SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
For the quarterly period ended September 30, 2004
Commission file number 1-3605
Kaiser Aluminum & Chemical Corporation
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Delaware
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94-0928288 | |
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(State of incorporation)
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(I.R.S. Employer Identification No.) | |
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5847 San Felipe, Suite 2500,
Houston, Texas |
77057-3268 (Zip Code) |
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(Address of principal executive
offices)
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(713) 267-3777
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 þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes o No þ
At October 31, 2004, the registrant had 46,171,365 shares of Common Stock outstanding.
KAISER ALUMINUM & CHEMICAL CORPORATION AND SUBSIDIARY COMPANIES
PART I — FINANCIAL INFORMATION
| Item 1. | Financial Statements |
CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | ||||||||||
| 2004 | 2003 | ||||||||||
| (Unaudited) | |||||||||||
| (In millions of dollars) | |||||||||||
| ASSETS | |||||||||||
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Current assets:
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|||||||||||
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Cash and cash equivalents
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$ | 31.9 | $ | 35.6 | |||||||
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Receivables:
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|||||||||||
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Trade, less allowance for doubtful receivables of
$6.5 and $6.4
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105.7 | 65.4 | |||||||||
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Other
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10.8 | 25.0 | |||||||||
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Inventories
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131.4 | 102.6 | |||||||||
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Prepaid expenses and other current assets
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36.6 | 23.9 | |||||||||
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Discontinued operations’ current assets
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96.0 | 178.7 | |||||||||
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Total current assets
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412.4 | 431.2 | |||||||||
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Investments in and advances to unconsolidated
affiliates
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55.5 | 50.9 | |||||||||
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Property, plant, and equipment — net
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217.7 | 230.1 | |||||||||
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Restricted proceeds from sale of commodity
interests
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302.6 | — | |||||||||
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Other assets
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488.1 | 520.5 | |||||||||
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Discontinued operations’ long-term assets
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49.7 | 396.0 | |||||||||
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Total
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$ | 1,526.0 | $ | 1,628.7 | |||||||
| LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
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Liabilities not subject to compromise —
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|||||||||||
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Current liabilities:
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|||||||||||
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Accounts payable
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$ | 48.4 | $ | 40.1 | |||||||
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Accrued interest
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.9 | .8 | |||||||||
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Accrued salaries, wages, and related expenses
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32.9 | 31.6 | |||||||||
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Accrued postretirement medical benefit
obligation — current portion
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1.1 | 32.5 | |||||||||
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Other accrued liabilities
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70.6 | 32.6 | |||||||||
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Payable to affiliates
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45.8 | 43.6 | |||||||||
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Long-term debt — current portion
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1.2 | 1.3 | |||||||||
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Discontinued operations’ current liabilities
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109.1 | 137.0 | |||||||||
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Total current liabilities
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310.0 | 319.5 | |||||||||
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Long-term liabilities
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44.5 | 59.4 | |||||||||
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Long-term debt
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2.2 | 2.2 | |||||||||
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Discontinued operations’ long-term
liabilities, including minority interests of $13.9 and $121.1
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54.2 | 195.6 | |||||||||
| 410.9 | 576.7 | ||||||||||
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Liabilities subject to compromise
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2,856.0 | 2,783.2 | |||||||||
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Commitments and contingencies
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|||||||||||
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Stockholders’ equity (deficit):
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|||||||||||
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Preference stock
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.7 | .7 | |||||||||
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Common stock
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15.4 | 15.4 | |||||||||
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Additional capital
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2,453.6 | 2,454.0 | |||||||||
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Accumulated deficit
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(2,010.8 | ) | (1,901.7 | ) | |||||||
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Accumulated other comprehensive income (loss)
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(8.1 | ) | (107.9 | ) | |||||||
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Less: Note receivable from parent
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(2,191.7 | ) | (2,191.7 | ) | |||||||
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Total stockholders’ equity (deficit)
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(1,740.9 | ) | (1,731.2 | ) | |||||||
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Total
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$ | 1,526.0 | $ | 1,628.7 | |||||||
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
1
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
| Quarter Ended | Nine Months Ended | |||||||||||||||||
| September 30, | September 30, | |||||||||||||||||
| 2004 | 2003 | 2004 | 2003 | |||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (In millions of dollars) | ||||||||||||||||||
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Net sales
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$ | 281.8 | $ | 203.1 | $ | 792.7 | $ | 613.2 | ||||||||||
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Costs and expenses:
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||||||||||||||||||
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Cost of products sold
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245.3 | 189.7 | 700.7 | 570.6 | ||||||||||||||
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Depreciation and amortization
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5.9 | 6.3 | 16.9 | 20.3 | ||||||||||||||
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Selling, administrative, research and
development, and general
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26.8 | 25.0 | 68.2 | 73.1 | ||||||||||||||
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Other operating charges (benefits), net
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154.7 | 15.0 | 154.7 | 4.7 | ||||||||||||||
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Total costs and expenses
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432.7 | 236.0 | 940.5 | 668.7 | ||||||||||||||
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Operating loss
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(150.9 | ) | (32.9 | ) | (147.8 | ) | (55.5 | ) | ||||||||||
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Other income (expense):
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||||||||||||||||||
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Interest expense (excluding unrecorded
contractual interest expense of $23.7 for both quarters and
$71.2 for both nine-month periods)
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(2.3 | ) | (2.5 | ) | (6.4 | ) | (7.1 | ) | ||||||||||
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Reorganization items
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(10.0 | ) | (5.4 | ) | (28.9 | ) | (20.2 | ) | ||||||||||
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Other — net
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1.3 | (6.7 | ) | 5.2 | (8.7 | ) | ||||||||||||
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Loss before income taxes and discontinued
operations
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(161.9 | ) | (47.5 | ) | (177.9 | ) | (91.5 | ) | ||||||||||
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Provision for income taxes
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(4.7 | ) | (1.4 | ) | (13.5 | ) | (5.8 | ) | ||||||||||
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Loss from continuing operations
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(166.6 | ) | (48.9 | ) | (191.4 | ) | (97.3 | ) | ||||||||||
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Discontinued operations:
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||||||||||||||||||
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Loss from discontinued operations, net of income
taxes, including minority interests
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(4.4 | ) | (39.7 | ) | (42.7 | ) | (117.7 | ) | ||||||||||
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Gain from sale of commodity interests
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101.6 | — | 125.0 | — | ||||||||||||||
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Income (loss) from discontinued operations
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97.2 | (39.7 | ) | 82.3 | (117.7 | ) | ||||||||||||
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Net loss
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$ | (69.4 | ) | $ | (88.6 | ) | $ | (109.1 | ) | $ | (215.0 | ) | ||||||
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
2
STATEMENTS OF CONSOLIDATED STOCKHOLDERS’ EQUITY (DEFICIT)
| Accumulated | |||||||||||||||||||||||||||||
| Other | Note | ||||||||||||||||||||||||||||
| Comprehensive | Receivable | ||||||||||||||||||||||||||||
| Preference | Common | Additional | Accumulated | Income | From | ||||||||||||||||||||||||
| Stock | Stock | Capital | Deficit | (Loss) | Parent | Total | |||||||||||||||||||||||
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BALANCE, December 31, 2003
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$ | .7 | $ | 15.4 | $ | 2,454.0 | $ | (1,901.7 | ) | $ | (107.9 | ) | $ | (2,191.7 | ) | $ | (1,731.2 | ) | |||||||||||
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Net loss
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— | — | — | (109.1 | ) | — | — | (109.1 | ) | ||||||||||||||||||||
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Minimum pension liability adjustment during the
quarter ended September 30, 2004
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— | — | — | — | 96.7 | — | 96.7 | ||||||||||||||||||||||
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Unrealized net increase in value of derivative
instruments arising during the period (including net increase in
value of $1.2 for the quarter ended September 30, 2004)
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— | — | — | — | 2.0 | — | 2.0 | ||||||||||||||||||||||
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Reclassification adjustment for net realized
losses on derivative instruments included in net loss (including
net realized losses of $.3 for the quarter ended
September 30, 2004)
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— | — | — | — | 1.1 | — | 1.1 | ||||||||||||||||||||||
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Comprehensive income (loss)
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— | — | — | — | — | — | (9.3 | ) | |||||||||||||||||||||
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Restricted stock cancellations
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— | — | (.4 | ) | — | — | — | (.4 | ) | ||||||||||||||||||||
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BALANCE, September 30, 2004
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$ | .7 | $ | 15.4 | $ | 2,453.6 | $ | (2,010.8 | ) | $ | (8.1 | ) | $ | (2,191.7 | ) | $ | (1,740.9 | ) | |||||||||||
For the Nine Months Ended September 30, 2003
| Accumulated | |||||||||||||||||||||||||||||
| Other | Note | ||||||||||||||||||||||||||||
| Comprehensive | Receivable | ||||||||||||||||||||||||||||
| Preference | Common | Additional | Accumulated | Income | From | ||||||||||||||||||||||||
| Stock | Stock | Capital | Deficit | (Loss) | Parent | Total | |||||||||||||||||||||||
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BALANCE, December 31, 2002
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$ | .7 | $ | 15.4 | $ | 2,454.8 | $ | (1,113.6 | ) | $ | (243.9 | ) | $ | (2,191.7 | ) | $ | (1,078.3 | ) | |||||||||||
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Net loss
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— | — | (215.0 | ) | — | — | (215.0 | ) | |||||||||||||||||||||
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Unrealized net decrease in value of derivative
instruments arising during the period (including net decrease in
value of $1.9 for the quarter ended September 30, 2003)
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— | — | — | (1.3 | ) | — | (1.3 | ) | |||||||||||||||||||||
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Reclassification adjustment for net realized
gains on derivative instruments included in net loss (including
net realized gains of $.2 for the quarter ended
September 30, 2003)
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— | — | — | (.7 | ) | — | (.7 | ) | |||||||||||||||||||||
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Comprehensive income (loss)
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— | — | — | — | (217.0 | ) | |||||||||||||||||||||||
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Restricted stock cancellations
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(.9 | ) | — | — | — | (.9 | ) | ||||||||||||||||||||||
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Restricted stock accretion
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— | .3 | — | — | — | .3 | |||||||||||||||||||||||
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BALANCE, September 30, 2003
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$ | .7 | $ | 15.4 | $ | 2,454.2 | $ | (1,328.6 | ) | $ | (245.9 | ) | $ | (2,191.7 | ) | $ | (1,295.9 | ) | |||||||||||
The accompanying notes to interim consolidated financial statements are an integral part of these statements.
3
STATEMENTS OF CONSOLIDATED CASH FLOWS
| Nine Months Ended | |||||||||||
| September 30, | |||||||||||
| 2004 | 2003 | ||||||||||
| (Unaudited) | |||||||||||
| (In millions of | |||||||||||
| dollars) | |||||||||||
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Cash flows from operating activities:
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|||||||||||
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Net loss
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$ | (109.1 | ) | $ | (215.0 | ) | |||||
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Less net income (loss) from discontinued
operations
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82.3 | (117.7 | ) | ||||||||
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Net loss from continuing operations
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(191.4 | ) | (97.3 | ) | |||||||
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Adjustments to reconcile net loss from continuing
operations to net cash (used) provided by continuing
operations:
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|||||||||||
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Depreciation and amortization (including deferred
financing costs of $3.6 and $3.8 respectively)
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20.5 | 24.1 | |||||||||
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Non-cash charges in other operating charges
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155.5 | ||||||||||