Pechiney: 2002 Third Quarter Results
PARIS--October 24, 2002--Pechiney (PY)(PECH.PA)(PCHO)(SICOVAM:13290)
Pechiney announces earnings from operations in the third quarter of 2002 of EUR 95 million, down 31% from the third quarter of 2001, and a net loss of EUR 14 million. Adjusted net income stands at EUR 38 million, EUR 0.48 per share.
Highlights of the period & recent developments:
| -- | Acquisition of Corus' aluminium conversion activities. Pechiney and Corus reached an agreement in principle for Pechiney's acquisition of Corus's aluminium conversion activities. |
| -- | Downsizing at Ravenswood. Restructuring is part of a plan to ensure the plant's industrial and commercial recovery. This measure will affect 202 people, 17% of the work force. |
| -- | The group's significant legal disputes came to an end during the quarter |
| -- | Continuous Improvement. At the end of the third quarter of 2002, cumulated Continuous Improvement Gains totaled EUR 102 million. |
Outlook:
As anticipated, the negative trend in the price of aluminium and the parity of the U.S. dollar vis-a-vis the euro will continue to affect the Group's results in the last quarter.
Beyond these factors, the success of the cost reductions allowed by Pechiney's Continuous Improvement System, together with the growth in revenues from the sale of smelting technology, should make it possible to largely offset the impact, on the group's objectives, of the absence of an economic recovery, in particular in packaging for the beauty and cosmetics sector.
Altogether, in light of the Group's sensitivity to the price of aluminium and the parity of the U.S. dollar, full year earnings from operations are now estimated to be close to EUR 400 million.
Statement of Income (French GAAP)
-------------------
-------------------------------------------------------
Millions of euros Q3-01 Q2-02 Q3-02
-------------------------------------------------------
Results
Net sales 2.752 3.397 3.020
Earnings from operations 137 137 95
Restructuring expense,
other (expense) income (15) (54) (47)
Financial expense, net (19) (11) (16)
Income tax expense (39) (31) (19)
Equity affiliates 5 3 0
Minority interests (6) 4 (3)
Net Income before goodwill 63 48 10
Goodwill amortisation (7) (39) (24)
Net Income 56 9 (14)
Adjusted Net Income 66 74 38
-------------------------------------------------------
N.I. Per share "A" (EUR) 0,70 0,11 (0,18)
Adj. Net inc. / share(1)
bef. GW 0,93 1,04 0,59
Adj. net income per
share(1) 0,84 0,94 0,48
-------------------------------------------------------
9M 01 9M 02
-------------------------------------------------------
Net sales 8.375 9.231
Earnings from operations 445 336
Restructuring expense,
other (expense) income (28) (117)
Financial expense, net (52) (38)
Income tax expense (114) (78)
Equity affiliates 16 4
Minority interests (22) (3)
Net Income before goodwill 245 104
Goodwill amortisation (20) (72)
Net Income 225 32
Adjusted Net Income 244 161
-------------------------------------------------------
N.I. Per share "A" (EUR) 2,82 0,39
Adj. net inc. / share(1)
bef. GW 3,33 2,04
Adj. net income per share(1) 3,08 2,37
----------------------------------------------
(1) Published net income per share excluding the impact, after
taxes, of restructuring expense, other (expense) income and other
non-recurring items.
The Group's earnings from operations totaled EUR 95 million in the third quarter of 2002, down 31% from the third quarter of 2001.
The major portion of this decrease (EUR 39 million out of EUR 42 million) was directly linked to the downturn in the primary aluminium market. The two main external factors -- the average price of aluminium and the parity of the U.S. dollar vis-a-vis the euro -- declined significantly. At 1,360 $/ton in the third quarter, the average realized price for aluminium fell sharply from the price in the same period of 2001 (1,481 U.S.$/metric ton), while the realized $/EUR parity went from 0.88 to 0.95, representing a decrease of more than 7% in the value of the dollar vis-a-vis the euro.
The Group's aluminium conversion activities demonstrated good resistance in a market environment marked by a brutal slump in aerospace shipments, compared with the first quarter of 2001. This result was achieved as a result of the good performance reported by European facilities, while ongoing difficulties at the Ravenswood plant led the Group to launch a major recovery program.
In packaging, continued difficult market conditions in the beauty and cosmetics sector were offset by further progress in plastic packaging and as a result of the Pechiney Continuous Improvement System.
Net income before amortization of goodwill totaled EUR 10 million in the third quarter of 2002, compared with EUR 63 million in the third quarter of 2001. This result included non-recurring expenses linked to the restructuring measures taken by the Group, as well as the settlement in the third quarter of the principal legal proceedings in which it was involved. Amortization of goodwill included exceptional amortization in the amount of EUR 16 million related to the activity of the Ravenswood plant in the United States. Adjusted net income per share(1) was EUR 0.48 versus EUR 0.84 in the third quarter of 2001.
Principal indicators
------------------------------------------------------------
Q3 Q2 Q3
2001 2002 2002
------------------------------------------------------------
Average euro/U.S. dollar 0.89 0.92 0.98
Realised EUR /$ (Primary Al.) 0.88 0.90 0.95
LME average price ($/t) 1,405 1,377 1,329
Average realized price ($/t) 1,481 1,385 1,360
------------------------------------------------------------
Recent developments - Q3 2002
-- On October 23, Pechiney and Corus announced that they have
reached an agreement in principle for Pechiney's acquisition
of Corus' aluminium conversion activities. In 2001, these
entities reported net sales of more than EUR 1.5 billion, with
4,600 employees and seven manufacturing facilities. Subject to
the approval of anti-trust authorities, the transaction will
represent a total amount of EUR 750 million. The synergies
related to the integration of these activities into the Group,
as expected in the three years following the finalization of
the operation, will total EUR 40 million, i.e. 62% of earnings
from operations in 2001 of the activities acquired. It should
be able to add an additional EUR 20 million by 2007.
This operation will allow Pechiney to strengthen its positions
in strategic markets - aerospace and automotive. Pechiney will
not only increase its manufacturing capacity and bolster its
research and development potential, but also broaden its
customer base and expand the range of products it offers. More
generally, the Group will benefit from the know-how of a
management team focused on customer service and already
familiar with the approach of Pechiney's Continuous
Improvement System.
-- On October 7, Pechiney announced job reduction measures at the
Ravenswood plant of its American subsidiary Pechiney Rolled
Products as part of a restructuring plan. The job reduction
measures, which will be completed by December 2002, are part
of a plan to make the plant profitable again by focusing on
both costs and its marketing policy. The restructuring plan
will cost approximately $9 million, which will be accounted
for in the fourth quarter of 2002. The restructuring measures
will affect 202 people, i.e. 17% of the work force.
Operating results - Q3 2002
Net sales
Consolidated net sales in the third quarter rose 10% to EUR 3,020 million, compared with the third quarter of 2001. On a comparable basis, there was an increase of 1%, with the difference mainly attributable to the consolidation of an international Trade subsidiary.
----------------------------------------------------------------
Millions of euros Q3 2001 Q2 2002 Q3 2002
----------------------------------------------------------------
Primary Aluminium 446 409 390
Aluminium Conversion 668 703 612
Packaging 589 614 559
Ferroalloys 87 79 78
-------------------------------
Net sales from industrial
operations 1,790 1,805 1,639
International Trade 962 1,592 1,381
----------------------------------------------------------------
Total 2,752 3,397 3,020
----------------------------------------------------------------
Earnings from Operations
At EUR 95 million, earnings from operations in the period decreased by 31% compared with the third quarter of 2001, as well as with the second quarter of 2002.
---------------------------------------------------------------- Millions of euros Q3 2001 Q2 2002 Q3 2002 ---------------------------------------------------------------- Primary Aluminium 115 91 69 Aluminium Conversion 4 9 1 Packaging 32 40 32 Ferroalloys (3) 2 0 International Trade 10 18 16 Holdings (21) (23) (23) ---------------------------------------------------------------- Total 137 137 95 ----------------------------------------------------------------
Segment breakdown - Q3 2002
Primary Aluminium (Aluminium Metal & Bauxite, Alumina)
At EUR 69 million, earnings from operations in the third quarter of 2002 were down EUR 46 million from the same period in 2001.
The main portion of this decrease, i.e. EUR 39 million, was linked to the significantly negative trend in the price of aluminium and geographical premiums, as well as in the parity of the U.S. dollar vis-a-vis the euro. At 1,360 U.S.$/metric ton in the third quarter, the average realized price fell more than 8%, while the $/EUR parity realized by primary aluminium activities went from 0.88 to 0.95, representing a decrease of more than 7% in the value of the dollar vis-a-vis the euro.
In addition, during the quarter, this business was faced with increased production costs (large number of relining during the quarter), which were offset by a rise in the volume of technology sales (smelting equipment for Mozal 2, Alouette contract), as well as by the impact of the additional equity interest acquired in Tomago in October 2001.
Compared with the second quarter of 2002, earnings from operations were down EUR 22 million, primarily owing to the depreciation of the U.S. dollar.
Conversion
Earnings from operations in Aluminium Conversion went from EUR 4 million in the third quarter of 2001 to EUR 1 million in the third quarter of 2002.
Earnings from operations reported by European activities went from EUR 15 million in the third quarter of 2001 to EUR 12 million in the same period in 2002. These activities showed good resistance to the worsening of the economic environment and, particularly, to the significant decline in shipments to the aerospace industry since the end of 2001, as a result of the good adaptation of the Issoire facility. In addition, the activities involved in the production of automobile body sheets, can stock and thin foil reported good operating performances.
In the United States, the operating loss at Ravenswood totaled EUR 12 million in the third quarter, compared with EUR 11 million in the third quarter of 2001 and EUR 15 million in the second quarter of 2002. Despite this decrease of EUR 3 million in Ravenswood's operating loss from one quarter to the next, achieved in spite of a new decline in aerospace volume, the persistence of losses in this activity led the Group to launch an ambitious recovery plan. The plan involves reducing the work force by 17% and profoundly modifying sales and marketing, in order to refocus sales on the most profitable customers and segments.
Packaging
In Packaging, earnings from operations totaled EUR 32 million, stable compared with the third quarter of 2001.
This result reflected the absence of any recovery in sales volume in these markets in the third quarter. The impact of this difficult environment on earnings from operations was offset by cost reductions achieved through the implementation of the Pechiney Continuous Improvement System.
More specifically, while the results of flexible packaging continued to advance in a satisfactory manner and benefit notably from the synergies linked to the successful integration of Soplaril, cosmetics and luxury activities were affected by particularly difficult conditions for both price and volume.
In this way, the significant decline in volume in the first nine months of the year 2002, with reference to both the impact of inventory reduction and the major downturn in the luxury packaging market, cost the packaging sector EUR 31 million in earnings from operations and will no doubt not allow the Group to report increased results in this sector in 2002. Conversely, this decrease masks very good performances in cost reduction, perfectly in line with this branch's objectives. Any recovery of sales volume, which we do not expect before 2003, will therefore make it possible to enjoy the benefits of these operating improvements, in large measure linked to the positive action of the Pechiney Continuous Improvement System.
Other Activities
In Ferroalloys and other activities, earnings from operations rose EUR 3 million from the third quarter of 2001.
In International Trade, earnings from operations increased by EUR 6 million over the third quarter of 2001, rising from EUR 10 million to EUR 16 million. This major improvement was linked to the good performance of physical trading, alumina, copper and aluminium activities.
Other statement of income items
In the third quarter of 2002, income from operations totaled EUR 48 million, compared with EUR 122 million for the same period in 2001. This figure included EUR 47 million in restructuring expense and other (expense) income. It particularly involved the restructuring expense corresponding to the new measures taken by the Group to adapt its manufacturing base to the economic environment, and in particular a provision of EUR 7 million to restructure its Ferroalloys headquarters. It also included the impact of the settlement, during the third quarter, of the main legal proceedings in which the Group was involved, in particular the positive outcome of litigation concerning the violation of a patent registered by the Group, the settlement of litigation linked to the past activity of a brokerage business sold in 2000, and the subscription of an insurance policy to cover site restoration costs for a mine formerly operated in the United States. With the settlement of these legal proceedings, the Group estimates that the litigation in which it is now involved is not likely to have a significant impact on the accounts in the near future.
Current and deferred income taxes represented a charge of EUR 19 million, 59% of income before taxes. This high rate was due to the accounting, during the quarter, of non-tax deductible restructuring expense. On an annual basis, the Group anticipates a tax rate of approximately 43%.
Exceptional amortization of goodwill. When the prospects and operating conditions of the Ravenswood plant were being re-examined, leading to the launch of a major recovery plan, Pechiney conducted a new study of the value of the goodwill associated with this activity. Consequently, this goodwill was subject to exceptional amortization in the amount of EUR 16 million.
Financial structure
As of September 30, 2002, net indebtedness totaled EUR 1,324 million, down EUR 160 million from December 31, 2001. Compared with shareholders' equity and minority interests of EUR 3,314 million, the debt-to-equity ratio was 0.40, compared with 0.42 as of December 31, 2001.
As of September 30, 2002, the total number of outstanding shares was 82,512,658, of which 4,432,238 were owned by the Company.
Outlook
As anticipated, the negative trend in the price of aluminium and the parity of the U.S. dollar vis-a-vis the euro will continue to affect the Group's results in the last quarter. Beyond these factors, the success of the cost reductions allowed by Pechiney's Continuous Improvement System, together with the growth in revenues from the sale of smelting technology, should make it possible to largely offset the impact, on the group's objectives, of the absence of an economic recovery, in particular in packaging for the beauty and cosmetics sector.
Altogether, in light of the Group's sensitivity to the price of aluminium and the parity of the U.S. dollar, full year earnings from operations are now estimated to be close to EUR 400 million.
-------------------------------------------------------------------- Agenda -------------------------------------------------------------------- Next consensus survey : January 7. 2003 --------------------- Full year 2002 : January 30. 2003 -------------- --------------------------------------------------------------------
Certain statements in this press release that describe Pechiney's intentions, expectations or projections may constitute forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Pechiney's actual results, performance or achievement to be materially different from its intentions, expectations or projections. The forward-looking statements in this press release speak only as of its date and Pechiney undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Appendix
Comparison with American accounting standards (US GAAP)
Statement of Income Q3 2002
Millions of euros French FAS 133 FAS 142 US GAAP
GAAP Impact Impact
-------------------------------------------- -------- -------- -------
Net Sales 3.020 1 - 3.021
-------------------------------------------- -------- -------- -------
Earnings from operations 95 (20) - 75
-------------------------------------------- -------- -------- -------
Restructuring expense, other
(expense) income (47) - - (47)
-------- -------- -------- -------
Income from operations 48 (20) - 28
Financial expense, net (16) 4 - (12)
Income tax benefit (expense) (19) 5 - (14)
Equity in net earnings of affiliates 0 - - 0
Minority interests (3) - - (3)
Goodwill amortisation (8) - 8 -
Exceptional Goodwill amortisation (16) (1) (17)
-------------------------------------------- -------- -------- -------
Net Income (14) (11) 7 (18)
-------------------------------------------- -------- -------- -------
Balance Sheet as of 30/09/2002
Millions of euros French US GAAP US
GAAP Impact GAAP
----------------------------------------------- ---------- -----------
Long-term assets 4.845 (58) 4.787
Current assets 3.596 140 3.736
------------- ---------- -----------
Total assets 8.441 82 8.523
Shareholder's equity 3.162 (101) 3.061
Minority Interests 152 - 152
Long-term liabilities 2.855 38 2.893
Current liabilities 2.272 145 2.417
------------- ---------- -----------
Total liabilities and
Shareholder's equity 8.441 82 8.523
----------------------------------------------- ---------- -----------
The accounting principles applied by the Group in the preparation of its financial statements (French GAAP) differ in certain points from generally accepted accounting principles in the United States. The impact of these differences is presented in the accompanying tables.
The differences affect the statement of income in the following way.
-- Accounting for derivatives and hedging activities
In Pechiney's financial statements prepared in accordance with US GAAP:
| -- | derivative instruments (foreign exchange, interest rates, commodities) are recognized in the balance sheet, at fair value; |
| -- | the main transactions that meet the criteria set by SFAS 133 are accounted for as hedging operations; other hedging transactions, although efficient from an economic point of view, are not recognized as hedging activities. |
As a result, gains and losses resulting from the mark to market of certain hedging instruments are to be recorded in net income or in equity, with no recognition of the inverse effect of the mark to market of the hedged items.
For this reason, the impact of this standard on results varies according to market conditions and is difficult to forecast. The application of SFAS 133 generated a net accounting charge (with no impact on cash flow) of EUR 11 million in the third quarter of 2002.
-- Amortization of goodwill
In Pechiney's financial statements prepared in accordance with US GAAP, in compliance with the accounting standard SFAS 142, goodwill is not amortized. As of 2002, it will be regularly tested for impairment generating, if necessary, non-recurring write-downs.
In the third quarter of 2002, the amortization charge recorded in the French GAAP financial statements and cancelled in the US GAAP financial statements amount to EUR 8m. The non recurring write down of the Ravenswood plant's goodwill amounts to EUR 17m in the US GAAP financial statements.
Differences in the balance sheet included the impact of SFAS 133 and SFAS 142 (respectively nil impact and a EUR 19 million increase in shareholders' equity), and a EUR 122 million reduction in shareholders' equity due to the different way additional pension liabilities are recorded.
Appendix
PECHINEY
Consolidated Statement of Income
French GAAP
(in millions of euros) Q3 2001 Q3 2002
--------------------------------------------------------- ------------
Net sales 2,752 3,020
Other operating revenues 29 35
Cost of goods sold (excluding depreciation) (2,393) (2,717)
Selling, general and administrative expense (146) (142)
Research and development expense (24) (22)
Amortisation (excluding goodwill) (81) (79)
------------ ------------
Earnings from operations 137 95
Restructuring expense and Long-lived assets
writedown (57) (7)
Other (expense) income 42 (40)
------------ ------------
Income from operations 122 48
Financial expense, net (19) (16)
------------ ------------
Income before income taxes 103 32
Income tax benefit (expense) (39) (19)
------------ ------------
Income from consolidated companies 64 13
Equity in net earnings of affiliates 5 0
Minority interests (6) (3)
------------ ------------
Net Income before goodwill 63 10
Goodwill amortisation (7) (24)
------------ ------------
Net Income 56 (14)
--------------------------------------------------------- ------------
Net income per common share "A" (euros) (1) 0,70 (0,18)
--------------------------------------------------------- ------------
(1) Computed on the average number of "A" and "B" shares, i.e.
78,592,611 for the third quarter 2002 (excluding treasury shares).
Adjusted Net Income per share Calculation
----------------------------------------------------------------------
- Adjusted net income (2) 66 38
- Adjusted Net Income per share (EUR) 0,84 0,48
--------------------------------------------------------- ------------
(2) Published net income per share restated to reflect the impact,
after taxes, of restructuring expense, other (expense) income and
other non recurring items.
Consolidated Statement of Cash Flow
(millions of euros) Q3 2001 Q3 2002
--------------------------------------------------------- ------------
Resources from Operations 179 176
Change in working capital requirements 76 73
Utilisation of provisions and other 13 (31)
------------ ------------
Cash provided by Operations 268 218
Capital expenditures (88) (119)
Financial investments (172) (6)
Divestitures and other (1) 14
------------ ------------
Net Cash-flow 7 107
Dividends paid (29) (23)
Purchase of treasury shares (41) (22)
Increase in capital - -
--------------------------------------------------------- ------------
Increase (decrease) in Cash (63) 62
--------------------------------------------------------- ------------
Appendix
PECHINEY
Consolidated Statement of Income(1)
French GAAP
2001 2002
----------------------------------------------------------------------
(millions of Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
euros)
----------------------------------------------------------------------
Net sales 2,817 2,806 2,752 2,679 2,814 3,397 3,020
Other
operating
revenues 43 38 29 40 30 41 35
Cost of goods
sold
(excluding
depreciation) (2,443)(2,448)(2,393)(2,331)(2,473)(3,042)(2,717)
Selling,
general and
adminis-
trative
expense (147) (150) (146) (172) (153) (152) (142)
Research and
development
expense (24) (22) (24) (27) (24) (20) (22)
Amortisation
(excluding
goodwill) (80) (82) (81) (85) (90) (87) (79)
-------------------------------------------------------
Earnings from
operations 166 142 137 104 104 137 95
Restructuring
expense and
Long-lived
assets
writedowns 0 (7) (57) (11) (10) (43) (7)
Other (expense)
income 8 (14) 42 (24) (6) (11) (40)
-------------------------------------------------------
Income from
operations 174 121 122 69 88 83 48
Financial
expense, net (16) (17) (19) (16) (11) (11) (16)
-------------------------------------------------------
Income before
income taxes 158 104 103 53 77 72 32
Income tax
benefit
(expense) (48) (27) (39) (16) (28) (31) (19)
Income from
consolidated
companies 110 77 64 37 49 41 13
Equity in net
earnings of
affiliates 1 10 5 8 1 3 0
Minority
interests (9) (7) (6) (6) (4) 4 (3)
Net Income
before
goodwill 102 80 63 39 46 48 10
Goodwill
amortisation (6) (7) (7) (31) (9) (39) (24)
Net Income 96 73 56 8 37 9 (14)
----------------------------------------------------------------------
(1) Amortization of goodwill, previously recorded in operating income,
is now presented before net income. The 2001 quarterly accounts
were therefore restated.
Adjusted Net Income per share Calculation
----------------------------------------------------------------------
Adjusted net
Income(2) 91 87 66 53 49 74 38
Adjusted net
Income per
share (EUR) 1.15 1.09 0.84 0.68 0.62 0.94 0.48
----------------------------------------------------------------------
(2) Published net income per share restated to reflect the impact,
after taxes, of restructuring expense, other (expense) income and
other non recurring items.
Earnings from Operations
----------------------------------------------------------------------
2001 2002
----------------------------------------------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
----------------------------------------------------------------------
Primary
Aluminium 136 100 115 72 70 91 69
Aluminium
Conversion 9 19 4 (9) 5 9 1
Packaging 32 37 32 35 33 40 32
Ferroalloys 1 (4) (3) 6 (2) 2 0
International
Trade 10 11 10 24 19 18 16
Holdings (22) (21) (21) (24) (21) (23) (23)
-------------------------------------------------------
Total 166 142 137 104 104 137 95
EBITDA (3) 246 224 218 189 194 224 174
----------------------------------------------------------------------
Consolidated
primary
Aluminium
Prod. (kt) 197 200 202 221 215 219 221
Average
realised LME
price
($/t)(4) 1,550 1,543 1,481 1,373 1,354 1,385 1,360
Realised (EUR)
/$ - Primary
Aluminium 0.90 0.90 0.88 0.89 0.88 0.90 0.95
----------------------------------------------------------------------
Average
euro/U.S.
dollar 0.92 0.87 0.89 0.90 0.88 0.92 0.98
----------------------------------------------------------------------
(3) Earnings from operations before depreciation.
(4) Average actual selling price of a metric ton of primary aluminium
(excluding premiums) negotiated by the Group during the period.
Appendix
Consolidated Balance Sheet
French GAAP As of As of
(millions of euros) 31/12/2001 30/09/2002
----------------------------------------------------------------------
ASSETS
Property, plant and equipment, net 2,997 2,901
Goodwill, net 860 726
Other intangible assets, net 145 146
Investments in equity affiliates 297 293
Long-term investments 141 153
Deferred income taxes 335 392
Other long-term assets 256 234
-------------------------
5,031 4,845
Inventories, net 1,601 1,433
Accounts receivable - Trade 1,466 1,399
Deferred income taxes 60 122
Prepaid expenses 71 74
Other receivables 20 26
Marketable securities 113 189
Cash 321 353
-------------------------
Total current assets 3,652 3,596
---------------------------------------------------------------------
Total assets 8,683 8,441
---------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Shareholder's equity
Capital stock
- Common shares "A" 1,229 1,242
- Preferred shares "B" 16 16
Share premium (140) (169)
Retained earnings 767 789
Accumulated other comprehensive (loss)
income 1,473 1,379
Treasury shares 50 (95)
-------------------------
3,395 3,162
Minority interests 169 152
Long-term liabilities
Deferred income taxes 173 238
Other long-term liabilities 1,129 1,125
-------------------------
1,302 1,363
Long-term debt 971 1,492
Current liabilities
Accounts payable - Trade 1,504 1,521
Accrued liabilities 375 351
Other payables 18 9
Current portion of long-term debt 37 4
Short-term bank loans 912 387
-------------------------
2,846 2,272
---------------------------------------------------------------------
Total liabilities and shareholders' equity 8,683 8,441
---------------------------------------------------------------------
Net Debt 1,484 1,324
Shareholder's equity + Minority interests 3,564 3,314
Gearing 0.42 0.40
---------------------------------------------------------------------
Appendix
PECHINEY
Consolidated Statement of Income
US GAAP
(in millions of euros) Q3 2001 Q3 2002
----------------------------------------------------------------------
Net sales 2,734 3,021
Other operating revenues 29 35
Cost of goods sold (excluding depreciation) (2,405) (2,738)
Selling, general and administrative expense (147) (142)
Research and development expense (24) (22)
Amortisation (excluding goodwill) (81) (79)
-------------------------
Earnings from operations 106 75
Restructuring expense and Long-lived assets
writedown (57) (7)
Other (expense) income 42 (40)
-------------------------
Income from operations 91 28
Financial expense, net (16) (12)
-------------------------
Income before income taxes 75 16
Income tax benefit (expense) (29) (14)
-------------------------
Income from consolidated companies 46 2
Equity in net earnings of affiliates 16 0
Minority interests (6) (3)
-------------------------
Net Income before goodwill 56 (1)
Goodwill amortisation (7) (17)
Net Income 49 (18)
----------------------------------------------------------------------
Net income per common share "A" (euros) (1) 0.61 (0.23)
----------------------------------------------------------------------
(1) Computed on the average number of "A" and "B" shares, i.e.
78,592,611 for the third quarter 2002 (excluding treasury shares).
Adjusted Net Income per share Calculation
----------------------------------------------------------------------
- Adjusted net income (2) 59 35
- Adjusted Net Income per share (EUR) 0.75 0.44
----------------------------------------------------------------------
(2) Published net income per share restated to reflect the impact,
after taxes, of restructuring expense and other (expense) income.
Consolidated Statement of Cash Flow
(millions of euros) Q3 2001 Q3 2002
----------------------------------------------------------------------
Resources from Operations 148 160
Change in working capital requirements 74 118
Utilisation of provisions and other 46 (60)
-------------------------
Cash provided by Operations 268 218
Capital expenditures (88) (119)
Financial investments (172) (6)
Divestitures and other (1) 14
-------------------------
Net Cash-flow 7 107
Dividends paid (29) (23)
Purchase of treasury shares (41) (22)
Increase in capital - -
----------------------------------------------------------------------
Increase (decrease) in Cash (63) 62
----------------------------------------------------------------------
Appendix
Consolidated Balance Sheet
US GAAP As of As of
(millions of euros) 31/12/2001 30/09/2002
----------------------------------------------------------------------
ASSETS
Cash 321 354
Marketable securities 113 189
Other receivables 20 16
Prepaid expenses 205 243
Deferred income taxes 69 124
Accounts receivable - Trade 1,444 1,381
Inventories, net 1,601 1,429
-------------------------
Total current assets 3,773 3,736
Other long-term assets 206 153
Deferred income taxes 339 390
Long-term investments 141 153
Investments in equity affiliates 280 292
Other intangible assets, net 145 146
Goodwill, net 864 752
Property, plant and equipment, net 2,997 2,901
-------------------------
4,972 4,787
----------------------------------------------------------------------
Total assets 8,745 8,523
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Short term debt
Short term bank loans 912 387
Current portion of long term debt 37 4
Other payables 15 9
Accrued liabilities 516 501
Accounts payable - Trade 1,505 1,516
-------------------------
2,985 2,417
Other long term liabilities 81 38
Long term Debt 971 1,492
Long term Liabilities
Other long term liabilities 1,129 1,125
Deferred income taxes 173 238
-------------------------
1,302 1,363
Minority Interests 169 152
Shareholder's equity
Accumulated other comprehensive income
(loss) (65) (198)
Retained earnings 1,430 1,381
Share premium 767 789
Treasury shares (140) (169)
Capital stock
- Common shares "A" 1,229 1,242
- Preferred shares "B" 16 16
-------------------------
Total liabilities and shareholders' equity 3,237 3,061
----------------------------------------------------------------------
Total du passif et des capitaux propres 8,745 8,523
----------------------------------------------------------------------