Timminco Limited
TSX : TIM

Timminco Limited

March 15, 2011 17:03 ET

Timminco Reports Financial Results for Fourth Quarter and 2010 Year

TORONTO, ONTARIO--(Marketwire - March 15, 2011) - Timminco Limited ("Timminco" or the "Company")(TSX:TIM) today reported its financial results for the fourth quarter and year ended December 31, 2010 (all figures are in Canadian dollars unless otherwise stated).

Fourth Quarter Fiscal 2010 Summary (all figures are comparable with fourth quarter fiscal 2009):
  • Consolidated sales increased 22% to $31.0 million from $25.5 million;
  • Sales from silicon metal product lines increased 5% to $31.0 million from $29.3 million;
  • EBITDA (excluding a provision for the impairment of long-lived assets related to the purification of silicon metal and reorganization costs related to disposal of the Magnesium Group) was negative $5.2 million compared with negative $17.4 million;
  • Net loss was $19.9 million, or $0.10 per share, compared with $69.4 million, or $0.48 per share;
  • Completed a silicon metal production partnership with Dow Corning Corporation, known as Quebec Silicon, which generated net cash proceeds of US$40.1 million, and established a $10 million revolving line of credit facility with Dow Corning for Quebec Silicon;
  • Fully repaid US$27.7 million Bank of America debt and established new $20.0 million three-year revolving credit facility; and,
  • Confirmed the extension to July 2019 of a $25.0 million term loan with Investissement Quebec.
Fiscal 2010 Summary (all figures are comparable with fiscal 2009):
  • Consolidated sales increased 27% to $133.0 million from $104.6 million (with fiscal 2009's total including a contribution of $30.1 million from the Magnesium Group, which was divested in July 2009);
  • Sales from silicon metal product lines increased 91% to $132.7 million from $69.4 million;
  • Recorded $26.0 million inventory net realizable value provision related to solar by-product and solar grade silicon inventories, a $7.5 million long-lived asset provision related to purification of silicon metal, a $2.2 million provision related to solar grade silicon supplier claims, and $0.5 million in reorganization costs related to disposal of the Magnesium Group;
  • EBITDA (excluding the aforementioned items) was negative $38.9 million compared with negative $50.9 million;
  • Net loss was $74.8 million, or $0.40 per share, compared with $134.2 million, or $1.09 per share;
  • Signed long-term contracts to supply a significant volume of silicon metal over the next five years to a long-standing customer; and
  • Announced plans to pursue opportunities to expand silicon metal capacity through a potential production facility in Iceland.

"Our financial results for both the fourth quarter and the year are demonstrative of the continued strong demand for our silicon metal products from our traditional chemicals and aluminum customers, which allowed us to run our operations at full capacity throughout 2010," said Dr. Heinz Schimmelbusch, Chairman of the Board and Chief Executive Officer of Timminco. "Sales achieved strong year-over-year growth of 22% and 27% for the quarter and the year, respectively. Profitability, however, was impacted by a number of provisions related to the strategic positioning of the Silicon Group for the future. As we look forward to 2011, silicon metal production for the year is essentially sold out and we will continue to focus on opportunities to reduce production costs."

Dr. Schimmelbusch continued, "The additional actions we undertook in 2010 to strengthen the balance sheet have positioned Timminco to capitalize on the opportunities inherent in our silicon metal operations, as well as our proprietary solar grade silicon purification process. We believe that the long-term viability of the solar photovoltaic industry will require a less energy intensive alternative to polysilicon. We continue to work on process refinements, which when applied at a commercial scale, could reduce our solar grade silicon production costs over the long term, potentially providing a cost advantage relative to polysilicon. In the interim we are developing new customer markets to enable re-establishing commercial production."

Financial Results

The Company's financial results for the fourth quarter and fiscal year ended December 31, 2010 and fourth quarter ended December 31, 2009 consist of its silicon metal and solar grade silicon operations. The results for the fiscal year ended December 31, 2009 also include the contribution from the Magnesium Group, which was divested on July 22, 2009.

($000s except per share amounts, unaudited)      
    Three Months Ended     Twelve Months Ended  
             
    Dec. 31, 2010     Dec. 31, 2009     Dec. 31, 2010     Dec. 31, 2009  
                         
Sales   30,975     25,468     132,997     104,568  
Gross loss   (255 )   (13,368 )   (22,810 )   (37,140 )
Gross loss percentage   (0.8 %)   (52.5 %)   (17.2 %)   (35.5 %)
EBITDA   (5,148 )   (17,432 )   (38,942 )   (50,931 )
Net loss   (19,910 )   (69,403 )   (74,752 )   (134,222 )
                         
Loss per common share, basic and diluted   (0.10 )   (0.48 )   (0.40 )   (1.09 )
                         
Working capital (excluding available cash items and interest bearing debt)   18,762     24,853     18,762     24,853  
                         
Total assets   169,234     209,908     169,234     209,908  
                         
Cash, cash equivalents and short-term investments   8,181     1,170     8,181     1,170  
                         
Bank debt   -     40,315     -     40,315  
                         
Total long-term liabilities   72,550     28,888     72,550     28,888  
Weighted average number of
Common shares outstanding, basic and diluted (000's)
  195,735     143,748     184,167     123,448  

Sales for the fourth quarter of 2010 ("Q4-10") increased 22% to $31.0 million from $25.5 million for the fourth quarter of 2009 ("Q4-09"). Sales for 2010 increased 27% to $132.7 million from $104.6 million for fiscal 2009, which included $30.1 million in sales from the Magnesium Group. The increase for both periods is the result of higher sales from the Company's core silicon metal product lines.

EBITDA for Q4-10 was negative $5.1 million, compared with negative $17.4 million for Q4-09. EBITDA for 2010 was negative $38.9 million compared with negative $50.9 million for 2009. The EBITDA losses were primarily the result of a net realizable value provision related to solar grade silicon inventories and a provision related to solar grade silicon supplier claims, as well as the strength of the Canadian dollar versus the Euro and U.S. dollar and expenditures related to solar grade silicon product specification improvements. 

Net loss for Q4-10 improved to $19.9 million, or $0.10 per share, compared with a net loss of $69.4 million, or $0.48 per share, for Q4-09. Net loss for 2010 improved to $74.8 million, or $0.40 per share, from a net loss of $134.2 million, or $1.09 per share, for 2009.

Cash, cash equivalents and short-term investments at December 31, 2010 were $8.2 million compared with $1.2 million at December 31, 2009. The increase is primarily the result of the generation of $41.0 million (US$40.1 million) from the production partnership transaction with Dow Corning, which was partially offset by repayment in full of the outstanding amount of US$27.7 million on the Bécancour Silicon credit facility with Bank of America, as well as cash used in operations.

Provisions Recorded in 2010 and 2009

The results for both the fourth quarter and the full year 2010 include provisions primarily related to the strategic positioning of the Silicon Group, as it focused its business on the production of silicon metal for the chemical and aluminum industries, and market development for solar grade silicon. These provisions, summarized in the table below, are in addition to the costs recognized in relation to the closure of the former Magnesium Group's Aurora, Colorado operations in 2009 and residual impairment losses related to the Company's former investment in Fundo Wheels AS. In total, the Company has written down approximately $101 million in assets and investments over the past two years as it has restructured its businesses.

($000s)   Three Months Ended (unaudited)   Twelve Months Ended (unaudited)
    2010   2009   2010   2009
Net realizable value provision relating to inventories increasing cost of sales   232   7,119   27,218   9,377
Impairment of long lived assets related to purification of silicon metal   7,498   39,039   7,498   39,039
Provision for contract termination claims from suppliers to solar operations included in SG&A expenses   80   3,101   2,206   3,101
Environmental remediation costs   23   1,230   490   1,627
Loss on disposal of the Magnesium Group and impairment of notes receivable from Applied Magnesium   -   3,006   -   5,186
Reorganization costs related to the closure of facilities and disposal of the Magnesium Group   506   542   506   4,293
Impairment of the investment in Fundo Wheels   -   -   -   698
Total impact on net income   8,339   54,037   37,918   63,321

Silicon Group

Silicon Group sales for Q4-10 increased by 22% to $31.0 million from $25.4 million for Q4-09 2009. Sales were composed almost entirely of silicon metal product lines and reflected shipments of 25,730 mt compared with 15,753 mt in Q4-09. Silicon metal product line sales increased 5% to $30.9 million from $29.3 million in Q4-09. The increase in silicon metal sales is due to improved demand for silicon metal from the Company's traditional chemical and aluminium industry customers. Silicon Group sales for 2010 increased by 79% to $133.0 million from $74.4 million for 2009. Sales were composed almost entirely of silicon metal product lines and reflected shipments of 101,816 mt compared with 60,266 mt for 2009. Silicon metal product line sales increased 91% to $132.7 million from $69.4 million for 2009. The increase in silicon metal sales is due to improved demand for silicon metal from the Company's traditional chemical and aluminium industry customers. The strength of the Canadian dollar against the U.S. dollar and the Euro had an unfavourable impact on Q4-10 Silicon Group sales of $1.6 million and $0.4 million, respectively, relative to Q4-09 and an unfavourable impact on 2010 Silicon Group sales of $7.9 million and $4.6 million, respectively, relative to 2009.

Solar grade silicon sales for Q4-10 were $0.1 million reflecting shipments of trial material to potential customers, compared with negative $3.9 million for Q4-09. Solar grade silicon sales for 2010 were $0.3 million compared with $5.1 million for 2009 and reflected shipments of approximately 13 mt of trial material to potential customers (excluding customer returns of 5 mt in FY-10). The Company continues to pursue its market development and research and development efforts in anticipation of changes in market demand for solar grade silicon, which during Q4-10 resulted in costs of approximately $1.1 million and during 2010 resulted in costs of approximately $4.2 million.

Gross profit for Q4-10 was negative $0.3 million (negative 0.8% of sales) compared with negative $14.1 million (negative 55.6% of sales) for Q4-09. Gross profit for Q4-10 was impacted by stand down and other operating costs related to solar grade silicon of $1.1 million and an inventory net realizable value provision of $0.1 million. Excluding these items, normalized gross profit for Q4-10 was $0.9 million compared with negative $4.9 million for Q4-10. Gross profit for 2010 was negative $22.8 million (negative 17.2% of sales) compared with negative $37.9 million (negative 51.0% of sales) for 2009. Gross profit for 2010 was impacted by an inventory net realizable value provision of $26.0 million and stand down and other operating costs related to solar grade silicon of $4.2 million. Excluding these items, normalized gross profit for 2010 was positive $7.4 million compared with positive $6.7 million for 2009. The increase in normalized gross profit for both periods is primarily the result of lower production costs per metric ton reflecting better furnace efficiency and lower labour costs, as well as higher selling prices. 

EBITDA for Q4-10 was negative $1.5 million compared with negative $18.3 million for Q4-09. EBITDA for Q4-10 was impacted by stand down and other operating costs related to solar grade silicon of $1.1 million, an inventory net realizable value provision of $0.1 million and contract termination settlements of $0.1 million. Excluding these items, normalized EBITDA for Q4-10 was negative $0.2 million compared with negative $5.9 million for Q4-09. EBITDA for 2010 was negative $27.5 million compared with negative $47.8 million for 2009. EBITDA for 2010 was impacted by inventory net realizable value provisions of $26.0 million, stand down and other operating costs related to solar grade silicon of $4.2 million and contract termination settlements of $2.2 million. Excluding these items, normalized EBITDA for 2010 was positive $4.9 million compared with negative $0.1 million for 2009. The improvement in normalized EBITDA is primarily the result of operating at historical production levels in 2010 relative to the temporary shutdown of production for part of 2009, which was partially offset by the unfavourable impact of the strength of the Canadian dollar against the U.S. dollar and the Euro.

Net loss for Q4-10 was $11.8 million compared with a net loss of $62.4 million for Q4-09. Net loss for 2010 was $46.7 million compared with a net loss of $104.4 million for 2009.

Summary of Operations
 
($000s, except per share amounts, unaudited)
    Three Months Ended   Twelve Months Ended
    Dec. 31, 2010   Dec. 31, 2009   Dec. 31, 2010   Dec. 31, 2009
Sales                
  Silicon   30,975   25,447   132,997   74,421
  Magnesium / Other(2)   -   21   -   30,147
  Total   30,975   25,468   132,997   104,568
                 
Gross Profit (Loss)(1)                
  Silicon   (255)   (14,142)   (22,810)   (37,938)
  Magnesium / Other   -   774   -   798
  Total   (255)   (13,368)   (22,810)   (37,140)
                 
Gross Profit (Loss) Percentage(1)                
  Silicon   (0.8%)   (55.6%)   (17.2%)   (51.0%)
  Magnesium/Other   -   n/m(3)   -   2.6%
  Total   (0.8%)   (52.5%)   (17.2%)   (35.5%)
                 
Net Loss                
  Silicon   (11,780)   (62,439)   (46,704)   (104,412)
  Magnesium   -   -   -   (9,909)
  Corporate / Other   (8,130)   (6,964)   (28,048)   (19,901)
  Total   (19,910)   (69,403)   (74,752)   (134,222)
                 
EBITDA(1)                
  Silicon   (1,460)   (18,301)   (27,491)   (47,791)
  Magnesium   -   -   -   (3,354)
  Corporate / Other   (3,688)   869   (11,451)   214
  Total   (5,184)   (17,432)   (38,942)   (50,931)
                 
Adjusted Loss (1)                
  Silicon   (4,278)   (22,179)   (38,614)   (62,928)
  Magnesium   -   -   -   (3,482)
  Corporate / Other   (7,409)   (3,440)   (27,011)   (15,179)
  Total   (11,687)   (25,619)   (65,625)   (81,859)
                 
Loss per common share, basic and diluted   (0.10)   (0.48)   (0.40)   (1.09)
                 
Weighted average number of common shares outstanding, basic and diluted   195,735   143,748   184,167   123,448
(1) See "Non-GAAP Accounting Definitions".
(2) The Company included the financial results of the Magnesium Group in its consolidated financial statements and MD&A for the period up to July 22, 2009, the effective disposition date of the Magnesium Group. Thereafter, no revenue and expense transactions were recorded by the Magnesium Group.
(3) Not meaningful.

Timminco will file its audited consolidated financial statements for the period ended December 31, 2010 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 tomorrow, Wednesday, March 16, 2010, at 8:30 a.m. ET to discuss its financial results for the fourth quarter and year ended December 31, 2010.

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 Wednesday, 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 48842719#.

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 electronics/solar industries, through its majority owned joint venture with Dow Corning, known as Québec Silicon. Timminco is also a producer of solar grade silicon, using its proprietary technology for purifying silicon metal, for the solar photovoltaic energy industry, through its wholly owned subsidiary Bécancour Silicon.

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: market demand and production costs for silicon metal and solar grade silicon; market development efforts for solar grade silicon; and future development of the solar photovoltaic industry. 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: liquidity risks; silicon metal supply commitments; production partnership with Dow Corning; foreign currency exchange rates; long lived asset impairment; pension risks; equipment failures, downtime or inefficiencies; dependence upon power supply for silicon metal production; pricing and availability of raw materials; credit risk exposure; selling price of silicon metal; transportation delays and disruptions; class action lawsuits; interest rates; future growth plans and strategic objectives; production capacity expansion at the Bécancour facilities; environmental, health and safety laws and liabilities; climate change; conflicts of interest; limited history with the solar grade silicon business; selling price of solar grade silicon; customer commitments;
achieving and maintaining quality of solar grade silicon; customer capabilities in producing ingots; access to crystallization equipment; protection of intellectual property rights; customer concentration; insurance costs; government and economic incentives; dependence upon key executives and employees; completion and integration of potential acquisitions, partnerships or joint ventures; intellectual property infringement claims; closure of the magnesium facilities; and investment in Applied Magnesium. These factors are discussed in greater detail in Timminco's Annual Information Form for the year ended December 31, 2010, 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:

($000s)   Three Months Ended (unaudited)     Twelve Months Ended (unaudited)  
    Dec. 31, 2010     Dec. 31, 2009     Dec. 31, 2010     Dec. 31, 2009  
                         
Net loss   (19,910 )   (69,403 )   (74,752 )   (134,222 )
Add back(subtract):                        
Income taxes   8     14     27     1,780  
Impairment of Fundo Wheels   -     -     -     698  
Loss on disposal of Magnesium Group   -     3,006     -     5,186  
Impairment of property, plant and equipment   7,567     39,039     7,567     39,039  
Loss (gain) on the sale of property, plant and equipment   -     (19 )   (64 )   10  
Interest   1,619     2,298     7,210     7,434  
Amortization of intangible assets   707     707     2,827     2,085  
Amortization of property, plant and equipment   2,117     3,203     8,319     13,212  
Reorganization costs   506     542     506     4,293  
Environmental remediation costs   142     1,230     1,091     1,627  
Stock-based compensation   2,096     1,979     8,327     7,927  
                         
EBITDA   (5,148 )   (17,432 )   (38,942 )   (50,931 )
                         

(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, loss (gain) on the sale of property, plant and equipment, impairment of investment in Fundo Wheels, environmental remediation costs and reorganization costs. Adjusted income (loss) is calculated as follows:

($000s)   Three Months Ended (unaudited)     Twelve Months Ended (unaudited)  
    Dec. 31, 2010     Dec. 31, 2009     Dec. 31, 2010     Dec. 31, 2009  
                         
Net loss   (19,910 )   (69,403 )   (74,752 )   (134,222 )
Add back(subtract):                        
Income taxes   8     (14 )   27     1,780  
Impairment of Fundo Wheels   -     -     -     698  
Loss on disposal of Magnesium Group   -     3,006     -     5,186  
Impairment of property, plant and equipment   7,567     39,039     7,567     39,039  
Loss (gain) on the sale of property, plant and equipment   -     (19 )   (64 )   10  
Reorganization costs   506     542     506     4,293  
Environmental remediation costs   142     1,230     1,091     1,627  
                         
Adjusted Loss   (11,687 )   (25,619 )   (65,625 )   (81,589 )

(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:

($000s)   Three Months Ended (unaudited)     Twelve Months Ended (unaudited)  
    Dec. 31, 2010     Dec. 31, 2009     Dec. 31, 2010     Dec. 31, 2009  
                         
Sales   30,975     25,468     132,997     104,568  
Cost of goods sold   31,230     38,836     155,807     141,708  
Gross profit (loss)   (255 )   (13,368 )   (22,810 )   (37,140 )
                         
Timminco Limited              
               
Consolidated Balance Sheets              
       
As at December 31   2010       2009  
(in thousands of Canadian dollars, unaudited)              
               
ASSETS              
Current Assets              
Cash and cash equivalent $ 8,076     $ 1,170  
Restricted cash   105       -  
Accounts receivable   13,984       11,007  
Due from related companies   967       209  
Inventories   29,368       39,797  
Finished goods consigned to related company   4,358       8,090  
Prepaid expenses and deposits   1,531       1,494  
    58,389       61,767  
               
Long term receivables   1,275       1,282  
Long term inventories   3,046       26,769  
Property, plant and equipment   83,608       91,396  
Investment in Applied Magnesium   222       222  
Employee future benefits   3,140       939  
Future income taxes   2,283       2,831  
Intangible assets   4,919       7,875  
Goodwill   12,352       16,827  
  $ 169,234     $ 209,908  
               
LIABILITIES              
Current Liabilities              
Bank indebtedness $ -     $ 40,315  
Accounts payable and accrued liabilities   20,426       19,627  
Deferred revenue   5,854       9,605  
Due to related companies   2,328       5,991  
Future income taxes   335       455  
Current portion of long term liabilities   2,604       39,158  
Current portion of long term provisions   3,679       5,132  
    35,226       120,283  
               
Due to related companies   16,199       -  
Long term liabilities   25,028       128  
Employee future benefits   20,360       20,118  
Future income taxes   1,948       2,376  
Long term provisions   9,015       6,266  
    107,776       149,171  
               
Non-controlling interest   41,574       -  
               
SHAREHOLDERS' EQUITY              
Capital stock   311,523       285,951  
Equity component of convertible notes   217       217  
Contributed surplus   21,323       12,996  
Deficit   (313,179 )     (238,427 )
    19,884       60,737  
               
  $ 169,234     $ 209,908  
               
               
Timminco Limited  
   
Consolidated Statements of Operations and Comprehensive Loss  
   
     
Years ended December 31   2010     2009  
(in thousands of Canadian dollars, except for loss per share information, unaudited)            
             
Sales $ 132,997   $ 104,568  
             
Expenses            
  Cost of goods sold   155,807     141,708  
  Selling and administrative   25,218     29,038  
  Amortization of property, plant and equipment   8,319     13,212  
  Amortization of intangible assets   2,827     2,085  
  Interest   7,210     7,434  
  Foreign exchange gain   (1,421 )   (7,310 )
             
Loss before the undernoted   (64,963 )   (81,599 )
             
  Impairment of long lived assets   (7,567 )   (39,039 )
  Reorganization costs   (506 )   (4,293 )
  Environmental remediation costs   (1,091 )   (1,627 )
  Loss on disposal of Magnesium Division   -     (1,109 )
  Realized foreign exchange loss on Fundo investment bankruptcy   -     (698 )
  Impairment of investment in Applied Magnesium   -     (4,077 )
             
             
             
Loss before income taxes   (74,127 )   (132,442 )
             
Income tax expense            
  Current   27     56  
  Future   -     1,724  
    27     1,780  
             
Net loss before non-controlling interest $ (74,154 ) $ (134,222 )
             
Non-controlling interest   598     -  
             
Net loss   (74,752 )   (134,222 )
             
Other comprehensive loss, net of income taxes            
             
  Realized foreign exchange loss on Fundo bankruptcy   -     698  
  Realized foreign exchange loss on the disposal of the Magnesium Group   -     170  
             
Comprehensive loss $ (74,752 ) $ (133,354 )
             
             
Loss per common share - basic and diluted $ (0.40 ) $ (1.09 )
             
             
             
Weighted average number of common shares outstanding - basic and diluted   184,167,420     123,447,806  
             
             
             
             
             
Consolidated Statements of Deficit            
             
             
Years ended December 31   2010     2009  
(in thousands of Canadian dollars, unaudited)            
             
Deficit, beginning of year $ (238,427 ) $ (104,205 )
Net loss   (74,752 )   (134,222 )
             
Deficit, end of year $ (313,179 ) $ (238,427 )
             
             
Timminco Limited  
   
Consolidated Statements of Cash Flows  
   
   
Years ended December 31   2010     2009  
(in thousands of Canadian dollars, unaudited)            
             
Cash flows from (used in) operating activities            
  Net loss $ (74,752 ) $ (134,222 )
  Adjustments for items not requiring cash            
  Amortization of property, plant and equipment   8,319     13,212  
  Amortization of intangible assets   2,827     2,085  
  Non-controlling interest   598     -  
  Net realizable value provision for inventories   27,218     9,377  
  Interest expense   1,773     -  
  Accretion of convertible debt   199     759  
  Stock-based compensation   8,327     7,927  
  Financing costs expensed   466     425  
  Reorganization costs   506     4,293  
  Provision for contract termination claims   2,206     -  
  Provision for environmental remediation   490     1,098  
  Accretion of environmental remediation costs   600     529  
  Benefits plan expense   3,878     4,908  
  Unrealized foreign exchange gain   (1,200 )   (51 )
  Impairment of long lived assets   7,567     39,039  
  Future income taxes   -     1,724  
  Loss on disposal of Magnesium Division   -     1,109  
  Impairment of investment in Fundo   -     698  
  Impairment of investment in Applied Magnesium   -     4,077  
Accrued employee future benefits paid   (6,343 )   (4,299 )
Expenditures charged against long term provisions   (2,000 )   (4,413 )
             
Change in non-cash working capital items            
  Increase in restricted cash   (105 )   -  
  Decrease (increase) in accounts receivable   (2,977 )   23,596  
  Decrease in inventories   10,666     8,198  
  Increase in prepaid expenses and deposits   (37 )   (68 )
  Increase (decrease) in accounts payable and accrued liabilities   95     (15,810 )
  Decrease in deposits   -     (206 )
  Increase (decrease) in deferred revenue   (3,751 )   9,605  
    (15,430 )   (26,410 )
             
Cash flows from (used in) investing activities            
Capital expenditures   (2,797 )   (39,752 )
Development costs capitalized   -     (5,656 )
Decrease in short term investments   -     116  
Investment in Applied Magnesium   -     100  
Decrease in long term receivable   -     47  
Proceeds on disposal of property, plant and equipment   -     4,821  
Other   -     170  
    (2,797 )   (40,154 )
             
Cash flows from (used in) financing activities            
Issuance of common shares   12,434     44,151  
Issuance of convertible bond   1,043     -  
Decrease in bank indebtedness   (40,315 )   (11,124 )
Term loan, net   -     24,575  
Decrease in long term liabilities   (793 )   (54 )
Increase in loans from related companies   11,788     6,041  
Funding from non-controlling interest   40,976     -  
    25,133     63,589  
             
Increase (decrease) in cash during the year   6,906     (2,975 )
             
Cash and cash equivalents assumed by Applied Magnesium   -     (367 )
             
Cash and cash equivalents, beginning of year   1,170     4,512  
             
Cash and cash equivalents, end of year $ 8,076   $ 1,170  
             
             
Supplemental cash flow information            
  Cash paid during the year:            
    Interest $ 3,853   $ 3,691  
    Income taxes $ 9   $ 63  

Contact Information

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