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
3, 2007
Kronos
Worldwide, Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-31763
|
76-0294959
|
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
|
5430
LBJ Freeway, Suite 1700, Dallas, Texas
|
75240-2697
|
||
|
(Address
of principal executive offices)
|
(Zip
Code)
|
||
Registrant’s
telephone number, including area code
(972)
233-1700
|
(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):
|
o
|
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.
|
The
registrant hereby furnishes the information set forth in its press release
issued on May 3, 2007, 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 U.S. 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.
|
|
(d)
|
Exhibits
|
||
|
Item
No.
|
Exhibit
Index
|
||
|
99.1
|
Press
release dated May 3, 2007 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
|
|
|
Date:
May 8, 2007
|
Gregory
M. Swalwell, Vice President, Finance
and
Chief Financial
Officer
|
INDEX
TO EXHIBITS
|
Item
No.
|
Exhibit
Index
|
|
|
99.1
|
Press
release dated May 3, 2007 issued by the
registrant.
|
KRONOS
WORLDWIDE REPORTS FIRST QUARTER RESULTS
DALLAS,
TEXAS…May 3, 2007…Kronos Worldwide, Inc. (NYSE:KRO) today reported net income
for the first quarter of 2007 of $12.9 million, or $.26 per diluted share,
compared with net income of $15.7 million, or $.32 per diluted share, in the
first quarter of 2006. Net sales of $314.0 million in the first quarter of
2007
were $9.7 million, or 3%, higher than the first quarter of 2006 due primarily
to
the net effect of favorable fluctuations in foreign currency exchange rates,
which increased sales by approximately $16 million, partially offset by lower
average TiO2
selling
prices. The Company’s average selling prices were 3% lower in the first quarter
of 2007 as compared to the first quarter of 2006. The table at the end of this
press release shows how each of these items impacted the overall increase in
sales.
The
Company’s TiO2
segment
profit (see description of non-GAAP information below) for the first quarter
of
2007 was $31.1 million compared with $37.2 million in the first quarter of
2006.
First quarter segment profit declined due primarily to lower average
TiO2
selling
prices and higher raw material and energy costs, partially offset by higher
TiO2
production volumes, and the favorable effects of fluctuations in foreign
currency exchange rates, which increased segment profit by approximately $3
million.
The
Company’s first quarter 2007 TiO2
sales
volumes increased less than 1% from the first quarter of 2006, with higher
sales
volumes in Europe and export markets offsetting the effect of significantly
lower sales volumes in the US. The Company’s TiO2
production volumes were 5% higher in the first quarter of 2007 as compared
to
the first quarter of 2006, with operating rates at near full capacity in both
periods. Both TiO2
sales
and production volumes in the first quarter of 2007 were new records for a
first
quarter. Finished goods inventories at March 31, 2007, representing over 2
months of average sales, were higher compared to December 31, 2006
levels.
As
previously reported, in April 2006 the Company’s wholly-owned subsidiary, Kronos
International, Inc. (“KII”) issued an aggregate of euro 400 million principal
amount of new 6.5% Senior Secured Notes due April 2013. KII used the proceeds
from the issuance of the 6.5% Senior Secured Notes to redeem all of its 8.875%
Senior Secured Notes in May 2006 at 104.437% of the aggregate principal amount
of euro 375 million. The reduction in the interest rate decreased the U.S.
dollar equivalent of interest expense on KII’s Senior Secured Notes by
approximately $1 million in the first quarter of 2007 as compared to the first
quarter of 2006.
Effective
December 31, 2006 the Company adopted a new accounting standard related to
planned major maintenance expense. Under the new standard, the Company no longer
accrues the cost of planned major maintenance expense in advance but instead
recognizes the cost of planned major maintenance when incurred. The new standard
was adopted retroactively, and accordingly the Company’s net income in the first
quarter of 2006 is approximately $.7 million, or $.01 per diluted share, higher
than previously reported.
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:
| · |
Future
supply and demand for the Company’s
products,
|
| · |
The
extent of the dependence of certain of the Company’s businesses on certain
market sectors,
|
| · |
The
cyclicality of the Company's
businesses,
|
| · |
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),
|
| · |
Changes
in raw material and other operating costs (such as energy
costs),
|
| · |
The
possibility of labor disruptions,
|
| · |
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),
|
| · |
Competitive
products and substitute products,
|
| · |
Customer
and competitor strategies,
|
| · |
Potential
consolidation of our competitors
|
| · |
The
impact of pricing and production
decisions,
|
| · |
Competitive
technology positions,
|
| · |
The
introduction of trade barriers,
|
| · |
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),
|
| · |
Operating
interruptions (including, but not limited to, labor disputes, leaks,
natural disasters, fires, explosions, unscheduled or unplanned downtime
and transportation interruptions),
|
| · |
The
timing and amounts of insurance
recoveries,
|
| · |
The
ability of the Company to renew or refinance credit
facilities,
|
| · |
The
ultimate outcome of income tax audits, tax settlement initiatives
or other
tax matters,
|
| · |
The
ultimate ability to utilize income tax attributes, the benefit of
which
has been recognized under the more-likely-than-not recognition
criteria,
|
| · |
Environmental
matters (such as those requiring emission and discharge standards
for
existing and new facilities),
|
| · |
Government
laws and regulations and possible changes therein,
|
| · |
The
ultimate resolution of pending litigation, and
|
| · |
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:
| · |
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,
|
|||||||
|
2006
|
2007
|
||||||
|
Net
sales
|
$
|
304.3
|
$
|
314.0
|
|||
|
Cost
of sales
|
228.5
|
243.6
|
|||||
|
Gross
margin
|
75.8
|
70.4
|
|||||
|
Selling,
general and administrative expense
|
37.8
|
39.4
|
|||||
|
Other
operating income (expense):
|
|||||||
|
Currency
transactions, net
|
(.8
|
)
|
(.1
|
)
|
|||
|
Other
expense, net
|
(.5
|
)
|
(.2
|
)
|
|||
|
Corporate
expense
|
(1.3
|
)
|
(1.4
|
)
|
|||
|
Income
from operations
|
35.4
|
29.3
|
|||||
|
Other
income (expense):
|
|||||||
|
Trade
interest income
|
.5
|
.4
|
|||||
|
Other
interest income
|
-
|
.2
|
|||||
|
Interest
expense
|
(10.7
|
)
|
(9.5
|
)
|
|||
|
Income
before income taxes
|
25.2
|
20.4
|
|||||
|
Provision
for income taxes
|
9.5
|
7.5
|
|||||
|
Net
income
|
$
|
15.7
|
$
|
12.9
|
|||
|
Basic
and diluted net income per share
|
$
|
.32
|
$
|
.26
|
|||
|
Basic
and diluted weighted-average shares used in the calculation of net
income
per share
|
48.9
|
49.0
|
|||||
|
TiO2
data - metric tons in thousands:
|
|||||||
|
Sales
volumes
|
124
|
125
|
|||||
|
Production
volumes
|
127
|
133
|
|||||
KRONOS
WORLDWIDE, INC.
RECONCILIATION
OF SEGMENT PROFIT TO
INCOME
FROM OPERATIONS
(In
millions)
(Unaudited)
|
Three
months ended
March
31,
|
|||||||
|
2006
|
2007
|
||||||
|
Segment
profit
|
$
|
37.2
|
$
|
31.1
|
|||
|
Adjustments:
|
|||||||
|
Trade
interest income
|
(.5
|
)
|
(.4
|
)
|
|||
|
Corporate
expense
|
(1.3
|
)
|
(1.4
|
)
|
|||
|
Income
from operations
|
$
|
35.4
|
$
|
29.3
|
|||
IMPACT
OF PERCENTAGE CHANGE IN SALES
(Unaudited)
|
Three
months ended
March
31,
2007
vs.
2006
|
||||
|
Percent
change in sales:
|
||||
|
TiO2
product pricing
|
(3)%
|
|
||
|
TiO2
sales volume
|
- %
|
|
||
|
TiO2
product mix
|
1 %
|
|
||
|
Changes
in foreign currency exchange rates
|
5 %
|
|
||
|
|
||||
|
Total
|
3 %
|
|
||