Kaiser Aluminum Reports Results for Second Quarter of 2002
SOURCE: Kaiser Aluminum
Tuesday August 13, 7:07 pm Eastern TimeHOUSTON--(BUSINESS WIRE)--Aug. 13, 2002--Kaiser Aluminum today reported a net loss of $50.4 million, or $.63 per share, for the second quarter of 2002, compared to a net loss of $64.1 million, or $.80 per share, for the second quarter of 2001. Results for the year-ago quarter included a number of special items and significant adjustments, as detailed in tables accompanying this press release.
For the first six months of 2002, Kaiser reported a net loss of $114.5 million, or $1.42 per share, compared to net income of $55.5 million, or $.70 per share, for the first six months of 2001. The year-ago period included a number of special items and significant adjustments, as detailed in tables accompanying this press release.
Net sales in the second quarter and first six months of 2002 were $386.3 million and $756.9 million, compared to $446.8 million and $927.1 million, for the comparable periods of 2001.
In commenting on the company's performance in the second quarter of 2002, Kaiser President and Chief Executive Officer Jack A. Hockema said, "The company continued to experience very challenging business conditions characterized by substantially lower realized prices and lackluster demand in many market segments, especially aerospace. In addition, primary aluminum shipments were lower than those of the year-ago period because of the March 2002 curtailment of one potline at the 90%-owned Valco smelter in Ghana. Further, the 65%-owned Alpart alumina refinery experienced unfavorable cost performance in connection with higher fuel oil prices and maintenance and turnaround work.
"On a more favorable note," said Hockema, "despite experiencing lower realized prices, the Engineered Products business unit reported operating income more than triple that of the year-ago period due to a reduction in energy and overhead costs combined with improved demand in certain market segments, particularly ground transportation and electrical markets. In fact, this was the strongest earnings performance by this business unit since the second quarter of 2000. Also, the Gramercy alumina refinery reached a generally sustained operating rate of 100% of its rebuilt capacity during the quarter, and Valco continued to operate at record levels of efficiency despite the recent curtailment of one potline.
"I want to emphasize again that the company's Chapter 11 filing on February 12, 2002 has not affected the way we are operating our plants. We remain as focused as ever on meeting the needs of our customers through such programs as 'Best in Class,' where we have maintained on-time delivery performance that's unmatched by our competitors in the fabricated products business," said Hockema. "At the risk of repeating myself, I thank the customers, suppliers, employees and others who have demonstrated their ongoing support as we work to strengthen the company and emerge from Chapter 11.
"The Chapter 11 process continues as expected. We have established productive relationships with the unsecured creditors committee and the asbestos claimants committee and appreciate their support of our initial efforts," said Hockema.
As of July 31, 2002, the company had approximately $115.9 million of cash and cash equivalents and unused availability of $204.6 million under its Debtor-in-Possession (DIP) credit facility. This amount compares with cash and cash equivalents of $147.3 million and unused DIP availability of $204.8 million at June 30, 2002. The change in the cash position from June to July is primarily due to $30 million in payments to the company's 20%-owned affiliate, Queensland Alumina Limited (QAL), in July 2002 to fund the company's share of QAL's scheduled debt maturities.
Kaiser Aluminum Corporation is a leading producer of alumina, primary aluminum and fabricated aluminum products.
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 results 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
(Unaudited)
(In millions of dollars, except share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
----------------------- ---------------------
2002 2001 2002 2001
---------- --------- --------- ---------
Net sales $386.3 $446.8 $756.9 $927.1
---------- --------- --------- ---------
Costs and expenses:
Cost of products sold 363.7 418.8 705.7 863.3
Depreciation and
amortization 22.5 22.2 45.0 43.5
Selling,
administrative,
research and
development and
general 29.3 25.4 70.5 52.7
Other non-recurring
operating items,
net(1) 7.5 8.0 9.1 (220.2)
---------- --------- --------- ---------
Total cost and
expenses 423.0 474.4 830.3 739.3
---------- --------- --------- ---------
Operating income
(loss) (36.7) (27.6) (73.4) 187.8
Other income (expense):
Interest expense
(excluding unrecorded
contractual interest
of $23.7 and $36.5
in 2002) (2.5) (27.1) (16.0) (55.0)
Reorganization items (6.5) -- (16.1) --
Other - net(2) 0.3 (51.7) 2.5 (44.4)
---------- --------- --------- ---------
Income (loss) before
income taxes and
minority interests (45.4) (106.4) (103.0) 88.4
(Provision) benefit
for income taxes (3) (6.4) 41.5 (14.4) (34.5)
Minority interests 1.4 0.8 2.9 1.6
---------- --------- --------- ---------
Net income (loss) $(50.4) $(64.1) $(114.5) $55.5
========== ========= ========= =========
Earnings(loss) per
share:
Basic/Diluted $(0.63) $(0.80) $(1.42) $.70
========== ========= ========= =========
Weighted average
shares
outstanding (000):
Basic/Diluted 80,604 79,780 80,663 79,696
(1) Operating income (loss) for the quarter and six-month periods
ended June 30, 2002 and 2001, included the following items. The
business unit to which the items are applicable is indicated:
Quarter Ended Six Months Ended
June 30, June 30,
-------------- ----------------
2002 2001 2002 2001
------ ------ ------ ------
Net gains (losses) on power
sales (Primary Aluminum) $ -- $(5.5) $ -- $222.7
Restructuring charges -
Bauxite & Alumina (0.3) (2.0) (1.9) (2.0)
Primary Aluminum (1.7) -- (1.7) --
Flat-Rolled Products (3.9) -- (3.9) --
Corporate -- (0.5) -- (0.5)
Impairment charge associated
with product lines exit
(Flat-Rolled Products) (1.6) -- (1.6) --
------ ------ ------ ------
Non-recurring operating items $(7.5) $(8.0) $(9.1) $220.2
====== ====== ====== ======
(2) Other income (expense) for the quarter and six month periods ended
June 30, 2002 and 2001, included the following pre-tax gains
(losses):
Quarter Ended Six Months Ended
June 30, June 30,
------------- ----------------
2002 2001 2002 2001
------ ------ ------ ------
Gains on sale of real
estate $ -- $ -- $4.0 $ --
Mark-to-market gains
(losses) -- 3.1 (0.4) 18.4
Asbestos related charges -- (45.8) -- (53.3)
Adjustment to environment
liabilities -- (8.0) -- (8.0)
MetalSpectrum investment
write-off -- (2.8) -- (2.8)
------ ------ ------ ------
Special items, net -- (53.5) 3.6 (45.7)
All Other, net 0.3 1.8 (1.1) 1.3
------ ------ ------ ------
Other - net $0.3 $(51.7) $2.5 $(44.4)
====== ====== ====== ======
(3) The income tax provisions for the quarter and six-month periods
ended June 30, 2002 of $6.4 and $14.4, respectively, relate to
foreign income taxes. For the quarter and six-month periods ended
June 30, 2002, as a result of the Cases, the Company did not
recognize income tax benefits for the losses incurred from its
domestic operations or any U.S. tax benefits for foreign income
taxes. Instead, the increases in federal and state deferred tax
assets as a result of the losses were offset by equal increases in
the valuation allowances.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
SELECTED OPERATIONAL AND FINANCIAL INFORMATION
(Unaudited)
(In millions of dollars, except shipments and prices)
Quarter Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2002 2001 2002 2001
------ ------ ------ ------
Shipments: (000 metric tons)
Alumina
Third Party 648.4 664.9 1,273.6 1,328.9
Intersegment 51.4 51.9 186.3 234.8
------- ------- -------- --------
Total Alumina 699.8 716.8 1,459.9 1,563.7
------- ------- -------- --------
Primary Aluminum
Third party 44.7 62.8 96.0 126.7
Intersegment 0.5 0.5 1.6 2.0
------- ------- -------- --------
Total Primary
Aluminum 45.2 63.3 97.6 128.7
------- ------- -------- --------
Flat-Rolled Products 15.1 17.8 27.6 42.8
------- ------- -------- --------
Engineered Products 33.2 31.3 62.5 64.2
------- ------- -------- --------
Average realized
third-party sales price:
Alumina (per ton) $167 $190 $168 $192
Primary aluminum (per
pound) $.65 $.69 $.64 $.71
Net Sales
Bauxite and Alumina
Third Party (including
net sales of bauxite) $114.9 $132.7 $228.5 $270.3
Intersegment 9.0 9.9 32.2 45.9
------- ------- -------- --------
Total Bauxite and
Alumina 123.9 142.6 260.7 316.2
------- ------- -------- --------
Primary Aluminum
Third party 64.3 96.1 135.3 199.1
Intersegment 0.7 0.8 2.4 3.3
------- ------- -------- --------
Total Primary
Aluminum 65.0 96.9 137.7 202.4
------- ------- -------- --------
Flat-Rolled Products 57.4 76.9 105.7 172.8
Engineered Products 114.9 115.9 218.7 236.5
Commodities Marketing 10.5 (1.0) 21.5 (3.6)
Minority Interests 24.3 26.2 47.2 52.0
Eliminations (9.7) (10.7) (34.6) (49.2)
------- ------- -------- --------
Total Net Sales $386.3 $446.8 $756.9 $927.1
======= ======= ======== ========
Operating Income (Loss):
Bauxite and Alumina $(12.0) $(6.0) $(15.2) $(12.8)
Primary Aluminum (6.8) 3.9 (10.0) 8.4
Flat-Rolled Products (6.9) 3.1 (16.8) 6.3
Engineered Products 7.6 2.4 10.9 5.1
Commodities Marketing 8.4 (7.0) 19.1 (9.0)
Eliminations 2.4 1.7 2.9 5.5
Corporate and Other (21.9) (17.7) (55.2) (35.9)
Non-Recurring Operating
(Charges) Benefits,
Net(1) (7.5) (8.0) (9.1) 220.2
------- ------- -------- --------
Total Operating
Income (Loss) $(36.7) $(27.6) $(73.4) $187.8
======= ======= ======== ========
Net Income (Loss) $(50.4) $(64.1) $(114.5) $55.5
======= ======= ======== ========
Capital Expenditures $10.4 $42.8 $19.9 $86.8
======= ======= ======== ========
(1) Results for the quarter and six month periods ended June 30, 2002
and 2001 included non-recurring operating (charges) benefits. See
Note 1 to Statements of Consolidated Income (Loss).
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions of dollars)
June 30, December 31,
2002 2001
---------- ------------
Assets (1) (Unaudited)
Current assets (2) $677.6 $759.2
Investments in and advances to
unconsolidated affiliates 69.2 63.0
Property, plant, and
equipment - net 1,173.8 1,215.4
Other assets 704.3 706.1
-------- --------
Total $2,624.9 $2,743.7
======== ========
Liabilities & Stockholders' Equity (1)
Liabilities not subject to
compromise-
Current liabilities (3) $368.5 $803.4
Long-term liabilities 102.2 919.9
Accrued postretirement medical
benefit obligation -- 642.2
Long-term debt 42.9 700.8
Liabilities subject to compromise 2,573.9 --
Minority interests 119.4 118.5
Commitments and contingencies
Stockholders' equity (582.0) (441.1)
-------- --------
Total $2,624.9 $2,743.7
======== ========
(1) On February 12, 2002, the Company, KACC and 13 of KACC's
subsidiaries filed petitions for reorganization under Chapter 11
of the United States Federal Code. On March 15, 2002, two
additional subsidiaries of KACC filed petitions. The balance sheet
as of June 30, 2002, has been prepared on a "going concern"
basis, which contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business;
however, as a result of the Chapter 11 filings, such realization
of assets and liquidation liabilities are subject to a significant
number of uncertainties. Specifically, but not all inclusive, the
balance sheet does not present: (a) the realizable value of assets
on a liquidation basis or the availability of such assets to
satisfy liabilities, (b) the amount which will ultimately be paid
to settle liabilities and contingencies which may be allowed or
(c) the effect of any changes which may occur in connection with
the Company's capitalization or operations resulting from a plan
of reorganization.
(2) Includes Cash and cash equivalents of $147.3 and $153.3 at June
30, 2002 and December 31, 2001, respectively.
(3) Includes Current portion of long-term debt of $.8 and $173.5 at
June 30, 2002 and December 31, 2001, respectively. On February 12,
2002, the Company and KACC entered into a $300.0 post-petition
credit agreement with a group of lenders for debtor-in-possession
financing (the "DIP Facility"). As of June 30, 2002, there were no
outstanding borrowings under the DIP facility. At June 30, 2002,
outstanding letters of credit were approximately $36.9.
Kaiser Aluminum, Houston
Scott Lamb, 713/267-3826