or

o		Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     .

Commission file number: 333-148977

NORANDA ALUMINUM HOLDING CORPORATION

Delaware		20-8908550
(State or other jurisdiction		(I.R.S. Employer
of incorporation)		Identification Number)
801 Crescent Centre Drive, Suite 600		37067
Franklin, TN 37067		(Zip Code)
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (615) 771-5700

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

There is no established public trading market for the Registrant’s common stock. As of January 31, 2009, there were 22,204,236 shares of the Registrant’s common stock outstanding.

Documents Incorporated by Reference:
None

 

 

NORANDA ALUMINUM HOLDING COMPANY
TABLE OF CONTENTS

Cautionary Statement Concerning Forward-Looking Statements			3
Part I			4
Item 1. Business			4
Item 1A. Risk Factors			15
Item 1B. Unresolved Staff Comments			27
Item 2. Properties			27
Item 3. Legal Proceedings			27
Item 4. Submission of Matters to a Vote of Security Holders			27
Part II			28
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities			28
Item 6. Selected Financial Data			28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			35
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			58
Item 8. Financial Statements and Supplementary Data			61
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure			120
Item 9A(T). Controls and Procedures			120
Item 9B. Other Information			120
Part III			121
Item 10. Directors, Executive Officers and Corporate Governance			121
Item 11. Executive Compensation			125
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			144
Item 13. Certain Relationships and Related Person Transactions, and Director Independence			146
Item 14. Principal Accountant Fees and Services			147
Part IV			148
Item 15. Exhibits and Financial Statement Schedules			148
Signatures			149
EX-10.11
EX-10.12
EX-10.13
EX-10.14
EX-10.15
EX-10.16
EX-12.1
EX-21.1
EX-31.1
EX-31.2
EX-32.1

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     This Form 10-K contains “forward-looking statements.” You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are based upon information available to us on the date of this filing.

     Important factors that could cause actual results to differ materially from our expectations, which we refer to as cautionary statements, are disclosed under “Risk Factors” and elsewhere in this filing, including, without limitation, in conjunction with the forward-looking statements included in this filing. All forward-looking information in this filing and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

	•		delays in restoring our New Madrid smelter to its full production capacity;
	•		the cyclical nature of the aluminum industry and fluctuating commodity prices, which cause variability in our earnings and cash flows;
	•		a downturn in general economic conditions, including changes in interest rates, as well as a downturn in the end-use markets for certain of our products;
	•		losses caused by disruptions in the supply of electrical power;
	•		fluctuations in the relative cost of certain raw materials and energy compared to the price of primary aluminum and aluminum rolled products;
	•		restrictive covenants in our indebtedness that may adversely affect our operational flexibility;
	•		the effectiveness of our hedging strategies in reducing the variability of our cash flows;
	•		unexpected issues arising in connection with our joint ventures;
	•		the effects of competition in our business lines;
	•		the relative appeal of aluminum compared with alternative materials;
	•		the loss of order volumes from our largest customers would reduce our revenues and cash flows;
	•		our ability to retain customers, a substantial number of which do not have long-term contractual arrangements with us;
	•		our ability to fulfill our business’s substantial capital investment needs;
	•		the cost of compliance with and liabilities under environmental, safety, production and product regulations;
	•		natural disasters and other unplanned business interruptions;
	•		labor relations (i.e., disruptions, strikes or work stoppages) and labor costs, including at St. Ann where we are currently negotiating new labor contracts;
	•		unexpected issues arising in connection with our operations outside of the United States;
	•		our ability to retain key management personnel;
	•		our expectations with respect to our acquisition activity, or difficulties encountered in connection with acquisitions, dispositions or similar transactions;
	•		the ability of our insurance to cover fully our potential exposures; and
	•		neither our historical nor our pro forma financial information may be representative of results we would have achieved as an independent company or our future results.

     We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this filing may not in fact occur. Accordingly, investors should not place undue reliance on those statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

PART I

ITEM 1. BUSINESS

     Except as otherwise indicated herein or as the context otherwise requires, references in this report to (a) “Noranda HoldCo” refer only to Noranda Aluminum Holding Corporation, excluding its subsidiaries, (b) “Noranda AcquisitionCo” refer only to Noranda Aluminum Acquisition Corporation, a direct wholly owned subsidiary of Noranda HoldCo, excluding its subsidiaries, and (c) “Noranda,” the “Company,” “we,” “our,” and “us” refer collectively to (1) Noranda Aluminum, Inc. and its subsidiaries on a consolidated basis prior to the consummation on May 18, 2007 of the acquisition as described below by Apollo as defined below, which we refer to as the “Apollo Acquisition,” and (2) Noranda HoldCo, Noranda AcquisitionCo, Noranda Intermediate Holding Corporation and Noranda Aluminum, Inc. and its subsidiaries on a consolidated basis after the completion of the Apollo Acquisition, (d) “HoldCo notes” refers to Senior Floating Rate Notes due 2014 issued by Noranda HoldCo, and (e) “AcquistionCo notes” refers to Senior Floating Rate Notes due 2015 issued by Noranda AcquistionCo.

Overview

     We are a leading North American vertically integrated producer of value-added primary aluminum products and high quality rolled aluminum coils. We have two integrated businesses: our primary metals, or upstream business, and our rolling mills, or downstream business. In 2008, our upstream business produced approximately 575 million pounds (261,000 metric tonnes) of primary aluminum at our New Madrid smelter facility, accounting for approximately 10% of total United States primary aluminum production, according to production statistics from The Aluminum Association. Our upstream business is vertically integrated from bauxite to alumina to primary aluminum metal. Our 50% joint venture interest in a related bauxite mining operation in St. Ann, Jamaica and our 50% joint venture interest in an alumina refinery in Gramercy, Louisiana provide a secure raw material supply. Our downstream business, consisting of four rolling mill facilities with a combined annual production capacity of approximately 495 million pounds is one of the largest aluminum foil producers in North America, according to data from The Aluminum Association.

     In the second half of 2008, global economic contraction severely impacted the aluminum industry. Primary aluminum is a global commodity, and its price is set on the London Metal Exchange (the “LME” and such price, the “LME price”). Our primary aluminum products typically earn the LME price plus a Midwest premium, the sum of which is known as the Midwest Transaction Price (the “MWTP”). Driven by significant weakness in end-use markets such as housing and automotive, LME prices experienced a historic decline. The LME price dropped 49% in the last five months of 2008 to levels at which our production cash costs were higher than our primary metal selling prices causing a significant negative impact on our financial results. In addition, global inventories have grown to near record levels as market demand has continued to decline.

     In 2008, we sold approximately 70% of our upstream volume as value-added products of billet, rod and foundry. The markets for these products experienced acute downward pressure as the majority of our value-added products are sold into housing and automotive applications. In addition to extraordinary declines in volume and price in the upstream segment, the downstream business was also impacted by weak end markets and falling metal prices. Our downstream business is a low-cost domestic producer of aluminum rolled products servicing a variety of end markets including building, automotive, and HVAC. The economic crisis, including limited credit availability, had a major negative impact on these markets. Weak market conditions had a direct impact on our downstream business volume and subsequently our financial results.

     During the week of January 26, 2009, power supply to our New Madrid smelter, which supplies all of our upstream business’s production, was interrupted numerous times because of a severe ice storm in Southeastern Missouri. As a result of the outage, we lost approximately 75% of the smelter capacity. The smelting production facility is being cleaned out, inspected, and restarted. Based on our current assessment, we expect that the smelter could return to full production capacity during second half of 2009 with partial capacity phased in during the intervening months. We hold pot line freeze insurance covering up to $77.0 million of losses, which management expects to apply to costs of restoration and restarting the pot lines. We believe that insurance will cover a substantial portion, if not all, of the cost of restoring capacity; however, there can be no assurance that the full amount of the claim we submit will be reimbursed or the timing of when the reimbursement will be received. In addition, with the current available capacity and re-melt capability within the facility, we expect to service our customer base with minimal interruptions. The New Madrid power outage and temporary lost capacity will have no impact on our ability to serve customers for the downstream foil operations.

     To reduce commodity price risk and protect operating cash flows in the upstream business, we have implemented a hedging strategy that establishes the price at which approximately 50% of our expected cumulative primary aluminum shipments will be sold through December 2012. Subsequent to December 31, 2008, we entered into fixed price aluminum purchase swaps covering approximately 523.6 million pounds of aluminum purchases in 2010, 2011 and 2012 at approximately $0.75 per pound.

Company History

     Noranda HoldCo and Noranda AcquisitionCo were formed on March 27, 2007 by investment funds affiliated with, or co-investment vehicles managed by, Apollo Management, L.P., including Apollo Investment Fund VI, L.P. (collectively “Apollo”) to acquire a portion of the aluminum business of Xstrata (Schwiz) A.G. (“Xstrata”). The Apollo Acquisition was completed on May 18, 2007, when Noranda AcquisitionCo acquired the stock of a subsidiary of Xstrata that held the Noranda aluminum business. As used in this report, the term “Apollo

Transactions” means, collectively, the Apollo Acquisition and the related financings.

     Upon completion of the Apollo Acquisition, Apollo and certain members of management became the owners of all of the outstanding equity interests of Noranda HoldCo. Noranda AcquisitionCo is a wholly owned subsidiary of Noranda HoldCo.

Primary Metal—Upstream Business

     The aluminum industry experienced a profound decline in demand and pricing in the second half of 2008. The decline was driven by falling end-market demand resulting from global economic contraction. Two large aluminum end-use markets, automotive and construction, experienced unprecedented declines in demand that significantly impacted overall industry demand and pricing. The LME price dropped 49% in the last five months of 2008 and LME inventories increased to near record highs. The decline had significant negative impact on our financial results. Fourth quarter 2008 value-added upstream volume of 73.4 million pounds was 30.5% below fourth quarter 2007. Our aluminum and alumina production cash costs at year-end were higher than the respective market prices.

     During the week of January 26, 2009, power supply to our New Madrid smelter, which supplies all of our upstream business’s production, was interrupted numerous times because of a severe ice storm in Southeastern Missouri. We use large amounts of electricity to produce primary aluminum, and any loss of power which causes an equipment shutdown can result in the hardening or “freezing” of molten aluminum in the pots where it is produced. If this occurs, we may experience significant losses if the pots are damaged and require repair or replacement, a process that could limit or shut down our production operations for a prolonged period of time. Although we had full capability to continue full production throughout the storm, our electricity providers’ inability to return power to the smelter in a timely fashion caused a loss of approximately 75% of the smelter’s capacity. We are still in the process of assessing the damage. The smelting production facility is being cleaned out, inspected, and restarted. To date, approximately five percent of the lost capacity has been restored. Based on our current assessment, we expect that the smelter could return to full production during the second half of 2009 with partial capacity phased in during the intervening months.

     Because of the desire to restart production as quickly as possible and the need for Noranda’s skilled, dedicated workforce during the repair and restart process, we expect to retain as many jobs as possible with a goal of maintaining all jobs throughout the restart process. We have notified our insurance carrier and are diligently working through the claim process. We have received $4.2 million in pre-funding and have a request for an additional $0.8 million pending. We hold pot line freeze insurance covering up to $77.0 million of losses, which management expects to apply to costs of restoration and restarting the pot lines. We believe that insurance will cover a substantial portion, if not all, of the cost of restoring capacity; however, there can be no assurance that the full amount of the claim we submit will be reimbursed or the timing of when the reimbursement will be received.

     The process of making aluminum is power intensive and requires a large amount of alumina (aluminum oxide). Alumina is derived from the raw material bauxite, and approximately four pounds of bauxite are required to produce approximately two pounds of alumina, and the two pounds of alumina will produce approximately one pound of aluminum. Our aluminum smelter in New Madrid, Missouri receives substantially all of its alumina requirements at cost plus freight from our Gramercy joint venture. We believe New Madrid has a freight cost advantage relative to other smelters because of the proximity of Gramercy to St. Ann and New Madrid to Gramercy. In addition, New Madrid is the closest Midwest smelter to the Gulf Coast, the entry point for approximately 75% of the alumina shipped to the United States based on Brook Hunt statistics. We believe our location allows New Madrid to internally source its alumina from Gramercy or purchase alumina from third parties at a lower freight cost than other U.S. based smelters. The smelter is also located in an area with historically reliable sources of electrical power, and in June 2005, we entered into a 15-year power purchase agreement with AmerenUE for the electricity supply of the smelter through a transmission agreement between the Company and Associated Electric.

     All of our primary aluminum production occurs at the smelter in New Madrid, which produced 575 million pounds (261,000 metric tonnes) of primary aluminum in 2008. The plant site also includes a fabrication facility that converts molten aluminum into value-added products. The fabrication facility has the capacity to produce annually approximately 160 million pounds of rod, 286 million pounds of extrusion billet and 75 million pounds of foundry ingot. Molten aluminum that is not used in these product lines is produced as primary ingots for transfer to our downstream business or sale to other aluminum fabricators.

     In 2008, approximately 70% of our upstream products were sold as value-added products at the prior month’s MWTP plus a fabrication premium. Our value-added products are supported by excellent customer service and delivery. Our major target customers are located in the Midwestern United States and Mexico, with 88% of our customers within one-day truck delivery. To reduce commodity price risk and protect operating cash flows in the upstream business, we have implemented a hedging strategy that establishes the price at which approximately 50% of our expected cumulative primary aluminum shipments will be sold through December 2012. See Item 7A. “Quantitative and Qualitative Disclosures About Market Risk.”

     Through a 50/50 joint venture with Century Aluminum Company (“Century”), we own the Gramercy, Louisiana alumina refinery that supplies the alumina used at our New Madrid smelter. With Century, through a separate 50/50 joint venture, we also own an interest in a

Jamaican partnership that owns bauxite mining assets in St. Ann, Jamaica. Bauxite is the principal raw material used in the production of alumina and substantially all of the bauxite used at the Gramercy alumina refinery is purchased from the Jamaican partnership.

     During fourth quarter 2008, the cost of alumina purchased from our joint venture in Gramercy exceeded the cost of alumina available from other sources. We continue to evaluate options to reduce the purchase cost of alumina including evaluating with our joint venture partner curtailment of Gramercy’s operation. In addition, pursuant to the agreements governing the joint ventures, we are currently in a period of renegotiation with our joint venture partner concerning the future of the joint ventures after December 2010.

     Through our wholly owned subsidiary Gramercy Alumina Holdings Inc., we hold an interest in the two joint venture companies as shown below:

     As of December 31, 2008, Gramercy produced alumina at a capacity rate of approximately 1.2 million metric tonnes per year, consisting of approximately 80% smelter grade alumina, or SGA, and 20% alumina hydrate, also known as chemical grade alumina, or CGA. Third-party sales of chemical grade alumina reduce the net cash cost of New Madrid’s alumina supply. In 2008, St. Ann produced approximately 4.5 million tonnes of bauxite, of which it sold approximately 50% to a third-party, which reduced the net cost of bauxite transferred to Gramercy.

     Competition. The market for primary aluminum is diverse and highly competitive. We believe that we compete on the basis of price, quality, timeliness of delivery and customer service, with our focus on the latter three areas. We also compete on a global basis with other producers on the basis of cost. Aluminum also competes with other materials such as steel, plastic, copper, titanium and glass based upon functionality and relative pricing.

     Raw Materials and Supply. Electrical power and alumina are the main cost components for primary aluminum production. New Madrid has a power purchase agreement with AmerenUE, pursuant to which we have agreed to purchase substantially all of New Madrid’s electricity through May 2020. This contract is for regulated power and cannot be altered without the approval of the Missouri Public Service Commission. In January 2009, the Missouri Public Service Commission approved a rate increase and a fuel adjustment clause. The approved rate change increased our power cost by approximately 6%. The impact of an increase in our costs due to the fuel adjustment clause cannot be estimated at this time. Electricity provided by AmerenUE is delivered to our site through a transmission agreement between the Company and Associated Electric.

     Our upstream business is fully integrated from bauxite to alumina to primary aluminum metal, ensuring security of raw material supply. New Madrid receives alumina at cost plus freight from our Gramercy refinery. New Madrid is the closest Midwest smelter to the alumina source and therefore has a lower freight cost than its competition. In addition, our Gramercy refinery also sells chemical grade alumina (hydrate) which helps reduce the production cost for smelter grade alumina consumed by the New Madrid smelter. Bauxite is the principal raw material used in the production of alumina and substantially all of the bauxite used at our Gramercy refinery is purchased from our St. Ann joint venture. We transport bauxite from St. Ann to Gramercy by oceangoing vessels, which are the only available means of transportation. We currently have a four-year contract, effective January 1, 2007, with a third-party for bauxite ocean vessel freight, which contains escalators related to the cost of fuel. The contract was negotiated at arm’s length in 2006 based upon a tendering process which included identifying the availability of vessels equipped to carry bauxite in the volumes and frequencies required and related costs. In the current market environment, the cost of alumina purchased from our joint venture in Gramercy exceeds the cost available from other sources.

     Our Gramercy refinery has contracts with two suppliers of natural gas, Coral Energy Resources, L.P. and Atmos Energy Marketing, LLC, which expire on April 30, 2010 and April 30, 2009, respectively. These contracts guarantee a secure supply of natural gas at a price based on

the Henry Hub index plus transportation/pipeline costs. In addition, our contract with Atmos provides security in case of a short-term supply emergency (such as a hurricane or other force majeure situation), by granting Gramercy the option to obligate Atmos to utilize its storage assets to supply Gramercy’s full natural gas supply requirements. Fuel is a substantial component of the cost structure at our St. Ann bauxite mine. St Ann Jamaica Bauxite Partners has a requirements contract with Clark Oil Trading Company to purchase 3% sulfur fuel oil. Clark Oil Trading Company is required to provide St Ann with a minimum BTU (British Thermal Unit) per barrel through September 30, 2011. This contract guarantees a secure supply of fuel oil at a price based on the average of low quotations as published by Platt’s Oilgram Priced Report.

     Sales and Marketing; Customers. We employ a sales force consisting of inside and outside salespeople. Inside salespeople are responsible for maintaining customer relationships, receiving and soliciting individual orders and responding to service and other inquiries by customers. Our outside sales force is responsible for identifying potential customers and calling on them to explain our services and products as well as maintaining and expanding our relationships with our current customers. The sales force is trained and knowledgeable about the characteristics and applications of various metals, as well as the manufacturing methods employed by our customers.

     Our sales and marketing focus is on the identification of original equipment manufacturers, or OEMs, and other metals end-users that could achieve significant cost savings through the use of our inventory management, value-added processing, just-in-time delivery and other services. We use a variety of methods to identify potential customers, including the use of databases, and participation in manufacturers’ trade shows. Customer referrals and the knowledge of our sales force about regional end-users also result in the identification of potential customers. Once a potential customer is identified, our outside salespeople assume responsibility for visiting the appropriate contact, typically the managers of purchasing or operations and business owners.

     All of our value-added (billet, foundry, rod) sales are on a negotiated price basis. In some cases, sales are the result of a competitive bid process where a customer provides a list of products, along with requirements, to us and several competitors and we submit a bid on each product. We have a diverse customer base, with no single customer accounting for more than 9% of our net sales in each of the last three years. Our ten largest customers represented 45% of our net sales in 2008.

     New Madrid Primary Aluminum Smelter. During the week of January 26, 2009, power supply to our New Madrid smelter was interrupted numerous times because of a severe ice storm in Southeastern Missouri. Although we had full capability to continue full production throughout the storm, our electricity providers’ inability to return power to the smelter in a timely fashion caused a loss of approximately 75% of the smelter capacity. We continue to assess the damage. The smelting production facility is being cleaned out, inspected, and restarted. To date approximately five percent of the lost capacity has been restored. Based on our current assessment, we expect that the smelter could return to full production during the second half of 2009 with partial capacity phased in during the intervening months.

     Because of the desire to restart production as quickly as possible and the need for Noranda’s skilled, dedicated workforce during the repair and restart process, we expect to retain as many jobs as possible with a goal of maintaining all jobs throughout the restart process. We have notified our insurance carrier and are diligently working through the claim process. We have received $4.2 million in pre-funding and have a request for an additional $0.8 million pending. We hold pot line freeze insurance covering up to $77.0 million of losses, which management expects to apply to costs of restoration and restarting the pot lines. We believe that insurance will cover a substantial portion, if not all, of the cost of restoring capacity; however, there can be no assurance that the full amount of the claim we submit will be reimbursed or the timing of when the reimbursement will be received. In addition, with the current available capacity and re-melt capability within the facility, we expect to service our customer base with minimal interruptions.

     In 2008, New Madrid accounted for approximately 10% of the aluminum produced in the United States, based on 2008 production statistics from The Aluminum Association, and is strategically located as the closest Midwest facility to the supply of alumina. The smelter was built in 1971 and underwent significant capacity expansions in 1976, 1983 and 2001. The smelter is located at the mid-point of the Mississippi River near New Madrid, Missouri. It occupies 250 acres of the 4,200 acre St. Jude Industrial Park and has 44 acres under roof. Noranda owns and manages approximately 2,600 acres of the St. Jude Industrial Park, which is the largest industrial park in the State of Missouri. It is also located in an area with historically reliable sources of electrical power and has a 15-year power purchase agreement with AmerenUE. See “-Raw Materials and Supply” above. The smelter is fully integrated with its own raw material unloading facility, environmental control systems and aluminum reduction plant, including carbon anode fabrication, necessary to support the smelter’s production capacity.

     The plant site also includes a fabrication business for the production of continuous cast rod, extrusion billet and foundry ingot. This business converts molten aluminum into value-added products. At December 31, 2008, the business had the capacity to produce annually approximately 160 million pounds of rod, used mainly for electrical applications and steel de-oxidation; 286 million pounds of extrusion billet, used mainly for building construction and architectural and transportation applications; and 75 million pounds of foundry ingot, used mainly for transportation. In 2008, New Madrid produced approximately 18% of the rod manufactured in North America and supplied approximately 9% of North American primary extrusion billet. Molten aluminum that is not used in these product lines is produced as primary ingots for transfer to our downstream business or sale to other aluminum fabricators.

               

     In 2008, approximately 70% of our value-added products were sold at the prior month’s MWTP plus a fabrication premium. The remainder was either sold at current month pricing plus the MWTP or was fixed 30 days prior to the pricing period. The products are considered to be premium priced and supported by excellent customer service and delivery. Our major target customers are located in the Midwestern United States and Mexico, with 88% of these customers within one-day truck delivery. At December 31, 2008 we employed approximately 896 people at New Madrid.

     St. Ann Bauxite Mine. We and our joint venture partner operate the St. Ann bauxite mine through St. Ann Bauxite Limited (“SABL”), a Jamaican limited liability Company. SABL’s bauxite mining assets consist of: (1) a concession from the Government of Jamaica (“GOJ”), to mine bauxite in Jamaica through 2030 and (2) a 49% interest in St. Ann Jamaica Bauxite Partnership (“SAJBP”), which holds the physical mining assets and conducts the mining and related operations pursuant to the concession. The GOJ owns the remaining 51% of SAJBP. The physical mining assets consist primarily of rail facilities, other mobile equipment, dryers and loading and dock facilities. The age and remaining lives of the mining assets vary and they may be repaired or replaced from time to time as part of SAJBP’s ordinary capital expenditure plan.

     Under the terms of the concession, SAJBP mines the land covered by the concession and the GOJ retains surface rights and ownership of the land. The GOJ granted the concession and entered into other agreements with SABL for the purpose of ensuring sufficient reserves to allow SABL to ship annually 4.5 million dry metric tonnes (“DMT”) of bauxite from mining operations in the specified concession area through September 30, 2030. The GOJ is required to provide additional concessions if the specified concession does not contain sufficient quantities of commercially exploitable bauxite. In the event that market conditions require a reduction in the amount of bauxite to be mined, existing agreements between SABL and GOJ provide a mechanism for discussion between the parties regarding reducing the tonnage to be mined. In the event that SABL’s customer requirements increase, including its customers that are its affiliates, or the partners expand SAJBP’s bauxite producing operations, the Government has agreed to assess the feasibility of granting a new concession. SABL is responsible for reclamation of the land that it mines. In addition, SABL assumed reclamation obligations related to operations prior to the acquisition from Kaiser. The outstanding reclamation liability recorded by SABL at December 31, 2008 was $7.4 million. We account for SABL using the equity method.

     Pursuant to an Establishment Agreement and other corollary agreements that govern the relationship between SABL and the GOJ, SABL manages the operations of the partnership (SAJBP), pays operating costs and is entitled to all of its bauxite production. SABL pays the GOJ according to a negotiated fiscal structure, which consists of the following elements: (i) a royalty based on the amount of bauxite shipped, (ii) an annual “asset usage fee” for the use of the GOJ’s 51% interest in the mining assets, (iii) customary income and other taxes and fees, (iv) a production levy, which currently has been waived, and (v) certain fees for lands owned by the GOJ that are mined by SAJBP. In calculating income tax on revenues related to sales to our Gramercy refinery, SABL uses a set market price, which is negotiated periodically between SABL and the GOJ. SABL is currently in the process of negotiating revisions to the fiscal structure with the GOJ, which may be effective retroactive to January 1, 2008.

     In 2008, approximately 50% of the bauxite from St. Ann was refined into alumina at our Gramercy refinery, and the remainder was sold to Sherwin Alumina Company (“Sherwin”). SABL entered into a new contract with Sherwin for continued bauxite supply through 2009 and 2010 with expected annual sale and purchase amounts of 1.9 million DMT. These third-party sales reduce the net cost of bauxite transferred to Gramercy. During the years ended December 31, 2006, 2007 and 2008, St. Ann mined 4.9 million, 4.5 million, and 4.5 million DMTs of bauxite, respectively.

     Gramercy Alumina Refinery. The market for alumina has substantially deteriorated in line with the profound decline in LME aluminum prices. Alumina price is highly correlated with aluminum price as most smelter-grade alumina is sold as a percentage of LME aluminum price. The market price for alumina has fallen approximately 55% since July 2008. In current market conditions, the cost of alumina purchased

from our Gramercy joint venture exceeds the cost of alumina available from other sources. We continue to evaluate options to reduce the purchase cost of alumina, including evaluating with our joint venture partner curtailment of Gramercy’s operations.

     At the Gramercy refinery, bauxite is chemically refined and converted into alumina, the principal raw material used in the production of primary aluminum. Extensive portions of the Gramercy refinery were rebuilt and modernized from 2000 through 2002. Gramercy has an annual production capacity of 1.2 million metric tonnes of alumina. The remaining alumina production at the Gramercy refinery is in the form of alumina hydrate, or chemical grade alumina, that is sold to third parties.

     Gramercy produced approximately 1.2 million tonnes of alumina during each of the years ended December 31, 2006, 2007 and 2008. Gramercy’s production can be divided into two product categories:

	•		Smelter Grade Alumina (“SGA”). Gramercy produces approximately 1.0 million tonnes of SGA annually. 50% of the SGA production is consumed by our New Madrid smelter, and the remaining 50% is consumed by our joint venture partner. The Gramercy refinery is the primary source for New Madrid’s alumina requirements. In 2008, New Madrid purchased alumina from time to time from third parties, but the quantities were minimal. Despite the current capacity reduction at our New Madrid smelter due to the January ice storm damage, we are still required to purchase 50% of the SGA produced at Gramercy.
	•		Chemical Grade Alumina (“Hydrate”). The other 0.2 million tonnes of alumina produced per year are chemical grade. Chemical grade alumina, which Gramercy sells to third parties, typically sells at a premium to metallurgical grade. Sales of chemical grade alumina reduce the net production cost for SGA. As a result of the decline in the overall economy, 2008 fourth quarter chemical grade volumes were down 11% versus the same period in 2007.

Rolling Mills—Downstream Business

     In 2008, the downstream business experienced its second consecutive year of volume decline due to continued weakness in the automotive and housing end markets. Fourth quarter market conditions were particularly weak. According to The Aluminum Association, North American foil demand declined 24% in the fourth quarter. In addition to falling demand, the downstream business was impacted by dramatically falling LME prices with significant timing differences between the cost of metal purchased and the price of metal sold to customers. The acute decline in foil demand continues to put pressure on pricing as industry capacity utilization is operating well below balanced levels. The New Madrid power outage and temporary lost capacity will have no impact on our ability to serve customers for the downstream foil operations in Huntingdon, Tennessee, Salisbury, North Carolina and Newport, Arkansas.

     Our downstream business is an integrated manufacturer of aluminum rolled products, particularly foil and light sheet. Our rolling mills are located in the southeastern United States, in Huntingdon, Tennessee, Salisbury, North Carolina and Newport, Arkansas, with a combined annual production capacity of approximately 495 million pounds, depending on product-mix. Our products include heavy gauge foil products such as finstock and semi-rigid container stock, light gauge converter foils used for packaging applications, consumer foils and light gauge sheet products such as transformer windings. We primarily sell our products to OEMs of air conditioners, transformers, semi-rigid containers and foil packaging, most of whom are located in the eastern and central part of the United States. Our plants are well situated to serve these customers and approximately 64% of sales are within a one-day delivery distance, resulting in freight savings and customer service benefits. Versatile manufacturing capabilities and advantageous geographic locations provide our rolling mills the flexibility to serve a diverse range of end uses while maintaining a low cost base. Our downstream business maintains a continuous improvement philosophy rooted in a strong Six Sigma culture to minimize variation and help optimize manufacturing and related processes. Additionally, the Huntingdon site has ISO 9001-2000 certification from the International Organization for Standardization with regards to its quality management system.

     Our products are produced at our four rolling mill facilities as follows:

				Approximate		% of Total
Plant		Location		Capacity (in lbs.)		Capacity				Products
Huntingdon—West		Huntingdon, TN		235 million			48	%		Finstock, container stock, intercompany reroll and miscellaneous heavy gauge products
Huntingdon—East		Huntingdon, TN		130 million			26	%		Finstock, container stock, transformer windings and miscellaneous heavy gauge products
Salisbury		Salisbury, NC		95 million			19	%		Light gauge products including flexible packaging, finstock, container stock, lithographic sheet, intercompany reroll and miscellaneous leveled building products
Newport		Newport, AR		35 million			7	%		Light gauge products including flexible packaging
Total				495 million			100	%

     We price our products at the MWTP plus a negotiated fabrication premium. The fabrication premium is designed to cover all conversion costs to fabricate the rolled products and allow for a profit margin. The cost of primary metal is passed through to customers. Therefore, except for cycles when LME prices change dramatically over our average inventory holding periods, our profitability is largely insulated from movement in aluminum prices. We use both primary aluminum, which is sourced from various smelters, and discounted metal units, which usually take the form of scrap or recycled scrap ingot. We seek to maximize profitability by optimizing both the mix of rolled products produced and the prime-to-scrap ratio in our metal feed. In 2008, approximately 13.6% of our upstream business’s primary aluminum production was shipped to our downstream mills, providing security of supply to our downstream facilities, and allowing us to take advantage of short-term surges in demand. In 2009, the downstream business was expected to purchase significantly more volume from our upstream business. However, due to the power outage at New Madrid and the related loss of capacity, the downstream business will need to purchase all of its aluminum requirements from external sources until capacity is restored. This should have minimal financial impact on our business.

     Competition. The aluminum rolled products market is highly competitive. We face domestic competition from a number of companies in the markets in which we operate. Our primary competitors are Aleris, Hindalco (Novelis) and J.W. Aluminum. Some of our competitors are substantially larger, have more diversified operations, and compete in product lines in which we do not operate. We also face competition from imports, mainly from Asia. The factors influencing competition vary by region and end-use, but we generally compete on the basis of our value proposition, including price, product quality, the ability to meet customers’ specifications, range of products offered, lead times, technical support and customer service.

     In addition to competition from within the aluminum rolled products industry, the industry faces competition from non-aluminum materials. In the packaging market, aluminum rolled products’ primary competitors are plastics and cardboard. However, for our most important heat exchanger customers, usage of aluminum finstock is well entrenched because no other material offers more favorable economics. Factors affecting competition with substitute materials or aluminum structures that Noranda does not currently produce include technological innovation, relative prices, ease of manufacture, consumer preference and performance characteristics.

     Raw Materials and Supply. The principal raw materials that we use in rolled products manufacturing include primary aluminum, recycled aluminum and alloying elements. In total, we purchased approximately 358 million pounds of metal units in 2008. These raw materials are generally available from several sources and are not subject to supply constraints under normal market conditions. We also consume considerable amounts of energy in the operation of our facilities, which is a significant component of our non-metal conversion costs.

     Natural gas and electricity represented 100% of our energy consumption in 2008. The majority of energy usage occurs during the melting/casting process in the form of natural gas. Most of our electricity is consumed in the cold rolling process. We purchase our natural gas on the open market, which subjects us to market pricing fluctuations. We use a combination of forward purchase contracts and hedges from time to time to help stabilize gas price volatility. See Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” for a summary of hedges we had in place during 2008.

     Electricity is purchased through medium-term contracts at competitive industrial rates from regional utilities supplied through local distributors.

     Sales and Marketing; Customers. Our sales force consists of inside and outside salespeople. Our outside sales force is primarily responsible for identifying potential customers and calling on them to negotiate profitable business and handling any subsequent issues that may arise. Inside salespeople are primarily responsible for maintaining customer relationships, receiving and soliciting individual orders and responding to service and other inquiries by customers. The sales force is trained and knowledgeable about the characteristics and applications of our various products, as well as our manufacturing methods and the end-use markets in which our customers are involved.

     Our sales and marketing focus is on servicing OEMs who are major participants in the markets where our products are used as inputs. However, our staff participates in industry groups and attends trade shows in order to keep abreast of market developments and to identify potential new accounts. Once a potential new customer is identified, our outside salespeople assume responsibility for visiting the appropriate contact, typically the purchasing manager or manager of operations, to explore and develop business opportunities.

     Nearly all business is conducted on a negotiated price basis with a few sales made at list prices, typically to smaller accounts.

     Our downstream business has a diverse customer base, with no single customer accounting for 10% or more of our downstream business net sales in each of the last three years. In 2008, our ten largest downstream customers collectively represented 50% of net sales. Of our ten largest customers, we have done business with nine for ten years or more.

Products. Aluminum foil has several outstanding characteristics that account for a wide range of commercial applications:

	•		long life: the aluminum surface has a natural hard, transparent layer of oxide which substantially precludes further oxidation;
	•		high electrical and thermal conductivity;
	•		nontoxic and nonabsorbent;
	•		excellent moisture barrier even at thicknesses less than the diameter of a human hair;
	•		light weight;
	•		highly reflective and attractive in appearance;
	•		“dead fold” for packaging applications;
	•		the most plentiful metal in the earth’s crust;
	•		the most recycled packaging material in the world; and
	•		attractive cost-to-weight ratio compared to other metals such as copper and tin.

     We have a variety of distinctive product and service capabilities, providing us with a strong competitive position. Our main product lines are the following:

	•		Finstock: Bare aluminum foil and sheet ranging in gauge from 0.002” to 0.007” is widely used as a heat exchanger in air conditioners because it provides more heat transfer area per unit of cost than any other material. Aluminum sheet and foil finstock are used in commercial, residential and automotive applications.
	•		Semi-Rigid Containers: These products are typically made with harder alloys than finstock although the range of gauges is similar, encompassing both foil and light sheet. Formed, disposable aluminum containers are among the most versatile of all packages and are widely used for pre-packaged foods, easily withstanding all normal extremes of heating and freezing.
	•		Flexible Packaging: Aluminum foil is laminated to papers, paperboards and plastic films to make flexible and semi-rigid pouches and cartons for a wide range of food, drink, agricultural and industrial products. The laminating process is known as “converting,” hence the term “converter foil” for rolled aluminum products used in this application.
	•		Transformer Windings: Aluminum sheet cut into strips and insulated is widely used as the conducting medium that forms the windings of electrical transformers widely used on power grids. Aluminum’s relatively low cost is key to this application.

     Facilities. We operate four plants at three locations in the southeastern United States and our divisional offices are located at our corporate headquarters in Franklin, Tennessee.

				Approximate		% of Total				Number of
Plant		Location		Capacity (lbs.)(1)		Capacity				Employees(2)
Huntingdon-West		Huntingdon, TN		235 million			48	%			378	(3)
Huntingdon-East		Huntingdon, TN		130 million			26	%			—	(3)
Salisbury		Salisbury, NC		95 million			19	%			167
Newport		Newport, AR		35 million			7	%			103
Divisional Office		Franklin, TN		—			—				39
Total				495 million			100	%			687

     Huntingdon. Our largest production site is in Huntingdon, Tennessee, with an annual capacity of 365 million pounds. The Huntingdon site is subject to a long-term lease arrangement with the Industrial Development Board of the Town of Huntingdon, pursuant to which we functionally own the facility and can acquire legal title for the nominal sum of $100. The site includes a long established casting and rolling facility which was built in 1967 and acquired from Archer Aluminum by Noranda in 1979, which we refer to as the East Plant. Construction began on a second plant in 1998 and production started in 2000 at a capital cost of $238 million, which we refer to as the West Plant. The two plants are physically separate, but are operated with shared administration and maintenance personnel, and with some sharing of production capabilities. The Huntingdon-West facility is recognized as the most modern rolling facility in North America, and has the lowest conversion cost (excluding metal) for foil stock production in North America according to CRU, an independent business analysis and consultancy group focused in part on the mining and metals sectors.

     Salisbury. This plant was originally constructed in 1965 and has annual capacity of approximately 95 million pounds. The Salisbury plant is one of the largest U.S. producers of intermediate width light gauge product (0.000X” thickness), typically sold to customers who laminate the foil with paper, plastic or cardboard used in flexible packaging applications such as juice boxes. The facility also has a “tension leveling” line which enables production of lithographic sheet, a higher margin item used in the printing industry.

     Newport. The Newport plant is a rolling and finishing operation only and relies on intermediate gauge “reroll” supplied by Salisbury or Huntingdon. We believe this plant has the widest light gauge mills in North America. The Newport plant has a production capacity of approximately 35 million pounds annually.

Seasonality

     We do not experience significant seasonality of demand. Our power contracts have seasonally adjusted pricing which results in fluctuations in our cost of production; the rates from June to September are approximately 45% higher than the rates from October to May.

Employees

     As of December 31, 2008, we employed approximately 2,700 persons, including employees of our joint ventures. On December 4, 2008, we announced a Company-wide workforce and business process restructuring that has reduced our operating costs, conserved liquidity and improved operating efficiencies. We expect this restructuring to generate cash cost savings and operating efficiencies of approximately $23.0 million annually. The restructuring plan involves a total staff reduction of approximately 338 employees and contract workers, or 18% of our workforce. The reduction in the employee work force includes 228 affected employees in our upstream business. These reductions occurred during the fourth quarter of 2008 and have continued in the first quarter of 2009. The reductions at our downstream facilities in Huntingdon, Tennessee, Salisbury, North Carolina, and Newport, Arkansas include 96 affected employees. These reductions were substantially completed during the fourth quarter of 2008.

     As of December 31, 2008, approximately 1,800 of our employees (approximately 66%) at various sites were members of the following unions: the United Steelworkers of America; the International Association of Machinists and Aerospace Workers; the University and Allied Workers Union (“UAWU”); and the Union of Technical, Administrative and Supervisory Personnel (“UTASP”). We believe we have been successful in establishing productive working relationships with these unions. Within the consolidated business segments, there has not been a labor disruption at any of the facilities since 1996. Within the unconsolidated business segments of Gramercy and St. Ann, approximately 70% and 83% of the workforce is unionized, respectively. Since we formed the joint venture in 2004, our management has successfully negotiated a labor contract with the United Steelworkers at Gramercy and labor contracts with each of the two Jamaican-based unions at St. Ann. We believe we have established a good working relationship with each of these groups.

     We are a party to six collective bargaining agreements, including three at our joint ventures, which expire at various times. We entered into a five-year labor contract at New Madrid effective September 1, 2007, which provides for an approximately 3% increase per year in compensation. Two agreements with unions at St. Ann expired in 2007. We agreed to a new contract with the UTASP in December 2008, but negotiations with the UAWU continue at the Industrial Disputes Tribunal, Jamaica’s primary labor arbitrator. We have occasionally experienced brief work slowdowns in connection with these negotiations. A work stoppage, although possible, is not anticipated. All other collective bargaining agreements expire within the next five years. A new collective bargaining agreement at our Newport rolling mill became effective June 1, 2008. The contract at our Salisbury plant expires in the fourth quarter of 2009.

     From time to time, there are shortages of qualified operators of metals processing equipment. In addition, during periods of low unemployment, turnover among less-skilled workers can be relatively high. We believe that our relations with our employees are satisfactory.

     See Item 1A. “Risk Factors-Risks Related to Our Business-The loss of certain members of our management may have an adverse effect on our operating results” and Item 1A. “Risk Factors-Risks Related to Our Business-We could experience labor disputes that disrupt our business.”

Safety

     Our goal is to provide an accident-free workplace. We are committed to continuing and improving upon each facility’s focus on safety in the workplace. We have a number of safety programs in place, which include regular weekly safety meetings and training sessions to teach proper safe work procedures.

     Our executive management, along with site managers and union leadership, are actively involved in supporting and promoting the ongoing emphasis on workplace safety. Improvement in safety performance is a key metric used in determining annual incentive awards for our salaried employees.

Research and Development

     We do not incur material expenses in research and development activities but from time to time participate in various research and development programs. We address research and development requirements and product enhancement by maintaining a staff of technical support, quality assurance and engineering personnel.

Additional Information

     Noranda Aluminum Holding Corporation, which was formerly named Music City Holding Corporation, was incorporated in Delaware on March 27, 2007. We file annual, quarterly and current reports and other information with the SEC. You may read and copy any document we file with the SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our SEC filings are also available to the public at the SEC’s website at http://www.sec.gov.

     You may obtain copies of the information and documents incorporated by reference in this filing at no charge by writing or telephoning us at the following address or telephone number:

Noranda Aluminum Holding Corporation
801 Crescent Centre Drive, Suite 600
Franklin, TN 37067
Attention: Chief Financial Officer
(615) 771-5700

     We also maintain an Internet site at http://www.norandaaluminum.com. We will, as soon as reasonably practicable after the electronic filing of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports if applicable, make available such reports free of charge on our website. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into Form 10-K.

ITEM 1A. RISK FACTORS

     You should carefully consider the risk factors set forth below as well as the other information contained in this Annual Report of
Form 10-K, including our consolidated financial statements and related notes. The risks described below are not the only risks we face. Additional risks not presently known to us or which we currently consider immaterial also may adversely affect us. If any of these risks or uncertainties actually occurs, our business, financial condition and operating results could be materially adversely affected. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

Risks Related to Our Business

Delays in restoring our New Madrid smelter to its full production capacity could materially and adversely affect our business, financial condition, results of operations and cash flows.

     As a result of a major winter storm in Southeastern Missouri the week of January 26, 2009, our New Madrid, Missouri smelter facility experienced a power outage that damaged approximately 75% of New Madrid’s plant capacity. Based on preliminary information and management’s initial assessment, Noranda expects that the smelter could return to full production during the second half of 2009 with partial capacity phased in during the intervening months. Restoration of capacity could take longer if unforeseen issues arise with restart including but not limited to equipment damage and large-scale pot failure and rebuild. At this time, the cost associated with the outage is unknown, as we are still assessing the full impact on our operations. Delays in restoring capacity could materially and adversely affect our business, financial condition, results of operations and cash flows.

     We hold pot line freeze insurance covering up to $77.0 million of losses, which management expects to apply to costs of restoring and restarting the pot lines. We believe that insurance will cover a substantial portion, if not all, of the cost of restoring capacity; however, there can be no assurance that the full amount of the claim submitted by Noranda will be reimbursed, or reimbursed in a timely manner, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

Cyclical fluctuations in the primary aluminum industry cause variability in our earnings and cash flows.

     Our operating results depend on the market for primary aluminum, which is a cyclical commodity with prices subject to global market forces of supply and demand and other related factors such as speculative activities by market participants, production activities by competitors, political and economic conditions, as well as production costs in major production regions. A substantial increase in primary aluminum production capacity could further affect prices. Prices have been historically volatile. Over the past ten years, the average daily LME settlement price has ranged from a low of $0.52 per pound in 1999 to a high of $1.49 per pound in July 2008.

     In the second half of 2008, global economic contraction severely impacted the aluminum industry. Driven by significant weakness in end-use markets such as housing and automotive, aluminum prices experienced a profound decline. In addition, global inventories have grown to near record levels as market demand has continued to decline. The LME price dropped 49% in the last five months of 2008 to $0.65 per pound, to levels at which our production cash costs were higher than our primary metal selling prices. The decline in LME price has had a significant negative impact on our financial results. If LME prices do not increase, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

     Although we have entered into fixed price aluminum sales swaps to manage our exposure to the volatility of LME-based prices, we have hedged only 50% of our expected cumulative primary aluminum shipments through 2012. We also may terminate or restructure our current hedges or enter into new hedging arrangements in the future, which may not be beneficial, depending on subsequent LME price changes. Thus, changes in aluminum prices could materially and adversely affect our business, financial condition, results of operations and cash flows. A prolonged downturn in prices for primary aluminum could significantly reduce the amount of cash available to us to meet our current obligations and fund our long-term business strategies.

     Our significant cost components, specifically our supply of alumina, which we own, and our New Madrid power contract are not tied to the LME price of aluminum. As a result, as the LME prices decrease, our profit margins are reduced which could materially and adversely affect our business, financial condition, results of operations and cash flows.

A downturn in general economic conditions, as well as a downturn in the end-use markets for certain of our products, could materially and adversely affect our business, financial condition, results of operations and cash flows.

     We are currently in a significant economic crisis that has substantially impacted our upstream and downstream markets. Fourth quarter value-added primary and downstream volumes were down 30% and 12%, respectively, versus fourth quarter 2007. Continued decline in 2009 would have a corresponding negative impact on our business, financial condition, results of operations and cash flows.

     Historically, global supply and demand for primary aluminum have fluctuated in part due to general economic and market conditions in the United States and other major global economies, including China. In addition, certain end-use markets for our rolled products, such as the housing, construction and transportation industries, experience demand cycles that are highly correlated to the general economic environment. Economic downturns in regional and global economies or a decrease in manufacturing activity in industries such as construction, packaging and consumer goods, all of which are sensitive to a number of factors outside our control, could materially and adversely affect our business, financial condition, results of operations or cash flows.

Losses caused by disruptions in the supply of electrical power could materially and adversely affect our business, financial condition, results of operations and cash flows.

     We are subject to losses associated with equipment shutdowns, which may be caused by the loss or interruption of electrical power to our facilities due to unusually high demand, blackouts, equipment failure, natural disasters or other catastrophic events. We use large amounts of electricity to produce primary aluminum, and any loss of power which causes an equipment shutdown can result in the hardening or “freezing” of molten aluminum in the pots where it is produced. If this occurs, we may experience significant losses if the pots are damaged and require repair or replacement, a process that could limit or shut down our production operations for a prolonged period of time. During the week of January 26, 2009, power supply to our New Madrid smelter was interrupted numerous times because of a severe ice storm in Southeastern Missouri. Although we had full capability to continue full production throughout the storm, our electricity suppliers’ inability to return power to the smelter in a timely fashion caused a loss of approximately 75% of the smelter capacity. We continue to assess the damage from this significant event. Delay in rebuilding and restarting from this event could have a material adverse effect on our business, financial condition, results of operations and cash flows.

     Although we maintain property and business interruption insurance to mitigate losses resulting from catastrophic events, we may be required to pay significant amounts under the deductible provisions of those insurance policies. In addition, our coverage may not be sufficient to cover all losses, or may not cover certain events. Certain of our insurance policies do not cover any losses we may incur if our suppliers are unable to provide us with power during periods of unusually high demand.

Our operations consume substantial amounts of energy and our profitability may decline if energy costs rise.

     Electricity and natural gas are essential to our businesses, which are energy intensive. The costs of these resources can vary widely and unpredictably. The factors that affect our energy costs tend to be specific to each of our facilities. Electricity is a key cost component at our New Madrid smelter. We have a power purchase agreement with AmerenUE, pursuant to which we have agreed to purchase substantially all of New Madrid’s electricity through May 2020. AmerenUE must obtain the approval of the Missouri Public Service Commission to increase the rates that it charges. In January 2009, the Missouri Public Service Commission approved a rate increase and a fuel adjustment clause. The approved rate change increased our power costs by approximately 6%. The impact of an increase in our costs due to the fuel adjustment clause cannot be estimated at this time. Our electricity costs may increase further if AmerenUE applies for and is granted additional rate increases in the future. Missouri legislative bodies are currently considering legislation that would permit AmerenUE to include in its cost base financing costs for construction work in progress. The passage of such legislation could materially increase our New Madrid annual power costs. See Item 1. “Business—Primary Metal—Upstream Business—Raw Materials and Supply” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Company Overview—Production Costs” for additional details.

     Electricity is also a key cost component at our rolling mill facilities. Electricity is purchased through medium-term contracts at competitive industrial rates from regional utilities supplied through local distributors. If we are unable to obtain power at affordable rates upon termination of these contracts, we may be forced to curtail or idle a portion of our production capacity, which would lower our revenues and adversely affect the profitability of our operations.

     Natural gas is the largest cost component at our Gramercy refinery and a key cost component at our rolling mill facilities. Our Gramercy refinery has contracts to guarantee secure supply from two suppliers at an index-based price. See Item 1. “Business—Primary Metal—Upstream Business—Raw Materials and Supply” for additional details. Our downstream business purchases natural gas on the open market. The price of natural gas can be particularly volatile. As a result, our natural gas costs may fluctuate dramatically, and we may not be able to mitigate the effect of higher natural gas costs on our cost of sales. Any substantial increases in energy costs could cause our operating costs to increase and could materially and adversely affect our business, financial condition, results of operations and cash flows. We enter into financial swaps to offset changes in natural gas prices.

     Fuel is a substantial component of the cost structure at our St. Ann bauxite mine. Fuel is generally linked to the price of oil. Our fuel costs at St. Ann may fluctuate, and we may not be able to mitigate the effect of higher fuel costs. Our fuel is provided under an indexed-based contract. See Item 1. “Business-Primary Metal-Upstream Business-Raw Materials and Supply” for additional details. Changes in the index will have an impact on our cost structure. Any increases in fuel costs could cause our operating costs to increase and could materially and adversely affect our business, financial condition, results of operations and cash flows.

We may encounter increases in the cost of raw materials, which could cause our cost of goods sold to increase, thereby materially and adversely affecting our business, financial condition, results of operations or cash flows and limiting our operating flexibility.

     We require substantial amounts of raw materials in our business, consisting principally of bauxite, alumina, primary aluminum, recycled aluminum and aluminum scrap. We receive alumina at cost plus freight from our Gramercy refinery. The alumina that we receive from Gramercy is purchased under a take-or-pay contract. We are obligated to take receipt of our share of the alumina production at Gramercy, even if such amounts are in excess of our requirements. As costs increase at Gramercy, including natural gas prices, our cost of sales increases, which could materially and adversely affect our business, financial condition, results of operations and cash flows. This contract could potentially require us to sell excess alumina at market prices that could be substantially lower than our cash cost of production which could materially and adversely affect our business, financial condition, results of operations and cash flows.

     Prices for the raw materials used by our downstream business, including primary aluminum, recycled aluminum and alloying elements, are subject to continuous volatility and may increase from time to time. Our sales are generally made on the basis of a “margin over metal price,” but if other raw material prices increase we may not be able to pass on the entire cost of the increases to our customers or offset fully the effects of high raw materials costs through productivity improvements, which could materially and adversely affect our business, financial condition, results of operations or cash flows. In addition, a sustained material increase in raw materials prices may cause some of our customers to substitute other materials for our products.

Our hedging activities may not be effective in reducing the variability of our revenues.

     We have entered into derivative transactions related to a substantial portion of our expected primary aluminum shipment volumes through 2012, which enables us to receive a minimum price for such portion of our expected shipments. If we do not undertake further hedging activities, we will continue to have price risk with respect to the unhedged portion of our primary aluminum shipments. In addition, our actual future shipment volumes may be higher or lower than we estimated. Further, the derivative instruments we utilize for our hedging activities are based on posted market prices for primary aluminum, which may differ from the prices that we realize in our operations. As a result of these factors, our hedging activities may be less effective than expected in reducing the economic variability of our future revenues. We have hedged only 50% of our expected cumulative primary aluminum shipments through 2012.

     Our hedges, which are structured as fixed price aluminum sale swaps, had a value of $401.9 million at December 31, 2008. This derivative asset reflects the present value of the difference between the current forward price curve for aluminum and the price of our aluminum hedges. We are under no obligation under our existing senior secured credit facilities, our outstanding notes or otherwise to maintain our existing hedging arrangements or to enter into further hedging arrangements. Future market prices for aluminum could decline materially, reducing our revenues and cash flows. For additional information regarding our hedging activities, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk-Commodity Price Risks.”

     Subsequent to December 31, 2008, we entered into fixed price aluminum purchase swaps covering approximately 523.6 million pounds of aluminum purchases in 2010, 2011 and 2012 at approximately $0.75 per pound in order to lock in some of the asset value of our current hedges. This action is based on management’s expectation of higher future LME prices which would decrease the value of our current hedges. If management’s expectation proves incorrect, the hedges will not offset all of a decline in prices. This result could materially and adversely affect our business, financial condition, results of operations and cash flows.

We face risks relating to our joint ventures that we do not entirely control.

     Some of our activities are, and will in the future be, conducted through entities that we do not entirely control or wholly own. These entities include our Gramercy and St. Ann joint ventures. Risks we face in connection with these joint ventures include the following:

	•		Under the governing documents for these joint ventures, we do not solely determine certain key matters, such as the timing and amount of cash distributions from these entities or the terms on which they supply us with raw material. As a result, our ability to generate cash from and set supply terms with these entities may be more restricted than if they were wholly owned entities.
	•		In the event our joint venture partner is not able to meet its obligations under the governing documents, the activities of the joint ventures may be disrupted or we may be required to make significant cash investments in order to protect our interests.

	•		Pursuant to the agreement governing the joint ventures, we are currently in a period of renegotiation with our joint venture partner concerning the future of the joint ventures after December 31, 2010. These negotiations may not conclude successfully and, in that case, may result in changes in cost or supply of the raw materials that we purchase from these joint ventures.
	•		We may be required to make cash contributions to the joint ventures on a regular basis in order to provide for their ongoing operational costs, maintenance capital expenditure and working capital needs. To the extent these needs exceed the joint ventures’ third-party revenues, we may be required to make a significant cash investment.
	•		The agreements governing the joint ventures contain restrictions on our ability to transfer our interest in the joint ventures, including a right of first refusal to our joint venture partner, a requirement that the transferee have a minimum level of tangible net worth and other requirements.
	•		St. Ann pays the GOJ according to a negotiated fiscal structure with multiple components. St. Ann is currently in the process of negotiating revisions to this fiscal structure. See Item 1. “Business-Primary Metal-Upstream Business-St. Ann Bauxite Mine.” Possible revisions could result in a net increase in our per pound net cash cost to produce primary aluminum. If this increase is substantial, it could materially and adversely affect our business, financial condition, results of operations and cash flows.
	•		Approximately 50% of the bauxite mined at St. Ann is sold to a third-party. Revenues from these sales reduce the net cost of bauxite to Gramercy. We have a sales contract for 2009 and 2010 with this third-party purchaser. In the event the third-party purchaser is unable to honor that contract, or renew the contract after 2010, the cost of our bauxite could increase, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

We may be unable to continue to compete successfully in the highly competitive markets in which we operate.

     We are engaged in a highly fragmented and competitive industry. We compete with a number of large, well-established companies in each of the markets in which we operate. Our upstream business competes with a large number of other value-added metals producers on an international, national, regional and local basis. We also compete, to a much lesser extent, with primary metals producers, who typically sell to very large customers requiring regular shipments of large volumes of metals. Our downstream business competes in the production and sale of rolled aluminum products with a number of other aluminum rolling mills, including large, single-purpose sheet mills, continuous casters and other multi-purpose mills. Aluminum also competes with other materials, such as steel, copper, plastics, composite materials and glass, among others, for various applications. In the past, for certain applications customers have demonstrated a willingness to substitute other materials for aluminum. In both businesses, some of our competitors are larger than us and have greater financial and technical resources than we do. These larger competitors may be better able to withstand reductions in price or other adverse industry or economic conditions. A current or new competitor may also add or build new capacity, which could diminish our profitability by decreasing price. New competitors could emerge from within North America or globally, including China. If we do not compete successfully, our business, financial condition, results from operations and cash flows could be materially and adversely affected.

     In addition, our downstream business competes with other rolled products suppliers, principally multi-purpose mills, on the basis of quality, price, timeliness of delivery, technological innovation and customer service. One primary competitive factor, particularly in the flat rolled business, is price. We may be required in the future to reduce fabrication prices or shift our production to products that generally yield lower fabrication prices in order to remain at full capacity, which could impact our level of profitability. In addition, technological innovation is important to our customers and if we are unable to lead or effectively meet new innovations to meet our customers’ needs, our financial performance could be materially and adversely impacted. Increased competition in any of our businesses could have a material and adverse effect on our business, financial condition, results of operations and cash flows.

     Due to the fall-off in demand of our upstream and downstream products in the fourth quarter of 2008, the competitive landscape has become more challenging. Although 2009 contract pricing has increased on average over 2008, spot pricing has declined. Without a recovery of demand in 2009, contract negotiations during 2009 for 2010 volume will be more difficult. Loss of volume during contract negotiations in a declining environment is a threat that could materially and adversely affect our business, financial condition, results of operations and cash flows.

Aluminum may become less competitive with alternative materials, which could reduce our share of industry sales, lower our selling prices and reduce our sales volumes.

     Aluminum competes with other materials such as steel, copper, plastics, composite materials and glass for various applications. Higher aluminum prices relative to substitute materials tend to make aluminum products less competitive with these alternative materials. Environmental or other regulations may increase our costs and be passed on to our customers, making our products less competitive. The willingness of customers to accept aluminum substitutions, or the ability of large customers to exert leverage in the marketplace to affect pricing for fabricated aluminum products, could result in a reduced share of industry sales or reduced prices for our products and services, which could decrease revenues or reduce volumes, either of which could materially and adversely affect our business, financial condition, results of operations and cash flows.

If we were to lose order volumes from any of our largest customers, our revenues and cash flows could be reduced.

     Our business is exposed to risks related to customer concentration. In 2008, our ten largest customers were responsible for 31% of our consolidated revenues. No one customer accounted for more than 5% of our consolidated revenues in 2008. A loss of order volumes from, or a loss of industry share by, any major customer could materially and adversely affect our financial condition and results of operations by lowering sales volumes, increasing costs and lowering profitability. In addition, our customers may become involved in bankruptcy or insolvency proceedings or default on their obligations to us. Our balance sheet reflected an allowance for doubtful accounts totaling $0.2 million at December 31, 2007 and $1.6 million at December 31, 2008.

We do not have long-term contractual arrangements with a significant majority of our customers, and our revenues and cash flows could be reduced if our customers switch their suppliers.

     A significant majority of our customer contracts have a term of one year or less, although we have long-term relationships with many of our customers. Many of these customers purchase products and services from us on a purchase order basis and may choose not to continue to purchase our products and services. The loss of these customers or a significant reduction in their purchase orders could have a material and adverse impact on our sales volume and business, or cause us to reduce our prices, diminishing profitability.

Our business requires substantial capital investments that we may be unable to fulfill.

     Our operations are capital intensive. Capital expenditures were $41.6 million, $41.9 million and $51.7 million for 2006, 2007 and 2008, respectively, excluding our joint ventures. Including 50% of our joint ventures’ capital expenditures, capital expenditures were $53.0 million, $52.3 million and $66.5 million for 2006, 2007 and 2008, respectively.

     We may not generate sufficient operating cash flows and our external financing sources may not be available in an amount sufficient to enable us to make anticipated capital expenditures, service or refinance our indebtedness or fund other liquidity needs. If we are unable to make upgrades or purchase new plant and equipment, our business, financial condition, results of operations and cash flows could be materially and adversely affected by higher maintenance costs, lower sales volumes due to the impact of reduced product quality and other competitive influences.

We may be materially and adversely affected by environmental, safety, production and product regulations or concerns.

     Our operations are subject to a wide variety of U.S. federal, state, local and non-U.S. environmental laws and regulations, including those governing emissions to air, discharges to waters, the generation, use, storage, transportation, treatment and disposal of hazardous materials and wastes and employee health and safety matters. Compliance with environmental laws and regulations can be costly, and we have incurred and will continue to incur costs, including capital expenditures, to comply with these requirements. As these regulatory costs increase and are passed through to our customers, our products may become less competitive than other materials, which could reduce our sales. If we are unable to comply with environmental laws and regulations, we could incur substantial costs, including fines and civil or criminal sanctions, or costs associated with upgrades to our facilities or changes in our manufacturing processes in order to achieve and maintain compliance. In addition, environmental requirements change frequently and have tended to become more stringent over time. We cannot predict what environmental laws or regulations will be enacted or amended in the future, how existing or future laws or regulations will be interpreted or enforced, or the amount of future expenditures that may be required to comply with such laws or regulations. Our costs of compliance with current and future environmental requirements could materially and adversely affect our business, financial condition, results of operations and cash flows.

     In addition, as an owner and operator of real property and a generator of hazardous waste, we may be subject to environmental cleanup liability, regardless of fault, pursuant to Superfund or analogous state or non-U.S. laws. Thus, we could incur substantial costs, including cleanup costs and costs arising from third-party property damage or personal injury claims, relating to environmental contamination at properties currently or formerly operated by us or at third-party sites at which wastes from our operations have been disposed. Contaminants have been discovered in the soil and/or groundwater at some of our facilities. The discovery of additional contaminants or the imposition of additional cleanup obligations at these or other sites could result in significant liability. In addition, because we use or process hazardous substances in our operations, we may be liable for personal injury claims or workers’ compensation claims relating to exposure to hazardous substances.

     Xstrata has agreed to indemnify us through May 2010 from certain environmental liabilities relating to Xstrata’s operation of the business. If Xstrata becomes unable to, or otherwise does not, comply with its indemnity obligations, or if certain environmental conditions or other liabilities for which we are obligated are not subject to indemnification, we could be subject to significant unforeseen liabilities.

Some of our facilities are located in areas that have been subject to natural disasters. Future natural disasters in these areas could damage our facilities and disrupt our operations.

     Our aluminum smelter is located in New Madrid, Missouri on the banks of the Mississippi River and near the New Madrid fault line, in an area that may be subject to natural disasters such as floods, tornados, ice storms and earthquakes. As experienced during the January 2009 ice storm and subsequent power outages at our New Madrid facility, when such a disaster occurs, it can damage the facility in question and disrupt our production of aluminum. Our bauxite mine is located in St. Ann, Jamaica and our refinery is located in Gramercy, Louisiana, areas that may be exposed to hurricanes. In addition, our other facilities may be subject to natural disasters. We maintain insurance to protect us from events that may be caused by floods, earthquakes, tornados and hurricanes in amounts that we believe are commercially reasonable and sufficient to protect our interests. There can be no assurance, however, that such insurance would be available on a timely basis or adequate to completely reimburse us for the losses that might be sustained or to provide funds for the reconstruction of our facilities, and in any event such insurance would not enable us to immediately reconstruct our facilities to avoid a suspension or disruption of our business while reconstruction proceeded to completion or alternative sourcing was located. In addition, our hedging arrangements could require us to deliver aluminum even if we are unable to produce such aluminum, which could cause us to incur unexpected costs in purchasing aluminum on the open market.

Our business is subject to unplanned business interruptions which may adversely affect our performance.

     The production of aluminum is subject to unplanned events such as accidents, supply interruptions, transportation interruptions, human error, mechanical failure and other contingencies. Operational malfunctions or interruptions at one or more of our facilities could cause substantial losses in our production capacity. For example, during January 2009, an ice storm caused a power outage at our New Madrid smelter, causing a loss of approximately 75% of the smelter’s capacity. As such events occur, we may experience substantial business loss and the need to purchase one of our integrated raw materials at prices substantially higher than our normal cost of production, which could materially and adversely affect our business, financial condition, results of operations and cash flows. Furthermore, our vertical integration may cause operational malfunctions or interruptions at an upstream facility to materially and adversely affect the performance or operation of our downstream facilities. Such interruptions may harm our reputation among actual and potential customers, potentially resulting in a loss of business. Although we maintain property and business interruption insurance to mitigate losses resulting from catastrophic events, we may be required to pay significant amounts under the deductible provisions of those insurance policies. In addition, our coverage may not be sufficient to cover all losses, or may not cover certain events. To the extent these losses are not covered by insurance, our financial condition, results of operations and cash flows could be materially and adversely affected.

We could experience labor disputes that disrupt our business.

     As of December 31, 2008, approximately 66% of our employees are represented by unions or equivalent bodies and are covered by collective bargaining or similar agreements which are subject to periodic renegotiation. Collective bargaining agreements for all of our union employees expire within the next five years. A new collective bargaining agreement at our Newport rolling mill, where approximately 120 employees are represented by the International Association of Machinists, became effective on June 1, 2008. Two collective bargaining agreements at our St. Ann joint venture expired in 2007. Consistent with Jamaican labor practices, negotiations with each union were protracted. As of the date of this report, our UAWU contract is still unresolved and is in arbitration at the Industrial Disputes Tribunal. We have occasionally experienced brief work slowdowns in connection with these negotiations. The contract at the Salisbury plant expires in the fourth quarter of 2009.

     Labor negotiations may not conclude successfully and, in that case, may result in a significant increase in the cost of labor or may break down and result in work stoppages or labor disturbances, disrupting our operations. Any such cost increases, stoppages or disturbances could materially and adversely affect our business, financial condition, results of operations or cash flows by limiting plant production, sales volumes and profitability.

Our operations have been and will continue to be exposed to various business and other risks, changes in conditions and events beyond our control in foreign countries.

     We are, and will continue to be, subject to financial, political, economic and business risks in connection with our non-U.S. operations. We have made investments and carry on production activities outside the United States via our joint venture bauxite mining operations in St. Ann, Jamaica. In addition to the business risks inherent in operating outside the United States, economic conditions may be more volatile, legal and regulatory systems less developed and predictable and the possibility of various types of adverse governmental action more pronounced.

     In addition, our revenues, expenses, cash flows and results of operations could be affected by actions in foreign countries that more generally affect the global market for primary aluminum, including inflation, fluctuations in currency and interest rates, competitive factors, civil unrest and labor problems. Our operations and the commercial markets for our products could also be materially and adversely

affected by acts of war, terrorism or the threat of any of these events as well as government actions such as controls on imports, exports and prices, tariffs, new forms of taxation or changes in fiscal regimes and increased government regulation in countries engaged in the manufacture or consumption of aluminum products. Unexpected or uncontrollable events or circumstances in any of these markets could materially and adversely affect our business, financial condition, results of operations or cash flows.

The loss of certain members of our management may have an adverse effect on our operating results.

     Our success will depend, in part, on the efforts of our senior management and other key employees. These individuals possess sales, marketing, engineering, manufacturing, financial and administrative skills that are critical to the operation of our business. If we lose or suffer an extended interruption in the services of one or more of our senior officers, our business, financial condition, results of operations and cash flows may be materially and adversely affected. Moreover, the market for qualified individuals may be highly competitive and we may not be able to attract and retain qualified personnel to replace or succeed members of our senior management or other key employees, should the need arise.

Past and future acquisitions or divestitures may adversely affect our financial condition.

     We have grown partly through the acquisition of other businesses, including our joint venture businesses acquired in 2004. As part of our strategy, we may continue to pursue acquisitions, divestitures or strategic alliances, which may not be completed or, if completed, may not be ultimately beneficial to us. There are numerous risks commonly encountered in business combinations, including the risk that we may not be able to complete a transaction that has been announced, effectively integrate businesses acquired or generate the cost savings and synergies anticipated. Failure to do so could materially and adversely affect our business, financial condition, results of operations and cash flows.

The insurance that we maintain may not fully cover all potential exposures.

     We maintain property, casualty and workers’ compensation insurance, but such insurance does not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered. We may incur losses beyond the limits, or outside the coverage, of our insurance policies, including liabilities for environmental compliance or remediation. In addition, from time to time, various types of insurance for companies in our industries have not been available on commercially acceptable terms or, in some cases, have not been available at all. In the future, we may not be able to obtain coverage at current levels, and our premiums may increase significantly on coverage that we maintain. For example, our $77.0 million pot line freeze coverage may not cover all of our losses of the outage caused by the January 2009 ice storm. In addition, the outage may have an impact on our ability in the future to obtain insurance at similar levels and costs which could materially and adversely affect our business, financial condition, results of operations and cash flows.

Neither our historical nor our pro forma financial information may be representative of results we would have achieved as an independent company or our future results.

     Certain of the historical financial information we have included in this filing has been derived from Noranda Aluminum, Inc.’s predecessor and pre-predecessor consolidated financial statements and does not necessarily reflect what our results of operations, financial position or cash flows would have been had we been an independent company during the periods presented. For this reason, as well as the inherent uncertainties of our business, the historical financial information does not necessarily indicate what our results of operations, financial position, cash flows or costs and expenses will be in the future. Although our pro forma adjustments reflect certain changes that have occurred in our capital and cost structure as a result of the acquisition by Apollo and other adjustments, they do not necessarily indicate the actual changes in capital and cost structure that may follow from the acquisition by Apollo and as we operate as an independent company.

Risks Related to our Indebtedness

We have substantial indebtedness, which could adversely affect our ability to meet our obligations under the notes and may otherwise restrict our activities.

     We have substantial indebtedness. As of December 31, 2008, our total indebtedness was $1,346.6 million (net of unamortized discount of $1.8 million). Based on the amount of indebtedness outstanding and interest rates at December 31, 2008, our annualized cash interest expense is approximately $74.2 million, all of which represents interest expense on floating-rate obligations (and thus is subject to increase in the event interest rates were to rise), prior to any consideration of the impact of interest rate swaps. Of this amount, we have the right under the applicable indebtedness to pay approximately $52.0 million by issuing additional indebtedness rather than in cash. In the event we exercise such right, our debt will increase. Our subsidiaries’ ability to generate sufficient cash flow from operations to make scheduled payments on their and our debt depends on a range of economic, competitive and business factors, many of which are outside their and our control. Our subsidiaries’ inability to generate cash flow sufficient to satisfy their and our debt obligations, or to refinance their and our obligations on commercially reasonable terms, could materially and adversely affect our business, financial condition, results of operations or cash flows and could require us and our subsidiaries to do one or more of the following:

	•		raise additional capital through debt or equity issuances or both;
	•		cancel or scale back current and future business initiatives; or
	•		sell businesses or properties.

     Our and our subsidiaries’ substantial indebtedness could have important consequences, including:

	•		making it more difficult for us to satisfy our obligations under our indebtedness;
	•		limiting our ability to borrow money for our working capital, capital expenditures, debt service requirements or other corporate purposes;
	•		requiring our subsidiaries to dedicate a substantial portion of their cash flow to payments on their and our indebtedness, which will reduce the amount of cash flow available for working capital, capital expenditures, product development and other corporate requirements;
	•		increasing our vulnerability to general economic and industry conditions;
	•		placing us at a competitive disadvantage to our less leveraged competitors;
	•		limiting our ability to respond to business opportunities; and
	•		subjecting us and our subsidiaries to restrictive covenants, which, if we and our subsidiaries fail to comply with these covenants, could result in an event of default under their and our debt which, if not cured or waived, could materially and adversely affect our business, financial condition, results of operations and cash flows.

Because Noranda HoldCo is the sole obligor on the HoldCo notes, and its subsidiaries do not guarantee its obligations under the HoldCo notes or have any obligation with respect to the HoldCo notes, the HoldCo notes are structurally subordinated to the debt and liabilities of its subsidiaries and joint ventures.

     Noranda HoldCo has no operations of its own and derives all of its revenues and cash flow from its subsidiaries. Our subsidiaries and joint ventures are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to the HoldCo notes, or to make any funds available therefore, whether by dividends, loans, distributions or other payments.

     As of December 31, 2008, the aggregate amount of indebtedness and other liabilities of our subsidiaries (including trade payables) structurally senior to the HoldCo notes was approximately $1,679.3 million. Further, approximately $25.0 million was undrawn under the existing senior secured credit facilities and our subsidiaries are liable with respect to any liabilities we may incur in connection with our hedging activities (discussed below). We had $7.0 million in outstanding letters of credit at December 31, 2008, which reduced our availability under the existing senior secured credit facilities to $18.0 million. Holders of the HoldCo notes will not have any claim as creditors against our subsidiaries or joint ventures. None of our subsidiaries or joint ventures guarantee our obligations under the HoldCo notes. The HoldCo notes are structurally subordinated to any existing and future indebtedness and other liabilities of any of our subsidiaries and joint ventures, even if those obligations do not constitute indebtedness.

     Any right that we have to receive any assets of any of our subsidiaries and joint ventures upon the liquidation or reorganization of those subsidiaries and joint ventures, and the consequent rights of holders of the HoldCo notes to realize proceeds from the sale of any of those subsidiaries’ and joint ventures’ assets, will be effectively subordinated to the claims of those entities’ creditors, including holders of existing notes, lenders under the existing senior secured facilities, trade creditors and holders of preferred equity interests of those entities. In the event of a bankruptcy, liquidation or reorganization of any of our subsidiaries or joint ventures, these entities will pay the holders of their debts,

holders of preferred equity interests and their trade creditors before they will be able to distribute any of their assets to us. Moreover, Noranda HoldCo is a guarantor of the existing senior secured credit facilities and the AcquisitionCo notes, and as such, is an obligor of any indebtedness outstanding under such credit facilities and notes and has pledged all of its equity interests in Noranda AcquisitionCo to secure its obligations under the existing senior secured credit facilities. As of December 31, 2008, there was a $393.5 million term B loan outstanding, $225.0 million revolving credit facility outstanding, and $18.0 million available for borrowing under the existing senior secured credit facilities. Accordingly, there might only be a limited amount of assets available to satisfy your claims as a holder of the HoldCo notes upon an acceleration of the maturity of the HoldCo notes. We cannot assure you that if our subsidiaries and joint ventures have their debt accelerated we will be able to repay the HoldCo notes. We also cannot assure you that our and our subsidiaries’ assets will be sufficient to fully repay the HoldCo notes and our subsidiaries’ other indebtedness.

Restrictive covenants under the indentures governing the notes and the existing senior secured credit facilities may adversely affect our operational flexibility.

     The terms of the indentures governing the notes and the existing senior secured credit facilities contain, and any future indebtedness we incur may contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and our subsidiaries, including restrictions on our and our subsidiaries’ ability to, among other things:

	•		incur or guarantee additional debt;
	•		pay dividends or make distributions to our stockholders;
	•		repurchase or redeem capital stock;
	•		make loans, capital expenditures, acquisitions or investments;
	•		sell assets including stock of subsidiaries;
	•		create or incur liens;
	•		merge or consolidate with other companies or transfer all or substantially all of our assets;
	•		enter into transactions with our affiliates; and
	•		engage in certain business activities.

     As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.

     A failure to comply with the covenants contained in the existing senior secured credit facilities and the indentures governing the notes or any future indebtedness could result in an event of default under the existing senior secured credit facilities, the indentures governing the notes or such future indebtedness, which, if not cured or waived, could have a material adverse affect on our business, financial condition and results of operations. In the event of any default under the existing senior secured credit facilities, the indentures governing the notes or our other indebtedness, our and our subsidiaries’ debt holders and lenders:

	•		will not be required to lend any additional amounts to us and our subsidiaries;
	•		could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable;
	•		may have the ability to require us to apply all of our available cash to repay these borrowings; or
	•		may prevent us and our subsidiaries from making debt service payments under our and our subsidiaries’ other agreements, including the indentures governing the notes, any of which could result in an event of default under the notes.

     If the indebtedness under the existing senior secured credit facilities or our other indebtedness, including the notes, were to be accelerated, there can be no assurance that our and our subsidiaries’ assets would be sufficient to repay such indebtedness in full.

Despite our substantial indebtedness, we and our subsidiaries may still be able to incur significantly more debt. This could increase the risks associated with our substantial leverage, including our ability to service our indebtedness.

     The terms of the indentures governing the notes contain, and the existing senior secured credit facilities contain, restrictions on our and/or our subsidiaries’ ability to incur additional indebtedness. These restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Accordingly, we and our subsidiaries could incur significant additional indebtedness in the future, much of which could constitute secured or senior indebtedness. At December 31, 2008, Noranda AcquisitionCo had $18.0 million available for additional borrowing and potential letters of credit under the existing revolving credit facility, all of which would be secured. The more leveraged we and our subsidiaries become, the more we and our subsidiaries, and in turn our security holders, become exposed to the risks described above under “—We have substantial indebtedness, which could adversely affect our ability to meet our obligations under the notes and may otherwise restrict our activities.”

Repayment of our debt, including the notes, is dependent on cash flow generated by our subsidiaries.

     Noranda AcquisitionCo is the issuer of the Senior Floating Rate Notes due 2015, and Noranda HoldCo is the issuer of the Senior Floating Rate Notes due 2014, collectively referred to as the “Issuers”. The Issuers are holding companies with no operations or assets of their own. Our subsidiaries and joint ventures own all of our assets and conduct substantially all of our operations. Accordingly, repayment of our indebtedness, including the notes, is dependent, to a significant extent, on the generation of cash flow by our subsidiaries and joint ventures and their ability to make such cash available to us, by dividend, debt repayment or otherwise.

     Our subsidiaries and joint ventures may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness, including the notes. Each subsidiary and joint venture is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from them. The terms of the existing senior secured credit facilities and the terms of the indentures governing the notes significantly restrict our subsidiaries from paying dividends and otherwise transferring assets to us. The terms of each of those debt instruments provide our subsidiaries with “baskets” that can be used to make certain types of “restricted payments,” including dividends or other distributions to us. For example, pursuant to the indenture governing the AcquisitionCo notes, the ability of Noranda AcquisitionCo and its subsidiaries to make such payments is governed by a formula based on 50% of its consolidated net income (as defined in such indenture). In addition, as a condition to making such payments to Noranda HoldCo based on such formula, Noranda AcquisitionCo must have a fixed charge coverage ratio of at least 2.0 to 1 after giving effect to any such payments.

     We cannot assure you that our subsidiaries will have sufficient payment capacity under the existing senior secured credit facilities or the notes in order to make funds available to us to pay interest on the notes or make payments upon a change of control or payments at the maturity of the notes. In particular, the HoldCo notes mature earlier than the AcquisitionCo notes, and there is no assurance that we will have sufficient capacity under our baskets for the AcquisitionCo notes to repay the principal amount of the HoldCo notes due at maturity. In addition, the terms of any future indebtedness incurred by us or any of our subsidiaries may include additional restrictions on our and their ability to make funds available to us to make payments on the notes, which may be more restrictive than those contained in the terms of the existing senior secured credit facilities or the existing notes.

     In the event the Issuers do not have sufficient cash available to make any required payments on the notes, with respect to interest payments, they may elect to pay AcquisitionCo PIK interest and/or HoldCo PIK interest, or in the case of interest or other payments they and their subsidiaries will be required to adopt one or more alternatives, such as refinancing all of their and their subsidiaries’ indebtedness, obtaining the consents from the lenders in respect of that indebtedness, selling equity securities or seeking capital contributions from their affiliates. None of their affiliates is obligated to make any capital contributions, loans or other payments to them with respect to their obligations on the notes.

     Further, we cannot assure you that any of the foregoing actions could be effected on satisfactory terms, if at all, or that any of the foregoing actions would enable us to refinance our or our subsidiaries’ indebtedness or pay the required amounts on the notes, or that any such actions would be permitted by the terms of the indentures governing the notes or the terms of any other debt of ours or our subsidiaries then in effect.

     While the indentures governing the notes limit the ability of our subsidiaries and joint ventures to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to certain qualifications and exceptions. In the event that we do not receive distributions from our subsidiaries or joint ventures, we may be unable to make required principal and interest payments on our indebtedness, including the notes.

Our variable-rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

     Substantially all of our and our subsidiaries’ indebtedness, including the notes and borrowings under the existing senior secured credit facilities, are subject to variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase, resulting in a reduction of our net income, even if the amount borrowed remains the same. As of December 31, 2008, outstanding debt was $1,346.6 million. A 1% increase in the interest rate would increase our annual interest expense by $13.5 million, prior to any consideration of the impact of interest rate swaps.

If we or our subsidiaries default on obligations to pay other indebtedness, we may not be able to make payments on the notes.

     Any default under the agreements governing our or our subsidiaries’ indebtedness, including a default under the existing senior secured credit facilities that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness could prohibit us from making payments of principal, premium, if any, or interest on the notes and could substantially decrease the market value of the notes. If we and our subsidiaries are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, or interest on our and their indebtedness, or if we or our subsidiaries otherwise fail to comply with the various covenants in the instruments governing our and their indebtedness (including the existing senior secured credit facilities and the indentures governing the notes), we and our subsidiaries could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest. More specifically, the lenders under the existing revolving credit facility could elect to terminate their commitments and cease making further loans, such lenders along with the lenders under the existing term loan could institute foreclosure proceedings against our and our subsidiaries’ assets, and we and our subsidiaries could be forced into bankruptcy or liquidation. We may in the future need to seek waivers from the required lenders under the existing senior secured credit facilities to avoid being in default. If we and our subsidiaries breach the covenants under the existing senior secured credit facilities and seek a waiver, we and our subsidiaries may not be able to obtain a waiver from the required lenders. If this occurs, we and our subsidiaries would be in default under the existing senior secured credit facilities, the lenders could exercise their rights as described above, and we and our subsidiaries could be forced into bankruptcy or liquidation.

We may not be able to generate sufficient cash to service all of our indebtedness, including the notes, and may be forced to take other actions to satisfy our obligations under our indebtedness that may not be successful.

     The Issuers have no operations of their own and conduct their operations through their operating subsidiaries and joint ventures. As a result, we depend on those entities for dividends and other payments to generate the funds necessary to meet our financial obligations, including payments on our indebtedness. We cannot be certain that our earnings and the earnings of our operating subsidiaries will be sufficient to allow us to make payments in respect of the notes and meet our other obligations.

     Our subsidiaries’ ability to generate cash from operations will depend upon, among other things:

	•		their future financial and operating performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors, many of which are beyond their control; and
	•		the future availability of borrowings under the existing senior secured credit facilities, which depends on, among other things, complying with the covenants in the existing senior secured credit facilities.

     We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under the existing senior secured credit facilities or otherwise, in an amount sufficient to fund our liquidity needs, including the payment of principal and interest on the notes. See “Cautionary Statement Concerning Forward-Looking Statements” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources.”

     If our and our subsidiaries’ cash flows and capital resources are insufficient to service our indebtedness, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. Our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our and our subsidiaries’ business operations. In addition, the terms of existing or future debt agreements, including the existing senior secured credit facilities and the indentures governing the notes, may restrict us from adopting some of these alternatives. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions for fair market value or at all. Furthermore, any proceeds that we could realize from any such dispositions may not be adequate to meet our debt service obligations then due. Also, Apollo has no continuing obligation to provide us or our subsidiaries with debt or equity financing.

Federal and state statutes may allow courts, under specific circumstances, to void the notes and/or the guarantees and require noteholders to return payments received.

     The issuance of the notes and the incurrence of the guarantees of the notes may be subject to review under federal and state fraudulent transfer and conveyance statutes in a bankruptcy, liquidation or reorganization case or if a lawsuit, including under circumstances in which bankruptcy is not involved, were commenced at some future date by us or on behalf of our unpaid creditors. Under the federal bankruptcy laws and comparable provisions of state fraudulent transfer and fraudulent conveyance laws, a court may void or otherwise decline to enforce

the notes and/or the guarantees or a court may subordinate the notes and/or the guarantees to the Issuers’ and their subsidiaries’ existing and future indebtedness.

     While the relevant laws may vary from state to state, a court might void or otherwise decline to enforce the notes or the guarantees if it found that when the notes were issued or the guarantees were incurred, or, in some states, when payments became due under the notes or the guarantees, an Issuer or any of the guarantors received less than reasonably equivalent value or fair consideration and either:

	•		the applicable Issuer or guarantor was insolvent or rendered insolvent by reason of such incurrence; or
	•		the applicable Issuer or guarantor was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or
	•		the applicable Issuer or guarantor intended to incur, or believed or reasonably should have believed that it would incur, debts beyond its ability to pay such debts as they mature; or
	•		the applicable Issuer or guarantor was a defendant in an action for money damages, or had a judgment for money damages docketed against it if, in either case, after final judgment, the judgment is unsatisfied.

     A court might also void the notes or guarantees without regard to the above factors, if it found that an Issuer or guarantor, as applicable, issued the notes or incurred a guarantee with actual intent to hinder, delay or defraud our creditors.

     A court would likely find that an Issuer or a guarantor did not receive reasonably equivalent value or fair consideration for the notes or such a guarantee if it did not substantially benefit directly or indirectly from the issuance of the notes or the applicable guarantee. As a general matter, value is given for a note if, in exchange for the note, property is transferred or an antecedent debt is satisfied. A debtor may not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

     The measures of insolvency for purposes of fraudulent conveyance laws vary depending upon the law of the particular jurisdiction that is being applied. Generally, however, an entity would be considered insolvent if:

	•		the sum of its debts, including subordinated and contingent liabilities, was greater than the fair saleable value of its assets;
	•		the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including subordinated and contingent liabilities, as they become absolute and mature; or
	•		it could not pay its debts as they become due.

     We cannot be certain as to the standards a court would use to determine whether or not an Issuer or a guarantor was solvent at the relevant time, or regardless of the standard used, that the issuance of the notes or the incurrence of the guarantees would not be subordinated to our other debt.

     In the event of a finding that a fraudulent conveyance or transfer has occurred, the court may void, or hold unenforceable, the notes and/or the guarantees, which could mean that you may not receive any payments on the notes and the court may direct you to repay any amounts that you have already received from the Issuers and the guarantors for the benefit of their creditors. Furthermore, the holders of voided notes would cease to have any direct claim against the Issuers and the guarantors. Consequently, each Issuer’s assets would be applied first to satisfy its other liabilities, before any portion of its assets could be applied to the payment of the notes. Sufficient funds to repay the notes may not be available from other sources. Moreover, the voidance of the notes could result in an event of default with respect to its other debt that could result in acceleration of such debt (if not otherwise accelerated due to insolvency or other proceedings).

     Although each guarantee entered into by a subsidiary will contain a provision intended to limit that guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, such a provision may not be effective to protect those guarantees from being voided under fraudulent transfer law, or it may reduce that guarantor’s obligation to an amount that effectively makes its guarantee worthless.

Certain restrictive covenants in the indentures governing the notes will be suspended if the notes achieve investment grade ratings.

     Most of the restrictive covenants in the indentures governing the notes will not apply if and for so long as the notes achieve investment grade ratings from Moody’s and S&P and no default or event of default has occurred. If these restrictive covenants cease to apply, we may take actions, such as incurring additional debt, undergoing a change of control transaction or making certain dividends or distributions that would otherwise be prohibited under, or would otherwise require a prepayment offer to noteholders under, the indentures governing the notes. Ratings are given by these rating agencies based upon analyses that include many subjective factors. We cannot assure you that the notes will (or will not) achieve investment grade ratings, nor can we assure you that investment grade ratings, if granted, will reflect all of the factors that would be important to holders of the notes.

Our ability to generate the significant amount of cash needed to pay interest and principal on the notes and service our other debt and our ability to refinance all or a portion of our indebtedness or obtain additional financing depends on many factors beyond our control.

     Our ability to make scheduled payments on, or to refinance our obligations under, our debt will depend on our financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may be beyond our control, including those described under “—Risks Related to Our Business” above.

     If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital or restructure our debt. In the future, our cash flow and capital resources may not be sufficient for payments of interest on and principal of our debt, and such alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations.

     The existing senior secured revolving credit facility will mature in 2013 and the existing senior secured term loan facility will mature in 2014. As a result, we may be required to refinance any outstanding amounts under those facilities prior to the maturity dates of the notes. We cannot assure you that we will be able to refinance any of our indebtedness or obtain additional financing. As a result, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The existing senior secured credit facilities and the indentures governing the notes will restrict our ability to dispose of assets and use the proceeds from any such dispositions. We cannot assure you we will be able to consummate any sales of assets, or if we do, what the timing of such sales will be or whether the proceeds that we realize will be adequate to meet debt service obligations when due.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     Not applicable.

ITEM 2. PROPERTIES

     Our upstream business is a vertically integrated producer of primary aluminum, consisting of a bauxite mine, an alumina refinery and an aluminum smelter. We have a 50% joint venture interest in the bauxite mining operation in Jamaica, a 50% joint venture interest in the alumina refinery in Gramercy, Louisiana and we own the smelter in New Madrid, Missouri.

     Our downstream business is a manufacturer of aluminum foil and light sheet, which consists of four rolling mill facilities. We own and operate four rolling mills located in the southeastern United States, two in Huntingdon, Tennessee, and one each in Salisbury, North Carolina and Newport, Arkansas, with a combined annual production capacity of approximately 495 million pounds, depending on product-mix.

     Our corporate headquarters is located in Franklin, Tennessee and consists of leased office space aggregating approximately 30 thousand square feet.

     For additional information about the location and productive capacity of our facilities see Item 1. “Business.” See Item 1A. “Risk Factors — Risks Related to Our Business-Delays in restoring our New Madrid smelter to its full production capacity could materially and adversely affect our business, financial condition, results of operations and cash flows” for a discussion of the impact of the January 2009 power outage at our New Madrid smelter.

ITEM 3. LEGAL PROCEEDINGS

     From time to time, we are involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. We believe the resolution of these matters and the incurrence of their related costs and expenses should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. While it is not feasible to predict the outcome of all pending suits and claims, the ultimate resolution of these matters as well as future lawsuits could have a material adverse effect on our business, financial condition, results of operations or reputation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of our security holders during the fourth quarter of 2008.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

     The Company’s common stock is not traded on any stock exchange and has no established public trading market. Investment funds associated with Apollo own approximately 98.5% of our capital stock. The remainder of our capital stock is held by members of our management.

Holders

     As of January 31, 2009 there were a total of 26 holders of the Company’s common stock.

Dividends

     The payment of any cash dividend on our common stock is considered a restricted payment under our credit facilities and the indentures governing our notes, and we are restricted from paying any cash dividend on our common stock unless we satisfy certain conditions, including financial tests and the absence of any event of default.

     On June 7, 2007, Noranda HoldCo issued the HoldCo notes. Noranda HoldCo used the proceeds from the offering of the HoldCo notes, as well as $4.3 million of cash on hand, to pay a $216.1 million net cash distribution to its stockholders, which included Apollo and certain members of its management, to make a cash payment of $4.1 million to its optionholders (as part of an adjustment to preserve the value of the Noranda HoldCo options following the dividend), and to pay for fees and expenses related to the offering of the HoldCo notes. As used in this report the term “Special Dividend” means the payments to stockholders and optionholders, along with the related financing.

     Our Board of Directors declared and we paid a $102.2 million cash dividend ($4.70 per share) in June 2008.

Securities authorized for issuance under equity compensation plans

     See Item 11. “Executive Compensation-Elements used to Achieve Compensation Objectives” for a description of our equity compensation plan.

ITEM 6. SELECTED FINANCIAL DATA

Selected Historical Consolidated Financial Data

     Noranda HoldCo, Noranda AcquisitionCo and Noranda Intermediate Holding Corporation were formed in 2007 in connection with the Apollo Acquisition and did not engage in any business or other activities prior to the Apollo Acquisition except in connection with their formation, the Apollo Transactions and the Special Dividend described elsewhere in this report. Accordingly, for the purposes of this report, all financial and other information herein relating to periods prior to the completion of the Apollo Transactions and the Special Dividend is that of Noranda Aluminum, Inc.

     Prior to December 31, 2005, Xstrata accumulated a 19.9% ownership in Falconbridge Limited, which owned 100% of Noranda Aluminum, Inc. at that time. On August 15, 2006, through a tender offer, Xstrata effectively acquired the remaining 80.1% of shares of Falconbridge Limited, which resulted in Noranda Aluminum, Inc. being Xstrata’s wholly owned subsidiary (“the Xstrata Acquisition”).

     The financial information as of and for the years ended December 31, 2004 and 2005 and for the period from January 1, 2006 to August 15, 2006 includes the results of operations, cash flows and financial condition for Noranda Aluminum, Inc. on a basis reflecting the historical carrying values of Noranda Aluminum, Inc. prior to the Xstrata Acquisition and is referred to as “Pre-predecessor.” The financial information for the periods from August 16, 2006 to December 31, 2006 and from January 1, 2007 to May 17, 2007, and as of December 31, 2006 includes the results of operations, cash flows and financial condition for Noranda Aluminum, Inc. on a basis reflecting the stepped-up values of Noranda Aluminum, Inc. prior to the Apollo Acquisition, but subsequent to the Xstrata Acquisition, and is referred to as “Predecessor.” The financial information for the periods from May 18, 2007 to December 31, 2007, for the year ended December 31, 2008, and as of December 31, 2007 and December 31, 2008 include the results of operations, cash flows and financial condition for Noranda Aluminum Holding Corporation on a basis reflecting the impact of the purchase allocation of the Apollo Acquisition, and is referred to as “Successor.”

     The consolidated statements of operations data for the year ended December 31, 2008, the periods from January 1, 2006 to August 15, 2006, from August 16, 2006 to December 31, 2006, from January 1, 2007 to May 17, 2007 and from May 18, 2007 to December 31, 2007 and the consolidated balance sheet data as of December 31, 2007 and 2008 have been derived from our audited consolidated financial statements included elsewhere in this report. The consolidated statement of operations data for the years ended December 31, 2004 and 2005 and

the consolidated balance sheet data as of December 31, 2004, 2005, and 2006 have been derived from our audited consolidated financial statements which are not included in this report.

     Management also has presented certain supplemental pro forma condensed consolidated statements of operations. The supplemental pro forma condensed consolidated statements of operations include pro forma adjustments that we believe are (i) directly attributable to the Apollo Transactions and the Special Dividend, (ii) factually supportable and (iii) expected to have a continuing impact on the consolidated results. We believe that the assumptions used to derive the unaudited pro forma condensed consolidated statement of operations are reasonable given the information available; however, such assumptions are subject to change and the effect of any such change could be material.

     The supplemental pro forma condensed consolidated statements of operations for the years ended December 31, 2006 and December 31, 2007 are based on the historical consolidated statements of operations for the Pre-predecessor period from January 1, 2006 to August 15, 2006 and the Predecessor period from August 16, 2006 to December 31, 2006 and the Predecessor period from January 1, 2007 to May 17, 2007 and the Successor for the period from May 18, 2007 to December 31, 2007, respectively, and give effect to the Apollo Transactions and Special Dividend as if they had occurred on January 1, 2006.

     The supplemental pro forma condensed consolidated statement of operations is presented for information purposes only and is not intended to represent or be indicative of the consolidated results of operations that we would have reported had the Apollo Transactions and the Special Dividend been completed for the periods presented, nor are they necessarily indicative of future results.

     The following tables present our selected historical consolidated financial data. This information should be read in conjunction with Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the audited consolidated financial statements of Noranda Aluminum, Inc. and Noranda Aluminum Holding Corporation and their notes included elsewhere in this report, as well as the other financial information included in this report.

											Pro Forma					Pro Forma
											Pre-predecessor					Predecessor
		Pre-predecessor									and Predecessor					and Successor				Successor
		For the year				For the year					For the year					For the year				For the year
		ended				ended					ended					ended				ended
		December 31,				December 31,					December 31,					December 31,				December 31,
(in millions)		2004				2005					2006					2007				2008
		$				$					$					$				$
Statement of Operations Data:
Sales			919.1				1,026.4					1,312.7					1,395.1				1,266.4
Operating costs and expenses
Cost of sales			829.5				929.5					1,133.8					1,205.3				1,122.7
Selling, general and administrative expenses			33.3				23.8					40.1					56.5				73.8
Goodwill impairment			—				—					—					—				25.5
Other charges (recoveries), net			—				1.6					(0.6	)				(0.5	)			—
			862.8				954.9					1,173.3					1,261.3				1,222.0
Operating income			56.3				71.5					139.4					133.8				44.4
Other expenses (income)
Interest expense, net			27.3				28.5					112.7					109.0				89.2
(Gain) loss on derivative instruments and hedging activities			(0.5	)			(7.9	)				22.0					44.1				69.9
Gain on settlement of contract			(129.0	)			—					—					—				—
Equity in net loss (income) of investments in affiliates			0.4				(9.8	)				(9.2	)				(11.5	)			(7.7	)
Other, net			12.6				0.6					—					—				—
Income (loss) from continuing operations before income taxes			145.5				60.1					13.9					(7.8	)			(107.0	)
Income tax expense (benefit)			57.0				18.6					0.8					1.7				(32.9	)
Income (loss) from continuing operations			88.5				41.5					13.1					(9.5	)			(74.1	)
Discontinued operations, net of tax effects			(65.7	)			8.8					—					—				—
Net income (loss) for the period			22.8				50.3					13.1					(9.5	)			(74.1	)
											Pre-predecessor					Predecessor
		Pre-predecessor									and Predecessor					and Successor				Successor
		As of and for				As of and for					As of and for					As of and for				As of and for
		the year				the year					the year					the year				the year
		ended				ended					ended					ended				ended
		December 31,				December 31,					December 31,					December 31,				December 31,
(in millions)		2004				2005					2006					2007				2008
		$				$					$					$				$
Balance Sheet Data(3):
Cash and cash equivalents			1.1				1.4					40.5					75.6				184.7
Property, plant and equipment, net			520.8				528.7					672.8					657.8				599.6
Total assets			1,024.6				988.1					1,616.7					1,650.5				1,936.2
Long-term debt (including current portion)(1)			329.5				252.0					160.0					1,151.7				1,346.6
Common stock subject to redemption			—				—					—					—				2.0
Shareholders’ (deficiency) equity			(15.2	)			472.3					1,008.5					(0.1	)			36.6
Working capital(2)			173.2				127.5					201.7					211.5				336.0
Financial and Other Data:
Cash Flow Data(3):
Operating activities			1.2				57.2					189.7					202.0				65.5
Investing activities			(52.9	)			(17.8	)				(52.3	)				(1,192.6	)			(51.1	)
Financing activities			20.7				(41.1	)				(98.2	)				1,028.8				94.7
Shipments (pounds in millions)
Upstream
External customers			492.5				502.7					496.5					523.4				509.5
Intersegment			56.4				43.5					58.5					31.2				80.4
Total			548.9				546.2					555.0					554.6				589.9
Downstream			383.3				392.2					409.3					371.6	(4)			346.1

		Pre-predecessor				Predecessor									Successor
							Period from									Period from				As of and
							August 16, 2006 to									May 18, 2007 to				for the year
		Period from					December 31, 2006				Period from					December 31, 2007				ended
		January 1, 2006 to					and as of				January 1, 2007 to					and as of				December 31,
(in millions)		August 15, 2006					December 31, 2006				May 17, 2007					December 31, 2007				2008
		$					$				$					$				$
Statement of Operations Data:
Sales			816.0					496.7				527.7					867.4				1,266.4
Operating costs and expenses
Cost of sales			660.6					409.0				424.5					768.0				1,122.7
Selling, general and administrative expenses			23.9					14.0				16.8					39.2				73.8
Goodwill impairment			—					—				—					—				25.5
Other (recoveries) charges, net			(0.1	)				(0.5	)			—					(0.5	)			—
			684.4					422.5				441.3					806.7				1,222.0
Operating income			131.6					74.2				86.4					60.7				44.4
Other expenses (income)
Interest expense, net			12.7					6.4				6.2					67.2				89.2
Loss (gain) on derivative instruments and hedging activities			16.6					5.4				56.6					(12.5	)			69.9
Equity in net income of investments in affiliates			(8.3	)				(3.2	)			(4.3	)				(7.3	)			(7.7	)
Income (loss) before income taxes			110.6					65.6				27.9					13.3				(107.0	)
Income tax expense (benefit)			38.7					23.6				13.6					5.1				(32.9	)
Net income (loss) for the period			71.9					42.0				14.3					8.2				(74.1	)
Balance sheet data:
Cash and cash equivalents								40.5									75.6				184.7
Property, plant and equipment, net								672.8									657.8				599.6
Total assets								1,616.7									1,650.5				1,936.2
Long-term debt (including current portion)(1).								160.0									1,151.7				1,346.6
Common stock subject to redemption								—									—				2.0
Shareholders’ equity (deficiency)								1,008.5									(0.1	)			36.6
Working capital(2)								201.7									211.5				336.0
Cash flow data:
Operating activities			81.9					107.8				41.2					160.8				65.5
Investing activities			(20.5	)				(31.8	)			5.1					(1,197.7	)			(51.1	)
Financing activities			(37.7	)				(60.5	)			(83.7	)				1,112.5				94.7
Financial and other data:
Average realized Midwest transaction price (4)			1.19					1.20				1.31					1.21				1.21
Net cash cost for primary aluminum (per pound shipped) (5)												0.74					0.76				0.81
Shipments (pounds in millions)
Upstream
External customers			308.8					187.7				202.3					321.1				509.5
Intersegment			36.3					22.2				12.1					19.1				80.4
Total			345.1					209.9				214.4					340.2				589.9
Downstream			259.1					150.2				135.6	(3)				236.0	(3)			346.1

The following table summarizes the unit net cash costs for primary aluminum for the upstream segment for the periods presented:

		Predecessor					Successor
		Period from					Period from				For the
		January 1, 2007 to					May 18, 2007 to				year ended
		May 17, 2007					December 31, 2007				December 31, 2008
Total upstream cash cost (in millions)		$	158.8				$	259.3			$	478.2
Total shipments (pounds in millions)			214.4					340.2				589.9
Net upstream cash cost for primary aluminum		$	0.74				$	0.76			$	0.81

     The following table reconciles the upstream segment’s cost of sales to the total upstream cash cost for primary aluminum for the periods presented (in millions):

		Predecessor					Successor
		Period from					Period from				For the
		January 1, 2007 to					May 18, 2007 to				year ended
		May 17, 2007					December 31, 2007				December 31, 2008
		$					$				$
Upstream cost of sales			186.6					335.3				525.2
Downstream cost of sales			237.9					432.7				597.5
Total cost of sales			424.5					768.0				1,122.7
Upstream cost of sales			186.6					335.3				525.2
LIFO and lower of cost or market adjustments (a)			(0.7	)				2.5				(30.5	)
Fabrication premium (b)			(18.1	)				(27.3	)			(40.5	)
Depreciation expense-upstream			(20.8	)				(51.2	)			(70.3	)
Joint ventures impact (c)			(8.6	)				(13.6	)			(13.1	)
Selling, general and administrative expenses (d)			4.4					7.7				4.4
Intersegment eliminations (e)			16.0					5.9				103.0
Total upstream cash cost of primary aluminum			158.8					259.3				478.2

SUPPLEMENTAL PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007
(in millions)

     The following unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2007 is based on the historical consolidated statements of operations of the Predecessor period from January 1, 2007 to May 17, 2007 and the Successor period from May 18, 2007 to December 31, 2007 and gives effect to the Apollo Transactions and the Special Dividend as if they had occurred on January 1, 2007.

															Pro Forma Noranda
															Aluminum Holding
		Predecessor				Successor									Corporation
		Period from					Period from								Year
		January 1, 2007 to					May 18, 2007 to				Pro Forma				ended
		May 17, 2007(1)					December 31, 2007(1)				adjustments				December 31, 2007
		$					$				$				$
Sales			527.7					867.4				—				1,395.1
Operating costs and expenses
Cost of sales			424.5					768.0				12.8	(2)			1,205.3
Selling, general and administrative expenses			16.8					39.2				0.5	(3)			56.5
Other charges (recoveries), net			—					(0.5	)			—				(0.5	)
			441.3					806.7				13.3				1,261.3
Operating income			86.4					60.7				(13.3	)			133.8
Other expenses (income)
Interest expense, (income) net
Parent and related party			7.2					—				(7.2	)(4)			—
Other			(1.0	)				67.2				42.8	(5)			109.0
Loss (gain) on derivative instruments and hedging activities			56.6					(12.5	)			—				44.1
Equity in net income of investments in affiliates			(4.3	)				(7.3	)			0.1	(6)			(11.5	)
Total other expenses, net			58.5					47.4				35.7				141.6
Income (loss) before income taxes			27.9					13.3				(49.0	)			(7.8	)
Income tax expense (benefit)			13.6					5.1				(17.0	)(7)			1.7
Net income (loss)			14.3					8.2				(32.0	)			(9.5	)

     The above unaudited pro forma condensed consolidated statement of operations does not adjust the write-off of deferred financing costs, which are included in the historical consolidated results of operations included elsewhere in this report.

SUPPLEMENTAL PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(in millions)

     This supplemental pro forma condensed consolidated statement of operations for the year ended December 31, 2006, on a pro forma basis, reflects the pro forma assumptions and adjustments as if the Apollo Transactions and the Special Dividend had occurred on January 1, 2006.

															Pro Forma Noranda
															Aluminum Holding
		Pre-predecessor					Predecessor								Corporation
		Period from					Period from
		January 1, 2006					August 16, 2006								Year
		to					to				Pro Forma				ended
		August 15, 2006(1)					December 31, 2006(1)				adjustments				December 31, 2006
		$					$				$				$
Sales			816.0					496.7				—				1,312.7
Operating costs and expenses
Cost of sales			660.6					409.0				64.2	(2)			1,133.8
Selling, general and administrative expenses			23.9					14.0				2.2	(3)			40.1
Other charges (recoveries), net			(0.1	)				(0.5	)			—				(0.6	)
			684.4					422.5				66.4				1,173.3
Operating income			131.6					74.2				(66.4	)			139.4
Other expenses (income)
Interest expense, (income) net
Parent and related party			12.6					7.1				(19.7	)(4)			—
Other			0.1					(0.7	)			113.3	(5)			112.7
Loss on derivative instruments and hedging activities			16.6					5.4				—				22.0
Equity in net income of investments in affiliates			(8.3	)				(3.2	)			2.3	(6)			(9.2	)
Total other expenses, net			21.0					8.6				95.9				125.5
Income (loss) before income taxes			110.6					65.6				(162.3	)			13.9
Income tax expense (benefit)			38.7					23.6				(61.5	)(7)			0.8
Net income (loss)			71.9					42.0				(100.8	)			13.1

     The above unaudited pro forma condensed consolidated statement of operations does not adjust the write-off of deferred financing costs, which are included in the historical consolidated results of operations included elsewhere in this report.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis of our results of operations and financial condition covers certain periods prior to the consummation of the Apollo Transactions. Accordingly, the discussion and analysis of periods prior to the Apollo Transactions do not reflect the significant impact that the Apollo Transactions have had on us, including significantly increased leverage and liquidity requirements. You should read the following discussion of our results of operations and financial condition with the “Unaudited Pro Forma Condensed Consolidated Financial Information,” “Selected Historical Consolidated Financial Data,” “Unaudited Pro Forma Condensed Financial information” and the audited consolidated financial statements and related notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs, and that involve numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this report. Actual results may differ materially from those contained in any forward-looking statements. See “Cautionary Statement Concerning Forward-Looking Statements.”

Introduction

     The following Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is provided as a supplement to the audited consolidated financial statements and the related notes included elsewhere in the filing to help provide an understanding of our financial condition, changes in financial condition and results of our operations. The MD&A is organized as follows:

     Company Overview. This section provides a general description of our business as well as recent developments that we believe are necessary to understand our financial condition and results of operations and to anticipate future trends in our business.

     Reconciliation of Net Income between Noranda AcquisitionCo and Noranda HoldCo. This section reconciles the results of operations of Noranda HoldCo and its wholly owned subsidiary, Noranda AcquisitionCo.

     Critical Accounting Policies and Estimates. This section discusses the accounting policies and estimates that we consider to be important to our financial condition and results of operations and that require significant judgment and estimates on the part of management in their application.

     Results of Operations. This section provides a discussion of the results of operations on a historical basis for each of our fiscal periods in the years ended December 31, 2006, 2007 and 2008. The section also provides a supplemental discussion of operating results for those periods on a pro forma basis.

     Liquidity and Capital Resources. This section provides an analysis of our cash flows for each of our fiscal periods in the years ended December 31, 2006, 2007 and 2008.

     Contractual Obligations and Contingencies. This section provides a discussion of our commitments as of December 31, 2008.

     Known Trends and Uncertainties. This section discusses certain additional items which we feel could potentially impact our results of operations and financial position.

Company Overview

     We are a leading North American vertically integrated producer of value-added primary aluminum products and high quality rolled aluminum coils. We have two integrated businesses: our primary metals, or upstream business, and our rolling mills, or downstream business. In 2008, our upstream business produced approximately 575 million pounds (261,000 metric tonnes) of primary aluminum, accounting for approximately 10% of total United States primary aluminum production. During the week of January 26, 2009, power supply to Noranda’s New Madrid smelter was interrupted numerous times because of an ice storm in Southeastern Missouri. See Item 1. “Business-Primary Metal-Upstream Business” for further discussion. Our downstream business, consisting of four rolling mill facilities with a combined annual production capacity of approximately 495 million pounds, is one of the largest aluminum foil producers in North America. The upstream and downstream businesses constitute our two reportable segments as defined by Statement of Financial Accounting Standards (“SFAS”) No. 131, Disclosure about Segments of an Enterprise and Related Information (“SFAS No. 131”).

Key factors affecting our results of operations

     Demand

     In the second half of 2008, global economic contraction severely impacted the aluminum industry. Primary aluminum is a global commodity, and its price is set on the LME. Our primary aluminum products typically earn the LME price plus a Midwest premium, the sum of which is known as the Midwest Transaction Price, or MWTP. Driven by significant weakness in end-use markets such as housing and

automotive, LME aluminum prices experienced a historic decline. The decline in price has had significant negative impact on our financial results. The LME price dropped 49% in the last five months of 2008 to levels at which our production cash costs were higher than our primary metal selling prices. Global inventories have grown to near record levels as market demand has continued to decline.

     In addition to extraordinary declines in volume and price in the upstream segment, the downstream business was also impacted by weak end markets and falling metal prices. Our downstream business is a low-cost domestic producer of aluminum rolled products servicing a variety of end markets including building, automotive, and HVAC. The economic crisis, including limited credit availability, had a particularly negative impact on these markets. Weak market conditions had a direct impact on our downstream business volume and subsequently our financial results. The downstream business prices its products at the MWTP plus a fabrication premium. As LME aluminum prices fell in 2008, the business experienced significant negative timing differences between the cost of metal and the price of metal sold.

     Through July 2008, primary aluminum experienced strong price trends supported to a large extent by improved market fundamentals for aluminum, including global demand growth from developing regions, higher global power costs, new supply constraints and a weaker U.S. dollar, among several other factors. Beginning in August 2008, the primary aluminum prices declined in response to deteriorating global economic conditions.

     In 2008, we experienced a decline in demand for value-added products utilized in the housing and construction industry. For the year ended December 31, 2008, external value-added shipments were 13.9 million pounds lower than in 2007. We have responded to the decrease in demand for value-added products by increasing the production of commodity sow used in our downstream business. The decrease in value-added shipments to external customers was more than offset by a 49.2 million pound increase in shipments to our downstream operation and a 55.9 million increase in external sow shipments. Our integrated operations provide us the flexibility to shift a portion of our upstream production to our downstream business, reducing our overall external purchase commitments, and allowing us to retain the economic differential between LME pricing and our production costs.

     Prices and markets

     As discussed above, we have experienced, and expect to continue to be subject to volatile primary aluminum prices, which are influenced primarily by the world supply-demand balance for those commodities and related processing services, and other related factors such as speculative activities by market participants, production activities by competitors and political and economic conditions, as well as production costs in major production regions. Increases or decreases in primary aluminum prices result in increases and decreases in our revenues (assuming all other factors are unchanged).

     We have entered into fixed price aluminum swaps to establish the aluminum price at which a portion of our expected cumulative primary aluminum shipments will be sold. See Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” for further discussion of fixed price aluminum swaps and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” for further discussion of our accounting for these hedges.

     Our fabrication prices are not impacted by volatility in LME prices. Instead, they are dependent upon capacity utilization in the industry, which in turn is driven by supply-demand fundamentals for our products. Our value-added profitability is largely insulated from movement in aluminum prices, except for cycles when LME prices change dramatically over our average inventory holding periods. During 2008, the downturn in the housing market resulted in lower demand, which reduced capacity utilization and had a negative impact on our 2008 fabrication prices and our 2008 financial results. In 2006 and parts of 2007 we saw increasing average prices, reflecting strong supply-demand fundamentals for the goods made using our products, especially finstock and semi-rigid container products.

     Production

     In 2008, our upstream business produced approximately 575 million pounds (261,000 metric tonnes) of primary aluminum. Due to a severe ice storm the week of January 26, 2009, our New Madrid smelter lost approximately 75% of its capacity because of damage from power interruptions. We are still in the process of assessing the amount of damage and timing of repairs. See Item 1. “Business-Primary Metal-Upstream Business” for further discussion. In 2008, our New Madrid smelter began to implement a facility expansion project at an expected total cost of $48.0 million. The expansion expected to increase metal production by approximately 39 million pounds per annum to 610 million pounds by 2011 and contribute to a reduction in our future average net cash cost per pound of aluminum produced. Through December 31, 2008, we spent $16.2 million related to these expansion projects. As a result of declining market conditions and the January 2009 power outage, we have reduced the near-term scale of the New Madrid smelter expansion program. Although we continue to believe the remaining projects are viable, we have not determined a revised timeline for the program.

     Our rolling mills have capacity to produce 495 million pound annually; however, due to the downturn in the housing industry, our downstream business produced 388 million pounds of rolled products in 2008, compared to 406 million pounds in 2007 and 476 million pounds in 2006.

     Production costs

     The key cost components at our smelter are power and alumina. Power is supplied by AmerenUE under a 15-year contract that commenced on June 1, 2005 and includes an evergreen renewal option. The contract has all-in rates, with seasonal adjustments that result in rates from June to September being approximately 45% higher than the rates from October to May. Rate changes to this contract are subject to regulatory review and approval. In January 2009, the Missouri Public Service Commission approved a rate increase and a fuel adjustment clause. The rate change increased our power cost by approximately 6%. The impact to our costs due to the fuel adjustment clause cannot be estimated at this time.

     We obtain alumina from Gramercy under a take-or-pay contract where we are obligated to take receipt of our share of the alumina production at Gramercy, even if such amounts are in excess of our requirements or the cost of alumina from Gramercy exceeds the cost of alumina available from other sources. Gramercy in turn obtains bauxite from St. Ann. In addition to supplying raw materials for the two joint venture partners, St. Ann sells bauxite to third parties and Gramercy sells chemical grade alumina to third parties. These third-party sales reduce the cost for producing smelter grade alumina for our smelter in New Madrid.

     Our alumina supply arrangements with Gramercy provide us with a secure supply of alumina at a cost equal to the combined net cash cost of production and capital investment at the mine and refinery. During fourth quarter 2008, the cost of alumina purchased from our joint venture in Gramercy exceeded the cost of alumina available from other sources. We continue to evaluate options to reduce the purchase cost of alumina, including evaluating with our joint venture partner curtailment of Gramercy’s operations. In addition, pursuant to the agreement governing the joint ventures, we are currently in a period of renegotiation with our joint venture partner concerning the future of the joint ventures after December 31, 2010.

     During the year ended December 31, 2008, average natural gas prices rose to $9.43 from $7.22 per million BTU compared to 2007. For 2008, our direct consumption of natural gas was 14.1 million BTU. During 2008, we entered into forward swaps for natural gas, effectively fixing our cost for approximately 50% of our estimated upstream business’ natural gas exposure through 2012 at prices ranging from $8.65 to $9.89/mmbtu.

     At current market conditions, for our downstream business, aluminum metal units account for approximately 65% of production costs, and value-added conversion costs account for the remaining 35%. Conversion costs include labor, energy and operating supplies, including maintenance materials. Energy includes natural gas and electricity, which make up about 20% of conversion costs.

Reconciliation of Net Income between Noranda AcquisitionCo and Noranda HoldCo

     Noranda HoldCo was formed on March 27, 2007, and its principal asset is its wholly owned subsidiary, Noranda AcquisitionCo, which was also formed on March 27, 2007, for the purpose of the Apollo Transactions. The following table reconciles the results of operations of Noranda HoldCo and Noranda AcquisitionCo:

		Predecessor					Successor
		Period from					Period from
		January 1, 2007					May 18, 2007				Year
		to					to				ended
(in millions)		May 17, 2007					December 31, 2007				December 31, 2008
		$					$				$
Consolidated net income (loss) of Noranda AcquisitionCo			14.3					16.9				(59.5	)
HoldCo interest expense			—					(13.9	)			(21.3	)
HoldCo director and other fees			—					—				(1.6	)
HoldCo tax effects			—					5.2				8.3
Consolidated net income (loss) of Noranda HoldCo			14.3					8.2				(74.1	)

Critical Accounting Policies and Estimates

     Our principal accounting policies are described in Note 1. “Accounting Policies” of the audited consolidated financial statements included elsewhere in this report. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Management believes the accounting estimates discussed below represent those accounting estimates requiring the exercise of judgment where a different set of judgments could result in the greatest changes to reported results.

Revenue recognition

     Revenue is recognized when title and risk of loss pass to customers in accordance with contract terms. We periodically enter into supply contracts with customers and receive advance payments for product to be delivered in future periods. These advance payments are recorded as deferred revenue, and revenue is recognized as shipments are made and title, ownership, and risk of loss pass to the customer during the term of the contracts.

Impairment of long-lived assets

     Our long-lived assets, primarily property, plant and equipment, comprise a significant amount of our total assets. We evaluate our long-lived assets and make judgments and estimates concerning the carrying value of these assets, including amounts to be capitalized, depreciation and useful lives. The carrying values of these assets are reviewed for impairment periodically or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recorded in the period in which it is determined that the carrying amount is not recoverable. This evaluation requires us to make long-term forecasts of future revenues and costs related to the assets subject to review. These forecasts require assumptions about demand for our products and future market conditions. Significant and unanticipated changes to these assumptions could require a provision for impairment in a future period. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results.

Goodwill and other intangible assets

     Goodwill represents the excess of acquisition consideration paid over the fair value of identifiable net tangible and identifiable intangible assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS No. 142”), goodwill and other indefinite-lived intangible assets are not amortized, but are reviewed for impairment at least annually, in the fourth quarter, or upon the occurrence of certain triggering events. We evaluate goodwill for impairment using a two-step process provided by SFAS No. 142. The first step is to compare the fair value of each of its reporting units to their respective book values, including goodwill. If the fair value of a reporting unit exceeds its book value, reporting unit goodwill is not considered impaired and the second step of the impairment test is not required. If the book value of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the reporting unit’s goodwill with the book value of that goodwill. If the book value of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. During fourth quarter 2008, we recorded a $25.5 million goodwill impairment write down in the downstream business, reflecting continued weakness in end markets and the view that the acute decline in foil demand continues to put pressure on pricing as industry capacity utilization is operating well below historic levels. Our fourth quarter impairment testing indicated no goodwill impairment for the upstream business.

     Our SFAS No. 142 analyses included a combination of discounted cash flow and market-based valuations. Discounted cash flow valuations require that we make assumptions about future profitability and cash flows of our reporting units, which the Company believes reflect its best estimates at the date the valuations were performed (October 1 and December 31.) Key assumptions used to determine reporting units’ discounted cash flow valuations at December 31, 2008 include: (a) cash flow periods of seven years; (b) terminal values based upon long-term growth rates ranging from 1.5% to 2.0%; and (c) discount rates ranging from 11.8% to 12.7% based on a risk-adjusted weighted average cost of capital for each reporting unit. In the downstream business, a 1 percent increase in the discount rate would have decreased the reporting unit fair value, and consequently increased the goodwill impairment write-down, by approximately $40 million. In the downstream business, a 10% decrease in the cash flow forecast for each year would have decreased the reporting unit fair value, and consequently increased the goodwill impairment write-down, by approximately $50 million. In the upstream business, a 1 percent increase in the discount rate would have decreased the reporting unit fair value by approximately $50 million and a 10% decrease in the cash flow forecast for each year would have decreased the reporting unit fair value by approximately $80 million, neither of which would have resulted in upstream impairment at December 31, 2008.

     Intangible assets with a definite life (primarily customer relationships) are amortized over their expected lives and are tested for impairment whenever events or circumstances indicate that a carrying amount of an asset may not be recoverable.

Asset retirement obligations

     We record our environmental costs for legal obligations associated with the retirement of a tangible long-lived asset that results from its acquisition, construction, development or normal operation as asset retirement obligations. We recognize liabilities, at fair value, for our existing legal asset retirement obligations and adjust these liabilities for accretion costs and revision in estimated cash flows. The related asset retirement costs are capitalized as increases to the carrying amount of the associated long-lived assets and depreciation on these capitalized costs is recognized.

Inventories

     The majority of our inventories, including alumina and aluminum inventories, are stated at the lower of cost, using the last-in, first-out (“LIFO”) method, or market. The remaining inventories (principally supplies) are stated at cost using the first-in, first-out (“FIFO”) method. In our downstream segment, we use a standard costing system, which gives rise to cost variances. Variances are capitalized to inventory in proportion to the quantity of inventory remaining at period end to quantities produced during the period. Variances are recorded such that ending inventory reflects actual costs on a year-to-date basis.

     As of the date of the Apollo Acquisition a new base layer of LIFO inventories was established at fair value, such that FIFO basis and LIFO basis were equal. For layers added between the acquisition date and period end, we use a dollar-value LIFO approach where a single pool for each segment represents a composite of similar inventory items. Increases and decreases in inventory are measured on a pool basis rather than item by item. In periods following the Acquisition, LIFO cost of sales reflect sales at current production costs, which are substantially lower than the fair value cost recorded at the date of acquisition, to the extent that quantities produced exceed quantities sold. In periods when quantities sold exceed quantities produced, cost of goods sold reflect the higher fair value cost per unit.

     As LME prices fluctuate, our inventory will be subject to market valuation reserves. The principal factors that gave rise to our market valuation reserve at December 31, 2007 and 2008 were: (i) a substantial portion of the quantities in inventory were priced at base level prices and (ii) the LME price at December 31, 2007 and 2008 was significantly lower than the LME price used in determining the fair value of inventory at the date of the Apollo Acquisition. In periods when the LME price at a given balance sheet date is higher than the LME price at the time of the Apollo Acquisition, no reserves will be necessary. In December 2008, our expected selling prices were lower than our production cost on a FIFO basis.

Derivative instruments and hedging activities

     We account for derivative financial instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“SFAS No. 133”). During 2008, we designated fixed price aluminum swaps as cash flow hedges, thus the effective portion of such derivatives was adjusted to fair value through other comprehensive (loss) income, with the ineffective portion reported through earnings. Derivatives that have not been designated for hedge accounting are adjusted to fair value through earnings in loss (gain) on derivative instruments and hedging activities in the consolidated statements of operations. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of any gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivatives representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

     Forecasted sales represent a sensitive estimate in our designation of derivatives as cash flow hedges. Due to declines in demand for certain value-added products and uncertain business conditions, at November 30, 2008, management concluded that certain hedged sale transactions were no longer probable of occurring and de-designated hedge accounting for approximately 20.0 million pounds of notional amounts settling in 2008, 245.0 million pounds of notional amounts settling in 2009 and 20.0 million pounds of notional settling amounts in 2010. Based on revised forecasts in place at December 31, 2008, we re-designated approximately 144.0 million pounds of notional amounts settling in 2009 and 32.0 million pounds of notional amounts settling in 2010. As a result of the New Madrid power outage on January 28, 2009, and in anticipation of entering into fixed-price aluminum purchase swaps, as described in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” we discontinued hedge accounting for all of our aluminum fixed-price sale swaps on January 29, 2009.

     We determine the fair values of our derivative instruments using industry standard models that incorporate inputs which are observable, as defined in SFAS No. 157, throughout the full term of the instrument. Key inputs include quoted forward prices for commodities (aluminum and natural gas) and interest rates, and credit default swap spread rates for non-performance risk. Our derivative assets are adjusted for the non-performance risk of our counterparties using their credit default swap spread rates, which are updated quarterly. Likewise, in the case of our liabilities, our nonperformance risk is considered in the valuation, and are also adjusted quarterly based on current default swap spread rates on entities we consider comparable to us. We present the fair value of our derivative contracts net of cash paid pursuant to collateral agreements

on a net-by-counterparty basis in our consolidated statements of financial position when we believe a legal right of setoff exists under an enforceable master netting agreement.

Results of Operations

     The results of operations, cash flows and financial condition for the Pre-predecessor, Predecessor, and Successor periods reflect different bases of accounting due to the impact on the financial statements of the Xstrata Acquisition and the Apollo Acquisition, and the resulting purchase price allocations. The comparability of these periods is also limited by other changes inherent from one acquisition to another, such as operating as a stand-alone company in the Successor period versus operating as a subsidiary of a larger company in the Pre-predecessor and Predecessor periods.

     To aid the reader in understanding the results of operations of each of these distinctive periods, we have provided a discussion for the Pre-predecessor period from January 1, 2006 to August 15, 2006, for the Predecessor periods from August 16, 2006 to December 31, 2006 and January 1, 2007 to May 17, 2007, and for the Successor periods from May 18, 2007 to December 31, 2007, and for the year ended December 31, 2008.

     We have supplemented our discussion of historical results with an analysis of the results of operations for the years ended December 31, 2006 and 2007, reflecting the pro forma assumptions and adjustments as if the Apollo Acquisition had occurred on January 1, 2006. We believe presenting this pro forma information is beneficial to the reader because the impact of the purchase accounting associated with the Apollo Acquisition in 2007 impacts the comparability of the financial information for the historic periods presented. We believe this pro forma presentation provides the reader with additional information from which to analyze our financial results.

     You should read the following discussion of the results of operations and financial condition with the consolidated financial statements and related notes included herein.

     The following chart indicates the percentages of sales and operating income represented by each of our upstream and downstream businesses during 2006, 2007 and 2008:

Segment			Percentage of Sales													Percentage of Operating Income (Loss)
			2006				2007				2008					2006				2007				2008
			%				%				%					%				%				%
Upstream				49.1				50.1				52.2					90.9				91.2				176.5
Downstream				50.9				49.9				47.8					9.1				8.8				(76.5	)
Total				100.0				100.0				100.0					100.0				100.0				100.0

     Pre-predecessor period from January 1, 2006 to August 15, 2006; Predecessor periods from August 16, 2006 to December 31, 2006 and January 1, 2007 to May 17, 2007; and Successor period from May 18, 2007 to December 31, 2007 and for the year ended December 31, 2008

     Sales

			Pre-predecessor					Predecessor									Successor
			Period from					Period from				Period from					Period from
			January 1, 2006					August 16, 2006				January 1, 2007					May 18, 2007				For the
			to					to				to					to				year ended
(in millions)			August 15, 2006					December 31, 2006				May 17, 2007					December 31, 2007				December 31, 2008
			$					$				$					$				$
Upstream sales				400.3					243.6				275.2					423.8				660.7
Sales, excluding alumina sales				400.3					243.6				275.2					421.7				660.7
External shipments (in millions of pounds)				308.8					187.7				202.3					321.1				509.5
Average price per pound				1.30					1.30				1.36					1.31				1.30

			Pre-predecessor					Predecessor									Successor
			Period from					Period from				Period from					Period from
			January 1, 2006					August 16, 2006				January 1, 2007					May 18, 2007				For the
			to					to				to					to				year ended
(in millions)			August 15, 2006					December 31, 2006				May 17, 2007					December 31, 2007				December 31, 2008
			$					$				$					$				$
Downstream sales				415.7					253.1				252.5					443.6				605.7
Downstream sales, excluding brokered metal				415.7					253.1				244.3					400.4				605.7
External shipments (in millions of pounds)				259.1					150.2				135.6					236.0				346.1
Average price per pound				1.60					1.69				1.80					1.70				1.75

     Upstream and downstream sales per pound shipped fluctuated within a narrow range during the Predecessor period of 2007, reflecting the movement in the LME price and the Midwest Transfer Premium during the periods, which were at relative peaks during the first six months of both 2007 and 2008.

     In planning for 2007, management anticipated a significant increase in demand for downstream products, and entered into take-or-pay contracts to purchase fixed quantities of commodity-grade sow and other metals from external sources. With the softening of the housing market in mid-to-late 2007, the downstream business’s commodity grade sow requirements were less than originally anticipated. In certain cases the downstream business made arrangements to sell these contracted metal quantities to others. These sales are referred to as “brokered metal” sales, and were priced at or near our cost of purchasing the quantities. There were no brokered metal sales in 2008.

     In 2008, the upstream business increased its intersegment shipments to the downstream segment, primarily due to a decrease in demand for value-added products related to the softening of the U.S. economy and its impact on the housing and construction industry.

Cost of sales

		Pre-predecessor					Predecessor									Successor
		Period from					Period from				Period from					Period from				For the
		January 1,					August 16,				January 1,					May 18, 2007				year
		2006 to					2006 to				2007					to				ended
		August 15,					December 31,				to May 17,					December 31,				December 31,
		2006					2006				2007					2007				2008
		$					$				$					$				$
Upstream cost of sales			261.6					168.5				186.6					335.3				525.2
External shipments (in millions of pounds)			308.8					187.7				202.3					321.1				509.5
Average cost per pound			0.85					0.90				0.92					1.04				1.03

		Pre-predecessor					Predecessor									Successor
		Period from					Period from				Period from					Period from				For the
		January 1,					August 16,				January 1,					May 18, 2007				year
		2006					2006 to				2007					to				ended
		to Augustd 15,					December 31,				to May 17,					December 31,				December 31,
		2006					2006				2007					2007				2008
		$					$				$					$				$
Downstream cost of sales			399.0					240.5				237.9					432.7				597.5
Downstream cost of sales, excluding brokered metal			399.0					240.5				229.7					389.3				597.5
External shipments (in millions of pounds)			259.1					150.2				135.6					236.0				346.1
Average cost per pound			1.54					1.60				1.69					1.65				1.73

     Upstream and downstream costs per pound shipped fluctuated within a narrow range during the Predecessor period of 2007, reflecting the cost levels inherent in the inventory valuation from the Xstrata Acquisition completed in August 2006 and the relatively stable cost environment.

     Average upstream cost per pound shipped during the May 18, 2007 to December 31, 2007 Successor period is substantially higher than in the January 1, 2007 to May 17, 2007 Predecessor period reflecting the impact of a step-up in the cost basis of inventory at the time of the Apollo Acquisition and the impact of higher depreciation expense resulting from the higher purchase price allocation to property, plant and equipment. The step-up in cost basis is not as significant in the downstream business because the pass-through nature of the metal costs causes those costs to approximate current market rates, except in periods of rapid change as were experienced in the last half of 2008. In the downstream business, the higher per pound cost of sales in 2008 reflects LCM reserves resulting from the dramatic decline in LME prices.

Selling, general and administrative expenses and other (SG&A)

		Pre-predecessor					Predecessor									Successor
		Period from					Period from				Period from					Period from				Year
		January 1, 2006 to					August 16, 2006 to				January 1, 2007 to					May 18, 2007 to				ended
		August 15, 2006					December 31, 2006				May 17, 2007					December 31, 2007				December 31, 2008
SG&A expenses		$	23.9				$	14.0			$	16.8				$	39.2			$	73.8
As a % of sales			2.9	%				2.8	%			3.2	%				4.5	%			5.8	%