Ormet Announces Favorable Ruling by the Public Utilities Commission of Ohio and Its 2nd Quarter 2012 Financial Results

  Ormet Announces Favorable Ruling by the Public Utilities Commission of Ohio
  and Its 2nd Quarter 2012 Financial Results

Business Wire

HANNIBAL, Ohio -- October 17, 2012

Faced with declining London Metals Exchange (“LME”) prices compared to 2011
and higher electric power prices, the Company has reduced operations and has
taken other measures to mitigate these developments. The Company’s liquidity
will continue to be pressured because the 2012 contractual discounts that the
Company received from its power supplier were fully utilized in August 2012.

In addition, the Company has engaged Evercore Group L.L.C. to assist in
identifying and evaluating strategic alternatives. Representative initiatives
being explored include: asset sales, new sources of funds, vendor contract
re-negotiations and debt restructuring.

To that end, the Company has been in negotiations with its various
constituents (i.e. Term Loan lenders, ABL lender, the United Steelworkers
International, its electricity and other trade vendors and state government
agencies).

The Public Utilities Commission of Ohio (“PUCO”) approved the Company’s
request on October 17, 2012 for a deferral of AEP’s power bills that would be
payable in November 2012 and December 2012. These power bills, totaling
approximately $27 million, would have normally been paid twenty-one days after
receipt by the Company. According to the agreement, the payment for these
bills will be made in seventeen equal monthly installments beginning in
January 2014 and ending in May 2015. While this approval provides the Company
significant relief, the Company’s longer term liquidity will only be achieved
if all constituents and the Company reach satisfactory agreements. The outcome
of these remaining negotiations and the impact on the Company is uncertain at
this time.

                                     ###

Ormet announces a $13.9 million and $15.0 million net loss for the second
quarter of 2012 and first half of 2012, respectively. Net loss per common
share outstanding was $0.74 for the quarter and $0.80 the first half of 2012.
These results were significantly influenced by significantly lower selling
prices and increased electric power costs.

                                     ###

Jeffrey Marshall notified the Board of Directors on October 17, 2012 that he
was resigning as a Director and Chairman of the Board, immediately, due to
health reasons. The Board has accepted his resignation with regret and
extended its thanks for his many years of service. In his capacity as Vice
Chairman, Robert Prusak, will assume the responsibilities of Chairman,
effective immediately.

Mike Tanchuk, Ormet’s President and CEO commented, “Today, we received
approval from the PUCO for the short term relief Ormet needed to move forward
with improving our financial strength. On behalf of Ormet, its employees and
the families of our community, I want to thank Governor Kasich, the PUCO,
JobsOhio and the members of our region's state and federal legislative
delegations for their untiring support. There is much work yet to do but today
was a big step forward toward success. Ormet looks forward to continuing to
work with AEP toward a long term energy solution.

“We are facing difficult short term headwinds in the aluminum market driven
mainly by global financial uncertainty. Yet, at the same time, there has never
been a brighter future for growth of the use of aluminum in our everyday lives
around the world. We are optimistic that the global aluminum market will
continue to grow and Ormet will be a strong partner in the lives and economic
well-being of the families and communities in the region,” said Mike Tanchuk.

The complete Rule 15c2-11 Information and Disclosure Statement for the six
months ended June 30, 2012 is available on the Company’s website. Please visit
the Investor section of the website at www.ormet.com.

Cautionary Statement

This Statement contains forward-looking statements that can be identified by
use of words such as “anticipates,” “believes,” “estimates,” “expects,”
“hopes,” “targets,” “should,” “forecast,” “outlook,” “projects” or other words
of similar meaning. All statements that address the Company’s expectations or
projections about the future, including statements about the Company’s
strategy for growth, cost reduction goals, expenditures, financial results,
liquidity and capital needs, are forward-looking statements. Forward-looking
statements are based on the Company’s estimates, assumptions and expectations
of future events and are subject to a number of risks and uncertainties and
may or may not be realized. The Company cannot guarantee its future
performance or results of operations. All forward-looking statements in this
press release are based on information available to the Company on the date
hereof. The Company disclaims any intention or obligation to update or revise
any forward-looking statements, except as may be required by law. The
Company’s business is subject to a number of significant risks and
uncertainties. Reference is made to the risk factors and other disclosures
contained in the Company's Information and Disclosure Statements for year
ended December 31, 2011, which is available on the Company's website at
www.ormet.com. Given the significant uncertainties and risks to which the
Company is subject (a) the reader should not place undue reliance on
forward-looking statements contained in this press release and (b) the
Company’s future results could differ materially from the Company’s current
results and from those anticipated in the Company’s forward-looking
statements.

                                     ###

Headquartered in Hannibal, Ohio, Ormet Corporation is a major U.S. producer of
aluminum. Ormet employs approximately 1,250 people. For more information,
visit the Company’s website at www.ormet.com.

                                                           
                                                                  
Ormet Corporation
Financial Statements
                                                                  
                                                                  
Consolidated Balance Sheet
(Dollars in thousands)
                                                                  
                                                 Unaudited
                                                6/30/2012        12/31/2011
ASSETS
Cash                                             $ 6,103          $ 2,468
Accounts Receivable:
Trade accounts receivable, net                     8,930          $ 20,619
Receivable from sales contract                     -                23,000
cancellation
Inventories                                        110,789          124,013
Prepaid expense and other current assets          14,674         12,411   
Total current assets                               140,496          182,511
                                                                  
Property and equipment                             63,107           65,543
Goodwill                                           42,284           42,284
Deferred income tax asset, net                     150,890          143,724
Other assets                                      1,388          1,864    
                                                                  
TOTAL ASSETS                                     $ 398,165       $ 435,926  
                                                                  
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
                                                                  
Accounts payable                                   32,855           51,906
Deferred energy discount                           14,028           -
Accrued compensation                               12,346           18,670
Accrued interest                                   4,527            4,527
Postretirement obligations                         5,487            9,858
Current portion of long term debt                  127,146          -
Other accrued liabilities                         5,578          5,773    
Total current liabilities                          201,967          90,734
                                                                  
Long term debt                                     -                124,378
Other liabilities:
Pension obligations                                137,405          149,627
Postretirement obligations                         39,217           37,615
Other liabilities                                  6,178            7,446
STOCKHOLDERS’ EQUITY
Common stock 50,000 shares authorized at
$0.001 per share, 18,662 issued as of              19               19
6/30/2012 and 12/31/2011
Additional paid in capital and stock               187,243          187,113
warrants
Accumulated deficit                                (30,776  )       (15,790  )
Accumulated other comprehensive loss              (143,088 )      (145,216 )
Total stockholders' equity                        13,398         26,126   
                                                                  
TOTAL LIABILITIES AND STOCKHOLDERS’              $ 398,165       $ 435,926  
EQUITY
                                                                             

               
               
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
               
                   (Dollars in thousands, except per share amounts)
                       Three Months Ended             Six Months Ended
                                     As Adjusted                    As Adjusted
                       6/30/2012       6/30/2011        6/30/2012       6/30/2011
                                                                        
Net sales from
continuing             $ 151,975       $ 148,099        $ 290,495       $ 272,280
operations
Cost of sales
Production               163,207         121,641          293,727         230,109
costs
Alumina
refinery                -             5,830          -             7,694    
restart costs
Total cost of           163,207       127,471        293,727       237,803  
sales
                                                                        
Gross (loss)             (11,232 )       20,628           (3,232  )       34,477
profit
Operating
expenses
(income)
General and
administrative           5,175           4,568            9,953           8,313
expenses
Gain on sale            -             (5,827   )      -             (5,827   )
of assets
                                                                        
Operating                (16,407 )       21,887           (13,185 )       31,991
(loss) income
                                                                        
Non-operating
(expenses)
income
Other income             297             20               692             273
(expense), net
Interest                (5,354  )      (5,716   )      (10,716 )      (10,320  )
expense
                                                                        
Total
non-operating           (5,057  )      (5,696   )      (10,024 )      (10,047  )
expenses
                                                                        
(Loss) income
before income            (21,464 )       16,191           (23,209 )       21,944
taxes
                                                                        
Income tax              (7,605  )      (109,983 )      (8,223  )      (109,983 )
benefit
                                                                        
(Loss) income
from                     (13,859 )       126,174          (14,986 )       131,927
continuing
operations
Income from
discontinued            -             11,189         -             10,971   
operations
(Note 15)
Net (loss)             $ (13,859 )     $ 137,363       $ (14,986 )     $ 142,898  
income
Shares
outstanding:
Average during           18,662          18,607           18,662          18,559
period
As of June 30,           18,662          18,662           18,662          18,662
2012
Net (loss)
income per
share from             $ (0.74   )     $ 6.78          $ (0.80   )     $ 7.11     
continuing
operations
Net (loss)
income per             $ (0.74   )     $ 7.38          $ (0.80   )     $ 7.70     
share
                                                                                   

                                                  
                                                  
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Dollars in thousands)
                                                  
                  Three months ended            Six months Ended
                                    As Adjusted                   As Adjusted
                      6/30/2012       6/30/2011       6/30/2012       6/30/2011
Net (loss)            $ (13,859 )     $ 137,363      $ (14,986 )     $ 142,898 
income
Other
comprehensive
income:
Unrealized
gain (loss)             1,789           5,014           (549    )       5,014
on
derivatives
Recognized
gain on                 (2,546  )       -               (2,546  )       -
derivatives
Defined
benefit
pension plan:
Adjusted
prior service           20              20              40              40
cost
Change in
unrecognized           3,152         1,745         6,366         3,488   
net actuarial
loss
Other
Comprehensive           2,415           6,779           3,311           8,542
income,
pretax
                                                                      
Income tax             (864    )      (2,373  )      (1,183  )      (2,989  )
expense
                                                                      
Other
comprehensive          1,551         4,406         2,128         5,553   
income
                                                                      
Comprehensive         $ (12,308 )     $ 141,769      $ (12,858 )     $ 148,451 
(loss) income
                                                                      



CONSOLIDATED STATEMENT OF CASH FLOWS

                                              (Dollars in thousands)
                                                  Unaudited
                                                  Six Months Ended June 30,
                                                  2012          As Adjusted
                                                                  2011
Cash flows from operating activities
Net (loss) income                                 $ (14,986 )     $ 142,898
Adjustments to reconcile net income
(loss) to net cash from:
Depreciation and amortization                       9,634           9,812
Receivable from sales contract                      23,000          -
cancellation
Non cash interest                                   1,620           2,088
Amortization of pension plan loss                   6,375           3,529
Deferred gain on forward sales contracts            (2,546  )       -
Compensation expense related to options             130             363
Deferred income tax benefit                         (8,223  )       (104,075 )
Amortization of deferred financing costs            545             518
Gain on sale of property and equipment              -               (22,891  )
Net change in:
Trade accounts receivable                           11,689          (1,362   )
Inventory                                           13,224          14,046
Prepaid & other current assets                      (2,579  )       (3,918   )
Accounts payable                                    (19,051 )       (12,044  )
Accrued liabilities & other assets                  5,883           12,712
Pension and postretirement                         (15,591 )      (15,766  )
Net cash provided by operating activities          9,124         25,910   
                                                                  
Cash flows from investing activities
Proceeds from asset sales                           -               26,891
Capital spending                                   (6,872  )      (13,672  )
Net cash (used in) provided by investing           (6,872  )      13,219   
activities
                                                                  
Cash flows from financing activities
Repayment of long term loan                         -               (10,000  )
Proceeds from long term debt                        1,500           28,500
Proceeds from exercised stock options               -               457
Payment of financing fees                          (117    )      (433     )
Net cash provided by financing activities          1,383         18,524   
Net increase in cash                                3,635           57,653
Cash - beginning of period                         2,468         3,085    
Cash - end of period                              $ 6,103        $ 60,738   
                                                                  

See the Company’s complete consolidated financial statements for the six
months ended June 30, 2012 in the Investor’s section at www.ormet.com.

Contact:

Ormet Corporation
James B. Riley, 740-483-2602
 
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