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