Aleris Reports Fourth Quarter and Full Year 2010 Results

Mar 03, 2011, 08:00 ET from Aleris International, Inc.

BEACHWOOD, Ohio, March 3, 2011 /PRNewswire/ -- Aleris International, Inc. today reported results for the quarter and twelve months ended December 31, 2010.

Performance Summary

  • Fourth quarter 2010 volume increased 17% versus the fourth quarter of 2009. This increase, coupled with higher LME prices and improved rolling margins, resulted in fourth quarter revenue growth of 26% from $840 million in 2009 to $1.1 billion in 2010.

  • Net income for the fourth quarter of 2010 was $42 million compared to a net loss of $759 million for the fourth quarter of 2009. Fourth quarter 2010 and 2009 net income, excluding the net of tax impacts of metal price lag, reorganization items, unrealized gains on derivative financial instruments, the impact of recording assets at fair value through fresh-start accounting, restructuring and impairment charges, and interest expense associated with our previous debt structure, totaled $48 million and $34 million, respectively.

  • Adjusted EBITDA for the fourth quarter of 2010 was $63 million compared to $30 million for the fourth quarter of 2009. Adjusted EBITDA for the combined year ended December 31, 2010 was $264 million, versus $82 million for 2009.

  • Cash provided by operating activities was $22 million in the fourth quarter of 2010 compared to $17 million in the fourth quarter of 2009. Cash provided by operating activities subsequent to emergence from bankruptcy was $120 million for the seven months ended December 31, 2010.

  • Liquidity at December 31, 2010 was $520 million, which consisted of $406 million of availability under the revolving credit facility plus $114 million of cash.  Adjusted for the net proceeds from the February 2011 bond offering, liquidity would have been approximately $709 million.

  • The Company broke ground for its joint venture rolling mill in China in January 2011 and sold its Brazil recycling operations in the fourth quarter of 2010.

Aleris International, Inc. (1)



For the three months ended December 31,


For the year ended December 31,



2010


2009


2010


2009



(Successor)


(Predecessor)


(Combined)


(Predecessor)


(Dollars and pounds in millions)

(unaudited)


(unaudited)











Pounds invoiced

1,136


974


4,510


3,572


Rolled Products North America

176


174


817


691


Recycling and Specification Alloys Americas

548


446


2,035


1,537


Europe

412


354


1,658


1,344











Revenue

$1,059


$840


$4,117


$2,997











Net income (loss)

42


(759)


3,135


(1,187)











Adjusted EBITDA

63


30


264


82











Cash provided (used) by operating activities

22


17


(54)


57











(1) Aleris International, Inc. is a wholly-owned subsidiary of Aleris Holding Company ("AHC"), a holding company whose assets, liabilities and operations consist solely of those of Aleris International, Inc. The results of operations of Aleris Holding Company are identical to Aleris International, Inc.


Aleris emerged from Chapter 11 bankruptcy protection on June 1, 2010. This resulted in the emerged Company being considered a new entity for financial reporting purposes. As a result, our financial statements for periods after June 1, 2010 (references to the Company and the related financial statements for such periods, the "Successor") are not comparable to the financial statements for periods prior to that date (references to the Company and the related financial statements for such periods, the "Predecessor"). However, we have adjusted for the most significant of these differences in our presentation of Adjusted EBITDA. For illustrative purposes, the Company has combined the Successor and Predecessor results to derive "Combined" results for the year ended December 31, 2010. The financial information accompanying this earnings release provides separate Successor and Predecessor GAAP results for the applicable periods along with the combined results.




Aleris reported revenues of $1.1 billion for the fourth quarter of 2010 compared to $840 million in the same period of 2009 driven by higher shipment levels, rolling margins and aluminum prices. For the fourth quarter of 2010, net income totaled $42 million compared to a net loss of $759 million in the fourth quarter of 2009. Fourth quarter 2010 net income, excluding the net of tax impacts of $1 million of metal price lag, $2 million of reorganization items, $8 million of unrealized gains on derivative financial instruments, and $11 million of restructuring and impairment charges, totaled $48 million. For the fourth quarter of 2009 net income totaled $34 million, excluding the net of tax impacts of metal price lag, reorganization items, unrealized gains on derivative financial instruments, restructuring and impairment charges, and interest expense associated with our previous debt structure.

Adjusted EBITDA totaled $63 million in the fourth quarter of 2010 compared to $30 million in the fourth quarter of 2009. Operating results were positively impacted by a 17% increase in volume as economic conditions for many of the industries we serve improved compared to the fourth quarter of 2009. Contribution margins also benefited from improved pricing and wider scrap spreads. Productivity gains resulting from our 2009 restructuring initiatives and the Aleris Operating System partially offset both inflation and the increased seasonal maintenance spending necessitated by higher production levels in 2010.

At December 31, 2010, our long-term indebtedness consisted primarily of $45 million of exchangeable notes. We had $520 million of liquidity at December 31, 2010, which consisted of $406 million of availability under our revolving credit facility plus $114 million of cash. In February 2011, we issued $500 million of 7 5/8% senior notes in a private debt placement, a portion of the net proceeds from which were used to pay a $300 million dividend to the stockholders of Aleris Holding Company.  Pro forma for the offering of the notes and the payment of the dividend, our liquidity at December 31, 2010 would have been $709 million.

Steven J. Demetriou, Aleris chairman and chief executive officer, said, "Our fourth quarter results demonstrate the benefits associated with our successful restructuring initiatives and the continued momentum of the economic recovery. This is particularly true in our European rolled products and extrusions businesses, as well as our recycling and specification alloys businesses in both the Americas and Europe, where higher volumes and improved pricing led to significant performance improvements.  We ended 2010 well positioned to capitalize on our strategic growth initiatives led by our announced expansions in China, as well as expected continued benefits from the recovery."

Recycling and Specification Alloys Americas

Recycling and Specification Alloys Americas' segment income for the fourth quarter of 2010 increased by $8 million to $15 million compared to the prior year period and segment Adjusted EBITDA increased by $5 million to $17 million.  The increase in segment Adjusted EBITDA is due primarily to a 23% increase in pounds invoiced, driven by improved demand across all of the industries served by this segment, particularly the automotive applications. Further impacting quarterly performance were improved pricing and metal spreads as well as a $1 million partial settlement of an insurance claim.

Rolled Products North America

Rolled Products North America's segment income for the fourth quarter of 2010 decreased by $10 million to $6 million compared to the fourth quarter of 2009 while segment Adjusted EBITDA decreased by $7 million to $11 million. RPNA performance versus the prior year fourth quarter was impacted by customer restocking trends that positively benefited the fourth quarter of 2009 and slight customer de-stocking activities in the fourth quarter of 2010. Higher unit conversion costs resulted from the sequential seasonal decline in volume in the fourth quarter after ramping up production at our Lewisport, KY operations and partially restarting the Richmond, VA facility to meet higher demand in the first three quarters of 2010.  Additionally, the segment took the opportunity presented by lighter seasonal volumes to perform extended maintenance on its rolling mills and run additional trials of new alloys in our continuous cast rolling operations.  Higher rolling margins were realized after a series of successful pricing initiatives in the preceding quarters, partially offsetting the volume and conversion cost impacts.

Europe

Europe's segment income for the fourth quarter of 2010 increased by $23 million to $36 million compared to the fourth quarter of 2009 while segment Adjusted EBITDA increased by $36 million to $43 million. The increase in segment Adjusted EBITDA was primarily due to a 16% increase in shipment levels as demand from the automotive, aerospace and most other industries served by this segment continued to outpace the prior year. Contribution margins were positively impacted by improved pricing and metal spreads. Productivity initiatives across the segment also contributed to the improved performance with productivity gains more than offsetting inflation and higher seasonal repair and maintenance spending. The segment also benefited from gains totaling $3 million related to partial settlement of an insurance claim and a contract settlement.

Full Year Results

For the combined year ended December 31, 2010, Aleris reported revenues of $4.1 billion compared to $3.0 billion in 2009. Net income for the combined year ended December 31, 2010 totaled $3.1 billion compared to a net loss of $1.2 billion in the prior year. Combined 2010 net income, excluding the net of tax impacts of $3.1 billion of gains from reorganization, $19 million of unrealized losses on derivative financial instruments, $12 million of restructuring charges, $69 million of interest expense for the Predecessor period, $26 million of losses from the impact of recording inventory and other items at fair value through fresh-start and purchase accounting, and the favorable impact of $14 million of metal price lag, totaled $149 million. This compares to a net loss of $26 million in 2009, excluding the net of tax impacts of reorganization items, unrealized gains on derivative financial instruments, restructuring and impairment charges, interest expense, losses from the impact of recording assets at fair value through purchase accounting and the impact of metal price lag.

Adjusted EBITDA totaled $264 million in the combined year ended December 31, 2010 compared to $82 million in 2009. Demand increases across all of our segments drove the improved EBITDA performance in 2010, with all segments posting volume growth in excess of 18%. Significant improvement in cash conversion costs driven by our 2009 restructuring initiatives, other productivity programs and the Aleris Operating System also increased EBITDA in 2010. Gains of approximately $7 million related to insurance proceeds and supply contracts also improved 2010 results.  

Conference Call and Webcast Information

Aleris will hold a conference call March 3, 2011 at 11:00 a.m. Eastern Standard Time. Steven J. Demetriou, chairman and chief executive officer, and Sean M. Stack, executive vice president and chief financial officer, will host the call to discuss results.

The call can be accessed by dialing 1-877-398-9483 or 1-760-298-5072 (for international callers) and referencing ID # 47910512 – or through the Company's website, www.aleris.com.  A replay of the call will be posted on the Company's website in the Investor Relations section

Forward-Looking Statements

This press release contains forward-looking statements.  These include statements that contain words such as "believe," "expect," "anticipate," "intend," "estimate," "should" and similar expressions intended to connote future events and circumstances, and include statements regarding future actual and adjusted earnings; future improvements in margins, processing volumes and pricing; overall 2010 operating performance; anticipated effective tax rates; expected cost savings; the anticipated economic environment in 2011; and future benefits from acquisitions and new products.  Investors are cautioned that all forward-looking statements involve risks and uncertainties, and that actual results could differ materially from those described in the forward-looking statements.  These risks and uncertainties would include, without limitation, Aleris's levels of indebtedness and debt service obligations; the financial condition of Aleris's customers and future bankruptcies and defaults by major customers; the availability at favorable cost of aluminum scrap and other metal supplies that Aleris processes; the ability of Aleris to enter into effective metals, natural gas and other commodity derivatives; increases in natural gas and other fuel costs of Aleris; a weakening in industrial demand resulting from a decline in U.S. or world economic conditions, including any decline caused by terrorist activities or other unanticipated events; future utilized capacity of Aleris's various facilities; a continuation of building and construction customers and distribution customers reducing their inventory levels and reducing the volume of Aleris's shipments; restrictions on and future levels and timing of capital expenditures; retention of Aleris's major customers; the timing and amounts of collections; currency exchange fluctuations; future write-downs or impairment charges which may be required because of the occurrence of some of the uncertainties listed above; the difficult conditions in the capital, credit, commodities, automobile and housing segments and in the current economy; and other risks listed in Aleris's filings with the United States Bankruptcy Court, including but not limited to Aleris's First Amended Plan of Reorganization and related Disclosure Statement, particularly the section entitled "Risk Factors" contained therein.

Non-GAAP Financial Measures

In addition to the results reported in accordance with GAAP, this press release includes information regarding "Adjusted EBITDA" and "segment Adjusted EBITDA." These non-GAAP financial measures exclude interest income and expense, income taxes, depreciation and amortization, metal price lag, reorganization items, net, unrealized gains and losses on derivative financial instruments, restructuring and impairment charges, the impact of the recording assets at fair value through fresh-start and purchase accounting, currency gains and losses on the translation of indebtedness, stock-based compensation expense, and certain other gains and losses.  

Our computation of these non-GAAP measures is likely to differ from the methods used by other companies in computing similarly titled or defined terms.  Non-GAAP measures have limitations as analytical tools and should be considered in addition to, not in isolation or as a substitute for, or superior to, our measures of financial performance prepared in accordance with GAAP, including pre-tax income (loss) and net income (loss).  Investors are encouraged to review the accompanying tables reconciling Adjusted EBITDA and segment Adjusted EBITDA to comparable GAAP amounts.   Management uses Adjusted EBITDA and segment Adjusted EBITDA as a performance metric and believes the measure provides additional information commonly used by parties to our revolving credit facility and holders of our 7 5/8% senior notes in understanding the Company's operating results and the ongoing performance of our underlying businesses.  In addition, Adjusted EBITDA and segment Adjusted EBITDA, including the impacts of metal price lag, is a component of certain covenants required under the revolving credit facility and contained in the indenture governing our     7 5/8% senior notes.

About Aleris

Aleris is a privately-held, global leader in aluminum rolled products and extrusions, aluminum recycling and specification alloy production.  Headquartered in Beachwood, Ohio, the company operates more than 40 production facilities in the Americas, Europe and Asia.  For more information, visit www.aleris.com.  

While Aleris will in the future be required to file periodic and current reports with the SEC under the indenture governing the 7 5/8% senior notes, Aleris currently has no obligation under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or other laws to publicly disclose financial or other information regarding its business.  Aleris may publicly disclose certain information from time to time, in its sole discretion.  

The information disclosed in this press release is believed by Aleris to be accurate as of the date hereof.  Aleris expressly disclaims any duty to update the information contained in this press release.  Persons engaging in any transactions with Aleris or in Aleris's securities are cautioned that there may exist other material information regarding Aleris that is not publicly available.

Aleris International, Inc.


Consolidated Statements of Operations

(unaudited)

(in millions)



(Successor)



(Predecessor)



For the three



For the three



months ended



months ended



December 31, 2010



December 31, 2009


Revenues

$                      1,059.4



$                         839.5


Cost of sales

948.1



764.2


Gross profit

111.3



75.3


Selling, general and administrative expenses

66.6



55.1


Restructuring and impairment charges

10.9



770.7


Gains on derivative financial instruments

(1.1)



(29.5)


Other operating income, net

(2.0)



(0.1)


Operating income (loss)

36.9



(720.9)


Interest expense, net

3.1



60.0


Reorganization items, net

1.9



8.9


Other (income) expense, net

(0.4)



7.0


Income (loss) before income taxes

32.3



(796.8)


Benefit from income taxes

(9.5)



(37.9)


Net income (loss)

$                           41.8



$                       (758.9)






















Aleris International, Inc.


Consolidated Statements of Operations

(in millions)



(Combined)


(Successor)



(Predecessor)


(unaudited)


For the seven



For the five


For the


For the year ended


months ended



months ended


year ended


December 31, 2010


December 31, 2010



May 31, 2010


December 31, 2009

Revenues

$                  4,117.1


$             2,474.1



$         1,643.0


$             2,996.8

Cost of sales

3,707.6


2,251.8



1,455.8


2,820.4

Gross profit

409.5


222.3



187.2


176.4

Selling, general and administrative expenses

224.2


140.0



84.2


243.6

Restructuring and impairment charges (gains)

11.7


12.1



(0.4)


862.9

Losses (gains) on derivative financial instruments

22.4


(6.2)



28.6


(17.0)

Other operating (income) expense, net

(1.7)


(2.1)



0.4


(2.1)

Operating income (loss)

152.9


78.5



74.4


(911.0)

Interest expense, net

80.6


7.0



73.6


225.4

Reorganization items, net

(3,079.1)


7.4



(3,086.5)


123.1

Other expense (income), net

25.1


(7.6)



32.7


(10.3)

Income (loss) before income taxes

3,126.3


71.7



3,054.6


(1,249.2)

(Benefit from) provision for income taxes

(8.4)


0.3



(8.7)


(61.8)

Net income (loss)

$                  3,134.7


$                  71.4



$         3,063.3


$           (1,187.4)






























Aleris International, Inc.


Consolidated Balance Sheet

(in millions, except share and per share data)



(Successor)



(Predecessor)


December 31,

2010



2009

ASSETS





Current Assets





Cash and cash equivalents

$          113.5



$          108.9

Accounts receivable (net of allowances of $8.7 and $16.7 at December 31, 2010 and 2009, respectively)

393.4



319.3

Inventories

613.6



425.8

Deferred income taxes

1.6



9.8

Current derivative financial instruments

17.4



30.4

Prepaid expenses and other current assets

23.8



64.3

Total Current Assets

1,163.3



958.5

Property, plant and equipment, net

510.0



500.3

Goodwill

-



37.8

Intangible assets, net

49.7



26.3

Long-term derivative financial instruments

9.3



8.6

Deferred income taxes

13.9



28.9

Other long-term assets

33.5



19.9

Total Assets

$       1,779.7



$       1,580.3






LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)





Current Liabilities





Accounts payable

$          283.6



$          203.2

Accrued liabilities

165.2



165.1

Deferred income taxes

13.8



29.2

Current portion of long-term debt

5.3



391.7

Debt in default

-



5.0

Debtor-in-possession financing

-



444.0

Total Current Liabilities

467.9



1,238.2

Long-term debt

45.1



2.0

Deferred income taxes

8.7



27.5

Accrued pension benefits

184.5



123.4

Accrued postretirement benefits

48.5



-

Other long-term liabilities

83.2



90.3

Total Long-Term Liabilities

370.0



243.2

Liabilities subject to compromise

-



2,279.3

Redeemable preferred stock; par value $.01; 5,000 shares authorized and issued at December 31, 2010

5.2



-

Stockholder’s Equity (Deficit)





Successor:





Common stock; par value $.01; 5,000 shares authorized and 100 shares issued

-



-

Additional paid-in capital

838.7



-

Predecessor:





Preferred stock; par value $.01; 100 shares authorized; none issued

-



-

Common stock; par value $.01; 900 shares authorized and issued

-



-

Additional paid-in capital

-



857.9

Retained earnings (deficit)

71.2



(3,063.3)

Accumulated other comprehensive income

26.7



25.0

Total Stockholder’s Equity (Deficit)

936.6



(2,180.4)

Total Liabilities and Stockholder’s Equity (Deficit)

$       1,779.7



$       1,580.3













Aleris International, Inc.


Consolidated Statements of Cash Flows

(unaudited)

(in millions)



(Successor)



(Predecessor)



For the three



For the three



months ended



months ended



December 31, 2010



December 31, 2009


Operating activities






Net income (loss)

$                     41.8



$                 (758.9)


Adjustments to reconcile net income (loss) to net cash provided by operating activities:






Depreciation and amortization

17.7



28.3


Benefit from deferred income taxes

(4.8)



(23.2)


Reorganization items, net of payments

(13.0)



4.0


Restructuring and impairment charges, net of payments

9.2



757.8


Stock-based compensation expense

2.2



0.3


Unrealized gains on derivative financial instruments

(7.6)



(17.6)


Foreign exchange loss on debt

-



2.9


Amortization of debt issuance costs

1.1



32.0


Other non-cash gains, net

(2.0)



(1.6)


Change in operating assets and liabilities:






Change in accounts receivable

65.6



68.1


Change in inventories

(69.7)



(1.0)


Change in other assets

19.5



(13.9)


Change in accounts payable

2.6



(26.1)


Change in accrued liabilities

(40.9)



(34.1)


Net cash provided by operating activities

21.7



17.0


Investing activities






Proceeds from sale of businesses

19.9



-


Payments for property, plant and equipment

(21.1)



(15.7)


Proceeds from sale of property, plant and equipment

0.1



0.9


Other

(0.1)



(0.3)


Net cash used  by investing activities

(1.2)



(15.1)


Financing activities






Payments on DIP Facilities, net

-



20.2


Payments on other long-term debt

(0.5)



(4.1)


Debt issuance costs

(0.1)



-


Other

(0.6)



7.4


Net cash (used) provided by financing activities

(1.2)



23.5


Effect of exchange rate differences on cash and cash equivalents

(0.9)



2.5


Net increase in cash and cash equivalents

18.4



27.9


Cash and cash equivalents at beginning of period

95.1



81.0


Cash and cash equivalents at end of period

$                   113.5



$                   108.9










Aleris International, Inc.


Consolidated Statements of Cash Flows

(in millions)




(Combined)


(Successor)



(Predecessor)



For the twelve


For the seven



For the five


For the



months ended


months ended



months ended


year ended



December 31, 2010


December 31, 2010



May 31, 2010


December 31, 2009

Operating activities


(unaudited)








Net income (loss)


$               3,134.7


$                    71.4



$            3,063.3


$           (1,187.4)

Adjustments to reconcile net income (loss) to net










cash (used) provided by operating activities:










Depreciation and amortization


58.6


38.4



20.2


168.4

Benefit from deferred income taxes


(16.2)


(4.8)



(11.4)


(54.2)

Reorganization items, net of payments


(3,144.0)


(26.3)



(3,117.7)


97.9

Restructuring and impairment charges










(gains), net of payments


2.9


8.8



(5.9)


817.3

Stock-based compensation expense


6.2


4.9



1.3


2.1

Unrealized losses (gains) on derivative










financial instruments


19.4


(19.8)



39.2


(11.2)

Foreign exchange loss (gain) on debt


25.5


-



25.5


(14.9)

Amortization of debt issuance costs


30.3


2.5



27.8


109.1

Other non-cash (gains) charges, net


2.9


(15.4)



18.3


1.7

Change in operating assets and liabilities:










Change in accounts receivable


(100.2)


81.3



(181.5)


119.5

Change in inventories


(185.3)


(46.6)



(138.7)


159.3

Change in other assets


21.8


37.0



(15.2)


(41.7)

Change in accounts payable


92.2


24.8



67.4


(103.6)

Change in accrued liabilities


(2.5)


(35.9)



33.4


(5.6)

Net cash (used) provided by operating activities

(53.7)


120.3



(174.0)


56.7

Investing activities










Proceeds from sale of businesses


19.9


19.9



-


-

Payments for property, plant and equipment


(62.5)


(46.5)



(16.0)


(68.6)

Proceeds from sale of property, plant and equipment

0.7


0.4



0.3


8.1

Other


-


-



-


0.7

Net cash used  by investing activities


(41.9)


(26.2)



(15.7)


(59.8)

Financing activities










Proceeds from issuance of AHC common stock,










net of issuance costs of $22.5


541.1


-



541.1


-

Proceeds from issuance of Preferred Stock


5.0


-



5.0


-

(Payments on) proceeds from ABL Facility, net


(1.8)


(81.8)



80.0


-

Proceeds from Exchangeable Notes, net










of issuance costs of $1.2


43.8


-



43.8


-

Payments on DIP Facilities, net


(427.1)


-



(427.1)


158.8

Payments on other long-term debt


(2.3)


(1.0)



(1.3)


(8.8)

Debt issuance costs


(55.3)


(1.1)



(54.2)


(89.5)

Other


(0.7)


(0.9)



0.2


0.3

Net cash provided (used) by financing activities

102.7


(84.8)



187.5


60.8

Effect of exchange rate differences on










cash and cash equivalents


(2.5)


5.3



(7.8)


2.7

Net increase (decrease) in cash and cash equivalents

4.6


14.6



(10.0)


60.4

Cash and cash equivalents at beginning of period


108.9


98.9



108.9


48.5

Cash and cash equivalents at end of period


$                  113.5


$                  113.5



$                 98.9


$                108.9













Aleris International, Inc.


Reconciliation of Net Income (Loss) to Adjusted EBITDA

(unaudited)

(in millions)




For the three months ended


For the year ended



December 31,


December 31,



2010


2009


2010


2009



(Successor)


(Predecessor)


(Combined)


(Predecessor)










Net income (loss)


$               41.8


$            (758.9)


$          3,134.7


$         (1,187.4)

Interest expense, net


3.1


60.0


80.6


225.4

Benefit from income taxes


(9.5)


(37.9)


(8.4)


(61.8)

Depreciation and amortization


17.7


28.3


58.6


168.4

EBITDA


53.1


(708.5)


3,265.5


(855.4)

Reorganization items, net


1.9


8.9


(3,079.1)


123.1

Unrealized gains on derivative financial instruments

(7.6)


(17.6)


19.4


(11.2)

Restructuring and impairment charges


10.9


770.7


11.7


862.9

Impact of recording assets at fair value through









fresh-start and purchase accounting


0.2


(0.1)


26.0


2.5

Currency losses (gains) on translation of indebtedness

1.6


1.8


26.3


(17.0)

Stock-based compensation expense


2.2


0.3


6.2


2.1

Other


0.4


0.6


1.7


4.2

Unfavorable (favorable) metal price lag


0.7


(26.3)


(13.6)


(29.5)

Adjusted EBITDA


$               63.4


$               29.8


$             264.1


$               81.7












Aleris International, Inc.


Reconciliation of Adjusted EBITDA to Cash Flows Provided (Used) by Operating Activities

(unaudited)

(in millions)



For the three months ended


For the year ended


December 31,


December 31,


2010


2009


2010


2009


(Successor)


(Predecessor)


(Combined)


(Predecessor)









Adjusted EBITDA

$           63.4


$           29.8


$         264.1


$           81.8

Reorganization items, net

(1.9)


(8.9)


3,079.1


(123.1)

Unrealized gains (losses) on derivative financial instruments

7.6


17.6


(19.4)


11.2

Restructuring and impairment charges

(10.9)


(770.7)


(11.7)


(862.9)

Impact of recording assets at fair value through








fresh-start and purchase accounting

(0.2)


0.1


(26.0)


(2.5)

Currency (losses) gains on translation of indebtedness

(1.6)


(1.8)


(26.3)


17.0

Stock-based compensation expense

(2.2)


(0.3)


(6.2)


(2.1)

Other

(0.4)


(0.6)


(1.7)


(4.3)

(Unfavorable) favorable metal price lag

(0.7)


26.3


13.6


29.5

EBITDA

53.1


(708.5)


3,265.5


(855.4)

Interest expense, net

(3.1)


(60.0)


(80.6)


(225.4)

Benefit from income taxes

9.5


37.9


8.4


61.8

Depreciation and amortization

(17.7)


(28.3)


(58.6)


(168.4)

Net income (loss)

41.8


(758.9)


3,134.7


(1,187.4)

Depreciation and amortization

17.7


28.3


58.6


168.4

Benefit from deferred income taxes

(4.8)


(23.2)


(16.2)


(54.2)

Reorganization items, net of payments

(13.0)


4.0


(3,144.0)


97.9

Restructuring and impairment charges, net of payments

9.2


757.8


2.9


817.3

Stock-based compensation expense

2.2


0.3


6.2


2.1

Unrealized (gains) losses on derivative financial instruments

(7.6)


(17.6)


19.4


(11.2)

Foreign exchange loss (gain) on debt

-


2.9


25.5


(14.9)

Amortization of debt issuance costs

1.1


32.0


30.3


109.1

Other non-cash (gains) charges, net

(2.0)


(1.6)


2.9


1.7

Change in operating assets and liabilities:








Change in accounts receivable

65.6


68.1


(100.2)


119.5

Change in inventories

(69.7)


(1.0)


(185.3)


159.3

Change in other assets

19.5


(13.9)


21.8


(41.7)

Change in accounts payable

2.6


(26.1)


92.2


(103.6)

Change in accrued liabilities

(40.9)


(34.1)


(2.5)


(5.6)

Net cash provided (used) by operating activities

$           21.7


$           17.0


$         (53.7)


$           56.7











Aleris International, Inc.


Reconciliation of Segment Income (Loss) to

Segment Adjusted EBITDA

(unaudited)

(in millions)



For the three months ended

December 31,


For the year ended

December 31,


2010


2009


2010


2009


(Successor)


(Predecessor)


(Combined)


(Predecessor)

Rolled Products North America








Segment income

$                 5.8


$               16.2


$               59.1


$               55.8

Impact of recording assets at fair value through








fresh-start and purchase accounting

(0.2)


-


(2.7)


-

Depreciation and amortization

9.5


6.6


31.2


28.7

Other

0.1


0.8


0.7


2.0

Favorable metal price lag

(4.3)


(5.3)


(3.3)


(25.4)

Segment Adjusted EBITDA

$               10.9


$               18.3


$               85.0


$               61.1









Recycling and Specification Alloys Americas








Segment income (loss)

$               14.5


$                 6.9


$               53.6


$               (7.2)

Impact of recording assets at fair value through








fresh-start and purchase accounting

-


-


1.9


-

Depreciation and amortization

2.7


4.8


8.3


23.8

Other

-


-


(0.1)


0.5

Unfavorable metal price lag

-


0.7


-


3.6

Segment Adjusted EBITDA

$               17.2


$               12.4


$               63.7


$               20.7









Europe








Segment income (loss)

$               36.1


$               13.2


$             114.7


$             (79.7)

Impact of recording assets at fair value through








fresh-start and purchase accounting

0.4


(0.1)


26.6


2.4

Depreciation and amortization

4.0


16.2


15.2


111.6

Other

(2.1)


(0.2)


(2.2)


(2.8)

Unfavorable (favorable) metal price lag

5.0


(21.6)


(10.3)


(7.6)

Segment Adjusted EBITDA

$               43.4


$                 7.5


$             144.0


$               23.9











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SOURCE Aleris International, Inc.



RELATED LINKS

http://www.aleris.com