Noranda Inc.

Noranda Inc.

March 09, 2005 06:00 ET

Noranda and Falconbridge Agree to Combine


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: NORANDA INC.

TSX, NYSE SYMBOL: NRD

MARCH 9, 2005 - 06:00 ET

Noranda and Falconbridge Agree to Combine

TORONTO, ONTARIO--(CCNMatthews - March 9, 2005) - Noranda Inc.
(TSX:NRD)(NYSE:NRD) -

Noranda Announces Substantial Issuer Bid to Acquire 63.4 Million Common
Shares in Exchange for Junior Preferred Shares

A conference call to discuss the proposed merger will be held today,
Wednesday March 9, 2005 at 8:30 a.m. EST. To participate, dial (416)
641-6449 for local and overseas and 1-888-740-1975 toll-free in North
America. To participate in the live broadcast on the internet, sign on
to www.noranda.com.

Noranda Inc. ("Noranda") today announced an all-encompassing plan which
will combine Noranda and Falconbridge (the "Merger") to create one of
North America's largest base-metals companies. After the Merger, Noranda
will be renamed NorandaFalconbridge.

Today's announcement resolves the dual public ownership structure of
Noranda and Falconbridge, and brings Noranda's strategic alternatives
review process to a close. Noranda's Board of Directors has also
approved the making of a substantial Issuer Bid. Highlights are as
follows:

Highlights

- The Boards of Noranda and Falconbridge have unanimously agreed to
combine the two companies by way of a share exchange.

- Each Falconbridge shareholder will receive 1.77 Noranda shares for
each Falconbridge share, which represents a 15% premium to the 20-day
average share price for the period ending March 7, 2005. Each existing
Noranda common share will represent one share of the new combined entity.

- Prior to the Merger, Noranda will offer to repurchase 63.4 million of
its common shares, in exchange for three series of junior preferred
shares of the Company (the "Issuer Bid") with an aggregate stated value
of US$1.25 billion.

- Brascan, the owner of approximately 41% of Noranda common shares, has
indicated that it will tender its common shares to the US$1.25 billion
Issuer Bid. On completion of the Merger and Issuer Bid, Brascan's
ownership position will decline to between 16% and 26% of the new entity.

- The transaction simplifies the ownership structure and substantially
increases the public float and share liquidity of the new company.

- The larger market capitalization and simplified corporate ownership
structure is expected to attract a greater institutional investor base
for the combined company.

- The increased size, diversification and financial capability of the
new combined company will facilitate future growth.

Merger of Noranda and Falconbridge

The Board of Directors of each of Noranda and Falconbridge have
unanimously agreed to merge the two companies. The Merger will be
carried out by way of a share exchange take-over bid by Noranda. The
take-over bid will be mailed shortly to all Falconbridge shareholders.
In addition to the usual conditions, the take-over bid will be
conditional on acceptance by a majority of the minority Falconbridge
shareholders tendering to the Noranda Offer, and the Issuer Bid being
completed.

Issuer Bid

The Board of Directors of Noranda have unanimously approved the making
of a substantial Issuer Bid to all Noranda common shareholders whereby
shareholders of Noranda will be entitled to exchange up to 63.4 million
common shares for three series of junior preferred shares with an
aggregate stated capital of US$1.25 billion, representing a value of
US$19.72 per Noranda common share. The attributes of the junior
preferred shares are more fully described in "Schedule A". Brascan has
agreed to deposit its common shares of Noranda to the Issuer Bid,
subject to its right to withdraw such shares in certain circumstances.

No shareholder vote or other approvals will be required to complete the
Issuer Bid and its completion will not be conditional on the merger of
Noranda and Falconbridge being completed.

Comments from President and CEO of Noranda

"We are very pleased that this lengthy process is concluding with such a
positive outcome for our shareholders," said Derek Pannell, Noranda's
President and Chief Executive Officer. "The management team is
enthusiastic about building on the initiatives that have recently
generated both higher metal production and outstanding financial
results. Going forward, we will remain focused on improving the
performance of existing assets and developing the opportunities already
within our control in a disciplined manner."

Important Considerations for Noranda's Decision

Among the factors taken into account by the Noranda Board in arriving at
its decision to proceed with the Merger and the Issuer Bid were the
following:

- Direct access to consolidated cash flow - NorandaFalconbridge will
have direct access to 100% of the cash flow of the combined companies,
which will provide it
with greater financial flexibility and improved access to credit.

- Greater market capitalization - The merged company will enjoy the
benefits of a significantly greater market capitalization, which should
improve its ability to finance its activities.

- Increased trading liquidity - The positive impact on trading liquidity
in shares of the merged company. The public trading "float" of
NorandaFalconbridge will be over 50% greater than that of Noranda today.
This should attract a greater institutional investor base in the
ownership of the combined company.

- Favourable impact on exploration and development programs - As a
consolidated enterprise, NorandaFalconbridge will have enhanced
flexibility to carry out exploration and business development programs
from an operational and financial standpoint.

- Favourable fairness opinion - The Special Committee of the Board
received advice from its financial advisor, CIBC World Markets,
including an opinion that the Merger exchange ratio of 1.77 Noranda
common shares for each Falconbridge common share, is fair from a
financial point of view to Noranda.

- Available to all shareholders - All common shareholders of Noranda can
participate in the Issuer Bid.

- Enhanced Leverage - The issuance by Noranda of preferred shares will
provide the remaining common shareholders with enhanced returns from the
current strong commodity cycle.

- Terms of the preferred shares - The terms of the preferred shares are
flexible and allow for Noranda to pay dividends and repay the capital
amount using common shares as currency, which provides the company with
liquidity protection.

- Ability to redeem preferred shares - Noranda will have the ability to
redeem or refinance the preferred shares, whether or not the Merger
proceeds, through operating cash flow, assets available for sale, access
to the capital markets and other means.

The balance sheet and income statement of NorandaFalconbridge pro forma
the completion of the Issuer Bid and the Merger is outlined in "Schedule
B".

Strategic Alliance with China Minmetals

Noranda and China Minmetals have entered into discussions regarding a
strategic alliance which may involve commercial arrangements regarding
the offtake from certain development projects, assistance with
procurement and supply of equipment and other products and services in
regard to certain greenfield projects, joint exploration initiatives in
China and other matters.

Conference Call and Webcast

A conference call to discuss the proposed merger will be held today,
Wednesday March 9, 2005 at 8:30 a.m. EST. To participate, dial (416)
641-6449 for local and overseas and 1-888-740-1975 toll-free in North
America. To participate in the live broadcast on the internet, sign on
to www.noranda.com.

Noranda Inc. is a leading copper and nickel company with investments in
fully-integrated zinc and aluminum assets. The Company's primary focus
is the identification and development of world-class copper and nickel
mining deposits. It employs 16,000 people at its operations and offices
in 18 countries and is listed on The New York Stock Exchange and The
Toronto Stock Exchange (NRD). The company's website can be found at
www.noranda.com.

Falconbridge Limited is a leading low-cost producer of nickel, copper,
cobalt and platinum group metals. It is also one of the world's largest
recyclers and processors of metal-bearing materials. The company's
common shares are listed on the Toronto Stock Exchange under the symbol
FL. Falconbridge is owned by Noranda Inc. of Toronto (58.8%) and by
other investors (41.2%). The company's website can be found at
www.falconbridge.com.

Investor Information

This communication is being made in respect of the proposed combination
(the "Merger") involving Noranda Inc. and Falconbridge Limited. The
proposed Merger will be completed by way of a share exchange take-over
bid under which Falconbridge common shareholders (other than Noranda)
will be offered 1.77 Noranda common shares for each Falconbridge common
share. In connection with the proposed Merger, Noranda will prepare and
file with the U.S. Securities and Exchange Commission (the "SEC"), if
required, a registration statement on Form F-8 containing a share
exchange take-over bid circular to be delivered to the shareholders of
Falconbridge. Noranda, if required, will be filing other documents
regarding the proposed Merger with the SEC.

INVESTORS ARE URGED TO READ CAREFULLY THE OFFER OF SHARE EXCHANGE
TAKE-OVER BID CIRCULAR WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.

Investors will be able to obtain THE documents filed with the SEC free
of charge at the SEC's website (www.sec.gov). In addition, documents
filed with the SEC by Noranda may be obtained free of charge by
contacting Noranda at 416-982-7111.

Note: This press release may contain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. The
words "believe", "expect", "anticipate", "intend", "estimate" and other
expressions which are predictions of or indicate future events and
trends and which do not relate to historical matters identify forward
looking statements. Reliance should not be placed on forward-looking
statements because they involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or
achievements of the company to differ materially from anticipated future
results, performance or achievement expressed or implied by such
forward-looking statements. Factors that could cause actual results to
differ materially from those set forward in the forward-looking
statements include general economic conditions, interest rates,
availability of equity and debt financing and other risks detailed from
time to time in the companies' Annual Reports and 40-F filed with the
Securities and Exchange Commission. The companies undertake no
obligation to publicly update or revise any forward looking statements,
whether as a result of new information, future events or otherwise.

"Schedule A"

Noranda Inc.

Series 1, 2 and 3 Junior Preference Shares

Issuer:

Noranda Inc. (the "Corporation")

Issue:

20 million Junior Preference Shares, Series 1 (the "Series 1 Shares")

20 million Junior Preference Shares, Series 2 (the "Series 2 Shares")

10 million Junior Preference Shares, Series 3 (the "Series 3 Shares")

the Series 1 Shares, Series 2 Shares and Series 3 Shares, collectively,
the "Shares"

Amount:

Series 1 Shares - US$500,000,000

Series 2 Shares - US$500,000,000

Series 3 Shares - US$250,000,000

Price:

US$25 per Share

Additional Series:

As long as any of the Shares are outstanding, the Corporation may not
issue any additional Preferred Shares, other than Series F shares
issuable upon the conversion of Series G shares and Series G shares
issuable upon the conversion of Series F shares, without the approval of
the holders of the Shares, expressed by resolution of the holders of all
such shares voting together.

Dividends:

Series 1 Shares: Holders of the Series 1 Shares will be entitled to
receive fixed preferential cumulative cash dividends, if, as and when
declared by the Board of Directors of the Corporation, in an amount
equal to US$1.50 per share per annum, payable quarterly on the last day
of March, June, September and December of each year.

Series 2 Shares: Until June 30, 2010, holders of the Series 2 Shares
will be entitled to receive fixed preferential cumulative cash
dividends, if, as and when declared by the Board of Directors of the
Corporation, in an amount equal to US$1.5625 per share per annum,
payable quarterly on the last day of March, June, September and December
of each year.

From June 30, 2010 until June 30, 2012, holders of Series 2 Shares will
be entitled to fixed preferential cumulative cash dividends at a rate
per annum equal to the greater of (i) 6.25%; and (ii) a rate equal to
2.05% over the seven year US treasury bond yield, at the commencement of
such subsequent fixed rate period.

Series 3 Shares: Until June 30, 2010, holders of the Series 3 Shares
will be entitled to receive fixed preferential cumulative cash
dividends, if, as and when declared by the Board of Directors of the
Corporation, in an amount equal to US$1.625 per share per annum, payable
quarterly on the last day of March, June, September and December of each
year.

From June 30, 2010 until June 30, 2012 and for each succeeding 2-year
(or less, as applicable) subsequent fixed rate period until June 30,
2015, holders of Series 3 Shares will be entitled to fixed preferential
cumulative cash dividends at a rate per annum equal to the greater of
(i) 6.5%; and (ii) a rate equal to 2.35% over the ten year US treasury
bond yield at the commencement of each subsequent fixed rate period.

Extraordinary Dividends: As long as the Shares having an aggregate issue
price of at least US$300 million remain outstanding, the Corporation
will not at any time, without the approval of the holders of the Shares,
pay or set apart for payment any Extraordinary Dividend (as defined
below).

"Extraordinary Dividend" means:

(i) any dividend, other than a stock dividend paid wholly in Common
Shares, declared or paid on the Common Shares that is, when taken
together with the amount or value of all other dividends declared or
paid in the 12 month period preceding the date of declaration of the
dividend (the "measurement period") more than 125% of the aggregate
amount or value of the dividends declared or paid on the Common Shares,
other than stock dividends paid wholly in Common Shares, during the 12
month period ended on the day prior to the measurement period (or, where
there were no dividends paid in the 12 month period ended on the day
prior to the measurement period, the period of 12 months ending on the
date on which the Corporation last paid a dividend, other than a stock
dividend paid wholly in Common Shares, on the Common Shares); or

(ii) any dividend, other than a stock dividend paid wholly in Common
Shares, declared or paid on the Common Shares that results in the
Noranda Annual Dividend Rate exceeding a 10% compound annual growth
rate, measured from and following the Issue Date. For this purpose, the
Noranda Annual Dividend Rate is initially the aggregate amount or value
of all dividends declared or paid on the Common Shares, other than stock
dividends paid wholly in Common Shares, in the 12 month period
immediately preceding the Issue Date and thereafter is the aggregate
amount or value of all dividends declared or paid in any 12 month period
immediately preceding the date of declaration of any other dividend on
the Common Shares, together with the dividend then being declared; or

(iii) any other "special" dividend on, or distribution with respect to,
the Common Shares which is, by its terms or declared intent, declared
and paid outside the normal operations or normal dividend procedures of
the Corporation.

Payment Options:

The Corporation will be entitled to satisfy payment of the quarterly
dividend payments in:

(iv) cash; and/or

(v) that number of freely tradeable common shares of the Corporation
(the "Common Shares") determined by dividing the declared dividend
amount by 95% of the weighted average trading price of the Common Shares
on the Toronto Stock Exchange (the "TSX") for a period of 20 consecutive
trading days ending on the fourth day prior to the date specified for
payment of the dividend

Ranking:

The Shares will rank junior to the preferred shares of the Corporation
with respect to priority in the payment of dividends and the
distribution of assets of the Corporation in the event of any
liquidation, dissolution or winding up of the Corporation or other
distribution of assets of the Corporation among its shareholders for the
purpose of winding up its affairs. Articles of amendment to create the
Junior Preference Shares as a class will be authorized at the next
annual meeting of the Corporation's shareholders. To the extent that the
Junior Preference Shares are not created at the meeting, the Corporation
will issue series from the existing class of preferred shares which are
identical in terms to the Shares (other than as to ranking) and holders
of these new preferred shares will be required to enter into a
contractual subordination to give effect to this ranking.

Redemption:

Series 1: The Series 3 Shares (i) are redeemable, in cash, by the
Corporation at any time on at least 30 and not more than 60 days prior
notice, on or before June 30, 2008 at $25.25 per share plus all accrued
and unpaid dividends and thereafter at $25.00 per share plus all accrued
and unpaid dividends, and (ii) must be redeemed by the Corporation on
the date that is five years plus one day from the date of issue of the
Series 1 Shares at $25.00 per share plus accrued and unpaid dividends
thereon (the "Series 1 Final Redemption Date").

Any redemptions of Series 1 Shares prior to June 30, 2009 must be made
on a pro rata basis with all other Shares then outstanding.

Series 2: The Series 2 Shares (i) are redeemable, in cash, by the
Corporation at any time on at least 30 and not more than 60 days prior
notice, on or before June 30, 2010 at $25.25 per share plus all accrued
and unpaid dividends and thereafter until June 29, 2012 at $25.00 per
share plus all accrued and unpaid dividends, and (ii) must be redeemed
by the Corporation on June 30, 2012 at $25.00 per share plus accrued and
unpaid dividends thereon (the "Series 2 Final Redemption Date").

Any redemptions of Series 2 Shares prior to June 30, 2011 must be made
on a pro rata basis with all other Shares then outstanding.

Series 3: The Series 3 Shares (i) are redeemable, in cash, by the
Corporation at any time on at least 30 and not more than 60 days prior
notice, on or before June 30, 2013 at $25.25 per share plus all accrued
and unpaid dividends and thereafter until June 29, 2015 at $25.00 per
share plus accrued and unpaid dividends, and (ii) must be redeemed by
the Corporation on June 30, 2015 at $25.00 per share plus accrued and
unpaid dividends thereon (the "Series 3 Final Redemption Date").

Any redemptions of Series 3 Shares prior to June 30, 2012 must be made
on a pro rata basis with all other Shares then outstanding.

Application of Net Proceeds: From and including June 30, 2010, so long
as any Series 2 Shares or Series 3 Shares are outstanding, the
Corporation will apply the net proceeds it realizes from any public
equity offering by the Corporation or the sale by the Corporation of any
assets exceeding Cdn. $250 million to redeem for cash the then
outstanding Series 2 Shares and Series 3 Shares, provided that if any
Series 2 Shares or Series 3 Shares are then outstanding, the net
proceeds will be applied as nearly as practicable on a pro-rata basis
with the then outstanding Series 2 Shares or Series 3 Shares, as
applicable.

Conversion into Common Shares by the Corporation on the Final Redemption
Date:

On the Series 1 Final Redemption Date, the Series 2 Final Redemption
Date and the Series 3 Final Redemption Date, so long as: (i) a Change of
Control Event (as defined below) has not occurred (unless the applicable
take-over bid or control transaction has been withdrawn, is terminated
or expires without any person other than Brascan beneficially owning 30%
or more of the voting shares of the Corporation); (ii) an Extraordinary
Dividend (as defined below) has not been paid; and (iii) certain other
events have not occurred, the Shares are convertible, in whole or in
part, at the option of the Corporation, on at least 30 and not more than
60 days prior notice into that number of freely tradable Common Shares
determined by dividing the aggregate of $25.00, plus an amount equal to
accrued and unpaid dividends up to but excluding the final redemption
date, by the greater of $2.00 and 90% of the US dollar equivalent of
weighted average trading price of the Common Shares on the TSX for a
period of 20 consecutive trading days ending on the fourth day prior to
the date (if such date is a trading day) specified for conversion.

"Change of Control Event" means the occurrence of:

(i) the first date of public announcement (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant
to section 101 of the Securities Act (Ontario)) by the Corporation or a
person who beneficially owns 30% or more of the outstanding voting
shares of the Corporation of facts indicating that such person has
become such;

(ii) the date of the commencement of, or first public announcement of
the intent of any person (other than Brascan, the Corporation or any
subsidiary of the Corporation) to commence a take-over bid to acquire
30% or more of the voting shares of the Corporation; or

(iii) the date of the commencement of, or first public announcement of
the intent of any person other than Brascan to commence, a transaction
which would result in any person beneficially owning 30% or more of the
voting shares of the Corporation.

Retraction Rights:

Upon the occurrence of a Change of Control Event (unless the applicable
take-over bid or control transaction has been withdrawn, is terminated
or expires without any person beneficially owning 30% of more of the
voting shares of the Corporation), a holder of Shares shall have the
right to require the Corporation to redeem all of the holder's then
outstanding Shares.

Board Representation:

The Shares will be entitled, voting collectively, to elect two directors
to the Board of Directors at each meeting of shareholders of the
Corporation at which directors are to be elected.

Forthwith upon the occurrence of a Board Event (as defined below), and
for so long as it is continuing, the holders of the Shares will be
entitled, voting collectively, to elect three additional directors (for
a total of five).

"Board Event" means any one of the following events:

(i) if four quarterly dividends on the Shares are in arrears, whether or
not such dividends have been declared and whether or not there are any
monies of the Corporation properly applicable to the payment of
dividends; or

(ii) if Adjusted Net Worth is less than US$2.5 billion.

"Adjusted Net Worth" means, as at the end of any fiscal quarter, the
aggregate of :

(i) the dollar amount of outstanding share capital for all shares
ranking junior to the Junior Preference Shares;

(ii) without duplication, any surplus, whether contributed or capital;

(iii) retained earnings; and

(iv) consolidated non-controlling interest;

all as set forth in the Corporation's most recent consolidated balance
sheet filed in accordance with applicable securities laws.

Tax on Share Dividends:

The Corporation will elect, in the manner and within the time provided
under subsection 191.2(1) of the Income Tax Act (Canada) (the "Tax
Act"), to pay or cause payment of the tax under Part VI.1 of the Tax Act
at a rate such that the corporate holders of Shares will not be required
to pay tax under Part IV.1 of the Tax Act on dividends received on such
shares.

Covenants:

As long as Series 1 Shares, Series 2 Shares and Series 3 Shares having
an aggregate issue price of US$300,000,000 are outstanding, the
Corporation will not pay an Extraordinary Dividend; or

From and after June 30, 2010, the Corporation will apply the full net
proceeds from (i) the issuance of equity securities for cash (other than
in certain limited circumstances) or (ii) the sale of any capital assets
outside of the ordinary course of business with a sale price exceeding
Cdn. $250 million, to the redemption of the Series 1 Shares, Series 2
Shares and Series 3 Shares.

Liquidation, Dissolution or Winding Up:

In the event of liquidation, dissolution or winding up of the
Corporation or any other distribution of assets of the Corporation among
its shareholders for the purpose of winding up its affairs, the holders
of the Shares shall be entitled to payment of an amount equal to the
amount paid up on such shares in the case of any liquidation,
dissolution, winding up or other distribution which is involuntary, and
to payment of an amount equal to the amount paid up thereon plus the
premium on redemption applicable at the date thereof, if any, if the
same is voluntary, together in all cases with all unpaid dividends
accrued thereon (which shall for such purpose be treated as accruing up
to the date of distribution), the whole before any amount shall be paid
or any assets of the Corporation distributed to the holders of any
Common Shares or shares of any other class ranking junior to the Shares
but the whole subject to the rights of the holders of any other class of
shares of the Corporation entitled to receive the assets of the
Corporation upon such distribution in priority to or rateably with the
holders of the Shares. Upon payment to the holders of the Shares of the
amount so payable to them, they shall not be entitled to share in any
further distribution of assets of the Corporation.



"SCHEDULE B"

NORANDAFALCONBRIDGE INC.
INDICATIVE PRO FORMA CONSOLIDATED BALANCE SHEET
As at December 31, 2004


(Unaudited - Noranda Merge Buy-Back
US$ Millions) Inc. Falconbridge Shares Proforma
------- ------------ -------- --------
ASSETS
Cash and cash
equivalents 884 - - 884
Short-term
investments - - -
Accounts receivable 931 - 931
Metals and other
inventories 1,436 - 1,436
------- ------------ -------- --------
Current assets 3,251 - - 3,251
------- ------------ -------- --------

Operating capital
assets 4,870 1,441 6,311
Development projects 1,166 721 1,887
Investments and other
assets 324 - 324
------- ------------ -------- --------
9,611 2,162 - 11,773
------- ------------ -------- --------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Accounts and taxes
payable 1,248 - 1,248
Debt due within one
year 570 - 570
------- ------------ -------- --------
Current liabilities 1,818 - - 1,818
------- ------------ -------- --------

Long-term debt 2,638 - - 2,638
Preferred shares - - 1,250 1,250
Convertible debentures 89 - - 89
------- ------------ -------- --------
2,727 - 1,250 3,977
------- ------------ -------- --------

Future income taxes 304 648 - 952
Asset retirement
obligation, pension
and other provisions 595 - - 595

Stockholders' interests
Interests of other
shareholders 1,197 (1,006) - 191
Convertible
debentures - - - -
Capital stock -
preferred 295 - - 295
Capital stock - common,
retained earnings,
currency translation
adjustment 2,675 2,520 (1,250) 3,945
------- ------------ -------- --------
2,970 2,520 (1,250) 4,240
------- ------------ -------- --------
9,611 2,162 - 11,773
------- ------------ -------- --------
------- ------------ -------- --------

The pro forma financial statements may not be indicative of results
that actually would have occurred if the events reflected therein had
been in effect on the dates indicated or of the results that may be
obtained in the future.

NORANDAFALCONBRIDGE INC.
INDICATIVE PRO FORMA CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 2004


(Unaudited - Noranda Merge Additional 2004
US$ Millions) Inc. Falconbridge Dividends Pro-forma
------- ------------ ---------- ---------

Revenues 6,978 - - 6,978
------- ------------ ---------- ---------
6,978 - - 6,978
------- ------------ ---------- ---------
Operating expenses
Cost of operations 2,094 - - 2,094
Purchases raw
materials 3,005 - - 3,005
Depreciation,
amortization and
accretion 499 48 - 547
------- ------------ ---------- ---------
Total operating
expenses 5,598 48 - 5,646
------- ------------ ---------- ---------
------- ------------ ---------- ---------
Income generated by
operating assets 1,380 (48) - 1,332
------- ------------ ---------- ---------

Interest expense, net 119 - 78 197
Corporate and general
adminstration 66 - - 66
Research, development
and exploration 47 - - 47
Minority interest in
earnings in
subsidiaries 297 (274) - 23
------- ------------ ---------- ---------
529 (274) 78 333
------- ------------ ---------- ---------
Income before
undernoted 851 226 (78) 999
------- ------------ ---------- ---------
Tax expense 333 (14) - 319
Gain net of
restructuring costs
and other (33) - - (33)
------- ------------ ---------- ---------
Net income 551 240 (78) 713
------- ------------ ---------- ---------
------- ------------ ---------- ---------

Basic earnings per
share $ 1.78 $ 1.89
Diluted earnings
per share $ 1.75 $ 1.85

The pro forma financial statements may not be indicative of results
that actually would have occurred if the events reflected therein had
been in effect on the dates indicated or of the results that may be
obtained in the future.


-30-

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