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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): September 21, 1999
CENTURY ALUMINUM COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-27918 13-3070826
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
Incorporation)
2511 GARDEN ROAD
BUILDING A, SUITE 200
MONTEREY, CALIFORNIA 93940
(Address of principal executive offices) (Zip Code)
(831) 642-9300
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 21, 1999 Century Aluminum Company, a Delaware
corporation ("Century" or the "Company"), and Century Aluminum of West Virginia,
Inc., a Delaware corporation and wholly-owned subsidiary of Century ("Century
WV"), completed the sale to Pechiney Rolled Products LLC, a Delaware limited
liability company ("Pechiney"), of certain assets and the assumption of certain
liabilities of Century WV's rolled products unit at Ravenswood, West Virginia
(the "Rolling Business") and all of the issued and outstanding shares of common
stock of Century Cast Plate, Inc., a Delaware corporation and wholly-owned
subsidiary of Century ("Century CP"). The parties consummated the sale pursuant
to the Stock and Asset Purchase Agreement dated July 26, 1999 (the "Purchase
Agreement") by and among Century, Century WV and Pechiney. The aggregate
purchase price for the Rolling Business and Century CP was $248 million, subject
to certain post-closing adjustments. The purchase price was determined by
arms'-length negotiations between the parties. Century used a portion of the
purchase price to repay its outstanding debt.
The Rolling Business assets that were sold include Century
WV's casting operation at the Ravenswood, West Virginia facility. The facility,
which has the capacity to produce up to 600 million pounds (270,000 metric
tons) of rolled aluminum products a year, provides premium sheet and plate
products to the aerospace and transportation markets, and produces brazing
sheet used to manufacture radiators for passenger cars and trucks.
Century CP's operations include a fabrication plant located in
Vernon, California. The fabrication plant has the capacity to produce 15 million
pounds (7,000 metric tons) a year of cast aluminum plate. Cast aluminum plate is
used principally in the machinery and equipment market.
In connection with the Purchase Agreement, Century WV and
Pechiney entered into a Molten Aluminum Purchase Agreement dated as of September
21, 1999 (the "Metal Agreement"). Pursuant to the Metal Agreement, Pechiney has
agreed to purchase from Century WV substantial quantities of molten aluminum
produced at Century WV's reduction facility in Ravenswood, West Virginia at a
price which is based on a quoted average market price as reported for the month
immediately preceding the month of delivery. In addition, Pechiney has agreed to
provide casting services to Century WV in connection with the excess molten
aluminum produced at Century WV's reduction facility which is not purchased by
Pechiney under the Metal Agreement. In connection with the transition of
ownership of the Rolling Business, Century has agreed to make available certain
of its executive officers to provide consulting services to Pechiney.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
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(i) Unaudited pro forma consolidated balance sheet of
Century Aluminum Company and subsidiaries as of June
30, 1999 giving effect to the disposition of the
Rolling Business and Century CP as of June 30, 1999.
(ii) Unaudited pro forma consolidated statements of
operations of Century Aluminum Company and
subsidiaries for the year ended December 31, 1998 and
for the six month period ended June 30, 1999 giving
effect to the disposition of the Rolling Business and
Century CP as if such transaction had occurred
January 1, 1998.
The unaudited pro forma consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the financial position or results of operations of the
Company that would have actually resulted had the transaction occurred as of the
date or for the periods presented, or that may result in the future.
PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma consolidated financial
information has been presented for the balance sheet as of June 30, 1999 and for
the statements of operations for the year ended December 31, 1998 and the six
month period ended June 30, 1999. The historic consolidated financial
information presented herein should be read in conjuction with the audited
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1998 and the
unaudited consolidated financial statements and notes thereto included in the
Company's quarterly report on Form 10-Q for the period ended June 30, 1999.
The following unaudited pro forma consolidated financial
information is based on the historical consolidated financial statements of the
Company. The unaudited pro forma consolidated balance sheet gives effect to:
(i) the sale of the Rolling Business assets including all of the issued and
outstanding shares of Century CP and the assumption by Pechiney of certain
Rolling Business liabilities, (ii) the estimated costs and other charges
related to the transaction, (iii) the repayment of the outstanding borrowings
under the credit facility and (iv) the anticipated income tax effects related
to the transaction.
The unaudited pro forma consolidated statements of operations
give effect to: (i) the elimination of the Rolling Business and Century CP, (ii)
the estimated effects of the Metal Agreement and (iii) the elimination of
interest expense resulting from the reduction of the outstanding balance of the
Company's credit facility, as if such transactions occurred on January 1, 1998.
The gain from the sale of the Rolling Business and Century CP has not been
reflected in the pro forma consolidated statements of operations.
The unaudited pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable. The
unaudited pro forma consolidated financial information does not purport to
represent what the Company's financial position or results of operations would
actually have been had the transaction in fact occurred at such dates or to
project the Company's financial position or results of operations at or for any
future date or period. The unaudited pro forma consolidated financial
information should be read in conjunction with the historical consolidated
financial statements of the Company.
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The following unaudited pro forma financial information does
not reflect working capital changes related to the estimated effects of the
Metal Agreement with Pechiney.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
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PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------ ----------- ---------
(IN THOUSANDS)
ASSETS
CURRENT ASSETS:
Cash................................................................... $ 627 $241,877 (a) $ 130,504
(112,000) (b)
Restricted cash equivalents............................................ 5,817 5,817
Accounts receivable, trade - net....................................... 87,624 (76,120) (a) 11,504
Due from affiliates.................................................... 7,818 7,818
Inventories............................................................ 182,875 (152,185) (a) 30,690
Prepaid and other assets............................................... 9,620 (465) (a) 28,433
19,278 (c)
-------- ---------- ---------
Total current assets............................................. 294,381 (79,615) 214,766
PROPERTY, PLANT AND EQUIPMENT - NET........................................ 228,784 (126,309) (a) 102,475
OTHER ASSETS............................................................... 18,261 (2,703) (a) 297
(15,261) (c)
-------- ---------- ---------
TOTAL........................................................... $541,426 $(223,888) $ 317,538
======== ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade.............................................. $37,916 $ (13,569) (a) $ 24,347
Due to affiliates.................................................... 13,711 (9,645) (a) 4,066
Accrued and other current liabilities................................ 31,755 (2,473) (a) 29,282
Accrued employee benefits costs - current portion.................... 15,565 (11,046) (a) 4,519
-------- ---------- ---------
Total current liabilities....................................... 98,947 (36,733) 62,214
-------- ---------- ---------
REVOLVING TERM LOAN....................................................... 112,000 (112,000) (b) -
ACCRUED PENSION BENEFITS COSTS - Less current portion..................... 10,496 (5,223) (a) 5,273
ACCRUED POSTRETIREMENT BENEFITS COSTS - Less current portion 129,015 (91,031) (a) 37,984
OTHER LIABILITIES......................................................... 20,981 (13,411) (a) 22,564
14,994 (c)
-------- ---------- ---------
Total noncurrent liabilities.................................... 272,492 (206,671) 65,821
-------- ---------- ---------
SHAREHOLDERS' EQUITY:
Common stock......................................................... 202 202
Additional paid-in capital........................................... 164,406 164,406
Retained earnings.................................................... 5,379 30,493 (a) 24,895
(10,977) (c)
-------- ---------- ---------
Total shareholders' equity...................................... 169,987 19,516 189,503
-------- ---------- ---------
TOTAL........................................................... $ 541,426 $ (223,888) $ 317,538
========= =========== =========
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(a) Reflects the sale of the net assets of the Rolling Business and the
stock of Century CP for $241.9 million including transaction costs and
other charges related to the transaction
(b) Reflects principal repayment of the credit facility.
(c) Reflects the anticipated tax effect of the transaction.
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2,2 UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED
DECEMBER 31, 1998
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PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------ ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NET SALES:
Third-party customers ....................... $ 576,006 $ (534,522) (a) $ 272,968
231,484) (b)
Related parties ............................. 74,252 74,252
--------- ---------- ---------
650,258 (303,038) 347,220
COST OF GOODS SOLD ............................... (611,796) 501,098 (a) (323,721)
(213,023) (b)
--------- ---------- ---------
GROSS PROFIT ..................................... 38,462 (14,963) 23,499
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES ..................... (19,246) 7,507 (a) (11,739)
--------- ---------- ---------
OPERATING INCOME ................................. 19,216 (7,456) 11,760
INTEREST EXPENSE - Net ........................... (2,204) 2,204 (a) -
NET GAIN ON FORWARD CONTRACTS .................... 10,574 1,170 (a) 11,744
OTHER INCOME ..................................... 553 (185)(a) 368
--------- ---------- ---------
INCOME BEFORE INCOME TAXES ....................... 28,139 (4,267) 23,872
INCOME TAX EXPENSE ............................... (10,202) 1,536 (c) (8,666)
--------- ---------- ---------
NET INCOME ....................................... $ 17,937 $ (2,731) $ 15,206
========= ========= ==========
EARNINGS PER COMMON SHARE
Basic ....................................... $ 0.90 $ 0.76
========= ==========
Diluted ..................................... $ 0.89 $ 0.75
========= ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic ............................................ 20,000 20,000
========= ==========
Diluted .......................................... 20,266 20,266
========= ==========
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(a) Reflects the elimination of the Rolling Business and Century CP and
the reduction of interest expense related to the retirement of debt.
(b) Reflects the estimated effects of the Metal Agreement with Pechiney.
(c) Reflects the estimated tax effects of (a) and (b) above.
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED
JUNE 30, 1999
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PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------ ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NET SALES:
Third-party customers............................. $ 294,623 $(268,605)(a) $ 120,892
94,874 (b)
Related parties................................... 37,742 37,742
---------- --------- -----------
332,365 (173,731) 158,634
COST OF GOODS SOLD..................................... (331,633) 261,799 (a) (164,868)
(95,034) (b)
---------- --------- -----------
GROSS PROFIT (LOSS).................................... 732 (6,966) (6,234)
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES........................... (8,601) 3,476 (a) (5,125)
---------- --------- -----------
OPERATING LOSS......................................... (7,869) (3,490) (11,359)
INTEREST EXPENSE - Net................................. (3,552) 3,552 (a) -
NET LOSS ON FORWARD CONTRACTS.......................... (2,501) (842) (a) (3,343)
OTHER EXPENSE.......................................... (669) 332 (a) (337)
---------- --------- -----------
LOSS BEFORE INCOME TAXES............................... (14,591) (448) (15,039)
INCOME TAX BENEFIT..................................... 6,752 161 (c) 6,913
---------- --------- -----------
NET LOSS............................................... $ (7,839) $(287) $ (8,126)
========== ========= ===========
LOSS PER COMMON SHARE
Basic ............................................ ($0.39) ($.40)
========== ==========
Diluted........................................... ($0.39) ($.40)
========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic ............................................ 20,202 20,202
---------- ----------
Diluted........................................... 20,323 20,323
========== ==========
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(a) Reflects the elimination of the Rolling Business and Century CP and the
reduction of interest expense related to the retirement of debt.
(b) Reflects the estimated effects of the Metal Agreement with Pechiney.
(c) Reflects the estimated tax effects of (a) and (b) above.
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(c) Exhibits.
The following exhibits are filed with this report on Form 8-K:
Exhibit Number Description
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2.1* Stock and Asset Purchase Agreement dated July 26, 1999 by and
among Century Aluminum Company, Century Aluminum of West
Virginia, Inc. and Pechiney Rolled Products LLC
2.2* Management Services Agreement dated as of September 21, 1999
by and between Century Aluminum Company and Pechiney Rolled
Products LLC
2.3+ Molten Aluminum Purchase Agreement dated as of September 21,
1999 by and between Century Aluminum of West Virginia, Inc.
and Pechiney Rolled Products LLC
2.4* Amended and Restated Shared Facilities and Services Agreement
dated as of September 21, 1999 by and between Century Aluminum
of West Virginia, Inc. and Pechiney Rolled Products LLC
99.1 Press Release dated September 21, 1999
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* Schedules are omitted and will be furnished to the Commission upon request.
+ Portions of this Exhibit have been deleted and filed separately with the
Securities and Exchange Commission pursuant to the Company's request for
confidential treatment pursuant to Rule 24b-2 under the Securities Exchange
Act.
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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 thereunto duly authorized.
CENTURY ALUMINUM COMPANY
Date: October 6, 1999 By: /s/ David W. Beckley
--------------- ------------------------------------
Executive Vice President
and Chief Financial Officer
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