James Hardie Industries Plc. · NYSE:JHX
James Hardie Industries — Corporate Update (August 2009)
13 slides from James Hardie Industries's corporate update, Aug 19, 2009
Slide 1: Corporate Legacy Issues
Corporate Legacy Issues Russell Chenu, CFO 18 August 2009
Slide 2: Forward-looking statements
The presentation contains forward-looking statements. We may from time to time make forward-looking statements in our periodic reports filed with or furnished to the US Securities and Exchange Commission, on Forms 20-F and 6-K, in our annual reports to shareholders, in offering circulars, invitation
Slide 3: Agenda
Agenda Jackson/Special Commission of Inquiry Amendments to US/NL double tax agreement - domicile FY 1999 ATO amended assessment FY 2002 - 2006 ATO audit issues US Withholding Tax ASIC Impact on effective tax rate Current status Corporate Legacy Issues
Slide 4: Jackson/Special Commission of Inquiry
Jackson/Special Commission of Inquiry Established February 2004 Commenced hearings April 2004 Reported September 2004 Findings led to management changes October 2004 #1 priority was resolving asbestos compensation funding Corporate Legacy Issues
Slide 5: Amendments to US/NL double tax agreement
November 2004 - Amendments to US/NL double tax agreement Effective February 2006 Triggered need for increased management presence in Netherlands Netherlands domicile became increasingly difficult Early work on re-domicile options commenced in late 2004 Societas Europaea option became available in mi
Slide 6: FY 1999 ATO Amended Assessment
FY 1999 ATO Amended Assessment Late 2005: increased ATO audit activity on Australian corporate restructuring for proposed IPO of JHNV on NYSE in 1999 February 2006: matter referred to ATO's General Anti-Avoidance Rules Panel (Part IVA) March 2006: amended assessment issued to RCI for FY 1999 for A$3
Slide 7: FY 1999 ATO Amended Assessment (continued)
FY 1999 ATO Amended Assessment (continued) Outcome of litigation likely to be binary Worst case outcome - - James Hardie pays additional A$184 million to ATO plus costs - - James Hardie books charge against earnings of approx A$407 million before tax Best case outcome - - ATO pays James Hardie appro
Slide 8: FY 2002 - 2006 ATO Audit Issues
FY 2002 - 2006 ATO Audit Issues Late 2007 ATO audit activity increased for FY 2002 During 2007, audit activity expanded to FY 2003 and later years Range of issues involved Negotiated settlement resulted in James Hardie paying A$153 million in December 2008 Agreed settlement made without concessions
Slide 9: US Withholding Tax
US Withholding Tax IRS formed view that James Hardie did not qualify for Limitation of Benefits provisions of 2004 amendments to US/NL double tax agreement In June 2008 IRS issued Notice of Proposed Amendment for US$49 million for 2006 and 2007 James Hardie appealed IRS internal appeal heard April 2
Slide 10: ASIC proceedings
ASIC proceedings February 2007: proceedings commenced September 2008: ASIC dropped claim for A$1.9 billion indemnity from JHINV September 2008: hearing commenced April 2009: Justice Gzell delivered reasons for judgement July 2009: hearing on exoneration, penalties and costs Decision on exoneration,
Slide 11: Impact on effective tax rate (ETR)
Impact on effective tax rate (ETR) Some costs incurred on corporate legacy issues either not deductible (nexus broken between expense and income as a result of previous corporate restructure) or only partially deductible, and then at low tax rates. Examples: - - US$60 million expense on Special Comm
Slide 12: Current status
Current status Asbestos compensation agreement - negotiated 2004 - 2006, resolved early 2007 Australian tax issue - FY 2002-2006, resolved 2008 IRS - 2006 - 2007, resolved 2009 ASIC proceedings - exoneration, penalties and costs - decision pending Future domicile - expect resolution late 2009 early
Slide 13: Russell Chenu, CFO
Corporate Legacy Issues Russell Chenu, CFO 18 August 2009
James Hardie Industries — Corporate Update (August 2009) on 6ix