<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM __________ TO _________
Commission File Number 1-10319
RMI TITANIUM COMPANY
(Exact name of registrant as specified in its charter)
OHIO 31-0875005
(State of Incorporation) (I.R.S. Employer
Identification No.)
1000 WARREN AVENUE, NILES, OHIO 44446
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 330-544-7700
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<PAGE> 2
FORM 10-K/A
AMENDMENT NO. 1 TO
ANNUAL REPORT
ON
FORM 10-K
FOR THE YEAR ENDED
DECEMBER 31, 1997
OF
RMI TITANIUM COMPANY
Pursuant to Rule 12b-15, promulgated under the Securities Exchange Act of
1934, RMI Titanium Company hereby amends each of the following Items of its
Annual Report on Form 10-K for the year ended December 31, 1997, so that, as
amended, such Items read as set forth herein.
Index to Exhibits
Exhibit 23.1
Exhibit 99.1
Exhibit 99.2
<PAGE> 3
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NO. DESCRIPTION NUMBER
--- ----------- ------
<C> <S> <C>
2.0 Amended and Restated Reorganization Agreement, incorporated
by reference to Exhibit 2.1 to the Company's Registration
Statement on Form S-1 No. 33-30667 Amendment No. 1.
3.1 Articles of Incorporation of the Company, as amended March
31, 1994, incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1994.
3.2 Amended Code of Regulations of the Company, incorporated by
reference to Exhibit 3.2 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993.
4.1 Credit Agreement between RMI Titanium Company and PNC Bank,
National Association dated as of April 15, 1996,
incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-3 No. 333-01553 Amendment
No. 2.
10.1 Agreement for the sale and purchase of titanium
tetrachloride between SCM Chemicals, Inc., and RMI Titanium
Company dated March 9, 1993 incorporated by reference to
Exhibit 10.13 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1992.+
10.2 Agreement for the supply, purchase and sale of chlorine
between SCM Chemicals, Inc., and RMI Titanium Company dated
as of November 13, 1990, incorporated by reference to
Exhibit 10.3 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1990.
10.3 RMI Company Annual Incentive Compensation Plan, incorporated
by reference to Exhibit 10.3 to the Company's Registration
Statement on Form S-1 No. 33-30667 Amendment No. 2.
10.4 RMI Titanium Company 1989 Stock Option Incentive Plan,
incorporated by reference to Exhibit 10.4 to the Company's
Registration Statement on Form S-1 No. 33-30667 Amendment
No. 2.
10.5 RMI Titanium Company Supplemental Pension Plan effective
August 1, 1987, and amended as of December 12, 1990,
incorporated by reference to Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1990.
10.6 RMI Titanium Company 1989 Employee Restricted Stock Award
Plan, incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-1, No. 33-30667
Amendment No. 2.
10.7 Amendment to RMI Titanium Company 1989 Employee Restricted
Stock Award Plan, incorporated by reference to Exhibit 10.10
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1990.
10.8 RMI Titanium Company Excess Benefits Plan effective July 18,
1991, incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
10.9 Sales Agreement for the supply of titanium sponge and plasma
electrodes between Oregon Metallurgical Corporation and RMI
Titanium Company dated as of August 8, 1994 incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.+
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NO. DESCRIPTION NUMBER
--- ----------- ------
<C> <S> <C>
10.10 Sales Agreement for the supply of titanium sponge between
Osaka Titanium Co., Ltd., Sumitomo Corporation, Sumitomo
Corporation of America, and RMI Titanium Company dated as of
September 4, 1992 incorporated by reference to Exhibit 10.10
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.+
10.11 RMI Titanium Company 1995 Stock Plan incorporated by
reference to Exhibit 10.11 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
10.12 Employment agreement, dated September 1, 1996, between the
Company and John H. Odle, incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996.
10.13 Employment agreement, dated September 1, 1996, between the
Company and T. G. Rupert, incorporated by reference to
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1996.
10.14 Employment agreement, dated May 20, 1997, between the
Company and Harry B. Watkins.
10.15 Employment agreement dated May 1, 1997 between the Company
and Dawne S. Hickton.
10.16 Registration Rights Agreement dated August 21, 1996 between
the Company and USX Corporation, incorporated by reference
to Exhibit 10.3 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1996.
21 Subsidiaries of the Company.
23.1 Consent of Price Waterhouse LLP.
24 Powers of Attorney.
27 Financial Data Schedule.
99.1 Financial Statements of The RMI Titanium Company Employee
Savings and Investment Plan for the year ended December 31,
1997 (filed herewith).
99.2 Financial Statements of The RMI Titanium Company Bargaining
Unit Employee Savings and Investment Plan for the year ended
December 31, 1997 (filed herewith).
</TABLE>
- ---------
+ Confidential treatment has been requested.
<PAGE> 5
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-38559) of RMI Titanium Company of our report dated
June 15, 1998, appearing on page 1 of the Annual Report of The RMI Titanium
Company Employee Savings and Investment Plan which appears as Exhibit 99.1 to
the Annual Report on Form 10-K of RMI Titanium Company for the year ended
December 31, 1997, as amended by this Form 10-K/A. We also consent to the
incorporation by reference in the Registration Statement on Form S8 (No.
33-38340) of RMI Titanium Company of our report dated June 15, 1998, appearing
on page 1 of the Annual Report of The RMI Titanium Company Bargaining Unit
Employees Savings and Investment Plan which appears as Exhibit 99.2 to the
Annual Report on Form 10-K of RMI Titanium Company for the year ended December
31, 1997, as amended by this Form 10-K/A.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
June 29, 1998
<PAGE> 6
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
ANNUAL REPORT
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
EXHIBIT 99.1
<PAGE> 7
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of RMI Titanium Company Employee
Savings and Investment Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the RMI Titanium Company Employee Savings and Investment Plan (the Plan) at
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the years then ended, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Plan'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.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is additional information
required by the Employee Retirement Income Security Act of 1974. The Fund
Information in the statement of changes in net assets available for benefits is
presented for purposes of additional analysis rather than to present the changes
in net assets available for benefits of each fund. Schedules I and II and the
Fund Information have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, are fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
June 15, 1998
<PAGE> 8
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Investments, at fair value:
Fidelity Magellan Fund.................................... $ 3,832,989 $3,270,017
Fidelity Growth and Income Fund........................... 949,783 --
Fidelity Low Priced Stock Fund............................ 274,580 --
Fidelity Worldwide Fund................................... 442,289 --
Fidelity Managed Income Portfolio......................... 3,148,444 --
Spartan U.S. Equity Index Fund............................ 775,667 --
CIGNA Income and Growth Account........................... -- 115,611
CIGNA Stock Market Index Account.......................... -- 343,352
CIGNA International Equity Account........................ -- 469,416
RMI Titanium Company Common Stock Account................. 664,626 471,950
Participant Loans Receivable.............................. 170,807 180,311
----------- ----------
10,259,185 4,850,657
Investments, at contract value:
CIGNA Guaranteed "Long-Term" Account...................... -- 3,425,458
----------- ----------
Net assets available for benefits......................... $10,259,185 $8,276,115
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY SPARTAN
FIDELITY GROWTH & LOW PRICED FIDELITY MANAGED U.S. EQUITY
MAGELLAN INCOME STOCK WORLDWIDE INCOME INDEX
FUND FUND FUND FUND PORTFOLIO FUND
---- ---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Employees' contributions.......... $ 180,765 $164,722 $100,046 $ 39,982 $ 131,496 $121,562
---------- -------- -------- -------- ---------- --------
Investment income:
Interest and dividend income.... 291,630 36,997 12,372 43,629 172,987 27,798
Net appreciation (depreciation)
in fair value of
investments.................. 549,414 94,692 13,523 (533) -- 108,858
---------- -------- -------- -------- ---------- --------
841,044 131,689 25,895 43,096 172,987 136,656
Transfers....................... (421,005) 664,841 149,519 359,674 2,989,125 517,925
---------- -------- -------- -------- ---------- --------
Total net additions
(deductions)............... 600,804 961,252 275,460 442,752 3,293,608 776,143
---------- -------- -------- -------- ---------- --------
Participant's benefits paid....... (37,832) (11,469) (880) (463) (145,164) (476)
---------- -------- -------- -------- ---------- --------
Total net deductions......... (37,832) (11,469) (880) (463) (145,164) (476)
---------- -------- -------- -------- ---------- --------
Increase (decrease) in net
assets.......................... 562,972 949,783 274,580 442,289 3,148,444 775,667
Net assets available for benefits:
Beginning of year............... 3,270,017 -- -- -- -- --
---------- -------- -------- -------- ---------- --------
End of year..................... $3,832,989 $949,783 $274,580 $442,289 $3,148,444 $775,667
========== ======== ======== ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
<TABLE>
<CAPTION>
CIGNA CIGNA CIGNA CIGNA RMI
GUARANTEED INCOME & STOCK INT'L. TITANIUM CO. PARTICIPANT
"LONG-TERM" GROWTH MARKET INDEX EQUITY COMMON STOCK LOANS
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT RECEIVABLE TOTAL
------- ------- ------- ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
$ 17,514 $ 1,779 $ 3,090 $ 3,351 $ 21,157 $ -- $ 785,464
----------- --------- --------- --------- -------- -------- -----------
18,281 -- -- -- -- 12,778 616,472
-- 5,128 22,647 (1,014) 97,544 -- 890,259
----------- --------- --------- --------- -------- -------- -----------
18,281 5,128 22,647 (1,014) 97,544 12,778 1,506,731
(3,456,342) (122,518) (366,094) (471,753) 76,590 (12,444) (92,482)
----------- --------- --------- --------- -------- -------- -----------
(3,420,547) (115,611) (340,357) (469,416) 195,291 334 2,199,713
----------- --------- --------- --------- -------- -------- -----------
(4,911) -- (2,995) -- (2,615) (9,838) (216,643)
----------- --------- --------- --------- -------- -------- -----------
(4,911) -- (2,995) -- (2,615) (9,838) (216,643)
----------- --------- --------- --------- -------- -------- -----------
(3,425,458) (115,611) (343,352) (469,416) 192,676 (9,504) 1,983,070
3,425,458 115,611 343,352 469,416 471,950 180,311 8,276,115
----------- --------- --------- --------- -------- -------- -----------
$ -- $ -- $ -- $ -- $664,626 $170,807 $10,259,185
=========== ========= ========= ========= ======== ======== ===========
</TABLE>
<PAGE> 11
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA RMI
CIGNA CIGNA STOCK CIGNA TITANIUM CO.
GUARANTEED FIDELITY INCOME & MARKET INT'L. COMMON PARTICIPANT
"LONG-TERM" MAGELLAN GROWTH INDEX EQUITY STOCK LOANS
ACCOUNT FUND ACCOUNT ACCOUNT ACCOUNT ACCOUNT RECEIVABLE TOTAL
------- ---- ------- ------- ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Employees'
contributions.......... $ 280,921 $ 230,252 $ 49,164 $ 61,842 $ 61,977 $ 18,006 $ -- $ 702,162
---------- ---------- -------- -------- -------- -------- -------- ----------
Investment income:
Interest and dividend
income............... 179,432 520,722 -- -- -- -- 13,670 713,824
Net appreciation
(depreciation) in
fair value of
investments.......... -- (172,095) 9,192 34,617 40,762 391,245 -- 303,721
---------- ---------- -------- -------- -------- -------- -------- ----------
179,432 348,627 9,192 34,617 40,762 391,245 13,670 1,017,545
Transfers.............. 168,113 (399,178) (14,403) 168,839 22,636 (48,067) 52,406 (49,654)
---------- ---------- -------- -------- -------- -------- -------- ----------
Total net additions
(deductions)....... 628,466 179,701 43,953 265,298 125,375 361,184 66,076 1,670,053
---------- ---------- -------- -------- -------- -------- -------- ----------
Participant's benefits
paid................... (173,423) (120,802) (14,122) (3) (32,064) (80,709) -- (421,123)
---------- ---------- -------- -------- -------- -------- -------- ----------
Total net
deductions......... (173,423) (120,802) (14,122) (3) (32,064) (80,709) -- (421,123)
---------- ---------- -------- -------- -------- -------- -------- ----------
Increase (decrease) in
net assets............. 455,043 58,899 29,831 265,295 93,311 280,475 66,076 1,248,930
Net assets available for
benefits:
Beginning of year...... 2,970,415 3,211,118 85,780 78,057 376,105 191,475 114,235 7,027,185
---------- ---------- -------- -------- -------- -------- -------- ----------
End of year............ $3,425,458 $3,270,017 $115,611 $343,352 $469,416 $471,950 $180,311 $8,276,115
========== ========== ======== ======== ======== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 12
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1--SUMMARY OF ACCOUNTING POLICIES:
ACCOUNTING METHOD
The financial statements of the RMI Titanium Company Employee Savings and
Investment Plan (the Plan) use the accrual method of accounting.
USE OF ESTIMATES
Generally accepted accounting principles require management to make certain
estimates and assumptions relating primarily to the fair market value of certain
Plan assets. For additional information on the fair market value of Plan assets
see "Investments" below.
INVESTMENTS
Effective February 1, 1997, RMI Titanium Company (the Company) changed the
Plan Recordkeeper from CIGNA to Fidelity Investments Institutional Operations
Company, Inc. (FIIOC). Concurrently, new investment options in Fidelity managed
funds were made available to plan participants. Existing balances in CIGNA
managed funds were transferred to the Fidelity Fund most closely matching the
stated investment strategy. The RMI Titanium Company Common Stock investment
option was retained.
Available investment options at 12-31-97 are as follows:
RMI Titanium Company Common Stock
Fidelity managed mutual fund accounts:
Fidelity Magellan Fund
Fidelity Growth and Income Fund
Fidelity Low Priced Stock Fund
Fidelity Worldwide Fund
Spartan U.S. Equity Index Fund
Fidelity Managed Income Portfolio
(stable value fund)
Investments in Fidelity managed funds and RMI Titanium Company Common Stock
are valued at fair market value based on published quotations. For the year
ended December 31, 1996, the guaranteed investment contract was valued at
contract value, which approximated market value, and included approximately
$50,000 of assets which were allocated in accordance with participants chosen
investment elections in effect at the time the funds were withheld. Security
transactions are recorded as of the settlement date. All CIGNA managed funds
were valued by CIGNA based on the published quotations of the underlying
investments within each of the funds and reflected current market value.
FUNDING
The Plan is funded by contributions from the participating employees of the
Company. The costs of administering the Plan and the trust are borne by the
Company.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
<PAGE> 13
NOTE 2--DESCRIPTION OF PLAN:
GENERAL
The Plan Sponsor is the Company. The Company is a successor to entities
that have been operating in the titanium industry since 1958. The Company's
operations are conducted primarily in one business segment, the production and
marketing of titanium metal and related products.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
The Plan is a defined contribution plan covering full-time salaried,
nonrepresented employees who are at least 21 years of age and have one year of
service. Effective July 1, 1996, eligibility was amended to at least 21 years of
age and three months of service. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Participants may contribute from 1% to 15% of salary through payroll
deduction. Pre-tax contributions are subject to annual limitations as prescribed
by law ($9,500 in 1996 and 1997). Certain highly compensated participants, as
defined by the Internal Revenue Code, may contribute from 1% to 7% of salary
through payroll deduction. Contributions are directed by the participants into
any one or all of the investment options. Participants may change their
elections of investment funds by calling the recordkeeper directly. Participants
are 100% vested in their accounts at all times.
PAYMENT OF BENEFITS
Participants or their beneficiaries are entitled to the full current value
of their account in the Plan upon:
Retirement;
Termination of Employment with the Company;
or Death
Participants may also make written application to the administrator for
withdrawal of all or a portion of their account balance for certain limited
situations qualifying as financial hardships under Internal Revenue Service
guidelines in effect at the time of withdrawal.
PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their accounts a minimum of $1,000 up to a
maximum equal to 50% of the existing account balance up to a total of $50,000 in
any 12-month period. Loans are treated as a transfer (from) the investment fund
to the Participant Loans Receivable fund. Loan repayment terms range from one
month to five years and are secured by the balance in the participant's account.
Loans bear interest at a rate commensurate with the current market rate when
made. Loans made in 1997 and 1996 bear interest at 8.75%. Interest rates on
loans made prior to 1996 range from 8.75% to 15.00%. Principal and interest are
paid ratably through monthly payroll deductions. Repayments are transfers to the
investment funds (from) the Participant Loans Receivable fund.
TRANSFERS
Transfers represents net inter-plan and inter-fund transfers. Also included
in transfers for 1997 are all amounts transferred to Fidelity from CIGNA.
ADMINISTRATION
The Plan is administered by the Company's Retirement Board. The Board
establishes rules of procedures and interprets the provisions of the Plan.
<PAGE> 14
TERMINATION PROVISION
The Company anticipates the Plan will continue without interruption, but
reserves the right to discontinue the Plan at any time. In the event that such
discontinuance results in the termination of the Plan, the Plan provides that
each participant shall be fully vested with the amount in his/her individual
account which includes earnings on the participant's contributions. The
individual accounts of the participants shall continue to be administered by the
administrator, or be distributed in a lump sum to the participants, as deemed
appropriate by the administrator.
NOTE 3--INCOME TAXES:
The Internal Revenue Service (IRS) has determined and informed the Company
by a letter dated April 30, 1996, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code (IRC). The
Plan has been amended and restated since receiving the determination letter and
the Company has applied for a new letter. However, the Plan administrator
believes that the Plan is currently being operated in compliance with the
applicable requirements of the IRC. Therefore, no provision for income taxes has
been included in the Plan financial statements.
NOTE 4--RECORDKEEPING
Individual participant account balances, allocation and investment options
are maintained by FIIOC as of February 1, 1997 and CIGNA prior thereto based on
enrollment and payroll information supplied by the Company.
<PAGE> 15
SCHEDULE I
FORM 5500
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS & INVESTMENT PLAN
<TABLE>
<CAPTION>
(E)
(B) (C) (D) CURRENT
(A) IDENTITY DESCRIPTION OF INVESTMENT COST VALUE
- --- -------- ------------------------- ---- -----
<S> <C> <C> <C> <C>
* Fidelity Investments....... Fidelity Magellan Fund $3,423,138 $ 3,832,989
* Fidelity Investments....... Fidelity Growth and Income Fund 855,717 949,783
* Fidelity Investments....... Fidelity Low Priced Stock Fund 261,159 274,580
* Fidelity Investments....... Fidelity Worldwide Fund 442,550 442,289
* Fidelity Investments....... Fidelity Managed Income Portfolio 3,148,444 3,148,444
* Fidelity Investments....... Spartan U.S. Equity Index Fund 670,354 775,667
* Fidelity Investments....... RMI Titanium Company
Common Stock Account 632,988 664,626
- -- Participant Loans.......... Interest Rates High 15.00%, Low 8.75% N/A 170,807
-----------
TOTAL: $10,259,185
===========
</TABLE>
* DENOTES PARTY-IN-INTEREST
<PAGE> 16
SCHEDULE II
FORM 5500
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
RMI TITANIUM COMPANY
EMPLOYEE SAVINGS & INVESTMENT PLAN
A. PURCHASES:
<TABLE>
<CAPTION>
NET
IDENTITY OF DESCRIPTION NUMBER OF PURCHASED SELLING COST OF CURRENT GAIN
PARTY INVOLVED OF ASSETS TRANSACTIONS PRICE PRICE ASSET VALUE OR (LOSS)
-------------- --------- ------------ ----- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity Investments Fidelity
Magellan 57 $3,981,240 N/A $3,981,240 $3,981,240 N/A
Fidelity Investments Fidelity
Growth and
Income 51 897,523 N/A 897,523 897,523 N/A
Fidelity Investments Fidelity
Worldwide 32 677,961 N/A 677,961 677,961 N/A
Fidelity Investments Fidelity
Managed Income 55 3,970,404 N/A 3,970,404 3,970,404 N/A
Fidelity Investments Spartan U.S.
Equity Index 50 805,307 N/A 805,307 805,307 N/A
B. SALES:
Fidelity Investments Fidelity
Magellan 32 N/A $590,888 $ 558,102 $ 590,888 $32,786
Fidelity Investments Fidelity
Growth and
Income 12 N/A 43,709 41,806 43,709 1,903
Fidelity Investments Fidelity
Worldwide 15 N/A 246,133 235,411 246,133 10,722
Fidelity Investments Fidelity
Managed Income 56 N/A 821,960 821,960 821,960 N/A
Fidelity Investments Spartan U.S.
Equity Index 13 N/A 149,961 134,954 149,961 15,007
</TABLE>
<PAGE> 17
RMI TITANIUM COMPANY
BARGAINING UNIT
EMPLOYEE SAVINGS AND INVESTMENT PLAN
ANNUAL REPORT
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
EXHIBIT 99.2
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator
of RMI Titanium Company Bargaining Unit
Employee Savings and Investment Plan
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of the RMI Titanium Company Bargaining Unit Employee Savings and
Investment Plan (the Plan) at December 31, 1997 and 1996, and the changes in net
assets available for benefits for the years then ended, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Plan'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.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The additional information included
in Schedules I and II is presented for purposes of additional analysis and is
not a required part of the basic financial statements but is additional
information required by the Employee Retirement Income Security Act of 1974. The
Fund Information in the statement of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the changes in net assets available for benefits of each fund. Schedules I and
II and the Fund Information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
PRICE WATERHOUSE LLP
Pittsburgh, Pennsylvania
June 15, 1998
<PAGE> 19
RMI TITANIUM COMPANY
BARGAINING UNIT
EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Investments, at fair value:
Fidelity Magellan Fund.................................... $ 6,527,023 $ 5,029,544
Fidelity Growth and Income Fund........................... 821,523 --
Fidelity Low Priced Stock Fund............................ 309,518 --
Fidelity Worldwide Fund................................... 167,828 --
Fidelity Managed Income Portfolio......................... 4,242,875 --
Spartan U.S. Equity Index Fund............................ 562,364 --
CIGNA Income and Growth Account........................... -- 75,456
CIGNA Stock Market Index Account.......................... -- 186,766
CIGNA International Equity Account........................ -- 136,512
RMI Titanium Company Common Stock Account................. 853,331 1,185,574
Participant Loans Receivable.............................. 414,790 340,964
----------- -----------
13,899,252 6,954,816
Investments, at contract value:
CIGNA Guaranteed "Long-Term" Account...................... -- 3,925,419
----------- -----------
Net assets available for benefits......................... $13,899,252 $10,880,235
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 20
RMI TITANIUM COMPANY
BARGAINING UNIT
EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY SPARTAN
FIDELITY GROWTH & LOW PRICED FIDELITY MANAGED U.S. EQUITY
MAGELLAN INCOME STOCK WORLDWIDE INCOME INDEX
FUND FUND FUND FUND PORTFOLIO FUND
---- ---- ---- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Employees' contributions.......... $ 628,256 $280,624 $122,058 $ 53,018 $ 415,670 $177,147
---------- -------- -------- -------- ---------- --------
Investment income:
Interest and dividend income.... 454,093 35,775 24,285 14,848 214,325 11,805
Net appreciation (depreciation)
in fair value of
investments.................. 882,630 79,069 21,325 (3,409) -- 73,454
---------- -------- -------- -------- ---------- --------
1,336,723 114,844 45,610 11,439 214,325 85,259
Transfers....................... (357,530) 428,846 143,443 103,371 3,741,567 302,042
---------- -------- -------- -------- ---------- --------
Total net additions
(deductions)............... 1,607,449 824,314 311,111 167,828 4,371,562 564,448
Participant's benefits paid....... (109,970) (2,791) (1,593) -- (128,687) (2,084)
---------- -------- -------- -------- ---------- --------
Total net deductions......... (109,970) (2,791) (1,593) -- (128,687) (2,084)
---------- -------- -------- -------- ---------- --------
Increase (decrease) in net
assets.......................... 1,497,479 821,523 309,518 167,828 4,242,875 562,364
Net assets available for benefits:
Beginning of year............ 5,029,544 -- -- -- -- --
---------- -------- -------- -------- ---------- --------
End of year.................. $6,527,023 $821,523 $309,518 $167,828 $4,242,875 $562,364
========== ======== ======== ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 21
<TABLE>
<CAPTION>
CIGNA CIGNA CIGNA RMI
GUARANTEED INCOME & STOCK MARKET CIGNA TITANIUM CO. PARTICIPANT
"LONG-TERM" GROWTH INDEX INT'L. EQUITY COMMON STOCK LOANS
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT RECEIVABLE TOTAL
------- ------- ------- ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
$ 39,546 $ 2,733 $ 3,742 $ 3,701 $ 94,483 $ -- $ 1,820,978
----------- -------- --------- --------- ---------- --------- -----------
20,847 -- -- -- -- 22,072 798,050
-- 3,152 12,845 (325) 319,164 -- 1,387,905
----------- -------- --------- --------- ---------- --------- -----------
20,847 3,152 12,845 (325) 319,164 22,072 2,185,955
(3,959,562) (81,341) (203,163) (697,803) (139,568) (730,656) 54,748
----------- -------- --------- --------- ---------- --------- -----------
(3,899,169) (75,456) (186,576) (136,192) (317,009) 76,820 3,309,130
(26,250) -- (190) (320) (15,234) (2,994) (290,113)
----------- -------- --------- --------- ---------- --------- -----------
(26,250) -- (190) (320) (15,234) (2,994) (290,113)
----------- -------- --------- --------- ---------- --------- -----------
(3,925,419) (75,456) (186,766) (136,512) (332,243) 73,826 3,019,017
3,925,419 75,456 186,766 136,512 1,185,574 340,964 10,880,235
----------- -------- --------- --------- ---------- --------- -----------
$ -- $ -- $ -- $ -- $ 853,331 $ 414,790 $13,899,252
=========== ======== ========= ========= ========== ========= ===========
</TABLE>
<PAGE> 22
RMI TITANIUM COMPANY
BARGAINING UNIT
EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA RMI
CIGNA FIDELITY CIGNA STOCK CIGNA TITANIUM CO.
GUARANTEED MAGELLAN INCOME & MARKET INT'L. COMMON PARTICIPANT
"LONG-TERM" MUTUAL FUND GROWTH INDEX EQUITY STOCK LOANS
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT RECEIVABLE TOTAL
------- ------- ------- ------- ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Employees'
contributions....... $ 566,322 $ 549,387 $28,152 $ 25,266 $ 34,604 $ 50,430 $ -- $ 1,254,161
---------- ---------- ------- -------- -------- ---------- -------- -----------
Investment income:
Interest and
dividend income... 199,138 719,291 -- -- -- -- 26,700 945,129
Net appreciation
(depreciation) in
fair value of
investments....... -- (200,845) 5,276 23,107 9,882 830,375 -- 667,795
---------- ---------- ------- -------- -------- ---------- -------- -----------
199,138 518,446 5,276 23,107 9,882 830,375 26,700 1,612,924
Transfers........... 40,583 (213,474) 6,806 88,350 9,744 1,858 34,137 (31,996)
---------- ---------- ------- -------- -------- ---------- -------- -----------
Total net
additions....... 806,043 854,359 40,234 136,723 54,230 882,663 60,837 2,835,089
---------- ---------- ------- -------- -------- ---------- -------- -----------
Participant's benefits
paid................ (246,226) (110,000) -- (1,119) -- (4,829) -- (362,174)
---------- ---------- ------- -------- -------- ---------- -------- -----------
Total net
deductions...... (246,226) (110,000) -- (1,119) -- (4,829) -- (362,174)
---------- ---------- ------- -------- -------- ---------- -------- -----------
Increase in net
assets.............. 559,817 744,359 40,234 135,604 54,230 877,834 60,837 2,472,915
Net assets available
for benefits:
Beginning of year... 3,365,602 4,285,185 35,222 51,162 82,282 307,740 280,127 8,407,320
---------- ---------- ------- -------- -------- ---------- -------- -----------
End of year......... $3,925,419 $5,029,544 $75,456 $186,766 $136,512 $1,185,574 $340,964 $10,880,235
========== ========== ======= ======== ======== ========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 23
RMI TITANIUM COMPANY
BARGAINING UNIT EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1--SUMMARY OF ACCOUNTING POLICIES:
ACCOUNTING METHOD
The financial statements of the RMI Titanium Company Bargaining Unit
Employee Savings and Investment Plan (the Plan) use the accrual method of
accounting.
USE OF ESTIMATES
Generally accepted accounting principles require management to make certain
estimates and assumptions relating primarily to the fair market value of certain
Plan assets. For additional information on the fair market value of Plan assets,
see "Investments" below.
INVESTMENTS
Effective February 1, 1997, RMI Titanium Company (the Company) changed the
Plan Recordkeeper from CIGNA to Fidelity Investments Institutional Operations
Company (FIIOC). Concurrently, new investment options in Fidelity managed funds
were made available to plan participants. Existing balances in CIGNA managed
funds were transferred to the Fidelity fund most closely matching the stated
investment strategy. The RMI Titanium Company Common Stock investment option was
retained.
Available investment options at 12-31-97 are as follows:
RMI Titanium Company Common Stock
Fidelity managed mutual fund accounts:
Fidelity Magellan Fund
Fidelity Growth and Income Fund
Fidelity Low Priced Stock Fund
Fidelity Worldwide Fund
Spartan U.S. Equity Index Fund
Fidelity Managed Income Portfolio
(stable value fund)
Investments in Fidelity managed funds and RMI Titanium Company Common Stock
are valued at fair market value based on published quotations. For the year
ended December 31, 1996, the guaranteed investment contract was valued at
contract value, which approximated market value, and included approximately
$106,000 of assets which were allocated in accordance with participants chosen
investment elections in effect at the time the funds were withheld. Security
transactions are recorded as of the settlement date. All CIGNA managed funds
were valued by CIGNA based on the published quotations of the underlying
investments within each of the funds and reflected current market value.
FUNDING
The Plan is funded by contributions from the participating employees of the
Company. The costs of administering the Plan and the trust are borne by the
Company.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
<PAGE> 24
NOTE 2--DESCRIPTION OF PLAN:
GENERAL
The Plan Sponsor is RMI Titanium Company (the Company). The Company is a
successor to entities that have been operating in the titanium industry since
1958. The Company's operations are conducted primarily in one business segment,
the production and marketing of titanium metal and related products.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
The Plan is a defined contribution plan covering full-time union
represented employees who are at least 21 years of age and have one year of
service. Effective July 1, 1996, eligibility was amended to at least 21 years of
age and three months of service. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Participants may contribute from 1% to 15% of salary through payroll
deduction. Pre-tax contributions are subject to annual limitations as prescribed
by law ($9,500 in 1996 and 1997). Contributions are directed by the participants
into any one or all of the investment options. Participants may change their
elections of investment funds by calling the recordkeeper directly. Participants
are 100% vested in their accounts at all times.
PAYMENT OF BENEFITS
Participants or their beneficiaries are entitled to the full current value
of their account in the Plan upon:
Retirement;
Termination of Employment with the Company;
or Death
Participants may also make written application to the administrator for
withdrawal of all or a portion of their account balance for certain limited
situations qualifying as financial hardships under Internal Revenue Service
guidelines in effect at the time of the withdrawal.
PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their accounts a minimum of $1,000 up to a
maximum equal to 50% of the existing account balance up to a total of $50,000 in
any 12-month period. Loans are treated as a transfer (from) the investment fund
to the Participant Loans Receivable fund. Loan repayment terms range from one
month to five years and are secured by the balance in the participant's account.
Loans bear interest at a rate commensurate with the current market rate when
made. Loans made in 1997 and 1996 bear interest at 8.75%. Interest rates on
loans made prior to 1996 range from 8.75% to 15.00%. Principal and interest are
paid ratably through monthly payroll deductions. Repayments are transfers to the
investment funds (from) the Participant Loan Receivable fund.
TRANSFERS
Transfers represents net inter-plan and inter-fund transfers. Also included
in transfers for 1997 are all amounts transferred to Fidelity from CIGNA.
ADMINISTRATION
The Plan is administered by the Company's Retirement Board. The Board
establishes rules of procedures and interprets the provisions of the Plan.
TERMINATION PROVISION
The Company anticipates the Plan will continue without interruption, but
reserves the right to discontinue the Plan at any time subject to the provision
of the collective bargaining agreement. In the event that such
<PAGE> 25
discontinuance results in the termination of the Plan, the Plan provides that
each participant shall be fully vested with the amount in his/her individual
account which includes earnings on the participant's contributions. The
individual accounts of the participants shall continue to be administered by the
administrator, or be distributed in a lump sum to the participants, as deemed
appropriate by the administrator.
NOTE 3--INCOME TAXES:
The Internal Revenue Service (IRS) has determined and informed the Company
by a letter dated April 30, 1996, that the Plan and related trust are designed
in accordance with applicable sections of the Internal Revenue Code (IRC). The
Plan has been amended and restated since receiving the determination letter and
the Company has applied for a new letter. However, the Plan administrator
believes that the Plan is currently being operated in compliance with the
applicable requirements of the IRC. Therefore, no provision for income taxes has
been included in the Plan financial statements.
NOTE 4--RECORDKEEPING
Individual participant account balances, allocation and investment options
are maintained by FIIOC from February 1, 1997 and CIGNA prior thereto based on
enrollment and payroll information supplied by the Company.
<PAGE> 26
SCHEDULE I
FORM 5500
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
RMI TITANIUM COMPANY
BARGAINING UNIT EMPLOYEE SAVINGS & INVESTMENT PLAN
<TABLE>
<CAPTION>
(E)
(B) (C) (D) CURRENT
(A) IDENTITY DESCRIPTION OF INVESTMENT COST VALUE
- --- -------- ------------------------- ---- -----
<S> <C> <C> <C> <C>
* Fidelity Investments....... Fidelity Magellan Fund $5,859,312 $ 6,527,023
* Fidelity Investments....... Fidelity Growth and Income Fund 740,945 821,523
* Fidelity Investments....... Fidelity Low Priced Stock Fund 290,347 309,518
* Fidelity Investments....... Fidelity Worldwide Fund 172,097 167,828
* Fidelity Investments....... Fidelity Managed Income Portfolio 4,242,875 4,242,875
* Fidelity Investments....... Spartan U.S. Equity Index Fund 489,635 562,364
* RMI Titanium Company....... RMI Titanium Company 772,324 853,331
Common Stock Account
- -- Participant Loans.......... Interest Rates High 15.00%, Low 8.75% N/A 414,790
-----------
TOTAL: $13,899,252
===========
</TABLE>
* DESIGNATED PARTY-IN-INTEREST
<PAGE> 27
SCHEDULE II
FORM 5500
ITEM 27d--SCHEDULE OF REPORTABLE TRANSACTIONS
RMI TITANIUM COMPANY
BARGAINING UNIT EMPLOYEE SAVINGS & INVESTMENT PLAN
A. PURCHASES:
<TABLE>
<CAPTION>
NET
IDENTITY OF DESCRIPTION NUMBER OF PURCHASED SELLING COST OF CURRENT GAIN
PARTY INVOLVED OF ASSETS TRANSACTIONS PRICE PRICE ASSET VALUE OR (LOSS)
-------------- --------- ------------ ----- ----- ----- ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity Investments Fidelity
Magellan 89 $6,595,658 N/A $6,595,658 $6,595,658 N/A
Fidelity Investments Fidelity
Growth and
Income 82 801,833 N/A 801,833 801,833 N/A
Fidelity Investments Fidelity Low
Priced Stock 46 404,544 N/A 404,544 404,544 N/A
Fidelity Investments Fidelity
Managed Income
Portfolio 89 5,397,624 N/A 5,397,624 5,397,624 N/A
Fidelity Investments Spartan U.S.
Equity Index 55 528,466 N/A 528,466 528,466 N/A
B: SALES
Fidelity Investments Fidelity
Magellan 57 N/A $ 772,491 $ 736,339 $ 772,491 $36,152
Fidelity Investments Fidelity
Growth and
Income 22 N/A 63,231 60,888 63,231 2,343
Fidelity Investments Fidelity Low
Priced Stock 13 N/A 121,362 114,198 121,362 7,164
Fidelity Investments Fidelity
Managed Income
Portfolio 91 N/A 1,154,749 1,154,749 1,154,749 N/A
Fidelity Investments Spartan U.S.
Equity Index 16 N/A 41,192 38,831 41,192 2,361
</TABLE>
