BEACHWOOD, Ohio, Nov. 9 /PRNewswire-FirstCall/ -- Aleris International,
Inc. (NYSE: ARS) today reported results for the third quarter of 2006 and
for the nine months ended September 30, 2006.
Summary
- Third quarter net loss was $24.2 million, or $0.78 per share, at an
estimated tax rate of 37.0%, compared with reported net income of
$31.5 million, or $1.01 per share, in the third quarter of 2005, based
on an estimated tax rate benefit of 8.2%. Last year's reported third
quarter earnings per share would have been $0.59 using the 2006
estimated tax rate.
- Unfavorable special items recorded during the quarter aggregated
$104.0 million and included $24.3 million of unrealized losses on
derivatives, $53.7 million of charges related to refinancing debt for
the acquisition of the downstream business of Corus Group plc ("Corus
Aluminum"), $33.2 million of charges for the non-cash impact of
recording Corus assets at fair value, and $2.6 million of restructuring
and other charges; offset partially by a $9.8 million gain on currency
hedges related to a portion of the euro purchase price for the Corus
Aluminum acquisition.
- Adjusted earnings per share was $1.26 in the third quarter of 2006 at
the estimated tax rate of 37.0%, compared with adjusted earnings per
share of $0.82 in the prior year's third quarter using an adjusted
effective 2005 tax rate of 8.75%. Adjusted to the estimated 2006 tax
rate, last year's adjusted earnings per share would have been $0.58.
- Pro forma net debt to EBITDA excluding special items on a
last-twelve-month basis was unchanged at 2.8x at September 30, 2006
when compared to year end 2005, despite the acquisition of
Corus Aluminum on August 1, 2006.
- Merger-related synergies from the Commonwealth acquisition and
companywide productivity initiatives aggregated $16 million for the
quarter while synergies related to the 2005 acquisitions totaled
approximately $15 million.
- On August 1, 2006 Aleris completed the acquisition of Corus Aluminum
for a purchase price of €695 million ($887 million). Simultaneously,
Aleris entered into new credit agreements, the proceeds from which were
used to fund the acquisition and refinance substantially all of
Aleris's existing indebtedness. Aleris incurred charges in the
third quarter of $53.7 million related to the refinancing.
- In connection with the acquisition of Corus Aluminum, Aleris has
changed its external reporting segments to Global Rolled and Extruded
Products, Global Recycling, and Global Zinc to better represent the
global approach Aleris is taking to manage its businesses around the
world.
- On August 8, 2006 Aleris announced that it had entered into a
definitive merger agreement under which Texas Pacific Group (TPG) would
acquire all of the outstanding stock of Aleris for approximately
$1.7 billion plus the assumption of, or repayment of approximately
$1.6 billion of debt. The transaction continues on track as all
regulatory requirements have been met. Closing of the transaction is
expected at the end of 2006 or early in 2007.
Three Months Ended Nine Months Ended
September 30 September 30
(amounts in millions, except
per share data) 2006 2005 2006 2005
Volume
Recycling and zinc
lbs processed 886 835 2,641 2,505
Rolled and extruded
products lbs shipped 505 201 1,071 699
Revenue $1,395.0 $554.9 $3,255.4 $1,803.5
Net income (24.2) 31.5 59.4 79.5
Earnings per share* (0.78) 1.01 1.87 2.55
Adjusted earnings per share* 1.26 0.82 3.59 3.11
EBITDA (1) 18.7 52.1 211.2 152.3
EBITDA excluding special
items (1) 122.7 51.6 299.3 175.4
* All per share data is presented on a diluted basis.
(1) In this press release, we refer to various non-GAAP (generally
accepted accounting principles) financial measures including (i) EBITDA,
(ii) EBITDA excluding special items and (iii) adjusted earnings per share.
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", as used in this
press release, is defined as net income before interest income and expense,
taxes, depreciation and amortization and minority interests. "EBITDA
excluding special items," as used in this press release, is defined as
EBITDA excluding restructuring and other charges, losses on the early
extinguishment of debt, a one-time realized gain on the settlement of
derivative financial instruments that hedged a portion of the purchase
price to acquire Corus Aluminum, mark-to-market FAS 133 unrealized gains
and losses on derivative financial instruments, and the non-cash cost of
sales impact of the write-up of inventory and other items through purchase
accounting. "Adjusted earnings per share" excludes the per- share impact of
these special items. Management uses EBITDA as a performance metric and
believes this measure provides additional information commonly used by our
stockholders, 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 excluding special items and adjusted earnings per share 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. Additionally, management uses EBITDA because the
Company's new asset-backed lending facility, term-loan lending facility and
senior unsecured facility use EBITDA with additional adjustments to measure
its compliance with covenants such as fixed charge coverage and debt
incurrence.
Aleris resulted from the December 9, 2004 merger of IMCO Recycling Inc.
and Commonwealth Industries, Inc. During the last half of 2005, Aleris made
several acquisitions, including Tomra Latasa Reciclagem, which closed in
August, ALSCO Holdings, Inc., which closed in October, and Alumitech, Inc.,
and the acquisition of selected assets of Ormet Corporation, both of which
closed in December. Aleris's reported results for 2006 include these
acquisitions, but 2005 has not been recast on a comparable basis and
represents 2005 results as reported. In addition, Aleris acquired Corus
Aluminum on August 1, 2006 and is reporting two months of operations from
Corus Aluminum in its third quarter results. Similarly, neither earlier
2006 nor 2005 results have been recast to include Corus Aluminum results.
As a result of the acquisition of Corus Aluminum and Aleris's decision
to manage its businesses on a global basis going forward, Aleris has
changed its external reporting segments to Global Rolled and Extruded
Products, Global Recycling, and Global Zinc to better represent the global
approach Aleris is taking to manage its businesses around the world. Global
Rolled and Extruded Products includes Corus Aluminum as well as the North
American Rolled Products business. Global Recycling includes all of the
aluminum recycling businesses of Aleris that were previously included in
the Aluminum Recycling and International segments. The International
segment has been eliminated. For comparison purposes, the 2005 segment
results have been recast according to the new global basis. The former Zinc
segment has been renamed Global Zinc.
Third Quarter 2006 Operating Results
Aleris reported third quarter 2006 revenues of $1.40 billion and a net
loss of $24.2 million, or $0.78 per share. Results for the third quarter
2006 are reported using a 37.0% estimated tax rate. These results include
$2.04 per share of unfavorable special items attributable to a $53.7
million charge related to the early extinguishment of debt as Aleris
substantially refinanced all of its indebtedness during the quarter to fund
the Corus Aluminum acquisition, $33.2 million related to the non-cash cost
of sales impact of recording acquired assets at fair value, $24.3 million
of non-cash mark-to- market FAS 133 unrealized hedge losses and $2.6
million of restructuring and other charges; offset partially by a one-time
$9.8 million gain on currency hedges related to a portion of the euro
purchase price for the Corus Aluminum acquisition.
For the third quarter of 2005, Aleris reported revenues of $554.9
million and net income of $31.5 million, or $1.01 per diluted share, using
an effective tax rate benefit of approximately 8.2%. These results included
$0.19 per share of favorable special items including $2.7 million of
non-cash mark-to-market FAS 133 unrealized hedge gains that more than
offset $1.2 million related primarily to the non-cash cost of sales impact
of the write-up of global rolled and extruded products assets to fair value
at the date of purchase and $1.0 million of restructuring charges related
to the Commonwealth merger as well as a $0.16 per share benefit related to
a decrease in the expected 2005 effective tax rate which impacted the third
quarter. Last year's reported third quarter earnings per share would have
been $0.59 using the 2006 estimated tax rate.
Third quarter 2006 adjusted earnings per share was $1.26 compared with
$0.82 in the comparable year-ago period. Prior-year adjusted earnings per
share would have been $0.58 on a comparable tax rate basis. EBITDA
excluding special items totaled $122.7 million in the third quarter of
2006, an increase of 138% compared with $51.6 million in the third quarter
of 2005. The Company's improved results were driven primarily by the Corus
Aluminum acquisition, benefits from the 2005 acquisitions, merger-related
synergies from the Commonwealth acquisition and companywide productivity
initiatives and improved results from Global Zinc.
Steven J. Demetriou, Chairman and Chief Executive Officer of Aleris,
said, "We continue to be pleased with the performance of all of our
businesses and their focus on customers, profitable growth, merger and
acquisition-related synergies and productivity improvements. We are also
pleased with the initial results coming from the Corus Aluminum acquisition
and are delighted with the energy and enthusiasm with which the former
Corus Aluminum employees have embraced Aleris and our operating culture. We
are early in the integration process, but the overall organization
structure is in place and numerous teams are working to identify commercial
opportunities, best practices and productivity improvements for both the
former Corus Aluminum and legacy Aleris businesses. With the Corus Aluminum
acquisition, Aleris has become a truly global company with the opportunity
to expand our global reach and enter new applications with superior
technology and high value-added products. We look forward to the challenges
and opportunities that lie ahead."
Year-to-date Operating Results
For the first nine months of 2006, Aleris reported revenues of $3.26
billion and net income of $59.4 million or $1.87 per share. These results
include $1.72 per share of unfavorable special items, including a $53.7
million charge related to the early extinguishment of debt, $34.8 million
related to the non-cash cost of sales impact of recording acquired assets
at fair value, $7.1 million of non-cash mark-to-market FAS 133 unrealized
hedge losses and $2.3 million of restructuring and other charges; offset
partially by a $9.8 million gain on currency hedges related to a portion of
the euro purchase price of the Corus Aluminum acquisition. For the
comparable 2005 period, Aleris reported revenues of $1.80 billion and net
income of $79.5 million, or $2.55 per share. Those results included $0.56
per share of unfavorable special items, including $10.4 million of
mark-to-market FAS 133 unrealized hedge losses, $7.9 million of purchase
accounting adjustments and $4.8 million of restructuring and asset
impairment charges related to the Commonwealth merger.
Adjusted earnings per share of $3.59 for the first nine months of 2006
compare to $3.11 per share in 2005, or $2.15 using the 2006 year-to-date
tax rate of 36.8%. EBITDA excluding special items was $299.3 million for
the first nine months of 2006 compared with $175.4 million for the
prior-year period. The improved results for 2006 were the result of
merger-related synergies from the Commonwealth acquisition and companywide
productivity initiatives, benefits from the 2005 acquisitions, the Corus
Aluminum acquisition and improvements in Global Zinc.
Net debt increased by $833.4 million since December 31, 2005 due
primarily to the Corus Aluminum acquisition. However, pro forma net debt to
EBITDA excluding special items on a last-twelve-month basis of 2.8x at
September 30, 2006 was unchanged from year-end 2005.
Global Rolled and Extruded Products
North American shipments of rolled products totaled 288 million pounds
in the third quarter of 2006, including approximately 68 million pounds
from the 2005 acquisitions. This compared with shipments of 201 million
pounds for the comparable period in 2005. Excluding the 2005 acquisitions,
shipments were up approximately 9% compared with the 2005 third quarter as
customers returned to more normal seasonal buying patterns in 2006 compared
with the inventory destocking that occurred in 2005.
Excluding the 2005 acquisitions, North American rolled products
material margins for the third quarter improved to $0.522 per pound,
compared with $0.489 in the year-earlier period as improving scrap spreads
and the favorable FIFO impact of the rising London Metal Exchange (LME)
more than offset a slight decline in rolling margins. Sequentially,
material margins for the third quarter, excluding the 2005 acquisitions,
increased $0.041 per pound due to the significant favorable impact of the
rising LME. Including the 2005 acquisitions, material margins were $0.535
per pound as ALSCO products have higher material margins than the
underlying rolled products business. Including the 2005 acquisitions, cash
conversion costs were $0.236 per pound. Sequentially, cash conversion costs
increased $0.013 per pound during the third quarter of 2006 due to higher
costs associated with transferring production from the shutdown Hannibal
and Carson rolling mills.
Shipments for the former Corus Aluminum were 217 million pounds for the
last two months of the third quarter 2006 and benefited from continued
strength in shipments to aerospace customers, improved shipments of both
rolled and extruded products to automotive applications, and general
strengthening of the German and other European industrial economies.
Rolled and extruded products segment income was $45.5 million in the
third quarter of 2006, compared with segment income of $35.9 million in the
prior- year period. Excluding the impact of purchase accounting adjustments
which are recorded at the segment level, segment income was $78.7 million
in the third quarter 2006 compared with $37.1 million in the prior-year
period. Increased income was driven primarily by the Corus Aluminum
acquisition, the 2005 acquisitions of ALSCO and certain assets of Ormet,
favorable scrap spreads, improved productivity and the favorable FIFO
impact of the rising LME, which more than offset a slight decline in
rolling margins, as well as inflation in freight, energy and other
conversion costs.
Year-to-date North American shipments of rolled products totaled 853
million pounds compared with 699 million pounds reported in the first nine
months of 2005. Excluding the 2005 acquisitions, material margins for the
first nine months of 2006 improved to $0.512 per pound, compared with
$0.479 for the first nine months of 2005 as the favorable FIFO impact of
the rising LME, favorable scrap spreads and improved productivity more than
offset the expected decline in rolling margins. Including the 2005
acquisitions, material margins were $0.528 per pound for the first nine
months of 2006 while cash conversion costs were $0.235 per pound. Shipments
from the Corus Aluminum acquisition totaled 217 million pounds for the two
months since the acquisition.
Segment income was $140.3 million for the first nine months of 2006
compared with $123.7 million in the comparable prior-year period. Excluding
the impact of purchase accounting adjustments which are recorded at the
segment level, segment income was $175.1 million for the first nine months
of 2006 compared with $131.6 million in the prior-year period. Contributing
to the earnings increase were the 2005 acquisitions of ALSCO and certain
assets of Ormet and the Corus Aluminum acquisition as well as widening
scrap spreads and the favorable FIFO impact of the rising LME. In addition,
the segment has continued to achieve excellent results in its Six Sigma and
productivity initiatives. These factors have more than offset decreases in
legacy business volumes, slightly lower rolling margins and increases in
freight, paint and certain conversion costs such as labor and natural gas.
Global Recycling
Global Recycling segment income was $22.7 million in the third quarter
of 2006 compared with $10.7 million in the third quarter of 2005. Third
quarter 2006 processing volume of 822 million pounds compared with the 776
million pounds processed in the year-earlier third quarter. Results
improved primarily because of benefits from the 2005 acquisitions, the
capture of synergies and operational improvements, and higher margins.
Year-to-date 2006 processing volume was 2.5 billion pounds compared
with 2.3 billion pounds reported for the first nine months of 2005. Segment
income for the first nine months of 2006 was $71.0 million compared with
$31.3 million for the year-earlier period. This improvement was due
primarily to merger-related synergies from the Commonwealth acquisition and
companywide productivity initiatives, the benefits from the 2005
acquisitions, other operational improvements, and higher margins.
Global Zinc
Global Zinc segment income of $14.2 million for the third quarter of
2006 compared with $4.8 million reported for the same period in 2005. Third
quarter 2006 processing volume of 64 million pounds was 10% higher than the
58 million pounds processed in the third quarter of 2005. The substantial
increase in global zinc segment income was due primarily to the
unprecedented rise in LME zinc prices which has occurred this year, with
the average LME price of zinc at $1.76 per pound in the third quarter of
2006 compared with $0.59 per pound in the comparable period of 2005.
Year-to-date segment income of $48.5 million compared with $14.9
million for the first nine months of 2005, while year-to-date processing
volume of 188 million pounds compared with 171 million pounds reported for
the first nine months of 2005.
Corporate Expense
Corporate expense primarily includes corporate general and
administrative expense (G&A), other income/expense and interest expense. In
addition, in order to simplify understanding of ongoing segment operations,
corporate expense includes all restructuring and other charges as well as
non-cash adjustments associated with mark-to-market FAS 133 accounting for
hedging activity. In the third quarter of 2006, Aleris recorded charges of
$53.7 million for the early extinguishment of debt related to the Corus
Aluminum acquisition, $24.3 million of non-cash mark-to-market FAS 133
unrealized hedge losses and $2.6 million of restructuring and other costs;
offset partially by a one-time $9.8 million gain on currency hedges related
to a portion of the euro purchase price for the Corus Aluminum acquisition.
In the same period of 2005, Aleris recorded $2.7 million of non-cash
mark-to-market FAS 133 unrealized hedge gains that more than offset $1.0
million of restructuring charges related to the Commonwealth merger.
Corporate G&A increased 63% to $23.5 million in the third quarter of
2006 from the comparable 2005 period due to the Corus Aluminum acquisition,
increased incentive compensation expense and Aleris's centralization of
certain functions. However, as a percentage of revenues, corporate G&A
expense continued to decline to 1.7% in the third quarter of 2006 from 2.6%
in the third quarter of 2005.
Corporate interest and other income/expense aggregated $44.1 million of
expense during the third quarter 2006 and compared with $0.3 million of
income during the comparable 2005 period. Expense in 2006 included $53.7
million for the early extinguishment of debt and was partially offset by
$9.8 million of currency gains related to the Corus Aluminum acquisition.
Interest expense for the third quarter of 2006 increased to $26.6
million from $9.8 million in the third quarter of 2005 due to the
refinancing to fund the Corus Aluminum acquisition, higher borrowings
associated with the 2005 acquisitions and higher interest rates.
On a year-to-date basis, corporate G&A increased 35% to $57.2 million
from $42.4 million in the comparable 2005 period due to increased incentive
compensation and higher stock-based compensation expense, the Corus
Aluminum acquisition and the centralization of certain functions. However,
as a percentage of revenues, corporate G&A expense decreased to 1.8% in the
first nine months of 2006 from 2.4% for the first nine months of 2005.
Corporate interest and other income/expense totaled $43.9 million of
expense for the first nine months of 2006 and included $53.7 million for
the early extinguishment of debt, offset partially by $ 9.8 million of
currency gains.
Interest expense for year-to-date 2006 increased to $54.3 million from
$30.1 million in the prior-year period because of higher borrowings related
to the Corus Aluminum acquisition and the 2005 acquisitions as well as
higher rates.
Capital expenditures were $27.7 million for the third quarter of 2006,
compared with $16.9 million for the previous year's quarter. The increase
primarily resulted from expansions at the Company's rolled products
facilities in Lewisport, Kentucky, and Uhrichsville, Ohio. Year-to-date
capital expenditures were $53.5 million compared with $38.9 million for the
first nine months of 2005.
Proposed Merger With TPG
On August 8, 2006, Aleris announced that it had entered into a
definitive merger agreement under which TPG would acquire all of the
outstanding stock of Aleris for approximately $1.7 billion plus the
assumption of or repayment of approximately $1.6 billion of debt. The
transaction continues on track as all regulatory requirements have been
met. Closing of the transaction is expected at the end of 2006 or early in
2007.
About Aleris
Aleris International, Inc. is a global leader in aluminum rolled
products and extrusions, aluminum recycling and specification alloy
production. Aleris is also a recycler of zinc and a leading U.S.
manufacturer of zinc metal and value-added zinc products that include zinc
oxide and zinc dust. Headquartered in Beachwood, Ohio, a suburb of
Cleveland, the Company operates 50 production facilities in North America,
Europe, South America and Asia, and employs approximately 8,600 employees.
For more information about Aleris, please visit our Web site at
http://www.aleris.com.
Important Additional Information Regarding the Merger Will Be Filed
With the SEC
In connection with the proposed merger, Aleris will file a definitive
proxy statement with the Securities and Exchange Commission. INVESTORS AND
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER
AND THE PARTIES THERETO. Investors and security holders may obtain a free
copy of the proxy statement (when available) and other documents filed by
Aleris at the Securities and Exchange Commission's web site at
http://www.sec.gov. The proxy statement and such other documents may also
be obtained for free from Aleris by directing such request to Aleris
International, Inc., Investor Relations, 25825 Science Park Drive,
Beachwood, Ohio, 44072. Telephone: (216) 910-3634.
Aleris and its directors, executive officers and other members of its
management and employees may be deemed to be participants in the
solicitation of proxies from its stockholders in connection with the
proposed merger. Information concerning the interests of Aleris's
participants in the solicitation, which may be different than those of
Aleris stockholders generally, is set forth in Aleris's proxy statements
and Annual Reports on Form 10-K, previously filed with the Securities and
Exchange Commission, and in the proxy statement relating to the merger when
it becomes available.
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 and
earnings per share; future improvements in margins, processing volumes and
pricing; overall 2006 operating performance; anticipated higher adjusted
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; an anticipated favorable
economic environment in 2006; future benefits from acquisitions and new
products; expected benefits from changes in the industry landscape and
post-hurricane reconstruction; 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, 2005, and quarterly report on Form 10-Q for the quarter
ended June 30, 2006 and the 10-Q for the quarter ended September 30, 2006
when filed, particularly the sections entitled "Risk Factors" contained
therein.
Aleris International, Inc.
--------------------------------------
Consolidated Statement of Income
(in millions, except share and per share data)
(unaudited)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
--------------------------- --------------------------
2006 2005 2006 2005
REVENUES $1,395.0 $ 554.9 $ 3,255.4 $ 1,803.5
Cost of sales 1,287.6 495.8 2,946.9 1,610.7
------- ------- ------- -------
GROSS PROFIT 107.4 59.1 308.5 192.8
Selling, general
and administrative
expense 52.4 22.1 108.9 64.9
Restructuring and
other charges 2.6 1.0 2.3 4.8
Unrealized losses
(gains) on
Derivative
instruments 24.3 (2.7) 7.1 10.4
------- ------- ------- -------
Operating income 28.1 38.7 190.2 112.7
Interest expense 26.6 9.8 54.3 30.1
Interest income (0.9) (0.6) (1.5) (1.2)
Other expense
(income), net 41.1 0.2 42.4 (0.1)
Equity in net loss
of affiliate -- 0.1 -- 0.3
------- ------- ------- -------
(Loss) income before
provision for
income taxes and
minority interests (38.7) 29.2 95.0 83.6
(Benefit) provision
for taxes (14.7) (2.4) 35.0 3.8
------- ------- ------- -------
(Loss) income
before minority (24.0) 31.6 60.0 79.8
Minority interests,
net of provision
for income taxes 0.2 0.1 0.6 0.3
------- ------- ------- -------
Net (loss) income $ (24.2) $ 31.5 $ 59.4 $ 79.5
======= ======= ======= =======
(Loss) earnings
per share:
------------------
Basic $ (0.78) $ 1.03 $ 1.92 $ 2.62
Diluted $ (0.78) $ 1.01 $ 1.87 $ 2.55
Weighted Average
Shares Outstanding
(in thousands):
------------------
Basic 31,027 30,495 30,914 30,367
Diluted 31,027 31,276 31,724 31,151
Aleris International, Inc.
--------------------------------------
Supplementary Information
(in millions, except percentages and per share data)
(unaudited)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
--------------------------- --------------------------
2006 2005 2006 2005
Depreciation
and amortization $ 31.7 $ 13.6 $ 63.4 $ 39.8
Capital spending $ 27.7 $ 16.9 $ 53.5 $ 38.9
Segment Reporting
------------------
Shipment Lbs:
Global rolled and
extruded products 505.4 201.1 1,070.9 698.7
Processed Lbs:
Global Recycling 822.2 776.3 2,452.6 2,333.3
Global Zinc 63.6 58.3 188.1 171.2
------- ------- -------- --------
885.8 834.6 2,640.7 2,504.5
Revenues:
Global Rolled and
extruded products $ 877.6 $ 270.5 $ 1,767.9 $ 942.8
Global Recycling 375.7 230.9 1,110.3 708.9
Global Zinc 148.8 60.2 397.4 175.1
Intersegment
eliminations (7.1) (6.7) (20.2) (23.3)
------- ------- -------- --------
$1,395.0 $ 554.9 $ 3,255.4 $ 1,803.5
Segment Income:
Global Rolled and
extruded products $ 45.5 $ 35.9 $ 140.3 $ 123.7
Global Recycling 22.7 10.7 71.0 31.3
Global Zinc 14.2 4.8 48.5 14.9
------- ------- -------- --------
Total segment
income $ 82.4 $ 51.4 $ 259.8 $ 169.9
Corporate unallocated:
Corporate G & A (23.5) (14.4) (57.2) (42.4)
Restructuring and
other costs (2.6) (1.0) (2.3) (4.8)
Interest expense (26.6) (9.8) (54.3) (30.1)
Unrealized (losses)
gains on
Derivative
instruments (24.3) 2.7 (7.1) (10.4)
Interest and other
income, net (44.1) 0.3 (43.9) 1.4
------- ------- -------- --------
(Loss) income
before provision
for tax and
minority interest $ (38.7) $ 29.2 $ 95.0 $ 83.6
Aleris International, Inc.
--------------------------------------
Condensed Consolidated Balance Sheet
(in millions)
September 30, 2006 December 31, 2005
------------------ -----------------
(unaudited)
ASSETS
Current Assets:
Cash $ 107.6 $ 6.8
Accounts receivable, net 736.9 325.1
Inventories 874.4 404.8
Derivative financial instruments 56.0 28.0
Other current assets 95.2 46.1
------- -------
Total Current Assets 1,870.1 810.8
PP&E, net 1,051.9 537.8
Goodwill 266.4 152.8
Restricted cash 6.2 6.2
Other assets 95.6 46.5
------- -------
TOTAL ASSETS $ 3,290.2 $ 1,554.1
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 545.4 $ 200.8
Accrued liabilities 324.6 135.4
Current maturities of long-term debt 22.4 20.8
--------- ---------
Total Current Liabilities 892.4 357.0
Deferred income taxes payable 93.8 51.8
Long-term debt 1,563.6 631.0
Other long-term liabilities 287.6 120.5
Stockholders' Equity 452.8 393.8
--------- ---------
TOTAL LIABILITIES AND EQUITY $ 3,290.2 $ 1,554.1
--------- ---------
--------- ---------
Aleris International, Inc.
--------------------------------------
Reconciliation of Net Income to
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and EBITDA Excluding Special Items
(in millions)
(unaudited)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
--------------------------- --------------------------
2006 2005 2006 2005
Net (loss) income $ (24.2) $ 31.5 59.4 $ 79.5
Interest expense, net 25.7 9.3 52.8 28.9
Income taxes (14.7) (2.4) 35.0 3.8
Minority interests 0.2 0.1 0.6 0.3
Depreciation and
amortization 31.7 13.6 63.4 39.8
EBITDA $ 18.7 $ 52.1 $ 211.2 $ 152.3
Unrealized losses
(gains) on
derivative financial
instruments 24.3 (2.7) 7.1 10.4
Restructuring and
other charges 2.6 1.0 2.3 4.8
Non-cash cost of sales
impact of recording
acquired assets at
fair value 33.2 1.2 34.8 7.9
Charges related to
acquisitions 43.9 -- 43.9 --
------ ------- ------ -------
EBITDA, excluding
special items $ 122.7 $ 51.6 $ 299.3 $ 175.4
======= ======= ====== ======
Aleris International, Inc.
--------------------------------------
Reconciliation of Earnings per Diluted Share to
Adjusted Earnings per Diluted Share(1)
(unaudited)
For the Three Months For the Nine Months
Ended September 30 Ended September 30
--------------------- --------------------
2006 2005 2006 2005
(Loss) earnings per share $(0.78) $ 1.01 $ 1.87 $ 2.55
as reported
Purchase accounting adjustments 1.05 0.03 1.10 0.25
Unrealized losses (gains) on
derivative financial
instruments 0.76 (0.09) 0.22 0.33
Restructuring and other
charges 0.08 0.03 0.07 0.15
Acquisition related costs 1.38 -- 1.38 --
Tax impact (1.23) (0.16) (1.05) (0.17)
------- ------ ------- ------
Earnings per share as adjusted $ 1.26 $ 0.82 $3.59 $ 3.11
------- ------ ------- ------
(1) This statement reconciles (i)earnings per share as reported,(ii) to
earnings per share as adjusted to exclude the impact of purchase accounting
adjustments, loses on the early extinguishment of debt, a one time realized
gain on the settlement of derivative financial instruments that hedged a
portion of the purchase price to acquire Corus Aluminum, mark to market FAS
133, unrealized gains and losses on derivative financial instruments and
restructuring and other credits and charges. For 2005, the "tax impact"
represents the impact of using an 8.75% effective tax rate to compute
adjusted earnings per share rather than the quarterly and year-to-date
reported rates of (8.2)% and 4.2% respectively. The 8.75% rate was used to
develop our estimated adjusted earnings per share. For 2006 pro forma
adjusted earnings per share, the "tax impact" was determined by using an
annual tax rate of 38% on the adjusted items as shown. The methods used to
compute these measures may differ from the methods used by other companies.
Earnings per share as adjusted is a non GAAP measure. This non-GAAP measure
has limitations as an analytical tool 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 tables contained herein reconciling
the non-GAAP financial measures to comparable GAAP amounts. Management
believes earnings per share as adjusted to exclude special items is useful
to our stakeholders in better understanding our operating results from
period to period and the ongoing performance of our underlying businesses
without the impact of these special items.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050504/CLW056LOGO )
SOURCE Aleris International, Inc.
 back to top
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:
Michael D. Friday of Aleris International,
Inc., +1-216-910-3503
|
