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Washington, D.C. 20549
UNDER
THE SECURITIES ACT OF 1933
Canada | 3350 | 98-0442987 | ||
(State or other jurisdiction of incorporation or organization) | (Primary standard industrial classification code number) | (I.R.S. Employer Identification Number) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Exchange ActRule 14d-1(d) (Cross-Border Third-Party Tender Offer) o
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IRS Employer | ||||
Exact Name of Additional Registrants* | Jurisdiction of Formation | Identification No. | ||
Novelis Corporation | Texas | 41-2098321 | ||
Eurofoil Inc. (USA) | New York | 13-3783544 | ||
Novelis PAE Corporation | Delaware | 36-4266108 | ||
Aluminum Upstream Holdings LLC | Delaware | 20-5137700 | ||
Novelis Brand LLC | Delaware | 26-0442201 | ||
Novelis South America Holdings LLC | Delaware | 20-5137684 | ||
Novelis Cast House Technology Ltd. | Canada | Not applicable | ||
Novelis No. 1 Limited Partnership | 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 Services Limited | 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 | ||
Novelis Luxembourg S.A. | Luxembourg | Not applicable | ||
Novelis PAE S.A.S. | France | Not applicable | ||
Novelis Madeira, Unipessoal, Lda | Portugal | Not applicable |
* | The address for each of the additional Registrants isc/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 jurisdiction where the offer or sale is not permitted. |
• | Maturity: The new notes will mature on February 15, 2015. | |
• | Interest: The new notes will bear interest at the rate of 11.5% per annum. Interest on the new notes will be payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 2010. | |
• | Guarantees: The new notes will be guaranteed, fully and unconditionally and jointly and severally, on a senior unsecured basis, by all of our existing and future Canadian and U.S. restricted subsidiaries, certain of our existing foreign 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. | |
• | Ranking: The new notes and the guarantees will effectively rank junior to our secured debt and the secured debt of the guarantors (including debt under our existing senior secured credit facilities described herein), to the extent of the value of the assets securing that debt. | |
• | Optional Redemption: Prior to August 15, 2012, we may redeem all or a portion of the new notes by paying a “make-whole” premium. Commencing August 15, 2012, we may redeem all or a portion of the new notes at specified redemption prices. We also may redeem all of the new notes, at any time, in the event of certain changes in Canadian withholding taxes. In addition, prior to August 15, 2012, we may redeem up to 35% of the new notes from the proceeds of certain equity offerings at a specified redemption price. The redemption prices are set forth under “Description of the Notes — Optional Redemption.” | |
• | The new notes will not be listed on any securities exchange or automated quotation system. |
• | The exchange offer will expire at 5:00 p.m., New York City time, on , 2009, (which is the 20th business day following the date of this prospectus), unless we extend the exchange offer in our sole and absolute discretion. | |
• | The exchange offer is not subject to any conditions other than that it not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission, or the SEC. | |
• | Subject to the satisfaction or waiver of specified conditions, we will exchange the new notes for all old notes that are validly tendered and not withdrawn prior to the expiration of the exchange offer. | |
• | Tenders of old notes may be withdrawn at any time before the expiration of the exchange offer. | |
• | We will not receive any proceeds from the exchange offer. |
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F-1 | ||||||||
EX-3.50 AMENDMENT NO. 3 TO ARTICLES OF ASSOCIATION | ||||||||
EX-5.1 OPINION OF KING & SPALDING LLP | ||||||||
EX-12.1 STATEMENT REGARDING COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES | ||||||||
EX-23.1 CONSENT OF PRICEWATERHOUSECOOPERS LLP |
Novelis Inc.
3399 Peachtree Road, NE
Suite 1500
Atlanta, Georgia 30326
(404) 814-4200
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• | the level of our indebtedness and our ability to generate cash; | |
• | changes in the prices and availability of aluminum (or premiums associated with such prices) or other materials and raw materials we use; | |
• | the effect of metal price ceilings in certain of our sales contracts; | |
• | the capacity and effectiveness of our metal hedging activities, including our internal used beverage can (“UBC”) and smelter hedges; | |
• | relationships with, and financial and operating conditions of, our customers, suppliers and other stakeholders; | |
• | fluctuations in the supply of, and prices for, energy in the areas in which we maintain production facilities; | |
• | our ability to access financing to fund current operations and for future capital requirements; | |
• | continuing obligations and other relationships resulting from our spin-off from Alcan, Inc.; | |
• | changes in the relative values of various currencies and the effectiveness of our currency hedging activities; | |
• | factors affecting our operations, such as litigation, environmental remediation andclean-up costs, labor relations and negotiations, breakdown of equipment and other events; | |
• | the impact of restructuring efforts we may undertake in the future; | |
• | 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, including further deterioration in the global economy; | |
• | our ability to maintain effective internal control over financial reporting and disclosure controls and procedures in the future; | |
• | changes in the fair value of derivative instruments; | |
• | cyclical demand and pricing within the principal markets for our products as well as seasonality in certain of our customers’ industries; | |
• | changes in government regulations, particularly those affecting taxes, climate change, environmental, health or safety compliance; | |
• | changes in interest rates that have the effect of increasing the amounts we pay under our senior secured credit facilities and other financing agreements; | |
• | the effect of taxes and changes in tax rates; and | |
• | the other factors discussed under “Risk Factors.” |
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• | hot mills— that require sheet ingot, a rectangular slab of aluminum, as starter material; and | |
• | continuous casting mills— that can convert molten metal directly into semi-finished sheet. |
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The Exchange Offer | We are offering to exchange $1,000 principal amount of the new notes, which have been registered under the Securities Act, for each $1,000 principal amount of the old notes, which have not been registered under the Securities Act. We issued the old notes on August 11, 2009. | |
In order to exchange your old notes, you must promptly tender them before the expiration date (as described herein). All old notes that are validly tendered and not validly withdrawn will be exchanged. We will issue the new notes on or promptly after the expiration date. | ||
You may tender your old notes for exchange in whole or in part in denominations of $2,000 and integral multiples of $1,000 in excess thereof. | ||
Registration Rights Agreement | We sold the old notes on August 11, 2009 to Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. Incorporated and RBS Securities Inc., the initial purchasers. Simultaneously with that sale, we signed a registration rights agreement with the initial purchasers relating to the old notes that requires us to conduct this exchange offer. | |
You have the right under the registration rights agreement to exchange your old notes for new notes. The exchange offer is intended to satisfy such right. After the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your old notes. | ||
For a description of the procedures for tendering old notes, see the section “The Exchange Offer — Exchange Offer Procedures.” | ||
Consequences of Failure to Exchange | If you do not exchange your old notes for new notes in the exchange offer, you will still have the restrictions on transfer provided in the old notes and in the indenture that governs both the old notes and the new notes. In general, the old notes may not be offered or sold unless registered or exempt from registration under the Securities Act, or in a transaction not subject to the Securities Act and applicable state securities laws. Upon completion of the exchange offer, we will have no further obligations to register, and we do not currently plan to register, the old notes under the Securities Act. See the section “Risk Factors — If you do not exchange your old notes for new notes, your ability to sell your old notes will be restricted.” | |
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2009, unless we extend the exchange offer in our sole and absolute discretion. In that case, the expiration date will be the latest date and time to which we extend the exchange offer. See the section “The Exchange Offer — Expiration Date; Extensions; Amendments.” |
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Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, including, if in our reasonable judgement: | |
• the exchange offer, or the making of any exchange by a holder of old notes, would violate applicable law or any applicable interpretation of the staff of the SEC; or | ||
• any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer. | ||
We may choose to waive some of these conditions. For more information, see “The Exchange Offer — Conditions to the Exchange Offer.” | ||
Procedures for Tendering Old Notes | If you hold old notes through The Depository Trust Company (“DTC”) and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC. See the section “The Exchange Offer — Exchange Offer Procedures.” If you are not a DTC participant, you may tender your old notes by book-entry transfer by contacting your broker, dealer or other nominee or by opening an account with a DTC participant, as the case may be. | |
By accepting the exchange offer, you will represent to us that, among other things: | ||
• any new notes that you receive will be acquired in the ordinary course of your business; | ||
• you have no arrangement or understanding with any person or entity, including any of our affiliates, to participate in the distribution of the new notes; | ||
• you are not our “affiliate” as defined in Rule 405 under the Securities Act, or, if you are an affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act; | ||
• if you are not a broker-dealer, that you are not engaged in, and do not intend to engage in, the distribution of the new notes; and | ||
• if you are a broker-dealer that will receive new notes for your own account in exchange for old notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of the new notes. | ||
Withdrawal Rights | You may withdraw the tender of your old notes at any time before the expiration date. To do this, you should deliver a written notice of your withdrawal to the exchange agent according to the withdrawal procedures described in the section “The Exchange Offer — Withdrawal Rights.” | |
Exchange Agent | The exchange agent for the exchange offer is The Bank of New York Mellon Trust Company, N.A. The address, telephone number and facsimile number of the exchange agent are provided in the |
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section “The Exchange Offer — Exchange Agent,” as well as in the letter of transmittal. | ||
Use of Proceeds | We will not receive any cash proceeds from the issuance of the new notes. See the section “Use of Proceeds.” | |
Principal Canadian and U.S. Federal Income Tax Consequences | Your participation in the exchange offer generally will not be a taxable event for Canadian or U.S. federal income tax purposes. Accordingly, you will not recognize any taxable gain or loss or any interest income as a result of the exchange. See the section “Principal Canadian and U.S. Federal Income Tax Consequences of the Exchange Offer.” |
Issuer | Novelis Inc., a Canadian corporation. | |
Securities Offered | $185,000,000 aggregate principal amount of 111/2% senior notes due 2015. | |
Maturity Date | The new notes will mature on February 15, 2015. | |
Interest | The new notes will bear interest at the rate of 11.5% per annum. Interest on the new notes will be payable semi-annually in arrears on February 15 and August 15 of each year, commencing February 15, 2010. |
Guarantees | The new notes will be guaranteed, fully and unconditionally and jointly and severally, on a senior unsecured basis, by all of our existing and future Canadian and U.S. restricted subsidiaries, certain of our existing foreign 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. Generally each of our wholly-owned subsidiaries is a restricted subsidiary unless designated as an unrestricted subsidiary by the Board of Directors upon satisfying certain qualifications such as not owning any stock or debt of our company or a restricted subsidiary and having minimal assets. See “Description of Notes — Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries.” For the year ended March 31, 2009 and the six months ended September 30, 2009, our subsidiaries that will not be guarantors of the new notes had net sales of $2.6 billion and $1.2 billion, respectively, and, as of September 30, 2009, those subsidiaries had assets of $1.4 billion and debt and other liabilities of $1.0 billion (including inter-company balances). |
Ranking | The new notes will be: |
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• 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; | ||
• 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 new notes; and | ||
• 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; and | ||
• senior in right of payment to all of that guarantor’s future subordinated debt. |
As of September 30, 2009, we and the guarantors had $1.3 billion of secured debt. The indenture governing the new notes permits us, subject to specified limitations, to incur additional debt, which may be senior debt. |
Optional Redemption | Prior to August 15, 2012, we may, from time to time, redeem all or any portion of the new notes by paying a special “make-whole” premium specified in this prospectus under “Description of the Notes — Optional Redemption.” | |
Commencing August 15, 2012, we may, from time to time, redeem all or any portion of the new notes at the redemption prices specified in this prospectus under “Description of the Notes — Optional Redemption.” | ||
In addition, at any time and from time to time prior to August 15, 2012, we may also redeem up to 35% of the original aggregate principal amount of the new notes in an amount not to exceed the amount of proceeds of one or more equity offerings, at a price equal to 111.500% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date,providedthat at least 65% of the original aggregate principal amount of the new notes issued remains outstanding after the redemption. | ||
Additional Amounts and Tax Redemption | Any payments made by us with respect to the new 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 new notes, we will, subject to certain exceptions, pay the additional amount necessary so that the net amount received by the holders of new 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 new notes but not the guarantees, we will have the option to redeem the new notes, in whole but not in part, at a redemption price equal to 100% of the principal amount of the new notes, plus any accrued and unpaid interest to the date of redemption and any additional amounts that may be then payable. | ||
Certain Covenants | We will issue the new notes under an indenture among us, the guarantors and The Bank of New York Mellon Trust Company, N.A., as trustee. The indenture governing the new notes contains 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. (“Standard & Poor’s”), or Moody’s Investors Service, Inc. (“Moody’s”) have assigned an investment grade credit rating to the new 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 new 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 new 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 new notes, those covenants, including our obligation to repurchase new notes following certain asset sales, will terminate and no longer be applicable regardless of any subsequent changes in the rating of those new notes. See “Description of the Notes — Certain Covenants — Covenant Termination and Suspension.” | ||
These covenants are subject to a number of important limitations and exceptions. See “Description of the Notes — Certain Covenants.” |
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Change of Control Offer | Following a change of control, we will be required to offer to purchase all of the new notes at a purchase price of 101% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase. See “Description of the Notes — Change of Control Offer.” | |
Transfer Restrictions | The notes are not being offered for sale or exchange and may not be offered for sale or exchange 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 restriction on resale in Canada. | |
Risk Factors | Investing in the new notes involves substantial risks. See “Risk Factors” for a description of some of the risks you should consider before investing in the new notes. | |
Material Income Tax Considerations | You should carefully read the information under the heading “Principal Canadian and U.S. Federal Income Tax Consequences of the Exchange Offer.” | |
Original Issue Discount | The old notes were issued at a discount from their stated principal amount for U.S. federal income tax purposes. Consequently, original issue discount will be included in the gross income of a U.S. holder of notes for U.S. federal income tax purposes in advance of the receipt of corresponding cash payments on the notes. See“Principal Canadian and U.S. Federal Income Tax Consequences of the Exchange Offer — Certain U.S. Federal Income Tax Consequences of the Exchange Offer.” |
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Three | April 1, | May 16, | Six | Six | |||||||||||||||||||||||||
Months | 2007 | 2007 | Months | Months | |||||||||||||||||||||||||
Year Ended | Ended | through | through | Year Ended | Ended | Ended | |||||||||||||||||||||||
December 31, | March 31, | May 15, | March 31, | March 31, | September 30, | September 30, | |||||||||||||||||||||||
2006 | 2007 | 2007(1) | 2008(1) | 2009 | 2008 | 2009 | |||||||||||||||||||||||
Predecessor | Predecessor | Predecessor | Successor | Successor | Successor | Successor | |||||||||||||||||||||||
(In million, except per share share amounts) | |||||||||||||||||||||||||||||
Statement of Operations: | |||||||||||||||||||||||||||||
Net sales | $ | 9,849 | $ | 2,630 | $ | 1,281 | $ | 9,965 | $ | 10,177 | $ | 6,062 | $ | 4,141 | |||||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 9,317 | 2,447 | 1,205 | 9,042 | 9,251 | 5,622 | 3,261 | ||||||||||||||||||||||
Selling, general and administrative expenses | 410 | 99 | 95 | 319 | 319 | 173 | 161 | ||||||||||||||||||||||
Depreciation and amortization | 233 | 58 | 28 | 375 | 439 | 223 | 192 | ||||||||||||||||||||||
Research and development expenses | 40 | 8 | 6 | 46 | 41 | 22 | 17 | ||||||||||||||||||||||
Interest expense and amortization of debt issuance costs | 221 | 54 | 27 | 191 | 182 | 91 | 87 | ||||||||||||||||||||||
Interest income | (15 | ) | (4 | ) | (1 | ) | (18 | ) | (14 | ) | (10 | ) | (6 | ) | |||||||||||||||
(Gain) loss on change in fair value of derivative instruments, net | (63 | ) | (30 | ) | (20 | ) | (22 | ) | 556 | 120 | (152 | ) | |||||||||||||||||
Impairment of goodwill | — | — | — | — | 1,340 | — | — | ||||||||||||||||||||||
Gain on extinguishment of debt | — | — | — | — | (122 | ) | — | — | |||||||||||||||||||||
Restructuring charges, net | 19 | 9 | 1 | 6 | 95 | (1 | ) | 6 | |||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | (16 | ) | (3 | ) | (1 | ) | (25 | ) | 172 | — | 20 | ||||||||||||||||||
Other (income) expenses, net | (19 | ) | 47 | 35 | (6 | ) | 86 | 33 | (19 | ) | |||||||||||||||||||
10,127 | 2,685 | 1,375 | 9,908 | 12,345 | 6,273 | 3,567 | |||||||||||||||||||||||
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Three | April 1, | May 16, | Six | Six | |||||||||||||||||||||||||
Months | 2007 | 2007 | Months | Months | |||||||||||||||||||||||||
Year Ended | Ended | through | through | Year Ended | Ended | Ended | |||||||||||||||||||||||
December 31, | March 31, | May 15, | March 31, | March 31, | September 30, | September 30, | |||||||||||||||||||||||
2006 | 2007 | 2007(1) | 2008(1) | 2009 | 2008 | 2009 | |||||||||||||||||||||||
Predecessor | Predecessor | Predecessor | Successor | Successor | Successor | Successor | |||||||||||||||||||||||
(In million, except per share share amounts) | |||||||||||||||||||||||||||||
Income (loss) before income taxes | (278 | ) | (55 | ) | (94 | ) | 57 | (2,168 | ) | (211 | ) | 574 | |||||||||||||||||
Income tax provision (benefit) | (4 | ) | 7 | 4 | 73 | (246 | ) | (133 | ) | 199 | |||||||||||||||||||
Net income (loss) | (274 | ) | (62 | ) | (98 | ) | (16 | ) | (1,922 | ) | (78 | ) | 375 | ||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 1 | 2 | (1 | ) | 4 | (12 | ) | 2 | 37 | ||||||||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (275 | ) | $ | (64 | ) | $ | (97 | ) | $ | (20 | ) | $ | (1,910 | ) | $ | (80 | ) | $ | 338 | |||||||||
Comprehensive income (loss) | $ | (127 | ) | $ | (48 | ) | $ | (64 | ) | $ | 24 | $ | (2,157 | ) | $ | (161 | ) | $ | 515 | ||||||||||
Dividends per common share | $ | 0.20 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||||
Three | April 1, | May 16, | Six | Six | |||||||||||||||||||||||||
Months | 2007 | 2007 | Months | Months | |||||||||||||||||||||||||
Year Ended | Ended | through | through | Year Ended | Ended | Ended | |||||||||||||||||||||||
December 31, | March 31, | May 15, | March 31, | March 31, | September 30, | September 30, | |||||||||||||||||||||||
2006 | 2007 | 2007(1) | 2008(1) | 2009 | 2008 | 2009 | |||||||||||||||||||||||
Predecessor | Predecessor | Predecessor | Successor | Successor | Successor | Successor | |||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Statement of Cash Flows Data: | |||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 16 | $ | (87 | ) | $ | (230 | ) | $ | 405 | $ | (236 | ) | $ | (390 | ) | $ | 464 | |||||||||||
Net cash provided by (used in) investing activities | 193 | 2 | 2 | (98 | ) | (111 | ) | 52 | (442 | ) | |||||||||||||||||||
Net cash provided by (used in) financing activities | (243 | ) | 140 | 201 | (96 | ) | 286 | 251 | (39 | ) |
Three | April 1, | May 16, | Six | Six | |||||||||||||||||||||||||
Months | 2007 | 2007 | Months | Months | |||||||||||||||||||||||||
Year Ended | Ended | through | through | Year Ended | Ended | Ended | |||||||||||||||||||||||
December 31, | March 31, | May 15, | March 31, | March 31, | September 30, | September 30, | |||||||||||||||||||||||
2006 | 2007 | 2007(1) | 2008(1) | 2009 | 2008 | 2009 | |||||||||||||||||||||||
Predecessor | Predecessor | Predecessor | Successor | Successor | Successor | Successor | |||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Other Financial and Operating Data: | |||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(2) | — | — | — | 1.2 | x | — | — | 7.5 | x | ||||||||||||||||||||
Balance Sheet Data (at period end): | |||||||||||||||||||||||||||||
Total assets | $ | 5,792 | $ | 5,970 | $ | 10,737 | $ | 7,567 | $ | 10,324 | $ | 7,754 | |||||||||||||||||
Long-term debt (including current portion) | 2,302 | 2,300 | 2,575 | 2,559 | 2,558 | 2,645 | |||||||||||||||||||||||
Short-term borrowings | 133 | 245 | 115 | 264 | 351 | 177 | |||||||||||||||||||||||
Cash and cash equivalents | 73 | 128 | 326 | 248 | 219 | 246 | |||||||||||||||||||||||
Shareholders’ equity | 195 | 175 | 3,523 | 1,419 | 3,507 | 2,011 |
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(1) | The acquisition of Novelis by Hindalco on May 15, 2007 was recorded in accordance with Staff Accounting Bulletin No. 103,Push Down Basis of Accounting Required in Certain Limited Circumstances(“SAB 103”). In our consolidated balance sheets, the consideration and related costs paid by Hindalco in connection with the acquisition have been “pushed down” to us and have been allocated to the assets acquired and liabilities assumed in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 141,Business Combinations(“FASB 141”). Due to the impact of push down accounting, our financial statements and certain note presentations for the year ended March 31, 2008 included elsewhere in this prospectus are presented in two distinct periods to indicate the application of two different bases of accounting between the periods presented: (1) the period up to, and including, the acquisition date (April 1, 2007 through May 15, 2007, labeled “Predecessor”) and (2) the period after that date (May 16, 2007 through March 31, 2008, labeled “Successor”). The financial statements included elsewhere in this prospectus include a black line division which indicates that the Predecessor and Successor reporting entities shown are not comparable. | |
The consideration paid by Hindalco to acquire Novelis has been pushed down to us and allocated to the assets acquired and liabilities assumed based on our estimates of fair value, using methodologies and assumptions that we believe are reasonable. This allocation of fair value results in additional charges or income to our post-acquisition consolidated statements of operations. | ||
(2) | 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 GAAP. | |
Due to losses incurred in each of the periods presented below, the ratio coverage was less than 1:1. The table below presents the amount of additional earnings required to bring the fixed charge ratio to 1:1 for each respective period. |
Three | April 1, | Six | |||||||||||||||||||
Months | 2007 | Months | |||||||||||||||||||
Year Ended | Ended | through | Year Ended | Ended | |||||||||||||||||
December 31, | March 31, | May 15, | March 31, | September 30, | |||||||||||||||||
2006 | 2007 | 2007 | 2009 | 2008 | |||||||||||||||||
Predecessor | Predecessor | Predecessor | Successor | Successor | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Additional earnings required to bring fixed charge ratio to 1:1 | $ | 280 | $ | 57 | $ | 93 | $ | 1,996 | $ | 211 | |||||||||||
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• | We maximize the amount of our internally supplied metal inputs from our smelting, refining and mining operations in Brazil and rely on output from our recycling operations which utilize UBCs. Both of these sources of aluminum supply have historically provided an offsetting benefit to the metal price ceiling contracts as these sources are typically less expensive than purchasing aluminum from third party suppliers. We refer to these two sources as “internal hedges.” To the extent that this benefit is not as significant (or does not exist at all) in the future, our internal hedges may not provide an effective offset to the metal price ceiling contracts. | |
• | We generally enter into derivative instruments to hedge projected aluminum volume requirements above our assumed internal hedge position mitigating our exposure to further increases in LME. As a result of these instruments, we will continue to incur cash losses related to these contracts even if LME remains |
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below the ceiling price. As of September 30, 2009 the fair value of the liability associated with these derivative instruments was $197 million. In addition, to the extent that our exposures are not fully hedged due to the cost associated with derivative instruments, we will be exposed to gains and losses when changes occur in the market price of aluminum. Alternatively, we may continue to purchase derivative instruments at higher prices than historic levels. |
• | 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; | |
• | the inability to extend energy supply contracts upon expiration on economical terms; and | |
• | the inability to pass through energy costs in certain sales contracts. |
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• | ceasing production of commercial grade alumina at our Ouro Preto facility in Brazil; | |
• | the closure of our aluminum sheet mill in Rogerstone, South Wales, U.K.; | |
• | a restructuring plan to streamline our operations at our Rugles facility located in Upper Normandy, France; | |
• | a voluntary separation program for salaried employees in North America and the corporate office aimed at reducing staff levels; | |
• | a voluntary retirement program in Asia; and | |
• | the closure of our light gauge converter products facility in Louisville, Kentucky. |
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• | 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 our 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 hedging 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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• | incur additional debt and provide additional guarantees; | |
• | pay dividends and make other restricted payments, including certain investments; | |
• | 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; and | |
• | consolidate, merge or transfer all or substantially all of our assets or the assets of our restricted subsidiaries. |
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• | the lenders under our senior secured credit facilities could elect to terminate their commitments thereunder, declare all the funds borrowed thereunder to be due and payable and, if not promptly paid, institute foreclosure proceedings against our assets; | |
• | even if those lenders do not declare a default, they may be able to cause all of our available cash to be used to repay their loans; and | |
• | such default could cause a cross-default or cross-acceleration under our other indebtedness, including our 7.25% senior notes. |
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• | 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. |
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• | 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 of the guarantee; | |
• | 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; | |
• | 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. |
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• | applicable interpretations of the staff of the SEC do not permit us to effect the exchange offer; | |
• | for any other reason we do not consummate the exchange offer by August 11, 2010; | |
• | any initial purchaser so requests with respect to the old notes that are not eligible to be exchanged for new notes in the exchange offer and held by it following consummation of the exchange offer; or | |
• | certain holders are not eligible to participate in the exchange offer or may not resell the new notes acquired by them in the exchange offer to the public without delivering a prospectus. |
• | any new notes to be received by it will be acquired in the ordinary course of its business; | |
• | it has no arrangement or understanding with any person to participate in the distribution (within the meaning of Securities Act) of the new notes; | |
• | it is not our “affiliate,” as defined in Rule 405 under the Securities Act, or, if it is an affiliate, that it will comply with applicable registration and prospectus delivery requirements of the Securities Act; and | |
• | if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the new notes; and | |
• | if such holder is a broker-dealer that will receive new notes for its own account in exchange for old notes that were acquired by such broker-dealer as a result of market-making activities or other trading activities, that it will deliver a prospectus in connection with any resale of such new notes. |
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• | such holder is not an “affiliate” of ours within the meaning of Rule 405 under the Securities Act; | |
• | such new notes are acquired in the ordinary course of the holder’s business; and | |
• | the holder does not intend to participate in the distribution of such new notes. |
• | cannot rely on the position of the staff of the SEC set forth in “Exxon Capital Holdings Corporation” or similar interpretive letters; and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. |
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• | to delay accepting for exchange any old notes in connection with the extension of the exchange offer; | |
• | to extend the exchange offer or to terminate the exchange offer and to refuse to accept old notes not previously accepted if any of the conditions set forth below under “— Conditions to the Exchange Offer” have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; or |
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• | subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner, provided that in the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the exchange offer period, if necessary, so that at least five business days remain in the exchange offer following notice of the material change. |
• | the exchange offer, or the making of any exchange by a holder of old notes, would violate applicable law or any applicable interpretation of the staff of the SEC; or | |
• | any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer. |
• | the representations described under “— Purpose of the Exchange Offer,” “— Exchange Offer Procedures” and “Plan of Distribution;” and | |
• | such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the new notes under the Securities Act. |
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• | You must comply with DTC’s Automated Tender Offer Program (“ATOP”) procedures described below; | |
• | The exchange agent must receive a timely confirmation of a book-entry transfer of the old notes into its account at DTC through ATOP pursuant to the procedure for book-entry transfer described below, along with a properly transmitted agent’s message, before the expiration date. |
• | DTC has received an express acknowledgment from a participant in its ATOP that is tendering old notes that are the subject of the book-entry confirmation; | |
• | the participant has received and agrees to be bound by the terms and subject to the conditions set forth in this prospectus; and | |
• | we may enforce the agreement against such participant. |
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• | you must effect your tender through an “eligible guarantor institution;” | |
• | a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided by us herewith, or an agent’s message with respect to guaranteed delivery that is accepted by us, is received by the exchange agent on or prior to the expiration date as provided below; and | |
• | a book-entry confirmation of the transfer of such notes into the exchange agent account at DTC as described above, together with a letter of transmittal (or a manually signed facsimile of the letter of transmittal) properly completed and duly executed, with any signature guarantees and any other documents required by the letter of transmittal or a properly transmitted agent’s message, are received by the exchange agent within three New York Stock Exchange, Inc. trading days after the expiration date. |
• | specify the name of the person who deposited the old notes to be withdrawn; | |
• | identify the old notes to be withdrawn including the certificate number or numbers and aggregate principal amount of old notes to be withdrawn or, in the case of old notes transferred by book-entry transfer, the name and number of the account at DTC to be credited and otherwise comply with the procedures of the relevant book-entry transfer facility; and | |
• | specify the name in which the old notes being withdrawn are to be registered, if different from that of the person who deposited the notes. |
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• | SEC registration fees; | |
• | fees and expenses of the exchange agent and trustee; | |
• | accounting and legal fees and printing costs; and | |
• | related fees and expenses. |
• | certificates representing old notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of old notes tendered; or | |
• | a transfer tax is imposed for any reason other than the exchange of old notes under the exchange offer. |
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• | as set forth in the legend printed on the old notes as a consequence of the issuance of the old notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and | |
• | otherwise as set forth in the offering circular distributed in connection with the private offering of the old notes. |
• | could not rely on the applicable interpretations of the SEC; and | |
• | must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. |
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Three | April 1, | May 16, | Six | Six | |||||||||||||||||||||||||||||||||
Months | 2007 | 2007 | Months | Months | |||||||||||||||||||||||||||||||||
Year Ended | Year Ended | Year Ended | Ended | through | through | Year Ended | Ended | Ended | |||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | March 31, | May 15, | March 31, | March 31, | September 30, | September 30, | |||||||||||||||||||||||||||||
(In millions, except per share amounts) | 2004 | 2005(1) | 2006 | 2007 | 2007(2) | 2008(2) | 2009 | 2008 | 2009 | ||||||||||||||||||||||||||||
Combined | Predecessor | Predecessor | Predecessor | Predecessor | Successor | Successor | Successor | Successor | |||||||||||||||||||||||||||||
Statement of Operations: | |||||||||||||||||||||||||||||||||||||
Net sales | $ | 7,755 | $ | 8,363 | $ | 9,849 | $ | 2,630 | $ | 1,281 | $ | 9,965 | $ | 10,177 | $ | 6,062 | $ | 4,141 | |||||||||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 6,856 | 7,570 | 9,317 | 2,447 | 1,205 | 9,042 | 9,251 | 5,622 | 3,261 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | 289 | 352 | 410 | 99 | 95 | 319 | 319 | 173 | 161 | ||||||||||||||||||||||||||||
Depreciation and amortization | 246 | 230 | 233 | 58 | 28 | 375 | 439 | 223 | 192 | ||||||||||||||||||||||||||||
Research and development expenses | 58 | 41 | 40 | 8 | 6 | 46 | 41 | 22 | 17 | ||||||||||||||||||||||||||||
Interest expense and amortization of debt issuance costs | 74 | 203 | 221 | 54 | 27 | 191 | 182 | 91 | 87 | ||||||||||||||||||||||||||||
Interest income | (26 | ) | (9 | ) | (15 | ) | (4 | ) | (1 | ) | (18 | ) | (14 | ) | (10 | ) | (6 | ) | |||||||||||||||||||
(Gain) loss on change in fair value of derivative instruments, net | (69 | ) | (269 | ) | (63 | ) | (30 | ) | (20 | ) | (22 | ) | 556 | 120 | (152 | ) | |||||||||||||||||||||
Impairment of goodwill | — | — | — | — | — | — | 1,340 | — | — | ||||||||||||||||||||||||||||
Gain on extinguishment of debt | — | — | — | — | — | — | (122 | ) | — | — | |||||||||||||||||||||||||||
Restructuring charges, net | 20 | 10 | 19 | 9 | 1 | 6 | 95 | (1 | ) | 6 | |||||||||||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | (6 | ) | (6 | ) | (16 | ) | (3 | ) | (1 | ) | (25 | ) | 172 | — | 20 | ||||||||||||||||||||||
Other (income) expenses, net | 82 | 17 | (19 | ) | 47 | 35 | (6 | ) | 86 | 33 | (19 | ) | |||||||||||||||||||||||||
7,524 | 8,139 | 10,127 | 2,685 | 1,375 | 9,908 | 12,345 | 6,273 | 3,567 | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 231 | 224 | (278 | ) | (55 | ) | (94 | ) | 57 | (2,168 | ) | (211 | ) | 574 | |||||||||||||||||||||||
Income tax provision (benefit) | 166 | 107 | (4 | ) | 7 | 4 | 73 | (246 | ) | (133 | ) | 199 | |||||||||||||||||||||||||
Net income (loss) | 65 | 117 | (274 | ) | (62 | ) | (98 | ) | (16 | ) | (1,922 | ) | (78 | ) | 375 | ||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | 10 | 21 | 1 | 2 | (1 | ) | 4 | (12 | ) | 2 | 37 | ||||||||||||||||||||||||||
Net income (loss) before cumulative effect of accounting change | 55 | 96 | (275 | ) | (64 | ) | (97 | ) | (20 | ) | (1,910 | ) | (80 | ) | 338 | ||||||||||||||||||||||
Cumulative effect of accounting change — net of tax | — | (6 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
�� | |||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to our common shareholder | $ | 55 | $ | 90 | $ | (275 | ) | $ | (64 | ) | $ | (97 | ) | $ | (20 | ) | $ | (1,910 | ) | $ | (80 | ) | $ | 338 | |||||||||||||
Comprehensive income (loss) | $ | 86 | $ | (56 | ) | $ | (127 | ) | $ | (48 | ) | $ | (64 | ) | $ | 24 | $ | (2,157 | ) | $ | (161 | ) | $ | 515 | |||||||||||||
Dividends per common share | $ | 0.00 | $ | 0.36 | $ | 0.20 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||||||||
Balance Sheet Data (at period end) | |||||||||||||||||||||||||||||||||||||
Total assets | $ | 5,954 | $ | 5,476 | $ | 5,792 | $ | 5,970 | $ | 10,737 | $ | 7,567 | $ | 10,324 | $ | 7,754 | |||||||||||||||||||||
Long-term debt (including current portion) | 2,737 | 2,603 | 2,302 | 2,300 | 2,575 | 2,559 | 2,558 | 2,645 | |||||||||||||||||||||||||||||
Short-term borrowings | 541 | 27 | 133 | 245 | 115 | 264 | 351 | 177 | |||||||||||||||||||||||||||||
Cash and cash equivalents | 31 | 100 | 73 | 128 | 326 | 248 | 219 | 246 | |||||||||||||||||||||||||||||
Shareholders’/invested equity(3) | 555 | 433 | 195 | 175 | 3,523 | 1,419 | 3,507 | 2,011 | |||||||||||||||||||||||||||||
Statement of Cash Flows Data: | |||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 208 | $ | 449 | $ | 16 | $ | (87 | ) | $ | (230 | ) | $ | 405 | $ | (236 | ) | $ | (390 | ) | $ | 464 | |||||||||||||||
Net cash provided by (used in) investing activities | 726 | 325 | 193 | 2 | 2 | (98 | ) | (111 | ) | 52 | (442 | ) | |||||||||||||||||||||||||
Net cash provided by (used in) financing activities | (931 | ) | (703 | ) | (243 | ) | 140 | 201 | (96 | ) | 286 | 251 | (39 | ) | |||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||||||||||
Ratio of earnings to fixed charges(4) | 3.8 | x | 2.1 | x | — | — | — | 1.2 | x | — | — | 7.5 | x |
(1) | All income earned and cash flows generated by us as well as the risks and rewards of these businesses from January 1 to January 5, 2005, were primarily attributed to us and are included in our consolidated results for the year ended December 31, 2005, with the exception of losses of $43 million ($29 million net of tax) arising from the change in fair market value of derivative contracts, primarily with Alcan. Thesemark-to-market losses for the period from January 1 to January 5, 2005, were recorded in the consolidated |
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statement of operations for the year ended December 31, 2005, and were recognized as a decrease in Owner’s net investment. | ||
(2) | The acquisition of Novelis by Hindalco on May 15, 2007 was recorded in accordance with SAB 103. In the accompanying consolidated balance sheets, the consideration and related costs paid by Hindalco in connection with the acquisition have been “pushed down” to us and have been allocated to the assets acquired and liabilities assumed in accordance with FASB 141. Due to the impact of push down accounting, our consolidated financial statements and certain note presentations for the year ended March 31, 2008, are presented in two distinct periods to indicate the application of two different bases of accounting between the periods presented: (1) the period up to, and including, the acquisition date (April 1, 2007, through May 15, 2007, labeled “Predecessor”) and (2) the period after that date (May 16, 2007, through March 31, 2008, labeled “Successor”). The financial statements included elsewhere in this prospectus include a black line division which indicates that the Predecessor and Successor reporting entities shown are not comparable. The consideration paid by Hindalco to acquire Novelis has been pushed down to us and allocated to the assets acquired and liabilities assumed based on our estimates of fair value. This allocation of fair value results in additional charges or income to our post-acquisition consolidated statements of operations. | |
(3) | Alcan’s investment in the Novelis businesses as of December 31, 2004, includes the accumulated earnings of the businesses as well as cash transfers related to cash management functions performed by Alcan. | |
(4) | 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 GAAP. | |
Due to losses incurred in each of the periods presented below, the ratio coverage was less than 1:1. The table below presents the amount of additional earnings required to bring the fixed charge ratio to 1:1 for each respective period. |
Three | April 1, | Six | |||||||||||||||||||
Months | 2007 | Months | |||||||||||||||||||
Year Ended | Ended | through | Year Ended | Ended | |||||||||||||||||
December 31, | March 31, | May 15, | March 31, | September 30, | |||||||||||||||||
(In millions) | 2006 | 2007 | 2007 | 2009 | 2008 | ||||||||||||||||
Predecessor | Predecessor | Predecessor | Successor | Successor | |||||||||||||||||
Additional earnings required to bring fixed charge ratio to 1:1 | $ | 280 | $ | 57 | $ | 93 | $ | 1,996 | $ | 211 | |||||||||||
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May 16, 2007 | April 1, 2007 | ||||||||||||
through | through | Year Ended | |||||||||||
Shipments (In kt): | March 31, 2008 | May 15, 2007 | March 31, 2008 | ||||||||||
Successor | Predecessor | Combined | |||||||||||
Rolled products(1) | 2,640 | 348 | 2,988 | ||||||||||
Ingot products(2) | 147 | 15 | 162 | ||||||||||
Total shipments | 2,787 | 363 | 3,150 | ||||||||||
(1) | Rolled products include tolling (the conversion of customer-owned metal). | |
(2) | Ingot products include primary ingot in Brazil, foundry products in Korea and Europe, secondary ingot in Europe and other miscellaneous recyclable aluminum. |
May 16, 2007 | April 1, 2007 | ||||||||||||
through | through | Year Ended | |||||||||||
Results of Operations (In millions) | March 31, 2008 | May 15, 2007 | March 31, 2008 | ||||||||||
Successor | Predecessor | Combined | |||||||||||
Net sales | $ | 9,965 | $ | 1,281 | $ | 11,246 | |||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 9,042 | 1,205 | 10,247 | ||||||||||
Selling, general and administrative expenses | 319 | 95 | 414 | ||||||||||
Depreciation and amortization | 375 | 28 | 403 | ||||||||||
Research and development expenses | 46 | 6 | 52 | ||||||||||
Interest expense and amortization of debt issuance costs | 191 | 27 | 218 | ||||||||||
Interest income | (18 | ) | (1 | ) | (19 | ) | |||||||
Gain on change in fair value of derivative instruments, net | (22 | ) | (20 | ) | (42 | ) | |||||||
Restructuring charges, net | 6 | 1 | 7 | ||||||||||
Equity in net income of non-consolidated affiliates | (25 | ) | (1 | ) | (26 | ) | |||||||
Other (income) expenses, net | (6 | ) | 35 | 29 | |||||||||
9,908 | 1,375 | 11,283 | |||||||||||
Income (loss) before income taxes | 57 | (94 | ) | (37 | ) | ||||||||
Income tax provision | 73 | 4 | 77 | ||||||||||
Net loss | (16 | ) | (98 | ) | (114 | ) | |||||||
Net income (loss) attributable to noncontrolling interests | 4 | (1 | ) | 3 | |||||||||
Net loss attributable to our common shareholder | $ | (20 | ) | $ | (97 | ) | $ | (117 | ) | ||||
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• | Unaudited Financial Statements: the unaudited condensed consolidated financial statements of the Successor as of and for the six months ended September 30, 2009 and September 30, 2008 (the “Unaudited Financial Statements”). |
• | Audited Financial Statements: |
• | the audited consolidated financial statements of the Successor as of and for the year ended March 31, 2009, as of March 31, 2008 and for the period May 16, 2007, through March 31, 2008; and | |
• | the audited consolidated financial statements of the Predecessor for the period April 1, 2007 through May 15, 2007, for the three months ended March 31,2007, and for the year ended December 31, 2006 (the “Audited Financial Statements”). |
• | We reported pre-tax income of $301 million for the second quarter of fiscal 2009, as compared to pre-tax loss of $272 million for the second quarter of fiscal 2008. Results include $254 million of unrealized gains on derivatives as compared to $221 million of losses in the prior year second quarter. The $254 million of unrealized gains includes a $169 million reversal of previously recognized losses upon settlement of derivatives and $85 million of unrealized gains relating to mark to market adjustments on metal and currency derivatives. The results for the second quarter of fiscal 2008 also include a $26 million gain on the reversal of a legal claim. |
• | We reported pre-tax income of $574 million for the six months ended September 30, 2009, as compared to pre-tax loss of $211��million for the six months ended September 30, 2008. Results include $553 million of unrealized gains on derivatives as compared to $201 million of losses in the prior year. The $553 million of unrealized gains includes a $410 million reversal of previously recognized losses upon settlement of derivatives and $143 million of unrealized gains relating to mark to market adjustments on metal and currency derivatives. The results for the six months ended September 30, 2008 also include a $26 million gain on the reversal of a legal claim. |
• | We reported a Net loss attributable to our common shareholder of $1.9 billion for the year ended March 31, 2009, which includes non-cash impairment charges of $1.5 billion, unrealized losses on derivatives instruments of $519 million, $95 million in restructuring charges and a $122 million gain on a debt exchange transaction, compared to a Net loss attributable to our common shareholder of $117 million for the corresponding period in fiscal 2008. The prior year Net loss attributable to our common shareholder included $45 million of stock compensation expense and $32 million of transaction fees associated with Hindalco’s acquisition of Novelis. |
• | Impairment charges made to goodwill and investments in affiliates totaling $1.5 billion reflected the global economic environment and the related market increase in the cost of capital in fiscal 2009. | |
• | The unrealized loss on derivative instruments for fiscal 2009 was $519 million, compared to a $3 million loss in the prior year period. We use derivative instruments to hedge forecasted purchases |
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of aluminum and other commodities and related foreign currency exposures. This loss primarily reflects the drop in the price of aluminum during the current year from $3,292 per tonne in July 2008 to $1,365 per tonne at March 31, 2009. |
• | Shipments of flat rolled products in the three and six months ended September 30, 2009 were 8% and 12% less than the comparable three and six month periods a year ago, which was before the global economic slowdown. However, flat rolled shipments for the second quarter of fiscal 2009 were up in all regions over the first quarter of fiscal 2010, with the most significant increases in South America and Europe. Shipments of flat rolled products were 14% higher than the low levels experienced in the fourth quarter of fiscal 2009. |
• | Shipments to construction, automotive and industrial companies were significantly impacted in the second half of fiscal 2009 and the first half of fiscal 2010 by the economic downturn while can sheet shipments remained stable in most regions. |
• | Inventory levels were effectively managed despite slowing business conditions. Metal inventories as of September 30, 2009 totaled 325 kt up 9% from an inventory level of 299 kt as of March 31, 2009. |
Three Months Ended | Year Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||
June 30, | September 30, | December 31, | March 31, | March 31, | June 30, | September 30, | ||||||||||||||||||||||||||||||
Key Sales and Shipment Trends | 2008 | 2008 | 2008 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||||||||||||||||
(In millions, except shipments which are in kt) | ||||||||||||||||||||||||||||||||||||
Net sales | $ | 3,103 | $ | 2,959 | $ | 2,176 | $ | 1,939 | $ | 10,177 | $ | 1,960 | $ | 2,181 | ||||||||||||||||||||||
Percentage increase (decrease) in net sales versus comparable previous year period | 10 | % | 5 | % | (20 | )% | (32 | )% | (10 | )% | (37 | )% | (26 | )% | ||||||||||||||||||||||
Rolled product shipments: | ||||||||||||||||||||||||||||||||||||
North America | $ | 286 | $ | 293 | $ | 242 | $ | 246 | $ | 1,067 | 254 | 258 | ||||||||||||||||||||||||
Europe | 271 | 254 | 197 | 188 | 910 | 185 | 203 | |||||||||||||||||||||||||||||
Asia | 133 | 122 | 106 | 86 | 447 | 130 | 139 | |||||||||||||||||||||||||||||
South America | 87 | 87 | 87 | 85 | 346 | 81 | 93 | |||||||||||||||||||||||||||||
Total | 777 | 756 | 632 | 605 | 2,770 | 650 | 693 | |||||||||||||||||||||||||||||
Beverage and food cans | 417 | 416 | 363 | 361 | 1,557 | 395 | 407 | |||||||||||||||||||||||||||||
All other rolled products | 360 | 340 | 269 | 244 | 1,213 | 255 | 286 | |||||||||||||||||||||||||||||
Total | 777 | 756 | 632 | 605 | 2,770 | 650 | 693 | |||||||||||||||||||||||||||||
Percentage increase (decrease) in rolled products shipments versus comparable previous year period: | ||||||||||||||||||||||||||||||||||||
North America | 3 | % | 5 | % | (10 | )% | (11 | )% | (3 | )% | (11 | )% | (12 | )% | ||||||||||||||||||||||
Europe | (5 | )% | (8 | )% | (19 | )% | (30 | )% | (15 | )% | (32 | )% | (20 | )% | ||||||||||||||||||||||
Asia | 13 | % | 5 | % | (21 | )% | (30 | )% | (9 | )% | (2 | )% | 14 | % | ||||||||||||||||||||||
South America | 16 | % | 13 | % | 5 | % | (2 | )% | 7 | % | (7 | )% | 7 | % | ||||||||||||||||||||||
Total | 3 | % | 1 | % | (13 | )% | (20 | )% | (7 | )% | (16 | )% | (8 | )% | ||||||||||||||||||||||
Beverage and food cans | 11 | % | 9 | % | (6 | )% | (7 | )% | 2 | % | (5 | )% | (2 | )% | ||||||||||||||||||||||
All other rolled products | (5 | )% | (7 | )% | (22 | )% | (33 | )% | (17 | )% | (29 | )% | (16 | )% | ||||||||||||||||||||||
Total | 3 | % | 1 | % | (13 | )% | (20 | )% | (7 | )% | (16 | )% | (8 | )% | ||||||||||||||||||||||
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Percent Change | ||||||||||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||||||||||
Ended | Year Ended | Year Ended | ||||||||||||||||||||||||||||||
September 30, | March 31, | March 31, | ||||||||||||||||||||||||||||||
Six Months | 2009 | 2009 | 2008 | |||||||||||||||||||||||||||||
Ended | Versus | Versus | Versus | |||||||||||||||||||||||||||||
September 30, | Year Ended March 31, | September 30, | March 31, | March 31, | ||||||||||||||||||||||||||||
London Metal Exchange Prices | 2009 | 2008 | 2009 | 2008 | 2007 | 2008 | 2008 | 2007 | ||||||||||||||||||||||||
Successor | Successor | Successor | Combined | Predecessor | ||||||||||||||||||||||||||||
Aluminum (per metric tonne, and presented in U.S. dollars): | ||||||||||||||||||||||||||||||||
Closing cash price as of end of period | $ | 1,850 | $ | 2,395 | $ | 1,365 | $ | 2,935 | $ | 2,792 | (22.8 | )% | (53.5 | )% | 5.1 | % | ||||||||||||||||
Average cash price during period | $ | 1,651 | $ | 2,865 | $ | 2,234 | $ | 2,624 | $ | 2,665 | (42.4 | )% | (14.9 | )% | (1.5 | )% |
• | Our products have a price structure based upon the LME price. Increases or decreases in the LME price have a direct impact on net sales, cost of goods sold and working capital. |
• | We pay cash to brokers to settle derivative contracts in advance of billing and collecting cash from our customers, which negatively impacts our liquidity position. The lag between derivative settlement and customer collection typically ranges from 30 to 60 days, which temporarily reduces our liquidity in |
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periods following declines in LME. During the six months ended September 30, 2009, we had net outflows of $416 million for payments related to the settlement of derivatives. |
• | We maximize the amount of our internally supplied metal inputs from our smelting, refining and mining operations in Brazil and rely on output from our recycling operations which utilize used beverage cans (UBCs). Both of these sources of aluminum supply have historically provided an offsetting benefit to the metal price ceiling contracts. We refer to these two sources as “internal hedges.” |
• | We entered into derivative instruments to hedge projected aluminum volume requirements above our assumed internal hedge position, mitigating our exposure to further increases in LME prices. As a result of these instruments, we will continue to incur cash losses related to these contracts even if LME prices remain below the ceiling price. As of September 30, 2009 the fair value of the liability associated with these derivative instruments was $14 million. |
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Six Months | ||||||||||||||||||||||||||||||||||||
Ended | U.S. Dollar | Year Ended | U.S. Dollar | Year Ended | U.S. Dollar | |||||||||||||||||||||||||||||||
September 30, | Strengthen/ | March 31, | Strengthen/ | March 31, | Strengthen/ | |||||||||||||||||||||||||||||||
2009 | 2008 | (Weaken) | 2009 | 2008 | (Weaken) | 2008 | 2007 | (Weaken) | ||||||||||||||||||||||||||||
U.S. dollar per Euro | 1.409 | 1.520 | 7.3 | % | 1.411 | 1.432 | 1.5 | % | 1.432 | 1.294 | (10.7 | )% | ||||||||||||||||||||||||
Brazilian real per U.S. dollar | 1.932 | 1.673 | 15.5 | 1.982 | 1.837 | 7.9 | 1.837 | 2.148 | (14.5 | ) | ||||||||||||||||||||||||||
South Korean won per U.S. dollar | 1,261 | 1,065 | 18.4 | 1,224 | 932 | 31.3 | 932 | 944 | (1.3 | ) | ||||||||||||||||||||||||||
Canadian dollar per U.S. dollar | 1.115 | 1.028 | 8.5 | 1.134 | 1.025 | 10.6 | 1.025 | 1.135 | (9.7 | ) |
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Selected Operating Results | ||||||||||||||||||||||||
Six Months Ended September 30, 2009 | North | South | ||||||||||||||||||||||
(In millions, except shipments which are in kt) | America | Europe | Asia | America | Eliminations | Total | ||||||||||||||||||
Net sales | $ | 1,589 | $ | 1,400 | $ | 708 | $ | 456 | $ | (12 | ) | $ | 4,141 | |||||||||||
Shipments (kt) | ||||||||||||||||||||||||
Rolled products | 512 | 388 | 269 | 174 | — | 1,343 | ||||||||||||||||||
Ingot products | 15 | 42 | 1 | 14 | — | 72 | ||||||||||||||||||
Total shipments | 527 | 430 | 270 | 188 | — | 1,415 | ||||||||||||||||||
Selected Operating Results | ||||||||||||||||||||||||
Six Months Ended September 30, 2008 | North | South | ||||||||||||||||||||||
(In millions, except shipments which are in kt) | America | Europe | Asia | America | Eliminations | Total | ||||||||||||||||||
Net sales | $ | 2,194 | $ | 2,315 | $ | 968 | $ | 595 | $ | (10 | ) | $ | 6,062 | |||||||||||
Shipments (kt) | ||||||||||||||||||||||||
Rolled products | 579 | 525 | 255 | 174 | — | 1,533 | ||||||||||||||||||
Ingot products | 23 | 55 | 11 | 11 | — | 100 | ||||||||||||||||||
Total shipments | 602 | 580 | 266 | 185 | — | 1,633 | ||||||||||||||||||
North | South | |||||||||||||||
Changes in Segment Income (In millions) | America | Europe | Asia | America | ||||||||||||
Segment income — six months ended September 30, 2008 | $ | 44 | $ | 173 | $ | 28 | $ | 95 | ||||||||
Volume: | ||||||||||||||||
Rolled products | (43 | ) | (132 | ) | 4 | (3 | ) | |||||||||
Other | — | (1 | ) | (1 | ) | 2 | ||||||||||
Conversion premium and product mix | 27 | 68 | 21 | 24 | ||||||||||||
Conversion costs(1) | 43 | 30 | 26 | 7 | ||||||||||||
Metal price lag | 52 | (72 | ) | (42 | ) | (6 | ) | |||||||||
Foreign exchange | 12 | 35 | 42 | (9 | ) | |||||||||||
Other changes(2) | (3 | ) | (8 | ) | 8 | (63 | ) | |||||||||
Segment income — six months ended September 30, 2009 | $ | 132 | $ | 93 | $ | 86 | $ | 47 | ||||||||
(1) | Conversion costs include expenses incurred in production such as direct and indirect labor, energy, freight, scrap usage, alloys and hardeners, coatings, alumina and melt loss. Fluctuations in this component reflect cost efficiencies during the period as well as cost inflation (deflation). |
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(2) | Other changes include selling, general & administrative costs and research and development for all segments and certain other items which impact one or more regions, including such items as the impact of purchase accounting and metal price ceiling contracts. Significant fluctuations in these items are discussed below. |
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Six Months Ended | ||||||||
September 30, | ||||||||
(In millions) | 2009 | 2008 | ||||||
Successor | Successor | |||||||
North America | $ | 132 | $ | 44 | ||||
Europe | 93 | 173 | ||||||
Asia | 86 | 28 | ||||||
South America | 47 | 95 | ||||||
Corporate and other(1) | (34 | ) | (33 | ) | ||||
Depreciation and amortization | (192 | ) | (223 | ) | ||||
Interest expense and amortization of debt issuance costs | (87 | ) | (91 | ) | ||||
Interest income | 6 | 10 | ||||||
Unrealized gains (losses) on change in fair value of derivative instruments, net | 553 | (201 | ) | |||||
Adjustment to eliminate proportional consolidation(2) | (33 | ) | (36 | ) | ||||
Restructuring recoveries (charges), net | (6 | ) | 1 | |||||
Other costs, net | 9 | 22 | ||||||
Income (loss) before income taxes | 574 | (211 | ) | |||||
Income tax provision (benefit) | 199 | (133 | ) | |||||
Net income (loss) | 375 | (78 | ) | |||||
Net income attributable to noncontrolling interests | 37 | 2 | ||||||
Net income (loss) attributable to our common shareholder | $ | 338 | $ | (80 | ) | |||
(1) | Corporate and other includes functions that are managed directly from our corporate office, which focuses on strategy development and oversees governance, policy, legal compliance, human resources and finance matters. These expenses have not been allocated to the regions. | |
(2) | Our financial information for our segments (including Segment income) includes the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. However, under GAAP, these non-consolidated affiliates are accounted for using the equity method of accounting. Therefore, in order to reconcile Income from reportable segments to Net income attributable to our common shareholder, the proportional Segment income of these non-consolidated affiliates is removed from Income from reportable segments, net of our share of their net after-tax results, which is reported as equity in net (income) loss of non-consolidated affiliates on our condensed consolidated statements of operations. See “Note 5 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions” to our Unaudited Financial Statements included elsewhere in this prospectus for further information about these non-consolidated affiliates. |
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Selected Operating Results | Reportable Segments | |||||||||||||||||||||||
Year Ended March 31, 2009 | North | South | ||||||||||||||||||||||
(In millions, except shipments which are in kt) | America | Europe | Asia | America | Eliminations | Total | ||||||||||||||||||
Net sales | $ | 3,930 | $ | 3,718 | $ | 1,536 | $ | 1,007 | $ | (14 | ) | $ | 10,177 | |||||||||||
Shipments (kt) | ||||||||||||||||||||||||
Rolled products | 1,067 | 910 | 447 | 346 | — | 2,770 | ||||||||||||||||||
Ingot products | 42 | 99 | 13 | 19 | — | 173 | ||||||||||||||||||
Total shipments | 1,109 | 1,009 | 460 | 365 | — | 2,943 | ||||||||||||||||||
Selected Operating Results | Reportable Segments | |||||||||||||||||||||||
Year Ended March 31, 2008 | North | South | ||||||||||||||||||||||
(In millions, except shipments which are in kt) | America | Europe | Asia | America | Eliminations | Total | ||||||||||||||||||
(Combined) | ||||||||||||||||||||||||
Net sales | $ | 4,101 | $ | 4,338 | $ | 1,818 | $ | 994 | $ | (5 | ) | $ | 11,246 | |||||||||||
Shipments (kt) | ||||||||||||||||||||||||
Rolled products | 1,102 | 1,071 | 491 | 324 | — | 2,988 | ||||||||||||||||||
Ingot products | 64 | 35 | 39 | 24 | — | 162 | ||||||||||||||||||
Total shipments | 1,166 | 1,106 | 530 | 348 | — | 3,150 | ||||||||||||||||||
Reportable Segments | ||||||||||||||||
North | South | |||||||||||||||
Changes in Segment Income (In millions) | America | Europe | Asia | America | ||||||||||||
Segment income — year ended March 31, 2008 | $ | 242 | $ | 273 | $ | 52 | $ | 161 | ||||||||
Volume: | ||||||||||||||||
Rolled products | (28 | ) | (156 | ) | (35 | ) | 5 | |||||||||
Other | — | (3 | ) | (4 | ) | (9 | ) | |||||||||
Conversion premium and product mix | 22 | 68 | 26 | (3 | ) | |||||||||||
Conversion costs(1) | (57 | ) | 12 | (14 | ) | (36 | ) | |||||||||
Metal price lag | (87 | ) | 66 | 63 | (1 | ) | ||||||||||
Foreign exchange | (26 | ) | (40 | ) | (10 | ) | 14 | |||||||||
Other changes(2) | 16 | 16 | 8 | 8 | ||||||||||||
Segment income — year ended March 31, 2009 | $ | 82 | $ | 236 | $ | 86 | $ | 139 | ||||||||
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(1) | Conversion costs include expenses incurred in production such as direct and indirect labor, energy, freight, scrap usage, alloys and hardeners, coatings, alumina and melt loss. Fluctuations in this component reflect cost efficiencies during the period as well as cost inflation (deflation). | |
(2) | Other changes include selling, general & administrative costs and research and development for all segments and certain other items which impact one or more regions, including such items as the impact of purchase accounting and metal price ceiling contracts. Significant fluctuations in these items are discussed below. |
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Year Ended March 31, | ||||||||
(In millions) | 2009 | 2008 | ||||||
Successor | Combined | |||||||
North America | $ | 82 | $ | 242 | ||||
Europe | 236 | 273 | ||||||
Asia | 86 | 52 | ||||||
South America | 139 | 161 | ||||||
Corporate and other(1) | (55 | ) | (84 | ) | ||||
Depreciation and amortization | (439 | ) | (403 | ) | ||||
Interest expense and amortization of debt issuance costs | (182 | ) | (218 | ) | ||||
Interest income | 14 | 19 | ||||||
Unrealized losses on change in fair value of derivative instruments, net | (519 | ) | (3 | ) | ||||
Impairment of goodwill | (1,340 | ) | — | |||||
Gain on extinguishment of debt | 122 | — | ||||||
Impairment charges on long-lived assets | (1 | ) | (1 | ) | ||||
Adjustment to eliminate proportional consolidation(2) | (226 | ) | (43 | ) | ||||
Restructuring recoveries (charges), net | (95 | ) | (7 | ) | ||||
Other costs, net | 10 | (25 | ) | |||||
Loss before income taxes | (2,168 | ) | (37 | ) | ||||
Income tax provision (benefit) | (246 | ) | 77 | |||||
Net loss | (1,922 | ) | (114 | ) | ||||
Net income (loss) attributable to noncontrolling interests | (12 | ) | 3 | |||||
Net loss attributable to our common shareholder | $ | (1,910 | ) | $ | (117 | ) | ||
(1) | Corporate and Other includes functions that are managed directly from our corporate office, which focuses on strategy development and oversees governance, policy, legal compliance, human resources and finance matters. These expenses have not been allocated to the regions. | |
(2) | Our financial information for our segments (including Segment income) includes the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. However, under GAAP, these non-consolidated affiliates are accounted for using the equity method of accounting. Therefore, in order to reconcile Income from reportable segments to net loss attributable to our common shareholder, the proportional Segment income of these non-consolidated affiliates is removed from Income from reportable segments, net of our share of their net after-tax results, which is reported as equity in net (income) loss of non-consolidated affiliates on our condensed consolidated statements of operations. See “Note 10 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions” to our Audited Financial Statements included elsewhere in this prospectus for further information about these non-consolidated affiliates. |
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Selected Operating Results | Reportable Segments | |||||||||||||||||||||||
Year Ended March 31, 2008 | North | South | ||||||||||||||||||||||
(In millions, except shipments which are in kt) | America | Europe | Asia | America | Eliminations | Total | ||||||||||||||||||
(Combined) | ||||||||||||||||||||||||
Net sales | $ | 4,101 | $ | 4,338 | $ | 1,818 | $ | 994 | $ | (5 | ) | $ | 11,246 | |||||||||||
Shipments (kt) | ||||||||||||||||||||||||
Rolled products | 1,102 | 1,071 | 491 | 324 | — | 2,988 | ||||||||||||||||||
Ingot products | 64 | 35 | 39 | 24 | — | 162 | ||||||||||||||||||
Total shipments | 1,166 | 1,106 | 530 | 348 | — | 3,150 | ||||||||||||||||||
Selected Operating Results | Reportable Segments | |||||||||||||||||||||||
Year Ended March 31, 2007 | North | South | ||||||||||||||||||||||
(In millions, except shipments which are in kt) | America | Europe | Asia | America | Eliminations | Total | ||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||
Net sales | $ | 3,721 | $ | 3,851 | $ | 1,711 | $ | 889 | $ | (12 | ) | $ | 10,160 | |||||||||||
Shipments (kt) | ||||||||||||||||||||||||
Rolled products | 1,135 | 1,071 | 460 | 285 | — | 2,951 | ||||||||||||||||||
Ingot products | 74 | 15 | 45 | 28 | — | 162 | ||||||||||||||||||
Total shipments | 1,209 | 1,086 | 505 | 313 | — | 3,113 | ||||||||||||||||||
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Reportable Segments | ||||||||||||||||
North | South | |||||||||||||||
Changes in Segment Income (In millions) | America | Europe | Asia | America | ||||||||||||
Segment income — year ended March 31, 2007 | $ | (54 | ) | $ | 276 | $ | 72 | $ | 182 | |||||||
Volume | (29 | ) | 5 | 12 | 19 | |||||||||||
Conversion premium and product mix | 47 | 59 | 9 | 58 | ||||||||||||
Conversion costs(1) | (60 | ) | (6 | ) | (17 | ) | (10 | ) | ||||||||
Metal price lag | (31 | ) | (61 | ) | 9 | (17 | ) | |||||||||
Foreign exchange | 6 | 16 | (21 | ) | (35 | ) | ||||||||||
Purchase accounting | 242 | (8 | ) | (6 | ) | (9 | ) | |||||||||
Other changes(2) | 121 | (8 | ) | (6 | ) | (27 | ) | |||||||||
Segment income — year ended March 31, 2008 | $ | 242 | $ | 273 | $ | 52 | $ | 161 | ||||||||
(1) | Conversion costs include expenses incurred in production such as direct and indirect labor, energy, freight, scrap usage, alloys and hardeners, coatings, alumina and melt loss. Fluctuations in this component reflect cost efficiencies during the period as well as cost inflation (deflation). | |
(2) | Other changes include selling, general & administrative costs and research & development for all segments and certain other items which impact one or more regions, including such items as the impact of metal price ceiling contracts and stock compensation expense. Significant fluctuations in these items are discussed below. |
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Year Ended March 31, | ||||||||
(In millions) | 2008 | 2007 | ||||||
Combined | Predecessor | |||||||
North America | $ | 242 | $ | (54 | ) | |||
Europe | 273 | 276 | ||||||
Asia | 52 | 72 | ||||||
South America | 161 | 182 | ||||||
Corporate and other(1) | (84 | ) | (171 | ) | ||||
Depreciation and amortization | (403 | ) | (233 | ) | ||||
Interest expense and amortization of debt issuance costs | (218 | ) | (224 | ) | ||||
Interest income | 19 | 16 | ||||||
Unrealized gains on change in fair value of derivative instruments, net | (3 | ) | (152 | ) | ||||
Impairment charges on long-lived assets | (1 | ) | (8 | ) | ||||
Adjustment to eliminate proportional consolidation(2) | (43 | ) | (36 | ) | ||||
Restructuring charges, net | (7 | ) | (27 | ) | ||||
Loss on disposal of assets, net | — | (6 | ) | |||||
Other costs, net | (25 | ) | 4 | |||||
Loss before income taxes | (37 | ) | (361 | ) | ||||
Income tax provision (benefit) | 77 | (99 | ) | |||||
Net loss | (114 | ) | (262 | ) | ||||
Net income attributable to noncontrolling interests | 3 | 3 | ||||||
Net loss attributable to our common shareholder | $ | (117 | ) | $ | (265 | ) | ||
(1) | Corporate and other includes functions that are managed directly from our corporate office, which focuses on strategy development and oversees governance, policy, legal compliance, human resources and finance matters. These expenses have not been allocated to the regions. | |
(2) | Our financial information for our segments (including Segment income) includes the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. However, under GAAP, these non-consolidated affiliates are accounted for using the equity method of accounting. Therefore, in order to reconcile Income from reportable segments to net loss attributable to our common shareholder, the proportional Segment income of these non-consolidated affiliates is removed from Income from reportable segments, net of our share of their net after-tax results, which is reported as equity in net (income) loss of non-consolidated affiliates on our condensed consolidated statements of operations. See “Note 10 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions” to our Audited Financial Statements included elsewhere in this prospectus for further information about these non-consolidated affiliates. |
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September 30, | March 31, | January 31, | March 31, | |||||||||||||
(In millions) | 2009 | 2009 | 2009 | 2008 | ||||||||||||
Cash and cash equivalents | $ | 246 | $ | 248 | $ | 190 | $ | 326 | ||||||||
Overdrafts | (11 | ) | (11 | ) | (19 | ) | (5 | ) | ||||||||
Availability under the ABL Facility | 400 | 233 | 255 | 582 | ||||||||||||
Borrowing availability limitation due to fixed charge coverage ratio | (80 | ) | (80 | ) | (80 | ) | (80 | ) | ||||||||
Total estimated liquidity | $ | 555 | $ | 390 | $ | 346 | $ | 823 | ||||||||
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• | incur additional debt and provide additional guarantees; | |
• | pay dividends and make other restricted payments, including certain investments; | |
• | 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; and | |
• | consolidate, merge or transfer all or substantially all of our assets or the assets of our restricted subsidiaries. |
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Change | ||||||||||||||||||||||||||||||||
Six | ||||||||||||||||||||||||||||||||
Months | ||||||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||||||||
Six Months Ended | 2009 | 2009 | 2008 | |||||||||||||||||||||||||||||
September 30, | Year Ended March 31, | Versus | Versus | Versus | ||||||||||||||||||||||||||||
(In millions) | 2009 | 2008 | 2009 | 2008 | 2007 | 2008 | 2008 | 2007 | ||||||||||||||||||||||||
Successor | Successor | Successor | Combined | Predecessor | ||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 464 | $ | (390 | ) | $ | (236 | ) | $ | 175 | $ | (166 | ) | $ | 854 | $ | (411 | ) | $ | 341 | ||||||||||||
Net cash provided by (used in) investing activities | (442 | ) | 52 | (111 | ) | (96 | ) | 141 | (494 | ) | (15 | ) | (237 | ) | ||||||||||||||||||
Less: Proceeds from sales of assets | (4 | ) | (2 | ) | (5 | ) | (8 | ) | (36 | ) | (2 | ) | 3 | 28 | ||||||||||||||||||
Free cash flow | $ | 18 | $ | (340 | ) | $ | (352 | ) | $ | 71 | $ | (61 | ) | $ | 358 | $ | (423 | ) | $ | 132 | ||||||||||||
Ending cash and cash equivalents | $ | 246 | $ | 219 | $ | 248 | $ | 326 | $ | 128 | $ | 27 | $ | (78 | ) | $ | 198 | |||||||||||||||
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Change | ||||||||||||||||||||||||||||||||
Six | ||||||||||||||||||||||||||||||||
Months | ||||||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||||||||
Six Months Ended | 2009 | 2009 | 2008 | |||||||||||||||||||||||||||||
September 30, | Year Ended March 31, | Versus | Versus | Versus | ||||||||||||||||||||||||||||
(In millions) | 2009 | 2008 | 2009 | 2008 | 2007 | 2008 | 2008 | 2007 | ||||||||||||||||||||||||
Successor | Successor | Successor | Combined | Predecessor | ||||||||||||||||||||||||||||
Capital expenditures | $ | (46 | ) | $ | (70 | ) | $ | (145 | ) | $ | (202 | ) | $ | (119 | ) | $ | 24 | $ | 57 | $ | (83 | ) | ||||||||||
Proceeds from sales of assets | 4 | 2 | 5 | 8 | 36 | 2 | (3 | ) | (28 | ) | ||||||||||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | 2 | 13 | 20 | 25 | 2 | (11 | ) | (5 | ) | 23 | ||||||||||||||||||||||
Proceeds from related parties loans receivable, net | 14 | 13 | 17 | 18 | 31 | 1 | (1 | ) | (13 | ) | ||||||||||||||||||||||
Net proceeds (outflow) from settlement of derivative instruments | (416 | ) | 94 | (8 | ) | 55 | 191 | (510 | ) | (63 | ) | (136 | ) | |||||||||||||||||||
Net cash provided by (used in) investing activities | $ | (442 | ) | $ | 52 | $ | (111 | ) | $ | (96 | ) | $ | 141 | $ | (494 | ) | $ | (15 | ) | $ | (237 | ) | ||||||||||
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Change | ||||||||||||||||||||||||||||||||
Six | ||||||||||||||||||||||||||||||||
Months | ||||||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||||||
September 30, | ||||||||||||||||||||||||||||||||
Six Months Ended | 2009 | 2009 | 2008 | |||||||||||||||||||||||||||||
September 30, | Year Ended March 31, | Versus | Versus | Versus | ||||||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | 2008 | 2008 | 2007 | |||||||||||||||||||||||||
Successor | Successor | Successor | Combined | Predecessor | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Proceeds from issuance of common stock | $ | — | $ | — | $ | — | $ | 92 | $ | — | $ | — | $ | (92 | ) | $ | 92 | |||||||||||||||
Proceeds from issuance of debt | 180 | — | 354 | 1,250 | 41 | 180 | (896 | ) | 1,209 | |||||||||||||||||||||||
Principal repayments | (110 | ) | (7 | ) | (235 | ) | (1,010 | ) | (242 | ) | (113 | ) | 775 | (768 | ) | |||||||||||||||||
Short-term borrowings, net | (96 | ) | 263 | 176 | (181 | ) | 210 | (359 | ) | 357 | (391 | ) | ||||||||||||||||||||
Dividends | (13 | ) | (5 | ) | (6 | ) | (8 | ) | (10 | ) | (8 | ) | 2 | 2 | ||||||||||||||||||
Debt issuance costs | — | — | (3 | ) | (39 | ) | (10 | ) | — | 36 | (29 | ) | ||||||||||||||||||||
Proceeds from the exercise of stock options | — | — | — | 1 | 29 | — | (1 | ) | (28 | ) | ||||||||||||||||||||||
Other | — | — | — | — | 6 | — | — | (6 | ) | |||||||||||||||||||||||
Net cash provided by (used in) financing activities | $ | (39 | ) | $ | 251 | $ | 286 | $ | 105 | $ | 24 | $ | (290 | ) | $ | 181 | $ | 81 | ||||||||||||||
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• | any obligation under certain derivative instruments; | |
• | any obligation under certain guarantees or contracts; |
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• | a retained or contingent interest in assets transferred to an unconsolidated entity or similar entity or similar arrangement that serves as credit, liquidity or market risk support to that entity for such assets; and | |
• | any obligation under a material variable interest held by the registrant in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the registrant, or engages in leasing, hedging or research and development services with the registrant. |
September 30, 2009 | ||||||||||||||||||||
Assets | Liabilities | Net Fair Value | ||||||||||||||||||
Current | Noncurrent | Current | Noncurrent | Assets/(Liabilities) | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Successor | ||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Currency exchange contracts | $ | — | $ | — | $ | (1 | ) | $ | (27 | ) | $ | (28 | ) | |||||||
Interest rate swaps | — | 1 | (13 | ) | — | (12 | ) | |||||||||||||
Electricity swap | — | — | (6 | ) | (15 | ) | (21 | ) | ||||||||||||
Total derivatives designated as hedging instruments | — | 1 | (20 | ) | (42 | ) | (61 | ) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Aluminum forward contracts | 130 | 19 | (84 | ) | (3 | ) | 62 | |||||||||||||
Currency exchange contracts | 40 | 27 | (37 | ) | (7 | ) | 23 | |||||||||||||
Energy contracts | 1 | 1 | (4 | ) | — | (2 | ) | |||||||||||||
Total derivatives not designated as hedging instruments | 171 | 47 | (125 | ) | (10 | ) | 83 | |||||||||||||
Total derivative fair value | $ | 171 | $ | 48 | $ | (145 | ) | $ | (52 | ) | $ | 22 | ||||||||
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March 31, 2009 | ||||||||||||||||||||
Assets | Liabilities | Net Fair Value | ||||||||||||||||||
Current | Noncurrent | Current | Noncurrent | Assets/(Liabilities) | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Successor | ||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Currency exchange contracts | $ | — | $ | — | $ | — | $ | (11 | ) | $ | (11 | ) | ||||||||
Interest rate swaps | — | — | (13 | ) | — | (13 | ) | |||||||||||||
Electricity swap | — | — | (6 | ) | (12 | ) | (18 | ) | ||||||||||||
Total derivatives designated as hedging instruments | — | — | (19 | ) | (23 | ) | (42 | ) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Aluminum contracts | 99 | 41 | (532 | ) | (13 | ) | (405 | ) | ||||||||||||
Currency exchange contracts | 20 | 31 | (77 | ) | (12 | ) | (38 | ) | ||||||||||||
Energy contracts | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Total derivatives not designated as hedging instruments | 119 | 72 | (621 | ) | (25 | ) | (455 | ) | ||||||||||||
Total derivative fair value | $ | 119 | $ | 72 | $ | (640 | ) | $ | (48 | ) | $ | (497 | ) | |||||||
Six Months | Six Months | May 16, 2007 | April 1, 2007 | ||||||||||||||||||
Ended | Ended | Year Ended | through | through | |||||||||||||||||
September 30, | September 30, | March 31, | March 31, | May 15, | |||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | |||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Currency exchange contracts | $ | (21 | ) | $ | 120 | $ | 169 | $ | (82 | ) | $ | (8 | ) |
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Gain or (Loss) | ||||||||||||||||||||||||
Recognized in Income | ||||||||||||||||||||||||
Gain (Loss) | (Ineffective Portion | |||||||||||||||||||||||
Gain (Loss) | Reclassified from | and Amount Excluded from | ||||||||||||||||||||||
Recognized in OCI | AOCI into Income | Effectiveness Testing) | ||||||||||||||||||||||
Six Months | Six Months | Six Months | Six Months | Six Months | Six Months | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Successor | Successor | Successor | Successor | Successor | Successor | |||||||||||||||||||
Electricity swap | $ | (3 | ) | $ | — | $ | 2 | $ | 8 | $ | 2 | $ | — | |||||||||||
Interest rate swaps | $ | 1 | $ | 11 | $ | — | $ | — | $ | — | $ | — |
Gain or (Loss) | ||||||||||||
Recognized in Income | ||||||||||||
Gain (Loss) | (Ineffective Portion and | |||||||||||
Gain (Loss) | Reclassified from | Amount Excluded from | ||||||||||
Recognized in OCI | AOCI into Income | Effectiveness Testing) | ||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||
(In millions) | March 31, 2009 | March 31, 2009 | March 31, 2009 | |||||||||
Successor | Successor | Successor | ||||||||||
Energy contracts | $ | (21 | ) | $ | 12 | $ | — | |||||
Interest rate swaps | $ | 3 | $ | — | $ | — |
Gain (Loss) | |||||||||||||||||||||||||||
Recognized in Income | |||||||||||||||||||||||||||
Gain (Loss) | (Ineffective Portion and | ||||||||||||||||||||||||||
Gain (Loss) | Reclassified from | Amount Excluded from | |||||||||||||||||||||||||
Recognized in OCI | AOCI into Income | Effectiveness Testing) | |||||||||||||||||||||||||
May 16, | April 1, | May 16, | April 1, | May 16, | April 1, | ||||||||||||||||||||||
2007 | 2007 | 2007 | 2007 | 2007 | 2007 | ||||||||||||||||||||||
through | through | through | through | through | through | ||||||||||||||||||||||
March 31, | May 15, | March 31, | May 15, | March 31, | May 15, | ||||||||||||||||||||||
(In millions) | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
Currency exchange contracts | $ | — | $ | 4 | $ | — | $ | 1 | $ | — | $ | — | |||||||||||||||
Energy contracts | $ | 23 | $ | 4 | $ | 8 | $ | — | $ | — | $ | — | |||||||||||||||
Interest rate swaps | $ | (15 | ) | $ | — | $ | — | $ | — | $ | (1 | ) | $ | — |
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May 16, 2007 | April 1, 2007 | ||||||||||||||||||||
Six Months Ended | Year Ended | through | through | ||||||||||||||||||
September 30, | March 31, | March 31, | May 15, | ||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | |||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Derivative Instruments Not Designated as Hedges | |||||||||||||||||||||
Aluminum contracts | $ | 97 | $ | (159 | ) | $ | (561 | ) | $ | 44 | $ | 7 | |||||||||
Currency exchange contracts | 51 | 39 | 21 | (44 | ) | 10 | |||||||||||||||
Energy contracts | — | (9 | ) | (29 | ) | 12 | 3 | ||||||||||||||
Gain (loss) recognized | 148 | (129 | ) | (569 | ) | 12 | 20 | ||||||||||||||
Derivative Instruments Designated as Cash Flow Hedges | |||||||||||||||||||||
Interest rate swaps | — | — | — | (1 | ) | — | |||||||||||||||
Electricity swap | 4 | 9 | 13 | 11 | — | ||||||||||||||||
Gain (loss) on change in fair value of derivative instruments, net | $ | 152 | $ | (120 | ) | $ | (556 | ) | $ | 22 | $ | 20 | |||||||||
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Maximum | Liability | |||||||
Potential Future | Carrying | |||||||
(In millions) | Payment | Value | ||||||
Wholly-owned Subsidiaries | $ | 43 | $ | 5 | ||||
Aluminium Norf GmbH | 15 | — |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | through | through | Ended | Year Ended | |||||||||||||||||
March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||
(In millions) | 2009 | 2008 | 2007 | 2007 | 2006 | ||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Receivables forfaited | $ | 570 | $ | 507 | $ | 51 | $ | 68 | $ | 424 | |||||||||||
Receivables factored | 70 | 75 | — | 18 | 71 | ||||||||||||||||
Forfaiting expense | 5 | 6 | 1 | 1 | 5 | ||||||||||||||||
Factoring expense | 1 | 1 | — | — | 1 |
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March 31, | ||||||||
(In millions) | 2009 | 2008 | ||||||
Successor | Successor | |||||||
Forfaited receivables outstanding | $ | 71 | $ | 149 | ||||
Factored receivables outstanding | — | — |
Less Than | More Than | |||||||||||||||||||
(In millions) | Total | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||||||||||||||
Debt(1)(2) | $ | 2,522 | $ | 56 | $ | 126 | $ | 22 | $ | 2,318 | ||||||||||
Interest on long-term debt(2)(3) | 754 | 159 | 306 | 200 | 89 | |||||||||||||||
Capital leases(4) | 68 | 7 | 14 | 13 | 34 | |||||||||||||||
Operating leases(5) | 96 | 19 | 30 | 24 | 23 | |||||||||||||||
Purchase obligations(6) | 7,205 | 2,035 | 3,121 | 1,303 | 746 | |||||||||||||||
Unfunded pension plan benefits(7) | 120 | 12 | 21 | 24 | 63 | |||||||||||||||
Other post-employment benefits(7) | 114 | 7 | 17 | 21 | 69 | |||||||||||||||
Funded pension plans(7) | 52 | 52 | — | — | — | |||||||||||||||
Total(2) | $ | 10,931 | $ | 2,347 | $ | 3,635 | $ | 1,607 | $ | 3,342 | ||||||||||
(1) | Includes only principal payments on our 7.25% senior notes, Term Loan Facility, ABL Facility and notes payable to banks and others. These amounts exclude payments under capital lease obligations. | |
(2) | Does not include principal or interest payments on the old notes and does not give effect to the use of proceeds from the offering of old notes. | |
(3) | Interest on our fixed rate debt is estimated using the stated interest rate. Interest on our variable-rate debt is estimated using the rate in effect as of March 31, 2009 and includes the effect of current interest rate swap agreements. Actual future interest payments may differ from these amounts based on changes in floating interest rates or other factors or events. These amounts include an estimate for unused commitment fees. Excluded from these amounts are interest related to capital lease obligations, the amortization of debt issuance and other costs related to indebtedness. |
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(4) | Includes both principal and interest components of future minimum capital lease payments. Excluded from these amounts are insurance, taxes and maintenance associated with the property. | |
(5) | Includes the minimum lease payments for non-cancelable leases for property and equipment used in our operations. We do not have any operating leases with contingent rents. Excluded from these amounts are insurance, taxes and maintenance associated with the properties and equipment. | |
(6) | Includes agreements to purchase goods (including raw materials and capital expenditures) and services that are enforceable and legally binding on us, and that specify all significant terms. Some of our raw material purchase contracts have minimum annual volume requirements. In these cases, we estimate our future purchase obligations using annual minimum volumes and costs per unit that were in effect as of March 31, 2009. Due to volatility in the cost of our raw materials, actual amounts paid in the future may differ from these amounts. Excluded from these amounts are the impact of any derivative instruments and any early contract termination fees, such as those typically present in energy contracts. | |
(7) | Obligations for postretirement benefit plans are estimated based on actuarial estimates using benefit assumptions for, among other factors, discount rates, rates of compensation increases, and healthcare cost trends. Payments for unfunded pension plan benefits and other post-employment benefits are estimated through 2016. For funded pension plans, estimating the requirements beyond fiscal 2010 is not practical, as it depends on the performance of the plans’ investments, among other factors. |
Dividend/ | ||||||||
Declaration Date | Record Date | Share (in $) | Payment Date | |||||
March 1, 2005 | March 11, 2005 | 0.09 | March 24, 2005 | |||||
April 22, 2005 | May 20, 2005 | 0.09 | June 20, 2005 | |||||
July 27, 2005 | August 22, 2005 | 0.09 | September 20, 2005 | |||||
October 28, 2005 | November 21, 2005 | 0.09 | December 20, 2005 | |||||
February 23, 2006 | March 8, 2006 | 0.09 | March 23, 2006 | |||||
April 27, 2006 | May 20, 2006 | 0.09 | June 20, 2006 | |||||
August 28, 2006 | September 7, 2006 | 0.01 | September 25, 2006 | |||||
October 26, 2006 | November 20, 2006 | 0.01 | December 20, 2006 |
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Goodwill as of | ||||
September 30, 2009 | ||||
North America | $ | 288 | ||
Europe | 181 | |||
South America | 142 | |||
$ | 611 | |||
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Change in | Change in | |||||||
Price | Fair Value | |||||||
($ in millions) | ||||||||
Electricity | (10 | )% | $ | (2 | ) | |||
Natural Gas | (10 | )% | (2 | ) | ||||
Heating Oil | (10 | )% | — |
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Change in | Change in | |||||||
($ in millions) | Exchange Rate | Fair Value | ||||||
Currency measured against the U.S. dollar | ||||||||
Brazilian real | (10 | )% | $ | (35 | ) | |||
Euro | 10 | % | (29 | ) | ||||
Korean won | 10 | % | (7 | ) | ||||
Canadian dollar | (10 | )% | (2 | ) | ||||
British pound | 10 | % | (1 | ) | ||||
Swiss franc | 10 | % | (1 | ) |
Change in | Change in | |||||||
($ in millions) | Rate | Fair Value | ||||||
Interest Rate Contracts | ||||||||
North America | (10 | )% | $ | (1 | ) | |||
Asia | (10 | )% | — |
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• | hot mills— that require sheet ingot, a rectangular slab of aluminum, as starter material; and | |
• | continuous casting mills— that can convert molten metal directly into semi-finished sheet. |
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North America | Asia | |
Alcoa, Inc. (Alcoa) | Furukawa-Sky Aluminum Corp. | |
Aleris International, Inc. (Aleris) | Sumitomo Light Metal Company, Ltd. | |
Arco Aluminium, Inc. (a subsidiary of BP plc) | Southwest Aluminum Co. Ltd. | |
Norandal Aluminum | Kobe Steel Ltd. | |
Wise Metal Group LLC | Alcoa | |
Rio Tinto Alcan Inc. |
Europe | South America | |
Hydro A.S.A. | Companhia Brasileira de Alumínio | |
Rio Tinto Alcan Inc. | Alcoa | |
Alcoa | ||
Aleris |
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• | North America. Headquartered in Cleveland, Ohio, this segment manufactures aluminum sheet and light gauge products and operates 11 plants, including two fully dedicated recycling facilities, in two countries. | |
• | Europe. Headquartered in Zurich, Switzerland, this segment manufactures aluminum sheet and foil products and operates 14 plants, including one dedicated recycling facility, in six countries. | |
• | Asia. Headquartered in Seoul, South Korea, this segment manufactures aluminum sheet and light gauge products and operates three plants in two countries. | |
• | South America. Headquartered in Sao Paulo, Brazil, this segment comprises bauxite mining, aluminum smelting operations, power generation, aluminum sheet and light gauge products and operates four plants in Brazil. |
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Six Months | Six Months | May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||||||||
Ended | Ended | Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||||||||
September 30, | September 30, | March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||||||||
Net sales(1) | $ | 4,141 | $ | 6,062 | $ | 10,177 | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | |||||||||||||||
Total shipments | 1,415 | 1,633 | 2,943 | 2,787 | 363 | 772 | 3,123 | ||||||||||||||||||||||
North America | |||||||||||||||||||||||||||||
Net sales | $ | 1,589 | $ | 2,194 | $ | 3,930 | $ | 3,649 | $ | 446 | $ | 925 | $ | 3,691 | |||||||||||||||
Total shipments | 527 | 602 | 1,109 | 1,031 | 134 | �� | 286 | 1,229 | |||||||||||||||||||||
Europe | |||||||||||||||||||||||||||||
Net sales | $ | 1,400 | $ | 2,315 | $ | 3,718 | $ | 3,829 | $ | 510 | $ | 1,057 | $ | 3,620 | |||||||||||||||
Total shipments | 430 | 580 | 1,009 | 973 | 133 | 287 | 1,073 | ||||||||||||||||||||||
Asia | |||||||||||||||||||||||||||||
Net sales | $ | 708 | $ | 968 | $ | 1,536 | $ | 1,605 | $ | 216 | $ | 413 | $ | 1,692 | |||||||||||||||
Total shipments | 270 | 266 | 460 | 471 | 60 | 117 | 516 | ||||||||||||||||||||||
South America | |||||||||||||||||||||||||||||
Net sales | $ | 456 | $ | 595 | $ | 1,007 | $ | 887 | 109 | $ | 235 | $ | 863 | ||||||||||||||||
Total shipments | 188 | 185 | 365 | 312 | 36 | 82 | 305 |
(1) | Consolidated Net sales include the results of our non-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. These net sales were $12 million, $10 million, $14 million, $5 million, and $17 million, for the six months ended September 30, 2009, the six months ended September 30, 2008, the year ended March 31, 2009, the period from May 16, 2007 through March 31, 2008 and for the year ended December 31, 2006, respectively. There were less than $1 million of net sales from our non-consolidated affiliates in each of the periods from April 1, 2007 through May 15, 2007, and the three months ended March 31, 2007. |
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Agfa-Gevaert N.V. | Daching Holdings Limited | |
Alcan’s packaging business group | Lotte Aluminum Co. Ltd. | |
Anheuser-Busch Companies, Inc. | Kodak Polychrome Graphics GmbH | |
Affiliates of Ball Corporation | Impress | |
BMW Group | Pactiv Corporation | |
Can-Pack S.A. | Rexam Plc | |
Various bottlers of theCoca-Cola system | Ryerson Inc. | |
Crown Cork & Seal Company, Inc. | Tetra Pak Ltd. |
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Six Months | Six Months | May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||||||||
Ended | Ended | Year Ended | through | through | Ended | Year Ended | |||||||||||||||||||||||
September 30, | September 30, | March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||||||||
Successor | Successor | Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Research and development expenses | $ | 17 | $ | 22 | $ | 41 | $ | 46 | $ | 6 | $ | 8 | $ | 40 |
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Location | Plant Processes | Major End-Use Markets | ||
Berea, Kentucky | Recycling | Recycled ingot | ||
Burnaby, British Columbia | Finishing | Foil containers | ||
Fairmont, West Virginia | Cold rolling, finishing | Foil, HVAC material | ||
Greensboro, Georgia | Recycling | Recycled ingot | ||
Kingston, Ontario | Cold rolling, finishing | Automotive, construction/industrial | ||
Logan, Kentucky(1) | Hot rolling, cold rolling, finishing, recycling | Can stock | ||
Oswego, New York | Novelis Fusion(tm) casting, hot rolling, cold rolling, recycling, finishing | Can stock, construction/industrial, semi-finished coil | ||
Saguenay, Quebec | Continuous casting, recycling | Semi-finished coil | ||
Terre Haute, Indiana | Cold rolling, finishing | Foil | ||
Toronto, Ontario | Finishing | Foil, foil containers | ||
Warren, Ohio | Coating | Can end stock |
(1) | We own 40% of the outstanding common shares of Logan Aluminum Inc. (“Logan”), but we have made subsequent equipment investments such that our portion of Logan’s total machine hours has provided us more than 60% of Logan’s total production. |
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Location | Plant Processes | Major End-Use Markets | ||
Berlin, Germany | Converting | Packaging | ||
Bresso, Italy | Finishing, painting | Painted sheet, architectural | ||
Bridgnorth, United Kingdom | Cold rolling, finishing, converting | Foil, packaging | ||
Dudelange, Luxembourg | Continuous casting, cold rolling, finishing | Foil | ||
Göttingen, Germany | Cold rolling, finishing, painting | Can end, lithographic, painted sheet | ||
Latchford, United Kingdom | Recycling | Sheet ingot from recycled metal | ||
Ludenscheid, Germany | Cold rolling, finishing, converting | Foil, packaging | ||
Nachterstedt, Germany | Cold rolling, finishing | Automotive, industrial | ||
Norf, Germany(1) | Hot rolling, cold rolling | Can stock, foilstock, feeder stock for finishing operations | ||
Ohle, Germany | Cold rolling, finishing, converting | Foil, packaging | ||
Pieve, Italy | Continuous casting, cold rolling | Coil for Bresso, industrial | ||
Rugles, France | Continuous casting, cold rolling, finishing | Foil | ||
Sierre, Switzerland(2) | Novelis Fusion(tm) casting, hot rolling, cold rolling | Automotive sheet, industrial |
(1) | Operated as a 50/50 joint venture between us and Hydro Aluminium Deutschland GmbH (Hydro). | |
(2) | We have entered into an agreement with Alcan pursuant to which Alcan retains access to the plate production capacity, which represents a portion of the total production capacity of the Sierre hot mill. |
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Location | Plant Processes | Major End-Use Markets | ||
Bukit Raja, Malaysia(1) | Continuous casting, cold rolling | Construction/industrial, heavy and lightgauge foils | ||
Ulsan, Korea(2) | Novelis Fusion(tm) casting, hot rolling, cold rolling, recycling | Can stock, construction/industrial, electronics, foilstock, and recycled material | ||
Yeongju, Korea(3) | Hot rolling, cold rolling, recycling | Can stock, construction/industrial, electronics, foilstock and recycled material |
(1) | Ownership of the Bukit Raja plant corresponds to our 58% equity interest in Aluminium Company of Malaysia Berhad. | |
(2) | We hold a 68% equity interest in the Ulsan plant. | |
(3) | We hold a 68% equity interest in the Yeongju plant. |
Location | Plant Processes | Major End-Use Markets | ||
Pindamonhangaba, Brazil | Hot rolling, cold rolling, recycling | Construction/industrial, can stock, foilstock, recycled ingot, foundry ingot, forge stock | ||
Utinga, Brazil | Finishing | Foil | ||
Ouro Preto, Brazil(1) | Smelting | Primary aluminum (sheet ingot and billets) | ||
Aratu, Brazil | Smelting | Primary aluminum (sheet ingot) |
(1) | In May 2009, we ceased the production of alumina at our Ouro Preto facility in Brazil. |
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Name | Age | Position | ||||
Philip Martens | 49 | President and Chief Operating Officer | ||||
Steven Fisher | 38 | Senior Vice President and Chief Financial Officer | ||||
Erwin Mayr | 40 | Senior Vice President and Chief Strategy Officer | ||||
Leslie J. Parrette Jr. | 48 | Senior Vice President, General Counsel and Compliance Officer | ||||
Jean-Marc Germain | 43 | Senior Vice President and President of Novelis North America | ||||
Antonio Tadeu Coelho Nardocci | 52 | Senior Vice President and President of Novelis Europe | ||||
Thomas Walpole | 55 | Senior Vice President and President of Novelis Asia | ||||
Alexandre Almeida | 45 | Senior Vice President and President of Novelis South America | ||||
Robert Virtue | 57 | Vice President, Human Resources | ||||
Robert Nelson | 52 | Vice President, Controller and Chief Accounting Officer | ||||
Brenda Pulley | 51 | Vice President, Corporate Affairs and Communications | ||||
Nick Madden | 52 | Vice President and Chief Procurement Officer | ||||
Randal Miller | 46 | Vice President, Treasurer | ||||
Christopher Courts | 32 | Assistant General Counsel and Corporate Secretary |
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Name | Director Since | Age | Position | |||||
Kumar Mangalam Birla | May 15, 2007 | 42 | Chairman of the Board | |||||
Askaran Agarwala | May 15, 2007 | 76 | Director | |||||
D. Bhattacharya | May 15, 2007 | 61 | Director and Vice Chairman of the Board | |||||
Clarence J. Chandran | January 6, 2005 | 60 | Director | |||||
Donald A. Stewart | May 15, 2007 | 62 | Director |
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• | evaluating and compensating our independent registered public accounting firm; | |
• | making recommendations to the Board of Directors and shareholders relating to the appointment, retention and termination of our independent registered public accounting firm; | |
• | discussing with our independent registered public accounting firm their qualifications and independence from management; | |
• | reviewing with our independent registered public accounting firm the scope and results of their audit; | |
• | pre-approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; | |
• | review areas of potential significant financial risk and the steps taken to monitor and manage such exposures; |
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• | overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC; and | |
• | reviewing and monitoring our accounting principles, accounting policies and disclosure, internal control over financial reporting and disclosure controls and procedures. |
Name | Title | |
Martha Finn Brooks | Former President and Chief Operating Officer | |
Steven Fisher | Senior Vice President and Chief Financial Officer | |
Arnaud de Weert | Former President of Novelis Europe | |
Jean-Marc Germain | Senior Vice President and President of Novelis North America | |
Thomas Walpole | Senior Vice President and President of Novelis Asia |
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• | Provide Total Direct Compensation Opportunities That Are Competitive with Similar Positions at Comparable Companies: To enable us to attract, motivate and retain qualified executives, total direct compensation opportunities for each executive (base pay, annual short-term incentives and long-term incentives) are targeted at levels to be competitive with similar positions at comparable companies. The Committee strives to create a total direct compensation package that is at the median of the peer companies described below. | |
• | A Substantial Portion of Total Direct Compensation Should Be at Risk Because It Is Performance-Based: We believe executives should be rewarded for their performance. Consequently, a substantial portion of an executive’s total direct compensation should be at risk, with amounts actually paid dependent on performance against pre-established objectives for the individual and us. The proportion of an individual’s total direct compensation that is based upon these performance objectives should increase as the individual’s business responsibilities increase. | |
• | A Substantial Portion of Total Direct Compensation Should be Delivered in the Form of Long-Term Performance Based Awards: We believe a long-term stake in the sustained performance of Novelis effectively aligns executive and shareholder interests and provides motivation for enhancing shareholder value. As a result, we may provide long-term performance based awards, which are generally paid in cash. |
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• | Base Pay | |
• | Short-Term (Annual) Incentives | |
• | Long-Term Incentives | |
• | Employee Benefits |
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Target | ||||||||||||||||||||||||||||||
Bonus | Achievement | |||||||||||||||||||||||||||||
as a % of | Target | Target | Actual | as a % of | Bonus | |||||||||||||||||||||||||
Name | Salary | Bonus | Performance Objectives | Weighting | Performance | Performance | Target | Payoff | ||||||||||||||||||||||
Martha Finn Brooks | 110 | % | $ | 825,000 | Novelis Operating EBITDA | 45 | % | $ | 790.1 M | $ | 572.6 M | 0 | $ | — | ||||||||||||||||
Novelis Operating Free Cash Flow | 45 | % | $ | (26 M | ) | $ | (296.4 M) | 0 | $ | — | ||||||||||||||||||||
Novelis EHS | ||||||||||||||||||||||||||||||
Recordable Case Rate | 3 | % | 0.99 | 0.98 | 100 | % | $ | 24,750 | ||||||||||||||||||||||
Lost Time Rate | 3 | % | 0.26 | 0.25 | 93.3 | % | $ | 23,100 | ||||||||||||||||||||||
Completed Strategic Initiatives | 4 | % | 4 | >6 | 200 | % | $ | 66,000 | ||||||||||||||||||||||
$ | 113,850 | |||||||||||||||||||||||||||||
Steven Fisher | 75 | % | $ | 337,500 | Novelis Operating EBITDA | 45 | % | $ | 790.1 M | $ | 572.6 M | 0 | $ | — | ||||||||||||||||
Novelis Operating Free Cash Flow | 45 | % | $ | (26 M | ) | $ | (296.4 M) | 0 | $ | — | ||||||||||||||||||||
Novelis EHS | ||||||||||||||||||||||||||||||
Recordable Case Rate | 3 | % | 0.99 | 0.98 | 100 | % | $ | 10,125 | ||||||||||||||||||||||
Lost Time Rate | 3 | % | 0.26 | 0.25 | 93.3 | % | $ | 9,450 |
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Target | ||||||||||||||||||||||||||||||
Bonus | Achievement | |||||||||||||||||||||||||||||
as a % of | Target | Target | Actual | as a % of | Bonus | |||||||||||||||||||||||||
Name | Salary | Bonus | Performance Objectives | Weighting | Performance | Performance | Target | Payoff | ||||||||||||||||||||||
Completed Strategic Initiatives | 4 | % | 4 | >6 | 200 | % | $ | 27,000 | ||||||||||||||||||||||
$ | 46,575 | |||||||||||||||||||||||||||||
Arnaud de Weert | 62.5 | % | $ | 367,031 | Novelis Operating EBITDA | 22.5 | % | $ | 790.1 M | $ | 572.6 M | 0 | $ | — | ||||||||||||||||
Europe Operating EBITDA | 22.5 | % | € | 242 M | € | 168.5 M | 0 | $ | — | |||||||||||||||||||||
Novelis Operating Free Cash Flow | 22.5 | % | $ | (26 M | ) | $ | (296.4 M) | 0 | $ | — | ||||||||||||||||||||
Europe Operating Free Cash Flow | 22.5 | % | € | 151 M | € | 159.9 M | 114 | % | $ | 94,391 | ||||||||||||||||||||
Europe EHS | ||||||||||||||||||||||||||||||
Recordable Case Rate | 3 | % | 1.05 | 0.86 | 200 | % | $ | 22,022 | ||||||||||||||||||||||
Lost Time Rate | 3 | % | 0.39 | 0.33 | 133 | % | $ | 14,681 | ||||||||||||||||||||||
Completed Strategic Initiatives | 4 | % | 4 | >6 | 200 | % | $ | 29,362 | ||||||||||||||||||||||
$ | 160,457 | |||||||||||||||||||||||||||||
Jean-Marc Germain | 60 | % | $ | 195,000 | Novelis Operating EBITDA | 22.5 | % | $ | 790.1 M | $ | 572.6 M | 0 | $ | — | ||||||||||||||||
North America Operating EBITDA | 22.5 | % | $ | 240 M | $ | 160.3 M | 0 | $ | — | |||||||||||||||||||||
Novelis Operating Free Cash Flow | 22.5 | % | $ | (26 M | ) | $ | (296.4 M) | 0 | $ | — | ||||||||||||||||||||
North America Operating Free Cash Flow | 22.5 | % | $ | (87 M | ) | $ | (162.1M) | 0 | $ | — | ||||||||||||||||||||
North America EHS | ||||||||||||||||||||||||||||||
Recordable Case Rate | 3 | % | 1.28 | 1.53 | 0 | $ | — | |||||||||||||||||||||||
Lost Time Rate | 3 | % | 0.1 | 0.25 | 3 | % | $ | 190 | ||||||||||||||||||||||
Completed Strategic Initiatives | 4 | % | 4 | >6 | 200 | % | $ | 15,232 | ||||||||||||||||||||||
$ | 15,422 | |||||||||||||||||||||||||||||
Thomas Walpole | 55 | % | $ | 156,750 | Novelis Operating EBITDA | 22.5 | % | $ | 790.1 M | $ | 572.6 M | 0 | $ | — | ||||||||||||||||
Asia Operating EBITDA | 22.5 | % | $ | 129 M | $ | 47.4 M | 0 | $ | — | |||||||||||||||||||||
Novelis Operating Free Cash Flow | 22.5 | % | $ | (26 M | ) | $ | (296.4 M) | 0 | $ | — | ||||||||||||||||||||
Asia Operating Free Cash Flow | 22.5 | % | $ | 73 M | $ | (143.4 M) | 0 | $ | — | |||||||||||||||||||||
Asia EHS | ||||||||||||||||||||||||||||||
Recordable Case Rate | 3 | % | 0.59 | 0.55 | 133 | % | $ | 6,270 | ||||||||||||||||||||||
Lost Time Rate | 3 | % | 0.17 | 0.12 | 157 | % | $ | 7,367 | ||||||||||||||||||||||
Completed Strategic Initiatives | 4 | % | 4 | >6 | 200 | % | $ | 12,540 | ||||||||||||||||||||||
$ | 26,177 | |||||||||||||||||||||||||||||
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Eligible for | ||||||||||||||||
2008-2010 | Payout | |||||||||||||||
LTIP | Based on | 2009 LTIP | 2009 LTIP | |||||||||||||
Approved | 2009 | Approved | Approved | |||||||||||||
Name | Grant | Results | Level | Payout | ||||||||||||
Martha Finn Brooks | $ | 2,100,000 | $ | 210,000 | — | % | $ | — | ||||||||
Steven Fisher | $ | 450,000 | $ | 45,000 | — | % | $ | — | ||||||||
Arnaud de Weert | $ | 450,000 | $ | 45,000 | — | % | $ | — | ||||||||
Jean-Marc Germain | $ | 450,000 | $ | 45,000 | — | % | $ | — | ||||||||
Thomas Walpole | $ | 325,000 | $ | 32,500 | — | % | $ | — |
2009-2012 | Number of | |||||||||||||||
LTIP | Number of | SARs Vesting | Number of | |||||||||||||
Approved | SARs | Based on | SARs Forfeited/ | |||||||||||||
Name | Grant | Granted | FY 2009 | Canceled | ||||||||||||
Martha Finn Brooks(A) | $ | 2,231,000 | 3,919,938 | — | 979,984 | |||||||||||
Steven Fisher | $ | 500,000 | 878,516 | — | 219,629 | |||||||||||
Arnaud de Weert | $ | 500,000 | 878,516 | — | 219,629 | |||||||||||
Jean-Marc Germain | $ | 500,000 | 878,516 | — | 219,629 | |||||||||||
Thomas Walpole | $ | 350,000 | 614,961 | — | 153,740 |
(A) | Ms Brooks terminated her services with the Company effective May 8, 2009 and an additional 2,939,954 SARs granted to her were forfeited/cancelled. |
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Recognition | Consideration | |||||||
Name | Shares | Received | ||||||
Martha Finn Brooks | 14,200 | $ | 638,006 | |||||
Steven Fisher | 2,850 | $ | 128,051 | |||||
Arnaud de Weert | 4,100 | $ | 184,213 | |||||
Jean-Marc Germain | 2,700 | $ | 121,311 | |||||
Thomas Walpole | 3,500 | $ | 157,255 |
• | U.S. Pension Plan: |
• | Swiss Pension Schemes: Since our spin-off from Alcan, we continued to participate in Alcan’s two pension schemes in Switzerland: (1) the Pensionskasse Alcan Schweiz (a defined benefit plan) and (2) the Erganzungskasse Alcan Schweiz (a defined contribution plan). The defined benefit plan is computed based on a participant’s final annual earnings (up to a limit and less a coordination amount) and service up to 45 years. The defined contribution plan only recognizes earnings in excess of the defined benefit earnings limit. Mr. de Weert was the only named executive officer eligible for the Swiss pension schemes in 2008. | |
• | Savings Plan and Non-Qualified Defined Contribution Plan: All U.S. based executives are eligible to participate in our tax qualified savings plan. We match up to 4.5% of pay (up to the IRS compensation limit; $245,000 for calendar year 2009) for participants who contribute 6% of pay or more to the savings plan. In addition, U.S. based executives hired on or after January 1, 2005 are eligible to share in our discretionary contributions. Discretionary contributions are first made to the qualified plan (up to the IRS compensation limit) and any excess amounts are made to our non-qualified defined contribution plan. For fiscal 2009, we made a discretionary contribution equal to 5% of pay. Mr. Fisher was the only named executive officer eligible for a discretionary contribution for the period. | |
• | Perquisites: As noted in our Summary Compensation Table, we provide our officers with certain perquisites consistent with market practice. We do not view perquisites as a significant element of our comprehensive compensation structure. | |
• | Health & Welfare Benefits: Executives are entitled to participate in our employee benefit plans (including medical, dental, disability, and life insurance benefits) on the same basis as other employees. |
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Mr. Debnarayan Bhattacharya
Mr. Askaran Agarwala
Non-Equity | Change | |||||||||||||||||||||||||||||||||
Incentive | in | |||||||||||||||||||||||||||||||||
Stock | Option | Plan | Pension | All Other | ||||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Awards(A)(B) | Awards(B) | Compensation(C) | Value(D) | Compensation(E) | Total | |||||||||||||||||||||||||
Martha Finn Brooks, | 2009 | $ | 731,250 | $ | — | $ | 211,104 | $ | — | $ | 113,850 | $ | 344,054 | $ | 90,666 | $ | 1,490,924 | |||||||||||||||||
President and | 2008 | 672,572 | — | 896,739 | 10,466,761 | 1,096,223 | 97,640 | 92,991 | 13,322,926 | |||||||||||||||||||||||||
Chief Operating Officer | J-M 2007 | 163,750 | — | 1,692,965 | 264,377 | 147,375 | 97,363 | 12,707 | 2,378,537 | |||||||||||||||||||||||||
Steven Fisher, | 2009 | $ | 425,000 | $ | — | $ | 42,370 | $ | — | $ | 46,575 | $ | — | $ | 67,657 | $ | 581,602 | |||||||||||||||||
Senior Vice President and Chief Financial Officer | 2008 | 334,538 | 40,000 | 171,780 | 386,927 | 361,175 | — | 63,732 | 1,358,152 | |||||||||||||||||||||||||
Arnaud de Weert, | 2009 | $ | 625,745 | $ | — | $ | 60,953 | $ | — | $ | 160,457 | $ | 17,205 | $ | 108,161 | $ | 972,521 | |||||||||||||||||
Senior Vice President | 2008 | 674,280 | — | 247,123 | 670,448 | 601,043 | 24,801 | 114,236 | 2,331,931 | |||||||||||||||||||||||||
and President of Novelis Europe | J-M 2007 | 158,000 | — | 29,202 | 140,621 | 98,750 | 4,219 | 20,203 | 450,995 | |||||||||||||||||||||||||
Jean-Marc Germain, | 2009 | $ | 318,625 | $ | — | $ | 40,140 | $ | — | $ | 15,422 | $ | 24,847 | $ | 126,681 | $ | 525,715 | |||||||||||||||||
Senior Vice President and President of Novelis North America | ||||||||||||||||||||||||||||||||||
Thomas Walpole, | 2009 | $ | 281,250 | $ | — | $ | 52,033 | $ | — | $ | 26,177 | $ | 221,833 | $ | 539,251 | $ | 1,120,544 | |||||||||||||||||
Senior Vice President | 2008 | 270,000 | — | 217,752 | 981,865 | 210,890 | 59,765 | 607,032 | 2,347,304 | |||||||||||||||||||||||||
and President of Novelis Asia | J-M 2007 | 66,458 | — | 289,674 | 278,790 | 34,406 | 73,616 | 3,866 | 746,810 |
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(A) | For the year ended March 31, 2009, these stock awards represent awards under our Recognition agreements. | |
(B) | Represents the cost recognized in our financial statements in the applicable fiscal year calculated in accordance with FAS 123R. Assumptions used in the calculation of these amounts are included in Note 13 to our audited consolidated financial statements. | |
(C) | For the year ended March 31, 2009, these represent awards earned under the Novelis Annual Incentive Plan (AIP). | |
(D) | Represents the aggregate change in actuarial present value of the named executive officer’s accumulated benefit under our qualified and non-qualified defined benefit pension plans during fiscal 2009. Assumptions used in the calculation of these amounts are included in Note 14 to our audited consolidated financial statements for the year ended March 31, 2009. | |
(E) | The amounts shown in the All Other Compensation Column reflect the values from the table below. |
Company | ||||||||||||||||||||||||||||
Contribution | Other | |||||||||||||||||||||||||||
Severance | to Defined | Group | Relocation and | Perquisites and | ||||||||||||||||||||||||
Related | Contribution | Life | Hosing Related | Child Tuition | Personal | |||||||||||||||||||||||
Name | Payments | Plans(A) | Insurance | Payments | Reimbursement | Benefits | Total | |||||||||||||||||||||
Martha Finn Brooks | $ | — | $ | 8,075 | $ | 2,106 | $ | — | $ | 51,420 | $ | 29,065 | (B) | $ | 90,666 | |||||||||||||
Steven Fisher | $ | — | $ | 40,647 | $ | 457 | $ | — | $ | — | $ | 26,553 | (B) | $ | 67,657 | |||||||||||||
Arnaud de Weert | $ | — | $ | 83,563 | $ | — | $ | — | $ | — | $ | 24,598 | (C) | $ | 108,161 | |||||||||||||
Jean-Marc Germain | $ | — | $ | 9,705 | $ | 470 | $ | — | $ | 98,042 | $ | 18,464 | (B) | $ | 126,681 | |||||||||||||
Thomas Walpole | $ | — | $ | 8,916 | $ | 1,024 | $ | 527,309 | (D) | $ | — | $ | 2,002 | (E) | $ | 539,251 |
(A) | Represents matching contribution (and discretionary contributions in the case of Mr. Fisher) made to our tax qualified and non-qualified defined contribution plans. | |
(B) | Includes executive flex allowance, car allowance, tax advice and home security, each of which individually had an aggregate incremental cost less than $25,000. | |
(C) | Includes executive flex allowance and car allowance, each of which individually had an aggregate incremental cost less than $25,000. | |
(D) | Includes: (i) an Expatriate Premium of $153,346; (ii) Employer paid Korean Tax Deposit of $166,492; (iii) Employer provided housing of $119,544; (iv) Employer paid car/driver for Korean assignment of $64,091; (v) travel reimbursement of $23,543 and (vi) club dues of $293. | |
(E) | Includes car allowance and tax advice, each of which individually had an aggregate incremental cost less than $25,000. |
Estimated Future Payout | Estimated Future Payout | |||||||||||||||||||||||||||
Under Non-Equity | Under Equity | |||||||||||||||||||||||||||
Incentive Plan Awards(A) | Incentive Plan Awards(B) | |||||||||||||||||||||||||||
Name | Grant Date | Threshold | Target | Maximum | Threshold | Target ($) | Maximum | |||||||||||||||||||||
Martha Finn Brooks | 11/19/2008 | $ | — | $ | 825,000 | $ | 1,650,000 | $ | — | $ | 2,231,000 | $ | 6,693,000 | |||||||||||||||
Steven Fisher | 11/19/2008 | $ | — | $ | 337,500 | $ | 675,000 | $ | — | $ | 500,000 | $ | 1,500,000 | |||||||||||||||
Arnaud de Weert | 11/19/2008 | $ | — | $ | 367,031 | $ | 734,062 | $ | — | $ | 500,000 | $ | 1,500,000 | |||||||||||||||
Jean-Marc Germain | 11/19/2008 | $ | — | $ | 195,000 | $ | 390,000 | $ | — | $ | 500,000 | $ | 1,500,000 | |||||||||||||||
Thomas Walpole | 11/19/2008 | $ | — | $ | 156,750 | $ | 313,500 | $ | — | $ | 350,000 | $ | 1,050,000 |
(A) | This grant was made under the Novelis Annual Incentive Plan (AIP) for the year ended March 31, 2009. | |
(B) | This grant was made under the 2009 LTIP in the form of SARs. |
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• | a lump sum cash amount equal to two times the sum of (1) his annual base salary plus (2) his target short term incentive opportunity for the calendar year in which the change in control occurs; the lump sum cash amount will be reduced by the amount of severance payments, if any, paid or payable to him other than pursuant to the CIC Agreement to avoid duplication of payments; | |
• | other benefits described in the CIC Agreement including a lump sum payment to assist him with post-employment medical continuation coverage, life insurance benefits, and retirement benefits; and | |
• | a“gross-up” reimbursement for any excise tax liability imposed by Section 4999 of the Internal Revenue Code. |
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Name | LTIP Target | |||
Martha Finn Brooks | $ | 2,231,000 | ||
Steven Fisher | $ | 500,000 | ||
Arnaud de Weert | $ | 500,000 | ||
Jean-Marc Germain | $ | 500,000 | ||
Thomas Walpole | $ | 350,000 |
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Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Acquired on | Realized on | Acquired on | Realized on | |||||||||||||
Exercise or | Exercise or | Vesting or | Vesting or | |||||||||||||
Name | Cancellation | Cancellation | Cancellation(A) | Cancellation | ||||||||||||
Martha Finn Brooks | — | $ | — | 14,200 | $ | 638,006 | ||||||||||
Steven Fisher | — | $ | — | 2,850 | $ | 128,051 | ||||||||||
Arnaud de Weert | — | $ | — | 4,100 | $ | 184,213 | ||||||||||
Jean-Marc Germain | — | $ | — | 2,700 | $ | 121,311 | ||||||||||
Thomas Walpole | — | $ | — | 3,500 | $ | 157,255 |
(A) | Represents values for Recognition Awards. |
SAR Awards | ||||||||||||||||
Number of | Number of | |||||||||||||||
Securities | Securities | |||||||||||||||
Underlying | Underlying | |||||||||||||||
Unexercised SARs | Unexercised SARs | SAR Exercise | SAR | |||||||||||||
Name | Exercisable | Unexercisable | Price(A) | Expiration Date | ||||||||||||
Martha Finn Brooks | — | 2,939,954 | (B) | $ | 1.16 | June 19, 2015 | ||||||||||
Steven Fisher | — | 658,887 | $ | 1.16 | June 19, 2015 | |||||||||||
Arnaud de Weert | — | 658,887 | $ | 1.16 | June 19, 2015 | |||||||||||
Jean-Marc Germain | — | 658,887 | $ | 1.16 | June 19, 2015 | |||||||||||
Thomas Walpole | — | 461,221 | $ | 1.16 | June 19, 2015 |
(A) | SARs issued are payable in cash based on the stock performance of Hindalco Industries Limited, listed on the National Stock Exchange in Mumbai, India. Novelis is a subsidiary of Hindalco Industries Limited. The Exercise price of 60.5 Indian Rupees converted to US$ based on an exchange rate of 1US$=INR 52.17 which was the closing exchange rate on March 31, 2009. | |
(B) | Ms Brooks terminated her services with the Company effective May 8, 2009 and an additional 2,939,954 SARs granted to her were forfeited /cancelled. |
Number of | Present | Payments | ||||||||||||
Years | Value of | During | ||||||||||||
Credited | Accumulated | Last | ||||||||||||
Name | Plan Name(A) | Service | Benefit(B) | Fiscal Year | ||||||||||
Martha Finn Brooks | Novelis Pension Plan | 6.667 | $ | 125,445 | $ | — | ||||||||
Novelis SERP | 6.667 | 744,392 | (C) | — | ||||||||||
Steven Fisher | Not eligible | — | $ | — | $ | — | ||||||||
Arnaud de Weert | Pensionskasse Alcan Schweiz | 2.917 | $ | 55,659 | $ | — | ||||||||
Jean-Marc Germain | Novelis Pension Plan | 2.25 | $ | 27,726 | $ | — | ||||||||
Novelis SERP | 2.25 | 19,814 | — | |||||||||||
Thomas Walpole | Novelis Pension Plan | 29.833 | $ | 766,967 | $ | — | ||||||||
Novelis SERP | 29.833 | 592,814 | — |
(A) | See Compensation Discussion and Analysis — Elements of Our Compensation, Employee Benefits for a discussion of these plans. |
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(B) | See Note 15 to our audited consolidated financial statements for the year ended March 31, 2009, for a discussion of the assumptions used in the calculation of these amounts. | |
(C) | Includes an amount of $126,589 as the present value of accumulated benefit under the Cummins Minimum Pension Guarantee as outlined as part of Ms. Brooks’ employment agreement. |
Years of Service | ||||||||||||||||||||||||
10 | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||||
U.S. Pension Plan | 17 | % | 25 | % | 34 | % | 42 | % | 51 | % | 59 | % | ||||||||||||
Swiss Pension Scheme | 18 | % | 27 | % | 36 | % | 45 | % | 54 | % | 63 | % |
Martha Finn Brooks(A) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us without | Change in | Death or | ||||||||||||||||
Type of Payment | Executive | us for Cause | Cause | Control | Disability | |||||||||||||||
Short-Term Incentive Pay(B) | $ | 825,000 | $ | — | $ | 825,000 | $ | 825,000 | $ | 825,000 | ||||||||||
Long-Term Incentive Plan(C) | — | — | — | — | — | |||||||||||||||
Severance | — | — | 1,500,000 | (D) | 3,150,000 | (E) | — | |||||||||||||
Retirement plans | — | — | — | 390,861 | (F) | — | ||||||||||||||
Lump sum cash payment for continuation of health coverage | — | — | — | 49,948 | (G) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 4,997 | (H) | — | ||||||||||||||
Total | $ | 825,000 | $ | — | $ | 2,325,000 | $ | 4,420,806 | $ | 825,000 | ||||||||||
(A) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $57,692 at March 31, 2009). Ms. Brooks was not eligible for retirement on March 31, 2009. | |
(B) | These amounts represent 100% of the executive’s target short-term incentive opportunity for the period April 1, 2008 through March 31, 2009. | |
(C) | These amounts represent the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2009. | |
(D) | This amount is equal to 200% of executive’s annual base salary and would be paid pursuant to the executive’s Employment Agreement. | |
(E) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(F) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2009. |
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(G) | Pursuant to the executive’s Change in Control Agreement, this amount is intended to assist the executive in paying post-employment health coverage and is equal to 24 months times the COBRA premium rate in effect at March 31, 2009, grossed up for applicable taxes using an assumed tax rate of 40%. | |
(H) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
Steven Fisher(A) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us without | Change in | Death or | ||||||||||||||||
Type of Payment | Executive | us for Cause | Cause | Control | Disability | |||||||||||||||
Short-Term Incentive Pay(B) | $ | 337,500 | $ | — | $ | 337,500 | $ | 337,500 | $ | 337,500 | ||||||||||
Long-Term Incentive Plan(C) | — | — | — | — | — | |||||||||||||||
Severance | — | — | 56,250 | (D) | 1,575,000 | (E) | — | |||||||||||||
Retirement plans | — | — | — | 100,800 | (F) | — | ||||||||||||||
Lump sum cash payment for continuation of health coverage | — | — | — | 49,948 | (G) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 1,432 | (H) | — | ||||||||||||||
Total | $ | 337,500 | $ | — | $ | 393,750 | $ | 2,064,680 | $ | 337,500 | ||||||||||
(A) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $34,615 at March 31, 2009). Mr. Fisher was not eligible for retirement on March 31, 2009. | |
(B) | These amounts represent 100% of the executive’s target short-term incentive opportunity for the period April 1, 2008 through March 31, 2009. | |
(C) | These amounts represent the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2009. | |
(D) | This amount is equal to the benefit payable under the Novelis Severance Pay Plan. | |
(E) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(F) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. | |
(G) | Pursuant to the executive’s Change in Control Agreement, this amount is intended to assist the executive in paying post-employment health coverage and is equal to 24 months times the COBRA premium rate in effect at March 31, 2009, grossed up for applicable taxes using an assumed tax rate of 40%. | |
(H) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
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Arnaud de Weert(A) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us without | Change in | Death or | ||||||||||||||||
Type of Payment | Executive | us for Cause | Cause | Control | Disability | |||||||||||||||
Short-Term Incentive Pay(B) | $ | 367,031 | $ | — | $ | 367,031 | $ | 367,031 | $ | 367,031 | ||||||||||
Long-Term Incentive Plan(C) | — | — | — | — | — | |||||||||||||||
Severance | — | — | 685,125 | (D) | 1,908,563 | (E) | — | |||||||||||||
Retirement plans | — | — | — | 213,793 | (F) | — | ||||||||||||||
Total | $ | 367,031 | $ | — | $ | 1,052,156 | $ | 2,489,387 | $ | 367,031 | ||||||||||
(A) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $45,173 at March 31, 2009). Mr. de Weert was not eligible for retirement on March 31, 2009. | |
(B) | These amounts represent 100% of the executive’s target short-term incentive opportunity for the period April 1, 2008 through March 31, 2009. | |
(C) | These amounts represent the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2009. | |
(D) | This amount is equal to 14 months of executive’s annual base salary and would be paid pursuant to the executive’s Employment Agreement. | |
(E) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(F) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2009. |
Jean-Marc Germain(A) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | ||||||||||||||||||
Termination by | Termination by | us without | Change in | Death or | ||||||||||||||||
Type of Payment | Executive | us for Cause | Cause | Control | Disability | |||||||||||||||
Short-Term Incentive Pay(B) | $ | 195,000 | $ | — | $ | 195,000 | $ | — | $ | 195,000 | ||||||||||
Long-Term Incentive Plan(C) | — | — | — | — | — | |||||||||||||||
Severance | — | — | 780,000 | (D) | — | — | ||||||||||||||
Retirement plans | — | — | — | — | — | |||||||||||||||
Continued group life insurance coverage | — | — | — | — | — | |||||||||||||||
Total | $ | 195,000 | $ | — | $ | 975,000 | $ | — | $ | 195,000 | ||||||||||
(A) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $25,000 at March 31, 2009). Mr. Germain was not eligible for retirement on March 31, 2009. | |
(B) | These amounts represent 100% of the executive’s target short-term incentive opportunity for the period April 1, 2008 through March 31, 2009. |
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(C) | These amounts represent the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2009. | |
(D) | This amount is equal to 18 months of executive’s annual base salary and target bonus and would be paid pursuant to the executive’s Employment Agreement. |
Thomas Walpole(A) | ||||||||||||||||||||
Termination by | ||||||||||||||||||||
us without | ||||||||||||||||||||
Cause or by | ||||||||||||||||||||
Executive for | ||||||||||||||||||||
Good Reason in | ||||||||||||||||||||
Voluntary | Termination by | Connection with | Retirement | |||||||||||||||||
Termination by | Termination by | us without | Change in | Death or | ||||||||||||||||
Type of Payment | Executive | us for Cause | Cause | Control | Disability | |||||||||||||||
Short-Term Incentive Pay(B) | $ | 156,750 | $ | — | $ | 156,750 | $ | 156,750 | $ | 156,750 | ||||||||||
Long-Term Incentive Plan(C) | — | — | — | — | — | |||||||||||||||
Severance | — | — | 486,875 | (D) | 883,500 | (E) | — | |||||||||||||
Retirement plans | — | — | — | 270,619 | (F) | — | ||||||||||||||
Continued group life insurance coverage | — | — | — | 2,352 | (G) | — | ||||||||||||||
Total | $ | 156,750 | $ | — | $ | 643,625 | $ | 1,313,221 | $ | 156,750 | ||||||||||
(A) | In addition to the estimated payments set forth in this table, the executive would be eligible for payments or benefits that would be paid to our salaried employees generally upon termination of employment (including, for example, earned but unpaid base salary and accrued vacation (approximately $21,923 at March 31, 2009). Mr. Walpole was eligible for retirement on March 31, 2009. | |
(B) | These amounts represent 100% of the executive’s target short-term incentive opportunity for the period April 1, 2008 through March 31, 2009. | |
(C) | These amounts represent the amount of Long-Term Incentive Plan (LTIP) that would have been earned as of March 31, 2009. | |
(D) | This amount is equal to the benefit payable under the Novelis Severance Pay Plan. | |
(E) | This amount is equal to two times the sum of executive’s base salary and target short-term incentive and would be paid pursuant to the executive’s Change in Control Agreement. | |
(F) | This amount is equal to the present value of two additional years of benefit accrual under our qualified and non-qualified retirement plans and is payable pursuant to the executive’s Change in Control Agreement. See the Pension Benefits table for pension benefits accrued as of March 31, 2009. | |
(G) | The executive’s Change in Control Agreement provides that the executive will be entitled to two additional years of coverage under our group life insurance plan. |
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Fees Earned or | ||||
Name | Paid in Cash | |||
Kumar Mangalam Birla | $ | 62,500 | ||
D. Bhattacharya | $ | 155,000 | ||
Askaran K. Agarwala | $ | 150,000 | ||
Clarence J. Chandran | $ | 155,000 | ||
Donald A. Stewart | $ | — |
• | a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served on our Committee; | |
• | a director of another entity, one of whose executive officers served on our Committee; or | |
• | a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as one of our directors. |
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• | incur additional debt; | |
• | create or permit certain liens to exist; | |
• | enter into sale and leaseback transactions; | |
• | make investments, loan and advances; | |
• | engage in mergers, amalgamations or consolidations; | |
• | make certain asset sales; | |
• | pay dividends and distributions beyond certain amounts; | |
• | engage in certain transactions with affiliates; | |
• | prepay certain indebtedness; | |
• | amend certain agreements governing our indebtedness; | |
• | create or permit restrictions on the ability of our subsidiaries to pay dividends, make other distributions to us or incur liens on their assets; | |
• | issue preferred shares or stock of subsidiaries; and | |
• | change the business conducted by us and our subsidiaries. |
• | a default in the payment of principal when due; | |
• | a default in the payment of interest, fees or any other amount after a specified grace period; | |
• | a material breach of the representation or warranties; | |
• | a default in the performance of covenants; | |
• | the failure to make any payment when due under any indebtedness with a principal amount in excess of a specified amount; |
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• | the failure to observe any covenant or agreement that permits or results in the acceleration of indebtedness with a principal amount in excess of a specified amount; | |
• | certain bankruptcy events; | |
• | certain material judgments or court orders; | |
• | certain ERISA violations; | |
• | the invalidity or termination of certain loan documents or the liens created in favor of the lenders; and | |
• | a change in control. |
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• | 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 Secured Credit Facilities) to the extent of the value of the assets securing that debt; | |
• | equal in right of payment (pari passu) with all existing and future unsecured 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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25% | of the Company’s consolidated net sales are represented by net sales to third parties by subsidiaries that arenotSubsidiary Guarantors (for the six months ended September 30, 2009) | |
20% | of the Company’s consolidated EBITDA is represented by the subsidiaries that arenotSubsidiary Guarantors (for the six months ended September 30, 2009) | |
15% | of the Company’s consolidated assets are owned by subsidiaries that arenotSubsidiary Guarantors (as of September 30, 2009) |
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Period | Redemption Price | |||
August 15, 2012 through February 14, 2013 | 108.625 | % | ||
February 15, 2013 through February 14, 2014 | 105.750 | % | ||
February 15, 2014 and thereafter | 100.000 | % |
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• | the second paragraph under “— Limitation on Liens,” | |
• | the second paragraph under “— Limitation on Sale and Leaseback Transactions,” |
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• | “— 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.” |
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THE EXCHANGE OFFER
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F-2 | ||||
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May 16, | April 1, | Three | |||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||
2009 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net sales | $ | 10,177 | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | |||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 9,251 | 9,042 | 1,205 | 2,447 | 9,317 | ||||||||||||||||
Selling, general and administrative expenses | 319 | 319 | 95 | 99 | 410 | ||||||||||||||||
Depreciation and amortization | 439 | 375 | 28 | 58 | 233 | ||||||||||||||||
Research and development expenses | 41 | 46 | 6 | 8 | 40 | ||||||||||||||||
Interest expense and amortization of debt issuance costs | 182 | 191 | 27 | 54 | 221 | ||||||||||||||||
Interest income | (14 | ) | (18 | ) | (1 | ) | (4 | ) | (15 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments, net | 556 | (22 | ) | (20 | ) | (30 | ) | (63 | ) | ||||||||||||
Impairment of goodwill | 1,340 | — | — | — | — | ||||||||||||||||
Gain on extinguishment of debt | (122 | ) | — | — | — | — | |||||||||||||||
Restructuring charges, net | 95 | 6 | 1 | 9 | 19 | ||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 172 | (25 | ) | (1 | ) | (3 | ) | (16 | ) | ||||||||||||
Other (income) expenses, net | 86 | (6 | ) | 35 | 47 | (19 | ) | ||||||||||||||
12,345 | 9,908 | 1,375 | 2,685 | 10,127 | |||||||||||||||||
Income (loss) before income taxes | (2,168 | ) | 57 | (94 | ) | (55 | ) | (278 | ) | ||||||||||||
Income tax provision (benefit) | (246 | ) | 73 | 4 | 7 | (4 | ) | ||||||||||||||
Net loss | (1,922 | ) | (16 | ) | (98 | ) | (62 | ) | (274 | ) | |||||||||||
Net income (loss) attributable to noncontrolling interests | (12 | ) | 4 | (1 | ) | 2 | 1 | ||||||||||||||
Net loss attributable to our common shareholder | (1,910 | ) | (20 | ) | (97 | ) | (64 | ) | (275 | ) | |||||||||||
Dividends per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.20 | |||||||||||
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March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 248 | $ | 326 | ||||
Accounts receivable (net of allowances of $2 and $1 as of March 31, 2009 and 2008, respectively) | ||||||||
— third parties | 1,049 | 1,248 | ||||||
— related parties | 25 | 31 | ||||||
Inventories | 793 | 1,455 | ||||||
Prepaid expenses and other current assets | 51 | 58 | ||||||
Fair value of derivative instruments | 119 | 203 | ||||||
Deferred income tax assets | 216 | 125 | ||||||
Total current assets | 2,501 | 3,446 | ||||||
Property, plant and equipment, net | 2,799 | 3,357 | ||||||
Goodwill | 582 | 1,930 | ||||||
Intangible assets, net | 787 | 888 | ||||||
Investment in and advances to non-consolidated affiliates | 719 | 946 | ||||||
Fair value of derivative instruments, net of current portion | 72 | 21 | ||||||
Deferred income tax assets | 4 | 6 | ||||||
Other long-term assets | ||||||||
— third parties | 80 | 102 | ||||||
— related parties | 23 | 41 | ||||||
Total assets | $ | 7,567 | $ | 10,737 | ||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 51 | $ | 15 | ||||
Short-term borrowings | 264 | 115 | ||||||
Accounts payable | ||||||||
— third parties | 725 | 1,582 | ||||||
— related parties | 48 | 55 | ||||||
Fair value of derivative instruments | 640 | 148 | ||||||
Accrued expenses and other current liabilities | 516 | 704 | ||||||
Deferred income tax liabilities | — | 39 | ||||||
Total current liabilities | 2,244 | 2,658 | ||||||
Long-term debt, net of current portion | ||||||||
— third parties | 2,417 | 2,560 | ||||||
— related party | 91 | — | ||||||
Deferred income tax liabilities | 469 | 754 | ||||||
Accrued postretirement benefits | 495 | 421 | ||||||
Other long-term liabilities | 342 | 672 | ||||||
6,058 | 7,065 | |||||||
Commitments and contingencies | ||||||||
Shareholder’s equity | ||||||||
Common stock, no par value; unlimited number of shares authorized; 77,459,658 shares issued and outstanding as of March 31, 2009 and 2008, respectively | — | — | ||||||
Additional paid-in capital | 3,497 | 3,497 | ||||||
Accumulated deficit | (1,930 | ) | (20 | ) | ||||
Accumulated other comprehensive income (loss) | (148 | ) | 46 | |||||
Total equity of our common shareholder | 1,419 | 3,523 | ||||||
Noncontrolling interests | 90 | 149 | ||||||
Total equity | 1,509 | 3,672 | ||||||
Total liabilities and equity | $ | 7,567 | $ | 10,737 | ||||
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May 16, | April 1, | Three | |||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||
2009 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
OPERATING ACTIVITIES | |||||||||||||||||||||
Net loss | $ | (1,922 | ) | $ | (16 | ) | $ | (98 | ) | $ | (62 | ) | $ | (274 | ) | ||||||
Adjustments to determine net cash provided by (used in) operating activities: | |||||||||||||||||||||
Depreciation and amortization | 439 | 375 | 28 | 58 | 233 | ||||||||||||||||
(Gain) loss on change in fair value of derivative instruments, net | 556 | (22 | ) | (20 | ) | (30 | ) | (63 | ) | ||||||||||||
Non-cash Restructuring charges, net | 22 | — | — | 8 | — | ||||||||||||||||
Gain on extinguishment of debt | (122 | ) | — | — | — | — | |||||||||||||||
Deferred income taxes | (331 | ) | (5 | ) | (18 | ) | (9 | ) | (77 | ) | |||||||||||
Write-off and amortization of fair value adjustments, net | (233 | ) | (221 | ) | — | — | — | ||||||||||||||
Impairment of goodwill | 1,340 | — | — | — | — | ||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 172 | (25 | ) | (1 | ) | (3 | ) | (16 | ) | ||||||||||||
Foreign exchange remeasurement on debt | 26 | — | — | — | — | ||||||||||||||||
Gain on reversal of accrued legal claim | (26 | ) | — | — | — | — | |||||||||||||||
Amortization of debt issuance costs | 5 | 10 | 1 | 2 | 13 | ||||||||||||||||
Other, net | 3 | 2 | 4 | 2 | 12 | ||||||||||||||||
Changes in assets and liabilities (net of effects from acquisitions and divestitures): | |||||||||||||||||||||
Accounts receivable | 69 | 181 | (21 | ) | (25 | ) | (141 | ) | |||||||||||||
Inventories | 466 | 208 | (76 | ) | (95 | ) | (206 | ) | |||||||||||||
Accounts payable | (655 | ) | (18 | ) | (62 | ) | 78 | 523 | |||||||||||||
Other current assets | (6 | ) | (8 | ) | (7 | ) | 3 | 25 | |||||||||||||
Other current liabilities | (63 | ) | (68 | ) | 42 | (22 | ) | (64 | ) | ||||||||||||
Other noncurrent assets | 17 | (30 | ) | (1 | ) | (5 | ) | 6 | |||||||||||||
Other noncurrent liabilities | 7 | 42 | (1 | ) | 13 | 45 | |||||||||||||||
Net cash provided by (used in) operating activities | (236 | ) | 405 | (230 | ) | (87 | ) | 16 | |||||||||||||
INVESTING ACTIVITIES | |||||||||||||||||||||
Capital expenditures | (145 | ) | (185 | ) | (17 | ) | (24 | ) | (116 | ) | |||||||||||
Disposal of business, net | — | — | — | — | (7 | ) | |||||||||||||||
Proceeds from sales of assets | 5 | 8 | — | — | 38 | ||||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | 20 | 24 | 1 | 1 | 3 | ||||||||||||||||
Proceeds from related party loans receivable, net | 17 | 18 | — | 1 | 37 | ||||||||||||||||
Net proceeds from settlement of derivative instruments | (8 | ) | 37 | 18 | 24 | 238 | |||||||||||||||
Net cash provided by (used in) investing activities | (111 | ) | (98 | ) | 2 | 2 | 193 | ||||||||||||||
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Table of Contents
May 16, | April 1, | Three | |||||||||||||||||||
2007 | 2007 | Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||
2009 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
FINANCING ACTIVITIES | |||||||||||||||||||||
Proceeds from issuance of common stock | — | 92 | — | — | — | ||||||||||||||||
Proceeds from issuance of debt | |||||||||||||||||||||
— third parties | 263 | 1,100 | 150 | — | 41 | ||||||||||||||||
— related parties | 91 | — | — | — | — | ||||||||||||||||
Principal repayments | (235 | ) | (1,009 | ) | (1 | ) | (1 | ) | (353 | ) | |||||||||||
Short-term borrowings, net | 176 | (241 | ) | 60 | 113 | 103 | |||||||||||||||
Dividends | (6 | ) | (1 | ) | (7 | ) | — | (30 | ) | ||||||||||||
Debt issuance costs | (3 | ) | (37 | ) | (2 | ) | — | (11 | ) | ||||||||||||
Proceeds from the exercise of stock options | — | — | 1 | 27 | 2 | ||||||||||||||||
Other | — | — | — | 1 | 5 | ||||||||||||||||
Net cash provided by (used in) financing activities | 286 | (96 | ) | 201 | 140 | (243 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | (61 | ) | 211 | (27 | ) | 55 | (34 | ) | |||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | (17 | ) | 13 | 1 | — | 7 | |||||||||||||||
Cash and cash equivalents — beginning of period | 326 | 102 | 128 | 73 | 100 | ||||||||||||||||
Cash and cash equivalents — end of period | $ | 248 | $ | 326 | $ | 102 | $ | 128 | $ | 73 | |||||||||||
Supplemental disclosures of cash flow information: | |||||||||||||||||||||
Interest paid | $ | 169 | $ | 200 | $ | 13 | $ | 84 | $ | 201 | |||||||||||
Income taxes paid | 65 | 64 | 9 | 18 | 68 |
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Table of Contents
Equity of our Common Shareholder | ||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||
Retained | Other | |||||||||||||||||||||||||||
Additional | Earnings/ | Comprehensive | Non- | |||||||||||||||||||||||||
Common Stock | Paid-in | (Accumulated | Income (Loss) | controlling | Total | |||||||||||||||||||||||
Shares | Amount | Capital | Deficit) | (AOCI) | Interests | Equity | ||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||||||
Balance as of December 31, 2005 | 74,005,649 | $ | — | $ | 425 | $ | 92 | $ | (84 | ) | $ | 159 | $ | 592 | ||||||||||||||
Fiscal 2006 Activity: | ||||||||||||||||||||||||||||
Net loss attributable to our common shareholder | — | — | — | (275 | ) | — | — | (275 | ) | |||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | 1 | 1 | |||||||||||||||||||||
Issuance of common stock in connection with stock plans | 134,686 | — | 2 | — | — | — | 2 | |||||||||||||||||||||
Spin-off settlement and post-closing adjustments | — | — | (38 | ) | — | — | — | (38 | ) | |||||||||||||||||||
Share-based compensation | — | — | 9 | — | — | — | 9 | |||||||||||||||||||||
Currency translation adjustment, net of tax provision of $4 included in AOCI | — | — | — | — | 168 | 13 | 181 | |||||||||||||||||||||
Change in fair value of effective portion of hedges, net of tax of $— in AOCI | — | — | — | — | (46 | ) | — | (46 | ) | |||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Change in minimum pension liability, net of tax provision of $4 included in AOCI | — | — | — | — | 12 | — | 12 | |||||||||||||||||||||
Initial impact of adopting Financial Accounting Standards Board Statement No. 158 | — | — | — | — | (55 | ) | — | (55 | ) | |||||||||||||||||||
Noncontrolling interests cash dividends | — | — | — | — | — | (15 | ) | (15 | ) | |||||||||||||||||||
Dividends on common shares | — | — | — | (15 | ) | — | — | (15 | ) | |||||||||||||||||||
Balance as of December 31, 2006 | 74,140,335 | — | 398 | (198 | ) | (5 | ) | 158 | 353 | |||||||||||||||||||
Activity for Three Months Ended March 31, 2007: | ||||||||||||||||||||||||||||
Adjustment for uncertain tax positions | — | — | — | (1 | ) | — | — | (1 | ) | |||||||||||||||||||
Net loss attributable to our common shareholder | — | — | — | (64 | ) | — | — | (64 | ) | |||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||
Issuance of common stock from the exercise of stock options | 1,217,325 | — | 27 | — | — | — | 27 | |||||||||||||||||||||
Share-based compensation | — | — | 2 | — | — | — | 2 | |||||||||||||||||||||
Windfall tax benefit on share-based compensation | — | — | 1 | — | — | — | 1 | |||||||||||||||||||||
Currency translation adjustment, net of tax of $— in AOCI | — | — | — | — | 11 | (1 | ) | 10 | ||||||||||||||||||||
Change in fair value of effective portion of hedges, net of tax provision of $4 included in AOCI | — | — | — | — | 3 | — | 3 | |||||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Amortization of net actuarial loss, net of tax provision of $1 included in AOCI | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||
Noncontrolling interests cash dividends | — | — | — | — | — | (7 | ) | (7 | ) | |||||||||||||||||||
Balance as of March 31, 2007 | 75,357,660 | — | 428 | (263 | ) | 10 | 152 | 327 |
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Table of Contents
Equity of our Common Shareholder | ||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||
Retained | Other | |||||||||||||||||||||||||||
Additional | Earnings/ | Comprehensive | Non- | |||||||||||||||||||||||||
Common Stock | Paid-in | (Accumulated | Income (Loss) | controlling | Total | |||||||||||||||||||||||
Shares | Amount | Capital | Deficit) | (AOCI) | Interests | Equity | ||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||||||||
Activity for April 1, 2007 through May 15, 2007: | ||||||||||||||||||||||||||||
Net loss attributable to our common shareholder | — | — | — | (97 | ) | — | — | (97 | ) | |||||||||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||
Issuance of common stock from the exercise of stock options | 57,876 | — | 1 | — | — | — | 1 | |||||||||||||||||||||
Conversion of share-based compensation plans from equity-based plans to liability-based plans | — | — | (7 | ) | — | — | — | (7 | ) | |||||||||||||||||||
Currency translation adjustment, net of tax benefit of $4 included in AOCI | — | — | — | — | 35 | 1 | 36 | |||||||||||||||||||||
Change in fair value of effective portion of hedges, net of tax of $— in AOCI | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||
Postretirement benefit plans: | — | |||||||||||||||||||||||||||
Amortization of net actuarial loss | — | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||||||
Balance as of May 15, 2007 | 75,415,536 | $ | — | $ | 422 | $ | (360 | ) | $ | 43 | $ | 152 | $ | 257 | ||||||||||||||
Successor | ||||||||||||||||||||||||||||
Balance as of May 16, 2007 | 75,415,536 | $ | — | $ | 3,405 | $ | — | $ | — | $ | 152 | $ | 3,557 | |||||||||||||||
Activity for May 16, 2007 through March 31, 2008: | ||||||||||||||||||||||||||||
Net income (loss) attributable to our common shareholder | — | — | — | (20 | ) | — | — | (20 | ) | |||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||
Issuance of additional common stock | 2,044,122 | — | 92 | — | — | — | 92 | |||||||||||||||||||||
Currency translation adjustment, net of tax of $— in AOCI | — | — | — | — | 59 | (6 | ) | 53 | ||||||||||||||||||||
Postretirement benefit plans: | — | |||||||||||||||||||||||||||
Change in pension and other benefits, net of tax benefit of $4 included in AOCI | — | — | — | — | (13 | ) | — | (13 | ) | |||||||||||||||||||
Noncontrolling interests cash dividends | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||
Balance as of March 31, 2008 | 77,459,658 | — | 3,497 | (20 | ) | 46 | 149 | 3,672 | ||||||||||||||||||||
Fiscal 2009 Activity: | ||||||||||||||||||||||||||||
Net loss attributable to our common shareholder | — | — | — | (1,910 | ) | — | — | (1,910 | ) | |||||||||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | — | (12 | ) | (12 | ) | |||||||||||||||||||
Currency translation adjustment, net of tax of $— in AOCI | — | — | — | — | (122 | ) | (41 | ) | (163 | ) | ||||||||||||||||||
Change in fair value of effective portion of hedges, net of tax benefit of $11 included in AOCI | — | — | — | — | (19 | ) | — | (19 | ) | |||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Change in pension and other benefits, net of tax benefit of $31 included in AOCI | — | — | — | — | (53 | ) | — | (53 | ) | |||||||||||||||||||
Noncontrolling interests cash dividends | — | — | — | — | — | (6 | ) | (6 | ) | |||||||||||||||||||
Balance as of March 31, 2009 | 77,459,658 | $ | — | $ | 3,497 | $ | (1,930 | ) | $ | (148 | ) | $ | 90 | $ | 1,509 | |||||||||||||
F-10
Table of Contents
May 16, | April 1, | Three | |||||||||||||||||||
Year | 2007 | 2007 | Months | ||||||||||||||||||
Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, | March 31, | May 15, | March 31, | December 31, | |||||||||||||||||
2009 | 2008 | 2007 | 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (1,910 | ) | $ | (20 | ) | $ | (97 | ) | $ | (64 | ) | $ | (275 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||||
Currency translation adjustment | (122 | ) | 59 | 31 | 11 | 172 | |||||||||||||||
Change in fair value of effective portion of hedges, net | (30 | ) | — | (1 | ) | 7 | (46 | ) | |||||||||||||
Postretirement benefit plans: | |||||||||||||||||||||
Change in pension and other benefits | (84 | ) | (17 | ) | — | — | |||||||||||||||
Amortization of net actuarial loss | — | — | (1 | ) | 2 | — | |||||||||||||||
Change in minimum pension liability | — | — | — | — | 16 | ||||||||||||||||
Other comprehensive income (loss) before income tax effect | (236 | ) | 42 | 29 | 20 | 142 | |||||||||||||||
Income tax provision (benefit) related to items of other comprehensive income (loss) | (42 | ) | (4 | ) | (4 | ) | 5 | 8 | |||||||||||||
Other comprehensive income (loss), net of tax | (194 | ) | 46 | 33 | 15 | 134 | |||||||||||||||
Comprehensive income (loss) attributable to our common shareholder | (2,104 | ) | 26 | (64 | ) | (49 | ) | (141 | ) | ||||||||||||
Net income (loss) attributable to noncontrolling interests | (12 | ) | 4 | (1 | ) | 2 | 1 | ||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||
Currency translation adjustment | (41 | ) | (6 | ) | 1 | (1 | ) | 13 | |||||||||||||
Other comprehensive income (loss), net of tax | (41 | ) | (6 | ) | 1 | (1 | ) | 13 | |||||||||||||
Comprehensive income (loss) attributable to noncontrolling interests | (53 | ) | (2 | ) | — | 1 | 14 | ||||||||||||||
Comprehensive income (loss) | $ | (2,157 | ) | $ | 24 | $ | (64 | ) | $ | (48 | ) | $ | (127 | ) | |||||||
F-11
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1. | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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• | The current portion of liabilities related to the Fair value of derivative instruments were reclassified from Accrued expenses and other current liabilities to a separate line item. | |
• | Restructuring charges, net were reclassified from Other (income) expenses, net to a separate line item. | |
• | Interest income was reclassified from Interest expense and amortization of debt issuance costs to a separate line item. | |
• | Sale transaction fees were reclassified from a separate line item to Other (income) expense, net. |
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F-17
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Years | ||||
Buildings | 30 to 40 | |||
Leasehold improvements | 7 to 20 | |||
Machinery and equipment | 5 to 25 | |||
Furniture, fixtures and equipment | 3 to 10 | |||
Equipment under capital lease obligations | 6 to 15 |
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2. | LIQUIDITY |
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3. | IMPAIRMENT OF GOODWILL AND INVESTMENT IN AFFILIATE |
F-26
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March 31, | Other | March 31, | ||||||||||||||
Reporting Unit | 2008(A) | Impairments | Adjustments(B) | 2009 | ||||||||||||
Successor | Successor | |||||||||||||||
North America | $ | 1,149 | $ | (860 | ) | $ | (1 | ) | $ | 288 | ||||||
Europe | 518 | (330 | ) | (7 | ) | 181 | ||||||||||
South America | 263 | (150 | ) | — | 113 | |||||||||||
$ | 1,930 | $ | (1,340 | ) | $ | (8 | ) | $ | 582 | |||||||
(A) | See Note 1 — Business and Summary of Significant Accounting Policies (Reclassifications) for discussion of goodwill balance reclassification at March 31, 2008. | |
(B) | Other adjustments include: (1) an adjustment in North America for final payment related to the transfer of pension plans in Canada for employees who elected to transfer their past service to Novelis during the quarter ended June 30, 2008 and (2) adjustments in Europe related to tax audits during the year ended March 31, 2009. |
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4. | RESTRUCTURING PROGRAMS |
North | South | Restructuring | ||||||||||||||||||||||
Europe | America | Asia | America | Corporate | Reserves | |||||||||||||||||||
Predecessor | ||||||||||||||||||||||||
Balance as of December 31, 2006 | $ | 33 | $ | — | $ | — | $ | — | $ | 1 | $ | 34 | ||||||||||||
January 1, 2007 to March 31, 2007 Activity: | ||||||||||||||||||||||||
Provisions (recoveries), net | 9 | — | — | — | — | 9 | ||||||||||||||||||
Cash payments | (5 | ) | — | — | — | (1 | ) | (6 | ) | |||||||||||||||
Adjustments — other | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||
Balance as of March 31, 2007 | 36 | — | — | — | — | 36 | ||||||||||||||||||
April 1, 2007 to May 15, 2007 Activity: | ||||||||||||||||||||||||
Provisions (recoveries), net | 1 | — | — | — | — | 1 | ||||||||||||||||||
Cash payments | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||
Adjustments — other | 1 | — | — | — | — | 1 | ||||||||||||||||||
Balance as of May 15, 2007 | 37 | — | — | — | — | 37 | ||||||||||||||||||
Successor | ||||||||||||||||||||||||
May 16, 2007 to March 31, 2008 Activity: | ||||||||||||||||||||||||
Provisions (recoveries), net | 2 | 4 | — | — | — | 6 | ||||||||||||||||||
Cash payments | (20 | ) | — | — | — | — | (20 | ) | ||||||||||||||||
Adjustments — other | 1 | — | — | — | — | 1 | ||||||||||||||||||
Balance as of March 31, 2008 | 20 | 4 | — | — | — | 24 | ||||||||||||||||||
Fiscal 2009 Activity: | ||||||||||||||||||||||||
Provisions (recoveries), net | 53 | 16 | 1 | 2 | 1 | 73 | ||||||||||||||||||
Cash payments | (8 | ) | (5 | ) | (1 | ) | — | — | (14 | ) | ||||||||||||||
Adjustments — other | (4 | ) | 1 | — | — | — | (3 | ) | ||||||||||||||||
Balance as of March 31, 2009 | $ | 61 | $ | 16 | $ | — | $ | 2 | $ | 1 | $ | 80 | ||||||||||||
Severance related costs | $ | 20 | ||
Environmental remediation expense | 20 | |||
Fixed asset impairments(A) | 12 | |||
Write-down of parts and supplies(A) | 8 | |||
Reduction of reserve associated with unfavorable contract(A) | (3 | ) | ||
Other exit costs | 3 | |||
$ | 60 |
(A) | These restructuring charges are not included in the restructuring provision table above but have been reflected as reductions to the respective balance sheet accounts. |
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5. | ACCOUNTS RECEIVABLE |
March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Trade accounts receivable | $ | 1,002 | $ | 1,160 | ||||
Other accounts receivable | 49 | 89 | ||||||
Accounts receivable — third parties | 1,051 | 1,249 | ||||||
Allowance for doubtful accounts — third parties | (2 | ) | (1 | ) | ||||
1,049 | 1,248 | |||||||
Other accounts receivable — related parties | 25 | 31 | ||||||
Accounts receivable, net | $ | 1,074 | $ | 1,279 | ||||
F-30
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Balance at | Additions | Accounts | ||||||||||||||||||
Beginning | Charged to | Recovered/ | Foreign Exchange | Balance at | ||||||||||||||||
of Period | Expense | (Written-Off) | and Other | End of Period | ||||||||||||||||
Predecessor | ||||||||||||||||||||
Year Ended December 31, 2006 | $ | 26 | $ | 4 | $ | (4 | ) | $ | 3 | $ | 29 | |||||||||
Three Months Ended March 31, 2007 | $ | 29 | $ | — | $ | — | $ | — | $ | 29 | ||||||||||
April 1, 2007 Through May 15, 2007 | $ | 29 | $ | — | $ | (2 | ) | $ | 1 | $ | 28 | |||||||||
Successor | ||||||||||||||||||||
May 16, 2007 Through March 31, 2008 | $ | — | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||||
Year Ended March 31, 2009 | $ | 1 | $ | 2 | $ | (1 | ) | $ | — | $ | 2 |
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||||||
Year Ended | Through | Through | Ended | December 31, | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Receivables forfaited | $ | 570 | $ | 507 | $ | 51 | $ | 68 | $ | 424 | |||||||||||
Receivables factored | $ | 70 | $ | 75 | $ | — | $ | 18 | $ | 71 | |||||||||||
Forfaiting expense | $ | 5 | $ | 6 | $ | 1 | $ | 1 | $ | 5 | |||||||||||
Factoring expense | $ | 1 | $ | 1 | $ | — | $ | — | $ | 1 |
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March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Forfaited receivables outstanding | $ | 71 | $ | 149 | ||||
Factored receivables outstanding | $ | — | $ | — |
6. | INVENTORIES |
March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Finished goods | $ | 215 | $ | 381 | ||||
Work in process | 296 | 638 | ||||||
Raw materials | 207 | 362 | ||||||
Supplies | 79 | 75 | ||||||
797 | 1,456 | |||||||
Allowances | (4 | ) | (1 | ) | ||||
Inventories | $ | 793 | $ | 1,455 | ||||
7. | PROPERTY, PLANT AND EQUIPMENT |
As of March 31, | ||||||||||||
2009 | 2008 | |||||||||||
Successor | Successor | |||||||||||
Land and property rights | $ | 213 | $ | 258 | ||||||||
Buildings | 760 | 826 | ||||||||||
Machinery and equipment | 2,495 | 2,460 | ||||||||||
3,468 | 3,544 | |||||||||||
Accumulated depreciation and amortization | (741 | ) | (331 | ) | ||||||||
2,727 | 3,213 | |||||||||||
Construction in progress | 72 | 144 | ||||||||||
Property, plant and equipment, net | $ | 2,799 | $ | 3,357 | ||||||||
Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Depreciation expense related to property, plant and equipment | $ | 398 | $ | 338 | $ | 28 | $ | 58 | $ | 231 | |||||||||||
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Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Rent expense | $ | 25 | $ | 27 | $ | 3 | $ | 4 | $ | 22 | |||||||||||
Operating | Capital Lease | |||||||
Year Ending March 31, | Leases | Obligations | ||||||
2010 | $ | 19 | $ | 7 | ||||
2011 | 16 | 7 | ||||||
2012 | 14 | 7 | ||||||
2013 | 13 | 7 | ||||||
2014 | 11 | 6 | ||||||
Thereafter | 23 | 34 | ||||||
Total minimum lease payments | $ | 96 | 68 | |||||
Less: interest portion on capital lease | (21 | ) | ||||||
Principal obligation on capital leases | $ | 47 | ||||||
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March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Assets under capital lease obligations: | ||||||||
Buildings | $ | 9 | $ | 13 | ||||
Machinery and equipment | 63 | 55 | ||||||
72 | 68 | |||||||
Accumulated amortization | (19 | ) | (17 | ) | ||||
$ | 53 | $ | 51 | |||||
Predecessor | ||||
Asset retirement obligation as of December 31, 2006 | $ | 13 | ||
Liability incurred | 1 | |||
Liability settled | — | |||
Accretion | — | |||
Asset retirement obligation as of March 31, 2007 | 14 | |||
Liability incurred | — | |||
Liability settled | — | |||
Accretion | — | |||
Asset retirement obligation as of May 15, 2007 | $ | 14 | ||
Successor | ||||
Asset retirement obligation as of May 16, 2007 | $ | 14 | ||
Liability incurred | — | |||
Liability settled | — | |||
Accretion | 2 | |||
Asset retirement obligation as of March 31, 2008 | 16 | |||
Liability incurred | — | |||
Liability settled | — | |||
Accretion | 1 | |||
Other | (1 | ) | ||
Asset retirement obligation as of March 31, 2009 | $ | 16 | ||
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8. | INTANGIBLE ASSETS |
March 31, 2009 —Successor | March 31, 2008 —Successor | |||||||||||||||||||||||||||||||
Gross | Net | Weighted | Gross | Net | Weighted | |||||||||||||||||||||||||||
Carrying | Accumulated | Carrying | Average | Carrying | Accumulated | Carrying | Average | |||||||||||||||||||||||||
Amount | Amortization | Amount | Life | Amount | Amortization | Amount | Life | |||||||||||||||||||||||||
Tradenames | $ | 140 | $ | (13 | ) | $ | 127 | 20 years | $ | 152 | $ | (6 | ) | $ | 146 | 20 years | ||||||||||||||||
Technology | 165 | (21 | ) | 144 | 15 years | 169 | (10 | ) | 159 | 15 years | ||||||||||||||||||||||
Customer-related intangible assets | 459 | (43 | ) | 416 | 20 years | 484 | (21 | ) | 463 | 20 years | ||||||||||||||||||||||
Favorable energy supply contract | 124 | (28 | ) | 96 | 9.5 years | 124 | (13 | ) | 111 | 9.5 years | ||||||||||||||||||||||
Other favorable contracts | 13 | (9 | ) | 4 | 3.3 years | 15 | (6 | ) | 9 | 3.3 years | ||||||||||||||||||||||
$ | 901 | $ | (114 | ) | $ | 787 | 17.2 years | $ | 944 | $ | (56 | ) | $ | 888 | 17.2 years | |||||||||||||||||
Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Total Amortization expense related to intangible assets | $ | 59 | $ | 56 | $ | — | $ | — | $ | 2 | |||||||||||
Less: Amortization expense related to intangible assets included in Cost of goods sold (exclusive of depreciation and amortization)(A) | 18 | 19 | — | — | — | ||||||||||||||||
Amortization expense related to intangible assets included in Depreciation and amortization | $ | 41 | $ | 37 | $ | — | $ | — | $ | 2 | |||||||||||
(A) | Relates to amortization of favorable energy and other supply contracts. |
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Fiscal Year Ending March 31, | ||||
2010 | $ | 58 | ||
2011 | 55 | |||
2012 | 54 | |||
2013 | 54 | |||
2014 | 53 |
9. | CONSOLIDATION OF VARIABLE INTEREST ENTITIES |
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March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Current assets | $ | 64 | $ | 61 | ||||
Total assets | $ | 124 | $ | 106 | ||||
Current liabilities | $ | (35 | ) | $ | (39 | ) | ||
Total liabilities | $ | (135 | ) | $ | (112 | ) | ||
Net carrying value | $ | (11 | ) | $ | (6 | ) |
10. | INVESTMENT IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY TRANSACTIONS |
Ownership | ||||||
Affiliate Name | Ownership Structure | Percentage | ||||
Aluminium Norf GmbH | Corporation | 50 | % | |||
Consorcio Candonga | Unincorporated Joint Venture | 50 | % | |||
MiniMRF LLC | Limited Liability Company | 50 | % | |||
Deutsche Aluminium Verpackung Recycling GmbH | Corporation | 30 | % | |||
France Aluminium Recyclage S.A. | Public Limited Company | 20 | % |
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March 31, | ||||||||
2009 | 2008 | |||||||
Assets: | ||||||||
Current assets | $ | 158 | $ | 192 | ||||
Non-current assets | 560 | 677 | ||||||
Total assets | $ | 718 | $ | 869 | ||||
Liabilities: | ||||||||
Current liabilities | $ | 128 | $ | 151 | ||||
Non-current liabilities | 254 | 359 | ||||||
Total liabilities | 382 | 510 | ||||||
Equity: | ||||||||
Novelis | 168 | 180 | ||||||
Third parties | 168 | 179 | ||||||
Total liabilities and equity | $ | 718 | $ | 869 | ||||
Year | May 16, 2007 | April 1, 2007 | Three Months | Year | ||||||||||||||||
Ended | Through | Through | Ended | Ended | ||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | ||||||||||||||||
Net sales | $ | 553 | $ | 564 | $ | 45 | $ | 127 | $ | 558 | ||||||||||
Costs, expenses and income taxes | 511 | 495 | 43 | 122 | 521 | |||||||||||||||
Net income | $ | 42 | $ | 69 | $ | 2 | $ | 5 | $ | 37 | ||||||||||
Year | May 16, 2007 | |||||||
Ended | Through | |||||||
March 31, 2009 | March 31, 2008 | |||||||
Successor | Successor | |||||||
Incremental depreciation and amortization expense | $ | 48 | $ | 39 | ||||
Tax benefit(A) | (15 | ) | (29 | ) | ||||
Incremental depreciation and amortization expense, net | $ | 33 | $ | 10 | ||||
(A) | The tax benefits for the period from May 16, 2007 through March 31, 2008 includes tax benefits associated with amortization and a statutory tax rate change recorded as part of our equity method accounting |
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for these investments. There were no such statutory tax rate changes in the other period noted in the table above. |
Year | May 16, 2007 | April 1, 2007 | Three Months | Year | |||||||||||||||||
Ended | Through | Through | Ended | Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Purchases of tolling services, electricity and inventories | |||||||||||||||||||||
Aluminium Norf GmbH(A) | $ | 257 | $ | 253 | $ | 21 | $ | 61 | $ | 227 | |||||||||||
Consorcio Candonga(B) | 18 | 24 | 1 | 3 | 14 | ||||||||||||||||
Petrocoque S.A. Industria e Comercio(C) | n.a. | n.a. | n.a. | n.a. | 2 | ||||||||||||||||
Total purchases from related parties | $ | 275 | $ | 277 | $ | 22 | $ | 64 | $ | 243 | |||||||||||
Interest (income) expense | |||||||||||||||||||||
Aluminium Norf GmbH(D) | $ | — | $ | 1 | $ | — | $ | — | $ | (1 | ) | ||||||||||
(A) | We purchase tolling services (the conversion of customer-owned metal) from Aluminium Norf GmbH. | |
(B) | We obtain electricity from Consorcio Candonga for our operations in South America. | |
(C) | We purchased calcined-coke from Petrocoque for use in our smelting operations in South America. As previously discussed, we sold our interest in Petrocoque in November 2006. They are not considered a related party in periods subsequent to November 2006. | |
(D) | We earn interest income on a loan due from Aluminium Norf GmbH. |
March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Accounts receivable(A) | $ | 25 | $ | 31 | ||||
Other long-term receivables(A) | $ | 23 | $ | 41 | ||||
Accounts payable(B) | $ | 48 | $ | 55 |
(A) | The balances represent current and non-current portions of a loan due from Aluminium Norf GmbH. | |
(B) | We purchase tolling services from Aluminium Norf GmbH and electricity from Consorcio Candonga. |
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11. | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Accrued compensation and benefits | $ | 103 | $ | 141 | ||||
Accrued settlement of legal claim | — | 39 | ||||||
Accrued interest payable | 12 | 15 | ||||||
Accrued income taxes | 33 | 37 | ||||||
Current portion of fair value of unfavorable sales contracts | 152 | 242 | ||||||
Other current liabilities | 216 | 230 | ||||||
Accrued expenses and other current liabilities | $ | 516 | $ | 704 | ||||
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12. | DEBT |
March 31, 2009 | March 31, 2008 | |||||||||||||||||||||||||||
Unamortized | Unamortized | |||||||||||||||||||||||||||
Interest | Fair Value | Carrying | Fair Value | Carrying | ||||||||||||||||||||||||
Rates(A) | Principal | Adjustments(B) | Value | Principal | Adjustments(B) | Value | ||||||||||||||||||||||
Successor | Successor | |||||||||||||||||||||||||||
Long-term debt, net of current portion — third parties: | ||||||||||||||||||||||||||||
Novelis Inc. | ||||||||||||||||||||||||||||
7.25% Senior Notes, due February 2015 | 7.25 | % | $ | 1,124 | $ | 47 | $ | 1,171 | $ | 1,399 | $ | 67 | $ | 1,466 | ||||||||||||||
Floating rate Term Loan facility, due July 2014 | 3.21 | %(C) | 295 | — | 295 | 298 | — | 298 | ||||||||||||||||||||
Novelis Corporation | ||||||||||||||||||||||||||||
Floating rate Term Loan facility, due July 2014 | 3.21 | %(C) | 867 | (54 | ) | 813 | 655 | — | 655 | |||||||||||||||||||
Novelis Switzerland S.A. | ||||||||||||||||||||||||||||
Capital lease obligation, due December 2019 (Swiss francs (CHF) 51 million) | 7.50 | % | 45 | (3 | ) | 42 | 54 | (4 | ) | 50 | ||||||||||||||||||
Capital lease obligation, due August 2011 (CHF 3 million) | 2.49 | % | 2 | — | 2 | 3 | — | 3 | ||||||||||||||||||||
Novelis Korea Limited | ||||||||||||||||||||||||||||
Bank loan, due October 2010 | 5.44 | % | 100 | — | 100 | 100 | — | 100 | ||||||||||||||||||||
Bank loan, due February 2010 (Korean won (KRW) 50 billion) | 3.94 | % | 37 | — | 37 | — | — | — | ||||||||||||||||||||
Bank loan, due May 2009 (KRW 10 billion) | 7.47 | % | 7 | — | 7 | — | — | — | ||||||||||||||||||||
Bank loans, due September 2010 through June 2011 (KRW 308 million) | 3.24 | %(D) | — | — | — | 1 | — | 1 | ||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Other debt, due April 2009 through December 2012 | 0.61 | %(D) | 1 | — | 1 | 2 | — | 2 | ||||||||||||||||||||
Total debt — third parties | 2,478 | (10 | ) | 2,468 | 2,512 | 63 | 2,575 | |||||||||||||||||||||
Less: current portion | (59 | ) | 8 | (51 | ) | (15 | ) | — | (15 | ) | ||||||||||||||||||
Long-term debt, net of current portion — third parties: | $ | 2,419 | $ | (2 | ) | $ | 2,417 | $ | 2,497 | $ | 63 | $ | 2,560 | |||||||||||||||
Long-term debt, net of current portion — related party | ||||||||||||||||||||||||||||
Novelis Inc. | ||||||||||||||||||||||||||||
Unsecured credit facility — related party, due January 2015 | 13.00 | % | $ | 91 | $ | — | $ | 91 | $ | — | $ | — | $ | — | ||||||||||||||
(A) | Interest rates are as of March 31, 2009 and exclude the effects of accretion/amortization of fair value adjustments as a result of the Arrangement. | |
(B) | Debt existing at the time of the Arrangement was recorded at fair value. Additional floating rate Term Loan with a face value of $220 million issued in March 2009 was recorded at a fair value of $165 million. See discussion below. |
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(C) | Excludes the effect of related interest rate swaps and the effect of accretion of fair value. | |
(D) | Weighted average interest rate. |
Year Ending March 31, | Amount | |||
2010 | $ | 59 | ||
2011 | 116 | |||
2012 | 16 | |||
2013 | 16 | |||
2014 | 15 | |||
Thereafter | 2,347 | |||
Total | $ | 2,569 | ||
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13. | SHARE-BASED COMPENSATION |
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||
Through | Through | Ended | December 31, | ||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||
Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||
Active Plans(A): | |||||||||||||||||
Recognition Awards(B) | $ | 2.3 | $ | 1.5 | $ | 0.5 | $ | 0.5 | |||||||||
Inactive Plans: | |||||||||||||||||
Novelis 2006 Incentive Plan (stock options) | n.a. | 14.5 | 0.9 | 0.7 | |||||||||||||
Novelis 2006 Incentive Plan (stock appreciation rights) | n.a. | 5.6 | 1.4 | 0.4 | |||||||||||||
Novelis Conversion Plan of 2005 | n.a. | 23.8 | 0.3 | 7.3 | |||||||||||||
Stock Price Appreciation Unit Plan | n.a. | (0.5 | ) | 4.4 | 4.5 | ||||||||||||
Deferred Share Unit Plan for Non-Executive Directors | n.a. | 0.2 | 2.2 | 1.8 | |||||||||||||
Novelis Founders Performance Awards | n.a. | 0.1 | 6.0 | 2.7 | |||||||||||||
Total Shareholder Returns Performance Plan | n.a. | — | — | 0.2 | |||||||||||||
Inactive Plants — Total Share-Based Compensation Expense | n.a. | $ | 43.7 | $ | 15.2 | $ | 17.6 | ||||||||||
(A) | In June 2008, our board of directors authorized the 2009 Novelis Long-Term Incentive Plan. As of March 31, 2009, only the 2009 Novelis Long-term Incentive Plan remained active; however, there was no share-based compensation expense related to this plan in any period reflected in the table above or for the year ended March 31, 2009. | |
(B) | One-half of the outstanding Recognition Awards vested on December 31, 2007. The remaining outstanding Recognition Awards vested on December 31, 2008. As of March 31, 2009, the Recognition Awards were inactive. |
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Shares/Units | Cash Payments | |||||||
Settled | (In millions) | |||||||
Novelis 2006 Incentive Plan (stock options) | 825,850 | $ | 16 | |||||
Novelis 2006 Incentive Plan (stock appreciation rights) | 378,360 | 7 | ||||||
Novelis Conversion Plan of 2005 | 1,238,183 | 29 | ||||||
Stock Price Appreciation Unit Plan | 299,873 | 7 | ||||||
Deferred Share Unit Plan for Non-Executive Directors | 109,911 | 5 | ||||||
Novelis Founders Performance Awards | 180,400 | 8 | ||||||
$ | 72 | |||||||
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Expected volatility | 47.60 - 54.49% | |
Weighted average volatility | 50.87% | |
Dividend yield | 3.55% | |
Risk-free interest rate | 6.21 - 6.72% | |
Expected life | 3.22 - 4.72 years |
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Expected volatility | 42.20 to 46.40% | |
Weighted average volatility | 44.30% | |
Dividend yield | 0.16% | |
Risk-free interest rate | 4.68 to 4.71% | |
Expected life | 1.00 to 4.75 years |
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Three Months Ended | Year Ended | |||
March 31, 2007 | December 31, 2006 | |||
Predecessor | Predecessor | |||
Expected volatility | 40.70 to 44.70% | 40.80 to 45.40% | ||
Weighted average volatility | 42.70% | 43.10% | ||
Dividend yield | None | 0.14% | ||
Risk-free interest rate | 4.51 to 4.59% | 4.67 to 4.71% | ||
Expected life | 0.57 to 4.32 years | 0.83 to 4.57 years |
Expected volatility | 30.30% | |
Weighted-average volatility | 30.30% | |
Dividend yield | 1.56% | |
Risk-free interest rate | 2.88 to 3.73% | |
Expected life | 0.70 to 5.70 years |
Three Months Ended | Year Ended | |||
March 31, 2007 | December 31, 2006 | |||
Predecessor | Predecessor | |||
Expected volatility | 38.20 to 40.80% | 36.20 to 40.30% | ||
Weighted average volatility | 39.31% | 39.32% | ||
Dividend yield | None | 0.14% | ||
Risk-free interest rate | 4.51 to 4.56% | 4.67 to 4.80% | ||
Expected life | 2.25 to 4.37 years | 2.37 to 4.37 years |
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Year Ended | ||
December 31, 2006 | ||
Predecessor | ||
Expected volatility | 37.00% | |
Weighted average volatility | 37.00% | |
Dividend yield | 0.14% | |
Risk-free interest rate | 4.75% | |
Expected life (derived service periods) | 0.93 to 1.23 years |
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14. | POSTRETIREMENT BENEFIT PLANS |
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Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Funded pension plans | $ | 29 | $ | 35 | $ | 4 | $ | 10 | $ | 39 | |||||||||||
Unfunded pension plans | 16 | 19 | 2 | 6 | 22 | ||||||||||||||||
Savings and defined contribution pension plans | 16 | 13 | 2 | 3 | 12 | ||||||||||||||||
Total contributions | $ | 61 | $ | 67 | $ | 8 | $ | 19 | $ | 73 | |||||||||||
Allocation in | ||||||||||||
Aggregate as of | ||||||||||||
Target | March 31, | |||||||||||
Asset Category | Allocation Ranges | 2009 | 2008 | |||||||||
Successor | Successor | |||||||||||
Equity securities | 35 - 70 | % | 46 | % | 50 | % | ||||||
Debt securities | 25 - 60 | % | 46 | % | 42 | % | ||||||
Real estate | 0 - 25 | % | 4 | % | 4 | % | ||||||
Other | 0 - 15 | % | 4 | % | 3 | % |
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Pension Benefits | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Three Months | Year Ended | ||||||||||||||||||
Year Ended | Through | Through | Ended | December 31, | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Change in benefit obligation | |||||||||||||||||||||
Benefit obligation at beginning of period | $ | 991 | $ | 867 | $ | 885 | $ | 877 | $ | 575 | |||||||||||
Service cost | 38 | 40 | 6 | 12 | 42 | ||||||||||||||||
Interest cost | 57 | 43 | 6 | 12 | 44 | ||||||||||||||||
Members’ contributions | 9 | 5 | — | 1 | 4 | ||||||||||||||||
Benefits paid | (39 | ) | (39 | ) | (4 | ) | (10 | ) | (30 | ) | |||||||||||
Amendments | — | (9 | ) | — | — | 1 | |||||||||||||||
Transfers/mergers | 48 | 95 | — | — | 209 | ||||||||||||||||
Curtailments/ termination benefits | (2 | ) | — | — | — | (5 | ) | ||||||||||||||
Actuarial (gains) losses | (33 | ) | (52 | ) | (32 | ) | (9 | ) | (10 | ) | |||||||||||
Currency (gains) losses | (124 | ) | 41 | 6 | 2 | 47 | |||||||||||||||
Benefit obligation at end of period | $ | 945 | $ | 991 | $ | 867 | $ | 885 | $ | 877 | |||||||||||
Benefit obligation of funded plans | $ | 787 | $ | 800 | $ | 680 | $ | 696 | $ | 690 | |||||||||||
Benefit obligation of unfunded plans | 158 | 191 | 187 | 189 | 187 | ||||||||||||||||
Benefit obligation at end of period | $ | 945 | $ | 991 | $ | 867 | $ | 885 | $ | 877 | |||||||||||
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Other Benefits | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Benefit obligation at beginning of period | $ | 171 | $ | 140 | $ | 141 | $ | 139 | $ | 122 | |||||||||||
Service cost | 7 | 4 | 1 | 2 | 5 | ||||||||||||||||
Interest cost | 10 | 7 | 1 | 2 | 7 | ||||||||||||||||
Benefits paid | (7 | ) | (6 | ) | (1 | ) | (2 | ) | (8 | ) | |||||||||||
Transfers/mergers | — | — | (1 | ) | — | 1 | |||||||||||||||
Curtailments/termination benefits | (3 | ) | — | — | — | — | |||||||||||||||
Actuarial (gains) losses | (14 | ) | 25 | (2 | ) | — | 12 | ||||||||||||||
Currency (gains) losses | (2 | ) | 1 | 1 | — | — | |||||||||||||||
Benefit obligation at end of period | $ | 162 | $ | 171 | 140 | $ | 141 | $ | 139 | ||||||||||||
Benefit obligation of funded plans | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Benefit obligation of unfunded plans | 162 | 171 | 140 | 141 | 139 | ||||||||||||||||
Benefit obligation at end of period | $ | 162 | $ | 171 | $ | 140 | $ | 141 | $ | 139 | |||||||||||
Pension Benefits | |||||||||||||||||||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Change in fair value of plan assets | |||||||||||||||||||||
Fair value of plan assets at beginning of period | $ | 724 | $ | 607 | $ | 578 | $ | 568 | $ | 301 | |||||||||||
Actual return on plan assets | (102 | ) | (14 | ) | 16 | 6 | 41 | ||||||||||||||
Members’ contributions | 9 | 5 | — | 1 | 4 | ||||||||||||||||
Benefits paid | (39 | ) | (39 | ) | (2 | ) | (5 | ) | (30 | ) | |||||||||||
Company contributions | 45 | 54 | 12 | 3 | 51 | ||||||||||||||||
Transfers/mergers | 49 | 94 | — | 4 | 178 | ||||||||||||||||
Currency gains (losses) | (88 | ) | 17 | 3 | 1 | 23 | |||||||||||||||
Fair value of plan assets at end of period | $ | 598 | $ | 724 | $ | 607 | $ | 578 | $ | 568 | |||||||||||
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March 31, | |||||||||||||||||
2009 | 2008 | ||||||||||||||||
Pension | Other | Pension | Other | ||||||||||||||
Benefits | Benefits | Benefits | Benefits | ||||||||||||||
Successor | Successor | ||||||||||||||||
Funded status | |||||||||||||||||
Funded Status at end of period: | |||||||||||||||||
Assets less the benefit obligation of funded plans | $ | (189 | ) | $ | — | $ | (76 | ) | $ | — | |||||||
Benefit obligation of unfunded plans | (158 | ) | (162 | ) | (191 | ) | (171 | ) | |||||||||
$ | (347 | ) | $ | (162 | ) | $ | (267 | ) | $ | (171 | ) | ||||||
As included on consolidated balance sheet | |||||||||||||||||
Other long-term assets — third parties | $ | — | $ | — | $ | 7 | $ | — | |||||||||
Accrued expenses and other current liabilities | (12 | ) | (7 | ) | (16 | ) | (8 | ) | |||||||||
Accrued postretirement benefits | (335 | ) | (155 | ) | (258 | ) | (163 | ) | |||||||||
$ | (347 | ) | $ | (162 | ) | $ | (267 | ) | $ | (171 | ) | ||||||
March 31, | |||||||||||||||||
2009 | 2008 | ||||||||||||||||
Pension | Other | Pension | Other | ||||||||||||||
Benefits | Benefits | Benefits | Benefits | ||||||||||||||
Successor | Successor | ||||||||||||||||
Net actuarial loss | $ | 118 | $ | 9 | $ | 2 | $ | 25 | |||||||||
Prior service cost (credit) | (7 | ) | — | (10 | ) | — | |||||||||||
Total postretirement amounts recognized in Accumulated other comprehensive loss (income) | $ | 111 | $ | 9 | $ | (8 | ) | $ | 25 | ||||||||
March 31, | |||||||||
2009 | 2008 | ||||||||
Successor | Successor | ||||||||
Projected benefit obligation | $ | 887 | $ | 528 | |||||
Accumulated benefit obligation | $ | 784 | $ | 496 | |||||
Fair value of plan assets | $ | 549 | $ | 302 |
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Pension Benefits | Other Benefits | |||||||
2010 | $ | 35 | $ | 7 | ||||
2011 | 36 | 8 | ||||||
2012 | 40 | 9 | ||||||
2013 | 44 | 10 | ||||||
2014 | 49 | 11 | ||||||
2015 through 2019 | 301 | 69 | ||||||
Total | $ | 505 | $ | 114 | ||||
Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
Pension Benefits | 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net periodic benefit cost | |||||||||||||||||||||
Service cost | $ | 38 | $ | 40 | $ | 6 | $ | 12 | $ | 42 | |||||||||||
Interest cost | 57 | 43 | 6 | 12 | 44 | ||||||||||||||||
Expected return on assets | (50 | ) | (41 | ) | (5 | ) | (11 | ) | (38 | ) | |||||||||||
Amortization | |||||||||||||||||||||
— actuarial losses | — | — | — | 1 | 6 | ||||||||||||||||
— prior service cost | (1 | ) | — | — | — | 2 | |||||||||||||||
Curtailment/settlement losses | (1 | ) | — | — | — | (4 | ) | ||||||||||||||
Net periodic benefit cost | 43 | 42 | 7 | 14 | 52 | ||||||||||||||||
Proportionate share of non-consolidated affiliates’ deferred pension costs, net of tax | 4 | 4 | — | — | 4 | ||||||||||||||||
Total net periodic benefit costs recognized | $ | 47 | $ | 46 | $ | 7 | $ | 14 | $ | 56 | |||||||||||
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Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
Other Benefits | 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net periodic benefit cost | |||||||||||||||||||||
Service cost | $ | 7 | $ | 4 | $ | 1 | $ | 1 | $ | 5 | |||||||||||
Interest cost | 10 | 7 | 1 | 2 | 7 | ||||||||||||||||
Amortization | |||||||||||||||||||||
— actuarial losses | 2 | — | — | 1 | 1 | ||||||||||||||||
Curtailment/termination benefits | (3 | ) | — | — | — | — | |||||||||||||||
Total net periodic benefit costs recognized | $ | 16 | $ | 11 | $ | 2 | $ | 4 | $ | 13 | |||||||||||
Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
Pension Benefits | 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Weighted average assumptions used to determine benefit obligations | |||||||||||||||||||||
Discount rate | 6.0 | % | 5.8 | % | 5.4 | % | 5.3 | % | 5.4 | % | |||||||||||
Average compensation growth | 3.6 | % | 3.4 | % | 3.8 | % | 3.8 | % | 3.8 | % | |||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||||||
Discount rate | 5.9 | % | 5.2 | % | 5.4 | % | 5.4 | % | 5.1 | % | |||||||||||
Average compensation growth | 3.6 | % | 3.7 | % | 3.8 | % | 3.8 | % | 3.9 | % | |||||||||||
Expected return on plan assets | 6.9 | % | 7.3 | % | 7.5 | % | 7.5 | % | 7.3 | % | |||||||||||
Year Ended | May 16, 2007 | April 1, 2007 | Three Months | Year Ended | |||||||||||||||||
March 31, | Through | Through | Ended | December 31, | |||||||||||||||||
Other Benefits | 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | 2006 | ||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Weighted average assumptions used to determine benefit obligations | |||||||||||||||||||||
Discount rate | 6.2 | % | 6.1 | % | 5.8 | % | 5.7 | % | 5.7 | % | |||||||||||
Average compensation growth | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | |||||||||||
Weighted average assumptions used to determine net periodic benefit cost | |||||||||||||||||||||
Discount rate | 6.1 | % | 5.7 | % | 5.7 | % | 5.7 | % | 5.7 | % | |||||||||||
Average compensation growth | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % | 3.9 | % |
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1% Increase | 1% Decrease | |||||||
Sensitivity Analysis | ||||||||
Effect on service and interest costs | $ | 2 | $ | (2 | ) | |||
Effect on benefit obligation | $ | 14 | $ | (12 | ) |
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15. | CURRENCY LOSSES (GAINS) |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net (gain) loss on change in fair value of currency derivative instruments(A) | $ | (21 | ) | $ | 44 | $ | (10 | ) | $ | (5 | ) | $ | 24 | ||||||||
Net (gain) loss on remeasurement of monetary assets and liabilities(B) | 98 | (2 | ) | 4 | 6 | (8 | ) | ||||||||||||||
Net currency (gain) loss | $ | 77 | $ | 42 | $ | (6 | ) | $ | 1 | $ | 16 | ||||||||||
(A) | Included in(Gain) loss on change in fair value of derivative instruments, net. | |
(B) | Included inOther (income) expenses, net. |
May 16, 2007 | ||||||||
Year Ended | Through | |||||||
March 31, 2009 | March 31, 2008 | |||||||
Successor | Successor | |||||||
Cumulative currency translation adjustment — beginning of period | $ | 85 | $ | 32 | ||||
Effect of changes in exchange rates | (163 | ) | 53 | |||||
Cumulative currency translation adjustment — end of period | $ | (78 | ) | $ | 85 | |||
16. | FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS |
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March 31, 2009 | ||||||||||||||||||||
Assets | Liabilities | Net Fair Value | ||||||||||||||||||
Current | Noncurrent | Current | Noncurrent | Assets/(Liabilities) | ||||||||||||||||
Successor | ||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Currency exchange contracts | $ | — | $ | — | $ | — | $ | (11 | ) | $ | (11 | ) | ||||||||
Interest rate swaps | — | — | (13 | ) | — | (13 | ) | |||||||||||||
Electricity swap | — | — | (6 | ) | (12 | ) | (18 | ) | ||||||||||||
Total derivatives designated as hedging instruments | — | — | (19 | ) | (23 | ) | (42 | ) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Aluminum contracts | 99 | 41 | (532 | ) | (13 | ) | (405 | ) | ||||||||||||
Currency exchange contracts | 20 | 31 | (77 | ) | (12 | ) | (38 | ) | ||||||||||||
Energy contracts | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Total derivatives not designated as hedging instruments | 119 | 72 | (621 | ) | (25 | ) | (455 | ) | ||||||||||||
Total derivative fair value | $ | 119 | $ | 72 | $ | (640 | ) | $ | (48 | ) | $ | (497 | ) | |||||||
March 31, 2008 | ||||||||||||||||||||
Assets | Liabilities | Net Fair Value | ||||||||||||||||||
Current | Noncurrent | Current | Noncurrent | Assets/(Liabilities) | ||||||||||||||||
Successor | ||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Currency exchange contracts | $ | — | $ | — | $ | — | $ | (184 | ) | $ | (184 | ) | ||||||||
Interest rate swaps | — | — | (3 | ) | (12 | ) | (15 | ) | ||||||||||||
Electricity swap | 3 | 11 | — | — | 14 | |||||||||||||||
Total derivatives designated as hedging instruments | 3 | 11 | (3 | ) | (196 | ) | (185 | ) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Aluminum contracts | 131 | 4 | (29 | ) | — | 106 | ||||||||||||||
Currency exchange contracts | 64 | 6 | (116 | ) | (5 | ) | (51 | ) | ||||||||||||
Energy contracts | 5 | — | — | — | 5 | |||||||||||||||
Total derivatives not designated as hedging instruments | 200 | 10 | (145 | ) | (5 | ) | 60 | |||||||||||||
Total derivative fair value | $ | 203 | $ | 21 | $ | (148 | ) | $ | (201 | ) | $ | (125 | ) | |||||||
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May 16, 2007 | April 1, 2007 | ||||||||||||
Year Ended | Through | Through | |||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | |||||||||||
Successor | Successor | Predecessor | |||||||||||
Currency exchange contracts | $ | 169 | $ | (82 | ) | $ | (8 | ) |
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Gain or (Loss) | ||||||||||||
Recognized in Income | ||||||||||||
Gain (Loss) | (Ineffective Portion and Amount | |||||||||||
Gain (Loss) | Reclassified from | Excluded from | ||||||||||
Recognized in OCI | AOCI into Income | Effectiveness Testing) | ||||||||||
Year Ended | Year Ended | Year Ended | ||||||||||
March 31, 2009 | March 31, 2009 | March 31, 2009 | ||||||||||
Successor | Successor | Successor | ||||||||||
Energy contracts | $ | (21 | ) | $ | 12 | $ | — | |||||
Interest rate swaps | $ | 3 | $ | — | $ | — |
Gain (Loss) | |||||||||||||||||||||||||||
Recognized in Income | |||||||||||||||||||||||||||
Gain (Loss) | (Ineffective Portion and Amount | ||||||||||||||||||||||||||
Gain (Loss) | Reclassified from | Excluded from | |||||||||||||||||||||||||
Recognized in OCI | AOCI into Income | Effectiveness Testing) | |||||||||||||||||||||||||
May 16, 2007 | April 1, 2007 | May 16, 2007 | April 1, 2007 | May 16, 2007 | April 1, 2007 | ||||||||||||||||||||||
Through | Through | Through | Through | Through | Through | ||||||||||||||||||||||
March 31, 2008 | May 15, 2007 | March 31, 2008 | May 15, 2007 | March 31, 2008 | May 15, 2007 | ||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||||
Currency exchange contracts | $ | — | $ | 4 | $ | — | $ | 1 | $ | — | $ | — | |||||||||||||||
Energy contracts | $ | 23 | $ | 4 | $ | 8 | $ | — | $ | — | $ | — | |||||||||||||||
Interest rate swaps | $ | (15 | ) | $ | — | $ | — | $ | — | $ | (1 | ) | $ | — |
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May 16, 2007 | April 1, 2007 | ||||||||||||
Year Ended | Through | Through | |||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | |||||||||||
Successor | Successor | Predecessor | |||||||||||
Derivative Instruments Not Designated as Hedges | |||||||||||||
Aluminum contracts | $ | (561 | ) | $ | 44 | $ | 7 | ||||||
Currency exchange contracts | 21 | (44 | ) | 10 | |||||||||
Energy contracts | (29 | ) | 12 | 3 | |||||||||
Gain (loss) recognized | (569 | ) | 12 | 20 | |||||||||
Derivative Instruments Designated as Cash Flow Hedges | |||||||||||||
Interest rate swaps | — | (1 | ) | — | |||||||||
Electricity swap | 13 | 11 | — | ||||||||||
Gain (loss) on change in fair value of derivative instruments, net | $ | (556 | ) | $ | 22 | $ | 20 | ||||||
17. | FAIR VALUE OF ASSETS AND LIABILITIES |
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Fair Value Measurements Using | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Successor: | ||||||||||||||||
Assets — Derivative instruments | $ | — | $ | 191 | $ | — | $ | 191 | ||||||||
Liabilities — Derivative instruments | $ | — | $ | (644 | ) | $ | (44 | ) | $ | (688 | ) |
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Level 3 | ||||
Derivative | ||||
Instruments(A) | ||||
Successor: | ||||
Balance as of April 1, 2008 | $ | 11 | ||
Net realized/unrealized (losses) included in earnings(B) | (10 | ) | ||
Net realized/unrealized (losses) included in Other comprehensive income (loss)(C) | (33 | ) | ||
Net purchases, issuances and settlements | (13 | ) | ||
Net transfers in and/or (out) of Level 3 | 1 | |||
Balance as of March 31, 2009 | $ | (44 | ) | |
(A) | Represents derivative assets net of derivative liabilities. | |
(B) | Included in (Gain) loss on change in fair value of derivative instruments, net. | |
(C) | Included in Change in fair value of effective portion of hedges, net. |
March 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Successor | Successor | Successor | Successor | |||||||||||||
Assets | ||||||||||||||||
Long-term receivables from related parties | $ | 23 | $ | 23 | $ | 41 | $ | 41 | ||||||||
Liabilities | ||||||||||||||||
Long-term debt | ||||||||||||||||
Novelis Inc. | ||||||||||||||||
7.25% Senior Notes, due February 2015 | 1,171 | 454 | 1,466 | 1,249 | ||||||||||||
Floating rate Term Loan facility, due July 2014 | 295 | 200 | 298 | 298 | ||||||||||||
Unsecured credit facility — related party, due January 2015 | 91 | 93 | — | — | ||||||||||||
Novelis Corporation | ||||||||||||||||
Floating rate Term Loan facility, due July 2014 | 813 | 584 | 655 | 655 | ||||||||||||
Novelis Switzerland S.A. | ||||||||||||||||
Capital lease obligation, due December 2019 (CHF 51 million) | 42 | 36 | 50 | 43 | ||||||||||||
Capital lease obligation, due August 2011 (CHF 3 million) | 2 | 2 | 3 | 3 |
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March 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Successor | Successor | Successor | Successor | |||||||||||||
Novelis Korea Limited | ||||||||||||||||
Bank loan, due October 2010 | 100 | 83 | 100 | 87 | ||||||||||||
Bank loan, due February 2010 (KRW 50 billion) | 37 | 33 | — | — | ||||||||||||
Bank loan, due May 2009 (KRW 10 billion) | 7 | 7 | — | — | ||||||||||||
Bank loans, due September 2010 through June 2011 (KRW 308 million) | — | — | 1 | 1 | ||||||||||||
Other | ||||||||||||||||
Other debt, due April 2009 through December 2012 | 1 | 1 | 2 | 2 | ||||||||||||
Financial commitments | ||||||||||||||||
Letters of credit | — | 134 | — | 148 |
18. | OTHER (INCOME) EXPENSES, NET |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Exchange (gains) losses, net | $ | 98 | $ | (2 | ) | $ | 4 | $ | 6 | $ | (8 | ) | |||||||||
Gain on reversal of accrued legal claims(A) | (26 | ) | — | — | — | — | |||||||||||||||
Brazilian tax settlement(B) | 9 | — | — | — | — | ||||||||||||||||
Impairment charges on long-lived assets | 1 | 1 | — | 8 | — | ||||||||||||||||
Loss on disposal of business | — | — | — | — | 15 | ||||||||||||||||
Gain on sale of equity interest in non-consolidated affiliate(C) | — | — | — | — | (15 | ) | |||||||||||||||
Gain on sale of rights to develop and operate hydroelectric power plants(D) | — | — | — | — | (11 | ) | |||||||||||||||
Losses on disposals of property, plant and equipment, net | — | — | — | — | 5 | ||||||||||||||||
Sale transaction fees | — | — | 32 | 32 | — | ||||||||||||||||
Other, net | 4 | (5 | ) | (1 | ) | 1 | (5 | ) | |||||||||||||
Other (income) expenses, net | $ | 86 | $ | (6 | ) | $ | 35 | $ | 47 | $ | (19 | ) | |||||||||
(A) | We recognized a $26 million gain on the reversal of a previously recorded legal accrual upon settlement in September 2008. | |
(B) | Interest and penalty on Brazilian tax settlement. See Note 20 — Commitments and Contingencies(Brazil Tax Matters). | |
(C) | In November 2006, we sold the common and preferred shares of our 25% interest in Petrocoque to the other shareholders of Petrocoque for approximately $20 million. We recognized a pre-tax gain of approximately $15 million. | |
(D) | During the fourth quarter of 2006, we sold our rights to develop and operate two hydroelectric power plants in South America and recorded a pre-tax gain of approximately $11 million. |
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19. | INCOME TAXES |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Domestic (Canada) | $ | (15 | ) | $ | (102 | ) | $ | (45 | ) | $ | (44 | ) | $ | (100 | ) | ||||||
Foreign (all other countries) | (1,981 | ) | 134 | (50 | ) | (14 | ) | (194 | ) | ||||||||||||
Pre-tax income (loss) before equity in net (income) loss on non-consolidated affiliates | $ | (1,996 | ) | $ | 32 | $ | (95 | ) | $ | (58 | ) | $ | (294 | ) | |||||||
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Current provision (benefit): | |||||||||||||||||||||
Domestic (Canada) | $ | 7 | $ | 7 | $ | — | $ | 1 | $ | 1 | |||||||||||
Foreign (all other countries) | 78 | 71 | 21 | 15 | 72 | ||||||||||||||||
Total current | 85 | 78 | 21 | 16 | 73 | ||||||||||||||||
Deferred provision (benefit): | |||||||||||||||||||||
Domestic (Canada) | — | — | 4 | — | 4 | ||||||||||||||||
Foreign (all other countries) | (331 | ) | (5 | ) | (21 | ) | (9 | ) | (81 | ) | |||||||||||
Total deferred | (331 | ) | (5 | ) | (17 | ) | (9 | ) | (77 | ) | |||||||||||
Income tax provision (benefit) | $ | (246 | ) | $ | 73 | $ | 4 | $ | 7 | $ | (4 | ) | |||||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Pre-tax income (loss) before equity in net (income) loss on non-consolidated affiliates | $ | (1,996 | ) | $ | 32 | $ | (95 | ) | $ | (58 | ) | $ | (294 | ) | |||||||
Canadian Statutory tax rate | 31 | % | 32 | % | 33 | % | 33 | % | 33 | % | |||||||||||
Provision (benefit) at the Canadian statutory rate | $ | (619 | ) | $ | 10 | $ | (31 | ) | $ | (19 | ) | $ | (97 | ) | |||||||
Increase (decrease) for taxes on income (loss) resulting from: | |||||||||||||||||||||
Non-deductible goodwill impairment | 415 | — | — | — | — | ||||||||||||||||
Exchange translation items | (4 | ) | 39 | 23 | 6 | 15 | |||||||||||||||
Exchange remeasurement of deferred income taxes | (48 | ) | 27 | 3 | 2 | 3 | |||||||||||||||
Change in valuation allowances | 61 | (6 | ) | 13 | 23 | 71 | |||||||||||||||
Tax credits and other allowances | (8 | ) | (1 | ) | — | — | — | ||||||||||||||
Expense (income) items not subject to tax | 3 | 5 | (9 | ) | 1 | 13 | |||||||||||||||
Enacted tax rate changes | (7 | ) | (17 | ) | — | — | — | ||||||||||||||
Tax rate differences on foreign earnings | (33 | ) | 2 | 2 | (6 | ) | (15 | ) | |||||||||||||
Uncertain tax positions | 2 | 17 | — | — | — | ||||||||||||||||
Other, net | (8 | ) | (3 | ) | 3 | — | 6 | ||||||||||||||
Income tax provision (benefit) | $ | (246 | ) | $ | 73 | $ | 4 | $ | 7 | $ | (4 | ) | |||||||||
Effective tax rate | 12 | % | 228 | % | (4 | )% | (12 | )% | 1 | % | |||||||||||
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March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Deferred income tax assets: | ||||||||
Provisions not currently deductible for tax purposes | $ | 363 | $ | 324 | ||||
Tax losses/benefit carryforwards, net | 390 | 311 | ||||||
Depreciation and Amortization | 85 | 91 | ||||||
Other assets | 45 | 47 | ||||||
Total deferred income tax assets | 883 | 773 | ||||||
Less: valuation allowance | (228 | ) | (160 | ) | ||||
Net deferred income tax assets | $ | 655 | $ | 613 | ||||
Deferred income tax liabilities: | ||||||||
Depreciation and amortization | $ | 774 | $ | 940 | ||||
Inventory valuation reserves | 55 | 134 | ||||||
Other liabilities | 75 | 201 | ||||||
Total deferred income tax liabilities | $ | 904 | $ | 1,275 | ||||
Total deferred income tax liabilities | $ | 904 | $ | 1,275 | ||||
Less: Net deferred income tax assets | 655 | 613 | ||||||
Net deferred income tax liabilities | $ | 249 | $ | 662 | ||||
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F-70
Table of Contents
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||
Year Ended | Through | Through | Ended | ||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | ||||||||||||||
Successor | Successor | Predecessor | Predecessor | ||||||||||||||
Beginning balance | $ | 61 | $ | 47 | $ | 46 | $ | 46 | |||||||||
Additions based on tax positions related to the current period | 1 | 2 | — | — | |||||||||||||
Additions based on tax positions of prior years | 3 | 7 | — | 1 | |||||||||||||
Reductions based on tax positions of prior years | (3 | ) | — | — | (1 | ) | |||||||||||
Settlements | (4 | ) | — | — | — | ||||||||||||
Statute Lapses | (1 | ) | — | — | — | ||||||||||||
Foreign Exchange | (6 | ) | 5 | 1 | — | ||||||||||||
Ending Balance | $ | 51 | $ | 61 | $ | 47 | $ | 46 | |||||||||
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Table of Contents
20. | COMMITMENTS AND CONTINGENCIES |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Purchases from Alcan as a percentage of total combined prime and sheet ingot purchases in kt(A) | 47 | % | 35 | % | 34 | % | 35 | % | 35 | % | |||||||||||
(A) | One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. |
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F-73
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Maximum | Liability | |||||||
Potential | Carrying | |||||||
Type of Entity | Future Payment | Value | ||||||
Wholly-owned subsidiaries | $ | 50 | $ | 14 | ||||
Aluminium Norf GmbH | 13 | — |
21. | SEGMENT, GEOGRAPHICAL AREA AND MAJOR CUSTOMER INFORMATION |
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• | North America. Headquartered in Cleveland, Ohio, this segment manufactures aluminum sheet and light gauge products and operates 11 plants, including two fully dedicated recycling facilities, in two countries. | |
• | Europe. Headquartered in Zurich, Switzerland, this segment manufactures aluminum sheet and light gauge products and operates 14 plants, including one recycling facility, in six countries. | |
• | Asia. Headquartered in Seoul, South Korea, this segment manufactures aluminum sheet and light gauge products and operates three plants in two countries. | |
• | South America. Headquartered in Sao Paulo, Brazil, this segment comprises bauxite mining, alumina refining, smelting operations, power generation, carbon products, aluminum sheet and light gauge products and operates four plants in Brazil. |
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Adjustment to | ||||||||||||||||||||||||||||
Reportable Segments | Eliminate | |||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
Year Ended March 31, 2009 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
(Successor) | ||||||||||||||||||||||||||||
Net sales | $ | 3,930 | $ | 3,718 | $ | 1,536 | $ | 1,007 | $ | — | $ | (14 | ) | $ | 10,177 | |||||||||||||
Write-off and amortization of fair value adjustments | 218 | 7 | — | — | 8 | — | 233 | |||||||||||||||||||||
Depreciation and amortization | 166 | 226 | 50 | 72 | 3 | (78 | ) | 439 | ||||||||||||||||||||
Income tax provision (benefit) | (156 | ) | (13 | ) | (8 | ) | (62 | ) | 9 | (16 | ) | (246 | ) | |||||||||||||||
Capital expenditures | 42 | 76 | 20 | 25 | 2 | (20 | ) | 145 | ||||||||||||||||||||
Total assets as of March 31, 2009 | $ | 2,973 | $ | 2,750 | $ | 732 | $ | 1,296 | $ | 50 | $ | (234 | ) | $ | 7,567 |
Adjustment to | ||||||||||||||||||||||||||||
Reportable Segments | Eliminate | |||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
May 16, 2007 Through March 31, 2008 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
(Successor) | ||||||||||||||||||||||||||||
Net sales | $ | 3,655 | $ | 3,828 | $ | 1,602 | $ | 885 | $ | — | $ | (5 | ) | $ | 9,965 | |||||||||||||
Write-off and amortization of fair value adjustments | 242 | (8 | ) | (11 | ) | (9 | ) | 7 | — | 221 | ||||||||||||||||||
Depreciation and amortization | 140 | 176 | 52 | 62 | 1 | (56 | ) | 375 | ||||||||||||||||||||
Income tax provision (benefit) | 23 | (70 | ) | 1 | 69 | 16 | 34 | 73 | ||||||||||||||||||||
Capital expenditures | 42 | 98 | 28 | 28 | 3 | (14 | ) | 185 | ||||||||||||||||||||
Total assets as of March 31, 2008 | $ | 3,957 | $ | 4,355 | $ | 1,080 | $ | 1,485 | $ | 59 | $ | (199 | ) | $ | 10,737 |
Adjustment to | ||||||||||||||||||||||||||||
Reportable Segments | Eliminate | |||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
April 1, 2007 Through May 15, 2007 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales | $ | 446 | $ | 510 | $ | 216 | $ | 109 | $ | — | $ | — | $ | 1,281 | ||||||||||||||
Depreciation and amortization | 7 | 11 | 7 | 5 | 1 | (3 | ) | 28 | ||||||||||||||||||||
Income tax provision (benefit) | (19 | ) | 10 | — | 14 | (1 | ) | — | 4 | |||||||||||||||||||
Capital expenditures | 4 | 8 | 4 | 3 | 1 | (3 | ) | 17 |
Adjustment to | ||||||||||||||||||||||||||||
Reportable Segments | Eliminate | |||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
Three Months Ended March 31, 2007 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales | $ | 925 | $ | 1,057 | $ | 413 | $ | 235 | $ | — | $ | — | $ | 2,630 | ||||||||||||||
Depreciation and amortization | 16 | 24 | 14 | 11 | 1 | (8 | ) | 58 | ||||||||||||||||||||
Income tax provision (benefit) | (10 | ) | 6 | — | 11 | — | — | 7 | ||||||||||||||||||||
Capital expenditures | 9 | 11 | 3 | 4 | 1 | (4 | ) | 24 |
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Adjustment to | ||||||||||||||||||||||||||||
Reportable Segments | Eliminate | |||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
Year Ended December 31, 2006 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
(Predecessor) | ||||||||||||||||||||||||||||
Net sales | $ | 3,691 | $ | 3,620 | $ | 1,692 | $ | 863 | $ | — | $ | (17 | ) | $ | 9,849 | |||||||||||||
Depreciation and amortization | 70 | 92 | 55 | 44 | 4 | (32 | ) | 233 | ||||||||||||||||||||
Income tax provision (benefit) | (111 | ) | 29 | 11 | 63 | 9 | (5 | ) | (4 | ) | ||||||||||||||||||
Capital expenditures | 39 | 45 | 21 | 26 | 3 | (18 | ) | 116 |
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
North America | $ | 82 | $ | 266 | $ | (24 | ) | $ | (17 | ) | $ | 20 | |||||||||
Europe | 236 | 241 | 32 | 85 | 245 | ||||||||||||||||
Asia | 86 | 46 | 6 | 16 | 82 | ||||||||||||||||
South America | 139 | 143 | 18 | 57 | 165 | ||||||||||||||||
Corporate and other(A) | (55 | ) | (46 | ) | (38 | ) | (29 | ) | (170 | ) | |||||||||||
Depreciation and amortization | (439 | ) | (375 | ) | (28 | ) | (58 | ) | (233 | ) | |||||||||||
Interest expense and amortization of debt issuance costs | (182 | ) | (191 | ) | (27 | ) | (54 | ) | (221 | ) | |||||||||||
Interest income | 14 | 18 | 1 | 4 | 15 | ||||||||||||||||
Unrealized gains (losses) on change in fair value of derivative instruments, net(B) | (519 | ) | (8 | ) | 5 | (1 | ) | (151 | ) | ||||||||||||
Impairment of goodwill | (1,340 | ) | — | — | — | — | |||||||||||||||
Gain on extinguishment of debt | 122 | — | — | — | — | ||||||||||||||||
Impairment charges on long-lived assets | (1 | ) | (1 | ) | — | (8 | ) | — | |||||||||||||
Adjustment to eliminate proportional consolidation(C) | (226 | ) | (36 | ) | (7 | ) | (9 | ) | (35 | ) | |||||||||||
Restructuring charges, net | (95 | ) | (6 | ) | (1 | ) | (9 | ) | (19 | ) | |||||||||||
Loss on disposals of assets, net | — | — | — | — | (20 | ) | |||||||||||||||
Other costs, net(D) | 10 | 6 | (31 | ) | (32 | ) | 44 | ||||||||||||||
Income (loss) before income taxes | (2,168 | ) | 57 | (94 | ) | (55 | ) | (278 | ) | ||||||||||||
Income tax provision (benefit) | (246 | ) | 73 | 4 | 7 | (4 | ) | ||||||||||||||
Net loss | (1,922 | ) | (16 | ) | (98 | ) | (62 | ) | (274 | ) | |||||||||||
Net income (loss) attributable to noncontrolling interests | (12 | ) | 4 | (1 | ) | 2 | 1 | ||||||||||||||
Net loss attributable to our common shareholder | $ | (1,910 | ) | $ | (20 | ) | $ | (97 | ) | $ | (64 | ) | $ | (275 | ) | ||||||
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(A) | Corporate and other includes functions that are managed directly from our corporate office, which focuses on strategy development and oversees governance, policy, legal compliance, human resources and finance matters. These expenses have not been allocated to the regions. It also includes realized gains (losses) on corporate derivative instruments. | |
(B) | Unrealized gains (losses) on change in fair value of derivative instruments, net represents the portion of gains (losses) that were not settled in cash during the period. Total realized and unrealized gains (losses) are shown in the table below and are included in the aggregate each period in (Gain) loss on change in fair value of derivative instruments, net on our consolidated statements of operations. | |
(C) | Our financial information for our segments (including Segment income) includes the results of ournon-consolidated affiliates on a proportionately consolidated basis, which is consistent with the way we manage our business segments. However, under GAAP, these non-consolidated affiliates are accounted for using the equity method of accounting. Therefore, in order to reconcile Income from reportable segments to Net loss, the proportional Segment income of these non-consolidated affiliates is removed from Income from reportable segments, net of our share of their net after-tax results, which is reported as Equity in net (income) loss of non-consolidated affiliates on our consolidated statements of operations. The adjustment to eliminate proportional consolidation for the year ended March 31, 2009 includes a $160 million impairment charge related to our investment in Norf. See Note 10 — Investment in and Advances to Non-Consolidated Affiliates and Related Party Transactions for further information about these non-consolidated affiliates. | |
(D) | Other costs, net for the year ended March 31, 2009 include a $26 million non-cash gain on reversal of a legal accrual, as well as a $9 million charge for a tax settlement in Brazil. Sales transaction fees of $32 million were recorded in both the three months ended March 31, 2007 and the period April 1, 2007 through May 15, 2007. In the year ended December 31, 2006, Other costs, net includes a $15 million gain on sale of equity interest in non-consolidated affiliates and an $11 million gain on sale of rights to develop and operate hydroelectric power plants (see Note 18 — Other (Income) Expenses, net). |
May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
(Gains) losses on change in fair value of derivative instruments, net: | |||||||||||||||||||||
Realized and included in Segment income | $ | 41 | $ | (14 | ) | $ | (18 | ) | $ | (33 | ) | $ | (249 | ) | |||||||
Realized on corporate derivative instruments | (4 | ) | (16 | ) | 3 | 2 | 35 | ||||||||||||||
Unrealized | 519 | 8 | (5 | ) | 1 | 151 | |||||||||||||||
(Gains) losses on change in fair value of derivative instruments, net | $ | 556 | $ | (22 | ) | $ | (20 | ) | $ | (30 | ) | $ | (63 | ) | |||||||
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May 16, 2007 | April 1, 2007 | Three Months | |||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | |||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | |||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | |||||||||||||||||
Net sales: | |||||||||||||||||||||
United States | $ | 3,685 | $ | 3,419 | $ | 427 | $ | 870 | $ | 3,474 | |||||||||||
Asia and Other Pacific | 1,536 | 1,602 | 216 | 413 | 1,691 | ||||||||||||||||
Brazil | 1,006 | 880 | 109 | 235 | 847 | ||||||||||||||||
Canada | 243 | 236 | 19 | 55 | 217 | ||||||||||||||||
Germany | 2,439 | 2,508 | 212 | 651 | 2,263 | ||||||||||||||||
United Kingdom | 347 | 445 | 79 | 136 | 428 | ||||||||||||||||
Other Europe | 921 | 875 | 219 | 270 | 929 | ||||||||||||||||
Total Net sales | $ | 10,177 | $ | 9,965 | $ | 1,281 | $ | 2,630 | $ | 9,849 | |||||||||||
March 31, | ||||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Long-lived assets: | ||||||||
United States | $ | 1,902 | $ | 2,566 | ||||
Asia and Other Pacific | 384 | 565 | ||||||
Brazil | 768 | 967 | ||||||
Canada | 171 | 514 | ||||||
Germany | 415 | 247 | ||||||
United Kingdom | 51 | 170 | ||||||
Other Europe | 477 | 1,146 | ||||||
Total long-lived assets | $ | 4,168 | $ | 6,175 | ||||
May 16, 2007 | April 1, 2007 | Three Months | ||||||||||||||||||
Year Ended | Through | Through | Ended | Year Ended | ||||||||||||||||
March 31, 2009 | March 31, 2008 | May 15, 2007 | March 31, 2007 | December 31, 2006 | ||||||||||||||||
Successor | Successor | Predecessor | Predecessor | Predecessor | ||||||||||||||||
Net sales to Rexam as a percentage of total net sales | 17 | % | 15 | % | 14 | % | 16 | % | 14 | % | ||||||||||
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22. | SUPPLEMENTAL INFORMATION |
May 16, 2007 | ||||
Through | ||||
March 31, 2008 | ||||
Successor | ||||
Supplemental schedule of non-cash investing and financing activities related to the Acquisition of Novelis Common Stock: | ||||
Property, plant and equipment | $ | (1,344 | ) | |
Goodwill | (1,625 | ) | ||
Intangible assets | (893 | ) | ||
Investment in and advances to non-consolidated affiliates | (776 | ) | ||
Debt | 66 |
March 31, | March 31, | |||||||
2009 | 2008 | |||||||
Successor | Successor | |||||||
Currency translation adjustment | $ | (62 | ) | $ | 60 | |||
Fair value of effective portion of hedges | (19 | ) | — | |||||
Pension and other benefits | (67 | ) | (14 | ) | ||||
AOCI | $ | (148 | ) | $ | 46 | |||
23. | QUARTERLY RESULTS |
• | We identified that a customer sales contract included certain terms which, when elected by the customer, result in the recognition of a derivative under FASB 133. As changes in the valuation of the derivative associated with this arrangement were not previously recognized in our financial statements, the amounts previously reported in (Gain) loss on change in fair value of derivative instruments, net were misstated for the quarters ended June 30, 2008, September 30, 2008 and December 31, 2008 by $1 million, $(4) million and $(8) million, respectively. This error increased (decreased) previously reported net income (loss) attributable to our common shareholder by $(1) million, $2 million and $5 million for the quarters ended June 30, 2008, September 30, 2008 and December 31, 2008, respectively. | |
• | We determined that there was an error in our valuation of certain of our cross-currency swap derivative instruments. As a result, the amounts previously reported in (Gain) loss on change in fair value of derivative instruments, net were misstated for the quarters ended September 30, 2008 and December 31, 2008 by $4 million and $(1) million, respectively. This error increased (decreased) previously reported net income (loss) attributable to our common shareholder by $(3) million and $1 million for the quarters ended September 30, 2008 and December 31, 2008, respectively. |
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(Unaudited) | ||||||||||||||||
Quarter Ended | ||||||||||||||||
June 30, | September 30, | December 31, | March 31, | |||||||||||||
2008(A) | 2008(A) | 2008(A) | 2009 | |||||||||||||
Successor | Successor | Successor | Successor | |||||||||||||
Net sales | $ | 3,103 | $ | 2,959 | $ | 2,176 | $ | 1,939 | ||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 2,831 | 2,791 | 2,023 | 1,606 | ||||||||||||
Selling, general and administrative expenses | 84 | 89 | 73 | 73 | ||||||||||||
Depreciation and amortization | 116 | 107 | 107 | 109 | ||||||||||||
Research and development expenses | 12 | 10 | 11 | 8 | ||||||||||||
Interest expense and amortization of debt issuance costs | 45 | 46 | 47 | 44 | ||||||||||||
Interest income | (5 | ) | (5 | ) | (3 | ) | (1 | ) | ||||||||
(Gain) loss on change in fair value of derivative instruments, net | (65 | ) | 185 | 396 | 40 | |||||||||||
Impairment of goodwill | — | — | 1,340 | — | ||||||||||||
Gain on extinguishment of debt | — | — | — | (122 | ) | |||||||||||
Restructuring charges, net | (1 | ) | — | 15 | 81 | |||||||||||
Equity in net (income) loss of non-consolidated affiliates | 2 | (2 | ) | 166 | 6 | |||||||||||
Other (income) expenses, net | 23 | 10 | 20 | 33 | ||||||||||||
Income tax provision (benefit) | 35 | (168 | ) | (196 | ) | 83 | ||||||||||
Net income (loss) | 26 | (104 | ) | (1,823 | ) | (21 | ) | |||||||||
Net income (loss) attributable to noncontrolling interests | 2 | — | (9 | ) | (5 | ) | ||||||||||
Net income (loss) attributable to our common shareholder | $ | 24 | $ | (104 | ) | $ | (1,814 | ) | $ | (16 | ) | |||||
Dividends per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||
(A) | As revised. |
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April 1. 2007 | May 16, 2007 | Quarter Ended | |||||||||||||||||||||||
Quarter Ended | Through | Through | September 30, | December 31, | March 31, | ||||||||||||||||||||
March 31, 2007 | May 15, 2007 | June 30, 2007(B) | 2007(B) | 2007(B) | 2008(B) | ||||||||||||||||||||
Predecessor | Predecessor | Successor | Successor | Successor | Successor | ||||||||||||||||||||
Net sales | $ | 2,630 | $ | 1,281 | $ | 1,547 | $ | 2,821 | $ | 2,735 | $ | 2,862 | |||||||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 2,447 | 1,205 | 1,436 | 2,555 | 2,474 | 2,577 | |||||||||||||||||||
Selling, general and administrative expenses | 99 | 95 | 42 | 88 | 99 | 90 | |||||||||||||||||||
Depreciation and amortization | 58 | 28 | 53 | 103 | 108 | 111 | |||||||||||||||||||
Research and development expenses | 8 | 6 | 13 | 10 | 11 | 12 | |||||||||||||||||||
Interest expense and amortization of debt issuance costs | 54 | 27 | 28 | 60 | 53 | 50 | |||||||||||||||||||
Interest income | (4 | ) | (1 | ) | (3 | ) | (4 | ) | (6 | ) | (5 | ) | |||||||||||||
(Gain) loss on change in fair value of derivative instruments , net | (30 | ) | (20 | ) | (14 | ) | 30 | 56 | (94 | ) | |||||||||||||||
Restructuring charges, net | 9 | 1 | 1 | — | 1 | 4 | |||||||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | (3 | ) | (1 | ) | 1 | (20 | ) | 3 | (9 | ) | |||||||||||||||
Other (income) expenses, net | 47 | 35 | 10 | (2 | ) | (17 | ) | 3 | |||||||||||||||||
Income tax provision | 7 | 4 | 27 | 20 | 26 | — | |||||||||||||||||||
Net income (loss) | (62 | ) | (98 | ) | (47 | ) | (19 | ) | (73 | ) | 123 | ||||||||||||||
Net income (loss) attributable to noncontrolling interests | 2 | (1 | ) | (2 | ) | — | — | 6 | |||||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (64 | ) | $ | (97 | ) | $ | (45 | ) | $ | (19 | ) | $ | (73 | ) | $ | 117 | ||||||||
Dividends per common share | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||||||
(B) | Unaudited. |
24. | SUPPLEMENTAL GUARANTOR INFORMATION |
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Year Ended March 31, 2009 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,186 | $ | 8,421 | $ | 2,647 | $ | (2,077 | ) | $ | 10,177 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,182 | 7,679 | 2,467 | (2,077 | ) | 9,251 | ||||||||||||||
Selling, general and administrative expenses | 9 | 242 | 68 | — | 319 | |||||||||||||||
Depreciation and amortization | 16 | 328 | 95 | — | 439 | |||||||||||||||
Research and development expenses | 29 | 10 | 2 | — | 41 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 114 | 134 | 23 | (89 | ) | 182 | ||||||||||||||
Interest income | (78 | ) | (15 | ) | (10 | ) | 89 | (14 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments, net | 5 | 511 | 40 | — | 556 | |||||||||||||||
Impairment of goodwill | — | 1,340 | — | — | 1,340 | |||||||||||||||
Gain on extinguishment of debt, net | (67 | ) | (55 | ) | — | — | (122 | ) | ||||||||||||
Restructuring charges, net | 5 | 74 | 16 | — | 95 | |||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 1,890 | 172 | — | (1,890 | ) | 172 | ||||||||||||||
Other (income) expenses, net | (14 | ) | 11 | 89 | — | 86 | ||||||||||||||
3,091 | 10,431 | 2,790 | (3,967 | ) | 12,345 | |||||||||||||||
Income (loss) before income taxes | (1,905 | ) | (2,010 | ) | (143 | ) | 1,890 | (2,168 | ) | |||||||||||
Income tax provision (benefit) | 5 | (237 | ) | (14 | ) | — | (246 | ) | ||||||||||||
Net income (loss) | (1,910 | ) | (1,773 | ) | (129 | ) | 1,890 | (1,922 | ) | |||||||||||
Net loss attributable to noncontrolling interests | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Net loss attributable to our common shareholder | $ | (1,910 | ) | $ | (1,773 | ) | $ | (117 | ) | $ | 1,890 | $ | (1,910 | ) | ||||||
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May 16, 2007 Through March 31, 2008 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,300 | $ | 8,266 | $ | 2,701 | $ | (2,302 | ) | $ | 9,965 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,294 | 7,504 | 2,546 | (2,302 | ) | 9,042 | ||||||||||||||
Selling, general and administrative expenses | 40 | 210 | 69 | — | 319 | |||||||||||||||
Depreciation and amortization | 19 | 294 | 62 | — | 375 | |||||||||||||||
Research and development expenses | 27 | 17 | 2 | — | 46 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 124 | 135 | 34 | (102 | ) | 191 | ||||||||||||||
Interest income | (90 | ) | (17 | ) | (13 | ) | 102 | (18 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments, net | 8 | (13 | ) | (17 | ) | — | (22 | ) | ||||||||||||
Restructuring charges, net | — | 2 | 4 | — | 6 | |||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | (83 | ) | (25 | ) | — | 83 | (25 | ) | ||||||||||||
Other (income) expenses, net | (33 | ) | 6 | 21 | — | (6 | ) | |||||||||||||
1,306 | 8,113 | 2,708 | (2,219 | ) | 9,908 | |||||||||||||||
Income (loss) before income taxes | (6 | ) | 153 | (7 | ) | (83 | ) | 57 | ||||||||||||
Income tax provision (benefit) | 14 | 53 | 6 | — | 73 | |||||||||||||||
Net income (loss) | (20 | ) | 100 | (13 | ) | (83 | ) | (16 | ) | |||||||||||
Net income attributable to noncontrolling interests | — | — | 4 | — | 4 | |||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (20 | ) | $ | 100 | $ | (17 | ) | $ | (83 | ) | $ | (20 | ) | ||||||
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April 1, 2007 Through May 15, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 129 | $ | 1,020 | $ | 359 | $ | (227 | ) | $ | 1,281 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 131 | 961 | 340 | (227 | ) | 1,205 | ||||||||||||||
Selling, general and administrative expenses | 29 | 51 | 15 | — | 95 | |||||||||||||||
Depreciation and amortization | 2 | 18 | 8 | — | 28 | |||||||||||||||
Research and development expenses | 5 | 1 | — | — | 6 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 12 | 21 | 4 | (10 | ) | 27 | ||||||||||||||
Interest income | (9 | ) | (1 | ) | (1 | ) | 10 | (1 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments, net | (2 | ) | (19 | ) | 1 | — | (20 | ) | ||||||||||||
Restructuring charges, net | — | 1 | — | — | 1 | |||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 29 | (1 | ) | — | (29 | ) | (1 | ) | ||||||||||||
Other (income) expenses, net | 29 | 8 | (2 | ) | — | 35 | ||||||||||||||
226 | 1,040 | 365 | (256 | ) | 1,375 | |||||||||||||||
Income (loss) before income taxes | (97 | ) | (20 | ) | (6 | ) | 29 | (94 | ) | |||||||||||
Income tax provision (benefit) | — | 3 | 1 | — | 4 | |||||||||||||||
Net income (loss) | (97 | ) | (23 | ) | (7 | ) | 29 | (98 | ) | |||||||||||
Net loss attributable to noncontrolling interests | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Net loss attributable to our common shareholder | $ | (97 | ) | $ | (23 | ) | $ | (6 | ) | $ | 29 | $ | (97 | ) | ||||||
F-87
Table of Contents
Three Months Ended March 31, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 378 | $ | 2,228 | $ | 723 | $ | (699 | ) | $ | 2,630 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 377 | 2,094 | 675 | (699 | ) | 2,447 | ||||||||||||||
Selling, general and administrative expenses | 10 | 69 | 20 | — | 99 | |||||||||||||||
Depreciation and amortization | 3 | 38 | 17 | — | 58 | |||||||||||||||
Research and development expenses | 5 | 2 | 1 | — | 8 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 32 | 42 | 7 | (27 | ) | 54 | ||||||||||||||
Interest income | (25 | ) | (3 | ) | (3 | ) | 27 | (4 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments , net | 2 | (29 | ) | (3 | ) | — | (30 | ) | ||||||||||||
Restructuring charges, net | — | 9 | — | — | 9 | |||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 11 | (3 | ) | — | (11 | ) | (3 | ) | ||||||||||||
Other (income) expenses, net | 27 | 17 | 3 | — | 47 | |||||||||||||||
442 | 2,236 | 717 | (710 | ) | 2,685 | |||||||||||||||
Income (loss) before income taxes | (64 | ) | (8 | ) | 6 | 11 | (55 | ) | ||||||||||||
Income tax provision (benefit) | — | 5 | 2 | — | 7 | |||||||||||||||
Net income (loss) | (64 | ) | (13 | ) | 4 | 11 | (62 | ) | ||||||||||||
Net income attributable to noncontrolling interests | — | — | 2 | — | 2 | |||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (64 | ) | $ | (13 | ) | $ | 2 | $ | 11 | $ | (64 | ) | |||||||
F-88
Table of Contents
Year Ended December 31, 2006 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 1,572 | $ | 8,340 | $ | 2,822 | $ | (2,885 | ) | $ | 9,849 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 1,522 | 8,010 | 2,670 | (2,885 | ) | 9,317 | ||||||||||||||
Selling, general and administrative expenses | 72 | 269 | 69 | — | 410 | |||||||||||||||
Depreciation and amortization | 15 | 153 | 65 | — | 233 | |||||||||||||||
Research and development expenses | 28 | 12 | — | — | 40 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 145 | 152 | 31 | (107 | ) | 221 | ||||||||||||||
Interest income | (97 | ) | (12 | ) | (13 | ) | 107 | (15 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments , net | 49 | (128 | ) | 16 | — | (63 | ) | |||||||||||||
Restructuring charges, net | — | 16 | 3 | — | 19 | |||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 115 | (16 | ) | — | (115 | ) | (16 | ) | ||||||||||||
Other (income) expenses, net | (11 | ) | 4 | (12 | ) | — | (19 | ) | ||||||||||||
1,838 | 8,460 | 2,829 | (3,000 | ) | 10,127 | |||||||||||||||
Income (loss) before income taxes | (266 | ) | (120 | ) | (7 | ) | 115 | (278 | ) | |||||||||||
Income tax provision (benefit) | 9 | (28 | ) | 15 | — | (4 | ) | |||||||||||||
Net income (loss) | (275 | ) | (92 | ) | (22 | ) | 115 | (274 | ) | |||||||||||
Net income attributable to noncontrolling interests | — | — | 1 | — | 1 | |||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (275 | ) | $ | (92 | ) | $ | (23 | ) | $ | 115 | $ | (275 | ) | ||||||
F-89
Table of Contents
As of March 31, 2009 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 3 | $ | 175 | $ | 70 | $ | — | $ | 248 | ||||||||||
Accounts receivable, net of allowances | ||||||||||||||||||||
— third parties | 21 | 761 | 267 | — | 1,049 | |||||||||||||||
— related parties | 411 | 183 | 32 | (601 | ) | 25 | ||||||||||||||
Inventories | 31 | 523 | 239 | — | 793 | |||||||||||||||
Prepaid expenses and other current assets | 4 | 31 | 16 | — | 51 | |||||||||||||||
Fair value of derivative instruments | — | 145 | 7 | (33 | ) | 119 | ||||||||||||||
Deferred income tax assets | — | 192 | 24 | — | 216 | |||||||||||||||
Total current assets | 470 | 2,010 | 655 | (634 | ) | 2,501 | ||||||||||||||
Property, plant and equipment, net | 162 | 2,146 | 491 | — | 2,799 | |||||||||||||||
Goodwill | — | 570 | 12 | — | 582 | |||||||||||||||
Intangible assets, net | — | 787 | — | — | 787 | |||||||||||||||
Investments in and advances to non-consolidated affiliates | 1,647 | 719 | — | (1,647 | ) | 719 | ||||||||||||||
Fair value of derivative instruments, net of current portion | — | 46 | 28 | (2 | ) | 72 | ||||||||||||||
Deferred income tax assets | 1 | 3 | — | — | 4 | |||||||||||||||
Other long-term assets | 1,028 | 207 | 96 | (1,228 | ) | 103 | ||||||||||||||
Total assets | $ | 3,308 | $ | 6,488 | $ | 1,282 | $ | (3,511 | ) | $ | 7,567 | |||||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 3 | $ | 4 | $ | 44 | $ | — | $ | 51 | ||||||||||
Short-term borrowings | ||||||||||||||||||||
— third parties | — | 231 | 33 | — | 264 | |||||||||||||||
— related parties | 7 | 330 | 22 | (359 | ) | — | ||||||||||||||
Accounts payable | ||||||||||||||||||||
— third parties | 33 | 458 | 234 | — | 725 | |||||||||||||||
— related parties | 41 | 157 | 90 | (240 | ) | 48 | ||||||||||||||
Fair value of derivative instruments | 7 | 540 | 126 | (33 | ) | 640 | ||||||||||||||
Accrued expenses and other current liabilities | 34 | 395 | 90 | (3 | ) | 516 | ||||||||||||||
Deferred income tax liabilities | — | — | — | — | — | |||||||||||||||
Total current liabilities | 125 | 2,115 | 639 | (635 | ) | 2,244 | ||||||||||||||
Long-term debt, net of current portion | ||||||||||||||||||||
— third parties | 1,464 | 852 | 101 | — | 2,417 | |||||||||||||||
— related parties | 223 | 976 | 120 | (1,228 | ) | 91 | ||||||||||||||
Deferred income tax liabilities | — | 459 | 10 | — | 469 | |||||||||||||||
Accrued postretirement benefits | 27 | 346 | 122 | — | 495 | |||||||||||||||
Other long-term liabilities | 50 | 288 | 5 | (1 | ) | 342 | ||||||||||||||
1,889 | 5,036 | 997 | (1,864 | ) | 6,058 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | 3,497 | — | — | — | 3,497 | |||||||||||||||
Retained earnings (accumulated deficit) | (1,930 | ) | 1,533 | 325 | (1,858 | ) | (1,930 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | (148 | ) | (81 | ) | (130 | ) | 211 | (148 | ) | |||||||||||
Total equity of our common shareholder | 1,419 | 1,452 | 195 | (1,647 | ) | 1,419 | ||||||||||||||
Noncontrolling interests | — | — | 90 | — | 90 | |||||||||||||||
Total equity | 1,419 | 1,452 | 285 | (1,647 | ) | 1,509 | ||||||||||||||
Total liabilities and equity | $ | 3,308 | $ | 6,488 | $ | 1,282 | $ | (3,511 | ) | $ | 7,567 | |||||||||
F-90
Table of Contents
As of March 31, 2008 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 12 | $ | 177 | $ | 137 | $ | — | $ | 326 | ||||||||||
Accounts receivable, net of allowances | ||||||||||||||||||||
— third parties | 38 | 819 | 391 | — | 1,248 | |||||||||||||||
— related parties | 519 | 288 | 34 | (810 | ) | 31 | ||||||||||||||
Inventories | 58 | 992 | 405 | — | 1,455 | |||||||||||||||
Prepaid expenses and other current assets | 4 | 34 | 20 | — | 58 | |||||||||||||||
Fair value of derivative instruments | — | 187 | 29 | (13 | ) | 203 | ||||||||||||||
Deferred income tax assets | — | 121 | 4 | — | 125 | |||||||||||||||
Total current assets | 631 | 2,618 | 1,020 | (823 | ) | 3,446 | ||||||||||||||
Property, plant and equipment, net | 178 | 2,455 | 724 | — | 3,357 | |||||||||||||||
Goodwill | — | 1,741 | 189 | — | 1,930 | |||||||||||||||
Intangible assets, net | — | 888 | — | — | 888 | |||||||||||||||
Investments in and advances to non-consolidated affiliates | 3,629 | 945 | 1 | (3,629 | ) | 946 | ||||||||||||||
Fair value of derivative instruments, net of current portion | — | 18 | 3 | — | 21 | |||||||||||||||
Deferred income tax assets | 4 | — | 2 | — | 6 | |||||||||||||||
Other long-term assets | 1,329 | 159 | 135 | (1,480 | ) | 143 | ||||||||||||||
Total assets | $ | 5,771 | $ | 8,824 | $ | 2,074 | $ | (5,932 | ) | $ | 10,737 | |||||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 3 | $ | 11 | $ | 1 | $ | — | $ | 15 | ||||||||||
Short-term borrowings | ||||||||||||||||||||
— third parties | — | 70 | 45 | — | 115 | |||||||||||||||
— related parties | 5 | 370 | 25 | (400 | ) | — | ||||||||||||||
Accounts payable | ||||||||||||||||||||
— third parties | 84 | 925 | 573 | — | 1,582 | |||||||||||||||
— related parties | 109 | 234 | 88 | (376 | ) | 55 | ||||||||||||||
Fair value of derivative instruments | — | 146 | 15 | (13 | ) | 148 | ||||||||||||||
Accrued expenses and other current liabilities | 40 | 555 | 113 | (4 | ) | 704 | ||||||||||||||
Deferred income tax liabilities | — | 39 | — | — | 39 | |||||||||||||||
Total current liabilities | 241 | 2,350 | 860 | (793 | ) | 2,658 | ||||||||||||||
Long-term debt, net of current portion | ||||||||||||||||||||
— third parties | 1,761 | 698 | 101 | — | 2,560 | |||||||||||||||
— related parties | — | 1,206 | 304 | (1,510 | ) | — | ||||||||||||||
Deferred income tax liabilities | 1 | 733 | 20 | — | 754 | |||||||||||||||
Accrued postretirement benefits | 23 | 297 | 101 | — | 421 | |||||||||||||||
Other long-term liabilities | 222 | 431 | 19 | — | 672 | |||||||||||||||
2,248 | 5,715 | 1,405 | (2,303 | ) | 7,065 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | 3,497 | — | — | — | 3,497 | |||||||||||||||
Retained earnings (accumulated deficit) | (20 | ) | 3,075 | 564 | (3,639 | ) | (20 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | 46 | 34 | (44 | ) | 10 | 46 | ||||||||||||||
Total equity of our common shareholder | 3,523 | 3,109 | 520 | (3,629 | ) | 3,523 | ||||||||||||||
Noncontrolling interests | — | — | 149 | — | 149 | |||||||||||||||
Total equity | 3,523 | 3,109 | 669 | (3,629 | ) | 3,672 | ||||||||||||||
Total liabilities and equity | $ | 5,771 | $ | 8,824 | $ | 2,074 | $ | (5,932 | ) | $ | 10,737 | |||||||||
F-91
Table of Contents
Year Ended March 31, 2009 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 87 | $ | (139 | ) | $ | 39 | $ | (223 | ) | $ | (236 | ) | |||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (8 | ) | (100 | ) | (37 | ) | — | (145 | ) | |||||||||||
Proceeds from sales of assets | 2 | 2 | 1 | — | 5 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 20 | — | — | 20 | |||||||||||||||
Proceeds from loans receivable, net — related parties | — | 17 | — | — | 17 | |||||||||||||||
Net proceeds from settlement of derivative instruments | 2 | (77 | ) | 67 | — | (8 | ) | |||||||||||||
Net cash provided by (used in) investing activities | (4 | ) | (138 | ) | 31 | — | (111 | ) | ||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt | ||||||||||||||||||||
— third parties | — | 220 | 43 | — | 263 | |||||||||||||||
— related parties | 91 | — | — | — | 91 | |||||||||||||||
Principal repayments | ||||||||||||||||||||
— third parties | (223 | ) | (11 | ) | (1 | ) | — | (235 | ) | |||||||||||
— related parties | 41 | (89 | ) | (152 | ) | 200 | — | |||||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | — | 185 | (9 | ) | — | 176 | ||||||||||||||
— related parties | 2 | (25 | ) | — | 23 | — | ||||||||||||||
Dividends | ||||||||||||||||||||
— noncontrolling interests | — | — | (6 | ) | — | (6 | ) | |||||||||||||
Debt issuance costs | (3 | ) | — | — | — | (3 | ) | |||||||||||||
Net cash provided by (used in) financing activities | (92 | ) | 280 | (125 | ) | 223 | 286 | |||||||||||||
Net increase in cash and cash equivalents | (9 | ) | 3 | (55 | ) | — | (61 | ) | ||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | (5 | ) | (12 | ) | — | (17 | ) | ||||||||||||
Cash and cash equivalents — beginning of period | 12 | 177 | 137 | — | 326 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 3 | $ | 175 | $ | 70 | $ | — | $ | 248 | ||||||||||
F-92
Table of Contents
May 16, 2007 Through March 31, 2008 —Successor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 88 | $ | 363 | $ | 144 | $ | (190 | ) | $ | 405 | |||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (11 | ) | (143 | ) | (31 | ) | — | (185 | ) | |||||||||||
Proceeds from sales of assets | 5 | 2 | 1 | — | 8 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | (40 | ) | 25 | (1 | ) | 40 | 24 | |||||||||||||
Proceeds from loans receivable, net — related parties | — | 18 | — | — | 18 | |||||||||||||||
Net proceeds from settlement of derivative instruments | 12 | 32 | (7 | ) | — | 37 | ||||||||||||||
Net cash provided by (used in) investing activities | (34 | ) | (66 | ) | (38 | ) | 40 | (98 | ) | |||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of common stock | 92 | 40 | — | (40 | ) | 92 | ||||||||||||||
Proceeds from issuance of debt | 300 | 659 | 141 | — | 1,100 | |||||||||||||||
Principal repayments | ||||||||||||||||||||
— third parties | (261 | ) | (608 | ) | (140 | ) | — | (1,009 | ) | |||||||||||
— related parties | — | (189 | ) | 31 | 158 | — | ||||||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | (45 | ) | (188 | ) | (8 | ) | — | (241 | ) | |||||||||||
— related parties | (99 | ) | 81 | (14 | ) | 32 | — | |||||||||||||
Dividends | ||||||||||||||||||||
— noncontrolling interests | — | — | (1 | ) | — | (1 | ) | |||||||||||||
Debt issuance costs | (37 | ) | — | — | — | (37 | ) | |||||||||||||
Net cash provided by (used in) financing activities | (50 | ) | (205 | ) | 9 | 150 | (96 | ) | ||||||||||||
Net increase in cash and cash equivalents | 4 | 92 | 115 | — | 211 | |||||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 11 | 2 | — | 13 | |||||||||||||||
Cash and cash equivalents — beginning of period | 8 | 74 | 20 | — | 102 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 12 | $ | 177 | $ | 137 | $ | — | $ | 326 | ||||||||||
F-93
Table of Contents
April 1, 2007 Through May 15, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash used in operating activities | $ | (21 | ) | $ | (181 | ) | $ | (28 | ) | $ | — | $ | (230 | ) | ||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (1 | ) | (10 | ) | (6 | ) | — | (17 | ) | |||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 1 | — | — | 1 | |||||||||||||||
Net proceeds from settlement of derivative instruments | (5 | ) | 23 | — | — | 18 | ||||||||||||||
Net cash provided by (used in) investing activities | (6 | ) | 14 | (6 | ) | — | 2 | |||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt | — | 150 | — | — | 150 | |||||||||||||||
Principal repayments | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | 45 | 9 | 6 | — | 60 | |||||||||||||||
— related parties | (15 | ) | 11 | 4 | — | — | ||||||||||||||
Dividends | ||||||||||||||||||||
— noncontrolling interests | — | — | (7 | ) | — | (7 | ) | |||||||||||||
Debt issuance costs | (2 | ) | — | — | — | (2 | ) | |||||||||||||
Proceeds from the exercise of stock options | 1 | — | — | — | 1 | |||||||||||||||
Net cash provided by financing activities | 29 | 169 | 3 | — | 201 | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 2 | 2 | (31 | ) | — | (27 | ) | |||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 1 | — | — | 1 | |||||||||||||||
Cash and cash equivalents — beginning of period | 6 | 71 | 51 | — | 128 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 8 | $ | 74 | $ | 20 | $ | — | $ | 102 | ||||||||||
F-94
Table of Contents
Three Months Ended March 31, 2007 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (30 | ) | $ | (55 | ) | $ | 50 | $ | (52 | ) | $ | (87 | ) | ||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (2 | ) | (16 | ) | (6 | ) | — | (24 | ) | |||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 1 | — | — | 1 | |||||||||||||||
Proceeds from loans receivable, net — related parties | — | 1 | — | — | 1 | |||||||||||||||
Net proceeds from settlement of derivative instruments | — | 24 | — | — | 24 | |||||||||||||||
Net cash provided by (used in) investing activities | (2 | ) | 10 | (6 | ) | — | 2 | |||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Principal repayments | — | (1 | ) | — | — | (1 | ) | |||||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | — | 113 | — | — | 113 | |||||||||||||||
— related parties | 7 | 5 | (12 | ) | — | — | ||||||||||||||
Dividends | ||||||||||||||||||||
— common shareholders | — | (38 | ) | (14 | ) | 52 | — | |||||||||||||
Proceeds from the exercise of employee stock options | 27 | — | — | — | 27 | |||||||||||||||
Windfall tax benefit on share-based compensation | 1 | — | — | — | 1 | |||||||||||||||
Net cash provided by (used in) financing activities | 35 | 79 | (26 | ) | 52 | 140 | ||||||||||||||
Net increase in cash and cash equivalents | 3 | 34 | 18 | — | 55 | |||||||||||||||
Cash and cash equivalents — beginning of period | 3 | 37 | 33 | — | 73 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 6 | $ | 71 | $ | 51 | $ | — | $ | 128 | ||||||||||
F-95
Table of Contents
Year Ended December 31, 2006 —Predecessor | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 104 | $ | (9 | ) | $ | 87 | $ | (166 | ) | $ | 16 | ||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (8 | ) | (72 | ) | (36 | ) | — | (116 | ) | |||||||||||
Disposal of business, net | (7 | ) | — | — | — | (7 | ) | |||||||||||||
Proceeds from sales of assets | — | 38 | — | — | 38 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 3 | — | — | 3 | |||||||||||||||
Proceeds from (advances on) loans receivable, net — related parties | 48 | (60 | ) | (28 | ) | 77 | 37 | |||||||||||||
Premiums paid to purchase derivative instruments | — | (4 | ) | — | — | (4 | ) | |||||||||||||
Net proceeds from settlement of derivative instruments | (34 | ) | 283 | (7 | ) | — | 242 | |||||||||||||
Net cash provided by (used in) investing activities | (1 | ) | 188 | (71 | ) | 77 | 193 | |||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt | ||||||||||||||||||||
— third parties | — | — | 41 | — | 41 | |||||||||||||||
— related parties | — | 1,300 | 460 | (1,760 | ) | — | ||||||||||||||
Principal repayments | ||||||||||||||||||||
— third parties | (83 | ) | (147 | ) | (123 | ) | — | (353 | ) | |||||||||||
— related parties | — | (1,247 | ) | (397 | ) | 1,644 | — | |||||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | — | 103 | — | — | 103 | |||||||||||||||
Dividends | ||||||||||||||||||||
— preference shares | — | (12 | ) | — | 12 | — | ||||||||||||||
— common shareholders | (15 | ) | (175 | ) | (18 | ) | 193 | (15 | ) | |||||||||||
— noncontrolling interests | — | — | (15 | ) | — | (15 | ) | |||||||||||||
Net receipts from Alcan | 5 | — | — | — | 5 | |||||||||||||||
Debt issuance costs | (11 | ) | — | — | — | (11 | ) | |||||||||||||
Proceeds from the exercise of stock options | 2 | — | — | — | 2 | |||||||||||||||
Net cash used in financing activities | (102 | ) | (178 | ) | (52 | ) | 89 | (243 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | 1 | 1 | (36 | ) | — | (34 | ) | |||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 2 | 5 | — | 7 | |||||||||||||||
Cash and cash equivalents — beginning of period | 2 | 34 | 64 | — | 100 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 3 | $ | 37 | $ | 33 | $ | — | $ | 73 | ||||||||||
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Six Months | ||||||||
Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Net sales | $ | 4,141 | $ | 6,062 | ||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 3,261 | 5,622 | ||||||
Selling, general and administrative expenses | 161 | 173 | ||||||
Depreciation and amortization | 192 | 223 | ||||||
Research and development expenses | 17 | 22 | ||||||
Interest expense and amortization of debt issuance costs | 87 | 91 | ||||||
Interest income | (6 | ) | (10 | ) | ||||
(Gain) loss on change in fair value of derivative instruments, net | (152 | ) | 120 | |||||
Restructuring charges, net | 6 | (1 | ) | |||||
Equity in net (income) loss of non-consolidated affiliates | 20 | — | ||||||
Other (income) expenses, net | (19 | ) | 33 | |||||
3,567 | 6,273 | |||||||
Income (loss) before income taxes | 574 | (211 | ) | |||||
Income tax provision (benefit) | 199 | (133 | ) | |||||
Net income (loss) | 375 | (78 | ) | |||||
Net income attributable to noncontrolling interests | 37 | 2 | ||||||
Net income (loss) attributable to our common shareholder | $ | 338 | $ | (80 | ) | |||
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September 30, | March 31, | |||||||
2009 | 2009 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 246 | $ | 248 | ||||
Accounts receivable (net of allowances of $4 and $2 as of September 30, 2009 and March 31, 2009, respectively) | ||||||||
— third parties | 1,206 | 1,049 | ||||||
— related parties | 13 | 25 | ||||||
Inventories | 929 | 793 | ||||||
Prepaid expenses and other current assets | 50 | 51 | ||||||
Fair value of derivative instruments | 171 | 119 | ||||||
Deferred income tax assets | 37 | 216 | ||||||
Total current assets | 2,652 | 2,501 | ||||||
Property, plant and equipment, net | 2,769 | 2,799 | ||||||
Goodwill | 611 | 582 | ||||||
Intangible assets, net | 786 | 787 | ||||||
Investment in and advances to non-consolidated affiliates | 764 | 719 | ||||||
Fair value of derivative instruments, net of current portion | 48 | 72 | ||||||
Deferred income tax assets | 5 | 4 | ||||||
Other long-term assets | ||||||||
— third parties | 95 | 80 | ||||||
— related parties | 24 | 23 | ||||||
Total assets | $ | 7,754 | $ | 7,567 | ||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 49 | $ | 51 | ||||
Short-term borrowings | 177 | 264 | ||||||
Accounts payable | ||||||||
— third parties | 881 | 725 | ||||||
— related parties | 55 | 48 | ||||||
Fair value of derivative instruments | 145 | 640 | ||||||
Accrued expenses and other current liabilities | 428 | 516 | ||||||
Deferred income tax liabilities | 12 | — | ||||||
Total current liabilities | 1,747 | 2,244 | ||||||
Long-term debt, net of current portion | ||||||||
— third parties | 2,596 | 2,417 | ||||||
— related parties | — | 91 | ||||||
Deferred income tax liabilities | 518 | 469 | ||||||
Accrued postretirement benefits | 528 | 495 | ||||||
Other long-term liabilities | 354 | 342 | ||||||
Total liabilities | 5,743 | 6,058 | ||||||
Commitments and contingencies | ||||||||
Shareholder’s equity | ||||||||
Common stock, no par value; unlimited number of shares authorized; 77,459,658 shares issued and outstanding as of September 30, 2009 and March 31, 2009 | — | — | ||||||
Additional paid-in capital | 3,497 | 3,497 | ||||||
Accumulated deficit | (1,592 | ) | (1,930 | ) | ||||
Accumulated other comprehensive loss | (22 | ) | (148 | ) | ||||
Total Novelis shareholder’s equity | 1,883 | 1,419 | ||||||
Noncontrolling interests | 128 | 90 | ||||||
Total equity | 2,011 | 1,509 | ||||||
Total liabilities and shareholder’s equity | $ | 7,754 | $ | 7,567 | ||||
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Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | 375 | $ | (78 | ) | |||
Adjustments to determine net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 192 | 223 | ||||||
(Gain) loss on change in fair value of derivative instruments, net | (152 | ) | 120 | |||||
Deferred income taxes | 196 | (183 | ) | |||||
Write-off and amortization of fair value adjustments, net | (98 | ) | (124 | ) | ||||
Equity in net (income) loss of non-consolidated affiliates | 20 | — | ||||||
Foreign exchange remeasurement of debt | (15 | ) | 17 | |||||
Gain on reversal of accrued legal claim | — | (26 | ) | |||||
Other, net | 5 | 3 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (97 | ) | (183 | ) | ||||
Inventories | (84 | ) | (71 | ) | ||||
Accounts payable | 109 | (24 | ) | |||||
Other current assets | 4 | (25 | ) | |||||
Other current liabilities | (4 | ) | (74 | ) | ||||
Other noncurrent assets | (14 | ) | 9 | |||||
Other noncurrent liabilities | 27 | 26 | ||||||
Net cash provided by (used in) operating activities | 464 | (390 | ) | |||||
INVESTING ACTIVITIES | ||||||||
Capital expenditures | (46 | ) | (70 | ) | ||||
Proceeds from sales of assets | 4 | 2 | ||||||
Changes to investment in and advances to non-consolidated affiliates | 2 | 13 | ||||||
Proceeds from related party loans receivable, net | 14 | 13 | ||||||
Net proceeds (outflow) from settlement of derivative instruments | (416 | ) | 94 | |||||
Net cash provided by (used in) investing activities | (442 | ) | 52 | |||||
FINANCING ACTIVITIES | ||||||||
Proceeds from issuance of debt, third parties | 177 | — | ||||||
Proceeds from issuance of debt, related parties | 3 | — | ||||||
Principal payments, third parties | (16 | ) | (7 | ) | ||||
Principal payments, related parties | (94 | ) | — | |||||
Short-term borrowings, net | (96 | ) | 263 | |||||
Dividends, noncontrolling interest | (13 | ) | (5 | ) | ||||
Net cash provided by (used in) financing activities | (39 | ) | 251 | |||||
Net decrease in cash and cash equivalents | (17 | ) | (87 | ) | ||||
Effect of exchange rate changes on cash balances held in foreign currencies | 15 | (20 | ) | |||||
Cash and cash equivalents — beginning of period | 248 | 326 | ||||||
Cash and cash equivalents — end of period | $ | 246 | $ | 219 | ||||
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Novelis Inc. Shareholder | ||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||
Retained | Other | |||||||||||||||||||||||||||
Additional | Earnings | Comprehensive | Non- | |||||||||||||||||||||||||
Common Stock | Paid-in | (Accumulated | Income (Loss) | controlling | Total | |||||||||||||||||||||||
Shares | Amount | Capital | Deficit) | (AOCI) | Interests | Equity | ||||||||||||||||||||||
Balance as of March 31, 2009 | 77,459,658 | $ | — | $ | 3,497 | $ | (1,930 | ) | $ | (148 | ) | $ | 90 | $ | 1,509 | |||||||||||||
Net income attributable to our common shareholder | — | — | — | 338 | — | — | 338 | |||||||||||||||||||||
Net income attributable to noncontrolling interests | — | — | — | — | — | 37 | 37 | |||||||||||||||||||||
Currency translation adjustment, net of tax provision of $6 included in AOCI | — | — | — | — | 124 | 14 | 138 | |||||||||||||||||||||
Change in fair value of effective portion of hedges, net of tax benefit of $2 included in AOCI | — | — | — | — | (2 | ) | — | (2 | ) | |||||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||||||
Change in pension and other benefits, net of tax provision of $2 included in AOCI | — | — | — | — | 4 | — | 4 | |||||||||||||||||||||
Noncontrolling interests’ cash dividends | — | — | — | — | — | (13 | ) | (13 | ) | |||||||||||||||||||
Balance as of September 30, 2009 | 77,459,658 | $ | — | $ | 3,497 | $ | (1,592 | ) | $ | (22 | ) | $ | 128 | $ | 2,011 | |||||||||||||
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Six Months Ended | Six Months Ended | |||||||||||||||||||||||
September 30, 2009 | September 30, 2008 | |||||||||||||||||||||||
Attributable to | Attributable to | Attributable to | Attributable to | |||||||||||||||||||||
Our Common | Noncontrolling | Our Common | Noncontrolling | |||||||||||||||||||||
Shareholder | Interests | Total | Shareholder | Interests | Total | |||||||||||||||||||
Net income | $ | 338 | $ | 37 | $ | 375 | $ | (80 | ) | $ | 2 | $ | (78 | ) | ||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||
Currency translation adjustment | 130 | 14 | 144 | (63 | ) | (23 | ) | (86 | ) | |||||||||||||||
Change in fair value of effective portion of hedges, net | (4 | ) | — | (4 | ) | 3 | — | 3 | ||||||||||||||||
Postretirement benefit plans: | ||||||||||||||||||||||||
Change in pension and other benefits | 6 | — | 6 | 2 | — | 2 | ||||||||||||||||||
Other comprehensive income (loss) before income tax effect | 132 | 14 | 146 | (58 | ) | (23 | ) | (81 | ) | |||||||||||||||
Income tax provision related to items of other comprehensive income (loss) | 6 | — | 6 | 2 | — | 2 | ||||||||||||||||||
Other comprehensive income (loss), net of tax | 126 | 14 | 140 | (60 | ) | (23 | ) | (83 | ) | |||||||||||||||
Comprehensive income | $ | 464 | $ | 51 | $ | 515 | $ | (140 | ) | $ | (21 | ) | $ | (161 | ) | |||||||||
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1. | BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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F-103
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F-104
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2. | RESTRUCTURING PROGRAMS |
North | South | Restructuring | ||||||||||||||||||||||
Europe | America | Asia | America | Corporate | Reserves | |||||||||||||||||||
Balance as of March 31, 2009 | $ | 61 | $ | 16 | $ | — | $ | 2 | $ | 1 | $ | 80 | ||||||||||||
Provisions (recoveries), net | 3 | — | — | — | — | 3 | ||||||||||||||||||
Cash payments | (33 | ) | (6 | ) | — | (2 | ) | (1 | ) | (42 | ) | |||||||||||||
Impact of exchange rate changes | 7 | — | — | 1 | — | 8 | ||||||||||||||||||
Balance as of September 30, 2009 | $ | 38 | $ | 10 | $ | — | $ | 1 | $ | — | $ | 49 | ||||||||||||
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3. | INVENTORIES |
September 30, | March 31, | |||||||
2009 | 2009 | |||||||
Finished goods | $ | 226 | $ | 215 | ||||
Work in process | 375 | 296 | ||||||
Raw materials | 242 | 207 | ||||||
Supplies | 91 | 79 | ||||||
934 | 797 | |||||||
Allowances | (5 | ) | (4 | ) | ||||
Inventories | $ | 929 | $ | 793 | ||||
4. | CONSOLIDATION OF VARIABLE INTEREST ENTITIES |
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September 30, | March 31, | |||||||
2009 | 2009 | |||||||
Current assets | $ | 70 | $ | 64 | ||||
Total assets | $ | 132 | $ | 124 | ||||
Current liabilities | $ | (40 | ) | $ | (35 | ) | ||
Total liabilities | $ | (142 | ) | $ | (135 | ) | ||
Net carrying value | $ | (10 | ) | $ | (11 | ) |
5. | INVESTMENT IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY TRANSACTIONS |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Net sales | $ | 241 | $ | 324 | ||||
Costs, expenses and provisions for taxes on income | 247 | 288 | ||||||
Net income (loss) | $ | (6 | ) | $ | 36 | |||
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Incremental depreciation and amortization expense | $ | 24 | $ | 27 | ||||
Tax benefit | (7 | ) | (9 | ) | ||||
Incremental depreciation and amortization expense, net | $ | 17 | $ | 18 | ||||
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Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Purchases of tolling services and electricity | ||||||||
Aluminium Norf GmbH(A) | $ | 120 | $ | 147 | ||||
Consorcio Candonga(B) | 1 | 13 | ||||||
Total purchases from related parties | $ | 121 | $ | 160 | ||||
(A) | We purchase tolling services from Aluminium Norf GmbH. |
(B) | We obtain electricity from Consorcio Candonga for our operations in South America. |
September 30, | March 31, | |||||||
2009 | 2009 | |||||||
Accounts receivable(A) | $ | 13 | $ | 25 | ||||
Other long-term receivables(A) | $ | 24 | $ | 23 | ||||
Accounts payable(B) | $ | 55 | $ | 48 |
(A) | The balances represent current and non-current portions of a loan due from Aluminium Norf GmbH. |
(B) | We purchase tolling services from Aluminium Norf GmbH and electricity from Consorcio Candonga. |
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6. | DEBT |
September 30, 2009 | March 31, 2009 | |||||||||||||||||||||||||||
Unamortized | Unamortized | |||||||||||||||||||||||||||
Interest | Fair Value | Carrying | Fair Value | Carrying | ||||||||||||||||||||||||
Rates(A) | Principal | Adjustments(B) | Value | Principal | Adjustments(B) | Value | ||||||||||||||||||||||
Third party debt: | ||||||||||||||||||||||||||||
Short term borrowings | 2.09 | % | $ | 177 | $ | — | $ | 177 | $ | 264 | $ | — | $ | 264 | ||||||||||||||
Novelis Inc. | ||||||||||||||||||||||||||||
11.5% Senior Notes, due February 2015 | 11.50 | % | 185 | (4 | ) | 181 | — | — | — | |||||||||||||||||||
7.25% Senior Notes, due February 2015 | 7.25 | % | 1,124 | 44 | 1,168 | 1,124 | 47 | 1,171 | ||||||||||||||||||||
Floating rate Term Loan Facility, due July 2014 | 2.25 | %(C) | 293 | — | 293 | 295 | — | 295 | ||||||||||||||||||||
Novelis Corporation | ||||||||||||||||||||||||||||
Floating rate Term Loan Facility, due July 2014 | 2.27 | %(C) | 864 | (50 | ) | 814 | 867 | (54 | ) | 813 | ||||||||||||||||||
Novelis Switzerland S.A. | ||||||||||||||||||||||||||||
Capital lease obligation, due December 2019 (Swiss francs (CHF) 50 million) | 7.50 | % | 47 | (3 | ) | 44 | 45 | (3 | ) | 42 | ||||||||||||||||||
Capital lease obligation, due August 2011 (CHF 2 million) | 2.49 | % | 2 | — | 2 | 2 | — | 2 | ||||||||||||||||||||
Novelis Korea Limited | ||||||||||||||||||||||||||||
Bank loan, due October 2010 | 3.00 | %(C) | 100 | — | 100 | 100 | — | 100 | ||||||||||||||||||||
Bank loan, due February 2010 (Korean won (KRW) 50 billion) | 3.81 | % | 42 | — | 42 | 37 | — | 37 | ||||||||||||||||||||
Bank loan, due May 2009 (KRW 10 billion) | 7.47 | % | — | — | — | 7 | — | 7 | ||||||||||||||||||||
Other | ||||||||||||||||||||||||||||
Other debt, due December 2011 through December 2012 | 1.00 | % | 1 | — | 1 | 1 | — | 1 | ||||||||||||||||||||
Total debt — third parties | 2,835 | (13 | ) | 2,822 | 2,742 | (10 | ) | 2,732 | ||||||||||||||||||||
Less: Short term borrowings | (177 | ) | — | (177 | ) | (264 | ) | — | (264 | ) | ||||||||||||||||||
Current portion of long term debt | (58 | ) | 9 | (49 | ) | (59 | ) | 8 | (51 | ) | ||||||||||||||||||
Long-term debt, net of current portion — third parties: | $ | 2,600 | $ | (4 | ) | $ | 2,596 | $ | 2,419 | $ | (2 | ) | $ | 2,417 | ||||||||||||||
Related party debt | ||||||||||||||||||||||||||||
Novelis Inc. | ||||||||||||||||||||||||||||
Unsecured credit facility — related party, due January 2015 | 13.00 | % | $ | — | $ | — | $ | — | $ | 91 | $ | — | $ | 91 | ||||||||||||||
(A) | Interest rates are as of September 30, 2009 and exclude the effects of accretion/amortization of fair value adjustments as a result of the Arrangement and the debt exchange completed in the fourth quarter of fiscal 2009. |
(B) | Debt existing at the time of the Arrangement was recorded at fair value. Additional floating rate Term Loan with a face value of $220 million issued in March 2009 was recorded at a fair value of $165 million. Additional 11.5% Senior Note with a face value of $185 million issued in August 2009 was recorded at fair value of $181 million (see11.5% Senior Notesbelow). |
(C) | Excludes the effect of related interest rate swaps and the effect of accretion of fair value. |
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As of September 30, 2009 | Amount | |||
Within one year | $ | 58 | ||
2 years | 116 | |||
3 years | 16 | |||
4 years | 16 | |||
5 years | 1,114 | |||
Thereafter | 1,338 | |||
Total | $ | 2,658 | ||
• | all of our existing and future Canadian and U.S. restricted subsidiaries, |
• | certain of our existing foreign 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. |
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7. | SHARE-BASED COMPENSATION |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Novelis Long-Tem Incentive Plan 2009 | $ | 1 | $ | — | ||||
Novelis Long-Tem Incentive Plan 2010 | 1 | — | ||||||
Total compensation expense | $ | 2 | $ | — | ||||
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Weighted | Weighted Average | Aggregate | ||||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Number of | Exercise Price | Contractual Term | Value (USD | |||||||||||||
2010 LTIP | SARs | (in Indian Rupees) | (In years) | in millions) | ||||||||||||
SARs outstanding as of March 31, 2009 | — | — | — | (B | ) | |||||||||||
Granted | 13,459,711 | (A) | 85.79 | |||||||||||||
Exercised | — | — | — | |||||||||||||
Forfeited/Cancelled | — | — | ||||||||||||||
Expired | — | — | ||||||||||||||
SARs outstanding as of September 30, 2009 | 13,459,711 | 85.79 | 6.74 | $ | 12 | |||||||||||
Weighted | Weighted Average | Aggregate | ||||||||||||||
Average | Remaining | Intrinsic | ||||||||||||||
Number of | Exercise Price | Contractual Term | Value (USD | |||||||||||||
2009 LTIP | SARs | (in Indian Rupees) | (In years) | in millions) | ||||||||||||
SARs outstanding as of March 31, 2009 | 20,606,906 | (A) | 60.05 | 6.22 | (B | ) | ||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited/Cancelled | (9,041,795 | ) | — | |||||||||||||
Expired | — | — | ||||||||||||||
SARs outstanding as of September 30, 2009 | 11,565,111 | 60.05 | 5.72 | $ | 17 | |||||||||||
(A) | Represents total SARs approved by the Board of Directors for grant. As noted above, due to the performance criterion based on a future earnings target, the amount deemed granted for accounting purposes is limited to the individual tranches subject to an established earnings target, which includes the current and prior fiscal years. |
(B) | The aggregate intrinsic value is zero as the market value of a share of Hindalco stock was less than the SAR exercise price. |
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2010 LTIP | 2009 LTIP | |||
Expected volatility | 49.9 — 56.4% | 54.0 — 57.1% | ||
Weighted average volatility | 53.0% | 55.9% | ||
Dividend yield | 1.05% | 1.05% | ||
Risk-free interest rate | 6.8 — 7.1% | 6.61 — 6.93% | ||
Expected life | 3.7 — 5.2 years | 3.2 — 4.2 years |
8. | POSTRETIREMENT BENEFIT PLANS |
Pension Benefit Plans | ||||||||
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Service cost | $ | 16 | $ | 21 | ||||
Interest cost | 28 | 30 | ||||||
Expected return on assets | (20 | ) | (26 | ) | ||||
Amortization — (gains) losses | 6 | (1 | ) | |||||
Curtailment/settlement losses | — | 1 | ||||||
Net periodic benefit cost | $ | 30 | $ | 25 | ||||
Other Benefits | ||||||||
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Service cost | $ | 3 | $ | 3 | ||||
Interest cost | 6 | 5 | ||||||
Amortization — (gains) losses | — | 1 | ||||||
Curtailment/settlement losses | — | (2 | ) | |||||
Net periodic benefit cost | $ | 9 | $ | 7 | ||||
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Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Funded pension plans | $ | 12 | $ | 11 | ||||
Unfunded pension plans | 8 | 8 | ||||||
Savings and defined contribution pension plans | 7 | 9 | ||||||
Total contributions | $ | 27 | $ | 28 | ||||
9. | CURRENCY (GAINS) LOSSES |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Net (gain) loss on change in fair value of currency derivative instruments(A) | $ | (51 | ) | $ | (39 | ) | ||
Net (gain) loss on remeasurement of monetary assets and liabilities(B) | (7 | ) | 56 | |||||
$ | (58 | ) | $ | 17 | ||||
(A) | Included in (Gain) loss on change in fair value of derivative instruments, net. |
(B) | Included in Other (income) expenses, net. |
Six Months Ended | Year Ended | |||||||
September 30, 2009 | March 31,2009 | |||||||
Cumulative currency translation adjustment — beginning of period | $ | (78 | ) | $ | 85 | |||
Effect of changes in exchange rates | 138 | (163 | ) | |||||
Cumulative currency translation adjustment — end of period | $ | 60 | $ | (78 | ) | |||
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10. | FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS |
September 30, 2009 | ||||||||||||||||||||
Assets | Liabilities | Net Fair Value | ||||||||||||||||||
Current | Noncurrent | Current | Noncurrent(A) | Assets/(Liabilities) | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Currency exchange contracts | $ | — | $ | — | $ | (1 | ) | $ | (27 | ) | $ | (28 | ) | |||||||
Interest rate swaps | — | 1 | (13 | ) | — | (12 | ) | |||||||||||||
Electricity swap | — | — | (6 | ) | (15 | ) | (21 | ) | ||||||||||||
Total derivatives designated as hedging instruments | — | 1 | (20 | ) | (42 | ) | (61 | ) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Aluminum contracts | 130 | 19 | (84 | ) | (3 | ) | 62 | |||||||||||||
Currency exchange contracts | 40 | 27 | (37 | ) | (7 | ) | 23 | |||||||||||||
Energy contracts | 1 | 1 | (4 | ) | — | (2 | ) | |||||||||||||
Total derivatives not designated as hedging instruments | 171 | 47 | (125 | ) | (10 | ) | 83 | |||||||||||||
Total derivative fair value | $ | 171 | $ | 48 | $ | (145 | ) | $ | (52 | ) | $ | 22 | ||||||||
March 31, 2009 | ||||||||||||||||||||
Assets | Liabilities | Net Fair Value | ||||||||||||||||||
Current | Noncurrent | Current | Noncurrent(A) | Assets/(Liabilities) | ||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||
Currency exchange contracts | $ | — | $ | — | $ | — | $ | (11 | ) | $ | (11 | ) | ||||||||
Interest rate swaps | — | — | (13 | ) | — | (13 | ) | |||||||||||||
Electricity swap | — | — | (6 | ) | (12 | ) | (18 | ) | ||||||||||||
Total derivatives designated as hedging instruments | — | — | (19 | ) | (23 | ) | (42 | ) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||
Aluminum contracts | 99 | 41 | (532 | ) | (13 | ) | (405 | ) | ||||||||||||
Currency exchange contracts | 20 | 31 | (77 | ) | (12 | ) | (38 | ) | ||||||||||||
Energy contracts | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Total derivatives not designated as hedging instruments | 119 | 72 | (621 | ) | (25 | ) | (455 | ) | ||||||||||||
Total derivative fair value | $ | 119 | $ | 72 | $ | (640 | ) | $ | (48 | ) | $ | (497 | ) | |||||||
(A) | The noncurrent portions of derivative liabilities are included in Other long-term liabilities in the accompanying condensed consolidated balance sheets. |
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Amount of Gain or (Loss) | ||||||||||||||||||||||||
Amount of Gain or (Loss) | Recognized in Income on | |||||||||||||||||||||||
Amount of Gain or (Loss) | Reclassified from Accumulated | Derivative (Ineffective Portion | ||||||||||||||||||||||
Recognized in OCI on Derivative | OCI into Income | and Amount Excluded from | ||||||||||||||||||||||
(Effective Portion) | (Effective Portion) | Effectiveness Testing) | ||||||||||||||||||||||
Six Months | Six Months | Six Months | Six Months | Six Months | Six Months | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
September 30, | September 30, | September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Electricity swap | $ | (3 | ) | $ | — | $ | 2 | $ | 8 | $ | 2 | $ | — | |||||||||||
Interest rate swaps | $ | 1 | $ | 11 | $ | — | $ | — | $ | — | $ | — |
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Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Derivative Instruments Not Designated as Hedges | ||||||||
Aluminum contracts | $ | 97 | $ | (159 | ) | |||
Currency exchange contracts | 51 | 39 | ||||||
Energy contracts | — | (9 | ) | |||||
Gain (loss) recognized | 148 | (129 | ) | |||||
Derivative Instruments Designated as Cash Flow Hedges | ||||||||
Interest rate swaps | — | — | ||||||
Electricity swap | 4 | 9 | ||||||
Gain (loss) on change in fair value of derivative instruments, net | $ | 152 | $ | (120 | ) | |||
11. | FAIR VALUE MEASUREMENTS |
September 30, 2009 | ||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||
Level 1(A) | Level 2(B) | Level 3(C) | Total | |||||||||||||
Assets — Derivative instruments | $ | — | $ | 219 | $ | — | $ | 219 | ||||||||
Liabilities — Derivative instruments | $ | — | $ | (166 | ) | $ | (31 | ) | $ | (197 | ) |
March 31, 2009 | ||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||
Level 1(A) | Level 2(B) | Level 3(C) | Total | |||||||||||||
Assets — Derivative instruments | $ | — | $ | 191 | $ | — | $ | 191 | ||||||||
Liabilities — Derivative instruments | $ | — | $ | (644 | ) | $ | (44 | ) | $ | (688 | ) |
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Level 3 | ||||
Derivative | ||||
Instruments(A) | ||||
Balance as of March 31, 2009 | $ | (44 | ) | |
Net realized/unrealized gains included in earnings(B) | 15 | |||
Net realized/unrealized gains included in Other comprehensive income(C) | (9 | ) | ||
Net purchases, issuances and settlements | 7 | |||
Net transfers in and/or (out) of Level 3 | — | |||
Balance as of September 30, 2009 | $ | (31 | ) | |
(A) | Represents derivative assets net of derivative liabilities. |
(B) | Included in (Gain) loss on change in fair value of derivative instruments, net. |
(C) | Included in Change in fair value of effective portion of hedges, net. |
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September 30 ,2009 | March 31, 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value | Value | Value | Value | |||||||||||||
Assets | ||||||||||||||||
Long-term receivables from related parties | $ | 24 | $ | 22 | $ | 23 | $ | 21 | ||||||||
Liabilities | ||||||||||||||||
Long-term debt | ||||||||||||||||
Novelis Inc. | ||||||||||||||||
11.50% Senior Notes, due February 2015 | 181 | 192 | — | — | ||||||||||||
7.25% Senior Notes, due February 2015 | 1,168 | 981 | 1,171 | 454 | ||||||||||||
Floating rate Term Loan facility, due July 2014 | 293 | 228 | 295 | 200 | ||||||||||||
Unsecured credit facility — related party, due January 2015 | — | — | 91 | 93 | ||||||||||||
Novelis Corporation | ||||||||||||||||
Floating rate Term Loan facility, due July 2014 | 814 | 668 | 813 | 584 | ||||||||||||
Novelis Switzerland S.A. | ||||||||||||||||
Capital lease obligation, due December 2019 (CHF 50 million) | 44 | 39 | 42 | 36 | ||||||||||||
Capital lease obligation, due August 2011 (CHF 2 million) | 2 | 1 | 2 | 2 | ||||||||||||
Novelis Korea Limited | ||||||||||||||||
Bank loan, due October 2010 | 100 | 92 | 100 | 83 | ||||||||||||
Bank loan, due February 2010 (KRW 50 billion) | 42 | 41 | 37 | 33 | ||||||||||||
Bank loan, due May 2009 (KRW 10 billion) | — | — | 7 | 7 | ||||||||||||
Other | ||||||||||||||||
Other debt, due December 2011 through December 2012 | 1 | 1 | 1 | 1 | ||||||||||||
Financial commitments | ||||||||||||||||
Letters of credit | — | 153 | — | 134 |
12. | OTHER (INCOME) EXPENSES, NET |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Exchange (gains) losses, net | $ | (7 | ) | $ | 56 | |||
(Gain) loss on reversal of accrued legal claim | — | (26 | ) | |||||
Gain on disposal of property, plant and equipment, net | (1 | ) | (2 | ) | ||||
Gain on tax litigation settlement in Brazil | (6 | ) | — | |||||
Other, net | (5 | ) | 5 | |||||
Other (income) expenses, net | $ | (19 | ) | $ | 33 | |||
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13. | INCOME TAXES |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Pre-tax income before equity in net loss of non-consolidated affiliates and noncontrolling interests | $ | 594 | $ | (211 | ) | |||
Canadian statutory tax rate | 30 | % | 31 | % | ||||
Provision at the Canadian statutory rate | 178 | (65 | ) | |||||
Increase (decrease) for taxes on income (loss) resulting from: | ||||||||
Exchange translation items | 20 | (13 | ) | |||||
Exchange remeasurement of deferred income taxes | 36 | (21 | ) | |||||
Change in valuation allowances | 3 | 18 | ||||||
Expense (income) items not subject to tax | (4 | ) | 6 | |||||
Enacted statutory tax rate changes | — | 2 | ||||||
Tax rate differences on foreign earnings | (9 | ) | (68 | ) | ||||
Uncertain tax positions, net | (25 | ) | 1 | |||||
Other — net | — | 7 | ||||||
Provision | $ | 199 | $ | (133 | ) | |||
Effective tax rate | 34 | % | 63 | % | ||||
14. | COMMITMENTS AND CONTINGENCIES |
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Maximum | Liability | |||||||
Potential | Carrying | |||||||
Type of Entity | Future Payment | Value | ||||||
Wholly-owned subsidiaries | $ | 43 | $ | 5 | ||||
Aluminium Norf GmbH | $ | 15 | $ | — |
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15. | SEGMENT, MAJOR CUSTOMER AND MAJOR SUPPLIER INFORMATION |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
North | South | Corporate | Proportional | |||||||||||||||||||||||||
Total Assets | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
September 30, 2009 | $ | 2,714 | $ | 2,997 | $ | 881 | $ | 1,422 | $ | 39 | $ | (308 | ) | $ | 7,745 | |||||||||||||
March 31, 2009 | $ | 2,973 | $ | 2,750 | $ | 732 | $ | 1,296 | $ | 50 | $ | (234 | ) | $ | 7,567 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
Six Months Ended September 30, 2009 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
Net sales | $ | 1,589 | $ | 1,400 | $ | 708 | $ | 456 | $ | — | $ | (12 | ) | $ | 4,141 | |||||||||||||
Depreciation and amortization | 80 | 94 | 23 | 33 | 2 | (40 | ) | 192 | ||||||||||||||||||||
Capital expenditures | 13 | 22 | 5 | 12 | — | (6 | ) | 46 |
Adjustment to | ||||||||||||||||||||||||||||
Eliminate | ||||||||||||||||||||||||||||
Selected Operating Results | North | South | Corporate | Proportional | ||||||||||||||||||||||||
Six Months Ended September 30, 2008 | America | Europe | Asia | America | and Other | Consolidation | Total | |||||||||||||||||||||
Net sales | $ | 2,194 | $ | 2,315 | $ | 968 | $ | 595 | $ | — | $ | (10 | ) | $ | 6,062 | |||||||||||||
Depreciation and amortization | 83 | 117 | 28 | 36 | 1 | (42 | ) | 223 | ||||||||||||||||||||
Capital expenditures | 17 | 36 | 11 | 15 | 1 | (10 | ) | 70 |
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Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
North America | $ | 132 | $ | 44 | ||||
Europe | 93 | 173 | ||||||
Asia | 86 | 28 | ||||||
South America | 47 | 95 | ||||||
Corporate and other(A) | (34 | ) | (33 | ) | ||||
Depreciation and amortization | (192 | ) | (223 | ) | ||||
Interest expense and amortization of debt issuance costs | (87 | ) | (91 | ) | ||||
Interest income | 6 | 10 | ||||||
Unrealized gains (losses) on change in fair value of derivative instruments, net(B) | 553 | (201 | ) | |||||
Adjustment to eliminate proportional consolidation | (33 | ) | (36 | ) | ||||
Restructuring recoveries (charges), net | (6 | ) | 1 | |||||
Other costs, net | 9 | 22 | ||||||
Income (loss) before income taxes | 574 | (211 | ) | |||||
Income tax provision (benefit) | 199 | (133 | ) | |||||
Net income (loss) | 375 | (78 | ) | |||||
Net income attributable to noncontrolling interests | 37 | 2 | ||||||
Net income (loss) attributable to our common shareholder | $ | 338 | $ | (80 | ) | |||
(A) | Corporate and other includes functions that are managed directly from our corporate office, which focuses on strategy development and oversees governance, policy, legal compliance, human resources and finance matters. These expenses have not been allocated to the regions. It also includes realized gains (losses) on corporate derivative instruments. |
(B) | Unrealized gains (losses) on change in fair value of derivative instruments, net represents the portion of gains (losses) that were not settled in cash during the period. Total realized and unrealized gains (losses) are shown in the table below and are included in the aggregate each period in (Gain) loss on change in fair value of derivative instruments, net on our condensed consolidated statements of operations. |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Realized gains (losses) included in segment income | $ | (402 | ) | $ | 81 | |||
Realized gains (losses) on corporate derivative instruments | 1 | — | ||||||
Unrealized gains (losses) | 553 | (201 | ) | |||||
Gains (losses) on change in fair value of derivative instruments, net | $ | 152 | $ | (120 | ) | |||
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Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Rexam | 18 | % | 16 | % | ||||
Anheuser-Busch | 11 | % | 7 | % |
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Purchases from Rio Tinto Alcan as a percentage of total | 41 | % | 35 | % |
16. | SUPPLEMENTAL INFORMATION |
September 30, | March 31, | |||||||
2009 | 2009 | |||||||
Currency translation adjustment | $ | 62 | $ | (62 | ) | |||
Fair value of effective portion of hedges | (21 | ) | (19 | ) | ||||
Pension and other benefits | (63 | ) | (67 | ) | ||||
Accumulated other comprehensive income (loss) | $ | (22 | ) | $ | (148 | ) | ||
Six Months Ended | ||||||||
September 30, | ||||||||
2009 | 2008 | |||||||
Interest paid | $ | 78 | $ | 82 | ||||
Income taxes paid | $ | 13 | $ | 67 |
17. | SUPPLEMENTAL GUARANTOR INFORMATION |
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Six Months Ended September 30, 2009 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 386 | $ | 3,277 | $ | 1,157 | $ | (679 | ) | $ | 4,141 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 349 | 2,622 | 969 | (679 | ) | 3,261 | ||||||||||||||
Selling, general and administrative expenses | 19 | 115 | 27 | — | 161 | |||||||||||||||
Depreciation and amortization | 2 | 145 | 45 | — | 192 | |||||||||||||||
Research and development expenses | 11 | 5 | 1 | — | 17 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 55 | 59 | 5 | (32 | ) | 87 | ||||||||||||||
Interest income | (32 | ) | (5 | ) | (1 | ) | 32 | (6 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments, net | (3 | ) | (132 | ) | (17 | ) | — | (152 | ) | |||||||||||
Restructuring charges, net | — | 4 | 2 | — | 6 | |||||||||||||||
Equity in net (income) loss of non-consolidated affiliates | (305 | ) | 20 | — | 305 | 20 | ||||||||||||||
Other (income) expenses, net | (15 | ) | 24 | (28 | ) | — | (19 | ) | ||||||||||||
81 | 2,857 | 1,003 | (374 | ) | 3,567 | |||||||||||||||
Income (loss) before income taxes | 305 | 420 | 154 | (305 | ) | 574 | ||||||||||||||
Income tax provision (benefit) | (33 | ) | 204 | 28 | — | 199 | ||||||||||||||
Net income (loss) | 338 | 216 | 126 | (305 | ) | 375 | ||||||||||||||
Net income (loss) attributable to noncontrolling interests | — | — | 37 | — | 37 | |||||||||||||||
Net income (loss) attributable to our common shareholder | $ | 338 | $ | 216 | $ | 89 | $ | (305 | ) | $ | 338 | |||||||||
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Six Months Ended September 30, 2008 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
Net sales | $ | 784 | $ | 5,064 | $ | 1,603 | $ | (1,389 | ) | $ | 6,062 | |||||||||
Cost of goods sold (exclusive of depreciation and amortization shown below) | 771 | 4,741 | 1,499 | (1,389 | ) | 5,622 | ||||||||||||||
Selling, general and administrative expenses | 6 | 124 | 43 | — | 173 | |||||||||||||||
Depreciation and amortization | 12 | 166 | 45 | — | 223 | |||||||||||||||
Research and development expenses | 15 | 6 | 1 | — | 22 | |||||||||||||||
Interest expense and amortization of debt issuance costs | 57 | 71 | 15 | (52 | ) | 91 | ||||||||||||||
Interest income | (43 | ) | (11 | ) | (8 | ) | 52 | (10 | ) | |||||||||||
(Gain) loss on change in fair value of derivative instruments, net | 3 | 133 | (16 | ) | — | 120 | ||||||||||||||
Restructuring charges, net | (1 | ) | — | — | — | (1 | ) | |||||||||||||
Equity in net (income) loss of non-consolidated affiliates | 50 | — | — | (50 | ) | — | ||||||||||||||
Other (income) expenses, net | (8 | ) | (7 | ) | 48 | — | 33 | |||||||||||||
862 | 5,223 | 1,627 | (1,439 | ) | 6,273 | |||||||||||||||
Income (loss) before income taxes | (78 | ) | (159 | ) | (24 | ) | 50 | (211 | ) | |||||||||||
Income tax provision (benefit) | 2 | (131 | ) | (4 | ) | — | (133 | ) | ||||||||||||
Net income (loss) | (80 | ) | (28 | ) | (20 | ) | 50 | (78 | ) | |||||||||||
Net income (loss) attributable to noncontrolling interests | — | — | 2 | — | 2 | |||||||||||||||
Net income (loss) attributable to our common shareholder | $ | (80 | ) | $ | (28 | ) | $ | (22 | ) | $ | 50 | $ | (80 | ) | ||||||
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As of September 30, 2009 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 11 | $ | 157 | $ | 78 | $ | — | $ | 246 | ||||||||||
Accounts receivable, net of allowances | ||||||||||||||||||||
— third parties | 25 | 843 | 338 | — | 1,206 | |||||||||||||||
— related parties | 666 | 202 | 36 | (891 | ) | 13 | ||||||||||||||
Inventories | 45 | 608 | 276 | — | 929 | |||||||||||||||
Prepaid expenses and other current assets | 4 | 29 | 17 | — | 50 | |||||||||||||||
Fair value of derivative instruments | 4 | 168 | 15 | (16 | ) | 171 | ||||||||||||||
Deferred income tax assets | — | 30 | 7 | — | 37 | |||||||||||||||
Total current assets | 755 | 2,037 | 767 | (907 | ) | 2,652 | ||||||||||||||
Property, plant and equipment, net | 144 | 2,097 | 528 | — | 2,769 | |||||||||||||||
Goodwill | — | 600 | 11 | — | 611 | |||||||||||||||
Intangible assets, net | — | 778 | 8 | — | 786 | |||||||||||||||
Investments in and advances to non-consolidated affiliates | 1,993 | 763 | 1 | (1,993 | ) | 764 | ||||||||||||||
Fair value of derivative instruments, net of current portion | 1 | 24 | 25 | (2 | ) | 48 | ||||||||||||||
Deferred income tax assets | — | 4 | 1 | — | 5 | |||||||||||||||
Other long-term assets | 1,047 | 213 | 79 | (1,220 | ) | 119 | ||||||||||||||
Total assets | $ | 3,940 | $ | 6,516 | $ | 1,420 | $ | (4,122 | ) | $ | 7,754 | |||||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 3 | $ | 4 | $ | 42 | $ | — | $ | 49 | ||||||||||
Short-term borrowings | ||||||||||||||||||||
— third parties | 50 | 116 | 11 | — | 177 | |||||||||||||||
— related parties | 8 | 474 | 19 | (501 | ) | — | ||||||||||||||
Accounts payable | ||||||||||||||||||||
— third parties | 56 | 479 | 346 | — | 881 | |||||||||||||||
— related parties | 59 | 275 | 109 | (388 | ) | 55 | ||||||||||||||
Fair value of derivative instruments | 9 | 113 | 39 | (16 | ) | 145 | ||||||||||||||
Accrued expenses and other current liabilities | 40 | 304 | 86 | (2 | ) | 428 | ||||||||||||||
Deferred income tax liabilities | — | 12 | — | — | 12 | |||||||||||||||
Total current liabilities | 225 | 1,777 | 652 | (907 | ) | 1,747 | ||||||||||||||
Long-term debt, net of current portion | ||||||||||||||||||||
— third parties | 1,640 | 855 | 101 | — | 2,596 | |||||||||||||||
— related parties | 122 | 994 | 104 | (1,220 | ) | — | ||||||||||||||
Deferred income tax liabilities | — | 506 | 12 | — | 518 | |||||||||||||||
Accrued postretirement benefits | 30 | 370 | 128 | — | 528 | |||||||||||||||
Other long-term liabilities | 40 | 311 | 5 | (2 | ) | 354 | ||||||||||||||
Total liabilities | 2,057 | 4,813 | 1,002 | (2,129 | ) | 5,743 | ||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | 3,497 | — | — | — | 3,497 | |||||||||||||||
Retained earnings/(accumulated deficit)/owner’s net investment | (1,592 | ) | 1,730 | 392 | (2,122 | ) | (1,592 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | (22 | ) | (27 | ) | (102 | ) | 129 | (22 | ) | |||||||||||
Total Novelis shareholder’s equity | 1,883 | 1,703 | 290 | (1,993 | ) | 1,883 | ||||||||||||||
Noncontrolling interests | — | — | 128 | — | 128 | |||||||||||||||
Total liabilities and shareholder’s equity | $ | 3,940 | $ | 6,516 | $ | 1,420 | $ | (4,122 | ) | $ | 7,754 | |||||||||
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As of March 31, 2009 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 3 | $ | 175 | $ | 70 | $ | — | $ | 248 | ||||||||||
Accounts receivable, net of allowances | ||||||||||||||||||||
— third parties | 21 | 761 | 267 | — | 1,049 | |||||||||||||||
— related parties | 411 | 183 | 32 | (601 | ) | 25 | ||||||||||||||
Inventories | 31 | 523 | 239 | — | 793 | |||||||||||||||
Prepaid expenses and other current assets | 4 | 31 | 16 | — | 51 | |||||||||||||||
Fair value of derivative instruments | — | 145 | 7 | (33 | ) | 119 | ||||||||||||||
Deferred income tax assets | — | 192 | 24 | — | 216 | |||||||||||||||
Total current assets | 470 | 2,010 | 655 | (634 | ) | 2,501 | ||||||||||||||
Property, plant and equipment, net | 162 | 2,146 | 491 | — | 2,799 | |||||||||||||||
Goodwill | — | 570 | 12 | — | 582 | |||||||||||||||
Intangible assets, net | — | 787 | — | — | 787 | |||||||||||||||
Investments in and advances to non-consolidated affiliates | 1,647 | 719 | — | (1,647 | ) | 719 | ||||||||||||||
Fair value of derivative instruments, net of current portion | — | 46 | 28 | (2 | ) | 72 | ||||||||||||||
Deferred income tax assets | 1 | 3 | — | — | 4 | |||||||||||||||
Other long-term assets | 1,028 | 207 | 96 | (1,228 | ) | 103 | ||||||||||||||
Total assets | $ | 3,308 | $ | 6,488 | $ | 1,282 | $ | (3,511 | ) | $ | 7,567 | |||||||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Current portion of long-term debt | $ | 3 | $ | 4 | $ | 44 | $ | — | $ | 51 | ||||||||||
Short-term borrowings | ||||||||||||||||||||
— third parties | — | 231 | 33 | — | 264 | |||||||||||||||
— related parties | 7 | 330 | 22 | (359 | ) | — | ||||||||||||||
Accounts payable | ||||||||||||||||||||
— third parties | 33 | 458 | 234 | — | 725 | |||||||||||||||
— related parties | 41 | 157 | 90 | (240 | ) | 48 | ||||||||||||||
Fair value of derivative instruments | 7 | 540 | 126 | (33 | ) | 640 | ||||||||||||||
Accrued expenses and other current liabilities | 34 | 395 | 90 | (3 | ) | 516 | ||||||||||||||
Deferred income tax liabilities | — | — | — | — | — | |||||||||||||||
Total current liabilities | 125 | 2,115 | 639 | (635 | ) | 2,244 | ||||||||||||||
Long-term debt, net of current portion | ||||||||||||||||||||
— third parties | 1,464 | 852 | 101 | — | 2,417 | |||||||||||||||
— related parties | 223 | 976 | 120 | (1,228 | ) | 91 | ||||||||||||||
Deferred income tax liabilities | — | 459 | 10 | — | 469 | |||||||||||||||
Accrued postretirement benefits | 27 | 346 | 122 | — | 495 | |||||||||||||||
Other long-term liabilities | 50 | 288 | 5 | (1 | ) | 342 | ||||||||||||||
Total liabilities | 1,889 | 5,036 | 997 | (1,864 | ) | 6,058 | ||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Shareholder’s equity | ||||||||||||||||||||
Common stock | — | — | — | — | — | |||||||||||||||
Additional paid-in capital | 3,497 | — | — | — | 3,497 | |||||||||||||||
Retained earnings/(accumulated deficit)/owner’s net investment | (1,930 | ) | 1,533 | 325 | (1,858 | ) | (1,930 | ) | ||||||||||||
Accumulated other comprehensive income (loss) | (148 | ) | (81 | ) | (130 | ) | 211 | (148 | ) | |||||||||||
Total Novelis shareholder’s equity | 1,419 | 1,452 | 195 | (1,647 | ) | 1,419 | ||||||||||||||
Noncontrolling interests | — | — | 90 | — | 90 | |||||||||||||||
Total liabilities and shareholder’s equity | $ | 3,308 | $ | 6,488 | $ | 1,282 | $ | (3,511 | ) | $ | 7,567 | |||||||||
F-130
Table of Contents
Six Months Ended September 30, 2009 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 37 | $ | 353 | $ | 152 | $ | (78 | ) | $ | 464 | |||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (1 | ) | (34 | ) | (11 | ) | — | (46 | ) | |||||||||||
Proceeds from sales of property, plant and equipment | — | — | 4 | — | 4 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 2 | — | — | 2 | |||||||||||||||
Proceeds from loans receivable, net — related parties | — | 14 | — | — | 14 | |||||||||||||||
Net proceeds from settlement of derivative instruments | (2 | ) | (332 | ) | (82 | ) | — | (416 | ) | |||||||||||
Net cash provided by (used in) investing activities | (3 | ) | (350 | ) | (89 | ) | — | (442 | ) | |||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Proceeds from issuance of debt — third party | 177 | — | — | — | 177 | |||||||||||||||
Proceeds from issuance of debt — related party | 3 | — | — | — | 3 | |||||||||||||||
Principal payments | ||||||||||||||||||||
— third parties | (1 | ) | (6 | ) | (9 | ) | — | (16 | ) | |||||||||||
— related parties | (256 | ) | (41 | ) | (13 | ) | 216 | (94 | ) | |||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | 50 | (121 | ) | (25 | ) | — | (96 | ) | ||||||||||||
— related parties | 1 | 142 | (5 | ) | (138 | ) | — | |||||||||||||
Dividends — noncontrolling interests | — | — | (13 | ) | — | (13 | ) | |||||||||||||
Net cash provided by (used in) financing activities | (26 | ) | (26 | ) | (65 | ) | 78 | (39 | ) | |||||||||||
Net increase (decrease) in cash and cash equivalents | 8 | (23 | ) | (2 | ) | — | (17 | ) | ||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | 5 | 10 | — | 15 | |||||||||||||||
Cash and cash equivalents — beginning of period | 3 | 175 | 70 | — | 248 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 11 | $ | 157 | $ | 78 | $ | — | $ | 246 | ||||||||||
F-131
Table of Contents
Six Months Ended September 30, 2008 | ||||||||||||||||||||
Non- | ||||||||||||||||||||
Parent | Guarantors | Guarantors | Eliminations | Consolidated | ||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 15 | $ | (272 | ) | $ | (24 | ) | $ | (109 | ) | $ | (390 | ) | ||||||
INVESTING ACTIVITIES | ||||||||||||||||||||
Capital expenditures | (3 | ) | (50 | ) | (17 | ) | — | (70 | ) | |||||||||||
Proceeds from sales of property, plant and equipment | — | 1 | 1 | — | 2 | |||||||||||||||
Changes to investment in and advances to non-consolidated affiliates | — | 13 | — | — | 13 | |||||||||||||||
Proceeds from loans receivable, net — related parties | — | 13 | — | — | 13 | |||||||||||||||
Net proceeds from settlement of derivative instruments | — | 66 | 28 | — | 94 | |||||||||||||||
Net cash provided by (used in) investing activities | (3 | ) | 43 | 12 | — | 52 | ||||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||
Principal payments | ||||||||||||||||||||
— third parties | (1 | ) | (5 | ) | (1 | ) | — | (7 | ) | |||||||||||
— related parties | — | (89 | ) | (140 | ) | 229 | — | |||||||||||||
Short-term borrowings, net | ||||||||||||||||||||
— third parties | — | 279 | (16 | ) | — | 263 | ||||||||||||||
— related parties | 6 | (10 | ) | 124 | (120 | ) | — | |||||||||||||
Dividends — noncontrolling interests | — | — | (5 | ) | — | (5 | ) | |||||||||||||
Net cash provided by (used in) financing activities | 5 | 175 | (38 | ) | 109 | 251 | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | 17 | (54 | ) | (50 | ) | — | (87 | ) | ||||||||||||
Effect of exchange rate changes on cash balances held in foreign currencies | — | (6 | ) | (14 | ) | — | (20 | ) | ||||||||||||
Cash and cash equivalents — beginning of period | 12 | 177 | 137 | — | 326 | |||||||||||||||
Cash and cash equivalents — end of period | $ | 29 | $ | 117 | $ | 73 | $ | — | $ | 219 | ||||||||||
F-132
Table of Contents
Table of Contents
Item 20. | Indemnification of Directors and Officers. |
II-1
Table of Contents
Item 21. | Exhibits. |
Item 22. | Undertakings. |
II-2
Table of Contents
II-3
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Philip Martens | President and Chief Operating Officer (Principal Executive Officer) | November 9, 2009 | ||||
* Steven Fisher | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | November 9, 2009 | ||||
* Robert Nelson | Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) | November 9, 2009 | ||||
* Kumar Mangalam Birla | Chairman of the Board of Directors | November 9, 2009 | ||||
* Askaran Agarwala | Director | November 9, 2009 | ||||
* Debnarayan Bhattacharya | Vice Chairman, Director | November 9, 2009 | ||||
Clarence J. Chandran | Director | |||||
* Donald A. Stewart | Director | November 9, 2009 | ||||
/s/ Leslie J. Parrette Jr. Leslie J. Parrette Jr. | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-4
Table of Contents
By: | * Name: Jean-Marc Germain Title: President |
Signature | Title | Date | ||||
* Jean-Marc Germain | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Glen Guman | Director, Vice President and Treasurer (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Leslie J. Parrette Jr. Leslie J. Parrette Jr. | Director | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-5
Table of Contents
By: | * |
Signature | Title | Date | ||||
* John Tillman | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Glen Guman | Vice President and Treasurer (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Gordon Becker | Director | November 9, 2009 | ||||
/s/ Leslie J. Parrette Jr. Leslie J. Parrette Jr. | Director | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-6
Table of Contents
By: | * |
Signature | Title | Date | ||||
* John Tillman | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Glen Guman | Vice President and Treasurer (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Gordon Becker | Director | November 9, 2009 | ||||
/s/ Leslie J. Parrette Jr. Leslie J. Parrette Jr. | Director | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-7
Table of Contents
By: | /s/ Leslie J. Parrette Jr. |
Signature | Title | Date | ||||
/s/ Leslie J. Parrette Jr. Leslie J. Parrette Jr. | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Randal P. Miller | Treasurer (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Steve Fisher | Director | November 9, 2009 | ||||
* Philip Martens | Director | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-8
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Marion Greenhalgh | Director, President and Secretary (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-9
Table of Contents
By: | /s/ Leslie J. Parrette Jr. |
Signature | Title | Date | ||||
/s/ Leslie J. Parrette Jr. Leslie J. Parrette Jr. | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Randal P. Miller | Treasurer (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Steve Fisher | Director | November 9, 2009 | ||||
* Philip Martens | Director | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-10
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Marion Greenhalgh | Director, President and Secretary (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-11
Table of Contents
By: | 4260848 CANADA INC., |
By: | * |
Signature | Title | Date | ||||
* Marion Greenhalgh | Director, President and Secretary 4260848 Canada Inc. (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Director 4260848 Canada Inc. | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-12
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Marion Greenhalgh | Director, President and Secretary (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-13
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Marion Greenhalgh | Director, President and Secretary (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-14
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Antonio Tadeu Coelho Nardocci | Director (Principal Executive Officer) | November 9, 2009 | ||||
* Colin Bond | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* David Sneddon | Director | November 9, 2009 | ||||
* James Gunningham | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts |
II-15
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Antonio Tadeu Coelho Nardocci | Director (Principal Executive Officer) | November 9, 2009 | ||||
* Colin Bond | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* David Sneddon | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts |
II-16
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Colin Bond | Director (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* James Gunningham | Director | November 9, 2009 | ||||
* David Sneddon | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts |
II-17
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Alexandre Almeida | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Alexandre Sesso | Director, Finance Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts |
II-18
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Antonie Tadeu Coelho Nardocci | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Colin Bond | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Erwin Mayr | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts |
II-19
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Antonie Tadeu Coelho Nardocci | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Colin Bond | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Erwin Mayr | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts |
II-20
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Antonie Tadeu Coelho Nardocci | Director, President (Principal Executive Officer) | November 9, 2009 | ||||
* Colin Bond | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Erwin Mayr | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-21
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Andreas Thiele | Director (Principal Executive Officer) | November 9, 2009 | ||||
* Colin Bond | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Tony Lucido | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-22
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Erwin Mayr | Managing Director (Principal Executive Officer) | November 9, 2009 | ||||
* Gottfried Weindl | Managing Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-23
Table of Contents
By: | * |
Signature | Title | Date | ||||
* François Coeffic | Director (Principal Executive Officer) | November 9, 2009 | ||||
* Luigi Pisa | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* Pierre Labat | Director | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-24
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Philippe Charlier | President (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-25
Table of Contents
By: | * |
Signature | Title | Date | ||||
* Nick Madden | Director (Principal Executive Officer) | November 9, 2009 | ||||
* Alexandre Almeida | Director (Principal Financial Officer) (Principal Accounting Officer) | November 9, 2009 | ||||
* James Gunningham | Director | November 9, 2009 | ||||
* Andreas Glapka | Director | November 9, 2009 | ||||
Rosa Maria de Canha Ornelas Frazão Afonso | Director | |||||
Roberto Luiz Homem | Director | |||||
/s/ Christopher Courts Christopher Courts | Authorized Representative in the United States of America | November 9, 2009 | ||||
/s/ Christopher Courts *Christopher Courts Attorney-in-Fact |
II-26
Table of Contents
Exhibit | ||||
No. | Description of Exhibit | |||
2 | .1 | Arrangement Agreement by and among Hindalco Industries Limited, AV Aluminum Inc. and Novelis Inc., dated as of February 10, 2007 (incorporated by reference to Exhibit 2.1 to our Current Report onForm 8-K filed on February 13, 2007 (FileNo. 001-32312)). | ||
3 | .1 | Restated Certificate and Articles of Incorporation of Novelis Inc. (incorporated by reference to Exhibit 3.1 to our Current Report onForm 8-K filed on January 7, 2005 (FileNo. 001-32312)). | ||
3 | .2 | Novelis Inc. Amended and Restated Bylaws, adopted as of July 24, 2008 (incorporated by reference to Exhibit 3.2 to our Current Report onForm 8-K filed on July 25, 2008 (FileNo. 001-32312)). | ||
3 | .3 | Articles of Amendment to the Articles of Incorporation of Novelis Corporation (formerly Alcan Aluminum Corporation) (incorporated by reference to Exhibit 3.3 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .4 | Articles of Amendment to the Articles of Incorporation of Novelis Corporation (incorporated by reference to Exhibit 3.4 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .5 | Articles of Incorporation of Novelis Corporation (incorporated by reference to Exhibit 3.5 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .6 | Bylaws of Novelis Corporation (incorporated by reference to Exhibit 3.6 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .7 | Certificate of Amendment of Certificate of Incorporation of Novelis PAE Corporation (formerly Pechiney Aluminum Engineering, Inc.) (incorporated by reference to Exhibit 3.7 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .8 | Certificate of Incorporation of Novelis PAE Corporation (incorporated by reference to Exhibit 3.8 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .9 | By-laws of Novelis PAE Corporation (incorporated by reference to Exhibit 3.9 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .10 | Certificate of Incorporation of Eurofoil Inc. (USA) (incorporated by reference to Exhibit 3.10 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .11 | By-laws of Eurofoil Inc. (USA) (incorporated by reference to Exhibit 3.11 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .12 | Certificate of Formation of Aluminum Upstream Holdings LLC (incorporated by reference to Exhibit 3.33 to our Post-Effective Amendment No. 1 to Registration Statement onForm S-4 filed on December 1, 2006 (FileNo. 333-127139)). | ||
3 | .13 | Certificate of Amendment No. 1 to Certificate of Formation of Aluminum Upstream Holdings LLC.† | ||
3 | .14 | Limited Liability Company Agreement of Aluminum Upstream Holdings LLC (incorporated by reference to Exhibit 3.35 to our Post-Effective Amendment No. 1 to Registration Statement onForm S-4 filed on December 1, 2006 (FileNo. 333-127139)). | ||
3 | .15 | Certificate of Formation of Novelis South America Holdings LLC (incorporated by reference to Exhibit 3.36 to our Post-Effective Amendment No. 1 to Registration Statement onForm S-4 filed on December 1, 2006 (FileNo. 333-127139)). | ||
3 | .16 | Certificate of Amendment No. 1 to Certificate of Formation of Novelis South America Holdings LLC.† | ||
3 | .17 | Limited Liability Company Agreement of Novelis South America Holdings LLC (incorporated by reference to Exhibit 3.34 to our Post-Effective Amendment No. 1 to Registration Statement onForm S-4 filed on December 1, 2006 (FileNo. 333-127139)). | ||
3 | .18 | Certificate of Formation of Novelis Brand LLC (formerly Novelis Finances USA LLC) (incorporated by reference to Exhibit 3.31 to our Post-Effective Amendment No. 1 to Registration Statement onForm S-4 filed on December 1, 2006 (FileNo. 333-127139)). | ||
3 | .19 | Certificate of Amendment No. 1 to Certificate of Formation of Novelis Brand LLC.† | ||
3 | .20 | Certificate of Amendment No. 2 to Certificate of Formation of Novelis Brand LLC.† | ||
3 | .21 | Limited Liability Company Agreement of Novelis Brand LLC (formerly Novelis Finances USA LLC) (incorporated by reference to Exhibit 3.32 to our Post-Effective Amendment No. 1 to Registration Statement onForm S-4 filed on December 1, 2006 (FileNo. 333-127139)). | ||
3 | .22 | Articles of Association of Novelis do Brasil Ltda. (incorporated by reference to Exhibit 3.12 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .23 | Amendment No. 1 to Articles of Association of Novelis do Brasil Ltda.† | ||
3 | .24 | Amendment No. 2 to Articles of Association of Novelis do Brasil Ltda.† |
II-27
Table of Contents
Exhibit | ||||
No. | Description of Exhibit | |||
3 | .25 | Amendment No. 3 to Articles of Association of Novelis do Brasil Ltda.† | ||
3 | .26 | Certificate and Articles of Incorporation of 4260848 Canada Inc. (incorporated by reference to Exhibit 3.13 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .27 | By-law No. 1 of 4260848 Canada Inc. (incorporated by reference to Exhibit 3.14 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .28 | Certificate and Articles of Incorporation of 4260856 Canada Inc. (incorporated by reference to Exhibit 3.15 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .29 | By-law No. 1 of 4260856 Canada Inc. (incorporated by reference to Exhibit 3.16 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .30 | Amendment of Articles of Incorporation of Novelis Cast House Technology Ltd. (incorporated by reference to Exhibit 3.17 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .31 | Certificate and Articles of Incorporation of Novelis Cast House Technology Ltd. (incorporated by reference to Exhibit 3.18 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .32 | By-law No. 2 of Novelis Cast House Technology Ltd. (incorporated by reference to Exhibit 3.19 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .33 | By-law No. 1 of Novelis Cast House Technology Ltd. (incorporated by reference to Exhibit 3.20 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .34 | Amended and Restated Limited Partnership Agreement of Novelis No. 1 Limited Partnership.† | ||
3 | .35 | Bylaws of Novelis Deutschland GmbH.† | ||
3 | .36 | Certificate of Incorporation on Change of Name of Novelis Aluminium Holding Company (incorporated by reference to Exhibit 3.22 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .37 | Memorandum and Articles of Association of Novelis Aluminium Holding Company (incorporated by reference to Exhibit 3.23 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .38 | Articles of Association of Novelis AG (incorporated by reference to Exhibit 3.24 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .39 | Articles of Association of Novelis Technology AG (incorporated by reference to Exhibit 3.25 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .40 | Articles of Association for Novelis Switzerland S.A.† | ||
3 | .41 | Memorandum of Association of Novelis UK Ltd. (incorporated by reference to Exhibit 3.27 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .42 | Articles of Association of Novelis UK Ltd. (incorporated by reference to Exhibit 3.28 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .43 | Memorandum of Association of Novelis Europe Holdings Ltd. (incorporated by reference to Exhibit 3.29 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .44 | Articles of Association of Novelis Europe Holdings Ltd. (incorporated by reference to Exhibit 3.30 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
3 | .45 | Memorandum of Association of Novelis Services Limited.† | ||
3 | .46 | Articles of Association of Novelis Services Limited.† | ||
3 | .47 | Articles of Novelis Luxembourg S.A.† | ||
3 | .48 | Bylaws of Novelis PAE S.A.S.† | ||
3 | .49 | Articles of Novelis Madeira, Unipessoal, Lda.† | ||
3 | .50 | Amendment No. 3 to Articles of Association of Novelis do Brasil Ltda. | ||
4 | .1 | Shareholder Rights Agreement between Novelis Inc. and CIBC Mellon Trust Company (incorporated by reference to Exhibit 4.1 to our Annual Report onForm 10-K filed on March 30, 2005 (FileNo. 001-32312)). | ||
4 | .2 | First Amendment to the Shareholder Rights Agreement between Novelis Inc. and CIBC Mellon Trust Company, dated as of February 10, 2007 (incorporated by reference to Exhibit 4.1 to our Current Report onForm 8-K filed February 13, 2007 (FileNo. 001-32312)). | ||
4 | .3 | Specimen Certificate of Novelis Inc. Common Shares (incorporated by reference to Exhibit 4.2 to our Registration Statement onForm 10-12B filed on December 27, 2004 (FileNo. 001-32312)). |
II-28
Table of Contents
Exhibit | ||||
No. | Description of Exhibit | |||
4 | .4 | Indenture, relating to the 71/4% Senior Notes due 2015, 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 onForm 8-K filed on February 3, 2005 (FileNo. 001-32312)). | ||
4 | .5 | Form of Note for 71/4% Senior Notes due 2015 (incorporated by reference to Exhibit 4.1 to our Registration Statement onForm S-4 filed on August 3, 2005 (FileNo. 333-127139)). | ||
4 | .6 | Supplemental Indenture, between the Company, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC and the Bank of New York Trust Company, N.A. (incorporated by reference to Exhibit 4.6 to our Post-Effective Amendment No. 1 to our Registration Statement onForm S-4 Registration Statement filed on December 1, 2006 (FileNo. 333-127139)). | ||
4 | .7 | Supplemental Indenture, among the Company, Novelis No. 1 Limited Partnership, and the Bank of New York Trust Company, N.A., as trustee, dated as of May 14, 2007 (incorporated by reference to Exhibit 4.7 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
4 | .8 | Supplemental Indenture, among the Company, Novelis Luxembourg SA, and The Bank of New York Mellon Trust Company, N.A., as trustee, dated as of January 29, 2008 (incorporated by reference to Exhibit 4.8 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
4 | .9 | Supplemental Indenture, among the Company, Bellona-Trading Internacional, Sociedade Unipessoal, LDA, and The Bank of New York Mellon Trust Company, N.A., as trustee, dated as of June 26, 2008 (incorporated by reference to Exhibit 4.9 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
4 | .10 | Supplemental Indenture, among the Company, Novelis Services Limited, and The Bank of New York Mellon Trust Company N.A., as trustee, dated as of July 10, 2008 (incorporated by reference to Exhibit 4.10 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
4 | .11 | Supplemental Indenture, among the Company, Novelis PAE SAS, and The Bank of New York Mellon Trust Company N.A., as trustee, dated as of September 16, 2008 (incorporated by reference to Exhibit 4.11 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
4 | .12 | Indenture, relating to the 111/2% Senior Notes due 2015, dated as of August 11, 2009, between the Company, the guarantors named on the signature pages thereto and The Bank of New York Mellon Trust Company, N.A., as trustee.† | ||
4 | .13 | Registration Rights Agreement, dated as of August 11, 2009, among the Company, the guarantors named on the signature pages thereto, Credit Suisse Securities (USA) LLC, as Representative of the Initial Purchasers (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on August 17, 2009 (FileNo. 001-32312)). | ||
4 | .14 | Form of Note for 111/2% Senior Notes due 2015 (included in Exhibit 4.12). | ||
5 | .1 | Opinion of King & Spalding LLP regarding the legality of securities being registered. | ||
5 | .2 | Opinion of Torys LLP.† | ||
5 | .3 | Opinion of Lavery de Billy.† | ||
5 | .4 | Opinion of MacFarlanes.† | ||
5 | .5 | Opinion of Elvinger Dessoy Dennewald.† | ||
5 | .6 | Opinion of Ernst & Young Société d’Avocats.† | ||
5 | .7 | Opinion of Noerr Stiefenhofer Lutz.† | ||
5 | .8 | Opinion of CMS von Erlach Henrici AG.† | ||
5 | .9 | Opinion of A&L Goodbody.† | ||
5 | .10 | Opinion of Levy & Salomão Advogados.† | ||
5 | .11 | Opinion of Vieira de Almeida & Associados.† | ||
10 | .1 | $800 million asset-based lending credit facility (“ABL Facility”) dated as of July 6, 2007 among Novelis Inc., Novelis Corporation as U.S. Borrower, the other U.S. Subsidiaries of Novelis Inc., Novelis UK Ltd, Novelis AG, AV Aluminum Inc. as parent guarantor, the other guarantors party thereto, with the lenders party thereto, ABN AMRO Bank N.V., as U.S./European issuing bank, swingline lender and administrative agent, LaSalle Business Credit, LLC, as collateral agent and funding agent, UBS Securities LLC, as syndication agent, Bank of America, N.A., National City Business Credit, Inc. and CIT Business Credit Canada Inc., as documentation agents, ABN AMRO Bank N.V. Canada Branch, as Canadian issuing bank, Canadian funding agent and Canadian administrative agent, and ABN AMRO Incorporated and UBS Securities LLC, as joint lead arrangers and joint book managers.† |
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Exhibit | ||||
No. | Description of Exhibit | |||
10 | .2 | $960 million term loan facility (“Term Loan Facility”) dated as of July 6, 2007 among Novelis Inc., Novelis Corporation as U.S. Borrower, AV Aluminum Inc., as Holdings, and the other guarantors party thereto, with the lenders party thereto, UBS AG, Stamford Branch, as administrative agent and as collateral agent, UBS Securities LLC, as syndication agent, ABN AMRO Incorporated, as documentation agent, and UBS Securities LLC and ABN AMRO Incorporated as joint lead arrangers and joint book managers.† | ||
10 | .3 | Intercreditor Agreement dated as of July 6, 2007 by and among Novelis Inc., Novelis Corporation, Novelis PAE Corporation, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, Novelis UK Ltd, Novelis AG, AV Aluminum Inc., and the subsidiary guarantors party thereto, as grantors, ABN AMRO BANK N.V., as revolving credit administrative agent ABN AMRO Bank N.A., acting through its Canadian branch, as revolving credit Canadian administrative agent and as revolving credit Canadian funding agent, La Salle Business Credit, LLC, as revolving credit collateral agent and as revolving credit funding agent, and UBS AG, Stamford Branch, as Term Loan administrative agent, and Term Loan collateral agent (incorporated by reference to Exhibit 10.3 to our Quarterly Report onForm 10-Q filed on November 9, 2007) (FileNo. 001-32312)). | ||
10 | .4 | Security Agreement made by Novelis Inc., as Canadian Borrower, Novelis Corporation, as U.S. Borrower and the guarantors from time to time party thereto in favor of UBS AG, Stamford branch, as collateral agent dated as of July 6, 2007 (incorporated by reference to Exhibit 10.4 to our Quarterly Report onForm 10-Q filed on November 9, 2007) (FileNo. 001-32312)). | ||
10 | .5 | Security Agreement made by Novelis Inc., as Canadian Borrower, Novelis Corporation, Novelis PAE Corporation, Novelis Finances USA LLC, Novelis South America Holdings LLC, Aluminum Upstream Holdings LLC, as U.S. Borrowers and the guarantors from time to time party thereto in favor of La Salle Business Credit, LLC, as collateral agent dated as of July 6, 2007 (incorporated by reference to Exhibit 10.5 to our Quarterly Report onForm 10-Q filed on November 9, 2007) (FileNo. 001-32312)). | ||
10 | .6** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of re-melt aluminum ingot (incorporated by reference to Exhibit 10.6 to our Annual Report onForm 10-K filed on June 19, 2008 (FileNo. 001-32312)). | ||
10 | .7** | Amended and Restated Molten Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of molten metal to Purchaser’s Saguenay Works facility) (incorporated by reference to Exhibit 10.7 to our Annual Report onForm 10-K filed on June 19, 2008 (FileNo. 001-32312)). | ||
10 | .8** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in North America (incorporated by reference to Exhibit 10.8 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .9** | Amended and Restated Metal Supply Agreement between Novelis Inc., as Purchaser, and Alcan Inc., as Supplier, for the supply of sheet ingot in Europe (incorporated by reference to Exhibit 10.9 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .10* | Employment Agreement of Martha Finn Brooks (incorporated by reference to Exhibit 10.33 to our Registration Statement onForm 10-12B filed by Novelis Inc. on December 22, 2004 (FileNo. 001-32312)). | ||
10 | .11* | Employment Arrangement between Steven Fisher and Novelis Inc. (incorporated by reference to our Current Report onForm 8-K filed on May 21, 2007 and our Current Report onForm 8-K/A filed on August 15, 2007 (FileNo. 001-32312)). | ||
10 | .12* | Letter Agreement, dated October 20, 2006, by and between Novelis Inc. and Thomas Walpole (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on October 26, 2006 (FileNo. 001-32312)). | ||
10 | .13* | Employment Agreement of Antonio Tadeu Coelho Nardocci dated as of November 8, 2004 (incorporated by reference to Exhibit 10.16 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .14* | Employment Agreement of Arnaud de Weert (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on April 3, 2006 (FileNo. 001-32312)). | ||
10 | .15* | Form of Change in Control Agreement between Novelis Inc. and certain executive officers (incorporated by reference to Exhibit 99.1 to our Current Report onForm 8-K filed on September 27, 2006 (FileNo. 001-32312)). | ||
10 | .16* | Form of Change in Control Agreement between Novelis Inc. and certain executive officers and key employees (incorporated by reference to Exhibit 99.2 to our Current Report onForm 8-K filed on September 27, 2006 (FileNo. 001-32312)). |
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Exhibit | ||||
No. | Description of Exhibit | |||
10 | .17* | Form of Recognition Agreement between Novelis Inc. and certain executive officers and key employees (incorporated by reference to Exhibit 99.3 to our Current Report onForm 8-K filed on September 27, 2006 (FileNo. 001-32312)). | ||
10 | .18* | Form of Amendment to Recognition Agreements (incorporated by reference to Exhibit 10.1 of our Current Report onForm 8-K/A filed May 8, 2007 (FileNo. 001-32312)). | ||
10 | .19* | Form of SAR Award (incorporated by reference to Exhibit 10.3 to our Current Report onForm 8-K filed on November 1, 2006 (FileNo. 001-32312)). | ||
10 | .20* | Novelis Inc. 2006 Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on November 1, 2006 (FileNo. 001-32312)). | ||
10 | .21* | Form of Non-Qualified Stock Option Award (incorporated by reference to Exhibit 10.2 to our Current Report onForm 8-K filed on November 1, 2006 (FileNo. 001-32312)). | ||
10 | .22* | Form of Novelis Long-Term Incentive Plan for Fiscal2008-2010 (incorporated by reference to Exhibit 10.26 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .23* | Form of Indemnity Agreement between Novelis Inc. and Members of the Board of Directors of Novelis Inc. (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on May 21, 2007 (FileNo. 001-32312)). | ||
10 | .24* | Form of Indemnity Agreement between Novelis Inc. and certain executive officers dated as of June 27, 2007 (incorporated by reference to Exhibit 10.1 to our Current Report onForm 8-K filed on June 28, 2007(FileNo. 001-32312)). | ||
10 | .25* | Form of Amended and Restated Novelis Founders Performance Awards Plan dated March 14, 2006 (incorporated by reference to Exhibit 10.7 to our Current Report onForm 8-K filed on March 20, 2006 (FileNo. 001-32312)). | ||
10 | .26* | First Amendment to the Amended and Restated Novelis Founders Performance Awards Plan (incorporated by reference to our Current Report onForm 8-K/A filed May 8, 2007 (FileNo. 001-32312)). | ||
10 | .27* | Novelis Founders Performance Award Notification for Martha Brooks dated March 31, 2005 (incorporated by reference to Exhibit 10.2 to our Current Report onForm 8-K filed on March 21, 2006 (FileNo. 001-32312)). | ||
10 | .28* | Novelis Founders Performance Award Notification for Thomas Walpole dated March 31, 2005 (incorporated by reference to Exhibit 10.36 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .29* | Novelis Founders Performance Award Notification for Antonio Tadeu Coelho Nardocci dated March 31, 2005 (incorporated by reference to Exhibit 10.37 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .30* | Form of Novelis Annual Incentive Plan for 2007 — 2008 (incorporated by reference to Exhibit 10.39 to our Annual Report onForm 10-K filed on June 19, 2008 ) (FileNo. 001-32312)). | ||
10 | .31* | Employment Agreement of Jean-Marc Germain dated as of April 28, 2008 (incorporated by reference to Exhibit 10.1 to our Quarterly Report onForm 10-Q filed on August 14, 2008 (FileNo. 001-32312)). | ||
10 | .32* | Form of Novelis Long-Term Incentive Plan for Fiscal2009-2012 (incorporated by reference to Exhibit 10.2 to our Quarterly Report onForm 10-Q filed on August 14, 2008 (FileNo. 001-32312)). | ||
10 | .33* | Employment Agreement of Alexandre Moreira Martins de Almeida dated as of August 8, 2008 (incorporated by reference to Exhibit 10.1 to our Quarterly Report onForm 10-Q filed on November 10, 2008 (FileNo. 001-32312)). | ||
10 | .34* | Amended Novelis Long-Term Incentive Plan for Fiscal2009-2012 (incorporated by reference to Exhibit 10.2 to our Quarterly Report onForm 10-Q filed on February 17, 2009 (FileNo. 001-32312)). | ||
10 | .35* | Employment Agreement of Philip Martens, dated as of April 11, 2009 (incorporated by reference to Exhibit 10.36 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
10 | .36 | Joinder Agreement, among Novelis No. 1 Limited Partnership, its Subsidiaries listed on the Pledge and Security Agreement dated as of January 7, 2005, and Citicorp North America, Inc., as administrative agent, dated as of May 14, 2007 (incorporated by reference to Exhibit 10.37 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
10 | .37 | Joinder Agreement, among Novelis PAE S.A.S. and UBS AG, Stamford Branch, as administrative agent and collateral agent, dated as of September 12, 2008 (incorporated by reference to Exhibit 10.38 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
10 | .38 | Joinder Agreement, among Novelis PAE S.A.S. and LaSalle Business Credit, LLC, as funding agent, dated as of September 12, 2008 (incorporated by reference to Exhibit 10.39 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). |
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Table of Contents
Exhibit | ||||
No. | Description of Exhibit | |||
10 | .39 | Joinder Agreement, among Bellona-Trading Internacional, Sociedad Unipessoal, LDA and UBS AG, Stamford Branch, as administrative agent and as collateral agent, dated as of June 11, 2008 (incorporated by reference to Exhibit 10.40 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
10 | .40 | Joinder Agreement, among Novelis Services Limited, UBS AG, Stamford Branch, as administrative agent and as collateral agent, and LaSalle Business Credit, LLC, as funding agent and as collateral agent, dated as of July 16, 2008 (incorporated by reference to Exhibit 10.41 to our Annual Report onForm 10-K filed on June 29, 2009 (FileNo. 001-32312)). | ||
10 | .41* | Novelis Long-Term Incentive Plan for Fiscal Years 2010 -- 2013 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July 1, 2009 (File No. 001-32312)). | ||
10 | .42* | Novelis Annual Incentive Plan for Fiscal Year 2010 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on July 1, 2009 (File No. 001-32312)). | ||
10 | .43* | Form Change in Control Agreement (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed on July 1, 2009 (File No. 001-32312)). | ||
10 | .44* | Form Severance Agreement (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed on July 1, 2009 (File No. 001-32312)). | ||
10 | .45* | Termination of Employment Agreement between Novelis AG and Arnaud deWeert, dated June 26, 2009 (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed on July 1, 2009 (File No. 001-32312)). | ||
10 | .46* | Change in Control Agreement between Novelis and Philip Martens, dated April 16, 2009 (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on August 3, 2009 (File No. 001-32312)). | ||
10 | .47* | Separation and Release Agreement between Novelis and Martha Brooks, dated May 8, 2009 (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q filed on August 3, 2009 (File No. 001-32312)). | ||
10 | .48* | Employment Agreement between Novelis Inc. and Antonio Tadeu Coelho Nardocci (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K/A filed on September 9, 2009 (File No. 001-32312)). | ||
11 | .1 | Statement regarding computation of per share earnings (incorporated by reference to “Note 19 — Earnings per Share” to the Consolidated and Combined Financial Statements). | ||
12 | .1 | Statement regarding computation of ratio of earnings to fixed charges. | ||
21 | .1 | List of subsidiaries of Novelis Inc.† | ||
23 | .1 | Consent of PricewaterhouseCoopers LLP. | ||
23 | .2 | Consent of King & Spalding LLP (included as part of Exhibit 5.1). | ||
23 | .3 | Consent of Torys LLP (included as part of Exhibit 5.2). | ||
23 | .4 | Consent of Lavery de Billy (included as part of Exhibit 5.3). | ||
23 | .5 | Consent of MacFarlanes (included as part of Exhibit 5.4). | ||
23 | .6 | Consent of Elvinger Dessoy Dennewald (included as part of Exhibit 5.5). | ||
23 | .7 | Consent of Ernst & Young Société d’Avocats (included as part of Exhibit 5.6). | ||
23 | .8 | Consent of Noerr Stiefenhofer Lutz (included as part of Exhibit 5.7). | ||
23 | .9 | Consent of CMS von Erlach Henrici AG (included as part of Exhibit 5.8). | ||
23 | .10 | Consent of A&L Goodbody (included as part of Exhibit 5.9). | ||
23 | .11 | Consent of Levy & Salomão Advogados (included as part of Exhibit 5.10). | ||
23 | .12 | Consent of Vieira de Almeida & Associados (included as part of Exhibit 5.11). | ||
24 | .1 | Powers of Attorney (included in the signature pages to this Registration Statement) | ||
25 | .1 | Statement of Eligibility onForm T-1 under the Trust Indenture Act of 1939 of The Bank of New York Mellon Trust Company, N.A., as trustee of the Indenture.† | ||
99 | .1 | Form of Letter of Transmittal.† | ||
99 | .2 | Form of Notice of Guaranteed Delivery.† |
* | 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. |
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