||
September 30, 2004 | 22.26 | 18.10 | |||||||
June 30, 2004 | 25.05 | 18.82 | |||||||
Month ended: | |||||||||
August 31, 2006 | 26.73 | 24.75 | |||||||
July 31, 2006 | 28.85 | 25.40 | |||||||
June 30, 2006 | 31.91 | 25.90 | |||||||
May 31, 2006 | 36.74 | 31.30 | |||||||
April 30, 2006 | 36.80 | 33.45 | |||||||
March 31, 2006 | 35.59 | 32.50 |
Common Stock (in the form of CUFS) | Australian Stock Exchange | |||
ADRs | New York Stock Exchange |
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Item 10. | Additional Information |
Purpose of the Company |
• | to participate in, to take an interest in any other way in and to conduct the management of business enterprises of whatever nature; | |
• | to raise funds through the issuance of debt or equity or in any other way and to finance third parties; | |
• | to provide guarantees, including guarantees for the debts of third parties; and | |
• | to perform all activities which are incidental to or which may be conducive to, or connected with, any of the foregoing. |
Provisions of our Articles of Association or Charter Related to Directors |
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Issuance of Shares; Preemptive Rights |
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Repurchase of Shares |
Reduction of Share Capital |
Shareholders Meetings and Voting Rights |
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Annual Report |
Indemnification |
Dividends |
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Amendment of Articles of Association |
Liquidation Rights |
Limitations on Right to Hold Common Stock |
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• | acquisitions that result from acceptances under a takeover bid, which complies with the Articles of Association, including the principles set forth above; | |
• | acquisitions which result in a person’s voting power increasing by not more than 3% in a six-month period; | |
• | acquisitions which are consistent with the principles set forth above, conform to the other takeover principles set out in the Articles of Association (adjusting those principles as appropriate to meet the particular circumstances of the acquisitions) and have received the prior approval of the Supervisory Board; and | |
• | acquisitions approved at a general meeting of shareholders, subject to certain requirements being satisfied in relation to voting and the provision of information. |
(i) ASX requires an amendment to the takeover provisions in our Articles of Association to comply with the ASX Listing Rules as then in force; or | |
(ii) any waiver of the ASX Listing Rules permitting the inclusion of the takeovers provisions has ceased to have effect. |
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Disclosure of Holdings |
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United States Taxation |
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Netherlands Taxation |
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(1) direct or indirect distributions in cash or in kind, deemed or constructive distributions, and repayments of additional paid-in capital not recognized as such for Netherlands dividend withholding tax purposes; | |
(2) liquidation proceeds, proceeds of redemption of shares of common stock or, generally, except if a certain specific exemption applies, consideration paid by us for the repurchase of shares of common stock in excess of the average paid-in capital recognized for Netherlands dividend withholding tax purposes; | |
(3) the par value of shares of common stock issued to a holder of shares of common stock or an increase of the par value of shares of common stock, as the case may be, to the extent that no contribution to capital, recognized for Netherlands dividend withholding tax purposes, was made or will be made; and | |
(4) the partial repayment of paid-in capital, recognized for Netherlands dividend withholding tax purposes, if and to the extent that there are net profits, orzuivere winst, for dividend withholding tax purposes, unless the general meeting of our shareholders has previously resolved to make such repayment and provided that the par value of the shares of common stock concerned has been reduced by a corresponding amount by changing our Articles of Association. As a result of contributions in kind (i.e., in shares) to our paid-in capital made prior to the listing of our common shares, a portion of such paid-in capital may not be recognized for Dutch dividend withholding tax purposes. |
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(1) such shareholder is neither resident nor deemed to be resident in The Netherlands, nor has elected to be subject to the rules of the Dutch Income Tax Act 2001 that apply to residents of The Netherlands; | |
(2) such shareholder does not have a business or an interest in a business that is, in whole or in part, carried on through a permanent establishment or a permanent representative in The Netherlands and to which business or part of a business, as the case may be, the shares of common stock are attributable; | |
(3) such shareholder does not perform independent personal services in The Netherlands giving rise to a fixed base in The Netherlands to which the shares of common stock are attributable; and | |
(4) the shares of common stock owned by such shareholder do not form part of a substantial interest or a deemed substantial interest, as defined below, in the share capital of the Company or, if such shares of common stock do form part of such an interest, they form part of the assets of a business other than a Netherlands business. |
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• | furnish our shareholders with annual reports containing consolidated financial statements examined by an independent registered public accounting firm; and | |
• | furnish quarterly reports for the first three quarters of each fiscal year containing unaudited consolidated financial information in filings with the SEC under Form 6-K. |
Item 11. | Quantitative and Qualitative Disclosures About Market Risk |
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US$ | A$ | NZ$ | Other(1) | |||||||||||||
Net sales | 82.9% | 11.0% | 3.6% | 2.5% | ||||||||||||
Cost of goods sold | 84.2% | 10.7% | 2.9% | 2.2% | ||||||||||||
Expenses(2) | 18.7% | 79.4% | 0.4% | 1.5% | ||||||||||||
Liabilities (excluding borrowings)(2) | 25.6% | 72.4% | 1.6% | 0.4% |
US$ | A$ | NZ$ | Other(1) | |||||||||||||
Net sales | 79.0% | 13.3% | 4.1% | 3.6% | ||||||||||||
Cost of goods sold | 81.5% | 12.0% | 3.1% | 3.4% | ||||||||||||
Expenses | 60.3% | 31.5% | 2.5% | 5.7% | ||||||||||||
Liabilities (excluding borrowings) | 73.9% | 17.6% | 5.1% | 3.4% |
(1) | Comprises Philippine Pesos, Euros and Chilean Pesos. |
(2) | Includes A$1.0 billion of asbestos provision recorded in the fourth quarter of fiscal year 2006, which is denominated in Australian dollars. |
Year Ending March 31, | ||||||||||||
Fair | ||||||||||||
2007 | Total | Value | ||||||||||
(In millions of U.S. dollars, | ||||||||||||
except percentages) | ||||||||||||
Fixed-rate debt | $ | 121.7 | $ | 121.7 | $ | 133.8 | ||||||
Weighted-average interest rate | 7.16 | % | 7.16 | % |
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Item 12. | Description of Securities Other Than Equity Securities |
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 |
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Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Business Conduct and Ethics |
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Item 16C. | Principal Accountant Fees and Services |
Fiscal Years Ended | ||||||||||||
March 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(In millions) | ||||||||||||
Audit Fees(1) | $ | 1.6 | $ | 3.1 | $ | 1.2 | ||||||
Audit-Related Fees(2) | 0.1 | 0.2 | 0.1 | |||||||||
Tax Fees(3) | 5.2 | 4.2 | 3.5 |
(1) | Audit Fees include the aggregate fees for professional services rendered by our independent registered public accounting firm. Professional services include the audit of our annual financial statements and services that are normally provided in connection with statutory and regulatory filings. During the fiscal year ended March 31, 2005, total audit fees also included internal investigation fees of $1.9 million. |
(2) | Audit-Related Fees include the aggregate fees billed for assurance and related services rendered by our independent registered public accounting firm. Our independent registered public accounting firm did not engage any temporary employees to conduct any portion of the audit of our financial statements for the fiscal year ended March 31, 2006. |
(3) | Tax Fees include the aggregate fees billed for tax compliance, tax advice and tax planning services rendered by our independent registered public accounting firm. |
Item 16D. | Exemptions from Listing Standards for Audit Committees |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Item 17. | Financial Statements |
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Item 18. | Financial Statements |
Exhibit | ||||
Number | Description of Exhibits | |||
1 | .1 | Articles of Association, as amended on September 1, 2005 of James Hardie Industries N.V. (English Translation) | ||
2 | .1 | Letter Agreement of September 6, 2001 by and between James Hardie Industries N.V. and CHESS Depositary Nominees Pty Limited, as the depositary for CHESS Units of Foreign Securities(3) | ||
2 | .2 | Deposit Agreement dated as of September 24, 2001 between The Bank of New York, as depositary, and James Hardie Industries N.V.(3) | ||
2 | .3 | Note Purchase Agreement, dated as of November 5, 1998, among James Hardie Finance B.V., James Hardie N.V. and certain purchasers thereto re: $225,000,000 Guaranteed Senior Notes(3) | ||
2 | .4 | Assignment and Assumption Agreement and First Amendment to Note Purchase Agreement, dated as of January 24, 2000, by and among James Hardie Finance B.V., James Hardie U.S. Funding, Inc., James Hardie N.V., James Hardie Aust Investco Pty Limited and certain noteholders thereto(3) | ||
2 | .5 | Second Amendment to the Note Purchase Agreement dated as of October 22, 2001, by and among, James Hardie U.S. Funding, Inc., James Hardie N.V., James Hardie Aust Investco Pty Limited, James Hardie Australia Finance Pty Limited, James Hardie International Finance B. V. and certain noteholders thereto(3) | ||
2 | .6 | Assignment and Assumption Agreement and Third Amendment to Note Purchase Agreement, dated as of November 18, 2002, among James Hardie U.S. Funding Inc, James Hardie International Finance B.V., James Hardie Industries N.V., James Hardie N.V. and certain noteholders thereto(1) | ||
2 | .7 | Common Terms Deed Poll dated June 15, 2005 between James Hardie International Finance B.V. and James Hardie Industries N.V.(3) | ||
2 | .8 | Form of Term Facility Agreement between James Hardie International Finance B.V. and Financier(3) | ||
2 | .9 | Form of Extension of Facilities and other matters for Term Facility Agreement between James Hardie International Finance B.V. and Financier | ||
2 | .10 | Form of 364-day Facility Agreement between James Hardie International Finance B.V. and Financier(3) | ||
2 | .11 | Form of Extension Request for 364-day Facility Agreement between James Hardie International Finance B.V. and Financier | ||
2 | .12 | Form of Guarantee Deed between James Hardie Industries N.V. and Financier(3) | ||
4 | .1 | James Hardie Industries N.V. 2001 Equity Incentive Plan(3) | ||
4 | .2 | Economic Profit and Individual Performance Incentive Plans(3) | ||
4 | .3 | JHI NV Stock Appreciation Rights Incentive Plan(3) | ||
4 | .4 | Supervisory Board Share Plan 2006 | ||
4 | .5 | James Hardie Industries N.V. Long Term Incentive Plan 2006 | ||
4 | .6 | 2005 Managing Board Transitional Stock Option Plan | ||
4 | .7 | Form of Joint and Several Indemnity Agreement among James Hardie N.V., James Hardie (USA) Inc. and certain indemnitees thereto(3) | ||
4 | .8 | Form of Joint and Several Indemnity Agreement among James Hardie Industries N.V., James Hardie Inc. and certain indemnitees thereto(3) |
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Exhibit | ||||
Number | Description of Exhibits | |||
4 | .9 | Form of Deed of Access to Documents, Indemnity and Insurance among James Hardie Industries N.V. and certain indemnitees thereto(3) | ||
4 | .10 | Form of Joint and Several Indemnity Agreement among James Hardie Industries N.V., James Hardie Building Products Inc. and certain indemnities thereto(3) | ||
4 | .11 | Lease Amendment, dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the corner of Cobalt & Silica Street, Carole Park, Queensland, Australia(2) | ||
4 | .12 | Variation of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the corner of Colquhoun & Devon Streets, Rosehill, New South Wales, Australia(2) | ||
4 | .13 | Extension of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at Rutland, Avenue, Welshpool, Western Australia, Australia(2) | ||
4 | .14 | Lease Amendment dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at 46 Randle Road, Meeandah, Queensland, Australia(2) | ||
4 | .15 | Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and James Hardie Industries N.V. re premises at the corner of O’Rorke and Station Roads, Penrose, Auckland, New Zealand(2) | ||
4 | .16 | Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and James Hardie Industries N.V. re premises at 44-74 O’Rorke Road, Penrose, Auckland, New Zealand(2) | ||
4 | .17 | Ownership transfer related to corner of O’Rorke and Station Roads, Penrose, Auckland, New Zealand and 44-74 O’Rorke Road, Penrose, Auckland, New Zealand effective June 30, 2005 | ||
4 | .18 | Industrial Building Lease Agreement, effective October 6, 2000, between James Hardie Building Products, Inc. and Fortra Fiber-Cement L.L.C., re premises at Waxahachie, Ellis County, Texas(3) | ||
4 | .19 | Asset Purchase Agreement by and between James Hardie Building Products, Inc. and Cemplank, Inc. dated as of December 12, 2001(3) | ||
4 | .20 | Amended and Restated Stock Purchase Agreement dated March 12, 2002, between BPB U.S. Holdings, Inc. and James Hardie Inc.(3) | ||
4 | .21 | Final Funding Agreement | ||
4 | .22 | Asbestos Injuries Compensation Fund Trust Deed by and between James Hardie Aust. Holdings Pty Limited and Asbestos Injuries Compensation Fund Limited | ||
4 | .23 | Deed of Release by and among James Hardie Industries N.V., Australian Council of Trade Unions, Unions New South Wales, and Bernard Douglas Banton | ||
4 | .24 | Parent Guarantee by and among Asbestos Injuries Compensation Fund Limited, The State of New South Wales, and James Hardie Industries N.V. | ||
4 | .25 | Deed of Release by and between James Hardie Industries N.V. and The State of New South Wales | ||
4 | .26 | Irrevocable Power of Attorney by and between Asbestos Injuries Compensation Fund Limited and The State of New South Wales | ||
4 | .27 | Deed of Accession by and among Asbestos Injuries Compensation Fund Limited, James Hardie Industries N.V., LGTDD Pty Limited, and The State of New South Wales | ||
4 | .28 | Letters Extending the Condition Precedent Date for the Final Funding Agreement | ||
8 | .1 | List of significant subsidiaries of James Hardie Industries N.V. | ||
12 | .1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
12 | .2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
13 | .1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
148
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Exhibit | ||||
Number | Description of Exhibits | |||
15 | .1 | Consent of independent registered public accounting firm | ||
15 | .2 | Consent of KPMG Actuaries Pty Ltd | ||
99 | .1 | Excerpts of the ASX Settlement and Transfer Corporation Pty Ltd as of June 10, 2005 | ||
99 | .2 | Excerpts of the Financial Services Reform Act 2001, as of March 11, 2002(3) | ||
99 | .3 | ASIC Class Order 02/311, dated November 3, 2002(3) | ||
99 | .4 | ASIC Modification, dated March 7, 2002(3) | ||
99 | .5 | ASIC Modification, dated February 26, 2004 |
(1) | Previously filed as an exhibit to our Annual Report on Form 20-F dated July 2, 2003 and incorporated herein by reference. |
(2) | Previously filed as an exhibit to our Annual Report on Form 20-F dated November 22, 2004 and incorporated herein by reference. |
(3) | Previously filed as an exhibit to our Annual Report on Form 20-F dated July 7, 2005 and incorporated herein by reference. |
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JAMES HARDIE INDUSTRIES N.V. |
By: | /s/ Louis Gries |
Louis Gries | |
Chief Executive Officer |
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F-1
Table of Contents
PricewaterhouseCoopers LLP
F-2
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March 31 | ||||||||||||||
Notes | 2006 | 2005 | ||||||||||||
(Millions of US dollars) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | 3 | $ | 315.1 | $ | 113.5 | |||||||||
Accounts and notes receivable, net of allowance for doubtful accounts of $1.3 million and $1.5 million as of March 31, 2006 and March 31, 2005, respectively | 4 | 153.2 | 127.2 | |||||||||||
Inventories | 5 | 124.0 | 99.9 | |||||||||||
Prepaid expenses and other current assets | 33.8 | 12.0 | ||||||||||||
Deferred income taxes | 13 | 30.7 | 26.0 | |||||||||||
Total current assets | 656.8 | 378.6 | ||||||||||||
Property, plant and equipment, net | 6 | 775.6 | 685.7 | |||||||||||
Deferred income taxes | 13 | 4.8 | 12.3 | |||||||||||
Other assets | 8.2 | 12.3 | ||||||||||||
Total assets | $ | 1,445.4 | $ | 1,088.9 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued liabilities | 8 | $ | 117.8 | $ | 94.0 | |||||||||
Current portion of long-term debt | 9 | 121.7 | 25.7 | |||||||||||
Short-term debt | 9 | 181.0 | 11.9 | |||||||||||
Accrued payroll and employee benefits | 46.3 | 35.7 | ||||||||||||
Accrued product warranties | 11 | 11.4 | 8.0 | |||||||||||
Income taxes payable | 13 | 24.5 | 21.4 | |||||||||||
Other liabilities | 3.3 | 1.7 | ||||||||||||
Total current liabilities | 506.0 | 198.4 | ||||||||||||
Long-term debt | 9 | — | 121.7 | |||||||||||
Deferred income taxes | 13 | 79.8 | 77.5 | |||||||||||
Accrued product warranties | 11 | 4.1 | 4.9 | |||||||||||
Asbestos provision | 12 | 715.6 | — | |||||||||||
Other liabilities | 10 | 45.0 | 61.7 | |||||||||||
Total liabilities | 1,350.5 | 464.2 | ||||||||||||
Commitments and contingencies | 12 | |||||||||||||
Shareholders’ equity: | ||||||||||||||
Common stock, Euro 0.59 par value, 2.0 billion shares authorized; 463,306,511 shares issued and outstanding at March 31, 2006 and 459,373,176 shares issued and outstanding at March 31, 2005 | 15 | 253.2 | 245.8 | |||||||||||
Additional paid-in capital | 15 | 158.8 | 139.4 | |||||||||||
Retained (deficit) earnings | (288.3 | ) | 264.3 | |||||||||||
Employee loans | 15 | (0.4 | ) | (0.7 | ) | |||||||||
Accumulated other comprehensive loss | 18 | (28.4 | ) | (24.1 | ) | |||||||||
Total shareholders’ equity | 94.9 | 624.7 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 1,445.4 | $ | 1,088.9 | ||||||||||
F-3
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Years Ended March 31 | ||||||||||||||||||
Notes | 2006 | 2005 | 2004 | |||||||||||||||
(Millions of US dollars, except per | ||||||||||||||||||
share data) | ||||||||||||||||||
Net sales | 17 | $ | 1,488.5 | $ | 1,210.4 | $ | 981.9 | |||||||||||
Cost of goods sold | (937.7 | ) | (784.0 | ) | (623.0 | ) | ||||||||||||
Gross profit | 550.8 | 426.4 | 358.9 | |||||||||||||||
Selling, general and administrative expenses | (209.8 | ) | (174.5 | ) | (162.0 | ) | ||||||||||||
Research and development expenses | (28.7 | ) | (21.6 | ) | (22.6 | ) | ||||||||||||
SCI and other related expenses | 12 | (17.4 | ) | (28.1 | ) | — | ||||||||||||
Impairment of roofing plant | 6 | (13.4 | ) | — | — | |||||||||||||
Asbestos provision | 12 | (715.6 | ) | — | — | |||||||||||||
Other operating expense | (0.8 | ) | (6.0 | ) | (2.1 | ) | ||||||||||||
Operating (loss) income | (434.9 | ) | 196.2 | 172.2 | ||||||||||||||
Interest expense | (7.2 | ) | (7.3 | ) | (11.2 | ) | ||||||||||||
Interest income | 7.0 | 2.2 | 1.2 | |||||||||||||||
Other (expense) income | — | (1.3 | ) | 3.5 | ||||||||||||||
(Loss) income from continuing operations before income taxes | 17 | (435.1 | ) | 189.8 | 165.7 | |||||||||||||
Income tax expense | 13 | (71.6 | ) | (61.9 | ) | (40.4 | ) | |||||||||||
(Loss) income from continuing operations | (506.7 | ) | 127.9 | 125.3 | ||||||||||||||
Discontinued operations: | ||||||||||||||||||
(Loss) income from discontinued operations, net of income tax benefit (expense) of nil, $0.2 million and ($0.1) million for 2006, 2005 and 2004, respectively | 14 | — | (0.3 | ) | 0.2 | |||||||||||||
(Loss) gain on disposal of discontinued operations, net of income tax benefit of nil, nil and $4.8 million for 2006, 2005 and 2004, respectively | 14 | — | (0.7 | ) | 4.1 | |||||||||||||
(Loss) income from discontinued operations | — | (1.0 | ) | 4.3 | ||||||||||||||
Net (loss) income | $ | (506.7 | ) | $ | 126.9 | $ | 129.6 | |||||||||||
(Loss) income per share — basic: | ||||||||||||||||||
(Loss) income from continuing operations | $ | (1.10 | ) | $ | 0.28 | $ | 0.27 | |||||||||||
Income from discontinued operations | — | — | 0.01 | |||||||||||||||
Net (loss) income per share — basic | $ | (1.10 | ) | $ | 0.28 | $ | 0.28 | |||||||||||
(Loss) income per share — diluted: | ||||||||||||||||||
(Loss) income from continuing operations | $ | (1.10 | ) | $ | 0.28 | $ | 0.27 | |||||||||||
Income from discontinued operations | — | — | 0.01 | |||||||||||||||
Net (loss) income per share — diluted | $ | (1.10 | ) | $ | 0.28 | $ | 0.28 | |||||||||||
Weighted average common shares outstanding (Millions): | ||||||||||||||||||
Basic | 2 | 461.7 | 458.9 | 458.1 | ||||||||||||||
Diluted | 2 | 461.7 | 461.0 | 461.4 |
F-4
Table of Contents
Years Ended March 31 | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(Millions of US dollars) | ||||||||||||||
Cash Flows From Operating Activities | ||||||||||||||
Net (loss) income | $ | (506.7 | ) | $ | 126.9 | $ | 129.6 | |||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||
Loss (gain) on sale of land and buildings | — | 0.7 | (4.2 | ) | ||||||||||
Loss (gain) on disposal of subsidiaries and businesses | — | 2.1 | (1.9 | ) | ||||||||||
Depreciation and amortization | 45.3 | 36.3 | 36.4 | |||||||||||
Deferred income taxes | 4.3 | 11.1 | 14.6 | |||||||||||
Prepaid pension cost | 2.9 | 7.6 | 1.8 | |||||||||||
Tax benefit from stock options exercised | 2.2 | 0.4 | 0.4 | |||||||||||
Stock compensation | 5.9 | 3.0 | 3.3 | |||||||||||
Asbestos provision | 715.6 | — | — | |||||||||||
Impairment of roofing plant | 13.4 | — | — | |||||||||||
Other | 1.7 | — | 0.7 | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts and notes receivable | (24.0 | ) | (3.7 | ) | (24.8 | ) | ||||||||
Inventories | (26.6 | ) | 4.3 | (24.9 | ) | |||||||||
Prepaid expenses and other current assets | (24.8 | ) | 32.6 | 2.1 | ||||||||||
Accounts payable and accrued liabilities | 24.4 | 15.0 | 1.3 | |||||||||||
Other accrued liabilities and other liabilities | 7.0 | (16.5 | ) | 28.2 | ||||||||||
Net cash provided by operating activities | 240.6 | 219.8 | 162.6 | |||||||||||
Cash Flows From Investing Activities | ||||||||||||||
Purchases of property, plant and equipment | (162.0 | ) | (153.2 | ) | (74.8 | ) | ||||||||
Proceeds from sale of property, plant and equipment | — | 3.4 | 10.9 | |||||||||||
Proceeds from disposal of subsidiaries and businesses, net of cash divested | 8.0 | — | 5.0 | |||||||||||
Net cash used in investing activities | (154.0 | ) | (149.8 | ) | (58.9 | ) | ||||||||
Cash Flows From Financing Activities | ||||||||||||||
Net proceeds from line of credit | — | 0.5 | 0.5 | |||||||||||
Proceeds from borrowings | 181.0 | — | — | |||||||||||
Repayments of borrowings | (37.6 | ) | (17.6 | ) | — | |||||||||
Proceeds from issuance of shares | 18.7 | 2.6 | 3.2 | |||||||||||
Repayments of capital | — | — | (68.7 | ) | ||||||||||
Dividends paid | (45.9 | ) | (13.7 | ) | (22.9 | ) | ||||||||
Collections on loans receivable | 0.3 | 0.6 | 0.9 | |||||||||||
Net cash provided by (used in) financing activities | 116.5 | (27.6 | ) | (87.0 | ) | |||||||||
Effects of exchange rate changes on cash | (1.5 | ) | (1.2 | ) | 0.5 | |||||||||
Net increase in cash and cash equivalents | 201.6 | 41.2 | 17.2 | |||||||||||
Cash and cash equivalents at beginning of period | 113.5 | 72.3 | 55.1 | |||||||||||
Cash and cash equivalents at end of period | $ | 315.1 | $ | 113.5 | $ | 72.3 | ||||||||
Components of Cash and Cash Equivalents | ||||||||||||||
Cash at bank and on hand | $ | 24.9 | $ | 28.6 | $ | 24.6 | ||||||||
Short-term deposits | 290.2 | 84.9 | 47.7 | |||||||||||
Cash and cash equivalents at end of period | $ | 315.1 | $ | 113.5 | $ | 72.3 | ||||||||
Supplemental Disclosure of Cash Flow Activities | ||||||||||||||
Cash paid during the period for interest, net of amounts capitalized | $ | 3.5 | $ | 10.7 | $ | 11.7 | ||||||||
Cash paid (refunded) during the period for income taxes, net | $ | 93.4 | $ | 15.7 | $ | (6.5 | ) |
F-5
Table of Contents
Accumulated | |||||||||||||||||||||||||||
Retained | Other | ||||||||||||||||||||||||||
Additional | Earnings | Comprehensive | |||||||||||||||||||||||||
Common | Paid-In | (Accumulated | Employee | Income | |||||||||||||||||||||||
Stock | Capital | Deficit) | Loans | (Loss) | Total | ||||||||||||||||||||||
(Millions of US dollars) | |||||||||||||||||||||||||||
Balances as of March 31, 2003 | $ | 269.7 | $ | 171.3 | $ | 44.4 | $ | (1.7 | ) | $ | (49.0 | ) | $ | 434.7 | |||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||
Net income | — | — | 129.6 | — | — | 129.6 | |||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Amortization of unrealized transition loss on derivative instruments | — | — | — | — | 1.1 | 1.1 | |||||||||||||||||||||
Foreign currency translation gain | — | — | — | — | 16.0 | 16.0 | |||||||||||||||||||||
Unrealized loss on available-for-sale securities | — | — | — | — | (0.1 | ) | (0.1 | ) | |||||||||||||||||||
Additional minimum pension liability adjustment | — | — | — | — | 7.7 | 7.7 | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | 24.7 | 24.7 | |||||||||||||||||||||
Total comprehensive income | 154.3 | ||||||||||||||||||||||||||
Dividends paid | — | — | (22.9 | ) | — | — | (22.9 | ) | |||||||||||||||||||
Conversion of common stock from Euro 0.64 par value to Euro 0.73 par value | 48.4 | (48.4 | ) | — | — | — | — | ||||||||||||||||||||
Conversion of common stock from Euro 0.73 par value to Euro 0.5995 par value and subsequent return of capital | (68.7 | ) | — | — | — | — | (68.7 | ) | |||||||||||||||||||
Conversion of common stock from Euro 0.5995 par value to Euro 0.59 par value | (5.0 | ) | 5.0 | — | — | — | — | ||||||||||||||||||||
Stock compensation | — | 3.3 | — | — | — | 3.3 | |||||||||||||||||||||
Tax benefit from stock options exercised | — | 0.4 | — | — | — | 0.4 | |||||||||||||||||||||
Employee loans repaid | — | — | — | 0.4 | — | 0.4 | |||||||||||||||||||||
Stock options exercised | 0.8 | 2.4 | — | — | — | 3.2 | |||||||||||||||||||||
Balances as of March 31, 2004 | $ | 245.2 | $ | 134.0 | $ | 151.1 | $ | (1.3 | ) | $ | (24.3 | ) | $ | 504.7 | |||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||
Net income | — | — | 126.9 | — | — | 126.9 | |||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Amortization of unrealized transition loss on derivative instruments | — | — | — | — | 1.1 | 1.1 | |||||||||||||||||||||
Foreign currency translation loss | — | — | — | — | (0.9 | ) | (0.9 | ) | |||||||||||||||||||
Other comprehensive income | — | — | — | — | 0.2 | 0.2 | |||||||||||||||||||||
Total comprehensive income | 127.1 | ||||||||||||||||||||||||||
Dividends paid | — | — | (13.7 | ) | — | — | (13.7 | ) | |||||||||||||||||||
Stock compensation | — | 3.0 | — | — | — | 3.0 | |||||||||||||||||||||
Tax benefit from stock options exercised | — | 0.4 | — | — | — | 0.4 | |||||||||||||||||||||
Employee loans repaid | — | — | — | 0.6 | — | 0.6 | |||||||||||||||||||||
Stock options exercised | 0.6 | 2.0 | — | — | — | 2.6 | |||||||||||||||||||||
Balances as of March 31, 2005 | $ | 245.8 | $ | 139.4 | $ | 264.3 | $ | (0.7 | ) | $ | (24.1 | ) | $ | 624.7 | |||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||||
Net loss | — | — | (506.7 | ) | — | — | (506.7 | ) | |||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||
Amortization of unrealized transition loss on derivative instruments | — | — | — | — | 0.5 | 0.5 | |||||||||||||||||||||
Foreign currency translation loss | — | — | — | — | (4.8 | ) | (4.8 | ) | |||||||||||||||||||
Other comprehensive loss | — | — | — | — | (4.3 | ) | (4.3 | ) | |||||||||||||||||||
Total comprehensive loss | (511.0 | ) | |||||||||||||||||||||||||
Dividends paid | — | — | (45.9 | ) | — | — | (45.9 | ) | |||||||||||||||||||
Stock compensation | — | 5.9 | — | — | — | 5.9 | |||||||||||||||||||||
Tax benefit from stock options exercised | — | 2.2 | — | — | — | 2.2 | |||||||||||||||||||||
Employee loans repaid | — | — | — | 0.3 | — | 0.3 | |||||||||||||||||||||
Stock options exercised | 7.4 | 11.3 | — | — | — | 18.7 | |||||||||||||||||||||
Balances as of March 31, 2006 | $ | 253.2 | $ | 158.8 | $ | (288.3 | ) | (0.4 | ) | $ | (28.4 | ) | $ | 94.9 | |||||||||||||
F-6
Table of Contents
1. | Background and Basis of Presentation |
Nature of Operations |
Background |
Basis of Presentation |
2. | Summary of Significant Accounting Policies |
Accounting Principles |
Use of Estimates |
F-7
Table of Contents
Reclassifications |
Foreign Currency Translation |
Cash and Cash Equivalents |
Inventories |
Property, Plant and Equipment |
Years | ||||
Buildings | 40 | |||
Building improvements | 5 to 10 | |||
Manufacturing machinery | 20 | |||
General equipment | 5 to 10 | |||
Computer equipment | 3 to 4 | |||
Office furniture and equipment | 3 to 10 |
Impairment of Long-Lived Assets |
F-8
Table of Contents
Environmental |
Mineral Acquisition Costs |
Revenue Recognition |
Cost of Goods Sold |
Shipping and Handling |
Selling, General and Administrative |
F-9
Table of Contents
Advertising |
Accrued Product Warranties |
Income Taxes |
Financial Instruments |
Stock-Based Compensation |
F-10
Table of Contents
Employee Benefit Plans |
Dividends |
Earnings Per Share |
Years Ended March 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Millions of shares) | ||||||||||||
Basic common shares outstanding | 461.7 | 458.9 | 458.1 | |||||||||
Dilutive effect of stock options | — | 2.1 | 3.3 | |||||||||
Diluted common shares outstanding | 461.7 | 461.0 | 461.4 | |||||||||
(Continuing operations — US dollar) | 2006 | 2005 | 2004 | |||||||||
Net (loss) income per share — basic | ($ | 1.10 | ) | $ | 0.28 | $ | 0.28 | |||||
Net (loss) income per share — diluted | ($ | 1.10 | ) | $ | 0.28 | $ | 0.28 |
Accumulated Other Comprehensive Income (Loss) |
F-11
Table of Contents
Recent Accounting Pronouncements |
Inventory Costs |
American Jobs Creation Act |
Exchanges of Non-Monetary Assets |
Share-Based Payment |
F-12
Table of Contents
Conditional Asset Retirement Obligations |
Accounting Changes and Error Corrections |
Uncertain Tax Positions |
3. | Cash and Cash Equivalents |
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
Cash at bank and on hand | $ | 24.9 | $ | 28.6 | |||||
Short-term deposits | 290.2 | 84.9 | |||||||
Total cash and cash equivalents | $ | 315.1 | $ | 113.5 | |||||
F-13
Table of Contents
4. | Accounts and Notes Receivable |
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
Trade receivables | $ | 146.5 | $ | 121.6 | |||||
Other receivables and advances | 8.0 | 7.1 | |||||||
Allowance for doubtful accounts | (1.3 | ) | (1.5 | ) | |||||
Total accounts and notes receivable | $ | 153.2 | $ | 127.2 | |||||
Years Ended March 31 | ||||||||
2006 | 2005 | |||||||
(Millions of US dollars) | ||||||||
Balance at April 1 | $ | 1.5 | $ | 1.2 | ||||
Charged to expense | 0.3 | 0.4 | ||||||
Costs and deductions | (0.5 | ) | (0.1 | ) | ||||
Balance at March 31 | $ | 1.3 | $ | 1.5 | ||||
5. | Inventories |
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
Finished goods | $ | 84.1 | $ | 71.1 | |||||
Work-in-process | 9.2 | 8.5 | |||||||
Raw materials and supplies | 33.0 | 22.4 | |||||||
Provision for obsolete finished goods and raw materials | (2.3 | ) | (2.1 | ) | |||||
Total inventories | $ | 124.0 | $ | 99.9 | |||||
F-14
Table of Contents
6. | Property, Plant and Equipment |
Machinery | |||||||||||||||||||||
and | Construction | ||||||||||||||||||||
Land | Buildings | Equipment | in Progress | Total | |||||||||||||||||
(Millions of US dollars) | |||||||||||||||||||||
Balance at April 1, 2004: | |||||||||||||||||||||
Cost | $ | 11.3 | $ | 135.0 | $ | 562.8 | $ | 63.0 | $ | 772.1 | |||||||||||
Accumulated depreciation | — | (21.0 | ) | (184.0 | ) | — | (205.0 | ) | |||||||||||||
Net book value | 11.3 | 114.0 | 378.8 | 63.0 | 567.1 | ||||||||||||||||
Changes in net book value: | |||||||||||||||||||||
Capital expenditures | 0.2 | 3.2 | 32.5 | 117.1 | 153.0 | ||||||||||||||||
Retirements and sales | — | — | — | (4.1 | ) | (4.1 | ) | ||||||||||||||
Depreciation | — | (4.5 | ) | (31.8 | ) | — | (36.3 | ) | |||||||||||||
Other movements | — | — | 3.4 | — | 3.4 | ||||||||||||||||
Foreign currency translation adjustments | — | — | 2.6 | — | 2.6 | ||||||||||||||||
Total changes | 0.2 | (1.3 | ) | 6.7 | 113.0 | 118.6 | |||||||||||||||
Balance at March 31, 2005: | |||||||||||||||||||||
Cost | 11.5 | 131.1 | 606.6 | 176.6 | 925.8 | ||||||||||||||||
Accumulated depreciation | — | (24.4 | ) | (215.7 | ) | — | (240.1 | ) | |||||||||||||
Net book value | $ | 11.5 | $ | 106.7 | $ | 390.9 | $ | 176.6 | $ | 685.7 | |||||||||||
Machinery | |||||||||||||||||||||
and | Construction | ||||||||||||||||||||
Land | Buildings | Equipment | in Progress | Total | |||||||||||||||||
Balance at April 1, 2005: | |||||||||||||||||||||
Cost | $ | 11.5 | $ | 131.1 | $ | 606.6 | $ | 176.6 | $ | 925.8 | |||||||||||
Accumulated depreciation | — | (24.4 | ) | (215.7 | ) | — | (240.1 | ) | |||||||||||||
Net book value | 11.5 | 106.7 | 390.9 | 176.6 | 685.7 | ||||||||||||||||
Changes in net book value: | |||||||||||||||||||||
Capital expenditures | 4.1 | 16.4 | 90.8 | 51.5 | 162.8 | ||||||||||||||||
Retirements and sales | — | — | (8.9 | ) | — | (8.9 | ) | ||||||||||||||
Depreciation | — | (7.3 | ) | (38.0 | ) | — | (45.3 | ) | |||||||||||||
Impairment | — | — | (13.4 | ) | — | (13.4 | ) | ||||||||||||||
Other movements | — | — | (0.9 | ) | — | (0.9 | ) | ||||||||||||||
Foreign currency translation adjustments | — | — | (4.4 | ) | — | (4.4 | ) | ||||||||||||||
Total changes | 4.1 | 9.1 | 25.2 | 51.5 | 89.9 | ||||||||||||||||
Balance at March 31, 2006: | |||||||||||||||||||||
Cost | 15.6 | 147.5 | 669.8 | 228.1 | 1,061.0 | ||||||||||||||||
Accumulated depreciation | — | (31.7 | ) | (253.7 | ) | — | (285.4 | ) | |||||||||||||
Net book value | $ | 15.6 | $ | 115.8 | $ | 416.1 | $ | 228.1 | $ | 775.6 | |||||||||||
F-15
Table of Contents
7. | Retirement Plans |
• | to achieve a rate of return (net of tax and investment expenses) that exceeds inflation (CPI) increases by at least 3% per annum over a moving five year period; | |
• | to achieve a rate of return (net of tax and investment expenses) above the median result for the Mercer Pooled Fund Survey over a rolling three year period; and | |
• | over shorter periods, outperform the notional return of the benchmark mix of investments. |
Equity securities | 40- 75 | % | ||
Debt securities | 15- 60 | % | ||
Real estate | 0- 20 | % |
F-16
Table of Contents
March 31 | |||||||||
2006 | 2005 | ||||||||
Equity securities | 48.8 | % | 36.6 | % | |||||
Fixed interest | 15.1 | 12.7 | |||||||
Real estate | 5.7 | 4.7 | |||||||
Cash | 30.4 | 46.0 | |||||||
Total | 100.0 | % | 100.0 | % | |||||
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
Service cost | $ | 1.9 | $ | 2.5 | $ | 2.9 | |||||||
Interest cost | 2.3 | 2.5 | 2.9 | ||||||||||
Expected return on plan assets | (2.6 | ) | (3.2 | ) | (3.6 | ) | |||||||
Amortization of unrecognized transition asset | — | — | (0.9 | ) | |||||||||
Amortization of prior service costs | — | 0.1 | 0.1 | ||||||||||
Recognized net actuarial loss | 0.4 | 0.4 | 0.4 | ||||||||||
Net periodic pension cost | 2.0 | 2.3 | 1.8 | ||||||||||
Settlement loss | 0.9 | 5.3 | — | ||||||||||
Net pension cost | $ | 2.9 | $ | 7.6 | $ | 1.8 | |||||||
March 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
% | % | % | ||||||||||
Net Periodic Benefit Cost Assumptions: | ||||||||||||
Discount rate | 6.5 | 6.5 | 6.8 | |||||||||
Rate of increase in compensation | 4.0 | 4.0 | 3.5 | |||||||||
Expected return on plan assets | 6.5 | 6.5 | 6.8 | |||||||||
Projected Benefit Obligation Assumptions: | ||||||||||||
Discount rate | 6.0 | 6.5 | 6.5 | |||||||||
Rate of increase in compensation | 4.0 | 4.0 | 4.0 |
F-17
Table of Contents
Years Ended March 31 | ||||||||||
2006 | 2005 | |||||||||
(Millions of US dollars) | ||||||||||
Changes in benefit obligation: | ||||||||||
Benefit obligation at April 1 | $ | 37.6 | $ | 40.7 | ||||||
Service cost | 1.9 | 2.5 | ||||||||
Interest cost | 2.3 | 2.5 | ||||||||
Plan participants’ contributions | 0.6 | 0.9 | ||||||||
Actuarial loss | 2.7 | 2.0 | ||||||||
Benefits paid | (6.7 | ) | (11.4 | ) | ||||||
Foreign currency translation | (2.8 | ) | 0.4 | |||||||
Benefit obligation at March 31 | $ | 35.6 | $ | 37.6 | ||||||
Changes in plan assets: | ||||||||||
Fair value of plan assets at April 1 | $ | 37.7 | $ | 41.2 | ||||||
Actual return on plan assets | 6.6 | 4.7 | ||||||||
Employer contributions | 1.2 | 1.8 | ||||||||
Participant contributions | 0.6 | 0.9 | ||||||||
Benefits paid | (6.7 | ) | (11.4 | ) | ||||||
Foreign currency translation | (2.9 | ) | 0.5 | |||||||
Fair value of plan assets at March 31 | $ | 36.5 | $ | 37.7 | ||||||
Funded status | $ | 0.9 | $ | 0.1 | ||||||
Unrecognized actuarial loss | 5.2 | 8.3 | ||||||||
Other assets | $ | 6.1 | $ | 8.4 | ||||||
Years Ended March 31 | ||||||||
2006 | 2005 | |||||||
(Millions of US dollars) | ||||||||
Projected benefit obligation | $ | 35.6 | $ | 37.6 | ||||
Accumulated benefit obligation | 35.6 | 37.6 | ||||||
Fair market value of plan assets | 36.5 | 37.7 |
F-18
Table of Contents
Years Ended | |||||
March 31 | |||||
(Millions of US dollars) | |||||
2007 | $ | 3.2 | |||
2008 | 2.1 | ||||
2009 | 2.2 | ||||
2010 | 2.6 | ||||
2011 | 2.6 | ||||
2012-2016 | 13.0 | ||||
Estimated future benefit payments | $ | 25.7 | |||
8. | Accounts Payable and Accrued Liabilities |
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
Trade creditors | $ | 66.0 | $ | 65.3 | |||||
Other creditors and accruals | 51.8 | 28.7 | |||||||
Total accounts payable and accrued liabilities | $ | 117.8 | $ | 94.0 | |||||
9. | Short and Long-Term Debt |
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
US$ noncollateralized notes — current portion | $ | 121.7 | $ | 25.7 | |||||
US$ noncollateralized notes — long-term portion | — | 121.7 | |||||||
Total debt at 7.11% average rate | $ | 121.7 | $ | 147.4 | |||||
F-19
Table of Contents
• | existing cash and unutilized committed facilities; | |
• | net operating cash flow during the current year; | |
• | an extension of the term of existing credit facilities; and | |
• | the addition of proposed new funding facilities. |
F-20
Table of Contents
10. | Non-Current Other Liabilities |
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
Employee entitlements | $ | 17.0 | $ | 5.3 | |||||
Product liability | 0.7 | 4.7 | |||||||
Other | 27.3 | 51.7 | |||||||
Total non-current other liabilities | $ | 45.0 | $ | 61.7 | |||||
11. | Product Warranties |
Years Ended March 31 | ||||||||
2006 | 2005 | |||||||
(Millions of US dollars) | ||||||||
Balance at beginning of period | $ | 12.9 | $ | 12.0 | ||||
Accruals for product warranties | 6.2 | 4.3 | ||||||
Settlements made in cash or in kind | (3.4 | ) | (3.4 | ) | ||||
Foreign currency translation adjustments | (0.2 | ) | — | |||||
Balance at end of period | $ | 15.5 | $ | 12.9 | ||||
F-21
Table of Contents
12. | Commitments and Contingencies |
Commitment to provide funding on a long-term basis in respect of asbestos-related liabilities of former subsidiaries |
• | the establishment of the SPF to provide compensation to Australian asbestos-related personal injury claimants with proven claims against the Former James Hardie Companies; | |
• | initial funding of approximately A$154 million provided by the Performing Subsidiary to the SPF, calculated on the basis of an actuarial report prepared by KPMG Actuaries Pty Ltd (“KPMG Actuaries”) as of March 31, 2006. That report provided an estimate of the discounted net present value of all present and future Australian asbestos-related personal injury claims against the Former James Hardie Companies of A$1.52 billion ($1.14 billion). | |
• | a two-year rolling cash buffer in the SPF and, subject to the cap described below, an annual contribution in advance to top up those funds to equal the actuarially calculated estimate of expected Australian asbestos-related personal injury claims against the Former James Hardie Companies for the following three years, to be revised annually; | |
• | a cap on the annual payments made by the Performing Subsidiary to the SPF, initially set at 35% of the Company’s free cash flow (defined as cash from operations in accordance with US GAAP in force at the date of the Final Funding Agreement) for the immediately preceding financial year, with provisions for the percentage to decline over time depending upon the Company’s financial performance (and therefore the contributions already made to the SPF) and the claims outlook; | |
• | an initial term of approximately 40 years, at which time the parties may either agree upon a final payment to be made by the Company in satisfaction of any further funding obligations, or have the term automatically extended for further periods of 10 years until such agreement is reached or the relevant asbestos-related liabilities cease to arise; | |
• | the entry by the parties and/or others into agreements to or connected with the Final Funding Agreements (the “Related Agreements”); | |
• | no cap on individual payments to asbestos claimants; |
F-22
Table of Contents
• | the Performing Subsidiary’s payment obligations are guaranteed by the James Hardie Industries N.V.; | |
• | the SPF’s claims to the funding payments required under the Final Funding Agreement will be subordinated to the claims of the Company’s lenders; and | |
• | the compensation arrangements will extend to members of the Baryulgil community for asbestos-related claims arising from the activities of a former subsidiary of ABN 60 (as described below). |
F-23
Table of Contents
Key events since 2001 leading to the signing of the Final Funding Agreement |
Separation of Amaca Pty Ltd and Amaba Pty Ltd and ABN 60 |
Potential for claims against the Former James Hardie Companies to be made against the Company |
F-24
Table of Contents
F-25
Table of Contents
Special Commission of Inquiry |
• | speedy, fair and equitable compensation for all existing and future claimants, including objective criteria to reduce superimposed inflation. Superimposed inflation is inflation in claim awards above the underlying rate of inflation and is sometimes called judicial inflation; |
F-26
Table of Contents
• | contributions to be made in a manner which provide certainty to claimants as to their entitlement, the scheme administrator as to the amount available for distribution, and the proposed contributors (including the Company) as to the ultimate amount of their contributions; | |
• | significant reductions in legal costs through reduced and more abbreviated litigation; and | |
• | limitation of legal avenues outside of the scheme. |
Principal findings in favor of the Company |
• | the establishment of the Foundation was legally effective and causes of action which the Foundation, Amaba or Amaca might have against the James Hardie Group, its officers and advisers would be unlikely to result in any significant increase in the funds of Amaba, Amaca or the Foundation (putting this finding conversely, the Company is unlikely to face any significant liability to the Foundation, Amaba or Amaba as a result of the then current causes of action of such entities against the current members of the James Hardie Group); | |
• | there was no finding that JHI NV had committed any material breach of any law as a result of the separation and reorganization transactions which took place in 2001; | |
• | many of the allegations and causes of action put forward by lawyers for the Foundation, Amaba and Amaca were “speculative”; and | |
• | the SCI rejected the suggestion that JHI NV had breached any law or was part of a conspiracy in relation to the fact that the reorganization scheme documents prepared in 2001 did not refer to the possibility of the partly-paid shares being cancelled (the shares were cancelled in 2003). |
Other principal findings relevant to the Company |
• | as a practical (but not legal) matter, if the “right” amount (and not merely the minimum amount) of funding was not provided to the Foundation, the Company would face potential legislative, customer, union and public action to apply legislative and boycott measures and public pressure to ensure that the Company met any significant funding shortfall; and | |
• | the directors of ABN 60 at the time of the cancellation of the partly-paid shares (Messrs Morley and Salter) effectively followed the instructions of JHI NV in relation to the cancellation. As a result, it might be concluded that JHI NV was a shadow director of ABN 60 at that time. However, while expressing some reservations about what occurred, the SCI did not find that the ABN 60 directors (including JHI NV as a shadow director) breached their duties in undertaking the cancellation. |
F-27
Table of Contents
Principal findings against ABN 60 (formerly called JHIL) |
Principal findings against Mr. Macdonald and Mr. Shafron |
• | alleged false and misleading conduct associated with a February 16, 2001 press release, particularly regarding a statement that the Foundation was “fully funded” in contravention of New South Wales and Commonwealth legislation prohibiting false or misleading conduct; | |
• | allegedly breaching their duties as officers of ABN 60 by encouraging the board of directors of ABN 60 to act on the Trowbridge report, dated February 13, 2001 (the “Trowbridge Report”), in forming a view that the Foundation would be “fully funded”; and | |
• | criticisms, falling short of findings of contraventions of law, based on their respective roles in the separation and reorganization transactions. These included criticisms relating to their development, control over, reliance on and use of the Trowbridge Report, despite (in the SCI’s view) their knowledge of its limitations. |
F-28
Table of Contents
Events Following the SCI Findings |
F-29
Table of Contents
Heads of Agreement |
Extension of Heads of Agreement to cover Baryulgil claims |
Interim Funding and ABN 60 Indemnity |
F-30
Table of Contents
Releases From Civil Liability |
F-31
Table of Contents
Actuarial Study; Claims Estimate |
F-32
Table of Contents
Claims Data |
Years Ended | ||||||||
March 31 | ||||||||
2006 | 2005 | |||||||
Australia | 556 | 712 | ||||||
New Zealand | — | — | ||||||
Unknown — Court Not Identified(1) | 20 | 36 | ||||||
USA | 1 | 1 |
(1) | The “Unknown — Court Not Identified” designation reflects that the information for such claims had not been, as of the date of publication, entered into the database which the Foundation maintains. Over time, as the details of “unknown” claims are provided to the Foundation, the Company believes the database is updated to reflect where such claims originate. Accordingly, the Company understands the number of unknown claims pending fluctuates due to the resolution of claims as well as the reclassification of such claims. |
Australia | ||||||||||||
Years Ended March 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of claims filed | 346 | 489 | 379 | |||||||||
Number of claims dismissed | 97 | 62 | 119 | |||||||||
Number of claims settled or otherwise resolved | 405 | 402 | 316 | |||||||||
Average settlement amount per claim | A$ | 151,883 | A$ | 157,594 | A$ | 167,450 | ||||||
Average settlement amount per claim | US$ | 114,322 | US$ | 116,572 | US$ | 116,127 |
F-33
Table of Contents
Unknown — Court Not Identified | ||||||||||||
Years Ended March 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of claims filed | 6 | 7 | 1 | |||||||||
Number of claims dismissed | 10 | 20 | 15 | |||||||||
Number of claims settled or otherwise resolved | 12 | 2 | — | |||||||||
Average settlement amount per claim | A$ | 198,892 | A$ | 47,000 | A$ | — | ||||||
Average settlement amount per claim | US$ | 149,706 | US$ | 34,766 | US$ | — |
USA | ||||||||||||
Years Ended March 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Number of claims filed | — | — | — | |||||||||
Number of claims dismissed | — | 3 | 1 | |||||||||
Number of claims settled or otherwise resolved | — | 1 | — | |||||||||
Average settlement amount per claim | A$ | — | A$ | 228,293 | A$ | — | ||||||
Average settlement amount per claim | US$ | — | US$ | 168,868 | US$ | — |
Years Ended March 31 | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Number of open claims at beginning of year | 749 | 743 | 814 | 671 | 569 | |||||||||||||||
Number of new claims | 352 | 496 | 380 | 409 | 375 | |||||||||||||||
Number of closed claims | 524 | 490 | 451 | 266 | 273 | |||||||||||||||
Number of open claims at year-end | 577 | 749 | 743 | 814 | 671 | |||||||||||||||
Average settlement amount per settled claim | A$ | 153,236 | A$ | 157,223 | A$ | 167,450 | A$ | 201,200 | A$ | 197,941 | ||||||||||
Average settlement amount per case closed | A$ | 121,945 | A$ | 129,949 | A$ | 117,327 | A$ | 177,752 | A$ | 125,435 | ||||||||||
Average settlement amount per settled claim | US$ | 115,341 | US$ | 116,298 | US$ | 116,127 | US$ | 112,974 | US$ | 101,603 | ||||||||||
Average settlement amount per case closed | US$ | 91,788 | US$ | 96,123 | US$ | 81,366 | US$ | 99,808 | US$ | 64,386 |
F-34
Table of Contents
SCI and Other Related Expenses |
Years Ended March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
SCI | $ | — | $ | 6.8 | |||||
Internal investigation | — | 4.9 | |||||||
ASIC investigation | 0.8 | 1.2 | |||||||
Severance and consulting | 0.1 | 6.0 | |||||||
Resolution advisory fees | 9.8 | 6.4 | |||||||
Funding advice | 2.9 | 0.6 | |||||||
Other | 3.8 | 2.2 | |||||||
Total SCI and other related expenses | $ | 17.4 | $ | 28.1 | |||||
ASIC |
F-35
Table of Contents
Financial Position of the Foundation |
Environmental and Legal |
F-36
Table of Contents
Operating Leases |
Years Ending March 31: | (Millions of US dollars) | ||||
2007 | $ | 15.8 | |||
2008 | 14.0 | ||||
2009 | 12.3 | ||||
2010 | 11.1 | ||||
2011 | 10.9 | ||||
Thereafter | 78.7 | ||||
Total | $ | 142.8 | |||
Capital Commitments |
13. | Income Taxes |
Years Ended March 31 | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(Millions of US dollars) | ||||||||||||||
Income from continuing operations before income taxes: | ||||||||||||||
Domestic(1) | $ | 113.7 | $ | 90.5 | $ | 103.5 | ||||||||
Foreign | (548.8 | ) | 99.3 | 62.2 | ||||||||||
(Loss) income from continuing operations before income taxes: | $ | (435.1 | ) | $ | 189.8 | $ | 165.7 | |||||||
Income tax expense: | ||||||||||||||
Current: | ||||||||||||||
Domestic(1) | $ | (9.0 | ) | $ | (14.1 | ) | $ | (6.7 | ) | |||||
Foreign | (91.5 | ) | (37.1 | ) | (20.4 | ) | ||||||||
Current income tax expense | (100.5 | ) | (51.2 | ) | (27.1 | ) | ||||||||
F-37
Table of Contents
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
Deferred: | |||||||||||||
Domestic(1) | (0.3 | ) | 5.0 | (3.9 | ) | ||||||||
Foreign | 29.2 | (15.7 | ) | (9.4 | ) | ||||||||
Deferred income tax expense | 28.9 | (10.7 | ) | (13.3 | ) | ||||||||
Total income tax expense for continuing operations | $ | (71.6 | ) | $ | (61.9 | ) | $ | (40.4 | ) | ||||
(1) | Since JHI NV is the Dutch parent holding company, domestic represents The Netherlands. |
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
Income tax expense computed at statutory tax rates | $ | 121.0 | $ | (65.3 | ) | $ | (60.7 | ) | |||||
US state income taxes, net of the federal benefit | (7.1 | ) | (5.3 | ) | (0.2 | ) | |||||||
Asbestos provision | (214.7 | ) | — | — | |||||||||
Benefit from Dutch financial risk reserve regime | 12.7 | 18.1 | 24.8 | ||||||||||
Expenses not deductible | (3.4 | ) | (2.3 | ) | (2.5 | ) | |||||||
Non-assessable items | 1.4 | — | 1.3 | ||||||||||
Losses not available for carryforward | (2.6 | ) | (2.4 | ) | — | ||||||||
Change in reserves | 20.7 | (3.7 | ) | (3.9 | ) | ||||||||
Other items | 0.4 | (1.0 | ) | 0.8 | |||||||||
Total income tax expense | $ | (71.6 | ) | $ | (61.9 | ) | $ | (40.4 | ) | ||||
Effective tax rate | 16.5 | % | 32.6 | % | 24.4 | % | |||||||
March 31 | ||||||||||
2006 | 2005 | |||||||||
(Millions of US dollars) | ||||||||||
Deferred tax assets: | ||||||||||
Provisions and accruals | $ | 33.2 | $ | 29.0 | ||||||
Net operating loss carryforwards | 8.9 | 12.8 | ||||||||
Capital loss carryforwards | 31.2 | 33.7 | ||||||||
Taxes on intellectual property transfer | 8.3 | 10.0 | ||||||||
Total deferred tax assets | 81.6 | 85.5 | ||||||||
Valuation allowance | (35.2 | ) | (38.1 | ) | ||||||
Total deferred tax assets net of valuation allowance | 46.4 | 47.4 | ||||||||
F-38
Table of Contents
March 31 | ||||||||||
2006 | 2005 | |||||||||
(Millions of US dollars) | ||||||||||
Deferred tax liabilities: | ||||||||||
Property, plant and equipment | (91.7 | ) | (86.9 | ) | ||||||
Prepaid pension cost | (1.8 | ) | (2.5 | ) | ||||||
Total deferred tax liabilities | (93.5 | ) | (89.4 | ) | ||||||
Foreign currency movements | 2.8 | 2.8 | ||||||||
Net deferred tax liabilities | $ | (44.3 | ) | $ | (39.2 | ) | ||||
F-39
Table of Contents
US$ | A$ | ||||||||
(Millions of dollars) | |||||||||
Primary tax after allowable credits | $ | 129.5 | A$ | 172.0 | |||||
Penalties(1) | 32.4 | 43.0 | |||||||
General interest charges | 122.7 | 163.0 | |||||||
Total amended assessment | $ | 284.6 | A$ | 378.0 | |||||
(1) | Represents 25% of primary tax |
F-40
Table of Contents
14. | Discontinued Operations |
Building Systems |
ABN 60 |
F-41
Table of Contents
Disposal of Chile Business |
Years Ended March 31 | |||||||||||
2006 | 2005 | ||||||||||
(Millions of US dollars) | |||||||||||
Chile Fibre Cement | |||||||||||
Net sales | $ | 5.1 | $ | 13.3 | |||||||
Cost of goods sold | (3.5 | ) | (10.1 | ) | |||||||
Gross profit | 1.6 | 3.2 | |||||||||
Selling, general and administrative expenses | (1.2 | ) | (2.0 | ) | |||||||
Loss on disposal of business | (0.8 | ) | — | ||||||||
Operating (loss) income | (0.4 | ) | 1.2 | ||||||||
Interest expense | (0.2 | ) | (0.4 | ) | |||||||
Net (loss) income | $ | (0.6 | ) | $ | 0.8 | ||||||
F-42
Table of Contents
Years Ended March 31 | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(Millions of US dollars) | ||||||||||||||
Building Systems | ||||||||||||||
Net sales | $ | — | $ | — | $ | 2.9 | ||||||||
Income before income tax expense | — | — | 0.3 | |||||||||||
Income tax expense | — | — | (0.1 | ) | ||||||||||
Net income | — | — | 0.2 | |||||||||||
Building Services | ||||||||||||||
Net sales | — | — | — | |||||||||||
Loss before income tax benefit | — | (0.5 | ) | — | ||||||||||
Income tax benefit | — | 0.2 | — | |||||||||||
Net loss | — | (0.3 | ) | — | ||||||||||
Total | ||||||||||||||
Net sales | — | — | 2.9 | |||||||||||
(Loss) income before income tax benefit (expense) | — | (0.5 | ) | 0.3 | ||||||||||
Income tax benefit (expense) | — | 0.2 | (0.1 | ) | ||||||||||
Net (loss) income | — | (0.3 | ) | 0.2 | ||||||||||
(Loss) gain on disposal, net of income taxes | — | (0.7 | ) | 4.1 | ||||||||||
(Loss) income from discontinued operations | $ | — | $ | (1.0 | ) | $ | 4.3 | |||||||
15. | Stock-Based Compensation |
Years Ended March 31 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Dividend yield | 1.2 | % | 1.1 | % | 1.0 | % | ||||||
Expected volatility | 27.4 | % | 29.1 | % | 26.0 | % | ||||||
Risk free interest rate | 4.8 | % | 3.2 | % | 2.7 | % | ||||||
Expected life in years | 3.3 | 3.3 | 3.3 | |||||||||
Weighted average fair value at grant date | A$ | 1.35 | A$ | 1.35 | A$ | 1.42 |
F-43
Table of Contents
Executive Share Purchase Plan |
Managing Board Transitional Stock Option Plan |
2001 Equity Incentive Plan |
F-44
Table of Contents
October 2001 | ||||||||||||
Original | Number of | Option | ||||||||||
Exercise | Options | Expiration | ||||||||||
Original Shadow Share Grant Date | Price | Granted | Date | |||||||||
November 1999 | A$ | 3.82 | 1,968,544 | November 2009 | ||||||||
November 2000 | A$ | 3.78 | 3,500,285 | November 2010 |
Original | Number of | Option | ||||||||||
Exercise | Options | Expiration | ||||||||||
Share Grant Date | Price | Granted | Date | |||||||||
December 2001 | A$ | 5.65 | 4,248,417 | December 2011 | ||||||||
December 2002 | A$ | 6.66 | 4,037,000 | December 2012 | ||||||||
December 2003 | A$ | 7.05 | 6,179,583 | December 2013 | ||||||||
December 2004 | A$ | 5.99 | 5,391,100 | December 2014 | ||||||||
February 2005 | A$ | 6.30 | 273,000 | February 2015 | ||||||||
December 2005 | A$ | 8.90 | 5,224,100 | December 2015 | ||||||||
March 2006 | A$ | 9.50 | 40,200 | March 2016 |
Years Ended March 31 | ||||||||||||
Shares Available for Grant | 2006 | 2005 | 2004 | |||||||||
Shares available at beginning of period | 24,340,258 | 27,293,210 | 32,884,940 | |||||||||
Awards granted | (5,264,300 | ) | (5,664,100 | ) | (6,179,583 | ) | ||||||
Options forfeited | 700,275 | 2,711,148 | 587,853 | |||||||||
Shares available at end of period | 19,776,233 | 24,340,258 | 27,293,210 | |||||||||
F-45
Table of Contents
2006 | 2005 | 2004 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Number of | Exercise | Number of | Exercise | Number of | Exercise | |||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
(In Australian dollars) | ||||||||||||||||||||||||
Outstanding at beginning of period | 20,128,610 | A$ | 5.75 | 17,978,707 | A$ | 5.72 | 13,410,024 | A$ | 5.20 | |||||||||||||||
Granted | 6,584,300 | 8.83 | 5,664,100 | 6.00 | 6,179,583 | 7.05 | ||||||||||||||||||
Exercised | (3,925,378 | ) | 4.79 | (803,049 | ) | 4.13 | (1,023,047 | ) | 4.38 | |||||||||||||||
Forfeited | (3,274,275 | ) | 5.68 | (2,711,148 | ) | 6.56 | (587,853 | ) | 5.79 | |||||||||||||||
Outstanding at end of period | 19,513,257 | A$ | 6.99 | 20,128,610 | A$ | 5.75 | 17,978,707 | A$ | 5.72 | |||||||||||||||
Options exercisable at March 31 | 7,234,897 | A$ | 5.82 | 7,155,625 | A$ | 5.08 | 3,858,736 | A$ | 4.54 | |||||||||||||||
Options Outstanding | ||||||||||||||||||||
Weighted | Options Exercisable | |||||||||||||||||||
Average | ||||||||||||||||||||
Remaining | Weighted | Weighted | ||||||||||||||||||
Number | Contractual | Average | Number | Average | ||||||||||||||||
Outstanding at | Life (in | Exercise | Exercisable at | Exercise | ||||||||||||||||
Range of Exercise Price | March 31, 2006 | Years) | Price | March 31, 2006 | Price | |||||||||||||||
(In Australian dollars) | ||||||||||||||||||||
A$3.09 | 773,750 | 4.6 | A$ | 3.09 | 773,750 | A$ | 3.09 | |||||||||||||
3.13 | 257,113 | 3.6 | 3.13 | 257,113 | 3.13 | |||||||||||||||
5.06 | 1,270,724 | 5.7 | 5.06 | 1,270,724 | 5.06 | |||||||||||||||
5.99 | 4,464,850 | 8.7 | 5.99 | 967,900 | 5.99 | |||||||||||||||
6.30 | 273,000 | 8.9 | 6.30 | 68,250 | 6.30 | |||||||||||||||
6.45 | 2,064,800 | 6.7 | 6.45 | 2,064,800 | 6.45 | |||||||||||||||
7.05 | 3,857,720 | 7.7 | 7.05 | 1,832,360 | 7.05 | |||||||||||||||
8.53 | 1,320,000 | 9.7 | 8.53 | — | — | |||||||||||||||
8.90 | 5,191,100 | 9.7 | 8.90 | — | — | |||||||||||||||
9.50 | 40,200 | 9.9 | 9.50 | — | — | |||||||||||||||
A$3.09 to A$9.50 | 19,513,257 | 8.2 | A$ | 6.99 | 7,234,897 | A$ | 5.82 | |||||||||||||
Supervisory Board Share Plan |
F-46
Table of Contents
Peter Donald Macdonald Share Option Plans |
Peter Donald Macdonald Share Option Plan |
Peter Donald Macdonald Share Option Plan 2001 |
Peter Donald Macdonald Share Option Plan 2002 |
F-47
Table of Contents
Key Management Shadow Stock Incentive Plan |
Stock Appreciation Rights Plan |
16. | Financial Instruments |
Foreign Currency |
Credit Risk |
F-48
Table of Contents
Fair Values |
March 31 | ||||||||||||||||||
2006 | 2005 | |||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||
Value | Value | Value | Value | |||||||||||||||
(Millions of US dollars) | ||||||||||||||||||
Long-term debt: | ||||||||||||||||||
Floating | $ | — | $ | — | $ | — | $ | — | ||||||||||
Fixed | 121.7 | 133.8 | 147.4 | 173.6 | ||||||||||||||
Total | $ | 121.7 | $ | 133.8 | $ | 147.4 | $ | 173.6 | ||||||||||
17. | Operating Segment Information and Concentrations of Risk |
Operating Segments |
Net Sales to Customers(1) | |||||||||||||
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
USA Fiber Cement | $ | 1,218.4 | $ | 939.2 | $ | 738.6 | |||||||
Asia Pacific Fiber Cement | 241.8 | 236.1 | 219.8 | ||||||||||
Other | 28.3 | 35.1 | 23.5 | ||||||||||
Worldwide total from continuing operations | $ | 1,488.5 | $ | 1,210.4 | $ | 981.9 | |||||||
F-49
Table of Contents
(Loss) Income From Continuing | ||||||||||||||
Operations Before Income Taxes | ||||||||||||||
Years Ended March 31 | ||||||||||||||
2006 | 2005 | 2004 | ||||||||||||
(Millions of US dollars) | ||||||||||||||
USA Fiber Cement(2) | $ | 342.6 | $ | 241.5 | $ | 195.6 | ||||||||
Asia Pacific Fiber Cement(2) | 41.7 | 46.8 | 37.6 | |||||||||||
Research and Development(2) | (15.7 | ) | (17.5 | ) | (17.6 | ) | ||||||||
Other | (26.5 | ) | (11.8 | ) | (15.9 | ) | ||||||||
Segments total | 342.1 | 259.0 | 199.7 | |||||||||||
General Corporate(3),(4) | (61.4 | ) | (62.8 | ) | (27.5 | ) | ||||||||
Asbestos provision | (715.6 | ) | — | — | ||||||||||
Total operating (loss) income | (434.9 | ) | 196.2 | 172.2 | ||||||||||
Net interest expense(5) | (0.2 | ) | (5.1 | ) | (10.0 | ) | ||||||||
Other income (expense), net | — | (1.3 | ) | 3.5 | ||||||||||
Worldwide total from continuing operations | $ | (435.1 | ) | $ | 189.8 | $ | 165.7 | |||||||
Total Identifiable Assets | |||||||||
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
USA Fiber Cement | $ | 826.0 | $ | 670.1 | |||||
Asia Pacific Fiber Cement | 170.4 | 181.4 | |||||||
Other | 54.8 | 79.4 | |||||||
Segments total | 1,051.2 | 930.9 | |||||||
General Corporate(6) | 394.2 | 155.8 | |||||||
Worldwide total | $ | 1,445.4 | $ | 1,086.7 | |||||
Additions to Property, | |||||||||||||
Plant and Equipment(7) | |||||||||||||
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
USA Fiber Cement | $ | 154.5 | $ | 144.8 | $ | 56.2 | |||||||
Asia Pacific Fiber Cement | 6.6 | 4.1 | 8.4 | ||||||||||
Other | 1.7 | 4.1 | 9.5 | ||||||||||
Worldwide total | $ | 162.8 | $ | 153.0 | $ | 74.1 | |||||||
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Table of Contents
Depreciation and | |||||||||||||
Amortization | |||||||||||||
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
USA Fiber Cement | $ | 32.4 | $ | 23.1 | $ | 25.1 | |||||||
Asia Pacific Fiber Cement | 10.0 | 10.1 | 9.7 | ||||||||||
Other | 2.9 | 3.1 | 1.5 | ||||||||||
Segments total | 45.3 | 36.3 | 36.3 | ||||||||||
General Corporate | — | — | 0.1 | ||||||||||
Worldwide total | $ | 45.3 | $ | 36.3 | $ | 36.4 | |||||||
Net Sales to Customers(1) | |||||||||||||
Years Ended March 31 | |||||||||||||
Geographic Areas | 2006 | 2005 | 2004 | ||||||||||
(Millions of US dollars) | |||||||||||||
USA | $ | 1,233.7 | $ | 955.7 | $ | 748.9 | |||||||
Australia | 164.5 | 160.5 | 154.9 | ||||||||||
New Zealand | 53.6 | 49.6 | 40.6 | ||||||||||
Other Countries | 36.7 | 44.6 | 37.5 | ||||||||||
Worldwide total from continuing operations | $ | 1,488.5 | $ | 1,210.4 | $ | 981.9 | |||||||
Total Identifiable Assets | |||||||||
March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
USA | $ | 870.3 | $ | 729.2 | |||||
Australia | 108.5 | 118.8 | |||||||
New Zealand | 18.7 | 21.4 | |||||||
Other Countries | 53.7 | 61.5 | |||||||
Segments total | 1,051.2 | 930.9 | |||||||
General Corporate(6) | 394.2 | 155.8 | |||||||
Worldwide total | $ | 1,445.4 | $ | 1,086.7 | |||||
(1) | Export sales and inter-segmental sales are not significant. |
(2) | Research and development costs of $13.2 million, $7.6 million and $6.3 million in fiscal years 2006, 2005 and 2004, respectively, were expensed in the USA Fiber Cement operating segment. Research and development costs of $2.3 million, $1.9 million and $2.2 million in fiscal years 2006, 2005 and 2004, respectively, were expensed in the Asia Pacific Fiber Cement segment. Research and development costs of $12.3 million, $12.0 million and $14.1 million in fiscal years 2006, 2005 and 2004, respectively, were expensed in the Research and Development segment. Research and Development costs of $0.9 million, $0.1 million and nil in fiscal years 2006, 2005 and 2004, respectively, were expensed in Other segment. Research and Development costs also include selling, general and administrative expenses of $3.4 million, $5.5 million and $3.5 million in fiscal years 2006, 2005 and 2004, respectively. |
Research and development expenditures are expensed as incurred and in total amounted to $28.7 million, $21.6 million and $22.6 million for the years ended March 31, 2006, 2005 and 2004, respectively. |
F-51
Table of Contents
(3) | The principal components of General Corporate are officer and employee compensation and related benefits, professional and legal fees, administrative costs and rental expense, net of rental income, on the Company’s corporate offices. |
Net periodic pension cost related to the Australian Defined Benefit Plan for the Asia Pacific Fiber Cement segment totaling $2.0 million, $2.3 million and $1.8 million in fiscal years 2006, 2005 and 2004, respectively, has been included in the General Corporate segment. Also, a settlement loss of $0.9 million and $5.3 million on the Defined Benefit Plan in fiscal years 2006 and 2005, respectively, has been included in the General Corporate segment. |
(4) | Includes costs of $17.4 million and $28.1 million for SCI and other related expenses in fiscal years 2006 and 2005, respectively. See Note 12. |
(5) | The Company does not report net interest expense for each operating segment as operating segments are not held directly accountable for interest expense. |
(6) | The Company does not report deferred tax assets and liabilities for each operating segment as operating segments are not held directly accountable for deferred taxes. All deferred taxes are included in General Corporate. |
(7) | Additions to property, plant and equipment are calculated on an accrual basis, and therefore differ from property, plant and equipment in the consolidated statements of cash flows. |
Concentrations of Risk |
Years Ended March 31 | |||||||||||||
2006 | 2005 | 2004 | |||||||||||
(Millions of US dollars) | |||||||||||||
Customer A | $ | 168.5 | $ | 131.8 | $ | 111.3 | |||||||
Customer B | 426.2 | 295.4 | 252.2 | ||||||||||
Customer C | 156.6 | 131.7 | 112.9 | ||||||||||
Total | $ | 751.3 | $ | 558.9 | $ | 476.4 | |||||||
F-52
Table of Contents
18. | Other Comprehensive Loss |
Years Ended March 31 | |||||||||
2006 | 2005 | ||||||||
(Millions of US dollars) | |||||||||
Unrealized transition loss on derivative instruments classified as cash flow hedges | $ | — | $ | (0.5 | ) | ||||
Foreign currency translation adjustments | (28.4 | ) | (23.6 | ) | |||||
Total accumulated other comprehensive loss | $ | (28.4 | ) | $ | (24.1 | ) | |||
19. | Related Party Transactions |
JHI NV Directors’ Securities Transactions |
Shares | |||||
Director | Allotted | ||||
M. Hellicar | 1,515 | ||||
J. Barr | 758 | ||||
M.R. Brown | 758 | ||||
P.S. Cameron | 1,894 | ||||
G.J. Clark | 758 | ||||
M.J. Gillfillan | 758 | ||||
J.R.H. Loudon | 758 | ||||
D.G. McGauchie | 758 | ||||
Total | 7,957 | ||||
F-53
Table of Contents
Existing Loans to the Company’s Directors and Directors of James Hardie Subsidiaries |
Payments made to Directors and Director Related Entities of JHI NV during the Year |
Payments made to Director and Director Related Entities of Subsidiaries of JHI NV |
F-54
Table of Contents
20. | Subsequent Events |
• | On June 29, 2006, the ATO issued a ruling to the Company to the effect that James Hardie’s contributions to the SPF would be tax deductible over the anticipated life of the arrangements in accordance with the recent “blackhole expenditure” Federal Legislation which was enacted in April 2006. | |
• | On June 23, 2006, the ATO advised the Company that it has refused to endorse the SPF as a tax concession charity, arguing that, in its opinion, the scope of its activities under the Trust Deed and the Final Funding Agreement does not meet current legislative requirements for such an endorsement. The Company is reviewing the implications of this development. Having the SPF qualify for tax exempt status remains a condition precedent to the completion of the Final Funding Agreement. | |
• | On June 23, 2006, following negotiation with the ATO regarding the payment options in relation to the amended assessment referred to in Note 13, the ATO advised the Company that it may make a partial payment of 50% of the A$378 million amended assessment (A$189 million) pending the outcome of an appeal. This amount was paid on July 5, 2006. | |
• | In June 2006, the Company’s lenders agreed to extend the maturity date of its364-day facilities from December 2006 to June 2007 and to extend the maturity date of its term facilities from June 2006 to December 2006. |
F-55
Table of Contents
Audit Fees |
F-56
Table of Contents
Audit-Related Fees |
Tax Fees |
F-57
Table of Contents
Year Ended March 31, 2006 | Year Ended March 31, 2005 | ||||||||||||||||||||||||||||||||
By Quarter | By Quarter | ||||||||||||||||||||||||||||||||
First | Second | Third | Fourth | First | Second | Third | Fourth | ||||||||||||||||||||||||||
(Millions of US dollars) | |||||||||||||||||||||||||||||||||
Net sales | $ | 359.4 | $ | 376.6 | $ | 362.7 | $ | 389.8 | $ | 306.1 | $ | 300.9 | $ | 287.0 | $ | 316.4 | |||||||||||||||||
Cost of goods sold | (214.1 | ) | (239.3 | ) | (234.0 | ) | (250.3 | ) | (194.8 | ) | (203.8 | ) | (190.3 | ) | (195.1 | ) | |||||||||||||||||
Gross profit | 145.3 | 137.3 | 128.7 | 139.5 | 111.3 | 97.1 | 96.7 | 121.3 | |||||||||||||||||||||||||
Operating income (loss) | 86.9 | 76.4 | 64.4 | (662.6 | ) | 58.3 | 40.0 | 33.3 | 64.6 | ||||||||||||||||||||||||
Interest expense | (1.7 | ) | (2.2 | ) | (1.1 | ) | (2.2 | ) | (2.8 | ) | (1.9 | ) | (1.3 | ) | (1.3 | ) | |||||||||||||||||
Interest income | 1.0 | 1.2 | 1.9 | 2.9 | 0.3 | 0.6 | 0.6 | 0.7 | |||||||||||||||||||||||||
Other (expense) income, net | — | — | — | — | — | (1.9 | ) | 0.4 | 0.2 | ||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | 86.2 | 75.4 | 65.2 | (661.9 | ) | 55.8 | 36.8 | 33.0 | 64.2 | ||||||||||||||||||||||||
Income tax (expense) benefit | (30.3 | ) | (27.8 | ) | (24.5 | ) | 11.0 | (18.7 | ) | (12.1 | ) | (13.2 | ) | (17.9 | ) | ||||||||||||||||||
Income (loss) from continuing operations | 55.9 | 47.6 | 40.7 | (650.9 | ) | 37.1 | 24.7 | 19.8 | 46.3 | ||||||||||||||||||||||||
Discontinued operations: | |||||||||||||||||||||||||||||||||
Loss from discontinued operations net of income tax | — | — | — | — | — | — | (0.3 | ) | — | ||||||||||||||||||||||||
(Loss) gain on disposal of discontinued operations net of income tax | — | — | — | — | (0.8 | ) | 0.1 | — | — | ||||||||||||||||||||||||
(Loss) income from discontinued operations | — | — | — | — | (0.8 | ) | 0.1 | (0.3 | ) | — | |||||||||||||||||||||||
Net income (loss) | $ | 55.9 | $ | 47.6 | $ | 40.7 | $ | (650.9 | ) | $ | 36.3 | $ | 24.8 | $ | 19.5 | $ | 46.3 | ||||||||||||||||
F-58
Table of Contents
Exhibit | ||||
Number | Description of Exhibits | |||
1 | .1 | Articles of Association, as amended on September 1, 2005 of James Hardie Industries N.V. (English Translation) | ||
2 | .1 | Letter Agreement of September 6, 2001 by and between James Hardie Industries N.V. and CHESS Depositary Nominees Pty Limited, as the depositary for CHESS Units of Foreign Securities(3) | ||
2 | .2 | Deposit Agreement dated as of September 24, 2001 between The Bank of New York, as depositary, and James Hardie Industries N.V.(3) | ||
2 | .3 | Note Purchase Agreement, dated as of November 5, 1998, among James Hardie Finance B.V., James Hardie N.V. and certain purchasers thereto re: $225,000,000 Guaranteed Senior Notes(3) | ||
2 | .4 | Assignment and Assumption Agreement and First Amendment to Note Purchase Agreement, dated as of January 24, 2000, by and among James Hardie Finance B.V., James Hardie U.S. Funding, Inc., James Hardie N.V., James Hardie Aust Investco Pty Limited and certain noteholders thereto(3) | ||
2 | .5 | Second Amendment to the Note Purchase Agreement dated as of October 22, 2001, by and among, James Hardie U.S. Funding, Inc., James Hardie N.V., James Hardie Aust Investco Pty Limited, James Hardie Australia Finance Pty Limited, James Hardie International Finance B. V. and certain noteholders thereto(3) | ||
2 | .6 | Assignment and Assumption Agreement and Third Amendment to Note Purchase Agreement, dated as of November 18, 2002, among James Hardie U.S. Funding Inc, James Hardie International Finance B.V., James Hardie Industries N.V., James Hardie N.V. and certain noteholders thereto(1) | ||
2 | .7 | Common Terms Deed Poll dated June 15, 2005 between James Hardie International Finance B.V. and James Hardie Industries N.V.(3) | ||
2 | .8 | Form of Term Facility Agreement between James Hardie International Finance B.V. and Financier(3) | ||
2 | .9 | Form of Extension of Facilities and other matters for Term Facility Agreement between James Hardie International Finance B.V. and Financier | ||
2 | .10 | Form of 364-day Facility Agreement between James Hardie International Finance B.V. and Financier(3) | ||
2 | .11 | Form of Extension Request for 364-day Facility Agreement between James Hardie International Finance B.V. and Financier | ||
2 | .12 | Form of Guarantee Deed between James Hardie Industries N.V. and Financier(3) | ||
4 | .1 | James Hardie Industries N.V. 2001 Equity Incentive Plan(3) | ||
4 | .2 | Economic Profit and Individual Performance Incentive Plans(3) | ||
4 | .3 | JHI NV Stock Appreciation Rights Incentive Plan(3) | ||
4 | .4 | Supervisory Board Share Plan 2006 | ||
4 | .5 | James Hardie Industries N.V. Long Term Incentive Plan 2006 | ||
4 | .6 | 2005 Managing Board Transitional Stock Option Plan | ||
4 | .7 | Form of Joint and Several Indemnity Agreement among James Hardie N.V., James Hardie (USA) Inc. and certain indemnitees thereto(3) | ||
4 | .8 | Form of Joint and Several Indemnity Agreement among James Hardie Industries N.V., James Hardie Inc. and certain indemnitees thereto(3) | ||
4 | .9 | Form of Deed of Access to Documents, Indemnity and Insurance among James Hardie Industries N.V. and certain indemnitees thereto(3) | ||
4 | .10 | Form of Joint and Several Indemnity Agreement among James Hardie Industries N.V., James Hardie Building Products Inc. and certain indemnities thereto(3) | ||
4 | .11 | Lease Amendment, dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the corner of Cobalt & Silica Street, Carole Park, Queensland, Australia(2) | ||
4 | .12 | Variation of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the corner of Colquhoun & Devon Streets, Rosehill, New South Wales, Australia(2) | ||
4 | .13 | Extension of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at Rutland, Avenue, Welshpool, Western Australia, Australia(2) |
Table of Contents
Exhibit | ||||
Number | Description of Exhibits | |||
4 | .14 | Lease Amendment dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at 46 Randle Road, Meeandah, Queensland, Australia(2) | ||
4 | .15 | Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and James Hardie Industries N.V. re premises at the corner of O’Rorke and Station Roads, Penrose, Auckland, New Zealand(2) | ||
4 | .16 | Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and James Hardie Industries N.V. re premises at 44-74 O’Rorke Road, Penrose, Auckland, New Zealand(2) | ||
4 | .17 | Ownership transfer related to corner of O’Rorke and Station Roads, Penrose, Auckland, New Zealand and 44-74 O’Rorke Road, Penrose, Auckland, New Zealand effective June 30, 2005 | ||
4 | .18 | Industrial Building Lease Agreement, effective October 6, 2000, between James Hardie Building Products, Inc. and Fortra Fiber-Cement L.L.C., re premises at Waxahachie, Ellis County, Texas(3) | ||
4 | .19 | Asset Purchase Agreement by and between James Hardie Building Products, Inc. and Cemplank, Inc. dated as of December 12, 2001(3) | ||
4 | .20 | Amended and Restated Stock Purchase Agreement dated March 12, 2002, between BPB U.S. Holdings, Inc. and James Hardie Inc.(3) | ||
4 | .21 | Final Funding Agreement | ||
4 | .22 | Asbestos Injuries Compensation Fund Trust Deed by and between James Hardie Aust. Holdings Pty Limited and Asbestos Injuries Compensation Fund Limited | ||
4 | .23 | Deed of Release by and among James Hardie Industries N.V., Australian Council of Trade Unions, Unions New South Wales, and Bernard Douglas Banton | ||
4 | .24 | Parent Guarantee by and among Asbestos Injuries Compensation Fund Limited, The State of New South Wales, and James Hardie Industries N.V. | ||
4 | .25 | Deed of Release by and between James Hardie Industries N.V. and The State of New South Wales | ||
4 | .26 | Irrevocable Power of Attorney by and between Asbestos Injuries Compensation Fund Limited and The State of New South Wales | ||
4 | .27 | Deed of Accession by and among Asbestos Injuries Compensation Fund Limited, James Hardie Industries N.V., LGTDD Pty Limited, and The State of New South Wales | ||
4 | .28 | Letters Extending the Condition Precedent Date for the Final Funding Agreement | ||
8 | .1 | List of significant subsidiaries of James Hardie Industries N.V. | ||
12 | .1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
12 | .2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
13 | .1 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
15 | .1 | Consent of independent registered public accounting firm | ||
15 | .2 | Consent of KPMG Actuaries Pty Ltd | ||
99 | .1 | Excerpts of the ASX Settlement and Transfer Corporation Pty Ltd as of June 10, 2005 | ||
99 | .2 | Excerpts of the Financial Services Reform Act 2001, as of March 11, 2002(3) | ||
99 | .3 | ASIC Class Order 02/311, dated November 3, 2002(3) | ||
99 | .4 | ASIC Modification, dated March 7, 2002(3) | ||
99 | .5 | ASIC Modification, dated February 26, 2004 |
(1) | Previously filed as an exhibit to our Annual Report on Form 20-F dated July 2, 2003 and incorporated herein by reference. |
(2) | Previously filed as an exhibit to our Annual Report on Form 20-F dated November 22, 2004 and incorporated herein by reference. |
(3) | Previously filed as an exhibit to our Annual Report on Form 20-F dated July 7, 2005 and incorporated herein by reference. |