July 24, 2008

Century Aluminum Reports Second Quarter 2008 Results

MONTEREY, CA, Jul 24, 2008 (MARKET WIRE via COMTEX News Network) -- Century Aluminum Company (NASDAQ: CENX) reported a net loss of $2.3 million ($0.06 per basic and diluted share) for the second quarter of 2008. Reported second quarter results were negatively impacted by an after-tax charge of $129.9 million ($3.16 per basic share) for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. Quarterly results were positively impacted by a $15.5 million tax benefit ($0.38 per basic share) resulting principally from a reduction in non-U.S. corporate tax rates. The dilutive effect of the convertible notes, options and service-based awards would reduce basic EPS by $0.21. Cash used to settle forward contracts that do not qualify for cash flow hedge accounting was $62.8 million.

In the second quarter of 2007, the company reported a net loss of $60.7 million ($1.77 per basic and diluted share), which included an after-tax charge of $125.1 million ($3.66 per basic share) for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting and a non-cash after-tax charge of $2.0 million ($0.06 per basic share) for the early extinguishment of debt. Quarterly results were positively impacted by a tax benefit of $4.3 million ($0.13 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 $0.13. Cash used to settle forward contracts that do not qualify for cash flow hedge accounting was $27.8 million.

Recent highlights included:

--  Net sales of $545 million increased 16 percent from record levels set
    in the first quarter of 2008.
--  Construction continued at the company's greenfield smelter project at
    Helguvik, Iceland, where first metal production is expected by year-end
    2010.  A groundbreaking ceremony in June celebrated the commencement of
    major construction activity.
--  After a successful conceptual study, Century and Minmetals have
    commissioned a full feasibility study for a bauxite and alumina joint
    venture project in Jamaica. The study is scheduled to be completed by the
    end of 2009.
--  In early July, Century settled all of its remaining fixed price
    forward aluminum financial sales contracts. The transaction was partially
    financed with a public stock offering of 7,475,000 shares of common stock
    (including an over-allotment option of 975,000 shares) at $62.25 per share.


Sales in the second quarter of 2008 were $545.2 million, compared with $464.0 million in the second quarter of 2007. Shipments of primary aluminum for the quarter totaled 198,172 tonnes compared with 188,650 tonnes in the year-ago quarter, reflecting the impact of the Grundartangi expansion to 260,000 tonnes, which was completed in the fourth quarter of 2007.

For the first half of 2008 the company reported a net loss of $235.1 million ($5.72 per basic and diluted share), which includes an after-tax charge of $415.8 million ($10.12 per basic share) for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. The dilutive effect of the convertible notes, options and performance shares would reduce basic EPS for the first half of 2008 by $0.30 per share. Cash used to settle forward contracts that do not qualify for cash flow hedge accounting was $115.0 million. This result compares with net income of $3.6 million ($0.11 per basic and $0.10 per diluted share) in the year-ago period, which included an after-tax charge of $125.1 million ($3.75 per basic share) for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. The dilutive effect of the convertible notes, options and service-based awards would reduce basic EPS for the first half of 2007 by $0.24 per share. During the first half of 2007, cash used to settle forward contracts that do not qualify for cash flow hedge accounting was $54.9 million.

Sales in the first six months of 2008 were $1,016.3 million compared with $911.7 million in the same period of 2007. Shipments of primary aluminum for the first six months of 2008 were 397,894 tonnes compared with 373,272 tonnes for the comparable 2007 period.

"Century made important progress during the quarter," said president and chief executive officer Logan W. Kruger. "The unwind of our entire aluminum hedge book provides our investors with full exposure to the commodity. We continue to believe firmly that metal markets, while volatile, will demonstrate long-term upward pressure consistent with ongoing cost increases and supply constraints, as well as increasing metal demand from emerging economies. Construction is accelerating at the Helguvik greenfield site and we expect to begin pouring concrete by the fourth quarter of this year. Finally, the Century-Minmetals Jamaican bauxite and alumina joint venture project has moved into a full feasibility study which, if successful, could result in a project decision by the end of 2009."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland, as well as an 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.

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.

Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:

Helga Gunnarsdottir, Director-Corporate Finance, Landsbanki Islands hf.

Olafur Finsen, Senior Legal Advisor-Corporate Finance, Landsbanki Islands hf.

                         Century Aluminum Company
                  Consolidated Statements of Operations
                 (in Thousands, Except Per Share Amounts)
                                (Unaudited)
                              Three months ended       Six months ended
                                   June 30,                June 30,
                            ----------------------  ----------------------
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------
NET SALES:
   Third-party customers    $  420,032  $  370,883  $  776,925  $  751,736
   Related parties             125,165      93,122     239,414     159,926
                            ----------  ----------  ----------  ----------
                               545,197     464,005   1,016,339     911,662
COST OF GOODS SOLD             388,973     355,613     764,120     692,618
                            ----------  ----------  ----------  ----------
GROSS PROFIT                   156,224     108,392     252,219     219,044
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES        13,851      14,445      32,717      27,412
                            ----------  ----------  ----------  ----------
OPERATING INCOME               142,373      93,947     219,502     191,632
INTEREST EXPENSE - Net          (3,889)     (7,439)     (7,609)    (16,469)
NET LOSS ON FORWARD
 CONTRACTS                    (203,784)   (205,246)   (652,092)   (204,856)
OTHER INCOME (EXPENSE) -
 Net                               306      (3,139)       (227)     (3,295)
                            ----------  ----------  ----------  ----------
LOSS BEFORE INCOME TAXES
 AND EQUITY IN EARNINGS OF
 JOINT VENTURES                (64,994)   (121,877)   (440,426)    (32,988)
INCOME TAX BENEFIT              57,087      57,045     195,330      28,958
                            ----------  ----------  ----------  ----------
LOSS BEFORE EQUITY IN
 EARNINGS OF JOINT VENTURES     (7,907)    (64,832)   (245,096)     (4,030)
EQUITY IN EARNINGS OF JOINT
 VENTURES                        5,566       4,167       9,959       7,614
                            ----------  ----------  ----------  ----------
NET INCOME (LOSS)           $   (2,341) $  (60,665) $ (235,137) $    3,584
                            ==========  ==========  ==========  ==========
EARNINGS (LOSS) PER COMMON
 SHARE
   Basic - Net income
    (loss)                  $    (0.06) $    (1.77) $    (5.72) $     0.11
   Diluted - Net income
    (loss)                  $    (0.06) $    (1.77) $    (5.72) $     0.10
WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING
   Basic                        41,143      34,224      41,092      33,371
   Diluted                      41,143      34,224      41,092      35,597
                         Century Aluminum Company
                        Consolidated Balance Sheets
                          (Dollars in Thousands)
                                (Unaudited)
                                                     June       December
ASSETS                                             30, 2008     31, 2007
                                                  -----------  -----------
Current Assets:
   Cash                                           $   351,644  $    60,962
   Restricted cash                                      2,771          873
   Short-term investments                              31,937      280,169
   Accounts receivable - net                           94,493       93,451
   Due from affiliates                                 33,288       26,693
   Inventories                                        205,348      175,101
   Prepaid and other current assets                    59,886       40,091
   Deferred taxes - current portion                   111,931       69,858
                                                  -----------  -----------
      Total current assets                            891,298      747,198
Property, plant and equipment - net                 1,278,406    1,260,040
Intangible asset - net                                 40,065       47,603
Goodwill                                               94,844       94,844
Deferred taxes - less current portion                 514,437      321,068
Other assets                                          144,567      107,518
                                                  -----------  -----------
      Total                                       $ 2,963,617  $ 2,578,271
                                                  ===========  ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable, trade                        $   100,913  $    79,482
   Due to affiliates                                  348,614      216,754
   Accrued and other current liabilities               88,723       60,482
   Accrued employee benefits costs - current
    portion                                            11,659       11,997
   Convertible senior notes                           175,000      175,000
   Industrial revenue bonds                             7,815        7,815
                                                  -----------  -----------
      Total current liabilities                       732,724      551,530
                                                  -----------  -----------
Senior unsecured notes payable                        250,000      250,000
Accrued pension benefit costs - less current
 portion                                               14,709       14,427
Accrued postretirement benefits costs - less
 current portion                                      191,093      184,853
Due to affiliates - less current portion            1,320,043      913,683
Other liabilities                                      57,191       39,643
Deferred taxes                                         54,240       62,931
                                                  -----------  -----------
      Total noncurrent liabilities                  1,887,276    1,465,537
                                                  -----------  -----------
Shareholders' Equity:
   Common stock (one cent par value, 100,000,000
    shares authorized; 41,151,652 shares outstanding
    at June 30, 2008 and 40,988,058 at
    December 31, 2007)                                    412          410
   Additional paid-in capital                         867,106      857,787
   Accumulated other comprehensive loss               (43,302)     (51,531)
   Accumulated deficit                               (480,599)    (245,462)
                                                  -----------  -----------
      Total shareholders' equity                      343,617      561,204
                                                  -----------  -----------
      Total                                       $ 2,963,617  $ 2,578,271
                                                  ===========  ===========
                         Century Aluminum Company
                  Consolidated Statements of Cash Flows
                          (Dollars in Thousands)
                                (Unaudited)
                                                       Six months ended
                                                           June 30,
                                                       2008        2007
                                                    ----------  ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                $ (235,137) $    3,584
   Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
      Unrealized net loss on forward contracts         536,650     150,160
      Depreciation and amortization                     41,860      38,012
      Deferred income taxes                           (194,569)    (48,949)
      Pension and other postretirement benefits          8,513       9,907
      Stock-based compensation                          11,658       2,598
      Excess tax benefits from share based
       compensation                                       (657)       (487)
      (Gain) Loss on disposal of assets                    109         (95)
      Non-cash loss on early extinguishment of debt          -       2,461
      Purchase of short-term trading securities        (97,532)   (347,958)
      Sale of short-term trading securities            345,764     226,277
      Undistributed earnings of joint ventures          (9,959)     (7,614)
      Change in operating assets and liabilities:
         Accounts receivable - net                      (1,042)      2,218
         Due from affiliates                            (6,595)       (456)
         Inventories                                   (30,212)    (21,934)
         Prepaid and other current assets              (20,821)     (2,650)
         Accounts payable, trade                        16,693       7,341
         Due to affiliates                               7,726      15,474
         Accrued and other current liabilities          (5,544)    (16,855)
         Other - net                                    (2,092)     10,053
                                                    ----------  ----------
      Net cash provided by operating activities        364,813      21,087
                                                    ----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property, plant and equipment           (14,961)     (7,678)
   Nordural expansion                                  (32,648)    (58,981)
   Investment in joint ventures                        (27,621)          -
   Proceeds from sale of property, plant and
    equipment                                                5         543
   Restricted cash deposits                             (1,898)      2,599
                                                    ----------  ----------
      Net cash used in investing activities            (77,123)    (63,517)
                                                    ----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Borrowings of long-term debt                              -      30,000
   Repayment of long-term debt                               -    (314,800)
   Excess tax benefits from share based
    compensation                                           657         487
   Issuance of common stock - net of issuance costs      2,335     418,105
                                                    ----------  ----------
      Net cash provided by financing activities          2,992     133,792
                                                    ----------  ----------
NET INCREASE IN CASH                                   290,682      91,362
CASH, BEGINNING OF PERIOD                               60,962      96,365
                                                    ----------  ----------
CASH, END OF PERIOD                                 $  351,644  $  187,727
                                                    ==========  ==========
                         Century Aluminum Company
                          Selected Operating Data
                                (Unaudited)
                       SHIPMENTS - PRIMARY ALUMINUM
                         Direct (1)                       Toll
                ----------------------------- -----------------------------
                 Metric     (000)              Metric     (000)     (000)
                  Tons     Pounds   $/Pound     Tons     Pounds    Revenue
                --------- --------- --------- --------- --------- ---------
2008
2nd Quarter       131,639   290,214 $    1.37    66,533   146,681 $ 147,128
1st Quarter       133,004   293,223 $    1.17    66,717   147,086 $ 127,177
2007
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
(1) Does not include Toll shipments from Nordural

Contacts:

Mike Dildine (media)
831-642-9364

Shelly Lair (investors)
831-642-9357


SOURCE: Century Aluminum Company


Copyright 2008 Market Wire, All rights reserved.

News Provided by COMTEX


Close window | Back to top

Copyright 2017 Century Aluminum Company