Falconbridge 6-K Current report (foreign)

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EXHIBIT 99.1

NORANDA INC.

CONSOLIDATED RESULTS

(US$ millions, unaudited)

		First quarter
		2004			2003
					Restated — note 2
Revenues		$	1,653		$	1,056
Operating expenses
Cost of operations			467			469
Purchased raw materials			711			414
Depreciation, amortization and reclamation			117			114
			1,295			997
Income generated by operating assets			358			59
Interest expense, net			25			38
Corporate and general administration			13			13
Research, development and exploration			7			8
Minority interest in earnings of subsidiaries			79			16
Income (loss) before undernoted			234			(16	)
Tax expense (recovery)			86			(6	)
Restructuring costs			—			30
Other income			(5	)		—
Net Income (loss)		$	153		$	(40	)
Dividends on preferred shares			5			3
Interest on convertible debentures			1			1
Net Income (loss) attributable to common shares		$	147		$	(44	)
Basic earnings (loss) per common share — $		$	0.50		$	(0.18	)
Diluted earnings (loss) per common share — $		$	0.49		$	(0.18	)
	Basic weighted average number of shares — 000's		295,070			241,560
	Diluted weighted average number of shares — 000's		297,438			241,560

Note:

Effective July 1, 2003, Noranda adoped the US dollar as its reporting and functional currency. This change has been reflected on a retroactive basis.

NORANDA INC.

CONSOLIDATED BALANCE SHEETS

(US$ millions, unaudited)

		Mar. 31 2004		Dec. 31 2003
				Restated — note 2
Assets
Current assets
	Cash and cash equivalents	$	619	$	501
	Short-term investments		118		129
	Accounts receivable		759		576
	Metals and other inventories		1,245		1,179
			2,741		2,385
Operating capital assets			4,698		4,765
Development projects			1,047		973
Investments and other assets			283		205
		$	8,769	$	8,328
Liabilities and Equity
Current Liabilities
	Accounts and taxes payable	$	1,061	$	903
	Debt due within one year		465		431
			1,526		1,334
Long-term debt			2,839		2,893
Future income taxes			91		46
Reclamation, pension and other provisions			589		539
Stockholders' interests:
	Interests of other shareholders		1,000		919
	Shareholders' equity		2,724		2,597
			3,724		3,516
		$	8,769	$	8,328

NORANDA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(US$ millions, unaudited)

			First quarter
			2004			2003
						Restated — note 2
Cash realized from (used for):
Operations
	Net income (loss)		$	153		$	(40	)
	Charges (credits) not affecting cash:
	Depreciation, amortization and reclamation			106			105
	Future taxes			43			(16	)
	Minority interests in earnings of subsidiaries			79			16
	Foreign exchange, restructuring and other			(31	)		44
				350			109
	Net change in accounts receivable, inventories and payables			(88	)		(103	)
Cash from operation				262			6
Investment activities
	Capital investments			(124	)		(101	)
	Investments and advances			10			—
	Proceeds on dispositions			2			1
Cash used in investment activities				(112	)		(100	)
Financing activities
	Long-term debt, including current portion
		Issued		28			59
		Repaid		(44	)		(54	)
	Issue of shares — common			13			—
	Issue of preferred shares			—			98
	Dividends paid			(32	)		(22	)
	Issue of shares — minority shareholders, net			11			—
	Dividends paid to minority shareholders			(8	)		(7	)
				(32	)		74
Increase (decrease) in cash and cash equivalents				118			(20	)
Cash and cash equivalents, beginning of period				501			293
Cash and cash equivalents, end of period			$	619		$	273

NORANDA INC.

SALES VOLUMES & REALIZED PRICES

			First Quarter
Metal Sales (tonnes, except as noted)		100% basis, except as noted
			2004	2003
Copper
	CCR		84,986	47,154
	Horne (concentrates)		17,605	9,711
	Kidd Creek		10,272	28,773
	Altonorte		55,097	29,661
	Nikkelverk		13,197	14,470
	Antamina (concentrates)	(33.75%)	11,609	22,414
	Collahuasi (concentrates)	(44%)	11,957	35,914
	Collahuasi	(44%)	5,914	8,515
	Lomas Bayas		15,935	14,578
			226,572	211,190
Zinc
	Kidd Creek		26,525	35,517
	Antamina (concentrates)	(33.75%)	14,219	15,400
	Brunswick/Matagami (concentrates)		74,134	78,027
			114,878	128,944
	CEZ (Noranda Income Fund)	(100% — basis)	67,254	58,599
Nickel			18,118	20,390
Ferronickel			6,777	6,536
Aluminum
	Primary Aluminum — shipments		60,745	59,852
	Norandal — shipments		42,388	36,925
Lead			21,211	18,469
Gold — 000 ounces			236	236
Silver — 000 ounces
	CCR		9,326	9,082
	Kidd Creek		1,004	1,204
	Antamina	(33.75%)	423	575
			10,753	10,861
Average Realized Prices — ($U.S. per pound, except as noted)
	Copper		1.17	0.76
	Zinc		0.53	0.41
	Nickel		6.88	3.83
	Ferronickel		6.80	3.65
	Aluminum		0.79	0.68
	Lead		0.41	0.24
	Gold ($US per ounce)		403.55	354.63
	Silver ($US per ounce)		6.33	4.72
Exchange Rate (US$1 = Cdn$1)			0.76	0.66

NORANDA INC.

PRODUCTION VOLUMES

			First Quarter
Mine Production (tonnes, except as noted)		100% basis, except as noted
			2004	2003
Copper
	Kidd Creek		9,296	10,718
	Matagami		1,856	2,003
	Brunswick		1,842	2,386
	INO		5,536	9,061
	Antamina	(33.75%)	25,557	24,457
	Collahuasi	(44%)	35,369	44,211
	Lomas Bayas		15,728	14,572
	Other		4,430	6,489
			99,614	113,897
Zinc
	Kidd Creek		20,792	21,172
	Brunswick		73,580	70,798
	Matagami		26,674	25,284
	Antamina	(33.75%)	22,469	24,168
	Other		1,544	1,972
			145,059	143,394
Nickel			11,072	12,961
Ferronickel			7,999	6,887
Lead			20,287	18,425
Silver — 000 ounces
	Kidd Creek		1,194	739
	Brunswick		1,602	1,482
	Matagami		114	97
	Antamina	(33.75%)	653	685
	Other		50	69
			3,613	3,072
Metal Production (tonnes, except as noted)
Refined copper
	CCR		78,160	43,026
	Kidd Creek		33,722	36,959
	Nikkelverk		9,746	8,535
	Collahuasi	(44%)	6,152	6,862
	Lomas Bayas		15,728	14,572
			143,508	109,954
Copper anodes
	Horne		43,234	28,267
	Kidd Creek		33,597	36,768
	Altonorte		63,850	41,093
			140,681	106,128
Refined zinc
	Kidd Creek		28,458	37,935
	CEZ (Noranda Income Fund)	(100% — basis)	69,080	62,055
			97,538	99,990
Refined nickel
	Nikkelverk		18,859	20,563
	Falcondo		7,999	6,887
			26,858	27,450
Primary aluminum			61,220	61,126
Fabricated Aluminum			42,388	36,925
Refined lead			25,148	24,466
Refined gold — 000 ounces			269	270
Refined silver — 000 ounces			10,123	8,668

NORANDA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Millions of US dollars, except as otherwise indicated)
(Unaudited)

1.    Accounting Policies

        These unaudited interim consolidated financial statements have been prepared using disclosure standards appropriate for interim financial statements and do not contain all the explanatory notes, descriptions of accounting policies or other disclosures required by Canadian generally accepted accounting principles for annual financial statements. Such notes, descriptions of accounting policies and other disclosures have been included in the Company's 2003 annual consolidated financial statements except as discussed in Note 2 below. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company's audited annual consolidated financial statements and the accompanying notes included in the 2003 Annual Report.

2.    Change in Accounting Standards

        Effective January 1, 2004, Noranda adopted the new Canadian Institute of Chartered Accountants (CICA) standards for Asset Retirement Obligations (CICA 3110) and Hedging Relationships (AcG13).

a)    Asset Retirement Obligations

        Previously, Noranda expensed costs related to ongoing site restoration programs when incurred, while a provision for future site reclamation and closure costs was charged to earnings over the life of the operations. In accordance with CICA 3110, asset retirement obligations are recognized when incurred and recorded as liabilities at fair value. The amount of the liability is subject to re-measurement at each reporting period. The liability is accreted over time through periodic charges to earnings. In addition, the asset retirement cost is capitalized as part of the asset's carrying value and amortized over the estimated life of the mine. This change in accounting policy was applied retroactively and, accordingly, the consolidated financial statements of prior periods were restated. As a result of this change, the cumulative impact from the adoption of this standard at January 1, 2003 was to decrease retained earnings by $27, increase capital assets by $70, increase the provision for asset retirement by $97, decrease future income taxes by $5 and increase interest of other shareholders by $5. Adoption of the new standard had a negligible impact to the first quarter of 2003 and reduced net income by $11 for the year ended December 31, 2003.

b)    Hedging Relationships

        As of January 1, 2004, Noranda adopted the recommendations of AcG 13 which provides for more restrictive conditions as to when hedge accounting may be used. On implementation of this standard at January 1, 2004, the Company's partially-owned subsidiary, Falconbridge, recorded a deferred mark-to-market gain of $27 on its interest rate hedges while recording a long-term receivable and long-term payable of $67 and $40, for those contracts in a gain and loss position, respectively. Amortization of $1 of this deferred gain was recognized in the first quarter of 2004.

        In addition, Noranda recorded a mark-to-market gain of $8 during the first quarter of 2004.

        Under the provisions of the new standard, Noranda continued to be eligible for hedge accounting on its fixed forward price hedges and on its forward and option contracts used as a currency hedge of Canadian dollars operating costs. Falconbridge did not seek hedge accounting for its contracts used as an economic currency hedge of Canadian dollar monetary assets and liabilities and accordingly continues to mark these to market.

3.    Stock-Based Compensation

        During the first quarter, the Company granted 860,500 stock options at a price of CDN$20.37 per share. These options have a 10-year term, vesting 20% per year over the first five years. The compensation expense associated with this stock option series was calculated using the Black-Scholes valuation model, assuming a 8-year term, 25% volatility, a weighted- average expected dividend of 1.87% annually and an interest rate of 4.32%, and is being charged against net income over its vesting period.

        Corporate and general administration for the quarter ended March 31, 2004 includes compensation costs of $1 relating to outstanding options.

4.    Exchange Gains and Losses on Foreign-denominated Expenditures

        The majority of Noranda's products are denominated in US dollars or indexed to US dollar prices. In addition, operating costs of Noranda's assets are also denominated in their local currency and exposed to exchange volatility. Prior to July 1, 2003, at which point Noranda changed its functional currency to the US dollar, Noranda managed its US dollar revenue exposure by utilizing spot and forward foreign exchange contracts with its banks as counter-parties. Subsequent to the change, Noranda started hedging its Canadian dollar costs using foreign currency exchange contracts.

        Noranda's operating costs for the quarter ended March 31, 2004 include realized exchange gains from the settlement of various cost hedge contracts of $25 (2003 — revenues include realized exchange gains on revenue hedge contracts of $4).

        Other foreign currency exchange contracts, relating to foreign currency expenditures and other foreign currency denominated monetary assets and liabilities, generated a gain of $5 for the first quarter of 2004 (2003 — loss of $1) at the Company's partially-owned subsidiary.

5.    Shareholders' Equity

					March 31, 2004				December 31, 2003
					Shares (000)	Amount			Shares (000)		Amount
Share Capital
	Authorized — an unlimited number of:
			Preferred, Common and Participating shares
	Issued:
		Common Shares
			Balance, beginning of year		295,228	$	2,084		241,289		$	1,595
				Issue of common shares	—		—		48,520			431
				Issued on exercise of stock options	1,052		14		373			6
				Issued under dividend re-investment	10		—		5,046			52
				Issued under share purchase plan	—		—		—			—
			Balance, end of period		296,290	$	2,098		295,228		$	2,084
		Preferred Shares, Series F
			Balance beginning of year and end of period		3,246		59		3,246			59
		Preferred Shares, Series G
			Balance beginning of year and end of period		8,754		137		8,754			137
		Preferred Shares, Series H
			Balance beginning of year		6,000		99		—			—
				Issued	—		—		6,000			99
			Balance end of period		6,000		99		6,000			99
		Preferred Shares, Series I
			Balance beginning of year		—		—		—			—
				Issued	—		—		6,000			100
				Redeemed	—		—		(6,000	)		(100	)
			Balance end of period		—		—		—			—
Contributed Surplus — stock option valuation							3					3
Convertible Debentures							85					84
Basic weighted average number of shares — 000's							295,070					261,618
Diluted weighted average number of shares — 000's							297,438					261,618
Retained Earnings (deficit):
		Balance beginning of year				$	(92	)			$	24
			Change in accounting policy:
			Asset retirement obligation				(38	)				(27	)
						$	(130	)			$	(3	)
			Net income				153					23
			Dividends:
				Common			(27	)				(121	)
				Preferred			(5	)				(21	)
			Other				—					(8	)
		Balance end of period					(9	)				(130	)
Currency Translation and other at end of period							252					261
Total Shareholders' Equity						$	2,724				$	2,587

6.    Segmented Information

        Noranda has four operating segments: Copper, Nickel, Zinc and Aluminum. Inter-segment sales and purchases are made at market prices and trade terms. Operating results and identifiable assets are presented below:

	Three Months Ended March 31, 2004
	Copper		Nickel	Zinc	Aluminum	Other		Total
Revenues	$	844	481	85	204	39		$	1,563
Operating expenses
Cost of operations		195	140	34	103	(5	)		467
Purchase of raw materials		462	122	31	76	20			711
Depreciation, amortization and reclamation		49	32	18	9	10			117
	$	705	294	83	188	25		$	1,285
Income generated by operating assets	$	139	187	2	16	14		$	358
Interest expense, net									(25	)
Corporate and general administration									(13	)
Research, development and exploration									(7	)
Minority interest in earnings of subsidiaries									(79	)
Income before undernoted								$	234
Tax expense									(85	)
Other income									5
Net income								$	153
Total assets, excluding cash and short-term investments	$	4,241	1,763	436	836	754		$	8,032
Capital investments	$	74	34	1	6	9		$	124

	Three Months Ended March 31, 2003
	Copper		Nickel	Zinc		Aluminum	Other		Total
Revenues	$	471	284	87		171	43		$	1,056
Operating expenses
Cost of operations		156	143	52		90	18			469
Purchase of raw materials		229	62	43		50	20			414
Depreciation, amortization and reclamation		52	29	13		11	9			114
	$	447	234	108		151	47		$	997
Income (loss) generated by operating assets	$	24	50	(21	)	10	(4	)	$	58
Interest expense, net										(38	)
Corporate and general administration										(13	)
Research, development and exploration										(8	)
Minority interest in earnings of subsidiaries										(16	)
Income before undernoted									$	(16	)
Tax recovery										6
Restructuring costs										(30	)
Net loss									$	(40	)
Total assets, excluding cash and short-term investments	$	3,757	1,523	497		807	594		$	7,268
Capital investments	$	56	12	—		5	18		$	101

7.    Comparative Figures

        The comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2004 consolidated statements.

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NORANDA INC. CONSOLIDATED RESULTS (US$ millions, unaudited)
NORANDA INC. CONSOLIDATED BALANCE SHEETS (US$ millions, unaudited)
NORANDA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (US$ millions, unaudited)
NORANDA INC. SALES VOLUMES & REALIZED PRICES
NORANDA INC. PRODUCTION VOLUMES
NORANDA INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Millions of US dollars, except as otherwise indicated) (Unaudited)