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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 2003
COMMONWEALTH INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3245741
(State of incorporation) (I.R.S. Employer Identification No.)
500 West Jefferson Street
19th Floor
Louisville, Kentucky 40202-2823
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (502) 589-8100
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Item 9. Regulation FD Disclosure.
See the following press release, dated April 22, 2003, announcing
Commonwealth Industries, Inc.'s results of operations for the First Quarter of
2003. Note that this information is being provided under Item 9 and Item 12 of
Form 8-K:
Contact: Katherine R. Gould
Vice President
Organizational Development
(502) 589-8130
COMMONWEALTH INDUSTRIES REPORTS FIRST QUARTER RESULTS
LOUISVILLE, Ky. (April 22, 2003) - Commonwealth Industries, Inc. (NASDAQ/NM:
CMIN) today announced results for the first quarter ended March 31, 2003. Net
sales for the first quarter of 2003 declined 4% to $212.0 million from $221.9
million in the same period last year. Gross profit for the quarter fell 12% to
$9.3 million from $10.5 million in the year-earlier quarter, while the operating
loss increased to $3.2 million from $0.7 million in the same period last year.
The net loss for the first quarter of 2003 was $6.5 million or $0.41 per diluted
share compared with a net loss of $4.4 million or $0.28 per diluted share in the
prior-year period, excluding the impact of goodwill impairment charges recorded
in the first quarter of 2002. Including goodwill impairment charges, the
Company's net loss for the first quarter of 2002 was $29.8 million or $1.86 per
diluted share.
Commonwealth's aluminum shipments fell 12% to 183.7 million pounds in
the first quarter of 2003 compared with 209.5 million pounds in the year-earlier
period, while shipments of electrical conduit products declined 9% to 114.9
million feet versus 126.0 million feet in the first quarter of 2002.
As anticipated by the Company last month, Commonwealth's loss for the
first quarter of 2003 primarily reflected a decline in selling prices and higher
unit manufacturing costs at its Alflex electrical products business because of
weaker customer demand.
Additionally, shipments of aluminum products declined in the first
quarter versus the same period last year due to unanticipated weakness in
certain markets, particularly for welded aluminum tube. The decline in aluminum
shipments also reflected planned equipment downtime for maintenance and capital
improvement outages during the first quarter. However, the Company's aluminum
business achieved higher gross profit in the first quarter as improved material
margins more than offset the impact of lower volume and higher unit
manufacturing costs. Because of its higher gross profit for the period,
operating income from Commonwealth's aluminum business was greater in the first
quarter of 2003 than in the year-earlier period.
Earnings before interest, taxes, depreciation and amortization charges
(EBITDA) for the first quarter of 2003 was $2.4 million versus $4.9 million in
the year-earlier period, excluding goodwill impairment charges. Including
goodwill impairment charges, the Company had negative EBITDA for the first
quarter of 2002 of $20.5 million.
Mark V. Kaminski, President and Chief Executive Officer said, "While we
had anticipated a challenging first quarter, we were disappointed by the
continued weakness in Alflex's key markets, particularly commercial
construction, and its impact on the financial results for both Alflex and
Commonwealth Industries as a whole. At the same time, we were pleased to see our
aluminum business increase its profitability during the quarter, a noteworthy
accomplishment considering the reduction in sales volume that resulted from
ongoing economic uncertainties."
The Company's gross profit margin for the first quarter declined to
4.4% from 4.8% in the year-earlier period, reflecting an improvement in its
aluminum business unit, which offset a lower gross profit margin in its
electrical products business unit. The gross profit margin for the aluminum
business increased to 3.7% in the first quarter of 2003 from 2.6% in the same
period last year as material margins improved to $0.353 per pound from $0.303
per pound in the same quarter last year, aided by firmer pricing, lower primary
metal costs, and better scrap availability. Unit manufacturing costs, however,
increased to $0.291 per pound from $0.255 per pound in the year-earlier quarter
due to lower volume and the Company's decision to incur significant down time
for maintenance purposes and to complete capital improvements. In the Company's
electrical products business, gross profit margin declined to 8.7% in the first
quarter of 2003 from 17.6% in the same period last year, reflecting lower volume
and the related impact on manufacturing efficiency, as well as continued
pressure on selling prices resulting from a continued decline in commercial
construction activity and the competitive price environment.
Selling, general and administrative expenses for the first quarter of
2003 increased 11% to $12.5 million from $11.3 million in the same quarter last
year and represented 5.9% of net sales in the first quarter of 2003 versus 5.1%
of net sales in the first quarter of 2002. The increase from the year-earlier
period was due primarily to expenses associated with the Company's project to
upgrade its information technology systems.
Concluding, Kaminski added: "Obviously, we cannot predict when and to
what extent an economic recovery will benefit our businesses. Many factors,
including greater consumer confidence and an easing of geopolitical tensions
around the world, must fall into place if a robust and sustained economic
expansion is to take place. We cannot control the timetable for these events, so
we intend to continue working to expand our cost and service advantages, and to
develop innovative product and revenue enhancements that will provide the
foundation for market share growth as the economy begins to improve."
At March 31, 2003, Commonwealth had total assets of $409.3 million
compared with $421.5 million a year ago. Stockholders' equity at March 31, 2003,
was $100.6 million versus $111.8 million at the end of the first quarter of
2002. Debt-to-capitalization was 55% at March 31, 2003, compared with 53% in the
year-earlier quarter.
Commonwealth Industries is one of North America's leading manufacturers
of aluminum sheet for distributors and the transportation, construction, and
consumer durables end-use markets. The Company has direct-chill casting
facilities in Kentucky and continuous casting mini-mills in Ohio and California.
Commonwealth also is a leading manufacturer of innovative electrical products
through its Alflex operations in California and North Carolina. For more
information about the Company, visit Commonwealth's website at
www.ciionline.com.
A public, listen-only simulcast and replay of Commonwealth's first
quarter conference call may be accessed at the Company's web site or
www.companyboardroom.com. The simulcast will begin at approximately 10:00 a.m.
Eastern Daylight Time on Tuesday, April 22, 2003, and a replay of the call will
be available beginning at approximately noon Eastern Daylight Time and will run
until May 22, 2003.
Certain statements set forth above, may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. All statements regarding the Company's and its subsidiaries' expected
future financial position, results of operations, cash flows, funds from
operations, dividends, financing plans, business strategy, budgets, projected
costs, capital expenditures, competitive positions and growth opportunities are
forward-looking statements. Such forward-looking statements are based on
management's current expectations and include known and unknown risks,
uncertainties and other factors, many of which the Company is unable to predict
or control, that may cause the Company's actual results or performance to
materially differ from any future results or performance expressed or implied by
such statements. Such factors may include, without limitation, the effect of
global economic conditions, the ability to achieve the level of cost savings or
productivity improvements anticipated by management, the effect (including
possible increases in the cost of doing business) resulting from war or
terrorist activities or political uncertainties, the ability to successfully
implement new marketing and sales strategies, the impact of competitive products
and pricing, product development and commercialization, availability and cost of
critical raw materials, capacity and supply constraints or difficulties, the
success of the Company in implementing its business strategy, and other risks as
detailed in the Company's various filings with the Securities and Exchange
Commission.
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Operations
(in thousands except per share data)
Three Months Ended
March 31,
2003 2002
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Net sales $ 211,968 $ 221,858
Cost of goods sold 202,650 211,318
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Gross profit 9,318 10,540
Selling, general and administrative expenses 12,524 11,260
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Operating income (loss) (3,206) (720)
Other income (expense), net 494 273
Interest expense, net (3,701) (3,851)
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Income (loss) before income taxes and cumulative effect of change
in accounting principle (6,413) (4,298)
Income tax expense 80 125
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Income (loss) before cumulative effect of change in accounting principle (6,493) (4,423)
Cumulative effect of change in accounting principle -- (25,327)
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Net income (loss) $ (6,493) $ (29,750)
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Basic and diluted net income (loss) per share:
Income (loss) before cumulative effect of change in accounting principle $ (0.41) $ (0.28)
Cumulative effect of change in accounting principle -- (1.58)
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Net income (loss) $ (0.41) $ (1.86)
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Weighted average shares outstanding:
Basic 16,011 15,984
Diluted 16,011 15,984
Dividends paid per share $ 0.05 $ 0.05
COMMONWEALTH INDUSTRIES, INC.
Operating and Financial Statistics
(dollars in thousands except per share data)
Three Months Ended
March 31,
2003 2002
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Net sales volume:
Aluminum products $ 187,286 $ 192,958
Electrical products $ 24,682 $ 28,900
Shipment volume:
Aluminum products (millions lbs.) 183.7 209.5
Electrical products (millions ft.) 114.9 126.0
Production volume:
Aluminum products (millions lbs.) 196.4 214.3
Electrical products (millions ft.) 116.4 124.8
Gross profit percent
Aluminum products 3.7% 2.6%
Electrical products 8.7% 17.6%
Consolidated Company 4.4% 4.8%
Operating income percent
Aluminum products 2.3% 1.1%
Electrical products (4.1%) 6.8%
Consolidated Company (1.5%) (0.3%)
EBITDA (excluding non-cash goodwill impairment charges of
$25.3 million in 2002) (1) $ 2,431 $ 4,868
EBITDA (including non-cash goodwill impairment charges of
$25.3 million in 2002) (1) $ 2,431 $ (20,459)
Current ratio 2.8x 2.3x
Interest coverage ratio (EBITDA excluding
non-cash goodwill impairment charges of $25.3 million in 2002
to interest expense) 0.7x 1.3x
Interest coverage ratio (EBITDA including
non-cash goodwill impairment charges of $25.3 million in 2002
to interest expense) 0.7x (5.3x)
Return on average stockholders' equity (annualized) (25.0%) (96.7%)
Debt-to-capitalization 55% 53%
Note (1) See EBITDA Calculation on Page 6.
COMMONWEALTH INDUSTRIES, INC.
EBITDA Calculation
(in thousands)
Three Months Ended
March 31,
2003 2002
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Net cash (used in) provided by operating activities $ (8,233) $ 1,063
Adjustments to reconcile to net cash (used in) provided by
operations to net income (loss):
Depreciation (5,143) (5,315)
Amortization (222) (319)
Goodwill impairment charges -- (25,327)
Loss on disposal of property, plant and equipment (12) (2)
Issuance of common stock in connection with stock awards (90) (75)
Change in working capital and other net assets 7,207 225
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Net income (loss) $ (6,493) $ (29,750)
Add back depreciation 5,143 5,315
Add back amortization (1) -- --
Add back tax expense / subtract tax benefit 80 125
Add back interest expense, net (1) 3,701 3,851
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EBITDA including non-cash goodwill impairment charges 2,431 (20,459)
Add back non-cash goodwill impairment charges -- 25,327
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EBITDA excluding non-cash goodwill impairment charges $ 2,431 $ 4,868
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Note (1) Amortization of financing costs for the three months ended March
31, 2003 and 2002 of $222 and $319, respectively, is included in
interest expense, net instead of in amortization in the above
calculation.
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
Three Months Ended
March 31,
2003 2002
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Cash flows from operating activities:
Net income (loss) $ (6,493) $ (29,750)
Adjustments to reconcile net income (loss) to net cash (used in)
provided by operations:
Depreciation 5,143 5,315
Amortization 222 319
Goodwill impairment charges -- 25,327
Loss on disposal of property, plant and equipment 12 2
Issuance of common stock in connection with stock awards 90 75
Change in working capital and other net assets (7,207) (225)
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Net cash (used in) provided by operating activities (8,233) 1,063
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Cash flows from investing activities:
Purchases of property, plant and equipment (4,598) (1,429)
Proceeds from sale of property, plant and equipment 3 --
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Net cash (used in) investing activities (4,595) (1,429)
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Cash flows from financing activities:
Increase in outstanding checks in excess of deposits 418 --
Proceeds from long-term debt 33,707 34,000
Repayments of long-term debt (33,707) (34,000)
Cash dividends paid (801) (799)
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Net cash (used in) financing activities (383) (799)
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Net (decrease) in cash and cash equivalents (13,211) (1,165)
Cash and cash equivalents at beginning of period 13,211 6,393
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Cash and cash equivalents at end of period $ -- $ 5,228
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COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Balance Sheet
(in thousands except share data)
March 31,
--------------------------
2003 2002
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Assets
Cash and cash equivalents $ -- $ 5,228
Accounts receivable, net 209 229
Inventories 140,555 127,601
Net residual interest in receivables sold 59,995 86,498
Prepayments and other current assets 7,423 2,172
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Total current assets 208,182 221,728
Property, plant and equipment, net 146,408 148,249
Goodwill, net 48,872 48,872
Other noncurrent assets 5,867 2,622
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Total assets $ 409,329 $ 421,471
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Liabilities
Outstanding checks in excess of deposits $ 418 $ --
Accounts payable 45,833 59,266
Accrued liabilities 28,225 35,844
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Total current liabilities 74,476 95,110
Long-term debt 125,000 125,000
Other long-term liabilities 5,076 6,621
Accrued pension benefits 28,136 4,344
Accrued postretirement benefits 76,075 78,558
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Total liabilities 308,763 309,633
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Commitments and contingencies -- --
Stockholders' Equity
Common stock, $0.01 par value, 50,000,000 shares authorized, 16,010,971 and
15,984,490 shares outstanding at March 31, 2003
and 2002, respectively 160 160
Additional paid-in capital 405,703 405,518
Accumulated deficit (285,236) (289,081)
Notes receivable from sale of common stock -- (1,561)
Accumulated other comprehensive income:
Minimum pension liability adjustment (21,391) --
Effects of cash flow hedges 1,330 (3,198)
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Total stockholders' equity 100,566 111,838
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Total liabilities and stockholders' equity $ 409,329 $ 421,471
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMONWEALTH INDUSTRIES, INC.
By /s/ Mark V. Kaminski
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Mark V. Kaminski, President and
Chief Executive Officer
Date: April 22, 2003