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December 2006

Aleris reports $24 million net loss in third quarter

Aleris International, Inc. reported results for the third quarter of 2006 and for the nine months ended September 30, 2006.

Their third quarter net loss was $24.2 million, or $0.78 per share, at an estimated tax rate of 37.0%, compared with reported net income of $31.5 million, or $1.01 per share, in the third quarter of 2005, based on an estimated tax rate benefit of 8.2%. Last year's reported third quarter earnings per share would have been $0.59 using the 2006 estimated tax rate.

Unfavorable special items recorded during the quarter aggregated $104.0 million and included $24.3 million of unrealized losses on derivatives, $53.7 million of charges related to refinancing debt for the acquisition of the downstream business of Corus Group plc (Corus Aluminum), $33.2 million of charges for the non-cash impact of recording Corus assets at fair value, and $2.6 million of restructuring and other charges; offset partially by a $9.8 million gain on currency hedges.

Adjusted earnings per share was $1.26 in the third quarter of 2006 at the estimated tax rate of 37.0%, compared with adjusted earnings per share of $0.82 in the prior year's third quarter using an adjusted effective 2005 tax rate of 8.75%. Adjusted to the estimated 2006 tax rate, last year's adjusted earnings per share would have been $0.58.

On August 1, 2006 Aleris completed the acquisition of Corus Aluminum for a purchase price of $887 million. Simultaneously, Aleris entered into new credit agreements, the proceeds from which were used to fund the acquisition and refinance substantially all of Aleris's existing indebtedness.

Aleris incurred charges in the third quarter of $53.7 million related to the refinancing.

On August 8, 2006 Aleris announced that it had entered into a definitive merger agreement under which Texas Pacific Group (TPG) would acquire all of the outstanding stock of Aleris for approximately $1.7 billion plus the assumption of, or repayment of approximately $1.6 billion of debt.

The transaction continues on track as all regulatory requirements have been met. Closing of the transaction is expected at the end of 2006 or early in 2007.

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