Teksid Aluminum S.A.R.L.S.C.A

TK Aluminum Ltd. Reports Financial Results for the First Quarter Ended March 31, 2006

    Carmagnola, Italy (ots/PRNewswire) - Teksid Aluminum net revenues in the first quarter of 2006, increased 10.1% as compared to the prior year. Adjusted EBITDA decreased by 56.4% materially impacted by raw material price increases mainly due to the aluminum lag embedded in the price formula, and operational inefficiencies in one of our North American operations.

    TK Aluminum Ltd., the indirect parent of Teksid Aluminum Luxembourg S.à.r.l., S.C.A., today reported its consolidated financial results for the first quarter ended March 31, 2006.

    "While Teksid Aluminum revenues continue to grow, we have experienced a challenging quarter with respect to EBITDA" reported Jake Hirsch, CEO of Teksid Aluminum. "In the first quarter of 2006, net revenues grew by 10% while tons sold were relatively flat and Adjusted EBITDA decreased by 56%. The positive impact of cost reduction initiatives and restructuring savings were more than offset by rapidly rising aluminum costs and continued operating inefficiencies in one of our North American operations. As previously reported, the aluminum lag has been improved through specific renegotiation of the price formula with our customers to align them with our buying formula. Going forward, we will benefit from an improved time lag between buy and sell on approximately 80% of the value of our contracts".

    Consolidated financial results for the quarter ended March 31, 2006

    The table below contains certain financial information of the Company for the three-month periods ended March 31, 2006 and 2005 respectively. All amounts included herein for the prior period have been adjusted to reflect the previous restatement of certain financial information related to the Brazilian investigation reported in the prior periods.

            EUR m                  Three-Month Period Ended March 31
                                                  2006            2005 (as restated)
            K/Tons                                56.2                        55.4
            Net Revenues                EUR274.5                 EUR249.4
            EBITDA                            EUR3.9                  EUR20.8
            Adjusted EBITDA              EUR7.1                  EUR16.3
            Net Loss                        EUR18.9                    EUR8.4
            Capex                              EUR6.8                  EUR19.9
            Net Debt (a)                EUR361.8                 EUR323.7

    (a) Net Debt at December 31, 2005 was EUR313.1 m

    Net Revenues increase as a result of aluminum pass through and a positive foreign exchange impact

    Net Revenues in the first quarter of 2006 increased by 10.1% compared to the same period in 2005, primarily due to exchange rate fluctuations. Assuming constant exchange rates, Net Revenues in the first quarter of 2006 were 3.3% higher as compared to the same period in 2005. Net Revenues in the reported period were primarily affected by aluminum price increases, partially offset by reduced tooling sales and contractual price give backs.

    Adjusted EBITDA in Q1 2006 was positively impacted by cost savings, restructuring savings, miscellaneous items, offset by a rapid increase in aluminum costs and operating inefficiencies in North America

    Adjusted EBITDA for the first quarter of 2006 was 2.6% of Net Revenues compared to Adjusted EBITDA for the same period in 2005, which was 6.5% of Net Revenues.

    Adjusted EBITDA for the first quarter of 2006 was positively impacted by cost saving initiatives of EUR4.3 million, by savings of EUR2.0 million on our restructuring program and by EUR3.3 million of miscellaneous items. This improvement was offset by the negative impact of EUR6.0 million due to aluminum price increases and the time lag in the pass through of such increases to customers, EUR5.0 million due to cost inefficiencies in North America, EUR4.2 million due to cost inflation, EUR1.2 million due to OEM contractual price give-backs and product mix, along with EUR0.7 million due to decreased tooling profit and EUR1.7 million due to negative foreign exchange impact.

    For a definition and reconciliation of EBITDA to Adjusted EBITDA see enclosed attachment 1.

    Net Loss increased primarily due to lower operating performance, higher interest costs and negative foreign exchange impact

    Net Loss for the first quarter of 2006 was EUR18.9 million representing a loss increase of 125.0% compared to same period in 2005, primarily as a result of aluminum price fluctuations, operational inefficiencies at our North American operations and higher interest costs in the current period.

    Capital expenditures carefully monitored

    Capital expenditures for the first quarter of 2006 were EUR6.8 million compared to EUR19.9 million during the same period of 2005. Such capital expenditures primarily relate to purchases of machinery and equipment by the Company's subsidiaries in the United States, Mexico and Europe. Capital Expenditure approval process has been carefully monitored in light of reduced operating performance for the current quarter.

    Net Debt increased primarily to support working capital requirements and as a result of reduced operating performance

    Net Debt at March 31, 2006, which includes EUR48.8 million in cash, increased by EUR48.7 million to EUR361.8 million from Net Debt of EUR313.1 million at December 31, 2005. The increase in Net Debt was primarily due to net cash used in operating activities mainly related to a seasonal increase in working capital and other reserves for EUR44.3 million and by a EUR6.8 million of cash used for investing activities, partially offset by a EUR2.4 million positive impact of foreign exchange.

    Aluminum

    Aluminum prices continued to increase through Q1 of 2006 by approximately 7%. This is in addition to a approximately 23% increase in aluminum prices in the fourth quarter of 2005. To minimize the effect of aluminum price fluctuations on our results, we are continuing to negotiate with our customers to amend existing sales contracts to shorten the time lag between the change in our cost of aluminium and the change in the price our customers pay to us for aluminum. Going forward, we will benefit from an improved time lag between buy and sell on approximately 80% of the value of our contracts.

    China

    On April 26, 2006, the Company signed an agreement to increase its investment in Nanjing Teksid Aluminum Foundry Co, Ltd., an aluminum foundry based in Nanjing. The investment is pending subject to approval by the local government. Upon approval, the Company will invest an additional EUR2.6 million in the Company registered capital, which will increase the Teksid Aluminum's equity rights to approximately 70%. Nineteen percent of this equity share is represented by voting rights provided to the Company from Simest, an Italian state owned agency that provides specific financial support for direct investment abroad to Italian companies.

    Covenants Compliance

    The next Financial Covenants period for the Company will be June 30th, 2006.

    Results for the three-month period ended March 31st 2006 and 2005 respectively included herein are unaudited and have been presented in accordance with U.S. GAAP.

    Further comments on the first quarter of 2006 earnings will be delivered by Messrs. Jake Hirsch and Jon Smith during the bondholders and analyst conference call to be held on June 5th, 2006, at 15:30 pm, Central European Time, 14:30 pm London Time, 9:30 am Eastern Time. Registration of the Conference Call will be available on June the 6th and 7th, 2006 at 15:30 pm, Central European Time, 14:30 pm London Time, 9:30 am Eastern Time.

    Any interested person may join the conference call by using the dial-in numbers set forth below.

    Dial-in +39-071-2861848

    About Teksid Aluminum

    Teksid Aluminum is a leading independent manufacturer of aluminum engine castings for the automotive industry. Our principal products are cylinder heads, engine blocks, transmission housings and suspension components. We operate 15 manufacturing facilities in Europe, North America, South America and Asia. Information about Teksid Aluminum is available on our website at www.teksidaluminum.com.

    Until September 2002, Teksid Aluminum was a division of Teksid S.p.A., which was owned by Fiat. Through a series of transactions completed between September 30, 2002 and November 22, 2002, Teksid S.p.A. sold its aluminum foundry business to a consortium of investment funds led by equity investors that include affiliates of each Questor Management Company, LLC, JPMorgan Partners, Private Equity Partners SGR SpA and AIG Global Investment Corp. As a result of the sale, Teksid Aluminum is owned by its equity investors through TK Aluminum Ltd., a Bermuda holding company.

    ATTACHMENT 1 to Press Release of May 30, 2006

    Reconciliation of Net Loss to EBITDA and Adjusted EBITDA

    Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with U.S. GAAP. Furthermore, Adjusted EBITDA should not be considered as an alternative to net income  (loss) or any other performance measures derived in accordance with U.S. GAAP, or to cash flows from operating activities as a measure of liquidity.

    The following is a reconciliation of net loss to EBITDA and to Adjusted EBITDA:

@@start.t1@@            (in thousands of euro)                                 Three Months ended
                                                                                         March 31
                                                                                    2006          2005
                                                                                                        as
                                                                                                  restated
            Net loss                                                        (18.923)    (8.383)
            Depreciation and amortization                        13.922        15.668
            Income tax (benefit) expense                        (2.952)        1.799
            Interest expense (income), net                      11.880        11.697
            EBITDA                                                            3.927         20.781
            Equity earnings of affiliated companies,        (74)          196
            net
            Foreign exchanges losses (gains), net            975         (4.630)
            Other expense (income), net                          (127)         (761)
            Adjustments to EBITDA:
            Restructuring / Severance / Early                 1.432         1.176
            retirement expenses (a)
            SEC Filing, SOA and Exchange Offer fees         174            191
            (b)
            Fees payables to affiliates of the                 625            625
            investors (c)
            Change in accounting treatment for the            -          (1.281)
            synthetic lease (d)
            Change in accounting principle of                  123              -
            Stock-based compensation (SFAS 123R) (e)
            Adjusted EBITDA                                              7.055         16.297
      
      (a) Adjustment to eliminate expenses associated with the operational
restructuring, severance, and early retirement programs commenced in
Italy, North America and France. In 2004, early retirement programs in
France were partially subsidized by the French government.
      (b) Adjustment to eliminate the impact of non-recurring expenses incurred
by the Company in connection with its SEC registration process, expired
private exchange offer and consent solicitation.
      (c ) Adjustment to eliminate the impact of fees payable to affiliates of
the investors according to the financial and advisory services
arrangement with affiliates of certain of the equity investors of the
Company. Such item is a specific adjustment as provided by the amendment
of the Senior Credit Facility as executed on April 26, 2005.
      (d) As part of the amendments in connection with our refinancing package,
the change in accounting principle related to the synthetic lease no
longer applies as adjustment to the EBITDA.
      (e) In association with changed accounting treatment of stock-based
compensation expense (SFAS 123R adopted January 1, 2006), for covenant
compliance purposes, the Company should apply, to the relevant financial
measures, the same accounting principles existing at the closing date,
September 30th, 2002.
      Management believes Adjusted EBITDA facilitates comparisons of operating
performance from period to period and company to company by eliminating
potential differences caused by variations in capital structures
(affecting interest expense), tax positions (such as the impact on
periods or companies of changes in effective tax rates or net operating
losses) and the age and book depreciation of tangible assets (affecting
depreciation expense). The Company presents Adjusted EBITDA as it is the
basis against which certain financial tests are measured under our senior
credit facility. The Company also presents EBITDA because management
believes it is frequently used by securities analysts, investors and
other interested parties in evaluating similar companies, the vast
majority of which present EBITDA when reporting their results.
Nevertheless, both EBITDA and Adjusted EBITDA have limitations as an
analytical tool, and you should not consider it in isolation from, or as
a substitute for analysis of, our results of operations as reported under
U.S. GAAP. Some of these limitations are: such measurements do not
reflect our cash expenditures or future requirements for capital
expenditures or contractual commitments; such measurements do not reflect
changes in, or cash requirements for, our working capital needs; such
measurements do not reflect the significant interest expense, or the cash
requirements necessary to service interest or principal payments, on our
debt; although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced in
the future, such measurements do not reflect any cash requirements for
such replacements; such measurements are not adjusted for all non-cash
income or expense items that are reflected in our statements of cash
flows; and other companies in our industry may calculate such
measurements differently than we do, limiting such measurements'
usefulness as a comparative measure.
      Because of these limitations, EBITDA and Adjusted EBITDA should not be
considered as a measure of discretionary cash available to us to invest
in the growth of our business.@@end@@

ots Originaltext: Teksid Aluminum S.A.R.L    S.C.A
Im Internet recherchierbar: http://www.presseportal.ch



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