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) May 10, 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))
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 May 10, 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 May 10, 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
Matthew O'Leary
Corporate Attorney and Assistant Secretary
Date: May 10, 2005
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release dated May 10, 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 FIRST QUARTER 2005;
ANNOUNCES PLANS TO EXPAND ITS TITANIUM SPONGE PRODUCTION FACILITY
DENVER, COLORADO . . . May 10, 2005 . . . Titanium Metals Corporation
("TIMET" or the "Company") (NYSE: TIE) reported operating income of $19.4
million and net income attributable to common stockholders of $38.1 million, or
$1.83 per diluted share, for the quarter ended March 31, 2005, compared to
operating income of $3.3 million and a net loss attributable to common
stockholders of $1.2 million, or $0.08 per diluted share, for the quarter ended
March 31, 2004. The Company also announced that it plans to expand its existing
titanium sponge facility in Henderson, Nevada.
The Company's first quarter 2005 net income attributable to common
stockholders was positively affected by the Company's determination that its
deferred income tax assets in both the U.S. and the U.K. now meet the
"more-likely-than-not" recognition criteria. Accordingly, the Company reversed
the valuation allowance attributable to such deferred income tax assets in the
first quarter of 2005, resulting in a $25.9 million income tax benefit.
Effective January 1, 2005, the Company changed its method for inventory
costing from the last-in, first-out ("LIFO") cost method to the specific
identification cost method for the approximate 40% of the Company's consolidated
inventories previously accounted for under the LIFO cost method. With the
significant volatility seen recently in raw material prices, the Company
believes this change in accounting method provides a better matching of revenues
and expenses. As required by accounting principles generally accepted in the
United States of America, the Company has restated its financial statements for
prior periods. As a result, the Company's net inventory balance as of December
31, 2004 increased by $26.7 million from the previously reported amount (with a
corresponding decrease to the Company's accumulated deficit), and the Company's
operating income and net income for the three months ended March 31, 2004 each
increased by $0.4 million.
The Company's net sales increased 29% to $155.2 million during the first
quarter of 2005 compared to net sales of $120.5 million during the year-ago
period, due to increases in both sales volumes and average selling prices. Mill
product sales volume increased 6% while melted product sales volume remained
flat during the first quarter of 2005, compared to the year-ago period. Mill
product average selling prices increased 19% and melted product average selling
prices increased 27% during the first quarter of 2005, compared to the year-ago
period.
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 March 2005 was
$490 million, a $40 million (9%) increase over the $450 million backlog at the
end of December 2004 and a $230 million (88%) increase over the $260 million
backlog at the end of March 2004.
The Company's aggregate unused borrowing availability under its U.S. and
European credit agreements approximated $110 million at March 31, 2005.
J. Landis Martin, Chairman and CEO, said, "We are pleased to report another
profitable quarter for TIMET. Our net sales of $155.2 million were the highest
we've reported since the fourth quarter of 1998. Demand for titanium products
remains strong, and we continue to see significant pricing improvements on
orders not covered by our long-term agreements. However, our costs, and our
ability to fully meet all of our customers' requirements, continue to be
adversely impacted by the current shortage of raw materials, and we expect this
shortage to remain a major challenge for us throughout 2005 and into 2006."
Mr. Martin continued, "Based upon our first quarter results, our current
backlog and other factors, we currently expect our full year 2005 sales revenue
to range between $700 million and $730 million, which is a $50 million increase
from our previous guidance primarily due to higher average selling prices. We
now expect operating income to increase $20 million over our previous guidance,
to between $70 million and $85 million, as a significant portion of the effect
of increased average selling prices will be offset by higher raw material costs.
Additionally, our previous 2005 operating income guidance assumed an increase in
our LIFO inventory reserve (and a corresponding charge to operating income) of
$10 million, which we will no longer incur.
"We now expect our full year 2005 net income attributable to common
stockholders to range between $80 million and $95 million, an increase of $45
million from our previous guidance primarily due to (i) higher operating income
as discussed above and (ii) the $25.9 million income tax benefit the Company
recognized during the first quarter related to the reversal of the Company's
valuation allowance attributable to its deferred income tax assets in the U.S.
and the U.K. Consistent with prior guidance, these estimates also include a
$12.6 million non-operating gain we currently expect to recognize in the second
quarter of 2005 related to the previously discussed sale of certain real
property at our Henderson, Nevada facility."
The Company currently expects to complete the expansion of its titanium
sponge plant facility by the first quarter of 2007, which will provide the
capacity to produce an additional 4,000 metric tons of sponge annually, an
increase of approximately 42% over current Henderson sponge production capacity
levels. The Company currently estimates the capital cost for the project will
approximate $38 million.
Titanium sponge (so called because of its porous appearance) is the
elemental form of titanium. Together with scrap and alloying elements, titanium
sponge is an essential raw material for all titanium products. TIMET is the sole
U.S. producer of titanium sponge for the titanium metals industry.
Remarking on the sponge plant expansion, Mr. Martin said, "We have been in
close contact with a number of our key end-user customers and based upon the
longer-term demand projections we are receiving from those customers we believe
that current levels of sponge production capacity will be inadequate to address
this demand. This additional sponge production capacity should position TIMET to
better address the increased longer-term demand projected by our existing
customers, while also enabling TIMET to continue to support further emerging
market growth. The added sponge production capacity will also allow the Company
to offset its previous reliance on sponge from the Defense Logistics Agency
stockpile (which is expected to become fully depleted during 2005) and should
reduce the volatility of TIMET's raw material costs."
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 assurance 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 the risks and uncertainties discussed in this Quarterly
Report, including risks and uncertainties in those portions referenced above and
those described from time to time in the Company's other filings with the
Securities and Exchange Commission ("SEC") which include, but are 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 availability of raw materials and services, changes in raw material prices
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 potential for adjustment of the Company's
deferred income 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.
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 March 31,
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2005 2004
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(restated)
Net sales $ 155.2 $ 120.5
Cost of sales 126.2 107.7
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Gross margin 29.0 12.8
Selling, general, administrative and development expense 12.4 9.5
Other income (expense), net 2.8 -
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Operating income 19.4 3.3
Interest expense 0.7 4.3
Other non-operating income (expense), net 0.7 0.7
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Pretax income (loss) 19.4 (0.3)
Income tax (benefit) expense (22.9) 0.5
Minority interest, net of tax 0.9 0.4
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Net income (loss) 41.4 (1.2)
Dividends on Series A Convertible Preferred Stock 3.3 -
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Net income (loss) attributable to common stockholders $ 38.1 $ (1.2)
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Earnings (loss) per share attributable to common stockholders:
Basic $ 2.39 $ (0.08)
Diluted $ 1.83 $ (0.08)
Weighted average shares outstanding:
Basic 15.9 15.9
Diluted 22.7 15.9
Melted product shipments:
Volume (metric tons) 1,415 1,420
Average selling price ($ per kilogram) $ 15.60 $ 12.25
Mill product shipments:
Volume (metric tons) 3,100 2,925
Average selling price ($ per kilogram) $ 36.75 $ 31.00
TITANIUM METALS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
March 31, December 31,
2005 2004
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ASSETS (unaudited) (restated)
Current assets:
Cash and cash equivalents $ 14.0 $ 7.9
Receivables, less allowance of $1.4 and $1.7, respectively 108.9 96.8
Inventories 279.9 258.3
Prepaid expenses and other 9.2 7.4
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Total current assets 412.0 370.4
Marketable securities 47.0 47.2
Investment in joint ventures 25.2 22.6
Investment in common securities of TIMET Capital Trust I 6.3 6.3
Property and equipment, net 231.9 228.2
Deferred income taxes 25.4 1.1
Other 16.4 16.5
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Total assets $ 764.2 $ 692.3
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LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 41.0 $ 43.2
Accounts payable 51.3 44.2
Accrued liabilities 66.2 65.1
Customer advance payments 32.3 6.9
Other 4.3 2.8
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Total current liabilities 195.1 162.2
Accrued OPEB and pension cost 91.3 92.0
Debt payable to TIMET Capital Trust I 12.0 12.0
Other 7.6 7.1
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Total liabilities 306.0 273.3
Minority interest 12.9 12.6
Stockholders' equity 445.3 406.4
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Total liabilities, minority interest and stockholders' equity $ 764.2 $ 692.3
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