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Canada | 3350 | 98-0442987 | ||
(State or other jurisdiction of incorporation or organization) | (Primary standard industrial classification code number) | (I.R.S. Employer Identification Number) |
* | The companies listed on the next page are also included in this Form S-4 Registration Statement as additional Registrants. |
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Jurisdiction of | IRS Employer | |||||
Exact Name of Additional Registrants* | Formation | Identification No. | ||||
Novelis Corporation | Texas | 41-2098321 | ||||
Eurofoil Inc. (USA) | New York | 13-3783544 | ||||
Novelis PAE Corporation | Delaware | 36-4266108 | ||||
Novelis Cast House Technology Ltd. | Canada | Not applicable | ||||
4260848 Canada Inc. | Canada | Not applicable | ||||
4260856 Canada Inc. | Canada | Not applicable | ||||
Novelis Europe Holdings Ltd. | United Kingdom | Not applicable | ||||
Novelis UK Ltd. | United Kingdom | Not applicable | ||||
Novelis do Brasil Ltda. | Brazil | Not applicable | ||||
Novelis AG | Switzerland | Not applicable | ||||
Novelis Switzerland S.A. | Switzerland | Not applicable | ||||
Novelis Technology AG | Switzerland | Not applicable | ||||
Novelis Aluminium Holding Company | Ireland | Not applicable | ||||
Novelis Deutschland GmbH | Germany | Not applicable |
* | The address for each of the additional Registrants is c/o Novelis Inc., 3399 Peachtree Rd., N.E., Suite 1500, Atlanta, Georgia 30326. The primary standard industrial classification number for each of the additional Registrants is 3350. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
• | You will receive an equal principal amount of Notes for all old notes that you validly tender and do not validly withdraw. | |
• | The exchange should not be a taxable exchange for United States federal income tax purposes. Similarly, the exchange will not constitute a disposition for Canadian federal income tax purposes. | |
• | There has been no public market for the old notes and we cannot assure you that any public market for the Notes will develop. We do not intend to list the Notes on any national securities exchange or any automated quotation system. |
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EX-12.1 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES | ||||||||
EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP | ||||||||
EX-99.1 FORM OF LETTER OF TRANSMITTAL | ||||||||
EX-99.2 FORM OF NOTICE OF GUARENTEED DELIVERY | ||||||||
EX-99.3 EXCHANGE AGENT AGREEMENT | ||||||||
SEC CORRESPONDENCE LETTER | ||||||||
SEC CORRESPONDENCE LETTER | ||||||||
SEC CORRESPONDENCE LETTER |
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• | our separation from Alcan; | |
• | the level of our indebtedness and our ability to generate cash following the separation; | |
• | relationships with, and financial and operating conditions of, our customers and suppliers; | |
• | changes in the prices and availability of raw materials we use; |
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• | 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; | |
• | changes in the relative values of various currencies; | |
• | factors affecting our operations, such as litigation, labour 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; | |
• | changes in general economic conditions; | |
• | cyclical demand and pricing within the principal markets for our products as well as seasonality in certain of our customers’ industries; and | |
• | changes in government regulations, particularly those affecting environmental, health or safety compliance. |
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Year Ended December 31, | At Period End | Average Rate(1) | High | Low | ||||||||||||
2000 | 1.4995 | 1.4871 | 1.5600 | 1.4350 | ||||||||||||
2001 | 1.5925 | 1.5519 | 1.6023 | 1.4933 | ||||||||||||
2002 | 1.5800 | 1.5702 | 1.6128 | 1.5108 | ||||||||||||
2003 | 1.2923 | 1.3916 | 1.5750 | 1.2923 | ||||||||||||
2004 | 1.2034 | 1.2984 | 1.3970 | 1.1775 | ||||||||||||
2005 (through September 23) | 1.1668 | 1.2283 | 1.2703 | 1.1749 |
(1) | The average of the noon buying rates on the last day of each month during the period. |
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The Exchange Offer | We are offering to exchange $1,000 principal amount of our Notes that we have registered under the Securities Act for each $1,000 principal amount of outstanding old notes. In order for us to exchange your old notes, you must validly tender them to us and we must accept them. We will exchange all outstanding old notes that are validly tendered and not validly withdrawn. | |
Resale of the Notes | Based on interpretations by the staff of the SEC set forth in no-action letters issued to other parties, we believe that you may offer for resale, resell and otherwise transfer your Notes without compliance with the registration and prospectus delivery provisions of the Securities Act if you are not our affiliate, you acquire the Notes issued in the exchange offer in the ordinary course of your business, you are not a broker-dealer that acquired any of its old notes directly from us and you are not participating, do not intend to participate and have no arrangement or understanding with any person to participate in the distribution of the Notes we issue to you in the exchange offer. | |
Each broker-dealer that receives Notes in the exchange offer for its own account in exchange for old notes that it acquired as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the Notes issued in the exchange offer. See “Plan of Distribution.” | ||
Expiration date | The exchange offer will expire at 5:00 p.m., Eastern Standard Time, October , 2005, unless we decide to extend the expiration date. We may extend the expiration date for any reason. If we fail to consummate the exchange offer, you will have certain rights against us under the registration rights agreement we entered into as part of the offering of the old notes. | |
Special procedures for beneficial owners | If you are the beneficial owner of old notes and you registered your old notes in the name of a broker or other institution, and you wish to participate in the exchange, you should promptly contact the person in whose name you registered your old notes and instruct that person to tender the old notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding old notes, either make appropriate arrangements to register ownership of the outstanding old notes in your name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. |
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Guaranteed delivery procedures | If you wish to tender your old notes and time will not permit your required documents to reach the exchange agent by the expiration date, or you cannot complete the procedure for book-entry transfer on time or you cannot deliver your certificates for registered old notes on time, you may tender your old notes pursuant to the procedures described in this prospectus under the heading “The Exchange Offer-How to use the guaranteed delivery procedures if you will not have enough time to send all documents to us.” | |
Withdrawal rights | You may withdraw the tender of your old notes at any time prior to the expiration date. | |
Certain Canadian federal and United States federal income tax consequences | An exchange of old notes for Notes should not be subject to United States federal income tax. Similarly, the exchange will not constitute a disposition for Canadian federal income tax purposes. See “Important Canadian Federal and United States Federal Income Tax Considerations.” | |
Use of proceeds | We will not receive any proceeds from the issuance of Notes pursuant to the exchange offer. Old notes that are validly tendered and exchanged will be retired and canceled. We will pay all expenses incident to the exchange offer. | |
Exchange agent | You can reach The Bank of New York Trust Company, N.A., the exchange agent, at Corporate Trust Operations, Reorganization Unit, 101 Barclay Street 7 East, New York, NY 10286, Attention: Randolph Holder. For more information with respect to the exchange offer, you may call the exchange agent on (212) 815-5098; the fax number for the exchange agent is (212) 298-1915 (eligible institutions only). | |
Dissenter or Appraisal Rights | Holders of old notes will not have dissenters’ or appraisal rights in connection with the exchange offer. |
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Issuer | Novelis Inc., a Canadian corporation | |
Securities Offered | $1,400,000,000 aggregate principal amount of 71/4% senior notes due 2015. | |
Maturity | The Notes will mature on February 15, 2015. | |
Interest rate and Payment Dates | The Notes will bear interest at the rate of 71/4% per annum. Interest on the Notes will be payable semiannually in arrears on February 15 and August 15 of each year commencing August 15, 2005. Interest on the Notes will accrue from the most recent date through which interest has been paid, or if no interest has been paid, from the date of original issuance of the old notes. | |
Guarantees | The Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by all of our existing and future Canadian and U.S. wholly-owned restricted subsidiaries, certain of our existing foreign wholly-owned restricted subsidiaries and our other restricted subsidiaries that guarantee debt in the future under any credit facilities, provided that the borrower of such debt is our company or a Canadian or a U.S. subsidiary. In 2004, on a historical combined basis, our subsidiaries that will not be guarantors at the consummation of this exchange offer had sales and operating revenues of $2.1 billion, and, at June 30, 2005, those subsidiaries had assets of $1.9 billion and debt and other liabilities of $1.1 billion (including inter-company balances). | |
Ranking | The Notes will be: | |
• our senior unsecured obligations; | ||
• effectively junior in right of payment to all of our existing and future secured debt to the extent of the value of the assets securing that debt, including the $1.1 billion of secured debt under our senior secured credit facilities as of June 30, 2005 (and up to an additional $500 million of revolving credit debt that we may borrow thereunder from time to time), which debt is secured by our assets and the assets of our principal subsidiaries; | ||
• effectively junior in right of payment to all debt and other liabilities (including trade payables) of any of our subsidiaries that do not guarantee the Notes; | ||
• equal in right of payment to all of our existing and future senior debt; and |
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• senior in right of payment to all of our future subordinated debt. | ||
The guarantees of each guarantor will be: | ||
• senior unsecured obligations of that guarantor; | ||
• effectively junior in right of payment to all existing and future secured debt of that guarantor to the extent of the value of the assets securing that debt, including the debt or guarantee of debt of that guarantor under the senior secured credit facilities, which debt or guarantee will be secured by the assets of that guarantor; | ||
• equal in right of payment to all of that guarantor’s existing and future senior debt; and | ||
• senior in right of payment to all of that guarantor’s future subordinated debt. | ||
At June 30, 2005, Novelis Inc. and the guarantors had $1.1 billion of secured debt. The indenture governing the Notes will permit us, subject to specified limitations, to incur additional debt, some or all of which may be senior debt. | ||
Optional Redemption | Prior to February 15, 2010, we may from time to time redeem all or a portion of the Notes by paying a special “make-whole” premium specified in this prospectus under “Description of Notes — Optional Redemption.” | |
At any time on or after February 15, 2010, we may from time to time redeem all or a portion of the Notes at the redemption prices specified in this prospectus under “Description of Notes — Optional Redemption.” | ||
In addition, at any time prior to February 15, 2008 we may also redeem up to 35% of the original aggregate principal amount of the old notes and the Notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 107.250% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 65% of the original aggregate principal amount of the old notes and the Notes issued remains outstanding after the redemption. | ||
Additional Amounts and Tax Redemption | Any payments made by us with respect to the Notes will be made without withholding or deduction, unless required by law. If we are required by law to withhold or deduct for taxes with respect to a payment to the holders of Notes, we will, subject to certain exceptions, pay the additional amount necessary so that the net amount received by the holder of Notes (other than certain excluded holders) after the withholding is not less than the amount they would have received in the absence of the withholding. |
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If we are required to pay additional amounts as a result of changes in laws applicable to tax-related withholdings or deductions in respect of payments on the old notes and Notes but not the guarantees, we will have the option to redeem the old notes and Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the old notes and Notes, plus any accrued and unpaid interest to the date of redemption and any additional amounts that may be then payable. | ||
Covenants | We will issue the Notes under an indenture between us and The Bank of New York Trust Company, N.A., as trustee, which is the same indenture under which we issued the old notes. The indenture governing the Notes will contain covenants that limit our ability and the ability of our restricted subsidiaries to: | |
• incur additional debt and provide additional guarantees; | ||
• 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 and the assets of our restricted subsidiaries. | ||
During any future period in which either Standard & Poor’s Rating Services, a division of the McGraw-Hill Companies, Inc., or Moody’s Investors Service, Inc. have assigned an investment grade credit rating to the Notes and no default or event of default under the indenture has occurred and is continuing, most of the covenants, including our obligation to repurchase Notes following certain asset sales, will be suspended. If either of these ratings agencies then withdraws its ratings or downgrades the ratings assigned to the Notes below the required investment grade rating, or a default or event of default occurs and is continuing, the suspended covenants will again be in effect. If at any time both ratings agencies have assigned an investment grade rating to the Notes, those covenants, including our obligation to repurchase Notes following certain asset sales, will terminate and no longer be applicable regardless of any subsequent changes in the rating of those Notes. See “Description of the Notes — Certain Covenants — Covenant Termination and Suspension.” |
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These covenants are subject to a number of important limitations and exceptions. For more details, see “Description of the Notes — Certain Covenants.” | ||
Change of Control | Following a change of control, we will be required to offer to purchase all of the Notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. | |
Exchange Offer; Registration Rights | Pursuant to a registration agreement among us and the initial purchasers of the old notes, we agreed to: | |
• file a registration statement within 180 days after the issue date of the old notes, relating to the exchange of the privately placed notes for publicly registered exchange notes with substantially identical terms evidencing the same continuing indebtedness; | ||
• use our reasonable best efforts to cause the registration statement to become effective within 270 days after the issue date of the old notes; | ||
• keep the exchange offer open for not less than 30 days and not more than 45 days; and | ||
• file a shelf registration statement for the resale of the old notes if we cannot effect an exchange offer within the specified time period and in certain other circumstances described in this prospectus. | ||
We intend the registration statement relating to this prospectus to satisfy these obligations. We filed this registration statement 181 days after the issue date of the old notes. Accordingly, special interest accrued for one day on the old notes. If we do not comply with our other obligations under the registration rights agreement, we will be required to pay additional special interest on the old notes and/or the Notes under specific circumstances. See “Registration Rights.” | ||
Offering; Transfer Restrictions | The Notes are not being offered for sale and may not be offered or sold directly or indirectly in Canada except in accordance with applicable securities laws of the provinces and territories of Canada. We are not required, and do not intend, to qualify by prospectus in Canada the Notes, and accordingly, the Notes will be subject to restrictions on resale in Canada. | |
Absence of a Public Market for the Notes | The Notes are a new issue of securities, and currently there is no existing trading market for them. We do not intend to apply for listing of the Notes on any national securities exchange or to arrange for quotation of the Notes on any automated dealer quotation system. The initial purchasers may make a market for the Notes, but they have no obligation to do so. Accordingly, we cannot assure you that a liquid market will develop for the Notes. See “Risk Factors — Risks Related to the Notes — There is no public market for the Notes and we do not know if a |
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market will ever develop or, if a market does develop, whether it will be sustained.” | ||
Amendments and Waivers | Except for specific amendments, the indenture may be amended and any existing default or compliance with any provisions of the indenture may be waived, with the consent of the holders of a majority of the aggregate principal amount then outstanding of the old notes and the Notes. | |
Risk Factors | Investing in the Notes involves substantial risks. You should carefully consider the information set forth in the section entitled “Risk Factors” and the other information included in this prospectus in deciding whether to tender your old notes. | |
Certain Income Tax Considerations | You should carefully read the information under the heading “Important Canadian Federal and United States Federal Income Tax Considerations.” |
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• | the debt incurred in connection with the restructuring and financing transactions, including the term loans, and the old notes issued; | |
• | the resulting interest costs on borrowed funds; | |
• | other debt issuance costs and commitment fees incurred in the restructuring and refinancing transactions; | |
• | the settlement of all loans payable to and advances receivable from Alcan; | |
• | the repayment of third party borrowings; | |
• | certain interest swap transactions related to third party borrowings; | |
• | the lease from Alcan of the Sierre North Building and the machinery and equipment located therein; | |
• | the net tax effects of the transactions described above; and | |
• | other adjustments described in the notes to our unaudited pro forma combined financial data. |
Historical(1)(2) | |||||||||||||||||||||||||||||
Six Months Ended | Years Ended | ||||||||||||||||||||||||||||
June 30, | December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
($ millions, except per share data) | |||||||||||||||||||||||||||||
Statement of Income Data: | |||||||||||||||||||||||||||||
Sales and operating revenues | $ | 4,291 | $ | 3,739 | $ | 7,755 | $ | 6,221 | $ | 5,893 | $ | 5,777 | $ | 5,668 | |||||||||||||||
Costs and expenses: | |||||||||||||||||||||||||||||
Cost of sales and operating expenses, excluding depreciation and amortization noted below | 3,852 | 3,275 | 6,856 | 5,482 | 5,208 | 5,156 | 4,992 | ||||||||||||||||||||||
Depreciation and amortization | 115 | 118 | 246 | 222 | 211 | 217 | 205 | ||||||||||||||||||||||
Selling, general and administrative expenses | 152 | 110 | 268 | 211 | 183 | 209 | 213 | ||||||||||||||||||||||
Research and development expenses | 19 | 28 | 58 | 62 | 67 | 62 | 42 | ||||||||||||||||||||||
Interest | 94 | 38 | 74 | 40 | 42 | 64 | 62 | ||||||||||||||||||||||
Other expenses (income) — net | (3 | ) | (14 | ) | 28 | — | 46 | 222 | 28 | ||||||||||||||||||||
4,229 | 3,555 | 7,530 | 6,017 | 5,757 | 5,930 | 5,542 | |||||||||||||||||||||||
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Historical(1)(2) | ||||||||||||||||||||||||||||
Six Months Ended | Years Ended | |||||||||||||||||||||||||||
June 30, | December 31, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||
($ millions, except per share data) | ||||||||||||||||||||||||||||
Income (loss) before income tax and other items | 62 | 184 | 225 | 204 | 136 | (153 | ) | 126 | ||||||||||||||||||||
Income taxes | 44 | 66 | 166 | 50 | 77 | 6 | 60 | |||||||||||||||||||||
Income (loss) before other items | 18 | 118 | 59 | 154 | 59 | (159 | ) | 66 | ||||||||||||||||||||
Equity income | 4 | 3 | 6 | 6 | 8 | 5 | 6 | |||||||||||||||||||||
Minority interests | (11 | ) | (7 | ) | (10 | ) | (3 | ) | 8 | 17 | 10 | |||||||||||||||||
Income (loss) before cumulative effect of accounting change | 11 | 114 | $ | 55 | 157 | 75 | (137 | ) | 82 | |||||||||||||||||||
Cumulative effect of accounting change(3) | — | — | — | — | (84 | ) | — | — | ||||||||||||||||||||
Net income (loss) | $ | 11 | $ | 114 | $ | 55 | $ | 157 | $ | (9 | ) | $ | (137 | ) | $ | 82 | ||||||||||||
Net income (loss) per share Basic | .15 | 1.54 | 0.74 | 2.12 | (0.12 | ) | (1.85 | ) | 1.11 | |||||||||||||||||||
Net income (loss) per share — Diluted | .15 | 1.53 | 0.74 | 2.11 | (0.13 | ) | (1.85 | ) | 1.10 | |||||||||||||||||||
Supplemental Information: | ||||||||||||||||||||||||||||
Net income attributable to consolidated results of Novelis from January 6 to June 30, 2005 — increase to retained earnings | 41 | |||||||||||||||||||||||||||
Net loss attributable to combined results of Novelis from January 1 to January 5, 2005 — decrease to Owner’s net investment | (30 | ) | ||||||||||||||||||||||||||
Other Financial Data: | ||||||||||||||||||||||||||||
Capital expenditures(4) | 56 | 59 | 165 | 189 | 179 | 236 | 261 | |||||||||||||||||||||
Ratio of Earnings to Fixed Charges | 1.7 | x | 5.4 | x | 3.8 | x | 5.5 | x | 3.7 | x | (i | ) | 2.8 | x | ||||||||||||||
Dividends per share | 0.18 | — | — | — | — | — | — |
Historical(2) | ||||||||||||||||||||||||||||
As at June 30, | As at December 31, | |||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||
($ millions) | ||||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and time deposits | $ | 129 | 28 | $ | 31 | $ | 27 | 31 | 17 | 35 | ||||||||||||||||||
Property, plant and equipment net | 2,181 | 2,369 | 2,348 | 2,419 | 2,305 | 2,271 | 2,502 | |||||||||||||||||||||
Total assets | 5,341 | 6,920 | 5,954 | 6,316 | 4,558 | 4,390 | 4,943 | |||||||||||||||||||||
Total debt | 2,783 | 2,886 | 3,278 | 2,623 | 989 | 959 | 1,082 | |||||||||||||||||||||
Shareholders’/Invested equity | 391 | 2,036 | 555 | 1,974 | 2,181 | 2,234 | 2,562 |
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For the | ||||
Year Ended | ||||
December 31, 2004 | ||||
($ millions except | ||||
per share data) | ||||
Pro Forma Financial Data: | ||||
Sales and operating revenues | $ | 7,755 | ||
Net loss | (59 | ) | ||
Net loss per common share-basic | (0.80 | ) | ||
Net loss per common share-diluted | (0.80 | ) | ||
Interest expense(5) | 197 |
(1) | Alcan implemented restructuring programs that included certain businesses we acquired from it in the reorganization transactions. Restructuring and asset impairment charges of $(2) million, $2 million, $95 million, $12 million, $25 million, $208 million and $26 million were recorded in relation to these programs for the six months ended June 30, 2005 and 2004, and in the years ended December 31, 2004, 2003, 2002, 2001 and 2000, respectively. |
(2) | In December 2003, Alcan acquired Pechiney. A portion of the acquisition cost relating to four plants that are included in our company was allocated to us and accounted for as additional invested equity. The net assets of the Pechiney plants are included in the combined financial statements as at December 31, 2003 and the results of operations and cash flows are included in the combined financial statements beginning January 1, 2004. |
(3) | On January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets. Under this standard, goodwill and other intangible assets with an indefinite life are no longer amortized but are carried at the lower of carrying value and fair value and are tested for impairment on an annual basis. An impairment of $84 million was identified in the goodwill balance as at January 1, 2002, and was charged to income as a cumulative effect of accounting change in 2002 upon adoption of the new accounting standard. The amount of goodwill amortization was $3 million in 2001 and $1 million in 2000. |
(4) | Excludes capital expenditures of the unconsolidated Norf joint venture in which we have a 50% equity interest. Our proportionate share of the Norf joint venture’s total capital expenditures was $15 million, $16 million, $12 million, $18 million and $16 million for the years ended December 31, 2004, 2003, 2002, 2001 and 2000, respectively and was $5 million and $5 million for the six months ended June 30, 2005 and 2004, respectively. |
(5) | Pro forma interest represents interest calculated based on pro forma debt using pro forma interest rates, and includes amortization of debt issuance costs of $6 million. |
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We have no history operating as an independent company and we may be unable to make on a timely or cost-effective basis the changes necessary to operate as an independent company. |
• | treasury administration; | |
• | selected benefits administration functions; | |
• | selected employee compensation functions; | |
• | selected information technology services; and | |
• | metal, energy and currency hedging. |
A deterioration of our financial position or a downgrade of our ratings by a credit rating agency could increase our borrowing costs and our business relationships could be adversely affected. |
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Our agreements with Alcan may not reflect what two unaffiliated parties might have agreed to. |
As a separate company, we have supply agreements with Alcan for a portion of our raw materials requirements. If Alcan is unable to deliver sufficient quantities of these materials or if it terminates these agreements, our ability to manufacture products on a timely basis could be adversely affected. |
We may lose key rights if a change in control of our voting shares were to occur. |
We could incur significant tax liability, or be liable to Alcan, if certain transactions occur which violate tax-free spin-off rules. |
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We may be required to satisfy certain indemnification obligations to Alcan, or may not be able to collect on indemnification rights from Alcan. |
We may have potential business conflicts of interest with Alcan with respect to our past and ongoing relationships that could harm our business operations. |
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Our agreement not to compete with Alcan in certain end-use markets may hinder our ability to take advantage of new business opportunities. |
Neither our historical nor our pro forma financial information may be representative of results we would have achieved as an independent company or our future results. |
We expect to have to spend significant amounts of time and resources to build a new brand identity. |
As we build our information technology infrastructure and transition our data to our own systems, we could experience temporary interruptions in business operations and incur additional costs. |
If we fail to maintain an effective system of disclosure controls and procedures, we may not be able to accurately report our financial results in a timely manner. |
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Certain of our customers are significant to our revenues, and we could be adversely affected by changes in the business or financial condition of these significant customers or by the loss of their business. |
Our profitability could be adversely affected by increases in the cost or disruptions in the availability of raw materials. |
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Our operations consume energy and our profitability may decline if energy costs were to rise, or if our energy supplies were interrupted. |
• | increases in costs of natural gas; | |
• | significant increases in costs of supplied electricity or fuel oil related to transportation; | |
• | interruptions in energy supply due to equipment failure or other causes; and | |
• | the inability to extend energy supply contracts upon expiration on economical terms. |
We may not have sufficient cash and may be limited in our ability to access financing for future capital requirements, which may prevent us from increasing our manufacturing capability, improving our technology or addressing any gaps in our product offerings. |
Adverse changes in currency exchange rates could negatively affect our financial results and the competitiveness of our aluminum rolled products relative to other materials. |
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Most of our facilities are staffed by a unionized workforce, and union disputes and other employee relations issues could materially adversely affect our financial results. |
Our operations have been and will continue to be exposed to various business and other risks, changes in conditions and events beyond our control in countries where we have operations or sell products. |
We could be adversely affected by disruptions of our operations. |
We may not be able to successfully develop and implement new technology initiatives in a timely manner. |
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Loss of our key management and other personnel, or an inability to attract such management and other personnel, could impact our business. |
We may not be able to adequately protect proprietary rights to our technology. |
Past and future acquisitions or divestitures may adversely affect our financial condition. |
We could be required to make unexpected contributions to our defined benefit pension plans as a result of adverse changes in interest rates and the capital markets. |
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We face risks relating to certain joint ventures and subsidiaries that we do not entirely control. Our ability to generate cash from these entities may be more restricted than if such entities were wholly owned subsidiaries. |
We face significant price and other forms of competition from other aluminum rolled products producers, which could hurt our results of operations. |
The end-use markets for certain of our products are highly competitive and customers are willing to accept substitutes for our products. |
A downturn in the economy could have a material adverse effect on our financial results. |
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The seasonal nature of some of our customers’ industries could have a material adverse effect on our financial results. |
We are subject to a broad range of environmental, health and safety laws and regulations in the jurisdictions in which we operate, and we may be exposed to substantial environmental, health and safety costs and liabilities. |
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We may be exposed to significant legal proceedings or investigations. |
Product liability claims against us could result in significant costs or negatively impact our reputation and could adversely affect our business results and financial condition. |
Following our separation from Alcan, we have a substantial amount of indebtedness. Our substantial indebtedness could adversely affect our business and therefore make it more difficult for us to fulfill our obligations under the Notes. |
• | 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. |
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We are a holding company and depend on our subsidiaries to generate sufficient cash flow to meet our debt service obligations, including payments on the Notes. |
The covenants in the senior secured credit facilities and the indenture governing the Notes impose significant operating and financial restrictions on us. If we default under these covenants, we may not be able to make payments on the Notes. |
• | incur additional debt and provide additional guarantees; | |
• | 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; |
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• | designate subsidiaries as unrestricted subsidiaries; and | |
• | consolidate, merge or transfer all or substantially all of our assets or the assets of our restricted subsidiaries. |
Most of the covenants in the indenture will be suspended during any future period that we have an investment grade rating from one rating agency, and during any such period you will not have the benefit of those covenants. In addition, certain covenants will be terminated if we have an investment grade rating from both rating agencies. |
Your right to receive payments on the Notes is effectively junior in right of payment to all existing and future secured indebtedness of ours or the guarantors up to the value of the collateral securing such indebtedness. |
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Your right to receive payments on the Notes could be adversely affected if any of our non-guarantor subsidiaries declares bankruptcy, liquidates, or reorganizes. |
We may be unable to repay or repurchase the Notes upon a change of control or sale of significant assets. |
There is no public market for the Notes and we do not know if a market will ever develop or, if a market does develop, whether it will be sustained. |
In Canada, you may only transfer the Notes in a transaction exempt from the applicable securities laws of the provinces or territories of Canada. |
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Changes in our credit ratings or the financial and credit markets could adversely affect the market prices of the Notes. |
• | our ratings with major credit rating agencies; | |
• | the prevailing interest rates being paid by companies similar to us; and | |
• | the overall condition of the financial and credit markets. |
Fraudulent conveyance laws and other legal restrictions may permit courts to void or subordinate our subsidiaries’ guarantees of the Notes in specific circumstances, which would prevent or limit payment under the guarantees. |
• | incurred the guarantee with the intent of hindering, defeating, delaying or defrauding current or future creditors or of giving one creditor a preference over others; or | |
• | received less than reasonably equivalent value or fair consideration for incurring the guarantee, and | |
• | was insolvent, on the eve of insolvency, or was rendered insolvent by reason of the incurrence; | |
• | was engaged, or about to engage, in a business or transaction for which the assets remaining with it constituted unreasonably small capital to carry on such business; | |
• | intended to incur, or believed that it would incur, debts beyond its ability to pay as those debts matured; or | |
• | was a defendant in an action for money damages, or had a judgment for money damages entered against it, if, in either case, after final judgment the judgment was unsatisfied. |
• | the sum of its debts and liabilities, including contingent liabilities, was greater than its assets at fair valuation; |
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• | the present fair saleable value of its assets was less than the amount required to pay the probable liability on its total existing debts and liabilities, including contingent liabilities, as they became absolute and matured; or | |
• | it could not pay its debts generally as they become due. |
U.S. investors in the Notes may have difficulties enforcing civil liabilities. |
Canadian bankruptcy and insolvency laws may impair the enforcement of remedies under the Notes. |
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Six Months | Years Ended December 31, | |||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
June 30, 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||
Ratio of Earnings to Fixed Charges(1)(2) | 1.7x | 3.8x | 5.5x | 3.7x | (3 | ) | 2.8x |
(1) | Earnings consist of income from continuing operations before the cumulative effect of accounting changes, before fixed charges (excluding capitalized interest) and income taxes, and eliminating undistributed income of persons owned less than 50% by us. Fixed charges consist of interest expenses and amortization of debt discount and expense and premium and that portion of rental payments which is considered as being representative of the interest factor implicit in our operating leases. The ratios shown above are based on our consolidated and combined financial information, which was prepared in accordance with U.S. GAAP. |
(2) | Includes restructuring and asset impairment charges for certain businesses that we acquired from Alcan in the reorganization transactions of $(2) million, $95 million, $12 million, $25 million, $208 million and $26 million which were recorded in relation to these programs for the six months ended June 30, 2005 and in the years ended December 31, 2004, 2003, 2002, 2001 and 2000, respectively. |
(3) | Due to our net loss in 2001, the ratio coverage was less than 1:1. We would have needed to generate additional earnings of $68 million to achieve coverage of 1:1. |
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As of | |||||
June 30, | |||||
2005 | |||||
($ millions) | |||||
Cash and time deposits | $ | 129 | |||
Short-term borrowings | 23 | ||||
Long-term debt | |||||
Term Loan B | 1,125 | ||||
71/4% Senior notes | 1,400 | ||||
Other third party debt | 235 | ||||
Total debt | 2,783 | ||||
Shareholders’ equity | |||||
Common shares at par | — | ||||
Additional paid-in capital | 434 | ||||
Retained earnings | 27 | ||||
Accumulated other comprehensive income (loss) | (70 | ) | |||
Shareholders’ equity | 391 | ||||
Total capitalization | $ | 3,303 | |||
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At and for the | |||||||||||||||||||||||||||||
Six Months | |||||||||||||||||||||||||||||
Ended June 30, | At and for the Years Ended December 31, | ||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||||
($ millions, except per share data) | |||||||||||||||||||||||||||||
Sales and operating revenues | $ | 4,291 | $ | 3,739 | $ | 7,755 | $ | 6,221 | $ | 5,893 | $ | 5,777 | $ | 5,668 | |||||||||||||||
Net income (loss) | 11 | 114 | 55 | 157 | (9 | ) | (137 | ) | 82 | ||||||||||||||||||||
Total assets | 5,341 | 6,920 | 5,954 | 6,316 | 4,558 | 4,390 | 4,943 | ||||||||||||||||||||||
Long-term debt (including current portion) | 2,760 | 1,964 | 2,737 | 1,659 | 623 | 514 | 584 | ||||||||||||||||||||||
Other debt | 23 | 922 | 541 | 964 | 366 | 445 | 498 | ||||||||||||||||||||||
Cash and time deposits | 129 | 28 | 31 | 27 | 31 | 17 | 35 | ||||||||||||||||||||||
Invested equity/Shareholders’ equity | 391 | 2,036 | 555 | 1,974 | 2,181 | 2,234 | 2,562 | ||||||||||||||||||||||
Earnings (loss) per share | |||||||||||||||||||||||||||||
Basic | |||||||||||||||||||||||||||||
Income (loss) before cumulative effect of accounting change | 0.15 | 1.54 | 0.74 | 2.12 | 1.01 | (1.85 | ) | 1.11 | |||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | — | (1.13 | ) | — | — | |||||||||||||||||||||
Net income (loss) per share — basic | 0.15 | 1.54 | 0.74 | 2.12 | (0.12 | ) | (1.85 | ) | 1.11 | ||||||||||||||||||||
Diluted | |||||||||||||||||||||||||||||
Income (loss) before effect of accounting change | 0.15 | 1.53 | 0.74 | 2.11 | 1.00 | (1.85 | ) | 1.10 | |||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | — | (1.13 | ) | — | — | |||||||||||||||||||||
Net income (loss) per share — diluted | 0.15 | 1.53 | 0.74 | 2.11 | (0.13 | ) | (1.85 | ) | 1.10 | ||||||||||||||||||||
Dividends per share | 0.18 | — | — | — | — | — | — |
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• | the debt incurred in connection with the restructuring and financing transactions, including the term loans, and the old notes issued; | |
• | the resulting interest costs on borrowed funds; | |
• | other debt issuance costs and commitment fees incurred in the restructuring and refinancing transactions; | |
• | the settlement of all loans payable to and advances receivable from Alcan; | |
• | the repayment of third party borrowings; | |
• | certain interest swap transactions related to third party borrowings; | |
• | the lease from Alcan of the Sierre North Building and the machinery and equipment located therein; |
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• | other adjustments described below; and | |
• | the net tax effects of the transactions described above. |
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Pro Forma | ||||||||||||
Historical | Adjustments | Pro Forma | ||||||||||
($ millions, except per share data) | ||||||||||||
Sales and operating revenues | $ | 7,755 | $ | — | $ | 7,755 | ||||||
Costs and expenses | ||||||||||||
Cost of sales and operating expenses, excluding depreciation and amortization noted below | 6,856 | — | 6,856 | |||||||||
Depreciation and amortization | 246 | — | 246 | |||||||||
Selling, administrative and general expenses | 268 | — | 268 | |||||||||
Research and development expenses | 58 | — | 58 | |||||||||
Interest | 74 | 168 | (a) | 194 | ||||||||
(33 | )(b) | |||||||||||
(16 | )(c) | |||||||||||
4 | (h) | |||||||||||
(3 | )(i) | |||||||||||
Other expenses (income) — net | 28 | 14 | (a) | 64 | ||||||||
22 | (b) | |||||||||||
Income before income taxes and other items | 225 | (156 | ) | 69 | ||||||||
Income taxes | 166 | (30 | )(d) | 124 | ||||||||
(12 | )(e) | |||||||||||
Income (loss) before other items | 59 | (114 | ) | (55 | ) | |||||||
Equity income | 6 | — | 6 | |||||||||
Minority interests | (10 | ) | — | (10 | ) | |||||||
Net income (loss) | $ | 55 | $ | (114 | ) | $ | (59 | ) | ||||
Earnings (loss) per share | ||||||||||||
Net income (loss) per common share — basic | $ | 0.74 | (f) | $ | (0.80 | ) | ||||||
Net income (loss) per common share — diluted | $ | 0.74 | (g) | $ | (0.80 | ) | ||||||
Average number of shares used in calculating earnings per share — basic (in millions) | 73.989 | (f) | 73.989 | |||||||||
Average number of shares used in calculating earnings per share — diluted (in millions) | 74.432 | (g) | 73.989 |
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• | On January 10, 2005, we obtained two seven-year senior secured term loans aggregating $1.3 billion at a variable interest rate (three-month LIBOR plus 1.75%), which would have been 3.42% for the year ended December 31, 2004, using historical average LIBOR rates. Between January 14 and March 1, 2005, a total of $310 million of these loans was swapped for fixed rate debt at 5.5%. | |
• | Also on January 10, 2005, we obtained a $500 million revolving credit facility (not included in the $2.9 billion as no amounts were drawn upon establishment). | |
• | On February 3, 2005, we sold $1.4 billion aggregate ten-year notes (also referred to as the old notes) bearing interest at 7.25%; | |
• | In February, we obtained a $50 million Korean floating rate term loan which was subsequently swapped for a 5.3% fixed rate KRW51 billion loan; and | |
• | In February, we obtained a $19 million Korean floating rate one-year term loan which was repaid before March 31, 2005. |
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Full Year Pro Forma | ||||||||||||
2004 | ||||||||||||
Effective | Interest | |||||||||||
Amount | Interest Rate | Expense | ||||||||||
($ millions, except interest rates) | ||||||||||||
Term loans — floating | $ | 990 | 3.42% | $ | 34 | |||||||
Term loans — fixed swap | 310 | 5.50% | 17 | |||||||||
Old Notes | 1,400 | 7.25% | 101 | |||||||||
Korean term loans (swapped) | 131 | 4.60% | 6 | |||||||||
Korean term loans (new) | 50 | 5.30% | 3 | |||||||||
Korean variable term loan | 19 | 3.48% | 1 | |||||||||
Amortization of debt issuance costs | — | 6 | ||||||||||
Total | $ | 2,900 | $ | 168 | ||||||||
(i) fixed rate loans totaling $2,423 million, with an average interest rate of 5.44%; and | |
(ii) floating interest rate loans totaling $486 million, with an average variable rate of 3.04%. |
(i) fixed rate loans totaling $244 million, with an average interest rate of 4.83%; and | |
(ii) floating interest rate loans totaling $125 million, with an average variable rate of 3.50%. |
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Six Months Ended | ||||||||||||||||||||
June 30, | Years Ended December 31, | |||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(In millions of US$, except where indicated) | ||||||||||||||||||||
Sales and operating revenues(i) | $ | 4,291 | $ | 3,739 | $ | 7,755 | $ | 6,221 | $ | 5,893 | ||||||||||
Total Regional Income(ii) | 322 | 354 | 654 | 508 | 472 | |||||||||||||||
Income before cumulative effect of accounting change | 11 | 114 | 55 | 157 | 75 | |||||||||||||||
Rolled products shipments(iii) (kt) | 1,443 | 1,392 | 2,785 | 2,491 | 2,479 | |||||||||||||||
Total assets | $ | 5,341 | $ | 6,920 | $ | 5,954 | $ | 6,316 | $ | 4,558 |
(i) | The accounting principles used to prepare the information by operating segment are the same as those used to prepare the consolidated and combined financial statements, except, as discussed below, the operating segments include our proportionate share of joint ventures (including joint ventures accounted for using the equity method) as they are managed within each operating segment, with the adjustments for equity-accounted joint ventures shown on a separate line in the reconciliation to Income before taxes and other items. |
(ii) | Total Regional Income, which is the measure of operating segment profitability that we use, comprises earnings before interest, taxes, depreciation and amortization excluding certain items, such as corporate office costs and asset and goodwill impairments, restructuring, rationalization and the change in fair market value of our derivatives, which are not under the control of the business groups. These items are managed by our head office, which focuses on strategy development and oversees governance, policy, legal compliance, human resources and finance matters. Regional Income is the measure by which we evaluate the performance of our business. Financial information for the regional groups includes the results of certain joint ventures on a proportionately consolidated basis, which is consistent with the way the business groups are managed. Under U.S. GAAP, these |
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joint ventures are accounted for under the equity method. Therefore, in order to reconcile Total Regional Income to income before income taxes and other items, the Regional Income attributable to these joint ventures is removed from Total Regional Income and the net after-tax results are reported as equity income. The change in the fair market value of derivatives has been removed from individual regional results and is shown on a separate line. This presentation provides a more accurate portrayal of underlying business group results and is in line with our portfolio approach to risk management. Prior to our separation from Alcan, profitability of the operating segments was measured based on business group profit, or BGP. Please see note 18 of our unaudited interim consolidated and combined financial statements and note 26 of our audited annual combined financial statements for a discussion of the differences between BGP and Regional Income. Prior period measures of profitability for our operating segments have been recast to conform to the current presentation. |
(iii) | Includes conversion of customer-owned metal (tolling). |
Reconciliation |
Six Months | Years Ended | ||||||||||||||||||||
Ended June 30, | December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Regional Income | |||||||||||||||||||||
Novelis North America | 91 | 141 | 240 | 176 | 218 | ||||||||||||||||
Novelis Europe | 115 | 98 | 200 | 175 | 127 | ||||||||||||||||
Novelis Asia | 59 | 43 | 80 | 69 | 41 | ||||||||||||||||
Novelis South America | 57 | 72 | 134 | 88 | 86 | ||||||||||||||||
Total Regional Income | 322 | 354 | 654 | 508 | 472 | ||||||||||||||||
Corporate Office | 7 | (20 | ) | (49 | ) | (36 | ) | (31 | ) | ||||||||||||
Additional Items for Reconciliation | |||||||||||||||||||||
Adjustment for equity-accounted joint ventures | (22 | ) | (21 | ) | (48 | ) | (42 | ) | (36 | ) | |||||||||||
Adjustment for mark-to-market derivatives | (47 | ) | 22 | 77 | 20 | 9 | |||||||||||||||
Restructuring, rationalization & impairment | 11 | 5 | (89 | ) | 16 | (25 | ) | ||||||||||||||
Depreciation & amortization | (115 | ) | (118 | ) | (246 | ) | (222 | ) | (211 | ) | |||||||||||
Interest | (94 | ) | (38 | ) | (74 | ) | (40 | ) | (42 | ) | |||||||||||
Income before income taxes and other items | 62 | 184 | 225 | 204 | 136 | ||||||||||||||||
Highlights |
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General Corporate Expenses |
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Pensions and Other Post-retirement Benefit Plans |
Income Taxes |
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Cash |
Net income |
• | Gain on the monetization of cross-currency interest swaps of inter-company debt amounting to $37 million in 2005; | |
• | Gain on the sale of land in Asia of $11 million in 2005; | |
• | Unrealized losses on the change in market value of derivatives of $37 million in the first half of 2005, compared to unrealized gains in the first half of 2004 of $8 million; | |
• | Foreign currency balance sheet translation losses of $21 million in the first half of 2005. The first half of 2004 recorded a gain of $5 million; | |
• | Start-up costs amounting to $19 million in 2005; | |
• | Gain in the first half of 2004 of $13 million on a change in our South American pension plan; and | |
• | As a stand-alone company, our interest expense increased by $37 million in the first half of 2005 compared to the first half of 2004. | |
Sales and Operating Revenues and Shipments |
Costs and Expenses |
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Income Taxes |
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Reconciliation |
Six Months | |||||||||
2005 | 2004 | ||||||||
($ in millions) | |||||||||
Regional Income | |||||||||
Novelis North America | 91 | 141 | |||||||
Novelis Europe | 115 | 98 | |||||||
Novelis Asia | 59 | 43 | |||||||
Novelis South America | 57 | 72 | |||||||
Total Regional Income | 322 | 354 | |||||||
Corporate office * | 7 | (20 | ) | ||||||
Other Items | |||||||||
Equity-accounted joint ventures | (22 | ) | (21 | ) | |||||
Change in fair market value and reclassification of derivatives | (47 | ) | 22 | ||||||
Restructuring, rationalization and impairment | 11 | 5 | |||||||
Depreciation and amortization | (115 | ) | (118 | ) | |||||
Interest | (94 | ) | (38 | ) | |||||
Income before income taxes and other items | 62 | 184 | |||||||
* | Corporate office includes the $45 million gain realized on the monetization of cross-currency interest rate swaps in the first six months of 2005. |
Novelis North America |
Six Months | Six Months | |||||||||||
North America | 2005 | 2004 | % Change | |||||||||
($ in millions, except for Regional | ||||||||||||
Income per tonne) | ||||||||||||
Sales and operating revenues | 1,667 | 1,419 | 18 | % | ||||||||
Regional Income | 91 | 141 | (36 | )% | ||||||||
Rolled product shipments (kt) | 567 | 563 | 1 | % | ||||||||
Regional Income per tonne | 160 | 250 | (36 | )% | ||||||||
Depreciation | 36 | 34 | 6 | % | ||||||||
Capital expenditures | 17 | 17 | — | |||||||||
Total assets | 1,415 | 2,879 | (51 | )% |
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Novelis Europe |
Six Months | Six Months | |||||||||||
Europe | 2005 | 2004 | % Change | |||||||||
($ in millions, except for Regional | ||||||||||||
Income per tonne) | ||||||||||||
Sales and operating revenues | 1,640 | 1,523 | 8 | % | ||||||||
Regional Income | 115 | 98 | 17 | % | ||||||||
Rolled product shipments (kt) | 516 | 505 | 2 | % | ||||||||
Regional Income per tonne | 223 | 194 | 15 | % | ||||||||
Depreciation | 51 | 52 | (2 | )% | ||||||||
Capital expenditures | 20 | 32 | (38 | )% | ||||||||
Total assets | 2,193 | 2,372 | (8 | )% |
Novelis Asia |
Six Months | Six Months | |||||||||||
Asia | 2005 | 2004 | % Change | |||||||||
($ in millions, except for Regional | ||||||||||||
Income per tonne) | ||||||||||||
Sales and operating revenues | 698 | 566 | 23 | % | ||||||||
Regional Income | 59 | 43 | 37 | % | ||||||||
Rolled product shipments (kt) | 237 | 223 | 6 | % | ||||||||
Regional Income per tonne | 249 | 193 | 29 | % | ||||||||
Depreciation | 23 | 23 | — | |||||||||
Capital expenditures | 10 | 8 | 25 | % | ||||||||
Total assets | 986 | 948 | 4 | % |
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Novelis South America |
Six Months | Six Months | |||||||||||
South America | 2005 | 2004 | % Change | |||||||||
($ in millions, except for Regional | ||||||||||||
Income per tonne) | ||||||||||||
Sales and operating revenues | 293 | 235 | 25 | % | ||||||||
Regional Income | 57 | 72 | (21 | )% | ||||||||
Rolled product shipments (kt) | 123 | 101 | 22 | % | ||||||||
Regional Income per tonne | 463 | 713 | (35 | )% | ||||||||
Depreciation | 22 | 24 | (8 | )% | ||||||||
Capital expenditures | 7 | 7 | — | |||||||||
Total assets | 761 | 808 | (6 | )% |
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Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Contribution to Novelis sales and operating revenues | |||||||||||||
Beverage/food cans | 36 | % | 35 | % | 38 | % | |||||||
Construction and industrial | 24 | 28 | 28 | ||||||||||
Foil products | 21 | 15 | 14 | ||||||||||
Transportation | 15 | 16 | 15 | ||||||||||
Ingot | 4 | 6 | 5 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
Results of Operations |
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Sales and Operating Revenues and Shipments |
% Change | |||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||
vs | vs | ||||||||||||||||||||
Years Ended December 31, | 2004 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
(In millions of US$, except where indicated) | |||||||||||||||||||||
Sales and operating revenues | $ | 7,755 | $ | 6,221 | $ | 5,893 | 25 | % | 6 | % | |||||||||||
Rolled products shipments(i) (kt) | 2,785 | 2,491 | 2,479 | 12 | — | ||||||||||||||||
Ingot products shipments(ii) (kt) | 234 | 290 | 234 | (19 | ) | 24 |
(i) | Includes conversion of customer-owned metal (tolling). |
(ii) | Includes primary and secondary ingot and recyclable aluminum. |
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Costs and Expenses |
Years Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
$ | % of Sales | $ | % of Sales | $ | % of Sales | |||||||||||||||||||
(In millions of US$, except where indicated) | ||||||||||||||||||||||||
Cost of sales and operating expenses, excluding depreciation and amortization | $ | 6,856 | 88.4 | % | $ | 5,482 | 88.1 | % | $ | 5,208 | 88.4 | % | ||||||||||||
Depreciation and amortization | 246 | 3.2 | 222 | 3.6 | 211 | 3.6 | ||||||||||||||||||
Selling, general and administrative expenses | 268 | 3.5 | 211 | 3.4 | 183 | 3.1 | ||||||||||||||||||
Research and development expenses | 58 | 0.8 | 62 | 1.0 | 67 | 1.1 | ||||||||||||||||||
Interest expenses | 74 | 1.0 | 40 | 0.7 | 42 | 0.7 | ||||||||||||||||||
Other expenses, net | 28 | 0.4 | 0 | — | 46 | 0.8 |
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Income Taxes |
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Goodwill |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Sales and operating revenues by business group(i) | |||||||||||||
Novelis North America | 38 | % | 38 | % | 43 | % | |||||||
Novelis Europe | 40 | 40 | 38 | ||||||||||
Novelis Asia | 15 | 15 | 13 | ||||||||||
Novelis South America | 7 | 7 | 6 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
(i) | Excludes intersegment revenues. Refer to note 26 of the audited annual combined financial statements for details on intersegment revenues. Additional operating segment information is presented in note 26 of the audited annual combined financial statements. |
Novelis North America |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Contribution to Novelis North America sales and operating revenues(i) | |||||||||||||
Beverage/food cans | 58 | % | 57 | % | 61 | % | |||||||
Construction and industrial | 15 | 14 | 11 | ||||||||||
Foil products | 10 | 12 | 11 | ||||||||||
Transportation | 14 | 15 | 15 | ||||||||||
Ingot | 3 | 2 | 2 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
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% Change | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, | 2004 | 2003 | |||||||||||||||||||
vs | vs | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
(In millions of US$, except per tonne data and | |||||||||||||||||||||
where indicated) | |||||||||||||||||||||
Novelis North America selected financial information(ii) | |||||||||||||||||||||
Sales and operating revenues | $ | 2,964 | $ | 2,385 | $ | 2,517 | 24 | % | (5 | )% | |||||||||||
Regional Income | 240 | 176 | 218 | 36 | (19 | ) | |||||||||||||||
Rolled products shipments(iii) (kt) | 1,115 | 1,042 | 1,120 | 7 | (7 | ) | |||||||||||||||
Ingot products shipments(iv) (kt) | 60 | 41 | 45 | 46 | % | (9 | ) | ||||||||||||||
Regional Income per tonne(v) | 215 | 169 | 195 | 27 | (13 | ) | |||||||||||||||
Depreciation | 69 | 68 | 67 | 1 | 1 | ||||||||||||||||
Capital expenditures | 41 | 38 | 32 | 8 | 19 | ||||||||||||||||
Total assets | 1,406 | 2,392 | 1,224 | (59 | ) | 95 |
(i) | Based on management estimates. |
(ii) | Intersegment revenues and shipments are not included in the figures above. Refer to note 26 of the audited annual combined financial statements for details on intersegment revenues. |
(iii) | Includes conversion of customer-owned metal (tolling). |
(iv) | Includes primary and secondary ingot and recyclable aluminum. |
(v) | Based on rolled products shipments only. |
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Novelis Europe |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Contribution to Novelis Europe sales and operating revenues(i) | |||||||||||||
Beverage/food cans | 16 | % | 17 | % | 19 | % | |||||||
Construction and industrial | 40 | 49 | 52 | ||||||||||
Foil products | 29 | 14 | 13 | ||||||||||
Transportation | 12 | 12 | 12 | ||||||||||
Ingot | 3 | 8 | 4 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
% Change | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, | 2004 | 2003 | |||||||||||||||||||
vs | vs | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
(In millions of US$, except per tonne data and | |||||||||||||||||||||
where indicated) | |||||||||||||||||||||
Novelis Europe selected financial information(ii) | |||||||||||||||||||||
Sales and operating revenues | $ | 3,081 | $ | 2,510 | $ | 2,218 | 23 | % | 13 | % | |||||||||||
Regional Income | 200 | 175 | 127 | 14 | 38 | ||||||||||||||||
Rolled products shipments(iii) (kt) | 984 | 860 | 853 | 14 | 1 | ||||||||||||||||
Ingot products shipments(iv) (kt) | 105 | 152 | 73 | (31 | ) | 108 | |||||||||||||||
Regional Income per tonne(v) | 203 | 203 | 149 | — | 36 | ||||||||||||||||
Depreciation | 115 | 87 | 75 | 32 | 16 | ||||||||||||||||
Capital expenditures | 84 | 97 | 81 | (13 | ) | 20 | |||||||||||||||
Total assets | 2,885 | 2,364 | 1,780 | 22 | 33 |
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(i) | Based on management estimates. |
(ii) | Intersegment revenues and shipments are not included in the figures above. Refer to note 26 of the audited annual combined financial statements for details on intersegment revenues. |
(iii) | Includes conversion of customer-owned metal (tolling). |
(iv) | Includes primary and secondary ingot and recyclable aluminum. |
(v) | Based on rolled products shipments only. |
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Novelis Asia |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Contribution to Novelis Asia sales and operating revenues(i) | |||||||||||||
Beverage/food cans | 24 | % | 23 | % | 10 | % | |||||||
Construction and industrial | 17 | 15 | 24 | ||||||||||
Foil products | 27 | 26 | 26 | ||||||||||
Transportation | 26 | 27 | 27 | ||||||||||
Ingot | 6 | 9 | 13 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
% Change | ||||||||||||||||||||
Years Ended | ||||||||||||||||||||
December 31, | 2004 | 2003 | ||||||||||||||||||
vs | vs | |||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | ||||||||||||||||
(In millions of US$, except per tonne data | ||||||||||||||||||||
and where indicated) | ||||||||||||||||||||
Novelis Asia selected financial information(ii) | ||||||||||||||||||||
Sales and operating revenues | $ | 1,194 | $ | 918 | $ | 785 | 30 | % | 17 | % | ||||||||||
Regional Income | 80 | 69 | 41 | 16 | 68 | |||||||||||||||
Rolled products shipments(iii) (kt) | 452 | 385 | 320 | 17 | 20 | |||||||||||||||
Ingot products shipments(iv) (kt) | 39 | 43 | 58 | (9 | ) | (26 | ) | |||||||||||||
Regional Income per tonne(v) | 177 | 179 | 128 | (1 | ) | 40 | ||||||||||||||
Depreciation | 46 | 45 | 42 | 2 | 7 | |||||||||||||||
Capital expenditures | 31 | 25 | 32 | 24 | (22 | ) | ||||||||||||||
Total assets | 954 | 904 | 891 | 6 | 15 |
(i) | Based on management estimates. |
(ii) | Intersegment revenues and shipments are not included in the figures above. Refer to note 26 of the audited annual combined financial statements for details on intersegment revenues. |
(iii) | Includes conversion of customer-owned metal (tolling). |
(iv) | Includes primary and secondary ingot and recyclable aluminum. |
(v) | Based on rolled products shipments only. |
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Novelis South America |
Years Ended | |||||||||||||
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Contribution to Novelis South America sales and operating revenues(i) | |||||||||||||
Beverage/food cans | 60 | % | 50 | % | 52 | % | |||||||
Construction and industrial | 3 | 5 | 3 | ||||||||||
Foil products | 11 | 8 | 10 | ||||||||||
Transportation | 15 | 17 | 14 | ||||||||||
Ingot | 11 | 20 | 21 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
% Change | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, | 2004 | 2003 | |||||||||||||||||||
vs | vs | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
(In millions of US$, except per tonne data | |||||||||||||||||||||
and where indicated) | |||||||||||||||||||||
Novelis South America selected financial information(ii) | |||||||||||||||||||||
Sales and operating revenues | $ | 525 | $ | 414 | $ | 379 | 27 | % | 9 | % | |||||||||||
Regional Income | 134 | 88 | 86 | 52 | 2 | ||||||||||||||||
Rolled products shipments(iii) (kt) | 234 | 204 | 186 | 15 | 10 | ||||||||||||||||
Ingot products shipments(iv) (kt) | 30 | 54 | 58 | (44 | ) | (7 | ) | ||||||||||||||
Regional Income per tonne(v) | 573 | 431 | 462 | 33 | (7 | ) | |||||||||||||||
Depreciation | 47 | 49 | 49 | (4 | ) | — | |||||||||||||||
Capital expenditures | 23 | 41 | 46 | (43 | ) | (11 | ) | ||||||||||||||
Total assets | 779 | 808 | 790 | (4 | ) | 2 |
(i) | Based on management estimates. |
(ii) | Intersegment revenues and shipments are not included in the figures above. Refer to note 26 of the audited annual combined financial statements for details on intersegment revenues. |
(iii) | Includes conversion of customer-owned metal (tolling). |
(iv) | Includes primary and secondary ingot and recyclable aluminum. |
(v) | Based on rolled products shipments only. |
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Operating Activities |
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(In millions of US$) | ||||||||||||
Cash from Operating Activities | $ | 288 | $ | 99 | 290 | % | ||||||
Dividends | (21 | ) | (3 | ) | 700 | |||||||
Capital Expenditures | (56 | ) | (59 | ) | 5 | |||||||
Free Cash Flow(i) | $ | 211 | $ | 37 | 570 | |||||||
(i) | Free cash flow (which is a non-GAAP measure) consists of cash from operating activities less capital expenditures and dividends. Dividends include those paid by our less than wholly-owned subsidiaries to their minority shareholders and dividends to the common shareholders of Novelis. Management believes that free cash flow is relevant to investors as it provides a measure of the cash generated internally that is available for debt service and other value creation opportunities. However, free cash flow does not necessarily represent cash available for discretionary activities, as certain debt service obligations must be funded out of free cash flow. Our method of calculating free cash flow may not be consistent with that of other companies. |
% Change | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, | 2004 | 2003 | |||||||||||||||||||
vs | vs | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
(In millions of US$, except where indicated) | |||||||||||||||||||||
Cash from operating activities | $ | 224 | $ | 444 | $ | 410 | (50 | )% | 8 | % | |||||||||||
Capital expenditures | (165 | ) | (189 | ) | (179 | ) | (13 | ) | 6 | ||||||||||||
Dividends(i) | (4 | ) | — | (2 | ) | ||||||||||||||||
Free cash flow | $ | 55 | $ | 255 | $ | 229 | (78 | ) | 11 | ||||||||||||
(i) | Dividends include only those paid by our less than wholly owned subsidiaries to their minority shareholders. |
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Investment Activities |
�� | ||||||||||||
Six Months | ||||||||||||
Ended June 30, | ||||||||||||
2005 | 2004 | % Change | ||||||||||
(In millions of US$, except | ||||||||||||
where indicated) | ||||||||||||
Capital expenditures | $ | 56 | $ | 59 | (5 | )% | ||||||
Depreciation and amortization expense | $ | 115 | $ | 118 | (3 | )% | ||||||
Reinvestment rate(i) | 49 | % | 50 | % |
(i) | Capital expenditures as a percentage of depreciation and amortization expense. |
% Change | |||||||||||||||||||||
Years Ended | |||||||||||||||||||||
December 31, | 2004 | 2003 | |||||||||||||||||||
vs | vs | ||||||||||||||||||||
2004 | 2003 | 2002 | 2003 | 2002 | |||||||||||||||||
(In millions of US$, except where indicated) | |||||||||||||||||||||
Capital expenditures | $ | 165 | $ | 189 | $ | 179 | (13 | )% | 6 | % | |||||||||||
Depreciation and amortization expense | $ | 246 | $ | 222 | $ | 211 | 11 | % | 5 | % | |||||||||||
Reinvestment rate(i) | 67 | % | 85 | % | 85 | % |
(i) | Capital expenditures as a percentage of depreciation and amortization expense. |
Financing Activities |
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Off-Balance Sheet Arrangements |
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Contractual Obligations |
Less Than | More Than | |||||||||||||||||||
Payments Due by Period as at December 31, 2004 | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
(In millions of US$) | ||||||||||||||||||||
Long-term debt(i) | $ | 2,737 | $ | 291 | $ | 329 | $ | 910 | $ | 1,207 | ||||||||||
Interest payments on long-term debt(ii) | 1,544 | 157 | 358 | 336 | 693 | |||||||||||||||
Capital leases(iii) | 2 | 1 | 1 | — | — | |||||||||||||||
Operating leases(iii) | 25 | 9 | 10 | 5 | 1 | |||||||||||||||
Purchase obligations(iii) | 105 | 41 | 31 | 22 | 11 | |||||||||||||||
Unfunded pension plans(iv) | 434 | 7 | 16 | 17 | 394 | |||||||||||||||
Other post-employment benefits(iv) | 457 | 8 | 18 | 19 | 412 | |||||||||||||||
Funded pension plans(iv) | (v) | 10 | 21 | 22 | (v) | |||||||||||||||
Total | $ | 524 | $ | 784 | $ | 1,331 | ||||||||||||||
(i) | Refer to note 18 of the audited annual combined financial statements. The long-term debt repayments above represent the repayments based on our historical debt balances. In 2005, we refinanced all of our long-term debt payable to Alcan and its subsidiaries with third party long-term debt as described in note 27, Subsequent Events — Financing of the audited annual combined financial statements. |
(ii) | As described in (i) above, we refinanced all of our long-term debt payable to Alcan and its subsidiaries with third party long-term debt, and accordingly, the interest payments discussed above are not representative of the interest expense that will actually accrue under the new debt structure. Our current debt structure consists of the $1.3 billion seven-year Term Loan B facility, the $1.4 billion 10-year Senior Notes as described in note 27 to the audited annual combined financial statements, and the existing third-party long-term debt of Alcan Taihan Aluminum Limited as described in note 18 to the audited annual combined financial statements. Based on this debt structure, expected interest payments would be as follows assuming variable interest rates do not change; our interest rate swaps are not replaced when they mature; and the Korean term loans are refinanced and swapped at the same rates prevailing as at March 29, 2005: Less than 1 year: $163 million; 1-3 years: $348 million; 3-5 years: $343 million; More than 5 years: $671 million. |
(iii) | Refer to note 20 of the audited annual combined financial statements. |
(iv) | Refer to note 24 of the audited annual combined financial statements. |
(v) | Pension funding generally includes the contribution required to finance the annual service cost, except where the plan is largely over-funded, and amortization of unfunded liabilities over periods of 15 years, with larger payments made over the initial period where required by pension legislation. Contributions depend on actual returns on pension assets and on deviations from other economic and demographic actuarial assumptions. Based on our long-term expected return on assets, annual contributions for years after 2009 are projected to be in the same range as in prior years and to grow in relation with payroll. |
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Risk Management |
65
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Commodity Price Risk |
Foreign Currency Exchange Risk |
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Sensitivities |
Change in | $ Millions | |||||||
Estimated Annual Effect on Our Net Income: | Rate/Price | per Year | ||||||
Economic impact of changes in period-average U.S. dollar exchange rates Euro | +10 | % | $ | 14 | ||||
Korean won | +10 | (4 | ) | |||||
Canadian dollar | +10 | (4 | ) | |||||
Brazilian real | +10 | % | (17 | ) |
Interest Rate Risk |
Allocation of General Corporate Expenses |
Pensions and Post-Retirement Benefits |
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Environmental Liabilities |
Property, Plant and Equipment |
Income Taxes |
68
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Consolidation of Variable Interest Entities |
Accounting for Conditional Asset Retirement Obligations |
Share-Based Payment |
69
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Treatment of Accounting Changes and Error Corrections |
Interest Rates |
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Currency Derivatives |
2009 | Total | ||||||||||||||||||||||||||||
and | Nominal | Fair | |||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | Beyond | Amount | Value | |||||||||||||||||||||||
(In US$ millions, except contract rates) | |||||||||||||||||||||||||||||
FORWARD CONTRACTS | |||||||||||||||||||||||||||||
To purchase USD against the foreign currency | |||||||||||||||||||||||||||||
CHF Nominal Amount | 12 | 11 | 2 | 2 | 1 | 28 | (1 | ) | |||||||||||||||||||||
Average contract rate | 1.2785 | 1.3479 | 1.2873 | 1.2613 | 1.2381 | ||||||||||||||||||||||||
To sell USD against the foreign currency | |||||||||||||||||||||||||||||
CAD Nominal Amount | 2 | — | — | — | — | 2 | — | ||||||||||||||||||||||
Average contract rate | 1.2560 | — | — | — | — | ||||||||||||||||||||||||
CHF Nominal Amount | 16 | — | — | — | — | 16 | — | ||||||||||||||||||||||
Average contract rate | 1.2751 | — | — | — | — | ||||||||||||||||||||||||
KRW Nominal Amount | 57 | — | — | — | — | 57 | (1 | ) | |||||||||||||||||||||
Average contract rate | 1,012.0 | — | — | — | — | ||||||||||||||||||||||||
To purchase EUR against the foreign currency | |||||||||||||||||||||||||||||
GBP Nominal Amount | 53 | 3 | 2 | — | 33 | 91 | (1 | ) | |||||||||||||||||||||
Average contract rate | 0.6760 | 0.7160 | 0.7361 | — | 0.7387 | ||||||||||||||||||||||||
CAD Nominal Amount | 2 | — | — | — | — | 2 | — | ||||||||||||||||||||||
Average contract rate | 1.5218 | — | — | — | — | ||||||||||||||||||||||||
USD Nominal Amount | 12 | — | — | — | — | 12 | — | ||||||||||||||||||||||
Average contract rate | 1.2248 | — | — | — | — | ||||||||||||||||||||||||
To sell EUR against the foreign currency | |||||||||||||||||||||||||||||
GBP Nominal Amount | 66 | 16 | — | — | — | 82 | 2 | ||||||||||||||||||||||
Average contract rate | 0.6844 | 0.7073 | — | — | — | ||||||||||||||||||||||||
CHF Nominal Amount | 14 | 8 | 4 | 4 | 3 | 33 | (1 | ) | |||||||||||||||||||||
Average contract rate | 1.5204 | 1.4973 | 1.4610 | 1.4430 | 1.4266 | ||||||||||||||||||||||||
USD Nominal Amount | 202 | 128 | 76 | — | 5 | 411 | 9 | ||||||||||||||||||||||
Average contract rate | 1.2501 | 1.2515 | 1.2699 | — | 1.1254 | ||||||||||||||||||||||||
To sell GBP against the foreign currency | |||||||||||||||||||||||||||||
CHF Nominal Amount | 7 | — | — | — | — | 7 | — | ||||||||||||||||||||||
Average contract rate | 2.1580 | — | — | — | — | ||||||||||||||||||||||||
USD Nominal Amount | 32 | — | — | — | — | 32 | 1 | ||||||||||||||||||||||
Average contract rate | 1.8368 | — | — | — | — | ||||||||||||||||||||||||
To purchase GBP against the foreign currency | |||||||||||||||||||||||||||||
CHF Nominal Amount | 7 | — | — | — | — | 7 | — | ||||||||||||||||||||||
Average contract rate | 2.2324 | — | — | — | — | ||||||||||||||||||||||||
USD Nominal Amount | 45 | 2 | 2 | 1 | — | 50 | (1 | ) | |||||||||||||||||||||
Average contract rate | 1.8229 | 1.7850 | 1.7949 | 1.7922 | — |
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Total | |||||||||||||||||||||||||||||
Nominal | Fair | ||||||||||||||||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | Amount | Value | |||||||||||||||||||||||
($ millions, except contract rates) | |||||||||||||||||||||||||||||
Forward contracts to purchase USD against the foreign currency | |||||||||||||||||||||||||||||
CHF Nominal Amount | 33 | 11 | 2 | 2 | 1 | 49 | (7 | ) | |||||||||||||||||||||
Average contract rate | 1.2722 | 1.3479 | 1.2904 | 1.2644 | 1.2408 | ||||||||||||||||||||||||
GBP Nominal Amount | 64 | 1 | — | — | — | 65 | (3 | ) | |||||||||||||||||||||
Average contract rate | 1.8273 | 1.7420 | — | — | — | ||||||||||||||||||||||||
To sell USD against the foreign currency | |||||||||||||||||||||||||||||
GBP Nominal Amount | 56 | 1 | — | — | — | 57 | 4 | ||||||||||||||||||||||
Average contract rate | 1.7856 | 1.6387 | — | — | — | ||||||||||||||||||||||||
EUR Nominal Amount | 49 | — | — | — | — | 49 | 4 | ||||||||||||||||||||||
Average contract rate | 1.2518 | — | — | — | — | ||||||||||||||||||||||||
CHF Nominal Amount | 1 | — | — | — | — | 1 | — | ||||||||||||||||||||||
Average contract rate | 1.1263 | — | — | — | — | ||||||||||||||||||||||||
To sell EUR against the foreign currency | |||||||||||||||||||||||||||||
USD Nominal Amount | 316 | 87 | 57 | — | — | 460 | (48 | ) | |||||||||||||||||||||
Average contract rate | 1.2329 | 1.2284 | 1.2330 | — | — | ||||||||||||||||||||||||
CHF Nominal Amount | 24 | 13 | 5 | 5 | 4 | 51 | (1 | ) | |||||||||||||||||||||
Average contract rate | 1.5199 | 1.5014 | 1.4614 | 1.4436 | 1.4266 | ||||||||||||||||||||||||
GBP Nominal Amount | 152 | 16 | — | — | — | 168 | (3 | ) | |||||||||||||||||||||
Average contract rate | 1.4288 | 1.4136 | — | — | — | ||||||||||||||||||||||||
To purchase EUR against the foreign currency | |||||||||||||||||||||||||||||
GBP Nominal amount | 56 | 5 | 1 | — | — | 62 | 1 | ||||||||||||||||||||||
Average contract rate | 1.4239 | 1.3990 | 1.3598 | — | — | ||||||||||||||||||||||||
To purchase GBP against the foreign currency | |||||||||||||||||||||||||||||
CHF Nominal Amount | 9 | — | — | — | — | 9 | — | ||||||||||||||||||||||
Average contract rate | 2.2036 | — | — | — | — | ||||||||||||||||||||||||
To sell EUR against the foreign currency | |||||||||||||||||||||||||||||
CHF Nominal Amount | 19 | — | — | — | — | 19 | — | ||||||||||||||||||||||
Average contract rate | 2.1730 | — | — | — | — |
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Derivative Commodity Contracts |
73
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• | Oswego, United States in 1963, a major producer of can sheet and industrial sheet; | |
• | Norf, Germany in 1967, a joint venture, owned at 50%, which operates the largest hot mill rolling facility in the world in terms of capacity; | |
• | Saguenay Works, Canada in 1971, which operates the largest capacity continuous caster in the world; and | |
• | Pindamonhangaba, Brazil in 1977, the only South American plant capable of producing beverage can body and end stock. |
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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. |
End-use Markets |
75
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Market Structure |
Competition |
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Key Factors Affecting Supply and Demand |
Economic Growth. We believe that economic growth is the single largest driver of aluminum rolled products demand. In mature markets, growth in demand has typically correlated closely with growth in industrial production. In emerging markets such as China, growth in demand typically exceeds industrial production growth largely because of expanding infrastructures, capital investments and rising incomes that often accompany economic growth in these markets. | |
Substitution Trends. Manufacturers’ willingness to substitute other materials for aluminum in their products and competition from substitution materials suppliers also affect demand. For example, in North America, competition from PET plastic containers and glass bottles, and changes in consumer preferences in beverage containers, have, in recent years, reduced the growth rate of aluminum can sheet in North America from the high rates experienced in the 1970s and 1980s. Despite changes in consumer preferences, North American aluminum beverage can shipments have remained at approximately 100 billion cans per year since 1994 according to the Can Manufacturers’ Institute. | |
LME and Local Currency Effect. U.S. dollar denominated trading of primary aluminum on the LME has two primary effects on demand. First, significant shifts between the value of the local currency of the end-user and the U.S. dollar may affect the cost of aluminum to the end-user relative to substitute materials, depending on the cost of the substitute material in local currency. Second, the uncertainty of primary metal movements on the LME may discourage product managers in industries such as automotive from making long term commitments to use aluminum parts. Long term forward contracts can be used by manufacturers to reduce the impact of LME price volatility. | |
Downgauging. Increasing technological and asset sophistication has enabled aluminum rolling companies to offer consistent or even improved product strength using less material, providing customers with a more cost-effective product. This continuing trend reduces raw material requirements, but also effectively increases rolled products’ plant utilization rates and reduces available capacity because the same number of units require more rolling hours to achieve thinner gauges. As utilization rates increase, revenues rise as pricing tends to be based on machine hours used rather than on the volume of material rolled. On balance, we believe that downgauging has enhanced overall market economics for both users and producers of aluminum rolled products. | |
Seasonality. Demand for certain aluminum rolled products is significantly affected by seasonal factors. As the temperature increases so does consumption of beer and soft drinks packaged in aluminum cans. Summer construction starts also increase demand for aluminum sheet used in the construction and industrial end-use market. For these reasons, revenues typically peak in the northern hemisphere in the second and third quarters, while sales in the southern hemisphere, which account for a relatively small portion of our revenues, are highest in the first and fourth quarters. |
Production Capacity. As in most manufacturing industries with high fixed costs, production capacity has the largest impact on supply in the aluminum rolled products industry. In the aluminum rolled products industry, the addition of production capacity requires large capital investments and significant plant construction or expansion and typically requires long lead-time equipment orders. | |
Alternative Technology. Advances in technological capabilities allow aluminum rolled products producers to better align product portfolio and supply with industry demand. As an example, continuous casting offers the ability in some markets to increase capacity in smaller increments than is possible with hot mill additions. This enables production capacity to better adjust to small year-over-year increases in demand. However, the continuous casting process permits the production of a more limited range of products. |
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Trade. Some trade flows do occur between regions despite shipping costs, import duties and the need for localized customer support. Higher value-added, specialty products such as lithographic sheet are more likely to be traded internationally, especially if demand in certain markets exceeds local supply. With respect to less technically demanding applications, emerging markets with low cost inputs may export commodity aluminum rolled products to larger, more mature markets. Accordingly, regional changes in supply, such as plant expansions, may have some effect on the worldwide supply of commodity aluminum rolled products. |
Address Customer Needs with Innovative and Market-Driven Products. We intend to enhance value to our customers by improving the quality of our products and services. We intend to conduct research and development that generates new products and processes to enable us to maintain long term partnerships with our key customers. Significant growth opportunities in aluminum rolled products consumption have typically come from product substitution opportunities, such as thin aluminum foil in packaging applications, automotive body panels and aluminum building materials. We plan to work in partnership with our customers to develop new uses for our various products by substituting highly engineered aluminum rolled products for other materials, thereby developing new markets for our products. We believe that our experience in process innovation, developing new technologies in surface treatment, casting, alloying, laser semi-finishing, forming and joining, and our ability to develop specialized aluminum rolled products solutions, will assist our efforts. We plan to address higher technology and more profitable end-use markets with proprietary products and processes that will be unique and attractive to our customers. | |
Develop and Implement a New Metal Conversion Business Model. Since we have separated from an integrated aluminum producer, we intend to implement a new metal conversion business model focused on the aluminum rolled products markets and emphasizing product line selection based on higher value-added rather than volume, economies of utilization and a higher focus on recyclables. We believe the resulting change will allow us to react more quickly in all markets and better align our business with customer requirements. | |
Improve Production From Existing Assets and Reduce Capital Needs. We intend to optimize our production capacity in order to focus on achieving attractive returns on our capital assets without investing significant amounts of new capital. Our modern mills in North America, Europe, Asia and South America give us the ability to manufacture a wide range of value-added differentiated aluminum rolled products enabling us to selectively move production among our mills within these regions based on market demand. We believe that our separation from Alcan and its vertically integrated production chain will offer us further opportunities to improve sourcing logistics and increase working capital efficiency. Other opportunities for capital reductions include increasing the use of tolling which reduces our capital requirements because the metal being processed is owned by the customer. Tolling refers to the process by which customers provide their own metal to us to be converted into a rolled product, and are charged a value-added conversion cost, instead of the metal plus value-added conversion cost. Tolling allows us to generate revenues by converting the metal without having to devote capital to maintaining inventories of metal. |
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Leverage Economies of Scale in Raw Material Sourcing. We intend to continue working with our suppliers to further leverage economies of scale in our purchase of primary aluminum, supplies and services. Our metal management strategy includes plans to develop our recycling program further with a focus on sources of material such as used beverage cans, as well as other forms of recycled material in all regions in which we operate, which will expand our access to more cost effective sources of aluminum. We also have the ability to expand our sheet ingot casting capacity in the different regions in which we operate, which can be used to reduce reliance on, or maintain costs from, third party sheet ingot suppliers. | |
Capture Growth in Targeted Markets. We intend to capitalize on our international presence in order to capture growth opportunities in targeted aluminum rolled products markets such as beverage cans in selected regions and the growing automotive component market on the North American, European and Asian continents. We also own technology relating to the two main types of continuous casting processes, namely belt caster and twin roll caster, providing us with a cost advantage when examining options to profitably serve common alloy aluminum rolled products production in emerging markets such as China, Eastern Europe and South America. We intend to use these strengths, through royalty arrangements, joint ventures with local partners, or on a stand-alone basis, to grow profitably when opportunities arise in these emerging markets. | |
Pursue Selected Expansion and Acquisition Opportunities. We intend to use our management team, large scale operations, technical resources, market focus and operating cash flow to identify and take advantage of appropriate expansion and acquisition opportunities as they may arise. |
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As at and for the | As at and for the | ||||||||||||||||||||
Six Months | Year Ended | ||||||||||||||||||||
Ended June 30, | December 31, | ||||||||||||||||||||
Business Group(i) | 2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||
(All amounts in $ millions, except shipments, | |||||||||||||||||||||
which are in kt) | |||||||||||||||||||||
Novelis North America | |||||||||||||||||||||
Sales and operating revenues | 1,667 | 1,419 | 2,964 | 2,385 | 2,517 | ||||||||||||||||
Regional Income | 91 | 141 | 240 | 176 | 218 | ||||||||||||||||
Total assets | 1,415 | 2,879 | 1,406 | 2,392 | 1,224 | ||||||||||||||||
Shipments | 567 | 563 | 1,175 | 1,083 | 1,165 | ||||||||||||||||
Novelis Europe | |||||||||||||||||||||
Sales and operating revenues | 1,640 | 1,523 | 3,081 | 2,510 | 2,218 | ||||||||||||||||
Regional Income | 115 | 98 | 200 | 175 | 127 | ||||||||||||||||
Total assets | 2,193 | 2,372 | 2,885 | 2,364 | 1,780 | ||||||||||||||||
Shipments | 516 | 505 | 1,089 | 1,012 | 926 | ||||||||||||||||
Novelis Asia | |||||||||||||||||||||
Sales and operating revenues | 698 | 566 | 1,194 | 918 | 785 | ||||||||||||||||
Regional Income | 59 | 43 | 80 | 69 | 41 | ||||||||||||||||
Total assets | 986 | 948 | 954 | 904 | 891 | ||||||||||||||||
Shipments | 237 | 223 | 491 | 428 | 378 | ||||||||||||||||
Novelis South America | |||||||||||||||||||||
Sales and operating revenues | 293 | 235 | 525 | 414 | 379 | ||||||||||||||||
Regional Income | 57 | 72 | 134 | 88 | 86 | ||||||||||||||||
Total assets | 761 | 808 | 779 | 808 | 790 | ||||||||||||||||
Shipments | 123 | 101 | 264 | 258 | 244 |
(i) | The sales and operating revenues and shipment information presented in the table above excludes intersegment revenues and shipments. |
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Novelis North America |
Novelis Europe |
Novelis Asia |
Novelis South America |
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Aluminum |
Primary Aluminum Purchases. We purchased approximately 2,100 kilotonnes of primary aluminum in 2004 in the form of sheet ingot and standard ingot, as quoted on the LME, 52% of which we purchased from Alcan. Following our separation from Alcan, we have continued to source aluminum from Alcan pursuant to the metal supply agreements described under “— Arrangements Between Novelis and Alcan.” | |
Primary Aluminum Production. We produced approximately 109 kilotonnes of our own primary aluminum requirements in 2004 through our smelter and related facilities in Brazil. | |
Recycled Aluminum Products. We operate facilities in several plants to recycle post-consumer aluminum, such as used beverage cans collected through recycling programs. In addition, we have agreements with several of our large customers where we take recycled processed material from their fabricating activity and re-melt, cast and roll their recycled aluminum products and re-supply them with aluminum sheet. Other sources of recycled material include lithographic plates, where over 90% of aluminum used is recycled, and products with longer lifespans, like cars and buildings, which are just starting to become high volume sources of recycled material. We purchased approximately 800 kilotonnes of recycled material in 2004. | |
The majority of recycled material collected and re-melted is directed back through can-stock plants. The net effect of these activities is that 29% of our aluminum rolled products production in 2004 was made with recycled material. | |
Sheet Ingot. We have the ability to cast sheet ingot, which are the slabs of aluminum that are fed into hot rolling mills to make aluminum rolled products. Casting, which requires precise control of heat and metal alloys, can have a major impact on the quality of the sheet ingot produced and all aluminum rolled products that are subsequently produced from that sheet ingot. In 2004, we were able to supply 71% of our internal needs for sheet ingot, which helped us to control the quality of the sheet ingot we used, and generated cost savings and sourcing flexibility. We purchased the remainder from Alcan and other providers on longer term contracts. Following the separation, we have continued to source a portion of our sheet ingot requirements from Alcan pursuant to the metal supply agreements described under “— Arrangements Between Novelis and Alcan.” |
Energy |
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Others |
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Direct Sales |
Distributors |
Backlog |
Research and Development |
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Separation Agreement |
Releases and Indemnification |
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• | the contributed businesses, liabilities or contracts; | |
• | 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 separation. |
• | 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 separation. |
Further Assurances |
Non-solicitation of Employees |
Non-competition |
Change of Control |
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Ancillary Agreements |
Transitional Services Agreement. Pursuant to the transitional services agreement, Alcan will provide to us or we will provide to Alcan, as applicable, on an interim, transitional basis, various services, including, but not limited to, treasury administration, selected benefits administration functions, employee compensation and information technology services. The agreed upon charges for these services generally allows us or Alcan, as applicable, to recover fully the allocated costs of providing the services, plus all out-of-pocket costs and expenses plus a margin of five percent. No margin will be added to the cost of services supplied by external suppliers. In general, the services began on the separation date and will cover a period generally not expected to exceed 12 months following the separation. With respect to particular services, we or Alcan, depending on who is the recipient of the relevant services, may terminate the agreement with respect to one or more of those services upon prior written notice. | |
Metal Supply Agreements. We and Alcan have entered into four multi-year metal supply agreements pursuant to which Alcan will supply us with specified quantities of remelt ingot, molten metal and sheet ingot in North America and Europe on terms and conditions substantially similar to market terms and conditions during specific periods. These agreements are anticipated to provide us with the ability to cover some metal requirements through a fixed price purchase mechanism. In addition, an ingot supply agreement in effect between Alcan and Alcan Taihan Aluminum prior to the separation remains in effect following the separation. | |
Foil Supply Agreements. We have entered into foil supply agreements with Alcan for the supply of foil from our facilities located in Norf, Ludenscheid and Ohle, Germany to Alcan’s packaging facility located in Rorschach, Switzerland as well as from our facilities located in Utinga, Brazil to Alcan’s packaging facility located in Maua, Brazil. These agreements are for five-year terms during the course of which we will supply specified percentages of Alcan’s requirements for its facilities described above (in the case of Alcan’s Rorschach facility, 95% in 2005, 94% in 2006, 93% in 2007, 92% in 2008 and 90% in 2009, and in the case of Alcan’s Maua facility, 70%). In addition, we will continue to supply certain of Alcan’s European operations with foil under the terms of two agreements that were in effect prior to the separation. | |
Alumina Supply Agreements. We have entered into a ten-year alumina supply agreement with Alcan pursuant to which we will purchase from Alcan, and Alcan will supply to us, alumina for our primary aluminum smelter located in Aratu, Brazil. The annual quantity of alumina to be supplied under this agreement is between 85,000 metric tonnes to 126,000 metric tonnes. In addition, an alumina supply agreement between Alcan and Novelis Deutschland GmbH that was in effect prior to the separation remains in effect following the separation. |
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Intellectual Property Agreements. We and Alcan have entered into intellectual property agreements pursuant to which Alcan has assigned or licensed to us a number of important patents, trademarks and other intellectual property rights owned by Alcan and required for our business. Ownership of intellectual property that is used by both us and Alcan is owned by one of us and licensed to the other. Certain specific intellectual property rights which were determined to be exclusively useful to us or which were required to be transferred to us for regulatory reasons have been assigned to us with no license back to Alcan. | |
Sierre Agreements. We and Alcan entered into a number of agreements pursuant to which: |
• | 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, at a transfer price determined by a valuation made by an independent third party, pursuant to the terms of the separation and asset transfer agreements; | |
• | 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 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 will 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 slabs 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 will provide 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 will 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 a two-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 current standards of maintenance, management and operation of the Sierre hot mill. |
With respect to the use of the machinery or equipment in the Sierre North Building, we have agreed to refrain from making or authorizing any use of it which may benefit any business relating to the sale, marketing, manufacturing, development or distribution of plate or aerospace products. |
Neuhausen Agreements. We have entered into an agreement with Alcan pursuant to which (1) Alcan transferred to us various laboratory and testing equipment used in the aluminum rolling sheet business located in Neuhausen, Switzerland and (2) approximately 35 employees transferred from Alcan to us at the Neuhausen facility. In addition, we have assumed certain obligations in connection with the operations of the Neuhausen facility, including (1) the obligation to reimburse Alcan for 100% of its actual and direct costs incurred in terminating employees, cancelling third-party |
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agreements, and discontinuing the use of assets in the event we request Alcan to discontinue or terminate services under the services agreement, (2) the obligation to reimburse Alcan for 20% of the costs to close the Neuhausen facility in certain circumstances, and (3) the obligation to indemnify Alcan for (a) all liabilities arising from the ownership, operation, maintenance, use, or occupancy of the Neuhausen facility and/or the equipment at any time after the separation date and resulting from our acts or omissions or our violation of applicable laws, including environmental laws, (b) all liabilities relating to the employees that transferred from Alcan to us arising before, on or after the separation date, and (c) an amount equal to 20% of all environmental legacy costs related to the Neuhausen facility. | |
Tax Sharing and Disaffiliation Agreement. The tax sharing and disaffiliation agreement provides an indemnification if certain factual representations are breached or if certain transactions are undertaken or certain actions are taken that have the effect of negatively affecting the tax treatment of the separation, including the reorganization transactions. It further governs the disaffiliation of the tax matters of Alcan and its subsidiaries or affiliates other than us, on the one hand, and us and our subsidiaries or affiliates, on the other hand. In this respect it allocates taxes accrued prior to the separation and after the separation as well as transfer taxes resulting therefrom. It also allocates obligations for filing tax returns and the management of certain pending or future tax contests and create mutual collaboration obligations with respect to tax matters. | |
Employee Matters Agreement. Pursuant to the employee matters agreement, we and Alcan have allocated between us assets, liabilities and responsibilities with respect to certain employee compensation, pension and benefit plans, programs and arrangements and certain employment matters and, more specifically, pursuant to which we have set out the terms and conditions pertaining to the transfer to us of certain Alcan employees. As of the separation date, we hired or employed all of the employees of Alcan and its affiliates who were then involved in the businesses transferred to us by Alcan. During a one-year period following the separation, such employees’ terms and conditions of employment, including pension and benefit plans as well as employment policies, will be comparable, in the aggregate, to the terms and conditions of employment in effect immediately prior to the separation. Employees who transferred to us from Alcan also receive credit for their years of service with Alcan prior to the separation. Effective as of the separation date, we generally assumed all employment compensation and employee benefit liabilities relating to our employees. | |
Technical Services Agreements. We have entered into technical services agreements with Alcan pursuant to which (1) Alcan will provide technical support and related services to certain of our facilities in Canada, Brazil and France, and (2) we will provide similar services to certain Alcan facilities in Canada. These agreements are not long-term agreements. In addition, we have entered into a technical services agreement with Alcan pursuant to which (1) Alcan will provide us with materials characterization, chemical analysis, mechanical testing and formability evaluation and other general support services at the Neuhausen facility, (2) Alcan will provide us and our employees with access to and use of those portions of the Neuhausen facility where the laboratory and testing equipment mentioned above is located, and office space suitable for our technical and administrative personnel, and (3) we will provide Alcan with access to specific technical equipment and additional services upon request from Alcan, in consideration for agreed upon service fees for a period of two years. Following the first year of the term of the Neuhausen technical services agreement, either party may terminate the agreement by providing the other with at least six months’ prior written notice. | |
Ohle Agreement. We and Alcan have entered into an agreement pursuant to which we will supply pet food containers to Alcan, which Alcan will market in connection with its related packaging activities. We have agreed for a period of five years not to, directly or indirectly, for ourselves or others, in any way work in or for, or have an interest in, any company or person or organization within the European market which conduct activities competing with the activities of Alcan Packaging Zutphen B.V., a subsidiary of Alcan, related to its pet food containers business. |
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Foil Supply and Distribution Agreement. Pursuant to the two-year foil supply and distribution agreement, we will (1) manufacture and supply to, or on behalf of, Alcan certain retail and industrial packages of Alcan brand aluminum foil and (2) provide certain services to Alcan in respect of the foil we supply to Alcan under this agreement, such as marketing and payment collection. We will receive a service fee based on a percentage of the foil sales under the agreement. Pursuant to the terms of the agreement, we have agreed we will not market retail packages of foil in Canada under a brand name that competes directly with the Alcan brand during the term of the agreement. | |
Metal Hedging Agreement. We have also entered into an agreement pursuant to which Alcan provides metal price hedging services to us. These fixed forward pricing arrangements help us to reduce the risk of metal price fluctuations when we enter into agreements with customers that provide for fixed metal price arrangements. Alcan charges us fees based on the amount of metal covered by each hedge. |
NNA |
Location | Plant Process | Major End-Use Markets | ||
Oswego, New York | Hot rolling, cold rolling, recycling | Can stock, Construction/ Industrial, Semi-finished coil | ||
Logan, Kentucky(i) | Hot rolling, cold rolling | Can stock | ||
Saguenay, Quebec | Continuous casting | Semi-finished coil | ||
Kingston, Ontario | Cold rolling, finishing | Automotive, Construction/Industrial | ||
Terre Haute, Indiana | Cold rolling, finishing | Foil | ||
Warren, Ohio | Coating | Can stock | ||
Fairmont, West Virginia | Cold rolling, finishing | Foil | ||
Toronto, Ontario | Finishing | Foil, foil containers | ||
Louisville, Kentucky | Cold rolling, finishing | Foil | ||
Burnaby, British Columbia | Finishing | Foil containers |
(i) | We own 40% of the shares of Logan Aluminium Inc., but we have made subsequent equipment investments such that we now have access to approximately 67% of Logan’s total production capacity. |
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NE |
Location | Plant Process | Major End-Use Markets | ||
Norf, Germany(i) | Hot rolling, cold rolling | Can stock, foilstock, reroll Construction/Industrial | ||
Göttingen, Germany | Cold rolling, finishing | Can end, Lithographic, Painted sheet | ||
Rogerstone, United Kingdom | Hot rolling, cold rolling | Foilstock, paintstock, reroll | ||
Nachterstedt, Germany | Cold rolling, finishing | Construction/Industrial, Automotive | ||
Sierre, Switzerland(ii) | Hot rolling, cold rolling | Automotive sheet | ||
Pieve, Italy | Continuous casting, cold rolling | Paintstock, industrial | ||
Ohle, Germany | Cold rolling, finishing | Foil | ||
Bresso, Italy | Finishing | Painted sheet | ||
Rugles, France | Continuous casting, cold rolling, finishing | Foil | ||
Dudelange, Luxembourg | Continuous casting, cold rolling, finishing | Foil | ||
Bridgnorth, United Kingdom | Cold rolling, finishing | Foil | ||
Annecy, France | Hot rolling, Cold rolling, finishing | Painted sheet, circles | ||
Ludenscheid, Germany | Cold rolling, finishing | Foil | ||
Berlin, Germany | Finishing | Foil |
(i) | Operated as a joint venture between us, 50% interest, and Norsk Hydro Aluminium Deutschland GmbH, 50% interest. |
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(ii) | We have entered into an agreement with Alcan pursuant to which Alcan, following the separation, retains access to the plate production capacity utilized prior to separation at the Sierre facility, which represents a portion of the total production capacity of the Sierre hot mill. |
NA |
Location | Plant Process | Major End-Use Markets | ||
Ulsan, Korea(i) | Hot rolling, cold rolling | Can stock, Construction/Industrial, Foil stock | ||
Yeongju, Korea(ii) | Hot rolling, cold rolling | Can stock | ||
Bukit Raja, Malaysia(iii) | Continuous casting, cold rolling | Construction/Industrial, Foil stock Foil, finstock |
(i) | We hold a 68% equity interest in the Ulsan plant. | |
(ii) | We hold a 68% equity interest in the Yeongju plant. | |
(iii) | Ownership of the Bukit Raja plant corresponds to our 59% shareholding in Aluminium Company of Malaysia Berhad. We increased our ownership from 36% to 59% in 2003. |
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NSA |
Location | Plant Process | Major End-Use Markets | ||
Pindamonhangaba, Brazil | Hot rolling, cold rolling | Construction/Industrial, can stock, foil stock | ||
Utinga, Brazil | Finishing | Foil |
Location | Plant Process | Major End-Use Markets | ||
Aratu, Brazil | Smelting | Primary aluminum (sheet ingot and billets) | ||
Petrocoque, Brazil(i) | Refining calcined coke | Carbon products (smelter anodes) | ||
Ouro Preto, Brazil | Hydroelectric, Bauxite mining, Alumina refining, Smelting | Primary aluminum (sheet ingot and billets) |
(i) | Operated as a joint venture between us, 25% interest, Petrobas Quimica S.A., 35% interest, Universal — Comércio e Empreendimentos Ltda., 25% interest, and Companhia Brasileira de Aluminio, 15% interest. |
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Environmental Matters |
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Name | Age | Position | ||||
Brian W. Sturgell | 56 | Director, President and Chief Executive Officer | ||||
J.E. Newall, O.C.(1)(2)(3)(4) | 70 | Non-Executive Chairman of the Board | ||||
Jacques Bougie, O.C.(2)(4) | 58 | Director | ||||
Charles G. Cavell(1)(2)(3) | 62 | Director | ||||
Clarence J. Chandran(2)(3)(4) | 56 | Director | ||||
C. Roberto Cordaro(2)(3)(4) | 55 | Director | ||||
Helmut Eschwey(2)(3)(4) | 56 | Director | ||||
David J. FitzPatrick(1)(2) | 51 | Director | ||||
Suzanne Labarge(1)(2)(3) | 58 | Director | ||||
William T. Monahan(2)(3)(4) | 58 | Director | ||||
Rudolf Rupprecht(1)(2)(4) | 65 | Director | ||||
Edward V. Yang(1)(2)(4) | 60 | Director |
(1) | Member of our audit committee. |
(2) | Member of our corporate governance committee. |
(3) | Member of our human resources committee. |
(4) | Member of our customer relations committee. |
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Name | Age | Position | ||||
Martha Finn Brooks | 46 | Chief Operating Officer | ||||
Geoffrey P. Batt | 57 | Senior Vice President and Chief Financial Officer | ||||
Christopher Bark-Jones | 59 | Senior Vice President and President — Europe | ||||
Kevin Greenawalt | 48 | Senior Vice President and President — North America | ||||
Jack Morrison | 53 | Senior Vice President and President — Asia | ||||
Antonio Tadeu Coelho Nardocci | 48 | Senior Vice President and President — South America | ||||
Pierre Arseneault | 49 | Vice President, Strategic Planning and Information Technology | ||||
Steven Fehling | 58 | Vice President Global Procurement and Metal Management | ||||
David Godsell | 50 | Vice President, Human Resources and Environment, Health and Safety | ||||
Jo-Ann Longworth | 44 | Vice President and Controller | ||||
Orville G. Lunking | 50 | Vice President and Treasurer | ||||
Leslie J. Parrette, Jr. | 44 | General Counsel | ||||
Brenda Pulley | 47 | Vice President, Corporate Affairs and Communications | ||||
Thomas Walpole | 50 | Vice President and General Manager, Can Products Business Unit | ||||
David Kennedy | 56 | Corporate Secretary |
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Novelis Board of Directors |
Corporate Governance Guidelines |
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Independence of Our Board of Directors |
Committees of Our Board of Directors |
Audit Committee and Financial Expert |
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Corporate Governance Committee |
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Human Resources Committee |
Customer Relations Committee |
Code of conduct |
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Base Salary |
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Annual Incentives |
Long-term Incentives |
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Long Term | |||||||||||||||||||||||||||||
Annual Compensation | Compensation Awards(i) | ||||||||||||||||||||||||||||
Bonus | Shares Underlying | ||||||||||||||||||||||||||||
(Executive | Options | ||||||||||||||||||||||||||||
Performance | Other Annual | Restricted | Granted/Stock | All Other | |||||||||||||||||||||||||
Salary | Award)(ii) | Compensation | Share Units | Price Appreciation | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Year | (In $) | (In $) | (In $)(iii) | (CAN$) | Units(iv (#)) | (In $) | ||||||||||||||||||||||
Brian W. Sturgell, | 2004 | 781,200 | 932,257 | 280,686 | (v) | 0 | 221,100 | 41,301 | (vi) | ||||||||||||||||||||
Director and Chief | 2003 | 600,000 | 561,845 | 254,115 | (v) | 404,815 | (vii) | 69,600 | 29,679 | (vi) | |||||||||||||||||||
Executive Officer | |||||||||||||||||||||||||||||
Martha Finn Brooks, | 2004 | 514,400 | 631,538 | 50,723 | (viii) | 0 | 78,600 | 14,666 | (ix) | ||||||||||||||||||||
Chief Operating Officer | 2003 | 440,000 | 445,608 | 32,661 | (viii) | 0 | 36,000 | 16,440 | (ix) | ||||||||||||||||||||
Chris Bark-Jones, | 2004 | 440,600 | 395,210 | 43,892 | (x) | 0 | 64,200 | (xi) | 0 | ||||||||||||||||||||
Senior Vice President and | 2003 | 375,000 | 465,972 | 9,659 | (x) | 0 | 27,600 | (xi) | 8,348 | (xii) | |||||||||||||||||||
President — Europe | |||||||||||||||||||||||||||||
Pierre Arseneault, | 2004 | 300,000 | 257,731 | 37,285 | (xiii) | 0 | 23,700 | 12,214 | (xiv) | ||||||||||||||||||||
Vice President | 2003 | 272,000 | 186,045 | 23,145 | (xiii) | 0 | 9,900 | 10,880 | (xiv) | ||||||||||||||||||||
Strategic Planning and | |||||||||||||||||||||||||||||
Information Technology | |||||||||||||||||||||||||||||
Jack Morrison, | 2004 | 251,088 | 206,150 | 329,512 | (xv) | 0 | 15,000 | 12,346 | (xvi) | ||||||||||||||||||||
Senior Vice President and | 2003 | 239,013 | 145,290 | 292,892 | (xv) | 0 | 8,400 | 13,588 | (xvi) | ||||||||||||||||||||
President — Asia |
(i) | There were no long term incentive plan payouts. |
(ii) | Alcan’s executive performance award plan, or EPA Plan, has two components, each based on a different aspect of performance: (1) the profitability of Alcan as measured by economic value added, or EVA (a registered trademark of Stern Stewart & Co.), and (2) the performance of Alcan relative to environment, health and safety, or EHS, objectives. For each position a target award is set (expressed as “percent of target base salary”) reflecting both the responsibilities of the position and the competitive compensation levels. The first component is 90% of the incentive compensation opportunity of an executive and is based on the overall profitability of Alcan as measured against the quantifiable financial metric EVA. The incentive compensation for executive officers who are part of Alcan’s corporate head office is contingent upon performance versus the pre-established EVA target for Alcan, while the incentive compensation for executive officers who are responsible for a business group is contingent on meeting the pre-established EVA objectives of their respective business group. The second component is 10% of the incentive compensation opportunity of an executive and is based on the achievement of the EHS objectives as measured against pre-established targets. The overall award paid is the sum of the weighted results of each component (i.e., EVA and EHS) modified by the rating for the individual performance and contribution to Alcan. The award paid may vary from zero when the results achieved are less than the minimum threshold set by Alcan’s human resources committee, to 200% of the target award when the results achieved are at or exceed the maximum level which was set by Alcan’s human resources committee. |
(iii) | Included in this column for one or more executive officers are amounts relating to professional financial advice, club memberships, tax equalization (amounts paid such that net income after taxes was not less than it would have been in the United States), expatriate-related compensation, relocation allowances and housing (including interest on housing-related loans transferred to third party financial institutions). |
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(iv) | See “— Grants of Alcan Stock Price Appreciation Units” below for a description of the stock price appreciation unit plan. The Alcan executive share option plan provides for the granting to senior employees of non-transferable options to purchase Alcan common shares. Certain executive officers and other management employees of Alcan have received over the years options under one or more of the six classes of Alcan options, namely A, B, C, D, E and F Options. With respect to the five executive officers named in the table above, only the C Options are applicable for the years 2004 and 2003. See “— Grants of Alcan Stock Options” below for a description of the C Options. |
(v) | Amounts include $254,756 (in 2004) and $219,155 (in 2003) for tax equalization. |
(vi) | Amounts for 2004 include $27,225 in respect of savings plans and $14,076 in respect of life insurance. Amounts for 2003 include $25,875 in respect of savings plans and $3,804 in respect of life insurance. |
(vii) | Granted as 7,175 Alcan restricted share units based on the market value of the Alcan shares on the date of grant, which was CAN$56.42. Alcan employees who became Novelis employees at the separation and who held restricted share units were entitled to receive a payment of the value of those units from Alcan. |
(viii) | Amounts for 2004 include $18,211 for tax equalization. Amounts for 2003 include $11,520 in a plan for professional financial advice and for club membership fees and $13,033 for housing assistance. |
(ix) | Amounts for 2004 include $12,902 in respect of savings plans and $1,764 in respect of life insurance. Amounts for 2003 include $15,480 in respect of savings plans and $960 in respect of life insurance. |
(x) | Amounts for 2004 include $38,015 for exchange rate equalization. Amounts for 2003 include $4,839 for automobile usage and $3,217 for professional financial advice. |
(xi) | Granted as Alcan stock price appreciation units, or SPAUs. |
(xiii) | Amounts for 2004 include $23,341 for expatriate-related compensation. Amounts for 2003 include $7,008 in a plan for professional financial advice and club membership fees. |
(xiv) | Amounts for 2004 include $10,804 in respect of savings plans and $1,410 in respect of life insurance. Amounts for 2003 include $9,240 in respect of savings plans and $1,640 in respect of life insurance. |
(xv) | Amounts for 2004 include $132,763 for housing expenses and $110,422 for expatriate-related compensation. Amounts for 2003 include $146,081 for housing expenses and $110,574 for expatriate-related compensation. |
(xvi) | Amounts for 2004 include $11,119 in respect of savings plans and $1,227 in respect of life insurance. Amounts for 2003 include $12,149 in respect of savings plans and $1,439 in respect of life insurance. |
Other Compensation |
Alcan Stock Options |
Grants of Alcan Stock Options |
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Potential Realizable Value at | ||||||||||||||||||||||||
Percentage of | Assumed Annual Rates of | |||||||||||||||||||||||
Shares | Total Options | Share Price Appreciation for | ||||||||||||||||||||||
Under | Granted to Alcan | Option Term (CAN$)(ii) | ||||||||||||||||||||||
Option | Employees in | Exercise Price | ||||||||||||||||||||||
Name | Granted (#) | 2004 | (CAN$/Share) | Expiration Date | 5% | 10% | ||||||||||||||||||
B. W. Sturgell | (i)221,100 | 8.3 | % | 58.15 | September 21, 2014 | 8,085,676 | 20,490,691 | |||||||||||||||||
M. F. Brooks | (i) 78,600 | 2.9 | % | 58.15 | September 21, 2014 | 2,874,419 | 7,284,343 | |||||||||||||||||
P. Arseneault | (i) 23,700 | 0.9 | % | 58.15 | September 21, 2014 | 866,714 | 2,196,424 | |||||||||||||||||
J. Morrison | (i) 15,000 | 0.6 | % | 58.15 | September 21, 2014 | 548,553 | 1,390,142 |
(i) | Date of grant: September 22, 2004. | |
(ii) | Reflects the value of the stock option on the date of grant assuming (1) for the 5% column, a 5% annual rate of appreciation in Alcan common shares over the term of the option and (2) for the 10% column, a 10% annual rate of appreciation in Alcan common shares over the term of option, in each case without discounting to net present value and before income taxes associated with the exercise. The 5% and 10% assumed rates of appreciation are based on the rules of the SEC and do not represent our estimate or projection of the future price of Alcan common shares. The amounts in this table may not necessarily be achieved. |
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Exercise of Alcan Stock Options |
Value of Unexercised | ||||||||||||||||
Shares Underlying | In-the-Money | |||||||||||||||
Shares | Value | Unexercised | Options at | |||||||||||||
Acquired on | Realized | Options at | December 31, 2004(i) | |||||||||||||
Name | Exercise (#) | (CAN$) | Dec. 31, 2004(i) (#) | (CAN$) | ||||||||||||
B. W. Sturgell | 167,450 | 2,734,759 | E: 0 | E: 0 | ||||||||||||
U: 379,700 | U: 1,945,328 | |||||||||||||||
M. F. Brooks | 25,934 | 561,082 | E: 45,334 | E: 13,147 | ||||||||||||
U: 150,232 | U: 560,170 | |||||||||||||||
C. Bark-Jones | 10,367 | 156,618 | E: 0 | E: 0 | ||||||||||||
U: 2,333 | U: 29,372 | |||||||||||||||
P. Arseneault | 11,134 | 216,628 | E: 0 | E: 0 | ||||||||||||
U: 44,866 | U: 254,768 | |||||||||||||||
J. Morrison | 39,300 | 575,712 | E: 0 | E: 0 | ||||||||||||
U: 35,300 | U: 235,853 |
(i) | E: Exercisable U: Unexercisable |
Treatment of Alcan Stock Options |
Alcan Stock Price Appreciation Units |
Grants of Alcan Stock Price Appreciation Units |
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the market value of Alcan common shares on the date of exercise of a SPAU over the market value of Alcan common shares as of the date of grant of such SPAU. SPAUs may be exercised in the same manner as C Options, described above. Grants are made under the SPAU Plan instead of under the Alcan executive share option plan due to certain local conditions of countries of the employees’ residence. |
Potential Realizable Value at | ||||||||||||||||||||||||
Shares | Percentage of | Exercise Price | Assumed Rates of Share | |||||||||||||||||||||
Granted | Total SPAUs | and Market | Price Appreciation for | |||||||||||||||||||||
Under | Granted to | Value on Date | Option Term (CAN$)(ii) | |||||||||||||||||||||
SPAUs | Employees in | of Grant | ||||||||||||||||||||||
Name | (#) | 2004 | (CAN$/Share) | Expiration Date | 5% | 10% | ||||||||||||||||||
C. Bark-Jones | 64,200 | 23.4 | % | 58.15 | September 21, 2014 | 2,347,808 | 5,949,807 |
(i) | Date of grant: September 22, 2004 |
(ii) | Reflects the value of the SPAU on the date of grant assuming (1) for the 5% column, a 5% annual rate of appreciation in Alcan common shares over the term of the option and (2) for the 10% column, a 10% annual rate of appreciation in Alcan common shares over the term of the SPAU, in each case without discounting to net present value and before income taxes associated with the exercise. The 5% and 10% assumed rates of appreciation are based on the rules of the SEC and do not represent our estimate or projection of the future price of Alcan common shares. The amounts in this table may not necessarily be achieved. |
Exercise of Alcan Stock Price Appreciation Units |
Value of | ||||||||||||||||
Unexercised | ||||||||||||||||
Aggregate | Unexercised | In-the-Money | ||||||||||||||
SPAUs | Value | SPAUs at | SPAUs at | |||||||||||||
Exercised | Realized | December 31, 2004(i) | December 31, 2004 | |||||||||||||
Name | (#) | (CAN$) | (#) | (CAN$)(i) | ||||||||||||
C. Bark-Jones | 23,434 | 521,503 | E: 0 | E: 0 | ||||||||||||
U: 107,766 | U: 504,985 |
(i) | E: Exercisable U: Unexercisable |
Treatment of Alcan Stock Price Appreciation Units |
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Alcan Total Shareholder Return Performance Plan |
Treatment of Incentives Granted under the Alcan Total Shareholder Return Performance Plan |
Novelis Pension and Retirement Benefits Plans |
Pension Plans |
Years as Officer | ||||||||||||||
5 | 10 | 15 | 20 | |||||||||||
15% | 30% | 40% | 50% |
Retirement Benefits |
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Years of Service | ||||||||||||||||||||||
10 | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||
17% | 25% | 34% | 42% | 51% | 59% |
Years of Service | ||||||||||||||||||||||
10 | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||
17% | 26% | 35% | 43% | 52% | 60% |
Employment Agreements |
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• | each person who is known by us to be the beneficial owner of 5 percent or more of our common shares; | |
• | each director, each director nominee, our chief executive officer and our four other most highly compensated officers identified in “Management — Executive Compensation” above; and | |
• | all of our directors, director nominees and executive officers as a group. |
Our Common | |||||||||
Shares | |||||||||
Beneficially | Percentage of | ||||||||
Name and Address of Beneficial Owner* | Owned | Class | |||||||
FMR Corp.(i) | 7,827,454 | 10.579 | % | ||||||
82 Devonshire Street | |||||||||
Boston, MA 02109 | |||||||||
Brian W. Sturgell, | 17,684 | ** | |||||||
Director and Chief Executive Officer(ii) | |||||||||
J.E. Newall, O.C., | 29,234 | ** | |||||||
Non-Executive Chairman of the Board(iii) | |||||||||
Jacques Bougie, O.C., | 3,221 | ** | |||||||
Director(iv) | |||||||||
Charles G. Cavell, | 1,664 | ** | |||||||
Director(v) | |||||||||
Clarence J. Chandran, | 4,021 | ** | |||||||
Director(vi) | |||||||||
C. Roberto Cordaro, | 1,610 | ** | |||||||
Director(vii) | |||||||||
Helmut Eschwey, | 1,610 | ** | |||||||
Director(viii) | |||||||||
David J. FitzPatrick, | 6,068 | ** | |||||||
Director(ix) | |||||||||
Suzanne Labarge, | 4,879 | ** | |||||||
Director(x) | |||||||||
William T. Monahan, | 4,610 | ** | |||||||
Director(xi) | |||||||||
Rudolf Rupprecht, | 1,664 | ** | |||||||
Director(xii) |
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Our Common | |||||||||
Shares | |||||||||
Beneficially | Percentage of | ||||||||
Name and Address of Beneficial Owner* | Owned | Class | |||||||
Edward V. Yang, | 1,664 | ** | |||||||
Director(xiii) | |||||||||
Martha Finn Brooks, | 95,960 | ** | |||||||
Chief Operating Officer(xiv)) | |||||||||
Chris Bark-Jones, | 20 | ** | |||||||
Senior Vice President and President — Europe(xv) | |||||||||
Pierre Arseneault, | 0 | 0 | % | ||||||
Vice President Strategic Planning and Information Technology(xvi) | |||||||||
Jack Morrison, | 0 | 0 | % | ||||||
Senior Vice President and President — Asia(xvii) | |||||||||
Directors and executive officers as a group (26 persons)(xviii) | 228,321 | ** |
* | The address for each individual listed is c/o Novelis Inc., 3399 Peachtree Road NE, Suite 1500, Atlanta, GA 30326. |
** | Indicates less than 1% of the class. |
(i) | The following information is based on the Schedule 13G, filed on June 10, 2005 with the Securities and Exchange Commission by FMR Corp. Fidelity Management & Research Company (“Fidelity”), 82 Devonshire Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 5,253,892 common shares as a result of acting as investment adviser to various investment companies. The ownership of one investment company, FA Mid Cap Stock Fund, 82 Devonshire Street, Boston, Massachusetts 02109, amounted to 5,211,460 shares. Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the funds each has sole power to dispose of the 5,253,892 shares owned by the Funds. Neither FMR Corp., nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds’ Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds’ Boards of Trustees. Fidelity Management Trust Company, 82 Devonshire Street, Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 1,604,362 common shares as a result of its serving as investment manager of the institutional account(s). Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 1,604,362 shares and sole power to vote or to direct the voting of 1,604,362 shares owned by the institutional account(s). Members of the Edward C. Johnson 3d family are the predominant owners of Class B shares of common stock of FMR Corp., representing approximately 49% of the voting power of FMR Corp. Mr. Johnson 3d owns 12.0% and Abigail Johnson owns 24.5% of the aggregate outstanding voting stock of FMR Corp. Abigail Johnson is a Director of FMR Corp. The Johnson family group and all other Class B shareholders have entered into a shareholders’ voting agreement under which all Class B shares will be voted in accordance with the majority vote of Class B shares. Accordingly, through their ownership of voting common stock and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR Corp. Fidelity International (“FIL”), Pembroke Hall, 42 Crowlane, Hamilton, Bermuda, and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. FIL is the beneficial owner of 969,200 common shares and has the sole power to vote and dispose of such shares. FMR Corp. and FIL are of the view that they are not acting as a “group” for purposes of Section 13(d) under the Securities Exchange Act of 1934 and that they are not otherwise required to attribute to each other the “beneficial ownership” of |
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securities “beneficially owned” by the other corporation within the meaning of Rule 13d-3 under the Securities Exchange Act. The Schedule 13G states that FMR Corp. is making the filing on a voluntary basis as if all the shares are beneficially owned by FMR Corp. and FIL on a joint basis. | |
(ii) | Does not include options to purchase 753,477 of our shares that are not currently exercisable and are not exercisable within 60 days. |
(iii) | Includes 20,800 common shares held by Waskesiu East Holdings Inc., the shares of which are held by Mr. Newall and his children. Includes approximately 7,516 director’s deferred share units, or DDSUs, that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(iv) | Includes approximately 3,221 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(v) | Includes approximately 1,664 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(vi) | Includes approximately 3,221 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(vii) | Includes approximately 1,610 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(viii) | Includes approximately 1,610 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(ix) | Includes approximately 1,068 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(x) | Includes approximately 1,879 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(xi) | Includes approximately 1,610 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(xii) | Includes approximately 1,664 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(xiii) | Includes approximately 1,664 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. See “Management — Director Compensation.” |
(xiv) | Includes options to purchase 89,960 of our common shares that are currently exercisable. Does not include options to purchase 298,121 of our shares that are not currently exercisable and are not exercisable within 60 days. |
(xv) | Does not include options to purchase 4,630 of our shares that are not currently exercisable and are not exercisable within 60 days. |
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(xvi) | Does not include options to purchase 89,032 of our shares that are not currently exercisable and are not exercisable within 60 days. |
(xvii) | Does not include options to purchase 70,049 of our shares that are not currently exercisable and are not exercisable within 60 days. |
(xviii) | Our directors and executive officers as a group hold 55,648 of our shares. 300 of such shares are shares over which the officer has sole investment power but does not have voting power. Our directors and executive officers as a group hold options to purchase 142,946 of our shares that are currently exercisable or are exercisable within 60 days. Our directors as a group hold approximately 26,727 DDSUs that become redeemable only upon termination of the directorship as a result of retirement, resignation or death. Our directors and executive officers as a group hold options to purchase 1,476,248 of our shares that are not currently exercisable and are not exercisable within 60 days. |
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Purpose of the Exchange Offer |
How to Determine If You Are Eligible to Participate in the Exchange Offer |
• | you must not be a broker-dealer that acquired the old notes from us or in market-making transactions; | |
• | you must acquire the Notes in the ordinary course of your business; | |
• | you must have no arrangements or understandings with any person to participate in the distribution of the Notes within the meaning of the Securities Act; and | |
• | you must not be an affiliate of ours, as defined in Rule 405 under the Securities Act. |
• | you cannot rely on the position of the SEC set forth in the no-action letters referred to above; and | |
• | you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale of the Notes. |
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Information About the Expiration Date of the Exchange Offer and Changes to It |
How to Tender Your Old Notes |
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How to Tender If You Hold Your Old Notes Through a Broker or Other Institution and You Do Not Have the Actual Old Notes |
How to Use the Guaranteed Delivery Procedures if You Will Not Have Enough Time to Send All Documents to Us |
We Reserve the Right to Determine Validity of All Tenders |
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If You Tender Old Notes Pursuant to the Exchange Offer, You May Withdraw Them at any Time Prior to the Expiration Date |
• | The person named in the letter of transmittal as tendering old notes you are withdrawing; | |
• | The certificate numbers of old notes you are withdrawing; | |
• | The principal amount of old notes you are withdrawing; | |
• | A statement that you are withdrawing your election to have us exchange such old notes; and | |
• | The name of the registered holder of such old notes, which may be a person or entity other than you, such as your broker-dealer. |
How We Will Either Exchange Your Old Notes for Notes or Return Them to You |
We May Modify or Terminate the Exchange Offer Under Some Circumstances |
• | Any court or governmental agency brings a legal action seeking to prohibit the exchange offer or assessing or seeking any damages as a result of the exchange offer, or resulting in a material delay in our ability to accept any of the old notes for exchange offer; or | |
• | Any government or governmental authority, domestic or foreign, brings or threatens any law or legal action that in our sole judgment, might directly or indirectly result in any of the consequences |
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referred to above; or, if in our sole judgment, such activity might result in the holders of Notes having obligations with respect to resales and transfers of Notes that are greater than those we described above in the interpretations of the staff of the SEC or would otherwise make it inadvisable to proceed with the exchange offer; or | ||
• | A material adverse change has occurred in our business, condition (financial or otherwise), operations or prospects. |
Where to Send Your Documents for the Exchange Offer |
The Bank of New York Trust Company, N.A. | |
Corporate Trust Operations | |
Reorganization Unit | |
101 Barclay Street 7 East | |
New York, NY 10286 | |
Attn: Randolph Holder |
(212) 815- 5098 |
(212) 298-1915 |
We Are Paying our Costs for the Exchange Offer |
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There Are No Dissenter or Appraisal Rights |
Canadian Federal and United States Federal Income Tax Consequences to You |
This Is the Only Exchange Offer for the Old Notes that We Are Required to Make |
Accounting Treatment |
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(1) the Company does not file within the required time period either: |
(A) a registration statement to allow for an exchange offer or | |
(B) a resale shelf registration statement for the Notes; |
(2) one of the registration statements referred to above is not declared effective within the required time period; |
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(3) the exchange offer referred to above is not consummated or the resale shelf registration statement referred to above is not declared effective within the required time period; or | |
(4) certain other conditions are not satisfied as described under “Registration Rights.” |
• | senior, unsecured obligations of the Company; | |
• | effectively junior in right of payment to all existing and future secured debt of the Company (including the Senior Credit Facility) to the extent of the value of the assets securing that debt; | |
• | equal in right of payment (“pari passu”) with all existing and future senior debt of the Company; | |
• | senior in right of payment to all future subordinated debt of the Company; and | |
• | guaranteed on a senior, unsecured basis by the Subsidiary Guarantors. |
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27% and 28% | of the Company’s combined and consolidated total sales and operating revenues represented by sales to third parties by subsidiaries that are not Subsidiary Guarantors (for the year ended December 31, 2004 and the six months ended June 30, 2005) | |
26% | of the Company’s consolidated income before income taxes and other items and interest represented by subsidiaries that are not Subsidiary Guarantors for the six months ended June 30, 2005. For the year ended December 31, 2004, the Company’s subsidiaries that are not Subsidiary Guarantors had a combined loss before income taxes and other items and interest totaling $50 million. | |
36% | of the Company’s consolidated assets represented by subsidiaries that are not Subsidiary Guarantors (at June 30, 2005) |
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(1) its ownership interest in a Subsidiary Guarantor, or | |
(2) all or substantially all the assets of a Subsidiary Guarantor, then the Subsidiary Guarantor so sold or disposed of will be released from all of its obligations under its Subsidiary Guaranty. In addition, if, consistent with the requirements of the Indenture, the Company redesignates a Subsidiary Guarantor as an Unrestricted Subsidiary, the redesignated Subsidiary Guarantor will be released from all its obligations under its Subsidiary Guaranty. See “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries,” “— Limitation on Issuance or Sale of Capital Stock of Restricted Subsidiaries” and “— Merger, Consolidation and Sale of Property.” |
Redemption | ||||
Year | Price | |||
2010 | 103.625% | |||
2011 | 102.417% | |||
2012 | 101.208% | |||
2013 and thereafter | 100.000% |
(a) 100% of the principal amount of the Notes to be redeemed, and | |
(b) the sum of the present values of (1) the redemption price of the Notes at February 15, 2010 (as set forth in the preceding paragraph) and (2) the remaining scheduled payments of interest from the redemption date through February 15, 2010, but excluding accrued and unpaid interest through the redemption date, discounted to the redemption date (assuming a 360–day year consisting of twelve 30–day months), at the Treasury Rate plus 50 basis points, |
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(a) any change in or amendment to the laws (or regulations promulgated thereunder) of any Taxing Jurisdiction, or | |
(b) any change in or amendment to any official position regarding the application or interpretation of such laws or regulations, which change or amendment is announced or is effective on or after the Issue Date. |
(a) with which the Company or such Subsidiary Guarantor does not deal at arm’s length (within the meaning of the Income Tax Act (Canada)) at the time of making such payment, or | |
(b) which is subject to such Taxes by reason of its being connected with the relevant Taxing Jurisdiction otherwise than by the mere acquisition, holding or disposition of the Notes or the Subsidiary Guaranty or the receipt of payments thereunder. |
(a) make such withholding or deduction, and | |
(b) remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. |
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(a) any Taxes so levied or imposed by or on behalf of a Taxing Jurisdiction and paid by such holder as a result of payments made under or with respect to the Notes and any liability (including penalties, interest and expense) arising therefrom or with respect thereto, and | |
(b) any Taxes (other than Taxes on such holder’s profits or net income) imposed with respect to any reimbursement under clause (a) above so that the net amount received by such holder after such reimbursement will not be less than the net amount such holder would have received if such reimbursement had not been imposed. |
(a) the payment of principal (and premium, if any), | |
(b) purchase prices in connection with a repurchase of Notes, | |
(c) interest, or | |
(d) any other amount payable on or with respect to any of the Notes, |
(a) cause a notice of the Change of Control Offer to be sent at least once to the Dow Jones News Service or similar business news service in the United States; and | |
(b) send, by first-class mail, with a copy to the Trustee, to each holder of Notes, at such holder’s address appearing in the Security Register, a notice stating: |
(1) that a Change of Control has occurred and a Change of Control Offer is being made pursuant to the covenant entitled “Change of Control Offer” and that all Notes timely tendered will be accepted for payment; |
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(2) the Change of Control Purchase Price and the repurchase date, which shall be, subject to any contrary requirements of applicable law, a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed; | |
(3) the circumstances and relevant facts regarding the Change of Control (including, if applicable, information with respect to pro forma historical income, cash flow and capitalization after giving effect to the Change of Control); and | |
(4) the procedures that holders of Notes must follow in order to tender their Notes (or portions thereof) for payment, and the procedures that holders of Notes must follow in order to withdraw an election to tender Notes (or portions thereof) for payment. |
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• | the second paragraph under “— Limitation on Liens,” | |
• | the second paragraph under “— Limitation on Sale and Leaseback Transactions,” | |
• | “— Designation of Restricted and Unrestricted Subsidiaries” (other than clause (x) of the third paragraph (and such clause (x) as referred to in the first paragraph thereunder)),” and | |
• | “— Future Subsidiary Guarantors.” |
(1) such Debt is Debt of the Company or a Subsidiary Guarantor and, after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the Consolidated Interest Coverage Ratio would be greater than 2.00: 1.00, or | |
(2) such Debt is Permitted Debt. |
(a) (i) Debt of the Company evidenced by the old notes and the Notes issued in exchange for such old notes and in exchange for any Additional Notes and (ii) Debt of the Subsidiary Guarantors evidenced by Subsidiary Guaranties relating to the old notes and the Notes issued in exchange for such old notes and in exchange for any Additional Notes; |
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(b) Debt of the Company or a Restricted Subsidiary under Credit Facilities, provided that the aggregate principal amount of all such Debt under Credit Facilities at any one time outstanding shall not exceed $2.1 billion, which amount shall be permanently reduced by the amount of Net Available Cash used to Repay Debt under Credit Facilities and not subsequently reinvested in Additional Assets or used to purchase Notes or Repay other Debt, pursuant to the covenant described under “— Limitation on Asset Sales;” | |
(c) Debt of the Company or a Restricted Subsidiary in respect of Capital Lease Obligations and Purchase Money Debt, provided that: |
(1) the aggregate principal amount of such Debt does not exceed the cost of construction, acquisition or improvement of the Property acquired, constructed or leased together with the reasonable costs of acquisition, and | |
(2) the aggregate principal amount of all Debt Incurred and then outstanding pursuant to this clause (c) (together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred pursuant to this clause (c)) does not exceed 5% of Consolidated Net Tangible Assets; |
(d) Debt of the Company owing to and held by any Wholly Owned Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by the Company or any Wholly Owned Restricted Subsidiary;provided, however, that any subsequent issue or transfer of Capital Stock or other event that results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly Owned Restricted Subsidiary or any subsequent transfer of any such Debt (except to the Company or a Wholly Owned Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the issuer thereof; | |
(e) Debt of a Restricted Subsidiary outstanding on the date on which such Restricted Subsidiary is acquired by the Company or otherwise becomes a Restricted Subsidiary (other than Debt Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such Restricted Subsidiary became a Subsidiary of the Company or was otherwise acquired by the Company), provided that at the time such Restricted Subsidiary is acquired by the Company or otherwise becomes a Restricted Subsidiary and after giving effect to the Incurrence of such Debt, the Company would have been able to Incur $1.00 of additional Debt pursuant to clause (1) of the first paragraph of this covenant; | |
(f) Debt under Interest Rate Agreements entered into by the Company or a Restricted Subsidiary for the purpose of limiting interest rate risk in the ordinary course of the financial management of the Company or such Restricted Subsidiary and not for speculative purposes, provided that the obligations under such agreements are directly related to payment obligations on Debt otherwise permitted by the terms of this covenant; | |
(g) Debt under Currency Exchange Protection Agreements entered into by the Company or a Restricted Subsidiary for the purpose of limiting currency exchange rate risks directly related to transactions entered into by the Company or such Restricted Subsidiary in the ordinary course of business and not for speculative purposes; | |
(h) Debt under Commodity Price Protection Agreements entered into by the Company or a Restricted Subsidiary in the ordinary course of the financial management of the Company or such Restricted Subsidiary and not for speculative purposes; | |
(i) Debt in connection with one or more standby letters of credit or performance bonds issued by the Company or a Restricted Subsidiary in the ordinary course of business or pursuant to self-insurance obligations and not in connection with the borrowing of money or the obtaining of advances or credit; |
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(j) Debt Incurred by a Securitization Entity in a Qualified Securitization Transaction that is not recourse to the Company or any Restricted Subsidiary (except for Standard Securitization Undertakings); | |
(k) Debt of the Company or a Restricted Subsidiary outstanding on the Issue Date not otherwise described in clauses (a) through (j) above (including in such clauses (a) through (j), but not limited to, any Debt incurred under Credit Facilities prior to the Issue Date); | |
(l) Debt of the Company or a Restricted Subsidiary in an aggregate principal amount outstanding at any one time not to exceed $150.0 million; and | |
(m) Permitted Refinancing Debt Incurred in respect of Debt Incurred pursuant to clause (1) of the first paragraph of this covenant and clauses (a), (c) and (k) above. |
(a) a Default or Event of Default shall have occurred and be continuing, | |
(b) the Company could not Incur at least $1.00 of additional Debt pursuant to clause (1) of the first paragraph of the covenant described under “— Limitation on Debt,” or | |
(c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the Issue Date (the amount of any Restricted Payment, if made other than in cash, to be based upon Fair Market Value at the time of such Restricted Payment) would exceed an amount equal to the sum of: |
(1) 50% of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter during which the Issue Date occurs to the end of the most recent fiscal quarter for which financial statements have been provided (or if the aggregate amount of Consolidated Net Income for such period shall be a deficit, minus 100% of such deficit), plus | |
(2) 100% of the Capital Stock Sale Proceeds, plus | |
(3) the sum of: |
(A) the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the issuance or sale after the Issue Date of convertible or exchangeable Debt that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of the Company, and | |
(B) the aggregate amount by which Debt (other than Subordinated Debt) of the Company or any Restricted Subsidiary is reduced on the Company’s consolidated balance sheet on or after the Issue Date upon the conversion or exchange of any Debt issued or sold on or prior to the Issue Date that is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company, |
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excluding, in the case of clause (A) or (B): |
(x) any such Debt issued or sold to the Company or a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees, and | |
(y) the aggregate amount of any cash or other Property distributed by the Company or any Restricted Subsidiary upon any such conversion or exchange, plus | |
(4) an amount equal to the sum of: |
(A) the net reduction in Investments in any Person other than the Company or a Restricted Subsidiary resulting from dividends, repayments of loans or advances or other transfers of Property, in each case to the Company or any Restricted Subsidiary from such Person, and | |
(B) the portion (proportionate to the Company’s equity interest in such Unrestricted Subsidiary) of the Fair Market Value of the net assets of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; provided, however, that the foregoing sum shall not exceed, in the case of any Person, the amount of Investments previously made (and treated as a Restricted Payment) by the Company or any Restricted Subsidiary in such Person. |
(a) pay dividends on its Capital Stock within 60 days of the declaration thereof if, on the declaration date, such dividends could have been paid in compliance with the Indenture; provided, however, that at the time of such payment of such dividend, no other Default or Event of Default shall have occurred and be continuing (or result therefrom);provided further, however, that such dividend shall be included in the calculation of the amount of Restricted Payments; | |
(b) purchase, repurchase, redeem, legally defease, acquire or retire for value Capital Stock of the Company or Subordinated Debt in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees);provided, however, that |
(1) such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments, and | |
(2) the Capital Stock Sale Proceeds from such exchange or sale shall be excluded from the calculation pursuant to clause (c)(2) above; and |
(c) purchase, repurchase, redeem, legally defease, acquire or retire for value any Subordinated Debt in exchange for, or out of the proceeds of the substantially concurrent sale of, Permitted Refinancing Debt;provided, however, that such purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments; | |
(d) repurchase shares of, or options to purchase shares of, common stock of the Company or any of its Subsidiaries from current or former officers, directors or employees of the Company or any of its Subsidiaries (or permitted transferees of such current or former officers, directors or employees);provided, however, that the aggregate amount of such repurchases shall not exceed $10.0 million in any calendar year and such repurchases shall be included in the calculation of the amount of Restricted Payments; | |
(e) make payments in connection with the Reorganization Transactions of not more than $2.7 billion in the aggregate to Alcan and its subsidiaries as contemplated in this prospectus,providedthat such payment shall be excluded from the calculation of the amount of Restricted Payments; |
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(f) make payments in connection with Specified Post Closing Transactions; and | |
(g) make other Restricted Payments in an aggregate amount after the Issue Date not to exceed $75.0 million. |
(a) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the Property subject to such Asset Sale; | |
(b) at least 75% of the consideration paid to the Company or such Restricted Subsidiary in connection with such Asset Sale is in the form of any one or a combination of the following: (i) cash, Cash Equivalents or Additional Assets, (ii) the assumption by the purchaser of liabilities of the Company or any Restricted Subsidiary (other than contingent liabilities or liabilities that are by their terms subordinated to the Notes or the applicable Subsidiary Guaranty) as a result of which the Company and the Restricted Subsidiaries are no longer obligated with respect to such liabilities, or (iii) securities, notes or other obligations received by the Company or such Restricted Subsidiary to the extent such securities, notes or other obligations are converted by the Company or such Restricted Subsidiary into cash, Cash Equivalents or Additional Assets within 90 days of such Asset Sale; |
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(c) no Default or Event of Default would occur as a result of such Asset Sale; and | |
(d) the Company delivers an Officers’ Certificate to the Trustee certifying that such Asset Sale complies with the foregoing clauses (a) and (c). |
(a) to Repay Senior Debt of the Company or any Subsidiary Guarantor or Debt of any Restricted Subsidiary that is not a Subsidiary Guarantor (excluding, in any such case, any Debt owed to the Company or an Affiliate of the Company); or | |
(b) to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary). |
(a) the Excess Proceeds; and | |
(b) a fraction, |
(1) the numerator of which is the aggregate principal amount of the old notes and Notes outstanding on the date of the Prepayment Offer, and | |
(2) the denominator of which is the sum of the aggregate principal amount of the old notes and Notes outstanding on the date of the Prepayment Offer and the aggregate principal amount of other Debt of the Company outstanding on the date of the Prepayment Offer that is pari passu |
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in right of payment with the old notes and Notes and subject to terms and conditions in respect of Asset Sales similar in all material respects to this covenant and requiring the Company to make an offer to repurchase such Debt at substantially the same time as the Prepayment Offer. |
(a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Company or any other Restricted Subsidiary; | |
(b) make any loans or advances to the Company or any other Restricted Subsidiary; or | |
(c) transfer any of its Property to the Company or any other Restricted Subsidiary. |
(1) to restrictions or encumbrances existing under or by reason of: |
(A) agreements in effect on the Issue Date (including, without limitation, restrictions pursuant to the Notes, the Indenture, the Subsidiary Guaranties and the Senior Credit Facility), and any amendments, modifications, restatements, renewals, replacements, refundings, refinancings, increases or supplements of those agreements, provided that the encumbrances or restrictions contained in any such amendments, modifications, restatements, renewals, replacements, refundings, refinancings, increases or supplements taken as a whole, are not materially more restrictive than the encumbrances or restrictions contained in agreements to which they relate as in place on the date of the Indenture, | |
(B) Debt or Capital Stock of a Restricted Subsidiary existing at the time it became a Restricted Subsidiary or at the time it merges with or into the Company or a Restricted Subsidiary if such restriction was not created in connection with or in anticipation of the |
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transaction or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company, and any amendments, modifications, restatements, renewals, replacements, refundings, refinancings, increases or supplements of those instruments, provided that the encumbrances or restrictions contained in any such amendments, modifications, restatements, renewals, replacements, refundings, refinancings, increases or supplements, taken as a whole, are not materially more restrictive than the encumbrances or restrictions contained in instruments in effect on the date of acquisition, | |
(C) the Refinancing of Debt Incurred pursuant to an agreement referred to in clause (1)(A) or (B) above or in clause (2)(A) or (B) below, provided such restrictions are not materially less favorable, taken as a whole to the holders of Notes than those under the agreement evidencing the Debt so Refinanced, | |
(D) any applicable law, rule, regulation or order, | |
(E) Permitted Refinancing Debt, provided that the restrictions contained in the agreements governing such Permitted Refinancing Debt, taken as a whole, are not materially more restrictive than those contained in the agreements governing the Debt being refinanced, | |
(F) Liens securing obligations otherwise permitted to be incurred under the provisions of the covenant described above under the caption “— Limitation on Liens” or below under the caption “— Limitation on Sale and Leaseback Transactions” that limit the right of the debtor to dispose of the assets subject to such Liens, | |
(G) customary provisions limiting or prohibiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, Sale and Leaseback Transactions, stock sale agreements and other similar agreements entered into in the ordinary course of business, which limitation or prohibition is applicable only to the assets that are the subject of such agreements, | |
(H) restrictions on cash or other deposits or net worth imposed by customers or lessors under contracts or leases entered into in the ordinary course of business, or | |
(I) arising under Debt or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided that such restrictions apply only to such Securitization Entity, and |
(2) with respect to clause (c) only, to restrictions or encumbrances: |
(A) relating to Debt that is permitted to be Incurred and secured without also securing the Notes or the applicable Subsidiary Guaranty pursuant to the covenants described under “— Limitation on Debt” and “— Limitation on Liens” that limit the right of the debtor to dispose of the Property securing such Debt, | |
(B) encumbering Property at the time such Property was acquired by the Company or any Restricted Subsidiary, so long as such restrictions relate solely to the Property so acquired and were not created in connection with or in anticipation of such acquisition, | |
(C) resulting from customary provisions restricting subletting or assignment of leases or customary provisions in other agreements that restrict assignment of such agreements or rights thereunder, | |
(D) customary restrictions contained in any asset purchase, stock purchase, merger or other similar agreement, pending the closing of the transaction contemplated thereby, or | |
(E) customary restrictions contained in joint venture agreements entered into in the ordinary course of business in good faith. |
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(a) the terms of such Affiliate Transaction are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate of the Company; | |
(b) if such Affiliate Transaction involves aggregate payments or value in excess of $20.0 million, the Board of Directors approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (a) of this paragraph as evidenced by a Board Resolution promptly delivered to the Trustee; and | |
(c) if such Affiliate Transaction involves aggregate payments or value in excess of $50.0 million (1) the Board of Directors (including at least a majority of the disinterested members of the Board of Directors) approves such Affiliate Transaction and, in its good faith judgment, believes that such Affiliate Transaction complies with clause (a) of this paragraph as evidenced by a Board Resolution promptly delivered to the Trustee, or (2) the Company obtains a written opinion from an Independent Financial Advisor to the effect that the consideration to be paid or received in connection with such Affiliate Transaction is fair, from a financial point of view, to the Company and the Restricted Subsidiaries. |
(a) any transaction or series of transactions between the Company and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries in the ordinary course of business, provided that no more than 10% of the total voting power of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an Affiliate of the Company (other than a Restricted Subsidiary); | |
(b) any Restricted Payment permitted to be made pursuant to the covenant described under “— Limitation on Restricted Payments” or any Permitted Investment; | |
(c) any employment, compensation, benefit or indemnification agreement or arrangement (and any payments or other transactions pursuant thereto) entered into by the Company or any Restricted Subsidiary in the ordinary course of business (or that is otherwise reasonable as determined in good faith by the board of directors of the Company or the Restricted Subsidiary, as the case may be) with an officer, employee, consultant or director and any transactions pursuant to stock option plans, stock ownership plans and employee benefit plans or arrangements; | |
(d) loans and advances to employees made in the ordinary course of business other than any loans or advances that would be in violation of Section 402 of the Sarbanes-Oxley Act; provided that the Dollar Equivalent of the aggregate principal amount of such loans and advances do not exceed $15.0 million in the aggregate at any time outstanding; | |
(e) any transactions between or among any of the Company, any Restricted Subsidiary and any Securitization Entity in connection with a Qualified Securitization Transaction, in each case provided that such transactions are not otherwise prohibited by terms of the Indenture; | |
(f) agreements in effect on the Issue Date and any amendments, modifications, extensions or renewals thereto that are no less favorable to the Company or any Restricted Subsidiary than such agreements as in effect on the Issue Date; | |
(g) transactions with a Person that is an Affiliate of the Company solely because the Company or a Restricted Subsidiary owns Capital Stock of and/or controls, such Person; |
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(h) payment of fees and expenses to directors who are not otherwise employees of the Company or a Restricted Subsidiary, for services provided in such capacity, so long as the Board of Directors or a duly authorized committee thereof shall have approved the terms thereof; | |
(i) the granting and performance of registration rights for shares of Capital Stock of the Company under a written registration rights agreement approved by the Company’s Board of Directors as a duly authorized committee thereof; | |
(j) transactions with Affiliates solely in their capacity as holders of Debt or Capital Stock of the Company or any of its Subsidiaries, provided that a significant amount of the Debt or Capital Stock of the same class is also held by persons that are not Affiliates of the Company and those Affiliates are treated no more favorably than holders of the Debt or Capital Stock generally; and | |
(k) any action required to be taken in connection with the Specified Post Closing Transactions. |
(a) the Company or such Restricted Subsidiary would be entitled to: |
(1) Incur Debt in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction pursuant to the covenant described under “— Limitation on Debt,” and | |
(2) create a Lien on such Property securing such Attributable Debt without also securing the Notes or the applicable Subsidiary Guaranty pursuant to the covenant described under “— Limitation on Liens,” and |
(b) such Sale and Leaseback Transaction is effected in compliance with the covenant described under “— Limitation on Asset Sales.” |
(1) the Company or that Restricted Subsidiary, as applicable, would at the time of entering into the transaction be entitled to incur Debt secured by a Lien on that Principal Property in an amount equal to the Attributable Debt with respect to such Sale and Leaseback Transaction without equally and ratably securing the Notes; or | |
(2) an amount equal to the net cash proceeds of the Sale and Leaseback Transaction is applied within 180 days to: |
(a) the voluntary retirement or prepayment of any Debt of the Company or any Restricted Subsidiary maturing more than one year after the date incurred, and which is senior to or pari passu in right of payment with the Notes, or | |
(b) the purchase of other property that will constitute Principal Property having a value (as determined in good faith by the Board of Directors) in an amount at least equal to the net cash proceeds of the Sale and Leaseback Transaction; or |
(3) within the 180-day period specified in clause (2) above, the Company or that Restricted Subsidiary, as applicable, deliver to the trustee for cancellation old notes and Notes in an aggregate principal amount at least equal to the net proceeds of the Sale and Leaseback Transaction. |
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(a) the Subsidiary to be so designated does not own any Capital Stock or Debt of, or own or hold any Lien on any Property of, the Company or any other Restricted Subsidiary; and | |
(b) either: |
(1) the Subsidiary to be so designated has total assets of $1,000 or less, or | |
(2) such designation is effective immediately upon such entity becoming a Subsidiary of the Company, or | |
(3) the Investment by the Company or another Restricted Subsidiary in such Subsidiary is treated as a Restricted Payment under the covenant described under “— Limitation on Restricted Payments” and such Restricted Payment is permitted under such covenant at the time such Investment is made. |
(x) the Company could Incur at least $1.00 of additional Debt pursuant to clause (1) of the first paragraph of the covenant described under “— Limitation on Debt,” and | |
(y) no Default or Event of Default shall have occurred and be continuing or would result therefrom. |
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(a) certifies that such designation or redesignation complies with the foregoing provisions, and | |
(b) gives the effective date of such designation or redesignation, |
(a) the Company shall be the Surviving Person in such merger, consolidation or amalgamation, or the Surviving Person (if other than the Company) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the laws of the United States, any State thereof, the District of Columbia, Canada or any province or territory of Canada; | |
(b) the Surviving Person (if other than the Company) expressly assumes, by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual payment of the principal of, and premium, if any, and interest on, all the Notes, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of the Indenture to be performed by the Company; | |
(c) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of the Company, such Property shall have been transferred as an entirety or virtually as an entirety to one Person; | |
(d) immediately before and after giving effect to such transaction or series of transactions on apro formabasis (and treating, for purposes of this clause (d) and clause (e) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; | |
(e) immediately after giving effect to such transaction or series of transactions on apro formabasis, the Company or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under clause (1) of the first paragraph of the covenant described under “— Certain Covenants — Limitation on Debt;” | |
(f) the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating |
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that such transaction or series of transactions and the supplemental indenture, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction or series of transactions have been satisfied; | |
(g) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the holders will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such transaction or series of transactions and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would be the case if the transaction or series of transactions had not occurred; and | |
(h) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax purposes as a result of such transaction or series of transactions and will be subject to Canadian federal, provincial or territorial income taxes (including withholding taxes) on the same amounts, in the same manner and at the same times as would be the case if such transaction or series of transactions had not occurred. |
(a) the Surviving Person (if not such Subsidiary Guarantor) formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation, company (including a limited liability company) or partnership organized and existing under the laws of the United States, any State thereof, the District of Columbia or Canada or any province or territory of Canada; | |
(b) the Surviving Person (if other than such Subsidiary Guarantor) expressly assumes, by supplemental indenture in form satisfactory to the Trustee, executed and delivered to the Trustee by such Surviving Person, the due and punctual performance and observance of all the obligations of such Subsidiary Guarantor under its Subsidiary Guaranty; | |
(c) in the case of a sale, transfer, assignment, lease, conveyance or other disposition of all or substantially all the Property of such Subsidiary Guarantor, such Property shall have been transferred as an entirety or virtually as an entirety to one Person; | |
(d) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of this clause (d) and clause (e) below, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person, the Company or any Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person, the Company or such Restricted Subsidiary at the time of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; | |
(e) immediately after giving effect to such transaction or series of transactions on a pro forma basis, the Company would be able to Incur at least $1.00 of additional Debt under clause (1) of the first paragraph of the covenant described under “— Certain Covenants — Limitation on Debt;” | |
(f) the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers’ Certificate and an Opinion of Counsel, each stating that such transaction or series of transactions and such Subsidiary Guaranty, if any, in respect thereto comply with this covenant and that all conditions precedent herein provided for relating to such transaction or series of transactions have been satisfied; | |
(g) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the holders will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such transaction or series of transactions and will be subject to U.S. Federal income tax on the same |
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amounts, in the same manner and at the same times as would be the case if such transaction or series of transactions had not occurred; and | |
(h) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax purposes as a result of such transaction or series of transactions and will be subject to Canadian federal, provincial or territorial income taxes (including withholding taxes) on the same amounts, in the same manner and at the same times as would be the case if such transaction or series of transactions had not occurred. |
(a) a sale, transfer, assignment, conveyance or other disposition (unless such sale, transfer, assignment, conveyance or other disposition is of all the assets of the Company as an entirety or virtually as an entirety), or | |
(b) a lease, |
(a) within 90 days after the end of each fiscal year (or such shorter period as the SEC may in the future prescribe), an annual report containing substantially the same information required to be contained in Form 10-K or Form 20-F (or any successor form) that would be required if the Company were subject to the reporting requirements of Section 13 or 15(d)) of the Exchange Act; and | |
(b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year (or such shorter period as the SEC may in the future prescribe), a quarterly report containing substantially the same information required to be contained in Form 10-Q (or any successor form) that would be required if the Company were organized in the United States and subject to the reporting requirements of Section 13 or 15(d)) of the Exchange Act, |
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(1) failure to make the payment of any interest (including Additional Amounts) or Special Interest, if any, on the Notes when the same becomes due and payable, and such failure continues for a period of 30 days; | |
(2) failure to make the payment of any principal of, or premium, if any, on, any of the Notes when the same becomes due and payable at its Stated Maturity, upon acceleration, redemption, optional redemption, required repurchase or otherwise; | |
(3) failure to comply with the covenant described under “— Merger, Consolidation and Sale of Property;” | |
(4) failure to comply with any other covenant or agreement in the Notes or in the Indenture (other than a failure that is the subject of the foregoing clause (1), (2) or (3)), and such failure continues for 60 days after written notice is given to the Company as provided below; | |
(5) a default under any Debt by the Company or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity, in an aggregate amount greater than $50.0 million (the “cross acceleration provisions”); | |
(6) any judgment or judgments for the payment of money in an aggregate amount in excess of $50.0 million that shall be rendered against the Company or any Restricted Subsidiary and that shall not be waived, satisfied or discharged for any period of 60 consecutive days during which a stay of enforcement shall not be in effect (the “judgment default provisions”); | |
(7) certain events involving bankruptcy, insolvency or reorganization of the Company or any Significant Subsidiary (the “bankruptcy provisions”); | |
(8) any Subsidiary Guaranty ceases to be in full force and effect (other than in accordance with the terms of such Subsidiary Guaranty) or any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guaranty (the “guaranty provisions”); and | |
(9) any security interest securing the Notes or any Subsidiary Guaranty that may be granted after the Issue Date pursuant to the terms of the Indenture shall, at any time, (A) cease to be in full force and effect for any reason other than in accordance with its terms or the satisfaction in full of all obligations under the Indenture and discharge of the Indenture or (B) be declared invalid or unenforceable or the Company or any Subsidiary Guarantor shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable (the “security default provisions”). |
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(a) such holder has previously given to the Trustee written notice of a continuing Event of Default; | |
(b) the registered holders of at least 25% in aggregate principal amount of the old notes and Notes then outstanding have made a written request and offered reasonable indemnity to the Trustee to institute such proceeding as trustee; and | |
(c) the Trustee shall not have received from the registered holders of at least a majority in aggregate principal amount of the old notes and Notes then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. |
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(1) reduce the principal amount of Notes whose holders must consent to an amendment, supplement or waiver; | |
(2) reduce the rate of, or extend the time for payment of, interest, including Special Interest, if any, on, any Note; | |
(3) reduce the principal of, or extend the Stated Maturity of, any Note, or alter the provisions with respect to the redemption of the Notes; | |
(4) make any Note payable in money other than that stated in the Note; | |
(5) impair the right of any holder of the Notes to receive payment of principal of, premium, if any, and interest, including Special Interest, if any, on, such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes or any Subsidiary Guaranty; | |
(6) waive a Default or Event of Default in the payment of principal of, premium, if any, and interest, including Special Interest, if any, on such Notes (except a rescission of acceleration of such Notes by the holders of at least a majority in aggregate principal amount of the old notes and Notes and a waiver of the payment default that resulted from such acceleration); | |
(7) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of holders of such Notes to receive payments of principal of, or interest or premium or Special Interest, if any, on such Notes; | |
(8) subordinate the Notes or any Subsidiary Guaranty to any other obligation of the Company or the applicable Subsidiary Guarantor; | |
(9) release any security interest that may have been granted in favor of the holders of the Notes other than pursuant to the terms of such security interest; | |
(10) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed, as described under “— Optional Redemption” and “— Additional Amounts;” | |
(11) reduce the premium payable upon a Change of Control or, at any time after a Change of Control has occurred, change the time at which the Change of Control Offer relating thereto must be made or at which the Notes must be repurchased pursuant to such Change of Control Offer; | |
(12) at any time after the Company is obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at which such Prepayment Offer must be made or at which the Notes must be repurchased pursuant thereto; | |
(13) amend or modify the provisions described under “— Additional Amounts;” | |
(14) make any change in any Subsidiary Guaranty, that would adversely affect the holders of the Notes; or | |
(15) make any change in the preceding amendment and waiver provisions. |
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(1) cure any ambiguity, omission, defect or inconsistency; | |
(2) provide for the assumption by a Surviving Person of the obligations of the Company under the Indenture,provided, that the Company delivers to the Trustee: |
(A) an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such assumption by a successor corporation and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would be the case if such assumption had not occurred, and | |
(B) an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Canadian federal, provincial or territorial income tax purposes as a result of such assumption by a successor corporation and will be subject to Canadian federal, provincial or territorial income taxes (including withholding taxes) on the same amounts, in the same manner and at the same times as would be the case if such assumption had not occurred; |
(3) provide for uncertificated Notes in addition to or in place of certificated Notes (providedthat the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code); | |
(4) add additional Guarantees with respect to the Notes or release Subsidiary Guarantors from Subsidiary Guaranties as provided or permitted by the terms of the Indenture; | |
(5) secure the Notes, add to the covenants of the Company for the benefit of the holders of the Notes or surrender any right or power conferred upon the Company; | |
(6) make any change that does not adversely affect the rights of any holder of the Notes; | |
(7) comply with any requirement of the SEC in connection with the qualification of the Indenture under the Trust Indenture Act; | |
(8) evidence or provide for a successor Trustee; or | |
(9) provide for the issuance of Additional Notes in accordance with the Indenture. |
(1) its obligations under the covenants described under “— Change of Control Offer” and “— Certain Covenants,” |
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(2) the operation of the cross acceleration provisions, the judgment default provisions, the bankruptcy provisions with respect to Significant Subsidiaries and the guaranty provisions, in each case described under “— Events of Default” above, and | |
(3) the limitations contained in clause (e) under the first paragraph of, and in the second paragraph of, “— Merger, Consolidation and Sale of Property” above (“covenant defeasance”). |
(a) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal of, premium, if any, and interest, including Special Interest, if any, on the Notes to maturity or redemption, as the case may be; | |
(b) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent certified public accountants expressing their opinion that the payments of principal, premium, if any, and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal, premium, if any, and interest when due on all the Notes to be defeased to maturity or redemption, as the case may be; | |
(c) 90 days pass after the deposit is made, and during the 90-day period, no Default described in clause (7) under “— Events of Default” occurs with respect to the Company or any other Person making such deposit which is continuing at the end of the period; | |
(d) no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto; | |
(e) such deposit does not constitute a default under any other agreement or instrument binding on the Company; | |
(f) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; | |
(g) in the case of the legal defeasance option, the Company delivers to the Trustee an Opinion of Counsel stating that: |
(1) the Company has received from the Internal Revenue Service a ruling, or | |
(2) since the date of the Indenture there has been a change in the applicable Federal income tax law, to the effect, in either case, that, and based thereon such Opinion of Counsel shall confirm that, the holders of the Notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such defeasance and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same time as would be the case if such defeasance has not occurred; |
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(h) in the case of the covenant defeasance option, the Company delivers to the Trustee an Opinion of Counsel to the effect that the holders of the Notes will not recognize income, gain or loss for U.S. Federal income tax purposes as a result of such covenant defeasance and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would be the case if such covenant defeasance had not occurred; | |
(i) the Company delivers to the Trustee an Opinion of Counsel to the effect that holders of the Notes will not recognize income, gain or loss for Canadian federal, provincial or territorial tax purposes as a result of such deposit and defeasance and will be subject to Canadian federal, provincial or territorial taxes (including withholding taxes) on the same amounts, in the same manner and at the same times as would be the case if such deposit and defeasance had not occurred; and | |
(j) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes have been complied with as required by the Indenture. |
(1) either |
(a) all the Notes previously authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has previously been deposited in trust or segregated and held in trust by the Company and is thereafter repaid to the Company or discharged from the trust) have been delivered to the Trustee for cancellation; or | |
(b) all Notes not previously delivered to the Trustee for cancellation |
(A) have become due and payable, or | |
(B) will become due and payable at their maturity within one year, or | |
(C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of a redemption by the Trustee, and |
in the case of (A), (B) or (C), the Company has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the holders, cash in U.S. dollars, U.S. Government Obligations, or a combination of such cash and U.S. Government Obligations, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Debt on the Notes not previously delivered to the Trustee for cancellation or redemption, for principal, premium, if any, and interest and Special Interest, if any, on the Notes to the date of deposit, in the case of Notes that have become due and payable, or to the Stated Maturity or redemption date, as the case may be; |
(2) the Company has paid or caused to be paid all other sums payable by it under the Indenture; and | |
(3) if required by the Trustee, the Company delivers to the Trustee an Officers’ Certificate and Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been satisfied. |
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(a) any Property (other than cash, Cash Equivalent and securities) to be owned by the Company or any Restricted Subsidiary and used in a Related Business; or | |
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary from any Person other than the Company or an Affiliate of the Company; provided, however, that, in the case of clause (b), such Restricted Subsidiary is primarily engaged in a Related Business. |
(a) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, or | |
(b) any other Person who is a director or officer of: |
(1) such specified Person, | |
(2) any Subsidiary of such specified Person, or | |
(3) any Person described in clause (a) above. |
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(a) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares), or | |
(b) any other Property of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary, other than, in the case of clause (a) or (b) above, |
(1) any disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary, | |
(2) any disposition that constitutes a Permitted Investment or Restricted Payment permitted by the covenant described under “— Certain Covenants — Limitation on Restricted Payments,” | |
(3) any disposition effected in compliance with the first or second paragraph of the covenant described under “— Merger, Consolidation and Sale of Property”), | |
(4) any sale of accounts receivable and related assets (including contract rights) of the type specified in the definition of “Qualified Securitization Transaction” to or by a Securitization Entity for the fair market value thereof, | |
(5) any sale pursuant to any Specified Post Closing Transactions; | |
(6) any sale of assets pursuant to a Sale and Leaseback Transaction, provided that neither the Company nor any Restricted Subsidiary shall, nor shall they permit any of their respective Subsidiaries to, become or remain liable as lessee or guarantor or other surety with respect to any operating lease, unless the aggregate amount of all rents paid or accrued under all such operating leases does not exceed $25.0 million in any fiscal year; | |
(7) any sale or disposition of cash or Cash Equivalents; | |
(8) the granting of Liens not prohibited by the Indenture; and | |
(9) any disposition in a single transaction or a series of related transactions of assets for aggregate consideration of less than $10.0 million. |
(a) if such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of “Capital Lease Obligations,” and | |
(b) in all other instances, the greater of: |
(1) the Fair Market Value of the Property subject to such Sale and Leaseback Transaction, and |
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(2) the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). |
(a) the sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each successive scheduled principal payment of such Debt or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by | |
(b) the sum of all such payments. |
(a) securities issued or fully guaranteed or insured by the federal government of the United States, Canada, Switzerland, any Approved Member State or any agency of the foregoing maturing within 365 days of the date of acquisition thereof; | |
(b) time deposit accounts, certificates of deposit, eurocurrency time deposits, overnight bank deposits, money market deposits and bankers’ acceptances maturing within 365 days of the date of acquisition thereof and issued by a bank or trust company organized under the laws of Canada or any province thereof, the United States, any state thereof, the District of Columbia, any non-U.S. bank, or |
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its branches or agencies (fully protected against currency fluctuations) that, at the time of acquisition, is rated at least “A-1” by S&P or “P-1” by Moody’s (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)) or the “R-1” category by the Dominion Bond Rating Service Limited and has capital, surplus and undivided profits aggregating in excess of $500 million; | |
(c) shares of any money market fund that (i) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (a) and (b) above, (ii) has net assets that exceed $500 million and (iii) is rated at least “A-1” by S&P or “P-1” by Moody’s; | |
(d) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) entered into with: |
(1) a bank meeting the qualifications described in clause (b) above, or | |
(2) any primary government securities dealer reporting to the Market Reports Division of the Federal Reserve Bank of New York; |
(e) commercial paper issued by a corporation (other than an Affiliate of the Company) with a rating at the time as of which any Investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)) or in the “R-1” category by the Dominion Bond Rating Service Limited; and | |
(f) direct obligations (or certificates representing an ownership interest in such obligations) of any state of the United States or the District of Columbia or any political subdivision or instrumentality thereof (including any agency or instrumentality thereof) or any province of Canada (including any agency or instrumentality thereof) for the payment of which the full faith and credit of such state or province is pledged and maturing within 365 days of the date of acquisition thereof, provided that the long-term debt of such state, province or political subdivision is rated, in the case of a state of the United States, one of the two highest ratings from Moody’s or S&P (or such similar equivalent rating by at least one “nationally recognized statistical rating organization” (as defined in Rule 436 under the Securities Act)), or the “R-1” category by the Dominion Bond Rating Service Limited; |
(a) any “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act or any successor of the foregoing), including any group acting for the purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of the total voting power of the Voting Stock of the Company (for purposes of this clause (a), such person or group shall be deemed to beneficially own any Voting Stock of a corporation held by any other corporation (the “parent corporation”) so long as such person or group beneficially owns, directly or indirectly, in the aggregate at least a majority of the total voting power of the Voting Stock of such parent corporation); or | |
(b) the sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the Property of the Company and the Restricted Subsidiaries, considered as a whole (other than a disposition of such Property as an entirety or virtually as an entirety to a Wholly Owned Restricted Subsidiary), shall have occurred, or the Company merges, consolidates or |
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amalgamates with or into any other Person or any other Person merges, consolidates or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where: |
(1) the outstanding Voting Stock of the Company is reclassified into or exchanged for other Voting Stock of the Company or for Voting Stock of the Surviving Person, and | |
(2) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the Company or the Surviving Person immediately after such transaction; or |
(c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election or appointment by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of not less than three-fourths of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors then in office; or | |
(d) the shareholders of the Company shall have approved any plan of liquidation or dissolution of the Company. |
(a) the average of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third business day preceding such redemption date, as set forth in the most recently published statistical release designated “H.15(519)” (or any successor release) published by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded U.S. treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” or | |
(b) if such release (or any successor release) is not published or does not contain such prices on such business day, the average of the Reference Treasury Dealer Quotations for such redemption date. |
(a) all intercompany items between the Company and any Restricted Subsidiary or between Restricted Subsidiaries, and | |
(b) all current maturities of long-term Debt. |
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(a) the aggregate amount of EBITDA for the most recent four consecutive fiscal quarters ending at least 45 days prior to such determination date to | |
(b) Consolidated Interest Expense for such four fiscal quarters; |
(1) if |
(A) since the beginning of such period the Company or any Restricted Subsidiary has Incurred any Debt that remains outstanding or Repaid any Debt, or | |
(B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence or Repayment of Debt, |
(2) if |
(A) since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Sale or an Investment (by merger or otherwise) in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary) or an acquisition of Property which constitutes all or substantially all of an operating unit of a business, | |
(B) the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is such an Asset Sale, Investment or acquisition, or | |
(C) since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made such an Asset Sale, Investment or acquisition, |
(a) interest expense attributable to leases constituting part of a Sale and Leaseback Transaction and to Capital Lease Obligations, | |
(b) amortization of debt discount and debt issuance cost, including commitment fees, | |
(c) capitalized interest, | |
(d) non-cash interest expense, |
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(e) commissions, discounts and other fees and charges owed with respect to letters of credit and banker’s acceptance financing, | |
(f) net costs associated with Hedging Obligations (including amortization of fees), | |
(g) Disqualified Stock Dividends, | |
(h) Preferred Stock Dividends, | |
(i) interest Incurred in connection with Investments in discontinued operations, | |
(j) interest accruing on any Debt of any other Person to the extent such Debt is Guaranteed by the Company or any Restricted Subsidiary, and | |
(k) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Debt Incurred by such plan or trust. |
(a) any net income (loss) of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that: |
(1) subject to the exclusion contained in clause (c) below, equity of the Company and its consolidated Restricted Subsidiaries in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (b) below), and | |
(2) the equity of the Company and its consolidated Restricted Subsidiaries in a net loss of any such Person other than an Unrestricted Subsidiary for such period shall be included in determining such Consolidated Net Income, |
(b) any net income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions, directly or indirectly, to the Company, except that: |
(1) subject to the exclusion contained in clause (c) below, the equity of the Company and its consolidated Restricted Subsidiaries in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary, to the limitation contained in this clause), and | |
(2) the equity of the Company and its consolidated Restricted Subsidiaries in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income, |
(c) any gain or loss realized upon the sale or other disposition of any Property of the Company or any of its consolidated Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business (providedthat sales or other dispositions of assets in connection with any Qualified Securitization Transaction shall be deemed to be in the ordinary course), | |
(d) any extraordinary gain or loss, | |
(e) the cumulative effect of a change in accounting principles, and |
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(f) any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Company or any Restricted Subsidiary, provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of the Company (other than Disqualified Stock). |
(a) the excess of cost over fair market value of assets or businesses acquired; | |
(b) any revaluation or other write-up in book value of assets subsequent to the last day of the fiscal quarter of the Company immediately preceding the Issue Date as a result of a change in the method of valuation in accordance with GAAP; | |
(c) unamortized debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses, organization or developmental expenses and other intangible items; | |
(d) minority interests in consolidated Subsidiaries held by Persons other than the Company or any Restricted Subsidiary; | |
(e) treasury stock; | |
(f) cash or securities set aside and held in a sinking or other analogous fund established for the purpose of redemption or other retirement of Capital Stock to the extent such obligation is not reflected in Consolidated Current Liabilities; and | |
(g) Investments in and assets of Unrestricted Subsidiaries. |
(a) the principal of and premium (if any) in respect of: |
(1) debt of such Person for money borrowed, and | |
(2) debt evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; |
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(b) all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person; | |
(c) all obligations of such Person representing the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); | |
(d) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in (a) through (c) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third business day following receipt by such Person of a demand for reimbursement following payment on the letter of credit); | |
(e) the amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of such Person, any Preferred Stock (but excluding, in each case, any accrued dividends); | |
(f) all obligations of the type referred to in clauses (a) through (e) above of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee; | |
(g) all obligations of the type referred to in clauses (a) through (f) above of other Persons secured by any Lien on any Property of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such Property and the amount of the obligation so secured; and | |
(h) to the extent not otherwise included in this definition, Hedging Obligations of such Person. |
(1) zero if such Hedging Obligation has been Incurred pursuant to clause (f), (g) or (h) of the second paragraph of the covenant described under “— Certain Covenants — Limitation on Debt,” or | |
(2) the notional amount of such Hedging Obligation if not Incurred pursuant to such clauses. |
(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, | |
(b) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part, or | |
(c) is convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock, |
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(a) the sum of Consolidated Net Income for such period,plus |
(1) any provision for taxes based on income or profits, | |
(2) Consolidated Interest Expense, | |
(3) loss from extraordinary items, | |
(4) depreciation, depletion and amortization expenses, | |
(5) all other non-cash expenses, charges and losses that are not payable in cash in any subsequent period, and | |
(6) non-recurring cash restructuring expenses, charges and losses, minus |
(b) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income for such period, but without duplication, (i) any credit for income tax, (ii) interest income, (iii) gains from extraordinary items, (iv) any aggregate net gain (but not any aggregate net loss) from the sale, exchange or other disposition of capital assets, (v) any other non-cash gains or other items which have been added in determining Consolidated Net Income, including any reversal of a change referred to in clause (5) above by reason of a decrease in the value of any Capital Stock or Capital Stock Equivalent. |
(a) if such Property has a Fair Market Value equal to or less than $50.0 million, by any Officer of the Company, or |
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(b) if such Property has a Fair Market Value in excess of $50.0 million, by at least a majority of the Board of Directors and evidenced by a Board Resolution, dated within 45 days of the relevant transaction, delivered to the Trustee. |
(a) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, | |
(b) the statements and pronouncements of the Financial Accounting Standards Board, | |
(c) such other statements by such other entity as approved by a significant segment of the accounting profession, and | |
(d) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. |
(a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise), or | |
(b) entered into for the purpose of assuring in any other manner the obligee against loss in respect thereof (in whole or in part); |
(1) endorsements for collection or deposit in the ordinary course of business, or | |
(2) a contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under clause (a), (b) or (c) of the definition of “Permitted Investment.” |
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(a) the Company’s “Investment” in such Subsidiary at the time of such redesignation, less | |
(b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation. |
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(a) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale, | |
(b) all payments made on or in respect of any Debt that is secured by any Property subject to such Asset Sale, in accordance with the terms of any Lien upon such Property, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law, be repaid out of the proceeds from such Asset Sale, | |
(c) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale, and | |
(d) the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the Property disposed of in such Asset Sale and retained by the Company or any Restricted Subsidiary after such Asset Sale. |
(a) the Company or any Restricted Subsidiary; | |
(b) any Person that will, upon the making of such Investment, become a Restricted Subsidiary; | |
(c) any Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, the Company or a Restricted Subsidiary; | |
(d) Cash Equivalents; | |
(e) receivables owing to the Company or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or such Restricted Subsidiary deems reasonable under the circumstances; | |
(f) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; | |
(g) loans and advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary, as the case may be,providedthat such loans and advances do not exceed $15.0 million in the aggregate at any one time outstanding; | |
(h) stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Company or a Restricted Subsidiary or in satisfaction of judgments; |
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(i) any Person to the extent such Investment represents the non-cash portion of the consideration received in connection with (A) an Asset Sale consummated in compliance with the covenant described under “— Certain Covenants — Limitation on Asset Sales,” or (B) any disposition of Property not constituting an Asset Sale; | |
(j) any Persons made for Fair Market Value that do not exceed 5% of Consolidated Net Tangible Assets in the aggregate outstanding at any one time; | |
(k) a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transactionprovidedthat any Investment in a Securitization Entity is in the form of a Purchase Money Note, contribution of additional receivables and related assets or any equity interests; | |
(l) any Specified Post Closing Transactions; and | |
(m) other Investments made for Fair Market Value that do not exceed $20.0 million in the aggregate outstanding at any one time. |
(a) Liens to secure Debt permitted to be Incurred under clause (b) of the second paragraph of the covenant described under “— Certain Covenants — Limitation on Debt”; | |
(b) Liens to secure Debt permitted to be Incurred under clause (c) of the second paragraph of the covenant described under “— Certain Covenants — Limitation on Debt,”providedthat any such Lien may not extend to any Property of the Company or any Restricted Subsidiary, other than the Property acquired, constructed or leased with the proceeds of such Debt and any improvements or accessions to such Property; | |
(c) Liens for taxes, assessments or governmental charges or levies on the Property of the Company or any Restricted Subsidiary if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings timely instituted and diligently pursued, provided that any reserve or other appropriate provision that shall be required in accordance with GAAP shall have been established with respect thereto; | |
(d) Deposit account banks’ rights of set-off, Liens of landlords arising by statute, Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens and other similar Liens, on the Property of the Company or any Restricted Subsidiary arising in the ordinary course of business and securing payment of obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings; | |
(e) Liens on the Property of the Company or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to statutory or regulatory requirements, performance or return-of-money bonds, surety bonds or other obligations of a like nature and Incurred in a manner consistent with industry practice, in each case which are not Incurred in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of Property and which do not in the aggregate impair in any material respect the use of Property in the operation of the business of the Company and the Restricted Subsidiaries taken as a whole; | |
(f) Liens on Property at the time the Company or any Restricted Subsidiary acquired such Property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary;provided, however, that any such Lien may not extend to any other Property of the Company or any Restricted Subsidiary;provided further, however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Property was acquired by the Company or any Restricted Subsidiary; |
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(g) Liens on the Property of a Person at the time such Person becomes a Restricted Subsidiary;provided, however, that any such Lien may not extend to any other Property of the Company or any other Restricted Subsidiary that is not a direct Subsidiary of such Person;provided further, however, that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a Restricted Subsidiary; | |
(h) pledges or deposits by the Company or any Restricted Subsidiary under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which the Company or any Restricted Subsidiary is party, or deposits to secure public or statutory obligations of the Company, or deposits for the payment of rent, in each case Incurred in the ordinary course of business; | |
(i) utility easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of a similar character; | |
(j) Liens existing on the Issue Date not otherwise described in clauses (a) through (i) above; | |
(k) Liens not otherwise described in clauses (a) through (k) above on the Property of any Restricted Subsidiary that is not a Subsidiary Guarantor to secure any Debt permitted to be Incurred by such Restricted Subsidiary pursuant to the covenant described under “— Certain Covenants — Limitation on Debt”; | |
(l) Liens on the Property of the Company or any Restricted Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clause (b), (f), (g), or (j) above;provided, however, that any such Lien shall be limited to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property), and the aggregate principal amount of Debt that is secured by such Lien shall not be increased to an amount greater than the sum of: |
(1) the outstanding principal amount, or, if greater, the committed amount, of the Debt secured by Liens described under clause (b), (f), (g) or (j) above, as the case may be, at the time the original Lien became a Permitted Lien under the Indenture, and | |
(2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by the Company or such Restricted Subsidiary in connection with such Refinancing; and |
(m) Liens on accounts receivable and related assets (including contract rights) of the type specified in the definition of “Qualified Securitization Transaction” transferred to a Securitization Entity in a Qualified Securitization Transaction; | |
(n) encumbrances arising by reason of zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar encumbrances on the use of real property not materially detracting from the value of such real property or not materially interfering with the ordinary conduct of the business conducted and proposed to be conducted at such real property; | |
(o) encumbrances arising under leases or subleases of real property that do not, in the aggregate, materially detract from the value of such real property or interfere with the ordinary conduct of the business conducted and proposed to be conducted at such real property; | |
(p) financing statements with respect to a lessor’s rights in and to personal property leased to such Person in the ordinary course of such Person’s business other than through a Capital Lease; | |
(q) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business; |
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(r) licenses of patents, trademarks and other intellectual property rights granted in the ordinary course of business and not interfering in any respect with the ordinary conduct of such Person’s business; | |
(s) Liens arising out of conditional sale, retention, consignment or similar arrangement, incurred in the ordinary course of business, for the sale of goods; and | |
(t) Liens not otherwise permitted by clauses (a) through (s) above encumbering Property having an aggregate Fair Market Value not in excess of 5% of Consolidated Net Tangible Assets, as determined based on the consolidated balance sheet of the Company as of the end of the most recent fiscal quarter for which financial statements have been filed or furnished. |
(a) such Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of: |
(1) the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) then outstanding of the Debt being Refinanced, and | |
(2) an amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing, |
(b) the Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced, | |
(c) the Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced, and | |
(d) the new Debt shall not be senior in right of payment to the Debt that is being Refinanced; |
(x) Debt of a Subsidiary that is not a Subsidiary Guarantor that Refinances Debt of the Company or a Subsidiary Guarantor, or | |
(y) Debt of the Company or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. |
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(a) consisting of the deferred purchase price of Property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations and obligations in respect of industrial revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Property being financed, and | |
(b) Incurred to finance the acquisition, construction or lease by the Company or a Restricted Subsidiary of such Property, including additions and improvements thereto; |
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(a) any dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Company or any Restricted Subsidiary (including any payment in connection with any merger or consolidation with or into the Company or any Restricted Subsidiary), except for (i) any dividend or distribution that is made solely to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, to the other shareholders of such Restricted Subsidiary on apro ratabasis or on a basis that results in the receipt by the Company or a Restricted Subsidiary of dividends or distributions of greater value than it would receive on apro ratabasis), (ii) any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of the Company or (iii) payments of up to $13.0 million required to be paid as a priority payment to Taihan Electric Wire Co., Ltd. under the constituent documents of NKL; | |
(b) the purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Company or any Restricted Subsidiary (other than from the Company or a Restricted Subsidiary) or any securities exchangeable for or convertible into any such Capital Stock, including the exercise of any option to exchange any Capital Stock (other than for or into Capital Stock of the Company that is not Disqualified Stock); | |
(c) the purchase, repurchase, redemption, acquisition or retirement for value, prior to the date for any scheduled maturity, sinking fund or amortization or other installment payment, of any Subordinated Obligation (other than the purchase, repurchase or other acquisition of any Subordinated Obligation purchased in anticipation of satisfying a scheduled maturity, sinking fund or amortization or other installment obligation, in each case due within one year of the date of acquisition); or | |
(d) any Investment (other than Permitted Investments) in any Person. |
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(a) all obligations consisting of the principal, premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company to the extent post-filing interest is allowed in such proceeding) in respect of: |
(1) Debt of the Company for borrowed money, and | |
(2) Debt of the Company evidenced by notes, debentures, bonds or other similar instruments permitted under the Indenture for the payment of which the Company is responsible or liable; |
(b) all Capital Lease Obligations of the Company and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by the Company; | |
(c) all obligations of the Company |
(1) for the reimbursement of any obligor on any letter of credit, banker’s acceptance or similar credit transaction, |
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(2) under Hedging Obligations, or | |
(3) issued or assumed as the deferred purchase price of Property and all conditional sale obligations of the Company and all obligations under any title retention agreement permitted under the Indenture; and |
(d) all obligations of other Persons of the type referred to in clauses (a), (b) and (c) for the payment of which the Company is responsible or liable as Guarantor; |
(A) Debt of the Company that is by its terms subordinate in right of payment to the Notes, including any Subordinated Debt; | |
(B) any Debt Incurred in violation of the provisions of the Indenture; | |
(C) accounts payable or any other obligations of the Company to trade creditors created or assumed by the Company in the ordinary course of business in connection with the obtaining of materials or services (including Guarantees thereof or instruments evidencing such liabilities); | |
(D) any liability for Federal, state, local or other taxes owed or owing by the Company; | |
(E) any obligation of the Company to any Subsidiary; or | |
(F) any obligations with respect to any Capital Stock of the Company. |
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(a) such Person, | |
(b) such Person and one or more Subsidiaries of such Person, or | |
(c) one or more Subsidiaries of such Person. |
(a) any Subsidiary of the Company that is designated after the Issue Date as an Unrestricted Subsidiary as permitted or required pursuant to the covenant described under “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries” and is not thereafter redesignated as a Restricted Subsidiary as permitted pursuant thereto; and | |
(b) any Subsidiary of an Unrestricted Subsidiary. |
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(a) DTC notifies the Company that it is unwilling or unable to continue as a depositary for such global security or if at any time DTC ceases to be a clearing agency registered under the Exchange Act, | |
(b) the Company in its discretion at any time determines not to have all the Notes represented by such global security, or | |
(c) there shall have occurred and be continuing a Default or an Event of Default with respect to the Notes represented by such global security. |
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(a) certificated Notes will be issued only in fully registered form in denominations of $1,000 or integral multiples thereof, | |
(b) payment of principal of, and premium, if any, and interest on, the certificated Notes will be payable, and the transfer of the certificated Notes will be registrable, at the office or agency of the Company maintained for such purposes, and | |
(c) no service charge will be made for any registration of transfer or exchange of the certificated Notes, although the Company may require payment of a sum sufficient to cover any tax or governmental charge imposed in connection therewith. |
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(a) as promptly as practicable (but in no event more than 180 days after so required or requested), file a registration statement (the “Shelf Registration Statement”) covering resales of the old notes or the Notes, as the case may be, | |
(b) use their respective reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act within 270 days after so required or requested, and | |
(c) use their respective reasonable best efforts to keep the Shelf Registration Statement continuously effective (subject to certain exceptions), supplemented and amended as required by the Securities Act until (1) the second anniversary of its effective date, or (2) the date upon which all the old notes or the Notes, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement, or (3) the date upon which the old notes or the Notes, as applicable, covered by the Shelf Registration Statement become eligible for resale, without regard to volume, manner of sale or other restrictions contained in Rule 144 under the Securities Act pursuant to paragraph (k) thereof. |
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(a) on or prior to the 180th day following the date of original issuance of the old notes, neither the Exchange Offer Registration Statement nor the Shelf Registration Statement has been filed with the SEC, | |
(b) on or prior to the 270th day following the date of original issuance of the old notes, neither the Exchange Offer Registration Statement nor the Shelf Registration Statement has been declared effective, | |
(c) on or prior to the 45th day following the effectiveness of the Exchange Offer Registration Statement, neither the Registered Exchange Offer has been consummated nor the Shelf Registration Statement has been declared effective, or | |
(d) after either the Exchange Offer Registration Statement or the Shelf Registration Statement has been declared effective, such Registration Statement thereafter ceases to be effective or usable (subject to certain exceptions) in connection with resales of old notes or Notes in accordance with and during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d), a “Registration Default”), |
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• | a dealer in securities or currencies, | |
• | a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings, | |
• | a bank, | |
• | a life insurance company, | |
• | a tax-exempt organization, | |
• | a person that owns Notes that are a hedge or that are hedged against interest rate risks, | |
• | a person that owns Notes as part of a straddle or conversion transaction for tax purposes, | |
• | a United States holder (as defined below) or a person related to a United States holder, that actually or constructively owns 10% or more of our voting stock, or | |
• | a United States holder whose functional currency for tax purposes is not the U.S. dollar. |
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United States Holders |
• | a citizen or resident of the United States, | |
• | a domestic corporation, | |
• | an estate whose income is subject to United States federal income tax regardless of its source, or | |
• | a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust. |
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United States Alien Holders |
• | a nonresident alien individual, | |
• | a foreign corporation, or | |
• | an estate or trust that in either case is not subject to United States federal income tax on a net income basis on income or gain from a note. |
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• | you are an insurance company carrying on a United States insurance business to which the interest is attributable, within the meaning of the Internal Revenue Code, or | |
• | you both |
• | have an office or other fixed place of business in the United States to which the interest is attributable and | |
• | derive the interest in the active conduct of a banking, financing or similar business within the United States. |
• | the gain is effectively connected with your conduct of a trade or business in the United States or | |
• | you are an individual, you are present in the United States for 183 or more days during the taxable year in which the gain is realized, and certain other conditions exist. |
• | payments of principal and interest on a Note within the United States, including payments made by wire transfer from outside the United States to an account you maintain in the United States, and | |
• | the payment of the proceeds from the sale of a Note effected at a United States office of a broker. |
• | fails to provide an accurate taxpayer identification number, | |
• | is notified by the Internal Revenue Service that you have failed to report all interest and dividends required to be shown on your federal income tax returns, or | |
• | in certain circumstances, fails to comply with applicable certification requirements. |
• | payments of principal and interest made to you outside the United States by us or another non-United States payor and | |
• | other payments of principal and interest and the payment of the proceeds from the sale of a Note effected at a United States office of a broker, as long as the income associated with such payments is otherwise exempt from United States federal income tax, and: |
• | the payor or broker does not have actual knowledge or reason to know that you are a United States person and you have furnished to the payor or broker: |
• | an Internal Revenue Service Form W-8BEN or an acceptable substitute form upon which you certify, under penalties of perjury, that you are a non-United States person, or |
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• | other documentation upon which it may rely to treat the payments as made to a non-United States person in accordance with U.S. Treasury regulations, or | |
• | you otherwise establish an exemption. |
• | the proceeds are transferred to an account maintained by you in the United States, | |
• | the payment of proceeds or the confirmation of the sale is mailed to you at a United States address, or | |
• | the sale has some other specified connection with the United States as provided in U.S. Treasury regulations, |
• | a United States person, | |
• | a controlled foreign corporation for United States tax purposes, | |
• | a foreign person 50% or more of whose gross income is effectively connected with the conduct of a United States trade or business for a specified three-year period, or | |
• | a foreign partnership, if at any time during its tax year: |
• | one or more of its partners are “U.S. persons,” as defined in U.S. Treasury regulations, who in the aggregate hold more than 50% of the income or capital interest in the partnership, or | |
• | such foreign partnership is engaged in the conduct of a United States trade or business, |
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F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 |
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2004 | 2003 | 2002 | |||||||||||
Sales and operating revenues | |||||||||||||
— third parties | 7,305 | 5,749 | 5,456 | ||||||||||
— related parties (NOTE 11) | 450 | 472 | 437 | ||||||||||
7,755 | 6,221 | 5,893 | |||||||||||
Costs and expenses | |||||||||||||
Cost of sales and operating expenses, excluding depreciation and amortization noted below | |||||||||||||
— third parties | 6,453 | 5,046 | 4,797 | ||||||||||
— related parties (NOTE 11) | 403 | 436 | 411 | ||||||||||
Depreciation and amortization (NOTE 7) | 246 | 222 | 211 | ||||||||||
Selling, general and administrative expenses | 268 | 211 | 183 | ||||||||||
Research and development expenses | |||||||||||||
— third parties | 20 | 18 | 18 | ||||||||||
— related parties (NOTE 11) | 38 | 44 | 49 | ||||||||||
Interest | |||||||||||||
— third parties | 41 | 21 | 20 | ||||||||||
— related parties (NOTE 11) | 33 | 19 | 22 | ||||||||||
Other expenses (income) — net (NOTE 14) | |||||||||||||
— third parties | 84 | 84 | 24 | ||||||||||
— related parties (NOTE 11) | (56 | ) | (84 | ) | 22 | ||||||||
7,530 | 6,017 | 5,757 | |||||||||||
Income before income taxes and other items | 225 | 204 | 136 | ||||||||||
Income taxes (NOTE 9) | 166 | 50 | 77 | ||||||||||
Income before other items | 59 | 154 | 59 | ||||||||||
Equity income (NOTE 10) | 6 | 6 | 8 | ||||||||||
Minority interests | (10 | ) | (3 | ) | 8 | ||||||||
Income before cumulative effect of accounting change | 55 | 157 | 75 | ||||||||||
Cumulative effect of accounting change, net of income taxes of nil (NOTES 4AND7) | — | — | (84 | ) | |||||||||
Net income (Loss) | 55 | 157 | (9 | ) | |||||||||
Earnings (Loss) per share(NOTE 5) | |||||||||||||
Basic | |||||||||||||
Income before cumulative effect of accounting change | 0.74 | 2.12 | 1.01 | ||||||||||
Cumulative effect of accounting change | — | — | (1.13 | ) | |||||||||
Net income (Loss) per share — basic | 0.74 | 2.12 | (0.12 | ) | |||||||||
Diluted | |||||||||||||
Income before cumulative effect of accounting change | 0.74 | 2.11 | 1.00 | ||||||||||
Cumulative effect of accounting change | — | — | (1.13 | ) | |||||||||
Net income (Loss) per share — diluted | 0.74 | 2.11 | (0.13 | ) | |||||||||
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2004 | 2003 | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and time deposits | 31 | 27 | |||||||
Trade receivables (net of allowances of $33 in 2004 and $30 in 2003) | |||||||||
— third parties (NOTE 12) | 710 | 558 | |||||||
— related parties (NOTE 11) | 87 | 163 | |||||||
Other receivables | |||||||||
— third parties | 118 | 97 | |||||||
— related parties (NOTES 11 AND 13) | 846 | 1,167 | |||||||
Inventories | |||||||||
Aluminum | 1,081 | 867 | |||||||
Raw materials | 20 | 14 | |||||||
Other supplies | 125 | 99 | |||||||
1,226 | 980 | ||||||||
Total current assets | 3,018 | 2,992 | |||||||
Deferred charges and other assets (NOTE 15) | 193 | 196 | |||||||
Long-term receivables from related parties (NOTE 11) | 104 | 614 | |||||||
Property, plant and equipment (NOTE 16) | |||||||||
Cost (excluding construction work in progress) | 5,506 | 5,218 | |||||||
Construction work in progress | 112 | 129 | |||||||
Accumulated depreciation | (3,270 | ) | (2,928 | ) | |||||
2,348 | 2,419 | ||||||||
Intangible assets (net of accumulated amortization of $9 in 2004 and $6 in 2003) (NOTE 7) | 35 | 26 | |||||||
Goodwill (NOTE 7) | 256 | 69 | |||||||
Total assets | 5,954 | 6,316 | |||||||
LIABILITIES AND INVESTED EQUITY | |||||||||
Current liabilities | |||||||||
Payables and accrued liabilities | |||||||||
— third parties | 859 | 802 | |||||||
— related parties (NOTE 11) | 401 | 286 | |||||||
Short-term borrowings | |||||||||
— third parties | 229 | 900 | |||||||
— related parties (NOTE 11) | 312 | 64 | |||||||
Debt maturing within one year (NOTE 18) | |||||||||
— third parties | 1 | 132 | |||||||
— related parties (NOTE 11) | 290 | 10 | |||||||
Total current liabilities | 2,092 | 2,194 | |||||||
Debt not maturing within one year (NOTES 18 AND 22) | |||||||||
— third parties | 139 | 506 | |||||||
— related parties (NOTE 11) | 2,307 | 1,011 | |||||||
Deferred credits and other liabilities (NOTE 17) | 472 | 362 | |||||||
Deferred income taxes (NOTE 9) | 249 | 152 | |||||||
Minority interests | 140 | 117 | |||||||
Invested equity | |||||||||
Owner’s net investment | 467 | 1,890 | |||||||
Accumulated other comprehensive income | 88 | 84 | |||||||
555 | 1,974 | ||||||||
Commitments and contingencies (NOTE 20) | |||||||||
Total liabilities and invested equity | 5,954 | 6,316 | |||||||
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2004 | 2003 | 2002 | |||||||||||||
OPERATING ACTIVITIES | |||||||||||||||
Net income (Loss) | 55 | 157 | (9 | ) | |||||||||||
Adjustments to determine cash from operating activities: | |||||||||||||||
Cumulative effect of accounting change | — | — | 84 | ||||||||||||
Depreciation and amortization | 246 | 222 | 211 | ||||||||||||
Deferred income taxes | 97 | (20 | ) | (1 | ) | ||||||||||
Equity income | (6 | ) | (6 | ) | (8 | ) | |||||||||
Asset impairment provisions | 75 | 4 | 19 | ||||||||||||
Stock option compensation | 2 | 2 | 2 | ||||||||||||
Loss (Gain) on sales of businesses and investment — net | — | (25 | ) | 4 | |||||||||||
Change in operating working capital | |||||||||||||||
Change in receivables | |||||||||||||||
— third parties | (112 | ) | 6 | 40 | |||||||||||
— related parties | 28 | 101 | (11 | ) | |||||||||||
Change in inventories | (145 | ) | (18 | ) | 63 | ||||||||||
Change in payables and accrued liabilities | |||||||||||||||
— third parties | (42 | ) | 18 | 142 | |||||||||||
— related parties | 64 | (24 | ) | (92 | ) | ||||||||||
Change in deferred charges and other assets | (9 | ) | (28 | ) | (59 | ) | |||||||||
Change in deferred credits and other liabilities | (14 | ) | 48 | 37 | |||||||||||
Other — net | (15 | ) | 7 | (12 | ) | ||||||||||
Cash from operating activities | 224 | 444 | 410 | ||||||||||||
FINANCING ACTIVITIES | |||||||||||||||
Proceeds from issuance of new debt | |||||||||||||||
— third parties | 575 | 500 | 105 | ||||||||||||
— related parties | 1,561 | 471 | — | ||||||||||||
Debt repayments | |||||||||||||||
— third parties | (993 | ) | — | — | |||||||||||
— related parties | (5 | ) | — | (50 | ) | ||||||||||
Short-term borrowings — net | |||||||||||||||
— third parties | (774 | ) | 577 | (75 | ) | ||||||||||
— related parties | 221 | (29 | ) | (66 | ) | ||||||||||
Dividends — minority interest | (4 | ) | — | (2 | ) | ||||||||||
Net payments to Alcan | (1,512 | ) | (592 | ) | (153 | ) | |||||||||
Cash from (used for) financing activities | (931 | ) | 927 | (241 | ) | ||||||||||
INVESTMENT ACTIVITIES | |||||||||||||||
Purchase of property, plant and equipment | (165 | ) | (189 | ) | (179 | ) | |||||||||
Business acquisitions, net of cash and time deposits acquired | — | (11 | ) | — | |||||||||||
Proceeds from disposal of businesses, investments and other assets, net of cash | 1 | 33 | 24 | ||||||||||||
Change in loans receivable — related parties | 874 | (1,210 | ) | (2 | ) | ||||||||||
Cash from (used for) investment activities | 710 | (1,377 | ) | (157 | ) | ||||||||||
Effect of exchange rate changes on cash and time deposits | 1 | 2 | 2 | ||||||||||||
Increase (Decrease) in cash and time deposits | 4 | (4 | ) | 14 | |||||||||||
Cash and time deposits — beginning of year | 27 | 31 | 17 | ||||||||||||
Cash and time deposits — end of year | 31 | 27 | 31 | ||||||||||||
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Accumulated | |||||||||||||||||
Owner’s | Other | Total | |||||||||||||||
Comprehensive | Net | Comprehensive | Invested | ||||||||||||||
Income (Loss) | Investment | Income (Loss) | Equity | ||||||||||||||
Balance at end of 2001 | 2,376 | (142 | ) | 2,234 | |||||||||||||
Net Loss — 2002 | (9 | ) | (9 | ) | (9 | ) | |||||||||||
Other comprehensive income: | |||||||||||||||||
Net change in deferred translation adjustments | 129 | ||||||||||||||||
Net change in minimum pension liability — net of taxes of $4 | (6 | ) | 123 | 123 | |||||||||||||
Comprehensive income | 114 | ||||||||||||||||
Transfers (to)/from Alcan — net* | (167 | ) | (167 | ) | |||||||||||||
Balance at end of 2002 | 2,200 | (19 | ) a | 2,181 | |||||||||||||
Net income — 2003 | 157 | 157 | 157 | ||||||||||||||
Other comprehensive income: | |||||||||||||||||
Net change in deferred translation adjustments | 102 | ||||||||||||||||
Net change in minimum pension liability — net of taxes of ($3) | 1 | 103 | 103 | ||||||||||||||
Comprehensive income | 260 | ||||||||||||||||
Transfers (to)/from Alcan — net* | (467 | ) | (467 | ) | |||||||||||||
Balance at end of 2003 | 1,890 | 84 b | 1,974 | ||||||||||||||
Net income — 2004 | 55 | 55 | 55 | ||||||||||||||
Other comprehensive income: | |||||||||||||||||
Net change in deferred translation adjustments | 30 | ||||||||||||||||
Net change in minimum pension liability — net of taxes of $15 | (26 | ) | 4 | 4 | |||||||||||||
Comprehensive income | 59 | ||||||||||||||||
Transfers (to)/from Alcan — net* | (1,478 | ) | (1,478 | ) | |||||||||||||
Balance at end of 2004 | 467 | 88 c | 555 | ||||||||||||||
* | Refer to note 2 — Basis of Presentation — Cash Management for discussion of these amounts. |
a. | Comprised of deferred translation adjustments of ($12) and minimum pension liability of ($7). |
b. | Comprised of deferred translation adjustments of $90 and minimum pension liability of ($6). |
c. | Comprised of deferred translation adjustments of $120 and minimum pension liability of ($32). |
F-6
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1. | NATURE OF OPERATIONS |
F-7
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2. | BASIS OF PRESENTATION |
F-8
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F-9
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3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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F-11
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F-12
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4. | ACCOUNTING CHANGES |
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F-16
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5. | EARNINGS PER SHARE |
2004 | 2003 | 2002 | |||||||||||
Numerator: | |||||||||||||
Income before cumulative effect of accounting change | 55 | 157 | 75 | ||||||||||
Denominator (number of common shares in millions): | |||||||||||||
Outstanding shares on January 6, 2005 | 73.99 | 73.99 | 73.99 | ||||||||||
Effect of dilutive stock options | 0.44 | 0.44 | 0.44 | ||||||||||
Adjusted number of outstanding shares | 74.43 | 74.43 | 74.43 | ||||||||||
Earnings per share — basic (in US$) | 0.74 | 2.12 | 1.01 | ||||||||||
Earnings per share — diluted (in US$) | 0.74 | 2.11 | 1.00 | ||||||||||
6. | SALES, ACQUISITIONS AND TRANSFER OF BUSINESSES |
2003 |
Canada, United States, and Other Europe |
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Fair value of net assets acquired at date of acquisition |
Final | Tentative | |||||||
Purchase Price | Purchase Price | |||||||
Allocation | Allocation | |||||||
Trade receivables | 82 | 82 | ||||||
Inventories | 101 | 101 | ||||||
Property, plant and equipment(2) | 84 | 70 | ||||||
Goodwill(1) | 228 | 45 | ||||||
Total assets | 495 | 298 | ||||||
Payables and accrued liabilities(2) | 158 | 139 | ||||||
Debt not maturing within one year | 4 | 4 | ||||||
Deferred credits and other liabilities | 18 | 14 | ||||||
Deferred income taxes — non-current | 18 | 13 | ||||||
Fair value of net assets acquired at date of acquisition (net of cash and time deposits acquired of $5) | 297 | 128 | ||||||
(1) | See note 7 — Goodwill and Intangible Assets. |
(2) | Include $19 of asset impairment charges and $19 of restructuring costs as described in note 8 — Restructuring Programs. |
Asia and Other Pacific |
Other |
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7. | GOODWILL AND INTANGIBLE ASSETS |
Goodwill |
Balance as at | Deferred | Balance as at | ||||||||||||||||||||||
January 1, | Translation | Impairment | December 31, | |||||||||||||||||||||
2004 | Additions | Adjustments | Adjustments* | Losses | 2004 | |||||||||||||||||||
Novelis Europe | 69 | — | 4 | 183 | — | 256 |
* | In 2004, adjustments are due to changes to the tentative purchase price allocation related to the Pechiney acquisition. See note 6 — Sales, Acquisitions and Transfer of Businesses. |
Balance | ||||||||||||||||||||||||
as at | Deferred | Balance as at | ||||||||||||||||||||||
January 1, | Translation | Impairment | December 31, | |||||||||||||||||||||
2003 | Additions | Adjustments | Adjustments | Losses | 2003 | |||||||||||||||||||
Novelis Europe | 21 | 45 | 3 | — | — | 69 |
Balance | ||||||||||||||||||||||||
as at | Deferred | Balance as at | ||||||||||||||||||||||
January 1, | Translation | Impairment | December 31, | |||||||||||||||||||||
2002 | Additions | Adjustments | Adjustments | Losses | 2002 | |||||||||||||||||||
Novelis Europe | 98 | — | 2 | 5 | (84 | ) | 21 |
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Intangible Assets with Finite Lives |
Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Net Book Value | ||||||||||
DECEMBER 31, 2004 | ||||||||||||
Trademarks | 14 | 4 | 10 | |||||||||
Patented and non-patented technology | 21 | 5 | 16 | |||||||||
Prior pension service costs (NOTE 24) | 9 | — | 9 | |||||||||
44 | 9 | 35 | ||||||||||
DECEMBER 31, 2003 | ||||||||||||
Trademarks | 11 | 2 | 9 | |||||||||
Patented and non-patented technology | 17 | 4 | 13 | |||||||||
Prior pension service costs (NOTE 24) | 4 | — | 4 | |||||||||
32 | 6 | 26 | ||||||||||
DECEMBER 31, 2002 | ||||||||||||
Trademarks | 10 | 2 | 8 | |||||||||
Patented and non-patented technology | 16 | 2 | 14 | |||||||||
Prior pension service costs (NOTE 24) | 1 | — | 1 | |||||||||
27 | 4 | 23 | ||||||||||
8. | RESTRUCTURING PROGRAMS |
2004 Restructuring Activities |
Pechiney |
Other 2004 Restructuring Activities |
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2001 Restructuring Program |
F-21
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Asset | ||||||||||||||||
Severance | Impairment | |||||||||||||||
Costs | Provisions | Other | Total | |||||||||||||
Provision balance as at December 31, 2003 | 19 | — | 12 | 31 | ||||||||||||
2004: | ||||||||||||||||
Charges recorded in the statement of income | 7 | 8 | (1 | ) | 14 | |||||||||||
Liabilities recorded in the allocation of the Pechiney purchase price | 17 | — | 2 | 19 | ||||||||||||
Cash payments — net | (14 | ) | — | (5 | ) | (19 | ) | |||||||||
Non-cash charges (recoveries) | — | (8 | ) | 6 | (2 | ) | ||||||||||
Provision balance as at December 31, 2004 | 29 | — | 14 | 43 | ||||||||||||
9. | INCOME TAXES |
2004 | 2003 | 2002 | ||||||||||
Income (Loss) before income taxes and other items | ||||||||||||
Canada | (25 | ) | (24 | ) | (22 | ) | ||||||
Other countries | 250 | 228 | 158 | |||||||||
225 | 204 | 136 | ||||||||||
Current income taxes | �� | |||||||||||
Canada | (11 | ) | (11 | ) | (10 | ) | ||||||
Other countries | 80 | 81 | 88 | |||||||||
69 | 70 | 78 | ||||||||||
Deferred income taxes | ||||||||||||
Canada | 2 | 4 | 2 | |||||||||
Other countries | 95 | (24 | ) | (3 | ) | |||||||
97 | (20 | ) | (1 | ) | ||||||||
Income tax provision | 166 | 50 | 77 | |||||||||
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2004 | 2003 | 2002 | |||||||||||
Income taxes at the composite statutory rate | 74 | 66 | 44 | ||||||||||
Differences attributable to: | |||||||||||||
Withholding tax in connection with the spin-off transaction | 21 | — | — | ||||||||||
Exchange translation items | 13 | 1 | (18 | ) | |||||||||
Exchange revaluation of deferred income taxes | 2 | 4 | — | ||||||||||
Unrecorded tax benefits — net | 42 | (14 | ) | 24 | |||||||||
Investment and other allowances | (3 | ) | (3 | ) | (2 | ) | |||||||
Reduced rate or tax exempt items | (2 | ) | (4 | ) | 5 | ||||||||
Foreign tax rate differences | 10 | 9 | 18 | ||||||||||
Prior years’ tax adjustments | 5 | (13 | ) | 5 | |||||||||
Other — net | 4 | 4 | 1 | ||||||||||
Income tax provision | 166 | 50 | 77 | ||||||||||
2004 | 2003 | |||||||
Liabilities | ||||||||
Property, plant, equipment and intangibles | 255 | 259 | ||||||
Inventory valuation | 42 | 11 | ||||||
Other — net | 51 | 38 | ||||||
348 | 308 | |||||||
Assets | ||||||||
Tax benefit carryovers | 174 | 123 | ||||||
Accounting provisions not currently deductible for tax | 100 | 122 | ||||||
274 | 245 | |||||||
Valuation allowance (amounts not likely to be recovered) | 163 | 89 | ||||||
111 | 156 | |||||||
Net deferred income tax liability | 237 | 152 | ||||||
Amounts recognized in the combined balance sheet consist of: | ||||||||
Deferred charges and other assets | (12 | ) | — | |||||
Deferred income tax liability | 249 | 152 | ||||||
237 | 152 | |||||||
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Table of Contents
10. | INVESTMENT IN NON-CONTROLLED AFFILIATES |
Summary of Combined Financial Position |
2004 | 2003 | |||||||
Current assets | 253 | 216 | ||||||
Non-current assets | 609 | 662 | ||||||
Total assets | 862 | 878 | ||||||
Current liabilities | 457 | 492 | ||||||
Non-current liabilities | 153 | 160 | ||||||
Total liabilities | 610 | 652 | ||||||
Net assets | 252 | 226 | ||||||
The Group’s equity in net assets | 122 | 110 | ||||||
Summary of Combined Operations |
2004 | 2003 | 2002 | ||||||||||
Revenues | 451 | 411 | 359 | |||||||||
Costs and expenses | 423 | 385 | 332 | |||||||||
Income taxes | 11 | 11 | 12 | |||||||||
Net income | 17 | 15 | 15 | |||||||||
The Group’s share of net income as reported in equity income | 6 | 6 | 8 | |||||||||
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Table of Contents
11. | RELATED PARTY TRANSACTIONS |
Year Ended December 31 | 2004 | 2003 | 2002 | |||||||||
Sales and operating revenues(A) | ||||||||||||
Alcan | 450 | 472 | 437 | |||||||||
Cost of sales and operating expenses(A) | ||||||||||||
Alcan | 403 | 436 | 411 | |||||||||
Research and development expenses(B) | ||||||||||||
Alcan | 38 | 44 | 49 | |||||||||
Interest expense(C) | ||||||||||||
Alcan | 33 | 19 | 22 | |||||||||
Other expense (income) — net | ||||||||||||
Service fee income(D) | (42 | ) | (39 | ) | (37 | ) | ||||||
Service fee expense(E) | 25 | 26 | 28 | |||||||||
Interest income | (22 | ) | (4 | ) | (1 | ) | ||||||
Derivatives(F) | (23 | ) | (68 | ) | (9 | ) | ||||||
Transfer pricing adjustment | — | — | 44 | |||||||||
Other | 8 | 2 | 2 | |||||||||
Total transactions with Alcan | (54 | ) | (83 | ) | 27 | |||||||
Interest income from Aluminium Norf GmbH | (2 | ) | (1 | ) | (5 | ) | ||||||
(56 | ) | (84 | ) | 22 | ||||||||
Purchase of inventory/tolling services | ||||||||||||
Aluminium Norf GmbH | 203 | 187 | 162 | |||||||||
Alcan(G) | 1,739 | 1,732 | 1,704 | |||||||||
(A) | The Group sells inventory to Alcan and certain investees accounted for under the equity method in the ordinary course of business. | |
(B) | These expenses are comprised of an allocation of research and development expenses incurred by Alcan on behalf of the Group. | |
(C) | As discussed further below as well as in note 18 — Debt Not Maturing Within One Year, the Group has various short-term and long-term debt payable to Alcan where interest is charged on both a fixed and a floating rate basis. | |
(D) | Service fee income relates to revenues generated through sales of research and development and other corporate services to Alcan. | |
(E) | Service fee expense relates to the purchase of corporate services from Alcan. | |
(F) | Alcan is the counterparty to all of the Group’s metal derivatives and most of the currency derivatives. Refer to note 22 — Financial Instruments and Commodity Contracts. | |
(G) | Alcan is the primary supplier of prime and sheet ingot to the Group. |
F-25
Table of Contents
As at December 31 | 2004 | 2003 | ||||||
Trade receivables(A) | ||||||||
Alcan | 87 | 163 | ||||||
Other receivables | ||||||||
Alcan(B)(C)(E) | 801 | 1,154 | ||||||
Aluminium Norf GmbH | 45 | 13 | ||||||
846 | 1,167 | |||||||
Long-term receivables | ||||||||
Alcan(C) | 2 | 500 | ||||||
Aluminium Norf GmbH(D) | 102 | 114 | ||||||
104 | 614 | |||||||
Payables and accrued liabilities(A) | ||||||||
Aluminium Norf GmbH | 45 | 4 | ||||||
Alcan | 356 | 282 | ||||||
401 | 286 | |||||||
Short-term borrowings(F) | ||||||||
Alcan | 312 | 64 | ||||||
Debt maturing within one year(G) | ||||||||
Alcan | 290 | 10 | ||||||
Debt not maturing within one year(G) | ||||||||
Alcan | 2,307 | 1,011 | ||||||
(A) | The Group purchases from and sells inventory to Alcan and purchases services from an investee accounted for under the equity method, in the ordinary course of business. | |
(B) | Includes Trade receivables sold to Alcan in the amount of $242 (2003: $218) as described in note 13 — Sales and Forfaiting of Receivables. | |
(C) | Alcan Aluminum Corporation Inc. (AAC), which is part of the Group, issued two $500 Floating Rate Notes (FRNs) on December 8, 2003, maturing in December 2004 and 2005, respectively, and advanced the funds including an additional $125 to Alcan as part of Alcan’s financing of its acquisition of Pechiney. As at December 31, 2003, the amounts due from Alcan to AAC are included in Other receivables, for the $500 FRN due in 2004 and the $125 loan (recorded by the Group in Short-term borrowings), and in Long-term receivables for the $500 FRN due in 2005. The $125 loan, the $500 FRN due in 2005, and the $500 FRN due in 2004 were repaid to AAC in March, August and December 2004, respectively, and AAC applied the funds to repay the corresponding third-party debt. | |
(D) | Loan to an investee accounted for under the equity method. | |
(E) | Includes various floating rate notes totalling€266 million (2003:€159 million) and $55 (2003: nil) maturing within one year. | |
(F) | Loans due to Alcan in various currencies including€193 million (2003: nil) and GBP20 million (2003: GBP36 million). |
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Table of Contents
(G) | The Group has various loans payable to Alcan as described in note 18 — Debt Not Maturing Within One Year. |
12. | ALLOWANCE FOR DOUBTFUL ACCOUNTS |
Additions | ||||||||||||||||||||
Balance at | Charged to | |||||||||||||||||||
Beginning | Costs & | Balance at | ||||||||||||||||||
Description | of Year | Expenses | Acquisitions | Write-Offs | End of Year | |||||||||||||||
2004 | 30 | 6 | — | (3 | ) | 33 | ||||||||||||||
2003 | 25 | 5 | 1 | (1 | ) | 30 | ||||||||||||||
2002 | 23 | 8 | — | (6 | ) | 25 |
13. | SALES AND FORFAITING OF RECEIVABLES |
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Table of Contents
14. | OTHER EXPENSES (INCOME) — NET |
2004 | 2003 | 2002 | ||||||||||
Restructuring costs | 20 | 8 | 6 | |||||||||
Asset impairment provisions | 75 | 4 | 19 | |||||||||
Loss (Gain) on disposal of fixed assets | (5 | ) | (28 | ) | 1 | |||||||
Environmental provisions | 6 | 25 | — | |||||||||
Interest revenue | (26 | ) | (7 | ) | (16 | ) | ||||||
Exchange (gains) losses | 2 | 17 | 3 | |||||||||
Derivatives (gains) losses | (69 | ) | (20 | ) | (9 | ) | ||||||
Service fee expense (income) — net | (17 | ) | (13 | ) | (9 | ) | ||||||
Transfer pricing adjustment | — | — | 44 | |||||||||
Other | 42 | 14 | 7 | |||||||||
28 | — | 46 | ||||||||||
15. | DEFERRED CHARGES AND OTHER ASSETS |
2004 | 2003 | |||||||
Prepaid pension costs (NOTE 24) | 8 | 2 | ||||||
Deferred income taxes (NOTE 9) | 12 | — | ||||||
Investments accounted for under the equity method (NOTE 10) | 122 | 110 | ||||||
Long-term notes and other receivables | 43 | 74 | ||||||
Other | 8 | 10 | ||||||
193 | 196 | |||||||
F-28
Table of Contents
16. | PROPERTY, PLANT AND EQUIPMENT |
2004 | 2003 | ||||||||
Cost (excluding Construction work in progress) | |||||||||
Land and property rights | 93 | 93 | |||||||
Buildings | 935 | 848 | |||||||
Machinery and equipment | 4,478 | 4,277 | |||||||
5,506 | 5,218 | ||||||||
17. | DEFERRED CREDITS AND OTHER LIABILITIES |
2004 | 2003 | |||||||
Post-retirement and post-employment benefits (NOTE 24) | 284 | 211 | ||||||
Environmental liabilities (NOTE 20) | 39 | 52 | ||||||
Restructuring liabilities | 1 | 2 | ||||||
Claims | 83 | 40 | ||||||
Other | 65 | 57 | ||||||
472 | 362 | |||||||
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Table of Contents
18. | DEBT NOT MATURING WITHIN ONE YEAR |
2004 | 2003 | |||||||
DUE TO RELATED PARTIES | ||||||||
Alcan Deutschland Holdings GmbH & Co. KG | ||||||||
3.62%, loan, due 2008 (€375 million) | 508 | 472 | ||||||
Floating rate loan, due 2006 (€51 million)(A) | 69 | 64 | ||||||
Alcan Deutschland GmbH | ||||||||
Floating rate loans, due 2005 (€214 million)(A) | 290 | 268 | ||||||
Alcan Aluminio do Brasil Ltda | ||||||||
Floating rate notes, due 2006/2007(A) | 125 | 195 | ||||||
Alcan Aluminio S.p.A. | ||||||||
Floating rate loan(A) | — | 22 | ||||||
Alcan Aluminum Corporation | ||||||||
5.05% Promissory Note, due 2009 | 400 | — | ||||||
Alcan Packaging Bridgnorth Ltd | ||||||||
7.8% Promissory Note, due 2014 (£61 million)(B) | 117 | — | ||||||
7.8% Promissory Note, due 2014 (£775,000)(B) | 1 | — | ||||||
ARCUSTARGET INC. | ||||||||
6.45% Promissory Note, due 2014 (€10 million)(B) | 14 | — | ||||||
5.15% Promissory Note, due 2014 (CHF245 million)(B) | 215 | — | ||||||
6.45% Promissory Note, due 2014 (€7 million)(B) | 9 | — | ||||||
7.80% Promissory Note, due 2014 (£23 million)(B) | 45 | — | ||||||
7.50% Promissory Note, due 2014(B) | 33 | — | ||||||
6.45% Promissory Note, due 2014 (€15 million)(B) | 20 | — | ||||||
6.45% Promissory Note, due 2014 (€83 million)(B) | 112 | — | ||||||
7.50% Promissory Note, due 2014(B) | 287 | — | ||||||
7.50% Promissory Note, due 2014(B) | 200 | — | ||||||
6.45% Promissory Note, due 2014 (€77 million)(B) | 105 | — | ||||||
Novelis Valais SA | ||||||||
5.15% Promissory Note, due 2014 (CHF35 million)(B) | 31 | — | ||||||
Novelis Specialités France | ||||||||
6.45% Promissory Note, due 2014 (€6 million)(B) | 8 | — | ||||||
Novelis PAE | ||||||||
6.45% Promissory Note, due 2014 (€6 million)(B) | 8 | — | ||||||
2,597 | 1,021 | |||||||
Debt maturing within one year included in current liabilities | (290 | ) | (10 | ) | ||||
Debt not maturing within one year due to related parties | 2,307 | 1,011 | ||||||
DUE TO THIRD PARTIES | ||||||||
Alcan Aluminum Corporation | ||||||||
Floating Rate Notes, due 2005(A)(C) | — | 500 | ||||||
Alcan Taihan Aluminium Limited(D) | ||||||||
4.55% Bank loan, due 2007 | 70 | — | ||||||
4.80% Bank loan, due 2007 (KRW40 billion) | 39 | 30 | ||||||
4.45% Bank loan, due 2007 (KRW25 billion) | 24 | 20 | ||||||
Bank loans, due 2005/2011 (KRW2 billion) | 2 | 2 | ||||||
Other | ||||||||
Bank loans, due 2005/2009 | 3 | 85 | ||||||
Other debt, due 2005/2010 | 2 | 1 | ||||||
140 | 638 | |||||||
Debt maturing within one year included in current liabilities | (1 | ) | (132 | ) | ||||
Debt not maturing within one year due to third parties | 139 | 506 | ||||||
F-30
Table of Contents
(A) | Interest rates fluctuate principally with the lender’s prime commercial rate, the commercial bank bill rate, or are tied to LIBOR/ EURIBOR rates. | |
(B) | These promissory notes totalling $1,205 comprise a major portion of the $1,375 bridge financing (Alcan Notes) provided by Alcan to the Group as a result of the reorganization transactions described in note 1 — Nature of Operations. The remaining balance of the Alcan Notes of $170 was obtained in January 2005. The equivalent USD interest rate of the Alcan Notes is fixed at 7.50%, subject to quarterly increases of 0.50%, not to exceed 11.50%. The Group obtained the Alcan Notes with the intention of refinancing them with third party long-term debt. The Notes were duly refinanced with the proceeds of the $1,400 10-year Senior Notes issued in February 2005 (refer to note 27 — Subsequent Events — Financing). Accordingly, the Alcan Notes have been classified as Debt not maturing within one year as at December 31, 2004. | |
(C) | Alcan Aluminum Corporation (AAC) had the right to redeem the FRNs due December 8, 2005, at any time on or after June 8, 2004. It opted to repay the FRNs on August 6, 2004 (refer to note 11 — Related Party Transactions). The FRNs ranked equally with AAC’s senior unsecured debt and were guaranteed by Alcan. | |
(D) | In December 2004, Alcan Taihan Aluminium Limited (ATA) entered into a $70 floating rate long-term loan which was subsequently swapped for a 4.55% fixed rate KRW73 billion loan. In 2004, ATA also entered into two new long-term floating rate loans of KRW40 billion and KRW25 billion that were swapped for fixed rates of 4.80% and 4.45%, respectively. These loans replace the KRW30 billion and KRW20 billion floating rate loans, that were outstanding in 2003 and that matured in 2004, of which $25 was swapped to fixed interest rates. Refer to note 22 — Financial Instruments and Commodity Contracts. In 2004, interest on the KRW2 billion loans ranges from 3.00% to 5.50% (2003: 2.75% to 5.83%). |
19. | STOCK OPTIONS AND OTHER STOCK-BASED COMPENSATION |
Alcan Executive Share Option Plan |
F-31
Table of Contents
2004 | 2003 | 2002 | ||||||||||
Dividend yield (%) | 1.85 | 1.88 | 1.65 | |||||||||
Expected volatility (%) | 27.87 | 29.16 | 35.73 | |||||||||
Risk-free interest rate (%) | 4.56 | 3.39 | 3.50 | |||||||||
Expected life (years) | 6 | 6 | 6 |
Compensation To Be Settled in Cash |
Stock Price Appreciation Unit Plan |
Total Shareholder Return Performance Plan |
Compensation Cost |
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20. | COMMITMENTS AND CONTINGENCIES |
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• | the contributed businesses, liabilities or contracts; | |
• | liabilities or obligations associated with the contributed businesses, as defined in the separation agreement between Novelis and Alcan, or otherwise assumed by the Group pursuant to the separation agreement; and | |
• | any breach by the Group of the separation agreement or any of the ancillary agreements entered into with Alcan in connection with the separation. |
21. | CURRENCY GAINS AND LOSSES |
2004 | 2003 | 2002 | ||||||||||
Currency gains (losses) recorded in income | ||||||||||||
Losses realized and unrealized on currency derivatives | (23 | ) | (37 | ) | (21 | ) | ||||||
Realized deferred translation adjustments | — | 1 | — | |||||||||
Gains (Losses) on translation of monetary assets and liabilities | (4 | ) | (7 | ) | 9 | |||||||
(27 | ) | (43 | ) | (12 | ) | |||||||
Deferred translation adjustments* — beginning of year | 90 | (12 | ) | (141 | ) | |||||||
Effect of exchange rate changes | 30 | 103 | 129 | |||||||||
Gains realized | — | (1 | ) | — | ||||||||
Deferred translation adjustments — end of year | 120 | 90 | (12 | ) | ||||||||
* | Deferred translation adjustments are included in Accumulated other comprehensive income (loss). |
22. | FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS |
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Derivatives — Currency |
Outstanding at | |||||||||||
December 31 | |||||||||||
2004 | 2003 | ||||||||||
Fair | Fair | ||||||||||
Value | Value | ||||||||||
Financial Instrument | Hedge | ||||||||||
Forward exchange contracts | Future firm net operating cash flows | ||||||||||
— third parties | (1 | ) | (4 | ) | |||||||
— related parties | (52 | ) | (26 | ) | |||||||
Cross currency interest swap (third parties) | To swap floating rate US$ third party borrowings to fixed rate KRW | (8 | ) | 2 |
Derivatives — Interest Rate |
Outstanding at | |||||||||
December 31 | |||||||||
2004 | 2003 | ||||||||
Fair | Fair | ||||||||
Value | Value | ||||||||
Financial Instrument | |||||||||
Rate swap — floating to fixed (third parties) | |||||||||
— KRW floating to KRW fixed | (1 | ) | — |
Derivatives — Aluminum |
Outstanding at December 31 | |||||||||
2004 | 2003 | ||||||||
Financial Instrument | |||||||||
Forward contracts (related parties) | |||||||||
Maturing principally in years | 2005 to 2006 | 2004 to 2005 | |||||||
Fair Value | 97 | 86 | |||||||
Call options purchased (related parties) | |||||||||
Maturing principally in years | 2005 | — | |||||||
Fair value | 26 | — | |||||||
Embedded derivatives | |||||||||
Maturing principally in years | 2005 | 2005 | |||||||
Fair value | (10 | ) | (49 | ) |
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Derivatives — Natural Gas |
2004 | 2003 | ||||||||
Financial Instrument | |||||||||
Swaps and options (third parties) | |||||||||
Maturing at various times through | 2005 | 2004 | |||||||
Fair value | (1 | ) | 1 |
Derivatives — Electricity |
2004 | 2003 | ||||||||
Financial Instrument | |||||||||
Fixed price contracts | |||||||||
Maturing at various times in years | 2016 | 2016 | |||||||
Fair value | 18 | 1 |
Counterparty risk |
Financial Instruments — Fair Value |
23. | SUPPLEMENTARY INFORMATION |
2004 | 2003 | 2002 | ||||||||||
Statement of income | ||||||||||||
Interest on long-term debt | 45 | 27 | 26 | |||||||||
Capitalized interest | (1 | ) | (1 | ) | — | |||||||
Statement of cash flows | ||||||||||||
Interest paid | 76 | 41 | 42 | |||||||||
Income taxes paid | 70 | 19 | 34 |
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2004 | 2003 | ||||||||
Balance sheet | |||||||||
Payables and accrued liabilities include the following: | |||||||||
Trade payables | 899 | 708 | |||||||
Other accrued liabilities | 279 | 286 | |||||||
Income and other taxes | 8 | 28 | |||||||
Accrued employment costs | 74 | 66 |
24. | POST-RETIREMENT BENEFITS |
Allocation in | ||||||||||||
Target | Aggregate at | |||||||||||
Category of Asset | Allocation | December 31 | ||||||||||
2004 | 2003 | |||||||||||
Equity | 40% to 65% | 55 | % | 46 | % | |||||||
Debt securities | 30% to 55% | 39 | % | 51 | % | |||||||
Real estate | — | — | ||||||||||
Other | 6 | % | 3 | % |
Pension Benefits | Other Benefits | ||||||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||||||
Change in benefit obligation | |||||||||||||||||
Benefit obligation at January 1 | 256 | 115 | 79 | 69 | |||||||||||||
Service cost | 15 | 6 | 4 | 2 | |||||||||||||
Interest cost | 29 | 12 | 6 | 4 | |||||||||||||
Members’ contributions | 1 | — | — | — | |||||||||||||
Benefits paid | (23 | ) | (11 | ) | (8 | ) | (6 | ) | |||||||||
Amendments | — | 1 | — | — | |||||||||||||
Acquisitions/reorganization | 251 | 88 | 22 | — | |||||||||||||
Curtailments/divestitures | (43 | ) | — | — | — | ||||||||||||
Actuarial (gains) losses | 32 | 28 | 12 | 10 | |||||||||||||
Currency losses | 32 | 17 | — | — | |||||||||||||
Benefit obligation measured at December 31 | 550 | 256 | 115 | 79 | |||||||||||||
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Pension Benefits | Other Benefits | ||||||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||||||
Benefit obligation of funded pension plans | 398 | 124 | N/A | N/A | |||||||||||||
Benefit obligation of unfunded pension plans | 152 | 132 | N/A | N/A | |||||||||||||
Benefit obligation measured at December 31 | 550 | 256 | 115 | 79 | |||||||||||||
Change in market value of plan assets | |||||||||||||||||
Assets at January 1 | 114 | 25 | — | — | |||||||||||||
Actual return on assets | 17 | 24 | — | — | |||||||||||||
Members’ contributions | 1 | — | — | — | |||||||||||||
Benefits paid from funded plans | (14 | ) | (7 | ) | — | — | |||||||||||
Company contributions | 23 | 4 | — | — | |||||||||||||
Acquisitions/reorganization | 177 | 68 | — | — | |||||||||||||
Curtailments/divestitures | (39 | ) | — | — | — | ||||||||||||
Currency gains | 11 | — | — | — | |||||||||||||
Assets at December 31 | 290 | 114 | — | — | |||||||||||||
Assets less than benefit obligation of funded pension plans | (108 | ) | (10 | ) | N/A | N/A | |||||||||||
Benefit obligation of unfunded pension plans | (152 | ) | (132 | ) | N/A | N/A | |||||||||||
Assets less than benefit obligation | (260 | ) | (142 | ) | (115 | ) | (79 | ) | |||||||||
Unamortized | |||||||||||||||||
— actuarial (gains)/losses | 84 | (8 | ) | 26 | 10 | ||||||||||||
— prior service cost | 15 | 16 | (1 | ) | (1 | ) | |||||||||||
Minimum pension liability | (54 | ) | (12 | ) | — | — | |||||||||||
Intangible assets | 9 | 4 | — | — | |||||||||||||
Net liability in balance sheet | (206 | ) | (142 | ) | (90 | ) | (70 | ) | |||||||||
Net liability in balance sheet for funded pension plans | (89 | ) | (26 | ) | N/A | N/A | |||||||||||
Net liability in balance sheet for unfunded pension plans | (117 | ) | (116 | ) | N/A | N/A | |||||||||||
Net liability in balance sheet | (206 | ) | (142 | ) | (90 | ) | (70 | ) | |||||||||
Deferred charges and other assets | 8 | 2 | — | — | |||||||||||||
Intangible assets | 9 | 4 | — | — | |||||||||||||
Payables and accrued liabilities | (29 | ) | (7 | ) | — | — | |||||||||||
Deferred credits and other liabilities | (194 | ) | (141 | ) | (90 | ) | (70 | ) | |||||||||
Net liability in balance sheet | (206 | ) | (142 | ) | (90 | ) | (70 | ) | |||||||||
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Pension Benefits | Other Benefits | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
Components of net periodic benefit cost | |||||||||||||||||||||||||
Service cost | 27 | 21 | 25 | 4 | 2 | 2 | |||||||||||||||||||
Interest cost | 37 | 33 | 37 | 6 | 5 | 4 | |||||||||||||||||||
Expected return on assets | (28 | ) | (28 | ) | (40 | ) | — | — | — | ||||||||||||||||
Amortization | |||||||||||||||||||||||||
— actuarial (gains) losses | 4 | 3 | (3 | ) | 1 | — | — | ||||||||||||||||||
— prior service cost | 4 | 5 | 6 | — | — | — | |||||||||||||||||||
Curtailment/settlement losses | (19 | ) | 7 | — | — | — | — | ||||||||||||||||||
Net periodic benefit cost | 25 | 41 | 25 | 11 | 7 | 6 | |||||||||||||||||||
Weighted average assumptions used to determine benefit obligations at December 31 | |||||||||||||||||||||||||
Discount rate | 5.4 | % | 5.8 | % | 5.6 | % | 5.8 | % | 6.2 | % | 6.5 | % | |||||||||||||
Average compensation growth | 3.6 | % | 3.3 | % | 3.0 | % | 4.0 | % | 3.7 | % | 3.9 | % | |||||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||||||||||
Discount rate | 5.8 | % | 6.2 | % | 5.6 | % | 6.2 | % | 6.5 | % | 7.0 | % | |||||||||||||
Average compensation growth | 3.3 | % | 3.0 | % | 3.0 | % | 3.7 | % | 3.9 | % | 5.0 | % | |||||||||||||
Expected return on plan assets | 8.3 | % | 8.0 | % | 5.0 | % | — | — | — |
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Other Benefits | ||||||||
1% Increase | 1% Decrease | |||||||
Sensitivity Analysis | ||||||||
Effect on service and interest costs | 1 | (1 | ) | |||||
Effect on benefit obligation | 11 | (10 | ) |
25. | INFORMATION BY GEOGRAPHIC AREAS |
Location | 2004 | 2003 | 2002 | |||||||||||||
Sales and operating revenues — third | Canada | 182 | 212 | 145 | ||||||||||||
and related parties (by origin) | United States | 2,795 | 2,174 | 2,373 | ||||||||||||
Brazil | 515 | 408 | 373 | |||||||||||||
United Kingdom | 382 | 302 | 357 | |||||||||||||
Germany | 1,865 | 1,705 | 1,409 | |||||||||||||
Other Europe | 822 | 503 | 451 | |||||||||||||
Asia and Other Pacific | 1,194 | 917 | 785 | |||||||||||||
Total | 7,755 | 6,221 | 5,893 | |||||||||||||
Location | 2004 | 2003 | ||||||||||||||
Property, plant and equipment, | Canada | 112 | 116 | |||||||||||||
Intangible assets and Goodwill at | United States | 438 | 454 | |||||||||||||
December 31(*) | Brazil | 544 | 568 | |||||||||||||
United Kingdom | 167 | 162 | ||||||||||||||
Germany | 275 | 267 | ||||||||||||||
Other Europe | 481 | 317 | ||||||||||||||
Asia and Other Pacific | 622 | 630 | ||||||||||||||
Total | 2,639 | 2,514 | ||||||||||||||
(*) | The allocation of the purchase price for Pechiney by geographic area was completed in 2004. |
26. | INFORMATION BY OPERATING SEGMENTS |
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a) BGP excluded restructuring costs related only to major corporate-wide acquisitions or initiatives whereas RI excludes all restructuring costs; | |
b) BGP included pension costs based on the normal current service cost with all actuarial gains, losses and other adjustments being included in Intersegment and other. RI includes all these pension costs in the applicable operating segment; and | |
c) BGP excluded certain corporate non-operating costs incurred by an operating segment and included such costs in Intersegment and other. Under the current management structure, these costs remain in the operating segment. |
Novelis North America |
Novelis Europe |
Novelis Asia |
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Novelis South America |
Corporate |
Intersegment | Third and Related Parties | |||||||||||||||||||||||
Sales and Operating Revenues | 2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||
Novelis North America | 8 | 40 | 9 | 2,964 | 2,385 | 2,517 | ||||||||||||||||||
Novelis Europe | 30 | 23 | 40 | 3,081 | 2,510 | 2,218 | ||||||||||||||||||
Novelis Asia | 9 | 13 | 11 | 1,194 | 918 | 785 | ||||||||||||||||||
Novelis South America | 57 | 23 | 13 | 525 | 414 | 379 | ||||||||||||||||||
Adjustments for equity-accounted joint ventures | — | — | — | (9 | ) | (7 | ) | (7 | ) | |||||||||||||||
Other | (104 | ) | (99 | ) | (73 | ) | — | 1 | 1 | |||||||||||||||
— | — | — | 7,755 | 6,221 | 5,893 | |||||||||||||||||||
Regional Income | 2004 | 2003 | 2002 | |||||||||
Novelis North America | 240 | 176 | 218 | |||||||||
Novelis Europe | 200 | 175 | 127 | |||||||||
Novelis Asia | 80 | 69 | 41 | |||||||||
Novelis South America | 134 | 88 | 86 | |||||||||
Total Regional Income | 654 | 508 | 472 | |||||||||
Corporate office costs | (49 | ) | (36 | ) | (31 | ) | ||||||
Adjustments for equity-accounted joint ventures | (48 | ) | (42 | ) | (36 | ) | ||||||
Adjustments for mark-to-market of derivatives | 77 | 20 | 9 | |||||||||
Restructuring, rationalization and impairment costs | (89 | ) | 16 | (25 | ) | |||||||
Depreciation and amortization | (246 | ) | (222 | ) | (211 | ) | ||||||
Interest | (74 | ) | (40 | ) | (42 | ) | ||||||
Income before income taxes and other items | 225 | 204 | 136 | |||||||||
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Total Assets At December 31, | 2004 | 2003 | ||||||
Novelis North America | 1,406 | 2,392 | ||||||
Novelis Europe | 2,885 | 2,364 | ||||||
Novelis Asia | 954 | 904 | ||||||
Novelis South America | 779 | 808 | ||||||
Adjustments for equity-accounted joint ventures | (60 | ) | (135 | ) | ||||
Other | (10 | ) | (17 | ) | ||||
5,954 | 6,316 | |||||||
Cash Paid for Capital | |||||||||||||||||||||||||
Depreciation and | Expenditures and | ||||||||||||||||||||||||
Amortization | Business Acquisitions | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
Novelis North America | 69 | 68 | 67 | 41 | 38 | 32 | |||||||||||||||||||
Novelis Europe | 115 | 87 | 75 | 84 | 97 | 81 | |||||||||||||||||||
Novelis Asia | 46 | 45 | 42 | 31 | 36 | * | 32 | ||||||||||||||||||
Novelis South America | 47 | 49 | 49 | 23 | 41 | 46 | |||||||||||||||||||
Adjustments for equity-accounted joint ventures | (37 | ) | (32 | ) | (26 | ) | (16 | ) | (14 | ) | (14 | ) | |||||||||||||
Other | 6 | 5 | 4 | 2 | 2 | 2 | |||||||||||||||||||
246 | 222 | 211 | 165 | 200 | 179 | ||||||||||||||||||||
* | Includes $11 of cash paid for business acquisitions. |
27. | SUBSEQUENT EVENTS |
Financing |
Stock Option Plans |
Executive Share Option Plan |
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Stock Price Appreciation Units |
Total Shareholder Return Performance Plan |
Shareholder Rights Plan |
Pension Benefits |
a) In the U.S., for Novelis employees previously participating in the Alcancorp Pension Plan and the Alcan Supplemental Executive Retirement Plan, Alcan agreed to recognize up to one year of additional service in its plan as long as such employee worked for Novelis and Novelis paid to Alcan the normal cost (in the case of the Alcancorp Pension Plan) and the current service cost (in the case of the Alcan Supplemental Executive Retirement Plan). | |
b) In the U.K., the sponsorship of the Alusuisse Holdings U.K. Ltd Pension Plan was transferred from Alcan to Novelis. No new plan was established. |
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28. | SUPPLEMENTAL GUARANTOR INFORMATION |
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Sales and operating revenues | |||||||||||||||||||||
— third parties | 182 | 5,137 | 1,986 | — | 7,305 | ||||||||||||||||
— related parties | 970 | 1,291 | 115 | (1,926 | ) | 450 | |||||||||||||||
1,152 | 6,428 | 2,101 | (1,926 | ) | 7,755 | ||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Cost of sales and operating expense, excluding depreciation and amortization noted below | |||||||||||||||||||||
— third parties | 135 | 4,471 | 1,847 | — | 6,453 | ||||||||||||||||
— related parties | 971 | 1,250 | 108 | (1,926 | ) | 403 | |||||||||||||||
Depreciation and amortization | 10 | 165 | 71 | — | 246 | ||||||||||||||||
Selling, general and administrative expenses | 44 | 167 | 57 | — | 268 | ||||||||||||||||
Research and development expenses | |||||||||||||||||||||
— third parties | — | 20 | — | — | 20 | ||||||||||||||||
— related parties | — | 38 | — | — | 38 | ||||||||||||||||
Interest | |||||||||||||||||||||
— third parties | — | 21 | 20 | — | 41 | ||||||||||||||||
— related parties | — | 33 | — | — | 33 | ||||||||||||||||
Other expense (income) — net | |||||||||||||||||||||
— third parties | 5 | 6 | 73 | — | 84 | ||||||||||||||||
— related parties | 3 | (54 | ) | (5 | ) | — | (56 | ) | |||||||||||||
1,168 | 6,117 | 2,171 | (1,926 | ) | 7,530 | ||||||||||||||||
Income (loss) before income taxes and other items | (16 | ) | 311 | (70 | ) | — | 225 | ||||||||||||||
Income taxes | 11 | 153 | 2 | — | 166 | ||||||||||||||||
Income (loss) before other items | (27 | ) | 158 | (72 | ) | — | 59 | ||||||||||||||
Equity income | 82 | 6 | — | (82 | ) | 6 | |||||||||||||||
Minority interests | — | — | (10 | ) | — | (10 | ) | ||||||||||||||
Net income (loss) | 55 | 164 | (82 | ) | (82 | ) | 55 | ||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Sales and operating revenues | |||||||||||||||||||||
— third parties | 212 | 4,320 | 1,217 | — | 5,749 | ||||||||||||||||
— related parties | 707 | 1,179 | 36 | (1,450 | ) | 472 | |||||||||||||||
919 | 5,499 | 1,253 | (1,450 | ) | 6,221 | ||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Cost of sales and operating expense, excluding depreciation and amortization noted below | |||||||||||||||||||||
— third parties | 169 | 3,761 | 1,116 | — | 5,046 | ||||||||||||||||
— related parties | 709 | 1,138 | 39 | (1,450 | ) | 436 | |||||||||||||||
Depreciation and amortization | 10 | 158 | 54 | — | 222 | ||||||||||||||||
Selling, general and administrative expenses | 55 | 114 | 42 | — | 211 | ||||||||||||||||
Research and development expenses | |||||||||||||||||||||
— third parties | — | 18 | — | — | 18 | ||||||||||||||||
— related parties | — | 44 | — | — | 44 | ||||||||||||||||
Interest | |||||||||||||||||||||
— third parties | — | 5 | 16 | — | 21 | ||||||||||||||||
— related parties | — | 17 | 2 | — | 19 | ||||||||||||||||
Other expense (income) — net | |||||||||||||||||||||
— third parties | 11 | 111 | (38 | ) | — | 84 | |||||||||||||||
— related parties | (20 | ) | (66 | ) | 2 | — | (84 | ) | |||||||||||||
934 | 5,300 | 1,233 | (1,450 | ) | 6,017 | ||||||||||||||||
Income (loss) before income taxes and other items | (15 | ) | 199 | 20 | — | 204 | |||||||||||||||
Income taxes (benefit) | (7 | ) | 66 | (9 | ) | — | 50 | ||||||||||||||
Income (loss) before other items | (8 | ) | 133 | 29 | — | 154 | |||||||||||||||
Equity income | 165 | 6 | — | (165 | ) | 6 | |||||||||||||||
Minority interests | — | — | (3 | ) | — | (3 | ) | ||||||||||||||
Net income | 157 | 139 | 26 | (165 | ) | 157 | |||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Sales and operating revenues | |||||||||||||||||||||
— third parties | 145 | 4,295 | 1,016 | — | 5,456 | ||||||||||||||||
— related parties | 705 | 1,047 | 82 | (1,397 | ) | 437 | |||||||||||||||
850 | 5,342 | 1,098 | (1,397 | ) | 5,893 | ||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Cost of sales and operating expense, excluding depreciation and amortization noted below | |||||||||||||||||||||
— third parties | 111 | 3,752 | 934 | — | 4,797 | ||||||||||||||||
— related parties | 706 | 1,018 | 84 | (1,397 | ) | 411 | |||||||||||||||
Depreciation and amortization | 10 | 148 | 53 | — | 211 | ||||||||||||||||
Selling, general and administrative expenses | 35 | 113 | 35 | — | 183 | ||||||||||||||||
Research and development expenses | |||||||||||||||||||||
— third parties | — | 18 | — | — | 18 | ||||||||||||||||
— related parties | — | 49 | — | — | 49 | ||||||||||||||||
Interest | |||||||||||||||||||||
— third parties | — | 4 | 16 | — | 20 | ||||||||||||||||
— related parties | — | 21 | 1 | — | 22 | ||||||||||||||||
Other expense (income) — net | |||||||||||||||||||||
— third parties | 1 | (1 | ) | 24 | — | 24 | |||||||||||||||
— related parties | 1 | 13 | 8 | — | 22 | ||||||||||||||||
864 | 5,135 | 1,155 | (1,397 | ) | 5,757 | ||||||||||||||||
Income (loss) before income taxes and other items | (14 | ) | 207 | (57 | ) | — | 136 | ||||||||||||||
Income taxes (benefit) | (7 | ) | 80 | 4 | — | 77 | |||||||||||||||
Income (loss) before other items | (7 | ) | 127 | (61 | ) | — | 59 | ||||||||||||||
Equity income (loss) | (2 | ) | 8 | — | 2 | 8 | |||||||||||||||
Minority interests | — | — | 8 | — | 8 | ||||||||||||||||
Income (loss) before cumulative effect of accounting change | (9 | ) | 135 | (53 | ) | 2 | 75 | ||||||||||||||
Cumulative effect of accounting change | — | (84 | ) | — | — | (84 | ) | ||||||||||||||
Net income (loss) | (9 | ) | 51 | (53 | ) | 2 | (9 | ) | |||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Current assets | |||||||||||||||||||||
Cash and time deposits | — | 12 | 19 | — | 31 | ||||||||||||||||
Trade receivables | |||||||||||||||||||||
— third parties | 1 | 399 | 310 | — | 710 | ||||||||||||||||
— related parties | 84 | 156 | 7 | (160 | ) | 87 | |||||||||||||||
Other receivables | |||||||||||||||||||||
— third parties | 2 | 70 | 46 | — | 118 | ||||||||||||||||
— related parties | 45 | 849 | 30 | (78 | ) | 846 | |||||||||||||||
Inventories | |||||||||||||||||||||
Aluminum | 44 | 705 | 332 | — | 1,081 | ||||||||||||||||
Raw materials | — | 18 | 2 | — | 20 | ||||||||||||||||
Other supplies | 6 | 78 | 41 | — | 125 | ||||||||||||||||
50 | 801 | 375 | — | 1,226 | |||||||||||||||||
Total current assets | 182 | 2,287 | 787 | (238 | ) | 3,018 | |||||||||||||||
Deferred charges and other assets | — | 32 | 39 | — | 71 | ||||||||||||||||
Investments | 1,242 | 168 | — | (1,288 | ) | 122 | |||||||||||||||
Long-term receivables from related parties | 210 | 104 | — | (210 | ) | 104 | |||||||||||||||
Property, plant and equipment | |||||||||||||||||||||
Cost | 273 | 3,883 | 1,350 | — | 5,506 | ||||||||||||||||
Construction work in progress | 6 | 76 | 30 | — | 112 | ||||||||||||||||
Accumulated depreciation | (167 | ) | (2,554 | ) | (549 | ) | — | (3,270 | ) | ||||||||||||
112 | 1,405 | 831 | — | 2,348 | |||||||||||||||||
Intangible assets | — | 31 | 4 | — | 35 | ||||||||||||||||
Goodwill | — | 28 | 228 | — | 256 | ||||||||||||||||
Total assets | 1,746 | 4,055 | 1,889 | (1,736 | ) | 5,954 | |||||||||||||||
LIABILITIES AND INVESTED EQUITY | |||||||||||||||||||||
Current liabilities | |||||||||||||||||||||
Payables and accrued liabilities | |||||||||||||||||||||
— third parties | 22 | 378 | 459 | — | 859 | ||||||||||||||||
— related parties | 79 | 429 | 60 | (167 | ) | 401 | |||||||||||||||
Short-term borrowings | |||||||||||||||||||||
— third parties | — | 122 | 107 | — | 229 | ||||||||||||||||
— related parties | — | 231 | 152 | (71 | ) | 312 | |||||||||||||||
Debt maturing within one year | |||||||||||||||||||||
— third parties | — | — | 1 | — | 1 | ||||||||||||||||
— related parties | 290 | — | — | — | 290 | ||||||||||||||||
Total current liabilities | 391 | 1,160 | 779 | (238 | ) | 2,092 | |||||||||||||||
Debt not maturing within one year | |||||||||||||||||||||
— third parties | — | — | 139 | — | 139 | ||||||||||||||||
— related parties | 749 | 1,751 | 17 | (210 | ) | 2,307 | |||||||||||||||
Deferred credits and other liabilities | 8 | 373 | 91 | — | 472 | ||||||||||||||||
Deferred income taxes | 43 | 183 | 23 | — | 249 | ||||||||||||||||
Minority interests | — | — | 140 | — | 140 | ||||||||||||||||
Invested equity | |||||||||||||||||||||
Owner’s net investment | 467 | 529 | 671 | (1,200 | ) | 467 | |||||||||||||||
Accumulated other comprehensive income | 88 | 59 | 29 | (88 | ) | 88 | |||||||||||||||
555 | 588 | 700 | (1,288 | ) | 555 | ||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||
Total liabilities and invested equity | 1,746 | 4,055 | 1,889 | (1,736 | ) | 5,954 | |||||||||||||||
F-51
Table of Contents
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Current assets | |||||||||||||||||||||
Cash and time deposits | — | 8 | 19 | — | 27 | ||||||||||||||||
Trade receivables | |||||||||||||||||||||
— third parties | — | 263 | 295 | — | 558 | ||||||||||||||||
— related parties | 59 | 228 | 7 | (131 | ) | 163 | |||||||||||||||
Other receivables | |||||||||||||||||||||
— third parties | 1 | 64 | 32 | — | 97 | ||||||||||||||||
— related parties | 21 | 1,202 | 31 | (87 | ) | 1,167 | |||||||||||||||
Inventories | |||||||||||||||||||||
Aluminum | 31 | 558 | 278 | — | 867 | ||||||||||||||||
Raw materials | — | 13 | 1 | — | 14 | ||||||||||||||||
Other supplies | 5 | 82 | 12 | — | 99 | ||||||||||||||||
36 | 653 | 291 | — | 980 | |||||||||||||||||
Total current assets | 117 | 2,418 | 675 | (218 | ) | 2,992 | |||||||||||||||
Deferred charges and other assets | — | 85 | 2 | — | 87 | ||||||||||||||||
Investments | 1,844 | 154 | — | (1,889 | ) | 109 | |||||||||||||||
Long-term receivables from related parties | — | 614 | — | — | 614 | ||||||||||||||||
Property, plant and equipment | |||||||||||||||||||||
Cost | 270 | 3,776 | 1,172 | — | 5,218 | ||||||||||||||||
Construction work in progress | 5 | 66 | 58 | — | 129 | ||||||||||||||||
Accumulated depreciation | (159 | ) | (2,397 | ) | (372 | ) | — | (2,928 | ) | ||||||||||||
116 | 1,445 | 858 | — | 2,419 | |||||||||||||||||
Intangible assets | — | 26 | — | — | 26 | ||||||||||||||||
Goodwill | — | 24 | 45 | — | 69 | ||||||||||||||||
Total assets | 2,077 | 4,766 | 1,580 | (2,107 | ) | 6,316 | |||||||||||||||
LIABILITIES AND INVESTED EQUITY | |||||||||||||||||||||
Current liabilities | |||||||||||||||||||||
Payables and accrued liabilities | |||||||||||||||||||||
— third parties | 19 | 404 | 379 | — | 802 | ||||||||||||||||
— related parties | 58 | 328 | 31 | (131 | ) | 286 | |||||||||||||||
Short-term borrowings | |||||||||||||||||||||
— third parties | — | 670 | 230 | — | 900 | ||||||||||||||||
— related parties | — | 64 | 87 | (87 | ) | 64 | |||||||||||||||
Debt maturing within one year | |||||||||||||||||||||
— third parties | — | 80 | 52 | — | 132 | ||||||||||||||||
— related parties | — | 10 | — | — | 10 | ||||||||||||||||
Total current liabilities | 77 | 1,556 | 779 | (218 | ) | 2,194 | |||||||||||||||
Debt not maturing within one year | |||||||||||||||||||||
— third parties | — | 500 | 6 | — | 506 | ||||||||||||||||
— related parties | — | 989 | 22 | — | 1,011 | ||||||||||||||||
Deferred credits and other liabilities | 5 | 323 | 34 | — | 362 | ||||||||||||||||
Deferred income taxes | 21 | 113 | 18 | — | 152 | ||||||||||||||||
Minority interests | — | — | 117 | — | 117 | ||||||||||||||||
Invested equity | |||||||||||||||||||||
Owner’s net investment | 1,890 | 1,149 | 656 | (1,805 | ) | 1,890 | |||||||||||||||
Accumulated other comprehensive income | 84 | 136 | (52 | ) | (84 | ) | 84 | ||||||||||||||
1,974 | 1,285 | 604 | (1,889 | ) | 1,974 | ||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||
Total liabilities and invested equity | 2,077 | 4,766 | 1,580 | (2,107 | ) | 6,316 | |||||||||||||||
F-52
Table of Contents
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Cash from (used for) Operating Activities | (60 | ) | 269 | 21 | (6 | ) | 224 | ||||||||||||||
Financing Activities | |||||||||||||||||||||
Proceeds from issuance of new debt | 1,039 | 1,173 | 134 | (210 | ) | 2,136 | |||||||||||||||
Debt repayments | — | (935 | ) | (63 | ) | — | (998 | ) | |||||||||||||
Short-term borrowings — net | |||||||||||||||||||||
— third parties | — | (614 | ) | (160 | ) | — | (774 | ) | |||||||||||||
— related parties | — | 166 | 78 | (23 | ) | 221 | |||||||||||||||
Issuance of preference shares | — | (32 | ) | 32 | — | — | |||||||||||||||
Dividends — minority interest | — | — | (10 | ) | 6 | (4 | ) | ||||||||||||||
Net payments from (to) Alcan | (714 | ) | (828 | ) | 30 | — | (1,512 | ) | |||||||||||||
Cash from (used for) financing activities | 325 | (1,070 | ) | 41 | (227 | ) | (931 | ) | |||||||||||||
Investment Activities | |||||||||||||||||||||
Purchase of property, plant and equipment | (6 | ) | (93 | ) | (66 | ) | — | (165 | ) | ||||||||||||
Business acquisitions, net of cash and time deposits acquired | — | 1 | (1 | ) | — | — | |||||||||||||||
Proceeds from disposal of businesses, investments and other assets, net of cash | — | 1 | — | — | 1 | ||||||||||||||||
Change in loans receivable — related parties | (259 | ) | 895 | 5 | 233 | 874 | |||||||||||||||
Cash from (used for) investment activities | (265 | ) | 804 | (62 | ) | 233 | 710 | ||||||||||||||
Effect of exchange rate changes on cash and time deposits | — | 1 | — | — | 1 | ||||||||||||||||
Increase in cash and time deposits | — | 4 | — | — | 4 | ||||||||||||||||
Cash and time deposits — beginning of year | — | 8 | 19 | — | 27 | ||||||||||||||||
Cash and time deposits — end of year | — | 12 | 19 | — | 31 | ||||||||||||||||
F-53
Table of Contents
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Cash from Operating Activities | 107 | 65 | 213 | 59 | 444 | ||||||||||||||||
Financing activities | |||||||||||||||||||||
Proceeds from issuance of new debt | — | 971 | — | — | 971 | ||||||||||||||||
Short-term borrowings — net | |||||||||||||||||||||
— third parties | — | 621 | (44 | ) | — | 577 | |||||||||||||||
— related parties | (77 | ) | 52 | 8 | (12 | ) | (29 | ) | |||||||||||||
Net payments to Alcan | (58 | ) | (359 | ) | (126 | ) | (49 | ) | (592 | ) | |||||||||||
Cash from (used for) financing activities | (135 | ) | 1,285 | (162 | ) | (61 | ) | 927 | |||||||||||||
Investment Activities | |||||||||||||||||||||
Purchase of property, plant and equipment | (7 | ) | (147 | ) | (35 | ) | — | (189 | ) | ||||||||||||
Business acquisitions, net of cash and time deposits acquired | — | 8 | (9 | ) | (10 | ) | (11 | ) | |||||||||||||
Proceeds from disposal of businesses, investments and other assets, net of cash | — | 8 | 25 | — | 33 | ||||||||||||||||
Change in loans receivable — related parties | 35 | (1,229 | ) | (28 | ) | 12 | (1,210 | ) | |||||||||||||
Cash from (used for) investment activities | 28 | (1,360 | ) | (47 | ) | 2 | (1,377 | ) | |||||||||||||
Effect of exchange rate changes on cash and time deposits | — | 2 | — | — | 2 | ||||||||||||||||
Increase (Decrease) in cash and time deposits | — | (8 | ) | 4 | — | (4 | ) | ||||||||||||||
Cash and time deposits — beginning of year | — | 16 | 15 | — | 31 | ||||||||||||||||
Cash and time deposits — end of year | — | 8 | 19 | — | 27 | ||||||||||||||||
F-54
Table of Contents
Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Cash from (used for) Operating Activities | (14 | ) | 212 | 212 | — | 410 | |||||||||||||||
Financing activities | |||||||||||||||||||||
Proceeds from issuance of new debt | — | 80 | 25 | — | 105 | ||||||||||||||||
Debt repayments | 40 | (41 | ) | (49 | ) | — | (50 | ) | |||||||||||||
Short-term borrowings — net | |||||||||||||||||||||
— third parties | — | (22 | ) | (53 | ) | — | (75 | ) | |||||||||||||
— related parties | 42 | (91 | ) | (17 | ) | — | (66 | ) | |||||||||||||
Dividends — minority interest | — | 2 | (4 | ) | — | (2 | ) | ||||||||||||||
Net payments to Alcan | (49 | ) | (9 | ) | (95 | ) | — | (153 | ) | ||||||||||||
Cash from (used for) financing activities | 33 | (81 | ) | (193 | ) | — | (241 | ) | |||||||||||||
Investment Activities | |||||||||||||||||||||
Purchase of property, plant and equipment | (5 | ) | (135 | ) | (39 | ) | — | (179 | ) | ||||||||||||
Proceeds from disposal of businesses, investments and other assets, net of cash | — | 5 | 19 | — | 24 | ||||||||||||||||
Change in loans receivable — related parties | (14 | ) | 9 | 3 | — | (2 | ) | ||||||||||||||
Cash from (used for) investment activities | (19 | ) | (121 | ) | (17 | ) | — | (157 | ) | ||||||||||||
Effect of exchange rate changes on cash and time deposits | — | 2 | — | — | 2 | ||||||||||||||||
Increase in cash and time deposits | — | 12 | 2 | — | 14 | ||||||||||||||||
Cash and time deposits — beginning of year | — | 4 | 13 | — | 17 | ||||||||||||||||
Cash and time deposits — end of year | — | 16 | 15 | — | 31 | ||||||||||||||||
F-55
Table of Contents
2004 | First | Second | Third | Fourth | Year | ||||||||||||||||
Sales and operating revenues | 1,810 | 1,929 | 2,000 | 2,016 | 7,755 | ||||||||||||||||
Cost of sales and operating expenses | 1,585 | 1,690 | 1,757 | 1,824 | 6,856 | ||||||||||||||||
Depreciation and amortization | 61 | 57 | 60 | 68 | 246 | ||||||||||||||||
Income taxes | 43 | 23 | 45 | 55 | 166 | ||||||||||||||||
Other items: | |||||||||||||||||||||
SFAS No. 133 impact | (41 | ) | 26 | (22 | ) | (32 | ) | (69 | ) | ||||||||||||
Other | 93 | 88 | 126 | 194 | 501 | ||||||||||||||||
Net income (Loss) | 69 | 45 | 34 | (93 | ) | 55 | |||||||||||||||
Earnings (loss) per share: | |||||||||||||||||||||
Basic | 0.93 | 0.61 | 0.47 | (1.26 | ) | 0.74 | |||||||||||||||
Diluted | 0.92 | 0.61 | 0.46 | (1.26 | ) | 0.74 | |||||||||||||||
2003 | First | Second | Third | Fourth | Year | ||||||||||||||||
Sales and operating revenues | 1,519 | 1,634 | 1,532 | 1,536 | 6,221 | ||||||||||||||||
Cost of sales and operating expenses | 1,339 | 1,433 | 1,348 | 1,362 | 5,482 | ||||||||||||||||
Depreciation and amortization | 54 | 56 | 56 | 56 | 222 | ||||||||||||||||
Income taxes | 28 | 16 | 28 | (22 | ) | 50 | |||||||||||||||
Other items: | |||||||||||||||||||||
SFAS No. 133 impact | 9 | (10 | ) | (16 | ) | (3 | ) | (20 | ) | ||||||||||||
Other | 84 | 69 | 88 | 89 | 330 | ||||||||||||||||
Net income | 5 | 70 | 28 | 54 | 157 | ||||||||||||||||
Earnings per share: | |||||||||||||||||||||
Basic | 0.07 | 0.94 | 0.38 | 0.73 | 2.12 | ||||||||||||||||
Diluted | 0.07 | 0.93 | 0.38 | 0.72 | 2.11 | ||||||||||||||||
F-56
Table of Contents
F-58 | ||||
F-59 | ||||
F-61 | ||||
F-62 | ||||
F-63 |
F-57
Table of Contents
Six Months Ended June 30 | 2005 | 2004 | |||||||
Sales and operating revenues | |||||||||
— third parties | 4,291 | 3,523 | |||||||
— related parties (NOTE 7) | — | 216 | |||||||
4,291 | 3,739 | ||||||||
Costs and expenses | |||||||||
Cost of sales and operating expenses, excluding depreciation and amortization noted below | |||||||||
— third parties | 3,852 | 3,083 | |||||||
— related parties (NOTE 7) | — | 192 | |||||||
Depreciation and amortization | 115 | 118 | |||||||
Selling, administrative and general expenses | 152 | 110 | |||||||
Research and development expenses | 19 | 10 | |||||||
Research and development expenses — related parties (NOTE 7) | — | 18 | |||||||
Interest | |||||||||
— third parties | 94 | 21 | |||||||
— related parties (NOTE 7) | — | 17 | |||||||
Other expenses (income) — net (NOTE 9) | |||||||||
— third parties | (3 | ) | 8 | ||||||
— related parties (NOTE 7) | — | (22 | ) | ||||||
4,229 | 3,555 | ||||||||
Income before income taxes and other items | 62 | 184 | |||||||
Income taxes (NOTE 6) | 44 | 66 | |||||||
Income (loss) before other items | 18 | 118 | |||||||
Equity income | 4 | 3 | |||||||
Minority interests | (11 | ) | (7 | ) | |||||
Net income | 11 | 114 | |||||||
Earnings per share(NOTE 4) | |||||||||
Net income per share — basic | 0.15 | 1.54 | |||||||
Net income per share — diluted | 0.15 | 1.53 | |||||||
Dividends per common share | 0.18 | — | |||||||
Supplemental information(NOTE 1) | |||||||||
Net income attributable to consolidated results of Novelis from January 6 to June 30, 2005 — increase (decrease) to Retained earnings | 41 | ||||||||
Net loss attributable to combined results of Novelis from January 1 to January 5, 2005 — decrease to Owner’s net investment | (30 | ) | |||||||
Net income | 11 | ||||||||
F-58
Table of Contents
June 30, | December 31, | ||||||||
As at | 2005 | 2004 | |||||||
(unaudited) | (audited) | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | 129 | 31 | |||||||
Trade receivables (net of allowances of $32 in 2005 and $33 in 2004) | |||||||||
— third parties (NOTE 8) | 1,030 | 710 | |||||||
— related parties (NOTES 7 and 8) | — | 87 | |||||||
Other receivables | |||||||||
— third parties | 249 | 118 | |||||||
— related parties (NOTE 7) | 35 | 846 | |||||||
Inventories | |||||||||
Aluminum | 962 | 1,081 | |||||||
Raw materials | 18 | 20 | |||||||
Other supplies | 142 | 125 | |||||||
1,122 | 1,226 | ||||||||
Total current assets | 2,565 | 3,018 | |||||||
Deferred charges and other assets | 235 | 193 | |||||||
Long-term receivables from related parties (NOTE 7) | 82 | 104 | |||||||
Property, plant and equipment | |||||||||
Cost (excluding Construction work in progress) | 5,282 | 5,506 | |||||||
Construction work in progress | 117 | 112 | |||||||
Accumulated depreciation | (3,218 | ) | (3,270 | ) | |||||
2,181 | 2,348 | ||||||||
Intangible assets (net of accumulated amortization of $10 in 2005 and $9 in 2004) | 30 | 35 | |||||||
Goodwill | 248 | 256 | |||||||
Total assets | 5,341 | 5,954 | |||||||
F-59
Table of Contents
June 30, | December 31, | ||||||||
As at | 2005 | 2004 | |||||||
(unaudited) | (audited) | ||||||||
LIABILITIES AND SHAREHOLDERS’/ INVESTED EQUITY | |||||||||
Current liabilities | |||||||||
Payables and accrued liabilities | |||||||||
— third parties | 1,302 | 859 | |||||||
— related parties (NOTE 7) | 37 | 401 | |||||||
Short-term borrowings | |||||||||
— third parties | 23 | 229 | |||||||
— related parties (NOTE 7) | — | 312 | |||||||
Debt maturing within one year (NOTE 10) | |||||||||
— third parties | 3 | 1 | |||||||
— related parties (NOTE 7) | — | 290 | |||||||
Total current liabilities | 1,365 | 2,092 | |||||||
Debt not maturing within one year (NOTE 10) | |||||||||
— third parties | 2,757 | 139 | |||||||
— related parties (NOTE 7) | — | 2,307 | |||||||
Deferred credits and other liabilities | 486 | 472 | |||||||
Deferred income taxes | 198 | 249 | |||||||
Minority interests | 144 | 140 | |||||||
Shareholders’/ Invested equity | |||||||||
Common shares, no par value — unlimited number of shares authorized; issued and outstanding: 73,993,006 shares (NOTE 11) | — | — | |||||||
Additional paid-in capital | 434 | — | |||||||
Retained earnings | 27 | — | |||||||
Accumulated other comprehensive income (loss) | (70 | ) | 88 | ||||||
Owner’s net investment | — | 467 | |||||||
391 | 555 | ||||||||
Commitments and contingencies (NOTE 13) | |||||||||
Total liabilities and shareholders’/invested equity | 5,341 | 5,954 | |||||||
F-60
Table of Contents
Six Months Ended June 30 | 2005 | 2004 | |||||||||
OPERATING ACTIVITIES | |||||||||||
Net income | 11 | 114 | |||||||||
Adjustments to determine cash from operating activities: | |||||||||||
Depreciation and amortization | 115 | 118 | |||||||||
Deferred income taxes | (17 | ) | 15 | ||||||||
Equity income | (4 | ) | (3 | ) | |||||||
Stock option compensation | 1 | 1 | |||||||||
Change in operating working capital | |||||||||||
Change in receivables | |||||||||||
— third parties | 62 | (115 | ) | ||||||||
— related parties | — | (114 | ) | ||||||||
Change in inventories | 12 | (135 | ) | ||||||||
Change in payables and accrued liabilities | |||||||||||
— third parties | 131 | 141 | |||||||||
— related parties | (8 | ) | 125 | ||||||||
Change in deferred charges and other assets | 9 | (22 | ) | ||||||||
Change in deferred credits and other liabilities | (28 | ) | 2 | ||||||||
Other — net | 4 | (28 | ) | ||||||||
Cash from operating activities | 288 | 99 | |||||||||
FINANCING ACTIVITIES | |||||||||||
Proceeds from issuance of new debt — third parties | 2,750 | 441 | |||||||||
Debt repayments | |||||||||||
— third parties | (1,633 | ) | (28 | ) | |||||||
— related parties | (1,180 | ) | — | ||||||||
Short-term borrowings (repayments) — net | |||||||||||
— third parties | (468 | ) | (129 | ) | |||||||
— related parties | (74 | ) | 8 | ||||||||
Dividends — common shareholders | (14 | ) | — | ||||||||
Dividends — minority interests | (7 | ) | (3 | ) | |||||||
Net receipts from (payments to) Alcan | 104 | (17 | ) | ||||||||
Cash from (used for) financing activities | (522 | ) | 272 | ||||||||
INVESTING ACTIVITIES | |||||||||||
Purchases of property, plant and equipment | (56 | ) | (59 | ) | |||||||
Proceeds from disposal of businesses, investments and other assets, net of cash | 9 | — | |||||||||
Change in long-term and other receivables | |||||||||||
— third parties | 341 | (311 | ) | ||||||||
— related parties | 42 | — | |||||||||
Cash from (used for) investing activities | 336 | (370 | ) | ||||||||
Increase in cash and cash equivalents | 102 | 1 | |||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | (4 | ) | — | ||||||||
Cash and cash equivalents — beginning of period | 31 | 27 | |||||||||
Cash and cash equivalents — end of period | 129 | 28 | |||||||||
F-61
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Common Shares | Additional | Comprehensive | Owner’s | |||||||||||||||||||||||||
Paid-in | Retained | Income | Net | |||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | (Loss) | Investment | Total | ||||||||||||||||||||||
Balance at December 31, 2004 | — | — | — | — | 88 | 467 | 555 | |||||||||||||||||||||
Net income — six months ended June 30 | — | — | — | 41 | — | (30 | )(b) | 11 | ||||||||||||||||||||
Other comprehensive loss (NOTE 16) | — | — | — | — | (158 | ) | — | (158 | ) | |||||||||||||||||||
Dividends | — | — | — | (14 | ) | — | (7 | ) | (21 | ) | ||||||||||||||||||
Transfer from Alcan — net | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||
Issuance of common stock in connection with the distribution | 73,989 | — | 434 | (a) | — | — | (434 | ) | — | |||||||||||||||||||
Issuance of common stock in connection with stock plans | 4 | — | — | — | — | — | — | |||||||||||||||||||||
Balance at June 30, 2005 | 73,993 | — | 434 | 27 | (70 | ) | — | 391 | ||||||||||||||||||||
(a) | Represents the amount of Owner’s net investment after transfers from Alcan — net and the net loss from January 1 to January 5, 2005 as well as other post-transaction adjustments. | |
(b) | Refer to note 1 — Background and Basis of Presentation. | |
F-62
Table of Contents
1. | BACKGROUND AND BASIS OF PRESENTATION |
Background |
Post-transaction adjustments |
Agreements between Novelis and Alcan |
F-63
Table of Contents
Basis of presentation |
General Corporate Expenses |
F-64
Table of Contents
Pensions and Post-Retirement Benefits |
F-65
Table of Contents
Income Taxes |
Cash Management |
Interest Expense |
Derivatives |
Stock Options |
F-66
Table of Contents
Earnings Per Share |
2. | ACCOUNTING POLICIES |
Principles of Consolidation |
Debt Issuance Costs |
Dividend Policy |
Pensions and Post-Retirement Benefits |
F-67
Table of Contents
Recently Issued Accounting Standards |
Conditional Asset Retirement Obligations |
Share-Based Payment |
3. | ACCOUNTING CHANGES |
Stock Options and Other Stock-Based Compensation |
F-68
Table of Contents
Consolidation of Variable Interest Entities |
4. | EARNINGS PER SHARE |
Six months ended June 30 | 2005 | 2004 | |||||||
Numerator: | |||||||||
Net income | 11 | 114 | |||||||
Denominator (number of common shares in millions): | |||||||||
Weighted average number of outstanding shares | 73.99 | 73.99 | |||||||
Effect of dilutive stock options | 0.21 | 0.44 | |||||||
Adjusted number of outstanding shares | 74.20 | 74.43 | |||||||
Earnings per share — basic | 0.15 | 1.54 | |||||||
Earnings per share — diluted | 0.15 | 1.53 | |||||||
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5. | RESTRUCTURING PROGRAMS |
2005 Restructuring Activities |
2004 Restructuring Activities |
Pechiney |
Other 2004 restructuring activities |
2001 Restructuring Program |
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Asset | ||||||||||||||||
Severance | Impairment | |||||||||||||||
Costs | Provisions | Other | Total | |||||||||||||
Provision balance as at January 1, 2004 | 19 | — | 12 | 31 | ||||||||||||
2004: | ||||||||||||||||
Charges (recoveries) recorded in the statement of income | 7 | 8 | (1 | ) | 14 | |||||||||||
Liabilities recorded in the allocation of the Pechiney purchase price | 17 | — | 2 | 19 | ||||||||||||
Cash payments — net | (14 | ) | — | (5 | ) | (19 | ) | |||||||||
Non-cash charges (recoveries) | — | (8 | ) | 6 | (2 | ) | ||||||||||
Provision balance as at December 31, 2004 | 29 | — | 14 | 43 | ||||||||||||
Six Months Ended June 30, 2005: | ||||||||||||||||
Charges (recoveries) recorded in the statement of income | (3 | ) | — | 1 | (2 | ) | ||||||||||
Cash payments — net | (15 | ) | — | (4 | ) | (19 | ) | |||||||||
Provision balance as at June 30, 2005 | 11 | — | 11 | 22 | ||||||||||||
6. | INCOME TAXES |
Six months ended June 30 | 2005 | 2004 | ||||||
Current | 61 | 51 | ||||||
Deferred | (17 | ) | 15 | |||||
44 | 66 | |||||||
7. | RELATED PARTY TRANSACTIONS |
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Six months ended June 30 | 2005 | 2004 | ||||||
Sales and operating revenues(A) | ||||||||
Alcan | — | 216 | ||||||
Cost of sales and operating expenses(A) | ||||||||
Alcan | — | 192 | ||||||
Research and development expenses(B) | ||||||||
Alcan | — | 18 | ||||||
Interest(C) | ||||||||
Alcan | — | 17 | ||||||
Other expenses (income) — net | ||||||||
Service fee income(D) | — | (27 | ) | |||||
Service fee expense(E) | — | 19 | ||||||
Interest income(F) | — | (11 | ) | |||||
Derivatives(G) | — | (8 | ) | |||||
Other | —— | 6 | ||||||
Total other expenses (income) — net arising from transactions with Alcan | — | (21 | ) | |||||
Interest income from Aluminum Norf GmbH | — | (1 | ) | |||||
Total other expenses (income) — net arising from transactions with related parties | — | (22 | ) | |||||
Purchase of inventory/tolling services | ||||||||
Aluminum Norf GmbH | 102 | 96 | ||||||
Alcan(H) | — | 983 | ||||||
(A) | The Company sells inventory to Alcan and certain investees accounted for under the equity method in the ordinary course of business. In 2004, Alcan was considered a related party to Novelis. |
(B) | These expenses are comprised of an allocation of research and development expenses incurred by Alcan on behalf of the Company. In 2004, Alcan was considered a related party to Novelis. | |
(C) | As discussed further below and in note 10 — Debt Not Maturing Within One Year, the Company had various short-term and long-term debt payable to Alcan where interest was charged on both a fixed and a floating rate basis. | |
(D) | Service fee income relates to revenues generated through sales of research and development and other corporate services to Alcan. | |
(E) | Service fee expense relates to the purchase of corporate services from Alcan. | |
(F) | Interest income earned on outstanding advances and loans to Alcan. | |
(G) | Alcan was the counterparty to all of the Company’s metal derivatives and most of the Company’s currency derivatives. | |
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(H) | Alcan is the primary supplier of prime and sheet ingot to the Company. Refer to note 13 — Commitments and Contingencies. | |
June 30, | December 31, | |||||||
As at | 2005 | 2004 | ||||||
Trade receivables(A) | ||||||||
Alcan | — | 87 | ||||||
Other receivables | ||||||||
Alcan(B) | — | 801 | ||||||
Aluminium Norf GmbH(C) | 35 | 45 | ||||||
35 | 846 | |||||||
Long-term receivables | ||||||||
Alcan | — | 2 | ||||||
Aluminium Norf GmbH(C) | 82 | 102 | ||||||
82 | 104 | |||||||
Payables and accrued liabilities(A) | ||||||||
Alcan | — | 356 | ||||||
Aluminium Norf GmbH | 37 | 45 | ||||||
37 | 401 | |||||||
Short-term borrowings(D) | ||||||||
Alcan | — | 312 | ||||||
Debt maturing within one year(E) | ||||||||
Alcan | — | 290 | ||||||
Debt not maturing within one year(E) | ||||||||
Alcan | — | 2,307 | ||||||
(A) | The Company purchases from and sells inventory to Alcan and purchases services from an investee accounted for under the equity method, in the ordinary course of business. |
(B) | The balance at December 31, 2004 included various short-term floating rate notes totaling€ 266 million and $55 maturing within one year that were settled by Alcan in 2005 as part of the spin-off of Novelis. | |
(C) | Current and non-current portions of a loan to an investee accounted for under the equity method. | |
(D) | The balance at December 31, 2004 comprised loans due to Alcan in various currencies including€ 193 million and GBP 20 million that were repaid in 2005 as part of the spin-off of Novelis. | |
(E) | The Company had various loans payable to Alcan as at December 31, 2004 as described in note 10 — Debt Not Maturing Within One Year. | |
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8. | SALES AND FORFAITING OF RECEIVABLES |
9. | OTHER EXPENSES (INCOME) — NET |
Six months ended June 30 | 2005 | 2004 | ||||||
Restructuring costs (recoveries) — net | (2 | ) | 2 | |||||
Gain on disposals of fixed assets(1) | (11 | ) | (6 | ) | ||||
Interest income | (4 | ) | (13 | ) | ||||
Realized (gains) losses on monetization of cross-currency interest rate swaps | (45 | ) | — | |||||
Realized (gains) losses on derivatives(2) | (15 | ) | — | |||||
Exchange (gains) losses | 2 | 3 | ||||||
Unrealized (gains) losses on change in market value of derivatives and reclassifications(3) | 47 | (15 | ) | |||||
Service fee expense — net | — | 1 | ||||||
Bridge financing commitment fee | 13 | — | ||||||
Other expenses (income) | 12 | 14 | ||||||
(3 | ) | (14 | ) | |||||
(1) | Includes a gain on the sale of land in Asia of ($11) for the second quarter of 2005. |
(2) | Includes metal, natural gas and energy. |
(3) | Included within the $47 for the six months ended June 30, 2005, is $45 pre-tax ($30 after-tax) unrealized losses on the change in market value of derivative contracts, primarily with Alcan, for the period from January 1 to 5, 2005, as described in note 1 — Background and Basis of Presentation. |
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10. | DEBT NOT MATURING WITHIN ONE YEAR |
June 30, | December 31, | |||||||
As at | 2005 | 2004 | ||||||
DUE TO RELATED PARTIES | ||||||||
Total debt due to related parties(A) | — | 2,597 | ||||||
Debt maturing within one year included in current liabilities | — | (290 | ) | |||||
Debt not maturing within one year due to related parties | — | 2,307 | ||||||
DUE TO THIRD PARTIES | ||||||||
Novelis Inc. | ||||||||
Floating rate Term Loan B, due 2012(B)(C) | 411 | — | ||||||
7.25% Senior notes, due 2015(D) | 1,400 | — | ||||||
Novelis Corporation | ||||||||
Floating rate Term Loan B, due 2012(B)(C)(F) | 714 | — | ||||||
Novelis Switzerland S.A. | ||||||||
Capital lease obligation, due 2020 (CHF 62 million) | 48 | — | ||||||
Novelis Korea Limited(E) | ||||||||
Bank loan, due 2008 | 50 | — | ||||||
Bank loan, due 2007 | 70 | 70 | ||||||
Bank loan, due 2007 (Korean won (KRW) 40 billion) | 39 | 39 | ||||||
Bank loan, due 2007 (KRW 25 billion) | 24 | 24 | ||||||
Bank loans, due 2005/2011 (KRW 2 billion) | 2 | 2 | ||||||
Other | ||||||||
Bank loans, due 2005/2011(F) | 2 | 3 | ||||||
Other debt, due 2005/2010 | — | 2 | ||||||
2,760 | 140 | |||||||
Debt maturing within one year included in current liabilities | (3 | ) | (1 | ) | ||||
Debt not maturing within one year due to third parties | 2,757 | 139 | ||||||
(A) | All of the Company’s related party debt of $2,597 as at December 31, 2004 was payable to Alcan and was fully repaid in the first quarter of 2005. The related party debt was comprised of a combination of fixed and floating rate debt of $1,392 and fixed rate promissory notes (Alcan Notes) obtained in December 2004 of $1,205. The Alcan Notes comprised a major portion of the $1,375 bridge financing provided by Alcan to the Company as a result of the reorganization transactions described in note 1 — Background and Basis of Presentation. The remaining balance of the Alcan Notes of $170 was obtained in January 2005. The Alcan Notes were duly refinanced with the proceeds of the $1.4 billion 10-year Senior Notes issued in February 2005 (refer to (D) below). |
(B) | In connection with the reorganization transactions described in note 1 — Background and Basis of Presentation, the Company entered into senior secured credit facilities providing for aggregate borrowings of up to $1.8 billion. These facilities consist of a $1.3 billion seven-year senior secured Term Loan B facility, bearing interest at LIBOR plus 1.75%, all of which was borrowed on January 10, 2005, and a $500 five-year multi-currency revolving credit facility. The Term Loan B | |
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facility consists of an $825 Term Loan B in the U.S. and a $475 Term Loan B in Canada. The proceeds of the Term Loan B facility were used in connection with the reorganization transactions, the Company’s separation from Alcan and to pay related fees and expenses. Debt issuance costs incurred in relation to these facilities have been recorded in Deferred charges and other assets and are being amortized over the life of the related borrowing in Interest using the “effective interest amortization” method. | ||
(C) | The Company has entered into interest rate swaps to fix the interest rate on $310 of the variable rate Term Loan B debt at an effective weighted average interest rate of 5.5% for periods of up to three years. | |
(D) | On February 3, 2005, Novelis sold $1.4 billion aggregate principal amount of senior unsecured debt securities (Senior Notes). The Senior Notes, which were priced at par, bear interest at 7.25% and will mature on February 15, 2015. The net proceeds of the placement were used to repay the Alcan Notes. | |
(E) | In 2004, Novelis Korea Limited (Novelis Korea), formerly Alcan Taihan Aluminium Limited, entered into a $70 floating rate long-term loan which was subsequently swapped for a 4.55% fixed rate KRW 73 billion loan and into two long-term floating rate loans of KRW 40 billion and KRW 25 billion that were swapped for fixed rates of 4.80% and 4.45%, respectively. In 2005, interest on another loan for KRW 2 billion ranges from 3.00% to 4.43% (2004: 3.00% to 5.50%). In February 2005, Novelis Korea entered into a $50 floating rate long-term loan which was subsequently swapped for a 5.30% fixed rate KRW 51 billion loan. | |
(F) | Interest rates are a function of the lender’s prime commercial rates or LIBOR/ EURIBOR rates. | |
11. | COMMON SHARES |
Shareholder Rights Plan |
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12. | STOCK OPTIONS AND OTHER STOCK-BASED COMPENSATION |
Executive Share Option Plan |
2005 | 2004 | |||||||
Dividend yield(%) | 1.56 | 1.85 | ||||||
Expected volatility(%) | 30.30 | 27.87 | ||||||
Risk-free interest rate(%) | 3.73 | 4.56 | ||||||
Expected life (years) | 5.47 | 6.00 |
Compensation To Be Settled in Cash |
Stock Price Appreciation Unit Plan |
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Total Shareholder Return Performance Plan |
Non-Executive Directors Deferred Share Unit Plan |
Novelis Founders Performance Awards |
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Deferred Share Agreements |
Compensation Cost |
13. | COMMITMENTS AND CONTINGENCIES |
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• | the contributed businesses, liabilities or contracts; | |
• | liabilities or obligations associated with the contributed businesses, as defined in the separation agreement between Novelis and Alcan, or otherwise assumed by the Company pursuant to the separation agreement; and | |
• | any breach by the Company of the separation agreement or any of the ancillary agreements entered into with Alcan in connection with the separation. | |
14. | FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS |
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Financial Instruments — Fair Value |
15. | SUPPLEMENTARY INFORMATION |
Six months ended June 30 | 2005 | 2004 | |||||||
Statement of Income | |||||||||
Interest on long-term debt | 85 | 25 | |||||||
Capitalized interest | — | (1 | ) | ||||||
Statement of Cash Flows | |||||||||
Interest paid | 43 | 38 | |||||||
Income taxes paid | 38 | 36 | |||||||
June 30, | December 31, | ||||||||
As at | 2005 | 2004 | |||||||
Balance Sheet | |||||||||
Payables and accrued liabilities include the following: | |||||||||
Trade payables | 825 | 899 | |||||||
Accrued liabilities | 514 | 361 |
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16. | COMPREHENSIVE INCOME |
Six months ended June 30 | 2005 | 2004 | |||||||
Net income (loss) | 11 | 114 | |||||||
Other comprehensive income (loss): | |||||||||
Net change in deferred translation adjustments | (144 | ) | (44 | ) | |||||
Net change in minimum pension liability, net of taxes of ($8) for the six months ended June 30, 2005 (2004: nil) | (14 | ) | — | ||||||
Comprehensive income (loss) | (147 | ) | 70 | ||||||
June 30, | December 31, | |||||||
As at | 2005 | 2004 | ||||||
Deferred translation adjustments | (24 | ) | 120 | |||||
Minimum pension liability | (46 | ) | (32 | ) | ||||
Accumulated other comprehensive income (loss) | (70 | ) | 88 | |||||
17. | POST-RETIREMENT BENEFITS |
a) In the U.S., for Novelis employees previously participating in the Alcancorp Pension Plan and the Alcan Supplemental Executive Retirement Plan, Alcan agreed to recognize up to one year of additional service in its plan as long as such employee worked for Novelis and Novelis paid to Alcan the normal cost (in the case of the Alcancorp Pension Plan) and the current service cost (in the case of the Alcan Supplemental Executive Retirement Plan). | |
b) In the U.K., the sponsorship of the Alusuisse Holdings U.K. Ltd Pension Plan was transferred from Alcan to Novelis. No new plan was established. | |
c) In Switzerland, Novelis became a participating employer in the Alcan Swiss Pension Plans and Novelis employees are participating in these plans for up to one year (or longer with Alcan approval) provided Novelis makes the required pension contributions. | |
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Pension | Other | ||||||||||||||||
Benefits | Benefits | ||||||||||||||||
Six months ended June 30 | 2005 | 2004 | 2005 | 2004 | |||||||||||||
Service cost | 16 | 10 | 2 | 1 | |||||||||||||
Interest cost | 15 | 14 | 6 | 3 | |||||||||||||
Expected return on assets | (12 | ) | (12 | ) | — | — | |||||||||||
Amortization | |||||||||||||||||
— actuarial losses | 4 | 2 | — | — | |||||||||||||
— prior service cost | 2 | 2 | — | — | |||||||||||||
Curtailment/ settlement gains | — | (19 | ) | — | — | ||||||||||||
Net periodic benefit cost | 25 | (3 | ) | 8 | 4 | ||||||||||||
Employer Contributions |
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18. | INFORMATION BY OPERATING SEGMENTS |
a) BGP excluded restructuring costs related only to major corporate-wide acquisitions or initiatives whereas Regional Income excludes all restructuring costs; | |
b) BGP included pension costs based on the normal current service cost with all actuarial gains, losses and other adjustments being included in Intersegment and other. Regional Income includes all these pension costs in the applicable operating segment; and | |
c) BGP excluded certain corporate non-operating costs incurred by an operating segment and included such costs in Intersegment and other. Under the current management structure, these costs remain in the operating segment. | |
Novelis North America |
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Novelis Europe |
Novelis Asia |
Novelis South America |
Corporate |
Risk Concentration |
Six months ended June 30 | 2005 | 2004 | ||||||
Sales and operating revenues — intersegment | ||||||||
Novelis North America | 1 | 5 | ||||||
Novelis Europe | 28 | 13 | ||||||
Novelis Asia | 5 | 4 | ||||||
Novelis South America | 30 | 27 | ||||||
Adjustments for equity-accounted joint ventures | — | — | ||||||
Eliminations | (64 | ) | (49 | ) | ||||
— | — | |||||||
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Six months ended June 30 | 2005 | 2004 | ||||||
Sales and operating revenues | ||||||||
Novelis North America | 1,667 | 1,419 | ||||||
Novelis Europe | 1,640 | 1,523 | ||||||
Novelis Asia | 698 | 566 | ||||||
Novelis South America | 293 | 235 | ||||||
Adjustments for equity-accounted joint ventures | (7 | ) | (4 | ) | ||||
4,291 | 3,739 | |||||||
Six months ended June 30 | 2005 | 2004 | ||||||
Regional Income | ||||||||
Novelis North America | 91 | 141 | ||||||
Novelis Europe | 115 | 98 | ||||||
Novelis Asia | 59 | 43 | ||||||
Novelis South America | 57 | 72 | ||||||
Total Regional Income | 322 | 354 | ||||||
Corporate costs | 7 | (20 | ) | |||||
Impairment, restructuring and rationalization costs | 11 | 5 | ||||||
Adjustments for equity-accounted joint ventures | (22 | ) | (21 | ) | ||||
Adjustments for change in fair market value and reclassifications of derivatives | (47 | ) | 22 | |||||
Depreciation and amortization | (115 | ) | (118 | ) | ||||
Interest | (94 | ) | (38 | ) | ||||
Income before income taxes and other items | 62 | 184 | ||||||
19. | SUBSEQUENT EVENTS |
20. | SUPPLEMENTAL GUARANTOR INFORMATION |
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Sales and operating revenues | |||||||||||||||||||||
— third parties | 109 | 2,996 | 1,186 | — | 4,291 | ||||||||||||||||
— related parties | 518 | 532 | 70 | (1,120 | ) | — | |||||||||||||||
627 | 3,528 | 1,256 | (1,120 | ) | 4,291 | ||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Cost of sales and operating expense, excluding depreciation and amortization noted below | |||||||||||||||||||||
— third parties | 92 | 2,674 | 1,086 | — | 3,852 | ||||||||||||||||
— related parties | 518 | 532 | 70 | (1,120 | ) | — | |||||||||||||||
Depreciation and amortization | 5 | 80 | 30 | — | 115 | ||||||||||||||||
Selling, general and administrative expenses | 32 | 89 | 31 | — | 152 | ||||||||||||||||
Research and development expenses | 13 | 5 | 1 | — | 19 | ||||||||||||||||
Interest | |||||||||||||||||||||
— third parties | 58 | 29 | 7 | — | 94 | ||||||||||||||||
— related parties | — | 35 | 8 | (43 | ) | — | |||||||||||||||
Other expense (income) — net | |||||||||||||||||||||
— third parties | (30 | ) | 22 | 5 | — | (3 | ) | ||||||||||||||
— related parties | (36 | ) | (4 | ) | (3 | ) | 43 | — | |||||||||||||
652 | 3,462 | 1,235 | (1,120 | ) | 4,229 | ||||||||||||||||
Income (loss) before income taxes and other items | (25 | ) | 66 | 21 | — | 62 | |||||||||||||||
Income taxes(benefit) | (8 | ) | 50 | 2 | — | 44 | |||||||||||||||
Income (loss) before other items | (17 | ) | 16 | 19 | — | 18 | |||||||||||||||
Equity income (loss) | 28 | 4 | — | (28 | ) | 4 | |||||||||||||||
Minority interests | — | — | (11 | ) | — | (11 | ) | ||||||||||||||
Net Income (loss) | 11 | 20 | 8 | (28 | ) | 11 | |||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Sales and operating revenues | |||||||||||||||||||||
— third parties | 86 | 2,456 | 981 | — | 3,523 | ||||||||||||||||
— related parties | 453 | 652 | 10 | (899 | ) | 216 | |||||||||||||||
539 | 3,108 | 991 | (899 | ) | 3,739 | ||||||||||||||||
Costs and expenses | |||||||||||||||||||||
Cost of sales and operating expense, excluding depreciation and amortization noted below | |||||||||||||||||||||
— third parties | 60 | 2,116 | 907 | — | 3,083 | ||||||||||||||||
— related parties | 454 | 627 | 10 | (899 | ) | 192 | |||||||||||||||
Depreciation and amortization | 5 | 81 | 32 | — | 118 | ||||||||||||||||
Selling, general and administrative expenses | 41 | 45 | 24 | — | 110 | ||||||||||||||||
Research and development expenses | |||||||||||||||||||||
— third parties | — | 10 | — | — | 10 | ||||||||||||||||
— related parties | — | 18 | — | — | 18 | ||||||||||||||||
Interest | |||||||||||||||||||||
— third parties | — | 11 | 10 | — | 21 | ||||||||||||||||
— related parties | — | 17 | — | — | 17 | ||||||||||||||||
Other expense (income) — net | |||||||||||||||||||||
— third parties | 3 | 5 | — | — | 8 | ||||||||||||||||
— related parties | (47 | ) | 23 | 2 | — | (22 | ) | ||||||||||||||
516 | 2,953 | 985 | (899 | ) | 3,555 | ||||||||||||||||
Income before income taxes and other items | 23 | 155 | 6 | — | 184 | ||||||||||||||||
Income taxes (benefit) | (4 | ) | 68 | 2 | — | 66 | |||||||||||||||
Income before other items | 27 | 87 | 4 | — | 118 | ||||||||||||||||
Equity income | 87 | 3 | — | (87 | ) | 3 | |||||||||||||||
Minority interests | — | — | (7 | ) | — | (7 | ) | ||||||||||||||
Net Income (loss) | 114 | 90 | (3 | ) | (87 | ) | 114 | ||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of US$) | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Current assets | |||||||||||||||||||||
Cash and cash equivalents | 18 | 81 | 30 | — | 129 | ||||||||||||||||
Trade receivables | |||||||||||||||||||||
— third parties | 25 | 677 | 328 | — | 1,030 | ||||||||||||||||
— related parties | 90 | 128 | 5 | (223 | ) | — | |||||||||||||||
Other receivables | |||||||||||||||||||||
— third parties | 25 | 175 | 49 | — | 249 | ||||||||||||||||
— related parties | 255 | 141 | 118 | (479 | ) | 35 | |||||||||||||||
Inventories | |||||||||||||||||||||
Aluminum | 39 | 624 | 299 | — | 962 | ||||||||||||||||
Raw materials | — | 16 | 2 | — | 18 | ||||||||||||||||
Other supplies | 5 | 81 | 56 | — | 142 | ||||||||||||||||
44 | 721 | 357 | — | 1,122 | |||||||||||||||||
Total current assets | 457 | 1,923 | 887 | (702 | ) | 2,565 | |||||||||||||||
Deferred charges and other assets | 36 | 53 | 36 | — | 125 | ||||||||||||||||
Investments | 675 | 156 | — | (721 | ) | 110 | |||||||||||||||
Long-term receivables from related parties | 1,169 | 81 | 1 | (1,169 | ) | 82 | |||||||||||||||
Property, plant and equipment | |||||||||||||||||||||
Cost | 277 | 3,746 | 1,259 | — | 5,282 | ||||||||||||||||
Construction work in progress | 8 | 73 | 36 | — | 117 | ||||||||||||||||
Accumulated depreciation | (171 | ) | (2,525 | ) | (522 | ) | — | (3,218 | ) | ||||||||||||
114 | 1,294 | 773 | — | 2,181 | |||||||||||||||||
Intangible assets | — | 27 | 3 | — | 30 | ||||||||||||||||
Goodwill | — | 26 | 222 | — | 248 | ||||||||||||||||
Total assets | 2,451 | 3,560 | 1,922 | (2,592 | ) | 5,341 | |||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||
Current liabilities | |||||||||||||||||||||
Payables and accrued liabilities | |||||||||||||||||||||
— third parties | 108 | 709 | 485 | — | 1,302 | ||||||||||||||||
— related parties | 71 | 147 | 42 | (223 | ) | 37 | |||||||||||||||
Short-term borrowings | |||||||||||||||||||||
— third parties | — | 1 | 22 | — | 23 | ||||||||||||||||
— related parties | 40 | 376 | 63 | (479 | ) | — | |||||||||||||||
Debt maturing within one year | — | — | 3 | — | 3 | ||||||||||||||||
Total current liabilities | 219 | 1,233 | 615 | (702 | ) | 1,365 | |||||||||||||||
Debt not maturing within one year | |||||||||||||||||||||
— third parties | 1,811 | 760 | 186 | — | 2,757 | ||||||||||||||||
— related parties | — | 979 | 190 | (1,169 | ) | — | |||||||||||||||
Deferred credits and other liabilities | 16 | 376 | 94 | — | 486 | ||||||||||||||||
Deferred income taxes | 14 | 172 | 12 | — | 198 | ||||||||||||||||
Minority interests | — | — | 144 | — | 144 | ||||||||||||||||
Shareholders’ equity | |||||||||||||||||||||
Common shares | — | — | — | — | — | ||||||||||||||||
Additional paid-in capital | 434 | — | — | — | 434 | ||||||||||||||||
Retained earnings | 27 | 40 | 681 | (721 | ) | 27 | |||||||||||||||
Accumulated other comprehensive income (loss) | (70 | ) | — | — | — | (70 | ) | ||||||||||||||
391 | 40 | 681 | (721 | ) | 391 | ||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||
Total liabilities and shareholders’ equity | 2,451 | 3,560 | 1,922 | (2,592 | ) | 5,341 | |||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of US$) | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||
Current assets | |||||||||||||||||||||
Cash and cash equivalents | — | 12 | 19 | — | 31 | ||||||||||||||||
Trade receivables | |||||||||||||||||||||
— third parties | 1 | 399 | 310 | — | 710 | ||||||||||||||||
— related parties | 84 | 156 | 7 | (160 | ) | 87 | |||||||||||||||
Other receivables | |||||||||||||||||||||
— third parties | 2 | 70 | 46 | — | 118 | ||||||||||||||||
— related parties | 45 | 849 | 30 | (78 | ) | 846 | |||||||||||||||
Inventories | |||||||||||||||||||||
Aluminum | 44 | 705 | 332 | — | 1,081 | ||||||||||||||||
Raw materials | — | 18 | 2 | — | 20 | ||||||||||||||||
Other supplies | 6 | 78 | 41 | — | 125 | ||||||||||||||||
50 | 801 | 375 | — | 1,226 | |||||||||||||||||
Total current assets | 182 | 2,287 | 787 | (238 | ) | 3,018 | |||||||||||||||
Deferred charges and other assets | — | 32 | 39 | — | 71 | ||||||||||||||||
Investments | 1,242 | 168 | — | (1,288 | ) | 122 | |||||||||||||||
Long-term receivables from related parties | 210 | 104 | — | (210 | ) | 104 | |||||||||||||||
Property, plant and equipment | |||||||||||||||||||||
Cost | 273 | 3,883 | 1,350 | — | 5,506 | ||||||||||||||||
Construction work in progress | 6 | 76 | 30 | — | 112 | ||||||||||||||||
Accumulated depreciation | (167 | ) | (2,554 | ) | (549 | ) | — | (3,270 | ) | ||||||||||||
112 | 1,405 | 831 | — | 2,348 | |||||||||||||||||
Intangible assets | — | 31 | 4 | — | 35 | ||||||||||||||||
Goodwill | — | 28 | 228 | — | 256 | ||||||||||||||||
Total assets | 1,746 | 4,055 | 1,889 | (1,736 | ) | 5,954 | |||||||||||||||
LIABILITIES AND INVESTED EQUITY | |||||||||||||||||||||
Current liabilities | |||||||||||||||||||||
Payables and accrued liabilities | |||||||||||||||||||||
— third parties | 22 | 378 | 459 | — | 859 | ||||||||||||||||
— related parties | 79 | 429 | 60 | (167 | ) | 401 | |||||||||||||||
Short-term borrowings | |||||||||||||||||||||
— third parties | — | 122 | 107 | — | 229 | ||||||||||||||||
— related parties | — | 231 | 152 | (71 | ) | 312 | |||||||||||||||
Debt maturing within one year | |||||||||||||||||||||
— third parties | — | — | 1 | — | 1 | ||||||||||||||||
— related parties | 290 | — | — | — | 290 | ||||||||||||||||
Total current liabilities | 391 | 1,160 | 779 | (238 | ) | 2,092 | |||||||||||||||
Debt not maturing within one year | |||||||||||||||||||||
— third parties | — | — | 139 | — | 139 | ||||||||||||||||
— related parties | 749 | 1,751 | 17 | (210 | ) | 2,307 | |||||||||||||||
Deferred credits and other liabilities | 8 | 373 | 91 | — | 472 | ||||||||||||||||
Deferred income taxes | 43 | 183 | 23 | — | 249 | ||||||||||||||||
Minority interests | — | — | 140 | — | 140 | ||||||||||||||||
Invested equity | |||||||||||||||||||||
Owner’s net investment | 467 | 529 | 671 | (1,200 | ) | 467 | |||||||||||||||
Accumulated other comprehensive income | 88 | 59 | 29 | (88 | ) | 88 | |||||||||||||||
555 | 588 | 700 | (1,288 | ) | 555 | ||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||
Total liabilities and invested equity | 1,746 | 4,055 | 1,889 | (1,736 | ) | 5,954 | |||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Cash from (used for) operating activities | 638 | (192 | ) | (110 | ) | (48 | ) | 288 | |||||||||||||
Financing Activities | |||||||||||||||||||||
Proceeds from issuance of new debt | 1,875 | 2,000 | 379 | (1,504 | ) | 2,750 | |||||||||||||||
Debt repayments | (1,276 | ) | (1,443 | ) | (94 | ) | — | (2,813 | ) | ||||||||||||
Short-term borrowings — net | |||||||||||||||||||||
— third parties | (20 | ) | (366 | ) | (82 | ) | — | (468 | ) | ||||||||||||
— related parties | (277 | ) | 317 | (114 | ) | — | (74 | ) | |||||||||||||
Proceeds from issuance of preference shares | — | — | 32 | (32 | ) | — | |||||||||||||||
Dividends — common shareholders | (14 | ) | (77 | ) | (3 | ) | 80 | (14 | ) | ||||||||||||
Dividends — minority interest | — | — | (7 | ) | — | (7 | ) | ||||||||||||||
Net payments to Alcan | 116 | (15 | ) | 3 | — | 104 | |||||||||||||||
Cash from (used for) financing activities | 404 | 416 | 114 | (1,456 | ) | (522 | ) | ||||||||||||||
Investment Activities | |||||||||||||||||||||
Purchase of property, plant and equipment | (5 | ) | (33 | ) | (18 | ) | — | (56 | ) | ||||||||||||
Proceeds from disposal of businesses, investments and other assets, net of cash | — | 2 | 7 | — | 9 | ||||||||||||||||
Change in long-term and other receivables | |||||||||||||||||||||
— third parties | — | 322 | 19 | — | 341 | ||||||||||||||||
— related parties | (1,019 | ) | (443 | ) | — | 1,504 | 42 | ||||||||||||||
Cash from (used for) investment activities | (1,024 | ) | (152 | ) | 8 | 1,504 | 336 | ||||||||||||||
Increase in cash and cash equivalents | 18 | 72 | 12 | — | 102 | ||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | (3 | ) | (1 | ) | — | (4 | ) | |||||||||||||
Cash and cash equivalents — beginning of period | — | 12 | 19 | — | 31 | ||||||||||||||||
Cash and cash equivalents — end of period | 18 | 81 | 30 | — | 129 | ||||||||||||||||
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Non- | |||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | |||||||||||||||||
(In millions of US$) | |||||||||||||||||||||
Cash from (used for) operating activities | 12 | (55 | ) | 144 | (2 | ) | 99 | ||||||||||||||
Financing Activities | |||||||||||||||||||||
Proceeds from issuance of new debt | — | 439 | 2 | — | 441 | ||||||||||||||||
Debt repayments | — | — | (28 | ) | — | (28 | ) | ||||||||||||||
Short-term borrowings — net | |||||||||||||||||||||
— third parties | — | (125 | ) | — | (4 | ) | (129 | ) | |||||||||||||
— related parties | 90 | (60 | ) | (22 | ) | — | 8 | ||||||||||||||
Dividends — minority interest | (5 | ) | 7 | (5 | ) | — | (3 | ) | |||||||||||||
Net payments to Alcan | (70 | ) | 137 | (86 | ) | 2 | (17 | ) | |||||||||||||
Cash from (used for) financing activities | 15 | 398 | (139 | ) | (2 | ) | 272 | ||||||||||||||
Investment Activities | |||||||||||||||||||||
Purchase of property, plant and equipment | (1 | ) | (33 | ) | (25 | ) | — | (59 | ) | ||||||||||||
Change in long-term and other receivables | (26 | ) | (310 | ) | 21 | 4 | (311 | ) | |||||||||||||
Cash from (used for) investment activities | (27 | ) | (343 | ) | (4 | ) | 4 | (370 | ) | ||||||||||||
Increase in cash and cash equivalents | — | — | 1 | — | 1 | ||||||||||||||||
Cash and cash equivalents — beginning of period | — | 8 | 19 | — | 27 | ||||||||||||||||
Cash and cash equivalents — end of period | — | 8 | 20 | — | 28 | ||||||||||||||||
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To Confirm by Telephone: | Facsimile Transmissions (eligible institutions only): | |
(212) 815-5098 | (212) 298-1915 |
Table of Contents
ITEM 20. | Indemnification of Directors and Officers |
(1) a corporation may indemnify a Director or Officer of the Corporation, a former Director or Officer of the Corporation or another individual who acts or acted at the Corporation’s request as a Director or Officer or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity. | |
(2) a corporation may advance moneys to a Director, Officer or other individual for the costs, charges and expenses of a proceeding referred to paragraph (1). However, the individual shall repay the moneys if he or she does not fulfill the conditions of paragraph (3). | |
(3) a corporation may not indemnify an individual under paragraph (1), unless the individual |
(4) A Corporation may with the approval of a court indemnify a person referred to in paragraph (1), or advance moneys under paragraph (2), in respect of an action by or on behalf of the Corporation or other entity to procure a judgment in its favor, to which the individual is made a party because of the individual’s association with the Corporation or other entity as described in paragraph (1) against all costs, charges and expenses reasonably incurred by the individual in connection with such action if the individual fulfils the conditions set out in paragraph (3). | |
(5) Despite paragraph (1), an individual referred to in paragraph (I) is entitled to indemnity from the Corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the Corporation or other entity as described in paragraph (1), if the individual seeking indemnity: |
“17. (1) INDEMNITY — Subject to the limitations contained in the governing Act but without limit to the right of the Corporation to indemnify as provided for in the Act, the Corporation shall indemnify a Director or Officer, a former Director or Officer, or a person who acts or acted at the Corporation’s request as a Director or Officer of a body corporate of which the Corporation is or was a Shareholder or creditor (or a person who undertakes or has undertaken any liability on behalf of the Corporation or at the Corporation’s request on behalf of any such body corporate) and his heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an |
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action or satisfy a judgment, reasonably incurred by him in respect of any civil, criminal, administrative, investigative or other proceeding to which he is made a party by reason of being or having been a Director or Officer of the Corporation or such body corporate or by reason of having undertaken such liability. | |
(2) ADVANCE OF COSTS — The Corporation shall advance moneys to a Director, Officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual shall repay the moneys if the individual does not fulfill the conditions of subsection (3). | |
(3) LIMITATION — The Corporation may not indemnify an individual under subsection (1) unless the individual |
ITEM 21. | Exhibits and Financial Statement Schedules |
Exhibit | ||||
No. | Description | |||
3 | .1 | Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
3 | .2 | By-law No. 1 of Novelis Inc. (incorporated by reference to Exhibit 3.2 to the Form 10 filed by Novelis Inc. on November 17, 2004 (File No. 001-32312).) | ||
3 | .3 | Articles of Amendment to the Articles of Incorporation of Novelis Corporation (formerly Alcan Aluminum Corporation)† | ||
3 | .4 | Articles of Amendment to the Articles of Incorporation of Novelis Corporation† | ||
3 | .5 | Articles of Incorporation of Novelis Corporation† | ||
3 | .6 | Bylaws of Novelis Corporation† | ||
3 | .7 | Certificate of Amendment of Certificate of Incorporation of Novelis PAE Corporation (formerly Pechiney Aluminum Engineering, Inc.)† | ||
3 | .8 | Certificate of Incorporation of Novelis PAE Corporation† | ||
3 | .9 | By-laws of Novelis PAE Corporation† | ||
3 | .10 | Certificate of Incorporation of Eurofoil Inc. (USA)† | ||
3 | .11 | By-laws of Eurofoil Inc. (USA)† | ||
3 | .12 | Articles of Association of Novelis do Brasil Ltda.† | ||
3 | .13 | Certificate and Articles of Incorporation of 4260848 Canada Inc.† | ||
3 | .14 | By-law No. 1 of 4260848 Canada Inc.† | ||
3 | .15 | Certificate and Articles of Incorporation of 4260856 Canada Inc.† | ||
3 | .16 | By-law No. 1 of 4260856 Canada Inc.† | ||
3 | .17 | Amendment of Articles of Incorporation of Novelis Cast House Technology Ltd.† | ||
3 | .18 | Certificate and Articles of Incorporation of Novelis Cast House Technology Ltd.† | ||
3 | .19 | By-law No. 2 of Novelis Cast House Technology Ltd.† | ||
3 | .20 | By-law No. 1 of Novelis Cast House Technology Ltd.† | ||
3 | .21 | Bylaws of Novelis Deutschland GmbH† |
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Exhibit | ||||
No. | Description | |||
3 | .22 | Certificate of Incorporation on Change of Name of Novelis Aluminium Holding Company† | ||
3 | .23 | Memorandum and Articles of Association of Novelis Aluminium Holding Company† | ||
3 | .24 | Articles of Association of Novelis AG† | ||
3 | .25 | Articles of Association of Novelis Technology AG† | ||
3 | .26 | Articles of Association for Novelis Switzerland S.A.† | ||
3 | .27 | Memorandum of Association of Novelis UK Ltd.† | ||
3 | .28 | Articles of Association of Novelis UK Ltd.† | ||
3 | .29 | Memorandum of Association of Novelis Europe Holdings Ltd.† | ||
3 | .30 | Articles of Association of Novelis Europe Holdings Ltd.† | ||
4 | .1 | 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 our Current Report on Form 8-K filed on February 3, 2005 (File No. 001-32312)) | ||
4 | .2 | Registration Rights Agreement, dated as of February 3, 2005, among the Company, the guarantors named on the signature pages thereto, Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated and UBS Securities LLC, as Representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on February 3, 2005 (File No. 001-32312)) | ||
4 | .3 | Form of Note for 71/4% Senior Notes due 2015 (included as part of Exhibit 4.1) | ||
5 | .1 | Opinion of Sullivan & Cromwell LLP regarding the legality of securities being registered† | ||
5 | .2 | Opinion of Ogilvy Renault LLP† | ||
5 | .3 | Opinion of Jones Day† | ||
5 | .4 | Opinion of MacFarlanes† | ||
5 | .5 | Opinion of Internal Counsel of Novelis Inc.† | ||
5 | .6 | Opinion of Internal Counsel of Novelis Inc.† | ||
5 | .7 | Opinion of A&L Goodbody† | ||
5 | .8 | Opinion of Levy & Salomão Advogados† | ||
10 | .1 | Separation Agreement between Alcan Inc. and Novelis Inc. (incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .2 | Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of remelt aluminum ingot** (incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .3 | 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** (incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .4 | Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in North America** (incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .5 | Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in Europe** (incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .6 | Tax Sharing and Disaffiliation Agreement between Alcan Inc., Novelis Inc., Arcustarget Inc., Alcan Corporation and Novelis Corporation (incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .7 | Transitional Services Agreement between Alcan Inc. and Novelis Inc. (incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) |
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Exhibit | ||||
No. | Description | |||
10 | .8 | Principal Intellectual Property Agreement between Alcan International Limited and Novelis Inc.** (incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .9 | Secondary Intellectual Property Agreement between Novelis Inc. and Alcan International Limited** (incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .10 | Master Metal Hedging Agreement between Alcan Inc. and Novelis Inc.** (incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .11 | Credit Agreement, dated as of January 7, 2005, among Novelis Inc., Novelis Corporation, Novelis Deutschland GmbH, Novelis UK Limited and Novelis AG, as Borrowers, the Lenders and Issuers Party (as defined in the agreement), Citigroup North America, Inc., as Administrative Agent and Collateral Agent, Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as Co-Syndication Agents, and Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as Joint Lead Arrangers and Joint Book-Running Managers. (incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .11.1 | Amendment No. 1 dated as of September 19, 2005 to Credit Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 20, 2005 (File No. 001-32312)) | ||
10 | .12* | Employee Matters Agreement between Alcan Inc. and Novelis Inc. (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .13* | Employment Agreement of Brian W. Sturgell (incorporated by reference to Exhibit 10.32 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .14* | 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 (File No. 001-32312).) | ||
10 | .15* | Employment Agreement of Christopher Bark-Jones (incorporated by reference to Exhibit 10.34 to the Form 10 filed by Novelis Inc. on December 27, 2004 (File No. 001-32312).) | ||
10 | .16* | Employment Agreement of Pierre Arseneault (incorporated by reference to Exhibit 10.35 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .17* | Employment Agreement of Geoffrey P. Batt (incorporated by reference to Exhibit 10.36 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .18* | Form of Change of Control Agreement between Alcan Inc. and executive officers of Novelis Inc. (incorporated by reference to Exhibit 10.37 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .19* | Change of Control Agreement dated as of August 1, 2002 between Alcan Inc. and Brian W. Sturgell, as amended by a letter dated May 11, 2004 from Travis Engen, President and Chief Executive Officer of Alcan Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .20* | Change of Control Agreement dated as of December 22, 2004 between Alcan Inc. and Martha Finn Brooks (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .21* | Change of Control Agreement dated as of December 23, 2004 between Alcan Inc. and Christopher Bark-Jones (incorporated by reference to Exhibit 10.3 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .22* | Change of Control Agreement dated as of November 12, 2004 between Alcan Inc. and Pierre Arseneault (incorporated by reference to Exhibit 10.4 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .23* | Change of Control Agreement dated as of November 8, 2004 between Alcan Inc. and Geoffrey P. Batt (incorporated by reference to Exhibit 10.5 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) |
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Exhibit | ||||
No. | Description | |||
10 | .24* | Novelis Conversion Plan of 2005 (incorporated by reference to Exhibit 10.6 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) |
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Exhibit | ||||
No. | Description | |||
10 | .25* | Written description of Novelis Short Term Incentive Plan — 2005 Performance Measures (incorporated by reference to Exhibit 10.25 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .26* | Novelis Inc. Deferred Share Unit Plan for Non-Executive Directors (incorporated by reference to Exhibit 10.26 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .27* | Employment Agreement of Jack Morrison (incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .28* | Form of Offer Letter with certain Novelis executive officers (incorporated by reference to Exhibit 10.28 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .29* | Written description of Novelis Pension Plan for Officers (incorporated by reference to Exhibit 10.29 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .30* | Written description of Novelis Founders Performance Award Plan (incorporated by reference to Exhibit 10.30 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .31* | Deferred Share Agreement, dated as of July 1, 2002, between Alcan Corporation and Martha Finn Brooks (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Novelis Inc. on August 1, 2005 (File No. 001-32312)) | ||
10 | .32* | Amendment to Deferred Share Agreement, dated as of July 27, 2005, between Novelis Inc. and Martha Finn Brooks (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by Novelis Inc. on August 1, 2005) (File No. 001-32312) | ||
12 | .1 | Statement regarding computation of ratio of earnings to fixed charges | ||
21 | .1 | List of Subsidiaries of Novelis Inc. (incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
23 | .1 | Consent of PricewaterhouseCoopers LLP | ||
23 | .2 | Consent of Sullivan & Cromwell LLP (included as part of Exhibit 5.1)† | ||
23 | .3 | Consent of Ogilvy Renault LLP (included as part of Exhibit 5.2)† | ||
23 | .4 | Consent of Jones Day (included as part of Exhibit 5.3)† | ||
23 | .5 | Consent of MacFarlanes (included as part of Exhibit 5.4)† | ||
23 | .6 | Consent of Internal Counsel of Novelis Inc. (included as part of Exhibit 5.5)† | ||
23 | .7 | Consent of Internal Counsel of Novelis Inc. (included as part of Exhibit 5.6)† | ||
23 | .8 | Consent of A&L Goodbody (included as part of Exhibit 5.7)† | ||
23 | .9 | Consent of Levy & Salomão Advogados (included as part of Exhibit 5.8)† | ||
24 | .1 | Powers of Attorney (included in the signature pages to this Registration Statement)†† | ||
25 | .1 | Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939 of The Bank of New York Trust Company, N.A., as trustee of the Indenture† | ||
99 | .1 | Form of Letter of Transmittal | ||
99 | .2 | Form of Notice of Guaranteed Delivery | ||
99 | .3 | Exchange Agent Agreement between Novelis Inc. and The Bank of New York Trust Company, N.A. |
* | 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. |
† | Previously filed. | |
†† | Certain powers of attorney previously filed. | |
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ITEM 22. | Undertakings |
(a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: |
(i) To include any prospectus required by section 10(a)(3) of the Securities Act. | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. | |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. |
(b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
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NOVELIS INC. |
By: | * |
Name: Brian W. Sturgell | |
Title: Chief Executive Officer |
Signature | Title | Date | ||||
* | Director, Chief Executive Officer (Principal Executive Officer) | September 22, 2005 | ||||
* | Chief Financial Officer (Principal Financial Officer) | September 22, 2005 | ||||
* | Vice President and Controller (Principal Accounting Officer) | September 22, 2005 | ||||
* | Non-Executive Chairman | September 22, 2005 | ||||
Director | ||||||
* | Director | September 22, 2005 | ||||
Director | ||||||
* | Director | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
* | Director | September 22, 2005 |
II-7
Table of Contents
Signature | Title | Date | ||||
* | Director | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-8
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NOVELIS CORPORATION |
By: | * |
Name: Charles R. Aley | |
Title: Secretary |
Signature | Title | Date | ||||
* | Director, President (Principal Executive Officer) | September 22, 2005 | ||||
* | Director, Vice President and Treasurer (Principal Financial Officer) | September 22, 2005 | ||||
* | Assistant Treasurer (Principal Accounting Officer) | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-9
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EUROFOIL INC. (USA) |
By: | * |
Name: Charles R. Aley | |
Title: Secretary |
Signature | Title | Date | ||||
* | Vice President and Treasurer (Principal Executive Officer) (Principal Financial Officer) | September 22, 2005 | ||||
* | Assistant Treasurer (Principal Accounting Officer) | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-10
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NOVELIS PAE CORPORATION |
By: | * |
Name: Charles R. Aley | |
Title: Secretary |
Signature | Title | Date | ||||
* | Vice President and Treasurer (Principal Executive Officer) (Principal Financial Officer) | September 22, 2005 | ||||
* | Assistant Treasurer (Principal Accounting Officer) | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
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NOVELIS CAST HOUSE TECHNOLOGY LTD. |
By: | * |
Name: David Kennedy | |
Title: President |
Signature | Title | Date | ||||
* | Director, President (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-12
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4260848 CANADA INC. |
By: | * |
Name: David Kennedy | |
Title: President |
Signature | Title | Date | ||||
* | Director, President (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-13
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4260856 CANADA INC. |
By: | * |
Name: David Kennedy | |
Title: President |
Signature | Title | Date | ||||
* | Director, President (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-14
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NOVELIS EUROPE HOLDINGS LTD. |
By: | * |
Name: Christopher Bark-Jones | |
Title: Director |
Signature | Title | Date | ||||
* | Director, (Principal Executive Officer) | September 22, 2005 | ||||
* | Director, (Principal Financial Officer,) (Principal Accounting Officer) | September 22, 2005 | ||||
* | Director | September 22, 2005 | ||||
Director | ||||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-15
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NOVELIS UK LTD. |
By: | * |
Name: Christopher Bark-Jones | |
Title: Director |
Signature | Title | Date | ||||
* | Director, (Principal Executive Officer) | September 22, 2005 | ||||
* | Director, (Principal Financial Officer,) (Principal Accounting Officer) | September 22, 2005 | ||||
Director | ||||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-16
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NOVELIS DO BRASIL LTDA. |
By: | * |
Name: Antonio Tadeu Coelho Nardocci | |
Title: President |
Signature | Title | Date | ||||
* | Director, President (Principal Executive Officer) | September 22, 2005 | ||||
* | Finance Director (Principal Financial Officer) (Principal Accounting Officer) | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-17
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NOVELIS AG |
By: | * |
Name: Christopher Bark-Jones | |
Title: Director |
Signature | Title | Date | ||||
* | Director, (Principal Executive Officer) | September 22, 2005 | ||||
* | (Director, Principal Financial Officer,) (Principal Accounting Officer) | September 22, 2005 | ||||
Director | ||||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-18
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NOVELIS SWITZERLAND S.A. |
By: | * |
Name: Christopher Bark-Jones | |
Title: Chairman |
Signature | Title | Date | ||||
* | Director, (Principal Executive Officer) | September 22, 2005 | ||||
* | Director, (Principal Financial Officer,) (Principal Accounting Officer) | September 22, 2005 | ||||
Director | ||||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-19
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NOVELIS TECHNOLOGY AG |
By: | * |
Name: Christopher Bark-Jones | |
Title: Chairman |
Signature | Title | Date | ||||
* | Director, (Principal Executive Officer) | September 22, 2005 | ||||
* | Director, (Principal Financial Officer,) (Principal Accounting Officer) | September 22, 2005 | ||||
Director | ||||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-20
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NOVELIS ALUMINIUM HOLDING COMPANY |
By: | * |
Name: Erwin Faust | |
Title: Managing Director |
Signature | Title | Date | ||||
* | Managing Director, Principal Executive Officer | September 22, 2005 | ||||
* | Managing Director, Principal Financial Officer Principal Accounting Officer | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
II-21
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NOVELIS DEUTSCHLAND GMBH |
By: | * |
Name: Erwin Faust | |
Title: Managing Director |
Signature | Title | Date | ||||
* | Managing Director (Principal Executive Officer) | September 22, 2005 | ||||
* | Managing Director (Principal Financial Officer) (Principal Accounting Officer) | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. | Authorized Representative in the United States of America | September 22, 2005 | ||||
/s/Leslie J. Parrette, Jr. Attorney-in-Fact |
Signature | Title | Date | ||||
/s/Nikolaus Von Verschuer | Director | August 2, 2005 | ||||
/s/Erwin Faust | Director | August 2, 2005 |
II-22
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Exhibit | ||||
No. | Description | |||
3 | .1 | Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
3 | .2 | By-law No. 1 of Novelis Inc. (incorporated by reference to Exhibit 3.2 to the Form 10 filed by Novelis Inc. on November 17, 2004 (File No. 001-32312).) | ||
3 | .3 | Articles of Amendment to the Articles of Incorporation of Novelis Corporation (formerly Alcan Aluminum Corporation)† | ||
3 | .4 | Articles of Amendment to the Articles of Incorporation of Novelis Corporation† | ||
3 | .5 | Articles of Incorporation of Novelis Corporation† | ||
3 | .6 | Bylaws of Novelis Corporation† | ||
3 | .7 | Certificate of Amendment of Certificate of Incorporation of Novelis PAE Corporation (formerly Pechiney Aluminum Engineering, Inc.)† | ||
3 | .8 | Certificate of Incorporation of Novelis PAE Corporation† | ||
3 | .9 | By-laws of Novelis PAE Corporation† | ||
3 | .10 | Certificate of Incorporation of Eurofoil Inc. (USA)† | ||
3 | .11 | By-laws of Eurofoil Inc. (USA)† | ||
3 | .12 | Articles of Association of Novelis do Brasil Ltda.† | ||
3 | .13 | Certificate and Articles of Incorporation of 4260848 Canada Inc.† | ||
3 | .14 | By-law No. 1 of 4260848 Canada Inc.† | ||
3 | .15 | Certificate and Articles of Incorporation of 4260856 Canada Inc.† | ||
3 | .16 | By-law No. 1 of 4260856 Canada Inc.† | ||
3 | .17 | Amendment of Articles of Incorporation of Novelis Cast House Technology Ltd.† | ||
3 | .18 | Certificate and Articles of Incorporation of Novelis Cast House Technology Ltd.† | ||
3 | .19 | By-law No. 2 of Novelis Cast House Technology Ltd.† | ||
3 | .20 | By-law No. 1 of Novelis Cast House Technology Ltd.† | ||
3 | .21 | Bylaws of Novelis Deutschland GmbH† | ||
3 | .22 | Certificate of Incorporation on Change of Name of Novelis Aluminium Holding Company† | ||
3 | .23 | Memorandum and Articles of Association of Novelis Aluminium Holding Company† | ||
3 | .24 | Articles of Association of Novelis AG† | ||
3 | .25 | Articles of Association of Novelis Technology AG† | ||
3 | .26 | Articles of Association for Novelis Switzerland S.A.† | ||
3 | .27 | Memorandum of Association of Novelis UK Ltd.† | ||
3 | .28 | Articles of Association of Novelis UK Ltd.† | ||
3 | .29 | Memorandum of Association of Novelis Europe Holdings Ltd.† | ||
3 | .30 | Articles of Association of Novelis Europe Holdings Ltd.† | ||
4 | .1 | 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 our Current Report on Form 8-K filed on February 3, 2005 (File No. 001-32312)) | ||
4 | .2 | Registration Rights Agreement, dated as of February 3, 2005, among the Company, the guarantors named on the signature pages thereto, Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated and UBS Securities LLC, as Representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed on February 3, 2005 (File No. 001-32312)) | ||
4 | .3 | Form of Note for 71/4% Senior Notes due 2015 (included as part of Exhibit 4.1) | ||
5 | .1 | Opinion of Sullivan & Cromwell LLP regarding the legality of securities being registered† | ||
5 | .2 | Opinion of Ogilvy Renault LLP† |
Table of Contents
Exhibit | ||||
No. | Description | |||
5 | .3 | Opinion of Jones Day† | ||
5 | .4 | Opinion of MacFarlanes† | ||
5 | .5 | Opinion of Internal Counsel of Novelis Inc.† | ||
5 | .6 | Opinion of Internal Counsel of Novelis Inc.† | ||
5 | .7 | Opinion of A&L Goodbody† | ||
5 | .8 | Opinion of Levy & Salomão Advogados† | ||
10 | .1 | Separation Agreement between Alcan Inc. and Novelis Inc. (incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .2 | Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of remelt aluminum ingot**(incorporated by reference to Exhibit 10.2 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .3 | 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**(incorporated by reference to Exhibit 10.3 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .4 | Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in North America**(incorporated by reference to Exhibit 10.4 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .5 | Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in Europe**(incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .6 | Tax Sharing and Disaffiliation Agreement between Alcan Inc., Novelis Inc., Arcustarget Inc., Alcan Corporation and Novelis Corporation (incorporated by reference to Exhibit 10.6 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .7 | Transitional Services Agreement between Alcan Inc. and Novelis Inc. (incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .8 | Principal Intellectual Property Agreement between Alcan International Limited and Novelis Inc.**(incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .9 | Secondary Intellectual Property Agreement between Novelis Inc. and Alcan International Limited**(incorporated by reference to Exhibit 10.9 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .10 | Master Metal Hedging Agreement between Alcan Inc. and Novelis Inc.**(incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .11 | Credit Agreement, dated as of January 7, 2005, among Novelis Inc., Novelis Corporation, Novelis Deutschland GmbH, Novelis UK Limited and Novelis AG, as Borrowers, the Lenders and Issuers Party (as defined in the agreement), Citigroup North America, Inc., as Administrative Agent and Collateral Agent, Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as Co-Syndication Agents, and Citigroup Global Markets Inc., Morgan Stanley Senior Funding, Inc. and UBS Securities LLC, as Joint Lead Arrangers and Joint Book-Running Managers. (incorporated by reference to Exhibit 10.11 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .11.1 | Amendment No. 1 dated as of September 19, 2005 to Credit Agreement (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on September 20, 2005 (File No. 001-32312)) | ||
10 | .12* | Employee Matters Agreement between Alcan Inc. and Novelis Inc. (incorporated by reference to Exhibit 10.12 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .13* | Employment Agreement of Brian W. Sturgell (incorporated by reference to Exhibit 10.32 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) |
Table of Contents
Exhibit | ||||
No. | Description | |||
10 | .14* | 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 (File No. 001-32312).) | ||
10 | .15* | Employment Agreement of Christopher Bark-Jones (incorporated by reference to Exhibit 10.34 to the Form 10 filed by Novelis Inc. on December 27, 2004 (File No. 001-32312).) | ||
10 | .16* | Employment Agreement of Pierre Arseneault (incorporated by reference to Exhibit 10.35 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .17* | Employment Agreement of Geoffrey P. Batt (incorporated by reference to Exhibit 10.36 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .18* | Form of Change of Control Agreement between Alcan Inc. and executive officers of Novelis Inc. (incorporated by reference to Exhibit 10.37 to the Form 10 filed by Novelis Inc. on December 22, 2004 (File No. 001-32312).) | ||
10 | .19* | Change of Control Agreement dated as of August 1, 2002 between Alcan Inc. and Brian W. Sturgell, as amended by a letter dated May 11, 2004 from Travis Engen, President and Chief Executive Officer of Alcan Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .20* | Change of Control Agreement dated as of December 22, 2004 between Alcan Inc. and Martha Finn Brooks (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .21* | Change of Control Agreement dated as of December 23, 2004 between Alcan Inc. and Christopher Bark-Jones (incorporated by reference to Exhibit 10.3 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .22* | Change of Control Agreement dated as of November 12, 2004 between Alcan Inc. and Pierre Arseneault (incorporated by reference to Exhibit 10.4 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .23* | Change of Control Agreement dated as of November 8, 2004 between Alcan Inc. and Geoffrey P. Batt (incorporated by reference to Exhibit 10.5 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .24* | Novelis Conversion Plan of 2005 (incorporated by reference to Exhibit 10.6 to the Form 8-K filed by Novelis Inc. on January 7, 2005 (File No. 001-32312).) | ||
10 | .25* | Written description of Novelis Short Term Incentive Plan — 2005 Performance Measures (incorporated by reference to Exhibit 10.25 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .26* | Novelis Inc. Deferred Share Unit Plan for Non-Executive Directors (incorporated by reference to Exhibit 10.26 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .27* | Employment Agreement of Jack Morrison (incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .28* | Form of Offer Letter with certain Novelis executive officers (incorporated by reference to Exhibit 10.28 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .29* | Written description of Novelis Pension Plan for Officers (incorporated by reference to Exhibit 10.29 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .30* | Written description of Novelis Founders Performance Award Plan (incorporated by reference to Exhibit 10.30 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
10 | .31* | Deferred Share Agreement, dated as of July 1, 2002, between Alcan Corporation and Martha Finn Brooks (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by Novelis Inc. on August 1, 2005 (File No. 001-32312)) | ||
10 | .32* | Amendment to Deferred Share Agreement, dated as of July 27, 2005, between Novelis Inc. and Martha Finn Brooks (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Novelis Inc. on August 1, 2005 (File No. 001-32312)) |
Table of Contents
Exhibit | ||||
No. | Description | |||
12 | .1 | Statement regarding computation of ratio of earnings to fixed charges | ||
21 | .1 | List of Subsidiaries of Novelis Inc. (incorporated by reference to Exhibit 21.1 to our Annual Report on Form 10-K filed on March 30, 2005 (File No. 001-32312)) | ||
23 | .1 | Consent of PricewaterhouseCoopers LLP | ||
23 | .2 | Consent of Sullivan & Cromwell LLP (included as part of Exhibit 5.1)† | ||
23 | .3 | Consent of Ogilvy Renault LLP (included as part of Exhibit 5.2)† | ||
23 | .4 | Consent of Jones Day (included as part of Exhibit 5.3)† | ||
23 | .5 | Consent of MacFarlanes (included as part of Exhibit 5.4)† | ||
23 | .6 | Consent of Internal Counsel of Novelis Inc. (included as part of Exhibit 5.5)† | ||
23 | .7 | Consent of Internal Counsel of Novelis Inc. (included as part of Exhibit 5.6)† | ||
23 | .8 | Consent of A&L Goodbody (included as part of Exhibit 5.7)† | ||
23 | .9 | Consent of Levy & Salomão Advogados (included as part of Exhibit 5.8)† | ||
24 | .1 | Powers of Attorney (included in the signature pages to this Registration Statement)†† | ||
25 | .1 | Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939 of The Bank of New York Trust Company, N.A., as trustee of the Indenture† | ||
99 | .1 | Form of Letter of Transmittal | ||
99 | .2 | Form of Notice of Guaranteed Delivery | ||
99 | .3 | Exchange Agent Agreement between Novelis Inc. and The Bank of New York Trust Company, N.A. |
* | 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. |
† | Previously filed. | |
†† | Certain powers of attorney previously filed. | |