Aleris Reports Third Quarter 2011 Results

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CLEVELAND, Nov. 4, 2011 /CNW/ -- Aleris International, Inc. today reported results for the third quarter ended September 30, 2011.

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    Performance Summary

    --  Revenue for the third quarter of 2011 was approximately $1.2 billion,
        an 18 percent increase over the third quarter of 2010.  This increase
        was primarily due to higher London Metal Exchange (LME) prices and
        rolling margins as well as an improved product mix.

    --  Net income attributable to Aleris International, Inc. for the third
        quarter of 2011 was $28 million compared to $54 million for the third
        quarter of 2010.

    --  Adjusted EBITDA for the third quarter of 2011 was $96 million compared
        to $72 million for the third quarter of 2010, a 34 percent increase.
        Adjusted EBITDA for the 12 months ended September 30, 2011 totaled
$333
        million.

    --  Cash provided by operating activities was $125 million in the third
        quarter of 2011 compared to cash provided of $73 million in the third
        quarter of 2010 driven by higher EBITDA and working capital
        productivity.

    --  Liquidity at September 30, 2011 was $761 million, which consisted of
        $495 million of availability under the Company's revolving credit
        facility plus $266 million of cash.

    --  Capital expenditures increased in the third quarter sequentially and
        versus the prior year as spending on our growth projects in Zhenjiang,
        China, Duffel, Belgium and the recycling business continued to
progress
        as planned.


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                                   Aleris International, Inc.(1)
                                   -----------------------------
    >>

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                                             For the three             For the
nine months
                                              months ended                   
ended
                                             September 30,               
September 30,
                                             -------------               
-------------
                                          2011          2010            2011  
2010
                                          ----          ----            ----  
----
                                              (Successor)          (Successor)
(Combined)
      (Dollars
       and
       pounds
       in
       millions)                            (unaudited)            (unaudited)
    >>

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    Pounds
     invoiced                            1,143         1,180           3,482  
3,375
      Rolled
       Products
       North
       America                             216           222             635  
641
      Recycling
       and
       Specification
       Alloys
       Americas                            503        532        1,502       
1,487
      Europe                               425           426           1,346  
1,246
    >>

Revenue $1,247 $1,057 $3,767 $3,058

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    Net
     income
     attributable
     to
     Aleris
     International,
     Inc.                                  $28        $54         $142      
$2,234
    >>

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    Adjusted
     EBITDA                                $96           $72            $270  
$201
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    Cash
     provided
     (used)
     by
     operating
     activities                           $125        $73         $150        
$(75)
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    (1)  Aleris International, Inc. is a wholly-owned
     subsidiary of Aleris Corporation, a holding
     company formerly known as Aleris Holding Company,
     whose assets, liabilities and operations consist
     solely of those of Aleris International, Inc. The
     results of operations of Aleris Corporation are
     identical to Aleris International, Inc.


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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 purposes of discussing operating performance in this press release, the Successor and Predecessor results have been combined to derive "Combined" results for the nine months ended September 30, 2010. All references to operating results for this period are to the combined results.

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Aleris reported revenues of approximately $1.2 billion for the third quarter of 2011 compared to approximately $1.1 billion in the same period of 2010, driven by improved product mix and higher rolling margins and aluminum prices. For the third quarter of 2011, net income attributable to Aleris International, Inc. totaled $28 million compared to $54 million in the third quarter of 2010. While gross margins increased as a result of volume, mix and price improvements, third quarter 2011 net income was negatively impacted by a net $27 million variance between unrealized non-cash mark to market changes in derivative financial instruments, metal price lag and the impact of purchase accounting on derivative instruments, a $9 million increase in interest expense associated with the Company's $500 million senior note offering, an $8 million reduction in currency gains, primarily due to exchange rate fluctuations between the Euro and U.S. dollar, and $4 million of start-up expenses associated with our joint venture in Zhenjiang, China. In addition, we terminated our research and development agreement with Tata Steel, successor to Corus Group Ltd., during the third quarter of 2011 and, as a result, recorded a one-time $12 million contract termination charge in third quarter 2011 selling, general and administrative expenses.

Adjusted EBITDA totaled $96 million in the third quarter of 2011 compared to $72 million in the third quarter of 2010. Operating results were positively impacted by a 3 percent increase in volume, after adjusting for the sale of the Brazilian recycling facility in December 2010, and a more profitable selling mix driven by substantially higher aircraft and automotive volumes. Adjusted EBITDA also benefited from margin improvements as higher rolling margins, better scrap and metal spreads, and productivity improvements more than offset inflationary and other cost pressures.

At September 30, 2011, the Company's long-term indebtedness consisted primarily of $500 million of 7 5/8% senior notes, $45 million of exchangeable notes, and $11 million of non-recourse term-loan debt held by Aleris's China joint venture. Aleris had $761 million of liquidity at September 30, 2011, which consisted of $495 million of availability under the Company's revolving credit facility plus $266 million of cash.

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    Rolled Products North America
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Rolled Products North America's segment income for the third quarter of 2011 increased by $1 million to $19 million compared to the third quarter of 2010. Segment Adjusted EBITDA increased by 11 percent, or $3 million, to $27 million. The segment reported improved operating results, which benefited from higher rolling margins, higher scrap utilization and improved scrap spreads. Despite continued improvements in demand from the transportation segment and a slight rebound in distributor segment volumes, the quarter saw a 3 percent lower volume overall, driven largely by a 15 percent reduction in volume to building and construction customers. Previously announced pricing initiatives led to continued year-over-year improvement in rolling margins and enabled the Rolled Products North America business to more than offset inflationary pressures on commodity costs.

Segment income for the third quarter of 2011 increased from the third quarter of 2010 as a result of the increase in Segment Adjusted EBITDA and changes in metal price lag, but was negatively impacted by reduced benefits from valuing inventory and other items to fair value upon the emergence from bankruptcy. Neither fresh-start accounting nor metal price lag impact Adjusted EBITDA.

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    Recycling and Specification Alloys Americas
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Recycling and Specification Alloys Americas' segment income increased by $9 million, from $10 million in the third quarter of 2010 to $19 million in the third quarter of 2011. Segment Adjusted EBITDA increased by 72 percent, or $9 million, from $12 million in the third quarter of 2010 to $21 million in the third quarter of 2011. Operating performance was positively impacted by improved demand from the North American automotive industry and recycling volumes. Excluding the effects of the sale of the Brazilian facility, third quarter 2011 shipment volumes improved 9 percent from the prior year period. Segment results in the quarter were favorably impacted by wider metal spreads and higher aluminum prices as well as the sale of the Brazilian facility, which incurred an EBITDA loss of $2 million in the third quarter of 2010. Productivity gains associated with the Aleris Operating System (AOS) further impacted quarterly performance, continuing to offset inflation.

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    Europe
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Europe's segment income for the third quarter of 2011 increased by $21 million to $48 million compared to the third quarter of 2010. Segment Adjusted EBITDA increased 32 percent, or $14 million, to $58 million, compared to the prior period. Improved operating performance was driven primarily by an improved product mix, with strong double-digit increases in the most profitable product categories within rolled products, including aerospace plate and sheet, and automotive sheet. European recycling operations continued to benefit from robust automotive demand, although year-over-year volume growth slowed compared with the first half of 2011. One-time gains and currency fluctuations further improved Segment Adjusted EBITDA by $7 million compared to the prior year.

Segment income for the third quarter of 2011 increased from the third quarter of 2010 as a result of the increase in Segment Adjusted EBITDA and an $18 million variance in the impact of metal price lag. These increases were partially offset by $12 million of contract termination costs recorded during the third quarter of 2011 associated with the ending of our research and development agreement with Tata Steel.

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    Year-to-Date Results
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For the nine months ended September 30, 2011, Aleris reported revenues of approximately $3.8 billion compared to approximately $3.1 billion for the nine months ended September 30, 2010. Net income attributable to Aleris International, Inc. for the nine months ended September 30, 2011 totaled $142 million compared to approximately $2.2 billion for the prior year period. Excluding a gain of approximately $2.2 billion related to the Company's reorganization and emergence from bankruptcy, the Company reported net income attributable to Aleris International, Inc. of $12 million for the nine months ended September 30, 2010.

Adjusted EBITDA for the nine months ended September 30, 2011 totaled $270 million, a 34 percent increase compared to the nine months ended September 30, 2010. Additionally, for the twelve month period ended September 30, 2011, Adjusted EBITDA totaled $333 million.

In addition to the typical reduced demand in our fourth quarter and the current downward trend in LME prices, the European sovereign debt crisis and broader economic uncertainty are expected to result in lower overall demand in the fourth quarter as compared to the prior year, notwithstanding continued strong demand in aerospace, automotive and transportation.

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    Conference Call and Webcast Information
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Aleris will hold a conference call on November 4, 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 # 24616320 - 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.

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    Forward-Looking Statements
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Certain statements in this press release are "forward-looking statements" within the meaning of the federal securities laws. Statements about our beliefs and expectations and statements containing the words "may," "could," "would," "should," "will," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "look forward to," "intend" and similar expressions intended to connote future events and circumstances constitute forward-looking statements. Forward-looking statements include statements about future costs and prices of commodities, production volumes, industry trends, demand for our products and services, anticipated cost savings, anticipated benefits from new products or facilities, and projected results of operations. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in or implied by any forward-looking statement. Important factors that could cause actual results to differ materially from those expressed or implied by forward-looking statements include, but are not limited to, the following: (1) our ability to successfully implement our business strategy; (2) the cyclical nature of the aluminum industry, our end-use segments and our customers' industries; (3) our ability to fulfill substantial capital investment requirements; (4) variability in general economic conditions on a global or regional basis; (5) our ability to enter into effective aluminum, natural gas and other commodity derivatives or arrangements with customers to effectively manage our exposure to commodity price fluctuations and changes in the pricing of metals; (6) increases in the cost of raw materials and energy; (7) the loss of order volumes from or the retention of our major customers; (8) our ability to generate sufficient cash flows to fund capital expenditure requirements and debt service obligations; (9) competitor pricing activity, competition of aluminum with alternative materials and the general impact of competition in our industry segments; (10) risks of investing in and conducting operations on a global basis, including political, social, economic, currency and regulatory factors; (11) liabilities under and costs of compliance with environmental, labor, health and safety laws; and (12) other factors discussed in our filings with the Securities and Exchange Commission, including the sections entitled "Risk Factors" contained therein. Investors, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether in response to new information, futures events or otherwise, except as otherwise required by law.

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    Non-GAAP Financial Measures
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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, start-up expenses and certain other gains and losses. Metal price lag represents the financial impact of the timing difference between when aluminum prices included within our revenues are established and when aluminum purchase prices included in our cost of sales are established. This lag will, generally, increase our earnings and EBITDA in times of rising primary aluminum prices and decrease our earnings and EBITDA in times of declining primary aluminum prices. We now seek to reduce this impact through the use of derivative financial instruments. Metal price lag is net of the realized gains and losses from our derivative financial instruments. We exclude metal price lag from our determination of Adjusted EBITDA because it is not an indicator of the performance of our underlying operations.

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) attributable to Aleris International, Inc. 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, including the impacts of metal price lag, is a component of certain covenants under the revolving credit facility and EBITDA, with certain adjustments, is a component of certain covenants under the indenture governing our 7 5/8% senior notes.

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    About Aleris

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

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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.

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    (Logo:  http://photos.prnewswire.com/prnh/20110616/CL21386LOGO )




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                                    Aleris International, Inc.
                                    --------------------------
    >>

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                              Consolidated Statements of Operations
                                           (unaudited)
                                          (in millions)
    >>

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                                                 (Successor)                  
(Predecessor)
                                                 -----------                  
-------------
                       For the           For the                              
For the
                        three             three         For the nine    For
the four              five
                                                                              
months
                    months ended      months ended      months ended    months
ended             ended
                      September         September         September      
September             May 31,
                       30, 2011          30, 2010          30, 2011        30,
2010               2010
                     ----------        ----------        ----------     
----------            --------
    Revenues            $1,247.1          $1,056.9          $3,766.7       
$1,414.8              $1,643.0
    Cost of sales        1,126.1             951.4           3,382.5        
1,303.8               1,455.8
                         -------             -----           -------        
-------               -------
    Gross profit           121.0             105.5             384.2          
111.0                 187.2
    Selling,
     general and
     administrative
     expenses               76.2              56.7             206.0          
73.3                  84.2
    Restructuring
     and
     impairment
     charges
     (gains)                 1.6            0.7            3.4          1.2   
(0.4)
    Losses (gains)
     on derivative
     financial
     instruments             0.7             (14.2)             (3.5)         
(5.1)                 28.6
    Other
     operating
     expense
     (income), net           0.8                 -              (3.0)         
-                   0.4
                             ---               ---              ----          
---                   ---
    Operating
     income                 41.7              62.3             181.3          
41.6                  74.4
    Interest
     expense, net           11.8               2.9              34.2          
3.9                  73.6
    Reorganization
     items, net              0.1               3.5              (1.4)         
5.5              (2,227.3)
    Other expense
     (income), net           2.5              (7.3)             (2.8)         
(7.2)                 32.7
                             ---              ----              ----          
----                  ----
    Income before
     income taxes           27.3              63.2             151.3          
39.4               2,195.4
    (Benefit from)
     provision for
     income taxes           (0.3)              9.4               9.6          
9.7                  (8.7)
                            ----               ---               ---          
---                  ----
    Net income              27.6              53.8             141.7          
29.7               2,204.1
                            ----              ----             -----          
----               -------
    Net loss
     attributable
     to
     noncontrolling
     interest               (0.3)             -           (0.1)           -   
-
    Net income
     attributable
     to Aleris
     International,
     Inc.                  $27.9          $53.8         $141.8        $29.7   
$2,204.1
                           =====             =====            ======          
=====              ========






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                                  Aleris International, Inc.
                                  --------------------------
    >>

    <<
                               Operating and Segment Information
                                          (unaudited)
                                         (in millions)
    >>

    <<
                                                                   
(Successor)
                                                                   
-----------
                                                         For the three       
For the three
                                                         months ended        
months ended
                                                         September 30,       
September 30,
                                                              2011            
2010
                                                         --------------      
--------------
    Pounds invoiced:
      Rolled Products North
       America                                                    215.9       
221.8
      Recycling and Specification
       Alloys Americas                                            502.5       
532.4
      Europe                                                      424.7       
426.1
    Total                                                       1,143.1       
1,180.3
                                                                =======       
=======
    >>

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    Revenues:
      Rolled Products North
       America                                                   $365.5       
$322.4
      Recycling and Specification
       Alloys Americas                                            247.1       
224.8
      Europe                                                      636.5       
513.5
      Intersegment revenues                                        (2.0)      
(3.8)
    Total                                                      $1,247.1       
$1,056.9
                                                               ========       
========
    >>

    <<
    Segment income:
      Rolled Products North
       America                                                    $19.1       
$17.8
      Recycling and Specification
       Alloys Americas                                             18.7       
9.9
      Europe                                                       47.7       
27.2
                                                                   ----       
----
    Total segment income                                           85.5       
54.9
      Corporate general and
       administrative expenses                                    (16.1)      
(10.6)
      Restructuring and impairment
       charges                                                     (1.6)      
(0.7)
      Interest expense, net                                       (11.8)      
(2.9)
      Unallocated (losses) gains
       on derivative financial
       instruments                                                (22.5)      
20.0
      Reorganization items, net                                    (0.1)      
(3.5)
      Unallocated currency
       exchange (losses) gains                                     (6.0)      
7.2
      Other expense, net                                           (0.1)      
(1.2)
    Income before income taxes                                    $27.3       
$63.2
                                                                  =====       
=====
    >>

    <<
    Segment adjusted EBITDA:
      Rolled Products North
       America                                                    $27.1       
$24.4
      Recycling and Specification
       Alloys Americas                                             20.8       
12.1
      Europe                                                       58.0       
44.1
      Unallocated                                                  (9.5)      
(8.7)
    Total Adjusted EBITDA                                         $96.4       
$71.9
                                                                  =====       
=====
    >>

    <<
    Supplemental Europe segment product line
     information
      Pounds Invoiced                                             424.7       
426.1
        Rolled Products                                           171.2       
175.6
        Extruded Products                                          42.5       
41.5
        Recycled Products                                         211.0       
209.0
    >>

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      Revenues                                                   $636.5       
$513.5
        Intrasegment eliminations                                 (35.6)      
(38.3)
        Rolled Products                                           391.3       
327.0
        Extruded Products                                         106.6       
95.8
        Recycled Products                                         174.2       
129.0
    >>

    <<
      Segment Adjusted EBITDA                                     $58.0       
$44.1
        Rolled Products                                            47.0       
30.6
        Extruded Products                                           3.1       
4.1
        Recycled Products                                           7.9       
9.4





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                                            Aleris International, Inc.
                                            --------------------------
    >>

    <<
                                        Operating and Segment Information
                                                   (unaudited)
                                                  (in millions)
    >>

    <<
                                          (Successor)           (Combined)    
(Successor)    (Predecessor)
                                          -----------           ----------    
-----------    -------------
                                                                              
For the
                                         For the nine         For the nine   
For the four         five
                                                                              
months
                                         months ended         months ended   
months ended        ended
                                         September 30,        September 30,  
September 30,      May 31,
                                              2011                 2010       
2010            2010
                                         --------------       -------------- 
--------------    --------
    Pounds invoiced
      Rolled Products North
       America                                    634.6                641.2  
295.6          345.6
      Recycling and
       Specification Alloys
       Americas                                 1,501.7              1,487.3  
699.8          787.5
      Europe                                    1,346.0              1,246.0  
577.1          668.9
    Total                                       3,482.3              3,374.5  
1,572.5        1,802.0
                                                =======              =======  
=======        =======
    >>

    <<
    Revenues:
      Rolled Products North
       America                                 $1,054.6               $935.7  
$428.5         $507.2
      Recycling and
       Specification Alloys
       Americas                                   750.3                676.1  
302.4          373.7
      Europe                                    1,967.9              1,457.6  
688.5          769.1
      Intersegment revenues                        (6.1)               (11.6) 
(4.6)          (7.0)
    Total                                      $3,766.7             $3,057.8  
$1,414.8       $1,643.0
                                               ========             ========  
========       ========
    >>

    <<
    Segment income:
      Rolled Products North
       America                                    $53.6                $53.3  
$15.2          $38.1
      Recycling and
       Specification Alloys
       Americas                                    55.7                 39.1  
12.7           26.4
      Europe                                      136.9                 78.7  
18.5           60.2
                                                  -----                 ----  
----           ----
    Total segment income                          246.2                171.1  
46.4          124.7
      Corporate general and
       administrative
       expenses                                   (43.8)               (25.7) 
(13.5)         (12.2)
      Restructuring and
       impairment (charges)
       gains                                       (3.4)                (0.8) 
(1.2)           0.4
      Interest expense, net                       (34.2)               (77.5) 
(3.9)         (73.6)
      Unallocated (losses)
       gains on derivative
       financial instruments                      (13.8)               (27.6) 
11.2          (38.8)
      Reorganization items,
       net                                          1.4              2,221.8  
(5.5)       2,227.3
      Unallocated currency
       exchange (losses)
       gains                                       (0.2)               (24.6) 
7.4          (32.0)
      Other expense, net                           (0.9)                (1.9) 
(1.5)          (0.4)
    Income before income
     taxes                                       $151.3             $2,234.8  
$39.4       $2,195.4
                                                 ======             ========  
=====       ========
    >>

    <<
    Segment adjusted EBITDA:
      Rolled Products North
       America                                    $80.4                $74.1  
$31.6          $42.5
      Recycling and
       Specification Alloys
       Americas                                    60.6                 46.4  
17.3           29.1
      Europe                                      156.0                100.3  
60.6           39.7
      Corporate                                   (27.1)               (20.2) 
(10.9)          (9.3)
    Total Adjusted EBITDA                        $269.9               $200.6  
$98.6         $102.0
                                                 ======               ======  
=====         ======
    >>

    <<
    Supplemental Europe segment product
     line information
      Pounds Invoiced                           1,346.0              1,246.0  
577.1          668.9
        Rolled Products                           545.7                502.0  
236.6          265.4
        Extruded Products                         133.3                126.4  
57.4           69.0
        Recycled Products                         667.0                617.6  
283.1          334.5
    >>

    <<
      Revenues                                 $1,967.9             $1,457.6  
$688.5         $769.1
        Intrasegment
         eliminations                            (107.4)               (83.9) 
(41.4)         (42.5)
        Rolled Products                         1,206.7                890.1  
425.6          464.5
        Extruded Products                         323.9                257.8  
125.3          132.5
        Recycled Products                         544.7                393.6  
179.0          214.6
    >>

    <<
      Segment Adjusted EBITDA                    $156.0               $100.3  
$60.6          $39.7
        Rolled Products                           117.7                 69.3  
41.1           28.2
        Extruded Products                           7.5                  7.3  
6.4            0.9
        Recycled Products                          30.8                 23.7  
13.1           10.6






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    <<
                                   Aleris International, Inc.
                                   --------------------------
    >>

    <<
                                   Consolidated Balance Sheet
                                          (unaudited)
                         (in millions, except share and per share data)
    >>

    <<
                                                                   
(Successor)
                                                                   
-----------
                                                         September 30,      
December 31,
                                                              2011            
2010
                                                        --------------     
-------------
                                 ASSETS
    Current Assets
    Cash and cash equivalents                                   $265.9        
$113.5
    Accounts receivable (net of allowances of $9.4
     and $8.7 at September 30, 2011 and
      December 31, 2010, respectively)                           530.4        
393.4
    Inventories                                                  672.2        
613.6
    Deferred income taxes                                          1.6        
1.6
    Current derivative financial
     instruments                                                  14.0        
17.4
    Prepaid expenses and other current
     assets                                                       26.0        
23.8
                                                                  ----        
----
           Total Current Assets                                1,510.1        
1,163.3
    Property, plant and equipment, net                           573.1        
510.0
    Intangible assets, net                                        48.2        
49.7
    Long-term derivative financial
     instruments                                                   0.9        
9.3
    Deferred income taxes                                         13.8        
13.9
    Other long-term assets                                        35.9        
33.5
           Total Assets                                       $2,182.0        
$1,779.7
                                                              ========        
========
    >>

    <<
                  LIABILITIES AND STOCKHOLDER'S EQUITY
    Current Liabilities
    Accounts payable                                            $376.4        
$283.6
    Accrued liabilities                                          219.6        
165.2
    Deferred income taxes                                         13.8        
13.8
    Current portion of long-term debt                              4.7        
5.3
           Total Current Liabilities                             614.5        
467.9
    Long-term debt                                               549.0        
45.1
    Deferred income taxes                                          9.9        
8.7
    Accrued pension benefits                                     179.1        
184.5
    Accrued postretirement benefits                               47.0        
48.5
    Other long-term liabilities                                   80.7        
83.2
                                                                  ----        
----
           Total Long-Term Liabilities                           865.7        
370.0
    Redeemable preferred stock; par
     value $.01; 5,000 shares
     authorized and issued                                         5.3        
5.2
    Stockholder's Equity
    Common stock; par value $.01;
     5,000 shares authorized and 100
     shares issued                                                   -        
-
    Additional paid-in capital                                   630.9        
838.7
    Retained earnings                                             27.8        
71.2
    Accumulated other comprehensive
     income                                                       30.5        
26.7
           Total Aleris International, Inc.
            Equity                                               689.2        
936.6
    Noncontrolling interest                                        7.3        
-
                                                                   ---        
---
           Total Equity                                          696.5        
936.6
                                                                 -----        
-----
           Total Liabilities and Equity                       $2,182.0        
$1,779.7
                                                              ========        
========


    >>

    <<
                                 Aleris International, Inc.
                                 --------------------------
    >>

    <<
                            Consolidated Statements of Cash Flows
                                         (unaudited)
                                        (in millions)
    >>

    <<
                                                                 (Successor)
                                                                 -----------
                                                        For the             
For the
                                                         three               
three
                                                     months ended        
months ended
                                                       September           
September
                                                        30, 2011            
30, 2010
                                                      ----------          
----------
    Operating activities
      Net income                                            $27.6             
$53.8
      Adjustments to reconcile net income to net
       cash provided
        by operating activities:
         Depreciation and amortization                       17.0             
15.4
         Provision for deferred income
          taxes                                               0.7             
-
         Reorganization items:
           Charges                                            0.1             
3.5
           Payments, net of cash received                    (1.6)            
(12.7)
         Restructuring and impairment charges:
           Charges                                            1.6             
0.7
           Payments                                          (1.2)            
(1.1)
         Stock-based compensation
          expense                                             2.8             
2.1
         Unrealized losses (gains) on
          derivative financial
          instruments                                        22.3             
(20.9)
         Currency exchange losses
          (gains) on debt                                     5.3             
(0.1)
         Amortization of debt issuance
          costs                                               1.5             
1.0
         Other non-cash charges
          (gains), net                                        2.0             
(14.8)
      Changes in operating assets and
       liabilities:                                             -             
-
         Change in accounts receivable                       30.0             
12.3
         Change in inventories                                7.4             
(8.3)
         Change in other assets                               4.1             
19.4
         Change in accounts payable                          16.4             
20.8
         Change in accrued liabilities                      (10.7)            
2.1
    Net cash provided by operating
     activities                                             125.3             
73.2
    Investing activities
      Payments for property, plant
       and equipment                                        (48.3)            
(18.8)
      Proceeds from the sale of
       property, plant and equipment                          0.3             
0.3
      Other                                                  (0.2)            
(0.1)
    Net cash used by investing
     activities                                             (48.2)            
(18.6)
    Financing activities
      Proceeds from ABL Facility                                -             
3.9
      Payments on ABL Facility                                  -             
(36.2)
      Proceeds from China Loan
       Facility                                               5.8             
-
      Net payments on other long-
       term debt                                             (2.5)            
(0.2)
      Debt and equity issuance costs                         (0.4)            
(0.7)
      Contributions from
       noncontrolling interests                               3.5             
-
      Dividends paid                                            -             
-
    Net cash provided (used) by
     financing activities                                     6.2             
(33.2)
      Effect of exchange rate
       differences on cash and cash
       equivalents                                           (5.0)            
6.2
    Net increase in cash and cash
     equivalents                                             78.3             
27.6
      Cash and cash equivalents at
       beginning of period                                  187.6             
67.5
                                                            -----             
----
    Cash and cash equivalents at
     end of period                                         $265.9             
$95.1
                                                           ======             
=====



    >>

    <<
                                               Aleris International, Inc.
                                               --------------------------
    >>

    <<
                                         Consolidated Statements of Cash Flows
                                                      (unaudited)
                                                     (in millions)
    >>

    <<
                                                     (Successor)      
Combined   (Successor)  (Predecessor)
                                                     -----------      
--------   -----------  -------------
                                                        For the         For
the      For the      For the
                                                         nine            nine 
four          five
                                                        months          months
months        months
                                                         ended           ended
ended        ended
                                                      September      
September    September      May 31,
                                                       30, 2011        30,
2010     30, 2010        2010
                                                     ----------     
----------   ----------     --------
    Operating activities
     Net income                                           $141.7       
$2,233.8        $29.7       $2,204.1
     Adjustments to reconcile net income to net
      cash
      provided (used) by operating activities:
        Depreciation and amortization                       50.9           
40.9         20.7           20.2
        Provision for (benefit from)
         deferred income taxes                               1.5          
(11.4)           -          (11.4)
        Reorganization items:
            (Gains) charges                                 (1.4)      
(2,221.8)         5.5       (2,227.3)
            Payments, net of cash received                  (1.7)         
(50.0)       (18.8)         (31.2)
        Restructuring and impairment charges
         (gains):
            Charges (gains)                                  3.4            
0.8          1.2           (0.4)
        Payments                                            (3.0)          
(7.1)        (1.6)          (5.5)
        Stock-based compensation
         expense                                             7.3            
4.0          2.7            1.3
        Unrealized losses (gains) on
         derivative financial
         instruments                                        13.4           
27.0        (12.2)          39.2
        Currency exchange (gains) losses
         on debt                                            (1.0)          
25.5            -           25.5
        Amortization of debt issuance
         costs                                               4.5           
29.2          1.4           27.8
        Other non-cash (gains) charges,
         net                                                (5.9)           
4.8        (13.5)          18.3
     Changes in operating assets and
      liabilities:
        Change in accounts receivable                     (130.7)        
(165.8)        15.7         (181.5)
        Change in inventories                              (53.5)        
(115.6)        23.1         (138.7)
        Change in other assets                              (3.7)           
2.3         17.5          (15.2)
        Change in accounts payable                          88.4           
89.5         22.1           67.4
        Change in accrued liabilities                       39.5           
38.5          5.1           33.4
                                                            ----           
----          ---           ----
    Net cash provided (used) by
     operating activities                                  149.7           
75.4         98.6         (174.0)
    Investing activities
      Payments for property, plant and
       equipment                                          (108.4)         
(41.4)       (25.4)         (16.0)
      Proceeds from the sale of
       property, plant and equipment                         7.8            
0.6          0.3            0.3
      Other                                                 (0.4)           
0.1          0.1              -
                                                            ----            
---          ---            ---
    Net cash used by investing
     activities                                           (101.0)         
(40.7)       (25.0)         (15.7)
    Financing activities
      Proceeds from ABL Facility                               -          
140.8         60.8           80.0
      Payments on ABL Facility                                 -         
(142.6)      (142.6)             -
      Proceeds from issuance of Senior
       Notes, net of discount of $10.0                     490.0              
-            -              -
      Proceeds from China Loan
       Facility                                             11.5              
-            -              -
      Net payments on other long-term
       debt                                                 (1.0)          
(1.8)        (0.5)          (1.3)
      Proceeds from issuance of common
       stock, net of issuance costs of
       $22.5                                                   -          
541.1            -          541.1
      Proceeds from issuance of
       Preferred Stock                                         -            
5.0            -            5.0
      Proceeds from Exchangeable
       Notes, net of issuance costs of
       $1.2                                                    -           
43.8            -           43.8
      Proceeds from DIP ABL Facility                           -          
895.3            -          895.3
      Payments on DIP ABL Facility                             -       
(1,112.5)           -       (1,112.5)
      Proceeds from DIP Term Facility                          -           
34.8            -           34.8
      Payments on DIP Term Facility                            -         
(244.7)           -         (244.7)
      Debt and equity issuance costs                        (7.2)         
(55.2)        (1.0)         (54.2)
      Contributions from
       noncontrolling interests                              7.6              
-            -              -
      Dividends paid to Aleris
       Corporation                                        (400.0)             
-            -              -
      Other                                                  2.0           
(0.1)        (0.3)           0.2
                                                             ---           
----         ----            ---
    Net cash provided (used) by
     financing activities                                  102.9          
103.9        (83.6)         187.5
      Effect of exchange rate
       differences on cash and cash
       equivalents                                           0.8           
(1.6)         6.2           (7.8)
                                                             ---           
----          ---           ----
    Net increase (decrease) in cash
     and cash equivalents                                  152.4          
(13.8)        (3.8)         (10.0)
      Cash and cash equivalents at
       beginning of period                                 113.5          
108.9         98.9          108.9
                                                           -----          
-----         ----          -----
    Cash and cash equivalents at end
     of period                                            $265.9          
$95.1        $95.1          $98.9
                                                          ======          
=====        =====          =====



    >>

    <<
                                 Aleris International, Inc.
                                 --------------------------
    >>

    <<
                        Reconciliation of Net Income Attributable to
                                Aleris International, Inc. to
                                       Adjusted EBITDA
                                         (unaudited)
                                        (in millions)
    >>

    <<
                                             For the three             For the
nine months
                                             months ended                    
ended
                                           September 30,               
September 30,
                                           -------------               
-------------
                                           2011         2010              2011
2010
                                           ----         ----              ----
----
                                            (Successor)          (Successor)  
(Combined)
    Net income
     attributable
     to Aleris
     International,
     Inc.                                 $27.9     $53.8         $141.8     
$2,233.8
    Interest
     expense,
     net                                   11.8          2.9              34.2
77.5
    (Benefit
     from)
     provision
     for income
     taxes                                 (0.3)      9.4            9.6      
1.0
    Depreciation
     and
     amortization                          17.0         15.4              50.9
40.9
      EBITDA                               56.4         81.5             236.5
2,353.2
     Reorganization
     items, net                             0.1          3.5             
(1.4)        (2,221.8)
    Unrealized
     losses
     (gains) on
     derivative
     financial
     instruments                           22.3     (20.9)          13.4      
27.0
    (Favorable)
     unfavorable
     metal price
     lag                                   (8.7)        13.1             
(6.3)           (14.3)
     Restructuring
     and
     impairment
     charges                                1.6          0.7               3.4
0.8
    Impact of recording
     assets at fair
     value through
        fresh-start
         and
         purchase
         accounting                         0.9         (1.2)              2.2
25.8
    Currency
     losses
     (gains) on
     translation
     of
     indebtedness                           5.0      (7.2)          (1.0)     
24.6
    Stock-based
     compensation
     expense                                2.8          2.1               7.3
4.0
    Start-up
     costs                                  4.0          0.6               8.2
0.6
    Other                                  12.0         (0.3)              7.6
0.7
      Adjusted
       EBITDA                             $96.4        $71.9            $269.9
$200.6
                                          =====        =====            ======
======





    >>

Aleris International, Inc.

    <<
                              Reconciliation of Adjusted EBITDA to
                       Cash Flows Provided (Used) by Operating Activities
                                           (unaudited)
                                          (in millions)
                                          -------------
                                               For the three               For
the nine months
                                               months ended                   
ended
                                              September 30,                  
September 30,
                                              -------------                  
-------------
                                             2011         2010             
2011             2010
                                             ----         ----             
----             ----
                                             (Successor)           (Successor)
(Combined)
    Adjusted
     EBITDA                                 $96.4        $71.9           
$269.9           $200.6
     Reorganization
     items,
     net                                     (0.1)        (3.5)             
1.4          2,221.8
    Unrealized
     (losses)
     gains on
     derivative
     financial
     instruments                            (22.3)     20.9          (13.4)   
(27.0)
    Favorable
     (unfavorable)
     metal
     price lag                                8.7        (13.1)             
6.3             14.3
     Restructuring
     and
     impairment
     charges                                 (1.6)        (0.7)            
(3.4)            (0.8)
    Impact of recording
     assets at fair
     value through
        fresh-
         start and
         purchase
         accounting                          (0.9)         1.2             
(2.2)           (25.8)
    Currency
     (losses)
     gains on
     translation
     of
     indebtedness                            (5.0)      7.2            1.0    
(24.6)
    Stock-
     based
     compensation
     expense                                 (2.8)        (2.1)            
(7.3)            (4.0)
    Start-up
     costs                                   (4.0)        (0.6)            
(8.2)            (0.6)
    Other                                   (12.0)         0.3             
(7.6)            (0.7)
                                            -----                          
----
    EBITDA                                   56.4         81.5            
236.5          2,353.2
    Interest
     expense,
     net                                    (11.8)        (2.9)           
(34.2)           (77.5)
    Benefit
     from
     (provision
     for)
     income
     taxes                                    0.3      (9.4)          (9.6)   
(1.0)
     Depreciation
     and
     amortization                           (17.0)       (15.4)           
(50.9)           (40.9)
                                            -----        -----            
-----            -----
    Net income
     attributable
     to Aleris
     International,
     Inc.                                    27.9      53.8          141.8    
2,233.8
    Net loss
     attributable
     to
     noncontrolling
     interest                                (0.3)        -           (0.1)   
-
                                             ----          ---             
----              ---
    Net income                               27.6         53.8            
141.7          2,233.8
     Depreciation
     and
     amortization                            17.0         15.4             
50.9             40.9
    Provision
     for
     (benefit
     from)
     deferred
     income
     taxes                                    0.7         -            1.5    
(11.4)
     Reorganization
     items,
     net of
     payments                                (1.5)        (9.2)            
(3.1)        (2,271.8)
     Restructuring
     and
     impairment
     charges
     (gains),
     net of
     payments                                 0.4      (0.4)           0.4    
(6.3)
    Stock-
     based
     compensation
     expense                                  2.8          2.1              
7.3              4.0
    Unrealized
     losses
     (gains) on
     derivative
     financial
     instruments                             22.3     (20.9)          13.4    
27.0
    Currency
     exchange
     losses
     (gains)
     on debt                                  5.3      (0.1)          (1.0)   
25.5
     Amortization
     of debt
     issuance
     costs                                    1.5          1.0              
4.5             29.2
    Other non-
     cash
     charges
     (gains),
     net                                      2.0     (14.8)          (5.9)   
4.8
    Change in operating
     assets and
     liabilities:
        Change in
         accounts
         receivable                          30.0         12.3           
(130.7)          (165.8)
        Change in
         inventories                          7.4         (8.3)           
(53.5)          (115.6)
        Change in
         other
         assets                               4.1         19.4             
(3.7)             2.3
        Change in
         accounts
         payable                             16.4         20.8             
88.4             89.5
        Change in
         accrued
         liabilities                        (10.7)         2.1             
39.5             38.5
    Net cash
     provided
     (used) by
     operating
     activities                            $125.3     $73.2         $149.7    
$(75.4)
                                           ======        =====           
======           ======




    >>

    <<
                          Aleris International, Inc.
                          --------------------------
    >>

    <<
                      Reconciliation of Segment Income to
                            Segment Adjusted EBITDA
                                  (unaudited)
                                 (in millions)
    >>

    <<
                                  For the three months            For the nine
months
                                          ended                          ended
                                     September 30,                   September
30,
                                   -------------                 -------------
                                 2011             2010             2011       
2010
                                 ----             ----             ----       
----
                                    (Successor)           (Successor)      
(Combined)
    Rolled Products
     North America
      Segment
       income                   $19.1            $17.8            $53.6       
$53.3
      Impact of
       recording
       assets at fair
       value through
         fresh-
          start
          and
          purchase
          accounting                -          (4.4)            -         
(2.5)
       Depreciation
       and
       amortization               9.5              9.2             29.2       
21.7
      Other                       0.3                -              0.6       
0.6
       (Favorable)
       unfavorable
       metal
       price
       lag                       (1.8)          1.8          (3.0)         
1.0
        Segment
         Adjusted
         EBITDA                 $27.1            $24.4            $80.4       
$74.1
                                =====            =====            =====       
=====
    >>

    <<
    Recycling and
     Specification
     Alloys Americas
      Segment
       income                   $18.7             $9.9            $55.7       
$39.1
      Impact of
       recording
       assets at fair
       value through
         fresh-
          start
          and
          purchase
          accounting                -           0.2             -          
1.9
       Depreciation
       and
       amortization               1.7              2.0              5.1       
5.6
      Other                       0.4                -             (0.2)      
(0.2)
        Segment
         Adjusted
         EBITDA                 $20.8            $12.1            $60.6       
$46.4
                                =====            =====            =====       
=====
    >>

    <<
    Europe
      Segment
       income                   $47.7            $27.2           $136.9       
$78.7
      Impact of
       recording
       assets at fair
       value through
         fresh-
          start
          and
          purchase
          accounting              0.9           3.0           2.2         
26.5
       Depreciation
       and
       amortization               5.0              3.2             14.0       
11.3
      Other                      11.3             (0.6)             6.2       
(0.9)
       (Favorable)
       unfavorable
       metal
       price
       lag                       (6.9)         11.3          (3.3)       
(15.3)
        Segment
         Adjusted
         EBITDA                 $58.0            $44.1           $156.0       
$100.3
                                =====            =====           ======       
======





    >>

    <<
                              Aleris International, Inc.
                              --------------------------
    >>

    <<
                         Reconciliation of Last Twelve Months
               Net Income Attributable to Aleris International, Inc. to
                                    Adjusted EBITDA
                                      (unaudited)
                                     (in millions)
    >>

    <<
                                                          For the twelve
months
                                                                   ended
                                                        
----------------------
                                                            September 30, 2011
                                                            ------------------
                                                               (Successor)
    >>

    <<
    Net income attributable to Aleris
     International, Inc.                                                 
$183.6
    Net loss attributable to noncontrolling
     interest                                                              
(0.1)
    Depreciation and amortization                                          
68.5
    Provision for income taxes                                              
0.1
    Interest expense, net                                                  
37.3
                                                                           
----
       EBITDA                                                             
289.4
    Reorganization items, net                                               
0.5
    Unrealized losses on derivative financial
     instruments                                                            
5.8
    Restructuring, impairment and other charges                            
14.3
    Impact of recording assets at fair value
     through fresh-start and purchase
     accounting                                                             
2.4
    Currency gains on translation of
     indebtedness                                                           
0.6
    Stock-based compensation expense                                        
9.5
    Metal price lag                                                        
(5.7)
    Start-up costs                                                          
9.6
    Other                                                                   
6.8
       Adjusted EBITDA                                                   
$333.2
                                                                         
======









    >>

SOURCE Aleris International, Inc.

For further information: Investor Contact: Sean M. Stack, +1-216-910-3504 or Media Contact: Kristen Bihary, +1-216-910-3664 Web Site: http://www.aleris.com

Profil de l'entreprise

Aleris International, Inc.

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