IMCO Reports for Quarter

In the same period of 2001 the company had a net loss of $3.4 million. Those results included after-tax costs of $2.5 million due to an increase in the reserve for doubtful accounts related to customer bankruptcies, and to the closing of a zinc trading office in Germany at the end of 2001.

Before the cumulative effect of a required accounting change for goodwill recognized in the first quarter, IMCO Recycling's earnings for the full year of 2002 were $6.9 million compared with a loss of $2.7 million. After the effect of the accounting change, the company had a net loss in 2002 of $51.9 million.

Don Ingram, chairman and CEO, said the improvement in the company's fourth quarter financial performance "was in part a result of reductions we've achieved in plant operating costs as well as gains in productivity realized through installation of technically advanced equipment and processes. These improvements significantly increased our gross profit in both the fourth quarter and full year of 2002. We also recorded higher sales of specification aluminum alloys to auto producers and their component suppliers in the same periods."

Ingram said processing volume at the company's aluminum recycling facilities "was well below full capacity in the fourth quarter as it has been for about two years due to the low level of activity in the industrial sector of the U.S. economy and a decline in the aluminum can recycling rate. However, the profitability of these plants rose on a year-to-year basis because of the operating improvements we put in place.

"The weakness in U.S. manufacturing also depressed the zinc price which reached an all-time low in August 2002. However, U.S. Zinc Corporation, our wholly owned subsidiary, improved its performance in the fourth quarter from the year-ago period because it lowered management, administrative and operating costs."

Looking forward, Ingram said that in 2003 the company "will continue to benefit from operating cost reductions and productivity gains that we've achieved. Most forecasters expect meaningful expansion of the economy in 2003, particularly in the second half of the year if current international tensions are somewhat resolved. Increases in industrial production would raise volumes at our aluminum recycling facilities and help prices in our zinc business.

"The performance of the company's specialty alloys plants will depend to a great extent on the level of U.S. auto production. U.S. auto sales in 2002 totaled 16.8 million units, the third-best sales year in history. Analysts estimate that 2003 auto sales will decline from last year's level, but aluminum use per vehicle produced continues to rise with the 2003 average estimated to rise about seven percent to some 284 pounds.

"We also expect the company's expanded international operations to contribute more significantly to net earnings in the current year," he said. "Our Mexican joint venture in which we have a majority interest is recycling aluminum dross and scrap under a long-term contract with a major producer of auto engine components. The joint venture is now operating a new production facility and its volume will move significantly higher this year. In addition, in June we acquired an aluminum recycling plant in Brazil and signed long-term contracts for it to serve that country's only can sheet rolling mill and a facility owned by South America's largest manufacturer of aluminum cans."

Total aluminum and zinc processing volume in the fourth quarter of 2002 was 653.4 million pounds compared with 651.3 million pounds in the fourth quarter of 2001.

Revenues in the fourth quarter totaled $167.9 million, six percent above revenues of $157.8 million in the same period of 2001.

Processing volume for the full year of 2002 was 2.54 billion pounds, virtually unchanged from the 2.55 billion pounds processed in 2001.