Exhibit 99.1
CENTURY ALUMINUM REPORTS SECOND QUARTER 2005 EARNINGS
MONTEREY, CA. July 27, 2005 -- Century Aluminum Company (NASDAQ:CENX) reported
net income of $40.7 million, or $1.27 a share, fully diluted, for the second
quarter of 2005. Reported after-tax net income was positively impacted by the
following items:
- $15.7 million or $0.49 a share, for mark to market adjustments on forward
contracts that do not qualify for cash flow hedge accounting.
- The Company has recorded income taxes on Nordural earnings assuming that
they will be subject to United States income taxes from the date of
acquisition, April 27, 2004 to March 31, 2005. During the second quarter
of 2005, management determined that certain Nordural earnings would remain
invested overseas indefinitely to fund growth opportunities in Iceland and
elsewhere. Accordingly, United States income taxes are no longer provided
on such earnings.
In the second quarter of 2005, the Company changed from the last-in first-out
(LIFO) inventory valuation method to the first-in first-out (FIFO) method.
Management believes that the change will provide a better matching of costs and
revenues. The change did not have a material impact on net income in the second
quarter. Financial statements for periods prior to second quarter 2005 have been
restated to reflect this change.
For the second quarter of 2004, the Company reported net income of $19.2
million, or $0.63 a share, fully diluted ($18.3 million, or $0.60 a share, fully
diluted, before restatement).
Sales in the second quarter of 2005 were $283.3 million compared with $263.7
million in the second quarter of 2004. Shipments of primary aluminum for the
quarter totaled 339.5 million pounds compared with 330.4 million pounds in the
year-ago quarter.
Net income for the first six months of 2005 was $52.5 million, or $1.63 a share,
fully diluted ($51.9 million, or $1.61 a share before restatement). This
compares with net income of $24.8 million, or $0.94 a share, fully diluted in
the year-ago period ($23.1 million, or $0.87 a share, fully diluted before
restatement).
Sales in the first six months of 2005 were $568.7 million compared with $495.8
million in the same period of 2004. Shipments of primary aluminum for the 2005
period were 676.5 million pounds compared with 627.2 million pounds in the
year-ago period.
Financial results and shipment data for 2004 include Nordural from April 27,
2004, the date of acquisition.
"Although aluminum prices were off somewhat from the first quarter, we continued
to benefit from a favorable market," said Craig Davis, chairman and chief
executive officer. "All of our facilities exceeded expectations except for
Hawesville, which continued to experience operational difficulties, including a
higher than average level of pot failures. The strong forward market that
prevailed in the quarter allowed us to put in place a significant eight-year
forward sale, beginning in 2008. As is our practice, however, a substantial
portion of our capacity remains unhedged, which allows us to participate in the
event of even stronger future markets."
Century presently owns 615,000 metric tonnes per year (mtpy) of primary aluminum
capacity. The company owns and operates a 244,000 mtpy plant at Hawesville,
Kentucky; a 170,000 mtpy plant at Ravenswood, West Virginia; and a 90,000 mtpy
plant at Grundartangi, Iceland that is being expanded to 212,000 mtpy. The
company also owns a 49.67-percent interest in a 222,000 mtpy reduction plant at
Mt. Holly, South Carolina. Alcoa Inc. owns the remainder of the plant and is the
operating partner. With the completion of the Grundartangi expansion, Century's
total capacity will stand at 737,000 mtpy. Century also holds a 50-percent share
of the 1.25 million mtpy Gramercy Alumina refinery in Gramercy, Louisiana and
related bauxite assets in Jamaica. Century's corporate offices are located in
Monterey, California.
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, Monterey, California
Michael Dildine, 831-642-9364
mdildine@centuryca.com
CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in Thousands, Except Per Share Amounts)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2004 2004
2005 RESTATED 2005 RESTATED
--------- --------- --------- ---------
NET SALES:
Third-party customers ...................... $243,329 $225,430 $490,754 $417,776
Related parties ............................ 39,927 38,303 77,898 78,051
--------- --------- --------- ---------
283,256 263,733 568,652 495,827
COST OF GOODS SOLD .............................. 237,908 217,054 471,737 410,795
--------- --------- --------- ---------
GROSS PROFIT .................................... 45,348 46,679 96,915 85,032
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES .... 8,046 3,991 16,842 9,399
--------- --------- --------- ---------
OPERATING INCOME ................................ 37,302 42,688 80,073 75,633
INTEREST EXPENSE - Net .......................... (6,242) (11,281) (12,708) (21,888)
NET GAIN (LOSS) ON FORWARD CONTRACTS ............ 24,496 (1,177) 1,001 (13,997)
OTHER INCOME (EXPENSE) - Net ................... (472) 9 (65) (605)
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS
OF JOINT VENTURE ................................ 55,084 30,239 68,301 39,143
INCOME TAX EXPENSE .............................. (19,239) (11,020) (26,074) (14,331)
--------- --------- --------- ---------
INCOME BEFORE EQUITY IN EARNINGS OF JOINT VENTURE 35,845 19,219 42,227 24,812
EQUITY IN EARNINGS OF JOINT VENTURE ............. 4,899 - 10,247 -
--------- --------- --------- ---------
NET INCOME ...................................... 40,744 19,219 52,474 24,812
PREFERRED DIVIDENDS ............................. - (269) - (769)
--------- --------- --------- ---------
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS .... $ 40,744 $ 18,950 $ 52,474 $ 24,043
======== ======== ======== ========
EARNINGS PER COMMON SHARE
Basic - Net income ......................... $ 1.27 $ 0.64 $ 1.63 $ 0.95
Diluted - Net income ....................... $ 1.27 $ 0.63 $ 1.63 $ 0.94
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic ...................................... 32,140 29,629 32,099 25,412
Diluted .................................... 32,196 30,542 32,162 25,588
CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
DECEMBER 31, 2004
ASSETS JUNE 30, 2005 RESTATED
--------------- -----------------
CURRENT ASSETS:
Cash ...................................................................... $ 35,174 $ 44,168
Restricted cash ........................................................... 2,027 1,678
Accounts receivable - net ................................................. 104,575 79,576
Due from affiliates ....................................................... 14,044 14,371
Inventories ............................................................... 104,450 111,284
Prepaid and other current assets .......................................... 16,172 10,055
Deferred taxes - current portion .......................................... 23,458 24,642
--------------- -----------------
Total current assets ................................................. 299,900 285,774
Property, plant and equipment - net ............................................ 916,008 806,250
Intangible asset - net ......................................................... 81,989 86,809
Goodwill ....................................................................... 94,844 95,610
Due from affiliates - less current portion ..................................... 2,747 -
Other assets ................................................................... 74,614 58,110
--------------- -----------------
Total ................................................................ $ 1,470,102 $ 1,332,553
=============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade ................................................... $ 47,926 $ 47,479
Due to affiliates ......................................................... 44,574 84,815
Industrial revenue bonds .................................................. 7,815 7,815
Long term debt - current portion .......................................... 561 10,582
Accrued and other current liabilities ..................................... 59,258 53,309
Accrued employee benefits costs - current portion ......................... 8,458 8,458
Convertible senior notes .................................................. 175,000 175,000
--------------- -----------------
Total current liabilities ............................................ 343,592 387,458
Senior unsecured notes payable - net ........................................... 250,000 250,000
Nordural debt .................................................................. 153,739 80,711
Accrued pension benefit costs - less current portion ........................... 12,358 10,685
Accrued postretirement benefits costs - less current portion ................... 91,296 85,549
Other liabilities .............................................................. 35,459 34,961
Due to affiliates - less current portion ....................................... 17,402 30,416
Deferred taxes ................................................................. 94,778 68,273
--------------- -----------------
Total noncurrent liabilities ......................................... 655,032 560,595
SHAREHOLDERS' EQUITY:
Common stock (one cent par value, 50,000,000 shares authorized; 32,149,154
shares outstanding at June 30, 2005 and 32,038,297 at December 31, 2004) 321 320
Additional paid-in capital ................................................ 418,412 415,453
Accumulated other comprehensive loss ...................................... (20,626) (52,186)
Retained earnings ......................................................... 73,371 20,913
--------------- -----------------
Total shareholders' equity ........................................... 471,478 384,500
--------------- -----------------
Total ................................................................ $ 1,470,102 $ 1,332,553
=============== =================
CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
(Dollars in Thousands)
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
2004
2005 RESTATED
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................................ $ 52,474 $ 24,812
Adjustments to reconcile net income to net cash provided by
operating activities:
Unrealized net (gain) loss on forward contracts ...................... (3,429) 6,659
Depreciation and amortization ........................................ 28,050 23,731
Deferred income taxes ................................................ 26,074 5,994
Pension and other post retirement benefits ........................... 7,421 5,376
Inventory market adjustment .......................................... - (2,273)
(Gain) loss on disposal of assets .................................... (4) 695
Non-cash loss on early extinguishment of debt ........................ 253 -
Change in operating assets and liabilities:
Accounts receivable - net ....................................... (24,999) (8,264)
Due from affiliates ............................................. 327 (1,059)
Inventories . .................................. 6,834 (3,495)
Prepaids and other current assets ............................... (5,712) (2,724)
Accounts payable, trade ......................................... (6,745) (1,294)
Due to affiliates ............................................... (9,548) (3,383)
Accrued and other current liabilities ........................... (3,948) 9,308
Other - net. .................................................... (8,324) (2,472)
--------- ---------
Net cash provided by operating activities ............................ 58,724 51,611
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ................................. (5,481) (5,712)
Nordural expansion ........................................................ (113,654) -
Proceeds from sale of property, plant and equipment ....................... 59 -
Restricted cash deposits .................................................. (350) -
Business acquisitions, net of cash acquired ............................... (7,000) (184,869)
--------- ---------
Net cash used in investing activities .................... (126,426) (190,581)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings ................................................................ 145,378 -
Repayment of debt ......................................................... (83,023) (20,659)
Financing fees ............................................................ (4,617) -
Dividends ................................................................. (16) (3,311)
Issuance of common stock .................................................. 986 209,905
--------- ---------
Net cash provided by financing activities ............................ 58,708 185,935
NET INCREASE (DECREASE) IN CASH ................................................ (8,994) 46,965
CASH, BEGINNING OF PERIOD ...................................................... 44,168 28,204
--------- ---------
CASH, END OF PERIOD ............................................................ $ 35,174 $ 75,169
========= =========
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
--------------------------------- -----------------------------------
(000) (000) (000)
Metric Tons Pounds $/Pound Metric Tons Pounds Revenue
----------- ------- ------- ----------- ------ ----------
2005
2nd Quarter 130,974 288,748 $ 0.86 23,025 50,761 $ 34,174
1st Quarter 130,083 286,783 $ 0.88 22,756 50,168 $ 33,372
2004
2nd Quarter 133,726 294,816 $ 0.82 16,148 35,600 $ 21,483
1st Quarter 134,601 296,743 $ 0.78 - - $ -
(1) Does not include Toll shipments from Nordural
FORWARD PRICED SALES - AS OF JUNE 30, 2005
2005(1) 2006(2) 2007(2) 2008(2) 2009(2) 2010(2) 2011-2015(2)
------- ------- ------- ------- ------- ------- ------------
Base Volume
Pounds (000) 247,849 370,266 374,565 240,745 231,485 231,485 826,733
Metric Tons 112,423 167,950 169,900 109,200 105,000 105,000 375,000
Percent of
estimated
capacity 36% 24% 22% 14% 14% 14% 10%
Potential Additional Volume(2)
Pounds (000) - 55,556 111,113 220,903 231,485 231,485 826,733
Metric Tons - 25,200 50,400 100,200 105,000 105,000 375,000
Percent of
estimated
capacity - 4% 7% 13% 14% 14% 10%
1)The forward priced sales in 2005 exclude July 2005 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 2006 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.