-----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, BNjMXgwZNLmEevBPmjd1LoVZ4G1j1f9mTZCfIfvO3t8iKpy2U/HwWq+eSe6jAYGV zlJisCW+mOgD9Ssodei8tQ== 0000950123-97-004222.txt : 19970514 0000950123-97-004222.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950123-97-004222 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALCAN ALUMINIUM LTD /NEW CENTRAL INDEX KEY: 0000004285 STANDARD INDUSTRIAL CLASSIFICATION: PRIMARY PRODUCTION OF ALUMINUM [3334] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03677 FILM NUMBER: 97602585 BUSINESS ADDRESS: STREET 1: 1188 SHERBROOKE ST WEST CITY: MONTREAL QUEBEC CANA STATE: A8 BUSINESS PHONE: 5148488000 10-Q 1 FORM 10-Q / ALCAN ALUMINUM 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 MARCH 31, 1997 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 [ ], No [ ] At March 31, 1997, the registrant had 226,935,076 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)
Three months ended March 31 -------------------- 1997 1996 ------ ------ (in millions of US$, except per share amounts) REVENUES Sales and operating revenues........................................... $1,870 $1,999 Other income........................................................... 28 16 ------ ------ 1,898 2,015 ------ ------ COSTS AND EXPENSES Cost of sales and operating expenses................................... 1,450 1,528 Depreciation........................................................... 107 110 Selling, administrative and general expenses........................... 103 108 Research and development expenses...................................... 16 18 Interest............................................................... 25 36 Other expenses......................................................... 10 27 ------ ------ 1,711 1,827 ------ ------ Income before income taxes and other items 187 188 Income taxes (note 2) 45 69 ------ ------ Income before other items................................................ 142 119 Equity income............................................................ 3 6 Minority interests....................................................... (2) -- ------ ------ NET INCOME............................................................... $ 143 $ 125 Dividends on preference shares........................................... 3 5 ------ ------ NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS........................... $ 140 $ 120 ====== ====== NET INCOME PER COMMON SHARE (NOTE 3)..................................... $ 0.62 $ 0.53 ====== ====== DIVIDENDS PER COMMON SHARE............................................... $ 0.15 $ 0.15 ====== ======
2 3 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED STATEMENT OF RETAINED EARNINGS (unaudited)
Three months ended March 31 -------------------- 1997 1996 ------ ------ (in millions of US$) RETAINED EARNINGS -- BEGINNING OF PERIOD................................. $3,217 $2,959 Net income............................................................... 143 125 Dividends -- Common...................................................... 34 34 -- Preference.................................................. 3 5 ------ ------ RETAINED EARNINGS -- END OF PERIOD....................................... $3,323 $3,045 ====== ======
3 4 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED BALANCE SHEET (unaudited for 1997)
MARCH 31 December 31 1997 1996 -------- ----------- (in millions of US$, except per common share amounts) ASSETS CURRENT ASSETS Cash and time deposits..................................................... $ 540 $ 546 Receivables................................................................ 1,399 1,262 Inventories -- Aluminum.................................................... 744 736 -- Raw Materials................................................ 306 325 -- Other supplies............................................... 243 244 ------- --------- 1,293 1,305 ------- --------- 3,232 3,113 ------- --------- Deferred charges and other assets............................................ 303 314 Investments.................................................................. 402 428 Property, plant and equipment Cost....................................................................... 11,404 11,517 Accumulated depreciation................................................... 6,040 6,047 ------- --------- 5,364 5,470 ------- --------- TOTAL ASSETS................................................................. $ 9,301 $ 9,325 ======= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Payables................................................................... $ 1,020 $ 1,008 Short-term borrowings...................................................... 188 178 Income and other taxes..................................................... 74 98 Debt maturing within one year.............................................. 19 19 ------- --------- 1,301 1,303 ------- --------- 1,301 1,303 ------- --------- Debt not maturing within one year............................................ 1,298 1,319 Deferred credits and other liabilities....................................... 758 770 Deferred income taxes........................................................ 982 996 Minority Interests........................................................... 71 73 SHAREHOLDERS' EQUITY Redeemable non-retractable preference shares............................... 203 203 Common shareholders' equity Common shares........................................................... 1,242 1,235 Retained earnings....................................................... 3,323 3,217 Deferred translation adjustments........................................ 123 209 ------- --------- 4,688 4,661 ------- --------- Total shareholders' equity................................................... 4,891 4,864 ------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................... $ 9,301 $ 9,325 ======= ========= COMMON SHAREHOLDERS' EQUITY PER COMMON SHARE................................. $ 20.66 $ 20.57 ======= ========= RATIO OF TOTAL BORROWINGS TO EQUITY.......................................... 23:77 23:77 ======= =========
4 5 ALCAN ALUMINIUM LIMITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
Three months ended March 31 ------------------ 1997 1996 ----- ----- (in millions of US$) OPERATING ACTIVITIES Net income.............................................................. $ 143 $ 125 Adjustments to determine cash from operating activities: Depreciation......................................................... 107 110 Deferred income taxes................................................ (2) 1 Equity income -- net of dividends.................................... (3) (3) Change in operating working capital.................................. (191) (131) Change in deferred charges, other assets, deferred credits and other liabilities -- net...................... 5 (11) Gain on sales of businesses -- net................................... (10) (1) Other -- net......................................................... 9 (16) ----- ----- CASH FROM OPERATING ACTIVITIES............................................ 58 74 FINANCING ACTIVITIES New debt................................................................ 24 6 Debt repayments......................................................... (5) (237) ----- ----- 19 (231) Short-term borrowings -- net............................................ 25 67 Common shares issued.................................................... 7 3 Dividends -- Alcan shareholders (including preference).................. (37) (39) ----- ----- CASH FROM (USED FOR) FINANCING ACTIVITIES................................. 14 (200) INVESTMENT ACTIVITIES Property, plant and equipment........................................... (108) (65) Net proceeds from disposal of businesses and other assets............... 42 339 ----- ----- CASH FROM (USED FOR) INVESTMENT ACTIVITIES................................ (66) 274 Effect of exchange rate changes on cash and time deposits................. (1) (1) ----- ----- INCREASE IN CASH AND TIME DEPOSITS........................................ 5 147 Cash of companies deconsolidated.......................................... (11) -- Cash and time deposits -- beginning of period............................. 546 66 ----- ----- Cash and time deposits -- end of period................................... $ 540 $ 213 ===== =====
5 6 ALCAN ALUMINIUM LIMITED INFORMATION BY PRODUCT SECTOR (unaudited)
Three months ended March 31 ----------------------------------------------------- SALES AND OPERATING REVENUES ----------------------------------- OPERATING Intersector Third parties INCOME ------------- ----------------- ------------- 1997 1996 1997 1996 1997 1996 ---- ---- ------ ------ ---- ---- (in millions of US$) Raw materials and chemicals.................. $113 $119 $ 120 $ 143 $ 8 $ 30 Primary metal................................ 391 511 373 366 166 163 Fabricated products.......................... -- -- 1,372 1,487 65 41 Intersector and other items.................. (504) (630) 5 3 5 16 ---- ---- ------ ------ ---- ---- $ -- $ -- $1,870 $1,999 $244 $250 ==== ==== ====== ====== ==== ==== Reconciliation to net income Equity income.............................. 3 6 Corporate offices.......................... (34) (26) Interest................................... (25) (36) Income taxes............................... (45) (69) ---- ---- NET INCOME................................. $143 $125 ==== ====
6 7 ALCAN ALUMINIUM LIMITED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (UNAUDITED) 1. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Differences relate principally to accounting for deferred income taxes and foreign currency translation.
First Quarter ------------------------------------------- 1997 1996 ------------------- ------------------- AS U.S. As U.S. REPORTED GAAP Reported GAAP -------- ------ -------- ------ (in millions of US$, except per share amounts) Net income......................................... $ 143 $ 142 $ 125 $ 120 ------ ------ ------ ------ Net income attributable to common shareholders..... $ 140 $ 139 $ 120 $ 115 ------ ------ ------ ------ Net income per common share........................ $ 0.62 $ 0.61 $ 0.53 $ 0.51 ------ ------ ------ ------ Deferred income taxes -- March 31.................. $ 982 $ 736 $ 970 $ 750 ------ ------ ------ ------ Retained earnings -- March 31...................... $3,323 $3,625 $3,045 $3,333 ------ ------ ------ ------ Deferred translation adjustments -- March 31....... $ 123 $ 60 $ 256 $ 176 ====== ====== ====== ======
2. INCOME TAXES
First Quarter ----------- 1997 1996 --- --- Current....................................................................... $47 $68 Deferred...................................................................... (2) 1 --- --- $45 $69 === ===
The composite of the applicable statutory corporate income tax rates in Canada is 40.2%. The difference between income taxes calculated at the composite rate and the amounts shown as reported is attributable to prior years' tax adjustments and investment and other allowances. In 1996, the difference is attributable to investment and other allowances and foreign tax rate differences partially offset by exchange. 3. NET INCOME PER COMMON SHARE Net income per common share is based on the average number of shares outstanding during the period (first quarter 1997: 226.8 million; 1996: 226.0 million). As at March 31, 1997, there were 226,935,077 common shares outstanding. 4. SUPPLEMENTARY INFORMATION STATEMENT OF CASH FLOWS
First Quarter ----------- 1997 1996 --- --- Interest paid................................................................. $28 $42 Income taxes paid............................................................. $60 $73 --- ---
7 8 SUMMARIZED FINANCIAL INFORMATION The following is summarized consolidated financial information for Alcan Aluminum Corporation, a wholly-owned subsidiary in the United States.
First Quarter ------------------------ 1997 1996 -------- ----------- RESULTS OF OPERATIONS Revenues............................................................. $865 $ 822 Cost and expenses.................................................... 840 780 ---- ----- Income before incomes taxes.......................................... 25 42 Income taxes......................................................... 10 16 ---- ----- Net income........................................................... $ 15 $ 26 ==== =====
MARCH 31 December 31 1997 1996 -------- ----------- FINANCIAL POSITION Current assets....................................................... $714 $ 868 Current liabilities.................................................. 394 578 ----- ----- Working capital...................................................... 320 290 Property, plant and equipment -- net................................. 755 756 Other liabilities -- net............................................. (200) (186) ----- ----- 875 860 Debt not maturing within one year.................................... 105 105 ----- ----- Net assets........................................................... $770 $ 755 ----- -----
In the above figures, inventories have been valued principally by the last-in, first-out (LIFO) method. In the Company's consolidated financial statements, the average cost method is used. 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. 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS
First quarter Fourth ----------------- quarter 1997 1996 1996 ------ ------ ------- (US$ millions, except per share amounts) Highlights Sales and operating revenues....................................... $1,870 $1,999 $1,800 Net income......................................................... 143 125 72 Net income per common share........................................ 0.62 0.53 0.31
Alcan reported consolidated net income of US$143 million for the quarter ended March 31, 1997, compared to $125 million for the year earlier quarter and $72 million for the fourth quarter of 1996. After preference share dividends, net income per common share for the quarter is 62 cents compared to 53 cents a year earlier and 31 cents in the prior quarter. Results for the first quarter of 1997 include after-tax gains of $36 million or 16 cents per share. These comprise a gain on the sale of downstream businesses in South America of $10 million and a favourable income tax adjustment in Canada related to prior years of $26 million.
First quarter Fourth ----------------- quarter 1997 1996 1996 ------ ------ ------- (thousands of tonnes) Volumes Shipments Ingot products*.................................................. 212 194 201 Fabricated products.............................................. 411 384 380 Fabrication of customer-owned metal................................ 67 56 62 ------ ------ ------ Total volume....................................................... 690 634 643 ====== ====== ====== Ingot product realizations (US$ per tonne)......................... 1,696 1,749 1,566 Fabricated product realizations (US$ per tonne).................... 2,969 3,472 3,101
-------------------- *includes primary and secondary ingot and scrap Sales and operating revenues for the first quarter of 1997 were 4% higher than in the fourth quarter of 1996 but some 6% below the comparable period of 1996. Higher volumes compared to the year-ago quarter were offset by lower price realizations. Total fabricated product volumes, which include products fabricated from customer-owned metal, were 478 thousand tonnes (kt) in the current quarter, some 8% higher than both the most recent quarter and the first quarter of 1996. The lower average price realization for shipments of fabricated products compared to the year-ago first quarter reflects a change in mix caused by business disposals, weaker prices and currency movements. The lower average price realization compared to the fourth quarter of 1996 is due to changes in sales mix and the weaker continental European currencies against the US dollar. Despite higher volumes, cost of sales and operating expenses in the first quarter of 1997 were lower than in the comparable period of 1996 reflecting changes in sales mix, due principally to business disposals, and currency movements. Selling, administrative and general expenses declined by $5 million from the year-ago quarter, largely due to the disposal of certain businesses. The effective tax rate was 24% for the first quarter of 1997 due to the favourable tax adjustment in Canada. Adjusting for this item the effective rate was 38%; the difference between this rate and the Company's composite statutory rate in Canada of 40.2% is attributable principally to investment and other allowances and tax exempt items. 9 10 PRODUCT SECTOR REVIEW Alcan reports selected information by major product sector, viewed on a stand-alone basis. Transactions between product sectors are conducted on an arm's length basis and reflect market-related prices. Thus, profit on all alumina produced by the Company, whether sold to third parties or used in the Company's smelters, is included in the raw materials and chemicals sector. Similarly, income from primary metal operations is mainly profit on metal produced by the Company, whether sold to third parties or used in the Company's fabricating operations. Income from fabricated product businesses represents only the fabricating profit on rolled products and downstream businesses.
First quarter Fourth ----------- quarter 1997 1996 1996 ---- ---- ------- (US$ millions) Operating income Raw materials and chemicals............................................ 8 30 7 Primary metal.......................................................... 166 163 104 Fabricated products.................................................... 65 41 3 Intersector and other items............................................ 5 16 55 --- --- --- 244 250 169 Equity income (Loss)..................................................... 3 6 (10) Corporate offices........................................................ (34) (26) (35) Interest................................................................. (25) (36) (26) Income taxes............................................................. (45) (69) (26) --- --- --- Net income............................................................... 143 125 72 === === ===
Operating profits from raw material and chemical operations were little changed from the fourth quarter but were down from the year-ago first quarter, due mainly to lower contract prices for alumina. Improved results from primary operations over the fourth quarter of 1996 reflect stronger market prices for ingot. The improvement in results from fabricated product businesses is due to higher volumes with a corresponding recovery in profit margins over the fourth quarter of 1996. The fourth quarter of 1996 also included rationalization expenses of $13 million, before tax, in Europe. "Intersector and other items" primarily reflects the deferral or realization of profits on intersector sales of metal. Realizations of such deferred profits were substantial in 1996 due to falling ingot prices at that time. In the first quarter of 1997 profits on intersector sales were deferred as ingot prices increased, but this was offset by the gain on disposal of businesses and interest earned on surplus cash. Alcan recorded a profit from equity-accounted companies of $3 million for the first quarter. The loss for the fourth quarter of 1996 was due to restructuring charges of $12 million at Alcan's 45.6%-owned affiliate in Japan, Nippon Light Metal Company, Ltd. (NLM). The increase in cost of Corporate Offices, compared to a year ago, results from the cost of a major project to re-engineer the finance function with transaction processing concentrated on shared service centres. The benefits of this will be felt throughout the organization. A favourable tax adjustment of $26 million in Canada, arising out of settlement of a dispute relating to prior years, is included in the tax charge for the first quarter of 1997. 10 11 GEOGRAPHIC REVIEW
First quarter Fourth ------------- quarter 1997 1996 1996 ---- ---- ------- (US$ millions) NET INCOME (LOSS) Canada................................................................. $ 85 $ 51 $28 United States.......................................................... 26 21 14 South America.......................................................... 14 6 6 Europe................................................................. 12 13 4 Asia and Pacific....................................................... 13 14 (8) Other (including eliminations)......................................... (7) 20 28 ---- ---- --- NET INCOME............................................................... $143 $125 $72 ==== ==== ===
In Canada, operating net income improved from the fourth quarter due to higher metal prices; also included is the favourable income tax adjustment referred to above. In the United States, net income from operations improved from the previous quarter principally due to higher ingot and fabricated product realizations. Operating results in South America were little changed but the net income includes a $10 million gain on the sale of non-strategic businesses. Despite continued weak business conditions in continental Europe, results improved reflecting higher rolled products shipments. Results in the Asia and Pacific region for the quarter improved as the fourth quarter of 1996 included restructuring charges at NLM. The loss from "Other" in the quarter arises principally from the deferral of unrealized profits on inter-regional sales of ingot. In the first and fourth quarters of 1996 this was favourable as previously deferred profits were recognized. LIQUIDITY AND CAPITAL RESOURCES OPERATING ACTIVITIES Cash generated from operating activities during the first quarter of 1997 was $58 million, down from $74 million in the comparable period of 1996 primarily due to a higher investment in operating working capital, due principally to higher sales volumes. FINANCING ACTIVITIES Cash from financing activities in the first quarter of 1997 was $14 million compared to an outflow in the first quarter of 1996 of $200 million. In the 1996 first quarter, the Company prepaid $232 million of debentures incurring an after-tax charge of $12 million. At March 31,1997 the debt:equity ratio was 23:77 compared to 27:73 a year earlier and unchanged from the December 1996 level. Adjusted for surplus cash, the ratio for the last two quarters improves to 17:83. Total debt at March 31, 1997, was $1,505 million versus $1,811 million at the same date last year. At the end of the first quarter of 1997, Alcan had cash and time deposits of $540 million. INVESTMENT ACTIVITIES Capital expenditures during the first quarter of 1997 were $108 million, compared to $65 million a year earlier. Through the first three months of 1997, net proceeds from disposals of businesses and other assets were $42 million, compared to $339 million a year earlier, most of which was generated by the sale of downstream businesses in the United Kingdom. KEMANO COMPLETION PROJECT ("KCP") On April 14, Alcan served a writ of summons and statement of claim on the Government of British Columbia in a lawsuit seeking compensation for the Company's loss on the project. KCP was rejected by the province more than two years ago, after Alcan had invested CAN$535 million (approximately $460 million) in the project. The action 11 12 reflects Alcan's conviction that the latest negotiation process was incapable of leading to an equitable resolution of the issues. Alcan's investment in KCP was written down in the third quarter of 1995 by an extraordinary after-tax charge to income of $280 million. 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 Not applicable. (b) Reports on Form 8-K None were filed in the quarter ended 31 March 1997. 12 13 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: 13 May 1997 By: /s/ Suresh Thadhani ---------------------------------- Suresh Thadhani Vice President and Chief Financial Officer (Principal Financial Officer and a Duly Authorized Officer) 13 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 540 0 1,399 0 1,293 3,232 11,404 6,040 9,301 1,301 1,298 0 203 1,242 3,446 9,301 1,870 1,898 1,450 1,450 107 0 25 187 45 143 0 0 0 143 0.62 0.62
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