##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-Q
   (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-32312
  Novelis Inc.
 (Exact name of registrant as
    specified in its charter)
   Canada(State or other jurisdiction
    of
    incorporation or organization)

98-0442987(I.R.S. employer
    identification number)3399 Peachtree Road NE, Suite 1500
    Atlanta, Georgia(Address of principal
    executive offices)

30326(Zip
    Code)   Telephone:
    (404) 814-4200
 (Registrants telephone
    number, including area code)
   þ o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ

Smaller reporting
    company o(Do not check if a smaller reporting
    company)   Rule 12b-2 o þ




---



##### 





TABLE OF
    CONTENTS
   
 PART I.


FINANCIAL INFORMATIONItem 1.


Financial StatementsCondensed Consolidated Statements of Operations
    and Comprehensive Income (Loss) (unaudited) Three Months Ended
    September 30, 2008; Three Months Ended September 30,
    2007 (Restated); Six Months Ended September 30, 2008;
    May 16, 2007 Through September 30, 2007 (Restated);
    and April 1, 2007 Through May 15, 2007


2Condensed Consolidated Balance Sheets (unaudited)
    As of September 30, 2008 and March 31, 2008
    (Restated)


3Condensed Consolidated Statements of Cash Flows
    (unaudited) Six Months Ended September 30, 2008;
    May 16, 2007 Through September 30, 2007 (Restated);
    and April 1, 2007 Through May 15, 2007


4Condensed Consolidated Statement of
    Shareholders Equity (unaudited) Six Months Ended
    September 30, 2008 (Restated as to opening balance)


6Notes to the Condensed Consolidated Financial
    Statements (unaudited)


7Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


51Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


90Item 4.


Controls and Procedures


94PART II.


OTHER INFORMATIONItem 1.


Legal Proceedings


96Item 6.


Exhibits


98EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2   1




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##### Table of Contents



PART I.
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  Novelis
    Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    AND
    COMPREHENSIVE INCOME (LOSS) (unaudited)
    (in millions)
  Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007(Restated)





(Restated)Successor


Successor


Successor


Successor



PredecessorNet sales

$
2,959


$
2,821


$
6,062


$
4,368



$
1,281Cost of goods sold (exclusive of depreciation and amortization
    shown below)


2,791



2,555



5,622



3,991




1,205Selling, general and administrative expenses


89



88



173



130




95Depreciation and amortization


107



103



223



156




28Research and development expenses


10



10



22



23




6Interest expense and amortization of debt issuance
    costs  net


41



56



81



81




26(Gain) loss on change in fair value of derivative
    instruments  net


185



30



119



16




(20
)Equity in net (income) loss of non-consolidated affiliates


(2
)


(20
)






(19
)



(1
)Sale transaction fees



















32Other (income) expenses  net


10



(2
)


32



9




43,231



2,820



6,272



4,387




1,375Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(272
)


1



(210
)


(19
)



(94
)Provision (benefit) for taxes on income (loss)


(169
)


20



(134
)


47




4Income (loss) before minority interests share


(103
)


(19
)


(76
)


(66
)



(98
)Minority interests share










(2
)


2




1Net income (loss)


(103
)


(19
)


(78
)


(64
)



(97
)Other comprehensive income (loss):Currency translation adjustment


(73
)


27



(63
)


14




31Change in fair value of effective portion of hedges


(16
)


2



3



4




(1
)Postretirement benefit plans:Amortization of net actuarial loss



















(1
)Change in pension and other benefits


2







2








Other comprehensive income (loss) before income tax effect


(87
)


29



(58
)


18




29Income tax (expense) benefit related to items of other
    comprehensive income (loss)


6



2



(2
)


12




4Other comprehensive income (loss)  net of tax


(81
)


31



(60
)


30




33Comprehensive income (loss)

$
(184
)

$
12


$
(138
)

$
(34
)


$
(64
)    2




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##### Table of Contents



Novelis
    Inc.
  CONDENSED
    CONSOLIDATED BALANCE SHEETS  (unaudited)
 (in millions, except number of shares)
  As ofSeptember 30,


March 31,2008


2008(Restated)Successor


SuccessorASSETSCurrent assetsCash and cash equivalents

$
219


$
326Accounts receivable (net of allowances of $1 as of
    September 30, 2008 and March 31, 2008) third parties


1,347



1,248 related parties


24



31Inventories


1,413



1,455Prepaid expenses and other current assets


75



58Current portion of fair value of derivative instruments


237



203Deferred income tax assets


186



125Total current assets


3,501



3,446Property, plant and equipment  net


3,032



3,357Goodwill


1,864



1,869Intangible assets  net


827



888Investment in and advances to non-consolidated affiliates


924



946Fair value of derivative instruments  net of current
    portion


46



21Deferred income tax assets


10



12Other long-term assets third parties


91



102 related parties


29



41Total assets

$
10,324


$
10,682LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
14


$
15Short-term borrowings


351



115Accounts payable third parties


1,418



1,582 related parties


57



55Accrued expenses and other current liabilities


965



850Deferred income tax liabilities


34



39Total current liabilities


2,839



2,656Long-term debt  net of current portion


2,544



2,560Deferred income tax liabilities


557



701Accrued postretirement benefits


420



421Other long-term liabilities


457



6726,817



7,010Commitments and contingenciesMinority interests in equity of consolidated affiliates


122



149Shareholders equityCommon stock, no par value; unlimited number of shares
    authorized; 77,459,658 shares issued and outstanding as of
    September 30, 2008 and March 31, 2008






Additional paid-in capital


3,497



3,497Retained earnings (Accumulated deficit)


(98
)


(20
)Accumulated other comprehensive income (loss)


(14
)


46Total shareholders equity


3,385



3,523Total liabilities and shareholders equity

$
10,324


$
10,682    3




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##### Table of Contents



Novelis
    Inc.
  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited)
    (in millions)
  Six Months


May 16, 2007



April 1, 2007Ended


Through



ThroughSeptember 30,


September,



May 15,2008


2007



2007(Restated)Successor


Successor



PredecessorOPERATING ACTIVITIESNet income (loss)

$
(78
)

$
(64
)


$
(97
)Adjustments to determine net cash provided by (used in)
    operating activities:Depreciation and amortization


223



156




28(Gain) loss on change in fair value of derivative
    instruments  net


119



16




(20
)Deferred income taxes


(183
)







(18
)Amortization of debt issuance costs


3



7




1Write-off and amortization of fair value adjustments 
    net


(124
)


(82
)



Foreign exchange remeasurement on non-working capital
    items  net


17



(2
)



Gain on reversal of accrued legal claim


(26
)







Provision for uncollectible accounts receivable






1




Equity in net (income) loss of non-consolidated affiliates






(19
)



(1
)Dividends from non-consolidated affiliates











4Minority interests share


2



(2
)



(1
)Impairment charges on long-lived assets


1








(Gain) loss on sales of property, plant and equipment and
    business  net


(2
)







Changes in assets and liabilities:Accounts receivable third parties


(183
)


54




(21
)Inventories


(71
)


105




(76
)Prepaid expenses and other current assets


(25
)


(2
)



(7
)Other long-term assets


9



(2
)



(1
)Accounts payable third parties


(33
)


(124
)



(62
) related parties


9



3




Accrued expenses and other current liabilities


(74
)


(57
)



42Accrued postretirement benefits


22



8




1Other long-term liabilities


4



7




(2
)Net cash provided by (used in) operating activities


(390
)


3




(230
)INVESTING ACTIVITIESCapital expenditures


(70
)


(57
)



(17
)Proceeds from sales of property, plant and equipment


2



1




Changes to investment in and advances to non-consolidated
    affiliates


13



3




1Proceeds from loans receivable  net 
    related parties


13



10




Net proceeds from settlement of derivative instruments


94



72




18Net cash provided by (used in) investing activities


52



29




2    4




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##### Table of Contents



Novelis
    Inc.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (unaudited) (in millions)  (Continued)
  Six Months


May 16, 2007



April 1, 2007Ended


Through



ThroughSeptember 30,


September 30,



May 15,2008


2007



2007(Restated)Successor


Successor



PredecessorFINANCING ACTIVITIESProceeds from issuance of common stock






92




Proceeds from issuance of debt






960




150Principal repayments


(7
)


(905
)



(1
)Short-term borrowings  net


263



(65
)



60Dividends  minority interests


(5
)


(1
)



(7
)Debt issuance costs






(35
)



(2
)Proceeds from the exercise of stock options











1Net cash provided by (used in) financing activities


251



46




201Net increase (decrease) in cash and cash equivalents


(87
)


78




(27
)Effect of exchange rate changes on cash balances held in
    foreign currencies


(20
)


1




1Cash and cash equivalents  beginning of period


326



102




128Cash and cash equivalents  end of period

$
219


$
181



$
102Supplemental disclosures of cash flow information:Interest paid

$
82


$
102



$
13Income taxes paid

$
67


$
31



$
9Supplemental schedule of non-cash investing and financing
    activities related to the Acquisition of Novelis Common Stock
    (See Note 1):Property, plant and equipment





$
(1,244
)Goodwill





$
(1,866
)Intangible assets





$
(859
)Investment in and advances to non-consolidated affiliates





$
(610
)Debt





$
66    5




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##### Table of Contents



Novelis
    Inc.
 CONDENSED
    CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
    (unaudited)

(in millions, except number of shares) Retained


AccumulatedAdditional


Earnings


OtherCommon Stock


Paid-in


(Accumulated


ComprehensiveShares


Amount


Capital


Deficit)


Income (Loss)


TotalSuccessorBalance as of March 31, 2008 (Restated)


77,459,658


$



$
3,497


$
(20
)

$
46


$
3,523Net income (loss)














(78
)






(78
)Currency translation adjustment  net


















(65
)


(65
)Change in fair value of effective portion of hedges 
    net


















2



2Postretirement benefit plans:Change in pension and other benefits  net


















3



3Balance as of September 30, 2008


77,459,658


$



$
3,497


$
(98
)

$
(14
)

$
3,385    6




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##### Table of Contents



Novelis
    Inc.
  NOTES
    TO THE CONDENSED  CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)
  1.
    Business
    and Summary of Significant Accounting Policies    Description
    of Business and Basis of Presentation
    Form 10-K/A Rule 10-01 Regulation S-X.
  Acquisition
    of Novelis Common Stock and Predecessor and Successor
    Reporting
    Push Down Basis
    of Accounting Required in Certain Limited Circumstances Business Combinations
 7




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Interim
    Reporting
    Reclassifications
  Accounts payable  third
    parties Foreign exchange
    remeasurement on non-working capital items  net
  Dividends
    Recently
    Adopted Accounting Standards
    The Fair Value Option for Financial Assets and Financial
    Liabilities  including an amendment of FASB Statement
    No. 115 instrument-by-instrument Accounting for Derivative Instruments and Hedging Activities
  Fair Value Measurements
 8




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  No. FAS 157-2, Effective Date of FASB Statement No. 157 No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement under Statement 13 Accounting for Leases Business Combinations
  No. FIN 39-1, Amendment of FASB Interpretation No. 39 FIN 39-1). FIN 39-1 Offsetting of Amounts
    Related to Certain Contracts
  Recently
    Issued Accounting Standards
    The
    Hierarchy of Generally Accepted Accounting Principles The Meaning of Present Fairly in Conformity
    with Generally Accepted Accounting Principles
  No. FAS 142-3, Determination of Useful Life of Intangible Assets, FAS 142-3). FAS 142-3 Goodwill and Other Intangible Assets FAS 142-3 FAS 142-3 FAS 142-3
  Disclosures about Derivative Instruments and Hedging
    Activities
 9




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Business Combinations ,
    Accounting for Income Taxes,
  Noncontrolling Interests in Consolidated Financial Statements
    2.
    Restatement
    of Financial Statements  Form 10-K/A
 10




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
      Three MonthsEndedSeptember 30, 2007As Previously





AsReported


Restatements


RestatedSuccessor





SuccessorNet sales

$
2,821


$



$
2,821Cost of goods sold (exclusive of depreciation and amortization
    shown below)


2,555







2,555Selling, general and administrative expenses


88







88Depreciation and amortization


102



1



103Research and development expenses


10







10Interest expense and amortization of debt issuance
    costs  net


56







56(Gain) loss on change in fair value of derivative
    instruments  net


36



(6
)


30Equity in net (income) loss of non-consolidated affiliates


4



(24
)


(20
)Other (income) expenses  net


(7
)


5



(2
)2,844



(24
)


2,820Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(23
)


24



1Provision (benefit) for taxes on income (loss)


(36
)


56



20Income (loss) before minority interests share


13



(32
)


(19
)Minority interests share










Net income (loss)


13



(32
)


(19
)Other comprehensive income (loss):Currency translation adjustment


27







27Change in fair value of effective portion of hedges 
    net


2







2Other comprehensive income (loss) before income tax effect


29







29Income tax (expense) benefit related to items of other
    comprehensive income (loss)


2







2Other comprehensive income (loss)  net of tax


31







31Comprehensive income (loss)

$
44


$
(32
)

$
12  11




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    May 16, 2007ThroughSeptember 30, 2007As Previously





AsReported


Restatements


RestatedSuccessor





SuccessorNet sales

$
4,368


$



$
4,368Cost of goods sold (exclusive of depreciation and amortization
    shown below)


3,991







3,991Selling, general and administrative expenses


130







130Depreciation and amortization


155



1



156Research and development expenses


23







23Interest expense and amortization of debt issuance
    costs  net


81







81(Gain) loss on change in fair value of derivative
    instruments  net


22



(6
)


16Equity in net (income) loss of non-consolidated affiliates


5



(24
)


(19
)Other (income) expenses  net


4



5



94,411



(24
)


4,387Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(43
)


24



(19
)Provision (benefit) for taxes on income (loss)






47



47Income (loss) before minority interests share


(43
)


(23
)


(66
)Minority interests share


2







2Net income (loss)


(41
)


(23
)


(64
)Other comprehensive income (loss):Currency translation adjustment


14







14Change in fair value of effective portion of hedges 
    net


4







4Other comprehensive income (loss) before income tax effect


18







18Income tax (expense) benefit related to items of other
    comprehensive income (loss)


12







12Other comprehensive income (loss)  net of tax


30







30Comprehensive income (loss)

$
(11
)

$
(23
)

$
(34
)  12




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    May 16, 2007ThroughSeptember 30, 2007As Previously





AsReported


Restatements


RestatedSuccessor





SuccessorOPERATING ACTIVITIESNet income (loss)

$
(41
)

$
(23
)

$
(64
)Adjustments to determine net cash provided by (used in)
    operating activities:Depreciation and amortization


155



1



156(Gain) loss on change in fair value of derivative
    instruments  net


22



(6
)


16Deferred income taxes


(46
)


46



Amortization of debt issuance costs


7







7Write-off and amortization of fair value adjustments 
    net


(82
)






(82
)Foreign exchange remeasurement on non-working capital
    items  net


(2
)






(2
)Provision for uncollectible accounts receivable


1







1Equity in net (income) loss of non-consolidated affiliates


5



(24
)


(19
)Minority interests share


(2
)






(2
)Changes in assets and liabilities (net of effects from
    acquisitions and divestitures):Accounts receivable  third parties


54







54Inventories


105







105Prepaid expenses and other current assets


(2
)






(2
)Other long-term assets


(2
)






(2
)Accounts payable  third parties


(124
)






(124
)Accounts payable  related parties


3







3Accrued expenses and other current liabilities


(57
)






(57
)Accrued postretirement benefits


8







8Other long-term liabilities


7







7Net cash provided by (used in) operating activities


9



(6
)


3INVESTING ACTIVITIESCapital expenditures


(57
)






(57
)Proceeds from sales of assets


1







1Changes to investment in and advances to non-consolidated
    affiliates


3







3Proceeds from loans receivable  net 
    related parties


10







10Net proceeds from settlement of derivative instruments


66



6



72Net cash provided by (used in) investing activities


23



6



29FINANCING ACTIVITIESProceeds from issuance of common stock


92







92Proceeds from issuance of debt


960







960Principal repayments


(905
)






(905
)Short-term borrowings  net


(65
)






(65
)Dividends  minority interests


(1
)






(1
)Debt issuance costs


(35
)






(35
)Net cash provided by (used in) financing activities


46







46Net increase (decrease) in cash and cash equivalents


78







78Effect of exchange rate changes on cash balances held in
    foreign currencies


1







1Cash and cash equivalents  beginning of period


102







102Cash and cash equivalents  end of period

$
181


$



$
181  13




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##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  3.
    Restructuring
    Programs    Other ExitSeverance Reserves


Related Reserves


TotalNorth








North





RestructuringEurope


America


Total


Europe


America


Total


ReservesSuccessor:Balance as of March 31, 2008

$
4


$
3


$
7


$
16


$
1


$
17


$
24Provisions (recoveries)  net






(1
)


(1
)














(1
)Cash payments


(1
)






(1
)


(1
)






(1
)


(2
)Adjustments  other






2



2















2Balance as of June 30, 2008


3



4



7



15



1



16



23Cash payments






(2
)


(2
)


(2
)






(2
)


(4
)Adjustments  other


(2
)






(2
)


(1
)






(1
)


(3
)Balance as of September 30, 2008

$
1


$
2


$
3


$
12


$
1


$
13


$
16   4.
    Inventories    As ofSeptember 30, 2008


March 31, 2008Successor


SuccessorFinished goods

$
330


$
357Work in process


570



638Raw materials


428



386Supplies


87



751,415



1,456Allowances


(2
)


(1
)Inventories

$
1,413


$
1,455  14




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  5.
    Property,
    Plant and Equipment    As ofSeptember 30, 2008


March 31, 2008(Restated)Successor


SuccessorLand and property rights

$
235


$
258Buildings


805



826Machinery and equipment


2,431



2,4603,471



3,544Accumulated depreciation and amortization


(518
)


(331
)2,953



3,213Construction in progress


79



144Property, plant and equipment  net

$
3,032


$
3,357     Three Months

Six Months

May 16, 2007


April 1, 2007Ended

Ended

Through


ThroughSeptember 30,

September 30,

September 30,


May 15,2008

2007

2008

2007


2007(Restated)



(Restated)Successor

Successor

Successor

Successor


PredecessorDepreciation expense related to property, plant and equipment

$
97


$
93


$
203


$
142



$
28     Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorTotal Amortization expense related to intangible assets

$
15


$
15


$
30


$
22



$
Less: Amortization expense related to intangible assets included
    in Cost of goods sold(A)


(5
)


(5
)


(10
)


(8
)



Amortization expense related to intangible assets included in
    Depreciation and amortization

$
10


$
10


$
20


$
14



$
     (A)
    
    Relates to amortization of favorable energy and other supply
    contracts. 15




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
   6.  Investment
    in and Advances to Non-Consolidated Affiliates and Related Party
    Transactions
    OwnershipAffiliate Name

Ownership Structure

PercentageAluminium Norf GmbH

Corporation Unincorporated Joint


50
%Consorcio Candonga

Venture Limited Liability


50
%MiniMRF LLC

Company


50
%Deutsche Aluminium Verpackung Recycling GmbH

Corporation


30
%France Aluminium Recyclage S.A.

Public Limited Company


20
%     Three Months


Six Months


May 16, 2007


April 1, 2007Ended


Ended


Through


ThroughSeptember 30,


September 30,


September 30,


May 15,2008


2007


2008


2007


2007Net sales

$
167


$
138


$
324


$
223


$
45Costs, expenses and provisions for taxes on income


146



130



288



211



43Net income

$
21


$
8


$
36


$
12


$
2    16




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorPurchases of tolling services and electricityAluminium Norf GmbH(A)

$
74


$
66


$
147


$
106



$
21Consorcio Candonga(B)


10



3



13



6




1Total purchases from related parties

$
84


$
69


$
160


$
112



$
22     (A)
    
    We purchase tolling services (the conversion of customer-owned
    metal) from Aluminium Norf GmbH.(B)
    
    We purchase electricity from Consorcio Candonga for our
    operations in South America.    As ofSeptember 30, 2008


March 31, 2008Successor


SuccessorAccounts receivable(A)

$
24


$
31Other long-term receivables(A)

$
29


$
41Accounts payable(B)

$
57


$
55     (A)
    
    The balances represent current and non-current portions of a
    loan due from Aluminium Norf GmbH.(B)
    
    We purchase tolling services from Aluminium Norf GmbH and
    electricity from Consorcio Candonga.  7.
    Accrued
    Expenses and Other Current Liabilities    As ofSeptember 30, 2008


March 31, 2008Successor


SuccessorAccrued compensation and benefits

$
122


$
141Accrued settlement of legal claim






39Accrued interest payable


18



15Accrued income taxes


3



35Current portion of fair value of unfavorable sales contracts


225



242Current portion of fair value of derivative instruments


385



148Other current liabilities


212



230Accrued expenses and other current liabilities

$
965


$
850  17




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  8.
    Debt    As ofSeptember 30, 2008


March 31, 2008Unamortized








UnamortizedInterest





Fair Value


Carrying





Fair Value


CarryingRates(A)


Principal


Adjustments(B)


Value


Principal


Adjustments(B)


ValueSuccessor








SuccessorNovelis Inc.7.25% Senior Notes, due February 2015


7.25
%

$
1,399


$
63


$
1,462


$
1,399


$
67


$
1,466Floating rate Term Loan facility, due July 2014


5.88
%


296







296



298







298Novelis CorporationFloating rate Term Loan facility, due July 2014


5.88
%(C)


652







652



655







655Novelis Switzerland S.A.Capital lease obligation, due January 2020 (Swiss francs (CHF)
    52 million)


7.50
%


47



(3
)


44



54



(4
)


50Capital lease obligation, due August 2011 (CHF 3 million)


2.49
%


3







3



3







3Novelis Korea LimitedBank loan, due October 2010


5.44
%


100







100



100







100Bank loans, due September 2010 through June 2011 (Korean won
    (KRW) 400 million)


3.50
%(D)














1







1OtherOther debt, due April 2009 through December 2012


1.40
%(D)


1







1



2







2Total debt






2,498



60



2,558



2,512



63



2,575Less: current portion






(14
)






(14
)


(15
)






(15
)Long-term debt  net of current portion





$
2,484


$
60


$
2,544


$
2,497


$
63


$
2,560     (A)
    
    Interest rates are as of September 30, 2008 and exclude the
    effects of accretion/amortization of fair value adjustments as a
    result of the Arrangement.(B)
    
    Debt was recorded at fair value as a result of the Arrangement.(C)
    
    Excludes the effect of related interest rate swaps.(D)
    
    Weighted average interest rate. 18




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
     Interest
    Rate Swaps
      Short-Term
    Borrowings and Lines of Credit
        9.
    Share-Based
    Compensation  Novelis
    Long-Term Incentive Plan
     19




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Share-Based
    Compensation Expense
  Selling, general and
    administrative expenses
      10.
    Postretirement
    Benefit Plans    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorPension Benefit PlansService cost

$
11


$
12


$
21


$
18



$
6Interest cost


15



12



30



18




6Expected return on assets


(13
)


(11
)


(26
)


(16
)



(5
)Amortization  prior service cost


(1
)






(1
)







Curtailment/settlement losses










1








Net periodic benefit cost

$
12


$
13


$
25


$
20



$
7   20




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorOther Postretirement Benefit PlansService cost

$
1


$
1


$
3


$
2



$
1Interest cost


2



2



5



3




1Amortization  actuarial losses


1







1








Curtailment/settlement losses










(2
)







Net periodic benefit cost

$
4


$
3


$
7


$
5



$
2     Employer
    Contributions to Plans
    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Predecessor


Successor


Successor



PredecessorFunded pension plans

$
7


$
11


$
11


$
16



$
4Unfunded pension plans


4



4



8



6




2Savings and defined contribution pension plans


4



4



9



6




2Total contributions

$
15


$
19


$
28


$
28



$
8    21




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  11.
    Currency
    (Gains) Losses    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007(Restated)





(Restated)Successor


Successor


Successor


Successor



PredecessorNet (gain) loss on change in fair value of currency derivative
    instruments(A)

$
(7
)

$
(2
)

$
(39
)

$
(18
)


$
(10
)Net (gain) loss on translation of monetary assets and
    liabilities(B)


36



8



56



15




4$
29


$
6


$
17


$
(3
)


$
(6
)     (A)
    
    Included in (Gain) loss on change in fair value of derivative
    instruments  net.(B)
    
    Included in Other (income) expenses  net.  Accumulated other comprehensive income (loss)
  Six Months


May 16, 2007Ended


ThroughSeptember 30, 2008


March 31, 2008(Restated)Successor


SuccessorCumulative currency translation adjustment  beginning
    of period

$
59


$
Effect of changes in exchange rates


(65
)


59Cumulative currency translation adjustment  end of
    period

$
(6
)

$
59   12.
    Financial
    Instruments and Commodity Contracts      Accrued expenses and
    other current liabilities Other long-term
    liabilities
 22




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    As of September 30, 2008Assets


Liabilities


Net Fair ValueCurrent


Noncurrent


Current


Noncurrent


Assets/(Liabilities)SuccessorDerivatives designated as hedging instruments:Cross-currency swaps

$



$



$



$
(65
)

$
(65
)Interest rate swaps














(4
)


(4
)Electricity swap






6











6Total derivatives designated as hedging instruments






6







(69
)


(63
)Derivatives not designated as hedging instruments:Foreign exchange forward contracts


43



1



(50
)


(16
)


(22
)Cross-currency swaps


12







(9
)






3Interest rate currency swaps






23











23Aluminum forward contracts


126



11



(297
)


(7
)


(167
)Aluminum options


2



5



(22
)


(7
)


(22
)Embedded derivative instruments


54















54Natural gas swaps










(7
)






(7
)Total derivatives not designated as hedging instruments


237



40



(385
)


(30
)


(138
)Total derivative fair value

$
237


$
46


$
(385
)

$
(99
)

$
(201
)   23




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  As of March 31, 2008Assets


Liabilities


Net Fair ValueCurrent


Noncurrent


Current


Noncurrent


Assets/(Liabilities)SuccessorDerivatives designated as hedging instruments:Cross-currency swaps

$



$



$



$
(184
)

$
(184
)Interest rate swaps










(3
)


(12
)


(15
)Electricity swap


3



11











14Total derivatives designated as hedging instruments


3



11



(3
)


(196
)


(185
)Derivatives not designated as hedging instruments:Foreign exchange forward contracts


43



4



(112
)


(4
)


(69
)Cross-currency swaps


19







(4
)


(1
)


14Interest rate currency swaps


2



2











4Aluminum forward contracts


130



4



(9
)






125Aluminum options


1















1Embedded derivative instruments










(20
)






(20
)Natural gas swaps


5















5Total derivatives not designated as hedging instruments


200



10



(145
)


(5
)


60Total derivative fair value

$
203


$
21


$
(148
)

$
(201
)

$
(125
)   Net
    Investment Hedges
  Other comprehensive income
    (loss) (Gain) loss on change in fair value
    of derivative instruments net.
  Other comprehensive income (loss)
  Three Months

Six Months

May 16, 2007


April 1, 2007Ended

Ended

Through


ThroughSeptember 30,

September 30,

September 30,


May 15,2008

2007

2008

2007


2007Successor

Successor

Successor

Successor


PredecessorCross-currency swaps

$
81


$
(28
)

$
120


$
(28
)


$
(8
)  24




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Cash Flow
    Hedges
  Other comprehensive
    income (loss) (Gain) loss on change
    in fair value of derivatives net
  Other comprehensive income (loss) Interest expense and amortization of debt issuance costs net
  (Gain) loss on change in fair value of derivative instruments net Accumulated
    other comprehensive income (loss)
    Other comprehensive income (loss)
    (OCI), Accumulated OCI
  Three
    Month Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)

Recognized in Income onAmount of Gain or (Loss)

Reclassified from Accumulated

Derivative (Ineffective PortionRecognized in OCI on Derivative

OCI into Income

and Amount Excluded from(Effective Portion)

(Effective Portion)

Effectiveness Testing)Three Months

Three Months

Three Months

Three Months

Three Months

Three MonthsEnded

Ended

Ended

Ended

Ended

EndedSeptember 30,

September 30,

September 30,

September 30,

September 30,

September 30,2008

2007

2008

2007

2008

2007Successor

Successor

Successor

Successor

Successor

SuccessorElectricity swap

$
(12
)

$
4


$
(4
)

$
2


$



$
Interest rate swaps

$
1


$



$



$



$



$
  25




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Six Month
    Comparison:
  Amount of Gain or (Loss)Recognized in IncomeAmount of Gain or (Loss) Recognized

Amount of Gain or (Loss)

on Derivativein OCI on Derivative

Reclassified from Accumulated

(Ineffective Portion and Amount(Effective Portion)

OCI into Income (Effective Portion)

Excluded from Effectiveness Testing)Six Months

Six Months

Six MonthsEnded

Ended

EndedSeptember 30,

September 30,

September 30,2008

2008

2008Successor

Successor

SuccessorElectricity swap

$



$
(7
)

$
Interest rate swaps

$
11


$



$
   Amount of Gain or (Loss)Amount of Gain or (Loss)

Amount of Gain or (Loss)

Recognized in Income on DerivativeRecognized in OCI on

Reclassified from Accumulated

(Ineffective Portion and AmountDerivative (Effective Portion)

OCI into Income (Effective Portion)

Excluded from Effectiveness Testing)May 16, 2007


April 1, 2007

May 16, 2007


April 1, 2007

May 16, 2007


April 1, 2007Through


Through

Through


Through

Through


ThroughSeptember 30,


May 15,

September 30,


May 15,

September 30,


May 15,2007


2007

2007


2007

2007


2007Successor


Predecessor

Successor


Predecessor

Successor


PredecessorForeign exchange forward contracts

$




$
3


$




$
(1
)

$




$
Electricity swap

$
6



$
4


$
2



$



$




$
   Derivative
    Instruments Not Designated as Hedges
          (Gain) loss on
    change in fair value of derivative instruments  net
 26




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorDerivative Instruments Not Designated as HedgesForeign exchange forward contracts

$
17


$
(4
)

$
7


$
12



$
11Interest rate currency swaps


15



(2
)


24



(2
)



(1
)Aluminum forward contracts


(207
)


(30
)


(191
)


(34
)



9Aluminum options


(27
)






(25
)


1




Embedded derivative instruments


53



15



58



12




2Natural gas swaps


(16
)


(2
)


(9
)


(3
)



1Cross currency swaps


(25
)


(9
)


8



(6
)



(3
)Gain (loss) recognized


(190
)


(32
)


(128
)


(20
)



19Derivative Instruments Designated as Cash Flow HedgesElectricity swap


5



2



9



4




1Gain (loss) on change in fair value of derivative instruments
     net

$
(185
)

$
(30
)

$
(119
)

$
(16
)


$
20   13.
    Fair
    Value Measurements  (Gain) loss on change in fair value of
    derivative instruments  net Accumulated other
    comprehensive income (loss) Accumulated other comprehensive income (loss)
   27




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Level 1
  Level 2
  Level 3
    Derivative
    contracts
            Fair Value Measurements UsingLevel 1


Level 2


Level 3


TotalSuccessor:Assets  Derivative instruments

$



$
277


$
6


$
283Liabilities  Derivative instruments

$



$
(468
)

$
(16
)

$
(484
)    28




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  (Gain) loss on change in fair value of derivative
    instruments  net.
  Net Realized/Net Realized/

UnrealizedUnrealized

Gains (Losses)Beginning

Gains

Included





EndingBalance

(Losses)

in Other

Net Purchases,

Net Transfers

BalanceApril 1,

Included in

Comprehensive

Issuances and

in and/or

September 30,2008

Earnings(B)

Income (Loss)(C)

Settlements

(out) of Level 3

2008Successor:Derivative instruments(A)

$
11


$
(5
)

$
(8
)

$
(9
)

$
1


$
(10
)     (A)
    
    Represents derivative assets net of derivative liabilities.(B)
    
    Included in (Gain) loss on change in fair value of derivative
    instruments net.(C)
    
    Included in Change in fair value of effective portion of
    hedges net.  14.
    Other
    (Income) Expenses  Net    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007(Restated)





(Restated)Successor


Successor


Successor


Successor



PredecessorExchange (gains) losses  net

$
36


$
8


$
56


$
15



$
4(Gain) loss on reversal of accrued legal claim(A)


(26
)






(26
)







(Gain) loss on partial reversal of accrued social contribution
    tax






(14
)






(14
)



Restructuring charges (recoveries)  net










(1
)


1




1Impairment charges on long-lived assets










1








(Gain) loss on disposal of property, plant and equipment
     net


(1
)






(2
)







Other  net


1



4



4



7




(1
)Other (income) expenses  net

$
10


$
(2
)

$
32


$
9



$
4     (A)
    
    See Note 16  Commitments and Contingencies for a
    discussion regarding the settlement of the Reynolds Boat Case.  15.
    Income
    Taxes  Provision (benefit) for taxes on income (loss) Provision
    (benefit) for taxes on income (loss)
 29




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007(Restated)





(Restated)Successor


Successor


Successor


Successor



PredecessorPre-tax income (loss) before equity in net (income) loss of
    non-consolidated affiliates and minority interests share

$
(274
)

$
(19
)

$
(210
)

$
(38
)


$
(95
)Canadian statutory tax rate


31
%


33
%


31
%


33
%



33
%Provision (benefit) at the Canadian statutory rate


(85
)


(6
)


(65
)


(13
)



(31
)Increase (decrease) for taxes on income (loss) resulting from:Exchange translation items


(22
)


30



(13
)


49




23Exchange remeasurement of deferred income taxes


(41
)


4



(21
)


7




3Change in valuation allowances


15



19



18



41




13Expense (income) items not subject to tax


10



(5
)


6



(19
)



(9
)Enacted statutory tax rate changes


2



(25
)


2



(25
)



Tax rate differences on foreign earnings


(54
)


(2
)


(68
)







2Uncertain tax positions










1








Other  net


6



5



6



7




3Provision (benefit) for taxes on income (loss)

$
(169
)

$
20


$
(134
)

$
47



$
4Effective tax rate


62
%


(105
)%


64
%


(124
)%



(4
)%     Tax
    Uncertainties
  Adoption
    of FASB Interpretation No. 48
  Accounting for Uncertainty in Income Taxes
 30




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    2004-2006.
  1999-2003. Goodwill
  ther long-term assets  third parties
    Provision (benefit) for taxes on income (loss) Provision
    (benefit) for taxes on income (loss) Provision (benefit) for taxes on
    income (loss)
  16.
    Commitments
    and Contingencies  Primary
    Supplier
    Three Months

Six Months

May 16, 2007


April 1, 2007Ended

Ended

Through


ThroughSeptember 30,

September 30,

September 30,


May 15,2008

2007

2008

2007


2007Successor

Successor

Successor

Successor


PredecessorPurchases from Alcan as a percentage of total metal purchases in
    kt(A)


36
%


37
%


35
%


36
%



34
%     (A)
    
    One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is
    equivalent to 2,204.6 pounds.  Legal
    Proceedings
  Reynolds Boat Case.
 31




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
      Form 10-K Accrued expenses and
    other current liabilities Prepaid expenses and
    other current assets
  Accrued expenses and other current liabilities
  Other (income) expenses  net
  Coca-Cola
    Lawsuits. Coca-Cola Coca-Cola Coca-Cola Coca-Cola
 32




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Coca-Cola Coca-Cola
      Anheuser-Busch Litigation.
         33




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  ARCO Aluminum Complaint.
        Environmental
    Matters
      clean-up
 34




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Other long-term
    liabilities Accrued expenses and other current liabilities
    Butler Tunnel Site.
      Brazil
    Tax Matters
  Other long-term assets  third parties
 35




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Other long-term liabilities
    Guarantees
    of Indebtedness
    
    certain of our wholly-owned subsidiaries and
    Aluminium Norf GmbH, which is a fifty percent (50%) owned joint
    venture that does not meet the requirements for consolidation
    under FASB Interpretation No. 46 (Revised),
    Consolidation of Variable Interest Entities.        Maximum


LiabilityPotential


CarryingType of Entity

Future Payment


ValueWholly-owned subsidiaries

$
89


$
63Aluminium Norf GmbH

$
14


$
     17.
    Segment
    and Major Customer Information  Segment
    Information
   36




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    
    North America.  Headquartered in Cleveland,
    Ohio, this segment manufactures aluminum sheet and light gauge
    products and operates 11 plants, including two fully dedicated
    recycling facilities, in two countries.
    Europe.  Headquartered in Zurich, Switzerland,
    this segment manufactures aluminum sheet and light gauge
    products and operates 14 plants, including one recycling
    facility, in six countries.
    Asia.  Headquartered in Seoul, South Korea,
    this segment manufactures aluminum sheet and light gauge
    products and operates three plants in two countries.
    South America.  Headquartered in Sao Paulo,
    Brazil, this segment comprises bauxite mining, alumina refining,
    smelting operations, power generation, carbon products, aluminum
    sheet and light gauge products and operates four plants in
    Brazil.  Adjustment to Eliminate Proportional
    Consolidation.
    Selected
    Segment Financial Information
  Adjustment toEliminateNorth





South

Proportional

CorporateTotal Assets

America

Europe

Asia

America

Consolidation

and Other

Total(Successor)September 30, 2008

$
4,003


$
3,775


$
985


$
1,486


$
(191
)

$
266


$
10,324March 31, 2008 (Restated)

$
3,888


$
4,171


$
1,081


$
1,478


$
(199
)

$
263


$
10,682   Comparison
    of Three Month Data:
  Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateThree Months Ended September 30, 2008

America


Europe


Asia


America


Consolidation


and Other


Total(Successor)Net sales (to third parties)

$
1,111


$
1,097


$
458


$
300


$
(7
)

$



$
2,959Intersegment sales


2



4















(6
)


Segment Income


2



62



(3
)


48











109Depreciation and amortization


41



54



13



19



(20
)






107Capital expenditures


10



17



6



9



(6
)


1



37   37




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateThree Months Ended September 30, 2007

America


Europe


Asia


America


Consolidation


and Other


Total(Successor)Net sales (to third parties)

$
1,050


$
1,092


$
438


$
241


$



$



$
2,821Intersegment sales


2



1



4



11







(18
)


Segment Income (Restated)


89



68



18



46











221Depreciation and amortization (Restated)


40



47



16



15



(15
)






103Capital expenditures


8



16



6



7



(3
)


1



35   Comparison
    of Six Month Data:
  Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateSix Months Ended September 30, 2008

America


Europe


Asia


America


Consolidation


and Other


Total(Successor)Net sales (to third parties)

$
2,194


$
2,315


$
968


$
595


$
(10
)

$



$
6,062Intersegment sales


2



5



1











(8
)


Segment Income


44



173



28



95











340Depreciation and amortization


83



117



28



36



(42
)


1



223Capital expenditures


17



36



11



15



(10
)


1



70   Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateMay 16, 2007 Through September 30, 2007

America


Europe


Asia


America


Consolidation


and Other


Total(Successor)Net sales (to third parties)

$
1,624


$
1,686


$
683


$
375


$



$



$
4,368Intersegment sales


3



1



6



27







(37
)


Segment Income (Restated)


112



111



16



68











307Depreciation and amortization (Restated)


61



72



24



22



(23
)






156Capital expenditures


14



25



11



8



(3
)


2



57   Adjustment toEliminateSelected Operating Results

North








South


Proportional


CorporateApril 1, 2007 Through May 15, 2007

America


Europe


Asia


America


Consolidation


and Other


Total(Predecessor)Net sales (to third parties)

$
446


$
510


$
216


$
109


$



$



$
1,281Intersegment sales










1



7







(8
)


Segment Income


(24
)


32



6



18











32Depreciation and amortization


7



11



7



5



(3
)


1



28Capital expenditures


4



8



4



3



(3
)


1



17  38




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007(Restated)





(Restated)Successor


Predecessor


Successor


Successor



PredecessorTotal Segment Income

$
109


$
221


$
340


$
307



$
32Interest expense and amortization of debt issuance
    costs  net


(41
)


(56
)


(81
)


(81
)



(26
)Unrealized gains (losses) on change in fair value of derivative
    instruments  net(A)


(221
)


(87
)


(200
)


(102
)



5Realized gains (losses) on corporate derivative
    instruments  net






30







38




(3
)Depreciation and amortization


(107
)


(103
)


(223
)


(156
)



(28
)Impairment charges on long-lived assets










(1
)







Minority interests share










(2
)


2




1Adjustment to eliminate proportional consolidation(B)


(18
)


7



(36
)


(2
)



(7
)Restructuring recoveries (charges)  net










1



(1
)



(1
)Gain (loss) on sales of property, plant and equipment and
    businesses  net


1







2








Corporate selling, general and administrative expenses


(16
)


(16
)


(30
)


(24
)



(35
)Other costs  net(C)


21



5



18



2




1Sale transaction fees



















(32
)Benefit (provision) for taxes on income (loss)


169



(20
)


134



(47
)



(4
)Net income (loss)

$
(103
)

$
(19
)

$
(78
)

$
(64
)


$
(97
)     (A)
    
    Unrealized gains (losses) on change in fair value of derivative
    instruments  net represents the portion of gains
    (losses) that were not settled in cash during the period. Total
    realized and unrealized gains (losses) are shown in the table
    below and are included in the aggregate each period in (Gain)
    loss on change in fair value of derivative instruments neton our condensed consolidated
    statements of operations.  39




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Three Months

Six Months

May 16, 2007


April 1, 2007Ended

Ended

Through


ThroughSeptember 30,

September 30,

September 30,


May 15,2008

2007

2008

2007


2007(Restated)



(Restated)Successor

Successor

Successor

Successor


Predecessor(Gains) losses on change in fair value of derivative
    instruments  net:Realized and included in Segment Income

$
(36
)

$
(27
)

$
(81
)

$
(48
)


$
(18
)Realized on corporate derivative instruments






(30
)






(38
)



3Unrealized


221



87



200



102




(5
)(Gains) losses on change in fair value of derivative instruments
     net

$
185


$
30


$
119


$
16



$
(20
)   (B)
    
    Our financial information for our segments (including Segment
    Income) includes the results of our non-consolidated affiliates
    on a proportionately consolidated basis, which is consistent
    with the way we manage our business segments. However, under
    GAAP, these non-consolidated affiliates are accounted for using
    the equity method of accounting. Therefore, in order to
    reconcile Total Segment Income to Net income (loss), the
    proportional Segment Income of these non-consolidated affiliates
    is removed from Total Segment Income, net of our share of their
    net after-tax results, which is reported as Equity in net
    (income) loss of non-consolidated affiliateson our
    condensed consolidated statements of operations. See
    Note 6  Investment in and Advances to
    Non-Consolidated Affiliates and Related Party Transactions for
    further information about these non-consolidated affiliates.(C)
    
    Other costs net includes a $26 million
    gain on the reversal of a legal accrual for the Reynolds Boat
    Case during the three and six months ended September 30,
    2008. See Note 16  Commitments and
    Contingenciesfor additional discussion.  Information
    about Major Customers
  Net sales
  Three Months

Six Months

May 16, 2007


April 1, 2007Ended

Ended

Through


ThroughSeptember 30,

September 30,

September 30,


May 15,2008

2007

2007

2007


2007Successor

Successor

Successor

Successor


PredecessorNet sales to Rexam as a percentage of total net sales

16.9%

15.6%

16.2%

14.7%


13.5%   18.
    Supplemental
    Guarantor Information   40




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
    Novelis
    Inc.
  Condensed
    Consolidating Statement of Operations
 (In
    millions)
  Three Months Ended September 30, 2008(Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
389


$
2,482


$
767


$
(679
)

$
2,959Cost of goods sold (exclusive of depreciation and amortization
    shown below)


384



2,364



722



(679
)


2,791Selling, general and administrative expenses


6



62



21







89Depreciation and amortization


6



77



24







107Research and development expenses


7



3











10Interest expense and amortization of debt issuance
    costs  net


7



31



3







41(Gain) loss on change in fair value of derivative
    instruments  net


3



197



(15
)






185Equity in net (income) loss of affiliates


81



(2
)






(81
)


(2
)Other (income) expenses  net


(3
)


(22
)


35







10491



2,710



790



(760
)


3,231Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(102
)


(228
)


(23
)


81



(272
)Provision (benefit) for taxes on income (loss)


1



(165
)


(5
)






(169
)Income (loss) before minority interests share


(103
)


(63
)


(18
)


81



(103
)Minority interests share


















Net income (loss)

$
(103
)

$
(63
)

$
(18
)

$
81


$
(103
)  41




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Operations
 (In
    millions)
  Three Months Ended September 30, 2007(Successor)Non-Restated

Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
369


$
2,340


$
736


$
(624
)

$
2,821Cost of goods sold (exclusive of depreciation and amortization
    shown below)


365



2,117



697



(624
)


2,555Selling, general and administrative expenses


8



62



18







88Depreciation and amortization


5



75



23







103Research and development expenses


7



2



1







10Interest expense and amortization of debt issuance
    costs  net


15



35



6







56(Gain) loss on change in fair value of derivative
    instruments  net


1



21



8







30Equity in net (income) loss of affiliates


(9
)


(20
)






9



(20
)Other (income) expenses  net


(8
)


7



(1
)






(2
)384



2,299



752



(615
)


2,820Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(15
)


41



(16
)


(9
)


1Provision (benefit) for taxes on income (loss)


4



15



1







20Income (loss) before minority interests share


(19
)


26



(17
)


(9
)


(19
)Minority interests share


















Net income (loss)

$
(19
)

$
26


$
(17
)

$
(9
)

$
(19
)  42




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Operations
 (In
    millions)
  Six Months Ended September 30, 2008(Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
784


$
5,064


$
1,603


$
(1,389
)

$
6,062Cost of goods sold (exclusive of depreciation and amortization
    shown below)


771



4,741



1,499



(1,389
)


5,622Selling, general and administrative expenses


6



124



43







173Depreciation and amortization


12



166



45







223Research and development expenses


15



6



1







22Interest expense and amortization of debt issuance
    costs  net


14



60



7







81(Gain) loss on change in fair value of derivative
    instruments  net


3



135



(19
)






119Equity in net (income) loss of affiliates


49











(49
)


Other (income) expenses  net


(10
)


(9
)


51







32860



5,223



1,627



(1,438
)


6,272Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(76
)


(159
)


(24
)


49



(210
)Provision (benefit) for taxes on income (loss)


2



(132
)


(4
)






(134
)Income (loss) before minority interests share


(78
)


(27
)


(20
)


49



(76
)Minority interests share










(2
)






(2
)Net income (loss)

$
(78
)

$
(27
)

$
(22
)

$
49


$
(78
)  43




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Operations
 (In
    millions)
   May 16, 2007 Through September 30, 2007(Successor)Non-Restated

Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
614


$
3,687


$
1,155


$
(1,088
)

$
4,368Cost of goods sold (exclusive of depreciation and amortization
    shown below)


612



3,368



1,099



(1,088
)


3,991Selling, general and administrative expenses


13



87



30







130Depreciation and amortization


8



113



35







156Research and development expenses


9



9



5







23Interest expense and amortization of debt issuance
    costs  net


18



55



8







81(Gain) loss on change in fair value of derivative
    instruments  net


(12
)


17



11







16Equity in net (income) loss of affiliates


16



(19
)






(16
)


(19
)Other (income) expenses  net


(12
)


21











9652



3,651



1,188



(1,104
)


4,387Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(38
)


36



(33
)


16



(19
)Provision (benefit) for taxes on income (loss)


26



20



1







47Income (loss) before minority interests share


(64
)


16



(34
)


16



(66
)Minority interests share










2







2Net income (loss)

$
(64
)

$
16


$
(32
)

$
16


$
(64
)  44




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Operations
 (In
    millions)
  April 1, 2007 Through May 15, 2007(Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedNet sales

$
129


$
1,020


$
359


$
(227
)

$
1,281Cost of goods sold (exclusive of depreciation and amortization
    shown below)


131



961



340



(227
)


1,205Selling, general and administrative expenses


29



51



15







95Depreciation and amortization


2



18



8







28Research and development expenses


5



1











6Interest expense and amortization of debt issuance
    costs  net


3



20



3







26(Gain) loss on change in fair value of derivative instruments
     net


(2
)


(19
)


1







(20
)Equity in net (income) loss of non-affiliates


29



(1
)






(29
)


(1
)Sale transaction fees


32















32Other (income) expenses  net


(3
)


9



(2
)






4226



1,040



365



(256
)


1,375Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(97
)


(20
)


(6
)


29



(94
)Provision (benefit) for taxes on income (loss)






3



1







4Income (loss) before minority interests share


(97
)


(23
)


(7
)


29



(98
)Minority interests share










1







1Net income (loss)

$
(97
)

$
(23
)

$
(6
)

$
29


$
(97
)  45




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Balance Sheet
 (In
    millions)
  As of September 30, 2008(Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
29


$
117


$
73


$



$
219Accounts receivable  net of allowances third parties


48



915



384







1,347 related parties


623



287



29



(915
)


24Inventories


70



936



407







1,413Prepaid expenses and other current assets


5



52



18







75Current portion of fair value of derivative instruments






198



53



(14
)


237Deferred income tax assets






170



16







186Total current assets


775



2,675



980



(929
)


3,501Property, plant and equipment  net


168



2,296



568







3,032Goodwill






1,858



6







1,864Intangible assets  net






827











827Investments


3,495



923



1



(3,495
)


924Fair value of derivative instruments  net of current
    portion


1



24



23



(2
)


46Deferred income tax assets


8







2







10Other long-term assets


1,065



139



7



(1,091
)


120Total assets

$
5,512


$
8,742


$
1,587


$
(5,517
)

$
10,324LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
3


$
10


$
1


$



$
14Short-term borrowings third parties


1



328



22







351 related parties


10



479



13



(502
)


Accounts payable third parties


72



825



521







1,418 related parties


116



223



127



(409
)


57Accrued expenses and other current liabilities


43



776



164



(18
)


965Deferred income tax liabilities






34











34Total current liabilities


245



2,675



848



(929
)


2,839Long-term debt  net of current portion third parties


1,757



686



101







2,544 related parties






1,010



81



(1,091
)


Deferred income tax liabilities






537



20







557Accrued postretirement benefits


22



292



106







420Other long-term liabilities


103



328



28



(2
)


4572,127



5,528



1,184



(2,022
)


6,817Commitments and contingenciesMinority interests in equity of consolidated affiliates










122







122Shareholders equityCommon stock


















Additional paid-in capital


3,497















3,497Retained earnings/(accumulated deficit)/owners net
    investment


(98
)


3,182



381



(3,563
)


(98
)Accumulated other comprehensive income (loss)


(14
)


32



(100
)


68



(14
)Total shareholders equity


3,385



3,214



281



(3,495
)


3,385Total liabilities and shareholders equity

$
5,512


$
8,742


$
1,587


$
(5,517
)

$
10,324  46




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Balance Sheet
 (In
    millions)
  As of March 31, 2008(Successor)Non-Restated

Parent


Guarantors


Guarantors


Eliminations


ConsolidatedASSETSCurrent assetsCash and cash equivalents

$
12


$
177


$
137


$



$
326Accounts receivable  net of allowances third parties


38



818



392







1,248 related parties


518



289



34



(810
)


31Inventories


57



993



405







1,455Prepaid expenses and other current assets


4



35



19







58Current portion of fair value of derivative instruments






186



30



(13
)


203Deferred income tax assets






121



4







125Total current assets


629



2,619



1,021



(823
)


3,446Property, plant and equipment  net


175



2,458



724







3,357Goodwill






1,680



189







1,869Intangible assets  net






888











888Investments


3,629



945



1



(3,629
)


946Fair value of derivative instruments  net of current
    portion






18



3







21Deferred income tax assets


10







2







12Other long-term assets


1,328



160



135



(1,480
)


143Total assets

$
5,771


$
8,768


$
2,075


$
(5,932
)

$
10,682LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt

$
3


$
11


$
1


$



$
15Short-term borrowings third parties






70



45







115 related parties


5



370



25



(400
)


Accounts payable third parties


84



925



573







1,582 related parties


110



233



88



(376
)


55Accrued expenses and other current liabilities


39



699



129



(17
)


850Deferred income tax liabilities






39











39Total current liabilities


241



2,347



861



(793
)


2,656Long-term debt  net of current portion third parties


1,761



698



101







2,560 related parties






1,206



304



(1,510
)


Deferred income tax liabilities


1



680



20







701Accrued postretirement benefits


23



297



101







421Other long-term liabilities


222



431



19







6722,248



5,659



1,406



(2,303
)


7,010Commitments and contingenciesMinority interests in equity of consolidated affiliates










149







149Shareholders equityCommon stock


















Additional paid-in capital


3,497















3,497Retained earnings/(accumulated deficit)/owners net
    investment


(20
)


3,075



564



(3,639
)


(20
)Accumulated other comprehensive income (loss)


46



34



(44
)


10



46Total shareholders equity


3,523



3,109



520



(3,629
)


3,523Total liabilities and shareholders equity

$
5,771


$
8,768


$
2,075


$
(5,932
)

$
10,682  47




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Cash Flows
 (In
    millions)
  Six Months Ended September 30, 2008(Successor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities

$
15


$
(272
)

$
(24
)

$
(109
)

$
(390
)INVESTING ACTIVITIESCapital expenditures


(3
)


(50
)


(17
)






(70
)Proceeds from sales of property, plant and equipment






1



1







2Changes to investment in and advances to non-consolidated
    affiliates






13











13Proceeds from loans receivable  net 
    related parties






13











13Net proceeds from settlement of derivative instruments






66



28







94Net cash provided by (used in) investing activities


(3
)


43



12







52FINANCING ACTIVITIESPrincipal repayments third parties


(1
)


(5
)


(1
)






(7
) related parties






(89
)


(140
)


229



Short-term borrowings  net third parties






279



(16
)






263 related parties


6



(10
)


124



(120
)


Dividends  minority interests










(5
)






(5
)Net cash provided by (used in) financing activities


5



175



(38
)


109



251Net increase (decrease) in cash and cash equivalents


17



(54
)


(50
)






(87
)Effect of exchange rate changes on cash balances held in
    foreign currencies






(6
)


(14
)






(20
)Cash and cash equivalents  beginning of period


12



177



137







326Cash and cash equivalents  end of period

$
29


$
117


$
73


$



$
219  48




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Cash Flows
    (In millions)
  May 16, 2007 Through September 30, 2007(Successor)Non-Restated

Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities

$
125


$
(129
)

$
7


$



$
3INVESTING ACTIVITIESCapital expenditures


(5
)


(47
)


(5
)






(57
)Proceeds from sales of assets










1







1Changes to investment in and advances to non-consolidated
    affiliates


(40
)


3







40



3Proceeds from loans receivable  net 
    related parties






10











10Net proceeds from settlement of derivative instruments


26



48



(2
)






72Net cash provided by (used in) investing activities


(19
)


14



(6
)


40



29FINANCING ACTIVITIESProceeds from issuance of common stock


92



40







(40
)


92Proceeds from issuance of debt


300



660











960Principal repayments


(260
)


(603
)


(42
)






(905
)Short-term borrowings  net third parties


(45
)


(67
)


47







(65
) related parties


(157
)


139



18







Dividends  minority interests










(1
)






(1
)Debt issuance costs


(35
)














(35
)Net cash provided by (used in) financing activities


(105
)


169



22



(40
)


46Net increase in cash and cash equivalents


1



54



23







78Effect of exchange rate changes on cash balances held in
    foreign currencies










1







1Cash and cash equivalents  beginning of period


8



74



20







102Cash and cash equivalents  end of period

$
9


$
128


$
44


$



$
181  49




---



##### Table of Contents



Novelis
    Inc.
  NOTES TO
    THE CONDENSED CONSOLIDATED
 FINANCIAL
    STATEMENTS (unaudited)  (Continued)
  Novelis
    Inc.
  Condensed
    Consolidating Statement of Cash Flows
 (In
    millions)
  April 1, 2007 Through May 15, 2007(Predecessor)Non-Parent


Guarantors


Guarantors


Eliminations


ConsolidatedOPERATING ACTIVITIESNet cash provided by (used in) operating activities

$
(21
)

$
(181
)

$
(28
)

$



$
(230
)INVESTING ACTIVITIESCapital expenditures


(1
)


(10
)


(6
)






(17
)Changes to investment in and advances to non-consolidated
    affiliates






1











1Net proceeds from settlement of derivative instruments


(5
)


23











18Net cash provided by (used in) investing activities


(6
)


14



(6
)






2FINANCING ACTIVITIESProceeds from issuance of debt






150











150Principal repayments






(1
)










(1
)Short-term borrowings  net third parties


45



9



6







60 related parties


(15
)


11



4







Dividends  minority interests










(7
)






(7
)Debt issuance costs


(2
)














(2
)Proceeds from the exercise of stock options


1















1Net cash provided by (used in) financing activities


29



169



3







201Net increase (decrease) in cash and cash equivalents


2



2



(31
)






(27
)Effect of exchange rate changes on cash balances held in
    foreign currencies






1











1Cash and cash equivalents  beginning of period


6



71



51







128Cash and cash equivalents  end of period

$
8


$
74


$
20


$



$
102  50




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  FORWARD
    LOOKING STATEMENTS
  The following information should be read together with our
    unaudited condensed consolidated financial statements and
    accompanying notes included elsewhere in this quarterly report
    for a more complete understanding of our financial condition and
    results of operations. The following discussion contains
    forward-looking statements that reflect our plans, estimates and
    beliefs. Our actual results could differ materially from those
    discussed in these forward-looking statements. Factors that
    could cause or contribute to these differences include, but are
    not limited to, those discussed below, particularly in
    SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
    MARKET DATA.
  REFERENCES
    Form 10-K/A Form 10-K/A
  GENERAL
    Restatement
  
  Acquisition
    of Novelis Common Stock
   51




---



##### Table of Contents



Push Down Basis of Accounting Required in Certain Limited
    Circumstances Business Combinations
  NOTE
    REGARDING COMBINED RESULTS OF OPERATIONS AND SELECTED FINANCIAL
    AND OPERATING INFORMATION DUE TO THE ACQUISITION
      May 16, 2007



April 1, 2007


Six MonthsThrough



Through


EndedSeptember 30, 2007



May 15, 2007


September 30, 2007Successor



Predecessor


CombinedCombined Shipments:Shipments (kt)(A):Rolled products(B)


1,156




348



1,504Ingot products(C)


66




15



81Total shipments


1,222




363



1,585     (A)
    
    One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is
    equivalent to 2,204.6 pounds.(B)
    
    Rolled products include tolling (the conversion of
    customer-owned metal).(C)
    
    Ingot products include primary ingot in Brazil and Europe,
    foundry products in Korea, secondary ingot in Europe and other
    miscellaneous recyclable aluminum.  52




---



##### Table of Contents



May 16, 2007



April 1, 2007


Six MonthsThrough



Through


EndedSeptember 30, 2007



May 15, 2007


September 30, 2007(Restated)






(Restated)Successor



Predecessor


CombinedCombined Results of Operations ($ in millions)Net sales

$
4,368



$
1,281


$
5,649Cost of goods sold (exclusive of depreciation and amortization
    shown below)


3,991




1,205



5,196Selling, general and administrative expenses


130




95



225Depreciation and amortization


156




28



184Research and development expenses


23




6



29Interest expense and amortization of debt issuance
    costs  net


81




26



107(Gain) loss on change in fair value of derivative
    instruments  net


16




(20
)


(4
)Equity in net (income) loss of non-consolidated affiliates


(19
)



(1
)


(20
)Sale transaction fees







32



32Other expenses  net


9




4



134,387




1,375



5,762Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(19
)



(94
)


(113
)Provision (benefit) for taxes on income (loss)


47




4



51Income (loss) before minority interests share


(66
)



(98
)


(164
)Minority interests share


2




1



3Net income (loss)

$
(64
)


$
(97
)

$
(161
)   HIGHLIGHTS
    
    Shipments and selected financial information are as follows ($
    in millions):  Three Months


Six MonthsEnded


EndedSeptember 30,


September 30,2008


2007


2008


2007(Restated)





(Restated)Successor


Successor


Successor


CombinedShipments (kt)(A):Rolled products(B)


759



747



1,536



1,504Ingot products(C)


49



42



97



81Total shipments


808



789



1,633



1,585Net sales

$
2,959


$
2,821


$
6,062


$
5,649Net income (loss)(D)

$
(103
)

$
(19
)

$
(78
)

$
(161
)Net increase (decrease) in total debt(E)

$
(86
)

$
(43
)

$
222


$
205     (A)
    
    One kilotonne (kt) is 1,000 metric tonnes. One metric tonne is
    equivalent to 2,204.6 pounds.(B)
    
    Rolled products include tolling (the conversion of
    customer-owned metal). 53




---



##### Table of Contents



(C)
    
    Ingot products include primary ingot in Brazil and Europe,
    foundry products in Korea, secondary ingot in Europe and other
    miscellaneous recyclable aluminum.(D)
    
    Net income (loss) for the three and six months ended
    September 30, 2007 has been restated. See
    Note 2  Restatement of Financial Statements to
    the accompanying condensed consolidated financial statements.(E)
    
    Net increase (decrease) in total debt is measured comparing the
    period-end amounts of our total outstanding debt (including
    short-term borrowings) as shown in our condensed consolidated
    balance sheets to (1) the preceding quarter-end balances
    for the three month periods and (2) the prior fiscal year
    end as of March 31 for the six month periods. The net increase
    (decrease) in total debt excludes the change in unamortized fair
    value adjustments recorded as part of the Arrangement.    
    London Metal Exchange (LME) pricing rose to a peak of $3,292 per
    tonne in July 2008 before subsequently dropping to $2,395 per
    tonne as of September 30, 2008. LME prices continued to
    decline during the month of October 2008.
    When compared to the prior year, the pre-tax loss for the
    quarter ended September 30, 2008 included approximately
    $200 million of non-cash unrealized losses on derivative
    instruments which are used to hedge forecasted purchases of
    aluminum and other commodities as well as related foreign
    currency exposures. In future periods, the losses on these
    hedging instruments should be offset by the benefits of lower
    commodity costs, more favorable currency relationships and the
    reduced impact of contracts with metal price ceilings.
    Unrealized losses on derivative instruments were
    $134 million higher than in the prior-year quarter and are
    net of $61 million of unrealized gains related to
    derivative instruments that hedge the income statement
    re-measurement of foreign currency denominated working capital
    and debt balances.
    Despite price declines that began in late July 2008, average LME
    aluminum prices were 9.6% and 8.0% higher than prior year during
    the quarter and year-to-date periods, respectively. Net sales
    for fiscal 2009 increased from the comparable prior year periods
    primarily due to this increase in average LME metal pricing and
    a modest increase in shipments.
    Costs associated with currency exposure primarily related to the
    euro and Brazilian real were higher in fiscal 2009 than in the
    comparable prior year periods as the average exchange rates for
    the euro and real reflected a weaker U.S. dollar. However,
    during the three months ended September 30, 2008 and
    through the month of October 2008 the U.S dollar strengthened
    against these currencies.    
    The full impact of recent events in the global financial
    services industry and their effects on global consumer demand
    remains uncertain. However, during October 2008 we experienced
    weak demand in North America, Europe and Asia particularly in
    construction and automotive markets. We have also seen an
    increased valuation of the U.S. dollar, declines in energy
    pricing and sharp declines in the pricing of primary aluminum.
    In the long term we should benefit from these currency and
    commodity movements. However, in the near term we expect
    customer demand to be uncertain and volatility in currency and
    commodity markets to remain high.
    Rolled products shipments during the current quarter and
    year-to-date periods were stable with increases in canstock
    offset by decreases in light gauge products as a result of weak
    market demand, specialty and painted products as a result of
    weak market conditions for building-related products and weak
    demand in the electronics sector, and foil stock.    
    Increased losses were attributable to the change in fair value
    of derivative instruments were driven by the mark-to-market
    impact of LME forward purchase contracts used to hedge metal
    price risk related to specific 54




---



##### Table of Contents



customer orders that include fixed sales prices and forecasted
    sales subject to metal price ceilings. The losses are partially
    offset by gains on LME forward sales contracts that are used to
    hedge output from our primary aluminum operations and metal
    price lag associated with customer orders that include formula
    pricing.  
    Input and operational costs were higher in the fiscal 2009
    period than in the comparable prior year periods primarily as a
    result of higher energy, freight and alloy costs.
    The fiscal 2009 periods were unfavorably impacted compared to
    the prior year periods for certain income and expense items
    associated with fair value adjustments recorded at the date of
    acquisition, driven by lower accretion of reserves related to
    unfavorable contracts.    
    We recorded income tax benefits in the fiscal 2009 periods
    compared to income tax expense in the comparable prior year
    periods primarily due to tax benefits related to exchange
    translation and re-measurement items and statutory tax rate
    differences on foreign earnings.    
    Free cash flow during the six month period decreased by
    $152 million in fiscal 2009 from the comparable prior year
    period due to changes in certain components of our working
    capital (exclusive of the impact of currency translation
    adjustments) primarily driven by higher dollar inventory levels
    due to the increase in average aluminum prices in the first half
    of this fiscal year and the timing of payments made by our
    customers at March 31, 2008 and September 30, 2008,
    and partially offset by our smaller net loss for the six month
    period.
    During the second quarter of fiscal 2009, we repaid
    $86 million of our total debt.
    Our estimated liquidity was $583 million at
    September 30, 2008.  OUR
    BUSINESS
  Business
    Model and Key Concepts
      Metal
    Price Ceilings
   55




---



##### Table of Contents



Metal
    Price Lag
        Accounting for Derivative Instruments and Hedging Activities
 56




---



##### Table of Contents



OPERATIONS
    AND SEGMENT REVIEW
    Three Months





Six MonthsEnded





EndedSeptember 30,


Percent


September 30,


Percent2008


2007


Change


2008


2007


ChangeSuccessor


Successor





Successor


CombinedShipments (kt):Rolled products, including tolling (the conversion of
    customer-owned metal)


759



747



1.6
%


1,536



1,504



2.1
%Ingot products, including primary and secondary ingot and
    recyclable aluminum


49



42



16.7
%


97



81



19.8
%Total shipments


808



789



2.4
%


1,633



1,585



3.0
%   57




---



##### Table of Contents



Three Months





Six MonthsEnded





EndedSeptember 30,


Percent


September 30,


Percent2008


2007


Change


2008


2007


Change(Restated)








(Restated)Successor


Successor





Successor


CombinedResults of Operations ($ in millions)Net sales

$
2,959


$
2,821



4.9
%

$
6,062


$
5,649



7.3
%Cost of goods sold (exclusive of depreciation and amortization
    shown below)


2,791



2,555



9.2
%


5,622



5,196



8.2
%Selling, general and administrative expenses


89



88



1.1
%


173



225



(23.1
)%Depreciation and amortization


107



103



3.9
%


223



184



21.2
%Research and development expenses


10



10




%


22



29



(24.1
)%Interest expense and amortization of debt issuance
    costs  net


41



56



(26.8
)%


81



107



(24.3
)%(Gain) loss on change in fair value of derivatives 
    net


185



30



516.7
%


119



(4
)


n.m.Equity in net (income) loss of non-consolidated affiliates


(2
)


(20
)


(90.0
)%






(20
)


n.m.Sale transaction fees











%






32



n.m.Other (income) expenses  net


10



(2
)


(600.0
)%


32



13



146.2
%3,231



2,820



14.6
%


6,272



5,762



8.9
%Income (loss) before provision (benefit) for taxes on income
    (loss) and minority interests share


(272
)


1



n.m.



(210
)


(113
)


85.8
%Provision (benefit) for taxes on income (loss)


(169
)


20



n.m.



(134
)


51



n.m.Income (loss) before minority interests share


(103
)


(19
)


442.1
%


(76
)


(164
)


(53.7
)%Minority interests share











%


(2
)


3



n.m.Net income (loss)

$
(103
)

$
(19
)


442.1
%

$
(78
)

$
(161
)


(51.6
)%       Three Months





Six MonthsEnded





EndedSeptember 30,


Percent


September 30,


Percent2008


2007


Change


2008


2007


ChangeSuccessor


Successor





Successor


CombinedLondon Metal Exchange PricesAluminum (per metric tonne, and presented in U.S. dollars):Closing cash price as of end of period

$
2,395


$
2,440



(1.8
)%

$
2,395


$
2,440



(1.8
)%Average cash price during the period

$
2,792


$
2,547



9.6
%

$
2,865


$
2,654



8.0
%   58




---



##### Table of Contents



Three Months





Six MonthsEnded


U.S. Dollar


Ended


U.S. DollarSeptember 30,


Strengthen/


September 30,


Strengthen/2008


2007


(Weaken)


2008


2007


(Weaken)Successor


Successor





Successor


CombinedFederal Reserve Bank of New York Exchange RatesAverage of the month end rates:U.S. dollar per Euro


1.478



1.386



(6.6
)%


1.520



1.370



(10.9
)%Brazilian real per U.S. dollar


1.708



1.891



(9.7
)%


1.673



1.926



(13.1
)%South Korean won per U.S. dollar


1,102



924



19.3
%


1,065



925



15.1
%Canadian dollar per U.S. dollar


1.050



1.039



1.1
%


1.028



1.060



(3.0
)%   Three Months





Six MonthsEnded





EndedSeptember 30,


Percent


September 30,


Percent2008


2007


Change


2008


2007


ChangeSuccessor


Successor





Successor


CombinedNew York Mercantile Exchange  Energy Price
    QuotationsLight Sweet CrudeAverage settlement price (per barrel)

$
125.85


$
71.08



77.1
%

$
121.81


$
66.39



83.5
%Natural GasAverage Henry Hub contract settlement price (per MMBTU)(A)

$
10.24


$
6.16



66.2
%

$
10.58


$
6.85



54.5
%     (A)
    
    One MMBTU is the equivalent of one decatherm, or one million
    British Thermal Units.  RESULTS
    OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2008 COMPARED
    TO THE QUARTER ENDED SEPTEMBER 30, 2007
  Shipments
    Net
    sales
   59




---



##### Table of Contents



Costs
    and expenses
    Three MonthsEndedSeptember 30,2008


2007% of





% of$ in millions


net sales


$ in millions


net sales(Restated)Successor


SuccessorCost of goods sold (exclusive of depreciation and amortization
    shown below)

$
2,791



94.3
%

$
2,555



90.6
%Selling, general and administrative expenses


89



3.0
%


88



3.1
%Depreciation and amortization


107



3.6
%


103



3.7
%Research and development expenses


10



0.3
%


10



0.4
%Interest expense and amortization of debt issuance
    costs  net


41



1.4
%


56



2.0
%(Gain) loss on change in fair value of derivative
    instruments  net


185



6.3
%


30



1.1
%Equity in net (income) loss of non-consolidated affiliates


(2
)


(0.1
)%


(20
)


(0.7
)%Other (income) expenses  net


10



0.3
%


(2
)


(0.1
)%$
3,231



109.2
%

$
2,820



100.0
%   Cost of goods sold.
  Interest expense and amortization of debt issuance
    costs  net.
  (Gain) loss on change in fair value of derivative
    instruments  net.
  Equity in net (income) loss of non-consolidated
    affiliates.
 60




---



##### Table of Contents



Other (income) expenses  net.
  Other(Income)Expenses  NetOther (income) expenses  net for the three months
    ended September 30, 2007

$
(2
)Exchange losses of $36 million in 2009 compared to
    $8 million in 2008


28Gain on reversal of accrued legal claim of $26 million in
    2009 only


(26
)Gain on partial reversal of accrued social contribution tax of
    $14 million in 2008 only


14Gain on disposal of property, plant and equipment
    net of $1 million in 2009 only


(1
)Other  net


(3
)Other (income) expenses  net for the three months
    ended September 30, 2008

$
10   Provision
    (benefit) for taxes on income (loss)
      OPERATING
    SEGMENT REVIEW FOR THE QUARTER ENDED SEPTEMBER 30, 2008 COMPARED
    TO THE QUARTER ENDED SEPTEMBER 30, 2007
    Disclosure About the Segments of
    an Enterprise and Related Information.
 61




---



##### Table of Contents



Form 10-K/A
    Reconciliation
    Three MonthsEndedSeptember 30,2008


2007(Restated)Successor


SuccessorSegment IncomeNorth America

$
2


$
89Europe


62



68Asia


(3
)


18South America


48



46Total Segment Income


109



221Interest expense and amortization of debt issuance
    costs  net


(41
)


(56
)Unrealized gains (losses) on change in fair value of derivative
    instruments  net(A)


(221
)


(87
)Realized gains (losses) on corporate derivative
    instruments  net






30Depreciation and amortization


(107
)


(103
)Adjustment to eliminate proportional consolidation(B)


(18
)


7Gains (losses) on disposal of property, plant, equipment and
    businesses  net


1



Corporate selling, general and administrative expenses


(16
)


(16
)Other costs  net


21



5Provision (benefit) for taxes on income (loss)


169



(20
)Net income (loss)

$
(103
)

$
(19
)     (A)
    Unrealized gains (losses) on change in fair value of derivative
    instruments  net represents the portion of gains
    (losses) that were not settled in cash during the period.  (B)
    Our financial information for our segments (including Segment
    Income) includes the results of our non-consolidated affiliates
    on a proportionately consolidated basis, which is consistent
    with the way we manage our business segments. However, under
    GAAP, these non-consolidated affiliates are accounted for using
    the equity method of accounting. Therefore, in order to
    reconcile Total Segment Income to Net income (loss), the
    proportional Segment Income of these non-consolidated affiliates
    is removed from Total Segment Income, net of our share of their
    net after-tax results, which is reported as Equity in net
    (income) loss of non-consolidated affiliates on our condensed
    consolidated 62




---



##### Table of Contents



statements of operations. See Note 6  Investment
    in and Advances to Non-Consolidated Affiliates and Related Party
    Transactions to the accompanying condensed consolidated
    financial statements for further information about these
    non-consolidated affiliates.  OPERATING
    SEGMENT RESULTS
  North
    America
      Three MonthsEndedSeptember 30,


Percent2008


2007


Change(Restated)Successor


SuccessorShipments (kt):Rolled products


293



279



5.0
%Ingot products


15



17



(11.8
)%Total shipments


308



296



4.1
%Net sales

$
1,111


$
1,050



5.8
%Segment Income

$
2


$
89



(97.8
)%Total assets

$
4,003


$
4,463



(10.3
)%   Shipments
    Net
    sales
    Segment
    Income
   63




---



##### Table of Contents



Total
    Assets
    Europe
      Three MonthsEndedSeptember 30,


Percent2008


2007


Change(Restated)Successor


SuccessorShipments (kt):Rolled products


254



275



(7.6
)%Ingot products


27



8



237.5
%Total shipments


281



283



(0.7
)%Net sales

$
1,097


$
1,092



0.5
%Segment Income

$
62


$
68



(8.8
)%Total assets

$
3,775


$
3,227



17.0
%   Shipments
    Net
    sales
    Segment
    Income
    Total
    Assets
   64




---



##### Table of Contents



Asia
      Three MonthsEndedSeptember 30,


Percent2008


2007


Change(Restated)Successor


SuccessorShipments (kt):Rolled products


122



116



5.2
%Ingot products


4



10



(60.0
)%Total shipments


126



126




%Net sales

$
458


$
438



4.6
%Segment Income

$
(3
)

$
18



(116.7
)%Total assets

$
985


$
1,361



(27.6
)%   Shipments
    Net
    sales
    Segment
    Income
    Total
    assets
    South
    America
   65




---



##### Table of Contents



Three MonthsEndedSeptember 30,


Percent2008


2007


Change(Restated)Successor


SuccessorShipments (kt):Rolled products


90



77



16.9
%Ingot products


3



7



(57.1
)%Total shipments


93



84



10.7
%Net sales

$
300


$
241



24.5
%Segment Income

$
48


$
46



4.3
%Total assets

$
1,486


$
1,347



10.3
%   Shipments
    Net
    sales
    Segment
    Income
    Total
    assets
    RESULTS
    OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
    COMPARED TO THE SIX MONTHS ENDED SEPTEMBER 30, 2007 (ON A
    COMBINED NON-GAAP BASIS)
    Shipments
   66




---



##### Table of Contents



Net
    sales
      Costs
    and expenses
    Six MonthsEndedSeptember 30,2008


2007% of





% of$ in Millions


Net Sales


$ in Millions


Net Sales(Restated)Successor


CombinedCost of goods sold (exclusive of depreciation and amortization
    shown below)

$
5,622



92.7
%

$
5,196



92.0
%Selling, general and administrative expenses


173



2.9
%


225



4.0
%Depreciation and amortization


223



3.7
%


184



3.3
%Research and development expenses


22



0.4
%


29



0.5
%Interest expense and amortization of debt issuance
    costs  net


81



1.3
%


107



1.9
%(Gain) loss on change in fair value of derivative instruments
     net


119



2.0
%


(4
)


(0.1
)%Equity in net (income) loss of non-consolidated affiliates







%


(20
)


(0.4
)%Sale transaction fees







%


32



0.6
%Other expenses  net


32



0.5
%


13



0.2
%$
6,272



103.5
%

$
5,762



102.0
%  67




---



##### Table of Contents



Cost of goods sold.
  Selling, general and administrative expenses
    (SG&A).
  Depreciation and amortization.
  Research and development expenses.
  Interest expense and amortization of debt issuance
    costs  net.
  (Gain) loss on change in fair value of derivative
    instruments  net.
  Equity in net (income) loss of non-consolidated
    affiliates.
  Sale transaction fees.
  Other (income) expenses  net.
  Other(Income)Expenses  NetOther (income) expenses  net for the six months
    ended September 30, 2007

$
13Exchange losses of $56 million in 2009 compared to
    $19 million in 2008


37Gain on reversal of accrued legal claim of $26 million in
    2009 only


(26
)Gain on partial reversal of accrued social contribution tax of
    $14 million in 2008 only


14Restructuring charges (recoveries)  net of
    $(1) million in 2009 compared to $2 million in 2008


(3
)Impairment charges on long-lived assets of $1 million in
    2009 only


1Gain on disposal of property, plant and equipment
    net of $2 million in 2009 only


(2
)Other  net


(2
)Other (income) expenses  net for the six months
    ended September 30, 2008

$
32   Provision
    (benefit) for taxes on income (loss)
   68




---



##### Table of Contents



OPERATING
    SEGMENT REVIEW FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008
    COMPARED TO THE SIX MONTHS ENDED SEPTEMBER 30, 2007 (ON A
    COMBINED NON-GAAP BASIS)
    Net
    sales
    May 16, 2007



April 1, 2007


Six MonthsThrough



Through


EndedSeptember 30, 2007



May 15, 2007


September 30, 2007Successor



Predecessor


CombinedCombined Net sales by Operating Segment:North America

$
1,624



$
446


$
2,070Europe


1,686




510



2,196Asia


683




216



899South America


375




109



484Total Net sales

$
4,368



$
1,281


$
5,649   Segment
    Income
    69




---



##### Table of Contents



May 16, 2007



April 1, 2007


Six MonthsThrough



Through


EndedSeptember 30, 2007



May 15, 2007


September 30, 2007(Restated)






(Restated)Successor



Predecessor


CombinedCombined Results by Operating Segment:Segment IncomeNorth America

$
112



$
(24
)

$
88Europe


111




32



143Asia


16




6



22South America


68




18



86Total Segment Income


307




32



339Interest expense and amortization of debt issuance
    costs  net


(81
)



(26
)


(107
)Unrealized gains (losses) on change in fair value of derivative
    instruments  net(A)


(102
)



5



(97
)Realized gains (losses) on corporate derivative instruments
     net


38




(3
)


35Depreciation and amortization


(156
)



(28
)


(184
)Minority interests share


2




1



3Adjustment to eliminate proportional consolidation(B)


(2
)



(7
)


(9
)Restructuring charges  net


(1
)



(1
)


(2
)Corporate selling, general and administrative expenses


(24
)



(35
)


(59
)Other costs  net


2




1



3Sale transaction fees







(32
)


(32
)Provision (benefit) for taxes on income (loss)


(47
)



(4
)


(51
)Net income (loss)

$
(64
)


$
(97
)

$
(161
)     (A)
    
    Unrealized gains (losses) on change in fair value of derivative
    instruments  net represents the portion of gains
    (losses) that were not settled in cash during the period.(B)
    
    Our financial information for our segments (including Segment
    Income) includes the results of our non-consolidated affiliates
    on a proportionately consolidated basis, which is consistent
    with the way we manage our business segments. However, under
    GAAP, these non-consolidated affiliates are accounted for using
    the equity method of accounting. Therefore, in order to
    reconcile Total Segment Income to Net income (loss), the
    proportional Segment Income of these non-consolidated affiliates
    is removed from Total Segment Income, net of our share of their
    net after-tax results, which is reported as Equity in net
    (income) loss of non-consolidated affiliates on our condensed
    consolidated statements of operations. See
    Note 6  Investment in and Advances to
    Non-Consolidated Affiliates and Related Party Transactions in
    the accompanying notes to the condensed consolidated financial
    statements for further information about these non-consolidated
    affiliates. 70




---



##### Table of Contents



Reconciliation
    Six MonthsEndedSeptember 30,2008


2007(Restated)Successor


CombinedSegment IncomeNorth America

$
44


$
88Europe


173



143Asia


28



22South America


95



86Total Segment Income


340



339Interest expense and amortization of debt issuance
    costs  net


(81
)


(107
)Unrealized gains (losses) on change in fair value of derivative
    instruments  net


(200
)


(97
)Realized gains (losses) on corporate derivative
    instruments  net






35Depreciation and amortization


(223
)


(184
)Impairment charges on long-lived assets


(1
)


Minority interests share


(2
)


3Adjustment to eliminate proportional consolidation


(36
)


(9
)Restructuring charges  net


1



(2
)Gains (losses) on disposal of property, plant, and
    equipment  net


2



Corporate selling, general and administrative expenses


(30
)


(59
)Other corporate costs  net


18



3Sale transaction fees






(32
)Benefit (provision) for taxes on income (loss)


134



(51
)Net income (loss)

$
(78
)

$
(161
)   OPERATING
    SEGMENT RESULTS
  North
    America
    Six MonthsEndedSeptember 30,2008


2007


ChangeSuccessor


CombinedShipments (kt):Rolled products


579



557



3.9
%Ingot products


23



33



(30.3
)%Total shipments


602



590



2.0
%Net sales

$
2,194


$
2,070



6.0
%Segment Income

$
44


$
88



(50.0
)%  71




---



##### Table of Contents



Shipments
    Net
    sales
      Segment
    Income
    Europe
    Six MonthsEndedSeptember 30,


Percent2008


2007


Change(Restated)Successor


CombinedShipments (kt):Rolled products


525



559



(6.1
)%Ingot products


55



12



358.3
%Total shipments


580



571



1.6
%Net sales

$
2,315


$
2,196



5.4
%Segment Income

$
173


$
143



21.0
%   Shipments
    Net
    sales
   72




---



##### Table of Contents



Segment
    Income
    Asia
    Six MonthsEndedSeptember 30,


Percent2008


2007


Change(Restated)Successor


CombinedShipments (kt):Rolled products


255



234



9.0
%Ingot products


11



22



(50.0
)%Total shipments


266



256



3.9
%Net sales

$
968


$
899



7.7
%Segment Income

$
28


$
22



27.3
%   Shipments
    Net
    sales
    Segment
    Income
   73




---



##### Table of Contents



South
    America
    Six MonthsEndedSeptember 30,


Percent2008


2007


ChangeSuccessor


CombinedShipments (kt):Rolled products


177



154



14.9
%Ingot products


8



14



(42.9
)%Total shipments


185



168



10.1
%Net sales

$
595


$
484



22.9
%Segment Income

$
95


$
86



10.5
%   Shipments
    Net
    Sales
    Segment
    Income
    LIQUIDITY
    AND CAPITAL RESOURCES
    Cash
    Flows
    74




---



##### Table of Contents



May 16, 2007



April 1, 2007


Six MonthsThrough



Through


EndedSeptember 30,



May 15,


September 30,2007



2007


2007(Restated)






(Restated)Successor



Predecessor


CombinedOPERATING ACTIVITIESNet cash provided by (used in) operating activities

$
3



$
(230
)

$
(227
)INVESTING ACTIVITIESCapital expenditures


(57
)



(17
)


(74
)Proceeds from sales of assets


1








1Changes to investment in and advances to non-consolidated
    affiliates


3




1



4Proceeds from loans receivable  net 
    related parties


10








10Net proceeds from settlement of derivative instruments


72




18



90Net cash provided by (used in) investing activities


29




2



31FINANCING ACTIVITIESProceeds from issuance of common stock


92








92Proceeds from issuance of debt


960




150



1,110Principal repayments


(905
)



(1
)


(906
)Short-term borrowings  net


(65
)



60



(5
)Dividends  minority interests


(1
)



(7
)


(8
)Debt issuance costs


(35
)



(2
)


(37
)Proceeds from the exercise of stock options







1



1Net cash provided by (used in) financing activities


46




201



247Net increase (decrease) in cash and cash equivalents


78




(27
)


51Effect of exchange rate changes on cash balances held in
    foreign currencies


1




1



2Cash and cash equivalents  beginning of period


102




128



128Cash and cash equivalents  end of period

$
181



$
102


$
181   Operating
    Activities
     75




---



##### Table of Contents



Six MonthsEndedSeptember 30,2008


2007


Change(Restated)Successor


CombinedNet cash provided by (used in) operating activities

$
(390
)

$
(227
)

$
(163
)Dividends  minority interests


(5
)


(8
)


3Capital expenditures


(70
)


(74
)


4Net proceeds from settlement of derivative instruments


94



90



4Free cash flow

$
(371
)

$
(219
)

$
(152
)Ending cash and cash equivalents

$
219


$
181


$
38         tm
   76




---



##### Table of Contents



Investing
    Activities
    Six MonthsEndedSeptember 30,2008


2007


Change(Restated)Successor


CombinedCapital expenditures

$
(70
)

$
(74
)

$
4Proceeds from sales of property, plant and equipment


2



1



1Changes to investment in and advances to non-consolidated
    affiliates


13



4



9Proceeds from loans receivable  net


13



10



3Net proceeds from settlement of derivative instruments


94



90



4Net cash provided by (used in) investing activities

$
52


$
31


$
21     tm
    Financing
    Activities
  Overview
    Six MonthsEndedSeptember 30,2008


2007


ChangeSuccessor


CombinedProceeds from issuance of common stock

$



$
92


$
(92
)Proceeds from issuance of debt






1,110



(1,110
)Principal repayments


(7
)


(906
)


899Short-term borrowings  net


263



(5
)


268Dividends  minority interests


(5
)


(8
)


3Debt issuance costs






(37
)


37Proceeds from the exercise of stock options






1



(1
)Net cash provided by (used in) financing activities

$
251


$
247


$
4    77




---



##### Table of Contents



Senior
    Secured Credit Facilities
      Interest
    Rate Swaps
      Short-Term
    Borrowings and Letters of Credit
      Liquidity
   78




---



##### Table of Contents



As ofSeptember 30,


March 31,2008


2008Successor


SuccessorCash and cash equivalents

$
219


$
326Gross availability under senior secured credit facilities


444



582Borrowing availability limitation due to fixed charge coverage
    ratio


(80
)


(69
)Total estimated liquidity

$
583


$
839           OFF-BALANCE
    SHEET ARRANGEMENTS
    
    any obligation under certain derivative instruments;
    any obligation under certain guarantees or contracts;
    a retained or contingent interest in assets transferred to an
    unconsolidated entity or similar entity or similar arrangement
    that serves as credit, liquidity or market risk support to that
    entity for such assets and 79




---



##### Table of Contents




    any obligation under a material variable interest held by the
    registrant in an unconsolidated entity that provides financing,
    liquidity, market risk or credit risk support to the registrant,
    or engages in leasing, hedging or research and development
    services with the registrant.    Derivative
    Instruments
         80




---



##### Table of Contents



As of September 30, 2008Assets


Liabilities


Net Fair ValueAssets/Current


Noncurrent


Current


Noncurrent


(Liabilities)SuccessorDerivatives designated as hedging instruments:Cross-currency swaps

$



$



$



$
(65
)

$
(65
)Interest rate swaps














(4
)


(4
)Electricity swap






6











6Total derivatives designated as hedging instruments






6







(69
)


(63
)Derivatives not designated as hedging instruments:Foreign exchange forward contracts


43



1



(50
)


(16
)


(22
)Cross-currency swaps


12







(9
)






3Interest rate swaps






23











23Aluminum forward contracts


126



11



(297
)


(7
)


(167
)Aluminum options


2



5



(22
)


(7
)


(22
)Embedded derivative instruments


54















54Natural gas swaps










(7
)






(7
)Total derivatives not designated as hedging instruments


237



40



(385
)


(30
)


(138
)Total derivative fair value

$
237


$
46


$
(385
)

$
(99
)

$
(201
)   81




---



##### Table of Contents



As of March 31, 2008Assets


Liabilities


Net Fair ValueAssets/Current


Noncurrent


Current


Noncurrent


(Liabilities)SuccessorDerivatives designated as hedging instruments:Cross-currency swaps

$



$



$



$
(184
)

$
(184
)Interest rate swaps










(3
)


(12
)


(15
)Electricity swap


3



11











14Total derivatives designated as hedging instruments


3



11



(3
)


(196
)


(185
)Derivatives not designated as hedging instruments:Foreign exchange forward contracts


43



4



(112
)


(4
)


(69
)Cross-currency swaps


19







(4
)


(1
)


14Interest rate swaps


2



2











4Aluminum forward contracts


130



4



(9
)






125Aluminum options


1















1Embedded derivative instruments










(20
)






(20
)Natural gas swaps


5















5Total derivatives not designated as hedging instruments


200



10



(145
)


(5
)


60Total derivative fair value

$
203


$
21


$
(148
)

$
(201
)

$
(125
)   Net
    Investment Hedges
      Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorCross-currency swaps


$81



$(28)



$120



$(28)




$(8)   Cash Flow
    Hedges
     82




---



##### Table of Contents



(OCI) OCI
  Three Month Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)


Amount of Gain or (Loss)


Recognized in Income onRecognized in OCI on


Reclassified from Accumulated


Derivative (Ineffective PortionDerivative


OCI into Income


and Amount Excluded from(Effective Portion)


(Effective Portion)


Effectiveness Testing)Three Months


Three Months


Three Months


Three Months


Three Months


Three MonthsEnded


Ended


Ended


Ended


Ended


EndedSeptember 30,


September 30,


September 30,


September 30,


September 30,


September 30,2008


2007


2008


2007


2008


2007Successor


Successor


Successor


Successor


Successor


SuccessorElectricity swap

$
(12
)

$
4


$
(4
)

$
2


$



$
Interest rate swaps

$
1


$



$



$



$



$
   Six Month
    Comparison:
  Amount of Gain or (Loss)Amount of Gain or (Loss)


Amount of Gain or (Loss)


Recognized in Income onRecognized in OCI on


Reclassified from Accumulated


Derivative (Ineffective PortionDerivative


OCI into Income


and Amount Excluded from(Effective Portion)


(Effective Portion)


Effectiveness Testing)Six Months


Six Months


Six MonthsEnded


Ended


EndedSeptember 30,


September 30,


September 30,2008


2008


2008Successor


Successor


SuccessorElectricity swap

$



$
(7
)

$
Interest rate swaps

$
11


$



$
   83




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##### Table of Contents



Amount ofAmount of


Gain or (Loss)Gain or (Loss)


Recognized in Income onAmount of Gain or


Reclassified from


Derivative (Ineffective(Loss) Recognized


Accumulated


Portion and Amountin OCI on Derivative


OCI into Income


Excluded from(Effective Portion)


(Effective Portion)


Effectiveness Testing)May 16, 2007



April 1, 2007


May 16, 2007



April 1, 2007


May 16, 2007



April 1, 2007Through



Through


Through



Through


Through



ThroughSeptember 30,



May 15,


September 30,



May 15,


September 30,



May 15,2007



2007


2007



2007


2007



2007Successor



Predecessor


Successor



Predecessor


Successor



PredecessorForeign exchange forward contracts

$




$
3


$




$
(1
)

$




$
Electricity swap

$
6



$
4


$
2



$



$




$
   Derivative
    Instruments Not Designated as Hedges
           84




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##### Table of Contents



Three Months


Six Months


May 16, 2007



April 1, 2007Ended


Ended


Through



ThroughSeptember 30,


September 30,


September 30,



May 15,2008


2007


2008


2007



2007Successor


Successor


Successor


Successor



PredecessorDerivative Instruments Not Designated as HedgesForeign exchange forward contracts

$
17


$
(4
)

$
7


$
12



$
11Interest rate swaps


15



(2
)


24



(2
)



(1
)Aluminum forward contracts


(207
)


(30
)


(191
)


(34
)



9Aluminum options


(27
)






(25
)


1




Embedded derivative instruments


53



15



58



12




2Natural gas swaps


(16
)


(2
)


(9
)


(3
)



1Cross currency swaps


(25
)


(9
)


8



(6
)



(3
)Gain (loss) recognized


(190
)


(32
)


(128
)


(20
)



19Derivative Instruments Designated as Cash Flow HedgesElectricity swap


5



2



9



4




1Gain (loss) on change in fair value of derivative instruments
     net

$
(185
)

$
(30
)

$
(119
)

$
(16
)


$
20   Guarantees
    of Indebtedness
    
    certain of our wholly-owned and majority-owned
    subsidiaries; and
    Aluminium Norf GmbH, which is a fifty percent (50%) owned joint
    venture that does not meet the requirements for consolidation
    under FASB Interpretation No. 46 (Revised),
    Consolidation of Variable Interest Entities.        Maximum

LiabilityPotential Future

CarryingPayment

ValueWholly-owned Subsidiaries

$
89


$
63Aluminium Norf GmbH

$
14


$
  85




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##### Table of Contents



Other
    CONTRACTUAL
    OBLIGATIONS
  Form 10-K/A
  DIVIDENDS
    CRITICAL
    ACCOUNTING POLICIES AND ESTIMATES
  Form 10-K/A
  RECENT
    ACCOUNTING STANDARDS
  Recently
    Adopted Accounting Standards
    The Fair Value Option for Financial Assets and Financial
    Liabilities  including an amendment of FASB Statement
    No. 115 instrument-by-instrument Accounting for Derivative Instruments and Hedging Activities
  Fair Value Measurements No. FAS 157-2, Effective Date of FASB Statement No. 157
 86




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##### Table of Contents



No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement under Statement 13 Accounting for Leases Business Combinations
  No. FIN 39-1, Amendment of FASB Interpretation No. 39 FIN 39-1). FIN 39-1 Offsetting of Amounts
    Related to Certain Contracts
  Recently
    Issued Accounting Standards
    The
    Hierarchy of Generally Accepted Accounting Principles The Meaning of Present Fairly in Conformity
    with Generally Accepted Accounting Principles
  No. FAS 142-3, Determination of Useful Life of Intangible Assets, FAS 142-3). FAS 142-3 Goodwill and Other Intangible Assets FAS 142-3 FAS 142-3 FAS 142-3
  Disclosures about Derivative Instruments and Hedging
    Activities
  Business Combinations
 87




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##### Table of Contents



Accounting for
    Income Taxes,
  Noncontrolling Interests in Consolidated Financial Statements
   88




---



##### Table of Contents



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS AND MARKET
    DATA
  Form 10-Q
    
    the level of our indebtedness and our ability to generate cash;
    changes in the prices and availability of aluminum (or premiums
    associated with such prices) or other materials and raw
    materials we use;
    the effect of metal price ceilings in certain of our sales
    contracts;
    the capacity and effectiveness of our metal hedging activities,
    including our internal used beverage cans (UBC) and smelter
    hedges;
    relationships with, and financial and operating conditions of,
    our customers, suppliers and our ultimate parent, Hindalco;
    fluctuations in the supply of, and prices for, energy in the
    areas in which we maintain production facilities;
    our ability to access financing for future capital requirements;
    continuing obligations and other relationships resulting from
    our spin-off from Alcan;
    changes in the relative values of various currencies;
    factors affecting our operations, such as litigation,
    environmental remediation and
    clean-up
    costs, labor relations and negotiations, breakdown of equipment
    and other events;
    economic, regulatory and political factors within the countries
    in which we operate or sell our products, including changes in
    duties or tariffs;
    competition from other aluminum rolled products producers as
    well as from substitute materials such as steel, glass, plastic
    and composite materials;
    changes in general economic conditions;
    our ability to improve and maintain effective internal control
    over financial reporting and disclosure controls and procedures
    in the future; 89




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##### Table of Contents




    changes in the fair value of derivative instruments;
    cyclical demand and pricing within the principal markets for our
    products as well as seasonality in certain of our
    customers industries;
    changes in government regulations, particularly those affecting
    taxes, environmental, health or safety compliance;
    changes in interest rates that have the effect of increasing the
    amounts we pay under our principal credit agreement and other
    financing agreements; and
    the effect of taxes and changes in tax rates.  Form 10-K/A
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk          Commodity
    Price Risks
    Aluminum
       90




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##### Table of Contents



Sensitivities
    Increase in

Change inRate/Price

Fair ValueAluminum Forward Contracts


10
%

$
76Aluminum Options


10
%

$
13   Energy
           91




---



##### Table of Contents



Sensitivities
    Increase in


Change inRate/Price


Fair ValueElectricity


10
%

$
6Natural Gas


10
%

$
2Heating Oil


10
%

$
1   Foreign
    Currency Exchange Risks
    non-U.S. dollar
     92




---



##### Table of Contents



Sensitivities
    Pre-TaxGainIncrease in


(Loss) inExchange Rate


Fair ValueCurrency measured against the U.S. dollarEuro


10
%

$
(39
)Korean won


10
%

$
(10
)Brazilian real


10
%

$
18British pound


10
%

$
8Canadian dollar


10
%

$
3Swiss franc


10
%

$
(1
)Malaysian ringgit


10
%

$
1       Pre-TaxIncrease in


Loss inRate


Fair ValueCurrency measured against the U.S. dollarEuro


10
%

$
(79
)British pound


10
%

$
(13
)Swiss franc


10
%

$
(4
)   Interest
    Rate Risks
       93




---



##### Table of Contents



Sensitivities
    Increase in

Change inRate

Fair ValueInterest Rate Swap ContractsNorth America


10
%

$
2Asia


10
%

$
   Item 4.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Form 10-Q Rule 13a-15(e)
  Changes
    in Internal Control Over Financial Reporting
  Rule 13a-15(f)
  Material
    Weakness Existing as of September 30, 2008 and Remediation
    Plan
  Form 10-K/A
   94




---



##### Table of Contents



95




---



##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Reynolds Boat Case.
    Form 10-K Accrued expenses and
    other current liabilities Prepaid expenses and
    other current assets
  Accrued expenses and other current liabilities
  Other (income) expenses  net
  Coca-Cola
    Lawsuits. Coca-Cola Coca-Cola Coca-Cola Coca-Cola
 96




---



##### Table of Contents



Coca-Cola Coca-Cola
  Anheuser-Busch,
    Anheuser-Busch Litigation. Anheuser-Buschs
          ARCO Aluminum Complaint.
 97




---



##### Table of Contents



Item 6.
    Exhibits  ExhibitNo.

Description2
.1

Arrangement Agreement by and among Hindalco Industries Limited,
    AV Aluminum Inc. and Novelis Inc., dated as of February 10,
    2007 (incorporated by reference to Exhibit 2.1 to our
    Current Report on
    Form 8-K
    filed on February 13, 2007)3
.1

Restated Certificate and Articles of Incorporation of Novelis
    Inc. (incorporated by reference to Exhibit 3.1 to the
    Form 8-K
    filed by Novelis Inc. on January 7, 2005 (File
    No. 001-32312))3
.2

Amended and Restated Bylaws, adopted as of July 24, 2008
    (incorporated by reference to Exhibit 3.2 to the
    Form 8-K
    filed by Novelis Inc. on July 25, 2008 (File
    No. 001-32312))4
.1

Shareholder Rights Agreement between Novelis and CIBC Mellon
    Trust Company (incorporated by reference to
    Exhibit 4.1 to the
    Form 10-K
    filed by Novelis Inc. on March 30, 2005 (File
    No. 001-32312))4
.2

Indenture, relating to the Notes, dated as of February 3,
    2005, between the Company, the guarantors named on the signature
    pages thereto and The Bank of New York Trust Company, N.A.,
    as trustee (incorporated by reference to Exhibit 4.1 to our
    Current Report on
    Form 8-K
    filed on February 3, 2005 (File
    No. 001-32312))4
.3

Form of Note for 7
    1/4% Senior
    Notes due 2015 (incorporated by reference to Exhibit 4.1 to
    the
    Form S-4
    filed by Novelis Inc. on August 3, 2005 (File
    No. 331-127139))4
.4

First Amendment to the Shareholder Rights Agreement between
    Novelis Inc. and CIBC Mellon Trust Company, dated as of
    February 10, 2007 (incorporated by reference to our Current
    Report on
    Form 8-K
    file on February 13, 2007)10
.1*

Employment Agreement dated August 8, 2008 between Novelis
    Inc. and Alexandre Moreira Martins de Almeida31
.1

Section 302 Certification of Principal Executive Officer31
.2

Section 302 Certification of Principal Financial Officer32
.1

Section 906 Certification of Principal Executive Officer32
.2

Section 906 Certification of Principal Financial Officer     *
    
    Indicates a management contract or compensatory plan or
    arrangement. 98




---



##### Table of Contents



SIGNATURES
       By:
    /s/  Steven
    Fisher       99




---



##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description2
.1

Arrangement Agreement by and among Hindalco Industries Limited,
    AV Aluminum Inc. and Novelis Inc., dated as of February 10,
    2007 (incorporated by reference to Exhibit 2.1 to our
    Current Report on
    Form 8-K
    filed on February 13, 2007)3
.1

Restated Certificate and Articles of Incorporation of Novelis
    Inc. (incorporated by reference to Exhibit 3.1 to the
    Form 8-K
    filed by Novelis Inc. on January 7, 2005 (File
    No. 001-32312))3
.2

Amended and Restated Bylaws, adopted as of July 24, 2008
    (incorporated by reference to Exhibit 3.2 to the
    Form 8-K
    filed by Novelis Inc. on July 25, 2008 (File
    No. 001-32312))4
.1

Shareholder Rights Agreement between Novelis and CIBC Mellon
    Trust Company (incorporated by reference to
    Exhibit 4.1 to the
    Form 10-K
    filed by Novelis Inc. on March 30, 2005 (File
    No. 001-32312))4
.2

Indenture, relating to the Notes, dated as of February 3,
    2005, between the Company, the guarantors named on the signature
    pages thereto and The Bank of New York Trust Company, N.A.,
    as trustee (incorporated by reference to Exhibit 4.1 to our
    Current Report on
    Form 8-K
    filed on February 3, 2005 (File
    No. 001-32312))4
.3

Form of Note for 7
    1/4% Senior
    Notes due 2015 (incorporated by reference to Exhibit 4.1 to
    the
    Form S-4
    filed by Novelis Inc. on August 3, 2005 (File
    No. 331-127139))4
.4

First Amendment to the Shareholder Rights Agreement between
    Novelis Inc. and CIBC Mellon Trust Company, dated as of
    February 10, 2007 (incorporated by reference to our Current
    Report on
    Form 8-K
    file on February 13, 2007)10
.1*

Employment Agreement dated August 8, 2008 between Novelis
    Inc. and Alexandre Moreira Martins de Almeida31
.1

Section 302 Certification of Principal Executive Officer31
.2

Section 302 Certification of Principal Financial Officer32
.1

Section 906 Certification of Principal Executive Officer32
.2

Section 906 Certification of Principal Financial Officer     *
    
    Indicates a management contract or compensatory plan or
    arrangement. 100