2008-02-15 10:09:13 CET
2011-09-16 12:25:55 CEST
Century Aluminum Company - Annual report
- Century Reports 2007 Financial Results
MONTEREY, CA--(Marketwire - February 14, 2008) - Century Aluminum Company
(NASDAQ: CENX) today reported a net loss of $112.3 million ($2.74 per basic and
diluted share) for the fourth quarter of 2007. Reported fourth quarter results
were impacted by a net after-tax charge of $147.7 million ($3.61 per basic
share) for mark-to-market adjustments on forward contracts that do not qualify
for cash flow hedge accounting. Quarterly results were impacted by a tax
benefit of $4.0 million ($0.10 per basic share) related to the increase in the
carrying amount of deferred tax assets as a result of a state tax law change.
The dilutive effect of the convertible notes, options and service-based awards
would reduce basic EPS by $0.05 per share.
For the fourth quarter of 2006, the company reported a net loss of $119.1
million ($3.67 per basic and diluted share). Reported results for this quarter
were impacted by an after-tax charge of $174.3 million ($5.37 per basic share)
for mark-to-market adjustments on forward contracts that do not qualify for
cash flow hedge accounting and by a gain on a sale of surplus land. The
dilutive effect of the options, convertible notes and service-based awards
would reduce basic EPS by $0.06 per share.
Recent highlights include:
-- 2007 financial results were strong. Free cash flow* increased 55
percent over 2006. Shipment volumes were 13 percent higher and realized
prices increased 2 percent.
-- The 40,000 tonne expansion of the Grundartangi, Iceland plant was
completed in November, on schedule and on budget. This latest development
was the culmination of a three-year program which increased the smelter's
capacity from 90,000 to 260,000 tonnes per year.
-- Significant progress was made on the greenfield smelter project near
Helguvik, Iceland, including the receipt of a positive opinion by the
National Planning Agency. Development plans for the project are well
advanced.
-- Hawesville's proposed new long-term power contract was filed with the
Kentucky Public Service Commission. The contract would provide the smelter
with cost based power through 2023. The parties involved expect the
transaction to close during the second quarter of 2008.
-- All primary aluminum facilities operated safely at or above capacity.
* A reconciliation of non-GAAP financial measures to GAAP financial
measures is presented in Schedule I of this press release.
For 2007, Century reported a net loss of $101.2 million ($2.72 per basic and
diluted share). Included in these results is a net after-tax charge of $328.3
million ($8.83 per basic and diluted share) for mark-to-market adjustments on
forward contracts that do not qualify for cash flow hedge accounting. Full year
results were impacted by a tax benefit of $8.3 million ($0.22 per basic share)
related to the increase in the carrying amount of deferred tax assets as a
result of a state tax law change. The dilutive effect of the convertible notes,
options and service-based awards would reduce basic EPS by $0.37 per share.
For 2006, Century reported a net loss of $41.0 million ($1.26 per basic and
diluted share). Results for 2006 include a net after-tax charge of $241.7
million ($7.46 per basic share) for mark-to-market adjustments on forward
contracts that do not qualify for cash flow hedge accounting and by a gain on
the sale of surplus land. The dilutive effect of the convertible notes, options
and service-based awards would reduce basic EPS by $0.17 per share.
Sales for the fourth quarter of 2007 were $432.1 million compared with $424.4
million for the fourth quarter of 2006. Shipments of primary aluminum for the
2007 fourth quarter were 198,138 tonnes, compared with 181,675 tonnes shipped
in the year-ago quarter. Cash used to settle forward contracts that do not
qualify for cash flow hedge accounting was $20.0 million in the fourth quarter
of 2007 compared to $12.3 million in the fourth quarter of 2006.
Sales for 2007 were $1.8 billion compared with $1.6 billion for 2006, and total
2007 primary aluminum shipments of 766,951 tonnes compared with 679,939 tonnes
shipped in 2006. Cash used to settle forward contracts that do not qualify for
cash flow hedge accounting was $98.3 million in 2007 compared to $54.2 million
in 2006. "Century made good progress in 2007 toward its strategic objectives of lowering
unit production costs, increasing global diversification and addressing our
long-term cost structure," said president and chief executive officer Logan W.
Kruger. "Our financial results were strong and included record shipments and
cash flow. "During the fourth quarter, we completed the latest expansion of Nordural's
smelter at Grundartangi, Iceland. The entire three-year project, which almost
tripled the size of the plant, was implemented on time and on budget. The
smelter is now producing at its 260,000 tonne per year capacity, and is
operating well. We are proud of the team which delivered this impressive
result, while simultaneously operating the plant in an efficient and safe
manner. "At our greenfield smelter project near Helguvik, Iceland, we made important
progress. We signed agreements with two geothermal power providers and with the
national power transmission company. We received a favorable opinion from the
National Planning Agency on our environmental impact assessment. We raised the
equity financing for the plant's first two phases and became the first U.S.
company to list on the Iceland stock exchange. Lastly, we have assembled an
experienced project team; they are now completing the final steps required for
the commencement of construction. "We see 2008 as another year of opportunity for Century," Mr. Kruger concluded."We will begin the major construction phase of our new plant in Iceland. We
will also commence a modest two year capital improvement program for our U.S.
plants. These activities are taking place in an industry environment that we
would characterize as favorable over the medium and longer-term."
Century Aluminum Company owns primary aluminum capacity in the United States
and Iceland, as well as an ownership interest in alumina and bauxite assets in
the United States and Jamaica. Century's corporate offices are located in
Monterey, California.
Century Aluminum's quarterly conference call is scheduled for 5:00 p.m. Eastern
time today. To listen to the conference call and to view related presentation
materials, go to www.centuryaluminum.com and click on the conference call link
on the homepage.
Certified Advisors for the First North market of the OMX Nordic Exchange
Iceland hf. for Global Depositary Receipts in Iceland:
Astridur Thordardottir, Senior Manager-Corporate Finance, Landsbanki Islands
hf.
Olafur Finsen, Senior Legal Advisor-Corporate Finance, Landsbanki Islands hf.
Cautionary Statement
This press release may contain "forward-looking statements" within the meaning
of U.S. federal securities laws. The company has based its forward-looking
statements on current expectations and projections about the future; however,
these statements are subject to risks, uncertainties and assumptions, any of
which could cause the company's actual results to differ materially from those
expressed in its forward-looking statements. More information about these
risks, uncertainties and assumptions can be found in the risk factors and
forward-looking statements cautionary language contained in the company's
Annual Report on Form 10-K and in other filings made with the Securities and
Exchange Commission. The company does not undertake, and specifically
disclaims, any obligation to revise any forward-looking statements to reflect
the occurrence of anticipated or unanticipated events or circumstances after
the date such forward-looking statements are made.
Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Year ended
December 31, December 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
NET SALES:
Third-party
customers $ 337,678 $ 332,282 $ 1,449,750 $ 1,299,035
Related parties 94,452 92,085 348,413 259,531
----------- ----------- ----------- -----------
432,130 424,367 1,798,163 1,558,566
COST OF GOODS SOLD 372,207 331,291 1,434,700 1,210,044
----------- ----------- ----------- -----------
GROSS PROFIT 59,923 93,076 363,463 348,522
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 19,136 10,724 59,920 39,363
----------- ----------- ----------- -----------
OPERATING INCOME 40,787 82,352 303,543 309,159
INTEREST EXPENSE - Net (2,983) (10,272) (22,109) (35,297)
NET LOSS ON FORWARD
CONTRACTS (228,978) (282,891) (508,875) (389,839)
OTHER INCOME (EXPENSE)
- Net 124 7,019 (3,302) 6,898
----------- ----------- ----------- -----------
LOSS BEFORE INCOME
TAXES AND EQUITY IN
EARNINGS OF JOINT
VENTURES (191,050) (203,792) (230,743) (109,079)
INCOME TAX BENEFIT 74,453 79,716 113,849 52,041
----------- ----------- ----------- -----------
LOSS BEFORE EQUITY IN
EARNINGS OF JOINT
VENTURES (116,597) (124,076) (116,894) (57,038)
EQUITY IN EARNINGS OF
JOINT VENTURES 4,294 4,953 15,645 16,083
----------- ----------- ----------- -----------
NET LOSS $ (112,303) $ (119,123) $ (101,249) $ (40,955)
=========== =========== =========== ===========
EARNINGS PER COMMON
SHARE
Basic - Net loss $ (2.74) $ (3.67) $ (2.72) $ (1.26)
Diluted - Net loss $ (2.74) $ (3.67) $ (2.72) $ (1.26)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 40,973 32,457 37,199 32,395
Diluted 40,973 32,457 37,199 32,395
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
December 31, December 31,
ASSETS 2007 2006
------------- -------------
Current Assets:
Cash $ 60,962 $ 96,365
Restricted cash 873 2,011
Short-term investments 280,169 -
Accounts receivable - net 93,451 113,371
Due from affiliates 26,693 37,542
Inventories 175,101 145,410
Prepaid and other current assets 40,091 19,830
Deferred taxes - current portion 69,858 103,110
------------- -------------
Total current assets 747,198 517,639
Property, plant and equipment - net 1,260,040 1,218,777
Intangible asset - net 47,603 61,594
Goodwill 94,844 94,844
Deferred taxes - less current portion 321,068 203,451
Other assets 107,518 88,929
------------- -------------
Total $ 2,578,271 $ 2,185,234
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 79,482 $ 64,849
Due to affiliates 216,754 282,282
Accrued and other current liabilities 60,482 75,143
Long term debt - current portion - 30,105
Accrued employee benefits costs - current
portion 11,997 11,083
Convertible senior notes 175,000 175,000
Industrial revenue bonds 7,815 7,815
------------- -------------
Total current liabilities 551,530 646,277
------------- -------------
Senior unsecured notes payable 250,000 250,000
Nordural debt - 309,331
Accrued pension benefit costs - less current
portion 14,427 19,239
Accrued postretirement benefits costs - less
current portion 184,853 206,415
Due to affiliates - less current portion 913,683 554,864
Other liabilities 39,643 27,811
Deferred taxes 62,931 41,587
------------- -------------
Total noncurrent liabilities 1,465,537 1,409,247
------------- -------------
Shareholders' Equity:
Common stock (one cent par value,
100,000,000 shares authorized; 40,988,058
shares outstanding at December 31, 2007
and 32,457,670 at December 31, 2006) 410 325
Additional paid-in capital 857,787 432,270
Accumulated other comprehensive loss (51,531) (166,572)
Accumulated deficit (245,462) (136,313)
------------- -------------
Total shareholders' equity 561,204 129,710
------------- -------------
Total $ 2,578,271 $ 2,185,234
============= =============
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Year ended
December 31,
2007 2006
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (101,249) $ (40,955)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Unrealized net loss on forward contracts 411,023 333,081
Depreciation and amortization 78,060 69,220
Deferred income taxes (135,071) (126,342)
Pension and other postretirement benefits 11,038 14,561
Workers' compensation (743) 987
Stock-based compensation 5,962 5,582
Excess tax benefits from share based
compensation (588) (1,394)
(Gain) loss on disposal of assets 72 (6,851)
Non-cash loss on early extinguishment of debt 2,461 -
Purchase of short-term trading securities (721,271) -
Sale of short-term trading securities 441,102 -
Undistributed earnings of joint ventures (15,645) (16,083)
Change in operating assets and liabilities:
Accounts receivable - net 19,920 (30,355)
Due from affiliates 10,850 (18,904)
Inventories (26,080) (28,524)
Prepaid and other current assets (12,540) 89
Accounts payable, trade 18,211 9,608
Due to affiliates 13,188 9,701
Accrued and other current liabilities (13,660) 18,965
Other - net 9,642 (7,033)
---------- ----------
Net cash (used in) provided by operating
activities (5,318) 185,353
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (24,525) (23,602)
Nordural expansion (88,764) (193,511)
Proceeds from sale of property, plant and
equipment 543 7,759
Restricted cash deposits 3,738 (2,583)
---------- ----------
Net cash used in investing activities (109,008) (211,937)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 30,000 109,000
Repayment of long-term debt (369,436) (581)
Net repayments under revolving credit facility - (8,069)
Excess tax benefits from share based
compensation 588 1,394
Issuance of common stock - net of issuance costs 417,771 3,453
---------- ----------
Net cash provided by financing activities 78,923 105,197
---------- ----------
NET (DECREASE) INCREASE IN CASH (35,403) 78,613
CASH, BEGINNING OF YEAR 96,365 17,752
---------- ----------
CASH, END OF YEAR $ 60,962 $ 96,365
========== ==========
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
----------------------------- ----------------------------
Metric (000) Metric (000) (000)
Tons Pounds $/Pound Tons Pounds Revenue
--------- --------- ------- ------- --------- ---------
2007
4th Quarter 133,002 293,219 $ 1.07 65,136 143,600 $ 119,635
3rd Quarter 134,495 296,509 $ 1.13 61,046 134,583 $ 120,554
2nd Quarter 132,496 292,104 $ 1.19 56,154 123,798 $ 117,667
1st Quarter 131,568 290,057 $ 1.15 53,054 116,964 $ 114,383
--------- --------- ------- ------- --------- ---------
Total 531,561 1,171,889 $ 1.13 235,390 518,945 $ 472,239
2006
4th Quarter 131,041 288,895 $ 1.12 50,634 111,630 $ 100,847
3rd Quarter 126,810 279,568 $ 1.07 42,788 94,331 $ 81,424
2nd Quarter 132,590 292,311 $ 1.12 39,125 86,255 $ 77,702
1st Quarter 132,378 291,843 $ 1.03 24,573 54,174 $ 45,166
--------- --------- ------- ------- --------- ---------
Total 522,819 1,152,617 $ 1.09 157,120 346,390 $ 305,139
(1) Does not include Toll shipments from Nordural
FORWARD PRICED SALES - As of December 31, 2007
2008(1) 2012-2015
(2) 2009(2) 2010(2) 2011(2) (2)
--------- --------- ------- ------- ---------
Base Volume
Pounds (000) 246,958 231,485 231,485 165,347 661,386
Metric Tons 112,018 105,000 105,000 75,000 300,000
Percent of
estimated
capacity 14% 13% 13% 9% 9%
Potential
Additional
Volume(2)
Pounds (000) 220,903 231,485 231,485 165,347 661,386
Metric Tons 100,200 105,000 105,000 75,000 300,000
Percent of
estimated
capacity 12% 13% 13% 9% 9%
(1) The forward priced sales in 2008 exclude January 2008 shipments to
customers that are priced based upon the prior month's market price.
(2) Certain financial sales contracts included in the forward priced
sales base volume for the period 2008 through 2015 contain clauses that
trigger potential additional sales volume when the market price for a
contract month is above the base contract ceiling price. These contracts
will be settled monthly and, if the market price exceeds the ceiling
price for all contract months through 2015, the potential additional
sales volume would be equivalent to the amounts shown above.
SCHEDULE I
Century Aluminum Company
Reconciliation of Cash Flow from Operations to Free Cash Flow
(Dollars in Thousands)
(Unaudited)
Year ended
December 31,
2007 2006
--------- ---------
Net cash (used in) provided by operating activities $ (5,318) $ 185,353
Increase in short-term investments - net 280,169 -
Purchase of property, plant and equipment (1) (24,525) (23,602)
--------- ---------
Free Cash Flow $ 250,326 $ 161,751
========= =========
Footnote:
(1) Excludes Grundartangi, Iceland expansion
The Company's earnings release includes a discussion of free cash flow,
which is not a financial measure based upon generally accepted accounting
principles, or GAAP. The Company defines free cash flow as net cash (used
in) provided by operating activities less capital expenditures (other than
capital expenditures related to the expansion of the Company's
Grundartangi, Iceland facility) and including the net increase in short
term investments due to their liquidity. The Company's calculation of free
cash flow may not be comparable to similarly titled measures reported by
other companies due to differences in the components used in its
calculation. The Company's earnings release includes a reconciliation of
free cash flow to cash flow from operating activities, which is the most
directly comparable GAAP financial measure. Free cash flow should not be
considered as a substitute for cash flows from operating activities as
determined in accordance with GAAP.
The Company's management believes the presentation of free cash flow is a
useful measure that helps investors evaluate the Company's capacity to fund
its ongoing cash operating requirements, including capital expenditures and
debt service obligations, and to make acquisitions or other investments.
Contacts:
Mike Dildine (media)
831-642-9364
Shelly Lair (investors)
831-642-9357
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