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Exhibit 4.68  

	 
	 	 

	 	 	 
	

 	 	Contacts:

Denis Couture

Vice-President, Public Affairs

& Communications

(416) 982-7020
	 	 	Lars-Eric Johansson

Executive Vice-President

& Chief Financial Officer

(416) 982-7139

n e w s    r e l e a s e 

 
 

NORANDA REPORTS SECOND QUARTER LOSS OF $15 MILLION
  Recapitalization Plan Will Add Financial Flexibility and Improve Cash Flow    
    

TORONTO, July 25, 2003 — Noranda Inc. today reported a net loss of $15 million ($0.11 per
common share) for the three months ended June 30, 2003. The results include net after-tax unusual items of $5 million comprising a non-recurring tax recovery
($7 million) and restructuring provisions ($12 million). The Company reported earnings, for the same period in 2002, of $47 million ($0.18 per common share), including a net
after-tax gain of $66 million from the sale of 51% of the CEZ processing facility. 

For
the first six months of 2003, the net loss amounts to $74 million or $0.38 per share compared to net earnings of $55 million or $0.19 per share in 2002. 

In
a separate statement on July 25th, Noranda announced a recapitalization plan that includes the issuance of up to $500 million of common shares, reduction of the
quarterly dividend from $0.20 to $0.12, conversion to U.S. dollar reporting and the issuance of US$300 million of debt. Proceeds from the new equity and debt issues will be used to
reduce current debt and augment financial resources for opportunities in the principal businesses. Altogether, the change to the dividend payment and the redemption of $150 million of preferred
shares are expected to reduce the company's annual dividends by approximately $70 million. 

Second Quarter Highlights  

	•
	Achieved
relatively unchanged year over year EBITDA despite the negative effect of the stronger Canadian dollar, relative to the U.S. dollar, of $23 million.

	•
	Issued
a private placement of preferred shares for gross proceeds of $150 million which have been used to reduce debt.

	•
	Sold
priority units in the Noranda Income Fund. Net proceeds of $110 million were received and a net after-tax gain of $41 million will be recorded
in the third quarter.

	•
	Reduced
net debt by $691 million since year-end 2002.

	•
	Signed
new collective agreement at the Horne smelter ending the labour strike.

	•
	Completed
the last of the uneconomic wheel contracts and closed the related production facility at American Racing Equipment. 

Commentary

"Our operations are performing well, our cost structure continues to improve and we are within reach of the goals set for the year," said Derek Pannell,
Noranda's President and Chief Executive Officer. "However, the Company's full potential continues to be hampered by the low metal price environment. Our recently announced
5-step recapitalization plan is a powerful initiative to improve financial flexibility so that Noranda is in a position to benefit more fully from opportunities in the copper and nickel
business." 

Consolidated Results  

Revenues
were lower in the quarter compared to the last year mostly on account of the stronger Canadian dollar and lower copper metal sales as a result of the labour strike at the Horne smelter which
was resolved in mid May. 

Operating
costs were lower than both the same period of last year and the first quarter of 2003. The steadily improving cost structure resulting from the Six Sigma program and other initiatives was
somewhat offset by increased energy rates. 

The
cost to purchase raw materials was lower year-over-year due to a reduction in purchasing requirements caused by the strike at the Horne smelter. 

Corporate
and general administration, exploration and research expenses were almost 18% lower than last year. Benefits of the co-ordination of functions throughout the Company's operations
and the adjustment of exploration and research programs to fit the business needs of the Company continue to be realized. 

The
Company recorded restructuring provisions of $20 million in the quarter related to workforce reductions and plant shutdowns at the Canadian Copper and Recycling business unit, American
Racing Equipment and the magnesium plant. 

Interest
expense of $51 million is net of capitalized interest of $2 million, which relates to the major capital projects currently under construction. 

The
tax recovery of $32 million recorded in the period includes a $12 million non-recurring recovery booked by Falconbridge which is attributable to Canadian Government
changes in resource sector taxation. 

OPERATIONS  

Copper  

The
Copper business reported operating income (earnings before interest, taxes and minority interest) of $48 million in the quarter compared to $46 million in the comparable period of
2002. The LME price for copper averaged US$0.74 per pound for the quarter and US$0.75 for the first half of the year. 

At
the Antamina mine, throughput at the mill averaged 73,589 tonnes per day with average grades of 1.09% copper and 1.97% zinc. By the end of the quarter, the remaining steps necessary to achieve
conversion of the project's debt to a non-recourse basis were completed. 

Collahuasi's
mine production was lower than the second quarter of 2002 as a result of lower ore grades. Concentrate production was lower than the corresponding period of 2002, while cathode production
was the same as last year's levels. 

Production
from the Lomas Bayas mine was similar to last year's levels. An expansion of the mine's crushing capacity to compensate for the declining ore grades, was started during the quarter. The
additional capacity, expected to be operational by the second quarter of 2004, will maintain the current production level and will require an investment of $16 million. 

At
the Altonorte smelter, throughput and operating performance of the new facilities exceeded expectations. Anode production exceeded both the second quarter of 2002 and the first quarter of 2003 by
78% and 65% respectively and additional production was held back because of the lack of casting capacity. The installation of a new casting wheel is scheduled to be completed by the end of July. 

Canadian Copper and Recycling  

The
Canadian Copper and Recycling business produced an operating loss of $8 million in the quarter including a pre-tax provision of $9 million for severances at both the Kidd
facility and the Horne smelter and an $11 million inventory write-down in the value of the metal inventory resulting from the stronger Canadian dollar. In the comparable period of
2002, the operating loss of $35 million included $18 million of closure costs at the Gaspé smelter. 

During
the quarter, the Company and the unionized employees at the Horne smelter signed a new collective agreement and ended the labour strike that began in June of 2002. The agreement gives the
Company increased flexibility in the assignment of workers, latitude to balance manpower levels with workload and removes employment guarantees for tradespersons. Prior to the return to work, the
labour force was reduced by 125 positions. The plant was operating at approximately 80% of capacity by the end of the quarter and attained normal operating levels in mid July. 

Copper
and zinc production from the Kidd Mine was lower than for the corresponding period of 2002 due to access restrictions to high grades zones in the upper mine. Production results should improve
for the balance of 

the
year with the completion of additional ground-control work. Copper cathode production for the period was above last year's output, while zinc production was slightly lower than in the second
quarter of 2002. 

During
the quarter, a decision was taken to extend the shutdown at the Kidd Creek zinc plant for market and supply-related reasons to September 30th instead of
September 2nd. As a further step to offset the strong Canadian dollar and weak market conditions, eighty-five positions were permanently removed from the workforce,
thereby lowering production costs. 

Nickel  

The
Nickel business produced operating income of $64 million in the quarter compared to $46 million in the comparable period of 2002. The LME nickel price averaged US$3.80 per pound for
the quarter, a 21% improvement over the second quarter 2002 average of US$3.15 per pound. 

At
the Sudbury mines, production was lower compared to last year because of ore grades which declined to 1.38% from 1.56%. In the third quarter, production will be affected by the scheduled vacation
shutdowns at the Lockerby and Thayer Lindsley mines and the Strathcona Mill. 

At
Raglan, metal production was ahead of the comparable period last year as higher ore grades and recoveries compensated for lower mine tonnages. 

Metal
production of 15,833 tonnes of nickel and 5,468 tonnes of copper from the Sudbury smelter were comparable to last year. The smelter is currently in its annual maintenance and vacation shutdown,
which began on June 22nd and will continue to August 4th. 

Production
from the Nikkelverk refinery was ahead of last year as the impact of lower custom feed volumes from the BCL smelter was offset by increased matte production from Sudbury. Production in the
third quarter will be negatively impacted by the shutdown of the Sudbury smelter. 

Production
at Falcondo of 6,557 tonnes was slightly lower than a year ago on account of scheduled maintenance work and a 5-day power failure. 

Zinc  

The
Zinc business recorded an operating loss of $43 million in the quarter compared to operating earnings of $70 million in the same period last year, which included a $98 million
pre-tax gain from the sale of the CEZ refinery. The LME zinc price averaged US$0.35 per pound in the quarter, essentially unchanged from a year ago. 

Production
at the Brunswick mine of 73,942 tonnes of zinc was slightly ahead of last year's level of 71,382 tonnes. Mill throughput averaged 10,184 tonnes per day compared to 9,913 tonnes in 2002. 

At
the Brunswick Smelter, production was below that of the second quarter of 2002 as the plant began its four-month shutdown in mid-June. The plant is scheduled to restart
operations in November 2003. 

At
the Bell-Allard mine, zinc production increased to 25,113 tonnes from last year's level of 24,521 tonnes. The mine is entering the last stages of its production life and workforce
adjustments are expected to begin at the end of the third quarter. 

Aluminum  

The
Aluminum business produced operating income of $9 million in the quarter compared to $20 million in the same quarter of 2002. The LME aluminum price averaged US$0.63 per pound for
the period. 

At
the primary smelter, both production and shipments exceeded last year's volumes however value-added product sales were lower. Results were also negatively affected by higher energy and pension
costs and the negative impact of the stronger Canadian dollar of approximately $14 million. 

At
Norandal, the year-over-year improvement in production and costs at all of the plants were offset by higher energy costs and a slowdown in the market, which has since
improved. 

Other Operations  

American
Racing Equipment (ARE) reported an operating loss of $10 million for the period including a pre-tax restructuring charge of $6 million. This compares to earnings of
$2 million in 2002. The current quarter results reflect the completion of the exit from the original wheel manufacturing business and the subsequent closure of the related manufacturing
facility in Queretaro, Mexico. 

FINANCIAL RESOURCES AND LIQUIDITY  

Cash
generated from operations before changes in working capital, amounted to $201 million for the quarter and $361 million for the first six months compared to $153 million and
$370 million a year ago. 

Capital
investments of $306 million for the first six months of the year were as planned. Investments for the full year are expected to approximate $715 million with the major
commitments being the deepening of the Kidd Mine D, the transition and expansion of the Collahuasi facility and the development of the Montcalm nickel/copper project. 

During
the quarter, Noranda issued six million cumulative preferred shares to Brascan Corporation for gross proceeds of $150 million. The shares pay an 8% annual dividend and are redeemable by
Noranda at any time without penalty. This brings the total amount raised through the issuance of preferred shares for the year to $300 million. Net proceeds were used to repay debt. 

On
May 28th, Falconbridge completed the sale of US$250 million of twelve-year debentures. The notes, which are unsecured and bear a coupon rate of 5.375% per
annum, mature on June 1, 2015. The proceeds were used to repay amounts outstanding under Falconbridge's commercial paper program, to fund planned capital expenditures and for general purposes. 

In
mid-July, Noranda sold its 11,984,900 Priority Units of the Noranda Income Fund at $9.85 per unit to a syndicate of underwriters. Net proceeds, received in the third quarter, of
$110 million were used to repay debt. Following the offering, Noranda still has a 25% interest in the Fund through its holding of Ordinary Units of Noranda Income Fund Limited Partnership. A
gain of $41 million will be recorded in the third quarter. 

At
the end of the quarter, cash resources stood at $554 million and net debt at $4.1 billion. At year-end 2002 the net debt was $4.8 billion. The decrease is mainly
due to the repayment of a US$200 million debenture, which matured during the quarter and the effect of the stronger Canadian dollar on the U.S. denominated debt. Consolidated undrawn
committed bank lines stood at approximately $1 billion at quarter end. 

In
July, the Company purchased the 3.3% net proceeds interest relating to the Antamina mine in Peru from Inmet Mining Corporation for US$22.5 million. The purchase releases Noranda of any
royalty obligation that it had on its share of the mine production and entitles it to receive royalties from Teck Cominco's interest in Antamina once the mine recovers its development cost. 

PROJECTS  

At
Nickel Rim South, in Sudbury, Ontario, the current phase of diamond drilling has been completed and borehole geophysical surveys are in progress to assist in the determination of the optimum
location for the shaft pilot hole. A revised inferred resource estimate of 7,950,000 tonnes is a 27% increase in tonnage compared to the January 1, 2003 estimate. 

The
development of the Montcalm nickel project in Ontario has been approved by the Falconbridge Board of Directors, subject to the receipt of all necessary operating permits. The net capital cost,
after preproduction revenues, to develop the project is estimated at $100 million, and includes $19 million for working capital. 

DIVIDEND  

The
following dividends have been declared: 

	Security
 
	 	Dividend Amount
 
	 	Record Date
 
	 	Payable Date
 

	Common shares	 	$0.12 per share	 	August 29, 2003	 	September 15, 2003
	Preferred Series F shares	 	Floating rate	 	August 29, 2003	 	September 12, 2003
	Preferred Series F shares	 	Floating rate	 	September 30, 2003	 	October 12, 2003
	Preferred Series F shares	 	Floating rate	 	October 31, 2003	 	November 12, 2003
	Preferred Series G shares	 	$0.38125 per share	 	October 15, 2003	 	November 1, 2003
	Preferred Series H shares	 	$0.40625 per share	 	August 15, 2003	 	September 30, 2003

QUARTERLY WEBCAST  

Noranda
will be holding its quarterly teleconference on Friday, July 25, 2003 at 8:30 a.m. Eastern Standard Time. The call will be broadcast live on the internet via
www.noranda.com. 

This
news release contains forward-looking statements concerning the Company's business and operations. The Company cautions that, by their nature, forward-looking statements involve risk and
uncertainty and the Company's actual results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Information Form for a
description of the major risk factors. 

Noranda Inc. is a leading international mining and metals company with more than 48 mining and metallurgical operations and projects under development in 17 countries.
Noranda is one of the world's largest producers of zinc and nickel and is a significant producer of copper, primary and fabricated aluminum, lead, silver, gold, sulphuric acid and cobalt. Noranda is
also a major recycler of secondary copper, nickel and precious metals. It is listed on The Toronto Stock Exchange and The New York Stock Exchange (NRD).

— 30 —

Note: This press release is also available at www.noranda.com. All dollar amounts are in Canadian dollars unless otherwise
noted.

ATTACHMENTS  

 
 

NORANDA INC.    
    
    CONSOLIDATED RESULTS    
    
    ($ millions)    
    

	 
	 	Second Quarter
	 	Six Months Ended

June 30
	 
	 
	 	2003
	 	Restated

2002
	 	2003
	 	Restated

2002
	 
	 
	 	 
	 	(Note 2)
 
	 	 
	 	(Note 2)
 
	 
	Revenues(1)	 	 	1,578	 	 	1,668	 	 	3,163	 	 	3,303	 
	 	 	
	 	
	 	
	 	
	 
	
Operating expenses	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 	
 	

 	
 
	 	Cost of operations	 	 	722	 	 	766	 	 	1,462	 	 	1,535	 
	 	Purchased raw materials	 	 	590	 	 	622	 	 	1,176	 	 	1,236	 
	 	Corporate and general administration	 	 	19	 	 	25	 	 	37	 	 	45	 
	 	Exploration	 	 	14	 	 	15	 	 	20	 	 	26	 
	 	Research	 	 	4	 	 	5	 	 	9	 	 	12	 
	 	Other operating income	 	 	—	 	 	—	 	 	(3	)	 	—	 
	 	 	
	 	
	 	
	 	
	 
	 	 	 	1,349	 	 	1,433	 	 	2,701	 	 	2,854	 
	 	 	
	 	
	 	
	 	
	 
	 	Operating income before depreciation and restructuring costs	 	 	229	 	 	235	 	 	462	 	 	449	 
	 	

Depreciation, amortization and reclamation	
 	
 	
180	
 	
 	

200	
 	
 	
353	
 	
 	

382	
 
	 	Magnesium and other restructuring costs, net	 	 	20	 	 	(72	)	 	63	 	 	(72	)
	 	 	
	 	
	 	
	 	
	 
	Operating income	 	 	29	 	 	107	 	 	46	 	 	139	 
	

Interest expense, net	
 	
 	
51	
 	
 	

36	
 	
 	
109	
 	
 	

71	
 
	Tax (recovery)	 	 	(32	)	 	6	 	 	(41	)	 	(17	)
	Minority interest in earnings of subsidiaries	 	 	25	 	 	18	 	 	52	 	 	30	 
	 	 	
	 	
	 	
	 	
	 
	Net income (loss)	 	 	(15	)	 	47	 	 	(74	)	 	55	 
	

Dividend on preferred shares	
 	
 	
13	
 	
 	

4	
 	
 	
17	
 	
 	

8	
 
	 	 	
	 	
	 	
	 	
	 
	Income (loss) attributable to common shares	 	 	(28	)	 	43	 	 	(91	)	 	47	 
	 	 	
	 	
	 	
	 	
	 
	Basic and Diluted Earnings (Loss) per common share — $	 	$	(0.11	)	$	0.18	 	$	(0.38	)	$	0.19	 
	 	 	
	 	
	 	
	 	
	 

Noranda Inc. has approximately 244.4 million common shares outstanding as at June 30, 2003 

	(1)
	Revenues
for the six months and quarter ended June 30, 2003 include $5 million and $4 million (2002 — $3 million and
$3 million) as the Company's share of earnings in the Noranda Income Fund. 

 
 

NORANDA INC.    
    
    CONSOLIDATED BALANCE SHEETS    
    
    ($ millions)    
    

	 
	 	Jun. 30

2003
	 	Restated

Dec. 31

2002

	 
	 	 
	 	(Note 2)
 

	Assets	 	 	 	 
	Current assets	 	 	 	 
	 	Cash and cash equivalents	 	554	 	463
	 	Accounts receivable	 	801	 	752
	 	Inventories	 	1,420	 	1,415
	 	 	
	 	

	 	 	2,775	 	2,630
	

Capital assets	
 	

7,496	
 	

8,169
	Investments and other assets	 	425	 	407
	Future income tax asset	 	304	 	242
	 	 	
	 	

	 	 	11,000	 	11,448
	 	 	
	 	

	
Liabilities and Shareholders' Equity	
 	

 	
 	

 
	Current Liabilities	 	 	 	 
	 	Bank advances and short-term notes	 	41	 	39
	 	Accounts and taxes payable	 	1,043	 	1,137
	 	Debt due within one year	 	567	 	490
	 	 	
	 	

	 	 	1,651	 	1,666
	

Long-term debt — wholly owned operations	
 	

1,701	
 	

2,219
	                            — partially-owned subsidiaries and
projects	 	2,356	 	2,514
	Liability element of convertible debentures	 	26	 	29
	Future income tax liability	 	365	 	319
	Other deferred credits	 	608	 	579
	Minority interest in subsidiaries	 	1,182	 	1,154
	Shareholders' equity (Note 7)	 	3,111	 	2,968
	 	 	
	 	

	 	 	11,000	 	11,448
	 	 	
	 	

 
 

NORANDA INC.    
    
    CONSOLIDATED STATEMENTS OF CASHFLOWS    
    
    ($ millions)    
    

	 
	 	Second Quarter
	 	Six Months Ended

June 30
	 
	 
	 	2003
	 	Restated

2002
	 	2003
	 	Restated

2002
	 
	 
	 	 
	 	(Note 2)
 
	 	 
	 	(Note 2)
 
	 
	Cash realized from (used for):	 	 	 	 	 	 	 	 	 
	
Operations	
 	

 	
 	

 	
 	

 	
 	

 	
 
	 	Earnings (loss)	 	(15	)	47	 	(74	)	55	 
	 	Charges (credits) not affecting cash:	 	 	 	 	 	 	 	 	 
	 	Depreciation and amortization	 	163	 	175	 	321	 	351	 
	 	Future income taxes	 	17	 	(21	)	(13	)	3	 
	 	Minority interest in earnings of subsidiaries	 	25	 	18	 	52	 	30	 
	 	Earnings in associates net of dividends received	 	2	 	(1	)	7	 	(1	)
	 	Other	 	9	 	(65	)	68	 	(68	)
	 	 	
	 	
	 	
	 	
	 
	 	 	201	 	153	 	361	 	370	 
	 	Change in operating working capital	 	(45	)	38	 	(227	)	(130	)
	 	 	
	 	
	 	
	 	
	 
	 	 	156	 	191	 	134	 	240	 
	 	 	
	 	
	 	
	 	
	 
	
Investment activities	
 	

 	
 	

 	
 	

 	
 	

 	
 
	 	Capital expenditures	 	(154	)	(206	)	(306	)	(403	)
	 	Investments and advances	 	(10	)	—	 	(10	)	(33	)
	 	Sale of assets and investments	 	14	 	409	 	16	 	413	 
	 	 	
	 	
	 	
	 	
	 
	 	 	(150	)	203	 	(300	)	(23	)
	 	 	
	 	
	 	
	 	
	 
	
Financing activities	
 	

 	
 	

 	
 	

 	
 	

 	
 
	 	Long-term debt, including current portion	 	 	 	 	 	 	 	 	 
	 	 	Issued	 	448	 	280	 	491	 	570	 
	 	 	Repaid	 	(396	)	(122	)	(431	)	(122	)
	 	Issue of common shares	 	2	 	2	 	2	 	2	 
	 	Settlement of stock options	 	—	 	(3	)	—	 	(3	)
	 	Share purchase plan repayment	 	—	 	1	 	—	 	2	 
	 	Issue of preferred shares	 	145	 	—	 	291	 	—	 
	 	 	
	 	
	 	
	 	
	 
	 	 	199	 	158	 	353	 	449	 
	 	 	
	 	
	 	
	 	
	 
	Dividends	 	(53	)	(64	)	(96	)	(127	)
	 	 	
	 	
	 	
	 	
	 
	Cash generated	 	152	 	488	 	91	 	539	 
	Cash, beginning of period	 	402	 	336	 	463	 	285	 
	 	 	
	 	
	 	
	 	
	 
	Cash, end of period	 	554	 	824	 	554	 	824	 
	 	 	
	 	
	 	
	 	
	 

 
 

NORANDA INC.    
    
    PRODUCTION VOLUMES    
    

	 
	 	 
	 	Second Quarter
	 	Six Months Ended June 30

	 
	 	 
	 	2003
	 	2002
	 	2003
	 	2002

	Mine Production (tonnes, except as noted)	 	 	 	 	 	 	 	 	 	 
	Copper	 	 	 	 	 	 	 	 	 	 
	 	Kidd Creek	 	 	 	10,655	 	11,152	 	21,373	 	22,040
	 	Matagami	 	 	 	1,928	 	2,084	 	3,931	 	3,943
	 	Brunswick	 	 	 	2,193	 	2,369	 	4,579	 	4,589
	 	INO	 	 	 	10,885	 	10,825	 	19,946	 	20,371
	 	Antamina	 	(33.75%)	 	21,942	 	31,631	 	46,399	 	57,690
	 	Collahuasi	 	(44%)	 	43,515	 	46,945	 	87,726	 	93,012
	 	Lomas Bayas	 	 	 	14,809	 	14,421	 	29,381	 	29,190
	 	Other	 	 	 	3,245	 	4,608	 	9,734	 	9,802
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	109,172	 	124,035	 	223,069	 	240,637
	 	 	 	 	
	 	
	 	
	 	

	Zinc	 	 	 	 	 	 	 	 	 	 
	 	Kidd Creek	 	 	 	16,479	 	26,858	 	37,651	 	52,488
	 	Brunswick	 	 	 	73,942	 	71,382	 	144,740	 	140,876
	 	Matagami	 	 	 	25,113	 	24,521	 	50,397	 	43,655
	 	Antamina	 	(33.75%)	 	33,592	 	15,937	 	57,760	 	38,102
	 	Other	 	 	 	2,120	 	2,308	 	4,092	 	4,315
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	151,246	 	141,006	 	294,640	 	279,436
	 	 	 	 	
	 	
	 	
	 	

	Nickel	 	 	 	13,754	 	13,192	 	26,715	 	27,334
	Ferronickel	 	 	 	6,557	 	7,162	 	13,444	 	10,264
	Lead	 	 	 	19,911	 	19,040	 	38,336	 	38,153
	Silver — 000 ounces	 	 	 	 	 	 	 	 	 	 
	 	Kidd Creek	 	 	 	548	 	774	 	1,287	 	1,982
	 	Brunswick	 	 	 	1,543	 	1,600	 	3,025	 	3,239
	 	Matagami	 	 	 	89	 	88	 	186	 	178
	 	Antamina	 	(33.75%)	 	575	 	569	 	1,260	 	1,224
	 	Other	 	 	 	61	 	66	 	130	 	127
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	2,816	 	3,097	 	5,888	 	6,750
	 	 	 	 	
	 	
	 	
	 	

	Metal Production (tonnes, except as noted)	 	 	 	 	 	 	 	 	 	 
	Refined copper	 	 	 	 	 	 	 	 	 	 
	 	CCR	 	 	 	46,444	 	71,503	 	89,470	 	154,425
	 	Kidd Creek	 	 	 	38,024	 	37,346	 	74,983	 	71,140
	 	Nikkelverk	 	 	 	8,843	 	7,272	 	17,378	 	15,466
	 	Collahuasi	 	(44%)	 	6,583	 	6,579	 	13,445	 	13,008
	 	Lomas Bayas	 	 	 	14,809	 	14,421	 	29,381	 	29,190
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	114,703	 	137,121	 	224,657	 	283,229
	 	 	 	 	
	 	
	 	
	 	

	Copper anodes	 	 	 	 	 	 	 	 	 	 
	 	Gaspe	 	 	 	—	 	6,477	 	—	 	29,612
	 	Horne	 	 	 	22,054	 	44,802	 	50,321	 	93,131
	 	Kidd Creek	 	 	 	36,276	 	36,496	 	73,044	 	72,703
	 	Altonorte	 	 	 	67,917	 	38,181	 	109,010	 	62,487
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	126,247	 	125,956	 	232,375	 	257,933
	 	 	 	 	
	 	
	 	
	 	

	Refined zinc	 	 	 	 	 	 	 	 	 	 
	 	Kidd Creek	 	 	 	30,966	 	34,654	 	68,901	 	72,439
	 	CEZ (Noranda Income Fund)	 	(100% — basis)	 	65,673	 	69,981	 	127,728	 	132,329
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	96,639	 	104,635	 	196,629	 	204,768
	 	 	 	 	
	 	
	 	
	 	

	Refined nickel	 	 	 	 	 	 	 	 	 	 
	 	Nikkelverk	 	 	 	20,140	 	18,314	 	40,703	 	35,371
	 	Falcondo	 	 	 	6,557	 	7,162	 	13,444	 	10,264
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	26,697	 	25,476	 	54,147	 	45,635
	 	 	 	 	
	 	
	 	
	 	

	Primary aluminum	 	 	 	61,178	 	59,400	 	122,304	 	116,214
	Fabricated aluminum	 	 	 	36,660	 	34,211	 	73,585	 	64,175
	Refined lead	 	 	 	23,322	 	24,085	 	47,788	 	49,484
	Refined gold — 000 ounces	 	 	 	293	 	319	 	563	 	633
	Refined silver — 000 ounces	 	 	 	7,028	 	12,230	 	15,696	 	24,677

 
 

NORANDA INC.    
    
    SALES VOLUMES & REALIZED PRICES    
    

	 
	 	 
	 	Second Quarter
	 	Six Months Ended June 30

	 
	 	 
	 	2003
	 	2002
	 	2003
	 	2002

	Metal Sales (tonnes, except as noted)	 	 	 	 	 	 	 	 	 	 
	 	Copper	 	 	 	 	 	 	 	 	 	 
	 	 	CCR	 	 	 	48,608	 	77,428	 	95,762	 	175,492
	 	 	Kidd Creek	 	 	 	26,375	 	24,096	 	55,148	 	49,506
	 	 	Nikkelverk	 	 	 	16,139	 	13,634	 	30,609	 	29,261
	 	 	Antamina (concentrates)	 	(33.75%)	 	21,173	 	28,639	 	43,587	 	57,415
	 	 	Collahuasi (concentrates)	 	(44%)	 	37,548	 	38,115	 	73,462	 	70,533
	 	 	Collahuasi	 	(44%)	 	9,250	 	15,233	 	17,765	 	24,844
	 	 	Lomas Bayas	 	 	 	14,817	 	14,324	 	29,395	 	30,263
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	173,910	 	211,469	 	345,728	 	437,314
	 	 	 	 	
	 	
	 	
	 	

	 	Zinc	 	 	 	 	 	 	 	 	 	 
	 	 	Kidd Creek	 	 	 	28,361	 	39,118	 	63,878	 	74,191
	 	 	Antamina (concentrates)	 	(33.75%)	 	31,033	 	15,009	 	46,433	 	38,040
	 	 	Brunswick/Matagami (concentrates)	 	 	 	86,104	 	78,517	 	164,131	 	113,174
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	145,498	 	132,644	 	274,442	 	225,405
	 	 	 	 	
	 	
	 	
	 	

	 	 	CEZ (Noranda Income Fund)	 	(100% — basis)	 	65,548	 	71,314	 	124,147	 	132,171
	 	Nickel	 	 	 	20,562	 	17,137	 	40,952	 	35,905
	 	Ferronickel	 	 	 	6,455	 	7,460	 	12,991	 	8,003
	 	Aluminum	 	 	 	 	 	 	 	 	 	 
	 	 	Primary Aluminum — shipments	 	 	 	63,528	 	60,958	 	123,380	 	120,769
	 	 	Norandal — shipments	 	 	 	36,660	 	34,211	 	73,585	 	64,175
	 	Lead	 	 	 	26,446	 	22,195	 	44,915	 	46,212
	 	Gold — 000 ounces	 	 	 	213	 	318	 	449	 	590
	 	Silver — 000 ounces	 	 	 	 	 	 	 	 	 	 
	 	 	CCR	 	 	 	6,308	 	13,338	 	15,390	 	25,248
	 	 	Kidd Creek	 	 	 	1,553	 	1,124	 	2,757	 	1,502
	 	 	Antamina	 	(33.75%)	 	435	 	489	 	1,010	 	1,091
	 	 	 	 	
	 	
	 	
	 	

	 	 	 	 	8,296	 	14,951	 	19,157	 	27,841
	 	 	 	 	
	 	
	 	
	 	

	
Average Realized Prices — ($U.S. per pound, except as noted)	
 	

 
	 	 	Copper	 	 	 	0.75	 	0.76	 	0.76	 	0.74
	 	 	Copper — Falconbridge	 	 	 	0.76	 	0.75	 	0.77	 	0.75
	 	 	Zinc	 	 	 	0.40	 	0.41	 	0.40	 	0.41
	 	 	Zinc — Falconbridge	 	 	 	0.39	 	0.39	 	0.39	 	0.39
	 	 	Nickel	 	 	 	3.87	 	3.23	 	3.85	 	3.03
	 	 	Ferronickel	 	 	 	3.78	 	3.12	 	3.71	 	3.09
	 	 	Aluminum	 	 	 	0.67	 	0.66	 	0.67	 	0.66
	 	 	Lead	 	 	 	0.24	 	0.24	 	0.24	 	0.25
	 	 	Gold ($US per ounce)	 	 	 	344.27	 	311.86	 	350.58	 	301.16
	 	 	Silver ($US per ounce)	 	 	 	4.58	 	4.71	 	4.70	 	4.60
	 	 	Silver — Falconbridge ($US per ounce)	 	 	 	4.62	 	4.70	 	4.63	 	4.60
	
Exchange Rate (US$1 = Cdn$1)	
 	

 	
 	

1.40	
 	

1.55	
 	

1.45	
 	

1.57

 
 

NORANDA INC.    
    
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
    
    ($ millions except as otherwise indicated)    
    

1.     Accounting Policies  

These
unaudited interim consolidated financial statements have been prepared following the accounting policies as set out in the 2002 annual consolidated financial statements except as discussed in
Note 2 below. The unaudited interim consolidated financial statements do not conform in all respects to the requirements of Canadian generally accepted accounting principles for annual
financial statements. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company's audited annual consolidated financial statements and the accompanying
notes included in the 2002 Annual Report. 

2.     Change in Accounting Policy  

Effective
January 1, 2003, Noranda revised its capitalization of interest policy to harmonize its policies with U.S. accounting standards. 

Previously,
Noranda capitalized interest that could be identified with major projects until the project achieved commercial production. Under the new policy, interest is capitalized as it arises from
indebtedness incurred to finance major projects, either directly or indirectly, until the project achieves commercial production. As a result, an increase to retained earnings of $38 million
was recorded at January 1, 2003 ($36 million at January 1, 2002). The change resulted in a negligible impact to earnings for the six months and quarter ended June 30, 2003
(to June 30, 2002 — $12 million earnings over six months; $5 million earnings for the quarter). 

3.     Preferred Share Issue  

On
March 25, 2003, Noranda issued six million Cumulative Preferred Shares, Series H to the public, for gross proceeds of $150 million. These shares carry a 6.5% annual
dividend. 

On
April 24, 2003, Noranda completed an issue of six million Cumulative Preferred Shares, Series I to Brascan Corporation, for gross proceeds of $150 million. The preferred
shares carry an 8% annual dividend and are redeemable by Noranda without penalty. 

Proceeds
from both issues were applied against the Company's revolving bank debt. 

4.     Debt  

On
May 28, 2003 Noranda's partially-owned subsidiary issued US$250 million 5.375% fixed rate debentures maturing on June 1, 2015. The proceeds from this offering were used to
repay debt outstanding under the company's commercial paper program, to fund planned expenditures and for other general corporate purposes. 

5.     Business Restructuring  

Noranda
recorded in the first quarter a charge of $42 million ($30 million after-tax) related to costs associated with its decision to temporarily shut down its Magnesium
operation. This charge is reported as "Magnesium and other restructuring costs", in the six-month results ended June 30, 2003. 

6.     Stock-Based Compensation  

During
the first quarter, the Company granted 1,157,500 stock options at a price of $13.82 per share. These options have a 10-year term, vesting 20% per year over the first five years. The
compensation expense associated with this stock option series was calculated using the Black-Scholes valuation model, assuming a 8-year term, 25% volatility, a weighted- average expected
dividend of 5.79% annually and an interest rate of 4.95%, and is being charged against net income over its vesting period. 

Corporate
and general administration for the six months and quarter ended June 30, 2003 include compensation costs of $2 million and $1 million relating to outstanding options (to
June 30, 2002 — six months $5 million and $4 million for the quarter). 

7.     Shareholders' Equity  

	 
	 	June 30, 2003
	 	December 31, 2002
	 
	 
	 	Shares
	 	Amount
	 	Shares
	 	Amount
	 
	 
	 	(000)
 
	 	 
	 	(000)
 
	 	 
	 
	Share capital	 	 	 	 	 	 	 	 	 	 	 
	 	Authorized — an unlimited number of:	 	 	 	 	 	 	 	 	 	 	 
	 	 	Preferred, Common and Participating shares	 	 	 	 	 	 	 	 	 	 	 
	 	Issued:	 	 	 	 	 	 	 	 	 	 	 
	 	 	Common Shares	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Balance, beginning of year	 	241,289	 	 	2,442	 	238,584	 	 	2,401	 
	 	 	 	 	Issued on exercise of stock options	 	2	 	 	—	 	15	 	 	—	 
	 	 	 	 	Issued under dividend re-investment	 	3,147	 	 	40	 	2,553	 	 	39	 
	 	 	 	 	Issued under share purchase plan	 	—	 	 	—	 	137	 	 	2	 
	 	 	
	 	
	 	
	 	
	 
	 	 	 	Balance, end of period	 	244,438	 	 	2,482	 	241,289	 	 	2,442	 
	 	 	
	 	
	 	
	 	
	 
	 	 	Preferred Shares, Series F	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Balance beginning of year and end of period	 	3,246	 	 	81	 	3,246	 	 	81	 
	 	 	
	 	
	 	
	 	
	 
	 	 	Preferred Shares, Series G	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Balance beginning of year and end of period	 	8,754	 	 	219	 	8,754	 	 	219	 
	 	 	
	 	
	 	
	 	
	 
	 	 	Preferred Shares, Series H	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Balance beginning of year	 	—	 	 	—	 	—	 	 	—	 
	 	 	 	 	Issued	 	6,000	 	 	146	 	—	 	 	—	 
	 	 	
	 	
	 	
	 	
	 
	 	 	 	Balance end of period	 	6,000	 	 	146	 	—	 	 	—	 
	 	 	
	 	
	 	
	 	
	 
	 	 	Preferred Shares, Series I	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Balance beginning of year	 	—	 	 	—	 	—	 	 	—	 
	 	 	 	 	Issued	 	6,000	 	 	145	 	—	 	 	—	 
	 	 	
	 	
	 	
	 	
	 
	 	 	 	Balance end of period	 	6,000	 	 	145	 	—	 	 	—	 
	 	 	
	 	
	 	
	 	
	 
	Contributed Surplus	 	 	 	 	3	 	 	 	 	2	 
	 	 	 	 	
	 	 	 	
	 
	Convertible Debentures	 	 	 	 	124	 	 	 	 	121	 
	 	 	 	 	
	 	 	 	
	 
	Basic and Diluted weighted average number of shares	 	 	 	 	241,624,024	 	 	 	 	238,823,521	 
	 	 	 	 	
	 	 	 	
	 
	Retained Earnings (deficit):	 	 	 	 	 	 	 	 	 	 	 
	 	Balance beginning of year	 	 	 	$	(17	)	 	 	$	896	 
	 	 	Change in accounting policy (note 2)	 	 	 	 	38	 	 	 	 	36	 
	 	 	 	 	
	 	 	 	
	 
	 	 	 	 	 	21	 	 	 	 	932	 
	 	 	Loss	 	 	 	 	(74	)	 	 	 	(698	)
	 	 	Dividends:    Common	 	 	 	 	(97	)	 	 	 	(191	)
	 	 	                      Preferred	 	 	 	 	(17	)	 	 	 	(17	)
	 	 	Other	 	 	 	 	(2	)	 	 	 	(5	)
	 	 	 	 	
	 	 	 	
	 
	 	Balance end of period	 	 	 	 	(169	)	 	 	 	21	 
	 	 	 	 	
	 	 	 	
	 
	Currency Translation and other at end of period	 	 	 	 	80	 	 	 	 	82	 
	 	 	 	 	
	 	 	 	
	 
	Total Shareholders' Equity	 	 	 	$	3,111	 	 	 	$	2,968	 
	 	 	 	 	
	 	 	 	
	 

8.     Exchange Gains and Losses  

The
majority of Noranda's products are denominated in US dollars or indexed to US dollar prices. In addition, operating costs of Noranda's international assets are also denominated in their local
currency and exposed to exchange volatility. Noranda manages its foreign currency exposure by utilizing spot and forward foreign exchange contracts with its banks as counter-parties. 

Revenues
for the six months and quarter ended June 30, 2003 include exchange gains of $25 million and $20 million (2002 — exchange loss of
$15 million and $6 million respectively). 

Other
foreign currency exchange contracts, relating to foreign currency expenditures and other foreign currency denominated monetary assets and liabilities, generated a loss of $6 million in
the quarter and year-to-date (2002 — gain of $2 million in the quarter and year-to-date) at Noranda's
partially-owned subsidiary. 

9.     Post-employment costs  

Noranda's
post-employment benefit expense for the six months and quarter ended June 30, 2003 was $62 million and $29 million
(2002 — $54 million and $28 million), which included $47 million and $22 million for its pension benefit plans and $15 million
and $7 million for other benefit plans (2002 — six months $38 million and $16 millon; quarter $20 million and $8 million). 

At
June 30, 2003, Noranda's pension plan assets were $1,836 (Dec. 2002 — $1,872) while obligations were $2,105 (Dec.
2002 — $2,203). 

10.   Guarantees  

Effective
January 1, 2003, the new CICA Accounting Guideline 14 requires disclosure of certain guarantees binding on corporations. Noranda has determined that it has no material guarantees
requiring disclosure under the accounting standard. 

11.   Subsequent Event  

Subsequent
to June 30, 2003, Noranda completed the sale of its 11,984,900 Priority Units of the Noranda Income Fund for net proceeds of $110 million. The net pre-tax gain on
the sale is estimated at $50 million. The proceeds will be used to repay debt. 

12.   Comparative Figures  

The
comparative consolidated financial statements have been reclassified from statements previously presented to conform to the presentation of the 2003 consolidated statements. 

13.   Segmented Information  

Noranda
has five operating segments: Aluminum, Canadian Copper and Recycling, Copper, Nickel and Zinc. Operating results are presented below: 

	 
	 	Second Quarter 2003
 
	 
	 
	 	Aluminum
	 	Canadian Copper & Recycling
	 	Copper
	 	Nickel
	 	Zinc
	 	Other
	 	Total
	 
	Revenues	 	$	239	 	467	 	315	 	435	 	132	 	(10	)	$	1,578	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cost of operations	 	 	132	 	86	 	117	 	237	 	84	 	66	 	 	722	 
	 	Purchased raw materials	 	 	83	 	353	 	101	 	69	 	65	 	(81	)	 	590	 
	 	Corporate and general administration	 	 	—	 	—	 	—	 	—	 	—	 	19	 	 	19	 
	 	Exploration	 	 	—	 	—	 	2	 	10	 	—	 	2	 	 	14	 
	 	Research and development	 	 	—	 	—	 	—	 	3	 	—	 	1	 	 	4	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	215	 	439	 	220	 	319	 	149	 	7	 	 	1,349	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating income (loss) before depreciation and restructuring costs	 	 	24	 	28	 	95	 	116	 	(17	)	(17	)	 	229	 
	Depreciation, amortization and reclamation	 	 	15	 	27	 	47	 	52	 	26	 	13	 	 	180	 
	Magnesium and other restructuring costs	 	 	—	 	9	 	—	 	—	 	—	 	11	 	 	20	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating Income (loss)	 	$	9	 	(8	)	48	 	64	 	(43	)	(41	)	$	29	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Interest expense, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(51	)
	Tax recovery	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	32	 
	Minority interest in earnings of subsidiaries	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(25	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Net loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(15	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Capital investments	 	$	8	 	26	 	72	 	38	 	1	 	9	 	$	154	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 

	 
	 	Second Quarter 2002 (Restated — Note 2)
 
	 
	 
	 	Aluminum
	 	Canadian Copper & Recycling
	 	Copper
	 	Nickel
	 	Zinc
	 	Other
	 	Total
	 
	Revenues	 	$	270	 	567	 	285	 	354	 	170	 	22	 	$	1,668	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cost of operations	 	 	133	 	205	 	114	 	183	 	103	 	28	 	 	766	 
	 	Purchased raw materials	 	 	101	 	347	 	65	 	62	 	66	 	(19	)	 	622	 
	 	Corporate and general administration	 	 	—	 	—	 	—	 	—	 	—	 	25	 	 	25	 
	 	Exploration	 	 	—	 	—	 	2	 	7	 	—	 	6	 	 	15	 
	 	Research and development	 	 	1	 	1	 	(1	)	4	 	1	 	(1	)	 	5	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	235	 	553	 	180	 	256	 	170	 	39	 	 	1,433	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating income (loss) before depreciation	 	 	35	 	14	 	105	 	98	 	—	 	(17	)	 	235	 
	Depreciation, amortization and reclamation	 	 	15	 	31	 	59	 	52	 	24	 	19	 	 	200	 
	Restructuring costs, net	 	 	—	 	18	 	—	 	—	 	(94	)	4	 	 	(72	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating Income (loss)	 	$	20	 	(35	)	46	 	46	 	70	 	(40	)	$	107	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Interest expense, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(36	)
	Tax expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(6	)
	Minority interest in earnings of subsidiaries	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(18	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	47	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Capital investments	 	$	12	 	47	 	57	 	32	 	2	 	56	 	$	206	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 

13.   Segmented Information  

	 
	 	Six Months ended June 30, 2003
 
	 
	 
	 	Aluminum
	 	Canadian Copper & Recycling
	 	Copper
	 	Nickel
	 	Zinc
	 	Other
	 	Total
	 
	Revenues	 	$	497	 	944	 	615	 	868	 	277	 	(38	)	$	3,163	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cost of operations	 	 	268	 	252	 	231	 	457	 	170	 	84	 	 	1,462	 
	 	Purchased raw materials	 	 	174	 	658	 	180	 	164	 	136	 	(136	)	 	1,176	 
	 	Corporate and general administration	 	 	—	 	—	 	—	 	—	 	—	 	37	 	 	37	 
	 	Exploration	 	 	—	 	—	 	4	 	13	 	—	 	3	 	 	20	 
	 	Research and development	 	 	—	 	—	 	—	 	5	 	—	 	4	 	 	9	 
	 	Other operating income	 	 	—	 	—	 	—	 	—	 	—	 	(3	)	 	(3	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	442	 	910	 	415	 	639	 	306	 	(11	)	 	2,701	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating income (loss) before depreciation and restructuring costs	 	 	55	 	34	 	200	 	229	 	(29	)	(27	)	 	462	 
	Depreciation, amortization and reclamation	 	 	31	 	55	 	98	 	94	 	48	 	27	 	 	353	 
	Magnesium and other restructuring costs	 	 	—	 	9	 	—	 	—	 	—	 	54	 	 	63	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating Income (loss)	 	$	24	 	(30	)	102	 	135	 	(77	)	(108	)	$	46	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Interest expense, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(109	)
	Tax recovery	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	41	 
	Minority interest in earnings of subsidiaries	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(52	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Net loss	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	(74	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Total assets, excluding cash, cash equivalents and future tax assets	 	$	1,086	 	2,130	 	3,245	 	2,160	 	689	 	842	 	$	10,142	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Capital investments	 	$	15	 	59	 	138	 	55	 	1	 	38	 	$	306	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 

	 
	 	Six Months ended June 30, 2003 (Restated — Note 2)
 
	 
	 
	 	Aluminum
	 	Canadian Copper & Recycling
	 	Copper
	 	Nickel
	 	Zinc
	 	Other
	 	Total
	 
	Revenues	 	$	526	 	1,202	 	577	 	625	 	370	 	3	 	$	3,303	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cost of operations	 	 	266	 	405	 	240	 	336	 	226	 	62	 	 	1,535	 
	 	Purchased raw materials	 	 	193	 	763	 	126	 	110	 	125	 	(81	)	 	1,236	 
	 	Corporate and general administration	 	 	—	 	—	 	—	 	—	 	—	 	45	 	 	45	 
	 	Exploration	 	 	—	 	1	 	5	 	12	 	1	 	7	 	 	26	 
	 	Research and development	 	 	1	 	1	 	—	 	7	 	2	 	1	 	 	12	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	460	 	1,170	 	371	 	465	 	354	 	34	 	 	2,854	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating income (loss) before depreciation	 	 	66	 	32	 	206	 	160	 	16	 	(31	)	 	449	 
	Depreciation, amortization and reclamation	 	 	30	 	62	 	109	 	97	 	51	 	33	 	 	382	 
	Restructuring costs, net	 	 	—	 	18	 	—	 	—	 	(94	)	4	 	 	(72	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Operating Income (loss)	 	$	36	 	(48	)	97	 	63	 	59	 	(68	)	$	139	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Interest expense, net	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(71	)
	Tax expense	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	17	 
	Minority interest in earnings of subsidiaries	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(30	)
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Net income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	55	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Total assets, excluding cash, cash equivalents and future tax assets	 	$	1,186	 	1,996	 	3,423	 	2,196	 	822	 	1,685	 	$	11,308	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 
	Capital investments	 	$	24	 	86	 	120	 	61	 	5	 	107	 	$	403	 
	 	 	
	 	
	 	
	 	
	 	
	 	
	 	
	 

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EXHIBIT 10.27  

 
  Amended and Restated Tax Sharing Agreement    
    

This
Amended and Restated Tax Sharing Agreement is made and entered into as of February 7, 2001 by and among The Dow Chemical Company, a Delaware corporation ("Dow"), as Common Parent, on
behalf of itself and the other members of the Dow Group (other than any member of the UCC Group), and Union Carbide Corporation, a Delaware corporation ("UCC"), on behalf of itself and the other
members of the UCC Group. 

        WHEREAS,
Dow is the Common Parent of the Dow Group, and files a Consolidated Return for the Dow Group, which prior to February 7, 2001, did not include the UCC Group; 

        WHEREAS,
UCC is the Common Parent of an Affiliated Group comprised of UCC and its Subsidiaries, and prior to February 7, 2001, filed a Consolidated Return for the UCC Group; 

        WHEREAS,
certain state and local consolidated, combined or unitary income or franchise tax returns are filed for various Members or for the Dow Group; 

        WHEREAS,
the UCC Group became part of the Dow Group on February 7, 2001, as a result of a triangular merger transaction; 

        NOW
THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto agree as follows: 

1.     Definitions  

The
following terms as used in this Agreement, shall have the meanings set forth below: 

	(a)
	Affiliated Group shall have the meaning attributed to that term in Section 1504(a) of the Code.

	(b)
	Agreement shall mean this Tax Sharing Agreement, as amended from time to time.

	(c)
	Allowable Tax Attributes are defined in Section 7(b).

	(d)
	Business Day shall mean a day in the City of New York, N.Y., that is not a legal holiday or a day on which banking institutions are
authorized or obligated by law to close.

	(e)
	Code shall mean the Internal Revenue Code of 1986, as amended, and shall include corresponding provisions of any subsequently enacted
federal tax laws.

	(f)
	Combined Return shall mean any non-federal tax return that (a) is filed on a combined, consolidated or unitary basis
between or among (i) the Dow Group, or any Member thereof, and (ii) the UCC Group, or any Member thereof, and (b) where any Member of the Dow Group (other than the UCC Group)
makes any payment to the appropriate state or local tax authority on behalf of all Members of the Dow Group and the UCC Group included in such return.

	(g)
	Common Parent shall have the meaning of that term as it is used in the Consolidated Return Regulations.

	(h)
	Completion means for any Taxable Year of the Dow Group, shall mean the date on which the final Consolidated Return is filed.

	(i)
	Consolidated Return, for any Taxable Year of the Dow Group, shall mean a consolidated federal income tax return filed pursuant to
section 1501 of the Code by the Common Parent for such Taxable Year.

	(j)
	Consolidated Return Regulations shall mean Income Tax Regulations Sections 1.1502-1 through 1.1502-100 (26
C.F.R.), as amended from time to time.

	(k)
	Dow Group, as of any particular date, shall mean the Affiliated Group of which Dow (or any successor thereto) is the Common Parent as
of such date. 

24

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

	(l)
	Dow Group Consolidated Tax Liability shall mean the consolidated U.S. federal income tax liability of the Dow Group for any Taxable
Year for which the Dow Group files a Consolidated Return.

	(m)
	Effective Date shall mean February 7, 2001.

	(n)
	Final Determination shall mean with respect to any issue or item (i) the execution of a final irrevocable closing agreement or
other settlement agreement with the Service or the relevant state or local taxing authorities, (ii) the expiration of the time for filing a claim for refund or, if a refund claim has been
timely filed, the expiration of the time for instigating suit in respect of such refund claim, (iii) the expiration of the time for filing a petition with the Tax Court or the relevant state or
local tribunal if no such petition has been filed and no suit has been investigated in respect of the subject matter of such petition, or (iv) a final unappealable decision of any court of
competent jurisdiction.

	(o)
	Includible Corporation shall have the meaning attributed to that term in section 1504(b) of the Code.

	(p)
	Income Tax Regulations shall mean the regulations (26 C.F.R.), as amended from time to time, promulgated to the Code.

	(q)
	Member, for any Taxable Year of the Dow Group, shall mean any corporation (or any predecessor in interest to such corporation under
section 381 of the Code or otherwise which was or is an Includible Corporation) which at any time during such Taxable Year is an Includible Corporation that is included in the Dow Group and
shall include such corporation which at any time during such Taxable Year is the Common Parent.

	(r)
	Separate Taxable Income means for any non-federal jurisdiction, with respect to any UCC Member, the taxable income
allocated to such jurisdiction for any taxable year (but in no case less than zero), determined without reference to any carrybacks or carryforwards of any net operating loss, net capital loss,
charitable contribution or other item attributable to any other taxable period, as determined on a basis consistent with the manner in which the members of the Dow Group's Separate Taxable Income has
been determined.

	(s)
	Service shall mean the Internal Revenue Service.

	(t)
	Subsidiary shall mean as to any entity (including the parent corporation) a corporation that would be an Includible Corporation in an
Affiliated Group of which the parent corporation would be the Common Parent.

	(u)
	Tax Attributes are defined in Section 7(b).

	(v)
	Taxable Year shall mean any taxable year or portion thereof beginning on or after January 1, 2001 with respect to which a
Consolidated Return is filed on behalf of the Dow Group which includes any UCC Member (or any successor corporation) provided, however, that if any UCC Member is included in the Dow Group for only a
portion of a Taxable Year of the Dow Group, the "Taxable Year" with respect to such UCC Member shall include only that portion of the Taxable Year in which such UCC Member is included in the Dow
Group.

	(w)
	UCC Group, as of any particular date, shall mean the Affiliated Group of which UCC (or any successor thereto) is the Common Parent as
of such date.

	(x)
	UCC Member shall mean UCC and those present and future corporations that would be considered Includible Corporations of an Affiliated
Group of which UCC would be the Common Parent if it were not includible in the Dow Group.

	(y)
	UCC Member's State and Local Tax Liability shall equal for each Combined Return, (i) the Separate Taxable Income of each UCC
Member that is included in a Combined Return and has nexus in the jurisdiction for which the Combined Return is filed, divided by (ii) the sum of the Separate Taxable Incomes for all members of
the Dow Group that are included in the Combined Return and have nexus in such jurisdiction, multiplied by (iii) the total tax liability, net of any tax credits (including net operating losses),
reflected on such Combined Return. 

25

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

	(z)
	UCC Member's Federal Tax Liability shall, for any Taxable Year, mean the UCC Member's United States federal income tax liability
determined by Dow pursuant to this Agreement. In making such computation for any such Taxable Year, such liability shall be determined using any simplifying assumptions and convention Dow, in its sole
discretion, deems necessary to minimize the administrative burden of making such calculations, including:

	(i)
	Utilizing
the highest rate of U.S. federal corporate tax in effect for such taxable year under section 11 of the Code, as though such rate were the only income
tax rate in effect for such Taxable Year, and

	(ii)
	Assuming
that the alternative minimum tax imposed by Section 55 of the Code is inapplicable. 

2.     Scope and Cooperation  

(a)    Scope. This Agreement relates solely to (i) U.S. federal income tax liabilities and (ii) income tax liabilities with
respect to certain state and local jurisdictions in which any UCC Member participates with Dow or any Subsidiary of Dow (other than UCC or any of its subsidiaries) in the filing of a Combined Return. 

(b)    Cooperation. Dow and UCC shall cooperate, and each shall cause its respective Subsidiaries to cooperate fully in the implementation of
this Agreement on a consolidated basis, including but not limited to, providing promptly to the requesting party such assistance and documentation (at the expense of the providing party) as may be
requested by such party in connection with the preparation or filing of the Consolidated Return (and any Combined Return), and the conduct of any audit or other examination, or judicial or
administrative proceeding or determination relating thereto. 

3.     Filing of Returns  

(a)    Appointment of Dow as Agent For Consolidated Return. UCC and each of its Subsidiaries hereby appoint Dow as their agent, with respect
to all periods during which UCC or such Subsidiary, as the case may be, is a Member of the Dow Group, for the purpose of filing the Consolidated Return and for making any election or application or
taking any action in connection therewith on behalf of UCC and such Subsidiary. Nothing herein shall be construed as requiring Dow to file a Consolidated Return for any Taxable Year;  provided, however, that if Dow decides not to file a Consolidated Return it shall notify UCC in writing within a period reasonably sufficient to
permit UCC to file timely returns for the UCC Members. 

(b)    Dow Control Over Consolidated Return. Dow shall prepare and file, or cause to be prepared and filed, the Consolidated Return and any
other documents or statements required to be filed with the Service that pertain to the determination of the Dow Group Consolidated Tax Liability for each Taxable Year of the Dow Group. In its sole
and absolute discretion, but after prior good faith consultation with UCC on issues which impact any UCC Member's Tax Liability (if requested by such UCC Member), Dow shall have the right with respect
to any Consolidated Return that it has filed or will file to determine: 

(i)    the
manner in which such Consolidated Return, as well as any other documents or statements incidental or related thereto shall be prepared and filed, including without limitation, the
manner in which any item of income, gain, loss, deduction, expense or credit of any UCC Member shall be reported therein or thereon; 

(ii)    whether
any extensions (including extensions of the date for filing or any statue of limitations) with respect to any Consolidated Return will be requested; 

(iii)    the
elections that will be made in any such Consolidated Return by any Member, including without limitation, elections by any UCC Member; 

(iv)    whether
to file an amended Consolidated Return and to prosecute, compromise or settle any claim for refund set forth therein; and 

(v)    whether
any refunds to which the Dow Group may be entitled shall be passed by way of cash refund or credited against the Dow Group Consolidated Tax Liability for any Taxable Year or
Taxable Years of the Dow Group. 

26

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

UCC
and each Subsidiary of UCC hereby irrevocably appoints Dow as its agents and attorney-in-fact to take any action (including the execution of documents) as Dow may deem
appropriate to effect the foregoing. Nothing contained in this Agreement shall limit Dow's discretion to determine the manner in which any item shall be reported on the Consolidated Return. 

(c)    Appointment of Dow as Agent for Certain Combined Returns. UCC and each Subsidiary of UCC hereby appoint Dow as their agent with respect
to all periods during which UCC or such Subsidiary, as the case may be, is a Member of the Dow Group, for the purpose of filing any Combined Return that Dow (or any Subsidiary of Dow, other than UCC
or any of its Subsidiaries) may elect to file, and making any election or application or taking any action (including any extension of statues of limitation) in connection therewith on behalf of UCC
and such Subsidiary. UCC and each of its Subsidiaries hereby consent to the filing of such returns, and to the making of such elections and applications. Nothing contained in this Agreement shall be
construed as requiring Dow or any Subsidiary of Dow to file a Combined Return on behalf of UCC or any Subsidiary of UCC for any Taxable Year. Dow shall in its sole and absolute discretion
determine whether and with respect to which jurisdictions UCC or any of its Subsidiaries shall participate in the filing of any Combined Return. 

(d)    Other Returns. UCC and its Subsidiaries shall be solely responsible for filing all tax returns not described in subsections
(b) and (c) of this Section 3 and that relate solely to UCC and/or its Subsidiaries. 

(e)    Assistance and Responsibility For Support of Returns; Provisions of Financial Data. UCC and its Subsidiaries shall assist Dow in the
filing, to the extent permitted by law, of a Consolidated Return and such Combined Returns as Dow elects to file or cause to be filed, by maintaining such books and records and providing such
information as may be necessary or useful in the filing of such returns and executing any documents and taking any actions which Dow may reasonably request in connection therewith including without
limitation designing and implementing systems, processes and programs for the compilation and review of financial data; the review of transactions and accounting methods; and the preparation of
returns and of supporting documentation to assure that such returns and all related reports and schedules are complete and accurate. UCC shall, at its own expense, provide Dow with all information
required by Dow to reflect completely and accurately the financial results of the UCC Members in the Dow Group's Consolidated Return (or a Combined Return). Such information shall be in such form as
determined by Dow from time to time and shall be delivered to Dow on a mutually agreed upon date, but in no event later than the first business day in June of the year following such Taxable Year. UCC
shall, at its own expense, maintain sufficient books, records and expertise to support all returns, positions taken thereon and methods used to prepare such returns until there has been a Final
Determination with respect to all issues included on such returns. Dow and UCC shall provide one another with such other information concerning such returns and the application of payments made under
this Agreement as Dow or UCC may reasonably request of one another. 

4.     Union Carbide Tax Calculations  

For
each Taxable Year for which a Consolidated Return or Combined Return is filed and UCC or any Subsidiary of UCC is a Member of the Dow Group, Dow shall calculate each UCC Member's tax liability for
that portion of the Taxable Year in which the UCC Member is included in the Dow Group. Dow shall determine the impact to the separate UCC Members of the Code provisions that require consolidated
calculations but with any simplifying conventions and assumptions approved or suggested by the Tax Director of Dow. The calculation shall include gains and losses with respect to deferred intercompany
transactions if, and only if, and to the extent that, such gains or losses are actually restored and reflected on the Dow Group's Consolidated Return. 

5.     Payments by UCC Members  

(a)    UCC Member's Federal Tax Liability. For each Taxable Year of the Dow Group, UCC Members shall pay to Dow the amount of the UCC Member's
Federal Tax Liability in the manner provided in Section 9(a) hereof in the amounts and at the time or times herein provided. 

(i)    In
the event that the estimated UCC Member's Federal Tax Liability for such Taxable Year that will be owed to Dow is greater than zero (after taking into account the expected use of
such UCC Member's Allowable Tax Attributes and the expected use of other UCC Members' Allowable Tax Attributes), such UCC Member shall make quarterly payments of its estimated UCC Member's Federal Tax
Liability owed to Dow for such Taxable Year. The amount of each such quarterly payment shall be determined by Dow and shall equal the amount which such UCC 

27

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

Member
would be required under Section 6655(d) of the Code (or under any successor section of the Code) to pay to the Service for such quarter were such UCC Member to make installment payments
of its UCC Member's Federal Tax Liability owed to Dow for such Taxable Year (after taking into account the expected use of Allowable Tax Attributes) in accordance with the provisions of such section.
In estimating each UCC Member's Federal Tax Liability to be owed to Dow, such liability shall be determined using any simplifying assumptions and conventions that Dow, in its sole discretion, deems
necessary to minimize the administrative burden of such estimation. 

(ii)    If
the actual UCC Member's Federal Tax Liability owed to Dow for such Taxable Year exceeds the total estimated payments, if any, which such UCC Member made pursuant to
Section 5(a)(i) hereof for such Taxable Year, such UCC Member shall pay an amount equal to such excess to Dow by October 31 of the year following such Taxable Year. 

(iii)    If
the total estimated payments which any UCC Member made pursuant to Section 5(a)(i) hereof for such Taxable Year exceeds the actual UCC Member's Federal Tax
Liability owed to Dow, Dow shall pay an amount equal to such excess to such UCC Member by October 31 of the year following such Taxable Year. 

(iv)    Each
of the quarterly payments required to be made pursuant to Section 5(a)(i) hereof shall be made in the manner provided in Section 9(a) hereof on or before
the due date for the payment of the respective quarterly estimate of the Dow Group Consolidated Tax Liability for such Taxable Year. 

(b)    UCC Member's State and Local Tax Liability. For each Taxable Year with respect to which UCC or any of its Subsidiaries Participates in
the filing of a Combined Return such UCC Member shall pay to Dow, within 30 days of receipt of a bill from Dow, the UCC Member's State and Local Tax Liability for such Taxable Year. 

(c)    Other Taxes. UCC shall be solely responsible for paying tax with respect to all tax returns that UCC or any of its Subsidiaries have
responsibility for filing pursuant to this Agreement. 

6.     Payments to UCC Members  

Any
payment that UCC Members may be entitled to receive with respect to their last Taxable Year pursuant to Section 7(c) hereof shall be paid to such UCC Member in the manner provided in
Section 9(a) hereof on or before December 31 of the calendar year following the end of the applicable Taxable Year. 

7.     Use of Attributes; Additional Rights and Obligations Upon Deconsolidation  

(a)    In
determining the Dow Group's Consolidated Tax Liability and in preparing the Consolidated Return for each taxable year, Dow may utilize on behalf of the Dow Group all the tax
attributes and other items of income, gain, loss, deduction, expense, credit, etc. of UCC and its Subsidiaries arising in such taxable year or which arose in another taxable year or taxable years and
which properly may be carried back or carried forward to such taxable year, without regard to whether such attributes and items are concurrently being, have previously been or may subsequently be
utilized in determining for any Taxable Year or Taxable Years, any UCC Member's Tax Liability. Except as expressly provided in Section 7(b) and Section 8 of this Agreement, no UCC Member
shall in any manner be entitled to any compensation for the use of any attributes and other items of income, gain, loss, deduction, expense, credit, etc. of any UCC Member. Moreover, in the event any
UCC Member ceases for any reason to be a Member of the Dow Group either (A) after any of its tax attributes or items of income, gain, loss, deduction, expense, credit, etc. has been utilized by
Dow on behalf of the Dow Group in determining the Dow Group's Consolidated Tax Liability for any Taxable Year or Taxable Years of the Dow Group, but before any UCC Member has utilized such attribute
or item (in whole or in part) in reducing its payment obligation under Section 5(a) of this Agreement for any Taxable Year or Taxable Years, or (B) after any of its tax attributes or
items of income, gain, loss, deduction, expense, credit, etc. has been utilized by any UCC Member in reducing its
payment obligation under Section 5(a) of this Agreement for any Taxable Year or Taxable Years, but before the Dow Group has utilized such attribute or item (in whole or in part) in determining
for any Taxable Year or Taxable Years, the Dow Group Consolidated Tax Liability, neither the Dow Group nor the UCC Member, as the case may be, shall be obligated or required to compensate such other
party in any manner for any amount as a result to the occurrence of such event, except as expressly provided in Sections 7 and 8 below. 

28

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

(b)    Dow
shall determine tax attributes, including but not limited to, foreign tax credits, net operating losses and general business credits (collectively "Tax Attributes"), for each UCC
Member on a separate Member basis. For example, the net operating loss of a UCC Member shall equal the separate net operating loss of such member and not its share of any consolidated net operating
loss of the Dow Group. The foreign tax credits of a UCC Member shall equal the foreign taxes paid or deemed paid by such UCC Member. The research and experimentation credits of a UCC Member shall
equal such Member's share of the consolidated research and experimentation credit as determined pursuant to Income Tax Regulation Sections 1.41-6. Dow will use reasonable simplifying
assumptions and conventions, including assumptions relating to the order Tax Attributes are utilized, and the manner in which expiration of Tax Attributes are shared among Dow Group Members, including
UCC Members. 

(c)    Dow
shall annually determine the amount of Tax Attributes allowed to be used to reduce any UCC Member's payment obligation to Dow hereunder. Dow shall determine the cumulative Tax
Attributes of each UCC Member during taxable periods when it is a member of the Dow Group or carried to such a period from a separate return period by category for each UCC Member which shall be
reduced by sum of the following: 

(i)    The
amount of any Tax Attributes by category that the UCC Member would carry to a separate return year if it ceased to be a member of the Dow Group; and 

(ii)    The
UCC Member's allocable share of any Tax Attributes that expired at the Dow Group level; 

(iii)    The
amount of any Tax Attributes used by the UCC Member to reduce the UCC Member's payment obligation to Dow for previous Taxable Years in accordance with this Agreement; and 

(iv)    The
amount of any Tax Attributes used by any other UCC Member to reduce such other UCC Member's payment obligation to Dow for previous Taxable Years in accordance with this
Agreement. 

The
amount of Tax Attributes by category remaining after the above described calculation is hereinafter referred to as "Allowable Tax Attributes". A UCC Member may reduce its payment obligation to Dow
under Section 5(a) of this Agreement by the value (as defined below) of its own Allowable Tax Attributes and the Allowable Tax Attributes of any other UCC Member. If a UCC Member uses the
Allowable Tax Attributes of another UCC Member to reduce its obligation to Dow, then such UCC Member shall pay the other UCC Member the value (as defined below) of the Allowable Tax Attributes so used
by October 31 of the year following the applicable Taxable Year. Dow shall determine which other UCC Member's Allowable Tax Attributes are used. Allowable Tax Attributes may not be used more
than once to reduce a payment obligation to Dow. A UCC Member may not carry back Allowable Tax Attributes to reduce its payment obligations to Dow for previous Taxable Years. 

(d)    In
the event UCC or any of its Subsidiaries ceases for any reason to be a Member of the Dow group, then within 60 days after the filing of the Consolidated Return for the last
Taxable Year that UCC or such Subsidiary was included therein, Dow shall inform UCC or such subsidiary, as the case may be, of the amount of Allowable Tax Attributes as of the end of the UCC Member's
last Taxable Year. Dow shall pay the UCC Member the value (as defined below) of such Allowable Tax Attributes that are not used by any UCC Member to reduce its payment obligation to Dow pursuant to
this Agreement. Dow's determinations pursuant to this Section 7(d) shall be presumptively correct and shall be binding on the parties hereto. 

(e)    For
purposes of this Section 7, tax credits shall be valued on a dollar-for-dollar basis and losses or deductions shall be valued at the highest
marginal federal tax rate applicable to corporations (i) for purposes of Section 7(c) hereof, for the Taxable Year for which the Allowable Tax Attributes are used to reduce a UCC
Member's oligation to Dow, and (ii) for purposes of Section 7(d) hereof, for the UCC Member's last Taxable Year. 

(f)    If
a UCC Member at any time acquires the assets and properties of another UCC Member pursuant to a transaction to which Section 381 of the Code applies or otherwise, the
acquiring UCC Member shall, from and after the date of such acquisition, be responsible for all of the undertakings and obligations of such other UCC Member hereunder and shall, from after such date,
be entitled to receive any and all payments that such other UCC Member would be entitled to receive hereunder. Provided such other UCC Member ceases to exist solely as a result of such transaction,
such event shall not, except as expressly provided herein, in any way result in any acceleration of the time at which any payments hereunder are due to or from such other UCC Member, and except as
expressly provided herein to the contrary, all such payments shall be 

29

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

made
to or by the acquiring UCC Member at the same time or times that such payments would be payable to or by such other UCC Member had such other UCC Member continued to exist as a UCC Member
hereunder. 

8.     Adjustments  

(a)    If
any adjustment is made with respect to a Taxable Year during which UCC or any of its Subsidiaries is a member of the Dow Group to any item of income, gain, loss, deduction, expense
or credit of UCC or any Subsidiary of UCC by reason of the filing of an amended Consolidated Return (or an amended Combined Return), a claim for refund with respect to such Taxable Year or an audit
with respect to such Taxable Year by the Service (or the applicable State and Local taxing authority), the amounts, if any, due to or from UCC or a UCC Subsidiary under this Agreement shall be
redetermined by taking into account any such adjustment and applying the procedures set forth in this Agreement. Dow shall have sole and absolute discretion, but after prior good faith consultation
with the Tax Director of UCC, to determine whether and in what amount an adjustment applies to UCC or any of its Subsidiaries. If, as a result of such redetermination, any amounts due to or from UCC
under this Agreement differ from the amounts previously paid, then except as herein provided, payments of such difference together with any interest, penalty or addition to tax properly allocated to
UCC shall be made as an adjustment to the UCC Member's Tax Liability for the current Taxable Year. If such UCC Member is no longer a Member of the Dow Group, then instead of making an adjustment to
the UCC Member's Tax Liability, the same amount shall be paid to UCC or by UCC in the manner provided in Section 9(a) as follows: (a) in the case of an adjustment resulting in a credit
or refund of tax, within 10 calendar days of the date on which such refund or notice of such credit is received by Dow or the UCC Member with respect to such adjustment, or (b) in the case of
an adjustment resulting in a payment of additional tax, within 10 calendar days of the date on which such additional tax is paid. Any interest, penalty or addition to tax will be allocated as Dow, in
its discretion, deems just and proper in view of all applicable circumstances (to the extent practicable, however, such allocations shall reflect the amount of interest that the UCC Member would have
paid on a stand alone basis). Nothing in this Section 8 shall be construed to entitle UCC or any Subsidiary of UCC to receive a double benefit or compensation with respect to any attribute. 

9.     Remittance by and to UCC  

(a)    Until
such time as Dow notifies UCC in writing to the contrary, any and all payments that UCC and its Subsidiaries are required to make to Dow hereunder shall be made and remitted by
UCC and its Subsidiaries directly to Dow. Dow shall be responsible for making all payments required to be made by Dow hereunder to UCC and its Subsidiaries. 

(b)    Any
payments required to be made hereunder that are not made on or before such date on which such payment is due under the terms of this Agreement shall bear interest at the rate
specified from time to time pursuant to section 6621(a)(2) of the Code, and the party to whom such payment is due shall be entitled to receive interest computed at such rate upon the late
payment of any such amount which is required at any time to be paid hereunder. 

10.   Carrybacks  

If
part or all of an unused consolidated net operating loss or tax credit of UCC or one of its Subsidiaries arises in a year in which UCC or such Subsidiary is not a Member of the Dow Group and is
carried back to a year in which UCC or such Subsidiary is a Member of the Dow Group, any refund or reduction in tax liability arising from the carryback will be retained by or allocated to Dow. Dow
shall have no obligation to pay to UCC or its Subsidiaries the amount of any refund or credit of federal income tax that Dow may receive as a result of such carryback (nor will such occurrence affect
the calculation of Allowable Tax Attributes). 

11.   Allocation of Dow Group Consolidated Tax Liability For Purposes of Determining Earnings and Profits  

The
Dow Group Consolidated Tax Liability for each Taxable Year of the Dow Group shall, for purposes of determining the earnings and profits of each Member, be allocated among the Members in accordance
with the methods prescribed in Section 1.1552-1(a)(2) of the Income Tax Regulations. Notwithstanding the foregoing, Dow may, in its sole and absolute discretion, change the method
set forth above to the extent that is it permitted to do so by applicable law; provided further that such change in method is consistently applied to all Members of the Dow Group. 

30

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

12.   Dow Control of Conduct of Audits, Litigation, Expenses  

(a)    In
any audit, conference or other proceeding with the Service or the relevant state or local authorities, or in any judicial proceedings concerning the determination of the Dow Group
Consolidated Return Liability or the state or local income tax liability of any consolidated, combined or unitary group including Dow or any of it Subsidiaries (other than UCC or a Subsidiary of UCC)
and UCC (or any of the Subsidiaries of UCC), Dow shall have the exclusive right to contest (with the participation of the Tax Director of UCC) in (a) any examination by the Service at the
district level or by any state or local authority, or (b) the preparation and submission of any protest brief or other submission to the Service's appellate division (or in any similar
administrative proceeding before any state or local authority), compromise or settle any adjustment or deficiency proposed, asserted or assessed as a result of such proceeding and to extend or refuse
to extend the applicable time period for making assessments or adjustments. UCC and each subsidiary of UCC hereby appoints Dow as its agent for the purpose of conducting such contest or proposing and
concluding any such compromise and settlement. Dow shall have control over the proceedings, but shall confer in good faith with UCC regarding any proposed adjustment bearing on any material liability
of UCC pursuant to this Agreement. UCC shall support any audit or other examination or judicial or administrative proceeding with respect to any Taxable Year, at its own expense, in any reasonable way
requested by Dow. Nothing herein shall limit Dow's discretion to determine whether and in what amount an item arising from UCC or any UCC Subsidiary shall be conceded or otherwise compromised and
whether and in what amount an item results in an adjustment to UCC or any UCC Subsidiary described in Section 8(a); provided, however, that such decision shall be made only after full and
complete good faith consultation with the Tax Director of UCC. 

(b)    Expenses. UCC shall reimburse Dow for all expenses (including, without limitation, legal and accounting fees) incurred by Dow in the
course of proceedings described in this Section 12 to the extent such expenses are allocable, in Dow's sole and absolute discretion, but after prior good faith consultation with UCC (if
requested by the Tax Director of UCC), to UCC Member items. 

13.   Partnership Interests  

In
connection with any partnership interest for which UCC or a UCC Subsidiary is the Tax Matters Partner, UCC shall to the maximum extent feasible make elections, use accounting methods, and report
positions with respect to such partnership interest that are consistent with positions reported on the Dow Group's Consolidated Return and report positions on any other tax returns that consistent
with those reported for such partnership interest on the Dow Group's Consolidated Return. UCC shall confer in good faith with Dow in advance regarding any such item which may be or could be
inconsistent with items on the Dow Group's Consolidated Return. 

14.   Administration; Resolution of Disputes  

The
provisions of this Agreement will be administered by Dow. Except as otherwise expressly governed by the terms of this Agreement, Dow may use any reasonable method in making any computations or
allocations hereunder, and Dow's calculations will be conclusive. 

15.   Indemnification Against Joint and Several Liability  

Except
as may be expressly provided otherwise in this Agreement, Dow shall be liable for, and agrees to defend, hold harmless and indemnify the UCC Members from and against, any and all taxes (and any
interest, penalties and similar amounts relating thereto of the Dow Group (other than the UCC Members), including, but not limited to, any such taxes (and any interest, penalties and similar amounts
relating thereto) for which any UCC Member is or may be or become liable for under any successor or transferee liability law or other similar law under Section 1.1502-6 or
1.1502-78(b) of the Income Tax Regulations or any similar provision under any applicable foreign, state, or local law. 

16.   Interpretation  

This
Agreement is intended to provide for the calculation and allocation of certain federal and state and local income tax liabilities between the Dow Group (other than UCC and its Subsidiaries) and
the UCC Member, and any situation or circumstances concerning such calculation and allocation that is not specifically contemplated hereby or provided for herein shall be dealt with in a manner
consistent with the underlying principles of calculation and allocation in this Agreement. 

31

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

17.   Effect of Agreement  

This
Agreement shall determine the liability of Dow and the UCC Members as to the matters provided for herein, whether or not such determination is effective for purposes of the Code or of state or
local revenue laws, for financial reporting purposes or any other purpose. 

18.   Term  

This
Agreement will apply to Taxable Years ending after the Effective Date and all subsequent Taxable Years, unless Dow and any UCC Member agree in writing to terminate this Agreement. Notwithstanding
such termination, this Agreement will continue in effect with respect to any payment or refunds due for all Taxable Years prior to termination. Any UCC Member that leaves the Dow Group will be bound
this Agreement. The failure of one or more parties hereto to qualify for inclusion in the Consolidated Return filed by Dow will not operate to terminate this Agreement with respect to the other
parties as long as two or more parties hereto continue to so qualify. 

19.   Assignment  

Rights
and obligations under this Agreement will not be assignable by any party without the prior written consent of the other parties. 

20.   Confidentiality  

Dow
and the UCC Members agree that any information furnished among one another pursuant to this Agreement is confidential and, except as and to the extent required during the course of the preparation
or returns or the conduct of an audit or litigation, shall not be disclosed to other persons. 

21.   Documentation  

All
material, including but not limited to, returns, supporting schedules, work papers, correspondence, and other documents relating to the Consolidated Return and any Combined Returns filed for a
Taxable Year subject to this Agreement will be made available to any party to the Agreement during regular business hours for a minimum period equal to applicable federal and state record retention
requirements (or the applicable statue or limitations period). 

22.   Additional Members  

The
parties hereto specifically recognize that from time to time other Subsidiaries of Dow and UCC may become or become or become again Members of the Dow Group and hereby agree that this Agreement
shall be deemed to have been adopted and affirmed, or readopted and reaffirmed, by such Subsidiary. Dow and UCC shall, upon the written request of the other, cause any of their respective Subsidiaries
formally to ratify and execute this Agreement. 

23.   Tax Law Changes  

Any
alteration, modification, addition, deletion, or other change in the Code or the Income Tax Regulations (or the applicable state and local tax provisions) will automatically be applicable to this
Agreement when changed. 

24.   Successors and Assigns  

This
Agreement will bind and inure to the benefit of the respective successors and assigns of the parties hereto; but no assignment will relieve any party of its obligations hereunder without the
written consent of the other parties. 

25.   Counterparts  

This
Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. 

32

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

26.   Headings  

The
headings in this Agreement are inserted for convenience only and shall not constitute a part hereof or affect the interpretation of this Agreement. 

27.   Severability.  

If
any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, in order to achieve the intent of the parties to the maximum extent
practicable. In any event, all other provisions of this Agreement shall be deemed valid, binding and enforceable to their full extent. 

28.   Entire Agreement  

This
Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and, except as expressly contained herein there are no written or oral promises, covenants,
undertakings, representations or warranties of the parties with respect to the subject matter hereof. 

29.   Notices  

Any
notices or other communications required or permitted by this Agreement shall be effective upon the receipt, shall be in writing personally delivered or mailed by registered or certified mail,
return receipt requested, or sent by facsimile to the persons and addresses shown below: 

	(a)
	With
respect to Dow:

The Dow Chemical Company

2030 Dow Center

Midland, Michigan 48674

Attention: Mr. Chuck Hahn, Director of Taxes

	(b)
	With
Respect to UCC:

Union Carbide Corporation

39 Old Ridgebury Rd.

Danbury, CT 06817-0001

Attention: Mr. John Dearborn, President 

30.   Governing Law  

This
Agreement shall be construed and interpreted, and all rights and liabilities of the parties hereto, with respect to this Agreement shall be governed by the laws of the State of Delaware, U.S.A. 

33

 
EXHIBIT 10.27  

Amended and Restated Tax Sharing Agreement  

IN
WITNESS WHEREOF, the parties respective authorized representatives executed this Agreement on the dates below their respective signatures, but effective as of February 7, 2001. 

	THE DOW CHEMICAL COMPANY
	

 	

BY	
 	

/s/  CHARLES J. HAHN      
	

 
	 	Name:	 	Charles J. Hahn	 
	 	Title:	 	Director of Tax and Assistant Secretary	 
	 	Date	 	June 30, 2003	 
	

UNION CARBIDE CORPORATION ON BEHALF OF THE UCC MEMBERS
	

 	

BY	
 	

/s/  EDWARD W. RICH      
	

 
	 	Name:	 	Edward W. Rich	 
	 	Title:	 	Vice President and Treasurer	 
	 	Date	 	June 30, 2003	 

34

QuickLinks

Amended and Restated Tax Sharing Agreement

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