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Washington D.C. 20549
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended March 31, 2008 | ||
Or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to . |
Canada | 98-0442987 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification Number) | |
3399 Peachtree Road NE, Suite 1500, Atlanta, GA (Address of principal executive offices) | 30326 (Zip Code) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
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• | the level of our indebtedness and our ability to generate cash; | |
• | changes in the prices and availability of aluminum (or premiums associated with such prices) or other materials and raw materials we use; | |
• | the effect of metal price ceilings in certain of our sales contracts; | |
• | the effectiveness of our metal hedging activities, including our internal used beverage can (UBC) and smelter hedges; | |
• | relationships with, and financial and operating conditions of, our customers, suppliers and other stakeholders; | |
• | integration with Hindalco Industries Limited; | |
• | fluctuations in the supply of, and prices for, energy in the areas in which we maintain production facilities; | |
• | our ability to access financing for future capital requirements; | |
• | continuing obligations and other relationships resulting from our spin-off from Alcan, Inc.; | |
• | changes in the relative values of various currencies and the effectiveness of our currency hedging activities; | |
• | factors affecting our operations, such as litigation, environmental remediation andclean-up costs, labor relations and negotiations, breakdown of equipment and other events; | |
• | economic, regulatory and political factors within the countries in which we operate or sell our products, including changes in duties or tariffs; | |
• | competition from other aluminum rolled products producers as well as from substitute materials such as steel, glass, plastic and composite materials; |
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• | changes in general economic conditions; | |
• | our ability to maintain effective internal control over financial reporting and disclosure controls and procedures in the future; | |
• | changes in the fair value of derivative instruments; | |
• | cyclical demand and pricing within the principal markets for our products as well as seasonality in certain of our customers’ industries; | |
• | changes in government regulations, particularly those affecting taxes, environmental, health or safety compliance; | |
• | changes in interest rates that have the effect of increasing the amounts we pay under our principal credit agreement and other financing agreements; and | |
• | the effect of taxes and changes in tax rates. |
Period | At Period End | Average Rate(1) | High | Low | ||||||||||||
Year Ended December 31, 2003 | 1.2923 | 1.3916 | 1.5750 | 1.2923 | ||||||||||||
Year Ended December 31, 2004 | 1.2034 | 1.2984 | 1.3970 | 1.1775 | ||||||||||||
Year Ended December 31, 2005 | 1.1656 | 1.2083 | 1.2703 | 1.1507 | ||||||||||||
Year Ended December 31, 2006 | 1.1652 | 1.1310 | 1.1726 | 1.0955 | ||||||||||||
Three Months Ended March 31, 2007(2) | 1.1530 | 1.1674 | 1.1852 | 1.1530 | ||||||||||||
April 1, 2007 Through May 15, 2007(2) | 1.0976 | 1.1022 | 1.1583 | 1.0976 | ||||||||||||
May 16, 2007 Through March 31, 2008(2) | 1.0275 | 1.0180 | 1.1028 | 0.9168 |
(1) | The average of the noon buying rates on the last day of each month during the period. | |
(2) | See Note 1 — Business and Summary of Significant Accounting Policies to our accompanying consolidated and combined financial statements. |
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Item 1. | Business |
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• | hot mills— that require sheet ingot, a rectangular slab of aluminum, as starter material; and | |
• | continuous casting mills— that can convert molten metal directly into semi-finished sheet. |
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North America | Asia | |
Alcoa, Inc. (Alcoa) | Furukawa-Sky Aluminum Corp. | |
Aleris International, Inc. (Aleris) | Sumitomo Light Metal Company, Ltd. | |
Arco Aluminium, (a subsidiary of BP plc) | Southwest Aluminum Co. Ltd. | |
Norandal Aluminum | Kobe Steel Ltd. | |
Wise Metal Group LLC | Alcoa | |
Alcan |
Europe | South America | |
Hydro A.S.A. | Companhia Brasileira de Alumínio | |
Alcan | Alcoa | |
Alcoa | ||
Aleris |
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• | Optimize our portfolio of rolled products, improving our product mix and margins by leveraging our assets and technical capabilities into products and markets that have higher margins, stability, barriers to entry and growth. Supply these differentiated and demanding higher value rolled products in all regions in which we operate. | |
• | Grow through the development of new market applications and through the substitution of existing market applications, such as our Novelis Fusiontm technology, where our customers benefit from superior characteristicsand/or a substitution to a higher value product. Novelis Fusiontm technology allows us to produce a high quality ingot with a core of one aluminum alloy, combined with one or more layers of different aluminum alloy(s). The ingot can then be rolled into a sheet product with |
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different properties on the inside and the outside, allowing previously unattainable performance for flat rolled products and creating opportunity for new applications as well as improved performance and efficiency in existing operations. |
• | Move towards more technologically advanced and profitable end-use markets by delivering proprietary products and processes that will be unique and attractive to our customers. |
• | Grow our global leadership position as the largest recycler of aluminum cans and other forms of aluminum. In fiscal 2008, we recycled approximately 36 billion cans. We are striving to increase the availability of recycled metal, focusing on recycling programs and education in the U.S., Europe, and Brazil. |
• | Continue to embrace Lean Six Sigma as our formal approach to continuous improvement, and implement these techniques throughout the Company. We continue to expect significant improvements in our business results globally from our full-time dedicated continuous improvement staff. | |
• | Drive best practice sharing and implementation in all administrative and operational functions. |
• | North America. Headquartered in Cleveland, Ohio, this segment manufactures aluminum sheet and light gauge products and operates 12 plants, including two fully dedicated recycling facilities, in two countries. | |
• | Europe. Headquartered in Zurich, Switzerland, this segment manufactures aluminum sheet and light gauge products and operates 14 plants, including one recycling facility, in six countries. |
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• | Asia. Headquartered in Seoul, South Korea, this segment manufactures aluminum sheet and light gauge products and operates three plants in two countries. | |
• | South America. Headquartered in Sao Paulo, Brazil, this segment comprises bauxite mining, alumina refining, smelting operations, power generation, carbon products, aluminum sheet and light gauge products and operates four plants in Brazil. |
Three | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
North America | |||||||||||||||||||||
Net sales | $ | 3,655 | $ | 446 | $ | 925 | $ | 3,691 | $ | 3,265 | |||||||||||
Intersegment sales | 9 | — | — | 2 | 2 | ||||||||||||||||
Segment Income (Loss) | 266 | (24 | ) | (17 | ) | 20 | 193 | ||||||||||||||
Total shipments | 1,032 | 134 | 286 | 1,229 | 1,194 | ||||||||||||||||
Rolled product shipments | 974 | 128 | 268 | 1,156 | 1,119 |
Three | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Europe | |||||||||||||||||||||
Net sales | $ | 3,828 | $ | 510 | $ | 1,057 | $ | 3,620 | $ | 3,093 | |||||||||||
Intersegment sales | 3 | — | 1 | 5 | 31 | ||||||||||||||||
Segment Income | 241 | 32 | 85 | 245 | 195 | ||||||||||||||||
Total shipments | 974 | 132 | 287 | 1,073 | 1,081 | ||||||||||||||||
Rolled product shipments | 940 | 131 | 282 | 1,055 | 1,009 |
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Three | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Asia | |||||||||||||||||||||
Net sales | $ | 1,602 | $ | 216 | $ | 413 | $ | 1,692 | $ | 1,391 | |||||||||||
Intersegment sales | 10 | �� | 1 | 3 | 15 | 8 | |||||||||||||||
Segment Income | 46 | 6 | 16 | 82 | 106 | ||||||||||||||||
Total shipments | 471 | 59 | 117 | 516 | 524 | ||||||||||||||||
Rolled product shipments | 437 | 54 | 107 | 471 | 483 |
Three | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
South America | |||||||||||||||||||||
Net sales | $ | 885 | $ | 109 | $ | 235 | $ | 863 | $ | 630 | |||||||||||
Intersegment sales | 27 | 7 | 12 | 50 | 41 | ||||||||||||||||
Segment Income | 143 | 18 | 57 | 165 | 112 | ||||||||||||||||
Total shipments | 310 | 38 | 82 | 305 | 288 | ||||||||||||||||
Rolled product shipments | 289 | 35 | 75 | 278 | 261 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
North | South | Proportional | Corporate | |||||||||||||||||||||||||
Total Assets | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
March 31, 2008 (Successor) | $ | 3,892 | $ | 4,430 | $ | 1,082 | $ | 1,478 | $ | (149 | ) | $ | 213 | $ | 10,946 | |||||||||||||
March 31, 2007 (Predecessor) | 1,566 | 2,543 | 1,110 | 821 | (114 | ) | 44 | 5,970 | ||||||||||||||||||||
December 31, 2006 (Predecessor) | 1,476 | 2,474 | 1,078 | 821 | (117 | ) | 60 | 5,792 | ||||||||||||||||||||
December 31, 2005 (Predecessor) | 1,547 | 2,139 | 1,002 | 790 | (85 | ) | 83 | 5,476 |
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Three | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Consolidated | |||||||||||||||||||||
Net sales(A) | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | $ | 8,363 | |||||||||||
Total shipments | 2,787 | 363 | 772 | 3,123 | 3,087 | ||||||||||||||||
North America | |||||||||||||||||||||
Net sales | 36.6 | % | 34.8 | % | 35.2 | % | 37.5 | % | 39.0 | % | |||||||||||
Total shipments | 37.0 | % | 36.9 | % | 37.0 | % | 39.4 | % | 38.7 | % | |||||||||||
Europe | |||||||||||||||||||||
Net sales | 38.4 | % | 39.8 | % | 40.2 | % | 36.8 | % | 37.0 | % | |||||||||||
Total shipments | 34.9 | % | 36.4 | % | 37.2 | % | 34.4 | % | 35.0 | % | |||||||||||
Asia | |||||||||||||||||||||
Net sales | 16.1 | % | 16.9 | % | 15.7 | % | 17.2 | % | 16.6 | % | |||||||||||
Total shipments | 16.9 | % | 16.3 | % | 15.2 | % | 16.5 | % | 17.0 | % | |||||||||||
South America | |||||||||||||||||||||
Net sales | 8.9 | % | 8.5 | % | 8.9 | % | 8.8 | % | 7.5 | % | |||||||||||
Total shipments | 11.2 | % | 10.4 | % | 10.6 | % | 9.8 | % | 9.3 | % |
(A) | Consolidated Net sales include the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. These Net sales were $5 million, $17 million, and $16 million for the period from May 16, 2007 through March 31, 2008 and for the years ended December 31, 2006 and 2005, respectively. There were less than $1 million of Net sales from our non-consolidated affiliates in each of the periods from April 1, 2007 through May 15, 2007, and the three months ended March 31, 2007. |
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Three | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Research and development expenses | $ | 46 | $ | 6 | $ | 8 | $ | 40 | $ | 41 | |||||||||||
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Name | Age | Position | ||||
Martha Finn Brooks | 49 | President and Chief Operating Officer | ||||
Steven Fisher | 37 | Chief Financial Officer | ||||
Leslie J. Parrette, Jr. | 46 | General Counsel, Corporate Secretary and Compliance Officer | ||||
Jean-Marc Germain | 42 | Senior Vice President and President — North America | ||||
Thomas Walpole | 53 | Senior Vice President and President — Asia | ||||
Antonio Tadeu Coelho Nardocci | 50 | Senior Vice President and President — South America | ||||
Arnaud de Weert | 44 | Senior Vice President and President — Europe | ||||
Robert Virtue | 56 | Vice President, Human Resources | ||||
Jeffrey Schwaneke | 33 | Vice President and Controller | ||||
Brenda Pulley | 50 | Vice President, Corporate Affairs and Communication | ||||
Nick Madden | 51 | Vice President, Global Procurement Metal Management |
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• | the contributed businesses, liabilities or contracts; |
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• | liabilities or obligations associated with the contributed businesses, as defined in the separation agreement, or otherwise assumed by us pursuant to the separation agreement; and | |
• | any breach by us of the separation agreement or any of the ancillary agreements we entered into with Alcan in connection with the spin-off. |
• | liabilities of Alcan other than those of an entity forming part of our group or otherwise assumed by us pursuant to the separation agreement; | |
• | any liability of Alcan or its subsidiaries, other than us, retained by Alcan under the separation agreement; and | |
• | any breach by Alcan of the separation agreement or any of the ancillary agreements we entered into with Alcan in connection with the spin-off. |
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• | Alcan transferred to us certain assets and liabilities of the automotive and other aluminum rolled products businesses relating to the sales and marketing output of the Sierre North Building, which comprises a portion of the Sierre facility in Switzerland. Pursuant to the terms of the separation and asset transfer agreements, the transfer price was determined by a valuation; | |
• | Alcan leased to us the Sierre North Building and the machinery and equipment located in the Sierre North Building (including the hot and cold mills) for a term of 15 years, renewable at our option for additional five-year periods, at an annual base rent in an amount equal to 8.5% of the then current book value of the Sierre North Building, the leased machinery or equipment, as applicable, pursuant to the terms of the real estate lease and equipment lease agreements; | |
• | We and Alcan have access to, and use of, property and assets that are common to each of our respective operations at the Sierre facility, pursuant to the terms of the access and easement agreement; | |
• | Alcan agreed to supply us with all our requirements of aluminum rolling ingots for the production of aluminum rolled products at the Sierre facility for a term of ten years, subject to availability, and provided the aluminum rolling slabs meet applicable quality standards and are competitively priced, pursuant to the terms of the metal supply agreement; | |
• | Alcan provides certain services to us at the Sierre facility, including services consisting of or relating to environmental testing, chemical laboratory services, utilities, waste disposal, facility safety and security, medical services, employee food service and rail transportation, and we provide certain services to Alcan at the Sierre facility, including services consisting of or relating to hydraulic and mechanical maintenance, roll grinding and recycled process material for atwo-year renewable term, pursuant to the terms of the shared services agreement; and | |
• | Alcan retains access to all of the total plate production capacity of the Sierre facility, which represents a portion of Sierre’s total hot mill production capacity. The formula for the price to be charged to Alcan for products from the Sierre hot mill is based upon its proportionate share of the fixed production costs relating to the Sierre hot mill (determined by reference to actual production hours utilized by Alcan) and the variable production costs (determined by reference to the volume of product produced for Alcan). Under the tolling agreement, we have agreed to maintain the pre-spin-off standards of maintenance, management and operation of the Sierre hot mill. |
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Item 1A. | Risk Factors |
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• | increases in costs of natural gas; | |
• | significant increases in costs of supplied electricity or fuel oil related to transportation; |
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• | interruptions in energy supply due to equipment failure or other causes; and | |
• | the inability to extend energy supply contracts upon expiration on economical terms. |
• | limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our growth strategy, or other general corporate purposes; | |
• | limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service the debt; | |
• | increasing our vulnerability to general adverse economic and industry conditions; | |
• | placing us at a competitive disadvantage as compared to our competitors that have less leverage; | |
• | limiting our ability to capitalize on business opportunities and to react to competitive pressures and adverse changes in government regulation; | |
• | limiting our ability or increasing the costs to refinance indebtedness; and | |
• | limiting our ability to enter into marketing, hedging, optimization and trading transactions by reducing the number of counterparties with whom we can enter into such transactions as well as the volume of those transactions. |
• | incur additional debt and provide additional guarantees; |
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• | pay dividends beyond certain amounts and make other restricted payments; | |
• | create or permit certain liens; | |
• | make certain asset sales; | |
• | use the proceeds from the sales of assets and subsidiary stock; | |
• | create or permit restrictions on the ability of our restricted subsidiaries to pay dividends or make other distributions to us; | |
• | engage in certain transactions with affiliates; | |
• | enter into sale and leaseback transactions; | |
• | designate subsidiaries as unrestricted subsidiaries; and | |
• | consolidate, merge or transfer all or substantially all of our assets or the assets of our restricted subsidiaries. |
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Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
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Location | Plant Processes | Major End-Use Markets/Applications | ||
Berea, Kentucky | Recycling | Recycled ingot | ||
Burnaby, British Columbia | Finishing | Foil containers | ||
Fairmont, West Virginia | Cold rolling, finishing | Foil, HVAC material | ||
Greensboro, Georgia | Recycling | Recycled ingot | ||
Kingston, Ontario | Cold rolling, finishing | Automotive, construction/industrial | ||
Logan, Kentucky(i) | Hot rolling, cold rolling, finishing | Can stock | ||
Louisville, Kentucky(ii) | Cold rolling, finishing | Foil, converter foil | ||
Oswego, New York | Hot rolling, cold rolling, recycling, finishing | Can stock, construction/industrial, semi-finished coil | ||
Saguenay, Quebec | Continuous casting | Semi-finished coil | ||
Terre Haute, Indiana | Cold rolling, finishing | Foil | ||
Toronto, Ontario | Finishing | Foil, foil containers | ||
Warren, Ohio | Coating | Can end stock |
(i) | We own 40% of the outstanding common shares of Logan Aluminum Inc., but we have made subsequent equipment investments such that we now have rights to approximately 64% of Logan’s total production capacity. | |
(ii) | The Louisville, Kentucky plant is scheduled to be closed by June 30, 2008. |
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Location | Plant Processes | Major End-Use Markets/Applications | ||
Berlin, Germany | Converting | Packaging | ||
Bresso, Italy | Finishing | Painted sheet | ||
Bridgnorth, United Kingdom | Cold rolling, finishing, converting | Foil, packaging | ||
Dudelange, Luxembourg | Continuous casting, cold rolling, finishing | Foil | ||
Göttingen, Germany | Cold rolling, finishing | Can end, lithographic, painted sheet | ||
Latchford, United Kingdom | Recycling | Sheet ingot from recycled metal | ||
Ludenscheid, Germany(i) | Cold rolling, finishing, converting | Foil, packaging | ||
Nachterstedt, Germany | Cold rolling, finishing | Automotive, industrial | ||
Norf, Germany(ii) | Hot rolling, cold rolling | Can stock, foilstock, reroll | ||
Ohle, Germany(i) | Cold rolling, finishing, converting | Foil, packaging | ||
Pieve, Italy | Continuous casting, cold rolling | Paintstock, industrial | ||
Rogerstone, United Kingdom | Hot rolling, cold rolling | Foilstock, paintstock, reroll, industrial | ||
Rugles, France | Continuous casting, cold rolling, finishing | Foil | ||
Sierre, Switzerland(iii) | Hot rolling, cold rolling | Automotive sheet, industrial |
(i) | We reorganized our plants in Ohle and Ludenscheid, Germany, including the closure of two non-core business lines located within those facilities as of May 2006. | |
(ii) | Operated as a 50/50 joint venture between us and Hydro Aluminium Deutschland GmbH (Hydro). | |
(iii) | We have entered into an agreement with Alcan pursuant to which Alcan retains access to the plate production capacity, which represents a portion of the total production capacity of the Sierre hot mill. |
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Location | Plant Processes | Major End-Use Markets/Applications | ||
Bukit Raja, Malaysia(i) | Continuous casting, cold rolling | Construction/industrial, foilstock foil, finstock | ||
Ulsan, Korea(ii) | Hot rolling, cold rolling, recycling | Can stock, construction/industrial, foilstock, recycled ingot | ||
Yeongju, Korea(iii) | Hot rolling, cold rolling | Can stock, construction/industrial, foilstock |
(i) | Ownership of the Bukit Raja plant corresponds to our 58% equity interest in Aluminium Company of Malaysia Berhad. | |
(ii) | We hold a 68% equity interest in the Ulsan plant. | |
(iii) | We hold a 68% equity interest in the Yeongju plant. |
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Location | Plant Processes | Major End-Use Markets/Applications | ||
Pindamonhangaba, Brazil | Hot rolling, cold rolling, recycling | Construction/industrial, can stock, foilstock, recycled ingot, foundry ingot, forge stock | ||
Utinga, Brazil | Finishing | Foil | ||
Ouro Preto, Brazil | Alumina refining, smelting | Primary aluminum (sheet ingot and billets) | ||
Aratu, Brazil | Smelting | Primary aluminum (sheet ingot and billets) |
Item 3. | Legal Proceedings |
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Item 4. | Submission of Matters to a Vote of Security Holders |
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Item 5. | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |
Item 6. | Selected Financial Data |
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• | our consolidated statements of operations for: |
• | the periods from May 16, 2007 through March 31, 2008 and from April 1, 2007 through May 15, 2007; | |
• | the three months ended March 31, 2007; and | |
• | the year ended December 31, 2006; |
• | our consolidated and combined statement of operations for the year ended December 31, 2005 and | |
• | our consolidated balance sheets as of March 31, 2008 and 2007. |
• | our combined statements of operations for the years ended December 31, 2004 and 2003; | |
• | our consolidated balance sheets as of December 31, 2006 and 2005; and | |
• | our combined balance sheets as of December 31, 2004 and 2003. |
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May 16, | April 1, | Three | |||||||||||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||||
Net sales | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | $ | 8,363 | $ | 7,755 | $ | 6,221 | |||||||||||||||
Net income (loss) | $ | 28 | $ | (97 | ) | $ | (64 | ) | $ | (275 | ) | $ | 90 | $ | 55 | $ | 157 | ||||||||||||
Dividends per common share | $ | — | $ | — | $ | — | $ | 0.20 | $ | 0.36 | $ | — | $ | — |
As of | As of | ||||||||||||||||||||||||
March 31, | March 31, | As of December 31, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | ||||||||||||||||||||
Total assets | $ | 10,946 | $ | 5,970 | $ | 5,792 | $ | 5,476 | $ | 5,954 | $ | 6,316 | |||||||||||||
Long-term debt (including current portion) | $ | 2,575 | $ | 2,300 | $ | 2,302 | $ | 2,603 | $ | 2,737 | $ | 1,659 | |||||||||||||
Short-term borrowings | $ | 115 | $ | 245 | $ | 133 | $ | 27 | $ | 541 | $ | 964 | |||||||||||||
Cash and cash equivalents | $ | 326 | $ | 128 | $ | 73 | $ | 100 | $ | 31 | $ | 27 | |||||||||||||
Shareholders’/invested equity | $ | 3,538 | $ | 175 | $ | 195 | $ | 433 | $ | 555 | $ | 1,974 |
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May 16, | April 1, | Three | |||||||||||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||||
Restructuring charges — net | $ | 6 | $ | 1 | $ | 9 | $ | 19 | $ | 10 | $ | 20 | $ | 8 | |||||||||||||||
Impairment charges on long-lived assets | 1 | — | 8 | — | 7 | 75 | 4 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | General; |
• | Acquisition of Novelis Common Stock and Predecessor and Successor Reporting; and | |
• | Change in Fiscal Year End |
• | Note Regarding Combined Results of Operations and Selected Financial and Operating Information Due to our Acquisition by Hindalco; | |
• | Highlights; | |
• | Our Business: |
• | Business Model and Key Concepts; | |
• | Challenges; | |
• | Key Trends and Business Outlook; and | |
• | Spin-off from Alcan, Inc. (Alcan) (in October 2007, the Rio Tinto Group purchased all of the outstanding shares of Alcan, our former parent, and was renamed Rio Tinto Alcan). |
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• | Operations and Segment Review — an analysis of our consolidated and combined results of operations, on both a consolidated and combined and on a segment basis; | |
• | Liquidity and Capital Resources — an analysis of the effect of our operating, financing and investing activities on our liquidity and capital resources; | |
• | Off-Balance Sheet Arrangements — a discussion of such commitments and arrangements; | |
• | Contractual Obligations — a summary of our aggregate contractual obligations; | |
• | Dividends — our dividend history; | |
• | Environment, Health and Safety — our mission and commitment to environment, health and safety management; | |
• | Critical Accounting Policies and Estimates — a discussion of accounting policies that require significant judgments and estimates; and | |
• | Recently Issued Accounting Standards — a summary and discussion of our plans for the adoption of new accounting standards relevant to us. |
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May 16, 2007 | April 1, 2007 | ||||||||||||
Through | Through | Year Ended | |||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2008 | |||||||||||
Successor | Predecessor | Combined | |||||||||||
Combined Shipments: | |||||||||||||
Shipments (kt)(A): | |||||||||||||
Rolled products(B) | 2,640 | 348 | 2,988 | ||||||||||
Ingot products(C) | 147 | 15 | 162 | ||||||||||
Total shipments | 2,787 | 363 | 3,150 | ||||||||||
(A) | One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. | |
(B) | Rolled products include tolling (the conversion of customer-owned metal). | |
(C) | Ingot products include primary ingot in Brazil, foundry products in Korea and Europe, secondary ingot in Europe and other miscellaneous recyclable aluminum. |
May 16, 2007 | April 1, 2007 | ||||||||||||
Through | Through | Year Ended | |||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2008 | |||||||||||
Successor | Predecessor | Combined | |||||||||||
Combined Results of Operations ($ in millions): | |||||||||||||
Net sales | $ | 9,965 | $ | 1,281 | $ | 11,246 | |||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 9,042 | 1,205 | 10,247 | ||||||||||
Selling, general and administrative expenses | 319 | 95 | 414 | ||||||||||
Depreciation and amortization | 367 | 28 | 395 | ||||||||||
Research and development expenses | 46 | 6 | 52 | ||||||||||
Interest expense and amortization of debt issuance costs — net | 173 | 26 | 199 | ||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (22 | ) | (20 | ) | (42 | ) | |||||||
Equity in net (income) loss of non-consolidated affiliates | 4 | (1 | ) | 3 | |||||||||
Sale transaction fees | — | 32 | 32 | ||||||||||
Other (income) expenses — net | — | 4 | 4 | ||||||||||
9,929 | 1,375 | 11,304 | |||||||||||
Income (loss) before provision (benefit) for taxes on income (loss) and minority interests’ share | 36 | (94 | ) | (58 | ) | ||||||||
Provision (benefit) for taxes on income (loss) | 3 | 4 | 7 | ||||||||||
Income (loss) before minority interests’ share | 33 | (98 | ) | (65 | ) | ||||||||
Minority interests’ share | (5 | ) | 1 | (4 | ) | ||||||||
Net income (loss) | $ | 28 | $ | (97 | ) | $ | (69 | ) | |||||
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• | Shipments and selected financial information are as follows (in millions, except shipments, which are in kt): |
Year Ended | ||||||||||||||||
March 31, | December 31, | |||||||||||||||
2008 | 2007 | 2006 | 2005 | |||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||
Shipments (kt): | ||||||||||||||||
Rolled products | 2,988 | 2,951 | 2,960 | 2,873 | ||||||||||||
Ingot products | 162 | 162 | 163 | 214 | ||||||||||||
Total shipments | 3,150 | 3,113 | 3,123 | 3,087 | ||||||||||||
Net sales | $ | 11,246 | $ | 10,160 | $ | 9,849 | $ | 8,363 | ||||||||
Net income (loss) | $ | (69 | ) | $ | (265 | ) | $ | (275 | ) | $ | 90 | |||||
Net increase (decrease) in total debt(A) | $ | 82 | $ | 18 | $ | (195 | ) | $ | (321 | ) |
(A) | Net increase (decrease) in total debt is measured comparing the period-end amounts of our total outstanding debt (including short-term borrowings) as shown in our consolidated balance sheets. For the year ended March 31, 2008, the net increase in total debt excludes unamortized fair value adjustments recorded as part of the Arrangement. For the year ended December 31, 2005, the net decrease in total debt is measured as the reduction from our total debt of $2.951 billion as of January 6, 2005, the date of our spin-off from Alcan. |
• | Rolled products shipments increased in fiscal 2008 primarily due to increased shipments in the can market in Europe, South America and Asia. The increase in demand for can products was partially offset by decreased shipments in the industrial and automotive markets in North America and Europe. | |
• | London Metal Exchange (LME) pricing for aluminum (metal) was an average of 1.5% lower during the year ended March 31, 2008 than the comparable prior year period. Cash prices have trended up at the end of this fiscal year. As of March 31, 2008 and 2007; December 31, 2007 and 2006, cash prices per metric tonne were $2,935 and $2,792; $2,850 and $2,285, respectively. This trend positively impacted our fiscal 2008 fourth quarter results as described more fully under Metal Price Lag below. | |
• | Net sales for the year ended March 31, 2008 increased from the prior year primarily due to (1) increased conversion premium, (2) strengthening of the euro against the U.S. dollar, (3) accretion of fair value reserves associated with the sales contracts subject to metal price ceilings, (4) metal price lag, (5) increased volume and (6) a reduction of sales subject to metal price ceilings. These metal price ceilings prevent us from passing metal price increases above a specified level through to certain customers. During the years ended March 31, 2008 and 2007, we were unable to pass through approximately $230 million and $460 million, respectively, of metal price increases associated with sales under these contracts for a net favorable impact of approximately $230 million. |
• | During the years ended March 31, 2008 and 2007; December 31, 2006 and 2005, we recognized pre-tax gains of $42 million and $39 million; $63 million and $269 million, respectively, related to the change in fair value of derivative instruments. For segment reporting purposes, Segment Income |
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(defined in Operating Segment Review below) includes approximately $32 million and $228 million; $249 million and $83 million of cash-settled derivative gains for the years ended March 31, 2008 and 2007; December 31, 2006 and 2005, respectively. |
• | Compared to the year ended March 31, 2007, our net loss for the year ended March 31, 2008 was impacted by $43 million of incremental stock compensation expense associated with the Arrangement and $21 million of incremental income associated with push-down accounting and the allocation of purchase price. | |
• | As of March 31, 2008, our total debt increased by $82 million from the prior year (excluding unamortized fair value adjustments recorded as part of the acquisition by Hindalco). The increase in debt was driven primarily by costs associated with or triggered by the Arrangement that were in excess of the additional $92 million of equity contributed by Hindalco as well as increased cash and cash equivalents as compared to the prior year by $198 million. | |
• | As described more fully in Note 2 — Acquisition of Novelis Common Stock in the accompanying consolidated and combined financial statements, the consideration paid by Hindalco to acquire Novelis has been pushed down to us and allocated to the assets acquired and liabilities assumed based on our estimates of fair value, using methodologies and assumptions that we believe are reasonable. This allocation of fair value results in additional charges or income to our post-acquisition consolidated statements of operations. A summary of the impacts of these items on our pre-tax income and Segment Income for our fiscal year ended March 31, 2008 is shown below (in millions). |
Increase (Decrease) to: | ||||||||
Pre-Tax | Segment | |||||||
Income | Income(A) | |||||||
Depreciation and amortization | $ | (162 | ) | $ | — | |||
Can ceiling contracts | 270 | 270 | ||||||
Other favorable/unfavorable contracts | (8 | ) | (8 | ) | ||||
In-process research and development | (9 | ) | (9 | ) | ||||
Inventory | (35 | ) | (35 | ) | ||||
Equity investments | (38 | ) | — | |||||
Fair value of debt | 3 | — | ||||||
Total impact | $ | 21 | $ | 218 | ||||
(A) | We use Segment Income to measure the profitability and financial performance of our operating segments, as discussed below in “OPERATING SEGMENT REVIEW FOR THE YEAR ENDED MARCH 31, 2008 (TWELVE MONTHS COMBINED NON-GAAP) COMPARED TO THE YEAR ENDED MARCH 31, 2007 (TWELVE MONTHS COMBINED NON-GAAP)” and “FOR THE YEAR ENDED DECEMBER 31, 2006 COMPARED TO THE YEAR ENDED DECEMBER 31, 2005.” |
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Percent Change | ||||||||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||
2008 | 2006 | |||||||||||||||||||||||
Year Ended | versus | versus | ||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
Shipments (kt): | ||||||||||||||||||||||||
Rolled products, including tolling (the conversion of customer-owned metal) | 2,988 | 2,951 | 2,960 | 2,873 | 1.3 | % | 3.0 | % | ||||||||||||||||
Ingot products, including primary and secondary ingot and recyclable aluminum | 162 | 162 | 163 | 214 | — | % | (23.8 | )% | ||||||||||||||||
Total shipments | 3,150 | 3,113 | 3,123 | 3,087 | 1.2 | % | 1.2 | % | ||||||||||||||||
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Percent Change | ||||||||||||||||||||||||
Year | ||||||||||||||||||||||||
Ended | Year Ended | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||
2008 | 2006 | |||||||||||||||||||||||
Year Ended | versus | versus | ||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
Results of Operations ($ in millions): | ||||||||||||||||||||||||
Net sales | $ | 11,246 | $ | 10,160 | $ | 9,849 | $ | 8,363 | 10.7 | % | 17.8 | % | ||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 10,247 | 9,629 | 9,317 | 7,570 | 6.4 | % | 23.1 | % | ||||||||||||||||
Selling, general and administrative expenses | 414 | 417 | 410 | 352 | (0.7 | )% | 16.5 | % | ||||||||||||||||
Depreciation and amortization | 395 | 233 | 233 | 230 | 69.5 | % | 1.3 | % | ||||||||||||||||
Research and development expenses | 52 | 39 | 40 | 41 | 33.3 | % | (2.4 | )% | ||||||||||||||||
Interest expense and amortization of debt issuance costs — net | 199 | 208 | 206 | 194 | (4.3 | )% | 6.2 | % | ||||||||||||||||
Gain (loss) on change in fair value of derivative instruments — net | (42 | ) | (39 | ) | (63 | ) | (269 | ) | 7.7 | % | (76.6 | )% | ||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 3 | (16 | ) | (16 | ) | (6 | ) | (118.8 | )% | 166.7 | % | |||||||||||||
Sale transaction fees | 32 | 32 | — | — | — | % | — | % | ||||||||||||||||
Litigation settlement — net of insurance recoveries | — | — | — | 40 | — | % | n.m. | |||||||||||||||||
Other (income) expenses — net | 4 | 18 | — | (13 | ) | (77.8 | )% | n.m. | ||||||||||||||||
11,304 | 10,521 | 10,127 | 8,139 | 7.4 | % | 24.4 | % | |||||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss), minority interests’ share and cumulative effect of accounting change | (58 | ) | (361 | ) | (278 | ) | 224 | (83.9 | )% | (224.1 | )% | |||||||||||||
Provision (benefit) for taxes on income (loss) | 7 | (99 | ) | (4 | ) | 107 | (107.1 | )% | (103.7 | )% | ||||||||||||||
Income (loss) before minority interests’ share and cumulative effect of accounting change | (65 | ) | (262 | ) | (274 | ) | 117 | (75.2 | )% | (334.2 | )% | |||||||||||||
Minority interests’ share | (4 | ) | (3 | ) | (1 | ) | (21 | ) | 33.3 | % | (95.2 | )% | ||||||||||||
Net income (loss) before cumulative effect of accounting change | (69 | ) | (265 | ) | (275 | ) | 96 | (74.0 | )% | (386.5 | )% | |||||||||||||
Cumulative effect of accounting change — net of tax | — | — | — | (6 | ) | — | % | n.m. | ||||||||||||||||
Net income (loss) | $ | (69 | ) | $ | (265 | ) | $ | (275 | ) | $ | 90 | (74.0 | )% | (405.6 | )% | |||||||||
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Percent Change | ||||||||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||
2008 | 2006 | |||||||||||||||||||||||
Year Ended | versus | versus | ||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
London Metal Exchange Prices | ||||||||||||||||||||||||
Aluminum (per metric tonne, and presented in U.S. dollars): | ||||||||||||||||||||||||
Closing cash price as of end of period | $ | 2,935 | $ | 2,792 | $ | 2,850 | $ | 2,285 | 5.1 | % | 24.7 | % | ||||||||||||
Average cash price during period | $ | 2,624 | $ | 2,665 | $ | 2,567 | $ | 1,897 | (1.5 | )% | 35.3 | % |
U.S. Dollar | ||||||||||||||||||||||||
Strengthen/(Weaken) | ||||||||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||
2008 | 2006 | |||||||||||||||||||||||
Year Ended | versus | versus | ||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
Federal Reserve Bank of New York Exchange Rates | ||||||||||||||||||||||||
Average of the month end rates: | ||||||||||||||||||||||||
U.S. dollar per euro | 1.432 | 1.294 | 1.266 | 1.240 | (10.7 | )% | (2.1 | )% | ||||||||||||||||
Brazilian real per U.S. dollar | 1.837 | 2.148 | 2.164 | 2.407 | (14.5 | )% | (10.1 | )% | ||||||||||||||||
South Korean won per U.S. dollar | 932 | 944 | 950 | 1,023 | (1.3 | )% | (7.1 | )% | ||||||||||||||||
Canadian dollar per U.S. dollar | 1.025 | 1.135 | 1.131 | 1.209 | (9.7 | )% | (6.5 | )% |
Percent Change | ||||||||||||||||||||||||
Year Ended | Year Ended | |||||||||||||||||||||||
March 31, | December 31, | |||||||||||||||||||||||
2008 | 2006 | |||||||||||||||||||||||
Year Ended | versus | versus | ||||||||||||||||||||||
March 31, | December 31, | March 31, | December 31, | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
New York Mercantile Exchange — Energy Price Quotations | ||||||||||||||||||||||||
Light Sweet Crude — Average settlement price (per barrel) | $ | 78.80 | $ | 64.02 | $ | 65.28 | $ | 50.03 | 23.1 | % | 30.5 | % | ||||||||||||
Natural Gas — Average Henry Hub contract settlement price (per MMBTU)(A) | $ | 7.18 | $ | 6.67 | $ | 7.23 | $ | 8.62 | 7.6 | % | (16.1 | )% |
(A) | One MMBTU is the equivalent of one decatherm, or one million British Thermal Units (BTUs). |
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Year Ended March 31, | ||||||||||||||||
2008 | 2007 | |||||||||||||||
$ in | % of | $ in | % of | |||||||||||||
millions | net sales | millions | net sales | |||||||||||||
Combined | Predecessor | |||||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | $ | 10,247 | 91.1 | % | $ | 9,629 | 94.8 | % | ||||||||
Selling, general and administrative expenses | 414 | 3.7 | % | 417 | 4.1 | % | ||||||||||
Depreciation and amortization | 395 | 3.5 | % | 233 | 2.3 | % | ||||||||||
Research and development expenses | 52 | 0.5 | % | 39 | 0.4 | % | ||||||||||
Interest expense and amortization of debt issuance costs — net | 199 | 1.8 | % | 208 | 2.0 | % | ||||||||||
Gain (loss) on change in fair value of derivative instruments — net | (42 | ) | (0.4 | )% | (39 | ) | (0.4 | )% | ||||||||
Equity in net (income) loss of non-consolidated affiliates | 3 | — | % | (16 | ) | (0.2 | )% | |||||||||
Sale transaction fees | 32 | 0.3 | % | 32 | 0.3 | % | ||||||||||
Other (income) expenses — net | 4 | — | % | 18 | 0.2 | % | ||||||||||
$ | 11,304 | 100.5 | % | $ | 10,521 | 103.5 | % | |||||||||
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Other (Income) | ||||
Expenses — Net | ||||
Other (income) expenses — net for the year ended March 31, 2007 | $ | 18 | ||
Restructuring charges — net of $7 million in 2008 compared to $27 million in 2007 | (20 | ) | ||
Exchange losses of $2 million in 2008 compared to $3 million in 2007 | (1 | ) | ||
Impairment charges on long-lived assets of $1 million in 2008 compared to $8 million in 2007 | (7 | ) | ||
Gain on sale of equity interest in non-consolidated affiliate in 2007 only | 15 | |||
Gain on sale of rights to develop and operate hydroelectric power plants in 2007 only | 11 | |||
Losses on disposals of property, plant and equipment — net in 2007 only | (6 | ) | ||
Other — net | (6 | ) | ||
Other (income) expenses — net for the year ended March 31, 2008 | $ | 4 | ||
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Year Ended December 31, | ||||||||||||||||
2006 | 2005 | |||||||||||||||
$ in | % of | $ in | % of | |||||||||||||
millions | net sales | millions | net sales | |||||||||||||
Predecessor | Predecessor | |||||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | $ | 9,317 | 94.6 | % | $ | 7,570 | 90.5 | % | ||||||||
Selling, general and administrative expenses | 410 | 4.1 | % | 352 | 4.2 | % | ||||||||||
Depreciation and amortization | 233 | 2.4 | % | 230 | 2.8 | % | ||||||||||
Research and development expenses | 40 | 0.4 | % | 41 | 0.5 | % | ||||||||||
Interest expense and amortization of debt issuance costs — net | 206 | 2.1 | % | 194 | 2.3 | % | ||||||||||
Gain (loss) on change in fair value of derivative instruments — net | (63 | ) | (0.6 | )% | (269 | ) | (3.2 | )% | ||||||||
Equity in net (income) loss of non-consolidated affiliates | (16 | ) | (0.2 | )% | (6 | ) | (0.1 | )% | ||||||||
Litigation settlement — net of insurance recoveries | — | — | % | 40 | 0.5 | % | ||||||||||
Other (income) expenses — net | — | — | % | (13 | ) | (0.2 | )% | |||||||||
$ | 10,127 | 102.8 | % | $ | 8,139 | 97.3 | % | |||||||||
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Other (Income) | ||||
Expenses — Net | ||||
Other (income) expenses — net for the year ended December 31, 2005 | $ | (13 | ) | |
Restructuring charges — net of $19 million in 2006 compared to $10 million in 2005 | 9 | |||
Exchange gains of $8 million in 2006 compared to $6 million in 2005 | (2 | ) | ||
Impairment charges on long lived assets in 2005 only | (7 | ) | ||
Loss on disposal of business in 2006 only | 15 | |||
Gain on sale of equity interest in non-consolidated affiliate in 2006 only | (15 | ) | ||
Gain on sale of rights to develop and operate hydroelectric power plants in 2006 only | (11 | ) | ||
Losses on disposals of property, plant and equipment — net of $5 million 2006 compared to gains of $17 million in 2005 | 22 | |||
Other — net | 2 | |||
Other (income) expenses — net for the year ended December 31, 2006 | $ | — | ||
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May 16, 2007 | April 1, 2007 | ||||||||||||
Through | Through | Year Ended | |||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2008 | |||||||||||
Successor | Predecessor | Combined | |||||||||||
Combined Net sales by Operating Segment: | |||||||||||||
North America | $ | 3,655 | $ | 446 | $ | 4,101 | |||||||
Europe | 3,828 | 510 | 4,338 | ||||||||||
Asia | 1,602 | 216 | 1,818 | ||||||||||
South America | 885 | 109 | 994 | ||||||||||
Total Combined Net sales(A) | $ | 9,970 | $ | 1,281 | $ | 11,251 | |||||||
(A) | Combined Net sales do not include the elimination of results from our non-consolidated affiliates on a proportionately consolidated basis. The Net sales attributable to our non-consolidated affiliates were $5 million for the period from May 16, 2007 through March 31, 2008 and less than $1 million for the period from April 1, 2007 through May 15, 2007. |
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May 16, 2007 | April 1, 2007 | ||||||||||||
Through | Through | Year Ended | |||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2008 | |||||||||||
Successor | Predecessor | Combined | |||||||||||
Combined Results by Operating Segment: | |||||||||||||
Segment Income (Loss) | |||||||||||||
North America | $ | 266 | $ | (24 | ) | $ | 242 | ||||||
Europe | 241 | 32 | 273 | ||||||||||
Asia | 46 | 6 | 52 | ||||||||||
South America | 143 | 18 | 161 | ||||||||||
Total Segment Income (Loss) | 696 | 32 | 728 | ||||||||||
Interest expense and amortization of debt issuance costs — net | (173 | ) | (26 | ) | (199 | ) | |||||||
Unrealized gains (losses) on change in fair value of derivative instruments — net(A) | (8 | ) | 5 | (3 | ) | ||||||||
Realized gains (losses) on corporate derivative instruments — net | 16 | (3 | ) | 13 | |||||||||
Depreciation and amortization | (367 | ) | (28 | ) | (395 | ) | |||||||
Impairment charges on long-lived assets | (1 | ) | — | (1 | ) | ||||||||
Minority interests’ share | (5 | ) | 1 | (4 | ) | ||||||||
Adjustment to eliminate proportional consolidation(B) | (65 | ) | (7 | ) | (72 | ) | |||||||
Restructuring charges — net | (6 | ) | (1 | ) | (7 | ) | |||||||
Corporate selling, general and administrative expenses | (55 | ) | (35 | ) | (90 | ) | |||||||
Other costs — net | (1 | ) | 1 | — | |||||||||
Sale transaction fees | — | (32 | ) | (32 | ) | ||||||||
Benefit (provision) for taxes on income (loss) | (3 | ) | (4 | ) | (7 | ) | |||||||
Net income (loss) | $ | 28 | $ | (97 | ) | $ | (69 | ) | |||||
(A) | Unrealized gains (losses) on change in fair value of derivative instruments — net represents the portion of gains (losses) that were not settled in cash during the period. |
(B) | Our financial information for our segments (including Segment Income) includes the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. However, under GAAP, these non-consolidated affiliates are accounted for using the equity method of accounting. Therefore, in order to reconcile Total Segment Income to Net income (loss), the proportional Segment Income of these non-consolidated affiliates is removed from Total Segment Income, net of our share of their net after-tax results, which is reported as Equity in net (income) loss of non-consolidated affiliates on our consolidated and combined statements of operations. See Note 8 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions in the accompanying consolidated and combined financial statements for further information about these non-consolidated affiliates. |
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Year Ended | ||||||||||||||||
March 31, | December 31, | |||||||||||||||
2008 | 2007 | 2006 | 2005 | |||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||
Segment Income (Loss) | ||||||||||||||||
North America | $ | 242 | $ | (54 | ) | $ | 20 | $ | 193 | |||||||
Europe | 273 | 276 | 245 | 195 | ||||||||||||
Asia | 52 | 72 | 82 | 106 | ||||||||||||
South America | 161 | 182 | 165 | 112 | ||||||||||||
Total Segment Income (Loss) | 728 | 476 | 512 | 606 | ||||||||||||
Interest expense and amortization of debt issuance costs — net | (199 | ) | (208 | ) | (206 | ) | (194 | ) | ||||||||
Unrealized gains (losses) on change in fair value of derivative instruments — net | (3 | ) | (152 | ) | (151 | ) | 141 | |||||||||
Realized gains (losses) on corporate derivative instruments — net | 13 | (37 | ) | (35 | ) | 45 | ||||||||||
Depreciation and amortization | (395 | ) | (233 | ) | (233 | ) | (230 | ) | ||||||||
Impairment charges on long-lived assets | (1 | ) | (8 | ) | — | (7 | ) | |||||||||
Minority interests’ share | (4 | ) | (3 | ) | (1 | ) | (21 | ) | ||||||||
Adjustment to eliminate proportional consolidation | (72 | ) | (36 | ) | (35 | ) | (36 | ) | ||||||||
Restructuring charges — net | (7 | ) | (27 | ) | (19 | ) | (10 | ) | ||||||||
Gain (loss) on disposals of property, plant and equipment and businesses — net | — | (6 | ) | (20 | ) | 17 | ||||||||||
Corporate selling, general and administrative expenses | (90 | ) | (127 | ) | (128 | ) | (78 | ) | ||||||||
Other costs — net | — | 29 | 37 | 10 | ||||||||||||
Litigation settlement — net of insurance recoveries | — | — | — | (40 | ) | |||||||||||
Sale transaction fees | (32 | ) | (32 | ) | — | — | ||||||||||
Benefit (provision) for taxes on income (loss) | (7 | ) | 99 | 4 | (107 | ) | ||||||||||
Cumulative effect of accounting change — net of tax | — | — | — | (6 | ) | |||||||||||
Net income (loss) | $ | (69 | ) | $ | (265 | ) | $ | (275 | ) | $ | 90 | |||||
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Percent Change | ||||||||||||||||||||||||
Year Ended | 2008 | 2006 | ||||||||||||||||||||||
March 31, | December 31, | versus | versus | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||
Shipments (kt): | ||||||||||||||||||||||||
Rolled products | 1,102 | 1,135 | 1,156 | 1,119 | (2.9 | )% | 3.3 | % | ||||||||||||||||
Ingot products | 64 | 74 | 73 | 75 | (13.5 | )% | (2.7 | )% | ||||||||||||||||
Total shipments | 1,166 | 1,209 | 1,229 | 1,194 | (3.6 | )% | 2.9 | % | ||||||||||||||||
Net sales | $ | 4,101 | $ | 3,721 | $ | 3,691 | $ | 3,265 | 10.2 | % | 13.0 | % | ||||||||||||
Segment Income (Loss) | $ | 242 | $ | (54 | ) | $ | 20 | $ | 193 | 548.1 | % | (89.6 | )% | |||||||||||
Total assets | $ | 3,892 | $ | 1,566 | $ | 1,476 | $ | 1,547 | 148.5 | % | (4.6 | )% |
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Percent Change | ||||||||||||||||||||||||
Year Ended | 2008 | 2006 | ||||||||||||||||||||||
March 31, | December 31, | versus | versus | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||
Shipments (kt): | ||||||||||||||||||||||||
Rolled products | 1,071 | 1,071 | 1,055 | 1,009 | — | % | 4.6 | % | ||||||||||||||||
Ingot products | 35 | 15 | 18 | 72 | 133.3 | % | (75.0 | )% | ||||||||||||||||
Total shipments | 1,106 | 1,086 | 1,073 | 1,081 | 1.8 | % | (0.7 | )% | ||||||||||||||||
Net sales | $ | 4,338 | $ | 3,851 | $ | 3,620 | $ | 3,093 | 12.6 | % | 17.0 | % | ||||||||||||
Segment Income | $ | 273 | $ | 276 | $ | 245 | $ | 195 | (1.1 | )% | 25.6 | % | ||||||||||||
Total assets | $ | 4,430 | $ | 2,543 | $ | 2,474 | $ | 2,139 | 74.2 | % | 15.7 | % |
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Percent Change | ||||||||||||||||||||||||
Year Ended | 2008 | 2006 | ||||||||||||||||||||||
March 31, | December 31, | versus | versus | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||
Shipments (kt): | ||||||||||||||||||||||||
Rolled products | 491 | 460 | 471 | 483 | 6.7 | % | (2.5 | )% | ||||||||||||||||
Ingot products | 39 | 45 | 45 | 41 | (13.3 | )% | 9.8 | % | ||||||||||||||||
Total shipments | 530 | 505 | 516 | 524 | 5.0 | % | (1.5 | )% | ||||||||||||||||
Net sales | $ | 1,818 | $ | 1,711 | $ | 1,692 | $ | 1,391 | 6.3 | % | 21.6 | % | ||||||||||||
Segment Income | $ | 52 | $ | 72 | $ | 82 | $ | 106 | (27.8 | )% | (22.6 | )% | ||||||||||||
Total assets | $ | 1,082 | $ | 1,110 | $ | 1,078 | $ | 1,002 | (2.5 | )% | 7.6 | % |
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Percent Change | ||||||||||||||||||||||||
Year Ended | 2008 | 2006 | ||||||||||||||||||||||
March 31, | December 31, | versus | versus | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||
Shipments (kt): | ||||||||||||||||||||||||
Rolled products | 324 | 285 | 278 | 261 | 13.7 | % | 6.5 | % | ||||||||||||||||
Ingot products | 24 | 28 | 27 | 27 | (14.3 | )% | — | % | ||||||||||||||||
Total shipments | 348 | 313 | 305 | 288 | 11.2 | % | 5.9 | % | ||||||||||||||||
Net sales | $ | 994 | $ | 889 | $ | 863 | $ | 630 | 11.8 | % | 37.0 | % | ||||||||||||
Segment Income | $ | 161 | $ | 182 | $ | 165 | $ | 112 | (11.5 | )% | 47.3 | % | ||||||||||||
Total assets | $ | 1,478 | $ | 821 | $ | 821 | $ | 790 | 80.0 | % | 3.9 | % |
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May 16, 2007 | April 1, 2007 | ||||||||||||
Through | Through | Year Ended | |||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2008 | |||||||||||
Successor | Predecessor | Combined | |||||||||||
OPERATING ACTIVITIES | |||||||||||||
Net cash provided by (used in) operating activities | $ | 405 | $ | (230 | ) | $ | 175 | ||||||
INVESTING ACTIVITIES | |||||||||||||
Capital expenditures | (185 | ) | (17 | ) | (202 | ) | |||||||
Proceeds from sales of assets | 8 | — | 8 | ||||||||||
Changes to investment in and advances to non-consolidated affiliates | 24 | 1 | 25 | ||||||||||
Proceeds from loans receivable — net — related parties | 18 | — | 18 | ||||||||||
Net proceeds from settlement of derivative instruments | 37 | 18 | 55 | ||||||||||
Net cash provided by (used in) investing activities | (98 | ) | 2 | (96 | ) | ||||||||
FINANCING ACTIVITIES | |||||||||||||
Proceeds from issuance of common stock | 92 | — | 92 | ||||||||||
Proceeds from issuance of debt | 1,100 | 150 | 1,250 | ||||||||||
Principal repayments | (1,009 | ) | (1 | ) | (1,010 | ) | |||||||
Short-term borrowings — net | (241 | ) | 60 | (181 | ) | ||||||||
Dividends — minority interests | (1 | ) | (7 | ) | (8 | ) | |||||||
Debt issuance costs | (37 | ) | (2 | ) | (39 | ) | |||||||
Proceeds from the exercise of stock options | — | 1 | 1 | ||||||||||
Net cash provided by (used in) financing activities | (96 | ) | 201 | 105 | |||||||||
Net increase (decrease) in cash and cash equivalents | 211 | (27 | ) | 184 | |||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | 13 | 1 | 14 | ||||||||||
Cash and cash equivalents — beginning of period | 102 | 128 | 128 | ||||||||||
Cash and cash equivalents — end of period | $ | 326 | $ | 102 | $ | 326 | |||||||
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Change Year | ||||||||||||||||||||||||
Year Ended | 2008 | 2006 | ||||||||||||||||||||||
March 31, | December 31, | versus | versus | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 175 | $ | (166 | ) | $ | 16 | $ | 449 | $ | 341 | $ | (433 | ) | ||||||||||
Dividends | (8 | ) | (10 | ) | (30 | ) | (34 | ) | 2 | 4 | ||||||||||||||
Capital expenditures | (202 | ) | (119 | ) | (116 | ) | (178 | ) | (83 | ) | 62 | |||||||||||||
Net proceeds from settlement of derivative instruments | 55 | 191 | 238 | 91 | (136 | ) | 147 | |||||||||||||||||
Free cash flow | $ | 20 | $ | (104 | ) | $ | 108 | $ | 328 | $ | 124 | $ | (220 | ) | ||||||||||
Ending cash and cash equivalents | $ | 326 | $ | 128 | $ | 73 | $ | 100 | $ | 198 | $ | (27 | ) | |||||||||||
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Change Year | ||||||||||||||||||||||||
Year Ended | 2008 | 2006 | ||||||||||||||||||||||
March 31, | December 31, | versus | versus | |||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2007 | 2005 | |||||||||||||||||||
Combined | Predecessor | Predecessor | ||||||||||||||||||||||
Net proceeds from settlement of derivative instruments | $ | 55 | $ | 191 | $ | 238 | $ | 91 | $ | (136 | ) | $ | 147 | |||||||||||
Capital expenditures | (202 | ) | (119 | ) | (116 | ) | (178 | ) | (83 | ) | 62 | |||||||||||||
Proceeds from loans receivable — net | 18 | 31 | 37 | 393 | (13 | ) | (356 | ) | ||||||||||||||||
Proceeds from sales of assets | 8 | 36 | 38 | 19 | (28 | ) | 19 | |||||||||||||||||
Payments related to disposal of business | — | — | (7 | ) | — | — | (7 | ) | ||||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | 25 | 2 | 3 | — | 23 | 3 | ||||||||||||||||||
Net cash provided by (used in) investing activities | $ | (96 | ) | $ | 141 | $ | 193 | $ | 325 | $ | (237 | ) | $ | (132 | ) | |||||||||
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Year Ended March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Cash and cash equivalents | $ | 326 | $ | 128 | |||||
Amount available under senior secured credit facilities | 582 | 234 | |||||||
Total estimated liquidity | $ | 908 | $ | 362 | |||||
• | any obligation under certain derivative instruments; | |
• | any obligation under certain guarantees or contracts; | |
• | a retained or contingent interest in assets transferred to an unconsolidated entity or similar entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets and | |
• | any obligation under a material variable interest held by the registrant in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the registrant, or engages in leasing, hedging or research and development services with the registrant. |
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Maturity | March 31, 2008 | |||||||||||||||
Dates | Net Fair | |||||||||||||||
(Fiscal Year) | Assets | Liabilities | Value | |||||||||||||
Successor: | ||||||||||||||||
Foreign exchange forward contracts | 2009 through 2012 | $ | 47 | $ | (116 | ) | $ | (69 | ) | |||||||
Cross-currency swaps | 2009 through 2015 | 19 | (189 | ) | (170 | ) | ||||||||||
Interest rate currency swaps | 2009 through 2011 | 4 | — | 4 | ||||||||||||
Interest rate swaps | 2009 through 2010 | — | (15 | ) | (15 | ) | ||||||||||
Aluminum forward contracts | 2009 through 2011 | 134 | (9 | ) | 125 | |||||||||||
Aluminum options | 2009 through 2011 | 1 | — | 1 | ||||||||||||
Electricity swap | 2017 | 14 | — | 14 | ||||||||||||
Embedded derivative instruments | 2009 | — | (20 | ) | (20 | ) | ||||||||||
Natural gas swaps | 2009 through 2010 | 5 | — | 5 | ||||||||||||
Total fair value | 224 | (349 | ) | (125 | ) | |||||||||||
Less: current portion | 203 | (148 | ) | 55 | ||||||||||||
Noncurrent portion | $ | 21 | $ | (201 | ) | $ | (180 | ) | ||||||||
Maturity | March 31, 2007 | |||||||||||||||
Dates | Net Fair | |||||||||||||||
(Fiscal Year) | Assets | Liabilities | Value | |||||||||||||
Predecessor: | ||||||||||||||||
Foreign exchange forward contracts | 2008 through 2012 | $ | 16 | $ | (20 | ) | $ | (4 | ) | |||||||
Interest rate swaps | 2008 | 2 | — | 2 | ||||||||||||
Cross-currency swaps | 2008 through 2015 | 6 | (90 | ) | (84 | ) | ||||||||||
Aluminum forward contracts | 2008 through 2010 | 60 | (8 | ) | 52 | |||||||||||
Aluminum options | 2008 | 1 | — | 1 | ||||||||||||
Electricity swap | 2017 | 60 | — | 60 | ||||||||||||
Embedded derivative instruments | 2008 | 1 | — | 1 | ||||||||||||
Natural gas swaps | 2008 | 1 | — | 1 | ||||||||||||
Total fair value | 147 | (118 | ) | 29 | ||||||||||||
Less: current portion | 92 | (33 | ) | 59 | ||||||||||||
Noncurrent portion | $ | 55 | $ | (85 | ) | $ | (30 | ) | ||||||||
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• | certain of our wholly-owned and majority-owned subsidiaries; and | |
• | Aluminium Norf GmbH, which is a fifty percent (50%) owned joint venture that does not meet the requirements for consolidation under FASB Interpretation No. 46 (Revised),Consolidation of Variable Interest Entities. |
Maximum | Liability | |||||||
Potential Future | Carrying | |||||||
Payment | Value | |||||||
Wholly-owned Subsidiaries | $ | 98 | $ | 67 | ||||
Aluminium Norf GmbH | 16 | — |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | |||||||||||||||||||
March 31, | May 15, | March 31, | Year Ended December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Receivables forfaited | $ | 507 | $ | 51 | $ | 68 | $ | 424 | $ | 285 | |||||||||||
Receivables factored | $ | 75 | $ | — | $ | 18 | $ | 71 | $ | 94 | |||||||||||
Forfaiting expense | $ | 6 | $ | 1 | $ | 1 | $ | 5 | $ | 2 | |||||||||||
Factoring expense | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Forfaited receivables outstanding | $ | 149 | $ | 75 | |||||
Factored receivables outstanding | $ | — | $ | — |
Less Than | More Than | |||||||||||||||||||
Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | ||||||||||||||||
Debt(A) | $ | 2,570 | $ | 126 | $ | 120 | $ | 20 | $ | 2,304 | ||||||||||
Interest on long-term debt(B) | 995 | 151 | 299 | 289 | 256 | |||||||||||||||
Capital leases(C) | 85 | 8 | 16 | 14 | 47 | |||||||||||||||
Operating leases(D) | 119 | 23 | 34 | 26 | 36 | |||||||||||||||
Purchase obligations(E) | 16,447 | 4,231 | 6,242 | 3,781 | 2,193 | |||||||||||||||
Unfunded pension plan benefits(F) | 215 | 17 | 35 | 39 | 124 | |||||||||||||||
Other post-employment benefits(F) | 117 | 8 | 17 | 21 | 71 | |||||||||||||||
Funded pension plans(F) | 35 | 35 | — | — | — | |||||||||||||||
Total | $ | 20,583 | $ | 4,599 | $ | 6,763 | $ | 4,190 | $ | 5,031 | ||||||||||
(A) | Includes only principal payments on our Senior Notes, term loans, revolving credit facilities and notes payable to banks and others. These amounts exclude payments under capital lease obligations. | |
(B) | Interest on our fixed rate debt is estimated using the stated interest rate. Interest on our variable rate debt is estimated using the rate in effect as of March 31, 2008 and includes the effect of current interest rate |
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swap agreements. Actual future interest payments may differ from these amounts based on changes in floating interest rates or other factors or events. These amounts include an estimate for unused commitment fees. Excluded from these amounts are interest related to capital lease obligations, the amortization of debt issuance and other costs related to indebtedness. | ||
(C) | Includes both principal and interest components of future minimum capital lease payments. Excluded from these amounts are insurance, taxes and maintenance associated with the property. | |
(D) | Includes the minimum lease payments for non-cancelable leases for property and equipment used in our operations. We do not have any operating leases with contingent rents. Excluded from these amounts are insurance, taxes and maintenance associated with the properties and equipment. |
(E) | Includes agreements to purchase goods (including raw materials and capital expenditures) and services that are enforceable and legally binding on us, and that specify all significant terms. Some of our raw material purchase contracts have minimum annual volume requirements. In these cases, we estimate our future purchase obligations using annual minimum volumes and costs per unit that are in effect as of March 31, 2008. Due to volatility in the cost of our raw materials, actual amounts paid in the future may differ from these amounts. Excluded from these amounts are the impact of any derivative instruments and any early contract termination fees, such as those typically present in energy contracts. | |
(F) | Obligations for postretirement benefit plans are estimated based on actuarial estimates using benefit assumptions for, among other factors, discount rates, expected long-term rates of return on assets, rates of compensation increases, and healthcare cost trends. Payments for unfunded pension plan benefits and other post-employment benefits are estimated through 2016. For funded pension plans, estimating the requirements beyond fiscal 2008 is not practical, as it depends on the performance of the plans’ investments, among other factors. |
Declaration Date | Record Date | Dividend/Share | Payment Date | |||||
March 1, 2005 | March 11, 2005 | $ | 0.09 | March 24, 2005 | ||||
April 22, 2005 | May 20, 2005 | $ | 0.09 | June 20, 2005 | ||||
July 27, 2005 | August 22, 2005 | $ | 0.09 | September 20, 2005 | ||||
October 28, 2005 | November 21, 2005 | $ | 0.09 | December 20, 2005 | ||||
February 23, 2006 | March 8, 2006 | $ | 0.09 | March 23, 2006 | ||||
April 27, 2006 | May 20, 2006 | $ | 0.09 | June 20, 2006 | ||||
August 28, 2006 | September 7, 2006 | $ | 0.01 | September 25, 2006 | ||||
October 26, 2006 | November 20, 2006 | $ | 0.01 | December 20, 2006 |
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Effect if Actual Results | ||||
Description | Judgments and Uncertainties | Differ from Assumptions | ||
Derivative Financial Instruments | ||||
Our operations and cash flows are subject to fluctuations due to changes in commodity prices, foreign currency exchange rates, energy prices and interest rates. We use derivative financial instruments to manage commodity prices, foreign currency exchange rates and interest rate exposures, though not for speculative purposes. Derivative instruments we use are primarily commodity forward and option contracts, foreign currency forward contracts and interest swaps. | We are exposed to changes in aluminum prices through arrangements where the customer has received a fixed price commitment from us. We attempt to manage this risk by hedging future purchases of metal required for these firm commitments. In addition, we hedge a portion of our future production. Short-term exposures to changing foreign currency exchange rates occur due to operating cash flows denominated in foreign currencies. We manage this risk with forward currency swap contracts and currency exchange options. Our most significant foreign currency exposures relate to the euro, Brazilian real and the Korean won. We assess market conditions and determine an appropriate amount to hedge based on pre-determined policies. | To the extent that these exposures are not fully hedged, we are exposed to gains and losses when changes occur in the market price of aluminum. Hedges of specific arrangements and future production increase or decrease the fair value by approximately $91 million for a 10% change in the market value of aluminum as of March 31, 2008. To the extent that operating cash flows are not fully hedged, we are exposed to foreign exchange gains and losses. In the event that we choose not to hedge a cash flow, an adverse movement in rates could impact our earnings and cash flows. The change in the fair value of the foreign currency hedge portfolio as of March 31, 2008 that would result from a 10% instantaneous appreciation or depreciation in foreign exchange rates would result in an increase or decrease of approximately $70 million. | ||
We are exposed to changes in interest rates due to our financing, investing and cash management activities. We may enter into interest rate swap contracts to protect against our exposure to changes in future interest rate, which requires deciding how much of the exposure to hedge based on our sensitivity to variable rate fluctuations. The majority of our derivative financial instruments are valued using quoted market prices. The remaining derivative instruments are valued using industry standard pricing models. These pricing models require us to make a variety of assumptions including, but not limited to, market data of similar financial instruments, interest rates, forward curves, volatilities and financial instruments’ cash flows. | To the extent that we choose to hedge our interest costs, we are able to avoid the impacts of changing interest rates on our interest costs. In the event that we do not hedge a floating rate debt an adverse movement in market interest rates could impact our interest cost. As of March 31, 2008, a 10% change in the market interest rate would increase or decrease the fair value of our interest rate hedges by $2 million. A 12.5 basis point change in market interest rates as of March 31, 2008 would increase or decrease our unhedged interest cost on floating rate debt by approximately $1 million. |
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Effect if Actual Results | ||||
Description | Judgments and Uncertainties | Differ from Assumptions | ||
Impairment of long-lived assets | ||||
Long-lived assets, such as property and equipment, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of the assets contained in our financial statements may not be recoverable. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset’s estimated, future net cash flows (undiscounted and without interest charges). If the estimated future cash flows are less than the carrying value of the asset, we calculate and recognize an impairment loss. If we recognize an impairment loss, the adjusted carrying amount of the asset will be its new cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated over the remaining useful life of that asset. Restoration of a previously recognized impairment loss is prohibited. | Our impairment loss calculations require management to apply judgments in estimating future cash flows and asset fair values, including forecasting useful lives of the assets and selecting the discount rate that represents the risk inherent in future cash flows. | Using the impairment review methodology described herein, we recorded impairment charges on long-lived assets of $1 million, $8 million, and $7 million during the year ended March 31, 2008, the three months ended March 31, 2007 and the year ended December 31, 2005, respectively. We had no impairment charges on long-lived assets during the year ended December 31, 2006. If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to additional impairment losses that could be material to our results of operations. | ||
Goodwill and Intangible Assets | ||||
Goodwill represents the excess of the purchase price over the fair value of the net assets of acquired companies. We follow the guidance in FASB Statement No. 142,Goodwill and Intangible Assets, and test goodwill for impairment using a fair value approach, at the reporting unit level. We are required to test for impairment at least annually, absent some triggering event that would accelerate an impairment assessment. On an ongoing basis, absent any impairment indicators, we perform our goodwill impairment testing as of the last day of February of each year. As a result of the Arrangement, our intangible assets consist of tradenames, technology, customer relationships and favorable energy | We have recognized goodwill in our North American, European and South American operating segments, which are also reporting units for purposes of performing our goodwill impairment testing. We determine the fair value of our reporting units using the discounted cash flow valuation technique, which requires us to make assumptions and estimates regarding industry economic factors and the profitability of future business strategies. As a result of the Arrangement, we estimated fair value of goodwill and intangible assets using a number of factors, including the application of multiples and discounted cash flow estimates. | We performed our annual testing for goodwill impairment as of the last day of February 2008, using the methodology described herein, and determined that no goodwill impairment existed. If actual results are not consistent with our assumptions and estimates, we may be exposed to additional goodwill impairment charges. |
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Effect if Actual Results | ||||
Description | Judgments and Uncertainties | Differ from Assumptions | ||
and supply contracts and are amortized over 3 to 20 years. As of March 31, 2008, we do not have any intangible assets with indefinite useful lives. | ||||
We continue to review the carrying values of amortizable intangible assets whenever facts and circumstances change in a manner that indicates their carrying values may not be recoverable. | ||||
Pension and Other Postretirement Plans | ||||
We account for our defined benefit pension plans and non-pension postretirement benefit plans in accordance with FASB Statements No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, No. 87,Employers’ Accounting for Pensions, and No. 106,Employers’ Accounting for Postretirement Benefits Other Than Pensions. The actuarial models use an attribution approach that generally spreads the financial impact of changes to the plan and actuarial assumptions over the average remaining service lives of the employees in the plan. Changes in liability due to changes in actuarial assumptions such as discount rate, rate of compensation increases and mortality, as well as annual deviations between what was assumed and what was experienced by the plan are treated as gains or losses. Additionally, gains and losses are amortized over the group’s average future service. The average future service for pension plans and other postretirement benefit plans is 12.7 and 13.9 years respectively. The principle underlying the required attribution approach is that employees render service over their average remaining service lives on a relatively smooth basis and, | All net actuarial gains and losses are amortized over the expected average remaining service life of the employees. The costs and obligations of pension and other postretirement benefits are calculated based on assumptions including the long-term rate of return on pension assets, discount rates for pension and other postretirement benefit obligations, expected service period, salary increases, retirement ages of employees and healthcare cost trend rates. These assumptions bear the risk of change as they require significant judgment and they have inherent uncertainties that management may not be able to control. The two most significant assumptions used to calculate the obligations in respect of the net employee benefit plans are the discount rates for pension and other postretirement benefits, and the expected return on assets. The discount rate for pension and other postretirement benefits is the interest rate used to determine the present value of benefits. It is based on spot rate yield curves and individual bond matching models for pension plans in Canada and the United States, and on published long-term high quality corporate bond indices for pension plans in other countries, at the end of each fiscal year. In | As of March 31, 2008, an increase in the discount rate of 0.5%, assuming inflation remains unchanged, would result in a decrease of $86 million in the pension and other postretirement obligations and in a decrease of $11 million in the net periodic benefit cost. A decrease in the discount rate of 0.5% as of March 31, 2008, assuming inflation remains unchanged, would result in an increase of $86 million in the pension and other postretirement obligations and in an increase of $11 million in the net periodic benefit cost. The calculation of the estimate of the expected return on assets is described in Note 14 — Postretirement Benefit Plans to our accompanying consolidated and combined financial statements. The weighted average expected return on assets was 7.3% for 2008, 7.3% for 2006 and 7.4% for 2005. The expected return on assets is a long-term assumption whose accuracy can only be measured over a long period based on past experience. A variation in the expected return on assets by 0.5% as of March 31, 2008 would result in a variation of approximately $4 million in the net periodic benefit cost. |
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Effect if Actual Results | ||||
Description | Judgments and Uncertainties | Differ from Assumptions | ||
therefore, the accounting for benefits earned under the pension or non-pension postretirement benefits plans should follow the same relatively smooth pattern. Our pension obligations relate to funded defined benefit pension plans we have established in the United States, Canada, Switzerland and the United Kingdom, unfunded pension benefits primarily in Germany, and lump sum indemnities payable upon retirement to employees of businesses in France, Korea, Malaysia and Italy. Pension benefits are generally based on the employee’s service and either on a flat dollar rate or on the highest average eligible compensation before retirement. | light of the average long duration of pension plans in other countries, no adjustments were made to the index rates. The weighted average discount rate used to determine the pension benefit obligation was 5.8% as of March 31, 2008, compared to 5.4% and 5.1% for December 31, 2006 and 2005, respectively. The weighted average discount rate used to determine the other postretirement benefit obligation was 6.1% as of March 31, 2008, compared to 5.7% and 5.7% for December 31, 2006 and 2005, respectively. The weighted average discount rate used to determine the net periodic benefit cost is the rate used to determine the benefit obligation in the previous year. | |||
Income Taxes | ||||
We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, deferred tax assets are also recorded with respect to net operating losses and other tax attribute carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when realization of the benefit of deferred tax assets is not deemed to be more likely than not. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | The ultimate recovery of certain of our deferred tax assets is dependent on the amount and timing of taxable income that we will ultimately generate in the future and other factors such as the interpretation of tax laws. This means that significant estimates and judgments are required to determine the extent that valuation allowances should be provided against deferred tax assets. We have provided valuation allowances as of March 31, 2008 aggregating $161 million against such assets based on our current assessment of future operating results and these other factors. By their nature, tax laws are often subject to interpretation. Further complicating matters is that in those cases where a tax position is open to interpretation, differences of opinion can result in differing conclusions as to the amount of tax benefits to be recognized under FIN 48. Consequently, the level of evidence and documentation necessary to | Although management believes that the estimates and judgments discussed herein are reasonable, actual results could differ, which could result in gains or losses that could be material. |
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Effect if Actual Results | ||||
Description | Judgments and Uncertainties | Differ from Assumptions | ||
FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes(FIN 48) clarifies the accounting for uncertainty of income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 utilizes a two-step approach for evaluating tax positions. Recognition (Step 1) occurs when an enterprise concludes that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination. Measurement (Step 2) is only addressed if Step 1 has been satisfied. Under Step 2, the tax benefit is measured as the largest amount of benefit, determined on a cumulative probability basis that is more likely than not to be realized upon ultimate settlement. | support a position prior to being given recognition and measurement within the financial statements is a matter of judgment that depends on all available evidence. | |||
For fiscal years prior to and ending on December 31, 2006, contingent tax liabilities must be accounted for separately from deferred tax assets and liabilities. FASB Statement No. 5,Accounting for Contingenciesis the governing standard for contingent liabilities. It must be probable that a contingent tax benefit will be sustained before the contingent benefit is recognized for financial reporting purposes. | ||||
Assessment of Loss Contingencies | ||||
We have legal and other contingencies, including environmental liabilities, which could result in significant losses upon the ultimate resolution of such contingencies. Environmental liabilities that are not legal asset retirement obligations are accrued on an undiscounted basis when it is probable that a liability exists for past events. | We have provided for losses in situations where we have concluded that it is probable that a loss has been or will be incurred and the amount of the loss is reasonably estimable. A significant amount of judgment is involved in determining whether a loss is probable and reasonably estimable due to the uncertainty involved in determining the likelihood of future events and estimating the financial statement impact of such events. | If further developments or resolution of a contingent matter are not consistent with our assumptions and judgments, we may need to recognize a significant charge in a future period related to an existing contingency. |
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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Change in | Change in | |||||||
Rate/Price | Fair Value | |||||||
Aluminum Forward Contracts | 10 | % | $ | 91 | ||||
Aluminum Options | 10 | % | (1 | ) |
Change in | Change in | |||||||
Rate/Price | Fair Value | |||||||
Electricity | 10 | % | $ | 7 | ||||
Natural Gas | 10 | % | 2 |
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Pre-Tax | ||||||||
Increase (Decrease) | Loss in | |||||||
in Exchange Rate | Fair Value | |||||||
Currency measured against the U.S. dollar | ||||||||
Euro | (10 | )% | $ | (26 | ) | |||
Korean won | (10 | )% | (3 | ) | ||||
Brazilian real | (10 | )% | (25 | ) | ||||
British pound | (10 | )% | (2 | ) | ||||
Swiss franc | (10 | )% | (26 | ) |
Pre-Tax | ||||||||
Increase (Decrease) | Loss in | |||||||
in Exchange Rate | Fair Value | |||||||
Other cross-currency exchange rates | ||||||||
Swiss franc measured against the euro | (10 | )% | $ | (21 | ) | |||
British pound measured against the euro | (10 | )% | (13 | ) |
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Pre-Tax | ||||||||
Increase in | Loss in | |||||||
Rate | Fair Value | |||||||
Currency measured against the U.S. dollar | ||||||||
Euro | 10 | % | $ | (91 | ) | |||
British pound | 10 | % | (15 | ) | ||||
Swiss franc | 10 | % | (5 | ) |
Change in | Change in | |||||||
Rate | Fair Value | |||||||
Interest Rate Swap Contracts | ||||||||
North America | 10 | % | $ | (2 | ) | |||
Asia | 10 | % | — |
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/s/ Martha Finn Brooks | /s/ Steven Fisher | |
MARTHA FINN BROOKS President and Chief Operating Officer | STEVEN FISHER Chief Financial Officer |
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CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(In millions, except per share amounts)
May 16, | April 1, | Three | |||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||
Through | Through | Ended | Year Ended | ||||||||||||||||||
March 31, | May 15, | March 31, | December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net sales | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | $ | 8,363 | |||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 9,042 | 1,205 | 2,447 | 9,317 | 7,570 | ||||||||||||||||
Selling, general and administrative expenses | 319 | 95 | 99 | 410 | 352 | ||||||||||||||||
Depreciation and amortization | 367 | 28 | 58 | 233 | 230 | ||||||||||||||||
Research and development expenses | 46 | 6 | 8 | 40 | 41 | ||||||||||||||||
Interest expense and amortization of debt issuance costs — net | 173 | 26 | 50 | 206 | 194 | ||||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (22 | ) | (20 | ) | (30 | ) | (63 | ) | (269 | ) | |||||||||||
Equity in net (income) loss of non-consolidated affiliates | 4 | (1 | ) | (3 | ) | (16 | ) | (6 | ) | ||||||||||||
Sale transaction fees | — | 32 | 32 | — | — | ||||||||||||||||
Litigation settlement — net of insurance recoveries | — | — | — | — | 40 | ||||||||||||||||
Other (income) expenses — net | — | 4 | 24 | — | (13 | ) | |||||||||||||||
9,929 | 1,375 | 2,685 | 10,127 | 8,139 | |||||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss), minority interests’ share and cumulative effect of accounting change | 36 | (94 | ) | (55 | ) | (278 | ) | 224 | |||||||||||||
Provision (benefit) for taxes on income (loss) | 3 | 4 | 7 | (4 | ) | 107 | |||||||||||||||
Income (loss) before minority interests’ share and cumulative effect of accounting change | 33 | (98 | ) | (62 | ) | (274 | ) | 117 | |||||||||||||
Minority interests’ share | (5 | ) | 1 | (2 | ) | (1 | ) | (21 | ) | ||||||||||||
Net income (loss) before cumulative effect of accounting change | 28 | (97 | ) | (64 | ) | (275 | ) | 96 | |||||||||||||
Cumulative effect of accounting change — net of tax | — | — | — | — | (6 | ) | |||||||||||||||
Net income (loss) | 28 | (97 | ) | (64 | ) | (275 | ) | 90 | |||||||||||||
Other comprehensive income (loss) — net of tax Currency translation adjustment | 26 | 35 | 11 | 168 | (155 | ) | |||||||||||||||
Change in fair value of effective portion of hedges — net | — | (1 | ) | 3 | (46 | ) | — | ||||||||||||||
Postretirement benefit plans: | |||||||||||||||||||||
Amortization of net actuarial loss | — | (1 | ) | 1 | — | — | |||||||||||||||
Change in pension and other benefits | (13 | ) | — | — | — | — | |||||||||||||||
Change in minimum pension liability | — | — | — | 12 | (17 | ) | |||||||||||||||
Other comprehensive income (loss) — net of tax | 13 | 33 | 15 | 134 | (172 | ) | |||||||||||||||
Comprehensive income (loss) | $ | 41 | $ | (64 | ) | $ | (49 | ) | $ | (141 | ) | $ | (82 | ) | |||||||
Dividends per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.20 | $ | 0.36 | |||||||||||
Supplemental information for 2005 only: | |||||||||||||||||||||
Net income attributable to the consolidated and combined results of Novelis from January 6 to December 31, 2005 — increase to Retained earnings | $ | 119 | |||||||||||||||||||
Net loss attributable to the combined results of Novelis from January 1 to January 5, 2005 — decrease to Owner’s net investment | (29 | ) | |||||||||||||||||||
Net income | $ | 90 | |||||||||||||||||||
are an integral part of these statements.
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As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 326 | $ | 128 | |||||
Accounts receivable (net of allowances of $1 and $29 as of March 31, 2008 and 2007, respectively) | |||||||||
— third parties | 1,248 | 1,350 | |||||||
— related parties | 31 | 25 | |||||||
Inventories | 1,455 | 1,483 | |||||||
Prepaid expenses and other current assets | 58 | 39 | |||||||
Current portion of fair value of derivative instruments | 203 | 92 | |||||||
Deferred income tax assets | 125 | 19 | |||||||
Total current assets | 3,446 | 3,136 | |||||||
Property, plant and equipment — net | 3,365 | 2,106 | |||||||
Goodwill | 2,157 | 239 | |||||||
Intangible assets — net | 888 | 20 | |||||||
Investment in and advances to non-consolidated affiliates | 917 | 153 | |||||||
Fair value of derivative instruments — net of current portion | 21 | 55 | |||||||
Deferred income tax assets | 9 | 102 | |||||||
Other long-term assets | |||||||||
— third parties | 102 | 105 | |||||||
— related parties | 41 | 54 | |||||||
Total assets | $ | 10,946 | $ | 5,970 | |||||
LIABILITIES AND SHAREHOLDER’S EQUITY | |||||||||
Current liabilities | |||||||||
Current portion of long-term debt | $ | 15 | $ | 143 | |||||
Short-term borrowings | 115 | 245 | |||||||
Accounts payable | |||||||||
— third parties | 1,582 | 1,614 | |||||||
— related parties | 55 | 49 | |||||||
Accrued expenses and other current liabilities | 850 | 480 | |||||||
Deferred income tax liabilities | 39 | 73 | |||||||
Total current liabilities | 2,656 | 2,604 | |||||||
Long-term debt — net of current portion | 2,560 | 2,157 | |||||||
Deferred income tax liabilities | 952 | 103 | |||||||
Accrued postretirement benefits | 421 | 427 | |||||||
Other long-term liabilities | 670 | 352 | |||||||
7,259 | 5,643 | ||||||||
Commitments and contingencies | |||||||||
Minority interests in equity of consolidated affiliates | 149 | 152 | |||||||
Shareholder’s equity | |||||||||
Common stock, no par value; unlimited number of shares authorized; 77,459,658 and 75,357,660 shares issued and outstanding as of March 31, 2008 and 2007, respectively | — | — | |||||||
Additional paid-in capital | 3,497 | 428 | |||||||
Retained earnings (Accumulated deficit) | 28 | (263 | ) | ||||||
Accumulated other comprehensive income (loss) | 13 | 10 | |||||||
Total shareholder’s equity | 3,538 | 175 | |||||||
Total liabilities and shareholder’s equity | $ | 10,946 | $ | 5,970 | |||||
are an integral part of these statements.
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May 16, | April 1, | Three | |||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||
Through | Through | Ended | Year Ended | ||||||||||||||||||
March 31, | May 15, | March 31, | December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||||||
Net income (loss) | $ | 28 | $ | (97 | ) | $ | (64 | ) | $ | (275 | ) | $ | 90 | ||||||||
Adjustments to determine net cash provided by (used in) operating activities: | |||||||||||||||||||||
Cumulative effect of accounting change — net of tax | — | — | — | — | 6 | ||||||||||||||||
Depreciation and amortization | 367 | 28 | 58 | 233 | 230 | ||||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (22 | ) | (20 | ) | (30 | ) | (63 | ) | (269 | ) | |||||||||||
Litigation settlement — net of insurance recoveries | — | — | — | — | 40 | ||||||||||||||||
Deferred income taxes | (74 | ) | (18 | ) | (9 | ) | (77 | ) | 30 | ||||||||||||
Amortization of debt issuance costs | 10 | 1 | 2 | 13 | 17 | ||||||||||||||||
Write-off and amortization of fair value adjustments — net | (221 | ) | — | — | — | — | |||||||||||||||
Provision for uncollectible accounts receivable | 1 | — | — | 4 | 3 | ||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 4 | (1 | ) | (3 | ) | (16 | ) | (6 | ) | ||||||||||||
Dividends from non-consolidated affiliates | — | 4 | — | 5 | — | ||||||||||||||||
Minority interests’ share | 5 | (1 | ) | 2 | 1 | 21 | |||||||||||||||
Impairment charges on long-lived assets | 1 | — | 8 | — | 7 | ||||||||||||||||
Share-based compensation | — | — | 2 | 9 | 3 | ||||||||||||||||
(Gain) loss on sales of businesses, investments, and assets — net | — | — | — | (6 | ) | (17 | ) | ||||||||||||||
Changes in assets and liabilities (net of effects from acquisitions and divestitures): | |||||||||||||||||||||
Accounts receivable | |||||||||||||||||||||
— third parties | 182 | (21 | ) | (25 | ) | (142 | ) | (91 | ) | ||||||||||||
— related parties | (1 | ) | — | — | 1 | (1 | ) | ||||||||||||||
Inventories | 208 | (76 | ) | (95 | ) | (206 | ) | 52 | |||||||||||||
Prepaid expenses and other current assets | (8 | ) | (7 | ) | 3 | 25 | 18 | ||||||||||||||
Other long-term assets | (30 | ) | (1 | ) | (5 | ) | 6 | (13 | ) | ||||||||||||
Accounts payable | |||||||||||||||||||||
— third parties | (11 | ) | (62 | ) | 73 | 519 | 181 | ||||||||||||||
— related parties | (7 | ) | — | 5 | 4 | 2 | |||||||||||||||
Accrued expenses and other current liabilities | (68 | ) | 42 | (22 | ) | (64 | ) | 134 | |||||||||||||
Accrued postretirement benefits | 23 | 1 | 4 | (24 | ) | 13 | |||||||||||||||
Other long-term liabilities | 18 | (2 | ) | 9 | 69 | (1 | ) | ||||||||||||||
Net cash provided by (used in) operating activities | 405 | (230 | ) | (87 | ) | 16 | 449 | ||||||||||||||
INVESTING ACTIVITIES | |||||||||||||||||||||
Capital expenditures | (185 | ) | (17 | ) | (24 | ) | (116 | ) | (178 | ) | |||||||||||
Disposal of business — net | — | — | — | (7 | ) | — | |||||||||||||||
Proceeds from sales of assets | 8 | — | — | 38 | 19 | ||||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | 24 | 1 | 1 | 3 | — | ||||||||||||||||
Proceeds from loans receivable — net | |||||||||||||||||||||
— third parties | — | — | — | — | 19 | ||||||||||||||||
— related parties | 18 | — | 1 | 37 | 374 | ||||||||||||||||
Net proceeds from settlement of derivative instruments | 37 | 18 | 24 | 238 | 91 | ||||||||||||||||
Net cash provided by (used in) investing activities | (98 | ) | 2 | 2 | 193 | 325 | |||||||||||||||
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May 16, | April 1, | Three | |||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||
Through | Through | Ended | Year Ended | ||||||||||||||||||
March 31, | May 15, | March 31, | December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||||
Proceeds from issuance of common stock | 92 | — | — | — | — | ||||||||||||||||
Proceeds from issuance of debt | 1,100 | 150 | — | 41 | 2,779 | ||||||||||||||||
Principal repayments | |||||||||||||||||||||
— third parties | (1,009 | ) | (1 | ) | (1 | ) | (353 | ) | (1,822 | ) | |||||||||||
— related parties | — | — | — | — | (1,180 | ) | |||||||||||||||
Short-term borrowings — net | |||||||||||||||||||||
— third parties | (241 | ) | 60 | 113 | 103 | (145 | ) | ||||||||||||||
— related parties | — | — | — | — | (302 | ) | |||||||||||||||
Dividends | |||||||||||||||||||||
— common shareholders | — | — | — | (15 | ) | (27 | ) | ||||||||||||||
— minority interests | (1 | ) | (7 | ) | — | (15 | ) | (7 | ) | ||||||||||||
Net receipts from Alcan | — | — | — | 5 | 72 | ||||||||||||||||
Debt issuance costs | (37 | ) | (2 | ) | — | (11 | ) | (71 | ) | ||||||||||||
Proceeds from the exercise of stock options | — | 1 | 27 | 2 | — | ||||||||||||||||
Windfall tax benefit on share-based compensation | — | — | 1 | — | — | ||||||||||||||||
Net cash provided by (used in) financing activities | (96 | ) | 201 | 140 | (243 | ) | (703 | ) | |||||||||||||
Net increase (decrease) in cash and cash equivalents | 211 | (27 | ) | 55 | (34 | ) | 71 | ||||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | 13 | 1 | — | 7 | (2 | ) | |||||||||||||||
Cash and cash equivalents — beginning of period | 102 | 128 | 73 | 100 | 31 | ||||||||||||||||
Cash and cash equivalents — end of period | $ | 326 | $ | 102 | $ | 128 | $ | 73 | $ | 100 | |||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||||||||
Interest paid | $ | 200 | $ | 13 | $ | 84 | $ | 201 | $ | 153 | |||||||||||
Income taxes paid | 64 | 9 | 18 | 68 | 39 | ||||||||||||||||
Supplemental schedule of non-cash investing and financing activities related to the Acquisition of Novelis Common Stock (Note 2): | |||||||||||||||||||||
Property, plant and equipment | $ | (1,344 | ) | ||||||||||||||||||
Goodwill | (1,913 | ) | |||||||||||||||||||
Intangible assets | (893 | ) | |||||||||||||||||||
Investment in and advances to non-consolidated affiliates | (776 | ) | |||||||||||||||||||
Debt | 66 | ||||||||||||||||||||
Supplemental schedule of non-cash investing and financing activities related to the 2005 spin-off transaction from Alcan and post-closing adjustments: | |||||||||||||||||||||
Other receivables | $ | 433 | |||||||||||||||||||
Short-term borrowings — related parties | (57 | ) | |||||||||||||||||||
Debt — related parties | 32 | ||||||||||||||||||||
Capital lease obligation | 52 | ||||||||||||||||||||
Additional paid-in capital | $ | (43 | ) | (109 | ) | ||||||||||||||||
Supplemental schedule of non-cash transaction — final purchase price allocation adjustment from Alcan related to the 2004 Pechiney acquisition: | |||||||||||||||||||||
Assets | $ | 8 | |||||||||||||||||||
Liabilities | — | ||||||||||||||||||||
Adjustment to net assets allocated to us from Alcan | $ | 8 | |||||||||||||||||||
are an integral part of these statements.
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Retained | Accumulated | |||||||||||||||||||||||||||
Additional | Earnings/ | Other | Owner’s | |||||||||||||||||||||||||
Common Stock | Paid-in | (Accumulated | Comprehensive | Net | ||||||||||||||||||||||||
Shares | Amount | Capital | Deficit) | Income (Loss) | Investment | Total | ||||||||||||||||||||||
Predecessor: | ||||||||||||||||||||||||||||
Balance as of December 31, 2004 | — | $ | — | $ | — | $ | — | $ | 88 | $ | 467 | $ | 555 | |||||||||||||||
2005 Activity: | ||||||||||||||||||||||||||||
January 1 to January 5, 2005 — Net income (loss) | — | — | — | — | — | (29 | ) | (29 | ) | |||||||||||||||||||
Adjusted Invested equity at spin-off date — January 6, 2005 | — | — | — | — | 88 | 438 | 526 | |||||||||||||||||||||
Issuance of common stock in connection with the spin-off | 73,988,933 | — | 438 | — | — | (438 | ) | — | ||||||||||||||||||||
Spin-off settlement and post-closing adjustments | — | — | (6 | ) | — | — | ��� | (6 | ) | |||||||||||||||||||
Issuance of common stock in connection with stock plans | 16,716 | — | — | — | — | — | — | |||||||||||||||||||||
January 6 to December 31, 2005 — Net income (loss) | — | — | — | 119 | — | — | 119 | |||||||||||||||||||||
Currency translation adjustment | — | — | — | — | (155 | ) | — | (155 | ) | |||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Change in minimum pension liability | — | — | — | — | (17 | ) | — | (17 | ) | |||||||||||||||||||
Dividends on common shares | — | — | — | (27 | ) | — | — | (27 | ) | |||||||||||||||||||
Dividends on preferred shares of consolidated affiliates | — | — | (7 | ) | — | — | — | (7 | ) | |||||||||||||||||||
Balance as of December 31, 2005 | 74,005,649 | — | 425 | 92 | (84 | ) | — | 433 | ||||||||||||||||||||
2006 Activity: | ||||||||||||||||||||||||||||
Net income (loss) | — | — | — | (275 | ) | — | — | (275 | ) | |||||||||||||||||||
Issuance of common stock in connection with stock plans | 134,686 | — | 2 | — | — | — | 2 | |||||||||||||||||||||
Spin-off settlement and post-closing adjustments | — | — | (38 | ) | — | — | — | (38 | ) | |||||||||||||||||||
Share-based compensation | — | — | 9 | — | — | — | 9 | |||||||||||||||||||||
Currency translation adjustment | — | — | — | — | 168 | — | 168 | |||||||||||||||||||||
Change in fair value of effective portion of hedges — net | — | — | — | — | (46 | ) | — | (46 | ) | |||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Change in minimum pension liability | — | — | — | — | 12 | — | 12 | |||||||||||||||||||||
Initial impact of adopting Financial Accounting Standards Board Statement No. 158 | — | — | — | — | (55 | ) | — | (55 | ) | |||||||||||||||||||
Dividends on common shares | — | — | — | (15 | ) | — | — | (15 | ) | |||||||||||||||||||
Balance as of December 31, 2006 | 74,140,335 | — | 398 | (198 | ) | (5 | ) | — | 195 | |||||||||||||||||||
Activity for Three Months Ended March 31, 2007: | ||||||||||||||||||||||||||||
Adjustment for uncertain tax positions | — | — | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||||
Net income (loss) | — | — | — | (64 | ) | — | — | (64 | ) | |||||||||||||||||||
Issuance of common stock from the exercise of stock options | 1,217,325 | — | 27 | — | — | — | 27 | |||||||||||||||||||||
Share-based compensation | — | — | 2 | — | — | — | 2 | |||||||||||||||||||||
Windfall tax benefit on share-based compensation | — | — | 1 | — | — | — | 1 | |||||||||||||||||||||
Currency translation adjustment | — | — | — | — | 11 | — | 11 | |||||||||||||||||||||
Change in fair value of effective portion of hedges — net | — | — | — | — | 3 | — | 3 | |||||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Amortization of net actuarial loss | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||
Balance as of March 31, 2007 | 75,357,660 | — | 428 | (263 | ) | 10 | — | 175 |
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Retained | Accumulated | |||||||||||||||||||||||
Additional | Earnings/ | Other | ||||||||||||||||||||||
Common Stock | Paid-in | (Accumulated | Comprehensive | |||||||||||||||||||||
Shares | Amount | Capital | Deficit) | Income (Loss) | Total | |||||||||||||||||||
Predecessor: | ||||||||||||||||||||||||
Activity April 1, 2007 through May 15, 2007: | ||||||||||||||||||||||||
Net income (loss) | — | — | — | (97 | ) | — | (97 | ) | ||||||||||||||||
Issuance of common stock from the exercise of stock options | 57,876 | — | 1 | — | — | 1 | ||||||||||||||||||
Conversion of share-based compensation plans from equity-based plans to liability-based plans | — | — | (7 | ) | — | — | (7 | ) | ||||||||||||||||
Currency translation adjustment | — | — | — | — | 35 | 35 | ||||||||||||||||||
Change in fair value of effective portion of hedges — net | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||
Amortization of net actuarial loss | — | — | — | — | (1 | ) | (1 | ) | ||||||||||||||||
Balance as of May 15, 2007 | 75,415,536 | $ | — | $ | 422 | $ | (360 | ) | $ | 43 | $ | 105 | ||||||||||||
Successor: | ||||||||||||||||||||||||
Balance as of May 16, 2007 | 75,415,536 | $ | — | $ | 3,405 | $ | — | $ | — | $ | 3,405 | |||||||||||||
Activity May 16, 2007 through March 31, 2008: | ||||||||||||||||||||||||
Net income (loss) | — | — | — | 28 | — | 28 | ||||||||||||||||||
Issuance of additional common stock | 2,044,122 | — | 92 | — | — | 92 | ||||||||||||||||||
Currency translation adjustment | — | — | — | — | 26 | 26 | ||||||||||||||||||
Change in fair value of effective portion of hedges — net | — | — | — | — | — | — | ||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||
Pension and other benefits adjustment, net of tax effect of $(4) | — | — | — | — | (13 | ) | (13 | ) | ||||||||||||||||
Balance as of March 31, 2008 | 77,459,658 | $ | — | $ | 3,497 | $ | 28 | $ | 13 | $ | 3,538 | |||||||||||||
are an integral part of these statements.
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1. | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Years | ||||
Buildings | 30 to 40 | |||
Leasehold improvements | 7 to 20 | |||
Machinery and equipment | 5 to 25 | |||
Furniture, fixtures and equipment | 3 to 10 | |||
Equipment under capital lease obligations | 6 to 15 |
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2. | ACQUISITION OF NOVELIS COMMON STOCK |
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Purchase of all outstanding 75,415,536 common shares at $44.93 per share | $ | 3,388 | ||
Direct transaction costs incurred by Hindalco | 17 | |||
Total consideration | $ | 3,405 | ||
Final | Initial | |||||||
Assets acquired: | ||||||||
Current assets | $ | 3,210 | $ | 3,210 | ||||
Property, plant and equipment | 3,451 | 3,350 | ||||||
Goodwill | 2,157 | 2,341 | ||||||
Intangible assets | 913 | 879 | ||||||
Investment in and advances to non-consolidated affiliates | 927 | 762 | ||||||
Fair value of derivative instruments — net of current portion | 3 | 3 | ||||||
Deferred income tax assets | 117 | 117 | ||||||
Other long-term assets | 109 | 110 | ||||||
Total assets acquired | 10,887 | 10,772 | ||||||
Liabilities assumed: | ||||||||
Accounts payable | (1,612 | ) | (1,612 | ) | ||||
Accrued expenses and other current liabilities | (750 | ) | (738 | ) | ||||
Long-term debt, including current portion and short-term borrowings | (2,824 | ) | (2,824 | ) | ||||
Deferred income tax liabilities, including current portion | (1,038 | ) | (874 | ) | ||||
Accrued postretirement benefits | (382 | ) | (430 | ) | ||||
Other long-term liabilities | (723 | ) | (736 | ) | ||||
Minority interests in equity of consolidated affiliates | (153 | ) | (153 | ) | ||||
Total liabilities assumed | (7,482 | ) | (7,367 | ) | ||||
Total consideration | $ | 3,405 | $ | 3,405 | ||||
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Three Months | ||||||||||||
Year Ended | Ended | Year Ended | ||||||||||
March 31, | March 31, | December 31, | ||||||||||
2008 | 2007 | 2006 | ||||||||||
Net sales | $ | 11,280 | $ | 2,721 | $ | 10,164 | ||||||
Loss before provision (benefit) for taxes and minority interests’ share | $ | (54 | ) | $ | (60 | ) | $ | (243 | ) | |||
Net loss | $ | (65 | ) | $ | (69 | ) | $ | (240 | ) |
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3. | RESTRUCTURING PROGRAMS |
Other Exit | ||||||||||||||||||||||||||||
Related | ||||||||||||||||||||||||||||
Severance Reserves | Reserves | Total | ||||||||||||||||||||||||||
North | Corporate | Total | North | Restructuring | ||||||||||||||||||||||||
Europe | America | and Other | Severance | Europe | America | Reserves | ||||||||||||||||||||||
Predecessor: | ||||||||||||||||||||||||||||
Balance as of December 31, 2006 | $ | 14 | $ | — | $ | 1 | $ | 15 | $ | 19 | $ | — | $ | 34 | ||||||||||||||
January 1, 2007 to March 31, 2007 Activity: | ||||||||||||||||||||||||||||
Provisions (recoveries) — net | 9 | — | — | 9 | — | — | 9 | |||||||||||||||||||||
Cash payments | (4 | ) | — | (1 | ) | (5 | ) | (1 | ) | — | (6 | ) | ||||||||||||||||
Adjustments — other | (1 | ) | — | — | (1 | ) | — | — | (1 | ) | ||||||||||||||||||
Balance as of March 31, 2007 | 18 | — | — | 18 | 18 | — | 36 | |||||||||||||||||||||
April 1, 2007 to May 15, 2007 Activity: | ||||||||||||||||||||||||||||
Provisions (recoveries) — net | 1 | — | — | 1 | — | — | 1 | |||||||||||||||||||||
Cash payments | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||
Adjustments — other | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||
Balance as of May 15, 2007 | 19 | — | — | 19 | 18 | — | 37 | |||||||||||||||||||||
Successor: | ||||||||||||||||||||||||||||
May 16, 2007 to March 31, 2008 Activity: | ||||||||||||||||||||||||||||
Provisions (recoveries) — net | 1 | 3 | — | 4 | 1 | 1 | 6 | |||||||||||||||||||||
Cash payments | (16 | ) | — | — | (16 | ) | (4 | ) | — | (20 | ) | |||||||||||||||||
Adjustments — other | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||
Balance as of March 31, 2008 | $ | 4 | $ | 3 | $ | — | $ | 7 | $ | 16 | $ | 1 | $ | 24 | ||||||||||||||
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4. | ACCOUNTS RECEIVABLE |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Customer accounts receivable — third parties | $ | 1,160 | $ | 1,283 | |||||
Other accounts receivable: | |||||||||
— third parties | 89 | 96 | |||||||
— related parties | 31 | 25 | |||||||
120 | 121 | ||||||||
Total accounts receivable — gross | 1,280 | 1,404 | |||||||
Allowance for doubtful accounts — third parties | (1 | ) | (29 | ) | |||||
Accounts receivable — net | $ | 1,279 | $ | 1,375 | |||||
Balance at | Additions | Accounts | ||||||||||||||||||
Beginning | Charged to | Recovered/ | Foreign Exchange | Balance at | ||||||||||||||||
of Period | Expense | (Written-Off) | and Other | End of Period | ||||||||||||||||
Predecessor: | ||||||||||||||||||||
Year Ended December 31, 2005 | $ | 33 | $ | 3 | $ | (8 | ) | $ | (2 | ) | $ | 26 | ||||||||
Year Ended December 31, 2006 | $ | 26 | $ | 4 | $ | (4 | ) | $ | 3 | $ | 29 | |||||||||
Three Months Ended March 31, 2007 | $ | 29 | $ | — | $ | — | $ | — | $ | 29 | ||||||||||
April 1, 2007 Through May 15, 2007 | $ | 29 | $ | — | $ | (2 | ) | $ | 1 | $ | 28 | |||||||||
Successor: | ||||||||||||||||||||
May 16, 2007 Through March 31, 2008 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Receivables forfaited | $ | 507 | $ | 51 | $ | 68 | $ | 424 | $ | 285 | |||||||||||
Receivables factored | $ | 75 | $ | — | $ | 18 | $ | 71 | $ | 94 | |||||||||||
Forfaiting expense | $ | 6 | $ | 1 | $ | 1 | $ | 5 | $ | 2 | |||||||||||
Factoring expense | $ | 1 | $ | — | $ | — | $ | 1 | $ | 1 |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Forfaited receivables outstanding | $ | 149 | $ | 75 | |||||
Factored receivables outstanding | $ | — | $ | — |
5. | INVENTORIES |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Finished goods | $ | 357 | $ | 401 | |||||
Work in process | 638 | 556 | |||||||
Raw materials | 386 | 428 | |||||||
Supplies | 75 | 120 | |||||||
1,456 | 1,505 | ||||||||
Allowances | (1 | ) | (22 | ) | |||||
Inventories | $ | 1,455 | $ | 1,483 | |||||
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6. | PROPERTY, PLANT AND EQUIPMENT |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Land and property rights | $ | 258 | $ | 97 | |||||
Buildings | 826 | 895 | |||||||
Machinery and equipment | 2,460 | 4,699 | |||||||
3,544 | 5,691 | ||||||||
Accumulated depreciation and amortization | (323 | ) | (3,674 | ) | |||||
3,221 | 2,017 | ||||||||
Construction in progress | 144 | 89 | |||||||
Property, plant and equipment — net | $ | 3,365 | $ | 2,106 | |||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Depreciation expense related to property, plant and equipment | $ | 330 | $ | 28 | $ | 58 | $ | 231 | $ | 228 | |||||||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Rent expense | $ | 27 | $ | 3 | $ | 4 | $ | 22 | $ | 21 | |||||||||||
Operating | Capital Lease | |||||||
Year Ending March 31, | Leases | Obligations | ||||||
2009 | $ | 23 | $ | 8 | ||||
2010 | 18 | 8 | ||||||
2011 | 16 | 8 | ||||||
2012 | 14 | 7 | ||||||
2013 | 12 | 7 | ||||||
Thereafter | 36 | 47 | ||||||
Total minimum lease payments | $ | 119 | 85 | |||||
Less: interest portion on capital leases | (28 | ) | ||||||
Principal obligation on capital leases | $ | 57 | ||||||
As of March 31, | ||||||||
2008 | 2007 | |||||||
Successor | Predecessor | |||||||
Assets under capital lease obligations: | ||||||||
Land | $ | — | $ | 1 | ||||
Buildings | 13 | 10 | ||||||
Machinery and equipment | 55 | 40 | ||||||
68 | 51 | |||||||
Accumulated amortization | (17 | ) | (10 | ) | ||||
$ | 51 | $ | 41 | |||||
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Predecessor: | ||||
Asset retirement obligation as of January 1, 2006 | $ | 11 | ||
Liability incurred | — | |||
Liability settled | — | |||
Accretion | 2 | |||
Asset retirement obligation as of December 31, 2006 | 13 | |||
Liability incurred | 1 | |||
Liability settled | — | |||
Accretion | — | |||
Asset retirement obligation as of March 31, 2007 | 14 | |||
Liability incurred | — | |||
Liability settled | — | |||
Accretion | — | |||
Asset retirement obligation as of May 15, 2007 | 14 | |||
Successor: | ||||
Asset retirement obligation as of May 16, 2007 | 14 | |||
Liability incurred | — | |||
Liability settled | — | |||
Accretion | 2 | |||
Asset retirement obligation as of March 31, 2008 | $ | 16 | ||
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7. | GOODWILL AND INTANGIBLE ASSETS |
Balance as of | Balance as of | |||||||||||
Operating Segment (Successor) | May 16, 2007 | Adjustments(A) | March 31, 2008 | |||||||||
North America | $ | 1,527 | $ | (434 | ) | $ | 1,093 | |||||
Europe | 389 | 414 | 803 | |||||||||
Asia | 162 | (162 | ) | — | ||||||||
South America | 263 | (2 | ) | 261 | ||||||||
$ | 2,341 | $ | (184 | ) | $ | 2,157 | ||||||
(A) | The adjustments of $184 million represent the finalization of our estimates of fair value and allocation of the total consideration to assets acquired and liabilities assumed in connection with our acquisition by Hindalco, see Note 2 — Acquisition of Novelis Common Stock. |
Balance | Balance | Balance | ||||||||||||||||||
as of | Cumulative | as of | Cumulative | as of | ||||||||||||||||
December 31, | Translation | March 31, | Translation | May 15, | ||||||||||||||||
Operating Segment(Predecessor) | 2006 | Adjustment | 2007 | Adjustment | 2007 | |||||||||||||||
North America | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Europe | 236 | 3 | 239 | 5 | 244 | |||||||||||||||
Asia | — | — | — | — | — | |||||||||||||||
South America | — | — | — | — | — | |||||||||||||||
$ | 236 | $ | 3 | $ | 239 | $ | 5 | $ | 244 | |||||||||||
As of March 31, 2008 —Successor | As of March 31, 2007 —Predecessor | ||||||||||||||||||||||||||||||||
Gross | Net | Weighted | Gross | Net | Weighted | ||||||||||||||||||||||||||||
Carrying | Accumulated | Carrying | Average | Carrying | Accumulated | Carrying | Average | ||||||||||||||||||||||||||
Amount | Amortization | Amount | Life | Amount | Amortization | Amount | Life | ||||||||||||||||||||||||||
Tradenames | $ | 152 | $ | (6 | ) | $ | 146 | 20 years | $ | 14 | $ | (6 | ) | $ | 8 | 15 years | |||||||||||||||||
Technology | 169 | (10 | ) | 159 | 15 years | 20 | (8 | ) | 12 | 15 years | |||||||||||||||||||||||
Customer-related intangible assets | 484 | (21 | ) | 463 | 20 years | — | — | — | |||||||||||||||||||||||||
Favorable energy supply contract | 124 | (13 | ) | 111 | 9.5 years | — | — | — | |||||||||||||||||||||||||
Other favorable contracts | 15 | (6 | ) | 9 | 3.3 years | — | — | — | |||||||||||||||||||||||||
$ | 944 | $ | (56 | ) | $ | 888 | 17.2 years | $ | 34 | $ | (14 | ) | $ | 20 | 15 years | ||||||||||||||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended | ||||||||||||||||||
March 31, | May 15, | March 31, | December 31, | ||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Total Amortization expense related to intangible assets | $ | 56 | $ | — | $ | — | $ | 2 | $ | 2 | |||||||||||
Less: Amortization expense related to intangible assets included inCost of goods sold(A) | 19 | — | — | — | — | ||||||||||||||||
Amortization expense related to intangible assets included inDepreciation and amortization | $ | 37 | $ | — | $ | — | $ | 2 | $ | 2 | |||||||||||
(A) | Relates to amortization of favorable energy and other supply contracts. |
Fiscal Year Ending March 31, | ||||
2009 | $ | 62 | ||
2010 | 60 | |||
2011 | 56 | |||
2012 | 55 | |||
2013 | 82 |
8. | INVESTMENT IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY TRANSACTIONS |
Ownership | ||||||
Affiliate Name | Ownership Structure | Percentage | ||||
Aluminium Norf GmbH | Corporation | 50 | % | |||
Consorcio Candonga | Unincorporated Joint Venture | 50 | % | |||
MiniMRF LLC | Limited Liability Company | 50 | % | |||
Deutsche Aluminium Verpackung Recycling GmbH | Corporation | 30 | % | |||
France Aluminium Recyclage S.A. | Public Limited Company | 20 | % |
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As of March 31, | ||||||||
2008 | 2007 | |||||||
Assets: | ||||||||
Current assets | $ | 192 | $ | 152 | ||||
Non-current assets | 677 | 638 | ||||||
Total assets | $ | 869 | $ | 790 | ||||
Liabilities: | ||||||||
Current liabilities | $ | 151 | $ | 225 | ||||
Non-current liabilities | 359 | 260 | ||||||
Total liabilities | 510 | 485 | ||||||
Equity: | ||||||||
Novelis | 180 | 153 | ||||||
Third parties | 179 | 152 | ||||||
Total liabilities and equity | $ | 869 | $ | 790 | ||||
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
Through | Through | Ended | December 31, | |||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | ||||||||||||||||
Net sales | $ | 564 | $ | 45 | $ | 127 | $ | 558 | $ | 497 | ||||||||||
Costs, expenses and income taxes | 495 | 43 | 122 | 521 | 479 | |||||||||||||||
Net income | $ | 69 | $ | 2 | $ | 5 | $ | 37 | $ | 18 | ||||||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Purchases of tolling services, electricity and inventories | |||||||||||||||||||||
Aluminium Norf GmbH(A) | $ | 253 | $ | 21 | $ | 61 | $ | 227 | $ | 205 | |||||||||||
Consorcio Candonga(B) | 24 | 1 | 3 | 14 | 8 | ||||||||||||||||
Petrocoque S.A. Industria e Comercio(C) | n.a. | n.a. | n.a. | 2 | 2 | ||||||||||||||||
Total purchases from related parties | $ | 277 | $ | 22 | $ | 64 | $ | 243 | $ | 215 | |||||||||||
Interest (income) expense | |||||||||||||||||||||
Aluminium Norf GmbH(D) | $ | 1 | $ | — | $ | — | $ | (1 | ) | $ | 1 | ||||||||||
(A) | We purchase tolling services (the conversion of customer-owned metal) from Aluminium Norf GmbH. | |
(B) | We purchase electricity from Consorcio Candonga for our operations in South America. | |
(C) | We purchased calcined-coke from Petrocoque for use in our smelting operations in South America. As previously discussed, we sold our interest in Petrocoque in November 2006. They are not considered a related party in periods subsequent to November 2006. | |
(D) | We earn interest income on a loan due from Aluminium Norf GmbH. | |
n.a. | not applicable — see (C). |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Accounts receivable(A) | $ | 31 | $ | 25 | |||||
Other long-term receivables(A) | $ | 41 | $ | 54 | |||||
Accounts payable(B) | $ | 55 | $ | 49 |
(A) | The balances represent current and non-current portions of a loan due from Aluminium Norf GmbH. | |
(B) | We purchase tolling services from Aluminium Norf GmbH and electricity from Consorcio Candonga. |
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9. | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Accrued compensation and benefits | $ | 141 | $ | 138 | |||||
Accrued settlement of legal claim | 39 | 39 | |||||||
Accrued interest payable | 15 | 24 | |||||||
Accrued income taxes | 35 | 9 | |||||||
Current portion of fair value of unfavorable sales contracts | 242 | — | |||||||
Current portion of fair value of derivative instruments | 148 | 33 | |||||||
Other current liabilities | 230 | 237 | |||||||
Accrued expenses and other current liabilities | $ | 850 | $ | 480 | |||||
10. | DEBT |
As of March 31, | |||||||||||||||||||||
2008 | 2007 | ||||||||||||||||||||
Unamortized | Principal/ | ||||||||||||||||||||
Interest | Fair Value | Carrying | Carrying | ||||||||||||||||||
Rates(A) | Principal | Adjustments(B) | Value | Value | |||||||||||||||||
Successor | Predecessor | ||||||||||||||||||||
Novelis Inc. | |||||||||||||||||||||
7.25% Senior Notes, due February 2015 | 7.25 | % | $ | 1,399 | $ | 67 | $ | 1,466 | $ | 1,400 | |||||||||||
Floating rate Term Loan facility, due July 2014 | 4.70 | % | 298 | — | 298 | — | |||||||||||||||
Floating rate Term Loan B(D) | — | — | — | — | 259 | ||||||||||||||||
Novelis Corporation | |||||||||||||||||||||
Floating rate Term Loan facility, due July 2014 | 4.70 | %(C) | 655 | — | 655 | — | |||||||||||||||
Floating rate Term Loan B(D) | — | — | — | — | 449 | ||||||||||||||||
Novelis Switzerland S.A. | |||||||||||||||||||||
Capital lease obligation, due January 2020 (Swiss francs (CHF) 54 million) | 7.50 | % | 54 | (4 | ) | 50 | 46 | ||||||||||||||
Capital lease obligation, due August 2011 (CHF 3 million) | 2.49 | % | 3 | — | 3 | 4 | |||||||||||||||
Novelis Korea Limited | |||||||||||||||||||||
Bank loan, due October 2010 | 5.44 | % | 100 | — | 100 | — | |||||||||||||||
Bank loan, due December 2007(F) | — | — | — | — | 70 | ||||||||||||||||
Bank loan (Korean won (KRW) 40 billion)(E) | — | — | — | — | 42 | ||||||||||||||||
Bank loan, due December 2007 (KRW 25 billion)(F) | — | — | — | — | 27 | ||||||||||||||||
Bank loans, due September 2008 through June 2011 (KRW 1 billion) | 3.60 | %(G) | 1 | — | 1 | 1 | |||||||||||||||
Other | |||||||||||||||||||||
Other debt, due April 2008 through December 2012 | 1.99 | %(G) | 2 | — | 2 | 2 | |||||||||||||||
Total debt | 2,512 | 63 | 2,575 | 2,300 | |||||||||||||||||
Less: current portion | (15 | ) | — | (15 | ) | (143 | ) | ||||||||||||||
Long-term debt — net of current portion | $ | 2,497 | $ | 63 | $ | 2,560 | $ | 2,157 | |||||||||||||
(A) | Interest rates are as of March 31, 2008 and exclude the effects of accretion/amortization of fair value adjustments as a result of the Arrangement. | |
(B) | Debt was recorded at fair value as a result of the Arrangement (see Note 2 — Acquisition of Novelis Common Stock). |
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(C) | Excludes the effect of any related interest rate swaps. SeeNew Senior Secured Credit Facilities. | |
(D) | The Floating rate Term Loan B was refinanced in July 2007. SeeNew Senior Secured Credit Facilities. | |
(E) | The Bank loan was refinanced in August 2007 with a short-term borrowing. SeeKorean Bank Loans. | |
(F) | These two Bank loans were refinanced in October 2007. SeeKorean Bank Loans. | |
(G) | Weighted average interest rate. |
Year Ending March 31, | Amount | |||
2009 | $ | 15 | ||
2010 | 14 | |||
2011 | 114 | |||
2012 | 14 | |||
2013 | 14 | |||
Thereafter | 2,341 | |||
Total | $ | 2,512 | ||
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11. | OTHER COMPREHENSIVE INCOME (LOSS) |
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net change in foreign currency translation adjustments | $ | 26 | $ | 31 | $ | 11 | $ | 172 | $ | (169 | ) | ||||||||||
Net change in fair value of effective portion of hedges | — | (1 | ) | 7 | (46 | ) | — | ||||||||||||||
Postretirement benefit plans: | |||||||||||||||||||||
Amortization of net actuarial loss | — | (1 | ) | 2 | — | — | |||||||||||||||
Net change in pension and other benefits | (17 | ) | — | — | — | — | |||||||||||||||
Net change in minimum pension liability | — | — | — | 16 | (14 | ) | |||||||||||||||
Net other comprehensive income (loss) adjustments, before income tax effect | 9 | 29 | 20 | 142 | (183 | ) | |||||||||||||||
Income tax effect | 4 | 4 | (5 | ) | (8 | ) | 11 | ||||||||||||||
Other comprehensive income (loss) | $ | 13 | $ | 33 | $ | 15 | $ | 134 | $ | (172 | ) | ||||||||||
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Foreign currency translation adjustments | $ | 26 | $ | 144 | |||||
Fair value of effective portion of hedges — net | — | (43 | ) | ||||||
Postretirement benefit plans: | |||||||||
Net actuarial loss | — | (82 | ) | ||||||
Pension and other benefits | (13 | ) | — | ||||||
Net prior service cost | — | (8 | ) | ||||||
Net transition obligation | — | (1 | ) | ||||||
Accumulated other comprehensive income (loss) | $ | 13 | $ | 10 | |||||
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12. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
As of March 31, | |||||||||||||||||
2008 | 2007 | ||||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||||
Value | Value | Value | Value | ||||||||||||||
Successor | Successor | Predecessor | Predecessor | ||||||||||||||
Assets | |||||||||||||||||
Long-term receivables from related parties | $ | 72 | $ | 72 | $ | 54 | $ | 54 | |||||||||
Liabilities | |||||||||||||||||
Long-term debt | |||||||||||||||||
Novelis Inc. | |||||||||||||||||
7.25% Senior Notes, due February 2015 | 1,466 | 1,249 | 1,400 | 1,481 | |||||||||||||
Floating rate Term Loan facility, due July 2014 | 298 | 298 | — | — | |||||||||||||
Floating rate Term Loan B | — | — | 259 | 259 | |||||||||||||
Novelis Corporation | |||||||||||||||||
Floating rate Term Loan facility, due July 2014 | 655 | 655 | — | — | |||||||||||||
Floating rate Term Loan B | — | — | 449 | 449 | |||||||||||||
Novelis Switzerland S.A. | |||||||||||||||||
Capital lease obligation, due January 2020 (CHF 54 million) | 50 | 43 | 46 | 43 | |||||||||||||
Capital lease obligation, due August 2011 (CHF 3 million) | 3 | 3 | 4 | 3 | |||||||||||||
Novelis Korea Limited | |||||||||||||||||
Bank loan, due October 2010 | 100 | 87 | — | — | |||||||||||||
Bank loan, due December 2007 | — | — | 70 | 67 | |||||||||||||
Bank loan (KRW 40 billion) | — | — | 42 | 41 | |||||||||||||
Bank loan, due December 2007 (KRW 25 billion) | — | — | 27 | 26 | |||||||||||||
Bank loans, due September 2008 through June 2011 (KRW 1 billion) | 1 | 1 | 1 | 1 | |||||||||||||
Other | |||||||||||||||||
Other debt, due April 2008 through December 2012 | 2 | 2 | 2 | 2 | |||||||||||||
Financial commitments | |||||||||||||||||
Letters of credit | — | 148 | — | 84 | |||||||||||||
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13. | SHARE-BASED COMPENSATION |
Shares/Units | Cash Payments | |||||||
Settled | (In millions) | |||||||
Novelis 2006 Incentive Plan (stock options) | 825,850 | $ | 16 | |||||
Novelis 2006 Incentive Plan (stock appreciation rights) | 378,360 | 7 | ||||||
Novelis Conversion Plan of 2005 | 1,238,183 | 29 | ||||||
Stock Price Appreciation Unit Plan | 299,873 | 7 | ||||||
Deferred Share Unit Plan for Non-Executive Directors | 109,911 | 5 | ||||||
Novelis Founders Performance Awards | 180,400 | 8 | ||||||
$ | 72 | |||||||
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Weighted | ||||||||||||
Average | ||||||||||||
Number of | Fair Value | Award | ||||||||||
Recognition | at Grant | Redemption | ||||||||||
Awards | Date | Price | ||||||||||
Predecessor: | ||||||||||||
Recognition Awards as of December 31, 2006 | 145,800 | $ | 23.15 | |||||||||
Granted | — | |||||||||||
Vested | — | |||||||||||
Forfeited/Cancelled | — | |||||||||||
Recognition Awards as of March 31, 2007 | 145,800 | $ | 23.15 | |||||||||
Granted | — | |||||||||||
Vested | — | |||||||||||
Forfeited/Cancelled | — | |||||||||||
Recognition Awards as of May 15, 2007 | 145,800 | $ | 44.93 | |||||||||
Successor: | ||||||||||||
Granted | — | |||||||||||
Vested | (59,050 | ) | ||||||||||
Forfeited/Cancelled | (30,400 | ) | ||||||||||
Recognition Awards as of March 31, 2008 | 56,350 | $ | 44.93 | |||||||||
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Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | |||||||||||||||
Average | Contractual | Aggregate | ||||||||||||||
Number of | Exercise | Term | Intrinsic | |||||||||||||
Options | Price | (In years) | Value | |||||||||||||
Predecessor: | ||||||||||||||||
Options outstanding as of December 31, 2006 | 858,500 | $ | 25.53 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited/Cancelled | (32,650 | ) | $ | 25.53 | ||||||||||||
Expired | — | — | ||||||||||||||
Options outstanding as of March 31, 2007 | 825,850 | $ | 25.53 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited/Cancelled | — | — | ||||||||||||||
Expired | — | — | ||||||||||||||
Settled as a result of the Arrangement | (825,850 | ) | $ | 25.53 | ||||||||||||
Options outstanding as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
Options exercisable as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
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Year Ended | ||
December 31, 2006; | ||
Three Months Ended | ||
March 31, 2007; and | ||
the Period from | ||
April 1, 2007 | ||
Through | ||
May 15, 2007 | ||
Predecessor | ||
Expected volatility | 42.20 to 46.40% | |
Weighted average volatility | 44.30% | |
Dividend yield | 0.16% | |
Risk-free interest rate | 4.68 to 4.71% | |
Expected life | 1.00 to 4.75 years |
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Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | ||||||||||||||||
Weighted | Contractual | Aggregate | ||||||||||||||
Number of | Average | Term | Intrinsic | |||||||||||||
SARs | Exercise Price | (In years) | Value | |||||||||||||
Predecessor: | ||||||||||||||||
SARs outstanding as of December 31, 2006 | 381,090 | $ | 25.53 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited/Cancelled | (1,090 | ) | $ | 25.53 | ||||||||||||
Expired | — | — | ||||||||||||||
SARs outstanding as of March 31, 2007 | 380,000 | $ | 25.53 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited/Cancelled | (1,640 | ) | $ | 25.53 | ||||||||||||
Expired | — | — | ||||||||||||||
Settled as a result of the Arrangement | (378,360 | ) | $ | 25.53 | ||||||||||||
SARs outstanding as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
SARs exercisable as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
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Three Months Ended | Year Ended | |||
March 31, 2007 | December 31, 2006 | |||
Predecessor | Predecessor | |||
Expected volatility | 40.70 to 44.70% | 40.80 to 45.40% | ||
Weighted average volatility | 42.70% | 43.10% | ||
Dividend yield | None | 0.14% | ||
Risk-free interest rate | 4.51 to 4.59% | 4.67 to 4.71% | ||
Expected life | 0.57 to 4.32 years | 0.83 to 4.57 years |
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Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | |||||||||||||||
Average | Contractual | Aggregate | ||||||||||||||
Number of | Exercise | Term | Intrinsic | |||||||||||||
Options | Price | (In years) | Value | |||||||||||||
Predecessor: | ||||||||||||||||
Options outstanding as of December 31, 2006 | 2,514,277 | $ | 21.84 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (1,217,325 | ) | $ | 21.95 | ||||||||||||
Forfeited/Cancelled | — | — | ||||||||||||||
Expired | — | — | ||||||||||||||
Options outstanding as of March 31, 2007 | 1,296,952 | $ | 21.74 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (57,876 | ) | $ | 22.00 | ||||||||||||
Forfeited/Cancelled | (893 | ) | $ | 23.74 | ||||||||||||
Expired | — | — | ||||||||||||||
Settled as a result of the Arrangement | (1,238,183 | ) | $ | 21.82 | ||||||||||||
Options outstanding as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
Options exercisable as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
Years December 31, | ||
2005 and 2006; | ||
Three Months Ended | ||
March 31, 2007; and | ||
the Period from | ||
April 1, 2007 | ||
Through | ||
May 15, 2007 | ||
Predecessor | ||
Expected volatility | 30.30% | |
Weighted-average volatility | 30.30% | |
Dividend yield | 1.56% | |
Risk-free interest rate | 2.88 to 3.73% | |
Expected life | 0.70 to 5.70 years |
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Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | ||||||||||||||||
Weighted | Contractual | Aggregate | ||||||||||||||
Number of | Average | Term | Intrinsic | |||||||||||||
SPAUs | Exercise Price | (In years) | Value | |||||||||||||
Predecessor: | ||||||||||||||||
SPAUs outstanding as of December 31, 2007 | 418,405 | $ | 22.04 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (117,788 | ) | $ | 22.29 | ||||||||||||
Forfeited/Cancelled | — | — | ||||||||||||||
Expired | — | — | ||||||||||||||
SPAUs outstanding as of March 31, 2007 | 300,617 | $ | 21.94 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited/Cancelled | — | — | ||||||||||||||
Expired | (744 | ) | $ | 21.49 | ||||||||||||
Settled as a result of the Arrangement | (299,873 | ) | $ | 21.94 | ||||||||||||
SPAUs outstanding as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
SPAUs exercisable as of May 15, 2007 | — | $ | — | — | $ | — | ||||||||||
Three Months Ended | Year Ended | |||
March 31, 2007 | December 31, 2006 | |||
Predecessor | Predecessor | |||
Expected volatility | 38.20 to 40.80% | 36.20 to 40.30% | ||
Weighted average volatility | 39.31% | 39.32% | ||
Dividend yield | None | 0.14% | ||
Risk-free interest rate | 4.51 to 4.56% | 4.67 to 4.80% | ||
Expected life | 2.25 to 4.37 years | 2.37 to 4.37 years |
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Aggregate | ||||||||||||
Number of | Redemption | Intrinsic | ||||||||||
DDSUs | Price | Value | ||||||||||
Predecessor: | ||||||||||||
DDSUs outstanding as of December 31, 2006 | 112,039 | $ | 27.11 | |||||||||
Granted | 7,060 | |||||||||||
Exercised (paid out) | (12,521 | ) | ||||||||||
Forfeited | — | |||||||||||
Expired/Cancelled | — | |||||||||||
DDSUs outstanding as of March 31, 2007 | 106,578 | $ | 44.09 | |||||||||
Granted | 3,333 | |||||||||||
Exercised (paid out) | — | |||||||||||
Forfeited | — | |||||||||||
Expired/Cancelled | — | |||||||||||
Settled as a result of the Arrangement | (109,911 | ) | $ | 44.93 | ||||||||
DDSUs outstanding as of May 15, 2007 | — | $ | — | $ | — | |||||||
DDSUs exercisable as of May 15, 2007 | — | $ | — | $ | — | |||||||
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Year Ended | ||||
December 31, 2006 | ||||
Predecessor | ||||
Expected volatility | 37.00% | |||
Weighted average volatility | 37.00% | |||
Dividend yield | 0.14% | |||
Risk-free interest rate | 4.75% | |||
Expected life (derived service periods) | 0.93 to 1.23 years |
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May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Recognition Awards | $ | 2.3 | $ | 1.5 | $ | 0.5 | $ | 0.5 | $ | — | |||||||||||
Novelis 2006 Incentive Plan (stock options) | n.a. | 14.5 | 0.9 | 0.7 | — | ||||||||||||||||
Novelis 2006 Incentive Plan (stock appreciation rights) | n.a. | 5.6 | 1.4 | 0.4 | — | ||||||||||||||||
Novelis Conversion Plan of 2005 | n.a. | 23.8 | 0.3 | 7.3 | 3.1 | ||||||||||||||||
Stock Price Appreciation Unit Plan | n.a. | (0.5 | ) | 4.4 | 4.5 | — | |||||||||||||||
Deferred Share Unit Plan for Non-Executive Directors | n.a. | 0.2 | 2.2 | 1.8 | 1.8 | ||||||||||||||||
Novelis Founders Performance Awards | n.a. | 0.1 | 6.0 | 2.7 | 1.9 | ||||||||||||||||
Total Shareholder Returns Performance Plan | n.a. | — | — | 0.2 | (0.4 | ) | |||||||||||||||
Deferred Share Agreements | n.a. | — | — | — | 0.5 | ||||||||||||||||
Total Share-Based Compensation Expense | $ | 2.3 | $ | 45.2 | $ | 15.7 | $ | 18.1 | $ | 6.9 | |||||||||||
14. | POSTRETIREMENT BENEFIT PLANS |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Funded pension plans | $ | 35 | $ | 4 | $ | 10 | $ | 39 | $ | 27 | |||||||||||
Unfunded pension plans | 19 | 2 | 6 | 22 | 16 | ||||||||||||||||
Savings and defined contribution pension plans | 13 | 2 | 3 | 12 | 9 | ||||||||||||||||
Total contributions | $ | 67 | $ | 8 | $ | 19 | $ | 73 | $ | 52 | |||||||||||
Allocation in | |||||||||||||
Aggregate as of | |||||||||||||
Target | March 31, | ||||||||||||
Asset Category | Allocation Ranges | 2008 | 2007 | ||||||||||
Successor | Predecessor | ||||||||||||
Equity securities | 35 - 70 | % | 50 | % | 58 | % | |||||||
Debt securities | 25 - 60 | % | 42 | % | 40 | % | |||||||
Real estate | 0 - 25 | % | 4 | % | 1 | % | |||||||
Other | 0 - 15 | % | 3 | % | 1 | % |
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Pension Benefits | |||||||||||||||||
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Change in benefit obligation | |||||||||||||||||
Benefit obligation at beginning of period | $ | 867 | $ | 885 | $ | 877 | $ | 575 | |||||||||
Service cost | 40 | 6 | 12 | 42 | |||||||||||||
Interest cost | 43 | 6 | 12 | 44 | |||||||||||||
Members’ contributions | 5 | — | 1 | 4 | |||||||||||||
Benefits paid | (39 | ) | (4 | ) | (10 | ) | (30 | ) | |||||||||
Amendments | (9 | ) | — | — | 1 | ||||||||||||
Transfers/mergers | 95 | — | — | 209 | |||||||||||||
Curtailments/settlements/termination benefits | — | — | — | (5 | ) | ||||||||||||
Actuarial (gains) losses | (52 | ) | (32 | ) | (9 | ) | (10 | ) | |||||||||
Currency (gains) losses | 41 | 6 | 2 | 47 | |||||||||||||
Benefit obligation at end of period | $ | 991 | $ | 867 | $ | 885 | $ | 877 | |||||||||
Benefit obligation of funded plans | $ | 800 | $ | 680 | $ | 696 | $ | 690 | |||||||||
Benefit obligation of unfunded plans | 191 | 187 | 189 | 187 | |||||||||||||
Benefit obligation at end of period | $ | 991 | $ | 867 | $ | 885 | $ | 877 | |||||||||
Other Benefits | |||||||||||||||||
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Benefit obligation at beginning of period | $ | 140 | $ | 141 | $ | 139 | $ | 122 | |||||||||
Service cost | 4 | 1 | 2 | 5 | |||||||||||||
Interest cost | 7 | 1 | 2 | 7 | |||||||||||||
Benefits paid | (6 | ) | (1 | ) | (2 | ) | (8 | ) | |||||||||
Amendments | — | — | — | — | |||||||||||||
Transfers/mergers | — | (1 | ) | — | 1 | ||||||||||||
Actuarial (gains) losses | 25 | (2 | ) | — | 12 | ||||||||||||
Currency (gains) losses | 1 | 1 | — | — | |||||||||||||
Benefit obligation at end of period | $ | 171 | 140 | $ | 141 | $ | 139 | ||||||||||
Benefit obligation of funded plans | $ | — | $ | — | $ | — | $ | — | |||||||||
Benefit obligation of unfunded plans | 171 | 140 | 141 | 139 | |||||||||||||
Benefit obligation at end of period | $ | 171 | $ | 140 | $ | 141 | $ | 139 | |||||||||
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Pension Benefits | |||||||||||||||||
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Change in fair value of plan assets | |||||||||||||||||
Fair value of plan assets at beginning of period | $ | 607 | $ | 578 | $ | 568 | $ | 301 | |||||||||
Actual return on plan assets | (14 | ) | 16 | 6 | 41 | ||||||||||||
Members’ contributions | 5 | — | 1 | 4 | |||||||||||||
Benefits paid | (39 | ) | (2 | ) | (5 | ) | (30 | ) | |||||||||
Company contributions | 54 | 12 | 3 | 51 | |||||||||||||
Transfers/mergers | 94 | — | 4 | 178 | |||||||||||||
Currency gains (losses) | 17 | 3 | 1 | 23 | |||||||||||||
Fair value of plan assets at end of period | $ | 724 | $ | 607 | $ | 578 | $ | 568 | |||||||||
As of March 31, | |||||||||||||||||
2008 | 2007 | ||||||||||||||||
Pension | Other | Pension | Other | ||||||||||||||
Benefits | Benefits | Benefits | Benefits | ||||||||||||||
Successor | Predecessor | ||||||||||||||||
Funded status | |||||||||||||||||
Funded Status at end of period: | |||||||||||||||||
Assets less the benefit obligation of funded plans | $ | (76 | ) | $ | — | $ | (118 | ) | $ | — | |||||||
Benefit obligation of unfunded plans | (191 | ) | (171 | ) | (189 | ) | (141 | ) | |||||||||
$ | (267 | ) | $ | (171 | ) | $ | (307 | ) | $ | (141 | ) | ||||||
As included on consolidated balance sheet | |||||||||||||||||
Other long-term assets — third parties | $ | 7 | $ | — | $ | 2 | $ | — | |||||||||
Accrued expenses and other current liabilities | (16 | ) | (8 | ) | (17 | ) | (7 | ) | |||||||||
Accrued postretirement benefits | (258 | ) | (163 | ) | (292 | ) | (134 | ) | |||||||||
$ | (267 | ) | $ | (171 | ) | $ | (307 | ) | $ | (141 | ) | ||||||
As of March 31, | |||||||||||||||||
2008 | 2007 | ||||||||||||||||
Pension | Other | Pension | Other | ||||||||||||||
Benefits | Benefits | Benefits | Benefits | ||||||||||||||
Successor | Predecessor | ||||||||||||||||
Net actuarial loss | $ | 2 | $ | 25 | $ | 59 | $ | 33 | |||||||||
Prior service cost (credit) | (10 | ) | — | 15 | (2 | ) | |||||||||||
Net transition obligation | — | — | — | 1 | |||||||||||||
Total postretirement amounts recognized in | |||||||||||||||||
Accumulated other comprehensive income (loss) | $ | (8 | ) | $ | 25 | $ | 74 | $ | 32 | ||||||||
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As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Projected benefit obligation | $ | 528 | $ | 606 | |||||
Accumulated benefit obligation | $ | 496 | $ | 536 | |||||
Fair value of plan assets | $ | 302 | $ | 325 |
(in millions).
Pension | Other | |||||||
Benefits | Benefits | |||||||
2009 | $ | 39 | $ | 8 | ||||
2010 | 43 | 8 | ||||||
2011 | 47 | 9 | ||||||
2012 | 51 | 10 | ||||||
2013 | 55 | 11 | ||||||
2014 through 2018 | 352 | 71 | ||||||
Total | $ | 587 | $ | 117 | ||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
Pension Benefits | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net periodic benefit cost | |||||||||||||||||||||
Service cost | $ | 40 | $ | 6 | $ | 12 | $ | 42 | $ | 23 | |||||||||||
Interest cost | 43 | 6 | 12 | 44 | 29 | ||||||||||||||||
Expected return on assets | (41 | ) | (5 | ) | (11 | ) | (38 | ) | (20 | ) | |||||||||||
Amortization | |||||||||||||||||||||
— actuarial losses | — | — | 1 | 6 | 5 | ||||||||||||||||
— prior service cost | — | — | — | 2 | 2 | ||||||||||||||||
Curtailment/settlement losses | — | — | — | (4 | ) | — | |||||||||||||||
Net periodic benefit cost | 42 | 7 | 14 | 52 | 39 | ||||||||||||||||
Proportionate share of non-consolidated affiliates’ deferred pension costs, net of tax | 4 | — | — | 4 | — | ||||||||||||||||
Total net periodic benefit costs recognized | $ | 46 | $ | 7 | $ | 14 | $ | 56 | $ | 39 | |||||||||||
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||||||
Other Benefits | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net periodic benefit cost | |||||||||||||||||||||
Service cost | $ | 4 | $ | 1 | $ | 1 | $ | 5 | $ | 4 | |||||||||||
Interest cost | 7 | 1 | 2 | 7 | 7 | ||||||||||||||||
Amortization | |||||||||||||||||||||
— actuarial losses | — | — | 1 | 1 | 1 | ||||||||||||||||
Total net periodic benefit costs recognized | $ | 11 | $ | 2 | $ | 4 | $ | 13 | $ | 12 | |||||||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
Pension Benefits | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Weighted average assumptions used to determine benefit obligations | |||||||||||||||||||||
Discount rate | 5.8 | % | 5.4 | % | 5.3 | % | 5.4 | % | 5.1 | % | |||||||||||
Average compensation growth | 3.4 | % | 3.8 | % | 3.8 | % | 3.8 | % | 4.0 | % | |||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||||||
Discount rate | 5.2 | % | 5.4 | % | 5.4 | % | 5.1 | % | 5.4 | % | |||||||||||
Average compensation growth | 3.7 | % | 3.8 | % | 3.8 | % | 3.9 | % | 4.2 | % | |||||||||||
Expected return on plan assets | 7.3 | % | 7.5 | % | 7.5 | % | 7.3 | % | 7.4 | % |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
Other Benefits | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | ||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Weighted average assumptions used to determine benefit obligations | |||||||||||||||||||||
Discount rate | 6.1 | % | 5.8 | % | 5.7 | % | 5.7 | % | 5.7 | % | |||||||||||
Average compensation growth | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | |||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||||||
Discount rate | 5.7 | % | 5.7 | % | 5.7 | % | 5.7 | % | 5.8 | % | |||||||||||
Average compensation growth | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | 4.0 | % |
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1% Increase | 1% Decrease | |||||||
Sensitivity Analysis | ||||||||
Effect on service and interest costs | $ | 1 | $ | (1 | ) | |||
Effect on benefit obligation | $ | 15 | $ | (13 | ) |
15. | CURRENCY LOSSES (GAINS) |
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net (gain) loss on change in fair value of currency derivative instruments(A) | $ | 37 | $ | (10 | ) | $ | (5 | ) | $ | 24 | $ | (96 | ) | ||||||||
Net (gain) loss on translation of monetary assets and liabilities(B) | (2 | ) | 4 | 6 | (8 | ) | (6 | ) | |||||||||||||
Net currency (gain) loss | $ | 35 | $ | (6 | ) | $ | 1 | $ | 16 | $ | (102 | ) | |||||||||
(A) | Included in (Gain) loss on change in fair value of derivative instruments — net. | |
(B) | Included inOther (income) expenses — net. |
May 16, 2007 | January 1, 2007 | ||||||||
Through | Through | ||||||||
March 31, 2008 | March 31, 2007 | ||||||||
Successor | Predecessor | ||||||||
Cumulative currency translation adjustment — beginning of period | $ | — | $ | 133 | |||||
Effect of changes in exchange rates | 26 | 11 | |||||||
Cumulative currency translation adjustment — end of period | $ | 26 | $ | 144 | |||||
16. | FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS |
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As of March 31, 2008 | ||||||||||||||
Maturity Dates | Net Fair | |||||||||||||
(Fiscal Year) | Assets | Liabilities | Value | |||||||||||
Successor: | ||||||||||||||
Foreign exchange forward contracts | 2009 through 2012 | $ | 47 | $ | (116 | ) | $ | (69 | ) | |||||
Cross-currency swaps | 2009 through 2015 | 19 | (189 | ) | (170 | ) | ||||||||
Interest rate currency swaps | 2009 through 2011 | 4 | — | 4 | ||||||||||
Interest rate swaps | 2009 through 2010 | — | (15 | ) | (15 | ) | ||||||||
Aluminum forward contracts | 2009 through 2011 | 134 | (9 | ) | 125 | |||||||||
Aluminum options | 2009 through 2011 | 1 | — | 1 | ||||||||||
Electricity swap | 2017 | 14 | — | 14 | ||||||||||
Embedded derivative instruments | 2009 | — | (20 | ) | (20 | ) | ||||||||
Natural gas swaps | 2009 through 2010 | 5 | — | 5 | ||||||||||
Total fair value | 224 | (349 | ) | (125 | ) | |||||||||
Less: current portion(A) | 203 | (148 | ) | 55 | ||||||||||
Noncurrent portion(A) | $ | 21 | $ | (201 | ) | $ | (180 | ) | ||||||
As of March 31, 2007 | ||||||||||||||
Maturity Dates | Net Fair | |||||||||||||
(Fiscal Year) | Assets | Liabilities | Value | |||||||||||
Predecessor: | ||||||||||||||
Foreign exchange forward contracts | 2008 through 2012 | $ | 16 | $ | (20 | ) | $ | (4 | ) | |||||
Interest rate swaps | 2008 | 2 | — | 2 | ||||||||||
Cross-currency swaps | 2008 through 2015 | 6 | (90 | ) | (84 | ) | ||||||||
Aluminum forward contracts | 2008 through 2010 | 60 | (8 | ) | 52 | |||||||||
Aluminum options | 2008 | 1 | — | 1 | ||||||||||
Electricity swap | 2017 | 60 | — | 60 | ||||||||||
Embedded derivative instruments | 2008 | 1 | — | 1 | ||||||||||
Natural gas swaps | 2008 | 1 | — | 1 | ||||||||||
Total fair value | 147 | (118 | ) | 29 | ||||||||||
Less: current portion(A) | 92 | (33 | ) | 59 | ||||||||||
Noncurrent portion(A) | $ | 55 | $ | (85 | ) | $ | (30 | ) | ||||||
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(A) | The amounts of the current and long-term portions of fair values under assets are each presented on the face of our accompanying consolidated balance sheets. The amounts of the current and noncurrent portions of fair values under liabilities are included inAccrued expenses and other current liabilitiesandOther long-term liabilities, respectively, in the accompanying consolidated balance sheets. |
17. | OTHER (INCOME) EXPENSES — NET |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Restructuring charges — net | $ | 6 | $ | 1 | $ | 9 | $ | 19 | $ | 10 | |||||||||||
Exchange (gains) losses — net | (2 | ) | 4 | 6 | (8 | ) | (6 | ) | |||||||||||||
Impairment charges on long-lived assets | 1 | — | 8 | — | 7 | ||||||||||||||||
(Gain) loss on disposal of business | — | — | — | 15 | — | ||||||||||||||||
(Gain) loss on sale of equity interest in non-consolidated affiliate(A) | — | — | — | (15 | ) | — | |||||||||||||||
(Gain) loss on sale of rights to develop and operate hydroelectric power plants(B) | — | — | — | (11 | ) | — | |||||||||||||||
(Gains) losses on disposals of property, plant and equipment — net | — | — | — | 5 | (17 | ) | |||||||||||||||
Other — net | (5 | ) | (1 | ) | 1 | (5 | ) | (7 | ) | ||||||||||||
Other (income) expenses — net | $ | — | $ | 4 | $ | 24 | $ | — | $ | (13 | ) | ||||||||||
(A) | In November 2006, we sold the common and preferred shares of our 25% interest in Petrocoque to the other shareholders of Petrocoque for approximately $20 million. We recognized a pre-tax gain of approximately $15 million. | |
(B) | During the fourth quarter of 2006, we sold our rights to develop and operate two hydroelectric power plants in South America and recorded a pre-tax gain of approximately $11 million. |
18. | INCOME TAXES |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Domestic (Canada) | $ | (102 | ) | $ | (45 | ) | $ | (44 | ) | $ | (100 | ) | $ | (40 | ) | ||||||
Foreign (all other countries) | 142 | (50 | ) | (14 | ) | (194 | ) | 258 | |||||||||||||
Pre-tax income (loss) before equity in net (income) loss on non-consolidated affiliates and minority interests’ share | $ | 40 | $ | (95 | ) | $ | (58 | ) | $ | (294 | ) | $ | 218 | ||||||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Current provision (benefit): | |||||||||||||||||||||
Canada | $ | 7 | $ | — | $ | 1 | $ | 1 | $ | 11 | |||||||||||
Foreign (all other countries) | 71 | 21 | 15 | 72 | 66 | ||||||||||||||||
Total current | 78 | 21 | 16 | 73 | 77 | ||||||||||||||||
Deferred provision (benefit): | |||||||||||||||||||||
Canada | — | 4 | — | 4 | (15 | ) | |||||||||||||||
Foreign (all other countries) | (75 | ) | (21 | ) | (9 | ) | (81 | ) | 45 | ||||||||||||
Total deferred | (75 | ) | (17 | ) | (9 | ) | (77 | ) | 30 | ||||||||||||
Total provision (benefit) for taxes on income (loss) | $ | 3 | $ | 4 | $ | 7 | $ | (4 | ) | $ | 107 | ||||||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Pre-tax income (loss) before equity in net (income) loss on non-consolidated affiliates and minority interests’ share | 40 | (95 | ) | (58 | ) | (294 | ) | 218 | |||||||||||||
Canadian Statutory tax rate | 32 | % | 33 | % | 33 | % | 33 | % | 33 | % | |||||||||||
Provision (benefit) at the Canadian statutory rate | $ | 13 | $ | (31 | ) | $ | (19 | ) | $ | (97 | ) | $ | 72 | ||||||||
Increase (decrease) for taxes on income (loss) resulting from: | |||||||||||||||||||||
Exchange translation items | 39 | 23 | 6 | 15 | 23 | ||||||||||||||||
Exchange remeasurement of deferred income taxes | 27 | 3 | 2 | 3 | 1 | ||||||||||||||||
Change in valuation allowances | (6 | ) | 13 | 23 | 71 | 5 | |||||||||||||||
Tax credits and other allowances | (1 | ) | — | — | — | (2 | ) | ||||||||||||||
Expense/income items with no tax effect — net | 5 | (9 | ) | 1 | 13 | 7 | |||||||||||||||
Enacted tax rate changes | (78 | ) | — | — | — | — | |||||||||||||||
Tax rate differences on foreign earnings | (12 | ) | 2 | (6 | ) | (15 | ) | 5 | |||||||||||||
Uncertain tax positions | 17 | — | — | — | — | ||||||||||||||||
Other — net | (1 | ) | 3 | — | 6 | (4 | ) | ||||||||||||||
Provision (benefit) for taxes on income (loss) | $ | 3 | $ | 4 | $ | 7 | $ | (4 | ) | $ | 107 | ||||||||||
Effective tax rate | 8 | % | (4 | )% | (12 | )% | 1 | % | 49 | % | |||||||||||
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As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Deferred income tax assets: | |||||||||
Provisions not currently deductible for tax purposes | $ | 324 | $ | 212 | |||||
Tax losses/benefit carryforwards — net | 311 | 286 | |||||||
Depreciation and Amortization | 91 | 1 | |||||||
Other assets | 53 | 48 | |||||||
Total deferred income tax assets | 779 | 547 | |||||||
Less: valuation allowance | (161 | ) | (143 | ) | |||||
Net deferred income tax assets | $ | 618 | $ | 404 | |||||
Deferred income tax liabilities: | |||||||||
Depreciation and amortization | $ | 1,205 | $ | 219 | |||||
Inventory valuation reserves | 81 | 114 | |||||||
Other liabilities | 189 | 125 | |||||||
Total deferred income tax liabilities | $ | 1,475 | $ | 458 | |||||
Total deferred income tax liabilities | $ | 1,475 | $ | 458 | |||||
Less: Net deferred income tax assets | 618 | 404 | |||||||
Net deferred income tax liabilities | $ | 857 | $ | 54 | |||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||
Through | Through | Ended | |||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | |||||||||||
Successor | Predecessor | Predecessor | |||||||||||
Beginning balance | $ | 47 | $ | 46 | $ | 46 | |||||||
Additions based on tax positions related to the current period | 2 | — | — | ||||||||||
Additions based on tax positions of prior years | 7 | — | 1 | ||||||||||
Reductions based on tax positions of prior years | — | — | (1 | ) | |||||||||
Settlements | — | — | — | ||||||||||
Foreign Exchange | 3 | 1 | — | ||||||||||
Ending Balance | $ | 59 | $ | 47 | $ | 46 | |||||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Cash taxes paid | $ | 64 | $ | 9 | $ | 18 | $ | 68 | $ | 39 | |||||||||||
19. | COMMITMENTS AND CONTINGENCIES |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Purchases from Alcan as a percentage of total combined prime and sheet ingot purchases in kt(A) | 35 | % | 34 | % | 35 | % | 35 | % | 40 | % | |||||||||||
(A) | One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. |
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• | certain of our wholly-owned subsidiaries and | |
• | Aluminium Norf GmbH, which is a fifty percent (50%) owned joint venture that does not meet the requirements for consolidation under FASB Interpretation No. 46 (Revised),Consolidation of Variable Interest Entities. |
Maximum | Liability | |||||||
Potential | Carrying | |||||||
Type of Entity | Future Payment | Value | ||||||
Wholly-owned subsidiaries | $ | 98 | $ | 67 | ||||
Aluminium Norf GmbH | 16 | — |
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20. | SEGMENT, GEOGRAPHICAL AREA AND MAJOR CUSTOMER INFORMATION |
• | North America. Headquartered in Cleveland, Ohio, this segment manufactures aluminum sheet and light gauge products and operates 12 plants, including two fully dedicated recycling facilities, in two countries. | |
• | Europe. Headquartered in Zurich, Switzerland, this segment manufactures aluminum sheet and light gauge products and operates 14 plants, including one recycling facility, in six countries. | |
• | Asia. Headquartered in Seoul, South Korea, this segment manufactures aluminum sheet and light gauge products and operates three plants in two countries. | |
• | South America. Headquartered in Sao Paulo, Brazil, this segment comprises bauxite mining, alumina refining, smelting operations, power generation, carbon products, aluminum sheet and light gauge products and operates four plants in Brazil. |
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Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
North | South | Proportional | Corporate | |||||||||||||||||||||||||
Total Assets | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
March 31, 2008 (Successor) | $ | 3,892 | $ | 4,430 | $ | 1,082 | $ | 1,478 | $ | (149 | ) | $ | 213 | $ | 10,946 | |||||||||||||
March 31, 2007 (Predecessor) | $ | 1,566 | $ | 2,543 | $ | 1,110 | $ | 821 | $ | (114 | ) | $ | 44 | $ | 5,970 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
North | South | Proportional | Corporate | |||||||||||||||||||||||||
Investment in and Advances to Non-Consolidated Affiliates | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
March 31, 2008 (Successor) | $ | 1 | $ | 868 | $ | — | $ | 48 | $ | — | $ | — | $ | 917 | ||||||||||||||
March 31, 2007 (Predecessor) | $ | 2 | $ | 102 | $ | — | $ | 49 | $ | — | $ | — | $ | 153 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Proportional | Corporate | ||||||||||||||||||||||||
May 16, 2007 Through March 31, 2008 | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
(Successor) | ||||||||||||||||||||||||||||
Net sales (to third parties) | $ | 3,655 | $ | 3,828 | $ | 1,602 | $ | 885 | $ | (5 | ) | — | $ | 9,965 | ||||||||||||||
Intersegment sales | 9 | 3 | 10 | 27 | — | (49 | ) | — | ||||||||||||||||||||
Segment Income (Loss) | 266 | 241 | 46 | 143 | — | — | 696 | |||||||||||||||||||||
Interest income | (2 | ) | (2 | ) | (2 | ) | (5 | ) | — | (7 | ) | (18 | ) | |||||||||||||||
Interest expense and amortization of debt issuance costs | 53 | 5 | 11 | — | — | 122 | 191 | |||||||||||||||||||||
Depreciation and amortization | 137 | 172 | 51 | 61 | (55 | ) | 1 | 367 | ||||||||||||||||||||
Write-off and amortization of fair value adjustments | 242 | (8 | ) | (9 | ) | (6 | ) | — | — | 219 | ||||||||||||||||||
Impairment charges on long-lived assets | — | 1 | — | — | — | — | 1 | |||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | — | 25 | — | (21 | ) | — | — | 4 | ||||||||||||||||||||
Provision (benefit) for taxes on income (loss) | 24 | (110 | ) | 1 | 72 | — | 16 | 3 | ||||||||||||||||||||
Capital expenditures | 42 | 98 | 28 | 28 | (14 | ) | 3 | 185 |
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Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Proportional | Corporate | ||||||||||||||||||||||||
April 1, 2007 Through May 15, 2007 | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales (to third parties) | $ | 446 | $ | 510 | $ | 216 | $ | 109 | $ | — | $ | — | $ | 1,281 | ||||||||||||||
Intersegment sales | — | — | 1 | 7 | — | (8 | ) | — | ||||||||||||||||||||
Segment Income (Loss) | (24 | ) | 32 | 6 | 18 | — | — | 32 | ||||||||||||||||||||
Interest income | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||
Interest expense and amortization of debt issuance costs | 9 | 4 | 1 | 1 | — | 12 | 27 | |||||||||||||||||||||
Depreciation and amortization | 7 | 11 | 7 | 5 | (3 | ) | 1 | 28 | ||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | — | (1 | ) | — | — | — | — | (1 | ) | |||||||||||||||||||
Provision (benefit) for taxes on income (loss) | (19 | ) | 10 | — | 14 | — | (1 | ) | 4 | |||||||||||||||||||
Capital expenditures | 4 | 8 | 4 | 3 | (3 | ) | 1 | 17 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Proportional | Corporate | ||||||||||||||||||||||||
Three Months Ended March 31, 2007 | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales (to third parties) | $ | 925 | $ | 1,057 | $ | 413 | $ | 235 | $ | — | $ | — | $ | 2,630 | ||||||||||||||
Intersegment sales | — | 1 | 3 | 12 | — | (16 | ) | — | ||||||||||||||||||||
Segment Income (Loss) | (17 | ) | 85 | 16 | 57 | — | — | 141 | ||||||||||||||||||||
Interest income | — | (1 | ) | (1 | ) | — | — | (2 | ) | (4 | ) | |||||||||||||||||
Interest expense and amortization of debt issuance costs | 15 | 3 | 2 | 2 | — | 32 | 54 | |||||||||||||||||||||
Depreciation and amortization | 16 | 24 | 14 | 11 | (8 | ) | 1 | 58 | ||||||||||||||||||||
Impairment charges on long-lived assets | — | 8 | — | — | — | — | 8 | |||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | — | (2 | ) | — | (1 | ) | — | — | (3 | ) | ||||||||||||||||||
Provision (benefit) for taxes on income (loss) | (10 | ) | 6 | — | 11 | — | — | 7 | ||||||||||||||||||||
Capital expenditures | 9 | 11 | 3 | 4 | (4 | ) | 1 | 24 |
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Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Proportional | Corporate | ||||||||||||||||||||||||
Year Ended December 31, 2006 | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales (to third parties) | $ | 3,691 | $ | 3,620 | $ | 1,692 | $ | 863 | $ | (17 | ) | $ | — | $ | 9,849 | |||||||||||||
Intersegment sales | 2 | 5 | 15 | 50 | — | (72 | ) | — | ||||||||||||||||||||
Segment Income (Loss) | 20 | 245 | 82 | 165 | — | — | 512 | |||||||||||||||||||||
Interest income | (2 | ) | (3 | ) | (3 | ) | (2 | ) | — | (5 | ) | (15 | ) | |||||||||||||||
Interest expense and amortization of debt issuance costs | 50 | 11 | 10 | 6 | — | 144 | 221 | |||||||||||||||||||||
Depreciation and amortization | 70 | 92 | 55 | 44 | (32 | ) | 4 | 233 | ||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | — | (8 | ) | — | (8 | ) | — | — | (16 | ) | ||||||||||||||||||
Provision (benefit) for taxes on income (loss) | (111 | ) | 29 | 11 | 63 | (5 | ) | 9 | (4 | ) | ||||||||||||||||||
Capital expenditures | 39 | 45 | 21 | 26 | (18 | ) | 3 | 116 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Proportional | Corporate | ||||||||||||||||||||||||
Year Ended December 31, 2005 | America | Europe | Asia | America | Consolidation | and Other | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales (to third parties) | $ | 3,265 | $ | 3,093 | $ | 1,391 | $ | 630 | $ | (16 | ) | $ | — | $ | 8,363 | |||||||||||||
Intersegment sales | 2 | 31 | 8 | 41 | — | (82 | ) | — | ||||||||||||||||||||
Segment Income (Loss) | 193 | 195 | 106 | 112 | — | — | 606 | |||||||||||||||||||||
Interest income | (1 | ) | (3 | ) | (1 | ) | (1 | ) | — | (3 | ) | (9 | ) | |||||||||||||||
Interest expense and amortization of debt issuance costs | 44 | 10 | 11 | 3 | — | 135 | 203 | |||||||||||||||||||||
Depreciation and amortization | 72 | 96 | 51 | 44 | (34 | ) | 1 | 230 | ||||||||||||||||||||
Impairment charges on long-lived assets | — | 7 | — | — | — | — | 7 | |||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | — | (4 | ) | — | (2 | ) | — | — | (6 | ) | ||||||||||||||||||
Provision (benefit) for taxes on income (loss) | 33 | 59 | (8 | ) | 26 | (4 | ) | 1 | 107 | |||||||||||||||||||
Capital expenditures | 61 | 80 | 21 | 24 | (20 | ) | 12 | 178 |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Total Segment Income | $ | 696 | $ | 32 | $ | 141 | $ | 512 | $ | 606 | |||||||||||
Interest expense and amortization of debt issuance costs — net | (173 | ) | (26 | ) | (50 | ) | (206 | ) | (194 | ) | |||||||||||
Unrealized gains (losses) on change in fair value of derivative instruments — net(A) | (8 | ) | 5 | (1 | ) | (151 | ) | 141 | |||||||||||||
Realized gains (losses) on corporate derivative instruments — net | 16 | (3 | ) | (2 | ) | (35 | ) | 45 | |||||||||||||
Depreciation and amortization | (367 | ) | (28 | ) | (58 | ) | (233 | ) | (230 | ) | |||||||||||
Impairment charges on long-lived assets | (1 | ) | — | (8 | ) | — | (7 | ) | |||||||||||||
Minority interests’ share | (5 | ) | 1 | (2 | ) | (1 | ) | (21 | ) | ||||||||||||
Adjustment to eliminate proportional consolidation(B) | (65 | ) | (7 | ) | (9 | ) | (35 | ) | (36 | ) | |||||||||||
Restructuring charges — net | (6 | ) | (1 | ) | (9 | ) | (19 | ) | (10 | ) | |||||||||||
Gain (loss) on disposals of property, plant, and equipment and businesses — net | — | — | — | (20 | ) | 17 | |||||||||||||||
Corporate selling, general and administrative expenses | (55 | ) | (35 | ) | (26 | ) | (128 | ) | (78 | ) | |||||||||||
Other costs — net(C) | (1 | ) | 1 | (1 | ) | 37 | 10 | ||||||||||||||
Litigation settlement — net of insurance recoveries | — | — | — | — | (40 | ) | |||||||||||||||
Sale transaction fees | — | (32 | ) | (32 | ) | — | — | ||||||||||||||
Benefit (provision) for taxes on income (loss) | (3 | ) | (4 | ) | (7 | ) | 4 | (107 | ) | ||||||||||||
Cumulative effect of accounting change — net of tax | — | — | — | — | (6 | ) | |||||||||||||||
Net income (loss) | $ | 28 | $ | (97 | ) | $ | (64 | ) | $ | (275 | ) | $ | 90 | ||||||||
(A) | Unrealized gains (losses) on change in fair value of derivative instruments — net represents the portion of gains (losses) that were not settled in cash during the period. Total realized and unrealized gains (losses) are shown in the table below and are included in the aggregate each period in (Gain) loss on change in fair value of derivative instruments— neton our consolidated and combined statements of operations. |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
(Gains) losses on change in fair value of derivative instruments — net: | |||||||||||||||||||||
Realized and included in Segment Income | $ | (14 | ) | $ | (18 | ) | $ | (33 | ) | $ | (249 | ) | $ | (83 | ) | ||||||
Realized on corporate derivative instruments | (16 | ) | 3 | 2 | 35 | (45 | ) | ||||||||||||||
Unrealized | 8 | (5 | ) | 1 | 151 | (141 | ) | ||||||||||||||
(Gains) losses on change in fair value of derivative instruments — net | $ | (22 | ) | $ | (20 | ) | $ | (30 | ) | $ | (63 | ) | $ | (269 | ) | ||||||
(B) | Our financial information for our segments (including Segment Income) includes the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. However, under GAAP, these non-consolidated affiliates are accounted for using the equity method of accounting. Therefore, in order to reconcile Total Segment Income to Net income (loss), the proportional Segment Income of these non-consolidated affiliates is removed from Total Segment Income, net of our share of their net after-tax results, which is reported asEquity in net (income) loss of non-consolidated affiliateson our consolidated and combined statements of operations. See Note 8 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions for further information about these non-consolidated affiliates. | |
(C) | Other costs — net includes a gain on sale of equity interest in non-consolidated affiliates and a gain on sale of rights to develop and operate hydroelectric power plants, recognized in the three months ended December 31, 2006 (see Note 17 — Other (Income) Expenses — net). |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net sales: | |||||||||||||||||||||
United States | $ | 3,419 | $ | 427 | $ | 870 | $ | 3,474 | $ | 3,029 | |||||||||||
Asia and Other Pacific | 1,602 | 216 | 413 | 1,691 | 1,391 | ||||||||||||||||
Brazil | 880 | 109 | 235 | 847 | 616 | ||||||||||||||||
Canada | 236 | 19 | 55 | 217 | 234 | ||||||||||||||||
Germany | 2,508 | 212 | 651 | 2,263 | 1,850 | ||||||||||||||||
United Kingdom | 445 | 79 | 136 | 428 | 339 | ||||||||||||||||
Other Europe | 875 | 219 | 270 | 929 | 904 | ||||||||||||||||
Total Net sales | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | $ | 8,363 | |||||||||||
As of March 31, | |||||||||
2008 | 2007 | ||||||||
Successor | Predecessor | ||||||||
Long-lived assets: | |||||||||
United States | $ | 2,513 | $ | 415 | |||||
Asia and Other Pacific | 566 | 601 | |||||||
Brazil | 967 | 440 | |||||||
Canada | 515 | 101 | |||||||
Germany | 248 | 210 | |||||||
United Kingdom | 170 | 162 | |||||||
Other Europe | 1,431 | 436 | |||||||
Total long-lived assets | $ | 6,410 | $ | 2,365 | |||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Through | Through | Ended | Year Ended December 31, | ||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | 2005 | |||||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net sales to Rexam as a percentage of total net sales | 15.3 | % | 13.5 | % | 15.5 | % | 14.1 | % | 12.5 | % | |||||||||||
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21. | QUARTERLY RESULTS |
Period from | Quarter Ended | ||||||||||||||||||||
April 1, 2007 | May 16, 2007 | ||||||||||||||||||||
Through | Through | September 30, | December 31, | March 31, | |||||||||||||||||
May 15, 2007 | June 30, 2007(A) | 2007(A) | 2007(A) | 2008(A) | |||||||||||||||||
Predecessor | Successor | Successor | Successor | Successor | |||||||||||||||||
Net sales | $ | 1,281 | $ | 1,547 | $ | 2,821 | $ | 2,735 | $ | 2,862 | |||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,205 | 1,436 | 2,555 | 2,475 | 2,576 | ||||||||||||||||
Selling, general and administrative expenses | 95 | 42 | 88 | 99 | 90 | ||||||||||||||||
Depreciation and amortization | 28 | 53 | 102 | 105 | 107 | ||||||||||||||||
Research and development expenses | 6 | 13 | 10 | 11 | 12 | ||||||||||||||||
Interest expense and amortization of debt issuance costs — net | 26 | 25 | 56 | 47 | 45 | ||||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (20 | ) | (14 | ) | 36 | 50 | (94 | ) | |||||||||||||
Equity in net (income) loss of non-consolidated affiliates | (1 | ) | 1 | 4 | 4 | (5 | ) | ||||||||||||||
Sale transaction fees | 32 | — | — | — | — | ||||||||||||||||
Other (income) expenses — net | 4 | 11 | (7 | ) | (11 | ) | 7 | ||||||||||||||
Provision (benefit) for taxes on income (loss) | 4 | 36 | (36 | ) | 4 | (1 | ) | ||||||||||||||
Minority interests’ share | (1 | ) | (2 | ) | — | — | 7 | ||||||||||||||
Net income (loss) | $ | (97 | ) | $ | (54 | ) | $ | 13 | $ | (49 | ) | $ | 118 | ||||||||
Dividends per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||
(A) | Unaudited |
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Quarter Ended | ||||
March 31, | ||||
2007 | ||||
Predecessor | ||||
Net sales | $ | 2,630 | ||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 2,447 | |||
Selling, general and administrative expenses | 99 | |||
Depreciation and amortization | 58 | |||
Research and development expenses | 8 | |||
Interest expense and amortization of debt issuance costs — net | 50 | |||
(Gain) loss on change in fair value of derivative instruments — net | (30 | ) | ||
Equity in net (income) loss of non-consolidated affiliates | (3 | ) | ||
Sale transaction fees | 32 | |||
Other (income) expenses — net | 24 | |||
Provision (benefit) for taxes on income (loss) | 7 | |||
Minority interests’ share | 2 | |||
Net income (loss) | $ | (64 | ) | |
Dividends per common share | $ | 0.00 | ||
(Unaudited) | ||||||||||||||||
Quarter Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2006 | 2006 | 2006 | 2006 | |||||||||||||
Predecessor | Predecessor | Predecessor | Predecessor | |||||||||||||
Net sales | $ | 2,319 | $ | 2,564 | $ | 2,494 | $ | 2,472 | ||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 2,135 | 2,407 | 2,389 | 2,386 | ||||||||||||
Selling, general and administrative expenses | 92 | 98 | 103 | 117 | ||||||||||||
Depreciation and amortization | 58 | 59 | 57 | 59 | ||||||||||||
Research and development expenses | 9 | 10 | 10 | 11 | ||||||||||||
Interest expense and amortization of debt issuance costs — net | 48 | 49 | 52 | 57 | ||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (54 | ) | (41 | ) | 37 | (5 | ) | |||||||||
Equity in net (income) loss of non-consolidated affiliates | (3 | ) | (4 | ) | (5 | ) | (4 | ) | ||||||||
Other (income) expenses — net | 6 | (4 | ) | 7 | (9 | ) | ||||||||||
Provision (benefit) for taxes on income (loss) | 102 | (20 | ) | (52 | ) | (34 | ) | |||||||||
Minority interests’ share | — | 4 | (2 | ) | (1 | ) | ||||||||||
Net income (loss) | $ | (74 | ) | $ | 6 | $ | (102 | ) | $ | (105 | ) | |||||
Dividends per common share | $ | 0.09 | $ | 0.09 | $ | 0.01 | $ | 0.01 | ||||||||
22. | SUPPLEMENTAL GUARANTOR INFORMATION |
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May 16, 2007 Through March 31, 2008 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,300 | $ | 8,266 | $ | 2,701 | $ | (2,302 | ) | $ | 9,965 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,294 | 7,504 | 2,546 | (2,302 | ) | 9,042 | ||||||||||||||
Selling, general and administrative expenses | 40 | 210 | 69 | — | 319 | |||||||||||||||
Depreciation and amortization | 19 | 289 | 59 | — | 367 | |||||||||||||||
Research and development expenses | 27 | 17 | 2 | — | 46 | |||||||||||||||
Interest expense and amortization of debt issuance costs — net | 34 | 118 | 21 | — | 173 | |||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | 8 | (13 | ) | (17 | ) | — | (22 | ) | ||||||||||||
Equity in net (income) loss of affiliates | (130 | ) | 4 | — | 130 | 4 | ||||||||||||||
Other (income) expenses — net | (33 | ) | 8 | 25 | — | — | ||||||||||||||
1,259 | 8,137 | 2,705 | (2,172 | ) | 9,929 | |||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss) and minority interests’ share | 41 | 129 | (4 | ) | (130 | ) | 36 | |||||||||||||
Provision (benefit) for taxes on income (loss) | 13 | (16 | ) | 6 | — | 3 | ||||||||||||||
Income (loss) before minority interests’ share | 28 | 145 | (10 | ) | (130 | ) | 33 | |||||||||||||
Minority interests’ share | — | — | (5 | ) | — | (5 | ) | |||||||||||||
Net income (loss) | $ | 28 | $ | 145 | $ | (15 | ) | $ | (130 | ) | $ | 28 | ||||||||
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April 1, 2007 Through May 15, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 129 | $ | 1,020 | $ | 359 | $ | (227 | ) | $ | 1,281 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 131 | 961 | 340 | (227 | ) | 1,205 | ||||||||||||||
Selling, general and administrative expenses | 29 | 51 | 15 | — | 95 | |||||||||||||||
Depreciation and amortization | 2 | 18 | 8 | — | 28 | |||||||||||||||
Research and development expenses | 5 | 1 | — | — | 6 | |||||||||||||||
Interest expense and amortization of debt issuance costs — net | 3 | 20 | 3 | — | 26 | |||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (2 | ) | (19 | ) | 1 | — | (20 | ) | ||||||||||||
Equity in net (income) loss of affiliates | 29 | (1 | ) | — | (29 | ) | (1 | ) | ||||||||||||
Sale transaction fees | 32 | — | — | — | 32 | |||||||||||||||
Other (income) expenses — net | (3 | ) | 9 | (2 | ) | — | 4 | |||||||||||||
226 | 1,040 | 365 | (256 | ) | 1,375 | |||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss) and minority interests’ share | (97 | ) | (20 | ) | (6 | ) | 29 | (94 | ) | |||||||||||
Provision (benefit) for taxes on income (loss) | — | 3 | 1 | — | 4 | |||||||||||||||
Income (loss) before minority interests’ share | (97 | ) | (23 | ) | (7 | ) | 29 | (98 | ) | |||||||||||
Minority interests’ share | — | — | 1 | — | 1 | |||||||||||||||
Net income (loss) | $ | (97 | ) | $ | (23 | ) | $ | (6 | ) | $ | 29 | $ | (97 | ) | ||||||
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Three Months Ended March 31, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 378 | $ | 2,228 | $ | 723 | $ | (699 | ) | $ | 2,630 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 374 | 2,094 | 675 | (696 | ) | 2,447 | ||||||||||||||
Selling, general and administrative expenses | 10 | 69 | 20 | — | 99 | |||||||||||||||
Depreciation and amortization | 3 | 38 | 17 | — | 58 | |||||||||||||||
Research and development expenses | 5 | 2 | 1 | — | 8 | |||||||||||||||
Interest expense and amortization of debt issuance costs — net | 7 | 39 | 4 | — | 50 | |||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | 2 | (29 | ) | (3 | ) | — | (30 | ) | ||||||||||||
Equity in net (income) loss of affiliates | 14 | (3 | ) | — | (14 | ) | (3 | ) | ||||||||||||
Sale transaction fees | 32 | — | — | — | 32 | |||||||||||||||
Other (income) expenses — net | (5 | ) | 26 | 3 | — | 24 | ||||||||||||||
442 | 2,236 | 717 | (710 | ) | 2,685 | |||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss) and minority interests’ share | (64 | ) | (8 | ) | 6 | 11 | (55 | ) | ||||||||||||
Provision (benefit) for taxes on income (loss) | — | 5 | 2 | — | 7 | |||||||||||||||
Income (loss) before minority interests’ share | (64 | ) | (13 | ) | 4 | 11 | (62 | ) | ||||||||||||
Minority interests’ share | — | — | (2 | ) | — | (2 | ) | |||||||||||||
Net income (loss) | $ | (64 | ) | $ | (13 | ) | $ | 2 | $ | 11 | $ | (64 | ) | |||||||
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Year Ended December 31, 2006 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,572 | $ | 8,340 | $ | 2,822 | $ | (2,885 | ) | $ | 9,849 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,522 | 8,010 | 2,670 | (2,885 | ) | 9,317 | ||||||||||||||
Selling, general and administrative expenses | 72 | 269 | 69 | — | 410 | |||||||||||||||
Depreciation and amortization | 15 | 153 | 65 | — | 233 | |||||||||||||||
Research and development expenses | 28 | 12 | — | — | 40 | |||||||||||||||
Interest expense and amortization of debt issuance costs — net | 48 | 140 | 18 | — | 206 | |||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | 49 | (128 | ) | 16 | — | (63 | ) | |||||||||||||
Equity in net (income) loss of affiliates | 115 | (16 | ) | — | (115 | ) | (16 | ) | ||||||||||||
Other (income) expenses — net | (11 | ) | 20 | (9 | ) | — | — | |||||||||||||
1,838 | 8,460 | 2,829 | (3,000 | ) | 10,127 | |||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss) and minority interests’ share | (266 | ) | (120 | ) | (7 | ) | 115 | (278 | ) | |||||||||||
Provision (benefit) for taxes on income (loss) | 9 | (28 | ) | 15 | — | (4 | ) | |||||||||||||
Income (loss) before minority interests’ share | (275 | ) | (92 | ) | (22 | ) | 115 | (274 | ) | |||||||||||
Minority interests’ share | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Net income (loss) | $ | (275 | ) | $ | (92 | ) | $ | (23 | ) | $ | 115 | $ | (275 | ) | ||||||
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Year Ended December 31, 2005 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,284 | $ | 6,872 | $ | 2,479 | $ | (2,272 | ) | $ | 8,363 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,245 | 6,283 | 2,314 | (2,272 | ) | 7,570 | ||||||||||||||
Selling, general and administrative expenses | 43 | 242 | 67 | — | 352 | |||||||||||||||
Depreciation and amortization | 11 | 158 | 61 | — | 230 | |||||||||||||||
Research and development expenses | 28 | 12 | 1 | — | 41 | |||||||||||||||
Interest expense and amortization of debt issuance costs — net | 55 | 119 | 20 | — | 194 | |||||||||||||||
(Gain) loss on change in fair value of derivative instruments — net | (29 | ) | (229 | ) | (11 | ) | — | (269 | ) | |||||||||||
Equity in net (income) loss of affiliates | (139 | ) | (6 | ) | — | 139 | (6 | ) | ||||||||||||
Litigation settlement — net of insurance recoveries | — | 40 | — | 40 | ||||||||||||||||
Other (income) expenses — net | (29 | ) | 7 | 9 | — | (13 | ) | |||||||||||||
1,185 | 6,626 | 2,461 | (2,133 | ) | 8,139 | |||||||||||||||
Income (loss) before provision (benefit) for taxes on income (loss), minority interests’ share and cumulative effect of accounting change | 99 | 246 | 18 | (139 | ) | 224 | ||||||||||||||
Provision (benefit) for taxes on income (loss) | 3 | 107 | (3 | ) | — | 107 | ||||||||||||||
Income before minority interests’ share and cumulative effect of accounting change | 96 | 139 | 21 | (139 | ) | 117 | ||||||||||||||
Minority interests’ share | — | — | (21 | ) | — | (21 | ) | |||||||||||||
Net income (loss) before cumulative effect of accounting change | 96 | 139 | — | (139 | ) | 96 | ||||||||||||||
Cumulative effect of accounting change — net of tax | (6 | ) | (6 | ) | — | 6 | (6 | ) | ||||||||||||
Net income (loss) | $ | 90 | $ | 133 | $ | — | $ | (133 | ) | $ | 90 | |||||||||
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As of March 31, 2008 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 12 | $ | 177 | $ | 137 | $ | — | $ | 326 | ||||||||||
Accounts receivable — net of allowances | ||||||||||||||||||||
— third parties | 38 | 818 | 392 | — | 1,248 | |||||||||||||||
— related parties | 518 | 289 | 34 | (810 | ) | 31 | ||||||||||||||
Inventories | 57 | 993 | 405 | — | 1,455 | |||||||||||||||
Prepaid expenses and other current assets | 4 | 35 | 19 | — | 58 | |||||||||||||||
Current portion of fair value of derivative instruments | — | 186 | 30 | (13 | ) | 203 | ||||||||||||||
Deferred income tax assets | — | 121 | 4 | — | 125 | |||||||||||||||
Total current assets | 629 | 2,619 | 1,021 | (823 | ) | 3,446 | ||||||||||||||
Property, plant and equipment — net | 178 | 2,462 | 725 | — | 3,365 | |||||||||||||||
Goodwill | — | 1,968 | 189 | — | 2,157 | |||||||||||||||
Intangible assets — net | — | 888 | — | — | 888 | |||||||||||||||
Investments | 3,641 | 915 | 2 | (3,641 | ) | 917 | ||||||||||||||
Fair value of derivative instruments — net of current portion | — | 18 | 3 | — | 21 | |||||||||||||||
Deferred income tax assets | 7 | — | 2 | — | 9 | |||||||||||||||
Other long-term assets | 1,328 | 160 | 135 | (1,480 | ) | 143 | ||||||||||||||
Total assets | $ | 5,783 | $ | 9,030 | $ | 2,077 | $ | (5,944 | ) | $ | 10,946 | |||||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 3 | $ | 11 | $ | 1 | $ | — | $ | 15 | ||||||||||
Short-term borrowings | ||||||||||||||||||||
— third parties | — | 70 | 45 | — | 115 | |||||||||||||||
— related parties | 5 | 370 | 25 | (400 | ) | — | ||||||||||||||
Accounts payable | ||||||||||||||||||||
— third parties | 84 | 925 | 573 | — | 1,582 | |||||||||||||||
— related parties | 110 | 233 | 88 | (376 | ) | 55 | ||||||||||||||
Accrued expenses and other current liabilities | 39 | 699 | 129 | (17 | ) | 850 | ||||||||||||||
Deferred income tax liabilities | — | 39 | — | — | 39 | |||||||||||||||
Total current liabilities | 241 | 2,347 | 861 | (793 | ) | 2,656 | ||||||||||||||
Long-term debt — net of current portion | ||||||||||||||||||||
— third parties | 1,761 | 698 | 101 | — | 2,560 | |||||||||||||||
— related parties | — | 1,206 | 304 | (1,510 | ) | — | ||||||||||||||
Deferred income tax liabilities | 1 | 930 | 21 | — | 952 | |||||||||||||||
Accrued postretirement benefits | 23 | 297 | 101 | — | 421 | |||||||||||||||
Other long-term liabilities | 219 | 432 | 19 | — | 670 | |||||||||||||||
2,245 | 5,910 | 1,407 | (2,303 | ) | 7,259 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Minority interests in equity of consolidated affiliates | — | — | 149 | — | 149 | |||||||||||||||
Shareholder’s equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | 3,497 | — | — | — | 3,497 | |||||||||||||||
Retained earnings/(accumulated deficit)/owner’s net investment | 28 | 3,119 | 565 | (3,684 | ) | 28 | ||||||||||||||
Accumulated other comprehensive income (loss) | 13 | 1 | (44 | ) | 43 | 13 | ||||||||||||||
Total shareholder’s equity | 3,538 | 3,120 | 521 | (3,641 | ) | 3,538 | ||||||||||||||
Total liabilities and shareholder’s equity | $ | 5,783 | $ | 9,030 | $ | 2,077 | $ | (5,944 | ) | $ | 10,946 | |||||||||
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As of March 31, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 6 | $ | 71 | $ | 51 | $ | — | $ | 128 | ||||||||||
Accounts receivable — net of allowances | ||||||||||||||||||||
— third parties | 36 | 903 | 411 | — | 1,350 | |||||||||||||||
— related parties | 416 | 500 | 58 | (949 | ) | 25 | ||||||||||||||
Inventories | 65 | 1,008 | 421 | (3 | ) | 1,491 | ||||||||||||||
Prepaid expenses and other current assets | 3 | 26 | 10 | — | 39 | |||||||||||||||
Current portion of fair value of derivative instruments | — | 88 | 4 | — | 92 | |||||||||||||||
Deferred income tax assets | 3 | 12 | 4 | — | 19 | |||||||||||||||
Total current assets | 529 | 2,608 | 959 | (952 | ) | 3,144 | ||||||||||||||
Property, plant and equipment — net | 112 | 1,225 | 761 | — | 2,098 | |||||||||||||||
Goodwill | — | 29 | 210 | — | 239 | |||||||||||||||
Intangible assets — net | — | 18 | 2 | — | 20 | |||||||||||||||
Investments | 362 | 153 | — | (362 | ) | 153 | ||||||||||||||
Fair value of derivative instruments — net of current portion | — | 55 | — | — | 55 | |||||||||||||||
Deferred income tax assets | 1 | 66 | 35 | — | 102 | |||||||||||||||
Other long-term assets | 1,231 | 160 | 132 | (1,364 | ) | 159 | ||||||||||||||
Total assets | $ | 2,235 | $ | 4,314 | $ | 2,099 | $ | (2,678 | ) | $ | 5,970 | |||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | — | $ | 3 | $ | 140 | $ | — | $ | 143 | ||||||||||
Short-term borrowings | ||||||||||||||||||||
— third parties | — | 241 | 4 | — | 245 | |||||||||||||||
— related parties | 15 | 529 | 61 | (605 | ) | — | ||||||||||||||
Accounts payable | ||||||||||||||||||||
— third parties | 116 | 938 | 560 | — | 1,614 | |||||||||||||||
— related parties | 69 | 240 | 84 | (344 | ) | 49 | ||||||||||||||
Accrued expenses and other current liabilities | 63 | 317 | 100 | — | 480 | |||||||||||||||
Deferred income tax liabilities | — | 73 | — | — | 73 | |||||||||||||||
Total current liabilities | 263 | 2,341 | 949 | (949 | ) | 2,604 | ||||||||||||||
Long-term debt — net of current portion | ||||||||||||||||||||
— third parties | 1,659 | 496 | 2 | — | 2,157 | |||||||||||||||
— related parties | — | 1,116 | 248 | (1,364 | ) | — | ||||||||||||||
Deferred income tax liabilities | — | 89 | 14 | — | 103 | |||||||||||||||
Accrued postretirement benefits | 19 | 293 | 115 | — | 427 | |||||||||||||||
Other long-term liabilities | 119 | 214 | 19 | — | 352 | |||||||||||||||
2,060 | 4,549 | 1,347 | (2,313 | ) | 5,643 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Minority interests in equity of consolidated affiliates | — | — | 152 | — | 152 | |||||||||||||||
Shareholders’ equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | 428 | — | — | — | 428 | |||||||||||||||
Retained earnings/(accumulated deficit)/owner’s net investment | (263 | ) | (458 | ) | 575 | (117 | ) | (263 | ) | |||||||||||
Accumulated other comprehensive income (loss) | 10 | 223 | 25 | (248 | ) | 10 | ||||||||||||||
Total shareholders’ equity | 175 | (235 | ) | 600 | (365 | ) | 175 | |||||||||||||
Total liabilities and shareholders’ equity | $ | 2,235 | $ | 4,314 | $ | 2,099 | $ | (2,678 | ) | $ | 5,970 | |||||||||
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May 16, 2007 Through March 31, 2008 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 88 | $ | 363 | $ | 144 | $ | (190 | ) | $ | 405 | |||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (11 | ) | (143 | ) | (31 | ) | — | (185 | ) | |||||||||||
Proceeds from sale of assets | 5 | 2 | 1 | — | 8 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | (40 | ) | 25 | (1 | ) | 40 | 24 | |||||||||||||
Proceeds from loans receivable — net — related parties | — | 18 | — | — | 18 | |||||||||||||||
Net proceeds from settlement of derivative instruments | 12 | 32 | (7 | ) | — | 37 | ||||||||||||||
Net cash provided by (used in) investing activities | (34 | ) | (66 | ) | (38 | ) | 40 | (98 | ) | |||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of common stock | 92 | 40 | — | (40 | ) | 92 | ||||||||||||||
Proceeds from issuance of debt | 300 | 659 | 141 | — | 1,100 | |||||||||||||||
Principal repayments | ||||||||||||||||||||
— third parties | (261 | ) | (608 | ) | (140 | ) | — | (1,009 | ) | |||||||||||
— related parties | — | (189 | ) | 31 | 158 | — | ||||||||||||||
Short-term borrowings — net | ||||||||||||||||||||
— third parties | (45 | ) | (188 | ) | (8 | ) | — | (241 | ) | |||||||||||
— related parties | (99 | ) | 81 | (14 | ) | 32 | — | |||||||||||||
Dividends | ||||||||||||||||||||
— minority interests | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Debt issuance costs | (37 | ) | — | — | — | (37 | ) | |||||||||||||
Net cash provided by (used in) financing activities | (50 | ) | (205 | ) | 9 | 150 | (96 | ) | ||||||||||||
Net increase in cash and cash equivalents | 4 | 92 | 115 | — | 211 | |||||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 11 | 2 | — | 13 | |||||||||||||||
Cash and cash equivalents — beginning of period | 8 | 74 | 20 | — | 102 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 12 | $ | 177 | $ | 137 | $ | — | $ | 326 | ||||||||||
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April 1, 2007 Through May 15, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash used in operating activities | $ | (21 | ) | $ | (181 | ) | $ | (28 | ) | $ | — | $ | (230 | ) | ||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (1 | ) | (10 | ) | (6 | ) | — | (17 | ) | |||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 1 | — | — | 1 | |||||||||||||||
Net proceeds from settlement of derivative instruments | (5 | ) | 23 | — | — | 18 | ||||||||||||||
Net cash provided by (used in) investing activities | (6 | ) | 14 | (6 | ) | — | 2 | |||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt | — | 150 | — | — | 150 | |||||||||||||||
Principal repayments | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Short-term borrowings — net | ||||||||||||||||||||
— third parties | 45 | 9 | 6 | — | 60 | |||||||||||||||
— related parties | (15 | ) | 11 | 4 | — | — | ||||||||||||||
Dividends | ||||||||||||||||||||
— minority interests | — | — | (7 | ) | — | (7 | ) | |||||||||||||
Debt issuance costs | (2 | ) | — | — | — | (2 | ) | |||||||||||||
Proceeds from the exercise of stock options | 1 | — | — | — | 1 | |||||||||||||||
Net cash provided by financing activities | 29 | 169 | 3 | — | 201 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 2 | 2 | (31 | ) | — | (27 | ) | |||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 1 | — | — | 1 | |||||||||||||||
Cash and cash equivalents — beginning of period | 6 | 71 | 51 | — | 128 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 8 | $ | 74 | $ | 20 | $ | — | $ | 102 | ||||||||||
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Three Months Ended March 31, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (30 | ) | $ | (55 | ) | $ | 50 | $ | (52 | ) | $ | (87 | ) | ||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (2 | ) | (16 | ) | (6 | ) | — | (24 | ) | |||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 1 | — | — | 1 | |||||||||||||||
Proceeds from loans receivable — net — related parties | — | 1 | — | — | 1 | |||||||||||||||
Net proceeds from settlement of derivative instruments | — | 24 | — | — | 24 | |||||||||||||||
Net cash provided by (used in) investing activities | (2 | ) | 10 | (6 | ) | — | 2 | |||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Principal repayments | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Short-term borrowings — net | ||||||||||||||||||||
— third parties | — | 113 | — | — | 113 | |||||||||||||||
— related parties | 7 | 5 | (12 | ) | — | — | ||||||||||||||
Dividends | ||||||||||||||||||||
— common shareholders | — | (38 | ) | (14 | ) | 52 | — | |||||||||||||
Proceeds from the exercise of employee stock options | 27 | — | — | — | 27 | |||||||||||||||
Windfall tax benefit on share-based compensation | 1 | — | — | — | 1 | |||||||||||||||
Net cash provided by (used in) financing activities | 35 | 79 | (26 | ) | 52 | 140 | ||||||||||||||
Net increase in cash and cash equivalents | 3 | 34 | 18 | — | 55 | |||||||||||||||
Cash and cash equivalents — beginning of period | 3 | 37 | 33 | — | 73 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 6 | $ | 71 | $ | 51 | $ | — | $ | 128 | ||||||||||
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Year Ended December 31, 2006 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 104 | $ | (9 | ) | $ | 87 | $ | (166 | ) | $ | 16 | ||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (8 | ) | (72 | ) | (36 | ) | — | (116 | ) | |||||||||||
Disposal of business — net | (7 | ) | — | — | — | (7 | ) | |||||||||||||
Proceeds from sales of assets | — | 38 | — | — | 38 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 3 | — | — | 3 | |||||||||||||||
Proceeds from (advances on) loans receivable — net — related parties | 48 | (60 | ) | (28 | ) | 77 | 37 | |||||||||||||
Premiums paid to purchase derivative instruments | — | (4 | ) | — | — | (4 | ) | |||||||||||||
Net proceeds from settlement of derivative instruments | (34 | ) | 283 | (7 | ) | — | 242 | |||||||||||||
Net cash provided by (used in) investing activities | (1 | ) | 188 | (71 | ) | 77 | 193 | |||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt | ||||||||||||||||||||
— third parties | — | — | 41 | — | 41 | |||||||||||||||
— related parties | — | 1,300 | 460 | (1,760 | ) | — | ||||||||||||||
Principal repayments | ||||||||||||||||||||
— third parties | (83 | ) | (147 | ) | (123 | ) | — | (353 | ) | |||||||||||
— related parties | — | (1,247 | ) | (397 | ) | 1,644 | — | |||||||||||||
Short-term borrowings — net | ||||||||||||||||||||
— third parties | — | 103 | — | — | 103 | |||||||||||||||
Dividends | ||||||||||||||||||||
— preference shares | — | (12 | ) | — | 12 | — | ||||||||||||||
— common shareholders | (15 | ) | (175 | ) | (18 | ) | 193 | (15 | ) | |||||||||||
— minority interests | — | — | (15 | ) | — | (15 | ) | |||||||||||||
Net receipts from Alcan | 5 | — | — | — | 5 | |||||||||||||||
Debt issuance costs | (11 | ) | — | — | — | (11 | ) | |||||||||||||
Proceeds from the exercise of stock options | 2 | — | — | — | 2 | |||||||||||||||
Net cash used in financing activities | (102 | ) | (178 | ) | (52 | ) | 89 | (243 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | 1 | 1 | (36 | ) | — | (34 | ) | |||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 2 | 5 | — | 7 | |||||||||||||||
Cash and cash equivalents — beginning of period | 2 | 34 | 64 | — | 100 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 3 | $ | 37 | $ | 33 | $ | — | $ | 73 | ||||||||||
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Year Ended December 31, 2005 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by operating activities | $ | 181 | $ | 407 | $ | 39 | $ | (178 | ) | $ | 449 | |||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (19 | ) | (120 | ) | (39 | ) | — | (178 | ) | |||||||||||
Proceeds from sales of assets | — | 10 | 9 | — | 19 | |||||||||||||||
Proceeds from (advances on) loans receivable — net | ||||||||||||||||||||
— third parties | — | 4 | 15 | — | 19 | |||||||||||||||
— related parties | (1,171 | ) | (156 | ) | (118 | ) | 1,819 | 374 | ||||||||||||
Share repurchase — intercompany | 400 | — | — | (400 | ) | — | ||||||||||||||
Premiums paid to purchase derivative instruments | — | (57 | ) | — | — | (57 | ) | |||||||||||||
Net proceeds from settlement of derivative instruments | 45 | 94 | 9 | — | 148 | |||||||||||||||
Net cash provided by (used in) investing activities | (745 | ) | (225 | ) | (124 | ) | 1,419 | 325 | ||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt | ||||||||||||||||||||
— third parties | 1,875 | 825 | 79 | — | 2,779 | |||||||||||||||
— related parties | 40 | 1,526 | 253 | (1,819 | ) | — | ||||||||||||||
Principal repayments | ||||||||||||||||||||
— third parties | (1,153 | ) | (574 | ) | (95 | ) | — | (1,822 | ) | |||||||||||
— related parties | (192 | ) | (988 | ) | — | — | (1,180 | ) | ||||||||||||
Short-term borrowings — net | ||||||||||||||||||||
— third parties | 2 | (47 | ) | (100 | ) | — | (145 | ) | ||||||||||||
— related parties | (30 | ) | (281 | ) | 9 | — | (302 | ) | ||||||||||||
Share repurchase — intercompany | — | (400 | ) | — | 400 | — | ||||||||||||||
Dividends | ||||||||||||||||||||
— common shareholders | (27 | ) | (176 | ) | (2 | ) | 178 | (27 | ) | |||||||||||
— minority interests | — | — | (7 | ) | — | (7 | ) | |||||||||||||
Net receipts from (payments to) Alcan | 100 | (21 | ) | (7 | ) | — | 72 | |||||||||||||
Debt issuance costs | (49 | ) | (22 | ) | — | — | (71 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 566 | (158 | ) | 130 | (1,241 | ) | (703 | ) | ||||||||||||
Net increase in cash and cash equivalents | 2 | 24 | 45 | — | 71 | |||||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | (2 | ) | — | — | (2 | ) | |||||||||||||
Cash and cash equivalents — beginning of period | — | 12 | 19 | — | 31 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 2 | $ | 34 | $ | 64 | $ | — | $ | 100 | ||||||||||
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Item 9. | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
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• | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; | |
• | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and | |
• | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements. |
Item 9B. | Other Information |
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Table of Contents
Item 10. | Directors, Executive Officers and Corporate Governance |
Name | Director Since | Age | Position | |||
Kumar Mangalam Birla | May 15, 2007 | 40 | Chairman of the Board | |||
Askaran Agarwala(2) | May 15, 2007 | 74 | Director | |||
Debnarayan Bhattacharya(1)(2) | May 15, 2007 | 59 | Director and Vice Chairman of the Board | |||
Clarence J. Chandran(1)(2) | January 6, 2005 | 59 | Director | |||
Donald A. Stewart(1) | January 6, 2005 | 61 | Director |
(1) | Member of our Audit Committee. | |
(2) | Member of our Compensation Committee. |
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Table of Contents
• | evaluating and compensating our independent registered public accounting firm; | |
• | making recommendations to the Board of Directors and shareholders relating to the appointment, retention and termination of our independent registered public accounting firm; | |
• | discussing with our independent registered public accounting firm their qualifications and independence from management; | |
• | reviewing with our independent registered public accounting firm the scope and results of their audit; | |
• | pre-approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; | |
• | review areas of potential significant financial risk and the steps taken to monitor and manage such exposures; | |
• | overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC and | |
• | reviewing and monitoring our accounting principles, accounting policies and disclosure, internal control over financial reporting and disclosure controls and procedures. |
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Table of Contents
Item 11. | Executive Compensation |
Name | Title | |
Edward Blechschmidt | Former Acting Chief Executive Officer | |
Martha Finn Brooks | President and Chief Operating Officer | |
Rick Dobson | Former Senior Vice President and Chief Financial Officer | |
Steven Fisher | Chief Financial Officer | |
Arnaud de Weert | Senior Vice President and President Europe | |
Kevin Greenawalt | Senior Vice President and President North America | |
Thomas Walpole | Senior Vice President and President Asia | |
Antonio Tadeu Coehlo Nardocci | Senior Vice President and President South America | |
David Godsell | Former Vice President Human Resources and Environment, Health and Safety |
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• | Provide Total Direct Compensation Opportunities That Are Competitive with Similar Positions at Comparable Companies: To enable us to attract, motivate and retain qualified executives, total direct compensation opportunities for each executive (base pay, short-term (annual) incentives and long-term incentives) are targeted at levels to be competitive with similar positions at comparable companies. The Committee strives to create a total direct compensation package that is at the median of the peer companies described below. | |
• | A Substantial Portion Of Total Direct Compensation Should Be At Risk Because It Is Performance-Based: We believe executives should be rewarded for their performance. Consequently, a substantial portion of an executive’s total direct compensation should be at risk, with amounts actually paid dependent on performance against pre-established objectives for the individual and us. The proportion of an individual’s total direct compensation that is based upon these performance objectives should increase as the individual’s business responsibilities increase. | |
• | A Substantial Portion of Total Direct Compensation Should Be Delivered in the Form of Long-Term Performance Based Awards: We believe a long-term stake in the sustained performance of Novelis effectively aligns executive and shareholder interests and provides motivation for enhancing shareholder value. As a result, we may provide long-term performance based awards, which are generally paid in cash. |
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• | Base Pay | |
• | Short-Term (Annual) Incentives | |
• | Long-Term Incentives | |
• | Employee Benefits |
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2007 | 2007 | |||||||
Prorated | Prorated | |||||||
Name | Target | Actual | ||||||
Martha Finn Brooks | $ | 73,688 | $ | 73,688 | ||||
Rick Dobson | $ | 42,188 | $ | 42,188 | ||||
Steven Fisher | $ | 14,906 | $ | 14,906 | ||||
Arnaud de Weert | $ | 49,375 | $ | 49,375 | ||||
Kevin Greenawalt | $ | 23,250 | $ | 23,250 | ||||
Thomas Walpole | $ | 18,563 | $ | 18,563 | ||||
Antonio Tadeu Coehlo Nardocci | $ | 23,233 | $ | 23,233 | ||||
David Godsell | $ | 21,313 | $ | 21,313 |
Fiscal 2008 | Fiscal 2008 | |||||||
Name | Target | Actual | ||||||
Martha Finn Brooks | $ | 590,625 | $ | 728,241 | ||||
Steven Fisher | $ | 229,688 | $ | 283,205 | ||||
Arnaud de Weert | $ | 358,586 | $ | 488,604 | ||||
Kevin Greenawalt | $ | 178,500 | $ | 194,404 | ||||
Thomas Walpole | $ | 129,938 | $ | 146,781 | ||||
Antonio Tadeu Coehlo Nardocci | $ | 184,432 | $ | 287,622 |
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Eligible for | ||||||||||||||||
2008-2010 | Payout | |||||||||||||||
LTIP | Based on | 2008 LTIP | 2008 LTIP | |||||||||||||
Approved | 2008 | Approved | Approved | |||||||||||||
Name | Grant | Results | Level | Payout | ||||||||||||
Martha Finn Brooks | $ | 2,100,000 | $ | 210,000 | 70.07 | % | $ | 147,147 | ||||||||
Steven Fisher | $ | 450,000 | $ | 45,000 | 70.07 | % | $ | 31,532 | ||||||||
Arnaud de Weert | $ | 450,000 | $ | 45,000 | 70.07 | % | $ | 31,532 | ||||||||
Kevin Greenawalt | $ | 450,000 | $ | 45,000 | 70.07 | % | $ | 31,532 | ||||||||
Thomas Walpole | $ | 325,000 | $ | 32,500 | 70.07 | % | $ | 22,773 | ||||||||
Antonio Tadeu Coehlo Nardocci | $ | 325,000 | $ | 32,500 | 70.07 | % | $ | 22,773 |
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• | U.S. Pension Plan: |
• | Swiss Pension Schemes: Since our spin-off from Alcan, we continued to participate in Alcan’s two pension schemes in Switzerland: (1) the Pensionskasse Alcan Schweiz (a defined benefit plan) and (2) the Erganzungskasse Alcan Schweiz (a defined contribution plan). The defined benefit plan is computed based on a participant’s final annual earnings (up to a limit and less a coordination amount) and service up to 45 years. The defined contribution plan only recognizes earnings in excess of the defined benefit earnings limit. Mr. de Weert was the only named executive officer eligible for the Swiss pension schemes in 2008. | |
• | Brazil Defined Contribution Pension Plan: Novelis sponsors a defined contribution pension plan for all employees in Brazil with a fixed employer contribution and voluntary employee contributions. Employees can contribute up to 12% of base pay. The company contributes 0.7% of pay up to 1 plan unit ($1,379 in 2008) and 10% (14% for employees active on June 30, 2003) of pay in excess of 1 plan unit. The sole investment option is a fixed income fund. Mr. Nardocci is a participant in the Brazil Pension Plan. | |
• | Additional Pension Benefits: In addition to her participation in the U.S. Pension Plan described above, Ms. Brooks will receive from us a supplemental pension equal to the excess, if any, of the pension she would have received from her employer prior to joining Alcan had she been covered by her prior employer’s pension plan until her separation or retirement from Novelis, over the sum of her pension from the U.S. Pension Plan and the pension rights actually accrued with her previous employer. | |
• | Savings Plan and Non-Qualified Defined Contribution Plan: All U.S. based executives are eligible to participate in our tax qualified savings plan. We match up to 4.5% of pay (up to the IRS compensation limit; $230,000 for calendar year 2008) for participants who contribute 6% of pay or more to the savings plan. In addition, U.S. based executives hired on or after January 1, 2005 are eligible to share in our discretionary contributions. Discretionary contributions are first made to the qualified plan (up to the IRS compensation limit) and any excess amounts are made to our non-qualified defined contribution plan. For fiscal 2008, we made a discretionary contribution equal to 5% of pay. Messrs. Dobson and Fisher were the only named executive officers eligible for a discretionary contribution for the period. Mr. Dobson and Mr. Godsell received contributions in the non-qualified plan in accordance with the terms in their termination agreements. | |
• | Health & Welfare Benefits: Executives are entitled to participate in our employee benefit plans (including medical, dental, and life insurance benefits) on the same basis as other employees. | |
• | Perquisites: As noted in our Summary Compensation Table, we provide our officers with certain perquisites consistent with market practice. We do not view perquisites as a significant element of our comprehensive compensation structure. |
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• | the number of shares of our common stock subject to the option as of the effective time of the acquisition; and | |
• | the excess of $44.93 over the exercise price per share of common stock subject to such option. |
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Number of Shares | Weighted | Actual | ||||||||||
Underlying | Average | Consideration | ||||||||||
Name | Options | Exercise Price | Received(1) | |||||||||
Edward Blechschmidt | — | $ | — | $ | — | |||||||
Martha Finn Brooks | 551,311 | $ | 23.66 | $ | 11,724,157 | |||||||
Rick Dobson | 92,500 | $ | 25.53 | $ | 1,794,500 | |||||||
Steven Fisher | 21,770 | $ | 25.53 | $ | 422,338 | |||||||
Arnaud de Weert | — | $ | — | $ | — | |||||||
Kevin Greenawalt | 92,080 | $ | 23.62 | $ | 1,962,229 | |||||||
Thomas Walpole | 52,690 | $ | 23.24 | $ | 1,142,909 | |||||||
Antonio Tadeu Coehlo Nardocci | 36,117 | $ | 21.78 | $ | 836,095 | |||||||
David Godsell | 79,313 | $ | 23.05 | $ | 1,735,559 |
(1) | The amounts set forth in this “Actual Consideration Received” column are calculated based on the actual exercise prices underlying the related options, as opposed to the weighted average exercise price per share. |
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Number of | Number of | Total Actual | ||||||||||
Tranche 2 | Tranche 3 | Consideration | ||||||||||
Name | PSUs | PSUs | Received | |||||||||
Edward Blechschmidt | — | — | — | |||||||||
Martha Finn Brooks | 23,750 | 23,750 | $ | 2,134,175 | ||||||||
Rick Dobson | — | — | — | |||||||||
Steven Fisher | — | — | — | |||||||||
Arnaud de Weert | — | — | — | |||||||||
Kevin Greenawalt | 7,200 | 7,200 | $ | 646,992 | ||||||||
Thomas Walpole | 3,950 | 3,950 | $ | 354,947 | ||||||||
Antonio Tadeu Coehlo Nardocci | 7,200 | 7,200 | $ | 646,992 | ||||||||
David Godsell | 6,000 | 6,000 | $ | 539,160 |
Actual | ||||||||||||
Number of | Exercise | Consideration | ||||||||||
Name | SARs | Price | Received | |||||||||
Arnaud de Weert | 43,530 | $ | 25.53 | $ | 844,482 | |||||||
Antonio Tadeu Coehlo Nardocci | 32,650 | $ | 25.53 | $ | 633,410 |
Weighted | Actual | |||||||||||
Number of | Average | Consideration | ||||||||||
Name | SPAUs | Exercise Price | Received(1) | |||||||||
Kevin Greenawalt | 22,952 | $ | 19.95 | $ | 573,431 | |||||||
Thomas Walpole | 22,027 | $ | 23.74 | $ | 466,752 |
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Non-Equity | Change | |||||||||||||||||||||||||||||||||||
Incentive | in | |||||||||||||||||||||||||||||||||||
Option | Plan | Pension | All Other | |||||||||||||||||||||||||||||||||
Salary | Bonus | Stock | Awards | Compensation | Value | Compensation | Total | |||||||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($) | Awards ($) | ($) | ($)(1) | ($)(2) | ($)(3) | ($) | |||||||||||||||||||||||||||
Edward Blechschmidt, | 2008 | 292,500 | 792,500 | (4) | — | — | — | — | 200,649 | (5) | 1,285,649 | |||||||||||||||||||||||||
Former Acting Chief Executive Officer | J-M 2007 | 195,000 | — | — | — | — | — | 140,000 | (6) | 335,000 | ||||||||||||||||||||||||||
Martha Finn Brooks, | 2008 | 672,572 | — | 896,739 | 10,466,761 | 1,096,223 | 97,640 | 92,991 | 13,322,926 | |||||||||||||||||||||||||||
President and Chief Operating | J-M 2007 | 163,750 | — | 1,692,965 | 264,377 | 147,375 | 97,363 | 12,707 | 2,378,537 | |||||||||||||||||||||||||||
Officer | 2006 | 655,000 | — | 784,197 | 552,181 | 475,000 | 139,903 | 132,535 | 2,738,816 | |||||||||||||||||||||||||||
Rick Dobson, | 2008 | 168,750 | 125,000 | (7) | 202,411 | 1,644,039 | 42,188 | — | 3,111,453 | 5,293,841 | ||||||||||||||||||||||||||
Former Senior Vice | J-M 2007 | 112,500 | — | 69,443 | 87,364 | 84,375 | — | 16,034 | 369,716 | |||||||||||||||||||||||||||
President & Chief Financial Officer | 2006 | 202,679 | 125,000 | (7) | 74,073 | 63,096 | 200,000 | — | 56,890 | 721,738 | ||||||||||||||||||||||||||
Steven Fisher , | 2008 | 334,538 | 40,000 | (8) | 171,780 | 386,927 | 361,175 | — | 63,732 | 1,358,152 | ||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
Arnaud de Weert | 2008 | 674,280 | — | 247,123 | 670,448 | 601,043 | 24,801 | 114,236 | 2,331,931 | |||||||||||||||||||||||||||
Senior Vice President and | J-M 2007 | 158,000 | — | 29,202 | 140,621 | 98.750 | 4,219 | 20,203 | 450,995 | |||||||||||||||||||||||||||
President Europe | 2006 | 340,631 | 160,927 | 31,149 | 33,413 | 300,000 | 9,428 | 110,487 | 986,035 | |||||||||||||||||||||||||||
Kevin Greenawalt, | 2008 | 332,500 | — | 259,507 | 1,718,327 | 280,718 | 80,281 | 30,504 | 2,701,837 | |||||||||||||||||||||||||||
Former Senior Vice President | J-M 2007 | 77,500 | — | 511,777 | 412,630 | 46,500 | 114,707 | 7,054 | 1,170,168 | |||||||||||||||||||||||||||
and President North America | 2006 | 310,000 | — | 232,896 | 293,949 | 150,000 | 219,749 | 36,730 | 1,243,324 | |||||||||||||||||||||||||||
Thomas Walpole, | 2008 | 270,000 | — | 217,752 | 981,865 | 210,890 | 59,765 | 607,032 | 2,347,304 | |||||||||||||||||||||||||||
Senior Vice President and President Asia | J-M 2007 | 66,458 | — | 289,674 | 278,790 | 34,406 | 73,616 | 3,866 | 746,811 | |||||||||||||||||||||||||||
Antonio Tadeu Coehlo Nardocci, | 2008 | 359,732 | — | 211,288 | 1,154,909 | 373,919 | — | 103,105 | 2,202,953 | |||||||||||||||||||||||||||
Senior Vice President and President South America | J-M 2007 | 81,416 | — | 506,079 | 105,474 | 46,466 | — | 25,777 | 765,212 | |||||||||||||||||||||||||||
David Godsell, | 2008 | 77,500 | — | 95,437 | 1,482,825 | 21,313 | 676,736 | 2,346,512 | 4,700,323 | |||||||||||||||||||||||||||
Former Vice President Human Resources and Environment, Health and Safety | J-M 2007 | 77,500 | — | 431,348 | 32,439 | 42,625 | 164,257 | 6,344 | 754,513 |
(1) | Represents awards earned under the short-term incentive plan for the period April 1, 2007 through May 15, 2007 and under the Novelis Annual Incentive Plan (AIP) for the period May 16, 2007 though March 31, 2008. | |
(2) | Represents the aggregate change in actuarial present value of the named executive officer’s accumulated benefit under our qualified and non-qualified defined benefit pension plans during fiscal 2008. Assumptions used in the calculation of these amounts are included in Note 14 to our audited financial statements for the fiscal year ended March 31, 2008. |
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(3) | With the exception of Mr. Blechschmidt (see footnote (6) below), the amounts for 2008 shown in the All Other Compensation Column reflect the values from the table below. |
Company | ||||||||||||||||||||||||||||
Contribution to | Other | |||||||||||||||||||||||||||
Severance | Defined | Relocation and | Perquisites and | |||||||||||||||||||||||||
Related | Contribution | Group Life | Hosing Related | Child Tuition | Personal | |||||||||||||||||||||||
Payments | Plans | Insurance | Payments | Reimbursement | Benefits | Total | ||||||||||||||||||||||
Name | ($) | ($)(a) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
Martha Finn Brooks | — | 8,588 | 2,106 | 6,281 | 48,741 | 27,275 | (b) | 92,991 | ||||||||||||||||||||
Rick Dobson | 2,923,021 | (c) | 148,471 | 810 | 35,194 | — | 3,957 | (d) | 3,111,453 | |||||||||||||||||||
Steven Fisher | — | 35,510 | 286 | 7,927 | — | 20,009 | (b) | 63,732 | ||||||||||||||||||||
Arnaud de Weert | — | 87,778 | — | — | — | 26,458 | (d) | 114,236 | ||||||||||||||||||||
Kevin Greenawalt | — | 10,463 | 1,408 | — | — | 18,633 | (b) | 30,504 | ||||||||||||||||||||
Thomas Walpole | — | 10,172 | 1,024 | 592,895 | (e) | — | 2,941 | (f) | 607,032 | |||||||||||||||||||
Antonio Tadeu Coehlo Nardocci | — | 85,909 | 2,063 | — | — | 15,134 | (g) | 103,106 | ||||||||||||||||||||
David Godsell | 2,283,578 | (h) | 26,888 | 1,317 | 19,011 | — | 15,718 | (b) | 2,346,512 |
(a) | Represents matching contribution (and discretionary contributions in the case of Messrs. Fisher, Dobson and Godsell) made to our tax qualified and non-qualified defined contribution plans. |
(b) | Includes executive flex allowance, car allowance, and home security, each of which individually had an aggregate incremental cost less than $25,000. | |
(c) | Represents payments due to a change in control, $1,575,000 for change in control payment, $53,976 in lieu of health care coverage, tax gross ups for Internal Revenue Code Section 280G consideration in the amount of $1,294,045. | |
(d) | Includes executive flex allowance and car allowance, each of which individually had an aggregate incremental cost less than $25,000. | |
(e) | Includes (i) an Expatriate Premium of $158,044; (ii) Employer paid Korean Tax Deposit of $240,670; (iii) Employer provided housing of $99,466; (iv) Employer paid car/driver for Korean assignment of $52,248; (v) travel reimbursement of $3,651; and (vi) relocation allowance of $38,816 pursuant to expatriate agreement. | |
(f) | Includes car allowance, and tax advice, each of which individually had an aggregate incremental cost less than $25,000. | |
(g) | Includes car allowance, home security and medical cost reimbursement, each of which individually had an aggregate incremental cost less than $25,000. | |
(h) | Represents payments due to a change in control, $961,000 for change in control payment, $50,000 one time payment, tax gross ups for 280G consideration in the amount of $1,272,578. |
(4) | The board approved discretionary and incentive awards totaling $792,500 for Mr. Blechschmidt based on his efforts as our Acting Chief Executive Officer. | |
(5) | Represents the final payout of the Director Deferred Share Unit (DDSU) plan following the transaction with Hindalco. The payout includes amounts earned while a director in fiscal year 2008. | |
(6) | Represents supplemental compensation paid to Mr. Blechschmidt for his board service. | |
(7) | Mr. Dobson received these payments as the two installments of his signing bonus when he joined Novelis in 2006. | |
(8) | Mr. Fisher received a discretionary, exceptional achievement award for his service during fiscal year 2008. |
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Estimated Future Payout | ||||||||||||
Under Non-Equity | ||||||||||||
Incentive Plan Awards(1) | ||||||||||||
Name | Grant Date | Target ($) | Maximum ($) | |||||||||
Martha Finn Brooks | 4/01/07 | (2) | 73,688 | 147,376 | ||||||||
5/15/07 | (3) | 590,625 | 1,181,250 | |||||||||
01/11/08 | (4) | 2,100,000 | 4,200,000 | |||||||||
Rick Dobson | 4/01/07 | (2) | 42,188 | 84,376 | ||||||||
Steven Fisher | 4/01/07 | (2) | 14,906 | 29,812 | ||||||||
5/15/07 | (3) | 229,688 | 459,376 | |||||||||
01/11/08 | (4) | 450,000 | 900,000 | |||||||||
Arnaud de Weert | 4/01/07 | (2) | 49,375 | 98,750 | ||||||||
5/15/07 | (3) | 358,586 | 717,172 | |||||||||
01/11/08 | (4) | 450,000 | 900,000 | |||||||||
Kevin Greenawalt | 4/01/07 | (2) | 23,250 | 46,500 | ||||||||
5/15/07 | (3) | 178,500 | 357,000 | |||||||||
01/11/08 | (4) | 450,000 | 900,000 | |||||||||
Thomas Walpole | 4/01/07 | (2) | 18,563 | 37,126 | ||||||||
5/15/07 | (3) | 129,938 | 259,876 | |||||||||
01/11/08 | (4) | 325,000 | 650,000 | |||||||||
Antonio Tadeu Coehlo Nardocci | 4/01/07 | (2) | 23,233 | 46,466 | ||||||||
5/15/07 | (3) | 184,432 | 368,864 | |||||||||
01/11/08 | (4) | 325,000 | 650,000 | |||||||||
David Godsell | 4/01/07 | (2) | 21,313 | 42,626 |
(1) | This information pertains to grants under our annual (short-term) and long-term incentive plans. | |
(2) | This grant was made under the 2007 short-term incentive plan covering the period April 1, 2007 through May 15, 2007. | |
(3) | This grant was made under the Novelis Annual Incentive Plan (AIP) and covered the period May 16, 2007 through March 31, 2008. | |
(4) | This grant was made under the Novelis Long-Term Incentive Plan (LTIP) FY 2008 — FY 2010. |
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• | a lump sum cash amount equal to two times the sum of the executive’s base salary and target short-term incentive opportunity, minus the amount of retention-related and severance payments, if any, paid or payable to the executive other than pursuant tohis/her change in control agreement in order to avoid duplication of payments; | |
• | all short-term and long-term incentive awards pursuant to the terms of the incentive plan with respect to which such awards were issued; | |
• | if the executive is not eligible for retiree medical benefits and is covered under our group health plan at the time of termination, we will pay an additional lump sum cash amount (generally equal to the COBRA premium for 24 months grossed up for taxes) in order to assist the executive with the cost of post-employment medical continuation coverage; | |
• | continued coverage under our group life plan for 24 months; | |
• | an additional two-years credit for benefit accrual and contribution allocation purposes under our qualified and non-qualified pension, savings or other retirement plans; | |
• | 100% vesting under our qualified and non-qualified retirement pension, savings and other retirement plans; and | |
• | agross-up reimbursement for any excise tax liability imposed by Section 4999 of the Internal Revenue Code. |
Recognition | Recognition | |||||||
Shares | Shares | |||||||
Payable on | Payable on | |||||||
December 31, | December 31, | |||||||
2007 | 2008 | |||||||
Name | (#) | (#) | ||||||
Martha Finn Brooks | 14,200 | 14,200 | ||||||
Steven Fisher | 2,850 | 2,850 | ||||||
Arnaud de Weert | 4,100 | 4,100 | ||||||
Kevin Greenawalt | 4,100 | 4,100 | ||||||
Thomas Walpole | 3,500 | 3,500 | ||||||
Antonio Tadeu Coehlo Nardocci | 3,300 | 3,300 |
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Recognition | Consideration | |||||||
Name | Shares (#) | Received ($) | ||||||
Martha Finn Brooks | 14,200 | 638,006 | ||||||
Steven Fisher | 2,850 | 128,051 | ||||||
Arnaud de Weert | 4,100 | 184,213 | ||||||
Kevin Greenawalt | 4,100 | 184,213 | ||||||
Thomas Walpole | 3,500 | 157,255 | ||||||
Antonio Tadeu Coehlo Nardocci | 3,300 | 148,269 |
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Option Awards(1) | Stock Awards(2) | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Shares | |||||||||||||||
Acquired | Value Realized | Acquired | Value Realized | |||||||||||||
on Exercise or | on Exercise or | on Vesting or | on Vesting or | |||||||||||||
Cancellation | Cancellation | Cancellation | Cancellation | |||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||
Edward Blechschmidt | — | — | — | — | ||||||||||||
Martha Finn Brooks | 551,311 | (3) | 11,724,157 | 61,700 | (4) | 2,772,181 | ||||||||||
Rick Dobson | 92,500 | (5) | 1,794,500 | — | — | |||||||||||
Steven Fisher | 21,770 | (6) | 422,338 | 2,850 | (7) | 128,051 | ||||||||||
Arnaud de Weert | 43,530 | (8) | 844,482 | 4,100 | (9) | 184,213 | ||||||||||
Kevin Greenawalt | 115,032 | (10) | 2,535,660 | 18,500 | (11) | 831,205 | ||||||||||
Thomas Walpole | 74,717 | (12) | 1,609,661 | 11,400 | (13) | 512,202 | ||||||||||
Antonio Tadeu Coehlo Nardocci | 68,767 | (14) | 1,469,505 | 17,700 | (15) | 795,261 | ||||||||||
David Godsell | 79,313 | (16) | 1,735,559 | 12,000 | (17) | 539,160 |
(1) | Includes Stock Options, Stock Price Appreciation Units and Stock Appreciation Rights. The value received on Stock Options, Stock Price Appreciation Units and Stock Appreciation Rights was computed at $44.93 per share less the actual exercise price underlying the related option award. | |
(2) | Includes Performance Share Units and Recognition Shares. All Performance Shares Units and Recognition Shares were settled in cash at $44.93 per share. | |
(3) | Represents 551,311 Stock Options. | |
(4) | Represents 47,500 Performance Share Units and 14,200 Recognition Shares. | |
(5) | Represents 92,500 Stock Options. | |
(6) | Represents 21,770 Stock Options. | |
(7) | Represents 2,850 Recognition Shares. | |
(8) | Represents 43,530 Stock Price Appreciation Rights. | |
(9) | Represents 4,100 Recognition Shares. | |
(10) | Represents 92,080 Stock Options and 22,952 Stock Price Appreciation Units. | |
(11) | Represents 14,400 Performance Share Units and 4,100 Recognition Shares. | |
(12) | Represents 52,690 Stock Options and 22,027 Stock Price Appreciation Units. | |
(13) | Represents 7,900 Performance Share Units and 3,500 Recognition Shares. | |
(14) | Represents 36,117 Stock Options and 32,650 Stock Appreciation Rights. | |
(15) | Represents 14,400 Performance Share Units and 3,300 Recognition Shares. | |
(16) | Represents 79,313 Stock Options. | |
(17) | Represents 12,000 Performance Share Units. |
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Number of | Present | Payments | ||||||||||||
Years | Value of | During | ||||||||||||
Credited | Accumulated | Last | ||||||||||||
Service | Benefit | Fiscal Year | ||||||||||||
Name | Plan Name(1) | (#) | ($)(2) | ($) | ||||||||||
Martha Finn Brooks | Novelis Pension Plan | 5.667 | 98,171 | — | ||||||||||
Novelis SERP | 5.667 | 427,612 | — | |||||||||||
Rick Dobson | Not eligible | — | — | — | ||||||||||
Steven Fisher | Not eligible | — | — | — | ||||||||||
Arnaud de Weert | Pensionskasse Alcan Schweiz | 1.917 | 38,453 | — | ||||||||||
Kevin Greenawalt | Novelis Pension Plan | 24.75 | 513,851 | — | ||||||||||
Novelis SERP | 24.75 | 629,473 | — | |||||||||||
Thomas Walpole | Novelis Pension Plan | 28.833 | 681,903 | — | ||||||||||
Novelis SERP | 28.833 | 456,045 | — | |||||||||||
Antonio Tadeu Coehlo Nardocci | Not eligible | — | — | — | ||||||||||
David Godsell | Novelis Pension Plan | 27.500 | 496,233 | 9,027 | ||||||||||
Novelis SERP | 27.500 | 1,248,911 | 22,719 |
(1) | See Compensation Discussion and Analysis — Elements of Our Compensation, Employee Benefits for a discussion of these plans. | |
(2) | See Note 15 to our audited financial statements for the fiscal year ended March 31, 2008, for a discussion of the assumptions used in the calculation of these amounts. |
Years of Service | ||||||||||||||||||||||||
10 | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||||
U.S. Pension Plan | 17 | % | 25 | % | 34 | % | 42 | % | 51 | % | 59 | % | ||||||||||||
Swiss Pension Scheme | 18 | % | 27 | % | 36 | % | 45 | % | 54 | % | 63 | % |
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Martha Finn Brooks(1) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us Without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us Without | Change in | Death or | ||||||||||||||||
Executive | us for Cause | Cause | Control | Disability | ||||||||||||||||
Type of Payment | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Short-Term Incentive Pay | 590,625 | (2) | — | 590,625 | (2) | 590,625 | (2) | 590,625 | (2) | |||||||||||
Long-Term Incentive Plan | — | — | 294,294 | (3) | 294,294 | (3) | 294,294 | (3) | ||||||||||||
Severance | — | — | 1,012,500 | (4) | 2,700,000 | (5) | — | |||||||||||||
Retirement plans | — | — | — | 295,366 | (6) | — | ||||||||||||||
Lump sum cash payment for continuation of health coverage | — | — | — | 46,420 | (7) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 4,212 | (8) | — | ||||||||||||||
Change in control taxgross-up | — | — | — | — | — | |||||||||||||||
Total | 590,625 | — | 1,897,419 | 3,930,917 | 884,919 |
(1) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $51,923 at March 31, 2008). Ms. Brooks was not eligible for retirement on March 31, 2008. | |
(2) | This amount represents 100% of the executive’s target short-term incentive opportunity for fiscal 2008 prorated for the period following the acquisition or May 16, 2007 through March 31, 2008. | |
(3) | This amount represents the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2008. | |
(4) | This amount is equal to 150% of executive’s annual base salary and would be paid pursuant to the executive’s Recognition Agreement. | |
(5) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(6) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2008. | |
(7) | Pursuant to the executive’s Change in Control Agreement, this amount is intended to assist the executive in paying post-employment health coverage and is equal to 24 months times the COBRA premium rate in effect at March 31, 2008, grossed up for applicable taxes using an assumed tax rate of 40%. |
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(8) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
Steven Fisher(1) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us Without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us Without | Change in | Death or | ||||||||||||||||
Executive | us for Cause | Cause | Control | Disability | ||||||||||||||||
Type of Payment | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Short-Term Incentive Pay | 229,688 | (2) | — | 229,688 | (2) | 229,688 | (2) | 229,688 | (2) | |||||||||||
Long-Term Incentive Plan | — | — | 63,064 | (3) | 63,064 | (3) | 63,064 | (3) | ||||||||||||
Severance | — | — | 525,000 | (4) | 1,225,000 | (5) | — | |||||||||||||
Retirement plans | — | — | — | 81,950 | (6) | — | ||||||||||||||
Lump sum cash payment for continuation of health coverage | — | — | — | 46,420 | (7) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 914 | (8) | — | ||||||||||||||
Change in control taxgross-up | — | — | — | — | — | |||||||||||||||
Total | 229,688 | — | 817,752 | 1,647,036 | 292,752 |
(1) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $26,923 at March 31, 2008). Mr. Fisher was not eligible for retirement on March 31, 2008. | |
(2) | This amount represents 100% of the executive’s target short-term incentive opportunity for fiscal 2008 prorated for the period following the acquisition or May 16, 2007 through March 31, 2008. | |
(3) | This amount represents the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2008. | |
(4) | This amount is equal to 150% of executive’s annual base salary and would be paid pursuant to the executive’s Recognition Agreement. | |
(5) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(6) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. | |
(7) | Pursuant to the executive’s Change in Control Agreement, this amount is intended to assist the executive in paying post-employment health coverage and is equal to 24 months times the COBRA premium rate in effect at March 31, 2008, grossed up for applicable taxes using an assumed tax rate of 40%. | |
(8) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
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Arnaud de Weert(1) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us Without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us Without | Change in | Death or | ||||||||||||||||
Executive | us for Cause | Cause | Control | Disability | ||||||||||||||||
Type of Payment | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Short-Term Incentive Pay | 358,586 | (2) | — | 358,586 | (2) | 358,586 | (2) | 358,586 | (2) | |||||||||||
Long-Term Incentive Plan | — | — | 63,064 | (3) | 63,064 | (3) | 63,064 | (3) | ||||||||||||
Severance | — | — | 983,550 | (4) | 2,131,025 | (5) | — | |||||||||||||
Retirement plans | — | — | — | 40,125 | (6) | — | ||||||||||||||
Lump sum cash payment for continuation of health coverage | — | — | — | 46,420 | (7) | — | ||||||||||||||
Change in control taxgross-up | — | — | — | — | — | |||||||||||||||
Total | 358,586 | — | 1,405,200 | 2,639,220 | 421,650 |
(1) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $50,438 at March 31, 2008). Mr. de Weert was not eligible for retirement on March 31, 2008. | |
(2) | This amount represents 100% of the executive’s target short-term incentive opportunity for fiscal 2008 prorated for the period following the acquisition or May 16, 2007 through March 31, 2008. | |
(3) | This amount represents the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2008. | |
(4) | This amount is equal to 150% of executive’s annual base salary and would be paid pursuant to the executive’s Recognition Agreement. | |
(5) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(6) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2008. | |
(7) | Pursuant to the executive’s Change in Control Agreement, this amount is intended to assist the executive in paying post-employment health coverage and is equal to 24 months times the COBRA premium rate in effect at March 31, 2008, grossed up for applicable taxes using an assumed tax rate of 40%. |
Kevin Greenawalt(1) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us Without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | Retirement | |||||||||||||||||
Termination by | Termination by | us Without | Change in | Death or | ||||||||||||||||
Executive | us for Cause | Cause | Control | Disability | ||||||||||||||||
Type of Payment | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Short-Term Incentive Pay | 178,500 | (2) | — | 178,500 | (2) | 178,500 | (2) | 178,500 | (2) | |||||||||||
Long-Term Incentive Plan | — | — | 63,064 | (3) | 63,064 | (3) | 63,064 | (3) | ||||||||||||
Severance | — | — | 510,000 | (4) | 1,088,000 | (5) | — | |||||||||||||
Retirement plans | — | — | — | 258,619 | (6) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 2,815 | (7) | — | ||||||||||||||
Change in control taxgross-up | — | — | — | — | — | |||||||||||||||
Total | 178,500 | — | 751,564 | 1,590,998 | 241,564 |
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(1) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $26,154 at March 31, 2008). Mr. Greenawalt was eligible for retirement on March 31, 2008. | |
(2) | This amount represents 100% of the executive’s target short-term incentive opportunity for fiscal 2008 prorated for the period following the acquisition or May 16, 2007 through March 31, 2008. | |
(3) | This amount represents the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2008. | |
(4) | This amount is equal to 150% of executive’s annual base salary and would be paid pursuant to the executive’s Recognition Agreement. | |
(5) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(6) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2008. | |
(7) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
Thomas Walpole(1) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us Without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | Retirement | |||||||||||||||||
Termination by | Termination by | us Without | Change in | Death or | ||||||||||||||||
Executive | us for Cause | Cause | Control | Disability | ||||||||||||||||
Type of Payment | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Short-Term Incentive Pay | 129,938 | (2) | — | 129,938 | (2) | 129,938 | (2) | 129,938 | (2) | |||||||||||
Long-Term Incentive Plan | — | — | 45,546 | (3) | 45,546 | (3) | 45,546 | (3) | ||||||||||||
Severance | — | — | 405,000 | (4) | 837,000 | (5) | — | |||||||||||||
Retirement plans | — | — | — | 236,350 | (6) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 2,048 | (7) | — | ||||||||||||||
Change in control taxgross-up | — | — | — | — | — | |||||||||||||||
Total | 129,938 | — | 580,484 | 1,250,882 | 175,484 |
(1) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $20,769 at March 31, 2008). Mr. Walpole was eligible for retirement on March 31, 2008. | |
(2) | This amount represents 100% of the executive’s target short-term incentive opportunity for fiscal 2008 prorated for the period following the acquisition or May 16, 2007 through March 31, 2008. | |
(3) | This amount represents the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2008. | |
(4) | This amount is equal to 150% of executive’s annual base salary and would be paid pursuant to the executive’s Recognition Agreement. | |
(5) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(6) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2008. |
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(7) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
Antonio Tadeu Coehlo Nardocci(1) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us Without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | Retirement | |||||||||||||||||
Termination by | Termination by | us Without | Change in | Death or | ||||||||||||||||
Executive | us for Cause | Cause | Control | Disability | ||||||||||||||||
Type of Payment | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Short-Term Incentive Pay | 184,432 | (2) | — | 184,432 | (2) | 184,432 | (2) | 184,432 | (2) | |||||||||||
Long-Term Incentive Plan | — | — | 45,546 | (3) | 45,546 | (3) | 45,546 | (3) | ||||||||||||
Severance | — | — | 526,949 | (4) | 1,124,157 | (5) | — | |||||||||||||
Retirement plans | — | — | — | 171,818 | (6) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 4,126 | (7) | — | ||||||||||||||
Change in control taxgross-up | — | — | — | — | — | |||||||||||||||
Total | 184,432 | — | 756,927 | 1,530,079 | 229,978 |
(1) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $27,023 at March 31, 2008). Mr. Nardocci was eligible for retirement on March 31, 2008. | |
(2) | This amount represents 100% of the executive’s target short-term incentive opportunity for fiscal 2008 prorated for the period following the acquisition or May 16, 2007 through March 31, 2008. | |
(3) | This amount represents the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2008. | |
(4) | This amount is equal to 150% of executive’s annual base salary and would be paid pursuant to the executive’s Recognition Agreement. | |
(5) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(6) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. | |
(7) | Pursuant to the executive’s Change in Control Agreement, this amount is intended to assist the executive in paying post-employment health coverage and is equal to 24 months times the COBRA premium rate in effect at March 31, 2008, grossed up for applicable taxes using an assumed tax rate of 40%. |
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Fees Earned | ||||||||||||||||
or Paid | Stock | All Other | ||||||||||||||
in Cash | Awards | Compensation | Total | |||||||||||||
Name | ($) | (#) | ($) | ($) | ||||||||||||
Edward A. Blechschmidt | — | 418.3064 | — | 18,750 | ||||||||||||
Charles G. Cavell | 9,375 | 209.1532 | — | 18,750 | ||||||||||||
Clarence J. Chandran | — | 418.3064 | — | 18,750 | ||||||||||||
C. Roberto Cordaro | 9,688 | 216.1250 | — | 19,375 | ||||||||||||
Helmut Eschwey | 9,375 | 209.1532 | — | 18,750 | ||||||||||||
David J. Fitzpatrick | 9,688 | 216.1250 | — | 19,375 | ||||||||||||
Suzanne Labarge | 10,938 | 244.0121 | — | 21,875 | ||||||||||||
Patrick J. Monahan | 9,375 | 209.1532 | — | 18,750 | ||||||||||||
William T. Monahan | 15,625 | 348.5887 | — | 31,250 | ||||||||||||
Sheldon Plener | 9,375 | 209.1532 | — | 18,750 | ||||||||||||
Rudolf Rupprecht | 9,375 | 209.1532 | — | 18,750 | ||||||||||||
Kevin Twomey | 9,688 | 216.1250 | — | 19,375 | ||||||||||||
Edward V. Yang | 9,375 | 209.1532 | — | 18,750 |
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April 1 | ||||||||||||
to May 15, | ||||||||||||
2007 Deferred | Aggregate | Aggregate | ||||||||||
Share Unit | Deferred | Deferred | ||||||||||
Awards | Share Units | Share Units | ||||||||||
Name | (#) | (#) | ($) | |||||||||
Edward A. Blechschmidt | 418.3064 | 4,465.8225 | 200,649 | |||||||||
Charles G. Cavell | 209.1532 | 7,543.4209 | 338,926 | |||||||||
Clarence J. Chandran | 418.3064 | 14,711.8938 | 661,005 | |||||||||
C. Roberto Cordaro | 216.1250 | 7,377.0961 | 331,453 | |||||||||
Helmut Eschwey | 209.1532 | 7,355.9473 | 330,503 | |||||||||
David J. Fitzpatrick | 216.1250 | 6,994.3002 | 314,254 | |||||||||
Suzanne Labarge | 244.0121 | 8,581.9382 | 385,586 | |||||||||
Patrick J. Monahan | 209.1532 | 776.2344 | 34,876 | |||||||||
William T. Monahan | 348.5887 | 9,160.9806 | 411,603 | |||||||||
Sheldon Plener | 209.1532 | 776.2344 | 34,876 | |||||||||
Rudolf Rupprecht | 209.1532 | 7,543.4209 | 338,926 | |||||||||
Kevin Twomey | 216.1250 | 2,547.3637 | 114,453 | |||||||||
Edward V. Yang | 209.1532 | 7,543.4209 | 338,926 |
Fees Earned | ||||
or Paid in Cash | ||||
Name | ($) | |||
Kumar Mangalam Birla | 218,750 | |||
Debnarayan Bhattacharya | 135,625 | |||
Askaran K. Agarwala | 131,250 | |||
Clarence J. Chandran | 135,625 | |||
Donald A. Stewart | 153,125 |
• | a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served on our Committee; |
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• | a director of another entity, one of whose executive officers served on our Committee; or | |
• | a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as one of our directors. |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13. | Certain Relationships and Related Transactions and Director Independence |
Item 14. | Principal Accountant Fees and Services |
• | Audit fees: $8,203,000 (for the periods from January 1, 2007 through March 31, 2007, April 1, 2007 through May 15, 2007, and May 16, 2007 through March 31, 2008) and $13,597,000 (for the fiscal year ended December 31, 2006) for professional services rendered and expenses incurred for the audit |
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of the Company’s annual financial statements, review of financial statements included in the Company’s Form10-Qs and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements for those fiscal periods. |
• | Audit-Related Fees: $176,000 (for the period from May 15, 2007 through March 31, 2008) related to consultations concerning anticipated transactions. | |
• | Tax Fees: $602,000 (for the period from May 15, 2007 through March 31, 2008) related to a transfer pricing study. | |
• | All Other Fees: $4,500 (for the periods from January 1, 2007 through March 31, 2007, April 1, 2007 through May 15, 2007, and May 16, 2007 through March 31, 2008) and $14,000 (for the fiscal year ended December 31, 2006) for fees related to an on-line research tool. |
Item 15. | Exhibits and Financial Statement Schedules |
1. | Financial Statement Schedules |
2. | Exhibits |
Exhibit | ||||
No. | Description | |||
2 | .1 | Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1 to our Current Report onForm 8-K filed on February 13, 2007) | ||
3 | .1 | Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to ourForm 8-K filed on January 7, 2005 (FileNo. 001-32312)) | ||
3 | .2 | By-law No. 1 of Novelis Inc. (incorporated by reference to Exhibit 3.2 to our Form 10 filed on November 17, 2004 (FileNo. 001-32312)) | ||
4 | .1 | Shareholder Rights Agreement between Novelis Inc. and CIBC Mellon Trust Company (incorporated by reference to Exhibit 4.1 to ourForm 10-K filed on March 30, 2005 (FileNo. 001-32312)) | ||
4 | .2 | First Amendment to the Shareholder Rights Agreement between Novelis Inc. and CIBC Mellon Trust Company, dated as of February 10, 2007 (incorporated by reference to Exhibit 4.1 to ourForm 8-K filed February 13, 2007 (File No. 001-32312)) | ||
4 | .3 | Specimen Certificate of Novelis Inc. Common Shares (incorporated by reference to Exhibit 4.2 to our Form 10 filed on December 27, 2004 (FileNo. 001-32312)) | ||
4 | .4 | Indenture, relating to the Notes, dated as of February 3, 2005, between the Company, the guarantors named on the signature pages thereto and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to ourForm 8-K filed on February 3, 2005 (FileNo. 001-32312)) | ||
4 | .5 | Form of Note for 71/4% Senior Notes due 2015 (incorporated by reference to Exhibit 4.1 to ourForm S-4 filed on August 3, 2005 (FileNo. 333-127139)) | ||
4 | .6 | Supplemental Indenture, between the Company, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC and the Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.6 to our Post-Effective Amendment No. 1 to ourForm S-4 Registration Statement filed on December 1, 2006 (FileNo. 333-127139)) |
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Exhibit | ||||
No. | Description | |||
10 | .1 | $800 million asset-based lending credit facility (“ABL Facility”) dated as of July 6, 2007 among Novelis Inc., Novelis Corporation as U.S. Borrower, the other U.S. Subsidiaries of Novelis Inc., Novelis UK Ltd, Novelis AG, AV Aluminum Inc. as parent guarantor, the other guarantors party thereto, with the lenders party thereto, ABN AMRO Bank N.V., as U.S./European issuing bank, swingline lender and administrative agent, LaSalle Business Credit, LLC, as collateral agent and funding agent, UBS Securities LLC, as syndication agent, Bank of America, N.A., National City Business Credit, Inc. and CIT Business Credit Canada Inc., as documentation agents, ABN AMRO Bank N.V. Canada Branch, as Canadian issuing bank, Canadian funding agent and Canadian administrative agent, and ABN AMRO Incorporated and UBS Securities LLC, as joint lead arrangers and joint book managers (incorporated by reference to Exhibit 10.1 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .2 | $960 million term loan facility (“Term Loan Facility”) dated as of July 6, 2007 among Novelis Inc., Novelis Corporation as U.S. Borrower, AV Aluminum Inc., As Holdings, and the other guarantors party thereto, with the lenders party thereto, UBS AG, Stamford Branch, as administrative agent and as collateral agent, UBS Securities LLC, as syndication agent, ABN AMRO Incorporated, as documentation agent, and UBS Securities LLC and ABN AMRO Incorporated as joint lead arrangers and joint book managers (incorporated by reference to Exhibit 10.2 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .3 | Intercreditor Agreement dated as of July 6, 2007 by and among Novelis Inc., Novelis Corporation, Novelis PAE Corporation, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, Novelis UK Ltd, Novelis AG, AV Aluminum Inc., and the subsidiary guarantors party thereto, as grantors, ABN AMRO BANK N.V., as revolving credit administrative agent ABN AMRO Bank N.A., acting through its Canadian branch, as revolving credit Canadian administrative agent and as revolving credit Canadian funding agent, La Salle Business Credit, LLC, as revolving credit collateral agent and as revolving credit funding agent, and UBS AG, Stamford Branch, as Term Loan administrative agent, and Term Loan collateral agent (incorporated by reference to Exhibit 10.3 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .4 | Security Agreement made by Novelis Inc., as Canadian Borrower, Novelis Corporation, as U.S. Borrower and the guarantors from time to time party thereto in favor of UBS AG, Stamford branch, as collateral agent dated as of July 6, 2007 (incorporated by reference to Exhibit 10.4 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .5 | Security Agreement made by Novelis Inc., as Canadian Borrower, Novelis Corporation, Novelis PAE Corporation, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, as U.S. Borrowers and the guarantors from time to time party thereto in favor of La Salle Business Credit, LLC, as collateral agent dated as of July 6, 2007 (incorporated by reference to Exhibit 10.5 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .6** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of re-melt aluminum ingot | ||
10 | .7** | Amended and Restated Molten Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of molten metal to Purchaser’s Saguenay Works facility | ||
10 | .8** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in North America | ||
10 | .9** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in Europe | ||
10 | .10* | Letter Agreement between Novelis Inc. and Edward A. Blechschmidt dated as of January 16, 2007 (incorporated by reference to Exhibit 10.1 to our Form 8-K filed on January 19, 2007 (File No. 001-32312)) | ||
10 | .11* | Employment Agreement of Martha Finn Brooks (incorporated by reference to Exhibit 10.33 to the Form 10 filed by Novelis Inc. on December 22, 2004 (FileNo. 001-32312)) |
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Exhibit | ||||
No. | Description | |||
10 | .12* | Employment Letter, dated June 23, 2006, by and between Rick Dobson and Novelis Inc. (incorporated by reference to Exhibit 10.50 to our Annual Report on Form10-K filed on August 25, 2006 (File No. 001-32312)) | ||
10 | .13* | Addendum to Rick Dobson Offer Letter, dated June 20, 2006, by and between Rick Dobson and Novelis Inc. (incorporated by reference to Exhibit 10.51 to our Annual Report onForm 10-K filed on August 25, 2006 (File No. 001-32312)) | ||
10 | .14* | Employment Arrangement between Steven Fisher and Novelis Inc. as described in theForm 8-K andForm 8-K/A filed on May 21, 2007 and August 15, 2007, respectively (incorporated by reference to ourForm 8-K filed on May 21, 2007 and ourForm 8-K/A filed on August 15, 2007 (FileNo. 001-32312)) | ||
10 | .15* | Letter Agreement, dated October 20, 2006, by and between Novelis Inc. and Thomas Walpole (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on October 26, 2006 (FileNo. 001-32312)) | ||
10 | .16* | Employment Agreement of Antonio Tadeu Coelho Nardocci dated as of November 8, 2004 | ||
10 | .17* | Employment Agreement of Arnaud de Weert (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on April 3, 2006 (FileNo. 001-32312)) | ||
10 | .18* | Letter Agreement between Novelis Inc. and David Godsell dated as of November 10, 2004 (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on October 26, 2006 (FileNo. 001-32312)) | ||
10 | .19* | Form of Change in Control Agreement between Novelis Inc. and certain executive officers (incorporated by reference to Exhibit 99.1 to ourForm 8-K filed on September 27, 2006 (FileNo. 001-32312)) | ||
10 | .20* | Form of Change in Control Agreement between Novelis Inc. and certain executive officers and key employees (incorporated by reference to Exhibit 99.2 to ourForm 8-K filed on September 27, 2006 (FileNo. 001-32312)) | ||
10 | .21* | Form of Recognition Agreement between Novelis Inc. and certain executive officers and key employees (incorporated by reference to Exhibit 99.3 to ourForm 8-K filed on September 27, 2006 (FileNo. 001-32312)) | ||
10 | .22* | Form of Amendment to Recognition Agreements (incorporated by reference to Exhibit 10.1 of ourForm 8-K/A filed May 8, 2007 (File No. 001-32312)) | ||
10 | .23* | Form of SAR Award (incorporated by reference to Exhibit 10.3 to ourForm 8-K filed on November 1, 2006 (FileNo. 001-32312)) | ||
10 | .24* | Novelis Inc. 2006 Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on November 1, 2006 (FileNo. 001-32312)) | ||
10 | .25* | Form of Non-Qualified Stock Option Award (incorporated by reference to Exhibit 10.2 to ourForm 8-K filed on November 1, 2006 (FileNo. 001-32312)) | ||
10 | .26* | Form of Novelis Long-Term Incentive Plan for Fiscal2008-2010 | ||
10 | .27* | Separation and Release Agreement between Novelis Inc. and Rick Dobson dated August 15, 2007 | ||
10 | .28* | Agreement Regarding Termination of Employment between Novelis Inc. and David Godsell dated as of November 12, 2007 | ||
10 | .29* | Separation and Release Agreement between Novelis Inc. and David Godsell dated November 12, 2007 | ||
10 | .30 | Form of Indemnity Agreement between Novelis Inc. and Members of the Board of Directors of Novelis Inc. (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on May 21, 2007) | ||
10 | .31 | Form of Indemnity Agreement between Novelis Inc. and certain executive officers dated as of June 27, 2007 (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on June 28, 2007(FileNo. 001-32312)) | ||
10 | .32* | Form of Amended and Restated Novelis Founders Performance Awards Plan dated March 14, 2006 (incorporated by reference to Exhibit 10.7 to ourForm 8-K filed on March 20, 2006(File No. 001-32312)) |
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Exhibit | ||||
No. | Description | |||
10 | .33* | First Amendment to the Amended and Restated Novelis Founders Performance Awards Plan (incorporated by reference to ourForm 8-K/A filed May 8, 2007 (FileNo. 001-32312)) | ||
10 | .34* | Novelis Founders Performance Award Notification for Martha Brooks dated March 31, 2005 (incorporated by reference to Exhibit 10.2 to ourForm 8-K filed on March 21, 2006 (FileNo. 001-32312)) | ||
10 | .35* | Novelis Founders Performance Award Notification for Kevin Greenawalt dated March 31, 2005 | ||
10 | .36* | Novelis Founders Performance Award Notification for Thomas Walpole dated March 31, 2005 | ||
10 | .37* | Novelis Founders Performance Award Notification for Tadeu Nardocci dated March 31, 2005 | ||
10 | .38* | Novelis Founders Performance Award Notification for David Godsell dated March 31, 2005 | ||
10 | .39* | Form of Novelis Annual Incentive Plan for 2007 – 2008 | ||
11 | .1 | Statement regarding computation of per share earnings (incorporated by reference to Item 8. Financial Statements and Supplementary Data — Note 19 — Earnings per Share to the Consolidated and Combined Financial Statements. (FileNo. 001-32312)) | ||
21 | .1 | List of subsidiaries of Novelis Inc. | ||
31 | .1 | Section 302 Certification of Principal Executive Officer | ||
31 | .2 | Section 302 Certification of Principal Financial Officer | ||
32 | .1 | Section 906 Certification of Principal Executive Officer | ||
32 | .2 | Section 906 Certification of Principal Financial Officer |
* | Indicates a management contract or compensatory plan or arrangement. |
** | Confidential treatment requested for certain portions of this Exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission. |
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By | /s/ Martha Finn Brooks |
Title: | President and Chief Operating Officer |
/s/ Martha Finn Brooks Martha Finn Brooks | (Principal Executive Officer) | Date: June 19, 2008 | ||||
/s/ Steven Fisher Steven Fisher | (Principal Financial Officer) | Date: June 19, 2008 | ||||
/s/ Jeffrey Schwaneke Jeffrey Schwaneke | (Principal Accounting Officer) | Date: June 19, 2008 | ||||
/s/ Kumar Mangalam Birla Kumar Mangalam Birla | (Chairman of the Board of Directors) | Date: June 19, 2008 | ||||
/s/ Askaran Agarwala Askaran Agarwala | (Director) | Date: June 19, 2008 | ||||
/s/ Debnarayan Bhattacharya Debnarayan Bhattacharya | (Director) | Date: June 19, 2008 | ||||
/s/ Clarence J. Chandran Clarence J. Chandran | (Director) | Date: June 19, 2008 | ||||
/s/ Donald A. Stewart Donald A. Stewart | (Director) | Date: June 19, 2008 |
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Exhibit | ||||
No. | Description | |||
2 | .1 | Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1 to our Current Report onForm 8-K filed on February 13, 2007) | ||
3 | .1 | Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to ourForm 8-K filed on January 7, 2005 (FileNo. 001-32312)) | ||
3 | .2 | By-law No. 1 of Novelis Inc. (incorporated by reference to Exhibit 3.2 to our Form 10 filed on November 17, 2004 (FileNo. 001-32312)) | ||
4 | .1 | Shareholder Rights Agreement between Novelis Inc. and CIBC Mellon Trust Company (incorporated by reference to Exhibit 4.1 to ourForm 10-K filed on March 30, 2005 (FileNo. 001-32312)) | ||
4 | .2 | First Amendment to the Shareholder Rights Agreement between Novelis Inc. and CIBC Mellon Trust Company, dated as of February 10, 2007 (incorporated by reference to Exhibit 4.1 to ourForm 8-K filed February 13, 2007 (FileNo. 001-32312)) | ||
4 | .3 | Specimen Certificate of Novelis Inc. Common Shares (incorporated by reference to Exhibit 4.2 to our Form 10 filed on December 27, 2004 (FileNo. 001-32312)) | ||
4 | .4 | Indenture, relating to the Notes, dated as of February 3, 2005, between the Company, the guarantors named on the signature pages thereto and The Bank of New York Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to ourForm 8-K filed on February 3, 2005(File No. 001-32312)) | ||
4 | .5 | Form of Note for 71/4% Senior Notes due 2015 (incorporated by reference to Exhibit 4.1 to ourForm S-4 filed on August 3, 2005 (FileNo. 333-127139)) | ||
4 | .6 | Supplemental Indenture, between the Company, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC and the Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.6 to our Post-Effective Amendment No. 1 to ourForm S-4 Registration Statement filed on December 1, 2006 (FileNo. 333-127139)) | ||
10 | .1 | $800 million asset-based lending credit facility (“ABL Facility”) dated as of July 6, 2007 among Novelis Inc., Novelis Corporation as U.S. Borrower, the other U.S. Subsidiaries of Novelis Inc., Novelis UK Ltd, Novelis AG, AV Aluminum Inc. as parent guarantor, the other guarantors party thereto, with the lenders party thereto, ABN AMRO Bank N.V., as U.S./European issuing bank, swingline lender and administrative agent, LaSalle Business Credit, LLC, as collateral agent and funding agent, UBS Securities LLC, as syndication agent, Bank of America, N.A., National City Business Credit, Inc. and CIT Business Credit Canada Inc., as documentation agents, ABN AMRO Bank N.V. Canada Branch, as Canadian issuing bank, Canadian funding agent and Canadian administrative agent, and ABN AMRO Incorporated and UBS Securities LLC, as joint lead arrangers and joint book managers (incorporated by reference to Exhibit 10.1 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007)(File No. 001-32312) | ||
10 | .2 | $960 million term loan facility (“Term Loan Facility”) dated as of July 6, 2007 among Novelis Inc., Novelis Corporation as U.S. Borrower, AV Aluminum Inc., As Holdings, and the other guarantors party thereto, with the lenders party thereto, UBS AG, Stamford Branch, as administrative agent and as collateral agent, UBS Securities LLC, as syndication agent, ABN AMRO Incorporated, as documentation agent, and UBS Securities LLC and ABN AMRO Incorporated as joint lead arrangers and joint book managers (incorporated by reference to Exhibit 10.2 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007)(File No. 001-32312) | ||
10 | .3 | Intercreditor Agreement dated as of July 6, 2007 by and among Novelis Inc., Novelis Corporation, Novelis PAE Corporation, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, Novelis UK Ltd, Novelis AG, AV Aluminum Inc., and the subsidiary guarantors party thereto, as grantors, ABN AMRO BANK N.V., as revolving credit administrative agent ABN AMRO Bank N.A., acting through its Canadian branch, as revolving credit Canadian administrative agent and as revolving credit Canadian funding agent, La Salle Business Credit, LLC, as revolving credit collateral agent and as revolving credit funding agent, and UBS AG, Stamford Branch, as Term Loan administrative agent, and Term Loan collateral agent (incorporated by reference to Exhibit 10.3 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) |
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Exhibit | ||||
No. | Description | |||
10 | .4 | Security Agreement made by Novelis Inc., as Canadian Borrower, Novelis Corporation, as U.S. Borrower and the guarantors from time to time party thereto in favor of UBS AG, Stamford branch, as collateral agent dated as of July 6, 2007 (incorporated by reference to Exhibit 10.4 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .5 | Security Agreement made by Novelis Inc., as Canadian Borrower, Novelis Corporation, Novelis PAE Corporation, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, as U.S. Borrowers and the guarantors from time to time party thereto in favor of La Salle Business Credit, LLC, as collateral agent dated as of July 6, 2007 (incorporated by reference to Exhibit 10.5 to our Quarterly Report onForm 10-Q for the period ended September 30, 2007 filed on November 9, 2007) (FileNo. 001-32312) | ||
10 | .6** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of re-melt aluminum ingot | ||
10 | .7** | Amended and Restated Molten Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of molten metal to Purchaser’s Saguenay Works facility | ||
10 | .8** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in North America | ||
10 | .9** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in Europe | ||
10 | .10* | Letter Agreement between Novelis Inc. and Edward A. Blechschmidt dated as of January 16, 2007 (incorporated by reference to Exhibit 10.1 to our Form8-K filed on January 19, 2007)(File No. 001-32312) | ||
10 | .11* | Employment Agreement of Martha Finn Brooks (incorporated by reference to Exhibit 10.33 to the Form 10 filed by Novelis Inc. on December 22, 2004 (FileNo. 001-32312)) | ||
10 | .12* | Employment Letter, dated June 23, 2006, by and between Rick Dobson and Novelis Inc. (incorporated by reference to Exhibit 10.50 to our Annual Report on Form10-K filed on August 25, 2006 (FileNo. 001-32312)) | ||
10 | .13* | Addendum to Rick Dobson Offer Letter, dated June 20, 2006, by and between Rick Dobson and Novelis Inc. (incorporated by reference to Exhibit 10.51 to our Annual Report onForm 10-K filed on August 25, 2006 (FileNo. 001-32312)) | ||
10 | .14* | Employment Arrangement between Steven Fisher and Novelis Inc. as described in theForm 8-K andForm 8-K/A filed on May 21, 2007 and August 15, 2007, respectively (incorporated by reference to ourForm 8-K filed on May 21, 2007 and ourForm 8-K/A filed on August 15, 2007(File No. 001-32312)) | ||
10 | .15* | Letter Agreement, dated October 20, 2006, by and between Novelis Inc. and Thomas Walpole (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on October 26, 2006(File No. 001-32312)) | ||
10 | .16* | Employment Agreement of Antonio Tadeu Coelho Nardocci dated as of November 8, 2004 | ||
10 | .17* | Employment Agreement of Arnaud de Weert (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on April 3, 2006 (FileNo. 001-32312)) | ||
10 | .18* | Letter Agreement between Novelis Inc. and David Godsell dated as of November 10, 2004 (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on October 26, 2006(File No. 001-32312)) | ||
10 | .19* | Form of Change in Control Agreement between Novelis Inc. and certain executive officers (incorporated by reference to Exhibit 99.1 to ourForm 8-K filed on September 27, 2006(File No. 001-32312)) | ||
10 | .20* | Form of Change in Control Agreement between Novelis Inc. and certain executive officers and key employees (incorporated by reference to Exhibit 99.2 to ourForm 8-K filed on September 27, 2006 (FileNo. 001-32312)) | ||
10 | .21* | Form of Recognition Agreement between Novelis Inc. and certain executive officers and key employees (incorporated by reference to Exhibit 99.3 to ourForm 8-K filed on September 27, 2006 (FileNo. 001-32312)) |
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Exhibit | ||||
No. | Description | |||
10 | .22* | Form of Amendment to Recognition Agreements (incorporated by reference to Exhibit 10.1 of ourForm 8-K/A filed May 8, 2007 (File No. 001-32312)) | ||
10 | .23* | Form of SAR Award (incorporated by reference to Exhibit 10.3 to ourForm 8-K filed on November 1, 2006 (FileNo. 001-32312)) | ||
10 | .24* | Novelis Inc. 2006 Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to ourForm 8-K filed on November 1, 2006 (FileNo. 001-32312)) | ||
10 | .25* | Form of Non-Qualified Stock Option Award (incorporated by reference to Exhibit 10.2 to ourForm 8-K filed on November 1, 2006 (FileNo. 001-32312)) | ||
10 | .26* | Form of Novelis Long-Term Incentive Plan for Fiscal2008-2010 | ||
10 | .27* | Separation and Release Agreement between Novelis Inc. and Rick Dobson dated August 15, 2007 | ||
10 | .28* | Agreement Regarding Termination of Employment between Novelis Inc. and David Godsell dated as of November 12, 2007 | ||
10 | .29* | Separation and Release Agreement between Novelis Inc. and David Godsell dated November 12, 2007 | ||
10 | .30 | Form of Indemnity Agreement between Novelis Inc. and Members of the Board of Directors of Novelis Inc. (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on May 21, 2007) | ||
10 | .31 | Form of Indemnity Agreement between Novelis Inc. and certain executive officers dated as of June 27, 2007 (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on June 28, 2007(FileNo. 001-32312)) | ||
10 | .32* | Form of Amended and Restated Novelis Founders Performance Awards Plan dated March 14, 2006 (incorporated by reference to Exhibit 10.7 to ourForm 8-K filed on March 20, 2006(File No. 001-32312)) | ||
10 | .33* | First Amendment to the Amended and Restated Novelis Founders Performance Awards Plan (incorporated by reference to ourForm 8-K/A filed May 8, 2007 (FileNo. 001-32312)) | ||
10 | .34* | Novelis Founders Performance Award Notification for Martha Brooks dated March 31, 2005 (incorporated by reference to Exhibit 10.2 to ourForm 8-K filed on March 21, 2006 (FileNo. 001-32312)) | ||
10 | .35* | Novelis Founders Performance Award Notification for Kevin Greenawalt dated March 31, 2005 | ||
10 | .36* | Novelis Founders Performance Award Notification for Thomas Walpole dated March 31, 2005 | ||
10 | .37* | Novelis Founders Performance Award Notification for Tadeu Nardocci dated March 31, 2005 | ||
10 | .38* | Novelis Founders Performance Award Notification for David Godsell dated March 31, 2005 | ||
10 | .39* | Form of Novelis Annual Incentive Plan for 2007 – 2008 | ||
11 | .1 | Statement regarding computation of per share earnings (incorporated by reference to Item 8. Financial Statements and Supplementary Data — Note 19 — Earnings per Share to the Consolidated and Combined Financial Statements. (FileNo. 001-32312)) | ||
21 | .1 | List of subsidiaries of Novelis Inc. | ||
31 | .1 | Section 302 Certification of Principal Executive Officer | ||
31 | .2 | Section 302 Certification of Principal Financial Officer | ||
32 | .1 | Section 906 Certification of Principal Executive Officer | ||
32 | .2 | Section 906 Certification of Principal Financial Officer |
* | Indicates a management contract or compensatory plan or arrangement. |
** | Confidential treatment requested for certain portions of this Exhibit, which portions have been omitted and filed separately with the Securities and Exchange Commission. |
238