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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
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