WASHINGTON, The Specialty Steel Industry of North
America (SSINA) will host
a press conference to present an industry survey and
report that identify and establish the critical
interdependence between a
vibrant domestic specialty metals industry and the U.D. manufacturing capability
, absent
appropriate government intervention. Shilling, who spearheaded
the study. specialty metals
industry is a
very important supplier of these materials to various defense contractors. "Our plants
in the specialty metals industry are our laboratories.64 per share on a diluted basis(2)), compared
with
$855 million, or $4.
The new Inco to be created by the combination of two great companies
represents an exciting and unique opportunity for Inco and Falconbridge
shareholders.
(3) These amounts are based upon currently issued and outstanding shares
and not diluted shares
.35 to
$2. Our premiums are affected by fluctuations in the LME
cash nickel price and the effect
this has on the price we receive for the
nickel in matte product produced by PT International Nickel
Indonesia Tbk ("PT
Inco"), the lag effect that changes in the LME benchmark price have on the
pricing
of certain of our nickel products, and how certain of our specialty
nickel products are priced.23
1.32
-------------------------------------------------------------------------
-------------------------------------------------------------------------
For the fourth quarter
and full year 2005 compared with the corresponding
periods of 2004, the increase in nickel unit cash
cost of sales before
by-product credits was principally due to (1) higher costs for high sulphur
fuel oil and diesel fuel at PT Inco, (2) higher electricity and natural gas
prices at our Ontario
operations, (3) the negative impact on unit cost of
lower nickel production, (4) a higher average
Canadian-U. The decrease in nickel production for
2005 compared with 2004 was largely due to the
same reasons affecting fourth
quarter 2005 production, a longer than planned shutdown at our Ontario
operations and a slower ramp-up after that shutdown and a longer than usual
maintenance shutdown
during the third quarter at our Manitoba operations, a
shutdown which was necessary to prepare these
operations for the arrival of
the Voisey's Bay concentrates in the fourth quarter of 2005. Net cash
provided by operating
activities in the year 2005 was $739 million, compared with $1,393 million
in
2004.ca/webcast or through Inco's
website, http://www. Such
assumptions include, but are
not limited to, those set forth under the
"Outlook" section of this press release and the slides
and other material
covering the presentations being made as of this date which are available on
our
website and on the SEDAR system in Canada. - - 150 -
Proceeds from the sale of
an investment 103 - 103
-
Other 29 14 23 (5)
--
-----------------------------------------------------------------------
---------------------
----------------------------------------------------
Net cash used for investing
activities
(216) (325) (892) (881)
------------------------------
-------------------------------------------
Financing activities
Repayments of long-term
debt (3) (2) (105) (100)
Long-term borrowings 211
203 214 205
French government-sponsored
Girardin Act financing
49 41 49 41
Cash settlement of LYON
Notes converted
(11) - (76) -
Common shares issued
6 12 40 30
Common dividends paid (19) -
(57) -
Dividends paid to minority
interest (10)
(5) (49) (20)
Other (4) (11) 19
(10)
-------------------------------------------------------------------------
Net cash provided by financing
activities 219 238 35
146
-------------------------------------------------------------------------
Net
increase (decrease) in
cash and cash equivalents 42 207 (118) 658
Cash and cash equivalents at
beginning of period 916 869 1
,076 418
-------------------------------------------------------------------------
Cash and cash equivalents at
end of period $ 958 $ 1,076 $ 958
$ 1,076
-------------------------------------------------------------------------
-------------------------------------------------------------------------
vanadium inconel
military and national
defense. Most recently, the Department of Defense published notice in the
Federal Register of
the department's intent to strictly follow this provision
of the law.S. to establish fair trading
practices with its global
trading partners as required by the World Trade Organization.
* Congress and the Administration should closely monitor the behavior of
strategic trading partners
like China to ensure that U. Other specialty metals such as titanium and titanium
alloys, zirconium
, and niobium alloys are also produced by some SSINA member
companies.20 per share ($1.08 per share
on a diluted basis(2)), for
the full year of 2004. The amount of dilution per share
due
to these items is dependent on our level of earnings and the
price of our common shares.
We continue to move forward to complete the pending
acquisition.
During the fourth quarter
of 2005, we produced 142 million pounds of
nickel. However, the impact of
Voisey's Bay in 2006
will not be fully realized until we have a steady flow of
Voisey's Bay concentrates to our Ontario
and Manitoba operations in the second
half of 2006.08 0.03 0.002
--
----------------------------
(1) Canadian GAAP basic (Basic EPS Effect) and diluted (Diluted EPS
Effect) net earnings per share. dollar-Canadian dollar exchange rate for 2006, global
industrial
production and in key geographic markets, interest rates, global
nickel and other metals demand and
supply and in key geographical markets, and
growth in the key end-use markets for the metals produced
by the Company, that
we would not have any labour, equipment or other disruptions at any of our
operations
of any significance in 2006 other than any planned maintenance or
similar shutdowns and that any
third parties which we are relying on to supply
purchased intermediates or provide toll smelting
or other processing do not
experience any unplanned disruptions.41 6.67 1.60
-------------------------------------------------------------------------
-------------------
------------------------------------------------------
Nickel unit cash cost of sales
before by-product credits
per tonne $ 6,415 $ 6,107 $ 6,702 $
5,732
-------------------------------------------------------------------------
-----
--------------------------------------------------------------------
Nickel unit cash cost of
sales
after by-product credits
per pound $ 2.nikel indium
The industry believes
that its recommendations, because
of their inherent nature, should be politically acceptable to a
wide,
bipartisan constituency thereby facilitating their implementation. specialty metals
companies
conducted by their industry trade group, the Specialty Steel
Industry of North America (SSINA) proves
unequivocally that specialty metals
are vitally important to virtually every U.S.
"Companies
make investment decisions based on the expected rate of return
on their investments relative to their
cost of capital," he explained. lacks a
coherent strategy related to all manufacturing - and particularly
specialty
metals production.S.30 per share ($2.
We finished the year with about $1 billion in
the bank as we continued to
advance the biggest growth program in our history. The nickel concentrates
are now being processed into finished nickel
products at our Ontario and Manitoba operations.67 per
pound) over the January 3-February 13, 2006 period
compared with an average LME cash nickel price
of $12,628 per tonne ($5. In 2006, we expect that our nickel unit cash costs of
sales net of by-product
credits will be $2.
(signed)
Scott M.08 0.23 $ 1. The premium on our
nickel
products for 2006 we currently expect to realize over the London Metal
Exchange ("LME"
) cash nickel prices is approximately $0. We are not endorsing how First Call
arrives at its consensus
mean estimate for our 2006 adjusted net earnings per
share on a diluted basis or First Call's forecasts
for the LME cash nickel
price, or the other benchmark metal prices published by First Call and LBMA
,
for 2006. exchange rate(4)(5) 0.41 3. For the fourth quarter of 2005
compared
with the fourth quarter of 2004, the decrease in nickel unit cash
cost of sales after by-product
credits was due to (1) higher by-product
credits resulting from higher deliveries of PGMs and (2
) higher realized
prices for copper and certain PGMs. For the full year 2005 compared
with the
full year 2004, the increase in nickel unit cash cost of sales after
by-product credits was primarily
due to higher unit cash cost of sales before
by-product credits partially offset by higher by-product
credits.95
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average common
shares
outstanding, in thousands
Basic 191,023 187,909
189,425 187,550
-----------------------------------------------------------------------
--
-------------------------------------------------------------------------
Diluted
222,519 210,205 222,706 210,156
-----------------------------
--------------------------------------------
------------------------------------------------
-------------------------
Inco Limited
Consolidated Balance Sheet
December
31, December 31,
(in millions of U. dollars) 2005 2004 2005 2004
-------------------------------------------------------------------------
(Restated) (Restated)
Operating activities
Earnings
before minority
interest $ 254 $ 257 $ 909 $ 724
Items not affecting cash
Depreciation and depletion 69 70 256
248
Deferred income and mining
taxes 46 20
77 63
Asset impairment charge - - 25 201
Other (60) 44 57 114
Contributions
greater than
post-retirement benefits
expense (105)
(116) (137) (140)
Decrease (increase) in non-cash
working capital related to
operations
Accounts receivable (93) (51) (72) (166)
Inventories (114) (22) (149) (88)
Accounts payable
and accrued
liabilities 72 79 34 126
Income and mining taxes
payable (52) (64) (235)
249
Other 22 77 (26) 62
-------
------------------------------------------------------------------
Net cash provided by
operating activities 39 294 739 1,393
------------------
-------------------------------------------------------
-------------------------------------
------------------------------------
Investing activities
Capital expenditures
(348) (339) (1,168) (876)
Partial sale of interest in
Goro Nickel
S.hardfacing hafnium
specialty
metals manufacturers investing here rather than moving entirely offshore over
time
in search of better business opportunities and higher profits. "Compiling this information was very
time-consuming and I want to
thank the SSINA member companies for their cooperation and support of
this
project," said Shilling. A
series of reports entitled the Defense Industrial Base Capabilities
Studies
clearly show that applications which contain specialty metals are essential to
meeting
current national defense requirements and are critical components of
technologies that focus on 21st
century warfare." The recommendations include:
* The U.S. producers, and in the process has
become a major exporter of
these products to the U.
SSINA is a Washington, DC-based trade
association representing virtually
all North American producers of stainless steels and nickel-based
alloys,
including superalloys. Hartquist, an international trade attorney with the Washington,
DC
law firm Collier Shannon Scott, PLLC, serves as lead counsel to SSINA.
Our adjusted net earnings
(1) for the full year 2005 were $811 million, or
$4.
Our net earnings for the full year 2005
in accordance with Canadian GAAP
were $836 million, or $4. For the fourth quarter and full year
2005, the number of diluted shares used in this calculation was
approximately 223
million shares, compared with 210 million for the
corresponding periods of 2004. However
, we have seen a number of positive signs that these inventory
adjustments are now behind us. and
European high
nickel alloys market, fueled by the aerospace and power generation end-use
markets
for these alloys.S. We remain
optimistic in terms of the outcome of these processes.
minority
interest - - 0. Since such
adjustments would include assumptions
or forecasts relating to changes in the
Canadian-U. 0.10/MM BTU 0.S. dollars
December 31, December 31,
except per share amounts) 2005 2004 2005
2004
-------------------------------------------------------------------------
(Restated) (Restated)
Net sales
$ 1,121 $ 1,161 $ 4,518 $ 4,278
Net earnings
235 226 836 619
Net earnings per common share
- basic
1. Our effective tax rate for the year
2005 of 31 per cent was lower than the combined
statutory income and mining
tax rate in Canada of about 39 per cent due principally to the benefit
of
profits earned in jurisdictions having lower tax rates and the non-taxable
gain noted above
. At our option, we elected to settle a portion of the
conversions tendered in accordance with the
terms of the LYON Notes for cash
in lieu of shares in the amount of $76 million.S.80 6.08
$ 3.vanadium steelmaking
S.S.
military capabilities are directly dependent upon the availability of crucial
specialty
metals," explained SSINA Chairman Jack W.
Shilling also noted that for the past three decades
the U.
All of the adjustments made in arriving at adjusted net earnings for the
fourth
quarters and full years of 2005 and 2004 are set forth under
"Reconciliation Between Adjusted Net
Earnings and Net Earnings in Accordance
with Canadian GAAP" below.
Substituting Voisey's Bay
feed for external purchased feeds at our
Canadian operations will help to lower our costs. We are
building some 400 modules for the process plant in the Philippines and
delivery of these at the
Goro site is expected to begin in April.
Our balance sheet remains strong, with a cash position
of $958 million as
of year-end 2005. It will be a geographically diverse company, having
a major
presence in North and South America, Asia, the South Pacific and
Europe.01) - (0.75
2. For the year 2005, the increase in other income relates to this
gain partially offset by
a charge resulting from the conversions and
settlement of such conversions in cash of a portion of
our LYON Notes
originally issued in March 2001. The increased working capital requirements were primarily
related
to reduced income and mining tax payable balances in view of the significant
tax payments
of $245 million made during the first quarter of 2005 in respect
of the 2004 taxation year and higher
tax instalments paid in 2005.01 per share.com, by clicking on the "Latest Quarterly Webcasts" link on
the homepage. (Toronto time) on February 28, 2006 by dialling
1-800-558-5253 in North America
and by entering the reservation number
21280521.
Important Legal Information
This communication may be deemed to be solicitation material in respect
of Inco's proposed combination
with Falconbridge.vanadium stellite
S.
WHEN: Tuesday, December 6, 2005 at 10:00 a.
The industry
report cites Department of Defense studies as additional
evidence of the critical importance of specialty
metals to national defense.S.
competitiveness. At the same time, the obstacles facing those wanting
to
invest in American manufacturing include rising costs of energy, healthcare
and post-retirement
benefits; exorbitant regulatory and legal costs; high
taxes; and increasing concerns regarding enforcement
of U., Florham Park, NJ; Special Metals Corporation,
Huntington, WV; Techalloy Central Wire Group
, Mahwah, NJ; Timken Latrobe
Steel, Latrobe, PA; Universal Stainless and Alloy Products, Bridgeville
, PA;
and Valbruna Slater Stainless Inc. Platinum-group metals (PGMs)
production was 115,000 ounces
for the fourth quarter of 2005, and for the full
year was 419,000 ounces, above our previous October
2005 guidance of 380,000
to 390,000 ounces.65 per pound, better than our previous October 2005 guidance
for the year of $2.2 billion before changes in
working capital and capital expenditures.
We have continued to move forward in our efforts to obtain the remaining
required clearances from
antitrust/competition authorities in the U. The determination of which items to exclude when
calculating
adjusted net earnings involves the application of judgment by us.12) (1.01
-------------
------------------------------------------------------------
Canadian GAAP net earnings,
as reported $ 1.77 per pound ($14,935 per tonne). As reflected in the table below
, while our financial results are
most sensitive to changes in (1) nickel prices, our results are
also sensitive
to changes in copper and other prices as well as, on the cost side, changes in
oil
and natural gas prices and (2) the Canadian-U.10/lb.03
Realized platinum price(3) 50.95
Cash provided by operating
activities 39 294 739
1,393
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The increase in
net earnings for the fourth quarter of 2005 compared with
the fourth quarter of 2004 was primarily
the result of a gain on sale of a
non-core investment, lower currency translation adjustments, higher
realized
selling prices for copper and certain PGMs and higher deliveries of PGMs and
copper partially
offset by lower realized prices for nickel, lower Inco-source
nickel deliveries and higher nickel
unit cash cost of sales before by-product
credits. The increase in net earnings for full year 2005
compared with 2004
was primarily the result of the previously reported non-cash Goro project
asset
impairment charge of $191 million, after-taxes, recorded in 2004, higher
realized selling prices
for nickel, copper and certain PGMs and higher other
income, partially offset by higher nickel unit
cash cost of sales before
by-product credits and lower deliveries of Inco-source nickel, copper and
PGMs.
The effect of certain of these items on our results of operations is set
forth under
"Reconciliation between Adjusted Net Earnings and Net Earnings in
Accordance with Canadian GAAP"
above.24 $ 2.
Net cash used for investing activities was $216 million in the fourth
quarter
of 2005 compared with $325 million in the fourth quarter of 2004.
In the fourth quarter 2005, we
restated our prior year and current year
quarterly minority interest and deferred income taxes to
correct an error in
the allocation of net earnings to minority interests, and also restated prior
year and current year quarterly diluted earnings per share to correct an error
in applying the
"if converted" method with respect to our convertible debt. A recording of the presentation can be
listened
to until 11:59 p.
Cautionary Statement Regarding Forward-Looking Statements
This
news release contains forward-looking statements regarding the
Company's offer to purchase all of
the common shares of Falconbridge Limited,
including statements regarding the timing thereof and
the anticipated timing
of achievement of milestones in the regulatory clearance process, anticipated
financial or operating performance of the combined company, expected synergies
and cost savings
from the proposed combination of Inco and Falconbridge, and
strategies, objectives, goals and targets
of the combined company, and
forward-looking statements regarding the Company alone, including anticipated
financial or operating performance, the Company's costs on a stand-alone
basis, its position as
a low-cost producer of nickel, production levels for
nickel, copper and platinum-group metals for
its first quarter and full year
2006 for the Company as a whole and at its Indonesian, Voisey's Bay
and other
Canadian operations, nickel market conditions and nickel demand and supply
both globally
and for certain markets and uses, premiums realized on its
metals prices, nickel unit cash cost of
sales after by-product credits, third
party toll smelting and refining arrangements, production costs
on its own
mine production, nickel inventories, its financial results, including adjusted
net
earnings per share on a diluted basis, cash flow from operations, cash
generation, the effect on
and sensitivity of financial results to changes in
nickel and other metal prices, exchange rates
, energy and other costs and its
common share price, cost reduction and related savings objectives
,
construction, commissioning, initial start-up, and other schedules, capital
costs and other aspects
of its Goro project, arrangements covering copper
production and sales, capital expenditures at the
Company's growth projects,
overall capital expenditures, contributions from shareholders and government
programs and other external sources of funds, and governmental clearances or
approvals required
, for its growth projects, tax payments, planned maintenance
and other shutdowns and subsequent start
-ups at certain operations, new
collective labour agreements, including the risk of a disruption or
work
stoppage, and other issues and aspects relating to its business and
operations. The
forward
-looking statements included in this release represent the Company's
views as of the date of this
release. Falconbridge has filed a Schedule 14D-9F in connection with
Inco's offer and has filed,
and will file (if required), other documents
regarding the proposed combination, in each case with
the SEC.91 $ 2.A.shafting jinchuan
Regarding defense applications, the survey of U. Shilling, Ph.41 per share
($3.95 per
share on a diluted basis(2)), for the full year of 2004. Nickel demand in non-stainless
applications
like aerospace and hybrid vehicles remained very strong in the fourth quarter
of
2005.
Operations Review
In 2005 we met or exceeded our previous October 2005 guidance
on
production, nickel price premiums and nickel unit cash costs at our
operations, achieving consistent
production and productivity improvements
across the company.85 to $2. Assuming that the
outcome
of the regulatory clearance processes is positive, we would then be
able to proceed with our offer
and be in a position to take-up and pay for
Falconbridge common shares.31) (0. In addition, management
uses such
information internally for operating, budgeting, financial planning and
incentive compensation
purposes.
The earnings per share consensus estimate above refers to an estimate for
adjusted
net earnings and excludes certain adjustments that would be made in
the calculation of net earnings
in accordance with Canadian GAAP.00/troy oz 0.02
Realized cobalt price
1.
dollar-denominated liabilities. It is currently projected that our
consolidated total
capital expenditures for 2006 will be approximately
$1.91 $ 2. While
the cost of purchased
nickel intermediates is higher than that for processing
our own mine production and such cost increases
as the prevailing prices, LME
cash nickel or other benchmark prices, on which this material is purchased
by
us increases, the price realizations are also higher, resulting in margins on
these purchases
remaining relatively unchanged. The decrease in nickel production
in the fourth quarter compared
with the same period of 2004 was primarily due
to the need to rebuild the required inventories for
our Clydach, Wales
refinery after the previously announced planned shutdown and the related
slower
than planned ramp-up after that shutdown experienced at our Ontario
operations in the third quarter
of 2005.
Investing activities in the fourth quarter of 2005 included $103 million of
proceeds
from the sale of an investment referred to above. The revisions relate to the
accounting for instruments
for which the issuer has the right to settle in
cash or its own shares. Although the Company has
attempted to identify
important factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that
cause actions, events or results not to be as anticipated,
estimated or intended.
Accordingly
, readers should not place undue reliance on any forward-looking
statements.S. dollars ended December
31, ended December 31,
except where noted) 2005 2004 2005 2004
-------------------------------------------------------------------------
Cost of
sales and other
expenses, excluding
depreciation and depletion $ 726 $ 643
$ 2,633 $ 2,348
By-product costs (174) (147) (635) (572
)
Purchased finished nickel (87) (52) (331) (234)
Delivery expense
(8) (8) (35) (33)
Other businesses cost of sales
(10) (9) (39) (38)
Non-cash items(1) (11) (3)
(32) (28)
Remediation, demolition and
other related expenses (33
) (12) (57) (30)
Adjustments associated with
affiliate transactions
(17) 10 34 (54)
Asset write offs and related
charges
(2) - - (32) -
Other
(10) (12) (9) (11)
-----------------------------------------------
--------------------------
Nickel cash cost of sales
before by-product credits(3)
376 410 1,497 1,348
By-product net sales (261) (178)
(825) (719)
By-product costs 174 147 635 572
-------------------------------------------------------------------------
Nickel cash
cost of sales
after by-product credits(3) $ 289 $ 379 $ 1,307 $ 1,201
-------------------------------------------------------------------------
-----------------
--------------------------------------------------------
Inco-source nickel deliveries
(millions of pounds) 129 148 493 518
-------------------
------------------------------------------------------
--------------------------------------
-----------------------------------
Nickel unit cash cost of sales
before by-product credits
per pound $ 2.56 $ 2.stellite sudamin
Instead, they are designed to maintain the
competitiveness of an
already state-of-the-art domestic industry in an ever increasing competitive
world. "Since then, the ongoing importance of this statute to
national defense has been confirmed
virtually every year during debate in
Congress.S."
In case you think the solution might be
to abandon manufacturing and focus
on technology development, this will not work according to the
report.Inco reports results for fourth quarter and full year 2005
We expect to increase copper
production by 20 per cent in 2006, producing
340 million pounds of copper, including 65 million pounds
in Voisey's Bay
copper concentrates to be sold to third parties. Our 2006 PGMs production is
expected
to be in the range of 400,000 ounces.
In the face of ongoing cost pressures, we continue to work
hard to reduce
costs and improve productivity wherever we can.S.10 per pound
($110 to $220 per
tonne).
(2) Based on 223 million diluted shares.65 $ 2. The increase
in by-product credits
was primarily due to higher realized prices for copper
and certain PGMs partially offset by lower
deliveries of copper and certain
PGMs.
Nickel production decreased to 64,359 tonnes (142 million
pounds) in the
fourth quarter of 2005 compared with 66,195 tonnes (146 million pounds) in the
fourth
quarter of 2004.
Income and mining taxes
Our effective tax rate for the fourth
quarter of 2005 of approximately
21 per cent was lower than the combined statutory income and mining
tax rate
in Canada of about 39 per cent due principally to the non-taxable gain of
$88 million
on the sale of a non-core investment referred to above and a
decrease in estimated net mining taxes
. In
addition, inventory increased primarily as a result of increased production
costs, increased
finished copper inventory as a result of the previously
indicated closure of the copper refinery
in Ontario in the month of
December 2005 and higher in-process inventories of Voisey's Bay concentrates
as well as the establishment of supplies inventories at Voisey's Bay. Inco has also filed, and will
file
(if required), other documents with the SEC in connection with the proposed
combination.
40 1.shipp smelting
C. Some member companies also produce other specialty metals, such
as titanium and titanium
alloys, zirconium, and niobium alloys., Schaumburg, IL; Precision Rolled Products, Inc.S. "Without them
, the U.S.. This has been accomplished through a combination
of foreign investment, significant transfer
of Western technology, and
government subsidization., Fort Wayne, IN.
Growth Projects
We marked a number of significant milestones at our Voisey's Bay project
in 2005 - the
production of first concentrate, the opening of our
demonstration plant in Argentia, Newfoundland
to test hydrometallurgical
technologies for processing Voisey's Bay nickel concentrates, the first
concentrate shipments to our operations in Ontario and Manitoba, and the first
production of finished
nickel from Voisey's Bay concentrate at our Sudbury
operations in early January 2006.
The
ramp-up at Voisey's Bay is going very well. and
Europe.S.
(2) The net income tax benefits
recorded in the fourth quarter and full
year 2005 relate primarily to adjustments for prior
period tax
rulings, decisions, interpretations or determinations and the tax
impact
related to currency translation adjustments on our long-term
debt.14 $ 0.01
0.S. This was partially offset by higher unit
cash cost of sales before by-product credits.
Net cash provided by financing activities for the year 2005 was
$35 million.
Changes
in Accounting Policies and Restatements
Effective January 1, 2005, on a retroactive basis
, we adopted revisions
to Canadian Institute of Chartered Accountants (CICA) Section 3860, Financial
Instruments - Disclosure and Presentation.gov).32
(1) Including intermediates
LME
Average Cash Prices
Nickel - per tonne 12,628 14,080 14,733 13,852
- per pound 5.06 $ 1.alloys westley
WHERE: National Press Club (Holeman
Lounge)
529 14th Street, N. Industry Group Identifies Important Strategic Problem
and Offers Solutions
WASHINGTON, A comprehensive, fifteen-month study
conducted by the
U. Nor are they designed to overly limit the ability of multi-national
companies to continue to
invest overseas, subject to appropriate export
compliance controls. The latter
point is of critical
importance considering the acute nature of the problem."
Acting Deputy Under Secretary of Defense
Gary A. Powell reinforced
Shilling's comments by explaining, "There is no question that specialty
metals
are critical to national defense, and the U.L.
We established new all-time records
for total annual revenue, Canadian
GAAP net earnings, and our average annual realized price for nickel
in 2005. We expect that stainless steel
production will rebound in 2006, led by large production
increases in China as
new capacity there comes on stream.
In short, with strong growth in
nickel demand forecast for 2006, and with
limited new nickel projects or expansions currently expected
to come on stream
before at least 2008, we believe that nickel demand should continue to outpace
supply in 2006, which will continue to put upward pressure on prices. As a result, we have
raised
our 2006 production estimate from this operation to about 120 million
pounds of nickel in concentrate
. Approximately 900 construction
personnel are currently on site and earthworks have started for the
process
plant and our residue storage facility and on road realignment.
Our cash flow for the
full year 2005 was $1.05) -
Gain on forward currency
contracts
- 0.A.
(4) Represents, in 2005, the write-down in value of our copper refinery
at our Ontario operations and certain assets of PT Inco.
The current First Call consensus
mean estimate for our adjusted net
earnings per share for 2006 is $3.03 0.
(5) Increases
in these costs and exchange rate have a negative effect on
EPS.
Cost of sales
and other expenses
The following table summarizes our nickel unit cash cost of sales before
and after by-product credits for the periods indicated:
Three months ended Year ended
December 31,
December 31,
-------------------------------------------------------------------------
2005 2004 2005 2004
------------------
-------------------------------------------------------
Nickel unit cash cost of sales
before by-product credits
per pound $ 2.
Cash Flows and Financial
Condition
Net cash provided by operating activities in the fourth quarter of 2005
was
$39 million, compared with $294 million in the fourth quarter of 2004. This change impacted the
accounting
treatment for our LYON Notes, Convertible Debentures due 2023 and
3 1/2% Subordinated Convertible
Debentures due 2052 which were previously
treated as equity in accordance with EIC No.ca/webcast
.m.05 1. Specific links to which can usually be found as an @linked sub category of this main category
, or in the list of related categories.
aod inco
The report also proposes specific, dramatic and comprehensive
actions
to keep American specialty metals and other manufacturers investing in the
U.S.. "Leading
edge and more standard
defense applications represent perhaps 10 percent of total specialty steel
production," said Shilling. "The survival of our industry is dependent upon
the core commodity
products produced by our members., Kokomo, IN;
ThyssenKrupp Mexinox SA de CV, San Luis Potosi, S
. 14 - Inco Limited today reported
adjusted net earnings(1) of $169 million, or 89 cents per share
($0.
While 2005 was a very good year indeed for the Company and our
shareholders, with the
promise and potential of the new Inco we are convinced
that even more exciting times lie ahead.S
.89 $ 1.12
Gain on disposal of assets - 0. A reconciliation between our nickel
unit cash costs of sales
both before and after by-product credits as indicated and cost of sales
in
accordance with Canadian GAAP for the fourth quarter and full year 2005 and
2004 is set forth
in the table entitled "Reconciliation of Nickel Unit Cash
Cost of Sales to Canadian GAAP Cost of
Sales" below.45 per pound, and our understanding of the
latest mean forecasts by First Call and London
Bullion Market Association
(LBMA) for the prices for our other metal products for 2006, and taking
into
account our production, premium and nickel unit cash cost of sales after
by-product credits
estimates indicated above, we are comfortable with the
current First Call consensus estimate for
2006 for our adjusted net earnings
per share of $3.
A reconciliation of our nickel unit cash
cost of sales before and after
by-product credits to cost of sales under Canadian GAAP for the periods
indicated is shown in the table entitled "Reconciliation of Nickel Unit Cash
Cost of Sales to
Canadian GAAP Cost of Sales" below. Consequently, the charge of $35 million has been
bifurcated between
a charge to earnings of $9 million and a charge to retained
earnings of $26 million.
As previously
announced, on February 7, 2006 Inco's Board of Directors
declared an increased quarterly dividend
on our Common Shares of $0.125 per
share, payable March 1, 2006 to shareholders of record as of February
17,
2006. This recording is also available outside North America by dialling
416-626-4100 and
by entering the same reservation number.73 6.41 $ 3.75 $ 2.This category is for sites
dealing with the science and technology of metals and alloys.
ruthenium refines
The industry points out that should this
happen, the country will also lose its ability to create new defense-related
technology, an ability
not easily restored in the future. industrial policy that provides incentives to invest in
American
manufacturing, but at the same time is not protectionist, does not
pick winners and losers, and supports
the principles of free and fair trade. Most
importantly, other countries are manipulating the field
to their advantage
while the U.S.
"Technology development travels with the manufacturing process
," said
Shilling. Net earnings in accordance with Canadian GAAP for the full year 2005, as
reflected
in the table referred to above, were higher than for the full year
2004 due primarily to a gain on
the sale of a non-core investment referred to
above and the previously reported Goro non-cash asset
impairment charge
recorded in 2004 as well as higher realized selling prices for nickel, copper
and
certain PGMs, partially offset by nickel unit cash cost of sales before
by-product credits and lower
deliveries of Inco-source nickel, copper and
PGMs. On the supply side, we saw production disruptions
at several nickel
producers in the fourth quarter of 2005, tightening nickel supplies.
In
2006, we expect to see a substantial increase in our nickel
production.40 per pound, taking into
account the recently announced changes in industrial electricity rates in
Ontario.A.03
- 0.03
Asset impairment charge and
write-downs in value
of assets
(4) - - (0.01 - 0.13 -
Goro project
suspension costs
and related currency hedging
gains (losses), net
- (0.40 per pound ($5,182 to $5,292 per tonne).
In terms of the current estimated sensitivity
of our earnings per share,
both for basic and diluted purposes, to changes in nickel prices, for
every
change of 10 cents, up or down, per pound in our realized nickel price over a
full year
, our Canadian GAAP basic and diluted net earnings per share (EPS)
over a full year would change,
up or down, by about 14 cents and 12 cents,
respectively.07
Realized palladium price
50.20 4.
In the fourth quarter and full year 2005, we realized net cost reductions
and
related savings of $16 million and $40 million, respectively, below our
full year 2005 target of
$60 million for these savings. Nickel production decreased to 220,727 tonnes
(487 million pounds
) for the full year 2005 compared with 236,817 tonnes
(522 million pounds) for the full year 2004
.
Access to Webcast of February 14, 2006 Presentation to the Investment
Community on
Fourth Quarter 2005 Results and Related Matters
As previously announced, interested investors
can listen to our
presentation to the investment community, expected to include an analysis of
Inco
's 2005 financial and operating results as well as a review of (1) key
operational, marketing and
other current drivers of Inco's business, (2) the
"new" Inco to be created by the pending acquisition
of Falconbridge Limited,
(3) Inco's Voisey's Bay and Goro projects and key current strategic objectives
and (4) our current outlook for 2006 and beyond.austenitic shipp
S."
In addition to participating in the growth
of foreign markets, American
multi-national companies often invest in manufacturing overseas in order
to
take advantage of such incentives as favorable tax treatment; lower operating
costs (often
due to foreign government intervention); overt and covert
subsidies in many forms, including currency
manipulation; and inconsistent
application of the principles of free and fair trade, all of which
favor
foreign investment, according to the report.
Shilling explained that this was an extremely
important point and
cautioned that the U.35 per share ($1. At Voisey's Bay, we
produced our first
concentrates well ahead of our original schedule and we
began shipping the nickel concentrates to
our operations in Ontario and
Manitoba. This message, however, looks at Inco's historical and projected
performance without the very significant benefits expected to be realized from
the pending combination
.50 per share. These arrangements are expected to
provide Inco with an additional 30 million pounds
of nickel for sale, giving
us about 565 million pounds of nickel for sale in 2006.
We continue
to make good progress at our Goro project in New Caledonia. Over the next two weeks or so, we currently
expect to hear
from the U.30) (0.46 - 0. Our policy continues to be that we do
not publicly forecast where
nickel and other metal prices will be in the future given the historic
volatility of these prices and the level of economic uncertainty that
currently exists in at least
some of our key geographic markets. Each sensitivity assumes other
factors are held constant
. This was partially
offset by a 17 per cent increase in copper deliveries, a 38 per cent increase
in the average realized selling price for copper, a 46 per cent increase in
PGMs deliveries and
higher realized prices for certain PGMs. These adverse
effects on unit costs were partially offset
by (1) the net cost reductions and
related savings and (2) lower costs for purchased nickel intermediates
primarily as a result of lower volumes of purchased intermediates processed at
our Ontario and
Manitoba operations in 2005.04 $ 2.gfe refines
m.
(202) 662-7500
SPEAKER: Jack
W. defense capability
could be significantly compromised if the specialty metals industry were to
atrophy and move offshore, then takes the next step and asks the question,
"What should we do
about it?" One answer, according to Shilling, is the
creation of a U. specialty metals
technology
and the industrial base are not systematically and significantly
weakened by overt and coordinated
foreign trading and investment activities
inconsistent with the principles of free enterprise, fair
trade and World
Trade Organization rules., Mexico; North American
Stainless, Ghent, KY; Outokumpu
Stainless, Inc.75 per share on a diluted basis(2)),
compared with net earnings of $619 million, or
$3. Accordingly, it is unlikely that
comparisons can be made among different companies in
terms of such
adjusted results reported by them.
minority interest
- - 25 -
Goro project suspension costs
and related
currency hedging
gains (losses), net - (1) - 1
-------------------------------------------------------------------------
Canadian GAAP net
earnings,
as reported $ 235 $ 226 $ 836 $ 619
--
-----------------------------------------------------------------------
---------------------
----------------------------------------------------
(in millions except per
share
amounts) Basic Net Earnings Per Share(3)
--------------------------------
-----------------------------------------
Fourth Quarter
Year
-------------------------------------------------------------------------
2004 2004
2005 (Restated)(1) 2005 (Restated)(1)
------------------------------------------
-------------------------------
Adjusted net earnings $ 0.35 $ 4.56
Currency
translation
adjustments (0.07) -
Partial redemption of
convertible debt (0.01) - 0. The LME cash
nickel price averaged
$6.$)(1)
Amount of Change Basic EPS Diluted EPS
(up or down) Effect Effect(2)
----------------- ----------- ------------
Realized nickel price $ 0
.12
Realized copper price(3) 0.007 0.006
Natural gas price(5)
0. The difference between the
cash settlement price of $76 million and the book value of
the LYON Notes
tendered and settled in cash in the total amount of $41 million represents a
charge
of $35 million.01 per share; and third quarter 2005 - a decrease of $0.inco.S. Securities and Exchange
Commission. Inco filed with the SEC, on
October 24, 2005, a registration statement on Form F-8 (containing
an offer to
purchase and a share exchange take-over bid circular) and on each of
December 15,
2005 and January 20, 2006, an amendment to such form F-8, in
connection with the proposed combination
.95 1.32
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Nickel unit cash
cost of sales
after by-product credits
per tonne $ 4,938 $ 5
,644 $ 5,842 $ 5,115
------------------------------------------------------------------
-------
-------------------------------------------------------------------------
------------------------------
(1) Post-retirement benefits other than pensions.refines austenitic
, Washington,
D. Shilling, Ph. Members are:
AK Steel Corporation, Middletown, OH; Allegheny Ludlum Corporation
,
Pittsburgh, PA and Allvac, Monroe, NC (both Allegheny Technologies companies);
Carpenter Technology
Corporation, Reading, PA; Charter Specialty Steel, Fond
du Lac, WI; Crucible Specialty Metals, Syracuse
, NY; Electralloy, Oil City,
PA; Haynes International Inc. "Over 30 years ago, Congress enacted
the
Specialty Metals Amendment to the Berry Amendment to recognize the
importance of the industry to
national defense and help ensure its long-term
survival," he said.ssina.com. currency)
TORONTO, Feb.
Without doubt the most exciting development in 2005 was the announcement
of
our friendly offer to acquire Falconbridge Limited. When completed, the
combined company would be
the world's largest nickel company and a great
copper company. Our nickel production for the full
year was 487 million pounds, in
line with our previous October 2005 guidance of 485 to 490 million
pounds for
2005.35 to $2. All of our key operating units
achieved productivity increases in 2005
and we are strongly focussed on
getting further improvements in 2006 and they are all delivering
more
consistent and reliable production.02 0.30
-----------------------------------
--------------------------------------
------------------------------------------------------
-------------------
------------------------------
(1) The 2004 results have been restated
due to the retroactive
application of a change in accounting policy for convertible debt
and
a restatement of our minority interest balances.
Outlook
The following
section is limited to the outlook for Inco without taking
into account the completion of the pending
acquisition of Falconbridge
Limited.50, on a diluted basis. The LME cash nickel price on February
13,
2006 was $6.
Commentary on Results for the Fourth Quarter and Full Year 2005
Results of Operations
The following table summarizes our results in accordance with
Canadian
GAAP for the periods indicated:
Three Months
Ended Year Ended
(in millions of U.
Net sales
Net sales decreased
in the fourth quarter of 2005 by three per cent due
to an eight per cent decline in nickel deliveries
as well as a 10 per cent
decrease in the average realized selling price for nickel. Net cash used
for
investing activities for the year 2005 of $892 million increased slightly from
the year 2004
level of $881 million primarily due to (1) higher capital
spending, mainly in respect of our Goro
project and (2) higher sustaining
capital expenditures at our Canadian operations and PT Inco, partially
offset
by (x) lower capital spending for our Voisey's Bay project and the proceeds
from the sale
of an interest in the Goro project, (y) subsequent contributions
from our partner in the Goro project
and (z) the proceeds from the sale of an
investment referred to above. The remainder of the LYON
Notes tendered for
conversion were, at our option, settled in shares with no impact on net
earnings
. Total debt as a
percentage of total debt plus shareholders' equity was 28 per cent at
December
31, 2005, compared with 30 per cent at December 31, 2004. These assumptions include
estimates on
the U. Some of the material assumptions made by
us involve confidential or particularly sensitive
information and,
accordingly, we do not believe it is appropriate to disclose such assumptions
for
competitive or other business reasons. Therefore, the reader is especially cautioned not to place undue
reliance on such long-term forward-looking statements.sec.
Suppliers of products or services should
submit their sites to an appropriate category in our Business section.
stellite sudamin
S. "Our report is
different in that it both
spotlights the critical threat to America's defense capability if we become
dependent on foreign specialty metals production, and makes recommendations to
encourage investment
in American manufacturing that we believe are politically
acceptable."
The complete report
, including a partial list of defense-related specialty
metals applications, can be found on the industry
's website:
http://www.76 per
share on a diluted basis(2)), for the fourth quarter of 2005, compared
with
adjusted net earnings(1) of $253 million, or $1.23 per share ($1.08 per
share on a diluted
basis(2)), for the fourth quarter of 2004. In New Caledonia, we
successfully returned to the field
and began ramping up construction on our
Goro project.73 per
pound) in the fourth quarter of 2005
. PT Inco produced 168 million pounds of nickel in matte in 2005, the
highest production in its history
.
Engineering is about 70 per cent complete.06) (0.05
Favourable adjustment relating
to Goro Nickel S. As reflected in the chart above, we have
historically experienced, and
expect to continue to experience, some
quarter-to-quarter variability in production levels of our
primary metals
products due to planned maintenance shutdowns of operations and other normal
planned
actions.67 per pound ($14,711 per tonne) for the
January 3-February 13, 2006 period. dollar exchange
rate
given that a substantial portion of our expenses are incurred in Canadian
dollars:
ESTIMATES OF CURRENT 2006 SENSITIVITY OF BASIC
AND DILUTED
EPS TO CERTAIN
METALS PRICES AND OTHER CHANGES
OVER ONE YEAR (IN U.S.30
- diluted 1.
We have continued to use
purchased nickel intermediates to increase
processing capacity utilization at our Ontario and Manitoba
operations.
Other income
In the fourth quarter of 2005, other income increased
by $76 million
compared with the corresponding period in 2004 due principally to a gain from
the
sale of a non-core investment in a junior mining company in the amount of
$88 million. The decrease
in net cash provided by operating activities in 2005 was
primarily due to an increase in working
capital at the end of 2005 compared
with 2004. In December 2005, we received $49 million in respect
of the
French government-sponsored financing for Goro. During the fourth quarter of
2005, we also
received $200 million from the drawdown of the balance of our
$400 million term loan facility that
matures in December 2011.
At December 31, 2005, cash and cash equivalents were $958 million,
down
from $1,076 million at December 31, 2004, primarily reflecting cash outflows
for capital
expenditures for our growth projects and sustaining capital
expenditures at our operations.m.74
1.68 6.
(3) Nickel cash cost of sales before and after by-product credits
includes costs for both Inco-source and purchased nickel
intermediates.austenitic gfe
U.S. Specialty
Metals Industry Announces Press Conference on National Defense and Investing in America
Vibrant U
.S. Specialty Metals Industry Critical To National Defense . . . How Can We Keep It That Way?
Most
importantly, these proposals, unlike many others, are non-protectionist in
nature.S.
Member
companies are: AK Steel Corporation, Middletown, OH; Allegheny
Ludlum Corporation, Pittsburgh, PA
and Allvac, Monroe, NC (both Allegheny
Technologies companies); Carpenter Technology Corporation
, Reading, PA;
Charter Specialty Steel, Fond du Lac, WI; Crucible Specialty Metals, Syracuse,
NY;
Electralloy, Oil City, PA; Haynes International Inc. All of the
adjustments made in arriving at adjusted
net earnings(1) for the fourth
quarters and full years of 2005 and 2004 are set forth in the table
under
"Reconciliation Between Adjusted Net Earnings and Net Earnings in Accordance
with Canadian
GAAP" below.
Our adjusted net earnings(1) for the fourth quarter of 2005, as reflected
in
the table under "Reconciliation Between Adjusted Net Earnings and Net
Earnings in Accordance with
Canadian GAAP" below, were lower than adjusted net
earnings(1) for the corresponding period of 2004
due to a lower realized
selling price for nickel, lower Inco-source nickel deliveries and higher
production costs partially offset by higher realized selling prices for copper
and certain platinum
-group metals ("PGMs") and higher deliveries of PGMs. Industrial production and capital
investment
are expected to be strong in the U.
Our costs will be negatively affected by the same factors affecting
at least
some of the other producers, notably a stronger Canadian dollar and higher
energy costs
, particularly the cost of high sulphur fuel oil and diesel fuel
at PT Inco.878 billion is expected
to be at the upper end of the
plus 15 per cent confidence level.20 $ 4.10/lb.S.
Minority
Interest
For the full year 2005, minority interest included a previously recorded
favourable
adjustment of $25 million, reflecting the recovery of losses
previously taken by Inco due to insufficient
minority interest balances
existing in 2004 to absorb the share by the minority interest of the
impairment
charge associated with the Goro project recorded in the second
quarter of 2004.
This presentation
is scheduled for February 14, 2006, beginning at
3:00 p. Actual results and developments may differ
materially
from those contemplated by these statements depending on, among others, such
key factors
as, in the case of the planned acquisition of Falconbridge, the
risks that we will not be able to
obtain the required approvals or clearances
from regulatory and other agencies and bodies on a timely
basis, or
divestitures or other remedies required by regulatory agencies may not be
acceptable
or may not be completed in a timely manner, we may not meet the
other remaining conditions of our
offer, we may not realize the anticipated
annualized benefits and operational and other synergies
and cost savings from
the acquisition or related divestitures, restructurings, integration and other
initiatives associated with the planned combination of Inco and Falconbridge
and we may realize
unanticipated costs and/or delays or difficulties relating
to such integration, and such other factors
relating to Inco itself as
business and economic conditions in the principal markets for the Company
's
products, the supply, demand and prices for metals to be produced, purchased
nickel intermediates
and nickel-containing stainless steel scrap and other
substitutes and competing products for the
primary metals and other products
the Company produces, developments concerning labour relations
, the Company's
deliveries, production levels, production and other anticipated and
unanticipated
costs and expenses, metals prices, premiums realized over LME
cash and other benchmark prices, tax
benefits and charges, changes in tax
legislation, hedging activities, the Canadian-U.
INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE REGISTRATION
STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED OR THAT WILL BE FILED WITH
THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT
INFORMATION.65 $ 2.30
-----------------------------------------------------
--------------------
------------------------------------------------------------------------
-
Diluted $ 1.S.S.aod steelmaking
, Fort
Wayne, IN. specialty metals industry establishes
that the domestic
production and availability of high technology specialty metals are critical
to
the national defense. "These
factors are considerably different in different parts of the world and
each
year the field seems to tilt in favor of investment outside the U. the frequent reason cited
for a lack of U.S.D. With our strong
financial position and our continued positive outlook for the
nickel market,
we have increased our quarterly cash dividend, as announced on February 7,
2006
, by 25 per cent to an annualized rate of $0. The
expected initial start-up of the project remains
in late 2007. In late January 2006, we received clearance from the Canadian
Competition Bureau.
The following table provides, for the periods indicated, a reconciliation
between our adjusted
net earnings and net earnings as reported in accordance
with Canadian GAAP:
(in millions
except per
share amounts) Net Earnings
-----------------
--------------------------------------------------------
Fourth
Quarter Year
---------------------------------------------------------------------
----
2004 2004
2005 (Restated)(1) 2005 (Restated)(1)
-------------------------------
------------------------------------------
Adjusted net earnings $ 169 $ 253
$ 811 $ 855
Currency translation
adjustments (11)
(56) (59) (85)
Gain on the sale of non-core
investment
88 - 88 -
Net income tax benefits(2) 3
22 16 23
Gain on disposal of assets - 6 -
6
Asset impairment charge and
write-downs in value
of assets(4
) - - (23) (191)
Estimated remediation costs(5)
(13) - (13) -
Partial redemption of
convertible debt
(1) - (9) -
Gain on forward currency
contracts
- 2 - 10
Favourable adjustment relating
to Goro Nickel S. $ 0.00/troy oz 0.
Our capital expenditures for
our existing operations and growth projects
are also sensitive to changes in exchange rates depending
upon the currency in
which such expenditures are incurred. Net sales
increased for the year 2005
by six per cent due to higher selling prices for
nickel, copper and certain PGMs partially offset
by lower deliveries of
nickel, copper and PGMs.04 $ 2.56 $ 2. Such an instrument is bifurcated
between debt and
equity in accordance with this revised standard. The
impact on 2004 diluted earnings
per share was an increase of $0.newswire. There can be no assurance that forward-looking
statements
will prove to be accurate, as actual results and future events
could differ materially from those
anticipated in such statements.24 $ 2. dollars ended December 31, ended December 31,
except per share amounts) 2005 2004 2005 2004
-------------------
------------------------------------------------------
(Restated) (Restated)
Net sales $ 1,121 $ 1,161
$ 4,518 $ 4,278
-------------------------------------------------------------------------
Costs and expenses
Cost of sales and other
expenses, excluding
depreciation
and depletion 726 643 2,633 2,348
Depreciation and depletion
69 70 256 248
Selling, general and
administrative
51 60 207 192
Research and development 12
7 35 29
Exploration 13 13 43
32
Currency translation
adjustments 11 56
59 85
Interest expense 10 7 26 36
Asset impairment charge - - 25 201
-----------------
--------------------------------------------------------
------------------------------------
-------------------------------------
892 856
3,284 3,171
-------------------------------------------------------------------------
Other income, net 91 15 83 49
----------------
---------------------------------------------------------
Earnings before income and
mining
taxes and minority
interest 320 320 1,317 1,156
Income and mining taxes 66 63 408 432
----------------
---------------------------------------------------------
-----------------------------------
--------------------------------------
Earnings before minority
interest
254 257 909 724
Minority interest 19
31 73 105
--------------------------------------------------------------
-----------
Net earnings $ 235 $ 226 $ 836 $ 619
-
------------------------------------------------------------------------
Net earnings per common
share
Basic $ 1.shipp jinchuan
S. government, working with industry, create an industrial
policy
that levels the "investment" playing field, thereby encouraging investment in
America.
P.21 per share
on a diluted basis(2)), for the fourth quarter of 2004.56 per share ($4.
Chief Executive Officer's Message
The year 2005 was a very exciting one for Inco and our
shareholders. In addition, we produced 10 million pounds of copper in concentrate
at Voisey's Bay
in the fourth quarter of 2005.
We have also entered into contracts with two leading smelting and
refining
companies to have them toll smelt and refine nickel concentrates which we have
agreed
to purchase from Australian sources. We expect to have a definitive cost
estimate in the second quarter
2006, when engineering will be at least
75 per cent complete and all major contracts will have been
awarded. Our debt-to-capitalization ratio was 28 per cent as of
year-end 2005.02)
Estimated
remediation costs(5) (0.
We believe that the reporting of adjusted net earnings, a calculation
that, as noted above, excludes certain gains or losses on the sale of non-core
investments, asset
impairment charges, non-cash currency translation
adjustments and other items that, given their nature
, timing or extent, may
obscure trends in the performance of our operations or otherwise not be
representative
of our ongoing operations, provides our shareholders and other
investors with a potentially useful
picture that eliminates the volatility of
such items, whether they are favourable or unfavourable
, and may assist them
in assessing our operating performance.
Our current estimates for production
for the first quarter and full year
of 2006 for nickel, copper and platinum-group metals ("PGMs"
), including PGMs
produced from purchased material, are as follows:
First Quarter Full Year
2006 2006(1)
------------- -
------------
Nickel - tonnes (thousands) 59 - 61 256
- pounds (millions) 130 - 135 565
Copper
- tonnes (thousands) 33 154
- pounds (millions)
75 340
PGMs - troy ounces (thousands)
80 400
------------------------------
(1) Includes 30 million
pounds of nickel returned for sale from third
party toll smelting and refining arrangements
, with five million
pounds of toll finished nickel production in the first quarter of
2006.05
Fuel oil price (West Texas
Intermediate)(3)(5) 1.06
1.
Selling, general and administrative expenses
Selling, general and administrative
expenses decreased by $9 million in
the fourth quarter of 2005 due to lower consulting fees.
The
aggregate impact of these restatements on diluted earnings per share was
as follows: first quarter
2005 - nil; second quarter 2005 - an increase of
$0.newswire. While the Company anticipates that
subsequent events and developments may cause the Company's views to change,
the Company specifically
disclaims any obligation to update these
forward-looking statements.
Material Assumptions
A number of assumptions were made by Inco in preparing its guidance for
2006 and making
certain other forward-looking statements for 2006 and beyond
and in connection with our pending acquisition
of Falconbridge Limited. In addition, documents filed with
the SEC by Inco may be obtained free of
charge by contacting Inco's media or
investor relations departments.20 $ 4.gfe alloys
, Kokomo, IN; ThyssenKrupp
Mexinox SA de CV, San
Luis Potosi, S. "U. military and homeland security forces would
not have
the ability to fight a war, defend our borders, and protect our
citizens from terrorism. And
myriad
defense programs would be negatively impacted by specialty metal supply
disruptions. Congress has
understood the dependent relationship between a healthy U.
Regarding the latter point
, China's heavily subsidized strategic
initiative of aggressively seeking Western technology and,
in return, offering
access to its market across a wide range of manufacturing industries is a
major
and potentially devastating issue, according to the study.
It is naive to think that manufacturing
of these materials could be
transferred to China while technology development remains in the United
States.
Our adjusted net earnings(1) for the full year 2005, as reflected in the
table
under "Reconciliation Between Adjusted Net Earnings and Net Earnings in
Accordance with Canadian
GAAP" below, were lower than adjusted net earnings
for the corresponding period of 2004 due primarily
to lower deliveries of
Inco-source nickel, copper and PGMs as well as increased production costs
partially offset by higher realized prices for nickel, copper and certain
PGMs.
(2
) The calculation of adjusted net earnings per share and net earnings
per share in accordance
with Canadian GAAP on a diluted basis takes
into account the dilutive effect of our outstanding
warrants, share
options and convertible debentures. With the addition of Voisey's Bay output
for a full year, we plan
to raise nickel production from Inco's operations to about 535 million pounds
. Hand
Chairman and Chief Executive Officer
Reconciliation between Adjusted Net Earnings
and Net Earnings in
Accordance with Canadian GAAP
We define adjusted net earnings
and adjusted net earnings per share as a
calculation of net earnings that excludes items that, because
of the nature,
timing or extent of such items, we believe do not reflect or relate to our
ongoing
operating performance.12 0.41 $ 3. Based upon the
current First Call mean forecast for
the average LME cash nickel price for
2006, which we understand to be $6.S.00/bbl 0.
(3) Includes the impact of hedging activities as of December 31, 2005.
(4) Represents the impact
on Canadian dollar-denominated operating costs
and excludes the translation effect relating
to Canadian
dollar-denominated liabilities and to accrued taxes for Canadian
dollar
currency translation effects associated with U.82 billion total estimate, we will have
funded or
be required to fund about $1.60
Nickel unit cash cost of sales
after by-product credits
per pound $ 2.39 6.30
Deliveries
Nickel in all
forms (tonnes)
- Inco-source 58,843 67,271 223,811 235,185
- Purchased finished 6,607 3,693 22,471 16,697
-----------------
--------------------------------------------------------
65,450
70,964 246,282 251,882
-----------------------------------------------------------
--------------
-------------------------------------------------------------------------
Copper (tonnes) 34,814 29,694 120,543 124,884
-----------------
--------------------------------------------------------
------------------------------------
-------------------------------------
Cobalt (tonnes) 417 514
1,694 1,542
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Platinum-group metals
(in
thousands of troy ounces) 118 81 415 420
--------
-----------------------------------------------------------------
---------------------------
----------------------------------------------
Net Sales to Customers by
Product
(in millions)
Primary nickel $ 837 $ 1,004 $ 3,655 $ 3,503
Copper 158 97 463 364
Precious metals
81 51 267 246
Other 45
9 133 165
-----------------------------------------------------------
--------------
$ 1,121 $ 1,161 $ 4,518 $ 4,278
-------------------------------------------------------------------------
-----------------
--------------------------------------------------------
Nickel Production in all
Forms (tonnes) 64,359 66,195 220,727 236,817
--------------------
-----------------------------------------------------
---------------------------------------
----------------------------------
Finished Nickel Inventories
at end of Period (tonnes
) 23,444 27,334 23,444 27,334
---------------------------------------------
----------------------------
----------------------------------------------------------------
---------
Inco Limited
Reconciliation of Nickel Unit
Cash Cost of Sales to Canadian GAAP
Cost of Sales
For the three months For the year
(in millions of U.
Inco Limited
Consolidated Statement of Earnings
(unaudited)
For the three months For the year
(in millions of U. dollars) 2005
2004
-------------------------------------------------------------------------
(Restated)
ASSETS
Current
assets
Cash and cash equivalents $ 958 $ 1,076
Accounts
receivable 673 601
Inventories
996 834
Other
68 42
--------------------------------------------------------------------
-----
Total current assets 2,695 2,553
Property
, plant and equipment 8,459 7,587
Accrued pension benefits asset
611 422
Deferred charges and other assets
245 154
----------------------------------------------------------------------
---
Total assets $ 12,010 $ 10,716
---------
----------------------------------------------------------------
----------------------------
---------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
liabilities
Long-term debt due within one year $ 122 $ 107
Accounts
payable 253 331
Accrued payrolls and benefits
221 208
Other accrued liabilities
533 399
Income and mining taxes payable 36 279
-------------------------------------------------------------------------
Total current
liabilities 1,165 1,324
Deferred credits and other liabilities
Long-term debt 1,852 1,761
Deferred income
and mining taxes 2,018 1,891
Accrued post-retirement benefits liability
732 671
Asset retirement obligation 168
171
Deferred credits and other liabilities 131 58
--
-----------------------------------------------------------------------
Total liabilities
6,066 5,876
-----------------------------------------
--------------------------------
Minority interest 761
470
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity
Convertible debt 362 418
------------
-------------------------------------------------------------
Common shareholders' equity
Common shares issued and outstanding
192,237,394 (2004 - 188,133,439 shares)
3,000 2,891
Warrants 62 62
Contributed surplus 578 571
Retained earnings
1,181 428
---------------------------------------
----------------------------------
4,821
3,952
-------------------------------------------------------------------------
Total shareholders' equity 5,183 4,370
-----------------
--------------------------------------------------------
------------------------------------
-------------------------------------
Total liabilities and shareholders' equity $ 12,010
$ 10,716
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Inco Limited
Consolidated Statement of Cash Flows
(unaudited)
For the
three months For the year
ended December 31, ended December
31,
(in millions of U.steelmaking indium
military platform.S.S. specialty steel industry cannot exist simply by
producing materials for defense applications.
Jack W., Schaumburg, IL; Precision
Rolled
Products, Inc. Canadian GAAP full year 2005 net earnings of $836 million reflect a
record
year
(All dollar amounts are expressed in U.29 per share ($3. A reconciliation of adjusted
net
earnings to net earnings in accordance with Canadian GAAP appears
below as
well as an explanation of why we believe adjusted net
earnings is useful information.
We produced 92 million pounds of refined copper and related products in
the fourth quarter of
2005 and 277 million pounds of refined copper and
related products for the full year, slightly above
our previous October 2005
guidance.95 per pound, but an increase in this cash measure
when compared
with 2004.
Our capital cost estimate for the Goro mine, process plant and
infrastructure of
$1.
Our offer was subject to a number of customary conditions, including
receipt of all necessary
regulatory clearances and acceptance of the offer by
Falconbridge shareholders owning not less than
66 2/3 per cent of all
outstanding Falconbridge common shares. We will generate outstanding cash
flow and have the ability to
pursue our combined growth strategy on a scale that neither company
could have
contemplated individually.45)
Gain on the sale of non-core
investment
0.46 -
Net income tax benefits(2) 0.
We
currently project that our nickel unit cash cost of sales after
by-product credits for the full year
2006 will be in the range of $2. 0.77 $ 3. dollar exchange
rate that adversely affected
our costs and (5) higher spending on supplies and
services due, in part, to our efforts to expand
production. PT Inco produced
a record 168 million pounds of nickel in matte in 2005. 71, Financial
Instruments that
may be Settled at the Issuer's Option in Cash or its own Equity Instruments., at
http://www.S. Investors and security holders may obtain copies of the
registration statement and
Inco's and Falconbridge's SEC filings free of
charge at the SEC's website (http://www.S.23 $
1.austenitic indium
Not satisfied with simply identifying an impending strategic problem for
the country, the
industry goes on in its report to identify specific, dramatic
and comprehensive actions that, if
taken swiftly, will keep U.S. specialty metals
industry and a strong national defense.S.S. Interestingly
and certainly true
for the specialty metals industry, many if not most of these incentives are
unrelated
to labor costs ., is Executive Vice President, Corporate
Development and Chief Technical Officer
, Allegheny Technologies Incorporated.
Our net earnings for the fourth quarter of 2005 in accordance
with
Canadian generally accepted accounting principles ("Canadian GAAP") were
$235 million, or
$1.06 per share on a diluted basis(2)),
compared with net earnings of $226 million, or $1. Our net
earnings for the fourth quarter and full
year of 2005 in accordance with Canadian GAAP also reflect
the inclusion of
the adjustments referred to in the table under "Reconciliation Between
Adjusted
Net Earnings and Net Earnings in Accordance with Canadian GAAP"
below.
With the nickel market
expected to remain strong and our nickel
production expected to reach a new record high in 2006,
we believe that 2006
will be another very good year for earnings and cash flow.
As we entered
2006, the nickel market has begun to gain momentum, as
reflected in the benchmark LME cash nickel
price which has averaged $14,711
per tonne ($6.S. We are continuing to see good demand from the U
.S. This cost measure includes the feeds we purchase from third parties
at LME or other benchmark
prices and then process at our Canadian operations.
Building on a Strong Financial Foundation
In the fourth quarter of 2005, we generated $204 million of cash flow
from operations
, before changes in working capital and capital expenditures.07) - (0.05 to $0.S.01
0.01
Cdn.08 3. In addition to
certain debt repayments, cash used for financing
activities in 2005 included
$76 million in respect of the tender for conversion and settlement in
cash at
our election of a portion of our LYON Notes.02 per share.newswire. dollar and other exchange
rates, changes in the Company's common share price, the capital costs, scope,
schedule, required
permitting and other key aspects of the Goro project, the
timing of receipt of all necessary permits
and governmental, regulatory and
other clearances or approvals, and engineering and construction
timetables,
for the Goro project, the necessary shareholder and government program sources
of
financing for the Goro and other projects, political unrest or instability
in countries or territories
such as Indonesia and New Caledonia, risks
involved in mining, processing and exploration activities
, research and
development activities, the accuracy of our estimated mineral/ore reserves,
resolution
of environmental and other proceedings and the impact of various
environmental regulations and initiatives
, market competition, the ability to
continue to pay quarterly cash dividends in such amounts as Inco
's Board of
Directors may determine in light of other uses for such funds and other
factors, and
other risk factors listed from time to time in the Company's
reports filed with the U.indium alloys
, Mexico; North
American Stainless, Ghent, KY; Outokumpu
Stainless, Inc."
The report, after presenting evidence
that the U. trade laws and
the ability of the U.
While a government/industry consensus exists
that a healthy domestic
specialty steel industry is in America's best interest, the U. Trade, costs
and taxes are identified as the primary factors.S.29 $ 4. Accordingly, the estimates and projections
set forth below would
change significantly upon the expected combination of Inco and Falconbridge
.50 on a diluted basis.S.002 0. Selling, general and
administrative expenses increased by
$15 million for the year 2005 primarily
due to higher capital taxes and higher expenses associated
with share options
that had been granted in prior years with share appreciation rights based upon
the price of our common shares. Total debt was $1,974 million at December 31,
2005, compared with
$1,868 million at December 31, 2004.ca/webcast, at least five minutes before the start of the
presentation
. Inherent in those statements are known and unknown risks,
uncertainties, assumptions and other factors
well beyond the Company's ability
to control or predict.28
Copper - per tonne
4,297 3,094 3,684 2,868
- per pound 1.stellite inco
L."
Many
examples of leading edge specialty metals applications currently used
in missiles, jet aircraft,
submarines, helicopters, Humvees and munitions are
identified in the study, which will be delivered
to Capitol Hill and the
Pentagon. is sitting on the sidelines doing very little to influence
investment
decisions. "The erosion of the American manufacturing base is an issue
that receives a lot of attention
, but little has been offered in the way of
effective solutions," said Shilling. While
currently
incapable of making most, if not all, specialty metals required for
leading edge defense applications
, China has developed the capability of
producing commodity stainless flat and long products, which
are core commodity
products of U.
David A. The principal
adjustments made in arriving at
adjusted net earnings(1) for the fourth
quarter of 2005 were (1) the exclusion of a gain of $88 million
on the sale of
a non-core investment; (2) the exclusion of estimated remediation costs of
$13
million involving a property we retained from a disposed business
unrelated to our current operations
and (3) the exclusion of unfavourable
non-cash currency translation adjustments totalling $11 million
.
------------------------------
(1) The adjusted net earnings reported in this release
have not been
calculated in accordance with Canadian GAAP, the accounting
principles
under which our consolidated financial statements are
prepared, and there is no standard
definition in such principles for
such adjusted net earnings or loss. Once we reach this
goal in the second half of 2006, we expect
that our nickel unit cash cost of sales will be at least
$0.15 per pound lower
in the last six months of 2006 than projected for the full year 2006.
Update on our Friendly Acquisition of Falconbridge
On October 11, 2005, we announced Inco
's friendly take-over offer for
Falconbridge, and the two companies entered into a definitive support
agreement covering this transaction.
I look forward to reporting on the completion of the
pending acquisition
of Falconbridge and our performance for the first quarter of 2006. Accordingly
, the items that are excluded from
this calculation would include certain gains or losses on the sale
of non-core
investments, asset impairment charges and write-downs in the value of assets,
non
-cash currency translation adjustments relating principally to liabilities
that are not expected to
be discharged or settled for a number of years,
reclamation or remediation costs unrelated to our
current operations, income
or other tax benefits or charges relating to the impact of currency
translation
adjustments, certain tax losses where the related benefits are not
normally taken, adjustments for
tax rulings and other decisions,
interpretations and determinations covering, or based upon, transactions
which
occurred or related to prior periods and for revaluation of recorded future
tax liabilities
due to changes in laws or regulations affecting future tax
rates, interest income associated with
tax refunds, project suspension and
similar costs, including related project currency hedging gains
and losses,
adjustments to minority interests reflecting changes thereto due to subsequent
events
, losses or gains on debt retirements or redemptions, strike expenses,
and other gains and losses
that, in each case, do not reflect on our ongoing
operating performance.
(5) These estimated
costs are unrelated to our current businesses and
operations. dollar exchange rate and other
currency exchange rate changes
and other external factors that we do not believe we are in a position
to
predict with any degree of certainty, we do not provide a reconciliation
between any adjusted
net earnings estimate and a corresponding net earnings
estimate in accordance with Canadian GAAP
.00/lb.06 0.82 billion. Taking into account capital contributions expected to be made
in
2006 by other shareholders in our Goro project, certain previously
announced government assistance
relating to our growth projects and other
financing arrangements that are already in place for these
projects, we
currently project that of this $1.34 billion. Copies of any slides or other statistical
information to be used
for the conference call can be accessed and will be available for online
viewing
by persons with a computer system and Internet connection meeting
certain minimum requirements through
http://www.
The archival webcast of the presentation can be accessed via the Internet
through
http://www.73 6.77 $ 3.S.gfe austenitic
W., Chairman, SSINA,
and Executive Vice President
, Corporate Development and
Chief Technical Officer, Allegheny Technologies Incorporated
,
Pittsburgh, PA
SSINA, a Washington, DC-based trade association, represents
virtually all
North American stainless steel and nickel-based alloys producers, including
superalloys
.P., Florham
Park, NJ; Special Metals Corporation, Huntington, WV; Techalloy Central Wire
Group
, Mahwah, NJ; Timken Latrobe Steel, Latrobe, PA; Universal Stainless and
Alloy Products, Bridgeville
, PA; and Valbruna Slater Stainless Inc. It forewarns, however, the unfortunate loss of such
capability
, much like the loss of other U.S.S.
Nickel Market Developments and Outlook
The
stainless steel inventory adjustments that affected the global nickel
market beginning in the second
half of 2005 continued into the fourth quarter
of 2005. and to improve in Europe and
Japan.
In 2005, Inco's nickel unit cash cost of sales, net of by-product
credits, was $2. Department
of Justice and the European Commission on what, if
any, remedy would be required to resolve any competitive
concerns that these
authorities might see in the context of the pending acquisition. This transaction
promises to create the world's largest nickel
company and a leading copper company, with outstanding
growth prospects in
both metals, given the combined company's strong operations and unique project
portfolio. Combining the two companies' operations is also expected to create
significant operating
and other synergies that are uniquely available to the
two of us given the proximity of our operations
in Ontario and elsewhere. This estimate excludes the costs
of certain purchased intermediates and
related treatment and refining charges
of third parties.-U. The
decrease in net cash provided
by operating activities was primarily due to
higher working capital requirements in the fourth quarter
of 2005 due, in
part, to the required working capital ramp-up for Voisey's Bay as it commenced
commercial
production as of December 1, 2005. During 2005, LYON Notes
representing approximately $163 million
aggregate principal amount were
tendered for conversion. For accounting purposes, the LYON Notes
are bifurcated
between debt and equity, the equity portion representing the value of the
holders
' conversion options. (Toronto time), and can be accessed by visiting the website of a
third-party
webcasting service we will be using, CNW Group Ltd. These forward-looking statements should not be
relied
upon as representing the Company's views as of any date subsequent to
the date of this release. Forward
-looking statements for time
periods subsequent to 2006 involve longer term assumptions and estimates
than
forward-looking statements for 2006 and are consequently subject to greater
uncertainty.
February 14, 2006
Inco Limited
Key Financial and Operating Statistics
For
the three months For the year
ended December 31, ended
December 31,
2005 2004 2005 2004
-
------------------------------------------------------------------------
Average Realized Prices
Nickel(1) - per tonne $ 12,780 $ 14,138 $ 14,842 $ 13,906
- per
pound 5.31
Copper - per tonne 4,528 3,283 3,839 2
,916
- per pound 2.49 1.
(2) Relates to certain assets at
PT Inco that had no future value to PT
Inco's operations and the write-off of the book values
of certain
equipment assessed to be beyond economic repair and to PT Inco's
change
in accounting for asset sales and other dispositions.rhenium tzan
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