-----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, S5GDsInPOmy2wmtXBeR/rYwmwgEAgXHOmUMkAU9K/ooi3bqFzITWc4YHofc4FoYg GtEQ8FRr3JnrWjD3W8YehA== 0000891554-01-502777.txt : 20010516 0000891554-01-502777.hdr.sgml : 20010516 ACCESSION NUMBER: 0000891554-01-502777 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY ALUMINUM CO CENTRAL INDEX KEY: 0000949157 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 133070826 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27918 FILM NUMBER: 1639310 BUSINESS ADDRESS: STREET 1: 2511 GARDEN ROAD STREET 2: BUILDING A SUITE 200 CITY: MONTEREY STATE: CA ZIP: 93940 BUSINESS PHONE: 3042736000 MAIL ADDRESS: STREET 1: 2511 GARDEN ROAD STREET 2: BUILDING A SUITE 200 CITY: MONTEREY STATE: CA ZIP: 93940 10-Q 1 d25745_10-q.txt QUARTERLY REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001. Commission file number 0-27918 Century Aluminum Company (Exact name of Registrant as specified in its Charter) Delaware 13-3070826 (State of Incorporation) (IRS Employer Identification No.) 2511 Garden Road Building A, Suite 200 Monterey, California 93940 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (831) 642-9300 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [__] The registrant had 20,477,954 shares of common stock outstanding at May 1, 2001. CENTURY ALUMINUM COMPANY Index to Quarterly Report on Form 10-Q For the Quarter Ended March 31, 2001 Part I -- Financial Information
Item 1 -- Financial Statements Page Number Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000.......................................... 1 Consolidated Statements of Operations for the three months ended March 31, 2001 and 2000.................................. 2 Consolidated Statement of Shareholders' Equity as of March 31, 2001 and 2000........................................ 3 Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000.................................. 4 Notes to the Consolidated Financial Statements................. 5-13 Item 2 -- Management's Discussion and Analysis of Financial Condition and Results of Operations............................ 14-19 Item 3 -- Quantitative and Qualitative Disclosures About Market Risk..... 19-20 Part II -- Other Information Item 1 -- Legal Proceedings.............................................. 21 Item 4 -- Submission of Matters to a Vote of Stockholders................ 21 Item 6 -- Exhibits and Reports on Form 8-K............................... 21 Signatures............................................................... 22 Exhibit Index............................................................ 23
CENTURY ALUMINUM COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
March 31, December 31, 2001 2000 -------- ------------ ASSETS CURRENT ASSETS: Cash ...................................................................... $ 27,019 $ 32,962 Accounts receivable, trade - net .......................................... 36,282 31,119 Due from affiliates ....................................................... 18,032 15,672 Inventories ............................................................... 43,902 44,081 Prepaid and other assets .................................................. 11,307 9,487 -------- -------- Total current assets ................................................. 136,542 133,321 PROPERTY, PLANT AND EQUIPMENT -- NET ........................................ 184,342 184,526 OTHER ASSETS ................................................................ 16,773 15,923 -------- -------- TOTAL .................................................................... $337,657 $333,770 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable, trade ................................................... $ 23,714 $ 30,072 Due to affiliates ......................................................... 4,723 3,985 Accrued and other current liabilities ..................................... 14,265 17,739 Accrued employee benefits costs - current portion ......................... 4,824 4,824 -------- -------- Total current liabilities ............................................ 47,526 56,620 -------- -------- ACCRUED PENSION BENEFITS COSTS - Less current portion ....................... 3,634 3,656 ACCRUED POSTRETIREMENT BENEFITS COSTS - Less current portion ................ 43,303 42,170 OTHER LIABILITIES ........................................................... 32,880 28,685 -------- -------- Total noncurrent liabilities ............................................. 79,817 74,511 -------- -------- SHAREHOLDERS' EQUITY: Common stock (one cent par value, 50,000,000 shares authorized; 20,477,954 shares outstanding at March 31, 2001 and 20,339,203 at December 31, 2000) 205 203 Additional paid-in capital ................................................ 167,971 166,184 Accumulated other comprehensive income .................................... 3,757 -- Retained earnings ......................................................... 38,381 36,252 -------- -------- Total shareholders' equity ........................................... 210,314 202,639 -------- -------- TOTAL ................................................................ $337,657 $333,770 ======== ========
See notes to consolidated financial statements 1 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Per Share Amounts) (Unaudited) Three months ended March 31, --------- -------- 2001 2000 --------- -------- NET SALES: Third-party customers ....................... $ 84,090 $ 71,783 Related parties ............................. 26,600 24,666 --------- -------- 110,690 96,449 COST OF GOODS SOLD ............................ 102,228 88,282 --------- -------- GROSS PROFIT .................................. 8,462 8,167 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ..................... 3,591 3,385 --------- -------- OPERATING INCOME .............................. 4,871 4,782 INTEREST INCOME (EXPENSE) -- Net .............. 350 1,214 NET GAIN (LOSS) ON FORWARD CONTRACTS .......... (176) 2,725 OTHER INCOME (EXPENSE) ........................ (121) 71 --------- -------- INCOME BEFORE INCOME TAXES .................... 4,924 8,792 INCOME TAX EXPENSE ............................ (1,773) (3,165) --------- -------- NET INCOME .................................... $ 3,151 $ 5,627 ========= ======== EARNINGS PER COMMON SHARE Basic ........................................ $ 0.15 $ 0.28 --------- -------- Diluted ...................................... $ 0.15 $ 0.28 --------- -------- WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic ........................................ 20,360 20,339 ========= ======== Diluted ...................................... 20,401 20,450 ========= ======== DIVIDENDS PER COMMON SHARE .................... $ 0.05 $ 0.05 ========= ======== See notes to consolidated financial statements 2 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In Thousands, Except Per Share Amounts) (Unaudited)
Additional Total Comprehensive Common Paid-in Retained Shareholders' Income Stock Capital Earnings Equity ------ ----- ------- -------- ------ Balance, December 31, 1999 $202 $164,409 $15,117 $179,728 Comprehensive Income -- 2000 Net Income - 2000 $5,627 5,627 5,627 Other Comprehensive Income -- Unrealized gain on financial instruments, net of tax of $ - -- -- ------ Total comprehensive income $5,627 Cash dividends - Common, $0.05 per share (1,119) (1,119) Issuance of Common Stock Compensation plans 1 1,775 1,776 ----- -------- ------- -------- Balance, March 31, 2000 $203 $166,184 $19,625 $186,012 ===== ======== ======= ======== Balance, December 31, 2000 $203 $166,184 $36,252 $202,639 Comprehensive Income - 2001 Net Income - 2001 $3,151 3,151 3,151 Other Comprehensive Income - Unrealized gain on financial instruments, net of tax of $2,114 3,757 3,757 ------- Total comprehensive income $6,908 Cash dividends - Common, $0.05 per share (1,022) (1,022) Issuance of Common Stock Compensation plans 2 1,787 1,789 ----- -------- ------- -------- Balance, March 31, 2001 $205 $167,971 $38,381 $210,314 ===== ======== ======= ========
See notes to consolidated financial statements 3 CENTURY ALUMINUM COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three months ended March 31, ---------------------- 2001 2000 -------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ..................................................... $ 3,151 $ 5,627 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization ............................... 2,986 2,851 Deferred income taxes ....................................... 1,774 3,865 Pension and other postretirement benefits ................... 1,110 481 Inventory market adjustment ................................. -- 1,631 Change in operating assets and liabilities: Accounts receivable, trade -- net ........................ (5,163) (3,519) Due from affiliates ...................................... 2,145 2,309 Inventories .............................................. 180 5,892 Prepaids and other assets ................................ (786) 294 Accounts payable, trade .................................. (6,357) (3,577) Due to affiliates ........................................ 738 (5,640) Accrued and other current liabilities .................... (1,711) 11,255 Other -- net ............................................. (207) (528) -------- --------- Net cash provided by (used in) operating activities ......... (2,140) 20,941 -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment ...................... (2,803) (1,543) Disposal of fixed assets ....................................... 22 -- Restricted cash deposits ....................................... -- (2) -------- --------- Net cash used in investing activities ..................... (2,781) (1,545) -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings ..................................................... -- -- Repayment of borrowings ........................................ -- -- Dividends ...................................................... (1,022) (1,119) -------- --------- Net cash used in financing activities ..................... (1,022) (1,119) -------- --------- NET INCREASE (DECREASE) IN CASH ................................... (5,943) 18,277 CASH, BEGINNING OF PERIOD ......................................... 32,962 85,008 -------- --------- CASH, END OF PERIOD ............................................... $ 27,019 $ 103,285 ======== =========
See notes to consolidated financial statements 4 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) 1. General Effective April 1, 2001, Century Aluminum Company ("Century" or the "Company") completed the acquisition of a subsidiary, from the Southwire Company, which owned NSA Ltd. ("NSA"), an entity that operates an aluminum reduction operation in Hawesville, Kentucky (the "Hawesville facility"). The purchase price was $460,000 plus the assumption of $7,800 in industrial revenue bonds and is subject to certain post closing adjustments. Simultaneous with the closing, Glencore ("Glencore International AG", the "Glencore Group" or "Glencore") effectively purchased a 20% undivided interest in the Hawesville facility for $99,000. To support the Company's financing of the transaction, Glencore purchased $25,000 of convertible preferred stock of the Company. The stock has a coupon of 8% and is convertible into the Company's common stock at $17.92 per share. Century is a holding company whose principal subsidiaries are Century of West Virginia and Century of Kentucky, Inc. Century of West Virginia operates a primary aluminum reduction facility in Ravenswood, West Virginia. Century of West Virginia, through its wholly-owned subsidiary Berkeley Aluminum, Inc. ("Berkeley"), holds a 49.67% interest in a partnership which operates a primary aluminum reduction facility in Mt. Holly, South Carolina ("MHAC") and a 49.67% undivided interest in the property, plant, and equipment comprising MHAC. Century of Kentucky, Inc. owns the reduction operations at the Hawesville facility. Glencore is a major shareholder of Century. In addition to the $25,000 of convertible preferred shares, Glencore owns 7,925,000 common shares, or 39.0% of the common shares outstanding of the Company. Century and the Glencore Group enter into various transactions such as the purchase and sale of primary aluminum, alumina and metals risk management. The accompanying unaudited interim consolidated financial statements of the Company should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2000. In management's opinion, the unaudited interim consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, which are necessary for a fair presentation, in all material respects, of financial results for the interim periods presented. Operating results for the first three months of 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 5 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) 2. Inventories Inventories consist of the following:
March 31, 2001 December 31, 2000 -------------- ----------------- Raw materials .......................................... $26,521 $27,784 Work-in-process ........................................ 3,246 3,286 Finished goods ......................................... 4,622 3,859 Operating and other supplies ........................... 9,513 9,152 ------- ------- $43,902 $44,081 ======= =======
At March 31, 2001 and December 31, 2000, approximately 78% and 79%, respectively, of inventories were valued at the lower of last-in, first-out ("LIFO") cost or market. The excess of the first-in, first-out ("FIFO") cost over LIFO cost (or market, if lower) of inventory was approximately $360 and $490 at March 31, 2001 and December 31, 2000, respectively. 3. Debt Effective April 1, 2001, in connection with the acquisition of the Hawesville facility, the Company entered into a $100,000 senior secured revolving credit facility (the "Credit Facility") with a syndicate of banks. The revolving credit facility will be used to finance the NSA acquisition and for working capital, capital expenditures and other general corporate purposes. The borrowing base for purposes of determining availability will be based upon certain eligible inventory and receivables. The Company will be subject to customary covenants, including restrictions on capital expenditures, additional indebtedness, liens, guarantees, mergers and acquisitions, and dividends. There were no outstanding borrowings as of March 31, 2001. Effective April 1, 2001, the Company issued $325,000 of 11 3/4 percent senior secured first mortgage notes due 2008 to certain institutional investors to be used in connection with Century's acquisition of NSA. The notes were sold in a private placement under Rule 144A of the Securities Act of 1933. 6 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) 4. Contingencies and Commitments Environmental Contingencies The Company spends significant amounts for compliance with environmental laws and regulations. While the Company believes, based upon information currently available to management, that it will not have liabilities in this regard which are likely to have a material adverse effect on the Company, there can be no assurance that future remedial requirements at currently and formerly owned or operated properties or adjacent areas will not result in a material adverse effect on the Company's financial condition, results of operations or liquidity. The 1990 amendments to the Clean Air Act impose stringent standards on aluminum industry air emissions. These amendments will affect the operations of the Company's facilities. Technology-based standards relating to smelters and carbon plants have been promulgated. However, the Company cannot predict the total expenditures the Company will incur to comply with these standards. The Company's general capital expenditure plan includes certain projects designed to improve the Company's compliance with respect to both known and anticipated requirements. Pursuant to an Environmental Protection Agency ("EPA") order issued in 1994 under Section 3008(h) (the "3008(h) order") of the Resource Conservation and Recovery Act ("RCRA"), Century of West Virginia is performing remediation measures at a former oil pond area and in connection with cyanide contamination in the groundwater. Century of West Virginia also conducted and, in December 1999, submitted to the EPA a RCRA facility investigation ("RFI") evaluating other areas that may have contamination exceeding certain levels. After the RFI is complete, Ravenswood will have 60 days within which to submit a corrective measures study ("CMS") to the EPA proposing means of remediating areas that may require cleanup. If any cleanup were required, EPA would issue a subsequent order. Ravenswood believes this process will not be completed before the end of 2001. The Company is aware of some environmental contamination at Ravenswood, and it is likely cleanup activities will be required in two areas of the facility. Ravenswood believes a significant portion of this contamination is attributable to the operations of a prior owner and will be the financial responsibility of that owner, as discussed below. Prior to the Company's acquisition of Ravenswood, Kaiser Aluminum & Chemical Corporation ("Kaiser") owned and operated the facility for approximately thirty years. Many of the conditions which Ravenswood investigated under the 3008(h) order exist because of activities which occurred during Kaiser's ownership and operation. With respect to those conditions, Kaiser will be responsible for the costs of required cleanup under the terms of the Kaiser Purchase Agreement. In addition, Kaiser retained title to certain land within the Ravenswood premises and retains full responsibility for those areas. Under current environmental laws, the Company may be required to remediate any contamination which was discharged from areas which Kaiser owns or previously owned or operated. However, if such remediation is required, the Company believes Kaiser will be liable for some or all of the costs thereof pursuant to the Kaiser Purchase Agreement. 7 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) In connection with the sale to Pechiney of its fabricating businesses, the Company and Century of West Virginia provided Pechiney with certain indemnifications. Those include the indemnification rights Century of West Virginia and the Company, respectively, have under the Kaiser Purchase Agreement (with respect to the real property transferred to Pechiney) and the Company's Cast Plate, Inc., Stock Purchase Agreement with Alcoa. The Pechiney Purchase Agreement provides further indemnifications, which are limited, in general, to pre-closing conditions which were not disclosed to Pechiney or to off site migration of hazardous substances from pre-closing acts or omissions of Century of West Virginia. Environmental indemnifications under the Pechiney Purchase Agreement expire September 20, 2005. They are payable only to the extent they exceed $2,000. The Company, together with all other past and present owners of an alumina facility at St. Croix, Virgin Islands, has entered into an Administrative Order on Consent with the Environmental Protection Agency ("Order") pursuant to which the signatories have agreed to carry out a Hydrocarbon Recovery Plan to remove and manage oil floating on top of groundwater underlying the facility. Recovered hydrocarbons and groundwater will be delivered to the adjacent petroleum refinery where they will be received and managed. The owner of the petroleum refinery will compensate the other signatories by paying them the fair market value for the petroleum recovered. Lockheed Martin Corporation ("Lockheed"), which sold the facility to one of the Company's affiliates, Virgin Islands Alumina Corporation ("Vialco") in 1989, has tendered indemnity and defense of this matter to Vialco pursuant to terms of the Lockheed -Vialco Asset Purchase Agreement. The Company also gave certain environmental indemnity rights to St. Croix Alumina, LLC ("St. Croix"), an indirect affiliate of Alcoa, Inc., when it sold the facility to St. Croix. Those rights extend only to environmental conditions arising from Vialco's operation of the facility and then only after St. Croix has spent $300 on such conditions. Management does not believe Vialco will have any indemnification obligation to St. Croix arising out of the Order. Further, management does not believe Vialco's liability under this Order will have a material adverse effect on the Company's financial condition, results of operations, or liquidity. It is the Company's policy to accrue for costs associated with environmental assessments and remedial efforts when it becomes probable that a liability has been incurred and the costs can be reasonably estimated. The aggregate environmental related accrued liabilities were $900 at March 31, 2001 and December 31, 2000, respectively. All accruals have been recorded without giving effect to any possible recoveries. With respect to ongoing environmental compliance costs, including maintenance and monitoring, such costs are expensed as incurred. Because of the issues and uncertainties described above, and the Company's inability to predict the requirements of the future environmental laws, there can be no assurance that future capital expenditures and costs for environmental compliance will not have a material adverse effect on the Company's future financial condition, results of operations, or liquidity. Based upon all available information, management does not believe that the outcome of these environmental matters, or environmental matters concerning Mt. Holly, will have a material adverse effect on the Company's financial condition, results of operations, or liquidity. 8 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) Legal Contingencies While Century of West Virginia has been a named defendant (along with many other companies) in approximately 2,362 civil actions brought by employees of third party contractors who allege asbestos-related diseases arising out of exposure at facilities where they worked, including Ravenswood, all of those actions relating to the Ravenswood facility have been settled as to the Company and as to Kaiser. Approximately 10 of those civil actions alleged exposure during the period the Company owned the Ravenswood facility, and the Company has agreed to settlements aggregating less than $10. The Company is awaiting receipt of final documentation of those settlements and entry of dismissal orders. Management believes there are no unsettled asbestos cases pending against the Company. The Company has pending against it or may be subject to various other lawsuits, claims and proceedings related primarily to employment, commercial, environmental and safety and health matters. Although it is not presently possible to determine the outcome of these matters, management believes their ultimate disposition will not have a material adverse effect on the Company's financial condition, results of operations, or liquidity. In August 1999, an illegal, one-day work stoppage temporarily shut down one of the Company's four production lines at the Century of West Virginia facility. The cost of this work stoppage is estimated to be approximately $10,000 including equipment damaged as a result of the production line shutdown. During 2000, the Company filed a claim with its insurance carrier for business interruption and equipment damage relative to the work stoppage and has received partial settlement of approximately $6,100. Commitments To fulfill its power requirements at Ravenswood, the Company purchases electricity from Ohio Power at a fixed price pursuant to a power supply agreement, which terminates on July 31, 2003. Power for Mt. Holly is provided under a contract with the South Carolina Public Service Authority. That contract, which provides fixed pricing but is subject to modification for fuel adjustments and demand sales, terminates on December 31, 2005. On January 23, 1996, the Company and the Pension Benefit Guaranty Corporation ("PBGC") entered into an agreement (the "PBGC Agreement") which provided that the Company make scheduled cash contributions to its pension plan for hourly employees in 1996, 1997, 1998 and 1999. The Company made its scheduled contributions for each of the years. As part of the agreement, the Company had granted the PBGC a first priority security interest in (i) the property, plant and equipment at its Century of West Virginia facility and (ii) all of the outstanding shares of Berkeley. On February 2, 2001 the agreement with the PBGC, dated January 23, 1996, was terminated and the PBGC agreed to release its first priority security interest. 9 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) Other Century of West Virginia's hourly employees, which comprise 81% of the Company's workforce are represented by the United Steelworkers of America and are currently working under a four-year labor agreement effective June 1, 1999. 5. Forward Delivery Contracts and Financial Instruments As a producer of primary aluminum products, the Company is exposed to fluctuating raw material and primary aluminum prices. The Company routinely enters into fixed and market priced contracts for the sale of primary aluminum and the purchase of raw materials in future periods. In connection with the sale of the aluminum fabricating businesses in September 1999, the Company entered into a Molten Aluminum Purchase Agreement (the "Metal Agreement") with Pechiney, that shall continue in effect until July 31, 2003 with provisions for extension. Pursuant to the Metal Agreement, Pechiney has agreed to purchase and the Company has agreed to deliver, on a monthly basis, at least 23.0 million pounds and no more than 27.0 million pounds of molten aluminum. The selling price is determined by a market-based formula. Subsequent to the purchase of an additional 23% interest in MHAC from Xstrata, effective April 1, 2000, the Company entered into a ten-year agreement with Glencore (the "Glencore Metal Agreement") to sell approximately 110.0 million pounds of primary aluminum products per year. Selling prices for the first two years are determined by a market-based formula. The remaining eight years of the contract are at a fixed price as defined in the agreement. Exclusive of the Metal Agreement and the Glencore Metal Agreement, the Company had forward delivery contracts to sell 54.7 million pounds and 50.3 million pounds of primary aluminum at March 31, 2001 and December 31, 2000, respectively. Of these forward delivery contracts, 14.4 million pounds and 14.7 million pounds at March 31, 2001 and December 31, 2000, respectively, were with the Glencore Group. The Company had no forward commitments to purchase aluminum at March 31, 2001 or December 31, 2000. The Company entered into a long-term supply agreement to purchase 936.0 million pounds of alumina annually, beginning January 1, 1996. That agreement will terminate at the end of 2001 and be replaced by new long-term supply agreements with Glencore. These new agreements provide for a fixed quantity of alumina at prices determined by a market-based formula. In addition, as part of its acquisition of an additional 23% interest in Mt. Holly, the Company assumed a supply agreement with Glencore for the alumina raw material requirements relative to the additional interest. This alumina supply agreement terminates in 2008 and is priced with a market-based formula. To mitigate the volatility in its market priced forward delivery contracts, the Company enters into fixed price financial instruments, which settle in cash in the period corresponding to the intended delivery dates of the forward delivery contracts. At March 21, 2001 and December 31, 2000, the Company had financial instruments, primarily with the Glencore Group, for 457.1 million and 453.5 million pounds, respectively. These financial instruments are scheduled for settlement at various dates in 2001 through 2003. 10 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) 6. Supplemental Cash Flow Information Three Months Ended March 31, ------------------------ 2001 2000 ------- --------- Cash paid for: Interest ........................ $ 1 $ 93 Income taxes .................... 282 89 Cash received for: Interest ......................... 433 1,329 Income tax refunds ............... 30 12,865 7. Acquisitions Effective April 1, 2001, the Company completed the acquisition of a subsidiary from the Southwire Company that owned NSA, an entity that operates a 237,000 metric ton per year aluminum reduction operation in Hawesville, Kentucky. The purchase price was $460,000 plus the assumption of $7,800 in industrial revenue bonds and is subject to certain post closing adjustments. Simultaneous with the closing, Glencore effectively purchased a 20% undivided interest in the Hawesville facility for $99,000. To support the Company's financing of the transaction, Glencore purchased $25,000 in convertible preferred stock of the Company. The stock has a coupon of 8% and is convertible into the Company's common stock at $17.92 per share. Financing information for this acquisition can be found in note 3 of the March 31, 2001 financial statements. Effective April 1, 2000, Century, through its wholly-owned indirect subsidiary Berkeley, increased its 26.67% undivided interest in certain property, plant and equipment of the Mt. Holly Facility to 49.67% by purchasing a 23% undivided interest from Xstrata AG ("Xstrata") a publicly traded Swiss company. As part of the purchase, Berkeley also acquired Xstrata's 23% interest in the general partnership which operates and maintains the Mt. Holly Facility (the "Operating Partnership", and together with the Mt. Holly Facility, the "Mt. Holly Assets"). Prior to Berkeley's purchase of the Mt. Holly Assets, it held a 26.67% undivided interest in the Mt. Holly Facility and the Operating Partnership. Glencore is a major shareholder of Xstrata. The purchase was completed pursuant to an asset purchase agreement dated as of March 31, 2000 (the "Mt. Holly Purchase Agreement") by and between Berkeley and Xstrata. The aggregate purchase price for the Mt. Holly Assets was $94,734. Under the terms of the Mt. Holly Purchase Agreement, Berkeley agreed to assume certain of Xstrata's obligations and liabilities relating to the Mt. Holly Assets. The terms of the Mt. Holly Purchase Agreement were determined through arms'-length negotiations between the parties. The Company used available cash to complete the purchase. The acquisition was accounted for using the purchase method. 11 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) The following schedule represents the unaudited pro forma results of operations for the three months ended March 31, 2000, assuming the acquisition of the Mt. Holly (SC) assets occurred on January 1, 2000. The unaudited pro forma amounts may not be indicative of the results that actually would have occurred if the transaction described above had been completed and in effect for the periods indicated or the results that may be obtained in the future. The unaudited pro forma amounts only include the effects of the Glencore Metal Agreement after April 1, 2000. 2000 ---- (unaudited) Net sales $ 114,530 Net income 4,901 Earnings per share $ 0.24 8. New Accounting Standard Effective January 1, 2001, the Company adopted SFAS 133, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. All derivatives, whether designated in hedging relationships or not, are required to be recorded on the balance sheet at fair value. If the derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of the changes in the fair value of the cash flow hedges are recognized in earnings. Effectiveness of hedges is measured by a historical and probable future high correlation of changes in the fair value of the hedging instrument with the changes in the fair value of the hedged item. If the correlation ceases to exist, hedge accounting will be terminated and gains and losses on forward sales contracts will be recorded as net gains (losses) on forward contracts in the Statement of Operations. As of January 1, 2001, the Company's financial instruments were designated as cash flow hedges. As these financial instruments had not been recorded as hedges prior to the adoption of SFAS 133, there was no transition adjustment upon adoption. As of March 31, 2001, accounts receivable and other long-term assets included $5,895, and accrued and other liabilities included $2,138, representing the fair value of the Company's financial instruments. Based on the fair value of the Company's financial instruments as of March 31, 2001, accumulated other comprehensive income of $3,597 is expected to be reclassified to earnings over the next twelve month period. 12 CENTURY ALUMINUM COMPANY Notes to Consolidated Financial Statements Three Month Period Ended March 31, 2001 and 2000 (Dollars in Thousands) (Unaudited) The Financial Accounting Standards Boards' (the "FASB") Derivatives Implementation Group (the "DIG") continues to identify and provide guidance on various implementation issues related to SFAS 133 and 138 that are in varying stages of review and clearance by the DIG and FASB. The Company has not determined if the ultimate resolution of those issues would have a material impact on its financial statements. 13 FORWARD-LOOKING STATEMENTS -- CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995. This quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as "expects," "anticipates," "forecasts," "intends," "plans," "believes," "projects," and "estimates" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements include, but are not limited to, statements regarding new business and customers, contingencies, environmental matters and liquidity under "Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations," "Part I, Item 3 - Quantitative and Qualitative Disclosures About Market Risk" and "Part II, Item 1 Legal Proceedings." These statements are not guarantees of future performance and involve risks and uncertainties and are based on a number of assumptions that could ultimately prove to be wrong. Actual results and outcomes may vary materially from what is expressed or forecast in such statements. Among the factors that could cause actual results to differ materially are general economic and business conditions, changes in demand for the Company's products and services or the products of the Company's customers, fixed asset utilization, competition, the risk of technological changes and the Company's competitors developing more competitive technologies, the Company's dependence on certain important customers, the availability and terms of needed capital, risks of loss from environmental liabilities, and other risks detailed in this report. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The following information should be read in conjunction with the Company's 2000 Form 10-K along with the consolidated financial statements and related footnotes included within the Form 10-K. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Acquisitions Effective April 1, 2001, the Company completed the acquisition of a subsidiary from the Southwire Company which owned NSA, an entity that operates a 237,000 metric ton per year aluminum reduction operation in Hawesville, Kentucky. The purchase price was $460,000 plus the assumption of $7,800 in industrial revenue bonds and is subject to certain post closing adjustments. Simultaneous with the closing, Glencore effectively purchased a 20% undivided interest in the Hawesville facility for $99,000. To support the Company's financing of the transaction, Glencore purchased $25,000 in convertible preferred stock of the Company. The stock has a coupon of 8% and is convertible into the Company's common stock at $17.92 per share. On April 1, 2000, the Company purchased an additional 23% interest in Mt. Holly for cash consideration of $95.0 million, subject to certain post-closing adjustments. This purchase increased Century's ownership to 49.67%. Mt. Holly has the capacity to produce up to 480 million pounds of primary aluminum per year. Century's ownership represents 238.4 million pounds of this capacity. 14 Overview The Company is a manufacturer of primary aluminum. The aluminum industry is highly cyclical and the market price of aluminum (which trades as a commodity) has been volatile from time to time. The principal elements comprising the Company's cost of goods sold are raw materials, energy and labor. The major raw materials and energy sources used by the Company in its production process are alumina, coal tar, pitch, petroleum coke, aluminum fluoride and electricity. The Company produces t-ingot, rolling ingot, extrusion billet and foundry ingot. A significant portion of the Company's shipments are to a related party (the Glencore Group). Because a majority of the Company's costs are fixed, the Company's results of operations are sensitive to changes in the market price of aluminum and to fluctuations in volume. The market price for primary aluminum remained relatively stable during the first quarter of 2001 and the Company's shipments were essentially level with the fourth quarter of 2000. A shortage of electrical power at affordable rates is continuing to cause a number of the Company's competitors to curtail production at certain of their reduction facilities. Due to the Company's use of fixed contract pricing for its power needs, no such curtailment is anticipated at either of the Company's facilities. Results of Operations Century's financial highlights include (in thousands, except per share data): Three months ended March 31, -------------------------- 2001 2000 -------- -------- Net sales Third-party customers $ 84,090 $ 71,783 Related party customers 26,600 24,666 -------- -------- Total $110,690 $ 96,449 ======== ======== Net income $ 3,151 $ 5,627 Earnings per share - basic $ 0.15 $ 0.28 15 Net sales. Net sales for the three months ended March 31, 2001 increased $14.3 million to $110.7 million from $96.4 million for the same period in 2000. Shipments were 16.5% higher in the first quarter of 2001 as compared to the first quarter of 2000 due to the additional Mt. Holly (SC) capacity acquired from Xstrata, effective April 1, 2000. Revenue per pound decreased by $0.01 in the first quarter 2001 to $0.74 as compared to the same period in 2000. Gross profit. Gross profit for the quarter ended March 31, 2001 increased $0.3 million to $8.5 million from $8.2 million for the three months ended March 31, 2000. The 2001 first quarter included a $2.2 million charge for a non-recurring electrical power surcharge at the Company's Mt. Holly (SC) reduction plant. The 2000 first quarter included a $1.6 million charge for lower of cost or market inventory reserves. Excluding these two items, the quarter ended March 31, 2001 gross profit was approximately 10 percent higher than in the year-ago period. Selling, general and administrative expenses. For the three months ended March 31, 2001 selling, general and administrative expenses increased slightly to $3.6 million from $3.4 million for the same period in 2000. Interest Income/Expense. Interest income for the three months ended March 31, 2001 was $0.4 million compared with interest income of $1.2 million for the three months ended March 31, 2000. The change between periods was a result of using available cash to fund the purchase of a 23% undivided interest in Mt. Holly (SC) from Xstrata during the second quarter of 2000. See footnote 7 included in the March 31, 2001 financial statements. Net Gains/Losses on Forward Contracts. The Company recorded a loss on forward contracts for the three months ended March 31, 2001 of $0.2 million as compared to the $2.7 million gain reported for the three months ended March 31, 2000. The Company adopted SFAS No.133, "Accounting for Derivative Instruments and Hedging Activities" as amended by SFAS No.138 effective January 1, 2001. Most of the Company's forward delivery contracts qualify for the normal purchase and sale exemption provided by SFAS No.138. The Company's forward financial sales contracts, which were previously recorded at fair value through the statement of operations, have been designated as cash flow hedges as of January 1, 2001. Most unrealized gains and losses on forward sales contracts will no longer be reported in the statement of operations, but rather will be reported in other comprehensive income on a net of tax basis and reclassified into earnings when realized. Tax Provision. Income tax expense for the first quarter of 2001 was $1.8 million compared to a tax expense of $3.2 million for the first three months of 2000. The reduced expense for the three months in 2001 resulted from the Company's reduced pre-tax earnings as compared to the same period in 2000. Net Income/Loss. The Company earned $3.2 million during the three-month period ended March 31, 2001 compared to $5.6 million during the comparable 2000 period. The decrease in income was a result of a non-recurring power surcharge, reduced interest income, and the adoption of SFAS No.133 and SFAS No.138 in the first quarter of 2001 as compared to the same period in 2000. 16 Liquidity and Capital Resources Working capital amounted to $89.0 million and $76.7 million at March 31, 2001 and December 31, 2000, respectively. The Company's liquidity requirements arise primarily from working capital needs, capital investments and debt service. The Company's statements of cash flows for the three months ended March 31, 2001 and 2000 are summarized below (dollars in thousands): 2001 2000 -------- -------- Net cash from (used in) operating activities ..... $ (2,140) $ 20,941 Net cash from (used in) investing activities ..... (2,781) (1,545) Net cash from (used in) financing activities ..... (1,022) (1,119) -------- -------- Increase (decrease) in cash ...................... $ (5,943) $ 18,277 ======== ======== Operating activities used $2.1 million in net cash during the first three months of 2001. Increases in accounts receivable and reductions in trade payables were the primary reasons for the use of cash in the first quarter 2001. In the first three months of 2000, operating activities generated $20.9 million in net cash. Contributing to the cash generated was a reduction in the investment in inventory and a tax refund of $12.9 million. The Company's net cash used for investing activities was $2.8 million during the first three months of 2001. The cash was used for capital expenditures. The Company's net cash used in investing activities was $1.5 million during the first three months of 2000, primarily for capital expenditures. The Company used the capital expenditures in 2001 and 2000 to purchase, modernize or upgrade production equipment, maintain facilities and comply with environmental regulations. Net cash used in financing activities was $1.0 million during the first three months of 2001, which was used to fund the dividend payment for the first quarter of 2001. The net cash used by financing activities during the first three months of 2000 was $1.1 million, which was used to fund the dividend payment for the first quarter 2000. Effective April 1, 2001, the Company completed the acquisition of a subsidiary from the Southwire Company which owned NSA, an entity that operates a 237,000 metric ton per year aluminum reduction operation in Hawesville, Kentucky. The purchase price was $460,000 plus the assumption of $7,800 in industrial revenue bonds and is subject to certain post closing adjustments. Simultaneous with the closing, Glencore effectively purchased a 20% undivided interest in the Hawesville facility for $99,000. To support the Company's financing of the transaction, Glencore purchased $25,000 of convertible preferred stock of the Company. The stock has a coupon of 8% and is convertible into the Company's common stock at $17.92 per share. Effective April 1, 2001, the Company issued $325.0 million of 11 3/4 percent senior secured first mortgage notes due 2008 to certain institutional investors to be used in connection with Century's 80% share in NSA, a 237,000 metric ton per year aluminum reduction facility in Hawesville, Kentucky from Southwire Company. The notes were sold in a private placement under Rule 144A of the Securities Act of 1933. Effective April 1, 2001, in connection with the acquisition of the Hawesville facility, the Company entered into a $100 million senior secured revolving credit facility (the "Credit 17 Facility") with a syndicate of banks. The revolving credit facility will be used to finance the NSA acquisition and for working capital, capital expenditures and other general corporate purposes. The borrowing base for purposes of determining availability will be based upon certain eligible inventory and receivables. The Company will be subject to customary covenants, including restrictions on capital expenditures, additional indebtedness, liens, guarantees, mergers and acquisitions, and dividends. Effective April 1, 2000, the Company, through its wholly owned indirect subsidiary Berkeley, purchased an additional 23% interest in Mt. Holly. The aggregate purchase price was $95 million, subject to certain post-closing adjustments. The Company used available cash to complete the purchase. The Company believes that cash flows from operations and funds that will be available under its bank agreements will be sufficient to meet its working capital requirements, capital expenditures and debt service requirements in the near term and for the foreseeable future. Environmental Expenditures and Other Contingencies The Company has incurred and, in the future, will continue to incur capital expenditures and operating expenses for matters relating to environmental control, remediation, monitoring and compliance. The aggregate environmental related accrued liabilities were $0.9 million at March 31, 2001 and December 31, 2000, respectively. The Company believes that compliance with current environmental laws and regulations is not likely to have a material adverse effect on the Company's financial condition, results of operations or liquidity; however, environmental laws and regulations have changed rapidly in recent years and the Company may become subject to more stringent environmental laws and regulations in the future. In addition, the Company may be required to conduct remediation activities in the future pursuant to various orders issued by the EPA and West Virginia Department of Environmental Protection. There can be no assurance that compliance with more stringent environmental laws and regulations that may be enacted in the future, or future remediation costs, would not have a material adverse effect on the Company's financial condition, results of operations or liquidity. The Company is a defendant in several actions relating to various aspects of its business. While it is impossible to predict the ultimate disposition of any litigation, the Company does not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on the Company's financial condition, results of operations or liquidity. See Note 4 to Consolidated Financial Statements appearing in Part I, Item 1. New Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 2000, the FASB issued SFAS No. 138, which amended certain provisions of SFAS No. 133, including an amendment to expand the normal purchase and sale exemption for supply contracts. The Company was required to adopt SFAS No. 133, as amended by SFAS No. 138, on January 1, 2001. Most of the Company's forward delivery contracts qualified for the normal purchase and sale exemption provided in SFAS No. 138. The Company's primary aluminum financial instruments, which were previously recorded at fair value through the statement of operations, 18 were designated as cash flow hedges as of January 1, 2001 and accordingly unrealized gains and losses are reflected as accumulated other comprehensive income net of tax while realized gains and losses are recorded as revenue. The Company's natural gas financial instruments, which are designated as cash flow hedges, were recorded at fair value on the balance sheet as of December 31, 2000 and March 31, 2001. No transition adjustment was required upon adoption of SFAS 133. As of March 31, 2001, the Company reported a balance in accumulated other comprehensive income of $3.7 million. Item 3. Quantitative and Qualitative Disclosures About Market Risk Commodity Prices Century produces primary aluminum products. The Company's earnings are exposed to aluminum price fluctuations. The Company manages this risk through the issuance of forward delivery contracts and financial instruments. The Company does not engage in trading or speculative transactions. Although the Company has not materially participated in the purchase of call options, in cases where Century sells forward primary aluminum, it may purchase call options to preserve the benefit from price increases significantly above forward sales prices. In addition, it may purchase put options to protect itself from price decreases. In connection with the sale of the aluminum fabricating businesses in September 1999, the Company entered into a Molten Aluminum Purchase Agreement (the "Metal Agreement") with Pechiney, that shall continue in effect until July 31, 2003 with provisions for extension. Pursuant to the Metal Agreement, Pechiney has agreed to purchase and the Company has agreed to deliver, on a monthly basis, at least 23.0 million pounds and no more than 27.0 million pounds of molten aluminum. The selling price is determined by a market-based formula. Subsequent to the purchase of an additional 23% interest in MHAC from Xstrata , the Company entered into a ten-year agreement with Glencore (the "Glencore Metal Agreement") to sell approximately 110.0 million pounds of primary aluminum products per year. The selling price for the first two years is determined by a market based formula. The remaining eight years of the contract are at a fixed price as defined in the agreement. Exclusive of the Metal Agreement and the Glencore Metal Agreement, the Company had forward delivery contracts to sell 54.7 and 50.3 million pounds of primary aluminum at March 31, 2001 and December 31, 2000, respectively. Of these forward delivery contracts, 14.4 million pounds and 14.7 million pounds at March 31, 2001 and December 31, 2000, respectively, were with the Glencore Group. The Company entered into a long-term supply agreement for 936.0 million pounds of alumina annually, beginning January 1, 1996. That agreement will terminate at the end of 2001 and be replaced by new long-term supply agreements with Glencore. These agreements provide for a fixed quantity of alumina at prices determined by a market-based formula. In addition, as part of its acquisition of an additional 23% interest in Mt. Holly, the Company assumed a supply agreement with Glencore for the alumina raw material requirements relative to the additional interest. The unit cost is also determined by a market-based formula. The alumina supply agreement terminates in 2008. 19 At March 31, 2001, the Company had entered into 457.1 million pounds of fixed priced forward primary aluminum financial sales contracts primarily with the Glencore Group to mitigate the risk of commodity price fluctuations inherent in its business. These contracts will be settled in cash at various dates during 2001 and 2003. On a hypothetical basis a $0.01 per pound increase in the market price of primary aluminum is estimated to have an unfavorable impact of $2.8 million on accumulated other comprehensive income for the three months ended March 31, 2001 as a result of the forward primary aluminum financial sale contracts entered into by the Company at March 31, 2001. This quantification of the Company's exposure to the commodity price of aluminum is necessarily limited, as it does not take into consideration the Company's inventory or forward delivery contracts, or the offsetting impact upon the sales price of primary aluminum products. Effective January 1, 2001, most unrealized gains and losses on marking forward financial sales contracts to market that are designated as cash flow hedges will be reported in accumulated other comprehensive income until settled, rather than in the Statement of Operations. Century monitors its overall position, and its metals risk management activities are subject to the management, control and direction of senior management. These activities are regularly reported to the Board of Directors of Century. 20 Part II. OTHER INFORMATION Item 1. Legal Proceedings - None. Item 4. Submission of Matters to a Vote of Stockholders - None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The following exhibits are filed with this report on Form 10-Q: Exhibit Number Description 3.1 Certificate of Designation for the Company's 8% Cumulative Convertible Preferred Stock, par value $.01 per share 27.1 Financial Data Schedule (b) Reports on Form 8-K In connection with the planned sale of $325 million of the Company's senior secured first mortgage notes due 2008 (the "Notes") to certain institutional investors in an offering (the "Offering") exempt from the registration requirements of the Securities Act of 1933, as amended, the Company filed an 8-K on March 12, 2001, which attached: (i) the Company's press release announcing the Offering, and (ii) certain information provided to prospective purchasers of the Notes in connection with the Offering. On March 13, 2001, the Company filed an amendment to its 8-K filed on March 12, 2001, which furnished certain additional information provided to prospective purchasers of the Notes in connection with the Offering. 21 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 thereunto duly authorized. Century Aluminum Company Date: May 15, 2001 By: /s/ Craig A. Davis ------------ -------------------------------------- Craig A. Davis Chairman/Chief Executive Officer Date: May 15, 2001 By: /s/ David W. Beckley ------------ ---------------------------------------- David W. Beckley Executive Vice-President/Chief Financial Officer 22 Exhibit Index Exhibit Number Description ------- ---------------------------------------------------------- 3.1 Certificate of Designation for the Company's 8% Cumulative Convertible Preferred Stock, par value $.01 per share 27.1 Financial Data Schedule 23 EX-3.1 2 d25475_ex3-1.txt CERTIFICATE OF DESIGNATION CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF 8% CUMULATIVE CONVERTIBLE PREFERRED STOCK OF CENTURY ALUMINUM COMPANY CENTURY ALUMINUM COMPANY (the "Company"), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that, pursuant to the authority conferred upon the Board of Directors of the Company by the Certificate of Incorporation of the Company and pursuant to Section 151 of the General Corporation Law of the State of Delaware, a Committee of the Board of Directors of the Company, at a meeting duly held on March 28, 2001, duly adopted resolutions authorizing a series of the Company's previously authorized Preferred Stock, par value $0.01 per share with the following preferences and rights: Section 1. Designation, Amount and Par Value. The series of Preferred Stock shall be designated as the 8% Cumulative Convertible Preferred Stock (the "Preferred Stock"), and the number of shares so designated shall be 500,000. The par value of each share of Preferred Stock shall be $0.01. Each share of Preferred Stock shall have a stated value of $50.00 per share (the "Stated Value"). Section 2. Dividends. (a) Holders of Preferred Stock shall be entitled to receive and the Company shall pay, when, as and if declared by the Board of Directors out of funds legally available therefor, cumulative cash dividends at the rate per share (as a percentage of the Stated Value per share) equal to 8% per annum, payable quarterly in arrears on each March 31, June 30, September 30 and December 31 (each, a "Dividend Payment Date") and on the Conversion Date (as hereinafter defined). Dividends on the Preferred Stock shall accrue daily commencing on the Original Issue Date (as defined in Section 7) and shall be deemed to accrue whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. The person that is shown on the Company's records as the holder of the Preferred Stock on an applicable record date (the "Holder") for any dividend payment will be entitled to receive such dividend payment and any other accrued and unpaid dividends which accrued prior to such Dividend Payment Date, without regard to any sale or disposition of such Preferred Stock subsequent to the applicable record date but prior to the applicable Dividend Payment Date. Except as otherwise provided herein, if at any time the Company pays less than the total amount of dividends then accrued on the Preferred Stock, such payment shall be distributed ratably among the Holders of the Preferred Stock based upon the number of shares held by each Holder. (b) So long as any Preferred Stock shall remain outstanding, unless all accrued dividends payable on the Preferred Stock for all prior Dividend Payment Dates shall have been paid, neither the Company nor any subsidiary thereof shall redeem, purchase or otherwise acquire, directly or indirectly, any Common Stock (as defined in Section 5) or any shares of any other capital stock of the Company, ranking junior to the Preferred Stock in respect of dividends or liquidation preference, except the repurchase of shares of capital stock of the Company held by officers, directors or employees or former officers, directors or employees (or their estates or beneficiaries), upon death, disability, retirement, severance or termination of employment, or in order to satisfy tax withholding obligations of such persons upon the exercise of options or the vesting of performance shares or pursuant to any agreement under which such shares were issued, nor shall the Company directly or indirectly pay or declare any cash dividend or make any cash distribution (other than a dividend or distribution described in Section 5) upon, nor shall any cash distribution be made in respect of, any Common Stock or any other capital stock of the Company ranking junior to the Preferred Stock in respect of dividends or liquidation preference, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Common Stock or any shares of any other capital stock of the Company, ranking junior to the Preferred Stock in respect of dividends or liquidation preference, except as described above. Section 3. Voting Rights. Except as otherwise provided herein and as otherwise provided by law, the Preferred Stock shall have no voting rights. So long as any shares of Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the Holders of a majority of the shares of Preferred Stock then outstanding, (i) alter or change adversely the powers, preferences or rights given to the Preferred Stock, through an amendment to the Company's Certificate of Incorporation or otherwise, (ii) authorize or create any class of stock ranking as to dividends or distribution of assets upon a Liquidation (as defined below) senior to, prior to or pari passu with the Preferred Stock, or (iii) reorganize or reclassify the capital stock of the Company or merge or consolidate with or into any other company or entity. Section 4. Liquidation. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"), the Holders of shares of Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Preferred Stock an amount equal to the Stated Value, plus an amount equal to the then accrued but unpaid dividends per share, whether declared or not, but without interest ("Liquidation Preference"), before any distribution or payment shall be made to the holders of Common Stock or any other capital stock of the Company junior in respect of distribution of assets, and if the assets of the Company shall be insufficient to pay in full such amounts, then the entire assets to be distributed shall be distributed among the Holders of Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. A sale, conveyance or disposition of all or substantially all of the assets of the Company, other than to a domestic subsidiary of the Company, shall be deemed a Liquidation; however, a consolidation or merger of the Company with or into any other company or companies shall not be treated as a Liquidation, but instead shall be subject to the provisions of Section 5. The Company shall mail written notice of any such Liquidation, not less than 30 days prior to the payment date stated therein, to each record Holder of Preferred Stock. Section 5. Conversion. (a) Right to Convert. Each Holder of the Preferred Stock shall have the right at any time and from time to time, at the option of such Holder, to convert any or all Preferred Stock held by such Holder, into such number of fully paid, validly issued and nonassessable shares of common stock, par value $0.01 per share, of the Company ("Common Stock"), free and clear of any liens, claims or encumbrances created by the Company, as is determined by dividing -2- (i) the Liquidation Preference times the number of shares of Preferred Stock being converted ("Conversion Amount"), by (ii) the applicable Conversion Price (determined as hereinafter provided) in effect on the Conversion Date. Immediately following such conversion, the rights of the Holders of converted Preferred Stock shall cease and the persons entitled to receive the Common Stock upon the conversion of Preferred Stock shall be treated for all purposes as then having become the owners of such Common Stock. The right to convert any shares of Preferred Stock called for redemption under Section 6 shall continue until and shall expire at 4:30 New York time on the last business day prior to the redemption date. Any conversion of Preferred Stock by any Holder shall be of a minimum number of 1,000 shares of Preferred Stock, except in the event that any Holder holds less than 1,000 shares of Preferred Stock, in which case, all such shares held by such Holder may be converted. (b) Mechanics of Conversion. To convert Preferred Stock into Common Stock, the Holder shall give written notice ("Conversion Notice") to the Company (which Conversion Notice may be given by facsimile transmission no later than the Conversion Date) stating that such Holder elects to convert the same and shall state therein the number of shares of Preferred Stock to be converted and the name or names in which such Holder wishes the certificate or certificates for Common Stock to be issued (the conversion date specified in such Conversion Notice shall be referred to herein as the "Conversion Date"). As soon as possible after delivery of the Conversion Notice, such Holder shall surrender the certificate or certificates representing the Preferred Stock being converted, duly endorsed, at the office of the Company or, if identified in writing to all the Holders by the Company, at the offices of any transfer agent for the Preferred Stock. The Company shall, upon receipt of such Conversion Notice, issue and deliver to or upon the order of such Holder, against delivery of the certificates representing the Preferred Stock which have been converted, a certificate or certificates for the number of shares of Common Stock to which such Holder shall be entitled (with the number of and denomination of such certificates designated by such Holder), and the Company shall immediately issue and deliver to such Holder a certificate or certificates for the number of shares of Preferred Stock (including any fractional shares) which such Holder has not yet elected to convert hereunder but which are evidenced in part by the certificate(s) delivered to the Company in connection with such Conversion Notice. The Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of the Preferred Stock being converted are either delivered to the Company or its transfer agent or the Holder notifies the Company or any such transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection therewith. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion of Preferred Stock, provided the Company's transfer agent is participating in the Depository Trust Company ("DTC") Fast Automated Securities Transfer program, upon request of the Holder, the Company shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder, by crediting the account of the Holder's prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system. The parties agree to coordinate with DTC to accomplish this objective. The conversion pursuant to this Section 5 shall be deemed to have been made immediately prior to the close of business on the Conversion Date. The person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Stock at the close of business on the Conversion Date. The Company's obligation to -3- issue Common Stock upon conversion of Preferred Stock shall, except with respect to the Holder's compliance with the notice and delivery requirements set forth above in this Section 5(b), be absolute, is independent of any covenant of the Holder of Preferred Stock, and shall not be subject to: (i) any offset or defense, or (ii) any claims against the Holders of Preferred Stock whether pursuant to this Certificate of Designation, the Purchase Agreement (as defined in Section 7) or otherwise. In the event that the Company disputes the Holder's computation of the number of shares of Common Stock to be received, then the Company shall deliver to the Holder the number of shares of Common Stock not in dispute and shall seek to mutually agree with the Holder in good faith on the correct number of shares to be received. (c) Determination of Conversion Price. The Conversion Price applicable with respect to the Preferred Stock (the "Conversion Price"), subject to the adjustments set forth below, shall be $17.92 per share. (d) Stock Splits; Dividends; Adjustments. (i) If the Company, at any time while the Preferred Stock is outstanding shall, (A) pay a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities convertible into or exchangeable for such equity securities) in shares of Common Stock, (B) subdivide outstanding Common Stock into a larger number of shares, or (C) combine outstanding Common Stock into a smaller number of shares, then the Conversion Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately before such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 5(d)(i) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination. (ii) In the event that the Company issues or sells any Common Stock or securities which are convertible into or exchangeable for its Common Stock (other than the Preferred Stock), or any warrants or other rights to subscribe for or to purchase or any options for the purchase of its Common Stock ("Convertible Securities") (other than shares or options issued or which may be issued pursuant to (A) the Company's current or future employee or director stock incentive or option plans or shares issued upon exercise of options, warrants or rights or upon the vesting of performance shares outstanding on the date of the Purchase Agreement and listed in the Company's most recent periodic report filed under the Securities Exchange Act of 1934, as amended, (B) arrangements with the Holders of Preferred Stock, or (C) upon the conversion of the Preferred Stock) ("Exempted Issuances") at an effective purchase price per share which is less than the Per Share Market Value (as defined in Section 7) of the Common Stock on the Trading Day next preceding such issue or sale or, in the case of issuances to holders of its Common Stock, the record date fixed for the determination of stockholders entitled to receive Common Stock or Convertible Securities (the "Fair Market Price"), the Conversion Price in effect immediately prior to such issue or sale or record date, as applicable, shall be reduced effective concurrently with such issue or sale to an amount -4- determined by multiplying the Conversion Price then in effect by a fraction, (1) the numerator of which shall be the sum of (x) the number of shares of Common Stock outstanding immediately prior to such issue or sale and (y) the number of shares of Common Stock which the aggregate consideration received by the Company for such additional shares would purchase at the Fair Market Price, and (2) the denominator of which shall be the number of shares of Common Stock and Convertible Securities of the Company outstanding immediately after such issue or sale. For the purposes of the foregoing adjustment, shares of Common Stock owned by or held on account of the Company or any subsidiary shall not be deemed outstanding for the purpose of any such computation. In addition, for the purposes of the foregoing adjustment, in the case of the issuance of any Convertible Securities, the maximum number of shares of Common Stock issuable upon exercise, exchange or conversion of such Convertible Securities shall be deemed to be outstanding, and the aggregate consideration received by the Company for the issuance or sale of such Convertible Securities shall be deemed to include any consideration that would be received by the Company in connection with the exercise, exchange or conversion of such Convertible Securities, provided that no further adjustment shall be made upon the actual issuance of Common Stock upon exercise, exchange or conversion of such Convertible Securities. However, upon the expiration of any right or warrant to purchase Common Stock the issuance of which resulted in an adjustment in the Conversion Price designated in Section 5(c) pursuant to this Section 5(d)(ii), if any such right or warrant shall expire and shall not have been exercised, the Conversion Price designated in Section 5(c) shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Conversion Price made pursuant to the provisions of this Section 5 after the issuance of such rights or warrants) had the adjustment of the Conversion Price made upon the issuance of such rights or warrants been made on the basis of offering for subscription or purchase only that number of shares of Common Stock actually purchased upon the exercise of such rights or warrants actually exercised. (iii) If the Company, at any time while the Preferred Stock is outstanding, shall distribute to all holders of Common Stock evidence of its indebtedness or assets or cash (other than ordinary cash dividends) or rights or warrants to subscribe for or purchase any security of the Company or any of its subsidiaries (excluding those referred to in Sections 5(d)(i) or 5(d)(ii) above), then concurrently with such distributions to holders of Common Stock, the Company shall distribute to Holders of the Preferred Stock, the amount of such indebtedness, assets, cash or rights or warrants which the Holders of Preferred Stock would have received had they converted all their Preferred Stock into Common Stock immediately prior to the record date for such distribution. (iv) All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. (v) Whenever the Conversion Price is adjusted pursuant to this Section 5(d), the Company shall promptly mail to each Holder of Preferred Stock, a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. -5- (vi) No adjustment in the Conversion Price shall reduce the Conversion Price below the then par value of the Common Stock. (vii) The Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 Trading Days and if the reduction is irrevocable during the period. Whenever the Conversion Price is reduced, the Company shall mail to the Holders of Preferred Stock a notice of the reduction. The Company shall mail, first class, postage prepaid, the notice at least 15 days before the date the reduced Conversion Price takes effect. The notice shall state the reduced Conversion Price and the period it will be in effect. A reduction of the Conversion Price does not change or adjust the Conversion Price otherwise in effect for purposes of Section 5(d)(i), (ii), or (iii). (viii) If: A. In the event of any taking by the Company of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any security or right convertible into or entitling the holder thereof to receive additional shares of Common Stock, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or B. The Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or C. The approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the Company (other than a subdivision or combination of the outstanding shares of Common Stock), any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; or D. The Company shall authorize the voluntary or involuntary dissolution, liquidation or winding-up of the affairs of the Company; then the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of Preferred Stock, and shall cause to be mailed to the Holders of Preferred Stock at their last addresses as they shall appear upon the stock books of the Company, at least 15 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, share -6- exchange, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, share exchange, dissolution, liquidation or winding-up; provided, however, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. (e) Reorganization, Merger or Going Private. In case of any reorganization or reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another person, any compulsory share exchange pursuant to which the Common Stock is converted into other securities, cash or property or a "going private" transaction under Rule 13e-3 promulgated pursuant to the Exchange Act, the Holders of the Preferred Stock then outstanding shall be deemed to have converted their Preferred Stock into Common Stock immediately prior to such reorganization, reclassification, consolidation, merger or share exchange and shall have the right thereafter to convert such shares only into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such reorganization, reclassification, consolidation, merger or share exchange, and the Holders of the Preferred Stock shall be entitled upon such event to receive such amount of securities or property as the shares of the Common Stock of the Company into which such shares of Preferred Stock could have been converted immediately prior to such reorganization, reclassification, consolidation, merger or share exchange would have been entitled. The terms of any such reorganization, reclassification, consolidation, merger or share exchange shall include such terms so as to continue to give to the Holder of Preferred Stock the right to receive the securities or property set forth in this Section 5(e) upon any conversion following such reorganization, reclassification, consolidation, merger or share exchange. This provision shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, or share exchanges. (f) Other Actions. The Company will not avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company and will at all times in good faith assist in the carrying out of all of the provisions of this Section 5 and in the taking of all action as may be necessary or appropriate in order to protect the conversion rights of the Holders of the Preferred Stock against impairment. (g) Reservation of Shares. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of Preferred Stock as herein provided, free from preemptive rights or any other contingent purchase rights of persons other than the Holders of Preferred Stock, such number of shares of Common Stock as shall be issuable (taking into account the adjustments of Section 5(d) hereof) upon the conversion of all outstanding shares of Preferred Stock. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and nonassessable. The Company promptly will take such corporate action as may, in the opinion of its counsel, which may be an employee of the Company, be necessary to increase its authorized but unissued shares -7- of Common Stock to such number of shares as shall be sufficient for such purpose, including without limitation engaging in best efforts to obtain the requisite stockholder approval. (h) Fractional Shares. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may if otherwise permitted by applicable law, make a cash payment in respect of any final fraction of a share based on the Per Share Market Value at such time. If the Company elects not, or is unable, to make such a cash payment, the Holder of a share of Preferred Stock shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock. (i) Taxes. The issuance of certificates for shares of Common Stock on conversion of Preferred Stock shall be made without charge to the Holders thereof for any documentary, stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holder of such shares of Preferred Stock so converted and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. (j) Status of Converted or Redeemed Shares. Shares of Preferred Stock converted into Common Stock or redeemed shall be canceled and shall have the status of authorized but unissued shares of Preferred Stock. (k) Giving of Notice. Each Conversion Notice shall be given (i) by facsimile and by mail, postage prepaid, addressed to the attention of the Chief Financial Officer of the Company at the facsimile telephone number and address of the principal place of business of the Company, (ii) by overnight courier or (iii) by hand. Any such notice shall be deemed given and effective upon the earliest to occur of (1)(a) if such Conversion Notice is delivered via facsimile prior to 4:30 p.m. (local time in New York, NY) on any date, such date or such later date as is specified in the Conversion Notice, and (b) if such Conversion Notice is delivered via facsimile after 4:30 p.m. (local time in New York, NY) on any date, the next date or such later date as is specified in the Conversion Notice, (2) if such Conversion Notice is delivered by overnight courier, two business days after delivery to a nationally recognized overnight courier service or (3) if such Conversion Notice is delivered by hand, upon actual receipt. Section 6. Redemption. The Company may, at the option of the Board of Directors, redeem all or any part of the outstanding Preferred Stock at any time after the third anniversary of the Original Issue Date, by paying for each share so redeemed the redemption prices listed below, together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date fixed for redemption, provided that notice of redemption is sent by certified mail to the Holders of the Preferred Stock to be redeemed at least 40 but not more than 60 days prior to the date of redemption specified in such notice, addressed to each such Holder at his/her address as it appears in the records of the Company. On or after the redemption date, each Holder of shares of Preferred Stock to be redeemed shall present and surrender his/her certificate or certificates for such shares to the Company at the place designated in such notice and thereupon the redemption -8- price of such shares shall be paid to or to the order of the person whose name appears on such certificate or certificates as the owner thereon and each surrendered certificate shall be cancelled. In case less than all the shares represented by any such certificates are redeemed, a certificate shall be issued representing the unredeemed shares. From and after the redemption date (unless default shall be made by the Company in payment of the redemption price) all dividends on the shares of Preferred Stock designated for redemption in such notice shall cease to accrue, and all rights of the Holders thereof as stockholders of the Company, except the right to receive the redemption price thereof upon the surrender of certificates representing the same, without interest, shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Company) on the books of the Company, and such shares shall not be deemed to be outstanding for any purpose whatsoever. At its election, the Company prior to the redemption date may deposit the redemption price of the shares of Preferred Stock so called for redemption in trust for the Holders thereof with a bank or trust company (having a capital and surplus of not less than $500,000,000) in which case such notice to Holders of the Preferred Stock to be redeemed shall state the date of such deposit, shall specify the office of such bank or trust company as the place of payment of the redemption price, and shall call upon such Holders to surrender the certificates representing such shares at such price on or after the date fixed in such redemption notice (which shall not be later than the redemption date) against payment of the redemption price. From and after the making of such deposit, the shares of Preferred Stock so designated for redemption shall not be deemed to be outstanding for any purpose whatsoever, and the rights of the Holders of such shares shall be limited to the right to receive the redemption price of such shares, without interest, upon surrender of the certificates representing the same to the Company at said office of such bank and trust company, and the right of conversion (on or before the close of business on the last business day prior to the date fixed for redemption) herein provided. Any funds so deposited which shall not be required for such redemption because of the exercise of such right of conversion after the date of such deposit shall be returned to the Company. Any interest accrued on such funds shall be paid to the Company from time to time. Any moneys so deposited which shall remain unclaimed by the Holders of such Preferred Stock at the end of three years after the redemption date shall be returned by such bank or trust company to the Company after which the Holders of the Preferred Stock shall look only to the Company for payment of the redemption price. In the event that less than all the outstanding shares of Preferred Stock are to be redeemed at one time, the shares so to be redeemed shall be redeemed pro rata. The prices at which each share of Preferred Stock may be redeemed during the periods set forth below are as follows: Prior to the third anniversary of the Original Issue Date: No right to redeem. After the third anniversary of the Original Issue Date but before the fourth anniversary of the Original Issue Date: $52.00 together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date of redemption. After the fourth anniversary of the Original Issue Date but before the fifth anniversary of the Original Issue Date: $51.60 together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date of redemption. -9- After the fifth anniversary of the Original Issue Date but before the sixth anniversary of the Original Issue Date: $51.20 together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date of redemption. After the sixth anniversary of the Original Issue Date but before the seventh anniversary of the Original Issue Date: $50.80 together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date of redemption. After the seventh anniversary of the Original Issue Date but before the eighth anniversary of the Original Issue Date: $50.40 together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date of redemption. After the eighth anniversary of the Original Issue Date: $50.00 together with an amount equal to all cumulative dividends accrued and unpaid thereon to the date of redemption. Section 7. Definitions. For the purposes hereof, the following terms shall have the following meanings: "Original Issue Date" shall mean the date of the first issuance of any shares of Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock. "Per Share Market Value" means on any particular date (a) the closing sales price per share of the Common Stock on such date on The Nasdaq Stock Market or if the Common Stock is not listed on The Nasdaq Stock Market, on such other stock exchange on which the Common Stock has been listed or if there is no such price on such date, then the closing sales price on such exchange on the date nearest preceding such date, or (b) if the Common Stock is not listed on The Nasdaq Stock Market or any stock exchange, the closing sales price for a share of Common Stock in the over-the-counter market, as reported by the NASD at the close of business on such date, or (c) if the Common Stock is not quoted on the NASD, the closing sales price for a share of Common Stock in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or similar organization or agency succeeding to its functions of reporting prices), or (d) if the Common Stock is no longer publicly traded the fair market value of a share of Common Stock as determined by a nationally recognized or major regional investment banking firm or firm of independent certified public accountants of recognized standing (which may be the firm that regularly examines the financial statements of the Company )(an "Appraiser") selected in good faith by the Holders of a majority of the shares of the Preferred Stock; provided, however, that the Company, after receipt of the determination by such Appraiser, shall have the right to select an additional Appraiser, in which case, the fair market value shall be equal to the average of the determinations by each such Appraiser. -10- "Purchase Agreement" means the Cumulative Convertible Preferred Stock Purchase Agreement, dated as of the Original Issue Date, between the Company and the original Holder of the Preferred Stock. "Trading Day" means (a) a day on which the Common Stock is traded on The Nasdaq Stock Market or principal stock exchange on which the Common Stock is then listed, or (b) if the Common Stock is not listed on The Nasdaq Stock Market or any stock exchange, a day on which the Common Stock is traded in the over-the-counter market, as reported by the NASD, or (c) if the Common Stock is not quoted on The Nasdaq Stock Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices). IN WITNESS WHEREOF, Century Aluminum Company has caused this certificate to be signed by Gerald J. Kitchen, its Executive Vice President, General Counsel and Chief Administrative Officer and attested by, Daniel J. Krofcheck, its Vice President and Treasurer, this 28th day of March 2001. CENTURY ALUMINUM COMPANY By: /s/ Gerald J. Kitchen --------------------------------- Executive Vice President, General Counsel and Chief Administrative Officer Attest: By: /s/ Daniel J. Krofcheck ---------------------------- Vice President and Treasurer -11- EX-27 3 d25745_ex27.xfd FDS
5 This schedule contains summary financial information extracted from the Century Aluminum Company Consoldiated Financial Statements and is qualified in its entirety by reference to such financial statements. 0000949157 Century Aluminum Company 1,000 U.S.DOLLARS 3-MOS Jan-01-2001 Dec-31-2001 Mar-31-2001 1 27,019 0 36,282 0 43,902 136,542 300,005 115,663 337,657 47,526 0 0 0 205 210,109 337,657 110,690 110,690 102,228 105,819 297 0 (350) 4,924 1,773 3,151 0 0 0 3,151 0.15 0.15
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