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 THIRD QUARTER 2002 RESULTS
DENVER, COLORADO . . . October 24, 2002 . . . Titanium Metals Corporation
("TIMET" or the "Company") (NYSE: TIE) reported a net loss for the third quarter
of 2002 of $9.1 million, or $.29 per share, compared to net income in the third
quarter of 2001 of $4.3 million, or $.14 per share.
Sales of $82.8 million in the third quarter of 2002 were 35% lower than the
year-ago period. The decrease resulted principally from a 33% decrease in mill
product sales volume, a 54% decrease in melted product sales volume, and changes
in product mix. Mill product selling prices increased 2% (expressed in U.S.
dollars using actual foreign currency exchange rates prevailing during the
respective periods) while melted product selling prices decreased 5%. In billing
currencies (which exclude the effects of foreign currency translation), mill
product selling prices decreased 1% from the year-ago period. The Company
recognized $10.5 million of other operating income in the third quarter of 2002
related to the take-or-pay provisions of its purchase and supply agreement with
Boeing.
As compared to the second quarter of 2002, mill product sales volume in the
third quarter of 2002 decreased 6%, while selling prices expressed in U.S.
dollars decreased 1%. In billing currencies, mill product selling prices
decreased approximately 4%. Melted product sales volume increased 1% in the
third quarter of 2002 as compared to the second quarter of 2002, while melted
product selling prices decreased 3% during such period.
The Company's backlog at the end of September 2002 was approximately $165
million compared to $145 at the end of June 2002 and $315 million at the end of
September 2001.
On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets. Under SFAS No.
142, goodwill is no longer amortized on a periodic basis, but instead is subject
to a two-step impairment test to be performed on at least an annual basis. In
connection with the adoption of SFAS No. 142, the Company completed the
transitional impairment testing of goodwill during the third quarter of 2002 and
determined that the entire $44.3 million balance of the Company's goodwill
existing on January 1, 2002 was impaired. In accordance with the transition
requirements of SFAS No. 142, the Company reported this non-cash impairment
charge as a cumulative effect of a change in accounting principle as of January
1, 2002, which is reflected in the Company's results of operations for the nine
months ended September 30, 2002. There is no income tax benefit associated with
this charge.
J. Landis Martin, Chairman and CEO, said, "We expect sales revenue for the
full year 2002 to range from $360 million to $370 million and to report a loss,
before changes in accounting principles and other special items, of between $45
million and $50 million. We are continuing our efforts to bring costs more in
line with current business levels. In the third quarter of 2002, we reduced the
operating rate at our sponge production facility and took actions to reduce our
worldwide employment levels by approximately 13%. Other actions to reduce costs
and working capital will be implemented over the next several months."
Mr. Martin continued, "Our outlook for 2003 is for a continued difficult
business environment reflecting the severe downturn in the commercial aerospace
industry and sluggish economy. The commercial aerospace sector is the major
source of demand for our products. Early indications are that our sales revenue
and financial results during 2003, excluding special items, may be similar to
2002. However, we are conscious of the meaningful risks posed by the continuing
war on terrorism, and potential for conflicts in the Middle East and with Iraq.
These and other adverse world events could prolong and exacerbate the downturn
in the commercial aerospace industry and have broader economic consequences."
The Company recently amended its existing revolving credit agreement with
Congress Financial Corporation (Southwest) extending the maturity date to
February 2006. Under the terms of the amendment, maximum borrowings of $90
million are limited to a formula-determined borrowing base derived from the
value of accounts receivable, inventory and equipment. The amended credit
agreement continues to contain provisions and covenants similar to those
previously in effect and customary in lending transactions of this type. The
Company's various European credit facilities remain in place. The Company
presently has unused borrowing availability under its various U.S. and European
credit agreements of approximately $115 million.
Although the Company presently has substantial credit availability, given
the uncertainties surrounding present industry conditions, the Company is
considering exercising its right under the terms of its Convertible Preferred
Securities to defer future dividend payments on these securities. These
securities permit deferral of dividend payments for up to 20 consecutive
quarters, although interest will continue to accrue at the coupon rate on the
principal and unpaid dividends. The Company is also studying the possibility of
a reverse stock split. A decision on the dividend deferral is expected in the
next few days while an announcement on the reverse stock split will be made
after the evaluation is complete.
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 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 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, 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 war or
terrorist activities 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 Company assumes no duty to
update any forward-looking statements. 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.
As previously announced, TIMET will host a conference call to discuss its
third quarter results on October 24, 2002 at 10:30 a.m. EDT. On the conference
call will be J. Landis Martin, Chairman and Chief Executive Officer, and Mark A.
Wallace, Chief Financial Officer. The conference call will be webcast at
www.timet.com or participants may access the call by dialing 800-967-7185
(domestic) or 719-457-2634 (international). A replay of the webcast will be
available until 7:00 p.m. Eastern time October 31, 2002 on the TIMET website and
at CCBN's individual investor center. Participants may also access the replay by
dialing 888-203-1112 (domestic) or 719 457-0820 (international) with access code
701657.
TIMET, headquartered in Denver, Colorado, is a leading worldwide producer
of titanium metal products. Information on TIMET is available on the internet at
www.timet.com.
o o o o o
TITANIUM METALS CORPORATION
SUMMARY OF CONSOLIDATED OPERATIONS
----------------------------------
(In millions, except per share and product shipment data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
2002 2001 2002 2001
------------ ------------ ------------ ------------
Net sales $ 82.8 $ 126.4 $ 281.5 $ 370.5
Cost of sales 87.7 105.6 279.9 345.9
------------ ------------ ------------ ------------
Gross margin (4.9) 20.8 1.6 24.6
Selling, general, administrative and development expense 10.7 11.6 32.5 43.4
Other income 11.3 0.7 14.8 75.6
------------ ------------ ------------ ------------
Operating (loss) income (4.3) 9.9 (16.1) 56.8
General corporate income (expense) (0.9) 1.3 (29.2) 5.3
Interest expense 0.9 0.7 2.4 3.3
------------ ------------ ------------ ------------
Pretax (loss) income (6.1) 10.5 (47.7) 58.8
Income tax (benefit) expense (0.5) 3.7 (1.3) 20.7
Minority interest - Convertible Preferred Securities,
net of tax in 2001 3.3 2.2 10.0 6.8
Other minority interest, net of tax 0.2 0.3 1.2 1.0
------------ ------------ ------------ ------------
(Loss) income before cumulative effect of change in
accounting principle (9.1) 4.3 (57.6) 30.3
Cumulative effect of change in accounting principle - - (44.3) -
------------ ------------ ------------ ------------
Net (loss) income $ (9.1) $ 4.3 $ (101.9) $ 30.3
============ ============ ============ ============
(Loss) earnings per share:
Basic:
Before cumulative effect of change in accounting principle $ (.29) $ .14 $ (1.83) $ .96
Cumulative effect of change in accounting principle - - (1.40) -
------------ ------------ ------------ ------------
$ (.29) $ .14 $ (3.23) $ .96
============ ============ ============ ============
Diluted:
Before cumulative effect of change in accounting principle $ (.29) $ .14 $ (1.83) $ .95
Cumulative effect of change in accounting principle - - (1.40) -
------------ ------------ ------------ ------------
$ (.29) $ .14 $ (3.23) $ .95
============ ============ ============ ============
Weighted average shares outstanding:
Basic 31.6 31.5 31.6 31.5
Diluted 31.6 31.8 31.6 31.8
Mill product shipments:
Volume (metric tons) 2,005 3,015 6,825 9,245
Average price ($ per kilogram) $ 31.25 $ 30.20 $ 31.20 $ 29.70
Melted product shipments:
Volume (metric tons) 625 1,345 1,895 3,415
Average price ($ per kilogram) $ 13.85 $ 14.80 $ 14.75 $ 14.35
TITANIUM METALS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
September 30, December 31,
2002 2001
------------------- -----------------
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 4.6 $ 24.5
Receivables, less allowance of $3.1 and $2.7 78.2 89.3
Inventories 190.4 185.0
Prepaid expenses and other 5.6 9.9
------------------- -----------------
Total current assets 278.8 308.7
Investment in joint ventures 22.0 20.6
Preferred securities of Special Metals Corporation - 27.5
Property and equipment, net 258.6 275.3
Goodwill and other intangible assets, net 8.4 54.1
Other 14.6 13.2
------------------- -----------------
Total assets $ 582.4 $ 699.4
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LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current maturities of long-term debt and
capital lease obligations $ 18.0 $ 2.0
Accounts payable 29.1 44.4
Accrued liabilities 46.7 41.8
Customer advance payments 17.9 33.2
Other 0.8 0.9
------------------- -----------------
Total current liabilities 112.5 122.3
Long-term debt and capital lease obligations 10.5 19.3
Accrued OPEB and pension cost 35.9 39.7
Other 7.1 10.0
------------------- -----------------
Total liabilities 166.0 191.3
Minority interest - Company-obligated mandatorily
redeemable preferred securities of subsidiary trust holding
solely subordinated debt securities 201.3 201.3
Other minority interest 9.5 8.7
Stockholders' equity 205.6 298.1
------------------- -----------------
Total liabilities, minority interest and stockholders' equity $ 582.4 $ 699.4
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