Delaware
(State
of Incorporation)
|
13-3070826
(IRS
Employer Identification No.)
|
2511
Garden Road
Building
A, Suite 200
Monterey,
California
(Address
of principal executive offices)
|
93940
(Zip
Code)
|
June
30, 2006
|
December
31, 2005
|
||||||
ASSETS
|
|||||||
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
29,175
|
$
|
17,752
|
|||
Restricted
cash
|
6,029
|
2,028
|
|||||
Accounts
receivable — net
|
118,191
|
83,016
|
|||||
Due
from affiliates
|
15,635
|
18,638
|
|||||
Inventories
|
132,956
|
111,436
|
|||||
Prepaid
and other current assets
|
21,375
|
23,918
|
|||||
Deferred
taxes — current portion
|
53,281
|
37,705
|
|||||
Total
current assets
|
376,642
|
294,493
|
|||||
Property,
plant and equipment — net
|
1,155,732
|
1,070,158
|
|||||
Intangible
asset — net
|
68,118
|
74,643
|
|||||
Goodwill
|
94,844
|
94,844
|
|||||
Other
assets
|
251,358
|
143,293
|
|||||
TOTAL
|
$
|
1,946,694
|
$
|
1,677,431
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
LIABILITIES:
|
|||||||
Accounts
payable — trade
|
$
|
59,291
|
$
|
61,919
|
|||
Due
to affiliates
|
221,650
|
158,682
|
|||||
Accrued
and other current liabilities
|
52,691
|
53,715
|
|||||
Long
term debt — current portion
|
16,093
|
581
|
|||||
Accrued
employee benefits costs — current portion
|
9,333
|
9,333
|
|||||
Convertible
senior notes
|
175,000
|
175,000
|
|||||
Industrial
revenue bonds
|
7,815
|
7,815
|
|||||
Total
current liabilities
|
541,873
|
467,045
|
|||||
Senior
unsecured notes payable
|
250,000
|
250,000
|
|||||
Nordural
debt
|
283,636
|
230,436
|
|||||
Revolving
credit facility
|
--
|
8,069
|
|||||
Accrued
pension benefits costs — less current portion
|
10,904
|
10,350
|
|||||
Accrued
postretirement benefits costs — less current portion
|
103,245
|
96,660
|
|||||
Due
to affiliates — less current portion
|
592,550
|
337,416
|
|||||
Other
liabilities
|
28,420
|
28,010
|
|||||
Deferred
taxes
|
16,890
|
16,890
|
|||||
Total
noncurrent liabilities
|
1,285,645
|
977,831
|
|||||
CONTINGENCIES
AND COMMITMENTS (NOTE 6)
|
|||||||
SHAREHOLDERS’
EQUITY:
|
|||||||
Preferred
stock (one cent par value, 5,000,000 shares authorized, and no
shares
outstanding)
|
--
|
--
|
|||||
Common
stock (one cent par value, 100,000,000 shares authorized; 32,426,835
and
32,188,165 shares issued and outstanding at June 30, 2006 and
December
31, 2005, respectively)
|
324
|
322
|
|||||
Additional
paid-in capital
|
429,797
|
419,009
|
|||||
Accumulated
other comprehensive loss
|
(119,816
|
)
|
(91,418
|
)
|
|||
Accumulated
deficit
|
(191,129
|
)
|
(95,358
|
)
|
|||
Total
shareholders’ equity
|
119,176
|
232,555
|
|||||
TOTAL
|
$
|
1,946,694
|
$
|
1,677,431
|
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
NET
SALES:
|
|||||||||||||
Third-party
customers
|
$
|
356,242
|
$
|
243,329
|
$
|
654,715
|
$
|
490,754
|
|||||
Related
parties
|
49,734
|
39,927
|
98,207
|
77,898
|
|||||||||
405,976
|
283,256
|
752,922
|
568,652
|
||||||||||
Cost
of goods sold
|
297,972
|
237,908
|
568,450
|
471,737
|
|||||||||
Gross
profit
|
108,004
|
45,348
|
184,472
|
96,915
|
|||||||||
Selling,
general and administrative expenses
|
8,376
|
8,046
|
20,495
|
16,842
|
|||||||||
Operating
income
|
99,628
|
37,302
|
163,977
|
80,073
|
|||||||||
Interest
expense
|
(8,799
|
)
|
(6,517
|
)
|
(15,550
|
)
|
(13,201
|
)
|
|||||
Interest
income
|
152
|
275
|
348
|
493
|
|||||||||
Net
gain (loss) on forward contracts
|
(30,456
|
)
|
24,496
|
(317,216
|
)
|
1,001
|
|||||||
Other
income (expense)
|
37
|
(472
|
)
|
(124
|
)
|
(65
|
)
|
||||||
Income
(loss) before income taxes and equity in earnings of joint
ventures
|
60,562
|
55,084
|
(168,565
|
)
|
68,301
|
||||||||
Income
tax benefit (expense)
|
(19,109
|
)
|
(17,880
|
)
|
65,247
|
(22,733
|
)
|
||||||
Income
(loss) before equity in earnings of joint ventures
|
41,453
|
37,204
|
(103,318
|
)
|
45,568
|
||||||||
Equity
in earnings of joint ventures
|
4,347
|
3,540
|
7,547
|
6,906
|
|||||||||
Net
income (loss)
|
$
|
45,800
|
$
|
40,744
|
$
|
(95,771
|
)
|
$
|
52,474
|
||||
EARNINGS
(LOSS) PER COMMON SHARE:
|
|||||||||||||
Basic
|
$
|
1.41
|
$
|
1.27
|
$
|
(2.96
|
)
|
$
|
1.63
|
||||
Diluted
|
$
|
1.35
|
$
|
1.27
|
$
|
(2.96
|
)
|
$
|
1.63
|
||||
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING (000):
|
|||||||||||||
Basic
|
32,419
|
32,140
|
32,341
|
32,099
|
|||||||||
Diluted
|
34,297
|
32,196
|
32,341
|
32,162
|
Six
months ended June 30,
|
|||||||
2006
|
2005
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income (loss)
|
$
|
(95,771
|
)
|
$
|
52,474
|
||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
|||||||
Unrealized
net (gain) loss on forward contracts
|
283,573
|
(3,429
|
)
|
||||
Depreciation
and amortization
|
32,224
|
28,050
|
|||||
Deferred
income taxes
|
(29,806
|
)
|
7,681
|
||||
Pension
and other post retirement benefits
|
7,139
|
7,421
|
|||||
Stock-based
compensation
|
3,872
|
--
|
|||||
Excess
tax benefits from share-based compensation
|
(1,090
|
)
|
--
|
||||
(Gain)
loss on disposal of assets
|
45
|
(4
|
)
|
||||
Non-cash
loss on early extinguishment of debt
|
--
|
253
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable - net
|
(35,175
|
)
|
(24,999
|
)
|
|||
Due
from affiliates
|
3,003
|
327
|
|||||
Inventories
|
(17,880
|
)
|
6,834
|
||||
Prepaid
and other current assets
|
(3,459
|
)
|
(5,712
|
)
|
|||
Accounts
payable - trade
|
(710
|
)
|
(6,745
|
)
|
|||
Due
to affiliates
|
2,173
|
(9,548
|
)
|
||||
Accrued
and other current liabilities
|
(69,243
|
)
|
11,104
|
|
|||
Other
- net
|
(11,605
|
)
|
(4,983
|
)
|
|||
Net
cash provided by operating activities
|
67,290
|
58,724
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Nordural
expansion
|
(109,002
|
)
|
(113,654
|
)
|
|||
Purchase
of other property, plant and equipment
|
(7,568
|
)
|
(5,481
|
)
|
|||
Business
acquisitions, net of cash acquired
|
--
|
(7,000
|
)
|
||||
Restricted
cash deposits
|
(4,001
|
)
|
(350
|
)
|
|||
Proceeds
from sale of property, plant and equipment
|
10
|
59
|
|||||
Net
cash used in investing activities
|
(120,561
|
)
|
(126,426
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Borrowings
|
69,000
|
145,378
|
|||||
Repayment
of debt
|
(288
|
)
|
(83,023
|
)
|
|||
Net
repayments under revolving credit facility
|
(8,069
|
)
|
--
|
||||
Financing
fees
|
--
|
(4,617
|
)
|
||||
Excess
tax benefits from shared-based compensation
|
1,090
|
--
|
|||||
Dividends
|
--
|
(16
|
)
|
||||
Issuance
of common stock
|
2,961
|
986
|
|||||
Net
cash provided by financing activities
|
64,694
|
58,708
|
|||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
11,423
|
(8,994
|
)
|
||||
Cash
and cash equivalents at the beginning of the
period
|
17,752
|
44,168
|
|||||
Cash
and cash equivalents at the end of the period
|
$
|
29,175
|
$
|
35,174
|
1.
|
Three
months ended
|
Six
months ended
|
|||||||||
June
30, 2005
|
June
30, 2005
|
|||||||||
Net
income applicable to common shareholders
|
As
reported
|
$
|
40,744
|
$
|
52,474
|
|||||
Add:
Stock-based employee compensation expense included in reported
net income,
net of related tax effects
|
252
|
1,683
|
||||||||
Deduct:
Total stock-based employee compensation expense determined under
fair
value based method for all awards, net of related tax
effects
|
(392
|
)
|
(1,953
|
)
|
||||||
Pro
forma net income
|
$
|
40,604
|
$
|
52,204
|
||||||
Basic
earnings per share
|
As
reported
|
$
|
1.27
|
$
|
1.63
|
|||||
|
Pro
forma
|
$
|
1.26
|
$
|
1.63
|
|||||
Diluted
earnings per share
|
As
reported
|
|
$
|
1.27
|
$
|
1.63
|
||||
|
Pro
forma
|
$
|
1.26
|
$
|
1.62
|
2006
|
2005
|
||||||
Weighted
average fair value per option granted
during the period
|
$
|
26.81
|
$
|
15.19
|
|||
Risk-free
interest rate
|
4.30-4.99
|
%
|
3.98-4.29
|
%
|
|||
Expected
dividend yield
|
$
|
0.00
|
$
|
0.00
|
|||
Expected
volatility
|
60
|
%
|
67
|
%
|
|||
Expected
forfeiture rate
|
5
|
%
|
--
|
||||
Expected
lives (years)
|
5.5
|
5.5
|
Options
|
Number
|
Weighted
Average Exercise
Price
|
|||||
Outstanding
at January
1, 2006
|
453,661
|
$
|
20.93
|
||||
Granted
|
91,000
|
37.27
|
|||||
Exercised
|
(159,622
|
)
|
18.55
|
||||
Forfeited
|
(667
|
)
|
24.32
|
||||
Outstanding
at June 30, 2006
|
384,372
|
$
|
25.78
|
|
Service-based
stock awards (1)
|
Number
|
|||
Outstanding
at January 1, 2006
|
59,000
|
|||
Granted
|
39,500
|
|||
Outstanding
at June 30, 2006
|
98,500
|
(1)
All of our service-based stock awards require the recipients to
remain an
employee for a certain period of time before the award vests. Recipients
receive common stock upon vesting.
|
Options
Outstanding:
|
|||||||||||||
Range
of Exercise
Prices
|
Number
Outstanding
at
6/30/2006
|
Weighted
Avg.
Remaining
Contractual
Life
|
Weighted
Avg.
Exercise
Price
|
Aggregate
Intrinsic
Value
|
|||||||||
$26.70
to $47.61
|
113,834
|
9.6
years
|
$
|
35.19
|
$
|
920
|
|||||||
$23.98
to $24.70
|
188,010
|
9.3
years
|
$
|
24.25
|
3,575
|
||||||||
$7.03
to $23.18
|
82,528
|
6.3
years
|
$
|
16.21
|
2,233
|
||||||||
384,372
|
$
|
6,728
|
Exercisable
Options:
|
|||||||||||||
Range
of Exercise
Prices
|
Number
Exercisable
at
6/30/2006
|
Weighted
Avg.
Remaining
Contractual
Life
|
Weighted
Avg.
Exercise
Price
|
Aggregate
Intrinsic
Value
|
|||||||||
$26.70
to $47.61
|
37,581
|
9.5
years
|
$
|
33.20
|
$
|
379
|
|||||||
$23.98
to $24.70
|
27,929
|
8.6
years
|
$
|
24.35
|
528
|
||||||||
$7.03
to $23.18
|
63,597
|
5.7
years
|
$
|
14.13
|
1,853
|
||||||||
129,107
|
$
|
2,760
|
Non-vested
Options:
|
Number
|
Weighted
Average Fair Value
|
|||||
Non-vested
options at January 1, 2006
|
205,430
|
$
|
14.59
|
||||
Granted
|
67,669
|
22.98
|
|||||
Vested
|
(17,167
|
)
|
16.05
|
||||
Forfeited
|
(667
|
)
|
14.48
|
||||
Non-vested
options at June 30, 2006
|
255,265
|
$
|
16.72
|
Three
months ended June 30,
|
Six
months ended June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Compensation
expense reported:
|
|||||||||||||
Stock
option grants
|
$
|
916
|
$
|
--
|
$
|
2,921
|
$
|
--
|
|||||
Service-based
stock awards
|
398
|
--
|
839
|
--
|
|||||||||
Performance-based
stock grants
|
231
|
394
|
2,767
|
2,630
|
|||||||||
Total
compensation expense before income tax
|
1,545
|
394
|
6,527
|
2,630
|
|||||||||
Income
tax benefit
|
(552
|
)
|
(142
|
)
|
(2,330
|
)
|
(947
|
)
|
|||||
Total
compensation expense, net of income tax benefit
|
$
|
993
|
$
|
252
|
$
|
4,197
|
$
|
1,683
|
Remainder
2006
|
2007
|
2008
|
2009
|
||||||||||
Stock-based
compensation expense (pre-tax)
|
|
$
|
1,564
|
|
$
|
2,195
|
|
$
|
516
|
|
$
|
57
|
|
3.
|
June
30, 2006
|
December
31, 2005
|
||||||
Raw
materials
|
$
|
57,086
|
$
|
47,352
|
|||
Work-in-process
|
18,235
|
11,461
|
|||||
Finished
goods
|
5,410
|
5,446
|
|||||
Operating
and other supplies
|
52,225
|
47,177
|
|||||
$
|
132,956
|
$
|
111,436
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
Estimated
Amortization Expense
|
|
$
|
13,991
|
|
$
|
15,076
|
|
$
|
16,149
|
|
$
|
16,379
|
|
5.
|
Debt |
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Debt
classified as current liabilities:
|
|||||||
1.75%
convertible senior notes due 2024, interest payable semiannually
(1)(2)(3)(4)
|
$
|
175,000
|
$
|
175,000
|
|||
Hancock
County industrial revenue bonds due 2028 (“IRBs”), interest payable
quarterly (variable interest rates (not to exceed 12%))(1)
|
7,815
|
7,815
|
|||||
Current
portion of long-term debt
|
16,093
|
581
|
|||||
Long-term
debt:
|
|||||||
7.5%
senior unsecured notes payable due 2014, interest payable semiannually
(3)(4)(6)
|
250,000
|
250,000
|
|||||
Nordural
Senior term loan facility maturing in 2010, variable interest
rate,
principal and interest payments due semiannually through 2010,
less
current portion (5)
|
275,500
|
222,000
|
|||||
Various
Nordural loans, with interest rates ranging from 2.70% to 6.75%
due 2012
to 2020, less current portion
|
8,136
|
8,436
|
|||||
Borrowings
under revolving credit facility (4)
|
--
|
8,069
|
|||||
Total
Debt
|
$
|
732,544
|
$
|
671,901
|
(1) The
convertible notes are classified as current because they are convertible
at any time by the holder. The IRBs are classified as current liabilities
because they are remarketed weekly and could be required to be
repaid upon
demand if there is a failed remarketing. The IRB interest rate
at June 30,
2006 was 4.27%.
|
(2) The
convertible notes are convertible at any time by the holder at
an initial
conversion rate of 32.7430 shares of Century common stock per one
thousand
dollars of principal amount of convertible notes, subject to adjustments
for certain events. The initial conversion rate is equivalent to
a
conversion price of approximately $30.5409 per share of Century
common
stock. Upon conversion, the holder of the convertible note shall
receive
cash equal to the principal amount of the convertible note and,
at our
election, either cash or Century common stock, or a combination
thereof,
for the conversion value in excess of such principal amount, if
any.
|
(3) The
obligations of Century pursuant to the notes are unconditionally
guaranteed, jointly and severally, on a senior unsecured basis
by all of
our existing domestic restricted subsidiaries.
|
(4) The
indentures governing our note obligations contain customary covenants,
including limitations on our ability to incur additional indebtedness,
pay
dividends, sell assets or stock of certain subsidiaries and purchase
or
redeem capital stock. Our revolving credit facility contains customary
covenants, including limitations on capital expenditures, additional
indebtedness, affiliate transactions, liens, guarantees, mergers
and
acquisitions, dividends, distributions, capital redemptions and
investments.
|
(5) The
senior term loan interest rate at June 30, 2006 was 6.87%. Nordural's
$365,000 loan facility contains customary covenants, including
limitations
on additional indebtedness, investments, capital expenditures (other
than
related to the expansion project), dividends, and hedging agreements.
Nordural is also subject to various financial covenants, including
a net
worth covenant and certain maintenance covenants, including minimum
interest coverage and debt service coverage beginning as of December
31,
2006. Nordural's obligations under the term loan facility are secured
by a
pledge of all of Nordural's shares pursuant to a share pledge agreement
with the lenders. In addition, substantially all of Nordural's
assets are
pledged as security under the loan facility. Nordural is required
to make
the following minimum repayments of principal on the facility:
$15,500 on
February 28, 2007 and $14,000 on each of August 31, 2007, February
29,
2008, August 31, 2008, February 28, 2009, August 31, 2009, and
all
remaining outstanding principal amount on February 28,
2010.
|
(6) On
or after August 15, 2009, we may redeem any of the senior notes,
in whole
or in part, at an initial redemption price equal to 103.75% of
the
principal amount, plus accrued and unpaid interest. The redemption
price
will decline each year after 2009 and will be 100% of the principle
amount, plus accrued and unpaid interest, beginning on August 15,
2012.
|
Contract
|
Customer
|
Volume
|
Term
|
Pricing
|
Alcan
Metal Agreement (1)
|
Alcan
|
276
to 324 million pounds per year
|
Through
July 31, 2007
|
Based
on U.S. Midwest market
|
Glencore
Metal Agreement I (2)
|
Glencore
|
50,000
mtpy
|
Through
December 31, 2009
|
LME-based
|
Glencore
Metal Agreement II (3)
|
Glencore
|
20,400
mtpy
|
Through
December 31, 2013
|
Based
on U.S. Midwest market
|
Southwire
Metal Agreement (4)
|
Southwire
|
240
million pounds per year (high purity molten aluminum)
|
Through
March 31, 2011
|
Based
on U.S. Midwest market
|
60
million pounds per year (standard-grade molten aluminum)
|
Through
December 31, 2010
|
Based
on U.S. Midwest market
|
(1) Alcan
has the right, upon 12 months notice, to reduce its purchase obligations
by 50% under this contract. Following receipt of a 72 hour notice
to
strike by the USWA, we commenced an orderly shutdown of the Ravenswood
facility and on August 2, 2006 delivered a force majeure notice
to Alcan
informing it that deliveries under the Alcan Metal Agreement were
being
reduced. USWA workers approved a new labor agreement on August
4, 2006 and
full deliveries under the Alcan Metal Agreement are expected to
resume in
three months. See Note 17, Subsequent Events.
|
(2)
We account for the Glencore Metal Agreement I as a derivative instrument
under SFAS No. 133. We have not designated the Glencore Metal Agreement
I
as “normal” because it replaced and substituted for a significant portion
of a sales contract which did not qualify for this designation.
Because
the Glencore Metal Agreement I is variably priced, we do not expect
significant variability in its fair value, other than changes that
might
result from the absence of the U.S. Midwest premium.
|
(3)
We account for the Glencore Metal Agreement II as a derivative
instrument
under SFAS No. 133. Under the Glencore Metal Agreement II, pricing
is
based on then-current market prices, adjusted by a negotiated U.S.
Midwest
premium with a cap and a floor as applied to the current U.S. Midwest
premium. Following receipt of a 72 hour notice to strike by the
USWA, we
commenced an orderly shutdown of the Ravenswood facility and on
August 2,
2006 delivered a force majeure notice to Glencore informing it
that
deliveries under the Glencore Metal Agreement II were being reduced.
USWA
workers approved a new labor agreement on August 4, 2006 and full
deliveries under the Alcan Metal Agreement are expected to resume
in three
months. See Note 17, Subsequent Events.
|
(4)
The Southwire Metal Agreement will automatically renew for additional
five-year terms, unless either party provides 12 months notice
that it has
elected not to renew.
|
Contract
|
Customer
|
Volume
|
Term
|
Pricing
|
Billiton
Tolling Agreement (1)
|
BHP
Billiton
|
130,000
mtpy
|
Through
December 31, 2013
|
LME-based
|
Glencore
Tolling Agreement (2)(3)
|
Glencore
|
90,000
mtpy
|
Through
July 2016
|
LME-based
|
(1)
In September 2005, Nordural and BHP Billiton amended the Billiton
Tolling
Agreement to increase the tolling arrangement from 90,000 metric
tons to
130,000 metric tons of the per annum production capacity at Nordural
effective upon the completion of the expansion.
|
(2)
Nordural entered into a 10-year LME-based alumina tolling agreement
with
Glencore for 90,000 metric tons of the expansion capacity at
Nordural. In
July 2006, we began deliveries under the Glencore Tolling
agreement.
|
(3)
In December 2005, Glencore assigned 50% of its tolling rights
under this
agreement to Hydro Aluminum for the period 2007 to 2010.
|
Primary
Aluminum Financial Sales Contracts as of:
|
|||||||||||||||||||
(Metric
Tons)
|
|||||||||||||||||||
June
30, 2006
|
December
31, 2005
|
||||||||||||||||||
Cash
Flow Hedges
|
Derivatives
|
Total
|
Cash
Flow Hedges
|
Derivatives
|
Total
|
||||||||||||||
2006
|
73,000
|
12,600
|
85,600
|
142,750
|
51,000
|
193,750
|
|||||||||||||
2007
|
119,500
|
50,400
|
169,900
|
119,500
|
50,400
|
169,900
|
|||||||||||||
2008
|
9,000
|
100,200
|
109,200
|
9,000
|
100,200
|
109,200
|
|||||||||||||
2009
|
--
|
105,000
|
105,000
|
--
|
105,000
|
105,000
|
|||||||||||||
2010
|
--
|
105,000
|
105,000
|
--
|
105,000
|
105,000
|
|||||||||||||
2011-2015
|
--
|
375,000
|
375,000
|
--
|
375,000
|
375,000
|
|||||||||||||
Total
|
201,500
|
748,200
|
949,700
|
271,250
|
786,600
|
1,057,850
|
Natural
Gas Financial Purchase Contracts as of:
|
|||||||
(Thousands
of DTH)
|
|||||||
June
30, 2006
|
December
31, 2005
|
||||||
2006
|
2,500
|
1,680
|
|||||
2007
|
780
|
780
|
|||||
2008
|
480
|
480
|
|||||
Total
|
3,760
|
2,940
|
Six
months ended June 30,
|
|||||||
2006
|
2005
|
||||||
Cash
paid for:
|
|||||||
Interest
|
$
|
20,273
|
$
|
13,514
|
|||
Income
tax
|
31,448
|
2,975
|
|||||
Cash
received for:
|
|||||||
Interest
|
300
|
415
|
|||||
Income
tax refunds
|
577
|
--
|
|||||
Non-cash
investing activities:
|
|||||||
Accrued
Nordural expansion costs
|
$
|
(1,918
|
)
|
$
|
7,192
|
For
the six months ended June 30, 2006
|
For
the year ended December 31, 2005
|
||||||
Beginning
balance, ARO liability
|
$
|
11,808
|
$
|
17,232
|
|||
Additional
ARO liability incurred
|
1,332
|
1,849
|
|||||
ARO
liabilities settled
|
(1,474
|
)
|
(3,330
|
)
|
|||
Accretion
expense
|
851
|
1,370
|
|||||
FIN
47 adoption
|
--
|
(5,313
|
)
|
||||
Ending
balance, ARO liability
|
$
|
12,517
|
$
|
11,808
|
Comprehensive
Income:
|
|||||||
Six
months ended June 30,
|
|||||||
2006
|
2005
|
||||||
Net
income (loss)
|
$
|
(95,771
|
)
|
$
|
52,474
|
||
Other
comprehensive income (loss):
|
|||||||
Net
unrealized (gain) loss on financial instruments, net of tax of
$37,319 and
$(8,762), respectively
|
(66,647
|
)
|
15,205
|
||||
Net
amount reclassified to income, net of tax of $(21,625) and $(9,413),
respectively
|
38,249
|
16,354
|
|||||
Comprehensive
income (loss)
|
$
|
(124,169
|
)
|
$
|
84,033
|
Components
of Accumulated Other Comprehensive Loss:
|
|||||||
June
30, 2006
|
December
31, 2005
|
||||||
Unrealized
loss on financial instruments, net of tax of $65,471 and
$49,776
|
$
|
(116,856
|
)
|
$
|
(88,458
|
)
|
|
Minimum
pension liability adjustment, net of tax of $1,665
|
(2,960
|
)
|
(2,960
|
)
|
|||
Accumulated
other comprehensive loss
|
$
|
(119,816
|
)
|
$
|
(91,418
|
)
|
For
the three months ended June 30,
|
|||||||||||||||||||
2006
|
2005
|
||||||||||||||||||
Income
|
Shares
|
Per-Share
|
Income
|
Shares
|
Per-Share
|
||||||||||||||
Net
income
|
$
|
45,800
|
$
|
40,744
|
|||||||||||||||
Basic
EPS:
|
|||||||||||||||||||
Income
applicable to common shareholders
|
45,800
|
32,419
|
$
|
1.41
|
40,744
|
32,140
|
$
|
1.27
|
|||||||||||
Effect
of Dilutive Securities:
Plus:
|
|||||||||||||||||||
Options
|
--
|
99
|
--
|
56
|
|||||||||||||||
Service-based
stock awards
|
--
|
93
|
--
|
--
|
|||||||||||||||
Assumed
conversion of convertible debt
|
490
|
1,686
|
--
|
--
|
|||||||||||||||
Diluted
EPS:
|
|||||||||||||||||||
Income
applicable to common shareholders with assumed conversion
|
$
|
46,290
|
34,297
|
$
|
1.35
|
$
|
40,744
|
32,196
|
$
|
1.27
|
For
the six months ended June 30,
|
|||||||||||||||||||
2006
|
2005
|
||||||||||||||||||
Income
|
Shares
|
Per-Share
|
Income
|
Shares
|
Per-Share
|
||||||||||||||
Net
income (loss)
|
$
|
(95,771
|
)
|
$
|
52,474
|
||||||||||||||
Basic
EPS:
|
|||||||||||||||||||
Income
(loss) applicable to common shareholders
|
(95,771
|
)
|
32,341
|
$
|
(2.96
|
)
|
52,474
|
32,099
|
$
|
1.63
|
|||||||||
Effect
of Dilutive Securities:
Plus:
|
|||||||||||||||||||
Options
|
--
|
--
|
--
|
63
|
|||||||||||||||
Diluted
EPS:
|
|||||||||||||||||||
Income
(loss) applicable to common shareholders with assumed
conversion
|
$
|
(95,771
|
)
|
32,341
|
$
|
(2.96
|
)
|
$
|
52,474
|
32,162
|
$
|
1.63
|
Pension
Benefits
|
|||||||||||||
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Service
cost
|
$
|
1,030
|
$
|
929
|
$
|
2,060
|
$
|
1,962
|
|||||
Interest
cost
|
1,214
|
1,222
|
2,427
|
2,341
|
|||||||||
Expected
return on plan assets
|
(1,700
|
)
|
(1,506
|
)
|
(3,400
|
)
|
(2,950
|
)
|
|||||
Amortization
of prior service cost
|
103
|
1,299
|
207
|
1,481
|
|||||||||
Amortization
of net gain
|
214
|
202
|
427
|
314
|
|||||||||
Net
periodic benefit cost
|
$
|
861
|
$
|
2,146
|
$
|
1,721
|
$
|
3,148
|
Other
Postemployment Benefits
|
|||||||||||||
Three
months ended June 30,
|
Six
months ended June 30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Service
cost
|
$
|
1,468
|
$
|
1,178
|
$
|
2,936
|
$
|
2,516
|
|||||
Interest
cost
|
2,420
|
2,345
|
4,840
|
4,439
|
|||||||||
Expected
return on plan assets
|
--
|
--
|
--
|
--
|
|||||||||
Amortization
of prior service cost
|
(219
|
)
|
(220
|
)
|
(438
|
)
|
(439
|
)
|
|||||
Amortization
of net gain
|
1,035
|
1,093
|
2,070
|
1,857
|
|||||||||
Net
periodic benefit cost
|
$
|
4,704
|
$
|
4,396
|
$
|
9,408
|
$
|
8,373
|
15.
|
June
30, 2006
|
December
31, 2005
|
||||||
Deferred
tax assets
|
$
|
156,940
|
$
|
56,053
|
|||
Other
assets (primarily investment in joint ventures)
|
80,107
|
71,640
|
|||||
Deferred
financing fees
|
14,311
|
15,600
|
|||||
Other
assets
|
$
|
251,358
|
$
|
143,293
|
CONDENSED
CONSOLIDATING BALANCE SHEET
|
||||||||||||||||
As
of June 30, 2006
|
||||||||||||||||
Combined
Guarantor Subsidiaries
|
Combined
Non-Guarantor Subsidiaries
|
The
Company
|
Reclassifications
and Eliminations
|
Consolidated
|
||||||||||||
Assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
—
|
$
|
11,554
|
$
|
17,621
|
$
|
—
|
$
|
29,175
|
||||||
Restricted
cash
|
6,029
|
—
|
—
|
—
|
6,029
|
|||||||||||
Accounts
receivable — net
|
102,830
|
15,361
|
—
|
—
|
118,191
|
|||||||||||
Due
from affiliates
|
63,628
|
—
|
843,540
|
(891,533
|
)
|
15,635
|
||||||||||
Inventories
|
109,161
|
25,126
|
—
|
(1,331
|
)
|
132,956
|
||||||||||
Prepaid
and other assets
|
3,906
|
12,178
|
5,291
|
—
|
21,375
|
|||||||||||
Deferred
taxes — current portion
|
61,915
|
—
|
—
|
(8,634
|
)
|
53,281
|
||||||||||
Total
current assets
|
347,469
|
64,219
|
866,452
|
(901,498
|
)
|
376,642
|
||||||||||
Investment
in subsidiaries
|
18,354
|
—
|
18,283
|
(36,637
|
)
|
—
|
||||||||||
Property,
plant and equipment — net
|
442,772
|
712,632
|
328
|
—
|
1,155,732
|
|||||||||||
Intangible
asset — net
|
68,118
|
—
|
—
|
—
|
68,118
|
|||||||||||
Goodwill
|
—
|
94,844
|
—
|
—
|
94,844
|
|||||||||||
Other
assets
|
56,003
|
12,024
|
301,659
|
(118,328
|
)
|
251,358
|
||||||||||
Total
assets
|
$
|
932,716
|
$
|
883,719
|
$
|
1,186,722
|
$
|
(1,056,463
|
)
|
$
|
1,946,694
|
|||||
Liabilities
and shareholders’ equity:
|
||||||||||||||||
Accounts
payable -
trade
|
$
|
29,510
|
$
|
29,765
|
$
|
16
|
$
|
—
|
$
|
59,291
|
||||||
Due
to affiliates
|
363,753
|
54,563
|
53,914
|
(250,580
|
)
|
221,650
|
||||||||||
Industrial
revenue bonds
|
7,815
|
—
|
—
|
—
|
7,815
|
|||||||||||
Long
term debt — current portion
|
—
|
16,093
|
—
|
—
|
16,093
|
|||||||||||
Accrued
and other current liabilities
|
19,545
|
3,681
|
29,465
|
—
|
52,691
|
|||||||||||
Accrued
employee benefits costs — current portion
|
8,139
|
—
|
1,194
|
—
|
9,333
|
|||||||||||
Deferred
tax liability - current
|
—
|
—
|
8,634
|
(8,634
|
)
|
—
|
||||||||||
Convertible
senior notes
|
—
|
—
|
175,000
|
—
|
175,000
|
|||||||||||
Total
current liabilities
|
428,762
|
104,102
|
268,223
|
(259,214
|
)
|
541,873
|
||||||||||
Senior
unsecured notes payable
|
—
|
—
|
250,000
|
—
|
250,000
|
|||||||||||
Nordural
debt
|
—
|
283,636
|
—
|
—
|
283,636
|
|||||||||||
Accrued
pension benefit costs — less current portion
|
—
|
—
|
10,904
|
—
|
10,904
|
|||||||||||
Accrued
postretirement benefit costs — less current portion
|
102,233
|
—
|
1,012
|
—
|
103,245
|
|||||||||||
Other
liabilities/intercompany loan
|
324,450
|
340,206
|
—
|
(636,236
|
)
|
28,420
|
||||||||||
Due
to affiliates — less current portion
|
55,143
|
—
|
537,407
|
—
|
592,550
|
|||||||||||
Deferred
taxes
|
128,553
|
12,713
|
—
|
(124,376
|
)
|
16,890
|
||||||||||
Total
noncurrent liabilities
|
610,379
|
636,555
|
799,323
|
(760,612
|
)
|
1,285,645
|
||||||||||
Shareholders’
equity:
|
||||||||||||||||
Common
stock
|
60
|
12
|
324
|
(72
|
)
|
324
|
||||||||||
Additional
paid-in capital
|
259,148
|
85,190
|
429,797
|
(344,338
|
)
|
429,797
|
||||||||||
Accumulated
other comprehensive income (loss)
|
(118,832
|
)
|
(595
|
)
|
(119,816
|
)
|
119,427
|
(119,816
|
)
|
|||||||
Retained
earnings (accumulated deficit)
|
(246,801
|
)
|
58,455
|
(191,129
|
)
|
188,346
|
(191,129
|
)
|
||||||||
Total
shareholders’ equity
|
(106,425
|
)
|
143,062
|
119,176
|
(36,637
|
)
|
119,176
|
|||||||||
Total
liabilities and shareholders’ equity
|
$
|
932,716
|
$
|
883,719
|
$
|
1,186,722
|
$
|
(1,056,463
|
)
|
$
|
1,946,694
|
CONDENSED
CONSOLIDATING BALANCE SHEET
|
||||||||||||||||
As
of December 31, 2005
|
||||||||||||||||
Combined
Guarantor Subsidiaries
|
Combined
Non-Guarantor Subsidiaries
|
The
Company
|
Reclassifications
and Eliminations
|
Consolidated
|
||||||||||||
Assets:
|
||||||||||||||||
Cash
and cash equivalents
|
$
|
—
|
$
|
—
|
$
|
(1,253
|
)
|
$
|
—
|
$
|
17,752
|
|||||
Restricted
cash
|
2,028
|
—
|
—
|
—
|
2,028
|
|||||||||||
Accounts
receivable — net
|
73,540
|
9,476
|
—
|
—
|
83,016
|
|||||||||||
Due
from affiliates
|
60,246
|
—
|
703,995
|
(745,603
|
)
|
18,638
|
||||||||||
Inventories
|
96,347
|
15,372
|
—
|
(283
|
)
|
111,436
|
||||||||||
Prepaid
and other assets
|
7,693
|
8,627
|
7,598
|
—
|
23,918
|
|||||||||||
Deferred
taxes — current portion
|
46,339
|
—
|
—
|
(8,634
|
)
|
37,705
|
||||||||||
Total
current assets
|
286,193
|
52,480
|
710,340
|
(754,520
|
)
|
294,493
|
||||||||||
Investment
in subsidiaries
|
15,205
|
—
|
146,166
|
(161,371
|
)
|
—
|
||||||||||
Property,
plant and equipment — net
|
458,618
|
613,368
|
308
|
(2,136
|
)
|
1,070,158
|
||||||||||
Intangible
asset — net
|
74,643
|
—
|
—
|
—
|
74,643
|
|||||||||||
Goodwill
|
—
|
94,844
|
—
|
—
|
94,844
|
|||||||||||
Other
assets
|
54,049
|
8,951
|
156,242
|
(75,949
|
)
|
143,293
|
||||||||||
Total
assets
|
$
|
888,708
|
$
|
769,643
|
$
|
1,013,056
|
$
|
(993,976
|
)
|
$
|
1,677,431
|
|||||
Liabilities
and shareholders’ equity:
|
||||||||||||||||
Accounts
payable -
trade
|
$
|
36,670
|
$
|
25,249
|
$
|
—
|
$
|
—
|
$
|
61,919
|
||||||
Due
to affiliates
|
138,615
|
52,208
|