Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2002
ALSTOM
------
(Exact Name of Registrant as Specified in its Charter)
25, avenue Kléber, 75116 Paris, France
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(Address of Registrant's Principal Executive Office)
(Indicate by check mark whether the Registrant files or will file annual
reports under cover of Form 20-F or Form 40-F)
Form 20-F X Form 40-F
----- -----
(Indicate by check mark whether the Registrant, by furnishing the
information contained in this Form, is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934)
Yes No X
----- -----
(If "Yes" is marked, indicate below the file number assigned to the
Registrant in connection with Rule 12g3-2(b):____)
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE
REGISTRATION STATEMENTS ON FORM S-8 OF ALSTOM (NO. 333-10658, NO. 333-12028 and
No. 333-90154) AND THE RELATED PROSPECTUSES AND TO BE PART THEREOF FROM THE DATE
ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR
REPORTS SUBSEQUENTLY FILED OR FURNISHED.
Enclosures
Consolidated Financial Statements for Half-Year Ended September 30,
2002...........................................................................3
Consolidated financial statements
Half-year ended 30 September 2002
CONSOLIDATED INCOME STATEMENTS
Half-year ended
30 September Year ended
--------------------------------- 31 March
Note 2001 (*) 2002 2002 (*)
-------------- -------------- --------------
(in € million)
SALES................................................... 11,942.0 10,769.0 23,452.8
Cost of sales........................................... (9,988.0) (8,904.8) (19,621.9)
Selling expenses........................................ (542.2) (514.5) (1,078.2)
Research and development expenses....................... (255.7) (319.3) (575.4)
Administrative expenses................................. (633.3) (487.9) (1,236.3)
-------------- -------------- --------------
OPERATING INCOME........................................ 522.8 542.5 941.0
Other income (expense), net ............................ (1)&(3) (24.1) (188.2) (389.9)
Other intangible assets amortisation.................... (1)&(6) (31.0) (32.2) (64.2)
-------------- -------------- --------------
EARNINGS BEFORE INTEREST AND TAX........................ 467.7 322.1 486.9
Financial income (expense), net......................... (1)&(4) (144,9) (127.8) (294,5)
-------------- -------------- --------------
PRE-TAX INCOME.......................................... 322.8 194.3 192.4
Income tax.............................................. (5) (61.6) (35.8) (9.7)
Share in net income (loss) of equity investments........ (0.6) 1.6 0.8
Dividend on redeemable preference shares of a subsidiary (1)&(11) (7.4) - (13.9)
Minority interests...................................... (13.5) (4.8) (22.9)
Goodwill amortisation................................... (1)&(6) (147.6) (144.0) (286.1)
-------------- -------------- --------------
NET INCOME.............................................. 92.1 11.3 (139.4)
============== ============== ==============
Earnings per share in Euro
Basic ............................................... 0.4 - (0.6)
Diluted.............................................. 0.4 - (0.6)
(*) As published but after inclusion of the changes in presentation described in Note 1.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS
At 31 March At 30 September
Note 2002 (*) 2002
---------- ------------------- -------------------
(in € million)
ASSETS
Goodwill, net...................................................... (6) 4,612.4 4,586.0
Other intangible assets, net....................................... (6) 1,169.6 1,176.8
Property, plant and equipment, net................................. 2,788.1 2,562.7
Investments in equity method investees and other investments, net.. 301.0 302.5
Other fixed assets, net............................................ (7) 1,326.3 1,327.1
------------------- -------------------
Tangible, intangible and other fixed assets, net................... 10,197.4 9,955.1
Deferred taxes..................................................... 1,486.0 1,444.1
Inventories and contracts in progress, net......................... 5,592.6 5,566.9
Trade receivables, net............................................. (8) 4,730.0 4,195.4
Other accounts receivables, net.................................... (8) 3,304.1 3,247.6
------------------- -------------------
Current assets..................................................... 13,626.7 13,009.9
Short term investments............................................. 331.3 264.6
Cash and cash equivalents.......................................... 1,904.4 2,125.8
------------------- -------------------
Short term investments and cash and cash equivalents............... 2,235.7 2,390.4
------------------- -------------------
TOTAL ASSETS....................................................... 27,545.8 26,799.5
=================== ===================
LIABILITIES
Shareholders' equity............................................... 1,752.5 2,197.5
Minority interests................................................. 91.1 91.0
Redeemable preference shares of a subsidiary....................... (1)&(11) 205.0 -
Undated subordinated notes......................................... 250.0 250.0
Provisions for risks and charges................................... (9) 3,849.2 3,196.9
Accrued pension and retirement benefits............................ (10) 994.0 983.5
Redeemable preference shares of a subsidiary....................... (1)&(11) - 205.0
Bonds ............................................................. 1,200.0 1,200.0
Other borrowings................................................... 3,099.8 2,907.1
------------------- -------------------
Financial debt..................................................... (11) 4,299.8 4,312.1
Securitisation of future receivables............................... (12) 1,735.0 1,762.4
Deferred taxes..................................................... 46.3 50.4
Customers' deposits and advances................................... (13) 4,220.6 4,269.3
Trade payables..................................................... 5,564.1 5,116.4
Accrued contract costs, other payables and accrued expenses........ 4,538.2 4,570.0
------------------- -------------------
Current liabilities................................................ 14,322.9 13,955.7
=================== ===================
TOTAL LIABILITIES.................................................. 27,545.8 26,799.5
=================== ===================
Commitments and contingencies ..................................... (15)&(16)
(*) As published but after inclusion of the changes in presentation described in Note 1.
The accompanying Notes are an integral part of these Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(in € million) Number of Additional Cumulated
outstanding Paid-in Retained Translation Net Shareholders'
shares Capital Capital Earnings Adjustment Income Equity
------------------------------------------------------------------------------------
(in € million)
At 1 April 2001................. 215,387,459 1,292.3 85.2 570.3 (61.1) 203.7 2,090.4
Changes in cumulative translation
adjustments ..................... - - - - (80.0) - (80.0)
Net income....................... - - - - - (139.4) (139.4)
Appropriation of income.......... - - - 85.2 - (203.7) (118.5)
------------------------------------------------------------------------------------
At 31 March 2002 ................ 215,387,459 1,292.3 85.2 655.5 (141.1) (139.4) 1,752.5
====================================================================================
At 1 April 2002.................. 215,387,459 1,292.3 85.2 655.5 (141.1) (139.4) 1,752.5
Capital increase ................ 66,273,064 397.6 220.0 - - - 617.6
Changes in cumulative translation
adjustments ..................... - - - - (183.9) - (183.9)
Net income....................... - - - - - 11.3 11.3
Appropriation of income.......... - - - (139.4) - 139.4 0
------------------------------------------------------------------------------------
At 30 September 2002 ............ 281,660,523 1,689.9 305,2 516.1 (325.0) 11.3 2,197.5
====================================================================================
At the ordinary general shareholders' meeting held on 3 July 2002 it was decided
that no dividend be paid.
In July 2002, an issue of shares was made and 66,273,064 shares having a par
value of €6 were subscribed. Related costs of€18.6 million were charged against
additional paid-in of €238.6 million.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended Half year ended
31 March 30 September
2002 2002
------------------- -------------------
(in € million)
Net income (loss)......................................................... (139.4) 11.3
Minority interests........................................................ 22.9 4.8
Depreciation and amortisation............................................. 792.1 383.5
Changes in provision for pension and retirement benefits, net............. (51.0) 15.3
Net (gain) loss on disposal of fixed assets and investments............... (197.9) 10.7
Share in net income (loss) of equity investees (net of dividends received) 0.4 (1.6)
Changes in deferred tax................................................... (86.4) (15.5)
------------------- -------------------
Net income after elimination of non cash items............................ 340.7 408.5
------------------- -------------------
Decrease (increase) in inventories and contracts in progress, net......... 54.0 (287.7)
Decrease (increase) in trade and other receivables, net................... 528.5 177.3
Increase (decrease) in securitisation of existing receivables, net ....... 139.6 (151.5)
Increase (decrease) in contract related provisions, ...................... (947.9) (455.7)
Increase (decrease) in other provisions, ................................. 2.5 (41.2)
Increase (decrease) in restructuring provisions, ......................... (122.7) (37.4)
Increase (decrease) in customers' deposits and advances................... (1,254.6) 434.8
Increase (decrease) in trade and other payables, accrued contract costs and
accrued expenses.......................................................... 680.7 36.2
------------------- -------------------
Net cash provided by (used in) operating activities : (579.2) 83.3
------------------- -------------------
Proceeds from disposals of property, plant and equipment.................. 118.8 40.3
Capital expenditures...................................................... (550.3) (200.0)
Decrease(increase) in other fixed assets ,net............................. (103.7) (34.4)
Cash expenditures for acquisition of investments, net of net cash acquired (113.2) (165.9)
Cash proceeds from sale of investments, net of net cash sold.............. 771.9 12.5
------------------- -------------------
Net cash provided by (used in) investing activities....................... 123.5 (347.5)
------------------- -------------------
Capital increase.......................................................... - 617.6
Increase (decrease) in securitisation of future receivables, net.......... 161.1 40.6
Dividends paid including minorities....................................... (136.1) -
------------------- -------------------
Net cash provided by (used in) financing activities....................... 25.0 658.2
------------------- -------------------
Net effect of exchange rate............................................... (12.3) (67.4)
Other changes (*)......................................................... 11.8 (184.3)
------------------- -------------------
Decrease (increase) in net debt........................................... (431.2) 142.3
------------------- -------------------
------------------- -------------------
Net debt at the beginning of the period (1)............................... (1,632.9) (2,064.1)
------------------- -------------------
Net debt at the end of the period (1)..................................... (2,064.1) (1,921.8)
------------------- -------------------
(1) Net debt includes short term investments, cash and cash equivalents net of
short, medium and long term debt
(*) including reclassification of redeemable preference shares of a subsidiary
as disclosed in Note 1
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Notes to the half-year consolidated financial statements
Note 1 - Basis of preparation and Accounting policies
The unaudited interim financial statements for the six months ended 30 September
2002 have been prepared on the basis of the accounting policies and methods of
computation as set out in the Company's financial statements for the year ended
31 March 2002 and according principles set forth therein. Certain presentation
changes have been made as described in this Note under the heading "Changes in
presentation". Benchmark treatments are generally used. Capital lease
arrangements and long-term rentals are not capitalised. The Company's business
is not materially affected by seasonality.
The preparation of the Consolidated Financial Statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of the revenues and expenses during the
reporting period.
The Company designs, manufactures and sells several products of large individual
value that are used in major infrastructure projects. In response to competitive
pressures, the Company is increasingly required to introduce new,
technologically advanced products on increasingly short timetables. In some
cases, the Company is also required to sell products on the basis of
specifications that exceed the capabilities of currently existing commercially
applied technology or under contracts containing onerous after-sales warranties
and penalties related to performance, availability and delay. The Company is
also assuming a greater role in its various infrastructure projects beyond that
of simply a supplier of equipment.
Management reviews these contracts of large individual value on an ongoing basis
using currently available information. Costs to date are considered, as are
estimated costs to complete and estimated future costs of warranty obligations.
Estimates of future cost reflect management's current best estimate of the
probable outflow of financial resources that will be required to settle
contractual obligations. The assumptions to calculate present obligations take
into account the current technological situation as well as the commercial and
contractual positions, assessed on a contract by contract basis. Changes in
facts and circumstances may result in revised estimates.
The functional currency of the Company's foreign subsidiaries is the applicable
local currency. Outside the Euro zone, assets and liabilities of foreign
subsidiaries are translated into Euros at the period end rate of exchange, and
their income statements and cash flow statements are converted at the average
rate of exchange during the period. The resulting translation adjustment is
included as a component of shareholders' equity.
Changes in presentation
(i) Amortisation of goodwill
The presentation of goodwill amortisation previously included in Earnings
Before Interest and Tax has been changed and is now presented immediately
above net income. This change in presentation amount to €147.6 million at
30 September 2001, €144.0 million at 30 September 2002 and €286.1 million
at 31 March 2002.
The amortisation of other intangible assets continue to be shown as part
of Earnings before Interest and Tax.
(ii) Securitisation of future receivables
The right to receive payment from certain customers for future receivables
previously included in the line "Customer deposits and advances" have been
disclosed separately in the balance sheet. This amounts to €1,735.0
million at 31 March 2002 and €1,762.4 million at 30 September 2002.
The related costs previously included in the line "Other income (expenses)
net" have been reclassified and disclosed separately as part of "
Financial income (expenses) net". This amounts to €46.3 million at 30
September 2001, €56.0 million at 30 September 2002 and €87.0 million at 31
March 2002.
In the Consolidated Statements of Cash Flow the net cash provided by (used
in) securitisation of future receivables previously included in the "Net
cash provided by (used in) operating activities" has been reclassified and
disclosed separately as part of "Net cash provided by (used in) financing
activities ". This amounts to €161.1 million at 31 March 2002 and €40.6
million at 30 September 2002.
(iii) Securitisation of existing receivables
In the Consolidated Statements of Cash Flow the net cash provided by (used
in) securitisation of existing receivables previously included in the line
"Decrease (increase) in trade and other receivables, net" has been
disclosed separately as part of "Net cash provided by (used in) operating
activities ". This amounts to €139.6 million at 31 March 2002 and €(151.5)
million at 30 September 2002.
(iv) Deferred tax
Deferred tax assets and liabilities have been netted either by tax
grouping or by legal entity. This netting decrease the deferred tax asset
and liability positions by €658.0 million at 31 March 2002 and €724.3
million at 30 September 2002.
(v) Redeemable preference shares of a subsidiary
The issue of shares by the company in July 2002 was an event triggering
the requirement to redeem the €205 million preference shares of a wholly
owned subsidiary. Therefore the instrument has been re-classified as
long-term debt with a maturity in March 2006 and the related interest cost
disclosed as "net interest income/expense" in the accounts for the 6
months ended 30 September 2002.
No reclassification of previous periods has been made reflecting the
triggering event occurring during the 6 months to September 2002.
Note 2 - Changes in consolidated companies
The main changes in the consolidated companies for the first 6 months 2002 are
as follows :
(i) In April 2002, the Company acquired the remaining 49% of the share capital
in Fiat Ferroviaria Spa now renamed ALSTOM Ferroviaria Spa for €154
million. This Company is fully consolidated since the acquisition date.
(ii) In September 2002 operations in South Africa were sold to local
empowerment participants and financiers. A 10 % interest in the acquiring
Company has been retained. Gross proceeds from the sale are €50 million
paid in October 2002. It is de-consolidated with effect from 30 September
2002.
Note 3 - Other Income (Expense) Net
Half-year ended
30 September Year ended
------------------------------------ 31 March
2001 2002 2002
----------------- ------------------ ------------------
(in € million)
Net gain (loss) on disposal of fixed assets......... 8.6 (1.4) 11.2
Net gain (loss) on disposal of investments (1)...... 143.6 (9.0) 106.9
Restructuring costs................................. (65.2) (79.6) (227.2)
Employees' profit sharing........................... (8.5) (8.6) (5.4)
Pension costs....................................... (74.2) (96.9) (138.5)
Others, net (2)..................................... (28.4) 7.3 (136.9)
----------------- ------------------ ------------------
Other income (expense), net......................... (24.1) (188.2) (389.9)
================= ================== ==================
(1) In the half-year ended 30 September 2001 it reflects the net gains on the
disposal of Contracting Sector and GTRM. In the year-end 31 March 2002 it
reflects net gains Contracting Sector and GTRM and a net loss on disposal of the
Waste to Energy business .
(2) Of which, in the year ended March 31, 2002 is €90 million set aside as
additional Marine vendor finance provisioning.
Note 4 - Financial Income (Expense)
Half-year ended
30 September Year ended
------------------------------------ 31 March
2001 2002 2002
----------------- ------------------ ------------------
(in € million)
Interest income.................................. 114.1 83.4 165.2
Interest expense (1)............................. (201.5) (167.7) (328.2)
----------------- ------------------ ------------------
Net interest income (expense).................... (87.4) (84.3) (163.0)
Securitisation expenses.......................... (46.3) (56.0) (87.0)
Foreign currency gain (loss)..................... 1.3 35.0 (3.3)
Other financial income (expense) ................ (12.5) (22.5) (41.2)
----------------- ------------------ ------------------
Financial income (expense)....................... (144.9) (127.8) (294.5)
================= ================== ==================
(1) Including in the half year ended 30 September 2002, €6.7 million of interest
on redeemable preference shares of a subsidiary (see Note 1).
Note 5 - Income tax
(a) Analysis of income tax charge
Half-year ended
30 September Year ended
31 March
2001 2002 2002
----------------- ------------------ ------------------
(in € million)
Current income tax charge........................... 119.5 51.3 96.1
Deferred tax (income) charge........................ (57.9) (15.5) (86.4)
----------------- ------------------ ------------------
Income tax charge................................... 61.6 35.8 9.7
================= ================== ==================
Effective tax rate.................................. 19.1% 18.4% 5.0%
================= ================== ==================
(b) Effective income tax rate
The effective income tax rate can be analysed as follows :
Half-year ended
30 September 2002
--------------------------
Pre-tax income................................................. 194.3
Statutory income tax rate of the parent company................ 35.43%
--------------------------
Expected tax charge............................................ 68.9
--------------------------
Impact of :....................................................
- reduced taxation of capital gain ............................ (1.2)
- (utilisation) non recognition of tax loss carryforwards...... (5.4)
- net change in estimate of tax liabilities.................... (9.7)
- Intangible assets amortisation............................... 11.3
- other permanent differences.................................. (28.4)
- non recoverable withholding taxes, etc....................... 8.1
- differences in rates......................................... (7.8)
--------------------------
Income tax charge.............................................. 35.8
--------------------------
Effective tax rate............................................. 18.4 %
--------------------------
The effective tax rate in the current half-year is principally affected by
favourable differences between book and taxable income.
Note 6 - Goodwill and other intangible assets, net
---------------------------------------------------------------------------------------------------------------------------------
Translation
adjustments
At 31 March and other At 30 September
(in € million) 2002 Acquisitions Disposals Amortisation changes 2002
---------------------------------------------------------------------------------------------------------------------------------
Power (i) .......................... 3,524.1 - (2.7) (97.7) 0.1 3,423.8
Transmission & Distribution *....... 563.9 - - (18.1) (11.2) 534.6
Transport (ii)...................... 448.7 156.7 - (18.2) (14.7) 572.5
Marine.............................. 2.5 - - (0.1) - 2.4
Others (iii)........................ 73.2 - (9.7) (9.9) (0.9) 52.7
------------------------------------------------------------------------------------------
Goodwill , net...................... 4,612.4 156.7 (12.4) (144.0) (26.7) 4,586.0
==========================================================================================
------------------------------------------------------------------------------------------
Other intangible assets, net (iv)... 1,169.6 39.2 - (32.2) 0.2 1,176.8
==========================================================================================
* includes €93.2 Million of Power Conversion goodwill integrated into the
Transmission and Distribution sector as of 1 April 2002.
(i) Power
The goodwill is related to the acquisition of ABB ALSTOM Power in a two step
process in 1999 and 2000.
In setting up the ABB ALSTOM Power joint venture the Company contributed its
Energy business, except the Heavy Duty Gas Turbine business, and ABB contributed
substantially all of its power generation business, except for its nuclear
operations, Combustion Engineering Inc., a subsidiary of ABB, and its asbestos
liabilities for which ABB indemnified the Company.
(ii) Transport
The additional goodwill of €156.7 million is related to the acquisition of the
remaining 49% of the share capital in Fiat Ferroviaria Spa now renamed ALSTOM
Ferroviaria Spa. The acquisition cost paid in April 2002 was €154 million (Note
2).
(iii) Others
In September 2002 the Company sold its interest in its South African entities
reducing the net goodwill by €12.4 million (Note 2).
(iv) Other intangible assets
Other intangible assets results from the allocation of the purchase price
following the acquisition of ABB's remaining 50% shareholding in Power. It
includes technology, an installed base of customers and licensing agreement for
gross amounts of €1,242 million.
In addition it includes payments under a technology sharing agreement.
The goodwill and other intangible assets are amortised over a period of 20 years
in all Sectors due to the long term nature of the contracts and activities
involved.
Note 7 - Other fixed assets, net
At 31 March At 30 September
2002 2002
------------------------ ------------------------
(in € million)
Loans to third parties.................................. 251.3 249.1
Long term deposits and retentions....................... 527.1 566.3
Prepaid assets - pensions (see note 10)................ 469.3 451.8
Others.................................................. 78.6 59.9
------------------------ ------------------------
Other fixed assets, net................................. 1,326.3 1,327.1
======================== ========================
Other fixed assets, net include €561 million at 31 March 2002 and €536 million
at 30 September 2002 of loans and cash deposits in respect of Marine vendor
financing (see Note 16).
Note 8 - Securitisation of existing receivables
The following table shows amounts of trade receivables securitised :
At 31 March At 30 September
2002 2002
--------------------- ---------------------
(in € million)
Trade receivables securitised...................................... 1,388.1 1,254.3
Retained interests (1)............................................. (352.1) (370.3)
---------------------- ----------------------
Net cash proceeds from securitisation of trade receivables......... 1,036.0 884.0
====================== ======================
(1) included in "other accounts receivables, net"
The Company sold trade receivables in the normal course of business in revolving
period securitisations within which it irrevocably and without recourse
transferred eligible receivables. Under the terms of these agreements the
Company continues to service, administer and collect the receivables on behalf
of the purchaser. Certain receivables are retained by the banks as a credit
enhancement. Amounts of trade receivables securitised net of retained interests
are €1,036 million at 31 March 2002 and €884 million at 30 September 2002.
Note 9 - Provisions for risks and charges
Translation
adjustments At 30
At 31 March Additions Releases Applied and other (*) September
2002 2002
------------- ------------- ------------ ----------- ----------------- -----------
(in € million)
Warranties.................. 1,617.6 113.8 (63.6) (399.9) (17.3) 1,250.6
Penalties and claims........ 773.7 103.8 (9.0) (159.6) (7.6) 701.4
Contract loss .............. 490.4 220.0 (35.7) (200.0) 20.2 494.8
Other risks on contracts.... 333.5 55.3 (31.4) (49.4) 16.9 324.9
Provisions on contracts......... 3,215.2 492.9 (139.7) (808.9) 12.2 2,771.7
Restructuring .................. 177.9 23.2 (3.3) (57.3) (3.1) 137.4
Other provisions ............... 456.1 16.8 (21.3) (36.7) (127.1) 287.8
------------- ------------- ------------ ----------- ----------------- -----------
Total........................... 3,849.2 532.9 (164.3) (902.9) (118.0) 3,196.9
============= ============= ============ =========== ================= ===========
(*) of which €(87) million of translation adjustments and €(27) million of
transfer to accrued contract costs and other payables.
Provisions and accrued costs related to GT 24/26 turbines amount to €1,440
million at March 31,2002 and €1,042 million at September 30, 2002.
In the half-year ended 30 September 2002, application of provisions on contracts
related to GT24/26 turbines amounts to €295 million and application of accrued
contract costs was €103 million.
Note 10 - Accrued pension and retirement obligations
The Company provides various types of retirement, termination benefits and post
retirement benefits (including healthcare and medical cost) to its employees.
The type of benefits offered to an individual employee is related to local legal
requirements as well as the historical operating practices of the specific
subsidiaries and involves the Company in the operation of or participation in
various retirement plans.
These plans are either defined contributions or defined benefits.
For the defined contributions plans, the level of Company contribution to
independent administered funds is fixed at a set percentage of employees' pay.
The pension costs charged in the Profit and Loss account represent contributions
payable by the Company to the funds.
For the defined benefits plans which the Company operates, benefits are based on
employee pensionable remuneration and length of service. These are either
externally funded or unfunded, with provisions maintained in the Company balance
sheet. All are subject to regular actuarial review. Actuarial valuations are
carried out by external actuaries employed by the Company using the projected
unit method. The actuarial assumptions used to calculate the benefit obligation
vary according to the country in which the plan is situated.
Most defined-benefit pension liabilities are funded through separate pension
funds. Pension plan assets related to funded plans are invested mainly in equity
and debt securities.
Other supplemental defined-benefit pension plans sponsored by the Company for
certain employees are funded from the Company's assets as they become due.
The Company reviews annually plan assets and obligations. Differences between
actual and expected returns on assets together with the effects of any changes
in actuarial assumptions are assessed. If this difference exceeds 10% of the
greater of the projected benefit obligations or the market value of plan assets,
the resulting unrecognised gains/losses are amortised over the average remaining
service life of active employees.
The Company also provides post-retirement benefits (mainly post-retirement
medical benefits plans) to a number of retired employees in certain countries
principally in the United-States under plans which are predominantly unfunded.
In April 1999, the UK pension scheme was demutualised and pension assets and
liabilities associated with the then current employees and retirees were
segregated into defined benefit pension plans sponsored directly by the Company.
The surplus arising at that time was accounted for as a prepaid expense. This
prepayment is not offsetable against accruals on other pension schemes.
The balance sheet position of these liabilities and assets, which are
predominantly long term, are presented below :
At 31 March At 30 September
2002 2002
------------------- -------------------
(in € million)
Accrued pension and retirement benefits........................ (994.0) (983.5)
Prepaid assets - pensions (see note 7)......................... 469.3 451.8
------------------- -------------------
Net (accrued) prepaid benefit cost ............................ (524.7) (531.7)
=================== ===================
The components of the pension cost are the following :
Half-year ended
30 September Year ended
------------------------------------ 31 March
2001 2002 2002
----------------- ------------------ ------------------
(in € million)
Service cost........................................ 52.2 56.0 102.0
Expected interest cost.............................. 111.0 106.2 221.0
Expected return on plan assets...................... (104.0) (96.4) (208.0)
Amortisation of unrecognised prior service cost..... (4.0) - (8.0)
Amortisation of actuarial net loss (gain)........... 5.0 12.7 11.0
Curtailments / Settlements.......................... (14.0) - (32.0)
-------------------------------------------------------
Total defined benefits net periodic pension cost 46.2 78.5 86.0
Other defined contributions and multi-employer...... 28.0 18.4 52.5
Pension cost........................................ 74.2 96.9 138.5
================= ================== ==================
Note 11 - Financial Debt
(a) Analysis by nature
At 31 March At 30 September
2002 2002
------------------- -------------------
(in € million)
Redeemable preference shares (1) .............................. - 205.0
Bonds (2)...................................................... 1,200.0 1,200.0
Syndicated loans............................................... 1,550.0 1,970.0
Bilateral loans................................................ 283.0 233.0
Facilities in subsidiaries..................................... 811.7 476.4
Commercial paper (3)........................................... 455.1 227.7
------------------- -------------------
Financial debt................................................. 4,299.8 4,312.1
=================== ===================
Long-term...................................................... 2,762.9 3,684.8
Short-term..................................................... 1,536.9 627.3
(1) On 30 March 2001, a wholly owned subsidiary of ALSTOM Holdings issued
perpetual, cumulative, non voting, preference shares for a total amount of €205
million.
The preference shares have no voting rights. They are not redeemable, except at
the exclusive option of the issuer, in whole but not in part, on or after the
5th anniversary of the issue date or at any time in case of certain limited
specific pre identified events. Included in those events, are changes in tax
laws and the issuance of new share capital.
In July 2002 an issue of shares was made triggering the contractual redemption
of the preferred shares at 31 March 2006 at a price equal to par value together
with dividends accrued, but not yet paid. Therefore this instrument has been
re-classified as long term debt and its related interests have been classified
as interests and shown as "financial income (expenses)".
(2) On July 26, 1999, ALSTOM issued bonds for a principal amount of €650 million
with a 7 year maturity, listed on the Paris and Luxembourg Stock Exchanges,
bearing a 5 % coupon and to be redeemed at par on July 26, 2006.
On February 6, 2001, ALSTOM issued bonds for a principal amount of €550 million
with a 3 year maturity, listed on the Luxembourg Stock Exchange, bearing a 5.625
% coupon and to be redeemed at par on February 6, 2004.
(3) The total authorised commercial paper program is €2,500 million,
availability being subject to market conditions
(b) Analysis by maturity and interest rate
------------- ----------------------------------------------------------------------
Short Term Long Term
----------------------------------------------------------------------
Average
rate
of
Less than 1 After 5 interest-
TOTAL year 1-2 years 2-3 years 3-4 years 4-5 years years Long Term
---------------------------------------------------------------------------------------------
(in € million) (in € million)
Redeemable preference
shares................ 205.0 - - - 205.0 - - 6.5%
Bonds ................ 1,200.0 - 550.0 - 650.0 - - 5.0%
Syndicated loans...... 1,970.0 - 1,250.0 - 720.0 - - 3.9%
Bilateral loans...... 233.0 - - - - 233.0 4.1%
Facilities in
subsidiaries.......... 476.4 399.6 47.6 3.3 3.7 3.5 18.7
Commercial Paper...... 227.7 227.7 - - - - -
---------- ------------ ---------- ----------- ------------ ----------- ---------
Total................. 4,312.1 627.3 1,847.6 3.3 1,578.7 236.5 18.7
========== ============ ========== =========== ============ =========== =========
Interest rates on substantially all short-term debt are based on EURIBOR and
EONIA for euros and LIBOR for relevant currencies. Interest rates on
substantially all long-term debt are fixed rates.
(c) Analysis by currency
At 31 March At 30 September
2002 2002
------------------- -------------------
(in € million)
Euro................................................ 3,940.6 4,103.0
US dollar........................................... 125.4 32.5
Mexican peso........................................ 58.7 32.4
Pound sterling...................................... 24.3 4.1
Other currencies.................................... 150.8 140.1
------------------- -------------------
Total............................................... 4,299.8 4,312.1
=================== ===================
Note 12 - Securitisation of future receivables
The Company sold for a net amount of €1,735 million at 31 March 2002 and €1,762
million at 30 September 2002, the right to receive payment from certain
customers for future receivables.
Within the total of €1,762 million at 30 September 2002, a net amount of €879
million is for securitised Marine transactions including two transactions
pertaining to the sale of three cruise-ships to two customers. Such
transactions, which substantially limit the Company's exposure during the
cruise-ship construction period, provide for limited recourse only in the event
of customer default prior to the delivery of the cruise-ships to cover eventual
losses of the investors upon the resale of the cruise-ship in question, subject
to a maximum of €82 million in respect of one cruise-ship sold to one customer
and subject to a maximum of €168 million in respect of two cruise-ships sold to
the other customer. Included in the total above is a further Marine
securitisation involving the sale of future receivables from one customer for
€95.2 million net.
Total securitisations on Transport at 30 September 2002 were €883 million net,
covering thirteen contracts with four customers.
Note 13 - Customers deposits and advances
During the period the Company's marine subsidiary entered into a construction
finance contract in respect of one ship presently under construction. Under the
terms of this contract finance is made available against commitments to
suppliers and to work in progress. The amounts financed are secured against the
ship involved and the future receivable is collaterised by way of a guarantee of
the prefinancement.
Cash received has firstly been applied against amounts included in trade
receivables then against work in progress and where commitments made have not
yet become work in progress cash is shown as part of customer deposits and
advances.
At 30 September 2002 cash received on this pre-financing was €287.5 million of
which €206.0 million has been applied and the balance of €81.5 million included
in customers deposits and advances.
Note 14 - Sector and geographic data
a) Sector data
The Company is managed through Sectors of activity and has determined its
reportable segments accordingly.
The Company is organised in four Sectors:
o The Power Sector offers a wide range of products and services related to
electrical power generation including design, manufacture, construction,
turnkey project management and related services;
o The Transmission & Distribution Sector offers equipment and customer
support for the transmission and distribution of electrical energy.
From 1 April 2002 Power Conversion has been integrated within the
Transmission & Distribution Sector and provides solutions for
manufacturing processes and supplies high-performance products including
motors, generators, propulsion systems for Marine and drives for a variety
of industrial applications.
o The Transport Sector offers equipment, systems, and customer support for
rail transportation including passenger trains, locomotives, signalling
equipment, rail components and service;
o The Marine Sector designs and manufactures cruise and other speciality
ships.
The composition of the Sectors may vary slightly from time to time. As part of
any change in the composition of its sectors, Company management may also modify
the manner in which it evaluates and measures profitability.
It evaluates internally their performance on Earnings Before Interest and Tax.
Some units, not material to the sector presentation, have been transferred
between sectors. The revised segment composition has not been reflected on a
retroactive basis as the Company determined it was not practicable to do so.
-----------------------------------------------------------------------------------------------------------------------
Orders received Half-year ended
(in € million) 30 September Year ended
----------------------------------------------- 31 March
2001 2002 2002
----------------------------------------------- ------------------------ ---------------------- ----------------------
Power 6,598 5,031 11,033
Transport 3,259 3,300 6,154
Transmission & Distribution(1) 2,051 2,067 3,877
Marine 223 26 463
Corporate & others (2) 1,062 113 1,159
-----------------------------------------------------------------------------------------------------------------------
TOTAL 13,193 10,537 22,686
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Sales Half-year ended
(in € million) 30 September Year ended
----------------------------------------------- 31 March
2001 2002 2002
----------------------------------------------- ------------------------ ---------------------- ----------------------
Power 6,671 5,812 12,976
Transport 2,022 2,339 4,413
Transmission & Distribution(1) 1,737 1,778 3,814
Marine 606 725 1,241
Corporate & others (2) 906 115 1,009
-----------------------------------------------------------------------------------------------------------------------
TOTAL 11,942 10,769 23,453
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Operating income Half-year ended
(in € million) 30 September Year ended
----------------------------------------------- 31 March
2001 2002 2002
----------------------------------------------- ------------------------ ---------------------- ----------------------
Power 284 271 572
Transport 88 90 101
Transmission & Distribution(1) 103 110 226
Marine 42 16 47
Corporate & others (2) 6 56 (5)
-----------------------------------------------------------------------------------------------------------------------
TOTAL 523 543 941
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
EBIT (3) Half-year ended
(in € million) 30 September Year ended
----------------------------------------------- 31 March
2001 2002 2002
----------------------------------------------- ------------------------ ---------------------- ----------------------
Power 188 154 336
Transport 113 66 131
Transmission & Distribution(1) 95 94 190
Marine 40 13 44
Corporate & others (2) 32 (5) (214)
-----------------------------------------------------------------------------------------------------------------------
TOTAL 468 322 487
-----------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------
Capital employed (4)
(in € million) At 30 September
----------------------------------------------- At 31 March
2001 2002 2002
----------------------------------------------- ------------------------ ---------------------- ----------------------
Power 2,996 3,529 3,012
Transport 1,155 759 1,041
Transmission & Distribution(1) 1,158 1,028 1,044
Marine (195) (220) 100
Corporate & others (2) 1,908 1,601 1,491
-----------------------------------------------------------------------------------------------------------------------
TOTAL 7,022 6,697 6,688
-----------------------------------------------------------------------------------------------------------------------
(1) Power Conversion is integrated into the Transmission and Distribution sector
as of 1 April 2002. Previous years comparative figures have been restated
accordingly.
(2) Corporate & others include all units accounting for Corporate costs, the
International Network and the overseas entities in Australia, New Zealand ,
South Africa (before disposal) and India, that are not allocated to Sectors.
The figures for the half-year ended 30 September 2001 and the year ended 31
March 2002 include the Contracting sector. Sales, operating income and EBIT
were €759 million, €30 million and €18 million respectively.
(3) Restructuring costs have not been included in the EBIT by Sector.
(4) Capital employed is defined as the closing position of the total of
tangible, intangible and other fixed assets net, current assets (excluding
net amount of securitisation of existing receivables) less current
liabilities and provisions for risks and charges.
b) Geographic data
The table below set forth the geographic breakdown of Sales by country of
destination
-----------------------------------------------------------------------------------------------------------------------
Sales Half-year ended
(in € million) 30 September Year ended
----------------------------------------------- 31 March
2001 2002 2002
----------------------------------------------- ------------------------ ---------------------- ----------------------
France..................................... 1,085 942 1,867
UK 879 801 1,862
Germany.................................... 627 517 1,226
Rest of Europe............................. 2,364 2,042 4,358
USA........................................ 2,234 2,215 4,633
Other Americas............................. 1,442 1,233 3,061
Asia / Pacific............................. 2,290 1,833 4,521
Middle East / Africa....................... 1,021 1,186 1,925
-----------------------------------------------------------------------------------------------------------------------
TOTAL 11,942 10,769 23,453
-----------------------------------------------------------------------------------------------------------------------
Note 15 - Commitments and contingencies
(a) Guarantees related to contracts
In accordance with industry practice guarantees of performance under contracts
with customers and under offers on tenders are given.
Such guarantees can, in the normal course, extend from the tender period until
the final acceptance by the customer, and the end of the warranty period and may
include guarantees on project completion, of contract specific defined
performance criteria or plant availability.
The guarantees are provided by banks or surety companies by way of performance
bonds, surety bonds and letters of credit and are normally for defined amounts
and periods.
The Company provides a counter indemnity to the bank or surety company.
The projects for which the guarantees are given are regularly reviewed by
management and when it becomes probable that payments pursuant to performance
guarantees will require to be made accruals are recorded in the Consolidated
Financial Statement at that time.
The amounts of guarantees given on contracts, in the normal course and on which
the Company has contingent liabilities total €11,535 million at 31 March 2002
and €10,289 million at 30 September 2002.
Guarantees given by parent or group companies relating to liabilities included
in the consolidated accounts are not included.
(b) Capital and operating leases commitments
(i) Long term rental
Pursuant to a contract signed in 1995 with a major European metro operator, the
Company has sold 103 trains and associated equipment to two leasing entities.
These entities have entered into an agreement by which the Company leases back
the trains and associated equipment from the lessors for a period of 30 years.
The trains are made available for use by the metro operator for an initial
period of 20 years, extendible at the option of the operator for a further ten
year period. The trains are being maintained and serviced by the Company. These
commitments are in respect of the full lease period and are covered by payments
due to the Company from the metro operator.
If this lease was capitalised it would increase long-term assets and long-term
debt by €757 million and €735 million at 31 March 2002 and 30 September 2002,
respectively
(ii) Capital leases
Commitments relating to capital leases are as follows:
At 31 March At 30 September
2002 2002
------------------- -------------------
(in € million)
less than 1 year.................................... 14.6 20.3
1-2 years........................................... 16.6 18.8
2-3 years........................................... 12.1 16.7
3-4 years........................................... 10.3 13.3
4-5 years........................................... 7.9 10.8
+5 years............................................ 59.6 62.2
------------------- -------------------
Total............................................... 121.1 142.1
=================== ===================
If capital leases had been capitalised, it would increase long term assets
(property plant and equipment) by €112 million and €117 million, increase long
term financial debt by €119 million and €121 million and decrease of
shareholder's equity of €7 million and €4 million at 31 March 2002 and 30
September 2002, respectively.
(iii) Operating leases
Commitments relating to operating leases are as follows:
At 31 March At 30 September
2002 2002
------------------- -------------------
(in € million)
less than 1 year.................................... 83.4 58.6
1-2 years........................................... 82.4 64.8
2-3 years........................................... 63.1 50.8
3-4 years........................................... 50.3 37.1
4-5 years........................................... 41.6 31.5
+5 years............................................ 158.1 156.1
------------------- -------------------
Total............................................... 478.9 398.9
=================== ===================
A number of these operating leases have renewal options. Rent expense was €46
million in the half-year ended 30 September 2002.
Note 16 - Vendor financing
In periods up to 31 March 2002, the Company provided financial assistance,
referred to as vendor financing, to financial institutions and granted financing
to certain purchasers of its cruise-ships and other equipment. The total
exposure was €1,493 million at 31 March 2002 and €1,381 million at 30 September
2002.
The table below set forth the breakdown of the outstanding vendor financing by
Sector at 31 March 2002 and 30 September 2002 :
At 31 March 2002 At 30 September 2002
------------------------------------------ --------------------------------------------
Balance sheet Off balance Balance sheet Off balance
(1) sheet (2) Total (1) sheet (2) Total
-------------- ------------- ------------- --------------- ---------------- -----------
(in € million)
Marine.................... 561 483 1,044 536 439 975
Renaissance Cruises..... 291 141 432 265 122 387
Other customers......... 270 342 612 271 317 588
Transport ................ - 416 416 - 390 390
European metro operator. - 289 289 - 282 282
Others.................. - 127 127 - 108 108
Power..................... - 29 29 - 12 12
T&D ...................... - 4 4 - 4 4
-------------- ------------- ------------- --------------- ---------------- -----------
TOTAL..................... 561 932 1,493 536 845 1,381
============== ============= ============= =============== ================ ===========
(1) Balance sheets items are included in "other fixed assets" (Note 7)
(2) Off-balance sheet figures correspond to the total guarantees and
commitments, net of related cash deposits, which are shown as balance-sheet
items.
Marine
Renaissance Cruises
The "vendor financing" related to Renaissance Cruises amounted to €432 million
at 31 March 2002 and €387 million at 30 September 2002 as hereafter described :
- Subsidiaries of Cruiseinvest LLC, a Marshall Islands company belonging to
Cruiseinvest (Jersey) Ltd, an entity in which the Company owns no shares,
acquired in fiscal year 2002 six cruise-ships initially delivered to
Renaissance Cruises. The Company guaranteed some of the financing
arrangements up to US $ 173 million (€197 million at 31 March 2002 and €175
million at 30 September 2002) of which US $ 84 million (€96 million at 31
March 2002 and €85 million at 30 September 2002) are materialised by a cash
deposit in the balance sheet.
- Cruiseinvest LLC has been provided with a €40 million line of credit, of
which €8 million has been drawn down at 30 September 2002.
- The Company purchased US $ 170 million (€195 million at 31 March 2002 and€172
million at 30 September 2002) of subordinated limited recourse notes issued
by Cruiseinvest (Jersey) Ltd. These subordinated limited recourse notes are
composed of a series of five notes bearing interest at 6 % per annum payable
half yearly in arrears, and maturing in December 2011. The right of the
Company as note-holder is limited to amounts that shall become payable up to
the value of the notes.
Other customers
The Company has guaranteed the financing arrangements of four cruise-ships and
two high speed ferries delivered to three customers for an amount of €342
million at 31 March 2002 and €344 million at 30 September 2002. These guarantees
are supported by a cash deposit amounting to €27 million at 30 September 2002.
The Company also participates in the financing arrangements of two cruise-ships
delivered to one customer for an amount of €270 million at 31 March 2002 and
€244 million at 30 September 2002. These loans are secured by ship mortgages.
The provision retained in respect of Marine Vendor financing is €144 million at
31 March 2002 and €140 million at 30 September 2002.
Transport
Guarantees given as part of vendor financing arrangements in Transport Sector
amount to €416 million at 31 March 2002 and €390 million at 30 September 2002.
Included in this amount are guarantees given as part of a leasing scheme
involving a major European metro operator as described in Note 15. If the metro
operator decides in year 2017 not to extend the initial period the Company has
guaranteed to the lessors that the value of the trains and associated equipment
at the option date should not be less than GBP 177 million (€289 million at 31
March 2002 and €281 million at 30 September 2002).
Other Sectors
Other guarantees totalling €33 million at 31 March 2002 and €16 million at 30
September 2002 have been given. There has been no default by any of the
concerned entities under the underlying agreements.
Note 17 - Asbestos
It has been Company policy for many years to abandon definitively the use of
products containing asbestos by all of its operating units world-wide and to
promote the application of this principle to all suppliers, including in those
countries where the use of asbestos is permitted. In the past some products
containing asbestos have been used and sold, particularly in France in the
Marine Sector and to a lesser extent in the other Sectors. As a result, the
company is currently subject to approximately 1,300 asbestos-related cases in
France from employees, former employees or third parties. The company believes,
based in part on a number of court decisions, that compensation for such cases,
including cases where it may be found to be at fault, is or will be borne by the
general French social security (medical) funds and by the publicly funded
Indemnification Fund for Asbestos Victims.
As of October 31, 2002, the Company was subject to approximately 100
asbestos-related personal injury lawsuits in the United States which have their
origin in the purchase of ABB's power generation business, for which it is
indemnified by ABB (see Note 6).
As of October 31, 2002 the Company was also subject to approximately 60 other
asbestos-related personal injury lawsuits in the United States involving
approximately 6,500 claimants that, in whole or in part, assert claims against
the Company which are not based on the Company's purchase of ABB's power
generation business. These lawsuits are currently being litigated, most of which
are in the preliminary stages of the litigation process. All of such lawsuits
involve multiple defendants. The allegations in these lawsuits often are very
general and difficult to evaluate at preliminary stages in the litigation
process. In those cases where meaningful evaluation is practicable, the Company
believes that it has valid defenses and with respect to a number of lawsuits,
the Company is asserting rights to indemnification against a third party.
Approximately 5,800 of these claims are asserted in two very recently filed
cases in Mississippi where the Company is one of over two hundred defendants and
where the Company asserts such indemnification rights. The Company has not in
recent years suffered any adverse judgement, or made any settlement payment, in
respect of any US personal injury asbestos claim.
The Company believes that the existing asbestos-related cases described above
will not have a material adverse impact on its financial condition. It can,
however, give no assurances that such cases will not grow in number or that
those it has at present or may face in the future may not have a material
adverse impact.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALSTOM
Date: November 13, 2002 By: /s/ Philippe Jaffré
------------------------------
Name: Philippe Jaffré
Title: Chief Financial Officer