Century Aluminum Reports Second Quarter 2011 Earnings

MONTEREY, CA, Aug 04, 2011 (MARKETWIRE via COMTEX) -- Century Aluminum Company (NASDAQ: CENX) today reported net income of $24.0 million ($0.24 per basic and diluted share) for the second quarter of 2011. Financial results were negatively impacted by a $7.7 million charge related to the contractual impact of the recent changes in the Company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable, reflecting the fact that the matter is now in litigation, despite the Company's continuing view that it will ultimately receive such proceeds; a loss on forward contracts of $1.6 million, primarily related to the marking to market of aluminum put options; and a charge of $0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased quarterly results by $8.9 million with an associated discrete tax benefit of $2.1 million.

In the second quarter of 2010, the company reported net earnings of $5.1 million ($0.05 per basic and diluted share). Results were positively impacted by a gain on forward contracts of $9.3 million primarily related to the marking to market of aluminum put options. Cost of sales for the prior year quarter included a $16.0 million charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements and a $7.0 million charge for lower of cost or market inventory adjustments.

Sales in the second quarter of 2011 were $366.3 million, compared with $287.9 million in the second quarter of 2010. Shipments of primary aluminum for the quarter totaled 151,483 tonnes compared with 144,580 tonnes in the year-ago quarter.

For the first half of 2011, the company reported net income of $49.0 million ($0.48 per basic and diluted share). First half results were negatively impacted by a $7.7 million charge related to the contractual impact of the recent changes in the Company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable; a loss on forward contracts of $6.4 million, primarily related to the marking to market of aluminum put options; and a charge of $0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased first half results by $18.3 million with an associated discrete tax benefit of $4.2 million. Cost of sales for the first half includes an $8.6 million charge related to the restart of a curtailed potline at the Hawesville, KY smelter. This result compares to net income of $11.5 million ($0.11 per basic and diluted share) for the first half of 2010. Results for the prior six-month period were positively impacted by a gain on forward contracts of $7.3 million, primarily related to the marking to market of aluminum put options. Cost of sales for the first six months of 2010 included a $31.5 million charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements and a $6.9 million charge for lower of cost or market inventory adjustments.

Sales in the first six months of 2011 were $692.6 million compared with $573.2 million in the same period of 2010. Shipments of primary aluminum for the first six months of 2011 were 295,661 tonnes compared with 289,257 tonnes for the comparable 2010 period.

"Aluminum market conditions have remained generally stable during the last few months," commented Logan W. Kruger, Century's President and Chief Executive Officer. "In the developed economies, we continue to see demand reasonably in balance with supply. In China, Brazil and other developing markets, the pace of growth continues at robust levels. The long-term trends of constrained supply and escalating costs continue to be reinforced. More broadly, the well-published macro-economic issues, in both developed and developing markets, constitute risks that are difficult to quantify. Short of any of these concerns manifesting themselves in the form of real crises, we remain constructive on the aluminum market over the medium term."

Mr. Kruger continued, "We are focused on returning Hawesville to the trajectory we anticipated earlier this year. The issues facing the plant can all be remedied with qualified and determined leadership. Over the last thirty days, we have brought on board an able and experienced plant manager and have filled almost all of the previously vacant key operating and technical positions. The team has stabilized the operations and has now turned the corner toward reinstituting the plan to achieve full operating capacity for five lines, which we believe we will reach by the end of the year.

"We have made good progress across the rest of the company," concluded Mr. Kruger. "Grundartangi had an excellent quarter, with annualized shipment volume of 278,000 metric tons and controllable costs in check. Mt. Holly's performance was also very good; the plant is performing near its historically best-in-class levels. Lastly, we advanced the discussions with Helguvik's power suppliers in Iceland, as we continue to move toward a restart of major construction activity."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California.

Century Aluminum's quarterly conference call is scheduled for 5:00 p.m. Eastern time today. To listen to the conference call and to view related presentation materials, go to www.centuryaluminum.com and click on the conference call link on the homepage.

Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:

Atli B. Gudmundsson, Senior Manager -- Corporate Finance, NBI hf.

Steingrimur Helgason, Director -- Corporate Finance, NBI hf.

Cautionary Statement This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements, including, without limitation, declines in aluminum prices or increases in our operating costs; deterioration of global financial and economic conditions; increases in global aluminum inventories and the addition of additional global aluminum production capacity; additional delays in the completion of our Helguvik, Iceland smelter; and our ability to successfully implement measures to return our Hawesville facility to full production. Forward-looking statements in this press release include statements regarding future market conditions, including the pace of future macro-economic growth and the continuance of supply and cost trends in the aluminum market, our ability to successfully remedy production issues at our Hawesville facility; the ultimate outcome of certain insurance litigation; and our ability to successfully restart construction activity at our Helguvik facility. More information about the risks, uncertainties and assumptions affecting the Company can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K and in other filings made with the Securities and Exchange Commission. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.

                          Century Aluminum Company
                   Consolidated Statements of Operations
                  (in Thousands, Except Per Share Amounts)
                                (Unaudited)

                                  Three months ended     Six months ended
                                       June 30,              June 30,
                                 --------------------  --------------------
                                    2011       2010       2011       2010
                                 ---------  ---------  ---------  ---------
NET SALES:
  Third-party customers          $ 207,091  $ 183,045  $ 395,403  $ 375,977
  Related parties                  159,186    104,808    297,211    197,265
                                 ---------  ---------  ---------  ---------
                                   366,277    287,853    692,614    573,242

COST OF GOODS SOLD                 316,763    266,337    600,784    517,750
                                 ---------  ---------  ---------  ---------

GROSS PROFIT                        49,514     21,516     91,830     55,492

OTHER OPERATING EXPENSES
 (INCOME) - NET                     (5,205)     4,644    (11,089)     9,109
SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES            18,557     10,964     29,166     23,215
                                 ---------  ---------  ---------  ---------

OPERATING INCOME                    36,162      5,908     73,753     23,168

INTEREST EXPENSE - THIRD PARTY -
 NET                                (6,321)    (6,255)   (12,943)   (12,552)
INTEREST INCOME - RELATED PARTY         70        111        183        220
NET GAIN (LOSS) ON FORWARD
 CONTRACTS                          (1,617)     9,294     (6,426)     7,322
OTHER INCOME (EXPENSE) - NET        (1,132)       230       (455)       638
                                 ---------  ---------  ---------  ---------

INCOME BEFORE INCOME TAXES AND
 EQUITY
IN EARNINGS OF JOINT VENTURES       27,162      9,288     54,112     18,796

INCOME TAX EXPENSE                  (3,636)    (4,619)    (6,759)    (8,900)
                                 ---------  ---------  ---------  ---------

INCOME BEFORE EQUITY IN EARNINGS
OF JOINT VENTURES                   23,526      4,669     47,353      9,896

EQUITY IN EARNINGS OF JOINT
 VENTURES                              460        477      1,679      1,582
                                 ---------  ---------  ---------  ---------

NET INCOME                       $  23,986  $   5,146  $  49,032  $  11,478
                                 =========  =========  =========  =========

NET INCOME ALLOCATED TO COMMON
 SHAREHOLDERS                    $  22,061  $   4,723  $  45,066  $  10,532

EARNINGS PER COMMON SHARE
  Basic and Diluted              $    0.24  $    0.05  $    0.48  $    0.11

WEIGHTED AVERAGE COMMON SHARES
 OUTSTANDING
  Basic                             93,105     92,672     93,036     92,611
  Diluted                           93,567     93,332     93,432     93,218

                          Century Aluminum Company
                        Consolidated Balance Sheets
                           (Dollars in Thousands)
                                (Unaudited)

                                                  June 30,     December 31,
ASSETS                                              2011           2010
                                               -------------  -------------
Current Assets:
  Cash and cash equivalents                    $     232,401  $     304,296
  Restricted cash                                          -          3,673
  Accounts receivable - net                           54,838         43,903
  Due from affiliates                                 37,264         51,006
  Inventories                                        187,388        155,908
  Prepaid and other current assets                    46,151         18,292
                                               -------------  -------------
     Total current assets                            558,042        577,078
Property, plant and equipment - net                1,238,651      1,256,970
Due from affiliates - less current portion             3,094          6,054
Other assets                                         100,055         82,954
                                               -------------  -------------
      Total                                    $   1,899,842  $   1,923,056
                                               =============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable, trade                      $      87,595  $      88,004
  Due to affiliates                                   39,548         45,381
  Accrued and other current liabilities               49,225         41,495
  Accrued employee benefits costs - current
   portion                                            15,909         26,682
  Convertible senior notes                                 -         45,483
  Industrial revenue bonds                             7,815          7,815
                                               -------------  -------------
    Total current liabilities                        200,092        254,860
                                               -------------  -------------

Senior notes payable                                 249,011        248,530
Accrued pension benefits costs - less current
 portion                                              38,518         37,795
Accrued postretirement benefits costs - less
 current portion                                     106,718        103,744
Other liabilities                                     41,662         37,612
Deferred taxes                                        86,019         85,999
                                               -------------  -------------
    Total noncurrent liabilities                     521,928        513,680
                                               -------------  -------------

Shareholders' Equity:
  Series A Preferred stock (one cent par
   value, 5,000,000 shares authorized; 80,785
   and 82,515 shares issued and outstanding at
   June 30, 2011 and December 31, 2010,
   respectively)                                           1              1
  Common stock (one cent par value,
   195,000,000 shares authorized; 93,214,667
   and 92,771,864 shares issued and
   outstanding at June 30, 2011 and December
   31, 2010, respectively)                               932            928
  Additional paid-in capital                       2,506,435      2,503,907
  Accumulated other comprehensive loss               (78,234)       (49,976)
  Accumulated deficit                             (1,251,312)    (1,300,344)
                                               -------------  -------------
    Total shareholders' equity                     1,177,822      1,154,516
                                               -------------  -------------
    Total                                      $   1,899,842  $   1,923,056
                                               =============  =============

                          Century Aluminum Company
                   Consolidated Statements of Cash Flows
                           (Dollars in Thousands)
                                (Unaudited)

                                                         Six months ended
                                                             June 30,

                                                          2011       2010
                                                       ---------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                          $  49,032  $  11,478
   Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
     Unrealized net loss (gain) on forward contracts       6,170     (7,568)
     Realized benefit of contractual receivable                -     32,193
     Accrued and other plant curtailment costs - net     (16,592)    (2,576)
     Lower of cost or market inventory adjustment            (16)     6,999
     Depreciation and amortization                        31,064     31,505
     Debt discount amortization                            1,355      1,548
     Deferred income taxes                                     -      9,217
     Pension and other postretirement benefits           (28,608)     8,218
     Stock-based compensation                              2,501      2,163
     Non-cash loss on early extinguishment of debt           763          -
     Undistributed earnings of joint ventures             (1,679)    (1,582)
     Change in operating assets and liabilities:
       Accounts receivable - net                         (10,935)     1,013
       Due from affiliates                                11,265    (16,671)
       Inventories                                       (31,464)   (11,162)
       Prepaid and other current assets                  (28,991)    20,423
       Accounts payable, trade                            (1,202)    (6,725)
       Due to affiliates                                  (5,834)       621
       Accrued and other current liabilities               7,575     (2,189)
       Other - net                                          (539)    (4,773)
                                                       ---------  ---------
     Net cash provided by (used in) operating
      activities                                         (16,135)    72,132
                                                       ---------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property, plant and equipment              (7,353)    (3,012)
   Nordural expansion                                     (7,968)   (10,113)
   Investments in and advances to joint ventures               -        (17)
   Payment received on advances from joint ventures        3,056          -
   Proceeds from sale of property, plant and equipment        56          -
   Restricted and other cash deposits                      3,673       (983)
                                                       ---------  ---------
     Net cash used in investing activities                (8,536)   (14,125)
                                                       ---------  ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of debt                                     (47,067)         -
   Repayment of contingent obligation                       (189)         -
   Issuance of common stock - net                             32         23
                                                       ---------  ---------
     Net cash provided by (used in) financing
      activities                                         (47,224)        23
                                                       ---------  ---------

CHANGE IN CASH AND CASH EQUIVALENTS                      (71,895)    58,030

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD       304,296    198,234
                                                       ---------  ---------

CASH AND CASH EQUIVALENTS, END OF THE PERIOD           $ 232,401  $ 256,264
                                                       =========  =========

                          Century Aluminum Company
                           Selected Operating Data
                                 (Unaudited)

                        SHIPMENTS - PRIMARY ALUMINUM

                           Direct (1)                       Toll
                 ----------------------------- -----------------------------
                   Metric    (000)               Metric    (000)     (000)
                    Tons     Pounds   $/Pound     Tons     Pounds   Revenue
                 --------- --------- --------- --------- --------- ---------
   2011
----------------
2nd Quarter         84,509   186,310 $    1.26    66,974   147,652 $ 132,113
1st Quarter         80,479   177,426      1.17    63,699   140,432   117,658
                 --------- --------- --------- --------- --------- ---------
Year to Date       164,988   363,736 $    1.22   130,673   288,084 $ 249,771
                 ========= ========= ========= ========= ========= =========

   2010
----------------
2nd Quarter         76,521   168,700 $    1.04    68,059   150,043 $ 112,523
1st Quarter         76,653   168,990      1.04    68,024   149,968   109,659
                 --------- --------- --------- --------- --------- ---------
Year to Date       153,174   337,690 $    1.04   136,083   300,011 $ 222,182
                 ========= ========= ========= ========= ========= =========

(1) Does not include Toll shipments from Nordural Grundartangi