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Article Excerpt
Montreal, October 22 /PRNewswire/ -- HIGHLIGHTS
- Net income from continuing operations of US$118 million, reflecting adverse currency impacts partially offset by higher metal prices. - Operating earnings of US$151 million, up 5% sequentially and stable year-over-year. - Strong cash from operations of US$560 million, up US$140 million year- on-year. - Record free cash flow of US$266 million, up US$60 million year-on-year.
Alcan Inc. (NYSE, TSX: AL) today reported third quarter operating earnings from continuing operations, excluding foreign currency balance sheet translation effects and Other Specified Items, of US$0.46 per share versus US$0.47 per share a year earlier, and net income from continuing operations of US$0.36 per share versus US$0.59 per share a year ago.
"While major economies remain mixed, we have held our course by staying focused on the controllable elements of our business. Again this quarter, cost initiatives have helped to offset the negative impact of currency movements and higher fuel and pension costs," stated Travis Engen, President and CEO. "We have also taken some important steps in the disciplined execution of our strategy. In recent quarters, we have built on strong positions in packaging and composites through the acquisitions of VAW FlexPac, Baltek and Uniwood/Fome-Cor. In the coming months, we look forward to the successful acquisition and integration of Pechiney, which will create an even more competitive company with exciting new opportunities."
Net income from continuing operations for the third quarter of 2003 included a non-cash, after-tax charge of US$8 million (US$0.02 per share) for the effects of foreign currency balance sheet translation as compared to a gain of US$55 million (US$0.17 per share) in the year-ago quarter. Also included in net income from continuing operations for the third quarter of 2003 was an after-tax net charge of US$25 million (US$0.08 per share) from Other Specified Items. Other Specified Items included the realisation of deferred translation losses of US$13 million on the sale of a subsidiary in Thailand and after-tax charges of US$7 million for environmental provisions related to certain operations in the United States and Switzerland.
Foreign currency balance sheet translation effects and Other Specified Items, after-tax, resulted in a net gain of US$39 million (US$0.12 per share) in the third quarter of 2002, and a net charge of US$120 million (US$0.37 per share) in the second quarter of 2003. Other Specified Items of US$16 million in the year-ago quarter were mainly related to an asset impairment charge and increases to legal provisions. Other Specified Items in the second quarter of 2003 comprised mainly after-tax gains of US$41 million for the sale of non-core assets in Italy and a remaining portfolio investment in Japan, partially offset by US$8 million of after-tax charges for plant closures. In the first quarter, Other Specified Items were US$13 million after tax (US$0.04 per share) and comprised mainly tax adjustments relating to prior years.
After including results from discontinued operations, the Company reported net income of US$100 million (US$0.31 per share) for the quarter, compared to net income of US$191 million (US$0.59 per share) in the year-ago quarter and a net loss of US$89 million (US$0.28 per share) in the second quarter of 2003.
CONSOLIDATED REVIEW
Alcan presents operating earnings from continuing operations in addition to net income from continuing operations and reported net income, as it is consistent with the basis on which the Company manages and evaluates the performance of business groups. The Company believes that operating earnings from continuing operations provides investors with a meaningful basis for evaluating underlying earnings trends by excluding items that are not indicative of on-going operating results, such as Other Specified Items. Also excluded is the impact of foreign currency balance sheet translation. This non-cash impact results from movements in exchange rates that can be pronounced from quarter to quarter, but which may average out over time. This information is presented in response to investor requests and is consistent with the Company's historic financial reporting practices.
------------------------------------------------------------------------- THIRD NINE SECOND QUARTER MONTHS QUARTER ------------------------------------------------------------------------- (US$ millions, unless otherwise noted) 2003 2002 2003 2002 2003 ------------------------------------------------------------------------- Sales & operating revenues 3,480 3,170 10,161 9,204 3,468 ------------------------------------------------------------------------- Shipments (thousands of tonnes) ------------------------------------------------------------------------- Ingot products(1) 420 359 1,139 1,033 381 ------------------------------------------------------------------------- Rolled products 502 530 1,543 1,555 530 ------------------------------------------------------------------------- Conversion of customer-owned metal 97 102 302 272 100 ------------------------------------------------------------------------- Aluminum used in engineered products & packaging 127 140 418 418 144 ------------------------------------------------------------------------- Total aluminum volume 1,146 1,131 3,402 3,278 1,155 ------------------------------------------------------------------------- Ingot product realisations (US$ per tonne) 1,552 1,495 1,566 1,510 1,570 ------------------------------------------------------------------------- Average London Metal Exchange 3-month price (US$ per tonne) 1,420 1,329 1,397 1,367 1,379 ------------------------------------------------------------------------- Operating earnings - excluding foreign currency balance sheet translation and Other Specified Items 151 153 417 411 144 ------------------------------------------------------------------------- Foreign currency balance sheet translation (8) 55 (250) (29) (146) ------------------------------------------------------------------------- Other Specified Items (25)...
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