EX-99.2 6 m08474ex99-2.txt UNAUDITED INTERIM FINANCIAL STATEMENTS OF ALGROUP 1 EXHIBIT NO. 99.2: ALGROUP'S FINANCIAL RESULTS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 FINANCIAL RESULTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2000 Interim consolidated balance sheets at 31 December 1999 and 30 June 2000
31 DECEMBER 30 JUNE 1999 2000 ----------- ------- (unaudited) (In millions of CHF) Assets Fixed assets Property, plant and equipment 8,015 8,065 Accumulated depreciation (5,121) (5,185) Intangible assets and goodwill 282 291 Other noncurrent assets and deferred items 118 104 Investments in affiliates 34 15 Long-term loans and advances 7 6 Total fixed assets 3,335 3,296 Current assets Inventories, net 1,226 1,276 Trade receivables, net 1,087 1,214 Other receivables, prepaid expenses and accrued income 339 522 Short-term advances 74 27 Cash and cash equivalents 611 501 Total current assets 3,337 3,540 Total assets 6,672 6,836
See accompanying notes to the interim consolidated financial statements. 53 2 Interim consolidated balance sheets at 31 December 1999 and 30 June 2000
31 DECEMBER 30 JUNE 1999 2000 ----------- ------- (unaudited) (In millions of CHF) Liabilities and shareholders' equity Share capital 642 679 Consolidated reserves 716 1,466 Total shareholders' equity 1,358 2,145 Minority interests 40 52 Liabilities Long-term provisions 641 611 Long-term debt: Bonds 766 460 Due to banks and other financial institutions 322 372 ----- ----- Total long-term liabilities 1,729 1,443 ===== ===== Current liabilities: Trade payables 751 720 Other liabilities and deferred items 1,089 1,022 Short-term debt: Due to banks and other financial institutions 1,705 1,454 ----- ----- Total current liabilities 3,545 3,196 ----- ----- Total liabilities 5,274 4,639 ----- ----- Total liabilities and shareholders' equity 6,672 6,836 ===== =====
See accompanying notes to the interim consolidated financial statements. 54 3 Interim consolidated income statements
SIX MONTHS SIX MONTHS ENDED ENDED 30 JUNE 30 JUNE 1999 2000 ---------- ---------- (UNAUDITED) (In millions of CHF) Net sales 3,691 4,361 Changes in inventory of work-in-progress and finished goods 23 11 Income from production 3,714 4,372 Material costs (1,827) (2,233) Energy costs (137) (147) Personnel expenses (883) (909) Other operating income and expenses, net (390) (513) Depreciation and amortization (143) (161) Operating income 334 409 Amortization of goodwill (8) (10) Earnings from continuing operations before interest, taxes and minority interest 326 399 Interest income and exchange gains 44 75 Interest expenses and exchange losses (118) (151) Other income, net 1 1 Income from continuing operations before income taxes and minority interest 253 324 Income taxes (50) (89) Income attributable to minorities (4) (5) Income from continuing operations 199 230 Net income from discontinuing operations 139 0 Net income 338 230 Basic earnings per share continuing operations 31.65 -- Diluted earnings per share continuing operations 31.41 -- Basic earnings per share group 53.76 34.76 Diluted earnings per share group 52.43 34.60
See accompanying notes to the interim consolidated financial statements. 55 4 Interim consolidated cash flow statements
SIX MONTHS SIX MONTHS ENDED ENDED 30 JUNE 30 JUNE 1999 2000 ---------- ---------- (UNAUDITED) (In millions of CHF) Income from continuing operations 199 230 Depreciation on property, plant and equipment 139 158 Amortization of intangibles 4 3 Amortization of goodwill 8 10 Increase (decrease) in long-term provisions 18 (15) (Income) from application of the equity method 2 0 (Increase) in net working capital (259) (350) (Increase) in other prepaids and accruals (27) (126) Net cash provided by (used in) continuing operations 84 (90) Net cash provided by discontinuing operations 180 0 Total cash provided by (used in) operating activities 264 (90) Purchase of property, plant and equipment (173) (185) Purchase of intangibles (1) (1) Goodwill from purchase of operations (11) (1) Sale of investments in affiliates, net 7 7 Purchase of consolidated companies (less cash acquired) 0 (23) Sale of consolidated companies (less cash disposed) 2 0 Sale of property, plant and equipment 6 14 Sale of other assets 0 2 (Increase) decrease in loans and advances (18) 56 Net cash used in investing activities continuing (188) (131) Net cash used in investing activities discontinuing (73) 0 Total cash used in investing activities (261) (131) Increase of capital (in 2000: capital repayment from Lonza) 1 277 Increase (decrease) in debts 241 (162) Dividends paid (157) 0 Contribution from (distribution to) minority interests (3) 3 Net cash provided by financing activities continuing 82 118 Net cash provided by financing activities discontinuing 3 0 Total cash provided by financing activities 85 118 Translation adjustments (3) (7) Net increase (decrease) in cash 85 (110) Cash and cash equivalents at 1 January 360 611 Cash and cash equivalents at 30 June 445 501
See accompanying notes to the interim consolidated financial statements. 56 5 Notes to the unaudited interim consolidated financial statements 1 Accounting principles and basis of presentation The consolidated financial statements are reported in Swiss francs (CHF) and are based on the accounts of the individual Subsidiaries of algroup at 30 June, which have been drawn up according to uniform Group accounting principles consistent with those adopted by algroup in its consolidated financial statements for the year ended 31 December 1999 and include all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for fair presentation of the results of the interim periods. The consolidated accounts are rendered in conformity with International Accounting Standards ("IAS"), published by the International Accounting Standards Committee ("IASC"). During 1999, the Group adopted estimated useful lives for its operating assets which more accurately reflect industry practice. The effect of this change reduced depreciation expense for the six months ended 30 June 1999 by CHF 58 million. The effect of this change on net income of continuing operations for the six months ended 30 June 1999 was an increase of CHF 42 million. For comparative purposes, certain prior period amounts were reclassified to conform with the current period's presentation. 2 Discontinuing operations The discontinuing operations are comprised of the following: At the algroup extraordinary shareholders' meeting on 18 October 1999 the shareholders approved the demerger of the chemical business (composed of two divisions of the algroup Group, fine chemicals and specialties and intermediates and additives) and the energy business. The above mentioned activities are treated as discontinuing operations. The net assets of the chemical business were deducted from the algroup Group's equity on 1 November 1999. On 1 November 1999, the shares of Lonza Group were listed on the SWX Swiss Exchange and accordingly the discontinuing operations were included in algroup's consolidated financial statements for the six-month period ended 30 June 1999. In order to reflect the debt-free status effective as of 1 July 1999, as stated in the Separation and Demerger Agreement and related to the above mentioned activities, all the debt and accordingly the interest positions for the six months ended 30 June 1999 are shown under continuing operations. The algroup financial statements reflect the net income of discontinuing operations as a separate item and have been classified in the consolidated income statement as net income from discontinuing operations. 3 Alcan Exchange Offer Following discussions with the European commission's Merger Task Force Alcan, Pechiney and algroup decided on 14 March 2000 to withdraw the Alcan-Pechiney application from the European Commission process and to terminate the Three-Way Combination Agreement as it related to Pechiney. The companies concluded that the divestments which would ultimately be required to meet the objections of the European Commission would seriously undermine the strategic viability of the Three-way Combined Company's operations. On 1 June 2000, Alcan and algroup entered into the Amending Agreement. In the Amending Agreement the parties agreed that the consideration for the Exchange Offer shall be amended 57 6 to 17.1 Alcan Common Shares for one algroup Share. If more than 67% of algroup Shares are tendered in the Exchange Offer, algroup has agreed to pay a dividend of CHF 135 per algroup Share and make a capital repayment equal to CHF 90 per algroup Share to the shareholders of record on the close of business on the second business day prior to the exchange of shares under the Exchange Offer. If more than 67% of the algroup Shares are not tendered the capital repayment will be made on 24 October 2000. Alcan is expected to launch a public Exchange Offer to algroup shareholders for all registered shares in algroup. The tendering of the Exchange Offer is scheduled for the end of August and it is expected that the transaction will be concluded by the end of October 2000. The Exchange Offer is regarded as having succeeded if more than 67% of algroup Shares are exchanged for Alcan Shares. 4 Changes in shareholders' equity
30 JUNE 1999 30 JUNE 2000 ------------ ------------ (In millions of CHF) BEGINNING OF PERIOD 3,101 1,358 Issuance of Shares upon bond conversion 0 312 Net income 338 230 Dividend (157) 0 Translation differences 107 (32) Capital Repayment from Lonza 0 277 ----- ----- END OF PERIOD 3,389 2,145 ===== =====
In the six months ended 30 June 2000 conversion rights were exercised on 365,917 registered shares with a par value of approximately CHF 36.5 million, of these a total of 350 registered shares through the conversion rights related to the 2 1/4% 1995-2002 convertible bond issue, and 365,567 registered shares through the conversion rights related to the 2% 1996-2001 convertible bond issue. Due to the termination of the Three-way Combination Agreement with Alcan and Pechiney, U.S.$ 167 million was paid from Lonza Group to algroup in the six months ended 30 June 2000 in accordance with Combination Agreement. 5 Exchange rates
INCOME STATEMENT BALANCE SHEET HALF YEAR RATE CHF AVERAGE RATE CHF ----------------------- --------------------- 31.12.99 30.06.00 1999 2000 -------- -------- ---- ---- USA Dollar 1 1.59 1.62 1.47 1.65 Canada Dollar 1 1.09 1.09 0.99 1.12 Australia Dollar 1 1.04 0.97 0.95 1.00 Great Britain Pound Sterling 1 2.58 2.45 2.38 2.59 Germany Mark 100 82.02 79.70 81.80 81.06 France Franc 100 24.45 23.76 24.39 24.17 Italy Lira 100 0.082 0.080 0.083 0.081
58 7 6. Segment data
30 JUNE 1999 30 JUNE 2000 ------------------------ ------------------------ SALES BY DIVISION IN MILLIONS OF CHF % IN MILLIONS OF CHF % ----------------- ------------------ ---- ------------------ --- Primary materials and fabricated products 1 512 41 1 850 42 Packaging 1 689 46 1 872 43 Holding and others 4 0 3 0 ------ --- ----- --- SUBTOTAL 3 205 87 3 725 85 Trading 486 13 636 15 ----- --- ----- --- TOTAL 3 691 100 4 361 100 ===== === ===== ===
30 JUNE 1999 30 JUNE 2000 ---------------------- ------------------------ OPERATING INCOME BY DIVISION IN MILLIONS OF CHF % IN MILLIONS OF CHF % ---------------------------- ------------------ ---- ------------------ ---- Primary materials and fabricated products 189 57 239 58 Packaging 165 49 167 41 Holding and others (20) (6) 3 1 --- --- --- --- SUBTOTAL 334 100 409 100 Trading 0 0 0 0 --- --- --- --- TOTAL 334 100 409 100 === === === ===
30 JUNE 1999 30 JUNE 2000 ---------------------- ------------------------ DEPRECIATION & AMORTISATION BY IN MILLIONS OF CHF % IN MILLIONS OF CHF % DIVISION ------------------ ---- ------------------ ----- ------------------------------ Primary materials and fabricated products 66 46 72 45 Packaging 76 53 89 55 Holding and others 1 1 0 0 --- --- --- --- TOTAL 143 100 161 100 === === === ===
59 8
30 JUNE 1999 30 JUNE 2000 --------------------------- -------------------------- INVESTMENTS IN PROPERTY, PLANT BY DIVISION IN MILLIONS OF CHF % IN MILLIONS OF CHF % ------------------- ---- ------------------ ----- Primary materials and fabricated products 90 52 81 44 Packaging 82 47 104 56 Holding and others 1 1 0 0 --- --- --- --- TOTAL 173 100 185 100 === === === ===
PERSONNEL BY PRODUCTION AREA 30 JUNE 1999 % 30 JUNE 2000 % ------------ ---- ------------ ---- Switzerland 3,190 13 3,203 14 EU 12,235 51 12,009 52 Rest of Europe 997 5 972 4 ------ --- ------ --- Europe 16,422 69 16,184 70 North America 6,460 27 5,920 26 Other areas 938 4 954 4 ------ --- ------ --- TOTAL 23,820 100 23,058 100 ====== === ====== ===
PERSONNEL BY DIVISION 30 JUNE 1999 % 30 JUNE 2000 % ------------ ---- ------------ ---- Primary materials and fabricated products 9,698 41 9,828 43 Packaging 13,974 59 13,101 57 Holding and others 148 - 129 - ------ --- ----- --- TOTAL 23,820 100 23,058 100 ====== === ====== ===
60 9 7. Reconciliation Significant Differences Between International Accounting Standards and Generally Accepted Accounting Principles in the United States and Canada. The algroup unaudited interim consolidated financial statements have been prepared in accordance with International Accounting Standards (IAS) of the International Accounting Standards Committee (IASC) which differ in certain significant respects from generally accepted accounting principles in the United States (U.S. GAAP) and Canada (Canadian GAAP). The significant differences that affect the consolidated net income and shareholders' equity are set out below. U.S. and Canadian GAAP have been applied on a basis consistent with that of the consolidated financial statements for the year ended December 31, 1999. Reconciliation of net income to U.S. GAAP
SIX MONTHS ENDED JUNE 30, -------------- 1999 2000 ----- ----- (In millions of CHF) unaudited Net income as reported in the unaudited interim consolidated income statements in accordance with IAS 338 230 Adjustments required to conform with U.S. GAAP: Goodwill amortization (12) (11) Capitalized interest 6 -- Inventories 8 (2) Debt issue costs (1) -- Fixed assets (82) 3 Pensions 14 3 Derivatives (94) 81 Accruals 13 4 Restructuring provisions (14) (1) Other 2 (3) Tax effect of U.S. GAAP adjustments 33 (35) ----- ----- Net income in accordance with U.S. GAAP 211 269 ===== ===== Continuing operations 84 269 Discontinued operations 127 -- ===== ===== Basic earnings per share in accordance with U.S. GAAP: CHF CHF Continuing operations 13.36 40.65 Discontinued operations 20.20 -- ----- ----- Net income 33.56 40.65 ===== ===== Diluted earnings per share in accordance with U.S. GAAP: CHF CHF Continuing operations 14.02 39.80 Discontinued operations 19.20 -- ----- ----- Net income 33.22 39.80 ===== =====
61 10 Reconciliation of net income to Canadian GAAP
SIX MONTHS ENDED JUNE 30, ---------------- 1999 2000 ------- ------ (In millions of CHF) unaudited Net income as reported in the consolidated income statements in accordance with IAS 338 230 Adjustments required to conform with Canadian GAAP: Goodwill amortization and impairment (12) (11) Capitalized interest 6 -- Inventories (2) (1) Debt issue costs (1) -- Fixed assets 7 3 Pensions 14 3 Derivatives (94) (12) Accruals 13 4 Restructuring provisions (14) (1) Other 2 (3) Tax effect of Canadian GAAP adjustments 16 (10) ----- ----- Net income in accordance with Canadian GAAP 273 202 ===== ===== Continuing operations 128 202 Discontinued operations 145 -- ===== ===== Basic earnings per share in accordance with Canadian GAAP: CHF CHF Continuing operations 20.36 30.52 Discontinued operations 23.06 -- ----- ----- Net income 43.42 30.52 ===== ===== Fully diluted earnings per share in accordance with Canadian GAAP: CHF CHF Continuing operations 20.67 30.27 Discontinued operations 21.93 -- ----- ----- Net income 42.60 30.27 ===== =====
62 11 Reconciliation of shareholders' equity to U.S. and Canadian GAAP
DECEMBER 31, 1999 JUNE 30, 2000 -------------------- -------------------- US CANADIAN US CANADIAN GAAP GAAP GAAP GAAP ----- --------- ----- --------- (In millions of CHF) (In millions of CHF) unaudited unaudited Shareholders' equity as reported in the unaudited interim consolidated balance sheets in accordance with IAS 1,358 1,358 2,145 2,145 Adjustments required to conform with U.S. and Canadian GAAP: Goodwill: Cost 582 582 563 563 Amortization (368) (368) (369) (369) Capitalized interest 24 24 24 24 Inventories 1 (1) (1) (1) Debt issue costs 2 2 -- -- Fixed assets (71) (12) (68) (10) Pensions 85 85 88 88 Derivatives (264) (15) (183) (27) Accruals 9 9 13 13 Restructuring provisions -- 6 (2) 5 Other (14) (14) (16) (15) Tax effect of U.S. and Canadian GAAP adjustments 67 (14) 32 (26) ----- ----- ----- ----- Shareholders' equity in accordance with U.S. and Canadian GAAP 1,411 1,642 2,226 2,390 ===== ===== ===== =====
Comprehensive Income Beginning in 1998, U.S. GAAP requires the disclosure of comprehensive income which, for the Group, is net income increased or decreased for translation differences as presented in the notes to Group's interim consolidated financial statements. The following presents the Group's comprehensive income based upon IAS for each the six months ended June 30, 2000 and 1999.
SIX MONTHS ENDED JUNE 30, -------------------- 1999 2000 ---- ---- (In millions of CHF) Net income in accordance with IAS 338 230 Other comprehensive income: Currency translation adjustment 107 (32) --- --- Comprehensive income 445 198 === ===
63 12 NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS (in U.S. dollars except where otherwise stated) 1. BASIS OF PRESENTATION These unaudited pro forma combined financial statements have been prepared to reflect the combination of Alcan Aluminium Limited ("Alcan") and Alusuisse Group Ltd. ("algroup") using the purchase method and certain reorganizational events relating to algroup occurring prior to the combination. These unaudited pro forma combined financial statements have been prepared using Canadian GAAP, which is similar, in all material respects, to U.S. GAAP except as noted in Note 6. The unaudited pro forma combined financial statements are based on the following events which occurred prior to the combination: o Conversion of algroup's convertible debt into algroup common shares prior to the combination. o All of the outstanding shares of algroup are exchanged into Alcan Common Shares, virtually all of which were tendered at the date of combination, October 17, 2000, with the remainder to be exchanged or purchased as permitted under Swiss law which Alcan is currently undertaking. o On October 18, 1999, at an extraordinary shareholders' meeting, the shareholders of algroup approved the demerger of the chemical and energy division. The demerger occurred on November 1, 1999. The operations of the chemical and energy division were treated as discontinued operations in algroup's 1999 consolidated financial statements and consequently are not included in the unaudited pro forma combined statement of income for the year ended December 31, 1999. Also, these unaudited pro forma combined financial statements include the cash contribution of $234 million made by algroup to the chemical and energy division pursuant to the algroup chemicals demerger agreement. o A repayment of capital of CHF 90 per share for every share of algroup totaling $375 million, which was approved by the algroup shareholders on July 17, 2000. The amount was paid on October 13, 2000. o The repayment of $167 million owed to algroup by Lonza Group Ltd. pursuant to the algroup chemicals demerger agreement. The amount was paid to algroup in June 2000. o The payment of a special dividend of CHF 135 per share for every share of algroup totaling $562 million, which was approved by the algroup shareholders on July 17, 2000. The amount was paid on October 13, 2000. The unaudited pro forma combined financial statements have been adjusted to record the impact of businesses to be disposed of pursuant to the European Commission's decision to authorize the combination. See Note 5. 68