SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
February 4, 2002
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(Date of Report, date of earliest event reported)
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 (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
1999 Broadway, Suite 4300, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
(303) 296-5600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or address, if changed since last report)
Item 5: Other Events
On February 4, 2002 the Registrant issued the press release attached hereto
as Exhibit 99.1, which is incorporated herein by reference. The press release
relates to an announcement by Registrant regarding Registrant's fourth quarter
results for year 2001.
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Item No. Exhibit List
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99.1 Press Release dated February 4, 2002 issued by 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)
By: /s/ Joan H. Prusse
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Joan H. Prusse
Vice President, Deputy General Counsel
and Secretary
Date: February 6, 2002
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE: CONTACT:
Titanium Metals Corporation Mark A. Wallace
1999 Broadway, Suite 4300 Executive Vice President
Denver, Colorado 80202 and Chief Financial Officer
(303) 296-5615
TIMET ANNOUNCES FOURTH QUARTER 2001 RESULTS
DENVER, COLORADO . . . February 4, 2002 . . . Titanium Metals Corporation
("TIMET" or the "Company") (NYSE: TIE) reported a loss excluding special items
for the fourth quarter of 2001 of $2.9 million, or $.09 per share, compared to a
loss excluding special items in the fourth quarter of 2000 of $7.7 million, or
$.24 per share. Including special items, the Company reported a net loss of
$72.0 million, or $2.28 per share, for the fourth quarter 2001 compared to a net
loss of $.20 per share for the fourth quarter 2000. For the year ended December
31, 2001, the Company reported a loss excluding special items of $3.9 million or
$.12 per share. Including special items, the Company reported a net loss of
$1.33 per share for the full year 2001 compared to a net loss of $1.24 per share
in 2000.
Sales of $116.5 million in the fourth quarter of 2001 were 9% higher than
the year-ago period. The increase resulted principally from a 6% increase in
mill product selling prices (expressed in U.S. dollars using actual foreign
currency exchange rates prevailing during the respective periods) and changes in
product mix. In billing currencies (which exclude the effects of foreign
currency translation), mill product selling prices also increased approximately
6% from the year-ago period. Melted product (ingot and slab) sales volume
decreased 3% from year ago levels while selling prices increased 13%.
As compared to the third quarter of 2001, mill product sales volume in the
fourth quarter of 2001 decreased 3%, while selling prices expressed in U.S.
dollars increased 1%. In billing currencies, mill product selling prices
approximated third quarter levels. Melted product sales volume decreased 26% in
the fourth quarter of 2001 as compared to the third quarter of 2001 while
selling prices increased 2%.
The Company's backlog at the end of December 2001 was approximately $225
million compared to $315 million at the end of September 2001. The decline in
the backlog principally reflects customers' reaction to the September 11
terrorist attacks, as many of the Company's customers cancelled or deferred
delivery of previously scheduled orders and the rate of new orders slowed
significantly. Backlog at the end of December 2000 was $245 million.
During the fourth quarter of 2001, the Company recorded special charges
aggregating $69.1 million. The Company recognized a $61.5 million pre-tax charge
to general corporate items for an other than temporary decline in the fair value
of the Company's investment in preferred securities of Special Metals
Corporation. The Company also recorded a $12.3 million charge to provide for a
deferred tax asset valuation allowance related to its U.S. tax assets. The
deferred tax charge includes $8.6 million as a component of income tax expense
and $3.7 million as a component of minority interest - Convertible Preferred
Securities. Offsetting these two special charges was a reduction in the estimate
of the amount of certain expenses previously recorded during 2001 ($4.2 million
to selling, general, administrative and development for incentive compensation
and $.5 million to cost of sales for the estimated cost of the tungsten matter).
The special charges are principally a result of (i) the significant downturn in
the commercial aerospace industry that occurred in the fourth quarter following
September 11, as well as the economic slowdown in the U.S. and other regions of
the world, and (ii) the Company's assessment of the potential effect of
strategic and financial options Special Metals Corporation is currently
considering, including efforts to restructure and/or modify the terms of certain
debt agreements.
In addition to those mentioned above, the Company's results for the year
ended December 31, 2001, include the following pre-tax special items related to
prior 2001 quarters: (i) income of $62.7 million related to the Boeing
settlement, (ii) a $10.8 million impairment charge of certain manufacturing
assets, and (iii) a $3.8 million charge related to the previously reported
tungsten matter.
J. Landis Martin, Chairman and Chief Executive Officer of TIMET, said
"TIMET faces a difficult business climate in 2002 as demand for titanium from
the commercial aerospace sector has weakened significantly. We now expect sales
volumes in 2002 to decline 15% to 20% compared to 2001, driven by reduced
commercial aircraft production rates and the effect of excess inventory in the
supply chain. Market selling prices for titanium products are softening as well.
However, our long-term agreements with major aerospace customers generally
provide for fixed or formula pricing that provides for price stability on that
portion of our business. We expect 2002 sales to range from $375 million to $410
million. Unfortunately, at this level of business, we expect to report a net
loss, before special items, in 2002 between $35 million and $40 million."
Mr. Martin continued, "Although the near-term outlook for our business has
changed, we intend to continue to invest in both our core aerospace business as
well as the automotive, energy, military armor, and other emerging markets that
hold meaningful growth potential. TIMET continues to have a strong balance sheet
with over $150 million of credit availability at year end."
The statements in this release and the conference call 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 strategy 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 under their
long-term purchase agreements with the Company, the difficulty in forecasting
demand for titanium products, global economic and political conditions, global
productive capacity for titanium, changes in product pricing, 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, 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 increases in the
cost of doing business resulting from war or terrorist activities, and other
risks and uncertainties included in the Company's filings with the Securities
and Exchange Commission. 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 Company assumes no duty to update any forward-looking statements.
The Company's 2001 results are subject to completion of an audit and the filing
of its Annual Report on Form 10-K.
As previously announced, TIMET will host a conference call to discuss its
fourth quarter results on February 4, 2002 at 11:30 a.m. EST. On the conference
call will be J. Landis Martin, Chairman and Chief Executive Officer, and Mark A.
Wallace, Chief Financial Officer. Participants can access the call by dialing
(800) 230-1766 (domestic) or (612) 332-0418 (international). Information on
replays of this call can be found under "What's New" on TIMET's website.
TIMET, headquartered in Denver, Colorado, is a leading worldwide integrated
producer of titanium metal products. Information on TIMET is available on the
World Wide Web at http://www.timet.com/.
o o o o o
TITANIUM METALS CORPORATION
SUMMARY OF CONSOLIDATED OPERATIONS
(In millions, except per share data)
Quarter Ended Year Ended
December 31, December 31,
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2001 2000 2001 2000
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(Unaudited)
Net sales $ 116.5 $ 106.5 $ 486.9 $ 426.8
Cost of sales 101.2 104.3 447.0 423.0
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Gross margin 15.3 2.2 39.9 3.8
Selling, general, administrative and development expense 8.3 10.2 51.8 44.0
Other expense (income) (.7) (1.8) (76.2) (1.3)
Restructuring charge (credit) - - (.2) 2.8
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Operating income (loss) 7.7 (6.2) 64.5 (41.7)
General corporate (expense) income (61.3) 1.4 (55.9) 6.2
Interest expense .7 1.7 4.1 7.7
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Pretax (loss) income (54.3) (6.5) 4.5 (43.2)
Income tax expense (benefit) 10.4 (2.2) 31.1 (15.1)
Minority interest - Convertible Preferred Securities,
net of tax in 2000 7.0 2.1 13.9 8.7
Other minority interest, net of tax .3 - 1.3 1.2
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Income (loss) before extraordinary item (72.0) (6.4) (41.8) (38.0)
Extraordinary item - early extinguishment of debt, net of tax - - - .9
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Net income (loss) $ (72.0) $ (6.4) $ (41.8) $ (38.9)
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Earnings (loss) per share:
Basic:
Before extraordinary item $ (2.28) $ (.20) $ (1.33) $ (1.21)
Extraordinary item - - - .03
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$ (2.28) $ (.20) $ (1.33) $ (1.24)
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Diluted:
Before extraordinary item $ (2.28) $ (.20) $ (1.33) $ (1.21)
Extraordinary item - - - (.03)
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$ (2.28) $ (.20) $ (1.33) $ (1.24)
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Weighted average shares outstanding:
Basic 31.5 31.4 31.5 31.4
Diluted 31.5 31.4 31.5 31.4
Mill product shipments:
Volume (metric tons) 2,935 2,940 12,180 11,370
Average price ($ per kilogram) $ 30.15 $ 27.40 $ 29.80 $ 28.70
Melted product shipments:
Volume (metric tons) 1,000 1,030 4,415 3,470
Average price ($ per kilogram) $ 15.05 $ 13.15 $ 14.50 $ 13.65