February 12, 2024 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-32312

Novelis Inc.

(Exact name of registrant as specified in its charter)


Canada						98-0442987
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3550 Peachtree Road NE, Suite 1100 Atlanta, GA						30326
(Address of principal executive offices)						(Zip Code)

(404) 760-4000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No ☒

The registrant is a voluntary filer and is not subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934. However, the registrant 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.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

☒

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of February 9, 2024, the registrant had 1,100 shares of common stock, no par value, outstanding. All of the registrant's outstanding shares were held indirectly by Hindalco Industries Ltd., the registrant's parent company.

TABLE OF CONTENTS


Commonly Used or Defined Terms		3

PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited).	4
	Condensed Consolidated Statements of Operations (unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)	5
	Condensed Consolidated Balance Sheets (unaudited)	6
	Condensed Consolidated Statements of Cash Flows (unaudited)	7
	Condensed Consolidated Statement s of Shareholder's Equity (unaudited)	8
	Notes to the Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	54
Item 4.	Controls and Procedures.	56

PART II—OTHER INFORMATION
Item 1.	Legal Proceedings.	57
Item 1A.	Risk Factors.	57

Item 6.	Exhibits.	60

SIGNATURES		61

COMMONLY USED OR DEFINED TERMS


Term						Definition
Adjusted EBITDA						As defined in Note 15 – Segment, Geographical Area, Major Customer and Major Supplier Information
Aleris						Aleris Corporation
AluInfra						AluInfra Services
Alunorf						Aluminium Norf GmbH
ASC						FASB Accounting Standards Codification


Exchange Act						Securities Exchange Act of 1934, as amended

FASB						Financial Accounting Standards Board
fiscal 2016						Fiscal year ended March 31, 2016
fiscal 2020						Fiscal year ended March 31, 2020
fiscal 2021						Fiscal year ended March 31, 2021
fiscal 2022						Fiscal year ended March 31, 2022
fiscal 2023						Fiscal year ended March 31, 2023
fiscal 2024						Fiscal year ending March 31, 2024
fiscal 2026						Fiscal year ending March 31, 2026
Form 10-Q						Quarterly Report on Form 10-Q
FRP						Flat-rolled products
GAAP						Generally Accepted Accounting Principles
Kobe						Kobe Steel, Ltd.
kt						kilotonne (One kt is 1,000 metric tonnes)
LME						The London Metals Exchange
LMP						Local market premium
Logan						Logan Aluminum Inc.
MMBtu						One decatherm or 1 million British Thermal Units
OEM						Original equipment manufacturer


RSUs						Restricted stock units
SARs						Stock appreciation rights
SEC						United States Securities and Exchange Commission
SG&A						Selling, general and administrative expenses
Tri-Arrows						Tri-Arrows Aluminum Inc.
UAL						Ulsan Aluminum Ltd.
UBC						Used beverage can
U.S.						United States
U.K.						United Kingdom
VIE						Variable interest entity
2023 Form 10-K						Our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, as filed with the SEC on May 10, 2023

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited).

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2023		2022		2023		2022
Net sales	$	3,935	$	4,201	$	12,133	$	14,089
Cost of goods sold (exclusive of depreciation and amortization)	3,309		3,794		10,287		12,199
Selling, general and administrative expenses	189		164		545		509
Depreciation and amortization	139		133		406		405
Interest expense and amortization of debt issuance costs	73		75		228		198
Research and development expenses	24		23		72		69


Loss on extinguishment of debt, net	—		—		5		—
Restructuring and impairment expenses, net	26		5		33		7
Equity in net loss (income) of non-consolidated affiliates	6		(6)		(1)		(14)

Other (income) expenses, net	(6)		7		(35)		67
	3,760		4,195		11,540		13,440
Income from continuing operations before income tax provision	175		6		593		649
Income tax provision (benefit)	54		(6)		159		146
Net income from continuing operations	121		12		434		503
Loss from discontinued operations, net of tax	—		—		—		(2)


Net income	121		12		434		501
Net loss attributable to noncontrolling interests	—		—		—		(1)
Net income attributable to our common shareholder	$	121	$	12	$	434	$	502

____________________

See accompanying notes to the condensed consolidated financial statements.

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2023		2022		2023		2022
Net income	$	121	$	12	$	434	$	501
Other comprehensive income (loss):
Currency translation adjustment	140		215		61		(146)
Net change in fair value of effective portion of cash flow hedges	10		(158)		(74)		645
Net change in pension and other benefits	(3)		(6)		(10)		9
Other comprehensive income (loss) before income tax effect	147		51		(23)		508
Income tax provision (benefit) related to items of other comprehensive income (loss)	5		(38)		(21)		167
Other comprehensive income (loss), net of tax	142		89		(2)		341
Comprehensive income	263		101		432		842
Comprehensive loss attributable to noncontrolling interests, net of tax	(1)		—		(1)		(1)
Comprehensive income attributable to our common shareholder	$	264	$	101	$	433	$	843

____________________

See accompanying notes to the condensed consolidated financial statements.

Novelis Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


in millions, except number of shares	December 31, 2023		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	787	$	1,498
Accounts receivable, net
— third parties (net of allowance for credit losses of $7 and $5 as of December 31, 2023, and March 31, 2023, respectively)	1,973		1,751
— related parties	122		156
Inventories	2,677		2,729
Prepaid expenses and other current assets	160		178
Fair value of derivative instruments	136		145
Assets held for sale	1		3

Total current assets	5,856		6,460
Property, plant and equipment, net	5,498		4,900
Goodwill	1,076		1,076
Intangible assets, net	558		589
Investment in and advances to non-consolidated affiliates	918		877
Deferred income tax assets	145		166
Other long-term assets
— third parties	277		293
— related parties	3		3

Total assets	$	14,331	$	14,364

LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt	$	31	$	88
Short-term borrowings	552		671
Accounts payable
— third parties	2,785		3,100
— related parties	266		277
Fair value of derivative instruments	173		130
Accrued expenses and other current liabilities	650		633


Total current liabilities	4,457		4,899
Long-term debt, net of current portion	4,883		4,881
Deferred income tax liabilities	263		288
Accrued postretirement benefits	540		554
Other long-term liabilities	302		288

Total liabilities	10,445		10,910
Commitments and contingencies
Shareholder's equity:
Common stock, no par value; Unlimited number of shares authorized; 1,100 shares issued and outstanding as of December 31, 2023, and March 31, 2023	—		—
Additional paid-in capital	1,208		1,208
Retained earnings	2,906		2,472
Accumulated other comprehensive loss	(239)		(238)
Total equity of our common shareholder	3,875		3,442
Noncontrolling interests	11		12
Total equity	3,886		3,454
Total liabilities and equity	$	14,331	$	14,364

____________________

See accompanying notes to the condensed consolidated financial statements. Refer to Note 3 – Consolidation for information on our consolidated VIE.

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine Months Ended December 31,
in millions	2023		2022
OPERATING ACTIVITIES
Net income	$	434	$	501
Net loss from discontinued operations	—		(2)
Net income from continuing operations	$	434	$	503
Adjustments to determine net cash provided by operating activities:
Depreciation and amortization	406		405
Gain on unrealized derivatives and other realized derivatives in investing activities, net	(34)		(19)


Loss on sale or disposal of assets, net	4		1
Non-cash restructuring and impairment charges	24		5
Loss on extinguishment of debt, net	5		—
Deferred income taxes, net	12		(7)
Equity in net loss (income) of non-consolidated affiliates	(1)		(14)
Loss (gain) on foreign exchange remeasurement of debt	14		(8)
Amortization of debt issuance costs and carrying value adjustments	8		12
Other, net	3		—
Changes in assets and liabilities including assets and liabilities held for sale (net of effects from divestitures):
Accounts receivable	(183)		669
Inventories	61		(96)
Accounts payable	(355)		(1,061)
Other assets	43		(4)
Other liabilities	(21)		(65)




Net cash provided by operating activities – continuing operations	420		321
Net cash used in operating activities – discontinued operations	—		(12)
Net cash provided by operating activities	$	420	$	309
INVESTING ACTIVITIES
Capital expenditures	$	(960)	$	(462)

Acquisition of business and other investments, net of cash acquired	—		(4)
Proceeds from sales of assets, third party, net of transaction fees and hedging	—		2
Proceeds from the sale of a business	2		3
Proceeds (outflows) from investment in and advances to non-consolidated affiliates, net	3		(37)
Proceeds from the settlement of derivative instruments, net	9		5
Other	11		15


Net cash used in investing activities	$	(935)	$	(478)
FINANCING ACTIVITIES
Proceeds from issuance of long-term and short-term borrowings	$	699	$	—
Principal payments of long-term and short-term borrowings	(604)		(380)
Revolving credit facilities and other, net	(281)		749
Debt issuance costs	(3)		(6)

Return of capital to our common shareholder	—		(100)


Net cash (used in) provided by financing activities	$	(189)	$	263
Net (decrease) increase in cash, cash equivalents and restricted cash	(704)		94
Effect of exchange rate changes on cash	(6)		(39)
Cash, cash equivalents and restricted cash – beginning of period	1,511		1,084
Cash, cash equivalents and restricted cash – end of period	$	801	$	1,139

Cash and cash equivalents	$	787	$	1,126
Restricted cash (included in other long-term assets)	14		13


Cash, cash equivalents and restricted cash – end of period	$	801	$	1,139

Supplemental Disclosures:


Accrued capital expenditures as of December 31	$	176	$	125
Leased assets obtained in exchange for new operating lease liabilities	7		27

____________________

See accompanying notes to the condensed consolidated financial statements.

Novelis Inc.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (unaudited)


	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
in millions, except number of shares	Shares	Amount
Balance as of March 31, 2022	1,100	$	—	$	1,308	$	1,814	$	(620)	$	7	$	2,509
Net income attributable to our common shareholder	—	—		—		502		—		—		502
Net loss attributable to noncontrolling interests	—	—		—		—		—		(1)		(1)
Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		(146)		—		(146)
Change in fair value of effective portion of cash flow hedges, net of tax provision of $165 included in other comprehensive income (loss)	—	—		—		—		480		—		480
Change in pension and other benefits, net of tax provision of $2 included in other comprehensive income (loss)	—	—		—		—		7		—		7
Return of capital to our common shareholder	—	—		(100)		—		—		—		(100)
Balance as of December 31, 2022	1,100	$	—	$	1,208	$	2,316	$	(279)	$	6	$	3,251

	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance as of March 31, 2023	1,100	$	—	$	1,208	$	2,472	$	(238)	$	12	$	3,454
Net income attributable to our common shareholder	—	—		—		434		—		—		434

Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		61		—		61
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $18 included in other comprehensive income (loss)	—	—		—		—		(56)		—		(56)
Change in pension and other benefits, net of tax benefit of $3 included in other comprehensive income (loss)	—	—		—		—		(6)		(1)		(7)

Balance as of December 31, 2023	1,100	$	—	$	1,208	$	2,906	$	(239)	$	11	$	3,886

	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance as of September 30, 2022	1,100	$	—	$	1,208	$	2,304	$	(368)	$	6	$	3,150
Net income attributable to our common shareholder	—	—		—		12		—		—		12

Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		215		—		215
Change in fair value of effective portion of cash flow hedges, net of tax benefit of $37 included in other comprehensive income (loss)	—	—		—		—		(121)		—		(121)
Change in pension and other benefits, net of tax benefit of $1 included in other comprehensive income (loss)	—	—		—		—		(5)		—		(5)

Balance as of December 31, 2022	1,100	$	—	$	1,208	$	2,316	$	(279)	$	6	$	3,251

	Equity of our Common Shareholder
	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance as of September 30, 2023	1,100	$	—	$	1,208	$	2,785	$	(382)	$	12	$	3,623
Net income attributable to our common shareholder	—	—		—		121		—		—		121

Currency translation adjustment included in other comprehensive income (loss)	—	—		—		—		140		—		140
Change in fair value of effective portion of cash flow hedges, net of tax provision of $6 included in other comprehensive income (loss)	—	—		—		—		4		—		4
Change in pension and other benefits, net of tax benefit of $1 included in other comprehensive income (loss)	—	—		—		—		(1)		(1)		(2)

Balance as of December 31, 2023	1,100	$	—	$	1,208	$	2,906	$	(239)	$	11	$	3,886

____________________

See accompanying notes to the condensed consolidated financial statements.

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. Hindalco acquired Novelis in May 2007. Effective September 1, 2022, Novelis Inc. and AV Metals, Inc. (which, prior to such date, was our sole shareholder and a wholly owned subsidiary of AV Minerals (Netherlands) N.V.) completed a plan of arrangement, pursuant to which AV Metals, Inc. merged with and into Novelis Inc., with Novelis Inc. surviving the merger. As of the effectiveness of the plan of arrangement, we are a direct, wholly owned subsidiary of AV Minerals (Netherlands) N.V. and indirectly of Hindalco. Prior to the effectiveness of the plan of arrangement, AV Metals, Inc. was a holding company, with its assets being comprised solely of its investment in Novelis, and without any operations. The plan of arrangement was a combination of entities under common control and resulted in a change in the reporting entity. The opening balance of common shares has been increased to 1,100 shares and additional paid-in capital has been increased and retained earnings reduced by $4 million in the earliest period presented.

All tonnages are stated in metric tonnes. One metric tonne is equivalent to 2,204.6 pounds. One kt is 1,000 metric tonnes.

Organization and Description of Business

We produce aluminum sheet and light gauge products for use in the packaging market, which includes beverage and food can and foil products, as well as for use in the automotive, transportation, aerospace, electronics, architectural, and industrial product markets. As of December 31, 2023, we had manufacturing operations in nine countries on four continents: North America, South America, Asia, and Europe, through 32 operating facilities, which may include any combination of hot or cold rolling, finishing, casting, or recycling capabilities. We have recycling operations in 14 of our operating facilities to recycle post-consumer aluminum, such as UBCs, and post-industrial aluminum, such as class scrap.

Basis of Presentation

The condensed consolidated balance sheet data as of March 31, 2023, was derived from the March 31, 2023, audited financial statements but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes in our 2023 Form 10-K. Management believes that all adjustments necessary for the fair statement of results, consisting of normally recurring items, have been included in the unaudited condensed consolidated financial statements for the interim periods presented.

Consolidation Policy

Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and include the assets, liabilities, revenues, and expenses of all wholly owned subsidiaries, majority-owned subsidiaries over which we exercise control, and entities in which we have a controlling financial interest or are deemed to be the primary beneficiary. We eliminate intercompany accounts and transactions from our condensed consolidated financial statements.

We use the equity method to account for our investments in entities that we do not control but have the ability to exercise significant influence over operating and financial policies. Consolidated net income attributable to our common shareholder includes our share of the net income (loss) of these entities. The difference between consolidation and the equity method impacts certain of our financial ratios because of the presentation of the detailed line items reported in the condensed consolidated financial statements for consolidated entities, compared to a two-line presentation of investment in and advances to non-consolidated affiliates and equity in net loss (income) of non-consolidated affiliates.

Supplier Finance Programs

The Company participates in supply chain finance programs under which participating suppliers may elect to sell some or all of their Novelis receivables to a third-party financial institution. Supplier participation in the programs is solely up to the supplier, and participating suppliers negotiate their arrangements directly with the financial institutions. The payment terms that we have with our suppliers under these programs range up to 180 days and are considered commercially reasonable. The Company has provided a guarantee in support of the obligations of certain of its subsidiaries under one of the supply chain finance programs currently in effect pursuant to which invoices receivable from Novelis originating in North America and South America are purchased and sold. In the ordinary course of business, the Company provides operating guarantees relating to the payment obligations of certain of its subsidiaries. The Company’s obligation under the guarantee referenced above is qualitatively the same as its guarantees supporting payment obligations of its subsidiaries.

On December 31, 2023, and March 31, 2023, confirmed supplier invoices that are outstanding and subject to the third-party programs included in accounts payable on the condensed consolidated balance sheets were $672 million and $801 million, respectively.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Restructuring Activities

Restructuring charges, which are recorded within restructuring and impairment expenses, net on our condensed consolidated statements of operations, include employee severance and benefit costs, impairments of certain assets, and other costs associated with exit activities. In October 2023, the Company approved the plan to close the cold rolling and finishing plant in Clayton, New Jersey, and the plant ceased operations in December 2023. As a result, in the third quarter of fiscal 2024, the Company recorded approximately $24 million in charges for restructuring activities related to the plant closure.

Use of Estimates and Assumptions

The preparation of our condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The principal areas of judgment relate to (1) impairment of goodwill; (2) actuarial assumptions related to pension and other postretirement benefit plans; (3) tax uncertainties and valuation allowances; and (4) assessment of loss contingencies, including environmental and litigation liabilities. Future events and their effects cannot be predicted with certainty, and accordingly, our accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of our condensed consolidated financial statements may change as new events occur, more experience is acquired, additional information is obtained, and our operating environment changes. We evaluate and update our assumptions and estimates on an ongoing basis and may employ outside experts to assist in our evaluations. Actual results could differ from the estimates we have used.

Recently Adopted Accounting Standards

On April 1, 2023, we adopted ASU 2022-04, which requires a buyer in a supplier finance program to disclose qualitative and quantitative information about its supplier finance programs, including the key terms of the program, the amount of obligations outstanding at the end of the reporting period, and a description of where those obligations are presented in the balance sheet. If presented in more than one balance sheet line item, the amount in each line item should be disclosed. Further, effective April 1, 2024, a roll-forward of such amounts during the annual period should be presented. The adoption of this guidance resulted in enhanced disclosures regarding these programs (see Supplier Finance Programs above) and did not have a material impact on our consolidated financial condition, results of operations, or cash flows.

We did not adopt any other new accounting pronouncements during the nine months ended December 31, 2023, that had a material impact on our consolidated financial condition, results of operations, or cash flows.

Recently Issued Accounting Standards (Not Yet Adopted)

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating this ASU to determine its impact on the Company's disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU expands disclosures in an entity's income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for all entities for fiscal years beginning after December 15, 2024. We are currently evaluating this ASU to determine its impact on the Company's disclosures.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

2. INVENTORIES

Inventories consists of the following.


in millions	December 31, 2023		March 31, 2023
Finished goods	$	661	$	643
Work in process	1,224		1,303
Raw materials	500		505
Supplies	292		278
Inventories	$	2,677	$	2,729

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

3. CONSOLIDATION

Variable Interest Entity

The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and consolidates the VIE. An entity is deemed to have a controlling financial interest and is the primary beneficiary of a VIE if it has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

Logan is a consolidated joint venture in which we hold 40% ownership. Our joint venture partner is Tri-Arrows. Logan processes metal received from Novelis and Tri-Arrows and charges the respective partner a fee to cover expenses. Logan is a thinly capitalized VIE that relies on the regular reimbursement of costs and expenses from Novelis and Tri-Arrows to fund its operations. Novelis is considered the primary beneficiary and consolidates Logan since it has the power to direct activities that most significantly impact Logan's economic performance, an obligation to absorb expected losses, and the right to receive benefits that could potentially be significant to the VIE.

Other than the contractually required reimbursements, we do not provide additional material support to Logan. Logan's creditors do not have recourse to our general credit. There are significant other assets used in the operations of Logan that are not part of the joint venture, as they are directly owned and consolidated by Novelis or Tri-Arrows.

The following table summarizes the carrying value and classification of assets and liabilities owned by the Logan joint venture and consolidated in our condensed consolidated balance sheets.


in millions	December 31, 2023		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	3	$	6
Accounts receivable, net	8		6
Inventories	154		149
Prepaid expenses and other current assets	12		7
Total current assets	177		168
Property, plant and equipment, net	86		63
Goodwill	12		12
Deferred income tax assets	37		37
Other long-term assets	4		6
Total assets	$	316	$	286
LIABILITIES
Current liabilities:
Accounts payable	$	131	$	90
Accrued expenses and other current liabilities	30		28
Total current liabilities	161		118
Accrued postretirement benefits	122		130
Other long-term liabilities	3		6
Total liabilities	$	286	$	254

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

4. INVESTMENT IN AND ADVANCES TO NON-CONSOLIDATED AFFILIATES AND RELATED PARTY TRANSACTIONS

Included in the accompanying condensed consolidated financial statements are transactions and balances arising from business we conducted with our equity method non-consolidated affiliates.

Alunorf

Alunorf is a joint venture investment between Novelis Deutschland GmbH, a subsidiary of Novelis, and Speira GmbH. Each of the parties to the joint venture holds a 50% interest in the equity, profits and losses, shareholder voting, management control, and rights to use the production capacity of the facility. Alunorf tolls aluminum and charges the respective partner a fee to cover the associated expenses.

UAL

UAL is a joint venture investment between Novelis Korea Ltd., a subsidiary of Novelis, and Kobe. UAL is a thinly capitalized VIE that relies on the regular reimbursement of costs and expenses from Novelis and Kobe. UAL is controlled by an equally represented board of directors in which neither entity has sole decision-making ability regarding production operations or other significant decisions. Furthermore, neither entity has the ability to take the majority share of production or associated costs over the life of the joint venture. Our risk of loss is limited to the carrying value of our investment in and inventory-related receivables from UAL. UAL's creditors do not have recourse to our general credit. Therefore, UAL is accounted for as an equity method investment, and Novelis is not considered the primary beneficiary. UAL currently produces flat-rolled aluminum products exclusively for Novelis and Kobe. As of December 31, 2023, Novelis and Kobe both hold a 50% interest in UAL. During the three and nine months ended December 31, 2023, we made additional contributions to UAL in the amount of $11 million and $18 million, respectively. During the three and nine months ended December 31, 2022, we made contributions to UAL in the amount of $13 million and $20 million, respectively.

AluInfra

AluInfra is a joint venture investment between Novelis Switzerland SA, a subsidiary of Novelis, and Constellium SE. Each of the parties to the joint venture holds a 50% interest in the equity, profits and losses, shareholder voting, management control, and rights to use the facility.

The following table summarizes the results of operations of our equity method non-consolidated affiliates in the aggregate and the nature and amounts of significant transactions we have with our non-consolidated affiliates. The amounts in the table below are disclosed at 100% of the operating results of these affiliates.


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2023		2022		2023		2022
Net sales	$	345	$	388	$	1,135	$	1,344
Costs and expenses related to net sales	359		363		1,121		1,282
Income tax (benefit) provision	(6)		8		2		19
Net (loss) income	$	(8)	$	17	$	12	$	43

Purchases of tolling services from Alunorf	$	65	$	85	$	223	$	253

The following table describes related party balances in the accompanying condensed consolidated balance sheets. We had no other material related party balances with non-consolidated affiliates.


in millions	December 31, 2023		March 31, 2023
Accounts receivable, net — related parties	$	122	$	156
Other long-term assets — related parties	3		3
Accounts payable — related parties	266		277

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Transactions with Hindalco

We occasionally have related party transactions with Hindalco. During the three and nine months ended December 31, 2023, we recorded net sales of less than $1 million and $1 million, respectively, between Novelis and Hindalco related primarily to sales of equipment and other services. During the three and nine months ended December 31, 2022, we recorded net sales of less than $1 million between Novelis and Hindalco related primarily to sales of equipment and other services. As of December 31, 2023, and March 31, 2023, there was $1 million and $2 million, respectively, of outstanding accounts receivable, net — related parties net of accounts payable — related parties related to transactions with Hindalco.

Return of Capital

On August 1, 2023, the Board of Directors approved a return of capital to our common shareholder in an amount of up to $100 million, expected to be paid during fiscal 2024. The timing and the final amount are subject to changes based upon all final shareholder approvals.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

5. DEBT

Debt consists of the following.


	December 31, 2023								March 31, 2023
in millions	Interest Rates(1)		Principal		Unamortized Carrying Value Adjustments(2)		Carrying Value		Principal		Unamortized Carrying Value Adjustments(2)		Carrying Value
Short-term borrowings	5.41	%	$	552	$	—	$	552	$	671	$	—	$	671
Floating rate Term Loans, due January 2025			—		—		—		752		(7)		745
Floating rate Term Loans, due September 2026	7.00	%	748		(4)		744		—		—		—
Floating rate Term Loans, due March 2028	7.50	%	486		(6)		480		490		(6)		484
3.25% Senior Notes, due November 2026	3.25	%	750		(6)		744		750		(8)		742
3.375% Senior Notes, due April 2029	3.375	%	553		(8)		545		543		(8)		535
4.75% Senior Notes, due January 2030	4.75	%	1,600		(19)		1,581		1,600		(22)		1,578
3.875% Senior Notes, due August 2031	3.875	%	750		(8)		742		750		(9)		741
China Bank Loans, due August 2027	3.90	%	59		—		59		64		—		64
1.8% Brazil Loan, due June 2023			—		—		—		30		—		30
1.8% Brazil Loan, due December 2023			—		—		—		20		—		20
Finance lease obligations and other debt, due through June 2028	2.97	%	19		—		19		30		—		30
Total debt			$	5,517	$	(51)	$	5,466	$	5,700	$	(60)	$	5,640
Less: Short-term borrowings			(552)		—		(552)		(671)		—		(671)
Less: Current portion of long-term debt			(31)		—		(31)		(88)		—		(88)
Long-term debt, net of current portion			$	4,934	$	(51)	$	4,883	$	4,941	$	(60)	$	4,881

____________________

(1)Interest rates are the stated rates of interest on the debt instrument (not the effective interest rate) as of December 31, 2023, and therefore exclude the effects of related interest rate swaps and accretion and amortization of debt issuance costs related to refinancing transactions and additional borrowings. We present stated rates of interest because they reflect the rate at which cash will be paid for future debt service.

(2)Amounts include unamortized debt issuance costs, fair value adjustments, and debt discounts.

Principal repayment requirements for our total debt over the next five years and thereafter using exchange rates as of December 31, 2023, for our debt denominated in foreign currencies are as follows (in millions).


As of December 31, 2023	Amount
Short-term borrowings and current portion of long-term debt due within one year	$	583
2 years	28
3 years	1,508
4 years	26
5 years	467
Thereafter	2,905
Total	$	5,517

Short-Term Borrowings

As of December 31, 2023, our short-term borrowings totaled $552 million, which consisted of $238 million of borrowings on our ABL Revolver, $200 million in short-term Brazil loans, $67 million in bank overdrafts, and $47 million in short-term China loans (CNY 336 million). The weighted average interest rate on the short-term borrowings was 5.41% and 6.67% as of December 31, 2023, and March 31, 2023, respectively.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Term Loan Facility

As of December 31, 2023, we were in compliance with the covenants of our Term Loan Facility.

On March 31, 2023, Novelis amended the Term Loan Facility, primarily to modify the reference rate used to determine interest from LIBOR to SOFR. Beginning with the interest period commencing June 30, 2023, term loans under the Term Loan Facility accrue interest at SOFR plus a 0.15% credit spread adjustment plus a spread of 1.75% in the case of the 2020 Term Loans, or a spread of 2.00% in the case of the 2021 Term Loans. During fiscal 2021, the Company adopted the practical expedient for Reference Rate Reform related to its debt arrangements and as such, this amendment is treated as a continuation of the existing debt agreement and no gain or loss on the modification was recorded. The Company did not record any gains or losses on the conversion of the reference rate for the borrowings under the Term Loan Facility from LIBOR to SOFR.

In September 2023, Novelis amended the Term Loan Facility and borrowed $750 million of term loans (the "2023 Term Loans"). The proceeds of the 2023 Term Loan were used to repay the previously-issued term loans due January 2025 (the "2020 Term Loans"). The 2023 Term Loans mature on September 25, 2026, are subject to 0.25% quarterly amortization payments and accrue interest at SOFR plus 1.65%.

In accordance with ASC 470, Debt, the amendment was accounted for as a partial extinguishment of the 2020 Term Loans, whereby $482 million of the $750 million outstanding at the time of the transaction was deemed an extinguishment and $268 million was deemed a modification of debt. As a result of this transaction, we recorded a loss on extinguishment of debt of $5 million in the second quarter of fiscal 2024.

ABL Revolver

In April 2022, Novelis amended the ABL Revolver facility to increase the limit on committed letters of credit under the facility to $275 million. There were no material costs incurred or accounting impacts as a result of this amendment.

In August 2022, Novelis amended the ABL Revolver facility to, among other things, increase the commitment under the ABL Revolver by $500 million to $2.0 billion and extend the maturity of the ABL Revolver until August 18, 2027. The amendment provides that new borrowings under the ABL Revolver facility made subsequent to the date of the amendment will incur interest at Term SOFR, EURIBOR, SONIA or SARON, as applicable based on the currency of the loan, plus a spread of 1.10% to 1.60% based on excess availability. The ABL Revolver facility also permits us to elect to borrow USD loans that accrue interest at a base rate (determined based on the greatest of one month Term SOFR plus 1.00%, a prime rate or an adjusted federal funds rate) plus a prime spread of 0.10% to 0.60% based on excess availability.

As of December 31, 2023, we had $238 million in borrowings under the ABL Revolver and were in compliance with debt covenants. We utilized $45 million of the ABL Revolver for letters of credit. We had availability of $1.2 billion on the ABL Revolver, including $230 million of remaining availability that can be utilized for letters of credit.

Senior Notes

The Senior Notes are guaranteed, jointly and severally, on a senior unsecured basis, by Novelis Inc. and certain of its subsidiaries. The Senior Notes contain customary covenants and events of default that will limit our ability and, in certain instances, the ability of certain of our subsidiaries to incur additional debt and provide additional guarantees; pay dividends or return capital beyond certain amounts and make other restricted payments; create or permit certain liens; make certain asset sales; use the proceeds from the sales of assets and subsidiary stock; create or permit restrictions on the ability of certain of Novelis' subsidiaries to pay dividends or make other distributions to Novelis or certain of Novelis' subsidiaries, as applicable; engage in certain transactions with affiliates; enter into sale and leaseback transactions; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge, or transfer all or substantially all of our assets and the assets of certain of our subsidiaries. During any future period in which either Standard & Poor's Ratings Group, Inc. or Moody's Investors Service, Inc. have assigned an investment grade credit rating to the Senior Notes and no default or event of default under the indenture has occurred and is continuing, certain of the covenants will be suspended. The Senior Notes include customary events of default, including a cross-acceleration event of default. The Senior Notes also contain customary call protection provisions for our bondholders that extend through November 2023 for the 3.25% Senior Notes due November 2026, through April 2024 for the 3.375% Senior Notes due April 2029, through January 2025 for the 4.75% Senior Notes due January 2030, and through August 2026 for the 3.875% Senior Notes due August 2031.

As of December 31, 2023, we were in compliance with the covenants of our Senior Notes.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

6. SHARE-BASED COMPENSATION

During the nine months ended December 31, 2023, we granted 1,969,209 Hindalco phantom RSUs and 2,620,019 Hindalco SARs. Total share-based compensation expense was $13 million and $27 million for the three and nine months ended December 31, 2023, respectively. Total share-based compensation expense was $9 million and $13 million for the three and nine months ended December 31, 2022, respectively. As of December 31, 2023, the outstanding liability related to share-based compensation was $35 million.

The cash payments made to settle all Hindalco SAR liabilities were $5 million and $8 million in the nine months ended December 31, 2023, and 2022, respectively. Total cash payments made to settle RSUs were $13 million and $15 million in the nine months ended December 31, 2023, and 2022, respectively. As of December 31, 2023, unrecognized compensation expense related to the non-vested Hindalco SARs (assuming all future performance criteria are met) and the RSUs was $10 million and $22 million, respectively. The unrecognized expense related to the non-vested Hindalco SARs and the RSUs is expected to be recognized over weighted average periods of 1.3 years and 1.4 years, respectively.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

7. POSTRETIREMENT BENEFIT PLANS

The Company recognizes actuarial gains and losses and prior service costs in the condensed consolidated balance sheet and recognizes changes in these amounts during the year in which changes occur through other comprehensive income (loss). The Company uses various assumptions when computing amounts relating to its defined benefit pension plan obligations and their associated expenses (including the discount rate and the expected rate of return on plan assets).

Components of net periodic benefit cost for all of our postretirement benefit plans are shown in the table below.


	Pension Benefit Plans				Other Benefit Plans
	Three Months Ended December 31,				Three Months Ended December 31,
in millions	2023		2022		2023		2022
Service cost	$	6	$	7	$	1	$	1
Interest cost	19		16		2		2
Expected return on assets	(20)		(18)		—		—
Amortization — losses, net	—		2		(1)		(1)
Amortization — prior service credit, net	—		(1)		(1)		—

Net periodic benefit cost(1)	$	5	$	6	$	1	$	2

	Pension Benefit Plans				Other Benefit Plans
	Nine Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Service cost	$	17	$	20	$	2	$	3
Interest cost	57		47		5		4
Expected return on assets	(59)		(54)		—		—
Amortization — losses, net	(1)		6		(2)		(1)
Amortization — prior service credit, net	(1)		(1)		(3)		(2)

Net periodic benefit cost(1)	$	13	$	18	$	2	$	4

____________________

(1)Service cost is included within cost of goods sold (exclusive of depreciation and amortization) and selling, general and administrative expenses, while all other cost components are recorded within other (income) expenses, net.

The average expected long-term rate of return on all plan assets is 6.1% in fiscal 2024.

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., the U.K., Canada, Germany, Italy, Switzerland, and Brazil. We contributed the following amounts to all plans.


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2023		2022		2023		2022
Funded pension plans	$	2	$	2	$	23	$	10
Unfunded pension plans	4		4		11		12
Savings and defined contribution pension plans	14		13		44		40
Total contributions	$	20	$	19	$	78	$	62

During the remainder of fiscal 2024, we expect to contribute an additional $6 million to our funded pension plans, $6 million to our unfunded pension plans, and $13 million to our savings and defined contribution pension plans.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

8. CURRENCY LOSSES (GAINS)

The following currency losses are included in other (income) expenses, net in the accompanying condensed consolidated statements of operations.


	Three Months Ended December 31,				Nine Months Ended December 31,
in millions	2023		2022		2023		2022
Losses (gains) on remeasurement of monetary assets and liabilities, net	$	43	$	39	$	39	$	(28)
(Gains) losses recognized on balance sheet remeasurement currency exchange contracts, net	(36)		(32)		(27)		46
Currency losses, net	$	7	$	7	$	12	$	18

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

9. FINANCIAL INSTRUMENTS AND COMMODITY CONTRACTS

The following tables summarize the gross fair values of our financial instruments and commodity contracts as of the periods presented.


	December 31, 2023
	Assets				Liabilities				Net Fair Value
in millions	Current		Noncurrent(1)		Current		Noncurrent(1)		Assets / (Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Metal contracts	$	12	$	—	$	(83)	$	(3)	$	(74)
Currency exchange contracts	27		4		(5)		(1)		25
Energy contracts	—		1		(4)		—		(3)
Interest rate swap contracts	—		—		—		(8)		(8)
Total derivatives designated as hedging instruments	$	39	$	5	$	(92)	$	(12)	$	(60)
Derivatives not designated as hedging instruments:
Metal contracts	$	65	$	1	$	(65)	$	(2)	$	(1)
Currency exchange contracts	32		1		(15)		—		18
Energy contracts	—		—		(1)		—		(1)
Total derivatives not designated as hedging instruments	$	97	$	2	$	(81)	$	(2)	$	16
Total derivative fair value	$	136	$	7	$	(173)	$	(14)	$	(44)


	March 31, 2023
	Assets				Liabilities				Net Fair Value
	Current		Noncurrent(1)		Current		Noncurrent(1)		Assets / (Liabilities)
Derivatives designated as hedging instruments:
Cash flow hedges
Metal contracts	$	37	$	—	$	(31)	$	—	$	6
Currency exchange contracts	26		4		(19)		(1)		10
Energy contracts	3		—		(4)		—		(1)
Total derivatives designated as hedging instruments	$	66	$	4	$	(54)	$	(1)	$	15
Derivatives not designated as hedging instruments:
Metal contracts	$	66	$	—	$	(52)	$	(2)	$	12
Currency exchange contracts	13		3		(22)		(3)		(9)
Energy contracts	—		—		(2)		—		(2)
Total derivatives not designated as hedging instruments	$	79	$	3	$	(76)	$	(5)	$	1
Total derivative fair value	$	145	$	7	$	(130)	$	(6)	$	16

____________________

(1)The noncurrent portions of derivative assets and liabilities are included in other long-term assets and other long-term liabilities, respectively, in the accompanying condensed consolidated balance sheets.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Metal

We use derivative instruments to preserve our conversion margins and manage the timing differences associated with metal price lag. We use over-the-counter derivatives indexed to the LME (referred to as our "aluminum derivative forward contracts") to reduce our exposure to fluctuating metal prices associated with the period of time between the pricing of our purchases of inventory and the pricing of the sale of that inventory to our customers, which is known as "metal price lag." We also purchase forward LME aluminum contracts simultaneously with our sales contracts with customers that contain fixed metal prices. These LME aluminum forward contracts directly hedge the economic risk of future metal price fluctuations to better match the selling price of the metal with the purchase price of the metal. The volatility in LMPs also results in metal price lag.

Price risk arises due to fluctuating aluminum prices between the time the sales order is committed and the time the order is shipped. We identify and designate certain LME aluminum forward purchase contracts as cash flow hedges of the metal price risk associated with our future metal purchases that vary based on changes in the price of aluminum. Generally, such exposures do not extend beyond three years in length. The average duration of those contracts is one year.

Price risk exposure arises due to the timing lag between the LME based pricing of raw material aluminum purchases and the LME based pricing of finished product sales. We identify and designate certain LME aluminum forward sales contracts as cash flow hedges of the metal price risk associated with our future metal sales that vary based on changes in the price of aluminum. Generally, such designated exposures do not extend beyond two years in length. The average duration of those contracts is less than one year.

In addition to aluminum, we entered into LME copper and zinc forward contracts, as well as LMP forward contracts. As of December 31, 2023, and March 31, 2023, the fair value of these contracts represented an asset of $2 million and an asset of less than $1 million, respectively. These contracts are undesignated, with an average duration of one year.

The following table summarizes our notional amount.


in kt	December 31, 2023	March 31, 2023
Hedge type
Purchase (sale)
Cash flow purchases	—	1
Cash flow sales	(754)	(699)
Not designated	(242)	(144)
Total, net	(996)	(842)

Foreign Currency

We use foreign exchange forward contracts and cross-currency swaps to manage our exposure to changes in exchange rates. These exposures arise from recorded assets and liabilities, firm commitments, and forecasted cash flows denominated in currencies other than the functional currency of certain operations.

We use foreign currency contracts to hedge expected future foreign currency transactions, which include capital expenditures. These contracts cover the same periods as known or expected exposures. We had total notional amounts of $1 billion and $1.2 billion in outstanding foreign currency forwards designated as cash flow hedges as of December 31, 2023, and March 31, 2023, respectively.

As of December 31, 2023, and March 31, 2023, we had outstanding foreign currency exchange contracts with a total notional amount of $1.4 billion and $1.7 billion, respectively, to primarily hedge balance sheet remeasurement risk, which were not designated as hedges. Contracts representing the majority of this notional amount will mature by the fourth quarter of fiscal 2024 and offset the remeasurement impact.

Novelis Inc.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Interest rate

We use interest rate swaps to partially manage our exposure to changes in the SOFR interest rate, which impacts our variable-rate debt. During this fiscal year we entered into several interest rate swaps to convert $400 million of our variable rate exposure to a weighted average fixed rate of 4.4%. These interest rate swaps, designated as cash flow hedges, are effective from September 2023 through March 31, 2027.

Energy

We use natural gas forward purchase contracts to manage our exposure to fluctuating energy prices in North America. We had a notional of 8 million MMBtu designated as cash flow hedges as of December 31, 2023, and the fair value was a liability of $3 million. There was a notional of 7 million MMBtu of natural gas forward purchase contracts designated as cash flow hedges as of March 31, 2023, and the fair value was a liability of less than $1 million. As of December 31, 2023, we had a notional of less than 1 million MMBtu forward contracts that were not designated as hedges, and the fair value was a liability of less than $1 million. As of March 31, 2023, we had a notional of less than 1 million MMBtu and the fair value was a liability of less than $1 million. The average for all natural gas contracts is less than three years in length.

We use diesel fuel forward purchase contracts to manage our exposure to fluctuating fuel prices in North America and Europe. We had a notional of less than 1 million gallons designated as cash flow hedges as of December 31, 2023, and the fair value was a liability of less than $1 million. There was a notional of 1 million gallons designated as cash flow hedges as of March 31, 2023, and the fair value was a liability of less than $1 million. As of December 31, 2023, we had a notional of less than 1 million metric tonnes not designated as hedges, and the fair value was a liability of $1 million. As of March 31, 2023, we had a notional of less than 1 million metric tonnes of forward contracts that were not designated as hedges, and the fair value was a liability of less than $1 million. The average duration for all diesel fuel contracts is one year in length.

(Gain) Loss Recognition

The following table summarizes the (gains) losses associated with the change in fair value of derivative instruments not designated as hedges and the excluded portion of designated derivatives recognized in other (income) expenses, net. (Gains) losses recognized in other line items in the condensed consolidated statement of operations are separately disclosed within this footnote.

Three Months Ended

December 31

Nine Months Ended

December 31

in millions

Form: 10-Q

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