UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended
June 30, 2008
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number:
001-32312
Novelis Inc.
(Exact name of registrant as
specified in its charter)
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Canada
(State or other jurisdiction
of
incorporation or organization)
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98-0442987
(I.R.S. employer
identification number)
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3399 Peachtree Road NE, Suite 1500
Atlanta, Georgia
(Address of principal
executive offices)
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30326
(Zip
Code)
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Telephone:
(404) 814-4200
(Registrants 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 þ No
o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large accelerated
filer o
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Accelerated
filer o
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Non-accelerated
filer þ
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Smaller reporting
company o
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Exchange
Act). Yes o
No þ
As of July 31, 2008, the registrant had 77,459,658 common
shares outstanding. All of the Registrants outstanding
shares were held indirectly by Hindalco Industries Ltd., the
Registrants parent company.
TABLE OF
CONTENTS
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FINANCIAL INFORMATION
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Financial Statements
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Condensed Consolidated Statements of Operations
and Comprehensive Income (Loss) (unaudited) Three Months Ended
June 30, 2008; May 16, 2007 Through June 30, 2007
(Restated); and April 1, 2007 Through May 15, 2007
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2
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Condensed Consolidated Balance Sheets (unaudited)
As of June 30, 2008 and March 31, 2008 (Restated)
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3
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Condensed Consolidated Statements of Cash Flows
(unaudited) Three Months Ended June 30, 2008;
May 16, 2007 Through June 30, 2007 (Restated); and
April 1, 2007 Through May 15, 2007
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4
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Condensed Consolidated Statement of
Shareholders Equity (unaudited) Three Months Ended
June 30, 2008 (Restated as to opening balance)
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5
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Notes to the Condensed Consolidated Financial
Statements (unaudited)
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6
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Managements Discussion and Analysis of
Financial Condition and Results of Operations
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44
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Quantitative and Qualitative Disclosures About
Market Risk
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71
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Controls and Procedures
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75
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OTHER INFORMATION
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Legal Proceedings
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77
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Exhibits
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79
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EX-10.1 EMPLOYMENT LETTER |
EX-10.2 FORM OF NOVELIS LONG-TERM INCENTIVE PLAN |
EX-31.1 SECTION CERTIFICATION OF PEO |
EX-31.2 SECTION 302 CERTIFICATION OF PFO |
EX-32.1 SECTION 906 CERTIFICATION OF PEO |
EX-32.2 SECTION 906 CERTIFICATION OF PFO |
1
PART I.
FINANCIAL INFORMATION
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Item 1.
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Financial
Statements
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Novelis
Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS) (unaudited)
(in millions)
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Three Months
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May 16, 2007
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April 1, 2007
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Ended
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Through
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Through
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June 30, 2008
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June 30, 2007
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May 15, 2007
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(Restated)(A)
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Successor
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Successor
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Predecessor
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Net sales
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$
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3,103
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$
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1,547
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$
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1,281
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Cost of goods sold (exclusive of depreciation and amortization
shown below)
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2,831
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1,436
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1,205
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Selling, general and administrative expenses
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84
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42
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95
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Depreciation and amortization
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116
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53
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28
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Research and development expenses
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12
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13
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6
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Interest expense and amortization of debt issuance
costs net
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40
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25
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26
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(Gain) loss on change in fair value of derivative
instruments net
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(66
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)
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(14
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(20
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Equity in net (income) loss of non-consolidated affiliates
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2
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1
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(1
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Sale transaction fees
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32
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Other (income) expenses net
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22
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11
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4
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3,041
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1,567
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1,375
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Income (loss) before provision (benefit) for taxes on income
(loss) and minority interests share
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62
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(20
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(94
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Provision (benefit) for taxes on income (loss)
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35
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27
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4
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Income (loss) before minority interests share
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27
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(47
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(98
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Minority interests share
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(2
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2
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1
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Net income (loss)
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25
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(45
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(97
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Other comprehensive income (loss) net of tax
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Currency translation adjustment
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10
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(2
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35
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Change in fair value of effective portion of hedges
net
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11
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1
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(1
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Amortization of net actuarial loss for postretirement benefit
plans
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(1
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Other comprehensive income (loss) net of tax
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21
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(1
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33
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Comprehensive income (loss)
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$
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46
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$
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(46
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$
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(64
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(A) |
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See Note 2 Restatement of Financial Statements. |
The accompanying notes are an integral part of these condensed
consolidated financial statements.
2
Novelis
Inc.
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
(in millions, except number of shares)
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As of
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June 30,
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March 31,
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2008
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2008
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(Restated)(A)
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Successor
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Successor
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ASSETS
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Current assets
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Cash and cash equivalents
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$
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296
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$
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326
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Accounts receivable (net of allowances of $1 as of June 30,
2008 and March 31, 2008)
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third parties
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1,577
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1,248
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related parties
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27
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31
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Inventories
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1,577
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1,455
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Prepaid expenses and other current assets
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86
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58
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Current portion of fair value of derivative instruments
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198
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203
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Deferred income tax assets
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111
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125
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Total current assets
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3,872
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3,446
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Property, plant and equipment net
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3,253
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3,357
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Goodwill
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1,868
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1,869
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Intangible assets net
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868
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888
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Investment in and advances to non-consolidated affiliates
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938
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946
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Fair value of derivative instruments net of current
portion
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32
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21
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Deferred income tax assets
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9
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12
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Other long-term assets
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third parties
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92
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102
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related parties
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37
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41
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Total assets
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$
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10,969
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$
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10,682
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LIABILITIES AND SHAREHOLDERS EQUITY
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Current liabilities
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Current portion of long-term debt
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$
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14
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$
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15
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Short-term borrowings
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430
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115
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Accounts payable
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third parties
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1,613
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1,582
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related parties
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61
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55
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Accrued expenses and other current liabilities
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805
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850
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Deferred income tax liabilities
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46
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39
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Total current liabilities
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2,969
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2,656
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Long-term debt net of current portion
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2,553
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2,560
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Deferred income tax liabilities
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695
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701
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Accrued postretirement benefits
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435
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421
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Other long-term liabilities
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599
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672
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7,251
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7,010
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Commitments and contingencies
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Minority interests in equity of consolidated affiliates
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149
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149
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Shareholders equity
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Common stock, no par value; unlimited number of shares
authorized; 77,459,658 shares issued and outstanding as of
June 30, 2008 and March 31, 2008
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Additional paid-in capital
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3,497
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3,497
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Retained earnings (Accumulated deficit)
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5
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(20
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Accumulated other comprehensive income (loss)
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67
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46
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Total shareholders equity
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3,569
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3,523
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Total liabilities and shareholders equity
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$
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10,969
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$
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10,682
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(A) |
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See Note 2 Restatement of Financial Statements. |
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
Novelis
Inc.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in millions)
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Three Months
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May 16, 2007
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April 1, 2007
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Ended
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Through
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Through
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June 30, 2008
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June 30, 2007
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May 15, 2007
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(Restated)(A)
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Successor
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Successor
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Predecessor
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OPERATING ACTIVITIES
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Net income (loss)
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$
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25
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$
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(45
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)
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$
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(97
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)
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Adjustments to determine net cash provided by (used in)
operating activities:
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Depreciation and amortization
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116
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53
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28
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(Gain) loss on change in fair value of derivative
instruments net
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(66
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)
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(14
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(20
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Deferred income taxes
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10
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14
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(18
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Amortization of debt issuance costs
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1
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1
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Write-off and amortization of fair value adjustments
net
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(64
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)
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(6
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)
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Equity in net (income) loss of non-consolidated affiliates
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2
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1
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(1
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Dividends from non-consolidated affiliates
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4
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Minority interests share
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2
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(2
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(1
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Impairment charges on long-lived assets
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1
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(Gain) loss on sales of property, plant and
equipment net
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(1
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)
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Changes in assets and liabilities:
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Accounts receivable
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|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
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|
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(337
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)
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(59
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)
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(21
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)
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related parties
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(2
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)
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|
|
|
|
|
|
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Inventories
|
|
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(129
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)
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70
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|
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(76
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)
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Prepaid expenses and other current assets
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(29
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)
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5
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|
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(7
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)
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Other long-term assets
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8
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|
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(1
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)
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|
|
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(1
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)
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Accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
63
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|
|
|
|
|
|
|
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(62
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)
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related parties
|
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|
11
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|
|
|
1
|
|
|
|
|
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Accrued expenses and other current liabilities
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|
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(5
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)
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|
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(78
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)
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42
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Accrued postretirement benefits
|
|
|
16
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|
|
|
5
|
|
|
|
|
1
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Other long-term liabilities
|
|
|
27
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|
|
|
12
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|
|
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(2
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)
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|
|
|
|
|
|
|
|
|
|
|
|
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Net cash provided by (used in) operating activities
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|
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(351
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)
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|
|
(44
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)
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|
|
|
(230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(33
|
)
|
|
|
(22
|
)
|
|
|
|
(17
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
Changes to investment in and advances to non-consolidated
affiliates
|
|
|
6
|
|
|
|
1
|
|
|
|
|
1
|
|
Proceeds from loans receivable net
related parties
|
|
|
8
|
|
|
|
4
|
|
|
|
|
|
|
Net proceeds from settlement of derivative instruments
|
|
|
34
|
|
|
|
29
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
16
|
|
|
|
13
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
|
|
|
|
92
|
|
|
|
|
|
|
Proceeds from issuance of debt
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
Principal repayments
|
|
|
(4
|
)
|
|
|
(46
|
)
|
|
|
|
(1
|
)
|
Short-term borrowings net
|
|
|
313
|
|
|
|
83
|
|
|
|
|
60
|
|
Dividends minority interests
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
(7
|
)
|
Debt issuance costs
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
(2
|
)
|
Proceeds from the exercise of stock options
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
309
|
|
|
|
115
|
|
|
|
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(26
|
)
|
|
|
84
|
|
|
|
|
(27
|
)
|
Effect of exchange rate changes on cash balances held in
foreign currencies
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
1
|
|
Cash and cash equivalents beginning of period
|
|
|
326
|
|
|
|
102
|
|
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period
|
|
$
|
296
|
|
|
$
|
186
|
|
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
17
|
|
|
$
|
14
|
|
|
|
$
|
13
|
|
Income taxes paid
|
|
$
|
55
|
|
|
$
|
12
|
|
|
|
$
|
9
|
|
Supplemental schedule of non-cash investing and financing
activities related to the Acquisition of Novelis Common Stock
(See Note 1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
|
|
|
|
$
|
(1,244
|
)
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
$
|
(1,866
|
)
|
|
|
|
|
|
Intangible assets
|
|
|
|
|
|
$
|
(859
|
)
|
|
|
|
|
|
Investment in and advances to non-consolidated affiliates
|
|
|
|
|
|
$
|
(610
|
)
|
|
|
|
|
|
Debt
|
|
|
|
|
|
$
|
66
|
|
|
|
|
|
|
|
|
|
(A) |
|
See Note 2 Restatement of Financial Statements. |
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
Novelis
Inc.
CONDENSED
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
(unaudited)
(in millions, except number of shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Earnings
|
|
|
Other
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
(Accumulated
|
|
|
Comprehensive
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit)
|
|
|
Income (Loss)
|
|
|
Total
|
|
|
Successor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2008 (Restated)(A)
|
|
|
77,459,658
|
|
|
$
|
|
|
|
$
|
3,497
|
|
|
$
|
(20
|
)
|
|
$
|
46
|
|
|
$
|
3,523
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
25
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
10
|
|
Change in fair value of effective portion of hedges
net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2008
|
|
|
77,459,658
|
|
|
$
|
|
|
|
$
|
3,497
|
|
|
$
|
5
|
|
|
$
|
67
|
|
|
$
|
3,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
See Note 2 Restatement of Financial Statements. |
The accompanying notes are an integral part of these condensed
consolidated financial statements.
5
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited)
|
|
1.
|
Business
and Summary of Significant Accounting Policies
|
References herein to Novelis, the
Company, we, our, or
us refer to Novelis Inc. and its subsidiaries unless
the context specifically indicates otherwise. References herein
to Hindalco refer to Hindalco Industries Limited. In
October 2007, the Rio Tinto Group purchased all the outstanding
shares of Alcan, Inc. References herein to Alcan
refer to Rio Tinto Alcan Inc.
Description
of Business and Basis of Presentation
Novelis Inc., formed in Canada on September 21, 2004, and
its subsidiaries, is the worlds leading aluminum rolled
products producer based on shipment volume. We produce aluminum
sheet and light gauge products where the end-use destination of
the products includes the construction and industrial, beverage
and food cans, foil products and transportation markets. As of
June 30, 2008, we had operations on four continents: North
America; Europe; Asia and South America, through 32 operating
plants, one research facility and several market-focused
innovation centers in 11 countries. In addition to aluminum
rolled products plants, our South American businesses include
bauxite mining, alumina refining, primary aluminum smelting and
power generation facilities that are integrated with our rolling
plants in Brazil.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with our audited
consolidated financial statements and accompanying notes in our
Annual Report on
Form 10-K/A
for the year ended March 31, 2008 filed with the United
States Securities and Exchange Commission (SEC) on
August 11, 2008. The accompanying unaudited condensed
consolidated financial statements have been prepared pursuant to
SEC
Rule 10-01
of
Regulation S-X.
Certain information and note disclosures normally included in
annual financial statements prepared in accordance with
generally accepted accounting principles in the United States of
America (GAAP) have been condensed or omitted pursuant to those
rules and regulations, although we believe that the disclosures
made are adequate to make the information not misleading.
Acquisition
of Novelis Common Stock and Predecessor and Successor
Reporting
On May 15, 2007, the Company was acquired by Hindalco
through its indirect wholly-owned subsidiary pursuant to a plan
of arrangement (the Arrangement) at a price of $44.93 per share.
The aggregate purchase price for all of the Companys
common shares was $3.4 billion and Hindalco also assumed
$2.8 billion of Novelis debt for a total transaction
value of $6.2 billion. Subsequent to completion of the
Arrangement on May 15, 2007, all of our common shares were
indirectly held by Hindalco.
Our acquisition by Hindalco was recorded in accordance with
Staff Accounting Bulletin No. 103, Push Down Basis
of Accounting Required in Certain Limited Circumstances
(SAB No. 103). In the accompanying condensed
consolidated balance sheets, the consideration and related costs
paid by Hindalco in connection with the acquisition have been
pushed down to us and have been allocated to the
assets acquired and liabilities assumed in accordance with
Financial Accounting Standards Board (FASB) Statement
No. 141, Business Combinations. Due to the impact of
push down accounting, the Companys condensed consolidated
financial statements and certain note presentations for the
three months ended June 30, 2007 are presented in two
distinct periods to indicate the application of two different
bases of accounting between the periods presented: (1) the
period up to, and including, the acquisition date (April 1,
2007 through May 15, 2007, labeled Predecessor)
and (2) the period after that date (May 16, 2007
through June 30, 2007, labeled Successor). The
accompanying condensed consolidated financial statements include
a black line division which indicates that the Predecessor and
Successor reporting entities shown are not comparable.
6
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Interim
Reporting
The unaudited results of operations for the interim periods
shown in these condensed consolidated financial statements,
including the periods shown as Predecessor and Successor, are
not necessarily indicative of operating results for the entire
fiscal year. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements recognize
all adjustments of a normal recurring nature considered
necessary to fairly state our consolidated financial position as
of June 30, 2008 and March 31, 2008; the consolidated
results of our operations and consolidated cash flows for
(1) the three months ended June 30, 2008 and
(2) the periods from May 16, 2007 through
June 30, 2007 (as restated); and from April 1, 2007
through May 15, 2007; and changes in our consolidated
shareholders equity for the three months ended
June 30, 2008.
Dividends
Our board of directors has declared no dividends since
October 26, 2006. Future dividends are at the discretion of
the board of directors and will depend on, among other things,
our financial resources, cash flows generated by our business,
our cash requirements, restrictions under the instruments
governing our indebtedness, being in compliance with the
appropriate indentures and covenants under the instruments that
govern our indebtedness that would allow us to legally pay
dividends and other relevant factors.
Recently
Adopted Accounting Standards
The following accounting standards have been adopted by us
during the three months ended June 30, 2008.
On April 1, 2008, we adopted FASB Statement No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities including an amendment of FASB Statement
No. 115 (FASB Statement No. 159). FASB Statement
No. 159 permits entities to choose to measure financial
instruments and certain other assets and liabilities at fair
value on an
instrument-by-instrument
basis (the fair value option) with changes in fair
value reported in earnings each reporting period. The fair value
option enables some companies to reduce the volatility in
reported earnings caused by measuring related assets and
liabilities differently without applying the complex hedge
accounting requirements under FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities
(FASB Statement No. 133), to achieve similar results.
We already record our derivative contracts and hedging
activities at fair value in accordance with FASB Statement
No. 133. We did not elect the fair value option for any
other financial instruments or certain other financial assets
and liabilities that were not previously required to be measured
at fair value.
On April 1, 2008, we adopted FASB Statement No. 157,
Fair Value Measurements (FASB
Statement No. 157), as it relates to financial assets
and financial liabilities. In February 2008, the FASB issued
FASB Staff
Position No. FAS 157-2,
Effective Date of FASB Statement No. 157, which
delayed our required adoption date of FASB Statement
No. 157 for all nonfinancial assets and nonfinancial
liabilities, except those that are recognized or disclosed at
fair value in the financial statements on at least an annual
basis, until April 1, 2009. Also in February 2008, the FASB
issued FASB Staff Position
No. FAS 157-1,
Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13, which states that FASB
Statement No. 13, Accounting for Leases, and other
accounting pronouncements that address fair value measurements
for purposes of lease classification or measurement under FASB
Statement No. 13 are excluded from the provisions of FASB
Statement No. 157, except for assets and liabilities
related to leases assumed in a business combination that are
required to be measured at fair value under FASB Statement
No. 141 or FASB Statement No. 141 (Revised),
Business Combinations. See Note 15 Fair
Value Measurements regarding our adoption of this standard.
7
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
On April 1, 2008, we adopted FASB Staff Position (FSP)
No. FIN 39-1,
Amendment of FASB Interpretation No. 39, (FSP
FIN 39-1).
FSP
FIN 39-1
amends FASB Statement No. 39, Offsetting of Amounts
Related to Certain Contracts, by permitting entities that
enter into master netting arrangements as part of their
derivative transactions to offset in their financial statements
net derivative positions against the fair value of amounts (or
amounts that approximate fair value) recognized for the right to
reclaim cash collateral or the obligation to return cash
collateral under those arrangements. Our adoption of this
standard did not have a material impact on our consolidated
financial position, results of operations and cash flows.
Recently
Issued Accounting Standards
The following new accounting standards have been issued, but
have not yet been adopted by us as of June 30, 2008, as
adoption is not required until future reporting periods.
In May 2008, the FASB issued Statement No. 162, The
Hierarchy of Generally Accepted Accounting Principles (FASB
Statement No. 162). FASB Statement No. 162 defines the
order in which accounting principles that are generally accepted
should be followed. FASB Statement No. 162 is effective
60 days following the SECs approval of the Public
Company Accounting Oversight Board (PCAOB) amendments to AU
Section 411, The Meaning of Present Fairly in Conformity
with Generally Accepted Accounting Principles. We have not
yet commenced evaluating the potential impact, if any, of the
adoption of FASB Statement No. 162 on our consolidated
financial position, results of operations and cash flows.
In April 2008, the FASB issued Staff Position
No. FAS 142-3,
Determination of Useful Life of Intangible Assets, (FSP
FAS 142-3).
FSP
FAS 142-3
amends the factors that should be considered in developing the
renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under FASB Statement
No. 142, Goodwill and Other Intangible Assets. FSP
FAS 142-3
also requires expanded disclosure related to the determination
of intangible asset useful lives. FSP
FAS 142-3
is effective for fiscal years beginning after December 15,
2008. Earlier adoption is prohibited. We have not yet commenced
evaluating the potential impact, if any, of the adoption of FSP
FAS 142-3
on our consolidated financial position, results of operations
and cash flows.
In March 2008, the FASB issued Statement No. 161,
Disclosures about Derivative Instruments and Hedging
Activities (FASB Statement No. 161), an amendment of
FASB Statement No. 133. FASB Statement No. 161 changes
the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced
disclosures about (i) how and why an entity uses derivative
instruments, (ii) how derivative instruments and related
hedged items are accounted for under FASB Statement No. 133
and its related interpretations and (iii) how derivative
instruments and related hedged items affect an entitys
financial position, results of operations and cash flows. FASB
Statement No. 161 is effective for financial statements
issued for fiscal years and interim periods beginning after
November 15, 2008, with early adoption permitted. FASB
Statement No. 161 permits, but does not require,
comparative disclosures for earlier periods upon initial
adoption. We have not yet commenced evaluating the potential
impact, if any, of the adoption of FASB Statement No. 161
on our consolidated financial position, results of operations,
cash flows or disclosures related to derivative instruments and
hedging activities.
In December 2007, the FASB issued Statement No. 141
(Revised), Business Combinations, (FASB Statement
No. 141(R)) which establishes principles and requirements
for how the acquirer in a business combination
(i) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree, (ii) recognizes
and measures the goodwill acquired in the business combination
or a gain from a bargain purchase, and (iii) determines
what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the
business combination. FASB Statement No. 141(R) also
requires acquirers to estimate the acquisition-date fair value
of any contingent consideration and to recognize any subsequent
changes in the fair value of contingent
8
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
consideration in earnings. We will be required to apply this new
standard prospectively to business combinations for which the
acquisition date is on or after the beginning of the annual
reporting period beginning on or after December 15, 2008,
with the exception of the accounting for valuation allowances on
deferred taxes and acquired tax contingencies. FASB Statement
No. 141(R) amends certain provisions of FASB Statement
No. 109, Accounting for Income Taxes, such that
adjustments made to valuation allowances on deferred taxes and
acquired tax contingencies associated with acquisitions that
closed prior to the effective date of FASB Statement
No. 141(R) would also apply the provisions of FASB
Statement No. 141(R). Early adoption is prohibited. We are
currently evaluating the effects that FASB Statement
No. 141(R) may have on our consolidated financial position,
results of operations and cash flows.
In December 2007, the FASB issued Statement No. 160,
Noncontrolling Interests in Consolidated Financial Statements
(FASB Statement No. 160), which establishes accounting
and reporting standards that require: (i) the ownership
interest in subsidiaries held by parties other than the parent
to be clearly identified and presented in the consolidated
balance sheet within shareholders equity, but separate
from the parents equity; (ii) the amount of
consolidated net income attributable to the parent and the
noncontrolling interest to be clearly identified and presented
on the face of the consolidated statement of operations and
(iii) changes in a parents ownership interest while
the parent retains its controlling financial interest in its
subsidiary to be accounted for consistently. FASB Statement
No. 160 applies to fiscal years beginning after
December 15, 2008. Earlier adoption is prohibited. We have
not yet commenced evaluating the potential impact, if any, of
the adoption of FASB Statement No. 160 on our consolidated
financial position, results of operations and cash flows.
We have determined that all other recently issued accounting
standards will not have a material impact on our consolidated
financial position, results of operations or cash flows, or do
not apply to our operations.
|
|
2.
|
Restatement
of Financial Statements
|
The Company has restated its consolidated financial statements
as of March 31, 2008 and for the period from May 16,
2007 through March 31, 2008. This restatement corrects
non-cash errors relating to our application of purchase
accounting associated with an equity method investment which led
to a misstatement of our provision for income taxes during the
period we were finalizing our purchase accounting. The impact of
the restatement on the period from May 16, 2007 through
June 30, 2007 represented the correction of other
miscellaneous adjustments related to an overstatement of
deferred income tax expense that were deemed to be not material
by management, either individually or in the aggregate. These
adjustments do not have an impact on our compliance with the
financial covenants under our 7.25% Senior Notes or under
our New Senior Secured Credit Facilities (see
Note 9 Debt to our accompanying condensed
consolidated financial statements). See our
Form 10-K/A
filed with the SEC on August 11, 2008 for details of these
corrections, including the effects of the restatement on the
March 31, 2008 balance sheet.
9
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
The following tables highlight the financial statement effect
related to the above corrections for the period from
May 16, 2007 through June 30, 2007.
Our condensed consolidated statement of operations and
comprehensive income (loss) for the period from May 16,
2007 through June 30, 2007 is restated as follows (in
millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 16, 2007 Through June 30, 2007
|
|
|
|
As Previously
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Restatements
|
|
|
Restated
|
|
|
|
Successor
|
|
|
|
|
|
Successor
|
|
|
Net sales
|
|
$
|
1,547
|
|
|
$
|
|
|
|
$
|
1,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and amortization
shown below)
|
|
|
1,436
|
|
|
|
|
|
|
|
1,436
|
|
Selling, general and administrative expenses
|
|
|
42
|
|
|
|
|
|
|
|
42
|
|
Depreciation and amortization
|
|
|
53
|
|
|
|
|
|
|
|
53
|
|
Research and development expenses
|
|
|
13
|
|
|
|
|
|
|
|
13
|
|
Interest expense and amortization of debt issuance
costs net
|
|
|
25
|
|
|
|
|
|
|
|
25
|
|
(Gain) loss on change in fair value of derivative
instruments net
|
|
|
(14
|
)
|
|
|
|
|
|
|
(14
|
)
|
Equity in net (income) loss of non-consolidated affiliates
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Other (income) expenses net
|
|
|
11
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,567
|
|
|
|
|
|
|
|
1,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision (benefit) for taxes on income
(loss) and minority interests share
|
|
|
(20
|
)
|
|
|
|
|
|
|
(20
|
)
|
Provision (benefit) for taxes on income (loss)
|
|
|
36
|
|
|
|
(9
|
)
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interests share
|
|
|
(56
|
)
|
|
|
9
|
|
|
|
(47
|
)
|
Minority interests share
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(54
|
)
|
|
|
9
|
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency translation adjustment
|
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
Change in fair value of effective portion of hedges
net
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) net of tax
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(55
|
)
|
|
$
|
9
|
|
|
$
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Our condensed consolidated statement of cash flows for the
period from May 16, 2007 through June 30, 2007 is
restated as follows (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 16, 2007 Through June 30, 2007
|
|
|
|
As Previously
|
|
|
|
|
|
As
|
|
|
|
Reported
|
|
|
Restatements
|
|
|
Restated
|
|
|
|
Successor
|
|
|
|
|
|
Successor
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(54
|
)
|
|
$
|
9
|
|
|
$
|
(45
|
)
|
Adjustments to determine net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
53
|
|
|
|
|
|
|
|
53
|
|
(Gain) loss on change in fair value of derivative
instruments net
|
|
|
(14
|
)
|
|
|
|
|
|
|
(14
|
)
|
Deferred income taxes
|
|
|
23
|
|
|
|
(9
|
)
|
|
|
14
|
|
Write-off and amortization of fair value adjustments
net
|
|
|
(6
|
)
|
|
|
|
|
|
|
(6
|
)
|
Equity in net (income) loss of non-consolidated affiliates
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Minority interests share
|
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
Changes in assets and liabilities (net of effects from
acquisitions and divestitures):
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable third parties
|
|
|
(59
|
)
|
|
|
|
|
|
|
(59
|
)
|
Inventories
|
|
|
70
|
|
|
|
|
|
|
|
70
|
|
Prepaid expenses and other current assets
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
Other long-term assets
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Accounts payable related parties
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Accrued expenses and other current liabilities
|
|
|
(78
|
)
|
|
|
|
|
|
|
(78
|
)
|
Accrued postretirement benefits
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
Other long-term liabilities
|
|
|
12
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
(44
|
)
|
|
|
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(22
|
)
|
|
|
|
|
|
|
(22
|
)
|
Proceeds from sales of assets
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Changes to investment in and advances to non-consolidated
affiliates
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Proceeds from loans receivable net
related parties
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Net proceeds from settlement of derivative instruments
|
|
|
29
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
13
|
|
|
|
|
|
|
|
13
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
92
|
|
|
|
|
|
|
|
92
|
|
Principal repayments
|
|
|
(46
|
)
|
|
|
|
|
|
|
(46
|
)
|
Short-term borrowings net
|
|
|
83
|
|
|
|
|
|
|
|
83
|
|
Dividends minority interests
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Debt issuance costs
|
|
|
(13
|
)
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
115
|
|
|
|
|
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
84
|
|
|
|
|
|
|
|
84
|
|
Effect of exchange rate changes on cash balances held in
foreign currencies
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents beginning of period
|
|
|
102
|
|
|
|
|
|
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period
|
|
$
|
186
|
|
|
$
|
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
3.
|
Restructuring
Programs
|
The following table summarizes the activity in our restructuring
reserves (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Exit
|
|
|
|
|
|
|
Severance Reserves
|
|
|
Related Reserves
|
|
|
Total
|
|
|
|
|
|
|
North
|
|
|
|
|
|
|
|
|
North
|
|
|
|
|
|
Restructuring
|
|
|
|
Europe
|
|
|
America
|
|
|
Total
|
|
|
Europe
|
|
|
America
|
|
|
Total
|
|
|
Reserves
|
|
|
Successor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2008
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
7
|
|
|
$
|
16
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
24
|
|
Provisions (recoveries) net
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
Cash payments
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
|
|
(2
|
)
|
Adjustments other
|
|
|
|
|
|
|
2
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2008
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories consist of the following (in millions).
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2008
|
|
|
March 31, 2008
|
|
|
|
Successor
|
|
|
Successor
|
|
|
Finished goods
|
|
$
|
355
|
|
|
$
|
357
|
|
Work in process
|
|
|
609
|
|
|
|
638
|
|
Raw materials
|
|
|
526
|
|
|
|
386
|
|
Supplies
|
|
|
88
|
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,578
|
|
|
|
1,456
|
|
Allowances
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
$
|
1,577
|
|
|
$
|
1,455
|
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
Property,
Plant and Equipment
|
Property, plant and equipment net, consists of the
following (in millions).
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2008
|
|
|
March 31, 2008
|
|
|
|
|
|
|
(Restated)
|
|
|
|
Successor
|
|
|
Successor
|
|
|
Land and property rights
|
|
$
|
260
|
|
|
$
|
258
|
|
Buildings
|
|
|
844
|
|
|
|
826
|
|
Machinery and equipment
|
|
|
2,481
|
|
|
|
2,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,585
|
|
|
|
3,544
|
|
Accumulated depreciation and amortization
|
|
|
(413
|
)
|
|
|
(331
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
3,172
|
|
|
|
3,213
|
|
Construction in progress
|
|
|
81
|
|
|
|
144
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment net
|
|
$
|
3,253
|
|
|
$
|
3,357
|
|
|
|
|
|
|
|
|
|
|
12
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Total depreciation expense is shown in the table below (in
millions). We had no material interest capitalized on
construction projects related to property, plant and equipment
for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
May 16, 2007
|
|
|
April 1, 2007
|
|
|
Ended
|
|
Through
|
|
|
Through
|
|
|
June 30, 2008
|
|
June 30, 2007
|
|
|
May 15, 2007
|
|
|
Successor
|
|
Successor
|
|
|
Predecessor
|
Depreciation expense related to property, plant and equipment
|
|
|
$103
|
|
|
|
$49
|
|
|
|
|
$28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
|
Goodwill
and Intangible Assets
|
Goodwill
Goodwill by operating segment is as follows (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
As of
|
|
Operating Segment
|
|
March 31, 2008
|
|
|
Adjustments
|
|
|
June 30, 2008
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
|
|
Successor
|
|
|
North America
|
|
$
|
1,093
|
|
|
$
|
(1
|
)(A)
|
|
$
|
1,092
|
|
Europe
|
|
|
515
|
|
|
|
|
|
|
|
515
|
|
Asia
|
|
|
|
|
|
|
|
|
|
|
|
|
South America
|
|
|
261
|
|
|
|
|
|
|
|
261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,869
|
|
|
$
|
(1
|
)
|
|
$
|
1,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Adjustment for final payment related to the transfer of pension
plans in Canada for employees who elected to transfer their past
service to Novelis. Plan assets transferred exceeded plan
liabilities assumed by $1 million (See
Note 12 Postretirement Benefit Plans). |
Intangible
Assets
The following table summarizes the components of intangible
assets (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2008
|
|
|
March 31, 2008
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Estimated
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Estimated
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Useful
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Useful
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Life
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Life
|
|
|
Tradenames
|
|
$
|
152
|
|
|
$
|
(9
|
)
|
|
$
|
143
|
|
|
|
20 years
|
|
|
$
|
152
|
|
|
$
|
(6
|
)
|
|
$
|
146
|
|
|
|
20 years
|
|
Technology
|
|
|
169
|
|
|
|
(13
|
)
|
|
|
156
|
|
|
|
15 years
|
|
|
|
169
|
|
|
|
(10
|
)
|
|
|
159
|
|
|
|
15 years
|
|
Customer-related intangible assets
|
|
|
482
|
|
|
|
(27
|
)
|
|
|
455
|
|
|
|
20 years
|
|
|
|
484
|
|
|
|
(21
|
)
|
|
|
463
|
|
|
|
20 years
|
|
Favorable energy supply contract
|
|
|
124
|
|
|
|
(17
|
)
|
|
|
107
|
|
|
|
9.5 years
|
|
|
|
124
|
|
|
|
(13
|
)
|
|
|
111
|
|
|
|
9.5 years
|
|
Other favorable contracts
|
|
|
15
|
|
|
|
(8
|
)
|
|
|
7
|
|
|
|
3.3 years
|
|
|
|
15
|
|
|
|
(6
|
)
|
|
|
9
|
|
|
|
3.3 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
942
|
|
|
$
|
(74
|
)
|
|
$
|
868
|
|
|
|
17.2 years
|
|
|
$
|
944
|
|
|
$
|
(56
|
)
|
|
$
|
888
|
|
|
|
17.2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our favorable energy supply contract and other favorable
contracts are amortized over their estimated useful lives using
methods that reflect the pattern in which the economic benefits
are expected to be
13
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
consumed. All other intangible assets are amortized using the
straight-line method over their estimated useful lives.
The components of amortization expense related to intangible
assets are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Total Amortization expense related to intangible assets
|
|
$
|
18
|
|
|
$
|
7
|
|
|
|
$
|
|
|
Less: Amortization expense related to intangible assets included
in Cost of goods sold(A)
|
|
|
5
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense related to intangible assets included in
Depreciation and amortization
|
|
$
|
13
|
|
|
$
|
4
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Relates to amortization of favorable energy and other supply
contracts. |
Estimated total amortization expense related to intangible
assets for each of the five succeeding fiscal years is as
follows (in millions). Actual amounts may differ from these
estimates due to such factors as customer turnover, raw material
consumption patterns, impairments, additional intangible asset
acquisitions and other events.
|
|
|
|
|
Fiscal Year Ending March 31,
|
|
|
|
|
2009 (remaining nine months)
|
|
$
|
46
|
|
2010
|
|
|
60
|
|
2011
|
|
|
56
|
|
2012
|
|
|
55
|
|
2013
|
|
|
55
|
|
|
|
7.
|
Investment
in and Advances to Non-Consolidated Affiliates and Related Party
Transactions
|
The following table summarizes the ownership structure and our
ownership percentage of the non-consolidated affiliates in which
we have an investment as of June 30, 2008, and which we
account for using the equity method. We have no material
investments in affiliates that we account for using the cost
method.
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
Affiliate Name
|
|
Ownership Structure
|
|
Percentage
|
|
|
Aluminium Norf GmbH
|
|
Corporation
|
|
|
50
|
%
|
Consorcio Candonga
|
|
Unincorporated Joint Venture
|
|
|
50
|
%
|
MiniMRF LLC
|
|
Limited Liability Company
|
|
|
50
|
%
|
Deutsche Aluminium Verpackung Recycling GmbH
|
|
Corporation
|
|
|
30
|
%
|
France Aluminium Recyclage S.A.
|
|
Public Limited Company
|
|
|
20
|
%
|
14
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
The following table summarizes the condensed results of
operations of our equity method affiliates (on a 100% basis, in
millions) on a historical basis of accounting. These results do
not include the incremental depreciation and amortization
expense that we record in our equity method accounting, which
arises as a result of the amortization of fair value adjustments
we made to our investments in non-consolidated affiliates due to
the Arrangement. For the three months ended June 30, 2008
and the period from May 16, 2007 through June 30,
2007, we recorded incremental depreciation and amortization
expense, net of tax of $9 million and $3 million,
respectively, as part of our equity method accounting for these
affiliates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
May 15, 2007
|
|
|
Net sales
|
|
$
|
157
|
|
|
$
|
85
|
|
|
$
|
45
|
|
Costs, expenses and provisions for taxes on income
|
|
|
142
|
|
|
|
81
|
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
15
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in the accompanying condensed consolidated financial
statements are transactions and balances arising from business
we conduct with these non-consolidated affiliates, which we
classify as related party transactions and balances. We earned
less than $1 million of interest income on a loan due from
Aluminum Norf GmbH during each of the following periods: the
three months ended June 30, 2008; the period from
May 16, 2007 through June 30, 2007 and the period from
April 1, 2007 through May 15, 2007. The following
table describes the nature and amounts of significant
transactions that we had with related parties (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Purchases of tolling services and electricity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aluminium Norf GmbH(A)
|
|
$
|
71
|
|
|
$
|
41
|
|
|
|
$
|
21
|
|
Consorcio Candonga(B)
|
|
|
3
|
|
|
|
2
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchases from related parties
|
|
$
|
74
|
|
|
$
|
43
|
|
|
|
$
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
We purchase tolling services (the conversion of customer-owned
metal) from Aluminium Norf GmbH. |
|
(B) |
|
We purchase electricity from Consorcio Candonga for our
operations in South America. |
The following table describes the period-end account balances
that we have with these non-consolidated affiliates, shown as
related party balances in the accompanying condensed
consolidated balance sheets (in millions). We have no other
material related party balances.
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2008
|
|
|
March 31, 2008
|
|
|
|
Successor
|
|
|
Successor
|
|
|
Accounts receivable(A)
|
|
$
|
27
|
|
|
$
|
31
|
|
Other long-term receivables(A)
|
|
$
|
37
|
|
|
$
|
41
|
|
Accounts payable(B)
|
|
$
|
61
|
|
|
$
|
55
|
|
|
|
|
(A) |
|
The balances represent current and non-current portions of a
loan due from Aluminium Norf GmbH. |
|
(B) |
|
We purchase tolling services from Aluminium Norf GmbH and
electricity from Consorcio Candonga. |
15
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
8.
|
Accrued
Expenses and Other Current Liabilities
|
Accrued expenses and other current liabilities are comprised of
the following (in millions).
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2008
|
|
|
March 31, 2008
|
|
|
|
Successor
|
|
|
Successor
|
|
|
Accrued compensation and benefits
|
|
$
|
125
|
|
|
$
|
141
|
|
Accrued settlement of legal claim
|
|
|
39
|
|
|
|
39
|
|
Accrued interest payable
|
|
|
41
|
|
|
|
15
|
|
Accrued income taxes
|
|
|
8
|
|
|
|
35
|
|
Current portion of fair value of unfavorable sales contracts
|
|
|
233
|
|
|
|
242
|
|
Current portion of fair value of derivative instruments
|
|
|
120
|
|
|
|
148
|
|
Other current liabilities
|
|
|
239
|
|
|
|
230
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
805
|
|
|
$
|
850
|
|
|
|
|
|
|
|
|
|
|
Debt consists of the following (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
June 30, 2008
|
|
|
|
March 31, 2008
|
|
|
|
|
|
|
|
|
|
Unamortized
|
|
|
|
|
|
|
|
|
|
Unamortized
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
Fair Value
|
|
|
Carrying
|
|
|
|
|
|
|
Fair Value
|
|
|
Carrying
|
|
|
|
Rates(A)
|
|
|
Principal
|
|
|
Adjustments(B)
|
|
|
Value
|
|
|
|
Principal
|
|
|
Adjustments(B)
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
|
|
|
Novelis Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.25% Senior Notes, due February 2015
|
|
|
7.25
|
%
|
|
$
|
1,399
|
|
|
$
|
65
|
|
|
$
|
1,464
|
|
|
|
$
|
1,399
|
|
|
$
|
67
|
|
|
$
|
1,466
|
|
Floating rate Term Loan facility, due July 2014
|
|
|
4.79
|
%
|
|
|
297
|
|
|
|
|
|
|
|
297
|
|
|
|
|
298
|
|
|
|
|
|
|
|
298
|
|
Novelis Corporation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floating rate Term Loan facility, due July 2014
|
|
|
4.79
|
%(C)
|
|
|
653
|
|
|
|
|
|
|
|
653
|
|
|
|
|
655
|
|
|
|
|
|
|
|
655
|
|
Novelis Switzerland S.A.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligation, due January 2020 (Swiss francs (CHF)
53 million)
|
|
|
7.50
|
%
|
|
|
52
|
|
|
|
(3
|
)
|
|
|
49
|
|
|
|
|
54
|
|
|
|
(4
|
)
|
|
|
50
|
|
Capital lease obligation, due August 2011 (CHF 3 million)
|
|
|
2.49
|
%
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
|
|
|
3
|
|
|
|
|
|
|
|
3
|
|
Novelis Korea Limited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank loan, due October 2010
|
|
|
5.44
|
%
|
|
|
100
|
|
|
|
|
|
|
|
100
|
|
|
|
|
100
|
|
|
|
|
|
|
|
100
|
|
Bank loans, due September 2008 through June 2011 (KRW
1 billion)
|
|
|
3.56
|
%(D)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt, due April 2008 through December 2012
|
|
|
1.64
|
%(D)
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
|
|
2,505
|
|
|
|
62
|
|
|
|
2,567
|
|
|
|
|
2,512
|
|
|
|
63
|
|
|
|
2,575
|
|
Less: current portion
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt net of current portion
|
|
|
|
|
|
$
|
2,491
|
|
|
$
|
62
|
|
|
$
|
2,553
|
|
|
|
$
|
2,497
|
|
|
$
|
63
|
|
|
$
|
2,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
|
(A) |
|
Interest rates are as of June 30, 2008 and exclude the
effects of accretion/amortization of fair value adjustments as a
result of the Arrangement. |
|
(B) |
|
Debt was recorded at fair value as a result of the Arrangement. |
|
(C) |
|
Excludes the effect of any related interest rate swaps. See
New Senior Secured Credit Facilities. |
|
(D) |
|
Weighted average interest rate. |
New
Senior Secured Credit Facilities
On July 6, 2007, we entered into new senior secured credit
facilities with a syndicate of lenders led by affiliates of UBS
and ABN AMRO (New Credit Facilities) providing for aggregate
borrowings of up to $1.76 billion. The New Credit
Facilities consist of (1) a $960 million seven-year
Term Loan facility (Term Loan facility) and (2) an
$800 million five year multi-currency asset-based revolving
credit line and letter of credit facility (ABL facility).
We incurred debt issuance costs on our New Credit Facilities
totaling $32 million. These fees are included in Other
long-term assets third parties and are being
amortized over the life of the related borrowing in Interest
expense and amortization of debt issuance costs net
using the effective interest amortization method
for the Term Loan facility and the straight-line method for the
ABL facility. The unamortized amount of these costs was
$25 million and $27 million as of June 30, 2008
and March 31, 2008, respectively.
During the quarter ended December 31, 2007, we entered into
interest rate swaps to fix the variable LIBOR interest rate for
up to $600 million of our floating rate Term Loan facility
at effective weighted average interest rates and amounts
expiring as follows: (i) 4.1% on $600 million through
September 30, 2008, (ii) 4.0% on $500 million
through March 31, 2009 and (iii) 4.0% on
$400 million through March 31, 2010. We are still
obligated to pay any applicable margin, as defined in our New
Credit Facilities, in addition to these interest rates.
7.25% Senior
Notes
On February 3, 2005, we issued $1.4 billion aggregate
principal amount of senior unsecured debt securities (Senior
Notes). The Senior Notes were priced at par, bear interest at
7.25% and mature on February 15, 2015.
As a result of the Arrangement, the Senior Notes were recorded
at their fair value of $1.474 billion based on their market
price of 105.25% of $1,000 face value per bond as of
May 14, 2007. The incremental fair value of
$74 million is being amortized to interest income over the
remaining life of the Senior Notes in Interest expense and
amortization of debt issuance costs net using
the effective interest amortization method. Due to
the change in the market price of our senior notes from 105.25%
as of May 14, 2007 to 94.25% as of June 30, 2008, the
estimated fair value of this debt has decreased
$155 million to $1.318 billion.
Short-Term
Borrowings and Lines of Credit
As of June 30, 2008, our short-term borrowings were
$430 million consisting of (1) $359 million of
short-term loans under our ABL facility, (2) a
$40 million short-term loan in Korea and
(3) $31 million in bank overdrafts. As of
June 30, 2008, $30 million of our ABL facility was
utilized for letters of credit and we had $411 million in
remaining availability under this revolving credit facility.
17
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
As of June 30, 2008, we had an additional $158 million
under letters of credit in Korea not included in our revolving
credit facility. The weighted average interest rate on our total
short-term borrowings was 3.63% and 4.12% as of June 30,
2008 and March 31, 2008, respectively.
|
|
10.
|
Accumulated
Other Comprehensive Income (Loss)
|
Other comprehensive income (loss) is comprised of the following
(in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
May 15,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Net change in foreign currency translation adjustments
|
|
$
|
10
|
|
|
$
|
(13
|
)
|
|
|
$
|
31
|
|
Net change in fair value of effective portion of hedges
|
|
|
19
|
|
|
|
2
|
|
|
|
|
(1
|
)
|
Amortization of net actuarial loss for postretirement benefit
plans
|
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income (loss), before income tax effect
|
|
|
29
|
|
|
|
(11
|
)
|
|
|
|
29
|
|
Income tax effect
|
|
|
(8
|
)
|
|
|
10
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
$
|
21
|
|
|
$
|
(1
|
)
|
|
|
$
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss), net of income tax
effects, is comprised of the following (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
June 30, 2008
|
|
|
|
March 31, 2008
|
|
|
|
|
|
|
|
(Restated)
|
|
|
|
Successor
|
|
|
|
Successor
|
|
|
Foreign currency translation adjustments
|
|
$
|
69
|
|
|
|
$
|
59
|
|
Fair value of effective portion of hedges net
|
|
|
11
|
|
|
|
|
|
|
Postretirement benefit plans:
|
|
|
|
|
|
|
|
|
|
Pension and other benefits
|
|
|
(13
|
)
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
$
|
67
|
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
|
Share-Based
Compensation
|
Novelis
Long-Term Incentive Plan
In June 2008, our board of directors authorized the Novelis
Long-Term Incentive Plan FY 2009 FY 2012 (2009 LTIP)
covering the performance period from April 1, 2008 through
March 31, 2012. Under the 2009 LTIP, phantom stock
appreciation rights (SARs) are to be granted to certain of our
executive officers and key employees. The SARs will vest at the
rate of 25% per year, subject to performance criteria (see
below) and expire seven years from their grant date. Each SAR is
to be settled in cash based on the difference between the market
value of one Hindalco share on the date of grant compared to the
date of exercise, converted from Indian rupees to
U.S. dollars at the time of exercise. The amount of cash
paid would be limited to (i) 2.5 times the target payout if
exercised within one year of vesting or (ii) 3 times the
target payout if exercised after one year of vesting. The SARs
do not transfer any shareholder rights in Hindalco to a
participant. As of June 30, 2008, no SARs have been awarded.
18
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
The performance criterion for vesting is based on the actual
overall Novelis Operating Earnings before Interest,
Depreciation, Amortization and Taxes (Operating EBITDA, as
defined in the 2009 LTIP) compared to the target Operating
EBITDA established and approved each fiscal year. The minimum
threshold for vesting each year is 75% of each annual target
Operating EBITDA, at which point 75% of the SARs for that period
would vest, with an equal pro rata amount of SARs vesting
through 100% achievement of the target.
Pre-Acquisition
Share-Based Compensation Expense
As a result of our acquisition by Hindalco on May 15, 2007,
all of our share-based compensation awards (except for our
Recognition Awards) were accelerated to vest, cancelled and
settled in cash using the $44.93 purchase price per common share
paid by Hindalco in the transaction. Compensation expense
resulting from the accelerated vesting of plan awards, totaling
$45 million is included in Selling, general and
administrative expenses in our condensed consolidated
statement of operations for the period from April 1, 2007
through May 15, 2007.
Total Share-Based Compensation Expense for the respective
periods is presented in the table below (in millions). These
amounts are included in Selling, general and administrative
expenses in our condensed consolidated statements of
operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Recognition Awards
|
|
$
|
0.1
|
|
|
$
|
0.4
|
|
|
|
$
|
1.5
|
|
Novelis 2006 Incentive Plan (stock options)
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
|
|
14.5
|
|
Novelis 2006 Incentive Plan (SARs)
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
|
|
5.6
|
|
Novelis Conversion Plan of 2005
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
|
|
23.8
|
|
Stock Price Appreciation Unit Plan
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
|
|
(0.5
|
)
|
Deferred Share Unit Plan for Non-Executive Directors
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
|
|
0.2
|
|
Novelis Founders Performance Awards
|
|
|
n.a.
|
|
|
|
n.a.
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Share-Based Compensation Expense
|
|
$
|
0.1
|
|
|
$
|
0.4
|
|
|
|
$
|
45.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n.a. not applicable
19
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
12.
|
Postretirement
Benefit Plans
|
Components of net periodic benefit cost for all of our
significant postretirement benefit plans are shown in the table
below (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefit Plans
|
|
|
Other Postretirement Benefit Plans
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Service cost
|
|
$
|
10
|
|
|
$
|
6
|
|
|
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
|
$
|
1
|
|
Interest cost
|
|
|
15
|
|
|
|
6
|
|
|
|
|
6
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
1
|
|
Expected return on assets
|
|
|
(13
|
)
|
|
|
(5
|
)
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Curtailment/settlement losses
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
13
|
|
|
$
|
7
|
|
|
|
$
|
7
|
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The expected long-term rate of return on plan assets is 6.9% in
fiscal 2009.
Employer
Contributions to Plans
For pension plans, our policy is to fund an amount required to
provide for contractual benefits attributed to service to date,
and amortize unfunded actuarial liabilities typically over
periods of 15 years or less. We also participate in savings
plans in Canada and the U.S., as well as defined contribution
pension plans in the U.S., U.K., Canada, Germany, Italy,
Switzerland, Malaysia and Brazil. We contributed the following
amounts to all plans, including the Alcan plans that cover our
employees (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Funded pension plans
|
|
$
|
4
|
|
|
$
|
4
|
|
|
|
$
|
4
|
|
Unfunded pension plans
|
|
|
4
|
|
|
|
2
|
|
|
|
|
2
|
|
Savings and defined contribution pension plans
|
|
|
5
|
|
|
|
2
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contributions
|
|
$
|
13
|
|
|
$
|
8
|
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the remainder of fiscal 2009, we expect to contribute an
additional $31 million to our funded pension plans,
$13 million to our unfunded pension plans and
$13 million to our savings and defined contribution plans.
During the quarter ended June 30, 2008, we finalized the
pension transfer in Canada for those employees who elected to
transfer their past service from Alcan to Novelis. During the
quarter, Alcan transferred pension assets of $50 million
and past service liability of $49 million to the Novelis
Pension Plan (Canada). We recorded the $1 million
difference between transferred plan assets and liabilities as an
adjustment to Goodwill (see Note 6
Goodwill and Intangible Assets).
20
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
13.
|
Currency
Losses (Gains)
|
The following currency losses (gains) are included in the
accompanying condensed consolidated statements of operations (in
millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Net loss (gain) on change in fair value of currency derivative
instruments(A)
|
|
$
|
(32
|
)
|
|
$
|
(16
|
)
|
|
|
$
|
(10
|
)
|
Net loss (gain) on translation of monetary assets and
liabilities(B)
|
|
|
20
|
|
|
|
7
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(12
|
)
|
|
$
|
(9
|
)
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Included in (Gain) loss on change in fair value of derivative
instruments net.
|
|
(B) |
|
Included in Other (income) expenses net.
|
The following currency gains (losses) are included in
Accumulated other comprehensive income (loss) in the
accompanying condensed consolidated balance sheets (net of tax
effect and in millions).
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
March 31, 2008
|
|
|
|
|
|
|
(Restated)
|
|
|
|
Successor
|
|
|
Successor
|
|
|
Cumulative currency translation adjustment beginning
of period
|
|
$
|
59
|
|
|
$
|
|
|
Effect of changes in exchange rates
|
|
|
10
|
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
Cumulative currency translation adjustment end of
period
|
|
$
|
69
|
|
|
$
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
14.
|
Financial
Instruments and Commodity Contracts
|
In conducting our business, we use various derivative and
non-derivative instruments to manage the risks arising from
fluctuations in exchange rates, interest rates, aluminum prices
and energy prices. Such instruments are used for risk management
purposes only. We may be exposed to losses in the future if the
counterparties to the contracts fail to perform. We are
satisfied that the risk of such non-performance is remote, due
to our monitoring of credit exposures.
Certain contracts are designated as hedges of either net
investment or cash flows. For these contracts we recognize the
change in fair value of the ineffective portion of the hedge as
a gain or loss in our current period results of operations. We
include the change in fair value of the effective and interest
portions of these hedges in Accumulated other comprehensive
income (loss) within Shareholders equity in the
accompanying condensed consolidated balance sheets.
Our condensed consolidated statement of operations for the three
months ended June 30, 2008 includes a gain of
$22 million presented in Other comprehensive income
(loss) net of tax for the change in fair value
of the effective portion of our cash flow hedges. As of
June 30, 2008, we expect to realize $3 million of
effective net gains during the next twelve months. The maximum
period over which we have hedged our exposure to cash flow
variability is through November 2016.
For the three months ended June 30, 2008, we recognized
gains of $38 million presented in Other comprehensive
income (loss) net of tax for the change in fair
value of the effective portion of our net investment hedges. As
of June 30, 2008, we expect to realize $10 million of
effective net losses during the next twelve months. The maximum
period over which we have hedged our exposure to net investment
variability is through February 2015.
21
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
The fair values of our financial instruments and commodity
contracts as of June 30, 2008 and March 31, 2008 were
as follows (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2008
|
|
|
|
Maturity Dates
|
|
|
|
|
|
|
|
Net Fair
|
|
|
|
(Fiscal Year)
|
|
Assets
|
|
|
Liabilities
|
|
|
Value
|
|
|
Successor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
2009 through 2012
|
|
$
|
50
|
|
|
$
|
(77
|
)
|
|
$
|
(27
|
)
|
Cross-currency swaps
|
|
2009 through 2015
|
|
|
7
|
|
|
|
(159
|
)
|
|
|
(152
|
)
|
Interest rate currency swaps
|
|
2009 through 2011
|
|
|
14
|
|
|
|
|
|
|
|
14
|
|
Interest rate swaps
|
|
2009 through 2010
|
|
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
Aluminum forward contracts
|
|
2009 through 2011
|
|
|
122
|
|
|
|
(28
|
)
|
|
|
94
|
|
Aluminum options
|
|
2009 through 2011
|
|
|
6
|
|
|
|
(4
|
)
|
|
|
2
|
|
Electricity swap
|
|
2017
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
Embedded derivative instruments
|
|
2009
|
|
|
|
|
|
|
(4
|
)
|
|
|
(4
|
)
|
Natural gas swaps
|
|
2009 through 2010
|
|
|
9
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value
|
|
|
|
|
230
|
|
|
|
(277
|
)
|
|
|
(47
|
)
|
Less: current portion(A)
|
|
|
|
|
198
|
|
|
|
(120
|
)
|
|
|
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent portion(A)
|
|
|
|
$
|
32
|
|
|
$
|
(157
|
)
|
|
$
|
(125
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2008
|
|
|
|
Maturity Dates
|
|
|
|
|
|
|
|
Net Fair
|
|
|
|
(Fiscal Year)
|
|
Assets
|
|
|
Liabilities
|
|
|
Value
|
|
|
Successor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts
|
|
2009 through 2012
|
|
$
|
47
|
|
|
$
|
(116
|
)
|
|
$
|
(69
|
)
|
Cross-currency swaps
|
|
2009 through 2015
|
|
|
19
|
|
|
|
(189
|
)
|
|
|
(170
|
)
|
Interest rate currency swaps
|
|
2009 through 2011
|
|
|
4
|
|
|
|
|
|
|
|
4
|
|
Interest rate swaps
|
|
2009 through 2010
|
|
|
|
|
|
|
(15
|
)
|
|
|
(15
|
)
|
Aluminum forward contracts
|
|
2009 through 2011
|
|
|
134
|
|
|
|
(9
|
)
|
|
|
125
|
|
Aluminum options
|
|
2009 through 2011
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Electricity swap
|
|
2017
|
|
|
14
|
|
|
|
|
|
|
|
14
|
|
Embedded derivative instruments
|
|
2009
|
|
|
|
|
|
|
(20
|
)
|
|
|
(20
|
)
|
Natural gas swaps
|
|
2009 through 2010
|
|
|
5
|
|
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fair value
|
|
|
|
|
224
|
|
|
|
(349
|
)
|
|
|
(125
|
)
|
Less: current portion(A)
|
|
|
|
|
203
|
|
|
|
(148
|
)
|
|
|
55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent portion(A)
|
|
|
|
$
|
21
|
|
|
$
|
(201
|
)
|
|
$
|
(180
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
The amounts of the current and long-term portions of fair values
under assets are each presented on the face of our accompanying
condensed consolidated balance sheets. The amounts of the
current and noncurrent portions of fair values under liabilities
are included in Accrued expenses and other current
liabilities and Other long-term liabilities,
respectively, in the accompanying condensed consolidated balance
sheets. |
22
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
15.
|
Fair
Value Measurements
|
FASB Statement No. 157 defines fair value, establishes a
framework for measuring fair value and expands disclosures about
fair value measurements. The provisions of this standard apply
to other accounting pronouncements that require or permit fair
value measurements and are to be applied prospectively with
limited exceptions. Our adoption of FASB Statement No. 157
on April 1, 2008 resulted in (1) a gain of less than
$1 million which is included in (Gain) loss on change in
fair value of derivative instruments net in our
condensed consolidated statement of operations, (2) a
$1 million decrease to the fair value of effective portion
of hedges net included in Accumulated other
comprehensive income (loss) and (3) a $35 million
increase to the foreign currency translation adjustment included
in Accumulated other comprehensive income (loss) in our
condensed consolidated balance sheet during the quarter ended
June 30, 2008. These adjustments are primarily due to the
inclusion of nonperformance risk (i.e., credit spreads) in our
valuation models related to certain of our cross-currency swap
derivative instruments (see Note 14 Financial
Instruments and Commodity Contracts).
FASB Statement No. 157 defines fair value as the price that
would be received to sell an asset or paid to transfer a
liability (an exit price) in an orderly transaction between
market participants at the measurement date. FASB Statement
No. 157 will be the single source in GAAP for the
definition of fair value, except for the fair value of leased
property as defined in FASB Statement No. 13, for purposes
of lease classification or measurement. FASB Statement
No. 157 establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions
developed based on market data obtained from independent sources
(observable inputs) and (2) an entitys own
assumptions about market participant assumptions developed based
on the best information available in the circumstances
(unobservable inputs). The fair value hierarchy consists of
three broad levels, which gives the highest priority to
unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair
value hierarchy under FASB Statement No. 157 are described
as follows:
Level 1 Unadjusted quoted prices in
active markets that are accessible at the measurement date for
identical, unrestricted assets or liabilities;
Level 2 Inputs other than quoted prices
included within Level 1 that are observable for the asset
or liability, either directly or indirectly; and
Level 3 Inputs that are unobservable for
the asset or liability.
The following section describes the valuation methodologies we
used to measure our various financial instruments at fair value,
including an indication of the level in the fair value hierarchy
in which each instrument is generally classified:
Derivative
contracts
For certain of our derivative contracts whose fair values are
based upon trades in liquid markets, such as aluminum forward
contracts and options, valuation model inputs can generally be
verified and valuation techniques do not involve significant
judgment. The fair values of such financial instruments are
generally classified within Level 2 of the fair value
hierarchy.
The majority of our derivative contracts are valued using
industry-standard models that use observable market inputs as
their basis, such as time value, forward interest rates,
volatility factors, and current (spot) and forward market prices
for foreign exchange rates. We generally classify these
instruments within Level 2 of the valuation hierarchy. Such
derivatives include interest rate swaps, cross currency swaps,
foreign currency forward contracts and certain energy-related
forward contracts (e.g., natural gas).
23
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
We classify derivative contracts that are valued based on models
with significant unobservable market inputs as Level 3 of
the valuation hierarchy. These derivatives include certain of
our energy-related forward contracts (e.g., electricity) and
certain foreign currency forward contracts. Models for these
fair value measurements include inputs based on estimated future
prices for periods beyond the term of the quoted prices.
FASB Statement No. 157 requires that for Level 2 and 3
of the fair value hierarchy, where appropriate, valuations are
adjusted for various factors such as liquidity, bid/offer
spreads and credit considerations (nonperformance risk).
The following table presents our assets and liabilities that are
measured and recognized at fair value on a recurring basis
classified under the appropriate level of the fair value
hierarchy as of June 30, 2008 (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
Successor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Derivative Instruments
|
|
$
|
|
|
|
$
|
208
|
|
|
$
|
22
|
|
|
$
|
230
|
|
Liabilities Derivative Instruments
|
|
$
|
|
|
|
$
|
(270
|
)
|
|
$
|
(7
|
)
|
|
$
|
(277
|
)
|
Financial instruments classified as Level 3 in the fair
value hierarchy represent derivative contracts (primarily
energy-related and certain foreign currency forward contracts)
in which at least one significant unobservable input is used in
the valuation model. The following table presents a
reconciliation of activity for such derivative contracts on a
net basis (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized/
|
|
Net Realized/
|
|
|
|
|
|
|
|
Net Change in
|
|
|
|
|
Unrealized
|
|
Unrealized Gains
|
|
|
|
|
|
|
|
Unrealized Gains
|
|
|
Beginning
|
|
Gains
|
|
(Losses) Included
|
|
Purchases,
|
|
Transfers
|
|
Ending
|
|
(Losses) Relating to
|
|
|
Balance
|
|
(Losses)
|
|
in Other
|
|
Issuances
|
|
in and/or
|
|
Balance
|
|
Instruments Still
|
|
|
April 1,
|
|
Included in
|
|
Comprehensive
|
|
and
|
|
(Out) of
|
|
June 30,
|
|
Held at June 30,
|
|
|
2008
|
|
Earnings(B)
|
|
Income (Loss)(C)
|
|
Settlements
|
|
Level 3
|
|
2008
|
|
2008(D)
|
|
Successor:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments(A)
|
|
|
$11
|
|
|
|
$(1
|
)
|
|
|
$9
|
|
|
|
$(5
|
)
|
|
|
$1
|
|
|
|
$15
|
|
|
|
$7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Represents derivative assets net of derivative liabilities. |
|
(B) |
|
Included in (Gain) loss on change in fair value of derivative
instruments net. |
|
(C) |
|
Included in Change in fair value of effective portion of
hedges net in the accompanying condensed
consolidated statement of shareholders equity. |
|
(D) |
|
Represents unrealized gains (losses) relating to assets and
liabilities classified as Level 3 included in (Gain)
loss on change in fair value of derivative instruments
net. |
24
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
16.
|
Other
(Income) Expenses Net
|
Other (income) expenses net is comprised of the
following (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Exchange (gains) losses net
|
|
$
|
20
|
|
|
$
|
7
|
|
|
|
$
|
4
|
|
Restructuring charges (recoveries) net
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
|
1
|
|
Impairment charges on long-lived assets
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
(Gain) loss on disposal of property, plant and
equipment net
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Other net
|
|
|
3
|
|
|
|
3
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expenses net
|
|
$
|
22
|
|
|
$
|
11
|
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We provide for income taxes using the liability method in
accordance with FASB Statement No. 109, Accounting for
Income Taxes. In accordance with APB Opinion No. 28,
Interim Financial Reporting, and FASB Interpretation
No. 18, Accounting for Income Taxes in Interim
Periods, the provision for taxes on income recognizes our
estimate of the effective tax rate expected to be applicable for
the full fiscal year, adjusted for the impact of any discrete
events, which are reported in the period in which they occur.
Each quarter, we re-evaluate our estimated tax expense for the
year and make adjustments for changes in the estimated tax rate.
Additionally, we evaluate the realizability of our deferred tax
assets on a quarterly basis. Our evaluation considers all
positive and negative evidence and factors, such as the
scheduled reversal of temporary differences, historical and
projected future taxable income or losses, and prudent and
feasible tax planning strategies.
The Provision (benefit) for taxes on income (loss) for
the three months ended June 30, 2008 was based on the
estimated effective tax rates applicable for the fiscal year
ending March 31, 2009, after considering items specifically
related to the interim period. The Provision (benefit) for
taxes on income (loss) for (1) the periods from
May 16, 2007 through June 30, 2007 (Successor) (as
restated) and April 1, 2007 through May 15, 2007
(Predecessor) were based on the estimated effective tax rates
applicable for the year ended March 31, 2008, after
considering items specifically related to the interim periods.
25
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
A reconciliation of the Canadian statutory tax rates to our
effective tax rates is as follows (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Pre-tax income (loss) before equity in net (income) loss of
non-consolidated affiliates and minority interests share
|
|
$
|
64
|
|
|
$
|
(19
|
)
|
|
|
$
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Canadian statutory tax rate
|
|
|
31
|
%
|
|
|
33
|
%
|
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) at the Canadian statutory rate
|
|
$
|
20
|
|
|
$
|
(6
|
)
|
|
|
$
|
(31
|
)
|
Increase (decrease) for taxes on income (loss) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange translation items
|
|
|
9
|
|
|
|
19
|
|
|
|
|
23
|
|
Exchange remeasurement of deferred income taxes
|
|
|
20
|
|
|
|
3
|
|
|
|
|
3
|
|
Change in valuation allowances
|
|
|
3
|
|
|
|
21
|
|
|
|
|
13
|
|
Expense/income items with no tax effect net
|
|
|
(4
|
)
|
|
|
(11
|
)
|
|
|
|
(9
|
)
|
Enacted tax rate changes
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
Tax rate differences on foreign earnings
|
|
|
(14
|
)
|
|
|
2
|
|
|
|
|
2
|
|
Uncertain tax positions
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Other net
|
|
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for taxes on income (loss)
|
|
$
|
35
|
|
|
$
|
27
|
|
|
|
$
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
55
|
%
|
|
|
(142
|
)%
|
|
|
|
(4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our effective tax rate differs from the Canadian statutory rate
primarily due to the following factors: (1) pre-tax foreign
currency gains or losses with no tax effect and the tax effect
of U.S. dollar denominated currency gains or losses with no
pre-tax effect, which is shown above as exchange translation
items; (2) the remeasurement of deferred income taxes due
to foreign currency changes, which is shown above as exchange
remeasurement of deferred income taxes; (3) changes in
valuation allowances primarily related to tax losses in certain
jurisdictions where we believe it is more likely than not that
we will not be able to utilize those losses; and
(4) differences between the Canadian statutory and foreign
effective tax rates applied to entities in different
jurisdictions shown above as tax rate differences on foreign
earnings.
Tax
Uncertainties
Adoption
of FASB Interpretation No. 48
In June 2006, the FASB issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48).
FIN 48 clarifies the accounting for income taxes, by
prescribing a minimum recognition threshold a tax position is
required to meet before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition,
measurement, classification, interest and penalties, accounting
in interim periods, disclosure and transition.
During the quarter ended June 30, 2008, our unrecognized
tax benefits increased less than $1 million as a result of
tax positions taken during a prior period. Our reserves for
uncertain tax positions totaled $61 million as of both
June 30, 2008 and March 31, 2008. As of both
June 30, 2008 and March 31, 2008, the total amount of
unrecognized tax benefits that, if recognized, would affect the
effective income tax rate in future periods based on anticipated
settlement dates is $44 million.
26
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Tax authorities are currently examining certain of our prior
years tax returns for
1999-2006.
We are evaluating potential adjustments related to certain items
and we anticipate that it is reasonably possible that settlement
of the examinations will result in a payment in the range of up
to $4 million and a corresponding decrease in unrecognized
tax benefits by March 31, 2009.
Separately, we are awaiting a court ruling regarding the
utilization of certain operating losses. We anticipate that it
is reasonably possible that this ruling will result in a
$14 million decrease in unrecognized tax benefits by
March 31, 2009 related to this matter. We have fully funded
this contingent liability through a judicial deposit, which is
included in Other long-term assets third parties
since January 2007.
With the exception of the ongoing tax examinations described
above, we are no longer subject to any income tax examinations
by any tax authorities for years before 2001. With few
exceptions, tax returns for all jurisdictions for all tax years
after 2000 are subject to examination by taxing authorities.
Our continuing practice and policy is to record potential
interest and penalties related to unrecognized tax benefits in
our Provision (benefit) for taxes on income (loss). As of
June 30, 2008 and March 31, 2008, we had
$16 million and $14 million accrued for potential
interest on income taxes, respectively. For the three months
ended June 30, 2008 and for the periods from May 16,
2007 through June 30, 2007; and from April 1, 2007
through May 15, 2007; our Provision (benefit) for taxes
on income (loss) included a charge for an additional
$2 million, $2 million and less than $1 million
of potential interest, respectively.
|
|
18.
|
Commitments
and Contingencies
|
Primary
Supplier
Alcan is our primary supplier of metal inputs, including prime
and sheet ingot. The table below shows our purchases from Alcan
as a percentage of our total combined metal purchases.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
May 16, 2007
|
|
|
April 1, 2007
|
|
|
Ended
|
|
Through
|
|
|
Through
|
|
|
June 30, 2008
|
|
June 30, 2007
|
|
|
May 15, 2007
|
|
|
Successor
|
|
Successor
|
|
|
Predecessor
|
Purchases from Alcan as a percentage of total metal
purchases in kt(A)
|
|
|
35
|
%
|
|
|
34
|
%
|
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is
equivalent to 2,204.6 pounds. |
Legal
Proceedings
Reynolds Boat Case. As previously disclosed,
we and Alcan were defendants in a case in the United States
District Court for the Western District of Washington, in
Tacoma, Washington, case number C04-0175RJB. Plaintiffs were
Reynolds Metals Company, Alcoa, Inc. and National Union Fire
Insurance Company of Pittsburgh PA. The case was tried before a
jury beginning on May 1, 2006 under implied warranty
theories, based on allegations that from 1998 to 2001 we and
Alcan sold certain aluminum products that were ultimately used
for marine applications and were unsuitable for such
applications. The jury reached a verdict on May 22, 2006
against us and Alcan for approximately $60 million, and the
court later awarded Reynolds and Alcoa approximately
$16 million in prejudgment interest and court costs.
The case was settled during July 2006 as among us, Alcan,
Reynolds, Alcoa and their insurers for $71 million. We
contributed approximately $1 million toward the settlement,
and the remaining $70 million was funded by our insurers.
Although the settlement was substantially funded by our
insurance carriers, certain of them have reserved the right to
request a refund from us, after reviewing details of the
plaintiffs damages to determine if they include costs of a
nature not covered under the insurance contracts. Of the
$70 million
27
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
funded, $39 million is in dispute with and under further
review by certain of our insurance carriers. In the quarter
ended September 30, 2006, we posted a letter of credit in
the amount of approximately $10 million in favor of one of
those insurance carriers, while we resolve the extent of
coverage of the costs included in the settlement. On
October 8, 2007, we received a letter from these insurers
stating that they have completed their review and they are
requesting a refund of the $39 million plus interest. We
reviewed the insurers position, and on January 7,
2008, we sent a letter to the insurers rejecting their position
that Novelis is not entitled to insurance coverage for the
judgment against Novelis.
Since our fiscal 2005 Annual Report on
Form 10-K
was not filed until August 25, 2006, we recognized a
liability for the full settlement amount of $71 million on
December 31, 2005, included in Accrued expenses and
other current liabilities on our consolidated balance sheet,
with a corresponding charge against earnings. We also recognized
an insurance receivable included in Prepaid expenses and
other current assets on our consolidated balance sheet of
$31 million, with a corresponding increase to earnings.
Although $70 million of the settlement was funded by our
insurers, we only recognized an insurance receivable to the
extent that coverage was not in dispute. This resulted in a net
charge of $40 million during the quarter ended
December 31, 2005.
In July 2006, we contributed and paid $1 million to our
insurers who subsequently paid the entire settlement amount of
$71 million to the plaintiffs. Accordingly, during the
quarter ended September 30, 2006, we reversed the
previously recorded insurance receivable of $31 million and
reduced our recorded liability by the same amount plus the
$1 million contributed by us. The remaining liability of
$39 million represents the amount of the settlement claim
that was funded by our insurers but is still in dispute with and
under further review by the parties as described above. The
$39 million liability is included in Accrued expenses
and other current liabilities in our condensed consolidated
balance sheets as of June 30, 2008 and March 31, 2008.
While the ultimate resolution of the nature and extent of any
costs not covered under our insurance contracts cannot be
determined with certainty or reasonably estimated at this time,
if there is an adverse outcome with respect to insurance
coverage, and we are required to reimburse our insurers, it
could have a material impact on our cash flows in the period of
resolution. Alternatively, the ultimate resolution could be
favorable, such that insurance coverage is in excess of the net
expense that we have recognized to date. This would result in
our recording a non-cash gain in the period of resolution, and
this non-cash gain could have a material impact on our results
of operations during the period in which such a determination is
made.
Coca-Cola
Lawsuits. A lawsuit was commenced against Novelis
Corporation on February 15, 2007 by
Coca-Cola
Bottlers Sales and Services Company LLC (CCBSS) in state
court in Georgia. In addition, a lawsuit was commenced against
Novelis Corporation and Alcan Corporation on April 3, 2007
by Coca-Cola
Enterprises Inc., Enterprises Acquisition Company, Inc., The
Coca-Cola
Company and The
Coca-Cola
Trading Company, Inc. (collectively CCE) in federal court in
Georgia. Novelis intends to defend these claims vigorously.
CCBSS is a consortium of
Coca-Cola
bottlers across the United States, including
Coca-Cola
Enterprises Inc. CCBSS alleges that Novelis Corporation
breached an aluminum can stock supply agreement between the
parties, and seeks monetary damages in an amount to be
determined at trial and a declaration of its rights under the
agreement. The agreement includes a most favored
nations provision regarding certain pricing matters. CCBSS
alleges that Novelis Corporation breached the terms of the most
favored nations provision. The dispute will likely turn on the
facts that are presented to the court by the parties and the
courts finding as to how certain provisions of the
agreement ought to be interpreted. If CCBSS were to prevail in
this litigation, the amount of damages would likely be material.
Novelis Corporation has filed its answer and the parties are
proceeding with discovery.
28
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
The claim by CCE seeks monetary damages in an amount to be
determined at trial for breach of a prior aluminum can stock
supply agreement between CCE and Novelis Corporation, successor
to the rights and obligations of Alcan Aluminum Corporation
under the agreement. According to its terms, that agreement with
CCE terminated in 2006. The CCE supply agreement included a
most favored nations provision regarding certain
pricing matters. CCE alleges that Novelis Corporations
entry into a supply agreement with Anheuser-Busch, Inc. breached
the most favored nations provision of the CCE supply
agreement. Novelis Corporation moved to dismiss the complaint
and on March 26, 2008, the U.S. District Court for the
Northern District of Georgia issued an order granting Novelis
Corporations motion to dismiss CCEs claim. On
April 24, 2008, CCE filed a notice of appeal of the
courts order with the United States Court of Appeals for
the Eleventh Circuit and filed its appellate brief on
July 11, 2008. On August 13, 2008, Novelis Corporation
filed its response brief with the United States Court of Appeals
for the Eleventh Circuit. If CCE were to ultimately prevail in
this appeal and litigation, the amount of damages would likely
be material. We have not recorded any reserves for these matters.
Anheuser-Busch Litigation. On
September 19, 2006, Novelis Corporation filed a lawsuit
against Anheuser-Busch, Inc. (Anheuser-Busch) in federal court
in Ohio. Anheuser-Busch subsequently filed suit against Novelis
Corporation and the Company in federal court in Missouri. On
January 3, 2007, Anheuser-Buschs suit was transferred
to the Ohio federal court.
Novelis Corporation alleged that Anheuser-Busch breached the
existing multi-year aluminum can stock supply agreement between
the parties, and sought monetary damages and declaratory relief.
Among other claims, we asserted that since entering into the
supply agreement, Anheuser-Busch has breached its
confidentiality obligations and there has been a structural
change in market conditions that requires a change to the
pricing provisions under the agreement.
In its complaint, Anheuser-Busch asked for a declaratory
judgment that Anheuser-Busch is not obligated to modify the
supply agreement as requested by Novelis Corporation, and that
Novelis Corporation must continue to perform under the existing
supply agreement.
On January 18, 2008, Anheuser-Busch filed a motion for
summary judgment. On May 22, 2008, the court granted
Anheuser-Buschs motion for summary judgment. Novelis
Corporation filed a notice of appeal with the United States
Court of Appeals for the Sixth Circuit on June 20, 2008.
Novelis Corporation has continued to perform under the supply
agreement during the litigation.
ARCO Aluminum Complaint. On May 24, 2007,
Arco Aluminum Inc. (ARCO) filed a complaint against Novelis
Corporation and Novelis Inc. in the United States District Court
for the Western District of Kentucky. ARCO and Novelis are
partners in a joint venture rolling mill located in Logan,
Kentucky. In the complaint, ARCO seeks to resolve a perceived
dispute over management and control of the joint venture
following Hindalcos acquisition of Novelis.
ARCO alleges that its consent was required in connection with
Hindalcos acquisition of Novelis. Failure to obtain
consent, ARCO alleges, has put us in default of the joint
venture agreements, thereby triggering certain provisions in
those agreements. The provisions include a reversion of the
production management at the joint venture to Logan Aluminum
from Novelis, and a reduction of the board of directors of the
entity that manages the joint venture from seven members (four
appointed by Novelis and three appointed by ARCO) to six members
(three appointed by each of Novelis and ARCO).
ARCO seeks a court declaration that (1) Novelis and its
affiliates are prohibited from exercising any managerial
authority or control over the joint venture,
(2) Novelis interest in the joint venture is limited
to an economic interest only and (3) ARCO has authority to
act on behalf of the joint venture. Or, alternatively, ARCO is
seeking a reversion of the production management function to
Logan Aluminum, and a change in the composition of the board of
directors of the entity that manages the joint venture. Novelis
filed its answer to the complaint on July 16, 2007.
29
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
On July 3, 2007, ARCO filed a motion for partial summary
judgment with respect to one of the counts of its complaint
relating to the claim that Novelis breached the joint venture
agreement by not seeking ARCOs consent. On July 30,
2007, Novelis filed a motion to hold ARCOs motion for
summary judgment in abeyance (pending further discovery), along
with a demand for a jury. On February 14, 2008, the judge
issued an order granting our motion to hold ARCOs summary
judgment motion in abeyance. Pursuant to this ruling, management
and the board of the joint venture are conducting their
activities as normal.
Environmental
Matters
The following describes certain environmental matters relating
to our business. None of the environmental matters include
government sanctions of $100,000 or more.
We are involved in proceedings under the U.S. Comprehensive
Environmental Response, Compensation, and Liability Act, also
known as CERCLA or Superfund, or analogous state provisions
regarding liability arising from the usage, storage, treatment
or disposal of hazardous substances and wastes at a number of
sites in the United States, as well as similar proceedings under
the laws and regulations of the other jurisdictions in which we
have operations, including Brazil and certain countries in the
European Union. Many of these jurisdictions have laws that
impose joint and several liability, without regard to fault or
the legality of the original conduct, for the costs of
environmental remediation, natural resource damages, third party
claims, and other expenses, on those persons who contributed to
the release of a hazardous substance into the environment. In
addition, we are, from time to time, subject to environmental
reviews and investigations by relevant governmental authorities.
As described further in the following paragraph, we have
established procedures for regularly evaluating environmental
loss contingencies, including those arising from such
environmental reviews and investigations and any other
environmental remediation or compliance matters. We believe we
have a reasonable basis for evaluating these environmental loss
contingencies, and we believe we have made reasonable estimates
of the costs that are likely to be borne by us for these
environmental loss contingencies. Accordingly, we have
established reserves based on our reasonable estimates for the
currently anticipated costs associated with these environmental
matters. We estimate that the undiscounted remaining
clean-up
costs related to all of our known environmental matters as of
June 30, 2008 will be approximately $47 million. Of
this amount, $33 million is included in Other long-term
liabilities, with the remaining $14 million included in
Accrued expenses and other current liabilities in our
condensed consolidated balance sheet as of June 30, 2008.
Management has reviewed the environmental matters, including
those for which we assumed liability as a result of our spin-off
from Alcan. As a result of this review, management has
determined that the currently anticipated costs associated with
these environmental matters will not, individually or in the
aggregate, materially impair our operations or materially
adversely affect our financial condition, results of operations
or liquidity.
With respect to environmental loss contingencies, we record a
loss contingency on a non-discounted basis whenever such
contingency is probable and reasonably estimable. The evaluation
model includes all asserted and unasserted claims that can be
reasonably identified. Under this evaluation model, the
liability and the related costs are quantified based upon the
best available evidence regarding actual liability loss and cost
estimates. Except for those loss contingencies where no estimate
can reasonably be made, the evaluation model is fact-driven and
attempts to estimate the full costs of each claim. Management
reviews the status of, and estimated liability related to,
pending claims and civil actions on a quarterly basis. The
estimated costs in respect of such reported liabilities are not
offset by amounts related to cost-sharing between parties,
insurance, indemnification arrangements or contribution from
other potentially responsible parties unless otherwise noted.
30
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Brazil
Tax Matters
Primarily as a result of legal proceedings with Brazils
Ministry of Treasury regarding certain taxes in South America,
as of June 30, 2008 and March 31, 2008, we had cash
deposits aggregating approximately $42 million and
$36 million, respectively, in judicial depository accounts
pending finalization of the related cases. The depository
accounts are in the name of the Brazilian government and will be
expended towards these legal proceedings or released to us,
depending on the outcome of the legal cases. These deposits are
included in Other long-term assets third parties
in our accompanying condensed consolidated balance sheets.
In addition, we are involved in several disputes with
Brazils Minister of Treasury about various forms of
manufacturing taxes and social security contributions, for which
we have made no judicial deposits but for which we have
established reserves ranging from $8 million to
$105 million as of June 30, 2008. In total, these
reserves approximate $128 million and $111 million as
of June 30, 2008 and March 31, 2008, respectively, and
are included in Other long-term liabilities in our
accompanying condensed consolidated balance sheets.
On July 16, 2008, the second instance court in Brazil ruled
in favor of the Ministry of Treasury in the amount of
$5.5 million in one of these tax disputes. We have
30 days to file a notice of appeal with the court and are
currently reviewing the courts order to understand the
reasoning behind the decision and evaluate our grounds for
appeal.
Guarantees
of Indebtedness
We have issued guarantees on behalf of certain of our
subsidiaries and non-consolidated affiliates, including:
|
|
|
|
|
certain of our wholly-owned subsidiaries and
|
|
|
|
Aluminium Norf GmbH, which is a fifty percent (50%) owned joint
venture that does not meet the requirements for consolidation
under FASB Interpretation No. 46 (Revised),
Consolidation of Variable Interest Entities.
|
In the case of our wholly-owned subsidiaries, the indebtedness
guaranteed is for trade accounts payable to third parties. Some
of the guarantees have annual terms while others have no
expiration and have termination notice requirements. Neither we
nor any of our subsidiaries or non-consolidated affiliates holds
any assets of any third parties as collateral to offset the
potential settlement of these guarantees.
Since we consolidate wholly-owned and majority-owned
subsidiaries in our condensed consolidated financial statements,
all liabilities associated with trade payables and short-term
debt facilities for these entities are already included in our
condensed consolidated balance sheets.
The following table discloses information about our obligations
under guarantees of indebtedness of others as of June 30,
2008 (in millions). We did not have any obligations under
guarantees of indebtedness related to our majority-owned
subsidiaries as of June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
Liability
|
|
|
Potential
|
|
Carrying
|
Type of Entity
|
|
Future Payment
|
|
Value
|
|
Wholly-owned subsidiaries
|
|
$
|
83
|
|
|
$
|
60
|
|
Aluminium Norf GmbH
|
|
$
|
16
|
|
|
$
|
|
|
We have no retained or contingent interest in assets transferred
to an unconsolidated entity or similar entity or similar
arrangement that serves as credit, liquidity or market risk
support to that entity for such assets.
31
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
19.
|
Segment
and Major Customer Information
|
Segment
Information
Due in part to the regional nature of supply and demand of
aluminum rolled products and in order to best serve our
customers, we manage our activities on the basis of geographical
areas and are organized under four operating segments: North
America, Europe, Asia and South America.
We measure the profitability and financial performance of our
operating segments, based on Segment Income, in accordance with
FASB Statement No. 131, Disclosure About the Segments of
an Enterprise and Related Information. Segment Income
provides a measure of our underlying segment results that is in
line with our portfolio approach to risk management. We define
Segment Income as earnings before: (a) interest expense and
amortization of debt issuance costs net;
(b) unrealized gains (losses) on change in fair value of
derivative instruments net; (c) realized gains
(losses) on corporate derivative instruments net;
(d) depreciation and amortization; (e) impairment
charges on long-lived assets; (f) minority interests
share; (g) adjustments to reconcile our proportional share
of Segment Income from non-consolidated affiliates to income as
determined on the equity method of accounting;
(h) restructuring recoveries (charges) net;
(i) gains or losses on sales of property, plant and
equipment and businesses net; (j) corporate
selling, general and administrative expenses; (k) other
costs net; (l) litigation
settlement net of insurance recoveries;
(m) sale transaction fees; (n) provision or benefit
for taxes on income (loss) and (o) cumulative effect of
accounting change net of tax.
Net sales and expenses are measured in accordance with the
policies and procedures described in Note 1
Business and Summary of Significant Accounting Policies to our
consolidated and combined financial statements included in our
Annual Report on
Form 10-K/A
for the year ended March 31, 2008.
We do not treat all derivative instruments as hedges under FASB
Statement No. 133. Accordingly, changes in fair value are
recognized immediately in earnings, which results in the
recognition of fair value as a gain or loss in advance of the
contract settlement. In the accompanying condensed consolidated
statements of operations, changes in fair value of derivative
instruments not accounted for as hedges under FASB Statement
No. 133 are recognized in (Gain) loss on change in fair
value of derivative instruments net. These gains
or losses may or may not result from cash settlement. For
Segment Income purposes we only include the impact of the
derivative gains or losses to the extent they are settled in
cash (i.e. realized) during that period.
The following is a description of our operating segments:
|
|
|
|
|
North America. Headquartered in Cleveland,
Ohio, this segment manufactures aluminum sheet and light gauge
products and operates 11 plants, including two fully dedicated
recycling facilities, in two countries.
|
|
|
|
Europe. Headquartered in Zurich, Switzerland,
this segment manufactures aluminum sheet and light gauge
products and operates 14 plants, including one recycling
facility, in six countries.
|
|
|
|
Asia. Headquartered in Seoul, South Korea,
this segment manufactures aluminum sheet and light gauge
products and operates three plants in two countries.
|
|
|
|
South America. Headquartered in Sao Paulo,
Brazil, this segment comprises bauxite mining, alumina refining,
smelting operations, power generation, carbon products, aluminum
sheet and light gauge products and operates four plants in
Brazil.
|
Adjustment to Eliminate Proportional
Consolidation. The financial information for our
segments includes the results of our non-consolidated affiliates
on a proportionately consolidated basis, which is consistent
with the way we manage our business segments. However, under
GAAP, these non-consolidated affiliates are accounted for using
the equity method of accounting. Therefore, in order to
reconcile the financial information for the segments shown in
the tables below to the relevant GAAP-based measures, we
32
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
must remove our proportional share of each line item that we
included in the segment amounts. See Note 7
Investment in and Advances to Non-Consolidated Affiliates and
Related Party Transactions for further information about these
non-consolidated affiliates.
The tables below show selected segment financial information (in
millions). The Corporate and Other column in the tables below
includes functions that are managed directly from our corporate
office, which focuses on strategy development and oversees
governance, policy, legal compliance, human resources and
finance matters. It also includes consolidating and other
elimination accounts.
Selected
Segment Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminate
|
|
|
|
|
|
|
|
|
|
North
|
|
|
|
|
|
|
|
|
South
|
|
|
Proportional
|
|
|
Corporate
|
|
|
|
|
Total Assets
|
|
America
|
|
|
Europe
|
|
|
Asia
|
|
|
America
|
|
|
Consolidation
|
|
|
and Other
|
|
|
Total
|
|
|
(Successor)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2008
|
|
$
|
3,996
|
|
|
$
|
4,231
|
|
|
$
|
1,129
|
|
|
$
|
1,544
|
|
|
$
|
(193
|
)
|
|
$
|
262
|
|
|
$
|
10,969
|
|
March 31, 2008 (Restated)
|
|
$
|
3,888
|
|
|
$
|
4,171
|
|
|
$
|
1,081
|
|
|
$
|
1,478
|
|
|
$
|
(199
|
)
|
|
$
|
263
|
|
|
$
|
10,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminate
|
|
|
|
|
|
|
|
Selected Operating Results
|
|
North
|
|
|
|
|
|
|
|
|
South
|
|
|
Proportional
|
|
|
Corporate
|
|
|
|
|
Three Months Ended June 30, 2008
|
|
America
|
|
|
Europe
|
|
|
Asia
|
|
|
America
|
|
|
Consolidation
|
|
|
and Other
|
|
|
Total
|
|
|
(Successor)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales (to third parties)
|
|
$
|
1,083
|
|
|
$
|
1,218
|
|
|
$
|
510
|
|
|
$
|
295
|
|
|
$
|
(3
|
)
|
|
$
|
|
|
|
$
|
3,103
|
|
Intersegment sales
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
Segment Income (Loss)
|
|
|
42
|
|
|
|
111
|
|
|
|
31
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
231
|
|
Depreciation and amortization
|
|
|
42
|
|
|
|
63
|
|
|
|
15
|
|
|
|
17
|
|
|
|
(22
|
)
|
|
|
1
|
|
|
|
116
|
|
Capital expenditures
|
|
|
7
|
|
|
|
19
|
|
|
|
5
|
|
|
|
6
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminate
|
|
|
|
|
|
|
|
Selected Operating Results
|
|
North
|
|
|
|
|
|
|
|
|
South
|
|
|
Proportional
|
|
|
Corporate
|
|
|
|
|
May 16, 2007 Through June 30, 2007
|
|
America
|
|
|
Europe
|
|
|
Asia
|
|
|
America
|
|
|
Consolidation
|
|
|
and Other
|
|
|
Total
|
|
|
(Successor)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales (to third parties)
|
|
$
|
574
|
|
|
$
|
593
|
|
|
$
|
246
|
|
|
$
|
134
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,547
|
|
Intersegment sales
|
|
|
1
|
|
|
|
|
|
|
|
3
|
|
|
|
16
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
Segment Income (Loss)
|
|
|
23
|
|
|
|
43
|
|
|
|
(2
|
)
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
86
|
|
Depreciation and amortization
|
|
|
21
|
|
|
|
22
|
|
|
|
8
|
|
|
|
7
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
53
|
|
Capital expenditures
|
|
|
5
|
|
|
|
12
|
|
|
|
4
|
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminate
|
|
|
|
|
|
|
|
Selected Operating Results
|
|
North
|
|
|
|
|
|
|
|
|
South
|
|
|
Proportional
|
|
|
Corporate
|
|
|
|
|
April 1, 2007 Through May 15, 2007
|
|
America
|
|
|
Europe
|
|
|
Asia
|
|
|
America
|
|
|
Consolidation
|
|
|
and Other
|
|
|
Total
|
|
|
(Predecessor)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales (to third parties)
|
|
$
|
446
|
|
|
$
|
510
|
|
|
$
|
216
|
|
|
$
|
109
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,281
|
|
Intersegment sales
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
7
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
|
Segment Income (Loss)
|
|
|
(24
|
)
|
|
|
32
|
|
|
|
6
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
Depreciation and amortization
|
|
|
7
|
|
|
|
11
|
|
|
|
7
|
|
|
|
5
|
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
28
|
|
Capital expenditures
|
|
|
4
|
|
|
|
8
|
|
|
|
4
|
|
|
|
3
|
|
|
|
(3
|
)
|
|
|
1
|
|
|
|
17
|
|
33
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
The following table shows the reconciliation from Total Segment
Income to Net income (loss) (in millions).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
|
May 16, 2007
|
|
|
|
April 1, 2007
|
|
|
|
Ended
|
|
|
Through
|
|
|
|
Through
|
|
|
|
June 30, 2008
|
|
|
June 30, 2007
|
|
|
|
May 15, 2007
|
|
|
|
|
|
|
(Restated)
|
|
|
|
|
|
|
|
Successor
|
|
|
Successor
|
|
|
|
Predecessor
|
|
Total Segment Income
|
|
$
|
231
|
|
|
$
|
86
|
|
|
|
$
|
32
|
|
Interest expense and amortization of debt issuance
costs net
|
|
|
(40
|
)
|
|
|
(25
|
)
|
|
|
|
(26
|
)
|
Unrealized gains (losses) on change in fair value of derivative
instruments net(A)
|
|
|
21
|
|
|
|
(15
|
)
|
|
|
|
5
|
|
Realized gains (losses) on corporate derivative
instruments net
|
|
|
|
|
|
|
8
|
|
|
|
|
(3
|
)
|
Depreciation and amortization
|
|
|
(116
|
)
|
|
|
(53
|
)
|
|
|
|
(28
|
)
|
Impairment charges on long-lived assets
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
Minority interests share
|
|
|
(2
|
)
|
|
|
2
|
|
|
|
|
1
|
|
Adjustment to eliminate proportional consolidation(B)
|
|
|
(18
|
)
|
|
|
(9
|
)
|
|
|
|
(7
|
)
|
Restructuring recoveries (charges) net
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
Gain (loss) on sales of property, plant and equipment and
businesses net
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
Corporate selling, general and administrative expenses
|
|
|
(14
|
)
|
|
|
(8
|
)
|
|
|
|
(35
|
)
|
Other costs net
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
1
|
|
Sale transaction fees
|
|
|
|
|
|
|
|
|
|
|
|
(32
|
)
|
Benefit (provision) for taxes on income (loss)
|
|
|
(35
|
)
|
|
|
(27
|
)
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
25
|
|
|
$
|
(45
|
)
|
|
|
$
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
|
Unrealized gains (losses) on change in fair value of derivative
instruments net represents the portion of gains
(losses) that were not settled in cash during the period. Total
realized and unrealized gains (losses) are shown in the table
below and are included in the aggregate each period in (Gain)
loss on change in fair value of derivative instruments
net on our condensed consolidated
statements of operations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
May 16, 2007
|
|
|
April 1, 2007
|
|
|
Ended
|
|
Through
|
|
|
Through
|
|
|
June 30, 2008
|
|
June 30, 2007
|
|
|
May 15, 2007
|
|
|
Successor
|
|
Successor
|
|
|
Predecessor
|
(Gains) losses on change in fair value of derivative
instruments net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and included in Segment Income
|
|
|
$(45
|
)
|
|
|
$(21
|
)
|
|
|
|
$(18
|
)
|
Realized on corporate derivative instruments
|
|
|
|
|
|
|
(8
|
)
|
|
|
|
3
|
|
Unrealized
|
|
|
(21
|
)
|
|
|
15
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Gains) losses on change in fair value of derivative
instruments net
|
|
|
$(66
|
)
|
|
|
$(14
|
)
|
|
|
|
$(20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
|
|
|
(B) |
|
Our financial information for our segments (including Segment
Income) includes the results of our non-consolidated affiliates
on a proportionately consolidated basis, which is consistent
with the way we manage our business segments. However, under
GAAP, these non-consolidated affiliates are accounted for using
the equity method of accounting. Therefore, in order to
reconcile Total Segment Income to Net income (loss), the
proportional Segment Income of these non-consolidated affiliates
is removed from Total Segment Income, net of our share of their
net after-tax results, which is reported as Equity in net
(income) loss of non-consolidated affiliates on our
condensed consolidated statements of operations. See
Note 7 Investment in and Advances to
Non-Consolidated Affiliates and Related Party Transactions for
further information about these non-consolidated affiliates. |
Information
about Major Customers
All of our operating segments had Net sales to Rexam Plc
(Rexam), our largest customer. The table below shows our net
sales to Rexam as a percentage of total Net sales.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
May 16, 2007
|
|
|
April 1, 2007
|
|
|
Ended
|
|
Through
|
|
|
Through
|
|
|
June 30, 2008
|
|
June 30, 2007
|
|
|
May 15, 2007
|
|
|
Successor
|
|
Successor
|
|
|
Predecessor
|
Net sales to Rexam as a percentage of total net sales
|
|
|
15.7
|
%
|
|
|
15.8
|
%
|
|
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.
|
Supplemental
Guarantor Information
|
In connection with the issuance of our Senior Notes, certain of
our wholly-owned subsidiaries provided guarantees of the Senior
Notes. These guarantees are full and unconditional as well as
joint and several. The guarantor subsidiaries (the Guarantors)
are comprised of the majority of our businesses in Canada, the
U.S., the U.K., Brazil and Switzerland, as well as certain
businesses in Germany. Certain Guarantors may be subject to
restrictions on their ability to distribute earnings to Novelis
Inc. (the Parent). The remaining subsidiaries (the
Non-Guarantors) of the Parent are not guarantors of the Senior
Notes.
The following information presents condensed consolidating
statements of operations, consolidating balance sheets and
consolidating statements of cash flows of the Parent, the
Guarantors, and the Non-Guarantors. Investments include
investment in and advances to non-consolidated affiliates as
well as investments in net assets of divisions included in the
Parent, and have been presented using the equity method of
accounting.
35
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Statement of Operations
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2008 (Successor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Net sales
|
|
$
|
395
|
|
|
$
|
2,582
|
|
|
$
|
836
|
|
|
$
|
(710
|
)
|
|
$
|
3,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and amortization
shown below)
|
|
|
387
|
|
|
|
2,377
|
|
|
|
777
|
|
|
|
(710
|
)
|
|
|
2,831
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
62
|
|
|
|
22
|
|
|
|
|
|
|
|
84
|
|
Depreciation and amortization
|
|
|
6
|
|
|
|
89
|
|
|
|
21
|
|
|
|
|
|
|
|
116
|
|
Research and development expenses
|
|
|
8
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
|
|
12
|
|
Interest expense and amortization of debt issuance
costs net
|
|
|
7
|
|
|
|
29
|
|
|
|
4
|
|
|
|
|
|
|
|
40
|
|
(Gain) loss on change in fair value of derivative instruments
net
|
|
|
|
|
|
|
(62
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
(66
|
)
|
Equity in net (income) loss of affiliates
|
|
|
(32
|
)
|
|
|
2
|
|
|
|
|
|
|
|
32
|
|
|
|
2
|
|
Other (income) expenses net
|
|
|
(7
|
)
|
|
|
13
|
|
|
|
16
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
369
|
|
|
|
2,513
|
|
|
|
837
|
|
|
|
(678
|
)
|
|
|
3,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision (benefit) for taxes on income
(loss) and minority interests share
|
|
|
26
|
|
|
|
69
|
|
|
|
(1
|
)
|
|
|
(32
|
)
|
|
|
62
|
|
Provision (benefit) for taxes on income (loss)
|
|
|
1
|
|
|
|
33
|
|
|
|
1
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interests share
|
|
|
25
|
|
|
|
36
|
|
|
|
(2
|
)
|
|
|
(32
|
)
|
|
|
27
|
|
Minority interests share
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
25
|
|
|
$
|
36
|
|
|
$
|
(4
|
)
|
|
$
|
(32
|
)
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Statement of Operations
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 16, 2007 Through June 30, 2007
(Successor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Restated
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Net sales
|
|
$
|
245
|
|
|
$
|
1,347
|
|
|
$
|
419
|
|
|
$
|
(464
|
)
|
|
$
|
1,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and amortization
shown below)
|
|
|
247
|
|
|
|
1,251
|
|
|
|
402
|
|
|
|
(464
|
)
|
|
|
1,436
|
|
Selling, general and administrative expenses
|
|
|
5
|
|
|
|
25
|
|
|
|
12
|
|
|
|
|
|
|
|
42
|
|
Depreciation and amortization
|
|
|
3
|
|
|
|
38
|
|
|
|
12
|
|
|
|
|
|
|
|
53
|
|
Research and development expenses
|
|
|
2
|
|
|
|
7
|
|
|
|
4
|
|
|
|
|
|
|
|
13
|
|
Interest expense and amortization of debt issuance
costs net
|
|
|
3
|
|
|
|
20
|
|
|
|
2
|
|
|
|
|
|
|
|
25
|
|
(Gain) loss on change in fair value of derivative instruments
net
|
|
|
(13
|
)
|
|
|
(4
|
)
|
|
|
3
|
|
|
|
|
|
|
|
(14
|
)
|
Equity in net (income) loss of affiliates
|
|
|
25
|
|
|
|
1
|
|
|
|
|
|
|
|
(25
|
)
|
|
|
1
|
|
Other (income) expenses net
|
|
|
(4
|
)
|
|
|
14
|
|
|
|
1
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
268
|
|
|
|
1,352
|
|
|
|
436
|
|
|
|
(489
|
)
|
|
|
1,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision (benefit) for taxes on income
(loss) and minority interests share
|
|
|
(23
|
)
|
|
|
(5
|
)
|
|
|
(17
|
)
|
|
|
25
|
|
|
|
(20
|
)
|
Provision (benefit) for taxes on income (loss)
|
|
|
22
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interests share
|
|
|
(45
|
)
|
|
|
(10
|
)
|
|
|
(17
|
)
|
|
|
25
|
|
|
|
(47
|
)
|
Minority interests share
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(45
|
)
|
|
$
|
(10
|
)
|
|
$
|
(15
|
)
|
|
$
|
25
|
|
|
$
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Statement of Operations
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2007 Through May 15, 2007
(Predecessor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
Net sales
|
|
$
|
129
|
|
|
$
|
1,020
|
|
|
$
|
359
|
|
|
$
|
(227
|
)
|
|
$
|
1,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and amortization
shown below)
|
|
|
131
|
|
|
|
961
|
|
|
|
340
|
|
|
|
(227
|
)
|
|
|
1,205
|
|
Selling, general and administrative expenses
|
|
|
29
|
|
|
|
51
|
|
|
|
15
|
|
|
|
|
|
|
|
95
|
|
Depreciation and amortization
|
|
|
2
|
|
|
|
18
|
|
|
|
8
|
|
|
|
|
|
|
|
28
|
|
Research and development expenses
|
|
|
5
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
Interest expense and amortization of debt issuance
costs net
|
|
|
3
|
|
|
|
20
|
|
|
|
3
|
|
|
|
|
|
|
|
26
|
|
(Gain) loss on change in fair value of derivative
instruments net
|
|
|
(2
|
)
|
|
|
(19
|
)
|
|
|
1
|
|
|
|
|
|
|
|
(20
|
)
|
Equity in net (income) loss of non-affiliates
|
|
|
29
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
(29
|
)
|
|
|
(1
|
)
|
Sale transaction fees
|
|
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
|
|
Other (income) expenses net
|
|
|
(3
|
)
|
|
|
9
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
226
|
|
|
|
1,040
|
|
|
|
365
|
|
|
|
(256
|
)
|
|
|
1,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision (benefit) for taxes on income
(loss) and minority interests share
|
|
|
(97
|
)
|
|
|
(20
|
)
|
|
|
(6
|
)
|
|
|
29
|
|
|
|
(94
|
)
|
Provision (benefit) for taxes on income (loss)
|
|
|
|
|
|
|
3
|
|
|
|
1
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interests share
|
|
|
(97
|
)
|
|
|
(23
|
)
|
|
|
(7
|
)
|
|
|
29
|
|
|
|
(98
|
)
|
Minority interests share
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(97
|
)
|
|
$
|
(23
|
)
|
|
$
|
(6
|
)
|
|
$
|
29
|
|
|
$
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Balance Sheet
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2008 (Successor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
ASSETS
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14
|
|
|
$
|
161
|
|
|
$
|
121
|
|
|
$
|
|
|
|
$
|
296
|
|
Accounts receivable net of allowances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
46
|
|
|
|
1,055
|
|
|
|
476
|
|
|
|
|
|
|
|
1,577
|
|
related parties
|
|
|
515
|
|
|
|
290
|
|
|
|
24
|
|
|
|
(802
|
)
|
|
|
27
|
|
Inventories
|
|
|
66
|
|
|
|
1,058
|
|
|
|
453
|
|
|
|
|
|
|
|
1,577
|
|
Prepaid expenses and other current assets
|
|
|
4
|
|
|
|
61
|
|
|
|
21
|
|
|
|
|
|
|
|
86
|
|
Current portion of fair value of derivative instruments
|
|
|
|
|
|
|
183
|
|
|
|
22
|
|
|
|
(7
|
)
|
|
|
198
|
|
Deferred income tax assets
|
|
|
|
|
|
|
105
|
|
|
|
6
|
|
|
|
|
|
|
|
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
645
|
|
|
|
2,913
|
|
|
|
1,123
|
|
|
|
(809
|
)
|
|
|
3,872
|
|
Property, plant and equipment net
|
|
|
172
|
|
|
|
2,430
|
|
|
|
651
|
|
|
|
|
|
|
|
3,253
|
|
Goodwill
|
|
|
|
|
|
|
1,679
|
|
|
|
189
|
|
|
|
|
|
|
|
1,868
|
|
Intangible assets net
|
|
|
|
|
|
|
868
|
|
|
|
|
|
|
|
|
|
|
|
868
|
|
Investments
|
|
|
3,652
|
|
|
|
937
|
|
|
|
1
|
|
|
|
(3,652
|
)
|
|
|
938
|
|
Fair value of derivative instruments net of current
portion
|
|
|
|
|
|
|
22
|
|
|
|
10
|
|
|
|
|
|
|
|
32
|
|
Deferred income tax assets
|
|
|
8
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
9
|
|
Other long-term assets
|
|
|
1,318
|
|
|
|
152
|
|
|
|
130
|
|
|
|
(1,471
|
)
|
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,795
|
|
|
$
|
9,001
|
|
|
$
|
2,105
|
|
|
$
|
(5,932
|
)
|
|
$
|
10,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
3
|
|
|
$
|
10
|
|
|
$
|
1
|
|
|
$
|
|
|
|
$
|
14
|
|
Short-term borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
|
|
|
|
359
|
|
|
|
71
|
|
|
|
|
|
|
|
430
|
|
related parties
|
|
|
5
|
|
|
|
358
|
|
|
|
20
|
|
|
|
(383
|
)
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
77
|
|
|
|
926
|
|
|
|
610
|
|
|
|
|
|
|
|
1,613
|
|
related parties
|
|
|
112
|
|
|
|
236
|
|
|
|
125
|
|
|
|
(412
|
)
|
|
|
61
|
|
Accrued expenses and other current liabilities
|
|
|
64
|
|
|
|
613
|
|
|
|
138
|
|
|
|
(10
|
)
|
|
|
805
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
261
|
|
|
|
2,548
|
|
|
|
965
|
|
|
|
(805
|
)
|
|
|
2,969
|
|
Long-term debt net of current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
1,758
|
|
|
|
694
|
|
|
|
101
|
|
|
|
|
|
|
|
2,553
|
|
related parties
|
|
|
|
|
|
|
1,202
|
|
|
|
273
|
|
|
|
(1,475
|
)
|
|
|
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
674
|
|
|
|
21
|
|
|
|
|
|
|
|
695
|
|
Accrued postretirement benefits
|
|
|
23
|
|
|
|
303
|
|
|
|
109
|
|
|
|
|
|
|
|
435
|
|
Other long-term liabilities
|
|
|
184
|
|
|
|
392
|
|
|
|
23
|
|
|
|
|
|
|
|
599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,226
|
|
|
|
5,813
|
|
|
|
1,492
|
|
|
|
(2,280
|
)
|
|
|
7,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests in equity of consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
3,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,497
|
|
Retained earnings/(accumulated deficit)/owners net
investment
|
|
|
5
|
|
|
|
3,108
|
|
|
|
559
|
|
|
|
(3,667
|
)
|
|
|
5
|
|
Accumulated other comprehensive income (loss)
|
|
|
67
|
|
|
|
80
|
|
|
|
(95
|
)
|
|
|
15
|
|
|
|
67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
3,569
|
|
|
|
3,188
|
|
|
|
464
|
|
|
|
(3,652
|
)
|
|
|
3,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
5,795
|
|
|
$
|
9,001
|
|
|
$
|
2,105
|
|
|
$
|
(5,932
|
)
|
|
$
|
10,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Balance Sheet
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2008 (Successor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
Restated
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
ASSETS
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
12
|
|
|
$
|
177
|
|
|
$
|
137
|
|
|
$
|
|
|
|
$
|
326
|
|
Accounts receivable net of allowances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
38
|
|
|
|
818
|
|
|
|
392
|
|
|
|
|
|
|
|
1,248
|
|
related parties
|
|
|
518
|
|
|
|
289
|
|
|
|
34
|
|
|
|
(810
|
)
|
|
|
31
|
|
Inventories
|
|
|
57
|
|
|
|
993
|
|
|
|
405
|
|
|
|
|
|
|
|
1,455
|
|
Prepaid expenses and other current assets
|
|
|
4
|
|
|
|
35
|
|
|
|
19
|
|
|
|
|
|
|
|
58
|
|
Current portion of fair value of derivative instruments
|
|
|
|
|
|
|
186
|
|
|
|
30
|
|
|
|
(13
|
)
|
|
|
203
|
|
Deferred income tax assets
|
|
|
|
|
|
|
121
|
|
|
|
4
|
|
|
|
|
|
|
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
629
|
|
|
|
2,619
|
|
|
|
1,021
|
|
|
|
(823
|
)
|
|
|
3,446
|
|
Property, plant and equipment net
|
|
|
175
|
|
|
|
2,458
|
|
|
|
724
|
|
|
|
|
|
|
|
3,357
|
|
Goodwill
|
|
|
|
|
|
|
1,680
|
|
|
|
189
|
|
|
|
|
|
|
|
1,869
|
|
Intangible assets net
|
|
|
|
|
|
|
888
|
|
|
|
|
|
|
|
|
|
|
|
888
|
|
Investments
|
|
|
3,629
|
|
|
|
945
|
|
|
|
1
|
|
|
|
(3,629
|
)
|
|
|
946
|
|
Fair value of derivative instruments net of current
portion
|
|
|
|
|
|
|
18
|
|
|
|
3
|
|
|
|
|
|
|
|
21
|
|
Deferred income tax assets
|
|
|
10
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
12
|
|
Other long-term assets
|
|
|
1,328
|
|
|
|
160
|
|
|
|
135
|
|
|
|
(1,480
|
)
|
|
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
5,771
|
|
|
$
|
8,768
|
|
|
$
|
2,075
|
|
|
$
|
(5,932
|
)
|
|
$
|
10,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
3
|
|
|
$
|
11
|
|
|
$
|
1
|
|
|
$
|
|
|
|
$
|
15
|
|
Short-term borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
|
|
|
|
70
|
|
|
|
45
|
|
|
|
|
|
|
|
115
|
|
related parties
|
|
|
5
|
|
|
|
370
|
|
|
|
25
|
|
|
|
(400
|
)
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
84
|
|
|
|
925
|
|
|
|
573
|
|
|
|
|
|
|
|
1,582
|
|
related parties
|
|
|
110
|
|
|
|
233
|
|
|
|
88
|
|
|
|
(376
|
)
|
|
|
55
|
|
Accrued expenses and other current liabilities
|
|
|
39
|
|
|
|
699
|
|
|
|
129
|
|
|
|
(17
|
)
|
|
|
850
|
|
Deferred income tax liabilities
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
241
|
|
|
|
2,347
|
|
|
|
861
|
|
|
|
(793
|
)
|
|
|
2,656
|
|
Long-term debt net of current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
1,761
|
|
|
|
698
|
|
|
|
101
|
|
|
|
|
|
|
|
2,560
|
|
related parties
|
|
|
|
|
|
|
1,206
|
|
|
|
304
|
|
|
|
(1,510
|
)
|
|
|
|
|
Deferred income tax liabilities
|
|
|
1
|
|
|
|
680
|
|
|
|
20
|
|
|
|
|
|
|
|
701
|
|
Accrued postretirement benefits
|
|
|
23
|
|
|
|
297
|
|
|
|
101
|
|
|
|
|
|
|
|
421
|
|
Other long-term liabilities
|
|
|
222
|
|
|
|
431
|
|
|
|
19
|
|
|
|
|
|
|
|
672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,248
|
|
|
|
5,659
|
|
|
|
1,406
|
|
|
|
(2,303
|
)
|
|
|
7,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interests in equity of consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
3,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,497
|
|
Retained earnings/(accumulated deficit)/owners net
investment
|
|
|
(20
|
)
|
|
|
3,075
|
|
|
|
564
|
|
|
|
(3,639
|
)
|
|
|
(20
|
)
|
Accumulated other comprehensive income (loss)
|
|
|
46
|
|
|
|
34
|
|
|
|
(44
|
)
|
|
|
10
|
|
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity
|
|
|
3,523
|
|
|
|
3,109
|
|
|
|
520
|
|
|
|
(3,629
|
)
|
|
|
3,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity
|
|
$
|
5,771
|
|
|
$
|
8,768
|
|
|
$
|
2,075
|
|
|
$
|
(5,932
|
)
|
|
$
|
10,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Statement of Cash Flows
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2008 (Successor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
4
|
|
|
$
|
(313
|
)
|
|
$
|
(7
|
)
|
|
$
|
(35
|
)
|
|
$
|
(351
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(1
|
)
|
|
|
(25
|
)
|
|
|
(7
|
)
|
|
|
|
|
|
|
(33
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Changes to investment in and advances to non-consolidated
affiliates
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
Proceeds from loans receivable net
related parties
|
|
|
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
8
|
|
Net proceeds from settlement of derivative instruments
|
|
|
|
|
|
|
21
|
|
|
|
13
|
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(1
|
)
|
|
|
11
|
|
|
|
6
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal repayments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
|
|
|
|
(4
|
)
|
related parties
|
|
|
|
|
|
|
5
|
|
|
|
(30
|
)
|
|
|
25
|
|
|
|
|
|
Short-term borrowings net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
|
|
|
|
288
|
|
|
|
25
|
|
|
|
|
|
|
|
313
|
|
related parties
|
|
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(1
|
)
|
|
|
286
|
|
|
|
(11
|
)
|
|
|
35
|
|
|
|
309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
2
|
|
|
|
(16
|
)
|
|
|
(12
|
)
|
|
|
|
|
|
|
(26
|
)
|
Effect of exchange rate changes on cash balances held in
foreign currencies
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
(4
|
)
|
Cash and cash equivalents beginning of period
|
|
|
12
|
|
|
|
177
|
|
|
|
137
|
|
|
|
|
|
|
|
326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period
|
|
$
|
14
|
|
|
$
|
161
|
|
|
$
|
121
|
|
|
$
|
|
|
|
$
|
296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Statement of Cash Flows
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 16, 2007 Through June 30, 2007
(Successor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
14
|
|
|
$
|
(23
|
)
|
|
$
|
(35
|
)
|
|
|
|
|
|
$
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(2
|
)
|
|
|
(18
|
)
|
|
|
(2
|
)
|
|
|
|
|
|
|
(22
|
)
|
Proceeds from sales of property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
Changes to investment in and advances to non-consolidated
affiliates
|
|
|
(40
|
)
|
|
|
1
|
|
|
|
|
|
|
|
40
|
|
|
|
1
|
|
Proceeds from loans receivable net related
parties
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Net proceeds from settlement of derivative instruments
|
|
|
6
|
|
|
|
22
|
|
|
|
1
|
|
|
|
|
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(36
|
)
|
|
|
9
|
|
|
|
|
|
|
|
40
|
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
92
|
|
|
|
40
|
|
|
|
|
|
|
|
(40
|
)
|
|
|
92
|
|
Principal repayments
|
|
|
(7
|
)
|
|
|
(39
|
)
|
|
|
|
|
|
|
|
|
|
|
(46
|
)
|
Short-term borrowings net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
(10
|
)
|
|
|
72
|
|
|
|
21
|
|
|
|
|
|
|
|
83
|
|
related parties
|
|
|
(19
|
)
|
|
|
8
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
minority interests
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
(1
|
)
|
Debt issuance costs
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
43
|
|
|
|
81
|
|
|
|
31
|
|
|
|
(40
|
)
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
21
|
|
|
|
67
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
84
|
|
Effect of exchange rate changes on cash balances held in
foreign currencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents beginning of period
|
|
|
8
|
|
|
|
74
|
|
|
|
20
|
|
|
|
|
|
|
|
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period
|
|
$
|
29
|
|
|
$
|
141
|
|
|
$
|
16
|
|
|
$
|
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Novelis
Inc.
NOTES TO
THE CONDENSED CONSOLIDATED
FINANCIAL
STATEMENTS (unaudited) (Continued)
Novelis
Inc.
Condensed
Consolidating Statement of Cash Flows
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1, 2007 Through May 15, 2007
(Predecessor)
|
|
|
|
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
|
|
|
Parent
|
|
|
Guarantors
|
|
|
Guarantors
|
|
|
Eliminations
|
|
|
Consolidated
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(21
|
)
|
|
$
|
(181
|
)
|
|
$
|
(28
|
)
|
|
$
|
|
|
|
$
|
(230
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(1
|
)
|
|
|
(10
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
(17
|
)
|
Changes to investment in and advances to non-consolidated
affiliates
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Net proceeds from settlement of derivative instruments
|
|
|
(5
|
)
|
|
|
23
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) provided by investing
activities
|
|
|
(6
|
)
|
|
|
14
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of debt
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
Principal repayments
|
|
|
|
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
Short-term borrowings net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
third parties
|
|
|
45
|
|
|
|
9
|
|
|
|
6
|
|
|
|
|
|
|
|
60
|
|
related parties
|
|
|
(15
|
)
|
|
|
11
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
minority interests
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
(7
|
)
|
Debt issuance costs
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
Proceeds from the exercise of stock options
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
29
|
|
|
|
169
|
|
|
|
3
|
|
|
|
|
|
|
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
2
|
|
|