<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO.1 TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 7, 2000
CENTURY ALUMINUM COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-27918 13-3070826
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
2511 GARDEN ROAD
BUILDING A, SUITE 200
MONTEREY, CALIFORNIA 93940
(Address of principal executive offices) (Zip Code)
(831) 642-9300
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 20, 2000, Century Aluminum Company (the"Company") filed a
Current Report on Form 8-K (the "Century Aluminum Initial Report") describing
the acquisition of certain assets and the assumption of certain liabilities of
Xstrata Aluminum Corporation ("Xstrata"). This Current Report on Form 8-K/A
amends the Century Aluminum Initial Report by including with this Form 8-K/A the
financial statements and pro forma financial information prescribed by Item 7 of
Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Xstrata Aluminum Corporation - Financial Statements:
Independent Auditor's Report - Ernst & Young, LLP
Balance Sheet as of December 31, 1999
Statement of Operations and Retained Earnings for the Year Ended
December 31, 1999
Statement of Cash Flows for the Year Ended December 31, 1999
Notes to Financial Statements
(b) Pro Forma Financial Information:
Pro Forma Condensed Combined Balance Sheet as of December 31, 1999
Pro Forma Condensed Combined Statement of Operations for the Year
Ended December 31, 1999
(c) Exhibits:
99.1 Consent of Ernst & Young, LLP
<PAGE> 3
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: June 21, 2000 By: /s/ Gerald J. Kitchen
--------------------- -----------------------------------
Executive Vice-President,
General Counsel and Secretary
<PAGE> 4
Xstrata Aluminum Corporation
Financial Statements
Year ended December 31, 1999
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors......................... 1
Financial Statements:
Balance Sheet.......................................... 2
Statement of Operations and Retained Earnings.......... 4
Statement of Cash Flows ............................... 6
Notes to Financial Statements.......................... 8
</TABLE>
<PAGE> 5
Report of Independent Auditors
The Board of Directors
Xstrata Aluminum Corporation
We have audited the accompanying balance sheet of Xstrata Aluminum Corporation
(the "Company") as of December 31, 1999, and the related statements of
operations and retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, based on our audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Xstrata
Aluminum Corporation at December 31, 1999, and the results of its operations and
its cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States.
Ernst & Young LLP
New York, NY
February 18, 2000, except for Note 1,
for which the date is April 7, 2000
<PAGE> 6
Xstrata Aluminum Corporation
Balance Sheet
December 31, 1999
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 1
Accounts receivable 7,434
Advances to equity investee 3,079
Inventory 4,765
Deferred income taxes 1,656
-------
Total current assets 16,935
Investment in subsidiaries 756
Property, plant and equipment, at cost, net 76,890
Goodwill, net of accumulated amortization of $508 2,262
-------
Total assets $96,843
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 4,146
Due to Glencore 4,700
Due to Parent 63,277
Accrued expenses and other liabilities 330
-------
Total current liabilities 72,453
Due to Glencore 3,120
-------
Total liabilities 75,573
Stockholder's equity:
Common stock, $1 par value; 1,000 shares authorized,
100 issued and outstanding -
Capital in excess of par value 15,380
Retained earnings 5,890
-------
Total stockholder's equity 21,270
-------
Total liabilities and stockholder's equity $96,843
=======
</TABLE>
See accompanying notes
<PAGE> 7
Xstrata Aluminum Corporation
Statement of Operations and Retained Earnings
For the year ended December 31, 1999
(In Thousands)
<TABLE>
<S> <C>
Sales $ 65,946
Cost of sales 63,890
-----------------
Gross profit 2,056
Depreciation and amortization 4,613
Selling, general and administrative expenses 377
-----------------
Loss from operations (2,934)
Other income (expense):
Interest expense (5,266)
Other, net 914
-----------------
(4,352)
-----------------
Loss before income taxes (7,286)
Income tax benefit 3,030
-----------------
Net loss (4,256)
Retained earnings at beginning of year 10,146
-----------------
Retained earnings at end of year $ 5,890
=================
</TABLE>
See accompanying notes.
<PAGE> 8
Xstrata Aluminum Corporation
Statement of Cash Flows
For the year ended December 31, 1999
(In Thousands)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (4,256)
Adjustments to reconcile loss from operations to net cash
used in operating activities:
Depreciation and amortization 4,613
Deferred income taxes (3,030)
Undistributed earnings in equity investee (11)
Changes in operating net assets and liabilities:
Accounts receivable (586)
Inventories (683)
Other assets 41
Accounts payable 4,146
Accrued expenses and other liabilities (780)
-----------------
Net cash used in operating activities (546)
INVESTING ACTIVITIES
Capital expenditures (1,917)
Advances to equity investee (182)
-----------------
Net cash used in investing activities (2,099)
-----------------
FINANCING ACTIVITIES
Change in due to parent 4,220
Repayments of note payable (1,578)
-----------------
Net cash provided by financing activities 2,642
-----------------
Net decrease in cash (3)
Cash, beginning of year 4
-----------------
Cash, end of year $ 1
=================
</TABLE>
See accompanying notes.
<PAGE> 9
Xstrata Aluminum Corporation
Notes to Financial Statements
December 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Xstrata Aluminum Corporation (the "Company"), is a wholly-owned subsidiary of
Xstrata AG, a Swiss based diversified natural resource group. Its principal
asset is a 23% undivided interest in certain property, plant and equipment which
comprise an aluminum reduction facility in Mt. Holly, South Carolina ("Mt.
Holly") and a 23% interest in a general partnership which operates and maintains
Mt. Holly (the "Mt. Holly Partnership").
The Mt. Holly facility is involved in the reduction of alumina into aluminum.
Aluminum is produced at the Mt. Holly reduction facility in the form of
T-ingots, extrusion billets, rolling slabs and foundry ingots. With the
exception of T-ingots all other primary aluminum products are considered to be
premium products and sell at a premium to the commodity priced T-ingot. Mt.
Holly is managed by Alcoa and 23% of production capacity is attributable to the
Company. Since acquiring its interest in Mt. Holly in 1996, the Company has been
party to an owners' agreement with Alumax (which was acquired by Alcoa) and
Berkeley Aluminum which provides for joint ownership of the fixed assets of the
facility on a pro-rata basis, and establishes Mt. Holly Aluminum to operate and
maintain Mt. Holly. Pursuant to such agreement, each owner furnishes its own
alumina for conversion to aluminum and is responsible for its pro-rata share of
operational and conversion costs.
In 1996, the Company entered into a 12 year off-take agreement with Glencore
Ltd. ("Glencore"), covering the sale of all the Company's aluminum production at
the prevailing price quoted on the London Metal Exchange (LME), plus a surcharge
for premium products. A 12-year purchase agreement for all of the Company's
alumina requirements was also entered into with Glencore, determining the price
at a fixed percentage of the prevailing aluminum metal price, as quoted on LME.
At December 31, 1999, Glencore International AG, the parent of Glencore, had a
39.5% ownership interest in Xstrata AG.
On March 31, 2000, the Company sold its 23% undivided interest in Mt. Holly and
the Mt. Holly partnership, the related accounts receivable, amounts due from the
equity investee, inventory, accounts payable and certain accrued liabilities, to
Berkeley Aluminum Corporation, a wholly-owned subsidiary of Century Aluminum
Corporation, for approximately $95 million. In connection with the transaction,
the Company repaid all amounts due to Glencore. (See Note 3).
<PAGE> 10
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
INVENTORIES
Inventories are stated at the lower of cost or market. The Company uses the
first-in, first-out (FIFO) method of determining cost for its inventories.
ACCOUNTS RECEIVABLE AND CONCENTRATIONS OF CREDIT RISK
All trade accounts receivable are from the Company's sole customer, Glencore.
The Company performs periodic credit evaluations of its customer's financial
condition and does not require collateral. Historically, there have been no
credit losses.
LONG-LIVED ASSETS
The Company accounts for its long-lived assets under Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of, which requires impairment losses to
be recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are not sufficient to recover the carrying value of the assets.
The impairment loss is measured by comparing the fair value of the asset to its
carrying amount.
DEPRECIATION AND AMORTIZATION
Buildings, machinery and equipment, represents the Company's proportionate share
of the building, machinery and equipment in Mt. Holly. These assets are
depreciated using the straight-line balance method over the estimated useful
lives of the individual assets, ranging from 5 to 20 years.
Goodwill is amortized on a straight-line basis over twenty years.
<PAGE> 11
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
Revenue is recognized upon delivery of product to the customer. Provisions are
made for warranty and return costs at the time of sale. Such provisions have not
been material.
INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes.
Under this approach, differences between the financial statement and tax bases
of assets and liabilities are determined annually, and deferred income tax
assets and liabilities are recorded for those differences that have future tax
consequences. Valuation allowances are established, if necessary, to reduce the
deferred tax assets to an amount that will more likely than not be realized in
future periods. Income tax expense is composed of the current tax payable or
refundable for the period plus or minus the change in net deferred tax assets
and liabilities.
2. TRANSACTIONS WITH PARENT
Amounts payable to the parent are generally due upon demand and accordingly are
classified as short term in the Company's balance sheet. The Company obtains
financing primarily through U.S. dollar denominated borrowings from its parent,
substantially all of which is interest bearing. The Company primarily utilized
short term loans from its parent with terms up to six months and interest rates
approximating LIBOR plus 2%.
3. DUE TO GLENCORE
In connection with the off-take agreement for aluminum, in December 1996,
Glencore and the Company entered into an agreement whereby Glencore made a $25
million prepayment to offset future billings by the Company for aluminum sold to
Glencore. The prepayment agreement provided for the Company to repay Glencore
$94 per ton of aluminum sold to Glencore plus a portion of the excess cash flow
of the Company. The prepayment bears interest at 150 basis points above LIBOR
and is unsecured and is for term of five years.
<PAGE> 12
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at December 31, 1999 consists of the following (in
thousands):
<TABLE>
<S> <C>
Land $ 5,278
Buildings 6,799
Machinery and equipment 80,918
Furniture, fixtures and other 873
------------------
93,868
Accumulated depreciation and amortization (16,978)
------------------
Property, plant and equipment, net $ 76,890
==================
</TABLE>
5. INCOME TAXES
The income tax benefit for the year ending December 31, 1999 is as follows (in
thousands):
<TABLE>
<S> <C>
Current:
Federal $ -
State -
-----------------
Total current tax provision -
Deferred:
Federal (3,030)
State -
-----------------
Total deferred tax benefit (3,030)
-----------------
Total tax benefit $ (3,030)
=================
</TABLE>
The difference between the effective rate reflected in the income tax benefit
for income taxes and the amount determined by applying the statutory U.S. rate
of 35% to the loss before income taxes for 1999 is analyzed below (in
thousands):
<TABLE>
<S> <C>
Benefit at statutory rate $ (2,550)
State income tax benefit (364)
Other (116)
------------------
Total tax benefit $ (3,030)
==================
</TABLE>
<PAGE> 13
4. INCOME TAXES (CONTINUED)
The Company reported deferred tax assets and liabilities at December 31, 1999 as
follows (in thousands):
<TABLE>
<S> <C>
Gross deferred tax liabilities $ (14,346)
Gross deferred tax assets $ 16,002
-------------------------
Net deferred tax assets $ 1,656
=========================
</TABLE>
The tax effect of temporary differences that give rise to significant portions
of the Company's net deferred tax assets are comprised of interest, net
operating loss carryforwards and AMT credit carryforwards, offset by tax
depreciation and amortization in excess of book.
The realization of the net deferred tax assets is dependent on the Company
generating future taxable income. Based on financial projections prepared by
management, the Company believes that it is likely to generate sufficient future
taxable income to fully utilize the net deferred tax assets.
The Company files its own federal and state income tax returns. The Company paid
no income taxes in 1999. State franchise taxes of approximately $15,000 were
paid in 1999.
The Company has been informed that there is currently an audit being conducted
by the U.S. Internal Revenue Service on the Mt. Holly partnership for the year
1995. No final tax assessment has yet been made by the IRS, however, any
assessment that is made by the IRS, could have an impact on the Company's tax
returns for the years 1996 through 1999. The impact, if any, on the Company's
financial position or results of operations is currently not known.
5. MANAGEMENT SERVICES AGREEMENT
In January 1996, the Company entered into management services agreement with
Glencore, for Glencore to provide accounting, tax, and administrative services
and for the management of Mt. Holly for the Company. The management fee is
$150,000 per annum. The agreement was for three years, however, automatically
extends at one-year intervals unless notice of termination is given by either
party.
<PAGE> 14
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The selected unaudited pro forma combined financial information presented below
has been derived from the audited historical financial statements of the Company
and Xstrata. The statements reflect management's present estimate of pro forma
adjustments, including a preliminary estimate of the purchase price allocations,
which ultimately may be different. The acquisition is being accounted for using
the purchase method of accounting. Accordingly, assets acquired and liabilities
assumed are recorded at their estimated fair values.
The unaudited pro forma combined statements of operations for the year ended
December 31, 1999 gives effect to the acquisition as if it had been consummated
at the beginning of the period. The unaudited pro forma condensed combined
balance sheet as of December 31, 1999 gives effect to the acquisition as if it
had been consummated on that date.
The unaudited pro forma condensed combined financial statements 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
condensed combined financial data presented below should be read in conjunction
with the audited historical financial statements and related notes thereto of
the Company and Xstrata.
<PAGE> 15
Century Aluminum Company
Unaudited Pro Forma Condensed Consolidated Balance Sheet
December 31, 1999
(numbers in thousands)
<TABLE>
<CAPTION>
Century Xstrata Pro Forma Pro Forma
Historical Historical Adjustments Combined
---------- ---------- ----------- ---------
ASSETS
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash $ 85,008 $ 1 $ (95,000) (b) $ 1
9,992 (b)
Restricted cash equivalents 5,821 - - 5,821
Accounts receivable, trade - net 38,499 7,434 - 45,933
Due from affiliates 15,991 3,079 (3,079) (a) 15,991
Inventories 44,936 4,765 - (b) 49,701
Prepaid and other assets 6,379 1,656 (1,656) (a) 6,379
---------- --------- ---------- ---------
Total current assets 196,634 16,935 (89,743) 123,826
Property, plant and equipment, net 105,158 76,890 6,380 (b) 188,428
Other assets 9,010 3,018 (3,018) (a)
4,006 (b) 13,016
---------- --------- ---------- ---------
TOTAL $ 310,802 $ 96,843 $ (82,375) $ 325,270
========== ========= ========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade $ 29,134 $ 4,146 $ - $ 33,280
Due to affiliates 10,737 67,977 (67,977) (a) 10,737
Accrued and other current liabilities 27,770 330 - 28,100
Accrued employee benefit costs - current portion 4,602 - - 4,602
---------- --------- ---------- ---------
Total current liabilities 72,243 72,453 (67,977) 76,719
Revolving term loan - - 9,992 (b) 9,992
Accrued pension benefits costs -
less current portion 3,589 - - 3,589
Accrued postretirements benefits -
less current portion 39,391 - - 39,391
Other liabilities 15,851 3,120 (3,120) (a) 15,851
---------- --------- ---------- ---------
Total noncurrent liabilities 58,831 3,120 6,872 68,823
SHAREHOLDERS' EQUITY:
Common Stock 202 - - 202
Additional paid-in capital 164,409 15,380 (15,380) (a) 164,409
Retained earnings 15,117 5,890 (5,890) (a) 15,117
---------- --------- ---------- ---------
Total shareholders' equity 179,728 21,270 (21,270) 179,728
---------- --------- ---------- ---------
TOTAL $ 310,802 $ 96,843 $ (82,375) $ 325,270
========== ========= ========== =========
</TABLE>
<PAGE> 16
Century Aluminum Company
Unaudited Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1999
(numbers in thousands)
<TABLE>
<CAPTION>
Century Xstrata Pro Forma Pro Forma
Historical Historical Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $566,276 $65,946 $ - $632,222
Cost of goods sold 739 (f)
572,921 68,503 370 (e) 642,533
-------- ------- ------- --------
Gross profit (6,645) (2,557) (1,109) (10,311)
Selling, general and administrative expenses 18,884 377 - 19,261
-------- ------- ------- --------
Operating income (loss) (25,529) (2,934) (1,109) (29,572)
Gain on sale of fabricating business 41,130 - - 41,130
Interest income (expense) - net (3,535) (5,266) 5,266 (a) (10,613)
(5,253) (c)
(1,825) (d)
Net gain (loss) on forward contracts (5,368) - - (5,368)
Other income (expense) (789) 914 - 125
-------- ------- ------- --------
Income (loss) before income taxes and
extraordinary item 5,909 (7,286) (2,921) (4,298)
Income tax (expense) benefit (628) 3,030 1,053 3,455
-------- ------- ------- --------
Net income (loss) before extraordinary item $ 5,281 $(4,256) $(1,868) $ (843)
======== ======= ======= ========
Basic average common shares outstanding 20,202 20,202 20,202 20,202
Diluted average common shares outstanding 20,357 20,357 20,357 20,357
Net income (loss) per share before extraordinary items
Basic $ 0.26 $ (0.21) $ (0.09) $ (0.04)
Diluted $ 0.26 $ (0.21) $ (0.09) $ (0.04)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 17
CENTURY ALUMINUM COMPANY
Notes to Pro Forma Condensed Financial Statements
For the Year Ended December 31, 1999
Numbers in Thousands
1. Basis of Presentation
On April 7, 2000, the Company, through its wholly-owned indirect
subsidiary Berkeley Aluminum, Inc. ("Berkeley"), increased its 26.67%
undivided interest in certain property, plant and equipment which
comprise an aluminum reduction facility in Mt. Holly, South Carolina
("Mt. Holly") to 49.67% by purchasing a 23% undivided interest from
Xstrata. Xstrata is a wholly-owned subsidiary of Xstrata AG, a publicly
traded Swiss company ("Xstrata AG"). Glencore International AG
("Glencore") is a major shareholder of Xstrata AG and is also a major
shareholder of the Company. As part of the purchase, Berkeley also
acquired Xstrata's 23% interest in the general partnership which operates
and maintains Mt. Holly. The allocation of the cash purchase price of
$95,000 is as follows:
<TABLE>
<S> <C>
Inventory $ 4,765
Accounts receivable 7,434
Fixed assets 83,271
Investment in partnership 4,006
Accounts payable (4,146)
Accrued liabilities (330)
--------------
Total purchase price $ 95,000
==============
</TABLE>
2. Pro Forma Adjustments
a. To eliminate the Xstrata assets, liabilities and equity not
acquired or assumed in connection with the Company's
acquisition of the 23% interest in Mt. Holly.
b. To reflect the purchase price as if the acquisition had
occurred on December 31, 1999.
c. To reflect interest expense on estimated additional
borrowings from January 1 through December 31 assuming the
acquisition had occurred on January 1, 1999.
d. To reflect reduced interest income from October 1 through
December 31 assuming the acquisition had occurred on
January 1, 1999 and the Company used the proceeds from the
sale of its fabrication business on September 21, 1999 to
retire the additional debt incurred to fund the $95,000
purchase price.
e. To reflect the effects of recording the Xstrata inventory
purchase using the last-in, first-out (LIFO) costing method
for the year ended December 31, 1999.
f. To reflect the increase in depreciation expense as a result
of the increase of the Xstrata fixed assets to their fair
market value as if the acquisition had occurred on January
1, 1999.
g. To reflect income tax effect of pro forma adjustments.
3. Commitments
Subsequent to the purchase, the Company entered into a ten year agreement
with Glencore to sell approximately 110,000 pounds of primary aluminum
products per year. The first two years are at variable prices using a
formula whose base is the quoted market price for primary aluminum on the
London Metal Exchange ("LME"). The remaining eight years of the contract
are at a fixed price as defined in the agreement. In addition, the
Company assumed a supply agreement with Glencore for the Company's
alumina raw material requirements. The unit cost is based on a fixed
percentage of the market price of primary aluminum as quoted on the LME.
The alumina supply agreement expires in 2008.
