##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 (Mark One)
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year endedMarch 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from            to
 Commission file number 1-15240
 JAMES HARDIE INDUSTRIES N.V.
 (Exact name of Registrant as specified in its charter)
 N/A
 (Translation of Registrants name into English)
 The Netherlands
 (Jurisdiction of incorporation or organization)
 Atrium, 8 th floor
Strawinskylaan 3077
1077 ZX Amsterdam, The Netherlands
(Address of principal executive offices)
 Russell Chenu
(Contact name)
 31 20 301 2980 (Telephone) 31 20 404 2544 (Facsimile)
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Title of each class:
    
    Name of each exchange on which registered:Common stock, represented by CHESS Units of Foreign Securities
    
    New York Stock Exchange*CHESS Units of Foreign Securities
    
    New York Stock Exchange*American Depositary Shares, each representing five units of CHESS Units of Foreign Securities
    
    New York Stock Exchange
 
  Securities registered or to be registered pursuant to Section 12(g) of the Act.   Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
  þ o
 o þ
  þ o
  þ o o
  U.S. GAAP þ
    
    International Financial Reporting Standards as issued by the International Accounting Standards Board o
    
    Other o
  o o
 o þ




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##### 



TABLE OF CONTENTS
 PagePART I
    
    
    2Item 1. Identity of Directors, Senior Management and Advisers
    
    
    2Item 2. Offer Statistics and Expected Timetable
    
    
    2Item 3. Key Information
    
    
    2Item 4. Information on the Company
    
    
    24Item 4A. Unresolved Staff Comments
    
    
    49Item 5. Operating and Financial Review and Prospects
    
    
    49Item 6. Directors, Senior Management and Employees
    
    
    70Item 7. Major Shareholders and Related Party Transactions
    
    
    106Item 8. Financial Information
    
    
    108Item 9. Listing Details
    
    
    108Item 10. Additional Information
    
    
    110Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    122Item 12. Description of Securities Other Than Equity Securities
    
    
    124PART II
    
    
    124Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    124Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
    
    
    124Item 15. Controls and Procedures
    
    
    124Item 16A. Audit Committee Financial Expert
    
    
    125Item 16B. Code of Business Conduct and Ethics
    
    
    125Item 16C. Principal Accountant Fees and Services
    
    
    126Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    126Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    127Item 17. Financial Statements
    
    
    127PART III
    
    
    128Item 18. Financial Statements
    
    
    128Item 19. Exhibits
    
    
    128EXHIBIT 1.1EXHIBIT 2.3EXHIBIT 2.6EXHIBIT 2.7EXHBIIT 2.9EXHIBIT 2.10EXHIBIT 2.11EXHIBIT 4.9EXHIBIT 4.10EXHIBIT 4.22EXHIBIT 4.23EXHIBIT 4.24EXHIBIT 4.25EXHIBIT 4.27EXHIBIT 8.1EXHIBIT 12.1EXHIBIT 12.2EXHIBIT 13.1EXHIBIT 15.1EXHBIIT 15.2EXHIBIT 99.1




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##### Table of Contents



PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 In this annual report, unless the context otherwise indicates, James Hardie Industries N.V., a
naamloze vennootschap, or a Dutch public limited liability company incorporated and existing
under the laws of The Netherlands, is referred to as JHI NV. JHI NV together with its direct and
indirect wholly owned subsidiaries as of the time relevant to the applicable reference, are
collectively referred to as the James Hardie Group. JHI NV and its current direct and indirect
wholly owned subsidiaries are collectively referred to as we, us, our, JHI NV and its wholly
owned subsidiaries or the Company.
 The term fiscal year refers to our fiscal year ended March 31 of such year; the term dollars,
US$ or $ refers to U.S. dollars; the term A$ refers to Australian dollars; and the term NZ$
refers to New Zealand dollars. Unless otherwise stated, all amounts in A$ have been converted into
US$ at the March 31, 2008 exchange rate of A$1.0903 to $1.0000. The term msf or thousand square
feet refers to thousands of square feet, where a square foot is defined as a standard square foot
of 5/16 thickness and the term mmsf or million square feet refers to millions of square feet,
where a square foot is defined as a standard square foot of 5/16 thickness.
 As a company incorporated under the laws of The Netherlands, we have listed our securities for
trading on the Australian Securities Exchange, or ASX, through the use of the Clearing House
Electronic Subregister System, or CHESS, Units of Foreign Securities, or CUFS. CUFS are a form of
depositary security that represents a beneficial ownership interest in the securities of a
non-Australian corporation. Each of our CUFS represents the beneficial ownership of one share of
common stock of JHI NV, the legal ownership of which is held by CHESS Depositary Nominees Pty Ltd.
The CUFS are listed and traded on the ASX under the symbol JHX.
 We have also listed our securities for trading on the New York Stock Exchange, or NYSE. We sponsor
a program, whereby beneficial ownership of five CUFS is represented by one American Depositary
Share, or ADS, which is issued by The Bank of New York. These ADSs trade on the NYSE in the form of
American Depositary Receipts, or ADRs, under the symbol JHX. Unless the context indicates
otherwise, when we refer to ADRs, we are referring to ADRs or ADSs and when we refer to our common
stock we are referring to the shares of our common stock that are represented by CUFS.
 Selected Financial Data
   2




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##### Table of Contents



Fiscal Years Ended March 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(In millions, except sales price per unit and per share data)Consolidated Statements of Operations Data:Net SalesUSA Fiber Cement
    
    $
    1,144.8
    
    
    $
    1,262.3
    
    
    $
    1,218.4
    
    
    $
    939.2
    
    
    $
    738.6Asia Pacific Fiber Cement (1)
    
    
    298.3
    
    
    
    251.7
    
    
    
    241.8
    
    
    
    236.1
    
    
    
    219.8Other (2)
    
    
    25.7
    
    
    
    28.9
    
    
    
    28.3
    
    
    
    35.1
    
    
    
    23.5Total net sales
    
    $
    1,468.8
    
    
    $
    1,542.9
    
    
    $
    1,488.5
    
    
    $
    1,210.4
    
    
    $
    981.9Operating (loss) income (3)
    
    $
    (36.6
    )
    
    $
    (86.6
    )
    
    $
    (434.9
    )
    
    $
    196.2
    
    
    $
    172.2Interest expense
    
    
    (11.1
    )
    
    
    (12.0
    )
    
    
    (7.2
    )
    
    
    (7.3
    )
    
    
    (11.2
    )Interest income
    
    
    12.2
    
    
    
    5.5
    
    
    
    7.0
    
    
    
    2.2
    
    
    
    1.2Other (expense) income (4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.3
    )
    
    
    3.5(Loss) income from continuing operations
before income taxes
    
    
    (35.5
    )
    
    
    (93.1
    )
    
    
    (435.1
    )
    
    
    189.8
    
    
    
    165.7Income tax (expense) benefit
    
    
    (36.1
    )
    
    
    243.9
    
    
    
    (71.6
    )
    
    
    (61.9
    )
    
    
    (40.4
    )(Loss) income from continuing operations
    
    $
    (71.6
    )
    
    $
    150.8
    
    
    $
    (506.7
    )
    
    $
    127.9
    
    
    $
    125.3Net (loss) income
    
    $
    (71.6
    )
    
    $
    151.7
    
    
    $
    (506.7
    )
    
    $
    126.9
    
    
    $
    129.6(Loss) Income from continuing operations per
common share  basic
    
    $
    (0.16
    )
    
    $
    0.32
    
    
    $
    (1.10
    )
    
    $
    0.28
    
    
    $
    0.27Net (Loss) income per common share  basic
    
    $
    (0.16
    )
    
    $
    0.33
    
    
    $
    (1.10
    )
    
    $
    0.28
    
    
    $
    0.28(Loss) income from continuing operations per
common share  diluted
    
    $
    (0.16
    )
    
    $
    0.32
    
    
    $
    (1.10
    )
    
    $
    0.28
    
    
    $
    0.27Net (Loss) income per common share  diluted
    
    $
    (0.16
    )
    
    $
    0.33
    
    
    $
    (1.10
    )
    
    $
    0.28
    
    
    $
    0.28Dividends paid per share
    
    $
    0.27
    
    
    $
    0.09
    
    
    $
    0.10
    
    
    $
    0.03
    
    
    $
    0.05Return of capital per share
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    0.15Weighted average number of common shares
outstandingBasic
    
    
    455.0
    
    
    
    464.6
    
    
    
    461.7
    
    
    
    458.9
    
    
    
    458.1Diluted
    
    
    455.0
    
    
    
    466.4
    
    
    
    461.7
    
    
    
    461.0
    
    
    
    461.4Consolidated Cash Flow Information:Cash flows provided by (used in) operating
activities
    
    $
    319.3
    
    
    $
    (67.1
    )
    
    $
    238.4
    
    
    $
    219.4
    
    
    $
    162.2Cash flows used in investing activities
    
    $
    (38.5
    )
    
    $
    (92.6
    )
    
    $
    (154.0
    )
    
    $
    (149.8
    )
    
    $
    (58.9
    )Cash flows (used in) provided by financing
activities
    
    $
    (254.4
    )
    
    $
    (136.4
    )
    
    $
    118.7
    
    
    $
    (27.2
    )
    
    $
    (86.6
    )Other Data:Depreciation and amortization (5)
    
    $
    56.5
    
    
    $
    50.7
    
    
    $
    45.3
    
    
    $
    36.3
    
    
    $
    36.4EBITDA (6)
    
    $
    19.9
    
    
    $
    (35.9
    )
    
    $
    (389.6
    )
    
    $
    232.5
    
    
    $
    208.6Capital expenditures (7)
    
    $
    38.5
    
    
    $
    92.1
    
    
    $
    162.8
    
    
    $
    153.0
    
    
    $
    74.1Volume (million square feet) (8)USA Fiber Cement
    
    
    1,916.6
    
    
    
    2,148.0
    
    
    
    2,182.8
    
    
    
    1,855.1
    
    
    
    1,519.9Asia Pacific Fiber Cement (1)
    
    
    398.2
    
    
    
    390.8
    
    
    
    368.3
    
    
    
    376.9
    
    
    
    362.1Average sales price per unit (per thousand
square feet)USA Fiber Cement
    
    $
    597
    
    
    $
    588
    
    
    $
    558
    
    
    $
    506
    
    
    $
    486Asia Pacific Fiber Cement (1)
    
    A$
    862
    
    
    A$
    842
    
    
    A$
    872
    
    
    A$
    846
    
    
    A$
    862Consolidated Balance Sheet Data:Net current assets (9)
    
    $
    183.7
    
    
    $
    259.0
    
    
    $
    150.8
    
    
    $
    180.2
    
    
    $
    195.9Total assets
    
    $
    2,179.9
    
    
    $
    2,128.1
    
    
    $
    1,445.4
    
    
    $
    1,088.9
    
    
    $
    971.2Total debt
    
    $
    264.5
    
    
    $
    188.0
    
    
    $
    302.7
    
    
    $
    159.3
    
    
    $
    175.8Common stock
    
    $
    219.7
    
    
    $
    251.8
    
    
    $
    253.2
    
    
    $
    245.8
    
    
    $
    245.2Shareholders (deficit) equity
    
    $
    (202.6
    )
    
    $
    258.7
    
    
    $
    94.9
    
    
    $
    624.7
    
    
    $
    504.7
 3




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(1)
    
    Asia Pacific Fiber Cement includes all fiber cement manufactured in Australia, New Zealand
and the Philippines and sold in Australia, New Zealand, Asia, the Middle East (Israel, Kuwait,
Qatar and United Arab Emirates) and various Pacific Islands.(2)
    
    Includes fiber cement manufactured and sold in Chile (through July 2005), fiber reinforced
concrete pipes manufactured and sold in the United States, fiber cement operations in Europe
and a roofing pilot plant in the United States (through fiscal year 2006). Our Chilean
business was sold in July 2005. Our roofing pilot plant was closed and the business ceased
operations in April 2006. Our Plant City, Florida Hardie Pipe Plant was closed and the
business ceased operations in May 2008.(3)
    
    Operating loss in fiscal year 2008 includes $240.1 million of asbestos adjustments; $4.0
million of Asbestos Injuries Compensation Fund (which we refer to as the AICF) SG&A expenses;
and $71.0 million of impairment charges. For fiscal years 2007, 2006 and 2005, operating
(loss) income includes Special Commission of Inquiry and other related expenses of $13.6
million, $17.4 million and $28.1 million, respectively. In addition, operating loss in fiscal
year 2007 includes $405.5 million related to asbestos adjustments. Operating loss in fiscal
year 2006 includes $715.6 million related to the establishment of an asbestos provision and
$13.4 million related to the impairment of our former roofing plant. For additional
information on the asbestos adjustments and AICF SG&A expenses see Item 5, Operating and
Financial Review and Prospects and Note 12 to our consolidated financial statements in Item
18. For additional information on the impairment charges for fiscal years 2008 and 2006, see
Item 5, Operating and Financial Review and Prospects and Note 7 to our consolidated
financial statements in Item 18.Operating (loss) income also includes restructuring and other operating income/expenses as
follows: (i) for fiscal year 2006, an $0.8 million loss related to the disposal of our
Chilean fiber cement business; (ii) for fiscal year 2005, $6.0 million consisting of a
settlement loss of $5.3 million related to an employee retirement plan and a $0.7 million
loss on the sale of land in Sacramento, California; and (iii) for fiscal year 2004, $2.1
million expense primarily related to an increase in cost provisions for our Australian and
New Zealand business.(4)
    
    Other (expense) income consists primarily of the following: (i) for fiscal year 2005, the
$1.3 million expense consisted of a $2.1 million impairment charge that we recorded on an
investment in a company that filed a voluntary petition for reorganization under Chapter 11 of
the U.S. bankruptcy code, partly offset by a $0.8 million gain on a separate investment; and
(ii) for fiscal year 2004, the net gain achieved after accounting for income items, including
a $4.5 million profit on the sale of our New Zealand property, was partially offset by expense
items, including $3.2 million primarily due to a capital duty fee paid in conjunction with our
Dutch corporate structure.(5)
    
    Information for depreciation and amortization is for continuing businesses only. 4




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(6)
    
    EBITDA represents income from continuing operations before interest income, interest expense,
income taxes, other non-operating expenses, net, described in footnote four above, cumulative
effect of change in accounting principle, depreciation and amortization charges as follows: Fiscal Years Ended March 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(In
millions)Net cash provided by (used in) operating activities
    
    $
    319.3
    
    
    $
    (67.1
    )
    
    $
    238.4
    
    
    $
    219.4
    
    
    $
    162.2Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities
    
    
    (318.9
    )
    
    
    4.5
    
    
    
    (789.1
    )
    
    
    (60.8
    )
    
    
    (50.7
    )Change in operating assets and liabilities, net
    
    
    (72.0
    )
    
    
    214.3
    
    
    
    44.0
    
    
    
    (31.7
    )
    
    
    18.1Net (loss) income
    
    
    (71.6
    )
    
    
    151.7
    
    
    
    (506.7
    )
    
    
    126.9
    
    
    
    129.6(Income) loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0
    
    
    
    (4.3
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (0.9
    )
    
    
    
    
    
    
    
    
    
    
    Income tax expense (benefit)
    
    
    36.1
    
    
    
    (243.9
    )
    
    
    71.6
    
    
    
    61.9
    
    
    
    40.4Interest expense
    
    
    11.1
    
    
    
    12.0
    
    
    
    7.2
    
    
    
    7.3
    
    
    
    11.2Interest income
    
    
    (12.2
    )
    
    
    (5.5
    )
    
    
    (7.0
    )
    
    
    (2.2
    )
    
    
    (1.2
    )Other expense (income)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    (3.5
    )Depreciation and amortization
    
    
    56.5
    
    
    
    50.7
    
    
    
    45.3
    
    
    
    36.3
    
    
    
    36.4EBITDA
    
    $
    19.9
    
    
    $
    (35.9
    )
    
    $
    (389.6
    )
    
    $
    232.5
    
    
    $
    208.6
 
 EBITDA is not a measure of financial performance under U.S. GAAP and should not be
considered an alternative to, or more meaningful than, income from operations, net income or
cash flows as defined by U.S. GAAP or as a measure of our profitability or liquidity. Not
all companies calculate EBITDA in the same manner as we have and, accordingly, EBITDA may
not be comparable with other companies. We have included information concerning EBITDA
because we believe that this data is commonly used by investors to evaluate the ability of a
companys earnings from its core business operations to satisfy its debt, capital
expenditure and working capital requirements. To permit evaluation of this data on a
consistent basis from period to period, EBITDA has been adjusted for noncash charges, as
well as non-operating income and expense items.(7)
    
    Capital expenditures includes both cash and credit purchases, and is for continuing
businesses only.(8)
    
    Fiber cement volume is measured in 5/16 thick square feet, which are referred to as standard
feet.(9)
    
    Total current assets less total current liabilities. 
 5




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Risk Factors
 Our wholly owned Australian subsidiary, James Hardie 117 Pty Ltd (which we refer to as the
Performing Subsidiary), is required to make payments to a special purpose fund that provides
compensation for Australian asbestos-related personal injury and death claims for which certain
former companies of the James Hardie Group are found liable. Such payments have reduced, and future
payments will reduce, our funds available for capital expenditures on existing and new business
opportunities, repayments of debt, payments of dividends or other distributions and may restrict
our ability to access equity or debt capital markets. Such payments have also materially adversely
affected, and will materially adversely affect, our business.
    Even though the Amended FFA has been implemented, we may be subject to potential additional
liabilities (including claims for compensation or property remediation outside the arrangements
reflected in the Amended FFA) because certain current and former companies of the James Hardie
Group previously manufactured products that contained asbestos.
   6




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Indemnification claims arising under certain indemnification agreements we have granted to third
parties could have a material adverse effect on our business.
  The Amended FFA imposes certain non-monetary obligations which could materially adversely affect
our business.
  7




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The Amended FFA does not eliminate the risk of adverse action being taken against us.
  If the Amended FFA is terminated, the NSW Government may pass legislation that would seek to impose
liability on us for asbestos claims.
   Since our revenues are primarily derived from sales in U.S. dollars and payments pursuant to the
Amended FFA are made in Australian dollars, unfavorable fluctuations in the U.S. dollar (and other
currencies from which we derive our sales) compared to the Australian dollar, will require us to
pay more of our revenues to discharge our obligations under the Amended FFA. In addition, since our
results of operations are reported in U.S. dollars, unfavorable fluctuations in the U.S. dollar
compared to the Australian dollar will require us to expense the difference in the reported period
in order to increase the amount of our asbestos liability on our balance sheet.
    8




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Regulatory action and continued scrutiny resulting from ongoing investigations may have an adverse
effect on our business.
    
    
    declarations regarding the alleged contraventions;
    
    orders for pecuniary penalties in such amount as the Supreme Court thinks fit up to
the limits specified in the Corporations Act. The Corporations Act presently limits
such penalties to A$200,000 ($183,436) per contravention;
    
    orders that former James Hardie Group directors or officers, including Mr. Michael
Brown, Mr. Michael Gillfillan, Ms. Meredith Hellicar, Mr. Martin Koffel, Mr. Peter
Macdonald, Mr. Philip Morley, Mr. Geoffrey OBrien, Mr. Peter Shafron, Mr. Gregory
Terry and Mr. Peter Willcox, be prohibited from managing an Australian corporation for
such period as the Supreme Court thinks fit;
    
    an order that the Company execute a deed of indemnity in favor of ABN 60 providing
that the Company indemnify ABN 60 for an amount up to a maximum of A$1.9 billion ($1.7
billion), for such amount as ABN 60, or its directors, consider, after giving careful
consideration, is necessary to ensure that ABN 60 is able to pay its debts, as and when
they fall due, and for such amount as ABN 60, or its directors, reasonably believe is
necessary to ensure that ABN 60 remains solvent; and
    
    its costs of the proceedings.
   We may be liable for costs, penalties, fees and expenses incurred by current or former directors,
officers or employees of the James Hardie Group to the extent that those costs are covered by
indemnity arrangements granted by the James Hardie Group to those persons.
  9




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Negative publicity may continue to adversely affect our business.
  We may have insufficient Australian taxable income to utilize tax deductions.
  Potential escalation in proven claims made against, and associated costs of, the AICF could
increase our annual funding payments required to be made under the Amended FFA, which may cause us
to have to increase our asbestos liability in the future.
  10




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We have experienced product bans and boycotts and have been subject to other measures taken in
response to the events investigated by the SCI and could continue to experience product bans and
boycotts in the future.
   The complexity and long-term nature of the Amended FFA and related legislation and agreements may
result in litigation as to their interpretation or one or more of the parties to the agreements may
seek to renegotiate their terms.
   Risk of certain Amended FFA tax conditions ceasing to be satisfied.
   11




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Our effective income tax rate could increase and materially adversely affect our business.
  Exposure to additional income tax liabilities due to audits could materially adversely affect our
business.
     Tax benefits are available under the U.S.-Netherlands income tax treaty to U.S. and Dutch taxpayers
that qualify for those benefits. The IRS is auditing us in connection with our eligibility for
those benefits on and after February 1, 2006 and has issued a notice of proposed adjustment
asserting that we are not eligible.
   12




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In finalizing its audit of our fiscal year ended March 31, 2002 the ATO may issue amended
assessments which may require substantial cash deposits to be made and substantial expenses to be
incurred in appealing any assessment. In addition, if an assessment is ultimately upheld this also
would materially and adversely affect our business.
       13




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Our wholly-owned subsidiary, RCI Pty Ltd (which we refer to as RCI), has been required to post a
substantial cash deposit and may incur substantial expenses in order to pursue an appeal of an
assessment by the ATO. In addition, if the assessment is ultimately upheld this also would
materially and adversely affect our business.
     Under Dutch tax law, we derive tax benefits from the group finance operations of our
Netherlands-based finance subsidiary, and changes in the laws applicable to the finance subsidiary
could increase our effective tax rate and, as a result, could materially adversely affect our
business.
  14




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We may reorganize our corporate structure by changing our place of incorporation and/or tax
residency (which we refer to collectively as Domicile) and this may materially affect our financial
position.
    If we are classified as a controlled foreign corporation or a passive foreign investment
company, our shareholders could be subject to increased tax liability as a consequence of their
investment in our securities.
  15




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Our board of directors and senior management continue to devote significant attention to the
Amended FFA, ASIC proceedings, tax audits and tax litigation.
  Substantial and increasing competition in the building products industry could materially adversely
affect our business.
     If damages resulting from product defects exceed our insurance coverage, paying these damages could
result in a material adverse effect on our business.
  16




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##### Table of Contents



If one or more of our fiber cement products fail to perform as expected or contain a design defect,
such failure or defect, and any resulting negative publicity, could result in lower sales and may
subject us to claims from purchasers or users of our fiber cement products.
 -
 Warranty claims resulting from unforeseen defects in our products and exceeding our warranty
reserves could have a material adverse effect on our business.
  We may incur significant costs in the future in complying with applicable environmental and health
and safety laws and regulations. A failure to comply with or a change in these laws and regulations
could subject us to significant liabilities, including, but not limited to, damages and penalties
and could have a material adverse effect on our business.
    17




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##### Table of Contents



Our business is dependent on the residential and commercial construction markets and we expect a
slow down in housing construction in the markets we serve, including the U.S., Australia and New
Zealand, over the short to medium term.
  Because demand for our products in our major markets is seasonal, our quarterly results of
operations may vary throughout the year.
  We may experience adverse fluctuations in the supply and cost of raw materials necessary to our
business. A significant reduction or cessation of shipments from an important supplier could have a
material adverse effect on our business.
  18




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##### Table of Contents



If our research and development efforts fail to generate new, innovative products or processes, our
overall profit margins may decrease and demand for our products may fall, which would have a
material adverse effect on our business. In addition we may incur substantial expenses related to
unsuccessful research and development efforts.
  Demand for our products is subject to changes in consumer preference.
   Our ability to sell our products into certain markets is influenced by building codes and
ordinances in effect in the related localities and states and may limit our ability to compete
effectively in certain markets and our ability to increase or maintain our current market share for
our products.
  19




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We rely on only a few customers to buy our fiber cement products and the loss of any customer could
materially adversely affect our business.
  Changes in, or failure to comply with, the laws, regulations, policies or conditions of any
jurisdiction in which we conduct our business could result in, among other consequences, the loss
of our assets in such jurisdiction, the elimination of certain rights that are critical to the
operation of our business in such jurisdiction, a decrease in revenues or the imposition of
additional taxes or other costs.
  
    
    changing political and economic conditions;
    
    changing laws and policies;
    
    the general hazards associated with the assertion of sovereign rights over certain
areas in which we conduct our business; and
    
    laws limiting or conditioning the right and ability of subsidiaries and joint
ventures to pay dividends or remit earnings to affiliated companies.
  Our ability to pay you dividends is dependent on Dutch law and may be limited in the future if we
are not able to maintain sufficient levels of Freely Distributable Reserves (which we refer to as
FDRs).
  Because our intellectual property and other proprietary information may be or may become publicly
available, we are subject to the risk that competitors could copy our products or processes.
  20




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Natural disasters could have an adverse effect on our overall business.
  We rely on a continuous power supply and availability of utilities to conduct our operations, and
any shortages or interruptions could disrupt our operations and increase our expenses.
  Because we have significant operations outside of the United States and report our earnings in U.S.
dollars, unfavorable fluctuations in currency values and exchange rates could have a material
adverse effect on our business.
  21




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Our Articles of Association and Dutch law contain provisions that could delay or prevent a change
of control that may otherwise be beneficial to you.
  Because we are incorporated under Dutch law, you may not be able to effectively seek legal recourse
against us or our management and you may have difficulty enforcing any U.S. judgments or rulings in
a foreign jurisdiction.
   The issuance of shares of common stock or the grant of options to acquire shares of common stock
could dilute the value of your shares and materially adversely affect the price of our common
stock.
   If we experience labor disputes or interruptions, as we have from time to time in the past, our
operations may be disrupted and our business may be materially adversely affected.
 1 ,
 
 1
    
    Under Australian law, we cannot keep records of union
members. The number quoted is the number of people who work in our factories
that have union participation and therefore may be represented by a union. 22




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We may acquire or divest businesses from time to time, and this may materially adversely affect our
results of operations and financial condition and may significantly change the nature of the
company in which you have invested.
  We are dependent upon our key management personnel for our future success.
  Forward-Looking Statements
  
    
    expectations about the timing and amount of payments to the AICF, a special purpose
fund for the compensation of proven Australian asbestos-related personal injury and
death claims;
    
    statements regarding tax liabilities and related audits and proceedings;
    
    statements as to the possible consequences of proceedings brought against us and
certain of our former directors and officers by the ASIC;
    
    expectations concerning indemnification obligations;
    
    expectations concerning the costs associated with the suspension of operations at
our Blandon, Pennsylvania and Plant City, Florida plants;
    
    expectations that our credit facilities will be extended or renewed;
    
    expectations concerning dividend payments;
    
    projections of our results of operations or financial condition;
 23




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##### Table of Contents




    
    statements regarding our plans, objectives or goals, including those relating to
competition, acquisitions, dispositions and our products;
    
    statements about our future performance; and
    
    statements about product or environmental liabilities.
  
 Item 4. Information on the Company
 History and Development of the Company
 besloten vennootschap met beperkte
aansprakelijkheid naamloze vennootschap th rd
 Corporate Restructuring
   
    
    the formation of JHNV;
    
    the transfer to subsidiaries of JHNV of all of our fiber cement businesses, our U.S.
gypsum wallboard business, our Australian and New Zealand building systems business and
our Australian windows business, all of which, except for fiber cement, were
subsequently sold;
 24




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##### Table of Contents




    
    a debt financing, consisting of an issuance of notes to U.S. purchasers, and the
arrangement of an Australian credit facility; and
    
    the relocation of most of our senior executives and managers to our operational
headquarters in the United States.
   
    
    the issuance of shares of JHI NV common stock represented by CUFS to substantially
all ABN 60 shareholders in exchange for their shares of ABN 60 common stock pursuant to
an approved Australian scheme of arrangement;
    
    the transfer by ABN 60 of all of the outstanding shares of JHNV (which directly or
indirectly held substantially all of the assets of the James Hardie Group at that time)
to JHI NV;
    
    a capital reduction and payment of a dividend by ABN 60 to its then sole
shareholder, JHI NV;
    
    the issuance by ABN 60 of 100,000 partly-paid ordinary shares to JHI NV for a total
issue price approximately equal to the market value of the James Hardie Group
immediately prior to the schemes implementation (which equaled approximately A$1.9
billion). There was an initial subscription price paid of A$50 per partly-paid ordinary
share (that is, for a total subscription price for such shares of A$5 million), and the
remainder was left uncalled. A partly-paid share is a share that is issued with only
part of its value paid by the owner of the share. The partly-paid shares were issued by
ABN 60 to enable it to call on JHI NV for funds in the future if ABN 60 needed such
funds to maintain its solvency;
    
    the listing of the shares of JHI NV represented by CUFS on the ASX and the listing
of ADRs, representing CUFS, which in turn represent shares of JHI NV, on the NYSE; and
    
    the establishment of a Dutch financing subsidiary, James Hardie International
Finance B.V. (which we refer to as JHIF BV).
   25




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##### Table of Contents




    
    JHI NV and ABN 60 cancelled the partly-paid shares. The decision to cancel the
partly-paid shares was taken by the directors of ABN 60 who did so based on a
determination that the reduction in capital would not materially prejudice ABN 60s
ability to pay its creditors, including Amaba and Amaca, which, under the terms of the
Deed of Covenant and Indemnity, were creditors of ABN 60 only to the extent of the
limited financial obligations under that Deed. The directors of ABN 60, after due
consideration of ABN 60s financial position, determined that the reduction in capital
would not materially prejudice ABN 60s ability to pay its creditors;
    
    ABN 60 transferred control of all of its non-operating subsidiaries to RCI Holdings
Pty Ltd, a wholly owned subsidiary of JHI NV, to distinguish between the operating
group of companies and non-operating subsidiaries; and
    
    Following the consolidation of the operating assets of the James Hardie Group under
JHI NV and JHNV in fiscal year 2003, the principal activity of ABN 60 was paying
amounts in accordance with the Deed of Covenant and Indemnity. At that time, the cash
position of the Company had improved significantly as a result of the sale of the
Companys gypsum business in the United States and the impending sale of a gypsum mine
in Nevada. On March 31, 2003, following a review of all available options to address
this issue and after a thorough review had been conducted to determine that the funds
available to ABN 60 would be sufficient to meet the claims of all creditors, the shares
in ABN 60 were transferred to the ABN 60 Foundation. ABN 60 Foundation was established to be the sole shareholder of ABN 60. ABN 60 was managed
by independent directors and operated entirely independently of the Company. During
fiscal year 2006, we completed a further restructuring which we believe will enable
us to continue paying
 26




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##### Table of Contents



Consolidation of the AICF
   27




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Recent Developments (events occurring after April 1, 2008)
     Board and Management Changes
      General Overview of Our Business
 ® TM   ® ®
 28




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2 2
  Fiscal Year Ended March 31,2008
    
    
    2007
    
    
    2006(In millions)USA Fiber Cement
    
    $
    1,144.8
    
    
    $
    1,262.3
    
    
    $
    1,218.4Asia Pacific Fiber Cement
    
    
    298.3
    
    
    
    251.7
    
    
    
    241.8Other
    
    
    25.7
    
    
    
    28.9
    
    
    
    28.3Total
    
    $
    1,468.8
    
    
    $
    1,542.9
    
    
    $
    1,488.5
 Industry Overview
 U.S. Housing Industry and Fiber Cement Industry
   
 2
    
    Actual siding usage reports from NAHB for calendar year
2007 will not be available until August and November 2008. 29




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International Fiber Cement Industry
    30




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Products
      ®  
     31




---



##### Table of Contents



®
 â â
 â â
 â â â â  â â
 â
 Seasonality
  Raw Materials
  Cellulose Fiber.
 Silica.
 Cement.
 32




---



##### Table of Contents



Water.
 Sales, Marketing and Distribution
 .
    ®
 33




---



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Research and Development
  Dependence on Trade Secrets and Research and Development
  34




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Governmental Regulation
 Environmental Regulation
  
    
    the Resource Conservation and Recovery Act;
    
    the Comprehensive Environmental Response, Compensation and Liability Act;
    
    the Clean Air Act;
    
    the Occupational Safety and Health Act;
    
    the Emergency Planning and Community Right to Know Act;
    
    the Clean Water Act;
    
    the Safe Drinking Water Act;
    
    the Surface Mining Control and Reclamation Act;
    
    the Toxic Substances Control Act;
    
    the National Environmental Policy Act; and
    
    the Endangered Species Act,
    35




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##### Table of Contents



Organizational Structure
   Name of Company
    
    Jurisdiction of EstablishmentJames Hardie 117 Pty Ltd.
    
    AustraliaJames Hardie Aust Holdings Pty Ltd.
    
    AustraliaJames Hardie Austgroup Pty Ltd.
    
    AustraliaJames Hardie Australia Management Pty Ltd.
    
    AustraliaJames Hardie Australia Pty Ltd.
    
    AustraliaJames Hardie Building Products Inc.
    
    United StatesJames Hardie Europe B.V.
    
    NetherlandsJames Hardie International Finance B.V.
    
    NetherlandsJames Hardie International Finance Holdings Sub I B.V.
    
    NetherlandsJames Hardie International Finance Holdings Sub II B.V.
    
    NetherlandsJames Hardie International Holdings B.V.
    
    NetherlandsJames Hardie N.V.
    
    NetherlandsJames Hardie New Zealand Limited.
    
    New ZealandJames Hardie Philippines Inc.
    
    PhilippinesJames Hardie Research (Holdings) Pty Ltd.
    
    AustraliaJames Hardie Research Pty Ltd.
    
    AustraliaJames Hardie U.S. Investments Sierra Inc.
    
    United StatesN.V. Technology Holdings A Limited Partnership
    
    AustraliaRCI Pty Ltd.
    
    Australia
 Capital Expenditures and Divestitures
  Fiscal Years Ended March 31,2008
    
    
    2007
    
    
    2006(In millions)USA Fiber Cement
    
    $
    31.3
    
    
    $
    80.3
    
    
    $
    154.5Asia Pacific Fiber Cement
    
    
    5.6
    
    
    
    10.5
    
    
    
    6.6Chile, U.S. Pipes, U.S. Roofing and Europe (1)
    
    
    1.6
    
    
    
    1.3
    
    
    
    1.7Total Capital Expenditures
    
    $
    38.5
    
    
    $
    92.1
    
    
    $
    162.8
 
 (1)
    
    In July 2005, we sold our fiber cement business located in Chile; in April 2006, we closed our
roofing pilot plant located in Fontana, California; and in May 2008, we closed our pipes plant
located in Plant City, Florida. For further information See Note 7 to our consolidated financial
statements in Item 18.  
    
    construction of a new fiber cement manufacturing plant in Pulaski, Virginia which began
in March 2005. The plant includes two manufacturing lines, each with an annual design
capacity of 300 million square feet. At the end of fiscal year 2006, we completed
construction on the first manufacturing line and, in April 2006, we commenced commercial
production on this line. In May 2006, we completed construction on the second manufacturing
line. However, we have not yet commissioned or commenced commercial production on this
second manufacturing line. The plant produces external siding and interior backerboard
products for new residential construction, repair and remodel and manufactured housing
markets. As of March 31, 2008, we have incurred $105.7 million related to the construction
of our Pulaski, Virginia plant;
 36




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##### Table of Contents




    
    the continued implementation of our ColorPlus® strategy. This strategy
includes constructing additional ColorPlus® coating capacity inside our existing
plants. In fiscal year 2006, we completed construction of, and commenced production on, a
new ColorPlus® line at our Blandon, Pennsylvania plant. In fiscal year 2007, we
completed construction of, and commenced production on, new ColorPlus® lines at
our Reno, Nevada and Pulaski, Virginia plants. In fiscal year 2008, we suspended production
at our Blandon, Pennsylvania plant. As of March 31, 2008, we have incurred $52.1 million
related to our ColorPlus® strategy;
    
    commencement of a new finishing capability on a new product line in fiscal year 2007. As
of March 31, 2008 we have incurred $18.8 million related to this project;
    
    the addition of a new fiber cement plant in Reno, Nevada at a cost of $58.0 million,
which occurred during fiscal years 2006, 2005 and 2004; and
    
    the addition of a new trim line at our Peru, Illinois plant. As of March 31, 2005, we
were in pre-production and in fiscal year 2006 we commenced the ramp-up of this new trim
line. As of March 31, 2007, this project was completed and we had incurred a total cost of
$59.0 million related to the construction of this new trim line. These expenditures
primarily occurred during fiscal years 2006, 2005 and 2004.
     Property, Plant and Equipment
   37




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Plants and Process
  Existing AnnualLocation
    
    Design Capacity (1)Fiber Cement (in million square feet)United StatesFontana, California
    
    
    180Plant City, Florida
    
    
    300Cleburne, Texas
    
    
    500Tacoma, Washington
    
    
    200Peru, Illinois
    
    
    560Waxahachie, Texas
    
    
    360Blandon, Pennsylvania (2)
    
    
    200Summerville, South Carolina
    
    
    190Reno, Nevada
    
    
    300Pulaski, Virginia (3)
    
    
    600Total United States
    
    
    3,390AustraliaSydney, New South Wales (4)
    
    
    180Brisbane, Queensland (Carole Park) (4) (6)
    
    
    120Total Australia
    
    
    300New ZealandAuckland (5)
    
    
    75The PhilippinesManila
    
    
    145Total Fiber Cement Flat Sheet
    
    
    3,910Fiber Reinforced Concrete Pipes(in tons) (7)Plant City, Florida (pipes) (8)
    
    
    Brisbane, Queensland (Meeandah) (4) (6)
    
    
    50,000Total Fiber Reinforced Concrete Pipes
    
    
    50,000
 
 (1)
    
    Annual design capacity is based on managements historical experience with our production
process and is calculated assuming continuous operation, 24 hours per day, seven days per
week, producing 5/16 thickness siding at a target operating speed. Annual design capacity is
not necessarily reflective of our actual capacity utilization at each plant. See below for a
description of average capacity utilization rates for our fiber cement plants by country.
Plants outside the United States produce a range of thicker products, which negatively affect
their outputs. Actual production is affected by factors such as product mix, batch size, plant
availability and production speeds and is usually less than annual design capacity.(2)
    
    On October 31, 2007, we announced plans to suspend production at our Blandon, Pennsylvania
plant. See Note 7 to the notes to our consolidated financial statements included in Item 18
for more information.(3)
    
    Our plant in Pulaski, Virginia has two manufacturing lines with a total annual design
capacity of 600 million square feet (300 million square feet per line). Both manufacturing
lines have been completed, however, currently only one line, with a capacity of 300 million
square feet, has commenced commercial production.(4)
    
    Prior to March 2004, the land and buildings on which these facilities are located were leased
on a long-term basis from Amaca. In March 2004, various subsidiaries of Multiplex Property
Trust (which we collectively refer to as Multiplex) an unrelated third party, acquired the
land and buildings related to these three fiber cement manufacturing facilities from Amaca.
The land and buildings on which these facilities are located are leased on a long-term basis
from Multiplex. 38




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##### Table of Contents



(5)
    
    Prior to March 2004, the land and buildings on which this facility is located were leased on
a long-term basis from Studorp Limited or Studorp. In March 2004, Multiplex acquired the
relevant land and buildings from Studorp. On June 30, 2005, an unrelated third party, the
Location Group Limited, acquired the relevant land and buildings from Multiplex. Penrose Land
Limited, a company within the Location Group Limited, took over as landlord in respect of the
lease of the land and buildings to James Hardie New Zealand Limited.(6)
    
    There are two manufacturing plants in Brisbane. Carole Park produces only flat sheets and
Meeandah produces only pipes and columns.(7)
    
    Pipe and column capacity is measured in tons rather than million square feet.(8)
    
    Our Plant City, Florida Pipe plant ceased operations in May 2008.   CapacityCountry
    
    Utilization (1)United States
    
    
    59
    %Australia
    
    
    76
    %New Zealand
    
    
    72
    %Philippines
    
    
    77
    %
 
 (1)
    
    Capacity utilization is based on design capacity. Design capacity is based on managements
estimates, as described above. No accepted industry standard exists for the calculation of
fiber cement manufacturing facility capacities. 39




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Mines
  Commitment to Provide Funding on a Long-Term Basis in Respect of Asbestos-Related Liabilities of
Former Subsidiaries
  Asbestos Adjustments
  Fiscal Years Ended March 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Change in estimatesChange in actuarial estimate  asbestos liability
    
    $
    (175.0
    )
    
    $
    50.3
    
    
    $
    Change in actuarial estimate  insurance
receivable
    
    
    27.4
    
    
    
    (22.6
    )
    
    
    Change in estimate  AICF claims-handling costs
    
    
    (6.5
    )
    
    
    0.8
    
    
    
    Change in estimate  Other
    
    
    1.2
    
    
    
    
    
    
    
    Subtotal  Change in estimates
    
    
    (152.9
    )
    
    
    28.5
    
    
    
    Effect of foreign exchange
    
    
    (87.2
    )
    
    
    (94.5
    )
    
    
    Tax impact related to the implementation of the
Amended FFA
    
    
    
    
    
    
    (335.0
    )
    
    
    Initial recording of provision at March 31, 2006
    
    
    
    
    
    
    
    
    
    
    (715.6
    )Other adjustments
    
    
    
    
    
    
    (4.5
    )
    
    
    Total Asbestos Adjustments
    
    $
    (240.1
    )
    
    $
    (405.5
    )
    
    $
    (715.6
    )
 40




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Asbestos-Related Assets and Liabilities
  March 31,(In millions)

    
    2008
    
    
    2007Asbestos liability  current
    
    $
    (78.7
    )
    
    $
    (63.5
    )Asbestos liability  non-current
    
    
    (1,497.8
    )
    
    
    (1,225.8
    )Asbestos liability  Total
    
    
    (1,576.5
    )
    
    
    (1,289.3
    )Insurance receivable  current
    
    
    14.1
    
    
    
    9.4Insurance receivable  non-current
    
    
    194.3
    
    
    
    165.1Insurance receivable  Total
    
    
    208.4
    
    
    
    174.5Workers compensation asset  current
    
    
    6.9
    
    
    
    2.7Workers compensation asset  non-current
    
    
    78.5
    
    
    
    76.5Workers compensation liability  current
    
    
    (6.9
    )
    
    
    (2.7
    )Workers compensation liability  non-current
    
    
    (78.5
    )
    
    
    (76.5
    )Workers compensation  Total
    
    
    
    
    
    
    Deferred income taxes  current
    
    
    9.1
    
    
    
    7.8Deferred income taxes  non-current
    
    
    397.1
    
    
    
    318.2Deferred income taxes  Total
    
    
    406.2
    
    
    
    326.0Income tax payable (reduction in income tax payable)
    
    
    20.4
    
    
    
    9.0Other net liabilities
    
    
    (3.4
    )
    
    
    (6.3
    )Net Amended FFA liability
    
    
    (944.9
    )
    
    
    (786.1
    )Restricted cash and cash equivalents and restricted
short-term investment assets of the AICF
    
    
    115.1
    
    
    
    146.9Unfunded Net Amended FFA liability
    
    $
    (829.8
    )
    
    $
    (639.2
    )
 Asbestos Liability
   A$
    
    
    A$ to
    
    
    US$Millions
    
    
    US$ rate
    
    
    MillionsAsbestos liability  March 31, 2007
    
    A$
    (1,598.1
    )
    
    
    1.2395
    
    
    $
    (1,289.3
    )Asbestos claims paid (1)
    
    
    74.3
    
    
    
    1.1503
    
    
    
    64.6AICF claims-handling costs incurred (1)
    
    
    2.8
    
    
    
    1.1503
    
    
    
    2.4Change in actuarial estimate (2)
    
    
    (190.8
    )
    
    
    1.0903
    
    
    
    (175.0
    )Change in estimate of AICF claims-handling costs (2)
    
    
    (7.1
    )
    
    
    1.0903
    
    
    
    (6.5
    )Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    (172.7
    )Asbestos liability  March 31, 2008
    
    A$
    (1,718.9
    )
    
    
    1.0903
    
    
    $
    (1,576.5
    )
 41




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##### Table of Contents



(1)
    
    The average exchange rate for the period is used to convert the Australian dollar amount to
U.S. dollars based on the assumption that these transactions occurred evenly throughout the
period.(2)
    
    The spot exchange rate at March 31, 2008 is used to convert the Australian dollar amount to
U.S. dollars as the adjustment to the estimate was made on that date. Insurance Receivable  Asbestos
  A$
    
    
    A$ to
    
    
    US$Millions
    
    
    US$ rate
    
    
    MillionsInsurance receivable  March 31, 2007
    
    A$
    216.3
    
    
    
    1.2395
    
    
    $
    174.5Insurance recoveries (1)
    
    
    (19.2
    )
    
    
    1.1503
    
    
    
    (16.7
    )Change in estimate (3)
    
    
    0.2
    
    
    
    1.1782
    
    
    
    0.2Change in actuarial estimate (2)
    
    
    29.9
    
    
    
    1.0903
    
    
    
    27.4Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    23.0Insurance receivable  March 31, 2008
    
    A$
    227.2
    
    
    
    1.0903
    
    
    $
    208.4
 
 (1)
    
    The average exchange rate for the period is used to convert the Australian dollar amount to
U.S. dollars based on the assumption that these transactions occurred evenly throughout the
period.(2)
    
    The spot exchange rate at March 31, 2008 is used to convert the Australian dollar amount to
U.S. dollars as the adjustment to the estimate was made on that date.(3)
    
    The spot exchange rate at June 30, 2007 is used to convert the Australian dollar amount to
U.S. dollars as the adjustment to the estimate was made on that date. Deferred Income Taxes  Asbestos
  A$
    
    
    A$ to US$
    
    
    US$Millions
    
    
    rate
    
    
    MillionsDeferred tax assets  March 31, 2007
    
    A$
    404.1
    
    
    
    1.2395
    
    
    $
    326.0Amounts offset against income tax payable (1)
    
    
    (11.1
    )
    
    
    1.1503
    
    
    
    (9.6
    )Impact of change in actuarial estimates (2)
    
    
    50.4
    
    
    
    1.0903
    
    
    
    46.2Impact of other asbestos adjustments (1)
    
    
    (0.5
    )
    
    
    1.1503
    
    
    
    (0.4
    )Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    44.0Deferred tax asset  March 31, 2008
    
    A$
    442.9
    
    
    
    1.0903
    
    
    $
    406.2
 
 (1)
    
    The average exchange rate for the period is used to convert the Australian dollar amount to
U.S. dollars based on the assumption that these transactions occurred evenly throughout the
period.(2)
    
    The spot exchange rate at March 31, 2008 is used to convert the Australian dollar amount to
U.S. dollars as the adjustment to the estimate was made on that date. Income Tax Payable
  42




---



##### Table of Contents



Other Net Liabilities
  Restricted Cash and Short-term Investment Assets of the AICF
   A$
    
    
    A$ to US$
    
    
    US$Millions
    
    
    rate
    
    
    MillionsRestricted cash and cash equivalents and
restricted short-term investment assets  March
31, 2007
    
    A$
    182.1
    
    
    
    1.2395
    
    
    $
    146.9Asbestos claims paid (1)
    
    
    (74.3
    )
    
    
    1.1503
    
    
    
    (64.6
    )AICF operating costs paid  claims handling (1)
    
    
    (2.8
    )
    
    
    1.1503
    
    
    
    (2.4
    )AICF operating costs paid  non-claims handling (1)
    
    
    (4.6
    )
    
    
    1.1503
    
    
    
    (4.0
    )Insurance recoveries (1)
    
    
    19.2
    
    
    
    1.1503
    
    
    
    16.7Interest and investment income (1)
    
    
    10.8
    
    
    
    1.1503
    
    
    
    9.4Unrealized loss on investments (1)
    
    
    (5.1
    )
    
    
    1.1503
    
    
    
    (4.4
    )Other (1)
    
    
    0.2
    
    
    
    1.1503
    
    
    
    0.2Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    17.3Restricted cash and cash equivalents and
restricted short-term investment assets 
March 31, 2008
    
    A$
    125.5
    
    
    
    1.0903
    
    
    $
    115.1
 
 (1)
    
    The average exchange rate for the period is used to convert the Australian dollar amount to
U.S. dollars based on the assumption that these transactions occurred evenly throughout the
period. Actuarial Study; Claims Estimate
    43




---



##### Table of Contents



Claims Data
   Years Ended March 31,2008
    
    2007
    
    2006(1)Number of claims filed
    
    
    552
    
    
    
    463
    
    
    
    346Number of claims dismissed
    
    
    74
    
    
    
    121
    
    
    
    97Number of claims settled
or otherwise resolved
    
    
    445
    
    
    
    416
    
    
    
    405Average settlement amount
per claim
    
    A$
    147,349
    
    
    A$
    166,164
    
    
    A$
    151,883Average settlement amount
per claim
    
    $
    128,096
    
    
    $
    127,165
    
    
    $
    114,322
 44




---



##### Table of Contents



As of March 31,2008
    
    2007
    
    2006(1)
    
    2005
    
    2004Number of open claims
at beginning of period
    
    
    490
    
    
    
    564
    
    
    
    712
    
    
    
    687
    
    
    
    743Number of new claims
    
    
    552
    
    
    
    463
    
    
    
    346
    
    
    
    489
    
    
    
    379Number of closed claims
    
    
    519
    
    
    
    537
    
    
    
    502
    
    
    
    464
    
    
    
    435Number of open claims
at end of period
    
    
    523
    
    
    
    490
    
    
    
    556
    
    
    
    712
    
    
    
    687Average settlement
amount per settled
claim
    
    A$
    147,349
    
    
    A$
    166,164
    
    
    A$
    151,883
    
    
    A$
    157,594
    
    
    A$
    167,450Average settlement
amount per settled
claim
    
    $
    128,096
    
    
    $
    127,163
    
    
    $
    114,318
    
    
    $
    116,572
    
    
    $
    116,123Average settlement
amount per case closed
    
    A$
    126,340
    
    
    A$
    128,723
    
    
    A$
    122,535
    
    
    A$
    136,536
    
    
    A$
    121,642Average settlement
amount per case closed
    
    $
    109,832
    
    
    $
    98,510
    
    
    $
    92,229
    
    
    $
    100,996
    
    
    $
    84,356
 
 (1)
    
    Information includes claims data for only 11 months ended February 28, 2006. Claims data for
the 12 months ended March 31, 2006 was not available at the time our financial statements were
prepared.   Legal Proceedings
   ASIC Proceedings
  45




---



##### Table of Contents




    
    declarations regarding the alleged contraventions;
    
    orders for pecuniary penalties in such amount as the Supreme Court thinks fit up to the
limits specified in the Corporations Act;
    
    orders that Former James Hardie Group directors or officers Michael Brown, Michael
Gillfillan, Meredith Hellicar, Martin Koffel, Peter Macdonald, Philip Morley, Geoffrey
OBrien, Peter Shafron, Gregory Terry and Peter Willcox be prohibited from managing an
Australian corporation for such period as the Supreme Court thinks fit;
    
    an order that the Company execute a deed of indemnity in favor of ABN 60 providing that
the Company indemnify ABN 60 for an amount up to a maximum of A$1.9 billion ($1.7
billion), for such amount as ABN 60, or its directors, consider, after giving careful
consideration, is necessary to ensure that ABN 60 is able to pay its debts, as and when
they fall due, and for such amount as ABN 60, or its directors, reasonably believe is
necessary to ensure that ABN 60 remains solvent; and
    
    its costs of the proceedings.
     Tax Contingencies
   46




---



##### Table of Contents



47




---



##### Table of Contents



Amended Australian Taxation Office Assessment
  (In millions)
    
    $(1)
    
    
    A$Primary tax after allowable credits
    
    $
    157.8
    
    
    A$
    172.0Penalties (2)
    
    
    39.4
    
    
    
    43.0General interest charges
    
    
    140.3
    
    
    
    153.0Total amended assessment
    
    $
    337.5
    
    
    A$
    368.0
 
 (1)
    
    U.S. dollar amounts calculated using the Australian dollar to U.S. dollar foreign exchange
spot rate at March 31, 2008.(2)
    
    Represents 25% of primary tax.      48




---



##### Table of Contents



Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
  Overview
   The Company and the Building Product Markets
    49




---



##### Table of Contents



Fiscal Year 2008 Key Results
        Critical Accounting Policies
  Accounting for Contingencies
  50




---



##### Table of Contents



Accounting for the Amended FFA
          Sales Rebates and Discounts
  51




---



##### Table of Contents



Accounts Receivable
  Inventory
  Accrued Warranty Reserve
  Accounting for Income Tax
   52




---



##### Table of Contents



Results of Operations
  Fiscal Years Ended March 31,2008
    
    
    2007
    
    
    2006Net sales:USA Fiber Cement
    
    $
    1,144.8
    
    
    
    77.9
    %
    
    $
    1,262.3
    
    
    
    81.8
    %
    
    $
    1,218.4
    
    
    
    81.9
    %Asia Pacific Fiber Cement
    
    
    298.3
    
    
    
    20.3
    
    
    
    251.7
    
    
    
    16.3
    
    
    
    241.8
    
    
    
    16.2Other (1)
    
    
    25.7
    
    
    
    1.8
    
    
    
    28.9
    
    
    
    1.9
    
    
    
    28.3
    
    
    
    1.9Total net sales
    
    
    1,468.8
    
    
    
    100.0
    
    
    
    1,542.9
    
    
    
    100.0
    
    
    
    1,488.5
    
    
    
    100.0Cost of goods sold
    
    
    (938.8
    )
    
    
    (63.9
    )
    
    
    (969.9
    )
    
    
    (62.9
    )
    
    
    (937.7
    )
    
    
    (63.0
    )Gross profit
    
    
    530.0
    
    
    
    36.1
    
    
    
    573.0
    
    
    
    37.1
    
    
    
    550.8
    
    
    
    37.0Selling, general and
administrative expenses
    
    
    (228.2
    )
    
    
    (15.5
    )
    
    
    (214.6
    )
    
    
    (13.9
    )
    
    
    (209.8
    )
    
    
    (14.1
    )Research and development
expenses
    
    
    (27.3
    )
    
    
    (1.9
    )
    
    
    (25.9
    )
    
    
    (1.7
    )
    
    
    (28.7
    )
    
    
    (1.9
    )Impairment charges
    
    
    (71.0
    )
    
    
    (4.8
    )
    
    
    
    
    
    
    
    
    
    
    (13.4
    )
    
    
    (0.9
    )SCI and other related
expenses
    
    
    
    
    
    
    
    
    
    
    (13.6
    )
    
    
    (0.8
    )
    
    
    (17.4
    )
    
    
    (1.2
    )Asbestos adjustments
    
    
    (240.1
    )
    
    
    (16.4
    )
    
    
    (405.5
    )
    
    
    (26.3
    )
    
    
    (715.6
    )
    
    
    (48.1
    )Other operating expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )
    
    
    Operating loss
    
    
    (36.6
    )
    
    
    (2.5
    )
    
    
    (86.6
    )
    
    
    (5.6
    )
    
    
    (434.9
    )
    
    
    (29.2
    )Interest expense
    
    
    (11.1
    )
    
    
    (0.7
    )
    
    
    (12.0
    )
    
    
    (0.8
    )
    
    
    (7.2
    )
    
    
    (0.5
    )Interest income
    
    
    12.2
    
    
    
    0.8
    
    
    
    5.5
    
    
    
    0.4
    
    
    
    7.0
    
    
    
    0.5Loss from continuing
operations before income
taxes
    
    
    (35.5
    )
    
    
    (2.4
    )
    
    
    (93.1
    )
    
    
    (6.0
    )
    
    
    (435.1
    )
    
    
    (29.2
    )Income tax (expense) benefit
    
    
    (36.1
    )
    
    
    (2.5
    )
    
    
    243.9
    
    
    
    15.8
    
    
    
    (71.6
    )
    
    
    (4.8
    )(Loss) income from
continuing operations
    
    $
    (71.6
    )
    
    
    (4.9
    )%
    
    $
    150.8
    
    
    
    9.8
    %
    
    $
    (506.7
    )
    
    
    (34.0
    )%
 
 (1)
    
    Includes fiber reinforced concrete pipes manufactured and sold in the United States, fiber
cement operations in Europe and a roofing pilot plant in the United States (fiscal year 2006
only). Our roofing pilot plant was closed and the business ceased operations in April 2006.
Our Plant City, Florida Hardie Pipe Plant was closed and the business ceased operations in May
2008. 53




---



##### Table of Contents



Fiscal Years Ended March 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006USA Fiber Cement (1)
    
    $
    268.0
    
    
    $
    362.4
    
    
    $
    342.6Asia Pacific Fiber Cement
    
    
    50.3
    
    
    
    39.4
    
    
    
    41.7Research and Development
    
    
    (18.1
    )
    
    
    (17.1
    )
    
    
    (15.7
    )Other (2)
    
    
    (32.8
    )
    
    
    (9.3
    )
    
    
    (26.5
    )Total segment operating income
    
    
    267.4
    
    
    
    375.4
    
    
    
    342.1General Corporate (3)
    
    
    (63.9
    )
    
    
    (56.5
    )
    
    
    (61.4
    )Asbestos adjustments
    
    
    (240.1
    )
    
    
    (405.5
    )
    
    
    (715.6
    )Total operating loss
    
    $
    (36.6
    )
    
    $
    (86.6
    )
    
    $
    (434.9
    )
 
 (1)
    
    Fiscal year 2008 includes an asset impairment charge of $32.4 million related to the
suspension of production at our Blandon, Pennsylvania plant; and an asset impairment of $13.2
million related to buildings and machinery utilized to produce materials for our products. See
Note 7 to our consolidated financial statements in Item 18.(2)
    
    Fiscal year 2008 includes an asset impairment charge of $25.4 million related to the closure
of our Plant City, Florida Hardie Pipe plant. Fiscal year 2006 includes an asset impairment
charge of $13.4 million related to the closure of our roofing pilot plant. See Note 7 to our
consolidated financial statements in Item 18.(3)
    
    Fiscal year 2008 includes $4.0 million of AICF Selling, general and administrative expenses. Year Ended March 31, 2008 Compared to Year Ended March 31, 2007
 Total Net Sales
 USA Fiber Cement Net Sales
  ® ®
 54




---



##### Table of Contents



Asia Pacific Fiber Cement Net Sales
  Other Sales â
   Gross Profit
   Selling, General and Administrative (SG&A) Expenses
 55




---



##### Table of Contents



ASIC Proceedings
    Research and Development Expenses
 Impairment Charges.
    SCI and Other Related Expenses
 Asbestos Adjustments.
 56




---



##### Table of Contents



Fiscal Years Ended March 31,(In millions)
    
    2008
    
    
    2007Change in estimates
    
    $
    (152.9
    )
    
    $
    28.5Effect of foreign exchange
    
    
    (87.2
    )
    
    
    (94.5
    )Impact of tax-effecting the net Amended FFA liability
    
    
    
    
    
    
    (335.0
    )Other adjustments
    
    
    
    
    
    
    (4.5
    )Asbestos adjustments
    
    $
    (240.1
    )
    
    $
    (405.5
    )
 Operating Loss.
     General Corporate Costs
 Net Interest Income (Expense).
 Income Tax (Expense) Benefit.
 57




---



##### Table of Contents



Net (Loss) Income.
 Year Ended March 31, 2007 Compared to Year Ended March 31, 2006
 Total Net Sales
 USA Fiber Cement Net Sales
   ® ®
 1 2 1 4 TM 1 4
 58




---



##### Table of Contents



Asia Pacific Fiber Cement Net Sales
   Other Sales
   Gross Profit
   Selling, General and Administrative (SG&A) Expenses
 Research and Development Expenses
 59




---



##### Table of Contents



SCI and Other Related Expenses
 Asbestos Adjustments
  (In millions)

    
    2007
    
    
    2006Adjustments to the net Amended FFA liability at September
30, 2006
    
    $
    (41.8
    )
    
    $
    Adjustments to the net Amended FFA liability at
March 31, 2007
    
    
    70.3
    
    
    
    Tax impact
related to the implementation of the Amended FFA
    
    
    (335.0
    )
    
    
    Effect of foreign exchange
    
    
    (94.5
    )
    
    
    Contributions to asbestos research and education
    
    
    (4.5
    )
    
    
    Initial recording of provision at March 31, 2006
    
    
    
    
    
    
    (715.6
    )Asbestos adjustments
    
    $
    (405.5
    )
    
    $
    (715.6
    )
 Adjustments to the Net Amended FFA liability
   September 30,
    
    
    
    
    
    
    Increase/2006
    
    
    March 31, 2006
    
    
    (decrease)(In millions, except exchange rate data)Discounted Central Estimate
    
    A$
    1,554.8
    
    
    A$
    1,517.0
    
    
    A$
    37.8U.S. GAAP AdjustmentsDiscounting and inflation allowance
    
    
    (112.6
    )
    
    
    (113.2
    )
    
    
    0.6Uninflated and undiscounted central estimate
    
    
    1,442.2
    
    
    
    1,403.8
    
    
    
    38.4Provision for claims handling costs of AICF
    
    
    67.7
    
    
    
    67.7
    
    
    
    Other U.S. GAAP adjustments
    
    
    31.5
    
    
    
    28.7
    
    
    
    2.8Net (assets) liabilities of AICF excluding funding payments
    
    
    (33.0
    )
    
    
    (71.6
    )
    
    
    38.6Total net Amended FFA liability pre-tax
    
    
    1,508.4
    
    
    
    1,428.6
    
    
    
    79.8Total net Amended FFA liability post-tax
    
    A$
    1,055.9
    
    
    A$
    1,000.0
    
    
    A$
    55.9Exchange rate  A$ to $- September 30, 2006
    
    
    
    
    
    
    
    
    
    
    1.3365Increase in the net Amended FFA liability
    
    
    
    
    
    
    
    
    
    $
    41.8
 60




---



##### Table of Contents



September 30,
    
    
    Increase/March 31, 2007
    
    
    2006
    
    
    (decrease)(In millions, except exchange rate data)Discounted Central Estimate
    
    A$
    1,355.1
    
    
    A$
    1,554.8
    
    
    A$
    (199.7
    )U.S. GAAP AdjustmentsDiscounting and inflation allowance
    
    
    (82.1
    )
    
    
    (112.6
    )
    
    
    30.5Uninflated and undiscounted central estimate
    
    
    1,273.0
    
    
    
    1,442.2
    
    
    
    (169.2
    )Provision for claims handling costs of AICF
    
    
    69.2
    
    
    
    67.7
    
    
    
    1.5Other U.S. GAAP adjustments
    
    
    39.6
    
    
    
    31.5
    
    
    
    8.1Net (assets) liabilities of AICF excluding
funding payments
    
    
    2.2
    
    
    
    (33.0
    )
    
    
    35.2Total net Amended FFA liability pre-tax
    
    
    1,384.0
    
    
    
    1,508.4
    
    
    
    (124.4
    )Total net Amended FFA liability post-tax
    
    A$
    968.8
    
    
    A$
    1,055.9
    
    
    A$
    (87.1
    )Exchange rate  A$ to $- March 31, 2007
    
    
    
    
    
    
    
    
    
    
    1.2395Decrease in the net Amended FFA liability
    
    
    
    
    
    
    
    
    
    $
    (70.3
    )
  Tax Impact Related to the Implementation of the Amended FFA
  Effect of Foreign Exchange
  Contributions to Asbestos Research and Education
  61




---



##### Table of Contents



Net Amended FFA Liability
  In millionsInsurance receivables
    
     current
    
    $
    9.4 non-current
    
    
    165.1Workers compensation receivable
    
     current
    
    
    2.7 non-current
    
    
    76.5Workers compensation liability
    
     current
    
    
    (2.7
    ) non-current
    
    
    (76.5
    )Asbestos liability
    
     current
    
    
    (63.5
    ) non-current
    
    
    (1,225.8
    )Deferred tax asset
    
     current
    
    
    7.8 non-current
    
    
    318.2Income taxes payable (reduction to income tax payable)
    
    
    9.0Other net liabilities
    
    
    (6.3
    )Net Amended FFA liability at March 31, 2007
    
    $
    (786.1
    )
  Operating Loss
      62




---



##### Table of Contents



Net Interest Expense
 Income Tax Benefit (Expense)
 Net Income
 Impact of Recent Accounting Pronouncements
 Fair Value Measurements
  Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements  an amendment to ARB No. 51
  63




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##### Table of Contents



Disclosures about Derivative Instruments and Hedging Activities
  Hierarchy of Generally Accepted Accounting Principles
 .
 Liquidity and Capital Resources
   64




---



##### Table of Contents



At March 31, 2008Effective
    
    
    
    
    
    
    PrincipalDescription
    
    Interest Rate
    
    
    Total Facility
    
    
    Drawn(In millions)US$364-day
facilities, can be
drawn in US$, variable
interest rates based
on LIBOR plus margin,
can be repaid and
redrawn until December
2008
    
    
    3.61
    %
    
    $
    110.0
    
    
    $
    90.0US$ term facilities,
can be drawn in US$,
variable interest
rates based on LIBOR
plus margin, can be
repaid and redrawn
until June 2010
    
    
    3.64
    %
    
    
    245.0
    
    
    
    174.5US$ term facilities,
can be drawn in US$,
variable interest
rates based on LIBOR
plus margin, can be
repaid and redrawn
until February 2011
    
    
    
    
    
    
    45.0
    
    
    
    US$ term facilities,
can be drawn in US$,
variable interest
rates based on LIBOR
plus margin, can be
repaid and redrawn
until February 2013
    
    
    
    
    
    
    90.0
    
    
    
    Total
    
    
    
    
    
    $
    490.0
    
    
    $
    264.5
       65




---



##### Table of Contents



Cash Flow  Year Ended March 31, 2008 compared to Year ended March 31, 2007
    Capital Requirements and Resources
    66




---



##### Table of Contents



67




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##### Table of Contents



Capital Expenditures
  ® â â â â
 Contractual Obligations
  Payments DueDuring Fiscal Year Ending March 31,(In millions)
    
    Total
    
    
    2009
    
    
    2010 to 2011
    
    
    2012 to 2013
    
    
    ThereafterAsbestos Liability (1)
    
    $
    1,576.5
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/A
    
    
    $
    N/ALong-Term Debt
    
    
    174.5
    
    
    
    
    
    
    
    174.5
    
    
    
    
    
    
    
    Operating Leases
    
    
    117.8
    
    
    
    14.8
    
    
    
    25.7
    
    
    
    20.6
    
    
    
    56.7Purchase Obligations (2)
    
    
    9.0
    
    
    
    9.0
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,877.8
    
    
    $
    23.8
    
    
    $
    200.2
    
    
    $
    20.6
    
    
    $
    56.7
 
 (1)
    
    The amount of the asbestos liability reflects the terms of the Amended FFA, which has been
calculated by reference to (but is not exclusively based upon) the most recent actuarial
estimate of the projected future asbestos-related cash flows prepared by KPMG Actuaries. The
asbestos liability also includes an allowance for the future claims-handling costs of the
AICF. The table above does not include a break down of payments due each year as such amounts
are not reasonably estimable. See Item 3, Key Information  Risk Factors, Item 4,
Information on the Company  Commitment to Provide Funding on a Long-Term Basis in Respect of
Asbestos-Related Liabilities of Former Subsidiaries and Note 12 of our consolidated financial
statements in Item 18 for further information regarding our future obligations under the
Amended FFA.(2)
    
    Purchase Obligations are defined as agreements to purchase goods or services that are
enforceable and legally-binding on us and that specify all significant terms, including: fixed
or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transactions.  68




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Off-Balance Sheet Arrangements
  Inflation
  Seasonality and Quarterly Variability
  Research and Development
    Outlook
      69




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##### Table of Contents



Item 6. Directors, Senior Management and Employees
 Board Practices and Senior Management
 Board Structure
 Three Boards
    Managing Board
     
    
    administering our general affairs, operations and finance;
    
    preparing a strategic plan and budget setting out our operational and financial
objectives, implementation strategy and parameters for us for the next three years, for
approval by the Joint and Supervisory Boards;
    
    ensuring the implementation of our strategic plan;
    
    preparing quarterly and annual accounts, management reports and media releases;
    
    monitoring our compliance with all relevant legislation and regulations and managing
the risks associated with our activities;
    
    reporting and discussing our internal risk management and control systems with the
Supervisory Board and the Audit Committee; and
    
    representing, entering into and performing agreements on our behalf.
 70




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##### Table of Contents



Supervisory Board
    
    
    nominating Managing Board directors for election by shareholders;
    
    appointing and removing the Chief Executive Officer and the Chairman of the Managing
Board;
    
    approving Managing Board decisions relating to specified matters or above agreed
thresholds;
    
    approving the strategic plan and annual budget proposed by the Managing Board;
    
    approving the annual financial accounts;
    
    supervising the policy and actions pursued by the Managing Board;
    
    supervising the general course of our affairs and the business enterprise we
operate; and
    
    approving issues of new shares.
 Joint Board
   
    
    supervising the general course of our affairs;
    
    approving declaration of dividends;
    
    approving any share buy-back programs and cancelling the shares bought back;
    
    approving issues of new shares;
    
    approving any significant changes in our identity or nature;
    
    approving the strategy set by the Managing Board;
    
    monitoring our performance; and
    
    maintaining effective external disclosure policies and procedures.
  Operation of the Board
 Board Meetings
   71




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Director Qualifications
   Succession Planning
     Retirement and Tenure Policy
   Board Evaluation
    72




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##### Table of Contents



Director Re-election
    Independence
      
    
    Mr. Donald McGauchie is Chairman of Telstra, Australias leading telecommunications
company, from whom we purchase communications services;
    
    Mr. Brian Anderson is a director of Pulte Homes, a home builder in the United States.
Pulte Homes does not buy any of our products directly from us, although it does buy our
products through our customers; and
    
    Mr. Rudy van der Meer is a Member of the Supervisory Board of ING Bank Nederland N.V.
and ING Verzekeringen (Insurance) Nederland N.V. Entities in the ING Group provide
financial services to us. In each case those entities were providing these services to
us at the same or lower volumes prior to Mr. van der Meer becoming a Supervisory Board
director.
  Orientation
  73




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##### Table of Contents



Board Continuing Development
  Letter of Appointment
  Chairman
   
    
    provides leadership to the Joint and Supervisory Boards;
    
    chairs Joint and Supervisory Board and shareholder meetings;
    
    facilitates Joint and Supervisory Board discussion; and
    
    monitors, evaluates and assesses the performance of our Boards and Board Committees.
   Indemnification
   Evaluation of Management
  74




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Information for the Board
    Board Committees
 www.jameshardie.com
   Audit Committee
     75




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##### Table of Contents




    
    overseeing our financial reporting process and reports on the results of its
activities to the Supervisory Board;
    
    reviewing with management and our external auditor our annual and quarterly
financial statements and reports to shareholders;
    
    discussing earnings releases as well as information and earnings guidance provided
to analysts;
    
    reviewing and assessing our risk management policies and procedures;
    
    having general oversight of the appointment and provision of all our external audit
services and our internal audit function;
    
    reviewing the adequacy and effectiveness of our internal compliance and control
procedures;
    
    reviewing our compliance with legal and regulatory requirements; and
    
    establishing procedures for complaints regarding accounting, internal accounting
controls and auditing matters, including any complaints from whistleblowers.
 Conflicts of Interest
  Reporting
  Nominating and Governance Committee
  
    
    identifying individuals qualified to become Managing Board or Supervisory Board
directors;
    
    recommending to the Supervisory Board candidates for the Managing Board or
Supervisory Board (to be appointed by shareholders at the AGM);
    
    overseeing the evaluation of the Supervisory and Managing Boards and senior
management;
    
    assessing the independence of each Supervisory Board director;
    
    operation of the AGM and Annual Information Meeting (which we refer to as AIM); and
    
    performing a leadership role in shaping our corporate governance policies.
  Remuneration Committee
  
    
    administers and makes recommendations on our incentive compensation and
equity-based remuneration plans;
    
    reviews the remuneration of Supervisory Board directors;
    
    reviews the remuneration policy for Managing Board directors; and
    
    makes recommendations to the Supervisory Board on our recruitment, retention and
termination policies and procedures for senior management.
 76




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##### Table of Contents



Policies and Processes
  
    
    Code of Business Conduct and Ethics;
    
    Ethics Hotline;
    
    Continuous Disclosure and Market Communication; and
    
    Insider Trading.
  Code of Business Conduct and Ethics and Ethics Hotline
  www.jameshardie.com
 Continuous Disclosure and Market Communication
    Share Trading
   77




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##### Table of Contents



Share Buyback
  Risk Management
 Overall Responsibility
   Objective
  
    
    our risk management systems are effective;
    
    our principal strategic, operational and financial risks are identified;
    
    effective systems are in place to monitor and manage risks; and
    
    reporting systems, internal controls and arrangements for monitoring compliance with
laws and regulations are adequate.
 Policies for Management of Material Business Risks
  
    
    an Enterprise Risk Management process, which involves identifying and then
developing contingency plans for the key risks we face and its assumptions in our three
year strategic plans and beyond;
    
    a planning process involving the preparation of three-year strategic plans and a
rolling 12 month forecast;
    
    annual budgeting and monthly reporting to monitor performance;
    
    maintaining an appropriate insurance program;
    
    maintaining policies and procedures in relation to treasury operations, including
the use of financial derivatives;
    
    issuing and revising standards and procedures in relation to environmental and
health and safety matters;
    
    implementing and maintaining training programs in relation to legal issues such as
trade practices/antitrust, trade secrecy, and intellectual property protection;
    
    issuing procedures requiring significant capital and recurring expenditure to be
approved at the appropriate levels; and
 78




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##### Table of Contents




    
    documenting detailed accounting policies, procedures and guidance for the group in a
single group finance manual.
 www.jameshardie.com
  Risk Management Committee
  Internal Audit
  External Audit
      Shareholders Participation
 Listing Information
 naamloze vennootschap
 79




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##### Table of Contents



Annual Information Meeting
   www.jameshardie.com
  Annual General Meeting
  
    
    attend the AGM either in person or by proxy;
 
    
    speak at the AGM; and
 
    
    exercise voting rights, subject to the provisions of our Articles of Association.
  Communication
  
    
    making management briefings and presentations accessible via a live webcast and/or
teleconference following the release of quarterly and annual results;
 
    
    audio webcasts of other management briefings and webcasts of the shareholder Annual
Information Meeting;
 
    
    a comprehensive Investor Relations website that displays all company announcements and
notices as soon as they have been cleared by the ASX, as well as all major management and
investor road show presentations;
 
    
    site visits and briefings on strategy for investment analysts;
 
    
    an e-mail alert service to advise shareholders and other interested parties of
announcements and other events; and
 
    
    equality of access for shareholders and investment analysts to briefings, presentations and
meetings and equality of media access to us, on a reasonable basis.
 Investor Website
 www.jameshardie.com
 Compliance with Corporate Governance Requirements
 NYSE Corporate Governance Rules
  80




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
    
    In the United States, an audit committee of a public company is required to be
directly responsible for appointing our independent registered public accounting firm.
Under Dutch law, the independent registered public accounting firm is appointed by the
shareholders or, in the absence of such an appointment, by the Supervisory Board and
then the Managing Board; and
    
    NYSE rules require each issuer to have an audit committee, a compensation committee
(equivalent to a remuneration committee) and a nominating committee composed entirely of
independent directors. As a foreign private issuer, we do not have to comply with this
requirement. In our case, the charters of our Board Committees reflect Australian and
Dutch practices, in that we have a majority of independent directors on these
committees, unless a higher number is mandatory. Notwithstanding this difference, our
Supervisory Board has determined that all of the current members of our Audit Committee,
Remuneration Committee and Nominating and Governance Committee presently qualify as
independent in accordance with the rules and regulations of the SEC and the NYSE.
 81




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##### Table of Contents



Current and Former Directors and Executive Officers
  Name
    
    Age
    
    Position
    
    Term ExpiresSupervisory BoardMichael Hammes
    
    
    66
    
    
    Chairman of the Joint Board and the Supervisory Board
    
    
    2009Donald McGauchie AO
    
    
    58
    
    
    Deputy Chairman of the Joint Board and Deputy Chairman of the Supervisory Board
    
    
    2009Brian Anderson
    
    
    57
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2009David Andrews (1)
    
    
    66
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2008Donald DeFosset (2)
    
    
    59
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2008David Harrison (3)
    
    
    61
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2008James Loudon (4)
    
    
    65
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2008Rudy van der Meer
    
    
    63
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2009Catherine Walter AM (5)
    
    
    55
    
    
    Member of the Joint Board and the Supervisory Board
    
    
    2010Managing BoardLouis Gries
    
    
    54
    
    
    Chief Executive Officer, Member of the Joint Board and Chairman of the Managing BoardRussell Chenu (6)
    
    
    58
    
    
    Chief Financial Officer and Member of the Managing BoardRobert Cox (6) (7)
    
    
    54
    
    
    General Counsel, Member of the Managing Board and Company Secretary
 
 (1)
    
    Mr. Andrews was appointed as a non-executive director effective September 1, 2007. As
required by our Articles of Association, Mr. Andrews will stand for re-election at the AGM to
be held in Amsterdam in August 2008.(2)
    
    Mr. DeFosset will be resigning from the Joint and Supervisory Boards effective August 31,
2008.(3)
    
    Mr. Harrison was appointed as a non-executive director effective May 19, 2008. As required by
our Articles of Association, Mr. Harrison will stand for re-election at the AGM to be held in
Amsterdam in August 2008.(4)
    
    Mr. Loudon will resign from the Joint and Supervisory Boards immediately after the 2008 AGM.(5)
    
    Mrs. Walter was appointed as a non-executive director effective July 1, 2007 and was
re-elected by our shareholders at our Extraordinary General Meeting in August 2007.(6)
    
    Messrs. Chenu and Cox will stand for re-election at the AGM to be held in Amsterdam in August
2008.(7)
    
    Mr. Cox was appointed General Counsel on January 14, 2008. He became a member of the Managing
Board and Company Secretary effective May 7, 2008. 82




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##### Table of Contents



Other Senior Leadership Team Officers
    
    Age
    
    PositionPeter Baker
    
    
    57
    
    
    Executive Vice President  Asia PacificMark Fisher
    
    
    37
    
    
    Vice President  Research and DevelopmentGrant Gustafson
    
    
    45
    
    
    Vice President  Interiors and Business DevelopmentBrian Holte
    
    
    41
    
    
    Vice President  General Manager Western DivisionNigel Rigby
    
    
    41
    
    
    Vice President  General Manager Northern DivisionJoel Rood
    
    
    50
    
    
    Vice President  General Manager Southern DivisionFormer Directors and
Senior Leadership Team
OfficersSteve Ashe (1)
    
    
    48
    
    
    Former Vice President  Investor RelationsJohn Barr (2)
    
    
    61
    
    
    Former Member of the Joint Board and the Supervisory BoardBenjamin Butterfield (3)
    
    
    48
    
    
    Former General Counsel, Member of the Managing Board and
Company SecretaryJames Chilcoff (4)
    
    
    43
    
    
    Former Vice President  Marketing and International BusinessRobert Russell (5)
    
    
    42
    
    
    Former Vice President  Engineering and Process DevelopmentCathy Wallace (6)
    
    
    52
    
    
    Former Vice President  Global Human Resources
 
 (1)
    
    On May 23, 2008, Mr. Ashe separated from the Company.(2)
    
    On March 31, 2008, Mr. Barr resigned from our Joint and Supervisory Boards.(3)
    
    On October 1, 2007, Mr. Butterfield separated from the Company.(4)
    
    On February 25, 2008, Mr. Chilcoff separated from the Company.(5)
    
    On January 18, 2008, Mr. Russell separated from the Company.(6)
    
    On June 29, 2007, Ms. Wallace separated from the Company. Directors
 Michael Hammes
 Donald McGauchie
 Brian Anderson
 83




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##### Table of Contents



David Andrews
 Donald DeFosset
 David Harrison
 James Loudon
 Rudy van der Meer
 Catherine Walter
 Louis Gries
 84




---



##### Table of Contents



Russell Chenu
 Robert Cox
 Senior Leadership Team Officers
 Peter Baker
 Mark Fisher
 Grant Gustafson
 Brian Holte
 Nigel Rigby
 85




---



##### Table of Contents



Joel Rood
  Employees
  Fiscal Years Ended March 31,2008
    
    2007
    
    2006Fiber Cement United States and Canada
    
    
    1,809
    
    
    
    1,868
    
    
    
    2,150Fiber Cement Australia
    
    
    397
    
    
    
    419
    
    
    
    402Fiber Cement New Zealand
    
    
    188
    
    
    
    164
    
    
    
    170Fiber Cement Philippines
    
    
    167
    
    
    
    170
    
    
    
    202Pipes (United States and Australia)
    
    
    116
    
    
    
    131
    
    
    
    129Fiber Cement Europe
    
    
    46
    
    
    
    41
    
    
    
    58Roofing (United States)
    
    
    
    
    
    
    
    
    
    
    24Research & Development, including Technology
    
    
    111
    
    
    
    101
    
    
    
    118General Corporate
    
    
    48
    
    
    
    50
    
    
    
    50Total Employees
    
    
    2,882
    
    
    
    2,944
    
    
    
    3,303
 3
 
 3
    
    Under Australian law, we cannot keep records of union
members. The number quoted is the number of people who work in our factories
that have union participation and therefore may be represented by a union. 86




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##### Table of Contents



Compensation
 Remuneration
   Post-Primary
    
    Equity
    
    employmentDirectors
    
    JHI NV
    
    Superannua-
    
    Other BenefitsName
    
    Fees (1)
    
    Stock (2)
    
    tion (3)
    
    (4)
    
    TotalNon-Executive DirectorsM. Hammes (5)Fiscal year 2008
    
    $
    60,636
    
    
    $
    59,583
    
    
    $
    
    
    
    $
    3,192
    
    
    $
    123,411Fiscal year 2007
    
    
    16,247
    
    
    
    
    
    
    
    
    
    
    
    2,888
    
    
    
    19,135D. McGauchie (5)Fiscal year 2008
    
    
    136,000
    
    
    
    50,000
    
    
    
    
    
    
    
    3,192
    
    
    
    189,192Fiscal year 2007
    
    
    96,071
    
    
    
    
    
    
    
    9,402
    
    
    
    2,888
    
    
    
    108,361B. Anderson (5)Fiscal year 2008
    
    
    71,000
    
    
    
    50,000
    
    
    
    
    
    
    
    3,192
    
    
    
    124,192Fiscal year 2007
    
    
    33,685
    
    
    
    
    
    
    
    
    
    
    
    2,888
    
    
    
    36,573D. Andrews (6)Fiscal year 2008
    
    
    30,782
    
    
    
    29,167
    
    
    
    
    
    
    
    3,192
    
    
    
    63,141Fiscal year 2007
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AD. DeFossetFiscal year 2008
    
    
    175,863
    
    
    
    91,667
    
    
    
    
    
    
    
    27,394
    
    
    
    294,924Fiscal year 2007
    
    
    32,959
    
    
    
    
    
    
    
    
    
    
    
    2,888
    
    
    
    35,847J. Loudon (7)Fiscal year 2008
    
    
    101,000
    
    
    
    
    
    
    
    
    
    
    
    3,192
    
    
    
    104,192Fiscal year 2007
    
    
    87,584
    
    
    
    
    
    
    
    
    
    
    
    2,888
    
    
    
    90,472R. van der MeerFiscal year 2008
    
    
    51,000
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    101,000Fiscal year 2007
    
    
    17,247
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,247C. Walter (8)Fiscal year 2008
    
    
    37,500
    
    
    
    37,500
    
    
    
    
    
    
    
    3,192
    
    
    
    78,192Fiscal year 2007
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AFormer Non-Executive DirectorsJ. Barr (5)(9)Fiscal year 2008
    
    
    59,352
    
    
    
    50,000
    
    
    
    
    
    
    
    3,192
    
    
    
    112,544Fiscal year 2007
    
    
    92,929
    
    
    
    20,000
    
    
    
    
    
    
    
    2,888
    
    
    
    115,817Total Compensation for
Non-Executive DirectorsFiscal year 2008
    
    $
    723,133
    
    
    $
    417,917
    
    
    $
    
    
    
    $
    49,738
    
    
    $
    1,190,788Fiscal year 2007
    
    $
    376,722
    
    
    $
    20,000
    
    
    $
    9,402
    
    
    $
    17,328
    
    
    $
    423,452
 
 (1)
    
    Amount includes base, Chairman, Deputy Chairman and Committee Chairman and Special Matter
Committee attendance fees. 87




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##### Table of Contents



(2)
    
    The actual amount spent by each Supervisory Board member was determined after deducting
applicable Dutch taxes from this amount as Dutch tax law does not allow acquisition of shares
out of pre-tax income. The number of JHI NV shares acquired was determined by dividing the
amount of participation in the Supervisory Board Share Plan 2006 (which we refer to as SBSP)
by the market purchase price.(3)
    
    Mr. McGauchie ceased making voluntary superannuation contributions in the first quarter of
fiscal year 2008.(4)
    
    Other Benefits includes the cost of non-executive directors fiscal compliance in The
Netherlands. For Mr. DeFosset, fiscal year 2008 also includes for the period he was Chairman
of the Joint and Supervisory Boards, office costs, the personal use of a company laptop and
PDA phone. Prior year amounts have been restated to conform with the current year
presentation.(5)
    
    The Company pays for expenses related to Supervisory Board spousal travel to accompany them
to up to one Board meeting per year. In fiscal year 2008, the Company paid $15,984, $16,331,
$21,865 and $18,163 for spousal travel for Messrs. Hammes, McGauchie, Anderson and Barr,
respectively. In fiscal year 2007, the Company paid $9,493 related to spousal travel for Mr.
McGauchie.(6)
    
    Mr. Andrews was appointed to the Companys Joint and Supervisory Boards effective September
1, 2007.(7)
    
    Mr. Loudon did not participate in the SBSP in fiscal year 2008. However, on March 14, 2008,
he bought 6,300 JHI NV shares on market, which was equivalent to the value of JHI NV shares he
would have received if he had participated in the SBSP.(8)
    
    Mrs. Walter was appointed to the Joint and Supervisory Boards effective July 1, 2007 and was
re-elected for a three-year term on August 17, 2007.(9)
    
    Mr. Barr resigned from the Companys Joint and Supervisory Boards effective March 31, 2008. 88




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##### Table of Contents



Post-Primary
    
    employment
    
    Equity
    
    OtherRelocationAllowances,ExpatriateStock
    
    Benefits, andNoncash
    
    Superannuation
    
    Appreciation
    
    Other Non-Bonuses
    
    Benefits
    
    and 401(k)
    
    Rights and
    
    recurringName
    
    Base Pay
    
    (1)
    
    (2)
    
    Benefits
    
    Options (3)
    
    (4)
    
    Severance
    
    TotalCurrent Executive
DirectorsL. GriesFiscal year 2008
    
    $
    836,763
    
    
    $
    659,033
    
    
    $
    143,477
    
    
    $
    24,741
    
    
    $
    1,588,941
    
    
    $
    161,380
    
    
    $
    
    
    
    $
    3,414,335Fiscal year 2007
    
    
    786,612
    
    
    
    1,738,430
    
    
    
    72,317
    
    
    
    14,287
    
    
    
    755,110
    
    
    
    121,498
    
    
    
    
    
    
    
    3,488,254R. ChenuFiscal year 2008
    
    
    712,430
    
    
    
    238,851
    
    
    
    44,032
    
    
    
    63,238
    
    
    
    223,959
    
    
    
    133,451
    
    
    
    
    
    
    
    1,415,961Fiscal year 2007
    
    
    596,181
    
    
    
    200,161
    
    
    
    57,628
    
    
    
    57,776
    
    
    
    101,282
    
    
    
    79,849
    
    
    
    
    
    
    
    1,092,877Former Executive
DirectorB. Butterfield (5)Fiscal year 2008
    
    
    168,470
    
    
    
    
    
    
    
    61,702
    
    
    
    
    
    
    
    260,028
    
    
    
    61,430
    
    
    
    335,323
    
    
    
    886,953Fiscal year 2007
    
    
    322,497
    
    
    
    466,516
    
    
    
    61,598
    
    
    
    13,200
    
    
    
    206,351
    
    
    
    111,160
    
    
    
    
    
    
    
    1,181,322Total Compensation
for Executive
DirectorsFiscal year 2008
    
    $
    1,717,663
    
    
    $
    897,884
    
    
    $
    249,211
    
    
    $
    87,979
    
    
    $
    2,072,928
    
    
    $
    356,261
    
    
    $
    335,323
    
    
    $
    5,717,249Fiscal year 2007
    
    $
    1,705,290
    
    
    $
    2,405,107
    
    
    $
    191,543
    
    
    $
    85,263
    
    
    $
    1,062,743
    
    
    $
    312,507
    
    
    $
    
    
    
    $
    5,762,453Current Senior
ExecutivesP. Baker (6)Fiscal year 2008
    
    
    341,244
    
    
    
    57,958
    
    
    
    6,728
    
    
    
    30,712
    
    
    
    51,296
    
    
    
    
    
    
    
    
    
    
    
    487,938Fiscal year 2007
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AR. Cox (7)Fiscal year 2008
    
    
    86,538
    
    
    
    
    
    
    
    2,332
    
    
    
    2,077
    
    
    
    
    
    
    
    65,502
    
    
    
    
    
    
    
    156,449Fiscal year 2007
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AM. FisherFiscal year 2008
    
    
    326,510
    
    
    
    136,890
    
    
    
    25,505
    
    
    
    11,958
    
    
    
    299,823
    
    
    
    
    
    
    
    
    
    
    
    800,686Fiscal year 2007
    
    
    301,538
    
    
    
    346,849
    
    
    
    24,044
    
    
    
    13,408
    
    
    
    295,748
    
    
    
    
    
    
    
    
    
    
    
    981,587G. GustafsonFiscal year 2008
    
    
    313,077
    
    
    
    82,811
    
    
    
    29,446
    
    
    
    12,681
    
    
    
    164,951
    
    
    
    29,655
    
    
    
    
    
    
    
    632,621Fiscal year 2007
    
    
    254,808
    
    
    
    142,914
    
    
    
    18,896
    
    
    
    11,619
    
    
    
    55,046
    
    
    
    104,913
    
    
    
    
    
    
    
    588,196B. Holte (6)Fiscal year 2008
    
    
    315,000
    
    
    
    88,191
    
    
    
    36,387
    
    
    
    10,177
    
    
    
    192,783
    
    
    
    71,072
    
    
    
    
    
    
    
    713,610Fiscal year 2007
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AN. RigbyFiscal year 2008
    
    
    326,510
    
    
    
    136,890
    
    
    
    34,307
    
    
    
    
    
    
    
    299,823
    
    
    
    12,418
    
    
    
    
    
    
    
    809,948Fiscal year 2007
    
    
    301,538
    
    
    
    350,488
    
    
    
    22,673
    
    
    
    
    
    
    
    282,435
    
    
    
    
    
    
    
    
    
    
    
    957,134J. Rood (6)Fiscal year 2008
    
    
    315,000
    
    
    
    69,300
    
    
    
    37,827
    
    
    
    
    
    
    
    190,408
    
    
    
    3,879
    
    
    
    
    
    
    
    616,414Fiscal year 2007
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
 89




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Post-Primary
    
    employment
    
    Equity
    
    OtherRelocationAllowances,ExpatriateStock
    
    Benefits, andNoncash
    
    Superannuation
    
    Appreciation
    
    Other Non-Bonuses
    
    Benefits
    
    and 401(k)
    
    Rights and
    
    recurringName
    
    Base Pay
    
    (1)
    
    (2)
    
    Benefits
    
    Options (3)
    
    (4)
    
    Severance
    
    TotalFormer Senior
ExecutivesJ. Chilcoff (8)Fiscal year 2008
    
    
    299,646
    
    
    
    
    
    
    
    41,966
    
    
    
    9,611
    
    
    
    290,804
    
    
    
    42,586
    
    
    
    
    
    
    
    684,613Fiscal year 2007
    
    
    310,961
    
    
    
    373,192
    
    
    
    44,136
    
    
    
    12,842
    
    
    
    277,998
    
    
    
    
    
    
    
    
    
    
    
    1,019,129R. Russell (9)Fiscal year 2008
    
    
    258,929
    
    
    
    
    
    
    
    50,935
    
    
    
    13,298
    
    
    
    286,294
    
    
    
    75,778
    
    
    
    83,635
    
    
    
    768,869Fiscal year 2007
    
    
    301,538
    
    
    
    359,235
    
    
    
    48,159
    
    
    
    13,408
    
    
    
    295,748
    
    
    
    6,058
    
    
    
    
    
    
    
    1,024,146Total Compensation
for Senior
ExecutivesFiscal year 2008
    
    $
    2,582,454
    
    
    $
    572,040
    
    
    $
    265,433
    
    
    $
    90,514
    
    
    $
    1,776,182
    
    
    $
    300,890
    
    
    $
    83,635
    
    
    $
    5,671,148Fiscal year 2007
    
    $
    1,470,383
    
    
    $
    1,572,678
    
    
    $
    157,908
    
    
    $
    51,277
    
    
    $
    1,206,975
    
    
    $
    110,971
    
    
    $
    
    
    
    $
    4,570,192
 
 (1)
    
    Bonuses in respect of each fiscal year are paid in June of the following fiscal year. The
amount in fiscal year 2008 includes all incentive amounts earned in respect of fiscal year
2008, pursuant to the terms of the applicable plans and the cash component of the Deferred
Bonus Program.The amount in fiscal year 2007 includes all incentive amounts paid in respect to fiscal year
2007, including the portion of any incentive awarded for performance in fiscal year 2007, as
well as, any performance incentive amount realized as a result of fiscal years 2006 and 2005s
performance as a result of our achievement of predetermined financial targets pursuant to the
terms of our Economic Profit Incentive Plan.See Other Compensation: Economic Profit Incentive Plan for a summary of the terms of our
Economic Profit Incentive Plan and Deferred Bonus Program.(2)
    
    Includes the aggregate amount of all noncash benefits received by the executive in the year
indicated. Examples of noncash benefits that may be received by our executives include medical
and life insurance benefits, car allowances, membership in executive wellness programs, long
service leave, and tax services.(3)
    
    Options are valued using either the Black-Scholes option-pricing model or the Monte Carlo
option-pricing method, depending on the plan the options were issued under, and the fair value
of options granted are included in compensation during the period in which the options vest.
For the Black-Scholes model, the weighted average assumptions and weighted average fair value
used for grants in fiscal year 2008 were as follows: 5.0% dividend yield; 30.0% expected
volatility; 3.4% risk free interest rate; 4.4 years of expected life; and A$1.13 weighted
average fair value at grant date. For the Monte Carlo method, the weighted average assumptions
and weighted average fair value used for grants in fiscal year 2008 were as follows: 5.0%
dividend yield; 32.1% expected volatility; 4.2% risk free interest rate; and A$3.14 weighted
average fair value at grant date. The figures stated here for Mr. Gries include Stock
Appreciation Rights. In December 2007, the remaining Stock Appreciation Rights vested and were
exercised.(4)
    
    Other non-recurring includes cash paid in lieu of vacation accrued, as permitted under our
U.S. vacation policy and California law.(5)
    
    Mr. Butterfield separated from the Company effective October 1, 2007. Severance amount
includes lump sum cash payment of $335,323. In addition, as part of his severance benefits,
Mr. Butterfield entered into a 2 year consulting agreement, under which he will be paid a
consulting fee equivalent to his current annual salary, at the time of his separation, on a
monthly basis for up to a period of 24 months provided that the consulting agreement is not
terminated earlier in accordance with its terms.(6)
    
    Messrs. Baker, Holte and Rood were not executives for whom the Company reported compensation
for in fiscal year 2007. 90




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##### Table of Contents



(7)
    
    Mr. Cox joined the Company on January 14, 2008 and became a member of the Managing Board
effective May 7, 2008.(8)
    
    Mr. Chilcoff separated from the Company effective February 25, 2008. Mr. Chilcoff entered
into a 2 year consulting agreement, under which he will be paid a consulting fee equivalent to
his current annual salary, at the time of his separation, on a monthly basis for up to a
period of 24 months provided that the consulting agreement is not terminated earlier in
accordance with its terms. Mr. Chilcoff received cash of $36,304 as payment for his accrued
vacation time and this is recorded as Other Non-Recurring in this table.(9)
    
    Mr. Russell separated from the Company effective January 18, 2008. Severance amount includes
post-employment consulting fees and health insurance benefits paid in fiscal year 2008. As
part of his separation benefits, Mr. Russell entered into a 2 year consulting agreement, under
which he will be paid a consulting fee equivalent to his current annual salary, at the time of
his separation, on a monthly basis for up to a period of 24 months provided that the
consulting agreement is not terminated earlier in accordance with its terms. Mr. Russell will
also receive health insurance benefits up to 18 months following his separation date. The
exercise period for his vested options was extended until the end of his post-employment
consulting agreement with the Company. Mr. Russell received cash of $67,726 as payment for his
accrued vacation time and this is recorded as Other Non-Recurring in this table.  91




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##### Table of Contents



Employment Contracts
  Chief Executive Officer
  Components
    
    DetailsLength of contract
    
    Three year term, commencing February 10, 2005. Term is
automatically extended on 9th day of each February for an
additional one year unless either party notifies the other, 90
days in advance of the automatic renewal date, that it does not
want the term to renew.Base salary (1)
    
    $850,000 for current year. Salary reviewed annually in May by
the Supervisory Board.Short-term incentive
    
    Annual short-term incentive target is 100% of annual base salary: 80% of this incentive target is based on the Company meeting
or exceeding pre-determined performance objectives; and 20% of this incentive target is based on the Chief Executive
Officer meeting or exceeding personal performance objectives.The Remuneration Committee recommends the Companys and Chief
Executive Officers performance objectives, and the performance
against these objectives, to the Supervisory Board for approval.
The Chief Executive Officers short-term incentive was
calculated under the Economic Profit and Individual Performance
Incentive Plan in fiscal year 2008, and will be calculated under
the Executive Incentive Program and Individual Performance Plan
in fiscal year 2009.Long-term incentive
    
    Upon the approval of the shareholders, stock options or other
equity incentive will be granted each year. The recommended
number of options or other form of equity to be granted will be
appropriate for this level of executive in the United States.Defined Contribution Plan
    
    The Chief Executive Officer may participate in the U.S. 401(k)
defined contribution plan up to the annual IRS limit. The
Company will match the Chief Executive Officers contributions
into the plan up to the annual IRS limit.Resignation
    
    The Chief Executive Officer may cease employment with the
Company by providing written notice.Termination by James Hardie
    
    The Company may terminate the Chief Executive Officers
employment for cause or not for cause. If the Company terminates
the employment, not for cause, or the Chief Executive Officer
terminates his employment for good reason the Company will pay
the following:a.    amount equivalent to 1.5 times the annual base salary at the
time of termination; andb.    amount equivalent to 1.5 times the executives average
short-term incentive actually paid in up to the previous three
fiscal years as Chief Executive Officer; andc.    continuation of health and medical benefits at the Companys
expense for the remaining term of the agreement and consulting
agreement referenced below.
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##### Table of Contents



Components
    
    DetailsPost-termination Consulting
    
    The Company will request the Chief Executive
Officer, and the Chief Executive Officer will
agree, to consult to the Company upon
termination for a minimum of two years, as
long as the Chief Executive Officer maintains
the Companys non-compete and confidentiality
agreements and executes a release of claims
following the effective date of termination.
Under the consulting agreement, the Chief
Executive Officer will receive the annual base
salary and annual target incentive in exchange
for this consulting and non-compete. Under the
terms of equity incentive grants made to the
Chief Executive Officer under the Managing
Board Transitional Stock Option Plan and
Long-Term Incentive Plan, the Chief Executive
Officers outstanding options will not expire
during any post-termination consulting period.
 
 (1)
    
    See actual salary paid for fiscal year 2008 in this section under Compensation. Chief Financial Officer
  Components
    
    DetailsLength of contract
    
    Fixed period of three years concluding October 5, 2010.Base salary (1)
    
    A$816,000 for current year. Salary reviewed annually
in May by the Supervisory Board.Short-term incentive
    
    Annual short-term incentive target is 33% of annual
base salary based on the Chief Financial Officer
meeting or exceeding personal performance objectives.
The Chief Financial Officer does not participate in
the Executive Incentive Program, but will in fiscal
year 2009 to the extent that some of the Chief
Financial Officers long-term incentive target has
been transferred to short-term incentive target under
the Executive Incentive Program.Long-term incentive
    
    Upon the approval of the shareholders, stock options
or other long-term equity with performance hurdles
will be granted each year. The recommended value of
equity to be granted will be equivalent to at least
$350,000. If the Chief Financial Officer ceases
employment with the Company then a pro-rata amount of
each tranche of the Chief Financial Officers unvested
options will expire on the date employment ceases,
calculated based on the formula D=Cx(A/B), where A is
the number of months from the date employment ceases
to the first testing date, B is the number of months
from the date of grant until the first testing date
and C is the total number of options granted in the
relevant tranche. The remaining unvested/unexercised
options will continue as if the Chief Financial
Officer remained employed by the Company until the
first testing date, at which point any options that do
not vest at that time will also lapse.Superannuation
    
    The Company will contribute 9% of gross salary to the
Chief Financial Officers nominated superannuation
fund.Resignation or Termination
    
    The Company or Chief Financial Officer may cease the
Chief Financial Officers employment with the Company
by providing three months notice in writing.
 93




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##### Table of Contents



Components
    
    DetailsRedundancy or diminution
of role
    
    If the position of Chief Financial Officer is
determined to be redundant or subject to a material
diminution in status, duties or responsibility, the
Company or the Chief Financial Officer may terminate
the Chief Financial Officers employment. The Company
will pay the Chief Financial Officer a severance
payment equal to the greater of 12 months pay or the
remaining proportion of the term of the contract.
 
 (1)
    
    See actual salary paid for fiscal year 2008 in this section under Compensation. Benefits Contained in Contracts for Chief Executive Officer and Chief Financial Officer
  Components
    
    DetailsInternational Assignment
    
    The Managing Board directors receive additional
benefits due to international assignment: housing
allowance, expatriate Goods and Services
allowance, moving and storage.Other
    
    Tax Equalization:The Company covers the extra
personal tax burden for Managing Board directors
based in The Netherlands.Tax Advice:The Company will pay the costs of
filing income tax returns to the required
countries.Health, Welfare and Vacation Benefits:Eligible
to receive all health, welfare and vacation
benefits offered to all U.S. employees or similar
benefits. They are also eligible to participate
in the Companys Executive Health and Wellness
program.Business Expenses:Entitled to receive
reimbursement for all reasonable and necessary
travel and other business expenses they incur or
pay for in connection with the performance of
their services under their employment agreements.Automobile: The Company will either purchase or
lease an automobile for business and personal use
or, in the alternative, they will be entitled to
an automobile equivalent to the level of vehicle
they could receive in the United States.
 94




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##### Table of Contents



Senior Executives Employment Contracts
  Components
    
    DetailsLength of contract
    
    Indefinite.Base salary
    
    Base salary is subject to
Remuneration Committee approval
and reviewed annually in May for
increase effective July 1.Short-term incentive
    
    An annual short-term incentive
target is set at a percentage of
the senior executives salary.
The short-term target is between
65% and 25% depending on the
individual; for U.S. senior
executives, 80% of this
short-term incentive target is
based on the Company meeting or
exceeding corporate performance
objectives and 20% of this
short-term incentive target is
based on the U.S. senior
executive meeting or exceeding
personal performance objectives.
For Australian senior
executives, this split is 70% -
30%.Long-term incentive
    
    Upon the approval of the Supervisory
Board, stock options have been
granted each year under the JHI
NV 2001 Equity Incentive Plan.
It is anticipated that in the
future senior executives will
receive equity grants under the
new plans proposed for fiscal
year 2009.Defined Contribution Plan/Superannuation
    
    U.S. senior executives may
participate in the U.S. 401(k)
defined contribution plan up to
the annual IRS limit. The
Company will match the senior
executives contributions into
the plan up to the annual IRS
limit. For Australian senior
executives, the Company will
contribute 9% of gross salary to
the senior executives nominated
superannuation fund.Resignation
    
    U.S. senior executives may cease
employment with the Company by
providing 30 days written
notice. For Australian senior
executives, this period is three
months.Termination by James Hardie
    
    The Company may terminate the
senior executives employment
for cause or not for cause.Post-termination Consulting
    
    Depending on the U.S. senior
executives individual contract,
and the reasons for termination,
the Company may request the
senior executive, and the senior
executive will agree, to consult
to the Company for two years
upon termination, as long as
they sign and comply with 1) a
consulting agreement, which will
require them to maintain
non-compete and confidentiality
obligations to the Company, and
2) a release of claims in a form
acceptable to the Company. In
exchange for the consulting
agreement, the Company shall pay
the senior executives annual
base salary as of the
termination date for each year
of consulting.Other
    
    Health, Welfare and Vacation
Benefits:U.S. senior executives
are eligible to receive all
health, welfare and vacation
benefits offered to all other
U.S. employees. The U.S. senior
executives are also eligible to
participate in the Companys
Executive Health and Wellness
program.Business Expenses:The senior
executives are entitled to
receive reimbursement for all
reasonable and necessary travel
and other business expenses
incurred or paid in connection
with the performance of services
under their employment.Automobile:For U.S. senior
executives, the Company will
either lease an automobile for
business and personal use by the
senior executive, or, in the
alternative, the senior
executive will be entitled to an
automobile lease allowance not
to exceed $750 per month.
 95




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##### Table of Contents



Components
    
    DetailsInternational Assignment
    
    Senior executives who are on
assignment in countries other
than their own receive
additional benefits which may
include tax equalization payment
and tax advice, a car in the
country they are assigned to,
and financial assistance with
housing, moving and storage.
  Share Ownership
  Number ofSharesBeneficially
    
    Percent of ClassName
    
    Owned (1)
    
    (2)Current Directors and Executive OfficersMichael Hammes (3)
    
    
    15,859
    
    
    
    *Donald McGauchie (4)
    
    
    15,372
    
    
    
    *Brian Anderson
    
    
    6,124
    
    
    
    *David Andrews (5)
    
    
    3,903
    
    
    
    *Donald DeFosset
    
    
    25,877
    
    
    
    *David Harrison
    
    
    5,000
    
    
    
    *James Loudon (6)
    
    
    12,655
    
    
    
    *Rudy van der Meer
    
    
    4,410
    
    
    
    *Catherine Walter (7)
    
    
    11,407
    
    
    
    *Louis Gries
    
    
    1,317,219
    
    
    
    *Russell Chenu
    
    
    113,000
    
    
    
    *Robert Cox
    
    
    
    
    
    
    Peter Baker
    
    
    26,875
    
    
    
    *Mark Fisher
    
    
    681,021
    
    
    
    *Grant Gustafson
    
    
    39,625
    
    
    
    *Brian Holte
    
    
    37,850
    
    
    
    *Nigel Rigby
    
    
    394,628
    
    
    
    *Joel Rood
    
    
    36,625
    
    
    
    *Former Directors and Executive OfficersJohn Barr (8)
    
    
    32,144
    
    
    
    *Benjamin Butterfield
    
    
    
    
    
    
    James Chilcoff
    
    
    
    
    
    
    Robert Russell
    
    
    335,625
    
    
    
    *
 
 *
    
    Indicates that the individual beneficially owns less than 1% of our shares of common stock.(1)
    
    Since the Supervisory Board Share Plan, was approved at our 2002 AGM, four general allotments
have been made to non-executive directors. The number of beneficial shares includes the
following Supervisory Board Share Plan allotments: Shares Allotted under Supervisory Board Share PlanNovember 22,
    
    December 3,
    
    August 22,
    
    August 27,Name
    
    2005 (a)
    
    2004 (b)
    
    2003 (c)
    
    2002 (d)James Loudon
    
    
    758
    
    
    
    2,117
    
    
    
    1,839
    
    
    
    1,641Donald McGauchie
    
    
    758
    
    
    
    1,068
    
    
    
    1,743
    
    
    
    Former DirectorJohn Barr
    
    
    758
    
    
    
    1,068
    
    
    
    
    
    
    
    
 96




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##### Table of Contents



(a)
    
    Each participants November 22, 2005 mandatory participation of 758 shares was
subject to a two-year escrow period ending November 22, 2007.(b)
    
    Each participants December 3, 2004 mandatory participation of 1,068 shares was
subject to a two-year escrow period until they were released on December 4, 2006.(c)
    
    Each participants August 22, 2003 mandatory participation of 1,260 shares was
subject to a two-year escrow period until they were released on August 22, 2005.(d)
    
    Each participants August 27, 2002 mandatory participation of 1,641 shares was
subject to a two-year escrow period until they were released on August 27, 2004.   Number of SharesFiscal years endedName
    
    2008
    
    2007Michael Hammes
    
    
    6,859
    
    
    
    Donald McGauchie
    
    
    5,803
    
    
    
    Brian Anderson
    
    
    6,124
    
    
    
    David Andrews
    
    
    3,903
    
    
    
    N/ADonald DeFosset
    
    
    10,377
    
    
    
    David Harrison
    
    
    N/A
    
    
    
    N/AJames Loudon (6)
    
    
    
    
    
    
    Rudy van der Meer
    
    
    4,410
    
    
    
    Catherine Walter
    
    
    5,032
    
    
    
    N/AFormer DirectorsJohn Barr
    
    
    7,667
    
    
    
    1,651
 
 (2)
    
    Based on 432,948,363 shares of common stock outstanding at May 31, 2008 (all of which are
subject to CUFS).(3)
    
    As of May 31, 2008, 10,859 shares were held in the name of Mr. and Mrs. Hammes.(4)
    
    As of May 31, 2008, 6,000 shares were held for the McGauchie Superannuation Fund for which
Mr. McGauchie is a trustee.(5)
    
    As of May 31, 2008, all shares were held in a trust, of which Mr. Andrews and his wife are
trustees.(6)
    
    Mr. Loudon did not participate in the SBSP in fiscal year 2008. However, on March 14, 2008,
he bought 6,300 JHI NV shares on market, which was equivalent to the value of JHI NV shares he
would have received is he had participated in the SBSP. As of May 31, 2008, 6,300 shares are
held by HSBC Nominees on behalf of Mr. Loudon.(7)
    
    As of May 31, 2008, 6,375 shares were held in the Walter Super Fund.(8)
    
    As of March 31, 2008, the date of Mr. Barrs resignation, 21,000 shares were held in a trust,
of which Mr. Barr and his wife are trustees.  97




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##### Table of Contents



Option Ownership
  Number of Shares UnderlyingName
    
    Options Owned
    
    Exercise Price
    
    Expiration DateCurrent Executive OfficersLouis Gries
    
    
    40,174
    (1, 2)
    
    A$3.1321/share (3, 4, 5)
    
    November 2009175,023
    (1, 6)
    
    A$3.0921/share (3, 4, 5)
    
    November 2010324,347
    (7)
    
    A$5.0586/share (4, 5)
    
    December 2011325,000
    (8)
    
    A$6.4490/share (5)
    
    December 2012325,000
    (9)
    
    A$7.05/share
    
    December 20131,000,000
    (10)
    
    A$8.53/share
    
    November 2015381,000
    (15)
    
    A$8.40/share
    
    November 2016415,000
    (15)
    
    A$8.40/share
    
    November 2016437,000
    (15)
    
    A$7.83/share
    
    August 2017445,000
    (15)
    
    A$7.83/share
    
    August 2017Russell Chenu
    
    
    93,000
    (11)
    
    A$6.30/share
    
    February 201590,000
    (10)
    
    A$8.53/share
    
    November 201560,000
    (15)
    
    A$8.40/share
    
    November 201665,000
    (15)
    
    A$8.40/share
    
    November 201666,000
    (15)
    
    A$7.83/share
    
    August 201768,000
    (15)
    
    A$7.83/share
    
    August 2017Robert Cox
    
    
    Peter Baker
    
    
    40,000
    (12)
    
    A$8.90/share
    
    December 201527,500
    (14)
    
    A$8.40/share
    
    November 201647,619
    (18)
    
    A$6.38/share
    
    December 2017Mark Fisher
    
    
    92,113
    (1, 6)
    
    A$3.0921/share (3, 4, 5)
    
    November 201068,283
    (7)
    
    A$5.0586/share (4, 5)
    
    December 201174,000
    (8)
    
    A$6.4490/share (5)
    
    December 2012132,000
    (9)
    
    A$7.05/share
    
    December 2013180,000
    (13)
    
    A$5.99/share
    
    December 2014190,000
    (12)
    
    A$8.90/share
    
    December 2015158,500
    (14)
    
    A$8.40/share
    
    November 2016277,778
    (18)
    
    A$6.38/share
    
    December 2017Grant Gustafson
    
    
    158,500
    (14)
    
    A$8.40/share
    
    November 2016222,222
    (18)
    
    A$6.38/share
    
    December 2017Brian Holte
    
    
    151,400
    (17)
    
    A$8.35/share
    
    March 2017250,000
    (18)
    
    A$6.38/share
    
    December 2017Nigel Rigby
    
    
    20,003
    (7)
    
    A$5.0586/share (4, 5)
    
    December 201127,000
    (8)
    
    A$6.4490/share (5)
    
    December 201233,000
    (9)
    
    A$7.05/share
    
    December 2013180,000
    (13)
    
    A$5.99/share
    
    December 2014190,000
    (12)
    
    A$8.90/share
    
    December 2015158,500
    (14)
    
    A$8.40/share
    
    November 2016277,778
    (18)
    
    A$6.38/share
    
    December 2017
 98




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##### Table of Contents



Number of SharesUnderlying OptionsName
    
    Owned

    
    Exercise Price
    
    Expiration DateJoel Rood
    
    
    146,500
    (16)
    
    A$8.90/share
    
    March 2017250,000
    (18)
    
    A$6.38/share
    
    December 2017Former Executive OfficersBenjamin Butterfield
    
    
    230,000
    (10)
    
    A$8.53/share
    
    December 2009101,000
    (15)
    
    A$8.40/share
    
    December 2009110,000
    (15)
    
    A$8.40/share
    
    December 2009James Chilcoff
    
    
    Robert Russell
    
    
    66,000
    (9)
    
    A$7.05/share
    
    January 2010135,000
    (13)
    
    A$5.99/share
    
    January 201095,000
    (12)
    
    A$8.90/share
    
    January 201039,625
    (14)
    
    A$8.40/share
    
    January 2010
 
 (1)
    
    This nonqualified stock option to purchase shares of our common stock was granted on October
19, 2001 under our 2001 Equity Incentive Plan in exchange for the termination of an award of
shadow stock covering an equal number of shares of JHIL common stock. See Equity Plans  2001
Equity Incentive Plan under Item 6.(2)
    
    All options vested and became exercisable in November 2004.(3)
    
    The exercise price reflects an A$0.0965 per share price reduction due to a capital return
paid to shareholders in December 2001.(4)
    
    The exercise price reflects an A$0.3804 per share price reduction due to a capital return
paid to shareholders in November 2002.(5)
    
    The exercise price reflects an A$0.2110 per share price reduction due to a capital return
paid to shareholders in November 2003.(6)
    
    All options vested and became exercisable in November 2005.(7)
    
    Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in
December 2004.(8)
    
    Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in
December 2005.(9)
    
    Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in
December 2006.(10)
    
    Granted under the Managing Board Transitional Stock Option Plan. Options vest and become
exercisable on the first business day on or after November 22, 2008 if the following
conditions are met: 50% vest if our total shareholder return, or TSR, is equal to or above the
Median TSR and an additional 2% of the options shall vest for each 1% increment that the
Companys TSR is above the Median TSR. If any options remain unvested on the last business day
of each six month period between November 22, 2008 and November 22, 2010, we will reapply the
vesting criteria to those options on that business day.(11)
    
    Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in
February 2008.(12)
    
    Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three
installments: 25% on December 1, 2006; 25% on December 1, 2007; and 50% on December 1, 2008.(13)
    
    Granted under the 2001 Equity Incentive Plan. All options vested and became exercisable in
December 2007.(14)
    
    Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three
installments: 25% on November 21, 2007; 25% on November 21, 2008; and 50% on November 21,
2009.(15)
    
    Granted under the Long Term Incentive Plan. Option vesting is subject to performance
hurdles as outlined in the plan rules.(16)
    
    Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three
installments: 25% on March 13, 2008; 25% on March 13, 2009; and 50% on March 13, 2010.(17)
    
    Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three
installments: 25% on March 27, 2008; 25% on March 27, 2009; and 50% on March 27, 2010.(18)
    
    Granted under the 2001 Equity Incentive Plan. Options vest and become exercisable in three
installments: 25% on December 10, 2008; 25% on December 10, 2009; and 50% on December 10,
2010. 99




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##### Table of Contents



Stock-Based Compensation
  Executive Share Purchase Plan
  2001 Equity Incentive Plan
    Options Outstanding as of MayShare Grant Date
    
    Number of Options Granted
    
    31, 2008October 2001 (1)
    
    
    5,468,829
    
    
    
    510,342December 2001
    
    
    4,248,417
    
    
    
    660,582December 2002
    
    
    4,037,000
    
    
    
    886,000December 2003
    
    
    6,179,583
    
    
    
    2,135,750December 2004
    
    
    5,391,100
    
    
    
    2,488,125February 2005
    
    
    273,000
    
    
    
    93,000December 2005
    
    
    5,224,100
    
    
    
    3,206,300March 2006
    
    
    40,200
    
    
    
    40,200November 2006
    
    
    3,499,490
    
    
    
    2,151,510March 2007
    
    
    330,900
    
    
    
    318,975December 2007
    
    
    5,031,310
    
    
    
    4,094,440Total outstanding
    
    
    
    
    
    
    16,585,224
 
 (1)
    
    Awarded to our employees on October 19, 2001 in exchange for the cancellation of JHIL shadow
stock awards under the JHIL Key Management Equity Incentive Plan.  100




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##### Table of Contents



Stock Options.
 Performance Awards.
 Restricted Stock Awards.
 Stock Appreciation Rights.
 Dividend Equivalent Rights.
 Other Stock-Based Benefits.
 Effect of Change in Control.
 101




---



##### Table of Contents



Stock Appreciation Rights Plans
  Effect of Liquidation, Merger or Sale
 Supervisory Board Share Plan
  Supervisory Board Share Plan 2006
 ,
     102




---



##### Table of Contents



Managing Board Transitional Stock Option Plan
   Effect of Change in Control.
 Long-Term Incentive Plan
  Effect of Change in Control, Takeover by Certain Organizations or Liquidation.
 103




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##### Table of Contents



Other Compensation
 Economic Profit Incentive Plan
    
    
    one-third of the excess is considered earned and paid in that year; and
    
    the remaining two-thirds is credited to the employees bonus bank (which we refer to as
Bonus Bank) and subject to being paid out equally in the following two years, provided
that the performance target was met and the employee continues to
meet the eligibility standards for additional payments.
    Deferred Bonus Program
   104




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##### Table of Contents



Executive Incentive Program and Individual Performance Plan
  
    
    an IP Plan, and
    
    an EIP
    401(k) Plan
  James Hardie Australia Superannuation Plan
  Director Retirement Benefits
  105




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##### Table of Contents



Item 7. Major Shareholders and Related Party Transactions
 Major Shareholders
   Shares
    
    Percentage ofBeneficially
    
    SharesShareholder
    
    Owned
    
    OutstandingLazard Asset Management Pacific Co.
    
    
    65,424,399
    
    
    
    15.11
    %The Capital Group Companies, Inc.
    
    
    32,960,346
    
    
    
    7.61
    %Schroder Investment Management Australia Limited
    
    
    31,024,755
    
    
    
    7.17
    %Suncorp-Metway Limited and its subsidiaries
    
    
    29,696,066
    
    
    
    6.86
    %Concord Capital
    
    
    28,585,361
    
    
    
    6.60
    %National Australia Bank Limited Group
    
    
    28,198,184
    
    
    
    6.51
    %Baillie Gifford & Co and its affiliated companies
    
    
    24,577,253
    
    
    
    5.68
    %Orion Asset Management Limited
    
    
    22,659,318
    
    
    
    5.23
    %Vanguard Investments Australia Ltd.
    
    
    22,097,739
    
    
    
    5.10
    %
       106




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##### Table of Contents



Other Security Ownership Information
  Related Party Transactions
 Existing Loans to our Directors and Directors of our Subsidiaries
   Payments Made to Directors and Director Related Entities of JHI NV during the Year
  107




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##### Table of Contents



Payments Made to Directors and Director Related Entities of Subsidiaries of JHI NV during the Year
    
 Item 8. Financial Information
   
 Item 9. Listing Details
 Price History
  Period
    
    High
    
    Low(A$)
    
    (US$)
    
    (A$)
    
    (US$)Fiscal year ended:March 31, 2008
    
    
    9.65
    
    
    
    8.39
    
    
    
    5.34
    
    
    
    4.64March 31, 2007
    
    
    10.24
    
    
    
    7.84
    
    
    
    6.31
    
    
    
    4.83March 31, 2006
    
    
    9.81
    
    
    
    7.38
    
    
    
    5.49
    
    
    
    4.13March 31, 2005
    
    
    7.23
    
    
    
    5.35
    
    
    
    4.95
    
    
    
    3.66March 31, 2004
    
    
    8.04
    
    
    
    5.58
    
    
    
    5.84
    
    
    
    4.05Fiscal quarter ended:June 30, 2008
    
    
    7.04
    
    
    
    6.64
    
    
    
    4.13
    
    
    
    3.90March 31, 2008
    
    
    7.07
    
    
    
    6.42
    
    
    
    5.34
    
    
    
    4.85December 31, 2007
    
    
    7.57
    
    
    
    6.77
    
    
    
    6.02
    
    
    
    5.38September 30, 2007
    
    
    9.17
    
    
    
    7.78
    
    
    
    7.00
    
    
    
    5.94June 30, 2007
    
    
    9.65
    
    
    
    8.03
    
    
    
    8.13
    
    
    
    6.76March 31, 2007
    
    
    10.24
    
    
    
    8.06
    
    
    
    8.05
    
    
    
    6.34December 31, 2006
    
    
    9.70
    
    
    
    7.47
    
    
    
    7.23
    
    
    
    5.57September 30, 2006
    
    
    7.85
    
    
    
    5.95
    
    
    
    6.31
    
    
    
    4.78June 30, 2006
    
    
    9.95
    
    
    
    7.43
    
    
    
    7.12
    
    
    
    5.32Month ended:June 30, 2008
    
    
    5.57
    
    
    
    5.30
    
    
    
    4.13
    
    
    
    3.93May 31, 2008
    
    
    6.09
    
    
    
    5.78
    
    
    
    5.36
    
    
    
    5.09April 30, 2008
    
    
    7.04
    
    
    
    6.55
    
    
    
    5.86
    
    
    
    5.45March 31, 2008
    
    
    6.40
    
    
    
    5.93
    
    
    
    5.51
    
    
    
    5.11February 28, 2008
    
    
    7.07
    
    
    
    6.47
    
    
    
    5.66
    
    
    
    5.18January 31, 2008
    
    
    6.58
    
    
    
    5.81
    
    
    
    5.34
    
    
    
    4.72
  108




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##### Table of Contents



Period
    
    High
    
    Low(US$)
    
    (US$)Fiscal year ended:March 31, 2008
    
    
    40.50
    
    
    
    23.00March 31, 2007
    
    
    41.70
    
    
    
    24.20March 31, 2006
    
    
    36.36
    
    
    
    21.54March 31, 2005
    
    
    27.21
    
    
    
    18.10March 31, 2004
    
    
    28.50
    
    
    
    18.25Fiscal quarter ended:June 30, 2008
    
    
    31.55
    
    
    
    20.15March 31, 2008
    
    
    30.57
    
    
    
    23.00December 31, 2007
    
    
    34.34
    
    
    
    25.18September 30, 2007
    
    
    39.60
    
    
    
    27.80June 30, 2007
    
    
    40.50
    
    
    
    33.30March 31, 2007
    
    
    41.70
    
    
    
    32.70December 31, 2006
    
    
    37.88
    
    
    
    26.98September 30, 2006
    
    
    28.85
    
    
    
    24.20June 30, 2006
    
    
    36.80
    
    
    
    25.90Month ended:June 30, 2008
    
    
    26.49
    
    
    
    20.15May 31, 2008
    
    
    29.18
    
    
    
    25.90April 30, 2008
    
    
    31.55
    
    
    
    27.50March 31, 2008
    
    
    29.31
    
    
    
    25.00February 28, 2008
    
    
    30.57
    
    
    
    26.56January 31, 2008
    
    
    28.73
    
    
    
    23.00
 Trading Markets
  Common Stock (in the form of CUFS)
    
    Australian Securities ExchangeADRs
    
    New York Stock Exchange
  Trading on the Australian Securities Exchange
  Trading on the New York Stock Exchange
 www.adrbny.com
 109




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##### Table of Contents



Item 10. Additional Information
 General
 besloten
vennootschap met beperkte aansprakelijkheid naamloze vennootschap
 th
 Key Provisions of our Articles of Association
 Purpose of the Company
  
    
    to participate in, to take an interest in any other way in and to conduct the
management of business enterprises of whatever nature;
    
    to raise funds through the issuance of debt or equity or in any other way and to
finance third parties;
    
    to provide guarantees, including guarantees for the debts of third parties; and
    
    to perform all activities which are incidental to or which may be conducive to, or
connected with, any of the foregoing.
 Provisions of our Articles of Association or Charter Related to Directors
 Power to vote when director is materially interested.
   Power to vote compensation.
  110




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##### Table of Contents



Borrowing Powers.
 Age Limit Requirement for Retirement or Non-Retirement.
 Number of shares for directors qualification.
 Issuance of Shares; Preemptive Rights
     Repurchase of Shares
   111




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##### Table of Contents



Reduction of Share Capital
 pro rata pro rata
 Shareholders Meetings and Voting Rights
     112




---



##### Table of Contents



Annual Report
  Indemnification
  Dividends
      113




---



##### Table of Contents



Amendment of Articles of Association
  Liquidation Rights
 pro rata
 Limitations on Right to Hold Common Stock
  
    
    acquisitions that result from acceptances under a takeover bid, which complies with
the Articles of Association, including the principles set forth above;
    
    acquisitions which result in a persons voting power increasing by not more than 3%
in a six-month period;
    
    acquisitions which are consistent with the principles set forth above, conform to
the other takeover principles set out in the Articles of Association (adjusting those
principles as appropriate to meet the particular circumstances of the acquisitions) and
have received the prior approval of the Supervisory Board; and
    
    acquisitions approved at a general meeting of shareholders, subject to certain
requirements being satisfied in relation to voting and the provision of information.
  114




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##### Table of Contents



Disclosure of Holdings
  www.sec.gov
 Material Contracts
  115




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##### Table of Contents



U.S. Dollar Cash Advance Facilities.
  Gypsum Indemnity. .
  ABN 60 Indemnities
 Exchange Controls
   Taxation
  116




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##### Table of Contents



PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISERS REGARDING THE PARTICULAR TAX CONSEQUENCES
OF THEIR ACQUIRING, OWNING AND DISPOSING OF SHARES OF OUR COMMON STOCK, INCLUDING THE EFFECT OF ANY
FOREIGN, STATE OR LOCAL TAXES.
 United States Taxation
   Treatment of ADRs.
 Taxation of Distributions.
 117




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##### Table of Contents



Credit of Foreign T es Withheld.
  118




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##### Table of Contents



Sale or Other Disposition of Shares.
 Capital Gain Rates.
 Passive Foreign Investment Company Status.
  Controlled Foreign Corporation Status.
   U.S. Federal Income Tax Provisions Applicable to Non-United States Holders.
 119




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##### Table of Contents



U.S. Information Reporting and Backup Withholding.
  Netherlands Taxation
  Treatment of ADRs
 Dutch Dividend Withholding Tax.
 (1)
    
    direct or indirect distributions in cash or in kind, deemed or constructive
distributions, and repayments of additional paid-in capital not recognized as such for
Netherlands dividend withholding tax purposes;(2)
    
    liquidation proceeds, proceeds of redemption of shares of common stock or,
generally, except if a certain specific exemption applies, consideration paid by us for
the repurchase of shares of common stock in excess of the average paid-in capital
recognized for Netherlands dividend withholding tax purposes;(3)
    
    the par value of shares of common stock issued to a holder of shares of common
stock or an increase of the par value of shares of common stock, as the case may be, to
the extent that no contribution to capital, recognized for Netherlands dividend
withholding tax purposes, was made or will be made; and
 
 120




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##### Table of Contents



(4)
    
    the partial repayment of paid-in capital, recognized for Netherlands dividend
withholding tax purposes, if and to the extent that there are net profits, or zuivere
winst, for dividend withholding tax purposes, unless the general meeting of our
shareholders has previously resolved to make such repayment and provided that the par
value of the shares of common stock concerned has been reduced by a corresponding
amount by changing our Articles of Association. As a result of contributions in kind
(i.e., in shares) to our paid-in capital made prior to the listing of our common
shares, a portion of such paid-in capital may not be recognized for Dutch dividend
withholding tax purposes.
     Taxes on Income and Capital Gains
 (1)
    
    such shareholder is neither resident nor deemed to be resident in The
Netherlands, nor has elected to be subject to the rules of the Dutch Income Tax Act
2001 that apply to residents of The Netherlands;(2)
    
    such shareholder does not have a business or an interest in a business that is,
in whole or in part, carried on through a permanent establishment or a permanent
representative in The Netherlands and to which business or part of a business, as the
case may be, the shares of common stock are attributable;(3)
    
    such shareholder does not perform independent personal services in The
Netherlands giving rise to a fixed base in The Netherlands to which the shares of
common stock are attributable; and(4)
    
    the shares of common stock owned by such shareholder do not form part of a
substantial interest or a deemed substantial interest, as defined below, in the share
capital of the Company or, if such shares of common stock do form part of such an interest, they form part of the
assets of a business other than a Netherlands business.
 
 121




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##### Table of Contents



Other Taxes and Duties.
 Documents Available for Review
 www.sec.gov, th
 
    
    furnish our shareholders with annual reports containing consolidated financial
statements examined by an independent registered public accounting firm; and
    
    furnish quarterly reports for the first three quarters of each fiscal year
containing unaudited consolidated financial information in filings with the SEC under
Form 6-K.
 
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
  122




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Foreign Currency Exchange Rate Risk
   US$
    
    
    A$
    
    
    NZ$
    
    
    Other (1)Net sales
    
    
    78.5
    %
    
    
    13.5
    %
    
    
    4.6
    %
    
    
    3.4
    %Cost of goods sold
    
    
    78.7
    %
    
    
    14.0
    %
    
    
    3.9
    %
    
    
    3.4
    %Expenses (2)
    
    
    43.1
    %
    
    
    53.0
    %
    
    
    1.5
    %
    
    
    2.4
    %Liabilities (excluding borrowings) (2)
    
    
    21.2
    %
    
    
    77.1
    %
    
    
    
    
    
    
    1.7
    %
 For our fiscal year ended March 31, 2007, the following currencies comprised the following
percentages of our net sales, cost of goods sold, expenses and liabilities:
 US$
    
    
    A$
    
    
    NZ$
    
    
    Other (1)Net sales
    
    
    82.9
    %
    
    
    11.0
    %
    
    
    3.5
    %
    
    
    2.6
    %Cost of goods sold
    
    
    83.0
    %
    
    
    11.4
    %
    
    
    3.2
    %
    
    
    2.4
    %Expenses (2)
    
    
    25.7
    %
    
    
    71.4
    %
    
    
    0.7
    %
    
    
    2.2
    %Liabilities (excluding borrowings) (2)
    
    
    11.9
    %
    
    
    86.3
    %
    
    
    1.1
    %
    
    
    0.7
    %
 
 (1)
    
    Comprises Philippine Pesos and Euros.(2)
    
    Liabilities include A$ denominated asbestos liability, which was initially recorded in the
fourth quarter of fiscal year 2006. Expenses include adjustments to the liability. See Item 3,
Key Information  Risk Factors, Item 4, Information on the Company  Commitment to Provide
Funding on a Long-Term Basis in Respect of Asbestos-Related Liabilities of Former
Subsidiaries, and Note 12 of our consolidated financial statements in Item 18 for further
information regarding the asbestos liability.
  Funding Under the Amended FFA
  123




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Interest Rate Risk
   Commodity Price Risk
   
 Item 12. Description of Securities Other Than Equity Securities
  
 PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  124




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##### Table of Contents



Managements Report on Internal Control over Financial Reporting
  Internal Control  Integrated Framework
  Changes in Internal Control over Financial Reporting
  
 Item 16A. Audit Committee Financial Expert
   
 Item 16B. Code of Business Conduct and Ethics
     125




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.
 www.jameshardie.com
 
 Item 16C. Principal Accountant Fees and Services
 Fees Paid to Our Independent Registered Public Accounting Firm
  Fiscal Years Ended March 31,(In millions)
    
    2008
    
    2007
    
    2006Audit Fees (1)
    
    $
    4.2
    
    
    $
    2.1
    
    
    $
    1.6Audit-Related Fees (2)
    
    
    
    
    
    
    0.1
    
    
    
    0.1Tax Fees (3)
    
    
    4.9
    
    
    
    8.0
    
    
    
    5.2All Other Fees
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Audit Fees include the aggregate fees for professional services rendered by our independent
registered public accounting firm. Professional services include the audit of our annual
financial statements and services that are normally provided in connection with statutory and
regulatory filings. During fiscal year ended March 31, 2008, total audit fees includes fees
for Sarbanes-Oxley compliance testing of $2.0 million, $0.8 million of which related to
Sarbanes-Oxley compliance testing performed for fiscal year 2007, but paid in fiscal year
2008. In addition, during fiscal year ended March 31, 2008, total audit fees includes fees for
statutory reporting of $0.8 million, $0.4 million of which related to statutory reporting fees
performed for fiscal year 2007, but paid in fiscal year 2008.(2)
    
    Audit-Related Fees include the aggregate fees billed for assurance and related services
rendered by our independent registered public accounting firm. Our independent registered
public accounting firm did not engage any temporary employees to conduct any portion of the
audit of our financial statements for the fiscal year ended March 31, 2008.(3)
    
    Tax Fees include the aggregate fees billed for tax compliance, tax advice and tax planning
services rendered by our independent registered public accounting firm. Audit Committee Pre-Approval Policies and Procedures
   
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  126




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Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
 (Number of shares in millions)
 Total Number of Shares
    
    Maximum Number ofAverage Price
    
    Purchased as Part of Publicly
    
    Shares that May Yet beTotal Number of Shares
    
    Paid per Share
    
    Announced Plans or Programs
    
    Purchased Under thePeriod
    
    (or Units) Purchased
    
    (or Unit)
    
    (1)
    
    Plans or Programs (1)From September 1, 2007 through September 30,
2007
    
    
    7.5
    
    
    $
    6.27
    
    
    
    7.5
    
    
    
    39.3From October 1, through October 31, 2007
    
    
    4.2
    
    
    $
    6.62
    
    
    
    4.2
    
    
    
    35.1From November 1, 2007 through November 30, 2007
    
    
    7.2
    
    
    $
    5.47
    
    
    
    7.2
    
    
    
    27.9From December 1, 2007 through December 31, 2007
    
    
    14.6
    
    
    $
    5.62
    
    
    
    14.6
    
    
    
    13.3From January 1, 2008 through January 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.3From February 1, 2008 through February 29, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.3From March 1, 2008 through March 31, 2008
    
    
    2.2
    
    
    $
    5.32
    
    
    
    2.2
    
    
    
    11.1
 
 (1)
    
    Pursuant to a share repurchase program originally announced on August 15, 2007 of up to 10%
of our issued capital (approximately 46.8 million shares), we repurchased approximately 35.7
million shares at a cost of $208.0 million in fiscal year 2008 as part of this plan. The
program has no expiration date. 
 Item 17. Financial Statements
  127




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PART III
 
 Item 18. Financial Statements
  
 Item 19. Exhibits
  ExhibitNumber
    
    Description of Exhibits1.1
    
    Articles of Association, as amended on August 20, 2007 of James Hardie Industries N.V. (English
Translation)2.1
    
    Letter Agreement of September 6, 2001 by and between James Hardie Industries N.V. and CHESS
Depositary Nominees Pty Limited, as the depositary for CHESS Units of Foreign Securities (2)2.2
    
    Deposit Agreement dated as of September 24, 2001 between The Bank of New York, as depositary, and
James Hardie Industries N.V. (2)2.3
    
    Common Terms Deed Poll amended and restated February 20, 2008 among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and James Hardie Industries N.V.2.4
    
    Form of Term Facility Agreement between James Hardie International Finance B.V. and Financier (2)2.5
    
    Form of Term Facility Agreement  Occurrence of Extension Event among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and Financier (5)2.6
    
    Form of 3 Year Term (Bullet) Facility Agreement dated February 21, 2008 among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and Financier2.7
    
    Form of 5 Year Term (Bullet) Facility Agreement dated February 21, 2008 among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and Financier2.8
    
    Form of 364-day Facility Agreement between James Hardie International Finance B.V. and Financier (2)2.9
    
    Form of Schedule 3  Extension Request to December 2008 for 364-day Facility Agreement between James Hardie
International Finance B.V. and Financier2.10
    
    Form of Schedule 3  Extension Request to June 2009 for 364-day Facility Agreement between James Hardie
International Finance B.V. and Financier2.11
    
    Form of Extension Request to June 2009 for 364-day Facility Agreement between James Hardie
International Finance B.V. and Financier2.12
    
    Form of Guarantee Deed between James Hardie Industries N.V. and Financier (2)4.1
    
    James Hardie Industries N.V. 2001 Equity Incentive Plan (2)4.2
    
    Economic Profit and Individual Performance Incentive Plans (2)4.3
    
    JHI NV Stock Appreciation Rights Incentive Plan (2)4.4
    
    Supervisory Board Share Plan 2006 (3)4.5
    
    James Hardie Industries N.V. Long Term Incentive Plan 2006 (3)4.6
    
    2005 Managing Board Transitional Stock Option Plan (3)4.7
    
    Form of Joint and Several Indemnity Agreement among James Hardie N.V., James Hardie (USA) Inc. and
certain former executive officers and Managing Board directors thereto (2)4.8
    
    Form of Joint and Several Indemnity Agreement among James Hardie Industries N.V., James Hardie Inc.
and certain former Supervisory Board and Managing Board directors thereto (2)4.9
    
    Form of Deed of Access, Insurance and Indemnity between James Hardie Industries N.V. and Supervisory
Board directors and Managing Board directors4.10
    
    Form of Indemnity Agreement between James Hardie Building Products, Inc. and Supervisory Board
directors, Managing Board directors and certain executive officers
 128




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibits4.11
    
    Lease Amendment, dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the
corner of Cobalt & Silica Street, Carole Park, Queensland, Australia (1)4.12
    
    Variation of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the
corner of Colquhoun & Devon Streets, Rosehill, New South Wales, Australia (1)4.13
    
    Extension of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at Rutland,
Avenue, Welshpool, Western Australia, Australia (1)4.14
    
    Lease Amendment dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at 46
Randle Road, Meeandah, Queensland,
 Australia (1)4.15
    
    Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and
James Hardie Industries N.V. re premises at the corner of ORorke and Station Roads, Penrose,
Auckland, New Zealand (1)4.16
    
    Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and
James Hardie Industries N.V. re premises at 44-74 ORorke Road, Penrose, Auckland, New Zealand (1)4.17
    
    Ownership transfer related to corner of ORorke and Station Roads, Penrose, Auckland, New Zealand and
44-74 ORorke Road, Penrose, Auckland, New Zealand effective June 30, 2005 (3)4.18
    
    Industrial Building Lease Agreement, effective October 6, 2000, between James Hardie Building
Products, Inc. and Fortra Fiber-Cement L.L.C., re premises at Waxahachie, Ellis County, Texas (2)4.19
    
    Asset Purchase Agreement by and between James Hardie Building Products, Inc. and Cemplank, Inc. dated
as of December 12, 2001 (2)4.20
    
    Amended and Restated Stock Purchase Agreement dated March 12, 2002, between BPB U.S. Holdings, Inc.
and James Hardie Inc. (2)4.21
    
    Amended and Restated Final Funding Agreement dated November 21, 2006 (4)4.22
    
    Amended FFA Amendment dated August 6, 20074.23
    
    Amended FFA Amendment dated November 8, 20074.24
    
    Amended FFA Amendment dated June 11, 20084.25
    
    Address for Service of Notice on Trustee dated June 13, 20084.26
    
    Asbestos Injuries Compensation Fund Amended and Restated Trust Deed by and between James Hardie
Industries N.V. and Asbestos Injuries Compensation Fund Limited dated December 14, 2006 (5)4.27
    
    Deed Poll dated June, 11, 2008  amendment of the Asbestos Injuries Compensation Fund Amended and
Restated Trust Deed4.28
    
    Deed of Release by and among James Hardie Industries N.V., Australian Council of Trade Unions, Unions
New South Wales, and Bernard Douglas Banton dated December 21, 2005 (3)4.29
    
    Parent Guarantee by and among Asbestos Injuries Compensation Fund Limited, The State of New South
Wales, and James Hardie Industries N.V. dated December 14, 2006 (5)4.30
    
    Deed of Release by and between James Hardie Industries N.V. and The State of New South Wales dated
June 22, 2006 (3)4.31
    
    Second Irrevocable Power of Attorney by and between Asbestos Injuries Compensation Fund Limited and
The State of New South Wales dated December 14, 2006 (5)4.32
    
    Deed of Accession by and among Asbestos Injuries Compensation Fund Limited, James Hardie Industries
N.V., James Hardie 117 Pty Limited, and The State of New South Wales dated December 14, 2006 (5)8.1
    
    List of significant subsidiaries of James Hardie Industries N.V.12.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 129




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibits13.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 200215.1
    
    Consent of independent registered public accounting firm15.2
    
    Consent of KPMG Actuaries Pty Ltd99.1
    
    Excerpts of the ASX Settlement and Transfer Corporation Pty Ltd as of March 31, 200899.2
    
    Excerpts of the Financial Services Reform Act 2001, as of March 11, 2002 (2)99.3
    
    ASIC Class Order 02/311, dated November 3, 2002 (2)99.4
    
    ASIC Modification, dated March 7, 2002 (2)99.5
    
    ASIC Modification, dated February 26, 2004 (3)
 
 (1)
    
    Previously filed as an exhibit to our Annual Report on Form 20-F dated November 22, 2004 and
incorporated herein by reference.(2)
    
    Previously filed as an exhibit to our Annual Report on Form 20-F dated July 7, 2005 and
incorporated herein by reference.(3)
    
    Previously filed as an exhibit to our Annual Report on Form 20-F dated September 29, 2006 and
incorporated herein by reference.(4)
    
    Previously filed as an exhibit to our Current Report on Form 6-K dated January 5, 2007 and
incorporated herein by reference.(5)
    
    Previously filed as an exhibit to our Annual Report on form 20-F dated July 6, 2007. 130




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##### Table of Contents



SIGNATURES
  JAMES HARDIE INDUSTRIES N.V.By:
    
    /s/ Louis Gries
    Louis
GriesDate: July 8, 2008
    
    
    
    Chief Executive Officer
 131




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##### Table of Contents



JAMES HARDIE INDUSTRIES N.V.
INDEX
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of March 31, 2008 and 2007
    
    
    F-3Consolidated Statements of Operations for the Years Ended March 31, 2008, 2007 and 2006
    
    
    F-4Consolidated Statements of Cash Flows for the Years Ended March 31, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Changes in Shareholders Equity for the Years Ended
March 31, 2008, 2007 and 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7Selected Quarterly Financial Data (Unaudited)
    
    
    F-45
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
    /s/ PricewaterhouseCoopers LLP
 F-2




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
 
 Consolidated Balance Sheets
 (Millions ofUS dollars)March 31
    
    
    March 31Notes
    
    
    2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    
    3
    
    
    $
    35.4
    
    
    $
    34.1Restricted cash and cash equivalents
    
    
    4
    
    
    
    5.0
    
    
    
    5.0Restricted cash and cash equivalents  Asbestos
    
    
    12
    
    
    
    37.4
    
    
    
    146.9Restricted short-term investments  Asbestos
    
    
    12
    
    
    
    77.7
    
    
    
    Accounts and notes receivable, net of allowance for
doubtful accounts of $2.0 million and $1.5 million
as of March 31, 2008 and March 31, 2007,
respectively
    
    
    5
    
    
    
    131.4
    
    
    
    163.4Inventories
    
    
    6
    
    
    
    179.7
    
    
    
    147.6Prepaid expenses and other current assets
    
    
    
    
    
    
    28.0
    
    
    
    32.4Insurance receivable  Asbestos
    
    
    12
    
    
    
    14.1
    
    
    
    9.4Workers compensation  Asbestos
    
    
    12
    
    
    
    6.9
    
    
    
    2.7Deferred income taxes
    
    
    14
    
    
    
    8.2
    
    
    
    27.3Deferred income taxes  Asbestos
    
    
    12
    
    
    
    9.1
    
    
    
    7.8Total current assets
    
    
    
    
    
    
    532.9
    
    
    
    576.6Property, plant and equipment, net
    
    
    7
    
    
    
    756.4
    
    
    
    827.7Insurance receivable  Asbestos
    
    
    12
    
    
    
    194.3
    
    
    
    165.1Workers compensation  Asbestos
    
    
    12
    
    
    
    78.5
    
    
    
    76.5Deferred income taxes
    
    
    14
    
    
    
    13.2
    
    
    
    6.9Deferred income taxes  Asbestos
    
    
    12
    
    
    
    397.1
    
    
    
    318.2Deposit with Australian Taxation Office
    
    
    15
    
    
    
    205.8
    
    
    
    154.8Other assets
    
    
    
    
    
    
    1.7
    
    
    
    2.3Total assets
    
    
    
    
    
    $
    2,179.9
    
    
    $
    2,128.1Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    
    8
    
    
    $
    107.6
    
    
    $
    100.8Short-term debt
    
    
    9
    
    
    
    90.0
    
    
    
    83.0Accrued payroll and employee benefits
    
    
    
    
    
    
    37.0
    
    
    
    42.0Accrued product warranties
    
    
    11
    
    
    
    6.9
    
    
    
    5.7Income taxes payable
    
    
    14
    
    
    
    13.0
    
    
    
    10.6Asbestos liability
    
    
    12
    
    
    
    78.7
    
    
    
    63.5Workers compensation  Asbestos
    
    
    12
    
    
    
    6.9
    
    
    
    2.7Other liabilities
    
    
    
    
    
    
    9.1
    
    
    
    9.3Total current liabilities
    
    
    
    
    
    
    349.2
    
    
    
    317.6Long-term debt
    
    
    9
    
    
    
    174.5
    
    
    
    105.0Deferred income taxes
    
    
    14
    
    
    
    84.2
    
    
    
    93.8Accrued product warranties
    
    
    11
    
    
    
    10.8
    
    
    
    9.5Asbestos liability
    
    
    12
    
    
    
    1,497.8
    
    
    
    1,225.8Workers compensation  Asbestos
    
    
    12
    
    
    
    78.5
    
    
    
    76.5Other liabilities
    
    
    10
    
    
    
    187.5
    
    
    
    41.2Total liabilities
    
    
    
    
    
    
    2,382.5
    
    
    
    1,869.4Commitments and contingencies
    
    
    13Shareholders equity:Common stock, Euro 0.59 par value, 2.0 billion
shares authorised; 432,214,668 shares issued
at March 31, 2008 and 467,295,391 shares
issued at March 31, 2007
    
    
    
    
    
    
    219.7
    
    
    
    251.8Additional paid-in capital
    
    
    
    
    
    
    19.3
    
    
    
    180.2Accumulated deficit
    
    
    
    
    
    
    (454.5
    )
    
    
    (178.7
    )Common stock in treasury, at cost, 708,695
shares and nil shares at March 31, 2008
and March 31, 2007, respectively
    
    
    
    
    
    
    (4.0
    )
    
    
    Accumulated other comprehensive income
    
    
    20
    
    
    
    16.9
    
    
    
    5.4Total shareholders (deficit) equity
    
    
    
    
    
    
    (202.6
    )
    
    
    258.7Total liabilities and shareholders equity
    
    
    
    
    
    $
    2,179.9
    
    
    $
    2,128.1
  F-3




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
 
 Consolidated Statements of Operations
 Years Ended March 31(Millions of US dollars, except per share data)
    
    Notes
    
    
    2008
    
    
    2007
    
    
    2006Net sales
    
    
    19
    
    
    $
    1,468.8
    
    
    $
    1,542.9
    
    
    $
    1,488.5Cost of goods sold
    
    
    
    
    
    
    (938.8
    )
    
    
    (969.9
    )
    
    
    (937.7
    )Gross profit
    
    
    
    
    
    
    530.0
    
    
    
    573.0
    
    
    
    550.8Selling, general and administrative expenses
    
    
    
    
    
    
    (228.2
    )
    
    
    (214.6
    )
    
    
    (209.8
    )Research and development expenses
    
    
    
    
    
    
    (27.3
    )
    
    
    (25.9
    )
    
    
    (28.7
    )Impairment charges
    
    
    7
    
    
    
    (71.0
    )
    
    
    
    
    
    
    (13.4
    )SCI and other related expenses
    
    
    
    
    
    
    
    
    
    
    (13.6
    )
    
    
    (17.4
    )Asbestos adjustments
    
    
    12
    
    
    
    (240.1
    )
    
    
    (405.5
    )
    
    
    (715.6
    )Other operating expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )Operating loss
    
    
    
    
    
    
    (36.6
    )
    
    
    (86.6
    )
    
    
    (434.9
    )Interest expense
    
    
    
    
    
    
    (11.1
    )
    
    
    (12.0
    )
    
    
    (7.2
    )Interest income
    
    
    
    
    
    
    12.2
    
    
    
    5.5
    
    
    
    7.0Loss before income taxes
    
    
    19
    
    
    
    (35.5
    )
    
    
    (93.1
    )
    
    
    (435.1
    )Income tax (expense) benefit
    
    
    14
    
    
    
    (36.1
    )
    
    
    243.9
    
    
    
    (71.6
    )(Loss) income before cumulative effect of change
in accounting principle
    
    
    
    
    
    
    (71.6
    )
    
    
    150.8
    
    
    
    (506.7
    )Cumulative effect of change in accounting principle
for stock-based compensation, net of income tax
expense of nil, $0.4 million and nil, respectively
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    Net (loss) income
    
    
    
    
    
    $
    (71.6
    )
    
    $
    151.7
    
    
    $
    (506.7
    )Net (loss) income per share  basic
    
    
    
    
    
    $
    (0.16
    )
    
    $
    0.33
    
    
    $
    (1.10
    )Net (loss) income per share  diluted
    
    
    
    
    
    $
    (0.16
    )
    
    $
    0.33
    
    
    $
    (1.10
    )Weighted average common shares outstanding
(Millions):Basic
    
    
    2
    
    
    
    455.0
    
    
    
    464.6
    
    
    
    461.7Diluted
    
    
    2
    
    
    
    455.0
    
    
    
    466.4
    
    
    
    461.7
  F-4




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
 
 Consolidated Statements of Cash Flows
 Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006Cash Flows From Operating ActivitiesNet (loss) income
    
    $
    (71.6
    )
    
    $
    151.7
    
    
    $
    (506.7
    )Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:Depreciation
    
    
    56.5
    
    
    
    50.7
    
    
    
    45.3Deferred income taxes
    
    
    (54.0
    )
    
    
    (310.4
    )
    
    
    4.3Prepaid pension cost
    
    
    1.0
    
    
    
    (0.4
    )
    
    
    2.9Stock-based compensation
    
    
    7.7
    
    
    
    4.5
    
    
    
    5.9Asbestos adjustments
    
    
    240.1
    
    
    
    405.5
    
    
    
    715.6Cumulative effect of change in accounting principle
    
    
    
    
    
    
    (0.9
    )
    
    
    Impairment charges
    
    
    71.0
    
    
    
    
    
    
    
    13.4Other
    
    
    (3.4
    )
    
    
    1.3
    
    
    
    1.7Changes in operating assets and liabilities:Restricted cash and cash equivalents
    
    
    44.7
    
    
    
    (151.9
    )
    
    
    Accounts and notes receivable
    
    
    39.6
    
    
    
    (4.8
    )
    
    
    (24.0
    )Inventories
    
    
    (26.6
    )
    
    
    (19.5
    )
    
    
    (26.6
    )Prepaid expenses and other current assets
    
    
    4.9
    
    
    
    (0.1
    )
    
    
    (24.8
    )Insurance receivable  Asbestos
    
    
    16.7
    
    
    
    
    
    
    
    Accounts payable and accrued liabilities
    
    
    2.6
    
    
    
    (18.4
    )
    
    
    24.4Asbestos liability
    
    
    (67.0
    )
    
    
    
    
    
    
    Deposit with Australian Taxation Office
    
    
    (9.7
    )
    
    
    (154.8
    )
    
    
    Other accrued liabilities and other liabilities
    
    
    66.8
    
    
    
    (19.6
    )
    
    
    7.0Net cash provided by (used in) operating activities
    
    
    319.3
    
    
    
    (67.1
    )
    
    
    238.4Cash Flows From Investing ActivitiesPurchases of property, plant and equipment
    
    
    (38.5
    )
    
    
    (92.6
    )
    
    
    (162.0
    )Proceeds from disposal of subsidiaries and businesses,
net of cash divested
    
    
    
    
    
    
    
    
    
    
    8.0Net cash used in investing activities
    
    
    (38.5
    )
    
    
    (92.6
    )
    
    
    (154.0
    )Cash Flows From Financing ActivitiesProceeds from short-term borrowings
    
    
    7.0
    
    
    
    
    
    
    
    181.0Repayments of short-term borrowings
    
    
    
    
    
    
    (98.0
    )
    
    
    Proceeds from long-term borrowings
    
    
    69.5
    
    
    
    105.0
    
    
    
    Repayments of long-term borrowings
    
    
    
    
    
    
    (121.7
    )
    
    
    (37.6
    )Proceeds from issuance of shares
    
    
    3.3
    
    
    
    18.5
    
    
    
    18.7Tax benefit from stock options exercised
    
    
    
    
    
    
    1.8
    
    
    
    2.2Treasury stock purchased
    
    
    (208.0
    )
    
    
    
    
    
    
    Dividends paid
    
    
    (126.2
    )
    
    
    (42.1
    )
    
    
    (45.9
    )Collections on loans receivable
    
    
    
    
    
    
    0.1
    
    
    
    0.3Net cash (used in) provided by financing activities
    
    
    (254.4
    )
    
    
    (136.4
    )
    
    
    118.7Effects of exchange rate changes on cash
    
    
    (25.1
    )
    
    
    15.1
    
    
    
    (1.5
    )Net increase (decrease) in cash and cash equivalents
    
    
    1.3
    
    
    
    (281.0
    )
    
    
    201.6Cash and cash equivalents at beginning of period
    
    
    34.1
    
    
    
    315.1
    
    
    
    113.5Cash and cash equivalents at end of period
    
    $
    35.4
    
    
    $
    34.1
    
    
    $
    315.1Components of Cash and Cash EquivalentsCash at bank and on hand
    
    $
    21.6
    
    
    $
    26.1
    
    
    $
    24.9Short-term deposits
    
    
    13.8
    
    
    
    8.0
    
    
    
    290.2Cash and cash equivalents at end of period
    
    $
    35.4
    
    
    $
    34.1
    
    
    $
    315.1Supplemental Disclosure of Cash Flow ActivitiesCash paid during the year for interest, net of amounts
capitalized
    
    $
    12.8
    
    
    $
    3.9
    
    
    $
    3.5Cash paid during the year for income taxes, net
    
    $
    70.4
    
    
    $
    80.8
    
    
    $
    93.4
  F-5




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
 
 Consolidated Statements of Changes in Shareholders Equity
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury(Millions of US dollars)
    
    Stock
    
    
    Capital
    
    
    Deficit
    
    
    (Loss) Income
    
    
    Stock
    
    
    TotalBalances as of March 31, 2005
    
    $
    245.8
    
    
    $
    138.7
    
    
    $
    264.3
    
    
    $
    (24.1
    )
    
    $
    
    
    
    $
    624.7Comprehensive income (loss):Net loss
    
    
    
    
    
    
    
    
    
    
    (506.7
    )
    
    
    
    
    
    
    
    
    
    
    (506.7
    )Amortization of unrealized transition gain on
derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.5Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.8
    )
    
    
    
    
    
    
    (4.8
    )Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.3
    )
    
    
    
    
    
    
    (4.3
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (511.0
    )Stock-based compensation
    
    
    
    
    
    
    5.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.9Tax benefit from stock options exercised
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.2Employee loans repaid
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Stock options exercised
    
    
    7.4
    
    
    
    11.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18.7Dividends paid
    
    
    
    
    
    
    
    
    
    
    (45.9
    )
    
    
    
    
    
    
    
    
    
    
    (45.9
    )Balances as of March 31, 2006
    
    $
    253.2
    
    
    $
    158.4
    
    
    $
    (288.3
    )
    
    $
    (28.4
    )
    
    $
    
    
    
    $
    94.9Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    151.7
    
    
    
    
    
    
    
    
    
    
    
    151.7Foreign currency translation gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.5
    
    
    
    
    
    
    
    36.5Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36.5
    
    
    
    
    
    
    
    36.5Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188.2Adoption of FAS 158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.7
    )
    
    
    
    
    
    
    (2.7
    )Stock-based compensation
    
    
    
    
    
    
    4.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.5Tax benefit from stock options exercised
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8Employee loans repaid
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Stock options exercised
    
    
    3.1
    
    
    
    15.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18.5Dividends paid
    
    
    
    
    
    
    
    
    
    
    (42.1
    )
    
    
    
    
    
    
    
    
    
    
    (42.1
    )Other
    
    
    (4.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.5
    )Balances as of March 31, 2007
    
    $
    251.8
    
    
    $
    180.2
    
    
    $
    (178.7
    )
    
    $
    5.4
    
    
    $
    
    
    
    $
    258.7Comprehensive income (loss)Net loss
    
    
    
    
    
    
    
    
    
    
    (71.6
    )
    
    
    
    
    
    
    
    
    
    
    (71.6
    )Pension and post-retirement benefit adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    0.6Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.4
    )
    
    
    
    
    
    
    (4.4
    )Foreign currency translation gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3
    
    
    
    
    
    
    
    15.3Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11.5
    
    
    
    
    
    
    
    11.5Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60.1
    )Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    (78.0
    )
    
    
    
    
    
    
    
    
    
    
    (78.0
    )Stock-based compensation
    
    
    
    
    
    
    7.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.7Stock options exercised
    
    
    0.5
    
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3Dividends paid
    
    
    
    
    
    
    
    
    
    
    (126.2
    )
    
    
    
    
    
    
    
    
    
    
    (126.2
    )Treasury stock purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (208.0
    )
    
    
    (208.0
    )Treasury stock retired
    
    
    (32.6
    )
    
    
    (171.4
    )
    
    
    
    
    
    
    
    
    
    
    204.0
    
    
    
    Balances as of March 31, 2008
    
    $
    219.7
    
    
    $
    19.3
    
    
    $
    (454.5
    )
    
    $
    16.9
    
    
    $
    (4.0
    )
    
    $
    (202.6
    )
  F-6




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
 
 Notes to Consolidated Financial Statements
 1. Background and Basis of Presentation
 Nature of Operations
  Background
     Basis of Presentation
  F-7




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 2. Summary of Significant Accounting Policies
 Accounting Principles
  Use of Estimates
  Reclassifications
  Foreign Currency Translation
  Cash and Cash Equivalents
  Restricted Cash and Cash Equivalents
  Accounts Receivable
  Inventories
  Property, Plant and Equipment
  F-8




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 YearsBuildings
    
    
    40Building improvements
    
    
    5 to 10Manufacturing machinery
    
    
    20General equipment
    
    
    5 to 10Computer equipment, software and software development
    
    
    3 to 7Office furniture and equipment
    
    3 to 10
   Impairment of Long-Lived Assets
  Environmental
  Revenue Recognition
  Cost of Goods Sold
  F-9




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Shipping and Handling
  Selling, General and Administrative
  Advertising
  Research and Development
  Accrued Product Warranties
  Income Taxes
  Financial Instruments
   F-10




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Stock-based Compensation
   Employee Benefit Plans
   Dividends
  Earnings Per Share
  F-11




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Years Ended March 31(Millions of shares)
    
    2008
    
    2007
    
    2006Basic common shares outstanding
    
    
    455.0
    
    
    
    464.6
    
    
    
    461.7Dilutive effect of stock options
    
    
    
    
    
    
    1.8
    
    
    Diluted common shares outstanding
    
    
    455.0
    
    
    
    466.4
    
    
    
    461.7
 (US dollars)
    
    2008
    
    2007
    
    2006Net (loss) income per share  basic
    
    $
    (0.16
    )
    
    $ 0.33
    
    $
    (1.10
    )Net (loss) income per share  diluted
    
    $
    (0.16
    )
    
    $ 0.33
    
    $
    (1.10
    )
  Repurchased Common Stock
  Accumulated Other Comprehensive Income
  Asbestos
     F-12




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 AICF
  Selling, general and administrative
expenses Interest
income
 Asbestos-Related Assets and Liabilities
 Asbestos-Related Assets and Liabilities
 Asbestos Liability
   Insurance Receivable
    F-13




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Workers Compensation
  Asbestos Liability
   Asbestos-Related Research and Education Contributions
  Restricted Cash and Cash Equivalents
  Restricted Short-Term Investments
  AICF  Other Assets and Liabilities
  Deferred Income Taxes
  Foreign Currency Translation
 Asbestos Adjustments
 F-14




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Recent Accounting Pronouncements
 Fair Value Measurements
  Fair Value Option for Financial Assets and Financial Liabilities
  Business Combinations
  Noncontrolling Interests in Consolidated Financial Statements  an amendment to ARB No. 51
  Disclosures about Derivative Instruments and Hedging Activities
  Hierarchy of Generally Accepted Accounting Principles
 .
 F-15




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 3. Cash and Cash Equivalents
   March 31(Millions of US dollars)
    
    2008
    
    
    2007Cash at bank and on hand
    
    $
    21.6
    
    
    $
    26.1Short-term deposits
    
    
    13.8
    
    
    
    8.0Total cash and cash equivalents
    
    $
    35.4
    
    
    $
    34.1
  4. Restricted Cash and Cash Equivalents
  5. Accounts and Notes Receivable
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Trade receivables
    
    $
    122.7
    
    
    $
    152.4Other receivables and advances
    
    
    10.7
    
    
    
    12.5Allowance for doubtful accounts
    
    
    (2.0
    )
    
    
    (1.5
    )Total accounts and notes receivable
    
    $
    131.4
    
    
    $
    163.4
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    1.5
    
    
    $
    1.3Charged to expense
    
    
    0.6
    
    
    
    0.5Costs and deductions
    
    
    (0.1
    )
    
    
    (0.3
    )Balance at end of period
    
    $
    2.0
    
    
    $
    1.5
 F-16




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 6. Inventories
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Finished goods
    
    $
    127.4
    
    
    $
    101.5Work-in-process
    
    
    8.4
    
    
    
    12.3Raw materials and supplies
    
    
    51.0
    
    
    
    37.8Provision for obsolete finished goods and raw materials
    
    
    (7.1
    )
    
    
    (4.0
    )Total inventories
    
    $
    179.7
    
    
    $
    147.6
 7. Property, Plant and Equipment
  Machineryand
    
    
    Construction(Millions of US dollars)
    
    Land
    
    
    Buildings
    
    
    Equipment
    
    
    in Progress
    
    
    TotalBalance at March 31, 2006:Cost
    
    $
    15.6
    
    
    $
    147.5
    
    
    $
    669.8
    
    
    $
    228.1
    
    
    $
    1,061.0Accumulated depreciation
    
    
    
    
    
    
    (31.7
    )
    
    
    (253.7
    )
    
    
    
    
    
    
    (285.4
    )Net book value
    
    
    15.6
    
    
    
    115.8
    
    
    
    416.1
    
    
    
    228.1
    
    
    
    775.6Changes in net book value:Capital expenditures
    
    
    1.3
    
    
    
    70.8
    
    
    
    131.3
    
    
    
    (110.8
    )
    
    
    92.6Retirements and sales
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    
    
    
    
    (0.6
    )Depreciation
    
    
    
    
    
    
    (8.3
    )
    
    
    (42.4
    )
    
    
    
    
    
    
    (50.7
    )Other movements
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    0.6Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    10.2
    
    
    
    
    
    
    
    10.2Total changes
    
    
    1.3
    
    
    
    62.5
    
    
    
    99.1
    
    
    
    (110.8
    )
    
    
    52.1Balance at March 31, 2007:Cost
    
    
    16.9
    
    
    
    218.3
    
    
    
    811.3
    
    
    
    117.3
    
    
    
    1,163.8Accumulated depreciation
    
    
    
    
    
    
    (40.0
    )
    
    
    (296.1
    )
    
    
    
    
    
    
    (336.1
    )Net book value
    
    $
    16.9
    
    
    $
    178.3
    
    
    $
    515.2
    
    
    $
    117.3
    
    
    $
    827.7Changes in net book value:Capital expenditures
    
    
    0.3
    
    
    
    7.3
    
    
    
    65.8
    
    
    
    (34.9
    )
    
    
    38.5Retirements and sales
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    
    
    
    
    (1.2
    )Depreciation
    
    
    
    
    
    
    (12.0
    )
    
    
    (44.5
    )
    
    
    
    
    
    
    (56.5
    )Impairment
    
    
    
    
    
    
    (16.7
    )
    
    
    (54.3
    )
    
    
    
    
    
    
    (71.0
    )Other movements
    
    
    
    
    
    
    
    
    
    
    5.2
    
    
    
    
    
    
    
    5.2Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    13.7
    
    
    
    
    
    
    
    13.7Total changes
    
    
    0.3
    
    
    
    (21.4
    )
    
    
    (15.3
    )
    
    
    (34.9
    )
    
    
    (71.3
    )Balance at March 31, 2008:Cost
    
    
    17.2
    
    
    
    208.9
    
    
    
    840.5
    
    
    
    82.4
    
    
    
    1,149.0Accumulated depreciation
    
    
    
    
    
    
    (52.0
    )
    
    
    (340.6
    )
    
    
    
    
    
    
    (392.6
    )Net book value
    
    $
    17.2
    
    
    $
    156.9
    
    
    $
    499.9
    
    
    $
    82.4
    
    
    $
    756.4
   F-17




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  Asset Impairments
     8. Accounts Payable and Accrued Liabilities
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Trade creditors
    
    $
    73.7
    
    
    $
    57.7Other creditors and accruals
    
    
    33.9
    
    
    
    43.1Total accounts payable and accrued liabilities
    
    $
    107.6
    
    
    $
    100.8
 9. Short and Long-Term Debt
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Short-term debt
    
    $
    90.0
    
    
    $
    83.0Long-term debt
    
    
    174.5
    
    
    
    105.0Total debt (1)
    
    $
    264.5
    
    
    $
    188.0
 
 (1)
    
    Total debt at 3.63% and 5.91% weighted average rates at March 31, 2008 and 2007,
respectively. F-18




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  Total
    
    PrincipalDescription
    
    Facility
    
    Drawn(US$ millions)364-day facilities, can be drawn in US$, variable
interest
rates based on LIBOR plus margin, can be repaid
and
redrawn until December 2008
    
    $
    110.0
    
    
    $
    90.0Term facilities, can be drawn in US$, variable
interest
rates based on LIBOR plus margin, can be repaid
and
redrawn until June 2010
    
    
    245.0
    
    
    
    174.5Term facilities, can be drawn in US$, variable
interest
rates based on LIBOR plus margin, can be repaid
and
redrawn until February 2011
    
    
    45.0
    
    
    
    Term facilities, can be drawn in US$, variable
interest
rates based on LIBOR plus margin, can be repaid
and
redrawn until February 2013
    
    
    90.0
    
    
    
    Total
    
    $
    490.0
    
    
    $
    264.5
     F-19




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 10. Non-Current Other Liabilities
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Employee entitlements
    
    $
    6.4
    
    
    $
    11.9Uncertain tax positions
    
    
    123.7
    
    
    
    0.7Other
    
    
    57.4
    
    
    
    28.6Total non-current other liabilities
    
    $
    187.5
    
    
    $
    41.2
 11. Product Warranties
    Years EndedMarch 31(Millions of US dollars)
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    15.2
    
    
    $
    15.5Accruals for product warranties
    
    
    10.2
    
    
    
    4.4Settlements made in cash or in kind
    
    
    (7.9
    )
    
    
    (4.9
    )Foreign currency translation adjustments
    
    
    0.2
    
    
    
    0.2Balance at end of period
    
    $
    17.7
    
    
    $
    15.2
  F-20




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 12. Asbestos
 Summary of Significant Accounting Policies
 Asbestos Adjustments
  Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006Change in estimates:Change in actuarial estimate  asbestos liability
    
    $
    (175.0
    )
    
    $
    50.3
    
    
    $
    Change in actuarial estimate  insurance receivable
    
    
    27.4
    
    
    
    (22.6
    )
    
    
    Change in estimate  AICF claims-handling costs
    
    
    (6.5
    )
    
    
    0.8
    
    
    
    Change in estimate  other
    
    
    1.2
    
    
    
    
    
    
    
    Subtotal  Change in estimates
    
    
    (152.9
    )
    
    
    28.5
    
    
    
    Effect of foreign exchange
    
    
    (87.2
    )
    
    
    (94.5
    )
    
    
    Tax impact related to the implementation of
the Amended FFA
    
    
    
    
    
    
    (335.0
    )
    
    
    Initial recording of provision at March 31, 2006
    
    
    
    
    
    
    
    
    
    
    (715.6
    )Other adjustments
    
    
    
    
    
    
    (4.5
    )
    
    
    Total Asbestos Adjustments
    
    $
    (240.1
    )
    
    $
    (405.5
    )
    
    $
    (715.6
    )
 F-21




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Asbestos-Related Assets and Liabilities
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Asbestos liability  current
    
    $
    (78.7
    )
    
    $
    (63.5
    )Asbestos liability  non-current
    
    
    (1,497.8
    )
    
    
    (1,225.8
    )Asbestos liability  Total
    
    
    (1,576.5
    )
    
    
    (1,289.3
    )Insurance receivable  current
    
    
    14.1
    
    
    
    9.4Insurance receivable  non-current
    
    
    194.3
    
    
    
    165.1Insurance receivable  Total
    
    
    208.4
    
    
    
    174.5Workers compensation asset  current
    
    
    6.9
    
    
    
    2.7Workers compensation asset  non-current
    
    
    78.5
    
    
    
    76.5Workers compensation liability  current
    
    
    (6.9
    )
    
    
    (2.7
    )Workers compensation liability  non-current
    
    
    (78.5
    )
    
    
    (76.5
    )Workers compensation  Total
    
    
    
    
    
    
    Deferred income taxes  current
    
    
    9.1
    
    
    
    7.8Deferred income taxes  non-current
    
    
    397.1
    
    
    
    318.2Deferred income taxes  Total
    
    
    406.2
    
    
    
    326.0Income tax payable (reduction in income tax payable)
    
    
    20.4
    
    
    
    9.0Other net liabilities
    
    
    (3.4
    )
    
    
    (6.3
    )Net Amended FFA liability
    
    
    (944.9
    )
    
    
    (786.1
    )Restricted cash and cash equivalents and restricted
short-term investment assets of the AICF
    
    
    115.1
    
    
    
    146.9Unfunded Net Amended FFA liability
    
    $
    (829.8
    )
    
    $
    (639.2
    )
 Asbestos Liability
  F-22




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  A$
    
    
    A$ to US$
    
    
    US$Millions
    
    
    rate
    
    
    MillionsAsbestos liability  March 31, 2007
    
    
    A$(1,598.1
    )
    
    
    1.2395
    
    
    $
    (1,289.3
    )Asbestos claims paid (1)
    
    
    74.3
    
    
    
    1.1503
    
    
    
    64.6AICF claims-handling costs incurred (1)
    
    
    2.8
    
    
    
    1.1503
    
    
    
    2.4Change in actuarial estimate (2)
    
    
    (190.8
    )
    
    
    1.0903
    
    
    
    (175.0
    )Change in estimate of AICF claims-handling costs (2)
    
    
    (7.1
    )
    
    
    1.0903
    
    
    
    (6.5
    )Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    (172.7
    )Asbestos liability  March 31, 2008
    
    
    A$(1,718.9
    )
    
    
    1.0903
    
    
    $
    (1,576.5
    )
 Insurance Receivable  Asbestos
  A$
    
    
    A$ to US$
    
    
    US$Millions
    
    
    rate
    
    
    MillionsInsurance receivable  March 31, 2007
    
    
    A$216.3
    
    
    
    1.2395
    
    
    $
    174.5Insurance recoveries (1)
    
    
    (19.2
    )
    
    
    1.1503
    
    
    
    (16.7
    )Change in estimate (3)
    
    
    0.2
    
    
    
    1.1782
    
    
    
    0.2Change in actuarial estimate (2)
    
    
    29.9
    
    
    
    1.0903
    
    
    
    27.4Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    23.0Insurance receivable  March 31, 2008
    
    
    A$227.2
    
    
    
    1.0903
    
    
    $
    208.4
 Deferred Income Taxes  Asbestos
  A$
    
    
    A$ to US$
    
    
    US$Millions
    
    
    rate
    
    
    MillionsDeferred tax assets  March 31, 2007
    
    
    A$404.1
    
    
    
    1.2395
    
    
    $
    326.0Amounts offset against income tax payable (1)
    
    
    (11.1
    )
    
    
    1.1503
    
    
    
    (9.6
    )Impact of change in actuarial estimates (2)
    
    
    50.4
    
    
    
    1.0903
    
    
    
    46.2Impact of other asbestos adjustments (1)
    
    
    (0.5
    )
    
    
    1.1503
    
    
    
    (0.4
    )Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    44.0Deferred tax assets  March 31, 2008
    
    
    A$442.9
    
    
    
    1.0903
    
    
    $
    406.2
 
 (1)
    
    The average exchange rate for the period is used to convert the Australian dollar amount to
U.S. dollars based on the assumption that these transactions occurred evenly throughout the
period.(2)
    
    The spot exchange rate at March 31, 2008 is used to convert the Australian dollar amount to
U.S. dollars as the adjustment to the estimate was made on that date.(3)
    
    The spot exchange rate at June 30, 2007 is used to convert the Australian dollar amount to
U.S. dollars as the adjustment to the estimate was made on that date. F-23




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Income Tax Payable
  Other Net Liabilities
  Restricted Cash and Short-term Investment Assets of the AICF
   A$
    
    
    A$ to US$
    
    
    US$Millions
    
    
    rate
    
    
    MillionsRestricted cash and cash equivalents and restricted
short-term investment assets  March 31, 2007
    
    A$
    182.1
    
    
    
    1.2395
    
    
    $
    146.9Asbestos claims paid (1)
    
    
    (74.3
    )
    
    
    1.1503
    
    
    
    (64.6
    )AICF operating costs paid  claims-handling (1)
    
    
    (2.8
    )
    
    
    1.1503
    
    
    
    (2.4
    )AICF operating costs paid  non claims-handling (1)
    
    
    (4.6
    )
    
    
    1.1503
    
    
    
    (4.0
    )Insurance recoveries (1)
    
    
    19.2
    
    
    
    1.1503
    
    
    
    16.7Interest and investment income (1)
    
    
    10.8
    
    
    
    1.1503
    
    
    
    9.4Unrealized loss on investments (1)
    
    
    (5.1
    )
    
    
    1.1503
    
    
    
    (4.4
    )Other (1)
    
    
    0.2
    
    
    
    1.1503
    
    
    
    0.2Effect of foreign exchange
    
    
    
    
    
    
    
    
    
    
    17.3Restricted cash and cash equivalents and restricted
short-term investment assets  March 31, 2008
    
    A$
    125.5
    
    
    
    1.0903
    
    
    $
    115.1
 
 (1)
    
    The average exchange rate for the period is used to convert the Australian dollar amount to
U.S. dollars based on the assumption that these transactions occurred evenly throughout the
period. Actuarial Study; Claims Estimate
  F-24




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
       Claims Data
  F-25




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  Years Ended March 312008
    
    
    2007
    
    
    2006 (1)Number of claims filed
    
    
    552
    
    
    
    463
    
    
    
    346Number of claims dismissed
    
    
    74
    
    
    
    121
    
    
    
    97Number of claims settled or otherwise resolved
    
    
    445
    
    
    
    416
    
    
    
    405Average settlement amount per settled claim
    
    A$
    147,349
    
    
    A$
    166,164
    
    
    A$
    151,883Average settlement amount per settled claim
    
    $
    128,096
    
    
    $
    127,165
    
    
    $
    114,322
  Years Ended March 312008
    
    
    2007
    
    
    2006 (1)
    
    
    2005
    
    
    2004Number of open claims at beginning of period
    
    
    490
    
    
    
    564
    
    
    
    712
    
    
    
    687
    
    
    
    743Number of new claims
    
    
    552
    
    
    
    463
    
    
    
    346
    
    
    
    489
    
    
    
    379Number of closed claims
    
    
    519
    
    
    
    537
    
    
    
    502
    
    
    
    464
    
    
    
    435Number of open claims at end of period
    
    
    523
    
    
    
    490
    
    
    
    556
    
    
    
    712
    
    
    
    687Average settlement amount per settled claim
    
    A$
    147,349
    
    
    A$
    166,164
    
    
    A$
    151,883
    
    
    A$
    157,594
    
    
    A$
    167,450Average settlement amount per case closed
    
    A$
    126,340
    
    
    A$
    128,723
    
    
    A$
    122,535
    
    
    A$
    136,536
    
    
    A$
    121,642Average settlement amount per settled claim
    
    $
    128,096
    
    
    $
    127,163
    
    
    $
    114,318
    
    
    $
    116,572
    
    
    $
    116,123Average settlement amount per case closed
    
    $
    109,832
    
    
    $
    98,510
    
    
    $
    92,229
    
    
    $
    100,996
    
    
    $
    84,356
 
 (1)
    
    Information includes claims data for only 11 months ended February 28, 2006. Claims data for
the 12 months ended March 31, 2006 were not available at the time the Companys financial
statements were prepared.  13. Commitment and Contingencies
 ASIC Proceedings
  F-26




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  
    
    declarations regarding the alleged contraventions;
    
    orders for pecuniary penalties in such amount as the Court thinks fit up to the limits
specified in the Corporations Act;
    
    orders that former James Hardie group directors or officers Michael Brown, Michael
Gillfillan, Meredith Hellicar, Martin Koffel, Peter Macdonald, Philip Morley, Geoffrey
OBrien, Peter Shafron, Gregory Terry and Peter Willcox be prohibited from managing an
Australian corporation for such period as the Court thinks fit;
    
    an order that the Company execute a deed of indemnity in favor of ABN 60 providing that
the Company indemnify ABN 60 for an amount up to a maximum of A$1.9 billion, for such
amount as ABN 60, or its directors, consider, after giving careful consideration, is
necessary to ensure that ABN 60 is able to pay its debts, as and when they fall due, and
for such amount as ABN 60, or its directors, reasonably believe is necessary to ensure
that ABN 60 remains solvent; and
    
    its costs of the proceedings.
     Environmental and Legal
   F-27




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  Operating Leases
  Years ending March 31:
    
    (Millions of US dollars)2009
    
    $
    14.82010
    
    
    13.32011
    
    
    12.42012
    
    
    12.02013
    
    
    8.6Thereafter
    
    
    56.7Total
    
    $
    117.8
  Capital Commitments
  Asbestos Amended ATO Assessment
 14. Income Taxes
  Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006(Loss) income from continuing operations before income taxes:Domestic (1)
    
    $
    80.1
    
    
    $
    110.9
    
    
    $
    113.7Foreign
    
    
    (115.6
    )
    
    
    (204.0
    )
    
    
    (548.8
    )(Loss) income from continuing operations before income taxes
    
    $
    (35.5
    )
    
    $
    (93.1
    )
    
    $
    (435.1
    )Income tax (expense) benefit:Current:Domestic (1)
    
    $
    (7.1
    )
    
    $
    0.4
    
    
    $
    (9.0
    )Foreign
    
    
    (102.1
    )
    
    
    (63.7
    )
    
    
    (91.5
    )Current income tax expense
    
    
    (109.2
    )
    
    
    (63.3
    )
    
    
    (100.5
    )Deferred:Domestic (1)
    
    
    (0.2
    )
    
    
    0.1
    
    
    
    (0.3
    )Foreign
    
    
    73.3
    
    
    
    307.1
    
    
    
    29.2Deferred income tax benefit
    
    
    73.1
    
    
    
    307.2
    
    
    
    28.9Total income tax (expense) benefit for continuing operations
    
    $
    (36.1
    )
    
    $
    243.9
    
    
    $
    (71.6
    )
 F-28




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 
 (1)
    
    Since JHI NV is the Dutch parent holding company, domestic represents The Netherlands.  Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006Income tax benefit computed at statutory tax rates
    
    $
    7.8
    
    
    $
    16.2
    
    
    $
    121.0U.S. state income taxes, net of the federal benefit
    
    
    (1.9
    )
    
    
    (6.5
    )
    
    
    (7.1
    )Asbestos provision
    
    
    
    
    
    
    242.0
    
    
    
    (214.7
    )Asbestos  effect of foreign exchange
    
    
    (27.5
    )
    
    
    (24.1
    )
    
    
    Benefit from Dutch financial risk reserve regime
    
    
    7.3
    
    
    
    8.1
    
    
    
    12.7Expenses not deductible
    
    
    (3.2
    )
    
    
    (1.7
    )
    
    
    (3.4
    )Non-assessable items
    
    
    2.7
    
    
    
    1.8
    
    
    
    1.4Losses not available for carryforward
    
    
    (1.4
    )
    
    
    (3.2
    )
    
    
    (2.6
    )Change in reserves
    
    
    (18.5
    )
    
    
    10.4
    
    
    
    Result of tax audits
    
    
    
    
    
    
    
    
    
    
    20.7Change in tax law
    
    
    
    
    
    
    3.0
    
    
    
    Other items
    
    
    (1.4
    )
    
    
    (2.1
    )
    
    
    0.4Total income tax (expense) benefit
    
    $
    (36.1
    )
    
    $
    243.9
    
    
    $
    (71.6
    )Effective tax rate
    
    
    101.7
    %
    
    
    262.0
    %
    
    
    16.5
    %
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Deferred tax assets:Asbestos liability
    
    $
    406.2
    
    
    $
    326.0Other provisions and accruals
    
    
    27.0
    
    
    
    33.3Net operating loss carryforwards
    
    
    6.3
    
    
    
    7.8Capital loss carryforwards
    
    
    40.0
    
    
    
    35.2Taxes on intellectual property transfer
    
    
    6.5
    
    
    
    6.5Prepayments
    
    
    2.9
    
    
    
    7.5Other
    
    
    0.8
    
    
    
    Total deferred tax assets
    
    
    489.7
    
    
    
    416.3Valuation allowance
    
    
    (45.1
    )
    
    
    (39.7
    )Total deferred tax assets, net of valuation
allowance
    
    
    444.6
    
    
    
    376.6Deferred tax liabilities:Property, plant and equipment
    
    
    (93.4
    )
    
    
    (108.4
    )Foreign currency movements
    
    
    (15.2
    )
    
    
    (5.2
    )Other
    
    
    
    
    
    
    (0.1
    )Total deferred tax liabilities
    
    
    (108.6
    )
    
    
    (113.7
    )Net deferred tax liabilities
    
    $
    336.0
    
    
    $
    262.9
  F-29




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
        F-30




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
     ,
  F-31




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  First Quarter Ended
    
    Second Quarter Ended
    
    Third Quarter EndedJune 30, 2007
    
    September 30, 2007
    
    December 31, 2007Previously
    
    
    
    
    
    Previously
    
    
    
    
    
    Previously(Millions of US dollars)
    
    Reported
    
    Revised
    
    Reported
    
    Revised
    
    Reported
    
    RevisedIncome tax expense
    
    $
    (36.4
    )
    
    $
    (35.6
    )
    
    $
    (27.6
    )
    
    $
    (26.8
    )
    
    $
    (8.9
    )
    
    $
    (8.0
    )Net income
    
    
    39.1
    
    
    
    39.9
    
    
    
    19.1
    
    
    
    19.9
    
    
    
    17.1
    
    
    
    18.0Total liabilities
    
    
    2,070.1
    
    
    
    2,056.2
    
    
    
    2,085.5
    
    
    
    2,070.2
    
    
    
    2,208.5
    
    
    
    2,192.3Total other comprehensive
income
    
    
    46.2
    
    
    
    47.7
    
    
    
    10.2
    
    
    
    12.3
    
    
    
    33.9
    
    
    
    36.0Shareholders equity (deficit)
    
    
    147.7
    
    
    
    161.6
    
    
    
    112.4
    
    
    
    127.7
    
    
    
    (52.6
    )
    
    
    (36.4
    )
  (Millions of USdollars)Unrecognized tax benefits at April 1, 2007
    
    $
    39.0Additions for tax positions of the current year
    
    
    1.3Additions for tax positions of prior year
    
    
    16.0Foreign translation adjustment
    
    
    5.6Unrecognized tax benefits at March 31, 2008
    
    $
    61.9
    15. Amended ATO Assessment
  F-32




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  (Millions of dollars)
    
    US$ (1)
    
    
    A$Primary tax after allowable credits
    
    $
    157.8
    
    
    
    A$172.0Penalties (2)
    
    
    39.4
    
    
    
    43.0General interest charges
    
    
    140.3
    
    
    
    153.0Total amended assessment
    
    $
    337.5
    
    
    
    A$368.0
 
 (1)
    
    US$ amounts calculated using the A$/US$ foreign exchange spot rate at March 31,
2008.(2)
    
    Represents 25% of primary tax.     16. Stock-Based Compensation
  Executive Share Purchase Plan
 ,
 F-33




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Managing Board Transitional Stock Option Plan
   JHI NV 2001 Equity Incentive Plan
  October 2001Original
    
    Number
    
    OptionOriginal Shadow
    
    Exercise
    
    of Options
    
    ExpirationShare Grant Date
    
    Price
    
    Granted
    
    DateNovember 1999
    
    
    A$3.82
    
    
    
    1,968,544
    
    
    November 2009November 2000
    
    
    A$3.78
    
    
    
    3,500,285
    
    
    November 2010
   F-34




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  Original
    
    Number
    
    OptionShare Grant
    
    Exercise
    
    of Options
    
    ExpirationDate
    
    Price
    
    Granted
    
    DateDecember 2001
    
    
    A$5.65
    
    
    
    4,248,417
    
    
    December 2011December 2002
    
    
    A$6.66
    
    
    
    4,037,000
    
    
    December 2012December 2003
    
    
    A$7.05
    
    
    
    6,179,583
    
    
    December 2013December 2004
    
    
    A$5.99
    
    
    
    5,391,100
    
    
    December 2014February 2005
    
    
    A$6.30
    
    
    
    273,000
    
    
    February 2015December 2005
    
    
    A$8.90
    
    
    
    5,224,100
    
    
    December 2015March 2006
    
    
    A$9.50
    
    
    
    40,200
    
    
    March 2016November 2006
    
    
    A$8.40
    
    
    
    3,499,490
    
    
    November 2016March 2007
    
    
    A$8.90
    
    
    
    179,500
    
    
    March 2017March 2007
    
    
    A$8.35
    
    
    
    151,400
    
    
    March 2017December 2007
    
    
    A$6.38
    
    
    
    5,031,310
    
    
    December 2017
   JHI NV Stock Appreciation Rights Incentive Plan
  Supervisory Board Share Plan
  Supervisory Board Share Plan 2006
  F-35




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Long-Term Incentive Plan
  Valuation and Expense Information Under SFAS No. 123R
     2008
    
    2007
    
    2006Dividend yield
    
    
    5.0
    %
    
    
    1.5
    %
    
    
    0.9
    %Expected volatility
    
    
    30.0
    %
    
    
    28.1
    %
    
    
    27.9
    %Risk free interest rate
    
    
    3.4
    %
    
    
    4.6
    %
    
    
    4.5
    %Expected life in years
    
    
    4.4
    
    
    
    5.1
    
    
    
    5.6Weighted average fair value at grant date
    
    A$
    1.13
    
    
    A$
    2.40
    
    
    A$
    2.78Number of stock options
    
    
    5,031,310
    
    
    
    3,830,390
    
    
    
    6,584,300
  2008
    
    2007
    
    2006Dividend yield
    
    
    5.0
    %
    
    
    1.6
    %
    
    
    N/AExpected volatility
    
    
    32.1
    %
    
    
    28.1
    %
    
    
    N/ARisk free interest rate
    
    
    4.2
    %
    
    
    4.6
    %
    
    
    N/AWeighted average fair value at grant date
    
    A$
    3.14
    
    
    A$
    3.30
    
    
    
    N/ANumber of stock options
    
    
    1,016,000
    
    
    
    1,132,000
    
    
    
    N/A
 F-36




---



##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  General Share-Based Award Information
  Outstanding OptionsWeightedShares
    
    
    
    
    
    AverageAvailable for
    
    
    
    
    
    ExerciseGrant
    
    Number
    
    PriceBalance at March 31, 2006
    
    
    19,836,233
    
    
    
    19,513,257
    
    
    
    A$6.99Newly Authorized
    
    
    3,000,000
    
    
    
    Granted
    
    
    (4,962,390
    )
    
    
    4,962,390
    
    
    
    A$8.42Exercised
    
    
    
    
    
    
    (3,988,880
    )
    
    
    A$5.96Forfeited
    
    
    1,546,950
    
    
    
    (1,546,950
    )
    
    
    A$7.70Balance at March 31, 2007
    
    
    19,420,793
    
    
    
    18,939,817
    
    
    
    A$7.52Newly Authorized
    
    
    
    
    
    
    Granted
    
    
    (6,047,310
    )
    
    
    6,047,310
    
    
    
    A$6.62Exercised
    
    
    
    
    
    
    (606,079
    )
    
    
    A$6.33Forfeited
    
    
    2,190,811
    
    
    
    (2,190,811
    )
    
    
    A$7.79Balance at March 31, 2008
    
    
    15,564,294
    
    
    
    22,190,237
    
    
    
    A$7.29
    F-37




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  (In Australian dollars)Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Average
    
    
    Aggregate
    
    
    
    
    
    
    Average
    
    
    AggregateExercise
    
    
    
    
    
    Remaining
    
    
    Exercise
    
    
    Intrinsic
    
    
    
    
    
    
    Exercise
    
    
    IntrinsicPrice
    
    Number
    
    
    Life (in Years)
    
    
    Price
    
    
    Value
    
    
    Number
    
    
    Price
    
    
    ValueA$3.09
    
    
    409,907
    
    
    
    2.6
    
    
    
    A$3.09
    
    
    
    A$1,295,306
    
    
    
    409,907
    
    
    
    A$3.09
    
    
    
    A$1,295,3063.13
    
    
    100,435
    
    
    
    1.6
    
    
    
    3.13
    
    
    
    313,357
    
    
    
    100,435
    
    
    
    3.13
    
    
    
    313,3575.06
    
    
    660,582
    
    
    
    3.7
    
    
    
    5.06
    
    
    
    787,017
    
    
    
    660,582
    
    
    
    5.06
    
    
    
    787,0175.99
    
    
    2,745,625
    
    
    
    6.7
    
    
    
    5.99
    
    
    
    713,862
    
    
    
    2,745,625
    
    
    
    5.99
    
    
    
    713,8626.30
    
    
    93,000
    
    
    
    6.9
    
    
    
    6.30
    
    
    
    
    
    
    
    93,000
    
    
    
    6.30
    
    
    
    6.38
    
    
    4,822,398
    
    
    
    9.7
    
    
    
    6.38
    
    
    
    
    
    
    
    14,286
    
    
    
    6.38
    
    
    
    6.45
    
    
    901,500
    
    
    
    4.6
    
    
    
    6.45
    
    
    
    
    
    
    
    901,500
    
    
    
    6.45
    
    
    
    7.05
    
    
    2,280,750
    
    
    
    5.7
    
    
    
    7.05
    
    
    
    
    
    
    
    2,280,750
    
    
    
    7.05
    
    
    
    7.83
    
    
    1,016,000
    
    
    
    9.4
    
    
    
    7.83
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.35
    
    
    151,400
    
    
    
    9.0
    
    
    
    8.35
    
    
    
    
    
    
    
    37,850
    
    
    
    8.35
    
    
    
    8.40
    
    
    3,747,340
    
    
    
    8.6
    
    
    
    8.40
    
    
    
    
    
    
    
    686,349
    
    
    
    8.40
    
    
    
    8.53
    
    
    1,320,000
    
    
    
    7.7
    
    
    
    8.53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.90
    
    
    3,901,100
    
    
    
    7.7
    
    
    
    8.90
    
    
    
    
    
    
    
    2,000,425
    
    
    
    8.90
    
    
    
    9.50
    
    
    40,200
    
    
    
    7.9
    
    
    
    9.50
    
    
    
    
    
    
    
    20,100
    
    
    
    9.50
    
    
    
    Total
    
    
    22,190,237
    
    
    
    7.7
    
    
    
    A$7.29
    
    
    
    A$3,109,542
    
    
    
    9,950,809
    
    
    
    A$6.83
    
    
    
    A$3,109,542
  17. Share Repurchase Program
  18. Financial Instruments
 Foreign Currency
   Credit Risk
  F-38




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
    Fair Values
  March 31(Millions of US dollars)
    
    2008
    
    
    2007Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueLong-term debt:Floating
    
    $
    174.5
    
    
    $
    174.5
    
    
    $
    105.0
    
    
    $
    105.0Fixed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    174.5
    
    
    $
    174.5
    
    
    $
    105.0
    
    
    $
    105.0
  19. Operating Segment Information and Concentrations of Risk
  F-39




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Operating Segments
  Net Sales to Customers (1)Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006USA Fiber Cement
    
    $
    1,144.8
    
    
    $
    1,262.3
    
    
    $
    1,218.4Asia Pacific Fiber Cement
    
    
    298.3
    
    
    
    251.7
    
    
    
    241.8Other
    
    
    25.7
    
    
    
    28.9
    
    
    
    28.3Worldwide total
    
    $
    1,468.8
    
    
    $
    1,542.9
    
    
    $
    1,488.5
 LossBefore Income TaxesYears Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006USA Fiber Cement (2), (3)
    
    $
    268.0
    
    
    $
    362.4
    
    
    $
    342.6Asia Pacific Fiber Cement (2)
    
    
    50.3
    
    
    
    39.4
    
    
    
    41.7Research and Development (2)
    
    
    (18.1
    )
    
    
    (17.1
    )
    
    
    (15.7
    )Other (4)
    
    
    (32.8
    )
    
    
    (9.3
    )
    
    
    (26.5
    )Segments total
    
    
    267.4
    
    
    
    375.4
    
    
    
    342.1General Corporate (5), (6)
    
    
    (304.0
    )
    
    
    (462.0
    )
    
    
    (777.0
    )Total operating loss
    
    
    (36.6
    )
    
    
    (86.6
    )
    
    
    (434.9
    )Net interest income (expense) (7)
    
    
    1.1
    
    
    
    (6.5
    )
    
    
    (0.2
    )Worldwide total
    
    $
    (35.5
    )
    
    $
    (93.1
    )
    
    $
    (435.1
    )
 Total Identifiable AssetsYears Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007USA Fiber Cement
    
    $
    835.8
    
    
    $
    893.0Asia Pacific Fiber Cement
    
    
    218.3
    
    
    
    199.3Research and Development
    
    
    13.9
    
    
    
    10.9Other
    
    
    10.6
    
    
    
    41.6Segments total
    
    
    1,078.6
    
    
    
    1,144.8General Corporate (8), (9)
    
    
    1,101.3
    
    
    
    983.3Worldwide total
    
    $
    2,179.9
    
    
    $
    2,128.1
 Geographic AreasNet Sales to Customers (1)Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006USA
    
    $
    1,153.1
    
    
    $
    1,279.4
    
    
    $
    1,233.7Australia
    
    
    198.6
    
    
    
    169.0
    
    
    
    164.5New Zealand
    
    
    67.3
    
    
    
    54.4
    
    
    
    53.6Other Countries
    
    
    49.8
    
    
    
    40.1
    
    
    
    36.7Worldwide total
    
    $
    1,468.8
    
    
    $
    1,542.9
    
    
    $
    1,488.5
 F-40




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Total Identifiable AssetsYears Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007USA
    
    $
    846.6
    
    
    $
    935.7Australia
    
    
    139.0
    
    
    
    127.1New Zealand
    
    
    26.1
    
    
    
    23.1Other Countries
    
    
    66.9
    
    
    
    58.9Segments total
    
    
    1,078.6
    
    
    
    1,144.8General Corporate (8), (9)
    
    
    1,101.3
    
    
    
    983.3Worldwide total
    
    $
    2,179.9
    
    
    $
    2,128.1
 
 (1)
    
    Export sales and inter-segmental sales are not significant.(2)
    
    Research and development costs of $7.4 million, $10.8 million and $13.2 million in fiscal
years 2008, 2007 and 2006, respectively, were expensed in the USA Fiber Cement segment.
Research and development costs of $1.6 million, $1.8 million and $2.3 million in fiscal years
2008, 2007 and 2006, respectively, were expensed in the Asia Pacific Fiber Cement segment.
Research and development costs of $18.0 million, $13.0 million and $12.3 million in fiscal
years 2008, 2007 and 2006, respectively, were expensed in the Research and Development
segment. Research and Development costs of $0.3 million, $0.3 million and $0.9 million in
fiscal years 2008, 2007 and 2006, respectively, were expensed in the Other segment. The
Research and Development segment also included selling, general and administrative expenses of
$0.1 million, $4.1 million and $3.4 million in fiscal years 2008, 2007 and 2006, respectively.Research and development expenditures are expensed as incurred and in total amounted to
$27.3 million, $25.9 million and $28.7 million for the years ended March 31, 2008, 2007 and
2006, respectively.(3)
    
    Included in USA Fiber Cement for the year ended March 31, 2008 are asset impairment charges
of $45.6 million.(4)
    
    Included in the Other segment for the years ended March 31, 2008 and 2006 are asset
impairment charges of $25.4 million and $13.4 million, respectively.(5)
    
    The principal components of General Corporate are officer and employee compensation and
related benefits; professional and legal fees; administrative costs; and rental expense, net
of rental income, on the Companys corporate offices. Also included in General Corporate are
unfavorable asbestos adjustments of $240.1 million, $405.5 million and $715.6 million in
fiscal years 2008, 2007 and 2006, respectively and AICF SG&A expenses of $4.0 million, nil and
nil in fiscal years 2008, 2007 and 2006, respectively.(6)
    
    Includes costs of nil, $13.6 million and $17.4 million for SCI and other related expenses in
fiscal years 2008, 2007 and 2006, respectively.(7)
    
    The Company does not report net interest expense for each operating segment as operating
segments are not held directly accountable for interest expense. Included in net interest
income (expense) is AICF interest income of $9.4 million, nil and nil in fiscal years 2008,
2007 and 2006, respectively. See Note 12.(8)
    
    The Company does not report deferred tax assets and liabilities for each operating segment as
operating segments are not held directly accountable for deferred income taxes. All deferred
income taxes are included in General Corporate.(9)
    
    Asbestos-related assets at March 31, 2008 and March 31, 2007 are $817.1 million and $727.6
million, respectively, and are included in the General Corporate segment. See Note 12. Concentrations of Risk
  F-41




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
  Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    2006%
  
    
    
    
    
    
    
    %
 
    
    
    
    
    
    
    %Customer A
    
    $
    431.3
    
    
    
    27.9
    
    
    $
    446.3
    
    
    
    26.7
    
    
    $
    426.2
    
    
    
    35.0Customer B
    
    
    108.2
    
    
    
    7.0
    
    
    
    172.3
    
    
    
    10.3
    
    
    
    168.5
    
    
    
    13.8Customer C
    
    
    167.3
    
    
    
    10.8
    
    
    
    168.9
    
    
    
    10.1
    
    
    
    156.6
    
    
    
    12.9Total
    
    $
    706.8
    
    
    
    
    
    
    $
    787.5
    
    
    
    
    
    
    $
    751.3
  20. Accumulated Other Comprehensive Income (Loss)
  Years Ended March 31(Millions of US dollars)
    
    2008
    
    
    2007
    
    
    2006Pension and post-retirement benefit adjustments
(net of $1.0 million and $1.2 million tax benefit, respectively)
    
    $
    (2.1
    )
    
    $
    (2.7
    )
    
    $
    Unrealized loss on restricted short-term investments
    
    
    (4.4
    )
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    23.4
    
    
    
    8.1
    
    
    
    (28.4
    )Total accumulated other comprehensive income (loss)
    
    $
    16.9
    
    
    $
    5.4
    
    
    $
    (28.4
    )
 21. Related Party Transactions
 JHI NV Directors and Former Directors Securities Transactions
   F-42




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 On MarketPurchases/(Sales)
    
    SBSPSupervisory
Board directorsM. Hammes
    
    
    9,000
    
    
    
    6,859B. Anderson
    
    
    
    
    
    
    6,124D. Andrews
    
    
    
    
    
    
    3,903D. DeFosset
    
    
    
    
    
    
    10,377J. Loudon
    
    
    6,300
    
    
    
    D. McGauchie AO
    
    
    
    
    
    
    5,803R. van der Meer
    
    
    
    
    
    
    4,410C. Walter AM
    
    
    
    
    
    
    5,032Managing
Board directorsL. Gries
    
    
    
    
    
    
    N/AR. Chenu
    
    
    5,000
    
    
    
    N/AFormer directorsJ. Barr
    
    
    
    
    
    
    7,667B. Butterfield
    
    
    (90,000
    )
    
    
    N/A
    Existing Loans to the Companys Directors and Directors of James Hardie Subsidiaries
   Payments Made to Directors and Director Related Entities of JHI NV during the Year
  F-43




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
 Payments made to Director and Director Related Entities of Subsidiaries of JHI NV
   
 F-44




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##### Table of Contents



James Hardie Industries N.V. and Subsidiaries
 
 Selected Quarterly Financial Data
 (unaudited, not forming part of the consolidated financial statements)
  Year Ended March 31, 2008
    
    
    
    Year Ended March 31, 2007By Quarter
    
    
    
    By Quarter(Millions of US dollars)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    
    First
    
    
    Second
    
    
    Third
    
    
    FourthNet sales
    
    $
    424.4
    
    
    $
    390.1
    
    
    $
    341.4
    
    
    $
    312.9
    
    
    
    $
    415.5
    
    
    $
    411.4
    
    
    $
    355.1
    
    
    $
    360.9Cost of goods sold
    
    
    (257.5
    )
    
    
    (251.3
    )
    
    
    (224.3
    )
    
    
    (205.7
    )
    
    
    
    (257.8
    )
    
    
    (256.2
    )
    
    
    (228.8
    )
    
    
    (227.1
    )Gross profit
    
    
    166.9
    
    
    
    138.8
    
    
    
    117.1
    
    
    
    107.2
    
    
    
    
    157.7
    
    
    
    155.2
    
    
    
    126.3
    
    
    
    133.8Operating income (loss)
    
    
    75.0
    
    
    
    44.7
    
    
    
    25.2
    
    
    
    (181.5
    )
    
    
    
    68.9
    
    
    
    41.0
    
    
    
    19.3
    
    
    
    (215.8
    )Interest expense
    
    
    (1.3
    )
    
    
    (2.5
    )
    
    
    (2.9
    )
    
    
    (4.4
    )
    
    
    
    (5.6
    )
    
    
    (0.2
    )
    
    
    (1.5
    )
    
    
    (4.7
    )Interest income
    
    
    1.8
    
    
    
    4.5
    
    
    
    3.7
    
    
    
    2.2
    
    
    
    
    3.6
    
    
    
    1.2
    
    
    
    0.2
    
    
    
    0.5Income (loss) from
continuing
operations before
income taxes
    
    
    75.5
    
    
    
    46.7
    
    
    
    26.0
    
    
    
    (183.7
    )
    
    
    
    66.9
    
    
    
    42.0
    
    
    
    18.0
    
    
    
    (220.0
    )Income tax (expense)
benefit
    
    
    (36.4
    )
    
    
    (27.6
    )
    
    
    (8.9
    )
    
    
    36.8
    
    
    
    
    (32.3
    )
    
    
    (20.9
    )
    
    
    (26.0
    )
    
    
    323.1Income (loss) from
continuing operations
    
    
    39.1
    
    
    
    19.1
    
    
    
    17.1
    
    
    
    (146.9
    )
    
    
    
    34.6
    
    
    
    21.1
    
    
    
    (8.0
    )
    
    
    103.1Cumulative effect of
change in accounting
principle for
stock-based
compensation
(net of $0.4 million
of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    39.1
    
    
    $
    19.1
    
    
    $
    17.1
    
    
    $
    (146.9
    )
    
    
    $
    35.5
    
    
    $
    21.1
    
    
    $
    (8.0
    )
    
    $
    103.1
 F-45




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibits1.1
    
    Articles of Association, as amended on August 20, 2007 of James Hardie Industries N.V. (English
Translation)2.1
    
    Letter Agreement of September 6, 2001 by and between James Hardie Industries N.V. and CHESS
Depositary Nominees Pty Limited, as the depositary for CHESS Units of Foreign Securities (2)2.2
    
    Deposit Agreement dated as of September 24, 2001 between The Bank of New York, as depositary, and
James Hardie Industries N.V. (2)2.3
    
    Common Terms Deed Poll amended and restated February 20, 2008 among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and James Hardie Industries N.V.2.4
    
    Form of Term Facility Agreement between James Hardie International Finance B.V. and Financier (2)2.5
    
    Form of Term Facility Agreement  Occurrence of Extension Event among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and Financier (5)2.6
    
    Form of 3 Year Term (Bullet) Facility Agreement dated February 21, 2008 among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and Financier2.7
    
    Form of 5 Year Term (Bullet) Facility Agreement dated February 21, 2008 among James Hardie International
Finance B.V., James Hardie Building Products, Inc. and Financier2.8
    
    Form of 364-day Facility Agreement between James Hardie International Finance B.V. and Financier (2)2.9
    
    Form of Schedule 3  Extension Request to December 2008 for 364-day Facility Agreement between James Hardie
International Finance B.V. and Financier2.10
    
    Form of Schedule 3  Extension Request to June 2009 for 364-day Facility Agreement between James Hardie
International Finance B.V. and Financier2.11
    
    Form of Extension Request to June 2009 for 364-day Facility Agreement between James Hardie
International Finance B.V. and Financier2.12
    
    Form of Guarantee Deed between James Hardie Industries N.V. and Financier (2)4.1
    
    James Hardie Industries N.V. 2001 Equity Incentive Plan (2)4.2
    
    Economic Profit and Individual Performance Incentive Plans (2)4.3
    
    JHI NV Stock Appreciation Rights Incentive Plan (2)4.4
    
    Supervisory Board Share Plan 2006 (3)4.5
    
    James Hardie Industries N.V. Long Term Incentive Plan 2006 (3)4.6
    
    2005 Managing Board Transitional Stock Option Plan (3)4.7
    
    Form of Joint and Several Indemnity Agreement among James Hardie N.V., James Hardie (USA) Inc. and
certain former executive officers and Managing Board directors thereto (2)4.8
    
    Form of Joint and Several Indemnity Agreement among James Hardie Industries N.V., James Hardie Inc.
and certain former Supervisory Board and Managing Board directors thereto (2)4.9
    
    Form of Deed of Access, Insurance and Indemnity between James Hardie Industries N.V. and Supervisory
Board directors and Managing Board directors4.10
    
    Form of Indemnity Agreement between James Hardie Building Products, Inc. and Supervisory Board
directors, Managing Board directors and certain executive officers




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibits4.11
    
    Lease Amendment, dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the
corner of Cobalt & Silica Street, Carole Park, Queensland, Australia (1)4.12
    
    Variation of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at the
corner of Colquhoun & Devon Streets, Rosehill, New South Wales, Australia (1)4.13
    
    Extension of Lease dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at Rutland,
Avenue, Welshpool, Western Australia, Australia (1)4.14
    
    Lease Amendment dated March 23, 2004, among Amaca Pty Limited (f/k/a/ James Hardie & Coy Pty
Limited), James Hardie Australia Pty Limited and James Hardie Industries N.V. re premises at 46
Randle Road, Meeandah, Queensland, Australia (1)4.15
    
    Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and
James Hardie Industries N.V. re premises at the corner of ORorke and Station Roads, Penrose,
Auckland, New Zealand (1)4.16
    
    Lease Agreement dated March 23, 2004 among Studorp Limited, James Hardie New Zealand Limited and
James Hardie Industries N.V. re premises at 44-74 ORorke Road, Penrose, Auckland, New Zealand (1)4.17
    
    Ownership transfer related to corner of ORorke and Station Roads, Penrose, Auckland, New Zealand and
44-74 ORorke Road, Penrose, Auckland, New Zealand effective June 30, 2005 (3)4.18
    
    Industrial Building Lease Agreement, effective October 6, 2000, between James Hardie Building
Products, Inc. and Fortra Fiber-Cement L.L.C., re premises at Waxahachie, Ellis County, Texas (2)4.19
    
    Asset Purchase Agreement by and between James Hardie Building Products, Inc. and Cemplank, Inc. dated
as of December 12, 2001 (2)4.20
    
    Amended and Restated Stock Purchase Agreement dated March 12, 2002, between BPB U.S. Holdings, Inc.
and James Hardie Inc. (2)4.21
    
    Amended and Restated Final Funding Agreement dated November 21, 2006 (4)4.22
    
    Amended FFA Amendment dated August 6, 20074.23
    
    Amended FFA Amendment dated November 8, 20074.24
    
    Amended FFA Amendment dated June 11, 20084.25
    
    Address for Service of Notice on Trustee dated June 13, 20084.26
    
    Asbestos Injuries Compensation Fund Amended and Restated Trust Deed by and between James Hardie
Industries N.V. and Asbestos Injuries Compensation Fund Limited dated December 14, 2006 (5)4.27
    
    Deed Poll dated June, 11, 2008  amendment of the Asbestos Injuries Compensation Fund Amended and
Restated Trust Deed4.28
    
    Deed of Release by and among James Hardie Industries N.V., Australian Council of Trade Unions, Unions
New South Wales, and Bernard Douglas Banton dated December 21, 2005 (3)4.29
    
    Parent Guarantee by and among Asbestos Injuries Compensation Fund Limited, The State of New South
Wales, and James Hardie Industries N.V. dated December 14, 2006 (5)4.30
    
    Deed of Release by and between James Hardie Industries N.V. and The State of New South Wales dated
June 22, 2006 (3)4.31
    
    Second Irrevocable Power of Attorney by and between Asbestos Injuries Compensation Fund Limited and
The State of New South Wales dated December 14, 2006 (5)4.32
    
    Deed of Accession by and among Asbestos Injuries Compensation Fund Limited, James Hardie Industries
N.V., James Hardie 117 Pty Limited, and The State of New South Wales dated December 14, 2006 (5)8.1
    
    List of significant subsidiaries of James Hardie Industries N.V.12.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002




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##### Table of Contents



ExhibitNumber
    
    Description of Exhibits13.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 200215.1
    
    Consent of independent registered public accounting firm15.2
    
    Consent of KPMG Actuaries Pty Ltd99.1
    
    Excerpts of the ASX Settlement and Transfer Corporation Pty Ltd as of March 31, 200899.2
    
    Excerpts of the Financial Services Reform Act 2001, as of March 11, 2002 (2)99.3
    
    ASIC Class Order 02/311, dated November 3, 2002 (2)99.4
    
    ASIC Modification, dated March 7, 2002 (2)99.5
    
    ASIC Modification, dated February 26, 2004 (3)
 
 (1)
    
    Previously filed as an exhibit to our Annual Report on Form 20-F dated November 22, 2004 and
incorporated herein by reference.(2)
    
    Previously filed as an exhibit to our Annual Report on Form 20-F dated July 7, 2005 and
incorporated herein by reference.(3)
    
    Previously filed as an exhibit to our Annual Report on Form 20-F dated September 29, 2006 and
incorporated herein by reference.(4)
    
    Previously filed as an exhibit to our Current Report on Form 6-K dated January 5, 2007 and
incorporated herein by reference.(5)
    
    Previously filed as an exhibit to our Annual Report on form 20-F dated July 6, 2007.