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Business acquisitions | 12 Months Ended
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Dec. 31, 2015
Business Combinations [Abstract] |
Business acquisitions | Business acquisitions Acquisition of Mt. Holly aluminum smelter On October 23, 2014, our wholly-owned subsidiary, Berkeley Aluminum Inc. ("Berkeley"), entered into a stock purchase agreement (the "Stock Purchase Agreement") with Alumax Inc. ("Alumax"), a wholly-owned subsidiary of Alcoa, pursuant to which Berkeley acquired all of the issued and outstanding shares of Alumax of South Carolina, Inc. ("Alumax of SC") and, thereby, acquired Alcoa's 50.3% stake in Mt. Holly. Immediately following the consummation of the transaction, Berkeley merged with and into Alumax of SC with Alumax of SC surviving and changed its name to "Century Aluminum of South Carolina, Inc." CASC now owns 100% of Mt. Holly. Mt. Holly, located in Goose Creek, South Carolina, employed approximately 600 people and had an annual production capacity of 231,000 tonnes of primary aluminum as of the acquisition date. Pursuant to the terms of the Stock Purchase Agreement, Berkeley acquired all of the issued and outstanding shares of capital stock of Alumax of SC for $67,500 in cash subject to working capital and other similar adjustments. The acquisition was funded with available cash on hand. We incurred $1,087 of acquisition related costs during 2014 and $452 of acquisition-related costs during 2015. All acquisition-related costs were expensed to selling, general and administrative expenses in the period they were incurred. The following table summarizes all of the elements of consideration for the transaction.
|  | December 1, 2014
Purchase price |  | $ | 67,500 |
Contingent consideration |  | 13,780 |
Economic, working capital and other closing adjustments |  | (13,513 | )
Total consideration |  | $ | 67,767 |
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 Alcoa is $22,500 and (ii) Alcoa 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 remeasured the fair value of the contingent consideration and the change in the fair value was recognized in earnings. We classified the contingent consideration within Level 3 of the fair value hierarchy as its fair value was determined with inputs that are not readily observable in the market. During 2015, we recognized $18,337 in gain on fair value of contingent consideration, primarily related to decreases in the forward curve of the LME price of primary aluminum. Pursuant to the earn-out provision, we currently expect Alcoa to pay us $12,500 in the first quarter of 2016. Economic Adjustment, working capital and other adjustments The Stock Purchase Agreement provides for an economic adjustment that was established to put the parties in the same economic position as if the closing date for the acquisition had occurred on September 30, 2014. The related adjustments include metal off-take and aluminum sales agreements, cash funding and management fee adjustments, as well adjustments for inventory and transition services. We received $11,189 from Alcoa for the economic adjustment in April 2015. The Stock Purchase Agreement also contained provisions for working capital adjustments. The working capital adjustment was based on actual working capital at closing compared to established working capital targets. We received $124 from Alcoa for the working capital adjustments in April 2015. Other adjustments include amounts due to CASC for expected future post-employment benefit payments and certain other items. The amounts were negotiated as part of the Stock Purchase Agreement and we received $2,400 from Alcoa for these adjustments at closing. Step Acquisition We accounted for this transaction as a step acquisition which required that we remeasure our prior 49.7% ownership interest, which was previously accounted for as an equity method investment, to fair value. The fair value of our interest in Mt. Holly was $47,855 at closing, resulting in a non-cash pre-tax gain of $15,955. $14,637 of that gain was recorded retroactively to the closing date resulting in an adjustment to Accumulated Deficit in the Consolidated Balance Sheets as of December 31, 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 and all of its operating assets have been included within our consolidated financial statements. Below is the final purchase price allocation for Mt. Holly.
| Preliminary estimate of the acquisition date fair value as of December 1, 2014 | Measurement period adjustments | Final acquisition date fair value as of December 1, 2014
Assets Acquired: |  |  |
Inventories | $ | 26,105 |  | $ | (2,126 | ) | $ | 23,979 |
Due from Alumax | 20,786 |  | (9,517 | ) | 11,269 |
Prepaid and other current assets | 2,527 |  | — |  | 2,527 |
Intangible asset | 2,580 |  | — |  | 2,580 |
Pension asset | 30,842 |  | — |  | 30,842 |
Property, plant and equipment – net | 127,089 |  | 15,748 |  | 142,837 |
Total assets acquired | $ | 209,929 |  | $ | 4,105 |  | $ | 214,034 |
Liabilities Assumed: |  |  |
Accounts payable, trade | $ | 41,471 |  | $ | — |  | $ | 41,471 |
Accrued and other current liabilities | 8,335 |  | 255 |  | 8,590 |
Accrued pension benefit costs | — |  | 34,595 |  | 34,595 |
Accrued postretirement benefit costs | 2,857 |  | — |  | 2,857 |
Asset retirement obligations | 8,213 |  | — |  | 8,213 |
Deferred taxes | 4,804 |  | (2,118 | ) | 2,686 |
Total liabilities assumed | $ | 65,680 |  | $ | 32,732 |  | $ | 98,412 |
Goodwill | $ | 4,804 |  | $ | (4,804 | ) | $ | — |
We have adjusted the purchase price allocation to appropriately reflect the liability for the pension funding obligations that we assumed as of the acquisition date, pursuant to the Stock Purchase Agreement. Additionally, we have revised the Consolidated Statements of Cash Flows for 2014 to classify $11,269 of accounts receivable collected from Alcoa at the closing out of investing activities and into operating activities. Pension funding obligations Pursuant to the Stock Purchase Agreement, Alcoa spun-off the pension plan assets for the current and former Mt. Holly employees into a qualified defined benefit plan that we established. Alcoa and Berkeley agreed to fund their proportionate share of the underfunded Mt. Holly pension plan benefit obligations, measured in accordance with generally accepted accounting principles in the United States ("GAAP") using agreed upon assumptions as of the transaction date. In addition, Berkeley agreed to fund any additional amount needed to bring the Mt. Holly pension benefit obligations to fully funded status on a termination basis under IRS Code Section 414(l) (the "414(l) liability"). In April 2015, CASC, as successor in interest to Berkeley, contributed a total of $34,595 to satisfy its pension plan funding obligations under the Stock Purchase Agreement. The Pension Benefit Guaranty Corporation (the "PBGC") assumptions used for termination basis funding are more conservative than those used for GAAP purposes and resulted in the recognition of a pension asset for the over funded plan. Settlement of amounts due from Alumax Prior to the closing date, the Mt. Holly partnership had amounts due from Alumax of SC for metal off-take, capital, plant administrative and various other costs. These amounts totaling $11,269 were received at closing. 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 Statements 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 from continuing operations | 125,847 |  | (38,819 | )
Pro forma earnings per common share, basic | 1.30 |  | (0.44 | )
Pro forma earnings per common share, diluted | 1.29 |  | (0.44 | )
Acquisition of Sebree aluminum smelter On June 1, 2013, Century Sebree acquired the Sebree aluminum smelter from a subsidiary of Rio Tinto Alcan ("RTA"). Sebree, located in Robards, Kentucky, has an annual hot metal production capacity of 218,000 tonnes of primary aluminum and employs approximately 500 people. The purchase price for the acquisition was $61,000 (subject to customary working capital adjustments). 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. 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, 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. In 2013, we allocated the purchase price using the estimated fair values at the date of acquisition and 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 | 8,705 |
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, 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, 2013
Pro forma revenues | $ | 1,662,707 |
Pro forma loss from continuing operations | (83,035 | )
Pro forma loss per common share, basic | (0.94 | )
Pro forma loss per common share, diluted | (0.94 | )

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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 5 -URI http://asc.fasb.org/extlink&oid=56956515&loc=d3e1497-128463 Reference 2: 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=56956515&loc=d3e1490-128463 Reference 3: 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=56956515&loc=d3e1392-128463 Reference 4: 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 5: 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=56956515&loc=d3e1486-128463 Reference 6: 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 7: 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=56956791&loc=d3e4845-128472 Reference 8: 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=56956515&loc=d3e1500-128463 Reference 9: 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=56956515&loc=d3e1524-128463 Reference 10: 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 11: 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=56956791&loc=d3e4922-128472 Reference 12: 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=56956791&loc=d3e4934-128472 Reference 13: 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=56956791&loc=d3e4926-128472 Reference 14: 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=56956515&loc=d3e1383-128463 Reference 15: 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 + Details
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