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Previous: ALCAN ALUMINIUM LTD /NEW, 8-K/A, EX-99.2, 2000-12-21 |
Next: ALCAN ALUMINIUM LTD /NEW, 8-K/A, EX-99.4, 2000-12-21 |
<PAGE> 1
EXHIBIT NO. 99.3: UNAUDITED PRO FORMA FINANCIAL INFORMATION
64
<PAGE> 2
ALCAN ALUMINIUM LIMITED
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 2000
(IN MILLIONS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
Historical Translated algroup Business Pro forma Pro forma
Alcan historical IAS to divestitures adjustments combined
Algroup Cdn GAAP Note(5) Note(2)
Note(1) Note(3)
(reclassified)
----------- ------------- ------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets
Cash and time deposits 88 181 - (5) (181) A 83
Receivables 1,468 1,082 - (57) - 2,493
Inventories 1,308 783 (1) (27) 38 B 2,101
------- ----- ---- --- ------ ------
2,864 2,046 (1) (89) (143) 4,677
Deferred charges and other assets 514 161 58 66 527 C 1,326
(including net assets held for sale)
Property, plant and equipment, net 6,898 1,767 2 (67) 1,152 D 9,752
Goodwill, net - 164 120 - 2,106 E 2,390
Deferred income taxes - 56 - - 92 F 148
------- ----- --- --- ----- ------
Total assets 10,276 4,194 179 (90) 3,734 18,293
------- ----- ---- --- ------ ------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Payables 1,380 1,015 16 (36) 302 G 2,677
Short term borrowings 586 892 - (4) 756 H 2,230
Income and other taxes 35 55 - - - 90
Debt maturing within one year 232 - - - - 232
------- ----- ---- --- ------ ------
2,233 1,962 16 (40) 1,058 5,229
Debt not maturing within one year 803 510 - (9) (1) I 1,303
Deferred credits and other liabilities 575 237 - (35) - 777
Deferred income taxes 798 137 13 (6) 646 J 1,588
Minority interests 204 32 - - - 236
SHAREHOLDERS' EQUITY
Redeemable retractable preference shares 160 - - - - 160
Common shares 1,222 417 - - 3,080 K 4,719
Retained earnings 4,375 899 155 - (1,054) L 4,375
Other (94) - (5) - 5 M (94)
------- ----- ---- --- ------ ------
5,663 1,316 150 - 2,031 9,160
Total liabilities and shareholders' equity 10,276 4,194 179 (90) 3,734 18,293
======= ===== ==== === ====== ======
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial statements
65
<PAGE> 3
ALCAN ALUMINIUM LIMITED
UNAUDITED PRO FORMA STATEMENT OF INCOME FROM CONTINUING OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2000
(IN MILLIONS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Historical Translated algroup Business Pro forma Pro forma
Alcan historical IAS to divestitures adjustments combined
Algroup Cdn GAAP Note(5) Note(2)
Note(1) Note(3)
(reclassified)
------------- --------------- -------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Sales and operating revenues 3,987 2,639 - (100) - 6,526
Other income 55 45 - - - 100
----- ----- ---- ---- --- -----
4,042 2,684 - (100) - 6,626
COSTS AND EXPENSES
Cost of sales and operating expenses 3,014 2,056 4 (85) - 4,989
Depreciation and amortization 230 97 1 (4) 55 O 379
Selling, administrative and general expenses 178 214 - (6) - 386
Research and development expenses 33 25 - (1) - 57
Interest 16 75 (1) - 15 P 105
Other expenses 54 16 - - - 70
----- ----- ---- ---- --- -----
3,525 2,483 4 (96) 70 5,986
Income before income taxes, other items and 517 201 (4) (4) (70) 640
amortization of goodwill
Income taxes 192 54 6 (2) (26) Q 224
----- ----- ---- ---- --- -----
Income before other items and amortization of 325 147 (10) (2) (44) 416
goodwill
Equity income - 1 - - - 1
Minority interest 2 (3) - - - (1)
----- ----- ---- ---- --- -----
Net income from continuing operations before 327 145 (10) (2) (44) 416
amortization of goodwill
Amortization of goodwill - 6 7 - 17 R 30
----- ----- ---- ---- --- -----
Net income from continuing operations 327 139 (17) (2) (61) 386
Dividends on preference shares 5 - - - - 5
----- ----- ---- ---- --- -----
Net income from continuing operations 322 139 (17) (2) (61) 381
attributable to common shareholders ===== ===== ==== ==== === =====
Earnings per common share before amortization
of goodwill
Basic N/A 1.24
Fully diluted N/A 1.23
Earnings per common share after amortization
of goodwill
Basic 1.48 1.16
Fully diluted 1.48 1.14
Weighted average of common share outstanding
Basic 214,600,000 330,762,000
Fully diluted 220,100,000 334,234,000
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial statements
66
<PAGE> 4
ALCAN ALUMINIUM LIMITED
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME FROM CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Translated algroup
historical IAS to Business Pro forma
Historical Algroup Cdn GAAP divestitures adjustments Pro forma
Alcan (reclassified) Note(3) Note(5) Note(2) combined
---------- -------------- -------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Sales and operating revenues 7,324 5,064 - (180) - 12,208
Other income 179 82 - - 261
------ ----- --- ---- ---- -------
7,503 5,146 - (180) - 12,469
COSTS AND EXPENSES
Cost of sales and operating expenses 5,695 3,901 29 (152) 38 N 9,511
Depreciation and amortization 477 194 3 (7) 110 O 777
Selling, administrative and general expenses 375 425 - (12) - 788
Research and development expenses 67 43 - (2) - 108
Interest 76 153 (9) - 25 P 245
Other expenses 127 33 - - - 160
------ ----- --- ---- ---- -------
6,817 4,749 23 (173) 173 11,589
Income before income taxes, other items and
amortization of goodwill 686 397 (23) (7) (173) 880
Income taxes 211 93 1 (3) (64) Q 238
------ ----- --- ---- ---- -------
Income before other items and amortization
of goodwill 475 304 (24) (4) (109) 642
Equity income ( loss) (1) 5 - - - 4
Minority interest (14) (5) - - - (19)
------ ----- --- ---- ---- -------
Net income from continuing operations before
amortization of goodwill 460 304 (24) (4) (109) 627
Amortization of goodwill - 11 16 - 33 R 60
------ ----- --- ---- ---- -------
Net income from continuing operations 460 293 (40) (4) (142) 567
Dividends on preference shares 9 - - - - 9
------ ----- --- ---- ---- -------
Net income from continuing operations
attributable to common shareholders 451 293 (40) (4) (142) 558
====== ===== === ==== ==== =======
Earnings per common share before amortization
of goodwill
Basic N/A 1.86
Fully diluted N/A 1.85
Earnings per common share after amortization
of goodwill
Basic 2.06 1.69
Fully diluted 2.03 1.67
Weighted average of common shares outstanding
Basic 219,100,000 330,762,000
Fully diluted 224,500,000 334,234,000
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma combined
financial statements
67
<PAGE> 5
The unaudited pro forma combined balance sheet as of June 30, 2000 gives effect
to the Alcan and algroup combination and related transactions as if such
transactions occurred on that date. The unaudited pro forma combined statements
of income for the six-month period ended June 30, 2000 and for the year ended
December 31, 1999 give effect to the Alcan and algroup combination and related
transactions as if such transactions had occurred on January 1, 1999. Certain
reclassifications have been made to the algroup historical financial statements
to conform to the presentation to be used by Alcan.
The combination has been accounted for using the purchase method of accounting.
In accordance with Canadian GAAP, the purchase price is based on the market
value of the Alcan common shares for a reasonable period of time before and
after October 17, 2000, the date the transaction was consummated. The average
price of the Alcan common shares for the five trading days beginning on October
13 and ending on October 19, 2000 was $30.11 per share. The total purchase price
has been allocated to the tangible and intangible assets and liabilities
acquired based upon their fair values determined with the assistance of
independent appraisers. The purchase price allocation is preliminary, based on
facts currently known to Alcan. However, Alcan management does not expect
significant changes in the purchase price allocation. The final allocation of
the purchase price will be based upon valuations and other studies including
independent appraisals that have not been completed. It is expected that the
appraisals will be completed in early January 2001. The excess of the purchase
price over the fair market value of the net assets acquired will be treated as
goodwill, to be amortized over 40 years.
69
<PAGE> 6
For the purpose of the unaudited pro forma combined financial statements,
the purchase price and goodwill have been determined as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000
--------------------
(In millions of US$)
<S> <C>
Purchase price
Acquisition of algroup shares (see below) $3,497
Transaction costs (of which $ 21 is incurred and included in deferred
charges and other assets) 43
------
3,540
Book value of net assets acquired 1,466
Less:
Special dividend (562)
Repayment of capital (375)
Algroup's predecessor goodwill (284)
ADD:
Conversion of the convertible debentures into algroup
common shares 1
------
246
Excess of purchase price over the book value of net assets acquired $3,294
======
</TABLE>
<TABLE>
Allocation of the excess of the purchase price over the book value
of the net assets acquired:
<S> <C>
Inventories $ 38
Property, plant and equipment 1,152
Intangible assets 548
Restructuring costs (principally severance costs) (80)
Derivatives (200)
Deferred income taxes (554)
Goodwill 2,390
------
$3,294
======
</TABLE>
70
<PAGE> 7
The purchase price for algroup has been determined as follows:
<TABLE>
<CAPTION>
<S> <C>
Algroup shares outstanding 6,790,262
Conversion of convertible debentures 1,170
------------
6,791,432
Exchange ratio 17.1
------------
Alcan shares issued 116,133,487
============
Price per Alcan share $ 30.11
============
Purchase price (in millions) $ 3,497
============
</TABLE>
The accompanying unaudited pro forma combined financial statements are based on
and should be read in conjunction with the historical consolidated financial
statements of Alcan and algroup for the year ended December 31, 1999 and for the
six-month period ended June 30, 2000, including the notes thereto which are
included with this filing.
The pro forma adjustments are based upon available information and include
certain assumptions and adjustments, which the management of Alcan believes to
be reasonable. These adjustments are directly attributable to the combination
and are expected to have a continuing impact on Alcan's business, results of
operations and financial position. The unaudited pro forma combined financial
statements do not give effect to any potential cost savings or other synergies
that could result from the combination. Plans are currently in development to
integrate the operations of Alcan and algroup. A preliminary estimate of costs
related to the integration and to be included in the purchase price allocation
is $80 million consisting principally of severance costs. To the extent that
other integration costs are incurred and not accounted for as accrued
liabilities at the date of consummation of the combination, a charge may result,
which may be material. The amount of the charge cannot be quantified at this
time, but is expected to be recognized in the period in which restructuring
occurs. To the extent that integration costs are accounted for as accrued
liabilities and included in the allocation of the purchase price consideration,
the amount allocated to goodwill would increase, and pro forma net income from
continuing operations would decrease.
The unaudited pro forma combined financial statements are not necessarily
indicative either of the results that actually would have been achieved if the
transactions reflected therein had been effective during the periods presented
or of the results which may be obtained in the future.
71
<PAGE> 8
2. FOREIGN CURRENCY TRANSLATION
The algroup historical consolidated balance sheet information and related
Canadian GAAP pro forma and business divestiture adjustments as of June 30,
2000 have been translated into U.S. dollars at the June 30, 2000 rate of
exchange of US$ 1 - CHF 1.63. The algroup historical consolidated
statements of income information for the year ended December 31, 1999, and
for the six-month period ended June 30, 2000 and related Canadian GAAP pro
forma and business divestiture adjustments to the unaudited pro forma
statements of income, have been translated at the average rates of exchange
of US$ 1 - CHF 1.5023, and US$ 1 - CHF 1.6512, respectively.
3. DIFFERENCES BETWEEN INTERNATIONAL ACCOUNTING STANDARDS AND CANADIAN GAAP
AS THEY APPLY TO ALGROUP
Refer to note 35 of algroup's 1999 consolidated financial statements which
are included with this filing for a description of differences between
International Accounting Standards and Canadian GAAP as they apply to
algroup.
4. UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following adjustments have been made to prepare the pro forma balance
sheet and statements of income. Pro forma income statement adjustments are
assumed to occur as of January 1, 1999. Pro forma balance sheet adjustments
are assumed to occur on June 30, 2000.
72
<PAGE> 9
<TABLE>
<CAPTION>
JUNE 30,
2000
(In millions of US$)
--------------------
<S> <C>
A
Repayment of capital on algroup common shares (181)
-----
B
Fair value allocation to inventories 38
-----
C
Reversal of transaction costs included in deferred charges and other assets (21)
Fair value allocation to intangible assets 548
-----
527
-----
D
Fair value allocation to property plant and equipment 1,152
-----
E
Elimination of predecessor goodwill (284)
Goodwill arising on acquisition 2,390
-----
2,106
-----
F
Deferred income taxes arising on fair value allocations using a tax rate of 38% 92
-----
G
Fair value allocation to derivatives 200
Accrued restructuring costs 80
Accrued transaction costs -- Alcan 22
-----
302
-----
H
Repayment of capital on algroup common shares 194
Special dividend on algroup common shares 562
------
756
------
</TABLE>
73
<PAGE> 10
<TABLE>
<CAPTION>
JUNE 30,
2000
(In millions of US$)
--------------------
<S> <C>
I
Conversion of convertible debentures to algroup common shares (1)
J
Deferred income taxes on fair value allocations using a tax rate of 38% 646
------
K
Issuance of Alcan Common Shares 3,497
Conversion of convertible debentures to algroup common shares 1
Repayment of capital on algroup common shares (375)
Elimination of algroup common shares residual value after conversion of the
Convertible debentures, and repayment of capital on algroup common shares (43)
------
3,080
------
L
Special dividend on algroup common shares (562)
Elimination of algroup's residual retained earnings (492)
------
(1,054)
------
M
Elimination of algroup deferred translation adjustment 5
------
</TABLE>
74
<PAGE> 11
<TABLE>
<CAPTION>
SIX-MONTH
ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
(In millions of US$)
------------- -----------------
<S> <C> <C>
N
Fair value allocation to inventories charged to cost of sales
and operating expenses - 38
--- ---
O
Depreciation of fair value allocation to property, plant and
equipment and amortization of fair value allocation to
intangible assets over 17 years and 13 years, respectively 55 110
--- ---
P
Reduction in interest expense re: convertible debentures - (8)
(using an interest rate of 4 %)
Reduction in interest expense re: repayment of amount
owed by Lonza Group Ltd. (using an interest rate of 4 %) (3) (7)
Increase in interest expense re: special dividend and
repayment of capital using an interest rate of 4 % 18 40
--- ---
15 25
--- ---
Q
Income taxes recovery at 38 % on items included in
items N,O and P 26 64
--- ---
R
Amortization of goodwill over 40 years 30 60
Elimination of predecessor goodwill amortization (13) (27)
--- ---
17 33
--- ---
</TABLE>
75
<PAGE> 12
5. BUSINESS DIVESTITURES
Pursuant to the European Commission's decision to authorize the
combination, Alcan agreed to divest the following algroup businesses:
o the alumina trihydrate plant at Martinswerk, Germany;
o the Star lithographic sheet mill at Bridgenorth, United Kingdom;
and,
o certain machines producing semi-rigid aluminum containers.
These divestitures are required to be completed by March 31, 2001.
The unaudited pro forma combined financial statements have been
adjusted to record the impact of these divestitures. The net assets to
be divested have been included in Deferred charges and other assets in
the unaudited pro forma combined balance sheet and the results of
operations from these assets have been removed from the unaudited pro
forma statements of income.
6. U.S. GAAP
Under U.S. GAAP, pro forma combined common shareholders' equity as at
June 30, 2000 would be $9,018, pro forma combined net income for the
year ended December 31, 1999 and for the six-month period ended June
30, 2000 would be $411 million and $427 million, respectively. Basic
combined pro forma earnings per share for the year ended December 31,
1999 and the six-month period ended June 30, 2000 would be $1.27 and
1.31, respectively.
Refer to Note 5 of the Alcan consolidated financial statements included
in Alcan's most recent 10-K for a description of the differences
between Canadian and U.S. GAAP as they apply to Alcan.
Refer to Note 35 of algroup's 1999 consolidated financial statements
which are included with this filing for a description of the
differences between IAS and U.S. GAAP as the apply to algroup.
The disclosure of net income before amortization of goodwill in the
income statements is not permitted under U.S. GAAP.
76
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