SOURCE: Century Aluminum Company

Century Aluminum Company

February 15, 2011 16:00 ET

Century Reports 2010 Earnings

MONTEREY, CA--(Marketwire - February 15, 2011) - Century Aluminum Company (NASDAQ: CENX) reported net income of $65.3 million ($0.65 per basic and $0.64 per diluted common share) for the fourth quarter of 2010. Financial results were negatively impacted by a mark-to-market loss on forward contracts of $5.7 million primarily related to LME price protection options and by a contractual termination pension benefit charge of $4.6 million due to the continued curtailment of the Ravenswood facility. Changes to the Century of West Virginia retiree medical benefits program increased current quarter results by $56.7 million with an associated discrete tax benefit of $2.0 million. Cost of sales for the quarter includes a $15.9 million net after-tax charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements.

For the fourth quarter of 2009, Century reported a net loss of $24.4 million ($0.28 per basic and diluted common share). Financial results were negatively impacted by net after-tax expense of $11.5 million related to the purchase of downside aluminum price protection for a portion of Century's U.S. production through 2010, and a net after-tax charge of $5.3 million for losses on early extinguishment and modification of debt. Financial results were positively impacted by a $6.6 million benefit related to discrete income tax adjustments. Cost of sales for the fourth quarter of 2009 included a $17.2 million net after-tax charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements.

For 2010, the company reported net income of $60.0 million ($0.59 per basic and diluted common share). These results were negatively impacted by a mark-to-market loss on forward contracts of $10.5 million primarily related to LME price protection options and by a contractual termination pension benefit charge of $4.6 million due to the continued curtailment of the Ravenswood facility. Changes to the Century of West Virginia retiree medical benefits program increased results by $56.7 million with an associated discrete tax benefit of $2.0 million. Tax benefits related to the release of tax reserves no longer required positively impacted results by $2.1 million for the year. Cost of sales for the year includes a $63.2 million net after-tax charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements.

For 2009, the company reported a net loss of $206.0 million ($2.73 per basic and diluted common share). These results were negatively impacted by several items, including: a net after-tax charge of $41.7 million for costs associated with production curtailments at U.S. smelters; a $73.2 million net after-tax impairment charge associated with the divestiture of our alumina and bauxite investments; a net after-tax charge of $11.0 million related to the purchase of downside aluminum price protection for a portion of our U.S. production through 2010; and a net after-tax charge of $4.7 million for losses on early extinguishment and modification of debt. 2009 results were positively impacted by a net after-tax benefit of $57.8 million, primarily from realized and unrealized gains related to the termination of the existing power contract and its replacement with a new power contract at Hawesville and a $14.3 million benefit related to discrete income tax adjustments. Net after-tax inventory lower of cost or market adjustments of $33.6 million favorably impacted the yearly results. Cost of sales for 2009 included a $31.6 million net after-tax charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements.

Sales for the fourth quarter of 2010 were $316.9 million compared with $256.8 million for the fourth quarter of 2009. Shipments of primary aluminum for the 2010 fourth quarter were 148,923 tonnes, compared with 147,700 tonnes shipped in the year-ago quarter. Sales for 2010 were $1,169 million compared with $899 million for 2009, and total 2010 primary aluminum shipments of 585,395 tonnes compared with 605,126 tonnes shipped in 2009.

"Global economic growth has improved over the last several quarters, with business increasing across most end-markets," commented Logan W. Kruger, President and Chief Executive Officer. "In China, consumer activity and industrial production have reaccelerated since last spring despite a variety of government actions to control inflationary pressures. Other developing regions also remain buoyant, although inflation is a developing trend in these regions as well. On the other hand, certain large markets, such as construction, remain historically weak in the U.S. and Europe. Aluminum inventories continue to be high, a situation that may be exacerbated by new and restarted capacity expected to come on-line over the next several months. In summary, we believe the risks of the current market environment are reasonably balanced; it is in this context that we are managing the company."

"We are pleased with Century's progress during the closing months of 2010 and the beginning of 2011," continued Mr. Kruger. "At Hawesville, we have concluded a new five-year labor agreement and are ahead of plans to restart the potline that was curtailed during the financial crisis. We are continuing to advance the complex process required for a potential restart of the Ravenswood smelter. We have built strong liquidity and reduced structural costs as well as long-term obligations. These accomplishments should help to protect the company during periods of volatility that inevitably occur in commodities markets and provide the underpinnings to grow the company in a deliberate manner. Toward this end, we are working on high-return, low-risk growth programs at Grundartangi and Hawesville and we continue to make progress toward what we cautiously expect will be a restart of major construction activity at Helguvik this year."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California.

Century Aluminum's quarterly conference call is scheduled for 5:00 p.m. Eastern time today. To listen to the conference call and to view related presentation materials, go to www.centuryaluminum.com and click on the conference call link on the homepage.

Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:

Atli B. Gudmundsson, Senior Manager - Corporate Finance, NBI hf.

Steingrimur Helgason, Director - Corporate Finance, NBI hf.

Cautionary Statement

This press release and comments made by Century management on the quarterly conference call contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements. Such risks and uncertainties may include, without limitation, declines in aluminum prices or increases in our operating costs; increasing inflation or other worsening of global financial and economic conditions; increases in global aluminum inventories and the addition of new or restarted global aluminum production capacity; additional delays in the completion of our Helguvik, Iceland smelter; our ability to successfully progress the potential restart of our Ravenswood smelter and implement growth programs at Grundartangi and Hawesville; and our ability to successfully implement measures to protect Century during economic down cycles. More information about these risks, uncertainties and assumptions can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K and in other filings made with the Securities and Exchange Commission. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.

                         Century Aluminum Company
                  Consolidated Statements of Operations
                 (in Thousands, Except Per Share Amounts)
                                (Unaudited)


                              Three months ended          Year ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
NET SALES:
     Third-party customers  $  205,547  $  187,906  $  755,863  $  668,344
     Related parties           111,304      68,908     413,408     230,909
                            ----------  ----------  ----------  ----------
                               316,851     256,814   1,169,271     899,253

COST OF GOODS SOLD             275,716     242,539   1,056,875     964,918
                            ----------  ----------  ----------  ----------

GROSS PROFIT (LOSS)             41,135      14,275     112,396     (65,665)

OTHER OPERATING EXPENSES
 (INCOME) - NET                (49,591)      6,013     (37,386)    (16,088)
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES        11,101      15,093      46,802      47,879
                            ----------  ----------  ----------  ----------

OPERATING INCOME (LOSS)         79,625      (6,831)    102,980     (97,456)

INTEREST EXPENSE - THIRD
 PARTY - NET                    (6,171)     (6,305)    (25,010)    (29,093)
INTEREST INCOME - RELATED
 PARTY                             115         141         448         572
NET LOSS ON FORWARD
 CONTRACTS                      (5,681)    (11,631)    (10,495)    (19,415)
OTHER EXPENSE - NET               (598)     (4,852)       (377)     (4,751)
                            ----------  ----------  ----------  ----------
INCOME (LOSS) BEFORE INCOME
 TAXES AND EQUITY
IN EARNINGS (LOSSES) OF
 JOINT VENTURES                 67,290     (29,478)     67,546    (150,143)

INCOME TAX (EXPENSE)
 BENEFIT                        (2,803)      4,257     (11,133)     12,357
                            ----------  ----------  ----------  ----------

INCOME (LOSS) BEFORE EQUITY
 IN EARNINGS (LOSSES)
OF JOINT VENTURES               64,487     (25,221)     56,413    (137,786)

EQUITY IN EARNINGS (LOSSES)
 OF JOINT VENTURES                 793         867       3,558     (68,196)
                            ----------  ----------  ----------  ----------

NET INCOME (LOSS)           $   65,280  $  (24,354) $   59,971  $ (205,982)
                            ==========  ==========  ==========  ==========


NET INCOME (LOSS) ALLOCATED
 TO COMMON SHAREHOLDERS     $   59,939  $  (24,354)  $  55,046  $ (205,982)

EARNINGS (LOSS) PER COMMON
 SHARE
     Basic                  $     0.65  $    (0.28) $     0.59  $    (2.73)
     Diluted                $     0.64  $    (0.28) $     0.59  $    (2.73)

WEIGHTED AVERAGE COMMON
 SHARES OUTSTANDING
     Basic                      92,742      88,160      92,676      75,343
     Diluted                    93,414      88,160      93,302      75,343






                         Century Aluminum Company
                        Consolidated Balance Sheets
                          (Dollars in Thousands)
                                (Unaudited)



                                             December 31,    December 31,
ASSETS                                           2010            2009
                                            --------------  --------------
Current Assets:
     Cash and cash equivalents              $      304,296  $      198,234
     Restricted cash                                 3,673           8,879
     Accounts receivable - net                      43,903          37,706
     Due from affiliates                            51,006          19,255
     Inventories                                   155,908         131,473
     Prepaid and other current assets               18,292          93,921
                                            --------------  --------------
          Total current assets                     577,078         489,468
Property, plant and equipment - net              1,256,970       1,298,288
Due from affiliates - less current portion           6,054           5,859
Other assets                                        82,954          68,135
                                            --------------  --------------
          Total                             $    1,923,056  $    1,861,750
                                            ==============  ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
     Accounts payable, trade                $       88,004  $       77,301
     Due to affiliates                              45,381          32,708
     Accrued and other current liabilities          41,495          38,598
     Accrued employee benefits costs -
      current portion                               26,682          12,997
     Convertible senior notes                       45,483          43,239
     Industrial revenue bonds                        7,815           7,815
                                            --------------  --------------
          Total current liabilities                254,860         212,658
                                            --------------  --------------

Senior notes payable                               248,530         247,624
Accrued pension benefits costs - less
 current portion                                    37,795          43,281
Accrued postretirements benefits costs -
 less current portion                              103,744         177,231
Other liabilities                                   37,612          31,604
Deferred taxes                                      85,999          81,622
                                            --------------  --------------
          Total noncurrent liabilities             513,680         581,362
                                            --------------  --------------

Shareholders' Equity:
     Series A Preferred stock (one cent par
      value, 5,000,000 shares authorized;
      82,515 and 83,452 shares issued and
      outstanding at December 31, 2010 and
      2009, respectively)                                1               1
     Common stock (one cent par value,
      195,000,000 shares authorized;
      92,771,864 and 92,530,068 shares
      issued and outstanding at
      December 31, 2010 and 2009,
      respectively)                                    928             925
     Additional paid-in capital                  2,503,907       2,501,389
     Accumulated other comprehensive loss          (49,976)        (74,270)
     Accumulated deficit                        (1,300,344)     (1,360,315)
                                            --------------  --------------
          Total shareholders' equity             1,154,516       1,067,730
                                            --------------  --------------
          Total                             $    1,923,056  $    1,861,750
                                            ==============  ==============




                         Century Aluminum Company
                  Consolidated Statements of Cash Flows
                          (Dollars in Thousands)
                                (Unaudited)


                                                      Year ended
                                                     December 31,

                                                 2010            2009
                                            --------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                        $       59,971  $     (205,982)
   Adjustments to reconcile net income
    (loss) to net cash provided by
    operating activities:
     Unrealized net loss on forward
      contracts                                     10,030          11,956
     Unrealized gain on contractual
      receivable                                         -         (81,557)
     Realized benefit of contractual
      receivable                                    55,703          26,025
     Write-off of intangible asset                       -          23,759
     Accrued and other plant curtailment
      costs - net                                  (56,010)          9,940
     Lower of cost or market inventory
      adjustment                                      (426)        (47,152)
     Depreciation and amortization                  63,550          72,624
     Debt discount amortization                      3,150           7,022
     Deferred income taxes                          15,552          44,952
     Pension and other postretirement
      benefits                                      14,578          12,952
     Stock-based compensation                        1,905           3,338
     Non-cash loss on early extinguishment
      and modification of debt                           -           2,325
     Non-cash loss from disposition of
      equity investments                                 -          73,234
     Non-cash contingent obligation                 13,091               -
     Undistributed earnings of joint
      ventures                                      (3,558)         (5,038)
     Change in operating assets and
      liabilities:
          Accounts receivable - net                 (6,197)         23,154
          Sale of short-term trading
           securities                                    -          13,686
          Due from affiliates                      (38,191)         21,625
          Inventories                              (24,009)         35,766
          Prepaid and other current assets          13,412          44,847
          Accounts payable, trade                   11,674         (17,596)
          Due to affiliates                         12,685         (11,961)
          Accrued and other current
           liabilities                              (1,758)        (15,448)
          Other - net                              (13,642)         (3,072)
                                            --------------  --------------
     Net cash provided by operating
      activities                                   131,510          39,399
                                            --------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property, plant and
    equipment                                      (12,241)        (16,935)
   Nordural expansion                              (19,227)        (21,981)
   Investments in and advances to joint
    ventures                                           (32)         (1,044)
   Payment received on advances from joint
    ventures                                             -           1,761
   Proceeds from sale of property, plant
    and equipment                                      823               -
   Restricted and other cash deposits                5,206          (8,014)
                                            --------------  --------------
     Net cash used in investing activities         (25,471)        (46,213)
                                            --------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment under revolving credit
    facility                                             -         (25,000)
   Financing fees                                        -          (2,429)
   Issuance of common stock - net                       23         103,077
                                            --------------  --------------
     Net cash provided by financing
      activities                                        23          75,648
                                            --------------  --------------

CHANGE IN CASH AND CASH EQUIVALENTS                106,062          68,834

CASH AND CASH EQUIVALENTS, BEGINNING OF
 YEAR                                              198,234         129,400
                                            --------------  --------------

CASH AND CASH EQUIVALENTS, END OF YEAR      $      304,296  $      198,234
                                            ==============  ==============




                         Century Aluminum Company
                          Selected Operating Data
                                (Unaudited)

                       SHIPMENTS - PRIMARY ALUMINUM


                         Direct (1)                       Toll
                ----------------------------- -----------------------------

                 Metric     (000)              Metric     (000)    (000)
                  Tons     Pounds    $/Pound    Tons     Pounds   Revenue
                --------- --------- --------- --------- --------- ---------
2010
4th Quarter        83,073   183,145 $    1.10    65,850   145,172 $ 114,513
3rd Quarter        81,693   180,102      0.99    65,523   144,454   100,231
2nd Quarter        76,521   168,700      1.04    68,058   150,043   112,523
1st Quarter        76,653   168,990      1.04    68,024   149,968   109,659
                --------- --------- --------- --------- --------- ---------
Total             317,940   700,937 $    1.04   267,455   589,637 $ 436,926
                --------- --------- --------- --------- --------- ---------

2009
4th Quarter        78,095   172,168 $    0.92    69,605   153,450 $  98,331
3rd Quarter        77,023   169,807      0.82    69,222   152,609    88,780
2nd Quarter        76,817   169,353      0.69    68,876   151,846    72,136
1st Quarter        97,392   214,712      0.72    68,096   150,126    71,048
                --------- --------- --------- --------- --------- ---------
Total             329,327   726,040 $    0.78   275,799   608,031 $ 330,295
                --------- --------- --------- --------- --------- ---------


(1) Does not include Toll shipments from Nordural Grundartangi

Contact Information

  • Contacts:
    Mike Dildine (media)
    831-642-9364

    Shelly Lair (investors)
    831-642-9357