Timminco Limited
TSX : TIM

Timminco Limited

March 16, 2010 16:30 ET

Timminco Reports Fourth Quarter and Year-End Fiscal 2009 Results

TORONTO, ONTARIO--(Marketwire - March 16, 2010) - Timminco Limited ("Timminco" or the "Company")(TSX:TIM) today reported its financial results for the fourth quarter and fiscal year ended December 31, 2009 (all figures are in Canadian dollars unless otherwise stated).

Fourth Quarter 2009 Summary

  • Consolidated sales were $25.5 million compared with $72.7 million for the fourth quarter of 2008;
  • Progressively resumed production of silicon metal through the re-start of the Company's three silicon metal furnaces in June, August and October, achieving full production in November;
  • Earnings before interest, taxes, depreciation and amortization (EBITDA)(1) were negative $17.4 million compared with positive $6.4 million for the fourth quarter of 2008; and
  • Net loss was $69.4 million, or $0.48 a share, and included $45.7 million in one-time costs related to the strategic turnaround of the Company, compared with a net loss of $1.3 million, or $0.01 per share, for the fourth quarter of 2008.

Fiscal 2009 Summary

  • Consolidated sales were $104.6 million compared with $252.6 million in 2008;
  • EBITDA was negative $50.9 million compared with positive $21.3 million in 2008;
  • Net loss was $134.2 million, or $1.09 a share, and included $51.6 million in one-time costs related to the strategic turnaround of the Company, compared with a net loss of $22.6 million, or $0.22 per share, in 2008;
  • Completed a number of capital transactions, including the conversion of $42.1 million of debt and other liabilities into common shares, a $25.0 million debt financing with Investissement Quebec, a $5.3 million convertible debt financing, and $44.2 million in equity financings; and
  • Completed the divestiture of its magnesium business.

Developments Subsequent to Year End

  • Signed long-term contracts to supply approximately 90,000 metric tons (mt) of silicon metal over the next five years to a long-standing customer;
  • Announced that the Company is pursuing opportunities to expand its silicon metal capacity through a potential production facility in Iceland that would be operated using geothermal power; and
  • Amended the credit agreement with Bank of America to facilitate continued access to funding under the revolving credit facility.

"Our financial results for the fourth quarter and for 2009 reflect the outcome of the actions we have taken in 2009 to position the Company for the future through resumption of sales of silicon metal and increasing production to full capacity. We are emerging from the difficult macroeconomic conditions that severely impacted global end-markets for our silicon metal product for most of 2009," said Dr. Heinz Schimmelbusch, Chairman of the Board and Chief Executive Officer of Timminco. "In response to this challenging environment, over the past year, we have made progress in our turnaround strategy to address our financial position and focus on our silicon metal operations, which we ramped up throughout the second half of the year and which have now been operating at full capacity since November. We believe that our three decades of experience in the silicon metal industry, our technical know-how, and our strong customer relationships will enable us to capitalize on the ongoing recovery in the silicon metal markets."

"At the same time, we remain committed to opportunities in solar grade silicon, and continue to pursue our goal of enabling our customers to manufacture solar wafers and cells that are indistinguishable from those made with polysilicon," Dr. Schimmelbusch added. "In the short term, we have suspended solar grade production pending evidence of sufficient customer demand and commitments to justify a resumption of production."

Financial Results

Based upon demand from traditional customers for silicon metal products in the fourth quarter of 2009, customer shipment commitments in 2010, and evidence of rising prices for silicon metal over the past six months, the Company believes that the extremely difficult conditions in its silicon metal markets during the first three quarters of 2009 eased subsequent to the end of the third quarter of 2009. However, market conditions in the solar industry continue to adversely influence the development of the Company's solar grade silicon product line, including demand for its solar grade silicon products, and are expected to continue to impact its operations and financial results in the foreseeable future, thereby subjecting the Company to substantial liquidity risk and creating uncertainty as to the ability of the Company to continue as a going concern.

The Company's financial results for the fourth quarter and year ended December 31, 2009 include the performance of its Silicon Group, which consists of the silicon metal and solar grade silicon product lines. The results for 2009 also include the operations of the Company's Magnesium Group, which consisted of magnesium extrusion, fabrication and specialty metals product lines, until the completion of its divestiture on July 22, 2009.

Consolidated Results Highlights        
($000's except per share amounts)        
  Three Months Ended Year Ended
  Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008
Sales 25,468 72,728 104,568 252,563
Gross profit (loss) (13,368) 16,583 (37,140) 48,023
Gross profit (loss) percentage (52.5%) 22.8% (35.5%) 19.0%
EBITDA (17,432) 6,407 (50,931) 21,263
Net loss (69,403) (1,278) (134,222) (22,609)
Loss per common share, basic and diluted (0.48) (0.01) (1.09) (0.22)
Working capital (excluding available cash 24,619 49,326 24,619 49,326
and interest bearing debt)        
Total assets 209,908 303,022 209,908 303,022
Cash, cash equivalents and short-term 1,170 4,628 1,170 4,628
investments        
Bank debt 40,315 51,439 40,315 51,439
Other interest bearing debt 39,096 - 39,096 -
Total long-term liabilities 28,716 52,561 28,716 52,561
Weighted average number of common 143,748 104,275 123,448 104,126
shares outstanding, basic and diluted        

Consolidated sales for the fourth quarter of 2009 ("Q4-09") were $25.5 million compared with $72.7 million for the fourth quarter of 2008 ("Q4-08"). Consolidated sales for 2009 were $104.6 million compared with $252.6 million for 2008. The declines were primarily attributable to lower sales volumes and lower average selling prices in the Company's Silicon Group and the divestiture of the Magnesium Group in July 2009.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for Q4-09 were negative $17.4 million compared with EBITDA of positive $6.4 million for Q4-08. EBITDA for 2009 was negative $50.9 million compared with an EBITDA of positive $21.3 million for 2008.

Net loss for Q4-09 was $69.4 million, or $0.48 per share, compared with a net loss of $1.3 million, or $0.01 per share, for Q4-08. Net loss for 2009 was $134.2 million, or $1.09 per share, compared with a net loss of $22.6 million, or $0.22 per share, for 2008. Net loss for Q4-09 and 2009 included $45.7 million and $51.6 million, respectively, in non-recurring, one-time costs related to the strategic turnaround of the Company, including: provision for contract claims from suppliers included in SG&A expenses; loss on disposal of Magnesium Group and impairment of notes receivable from Applied Magnesium International Limited ("Applied Magnesium"); reorganization costs related to closure of facilities and sale of the Magnesium Group and related pension curtailment costs; and impairment of capital assets.

Cash, cash equivalents and short-term investments at December 31, 2009 were $1.2 million compared with $4.6 million at December 31, 2008. The Company had funds available to it through its revolving credit facility at December 31, 2009 of US$0.3 million.

Provisions Recorded in 2009 and 2008

The results for both the fourth quarter and the full year 2009 include provisions primarily related to the strategic turnaround activities that the Company has managed over the last year, as it focused its business on the production of silicon metal for the chemical and aluminum industries. These provisions are in addition to the costs recognized in relation to the closure of the Magnesium Group's Haley Ontario operations in 2008 and the equity investment losses and impairment of the Company's investment in Fundo Wheels in 2008. In total, the Company has written down approximately $91.0 million in assets and investments over the past two years as it has restructured the business in response to extraordinary adverse economic forces.

($000's) Three Months Ended Year Ended
  Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008
Net realizable value provision relating to inventories included in cost of sales 7,119 21 9,377 41
Provision for contract termination claims from suppliers included in SG&A expenses 3,101 - 3,101 -
Loss on disposal of Magnesium Group and impairment of notes receivable from Applied 3,006 - 5,186 -
Magnesium        
Reorganization costs related to closure of facilities and sale of the Magnesium Group and related pension curtailment costs 542 644 4,293 6,903
Impairment of capital assets 39,039 1,025 39,039 1,351
Environmental remediation costs 1,230 (136) 1,627 3,908
Equity in losses of Fundo Wheels and impairment of the investment in Fundo Wheels - - 698 15,505
Total impact on net loss 54,037 1,554 63,321 27,708

Credit Agreement

Bank of America has agreed to amend the minimum EBITDA financial covenant under the Company's credit agreement, such that the Company is in compliance with this covenant as at December 31, 2009 and January 31, 2010. However, the write downs in inventory values of $7.1 million may reduce the borrowing base, and therefore availability, under the revolving credit facility. Unless the borrowing base calculations are revised, the Company will be required to repay approximately $3.5 million under the revolving credit facility upon finalization of the audit of the Company's annual financial statements. The Company is in active discussions with Bank of America to mitigate the liquidity risks resulting from this write-down.

Silicon Group

During Q4-09, the Silicon Group saw improving demand in silicon metal products but continued to face challenging market conditions for solar grade silicon.

Silicon Group sales for Q4-09 were $25.4 million compared with $58.5 million for Q4- 08. During Q4-09, the Company continued its ramp up of silicon metal production through the re-start of the third of its three silicon metal furnaces (the first and second having been restarted in the second and third quarters) and achieved full production in November. For Q4-09, the strength of the Canadian dollar against the U.S. dollar and the Euro had an unfavourable impact on sales of $1.6 million and $0.4 million, respectively, compared to Q4-08. Sales for 2009 were $74.4 million compared with $189.5 million for 2008. Against the U.S. dollar, the Canadian dollar was, on balance, weaker in 2009 than in 2008. The net result was an overall favourable impact on sales of $1.8 million while, over the course of the year, the exchange rate versus the Euro had a small negative impact of $0.1 million compared to 2008. The decreases in sales in the fourth quarter and the year were primarily due to lower sales volumes and lower average selling prices for both silicon metal and solar grade silicon.

Silicon metal product sales for Q4-09 were $29.4 million compared with $32.6 million for Q4-08. Sales of silicon metal for 2009 were $69.4 million compared with $127.7 million for 2008. The decreases in silicon metal product sales resulted from lower volumes in 2009 due to weak demand for silicon metal globally.

Solar grade silicon net revenues for Q4-09 were negative $3.9 million due to customer product returns of products shipped in previous quarters (shipments of 2 mt, excluding product returns) compared with $25.9 million (424 mt) for Q4-08. Solar grade silicon net revenues for 2009 were $5.1 million (182 mt, excluding product returns) compared with $61.7 million (1,045 mt) for 2008.

The average selling price for solar grade silicon for Q4-09 was $36 per kilogram compared with $65 per kilogram for Q4-08 and the average selling price of solar grade silicon for 2009 was $51 per kilogram compared with $62 per kilogram for 2008. The decreases in the average selling price for solar grade silicon reflect the weaker market conditions in 2009.

Pricing for silicon metal is determined on a product-by-product basis by customer, as each customer has its own product specifications, may commit to purchases on an annual basis or on a much shorter term, and will have preferences for the currency of the transaction. Therefore, average selling prices for relatively similar products can vary significantly in any given month. In general, silicon metal prices declined in 2009 compared with 2008 as recessionary pressures in key end markets, such as silicones and aluminum, reduced demand and created excess capacity in the industry, which negatively impacted prices.

Gross profit for Q4-09 was negative $14.1 million (negative 55.6% of sales) compared with positive gross profit of $15.4 million (26.3% of sales) for Q4-08. Gross profit for 2009 was negative $37.9 million (negative 51.0% of sales) compared with positive $40.1 million (21.2% of sales) for 2008. The negative margin for the Silicon Group is primarily attributable to the low volume of solar grade silicon produced relative to available production capacity. Cost of sales of the solar grade silicon product consist of raw materials, utilities, labour and an allocation of manufacturing overhead expenses, including depreciation. Total solar grade silicon product cost of sales for Q4-09 and 2009 were $9.3 million and $44.6 million, respectively.

EBITDA for Q4-09 was negative $18.3 million compared with positive $11.6 million for Q4-08. EBITDA for 2009 was negative $47.8 million compared with positive $31.9 million for 2008.

Net loss for Q4-09 was $62.4 million compared with a net income of $7.5 million for Q4- 08. Net loss for 2009 was $104.4 million compared with net income of $19.9 million for 2008. The net losses included one-time costs related to the strategic turnaround of the Company, inventory valuation provisions, environmental remediation provisions and operating losses due to lower revenues from both silicon metal and solar grade silicon product lines, as well as higher cost of production for solar grade silicon, amortization costs related to property, plant and equipment and income taxes.

Magnesium Group

During the year, Timminco completed the wind-up of operations at its Aurora, Colorado magnesium extrusion facility and the sale of the remaining operating assets of its magnesium business to Applied Magnesium. The financial results for the Magnesium Group for 2009 reflect the completion of the divestiture of the Magnesium Group as of July 22, 2009. Timminco holds a 19.5% equity interest in Applied Magnesium and accounts for that interest on the cost method.

Summary of Operations        
 
($000's, except per share amounts)        
  Three Months Ended Year Ended
  Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008
Sales        
  Silicon 25,447 58,535 74,421 189,452
  Magnesium/Other 21 14,193 30,147 63,111
  Total 25,468 72,728 104,568 252,563
           
Gross Profit (loss)(1)        
  Silicon (14,142) 15,387 (37,938) 40,068
  Magnesium/Other 774 1,196 798 7,955
  Total (13,368) 16,583 (37,140) 48,023
 
Gross Profit (loss) Percentage(1)        
  Silicon (55.6 %) 26.3% (51.0 %) 21.1%
  Magnesium n/m(2) 8.4% 2.6% 12.6%
  Total (52.5 %) 22.8% (35.5 %) 19.0%
 
Net Income (Loss)        
  Silicon (62,439) 7,499 (104,412) 19,864
  Magnesium - (3,902) (9,909) (14,668)
  Corporate / Other (6,964) (4,875) (19,901) (27,805)
  Total (69,403) (1,278) (134,222) (22,609)
           
EBITDA(1)        
  Silicon (18,301) 11,556 (47,791) 31,935
  Magnesium - (2,324) (3,354) (1,999)
  Corporate / Other 869 (2,825) 214 (8,673)
  Total (17,432) 6,407 (50,931) 21,263
           
Adjusted Income (Loss) (1)        
  Silicon (22,179) 9,103 (62,928) 25,133
  Magnesium - (2,357) (3,482) (2,447)
  Corporate / Other (3,440) (4,875) (15,179) (12,300)
  Total (25,619) 1,871 (81,589) 10,386
 
Loss per common share, basic and diluted (0.48) (0.01) (1.09) (0.22)
         
Weighted average number of common shares outstanding, basic and diluted 143,748 104,275 123,448 104,126
  1. See "Non-GAAP Accounting Definitions" below.
  2. n/m – not meaningful

Timminco will file its audited consolidated financial statements for the year ended December 31, 2009 and related management's discussion and analysis (MD&A) with securities regulatory authorities within the applicable timelines. Such financial statements, MD&A and related documents will be available through SEDAR at www.sedar.com as well as through Timminco's website, www.timminco.com.

Conference Call

Timminco will host a conference call today (March 16, 2010) at 5:00 pm ET to discuss its financial results for the fourth quarter and year ended December 31, 2009.

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Tuesday, March 23, 2010 at midnight. To access the archived conference call, dial 416-849-0833 or 1-800- 642-1687 and enter the reservation number 54423359.

A live audio webcast of the conference call will also be available at www.timminco.com . Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be available for replay at www.timminco.com following the live presentation.

About Timminco

Timminco produces silicon metal for the chemical (silicones), aluminum and electronic/solar industries. Timminco also produces solar grade silicon, using its proprietary technology for purifying silicon metal, for the solar photovoltaic energy industry.

Cautionary Notes

This news release contains "forward-looking information," as such term is defined in applicable Canadian securities legislation, concerning Timminco's future financial or operating performance and other statements that express management's expectations or estimates of future developments, circumstances or results. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "believes", "anticipates", "budget", "scheduled", "estimates", "forecasts", "intends", "plans" and variations of such words and phrases, or by statements that certain actions, events or results "may", "will", "could", "would" or "might" "be taken", "occur" or "be achieved". In this news release, such information includes statements regarding: Timminco's liquidity and access to funding under its revolving credit facility with Bank of America; silicon metal production and capacity expansion; and enabling customers to create wafers and cells that are indistinguishable from solar cells made from polysilicon. Forward-looking information is based on a number of assumptions and estimates that, while considered reasonable by management based on the business and markets in which Timminco operates, are inherently subject to significant operational, economic and competitive uncertainties and contingencies. Timminco cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Timminco's actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to: global economic conditions; customer commitments under long-term contracts for solar grade silicon; limitations under existing credit facilities; cost of solar grade silicon production; protection of intellectual property rights; increasing and maintaining the purity of solar grade silicon; selling prices for solar grade silicon; price volatility for silicon metal; pricing and availability of raw materials for silicon metal and solar grade silicon production; expansion of solar grade silicon production and sales; production capacity expansion at the Becancour facilities; limited history with solar grade silicon production; dependence upon power supply for silicon metal production; closure of magnesium facilities and execution of proposed joint venture for the magnesium business; price volatility for magnesium metal; magnesium supply chain interruptions; dependence upon key customers of magnesium extruded and fabricated products; financing requirements for capital expenditures; foreign currency exchange; dependence upon key executives and employees; customer concentration; completion and integration of potential acquisitions, partnerships or joint ventures; risks with foreign operations and suppliers; environmental, health and safety laws and liabilities; equipment failures; transportation disruptions; conflicts of interest; intellectual property infringement claims; new regulatory requirements; labour disputes; and changes in tax laws. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2008, and in Timminco's most recent Management's Discussion and Analysis, each of which is available via the SEDAR website at www.sedar.com. Although Timminco has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this news release is made as of the date of this news release and Timminco disclaims any intention or obligation to update or revise such information, except as required by applicable law.

Non-GAAP Accounting Definitions

(1) EBITDA is not a recognized measure under Canadian generally accepted accounting principles ("GAAP"). Management believes that, in addition to net income (loss), EBITDA is a useful supplemental measure as it provides investors with an indication of cash available for distribution prior to debt service, past pension service obligations, capital expenditures, income taxes and restructuring cash payments. Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company's method of calculating EBITDA may differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other companies. EBITDA is calculated as follows:

EBITDA        
($000's)        
  Three Months Ended Year Ended
  Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008
Net loss (69,403) (1,278) (134,222) (22,609)
Add back (subtract):        
Income taxes (14) 1,611 1,780 5,698
Impairment of Fundo Wheels - (1,415) 698 12,430
Equity in the loss (earnings) of Fundo Wheels - 1,415 - 3,075
Loss on disposal of Magnesium Group and impairment of investment in Applied Magnesium International 3,006 - 5,186 -
Impairment of property, plant and equipment 39,039 1,025 39,039 1,351
Loss (gain) on sale of property, plant and equipment (19) 5 10 (370)
Interest 2,298 796 7,434 1,610
Amortization of intangible assets 330 170 2,085 583
Amortization of property, plant and equipment 3,580 2,355 13,212 6,706
Reorganization costs 542 970 4,293 2,629
Environmental remediation costs 1,230 (136) 1,627 3,908
Pension curtailment costs - (326) - 4,274
Stock-based compensation 1,979 1,215 7,927 1,978
 
EBITDA (17,432) 6,407 (50,931) 21,263

(2) Adjusted income (loss) is not a recognized measure under GAAP. However, management believes that, in addition to net income (loss), adjusted income (loss) is a useful supplemental measure as it provides investors with an indication of the ongoing profits generated on products sold to customers after corporate overhead expenses. Management defines adjusted net income as net income before income taxes, loss on disposal of magnesium division, impairment of investment in Fundo Wheels, equity in the loss of Fundo Wheels, environmental remediation costs, reorganization costs and pension curtailment costs. Adjusted income (loss) is calculated as follows:

ADJUSTED INCOME (LOSS)        
($000's)        
  Three Months Ended Year Ended
  Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008
 
Net loss (69,403) (1,278) (134,222) (22,609)
Add back (subtract):        
Income taxes (14) 1,611 1,780 5,698
Impairment of Fundo Wheels - (1,415) 698 12,430
Equity in the loss (earnings) of Fundo Wheel - 1,415 - 3,075
Loss on disposal of Magnesium Group and impairment of investment in Applied Magnesium International 3,006 - 5,186 -
Impairment of property, plant and equipment 39,039 1,025 39,039 1,351
Loss (gain) on the sale of property, plant and equipment (19) 5 10 (370)
Reorganization costs 542 970 4,293 2,629
Environmental remediation costs 1,230 (136) 1,627 3,908
Pension curtailment costs - (326) - 4,274
 
Adjusted income (loss) (25,619) 1,871 (81,589) 10,386

(3) Gross profit is not a recognized measure under GAAP. Management believes that in addition to net income (loss), gross profit is a useful supplemental measure as it provides investors with an indication of the profits generated on products sold to customers before corporate overhead expenses. Investors should be cautioned, however, that gross profit should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's profitability. The Company's method of calculating gross profit may differ from other companies and accordingly, gross profit may not be comparable to measures used by other companies. Gross profit is calculated as follows:

GROSS PROFIT        
($000's)        
  Three Months Ended Year Ended
  Dec. 31, 2009 Dec. 31, 2008 Dec. 31, 2009 Dec. 31, 2008
 
Sales 25,468 72,728 104,568 252,563
Cost of goods sold 38,836 56,145 141,708 204,540
Gross profit (loss) (13,368) 16,583 (37,140) 48,023
Timminco Limited    
Consolidated Balance Sheets    
     
As at December 31 2009 2008
(in thousands of Canadian dollars)    
 
ASSETS    
Current Assets    
Cash and cash equivalents $ 1,170 $ 4,512
Short term investments - 116
Accounts receivable 11,007 37,243
Due from affiliated companies 209 -
Inventories 39,797 95,920
Finished goods consigned to affiliated companies 8,090 -
Prepaid expenses and deposits 1,494 2,353
Future income taxes - 3,235
  61,767 143,379
 
Long term receivables 1,282 1,329
Long term inventories 26,769 -
Property, plant and equipment 91,396 130,847
Investment in Applied Magnesium International 222 -
Employee future benefits 939 510
Future income taxes 2,831 5,825
Intangible assets 7,875 4,305
Goodwill 16,827 16,827
  $ 209,908 $ 303,022
 
LIABILITIES    
Current Liabilities    
Bank indebtedness $ 40,315 $ 51,439
Accounts payable and accrued liabilities 22,078 61,038
Current portion of deposits - 25,568
Deferred revenue 9,605 -
Due to affiliated companies 5,991 7,661
Future income taxes 455 -
Current portion of long term debt 39,158 49
Current portion of long term provisions 2,853 2,501
  120,455 148,256
Other long term liabilities 128 195
Deposits - 18,036
Employee future benefits 20,118 19,080
Future income taxes 2,376 9,284
Long term provisions 6,094 5,966
  149,171 200,817
 
SHAREHOLDERS' EQUITY    
Capital stock 285,951 199,688
Equity component of convertible notes 217 2,521
Contributed surplus 12,996 5,069
Deficit (238,427) (104,205)
Accumulated other comprehensive loss - (868)
  60,737 102,205
  $ 209,908 $ 303,022

 

Timminco Limited    
Consolidated Statements of Operations and Comprehensive Loss    
 
Years ended December 31 2009 2008
(in thousands of Canadian dollars, except for loss per share information)    
     
Sales $ 104,568 $ 252,563
     
Expenses    
  Cost of goods sold 141,708 204,540
    Selling and administrative 29,028 23,747
    Amortization of property, plant and equipment 13,212 6,706
    Amortization of intangible assets 2,085 583
    Interest 7,434 1,610
    Foreign exchange (gain) loss (7,310) 4,991
     
Income (loss) before the undernoted (81,589) 10,386
     
Environmental remediation costs (1,627) (3,908)
Reorganization costs (4,293) (2,629)
Defined benefit plan curtailment costs - (4,274)
Gain(loss) on sale of property, plant and equipment (10) 370
Equity in the loss of Fundo Wheels AS - (3,075)
Loss on disposal of Magnesium Division (1,109) -
Realized foreign exchange loss on Fundo investment bankruptcy (698)  
Impairment of capital assets (39,039) (1,351)
Impairment of investment in Applied Magnesium International (4,077)  
Impairment of investment in Fundo Wheels AS - (12,430)
     
Loss before income taxes (132,442) (16,911)
     
Income tax expense    
    Current 56 89
    Future 1,724 5,609
  1,780 5,698
Net loss $ (134,222) $ (22,609)
     
Other comprehensive income (loss), net of income taxes    
    Realized foreign exchange loss on Fundo investment bankruptcy 698 -
    Unrealized loss on translating financial statements of    
    self-sustaining foreign operation - (17)
    Realized foreign exchange loss on the disposal of the 170 -
    Magnesium division    
     
Comprehensive loss $ (133,354) $ (22,626)
 
Loss per common share - basic and diluted $ (1.09) $ (0.22)
 
Weighted average number of common shares    
  outstanding - basic and diluted 123,447,806 104,126,099
Consolidated Statements of Deficit    
 
Years ended December 31 2009 2008
(in thousands of Canadian dollars)    
     
Deficit, beginning of year $ (104,205) $ (81,596)
Net loss (134,222) (22,609)
     
Deficit, end of year $ (238,427) $ (104,205)
Timminco Limited    
Consolidated Statements of Cash Flows    
 
Years ended December 31 2009 2008
(in thousands of Canadian dollars)    
     
Cash flows from (used in) operating activities    
Net loss $ (134,222) $ (22,609)
Adjustments for items not requiring cash    
  Amortization of property, plant and equipment 13,212 6,706
  Amortization of intangible assets 2,085 583
  Accretion of convertible debt 759 681
  Stock-based compensation 7,927 1,978
  Financing costs expensed 425 -
  Reorganization costs 4,293 2,629
  Environmental remediation costs 1,627 3,908
  Defined benefit plan curtailment costs - 4,274
  Benefits plan expense 4,908 4,362
  Loss (gain) on disposal of property, plant and equipment 10 (370)
  Unrealized foreign exchange (gain) loss (51) 1,591
  Future income taxes 1,724 5,609
  Loss on disposal of Magnesium Division 1,109 -
  Equity in the loss of Fundo Wheels AS - 3,075
  Impairment of capital assets 39,039 1,351
  Impairment of investment in Applied Magnesium 4,077 -
  Impairment of investment in Fundo Wheels AS 698 12,430
Deposits from customers - 45,534
Accrued employee future benefits paid (4,299) (4,365)
Expenditures charged against provision for reorganization (3,203) (1,921)
Expenditures charged against other long term provisions (1,210) (436)
     
Change in non-cash working capital items    
  Decrease (increase) in accounts receivable 23,596 (18,275)
  Decrease (increase) in inventories 17,575 (55,882)
  Increase in prepaid expenses and deposits (68) (512)
  Increase (decrease) in accounts payable and accrued liabilities (15,820) 12,954
  Decrease in deposits (206) (1,930)
  Deferred revenue 9,605 -
  (26,410) 1,365
     
Cash flows from (used in) investing activities    
Capital expenditures (39,752) (80,134)
Development costs capitalized (5,656) -
Decrease in short term investments 116 15,035
Investment in Applied Magnesium International 100 -
Investment in convertible notes - (4,020)
Decrease (increase) in long term receivables 47 (199)
Proceeds on disposal of property, plant and equipment 4,821 434
Other 170 (86)
  (40,154) (68,970)
     
Cash flows from (used in) financing activities    
Issuance of common shares 44,151 255
Increase (decrease) in bank indebtedness (11,124) 51,418
Increase in term loan, net 24,575 -
Repayment of other liabilities and long term debt (54) (102)
Increase in loans from affiliated company 6,041 1,083
  63,589 52,654
     
Decrease in cash during the year (2,975) (14,951)
     
Cash and cash equivalents, assumed by Applied Magnesium (367) -
     
Cash and cash equivalents, beginning of year 4,512 19,463
     
Cash and cash equivalents, end of year $ 1,170 $ 4,512
 
Supplemental cash flow information    
  Cash paid during the year:    
    Interest $ 3,691 $ 509
    Income taxes $ 63 $ 58

Sedar File Profile #00000838

Contact Information

  • Timminco Limited
    Robert Dietrich
    Executive Vice President - Finance and CFO
    (416) 364-5171
    Fax: (416) 364-3451
    Email: rdietrich@timminco.com
    or
    The Equicom Group Inc.
    Lawrence Chamberlain
    (416) 815-0700 ext. 257
    Fax: (416) 815-0080
    Email: lchamberlain@equicomgroup.com