8-K 1 jb8k3q04.txt 3Q2004 FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 8, 2004 COMMONWEALTH INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 0-25642 13-3245741 (State of incorporation) (Commission File Number) (I.R.S. Employer Identification No.) 500 West Jefferson Street PNC Plaza-19th Floor Louisville, Kentucky 40202-2823 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (502) 589-8100 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Section 2 - Financial Information Item 2.02 Results of Operations and Financial Condition. See the following press release, dated November 8, 2004, announcing Commonwealth Industries, Inc.'s results of operations for the third quarter of 2004: Contact: Kim S. Knotts Director of Investor Relations (502) 588-8207 COMMONWEALTH INDUSTRIES REPORTS THIRD-QUARTER 2004 RESULTS o Strong growth in aluminum shipments o Improved metal margins o Renewed focus on working capital management generates cash o Estimated aluminum shipments for the year of 1 billion pounds LOUISVILLE, KENTUCKY (November 8, 2004) - Commonwealth Industries, Inc. (NASDAQ/NM: CMIN) today reported third-quarter income from continuing operations of $2.6 million, or $0.15 per diluted share, compared to $2.8 million, or $0.17 per diluted share, in the third quarter of 2003. Results for the 2004 period include the recognition of net charges totaling $1.5 million, including $5.2 million of restructuring and other costs associated with the Company's previously announced merger with IMCO Recycling Inc., its streamlining activities and the closure of its tube products line, offset by a mark-to-market aluminum contract hedge gain of $3.7 million. Exclusive of the $5.2 million of restructuring and other charges and $3.7 million aluminum hedge gain, the Company's income from continuing operations in the third quarter of 2004 would be approximately $0.25 per diluted share after those adjustments. Exclusive of the $1.1 million mark-to-market aluminum hedge gain, income from continuing operations in the third quarter of 2003 would have been approximately $0.11 per diluted share after that adjustment. The diluted earnings per share that exclude the restructuring charges, other costs and mark-to-market hedge gains are not measures defined under accounting principles generally accepted in the United States of America (GAAP). Management believes these numbers are useful to investors in understanding the results of operations of the Company because they illustrate the impact that the restructuring charges and hedge gains had separately from the Company's operational results. A schedule which reconciles the non-GAAP earnings data presented above to the most comparable financial measure calculated and presented in accordance with GAAP is provided as part of the financial tables included in this release. Commonwealth's President and Chief Executive Officer Steven J. Demetriou said, "In the third quarter, increased pricing and improved shipment volume translated into increased sales, stronger margins and improved earnings from continuing operations net of the effects of the hedge and restructuring activity. Actions taken during the second quarter, including discontinuing certain projects, divesting non-core assets and implementing price increases, have begun to improve bottom line profitability. "Material margins improved in the third quarter due to new pricing arrangements. We expect material margins in the fourth quarter of 2004 and into 2005 to continue to increase and benefit from continued strong demand. Additionally, our renewed focus on working capital management has resulted in the reduction of inventory levels and receivable days outstanding, which contributed to the one-time generation of approximately $10 million in cash during the third quarter. "Excluding the net charges incurred this quarter, we are seeing improvements in our results and are continuing our rigorous focus on productivity gains while positioning the Company for the merger and future success." Third-Quarter 2004 Results Commonwealth's third-quarter aluminum shipments improved 30% from 200.6 million pounds in the 2003 period to 261.5 million pounds in the 2004 period. Improved volumes reflected stronger customer demand across virtually all end-use industries. Net sales, including aluminum sales to Alflex, improved 37% to $309.3 million in the third quarter of 2004 from $225.1 million in the comparable 2003 period. Third-quarter 2004 gross profit improved 61% to $21.5 million from $13.3 million in the 2003 quarter. Gross profit margin improved to 7.0% from 6.0% in the same period last year. The increase includes the effects of the $3.7 million and $1.1 million mark-to-market net hedge gains in the 2004 and 2003 third quarters respectively. In addition, material margins increased to $0.350 per pound from $0.337 per pound in the third quarter of 2003. Excluding effects of the hedge, third-quarter 2004 material margins increased to $0.336 per pound from $0.332 per pound in the same period of 2003. On a sequential basis, material margins improved $0.028 per pound from $0.308 per pound in the second quarter of 2004 after adjustment for hedge gains and tube inventory write-downs. Third-quarter 2004 manufacturing unit costs declined to $0.241 per pound from $0.248 per pound in the prior-year quarter due to improved volume. As a percent of net sales, selling, general and administrative expenses in the third quarter were 3.2% for the third quarters of 2004 and 2003. The announced sale of the Company's Alflex subsidiary to the Southwire Company was completed on July 30. Alflex results are shown as discontinued operations for all periods in the accompanying financial statements. First Nine-Month 2004 Results Commonwealth's aluminum shipments increased 32% to 756.4 million pounds in the first nine months of 2004 compared with 572.5 million pounds in the year-earlier period. Improvement in shipments reflected stronger customer demand across virtually all end-use industries. Net sales, including aluminum sales to Alflex, improved 39% to $847.1 million in the first nine months of 2004 from $611.0 million in the comparable prior-year period. Gross profit improved 37% to $40.6 million in the first nine months of 2004 from $29.7 million in the same period of 2003, while gross profit margin decreased slightly to 4.9% in the 2004 period from 5.0% in the 2003 period. Material margins were $0.316 per pound in the first nine months of 2004 compared to $0.347 per pound in the same period of 2003. Adjusted for hedge gains and tube inventory write-downs, material margins were $0.314 per pound in the first nine months of 2004 compared to $0.345 per pound in the comparable 2003 period. Manufacturing unit costs, exclusive of tube write-down charges, declined to $0.235 per pound from $0.271 per pound in the first nine months of 2003. The gross profit improvement in the first nine months of 2004 compared to the prior-year period, despite lower material margins, is principally due to higher shipment volume and lower manufacturing unit costs. Loss from continuing operations for the first nine months of 2004 was $20.3 million, compared with a loss of $4.8 million in the prior-year period. Operating results for the first nine months of 2004 include $18.6 million of restructuring and other charges, $2.1 million net mark-to-market hedge gains and $2.2 million of tube closure costs included in cost of goods sold. The first nine months of 2003 include mark-to-market hedge gains of $1.5 million. Exclusive of the $18.6 million of restructuring charges, $2.2 million of tube closure costs and $2.1 million of aluminum hedge gains, the Company's loss from continuing operations in the nine months of 2004 would be approximately $1.6 million, or a loss of $0.10 per diluted share, after those adjustments. Exclusive of the $1.5 million mark-to-market aluminum hedge gain, the loss from continuing operations in the nine months of 2003 would have been approximately $6.3 million, or a loss of $0.39 per diluted share, after the adjustment. The diluted earnings per share that exclude the restructuring charges, other costs and mark-to-market hedge gains are not measures defined under GAAP. As previously stated, management believes these numbers are useful to investors in understanding the results of operations of the Company because they illustrate the impact that the restructuring charges, other costs and hedge gains had separately from the Company's operational results. A schedule which reconciles the non-GAAP earnings data presented above to the most comparable financial measure calculated and presented in accordance with GAAP is provided as part of the financial tables included in this release. As a percent of net sales, selling, general and administrative cost decreased to 3.7% in 2004 from 4.0% in 2003. Proposed Merger with IMCO Commonwealth Industries announced a proposed merger with IMCO Recycling on June 17, 2004. The Company currently anticipates completion of the merger in the fourth quarter. The completion of the transaction remains subject to approval by Commonwealth and IMCO shareholders. IMCO Recycling and Commonwealth Industries have announced that, following the completion of their proposed merger, they will name the merged company Aleris International, Inc. Commonwealth Industries has commenced a cash tender offer to purchase all of its outstanding $125 million aggregate principal amount of 10 3/4% Senior Subordinated Notes due 2006 on the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated October 21, 2004 (the Statement). The consummation of the tender offer is subject to the conditions set forth in the Statement, including satisfaction of the conditions to the merger. In connection with the tender offer, the Company is also soliciting consents from holders of the Notes for which the Company will pay a consent payment of $10.00 per $1,000 principal amount of Notes to tendering holders of Notes, if the consent solicitation is successful. A public, listen-only simulcast and replay of Commonwealth's third-quarter conference call may be accessed at the Company's web site or http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=CMIN&script= 1010&item_id=960743. The simulcast will begin at approximately 1:00 p.m. Eastern Daylight Time on Monday, November 8, and a replay of the webcast will be available beginning at approximately 3:00 p.m. Eastern Daylight Time and will run until December 8. Commonwealth Industries is one of North America's leading manufacturers of aluminum sheet for distributors and the transportation, construction, and consumer durables product industries. The Company has direct-chill casting facilities in Kentucky and continuous casting mini-mills in Ohio and California. For more information about the Company, visit Commonwealth's website at www.ciionline.com. Certain statements set forth above may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements regarding the consummation of the closing of the merger between Commonwealth and IMCO Recycling Inc., and the Company's and its subsidiaries' expected future financial position, results of operations, cash flows, dividends, financing plans, business strategy, budgets, projected costs, capital expenditures, competitive position and growth opportunities are forward-looking statements. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the Company's actual results or performance to materially differ from any future results or performance expressed or implied by such statements. Such factors may include, without limitation, the success of the implementation of the Company-wide information system, our compliance with the provisions of the Sarbanes-Oxley Act, the effect of global economic conditions, the ability to achieve the level of cost savings or productivity improvements anticipated by management, including synergies that the IMCO merger are expected to produce, necessary financing for and the timing of the closing of the proposed merger with IMCO, the effect (including possible increases in the cost of doing business) resulting from war or terrorist activities or political uncertainties, the ability to successfully implement new marketing and sales strategies, the impact of competitive products and pricing, product development and commercialization, availability and cost of critical raw materials, the ability to effectively hedge the cost of raw materials, capacity and supply constraints or difficulties, the success of the Company in implementing its business strategy, and other risks as detailed in the Company's various filings with the Securities and Exchange Commission. COMMONWEALTH INDUSTRIES, INC. Condensed Consolidated Statement of Operations (in thousands except per share data)

~~UNITED~~Three ~~STATES~~Months ~~SECURITIES~~Ended ~~AND~~Nine ~~EXCHANGE~~Months ~~COMMISSION~~Ended ~~Washington~~September 30, DSeptember 30, 2004 2003 2004 2003 ----------- ----------- ---------- ----------- Net sales $ 308,497 $ 221,213 $ 834,385 $ 598,598 Cost of goods sold 287,022 207,870 793,744 568,890 ----------- ---------- ----------- ---------- Gross profit 21,475 13,343 40,641 29,708 Selling, general and administrative expenses 9,817 7,109 30,728 24,113 Restructuring and other charges 5,243 -- 18,580 -- ----------- ---------- ----------- ---------- Operating income (loss) 6,415 6,234 (8,667) 5,595 Other income (expense), net 459 423 1,328 1,331 Interest expense, net (4,230) (3,867) (12,783) (11,621) ----------- ---------- ----------- ---------- Income (loss) from continuing operations before income taxes 2,644 2,790 (20,122) (4,695) Income tax expense 87 33 130 100 ----------- ---------- ----------- ---------- Income (loss) from continuing operations 2,557 2,757 (20,252) (4,795) Discontinued operations: Income (loss) from operations before income taxes (752) 168 4,412 (611) Income (loss) on disposition 11 -- (1,559) -- Income tax expense (benefit) (292) 17 720 50 ----------- ---------- ----------- ---------- Income (loss) from discontinued operations (449) 151 2,133 (661) ----------- ---------- ----------- ---------- Net income (loss) $ 2,108 $ 2,908 $ (18,119) $ (5,456) =========== ========== =========== ========== Basic net income (loss) per share: Income (loss) from continuing operations $ 0.C16 $ 0.17 ~~20549~~$ (1.25) $ (0.30) Income (loss) from discontinued operations (0.03) 0.01 0.13 (0.04) Net income (loss) 0.13 0.18 (1.12) (0.34) Diluted net income (loss) per share: Income (loss) from continuing operations $ 0.15 $ 0.17 $ (1.25) $ (0.30) Income (loss) from discontinued operations (0.03) 0.01 0.13 (0.04) Net income (loss) 0.13 0.18 (1.12) (0.34) Weighted average shares outstanding: Basic 16,435 16,011 16,176 16,011 Diluted 16,568 16,034 16,176 16,011 Dividends paid per share $ 0.00 $ 0.00 $ 0.00 $ 0.10

COMMONWEALTH INDUSTRIES, INC. Operating and Financial Statistics (dollars in thousands)

~~FORM~~Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Net sales volume (1) $ 309,327 $ 225,119 $ 847,069 $ 611,020 Shipment volume (millions lbs.)(2) 261.5 200.6 756.4 572.5 Production volume (millions lbs.) 262.0 186.7 768.3 548.5 Gross profit percent 7.0% 6.0% 4.9% 5.0% Operating income percent 2.1% 2.8% (1.0%) 0.9% Current ratio 2.8x 2.8x 2.8x 2.8x Interest coverage ratio (EBITDA to interest expense, net) 2.9x 2.9x 0.7x 1.8x Return on average stockholders' equity (annualized) 12.4% 11.7% (32.3%) (7.2%) Debt-Kto-capitalization 63% 56% 63% 56% EBITDA (3) $ 12,112 $ 11,265 $ 8,500 $ 20,666 Note (1)includes sales to discontinued electrical products operations of $830 and $3,906, respectively, for the one month ended July 31, 2004 and the three months ended September 30, 2003 and $12,684 and $12,422, respectively, for the seven months ended July 31, 2004 and the nine months ended September 30, 2003. (2)includes shipments to discontinued electrical products operations of 0.7 and 4.1, respectively, for the one month ended July 31, 2004 and the three months ended September 30, 2003 and 11.5 and 15.2, respectively, for the seven months ended July 31, 2004 and the nine months ended September 30, 2003. (3)earnings before interest, income taxes, depreciation and amortization. See EBITDA Calculation on next page.

COMMONWEALTH INDUSTRIES, INC. EBITDA Calculation (1) (in thousands)

~~CURRENT~~Three ~~REPORT~~Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Net cash (used in) continuing operations $ (39,814) $ (1,737) $ (41,099) $ (2,378) Adjustments to reconcile net cash (used in) continuing operations to income (loss) from continuing operations: Depreciation (4,971) (4,608) (15,486) (13,740) Amortization (534) (222) (1,138) (666) Loss on disposal of property, plant and equipment (26) (28) (604) (68) Issuance of common stock in connection with stock awards (6) -- (212) (90) Change in working capital and other net assets 47,908 9,352 38,287 12,147 ------------ ----------- ------------ ----------- Income (loss) from continuing operations $ 2,557 $ 2,757 $ (20,252) $ (4,795) Add back depreciation 4,971 4,608 15,486 13,740 Add back amortization (2) 267 -- 353 -- Add back tax expense 87 33 130 100 Add back interest expense, net (2) 4,230 3,867 12,783 11,621 ----------- ----------- ----------- ----------- EBITDA $ 12,112 $ 11,265 $ 8,500 $ 20,666 =========== =========== =========== =========== Note (1) EBITDA is used in the calculation of certain covenants under the Company's credit agreement. (2) amortization of financing costs for the three months ended September 30, 2004 and 2003 of $267 and $222, respectively, and the nine months ended September 30, 2004 and 2003 of $785 and $666, respectively, is included in interest expense, net instead of in amortization in the above calculation.

COMMONWEALTH INDUSTRIES, INC. Condensed Consolidated Statement of Cash Flows (in thousands)

~~Pursuant~~Nine Months Ended September 30, 2004 2003 ------------ ----------- Cash flows from operating activities: Net income (loss) $ (18,119) $ (5,456) (Income) loss from discontinued operations (2,133) 661 Adjustments to ~~Section~~reconcile 13net ORincome (loss) to net cash (used in) provided by operations: Depreciation 15,486 13,740 Amortization 1,138 666 Loss on disposal of property, plant and equipment 604 68 Issuance of common stock in connection with stock awards 212 90 Change in working capital and other net assets (d38,287) (12,147) ------------ ----------- Net cash (used in) continuing operations (41,099) (2,378) Net cash (used in) provided by discontinued operations (652) 1,567 ------------ ----------- Net cash (used in) discontinued operations (41,751) (811) ------------ ----------- Cash flows from investing activities: Proceeds from sale of electrical products segment 64,041 -- Purchases of property, plant and equipment (6,452) (11,198) Proceeds from sale of property, plant and equipment 182 158 ----------- ----------- Net cash provided by (used in) investing activities 57,771 (11,040) ----------- ----------- Cash flows from financing activities: (Decrease) in outstanding checks in excess of deposits (947) -- Proceeds from long-term debt 167,879 75,168 Repayments of long-term debt (167,879) (71,978) Proceeds from issuance of common stock 1,783 -- Cash dividends paid -- (1,601) ----------- ----------- Net cash provided by financing activities 836 1,589 ----------- ----------- Net increase (decrease) in cash and cash equivalents 16,856 (10,262) Cash and cash equivalents at beginning of period -- 13,199 ----------- ----------- Cash and cash equivalents at end of period $ 16,856 $ 2,937 =========== ===========

COMMONWEALTH INDUSTRIES, INC. Condensed Consolidated Balance Sheet (in thousands except share data)

~~The~~September ~~Securities~~30, ~~Exchange~~-------------------------- ~~Act~~2004 2003 ----------- ----------- Assets Cash and cash equivalents $ 16,856 $ 2,937 Accounts receivable, net 141 158 Inventories 111,555 102,262 Net residual interest in receivables sold 91,140 60,083 Prepayments and other current assets 24,470 4,910 Current assets of ~~1934~~discontinued operations 243 35,972 ----------- ----------- Total current assets 244,405 206,322 Property, plant and equipment, net 117,790 128,270 Other noncurrent assets 7,836 5,423 Noncurrent assets of discontinued operations -- 63,470 ----------- ----------- Total assets $ 370,031 $ 403,485 =========== =========== Liabilities Accounts payable $ 50,672 $ 41,836 Accrued liabilities 34,284 24,421 Current liabilities of discontinued operations 1,918 8,720 ----------- ----------- Total current liabilities 86,874 74,977 Long-term debt 125,000 128,190 Other long-term liabilities 3,256 3,921 Accrued pension benefits 23,533 26,043 Accrued postretirement benefits 58,368 70,085 Noncurrent liabilities of discontinued operations 775 1,000 ----------- ----------- Total liabilities 297,806 304,216 ----------- ----------- Commitments and contingencies -- -- Stockholders' Equity Common stock, $0.01 par value, 50,000,000 shares authorized, 16,644,343 and 16,010,971 shares outstanding at September 30, 2004 and 2003, respectively 166 160 Additional paid-in capital 410,103 405,703 Accumulated deficit (326,596) (284,999) Unearned compensation (2,058) -- Accumulated other comprehensive income: Minimum pension liability adjustment (21,276) (21,391) Effects of cash flow hedges 11,886 (204) ----------- ----------- Total stockholders' equity 72,225 99,269 ----------- ----------- Total liabilities and stockholders' equity $ 370,031 $ 403,485 =========== ===========

COMMONWEALTH INDUSTRIES, INC. Reconciliation of Non-GAAP Earnings Data to Most Comparable Financial Measure Calculated and Presented in Accordance with GAAP (1) (in thousands except per share data)

~~Date~~Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Income (loss) from continuing operations $ 2,557 $ 2,757 $ (20,252) $ (4,795) add back restructuring and other charges 5,243 - 18,580 - add back tube closure costs included in cost of ~~Report~~goods sold - - 2,208 - deduct mark-to-market aluminum hedge gains (~~Date~~3,645) (1,027) (2,090) (1,455) ------------ ----------- ------------ ----------- Income (loss) from continuing operations excluding restructuring and other charges and hedge gains $ 4,155 $ 1,730 $ (1,554) $ (6,250) ============ =========== ============ =========== Basic net income (loss) per share: Income (loss) from continuing operations $ 0.16 $ 0.17 $ (1.25) $ (0.30) Restructuring and other charges 0.32 - 1.15 - Tube closure costs included in cost of ~~earliest~~goods ~~event~~sold ~~reported~~- - 0.14 - Mark-to-market aluminum hedge gains (0.22) (0.06) (0.13) (0.09) Income (loss) from continuing operations excluding restructuring and other charges and hedge gains 0.25 0.11 (0.10) (0.39) Diluted net income (loss) per share: Income (loss) from continuing operations $ 0.15 $ 0.17 $ (1.25) $ (0.30) Restructuring and other charges 0.32 - 1.15 - Tube closure costs included in cost of goods sold - - 0.14 - Mark-to-market aluminum hedge gains (0.22) (0.06) (0.13) (0.09) Income (loss) from continuing operations excluding restructuring and other charges and hedge gains 0.25 0.11 (0.10) (0.39) Weighted average shares outstanding: Basic 16,435 16,011 16,176 16,011 Diluted 16,568 16,034 16,176 16,011 Note (1) GAAP = generally accepted accounting principles accepted in the United States of America.

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. COMMONWEALTH INDUSTRIES, INC. By /s/ Henry Del Castillo --------------------------------------- Henry Del Castillo Vice President Finance Date: November 8, 2004

October 21, 2004

COMMONWEALTH INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		0-25642		13-3245741
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

500 West Jefferson Street PNC Plaza–19th Floor Louisville, Kentucky		40202-2823
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code

(502) 589-8100

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 7.01 Regulation FD Disclosure

Explanatory Note

On July 21, 2004 IMCO filed with the Securities and Exchange Commission a Registration Statement on Form S-4, which included a joint proxy statement/prospectus of IMCO and Commonwealth, in addition to other relevant documents concerning their proposed merger transaction. The Form S-4 on file with the SEC has since been amended.

Investors are urged to read the joint proxy statement/prospectus and any other relevant documents filed with the SEC because they contain important information. You may obtain the documents free of charge at the website maintained by the SEC at www.sec.gov. In addition, you may obtain documents filed with the SEC by IMCO free of charge by requesting them in writing from IMCO or by telephone at (972) 401-7200. You may obtain documents filed with the SEC by Commonwealth free of charge by requesting them in writing from Commonwealth or by telephone at (502) 589-8100.

Cautionary Statement concerning Forward-Looking Statements

The information in this report includes information regarding the proposed business and plans and strategies for IMCO and Commonwealth as a combined company assuming their proposed merger is completed, which currently is expected to occur in the fourth quarter of 2004. This information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “will,” “look forward to” and similar expressions are intended to identify forward-looking statements.

The expectations set forth herein regarding, among other things, accretion of future earnings, achievement of annual cost savings and synergies, achievement of cash flows and sufficiency of cash flows to fund capital expenditures are only estimates regarding these matters. Actual results could differ materially from these expectations depending on factors such as:

• inflation;

• labor relations (i.e., disruptions, strikes or work stoppages) and labor costs;

• changes in the pricing of metals;

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• availability of aluminum and zinc scrap at advantageous prices;

• changes in energy prices, raw materials costs and our fuel costs;

• competitor pricing activity and the general impact of competition;

• our ability to obtain additional financing on acceptable terms when necessary;

• future levels of capacity utilization at our plants;

• automobile production growth and the increased use of aluminum in automobiles in North America and Europe;

• changes in and customer acceptance of new technology;

• changes in equity and debt markets;

• the impact terrorist activities may have on the economy and our businesses in general;

• the state of international, national, regional and local economies;

• the success or failure of our operating plans, including our ability to manage growth;

• whether the merger can be completed under the terms of the merger agreement; and

• expected future financial condition, results of operations, cash flows, funds from operations, financing plans, business strategies, projected costs, capital expenditures, anticipated synergies and cost savings, competitive positions, technical capabilities, and access to capital and growth opportunities.

In addition, actual results of IMCO and Commonwealth as a combined company following completion of the merger could differ materially from the expectations set forth herein, depending on additional factors such as:

• the ability of the combined company to integrate the operations of each entity and to realize the expected benefits of the merger;

• the ability of the combined company to identify and implement cost savings, synergies and efficiencies in the time frame needed to achieve these expectations;

• any loss of employees, customers or suppliers that the combined company may suffer as a result of the merger;

• the ability of the combined company to successfully implement new marketing and sales strategies; and

• the impact of competitive products and pricing, product development and commercialization, availability and cost of critical raw materials, the ability to effectively hedge the cost of raw materials, capacity and supply constraints or difficulties, the success of the combined company in implementing its business strategies, and other risks as detailed in the companies’ various filings with the SEC.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of the forward-looking statements contained in this report. Other unknown or unpredictable factors could also affect actual results. Consequently, there can be no assurance that the actual results or developments anticipated will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the combined company. Given these uncertainties, we urge you not to place undue reliance on such forward-looking statements.

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The forward-looking statements included in this report are made only as of the date hereof. There is no expressed or implied undertaking or obligation to update any statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.

Overview of the Combined Company

Note: Information contained below concerning processing volumes, production data, rankings, the use of aluminum and zinc and other industry information is based on management estimates based on assumptions as well as data from third party sources, including data from The Aluminum Association. Such third party data is believed to be reliable, but there can be no assurance as to the accuracy or completeness of the that data. Unless otherwise noted, financial data and related information provided below for the twelve months ended June 30, 2004 give pro forma effect to the merger and certain proposed financing transactions as if they had occurred on January 1, 2003, and on June 30, 2004 for balance sheet data.

Upon completion of the merger, IMCO and Commonwealth expect that the combined company will be a global leader in aluminum recycling and the production of specification alloys and a leading manufacturer of common alloy sheet, as well as a recycler of zinc and a leading U.S. manufacturer of zinc oxide and zinc dust. The customers of the combined company will include a number of the world’s largest companies in the transportation, containers and packaging, building and construction and metal distribution industries. For the twelve months ended June 30, 2004, the combined company would have had pro forma net sales of $2.0 billion. Additionally, for the twelve-month period ended June 30, 2004, IMCO processed 3.2 billion pounds of recycled metal and specification alloys, accounting for 51% of total pro forma revenues of the companies on a combined basis, and Commonwealth’s shipments of common alloy sheet products totaled 896.9 million pounds, which accounted for 49% of such total combined revenues of the two companies. On a combined pro forma basis, no single customer accounted for more than 10% of the pro forma combined net sales and revenues of IMCO and Commonwealth in 2003, 2002, or 2001.

Competitive Strengths of the Combined Company

Leading positions in attractive industrial segments. Management believes that aluminum’s growth prospects will remain attractive due to its superior strength to weight ratio, corrosion resistance and its ability to be recycled. Furthermore, in certain industrial segments, such as transportation, aluminum is being used as a substitute for other materials. For example, the amount of aluminum used in the average automobile has increased from 166 pounds in 1991 to 274 pounds in 2003.

Flexible, efficient processing operations. IMCO and Commonwealth as a combined company should benefit from the flexibility and efficiencies of their manufacturing and recycling operations. Commonwealth has significant expertise in continuous casting of aluminum, which makes Commonwealth one of the industry’s lowest cost common alloy sheet manufacturers. Additionally, Commonwealth’s flexible direct chill process enables it to produce a wide breadth

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of products. IMCO’s recycling operations rely on a network of facilities that have rotary and reverbatory melting furnaces, which are believed to be among the lowest cost and most efficient furnaces in the industry. The companies believe that the vertical integration of these lower-cost, efficient operations will allow for significant operating synergies.

Scrap recycling-based business model. Unlike the majority of U.S. common alloy sheet manufacturers and global specification alloys suppliers, IMCO and Commonwealth as a combined company will have the advantage of being able to use either primary or scrap aluminum. Commonwealth’s rolled product facilities and IMCO’s specification alloys facilities have been designed to use scrap aluminum but are capable of using primary aluminum. Historically, scrap aluminum has consistently been less expensive than primary aluminum. IMCO and Commonwealth believe that the use of scrap aluminum will continue to offer cost advantages for the combined company’s rolled products business. Furthermore, if primary domestic aluminum production continues to decline, the combined company’s recycling and alloy business should offer customers the logistical benefits of a domestic source of aluminum supply.

Geographically well-positioned manufacturing and distribution networks. IMCO’s and Commonwealth’s U.S. facilities are strategically positioned in the manufacturing regions where the majority of aluminum and zinc consumers are located. Moreover, they are generally situated within close proximity to a number of their large customers, which gives them the ability to provide service enhancements, such as just-in-time delivery of molten metal. IMCO’s international operations benefit from similar strategic locations. Examples of this strategic positioning include the following:

• Both companies’ domestic operations are located near major aluminum producers and fabricators, diecasters, automotive companies, steel companies and other processors;

• IMCO’s German operations are positioned to serve the European automotive segment;

• IMCO’s Mexican operation is located near the largest aluminum cylinder head and engine block casting facility in the Western Hemisphere; and

• IMCO’s Brazilian operation is located adjacent to the largest can sheet manufacturer in Brazil.

Reduced exposure to commodity price fluctuations. IMCO and Commonwealth plan to mitigate the impact of metal price fluctuations by:

• pursuing tolling arrangements, which eliminate exposure to aluminum and zinc price fluctuations;

• utilizing formula pricing in the rolled products business, such as market-based primary aluminum price plus a conversion fee;

• aligning metal purchases with metal sales; and

• hedging open market positions with the use of financial derivatives.

These techniques should help to minimize both margin and inventory risk consistent with the need to allow for continuous operation of production facilities. Additionally,

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the combined company will seek to mitigate the effects of natural gas volatility through the use of financial derivatives as well as through price escalators, such as those contained in many of the long-term supply agreements with IMCO’s recycling customers.

Long-term customer relationships. IMCO and Commonwealth have long-standing relationships with many of their largest customers, including Alcoa, General Motors (GM), Alcan, DaimlerChrysler and NEMAK. IMCO and Commonwealth believe these relationships will offer a consistent base of customer demand and allow the combined company to plan and manage its operations more effectively. Long-term customer relationships should also allow the combined company to be more effective in handling its customers’ needs, thereby providing them with superior service. For example, these types of close working relationships have allowed the companies to offer just-in-time inventory management to customers serving multiple industries. The mutual benefits of these long-term relationships also tend to cause significantly higher customer switching costs. Furthermore, as IMCO’s customer base has expanded globally, a number of IMCO’s long-term customers have encouraged IMCO to expand its operations to service them.

Experienced management team with proven, new senior leadership. The combined company will have the benefit of talented people from each organization, many of whom have a broad base of metals industry experience, to promote best practices and achieve efficiencies and growth within the combined company. Additionally, on completion of the merger, the combined company will be led by an executive management team with a prior record of achievement at Noveon International, Inc., a specialty chemical company. IMCO and Commonwealth believe that the addition of this new senior management team will contribute to a successful integration process and should create a value-oriented culture within the combined company’s organization.

Business Strategy

Achieve operating synergies through focused integration. It is anticipated that the combined company will achieve synergies by adopting new metals sourcing initiatives, leveraging purchasing volume, eliminating duplicative costs resulting from shared services and integrating the combined company’s recycling and alloy business with its rolled products business to achieve additional operational efficiencies.

Focus on productivity improvements and capacity utilization. IMCO and Commonwealth expect there will be significant opportunities to reduce manufacturing costs by implementing new initiatives, leaner manufacturing practices and expanded preventative maintenance practices. Considerable emphasis is expected to be placed on maximizing capacity utilization rates at the combined company’s plants as a means of increasing profitability. This would be accomplished by pursuing both long-term contractual arrangements with many of the largest existing customers and additional opportunities with new customers. In addition, the combined company’s production network should enable it to reallocate processing work among its various facilities, thereby maximizing capacity utilization and balancing demand. These productivity processes should also enable the combined company to optimize working capital and increase cash flow.

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Enhance business and product mix. IMCO and Commonwealth believe there are numerous opportunities to improve the mix of business for the combined company. One will be to expand the capabilities of Commonwealth’s continuous casting operations through manufacturing improvements to produce higher value common alloy sheet. Commonwealth believes that increasing the range of alloys produced by this particular aluminum rolling process could significantly improve its competitiveness, since it is a lower cost manufacturing technique. IMCO and Commonwealth as a combined company also expect to continue plans to supply higher value alloys targeting the transportation industry, taking advantage of increasing aluminum content per vehicle. Additionally, the combined company will seek to increase its tolling business, which allows for meaningful profit growth potential without significant investment in working capital or exposure to commodity price risk.

Expand in selected international regions. IMCO and Commonwealth expect the combined company to selectively pursue opportunities in foreign locales where long-term processing arrangements can be secured and attractive returns can be achieved. One opportunity recently announced by IMCO involves establishing a new facility near Stuttgart, Germany to support DaimlerChrysler and other European customers. Additionally, the combination of IMCO’s efficient furnaces and processing techniques and Commonwealth’s low cost continuous cast technologies should provide the combined company with a business model believed by management of both companies to be competitive and possibly exportable to emerging economies.

Opportunistically pursue acquisition targets and strategic alliances. In recent years, the aluminum industry has seen significant global consolidation among the larger, primary producing suppliers. IMCO and Commonwealth believe that a number of potential consolidation opportunities exist in both the rolled products and recycling and alloy businesses, and the combined company will evaluate these opportunities as potential enhancements to its existing operating platforms. Strategic alliances, where appropriate, will be considered in order to achieve operational efficiencies or expand product offerings.

Recent Developments of the Combined Company

Although neither IMCO nor Commonwealth have yet announced their respective third quarter results, on a preliminary combined pro forma basis after giving effect to the merger and the financing transactions, the combined company would have had $23.5 million of cash (including restricted cash) and total debt of $423.2 million as of September 30, 2004. These figures compare favorably to a combined pro forma cash (including restricted cash) balance of $36.1 million and total debt of $467.5 million as of June 30, 2004.

On October 20, 2004, IMCO announced that, due principally to a customer bankruptcy in the third quarter ended September 30, 2004, results for that quarter are expected to be a loss in the range $0.02 to $0.03 per share, compared to a $0.02 per share loss reported in the third quarter of 2003.

These amounts are preliminary and are subject to IMCO’s management and independent auditors completing their customary quarterly closing and review procedures.

Limitation On Incorporation By Reference

In accordance with General Instruction B.2 to Form 8-K, the information set forth in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		COMMONWEALTH INDUSTRIES, INC.
Dated: October 21,2004		/s/ Sean M. Stack
		Sean M. Stack
		Vice President and Treasurer

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