-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WMZ7ty0RFBB9WZNKe8DoHNcnWccaTZtOzQbpwiHY9anERZssb18R/RIPIwW2fVxB prnM1yJaZxhOb2Gq/nVu1w== 0000934747-03-000054.txt : 20031021 0000934747-03-000054.hdr.sgml : 20031021 20031021084458 ACCESSION NUMBER: 0000934747-03-000054 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031021 ITEM INFORMATION: FILED AS OF DATE: 20031021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMONWEALTH INDUSTRIES INC/DE/ CENTRAL INDEX KEY: 0000934747 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 133245741 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25642 FILM NUMBER: 03948831 BUSINESS ADDRESS: STREET 1: 500 WEST JEFFERSON STREET STREET 2: PNC PLAZA - 19TH FLOOR CITY: LOUISVILLE STATE: KY ZIP: 40202-2823 BUSINESS PHONE: 502-589-8100 MAIL ADDRESS: STREET 1: 500 WEST JEFFERSON STREET STREET 2: PNC PLAZA - 19TH FLOOR CITY: LOUISVILLE STATE: KY ZIP: 40202-2823 FORMER COMPANY: FORMER CONFORMED NAME: COMMONWEALTH ALUMINUM CORP DATE OF NAME CHANGE: 19941228 8-K 1 jb8k3q03.txt 3Q2003 FORM 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 21, 2003 COMMONWEALTH INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 13-3245741 (State of incorporation) (I.R.S. Employer Identification No.) 500 West Jefferson Street PNC Plaza-19th Floor Louisville, Kentucky 40202-2823 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (502) 589-8100 ================================================================================ Item 12. Results of Operations and Financial Condition. See the following press release, dated October 21, 2003, announcing Commonwealth Industries, Inc.'s results of operations for the Third Quarter of 2003: Contact: Kim S. Knotts Director of Investor Relations (502) 588-8207 COMMONWEALTH INDUSTRIES REPORTS PROFITABLE THIRD QUARTER RESULTS LOUISVILLE, Ky.(October 21, 2003) - Commonwealth Industries, Inc.(NASDAQ/NM: CMIN) today announced results for the third quarter and nine-month period ended September 30, 2003. During the third quarter, Commonwealth experienced a resurgence in sales activity compared with the first half of 2003. Higher shipments, combined with higher material margins associated with product mix improvements and positive accounting effects related to metals hedging activities, enabled Commonwealth to return to profitability following losses in the first half of 2003. While Commonwealth experienced a 15% increase in net sales from the second quarter due to increased customer demand, net sales for the third quarter of 2003 declined 2% to $248.1 million from $253.9 million in the same period last year. Commonwealth's gross profit increased 34% from the second quarter, while the quarter declined 16% to $16.4 million compared with $19.4 million for the year-earlier period. Operating income for the third quarter increased 312% from the second quarter, but was 8% lower at $6.3 million versus $6.8 million in the third quarter of 2002. Net income for the quarter totaled $2.9 million or $0.18 per share versus $6.1 million or $0.38 per share in the prior-year period. Net income for the prior-year quarter included a $2.7 million favorable income tax accrual adjustment. For the first nine months of 2003, net sales declined 7% to $675.2 million from $727.5 million in the year-earlier period. Gross profit for the first nine months of 2003 declined 17% to $37.9 million from $45.6 million in the same period last year, while operating income declined 58% to $4.6 million from $10.8 million in the year-to-date 2002 period. The net loss for the first nine months of 2003 was $5.5 million or $0.34 per diluted share compared with a net loss of $22.6 million or $1.40 per diluted share in the prior-year period, including the impact of goodwill impairment charges recorded in the first quarter of 2002. The Company's net income before the cumulative effect of an accounting change for the first nine months of 2002 was $2.8 million or $0.17 per share. Commenting on the results, Mark V. Kaminski, President and Chief Executive Officer, said, "Obviously, we are pleased to report the Company's return to profitability and are encouraged by the advances we have made over the past three years to reduce our cost structure. This progress reflects great effort and dedication from all of our employees in working to improve Commonwealth's competitive position for the long term. "I'm also pleased to announce that through the dedicated efforts of our employees, Commonwealth is implementing a new information system designed to streamline every aspect of our business," he continued. "These changes are part of our continuous improvement effort to make the Company the most customer-friendly corporation, while operating at maximum efficiency. We look forward to the expanded capabilities this new tool brings to our future growth and service quality." While Commonwealth's aluminum shipments increased 10% from the second quarter, shipments declined 16% to 195.4 million pounds in the third quarter of 2003 from 232.8 million pounds in the year-earlier period. Shipments of electrical conduit and cable products declined 4% to 124.5 million feet from 130.3 million feet in the third quarter of 2002, but increased 12% from the second quarter 2003. For the year-to-date period, aluminum shipments declined 18% to 557.3 million pounds from 680.2 million pounds in the first nine months of 2002. Shipments of electrical conduit and cable products were down 6% to 350.9 million feet in the first nine months of 2003 from 374.8 million feet in the comparable period last year. The Company's gross profit margin for the third quarter increased to 6.6% from 5.7% from the second quarter 2003, but declined from 7.6% in the year-earlier period, reflecting lower gross profit margin in both its aluminum products business and its electrical products business, Alflex. In Commonwealth's aluminum products business, which accounted for approximately 89% of the Company's total sales in the first nine months of 2003, gross profit margin declined to 6.0% in the third quarter of 2003 from 6.5% in the same period last year as the effects of lower shipment volume more than offset improved material margins. Material margins in Commonwealth's aluminum business increased to $0.346 per pound in the third quarter from $0.322 per pound in the year-earlier period. Gross profit margin for Alflex declined to 11.2% in the third quarter of 2003 from 15.0% in the same period last year, reflecting lower shipment volume and lower material margins. Included in the third quarter 2003 gross profit is a gain of approximately $1.1 million or $0.07 per diluted share relating to certain aluminum hedge transactions. The Company determined that hedges in place during the quarter to reduce its exposure to aluminum price fluctuations did not meet certain "effectiveness" requirements set forth in Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"). Accordingly, as prescribed by the provisions of SFAS No. 133, the derivative instruments used as hedges were marked-to-market, giving rise to the $1.1 million gain. Selling, general and administrative expenses for the third quarter of 2003 declined 19% to $10.1 million from $12.5 million in the same quarter last year. Selling, general and administrative expenses totaled 4.1% as a percentage of net sales in the third quarter of 2003, down from 4.9% in the same period last year. For the year to date, selling, general and administrative expenses totaled 4.9% of net sales compared with 4.8% of net sales for the first nine months of 2002. Kaminski noted that the Company's results for the quarter, most noticeably the reduction accomplished in selling, general and administrative expenses and cost of goods sold, reflected the impact of cost-cutting measures implemented during the past year. These initiatives have reduced overall costs by $4.5 million thus far this year, including $2.0 million in the third quarter. The third quarter savings are reflected in reductions of approximately $1.0 million each in selling, general and administrative expenses and cost of goods sold. At September 30, 2003, Commonwealth had $403.2 million in total assets compared with $419.6 million a year ago. Stockholders' equity at September 30, 2003, was $99.3 million versus $117.2 million at the end of the third quarter of 2002. Debt-to-capitalization was 56% at September 30, 2003, compared with 52% the same time last year. Commonwealth Industries is one of North America's leading manufacturers of aluminum sheet for distributors and the transportation, construction, and consumer durables end-use markets. The Company has direct-chill casting facilities in Kentucky and continuous casting mini-mills in Ohio and California. Commonwealth also is a leading manufacturer of innovative electrical products through its Alflex operations in California and North Carolina. For more information about the Company, visit Commonwealth's web site at www.ciionline.com. A public, listen-only simulcast and replay of Commonwealth's third quarter conference call may be accessed at the Company's web site or at www.companyboardroom.com. The simulcast will begin at approximately 10:00 a.m. Eastern Time today, and a replay of the call will be available beginning at approximately noon Eastern Time today through November 21, 2003. Certain statements set forth above, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding the Company's and its subsidiaries' expected future financial position, results of operations, cash flows, funds from operations, dividends, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive positions and growth opportunities are forward-looking statements. 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 by such statements. Such factors may include, without limitation, the success of the implementation of the company-wide information system, the effect of global economic conditions, the ability to achieve the level of cost savings or productivity improvements anticipated by management, the effect (including possible increases in the cost of doing business) resulting from war or terrorist activities or political uncertainties, the ability to successfully implement new marketing and sales strategies, the impact of competitive products and pricing, product development and commercialization, availability and cost of critical raw materials, the ability to effectively hedge the cost of raw materials, capacity and supply constraints or difficulties, the success of the Company in implementing its business strategy, and other risks as detailed in the Company's various filings with the Securities and Exchange Commission. COMMONWEALTH INDUSTRIES, INC. Condensed Consolidated Statement of Operations (in thousands except per share data)
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ----------- ----------- ---------- ----------- Net sales $ 248,117 $ 253,933 $ 675,205 $ 727,519 Cost of goods sold 231,760 234,571 637,316 681,933 ----------- ---------- ----------- ---------- Gross profit 16,357 19,362 37,889 45,586 Selling, general and administrative expenses 10,094 12,524 33,311 34,779 ----------- ---------- ----------- ---------- Operating income 6,263 6,838 4,578 10,807 Other income (expense), net 423 332 1,331 818 Interest expense, net (3,728) (3,704) (11,215) (11,406) ----------- ---------- ----------- ---------- Income (loss) before income taxes and cumulative effect of change in accounting principle 2,958 3,466 (5,306) 219 Income tax expense (benefit) 50 (2,610) 150 (2,532) ----------- ---------- ----------- ---------- Income (loss) before cumulative effect of change in accounting principle 2,908 6,076 (5,456) 2,751 Cumulative effect of change in accounting principle -- -- -- (25,327) ----------- ---------- ----------- ---------- Net income (loss) $ 2,908 $ 6,076 $ (5,456) $ (22,576) =========== ========== =========== ========== Basic net income (loss) per share: Income (loss) before cumulative effect of change in accounting principle $ 0.18 $ 0.38 $ (0.34) $ 0.17 Cumulative effect of change in accounting principle -- -- -- (1.58) ----------- ----------- ----------- ----------- Net income (loss) $ 0.18 $ 0.38 $ (0.34) $ (1.41) =========== =========== =========== =========== Diluted net income (loss) per share: Income (loss) before cumulative effect of change in accounting principle $ 0.18 $ 0.38 $ (0.34) $ 0.17 Cumulative effect of change in accounting principle -- -- -- (1.57) ----------- ----------- ----------- ----------- Net income (loss) $ 0.18 $ 0.38 $ (0.34) $ (1.40) =========== =========== =========== =========== Weighted average shares outstanding: Basic 16,011 15,998 16,011 15,992 Diluted 16,034 16,092 16,011 16,100 Dividends paid per share $ -- $ 0.05 $ 0.10 $ 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, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Net sales volume: Aluminum products $ 221,213 $ 224,124 $ 598,598 $ 641,081 Electrical products $ 26,904 $ 29,809 $ 76,607 $ 86,438 Shipment volume: Aluminum products (millions lbs.) 195.4 232.8 557.3 680.2 Electrical products (millions ft.) 124.5 130.3 350.9 374.8 Production volume: Aluminum products (millions lbs.) 186.7 241.1 548.5 693.5 Electrical products (millions ft.) 114.3 129.4 342.2 374.4 Gross profit percent Aluminum products 6.0% 6.5% 4.9% 4.6% Electrical products 11.2% 15.0% 10.7% 17.2% Consolidated Company 6.6% 7.6% 5.6% 6.3% Operating income percent Aluminum products 4.9% 5.0% 3.6% 3.2% Electrical products 0.1% 3.8% (1.3%) 5.9% Consolidated Company 2.5% 2.7% 0.7% 1.5% Current ratio 2.8x 2.4x 2.8x 2.4x Interest coverage ratio (EBITDA excluding non-cash goodwill impairment charges of $25.3 million in 2002 to interest expense) 3.2x 3.4x 1.9x 2.4x Interest coverage ratio (EBITDA including non-cash goodwill impairment charges of $25.3 million in 2002 to interest expense) 3.2x 3.4x 1.9x 0.2x Return on average stockholders' equity (annualized) 11.7% 21.0% (7.2%) (25.2%) Debt-to-capitalization 56% 52% 56% 52% EBITDA (1) (excluding non-cash goodwill impairment charges of $25.3 million in 2002) $ 11,853 $ 12,466 $ 21,326 $ 27,565 EBITDA (1) (including non-cash goodwill impairment charges of $25.3 million in 2002) $ 11,853 $ 12,466 $ 21,326 $ 2,238 Note (1) Earnings before interest, income taxes, depreciation and amortization. See EBITDA Calculation on Page 6.
COMMONWEALTH INDUSTRIES, INC. EBITDA Calculation (1) (in thousands)
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Net cash (used in) provided by operating activities $ (2,389) $ (3,972) $ (475) $ 4,160 Adjustments to reconcile net cash (used in) provided by operations to net income (loss): Depreciation (5,167) (5,296) (15,417) (15,940) Amortization (222) (225) (666) (762) Goodwill impairment charges -- -- -- (25,327) Loss on disposal of property, plant and equipment (28) (115) (68) (196) Issuance of common stock in connection with stock awards -- -- (90) (170) Change in working capital and other net assets 10,714 15,684 11,260 15,659 ------------ ----------- ------------ ----------- Net income (loss) $ 2,908 $ 6,076 $ (5,456) $ (22,576) Add back depreciation 5,167 5,296 15,417 15,940 Add back amortization (2) -- -- -- -- Add back tax expense / subtract tax benefit 50 (2,610) 150 (2,532) Add back interest expense, net (2) 3,728 3,704 11,215 11,406 ----------- ----------- ----------- ----------- EBITDA including non-cash goodwill impairment charges 11,853 12,466 21,326 2,238 Add back non-cash goodwill impairment charges -- -- -- 25,327 ----------- ----------- ----------- ----------- EBITDA excluding non-cash goodwill impairment charges $ 11,853 $ 12,466 $ 21,326 $ 27,565 =========== =========== =========== =========== Note (1) EBITDA is used in the calculation of certain covenants under the Company's credit agreement. (2) Amortization of financing costs for the three months ended September 30, 2003 and 2002 of $222 and $225, respectively, and the nine months ended September 30, 2003 and 2002 of $666 and $762, respectively, is included in interest expense, net instead of in amortization in the above calculation.
COMMONWEALTH INDUSTRIES, INC. Condensed Consolidated Statement of Cash Flows (in thousands)
Nine Months Ended September 30, 2003 2002 ------------ ----------- Cash flows from operating activities: Net income (loss) $ (5,456) $ (22,576) Adjustments to reconcile net income (loss) to net cash (used in) provided by operations: Depreciation 15,417 15,940 Amortization 666 762 Goodwill impairment charges -- 25,327 Loss on disposal of property, plant and equipment 68 196 Issuance of common stock in connection with stock awards 90 170 Change in working capital and other net assets (11,260) (15,659) ------------ ----------- Net cash (used in) provided by operating activities (475) 4,160 ------------ ----------- Cash flows from investing activities: Purchases of property, plant and equipment (11,543) (10,089) Proceeds from sale of property, plant and equipment 158 23 ----------- ----------- Net cash (used in) investing activities (11,385) (10,066) ----------- ----------- Cash flows from financing activities: Increase in outstanding checks in excess of deposits -- 351 Proceeds from long-term debt 75,168 55,700 Repayments of long-term debt (71,978) (55,700) Repayments of notes receivable form sale of common stock -- 1,561 Cash dividends paid (1,601) (2,399) ----------- ----------- Net cash provided by (used in) financing activities 1,589 (487) ----------- ----------- Net (decrease) in cash and cash equivalents (10,271) (6,393) Cash and cash equivalents at beginning of period 13,211 6,393 ----------- ----------- Cash and cash equivalents at end of period $ 2,940 $ -- =========== ===========
COMMONWEALTH INDUSTRIES, INC. Condensed Consolidated Balance Sheet (in thousands except share data)
September 30, -------------------------- 2003 2002 ----------- ----------- Assets Cash and cash equivalents $ 2,940 $ -- Accounts receivable, net 312 137 Inventories 116,067 116,369 Net residual interest in receivables sold 81,633 100,185 Prepayments and other current assets 5,051 4,036 ----------- ----------- Total current assets 206,003 220,727 Property, plant and equipment, net 142,868 146,067 Goodwill 48,872 48,872 Other noncurrent assets 5,423 3,901 ----------- ----------- Total assets $ 403,166 $ 419,567 =========== =========== Liabilities Outstanding checks in excess of deposits $ -- $ 351 Accounts payable 47,151 54,264 Accrued liabilities 27,507 36,564 ----------- ----------- Total current liabilities 74,658 91,179 Long-term debt 128,190 125,000 Other long-term liabilities 3,921 5,511 Accrued pension benefits 27,043 3,529 Accrued postretirement benefits 70,085 77,121 ----------- ----------- Total liabilities 303,897 302,340 ----------- ----------- Commitments and contingencies -- -- Stockholders' Equity Common stock, $0.01 par value, 50,000,000 shares authorized, 16,010,971 and 15,997,651 shares outstanding at September 30, 2003 and 2002, respectively 160 160 Additional paid-in capital 405,703 405,613 Accumulated deficit (284,999) (283,507) Accumulated other comprehensive income: Minimum pension liability adjustment (21,391) -- Effects of cash flow hedges (204) (5,039) ----------- ----------- Total stockholders' equity 99,269 117,227 ----------- ----------- Total liabilities and stockholders' equity $ 403,166 $ 419,567 =========== ===========
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COMMONWEALTH INDUSTRIES, INC. By /s/ Mark V. Kaminski --------------------------------------- Mark V. Kaminski, President and Chief Executive Officer Date: October 21, 2003 -----END PRIVACY-ENHANCED MESSAGE-----