Exhibit 99.1
NEWS RELEASE
(CENTURY ALUMINUM LOGO)
Century Aluminum Reports First Quarter 2004 Net Income of $4.8 million and a
Substantial Increase in Operating Income
Monterey, CA, April 26, 2004 - Century Aluminum Company (NASDAQ: CENX)
reported net income of $4.8 million, or $0.20 a share, fully diluted, for the
first quarter of 2004. Operating income increased by $28.1 million to $31.6
million for the 2004 first quarter from the comparable quarter in 2003.
The 2004 quarter includes net after-tax charges of $6.7 million, or $0.31
a share, comprised of: an after-tax charge of $8.2 million, or $0.38 a share,
for losses on marking to market the 110-million-pound-per-year fixed-price metal
delivery contract that remains in place for 2004 and other physical delivery
contracts and financial instruments that do not qualify for cash-flow hedge
accounting; and an after-tax credit of $1.5 million, or $0.07 a share, for the
reduction of lower of cost or market inventory reserves.
In the first quarter 2003 the company reported net income of $17.6
million, or $0.78 a share, fully diluted. Results for the year-ago quarter
included an after-tax gain of $26.9 million, or $1.20 a share, related to the
termination of the last five years (2005 to 2009) of the 110
million-pound-a-year metal delivery contract and marking to market years 2003
and 2004 of the contract. The results also included a net after-tax charge of
$5.9 million, $0.26 a share, for the cumulative effect of a change in accounting
principle.
Sales in the 2004 first quarter were $232.1 million compared with $179.0
million in the year-ago quarter. Shipments of primary aluminum in the first
quarter of 2004 were 296.7 million pounds versus 257.0 million pounds in the
first quarter of 2003.
Financial results for the first quarter of 2003 exclude the results from
the acquisition of the 20-percent interest in Century's Hawesville (KY)
Operations on April 1, 2003.
Commenting on the company's performance, Century Chairman and Chief
Executive Officer Craig A. Davis said:
"Operating income and cash flow in the first quarter were very strong due
to higher aluminum prices and improved operating performance. Our plants met
their cost goals while operating at near capacity levels. Market conditions have
improved further in 2004 which we expect will continue the positive trend
established in the first quarter. We expect to complete the acquisition of the
Nordural plant in Iceland by April 30, 2004. We also plan to begin an expansion
that will double its capacity to 180,000 mtpy by mid-2006."
Century Aluminum Company
25ll Garden Road
Building A, Suite 200
Monterey, CA 93940
831-642-9300 Phone
831-642-9399 Fax
Exhibit 99.1
NEWS RELEASE
(CENTURY ALUMINUM LOGO)
Century owns 525,000 metric tons per year (mtpy) of primary aluminum
capacity. It owns and operates the 244,000-mtpy plant at Hawesville, KY and the
170,000-mtpy plant at Ravenswood, WV. Century also owns a 49.67-percent interest
in the 222,000-mtpy reduction plant at Mt. Holly, SC. Alcoa Inc. owns the
remainder and is the operating partner. Century's headquarters are in Monterey,
CA.
Century's press releases may contain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. The company
cautions that such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties. Actual results may
vary.
Editorial contact: A. T. Posti (831) 642-9364
Century Aluminum Company
25ll Garden Road
Building A, Suite 200
Monterey, CA 93940
831-642-9300 Phone
831-642-9399 Fax
Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended
March 31,
----------------------
2004 2003
--------- ---------
NET SALES:
Third-party customers .............................................. $ 192,346 $ 153,455
Related parties .................................................... 39,748 25,554
--------- ---------
232,094 179,009
COST OF GOODS SOLD ..................................................... 195,045 171,303
--------- ---------
GROSS PROFIT ........................................................... 37,049 7,706
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ........................... 5,408 4,135
--------- ---------
OPERATING INCOME ....................................................... 31,641 3,571
INTEREST INCOME (EXPENSE) - Net ........................................ (10,607) (10,073)
NET GAIN (LOSS) ON FORWARD CONTRACTS ................................... (12,820) 41,693
OTHER INCOME (EXPENSE) ................................................. (614) 270
--------- ---------
INCOME BEFORE INCOME TAXES ............................................. 7,600 35,461
INCOME TAX EXPENSE ..................................................... (2,800) (12,974)
--------- ---------
INCOME BEFORE MINORITY INTEREST AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE ................ 4,800 22,487
MINORITY INTEREST ...................................................... -- 986
--------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE ..................................... 4,800 23,473
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET OF TAX BENEFIT OF $3.4 MILLION ...................... -- (5,878)
--------- ---------
NET INCOME ............................................................. 4,800 17,595
PREFERRED DIVIDENDS .................................................... (500) (500)
--------- ---------
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS ........................... $ 4,300 $ 17,095
========= =========
EARNINGS (LOSS) PER COMMON SHARE
Basic - Before cumulative effect of change in accounting principle . $ 0.20 $ 1.09
Basic - Cumulative effect of change in accounting principle ........ $ -- $ (0.28)
--------- ---------
Basic - Net income ................................................. $ 0.20 $ 0.81
Diluted - Before cumulative effect of change in accounting principle $ 0.20 $ 1.04
Diluted - Cumulative effect of change in accounting principle ...... $ -- $ (0.26)
--------- ---------
Diluted - Net income ............................................... $ 0.20 $ 0.78
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic .............................................................. 21,195 21,070
Diluted ............................................................ 21,384 22,465
See Notes to Consolidated Statements of Operations
Century Aluminum Company
Notes to Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
2004
Net (Loss) On Forward Contracts
Net Loss on Forward Contracts of $12,820 was a result of marking-to-market the
following items:
The 110 million pound, fixed-price, delivery contract with Glencore that matures
in 2004 - $7,276
The derivative liability associated with the absence of a delivery premium on
the 110 million pound annual delivery contract with Glencore for the years 2005
through 2009 - $1,706
Certain fixed-price, forward financial sales contracts maturing in 2004 that do
not qualify for cash-flow hedge accounting - $3,142
A 45.0 million pound annual delivery contract for years 2004 through 2013 for
the U.S. Midwest premium that exceeds the contract cap - $696
Cost Of Goods Sold
Cost of Goods Sold includes a credit of $2,273 for net lower of cost or market
inventory adjustments in the quarter.
2003
Net Gain On Forward Contracts
In January 2003, Century terminated and settled a 110 million pound per year
above-market, fixed price, physical delivery contract with Glencore for the
years 2005 through 2009. At that time, the parties entered into a new sales
contract that required the Company to deliver the same quantity of primary
aluminum as did the original contract for these years. However, the new sales
contract provided for variable pricing for the years 2005 through 2009, equal to
the quarterly average price of aluminum as quoted by the LME for the quarter
preceding delivery of the primary aluminum. For the years 2003 through 2004, the
sale price of primary aluminum delivered remained at fixed prices.
Prior to the January 2003 agreement to terminate and settle the original sale
contract for the years 2005 through 2009, the Company classified and accounted
for the contract as a Normal Sales contract as defined in SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." Accordingly,
prior to January 2003, the original sales contract was recorded on an accrual
basis of accounting and changes in the fair value of the original sales contract
were not recognized.
According to SFAS No. 133, it must be probable that at inception and throughout
its term, a contract classified as "normal" will not result in a net settlement
and will result in physical delivery. Because the Company and Glencore net
settled a significant portion of the original sales contract in January 2003, it
no longer qualified for the "normal" exemption of SFAS No. 133. requiring the
Company to mark the entire contract to market value.
Accordingly, the Company recorded a derivative asset and a pre-tax gain of
$41,693. Of the total recorded gain, $26,129 related to the favorable terms of
the original sales contract for the years 2005 through 2009, and $15,564 related
to the favorable terms of the original sales contract for 2003 through 2004.
On April 1, 2003, the Company received $35,484 from Glencore, $26,129 of which
related to the settlement of the original sales contract for the years 2005
through 2009, and $9,355 of which represented the fair value of the new sales
contract with Glencore for the years 2005 through 2009. The $9,355 initial fair
value of the new sales contract was a derivative liability and represented the
present value of the contract's favorable term to Glencore in that the new sales
contract excluded in its variable pricing an estimated U.S. Midwest Premium,
adjusted for delivery considerations
Cumulative Effect Of Change In Accounting Principle
The Company adopted Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations" during the quarter. The cumulative effect of adopting
this standard was a one-time, after tax, non-cash charge of $5,878. The standard
requires the Company to accrue the estimated fair value of future removal costs
associated with reduction plant spent pot lining upon asset retirement.
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
March 31, December 31,
ASSETS 2004 2003
--------- ------------
Current Assets:
Cash ............................................................................ $ 54,125 $ 28,204
Accounts receivable - net ....................................................... 61,336 51,370
Due from affiliates ............................................................. 11,893 10,957
Inventories ..................................................................... 87,971 89,360
Prepaid and other assets ........................................................ 2,938 4,101
Deferred taxes - current portion ................................................ 5,528 3,413
--------- ---------
Total current assets ....................................................... 223,791 187,405
Property, Plant and Equipment - net .................................................. 488,053 494,957
Intangible Asset - net ............................................................... 96,054 99,136
Other Assets ......................................................................... 30,149 28,828
--------- ---------
Total ...................................................................... $ 838,047 $ 810,326
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade ......................................................... $ 35,751 $ 34,829
Due to affiliates ............................................................... 28,321 27,139
Industrial revenue bonds ........................................................ 7,815 7,815
Accrued and other current liabilities ........................................... 46,952 30,154
Accrued employee benefits costs - current portion ............................... 8,747 8,934
--------- ---------
Total current liabilities .................................................. 127,586 108,871
Senior Secured Notes Payable - Net ................................................... 322,434 322,310
Note Payable - Affiliates ............................................................ 14,000 14,000
Accrued Pension Benefit Costs - Less current portion ................................. 11,225 10,764
Accrued Postretirement Benefits Costs - Less current portion ......................... 80,285 78,218
Other Liabilities .................................................................... 34,432 33,372
Due to Affiliates - Less current portion ............................................. 9,861 --
Deferred Taxes - Less current portion ................................................ 54,496 55,094
--------- ---------
Total noncurrent liabilities ............................................... 526,733 513,758
Shareholders' Equity:
Convertible Preferred Stock (8.0% cumulative, 500,000 shares outstanding) ....... 25,000 25,000
Common Stock (one cent par value, 50,000,000 shares authorized; 21,214,800
shares outstanding at March 31, 2004 and 21,130,839 at December 31, 2003) ..... 212 211
Additional Paid-In Capital ...................................................... 174,188 173,138
Other Comprehensive Income (Loss) ............................................... (15,042) (5,222)
Accumulated Deficit ............................................................. (630) (5,430)
--------- ---------
Total shareholders' equity ................................................. 183,728 187,697
--------- ---------
Total ...................................................................... $ 838,047 $ 810,326
========= =========
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Three months ended
March 31,
--------------------
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 4,800 $ 17,595
Adjustments to reconcile net income to net cash provided by
operating activities:
Unrealized net (gain) loss on forward contracts ........... 9,750 (15,564)
Depreciation and amortization ............................. 11,241 12,711
Deferred income taxes ..................................... 2,800 9,543
Pension and other postretirement benefits ................. 2,342 3,229
Inventory market adjustment ............................... (2,273) (99)
Loss on disposal of assets ................................ 626 --
Minority Interest ......................................... -- (986)
Cumulative effect of change in accounting principle ....... -- 9,308
Change in operating assets and liabilities:
Accounts receivable - net ............................ (9,966) (1,674)
Due from affiliates .................................. (935) (36,974)
Inventories .......................................... 3,663 2,749
Prepaids and other assets ............................ 2,037 3,068
Accounts payable, trade .............................. 922 (2,183)
Due to affiliates .................................... (7,147) 244
Accrued and other current liabilities ................ 9,740 8,294
Other - net .......................................... (928) 8,612
-------- --------
Net cash provided by operating activities ................. 26,672 17,873
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ..................... (1,802) (6,121)
-------- --------
Net cash used in investing activities ..................... (1,802) (6,121)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock ...................................... 1,051 --
Dividends ..................................................... -- (11)
-------- --------
Net cash provided by (used in) financing activities ....... 1,051 (11)
-------- --------
NET INCREASE IN CASH ................................................ 25,921 11,741
CASH, BEGINNING OF PERIOD ........................................... 28,204 45,092
-------- --------
CASH, END OF PERIOD ................................................. $ 54,125 $ 56,833
======== ========
Century Aluminum Company
Selected Operating Data
(in Thousands, Except Dollars per Pound)
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct
-------------------
Pounds $/Pound
-------- --------
2004
1st Quarter 296,743 $ 0.78
2003
1st Quarter 257,040 $ 0.70