Commonwealth Revises Previously Announced Third Quarter Earnings Due to Hedge Accounting Adjustment.LOUISVILLE Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. , Ky.--(BUSINESS WIRE)--Nov. 2, 1999--Commonwealth Industries, Inc. (Nasdaq/NM: CMIN Cmin Trough serum concentration, see there ) today said that in the course of a review of the Company's hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. activity, the Company identified a $1.6 million credit taken into income in the previously reported third quarter results which should have been deferred to the fourth quarter in order to match the effect of certain firm-priced forward sales forward sales npl → ventas fpl a término transactions expected to be realized in the fourth quarter of 1999. The effect of the adjustment is to increase cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold by $1.6 million, thus reducing gross profit and operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. by the same amount. The adjustment reduces net income for the third quarter of 1999 to $0.9 million or $0.05 per share versus the previously reported net income for the third quarter of 1999 of $2.2 million or $0.14 per share and reduces net income for the first nine months of 1999 to $9.6 million or $0.60 per share compared with the previously reported net income for the first nine months of 1999 of $11.0 million or $0.68 per share. These amounts for 1999 compared with a net loss of $2.1 million or $0.13 per share for the third quarter of 1998 and with a net loss of $2.0 million or $0.12 per share for the first nine months of 1998. The economic benefit of this $1.6 million credit will be recognized in the fourth quarter of 1999. Commonwealth Industries is one of North America's leading manufacturers of aluminum sheet for distributors and the transportation, construction, and consumer durables Consumer durables Consumer products that are expected to last three years or more, such as an automobile or a home appliance. consumer durables See durable goods. end-use markets. The Company has direct-chill casting facilities in Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. one of the largest multi-purpose aluminum rolling mills rolling mill: see steel. in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. - and continuous casting Continuous casting is a refinement of the casting process for the continuous, high-volume production of metal sections with a constant cross-section. It allows lower-cost production of metal sections with better quality, due to finer control through automation of the casting mini-mills in Ohio and California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . Commonwealth also is a leading manufacturer of innovative electrical products through its Alflex operations in California and North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. . Certain statements set forth above, may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company's actual results or performance to materially differ from any future results or performance expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. These statements involve risks, uncertainties and other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. Such factors may include, without limitation, the effect of global economic conditions, the impact of competitive products and pricing, product development and commercialization, availability and cost of critical raw materials, the rate of technology change, product demand and market acceptance risks, capacity and supply constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. or difficulties, the effects of Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 on the Company and third parties, and other risks as detailed in the Company's various filings with the Securities and Exchange Commission. -0-
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Income
(in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1999 1998 1999 1998
--------- --------- --------- ---------
Net sales $ 275,083 $ 231,348 $ 785,358 $ 738,621
Cost of goods sold 256,729 215,390 718,935 690,436
--------- --------- --------- ---------
Gross profit 18,354 15,958 66,423 48,185
Selling, general and
administrative
expenses 13,007 11,265 37,982 31,622
Amortization of
goodwill 1,119 1,119 3,357 3,357
--------- --------- --------- ---------
Operating income 4,228 3,574 25,084 13,206
Other income
(expense), net 278 107 731 511
Interest expense,
net (4,663) (5,671) (14,708) (16,887)
--------- --------- --------- ---------
Income (loss)
before income
taxes (157) (1,990) 11,107 (3,170)
Income tax expense
(benefit) (1,039) 149 1,488 (1,182)
--------- --------- --------- ---------
Net income (loss) $ 882 $ (2,139) $ 9,619 $ (1,988)
========= ========= ========= =========
Basic and diluted
net income (loss)
per share $ 0.05 $ (0.13) $ 0.60 $ (0.12)
========= ========= ========= =========
Weighted average
shares outstanding:
Basic 16,373 15,944 16,092 15,944
Diluted 16,471 15,944 16,148 15,944
Dividends paid
per share $ 0.05 $ 0.05 $ 0.15 $ 0.15
COMMONWEALTH INDUSTRIES, INC.
Operating and Financial Statistics
(dollars in thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
1999 1998 1999 1998
--------- --------- --------- ----------
Net sales volume:
Aluminum products $ 243,327 $ 198,234 $ 692,453 $ 644,911
Electrical products $ 31,756 $ 33,114 $ 92,905 $ 93,710
Shipment volume:
Aluminum products
(millions lbs.) 267.9 211.3 780.6 664.9
Electrical products
(millions ft.) 148.3 141.1 430.7 393.8
Production volume:
Aluminum products
(millions lbs.) 257.4 215.5 771.3 671.9
Electrical products
(millions ft.) 160.4 135.1 450.4 386.6
Gross profit percent 6.7% 6.9% 8.5% 6.5%
Operating income
percent 1.5% 1.5% 3.2% 1.8%
EBITDA $ 13,165 $ 12,105 $ 51,534 $ 38,798
EBITDA per share $ 0.80 $ 0.76 $ 3.20 $ 2.43
Current ratio 2.0x 2.2x 2.0x 2.2x
Interest coverage
ratio (EBITDA to
interest expense) 2.8x 2.1x 3.5x 2.3x
Return on stockholders'
equity (annualized) 1.1% (2.6%) 3.9% (0.8%)
Debt-to-capitalization 27% 28% 27% 28%
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
Nine Months Ended
September 30,
--------------------
1999 1998
-------- --------
Cash flows from operating activities:
Net income (loss) $ 9,619 $ (1,988)
Adjustments to reconcile net income
(loss) to net cash provided by
operations:
Depreciation and amortization 26,619 25,941
Loss on disposal of property, plant
and equipment 7 301
Issuance of common stock in
connection with stock awards 44 72
Change in working capital and other
net assets (10,110) 9,899
-------- --------
Net cash provided by operating activities 26,179 34,225
Cash flows from investing activities:
Purchases of property, plant and equipment (27,441) (21,723)
Proceeds from sale of property,
plant and equipment 7 32
-------- --------
Net cash (used in) investing activities (27,434) (21,691)
-------- --------
Cash flows from financing activities:
Increase (decrease) in outstanding
checks in excess of deposits 3,674 (9,122)
Proceeds from long-term debt 43,800 42,025
Repayments of long-term debt (43,800) (37,675)
Cash dividends paid (2,425) (2,392)
-------- --------
Net cash provided by financing activities 1,249 (7,164)
-------- --------
Net (decrease) in cash and cash
equivalents for the period (6) 5,370
Cash and cash equivalents at beginning
of period 6 --
-------- --------
Cash and cash equivalents at end of period $ -- $ 5,370
======== ========
COMMONWEALTH INDUSTRIES, INC.
Condensed Consolidated Balance Sheet
(in thousands except share data)
September 30,
----------------------
1999 1998
--------- ---------
Assets
Cash and cash equivalents $ -- $ 5,370
Accounts receivable, net 549 263
Inventories 176,026 185,936
Prepayments and other current assets 72,421 33,475
--------- ---------
Total current assets 248,996 225,044
Property, plant and equipment, net 275,202 266,302
Goodwill, net 165,729 170,205
Other noncurrent assets 8,092 9,777
--------- ---------
Total assets $ 698,019 $ 671,328
========= =========
Liabilities
Outstanding checks in excess of deposits $ 3,674 $ --
Accounts payable 84,066 72,519
Accrued liabilities 39,138 32,094
--------- ---------
Total current liabilities 126,878 104,613
Long-term debt 125,000 130,000
Other long-term liabilities 8,663 8,651
Accrued pension benefits 16,589 14,337
Accrued postretirement benefits 86,822 87,218
--------- ---------
Total liabilities 363,952 344,819
--------- ---------
Commitments and contingencies -- --
Stockholders' Equity
Common stock, $0.01 par value, 50,000,000
shares authorized, 16,621,000 and
15,944,000 shares outstanding at
September 30, 1999 and 1998, respectively 166 159
Additional paid-in capital 409,272 398,794
Accumulated deficit (62,427) (70,955)
Unearned compensation (302) (793)
Notes receivable from sale of common stock (10,511) --
Accumulated other comprehensive income:
Minimum pension adjustment (2,131) (696)
--------- ---------
Total stockholders' equity 334,067 326,509
--------- ---------
Total liabilities and stockholders'
equity $ 698,019 $ 671,328
========= =========
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