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) February 1, 2005
TITANIUM METALS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-28538 13-5630895
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1999 Broadway, Ste. 4300, Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 296-5600
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(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 (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))
SEC8873(6-04)
Potential persons who are to respond to the collection of
Information contained in this form are not required to respond
unless the form displays a currently valid OMB control number.
Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
The registrant hereby furnishes the information set forth in its press
release issued on February 1, 2005, a copy of which is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
The information, including the exhibit, the registrant furnishes in this
report is not deemed "filed" for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. Registration statements or other documents filed with the
Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Item No. Exhibit Index
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99.1 Press Release dated February 1, 2005, issued by the registrant.
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.
TITANIUM METALS CORPORATION
(Registrant)
/s/ Matthew O'Leary
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Matthew O'Leary
Corporate Attorney and Assistant Secretary
Date: February 1, 2005
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release dated February 1, 2005, issued by the registrant.
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE: CONTACT:
Titanium Metals Corporation Bruce P. Inglis
1999 Broadway, Suite 4300 Vice President - Finance, Corporate
Denver, Colorado 80202 Controller and Treasurer
(303) 296-5600
TIMET REPORTS NET INCOME FOR THE
FOURTH QUARTER AND FULL YEAR 2004
DENVER, COLORADO . . . February 1, 2005 . . . Titanium Metals Corporation
("TIMET" or the "Company") (NYSE: TIE) reported operating income of $35.3
million and net income attributable to common stockholders of $35.5 million, or
$2.20 per diluted share, for the year ended December 31, 2004, compared to
operating income of $5.4 million and a net loss attributable to common
stockholders of $13.1 million, or $0.82 per diluted share, for the year ended
December 31, 2003.
The Company reported net income attributable to common stockholders of
$11.2 million, or $0.64 per diluted share, for the fourth quarter of 2004,
compared to $9.9 million, or $0.62 per diluted share, for the year-ago period.
The Company reported operating income of $13.1 million for the fourth quarter of
2004, compared to $14.3 million for the fourth quarter of 2003.
The Company's net sales improved to $137.0 million during the fourth
quarter of 2004 compared to net sales of $100.6 million during the year-ago
period, due to increases in both sales volumes and average selling prices. Mill
product sales volume increased 20% and melted product sales volume increased 16%
during the fourth quarter of 2004, compared to the year-ago period. Mill product
average selling prices increased 12% and melted product average selling prices
increased 8% during the fourth quarter of 2004, compared to the year-ago period.
For the full year 2004, the Company's net sales were $501.8 million compared to
net sales of $385.3 million (stated net of a $6.8 million one-time charge
related to the termination of an agreement with a customer) during 2003.
Several significant items impacted the Company's fourth quarter and full
year 2004 results:
o An increase in the Company's LIFO inventory reserve, as a result of
higher raw material costs and increasing book inventories, resulting
in a charge to cost of sales of $4.8 million during the fourth quarter
and $7.8 million for the full year;
o An accrual of $3.9 million during the fourth quarter ($3.2 million to
cost of sales and $0.7 million to selling, general, administrative and
development expense) and $13.6 million for the full year ($10.8
million and $2.8 million, respectively) related to certain employee
incentive compensation payments expected to be made for 2004;
o A fourth quarter deferred tax benefit of $4.2 million from the
reversal of a portion of the Company's valuation allowance against
capital loss carryforwards related to a deferred gain (which was
recognized currently for tax purposes) on the sale of certain real
property at our Henderson, Nevada facility;
o The previously reported $15.5 million non-cash, non-operating gain
recognized during the third quarter of 2004, resulting from the
one-for-one exchange of 3,909,103 shares of the Company's 6.75% Series
A Preferred Stock for 97.1% of the outstanding 6.625% mandatorily
redeemable convertible preferred securities issued by the TIMET
Capital Trust I; and
o The previously reported one-time benefit of $1.9 million ($1.6 million
in cost of sales and $0.3 million in selling, general, administrative
and development expense), recorded during the first quarter of 2004,
related to the Company's modification of its vacation policy for its
U.S. salaried employees.
Comparatively, fourth quarter and full year 2003 results were significantly
impacted by:
o A decrease in the Company's LIFO inventory reserve resulting in a
reduction to cost of sales of $6.9 million during the fourth quarter
and $11.4 million for the full year; and
o A $1.7 million reduction to cost of sales during the third quarter as
a result of the Company's adjustment to its accrual related to the
previously reported tungsten inclusion matter.
During the third quarter of 2004, the Company modified its method of
calculating its backlog to include purchase orders under consignment
relationships. The Company believes inclusion of these orders provides a more
accurate reflection of the Company's overall backlog. Using the modified
methodology for all periods, the Company's backlog at the end of December 2004
was $450 million, a $50 million (13%) increase over the $400 million backlog at
the end of September 2004 and a $245 million (120%) increase over the $205
million backlog at the end of December 2003.
The Company's aggregate unused borrowing availability under its U.S. and
European credit agreements approximated $110 million at December 31, 2004.
All share and per share disclosures presented in this release have been
adjusted to give effect to the Company's previously reported five-for-one stock
split effective after the close of trading on August 27, 2004.
J. Landis Martin, Chairman and CEO, said, "We are pleased to report our
return to full year profitability in 2004, and we continue to be encouraged by
the increasing demand for titanium products in all markets as we look into 2005
and beyond. Our net sales showed significant growth during 2004, as compared to
2003, and we expect to show substantial improvement again during 2005.
Additionally, we were able to achieve substantial operating income growth in
2004, despite the adverse effect that LIFO inventory accounting had on our
operating results in 2004 as compared to 2003. We believe that our operations
continue to move in the right direction."
Mr. Martin continued, "Our operating results continue to be positively
impacted by increased overall capacity utilization (which was 72% for 2004 as
compared to 56% for 2003), and we currently anticipate overall capacity
utilization of 75% to 80% for 2005. Unfortunately, tightening in the raw
materials markets has continued to push scrap and alloy prices to record highs,
and the availability of titanium sponge has been significantly reduced. These
factors will likely moderate the operating results we could otherwise achieve in
2005 with increased selling prices and higher plant operating rates. We believe
we will continue to see some effects of rising prices on our 2005 sales revenue,
although we will not see the substantial pricing growth that the spot market
might currently allow because a portion of our business is under long-term
agreements.
"Based upon the various factors affecting our business, we currently expect
our full year 2005 sales revenue to range between $650 million and $680 million
and our full year 2005 operating income to range between $50 million and $65
million. These estimates represent increases over 2004 results of 30% to 36% for
net sales and 42% to 84% for operating income. As a result, we expect full year
2005 net income attributable to common stockholders to range between $35 million
and $50 million. These expectations could be adversely impacted if the current
tightness and higher pricing levels for raw materials were to worsen further.
These net income estimates include a $12.6 million non-operating gain we
currently expect to recognize in the first half of 2005 related to the
previously discussed sale of certain real property at our Henderson, Nevada
facility, which closed in the fourth quarter of 2004. However, these net income
estimates exclude a net tax benefit of $35 million to $40 million that we might
recognize during 2005 if a reversal of a portion of our deferred tax asset
valuation allowance with respect to our U.S. and U.K. net operating loss
carryforwards is determined to be appropriate under the more-likely-than-not
recognition criteria."
As previously announced, TIMET will host a conference call to discuss its
2004 results on February 1, 2005 at 10:30 a.m. (EST). Participants may access
the call by dialing (888) 208-1812 (domestic) or (719) 457-2654 (international).
A replay of the call will begin on February 1, 2005 at 1:30 p.m. (EST) and end
on February 5, 2005 at 12:00 midnight (EST) and can be accessed by dialing (888)
203-1112 (domestic) or (719) 457-0820 (international) with access code 2469828.
The statements in this release relating to matters that are not historical
facts are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Forward-looking statements
can be identified by the use of words such as "believes," "intends," "may,"
"will," "looks," "should," "could," "anticipates," "expects" or comparable
terminology or by discussions of strategies or trends. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements by their nature involve substantial risks and
uncertainties that could significantly affect expected results. Actual future
results could differ materially from those described in such forward-looking
statements, and the Company disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Among the factors that could cause actual results to
differ materially are risks and uncertainties including, but not limited to, the
cyclicality of the commercial aerospace industry, the performance of aerospace
manufacturers and the Company under their long-term agreements, the renewal of
certain long-term agreements, the difficulty in forecasting demand for titanium
products, global economic and political conditions, global productive capacity
for titanium, changes in product pricing and costs, the impact of long-term
contracts with vendors on the ability of the Company to reduce or increase
supply or achieve lower costs, the possibility of labor disruptions,
fluctuations in currency exchange rates, fluctuations in the market price of
marketable securities, control by certain stockholders and possible conflicts of
interest, uncertainties associated with new product development, the supply of
raw materials and services, changes in raw material and other operating costs
(including energy costs), possible disruption of business or increases in the
cost of doing business resulting from terrorist activities or global conflicts,
the Company's ability to achieve reductions in its cost structure, the potential
for adjustment of the Company's deferred tax asset valuation allowance and other
risks and uncertainties. Should one or more of these risks materialize (or the
consequences of such a development worsen), or should the underlying assumptions
prove incorrect, actual results could differ materially from those forecasted or
expected. The financial information contained in this release is subject to
future correction and revision and should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
most recent reports on Form 10-K and Form 10-Q, as each may be amended from time
to time, filed with the Securities and Exchange Commission. The Company's 2004
results are subject to completion of an audit and the filing of its Annual
Report on Form 10-K.
TIMET, headquartered in Denver, Colorado, is a leading worldwide producer
of titanium metal products. Information on TIMET is available on its website at
www.timet.com.
o o o o o
TITANIUM METALS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share and product shipment data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
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2004 2003 2004 2003
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Net sales $ 137.0 $ 100.6 $ 501.8 $ 385.3
Cost of sales 122.6 88.9 445.9 368.3
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Gross margin 14.4 11.7 55.9 17.0
Selling, general, administrative and development expense 12.5 8.4 44.9 36.4
Other income (expense), net 11.2 11.0 24.3 24.8
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Operating income 13.1 14.3 35.3 5.4
Interest expense 1.0 4.1 12.5 16.4
Other non-operating income (expense), net (0.1) 0.2 16.2 (0.3)
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Pretax income (loss) 12.0 10.4 39.0 (11.3)
Income tax (benefit) expense (2.8) 0.4 (2.1) 1.2
Minority interest, net of tax 0.3 0.1 1.2 0.4
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Income (loss) before cumulative effect of change
in accounting principle 14.5 9.9 39.9 (12.9)
Cumulative effect of change in accounting principle - - - (0.2)
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Net income (loss) 14.5 9.9 39.9 (13.1)
Dividends on Series A Convertible Preferred Stock 3.3 - 4.4 -
------------ ------------ ------------ ------------
Net income (loss) attributable to
common stockholders $ 11.2 $ 9.9 $ 35.5 $ (13.1)
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TITANIUM METALS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(In millions, except per share and product shipment data)
(Unaudited)
Three months ended Year ended
December 31, December 31,
---------------------------- ----------------------------
2004 2003 2004 2003
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Basic earnings (loss) per share attributable to
common stockholders:
Before cumulative effect of change
in accounting principle $ 0.70 $ 0.62 $ 2.24 $ (0.81)
Cumulative effect of change in accounting principle - - - (0.01)
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$ 0.70 $ 0.62 $ 2.24 $ (0.82)
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Diluted earnings (loss) per share attributable to
common stockholders:
Before cumulative effect of change
in accounting principle $ 0.64 $ 0.62 $ 2.20 $ (0.81)
Cumulative effect of change in accounting principle - - - (0.01)
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$ 0.64 $ 0.62 $ 2.20 $ (0.82)
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Weighted average shares outstanding:
Basic 15.9 15.9 15.9 15.9
Diluted 22.5 15.9 18.1 15.9
Melted product shipments:
Volume (metric tons) 1,420 1,225 5,360 4,725
Average selling price ($ per kilogram) $ 14.15 $ 13.05 $ 13.45 $ 12.15
Mill product shipments:
Volume (metric tons) 2,840 2,365 11,365 8,875
Average selling price ($ per kilogram) $ 33.80 $ 30.05 $ 32.05 $ 31.50
TITANIUM METALS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
December 31, December 31,
2004 2003
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ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 7.2 $ 35.0
Restricted cash and cash equivalents 0.7 2.2
Receivables, less allowance of $1.7 and $2.3, respectively 96.8 67.4
Inventories 231.6 165.7
Prepaid expenses and other 7.3 5.7
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Total current assets 343.6 276.0
Marketable securities 47.2 -
Investment in joint ventures 22.6 22.5
Investment in common securities of TIMET Capital Trust I 6.3 6.8
Property and equipment, net 228.2 239.2
Other 17.6 22.9
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Total assets $ 665.5 $ 567.4
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LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 43.2 $ -
Accounts payable 44.2 29.2
Accrued liabilities 65.1 44.5
Customer advance payments 6.9 3.3
Other 2.8 0.8
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Total current liabilities 162.2 77.8
Capital lease obligations 0.2 9.8
Accrued OPEB and pension cost 92.2 76.0
Debt payable to TIMET Capital Trust I 12.0 207.5
Other 6.7 26.4
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Total liabilities 273.3 397.5
Minority interest 12.5 11.1
Stockholders' equity 379.7 158.8
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Total liabilities, minority interest and stockholders' equity $ 665.5 $ 567.4
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