UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of the earliest event reported)
May 8, 2006
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Kronos Worldwide, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 1-31763 76-0294959
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(972) 233-1700
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
Pursuant to Items 2.02 and 7.01 of this current report, the registrant
hereby furnishes the information set forth in its press release issued on March
16, 2006, a copy of which is attached hereto as Exhibit 99.1 and incorporated
herein by reference.
The information, including the exhibit, the registrant furnishes in this
report is not deemed "filed" for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. Registration statements or other documents filed with the
Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Item No. Exhibit Index
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99.1 Press Release dated May 5, 2006 issued by the
registrant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KRONOS WORLDWIDE, INC.
(Registrant)
By: /s/ Gregory M. Swalwell
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Gregory M. Swalwell
Vice President
Date: May 8, 2006
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release dated May 5, 2006 issued by the registrant.
Kronos Worldwide, Inc. Contact: Gregory M. Swalwell
Three Lincoln Centre Vice President, Finance
5430 LBJ Freeway, Suite 1700 (972) 233-1700
Dallas, TX 75240-2697
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News Release
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FOR IMMEDIATE RELEASE
[GRAPHIC OMITTED]
KRONOS WORLDWIDE REPORTS FIRST QUARTER RESULTS
DALLAS, TEXAS...May 5, 2006...Kronos Worldwide, Inc. (NYSE:KRO) today reported
net income for the first quarter of 2006 of $15.0 million, or $.31 per diluted
share, compared with net income of $21.4 million, or $.44 per diluted share, in
the first quarter of 2005.
Net sales of $304.3 million in the first quarter of 2006 were $12.4 million, or
4%, higher than the first quarter of 2005 due to the net effects of higher
average TiO2 selling prices, higher sales volumes, and the unfavorable effect of
fluctuations in foreign currency exchange rates, which decreased sales by
approximately $16 million.
The Company's TiO2 segment profit (see description of non-GAAP information
below) for the first quarter of 2006 was $36.2 million compared with $48.0
million in the first quarter of 2005. First quarter segment profit diminished
due primarily to higher production costs, particularly raw material and energy
costs, as well as the negative effects of the fluctuation in foreign currency
rates which resulted in a net decrease in the Company's segment profit of
approximately $5 million.
The Company's average selling prices in billing currencies (which excludes the
effects of fluctuations in the value of the U.S. dollar relative to other
currencies) were 2% higher in the first quarter of 2006 as compared to the first
quarter of 2005. Expressed in U.S. dollars computed using actual foreign
currency exchange rates prevailing during the respective periods, the Company's
average selling prices in the first quarter of 2006 were 3% lower than the first
quarter of 2005.
The Company's first quarter 2006 TiO2 sales volumes increased 9% from the first
quarter of 2005, primarily due to higher sales volumes in the US, and slightly
higher sales volumes in Europe and in export markets offsetting the effects of
lower sales volumes in Canada. The Company's TiO2 production volumes were 4%
higher in the first quarter of 2006 as compared to the first quarter of 2005,
with operating rates at near full capacity in both periods. Finished goods
inventories at March 31, 2006, representing approximately 2 months of average
sales, were slightly higher as compared to December 31, 2005 levels. Both
production volume and sales volume in the first quarter of 2006 were new records
for Kronos for a first quarter.
Interest expense decreased due to relative changes in foreign currency exchange
rates, which decreased the U.S. dollar equivalent of interest expense on the
Company's Senior Secured Notes by approximately $1 million in the first quarter
of 2006 as compared to 2005.
The statements in this release relating to matters that are not historical facts
are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements by their nature involve substantial risks and
uncertainties that could significantly impact expected results, and actual
future results could differ materially from those described in such
forward-looking statements. While it is not possible to identify all factors,
the Company continues to face many risks and uncertainties. The factors that
could cause actual future results to differ materially include, but are not
limited to, the following:
o Future supply and demand for the Company's products,
o The extent of the dependence of certain of the Company's businesses on
certain market sectors,
o The cyclicality of the Company's businesses,
o Customer inventory levels (such as the extent to which the Company's
customers may, from time to time, accelerate purchases of TiO2 in advance
of anticipated price increases or defer purchases of TiO2 in advance of
anticipated price decreases),
o Changes in raw material and other operating costs (such as energy costs),
o The possibility of labor disruptions,
o General global economic and political conditions (such as changes in the
level of gross domestic product in various regions of the world and the
impact of such changes on demand for TiO2),
o Competitive products and substitute products,
o Customer and competitor strategies,
o The impact of pricing and production decisions,
o Competitive technology positions,
o The introduction of trade barriers,
o Fluctuations in currency exchange rates (such as changes in the exchange
rate between the U.S. dollar and each of the euro, the Norwegian kroner and
the Canadian dollar),
o Operating interruptions (including, but not limited to, labor disputes,
leaks, natural disasters, fires, explosions, unscheduled or unplanned
downtime and transportation interruptions),
o The timing and amounts of insurance recoveries,
o The ability of the Company to renew or refinance credit facilities,
o The ultimate outcome of income tax audits, tax settlement initiatives or
other tax matters,
o The ultimate ability to utilize income tax attributes, the benefit of which
has been recognized under the "more-likely-than-not" recognition criteria,
o Environmental matters (such as those requiring emission and discharge
standards for existing and new facilities),
o Government laws and regulations and possible changes therein,
o The ultimate resolution of pending litigation, and o Possible future
litigation.
Should one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or expected. The
Company disclaims any intention or obligation to update or revise any
forward-looking statement whether as a result of changes in information, future
events or otherwise.
In an effort to provide investors with additional information regarding the
Company's results of operations as determined by accounting principles generally
accepted in the United States of America ("GAAP"), the Company has disclosed
certain non-GAAP information, which the Company believes provides useful
information to investors:
o The Company discloses percentage changes in its average TiO2 selling prices
in billing currencies, which excludes the effects of foreign currency
translation. The Company believes disclosure of such percentage changes
allows investors to analyze such changes without the impact of changes in
foreign currency exchange rates, thereby facilitating period-to-period
comparisons of relative changes in average TiO2 selling prices in the
actual various billing currencies. Generally, when the U.S. dollar either
strengthens or weakens against other currencies, the percentage change in
average TiO2 selling prices in billing currencies will be higher or lower,
respectively, than such percentage changes would be using actual exchange
rates prevailing during the respective periods.
o The Company discloses segment profit, which is used by the Company's
management to assess the performance of the Company's TiO2 operations. The
Company believes disclosure of segment profit provides useful information
to investors because it allows investors to analyze the performance of the
Company's TiO2 operations in the same way that the Company's management
assesses performance. The Company defines segment profit as income before
income taxes, interest expense and certain general corporate items.
Corporate items excluded from the determination of segment profit include
corporate expense and interest income not attributable to the Company's
TiO2 operations.
Kronos Worldwide, Inc. is a major international producer of titanium dioxide
pigments.
KRONOS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share and metric ton data)
(Unaudited)
Three months ended
March 31,
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2005 2006
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Net sales $ 291.9 $ 304.3
Cost of sales 207.7 229.5
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Gross margin 84.2 74.8
Selling, general and administrative expense 37.2 37.8
Other operating income (expense):
Currency transactions, net .9 (.8)
Other expense - (.5)
Corporate expense (1.4) (1.3)
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Income from operations 46.5 34.4
Other income (expense):
Trade interest income .1 .5
Other interest income .3 -
Interest expense (11.8) (10.7)
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Income before income taxes 35.1 24.2
Provision for income taxes 13.7 9.2
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Net income $ 21.4 $ 15.0
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Basic and diluted net income per share $ .44 $ .31
Basic and diluted weighted-average
shares used in the calculation of net income per share 48.9 48.9
TiO2 data - metric tons in thousands:
Sales volumes 114 124
Production volumes 122 127
KRONOS WORLDWIDE, INC.
RECONCILIATION OF SEGMENT PROFIT TO
INCOME FROM OPERATIONS
(In millions)
(Unaudited)
Three months ended
March 31,
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2005 2006
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Segment profit $ 48.0 $ 36.2
Adjustments:
Trade interest income (.1) (.5)
Corporate expense (1.4) (1.3)
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Income from operations $ 46.5 $ 34.4
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RECONCILIATION OF PERCENTAGE CHANGE IN
AVERAGE SELLING PRICES
(Unaudited)
Three months ended
March 31,
2006 vs. 2005
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Percentage change in average selling prices:
Using actual foreign currency exchange rates -3%
Impact of changes in foreign currency exchange rates +5%
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In billing currencies +2%
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