<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 14, 1998
ALCAN ALUMINIUM LIMITED
(Exact name of registrant as specified in its charter)
Canada 1-3677 Inapplicable
------ ------ ------------
(state or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) (Identification No.)
1188 Sherbrooke Street West, Montreal, Quebec, Canada H3A 3G2
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (514) 848-8000
-------------
---------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
The information set forth in the press releases issued by Alcan
Aluminium Limited, attached hereto as Exhibit 99.1 and 99.2, is
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(c) Exhibits.
99.1 Press release of Alcan Aluminium Limited, dated October 14,
1998.
99.2 Press release of Alcan Aluminium Limited, dated October 16,
1998.
99.3 Cautionary Statement for purposes of the "Safe Harbor"
provisions of the Private Securities Litigation Reform Act of
1995.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALCAN ALUMINIUM LIMITED
/s/ DENIS G. O'BRIEN
------------------------
Denis G. O'Brien
Controller
Dated: October 16, 1998
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
99.1 Press release of Alcan Aluminium Limited, dated October 14, 1998.
99.2 Press release of Alcan Aluminium Limited, dated October 16, 1998.
99.3 Cautionary Statement for purposes of the "Safe Harbor" provisions of
the Private Securities Litigation Reform Act of 1995.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
PRESS RELEASE [LOGO]
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
ALCAN ALUMINIUM LIMITED FILES ITS STATEMENT OF DEFENCE TO
A NATIVE CLAIMS LEGAL ACTION IN BRITISH COLUMBIA, CANADA
VANCOUVER, CANADA - October 14, 1998 -- Alcan has filed a statement of defence
today in the Supreme Court of British Columbia in response to a suit filed
against Canada, British Columbia and Alcan by the 100-member Cheslatta Nation
Indian Band on 14 April 1998. Alcan believes that the Cheslatta claim is without
merit and will not succeed in court.
In their suit the plaintiffs seek a declaration that they be entitled to the
exclusive occupancy or possession of certain claimed lands, to damages and to
other relief. The Cheslatta claim appears to rely on the December 1997 decision
of the Supreme Court of Canada in the DELGAMUUKW case which deals with issues of
aboriginal rights and title. Specific aboriginal rights and titles will be
determined by the courts on a case-by-cases basis. Alcan obtained its title to
certain of its lands in the claimed territory under valid grants from the
Government of Canada upon due payment to that Government.
As evidenced by the statement of defence, Alcan will vigourously defend its
rights and raise both substantive and procedural defences. It is understood that
both Canada and British Columbia have filed appearances in the Cheslatta suit.
Alcan expects that they will each file statements of defence in due course.
Alcan believes that the hearings in the trial and on subsequent appeal are
likely to extend over several years, during which time the day-to-day operations
of Alcan's facilities in British Columbia will not be impeded.
Alcan Aluminium Limited is a multinational company engaged in all aspects of the
aluminum industry. With operations and sales offices in over 30 countries, the
Alcan Group is one of the most international aluminum companies in the world. It
is also a leading global producer and marketer of rolled aluminum products.
- END -
- -------------------------------------------------------------------www.alcan.com
Alcan Aluminium Limited Media contact: Richard Prokopanko
1188 Sherbrooke Street West Tel.: 1 (604) 257-1400
Montreal (Quebec) H3A 3G2 Investor contact: Alan G. Brown
Canada Tel.: 1 (514) 848-8368
<PAGE> 1
EXHIBIT 99.2
PRESS RELEASE [LOGO]
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
ALCAN REPORTS THIRD QUARTER EARNINGS
-- REDUCES STAKE IN JAPANESE AFFILIATE, NIPPON LIGHT METAL --
MONTREAL, CANADA - October 16, 1998 - Alcan Aluminium Limited (Stock Symbol: AL)
reports third quarter consolidated net income of $107 million compared to $80
million for the similar period of 1997. After preference share dividends, net
income per common share for the quarter is 46 cents, compared to 34 cents a year
earlier.
The current year's third quarter includes an after-tax gain of $20 million (9
cents per share)for exchange revaluation of the Company's accumulated deferred
tax liability and after-tax charges of $9 million (4 cents per share) for losses
at the 45.6%-owned Nippon Light Metal Company, Ltd. (NLM) and of $7 million (3
cents per share) for rationalization costs in Europe. The 1997 period included a
special charge of $30 million (13 cents per share) and operating losses of $7
million (3 cents per share) relating to NLM. Excluding these items, the net
income for the quarter was $103 million (44 cents per share) compared to $117
million (50 cents per share) for the corresponding quarter of 1997.
The rationalization costs relate to manpower reductions in Alcan's European
fabricating operations as part of the cost reduction programme in that region.
By the end of 1998 employee numbers will be reduced by about 500 in these
operations.
The Company also reports that it is reducing its 45.6% interest in NLM to below
20%. The cash proceeds of the sale of shares will be at least $145 million with
a corresponding after-tax gain of approximately $90 million to be reflected in
the fourth quarter results. The book value of the remaining investment will be
some $40 million. With the reduction in Alcan's interest to below 20%, NLM will
no longer be accounted for on an equity basis but will be treated as a portfolio
investment.
Commenting on the quarter, Jacques Bougie, President and Chief Executive Officer
said, "We are pleased with the underlying performance of our core businesses in
this period of very weak metal prices. We continue to see strong demand for our
products in North and South America. However, we are anticipating slower growth
in Europe."
.../2
- -------------------------------------------------------------------www.alcan.com
Alcan Aluminium Limited Media contact: Alain Bergeron
1188 Sherbrooke Street West Tel.: 1 (514) 848-8232
Montreal (Quebec) H3A 3G2 Investor contact: Alan G. Brown
Canada Tel.: 1 (514) 848-8368
<PAGE> 2
Page 2.
"In line with our strategy of focussing on our upstream and large-scale
fabricating businesses, we have reduced our shareholding in Nippon Light Metal
in Japan. We remain committed to Asia as a region offering strong long-term
growth and will continue our presence in Japan through our on- going links with
NLM." said Bougie.
<TABLE>
<CAPTION>
THIRD NINE SECOND
QUARTER MONTHS QUARTER
1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Sales and operating revenues
(US$ millions) 1,950 1,949 5,889 5,830 1,986
Net income
(US$ millions) 107 80 310 339 86
Shipments (thousands of tonnes)
Ingot products* 213 215 622 643 207
Fabricated products 467 436 1,372 1,295 469
Fabrication of
customer-owned metal 80 70 220 210 72
----- ----- ------ ------ -----
Total volume 760 721 2,214 2,148 748
===== ===== ====== ====== =====
Ingot product realizations
(US$ per tonne) 1,482 1,733 1,580 1,733 1,591
Fabricated product realizations
(US$ per tonne) 2,875 2,950 2,937 2,970 2,930
</TABLE>
* Includes primary and secondary ingot and scrap
Sales and operating revenues for the third quarter of 1998 were unchanged from a
year earlier at $1,950 million reflecting lower prices offset by increased
volume.
Total fabricated product volumes, which include products fabricated from
customer-owned metal, were 547 thousand tonnes (kt) in the third quarter, some
8% higher than a year earlier and slightly ahead of the second quarter of 1998.
This reflects strong North American shipments, seasonally lower sales in Europe
and the consolidation of shipments from Indian Aluminium Company, Limited
(Indal).
Average ingot product realizations declined $109/tonne from the second quarter
and $251/tonne from the third quarter of 1997 compared to declines of $48 and
$296 respectively in the LME 3-month price.
.../3
<PAGE> 3
Page 3.
Fabricated product realizations declined $55/tonne from the second quarter
level. For the nine months, average realizations are down just $33/tonne from
the previous year, despite much lower metal prices, reflecting improved local
currency prices and stronger currencies in Europe.
PRODUCT SECTOR REVIEW
<TABLE>
<CAPTION>
THIRD NINE SECOND
QUARTER MONTHS QUARTER
(US$ millions) 1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Operating income
Raw materials and chemicals 24 45 93 79 30
Primary metal 73 138 288 446 85
Fabricated products 85 85 249 240 88
Intersector and
other items 31 (21) 87 (39) 37
----- ----- ----- ----- -----
213 247 717 726 240
Equity loss (9) (36) (48) (34) (23)
Corporate offices (32) (29) (96) (89) (34)
Interest (21) (26) (65) (77) (21)
Income taxes (44) (76) (198) (187) (76)
----- ----- ----- ----- -----
Net income 107 80 310 339 86
===== ===== ===== ===== =====
</TABLE>
Operating profits from raw material and chemical operations declined from the
year-ago quarter with lower selling prices partially offset by cost savings.
Earnings declined from the second quarter as the effect of lower metal prices
flowed through to alumina prices.
The decline in earnings from primary metal operations compared to the second
quarter of 1998 and the year-ago quarter results primarily from lower
realizations for ingot.
Fabricated products earnings were unchanged from the second quarter reflecting
rationalization costs of $11 million in Europe offset by improved earnings from
North America and the consolidation of Indal's earnings.
"Intersector and other items" primarily reflects the realization or deferral of
profits on intersector sales of metal. Profits were deferred in 1997 due to
generally rising ingot prices. In the first nine months of 1998 previously
deferred profits on intersector sales were realized as ingot prices decreased.
Also included in this category is interest income.
.../4
<PAGE> 4
Page 4.
Alcan recorded a loss from equity-accounted companies of $9 million for the
third quarter primarily arising at NLM in Japan, where business conditions
remain difficult. Following the reduction of Alcan's interest to below 20% in
the fourth quarter, NLM will be cost-accounted and equity profits and losses
will no longer arise. During the third quarter the Company increased its
shareholding in Indal to majority ownership and, accordingly, that company is
now consolidated as a subsidiary.
Revaluation of the Company's cumulative deferred income tax liability to reflect
current exchange rates, as required by new Canadian accounting standards,
resulted in a write-back of $20 million. Each subsequent US$0.01 increase
(decrease) in the value of the Canadian dollar will decrease (increase) the
Company's net income by about $6 million, as a result of the revaluation of
deferred income taxes.
The debt:equity ratio at September 30, at 22:78 compared to the levels at June
30, 1998 of 21:79 and 23:77 a year ago.
GEOGRAPHIC REVIEW
<TABLE>
<CAPTION>
THIRD NINE SECOND
QUARTER MONTHS QUARTER
(US$ millions) 1998 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C>
Net income (Loss)
Canada 45 58 126 189 34
United States 41 41 113 107 41
South America - 3 6 22 1
Europe 3 6 32 33 5
Asia and Pacific (5) (27) (28) (7) (17)
Other
(including eliminations) 23 (1) 61 (5) 22
----- ----- ----- ----- -----
107 80 310 339 86
===== ===== ===== ===== =====
</TABLE>
In Canada, operating net income declined from the second quarter and the prior
year due to the effect of lower metal prices on primary metal operations. The
quarter's results also include the deferred income tax revaluation referred to
above.
In the United States, net income from operations was unchanged reflecting strong
fabricated product volumes, offset by lower realizations from smelter
operations.
.../5
<PAGE> 5
Page 5.
Operating results in South America were affected by lower raw material and
primary metal prices.
European results were lower reflecting lower prices for alumina and metal. Also,
fabricated products results were affected by seasonally lower volumes and the $7
million after-tax cost of manpower reductions.
Results in the Asia and Pacific region for the quarter reflect operating losses
from Japan as well as lower alumina prices.
The profit from "Other" in the quarter arises principally from the recognition
of previously deferred profits on inter-regional sales of ingot. In 1997 this
result was adverse as profits were deferred in a generally rising metal price
environment.
Statements made in this press release which describe the Company's intentions,
expectations or predictions may be forward-looking statements within the meaning
of securities laws. The Company cautions that, by their nature, forward-looking
statements involve risk and uncertainty and that the Company's results could
differ materially from those expressed or implied in such statements. Reference
should be made to the most recent Form 10-Q for a summary of major risk factors.
Alcan Aluminium Limited is a multinational company engaged in all aspects of the
aluminum industry. With operations and sales offices in over 30 countries, the
Alcan Group is one of the most international aluminum companies in the world. It
is also a leading global producer and marketer of rolled aluminum products.
The average number of common shares outstanding for the third quarter of 1998
was 227.6 million compared to 227.1 million in the comparable quarter of 1997.
- END -
NOTE:
All dollar amounts are stated in U.S. dollars.
All tonnages are stated in metric tonnes, equivalent to 2,204.6 pounds.
All figures are unaudited.
.../6
<PAGE> 6
Page 6.
ALCAN ALUMINIUM LIMITED
INTERIM CONSOLIDATED STATEMENT OF INCOME
(unaudited)
Periods ended September 30
(in millions of US$,
except per share amounts)
<TABLE>
<CAPTION>
Third Quarter Nine Months
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues
Sales and operating
revenues $1,950 $1,949 $5,889 $5,830
Other income 10 16 47 63
------ ------ ------ ------
1,960 1,965 5,936 5,893
Costs and expenses
Cost of sales and
operating expenses 1,514 1,504 4,560 4,506
Depreciation 116 106 339 323
Selling,
administrative and
general expenses 108 106 325 324
Research and
development
expenses 17 16 51 50
Interest 21 26 65 77
Other expenses 23 11 41 40
------ ------ ------ ------
1,799 1,769 5,381 5,320
Income before income
taxes and other
items 161 196 555 573
Income taxes (note 1)
Income taxes
excluding revaluation 64 78 218 195
Revaluation of
cumulative deferred
income tax liability (20) - (20) -
------ ------ ------ ------
44 78 198 195
Income before
other items 117 118 357 378
Equity loss (9) (36) (48) (34)
Minority interests (1) (2) 1 (5)
------ ------ ------ ------
Net income $ 107 $ 80 $ 310 $ 339
Dividends on
preference shares 3 2 8 7
------ ------ ------ ------
Net income
attributable to
common shareholders $ 104 $ 78 $ 302 $ 332
</TABLE>
.../7
<PAGE> 7
Page 7.
ALCAN ALUMINIUM LIMITED
INTERIM CONSOLIDATED STATEMENT OF INCOME (cont'd)
(unaudited)
Periods ended September 30
(in millions of US$,
except per share amounts)
<TABLE>
<CAPTION>
Third Quarter Nine Months
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net income per
common share $ 0.46 $ 0.34 $ 1.33 $ 1.46
Dividends per
common share $ 0.15 $ 0.15 $ 0.45 $ 0.45
</TABLE>
Montreal, Canada
October 16, 1998
.../8
<PAGE> 8
Page 8.
ALCAN ALUMINIUM LIMITED
INTERIM CONSOLIDATED BALANCE SHEET
(unaudited for 1998)
<TABLE>
<CAPTION>
(in millions of US$) September 30 December 31
1998 1997
<S> <C> <C>
ASSETS
Current assets
Cash and time deposits $ 375 $ 608
Receivables 1,440 1,292
Inventories
Aluminum 822 800
Raw materials 342 307
Other supplies 248 234
------- -------
1,412 1,341
------- -------
Total current assets 3,227 3,241
Deferred charges and
other assets 474 424
Investments 135 251
Property, plant and equipment
Cost 12,600 11,715
Accumulated depreciation 6,700 6,257
------- -------
5,900 5,458
------- -------
Total assets $ 9,736 $ 9,374
</TABLE>
.../9
<PAGE> 9
Page 9.
ALCAN ALUMINIUM LIMITED
INTERIM CONSOLIDATED BALANCE SHEET (cont'd)
(unaudited for 1998)
<TABLE>
<CAPTION>
(in millions of US$, September 30 December 31
except per share amounts) 1998 1997
<S> <C> <C>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Payables $ 1,114 $ 1,052
Short-term borrowings 150 238
Income and other taxes 53 98
Debt maturing within
one year 63 36
------- -------
1,380 1,424
------- -------
Debt not maturing within
one year 1,342 1,241
Deferred credits and
other liabilities 616 623
Deferred income taxes 754 969
Minority interests 103 43
Shareholders' equity
Redeemable non-retractable
preference shares 160 203
Common shareholders' equity
Common shares 1,259 1,251
Retained earnings 4,062 3,556
Deferred translation
adjustments 60 64
------- -------
5,381 4,871
------- -------
Total shareholders' equity 5,541 5,074
------- -------
Total liabilities and
shareholders' equity $ 9,736 $ 9,374
Common shareholders' equity
per common share $ 23.64 $ 21.43
Ratio of total borrowings
to equity 22:78 23:77
</TABLE>
Montreal, Canada
October 16, 1998
.../10
<PAGE> 10
Page 10.
ALCAN ALUMINIUM LIMITED
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30
(in millions of US$) 1998 1997
<S> <C> <C>
Operating activities
Net income $ 310 $ 339
Adjustments to determine cash
from operating activities:
Depreciation 339 323
Deferred income taxes 33 16
Equity loss - net of dividends 53 40
Change in operating
working capital (102) (243)
Change in deferred charges,
other assets, deferred
credits and other
liabilities - net (65) (69)
Gain on sales of
businesses - net (1) (13)
Other - net 6 27
------ ------
Cash from operating activities 573 420
Financing activities
New debt 55 39
Debt repayments (50) (39)
------ ------
5 -
Short-term borrowings - net (107) 95
Common shares issued 8 13
Redemption of preference shares (43) -
Dividends - Alcan shareholders
(including preference) (110) (110)
- Minority interests (1) (2)
------ ------
Cash used for financing activities (248) (4)
</TABLE>
.../11
<PAGE> 11
Page 11.
ALCAN ALUMINIUM LIMITED
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (cont'd)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30
(in millions of US$) 1998 1997
<S> <C> <C>
Investment activities
Property, plant and equipment (511) (372)
Investments (72) -
Net proceeds from disposal of
businesses and other assets 4 49
------ ------
Cash used for investment activities (579) (323)
Effect of exchange rate changes
on cash and time deposits 5 (7)
------ ------
Increase (decrease)in cash
and time deposits (249) 86
Cash of companies consolidated
(deconsolidated) 16 (11)
Cash and time deposits
- beginning of period 608 546
------ ------
Cash and time deposits
- end of period $ 375 $ 621
</TABLE>
Montreal, Canada
October 16, 1998
.../12
<PAGE> 12
Page 12.
ALCAN ALUMINIUM LIMITED
(in millions of US$)
Notes to Interim Consolidated Financial Statements
1. ACCOUNTING CHANGE
In 1998, the Company adopted new recommendations of the Canadian Institute
of Chartered Accountants dealing with accounting for income taxes. The
principal change under the new recommendations is the requirement to
revalue deferred income tax liabilities for all changes in tax rates and
exchange rates.
The Company has adopted the new recommendations retroactively without
restating prior years. The cumulative effect of adopting the new
recommendations at January 1, 1998 is to decrease Deferred income taxes by
$285, to increase Retained earnings by $306 and to decrease Deferred
translation adjustments by $21.
For the first nine months of 1998, the impact of the revaluation of
Deferred income taxes to reflect current exchange rates is to decrease the
Company's income tax provision by $20.
2. ACQUISITION OF CONTROLLING INTEREST IN INDIAN ALUMINIUM COMPANY, LIMITED
On July 3, 1998, the Company acquired an additional 17% of Indian Aluminium
Company, Limited (Indal), and will acquire a further 3% on completion of
certain formalities, for a total of $70 in cash. This will bring Alcan's
ownership in Indal to 54.6%. The accounts of Indal are being consolidated
with effect from July 1998.
3. PRIOR YEAR AMOUNTS
Certain prior year amounts have been reclassified to conform with the 1998
presentation.
Montreal, Canada
October 16, l998
<PAGE> 1
EXHIBIT NO. 99.3
CAUTIONARY STATEMENT FOR PURPOSES OF THE ''SAFE HARBOR'' PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Written or oral statements made by Alcan or its representatives, including
statements set forth in Alcan's press releases issued on October 14, 1998 and
October 16, 1998, which describe the Company's or management's objectives,
projections, estimates, expectations or predictions of the future may be
''forward-looking statements'' within the meaning of the United States Private
Securities Litigation Reform Act of 1995, which can be identified by the use of
forward-looking terminology such as ''believes,'' ''expects,'' ''may,''
''will,''''should,'' ''estimates,'' ''anticipates'' or the negative thereof or
other variations thereon. The Company cautions that, by their nature,
forward-looking statements involve risk and uncertainty and that the Company's
actual results could differ materially from those expressed or implied in such
forward-looking statements or could affect the extent to which a particular
projection is realized.
Important factors which could cause the Company's actual performance to differ
materially from projections or expectations included in forward-looking
statements include global aluminum supply and demand conditions, aluminum ingot
prices and changes in other raw materials costs and availability, cyclical
demand and pricing within the principal markets for the Company's products,
changes in government regulations, particularly those affecting environmental,
health or safety compliance, economic developments and other factors within the
countries in which the Company operates or sells its products and other factors
relating to the Company's ongoing operations including, but not limited to, the
outcome of litigation, labour negotiations and fiscal regimes.
Copies of the Company's filings may be obtained by contacting the Company or the
United States Securities and Exchange Commission.
