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RMI TITANIUM COMPANY
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
March 31, 1994
1:00 P.M. Eastern Standard Time
Pavilion Room
Avalon Inn and Resort
9519 East Market Street
Warren, Ohio
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TABLE OF CONTENTS
Page
Notice of Annual Meeting of Shareholders......3
Proxy Statement...............................4
The Board of Directors......................4
Proposal No. 1 -- Election of Directors.....6
Class I Nominees for Director.............7
Continuing Directors......................8
Proposal No. 2 -- Election of Independent
Accountants...................................9
Proposal No. 3 -- Amendment of Articles of
Incorporation................................11
Other Information..........................13
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1000 Warren Avenue
Niles, Ohio 44446
March , 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders to
be held on March 31, 1994, in the Pavilion Room of the Avalon Inn and Resort at
9519 East Market Street, Warren, Ohio at 1:00 P.M., Eastern Standard Time. Your
Board of Directors and management look forward to greeting personally those
shareholders who are able to attend.
The meeting will begin with a report on Company operations followed by
discussion and voting on the matters set forth in the accompanying Notice of
Annual Meeting and other business matters properly brought before the meeting.
Whether or not you plan to attend, it is important that you vote your shares. It
is especially important that you vote your shares this year since the Board of
Directors is recommending a proposal to amend the Articles of Incorporation to
effect a one-for-ten reverse stock split. Adoption of this proposal requires the
affirmative vote of at least two-thirds of the outstanding shares. Please
promptly read the Proxy Statement and then complete, sign, date and return your
proxy card in the enclosed prepaid envelope.
We look forward to seeing as many of you as possible at the 1994 Annual Meeting.
Sincerely,
L. FREDERICK GIEG, JR.
President and Chief Executive Officer
ROBERT M. HERNANDEZ
Chairman of the Board
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1000 Warren Avenue
Niles, Ohio 44446
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 31, 1994
The Annual Meeting of Shareholders of RMI Titanium Company will be held on
March 31, 1994, at 1:00 P.M., Eastern Standard, in the Pavilion Room, Avalon Inn
and Resort, 9519 East Market Street, Warren Ohio, for the following purposes.
1. To elect three Class I directors.
2. To elect independent accountants for 1994.
3. To consider and act upon a proposal to amend the Articles of
Incorporation to effect a one-for-ten reverse stock split.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record as of the close of business on March 1, 1994, are
entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
RICHARD M. HAYS
Secretary
Dated March , 1994
YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED PREPAID ENVELOPE. THE GIVING OF THE ENCLOSED PROXY WILL NOT AFFECT YOUR
RIGHT TO REVOKE SUCH PROXY OR TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO
ATTEND THE MEETING.
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RMI TITANIUM COMPANY
1000 Warren Avenue, Niles, Ohio 44446
March , 1994
PROXY STATEMENT
This proxy statement, which is to be mailed on or about March , 1994, is
furnished in connection with the solicitation of proxies by the Board of
Directors of RMI Titanium Company (the "Company") for use at the 1994 Annual
Meeting of Shareholders to be held on March 31, 1994, at the time, place and for
the purposes described in the accompanying Notice of Annual Meeting. On March 1,
1994, there were 14,750,459 shares of Common Stock of the Company outstanding
and entitled to vote. Each share of Common Stock is entitled to one vote.
Shareholders whose names appeared of record on the books of the Company at the
close of business on March 1, 1994, will be entitled to vote at the meeting.
Shares cannot be voted at the meeting unless the owner of record is present to
vote or is represented by proxy.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies will be voted for the election of the nominees for
director named herein, for the election of Price Waterhouse as independent
accountants for 1994 and for Proposal No. 3 to amend the Articles of
Incorporation. Directors are elected by a plurality of votes cast and
independent accountants by a majority of votes cast. Abstentions and broker
non-votes are not counted in determining the number of shares voted for or
against any nominee for director or any other voting matter except that since
adoption of Proposal No. 3 to amend the Articles of Incorporation requires the
affirmative vote of at least two-thirds of the outstanding shares of the Common
Stock, abstentions and broker non-votes have the effect of a vote against the
Proposal.
The Company knows of no business which may be presented for consideration at
the Annual Meeting other than as indicated in the Notice of Annual Meeting. If
any other business should properly come before the meeting, the persons named in
the proxy have discretionary authority to vote in accordance with their best
judgment. A proxy may be revoked by a shareholder at any time prior to its use
by a subsequent executed proxy, by giving notice of revocation to the Secretary
of the Company, or by voting in person at the Annual Meeting.
The cost of this solicitation of proxies will be borne by the Company. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, telegram, in person or by other means. Arrangements also will be
made with brokerage firms and other custodians, nominees and fiduciaries to
forward proxy solicitation material to the beneficial owners of shares of Common
Stock of the Company held of record by such persons and the Company will
reimburse such brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection therewith.
THE BOARD OF DIRECTORS
The Company is a successor to entities that have been operating since 1950
and in the titanium industry since 1958. On April 20, 1990, USX Corporation
("USX") and Quantum Chemical Corporation ("Quantum") transferred their entire
ownership interests in the Company's immediate predecessor, RMI Company, an Ohio
general partnership, to the Company in exchange for 15,000,000 shares of the
Company's Common Stock (the "Reorganization")". Quantum then sold its 7,500,000
shares to the public. USX retained ownership of its 7,500,000 shares. See "Other
Information-Security Ownership-Security Ownership of Certain Beneficial Owners".
As used herein, references to the "Company" include the Company, its
predecessors, including RMI Company, and its subsidiaries, unless the context
otherwise requires.
The business and affairs of the Company are under the general direction of a
Board of Directors as provided by the Code of Regulations of the Company and the
laws of the State of Ohio. The Board of Directors presently consists of ten
members, nine of whom are neither officers nor employees of the Company or its
subsidiaries. Three of the Board members are officers or employees of USX, and
two Board members are retired officers of USX. The Board of Directors met five
times during 1993. No director attended fewer than 75%
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of the total number of meetings of the Board of Directors and of the committees
of the Board on which he served during 1993.
There are four principal committees of the Board of Directors. Committee
membership, the functions of those committees and the number of meetings held
during 1993 are described below.
EXECUTIVE COMMITTEE
The members of the Executive Committee are Robert M. Hernandez (Chairman),
L. Frederick Gieg, Jr., Craig R. Andersson and Charles C. Gedeon.
The Executive Committee was established to assist the Board in the discharge
of its responsibilities and may act on behalf of the Board when emergencies or
scheduling make it difficult to convene all the directors. All actions taken by
the Committee must be reported at the Board's next meeting. During 1993, there
were no Executive Committee meetings held.
AUDIT COMMITTEE
The members of the Audit Committee, which is composed entirely of directors
who are not employees of the Company, are Dan F. Huebner (Chairman), Craig R.
Andersson, William E. Lewellen and Wesley W. von Schack.
The Audit Committee makes recommendations to the Board of Directors
regarding the independent accountants to be nominated for election by the
shareholders and reviews the independence of such accountants, approves the
scope of the annual audit activities, approves the audit fee payable to the
independent accountants, reviews audit results and regularly meets with the
Company's internal auditors. The Committee monitors developments in accounting
standards and principles followed by the Company in its financial reporting
activities and discusses with management the systems of internal accounting
controls. The independent accountants have full and free access to the Committee
and may meet with it, with or without management being present, to discuss all
appropriate matters. The Audit Committee held four meetings during 1993.
ORGANIZATION AND COMPENSATION COMMITTEE
The members of the Organization and Compensation Committee, which is
composed entirely of directors who are not employees of the Company, are Neil A.
Armstrong (Chairman), Craig R. Andersson, Keith K. Kappmeyer, Wesley W. von
Schack and Louis A. Valli.
The Organization and Compensation Committee makes recommendations to the
Board concerning the membership of the committees of the Board and general
executive management organization matters. The Committee is responsible for
recommendations to the Board on all matters of policy and procedures relating to
compensation of executive management, for approving the salaries of officers
(other than any officer-directors, whose salaries are approved by the Board) and
for administration of the Company's formal compensation plans, including the
Annual Incentive Compensation Plan, the Stock Option Incentive Plan and the
Employee Restricted Stock Award Plan. The Committee makes recommendations to the
Board concerning policy matters relating to employee benefits and employee
benefit plans. In addition, the Committee makes recommendations to the Board
concerning its size and candidates for election as directors, including nominees
recommended by shareholders for election as director. Such recommendations,
together with the nominee's qualifications and consent to be considered as a
nominee, should be sent to the Secretary of the Company for presentation to the
Organization and Compensation Committee. The Organization and Compensation
Committee held two meetings during 1993.
FINANCE COMMITTEE
The members of the Finance Committee are William E. Lewellen (Chairman),
Neil A. Armstrong, Charles C. Gedeon, L. Frederick Gieg, Jr., Robert M.
Hernandez and Dan F. Huebner.
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The Finance Committee makes recommendations to the Board concerning
dividends and matters of financial import and has authority to approve certain
borrowings by the Company. The Finance Committee held one meeting during 1993.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of the Company receive no fees or
remuneration, as such, for their services as directors. For so long as USX is a
shareholder, directors who are officers or employees of USX will accept no fees
or remuneration for their services as directors but participate in the 1989
Non-Employee Director Restricted Stock Award Plan (described below).
Non-employee directors receive an annual retainer plus a fee for each Board or
committee meeting attended, except that no fee is payable for attending a
committee meeting if there is a Board meeting on the same day. Effective
February 1, 1993 the Board reduced the annual retainer and meeting fee by 10% to
$22,500 and $450 respectively. Each non-employee committee Chairman also
receives an additional annual retainer which was reduced February 1, 1993 to
$2,500. The Board authorized payment of one-half of the annual retainer payable
to non-employee directors and to non-employee committee Chairmen for the annual
period beginning May 1, 1993 in the Company's common stock based on a value of
$2 per share.
The 1989 Non-Employee Director Restricted Stock Award Plan (the "Plan")
authorizes the award of up to 15,000 shares of the Company's Common Stock,
subject to adjustment in certain circumstances, to the non-employee directors of
the Company. No grant may be made under the Plan after December 31, 1994. The
Plan provides that on the date of each Annual Meeting of Shareholders of the
Company, each eligible director who is then a continuing or an elected director
shall be awarded 300 restricted shares. A person who becomes an eligible
director after an Annual Meeting will receive a grant of a pro rata portion of
300 shares based on full months of service until the next Annual Meeting. Each
of the incumbent directors, other than Mr. Gieg, received a grant of 300 shares
under the Plan with respect to the 1993 Annual Meeting and each eligible
director will receive a similar grant in 1994. Shares awarded under the Plan are
subject to a restriction providing that a participant shall not be permitted to
sell, transfer, pledge or assign awarded shares during the period commencing
with the date of an award and ending with the retirement of the participant from
the Board of Directors. Upon a participant's ceasing to remain a director of the
Company for any reason other than retirement, the participant's restricted
shares are forfeited. However, upon a participant's total disability or death,
the restrictions applicable to such participant's restricted shares
automatically lapse. Also, in the event of a change of control of the Company,
the restrictions with respect to a participant's shares will lapse. The Board of
Directors may amend, suspend or terminate the Plan at any time. However,
shareholder approval is required before the Board may increase the maximum
number of shares which may be awarded under the Plan, extend the term of the
Plan or impair the rights of a participant with respect to an outstanding award,
except under defined circumstances.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Under the Code of Regulations of the Company, the directors are divided into
up to three classes: Class I; Class II; and Class III. Each class must consist
of no fewer than three and no more than four directors. At such time as there
are nine or more directors, or at such time as the number of directors is
reduced to a number less than nine, the Board of Directors shall take such
action as it in its sole discretion deems necessary to reconstitute or change
the number and/or terms of the classes of directors in order to comply with the
foregoing requirement. The Board of Directors has set the number of directors at
nine, effective as of the 1994 Annual Meeting.
The term of the Class I directors expires at the 1994 Annual Meeting of
Shareholders. The terms of the Class II and Class III directors will expire at
the 1995 and 1996 Annual Meetings of Shareholders, respectively. At each Annual
Meeting, the directors elected to succeed those whose terms expire are
identified as being of the same class as those directors they succeed and are
elected for a term to expire at the third Annual Meeting of Shareholders after
their election if there are three classes of directors, and at the second Annual
Meeting of Shareholders after their election if there are two classes of
directors, and in any case until their successors are duly elected and
qualified. A director elected to fill a vacancy is elected to the same class as
the director he succeeds, and a director elected to fill a newly created
directorship holds office until the next election of the class to which such
director is elected.
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Three incumbent Class I directors are nominees for election this year for a
three-year term expiring at the 1997 Annual Meeting. The other incumbent Class I
director, Keith K. Kappmeyer, is retiring from the Board. Of the nine incumbent
directors who are nominees for election or continuing directors, one is a
current officer of the Company and the remaining eight have high level executive
or professional experience. Three directors are officers of USX, a diversified
company conducting business principally in energy and steel and one is a retired
officer of USX. A brief statement of the background of each nominee and each
continuing Class II and Class III director is given on the following pages. If
any nominee is unable to serve, proxies may be voted for another person
designated by the Board of Directors. The Company has no reason to believe that
any nominee will be unable to serve.
NOMINEES FOR DIRECTOR--TERM EXPIRES 1997
CLASS I
NEIL A. ARMSTRONG Age: 63
CHAIRMAN, AIL SYSTEMS, INC. Director since 1990
(A DEFENSE ELECTRONICS COMPANY)
Mr. Armstrong received a BS degree in aeronautical engineering from Purdue
University and an MS degree in aerospace engineering from the University of
Southern California. For 17 years he served with the National Aeronautics and
Space Administration and its predecessor agency as engineer, test pilot,
astronaut and administrator. From 1971 to 1979 he was professor of aerospace
engineering at the University of Cincinnati. He became Chairman of Cardwell
International, Ltd. in 1980; Chairman of CTA, Inc. in 1982; and Chairman of AIL
Systems, Inc. in 1989. He is a director of Cincinnati Gas and Electric Company,
Cincinnati Milacron, Inc., Eaton Corporation, Thiokol Corp., UAL Corporation and
USX. He is a member of the National Academy of Engineering.
ROBERT M. HERNANDEZ Age: 49
CHAIRMAN OF THE BOARD OF THE COMPANY Director since 1990
EXECUTIVE VICE PRESIDENT-ACCOUNTING & FINANCE AND
CHIEF FINANCIAL OFFICER, USX CORPORATION
On November 1, 1991, Mr. Hernandez was elected Executive Vice
President-Accounting & Finance and Chief Financial Officer and Director of USX.
Mr. Hernandez had been Senior Vice President-Finance & Treasurer of USX from
October 1, 1990, to October 31, 1991. Mr. Hernandez was President-U.S.
Diversified Group of USX from June 1, 1989, to September 30, 1990, and in such
role had responsibilities for USX's businesses not related to energy and steel.
From January 1, 1987, until May 31, 1989, he was Senior Vice President and
Comptroller of USX. Mr. Hernandez has his undergraduate degree from the
University of Pittsburgh and his MBA from the Wharton Graduate School of the
University of Pennsylvania. In addition to being a director of USX, he is a
director of ACE Limited, Marinette Marine Corporation, Allegheny Health,
Education and Research Foundation, Allegheny General Hospital, the Pennsylvania
Chamber of Business and Industry and the Pennsylvania Business Roundtable.
WESLEY W. VON SCHACK Age: 49
CHAIRMAN OF THE BOARD, PRESIDENT AND Director since 1991
CHIEF EXECUTIVE OFFICER, DQE
(ENERGY SERVICE HOLDING COMPANY)
Mr. von Schack has been a director of DQE since 1989 and of Duquesne Light
Company since 1986 and is Chairman of the Board, President and Chief Executive
Officer of DQE and of Duquesne Light. DQE is the parent company of Duquesne
Light. He is also a director of Mellon Bank Corporation, Mellon Bank, N.A., the
Regional Industrial Development Corporation of Southwestern Pennsylvania, the
Greater Pittsburgh Chamber of Commerce, the Pennsylvania Business Roundtable,
Edison Electric Institute and Duquesne University and a trustee of Carnegie
Mellon University and the Pittsburgh Cultural Trust. Mr. von Schack's
educational background includes an AB in economics from Fordham University, an
MBA from St. John's University and a Doctorate of Professional Studies from Pace
University.
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CONTINUING DIRECTORS--TERM EXPIRES 1995
CLASS II
CRAIG R. ANDERSSON Age: 56
VICE-CHAIRMAN Director since 1990
ARISTECH CHEMICAL CORPORATION
(CHEMICAL PRODUCER)
Mr. Andersson is a director and became Vice-Chairman of Aristech Chemical
Corporation on January 1, 1994. Previously, he was President and Chief Operating
Officer, a position he had held since December 4, 1986. Mr. Andersson was
President, and prior to that, Vice President, of USS Chemicals Division of USX
(the predecessor of Aristech) from 1981. He is a member of the American
Institute of Chemical Engineers, The Society of the Plastics Industry, The
Society of the Chemical Industry, Chemical Manufacturers Association and Alpha
Chi Sigma (a chemical professional society). He is also a member of the
Executive Committee of The Society of the Chemical Industry. He has a Bachelor
of Science degree in chemical engineering from the University of Minnesota.
DAN F. HUEBNER Age: 62
RETIRED VICE CHAIRMAN AND DIRECTOR GRUMMAN CORPORATION Director since 1990
(AIRCRAFT MANUFACTURER)
Mr. Huebner graduated from the University of Minnesota in 1955 with a BS degree
in aeronautics and received his MS degree in aeronautics and an aeronautical
engineering degree from the California Institute of Technology. After serving as
a U.S. Air Force Ballistic Missile Division Project Officer from 1958 to 1960,
he joined General Electric Company as Manager of Advanced Satellite Programs. He
held general management positions in a wide variety of domestic and
international business areas as well as executive positions in worldwide
business development, strategic planning and corporate development. Mr. Huebner
joined Grumman Corporation in 1981 as Senior Vice President-Marketing and
Advanced Technology. In 1985 Mr. Huebner was elected Senior Vice
President-Corporate Development and Marketing and in 1986 was elected Vice
Chairman-Development and a director. He retired in June 1989. Mr. Huebner is a
member of the Board of Trustees of The Green Point Savings Bank and the Atlantic
Insurance Company and a member of the Board of Directors of The Centennial
Insurance Co. and the United Home Care, Inc.
WILLIAM E. LEWELLEN Age: 68
RETIRED SENIOR VICE PRESIDENT-FINANCE AND TREASURER Director since 1990
USX CORPORATION
Mr. Lewellen served as Senior Vice President-Finance and Treasurer of USX from
1982 until his retirement on September 30, 1990, and previously had served as a
Vice President of USX since 1976. He is a graduate of Bethany College and the
University of Louisville School of Law. Mr. Lewellen is a director of Pitt-Des
Moines, Inc., Joseph Horne Co., and Magee Women's Health Corporation, and is a
trustee of Bethany College. He is also a member of the Kentucky and Federal Bars
and a life member of Financial Executive Institute.
CONTINUING DIRECTORS--TERM EXPIRES 1996
CLASS III
CHARLES C. GEDEON Age: 53
EXECUTIVE VICE PRESIDENT-RAW MATERIALS Director since 1991
AND DIVERSIFIED BUSINESSES
U.S. STEEL GROUP, USX CORPORATION
Mr. Gedeon joined USX in 1986 as Vice President-Raw Materials and President of
its coal mining company. He was promoted to Senior Vice President-Related
Resources for USX in 1988 and advanced to the position of President, U.S.
Diversified Group in 1990. He assumed his current position in 1992. From 1983
until he joined USX, Mr. Gedeon had been Vice President-Operations of National
Steel Corporation. Mr. Gedeon is a member of the Board of Directors of Zuari
Agro Chemicals of India and a member of the American Iron and Steel Institute.
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L. FREDERICK GIEG, JR. Age: 62
PRESIDENT AND CHIEF EXECUTIVE OFFICER Director since 1990
OF THE COMPANY
Mr. Gieg has been President and Chief Executive Officer of the Company and its
predecessor since September 1, 1982. Previously, Mr. Gieg had been Vice
President and General Manager of the Western Steel Division of USS and Senior
Vice President of Manufacturing and Associated Subsidiaries of USX through
August 1982. He began his career with USX in June 1953. Mr. Gieg is a member of
the Board of Trustees of the United Way of Trumbull County; a member of the
Operating Board of Leadership Warren and of the Board of Trustees of Leadership
Youngstown; and past President and member of the Board of Directors of the
Titanium Development Association and National Multiple Sclerosis Society. He has
a BA degree from Dartmouth College and a degree from the Advanced Management
Program at Harvard University.
LOUIS A. VALLI Age: 61
SENIOR VICE PRESIDENT-EMPLOYEE RELATIONS
USX CORPORATION
On June 1, 1989, Mr. Valli was elected Senior Vice President-Employee Relations
of USX. Mr. Valli was named Vice President-Benefits Administration on August 1,
1980, and was appointed Vice President-Personnel in 1982. He began his career
with USX in 1954. Mr. Valli is a trustee of Point Park College and a member of
the Labor Policy Association, the Personnel Roundtable and the Association of
Iron and Steel Engineers. He has a BA degree in business administration from the
University of Pittsburgh.
PROPOSAL NO. 2 -- ELECTION OF INDEPENDENT ACCOUNTANTS
Price Waterhouse has served as independent accountants for the Company and
its predecessors for a number of years. For the year 1993, Price Waterhouse
rendered professional services in connection with the audit of the financial
statements of the Company and its subsidiaries, including examination of certain
employee benefit plans. It is knowledgeable about the Company's operations and
accounting practices and is well qualified to act in the capacity of independent
accountants.
Representatives of Price Waterhouse will be present at the Annual Meeting,
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF PRICE WATERHOUSE AS
INDEPENDENT ACCOUNTANTS FOR THE COMPANY FOR 1994.
INTRODUCTION TO PROPOSAL NO. 3
The Company, along with the rest of the titanium industry, has experienced a
severe downturn in market conditions over the last three years. The Company
believes that a number of factors are responsible for this situation. Among
these factors are an abundant supply of titanium sponge, aggressive
international competition, declining military spending, lack of commercial
airline profitability and an uncertain economy. Soft demand and reduced prices
have resulted in the Company incurring losses in 1991, 1992 and 1993. These
losses have eroded the Company's equity base and impeded the generation of cash,
forcing increased reliance on the Company's $75 million credit line. Aggressive
cost-cutting efforts, improved operating efficiencies and the sale of assets
have enabled the Company to maintain operations in its traditional markets
during this period. However, the timing and the extent of recovery in the
Company's principal market, aerospace, are uncertain.
In an effort to lessen its dependence on the aerospace market and to
increase its participation in other markets, the Company has devoted significant
efforts to developing applications and new markets in the energy industry. The
Company believes that these markets offer significant potential for profitable
business. In October 1993, the Company received a contract for the world's first
titanium drilling riser for use by a major oil company in a North Sea
development project. The Company is currently working closely with several oil
companies and engineering concerns on a number of potential projects in these
markets.
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In order to adequately finance the development of these new markets, while
meeting other liquidity requirements, the Board of Directors has determined that
the Company should seek to raise up to $30,000,000 in net cash proceeds. The
Company currently intends to raise this amount through a rights offering to
shareholders (the "Rights Offering").
In the Rights Offering, the Company would expect to issue transferable
subscription rights (the "Rights") to holders of Common Stock as of a certain
record date to subscribe for and purchase, during a limited period of time,
additional shares of Common Stock at a specified price per share (the
"Subscription Price"). The Subscription Price would be determined based on
market conditions and advice from Lehman Brothers, which is acting as the
Company's Financial Advisor, at the time the Rights Offering commences. The
Subscription Price is expected to be substantially below the market price per
share for the Common Stock at the time the Rights are issued and issuance of the
Rights is expected to result in a lower market price of the Common Stock. Each
whole Right would entitle the holder thereof (a "Rightholder") to purchase from
the Company a specified number of shares of Common Stock (the "Basic
Subscription Privilege"). The Rights would be freely transferable and it is
anticipated that they would trade on the New York Stock Exchange (NYSE),
although no assurance can be given that a trading market will develop for the
Rights. It is contemplated that each Right also would carry the right to
subscribe (the "Oversubscription Privilege") at the Subscription Price for
additional shares of Common Stock that are not purchased by other Rightholders
pursuant to the Basic Subscription Privilege up to the total number of Rights
issued; however, there can be no assurance that the Oversubscription Privilege
will be available in any Rights Offering made by the Company. The Subscription
Price would be payable in cash.
As part of the Rights Offering, the Company, with the assistance of the
Financial Advisor, may also arrange for unaffiliated high net worth individuals
or institutional investors, possibly including an underwriter (collectively, the
"Standby Purchasers"), to agree severally to purchase all or a portion of the
shares of the Company's Common Stock not subscribed for by Rightholders through
the Basic Subscription Privilege or the Oversubscription Privilege. In addition,
each Standby Purchaser may be guaranteed the right to purchase or may be
committed to purchase a minimum number of shares. If there were insufficient
shares available for issuance to Standby Purchasers after the exercise of Rights
by Rightholders to satisfy this minimum purchase right, the Company would sell
shares to the Standby Purchasers. In the event that the Rights Offering were
only partially subscribed, the number of shares remaining unsold after the
exercise of Rights by Rightholders would be allocated among the Standby
Purchasers pro rata according to their maximum standby purchase commitments.
USX has indicated that if the terms and conditions of the Rights Offering
meet with its approval, it intends to purchase the shares of Common Stock
covered by the Rights issued to it and it does not intend to exercise any
Oversubscription Privilege.
If Proposal No. 1 below (the "Reverse Split Proposal") is approved by the
shareholders at the Annual Meeting, and the Company decides to conduct the
Rights Offering, it would be made by means of a separate mailing of a prospectus
filed with the Securities and Exchange Commission and subscription warrants
evidencing the right to purchase shares of Common Stock. Even if the Reverse
Split Proposal is approved by the stockholders at the Annual Meeting, however,
there can be no assurance that the Rights Offering will in fact be commenced or
consummated. The Rights Offering will not require approval of the shareholders.
PROPOSAL NO. 3
AMENDMENT OF ARTICLES OF INCORPORATION TO
EFFECT ONE-FOR-TEN REVERSE STOCK SPLIT
GENERAL
The Board is seeking the approval of the shareholders of the Company to
amend the Articles of Incorporation of the Company, effective on such date as
the Certificate of Amendment is filed with the Secretary of State of the State
of Ohio (the "Effective Date"), to implement a one-for-ten reverse stock split
(the "Reverse Split"). A reverse stock split is effected under Ohio law by
amending the Company's Articles of Incorporation. If the Reverse Split is
approved by the requisite vote of the Company's shareholders, upon filing
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of the Certificate of Amendment with the Ohio Secretary of State, the Reverse
Split will be effective, and each certificate representing shares of Common
Stock outstanding immediately prior to the Reverse Split (the "Old Shares") will
be deemed automatically, without any action on the part of the shareholders, to
represent one-tenth the number of shares of Common Stock after the Reverse Split
(the "New Shares"). The proposed amendment to the Company's Articles of
Incorporation is set forth in Exhibit I to this Proxy Statement.
PURPOSES OF REVERSE STOCK SPLIT
The Board of Directors believes that the current low per share price of the
Common Stock may reduce the effective marketability of the shares because of the
reluctance of many leading institutional investors to trade in low-priced stocks
and because brokerage firms are reluctant to recommend low-priced stocks to
their clients. Certain institutional investors also have internal policies and
practices which tend to discourage individual brokers within those firms from
dealing in low-priced stocks. Some of those policies and practices pertain to
the payment of brokers' commissions and to time-consuming procedures that
function to make the handling of low-priced stocks unattractive to brokers from
an economic standpoint. In addition, the structure of trading commissions also
tends to have an adverse impact upon holders of low-priced stocks because the
brokers' commission on a sale of low-priced stock generally represents a higher
percentage of the sales price than the commission on a relatively higher-priced
stock. The Reverse Split Proposal should result in an increase in the quoted
market price of the Common Stock and, if the Rights Offering is made, result in
a greater market price for the Rights. For the same reasons set forth above, the
Board of Directors believes that the result of the Reverse Split, in the event
the Rights are issued, should be to enhance the efficiency of the secondary
markets with respect to trading the Rights and thus result in the exercise of a
greater number of the Rights and increase the proceeds received by the Company.
The Board of Directors is hopeful that the decrease in the number of shares
of Common Stock outstanding as a consequence of the proposed Reverse Split will
result in an increase in the quoted market price of the Common Stock to a level
which the Board believes is a more readily accepted trading price in the capital
markets. There can be no assurance, however, that any such increase would be in
proportion to the one-for-ten reverse stock split ratio, or that the per share
price level of the Common Stock immediately after the proposed Reverse Split
will be maintained for any period of time.
The Board of Directors currently intends to implement the Reverse Split
Proposal, if it is approved by shareholders, promptly following such approval.
Shareholders who vote against the Reverse Split Proposal are not entitled to
dissenters' rights.
EFFECTS OF REVERSE SPLIT
The Reverse Split will decrease the number of shares of Common Stock issued
and outstanding on the Record Date from 14,750,459 shares to 1,475,046 shares.
The number of shares of Common Stock authorized by the Company's Articles of
Incorporation will not change as a result of the Reverse Split. The Reverse
Split will not affect any shareholder's proportionate equity interest in the
Company (other than as a result of the treatment of fractional interests,
discussed below) or the rights, preferences, privileges or priorities of the
Company's Common Stock or its par value per share. Furthermore, the Reverse
Split will not affect the shareholders' equity of the Company as reflected in
the financial statements of the Company except to change the number of the
issued and outstanding shares of Common Stock. In connection with the Reverse
Split, appropriate adjustments will be made in the exercise price of, and number
of shares issuable under, the Company's outstanding stock options. Shares issued
and outstanding pursuant to the Company's 1989 Employee Restricted Stock Award
Plan and 1989 Non-Employee Director Restricted Stock Award Plan will be treated
the same as all other outstanding shares.
11
<PAGE> 12
The following table illustrates the principal effects of the Reverse Split
Proposal without giving effect to the Rights Offering.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON STOCK
(AT DECEMBER 31, 1993)
---------------------------------------------
PRIOR TO REVERSE SPLIT AFTER REVERSE SPLIT
---------------------- -------------------
<S> <C> <C>
Authorized Shares.................................. 30,000,000 30,000,000
Shares Issued and Outstanding...................... 14,750,459 1,475,046
Shares Reserved for Issuance Under Stock Option and
Other Stock Plans................................ 789,525 78,952
Shares Available for Issuance...................... 14,460,016 28,446,002
Total Shareholders' Equity......................... $27,861,000 $27,861,000
Fully Diluted Book Value per Common Share.......... $1.89 $18.89
</TABLE>
EXCHANGE OF CERTIFICATES
If the Reverse Split is approved, the Company will notify shareholders of
the Effective Date. Shareholders of record on such date (the "Record Holders")
will receive a letter of transmittal for use in exchanging certificates
representing Old Shares held by such Record Holders for certificates
representing New Shares. The Reverse Split would be effective as to all holders
of Old Shares, whether or not they are Record Holders and irrespective of
whether they vote in favor of, against or abstain from voting on the proposal.
Each shareholder would be required to mail all stock certificates representing
Old Shares held by such shareholder to the exchange agent named in the letter of
transmittal (the "Exchange Agent") in order to receive stock certificates
representing New Shares. Until such time as the Old Shares are surrendered, each
certificate representing Old Shares would continue to be valid and represent New
Shares equal to one-tenth the number of Old Shares.
No scrip or fractional share certificates representing New Shares will be
issued in connection with the Reverse Split, but in lieu thereof, a certificate
or certificates evidencing the aggregate of all fractional shares otherwise
issuable, rounded, if necessary, to the next higher whole share shall be issued
to the Exchange Agent, or its nominee, as agent for the accounts of all holders
of Common Stock of the Company otherwise entitled to have a fraction of a share
issued to them in connection with the Reverse Split. Sales of fractional
interests will be effected by the Exchange Agent as soon as practicable on the
basis of prevailing market prices of the Company's Common Stock on the NYSE or
other applicable market at the time of sale. After the Effective Date, the
Exchange Agent or the Company will pay to such shareholders their pro rata share
of the net proceeds derived from the sale of their fractional interests upon
surrender of their stock certificates. No service charges or brokerage
commissions will be payable by shareholders in connection with the sale of
fractional interests, all of which costs will be borne by the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax consequences
of the proposed Reverse Split to the Company and its shareholders. This summary
is based upon laws, regulations, rulings and decisions now in effect, all of
which are subject to change. This summary does not discuss all aspects of
federal income taxation that may be relevant to a particular shareholder in
light of his, her or its personal investment circumstances or to certain types
of shareholders subject to special treatment under federal income tax laws (for
example, life insurance companies, tax exempt organizations, broker-dealers and
foreign taxpayers) and does not discuss any aspect of state, local or foreign
tax laws. The discussion with respect to exchanging shareholders is limited to
those who have held prior to the Reverse Split, and will hold immediately
following the Reverse Split, shares of Common Stock as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Each shareholder
should consult with his, her or its own tax advisor as to the specific tax
consequences of the Reverse Split to such shareholder, including the application
and effect of state, local and foreign income and other tax laws.
12
<PAGE> 13
The Reverse Split should qualify as a tax-free recapitalization under
Section 368(a)(1)(E) of the Code to the extent that shares of Common Stock held
prior to the Reverse Split are exchanged for new shares of Common Stock
following the Reverse Split, resulting in the following federal income tax
consequences:
1. Neither the Company nor its shareholders will recognize any gain or
loss by reason of the exchange.
2. The new shares of Common Stock issued as a result of the Reverse
Split in the hands of a shareholder will have an aggregate basis for
computing gain or loss equal to the aggregate basis of shares of Common
Stock (less that portion, if any, allocable to fractional shares) held by
that shareholder immediately prior to the Reverse Split.
3. The holding period of the new shares of Common Stock issued as a
result of the proposed Reverse Split in the hands of a shareholder will
include the period during which the shareholder held the shares of Common
Stock prior to the Reverse Split.
4. The payment of cash in lieu of fractional shares of Common Stock will
be treated for federal income tax purposes as if the fractional shares were
distributed as part of the recapitalization and then redeemed by the
Company. Consequently, a shareholder will recognize capital gain or loss
equal to the difference between the cash received and the shareholder's tax
basis in the fractional share surrendered.
VOTE REQUIRED
Approval of the Reverse Split Proposal requires the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the Common Stock.
USX Corporation, the owner of 7,500,000 shares of Common Stock, constituting
about 51% of the total shares outstanding, has indicated to the Company that it
intends to vote in favor of the Reverse Split Proposal.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE REVERSE SPLIT PROPOSAL
AND RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE REVERSE SPLIT
PROPOSAL.
OTHER INFORMATION
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Company, as of March 1, 1994, no person or group
owned beneficially more than five percent of the outstanding Common Stock of the
Company except:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------- ------------------------ ----------
<S> <C> <C>
USX Corporation................. 7,500,000 50.8%
600 Grant Street
Pittsburgh, PA 15219-4776
</TABLE>
13
<PAGE> 14
SECURITY OWNERSHIP OF MANAGEMENT
The following table reflects the number of shares of Common Stock of the
Company beneficially owned, as of March 1, 1994, by each director, by each
executive officer named in the Summary Compensation Table and by all directors
and executive officers as a group:
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF OUTSTANDING
NAME SHARES(1) SHARES(2)
- ----------------------------------------- --------- --------------------
<S> <C> <C>
Craig R. Andersson....................... 14,325 --
Neil A. Armstrong........................ 11,388 --
Charles C. Gedeon........................ 1,900 --
L. Frederick Gieg, Jr.................... 44,045 --
Robert M. Hernandez...................... 15,000 --
Dan F. Huebner........................... 10,388 --
Keith K. Kappmeyer....................... 10,825 --
William E. Lewellen...................... 9,088 --
Louis A. Valli........................... 2,300 --
Wesley W. von Schack..................... 7,725 --
John H. Odle............................. 25,207 --
Timothy G. Rupert........................ 15,601 --
All directors and executive officers
as a group (12 persons)................ 167,793 1.1%
</TABLE>
- ---------
(1) Does not include 122,900, 63,500 and 26,000 shares, respectively, which
Messrs. Gieg, Odle and Rupert had the right to acquire under the Company's
Stock Option Incentive Plan.
(2) No percent is shown for ownership of less than one percent of the
outstanding shares of Common Stock of the Company.
EXECUTIVE COMPENSATION
The following table shows the annual and long term compensation paid the
chief executive officer and the other three executive officers of the Company
for services rendered in all capacities to the Company and its subsidiaries in
1993, 1992 and 1991:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------------------- ----------
----------------------------------- STOCK LONG TERM
OTHER RESTRICTED OPTIONS INCENTIVE
NAME AND ANNUAL STOCK SARS PLAN ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1) (SHARES)(2) PAYOUTS COMPENSATION
- ------------------------------ ----- -------- -------- ------------ ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. Frederick Gieg, Jr......... 1993 $251,109 $-- $-- $40,625 24,000 $-- $--
President and Chief 1992 248,004 -- -- -- 40,000 -- --
Executive Officer 1991 248,004 -- -- -- 21,400 -- --
John H. Odle.................. 1993 126,579 -- -- 22,750 12,500 -- --
Senior Vice President- 1992 125,004 -- -- -- 20,000 -- --
Commercial and Research 1991 125,004 -- -- -- 11,000 --
James D. Page(3).............. 1993 61,600 -- -- 22,750 12,500 -- --
Senior Vice President- 1992 104,800 -- -- -- 20,000 -- --
Operations 1991 96,000 -- -- -- 9,000 -- --
Timothy G. Rupert(4).......... 1993 103,104 -- -- 19,500 11,000 -- --
Vice President and 1992 103,104 -- -- -- 15,000 -- --
Chief Financial Officer 1991 34,368 -- -- -- -- -- --
</TABLE>
- ---------
(1) As of December 31, 1993, Messrs Gieg, Odle and Rupert held 25,000, 14,000
and 12,000 shares, respectively, of restricted stock under the Company's
1989 Employee Restricted Stock Award Plan. This stock which is scheduled to
vest in June, 1996 had a value as of December 31, 1993 of $40,625, $22,750
and $19,500, respectively. Under the Plan cash dividends paid on restricted
stock are converted into additional shares of restricted stock.
(2) All stock options granted included stock appreciation rights ("SARs.")
14
<PAGE> 15
(3) Resigned effective August 1, 1993.
(4) Employed by the Company on September 1, 1991.
The following tables set forth information with respect to Stock
Option/Stock Appreciation Rights Grants and Exercises in 1993 and December 31,
1993 Stock Option/Stock Appreciation Rights Values:
STOCK OPTION/SAR GRANTS IN 1993
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS/ OPTIONS/SARS APPRECIATION
SARS GRANTED TO EXERCISE OR FOR OPTION TERM
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------
NAME (SHARES)(1) 1993 ($/SH) DATE 5% 10%
- -------------------------------- ----------- ------------ ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
L. Frederick Gieg, Jr........... 24,000 24 % $1.625 4/22/03 $63,504 $101,160
John H. Odle.................... 12,500 12.5% 1.625 4/22/03 33,075 52,687
James D. Page (2)............... 12,500 12.5% 1.635 4/22/03 -- --
Timothy G. Rupert............... 11,000 11 % 1.625 4/22/03 29,106 43,365
</TABLE>
- ---------
(1) All stock options granted included stock appreciation rights.
(2) Resigned effective August 1, 1993. All unexercised options forfeited.
AGGREGATED STOCK OPTION/SAR EXERCISES IN 1993
AND DECEMBER 31, 1993 STOCK OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES UNEXERCISED UNEXERCISED
ACQUIRED ON OPTIONS/SARS AT IN-THE-MONEY
EXERCISE VALUE DECEMBER 31, 1993 OPTIONS/SARS AT
NAME (SHARES) REALIZED (SHARES)(1) DECEMBER 31, 1993
- ----------------------------- ----------- ----------- -------------------- --------------------
<S> <C> <C> <C> <C>
L. Frederick Gieg, Jr........... -- $-- 122,900 $--
John H. Odle.................... -- -- 63,500 --
Timothy G. Rupert............... -- -- 26,000 --
</TABLE>
- ---------
(1) All stock options granted included stock appreciation rights.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board has furnished the
following report on executive compensation:
The Organization and Compensation Committee decides or recommends to the
Board for its decision all matters of policy relating to compensation of
executive management, approves the salaries of officers (other than the
president and chief executive officer whose salary is approved by the Board) and
administers the Annual Incentive Compensation Plan. The Committee also approves
grants of options, stock appreciation rights and restricted stock under, and
administers, the Company's Stock Option Incentive Plan and the 1989 Employee
Restricted Stock Award Plan.
Compensation programs for the Company's executive officers are designed to
attract, retain and motivate employees who will contribute to achievement of
corporate goals and objectives. Elements of executive compensation include
salaries, incentive compensation awards and awards under the Stock Option
Incentive Plan and the 1989 Employee Restricted Stock Award Plan. The last three
of these elements are variable. At its meeting in January, 1993, the Committee
also adopted a special Incentive Plan for the year 1993 providing for cash
awards to executive management based upon the Company's average aggregate debt
levels meeting specified goals.
15
<PAGE> 16
As mentioned above, there has been a severe downturn in market conditions in
the titanium industry over the last three years. The Company's management has
had to contend with a number of factors beyond their control such as aggressive
international competition, declining defense and commercial aerospace spending
and an uncertain economy. The Committee considers management performance in 1993
to have been excellent under very difficult market conditions. Management took a
number of steps which cut operating costs and resulted in numerous efficiencies.
Management also aggressively pursued new product applications in the energy
industry and elsewhere. The progress to date in this area has been encouraging
and management intends to continue their diligent efforts in developing these
new product applications as well as their achieving additional improvement in
operating costs and efficiencies in serving the Company's traditional markets.
In making its decisions or recommendations, the Committee has had to take
into account the Company's financial results for the last three years, including
lack of profit and negative cash flow. The Committee has sought to recognize
management performance without increasing the Company's current costs or
adversely affecting cash flow. Thus there have been no salary increases or
bonuses paid during this period (minor increases in salary numbers shown for
1993 are due to two modest increases which were suspended by management shortly
after they were awarded). Despite determined efforts by management, the goals
set forth in the special Incentive Plan described above were not met and
consequently no awards were granted by the Committee under this Plan. Although
the Committee did permit management to reinstate in 1994 the salary increases
which were suspended in 1993; it has had to focus primarily upon non-cash items;
namely, the Stock Option Incentive and Restricted Stock Plans. In considering
grants or awards under these plans, the Committee takes into account the
performance of each executive officer and an assessment of the Company's
performance against the other two companies in the titanium industry shown in
the performance graph. In addition, in considering relative awards under the
Stock Option and Restricted Stock Plans, the numbers of shares included in
option grants is diminished in the years (usually every 3 years) in which
restricted stock is awarded.
The shares of restricted stock held by the executive officers vested in June
of 1993 so the Committee awarded additional restricted stock to the executive
officers with a related reduction in the number of shares of stock granted them
under the option plan. In determining the amount of these awards, the Committee
reviewed data included in a survey of companies of comparable size to the
Company made by the Hay Group, compensation consultants. It also took into
account past practice in relating the amount of stock awarded to cash
compensation as well as the individual performance of the executive officers.
The compensation of the chief executive officer reflects the same elements,
and the Committee considered the same factors described above in determining the
chief executive officer's total compensation. In addition, the chief executive
officer's leadership and effectiveness in dealing with major corporate problems
and opportunities were considered. As noted above, the chief executive officer
received no material increase in cash compensation but did receive
performance-related stock awards which the Committee considered to be completely
justified.
Neil A. Armstrong, Chairman Craig R. Andersson Keith K.Kappmeyer
Wesley W. von Schack Louis A. Valli
16
<PAGE> 17
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative shareholder return on the Company's Common Stock with the
cumulative total return of the S&P 500 Stock Index and a titanium industry group
index consisting of the Company, Oregon Metallurgical Corporation and Tremont
Corporation. The graph commences October 29, 1990 since the Company's Common
Stock was not publicly traded until April 20, 1990 and Tremont Corporation
Common Stock first traded publicly on October 29, 1990.
COMPARISON OF THREE-YEAR CUMULATIVE
TOTAL RETURN* AMONG RMI TITANIUM,
INDUSTRY PEER GROUP AND S&P 500**
<TABLE>
<CAPTION>
Oct. Jan. Jan. Jan. Jan.
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
Titanium Industry 100 132 128 73 62
RMI Titanium Company 100 119 73 28 9
S&P 500 100 112 163 255 439
</TABLE>
Assumes $100 invested on October 29, 1990 in RMI common stock, 3 major titanium
producers and S&P 500 Index.
* Total return assumes reinvestment of dividends. ** Fiscal year ending
December 31.
17
<PAGE> 18
PENSION BENEFITS
The Company has two defined benefit plans, which first became effective at
RMI Company in 1971, in which substantially all salaried employees of the
Company and its subsidiaries automatically participate (the "Pension Plan"). The
Pension Plan recognizes, for certain purposes, services or compensation with RMI
Company, Reactive Metals, Inc. (a predecessor of RMI Company), USX, Quantum, or
subsidiaries of each. The amounts payable under the Pension Plan will be paid
monthly after a participant retires. The table below shows the annual pension
benefits for retirement at age 65 (or earlier under certain circumstances)
assuming no election of any dependent or surviving spouse feature, for various
levels of eligible earnings which would be payable to employees retiring with
representative years of service based on a formula of a specified percentage
(dependent on years of service) of average annual eligible earnings in the five
consecutive years of the ten years prior to retirement in which such earnings
are highest. Eligible compensation includes only base salary. Incentive awards
and similar benefits are excluded, although the amount of such benefits is
included on the Summary Compensation Table. Benefits payable under the Pension
Plan, and amounts reflected in the following table are subject to offsets for
social security benefits and, in certain instances, pensions payable under the
USX and the Quantum pension plans. As of December 31, 1993, Messrs. Gieg, Odle
and Rupert had 41, 16 and 25 credited years of service, respectively.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL GROSS BENEFITS PAYABLE FROM PENSION
PLANS
---------------------------------------------------------
AVERAGE
CONSECUTIVE ANNUAL BENEFITS FOR YEARS OF SERVICE
HIGHEST 5 YEARS OF ---------------------------------------------------------
COMPENSATION 10 15 30 40 45
- ------------------ ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $12,500 $18,750 $ 37,500 $ 51,000 $ 57,750
200,000 25,000 37,500 75,000 102,000 115,500
300,000 37,500 56,260 112,500 153,000 173,250
</TABLE>
USX has agreed to provide Messrs. Gieg and Rupert, each a former employee of
USX, certain pension and death and disability benefits necessary to supplement
like benefits payable under the Company plans so that the aggregate of such
payments to each such person equals what he would have received had he remained
employed by USX.
USX maintains the USX Corporation Pension Plan for Employees (the "USX
Plan") which provides defined benefits for USX employees using a different
formula than that used by the Company plan described above. Upon their
retirement from the Company, Messrs. Gieg, and Rupert will receive a pension
from the Company Pension Plan and the USX Plan, with the benefits paid from the
USX Plan calculated on service with USX and USX subsidiaries prior to their
employment by the Company. The combined benefits payable annually to Messrs.
Gieg and Rupert under the USX Plan (which relates to employment by USX) and from
USX pursuant to the supplemental agreements described above, if they retire at
age 65 and if their compensation remains at current levels, would be
approximately $220,266 and $66,298, respectively.
SUPPLEMENTAL PENSION PLAN
Officers and key employees who participate in the Incentive Compensation
Plan are also eligible for the RMI Company Supplemental Pension Program
("Supplemental Pension"), which first became effective at RMI Company on August
1, 1987. Eligible employees who retire or otherwise terminate employment after
age 60, or prior to age 60 with Company consent, under conditions of eligibility
for an immediate pension under the terms of the Pension Plan will be entitled to
receive a Supplemental Pension. The annual Supplemental Pension (which is paid
in monthly installments following retirement), is equal to the product of (i)
the annual average of the total bonuses paid or credited to the participant
pursuant to the Incentive Plan on or after January 1, 1985, during the five
years in which total bonus payments or credits were the highest out of the last
ten consecutive years prior to retirement, multiplied by (ii) a percentage equal
to 1.5% multiplied by the employee's years of continuous service with USX,
Quantum, any subsidiary of either company, RMI Company and the Company. Bonuses
paid under the Incentive Compensation Plan while it was maintained by RMI
Company as well as any bonuses paid under any successor cash incentive plan
adopted by the Company will be recognized for purposes of benefit calculations.
Upon retirement, a participant's Supplemental Pension will not be less than the
greatest benefit that the participant would have been entitled to at the end of
any earlier year in which he was eligible to participant in the plan if the
participant had retired at that time. Participants may elect to receive
18
<PAGE> 19
an actuarially equivalent lump sum payment in lieu of the monthly Supplemental
Pension. The Supplemental Pension Program also provides survivor benefits.
As of December 31, 1993, Messrs. Gieg, Odle and Rupert had 41, 16 and 25
credited years of service, respectively, for purposes of this plan.
RMI EXCESS BENEFITS PLAN
The Company's Excess Benefits Plan, adopted by the Board of Directors on
July 18, 1991, provides for payment to eligible participants of pension benefits
that would be payable under the Pension Plan were it not for certain benefit
limitations set forth in the Internal Revenue Code of 1986, as amended. Such
benefits are generally payable at the same time and in the same form as benefits
under the Pension Plan, except that a participant may elect to receive an
actuarially equivalent lump sum distribution at the time such benefit payments
would otherwise commence.
As of December 31, 1993, Mr. Gieg was the only participant in the Excess
Benefits Plan.
EMPLOYMENT CONTRACTS
Messrs. Gieg, Odle and Rupert each have an employment contract with the
Company, expiring February 1, 1997, pursuant to which they will be paid an
annual salary as set forth in the agreement, subject to increases from time to
time in the sole discretion of the Company. All agreements provide that in the
event of an executive's death, or if the executive's employment is terminated
because of physical or mental disability, the executive's right to compensation
under such agreement terminates. These agreements also provide that the Company
may terminate the services of each executive for gross misconduct in the course
of such employment. The agreements also obligate the Company to make an
interest-free loan to the executive if the Company makes the Rights Offering.
The loans would be in an amount sufficient to enable the executive to purchase
the additional shares of Common Stock covered by the Basic Subscriptions
Privilege included in Rights issued in connection with Common Stock owned by the
executive at the time of the Rights Offering. The loans would be repayable by
the executive in three equal annual installments. These agreements further
provide that each executive will not, for a period of 18 months after the end of
the employment period or employment termination, whichever occurs first, be
employed by, or otherwise participate in, any business which competes with the
Company or engages in the titanium business.
CERTAIN TRANSACTIONS
The Company, in the ordinary course of business, purchases goods and
services from USX. The cost of such transactions to the Company in 1993 amounted
to approximately $89,378
SHAREHOLDER PROPOSALS
Proposals of security holders intended to be presented at the 1994 Annual
Meeting of Shareholders must be received no later than November , 1994, for
inclusion in the proxy statement and proxy for that meeting.
By Order of the Board of Directors
RICHARD M. HAYS
Secretary
Dated: March , 1994
19
<PAGE> 20
EXHIBIT I
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
RMI TITANIUM COMPANY
PURSUANT TO SECTION 71 OF THE
GENERAL CORPORATION LAW OF THE STATE OF OHIO
RMI TITANIUM COMPANY, a corporation organized and existing under the laws of
the State of Ohio (the "Company"), DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors on January 28, 1994,
resolutions were duly adopted setting forth a proposed amendment to the Amended
Articles of Incorporation of the Company, declaring said amendment to be
advisable and directing that said amendment be considered at the next annual
meeting of the shareholders of the Company. The resolution setting forth the
proposed amendment is as follows:
"RESOLVED, that the Board of Directors of this Company hereby declares it
advisable that Article FOURTH of the Amended Articles of Incorporation of the
Company be amended by adding as the second paragraph of Article FOURTH the
following:
"Upon the effectiveness of this Certificate of Amendment, each share of
common stock of the Company, par value $.01 per share, that is issued and
outstanding shall be changed, ipso facto and without any other action on the
part of the holders of such common stock, into one-tenth ( 1/10) share of the
common stock of the Company, par value $.01 per share."
SECOND: That thereafter, pursuant to resolution of the Board of Directors of
the Company, the annual meeting of the shareholders of the Company was duly
called and held, upon notice in accordance with Section 41 of the General
Corporation Law of the State of Ohio, at which meeting the necessary number of
shares as required by statute and the Articles of Incorporation were voted in
favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of the General Corporation Law of the State of Ohio.
[FOURTH: This Certificate of Amendment to the Articles of Incorporation
shall be effective as of the close of business on the date on which it is filed
with the office of the Secretary of State of the State of Ohio.]
IN WITNESS WHEREOF, RMI Titanium Company has caused this certificate to be
signed by L. Frederick Gieg, Jr., its President and Chief Executive Officer and
attested by R. M. Hays, its Secretary this day of April, 1994.
<TABLE>
<S> <C>
ATTEST: RMI TITANIUM COMPANY
- --------------------------------------------- By-------------------
R. M. Hays L. Frederick Gieg, Jr.
Secretary President
and Chief Executive Officer
</TABLE>
II-1
<PAGE> 21
RMI TITANIUM COMPANY
1000 WARREN AVENUE, NILES, OHIO 44446
PROXY FOR 1994 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RMI TITANIUM COMPANY
The undersigned hereby appoints L. FREDERICK GIEG, JR., ROBERT M. HERNANDEZ
AND RICHARD M. HAYS, or any of them, proxies to vote all shares of Common Stock
which the undersigned is entitled to vote with all powers which the undersigned
would possess if personally present, at the Annual Meeting of Shareholders of
RMI Titanium Company on March 31, 1994, and any adjournments thereof, upon the
matters as may properly come before such meeting. SHAREHOLDERS ARE REQUESTED TO
COMPLETE, DATE AND SIGN THIS PROXY CARD AND TO RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
PLEASE COMPLETE, DATE AND SIGN THE REVERSE SIDE.
<PAGE> 22
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<S> <C>
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</TABLE>
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL BE VOTED "FOR" ALL
PROPOSALS.
The Board of Directors recommends a Vote FOR:
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<S> <C> <C>
1. Proposal No. 1--Election of Neil A. Armstrong, Robert M. Hernandez and Wesley W. von Schack as Class I directors.
FOR WITHHELD (To withhold authority for any individual nominee, write that nominee's name
all nominees from all in the space follows:______________________________________________________.)
0 0
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<TABLE>
<S> <C>
2. Proposal No. 2--Election of Price Waterhouse as 3. Proposal No. 3--Amendment of Articles of
independent accountants for 1994. Incorporation.
For Against Abstain For Against Abstain
0 0 0 0 0 0
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Dated:_______________________, 1994
___________________________________
___________________________________
(Signature or Signatures)
Please sign EXACTLY as your name
appears hereon. When signing as a
fiduciary or corporate officer,
give full title. Joint owners
should both sign.
