BEACHWOOD, Ohio, March 27 /PRNewswire/ -- Aleris International, Inc.
today reported results for the fourth quarter and full year ended December
31, 2007.
2007 Summary
-- Strong free cash flow from continuing operations of $422 million
-- Completed the Wabash Alloys acquisition, providing additional customer
diversification and scale that will allow us to continue to drive
integration synergies
-- Strong gross productivity savings totaling $121 million
-- Ongoing initiatives to restructure European and North American
operations
-- EBITDA from continuing operations, excluding special items, was $372
million
-- Pro forma adjusted EBITDA from continuing operations was $427 million
Fourth Quarter Summary
-- Strong free cash flow from continuing operations of $212 million
-- Completed strategic capital expansions; Koblenz 160" hot mill and
Duffel plate program
-- EBITDA from continuing operations, excluding special items, was $49
million
-- Operating results negatively impacted by U.S. building and
construction, automotive, and metal distribution volumes as well as
costs related to European expansions
-- Strong gross productivity savings of $33 million
Aleris International, Inc.
For the three months ended For the year ended
December 31 December 31
2007 2006 2007 2006
(Successor) (Combined) (Successor)(Combined)
(1) (1) (1) (1)
(Dollars and pounds in (unaudited)
millions)
Pounds shipped:
Global rolled and
extruded products 498.2 533.7 2,113.3 1,640.9
Global recycling 810.0 568.5 3,243.8 2,889.5
Revenue $1,534.0 $1,337.5 $5,989.9 $4,195.6
(Loss) income from
continuing operations (69.9) 5.9 (94.1) 30.8
Net (loss) income (114.0) 10.9 (128.6) 70.3
EBITDA from continuing operations,
excluding special items (2) 49.4 87.2 371.8 340.2
Cash flow provided by
operating activities
from continuing operations 160.3 64.3 303.7 208.6
Free cash flow from
continuing operations (2) 212.3 11.0 421.7 161.7
(1) In this press release, the 2006 periods prior to the acquisition of
Aleris by affiliates of TPG on December 19, 2006 and the period
subsequent to the acquisition through December 31, 2006 have been
combined and are referred to as the "Combined Periods" while the 2007
periods are referred to as the "Successor Periods".
In addition, we entered into a definitive agreement to sell our Zinc
business in November 2007 and completed the sale in January 2008. The
results associated with this segment have been removed from the
operating results and cash flows from continuing operations shown
above and throughout this press release. The results of our zinc
segment are included in net (loss) income.
(2) This press release refers to various non-GAAP (generally accepted
accounting principles) financial measures including EBITDA from
continuing operations, EBITDA from continuing operations, excluding
special items, and free cash flow from continuing operations. The
methods used to compute these measures are likely to differ from the
methods used by other companies. These non-GAAP measures have
limitations as analytical tools and should be considered in addition
to, not in isolation or as a substitute for, or superior to, Aleris's
measures of financial performance prepared in accordance with GAAP.
Investors are encouraged to review the accompanying tables reconciling
the non-GAAP financial measures to comparable GAAP amounts.
"EBITDA from continuing operations," as used in this press release, is
defined as (loss) income from continuing operations before interest
income and expense, taxes, depreciation and amortization and minority
interests. "EBITDA from continuing operations, excluding special
items," as used in this press release, is defined as EBITDA from
continuing operations excluding restructuring and other charges,
unrealized gains and losses on derivative financial instruments, the
impact of the write-up of inventory and other items through purchase
accounting, non-cash stock-based compensation expense, sponsor
management fees, and, in 2006, the gain on the sale of the Carson,
California property, the loss on the early extinguishment of debt, and
the one-time gain associated with the hedge of a portion of the
purchase price paid to acquire Corus Aluminum. "Free cash flow from
continuing operations," as used in this press release, is defined as
EBITDA from continuing operations, excluding special items, less or
plus changes in accounts receivable, inventory and accounts payable
(excluding working capital acquired in business combinations) and
less capital expenditures. In determining changes in inventory, the
change in the reported balance sheet amounts due to the impact of the
write-up of inventory through purchase accounting has been excluded.
Management uses EBITDA from continuing operations, EBITDA from
continuing operations, excluding special items, and free cash flow
from continuing operations as performance metrics and believes these
measures provide additional information commonly used by our
noteholders and lenders with respect to the performance of our
fundamental business objectives, as well as our ability to meet future
debt service, capital expenditures and working capital needs.
Management believes EBITDA from continuing operations, excluding
special items, is useful to our stakeholders in understanding our
operating results and the ongoing performance of our underlying
businesses without the impact of these special items.
2007 Operating Results
The Company entered into a definitive agreement to sell its Zinc
business and completed the sale in January 2008 for $295 million, subject
to adjustment based upon the working capital delivered. The zinc business
has been reported as a discontinued operation in this press release and in
our audited financial statements for all periods presented. All discussion
and data will exclude the Zinc business unless otherwise noted.
Fourth Quarter 2007
Aleris reported fourth quarter 2007 revenues of $1.5 billion and a loss
from continuing operations of $69.9 million. The loss from continuing
operations includes $51.2 million of special items, including $21.6 million
in restructuring and other charges, $15.1 million from purchase accounting,
and $11.2 million in unrealized mark-to-market losses on derivative
financial instruments. In addition, the fourth quarter results include
amortization expense of $9.2 million as a result of the Company's
acquisition by TPG, an increase of $4.0 million from the comparable period
of 2006. EBITDA from continuing operations, excluding special items, was
$49.4 million in the fourth quarter of 2007.
For the fourth quarter of 2006, Aleris reported revenues of $1.3
billion and income from continuing operations of $5.9 million. Income from
continuing operations included losses from special items totaling $6.0
million. EBITDA from continuing operations, excluding special items, was
$87.2 million in the fourth quarter of 2006.
The continued softness in the North American building and construction
and automotive industries as well as destocking in the North American and
European distribution industries impacted fourth quarter shipment levels
and profitability. Also affecting the fourth quarter were other out of the
ordinary issues of approximately $12.0 million, including a longer than
normal fourth quarter shutdown in Koblenz to install the new 160" hot mill.
During this period, we experienced higher maintenance and other plant
spending, while lower amounts of conversion costs were absorbed into
inventory as we worked down substantial amounts of work in process
inventory. Additionally, our North American recycling operations recorded a
$4.7 million increase in environmental reserves and we experienced
unfavorable metal price lag.
Commenting on Aleris's fourth quarter results, Steven J. Demetriou,
Chairman and Chief Executive Officer, said "Fourth quarter performance was
significantly impacted by reduced volumes in our Global Rolled and Extruded
Products business. The U.S. construction and automotive industries
continued to weaken and demand in certain European end uses was impacted by
customer inventory destocking. We have taken aggressive actions to offset
the reduced demand in North America, including the announced closure of our
Bedford, Ohio and Toronto, Canada paint facilities, and the temporary
reduction of manufacturing at our Richmond, Virginia rolling mill.
"The cost performance of our European rolled products business in the
fourth quarter was negatively impacted by the complexity and activity
associated with the completion of our state-of-the-art 160" hot mill in
Koblenz, Germany and the Duffel, Belgium plate project. However, both
projects are successfully on-line and production has met our expectations.
Over the long-term, the investment of capital into our European rolled
products business will allow us to expand our production of aerospace and
other heat treat plate and sheet, brazing sheet and other high-end product
offerings."
Full Year 2007
Aleris reported revenues of $6.0 billion and a loss from continuing
operations of $94.1 million for the year ended December 31, 2007. The loss
from continuing operations contains $146.2 million of unfavorable special
items including $104.3 million from purchase accounting, $32.8 million of
restructuring and other charges, and $9.1 million in sponsor management
fees. In addition, the 2007 results include amortization expense of $40.1
million, an increase of $33.0 million over 2006 as a result of the TPG
acquisition.
In 2006, Aleris reported revenues of $4.2 billion and income from
continuing operations of $30.8 million. The 2006 results included $98.5
million of unfavorable special items described on page 11 of this press
release.
EBITDA from continuing operations, excluding special items, was $371.8
million for 2007 compared with $340.2 million reported for 2006. Positively
impacting 2007 were the acquired operations of Corus Aluminum which were
fully included in our 2007 results versus five months in 2006, as well as
productivity benefits and cost reductions associated with Six Sigma,
synergy, and other productivity initiatives. Operating results in 2007 were
negatively impacted by the dramatic decline in demand from the North
American building and construction industry as housing starts decreased by
26% in 2007. In addition, operating results were negatively impacted by
tightening scrap spreads in our North American specification alloy business
as well as the higher costs of alloys and hardeners used in the
manufacturing process, negative effect of metal price lag and approximately
$32 million of out of the ordinary cost including higher absorption,
environmental reserves and other items.
Free cash flow from continuing operations for 2007 was $421.7 million,
driven by aggressive working capital management that yielded increased
turns from 5.2 to 6.6 per year and a decrease in days of working capital
from 70 to 56 in 2007 versus 2006.
Global Rolled and Extruded Products
Global Rolled and Extruded Products recorded a segment loss of $29.2
million in the fourth quarter of 2007 and segment income of $45.4 million
in the comparable period of 2006. Excluding the impacts of purchase
accounting adjustments and the gain on the sale of the Carson, CA property
in 2006, segment loss was $13.8 million in the fourth quarter of 2007
compared to segment income of $43.8 million in the fourth quarter of 2006.
Segment EBITDA, excluding the impact of purchase accounting
adjustments, was $23.8 million in the fourth quarter of 2007 compared to
$80.2 million in the comparable period of 2006. The decrease in performance
was driven by a 7% reduction in shipment levels versus the prior year
period due to weak demand in both North America and Europe. Demand for
building and construction products in North America declined as a result of
the sharp decline in U.S. housing starts while both the North American and
European operations were impacted by destocking in the distribution
sectors.
We also experienced higher operating costs in Europe in the fourth
quarter of 2007 where production rates declined, and maintenance and other
plant spending increased during the downtime necessary for the completion
of the 160" hot mill in Germany. Higher costs of alloys and hardeners used
in the production process also contributed to the decline in segment
performance as did the negative impacts of metal price lag in 2007. We
continued to improve our hedging program during 2007 and believe that the
impacts of metal price lag will be significantly reduced in 2008 and beyond
as a result of changes made to the program in the fourth quarter of 2007.
The hedging program is designed to reduce the business's exposure to
changing LME aluminum prices. While this program reduces the negative
impact of declining LME prices it also reduces our ability to benefit
during times of rising LME prices. Positively impacting the 2007 fourth
quarter results were benefits resulting from our Six Sigma and other
productivity initiatives.
Global Rolled and Extruded Products segment income was $50.8 million
for the year ended December 31, 2007, compared with segment income of
$180.7 million in the prior year. Excluding the impact of purchase
accounting adjustments and the gain on the sale of the Carson, CA property
in 2006, segment income was $151.6 million in 2007, compared with $212.6
million in 2006. Segment EBITDA, excluding purchase accounting adjustments,
was $305.2 million in 2007 compared to $288.1 million in 2006. This
increase resulted from the inclusion of the Corus Aluminum operations for
the entire year in 2007 and the benefits from our Six Sigma and other
productivity initiatives. Partially offsetting these increases was a 13%
reduction in shipments, excluding the impact of acquisitions, related to
the weaker U.S. building and housing activity, lower truck trailer build
rates and metal distributor destocking, and the impact of lower benefits
from metal price lag in 2007 versus 2006. Additionally, during the year we
experienced higher alloy and hardener costs for certain products, and
higher costs in Europe related to the shutdowns driven by the expansion
projects.
Global Recycling
Segment income was $9.9 million in the fourth quarter of 2007 compared
to $14.0 million in the fourth quarter of 2006. Segment EBITDA, excluding
purchase accounting adjustments, was $24.2 million in the fourth quarter of
2007 compared to $22.0 million in the fourth quarter of 2006. Segment
EBITDA benefited from strong European performance, the impact of the Wabash
acquisition and productivity gains resulting from our Six Sigma and other
initiatives; these gains were partially offset by declining scrap spreads
in our North American specification alloys business and a $4.7 million
charge in the fourth quarter of 2007 for environmental matters in North
America. Shipment levels increased by 242 million pounds from the prior
year's fourth quarter, driven by the acquisition of Wabash Alloys, which
accounted for 170 million pounds of the increase.
Segment income for the year ended December 31, 2007 decreased to $59.8
million from $84.8 million in the prior year. Excluding purchase accounting
adjustments, segment income was $63.2 million in 2007 compared to $85.2
million in 2006. Segment EBITDA, excluding purchase accounting adjustments,
was $108.2 million in 2007 compared to $114.7 million in 2006. The decrease
in segment performance resulted from declining scrap spreads in our North
America specification alloys business, the weakening of the U.S. dollar,
and higher accruals for environmental matters. These factors more than
offset record results in our European recycling operations and the benefits
resulting from our productivity initiatives. Shipments increased by 354
million pounds in 2007 primarily as a result of the acquisition of Wabash
Alloys in September 2007, which accounted for 212 million pounds of the
increase.
Corporate Expense
Corporate expense primarily includes corporate general and
administrative expense and certain corporate functions that are performed
for the business units (G&A), other income and expense, certain realized
gains and losses on derivative financial instruments resulting from the
centralization of our risk management functions, and interest expense. In
addition, in order to simplify the understanding of ongoing segment
operations, corporate expense includes all restructuring and other charges
as well as non-cash adjustments associated with mark-to-market accounting
for derivative financial instruments.
Corporate G&A increased to $24.2 million in the fourth quarter of 2007
from $19.6 million in the same period of 2006 as the addition of sponsor
management fees and increased operating costs at the Company's new European
headquarters including the impact of the stronger euro were only partially
offset by lower incentive and stock-based compensation expense. Full year
2007 Corporate G&A increased by $10.0 million for the same reasons in
addition to the full year impact of the Corus Aluminum acquisition.
During the fourth quarter, the Company recorded $21.6 million of
restructuring and other charges. These charges resulted primarily from the
impairment of long-lived assets at the Monterrey, Mexico recycling
facility, the Toronto, Ontario paint facility, and the Bedford, Ohio
coating facility as a result of the announced closure of those facilities
and severance costs related to the departure of certain executive officers.
Restructuring and other charges for the full year of $32.8 million included
the fourth quarter charges as well as costs associated with several
acquisitions that were not consummated and other facility consolidations.
Approximately $9.5 million of the total restructuring and other charges
will result in cash payments, primarily in 2008.
Capital expenditures were $191.8 million in 2007, compared with $119.4
million for the previous year. The increase is primarily attributable to a
full year of the Corus Aluminum acquisition and the expansion projects
which accounted for $137.1 million of capital expenditures in 2007.
We ended the year with $2.7 billion of net debt and $369 million of
liquidity, excluding the impact of the Zinc sale. Pro forma for the
application of the net proceeds from the Zinc sale, net debt was $2.4
billion as of December 31, 2007. Pro Forma EBITDA from continuing
operations, excluding special items and including 2007 acquisitions as if
they had occurred on January 1, 2007 and synergies as permitted by the
Company's Term Loan Agreement, for the year ended December 31, 2007 was
$427.2 million.
Demetriou stated "2007 proved to be a challenging year with soft demand
in North America and higher than expected costs in Europe. We will continue
to relentlessly drive our productivity and integration programs and to
right size our cost base with initiatives across the company. For example,
during 2007, we began restructuring initiatives in our European operations
and made significant progress in integrating the recently acquired Wabash
Alloys operations. In addition, during the first quarter of 2008, we
announced the combination of our North American specification alloy and
aluminum recycling operations under a single management team and announced
initiatives to right size the North American rolled products manufacturing
base. These actions and other restructuring initiatives underway will allow
us to consolidate nine facilities and eliminate approximately 700 positions
across Aleris and shed $60-72 million in cost between 2008 and 2009."
Aleris's management has completed its assessment of the effectiveness
of the Company's internal control over financial reporting as required by
Section 404 of the Sarbanes-Oxley Act of 2002. Based upon its
documentation, testing and evaluation, Management has concluded that the
Company did not have effective internal control over financial reporting as
of December 31, 2007 within the context of the framework developed by the
Committee of Sponsoring Organizations of the Treadway Commission. The
Company's Annual Report on Form 10-K for the year ended December 31, 2007
will contain management's report on internal control over financial
reporting that will reflect this conclusion. Aleris's registered public
accounting firm, Ernst & Young LLP, will also indicate in their audit
report the Company did not maintain effective internal control over
financial reporting.
The material weakness identified relates to the aggregation of several
deficiencies in the financial statement close process, and resulted in a
several post-closing adjustments proposed to and recorded in the Company's
consolidated financial statements for the year ended December 31, 2007,
which were not material on a net basis and which did not require
adjustments to prior periods.
Ernst & Young LLP has completed its audit and is expected to issue an
unqualified opinion with respect to Aleris's consolidated financial
statements to be included in its Annual Report on Form 10-K.
Conference Call and Webcast Information
Aleris will hold a conference call and webcast March 27, 2008 at 9:00
a.m. Eastern time. Steven J. Demetriou, Chairman and Chief Executive
Officer, and Sean M. Stack, Executive Vice President and Chief Financial
Officer, will host the call to discuss results.
The call can be accessed by dialing 800-901-5217 or 617-786-2964 and
referencing passcode 52887147 at least 10 minutes prior to the
presentation, which will begin promptly at 9:00 a.m. Eastern time. In
addition, the conference call will be broadcast live over the Internet at
http://www.aleris.com.
A replay of the conference call will be posted on the Company's Web
site at http://www.aleris.com. A taped replay of the call will also be available
by dialing 888-286-8010 or 617-801-6888 and referencing passcode 97567662
beginning at 1:00 pm Eastern time, March 27, 2008 until 11:59 p.m. Eastern
time, April 3, 2008.
About Aleris
Aleris International, Inc. is a global leader in aluminum rolled
products and extrusions, aluminum recycling and specification alloy
production. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the
Company has 48 production facilities in North America, Europe, South
America and Asia, and has approximately 8,800 employees. For more
information about Aleris, please visit our Web site at http://www.aleris.com.
SAFE HARBOR REGARDING FORWARD-LOOKING STATEMENTS
Forward-looking statements made in this news release are made pursuant
to the safe harbor provision of the Private Securities Litigation Reform
Act of 1995. These include statements that contain words such as "believe,"
"expect," "anticipate," "intend," "estimate," "should" and similar
expressions intended to connote future events and circumstances, and
include statements regarding future actual and adjusted earnings; future
improvements in margins, processing volumes and pricing; overall 2008
operating performance; anticipated effective tax rates; expected cost
savings; success in integrating Aleris's recent acquisitions, including the
acquisition of the downstream aluminum businesses of Corus Group plc; its
future growth; the anticipated economic environment in 2008; future
benefits from acquisitions and new products; expected benefits from changes
in the industry landscape; and anticipated synergies resulting from the
merger with Commonwealth, the acquisition of the downstream aluminum
businesses of Corus Group plc and other acquisitions. Investors are
cautioned that all forward-looking statements involve risks and
uncertainties, and that actual results could differ materially from those
described in the forward-looking statements. These risks and uncertainties
would include, without limitation, Aleris's levels of indebtedness and debt
service obligations; its ability to effectively integrate the business and
operations of its acquisitions; further slowdowns in automotive production
in the U.S. and Europe; the financial condition of Aleris's customers and
future bankruptcies and defaults by major customers; the availability at
favorable cost of aluminum scrap and other metal supplies that Aleris
processes; the ability of Aleris to enter into effective metals, natural
gas and other commodity derivatives; continued increases in natural gas and
other fuel costs of Aleris; a weakening in industrial demand resulting from
a decline in U.S. or world economic conditions, including any decline
caused by terrorist activities or other unanticipated events; future
utilized capacity of Aleris's various facilities; a continuation of
building and construction customers and distribution customers reducing
their inventory levels and reducing the volume of Aleris's shipments;
restrictions on and future levels and timing of capital expenditures;
retention of Aleris's major customers; the timing and amounts of
collections; currency exchange fluctuations; future write-downs or
impairment charges which may be required because of the occurrence of some
of the uncertainties listed above; and other risks listed in Aleris's
filings with the Securities and Exchange Commission (the "SEC"), including
but not limited to Aleris's annual report on Form 10-K for the fiscal year
ended December 31, 2006 and quarterly report on Form 10-Q for the quarter
ended September 30, 2007, particularly the sections entitled "Risk Factors"
contained therein.
Aleris International, Inc.
Consolidated Statement of Operations
(in millions)
For three months ended For the year ended
December 31 December 31
2007 2006 2007 2006
(Successor)(Combined) (Successor)(Combined)
(unaudited)
Revenues $1,534.0 $1,337.5 $5,989.9 $4,195.6
Cost of sales 1,487.5 1,254.5 5,688.0 3,845.7
Gross profit 46.5 83.0 301.9 349.9
Selling, general
and administrative expense 93.3 57.8 287.1 166.3
Restructuring and other charges 21.6 39.7 32.8 41.9
(Gains) losses on
derivative financial
instruments (13.2) (36.3) (49.9) (30.8)
Operating (loss) income (55.2) 21.8 31.9 172.5
Interest expense 53.8 27.9 209.2 84.9
Interest income (0.3) (3.5) (3.3) (5.0)
Other expense, net 1.2 (14.3) 9.2 37.6
(Loss) income from continuing
operations before provision for
income taxes and minority
interests (109.9) 11.7 (183.2) 55.0
(Benefit from) provision for
income taxes (39.1) 6.8 (89.2) 24.1
(Loss) income from continuing
operations before minority
interests (70.8) 4.9 (94.0) 30.9
Minority interests, net of
provision for income taxes (0.9) (1.0) 0.1 0.1
Net (loss) income from continuing
operations (69.9) 5.9 (94.1) 30.8
Net (loss) income from discontinued
operations, net of tax (44.1) 5.0 (34.5) 39.5
Net (loss) income $(114.0) $10.9 $(128.6) $70.3
Aleris International, Inc.
Operating and Segment Information
(in millions)
For three months ended For the year ended
December 31 December 31
2007 2006 2007 2006
(Successor)(Combined) (Successor)(Combined)
(unaudited)
Supplemental information:
Depreciation and
amortization $54.6 $45.1 $202.9 $106.8
Capital expenditures 64.3 68.5 191.8 119.4
Segment reporting:
Shipments (pounds)
Global rolled and extruded
products 498.2 533.7 2,113.3 1,640.9
Global recycling 810.0 568.5 3,243.8 2,889.5
1,308.2 1,102.2 5,357.1 4,530.4
Revenues:
Global rolled and extruded
products $1,005.2 $979.3 $4,305.0 $2,726.2
Global recycling 541.4 373.0 1,808.5 1,489.0
Intersegment eliminations (12.6) (14.8) (123.6) (19.6)
$1,534.0 $1,337.5 $5,989.9 $4,195.6
Segment income (loss):
Global rolled and extruded
products $(29.2) $45.4 $50.8 $180.7
Global recycling 9.9 14.0 59.8 84.8
(19.3) 59.4 110.6 265.5
Corporate general and
administrative expense (24.2) (19.6) (81.8) (71.8)
Restructuring and other
charges (21.6) (39.6) (32.8) (41.9)
Unallocated gains from
derivative financial
instruments 1.9 35.4 21.8 35.3
Interest expense (53.8) (27.9) (209.2) (84.9)
Interest and other income
(expense), net 7.1 4.0 8.2 (47.2)
(Loss) income from continuing
operations before
income taxes and minority
interests $(109.9) $11.7 $(183.2) $55.0
Aleris International, Inc.
Condensed Consolidated Balance Sheet
(in millions)
December 31, December 31,
2007 2006
ASSETS
Current Assets:
Cash and cash equivalents $109.9 $126.1
Accounts receivable, net 655.8 622.8
Inventories 840.9 936.0
Deferred income taxes 41.6 28.8
Derivative financial instruments 30.6 77.0
Other current assets 51.6 35.9
Assets of discontinued operations
- current 251.1 166.4
Total Current Assets 1,981.5 1,993.0
Property, plant and equipment, net 1,423.5 1,202.2
Goodwill 1,219.1 1,362.4
Intangible assets, net 329.9 84.1
Other assets 163.5 139.0
Assets of discontinued operations
- non-current - 21.2
TOTAL ASSETS $5,117.5 $4,801.9
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable $660.5 $514.3
Accrued liabilities 248.2 335.2
Deferred income taxes 25.2 31.3
Current maturities of long-term debt 20.6 20.5
Liabilities of discontinued operations
- current 67.5 43.5
Total Current Liabilities 1,022.0 944.8
Deferred income taxes 177.3 137.5
Long-term debt 2,743.7 2,567.5
Other long-term liabilities 326.8 302.6
Liabilities of discontinued operations
- non-current - 4.1
Stockholder's equity 847.7 845.4
TOTAL LIABILITIES AND EQUITY $5,117.5 $4,801.9
Aleris International, Inc.
Reconciliation of (Loss) Income from Continuing Operations to
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and
EBITDA, Excluding Special Items (1)
(unaudited)
(in millions)
For three months ended For the year ended
December 31 December 31
2007 2006 2007 2006
(Successor)(Combined) (Successor)(Combined)
(unaudited)
(Loss) income from continuing
operations $(69.9) $5.9 $(94.1) $30.8
Interest expense, net 53.5 24.3 205.9 79.9
Income taxes (39.1) 6.8 (89.2) 24.1
Minority interests (0.9) (1.0) 0.1 0.1
Depreciation and amortization 54.6 45.2 202.9 106.8
EBITDA from continuing
operations (1.8) 81.2 225.6 241.7
Unrealized losses (gains) on
derivative financial
instruments 11.2 (35.3) (3.9) (28.3)
Restructuring and other charges 21.6 39.7 32.8 41.9
Impact of recording acquired
assets at fair value 15.1 11.2 104.3 43.9
Sponsor management fee 2.3 -- 9.1 --
Stock-based compensation
expense 1.0 3.5 3.9 10.2
Loss on early extinguishment of
debt -- 0.7 -- 54.4
Gain on sale of Carson, CA
property -- (13.8) -- (13.8)
Realized hedge gain-Corus Aluminum
acquisition -- -- -- (9.8)
EBITDA from continuing operations,
excluding special items $49.4 $87.2 $371.8 $340.2
See note 2 on page 2.
Aleris International, Inc.
Reconciliation of Free Cash Flow to Cash Flow from Operating Activities of
Continuing Operations
(unaudited)
(in millions)
For three months ended For the year ended
December 31 December 31
2007 2006 2007 2006
(Successor)(Combined) (Successor)(Combined)
(unaudited)
Free cash flow $212.3 $11.0 $421.7 $161.7
Net working capital (decrease)
increase (228.2) 7.7 (241.7) 59.1
Capital expenditures 65.3 68.5 191.8 119.4
EBITDA, excluding special
items 49.4 87.2 371.8 340.2
Unrealized (losses) gains on
derivative financial
instruments (11.2) 35.3 3.9 28.3
Loss on early extinguishment
of debt - (0.7) - (54.4)
Realized hedge gain-Corus Aluminum
acquisition - - - 9.8
Gain on sale of Carson,
CA property - 13.8 - 13.8
Restructuring and other
charges (21.6) (39.7) (32.8) (41.9)
Impact of recording acquired assets
at fair value (15.1) (11.2) (104.3) (43.9)
Sponsor management fee (2.3) - (9.1) -
Stock-based compensation
expense (1.0) (3.5) (3.9) (10.2)
EBITDA from continuing
operations (1.8) 81.2 225.6 241.7
Interest expense, net (53.5) (24.3) (205.9) (79.9)
Benefit from (provision for) income
taxes 39.1 (6.8) 89.2 (24.1)
Depreciation and amortization (54.6) (45.2) (202.9) (106.8)
Minority interest, net of provision
for income taxes 0.9 1.0 (0.1) (0.1)
Net income (loss) from continuing
operations (69.9) 5.9 (94.1) 30.8
Depreciation and amortization 54.6 45.2 202.9 106.8
Benefit from deferred income
taxes (49.6) 14.7 (99.9) 11.8
Excess income tax benefits from
exercise of stock options - - (3.6)
Restructuring and other charges:
Charges 21.6 39.7 32.8 41.9
Payments (3.8) (24.1) (15.7) (30.0)
Non-cash loss on early
extinguishment of debt - - - 16.4
Stock-based compensation
expense 1.0 3.5 3.9 10.2
Proceeds from settlement of currency
derivative financial instruments - - - (9.8)
Unrealized losses (gains) on
derivative financial
instruments 11.2 (35.3) (3.9) (28.3)
Non-cash charges related to step-up
in carrying value of
inventory 1.1 (3.7) 47.3 -
(Gain) loss on sale of property,
plant, and equipment (0.6) (14.7) (0.6) (14.7)
Other non-cash charges 1.9 2.4 10.0 6.1
Net change in operating assets and
liabilities 192.8 30.7 221.0 71.0
Cash provided by operating
activities from continuing
operations $160.3 $64.3 $303.7 $208.6
Reconciliation of Segment Income to
Segment Income, Excluding Special Items and
Segment EBITDA, Excluding Special Items
(unaudited)
(in millions)
For three months ended For the year ended
December 31 December 31
2007 2006 2007 2006
Global Rolled and Extruded Products
Segment (loss) income $(29.2) $45.4 $50.8 $180.7
Purchase accounting
adjustments 15.4 11.4 100.8 43.9
Gain on sale of Carson, CA
property -- (13.8) -- (13.8)
Stock-based compensation
expense -- 0.8 -- 1.8
Segment income,
excluding special items (13.8) 43.8 151.6 212.6
Depreciation and
amortization 37.6 36.4 153.6 75.5
Segment EBITDA,
excluding special items $23.8 $80.2 $305.2 $288.1
Global Recycling
Segment income $9.9 $14.0 $59.8 $84.8
Purchase accounting
adjustments (0.5) -- 3.4 --
Stock-based compensation
expense -- 0.2 -- 0.4
Segment income,
excluding special items 9.4 14.2 63.2 85.2
Depreciation and
amortization 14.8 7.8 45.0 29.5
Segment EBITDA,
excluding special items $24.2 $22.0 $108.2 $114.7
Aleris International, Inc.
Reconciliation of Pro Forma Loss from Continuing Operations to
Pro Forma EBITDA from Continuing Operations and
Pro Forma Adjusted EBITDA from Continuing Operations (1)(2)
(unaudited)
(in millions)
For the year ended
December 31, 2007
Pro forma loss from continuing operations(3) $(97.0)
Interest expense, net 218.3
Income taxes (91.1)
Minority interests 0.1
Depreciation and amortization 210.8
Pro forma EBITDA from continuing operations 241.1
Unrealized losses on derivative financial
instruments (3.8)
Restructuring and other charges 32.8
Impact of recording acquired assets at fair value 104.3
Sponsor management fee 9.1
Stock-based compensation expense 3.9
Estimated synergies - Corus Aluminum 18.0
Estimated synergies - Wabash Alloys 20.0
Estimated synergies - EKCO Products 2.0
Pro forma adjusted EBITDA from continuing operations $427.4
1. See note 2 on page 2.
2. Represents unaudited pro forma financial information for the year ended
December 31, 2007 and presents the Company's combined results of
operations as if the acquisitions of Wabash Alloys and EKCO Products
had occurred on January 1, 2007. Pro forma adjusted EBITDA from
continuing operations includes the expected synergy savings from the
Corus Aluminum, Wabash Alloys, and EKCO Products acquisitions as
permitted by the Company's Term Loan Agreement. The unaudited pro
forma information is not necessarily indicative of the consolidated
results of operations that would have occurred had the acquisitions of
Wabash Alloys and EKCO Products been made at the beginning of the
period presented or the future results of combined operations.
3. Pro forma loss from continuing operations of $97.0 million consists of
Aleris's historical loss from continuing operations of $94.1 million,
Wabash Alloys' historical net income of $6.7 million, EKCO Products'
historical net income of $0.6 million, and pro forma adjustments of
($10.2) million. The net income of Wabash Alloys and EKCO Products are
estimates and are based on estimated financial information provided by
the management of those entities.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO )
SOURCE Aleris International, Inc.
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Related links:
http://aleris.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Sean M. Stack, +1-216-910-3504, or Joseph M.
Mallak, +1-216-910-3455, both of Aleris International, Inc.
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