Completed Operational Restructure and Refinance
of Senior Secured Notes
Positioned for Long-Term Growth with Improved
Profitability and Liquidity Profile
Executed Agreement for Sale of Total Plastics,
Inc. Subsidiary
A. M. Castle & Co. (NYSE:CAS) (“the Company” or
“Castle”), a global distributor of specialty metal and plastic
products, value-added services and supply chain solutions, today
reported financial results for the fourth quarter and year ended
December 31, 2015.
President and CEO Steve Scheinkman commented, “When I was
appointed CEO of Castle just under a year ago, there were questions
about the long-term viability of the Company. Our cost structure
was not aligned with the outlook for the business and the
macroeconomic environment, our management structure was not
conducive to nimble, customer-focused action at our branches, and
the business had limited liquidity, all with more than $200 million
of debt quickly approaching maturity. In light of this, we took
bold action during the year to operationally restructure our
Company and strategically refinance our debt with an objective to
improve profitability and better position Castle for long-term
growth.”
Summary of Key Accomplishments:
- Completed operational restructuring
plan including consolidation of seven facilities, on time and
within budget
- Reconfigured management structure and
philosophy to focus on branch accountability and customer
responsiveness
- Aligned corporate teams to ensure best
practices in purchasing and management of inventory
- Refinanced Senior Secured Notes due in
December 2016
- Overwhelming 97% participation in
private exchange offer for new Senior Secured Notes due December
2018
- Maintained ability to prepay the new
Senior Secured Notes without penalty
- Executed Transaction Support Agreements
with 89.7% of holders to exchange Convertible Notes due December
2017
- Upon completion, provides 30% discount
in principal amount and 1.75% reduction in coupon rate
- New Convertible Notes provide ability,
in certain circumstances, for the Company to initiate conversion
into equity
- Completed sale of vast majority of
remaining energy-related inventory and closure of Houston and
Edmonton facilities that generated significant operating and
non-cash losses in 2015
- Entered into sale agreement for
subsidiary, Total Plastics, Inc. which will provide significant
additional debt reduction upon closing scheduled for this week
Scheinkman further added, “We have substantially completed the
initiatives promised by the new Castle management team 11 months
ago, when I took the reins as CEO. Further, fulfilling the
commitments made earlier this year, we have completed the sale of a
vast majority of our remaining energy-related inventory and have
signed an agreement to sell our Total Plastics, Inc. subsidiary,
which we expect to close later this week. With the proceeds from
these sales, we will reduce our debt and improve our capital
structure for the long-term. In addition, the closure of our
facilities in Houston and Edmonton substantially reduces our
exposure to the energy markets and immediately eliminates
facilities that generated significant operating and non-cash losses
in 2015. While our restructuring activities created a temporary
headwind at certain branches, we believe our market position in the
aerospace and industrial channels we serve will allow us to grow
our business as we continue to execute our plan step-by-step, which
we believe demonstrates that Castle’s financial stability is as
solid as our reputation for high standards of safety, quality,
delivery performance, and customer focus. We are now excited to be
able to turn our attention to commercial activities to return to
profitability.”
Change in Accounting for Inventory Costing
During the fourth quarter 2015, the Company elected to change
its method of costing for its U.S. metals inventory to the average
cost method from the last-in first-out (LIFO) method. Prior to this
change in accounting principle, at December 31, 2014,
approximately 68% of the Company’s inventories were valued at the
lower of LIFO cost or market. The Company applied this change in
method of costing for its U.S. metals inventory by retrospectively
adjusting the prior period financial statements. The cumulative
effect of this accounting change resulted in a $84.1 million
after-tax increase in retained earnings as of January 1, 2013. The
financial results that follow reflect the retrospective application
of this change in accounting principle.
Fourth Quarter and Full Year 2015 Results
Consolidated net sales were $164.2 million for the fourth
quarter 2015 compared to $231.5 million in the fourth quarter
2014. The Company reported a fourth quarter 2015 net loss of
$119.7 million, or a loss of $5.08 per diluted share, compared to a
net loss of $29.7 million, or a loss of $1.27 per diluted share, in
the prior year period. Adjusted non-GAAP net loss, which
excludes restructuring activity, asset impairment charges, and
other items reconciled in the tables below, for the fourth quarter
2015 was $27.9 million compared to adjusted non-GAAP net loss of
$29.3 million in the fourth quarter 2014. The Company reported
fourth quarter 2015 negative EBITDA of $104.8 million, compared to
negative EBITDA of $17.6 million in the fourth quarter 2014. Fourth
quarter 2015 and fourth quarter 2014 results were impacted by $1.8
million and $2.9 million of foreign currency transaction losses in
each of those quarters, respectively. In addition, $1.3 million
from equity in the losses of the Company's joint venture negatively
impacted the fourth quarter 2015 results compared to the fourth
quarter 2014, which was positively impacted by $1.8 million from
equity in the earnings of the Company's joint venture. Exclusive of
restructuring activity and other items reconciled in the tables
below, the Company reported a fourth quarter 2015 negative adjusted
EBITDA of $13.0 million compared with negative adjusted EBITDA of
$17.0 million in the fourth quarter 2014.
The fourth quarter and full year 2015 results include the impact
of the Company's decision to sell the inventory and cease
operations at its facilities in Houston and Edmonton, which
primarily service the oil and gas industries. As a result of this
decision, the fourth quarter 2015 reported net loss included a
$33.7 million non-cash intangible assets impairment charge and a
$61.5 million non-cash charge for the write-down of inventory and
purchase commitments at these facilities.
Total restructuring activity recorded during the fourth quarter
of 2015, including a $3.3 million charge reflected in cost of
materials, resulted in income of $5.3 million compared to expense
from restructuring activity of $0.5 million in the prior year
period. Full year restructuring charges, including a $25.6 million
charge for the write-down of inventory included in cost of
materials and excluding the gain on the sale of facilities of $16.0
million, were $50.6 million. Of the full year restructuring
charges, $22.2 represented cash charges including an estimated $5.5
million charge from the withdrawal of a multi-employer pension plan
that may be paid over 20 years. Both the total restructuring
charges and total cash charges for the year were in-line with
management's original estimates.
“The operational restructuring plan announced in April 2015 and
put in place throughout the year is now complete,” said Pat
Anderson, Executive Vice President and CFO. “We believe our lower
cost structure and improved capital structure as the result of our
recent strategic refinancing will support improved cash flow,
operating margin, and EBITDA performance going forward.”
Net sales from the Metals segment during the fourth quarter 2015
were $132.5 million, which was 33.0% lower than the fourth quarter
2014 and 12.0% lower than the third quarter 2015. Tons sold per day
were down 36.3% compared to the fourth quarter 2014 and down 11.4%
compared to the third quarter 2015. Average selling price per ton
sold was up 0.9% from the fourth quarter 2014 and up 1.7% from the
third quarter 2015. The fourth quarter 2015 benefited from a
favorable product mix which offset some of the impact of
unfavorable volume shipped compared to both the fourth quarter 2014
and the third quarter 2015. In the Plastics segment, fourth quarter
2015 net sales were $31.7 million, which was 5.9% lower compared to
the fourth quarter 2014 and 7.2% lower compared to the third
quarter 2015. The decrease in Plastics segment sales was mainly a
result of lower demand in the automotive and life sciences sectors
amplified by raw material pricing declines across most plastics
product lines.
Consolidated gross material margins were negative 16.7% in the
fourth quarter 2015 compared to positive 20.0% in the fourth
quarter 2014. The negative gross material margin in the fourth
quarter 2015 was impacted by the $61.5 million non-cash charge for
the write-down of inventory and purchase commitments at the
Company's Houston and Edmonton locations, as discussed above, and a
$3.3 million charge related to restructuring activity in the fourth
quarter 2015. Excluding these charges, consolidated adjusted gross
material margin in the fourth quarter 2015 was positive 22.8%.
Excluding net restructuring income of $8.6 million and the
impairment of intangible assets of $33.7 million, operating
expenses were $55.5 million, or 33.8% of net sales, in the fourth
quarter 2015, compared to $68.8 million, or 29.7% of net sales in
fourth quarter 2014 (excluding net restructuring expense of $0.5
million), and $57.8 million, or 31.3% of net sales, in the third
quarter 2015 (excluding net restructuring expense of $1.2
million).
Full year 2015 consolidated net sales were $770.8 million
compared to $979.8 million in 2014. The Company reported a net
loss of $209.8 million in 2015, or a loss of $8.91 per diluted
share, compared to a net loss in 2014 of $119.4 million, or a loss
of $5.11 per diluted share. The net loss in 2015 included a $33.7
million non-cash intangible assets impairment charge and the $61.5
million non-cash charge recorded in cost of materials for the
write-down of inventory and purchase commitments related to the
Company's decision to sell the inventory and cease operations in
its Houston and Edmonton facilities. The net loss in 2014 included
a $56.2 million non-cash goodwill impairment charge. Adjusted
non-GAAP net loss for 2015 was $78.0 million compared to adjusted
non-GAAP net loss of $71.2 million in 2014. Including the non-cash
intangible asset and goodwill impairment charges in 2015 and 2014,
respectively, the Company reported a 2015 negative EBITDA of $164.6
million, compared to a 2014 negative EBITDA of $73.4 million.
Negative adjusted EBITDA for 2015 was $32.8 million compared to
negative adjusted EBITDA of $21.5 million in 2014.
Net cash used in operations was $22.1 million during 2015,
compared to net cash used in operations of $75.1 million during
2014. The $53.0 million improvement in net cash used in operations
from 2014 to 2015 was largely attributable to a significant
decrease in inventory during the year. Inventory decreased by
$124.2 million. Included within this reduction in inventory was
$80.8 million in non-cash reserve adjustments and non-cash
write-downs of inventory during the year. The Company had $66.1
million of borrowings outstanding under its revolving credit
facility at December 31, 2015, and $30.1 million of additional
unrestricted borrowing capacity available under the terms of the
revolving credit facility. There were $59.2 million in borrowings
under the revolving credit facility at December 31, 2014, and
$68.3 million at September 30, 2015. The Company’s net
debt-to-capital ratio was 84.2% at December 31, 2015, compared
to 53.6% at December 31, 2014. Total debt outstanding,
net of unamortized discount, was $321.8 million at
December 31, 2015 and $310.1 million at December 31,
2014. Total debt outstanding, net of unamortized discount, was
$322.7 million at September 30, 2015. Refer to the ‘Total Debt’
table below for details related to the Company’s outstanding debt
obligations.
Scheinkman concluded, “2015 was a year of significant change for
Castle, and my leadership team and I could not have been more
pleased with the outcome of the actions we have taken to
operationally and financially restructure our Company, allowing us
to be more competitive in the core Metals markets we serve even in
this challenging market environment. Going forward, we are
able to focus our undivided attention on our customers and
suppliers to provide supply chain solutions to address their
needs. Our goal is to become even more responsive to the needs
of our customers, while continuing to fine-tune our cost structure
on a branch-by-branch basis. Most importantly, we believe that we
are now positioned take advantage of opportunities that will be
available as market cycles begin to turn.”
Webcast Information
Management will hold a conference call at 11:00 a.m. ET today to
review the Company's results for the fourth quarter and full year
ended December 31, 2015 and discuss market conditions and
business outlook. The call can be accessed via the internet live or
as a replay. Those who would like to listen to the call may access
the webcast through a link on the investor relations page of the
Company’s website at http://www.castlemetals.com/investors or by
calling (800) 774-6070 or (630) 691-2753 and citing code 9086
056#.
An archived version of the conference call webcast will be
available for replay at the link above approximately three hours
following its conclusion, and will remain available until the next
earnings conference call.
About A. M. Castle & Co.
Founded in 1890, A. M. Castle & Co. is a global distributor
of specialty metal and plastic products and supply chain services,
principally serving the producer durable equipment, commercial
aircraft, heavy equipment, industrial goods, construction
equipment, oil and gas, retail, marine and automotive sectors of
the global economy. Its customer base includes many Fortune
500 companies as well as thousands of medium and smaller-sized
firms spread across a variety of industries. Within its metals
business, it specializes in the distribution of alloy and stainless
steels; nickel alloys; aluminum and carbon. Through its
wholly-owned subsidiary, Total Plastics, Inc., the Company also
distributes a broad range of value-added industrial plastics.
Together, Castle and its affiliated companies operate out of 41
service centers located throughout North America, Europe and
Asia. Its common stock is traded on the New York Stock
Exchange under the ticker symbol "CAS".
Regulation G Disclosure
This release and the financial statements included in this
release include non-GAAP financial measures. The non-GAAP financial
information should be considered supplemental to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP. However, we believe that non-GAAP reporting,
giving effect to the adjustments shown in the reconciliation
contained in this release and in the attached financial statements,
provides meaningful information and therefore we use it to
supplement our GAAP reporting and guidance. Management often uses
this information to assess and measure the performance of our
business. We have chosen to provide this supplemental information
to investors, analysts and other interested parties to enable them
to perform additional analyses of operating results, to illustrate
the results of operations giving effect to the non-GAAP adjustments
shown in the reconciliations and to assist with period-over-period
comparisons of such operations. The exclusion of the charges
indicated herein from the non-GAAP financial measures presented
does not indicate an expectation by the Company that similar
charges will not be incurred in subsequent periods.
In addition, the Company believes that the use and presentation
of EBITDA, which is defined by the Company as income (loss) before
provision for income taxes plus depreciation and amortization, and
interest expense, less interest income, is widely used by the
investment community for evaluation purposes and provides
investors, analysts and other interested parties with additional
information in analyzing the Company’s operating
results. Adjusted non-GAAP net income (loss) and adjusted
EBITDA, which are defined as reported net income (loss) and EBITDA
adjusted for non-cash items and items which are not considered by
management to be indicative of the underlying results, are
presented as the Company believes the information is important to
provide investors, analysts and other interested parties additional
information about the Company’s financial
performance. Management uses EBITDA, adjusted non-GAAP net
income (loss) and adjusted EBITDA to evaluate the performance of
the business.
Cautionary Statement on Risks Associated with Forward Looking
Statements
Information provided and statements contained in this release
that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended (“Securities Act”), Section 21E of the Securities Exchange
Act of 1934, as amended (“Exchange Act”), and the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements only speak as of the date of this release and the
Company assumes no obligation to update the information included in
this release. Such forward-looking statements include information
concerning our possible or assumed future results of operations,
including descriptions of our business strategy, and the cost
savings and other benefits that we expect to achieve from our
facility closures and organizational changes. These statements
often include words such as “believe,” “expect,” “anticipate,”
“intend,” “predict,” “plan,” "should," or similar expressions.
These statements are not guarantees of performance or results, and
they involve risks, uncertainties, and assumptions. Although we
believe that these forward-looking statements are based on
reasonable assumptions, there are many factors that could affect
our actual financial results or results of operations and could
cause actual results to differ materially from those in the
forward-looking statements, including our ability to effectively
manage our operational initiatives and restructuring activities,
the impact of volatility of metals and plastics prices, the
cyclical and seasonal aspects of our business, our ability to
effectively manage inventory levels, our ability to successfully
complete the remaining steps in our strategic refinancing process,
and the impact of our substantial level of indebtedness, as well as
including those risk factors identified in Item 1A “Risk Factors”
of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2014, and our Annual Report on Form 10-K for the
fiscal year ended December 31, 2015, which will be filed shortly.
All future written and oral forward-looking statements by us or
persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to
above. Except as required by the federal securities laws, we do not
have any obligations or intention to release publicly any revisions
to any forward-looking statements to reflect events or
circumstances in the future, to reflect the occurrence of
unanticipated events or for any other reason.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three
MonthsEnded
For the Year Ended
(Dollars in thousands, except per share data) Unaudited
December
31, December 31, 2015 2014
2015 2014 Net sales $ 164,151 $ 231,466 $
770,758 $ 979,837 Costs and expenses:
Cost of materials (exclusive of depreciation and amortization)
191,530 185,220 674,615 750,408 Warehouse, processing and delivery
expense 27,394 33,991 114,734 140,559 Sales, general, and
administrative expense 21,864 28,185 95,479 112,465 Restructuring
expense (income) (8,645 ) 541 9,008 (2,960 ) Depreciation and
amortization expense 6,193 6,655 24,854 26,044 Impairment of
intangible assets 33,742 — 33,742 — Impairment of goodwill —
— — 56,160 Total
costs and expenses 272,078 254,592
952,432 1,082,676 Operating loss
(107,927 ) (23,126 ) (181,674 ) (102,839 ) Interest expense, net
10,554 10,560 41,980 40,548 Other expense, net 1,774
2,896 6,306 4,323 Loss
before income taxes and equity in earnings (losses) of joint
venture (120,255 ) (36,582 ) (229,960 ) (147,710 ) Income tax
benefit (1,830 ) (5,121 ) (21,621 )
(20,631 ) Loss before equity in earnings (losses) of joint venture
(118,425 ) (31,461 ) (208,339 ) (127,079 ) Equity in earnings
(losses) of joint venture (1,292 ) 1,777
(1,426 ) 7,691 Net loss $ (119,717 ) $ (29,684
) $ (209,765 ) $ (119,388 ) Basic loss per common share $ (5.08 ) $
(1.27 ) $ (8.91 ) $ (5.11 ) Diluted loss per common share $ (5.08 )
$ (1.27 ) $ (8.91 ) $ (5.11 ) EBITDA (a) $ (104,800 ) $ (17,590 ) $
(164,552 ) $ (73,427 ) (a) Earnings (loss) before interest,
taxes, and depreciation and amortization. See reconciliation to net
loss below.
Reconciliation of
EBITDA and of Adjusted EBITDA to Net Loss:
For the Three
MonthsEnded
For the Year Ended (Dollars in thousands) Unaudited
December 31, December 31, 2015 2014
2015 2014 Net loss $ (119,717 ) $ (29,684 ) $
(209,765 ) $ (119,388 ) Depreciation and amortization expense 6,193
6,655 24,854 26,044 Interest expense, net 10,554 10,560 41,980
40,548 Income tax expense (benefit) (1,830 ) (5,121 )
(21,621 ) (20,631 ) Negative EBITDA (104,800 )
(17,590 ) (164,552 ) (73,427 ) Non-GAAP adjustments (a)
91,810 619 131,770 51,944
Adjusted negative EBITDA $ (12,990 ) $ (16,971 ) $ (32,782 )
$ (21,483 ) (a) Refer to 'Reconciliation of Adjusted Non-GAAP Net
Loss to Reported Net Loss' table for additional details on these
amounts. Unrealized foreign exchange losses on intercompany loans
were not included in Adjusted EBITDA in the prior year period
presented; had losses been included, Adjusted EBITDA would have
been $(14,764) and $(17,945), respectively, for the three-months
and year ended December 31, 2014.
Reconciliation of
Adjusted Non-GAAP Net Loss to Reported Net Loss:
(Dollars in thousands, except per share data)
For the Three
MonthsEnded
For the Year Ended Unaudited
December 31, December
31, 2015 2014 2015 2014 Net loss,
as reported $ (119,717 ) $ (29,684 ) $ (209,765 ) $ (119,388 )
Non-GAAP adjustments: Restructuring activity (a) (5,324 ) 541
34,664 (2,960 ) Non-cash write-down of inventory(b) 61,472 61,472 —
Foreign exchange losses on intercompany loans(c) 1,242 — 5,385 —
Foreign exchange losses on intercompany loans of joint venture 966
— 966 — Impairment of intangible assets 33,742 — 33,742 —
Impairment of goodwill — — — 56,160 Impairment of goodwill of
equity investment joint venture(d) — — 1,763 — Unrealized (gains)
losses on commodity hedges (288 ) 78 (600 ) (1,256 ) Gain on sale
of property, plant and equipment — —
(5,622 ) — Non-GAAP adjustments $ 91,810
$ 619 $ 131,770 $ 51,944 Tax effect of
adjustments (16 ) (244 ) (42 ) (3,770 )
Adjusted non-GAAP net loss $ (27,923 ) $ (29,309 ) $ (78,037 ) $
(71,214 ) Adjusted non-GAAP basic loss per share $ (1.18 ) $ (1.25
) $ (3.31 ) $ (3.05 ) Adjusted non-GAAP diluted loss per share $
(1.18 ) $ (1.25 ) $ (3.31 ) $ (3.05 ) (a) Restructuring activity
includes amounts recorded to restructuring expense (income). For
the three months and year ended December 31, 2015, amount include
$3,321 and $25,656 in inventory write-down charges, respectively,
recorded to cost of materials in the Condensed Consolidated
Statements of Operations.
(b) Amount relates to the non-cash
write-down of inventory and purchase commitments of the Company's
Houston and Edmonton locations which served the oil and gas
industries. The write-down was recorded in conjunction with the
Company's decision to market the inventory at this location and
reduces the carrying value of the inventory to its market value. In
February 2016, the Company announced the sale of all of the Houston
and Edmonton inventory and the planned closure of those
facilities.
(c) Unrealized foreign exchange losses on intercompany loans were
not included in the prior year period presented as an adjustment to
GAAP results as the amount was not significant. Had the losses been
included, adjusted non-GAAP net loss, adjusted non-GAAP loss per
share and adjusted non-GAAP diluted loss per share would have been
$(27,102), $(1.16), and $(1.16), respectively, for the three-month
period ended December 31, 2014. Adjusted non-GAAP net loss,
adjusted non-GAAP loss per share and adjusted non-GAAP diluted loss
per share would have been $(67,675), $(2.90), and $(2.90),
respectively, for the year ended December 31, 2014. (d) The
Company's 50% joint venture has determined that its goodwill
balance of $3,525 was impaired as of September 30, 2015. The
Company has recorded a charge of $1,763 in equity in earnings
(losses) of joint venture in the Condensed Consolidated Statements
of Operations to reflect its share of the goodwill impairment.
CONDENSED CONSOLIDATED BALANCE
SHEETS
As of
(In thousands, except par value data)
December 31,
December 31, Unaudited
2015 2014
ASSETS
Current assets: Cash and cash equivalents $ 11,100 $ 8,454 Accounts
receivable, less allowances of $3,440 and $3,375, respectively
89,879 131,003 Inventories 235,443 359,630 Prepaid expenses and
other current assets 11,523 9,458 Income tax receivable 346
2,886 Total current assets 348,291 511,431
Investment in joint venture 35,690 37,443 Goodwill 12,973 12,973
Intangible assets, net 10,250 56,555 Prepaid pension cost 8,422
7,092 Deferred income taxes 378 685 Other non-current assets 10,256
11,660 Property, plant and equipment: Land 2,869 4,466 Buildings
42,559 52,821 Machinery and equipment 177,803
183,923 Property, plant and equipment, at cost 223,231
241,210 Accumulated depreciation (151,838 ) (168,375
) Property, plant and equipment, net 71,393
72,835 Total assets $ 497,653 $ 710,674
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities: Accounts payable $ 56,272 $ 68,782 Accrued
payroll and employee benefits 11,246 9,332 Accrued and other
current liabilities 17,324 18,338 Income tax payable 33 328 Current
portion of long-term debt 7,012 737
Total current liabilities 91,887 97,517 Long-term debt, less
current portion 314,761 309,377 Deferred income taxes 4,169 28,729
Build-to-suit liability 13,237 — Other non-current liabilities
7,935 3,655 Pension and postretirement benefit obligations 18,676
18,747 Commitments and contingencies Stockholders' equity:
Preferred stock, $0.01 par value—9,988 shares authorized (including
400 Series B Junior Preferred $0.00 par value shares); no shares
issued and outstanding at December 31, 2015 and December 31, 2014,
respectively — — Common stock, $0.01 par value—60,000 shares
authorized and 23,888 shares issued and 23,794 outstanding at
December 31, 2015 and 23,630 shares issued and 23,559 outstanding
at December 31, 2014 238 236 Additional paid-in capital 226,844
225,953 (Accumulated deficit) retained earnings (145,309 ) 64,456
Accumulated other comprehensive loss (33,821 ) (37,116 ) Treasury
stock, at cost—94 shares at December 31, 2015 and 71 shares at
December 31, 2014 (964 ) (880 ) Total stockholders'
equity 46,988 252,649 Total liabilities
and stockholders' equity $ 497,653 $ 710,674
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended (Dollars in thousands)
December
31, Unaudited
2015 2014 Operating
activities: Net loss $ (209,765 ) $ (119,388 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 24,854 26,044 Amortization of
deferred loss (gain) 5 (261 ) Amortization of deferred financing
costs and debt discount 8,355 8,064 Impairment of intangible assets
33,742 — Impairment of goodwill — 56,160 Non-cash write-down of
inventory 53,971 — Gain on sale of property, plant and equipment
(21,568 ) (5,603 ) Unrealized gains on commodity hedges (600 )
(1,256 ) Unrealized foreign currency transaction losses 5,385 3,540
Equity in losses (earnings) of joint venture 1,426 (7,691 )
Dividends from joint venture 316 12,127 Pension curtailment 2,923 —
Pension settlement 3,915 — Deferred tax (benefit) expense (23,842 )
(19,094 ) Share-based compensation expense 828 1,972 Excess tax
benefits from share-based payment arrangements — (76 ) Changes in
assets and liabilities: Accounts receivable 37,063 (5,785 )
Inventories 63,986 (22,976 ) Prepaid expenses and other current
assets (7,884 ) (60 ) Other non-current assets (520 ) 1,777 Prepaid
pension costs 2,675 387 Accounts payable (4,461 ) 2,630 Accrued
payroll and employee benefits 6,938 (230 ) Income tax payable and
receivable 2,083 (863 ) Accrued and other current liabilities (196
) (3,493 ) Pension and postretirement benefit obligations and other
non-current liabilities (1,762 ) (1,002 ) Net cash
used in operating activities (22,133 ) (75,077 ) Investing
activities: Capital expenditures (8,250 ) (12,351 ) Proceeds from
sale of property, plant and equipment 28,631
7,464 Net cash from (used in) investing activities 20,381
(4,887 ) Financing activities: Proceeds from long-term debt 967,035
462,404 Repayments of long-term debt (960,962 ) (403,811 ) Payment
of debt issue costs — (627 ) Exercise of stock options — 158 Excess
tax benefits from share-based payment arrangements — 76 Payments of
build-to-suit liability (500 ) — Net cash from
(used in) financing activities 5,573 58,200 Effect of exchange rate
changes on cash and cash equivalents (1,175 ) (611 )
Net change in cash and cash equivalents 2,646 (22,375 ) Cash and
cash equivalents—beginning of year 8,454
30,829 Cash and cash equivalents—end of year $ 11,100
$ 8,454
Total
Debt:
As of
(Dollars in thousands)
December 31, December
31, Unaudited
2015 2014 LONG-TERM DEBT
12.75% Senior Secured Notes due December
15, 2016(a)
$ 6,681 $ 210,000 7.0% Convertible Notes due December 15, 2017
57,500 57,500 12.75% Senior Secured Notes due December 15, 2018
203,319 — Revolving Credit Facility due December 10, 2019 66,100
59,200 Other, primarily capital leases 428 1,257 Less: unamortized
discount (12,255 ) (17,843 ) Total debt $ 321,773 $
310,114 Less: current portion (7,012 ) (737 ) Total
long-term portion $ 314,761 $ 309,377
(a) In February 2016, the Company completed a private exchange
offer and consent solicitation (the “Exchange Offer”) to certain
eligible holders to exchange new 12.75% Senior Secured Notes due
2018 ("New Secured Notes") for the Company’s outstanding 12.75%
Senior Secured Notes due 2016 ("Secured Notes"). In connection
with the Exchange Offer, the Company issued $203,319 aggregate
principal amount of New Secured Notes leaving $6,681 aggregate
principal amount of Secured Notes outstanding. However, at a
minimum, the Company maintains a contractual right to exchange
approximately $3 million of the remaining Secured Notes with New
Secured Notes prior to their maturity date.
Reconciliation of
Total Debt to Net Debt and Net Debt-to-Capital:
As of (Dollars in thousands)
December 31,
December 31, Unaudited
2015 2014 Total
debt $ 321,773 $ 310,114 Less: Cash and cash equivalents
(11,100 ) (8,454 ) NET DEBT $ 310,673 $ 301,660
Stockholders' equity $ 46,988 $ 252,649 Total debt
321,773 310,114 CAPITAL $ 368,761
$ 562,763 NET DEBT-TO-CAPITAL 84.2 %
53.6 %
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version on businesswire.com: http://www.businesswire.com/news/home/20160314005379/en/
-At ALPHA IR-Analyst ContactMonica Gupta or Nick
Hughes(312) 445-2870Email: CAS@alpha-ir.comTraded: NYSE (CAS)