XML 35 R8.htm IDEA: XBRL DOCUMENT v2.4.0.8
Acquisition of Sebree aluminum smelter
 3 Months Ended
Mar. 31, 2014
Business Combinations [Abstract]  
Acquisition of Sebree aluminum smelter
Acquisition of Sebree aluminum smelter
On June 1, 2013, our wholly owned subsidiary, Century Aluminum Sebree LLC ("Century Sebree"), acquired the Sebree aluminum smelter ("Sebree") from a subsidiary of Rio Tinto Alcan, Inc. ("RTA"). Sebree, located in Robards, Kentucky, has an annualized hot metal production capacity of 205,000 tonnes of primary aluminum and employs approximately 500 people. The purchase price for the acquisition was $61,000 (subject to customary working capital adjustments), of which we have paid approximately $48,000 as of March 31, 2014. The remaining portion of the purchase price, if any, will be paid following final determination of the applicable working capital adjustments. We are working with RTA to resolve our disagreement relating to the working capital amount in accordance with the procedures set forth in the purchase agreement. We expect the matter to be resolved by the end of the second quarter of 2014. As part of the transaction, RTA retained all historical environmental liabilities of the Sebree smelter and funded the pension plan assumed by Century in accordance with the purchase agreement.
Purchase Price Allocation
Allocating the purchase price to the acquired assets and liabilities involves management judgment. We allocated the purchase price to the assets acquired, liabilities assumed, and the bargain gain in accordance with Accounting Standards Codification ("ASC") 805 "Business Combinations."
The allocation of the purchase price to the assets acquired and liabilities assumed is based on the estimated fair values at the date of acquisition. We have finalized the purchase price allocation for the assets acquired and liabilities assumed, but the final purchase price and gain on bargain purchase are preliminary and subject to change based on any working capital adjustments that occur prior to June 1, 2014, which is the limit of the measurement period for this acquisition.
Based on the purchase price allocation, we recorded a gain on bargain purchase of $5,253 in 2013. The following table summarizes the fair value of the assets acquired and the liabilities assumed as of the acquisition date:
 
Acquisition Date Estimated Fair Value as of March 31, 2014
Consideration:
 
Cash
$
48,083

Deferred purchase price
1,910

Assets Acquired:
 
Inventories
59,018

Prepaid and other current assets
2,273

Property, plant and equipment – net
55,520

Total assets acquired
$
116,811

Liabilities Assumed:
 
Accrued and other current liabilities
$
43,316

Accrued pension benefit costs
996

Accrued post retirement benefit costs
6,544

Other liabilities
7,476

Deferred taxes
3,233

Total liabilities assumed
$
61,565

Gain on bargain purchase:
$
5,253


The following unaudited pro forma financial information for the three months ended March 31, 2013 reflects our results of continuing operations as if the acquisition of Sebree had been completed on January 1, 2013. This unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what the actual results of operations would have been had the transactions taken place on January 1, 2013, nor is it indicative of the future consolidated results of operations or financial position of the combined companies.
 
Three months ended March 31,
 
2013
Pro forma revenues
$
447,698

Pro forma loss from continuing operations
(1,187
)
Loss per common share, basic
(0.01
)
Loss per common share, diluted
(0.01
)

Our net income for the three months ended March 31, 2014 includes a non-recurring credit for the amortization of the deferred power contract liability of $5,534. As part of the Sebree acquisition, we recorded a $36,625 liability for an unfavorable power contract we assumed. The fair value measurement of the power contract was based on the difference between the forecasted contract rate and estimated market power rates through the contract termination date in January 2014. We amortized the power contract liability over the remaining period of the contract through January 31, 2014, resulting in a credit to our depreciation and amortization expense within cost of goods sold on the consolidated statement of operations for the three months ended March 31, 2014.