<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1994
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------
RMI TITANIUM COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 31-0875005
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
1000 WARREN AVENUE, NILES, OHIO 44446 (216) 544-7604
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TIMOTHY G. RUPERT
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
1000 WARREN AVENUE
NILES, OHIO 44446
(216) 544-7700
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
<TABLE>
<CAPTION>
COPIES TO:
<S> <C>
R. E. HILTON, ESQ. RAYMOND W. WAGNER, ESQ.
ASSISTANT GENERAL COUNSEL--U.S. STEEL GROUP SIMPSON THACHER & BARTLETT
USX CORPORATION 425 LEXINGTON AVENUE
600 GRANT STREET NEW YORK, NEW YORK 10017
PITTSBURGH, PENNSYLVANIA 15219-4776 (212) 455-2568
(412) 433-2868
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
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<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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Common Stock, $.01 par value xxxx shares (2)(3) $x.xx(3) $30,000,000 $10,345
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933.
(2) Represents the maximum number of shares of Common Stock, $.01 par value,
issuable upon the exercise of the Rights to be distributed in connection
with the Rights Offering described herein.
(3) To be supplied by amendment.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, APRIL , 1994
PROSPECTUS
Shares
[RMI LOGO]
Common Stock
($.01 par value)
------------------
The shares of Common Stock, $.01 par value per share ("Common Stock") of RMI
Titanium Company ("RMI" or the "Company"), are being offered to holders of
record of the Common Stock ("Record Date Holders") at the close of business on
May , 1994 (the "Record Date") pursuant to transferable rights (the
"Rights") to purchase shares of Common Stock (the "Rights Offering" or the
"Offering"). Each such Record Date Holder is receiving Rights for
each share of Common Stock held of record on the Record Date. Holders of Rights
("Rights Holders" or "Holders") will be able to exercise their Rights during a
period (the "Subscription Period") commencing with the distribution of the
Rights and ending at 5:00 p.m., New York City time, on June , 1994, unless
extended by RMI to a time (the "Expiration Time") not later than July , 1994.
Each Right entitles the Rights Holder to subscribe for one share of Common Stock
(the "Basic Subscription Privilege"). Each Right also entitles the Rights Holder
exercising the Basic Subscription Privilege in full to subscribe for additional
shares of Common Stock that are not otherwise subscribed for pursuant to the
exercise of the Basic Subscription Privilege, subject to proration and reduction
by RMI under certain circumstances (the "Oversubscription Privilege"). Once a
Rights Holder has exercised the Basic Subscription Privilege or the
Oversubscription Privilege, such exercise may not be revoked. The Rights are
evidenced by transferable subscription warrants (the "Subscription Warrants").
See "The Rights Offering."
The Rights Offering is not conditioned upon the exercise of any minimum
number of Rights. However, RMI has been advised by USX Corporation ("USX"), the
owner of 750,000 shares of Common Stock, constituting approximately 50.8% of all
Common Stock outstanding as of the Record Date, that USX intends to exercise the
Basic Subscription Privilege, but not the Oversubscription Privilege, with
respect only to the Rights issued to it. Assuming USX so exercises such Rights,
and no other Rights are exercised, the Rights Offering would result in
approximately $ million in net proceeds for RMI and USX would own a total of
shares of Common Stock, constituting % of all such shares outstanding.
Holders of shares of Common Stock who do not exercise their Rights will
experience a decrease in their proportionate interest in the equity ownership
and voting power of RMI.
The Common Stock is traded on the New York Stock Exchange, Inc. (the "NYSE")
under the symbol "RTI". It is anticipated that the Rights will trade on the NYSE
under the symbol "RTI RT" until the close of business on the last trading day
preceding the day on which the Expiration Time occurs. There has, however, been
no prior market for the Rights, and no assurance can be given that a market will
develop or, if a market develops, that it will remain available throughout the
Subscription Period, or as to the price at which the Rights will trade. On May
, 1994, the last sales price of the Common Stock on the NYSE was $ per
share. See "Price Range of Common Stock and Dividends."
------------------
AFTER THE EXPIRATION TIME, THE RIGHTS WILL NO LONGER BE EXERCISABLE AND WILL
HAVE NO VALUE. ACCORDINGLY, RIGHTS HOLDERS ARE STRONGLY URGED TO EITHER EXERCISE
OR SELL THEIR RIGHTS.
A purchase of Common Stock involves substantial risks. See "Risk Factors" for a
discussion of certain factors that should be considered in connection with an
investment in the Common Stock offered hereby.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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UNDERWRITING
SUBSCRIPTION DISCOUNTS AND PROCEEDS TO
PRICE COMMISSIONS(1) RMI(2)(3)
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<S> <C> <C> <C>
Per Share $ None $
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Total $ None $
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</TABLE>
(1) Lehman Brothers Inc. ("Lehman Brothers") will receive a financial advisory
fee equal to 2 1/2% of the aggregate proceeds to RMI from the Rights
Offering. In addition, RMI has agreed to reimburse Lehman Brothers for its
expenses in connection with the Rights Offering and to indemnify Lehman
Brothers against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "The Rights Offering--Financial
Advisor."
(2) Before deducting estimated expenses of $ payable by RMI.
(3) RMI has been advised by USX, the owner of 750,000 shares of Common Stock,
that USX intends to exercise the Basic Subscription Privilege, but not the
Oversubscription Privilege, with respect only to the Rights issued to it.
------------------
The date of this Prospectus is May , 1994.
<PAGE> 3
Inside front cover of Prospectus
Markets for RMI Titanium Products
Six photographs of end use products
International and domestic commercial airframes
Jet aircraft gas turbine engines
Oil and gas extraction equipment
Chemical processing equipment
Petroleum refining equipment
Drilling riser for offshore deep well drilling
<PAGE> 4
AVAILABLE INFORMATION
RMI is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed by RMI can be inspected and copied at the Public Reference
Room of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the public reference facilities maintained by the Commission
at Seven World Trade Center, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Common Stock is listed on the NYSE, and such reports,
proxy statements and other information can also be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.
RMI has filed a Registration Statement on Form S-3 (the "Registration
Statement") with the Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
offered pursuant to the Rights Offering. This Prospectus does not contain all
the information set forth in the Registration Statement and the exhibits
thereto, to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by RMI with the Commission (file
no. 1-10319) are incorporated herein by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1993.
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
(c) The description of the Common Stock included in RMI's Registration
Statement on Form 8-A filed on September 1, 1989.
All reports and other documents filed by RMI pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Common Stock pursuant to the
Rights Offering shall be deemed to be incorporated by reference herein. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
RMI undertakes to provide without charge to each person to whom a
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the information incorporated by reference in this Prospectus,
other than exhibits to such information (unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to the
Director-Investor Relations, RMI Titanium Company, 1000 Warren Avenue, Niles,
Ohio 44446 (telephone 216-544-7622).
------------------------
As used in this Prospectus, the terms "RMI" and "Company" mean RMI Titanium
Company, its predecessors and consolidated subsidiaries, taken as a whole,
unless the context indicates otherwise.
2
<PAGE> 5
SUMMARY
The following summary is not intended to constitute a complete description
of RMI or of all material features of the Rights Offering and is qualified in
its entirety by reference to the detailed information set forth elsewhere in or
incorporated by reference into this Prospectus.
Effective March 31, 1994, RMI amended its Articles of Incorporation to
effect a one-for-ten reverse stock split. Unless otherwise noted, all Common
Stock share amounts and per share data set forth in this Prospectus have been
adjusted to give effect to this amendment.
THE COMPANY
RMI is one of the world's leading producers of titanium mill products.
Titanium, the world's fourth most abundant metal, is extracted from ore through
a chemical reduction process to form titanium sponge which, along with alloying
agents, is melted into an ingot. The ingot is then converted into various mill
product shapes. Titanium mill products, which are used primarily in the
aerospace industry, constituted 76% of RMI's sales in 1993, 81% in 1992 and 78%
in 1991. Approximately 70% of RMI's 1993 mill product sales were aerospace
related, compared to 76% in 1992 and 80% in 1991. Approximately 30% of RMI's
aerospace mill product sales were associated with military programs in all three
years.
RMI's related products and services are used in aerospace, oil and gas
production, chemical, pulp and paper and other processing industries. Related
products accounted for 16%, 13% and 10% of RMI's sales in 1993, 1992 and 1991,
respectively.
In 1993 RMI reported net sales of $127.4 million, an operating loss of
$10.8 million and a net loss of $28.9 million (which reflects a $16.9 million
cumulative effect charge relating to a change in an accounting principle). In
1992 and 1991, RMI reported net losses of $14.1 million and $57.1 million,
respectively. The 1991 results reflect a $37.1 million charge resulting from the
closure of RMI's sponge production facilities. The 1993, 1992 and 1991 results
reflect aggressive international competition, declining military spending,
reduced commercial airline demand for new aircraft and an uncertain world
economy. Domestic industry shipments of titanium mill products in 1991 were
approximately 34 million pounds, a decrease of 35% from 1990 shipments of 53
million pounds, the largest single one year decrease in the history of the
industry. Shipments remained at that level in each of 1992 and 1993, and are not
expected to increase significantly in 1994. During the three-year period RMI was
able to reduce its net losses from $20 million in 1991 to $14 million in 1992
and $12 million in 1993 (excluding the effects of the 1993 change in accounting
principle and the 1991 plant closing charge) by reducing RMI's administrative
costs and significant reductions in RMI's cost of raw materials. During the
first quarter ended March 31, 1994 RMI reported net sales of $36.4 million, an
operating loss of $2.2 million and a net loss of $4.3 million (which included a
$1.2 million charge for a change in accounting principle), compared to 1993
first quarter net sales of $32.1 million, an operating loss of $2.4 million and
a net loss of $19.8 million (which included a $16.9 million charge resulting
from a cumulative effect accounting change).
Further improvement in RMI's results of operations will depend largely on
increased commercial aerospace activity. However, in an effort to lessen its
dependence on the aerospace market, RMI is devoting significant efforts and
resources to developing new markets and applications for its products, including
those described below. RMI believes that applications in the energy markets
offer significant potential. RMI is currently working closely with several oil
companies and engineering concerns to evaluate a number of potential projects in
these markets. RMI, however, cannot give any assurances as to the extent to
which it will be able to develop these markets, including those described below,
or as to the time required for such development. If RMI is able to develop
successfully such markets, RMI expects to face competition.
RMI's efforts to develop these new markets and applications have focused on
demonstrating that not only does titanium outperform alternate materials in many
applications, but that it is more cost efficient, especially when viewed on a
total project basis, principally due to its superior corrosion and erosion
resistance and high strength-to-weight ratio. For example, steel pipe used in
geothermal applications, where wells bring hot brine from deep in the earth to
the surface for power generation, may need to be replaced every 6 to 18 months,
3
<PAGE> 6
while titanium pipe will last for the 30-40 year life of the project and thus
not only eliminate the cost of replacement pipe, but also the time and expense
of taking the well out of service. In addition, the use of titanium in riser
systems, which are suspended from offshore floating platforms, can allow oil and
gas producers to design smaller platforms, reducing weight and significantly
reducing total platform costs.
RMI is assisting energy companies in evaluating titanium applications and
is actively marketing the custom design, engineering and production of titanium
product systems, including the following:
- Drilling Riser--Heavy-walled tubular structure, connected at the top to
an offshore oil platform and at the bottom to the ocean floor, inside of
which the drill pipe operates. In October 1993, RMI received a contract to
supply the world's first high-pressure titanium drilling riser for use by
Conoco Norway in the Heidrun project in the Norwegian North Sea. When
assembled, the riser will be about 1,500 feet in length and will weigh
approximately 250,000 pounds. RMI expects to receive approximately $15
million in revenues from the contract.
- Production Riser--Structure similar to a drilling riser in which the oil
and gas flow to the platform after a well is drilled.
- Export Riser--Structure similar to a drilling riser in which oil and gas
flow from the platform to a pipeline for transmission onshore.
- Geothermal Pipe--Heavy walled pipe placed in deep land-based wells which
brings hot brine to the surface for use in generating electricity.
RMI-supplied well strings have been in successful service for several
years and RMI is working with the field operator on a major expansion of
this project.
- Welded Pipe--Pipe formed from flat-rolled titanium and welded along its
length. Used in numerous applications to transport liquids and to form
structural members. Principal product of Permipipe Titanium AS, RMI's
Norwegian joint venture, which, when operational in the first half of
1994, will be capable of producing up to 3 million pounds of pipe per
year.
- Coiled Tubing--Tube formed in similar manner to welded pipe on a
continuous basis and coiled onto spools much like cable products. Used in
numerous applications including subsea umbilical lines which operate
hydraulic equipment on the ocean floor, subsea flow lines which carry oil
and gas and workover strings used to inject various materials into
existing wells. The continuous nature of coiled tubing eliminates the need
to join lengths of tube together.
RMI believes that its expertise in manufacturing and fabrication, as well
as its capabilities in project management and subcontract administration, give
it an advantage over its competitors in the titanium industry. In addition, RMI
believes that it is the only titanium company with petroleum and design
engineering capabilities. RMI maintains a complete project management and
support group to administer its projects.
RMI has over 728,000 square feet of manufacturing facilities, most of which
are owned. RMI's equipment and facilities are well maintained and its products
meet the most stringent quality standards, including ISO-9002. RMI's principal
manufacturing plant is located in Niles, Ohio. Other manufacturing operations
are located in Pennsylvania, Missouri and Utah. RMI's facilities have a rated
capacity of melting 36 million pounds of ingot and producing 22 million pounds
of mill products, although practical capacity may be less. At March 31, 1994,
RMI's ingot and mill product facilities were being utilized at approximately 47%
and 52%, respectively, of rated capacities. RMI's products are marketed
worldwide through its internal sales organization and a network of distributors.
RMI's principal executive offices are located at 1000 Warren Avenue, Niles,
Ohio 44446, and its telephone number is (216) 544-7604.
4
<PAGE> 7
BACKGROUND AND PURPOSES OF THE RIGHTS OFFERING
The Board of Directors of RMI has determined that RMI should seek to raise
up to $30 million through the Rights Offering. Net proceeds of the Rights
Offering will be used by RMI for general corporate purposes, including working
capital for the development of new markets and applications for its products.
Development of RMI's new market opportunities, together with the lack of
recovery in RMI's traditional markets, will place greater pressure on its
limited financial resources.
RMI has recently obtained a commitment from the banks which are parties to
its $75 million revolving credit facility (the "Existing Credit Facility") to
amend the Existing Credit Facility to establish new financial covenants and to
relate the maximum amount of available credit thereunder to a borrowing-base
formula. Based on the values of the collateral as of March 31, 1994, RMI would
be able to borrow the entire $75 million available under the Existing Credit
Facility, as amended. In addition, RMI has obtained a separate commitment from
such banks to enter into a second revolving credit facility (the "EXIM Bank
Credit Facility") providing for up to an additional $15 million of available
credit which would be guaranteed by the Export Import Bank. RMI has applied to
the Export Import Bank for such a guarantee. Borrowings under the EXIM Bank
Credit Facility would be subject generally to the same conditions as borrowings
under the Existing Credit Facility, as amended, and also to the condition that
RMI receive cash equity investments from the Rights Offering of at least $14.7
million by July 29, 1994. The amendments to the Existing Credit Facility will be
effective upon execution of a definitive amendment thereto, but RMI would be in
default thereunder if it fails to receive cash equity investments from the
Rights Offering of at least $14.7 million by July 29, 1994. RMI expects to
execute the definitive amendment to the Existing Credit Facility prior to
commencing the Rights Offering. See "Risk Factors--Increasingly High Leverage;
Liquidity Concerns" and "Capitalization--Revolving Credit Facilities" below.
RMI has been advised by USX, the owner of 750,000 shares of Common Stock,
constituting approximately 50.8% of all Common Stock outstanding as of the
Record Date, that USX intends to exercise the Basic Subscription Privilege, but
not the Oversubscription Privilege, with respect only to the Rights issued to
it. Exercise of the Basic Subscription Privilege by USX with respect to such
Rights will result in the receipt of approximately $ million by RMI (after
deduction of expenses) and the issuance to USX of additional shares of
Common Stock, which will result in USX owning a total of shares of Common
Stock. If no other Rights are exercised, USX would own % of all shares
outstanding.
5
<PAGE> 8
RMI TITANIUM COMPANY
SUMMARY SELECTED FINANCIAL INFORMATION
The following summary selected financial information has been derived from
the consolidated financial statements of RMI for each of the five years in the
period ended December 31, 1993 and the condensed consolidated financial
statements of RMI for the quarters ended March 31, 1994 and 1993. The
information set forth below should be read in connection with the Consolidated
Financial Statements, the Condensed Consolidated Financial Statements and the
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations" related thereto, included elsewhere herein. The summary selected
quarterly information has been prepared by RMI without audit and reflects all
adjustments, consisting of only normal recurring adjustments, which are, in the
opinion of management, necessary for a fair statement of the results of
operations for the interim periods covered.
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
----------------------- ------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AND PRICE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Sales:
Mill Products................ $ 25,754 $ 26,987 $ 96,453 $110,509 $128,803 $208,058 $184,251
Related Products and
Services................... 7,948 3,610 20,512 16,745 17,260 16,397 19,931
Other(1)..................... 2,658 1,537 10,432 8,353 19,505 30,840 37,832
-------- -------- -------- -------- -------- -------- --------
Total.................... 36,360 32,134 127,397 135,607 165,568 255,295 242,014
Operating income (loss)........ (2,216) (2,359) (10,764) (11,387) (52,712)(2) 32,773 30,088
Income (loss) before cumulative
effect of a change in
accounting principle......... (2,929) (2,897) (11,955) (14,062) (57,085)(2) 28,126 26,544
Cumulative effect of a change
in accounting principle...... (1,202)(3) (16,938)(4) (16,938)(4) -- -- -- --
Net income (loss).............. (4,131) (19,835) (28,893) (14,062) (57,085) 28,126 26,544
Cash dividends per common
share(5)..................... -- -- -- -- .75 .75 --
NET LOSS PER COMMON SHARE:(5)
Before change in accounting
principle.................... $ (1.99) $ (1.98) $ (8.14) -- -- -- --
Net loss per common share...... (2.80) (13.58) (19.67) $ (9.66) $ (39.17) -- --
PRO FORMA DATA:(6)
Pro forma net income........... -- -- -- -- -- $ 27,274 $ 21,959
Pro forma net income per common
share(5)..................... -- -- -- -- -- 18.17 14.64
Pro forma book value per common
share(5)..................... -- -- -- -- -- -- 74.11
BALANCE SHEET DATA: (at end of
period)
Working capital................ $ 66,517 $ 66,319 $ 72,229 $ 79,820 $109,044 $102,666
Total assets................... 153,841 152,471 153,257 173,888 228,605 217,549
Long-term debt due after one
year......................... 68,530 66,660 62,280 58,800 61,205 38,503
Equity......................... 23,939 27,861 63,302 77,705 136,569 141,158
Book value per common
share(5)..................... 16.23 18.89 43.34 53.36 92.61 --
% Total debt to total
capitalization............... 74% 71% 50% 43% 31% 22%
OPERATING DATA:
Mill products shipments
(thousands of pounds):
Aerospace.................... 1,951 2,002 7,619 8,699 9,379 12,898 12,237
Nonaerospace................. 892 815 3,406 2,585 1,938 3,913 3,612
-------- -------- -------- -------- -------- -------- --------
Total.................... 2,843 2,817 11,025 11,284 11,317 16,811 15,849
Average mill product sales
price (per pound)............ $ 9.46 $ 10.38 $ 9.60 $ 10.20 $ 11.69 $ 12.58 $ 11.81
Mill product capacity (millions
of pounds)(7)................ 22.0 22.0 22.0 22.0 22.0
Ingot capacity (millions of
pounds):(7).................. 36.0 36.0 36.0 36.0 36.0
Ingot melt................... 14.6 14.7 14.0 22.9 24.2
% Utilization................ 41% 41% 39% 64% 67%
Active employees at
December 31,................. 782 843 1,172 1,660 1,650
</TABLE>
6
<PAGE> 9
- ---------
(1) Includes sales of discontinued products of $2.6 million, $13.2 million,
$22.9 million and $29.7 million in 1992, 1991, 1990 and 1989, respectively.
(2) Includes a charge of $37.1 million relating to the closing of RMI's sponge
production facilities. See Note 4 to the Consolidated Financial Statements
included elsewhere herein.
(3) Reflects the January 1, 1994 adoption of Statement of Financial Accounting
Standards ("SFAS") No. 112. See Note 4 to the Condensed Consolidated
Financial Statements included elsewhere herein.
(4) Reflects immediate recognition of the transition obligation determined as of
the January 1, 1993 adoption of SFAS No. 106. See Note 11 to the
Consolidated Financial Statements included elsewhere herein.
(5) Amounts retroactively restated to reflect the one-for-ten reverse stock
split effective March 31, 1994. See Note 17 to the Consolidated Financial
Statements included elsewhere herein.
(6) Reflects the change to RMI's capital structure effective April 20, 1990 (see
Note 1 to Consolidated Financial Statements included elsewhere herein) and
certain adjustments to historical partnership income.
(7) Rated annual capacity; practical capacity may be less.
SUMMARY CAPITALIZATION
The following table sets forth in summary form the consolidated
capitalization of RMI as of March 31, 1994, and as adjusted to give effect to
the issuance of Common Stock pursuant to the Rights Offering based on the
"Minimum Case" and the "Maximum Case". The Minimum Case assumes that USX
exercises only the Basic Subscription Privilege with respect only to the Rights
issued to it and that no other Rights are exercised, in which case
additional shares of Common Stock will be issued and RMI will receive
approximately $ million in net proceeds, after deduction of estimated
expenses. The Maximum Case assumes all of the Rights are fully exercised, in
which case RMI will issue additional shares of Common Stock and will
receive approximately $ million in such net proceeds. The following "As
Adjusted" information is not necessarily indicative of the financial position
that would have been attained had the Rights Offering actually taken place as of
March 31, 1994. The data should be read in conjunction with the Consolidated
Financial Statements, the Condensed Consolidated Financial Statements and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" related thereto, included elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1994
-------------------------------
AS ADJUSTED
-------------------
MINIMUM MAXIMUM
ACTUAL CASE CASE
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Total debt............................................ $68,650 $68,650 $68,650
Total shareholders' equity............................ 23,939
------- ------- -------
Total capitalization.................................. $92,589 $ $
------- ------- -------
------- ------- -------
</TABLE>
7
<PAGE> 10
THE RIGHTS OFFERING
<TABLE>
<S> <C>
RIGHTS........................... Each record holder of Common Stock ("Record Date Holder")
at the close of business on May , 1994 (the "Record
Date") is receiving transferable subscription rights
("Rights") for each share of Common Stock held of record
on the Record Date (the "Rights Offering" or "Offering").
An aggregate of Rights is being issued. Each
Right entitles the holder thereof (a "Holder" or "Rights
Holder") to purchase from RMI one share of Common Stock
(an "Underlying Share") for a price of $ per share
(the "Subscription Price"). The Rights are evidenced by
transferable subscription warrants (the "Subscription
Warrants"). No Rights will be issued with respect to any
treasury shares of Common Stock held by RMI.
BASIC SUBSCRIPTION PRIVILEGE..... Until the Expiration Time, Rights Holders are entitled to
purchase, at the Subscription Price, one Underlying Share
for each Right held (the "Basic Subscription Privilege").
Certificates representing shares purchased pursuant to the
Basic Subscription Privilege will be mailed or available
for pick-up as soon as practicable after exercise and
receipt of payment therefor by the Subscription Agent (as
defined below). See "The Rights Offering--Subscription
Privileges--Basic Subscription Privilege."
OVERSUBSCRIPTION PRIVILEGE....... Each Holder who elects to exercise the Basic Subscription
Privilege in full may also subscribe, at the Subscription
Price, for additional Underlying Shares available after
satisfaction of all subscriptions pursuant to the Basic
Subscription Privilege (the "Oversubscription Privilege").
If an insufficient number of Underlying Shares is
available to satisfy fully all exercises of the
Oversubscription Privilege, then the available Underlying
Shares will be prorated (subject to the elimination of
fractional shares) among Holders who exercise their
Oversubscription Privilege based upon the respective
number of Underlying Shares each Rights Holder has
purchased pursuant to the Basic Subscription Privilege.
Certificates representing shares purchased pursuant to the
Oversubscription Privilege will be mailed or available for
pick-up as soon as practicable after the Expiration Time
and after all prorations and adjustments contemplated by
the Rights Offering have been made and payment therefor
has been received by the Subscription Agent. Any funds
received by the Subscription Agent from a Holder with
respect to the Oversubscription Privilege that are not
applied as a result of a proration will be returned by
mail as soon as practicable, without interest or
deduction. See 'The Rights Offering--Subscription
Privileges--Oversubscription Privilege."
USE OF PROCEEDS.................. RMI will use the net proceeds of the Rights Offering for
general corporate purposes, including working capital for
the development of new markets for its products. Assuming
USX exercises the Basic Subscription Privilege with
respect only to the Rights issued to it (which USX has
advised RMI that USX intends to do), and no other Rights
are exercised, the Rights Offering will result in
approximately $ million in net proceeds to RMI, after
deduction of estimated expenses. If all of the Rights are
exercised, such net proceeds will be $ million.
</TABLE>
8
<PAGE> 11
<TABLE>
<S> <C>
PROCEDURE FOR EXERCISING
RIGHTS......................... The Basic Subscription Privilege and the Oversubscription
Privilege may be exercised by properly completing the
Subscription Warrant and forwarding it (or following the
Guaranteed Delivery Procedures), with payment of the
Subscription Price for each Underlying Share subscribed
for pursuant to the Basic Subscription Privilege and
Oversubscription Privilege, to the Subscription Agent,
which must receive such payment in the appropriate manner
and such Subscription Warrant (or a Notice of Guaranteed
Delivery) at or prior to the Expiration Time. If
Subscription Warrants are sent by mail, Rights Holders are
urged to use insured, registered mail.
Funds paid by uncertified check may take at least five
business days to clear. Accordingly, Rights Holders who
wish to pay the Subscription Price by means of uncertified
check are urged to make payment sufficiently in advance of
the Expiration Time to ensure that the payment is received
and clears by that time, and are urged to consider, in the
alternative, payment by means of certified or cashier's
check, money order or wire transfer of funds.
If the aggregate Subscription Price paid by an exercising
Rights Holder is insufficient to purchase the number of
Underlying Shares that the Rights Holder indicates are
being subscribed for, or if no number of Underlying Shares
to be purchased is specified, then the Rights Holder will
be deemed to have exercised the Basic Subscription
Privilege to purchase Underlying Shares to the full extent
of the payment tendered. If the aggregate Subscription
Price paid by an exercising Holder exceeds the amount
necessary to purchase the number of Underlying Shares for
which the Holder has indicated an intention to subscribe,
then the Holder will be deemed to have exercised the
Oversubscription Privilege to the full extent of the
excess payment tendered. See "The Rights
Offering--Exercise of Rights and Subscription Agent."
ONCE A RIGHTS HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION
PRIVILEGE OR THE OVERSUBSCRIPTION PRIVILEGE, THE EXERCISE
MAY NOT BE REVOKED. RIGHTS NOT EXERCISED PRIOR TO THE
EXPIRATION TIME WILL EXPIRE AND WILL NO LONGER BE
EXERCISABLE BY ANY HOLDER.
TRANSFERABILITY OF RIGHTS........ The Rights are transferable and it is anticipated that
they will trade on the NYSE until the close of business on
the last NYSE trading day preceding the day on which the
Expiration Time occurs. There can be no assurance,
however, that any market for the Rights will develop or,
if a market develops, that the market will remain
available throughout the period during which Rights may be
exercised, or as to the price at which the Rights will
trade.
The Subscription Agent will endeavor to sell Rights for
Rights Holders who have so requested and have delivered a
Subscription Warrant, with the instructions for sale
properly executed, to the Subscription Agent at or prior
to 11:00 a.m., New York City time, two NYSE trading days
preceding the day on which the Expiration Time occurs. If
the Rights cannot be sold by the Subscription Agent prior
to 5:00 p.m., New York City time, one NYSE trading day
preceding the day on which the Expiration Time occurs,
they will be returned promptly by mail to the Rights
Holder or, if so arranged, held by the Subscription Agent
for pick-up.
</TABLE>
9
<PAGE> 12
<TABLE>
<S> <C>
A Rights Holder wishing to sell Rights must submit the
Subscription Warrant evidencing those Rights to the
Subscription Agent, accompanied by instructions setting
forth the action to be taken with respect to the Rights
not to be sold. If so instructed, a new Subscription
Warrant will be issued to the submitting Rights Holder,
but only if the Subscription Agent receives the properly
endorsed Subscription Warrant no later than 5:00 p.m., New
York City time, on the fifth NYSE trading day preceding
the day on which the Expiration Time occurs. No new
Subscription Warrants will be issued with respect to
Subscription Warrants submitted after such time and date.
Accordingly, after such time and date a Rights Holder
selling or exercising less than all of its Rights will
lose the power to sell or exercise its remaining Rights.
See "The Rights Offering-- Method of Transferring Rights."
RECORD DATE...................... Close of business on May , 1994.
EXPIRATION TIME.................. 5:00 p.m., New York City time, June , 1994, unless
extended by RMI from time to time, in its sole discretion,
to a time (the "Expiration Time") not later than July ,
1994. See "The Rights Offering--Expiration Time."
PERSONS HOLDING COMMON STOCK,
OR WISHING TO EXERCISE RIGHTS,
THROUGH OTHERS................. Persons holding shares of Common Stock through a broker,
dealer, commercial bank, trust company or other nominee,
as well as persons holding certificates for Common Stock
personally who would prefer to have such institutions
effect transactions relating to the Rights on their
behalf, should contact the appropriate institution or
nominee and request it to effect the transactions for
them. See "The Rights Offering--Exercise of Rights and
Subscription Agent."
PROCEDURE FOR EXERCISING RIGHTS
BY FOREIGN SHAREHOLDERS........ Subscription Warrants will not be mailed to Rights Holders
whose addresses are outside the United States, but will be
held by the Subscription Agent for their account. To
exercise such Rights, such Rights Holders must notify the
Subscription Agent on or prior to 11:00 a.m., New York
City time, two NYSE trading days preceding the day on
which the Expiration Time occurs, at which time (if no
instructions have been received) the Subscription Agent
will attempt to sell such Rights. The net proceeds, if
any, from the sale of those Rights will be remitted to
such holders by the Subscription Agent. See "The Rights
Offering--Foreign and Certain Other Stockholders."
PROCEDURE FOR DTC PARTICIPANTS... It is anticipated that the Rights will be eligible for
transfer through, and that the exercise of the Basic
Subscription Privilege (but not the Oversubscription
Privilege) may be effected through, the facilities of The
Depository Trust Company ("DTC"). Rights with respect to
which the Basic Subscription Privilege has been exercised
through DTC are referred to as "DTC Exercised Rights." A
holder of DTC Exercised Rights may exercise the
Oversubscription Privilege in respect thereof by properly
executing and delivering to the Subscription Agent, at or
prior to the Expiration Time, a DTC Participant
Oversubscription Exercise Form and a Nominee Holder
</TABLE>
10
<PAGE> 13
<TABLE>
<S> <C>
Certification, together with payment of the appropriate
Subscription Price for the number of Underlying Shares for
which the Oversubscription Privilege is to be exercised.
Copies of the DTC Participant Oversubscription Exercise
Form and the Nominee Holder Certification may be obtained
from either the Information Agent or RMI at the addresses
and telephone numbers included elsewhere herein.
ISSUANCE OF COMMON STOCK......... Common Stock certificates representing shares of Common
Stock purchased pursuant to the exercise of the Basic
Subscription Privilege will be mailed or available for
pick-up as soon as practicable after exercise and receipt
of payment therefor. Certificates representing shares
purchased pursuant to the Oversubscription Privilege will
be mailed or available for pick-up as soon as practicable
after the Expiration Time and all prorations and
adjustments contemplated by the terms of the Rights
Offering have been effected and payment therefor has been
received by the Subscription Agent. See "The Rights
Offering--Subscription Privileges."
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES................... For United States federal income tax purposes, Record Date
Holders generally will not recognize taxable income in
connection with the issuance to them or exercise by them
of Rights. See "The Rights Offering--Certain Federal
Income Tax Consequences--Record Date Holder
Considerations."
SUBSCRIPTION AGENT............... Mellon Securities Trust Company (the "Subscription
Agent"). The Subscription Agent's telephone number is
(800) 777-3674.
INFORMATION AGENT................ Questions and requests for copies of applicable documents
and for assistance concerning the exercise or transfer of
Rights should be directed to Corporate Investor
Communications, Inc. (the "Information Agent"). The
Information Agent's telephone number is (800) 242-4410.
SOLICITING AGENT(S).............. RMI may engage one or more soliciting agents to assist it
in arranging the sale of shares of Common Stock through
the exercise of Rights. The fees to be paid to the
Soliciting Agent(s), if any, will be negotiated by RMI,
but in no event will such fees exceed % of the
purchases arranged by such agent(s). RMI may also agree to
indemnify such agent(s) against certain liabilities under
the Securities Act.
</TABLE>
FOR COPIES OF THIS PROSPECTUS, THE INSTRUCTIONS AND APPLICABLE FORMS
CONTACT RMI BY CALLING (800) 869-6304.
11
<PAGE> 14
RISK FACTORS
A purchase of Common Stock involves substantial risks. Potential purchasers
of Rights and Rights Holders determining whether to exercise Rights to purchase
Common Stock should carefully consider, in addition to the other information set
forth or incorporated herein, the following risk factors:
CERTAIN COMPANY CONSIDERATIONS
DEPRESSED TRADITIONAL AEROSPACE MARKETS. The cyclical nature of the
aerospace industry has been the principal cause of the fluctuations in
performance of companies engaged in the titanium industry. Prior to 1989-1990,
the last peak in the titanium industry cycle occurred during the 1979-1982
period. From 1987 through late 1990, average unit prices for RMI's mill products
increased steadily. Domestic industry shipment volumes in 1989 increased to 55
million pounds from 50 million in 1988, then decreased to 53 million pounds in
1990. Shipments for 1991 decreased to approximately 34 million pounds, a
decrease of 35% from 1990 levels, the largest single one year decrease in the
history of the industry. Domestic industry shipments amounted to approximately
35 million pounds in 1992 and approximately 36 million pounds in 1993. Domestic
industry shipment volumes for 1994 are not expected to increase significantly
from 1993 levels. While excess titanium inventories at prime aerospace
contractors appear to have decreased, a declining U.S. military budget and
production cutbacks at Boeing, McDonnell Douglas and Airbus Industrie resulting
from reduced commercial airline demand for new aircraft, continue to negatively
impact the demand for titanium mill products. During the three months ended
March 31, 1994, RMI's ingot and mill products facilities were being utilized at
approximately 47% and 52%, respectively, of their rated capacities (which may be
higher than their practical capacities). Improvement in RMI's results of
operations will largely depend on increased commercial aerospace activity.
TITANIUM INDUSTRY HIGHLY COMPETITIVE. The titanium industry is highly
competitive on a worldwide basis. Competition is primarily on the basis of
price, quality and delivery. In recent years the industry has been suffering
from excess production capacity, which has intensified price competition for
available business. Integrated and nonintegrated producers of mill products are
located primarily in the U.S., Japan, the Commonwealth of Independent States
("CIS"), Europe and China. Following closure of RMI's sponge facilities in 1992,
there are two remaining integrated producers in the United States. There are
also a number of domestic nonintegrated producers, of which RMI is the largest,
which produce mill products from purchased sponge, scrap or ingot. Imports of
titanium mill products from countries that receive the most-favored-nation
tariff rate ("MFN") are subject to a 15% tariff. The tariff rate applicable to
imports from countries that do not receive MFN treatment is 45%. Japanese
producers, which benefit from MFN treatment, participate significantly in the
European market, but historically have not been a major factor in the U.S. mill
products market. The United States does not currently grant MFN treatment to
imports, including titanium mill product imports, from the CIS countries, except
Russia. However, effective October 18, 1993, the United States government
extended the benefits of the Generalized System of Preferences ("GSP") to
Russia. Under GSP, the United States grants duty-free access to semifinished and
agricultural products from developing countries and territories. Certain
titanium mill products are covered by GSP. However, titanium sponge has not been
afforded GSP treatment. While countries within the CIS, including Russia, have
not participated to any significant degree in the U.S. market for titanium mill
products, they have the largest titanium production capacity in the world and
could materially affect competition if their exports were to increase
significantly. Several of RMI's competitors together challenged the granting of
GSP benefits to Russian titanium mill products, but recently withdrew their
petition. RMI was not a party to this challenge.
RECENT LOSSES. RMI's current financial condition and results of operations
for the period 1991-1993 reflect the severe downturn in market conditions
experienced generally by the titanium industry over that period. RMI incurred
net losses of $28.9 million, $14.1 million and $57.1 million in 1993, 1992 and
1991, respectively. The 1993 results reflect a $16.9 million cumulative effect
charge relating to SFAS No. 106, and the 1991 results reflect a $37.1 million
charge resulting from the closure of RMI's sponge production facilities. RMI
incurred a net loss of $4.3 million in the first quarter of 1994, compared to a
net loss of $19.8 million in the first quarter of 1993. The 1994 first quarter
results reflect a $1.2 million cumulative effect charge related to the adoption
of SFAS No. 112 and the 1993 first quarter results reflect the $16.9 million
cumulative effect
12
<PAGE> 15
charge related to the adoption of SFAS No. 106. Exclusive of these charges, the
losses over the three-year period and the first quarter of 1994 were primarily
due to soft demand and competitive pressures. RMI believes a number of factors
are responsible for this situation, including aggressive international
competition, declining military spending, reduced commercial airline demand for
new aircraft and an uncertain world economy. Domestic industry shipments of
titanium mill products are not expected to increase significantly in 1994 from
the level of shipments in each of 1992 and 1993.
INCREASINGLY HIGH LEVERAGE; LIQUIDITY CONCERNS. For the quarter ended March
31, 1994 and the year ended December 31, 1993, RMI's cash flow requirements for
operating losses and capital spending were funded primarily by working capital
reductions and borrowings under RMI's Existing Credit Facility. As of March 31,
1994, RMI had borrowed $67.5 million of the $75 million available under the
Existing Credit Facility. Aggressive cost-cutting efforts, combined with
improved operating efficiencies, the sale of non-strategic assets and borrowings
under such facility, have enabled RMI to maintain operations during the current
industry downturn. However, the timing and extent of any recovery in RMI's
traditional aerospace markets are uncertain. RMI has received from the banks
which are parties to the Existing Credit Facility a separate commitment to enter
into the EXIM Bank Credit Facility, which provides for up to $15 million of
available credit in addition to amounts available under the Existing Credit
Facility. Prior to any borrowings under the EXIM Bank Credit Facility, RMI would
be required to receive at least $14.7 million in cash equity investments as a
result of the Rights Offering by July 29, 1994. See "Proceeds from Offering"
below. Furthermore, the EXIM Bank Credit Facility is conditioned upon obtaining
a guarantee by the Export Import Bank of amounts outstanding thereunder. RMI has
applied to the Export Import Bank for such a guarantee. RMI believes that the
Existing Credit Facility, as amended, together with the EXIM Bank Credit
Agreement, will provide sufficient flexibility for RMI to carry out its business
plans, including the development of the new markets and applications for its
products described above under "The Company". However, continued losses from
operations or other charges could result in noncompliance with the minimum total
shareholders' equity covenant of the Existing Credit Facility, as amended. See
"Capitalization--Revolving Credit Facilities."
RMI's shareholders' equity declined to $23.9 million at March 31, 1994 from
$27.9 million at December 31, 1993 and $136.6 million at December 31, 1990, due
to the net losses described above and a $7.5 million minimum pension liability
adjustment recorded at December 31, 1993. Long-term debt increased from $61.2
million to $68.5 million over the same period.
The percentage of RMI's total debt to total capitalization has increased
from 31% in 1990 to 74% at March 31, 1994. This increase reflects primarily the
net losses and the pension liability adjustment described above.
NO ASSURANCES AS TO NEW PRODUCT AND MARKET DEVELOPMENT. In an effort to
lessen its dependence on the aerospace market and to increase its participation
in other markets, RMI is devoting significant efforts and resources to
developing new markets and applications for its products, principally in the
energy industry. RMI believes these new markets offer significant potential.
RMI, however, cannot give any assurances as to the extent to which it will be
able to develop new markets for its products, or as to the time required for
such development. If RMI is able to develop successfully such markets, RMI
expects to face competition.
These emerging market opportunities, together with the lack of recovery in
RMI's traditional markets, will place an even greater pressure on RMI's limited
financial resources.
UNDERFUNDED PENSION AND POSTRETIREMENT OBLIGATIONS. As indicated in Note 10
to the Consolidated Financial Statements included elsewhere herein, RMI has
substantial underfunded obligations related to its pension and other
postretirement benefit programs. As of December 31, 1993, the actuarial present
value of the accumulated benefit obligation for the defined benefit pension
plans of RMI was approximately $67.4 million, and the fair market value of the
pension fund assets available to pay such benefit obligation was approximately
$49.6 million. Also, as of December 31, 1993, RMI's unfunded accumulated
postretirement benefit obligations were $22.4 million. At December 31, 1993, RMI
recorded in noncurrent pension liabilities an additional minimum pension
liability of $12.9 million, and a related adjustment to reduce shareholders'
equity by $7.5 million, primarily as a result of a reduction in the assumed
discount rate used to measure benefit obligations. RMI is unable to predict
whether it may be required to record additional similar liabilities and
13
<PAGE> 16
obligations. RMI is unable to predict whether it may be required to record
additional similar liabilities and adjustments in the future. However, under the
Existing Credit Facility, as amended, minimum pension liability adjustments
charged to shareholders' equity in accordance with SFAS No. 87 do not affect
compliance with the minimum total shareholders' equity covenant.
ENVIRONMENTAL CONTINGENCIES. RMI is involved in investigative or cleanup
projects under federal or state environmental laws at a number of waste disposal
sites, including a Superfund site. Given the status of the proceedings with
respect to these sites, ultimate investigative and remediation costs cannot
presently be accurately predicted, but could, in the aggregate, be material.
Based on the information available regarding the current ranges of estimated
remediation costs at currently active sites, and what RMI believes will be its
ultimate share of such costs, provisions for environmental-related costs have
been recorded, including $2.7 million in 1991. These provisions are in addition
to amounts which have previously been accrued for RMI's share of environmental
study costs. At March 31, 1994, the amount accrued for future environmental-
related costs was $2.9 million. As these proceedings continue toward final
resolution, amounts in excess of those already provided may be necessary to
discharge RMI from its obligations for these projects.
In 1992, the Environmental Protection Agency ("EPA") proposed a $1.4
million civil penalty for alleged failure by RMI to comply with the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"). RMI is contesting
the complaint. Based on the preliminary nature of the proceeding, RMI is
currently unable to determine the ultimate liability, if any, that may arise
from this matter.
The ultimate resolution of these environmental matters could, individually
or in the aggregate, be material to the consolidated financial statements.
However, management believes that RMI will remain a viable and competitive
enterprise even though it is possible that these matters could be resolved
unfavorably.
LIMITATION ON USE OF TAX LOSSES. At December 31, 1993, RMI had net
operating loss carryforwards of approximately $75 million and certain other
unrealized future deductions that could be subject to an annual limitation on
their deductibility if certain substantial changes in its ownership should occur
over any three-year period, as provided under Section 382 of the Internal
Revenue Code. While RMI has not reflected a benefit in its December 31, 1993
consolidated financial statements with respect to these tax attributes, the
potential annual limitation could restrict RMI's ability to use them to reduce
future income tax liabilities. Although RMI does not expect the Rights Offering
to result in an ownership change that would cause the annual limitation to
apply, there is no assurance that an ownership change will not result from the
Rights Offering or from other equity transactions of RMI and USX. Further, the
Rights Offering significantly increases the likelihood that future equity
transactions by RMI or USX, or by either of these companies' significant current
or future shareholders in the three years following the Rights Offering (some of
which will not be within the control of RMI), could cause the annual limitation
to apply. See "The Rights Offering--Certain Federal Income Tax
Considerations--Company Considerations."
PRINCIPAL SHAREHOLDER. USX was the owner of 750,000 shares of RMI's Common
Stock as of the Record Date, constituting approximately 50.8% of all Common
Stock then outstanding. RMI has been advised by USX that USX intends to exercise
the Basic Subscription Privilege, but not the Oversubscription Privilege, with
respect only to the Rights issued to it. In the event only USX, and no other
Rights Holder, exercises the Basic Subscription Privilege, additional
shares of Common Stock will be owned by USX, increasing its ownership to
approximately % of all shares of Common Stock outstanding immediately after
completion of the Offering.
USX intends to enter into a Voting Trust Agreement promptly following the
completion of the Rights Offering, pursuant to which it will deposit with Mellon
Bank, N.A., as Trustee, sufficient shares of RMI's Common Stock, including any
shares acquired as a result of the exercise of Rights, so that the shares held
by USX outside of the trust do not exceed 49% of all shares of Common Stock
outstanding and are at least one share less than the number of such shares owned
by holders other than USX. Shares held by the Trustee will be voted on any
matter voted on by RMI's shareholders in the same proportion as all other shares
of Common Stock are voted on such matter.
14
<PAGE> 17
It is possible that USX could be in a position involving a conflict of
interest with RMI. Possible conflicts of interest could include a sale by USX of
a substantial portion or all of its Common Stock, which might trigger a change
in ownership in RMI, as provided under Section 382 of the Internal Revenue Code.
See "Limitations on Use of Tax Losses" above. When such interests diverge, there
can be no assurance that such conflicts will be resolved in favor of RMI.
Certain directors and/or officers of USX are also directors and/or officers of
RMI. When such persons act in their capacity as directors and/or officers of
RMI, they have a fiduciary duty to RMI and its shareholders, which includes a
duty of loyalty to RMI and its shareholders.
CERTAIN OFFERING CONSIDERATIONS
OWNERSHIP DILUTION TO CURRENT SHAREHOLDERS. The Rights entitle the Rights
Holders to purchase shares of Common Stock at a price below the market price of
the Common Stock immediately prior to the commencement of the Rights Offering.
Holders of shares of Common Stock who exercise their Rights will preserve, and
through the Oversubscription Privilege may increase, their proportionate
interest in their equity ownership and voting power of RMI. Holders who do not
exercise their Rights will experience a decrease in their proportionate interest
in the equity ownership and voting power of RMI. The sale of the Rights may not
compensate a Holder for all or any part of any reduction in the market value of
such shareholder's shares of Common Stock resulting from the Rights Offering.
SHAREHOLDERS WHO DO NOT EXERCISE OR SELL THEIR RIGHTS WILL RELINQUISH ANY VALUE
INHERENT IN THE RIGHTS.
The number of shares of Common Stock which will be issued pursuant to the
Rights Offering depends on how many Rights Holders exercise the Basic
Subscription Privilege and Oversubscription Privilege with respect to their
Rights. Assuming all Rights are exercised, additional shares of Common
Stock will be issued, representing over % of the total outstanding shares
immediately after the Offering. If USX exercises the Basic Subscription
Privilege with respect only to the Rights issued to it (which USX has advised
RMI that USX intends to do), and no other Rights are exercised,
additional shares of Common Stock will be issued, representing over % of the
total which will then be outstanding, and USX will own shares, or %
of all shares outstanding. USX has advised RMI that it does not intend to
exercise its Oversubscription Privilege.
NO MINIMUM EXERCISE OF RIGHTS REQUIRED. The Rights Offering is not
conditioned upon the exercise of any minimum number of Rights. However, as
stated under "Ownership Dilution to Current Shareholders" above, USX has advised
RMI that it intends to exercise the Basic Subscription Privilege with respect
only to the Rights issued to it.
POSSIBLE EXTENSION OF EXPIRATION TIME. RMI has reserved the right to extend
the Expiration Time from time to time, in its sole discretion, to a time not
later than July , 1994. Funds deposited in payment of the Subscription Price
may not be withdrawn and no interest will be paid thereon to Holders. In no
event will the Expiration Time be extended beyond July , 1994.
PROCEEDS FROM OFFERING. The amount of net proceeds RMI will receive as a
result of the Rights Offering will depend on the number of Rights which are
exercised. There can be no assurance the net proceeds will be sufficient to
provide RMI with adequate working capital to develop new markets and
applications for its products or to continue to satisfy its liquidity
requirements. RMI has been advised by USX that USX intends to exercise the Basic
Subscription Privilege with respect only to the Rights issued to it. If USX were
to so exercise its Rights, and no other Rights are exercised, the Rights
Offering would result in approximately $ million in net proceeds for RMI,
after deduction of estimated expenses, and USX's ownership would increase to
approximately % of all shares of Common Stock outstanding immediately after
completion of the Offering. RMI must receive $14.7 million in cash equity
investments from the Rights Offering by July 29, 1994 to satisfy the
requirements of the Existing Credit Facility, as amended, and the EXIM Bank
Credit Facility. RMI is confident sufficient Rights will be exercised by
Holders, including USX, to satisfy this requirement.
MARKET CONSIDERATIONS. There can be no assurance that the market price of
the Common Stock will not decline during or after the Rights Offering or that,
following the issuance of the Rights and the sale of the shares of Common Stock
upon exercise of the Basic Subscription Privilege or the Oversubscription
Privilege, a
15
<PAGE> 18
subscribing Rights Holder will be able to sell shares purchased as a result of
the Rights Offering at a price equal to or greater than the Subscription Price.
The election of a Rights Holder to exercise Rights in the Rights Offering is
irrevocable. Moreover, until certificates representing shares of Common Stock
purchased as a result of the exercise of Rights are delivered, subscribing
Rights Holders may not be able to sell the shares of Common Stock that they have
purchased pursuant to the Basic Subscription Privilege or the Oversubscription
Privilege. Certificates representing shares of Common Stock purchased pursuant
to the exercise of the Basic Subscription Privilege will be mailed or available
for pick-up as soon as practicable after exercise and receipt of payment of the
Subscription Price. Certificates representing shares purchased pursuant to the
Oversubscription Privilege will be mailed or available for pick-up as soon as
practicable after the Expiration Time and all prorations and adjustments
contemplated by the terms of the Rights Offering have been effected and payment
therefor has been received. There can be no assurance that the market price of
the Common Stock purchased pursuant to the exercise of Rights will not decline
below the Subscription Price before certificates representing such shares of
Common Stock are delivered.
The market price for RMI's Common Stock has substantially decreased over
the last two years. See "Price Range of Common Stock and Dividends." There can
be no assurance that the market price for the Common Stock may not decrease or
be subject to significant fluctuations in the future.
It is anticipated that the Rights will trade on the NYSE until the end of
trading on the last NYSE trading day preceding the day on which the Expiration
Time occurs. However, there has been no prior market for the Rights and no
assurance can be given that a market will develop or, if a market develops, that
it will continue until the Expiration Time, or as to the price at which the
Rights will trade. In the event a market develops, there can be no assurance
that the market price for the Rights will not be subject to significant
fluctuations prior to the Expiration Time. The shares of Common Stock to be
issued upon the exercise of Rights will be approved for listing on the NYSE
after delivery of certificates representing such shares to Rights Holders who
have exercised their Rights. See "The Rights Offering--Method of Transferring
Rights."
CONSIDERATIONS RELATING TO OHIO LAW. The provisions of the Merger
Moratorium Act (the "Merger Moratorium Act"), which is contained in Sections
1704.01 et. seq. of the Ohio Revised Code, and the Ohio Control Shares
Acquisition Act (the "Control Share Act"), which is contained in Section
1701.831 of the Ohio Revised Code, are applicable to RMI and its shareholders.
The Merger Moratorium Act regulates certain transactions between RMI and certain
holders of in excess of 10% of the outstanding Common Stock. The Board of
Directors has approved the acquisition of Common Stock pursuant to the exercise
of the Rights, for purposes of the Merger Moratorium Act, with the result that
persons acquiring in excess of 10% of the outstanding Common Stock by reason of
the exercise of the Rights will not be subject to the restrictions of the Merger
Moratorium Act. The Control Share Act prohibits the acquisition of shares of
Common Stock that would entitle the holder to exercise voting power in the
election of Directors of RMI in certain ranges, with the lowest range starting
at 20%. Depending on the number of holders of Rights exercising the Basic
Subscription Privilege and the Oversubscription Privilege, it is possible that
the exercise of the Rights would result in a person exercising the Rights
consummating a "control share acquisition" without compliance with the Control
Share Act. The Control Share Act does not specify a remedy for violation of the
Act. However, in at least one situation, a court has set aside an acquisition
made in violation of the Control Share Act.
16
<PAGE> 19
USE OF PROCEEDS
RMI will use the net proceeds of the Rights Offering for general corporate
purposes, including working capital for the development of new markets and
applications for its products. Pending such use, such net proceeds will be
applied to reduce the amount outstanding under RMI's Existing Credit Facility.
Assuming USX exercises the Basic Subscription Privilege with respect only to
Rights issued to it (which USX has advised RMI that USX intends to do), and no
other Rights are exercised, the Rights Offering will result in approximately
$ million in net proceeds to RMI, after deduction of estimated expenses. If
all of the Rights are exercised, such net proceeds will be $ million.
CAPITALIZATION
The following table sets forth the consolidated capitalization of RMI as of
March 31, 1994, and as adjusted to give effect to the issuance of Common Stock
pursuant to the Rights Offering based on the "Minimum Case" and the "Maximum
Case". The Minimum Case assumes that USX exercises only the Basic Subscription
Privilege with respect only to the Rights issued to it and that no other Rights
are exercised, in which case additional shares of Common Stock will be
issued and RMI will receive approximately $ million in net proceeds, after
deduction of estimated expenses. The Maximum Case assumes all of the Rights are
fully exercised, in which case RMI will issue additional shares of Common
Stock and will receive approximately $ million in such net proceeds. The
following "As Adjusted" information is not necessarily indicative of the
financial position that would have been attained had the Rights Offering
actually taken place as of March 31, 1994. The data should be read in
conjunction with the Consolidated Financial Statements, the Condensed
Consolidated Financial Statements and the "Management's Discussion and Analysis
of Financial Condition and Results of Operations" related thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
MARCH 31, 1994
----------------------------------
AS ADJUSTED
---------------------
MINIMUM MAXIMUM
ACTUAL CASE CASE
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Debt
Existing Credit Facility............................ $ 67,500 $67,500 $67,500
Industrial revenue bond............................. 1,150 1,150 1,150
-------- -------- --------
Total debt..................................... 68,650 68,650 68,650
-------- -------- --------
Shareholders' equity
Preferred Stock, no par value; 5,000,000 shares
authorized; no shares outstanding................. -- -- --
Common Stock, $0.01 par value; 30,000,000 shares
authorized; 2,037,582 shares issued; xxx shares
issued as
adjusted for Minimum Case; xxx shares issued as
adjusted for Maximum Case(1)...................... 15
Additional paid-in capital(1)....................... 124,720
Accumulated deficit................................. (90,285) (90,285 ) (90,285 )
Minimum pension liability adjustment................ (7,520) (7,520 ) (7,520 )
Treasury Common Stock at cost 562,536 shares........ (2,991) (2,991 ) (2,991 )
-------- -------- --------
Total shareholders' equity..................... 23,939
-------- -------- --------
Total capitalization..................................... $ 92,589
-------- -------- --------
-------- -------- --------
</TABLE>
- ---------
(1) Common Stock, additional paid-in capital and the shares of Common Stock
issued reflect the one-for-ten reverse stock split effective March 31, 1994.
See Note 3 to the Condensed Consolidated Financial Statements included
elsewhere herein.
17
<PAGE> 20
REVOLVING CREDIT FACILITIES
RMI has received commitments from the banks which are parties to the
Existing Credit Facility to amend the facility to establish new financial
covenants and relate the maximum amount of available credit thereunder to a
borrowing-base formula. Pursuant to the terms of the amended Existing Credit
Facility, RMI could borrow up to the lesser of $75 million or an amount equal to
the sum of the products of the aggregate value of each of various categories of
collateral and an advance rate established by the banks for each such category
of collateral, plus an available overadvance. Based on the values of the
collateral as of March 31, 1994, RMI would be able to borrow the entire $75
million available under the Existing Credit Facility, as amended. If RMI
receives cash equity investments as a result of the Rights Offering of $25
million or greater by July 29, 1994, the borrowing base formula would no longer
limit borrowings, unless RMI's total shareholders' equity were to decline by
more than $10 million when compared to its total shareholders' equity determined
immediately after completion of the Rights Offering. The Existing Credit
Facility, as amended, will include a covenant to maintain a minimum balance of
total shareholders' equity beginning June 30, 1994 and at all times thereafter
equal to an amount not less than the sum of (i) $27.9 million, which was RMI's
total shareholders' equity at December 31, 1993, as set forth in RMI's
consolidated balance sheet, (ii) any new cash equity investments in RMI
resulting from the Rights Offering, (iii) any increase in shareholders' equity
resulting from any change in RMI's method of accounting for inventories, (iv)
any noncash charges or credits to total shareholders' equity subsequent to
December 31, 1993, resulting from the adoption or application of SFAS No. 87
"Employers Accounting for Pensions," SFAS No. 106 "Employers Accounting for
Postretirement Benefits Other Than Pensions," and SFAS No. 112 "Employers
Accounting for Postemployment Benefits," and (v) the permitted cumulative
reduction to total shareholders' equity for the period as set forth below:
<TABLE>
<CAPTION>
PERIOD COMMENCING AMOUNT
-----------
<S> <C>
June 30, 1994................................................. $ 7,900,000
September 30, 1994............................................ 11,255,000
December 31, 1994............................................. 12,160,000
March 31, 1995................................................ 15,520,000
June 30, 1995................................................. 17,800,000
September 30, 1995............................................ 16,201,000
December 31, 1995 and thereafter.............................. 11,321,000
</TABLE>
As of March 31, 1994, the results of operations for the first quarter of
1994 had reduced RMI's total shareholders' equity, for purposes of the minimum
total shareholders' equity covenant, by $2.9 million when compared to RMI's
total shareholders' equity at December 31, 1993.
Under the Existing Credit Facility, as amended, neither RMI nor any of its
subsidiaries may incur, assume or pay any Indebtedness for Borrowed Money (as
defined) other than amounts borrowed under the Existing Credit Facility, as
amended, the EXIM Bank Credit Facility and RMI's existing obligations relating
to an industrial revenue bond. An event of default would occur under the
Existing Credit Facility, as amended, if RMI does not receive at least $14.7
million in cash equity investments as a result of the Rights Offering by July
29, 1994. Also under the Existing Credit Facility, as amended, if USX were to
cease to beneficially own at least 48% of RMI's voting equity securities, its
terms would be subject to renegotiation and, in such case, failure by RMI and
the banks to reach agreement on appropriate amendments would constitute an event
of default.
RMI has also received from the banks which are parties to the Existing
Credit Facility a separate commitment to enter into the EXIM Bank Credit
Facility providing for up to $15 million of available credit, in addition to
amounts available under the Existing Credit Facility, as amended. The EXIM Bank
Credit Facility would permit borrowings up to the lesser of $15 million or an
amount determined pursuant to a borrowing base formula substantially similar to
that used for the Existing Credit Facility, as amended, but which would include
only certain collateral related to, or arising out of, RMI's export sales. Prior
to any borrowings under the EXIM Bank Credit Facility, RMI would be required to
receive at least $14.7 million in
18
<PAGE> 21
new cash equity investments as a result of the Rights Offering by July 29, 1994.
The EXIM Bank Credit Facility is conditioned upon obtaining a guarantee by the
Export Import Bank of amounts outstanding thereunder. RMI has applied to the
Export Import Bank for such a guarantee.
If RMI were unable to comply with any covenant in either of such credit
facilities, RMI might not be able to borrow additional amounts under either the
Existing Credit Facility, as amended, or the EXIM Bank Credit Facility, and the
banks which are parties to the two credit facilities could demand payment of all
amounts outstanding thereunder.
Immediately subsequent to the Rights Offering, RMI will apply the net
proceeds to reduce amounts outstanding under its Existing Credit Facility until
such funds are employed for working capital purposes.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is traded on the NYSE. Set forth below are the high and
low sales prices, regular way, for the Common Stock on the NYSE for the periods
indicated. The last sales price of the Common Stock on a recent date is set
forth on the cover page of this Prospectus.
1992
<TABLE>
<CAPTION>
QUARTER HIGH LOW
------- ---- ----
<S> <C> <C>
First............................................. $42 1/2 $27 1/2
Second............................................ 32 1/2 26 1/4
Third............................................. 31 1/4 22 1/2
Fourth............................................ 27 1/2 16 1/4
</TABLE>
1993
<TABLE>
<CAPTION>
QUARTER
-------
<S> <C> <C>
First............................................. $ 20 $ 15
Second............................................ 25 15
Third............................................. 22 1/2 16 1/4
Fourth............................................ 20 15
</TABLE>
1994
<TABLE>
<CAPTION>
QUARTER
-------
<S> <C> <C>
First............................................. $ 20 $16 1/4
Second (through May ) ..................
</TABLE>
RMI has not paid dividends on its Common Stock since the second quarter of
1991 and does not intend to consider the payment of cash dividends on the Common
Stock until industry fundamentals and RMI's earnings improve significantly.
RMI has agreed with the banks which are parties to its Existing Credit
Facility not to pay any dividend or distribution or make any other payment in
respect of shares of its capital stock, including the Common Stock, or redeem,
purchase or otherwise acquire for any consideration any such shares, except for
annual redemptions not exceeding $200,000 in the aggregate; provided, however,
that if there is then no default under the Existing Credit Facility and RMI has
had positive net income for any fiscal quarter and the next preceding fiscal
quarter, it may pay dividends in such fiscal quarter equal to 25% of the sum of
its net income for such fiscal quarter and the next preceding fiscal quarter.
The Existing Credit Facility, as amended, and the EXIM Bank Credit Facility will
contain a covenant concerning dividends identical to that set forth in the
Existing Credit Facility.
19
<PAGE> 22
THE RIGHTS OFFERING
DETERMINATION OF STRUCTURE OF RIGHTS OFFERING
RMI's Board of Directors has considered the financial position of RMI and
current conditions in the titanium industry, and has concluded that RMI should
continue its efforts to develop new markets and applications for its products.
The Board has considered the working capital requirements for development of the
new markets and applications and, with the advice of Lehman Brothers, acting as
its financial advisor ("Financial Advisor"), the alternative means of raising
the necessary capital and has concluded that debt financing and various other
equity financing alternatives are not feasible, and that the necessary funds
should be raised by the Rights Offering.
The Subscription Price was determined by RMI with the assistance of the
Financial Advisor. In determining the structure of the Rights Offering and
establishing the Subscription Price, the Board of Directors sought to obtain the
amount of net proceeds from the Rights Offering believed necessary in order to
finance the development of new markets and applications while maintaining the
liquidity of RMI and providing the existing shareholders of RMI with the
opportunity to make an additional investment in RMI and thus reduce the dilution
of their proportionate ownership position in RMI. Some of the factors considered
by the Board of Directors included:
- The capital requirements of developing the new markets and applications
for RMI's titanium products and the adverse consequences of the failure to
develop such markets and applications.
- Strategic alternatives available to RMI for the raising of capital.
- The market price of the Common Stock.
- RMI's business prospects.
- The general condition of the securities markets.
THE RIGHTS
RMI is issuing Rights to each Record Date Holder as of the close of
business on May , 1994 (the "Record Date") at no charge to the Record Date
Holders. Record Date Holders will receive Rights for each share of Common
Stock held on the Record Date. An aggregate of Rights are being issued.
The Rights will be evidenced by transferable Subscription Warrants, which are
being issued to each Record Date Holder contemporaneously with the delivery of
this Prospectus. Upon execution of a Subscription Warrant, each Rights Holder
will agree that the exercise of Rights will be made on the terms and subject to
the conditions specified in this Prospectus. The Information Agent, the
Subscription Agent and RMI will each provide a copy of this Prospectus to any
person so requesting. Requests should be made to the Information Agent, the
Subscription Agent or RMI at the addresses and telephone numbers set forth
elsewhere herein.
No fractional Rights or cash in lieu thereof will be issued or paid. No
Subscription Warrant may be divided in such a way as to permit the Rights Holder
to receive a greater number of Rights than the number to which such Subscription
Warrant entitles its Holder, except that a depository, bank, trust company or
securities broker or dealer holding shares of Common Stock on the Record Date
for more than one beneficial owner may, upon proper showing to the Subscription
Agent, exchange its Subscription Warrant to obtain Subscription Warrants for the
number of Rights to which all such beneficial owners in the aggregate would have
been entitled.
EXPIRATION TIME
The ability of Holders to exercise the Basic Subscription Privilege and the
Oversubscription Privilege will expire at 5:00 p.m., New York City time, on June
, 1994, unless extended by RMI from time to time in its sole discretion, to a
time (the "Expiration Time"), not later than 5:00 p.m., New York City time, on
July , 1994. Rights not exercised prior to the Expiration Time will expire at
that time automatically, without further action by the Rights Holders, and
thereafter will no longer be exercisable by any Holder. RMI will not be
20
<PAGE> 23
obligated to honor any purported exercise of Rights by Rights Holders received
by the Subscription Agent after the Expiration Time, regardless of when the
documents relating to that exercise were sent, except pursuant to the Guaranteed
Delivery Procedures described below. RMI will not be obligated to give the
Rights Holders any notice of any extension of the Expiration Time.
SUBSCRIPTION PRIVILEGES
Basic Subscription Privilege. Each Right will entitle the Rights Holder to
purchase at the Subscription Price one Underlying Share (the "Basic Subscription
Privilege"). Each Rights Holder is entitled to subscribe for all, or any
portion, of the Underlying Shares that may be acquired through the exercise of
its Basic Subscription Privilege. Certificates representing Underlying Shares
purchased pursuant to the Basic Subscription Privilege will be mailed or
available for pick-up as soon as practicable after exercise and receipt of
payment therefor by the Subscription Agent.
Oversubscription Privilege. Subject to the allocation and possible
reduction described below, Holders who fully exercise their Basic Subscription
Privilege with respect to all Rights held by them in the same capacity will also
be eligible to subscribe, at the Subscription Price, for any additional
Underlying Shares which are available after satisfaction of all subscriptions
pursuant to the Basic Subscription Privilege (the "Oversubscription Privilege").
Only such Holders who so exercise the Basic Subscription Privilege in full will
be entitled to exercise the Oversubscription Privilege. For purposes of
determining if a Holder has fully exercised the Basic Subscription Privilege,
all Basic Subscription Privileges held by the Holder in the same capacity will
be considered. For example, a Holder holding Rights as an individual need not
fully exercise all Basic Subscription Privileges held in respect of Rights held
jointly with the Holder's spouse or in respect of Rights held in an Individual
Retirement Account. By completing the portion of the Subscription Warrant
exercising the Oversubscription Privilege, a Holder will be deemed to have
certified that it has fully exercised all Basic Subscription Privileges received
in respect of Rights held by it in the same capacity. A HOLDER'S ELECTION TO
EXERCISE ITS OVERSUBSCRIPTION PRIVILEGE MUST BE MADE AT THE TIME SUCH HOLDER
EXERCISES ITS BASIC SUBSCRIPTION PRIVILEGE IN FULL.
Underlying Shares will be available for purchase pursuant to the
Oversubscription Privilege only to the extent that any Underlying Shares are not
subscribed for through the Basic Subscription Privilege. If the Underlying
Shares not subscribed for through the Basic Subscription Privilege (the "Excess
Shares") are not sufficient to satisfy all subscriptions pursuant to the
Oversubscription Privilege, the Excess Shares will generally be allocated pro
rata (subject to the elimination of fractional shares) among those Holders
exercising the Oversubscription Privilege in proportion to the number of Rights
with respect to which each such Holder exercised the Basic Subscription
Privilege relative to the number of Rights so exercised by all Holders
exercising the Oversubscription Privilege. If this pro rata allocation results
in any Holder being allocated a greater number of Excess Shares than the Holder
subscribed for pursuant to the exercise of that Holder's Oversubscription
Privilege, then the Holder will be allocated only that number of Excess Shares
for which the Holder oversubscribed, and the remaining Excess Shares will be
allocated among all other Holders exercising the Oversubscription Privilege on
the same pro rata basis outlined above. This proration process will be repeated
until all Excess Shares have been allocated to the full extent of the
Oversubscription Privileges exercised. Payments for oversubscriptions will be
deposited upon receipt by the Subscription Agent and held in escrow pending a
final determination of the number of Underlying Shares to be issued pursuant to
the Oversubscription Privilege. If a proration of the Excess Shares results in a
Holder receiving fewer Excess Shares than the Holder subscribed for pursuant to
the Oversubscription Privilege, then the excess funds paid by that Holder as the
Subscription Price for shares not issued will be returned by mail as soon as
practicable after the Expiration Time, without interest or deduction.
Certificates representing Underlying Shares purchased pursuant to the
Oversubscription Privilege will be mailed or available for pick-up as soon as
practicable after the Expiration Time and after all prorations and adjustments
contemplated by the terms of the Rights Offering have been made and payment
therefor has been received by the Subscription Agent.
To illustrate the proration procedure, assume that there are 160 Rights
held by six Rights Holders; that Holders A, B, C and D have each exercised their
Basic Subscription Privilege to purchase 30, 30, 40 and 10 shares of Common
Stock, respectively; and Holders E and F have not exercised their Basic
Subscription
21
<PAGE> 24
Privilege to purchase any shares, leaving a total of 50 Excess Shares. Assume
further that only Holders A, B and C exercise their Oversubscription Privileges
to purchase 50, 40 and 10 additional shares, respectively. The exercise of the
Oversubscription Privilege by Holders A, B and C will be prorated because there
are only 50 Excess Shares available for purchase pursuant to the
Oversubscription Privileges and Holders A, B and C have exercised their
Oversubscription Privileges to purchase 100 Excess Shares. Holders A and B
initially will each receive 30% of the Excess Shares (15 shares each) because
they each exercised the Basic Subscription Privilege with respect to 30 shares
of Common Stock representing 30% of the aggregate shares so purchased by all the
Holders exercising the Oversubscription Privilege. Applying the same analysis,
Holder C would initially be entitled to receive 40% of the Excess Shares (20
shares), but Holder C will only be entitled to receive 10 Excess Shares because
Holder C has only subscribed for 10 shares pursuant to the Oversubscription
Privilege. The remaining unallocated 10 Excess Shares will be divided evenly
between Holders A and B (bringing their Excess Share entitlement to 20 shares
each), which represents 50% of the unallocated Excess Shares because each
exercised the Basic Subscription Privilege to purchase 30 shares representing
50% of the aggregate shares so purchased by Holders A and B.
In order to exercise the Oversubscription Privilege, banks, brokers and
other nominee Holders who exercise the Oversubscription Privilege on behalf of a
beneficial owner of Rights will be required to certify (a "Nominee Holder
Certification") to the Subscription Agent and RMI as to the number of shares
held on the Record Date on behalf of such beneficial owner of Rights, the number
of Rights as to which the Basic Subscription Privilege has been exercised on
behalf of such beneficial owner, that all such beneficial owner's Basic
Subscription Privileges held in the same capacity have been exercised in full
and the number of Underlying Shares subscribed for pursuant to the
Oversubscription Privilege by such beneficial owner, and to record certain other
information received from such beneficial owner.
NO MINIMUM EXERCISE OF RIGHTS REQUIRED
The Rights Offering is not conditioned upon the exercise of any minimum
number of Rights. However, USX, the owner of 750,000 shares of Common Stock, has
advised RMI that it intends to exercise the Basic Subscription Privilege, but
not the Oversubscription Privilege, with respect only to the Rights issued to
it.
SUBSCRIPTION PRICE
The Subscription Price is $ per Underlying Share subscribed for
pursuant to the Basic Subscription Privilege and the Oversubscription Privilege,
payable in cash, which represents a discount of % from the last sales price of
$ per share for the Common Stock on the NYSE on May , 1994.
EXERCISE OF RIGHTS AND SUBSCRIPTION AGENT
Rights Holders may exercise their Rights by delivering to Mellon Securities
Trust Company (the "Subscription Agent"), at any of its addresses specified
below, at or prior to the Expiration Time, the properly completed and executed
Subscription Warrant(s) evidencing those Rights, with any signatures guaranteed
as required, together with payment in full of the Subscription Price for each
Underlying Share subscribed for pursuant to the Basic Subscription Privilege and
the Oversubscription Privilege. Payment in full must be made by (i) check or
bank draft drawn upon a United States bank, or postal, telegraphic or express
money order, payable to Mellon Securities Trust Company, as Subscription Agent,
or (ii) wire transfer of funds to the account maintained by the Subscription
Agent for the purpose of accepting subscriptions at Mellon Bank, N.A.,
Pittsburgh, Pennsylvania, ABA number 043000261, account number 102-331, Mellon
Financial Services Corporation, #17, Reorg. Account, Attention: RMI Rights,
Evelyn O'Connor. The Subscription Price will be deemed to have been received by
the Subscription Agent only upon (i) clearance of any uncertified check, (ii)
receipt by the Subscription Agent of any certified or cashier's check or bank
draft drawn upon a United States bank or of any postal, telegraphic or express
money order, or (iii) receipt of collected funds in the Subscription Agent's
account designated above. Funds paid by uncertified check may take at least five
business days to clear. Accordingly, Rights Holders who wish to pay the
Subscription Price by means of uncertified check are urged to make payment
sufficiently in advance of the Expiration Time to ensure that the payment is
received and clears by that time, and are urged to consider in the alternative
22
<PAGE> 25
payment by means of certified or cashier's check, money order or wire transfer
of funds. Pending disbursement to RMI upon issuance of related shares of Common
Stock, all funds received in payment of the Subscription Price shall be held by
the Subscription Agent and invested at the direction of RMI in short-term
certificates of deposit, short-term obligations of the United States, any state
or any agency thereof, or money market mutual funds investing in the foregoing
instruments. The account in which these funds will be held is not insured by the
FDIC. Any interest earned on these funds will be retained by RMI, whether or not
any or all of the Underlying Shares are issued.
A Holder's election to exercise its Oversubscription Privilege must be made
at the time such Record Date Holder exercises its Basic Subscription Privilege
in full.
The Subscription Agent's addresses, which are the addresses to which the
Subscription Warrants and payment of the Subscription Price should be delivered,
as well as the addresses to which Nominee Holder Certifications and Notices of
Guaranteed Delivery and DTC Participant Oversubscription Exercise Forms (each as
described below) must be delivered, are:
<TABLE>
<S> <C> <C>
IF BY MAIL: IF BY OVERNIGHT COURIER: IF BY HAND:
Mellon Securities Trust Mellon Securities Trust Mellon Securities Trust
Company Company Company
P.O. Box 768 85 Challenger Road 120 Broadway
Midtown Station Overpeck Centre 33rd Floor
New York, NY 10018 Ridgefield, NJ 07660 New York, New York
Attention: Reorg. Dept.
</TABLE>
The Subscription Agent's telephone number is (800) 777-3674 and its
facsimile telecopier number is (201) 296-4062.
RMI will pay the fees and expenses of the Subscription Agent (except for
fees, applicable brokerage commissions, taxes and other expenses relating to the
sale of Rights by the Subscription Agent, all of which will be shared pro rata
by all Holders who sell Rights through the Subscription Agent on the same day)
and has also agreed to indemnify the Subscription Agent against certain
liabilities, including liabilities under the Securities Act, that it may incur
in connection with the services rendered by it.
Guaranteed Delivery Procedures. If a Rights Holder wishes to exercise
Rights, but time will not permit the Holder to cause the Subscription Warrant(s)
evidencing those Rights to reach the Subscription Agent prior to the Expiration
Time, the Rights may nevertheless be exercised if all of the following
conditions (the "Guaranteed Delivery Procedures") are met:
(i) the Rights Holder has caused payment in full of the Subscription
Price for each Underlying Share being subscribed for pursuant to the Basic
Subscription Privilege and, if applicable, the Oversubscription Privilege
to be received (in the manner set forth above) by the Subscription Agent at
or prior to the Expiration Time;
(ii) the Subscription Agent receives, at or prior to the Expiration
Time, a guarantee notice (a "Notice of Guaranteed Delivery"), substantially
in the form provided with the Instructions as to Use of RMI Titanium
Company Subscription Warrants (the "Instructions") distributed with the
Subscription Warrants, from a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. ("NASD"), or from a commercial bank or trust company having
an office or correspondent in the United States (each, an "Eligible
Institution"), stating the name of the exercising Rights Holder, the number
of Rights represented by the Subscription Warrant(s) held by the exercising
Rights Holder, the number of Underlying Shares being subscribed for
pursuant to the Basic Subscription Privilege and, if any, pursuant to the
Oversubscription Privilege and guaranteeing the delivery to the
Subscription Agent of the Subscription Warrant(s) evidencing those Rights
and, if applicable for a nominee Holder, the related Nominee Holder
Certification, no later than 5:00 p.m., New York City time, on the fifth
NYSE trading day following the day on which the Expiration Time occurs; and
23
<PAGE> 26
(iii) the properly completed Subscription Warrant(s) and, if
applicable for a nominee Holder, the related Nominee Holder Certification,
with any signatures guaranteed as required, is received by the Subscription
Agent no later than 5:00 p.m., New York City time. on the fifth NYSE
trading day following the day on which the Expiration Time occurs.
The Notice of Guaranteed Delivery may be delivered to the Subscription
Agent in the same manner as Subscription Warrants at any of the addresses set
forth above, by telegram or by facsimile transmission to the facsimile
telecopier number set forth above. Additional copies of the Notice of Guaranteed
Delivery are available upon request from the Information Agent and RMI, whose
addresses and telephone numbers are set forth elsewhere herein.
If an exercising Rights Holder does not indicate the number of Rights being
exercised, or does not make full payment, in the manner set forth above, of the
aggregate Subscription Price for the number of Rights that the Rights Holder
indicates are being exercised, then the Rights Holder will be deemed to have
exercised the Basic Subscription Privilege with respect to the maximum number of
Rights that may be exercised for the aggregate Subscription Price payment so
made by the Rights Holder, and to the extent that the aggregate Subscription
Price payment so made by the Rights Holder exceeds the product of the
Subscription Price multiplied by the number of Rights evidenced by the
Subscription Warrants delivered by the Rights Holder (such excess being the
"Subscription Excess"), the Rights Holder will be deemed to have exercised the
Oversubscription Privilege to purchase, to the extent available, that number of
whole Excess Shares equal to the quotient obtained by dividing the Subscription
Excess by the Subscription Price. Any amount remaining after application of the
foregoing procedures shall be returned to the Rights Holder by the Subscription
Agent as soon as practicable after the Expiration Time by mail without interest
or deduction.
Pending issuance of certificates representing shares of Common Stock, funds
received for the exercise of Basic Subscription Privileges and, if applicable,
Oversubscription Privileges, will be held by the Subscription Agent in a
segregated escrow account. If shares are not issued pursuant to the Basic
Subscription Privilege, or if a Holder exercising the Oversubscription Privilege
is allocated less than all of the Underlying Shares for which that Holder
subscribed pursuant to the Oversubscription Privilege, then the funds held in
escrow paid by that Rights Holder as the Subscription Price for shares not
issued or for Excess Shares not allocated to such Rights Holder shall be
returned by mail without interest or deduction as soon as practicable after the
Expiration Time and after all prorations and adjustments contemplated by the
terms of the Rights Offering have been made. The Subscription Agent will turn
over to RMI funds received for the exercise of Rights upon issuance of the
certificates representing the shares of Common Stock.
Certificates representing shares of Common Stock subscribed for and issued
pursuant to the Basic Subscription Privilege will be mailed or available for
pick-up as soon as practicable after exercise and receipt of payment by the
Subscription Agent. Certificates representing such shares subscribed for and
issued pursuant to the Oversubscription Privilege will be mailed or available
for pick-up as soon as practicable after the Expiration Time and after all
prorations and adjustments contemplated by the terms of the Offering have been
made and payment therefor received by the Subscription Agent. Unless otherwise
instructed in the Subscription Warrant, certificates for shares of Common Stock
issued pursuant to the exercise of Rights will be registered in the name of the
Rights Holder exercising such Rights.
A Rights Holder who subscribes for fewer than all of the shares represented
by its Subscription Warrants may, under certain circumstances, (i) direct the
Subscription Agent to attempt to sell its remaining Rights, or (ii) receive from
the Subscription Agent a new Subscription Warrant representing the unused
Rights. See "The Rights Offering--Method of Transferring Rights" below.
Unless a Subscription Warrant (i) provides that the Underlying Shares to be
issued pursuant to the exercise of the Rights represented thereby are to be
issued to the registered Holder of such Rights as indicated in the Subscription
Warrant, or (ii) is submitted for the account of an Eligible Institution,
signatures on each Subscription Warrant must be guaranteed by a member of an
approved Signature Guarantee Medallion Program.
24
<PAGE> 27
Record Date Holders who hold shares of Common Stock for the account of
others, such as brokers, trustees or depositories for securities (a "Nominee
Record Date Holder"), should contact the respective beneficial owners of such
shares as soon as possible to ascertain those beneficial owners' intentions and
to obtain instructions and certain beneficial owner certifications with respect
to their Rights, all in the manner described in the Instructions, which
Instructions should be promptly distributed by Nominee Record Date Holders to
beneficial owners. If a beneficial owner so instructs, the Nominee Record Date
Holder should complete appropriate Subscription Warrants and, in the case of any
exercise of the Oversubscription Privilege, the related Nominee Holder
Certification, and submit them to the Subscription Agent with the proper
payment. In addition, beneficial owners of Common Stock or Rights held through
such a Nominee Record Date Holder should contact the Nominee Record Date Holder
and request the Nominee Record Date Holder to effect transactions in accordance
with the beneficial owner's instructions.
THE INSTRUCTIONS ACCOMPANYING THE SUBSCRIPTION WARRANTS SHOULD BE READ
CAREFULLY AND FOLLOWED IN DETAIL. SUBSCRIPTION WARRANTS SHOULD BE SENT WITH
PAYMENT TO THE SUBSCRIPTION AGENT. DO NOT SEND SUBSCRIPTION WARRANTS OR PAYMENTS
TO RMI OR THE INFORMATION AGENT.
THE METHOD OF DELIVERY OF SUBSCRIPTION WARRANTS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE RIGHTS HOLDERS. If Subscription Warrants and payments are sent by mail,
Rights Holders are urged to send these materials by registered mail, properly
insured, with return receipt requested, and are urged to allow a sufficient
number of days to ensure delivery to the Subscription Agent and clearance of
payment prior to the Expiration Time. Because uncertified checks may take at
least five business days to clear, Rights Holders are strongly urged to pay, or
arrange for payment, by means of certified or cashier's check, money order or
wire transfer of funds.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights, including the method and timeliness of payment, will be
determined by RMI, whose determinations will be final and binding. RMI, in its
sole discretion, may waive any defect or irregularity, or permit a defect or
irregularity to be corrected within such time as it may determine, or reject the
purported exercise of any Right because of any defect or irregularity.
Subscription Warrants will not be deemed to have been received or accepted until
all irregularities have been waived or cured within such time as RMI determines,
in its sole discretion. Neither RMI nor the Subscription Agent will be under any
duty to give notification of any defect or irregularity in connection with the
submission of Subscription Warrants or any other required document or incur any
liability for failure to give such notification. RMI reserves the right to
reject any exercise if such exercise is not in accordance with the terms of the
Rights Offering or not in proper form or if the acceptance thereof or the
issuance of shares of Common Stock pursuant thereto could be deemed unlawful or
materially burdensome. All questions as to the interpretation of the terms of
this Rights Offering, the Subscription Warrants, the Instructions, the DTC
Participant Oversubscription Exercise Form, the Nominee Holder Certification or
the Notice of Guaranteed Delivery shall be decided by RMI, in its sole
discretion, whose determination shall be final and binding.
Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus, the
Instructions, the DTC Participant Oversubscription Exercise Form, the Nominee
Holder Certification or the Notice of Guaranteed Delivery should be directed to
the Information Agent at its address set forth under "Information Agent", below
(telephone (800) 242-4410).
NO REVOCATION
ONCE A RIGHTS HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE OR THE
OVERSUBSCRIPTION PRIVILEGE, THE EXERCISE MAY NOT BE REVOKED.
METHOD OF TRANSFERRING RIGHTS
Rights may be purchased or sold through usual investment channels. It is
anticipated that the Rights will trade on the NYSE until the close of business
on the last NYSE trading day preceding the day on which the Expiration Time
occurs. There has, however, been no prior market for the Rights, and no
assurance can be
25
<PAGE> 28
given that a market will develop or, if a market develops, that the market will
remain available throughout the Subscription Period, or as to the price at which
the Rights will trade.
The Rights evidenced by a single Subscription Warrant may be transferred in
whole by endorsing the Subscription Warrant for transfer in accordance with the
accompanying Instructions. A portion of the Rights evidenced by a single
Subscription Warrant (but not fractional Rights) may be transferred by
delivering to the Subscription Agent the Subscription Warrant properly endorsed
for transfer, with instructions to register that portion of the Rights indicated
therein in the name of the transferee and to issue a new Subscription Warrant to
the transferee evidencing the transferred Rights. In that event, a new
Subscription Warrant evidencing the balance of the Rights will be issued to the
Rights Holder or, if the Rights Holder so instructs, to an additional
transferee, or will be sold by the Subscription Agent in the manner described
below upon appropriate instruction from the Rights Holder.
The Rights evidenced by a Subscription Warrant may be sold, in whole or in
part, through the Subscription Agent by delivering to the Subscription Agent the
Subscription Warrant properly executed for sale by the Subscription Agent. If
only a portion of the Rights evidenced by a single Subscription Warrant is to be
sold by the Subscription Agent, that Subscription Warrant must be accompanied by
instructions setting forth the action to be taken with respect to the Rights
that are not to be sold. Promptly following the settlement of such sale, the
Subscription Agent will send the Rights Holder a check for the proceeds from the
sale of any Rights sold, less any applicable brokerage commissions, taxes and
other direct expenses of sales. Upon settlement, a Rights Holder for which the
Subscription Agent sells Rights on any given day will receive for each of its
Rights so sold the net weighted average sale price of all Rights sold on that
day by the Subscription Agent. The net weighted average sale price will be
calculated by dividing the total proceeds from all sales realized by the
Subscription Agent on the day of sale by the total number of Rights sold by the
Subscription Agent on that day and then subtracting a pro rata portion of any
applicable brokerage commissions, taxes and other expenses. No assurance,
however, can be given that a market will develop for the Rights, that the
Subscription Agent will be able to sell any Rights, or as to the price at which
the Rights will trade. RMI will pay the fees charged by the Subscription Agent
for effecting such sales. Orders to sell Rights must be received by the
Subscription Agent at or prior to 11:00 a.m., New York City time, two NYSE
trading days preceding the day on which the Expiration Time occurs. The
Subscription Agent's obligation to execute orders is subject to its ability to
find buyers. If the Rights cannot be sold by the Subscription Agent by 5:00
p.m., New York City time, one NYSE trading day preceding the day on which the
Expiration Time occurs, they will be returned promptly by mail to the Rights
Holder or, if so arranged, held by the Subscription Agent for pick-up.
Holders wishing to transfer all or a portion of their Rights (but not
fractional Rights) should allow a sufficient amount of time prior to the
Expiration Time for (i) the transfer instructions to be received and processed
by the Subscription Agent, and (ii) the Rights evidenced by the new Subscription
Warrants to be exercised or sold by the recipients thereof. Such amount of time
could range from two to ten business days, or more, depending upon the method by
which delivery of the Subscription Warrants and payment is made and the number
of transactions which the Rights Holder instructs the Subscription Agent to
effect. Neither RMI nor the Subscription Agent shall have any liability to a
transferee or transferor of Rights if Subscription Warrants or any other
required documents are not received in time for exercise or sale prior to the
Expiration Time.
A new Subscription Warrant will be issued to a submitting Rights Holder
upon the partial exercise or sale of Rights only if the Subscription Agent
receives a properly endorsed Subscription Warrant no later than 5:00 p.m., New
York City time, on the fifth NYSE trading day preceding the day on which the
Expiration Time occurs. No new Subscription Warrants will be issued with respect
to Subscription Warrants submitted after such time and date. Accordingly, after
such time and date a Rights Holder exercising less than all of its Rights will
lose the power to sell or exercise its remaining Rights. A new Subscription
Warrant will be sent by first class mail to the submitting Rights Holder if the
Subscription Agent receives the properly completed Subscription Warrant by 5:00
p.m., New York City time, on the seventh NYSE trading day preceding the day on
which the Expiration Time occurs. Unless the submitting Rights Holder makes
other arrangements with the Subscription Agent, a new Subscription Warrant
issued after 5:00 p.m., New York City time, on the
26
<PAGE> 29
seventh NYSE trading day preceding the day on which the Expiration Time occurs
will be held for pick-up by the submitting Rights Holder at the Subscription
Agent's hand delivery address provided above. All deliveries of newly issued
Subscription Warrants will be at the risk of the submitting Rights Holder.
Except for the fees charged by the Subscription Agent (which will be paid by RMI
as described above), all commissions, fees and other expenses (including
brokerage commissions and transfer taxes) incurred in connection with the
purchase, sale or exercise of Rights will be for the account of the transferor
of the Rights, and none of such commissions, fees or expenses will be paid by
RMI or the Subscription Agent.
A Rights Holder may make arrangements with the Subscription Agent for
Subscription Warrants to be held for pick-up at the Subscription Agent's address
for hand deliveries set forth above under "Exercise of Rights and Subscription
Agent."
THOSE RIGHTS NOT EXERCISED BY A RIGHTS HOLDER PRIOR TO THE EXPIRATION TIME
WILL EXPIRE AUTOMATICALLY AT THE EXPIRATION TIME WITHOUT FURTHER ACTION BY THE
RIGHTS HOLDER AND WILL THEREAFTER NO LONGER BE EXERCISABLE OR HAVE ANY VALUE.
PROCEDURES FOR DTC PARTICIPANTS
It is anticipated that the Rights will be eligible for transfer through,
and that the exercise of the Basic Subscription Privilege (but not the
Oversubscription Privilege) may be effected through, the facilities of The
Depository Trust Company ("DTC"). Rights exercised as part of the Basic
Subscription Privilege through DTC are referred to as "DTC Exercised Rights." A
holder of DTC Exercised Rights may exercise the Oversubscription Privilege in
respect thereof by properly executing and delivering to the Subscription Agent,
at or prior to the Expiration Time, a DTC Participant Oversubscription Exercise
Form and a Nominee Holder Certification, together with payment of the
appropriate Subscription Price for the number of Underlying Shares for which the
Oversubscription Privilege is to be exercised. Copies of the DTC Participant
Oversubscription Exercise Form and the Nominee Holder Certification may be
obtained from either the Information Agent or RMI.
INFORMATION AGENT
RMI has appointed Corporate Investors Communications, Inc. as Information
Agent for the Rights Offering. Any questions or requests for assistance
concerning the exercise or transfer of Rights or for additional copies of this
Prospectus, the Instructions, the Notice of Guaranteed Delivery, the Nominee
Holder Certification or the DTC Participant Oversubscription Exercise Form may
be directed to the Information Agent at the address and telephone number below:
Corporate Investors Communications, Inc.
111 Commerce Road
Carlstadt, NJ 07072-2586
(800) 242-4410
RMI will pay the fees and expenses of the Information Agent and has also
agreed to indemnify the Information Agent from certain liabilities, including
liabilities under the Securities Act, which it may incur in connection with the
services rendered by it.
SOLICITING AGENT(S)
RMI may engage one or more soliciting agents to assist it in arranging the
exercise of Rights. The fees to be paid to the Soliciting Agent(s), if any, will
be negotiated by RMI, but in no event will such fees exceed % of the gross
proceeds from the exercise of Rights arranged by such agent(s). RMI may also
agree to indemnify each such agent against certain liabilities, including
liabilities under the Securities Act, which it may incur in connection with the
services rendered by it.
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<PAGE> 30
FINANCIAL ADVISOR
RMI has entered into a letter agreement with Lehman Brothers whereby the
Financial Advisor will provide financial advisory services to RMI concerning the
financing and structuring of certain corporate transactions, including the
Rights Offering. Pursuant to this letter agreement, RMI will pay the Financial
Advisor a financial advisory fee equal to 2.5% of the gross proceeds to RMI from
the Rights Offering and will reimburse the Financial Advisor for its reasonable
expenses thereunder, including fees and expenses of counsel. In addition, RMI
has agreed to indemnify the Financial Advisor against certain liabilities,
including liabilities under the Securities Act, which it may incur in connection
with the services rendered by it.
FOREIGN AND CERTAIN OTHER SHAREHOLDERS
Subscription Warrants will not be mailed to Record Date Holders or to any
subsequent transferees of any Subscription Warrants whose addresses are outside
the United States or who have APO or FPO addresses, but will be held by the
Subscription Agent for such Holders' accounts. To exercise their Rights, such
Holders must notify the Subscription Agent prior to 11:00 a.m., New York City
time, two NYSE trading days preceding the day on which the Expiration Time
occurs, at which time (if no contrary instructions have been received) the
Rights represented thereby will be sold, subject to the Subscription Agent's
ability to find a purchaser. Any such sales will be at prevailing market prices.
See "The Rights Offering--Method of Transferring Rights." If the Rights can be
sold, a check for the proceeds from the sale of any Rights, less any applicable
brokerage commissions, taxes and other expenses, will be remitted to such
Holders by mail. The proceeds, if any, resulting from sales of Rights of Holders
whose addresses are not known by the Subscription Agent or to whom delivery
cannot be made will be held by the Subscription Agent in a non-interest bearing
account. Any amount remaining unclaimed on the second anniversary of the
Expiration Time will be turned over by the Subscription Agent to RMI and, after
such date, any person claiming such proceeds will, as an unsecured general
creditor of RMI, be able to look only to RMI for payment thereof. The ability of
all Holders, including Holders whose addresses are outside the United States or
who have APO or FPO addresses, to exercise Rights will expire at the Expiration
Time.
EFFECT OF RIGHTS OFFERING ON RMI STOCK OPTION, STOCK OWNERSHIP AND SAVINGS AND
INVESTMENT PLANS
The number of shares subject to, and the per share exercise price of,
outstanding stock options issued under RMI's 1989 Stock Option Incentive Plan,
and the aggregate number of shares reserved under the plan, will be adjusted to
reflect the Rights Offering. After consummation of the Rights Offering, RMI will
notify the holders of such stock options of the adjustments. Rights will be
issued with respect to all shares issued and outstanding under RMI's 1989
Non-Employee Director Restricted Stock Award Plan, including shares subject to
transfer restriction and vesting requirements, as well as shares credited to the
accounts of participants in RMI's Employee Savings and Investment Plan and its
Bargaining Unit Employee Savings and Investment Plan. RMI has waived all
remaining restrictions applicable to shares granted under its 1989 Employee
Restricted Stock Award Plan, and has distributed to participants in that plan
all shares awarded, free of any restriction. RMI has agreed to lend, interest
free, to Messrs. Gieg, Odle and Rupert sufficient funds to permit them to
exercise the Basic Subscription Privilege (but not the Oversubscription
Privilege) with respect to Rights issued to them other than Rights issued with
respect to shares of Common Stock credited to their accounts in the Employee
Savings and Investment Plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
RECORD DATE HOLDER CONSIDERATIONS
The following summary describes certain United States federal income tax
considerations applicable to Record Date Holders upon the issuance of Rights,
and to Rights Holders upon the exercise, disposition or lapse of the Rights.
This summary is based upon laws, regulations, rulings and decisions currently in
effect. This summary does not discuss all aspects of federal income taxation
that may be relevant to a particular investor or to certain types of investors
subject to special treatment under the federal income tax laws (for example,
banks, dealers in securities, life insurance companies, tax exempt organizations
and foreign
28
<PAGE> 31
taxpayers), nor does it discuss any aspect of state, local or foreign tax laws.
This summary is limited to taxpayers that will hold the Rights as a "capital
asset" (generally, property held for investment) within the meaning of Section
1221 of the Code.
Issuance of the Rights. Record Date Holders generally will not recognize
taxable income, for federal income tax purposes, in connection with the issuance
of Rights.
Basis and Holding Period of the Rights. Upon exercise or sale of the
Rights, a Rights Holder's basis in his or her Common Stock will be allocated
between such Common Stock and the Rights in proportion to the fair market values
of each on the date of issuance of the Rights. However, the basis of the Rights
issued to a Record Date Holder will be zero if the fair market value on the date
of issuance of the Rights is less than 15% of the fair market value (on such
date of issuance) of the Common Stock with respect to which they are issued
unless the Rights Holder elects, in his or her federal income tax return for the
taxable year in which the Rights are issued, to allocate part of the basis of
such Common Stock to the Rights. Also, the basis of the Rights will be zero if
the Rights are not exercised by a Rights Holder prior to the Expiration Time and
thus expire. The holding period of Rights received by a Record Date Holder will
include the holding period for the Common Stock with respect to which the Rights
were issued. In the case of a purchaser of Rights, the tax basis of such Rights
will be equal to the purchase price paid therefor, and the holding period for
such Rights will commence on the day following the date of the purchase.
Sale of the Rights. Any gain or loss on the sale of Rights will be treated
as capital gain or loss if the Rights are a capital asset in the hands of the
seller and such gain or loss will be long-term capital gain or loss if the
Rights are deemed to have been held for more than one year at the time of the
sale. Rights issued to a Record Date Holder generally will be a capital asset in
the hands of such Record Date Holder if the Common Stock with respect to which
the Rights were issued was a capital asset in the hands of the Record Date
Holder.
Expiration of the Rights. If the Rights are not exercised by a Rights
Holder prior to the Expiration Time and thus expire, no gain or loss will be
recognized unless the Rights were acquired by purchase, in which case the Rights
Holder will recognize a loss equal to its basis in such Rights. Any such loss
recognized with respect to Rights acquired by purchase will be a capital loss if
the Rights were a capital asset in the hands of such purchaser.
Exercise of the Rights; Basis and Holding Period of Underlying Shares.
Rights Holders will not recognize any gain or loss upon the exercise of such
Rights. The basis of Common Stock acquired upon exercise of Rights will be equal
to the sum of such Rights Holder's basis in the Rights exercised and the amount
paid upon exercise of those Rights. The holding period for Common Stock acquired
upon exercise of Rights will begin on the date the Rights are exercised.
THE FOREGOING IS ONLY A SUMMARY OF APPLICABLE FEDERAL INCOME TAX
CONSEQUENCES AND DOES NOT ADDRESS ANY STATE, LOCAL OR FOREIGN TAX CONSEQUENCES
TO RIGHTS HOLDERS. RECORD DATE HOLDERS AND RIGHTS HOLDERS SHOULD CONSULT THEIR
TAX ADVISORS CONCERNING THE TAX CONSEQUENCES IN THEIR PARTICULAR CIRCUMSTANCES.
COMPANY CONSIDERATIONS
LIMITATION ON USE OF TAX LOSSES. At December 31, 1993, RMI had net
operating loss carryforwards of approximately $75 million and certain other
unrealized future deductions that could be subject to an annual limitation on
their deductibility if certain substantial changes in its ownership should occur
over any three-year period, as provided under Section 382 of the Internal
Revenue Code. While RMI has not reflected a benefit in its December 31, 1993
financial statements with respect to these tax attributes, the potential annual
limitation could restrict RMI's ability to use them to reduce future income tax
liabilities. Although RMI does not expect the Rights Offering to result in an
ownership change that would cause the annual limitation to apply, there can be
no assurance that an ownership change will not result from the Rights Offering
or from other equity transactions of RMI and USX. Further, the Rights Offering
may significantly increase the likelihood that
29
<PAGE> 32
future equity transactions by RMI or USX, or by either of these companies'
significant current or future shareholders in the three years following the
Rights Offering (some of which will not be within the control of RMI), could
cause the annual limitation to apply. See Note 8 to Consolidated Financial
Statements included elsewhere herein.
Section 382 generally provides that if a corporation undergoes an
"ownership change," the amount of taxable income that the corporation may offset
after the date of the ownership change (the "Change Date") with net operating
loss carryforwards and certain built-in losses existing on the Change Date will
be subject to an annual limitation. In general, the annual limitation equals the
product of (i) the fair market value of the corporation's equity on the Change
Date (with certain adjustments including an adjustment excluding capital
contributions made in the two years preceding the Change Date), and (ii) a
long-term tax exempt bond rate of return published monthly by the Internal
Revenue Service.
The built-in losses that may be limited under Section 382 are those that
exist on the Change Date and are recognized within five years after the Change
Date. However, the total amount of recognized built-in losses that are subject
to limitation cannot exceed the corporation's net built-in loss (the excess of
the aggregate tax basis of the corporation's assets over their aggregate fair
market value) on the Change Date. The built-in losses of a corporation will be
subject to limitation under Section 382 only if the net built-in loss of the
corporation exceeds 15% of the fair market value of the corporation's assets or
$10,000,000, whichever is less. Certain deductions that have accrued
economically on the Change Date, but are allowed only after the Change Date, are
treated as built-in losses.
Generally, an "ownership change" occurs with respect to a corporation if
shareholders who own, directly or indirectly through shareholders such as USX,
five percent or more of the capital stock of the corporation ("5-percent
shareholders") increase their aggregate percentage ownership of such stock by
more than 50 percentage points over the lowest percentage of such stock owned by
such shareholders at any time during a prescribed testing period. In applying
Section 382, under a special rule, newly issued stock generally is considered to
be acquired by a new 5-percent shareholder even if no person acquiring the stock
in fact owns as much as five percent of the issuer's stock. Recently adopted
Treasury regulations limit the extent to which stock newly issued for cash to
shareholders owning individually less than five percent of the issuer's stock is
treated as acquired by a new 5-percent shareholder. The regulations thus reduce
the extent to which such an issuance (including stock issued as a result of the
exercise of rights such as the Rights) causes a change in shareholdings that
counts toward an ownership change. However, such Treasury regulations do not
apply to any new shareholder or Record Date Holder who acquires and exercises
sufficient rights to become an actual 5 percent shareholder.
30
<PAGE> 33
BUSINESS
THE COMPANY
The Company is one of the world's leading producers of titanium mill
products. Titanium mill products are used principally in the aerospace industry
in commercial and military aircraft, with major nonaerospace applications in
chemical processing equipment, mesh for bridge and deck repair, tubular products
for oil and gas production, pulp and paper production facilities and medical
implants.
The Company is a successor to entities that have been operating in the
titanium industry since 1958. The Company is an Ohio corporation, originally
incorporated in Ohio in 1975. In April, 1990, USX Corporation ("USX") and
Quantum Chemical Corporation ("Quantum") transferred their entire ownership
interest in the Company's immediate predecessor, RMI Company, an Ohio general
partnership, to the Company in exchange for shares of the Company's Common Stock
(the "Reorganization"). Quantum then sold its shares to the public. USX has
retained ownership of its shares. At December 31, 1993, approximately 50.8% of
the Company's outstanding common stock was owned by USX.
INDUSTRY OVERVIEW
Titanium is one of the newest industrial metals. It possesses physical
characteristics such as high strength-to-weight ratio, high temperature
performance and superior corrosion and erosion resistance. The first major
commercial application of titanium occurred in the early 1950's when it was used
as a component in aircraft gas turbine engines. Subsequent applications were
developed to use the material in airframe construction. Historically,
approximately 75-80% of the U.S. titanium industry's output has been used in
aerospace applications. However, the decline in aerospace demand in recent years
has resulted in an increased emphasis on nonaerospace products.
There are two distinct types of participants in the domestic titanium
market: integrated and nonintegrated producers. Integrated producers produce
both titanium sponge and mill products. Nonintegrated producers acquire their
titanium sponge from third parties. By virtue of the Company's decision in 1992
to discontinue its production of titanium sponge, two integrated producers
remain in the U.S. There are also a number of domestic nonintegrated producers,
of which the Company is the largest. Internationally, there are a number of
companies in the titanium industry producing sponge and/or mill products.
The cyclical nature of the aerospace industry has been the principal cause
of the fluctuations in performance of companies engaged in the titanium
industry. Prior to 1989-1990, the last peak in the titanium industry cycle
occurred during the 1979-1982 period. From 1987 through late 1990, average unit
prices for the Company's mill products increased steadily. Domestic industry
shipment volumes in 1989 increased to 55 million pounds from 50 million in 1988,
then decreased to 53 million pounds in 1990. Shipments for 1991 decreased to
approximately 34 million pounds, a decrease of 35% from 1990 levels, the largest
single one year decrease in the history of the industry. Domestic industry
shipments amounted to approximately 35 million pounds in 1992 and were
approximately 36 million pounds in 1993. The Company's shipments of mill
products in 1993 and the first quarter of 1994 were virtually unchanged from the
comparable immediately prior periods. Domestic industry shipping volumes for
1994 are not expected to increase significantly from 1993 levels. In response to
competitive price pressures caused by reduced demand, the Company's average
selling prices for mill products in 1993 decreased 6% from 1992. While excess
titanium inventories at prime aerospace contractors appear to have decreased, a
declining U.S. military budget and production cutbacks at Boeing, McDonnell
Douglas and Airbus Industrie resulting from reduced commercial airline demand
for new aircraft continue to negatively impact the demand for mill products.
Aerospace demand originates from two sectors: military and commercial.
Since 1987 commercial aerospace has become the dominant factor in titanium
demand. The commercial aerospace sector is expected to continue to dominate the
demand for titanium because of such factors as the need to repair and replace
aging fleets, and growth of worldwide air traffic. However, reduced commercial
airline profitability and consolidation of major commercial carriers are having
a continuing negative impact on the commercial aerospace industry. Military
aerospace demand, which remained relatively stable through 1989, dropped
31
<PAGE> 34
sharply between 1990 and 1991 and with the exception of a few specific programs,
is expected to remain relatively flat.
The following table highlights the cyclical nature of the titanium industry
by setting forth the total pounds of U.S. mill products shipped during 1975-1993
as well as the Company's shipments and average mill product prices.
<TABLE>
<CAPTION>
Measurement Period RMI Avg. RMI Industry
(Fiscal Year Covered) Price Shipments Shipments
<S> <C> <C> <C>
'75 27 8 23
'76 25 6 22
'77 21 9.6 21.4
'78 23 11.3 30.7
'79 38 13 33
'80 50 14 39.5
'81 65 15 35
'82 70 10 28
'83 45 8.5 23.5
'84 41 13.7 31.3
'85 42 13.7 31.3
'86 37 13 29
'87 35 13.7 30.3
'88 42 14.5 34.5
'89 51 16 38
'90 55 16.5 34.5
'91 50 11.5 21.5
'92 47 11.5 20.5
'93 44 11.3 24.9
Source: RMI and Titamium Development Association
</TABLE>
PRODUCTS AND MARKETS
The Company operates in a single business segment: Titanium Metal Products
and Related Products and Services. Titanium Metal Products consist principally
of mill products such as ingot, slab, bloom, billet, bar, plate, sheet, strip,
pipe and tube. Related Products and Services include hot-formed and
superplastically formed parts for aerospace applications, cut shapes and
titanium metal powders. Revenues from a titanium drilling riser contract, which
commenced in 1993, are included in Related Products and Services. The Company
also provides processing or conversion services for customer owned materials.
Additionally, the Company acts as contractor for the U.S. Department of Energy
("DOE") for the remediation and restoration of the Company's former Extrusion
Plant located in Ashtabula, Ohio. Revenue from the DOE contract is included in
the Other category. Prior to 1992, the Company also produced its own titanium
sponge, some of which was sold to domestic nonintegrated producers, as well as
sodium chloride, metallic sodium and sodium hypochlorite, which are classified
as Discontinued Products.
32
<PAGE> 35
The amount of sales and percentage of consolidated sales represented by
individual product classifications during each of the years beginning in 1989
was as follows:
RMI SALES
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------------------------------------------------
1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mill Products.............. $ 96.5 76% $110.5 81% $128.8 78% $208.1 81% $184.3 76%
Related Products and
Services................. 20.5 16 16.7 13 17.3 10 16.4 6 19.9 8
Other(1)................... 10.4 8 5.8 4 6.3 4 7.9 4 8.1 4
Discontinued Products(2)... -- -- 2.6 2 13.2 8 22.9 9 29.7 12
------ --- ------ --- ------ --- ------ --- ------ ---
Total.................. $127.4 100% $135.6 100% $165.6 100% $255.3 100% $242.0 100%
------ --- ------ --- ------ --- ------ --- ------ ---
------ --- ------ --- ------ --- ------ --- ------ ---
</TABLE>
- ---------
(1) Includes DOE remediation and restoration contract and preliminary
restoration activity.
(2) Discontinued Products includes titanium sponge, sodium chloride, sodium
hypochlorite and metallic sodium, which are no longer manufactured.
MILL PRODUCTS
The Company produces a full range of titanium mill products which are used
in both the aerospace and nonaerospace markets.
Aerospace Business. Approximately 70% of the Company's 1993 mill product
sales were aerospace related compared with approximately 76% in 1992. The
Company's products are certified and approved for use by all major domestic and
most international manufacturers of commercial and military aircraft and jet
engines. Products such as sheet, plate, strip, bar, billet and ingot, as well as
related products such as hot-formed or superplastically formed parts, are
utilized in aircraft bulkheads, tail sections, wing support and carry-through
structures and various engine components, including rotor blades, vanes, discs,
rings and engine cases.
The leading manufacturers of commercial aircraft, Boeing Company, McDonnell
Douglas Corporation and Airbus Industrie, have reported an aggregate of
approximately 2,025 planes under order and deliverable over the next five years.
The comparable backlog in 1992 amounted to 2,500 planes. Other industry sources
have reported that these companies have an aggregate backlog of approximately
3,000 planes under both firm orders and purchase options. However, the impact of
an uncertain world economy and instability in the commercial airline industry
may cause these manufacturers to re-evaluate aircraft orders and options.
Deliveries of commercial aircraft by the above manufacturers totaled 546 in
1993, 738 in 1992, and 753 in 1991.
33
<PAGE> 36
The following table presents the estimated titanium mill product
requirements of selected commercial and military aircraft:
ESTIMATED TITANIUM MILL PRODUCT REQUIREMENTS
PER AIRCRAFT
<TABLE>
<CAPTION>
BUY-WEIGHT(1)(2)
AIRCRAFT ------------------------
-------- (IN THOUSANDS OF POUNDS)
<S> <C>
Commercial:
Airbus Industrie
A320................................. 10-15
A330................................. 23-28
A340................................. 32
Boeing
737.................................. 17
747.................................. 60-82
757.................................. 33-37
767.................................. 36
777.................................. 66
McDonnell Douglas.........................
MD-11................................ 63
Military:
General Dynamics
F-16 Falcon.......................... 6-10
McDonnell Douglas
F-15 Eagle........................... 62
F/A-18 Hornet........................ 16
C-17................................. 94
Sikorsky
Blackhawk............................ 6
Super Stallion....................... 19
Seahawk.............................. 5
</TABLE>
- ---------
(1) Due to yield loss during production, only a portion of the titanium
buy-weight is ultimately used in the aircraft and engines.
(2) Ranges refer to aircraft with variable engine configurations.
Source: RMI estimates.
Nonaerospace Business. Principal nonaerospace mill products include
commercially pure (unalloyed) strip, tube and plate used for chemical
processing, oil refining, pulp and paper equipment and mesh for bridge and deck
repair. Bar is sold for the production of medical implants where the Company
enjoys a significant market share. The Company is also a leading supplier of
commercially pure titanium plate and strip, which offers superior corrosion
resistance and ductility for critical forming and metal expansion. Nonaerospace
sales in 1993 accounted for approximately 30% of the Company's mill product
sales and 24% in 1992. Since the Company's entry into strip production in 1984
and tube production in 1986, sales of these two products have grown to a
majority of the Company's total nonaerospace mill product sales.
34
<PAGE> 37
EXISTING AND DEVELOPING NONAEROSPACE APPLICATIONS
<TABLE>
<CAPTION>
MARKET PRODUCT APPLICATION
------ ------- -----------
<S> <C> <C>
Automotive....................... Bar/Powder Engine components, suspension and
structural components
Bridge and Deck Repair........... Strip Corrosion protection of
reinforced
concrete
Downhole......................... Pipe/Tubing High temperature sour gas
production lines
Environmental (Flue gas
desulfurization, wet
oxidation/disposal)............ Strip/Plate/Pipe Scrubbers and heat exchangers
Gas Transmission................. Pipe/Tubing Sour gas lines
Geothermal....................... Pipe High temperature brine well
strings
Marine/Offshore.................. All Risers, joints, fittings,
umbilical systems, subsea flow
lines, production tubulars
Medical Implants................. Bar/Plate Implants
Naval............................ All Heat exchangers, tubing, pumps
Nuclear and Toxic Waste.......... Plate/Strip Transportation and storage
containers
Nuclear Power Plants............. Plate/Strip/Tubing Heat exchangers and storage
vessels
Ordnance......................... Bar/Billet/Pipe Armor and barrels
</TABLE>
In addition, the Company has entered into two joint venture arrangements in
an effort to increase its participation in the nonaerospace sectors. The first,
formed with Precision Tube Technology, Inc. of Houston, Texas, will market
titanium coiled tubing for the downhole and offshore control line markets of the
petroleum industry. The second venture, Permipipe Titanium AS, formed with
Permascand AB, of Sweden, was finalized in January 1993. The venture will be
located in Norway and manufacture heavy-wall welded titanium tube and pipe for
the oil and gas, petrochemical, pulp and paper, and other process industries.
Manufacturing operations are expected to commence in the first half of 1994. RMI
will supply input material to both joint ventures.
RMI has received certification under ISO-9002 by Bureau Veritas Quality
International for all four of its titanium mill product manufacturing
facilities. ISO-9002 is an international quality management standard recognized
by 90 countries and requires a stringent assessment of all phases of a company's
quality system. RMI is the first, and to date, the only domestic titanium mill
products manufacturer to receive ISO certification.
RELATED PRODUCTS AND SERVICES
Related Products and Services include cut shapes, hot-formed and
superplastically formed parts for aerospace applications, and titanium powders.
The Company also provides conversion services for other titanium and specialty
metals producers. Titanium powders are used for alloy additions,
superconductors, grain refinement of other metals and titanium powder metal
parts.
The Company has devoted significant resources and effort to develop new
applications and markets for titanium in the energy extraction and chemical
process industries. During 1993, the Company executed an agreement under which
it will supply the world's first high-pressure titanium drilling riser for use
in the Conoco Norway, Inc. Heidrun Project located in the Norwegian sector of
the North Sea. Work commenced on the project in the third quarter of 1993, with
deliveries scheduled to begin in the fourth quarter of 1994. When assembled, the
riser will be about 1,500 feet in length and weigh approximately 250,000 pounds.
RMI expects to receive approximately $15 million in revenues from the contract.
35
<PAGE> 38
OTHER REVENUE
During the fourth quarter of 1993, the Company entered into a long-term
agreement with the DOE covering the remediation and restoration of the Company's
former Extrusion Plant located in Ashtabula, Ohio, for which the DOE is
responsible as a result of work performed there for the government. The Company
will serve as prime contractor during the remediation and restoration period.
The total amount of revenues to be recognized, which will be included in the
Other category, are not determinable at this time. However, based on the current
scope of work and assuming adequate DOE funding, revenues are expected to exceed
$250 million over the life of the contract, which is currently expected to
exceed ten years.
EXPORTS
Including revenues recognized in connection with the titanium drilling
riser contract, approximately 19% of consolidated sales in 1993 were generated
by exports, primarily to the European market, where the Company believes it is a
leader in supplying alloy flat-rolled titanium mill products as well as rotating
quality billet. Export sales comprised approximately 23% and 22% of consolidated
sales in 1992 and 1991, respectively. As a result of the overall decrease in
world demand for titanium, particularly in the European aerospace sector, the
Company's export sales in 1993 decreased approximately 24% from 1992. Export
sales in 1992 decreased approximately 12% from 1991. Through its distributors,
contracts have been secured to furnish titanium mill products to major European
aerospace manufacturers. In order to enhance its presence in the European
market, in 1992 the Company acquired a 40% ownership interest in its French
distributor, Reamet, SA. Most of the Company's exports consist of titanium mill
products used in aerospace markets. The Company's exports also consist of slab,
commercially pure strip, and plate and welded tubing used in nonaerospace
markets.
COMPETITION AND OTHER MARKET FACTORS
The Company is one of the major producers of titanium mill products in the
world. The titanium metals industry is highly competitive on a worldwide basis.
Competition is primarily on the basis of price, quality and delivery.
Integrated and nonintegrated producers of mill products are located
primarily in the U.S., Japan, the Commonwealth of Independent States ("CIS"),
Europe and China. Following closure of the Company's sponge facilities in 1992,
there are two remaining integrated producers in the United States. There are
also a number of domestic nonintegrated producers which along with the Company
produce mill products from purchased sponge, scrap or ingot. However, none of
the Company's nonintegrated competitors produce as full a line of mill products
as does RMI.
Imports of titanium mill products from countries that receive the
most-favored-nation tariff rate ("MFN") are subject to a 15% tariff. The tariff
rate applicable to imports from countries that do not receive MFN treatment is
45%. Japanese producers, which benefit from MFN treatment, participate
significantly in the European market, but historically have not been a major
factor in the U.S. mill products market. The United States does not currently
grant MFN treatment to imports, including titanium mill product imports, from
the CIS countries except Russia. However, effective October 18, 1993, the United
States government extended the benefits of the Generalized System of Preferences
("GSP") to Russia. Under GSP, the United States grants duty-free access to
semifinished and agricultural products from developing countries and
territories. Certain titanium mill products are covered by GSP. However,
titanium sponge has not been afforded GSP treatment. While countries within the
CIS, including Russia, have not participated to any significant degree in the
U.S. market for titanium mill products, they have the largest titanium
production capacity in the world and could materially affect competition if
their exports were to increase significantly. Several of the Company's
competitors together challenged the granting of GSP benefits to Russian titanium
mill products, but recently withdrew their petition. The Company was not a party
to this challenge. RMI anticipates that the GSP situation will provide the
Company with additional opportunities for metallics supplies. The Company has
conducted preliminary discussions with several Russian companies regarding
potential cooperative ventures.
36
<PAGE> 39
MARKETING AND DISTRIBUTION
RMI markets its titanium mill products and related products and services
worldwide. Approximately 80% of the Company's consolidated sales are made
through its internal sales organization. RMI's domestic sales force has offices
in Niles, Ohio; Houston, Texas; Brea, California; Washington, Missouri; and Salt
Lake City, Utah. Technical marketing personnel are available to service these
offices and to assist in new product applications and development. In addition,
the Company's Customer Technical Service and Research and Development
Departments, both located in Niles, Ohio, provide extensive customer support.
Independent distributors, while accounting for only a small portion of
sales, are an important channel of distribution for the Company. The use of
distributors allows RMI to service customers who require off-the-shelf titanium
mill products without an investment by the Company in inventories, facilities
and additional sales staff.
In the U.S., RMI maintains an exclusive domestic distributorship
arrangement with A.M. Castle and Co. ("AMC"), one of the nation's largest
independent metal service centers, having numerous domestic locations. AMC
possesses special expertise in titanium, including cutting and warehousing
capability.
Internationally, RMI maintains a sales office in England and has a
worldwide network of independent sales representatives and distributors. In
1992, in an exchange of common stock, the Company acquired a 40% ownership
interest in its French distributor, Reamet, SA. As a leading supplier of alloy
flat-rolled titanium mill products to the European market, the Company has
worked through its distributors to secure contracts to furnish mill products to
the major European aerospace manufacturers. As a result, the Company has export
sales to customers in France, the United Kingdom and Germany. International
sales representation is also available for the Netherlands, Italy, Israel,
Spain, Sweden, Brazil, Belgium, Norway and Australia.
RESEARCH, TECHNICAL AND PRODUCT DEVELOPMENT
The Company conducts research, technical and product development activities
at facilities in Niles. The principal goals of the Company's research program
are maintaining technical expertise in the production of titanium metal and
related products and providing technical support in the development of new
markets and products. Beyond the Company's own funding, certain major customers
have assisted in funding the Company's development of specific titanium
applications. Research, technical and product development costs totaled $2.4
million in 1993, $2.4 million in 1992, and $6.1 million in 1991. Customer
assisted funding, which is treated as a reduction of research and development
spending, reduced research and development expense to $1.5 million, $1.6
million, and $3.5 million, in 1993, 1992 and 1991, respectively.
The Company has research laboratories in Niles which contain melting, metal
processing and metal testing facilities and a corrosion laboratory for support
of the nonaerospace markets.
PATENTS AND TRADEMARKS
The Company possesses a substantial body of technical know-how and trade
secrets and owns ten U.S. patents applicable primarily to product formulations
and uses. The Company considers its know-how, trade secrets and patents
important to its business, although no individual item is considered to be
material to current business. Patents related to alloy formulations have been
cross-licensed with another titanium producer resulting in a small current
royalty income.
EMPLOYEE RELATIONS
As of March 31, 1994, the Company and its subsidiaries employed 826 people,
177 of whom were classified as administrative and sales personnel. Approximately
44 of the 826 employees were on temporary or extended layoff status and 111 were
directly involved with the DOE remediation and restoration contract at the
Company's former Extrusion Plant.
Hourly, clerical and technical employees at the Niles Manufacturing Plant
and the hourly employees at the former Extrusion Plant are represented by the
United Steel Workers of America ("USWA"). Other than
37
<PAGE> 40
remaining hourly workers at the Sodium Plant, who are represented by the Oil,
Chemicals and Atomic Workers Union, the remaining employees are not represented
by a union. In October 1992, a three year labor agreement was reached with the
USWA unit at Niles. The hourly employees at the former Extrusion Plant agreed to
a three year contract in January 1993. The Company believes its relationships
with its employees to be good.
RAW MATERIALS
Following the closure of its sponge production facilities in early 1992,
the Company began purchasing its titanium sponge from outside sources. The
Company has entered into two long-term sponge supply arrangements, each with
pricing below the cost of sponge which was produced at the Company's own
facilities. In addition, the Company has supplemented its metallics requirements
with additional sponge and raw material purchases from other suppliers, both
foreign and domestic.
The Company purchases titanium tetrachloride, the primary raw material used
in the manufacture of titanium sponge, from SCM Chemicals, Inc. ("SCM").
Titanium tetrachloride is shipped to one of the Company's long-term sponge
suppliers where it is used in providing sponge for the Company.
The Company believes it has adequate sources for alloying agents and other
miscellaneous raw materials.
PROPERTIES
The Company's principal products together with the location of its
principal manufacturing plants and aggregate capacity are set forth below.
<TABLE>
<CAPTION>
PRODUCT ANNUAL CAPACITY LOCATION
------- --------------- --------
<S> <C> <C>
Ingot....................................... 36 Million Pounds (1) Niles, OH
Mill Products............................... 22 Million Pounds (1) Niles, OH
Hermitage, PA
Sharon, PA
Hot-Formed and Superplastically Formed Washington, MO
Components................................ 21 Thousand Press Hours Sullivan, MO
Titanium Metal Powders...................... 1.5 Million Pounds Salt Lake City, UT
</TABLE>
- ---------
(1) Rated capacity based on current product mix and yields; practical capacity
may be less.
In total, the Company has over 728,000 square feet of manufacturing
facilities exclusive of office space, located primarily in Niles, Ohio. The
Company owns all of the foregoing facilities, except for the Sharon,
Pennsylvania and Sullivan, Missouri sites, and certain buildings and property at
Washington, Missouri, all of which are leased. The plants have been constructed
at various times over a long period. Many of the buildings have been remodeled
or expanded and additional buildings have been constructed from time to time.
Much of the equipment at the various locations has likewise been replaced or
remodeled and new equipment has been added at various times. The Company
believes that the plants are adequate and suitable for its operating needs. At
March 31, 1994, the Company's ingot and mill products facilities were being
utilized at approximately 47% and 52%, respectively, of rated capacities, which
may exceed practical capacities.
LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. Such claims
against the Company are generally covered by insurance. Given the critical
nature of many of the aerospace end uses for the Company's products, including
specifically their use in critical rotating parts of gas turbine engines, the
Company maintains aircraft products liability insurance of $250 million, which
includes an aggregate $100 million grounding liability.
38
<PAGE> 41
General. The Company has been named as a defendant in a number of cases
arising from the aircraft crash at Sioux City, Iowa, which occurred on July 19,
1989. In its final report, issued November 1, 1990, the National Transportation
Safety Board ("NTSB") concluded that the titanium used to manufacture the fan
disc which ultimately failed, leading to the crash, was supplied by a major
competitor of the Company. Based on the conclusions contained in the NTSB report
and the coverage provided by aircraft products liability insurance, the Company
does not anticipate any adverse financial exposure as a result of these actions.
In connection with the closing of the Sodium and Metals Reduction Plants,
the Oil, Chemical and Atomic Workers Union, Local 729, has brought an action
against the Company alleging violation of the notification provisions of the
Worker Adjustment and Retraining Notification Act ("WARN"). Three classes of
former employees of the Company's Sodium and Metals Reduction plants have
alleged that they did not receive the appropriate warnings of their pending
layoffs or layoffs as required under WARN. This case is currently in the
discovery phase. The Company believes that it has complied with the provisions
of WARN and that the claims are substantially without merit.
Environmental. The Company is subject to extensive federal, state and local
laws and regulations concerning environmental matters. During 1993, the Company
spent approximately $0.9 million for environmental-related expenditures, and
$0.7 million in each of 1992 and 1991. The Company broadly estimates
environmental-related expenditures, including capital items and compliance
costs, will total approximately $2.0 million during the 1994-1995 period.
In connection with the Reorganization, the Company assumed all
responsibility for environmental matters relating to RMI Company and its
immediate predecessor, Reactive Metals, Inc., which commenced business on April
1, 1964, and agreed to indemnify Quantum and USX against any liability relating
to such environmental matters. Quantum and USX have been named as potentially
responsible parties in connection with the Fields Brook Superfund site discussed
below. In addition, Quantum initially acquired the Company's now closed
Ashtabula facilities in 1950, which it owned until 1964, when they were acquired
by Reactive Metals, Inc. Although the Company believes it may have claims with
respect to possible remediation and other costs against Quantum for the pre-1964
period, ultimate apportionment of any liability between the Company and Quantum
has not been finally agreed upon.
Active Investigative or Cleanup Sites. The Company is involved in
investigative or cleanup projects at certain waste disposal sites, which are
discussed below.
Fields Brook Superfund Site. The Company, together with 31 other
companies has been identified by the U.S. Environmental Protection Agency
("EPA") as a potentially responsible party ("PRP") with respect to a
Superfund site defined as the Fields Brook watershed in Ashtabula, Ohio,
which includes the Company's now closed Ashtabula facilities. The EPA's
1986 estimate of the cost of remediation of the Fields Brook sediment
operable unit was $48 million. The actual cost of remediation may vary from
the estimate depending upon a number of factors such as extent of
contamination, method of remediation, required cleanup standards, timing of
the work, effect of inflation and development of remediation technology.
The EPA, in March 1989, ordered 19 of the PRPs to conduct a predesign
and design phase study for the sediment operable unit and a source control
study, which studies are currently estimated to cost $16.5 million. The
Company, working cooperatively with twelve others in accordance with two
separate agreements, is complying with the order. The Company has accrued
and is currently paying a portion of the cost of complying with the EPA's
order. It is anticipated that the study will be completed no earlier than
late 1994. Actual cleanup would not commence prior to that time. It is not
possible to determine accurately the Company's share in any final
allocation formula with respect to the study or the cleanup; however, on
the basis of its current knowledge, the Company believes its share of the
ultimate costs will be in the range of 5% to 11%.
In September 1989, EPA sued a number of the then nonparticipating PRPs
seeking recovery of costs incurred by the EPA related to study of the
Fields Brook site. The defendant PRPs later brought several third-party
actions against differing combinations of certain of the cooperating PRPs
and Quantum, in
39
<PAGE> 42
addition to a counterclaim against the EPA. A consent decree between the
EPA and the defendant PRPs has resolved the original suit and the
counterclaim. In 1993, USX was added as a defendant PRP.
Thirteen of the PRPs plus several others have agreed to a nonbinding
arbitration process to allocate the cost of complying with the March 1989
order. The arbitration is an alternative to the costly litigation which
would otherwise have developed. No significant new facts have been
discovered as a result of this process.
The Ohio Environmental Protection Agency ("Ohio EPA") has notified the
PRPs of its intention to undertake a Natural Resource Damage Assessment
("NRDA") for the Fields Brook site which could lead to a Natural Resource
Damage Claim ("NRDC") against the PRPs. Presently, some portions of the
assessment are being conducted. The assessment could lead to a claim
against the PRPs for residual damages after the clean up is completed. The
Company believes and the Ohio EPA has acknowledged in part, that any
actions to pursue an NRDA or NRDC are premature until the remediation of
the Fields Brook watershed is complete. It is not possible to predict, at
this time, the cost to the Company, if any, as a result of the NRDA and any
NRDC that might be brought.
Resource Conservation and Recovery Act of 1976 ("RCRA")
Proceedings--Ashtabula Sodium Plant. The Company, through its independent
environmental consultant, has identified and reported to EPA the presence
of metals and hazardous organic materials on portions of its now closed
Sodium Plant in Ashtabula, Ohio. As to the organic material, the consultant
has determined it originates from an off-site source, and the Company does
not anticipate it will be required to clean up this material.
A Corrective Measures Study report prepared for the Company by the
consultant states that the presence of metals would not be expected to have
an adverse impact on humans or the environment, and, after conducting a
detailed analysis of cleanup alternatives, the study recommended that
metals contaminated fill material be consolidated at an on-site landfill
and contained in place, at an estimated cost of $1 million. The Company has
responded to comments received and is awaiting final approval of the study.
Ashtabula River. The Ashtabula River and Harbor has been designated
one of 43 Areas of Concern on the Great Lakes by the International Joint
Commission. Fields Brook empties into the Ashtabula River, which in turn
flows into Lake Erie. The State of Ohio has appropriated $7 million in
state funds to the Ashtabula River dredging project to assist in securing
at least $18 million in federal funds needed to conduct the dredging.
The Company believes it is most appropriate to use public funds to
cleanup a site with regional environmental and economic development
implications such as the Ashtabula River and Harbor. However, it is
possible that EPA could determine that the Ashtabula River and Harbor
should be designated as an extension of the Fields Brook Superfund site,
or, alternatively, as a separate Superfund site. It is not possible at this
time to predict the methods or responsibility for any remediation and
whether the Company will have any liability for any costs incurred in
cleaning up the Ashtabula River and Harbor. In 1989, the Company and four
other companies entered into an Administrative Order By Consent with EPA
and the Ohio EPA providing for a study to evaluate the nature and extent of
sediment contamination of the Ashtabula River and Harbor and to investigate
potential sources of such contamination and its effect on the water supply
of the City of Ashtabula. The study, which showed no effect on the water
supply, was completed for approximately $1.7 million, of which the
Company's share was $0.4 million. The study report has not yet been
finalized with the EPA and Ohio EPA.
In a May 1993 public meeting on Fields Brook, the EPA reiterated that
the best remedy for the Ashtabula River and Harbor might be to perform a
partial dredging and leave the deep sediments in place, thereby reducing
the cost. The EPA also stated that if the river is not remediated by some
other mechanism, eventually it may be forced to pursue remediation under
Superfund.
With respect to each of the above sites, all of which are located in Ohio,
the State of Ohio may assert its interests and rights independent of those of
the EPA. The Company has notified all its insurers relative to the environmental
claims reported above and has demanded that the insurers assume the Company's
defense of
40
<PAGE> 43
such claims and indemnify the Company against such claims. During 1993 the
Company settled a claim with one insurer for $0.4 million. None of the remaining
insurers have agreed to defend or indemnify the Company, and several have denied
coverage. However, the Company continues to pursue these claims with its
insurers.
Given the status of the proceedings at certain of these sites, and the
evolving nature of environmental laws, regulations, and remediation techniques,
the Company's ultimate obligation for investigative and remediation costs cannot
be predicted. It is the Company's policy to recognize in its financial
statements environmental costs as an obligation becomes probable and a
reasonable estimate of exposure can be determined. At March 31, 1994, the amount
accrued for future environmental-related costs was $2.9 million. The amount
accrued is net of expected contributions from third parties (other than
insurers) of approximately $1.6 million which the Company believes are probable.
The Company has been receiving contributions from such third parties for a
number of years as partial reimbursement for costs incurred by the Company. As
these proceedings continue toward final resolution, amounts in excess of those
already provided may be necessary to discharge the Company from its obligations
for these sites.
Alleged RCRA Violation. On October 9, 1992 the EPA filed a complaint
alleging certain violations of RCRA at the Company's now closed Sodium Plant in
Ashtabula, Ohio. The EPA's determination is based on information gathered during
inspections of the facility in 1991. Under the complaint the EPA proposed to
assess a civil penalty of approximately $1.4 million for alleged failure to
comply with RCRA. The Company is contesting the complaint. It is the Company's
position that it has complied with the provisions of RCRA and that the EPA's
assessment of penalties is inappropriate. A formal hearing has been requested
and informal discussions with the EPA to settle this matter are ongoing. Based
on the preliminary nature of the proceedings, the Company is currently unable to
determine the ultimate liability, if any, that may arise from this matter.
The ultimate resolution of the foregoing contingencies could, individually
or in the aggregate, be material to the consolidated financial statements.
However, management believes that RMI will remain a viable and competitive
enterprise even though it is possible these matters could be resolved
unfavorably.
41
<PAGE> 44
RMI TITANIUM COMPANY
SELECTED FINANCIAL INFORMATION
The following selected financial information has been derived from the
consolidated financial statements of RMI for each of the five years in the
period ended December 31, 1993 and the condensed financial statements of RMI for
the quarters ended March 31, 1994 and 1993. The information set forth below
should be read in connection with the Consolidated Financial Statements, the
Condensed Consolidated Financial Statements and the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" related thereto,
included elsewhere herein. The selected quarterly information has been prepared
by the Company without audit and reflects all adjustments, consisting only of
normal recurring adjustments, which are, in the opinion of management, necessary
for a fair statement of the results of operations for the interim periods
covered.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- --------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AND PRICE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA:
Sales:
Mill Products................... $ 25,754 $ 26,987 $ 96,453 $110,509 $128,803 $208,058 $184,251
Related Products and Services... 7,948 3,610 20,512 16,745 17,260 16,397 19,931
Other(1)........................ 2,658 1,537 10,432 8,353 19,505 30,840 37,832
-------- -------- -------- -------- -------- -------- --------
Total....................... 36,360 32,134 127,397 135,607 165,568 255,295 242,014
Operating income (loss)........... (2,216) (2,359) (10,764) (11,387) (52,712)(2) 32,773 30,088
Income (loss) before cumulative
effect of a change in accounting
principle....................... (2,929) (2,897) (11,955) (14,062) (57,085)(2) 28,126 26,544
Cumulative effect of a change in
accounting principle............ (1,202)(3) (16,938)(4) (16,938)(4) -- -- -- --
Net income (loss)................. (4,131) (19,835) (28,893) (14,062) (57,085) 28,126 26,544
Cash dividends per common
share(5)........................ -- -- -- -- .75 .75 --
NET LOSS PER COMMON SHARE:(5)
Before change in accounting
principle....................... $ (1.99) $ (1.98) $ (8.14) -- -- -- --
Net loss per common share......... (2.80) (13.58) (19.67) $ (9.66) $ (39.17) -- --
PRO FORMA DATA:(6)
Pro forma net income.............. -- -- -- -- -- $ 27,274 $ 21,959
Pro forma net income per common
share(5)........................ -- -- -- -- -- 18.17 14.64
Pro forma book value per common
share(5)........................ -- -- -- -- -- -- 74.11
BALANCE SHEET DATA: (at end of
period)
Working capital................... $ 66,517 $ 66,319 $ 72,229 $ 79,820 $109,044 $102,666
Total assets...................... 153,841 152,471 153,257 173,888 228,605 217,549
Long-term debt due after one
year............................ 68,530 66,660 62,280 58,800 61,205 38,503
Equity............................ 23,939 27,861 63,302 77,705 136,569 141,158
Book value per common share(5).... 16.23 18.89 43.34 53.36 92.61 --
% Total debt to total
capitalization.................. 74% 71% 50% 43% 31% 22%
OPERATING DATA:
Mill product shipments
(thousands of pounds):
Aerospace....................... 1,951 2,002 7,619 8,699 9,379 12,898 12,237
Nonaerospace.................... 892 815 3,406 2,585 1,938 3,913 3,612
-------- -------- -------- -------- -------- -------- --------
Total....................... 2,843 2,817 11,025 11,284 11,317 16,811 15,849
Average mill product sales price
(per pound)..................... $ 9.46 $ 10.38 $ 9.60 $ 10.20 $ 11.69 $ 12.58 $ 11.81
Mill product capacity (millions of
pounds)(7)...................... 22.0 22.0 22.0 22.0 22.0
Ingot capacity (millions of
pounds):(7)..................... 36.0 36.0 36.0 36.0 36.0
Ingot melt...................... 14.6 14.7 14.0 22.9 24.2
% Utilization................... 41% 41% 39% 64% 67%
Active employees at
December 31,.................... 782 843 1,172 1,660 1,650
</TABLE>
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<PAGE> 45
- ---------
(1) Includes sales of discontinued products of $2.6 million, $13.2 million,
$22.9 million and $29.7 million in 1992, 1991, 1990 and 1989, respectively.
(2) Includes a charge of $37.1 million relating to the closing of the Company's
sponge production facilities. See Note 4 to the Consolidated Financial
Statements, included elsewhere herein.
(3) Reflects the January 1, 1994 adoption of SFAS No. 112. See Note 4 to the
Condensed Consolidated Financial Statements included elsewhere herein.
(4) Reflects immediate recognition of the transition obligation determined as of
the January 1, 1993 adoption of SFAS No. 106. See Note 11 to the
Consolidated Financial Statements, included elsewhere herein.
(5) Amounts retroactively restated to reflect the one-for-ten reverse stock
split effective March 31, 1994. See Note 17 to the Consolidated Financial
Statements included elsewhere herein.
(6) Reflects the change to the Company's capital structure effective April 20,
1990 (see Note 1 to Consolidated Financial Statements included elsewhere
herein) and certain adjustments to historical partnership income.
(7) Rated annual capacity; practical capacity may be less.
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<PAGE> 46
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with "Selected
Financial Data" and the Consolidated Financial Statements and Notes thereto and
the Condensed Consolidated Financial Statements and Selected Notes thereto of
the Company included elsewhere herein.
OVERVIEW
The cyclical nature of the aerospace industry has been the principal cause
of the fluctuations in performance of companies engaged in the titanium
industry. Prior to 1989-1990, the last peak in the titanium industry cycle
occurred during the 1979-1982 period. From 1987 through late 1990, average unit
prices for the Company's mill products increased steadily. Domestic industry
shipment volumes in 1989 increased to 55 million pounds from 50 million in 1988,
then decreased to 53 million pounds in 1990. Shipments for 1991 decreased to
approximately 34 million pounds, a decrease of 35% from 1990 levels, the largest
single one year decrease in the history of the industry. Domestic industry
shipments amounted to approximately 35 million pounds in 1992 and approximately
36 million pounds in 1993. Domestic industry shipping volumes for 1994 are not
expected to increase significantly from 1993 levels. While excess titanium
inventories at prime aerospace contractors appear to have decreased, a declining
U.S. military budget and production cutbacks at Boeing, McDonnell Douglas and
Airbus Industrie resulting from reduced commercial airline demand for new
aircraft, continue to negatively impact the demand for titanium mill products.
In response to these industry-wide conditions, the Company closed its
sponge production facilities in early 1992, which allowed the Company to
immediately stem significant losses generated at these plants, as well as
maintain the flexibility to purchase titanium sponge and other raw materials,
such as foreign or domestic scrap at opportunistic prices. The Company entered
into two long-term titanium sponge supply arrangements which will assure supply
of a significant portion of its sponge requirements at initial costs below the
cost of sponge which had been produced at its own facilities. These actions have
reduced the Company's raw material costs by approximately 18% since 1991, and
will continue to improve the Company's future competitive position.
In addition, the Company has substantially reduced administrative costs,
including a 58% reduction in salaried personnel since the beginning of 1991. As
a result, despite the adverse market conditions described above, the Company has
improved its operating results by 31% since 1991.
Further improvement in results of the Company's operations, however, will
depend largely on increased commercial aerospace activity and new market
applications. The Company is currently unable to accurately predict when demand
for its products will improve. In order to lessen its dependence on the
aerospace market and to increase its participation in commercial applications,
the Company has devoted significant efforts to developing new applications and
markets for titanium in the energy extraction and chemical process industries.
The Company's successful bid to supply the world's first titanium drilling riser
for the Conoco Norway Heidrun project is one of several opportunities in this
market that the Company is currently pursuing. In addition, the Company has
entered into two joint ventures, one for the marketing of titanium coiled tubing
for the downhole and offshore markets of the petroleum industry and the second
to manufacture heavy-wall tube and pipe for use in oil and gas, petrochemical,
pulp and paper, and other process industries. Further, the Company has signed an
agreement with an engineering company specializing in the design of offshore
structures for deep water drilling. The agreement provides for the Company to be
the exclusive supplier of titanium risers and stress joint components to the
engineering company's clients. The Company is currently working with other
companies to develop and expand opportunities for titanium in the energy field.
RESULTS OF OPERATIONS
Years 1993, 1992 and 1991
Net sales. Net sales in 1993 decreased by $8.2 million or 6% from 1992.
This decrease resulted primarily from lower selling prices of titanium mill
products combined with a continuing market driven shift in mix toward
semifinished products and away from higher margin mill products. Net sales
decreased 18% in 1992
44
<PAGE> 47
from 1991. This decrease reflects both reduced shipments and selling prices for
titanium mill products. Average selling prices for mill products in 1993
decreased 6% from 1992, and in 1992 decreased by 13% from 1991.
Sales of mill products in 1993 decreased by $14.0 million or 13% from 1992.
This decrease results from the shift in product mix combined with the decrease
in average selling prices mentioned above. The Company and the domestic titanium
industry in general have seen a weakening in mill product prices corresponding
closely to reduced demand. Prices on recent incoming orders continue to reflect
soft demand for titanium metal products.
Sales of related products and services in 1993 increased $3.7 million or
22% from 1992. This increase resulted primarily by the inclusion of revenues
from the titanium drilling riser contract partially offset by reduced demand for
hot formed parts, cut shapes and powders. Sales of related products and services
decreased by $.5 million from 1991 to 1992 primarily because of lower demand for
hot formed products and powders.
Other revenue in 1993 is represented by the DOE remediation and restoration
contract. Revenue relating to preliminary restoration activities in 1992 and
1991 is also included in other revenue.
Gross Profit. Gross margin improved slightly in 1993. This improvement
reflects decreased operating costs due to the closure of the sponge facilities
in 1992 and other cost reduction programs, largely offset by lower selling
prices and reduced product shipments.
Gross margin improved during 1992 to a loss of $0.4 million compared to a
loss of $1.4 million in 1991. This improvement reflects decreased operating
costs resulting from the closure of the sponge facilities, partially offset by
lower selling prices and a less favorable product mix.
Selling, General and Administrative Expenses ("SG&A"). SG&A decreased to
$9.1 million for 1993 from $9.4 million in 1992, while SG&A expenses in 1992
decreased by $1.3 million from $10.7 million in 1991. The decreases in each year
are due primarily to reduced employment levels consistent with lower operating
rates and other cost containment efforts.
Research, Technical and Product Development Expenses. The Company's total
research spending amounted to $2.4 million in each of 1993 and 1992 and $6.1
million in 1991. The spending levels in 1993 and 1992 were set with an objective
of maintaining the Company's technical expertise in titanium production,
providing customer technical support, and developing new products and markets,
in spite of poor economic conditions. The decrease from 1991 to 1992 resulted
primarily from the cessation of activities relating to the development of an
electrolytic sponge process which was discontinued with the closing of the
Company's sponge facilities in early 1992. Certain major customers have assisted
in funding the Company's overall product development effort. Such funding, which
is reflected as a reduction of research expense, reduced the Company's portion
of research expense to $1.5 million, $1.6 million and $3.5 million in 1993, 1992
and 1991, respectively.
Operating Loss. The operating loss for 1993 was $10.7 million compared to a
loss of $11.4 million in 1992. The operating loss amounted to $15.6 million in
1991. The improvement in 1993 resulted from decreased costs for raw materials
resulting from the closing of the Company's sponge facilities and lower
operating expenditures offset by reduced selling prices and a less favorable
product mix. The improvement in 1992 from 1991 stemmed from lower operating
costs partially offset by lower selling prices.
Net Loss. In 1993, the Company recorded a net loss of $28.9 million
compared to a net loss of $14.1 million in 1992. The 1993 results were affected
by a $16.9 million cumulative effect charge for adopting the provisions of SFAS
No. 106 "Employers Accounting for Postretirement Benefits Other than Pensions."
See Note 11 to Consolidated Financial Statements included elsewhere herein. The
net loss in 1992 amounted to $14.0 million compared to a net loss of $57.1
million in 1991. The 1991 results were impacted by a $37.1 million charge
resulting from the closing of its sponge production facilities. See Note 4 to
the Consolidated Financial Statements included elsewhere herein. Net interest
expense amounted to $2.7 million in 1993 and 1992. Interest expense in 1991
amounted to $3.5 million. While average borrowings increased in
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<PAGE> 48
1993 from 1992, interest expense remained flat due to lower overall interest
rates. The decrease in 1992 from 1993 resulted from lower interest rates
partially offset by increased borrowings. In accordance with income tax
accounting principles, no income tax benefit was recorded in relation to pretax
losses in 1993, 1992 and 1991. See Note 8 to the Consolidated Financial
Statements included elsewhere herein.
Three Months Ended March 31, 1994 and 1993
Net Sales. Net sales increased by $4.2 million, or 13%, for the three
months ended March 31, 1994 compared to the corresponding 1993 period. This
increase is due primarily to the recognition of $2.7 million in revenue under
the titanium drilling riser contract in 1994. Additionally, revenues under the
DOE remediation and restoration contract increased by $1.1 million in the first
quarter of 1994, or 73%, from the same period in 1993. Sales of hot formed parts
and cut shapes during the first quarter of 1994 increased approximately $.5
million or 15% from 1993 first quarter levels. Shipments of titanium mill
products increased slightly from first quarter 1993 shipments. Because of a less
favorable product mix and a continuation of intense price competition, average
selling prices on mill products in 1994 decreased by approximately 9% from 1993
first quarter levels; however, by comparison to the fourth quarter of 1993,
average selling prices on mill products in 1994 increased approximately 2%.
Overall demand and pricing for titanium mill products remains weak.
Gross Profit. Gross profit amounted to $.5 million for the quarter ended
March 31, 1994 compared to a gross profit of $.4 million for the comparable 1993
period. The 1994 results were favorably impacted by the titanium drilling riser
contract and the DOE remediation and restoration contract.
Selling, General and Administrative Expenses. SG&A amounted to $2.4 million
for the quarter ended March 31, 1994 compared to $2.3 million in the first
quarter of 1993. Although the Company has achieved administrative cost
reductions through its cost containment measures, 1994 first quarter
administrative costs were adversely impacted by an additional charge of $.1
million resulting from the recognition of deferred compensation expenses related
to the early vesting of awards previously granted under the Company's 1989
Employee Restricted Stock Award Plan. Additionally, reimbursable administrative
expenses associated with the DOE remediation and restoration contract increased
by $.1 million from 1993 first quarter levels. Research, technical and product
development expenses amounted to $.3 million in the first quarter of 1994
compared to $.4 million in the first quarter of 1993.
Operating Loss. The operating loss for the three months ended March 31,
1994 and 1993 amounted to $2.2 million and $2.4 million, respectively.
Net Loss. Because of increased overall interest rates and a higher level of
borrowings, interest expense increased to $.7 million in the first quarter of
1994 from $.6 million in 1993.
Net loss for the first quarter of 1994 reflects a charge of $1.2 million
resulting from the cumulative effect of adopting SFAS No. 112. See Note 4 to the
Condensed Consolidated Financial Statements included elsewhere herein. The
comparable 1993 period reflects a charge of $16.9 million representing the
cumulative effect of adopting SFAS No. 106.
BUSINESS OUTLOOK-BACKLOG
Including the remainder of the titanium drilling riser contract referred to
above, the Company's total order backlog as of March 31, 1994 was approximately
$70 million, compared to $71 million at December 31, 1993 and $53 million at
December 31, 1992. As a result of soft demand and competitive pressures, the
average selling prices on incoming orders for mill products have decreased over
the last several years. The Company believes a number of factors are responsible
for this situation. Among these factors are aggressive international
competition, declining military spending, lack of commercial airline profits,
and an uncertain world economy. Many aerospace contractors have adopted
just-in-time inventory practices or have demanded significantly shorter lead
times. Additionally, contractors are waiting until the last minute to place
orders in an effort to obtain the best possible pricing. The titanium industry
is also suffering from excess production capacity, which has intensified price
competition for available business. Improvement in the Company's results of
operations will depend largely on increased aerospace activity.
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<PAGE> 49
LIQUIDITY AND CAPITAL RESOURCES
Working capital amounted to $66.5 million at March 31, 1994, compared to
$66.3 million at December 31, 1993 and $72.2 million at December 31, 1992. The
decrease in working capital from 1992 to 1993 reflects a reduction in
inventories and a net increase in current liabilities partially offset by an
increase in accounts receivable resulting from a $3.8 million progress billing
on the titanium drilling riser contract, which was collected in January 1994.
The Company's working capital requirements are not seasonal.
For the quarter ended March 31, 1994 and the year ended December 31, 1993,
the Company's cash flow requirements for operating losses and capital spending
were funded primarily by working capital reductions and borrowings under the
Company's Existing Credit Facility. In 1992, the Company's cash flow
requirements were also funded by borrowings and reductions in working capital.
In 1991, cash provided from operating activities of $15 million was generated
primarily through working capital reductions.
At March 31, 1994 and December 31, 1993, the Company had borrowings of
$67.5 million and $65.6 million, respectively, under the Existing Credit
Facility. Included in the balance outstanding at December 31, 1993 is
approximately $4.8 million borrowed to finance working capital invested in the
titanium drilling riser contract. Other long-term debt consisted of $1.0 million
in industrial revenue bonds. As of March 31, 1994, the Company was in compliance
with the covenants and terms of the Existing Credit Facility.
RMI's shareholders' equity declined to $23.9 million at March 31, 1994,
from $136.6 million at December 31, 1990, due to the net losses described above
and a $7.5 million minimum pension liability adjustment recorded at December 31,
1993. Long-term debt increased from $61.2 million to $68.5 million over the same
period. The percentage of RMI's total debt to total capitalization has increased
from 31% in 1990 to 74% at March 31, 1994. This increase reflects primarily the
net losses and the pension liability adjustment described above.
The Company, along with the rest of the titanium industry, has experienced
a severe downturn in its traditional markets since 1990. Significant reductions
in demand for the Company's products and reduced prices have resulted in the
Company incurring losses in 1991, 1992, 1993 and the first quarter of 1994.
These losses have eroded the Company's equity base and impeded the generation of
cash, forcing increasing reliance on the Existing Credit Facility. Aggressive
cost-cutting efforts, combined with improved operating efficiencies, the sale of
nonstrategic assets and borrowings under the Existing Credit Facility have
enabled the Company to maintain operations during this difficult period.
However, the timing and extent of any recovery in the Company's traditional
aerospace markets is uncertain.
Emerging market opportunities as described above, together with the lack of
recovery in the Company's traditional markets, will place an even greater
pressure on the Company's limited financial resources. Accordingly, the Board of
Directors has determined that the Company should seek to raise up to $30 million
through the Rights Offering. Net proceeds of the Rights Offering will be used by
the Company for general corporate purposes, including working capital for the
development of new markets for its products. Additionally, the Company has
obtained a commitment from participating banks to amend its Existing Credit
Facility to establish new financial covenants and relate the maximum amount of
available credit thereunder to a borrowing-base formula and has also obtained a
commitment from such banks to enter into the EXIM Bank Credit Facility providing
for up to an additional $15 million of available credit. Additionally, continued
losses from operations could result in noncompliance with the minimum total
shareholders' equity covenant of the Existing Credit Facility, as amended. If
the Company were unable to comply with such covenant, the Company might not be
able to borrow additional amounts thereunder or under the EXIM Bank Credit
Facility, and the banks which are parties to the two credit facilities could
demand payment of all amounts outstanding thereunder. For information concerning
the Existing Credit Facilities, as amended, and the EXIM Bank Credit Facility,
see "Capitalization--Revolving Credit Facilities."
On March 31, 1994, the Company's shareholders approved an amendment to the
Articles of Incorporation of the Company effecting a one-for-ten reverse stock
split. A Certificate of Amendment to the Articles of Incorporation was filed
with the Ohio Secretary of State on March 31, 1994, and the reverse stock split
became effective on that date. Pursuant to the reverse split, each certificate
representing shares of common
47
<PAGE> 50
stock outstanding immediately prior to the reverse split is deemed to represent
one-tenth the number of shares of common stock immediately prior to the reverse
split.
NEW ACCOUNTING STANDARDS
For information regarding the effect of newly-adopted accounting standards,
see Note 11 to the Consolidated Financial Statements and Note 4 to the Condensed
Consolidated Financial Statements included elsewhere herein.
ENVIRONMENTAL MATTERS
The Company is subject to pervasive environmental laws and regulations as
well as various health and safety laws and regulations that are subject to
frequent modifications and revisions. While the costs of compliance for these
matters has not had a material adverse impact on RMI in the past, it is
impossible to predict accurately the ultimate effect these changing laws and
regulations may have on the Company in the future. During 1993, the Company
spent approximately $0.9 million for environmental-related expenditures,
compared to $0.7 million in each of 1992 and 1991. The Company broadly estimates
environmental-related expenditures, including capital items and compliance
costs, will total approximately $2.0 million during the 1994-1995 period.
The Company is involved in investigative or cleanup projects under federal
or state environmental laws at a number of waste disposal sites, including a
Superfund site. Given the status of the proceedings with respect to these sites,
ultimate investigative and remediation costs cannot presently be accurately
predicted, but could, in the aggregate, be material. Based on the information
available regarding the current ranges of estimated remediation costs at
currently active sites, and what the Company believes will be its ultimate share
of such costs, provisions for environmental-related costs have been recorded,
including $2.7 million in 1991. These provisions are in addition to amounts
which have previously been accrued for the Company's share of environmental
study costs. At March 31, 1994, the amount accrued for future
environmental-related costs was $2.9 million. The amount accrued is net of
expected contributions from third parties (other than insurers) of approximately
$1.6 million, which the Company believes are probable. The Company has been
receiving contributions from such third parties for a number of years as partial
reimbursement for costs incurred by the Company. As these proceedings continue
toward final resolution, amounts in excess of those already provided may be
necessary to discharge the Company from its obligations for these projects.
In 1992, the EPA proposed a $1.4 million civil penalty for alleged failure
to comply with RCRA. The Company is contesting the complaint. Based on the
preliminary nature of the proceeding the Company is currently unable to
determine the ultimate liability, if any, that may arise from this matter.
The ultimate resolution of these environmental matters could individually
or in the aggregate, be material to the consolidated financial statements.
However, management believes that the Company will remain a viable and
competitive enterprise even though it is possible that these matters could be
resolved unfavorably. For additional information on environmental matters, see
"Business--Legal Proceedings."
CAPITAL EXPENDITURES AND JOINT VENTURES
Capital expenditures for the quarters ended March 31, 1994 and 1993
amounted to $.1 million in each period. Capital expenditures for 1993, 1992 and
1991 amounted to $1.0 million, $4.2 million and $8.9 million, respectively. The
Company has budgeted capital spending of approximately $1.0 million in 1994.
Although the Company's capital spending has been reduced in order to conserve
cash, the Company's capital spending levels are adequate to maintain its
facilities while continuing to improve product quality. The Company anticipates
that it can fund this spending using cash provided from operations, supplemented
as necessary by available credit resources. Additionally, in the quarter ended
March 31, 1994 and during the year 1993, the Company invested $.2 million and
$1.2 million, respectively, in joint venture arrangements. These investments
will enable the Company to increase its participation in the developing
nonaerospace markets, principally in Europe.
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<PAGE> 51
DESCRIPTION OF CAPITAL STOCK
RMI is authorized to have outstanding 30,000,000 shares of Common Stock,
$.01 par value per share, and 5,000,000 shares of Preferred Stock, no par value
("Preferred Stock"). As of the Record Date, there were 1,475,285 shares of
Common Stock outstanding. All of the shares of Common Stock issued and
outstanding as of the Record Date are, and any shares of Common Stock to be
issued upon exercise of the Rights will be, fully paid and nonassessable. The
Preferred Stock is issuable in one or more series, with such designations,
dividend rates, dates at which dividends shall be payable and from which they
shall cumulate, redemption rights and prices, sinking fund requirements,
liquidation prices, conversion rights and restrictions as the Board of Directors
shall fix. No shares of Preferred Stock have been issued.
Each holder of shares of Common Stock is entitled to one vote for each
share upon all matters presented to shareholders. Each holder of Preferred Stock
is entitled to one vote for each share thereof and generally votes together with
the Common Stock as one class on all matters, except that Preferred Stock is
entitled to vote separately to elect two additional Directors in the event of a
default in the payment in six quarters of dividends on any series of such class
until no quarterly dividend is in default. In addition, under Ohio law, holders
of Preferred Stock have the right to vote separately as a class on specified
matters.
The Common Stock is not subject to redemption and has no conversion rights.
Upon liquidation, holders of Common Stock are entitled to receive pro rata all
assets of RMI remaining after payment of debts and liquidation preferences
relating to the Preferred Stock.
No holder of Common Stock or Preferred Stock has any preemptive rights or
cumulative voting rights.
Holders of Common Stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors of RMI out of funds legally
available for the payment of dividends. Dividends on Preferred Stock may be
cumulative in preference to holders of Common Stock at such rates and from such
dates as shall be set by the Directors. Dividend payments are prohibited to the
holders of Common Stock, unless all accrued and unpaid dividends have been paid
to the holders of the Preferred Stock.
RMI's Amended Articles of Incorporation may be amended by the affirmative
vote of two-thirds of the voting power to vote on the amendment and if required
by applicable law, two-thirds of the outstanding Preferred Stock.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
Under RMI's Amended Articles of Incorporation, there will be, immediately
after the Expiration Time, and assuming the Rights are fully exercised,
authorized and unissued shares of Common Stock and five million shares of
undesignated Preferred Stock. The unissued shares of Common Stock, to the extent
not reserved for issuance pursuant to RMI's Stock Option Plan and Restricted
Stock Plans, may be utilized for a variety of corporate purposes, including
future public offerings to raise additional capital or to make corporate
acquisitions. Except for the issuance of Common Stock pursuant to certain
director and employee benefit plans, RMI does not currently have any plans to
issue additional shares of Common Stock or any shares of Preferred Stock.
One of the effects of the existence of unissued and unreserved Common Stock
and undesignated Preferred Stock may be to enable the Board of Directors to
render more difficult or to discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby to protect the continuity of RMI's management. If, in the due exercise
of its fiduciary obligations, for example, the Board of Directors were to
determine that a takeover proposal were not in RMI's best interest, such shares
could be issued by the Board of Directors without shareholder approval in one or
more private placements or other transactions that might prevent or render more
difficult or costly the completion of the takeover transaction by diluting the
voting or other rights of the proposed acquiror or insurgent shareholder group,
by creating a substantial voting block in institutional or other hands that
might undertake to support the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude the takeover, or
otherwise. In this regard, except with respect to voting rights, RMI's Amended
Articles of Incorporation grants the Board of Directors broad power to establish
the rights and preferences of the
49
<PAGE> 52
authorized and unissued Preferred Stock, including the power to convert
Preferred Stock into a larger number of shares of Common Stock or other
securities, to demand redemption at a specified price under prescribed
circumstances related to a change of control, or to exercise other powers to
impede a takeover. The issuance of shares of Preferred Stock pursuant to the
Board's authority described above may adversely affect the rights of the holders
of the Common Stock. It should be noted that, although Ohio law and RMI's
Amended Articles of Incorporation would not require shareholder approval to
issue authorized shares, historically the NYSE on which the Common Stock is
listed, has prohibited certain issuances and has required shareholder approval
of certain other issuances as a condition of listing the additional shares or,
in some instances, of continued listing of the outstanding shares.
In addition, certain other charter provisions, which are described below,
may have the effect, alone or in combination with each other or with the
existence of authorized but unissued capital stock, of rendering more difficult
or discouraging an acquisition of RMI deemed undesirable by the Board of
Directors.
CERTAIN PROVISIONS OF RMI'S ARTICLES OF INCORPORATION AND REGULATIONS
Classified Board of Directors. RMI's Regulations provide for the Board of
Directors to be divided into up to three classes of directors, each class to
have at least three members and to be nearly equal in number of directors as
possible, serving staggered terms.
Size of Board of Directors; Removal of Directors; Filling of Vacancies on
the Board of Directors. RMI's Regulations provide that the number of directors
shall be fixed from time to time but shall not be fewer than three nor more than
twelve. Under Ohio law, unless the articles of incorporation or regulations
otherwise provide, a director on a classified board may be removed by the
shareholders with or without cause. RMI's Regulations specifically provide that
directors may be removed only for cause. RMI's Regulations also provide that
vacancies on the Board of Directors that may occur between annual meetings shall
be filled only by the Board of Directors. In addition, these provisions specify
that any director elected to fill a vacancy on the Board will serve for the
balance of the term of the replaced director.
Calling of Meetings of Shareholders. RMI's Regulations provide that
special meetings of shareholders may be called by a shareholder or shareholders
only if they hold 50% of the shares of stock entitled to vote.
Certain Voting Provisions. RMI's Amended Articles of Incorporation provide
that the approval of holders of two-thirds of the voting power of RMI (and, if
required by applicable law, a class vote of preferred holders) is required to
approve a merger or consolidation if under Ohio law such merger or consolidation
would have to be submitted to RMI's shareholders, a sale or disposition of all
or substantially all the assets of RMI or a dissolution of RMI.
CERTAIN PROVISIONS OF OHIO LAW
RMI is subject to certain provisions of Ohio law that may discourage or
render more difficult an unsolicited takeover of RMI. The Merger Moratorium Act
prohibits certain mergers, sales of assets, issuances or purchases of
securities, liquidation or dissolution, or reclassifications of the
then-outstanding shares of an Ohio corporation involving, or for the benefit of,
certain holders of stock representing 10% or more of the voting power of the
corporation, unless (i) the transaction is approved by the directors prior to
the time that the 10% shareholder became such, (ii) the acquisition of 10% of
the voting power is approved by the directors prior to the time that the 10%
shareholder became such or (iii) the transaction involves a 10% shareholder that
has been such for at least three years and (a) the transaction is approved by
holders of 2/3 of the voting power of the corporation and the holders of a
majority of the voting power not owned by 10% shareholders, or (b) certain
minimum price and form of consideration requirements are met. The Board of
Directors has approved the acquisition of Common Stock pursuant to the exercise
of the Rights for purposes of the Merger Moratorium Act, with the result that
persons acquiring in excess of 10% of the outstanding Common Stock by reason of
the exercise of the Rights, and USX, if USX increases its proportionate
ownership of the Common Stock as a result of the exercise of its Rights, will
not be subject to the restrictions of the Merger Moratorium Act.
50
<PAGE> 53
The Control Share Act provides that the acquisition of shares entitling the
holder to exercise voting power in certain ranges (one-fifth or more, one-third
or more, or a majority) can be made only with the prior authorization of (i) the
holders of at least a majority of the total voting power and (ii) the holders of
at least a majority of the total voting power held by shareholders other than
the proposed acquirer, officers of the corporation elected or appointed by the
directors, and directors of the corporation who are also employees and excluding
certain shares that are transferred after the announcement of the proposed
acquisition and prior to the vote with respect to the proposed acquisition. The
Control Share Act does not specify a remedy for violation of the Act. However,
in at least one situation, a court has set aside an acquisition made in
violation of the Control Share Act. The Profit Disgorgement Act, which is
contained in Section 1707.043 of the Ohio Revised Code, provides Ohio
corporations, or in certain circumstances the shareholders of an Ohio
corporation, a cause of action to recover profits realized under certain
circumstances by persons who dispose of securities of a corporation within 18
months of proposing to acquire such corporation.
THE RMI VOTING TRUST AGREEMENT
USX intends to enter into the RMI Titanium Company Voting Trust Agreement
("Voting Trust Agreement") with RMI, promptly following the completion of the
Rights Offering. Mellon Bank, N.A., will also be a party to the Voting Trust
Agreement in its capacity as Trustee. Pursuant to the Voting Trust Agreement,
USX will deposit with the Trustee, immediately after completion of the Rights
Offering, sufficient shares of Common Stock, including any shares acquired as a
result of the exercise of Rights, so that the shares held by USX outside of the
trust do not exceed 49% of all shares of Common Stock then outstanding and are
at least one share less than the number of such shares owned by holders other
than USX and all of its Affiliates (as defined in Rule 405 of the Commission).
In addition, USX has agreed that if at any time during the term of the Voting
Trust Agreement (a) the sum of the number of shares of Common Stock owned by USX
and all of its Affiliates increases above the number of such shares so owned
immediately after completion of the Rights Offering, or (b) the number of shares
of Common Stock outstanding decreases below the number then outstanding, then in
each such event USX will promptly deposit with the Trustee such number of
additional shares of Common Stock, if any, as is necessary to reduce the sum of
the number of shares of Common Stock owned by USX and not held by the Trustee in
the voting trust ("USX Non-Trust Stock") and by all of USX's Affiliates to no
more than 49% of all shares of Common Stock then outstanding and at least one
share less than the total number of shares of Common Stock owned by holders
other than USX and its Affiliates (the "Public Stock"). USX may, but is not
obligated to, deposit in the trust additional shares of Common Stock from time
to time.
Pursuant to the Voting Trust Agreement, the Trustee is obligated to cause
the shares of Common Stock which are deposited with it in the voting trust ("the
Trust Stock") to be present for purposes of determining a quorum at every
meeting of the holders of Common Stock. Whenever any vote of the holders of the
Common Stock is conducted at such a meeting, the Trustee is required not to vote
any of the Trust Stock with respect to any election of directors. With respect
to each matter on which a vote of the holders of Common Stock is conducted at
such meeting, other than the election of directors, the Trustee is required to
cause the Trust Stock to be voted "for," "against," or to abstain from voting,
in the same proportion as all shares of Common Stock, other than the Trust
Stock, are validly voted "for," "against," or abstain, as the case may be, with
respect to such matter. The Trustee is similarly required to consent in writing
to the taking of any action by the shareholders of RMI with respect to such
number of shares of the Trust Stock as equals the proportion of all shares of
Common Stock, other than the Trust Stock, as validly consents to such action.
RMI has agreed to recognize any proxy or written consent properly delivered by
the Trustee to it in connection with any such meeting or such action and
consistent with the Voting Trust Agreement as effective. Except as set forth
above, the Trustee shall not possess or be entitled to exercise any right or
power with respect to the Trust Stock, but shall instead act solely as directed
by USX from time to time with respect to the Trust Stock. In particular, but not
in limitation of the foregoing, USX may from time to time direct the Trustee to
tender shares of Trust Stock in connection with any tender, exchange or other
offer and to distribute the consideration received for such shares in any such
tender, exchange or other offer directly to USX free of the trust (unless such
consideration is shares of stock of RMI having ordinary voting power, in which
case such shares shall be
51
<PAGE> 54
retained by the Trustee and deemed to be Trust Stock to the extent described
above), and to exercise or sell for USX's benefit and as USX shall direct any
options, rights or warrants issued to the holders of the Common Stock. USX may
also direct the Trustee to sell shares of the Trust Stock at any time in
accordance with USX's directions, and any such shares sold shall be sold free of
the voting trust, provided that such sale shall be a bona fide sale to a person
other than an Affiliate of USX and that USX is not then in default of any of its
obligations under the Voting Trust Agreement. Any cash dividends declared and
paid upon the Trust Stock shall be paid to USX.
The Voting Trust Agreement and the voting trust created thereby shall
terminate on April 1, 2004, and are expressly declared to be irrevocable, except
that the Agreement and the voting trust may be terminated at any time (i) by USX
by written notice to the Trustee and RMI in the event the sum of the number of
shares of Common Stock owned by USX, including all the Trust Stock, and all of
its Affiliates, is less than 49% of all shares of Common Stock then outstanding,
(b) the total number of shares of Common Stock owned by USX, including all the
Trust Stock, is 80% or more of all shares of Common Stock then outstanding, or
(c) any person shall acquire more than 75% of the Public Stock, and (ii) by the
written election of the Trustee in its sole and absolute discretion in the event
it determines that the purpose for which the Voting Trust Agreement has been
entered and the voting trust has been created is no longer applicable and that
the continuation of the same serves no substantial purpose. In the event RMI
issues any of its currently authorized Preferred Stock, which is entitled to
ordinary voting rights in the same manner as the Common Stock, such shares shall
also be subject to the Voting Trust Agreement, and the Trustee shall be required
to act with respect to such shares, in the same manner and to the same extent as
Common Stock owned by USX.
LEGAL MATTERS
The validity of the shares of the Common Stock to be issued upon exercise
of the Rights will be passed upon for RMI by Robert E. Hilton, Assistant General
Counsel of the U.S. Steel Group of USX. The Law Department of the U.S. Steel
Group acts as counsel to RMI. Mr. Hilton is an employee of USX and participates
in benefit plans provided to employees of USX.
EXPERTS
The financial statements as of December 31, 1993 and 1992 and for each of
the three years in the period ended December 31, 1993 included and incorporated
by reference in this Prospectus have been so included and incorporated in
reliance on the report of Price Waterhouse, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
52
<PAGE> 55
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants................................................ F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Statement of Operations for the years ended
December 31, 1993, 1992 and 1991.......................................... F-3
Consolidated Balance Sheet at December 31, 1993 and 1992.................... F-4
Consolidated Statement of Cash Flows for the years ended
December 31, 1993, 1992 and 1991.......................................... F-5
Consolidated Statement of Shareholders' Equity for the years ended
December 31, 1993, 1992 and 1991.......................................... F-6
Notes to Consolidated Financial Statements.................................. F-7
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Statement of Operations for the quarters ended
March 31, 1994 and 1993 (unaudited)....................................... F-18
Condensed Consolidated Balance Sheet at March 31, 1994 (unaudited) and
December 31, 1993......................................................... F-19
Condensed Consolidated Statement of Cash Flows for the quarters
ended March 31, 1994 and 1993 (unaudited)................................. F-20
Condensed Consolidated Statement of Shareholders' Equity for the year ended
December 31, 1993 and the quarter ended March 31, 1994 (unaudited)......... F-21
Selected Notes to Condensed Consolidated Financial Statements............... F-22
</TABLE>
F-1
<PAGE> 56
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF RMI TITANIUM COMPANY
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of RMI Titanium Company and its subsidiaries at December 31, 1993 and
1992, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 2, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
other than Pensions," and Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," in 1993.
PRICE WATERHOUSE
Pittsburgh, Pennsylvania
January 31, 1994,
except for Note 17,
which is as of
March 31, 1994.
F-2
<PAGE> 57
RMI TITANIUM COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Sales.................................................. $ 127,397 $ 135,607 $ 165,568
Operating costs:
Cost of sales........................................ 127,486 135,985 166,963
Selling, general and administrative expenses......... 9,133 9,365 10,687
Research, technical and product development
expenses.......................................... 1,542 1,644 3,507
Plant closing charge (Note 4)........................ -- -- 37,123
---------- ---------- ----------
Total operating costs........................... 138,161 146,994 218,280
---------- ---------- ----------
Operating loss......................................... (10,764) (11,387) (52,712)
Other income (expense)--net............................ 1,554 178 (735)
Interest expense....................................... (2,745) (2,746) (3,538)
---------- ---------- ----------
Loss before income taxes............................... (11,955) (13,955) (56,985)
Provision for income taxes (Note 8).................... -- 107 100
---------- ---------- ----------
Loss before cumulative effect of change in accounting
principle............................................ (11,955) (14,062) (57,085)
Cumulative effect of change in accounting principle
(Note 11)............................................ (16,938) -- --
---------- ---------- ----------
Net loss............................................... $ (28,893) $ (14,062) $ (57,085)
---------- ---------- ----------
---------- ---------- ----------
Net loss per common share: (Note 17)
Before cumulative effect of change in accounting
principle............................................ $ (8.14) $ (9.66) $ (39.17)
Cumulative effect of change in accounting
principle......................................... (11.53) -- --
---------- ---------- ----------
Net loss................................ $ (19.67) $ (9.66) $ (39.17)
---------- ---------- ----------
---------- ---------- ----------
Weighted average shares outstanding.................. 1,468,885 1,456,203 1,457,516
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
F-3
<PAGE> 58
RMI TITANIUM COMPANY
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1993 1992
-------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................................. $ 293 $ 270
Receivables, less allowance for doubtful accounts of $940 and $1,050... 29,940 26,797
Inventories............................................................ 57,492 58,824
Other current assets................................................... 1,540 1,520
-------- --------
Total current assets.............................................. 89,265 87,411
Property, plant and equipment, net of accumulated depreciation......... 54,956 59,453
Other noncurrent assets................................................ 8,250 6,393
-------- --------
Total assets...................................................... $152,471 $153,257
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt...................................... $ 120 $ 120
Accounts payable....................................................... 11,770 8,889
Accrued wages and other employee costs................................. 6,383 4,390
Other accrued liabilities.............................................. 4,673 1,783
-------- --------
Total current liabilities......................................... 22,946 15,182
Long-term debt......................................................... 66,660 62,280
Accrued postretirement benefit cost.................................... 15,938 --
Noncurrent pension liabilities......................................... 17,056 10,401
Other noncurrent liabilities........................................... 2,010 2,092
-------- --------
Total liabilities................................................. 124,610 89,955
-------- --------
Contingencies (Note 15)................................................
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value; 5,000,000 shares authorized;
no shares outstanding................................................ -- --
Common Stock, $0.01 par value; 30,000,000 shares authorized;
15,312,995 and 15,154,856 shares issued (Note 17).................... 153 152
Additional paid-in capital (Note 17)................................... 124,578 124,306
Accumulated deficit.................................................... (86,154) (57,261)
Deferred compensation.................................................. (205) (249)
Minimum pension liability adjustment................................... (7,520) (677)
Treasury Common Stock at cost 562,536 and 550,472 shares............... (2,991) (2,969)
-------- --------
Total shareholders' equity........................................ 27,861 63,302
-------- --------
Total liabilities and shareholders' equity........................ $152,471 $153,257
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
F-4
<PAGE> 59
RMI TITANIUM COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
CASH PROVIDED FROM (USED IN) OPERATIONS:
Net loss................................................... $(28,893) $(14,062) $(57,085)
Adjustment for items not affecting cash:
Cumulative effect of change in accounting principle...... 16,938 -- --
Plant closing charge..................................... -- -- 37,123
Depreciation............................................. 6,298 6,506 10,789
(Gain) loss on disposal of facilities.................... (1,436) -- 320
Other noncash charges, net............................... 943 1,757 1,939
-------- -------- --------
(6,150) (5,799) (6,914)
-------- -------- --------
CHANGES IN ASSETS AND LIABILITIES (EXCLUDING CASH):
Receivables................................................ (3,792) 8,058 8,935
Inventories................................................ 1,332 6,261 13,850
Accounts payable........................................... 2,881 (519) (1,743)
Deferred tax asset......................................... -- 2,844 --
Other current liabilities.................................. 2,475 (11,685) (1,824)
Other assets............................................... (801) (623) 1,553
Noncurrent liabilities..................................... (82) (480) 1,006
Other...................................................... (92) (619) 186
-------- -------- --------
1,921 3,237 21,963
-------- -------- --------
Cash (used in) provided from operations............. (4,229) (2,562) 15,049
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in joint ventures............................ (1,216) -- --
Proceeds from sale of facilities......................... 2,124 1,783 153
Capital expenditures..................................... (1,014) (4,227) (8,952)
-------- -------- --------
Cash used in investing activities................... (106) (2,444) (8,799)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit agreement.............. 4,500 3,600 500
Debt repayments.......................................... (120) (120) (3,074)
Common Stock repurchased................................. (22) (82) (1,149)
Dividends................................................ -- -- (1,095)
-------- -------- --------
Cash provided from (used in) financing activities... 4,358 3,398 (4,818)
-------- -------- --------
Increase (decrease) in cash and cash equivalents........... 23 (1,608) 1,432
Cash and cash equivalents at beginning of period........... 270 1,878 446
-------- -------- --------
Cash and cash equivalents at end of period................. $ 293 $ 270 $ 1,878
-------- -------- --------
-------- -------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (net of amounts capitalized)........ $ 2,548 $ 2,829 $ 3,573
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
F-5
<PAGE> 60
RMI TITANIUM COMPANY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MINIMUM
ADDT'L. RETAINED TREASURY PENSION
SHARES COMMON DEFERRED PAID-IN EARNINGS COMMON LIABILITY
OUTSTANDING STOCK COMPENSATION CAPITAL (DEFICIT) STOCK ADJUSTMENT
----------- ------ ------------ -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1990............ 14,745,900 $151 $(841) $124,068 $ 14,981 $(1,790) --
Shares issued for Restricted
Stock Award Plans..................... 22,700 -- (129) 129 -- -- --
Reinvestment of dividends on
Restricted Stock Awards............... 2,081 -- -- 13 -- -- --
Treasury Common Stock purchases at
cost.................................. (208,900) -- -- -- -- (1,149) --
Compensation expense recognized......... -- -- 452 -- -- -- --
Net loss................................ -- -- -- -- (57,085) -- --
Cash dividends declared................. -- -- -- -- (1,095) -- --
----------- ------ ------------ -------- --------- -------- ----------
Balance outstanding at December 31,
1991.................................. 14,561,781 151 (518) 124,210 (43,199) (2,939) --
Compensation expense recognized......... -- -- 366 -- -- -- --
Treasury Common Stock reissued.......... 24,500 -- -- -- -- 52 --
Shares issued for Restricted
Stock Award Plans..................... 38,475 1 (97) 96 -- -- --
Treasury Common Stock purchases at
cost.................................. (20,372) -- -- -- -- (82) --
Net loss................................ -- -- -- -- (14,062) -- --
Minimum pension liability adjustment.... -- -- -- -- -- -- $(677)
----------- ------ ------------ -------- --------- -------- ----------
Balance at December 31, 1992............ 14,604,384 152 (249) 124,306 (57,261) (2,969) (677)
Compensation expense recognized......... -- -- 245 -- -- -- --
Shares issued for Restricted Stock Award
Plans................................. 122,700 1 (201) 200 -- -- --
Shares issued for Directors'
compensation.......................... 35,439 -- -- 72 -- -- --
Treasury Common Stock purchases at
cost.................................. (12,064) -- -- -- -- (22) --
Minimum pension liability adjustment.... -- -- -- -- -- -- (6,843)
Net loss................................ -- -- -- -- (28,893) -- --
----------- ------ ------------ -------- --------- -------- ----------
Balance at December 31, 1993*........... 14,750,459 $153 $(205) $124,578 $(86,154) $(2,991) $(7,520)
----------- ------ ------------ -------- --------- -------- ----------
----------- ------ ------------ -------- --------- -------- ----------
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
* See Note 17 to the Consolidated Financial Statements.
F-6
<PAGE> 61
RMI TITANIUM COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND OPERATIONS:
The consolidated financial statements of RMI Titanium Company (the
"Company") include the financial position and results of operations for the
Company and its immediate predecessor, RMI Company, a partnership organized
under the laws of Ohio. The partnership was 50% owned by Quantum Chemical
Corporation ("Quantum") and 50% owned by USX Corporation ("USX").
Pursuant to the Reorganization Agreement entered into by Quantum, USX and
the Company on April 20, 1990, Quantum and USX transferred their partnership
interest in RMI Company to the Company in exchange for 7.5 million shares each
of the Company's common stock (the "Reorganization"). Concurrent with this
reorganization, Quantum, in a secondary offering, sold its shares to the public.
USX has retained its 7.5 million shares of the Company's common stock. Partners'
equity as of the date of the Reorganization was reclassified to common stock and
additional paid-in capital. At December 31, 1993, approximately 51% of the
outstanding common stock was owned by USX.
The Company's operations are conducted primarily in one business segment,
the production and marketing of titanium metal and related products. In 1993, no
single customer accounted for more than 10% of consolidated revenues. In the
years ended December 31, 1993, 1992 and 1991, export sales were $24.2 million,
$31.7 million, and $36.1 million, respectively, principally to customers in
Western Europe.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of RMI Titanium
Company and its majority-owned subsidiaries. All significant intercompany
accounts and transactions are eliminated.
Inventories:
Inventories are valued at cost as determined by the last-in, first-out
(LIFO) method which, in the aggregate, is lower than market. Inventory costs
generally include materials, labor costs and manufacturing overhead (including
depreciation).
Depreciation and amortization:
In general, depreciation and amortization of properties is determined using
the straight-line method over the estimated useful lives of the various classes
of assets.
Retirement and disposal of properties:
The cost of properties, together with the accumulated depreciation provided
thereon, is eliminated from the accounts when such properties are retired or
otherwise disposed of. The net gain or loss is recognized in other income and
expense.
Maintenance and repairs:
Routine maintenance, repairs and replacements are charged to operations.
Expenditures that materially increase values, change capacities or extend useful
lives are capitalized.
Revenue and cost recognition:
Revenues from the sale of commercial products are recognized upon
passage of title to the customer, which in most cases coincides with shipment.
Revenues from long-term, fixed-price contracts are recognized on the
percentage-of-completion method, measured based on the achievement of certain
milestones in the
F-7
<PAGE> 62
production and fabrication process. Such milestones have been weighted based on
the critical nature of the operation performed, which management believes is the
best available measure of progress on these contracts. Revenues related to
cost-plus-fee contracts are recognized on the basis of costs incurred during the
period plus the fee earned.
Contract costs comprise all direct material and labor costs, including
outside processing fees, and those indirect costs related to contract
performance. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined.
Contract costs and estimated earnings on uncompleted contracts, net of
progress billings, are included in the consolidated balance sheet under
"Inventories."
Pensions:
The Company and its subsidiaries have a number of noncontributory pension
plans which cover substantially all employees. Most employees are covered by
defined benefit plans in which benefits are based on years of service and annual
compensation. Contributions to the defined benefit plans, as determined by an
independent actuary in accordance with regulations, provide not only for
benefits attributed to date but also for those expected to be earned in the
future.
The Company's policy is to fund pension costs at amounts equal to the
minimum funding requirements of ERISA plus additional amounts as may be approved
from time to time.
Postretirement Benefits:
The Company provides certain health care benefits and life insurance
coverage for certain of its employees and their dependents. Under the Company's
current plans, certain of the Company's employees will become eligible for those
benefits if they reach retirement age while working with the Company.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions," (SFAS 106). The new standard requires accrual accounting
for postretirement benefits, similar to accounting for pensions, rather than
recognizing cost as claims are paid, which was the method the Company previously
used. As permitted by SFAS 106, the Company elected to recognize the accumulated
postretirement benefit obligation at adoption (transition obligation)
immediately as the cumulative effect of a change in accounting principle.
Income tax:
In connection with the Reorganization, the tax basis of the Company's
assets at that time reflected the fair market value of the common stock then
issued by the Company. The new tax basis was allocated to all assets of the
Company based on federal income tax rules and regulations, and the results of an
independent appraisal. For financial statement purposes, the Company's assets
are carried at historical cost. As a result, the tax basis of a significant
portion of the Company's assets exceeds the related book values and depreciation
and amortization for tax purposes exceeds the corresponding financial statement
amounts.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." Under
the liability method specified by SFAS 109, deferred tax assets and liabilities
are determined based on the difference between the financial statement and tax
bases of assets and liabilities as measured by the enacted tax rates which will
be in effect when these differences reverse. Prior to the adoption of SFAS 109,
the Company accounted for income taxes pursuant to Statement of Financial
Accounting Standards No. 96 (SFAS 96) "Accounting for Income Taxes." The change
from SFAS 96 to SFAS 109 did not have a material effect on the financial
position, results of operations or cash flows of the Company. As permitted under
SFAS 109, prior year financial statements have not been restated.
F-8
<PAGE> 63
Cash flows:
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
NOTE 3--LONG-TERM CONTRACTS
During 1993, the Company executed an agreement to supply all the titanium
components for the world's first titanium high-pressure drilling riser for use
by a major oil company in development of a project in the Norwegian sector of
the North Sea (the "Riser Contract"). Work commenced on the Riser Contract
during the third quarter of 1993 and deliveries are scheduled to begin late in
1994. During 1993, the Company recorded an estimate of the revenue earned under
the Riser Contract of $4.3 million. At December 31, 1993, there was $1.3 million
included in the consolidated balance sheet under "Inventories," which represents
the amount of cost incurred on the Riser Contract, plus estimated earnings, less
progress billings receivable of $3.9 million (see Notes 5 and 6). There were no
unapproved change orders, claims or other items included as contract costs at
December 31, 1993 for which the realization under the contract was considered to
be uncertain.
In October 1993, the Company executed a long-term contract with the U.S.
Department of Energy ("DOE") covering the remediation and restoration of the
Company's former Extrusion Plant in Ashtabula, Ohio. The contract calls for the
Company to earn fees on cost-plus-fee basis, and acknowledges the DOE's
responsibility for the remediation of the site. During 1993 the Company
recognized revenues, including fees, of $10.4 million under the contract.
NOTE 4--PLANT CLOSING CHARGE:
In connection with its continuing efforts to reduce input metallic costs,
the Company's Board of Directors approved a program which resulted in the
closing of the Company's Sodium and Metals Reduction facilities located in
Ashtabula, Ohio. The resulting charge, which was recorded in 1991, includes
$28.1 million in connection with fixed assets, $5.4 million in employee related
costs, and $3.6 million in other costs.
NOTE 5--INVENTORIES:
<TABLE>
<CAPTION>
DECEMBER 31
(IN THOUSANDS)
---------------------
1993 1992
-------- --------
<S> <C> <C>
Raw materials and supplies............................ $ 18,366 $ 14,009
Work-in-process and finished goods.................... 52,151 56,341
Adjustment to LIFO values............................. (13,025) (11,526)
-------- --------
$ 57,492 $ 58,824
-------- --------
-------- --------
</TABLE>
Included in work-in-process at December 31, 1993 are costs relating to the
Riser Contract. Contract costs, plus estimated earnings, less progress billings
rendered at December 31, 1993 totalled $1.3 million.
During 1993 and 1992 LIFO inventory quantities, which were carried at lower
costs prevailing in prior years as compared with the cost of 1993 and 1992
purchases, were reduced. The effect of this reduction was to reduce cost of
sales for 1993 by $0.1 million and 1992 by $0.7 million.
F-9
<PAGE> 64
NOTE 6--ACCOUNTS RECEIVABLE:
<TABLE>
<CAPTION>
DECEMBER 31
(IN THOUSANDS)
---------------------
1993 1992
-------- --------
<S> <C> <C>
Trade and commercial customers........................ $26,373 $27,847
Progress billings on uncompleted contract............. 3,866 --
U.S. Government-DOE................................... 641 --
-------- --------
30,880 27,847
Less allowance for doubtful accounts.................. (940) (1,050)
-------- --------
$29,940 $26,797
-------- --------
-------- --------
</TABLE>
NOTE 7--PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost and consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31
(IN THOUSANDS)
---------------------
1993 1992
-------- --------
<S> <C> <C>
Land.................................................. $ 882 $ 882
Buildings and improvements............................ 54,605 55,699
Machinery and equipment............................... 113,048 114,717
Other................................................. 14,523 14,583
Construction in progress.............................. 8,683 9,298
-------- --------
191,741 195,179
Less--Accumulated depreciation........................ 136,785 135,726
-------- --------
$ 54,956 $ 59,453
-------- --------
-------- --------
</TABLE>
Interest is capitalized in connection with the construction of major
facilities and other capital projects. The capitalized interest is recorded as a
part of the asset to which it relates and is amortized over the asset's
estimated useful life. In 1993 and 1992, $0.2 million of interest cost was
capitalized each year.
NOTE 8--INCOME TAXES:
As discussed in Note 2, effective January 1, 1993, the Company adopted the
provisions of SFAS 109. Under the provisions of SFAS 109 or the previous income
tax accounting standard, SFAS 96, no tax benefits were recognized in connection
with the 1993, 1992 and 1991 pretax losses. The provisions for income taxes in
1992 and 1991 result primarily from certain state income taxes and taxes of a
subsidiary not consolidated for tax purposes.
F-10
<PAGE> 65
Deferred taxes result from the following at December 31, 1993 (in
thousands):
<TABLE>
<S> <C>
Deferred tax assets:
Federal income tax loss carryforwards
(expiring in 2006 through 2008).............................. $ 27,050
Inventories..................................................... 5,966
Property, plant and equipment................................... 5,082
Intangible assets............................................... 2,305
Other postretirement benefit costs.............................. 5,609
Other employment related items.................................. 5,992
Other........................................................... 1,622
Valuation allowance............................................. (53,626)
--------
Total deferred tax assets.................................... --
--------
Deferred tax liabilities.......................................... --
--------
Net deferred taxes........................................... $ --
--------
--------
</TABLE>
SFAS 109 requires a valuation allowance when it is "more likely than not
that some portion or all of the deferred tax assets will not be realized." It
further states that "forming a conclusion that a valuation allowance is not
needed is difficult when there is negative evidence such as cumulative losses in
recent years." The ultimate realization of this deferred income tax asset
depends on the Company's ability to generate sufficient taxable income in the
future. While the Company believes that the deferred income tax asset will be
fully or partially realized by future operating results, losses in recent years
and a desire to be conservative make it appropriate to record a valuation
allowance.
If the Company achieves sufficient profitability, the valuation allowance
will be reduced through a credit to income tax expense, thereby increasing
shareholders' equity.
If certain substantial changes in the Company's ownership should occur,
there would be an annual limitation on the amount of the Federal income tax loss
carryforward and other deductions which could be utilized.
NOTE 9--LONG-TERM DEBT:
In June 1993, the Company and participating banks completed a new three
year, $75 million revolving credit facility which replaced the previous $100
million facility. The new credit facility provides for an increase in
LIBOR-based borrowing rates, maintenance of a minimum net worth, and USX's
commitment to maintain its majority ownership of the Company's voting stock. It
is secured by inventory, accounts receivable and certain other assets. Interest
rates in effect at December 31, 1993 ranged from 4.41% to 4.73%. A commitment
fee of 1/8% is charged for the unused portion of the facility. As of December
31, 1993, the Company was in compliance with the covenants and terms of the new
credit facility. However, continued losses from operations could result in
noncompliance with the minimum net worth covenant in 1994. In light of these
developments, the Company is currently negotiating with its banks in an effort
to refinance or restructure its existing debt, and to expand its borrowing
capacity (see "Subsequent Event (Unaudited)" below in this Note 9). At December
31, 1993, the available and unused portion of the facility amounted $9.4
million.
F-11
<PAGE> 66
The previous $100 million facility provided for the rates based on the
prime rate or at negotiated rates derived from the bank's short-term rate or
LIBOR rate. Interest rates in effect at December 31, 1992 ranged from 4.01% to
4.99%.
<TABLE>
<CAPTION>
DECEMBER 31
(IN THOUSANDS)
-------------------
1993 1992
------- -------
<S> <C> <C>
Bank Credit Agreement dated June 1993................... $65,600 --
Bank Credit Agreement dated December 1990............... -- $61,100
Industrial revenue bond bearing interest at floating
rates based on weekly tax exempt market rates (3.4%
and 4.5% at December 31, 1993 and 1992, respectively)
payable in annual sinking fund payments of $120 over
15 years from October 1988............................ 1,180 1,300
Current portion of long-term debt....................... (120) (120)
------- -------
$66,660 $62,280
------- -------
------- -------
</TABLE>
The minimum principal payments on long-term debt outstanding at December
31, 1993 for the succeeding five years are as follows (in thousands):
<TABLE>
<S> <C>
1994............................................... $ 120
1995............................................... 120
1996............................................... 65,720
1997............................................... 120
1998............................................... 120
</TABLE>
SUBSEQUENT EVENT (UNAUDITED):
On April 19, 1994, the participating banks entered into a commitment to
amend the terms of the $75 million revolving credit facility. The terms and
conditions of the $75 million credit facility, as amended, are described in
"Capitalization--Revolving Credit Facilities" on pages 18-19 of this Prospectus.
NOTE 10--PENSION PLANS:
Pension expense was determined assuming an expected rate of return on plan
assets of 10% for 1993 and 1992, and 8.5% for 1991. The components of pension
expense for the three years ended December 31, 1993 are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost....................... $ 1,092 $ 1,314 $ 1,288
Interest cost (1993-8%; 1992-8%
and 1991-9%...................... 4,940 4,858 4,643
Return on plan assets:
Actual........................... $(3,460) $(1,675) $(8,990)
Deferred gain (loss)............. (1,595) (5,055) (3,079) (4,754) 4,869 (4,121)
------- ------- -------
Net amortization and deferral...... 611 635 645
------- ------- -------
$ 1,588 $ 2,053 $ 2,455
------- ------- -------
------- ------- -------
</TABLE>
F-12
<PAGE> 67
Funds' status--The benefit obligations at December 31, 1993 and 1992 were
determined using weighted average discount rates of approximately 7% and 8%,
respectively, and an assumed rate of compensation increase of 5.75% for both
years.
<TABLE>
<CAPTION>
DECEMBER 31
(IN THOUSANDS)
-----------------------
1993 1992
-------- --------
<S> <C> <C>
Fair value of plan assets........................................... $ 49,587 $ 51,545
Projected benefit obligation (PBO).................................. (70,674) (64,468)
-------- --------
Plan assets less than PBO........................................... (21,087) (12,923)
Unrecognized net loss............................................... 11,221 3,721
Unrecognized transition obligation.................................. 2,096 2,405
Unrecognized prior service cost..................................... 2,878 3,228
Adjustment required to recognize minimum liability.................. (12,922) (6,255)
-------- --------
Net pension liability............................................. $(17,814) $ (9,824)
-------- --------
-------- --------
Accumulated benefit obligation...................................... $(67,398) $(61,048)
-------- --------
-------- --------
Vested benefit obligation........................................... $(63,626) $(57,955)
-------- --------
-------- --------
</TABLE>
As of December 31, 1993, approximately 27% of the plans' assets are
invested in equity securities, and 36% in government debt instruments and the
balance in cash equivalents or debt securities.
Pursuant to the provisions of Statement of Financial Accounting Standards
No. 87 "Employers Accounting for Pensions," the Company recorded in noncurrent
pension liabilities an additional minimum pension liability adjustment of $12.9
million and $6.3 million as of December 31, 1993 and 1992, respectively,
representing the amount by which the accumulated benefit obligation exceeded the
fair value of plan assets plus accrued amounts previously recorded. The
reduction in the discount rate as of December 31, 1993 resulted in an increase
in the adjustment required to recognize the additional minimum pension liability
of approximately $6.7 million.
As a result of staff reduction actions, the Company recognized a $0.8
million curtailment loss in 1992.
NOTE 11--POSTRETIREMENT HEALTH CARE BENEFITS AND OTHER EMPLOYEE BENEFITS:
As discussed in Note 2, RMI adopted SFAS 106 effective January 1, 1993. The
Company elected to recognize immediately the transition obligation determined at
the date of adoption of the new accounting standard. The cumulative effect of
this change in accounting principle resulted in a charge of $16.9 million to the
Company's 1993 results.
Net periodic postretirement benefit cost for 1993 included the following
components (in thousands):
<TABLE>
<S> <C>
Service cost........................................................ $ 316
Interest cost....................................................... 1,337
------
$1,653
------
------
</TABLE>
The cash cost of providing these benefits in 1992 and 1991 amounted to $1.4
million and $1.5 million, respectively.
F-13
<PAGE> 68
The following table sets forth the plans' status reconciled with the amount
reported in the Company's balance sheet at December 31, 1993 (in thousands):
<TABLE>
<S> <C>
Accumulated Postretirement Benefit Obligation ("APBO")
attributable to:
Retirees........................................................ $(13,338)
Active participants............................................. (9,071)
--------
Total APBO................................................. $(22,409)
--------
--------
Accrued liability included in balance sheet, including transition
obligation...................................................... $(17,238)
Unrecognized net loss............................................ (5,171)
--------
Total APBO................................................. $(22,409)
--------
--------
</TABLE>
For measurement purposes, a 5% annual rate of increase in the per capita
cost of postretirement medical benefits was assumed beginning in 1993. The
ultimate costs of certain of the Company's retiree health care plans are capped
at contractually determined out-of-pocket spending limits. The annual rate of
increase in the per capita costs for these plans is limited to the contractually
determined spending cap. The health care cost trend rate assumption has a
significant affect on the amounts reported. For example, increasing the health
care cost trend rate by one percentage point in each year would increase the
accumulated postretirement benefit obligation at December 31, 1993 by $2.4
million and increase net periodic expense by $0.2 million. The discount rate
used in determining the accumulated postretirement benefit obligation at
December 31, 1993 was approximately 7%.
In November 1992, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 112 (SFAS 112), "Employers Accounting for
Postemployment Benefits." The statement will require accrual accounting for
certain postemployment benefits. The effective date for compliance with the
statement is 1994. The Company intends to adopt SFAS 112 effective January 1,
1994. The effect of adopting SFAS 112 is estimated to be approximately $1.2
million.
NOTE 12--OPERATING LEASES:
The Company and its subsidiaries have entered into various operating leases
for the use of certain equipment, principally office equipment and vehicles. The
leases generally contain renewal options and provide that the lessee pay
insurance and maintenance costs. The total rental expense under operating leases
amounted to $1.4 million in 1993, $1.6 million in 1992, and $1.8 million in
1991. Future commitments under operating leases are considered to be immaterial.
NOTE 13--TRANSACTIONS WITH RELATED PARTIES:
The Company, in the ordinary course of business, purchases goods and
services from USX. The cost of such transactions to the Company in 1993, 1992,
and 1991 amounted to $0.1 million in each year, and were transacted on terms no
less favorable to the Company than those obtained from other parties. On August
2, 1993 the United States Steel and Carnegie Pension Fund (the "Pension Fund")
was appointed as the trustee of the Company's pension plans. The Pension Fund
has for many years acted as trustee of USX Corporation's employee benefit plans.
The Pension Fund is a registered investment advisor under the Investment
Advisors Act of 1940, and receives a negotiated fee for such services. Other
transactions with related parties are incidental to the Company's business and
are not significant.
NOTE 14--OTHER INCOME STATEMENT INFORMATION:
Costs incurred for repairs and maintenance of plant and equipment totaled
$2.8, $4.5, and $7.3 million, for the years ended December 31, 1993, 1992, and
1991, respectively.
Real and personal property taxes amounted to $1.5, $1.8, and $2.5 million,
for the years ended December 31, 1993, 1992, and 1991, respectively.
F-14
<PAGE> 69
Other income (expense) for 1993 includes a $1.4 million gain on sales and
retirements of equipment and facilities. Amounts for 1991 include a loss of $0.5
million on disposals of facilities and a loss of $0.1 million pertaining to
settlement of litigation.
NOTE 15--CONTINGENCIES:
In connection with the Reorganization Agreement, the Company has agreed to
indemnify USX and Quantum against liabilities related to their ownership of the
RMI Company and its immediate predecessor, Reactive Metals, Inc., which was
formed by USX and Quantum in 1964.
AIRCRAFT PRODUCT LIABILITY
The Company has been named as a defendant in a number of cases arising from
the aircraft crash at Sioux City, Iowa, which occurred on July 19, 1989. In its
final report, issued November 1, 1990, the National Transportation Safety Board
("NTSB") concluded that the titanium used to manufacture the fan disc which
ultimately failed, leading to the crash, was supplied by a major competitor of
the Company.
The Company maintains an aircraft products liability insurance program.
Based on the conclusions contained in the NTSB report and the coverage provided
by aircraft products liability insurance, the Company does not anticipate any
liability as a result of these actions.
ENVIRONMENTAL MATTERS
In the ordinary course of business, the Company is subject to pervasive
environmental laws and regulations concerning the production, handling, storage,
transportation, emission, and disposal of waste materials and is also subject to
other federal and state laws and regulations regarding health and safety
matters. These laws and regulations are constantly evolving, and it is not
currently possible to predict accurately the ultimate effect these laws and
regulations will have on the Company in the future.
On October 9, 1992 the U.S. Environmental Protection Agency ("EPA") filed a
complaint alleging certain violations of the Resource Conservation and Recovery
Act of 1976, as amended ("RCRA") at the Company's now closed Sodium Plant in
Ashtabula, Ohio. The EPA's determination is based on information gathered during
inspections of the facility in February, March and June of 1991. Under the
complaint the EPA proposes to assess a civil penalty of approximately $1.4
million for alleged failure to comply with RCRA. The Company is contesting the
complaint. It is the Company's position that it has complied with the provisions
of RCRA and that the EPA's assessment of penalties is inappropriate. A formal
hearing has been requested and informal discussions with the EPA to settle this
matter are ongoing. Based on the preliminary nature of the proceedings, the
Company is currently unable to determine the ultimate liability, if any, that
may arise from this matter.
The Company, together with a number of unrelated companies, is involved in
investigative or cleanup projects under federal or state environmental laws at
certain waste disposal sites, including the Fields Brook Superfund Site and the
Ashtabula River and Harbor Area (designated an Area of Concern on the Great
Lakes by the International Joint Commission). The Company is also involved in
investigative and cleanup projects at certain of its own facilities. Given the
status of the proceedings at certain of these projects, and the evolving nature
of environmental laws, regulations, and remediation techniques, the Company's
ultimate obligation for investigative and remediation costs cannot be predicted.
Based on the information available regarding the current ranges of
estimated remediation costs at currently active projects, and what the Company
believes will be its ultimate share of such costs, provisions for
environmental-related costs were recorded, including $2.7 million in 1991. These
provisions are in addition to amounts which have previously been provided for
the Company's share of environmental study costs. At December 31, 1993 the
amount accrued for future environmental-related costs was $2.9 million. The
amount accrued is net of expected contributions from third parties (other than
insurers) of approximately $1.6 million which the Company believes are probable.
The Company has been receiving contributions from such third parties for a
number of years as partial reimbursement for costs incurred by the Company. As
these
F-15
<PAGE> 70
proceedings continue toward final resolution, amounts in excess of those already
provided may be necessary to discharge the Company from its obligations for
these projects.
The ultimate resolution of the foregoing contingencies could, individually
or in the aggregate, be material to the consolidated financial statements.
However, management believes that RMI will remain a viable and competitive
enterprise even though it is possible that these contingencies could be resolved
unfavorably.
NOTE 16--STOCK OPTION AND RESTRICTED STOCK AWARD PLANS:
1989 STOCK OPTION INCENTIVE PLAN:
The 1989 Stock Option Incentive Plan authorizes the granting of options to
purchase up to 750,000 shares of Common Stock to eligible officers and key
management employees at not less than the market value on the date the options
are granted. No option may be granted after August 14, 1999. Options granted may
include stock appreciation rights. The option period may not exceed ten years
from the date of the grant. The Organization and Compensation Committee of the
Board of Directors may approve surrender of any option and payment, in cash or
Common Stock, of the difference between the option exercise price and the market
value of the shares covered by the option surrendered. The Company has granted
options (which include stock appreciation rights) to employees to purchase
150,000 shares of Common Stock at the initial public offering price of $12.50,
90,000 shares at $5.875, 149,500 shares at $3.00, and 100,000 shares at $1.625.
To date, none of these options to purchase have been exercised.
1989 EMPLOYEE RESTRICTED STOCK AWARD PLAN:
The 1989 Restricted Stock Award Plan authorizes the granting of up to
300,000 shares of Common Stock to employees who have made significant
contribution to the success of the Company. No grant of such shares may be made
after December 31, 1994. Shares awarded are subject to such restrictions and
conditions as the Organization and Compensation Committee of the Board of
Directors may deem appropriate for carrying out the plan.
In 1993, 1992, and 1991, respectively, 134,000, 35,775 and 22,000 shares of
Common Stock were awarded under the plan. Compensation expense equivalent to the
fair market value of the shares on the date of the grant is being recognized
over the vesting periods during which the restrictions lapse. In November of
1992, in connection with the labor settlement at the Niles Plant, 35,775 shares
were awarded to unionized employees as a signing bonus. The restrictions on
these shares lapse over a two-year period.
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK AWARD PLAN:
The Non-Employee Director Restricted Stock Award Plan authorizes the
granting of up to 15,000 shares of Common Stock of the Company to directors who
are not and have never been officers or employees of the Company. Shares awarded
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 upon the participant retiring from the
Board of Directors. On the date of the Company's Annual Meeting of Shareholders
each calendar year, each eligible director shall be awarded 300 restricted
shares. No grant of such shares may be made after December 31, 1994.
During 1993, 1992 and 1991, 2,700 restricted shares of Common Stock were
awarded annually under the plan. Compensation expense equivalent to the fair
market value of the shares on the date of the grant has been recognized.
NOTE 17--SUBSEQUENT EVENT
On January 28, 1994, the Company's Board of Directors approved and
recommended for approval by the shareholders a proposal to amend the Articles of
Incorporation of the Company to implement a one-for-ten reverse stock split. On
March 31, 1994, the Company's shareholders approved this amendment and the
reverse stock split became effective on that same date. Common Stock, additional
paid-in capital, and the shares of
F-16
<PAGE> 71
Common Stock issued and outstanding prior to the effective date of the reverse
stock split have not been restated. All per share and weighted average share
amounts have been retroactively restated to reflect the reduction in the shares
of Common Stock outstanding as a result of the reverse stock split.
NOTE 18--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
The following table sets forth selected quarterly financial data for 1993
and 1992 (in thousands).
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
1993 QUARTER QUARTER QUARTER QUARTER
------- ------- ------- --------
<S> <C> <C> <C> <C>
Sales............................................. $32,134 $30,730 $32,151 $ 32,382
Gross profit...................................... 362 704 (545) (610)
Operating loss.................................... (2,359) (2,281) (3,124) (3,000)
Cumulative effect of change in accounting
principle....................................... (16,938) -- -- --
Net loss.......................................... (19,835) (2,867) (3,812) (2,379)
Net loss per common share (Note 17)
Before change in accounting principle............. (1.98) -- -- --
Net loss.......................................... (13.58) (1.95) (2.59) (1.55)
</TABLE>
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
1992 QUARTER QUARTER QUARTER QUARTER
------- ------- ------- --------
<S> <C> <C> <C> <C>
Sales............................................. $35,791 $35,392 $34,722 $ 29,702
Gross profit...................................... 347 1,406 (177) (1,954)
Operating loss.................................... (2,442) (1,564) (3,006) (4,375)
Net loss.......................................... (3,093) (2,249) (3,684) (5,036)
Net loss per common share (Note 17)............... (2.12) (1.54) (2.53) (3.47)
</TABLE>
F-17
<PAGE> 72
RMI TITANIUM COMPANY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1994 1993
------- --------
<S> <C> <C>
Sales............................................................... $36,360 $ 32,134
Operating costs:
Cost of sales..................................................... 35,833 31,772
Selling, general and administrative expenses...................... 2,406 2,338
Research and development expenses................................. 337 383
------- --------
Total operating costs.......................................... 38,576 34,493
------- --------
Operating loss...................................................... (2,216) (2,359)
Other income--net................................................... 15 73
Interest expense.................................................... (728) (610)
------- --------
Loss before income taxes and cumulative effect of change in
accounting principle.............................................. (2,929) (2,896)
Provision for income taxes.......................................... -- 1
------- --------
Loss before cumulative effect of change in accounting principle..... (2,929) (2,897)
Cumulative effect of change in accounting principle (Note 4)......... (1,202) (16,938)
------- --------
Net loss............................................................ $(4,131) $(19,835)
------- --------
------- --------
Net loss per common share: (Note 3)
Before cumulative effect of change in accounting principle..... $ (1.99) $ (1.98)
Cumulative effect of change in accounting principle............ (.81) $ (11.60)
------- --------
Net loss.................................................. $ (2.80) $ (13.58)
------- --------
------- --------
Weighted average shares outstanding............................ 1,457,049 1,460,438
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
F-18
<PAGE> 73
RMI TITANIUM COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1994 1993
---------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 348 $ 293
Receivables--less allowance for doubtful accounts of $1,219 and
$940.............................................................. 29,096 29,940
Inventories......................................................... 60,851 57,492
Other current assets................................................ 1,388 1,540
-------- ---------
Total current assets......................................... 91,683 89,265
-------- ---------
Property, plant and equipment, net of accumulated depreciation.... 53,487 54,956
Other noncurrent assets........................................... 8,671 8,250
-------- ---------
Total assets................................................. $153,841 $152,471
-------- ---------
-------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................. $ 120 $ 120
Accounts payable.................................................. 13,267 11,770
Accrued wages and other employee costs............................ 7,690 6,383
Other accrued liabilities......................................... 4,089 4,673
-------- ---------
Total current liabilities.................................... 25,166 22,946
-------- ---------
Long-term debt...................................................... 68,530 66,660
Other employee benefit liabilities.................................. 17,140 15,938
Noncurrent pension liabilities...................................... 17,056 17,056
Other noncurrent liabilities........................................ 2,010 2,010
-------- ---------
Total liabilities............................................ 129,902 124,610
-------- ---------
Contingencies (Note 5)..............................................
Shareholders' equity:
Preferred Stock, no par value; 5,000,000 shares authorized;
no shares outstanding.......................................... -- --
Common Stock, $0.01 par value; 30,000,000 shares authorized;
2,037,821 and 15,312,995 shares issued (Note 3)................ 15 153
Additional paid-in capital (Note 3)............................... 124,720 124,578
Retained deficit.................................................. (90,285) (86,154)
Deferred compensation............................................. -- (205)
Minimum pension liability adjustment.............................. (7,520) (7,520)
Treasury Common Stock at cost 562,536 shares...................... (2,991) (2,991)
-------- ---------
Total shareholders' equity................................... 23,939 27,861
-------- ---------
Total liabilities and shareholders' equity................... $153,841 $152,471
-------- ---------
-------- ---------
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
F-19
<PAGE> 74
RMI TITANIUM COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1994 1993
------- --------
<S> <C> <C>
CASH PROVIDED FROM (USED IN) OPERATIONS:
Net loss............................................................. $(4,131) $(19,835)
Adjustment for items not affecting funds from operations:
Depreciation....................................................... 1,560 1,619
Cumulative effect of change in accounting principle................ 1,202 16,938
Other noncash charges, net......................................... 578 503
------- --------
(791) (775)
------- --------
Changes in assets and liabilities (excluding cash):
Receivables.......................................................... 565 (3,022)
Inventories.......................................................... (3,359) 3,888
Accounts payable..................................................... 1,497 (1,762)
Other current liabilities............................................ 633 18
Other assets......................................................... (97) (388)
Other................................................................ -- (185)
------- --------
(751) (1,451)
Cash used in operating activities............................. (1,552) (2,226)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of facilities................................... 7 --
Capital expenditures............................................... (98) (50)
Investment in joint venture........................................ (172) --
------- --------
Cash used in investing activities............................. (263) (50)
------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreements................................. 1,900 2,500
Debt repayments.................................................... (30) (30)
------- --------
Cash provided from financing activities............................ 1,870 2,470
------- --------
INCREASE IN CASH AND CASH EQUIVALENTS................................ 55 194
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..................... $ 293 $ 270
------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD........................... $ 348 $ 464
------- --------
------- --------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (net of amounts capitalized)................ $ 738 $ 588
------- --------
------- --------
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
F-20
<PAGE> 75
RMI TITANIUM COMPANY
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MINIMUM
ADD'TL. RETAINED TREASURY PENSION
SHARES COMMON DEFERRED PAID-IN EARNINGS COMMON LIABILITY
OUTSTANDING STOCK COMPENSATION CAPITAL (DEFICIT) STOCK ADJUSTMENT
----------- ------ ------------ -------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992........................ 14,604,384 $ 152 $(249) $124,306 $(57,261) $(2,969) $ (677)
Compensation expense
recognized................. -- -- 245 -- -- -- --
Shares issued for Restricted
Stock Award Plans.......... 122,700 1 (201) 200 -- -- --
Shares issued in lieu of
Directors' compensation.... 35,439 -- -- 72 -- -- --
Treasury common stock
purchases-at cost.......... (12,064) -- -- -- -- (22) --
Minimum pension liability
adjustment................. -- -- -- -- -- -- (6,843)
Net loss..................... -- -- -- -- (28,893) -- --
----------- ------ ------ -------- --------- --------- ----------
Balance at December 31,
1993....................... 14,750,459 153 (205) 124,578 (86,154) (2,991) (7,520)
Compensation expense
recognized................. -- -- 205 -- -- -- --
One-for-ten reverse stock
split effective March 31,
1994 (Note 3).............. (13,275,414) (138 ) -- 138 -- -- --
Shares issued for Restricted
Stock Award Plans.......... 240 -- -- 4 -- -- --
Net loss..................... -- -- -- -- (4,131) -- --
----------- ------ ------ -------- --------- --------- ----------
Balance at March 31, 1994.... 1,475,285 $ 15 $ -- $124,720 $(90,285) $(2,991) $(7,520)
----------- ------ ------ -------- --------- --------- ----------
----------- ------ ------ -------- --------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
F-21
<PAGE> 76
RMI TITANIUM COMPANY
SELECTED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--GENERAL
The condensed consolidated financial statements include the accounts of RMI
Titanium Company and its majority-owned subsidiaries. The condensed consolidated
financial statements included herein have been prepared by RMI Titanium Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. The financial information presented reflects all
adjustments, consisting only of normal recurring adjustments, which are, in the
opinion of management, necessary for a fair statement of the results for the
interim periods presented. The results for the interim periods are not
necessarily indicative of the results to be expected for the year.
The Company's operations are conducted primarily in one business segment,
the production and marketing of titanium metal and related products.
NOTE 2--ORGANIZATION
On April 20, 1990, Quantum Chemical Corporation ("Quantum") and USX
Corporation ("USX") transferred their 50% partnership interests in RMI Company
(the immediate predecessor of the Company) to the Company in exchange for shares
of the Company's common stock (the "Reorganization"). Concurrent with the
Reorganization, Quantum completed a sale of its 7,500,000 shares of the
Company's common stock to the public. USX has retained its 7.5 million shares of
the Company's common stock. At March 31, 1994 approximately 51% of the Company's
outstanding common stock was owned by USX.
NOTE 3--REVERSE STOCK SPLIT
At its Annual Meeting held on March 31, 1994, the Company's shareholders
approved an amendment to the Articles of Incorporation of the Company effecting
a one-for-ten reverse stock split. A Certificate of Amendment to the Articles of
Incorporation was filed with the Ohio Secretary of State on March 31, 1994, and
the reverse split became effective on that date. Pursuant to the reverse split,
each certificate representing shares of common stock outstanding immediately
prior to the reverse split is deemed to represent one-tenth the number of shares
of common stock after the reverse split. Per share and weighted average share
amounts reported herein have been retroactively restated to reflect the reverse
stock split. Common Stock and additional paid-in capital have also been adjusted
at March 31, 1994 to reflect the reverse split. Treasury Common Stock was not
affected by the reverse split.
NOTE 4--NEW ACCOUNTING STANDARDS
Effective January 1, 1994 the Company adopted the provisions of Statement
of Financial Accounting Standards No. 112 ("SFAS 112"), "Employer's Accounting
for Postemployment Benefits." The results for the period ended March 31, 1994
reflect a one-time charge of $1.2 million representing the cumulative effect of
adopting the new standard. SFAS No. 112 will have no effect on cash flow.
Effective January 1, 1993 the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106 ("SFAS No. 106") "Employers' Accounting
for Postretirement Benefits Other than Pensions." The results for the three
months ended March 31, 1993 reflect a one-time charge of $16.9 million
representing the cumulative effect of recognizing the entire SFAS No. 106
transition obligation. Additionally, effective January 1, 1993 the Company
adopted the provisions of Statement of Financial Accounting Standards No. 109
(SFAS No. 109), "Accounting for Income Taxes." Prior to the adoption of SFAS No.
109, income tax expense was determined under Statement of Financial Accounting
Standards No. 96 (SFAS No. 96), "Accounting for Income Taxes." Under the
provisions of SFAS No. 109 and SFAS No. 96, no tax benefits were recognized for
the 1994 and 1993 pretax losses. The provision for taxes in the first quarter of
1993 results from certain state income taxes.
F-22
<PAGE> 77
NOTE 5--CONTINGENCIES
The Company is involved in investigative or cleanup projects under federal
or state environmental laws at a number of waste disposal sites, including a
Superfund site. Given the status of the proceedings with respect to these sites,
ultimate investigative and remediation costs cannot presently be accurately
predicted, but could, in the aggregate, be material. Based on the information
available regarding the current ranges of estimated remediation costs at
currently active sites, and what the Company believes will be its ultimate share
of such costs, provisions for environmental-related costs have been recorded.
These provisions are in addition to amounts which have previously been accrued
for the Company's share of environmental study costs. At March 31, 1994, the
amount accrued for future environmental-related costs was $2.9 million. The
amount accrued is net of expected contributions from third parties (other than
insurers) of approximately $1.6 million, which the Company believes are
probable. The Company has been receiving contributions from such third parties
for a number of years as partial reimbursement for costs incurred by the
Company. As these proceedings continue toward final resolution, amounts in
excess of those already provided may be necessary to discharge the Company from
its obligations for these projects.
The Company is also the subject of, or a party to, a number of other
pending or threatened legal actions involving a variety of matters.
The ultimate resolution of the foregoing contingencies could individually
or in the aggregate, be material to the consolidated financial statements.
However, management believes that the Company will remain a viable and
competitive enterprise even though it is possible that these matters could be
resolved unfavorably.
NOTE 6--INVENTORIES
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
MARCH 31, 1994 DECEMBER 31, 1993
-------------- ------------------
(UNAUDITED)
<S> <C> <C>
Raw material and supplies........................ $ 15,395 $ 18,366
Work-in-process and finished goods............... 58,481 52,151
Adjustments to LIFO values....................... (13,025) (13,025)
-------------- ------------------
$ 60,851 $ 57,492
-------------- ------------------
-------------- ------------------
</TABLE>
Inventories are valued at cost as determined by the last-in, first-out
(LIFO) method which, in the aggregate, is lower than market. Inventory costs
generally include materials, labor costs and manufacturing overhead (including
depreciation).
Included in work-in-process are costs relating to a drilling riser
contract, which is being accounted for as a long-term contract. Contract costs,
plus estimated earnings, less progress billings at March 31, 1994 and December
31, 1993 amounted to $4.0 million and $1.3 million, respectively.
F-23
<PAGE> 78
Inside back cover of Prospectus
Components made from RMI Titanium Products
Five photographs of component parts made from RMI Titanium
Medical implants
Sour gas production tubulars
Superplastically formed aircraft wing part
Jet engine fan blade
Coiled tubing spool
<PAGE> 79
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY RMI. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE IS UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Summary.............................. 3
Use of Proceeds...................... 17
Capitalization....................... 17
Price Range of Common Stock and
Dividends.......................... 19
The Rights Offering.................. 20
Business............................. 31
Selected Financial Information....... 42
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 44
Description of Capital Stock......... 49
The RMI Voting Trust Agreement....... 51
Legal Matters........................ 52
Experts.............................. 52
Index to Financial Statements........ F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
Shares
------------------
Common Stock
of
RMI TITANIUM COMPANY
------------------
PROSPECTUS
April , 1994
------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 80
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $10,345
Blue Sky fees and expenses...................................... *
Costs of printing and engraving................................. *
Legal fees and expenses......................................... *
Financial Advisor fees and expenses............................. *
Subscription Agent fees and expenses............................ *
Information Agent fees.......................................... *
Accounting fees and expenses.................................... *
Stock Exchange listing fee...................................... *
Miscellaneous expenses.......................................... *
--------
Total...................................................... $ *
--------
--------
</TABLE>
- ---------
* To be filed by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Ohio law contains numerous provisions concerning the responsibilities of
the officers and directors of Ohio corporations, such as the Company, including
provisions that have the effect of limiting the potential liability of such
officers and directors. The latter provisions are discussed below.
In general terms and subject to certain limitations, under Ohio law an Ohio
corporation is explicitly authorized to indemnify its directors, officers,
employees and agents who are parties or threatened to be made parties to any
threatened, pending or completed civil, criminal, administrative or
investigative action, suit or proceeding against expenses, including attorney's
fees, or any judgment, fines or settlement amounts issued against or incurred by
them, provided that they acted in good faith and in a manner reasonably believed
to be in or not opposed to the corporation's best interests. An Ohio corporation
is also specifically authorized (1) to provide indemnification to an even
greater extent than that described above, and (2) to purchase and maintain
insurance for or on behalf of its directors, officers, employees and agents
against liability arising out of their service, even if indemnification would
not be permitted under the circumstances. Ohio law concerning director
responsibilities was amended in 1990 to provide that a director shall be liable
in damages only if it is proved by clear and convincing evidence that his action
or failure to act arose out of deliberate intent to harm the corporation or out
of reckless disregard for the corporation's best interests, subject to certain
limitations and exceptions. Moreover, Ohio law makes clear that directors may
legitimately consider the interests of persons and groups such as employees and
local and national economic and other interests, in addition to interests of
shareholders, in connection with matters on which they may act.
The Company's Regulations provide that its directors and officers shall be
indemnified to the full extent permitted by law against liability and expenses.
In addition, the Company has obtained insurance covering liability of its
directors and officers for their actions as such. The Company will essentially
be a self-insurer with respect to any director and officer indemnification claim
not covered by the insurance policy.
II-1
<PAGE> 81
ITEM 16. EXHIBITS
EXHIBITS
4.1--Form of Subscription Warrant with Instructions*
5 --Opinion of R.E. Hilton, Assistant General Counsel of the U.S. Steel
Group--USX Corporation, regarding legality of the securities being
offered**
23.1--Consent of Price Waterhouse*
23.2--Consent of R.E. Hilton, Assistant General Counsel of the U.S. Steel
Group--USX Corporation (included in Exhibit 5)**
24 --Powers of Attorney.*
- ---------
* filed herewith
** to be filed by amendment
All other schedules are omitted because they are not applicable or the
required information is contained in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference herein.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE> 82
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to supplement the
prospectus set forth in this registration statement, after the expiration of the
subscription period, to set forth the results of the subscription offer.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the
Commission, such indemnification is against public policy as expressed in such
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 83
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF PITTSBURGH, COMMONWEALTH OF PENNSYLVANA,
ON APRIL 22, 1994.
<TABLE>
<S> <C>
RMI TITANIUM COMPANY
By *
---------------------------------------
L. Frederick Gieg, Jr.
President and Chief
Executive Officer
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON APRIL 22, 1994.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
*
- -------------------------------------------- President and Chief Executive Officer and Director
L. Frederick Gieg, Jr.
*
- -------------------------------------------- Senior Vice President and Chief Financial Officer
Timothy G. Rupert
*
- -------------------------------------------- Director
Craig R. Andersson
*
- -------------------------------------------- Director
Neil A. Armstrong
*
- -------------------------------------------- Director
Charles C. Gideon
*
- -------------------------------------------- Director
Dan F. Huebner
*
- -------------------------------------------- Chairman of the Board and Director
R. M. Hernandez
*
- -------------------------------------------- Director
William E. Lewellen
*
- -------------------------------------------- Director
Wesley W. von Schack
*
- -------------------------------------------- Director
Louis A. Valli
/s/T. G. Rupert
By:_________________________________________
T. G. Rupert
Attorney-in-fact
</TABLE>
II-4
<PAGE> 1
EXHIBIT 4.1
SUBSCRIPTION WARRANT
RMI TITANIUM COMPANY
SUBSCRIPTION WARRANT NO.
CUSIP NO.
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE PROSPECTUS
RELATING TO SHARES OF COMMON STOCK OF RMI TITANIUM COMPANY ("RMI"),
DATED MAY , 1994 (THE "PROSPECTUS") AND ARE INCORPORATED HEREIN BY REFERENCE.
COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM RMI, CORPORATE INVESTOR
COMMUNICATIONS, INC. (THE "INFORMATION AGENT") AND MELLON SECURITIES TRUST
COMPANY (THE "SUBSCRIPTION AGENT"). CAPITALIZED TERMS USED HEREIN WITHOUT
DEFINITION SHALL HAVE THE MEANINGS SET FORTH IN THE PROSPECTUS.
SUBSCRIPTION PRICE: $ PER SHARE RIGHTS TO PURCHASE
COMMON STOCK OF
RMI TITANIUM COMPANY
THE RIGHTS REPRESENTED BY THIS SUBSCRIPTION WARRANT, IN WHOLE OR IN PART, MAY BE
EXERCISED BY DULY COMPLETING FORM 1, MAY BE TRANSFERRED, OR EXERCISED OR SOLD
THROUGH A BANK OR BROKER, BY DULY COMPLETING FORM 2, AND MAY BE SOLD THROUGH THE
SUBSCRIPTION AGENT BY DULY COMPLETING FORM 3. BEFORE EXERCISING OR SELLING
RIGHTS, RIGHTS HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE
PROSPECTUS AND INSTRUCTIONS, COPIES OF WHICH ARE AVAILABLE FROM RMI, THE
INFORMATION AGENT AND THE SUBSCRIPTION AGENT. IMPORTANT--COMPLETE APPROPRIATE
FORM AND, IF APPLICABLE, DELIVERY INSTRUCTIONS, AND SIGN ON REVERSE SIDE. IF THE
INSTRUCTIONS OF THE REGISTERED HOLDER HEREOF ARE INSUFFICIENT TO DELINEATE THE
PROPER ACTION TO BE TAKEN WITH RESPECT TO ALL OF THE RIGHTS EVIDENCED HEREBY,
SUCH ACTION AS IS CLEARLY DELINEATED IN SUCH HOLDER'S INSTRUCTIONS WILL BE TAKEN
AND SUCH HOLDER WILL BE DELIVERED A NEW SUBSCRIPTION WARRANT EVIDENCING THE
REMAINING RIGHTS TO WHICH SUCH HOLDER IS ENTITLED.
THE REGISTERED HOLDER OF RIGHTS WHOSE NAME IS SET FORTH HEREIN, OR ASSIGNS,
IS ENTITLED TO SUBSCRIBE FOR ONE SHARE OF COMMON STOCK OF RMI TITANIUM COMPANY
FOR EACH RIGHT EVIDENCED HEREBY UNDER THE TERMS AND SUBJECT TO THE CONDITIONS
SET FORTH IN THE PROSPECTUS RELATING THERETO.
RMI TITANIUM COMPANY
BY: BY:
------------------------------ ------------------------------
L. FREDERICK GIEG, JR. T. G. RUPERT
President and Chief Executive Officer Senior Vice President and Chief
Financial Officer and Treasurer
THIS SUBSCRIPTION WARRANT IS TRANSFERABLE AND MAY BE COMBINED OR DIVIDED
(BUT ONLY INTO SUBSCRIPTION WARRANTS EVIDENCING A WHOLE NUMBER OF RIGHTS) AT THE
OFFICE OF THE SUBSCRIPTION AGENT.
RIGHTS HOLDERS SHOULD BE AWARE THAT IF THEY CHOOSE TO EXERCISE OR TRANSFER
LESS THAN ALL OF THE RIGHTS EVIDENCED HEREBY, A NEW SUBSCRIPTION WARRANT MAY NOT
BE RECEIVED IN SUFFICIENT TIME TO EXERCISE THE REMAINING RIGHTS EVIDENCED
THEREBY. NEITHER RMI NOR THE SUBSCRIPTION AGENT SHALL HAVE ANY LIABILITY TO A
TRANSFEREE OR TRANSFEROR OF RIGHTS IF SUBSCRIPTION WARRANTS ARE NOT RECEIVED IN
TIME FOR EXERCISE OR SALE PRIOR TO THE EXPIRATION TIME.
AN EXERCISE OF RIGHTS EVIDENCED HEREBY IS IRREVOCABLE.
- --------------------------------------------------------------------------------
FORM 1-EXERCISE AND SUBSCRIPTION: THE UNDERSIGNED HEREBY IRREVOCABLY
EXERCISES ONE OR MORE RIGHTS TO SUBSCRIBE FOR SHARES OF COMMON STOCK AS
INDICATED BELOW, ON THE TERMS AND SUBJECT TO THE CONDITIONS SPECIFIED IN THE
PROSPECTUS, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED.
(A) NUMBER OF SHARES SUBSCRIBED FOR PURSUANT TO THE BASIC SUBSCRIPTION
PRIVILEGE (NOT TO EXCEED THE NUMBER OF RIGHTS STAMPED ON THE FACE OF
THIS SUBSCRIPTION WARRANT): (A)
------------
(B) NUMBER OF SHARES SUBSCRIBED FOR PURSUANT TO THE OVERSUBSCRIPTION
PRIVILEGE (NO LIMITATION EXCEPT THAT THE BASIC SUBSCRIPTION PRIVILEGE
MUST BE EXERCISED WITH RESPECT TO ALL RIGHTS HELD BY THE UNDERSIGNED IN
THE SAME CAPACITY): (B)____________
(C) TOTAL (SUM OF LINES (A) AND (B)): (C)____________
(D) TOTAL SUBSCRIPTION PRICE (NUMBER OF SHARES ON LINE (C) MULTIPLIED BY THE
SUBSCRIPTION PRICE OF $_______): (D) $
----------
METHOD OF PAYMENT (CHECK AND COMPLETE APPROPRIATE BOX(ES)):
/ / UNCERTIFIED, CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER IN THE AMOUNT
OF $______ PAYABLE TO MELLON SECURITIES TRUST COMPANY.
/ / WIRE TRANSFER IN THE AMOUNT OF $_______ DIRECTED TO MELLON BANK, N.A.,
PITTSBURGH, PENNSYLVANIA, ABA NO. 043000261, ACCOUNT NO. 102-331,
MELLON FINANCIAL SERVICES CORPORATION, # 17, REORG. ACCOUNT,
ATTENTION: RMI RIGHTS, EVELYN O'CONNOR. INDICATE YOUR NAME AND THE
NAME OF INSTITUTION WIRE TRANSFERRING FUNDS.
(E) IF THE NUMBER OF RIGHTS BEING EXERCISED PURSUANT TO THE BASIC
SUBSCRIPTION PRIVILEGE IS LESS THAN ALL OF THE RIGHTS REPRESENTED BY
THIS SUBSCRIPTION WARRANT (CHECK ONLY ONE):
/ / DELIVER TO THE UNDERSIGNED A NEW SUBSCRIPTION WARRANT EVIDENCING THE
REMAINING RIGHTS TO WHICH THE UNDERSIGNED IS ENTITLED.
/ / DELIVER A NEW SUBSCRIPTION WARRANT EVIDENCING THE REMAINING RIGHTS IN
ACCORDANCE WITH THE UNDERSIGNED'S FORM 2 INSTRUCTIONS (WHICH INCLUDE
ANY REQUIRED SIGNATURE GUARANTEE).
/ / SELL THE REMAINING UNEXERCISED RIGHTS IN ACCORDANCE WITH THE
UNDERSIGNED'S FORM 3 INSTRUCTIONS.
<PAGE> 2
(F) / /CHECK HERE IF RIGHTS ARE BEING EXERCISED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE SUBSCRIPTION AGENT PRIOR TO THE
DATE HEREOF AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):_____________________________________
Window Ticket Number (if any):_______________________________________
Date of Execution of Notice of Guaranteed Delivery:__________________
Name of Eligible Institution which Guaranteed Delivery:______________
FORM 2-(A) TO TRANSFER YOUR SUBSCRIPTION WARRANT OR SOME OR ALL OF YOUR
RIGHTS, OR (B) TO EXERCISE OR SELL RIGHTS THROUGH YOUR BANK OR BROKER: For value
received, ______ Rights represented by this Subscription Warrant are hereby
assigned to (please print name and address and Taxpayer Identification or Social
Security Number of transferees in full):
Name:____________________________________________________________________
Address:_________________________________________________________________
Taxpayer Identification or Social Security Number :______________________
/ / FORM 3-CHECK HERE TO SELL SOME OR ALL OF YOUR UNEXERCISED RIGHTS
THROUGH THE SUBSCRIPTION AGENT AND COMPLETE THE FOLLOWING: The undersigned
hereby authorizes the Subscription Agent to sell _________ Rights represented by
this Subscription Warrant but not exercised hereby and to deliver to the
undersigned a check for the proceeds from the sale thereof, less any applicable
brokerage commissions, taxes or other direct expenses of sale. The Subscription
Agent's obligation to execute orders is subject to its ability to find buyers
for the Rights.
In order to sell Rights through the Subscription Agent, you must complete
and sign the Substitute Form W-9 as provided in Paragraph 8 of the Instructions.
FORM 4-SPECIAL ISSUANCE, PAYMENT OR DELIVERY INSTRUCTIONS: Unless otherwise
indicated below, the Subscription Agent is hereby authorized to issue and
deliver any check, Subscription Warrant and certificates for Common Stock to the
undersigned at the address appearing on the face of this Subscription Warrant.
Name and/or address for issuance and/or delivery of any check, Subscription
Warrant or Common Stock :
Name:____________________________________________________________________
Address:_________________________________________________________________
Taxpayer Identification or Social Security Number :______________________
IMPORTANT:
RIGHTS HOLDERS SIGN HERE AND, IF RIGHTS ARE BEING
SOLD OR EXERCISED, PLEASE ALSO COMPLETE SUBSTITUTE FORM W-9 ENCLOSED
_________________________________________________________________________
_________________________________________________________________________
(SIGNATURE(S) OF REGISTERED HOLDER(S))
Date___________________ , 1994
(Must be signed by registered holder(s) exactly as name(s) appear(s) on this
Subscription Warrant. If signature is by Trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of
corporation or another acting in a fiduciary or representative capacity, please
provide the following information. See Instructions.)
Name(s)_________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title)___________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(INCLUDING ZIP CODE)
(Area Code and Telephone Number)________________________________________________
(HOME) (BUSINESS)
(Taxpayer Identification or Social Security Number)_____________________________
GUARANTEE OF SIGNATURE(S)
NOTE: SEE PARAGRAPH 5(C) OF THE INSTRUCTIONS
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
Title __________________________________________________________________________
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
Indicate name of Approved Signature Guarantee Medallion Program in which firm is
a member _______________________________________________________________________
Area Code and Telephone Number _________________________________________________
Dated: ___________________, 1994
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO RMI TITANIUM COMPANY
SUBSCRIPTION WARRANTS
------------------------
CONSULT THE INFORMATION AGENT, OR YOUR BANK OR
BROKER, AS TO ANY QUESTIONS
------------------------
The following Instructions relate to the Rights Offering by RMI Titanium
Company described in the Prospectus, dated May , 1994, copies of which are
available upon request from RMI, the Information Agent and the Subscription
Agent at the addresses and telephone numbers set forth below.
The number of Rights to which you are entitled is printed on the face of
your Subscription Warrant. You should indicate your wishes with regard to the
exercise, transfer or sale of your Rights by completing the appropriate form or
forms on your Subscription Warrant and returning the Subscription Warrant to the
Subscription Agent in the prepaid envelope provided.
YOUR SUBSCRIPTION WARRANT MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, OR
GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION RIGHT MUST BE
COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION PRICE, INCLUDING FINAL CLEARANCE
OF ANY UNCERTIFIED CHECK, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, AT OR
BEFORE THE EXPIRATION TIME. YOU MAY NOT REVOKE ANY EXERCISE OF A RIGHT.
1. SUBSCRIPTION PRICE.
To exercise Rights, complete Form 1 and send your properly completed and
executed Subscription Warrant (or Notice of Guaranteed Delivery), together with
payment in full of the Subscription Price for each Underlying Share subscribed
for pursuant to the Basic Subscription Privilege and the Oversubscription
Privilege, to Mellon Securities Trust Company, as Subscription Agent (the
"Subscription Agent") at any of the addresses set forth below. Payment of the
Subscription Price must be made for the full number of Underlying Shares being
subscribed for in U.S. dollars (a) by check or postal, telegraphic or express
money order payable to Mellon Securities Trust Company, as Subscription Agent,
or (b) by wire transfer of funds to the account maintained by the Subscription
Agent for such purpose at Mellon Bank, N.A., Pittsburgh, Pennsylvania, ABA No.
043000261, Account No. 102-331, Mellon Financial Services Corporation, #17,
Reorg. Account, Attention: RMI Rights, Evelyn O'Connor. The Subscription Price
will be deemed to have been received by the Subscription Agent only upon (i)
clearance of any uncertified check, (ii) receipt by the Subscription Agent of
any certified or cashier's check or postal, telegraphic or express money order,
or (iii) receipt of collected funds in the Subscription Agent's account
designated above. If paying by uncertified check, please note that the funds
paid thereby may take at least five business days to clear. Accordingly,
registered holders of Rights who wish to pay the Subscription Price by means of
an uncertified check are urged to make payment sufficiently in advance of the
Expiration Time to ensure that such payment is received and clears by such date
and are urged to consider, in the alternative, payment by means of certified or
cashier's check, money order or wire transfer of funds. You may also transfer
your Subscription Warrant to your bank or broker in accordance with the
procedures specified in Instruction 3, make arrangements for the delivery of
funds on your behalf and request your bank or broker to exercise the
Subscription Warrant on your behalf. If you wish to have your bank or broker
exercise some of all of your Rights, you must complete Forms 1 and 2, providing
clear direction as to how many Rights are to be exercised and what action should
be taken in regard to any unexercised Rights. Alternatively, you may cause a
written guarantee substantially in the form of Exhibit A to these Instructions
(the "Notice of Guaranteed Delivery") from a member firm of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc., or from a commercial bank or trust company having an
office or correspondent in the United States (each, an "Eligible Institution"),
to be received by the Subscription Agent prior to the Expiration Time; payment
in full of the applicable Subscription Price may be made separately as long as
said payment is also received by the Subscription Agent prior to the Expiration
Time. Such Notice of Guaranteed Delivery must state your name, the number of
Rights represented by your Subscription Right and the number of Underlying
Shares being subscribed for pursuant to the Basic Subscription Privilege and, if
any, pursuant to the Oversubscription
<PAGE> 4
Privilege, and must guarantee the delivery to the Subscription Agent of your
properly complete and executed Subscription Warrant no later than 5:00 p.m., New
York City time, on the fifth NYSE trading day following the day on which the
Expiration Time occurs. If this procedure is followed, your Subscription
Warrant, properly completed and executed, must be received by the Subscription
Agent no later than 5:00 p.m., New York City time, on the fifth NYSE trading day
after the day on which the Expiration Time occurs. Additional copies of the
Notice of Guaranteed Delivery may be obtained upon request from the Information
Agent at the address, or by calling the telephone number, indicated below.
Banks, brokers and other nominee holders of Rights who exercise the Basic
Subscription Privilege and the Oversubscription Privilege on behalf of
beneficial owners of Rights will be required to certify to the Subscription
Agent and RMI (by delivery to the Subscription Agent of a Nominee Holder
Certification substantially in the form available from the Subscription Agent or
the Information Agent) as to the aggregate number of Rights which have been
exercised and the number of Underlying Shares thereby subscribed for pursuant to
the Basic Subscription Privilege and the Oversubscription Privilege by each
beneficial owner of Rights (which may include such nominee) on whose behalf such
nominee is acting. If more Excess Shares are subscribed for pursuant to the
Oversubscription Privilege than are available for sale, Excess Shares will be
allocated pro rata, as described in the Prospectus.
The addresses and telephone number of the Subscription Agent, are as
follows:
<TABLE>
<S> <C> <C>
If By Mail: If By Overnight Courier: If By Hand:
Mellon Securities Trust Mellon Securities Trust Mellon Securities Trust
Company Company Company
P.O. Box 768 85 Challenger Road 120 Broadway
Midtown Station Overpeck Centre 33rd Floor
New York, NY 10018 Ridgefield Park, NJ 07660 New York, New York
Attention: Reorganization
Department
</TABLE>
The Subscription Agent's telephone number is (800) 777-3674.
The address and telephone number of Corporate Investors Communications,
Inc, the Information Agent, are as follows:
If you exercise less than all of the Rights evidenced by your Subscription
Warrant by so indicating in Form 1 of your Subscription Right, the Subscription
Agent will either (i) issue to you a new Subscription Warrant evidencing the
unexercised Rights, or (ii) if you so indicate on Form 2 of your Subscription
Warrant, issue a new Subscription Warrant to a designated transferee, or (iii)
if you so indicate on Form 3 of your Subscription Warrant, endeavor to sell such
unexercised Rights for you. If no indication is made, the Subscription Agent
will issue to you a new Subscription Warrant evidencing the unexercised Rights.
If you choose, however, to have a new Subscription Warrant sent to you or a
designated transferee, any such new Subscription Warrant may not be received in
sufficient time to permit you or a designated transferee to sell or exercise the
Rights evidenced thereby.
If the aggregate Subscription Price that you have paid is insufficient to
purchase the number of Underlying Shares that you have indicated are being
subscribed for, or if you do not specify the number of Underlying Shares you
intend to purchase, then you will be deemed to have exercised first, the Basic
Subscription Privilege and second, the Oversubscription Privilege to purchase
Underlying Shares to the full extent of the payment made (subject only to the
restrictions described in the Prospectus). If the aggregate Subscription Price
that you have paid exceeds the amount necessary to purchase the number of
Underlying Shares for which you have indicated an intention to subscribe, then
you will be deemed to have exercised first, the Basic Subscription Privilege (if
not already fully exercised) and second, the Oversubscription Privilege to the
full extent of the excess payments tendered.
2
<PAGE> 5
2. ISSUANCE AND DELIVERY OF STOCK CERTIFICATES, ETC.
Certificates representing shares of Common Stock will be issued, and any
deliveries and payments will be made, in the name and to the address shown, on
the face of your Subscription Warrant unless you provide special issuance,
delivery or payment instructions to the contrary by completing Form 4.
(a) Basic Subscription Privilege. As soon as practicable after the
corresponding Rights have been validly exercised, the Subscription Agent will
issue and mail to each exercising registered holder of Rights, or hold for
pick-up if so arranged, a certificate representing shares of Common Stock
purchased pursuant to the Basic Subscription Privilege. See "The Rights
Offering--Subscription Privileges" in the Prospectus.
(b) Oversubscription Privilege. As soon as practicable after the Expiration
Time and after all prorations and adjustments contemplated by the terms of the
Rights Offering have been made, the Subscription Agent will issue and mail to
each registered holder of Rights who validly exercises the Oversubscription
Privilege, or hold for pick-up if so arranged, a certificate evidencing the
number of shares allocated to such registered holder pursuant to the
Oversubscription Privilege. See "The Rights Offering--Subscription Privileges"
in the Prospectus.
(c) Cash Payments. As soon as practicable after the Expiration Time and
after all prorations and adjustments contemplated by the terms of the Rights
Offering have been made, the Subscription Agent will return by mail without
interest or deduction to each holder of Rights exercising the Oversubscription
Privilege any excess funds received in payment of the Subscription Price for
Underlying Shares that are subscribed for by such Rights Holder but not
allocated to such Rights Holder pursuant to the Oversubscription Privilege.
Promptly following any sale of Rights through the Subscription Agent, the
Subscription Agent will mail to the holder of such Rights a check for the
proceeds of any Rights sold by the Subscription Agent on behalf of such holder,
less any applicable brokerage commissions, taxes and other direct expenses of
sale. Fees of the Subscription Agent for effecting such sale will be paid by
RMI.
3. TO SELL OR TRANSFER RIGHTS.
(a) Sale of Rights through a Bank or Broker. To sell or transfer all or a
portion of your Rights evidenced by a Subscription Warrant through your bank or
broker, so indicate on Form 2 and deliver your properly completed and signed
Subscription Warrant to your bank or broker. Your Subscription Warrant should be
delivered to your bank or broker in ample time for it to be exercised. If Form 2
is completed without designating a transferee, the Subscription Agent may
thereafter treat the bearer of the Subscription Warrant as the absolute owner of
all of the Rights evidenced by such Subscription Warrant for all purposes, and
the Subscription Agent shall not be affected by any notice to the contrary.
Because your bank or broker cannot issue Subscription Warrants, if you wish to
sell less than all of the Rights evidenced by a Subscription Warrant, either you
or your bank or broker must instruct the Subscription Agent as to the action to
be taken with respect to the Rights not transferred, or you or your bank or
broker must first have your Subscription Warrant divided into Subscription
Warrants of appropriate denominations, by following the instructions in
Paragraph 4 below. The Subscription Warrant evidencing the number of Rights you
intend to sell can then be transferred by your bank or broker in accordance with
the instructions in this Paragraph 3(a).
(b) Transfer of Rights to a Designated Transferee. To sell or transfer all
or a portion of your Rights to a transferee other than a bank or broker, you
must complete Form 2 in its entirety, sign the Subscription Warrant and have
your signature guaranteed by an Eligible Institution. A Subscription Warrant
that has been properly transferred in its entirety may be exercised by a new
holder without a new Subscription Warrant being issued. To exercise, or
otherwise take action with respect to, such a transferred Subscription Warrant,
the new holder should deliver the Subscription Warrant, together with payment of
the applicable Subscription Price (with respect to the exercise of both the
Basic Subscription Privilege and the Oversubscription Privilege) and complete
separate instructions signed by the new holder to the Subscription Agent in
ample time to permit the Subscription Agent to take the desired action. Because
only the Subscription Agent can issue Subscription Warrants, if you wish to
transfer less than all of the Rights evidenced by your Subscription Warrant to a
designated transferee, you must instruct the Subscription Agent as to the action
to be taken with respect to the Rights not sold or transferred, or you must
divide your Subscription Warrant into Subscription
3
<PAGE> 6
Warrants of appropriate smaller denominations by following the instructions in
Paragraph 4 below. The Subscription Warrant evidencing the number of Rights you
intend to transfer can then be transferred by following the instructions in this
Paragraph 3(b).
If you wish to transfer all or a portion of your Rights, you should allow a
sufficient amount of time prior to the Expiration Time for (i) the transfer
instructions to be received and processed by the Subscription Agent, (ii) new
Subscription Warrants to be issued and transmitted to the transferee or
transferees with respect to the transferred Rights, and to you with respect to
retained Rights, if any, and (iii) the Rights evidenced by the new Subscription
Warrants to be exercised or sold by the recipients thereof. Such amount of time
could range from two to ten business days, or more, depending upon the method by
which delivery of the Subscription Warrants and payment is made and the number
of transactions which you instruct the Subscription Agent to effect. Neither RMI
nor the Subscription Agent shall have any liability to a transferee or
transferor of Rights if Subscription Warrants are not received in time for
exercise or sale prior to the Expiration Time.
(c) Sale of Rights through Subscription Agent. To sell all or a portion of
your Rights evidenced by the Subscription Warrant through the Subscription
Agent, you must complete Form 3 in its entirety, sign the Subscription Warrant
and deliver the Subscription Warrant to the Subscription Agent. Your
Subscription Warrant should be delivered to the Subscription Agent in ample time
to be sold and exercised, but in no event later than 11:00 a.m., New York City
time, two NYSE trading days preceding the day on which the Expiration Time
occurs. The Subscription Agent's obligation to execute orders is subject to its
ability to find buyers. If you wish to sell less than all of your Rights, you or
your bank or broker must instruct the Subscription Agent as to the action to be
taken with respect to the Rights not sold. Promptly following any sale of your
Rights through the Subscription Agent, the Subscription Agent will send you a
check for the net proceeds of such sale as described in the Prospectus. If you
wish to sell Rights through the Subscription Agent, you should also complete the
Substitute Form W-9 referred to in Paragraph 8 below.
4. TO HAVE A SUBSCRIPTION WARRANT DIVIDED INTO SMALLER DENOMINATIONS.
Send your Subscription Right, together with complete separate instructions
(including specification of the denominations into which you wish your Warrant
to be divided) signed by you, to the Subscription Agent, allowing a sufficient
amount of time for new Subscription Warrants to be issued and returned so that
they can be used prior to the Expiration Time. Alternatively, you may ask a bank
or broker to effect such actions on your behalf. Your signature must be
guaranteed by an Eligible Institution if any of the new Subscription Warrants
are to be issued in a name other than that in which the original Subscription
Warrant was issued. Subscription Warrants may not be divided into fractional
Rights, and any instructions to do so will be rejected. As a result of delays in
the mail, the necessary processing time and other factors, you or your
transferee may not receive the new Subscription Warrants in time to enable the
Rights holder to complete a sale or exercise by the Expiration Time. Neither RMI
nor the Subscription Agent will be liable to either a transferor or transferee
for any such delays.
5. SIGNATURES.
(a) Signatures by Registered Holder. The signature on the Subscription
Warrant must correspond with the name of the registered holder exactly as it
appears on the face of the Subscription Warrant without any alteration or change
whatsoever. Persons who sign the Subscription Warrant in a representative or
other fiduciary capacity must indicate their capacity when signing and present
to the Subscription Agent satisfactory evidence of their authority to so act.
(b) Execution by Person Other than Registered Holder. If the Subscription
Warrant is signed by a person other than the holder named on the face of the
Subscription Warrant, proper evidence of authority of the person signing the
Subscription Warrant must accompany the same.
(c) Signature Guarantees. Your signature must be guaranteed by a member of
an Approved Signature Guarantee Medallion Program if you wish to: (i) transfer
your Rights, as specified in Paragraph 3(b) above, to a transferee other than a
bank or broker; (ii) have a Subscription Warrant or Warrants issued in a name
other than that in which the original Subscription Warrant was issued; or (iii)
specify special issuance, payment or delivery instructions pursuant to Form 4.
4
<PAGE> 7
6. METHOD OF DELIVERY.
The method of delivery of Subscription Warrants and payment of the
Subscription Price to the Subscription Agent will be at the election and risk of
the registered holder of the Rights, but, if sent by mail, it is recommended
that they be sent by registered mail, properly insured, with return receipt
requested, and that a sufficient number of days be allowed to ensure timely
delivery to the Subscription Agent and the clearance of any uncertified checks
sent in payment of the Subscription Price prior to the Expiration Time.
7. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE DEPOSITORY
TRUST COMPANY.
In the case of Rights that are held of record through The Depository Trust
Company ("DTC"), exercises of the Basic Subscription Privilege (but not the
Oversubscription Privilege) may be effected by instructing DTC to transfer
Rights (such Rights being "DTC Exercised Rights") from the DTC account of such
holder to the DTC account of the Subscription Agent, together with making
payment of the Subscription Price for each Underlying Share subscribed for
pursuant to the Basic Subscription Privilege. The Oversubscription Privilege in
respect to the DTC Exercised Rights may not be exercised through DTC. The holder
of DTC Exercised Rights may exercise the Oversubscription Privilege in respect
of such DTC Exercised Rights by properly executing and delivering to the
Subscription Agent at or prior to the Expiration time, a DTC Participant
Oversubscription Exercise Form and a Nominee Holder Certification, in the forms
available from the Information Agent or the Subscription Agent, together with
payment of the appropriate Subscription Price for the number of Underlying
Shares for which the Oversubscription Privilege is to be exercised.
If a Notice of Guaranteed Delivery relates to Rights with respect to which
exercise of the Basic Subscription Privilege will be made through DTC and such
Notice of Guaranteed Delivery also relates to the exercise of the
Oversubscription Privilege, a DTC Participant Oversubscription Exercise Form and
a Nominee Holder Certification, must also be received by the Subscription Agent
in respect of such exercise of the Oversubscription Privilege at or prior to the
Expiration Time.
8. SUBSTITUTE FORM W-9.
Each registered holder of Rights who elects to exercise Rights or have the
Subscription Agent endeavor to sell such holder's Rights should provide the
Subscription Agent with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, which is included as Exhibit B hereto. Additional copies of
Substitute Form W-9 may be obtained upon request from the Information Agent or
the Subscription Agent at the addresses, or by calling any of the telephone
numbers, indicated above. Failure to provide the information on the form may
subject such holder to a $50 penalty and to 31% backup U.S. federal income tax
withholding with respect to (i) dividends that may be paid by RMI on shares of
Common Stock purchased upon the exercise of Rights (for those holders exercising
Rights), or (ii) funds to be remitted to registered holders of Rights in respect
of Rights sold by the Subscription Agent (for those holders electing to have the
Subscription Agent sell their Rights).
9. TRANSFER TAXES.
RMI will pay transfer taxes, if any, applicable to the issuance and sale of
Common Stock to a registered holder of Rights upon the exercise of such holder's
Rights. If, however, a transfer tax is imposed for any reason other than the
issuance and sale of Common Stock to a registered holder of Rights upon exercise
of such holder's Rights, including the issuance of such shares in a name other
than that of such holder, the amount of any such transfer taxes (whether imposed
on the registered holder of any other person) will be payable by the registered
holder or such other person. In any such event, the Subscription Agent will be
entitled to refuse to take the action requested until it has received
satisfactory evidence of the payment of such taxes or exemption therefrom.
10. IRREGULARITIES.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by RMI, whose determinations will be
final and binding. RMI, in its sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may
5
<PAGE> 8
determine, or reject the purported exercise of any Right. Subscription Warrants
will not be deemed to have been received or accepted until all irregularities
have been waived or cured within such time as RMI determines, in its sole
discretion. Neither RMI nor the Subscription Agent will be under any duty to
give notification of any defect or irregularity in connection with the
submission of Subscription Rights or incur any liability for failure to give
such notification. All questions as to the interpretation of the terms of the
Rights Offering, the Subscription Warrants, the Instructions, the DTC
Participant Oversubscription Exercise Form, the Nominee Holder Certification or
the Notice of Guaranteed Delivery shall be decided by RMI, in its sole
discretion, whose determination shall be final and binding.
Exhibit A--Notice of Guaranteed Delivery
Exhibit B--Important Tax Information--Substitute Form W-9
6
<PAGE> 9
EXHIBIT A
TO INSTRUCTIONS
NOTICE OF GUARANTEED DELIVERY
FOR
SUBSCRIPTION WARRANTS
ISSUED BY
RMI TITANIUM COMPANY
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Rights Offering described in the Prospectus dated May ,
1994 (the "Prospectus") of RMI Titanium Company, an Ohio corporation ("RMI"), if
a registered holder of Rights cannot deliver the Subscription Warrant(s)
evidencing the Rights (the "Subscription Warrant(s)"), to the Subscription Agent
listed below (the "Subscription Agent") at or prior to 5:00 p.m., New York City
time, on the Expiration Time. Such form must be delivered by hand or sent by
facsimile transmission or mail to the Subscription Agent, and must be received
by the Subscription Agent at or prior to the Expiration Time. See "The Rights
Offering-Exercise of Rights and Subscription Agent" in the Prospectus. Payment
of the Subscription Price of $ per share for each share of Common Stock
subscribed for upon exercise of such Rights must be received by the Subscription
Agent in the manner specified in the Prospectus at or prior to the Expiration
Time, even if the Subscription Warrant evidencing such Rights is being delivered
pursuant to the procedure for guaranteed delivery thereof.
The Subscription Agent is:
<TABLE>
<S> <C> <C>
If By Mail: If By Overnight Courier: If By Hand:
Mellon Securities Trust Company Mellon Securities Trust Company Mellon Securities Trust Company
P.O. Box 768 85 Challenger Road 120 Broadway
Midtown Station Overpeck Centre 33rd Floor
New York, NY 10018 Ridgefield Park, NJ 07660 New York, New York
Attention: Reorganization
Department
</TABLE>
The Subscription Agent's telephone number is (800) 777-3674
DELIVERY OF THIS INSTRUMENT MUST BE MADE AT OR PRIOR TO THE EXPIRATION TIME.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
A-1
<PAGE> 10
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the registered holder of
Subscription Warrant(s) representing ____________ Rights and that such
Subscription Warrant(s) cannot be delivered to the Subscription Agent at or
before the Expiration Time. Upon the terms and subject to the conditions set
forth in the Prospectus, receipt of which is hereby acknowledged, the
undersigned hereby elects to exercise (i) the Basic Subscription Privilege to
subscribe for ___ shares of Common Stock with respect to the Rights represented
by such Subscription Warrant and (ii) the Oversubscription Privilege relating to
each such Right to subscribe, to the extent that Excess Shares (as defined in
the Prospectus) are available therefore, for an aggregate of up to
Excess Shares. The undersigned understands that payment of the Subscription
Price for each share of Common Stock subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege must be received by
the Subscription Agent at or before the Expiration Time, and represents that
such payment, in the aggregate amount of $_____________, either (check
appropriate box):
/ / is being delivered herewith to the Subscription Agent;
/ / has been, or is being, delivered separately to the Subscription Agent, in
the manner set forth below (check appropriate box and complete information
relating thereto):
/ / wire transfer of funds
- name of transferor institution__________________________________________
- date of transfer________________________________________________________
- confirmation number if available________________________________________
/ / uncertified check (Payment by uncertified check will not be deemed to have
been received by the Subscription Agent until such check has cleared.
Holders paying by such means are urged to make payment sufficiently in
advance of the Expiration Time to ensure that such payment clears by such
date.)
/ / certified or cashier's check or money order.
- name of maker___________________________________________________________
- date and number of certified or cashier's check or money order__________
- bank on which check is drawn or issuer of money order___________________
<TABLE>
<S> <C>
Signature__________________________________________ Address:
Name(s)____________________________________________ _______________________________________
___________________________________________________ (Including Zip Code)
Please Type or Print Area Code and Tel. No(s).______________
(If signature is by a trustee(s), executor(s),
administrator(s), guardian(s), attorney(s)-in-fact,
agent(s), officer(s) of a corporation or another acting in
a fiduciary or representative capacity, such capacity must
be clearly indicated below.)
Subscription Warrant
No(s). (if available)
</TABLE>
------------------
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SUBSCRIPTION WARRANT SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or correspondent in the United States,
guarantees that the undersigned will deliver to the Subscription Agent the
Subscription Warrants representing the Rights being exercised hereby, with any
required signature guarantee and any other required documents, all no later than
5:00 p.m., New York City time on the fifth New York Stock Exchange, Inc. trading
days following the day on which the Expiration Time occurs.
<TABLE>
<S> <C>
______________________________________________ Dated:_______________________________, 1994
Name(s)_______________________________________ ____________________________________________
______________________________________________ ____________________________________________
(Address) (Name of Firm)
______________________________________________ ____________________________________________
(Area Code and Telephone Number) (Authorized Signature)
</TABLE>
The institution which completes this form must communicate the guarantee to
the Subscription Agent and must deliver the Subscription Warrant(s) to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
A-2
<PAGE> 11
EXHIBIT B
TO INSTRUCTIONS
IMPORTANT TAX INFORMATION
Under the U.S. federal income tax law, (1) dividend payments that may be
made by RMI on shares of Common Stock issued upon the exercise of Rights, and
(2) payments that may be remitted by the Subscription Agent to holders of Rights
in respect of Rights sold on such holders' behalf by the Subscription Agent, may
be subject to backup withholding, and each Rights Holder who either exercises
Rights or requests the Subscription Agent to sell Rights should provide the
Subscription Agent (as RMI's agent, in respect of exercised Rights, and as payer
in respect of Rights sold by the Subscription Agent) with such holder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If such
Rights Holder is an individual, the TIN is his social security number. If the
Subscription Agent, which is also the transfer agent for RMI, is not provided
with the correct TIN in connection with such payments, the Rights Holder may be
subject to a $50 penalty imposed by the Internal Revenue Service.
Exempt holders of Rights (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
information reporting requirements. In general, in order for a foreign
individual to qualify as an exempt recipient, the Rights Holder must submit a
statement, signed under the penalties of perjury, attesting to that individual's
exempt status. Such statements can be obtained from the Subscription Agent. See
the Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If backup withholding applies, RMI or the Subscription Agent, as the case
may be, will be required to withhold 20% of any such payments made to the Rights
Holder. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding, any Rights Holder who has not previously
provided a correct TIN, is required to notify the Subscription Agent of his
correct taxpayer identification number by completing the form below certifying
that the taxpayer identification number provided on Substitute Form W-9 is
correct (or that such holder is awaiting a taxpayer identification number).
B-1
<PAGE> 12
PAYER'S NAME: RMI TITANIUM COMPANY
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN Social Security Number
FORM W-9 THE BOX AT THE RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW OR____________________________________
Employer Identification Number
-------------------------------------------------------------------------------
Part 2 -- Check the box if you are not subject to backup withholding under
Department of the Treasury the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code
Internal Revenue Service because (1) you have been notified that you are subject to backup
withholding as a result of failure to report all interest or dividends or
(2) the Internal Revenue Service has notified you that you are no longer
subject to backup withholding. / /
-------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I Part 3
IDENTIFICATION NUMBER (TIN) CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM IS
TRUE, CORRECT AND COMPLETE.
SIGNATURE
DATE Awaiting TIN / /
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 31, 1994 appearing on page 17 of RMI Titanium Company's Annual Report on
Form 10-K for the year ended December 31, 1993. We also consent to the use in
the Prospectus of our report dated January 31, 1994 relating to the financial
statements of RMI Titanium Company, which appears in such Prospectus. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE
Pittsburgh, Pennsylvania
April 22, 1994
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact to
sign and execute for me and on my behalf a registration statement on
Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
22nd day of March, 1994.
/s/ Craig R. Anderson
-------------------------
Craig R. Anderson
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact
to sign and execute for me and on my behalf a registration statement
on Form S-3 to be filed with the Securities and Exchange Commission in
connection with the offering of Common Stock of RMI Titanium Company
pursuant to transferable rights to be issued by RMI Titanium Company
pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorney-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
25 day of March, 1994.
/s/ Neil A. Armstrong
-------------------------
Neil A. Armstrong
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact
to sign and execute for me and on my behalf a registration statement
on Form S-3 to be filed with the Securities and Exchange Commission in
connection with the offering of Common Stock of RMI Titanium Company
pursuant to transferable rights to be issued by RMI Titanium Company
pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
23rd day of March, 1994.
/s/ Charles C. Gedeon
-------------------------
Charles C. Gedeon
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact
to sign and execute for me and on my behalf a registration statement
on Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended, in such form as they or any one or more of them
may approve, and to do any and all other acts which said
attorneys-in-fact may deem necessary or desirable to enable RMI
Titanium Company to comply with said Act and the rules and
regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
23rd day of March,1994.
/s/ L. Frederick Gieg, Jr.
-------------------------
L. Frederick Gieg, Jr.
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact to
sign and execute for me and on my behalf a registration statement on
Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
22nd day of March, 1994.
/s/ Robert M. Hernandez
-------------------------
Robert M. Hernandez
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact to
sign and execute for me and on my behalf a registration statement on
Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
23rd day of March, 1994.
/s/ Dan F. Huebner
-------------------------
Dan F. Huebner
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact to
sign and execute for me and on my behalf a registration statement on
Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
22nd day of March, 1994.
/s/ William E. Lewellen
-------------------------
William E. Lewellen
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact to
sign and execute for me and on my behalf a registration statement on
Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
29th day of March, 1994.
/s/ Louis A. Valli
-------------------------
Louis A. Valli
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby make, constitute and
appoint Robert M. Hernandez, L. Frederick Gieg, Jr. and Timothy G.
Rupert, or any one of them, my true and lawful attorneys-in-fact to
sign and execute for me and on my behalf a registration statement on
Form S-3 to be filed with the Securities and Exchange Commission
in connection with the offering of Common Stock of RMI Titanium
Company pursuant to transferable rights to be issued by RMI Titanium
Company pro rata to the holders of its Common Stock, and any and all
amendments to such registration statement to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, in such form as they or any one or more of them may
approve, and to do any and all other acts which said attorneys-in-fact
may deem necessary or desirable to enable RMI Titanium Company to
comply with said Act and the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
22nd day of March, 1994.
/s/ Wesley W. von Schack
-------------------------
Wesley W. von Schack
