CENTURY ALUMINUM COMPANY
SEBREE
MARCH 31, 2013
Contents
|
| | |
| | Page |
| Pro forma Financial Information | |
| | |
| Unaudited Pro forma Financial Statements | |
| | |
| Unaudited Pro forma Consolidated Statements of Operations for the year ended December 31, 2012 | |
| Unaudited Pro forma Consolidated Statements of Operations for the three months ended March 31, 2013 | |
| Unaudited Pro forma Consolidated Balance Sheets as of March 31, 2013 | |
| | |
| | |
| Notes to the Unaudited Pro forma Financial Statements | |
| | |
| Notes to the Unaudited Pro forma Consolidated Statements of Operations for the year ended December 31, 2012 | |
| Notes to the Unaudited Pro forma Consolidated Statements of Operations for the three months ended March 31, 2013 | |
| Notes to the Unaudited Pro forma Consolidated Balance Sheets as of March 31, 2013 | |
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma consolidated balance sheet of Century Aluminum Company ("Century") assumes the Century Aluminum Sebree LLC ("Sebree") acquisition was completed as of March 31, 2013 and is derived from the historical results of Century and the unaudited pro forma value of the Sebree assets purchased and liabilities assumed. The unaudited pro forma consolidated statements of operations have been prepared for the year ended December 31, 2012 and for the three-months ended March 31, 2013 as if the acquisition of Sebree had occurred on January 1, 2012 and January 1, 2013, respectively. The unaudited pro forma financial information reflects the Sebree acquisition using the acquisition method of accounting. The preliminary aggregate purchase price is $61 million, which is subject to customary working capital adjustments, and the Company intends to fund the purchase price with cash.
The unaudited pro forma consolidated financial statements have been prepared based upon a preliminary purchase price allocation. The actual fair values could differ materially from the values assumed in the pro forma consolidated financial statements. Differences between the preliminary and final purchase price allocation could result in material adjustments. The final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets acquired and liabilities assumed as of the date of the completion of the acquisition. In addition, subsequent to the closing date, there may be further refinements of the purchase price allocation as additional information becomes available.
The unaudited pro forma consolidated financial statements should be read in conjunction with the audited annual historical consolidated financial statements and notes thereto of Century and Sebree and the unaudited historical interim financial statements and notes thereto of Century and Sebree. The unaudited pro forma consolidated financial statements are presented for informational purposes only and are not necessarily indicative of the actual results had the Sebree acquisition occurred at the times described above, nor does it purport to represent results of future operations.
The pro forma financial information does not reflect any potential changes for the power contract at Sebree or any potential modifications we may make to Sebree's alumina contract. Additionally, Sebree's historical results reflect an allocation of overhead expenses from its parent. We expect that, following a transitional period, Sebree's overhead expenses will be lower under our ownership than that reflected, but have not made any adjustment to the pro forma financial statements.
CENTURY ALUMINUM COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, 2012
(In Thousands, Except Per Share Amounts)
|
| | | | | | | | | | | | | | | | |
| | | Century | | Sebree | | Pro Forma | | Pro Forma |
| | | Historical | | Historical | | Adjustments | | As Adjusted |
| NET SALES: | | | | | | | | |
| Third-party customers | | $ | 719,812 |
| | $ | — |
| | $ | 483,085 |
| (1) | $ | 1,202,897 |
|
| Related parties | | 552,299 |
| | 483,085 |
| | (483,085 | ) | (1) | 552,299 |
|
| | | 1,272,111 |
| | 483,085 |
| | — |
| | 1,755,196 |
|
| Cost of goods sold | | 1,225,769 |
| | 496,629 |
| | (27,274 | ) | (2) | 1,695,124 |
|
| Gross profit (loss) | | 46,342 |
| | (13,544 | ) | | 27,274 |
| | 60,072 |
|
| Impairment charge | | — |
| | 219,549 |
| | — |
| | 219,549 |
|
| Other operating expenses | | 18,253 |
| | 2,751 |
| | — |
| | 21,004 |
|
| Selling, general and administrative expenses | | 35,363 |
| | 12,868 |
| | (550 | ) | (3) | 47,681 |
|
| Operating income (loss) | | (7,274 | ) | | (248,712 | ) | | 27,824 |
| | (228,162 | ) |
| Interest expense – third party - net | | (23,537 | ) | | — |
| | — |
| | (23,537 | ) |
| Interest income – related parties | | 62 |
| | — |
| | — |
| | 62 |
|
| Net loss on forward contracts | | (4,150 | ) | | — |
| | — |
| | (4,150 | ) |
| Other income (expense) — third party | | 5,576 |
| | (2,323 | ) | | (15 | ) | (1) | 3,238 |
|
| Other income (expense) — related party | | — |
| | (15 | ) | | 15 |
| (1) | — |
|
Income (loss) before income taxes and equity in
earnings of joint ventures | | (29,323 | ) | | (251,050 | ) | | 27,824 |
| | (252,549 | ) |
| Income tax (expense) benefit | | (8,910 | ) | | 49,357 |
| | (51,026 | ) | (4) | (10,579 | ) |
Income (loss) before equity in earnings of joint
ventures | | (38,233 | ) | | (201,693 | ) | | (23,202 | ) | | (263,128 | ) |
| Equity in earnings of joint ventures | | 2,623 |
| | — |
| | — |
| | 2,623 |
|
| Net income (loss) | | $ | (35,610 | ) | | $ | (201,693 | ) | | $ | (23,202 | ) | | $ | (260,505 | ) |
| | | | | | | | | |
| Net income (loss) allocated to common shareholders | | $ | (35,610 | ) | | | | | | $ | (260,505 | ) |
| EARNINGS (LOSS) PER COMMON SHARE: | | | | | | | | |
| Basic | | $ | (0.40 | ) | | | | | | $ | (2.94 | ) |
| Diluted | | $ | (0.40 | ) | | | | | | $ | (2.94 | ) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | | |
| Basic | | 88,534 |
| | | | | | 88,534 |
|
| Diluted | | 88,534 |
| | | | | | 88,534 |
|
| | | | | | | | | |
| DIVIDENDS PER COMMON SHARE | | $ | — |
| | | | | | $ | — |
|
See accompanying notes to the unaudited pro forma consolidated statement of operations.
NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2012
1. Represents reclassifications of Sebree related party sales and other expense as a result of the acquisition.
2. Reflects an adjustment to Sebree's historical depreciation expense of $32,929 based on the reduced net book value as a result of the purchase accounting preliminary fair market valuation of Sebree's property, plant and equipment using an estimated average useful life of 10 years.
3. Reflects an adjustment to selling, general and administrative expenses for non-recurring transaction costs associated with the acquisition.
4. Reflects an adjustment to eliminate all taxes related to historical Sebree and to reflect the state income tax expense associated with the additional pro forma pre-tax income associated with the pro forma adjustments that consisted of a decrease in depreciation expense and selling, general and administrative expenses. The pro forma state statutory tax rate used is 6%. The pro forma adjustment to eliminate Sebree's historical taxes reflects that on a pro forma basis the Company's net operating loss carryforwards would have been available to offset Sebree's taxable income.
CENTURY ALUMINUM COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2013
(In Thousands, Except Per Share Amounts)
|
| | | | | | | | | | | | | | | | |
| | | Century | | Sebree | | Pro Forma | | Pro Forma |
| | | Historical | | Historical | | Adjustments | | As Adjusted |
| NET SALES: | | | | | | | | |
| Third-party customers | | $ | 188,514 |
| | $ | — |
| | $ | 126,424 |
| (1) | $ | 314,938 |
|
| Related parties | | 132,760 |
| | 126,424 |
| | (126,424 | ) | (1) | 132,760 |
|
| | | 321,274 |
| | 126,424 |
| | — |
| | 447,698 |
|
| Cost of goods sold | | 303,692 |
| | 116,469 |
| | (1,397 | ) | (2) | 418,764 |
|
| Gross profit (loss) | | 17,582 |
| | 9,955 |
| | 1,397 |
| | 28,934 |
|
| Impairment charge | | — |
| | 13,675 |
| | — |
| | 13,675 |
|
| Other operating expenses | | 1,096 |
| | 4,308 |
| | — |
| | 5,404 |
|
| Selling, general and administrative expenses | | 16,299 |
| | 3,214 |
| | (250 | ) | (3) | 19,263 |
|
| Operating income (loss) | | 187 |
| | (11,242 | ) | | 1,647 |
| | (9,408 | ) |
| Interest expense – third party - net | | (5,945 | ) | | — |
| | — |
| | (5,945 | ) |
| Net loss on forward contracts | | 15,507 |
| | — |
| | — |
| | 15,507 |
|
| Other income (expense) — third party | | 70 |
| | 156 |
| | — |
| | 226 |
|
Income (loss) before income taxes and equity in
earnings of joint ventures | | 9,819 |
| | (11,086 | ) | | 1,647 |
| | 380 |
|
| Income tax (expense) benefit | | (2,517 | ) | | 333 |
| | (432 | ) | (4) | (2,616 | ) |
Income (loss) before equity in earnings of joint
ventures | | 7,302 |
| | (10,753 | ) | | 1,215 |
| | (2,236 | ) |
| Equity in earnings of joint ventures | | 951 |
| | — |
| | — |
| | 951 |
|
| Net income (loss) | | $ | 8,253 |
| | $ | (10,753 | ) | | $ | 1,215 |
| | $ | (1,285 | ) |
| | | | | | | | | |
| Net income (loss) allocated to common shareholders | | $ | 7,567 |
| | | | | | $ | (1,285 | ) |
| EARNINGS (LOSS) PER COMMON SHARE: | | | | | | | | |
| Basic | | $ | 0.09 |
| | | | | | $ | (0.01 | ) |
| Diluted | | $ | 0.09 |
| | | | | | $ | (0.01 | ) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | | |
| Basic | | 88,555 |
| | | | | | 88,555 |
|
| Diluted | | 89,020 |
| | | | | | 88,555 |
|
| | | | | | | | | |
| DIVIDENDS PER COMMON SHARE | | $ | — |
| | | | | | $ | — |
|
See accompanying notes to the unaudited pro forma consolidated statement of operations.
NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2013
1. Represents reclassifications of Sebree related party sales as a result of the acquisition.
2. Reflects an adjustment to Sebree's historical depreciation expense of $2,811 based on the reduced net book value as a result of the purchase accounting preliminary fair market valuation of Sebree's property, plant and equipment using an estimated average useful life of 10 years.
3. Reflects an adjustment to selling, general and administrative expenses for non-recurring transaction costs associated with the acquisition.
4. Reflects an adjustment to eliminate all taxes related to historical Sebree and to reflect the state income tax expense associated with the additional pro forma pre-tax income associated with the pro forma adjustments that consisted of a decrease in depreciation expense and selling, general and administrative. The pro forma state statutory tax rate used is 6%. The pro forma adjustment to eliminate Sebree's historical taxes reflects that on a pro forma basis the Company's net operating loss carryforwards would have been available to offset Sebree's taxable income.
CENTURY ALUMINUM COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 2013
(In Thousands, Except Per Share Amounts)
|
| | | | | | | | | | | | | |
| | | Century | | Pro Forma | | Pro Forma |
| | | Historical | | Adjustments | | As Adjusted |
| ASSETS | | | | | | |
| Current Assets: | | | | | | |
| Cash and cash equivalents | | $ | 195,471 |
| | $ | (47,373 | ) | (1 | ) | $ | 148,098 |
|
| Restricted cash | | 258 |
| | — |
| | 258 |
|
| Accounts receivable – net | | 52,312 |
| | — |
| | 52,312 |
|
| Due from affiliates | | 43,561 |
| | — |
| | 43,561 |
|
| Inventories | | 156,815 |
| | 58,497 |
| (1 | ) | 215,312 |
|
| Prepaid and other current assets | | 41,163 |
| | 363 |
| (1 | ) | 41,526 |
|
| Deferred taxes - current portion | | 19,726 |
| | — |
| | 19,726 |
|
| Total current assets | | 509,306 |
| | 11,487 |
| | 520,793 |
|
| Property, Plant and Equipment – net | | 1,180,770 |
| | 55,520 |
| (1 | ) | 1,236,290 |
|
| Other assets | | 101,039 |
| | — |
| | 101,039 |
|
| Total | | $ | 1,791,115 |
| | $ | 67,006 |
| | $ | 1,858,121 |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | |
| LIABILITIES: | | | | | | |
| Accounts payable, trade | | $ | 75,796 |
| | $ | — |
| | $ | 75,796 |
|
| Due to affiliates | | 50,210 |
| | — |
| | 50,210 |
|
| Accrued and other current liabilities | | 49,001 |
| | 40,610 |
| (1 | ) | 89,611 |
|
| Accrued employee benefits costs - current portion | | 18,668 |
| | 3,512 |
| (1 | ) | 22,180 |
|
| Industrial revenue bonds | | 7,815 |
| | — |
| | 7,815 |
|
| Total current liabilities | | 201,490 |
| | 44,122 |
| | 245,611 |
|
| Senior notes payable | | 250,861 |
| | | | 250,861 |
|
| Accrued pension benefits costs – less current portion | | 67,322 |
| | 5,039 |
| (1 | ) | 72,361 |
|
Accrued postretirement benefits costs - less current
portion | | 143,794 |
| | 6,544 |
| (1 | ) | 150,338 |
|
| Other liabilities | | 25,278 |
| | 8,003 |
| (1 | ) | 33,281 |
|
| Deferred Taxes– Less current portion | | 110,361 |
| | 1,257 |
| (2 | ) | 111,618 |
|
| Total noncurrent liabilities | | 597,616 |
| | 20,843 |
| | 618,459 |
|
| SHAREHOLDERS’ EQUITY: | | | | | | |
Series A Preferred stock (one cent par value,
5,000,000 shares authorized; 80,084 shares issued
and outstanding) | | 1 |
| | — |
| | 1 |
|
Common stock (one cent par value, 195,000,000
shares authorized; 93,382,730 shares issued and
88,596,209 outstanding) | | 934 |
| | — |
| | 934 |
|
| Additional paid-in capital | | 2,507,671 |
| | — |
| | 2,507,671 |
|
| Treasury stock, at cost | | (49,924 | ) | | — |
| | (49,924 | ) |
| Accumulated other comprehensive loss | | (150,297 | ) | | — |
| | (150,297 | ) |
| Accumulated deficit | | (1,316,376 | ) | | 2,042 |
| (1 | ) | (1,314,334 | ) |
| Total shareholders’ equity | | 992,009 |
| | 2,042 |
| | 994,051 |
|
| Total | | $ | 1,791,115 |
| | $ | 67,006 |
| | $ | 1,858,121 |
|
See accompanying notes to the unaudited pro forma consolidated balance sheet.
NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED BALANCE SHEET
March 31, 2013
(Dollars in Thousands)
1. Reflects the adjusted purchase price and preliminary allocation of the estimated fair market value of assets purchased and liabilities assumed for the Sebree acquisition.
|
| | | |
| Preliminary consideration: | |
| Purchase price | $ | 65,000 |
|
| Other credits and working capital adjustments | (13,627 | ) |
| Other post retirement benefits credit | (4,000 | ) |
| Adjusted consideration | $ | 47,373 |
|
| The Company funded the acquisition with cash. | |
| | |
| Preliminary allocation of purchase price: | |
| Inventory | $ | 58,497 |
|
| Other current assets | 363 |
|
| Property, plant and equipment | 55,520 |
|
| Current liabilities | (44,122 | ) |
| Noncurrent liabilities | (20,843 | ) |
| Preliminary allocation of fair market value of net assets | $ | 49,415 |
|
| | |
| Preliminary bargain purchase gain | $ | 2,042 |
|
2. Reflects an adjustment to record deferred income taxes for the effects of the preliminary calculation of the pro forma bargain purchase gain using and effective tax rate of 38.1%.
