Kaiser Aluminum Reports Results for Fourth Quarter, Full Year of 2000
HOUSTON--(BUSINESS WIRE)--Feb. 7, 2001--Kaiser Aluminum Corporation (NYSE:KLU) today reported net income of $10.9 million, or $.14 per share, for the fourth quarter of 2000, compared to net income of $39.0 million, or $.49 per share, for the year-ago quarter.
Excluding special items from both periods, the company had a net loss of approximately $14.5 million, or $.19 per share, in the fourth quarter of 2000, compared to a net loss of approximately $9.5 million, or $.11 per share, in the year-ago quarter.
As detailed in tables accompanying this press release, special items in the fourth quarter of 2000 included a net gain from sales of power; a non-cash asset impairment charge related to the carrying value of the company's Northwest smelters; and certain non-cash LIFO inventory charges. Special items in the fourth quarter of 1999 included an involuntary conversion gain on the Gramercy, La., alumina refinery.
For the full year 2000, Kaiser's net income was $16.8 million, or $.21 per share, compared to a net loss of $54.1 million, or $.68 per share, for 1999. Excluding special items from both full-year periods, Kaiser had net income of approximately $3.0 million, or $.04 per share in 2000, compared to a net loss of approximately $72.0 million, or $.90 per share in 1999.
Net sales in the fourth quarter and full year of 2000 were $496.1 million and $2,169.8 million, compared to $528.4 million and $2,083.6 million for the same periods in 1999.
Commenting on the company's performance, Kaiser Chief Executive Officer Raymond J. Milchovich said, ``Excluding special items from both periods, our results in the fourth quarter of 2000 were less favorable than those of the year-ago quarter due primarily to lower shipments -- particularly in our Engineered Products segment as a result of weakness in demand in the ground transportation and distribution markets -- and higher energy costs in all business units.''
Additional fourth-quarter segment and business detail is provided below.
Alumina & Bauxite Business Unit -- Despite higher realized prices, segment operating income declined from that of the year ago period due primarily to higher energy prices and Gramercy-related costs resulting from the delayed restart. Relative to the third quarter of 2000, the drop in operating income reflects modestly lower realized prices and the higher Gramercy costs. Excluded from reported segment operating income for the fourth quarter of 2000 is a non-cash LIFO inventory charge of $7.0 million related to the delay in restarting Gramercy in December 2000 versus a planned restart in the third quarter of 2000.
Primary Aluminum Business Unit -- Reported segment operating income for the fourth quarter of 2000 does not include a pre-tax gain of $103.2 million from sales of power (after accruing for employee costs and other curtailment related expenses) and a non-cash asset impairment charge of $33.0 million related to the company's reduction in the carrying value of its Northwest smelters. Excluding these items, operating income in the fourth quarter of 2000 was below the level of the year-ago period and that of the third quarter of 2000 -- despite relatively flat realized prices -- due largely to a decline in shipments associated with the curtailment of the company's smelter operations in Washington and due to negligible profit margins on metal that was purchased and resold to customers. The unit also experienced higher labor costs, relative to both comparable quarters, associated with the return to work in the fourth quarter by union members after ratification of a new labor agreement.
Flat-Rolled Products Business Unit -- Segment operating income improved in the fourth quarter of 2000 relative to the operating loss of the year-ago period as shipments included a sharply higher percentage of value-added heat-treat products. This favorable impact was partially offset by higher labor costs associated with the return to work in the fourth quarter by union members after ratification of a new labor agreement. Relative to the third quarter of 2000, operating income declined due to higher labor costs and maintenance expense associated with the planned outage of a furnace. Excluded from the reported segment operating income for the fourth quarter of 2000 is a non-cash asset impairment charge of $3.6 million in connection with the company's completion of its exit from the can body stock business.
Engineered Products Business Unit -- Although realized prices were higher than those of the year-ago period, segment operating income declined in the fourth quarter of 2000 relative to the year-ago period as weakness in the ground transportation and distribution markets led to a 25% decline in shipments. Higher energy prices also contributed to the decline in operating income relative to the year-ago period. Relative to the third quarter of 2000, operating income decreased primarily because of a 19% decline in shipments.
Other Corporate Matters -- Kaiser also offered additional comments on power sales, the Gramercy project, and liquidity:
- In the fourth quarter, the company sold power provided by its existing contract with the Bonneville Power Administration (BPA) amounting to approximately $135 million. Fourth quarter results reflect an accrual of approximately $32 million pre-tax for smelter curtailment-related costs such as employee compensation that the company expects to incur through September 30, 2001. The net impact of these items was a pre-tax gain of $103.2 million, or $.79 per share, resulting from these sales. The company received cash proceeds from these transactions per an agreed payment schedule: $47 million in the fourth quarter; $52 million in January 2001; with $36 million to be received in late February 2001. The company has made additional power sales in January 2001 and intends to complete the sale of its remaining contract power. In addition, as a result of reduced power availability and increased power cost in the Pacific Northwest in connection with the new BPA contract, Kaiser recorded the previously cited asset impairment charge.
- The Gramercy plant began partial operation in mid-December 2000. As recently announced, construction on the final phase of the project is scheduled to be completed by mid-year 2001. Cumulative capital spending on the project at year-end 2000 was $240 million. The company continues to believe that property damage insurance will cover about 50% of the project's total capital cost. At the end of 2000, the company had received cumulative insurance proceeds of $253 million, allocated roughly as $100 million for property damage and $153 million for business interruption. Of this cumulative amount, the company's fourth-quarter insurance receipts were $46 million, which was allocated roughly as $27 million for property damage and $19 million for business interruption.
- At December 31, 2000, the company had outstanding borrowings under its Credit Agreement of $30 million, with availability of $156 million, and cash on the balance sheet of $23 million. In the fourth quarter of 2000, capital spending amounted to $100 million, of which approximately $80 million was attributable to the Gramercy project.
``Looking ahead,'' said Milchovich, ``we are encouraged by the solid progress that was accomplished during 2000, along with the recent strengthening in the primary aluminum price and the strong aerospace demand that we currently enjoy. However, in the near-term, unusually high energy prices will negatively impact our alumina refineries and fabricating facilities. Softness in the ground transportation and distribution markets also will be a near-term negative for Engineered Products. While not minimizing the significance of these issues, the key element of near- to medium-term performance is Pacific Northwest power and our Mead and Tacoma, Wash., smelters. The ability to continue to monetize our existing contract with BPA is a significant positive that will strengthen the company's liquidity and near-term financial flexibility. Nonetheless, given the current supply demand balance of the region and the specific terms of our new five year contract with BPA, the future earning capability of these facilities is unclear.''
Kaiser Aluminum Corporation is a leading producer of alumina, primary aluminum, and fabricated aluminum products. MAXXAM Inc. (ASE:MXM) directly and indirectly holds approximately 63 percent of Kaiser.
Company press releases may contain statements that constitute ``forward-looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995. The company cautions that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary materially from those expressed or implied in the forward-looking statements as a result of various factors.
Statements of Consolidated Income (Loss), Condensed Consolidated Balance Sheets, And Selected Operational and Financial Information Follow
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
(Unaudited)
(In millions of dollars, except share amounts)
Quarter Ended Year Ended
December 31, December 31,
---------------- ------------------
2000 1999 2000 1999
------ ------ -------- --------
Net sales (1) $496.1 $528.4 $2,169.8 $2,083.6
------ ------ -------- --------
Costs and expenses:
Cost of products
sold (1) 461.5 470.3 1,891.4 1,893.5
Depreciation and
amortization 17.9 20.1 76.9 89.5
Selling, administrative,
research and development
and general 26.5 22.5 104.1 105.4
Labor settlement charge -- -- 38.5 --
Other non-recurring
operating items, net (2) (57.9) -- (80.4) 24.1
------ ------ -------- --------
Total cost and expenses 448.0 512.9 2,030.5 2,112.5
------ ------ -------- --------
Operating income
(loss) 48.1 15.5 139.3 (28.9)
Other income
(expense):
Interest expense (26.0) (27.7) (109.6) (110.1)
Gain on involuntary
conversion at Gramercy
facility -- 85.0 -- 85.0
Other - net (3) (3.0) (16.6) (4.3) (35.9)
------ ------ -------- --------
Income (loss) before
income taxes and minority
interests 19.1 56.2 25.4 (89.9)
(Provision) benefit for
income taxes (9.1) (17.2) (11.6) 32.7
Minority interests 0.9 -- 3.0 3.1
------ ------ -------- --------
Net income (loss) $10.9 $39.0 $16.8 $(54.1)
====== ====== ======== ========
Earnings (loss) per
share: (4)
Basic $0.14 $0.49 $0.21 $(0.68)
Diluted $0.14 $0.49 $0.21 $(0.68)
Weighted average shares
outstanding (000):
Basic 79,575 79,405 79,520 79,336
Diluted 79,579 79,417 79,523 79,336
(1) Shipping and handling costs for the quarter and year ended
December 31, 1999 of $8.8 and $39.3, respectively, have been
reclassified from Net sales to Cost of products sold to
conform to the present presentation.
(2) Results for the quarter and year ended December 31, 2000 and
1999, included the following non-recurring operating income
(loss) items (other than the labor settlement). The business
segment to which the items are applicable is indicated
parenthetically.
Quarter Ended Year Ended
December 31, December 31,
---------------- --------------
2000 1999 2000 1999
------ ----- ------ ------
Net gains from power sales
(Primary Aluminum) $103.2 $-- $159.5 $--
Impairment charge --
Washington smelters
(Primary Aluminum) (33.0) -- (33.0) --
Gramercy-related items:
Incremental maintenance
spending
(Bauxite & Alumina) -- -- (11.5) --
Insurance deductibles, etc
($4 Bauxite & Alumina;
$1 Corporate) -- -- -- (5.0)
LIFO inventory charge
(Bauxite & Alumina) (7.0) -- (7.0) --
Impairment charges
associated with product
line exits:
(Flat-Rolled Products) (3.6) -- (12.6) --
(Engineered Products) (0.9) -- (5.6) --
Restructuring initiatives:
(Bauxite & Alumina) (0.8) -- (0.8) --
($3.1 Primary Aluminum;
$5.5 Corporate) -- -- (8.6) --
Micromill impairment
(Micromill) -- -- -- (19.1)
------ ----- ------ ------
Other non-recurring
operating items, net $57.9 $-- $80.4 $(24.1)
====== ===== ====== ======
(3) Results for the quarter and year ended December 31, 2000 and
1999, included the following pre-tax gains (losses):
Quarter Ended Year Ended
December 31, December 31,
---------------- --------------
2000 1999 2000 1999
------ ----- ------ ------
Asbestos-related
charges $-- $-- $(43.0) $(53.2)
Gains related to
real estate
transactions -- -- 39.0 --
Mark-to-market
gains(losses) 1.4 (12.8) 11.0 (32.8)
Gain on sale of
interests in AKW L.P. -- -- -- 50.5
Other, net (4.4) (3.8) (11.3) (0.4)
------ ------ ------ ------
Other -- net $(3.0) $(16.6) $(4.3) $(35.9)
====== ====== ====== ======
(4) Earnings (loss) per share for the quarter and year ended
December 31, 2000 and 1999, excluding material non-recurring
items is recapped as follows:
Quarter Ended Year Ended
December 31, December 31,
-------------- -------------
2000 1999 2000 1999
------ ------ ----- ------
Earnings (loss) per
share, as reported $0.14 $0.49 $0.21 $(0.68)
Less material non-
recurring (gains)
losses:
Labor settlement
charge -- -- 0.30 --
Impairment charge
-- Washington
smelters 0.25 -- 0.25 --
Asbestos-related
charges -- -- 0.33 0.44
Net gains from
power sales (0.79) -- (1.22) --
Operating profit
forgone as a result
of power sales 0.13 -- 0.20 --
Gains related to real
estate transactions -- -- (0.30) --
Other impairment and
restructuring charges 0.04 -- 0.21 --
Gramercy-related items:
Gain on involuntary
conversion -- (0.71) -- (0.71)
Incremental maintenance
spending -- -- 0.09 --
Charge for insurance
deductible -- -- -- 0.04
LIFO inventory charge 0.05 -- 0.05 --
Mark-to-market (gains)
losses (0.01) 0.11 (0.08) 0.27
Micromill impairment -- -- -- 0.16
Gain on sale of
interests in AKW L.P. -- -- -- (0.42)
------ ------ ----- ------
$(0.19) $(0.11) $0.04 $(0.90)
====== ====== ===== ======
The foregoing is for information purposes only and is not intended
to be a surrogate for basic or diluted earnings (loss) per share in
accordance with generally accepted accounting principles.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
SELECTED OPERATIONAL AND FINANCIAL INFORMATION
(Unaudited)
(In millions of dollars, except shipments and prices)
Quarter Ended Year Ended
Dec. 31, Dec. 31,
------------------- ------------------
2000 1999 2000 1999
-------- -------- -------- --------
Shipments: (000 metric tons)
Alumina (1)
Third Party 466.7 423.1 1,927.1 2,093.9
Intersegment 167.8 226.3 751.9 757.3
-------- -------- -------- --------
Total Alumina 634.5 649.4 2,679.0 2,851.2
-------- -------- -------- --------
Primary Aluminum (2)
Third party 83.7 88.3 345.5 295.6
Intersegment 29.5 40.8 148.9 171.2
-------- -------- -------- --------
Total Primary
Aluminum 113.2 129.1 494.4 466.8
-------- -------- -------- --------
Flat-Rolled Products 36.6 52.1 162.3 217.9
-------- -------- -------- --------
Engineered Products 32.7 43.3 164.6 171.1
-------- -------- -------- --------
Average realized third-party
sales price:
Alumina (per ton) $202 $193 $204 $179
Primary aluminum (per pound) $0.72 $0.71 $0.72 $0.68
Net Sales
Bauxite and Alumina (1)
Third Party (including
net sales of bauxite) $103.3 $89.7 $432.0 $403.1
Intersegment 33.0 42.7 148.3 129.0
-------- -------- -------- --------
Total Bauxite
and Alumina 136.3 132.4 580.3 532.1
-------- -------- -------- --------
Primary Aluminum (2)
Third party 132.5 137.3 548.5 443.9
Intersegment 46.2 62.7 242.3 240.6
-------- -------- -------- --------
Total Primary Aluminum 178.7 200.0 790.8 684.5
-------- -------- -------- --------
Flat-Rolled Products 119.2 134.9 521.0 591.3
Engineered Products 114.7 140.6 564.9 556.8
Minority Interests 26.4 25.9 103.4 88.5
Eliminations (79.2) (105.4) (390.6) (369.6)
-------- -------- -------- --------
Total Net Sales $496.1 $528.4 $2,169.8 $2,083.6
======== ======== ======== ========
Operating Income (Loss):(5)(6)
Bauxite and Alumina (3) $1.5 $4.4 $37.7 $(2.0)
Primary Aluminum (4) 5.5 18.5 70.9 8.0
Flat-Rolled Products 0.7 (3.6) 16.6 17.1
Engineered Products 0.9 8.8 34.1 38.6
Micromill -- (2.1) (0.6) (11.6)
Eliminations (1.1) 0.3 0.1 6.9
Corporate (17.3) (10.8) (61.4) (61.8)
Labor Settlement Charge (5) -- -- (38.5) --
Other Non-Recurring Operating
Items, Net (6) 57.9 -- 80.4 (24.1)
-------- -------- -------- --------
Total Operating
Income (Loss) $48.1 $15.5 $139.3 $(28.9)
======== ======== ======== ========
Net Income (Loss) $10.9 $39.0 $16.8 $(54.1)
======== ======== ======== ========
Capital Expenditures $100.0 $28.1 $296.5 $68.4
======== ======== ======== ========
(1) Net sales for the quarter and year ended December 31, 2000,
included approximately 72,000 tons and 267,000 tons
respectively, of alumina purchased from third parties and
resold to certain unaffiliated customers and 54,000 tons of
alumina purchased from third parties for the year ended
December 31, 2000, and transferred to the Company's Primary
aluminum business unit. There were no purchases of alumina
from third parties during the fourth quarter of 2000 for the
Company's Primary aluminum business unit. Net sales for the
quarter and year ended December 31, 1999, included
approximately 74,000 tons and 264,000 tons, respectively, of
alumina purchased from third parties and resold to certain
unaffiliated customers and 71,000 tons and 131,000 tons,
respectively, of alumina purchased from third parties and
transferred to the Company's Primary aluminum business unit.
(2) Net sales for the quarter and year ended December 31, 2000,
included approximately 61.7 tons and 206.5 tons, respectively,
of primary aluminum purchased from third parties to meet
third-party and internal commitments. Net sales for the
quarter and year ended December 31, 1999, included
approximately 51.8 tons and 260.1 tons, respectively, of
primary aluminum purchased from third parties to meet
third-party and internal commitments.
(3) Operating income (loss) for the quarter and year ended
December 31, 2000, included estimated business interruption
insurance recoveries totaling $22.0 and $111.6, respectively.
Operating income (loss) for the quarter and year ended
December 31, 1999, included estimated business interruption
insurance recoveries totaling $19.0 and $41.0 respectively.
Additionally, depreciation was suspended for the Gramercy
facility from July 1999 through November 2000, as a result of
the July 5, 1999, incident. Depreciation expense for the
Gramercy facility for the six months ended June 30, 1999, was
approximately $6.0.
(4) Operating income (loss) for the quarter and year ended
December 31, 1999, included potline restart costs of $1.3 and
$12.8, respectively.
(5) The allocation of the labor settlement charges to the
Company's business segments was as follows: Bauxite and
Alumina - $2.1, Primary aluminum - $15.9, Flat-rolled products
- $18.2 and Engineered products - $2.3.
(6) Results for the quarter and year ended December 31, 2000 and
1999, included significant non-recurring operating items
(other than the labor settlement). See Note 2 to Statements of
Consolidated Income (Loss).
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars)
Dec. 31, Dec. 31,
2000 1999
-------- --------
Assets (Unaudited)
Current assets (1) $1,012.1 $973.9
Investments in and advances to
unconsolidated affiliates 77.8 96.9
Property, plant, and
equipment - net 1,176.1 1,053.7
Deferred income taxes 454.2 440.0
Other assets 622.9 634.3
-------- --------
Total $3,343.1 $3,198.8
======== ========
Liabilities & Stockholders' Equity
Current liabilities (2)(3) $841.4 $637.9
Long-term liabilities 703.7 727.1
Accrued postretirement medical
benefit obligation 656.9 678.3
Long-term debt 957.8 972.5
Minority interests (3) 101.1 117.7
Commitments and contingencies -- --
Stockholders' equity 82.2 65.3
-------- --------
Total $3,343.1 $3,198.8
======== ========
(1) Includes Cash and cash equivalents of $23.4 and $21.2 at
December 31, 2000 and 1999, respectively.
(2) Includes current portion of long-term debt of $31.6 and $.3 at
December 31, 2000 and 1999, respectively. Outstanding
borrowings under KACC's Credit Agreement were $30.4 at
December 31, 2000.
(3) Current liabilities at December 31, 2000, includes redeemable
preference stock of $17.5 which KACC agreed to redeem as part
of the United Steelworkers of America settlement agreement. At
December 31, 1999, redeemable preference stock was included in
minority interests.
Kaiser Aluminum Corporation, Houston
Scott Lamb, 713/267-3826