CENTURY ALUMINUM CO - FORM 8-K - EX-99.1 - EXHIBIT - November 4, 2013

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Exhibit 99.1

Century Aluminum Reports Third Quarter 2013 Results

CHICAGO, IL -- 11/04/13 -- Century Aluminum Company (NASDAQ: CENX) reported a net loss of $9.5 million ($0.11 per basic and diluted common share) for the third quarter of 2013. Cost of sales for the quarter included a $5.8 million benefit for lower of cost or market inventory adjustments and an $11.7 million benefit for deferred power contract liability amortization.
In the third quarter of 2012, Century reported a net loss of $12.0 million ($0.14 per basic and diluted share). Financial results were positively impacted by a net benefit of $4.1 million related to certain litigation items. Cost of sales for the quarter included an $8.2 million benefit for lower of cost or market inventory adjustments.
Sales for the third quarter of 2013 were $399.9 million, compared with $304.6 million for the third quarter of 2012. Shipments of primary aluminum for the 2013 third quarter were 212,797 tonnes, compared with 163,431 tonnes shipped in the year-ago quarter. Sales and shipments of primary aluminum for the third quarter of 2013 both benefited from the June 2013 acquisition of the Sebree, KY aluminum smelter. During the quarter, the Sebree acquisition added $101.5 million in sales and 45,843 tonnes in primary aluminum shipments.
For the first nine months of 2013, Century reported a net loss of $30.6 million ($0.35 per basic and diluted share). These results were positively impacted by an unrealized gain of $16.2 million primarily related to a LME-based contingent obligation, a gain on bargain purchase of $5.3 million and deferred power contract liability amortization of $14.5 million. Results were negatively impacted by a non-cash charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge of $4.7 million for severance and other expenses related to our corporate headquarters relocation. Cost of sales in the first nine months of 2013 included a $10.3 million charge for lower of cost or market inventory adjustments.
This result compares to a net loss of $28.7 million ($0.32 per basic and diluted share) for the first nine months of 2012. These results were negatively impacted by an unrealized net loss on forward contracts of $3.2 million primarily related to the mark to market of aluminum price protection options. Results were positively impacted by a net benefit of $4.1 million related to certain litigation items. Cost of sales in the first nine months of 2012 included a $19.8 million benefit for lower of cost or market inventory adjustments.
Sales in the first nine months of 2013 were $1,053.1 million compared with $954.4 million in the same period of 2012. Shipments of primary aluminum for the first nine months of 2013 were 547,843 tonnes compared with 484,226 tonnes for the comparable 2012 period. Sales and shipments of primary aluminum for the first nine months were higher by $140.3 million and 63,522 tonnes, respectively, as a result of the Sebree smelter acquisition.
"We continue to operate in an uncertain global environment," commented Michael A. Bless, President and Chief Executive Officer. "Widespread and consistent recovery in developed and developing economies has been elusive. China has not developed momentum in driving more robust consumer activity, and potential problems in the financial system remain a concern. In the U.S. and Europe, political instability has led to predictable uncertainty on the part of people making investment decisions. In our sector, we have seen some hopeful signs. Demand continues to be relatively strong in most markets. Supply closures, though each individually small in the context of the broader market, have continued to build. Volatility caused by the potential for changes in the LME's warehousing rules has diminished. On balance, however, we will continue to manage the company with a bias toward downside risk in broad market conditions.
"We believe we have made good progress managing those items under our control," continued Mr. Bless. "Safety performance improved throughout the quarter, after a rough start at Sebree. Key performance indicators have been uniformly good; recent high purity production at Hawesville and billet production at Sebree have been at record levels. Most importantly, production costs have improved. As previously announced, we received approval from the Kentucky Public Service Commission for Hawesville's new power contract, and have been successfully purchasing market-based power since late August. Grundartangi's investment projects continue on track; we expect to produce finished anodes at our new plant in the Netherlands in December.
"We are focused on the important next steps for our power arrangements in Kentucky. For Hawesville, we are working with the regulators toward finalizing the procedures necessary for future grid stability and energy import capability; we expect to complete this process in late 2013 or early 2014. Century and Big Rivers plan to file the market-based power contract for Sebree soon, allowing for approval by the PSC before the termination of the current contract on January 31, 2014. We continue to work toward creating the conditions necessary for a restart of Ravenswood and of the Helguvik project; while there is not a solution at hand on either matter, discussions with the various parties remain active and we are committed to finding a solution."




Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century’s corporate offices are located in Chicago, Illinois. More information can be found at www.centuryaluminum.com.

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, visit www.centuryaluminum.com and click on the conference call link on the homepage. The webcast will be archived on our website and available for replay approximately two hours following the live call.

Cautionary Statement
This press release contains "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; worsening of global financial and economic conditions; increases in global aluminum inventories and the addition of new or restarted global aluminum production capacity; weakening of the company's U.S. customer markets; and our ability to successfully obtain long-term competitive power arrangements for our U.S. plants. Forward-looking statements in this press release include, without limitation, statements regarding our ability to successfully restart operations at our Vlissingen plant; our ability to finalize the wholesale power arrangement for our Hawesville smelter and achieve a similar arrangement at our Sebree smelter; and our ability to successfully progress the potential restart of our Ravenswood smelter and Helguvik project. 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.
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, Landsbankinn hf.
Steingrimur Helgason, Director -- Corporate Finance, Landsbankinn hf.


Century Aluminum Contacts:
Mike Dildine (media)

 
312-696-3142
Shelly Harrison (investors)    
 
312-696-3140









CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
Three months ended September 30,
 
Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
NET SALES:
 
 
 
 
 
 
 
Third-party customers
$
271,016

 
$
170,023

 
$
680,480

 
$
542,884

Related parties
128,912

 
134,612

 
372,659

 
411,560

 
399,928

 
304,635

 
1,053,139

 
954,444

Cost of goods sold
387,574

 
301,385

 
1,028,901

 
924,645

Gross profit
12,354

 
3,250

 
24,238

 
29,799

Other operating expenses – net
2,174

 
7,388

 
6,288

 
14,926

Selling, general and administrative expenses
14,422

 
9,182

 
45,875

 
24,792

Operating loss
(4,242
)
 
(13,320
)
 
(27,925
)
 
(9,919
)
Interest expense – third party – net
(5,265
)
 
(5,969
)
 
(17,248
)
 
(17,642
)
Interest income – related parties
—

 
—

 
—

 
62

Net gain (loss) on forward and derivative contracts
440

 
(340
)
 
16,151

 
(4,049
)
Gain on bargain purchase
—

 
—

 
5,253

 
—

Loss on early extinguishment of debt
—

 
—

 
(3,272
)
 
—

Other income (expense) – net
213

 
7,648

 
(1,001
)
 
8,115

Loss before income taxes and equity in earnings of joint ventures
(8,854
)
 
(11,981
)
 
(28,042
)
 
(23,433
)
Income tax expense
(1,384
)
 
(1,168
)
 
(4,714
)
 
(7,384
)
Loss before equity in earnings of joint ventures
(10,238
)
 
(13,149
)
 
(32,756
)
 
(30,817
)
Equity in earnings of joint ventures
731

 
1,126

 
2,118

 
2,116

Net loss
$
(9,507
)
 
$
(12,023
)
 
$
(30,638
)
 
$
(28,701
)
 
 
 
 
 
 
 
 
Net loss allocated to common shareholders
$
(9,507
)
 
$
(12,023
)
 
$
(30,638
)
 
$
(28,701
)
LOSS PER COMMON SHARE:
 
 
 
 
 
 
 
Basic and Diluted
$
(0.11
)
 
$
(0.14
)
 
$
(0.35
)
 
$
(0.32
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
88,611

 
88,468

 
88,588

 
88,549

Diluted
88,611

 
88,468

 
88,588

 
88,549






CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited)
 
September 30, 2013
 
December 31, 2012
ASSETS
 
 
 
Cash and cash equivalents
$
140,801

 
$
183,976

Restricted cash
3,273

 
258

Accounts receivable — net
51,247

 
50,667

Due from affiliates
24,955

 
37,870

Inventories
231,505

 
159,925

Prepaid and other current assets
40,708

 
34,975

Deferred taxes - current portion
19,720

 
19,726

Total current assets
512,209

 
487,397

Property, plant and equipment — net
1,239,201

 
1,188,214

Other assets
108,221

 
100,715

TOTAL
$
1,859,631

 
$
1,776,326

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
LIABILITIES:
 
 
 
Accounts payable, trade
$
105,950

 
$
75,370

Due to affiliates
71,739

 
39,737

Accrued and other current liabilities
72,921

 
40,099

Accrued employee benefits costs
17,060

 
18,683

Industrial revenue bonds
7,815

 
7,815

Current portion of long-term debt
2,603

 
—

Total current liabilities
278,088

 
181,704

Senior notes payable
246,442

 
250,582

Revolving credit facility
16,725

 
—

Accrued pension benefits costs — less current portion
59,724

 
67,878

Accrued postretirement benefits costs — less current portion
144,025

 
143,105

Other liabilities
37,184

 
40,162

Deferred taxes
111,922

 
110,252

Total noncurrent liabilities
616,022

 
611,979

 

 

SHAREHOLDERS’ EQUITY:
 
 
 
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 79,734 and 80,283 issued and outstanding at September 30, 2013 and December 31, 2012, respectively)
1

 
1

Common stock (one cent par value, 195,000,000 shares authorized; 93,469,452 issued and 88,682,931 outstanding at September 30, 2013; 93,335,158 issued and 88,548,637 outstanding at December 31, 2012)
935

 
933

Additional paid-in capital
2,508,456

 
2,507,454

Treasury stock, at cost
(49,924
)
 
(49,924
)
Accumulated other comprehensive loss
(138,680
)
 
(151,192
)
Accumulated deficit
(1,355,267
)
 
(1,324,629
)
Total shareholders’ equity
965,521

 
982,643

TOTAL
$
1,859,631

 
$
1,776,326





CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Nine months ended September 30,
 
2013
 
2012
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(30,638
)
 
$
(28,701
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Unrealized net (gain) loss on forward contracts
(762
)
 
3,196

Gain on bargain purchase
(5,253
)
 
—

Unrealized gain on E.ON contingent obligation
(16,428
)
 
—

Accrued and other plant curtailment costs — net
3,380

 
4,025

Lower of cost or market inventory adjustment
10,286

 
(19,818
)
Depreciation
49,082

 
46,925

Sebree power contract amortization
(14,461
)
 
—

Debt discount amortization
586

 
791

Pension and other postretirement benefits
(2,674
)
 
673

Stock-based compensation
961

 
412

Loss on early extinguishment of debt
3,272

 
—

Undistributed earnings of joint ventures
(2,118
)
 
(2,116
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable — net
(1,063
)
 
3,320

Due from affiliates
12,915

 
317

Inventories
(22,848
)
 
31,810

Prepaid and other current assets
(4,892
)
 
(8,254
)
Accounts payable, trade
26,547

 
(8,823
)
Due to affiliates
32,002

 
761

Accrued and other current liabilities
2,209

 
8,743

Other — net
2,355

 
(12,176
)
Net cash provided by operating activities
42,458

 
21,085

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchase of property, plant and equipment
(31,994
)
 
(10,399
)
Nordural expansion — Helguvik
(2,855
)
 
(5,474
)
Purchase of carbon anode assets and improvements
(8,519
)
 
(14,185
)
Purchase of Sebree smelter
(48,058
)
 
—

Investments in and advances to joint ventures
—

 
(275
)
Dividends and payments received on advances from joint ventures
—

 
3,166

Proceeds from sale of property, plant and equipment
515

 
89

Restricted and other cash deposits
(3,015
)
 
—

Net cash used in investing activities
(93,926
)
 
(27,078
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Repayment of debt
(249,604
)
 
—

Proceeds from issuance of debt
246,330

 
—

Borrowings under revolving credit facility
16,725

 
18,076

Repayments under revolving credit facility
—

 
(18,076
)
Debt issuance costs
(3,994
)
 
—

Debt retirement costs
(1,208
)
 
—

Repurchase of common stock
—

 
(4,033
)
Issuance of common stock — net
44

 
—





CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(Unaudited)
 
Nine months ended September 30,
 
2013
 
2012
Net cash provided by (used in) financing activities
8,293

 
(4,033
)
CHANGE IN CASH AND CASH EQUIVALENTS
(43,175
)
 
(10,026
)
Cash and cash equivalents, beginning of the period
183,976

 
183,401

Cash and cash equivalents, end of the period
$
140,801

 
$
173,375








CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)

 
 
SHIPMENTS - PRIMARY ALUMINUM
 
Direct (1)
 
Toll
 
Tonnes
 
(000)
Pounds
 
$/Pound
 
Tonnes
 
(000)
Pounds
 
$ (000)
Revenue
2013
 
 
 
 
 
 
 
 
 
 
 
3rd Quarter
140,120

 
308,911

 
$
0.96

 
72,677

 
160,225

 
$
101,381

2nd Quarter
106,284

 
234,316

 
0.98

 
69,986

 
154,293

 
101,290

1st Quarter
93,472

 
206,070

 
1.06

 
65,304

 
143,971

 
103,973

Total
339,876

 
749,297

 
$
0.99

 
207,967

 
458,489

 
$
306,644

 
 
 
 
 
 
 
 
 
 
 
 
2012
 
 
 
 

 
 
 
 
 
 
3rd Quarter
95,747

 
211,086

 
$
0.98

 
67,684

 
149,217

 
$
97,939

2nd Quarter
93,831

 
206,862

 
1.05

 
66,997

 
147,704

 
105,756

1st Quarter
94,087

 
207,426

 
1.06

 
65,880

 
145,240

 
106,416

Total
283,665

 
625,374

 
$
1.03

 
200,561

 
442,161

 
$
310,111



 

 

 

 

 

(1) Does not include Toll shipments from Nordural Grundartangi



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