-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BOzy9fRd72T7xi2GtVs0GeIGYWLEIOR+rierIFaj/sdKKNwPGSH5cvNxnOQsG1QX M7SSYfMuyQpijWWqLT0n9w== /in/edgar/work/0000950123-00-010423/0000950123-00-010423.txt : 20001114 0000950123-00-010423.hdr.sgml : 20001114 ACCESSION NUMBER: 0000950123-00-010423 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALCAN ALUMINIUM LTD /NEW CENTRAL INDEX KEY: 0000004285 STANDARD INDUSTRIAL CLASSIFICATION: [3334 ] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03677 FILM NUMBER: 761310 BUSINESS ADDRESS: STREET 1: 1188 SHERBROOKE ST WEST CITY: MONTREAL QUEBEC CANA STATE: A8 BUSINESS PHONE: 5148488000 10-Q 1 m07976e10-q.txt ALCAN ALUMINIUM LIMITED 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 Commission file number 1-3677 ALCAN ALUMINIUM LIMITED (Exact name of registrant as specified in its charter) CANADA Inapplicable (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 1188 SHERBROOKE STREET WEST, MONTREAL, QUEBEC, CANADA H3A 3G2 (Address of Principal Executive Offices and Postal Code) (514) 848-8000 (Registrant's Telephone Number, including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ____ At September 30, 2000, the registrant had 207,762,728 shares of common stock (without nominal or par value) outstanding. ================================================================================ 2 PART I - FINANCIAL INFORMATION In this report, all dollar amounts are stated in U.S. Dollars and all quantities in metric tons, or tonnes, unless indicated otherwise. A tonne is 1,000 kilograms, or 2,204.6 pounds. The word "Company" refers to Alcan Aluminium Limited and, where applicable, one or more consolidated subsidiaries. Item 1. FINANCIAL STATEMENTS ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED STATEMENT OF INCOME (unaudited) - --------------------------------------------------------------------------------
Third Quarter Nine Months Periods ended September 30 ----------------- ----------------- (in millions of US$, except per share amounts) 2000 1999 2000 1999 ------- ------- ------ ------- REVENUES Sales and operating revenues $ 1,979 $ 1,820 $ 5,966 $ 5,418 Other income (notes 7 and 9) 25 64 80 142 ------- ------- ------- ------- 2,004 1,884 6,046 5,560 ------- ------- ------- ------- COSTS AND EXPENSES Cost of sales and operating expenses 1,530 1,390 4,544 4,254 Depreciation 120 116 350 351 Selling, administrative and general expenses 89 82 267 288 Research and development expenses 15 17 48 49 Interest (note 11) 12 16 28 60 Other expenses (notes 6 and 10) 27 31 81 108 ------- ------- ------- ------- 1,793 1,652 5,318 5,110 ------- ------- ------- ------- Income before income taxes and other items 211 232 728 450 Income taxes (note 3) 34 71 226 174 ------- ------- ------- ------- Income before other items 177 161 502 276 Equity income (loss) 4 -- 4 (1) Minority interests -- (3) 2 (8) ------- ------- ------- ------- NET INCOME $ 181 $ 158 $ 508 $ 267 Dividends on preference shares 2 3 7 7 ------- ------- ------- ------- NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 179 $ 155 $ 501 $ 260 ------- ------- ------- ------- Net income per common share (note 4) $ 0.85 $ 0.71 $ 2.33 $ 1.19 ------- ------- ------- ------- Dividends per common share $ 0.15 $ 0.15 $ 0.45 $ 0.45 ------- ------- ------- -------
2 3 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED STATEMENT OF RETAINED EARNINGS (unaudited) - -------------------------------------------------------------------------------
Nine months ended September 30 2000 1999 ------- ------- (in millions of US$) RETAINED EARNINGS - BEGINNING OF PERIOD $ 4,227 $ 4,078 Net income 508 267 Amount related to common shares purchased for cancellation (note 12) (299) (171) Dividends - Common (98) (99) - Preference (7) (7) ------- ------- RETAINED EARNINGS - END OF PERIOD $ 4,331 $ 4,068 ======= =======
3 4 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED BALANCE SHEET (unaudited for 2000) - --------------------------------------------------------------------------------
(in millions of US$) September 30, December 31, 2000 1999 ------------- ------------ ASSETS - ------ CURRENT ASSETS Cash and time deposits $ 91 $ 315 Receivables 1,333 1,299 Inventories - Aluminum 906 778 - Raw materials 322 298 - Other supplies 169 200 ------- ------- 1,397 1,276 ------- ------- TOTAL CURRENT ASSETS 2,821 2,890 ------- ------- Deferred charges and other assets 530 525 Property, plant and equipment Cost (excluding Construction work in 11,800 11,771 Construction work in progress 1,886 1,220 Accumulated depreciation 6,631 6,557 ------- ------- 7,055 6,434 ------- ------- Total assets $10,406 $ 9,849 ======= =======
4 5 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED BALANCE SHEET (cont'd) (unaudited for 2000)
- ------------------------------------------------------------------------------------- (in millions of US$, except per share amounts) September 30, December 31, 2000 1999 ------------- ----------------- LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Payables $ 1,288 $ 1,237 Short-term borrowings 355 167 Income and other taxes 50 31 Debt maturing within one year (note 10) 204 311 -------- ------- TOTAL CURRENT LIABILITIES 1,897 1,746 -------- ------- Debt not maturing within one year 1,394 1,011 Deferred credits and other liabilities 579 563 Deferred income taxes 785 781 Minority interests 208 207 SHAREHOLDERS' EQUITY Redeemable non-retractable preference shares 160 160 Common shareholders' equity Common shares (note 12) 1,184 1,230 Retained earnings 4,331 4,227 Deferred translation adjustments (132) (76) -------- ------- 5,383 5,381 -------- ------- Total shareholders' equity 5,543 5,541 -------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 10,406 $ 9,849 -------- ------- COMMON SHAREHOLDERS' EQUITY PER COMMON SHARE $ 25.91 $ 24.65 -------- ------- RATIO OF TOTAL BORROWINGS TO EQUITY 25:75 21:79 -------- -------
5 6 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) - --------------------------------------------------------------------------------
Periods ended September 30 Third Quarter Nine Months (in millions of US$) -------------------- -------------------- 2000 1999 2000 1999 ---- ---- ---- ---- OPERATING ACTIVITIES Net income $ 181 $ 158 $ 508 $ 267 Adjustments to determine cash from operating activities: Depreciation 120 116 350 351 Deferred income taxes 12 (6) 77 35 Equity income - net of dividends (4) -- (3) 2 Change in operating working capital Change in receivables 135 77 (34) 17 Change in inventories (89) (14) (121) 205 Change in payables (92) 70 51 96 Change in income and other taxes payable 15 3 19 32 Changes in operating working capital due to: Deferred translation adjustments (32) 11 (61) (63) Acquisitions, disposals and consolidations/deconsolidations -- (7) (44) (52) ----- ----- ----- ----- (63) 140 (190) 235 Change in deferred charges, other assets, deferred credits and other liabilities -- net (25) (56) 5 4 Gain on sales of businesses -- net 1 (48) (9) (90) Other -- net 25 -- 11 16 ----- ----- ----- ----- CASH FROM OPERATING ACTIVITIES 247 304 749 820 ----- ----- ----- ----- FINANCING ACTIVITIES New debt 633 -- 634 3 Debt repayments (54) (151) (324) (208) ----- ----- ----- ----- 579 (151) 310 (205) Short-term borrowings -- net (228) (12) 171 (4) Common shares purchased for cancellation (230) -- (363) (219) Common shares issued 2 5 18 15 Dividends - Alcan shares (including preference) (35) (36) (105) (106) - Minority interests (2) (1) (2) (4) ----- ----- ----- ----- CASH FROM (USED FOR) FINANCING ACTIVITIES 86 (195) 29 (523) ----- ----- ----- ----- INVESTMENT ACTIVITIES Property, plant and equipment (328) (281) (975) (759) Business acquisitions -- (129) (200) (129) Net proceeds from disposal of businesses, investments and other assets -- 131 173 433 ----- ----- ----- ----- CASH USED FOR INVESTMENT ACTIVITIES (328) (279) (1,002) (455) ----- ----- ----- ----- Effect of exchange rate changes on cash and time deposits (2) (4) (5) (13) ----- ----- ----- ----- INCREASE (DECREASE) IN CASH AND TIME DEPOSITS 3 (174) (229) (171) Cash of companies consolidated (deconsolidated) -- net -- (2) 5 (4) Cash and time deposits -- beginning of period 88 616 315 615 ----- ----- ----- ----- Cash and time deposits -- end of period $91 $ 440 $ 91 $ 440 ===== ===== ===== =====
6 7 ALCAN ALUMINIUM LIMITED INFORMATION BY OPERATING SEGMENT (unaudited)
- -------------------------------------------------------------------------------------------------------------------------- Periods ended September 30 (in millions of US$) SALES AND OPERATING REVENUES --------------------------------------------------------- Third Quarter OPERATING INCOME --------------------------------------------------------- ----------------------- Intersegment Third Parties Third Quarter ------------------------- --------------------------- ------------------------ 2000 1999 2000 1999 2000 1999 -------- -------- -------- --------- ---------- ---------- Primary metal group $ 374 $ 331 $ 403 $ 428 $ 136 $ 116 Global fabrication group 6 - 1,571 1,377 77 95 Intersegment and other items (380) (331) 5 15 19 43 ------ -------- --------- --------- -------- -------- $ - $ - $ 1,979 $ 1,820 232 254 ====== ======== ========= ========= Reconciliation to net income Equity income 4 - Corporate (9) (9) Interest (12) (16) Income taxes (34) (71) --------- -------- Net income $ 181 $ 158 ========= ========
- -------------------------------------------------------------------------------------------------------------------------- SALES AND OPERATING REVENUES --------------------------------------------------------- Nine Months OPERATING INCOME --------------------------------------------------------- ------------------------ Intersegment Third Parties Nine Months ------------------------- --------------------------- ------------------------ 2000 1999 2000 1999 2000 1999 --------- ----------- ----------- ----------- ---------- ---------- Primary metal group $ 1,164 $ 961 $ 1,289 $ 1,218 $ 530 $ 181 Global fabrication group 19 - 4,660 4,180 207 217 Intersegment and other items (1,183) (961) 17 20 54 133 --------- ------- --------- ---------- --------- --------- $ - $ - $ 5,966 $ 5,418 791 531 ========= ========= ========= ========= Reconciliation to net income Equity income (loss) 4 (1) Corporate offices (33) (29) Interest (28) (60) Income taxes (226) (174) -------- -------- Net income $ 508 $ 267 ======== ========
7 8 ALCAN ALUMINIUM LIMITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS September 30, 2000 (Unaudited) (in millions of US$, except per share amounts) 1. COMBINATION AGREEMENT WITH ALUSUISSE GROUP LTD. Pursuant to the combination agreement entered into between the Company and Alusuisse Group Ltd. (algroup), the shareholders of algroup have tendered 6,757,415 shares, representing 99.52% of the registered algroup shares outstanding in exchange for 115,551,797 shares of the Company. Accordingly, the combination between the Company and algroup became effective on October 17, 2000 and algroup is now a subsidiary of the Company. - -------------------------------------------------------------------------------- 2. RECONCILIATION OF CANADIAN AND U.S. GAAP Differences relate principally to accounting for foreign currency translation and accounting for "available for sale" securities. RECONCILIATION OF CANADIAN AND U.S. GAAP ----------------------------------------
Third Quarter Nine Months --------------------------- ------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ----------- $ per $ per $ per $ per Common Common Common Common $ Share $ Share $ Share $ Share --- ------ --- ------ --- ------ --- ------ Net income - as reported 181 158 508 267 Differences due to: Foreign currency translation (2) (1) (6) (8) Other - 3 - 6 --- --- --- --- Net income - U.S. GAAP 179 160 502 265 --- --- --- --- Net income attributable to common shareholders as reported 179 0.85 155 0.71 501 2.33 260 1.19 --- ---- --- ---- --- ---- --- ---- Net income attributable to common shareholders - U.S. GAAP 176 0.84 157 0.71 495 2.30 258 1.17 --- ---- --- ---- --- ---- ---- ----
8 9 2. RECONCILIATION OF CANADIAN AND U.S. GAAP (cont'd)
Third Quarter --------------------------------------------------------------------- 2000 1999 ---------------------------------- --------------------------------- As reported U.S. GAAP As reported U.S. GAAP ---------------- ---------------- ----------------- -------------- Deferred charges and other assets - - September 30 $ 530 $ 532 $ 537 $ 559 Retained earnings - September 30 4,331 4,371 4,068 4,117 Deferred translation adjustments (DTA) - September 30 $(132) $ (188) $ (54) $ (110)
Third Quarter Nine Months -------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Comprehensive income (U.S. GAAP only) Net income $ 179 $ 160 $ 502 $ 265 Net change in deferred translation adjustments (38) 14 (56) (87) Net change in market value of available-for-sale securities (3) (45) (1) (17) ----- ----- ----- ----- Comprehensive income $ 138 $ 129 $ 445 $ 161 ===== ===== ===== ===== Accumulated other comprehensive income (U.S. GAAP only) Accumulated other comprehensive income - beginning of year $(113) $ 21 Change in deferred translation adjustments (56) (87) Change in excess of market value over book value of available-for-sale securities (1) (17) ----- ---- Accumulated other comprehensive income - September 30 $ (170) $ (83) ====== =====
- -------------------------------------------------------------------------------- 3. INCOME TAXES
Third Quarter Nine Months -------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Current $ 22 $ 77 $149 $139 Deferred 12 (6) 77 35 ---- ---- ---- ---- $ 34 $ 71 $226 $174 ==== ==== ==== ====
In the third quarter of 2000, the Company recorded an income tax recovery of $31, representing favourable prior years' tax adjustments in Canada. Also, due to a reduction in corporate income tax rates in Germany, enacted in the third quarter of 2000, a deferred income tax recovery of $12 was recognized representing the impact of the rate change on accumulated deferred income taxes. The composite of the applicable statutory corporate income tax rates in Canada is 40.3% (40.4% for 1999). In 2000, the difference between income taxes calculated at the composite rate and the amounts shown as reported is primarily attributable to prior years tax adjustments described above, investment and other allowances and the effect of the reduced corporate income tax rate in Germany also described above. In 1999, the difference is primarily attributable to reduced rate or tax-exempt items and investment and other allowances, partially offset by the currency revaluation of deferred income taxes. - -------------------------------------------------------------------------------- 9 10 4. NET INCOME PER COMMON SHARE Net income per common share is based on the average number of shares outstanding during the period (third quarter 2000: 210.3 million; 1999: 217.7 million; nine months 2000: 215.3 million; 1999: 219.4 million). As at September 30, 2000, there were 207,762,728 common shares outstanding. - -------------------------------------------------------------------------------- 5. SUPPLEMENTARY INFORMATION
STATEMENT OF CASH FLOWS Third Quarter Nine Months ----------------------- ------------- ------------- 2000 1999 2000 1999 ---- ---- ---- ---- Interest paid $ 35 $ 29 $ 95 $ 97 Income taxes paid $ 20 $ 71 $135 $154
- -------------------------------------------------------------------------------- 6. ASSET WRITE OFFS Included in Other expenses for the third quarter of 2000 are asset write offs in the Primary Metal Group totalling $15. - -------------------------------------------------------------------------------- 7. SALE OF INDIAN ALUMINIUM COMPANY, LIMITED In the second quarter of 2000, the Company completed the sale of its 54.62% interest in Indian Aluminium Company, Limited to Hindalco Industries Limited (Hindalco). Net proceeds from the sale were $162 resulting in a gain of $3, included in Other income. - -------------------------------------------------------------------------------- 8. ACQUISITION OF ALUMINIUM OF KOREA LIMITED In the second quarter of 2000, the Company's subsidiary Alcan Taihan Aluminum Limited (ATA), acquired a 95% interest in Aluminium of Korea Limited for $200 in cash and the assumption of $114 of debt. As a result of the transaction, the Company owns 68% of ATA. - -------------------------------------------------------------------------------- 9. DEMUTUALIZATION OF LIFE INSURANCE COMPANIES During the second quarter of 2000, as a policyholder in Canada and the United States,the Company received proceeds from the demutualization of Sun Life Assurance Company of Canada and Metropolitan Life Insurance Company. As a result of these transactions, a gain of $10 is included in Other income. - -------------------------------------------------------------------------------- 10. DEBT MATURING WITHIN ONE YEAR During the first quarter of 2000, the Company redeemed $100 of 9.5% debentures at a price of 104.64%. The loss on redemption of $3 is included in Other expenses. - -------------------------------------------------------------------------------- 10 11 11. CAPITALIZATION OF INTEREST COSTS Total interest costs in the third quarter and nine months were $34 and $84 (1999: $26 and $89) respectively, of which $22 and $56, (1999: $10 and $29) respectively, were capitalized. - -------------------------------------------------------------------------------- 12. SHARE REPURCHASE PROGRAM Under a normal course issuer bid, which terminates on June 18, 2001, the Company is authorized to repurchase up to 21,800,000 common shares, representing approximately 10% of the outstanding shares. In the third quarter and nine months of 2000, 6,938,100 common shares and 11,238,100 common shares, respectively, were purchased under this authorization. - -------------------------------------------------------------------------------- 13. SUBSEQUENT EVENT To finance a portion of the special shareholder payments made by algroup on October 13, 2000 under the terms of the Combination agreement, on October 12, the Company borrowed CHF920 million which was immediately loaned to algroup. - -------------------------------------------------------------------------------- In the opinion of management, all adjustments necessary for a fair presentation of interim period results have been included in the financial statements. These interim results are not necessarily indicative of results for the full year. 11 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Second Third Quarter Nine Months Quarter -------------- ------------- ------- 2000 1999 2000 1999 2000 ---- ---- ---- ---- ---- Highlights (US$ millions, except per share amounts) Sales and operating revenues 1,979 1,820 5,966 5,418 2,025 Net income 181 158 508 267 153 Net income per common share 0.85 0.71 2.33 1.19 0.70 Economic Value Added (EVA)(R) 36 (6) 119 (171) 31
(R)EVA is a registered trademark of Stern, Stewart & Company The Company reports third quarter consolidated net income of US$181 million compared to US$158 million in the third quarter of 1999 and US$153 million in the previous quarter. After preference share dividends, net income per common share for the quarter is 85 cents compared to 71 cents a year earlier and to 70 cents in the second quarter of 2000. For the first nine months of 2000 earnings per share of US$2.33 almost doubled compared to US$1.19 for the comparable period of 1999. Although there was some softening in demand in certain markets, as evidenced by lower shipment volumes in Alcan's fabrication business, strong overall volumes and improved metal prices contributed to another quarter of solid earnings, and a significant year over year improvement. Economic Value Added (EVA(R)) was higher than in the second quarter and the year over year improvement for the nine-month period was US$290 million. This reflects not only the increase in metal prices but also the benefits derived from Alcan's Full Business Potential (FBP) program.
Second Third Quarter Nine Months Quarter -------------- ------------- ------- Volumes (thousands of tonnes) Shipments Ingot products* 203 211 600 641 204 Fabricated products 534 482 1,591 1,431 546 Fabrication of Customer-owned metal 87 81 252 228 88 ----- ----- ----- ----- ------ Total volume 824 774 2,443 2,300 838 Ingot product realizations 1,726 1,564 1,718 1,466 1,677 (US$ per tonne) Fabricated product realizations 2,648 2,552 2,659 2,591 2,650 (US$ per tonne) Average London Metal Exchange 3-month price 1,587 1,471 1,580 1,338 1,501 (US$ per tonne)
* Includes primary and secondary ingot and scrap 12 13 Sales and operating revenues for the quarter were higher than the year-ago quarter, primarily due to higher fabricated products shipments and improved ingot and fabricated product realizations. Sales and operating revenues were lower than the last quarter, due to lower fabricated products shipments which more than offset the improvement from higher ingot product realizations. Total fabricated product shipments, which include products fabricated from customer-owned metal, reached a level of 621 thousand tonnes (kt) in the quarter, compared to 634 kt in the preceding quarter, and to 563 kt a year earlier. Average ingot product realizations of US$1,726/tonne increased 3% from the second quarter against a 6% increase in the London Metal Exchange (LME) price. This is attributable mainly to the time lag of about one month in pricing ingot products to customers. Fabricated product realizations were essentially unchanged from the preceding quarter, but were 4% higher than the year-ago quarter. Third quarter operating income for the primary metal group improved compared to the year-ago quarter. This reflects higher ingot product realizations as a result of the increased metal prices, partly offset by higher pre-operating expenses for the new Alma smelter and certain asset write offs. Compared to the second quarter of this year, the decline was caused mainly by the above charges, offset in part by an increase in ingot product realizations. In the global fabrication group, operating income was above the previous quarter, which had been adversely affected by the time lag in passing on higher metal prices to customers. However, it was below the year-ago level due in part to a less favourable product mix and to increased costs for natural gas purchases. Also, the weaker Euro had an adverse impact on earnings in dollar terms. In North America, shipments were less than a year ago and the preceding quarter due in large part to a slowing economy as well as a decline in can sheet sales. The trend in European shipments continued to be positive during the quarter. In South America, shipments during the quarter were 45% higher than in the third quarter of 1999, and 5% higher than in the previous quarter as progress continues following the expansion of the Pinda rolling mill. In Asia, volumes were essentially at the same level as in the second quarter. "Intersector and other items" includes the deferral or realization of profits on intersector sales of metal. The reduction from the second quarter of 2000 is due to the fact that in the second quarter, as ingot prices declined, previously deferred profits were realized, while for the third quarter, with rising ingot prices, profits were deferred. The effective income tax rate for the quarter was 16.1%. This reflects a prior year income tax adjustment in Canada, as well as a reduction in deferred tax liabilities due to reduced corporate income tax rates in Germany and the revaluation of deferred income tax balances due to the weaker Canadian dollar. The third quarter of 1999 included a charge of US$2 million for revaluation of deferred income taxes, and the second quarter of 2000 included a credit of US$8 million. The debt:equity ratio at September 30, 2000 was 25:75 compared to 22:78 at the end of the second quarter as well as the year-ago quarter. During the quarter, Alcan repurchased 6.9 million common shares at a cost of US$230 million. Interest expense was US$12 million in the quarter compared to US$16 million a year earlier and US$10 million in the second quarter. The decline from the year-ago quarter is due to higher capitalization of interest for Alma. 13 14
GEOGRAPHIC REVIEW Third Quarter Nine Months Second Quarter ------------- ----------- -------------- (US$ millions) 2000 1999 2000 1999 2000 Net income (Loss) Canada 85 39 238 (2) 68 United State 47 57 120 131 29 South America 10 (2) 25 (3) 7 Europe 24 15 71 46 11 Asia and Pacific 12 47 25 71 7 Other (including eliminations) 3 2 29 24 31 ---- ---- ---- ---- ---- Total 181 158 508 267 153
In Canada, the improvement in net income over the year-ago quarter and compared to the second quarter of 2000 primarily reflects the favourable prior year tax adjustment as well as improved ingot product realizations, offset partly by start-up and pre-operating expenses related to the Alma project and certain asset write offs. In the United States, net income during the quarter was lower than the year-ago level due to a less favourable product mix and to increased costs for natural gas purchases. However, results were higher than in the second quarter of 2000, which was negatively affected by the time lag in passing on higher metal prices to customers, and by an exceptional charge of US$9 million. Operating results in South America improved compared to year-ago levels and the second quarter as a result of higher metal prices and increased rolled product shipments. In Europe, operating net income was higher than both the 1999 third quarter level and the second quarter of 2000, primarily due to the reduction in deferred income tax liabilities in Germany, following the enactment of lower corporate income tax rates. Results in the Asia and Pacific region for the quarter were lower than the year-ago quarter, which included a non-recurring gain of US$37 million related to the sale of shares in Nippon Light Metal Company Ltd in Japan. LIQUIDITY AND CAPITAL RESOURCES OPERATING ACTIVITIES Cash generated from operating activities during the first nine months of 2000 was US$749 million compared to US$820 million in the comparable period of 1999. The increase in net income of US$241 million for the first nine months of 2000, compared to 1999, was more than offset by an increase in working capital. In the first nine months of 1999, operating working capital had been reduced by US$235 million. 14 15 FINANCING ACTIVITIES Cash from (used for) financing activities in the first nine months of 2000 was US$29 million compared to US$(523) million in the same period of 1999. In the third quarter of this year, the Company purchased for cancellation 6.9 million common shares for US$230 million. During the first nine months of this year, total debt increased by US$464 million due to the share repurchase program, as well as to fund the Alma smelter project. The debt:equity ratio at September 30, 2000 was 25:75, compared to 22:78 at the end of the second quarter as well as a year ago. During the first quarter of 2000, the Company redeemed US$100 million of 9.5% debentures at a price of 104.64%. The loss on redemption was US$3 million In the second quarter, the Company repaid, at their maturity date, US$150 million of 5.875% debentures. During the first nine months of 2000, cash and time deposits declined from US$315 million to US$91 million. INVESTMENT ACTIVITIES Capital expenditures during the first nine months of 2000 were US$975 million compared to US$759 million a year earlier. The most important project during the nine-month period was the construction of the Alma, Quebec aluminum smelter. The smelter began production at the end of October. During the second quarter, the Company's subsidiary Alcan Taihan Aluminum Limited (ATA) acquired a 95% interest in Aluminium of Korea Limited for US$200 million in cash and the assumption of US$114 million of debt. As a result of the transaction, the Company owns 68% of ATA. Also in the second quarter, the Company completed the sale of its 54.62% interest in Indian Aluminium Company, Limited (Indal) for net proceeds of US$162 million, resulting in a gain of US$3 million, included in Other Income. FINANCIAL INSTRUMENTS CURRENCY HEDGING FOR ALMA SMELTER Through forward exchange contracts totaling $525 million at September 30, 2000, and maturing over various periods in 2000 and 2001, the Company has hedged its future Canadian dollar commitments for the construction of the new smelter at Alma, Quebec. Any gains or losses from these hedging activities, and related costs, will be included in the capital cost of the new smelter. CURRENCY HEDGING FOR THE AUSTRALIAN DOLLAR Additionally, at September 30, 2000, the Company has hedged $A 483 million of its future $A commitments through forward exchange contracts and options maturing over the next five years. CAUTIONARY STATEMENT Readers are cautioned that forward looking statements contained in this Management's Discussion and Analysis should be read in conjunction with "Cautionary Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995" at Exhibit No. 99. 15 16 PART II. OTHER INFORMATION ITEMS 1. THROUGH 5. The registrant has nothing to report under these items. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule. (Filed herewith) (99) Cautionary statement for purposes of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995. (Filed herewith) (b) Reports on Form 8-K The following reports on Form 8-K were filed during the three months ended September 30, 2000: 1. On August 30, 2000 a report was filed reporting the launch of the public exchange offer for all shares in Alusuisse Group Ltd. 2. On September 27, 2000 a report was filed reporting that the shareholders of Alusuisse Group Ltd. tendered their shares in a solid show of support for the merger of Alusuisse Group Ltd. and Alcan. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALCAN ALUMINIUM LIMITED Dated: November 13, 2000 By: /s/ Glenn R. Lucas -------------------------- Glenn R. Lucas, Treasurer (A Duly Authorized Officer) 16 17 EXHIBIT INDEX
Exhibit Number Description (27) Financial Data Schedule. (99) Cautionary statement for purposes of the "Safe Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
17 EX-27 2 m07976ex27.txt FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Form 10-Q of Alcan Aluminium Limited for the quarter ended 30 September 2000 and is qualfied in its entirety by reference to such financial statements. 1,000,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 91 0 1,333 0 1,397 2,821 13,686 6,631 10,406 1,897 1,394 0 160 1,184 4,199 10,406 5,966 6,046 4,544 4,544 350 0 28 728 226 508 0 0 0 508 2.33 2.33
EX-99 3 m07976ex99.txt CAUTIONARY STATEMENT 1 EXHIBIT NO. 99: CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Written or oral statements made by Alcan or its representatives, including statements set forth in Alcan's Form 10-Q for the quarter ended September 30, 2000, which describe the Company's or management's objectives, projections, estimates, expectations or predictions of the future may be "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "estimates," "anticipates" or the negative thereof or other variations thereon. The Company cautions that, by their nature, forward-looking statements involve risk and uncertainty and that the Company's actual results could differ materially from those expressed or implied in such forward-looking statements or could affect the extent to which a particular projection is realized. Important factors which could cause the Company's actual performance to differ materially from projections or expectations included in forward-looking statements include global aluminum supply and demand conditions, aluminum ingot prices and changes in other raw materials costs and availability, cyclical demand and pricing within the principal markets for the Company's products, changes in government regulations, particularly those affecting environmental, health or safety compliance, economic developments and other factors within the countries in which the Company operates or sells its products and other factors relating to the Company's ongoing operations including, but not limited to, litigation, labour negotiations and fiscal regimes. Copies of the Company's filings may be obtained by contacting the Company or the United States Securities and Exchange Commission. 19 -----END PRIVACY-ENHANCED MESSAGE-----