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Business acquisitions (Notes) | 12 Months Ended
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Dec. 31, 2014
Business Combinations [Abstract] |
Business acquisitions | Business acquisitions Acquisition of Mt. Holly aluminum smelter On October 23, 2014, Berkeley entered into a stock purchase agreement (the "Stock Purchase Agreement") with Alumax Inc. ("Alumax"), a wholly owned subsidiary of Alcoa, to acquire Alcoa’s 50.3% stake in Mt. Holly. Upon closing of the transaction on December 1, 2014, Century owns 100% of Mt. Holly. Mt. Holly, located in Goose Creek, South Carolina, employs approximately 600 people and has an annual production capacity of 231,000 tonnes of primary aluminum. Pursuant to the terms of the Stock Purchase Agreement, Berkeley agreed to acquire all of the issued and outstanding shares of capital stock of Alumax of SC for $67,500 in cash less certain amounts owed by Alumax to Mt. Holly and subject to working capital and other similar adjustments, of which we have paid approximately $53,831 as of December 31, 2014. The acquisition was funded with available cash on hand. We incurred $1,087 of acquisition-related costs during 2014. All acquisition-related costs were expensed to selling, general and administrative expenses during 2014. Pension funding obligations Alcoa spun-off the pension plan assets for the Mt. Holly employees and former employees into a qualified defined benefit pension plan established by Century. The new Mt. Holly pension plan benefit obligations were measured based on termination basis under IRS Code Section 414(l). The Mt. Holly pension plan was fully funded using the Pension Benefit Guaranty Corporation ("PBGC") assumptions, which are more conservative than the assumptions we use to measure our defined benefit obligations, and resulted in the recognition of a pension asset at closing. Contingent Consideration - Earn-out provision The Stock Purchase Agreement provides for a post-closing cash payment to be made following December 31, 2015 based on (i) changes in the Midwest Transaction Price for aluminum between July 2, 2014 and December 31, 2015 and (ii) the aggregate cast house production of Mt. Holly from October 1, 2014 through December 31, 2015. The maximum amount of this post-closing cash payment by (i) CASC to Alumax is $22,500 and (ii) Alumax to CASC is $12,500. We measured the fair value of the contingent consideration and recognized a $13,780 liability at December 1, 2014. Each period, until the end of the measurement period on December 31, 2015, we will remeasure the fair value of the contingent consideration. Any changes in the fair value will be recognized in earnings. In December 2014, we recognized $7,943 in gain on fair value of contingent consideration, primarily related to decreases in the forward curve of the LME price of primary aluminum. Step Acquisition In accordance with ASC 805, we accounted for this transaction as a step acquisition which required that we remeasure our existing 49.7% ownership interest (previously accounted for as an equity method investment) to fair value. The fair value of our interest in Mt. Holly was $56,723 at closing, resulting in a non-cash pre-tax gain of $1,318 included in gain on remeasurement of equity investment on our consolidated statements of operations for 2014. Our previously recorded equity method investment in Mt. Holly and the proportionally consolidated property, plant and equipment was derecognized from our consolidated balance sheets. Since the date of the step acquisition, the financial results of Mt. Holly were included within our consolidated financial statements. 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. The purchase price allocation is preliminary and subject to change based on the finalization of the valuation of assets and liabilities and the fair value of the previously held equity investment. The amounts presented below represent our estimates based on a preliminary valuation of certain assets and liabilities in connection with the acquisition of the Mt. Holly smelter. The results of the valuation are currently under review by management and are expected to be finalized in the second quarter of 2015. The following table summarizes the preliminary fair value of the assets acquired and the liabilities assumed as of the acquisition date:
| Acquisition Date Fair Value as of December 1, 2014
Consideration: |
Purchase price | $ | 67,500 |
Pension funding (1) | 46,546 |
Contingent consideration | 13,780 |
Economic, working capital and other closing adjustments (1) | (12,324 | )
Settlement of partnership accounts | (23,172 | )
Fair value of existing equity investment | 56,723 |
Total consideration | $ | 149,053 |
Assets Acquired: |
Inventories | $ | 26,105 |
Due from Alumax | 20,786 |
Prepaid and other current assets | 2,527 |
Intangible asset | 2,580 |
Pension asset (1) | 30,842 |
Property, plant and equipment – net | 127,089 |
Total assets acquired | $ | 209,929 |
Liabilities Assumed: |
Accounts payable, trade | $ | 41,471 |
Accrued and other current liabilities | 8,335 |
Accrued postretirement benefit costs (1) | 2,857 |
Other liabilities | 8,213 |
Deferred taxes | 4,804 |
Total liabilities assumed | $ | 65,680 |
Goodwill | $ | 4,804 |
(1) | These amounts represents our preliminary estimates based on our current expectation of the pension, working capital, economic and other closing adjustments. These estimates are subject to review and approval by both parties. The final determination and payment of the settlement amounts is expected in the second quarter of 2015.
From the acquisition date of December 1, 2014 through December 31, 2014, the revenue and earnings that were attributable to the acquired Alcoa’s 50.3% stake in Mt. Holly included in the consolidated statement of operations is as follows:
| Year ended December 31,
| 2014
Mt. Holly revenue | $ | 25,911 |
Mt. Holly income from continuing operations (1) | 3,024 |
(1) | The income attributable to the acquired Alcoa’s 50.3% stake in Mt. Holly excludes the gain on the fair value of the contingent consideration and the gain on remeasurement of the equity investment.
The following unaudited pro forma financial information for the years ended December 31, 2014 and December 31, 2013 reflects our results of continuing operations as if the acquisition of the remaining interest in Mt. Holly 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.
| Year ended December 31,
| 2014 | 2013
Pro forma revenues | $ | 2,176,552 |  | $ | 1,707,838 |
Pro forma earnings (loss) from continuing operations | 125,847 |  | (38,819 | )
Pro forma earnings (loss) per common share, basic | 1.30 |  | (0.44 | )
Pro forma earnings (loss) per common share, diluted | 1.29 |  | (0.44 | )
Transactions Recognized Separately from the Mt. Holly acquisition As part of the acquisition, we recognized two transactions as separate and apart from the business combination with Mt. Holly. The Mt. Holly smelter tolled alumina for its partners and so had no alumina supply of its own. Upon the purchase, we negotiated with Alcoa to purchase alumina under two separate alumina supply agreements. We believe the price paid under these agreements was equivalent to a market rate that would be paid by a market participant. Contract prices were based on published alumina price indexes. In addition, we had a pre-existing relationship with Alcoa prior to the acquisition of Mt. Holly. Mt. Holly had receivables due from Alcoa's subsidiary, Alumax, that were part of the normal operations of the business. We assessed that these receivables were effectively settled as a result of the acquisition and were accounted for separately from the business combination. The receivables will be settled at an amount calculated consistent with the practices of Mt. Holly. The amounts due from Alumax are identified in the table above and recorded in the consolidated financial statements in accrued and other current liabilities as an offset against amounts due to Alcoa.
Amounts Recognized Separately from the Acquisition: | Line item | Amount recognized
Amounts Due from Alumax | Accrued and other current liabilities | $ | 20,786 |
Alumina Supply Agreements | Inventory | 14,880 |
Acquisition of Sebree aluminum smelter On June 1, 2013, Century Sebree acquired the Sebree aluminum smelter from a subsidiary of RTA. Sebree, located in Robards, Kentucky, had an annual hot metal production capacity of 205,000 tonnes of primary aluminum and employed approximately 500 people as of the acquisition date. The purchase price for the acquisition was $61,000 (subject to customary working capital adjustments). 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. Working Capital Adjustment In July 2014, we reached the final determination of the working capital adjustments for the Sebree acquisition, resulting in a final purchase price of $49,035. As the final determination was subsequent to the expiration of measurement period defined under ASC 805, we recognized a gain of approximately $965 in the second quarter of 2014 (these adjustments were not included as part of the gain on bargain purchase recorded in 2013). The gain was recorded in other income – net, from the release of accrued amounts related to the acquisition. Purchase Price Allocation Allocating the purchase price to the acquired assets and liabilities involves management judgment. We allocated the purchase price in accordance with ASC 805 using the estimated fair values at the date of acquisition. Based on the final 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 Fair Value
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 postretirement benefit costs | 6,544 |
Other liabilities | 7,476 |
Deferred taxes | 3,233 |
Total liabilities assumed | $ | 61,565 |
Gain on bargain purchase: | $ | 5,253 |
From the acquisition date of June 1, 2013 through December 31, 2013, the revenue and earnings that were attributable to Sebree included in the consolidated statement of operations is as follows:
| Year ended December 31, 2013
Sebree revenue | $ | 247,178 |
Sebree income from continuing operations (1) | 8,705 |
(1) | Our net income for the years ended December 31, 2014 and 2013, includes a non-recurring credit for the amortization of the deferred power contract liability of $5,534 and $31,031, respectively, related to the amortization of an unfavorable power contract assumed as part of the Sebree acquisition resulting in a credit to our depreciation and amortization expense within cost of goods sold on the consolidated statement of operations for the first quarter of 2014. The power contract terminated on January 31, 2014.
The following unaudited pro forma financial information for the year ended December 31, 2013 reflects our results of continuing operations as if the acquisition of Sebree had been completed on January 1, 2012. 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, 2012, nor is it indicative of the future consolidated results of operations or financial position of the combined companies.
| Year ended December 31,
| 2013 | 2012
Pro forma revenues | $ | 1,662,707 |  | $ | 1,755,196 |
Pro forma loss from continuing operations | (83,035 | ) | (260,505 | )
Pro forma loss per common share, basic | (0.94 | ) | (2.94 | )
Pro forma loss per common share, diluted | (0.94 | ) | (2.94 | )

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4934-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4926-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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