SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material under Rule 14a-12
TITANIUM METALS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule ( 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[Logo]
TITANIUM METALS CORPORATION
1999 Broadway, Suite 4300
Denver, Colorado 80202
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 4, 2003
Dear Stockholder,
You are cordially invited to attend a Special Meeting of Stockholders of
Titanium Metals Corporation, a Delaware corporation (the "Company"). The meeting
will be held on Tuesday, February 4, 2003 at 9:45 a.m., local time, at the
offices of Valhi, Inc., Three Lincoln Center, 5430 LBJ Freeway, Suite 1700,
Dallas, Texas 75240 for the following purposes:
1. To approve the amendment of the Company's Amended and Restated
Certificate of Incorporation to do the following:
(a) effect a reverse stock split of the Company's common stock
pursuant to which any whole number of outstanding shares between
and including eight and ten would be combined into one share of
our common stock and to authorize the Company's Board of
Directors to select the final exchange ratio within the
identified range, as determined by the Board of Directors to be
in the best interests of the Company and its stockholders; and
(b) reduce the number of shares of capital stock the Company is
authorized to issue from 100,000,000 shares (99,000,000 shares of
common stock and 1,000,000 shares of preferred stock), par value
$.01 per share, to 10,000,000 shares (9,900,000 shares of common
stock and 100,000 shares of preferred stock), par value $.01 per
share.
2. To conduct any other business properly brought before the meeting.
These items of business are more fully described in the Proxy Statement
accompanying this Notice.
The record date for the Special Meeting is December 13, 2002. Only
stockholders of record at the close of business on that date may vote at the
meeting or any adjournment thereof.
By Order of the Board of Directors,
Joan H. Prusse
Vice President, Deputy General Counsel & Secretary
Denver, Colorado
December __, 2002
-------------------
You are cordially invited to attend the meeting in person. Whether or not you
expect to attend the meeting, please complete, date, sign and return the
enclosed proxy as promptly as possible in order to ensure your representation at
the meeting. A return envelope (which is postage prepaid if mailed in the United
States) is enclosed for your convenience. Even if you have voted by proxy, you
may still vote in person if you attend the meeting. Please note, however, that
if your shares are held of record by a broker, bank or other nominee and you
wish to vote at the meeting, you must obtain a proxy issued in your name from
that record holder.
TITANIUM METALS CORPORATION
1999 Broadway, Suite 4300
Denver, Colorado 80202
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS
February 4, 2003
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I receiving these materials?
We sent you this proxy statement and the enclosed proxy card or voting
instruction form because the Board of Directors of Titanium Metals Corporation
(sometimes referred to as the "Company" or "TIMET") is soliciting your proxy to
vote at a Special Meeting of Stockholders. You are invited to attend the special
meeting and we request that you vote on the proposal described in this proxy
statement. However, you do not need to attend the meeting to vote your shares.
Instead, you may simply complete, sign and return the enclosed proxy card or
voting instruction form.
We intend to mail this proxy statement and accompanying proxy card on or
about December [20], 2002 to all stockholders of record entitled to vote at the
special meeting.
Who can vote at the special meeting?
Only stockholders of record at the close of business on December 13, 2002
will be entitled to vote at the special meeting. This date is referred to in
this proxy statement as the record date. On the record date, there were
[31,849,538] shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
------------------------------------------------------
If on the record date your shares were registered directly in your name
with our transfer agent, EquiServe Trust Company, N.A., or EquiServe, then you
are a stockholder of record. As a stockholder of record, you may vote in person
at the meeting or vote by proxy. Whether or not you plan to attend the meeting,
we urge you to fill out and return the enclosed proxy card to ensure your vote
is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
--------------------------------------------------------------------
If on the record date your shares were held in an account at a brokerage
firm, bank, dealer, or other similar organization, then you are the beneficial
owner of shares held in "street name" and these proxy materials are being
forwarded to you by that organization. The organization holding your account is
considered the stockholder of record for purposes of voting at the special
meeting. As a beneficial owner, you have the right to direct your broker or
other agent on how to vote the shares in your account. You are also invited to
attend the special meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the meeting unless you request
and obtain a valid proxy from your broker or other agent.
What am I voting on?
There is one matter scheduled for a vote:
To approve the amendment of the Company's certificate of incorporation to:
o effect a reverse stock split of the Company's common stock
pursuant to which any whole number of outstanding shares between
and including eight and ten would be combined into one share of
our common stock and to authorize the Company's Board of
Directors to select the final exchange ratio within the
identified range, as determined by the Board of Directors to be
in the best interests of the Company and its stockholders; and
1
o reduce the number of shares the Company is authorized to issue
from 100,000,000 shares (99,000,000 shares of common stock and
1,000,000 shares of preferred stock), par value $.01 per share,
to 10,000,000 shares (9,900,000 shares of common stock and
100,000 shares of preferred stock), par value $.01 per share.
Under Delaware law, in order for TIMET to amend its certificate of
incorporation, the Board of Directors must first approve the amendment. The
Board must then call a meeting of the stockholders for their vote on the
proposed amendment, which is being done by this proxy statement and vote
solicitation. The affirmative vote of a majority of the outstanding stock
entitled to vote on the amendment is required to approve any amendment. Because
TIMET's Board has passed a resolution that would enable it to effect a reverse
stock split using an exchange ratio of either eight, nine or ten shares to one,
with the final exchange ratio to be subsequently determined by the Board, there
are three different versions of the amendment to TIMET's certificate of
incorporation that you are being asked to consider and approve: one in which the
exchange ratio is eight shares for one, the second in which the exchange ratio
is nine shares for one, and the third in which the exchange ratio is ten shares
for one. The three versions of the amendment differ only in respect of the
specific exchange ratio each one contains. Each version of the amendment
requires stockholder approval to be effective. You are being asked to authorize
the Board to select the final exchange ratio and to cause the corresponding
amendment to the certificate of incorporation to be filed with the Delaware
Secretary of State and become effective. Each version of the amendment would
also decrease the number of shares of capital stock the Company is authorized to
issue. If the Board ultimately decides, after receiving stockholder approval, to
abandon the reverse stock split proposal altogether, all three of the approved
versions of the amendment to the certificate of incorporation would be abandoned
and none would ever be filed or become effective. If the Board does not
implement an approved reverse stock split prior to the one year anniversary of
this special meeting of stockholders, the Board has agreed to seek stockholder
approval before implementing any reverse stock split after that time.
How does the Board of Directors recommend that I vote?
The Board of Directors unanimously recommends that the stockholders vote
"For" the proposal.
How do I vote?
You may vote "For" or "Against" or "Abstain" from voting. The procedures
for voting are as follows:
Stockholder of Record: Shares Registered in Your Name
-------------------------------------------------------
If you are a stockholder of record, you may vote in person at the special
meeting or vote by proxy using the enclosed proxy card. Whether or not you plan
to attend the meeting, we urge you to vote by proxy to ensure your vote is
counted. You may still attend the meeting and vote in person if you have already
voted by proxy. o To vote in person, come to the special meeting and we will
give you a ballot when you arrive.
o To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
special meeting, we will vote your shares as you direct.
Beneficial Owner: Shares Registered in the Name of Broker, Bank or Other Agent
-------------------------------------------------------------------------------
If you are a beneficial owner of shares registered in the name of your
broker, bank, or other agent, you should have received a voting instruction form
with these proxy materials from that organization rather than from TIMET. Simply
complete and mail the voting instruction form to ensure that your vote is
counted. To vote in person at the special meeting, you must obtain a valid proxy
from your broker, bank, or other agent. Follow the instructions from your broker
or bank included with these proxy materials, or contact your broker or bank to
request a proxy form.
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How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common
stock you owned as of the record date.
What if I return a signed proxy card but do not make specific choices?
If you return a signed proxy card without marking any voting selections,
your shares will be voted "For" the amendment of TIMET's certificate of
incorporation. If any other matter is properly presented at the meeting, your
proxy or agent (one of the individuals named on your proxy card) will vote your
shares using his or her best judgment (subject to applicable limitations).
Who is paying for this proxy solicitation?
TIMET will pay for the entire cost of soliciting proxies. In addition to
these mailed proxy materials, our directors and employees may also solicit
proxies in person, by telephone, or by other means of communication. Directors
and employees will not be paid any additional compensation for soliciting
proxies. TIMET has retained D.F. King & Co., Inc. to aid in the distribution of
this proxy statement at a cost we estimate at $3,500. TIMET will also reimburse
brokerage firms, banks and other agents for the cost of forwarding proxy
materials to beneficial owners.
What does it mean if I receive more than one proxy card or voting instruction
form?
If you receive more than one proxy card or voting instruction form, your
shares are registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy card or voting instruction
form to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Yes. You may revoke your proxy at any time before the final vote at the
meeting. You may revoke your proxy in any one of three ways:
o You may submit another properly completed proxy card with a later
date.
o You may send a written notice that you are revoking your proxy to
EquiServe, the inspector of elections, at P.O. Box 2500, Jersey
City, New Jersey 07303-2500.
o You may attend the special meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
How are votes counted?
Votes will be counted by the inspector of elections appointed for the
meeting who will separately count "For" and "Against" votes, abstentions and
broker non-votes. (Under applicable rules of the New York Stock Exchange, or
NYSE, and Securities and Exchange Commission, or SEC, brokers are authorized to
vote on certain routine matters without receiving instructions from the
beneficial owner of the shares registered in the brokers' name. If a broker who
is entitled to vote on a routine matter does not vote the shares, such shares
are called broker non-votes.) Abstentions will be counted towards the vote total
for each proposal and will have the same effect as "Against" votes. Broker
non-votes are counted in the calculation of whether or not a quorum is present
(described below), but are not counted either as a vote "For" or "Against" in
determining whether a matter has been approved. However, because approval of the
proposal requires the affirmative vote of a majority of the shares outstanding
(and not simply of those shares voted, in person or by proxy, at the meeting), a
broker non-vote will have the same effect as an "Against" vote.
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What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum
will be present if at least a majority of the outstanding stock entitled to vote
is represented either by votes present at the meeting or by votes sent in by
proxy card. On the record date, there were [31,849,538] shares of TIMET's common
stock outstanding and entitled to vote. Thus, [15,924,770] shares of TIMET's
common stock must be represented by votes at the meeting or by proxy to have a
quorum.
Your shares will be counted towards the quorum only if you submit a valid
proxy vote or vote at the meeting. Abstentions and broker non-votes will also be
counted towards the quorum requirement. If there is no quorum, a majority of the
votes present at the meeting may adjourn the meeting to another date.
How many votes are needed to approve the proposal?
To be approved, the proposal to effect a reverse stock split and to reduce
the number of authorized shares must receive a "For" vote from holders of a
majority of our outstanding shares. If you "Abstain" from voting, it will have
the same effect as an "Against" vote. Broker non-votes will not be counted
either as a vote "For" or "Against," but, as explained above, will have the same
effect as an "Against" vote.
AS OF THE RECORD DATE, TREMONT CORPORATION, OR TREMONT, AND THE COMBINED
MASTER RETIREMENT TRUST, OR THE CMRT, BOTH ENTITIES RELATED TO HAROLD C.
SIMMONS, HELD, IN THE AGGREGATE, [47.6%] OF THE OUTSTANDING SHARES OF TIMET
COMMON STOCK, AND J. LANDIS MARTIN, TIMET'S CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, HELD [3.38%] OF THE OUTSTANDING SHARES OF TIMET COMMON STOCK.
TREMONT, THE CMRT AND MR. MARTIN HAVE EACH INDICATED THEIR INTENTION TO HAVE
SUCH SHARES REPRESENTED AT THE SPECIAL MEETING AND TO VOTE SUCH SHARES "FOR"
THIS PROPOSAL. THEREFORE, IF ALL OF SUCH SHARES ARE VOTED AS INDICATED, THE
PROPOSAL WILL BE APPROVED.
What are the effects of the proposed reverse stock split and the reduction in
authorized shares?
If the proposal for the reverse stock split and reduction in authorized
shares is approved by the stockholders and effected by the Board, each
stockholder will own a reduced number of shares of our common stock in
proportion to the exchange ratio selected by the Board. The reverse stock split
will affect all stockholders uniformly. The Company will not issue fractional
shares as a result of the reverse stock split but will instead "cash out"
fractional shares at a price equal to the proportionate average of the closing
sales prices of TIMET's common stock for ten full trading days prior to the
effective date of the reverse stock split. This cashing out of fractional shares
will have a very limited effect on stockholders' proportionate holdings of our
common stock before and after the reverse stock split.
In addition, for all stock options issued and outstanding under TIMET's two
stock option plans, following the reverse stock split the number of shares of
TIMET's common stock that will be issued upon exercise of such options will be
reduced in proportion to the exchange ratio selected by the Board, and the
exercise price of such options will increase by the same proportion. TIMET will
pay cash for any fractional shares that would otherwise be issuable under any
stock option based upon the market value of TIMET's common stock on the date of
exercise. The number of shares that may be issued in the future under these
option plans will be reduced by the same proportion.
Further, the number of shares of TIMET common stock into which the
convertible preferred securities that are issued by the TIMET Capital Trust I
are convertible, and the conversion rate, will be reduced in proportion to the
exchange ratio selected by the Board.
How can I find out the results of the voting at the special meeting?
Final voting results are expected to be announced at the special meeting
and publicly announced by press release shortly after the special meeting.
4
PROPOSAL
AMENDMENT TO TIMET'S
CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
AND TO REDUCE AUTHORIZED SHARES
OVERVIEW
Our Board of Directors has unanimously approved a proposal to amend our
certificate of incorporation to effect a reverse stock split of all outstanding
shares of our common stock at an exchange ratio ranging from eight-for-one to
ten-for-one. The Board has recommended that this proposal be presented to our
stockholders for approval. You are being asked to vote upon three versions of an
amendment to our certificate of incorporation to effect this reverse stock split
whereby either eight, nine or ten currently outstanding shares of our common
stock will be combined into and become, after the reverse split, one share of
our common stock, and to authorize the Board to select one of the three approved
exchange ratios. Assuming the stockholders approve the proposal, the Board will
have the sole discretion under Section 242(c) of the Delaware General
Corporation Law, as it determines to be in the best interests of TIMET and its
stockholders, both to select the specific exchange ratio (either eight, nine or
ten shares for one) and also to decide whether or not to proceed to effect a
reverse stock split or instead to abandon the proposal altogether. The Board
believes that stockholder approval of the proposal granting the Board the
discretion to pick an exchange ratio within this range or to abandon the reverse
stock split altogether (rather than approval of a specified exchange ratio) will
provide the Board with maximum flexibility to react to then-current market
conditions and, therefore, is in the best interests of the Company and its
stockholders.
The text of the three versions of the proposed amendment to our certificate
of incorporation is attached to this proxy statement as Appendix A. By approving
the proposal, stockholders will approve all three versions of the amendment to
our certificate of incorporation by which either eight, nine or ten outstanding
shares would be combined into one share of our common stock, and will authorize
the Board to select the final exchange ratio and file the appropriate version of
the amendment, as determined by the Board in the manner described herein, and to
abandon each version of the amendment not selected by the Board. The Board may
also elect not to implement any reverse split.
If the proposal is approved by the stockholders, and following such
approval the Board determines that effecting a reverse stock split is in the
best interests of the Company and its stockholders, the reverse stock split will
become effective when the Company files the selected amendment with the
Secretary of State of the State of Delaware. The amendment will identify the
exchange ratio, that is the number of shares selected by the Board within the
limits set forth in this proposal to be combined into one share of our common
stock.
If the Board elects to effect a reverse stock split following stockholder
approval, the number of issued and outstanding shares of common stock would be
reduced in accordance with the exchange ratio determined by the Board within the
limits set forth in this proposal. Except for adjustments that may result from
the treatment of fractional shares as described below, each stockholder will
hold the same percentage of our outstanding common stock immediately following
the reverse stock split as such stockholder held immediately prior to the
reverse stock split.
As a result of the reverse stock split, the number of outstanding shares of
TIMET common stock will be reduced from approximately [31,849,538] million
shares to between approximately [3,184,954] to approximately [3,981,192] million
shares, depending on which of the three exchange ratios the Board selects and
depending on the number of fractional shares.
In addition to effecting the reverse stock split, each of the three
versions of the amendment, if approved by stockholders and filed by the Board,
would decrease the number of shares of capital stock the Company is authorized
to issue. TIMET is currently authorized to issue up to 100,000,000 shares of
capital stock (99,000,000 shares of common stock and 1,000,000 shares of
preferred stock), each with a par value of $.01. The amendment would decrease
the number of authorized shares to 10,000,000 shares (9,900,000 shares of common
stock and 100,000 shares of preferred stock).
5
The par value of our capital stock (both common stock and preferred stock)
would remain unchanged at $0.01 per share.
REASONS FOR THE REVERSE STOCK SPLIT AND REDUCTION IN AUTHORIZED SHARES
The Board believes that a reverse stock split may be desirable for several
reasons. First, the Board believes the reverse stock split may increase our
stock's market price to a level that may raise broader institutional and retail
interest in purchasing our stock. Second, the Board believes that a reverse
stock split may allow us to avoid the risk of having our common stock delisted
from the NYSE.
The Board believes that the increased market price of our common stock
expected as a result of implementing a reverse stock split will improve the
marketability of our common stock and will encourage interest and trading in our
common stock. Given the trading volatility often associated with lower-priced
stocks, many brokerage houses, institutional investors and funds have internal
policies and practices that either prohibit them from investing in lower-priced
stocks or tend to discourage individual brokers from recommending lower-priced
stocks to their customers. Some of those policies and practices may cause the
processing of trades in lower-priced stocks to be economically unattractive to
brokers. Additionally, because brokers' commissions on lower-priced stocks
generally represent a higher percentage of the stock price than commissions on
higher-priced stocks, the current average price per share of our common stock
can result in individual stockholders paying transaction costs representing a
higher percentage of their total share value than would be the case if the share
price were substantially higher.
Our common stock is traded on the NYSE under the symbol "TIE." In order for
our common stock to continue to be traded on the NYSE, we must satisfy certain
continued listing standards established by the NYSE. One standard is that if the
closing sales price of our common stock is under $1.00 per share for 30
consecutive trading days, the NYSE may delist our common stock from trading on
the NYSE. If our common stock were to be delisted from the NYSE and did not
qualify for trading on the Nasdaq National Market or the Nasdaq SmallCap Market
(which have comparable minimum share price requirements), our common stock would
trade on the OTC Bulletin Board or in the "pink sheets" maintained by the
National Quotation Bureau, Inc. Such alternative markets are generally
considered to be less efficient than, and not as broad as, the NYSE.
While TIMET common stock has not traded below the $1.00 per share minimum
for 30 consecutive trading days at any point, it has from time to time in
October and early November 2002 traded below $1.00 per share for several
consecutive days each time. The Board expects that a reverse stock split of our
common stock will increase the market price of our common stock so that we
should be able to maintain compliance with the NYSE's minimum price standard.
However, there can be no assurance that the total market capitalization of our
common stock after the reverse stock split will be equal to or greater than the
total market capitalization of our common stock before the reverse stock split.
The effect of a reverse split upon the market price of our common stock
cannot be predicted with any certainty, and the history of similar stock split
combinations for companies in like circumstances is varied. It is possible that
the per share price of our common stock after the reverse split will not rise in
proportion to the reduction in the number of shares of our common stock
outstanding as a result of the reverse stock split, and there can be no
assurance that after the reverse split the market price per share will be above
the $1.00 NYSE minimum price per share standard for a sustained period of time.
The market price of our common stock is also based on other factors which are
unrelated to the number of shares outstanding, including our future performance.
Nevertheless, the Board believes that the proposed reverse stock split, on the
terms described, will result in the market price of our common stock rising to
the level necessary to satisfy the NYSE's $1.00 per share minimum price
requirement.
In addition, although we believe we are currently in compliance with the
other NYSE listing criteria, there can be no assurance that we will be able to
satisfy other NYSE continued listing requirements, even if the market price per
share of our common stock remains in excess of $1.00 following the reverse
split.
After the proposed reverse split, the number of shares of our common stock
outstanding will be reduced, which could make it more difficult to trade shares
of our common stock. The Board is hopeful, however, that the anticipated higher
market price will reduce, to some extent, the negative effects on the
marketability of our common
6
stock inherent in some of the policies and practices of institutional investors,
funds and brokerage houses described above.
The reduction in the number of shares of capital stock the Company is
authorized to issue should reduce the amount paid by TIMET in franchise taxes in
Delaware and possibly other states as well.
BOARD DISCRETION TO IMPLEMENT THE REVERSE STOCK SPLIT AND REDUCTION IN
AUTHORIZED SHARES
If the reverse stock split is approved by our stockholders, it will be
effected only upon a determination by the Board that a reverse stock split (with
an exchange ratio determined by the Board as described above) is in the best
interests of the Company and its stockholders. Such determination will be based
upon a number of factors, including satisfying the listing requirements for the
NYSE, existing and expected investor interest in our common stock, prevailing
market conditions and the likely effect of a reverse split on the market price
of our common stock. However, even if the stockholders approve the reverse stock
split the Board may, in its sole discretion, determine not to effect the reverse
stock split and not to amend our certificate of incorporation accordingly, as it
is permitted to do under Section 242(c) of the Delaware General Corporation Law.
If the Board does not implement an approved reverse stock split prior to the one
year anniversary of this special meeting of stockholders, the Board has agreed
to seek stockholder approval before implementing any reverse stock split after
that time.
The proposed reduction in the number of shares of capital stock the Company
is authorized to issue will occur only in conjunction with a reverse stock
split. If the stockholders do not approve the reverse stock split or if the
Board determines not to effect a reverse stock split in its discretion, as
described above, then the number of shares of capital stock the Company is
authorized to issue will not be reduced and our certificate of incorporation
will not be amended.
EFFECTS OF THE REVERSE STOCK SPLIT AND REDUCTION IN AUTHORIZED SHARES
If the reverse stock split is approved by our stockholders and implemented
by the Board, each stockholder will own a reduced number of shares of our common
stock. However, the proposed reverse stock split will affect all of our
stockholders uniformly and will not affect any stockholder's percentage
ownership interests in the Company, except to the limited extent that the
reverse split would result in any of TIMET's stockholders owning a fractional
share as described below. Proportionate voting rights, if any, and other rights
and preferences of the holders of our common stock will not be affected by the
proposed reverse stock split (other than as a result of the payment of cash to
stockholders instead of issuing fractional shares). For example, a holder of 2%
of the voting power of the outstanding shares of common stock immediately prior
to reverse stock split would continue to hold 2% of the voting power of the
outstanding shares of common stock immediately after the reverse stock split
(again, subject to the treatment of resulting fractional share interests). The
number of stockholders of record will not be affected by the proposed reverse
stock split (except in the event that any stockholder holds only a fractional
share interest and receives cash for such interest after the proposed reverse
stock split).
The proposed reverse stock split will reduce the number of shares of common
stock available for issuance under TIMET's 1996 Long Term Performance Incentive
Plan, referred to as the TIMET Stock Incentive Plan, in proportion to the
exchange ratio selected by the Board within the limits set forth in this
proposal. Under the terms of this plan, the proposed reverse stock split will
cause a reduction in the number of shares of common stock issuable upon exercise
of the outstanding stock options and restricted stock awards previously issued
or made under this plan in proportion to the exchange ratio of the reverse stock
split. The Management Development & Compensation Committee of the Board, which
has the authority under the TIMET Stock Incentive Plan to make other equitable
adjustments to outstanding options and restricted stock awards under such plan,
has determined that the exercise price under each outstanding stock option will
be increased in the same proportion as the exchange ratio ultimately selected by
the Board for any reverse stock split. The Company will pay cash for any
fractional shares that would otherwise be issuable under any stock option or
restricted stock award based upon the market value of TIMET's common stock on
the date of option exercise or lapse of restrictions under a restricted stock
award. Under the Company's 1996 Non-Employee Director Compensation Plan,
referred to as the TIMET Director Compensation Plan, the directors of the
Company who do not participate in the plan have discretion to determine if and
how to adjust the terms of such plan and the terms of stock options previously
issued under that plan following a reverse stock split. The sole "disinterested"
director has determined that the number of shares of TIMET's common stock
issuable upon the exercise of any stock options previously issued under the
TIMET Director Compensation Plan will
7
be reduced in proportion to the exchange ratio of the reverse stock split, and
the exercise price of such outstanding options will increase by the same
proportion.
By way of example, if an employee or director holds an option to acquire
1,000 shares of common stock at an exercise price of $10.00 per share (under
either the TIMET Stock Incentive Plan or the TIMET Director Compensation Plan),
assuming the Board ultimately determines to effect a reverse stock split at an
exchange ratio of ten-for-one, such option would thereafter represent the right
to acquire 100 shares of post-split common stock at an exercise price of $100
per share. Similarly, if a holder of a restricted stock award under the TIMET
Stock Incentive Plan were scheduled to receive 1,000 shares of common stock upon
the lapsing of restrictions in each of 2003, 2004, and 2005, assuming the Board
ultimately determined to effect a nine-for-one reverse stock split, such holder
would then become entitled to receive 111 shares of post-split common stock when
restrictions lapse in each of 2003, 2004 and 2005, together with a cash payment
in an amount equal to the then-current market value of 0.11 of a post-split
share each such year.
The TIMET Capital Trust I, referred to as the TIMET Trust, is a statutory
business trust formed under the laws of the State of Delaware that is 100% owned
by TIMET. The TIMET Trust exists for the sole purpose of issuing certain
convertible preferred securities, referred to as the convertible preferred
securities, and investing in an equivalent amount of 6-5/8% Convertible Junior
Subordinated Debentures due 2026 issued by TIMET. The convertible preferred
securities are convertible, at the holders' option, into an aggregate of
approximately 5.4 million shares of TIMET common stock at a conversion rate of
1.339 shares of our common stock for each convertible preferred security. The
aggregate number of shares of common stock into which the convertible preferred
securities are convertible and the conversion rate will be reduced in proportion
to the exchange ratio selected by the Board within the limits of the proposal.
The conversion rate of the convertible preferred securities following the
reverse stock split would be between approximately 0.167 and 0.134 shares of our
common stock for each convertible preferred security.
If the proposed reverse stock split is implemented, it will increase the
number of stockholders of the Company who own less than 100 shares of our common
stock, commonly called "odd lots." Brokerage commission and other costs of
transactions in odd lots are generally higher than the costs of transactions
involving more than 100 shares of common stock.
Our common stock is currently registered under Section 12(b) of the
Securities Exchange Act of 1934, as amended, and we are subject to the periodic
reporting and other requirements of the Exchange Act. The proposed reverse stock
split will not affect the registration of the common stock under the Exchange
Act. If the proposed reverse stock split is implemented, our common stock will
continue to be traded on the NYSE under the symbol "TIE," provided that TIMET
satisfies the continued listing standards of the NYSE.
Assuming a reverse stock split is effected, the amendment to TIMET's
certificate of incorporation will also reduce the number of shares of capital
stock that the Company is authorized to issue in the future. The reduction
should result in approximately 4.8 to 5.8 million unissued and unreserved shares
being available for future issuance. TIMET currently believes that the number of
shares available for future issuance following any reduction will be adequate
for its foreseeable future needs. However, it is possible that the reduction
could leave TIMET without an adequate number of authorized but unissued shares
in the future to address the need for shares to, for example, effect a stock
split or dividend, conclude a financing or acquisition transaction, implement a
stock-based stock option or other incentive compensation program, or issue
additional convertible securities. Any future increase in the number of shares
TIMET is authorized to issue would require stockholder approval.
The proposed reverse stock split will not affect the par value of our
common stock. As a result, on the effective date of the reverse stock split, the
stated capital on our balance sheet attributable to the common stock will be
reduced in proportion to the exchange ratio selected by the Board in the manner
described above, and the additional paid-in capital account will be credited
with the amount by which the stated capital is reduced. The per share net income
or loss and net book value of our common stock will be increased because there
will be fewer shares of our common stock outstanding after the reverse split.
8
EFFECTIVE DATE
The proposed reverse stock split and reduction in authorized shares of
capital stock would become effective as of 5:00 p.m., Eastern time, on the date
of filing of a certificate of amendment to our certificate of incorporation with
the office of the Secretary of State of the State of Delaware. Except as
explained below with respect to fractional shares, on the effective date, shares
of common stock issued and outstanding immediately prior to the effectiveness
will be combined and converted, automatically and without any action on the part
of the stockholders, into new shares of common stock in accordance with the
reverse stock split ratio determined by the Board within the limits set forth in
this proposal. The Company will make a public announcement if and when the Board
subsequently determines to effect a reverse stock split and the effective date
of any such split.
PAYMENT FOR FRACTIONAL SHARES
No fractional shares of common stock will be issued as a result of the
proposed reverse stock split. Instead, stockholders who otherwise would be
entitled to receive fractional shares will, upon surrender to the exchange agent
of certificates representing their fractional shares, be entitled to receive
cash in an amount equal to the product obtained by multiplying (i) the
proportionate average of the closing sales prices of our common stock for ten
full trading days prior to the effective date of the amendment to the Company's
certificate of incorporation as reported on the NYSE by (ii) the number of
shares of our common stock held by such stockholder before the reverse stock
split that would otherwise have been exchanged for such fractional share
interest.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the effective date of the reverse stock split,
stockholders will be individually notified that the reverse split has been
effected. Our transfer agent will act as exchange agent for purposes of
implementing the exchange of stock certificates. We refer to such person as the
"exchange agent." Holders of pre-reverse split shares will be asked to surrender
to the exchange agent all stock certificates representing pre-reverse split
shares in exchange for certificates representing post-reverse split shares in
accordance with the procedures to be set forth in a letter of transmittal to be
sent by us. No new certificates will be issued to a stockholder until that
stockholder has surrendered his or her outstanding certificate(s) together with
the properly completed and executed letter of transmittal to the exchange agent.
Stockholders should not destroy any stock certificate and should not submit any
certificates until requested to do so. For stockholders who do not have a
physical stock certificate and whose shares are represented by an electronic
"book entry," the appropriate modification to the book entry will automatically
be made to effect the reverse stock split.
ACCOUNTING CONSEQUENCES
The par value per share of our common stock would remain unchanged at $0.01
per share after the reverse stock split. As a result, on the effective date of
the reverse split, the stated capital on our balance sheet attributable to the
common stock will be reduced proportionally from its present amount, based on
the exchange ratio of the reverse stock split, and the additional paid-in
capital account will be credited with the amount by which the stated capital is
reduced. The per share common stock net income or loss and net book value will
be increased because there will be fewer shares of our common stock outstanding
following the reverse split. Cash paid for fractional shares to holders of TIMET
stock options upon any exercise of such stock options would be recognized as a
compensation charge at the time of exercise. We do not anticipate that any other
material accounting consequences would arise as a result of either the reverse
stock split or the reduction in the number of shares of capital stock the
Company is authorized to issue.
NO DISSENTER'S RIGHTS
Under the Delaware General Corporation Law, our stockholders are not
entitled to dissenter's rights with respect to the proposal to amend our
certificate of incorporation to effect the reverse split and reduce the number
of shares of capital stock the Company is authorized to issue. We will not
independently provide our stockholders with any such right.
9
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT AND
REDUCTION IN AUTHORIZED SHARES
The following is a summary of important U.S. tax considerations of the
proposed reverse stock split. It addresses only stockholders who hold the
pre-reverse split shares and post-reverse split shares as capital assets. This
summary is not complete and does not address stockholders who are subject to
special rules, such as financial institutions, tax-exempt organizations,
insurance companies, dealers in securities, mutual funds, foreign stockholders,
stockholders who hold the pre-reverse split shares as part of a straddle, hedge,
or conversion transaction, stockholders who hold the pre-reverse split shares as
qualified small business stock within the meaning of Section 1202 of the
Internal Revenue Code of 1986, as amended referred to as the Code, stockholders
who are subject to the alternative minimum tax provisions of the Code, and
stockholders who acquired their pre-reverse split shares pursuant to the
exercise of employee stock options or otherwise as compensation. This summary is
based upon current U.S. law, which may change, possibly even retroactively. It
does not address tax considerations under state, local, foreign, and other laws.
Furthermore, we have not obtained a ruling from the Internal Revenue Service or
an opinion of legal or tax counsel with respect to the consequences of the
reverse stock split. Each stockholder is advised to consult his or her tax
advisor as to his or her own situation.
The reverse stock split is intended to constitute a reorganization within
the meaning of Section 368 of the Code. Assuming the reverse split qualifies as
a reorganization, a stockholder generally will not recognize gain or loss on the
reverse stock split, except to the extent of cash, if any, received instead of a
fractional share interest in the post-reverse split shares. The aggregate tax
basis of the post-reverse split shares received will be equal to the aggregate
tax basis of the pre-reverse split shares exchanged therefor (excluding any
portion of the holder's basis allocated to fractional shares), and the holding
period of the post-reverse split shares received will include the holding period
of the pre-reverse split shares exchanged.
A holder of the pre-reverse split shares who receives cash instead of a
fractional share interest will generally recognize gain or loss equal to the
difference between the portion of the tax basis of the pre-reverse split shares
allocated to the fractional share interest and the cash received. Such gain or
loss will be a capital gain or loss and will be short term if the pre-reverse
split shares were held for one year or less and long term if held more than one
year.
There will be no tax consequences to a stockholder in connection with any
reduction in the number of shares of capital stock the Company is authorized to
issue.
No gain or loss will be recognized by the Company as a result of the
reverse stock split or the reduction in the number of shares of capital stock
the Company is authorized to issue.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE FOREGOING PROPOSAL
10
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF TIMET COMMON STOCK
The following table presents certain information regarding the ownership of
our common stock as of the record date by:
o all those known by us to be beneficial owners of more than five
percent of our common stock;
o each director;
o our chief executive officer and four other most highly
compensated executive officers at December 31, 2001; and
o all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes having voting or investment power with respect to
securities. With respect to each individual, beneficial ownership also includes
shares of common stock that are subject to options held by that individual and
exercisable within 60 days of the record date, and other securities convertible
into shares of common stock within 60 days of the record date. These shares
underlying stock options and convertible securities are not deemed outstanding
for purposes of computing the percentage ownership of any person other than the
individual holder of the option or convertible security and for all directors
and executive officers as a group. Percentage of beneficial ownership is based
on [31,849,538] shares of our common stock outstanding as of the record date.
All information has been taken from or is based upon ownership filings made by
such persons with the SEC or upon information provided by such person to the
Company.
TIMET Common Stock
-----------------------------------
Amount and Nature
of
Beneficial Percent of
Ownership (1) Class (2)
------------------- ------------
Name of Beneficial Owner
--------------------------
Greater than 5% Stockholders
Tremont Corporation (3)(4) 12,280,005 [38.6%]
Combined Master Retirement Trust (3) 2,865,200 [9.0%]
Dimensional Fund Advisors Inc. (5) 2,718,800 [8.5%]
ICM Asset Management, Inc. and James M. Simmons (6) 1,825,413 [5.7%]
11
Directors
Norman M. Green 1,000 ---
J. Landis Martin (3)(7) 1,435,407 [4.5%]
Dr. Albert W. Niemi, Jr. (8) 7,000 ---
Glenn R. Simmons (9) 13,000 ---
Gen. Thomas P. Stafford (3)(10) 11,100 ---
Steven L. Watson (3) (11) 20,500 ---
Other Executive Officers
Dr. Charles H. Entrekin, Jr. (12) 68,200 ---
Christian Leonhard (13) 63,000 ---
Robert E. Musgraves (14) 103,150 ---
Mark A. Wallace (15) 86,500 ---
All Directors and Executive Officers of the Company as a group
(10 persons) (3)(7)(8)(9)(10)(11)(12)(13)(14)(15)(16) 1,808,857 [5.7%]
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%.
(3) Tremont and the CMRT directly beneficially own approximately 38.6% and
9.0%, respectively, of the outstanding shares of TIMET common stock. Valhi,
Inc., or Valhi, established the CMRT to permit the collective investment by
master trusts that maintain the assets of certain employee benefit plans
adopted by Valhi and related companies. Harold C. Simmons is the sole
trustee of the CMRT and a member of the trust investment committee of the
CMRT. Valhi's board of directors selects the trustee and members of the
trust investment committee for the CMRT. Harold C. Simmons, Glenn R.
Simmons and Steven L. Watson are each members of Valhi's board of directors
and are participants in one or more of the employee benefit plans that
invest through the CMRT. However, each such person disclaims beneficial
ownership of the shares of TIMET common stock held by the CMRT, except to
the extent of his individual, vested beneficial interest, if any, in the
assets held by the CMRT.
Tremont Group, Inc., or TGI, NL Industries, Inc., or NL, and Valhi are the
direct holders of approximately 80.0%, 0.1% and 0.1%, respectively, of the
outstanding shares of common stock of Tremont. Valhi and NL are the direct
holders of 80.0% and 20.0%, respectively, of the outstanding common stock
of TGI.
Tremont and Valhi have entered into a merger agreement pursuant to which
Tremont would merge into a wholly owned subsidiary of Valhi. As a result,
Tremont would become a wholly owned subsidiary of Valhi and stockholders of
Tremont, other than Valhi and TGI, would receive shares of Valhi common
stock (and cash in lieu of fractional shares). The merger is subject to
stockholder approval and certain other conditions.
Valhi and TGI have entered into a merger agreement pursuant to which TGI
would merge into a wholly owned subsidiary of Valhi. As a result, TGI would
become a wholly owned subsidiary of Valhi and NL would receive shares of
Valhi common stock.
Valhi and Tremont are the direct holders of approximately 63.2% and 21.4%,
respectively, of the outstanding shares of common stock of NL. Valhi Group,
Inc., or VGI, National City Lines, Inc., or National, and Contran
Corporation, or Contran, are the holders of approximately 80.6%, 9.5%, and
2.1%, respectively, of the outstanding shares of common stock of Valhi.
National, NOA, Inc., or NOA, and Dixie Holding Company, or Dixie Holding,
are the direct holders of approximately 73.3%, 11.4% and 15.3%,
respectively, of the outstanding common stock of VGI. Contran and NOA are
the direct holders of approximately 85.7% and 14.3%, respectively, of the
outstanding common stock of National. Contran and Southwest Louisiana Land
Company, Inc., or Southwest, are the direct holders of approximately 49.9%
and 50.1%, respectively, of the outstanding common stock of NOA. Dixie Rice
Agricultural Corporation, Inc.,
12
or Dixie Rice, is the direct holder of 100% of the outstanding common stock
of Dixie Holding. Contran is the holder of 100% of the outstanding common
stock of Dixie Rice and approximately 88.9% of the outstanding common stock
Southwest. Substantially all of Contran's outstanding voting stock is held
by trusts established for the benefit of certain children and grandchildren
of Harold C. Simmons referred to as the Simmons Trusts, of which Mr.
Simmons is the sole trustee. As sole trustee of the Simmons Trusts, Mr.
Simmons has the power to vote and direct the disposition of the shares of
Contran stock held by the Simmons Trusts. Mr. Simmons, however, disclaims
beneficial ownership of any Contran shares held by the Simmons Trusts.
Harold C. Simmons is Chairman of the Board of TGI, NL, Valhi, VGI,
National, NOA, Dixie Holding, Dixie Rice, Southwest and Contran, and a
director of Tremont.
By virtue of the holding of the offices, the stock ownership, and his
service as trustee, all as described above, Mr. Simmons may be deemed to
control the entities described above, and Mr. Simmons and certain of such
entities may be deemed to possess indirect beneficial ownership of the
shares of Tremont, Valhi, NL and TIMET common stock held directly by
certain of such other entities. Mr. Simmons, however, disclaims beneficial
ownership of such shares beneficially owned, directly or indirectly, by any
of such entities, except to the extent otherwise expressly indicated in
this note.
Glenn R. Simmons and Steven L. Watson are directors of NL, Valhi and
Contran, J. Landis Martin is a director of NL and all of such persons are
directors of TGI and Tremont. Gen. Thomas P. Stafford is a director of NL
and Tremont. Each of such persons disclaims beneficial ownership of the
shares of Tremont common stock that TGI, NL, Valhi or Contran directly or
indirectly beneficially holds and the shares of TIMET common stock held by
Tremont.
The Harold Simmons Foundation, Inc., or the Foundation, directly holds
approximately 1.4% of the outstanding shares of common stock of Valhi. The
Foundation is a tax-exempt foundation organized for charitable purposes.
Harold C. Simmons is Chairman of the Board of the Foundation and may be
deemed to control the Foundation. Mr. Simmons, however, disclaims
beneficial ownership of any shares of Valhi common stock held by the
Foundation.
The CMRT also directly holds approximately 0.1% of the outstanding shares
of the common stock of Valhi. Harold C. Simmons, Glenn R. Simmons and
Steven L. Watson each disclaim beneficial ownership of the shares of Valhi
common stock held by the CMRT, except to the extent of his individual,
vested beneficial interest, if any, in the assets held by the CMRT.
The Contran Deferred Compensation Trust No. 2, or the CDCT No. 2, directly
holds approximately 0.4% of the outstanding shares of common stock of
Valhi. U.S. Bank National Association serves as the trustee of the CDCT No.
2. Contran established the CDCT No. 2 as an irrevocable "rabbi trust" to
assist Contran in meeting certain deferred compensation obligations that it
owes to Harold C. Simmons. If the CDCT No. 2 assets are insufficient to
satisfy such obligations, Contran must satisfy the balance of such
obligations as they come due. Pursuant to the terms of the CDCT No. 2,
Contran retains the power to vote the shares of Valhi common stock held by
the CDCT No. 2, retains dispositive power over such shares and may be
deemed the indirect beneficial owner of such shares. Mr. Simmons, however,
disclaims beneficial ownership of the shares owned, directly or indirectly,
by the CDCT No. 2, except to the extent of his interest as a beneficiary of
the CDCT No. 2.
Valmont Insurance Company, or Valmont, and a subsidiary of NL directly own
1,000,000 shares and 1,186,200 shares, respectively, of the outstanding
shares of common stock of Valhi. Valhi directly holds 100% of the
outstanding common stock of Valmont. Pursuant to Delaware law, Valhi treats
the shares of common stock of Valhi owned by Valmont and the subsidiary of
NL as treasury stock for voting purposes. For the purposes of this
footnote, such shares are not deemed outstanding.
Harold C. Simmons' spouse is the direct owner of 69,475 shares of common
stock of NL. Mr. Simmons may be deemed to share indirect beneficial
ownership of such shares. However, Mr. Simmons disclaims all such
beneficial ownership.
13
The business address of TGI, Valhi, VGI, National, NOA, Dixie Holding,
Contran, the CMRT and the Foundation is Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas 75240-2697. The business address of
Dixie Rice is 600 Pasquiere Street, Gueydan, Louisiana 70542. The business
address of Southwest is 402 Canal Street, Houma, Louisiana 70360. The
business address of TRE Holdings is 16825 Northchase Drive, Suite 1200,
Houston, Texas 77060.
(4) The address of Tremont Corporation is 1999 Broadway, Suite 4300, Denver,
Colorado 80202.
(5) As reported in Amendment No. 2 to Statement on Schedule 13G filed with the
Commission dated January 30, 2002. The address of Dimensional Fund Advisors
Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
(6) As reported in Amendment No. 4 to Statement on Schedule 13G filed with the
Commission dated February 5, 2002. The address of ICM Asset Management,
Inc. and James M. Simmons is W. 601 Main Avenue, Suite 600, Spokane,
Washington 99201. Mr. James M. Simmons is not related to Harold C. or Glenn
R. Simmons.
(7) The shares of TIMET common stock shown as beneficially owned by J. Landis
Martin include (i) 340,600 shares that Mr. Martin has the right to acquire
by the exercise of stock options within 60 days of the record date under
the TIMET Stock Incentive Plan and (ii) 400 shares held by Mr. Martin's
daughters, beneficial ownership of which is disclaimed by Mr. Martin. Mr.
Martin is also the holder of 13,000 shares (10,000 shares held indirectly)
of the convertible preferred securities. Such convertible preferred
securities are convertible into 17,407 shares of TIMET common stock, which
amount is included in the TIMET common stock ownership number shown for Mr.
Martin. No other director or executive officer of TIMET is known to hold
any convertible preferred securities.
(8) The shares of TIMET common stock shown as beneficially owned by Albert W.
Niemi Jr. include 5,000 shares that Dr. Niemi has the right to acquire by
the exercise of stock options within 60 days of the record date under the
TIMET Director Compensation Plan.
(9) The shares of TIMET common stock shown as beneficially owned by Glenn R.
Simmons include 5,000 shares that Mr. Simmons has the right to acquire by
the exercise of stock options within 60 days of the record date under the
TIMET Director Compensation Plan.
(10) The shares of TIMET common stock shown as beneficially owned by Thomas P.
Stafford include 6,500 shares that Gen. Stafford has the right to acquire
by the exercise of stock options within 60 days of the record date under
the TIMET Director Compensation Plan.
(11) The shares of TIMET common stock shown as beneficially owned by Steven L.
Watson include 10,000 shares that Mr. Watson has the right to acquire by
the exercise of stock options within 60 days of the record date under the
TIMET Director Compensation Plan.
(12) The shares of TIMET common stock shown as beneficially owned by Charles H.
Entrekin, Jr. include (i) 28,000 shares that Dr. Entrekin has the right to
acquire by the exercise of stock options within 60 days of the record date
under the TIMET Stock Incentive Plan and (ii) 24,000 shares of TIMET common
stock that represent restricted shares under the terms of the TIMET Stock
Incentive Plan with respect to which shares Dr. Entrekin has the power to
vote and receive dividends.
(13) The shares of TIMET common stock shown as beneficially owned by Christian
Leonhard include (i) 17,800 shares that Mr. Leonhard has the right to
acquire by the exercise of stock options within 60 days of the record date
under the TIMET Stock Incentive Plan and (ii) 24,000 shares of TIMET common
stock that represent restricted shares under the terms of the TIMET Stock
Incentive Plan with respect to which shares Mr. Leonhard has the power to
vote and receive dividends.
14
(14) The shares of TIMET common stock shown as beneficially owned by Robert E.
Musgraves include (i) 52,800 shares that Mr. Musgraves has the right to
acquire by the exercise of stock options within 60 days of the record date
under the TIMET Stock Incentive Plan, (ii) 200 shares held by members of
Mr. Musgraves' household, beneficial ownership of which is disclaimed by
Mr. Musgraves and (iii) 24,000 shares of TIMET common stock that represent
restricted shares under the terms of the TIMET Stock Incentive Plan with
respect to which shares Mr. Musgraves has the power to vote and receive
dividends. Of the shares of TIMET common stock shown as beneficially owned
by Mr. Musgraves, 14,400 shares are pledged to TIMET to secure repayment of
loans from TIMET made in 1998 and 2001 used to purchase such shares or pay
taxes with respect to restricted shares on which the restrictions have
lapsed.
(15) The shares of TIMET common stock shown as beneficially owned by Mark A.
Wallace include (i) 48,000 shares that Mr. Wallace has the right to acquire
by the exercise of stock options within 60 days of the record date under
the TIMET Stock Incentive Plan and (ii) 24,000 shares of TIMET common stock
that represent restricted shares under the terms of the TIMET Stock
Incentive Plan with respect to which shares Mr. Wallace has the power to
vote and receive dividends.
(16) The shares of TIMET common stock shown as beneficially owned by "All
Directors and Executive Officers of the Company as a group" include 513,700
shares that members of this group have the right to acquire by the exercise
of stock options within 60 days of the record date under the TIMET Stock
Incentive Plan or the TIMET Director Compensation Plan, 17,407 shares that
members of this group have the right to acquire by the conversion of
convertible preferred securities and 96,000 shares of TIMET common stock
that are restricted shares with respect to which members of the group have
the power to vote and receive dividends.
TIMET understands that Tremont and related entities may consider acquiring
or disposing of shares of TIMET common stock through open-market or privately
negotiated transactions, depending upon future developments, including, but not
limited to, the availability and alternative uses of funds, the performance of
TIMET common stock in the market, an assessment of the business of and prospects
for TIMET, financial and stock market conditions and other factors. TIMET may
similarly consider such acquisitions of shares of TIMET common stock and
acquisition or disposition of securities issued by related parties. TIMET does
not, and understands that Tremont also does not, presently intend to engage in
any transaction or series of transactions that would result in the TIMET common
stock's becoming eligible for termination of registration under the Exchange Act
or ceasing to be traded on a national securities exchange.
OWNERSHIP OF TREMONT AND VALHI COMMON STOCK
By virtue of the TIMET share ownership described above, for purposes of the
SEC's regulations, Tremont and Valhi may each be deemed to be the parent of
TIMET. The following table and accompanying notes set forth the beneficial
ownership, as of the record date, of Tremont common stock ($1.00 par value per
share) and Valhi common stock ($.01 par value per share) held by (i) each
director of TIMET, (ii) each executive officer of TIMET and (iii) all directors
and executive officers of TIMET as a group. Except as set forth below and under
the heading "Ownership of Convertible Preferred Securities" below, no securities
of TIMET's subsidiaries or less than majority owned affiliates are beneficially
owned by any director or executive officer of TIMET. All information has been
taken from or is based upon, ownership filings made by such persons with the SEC
or upon information provided by such persons to TIMET or Tremont.
Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities.
With respect to a given individual, beneficial ownership also includes shares of
common stock subject to options held by that individual exercisable within 60
days of the record date and other securities convertible into shares of common
stock within 60 days of the record date. These shares underlying stock options
and convertible securities are not deemed outstanding for purposes of computing
the percentage ownership of any person other than the holder of the option or
convertible security and of all directors and executive officers as a group.
Percentage of beneficial ownership is based on [6,424,858] and [115,118,917]
shares of Tremont and Valhi common stock, respectively, outstanding as of the
record date.
15
Ownership of Tremont and Valhi Common Stock
Tremont Common Stock Valhi Common Stock
--------------------------------- ---------------------------------
Amount and Amount and
Nature of Nature of
Beneficial Percent of Beneficial Percent of
Name of Beneficial Owner Ownership (1) Class (2) Ownership (1) Class (2)
-------------------------
-------------------- ------------ -------------------- ------------
Directors
Norman M. Green -0- --- -0- ---
J. Landis Martin (3) 20,788 --- -0- ---
Dr. Albert W. Niemi, Jr. -0- --- -0- ---
Glenn R. Simmons (3)(4) 19 --- [151,183] ---
Gen. Thomas P. Stafford (3) -0- --- -0- ---
Steven L. Watson (3)(5) 4,474 --- [155,335] ---
Other Executive Officers
Dr. Charles H. Entrekin, Jr. -0- --- -0- ---
Christian Leonhard -0- --- -0- ---
Robert E. Musgraves -0- --- -0- ---
Mark A. Wallace -0- --- -0- ---
All Directors and Executive Officers of the
Company as a group (10 persons) (3)(4)(5)(6) 25,281 --- [306,518] ---
-------------
(1) All beneficial ownership is sole and direct unless otherwise noted.
(2) No percent of class is shown for holdings of less than 1%.
(3) TGI, NL, and Valhi are the direct holders of approximately 80.0%, 0.1%, and
0.1%, respectively, of the outstanding shares of Tremont common stock. See
note (3) to the table appearing under the heading "Ownership of TIMET
Common Stock" above for information concerning individuals and entities
that may be deemed to indirectly beneficially own the shares of Tremont
common stock directly beneficially owned by such entities. Gen. Thomas P.
Stafford, Glenn R. Simmons, Harold C. Simmons, Steven L. Watson and J.
Landis Martin disclaim beneficial ownership of all of the shares of Tremont
common stock owned by such entities, except as otherwise noted in such note
(3).
(4) The shares of Valhi common stock shown as beneficially owned by Glenn R.
Simmons include [148,000] shares that Mr. Simmons has the right to acquire
by the exercise of stock options within 60 days of the record date under
stock option plans adopted by Valhi. In addition, such shares include 800
shares held in a retirement account for Mr. Simmons' wife, beneficial
ownership of which is disclaimed by Mr. Simmons.
(5) The shares of Valhi common stock shown as beneficially owned by Steven L.
Watson include [153,300] shares that Mr. Watson has the right to acquire by
the exercise of stock options within 60 days of the record date under stock
option plans adopted by Valhi.
(6) The shares of Valhi common stock shown as beneficially owned by "All
Directors and Executive Officers of the Company as a group" include
[301,300] shares that members of this group have the right to acquire by
the exercise of stock options within 60 days of the record date as
described in notes (4) and (5) above.
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OWNERSHIP OF CONVERTIBLE PREFERRED SECURITIES
The TIMET Trust is a statutory business trust formed under the laws of the
State of Delaware all of whose common securities are owned by TIMET. The TIMET
Trust exists for the sole purpose of issuing the convertible preferred
securities and investing in an equivalent amount of 6-5/8% Convertible Junior
Subordinated Debentures due 2026 issued by TIMET, referred to as the TIMET
debentures. The convertible preferred securities are convertible, at the
holders' option, into an aggregate of approximately 5.4 million shares of TIMET
common stock at a conversion rate of 1.339 shares of TIMET common stock for each
convertible preferred security. The aggregate number of shares of common stock
into which the convertible preferred securities are convertible and the
conversion rate will be reduced in proportion to the exchange ratio selected by
the Board within the limits of the proposal. TIMET has, in effect, fully and
unconditionally guaranteed repayment of all amounts due on the convertible
preferred securities.
The convertible preferred securities were issued pursuant to an offering
exempt from registration under the Securities Act of 1933, as amended. Pursuant
to an agreement with the original purchasers of the convertible preferred
securities, TIMET has subsequently registered under the Securities Act, among
other things, the convertible preferred securities, the TIMET debentures, the
TIMET common stock issuable upon the conversion of the convertible preferred
securities, and certain other shares of TIMET common stock that are held by, or
may be acquired by, Tremont. Except as set forth in note (7) to the table under
the heading "Ownership of TIMET Common Stock" above, no director or executive
officer of TIMET is known to hold any convertible preferred securities.
STOCKHOLDER PROPOSALS FOR 2003 AND 2004 ANNUAL MEETINGS
Stockholders may submit proposals on matters appropriate for stockholder
action at TIMET's annual meeting of stockholders, consistent with rules adopted
by the SEC. Such proposals must have been received by TIMET no later than
December 12, 2002 for consideration for inclusion in the proxy statement and
form of proxy relating to the 2003 Annual Meeting of Stockholders. Such
proposals must be received by TIMET no later than November 29, 2003 to be
considered for inclusion in the proxy statement and form of proxy relating to
the 2004 Annual Meeting of Stockholders. Any such proposal should be addressed
to: Corporate Secretary, Titanium Metals Corporation, 1999 Broadway, Suite 4300,
Denver, Colorado, 80202.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Special Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment (subject to
applicable limitations on such authority).
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HOUSEHOLDING
The SEC has adopted rules that permit companies and intermediaries such as
brokers to satisfy the delivery requirements for proxy statements with respect
to two or more security holders sharing the same address by delivering a single
proxy statement addressed to those security holders. This process, which is
commonly referred to as "householding," potentially means extra convenience for
stockholders and cost savings for companies.
This year, a number of brokers with account holders who are TIMET
stockholders will be "householding" our proxy materials. A single proxy
statement will be delivered to multiple stockholders sharing an address unless
contrary instructions have been received from the affected stockholders. Once
you have received notice from your broker or us that either will be
"householding" communications to your address, "householding" will continue
until you are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in "householding" and would prefer to
receive a separate proxy statement, or if you currently receive multiple copies
of the proxy statement at your address and would like to request "householding"
of Company communications, please notify your broker if your shares are not held
directly in your name. If you own your shares directly rather than through a
brokerage account, you should direct your written request to the corporate
secretary, Titanium Metals Corporation, 1999 Broadway, Suite 4300, Denver,
Colorado 80202 or contact the corporate secretary by phone at 303-296-5600, or
by fax at 303-291-2990.
TITANIUM METALS CORPORATION
Denver, Colorado
December ___, 2002
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APPENDIX A
CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
TITANIUM METALS CORPORATION
Titanium Metals Corporation (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: The name of the Corporation is Titanium Metals Corporation.
SECOND: The date on which the Corporation's original Certificate of
Incorporation was filed with the Delaware Secretary of State is December 13,
1955.
THIRD: The Board of Directors of the Corporation, acting in accordance with
the provision of Sections 141 and 242 of the General Corporation Law of the
State of Delaware adopted resolutions to amend Sections 4.1 and 4.3 of the
Amended and Restated Certificate of Incorporation of the Corporation to read in
their entirety as follows:
"4.1 Capital Stock. The total number of shares which the Corporation
shall have authority to issue is 10,000,000 shares, consisting of (a)
100,000 shares of Preferred Stock, with a par value of $.01 per share
("Preferred Stock"); and (b) 9,900,000 shares of Common Stock, with a
par value of $.01 per share ("Common Stock")."
"4.3 Reverse Stock Split. Effective as of 5:00 p.m., Eastern time, on
the date this Amendment to Certificate of Incorporation is filed with
the Secretary of State of Delaware, each [*] shares of Common Stock
then issued and outstanding shall, automatically and without any
action on the part of the respective holders thereof, be combined and
converted into one (1) share of Common Stock. No fractional shares
will be issued and, in lieu thereof, stockholders otherwise entitled
to receive a fractional share will instead receive cash for such
stockholder's fractional share on a basis determined by the Board of
Directors.
FOURTH: This Certificate of Amendment of Amended and Restated Certificate
of Incorporation was submitted to the stockholders of the Corporation and was
duly approved by the required vote of stockholders of the Corporation in
accordance with Sections 222 and 242 of the Delaware General Corporation Law.
The total number of outstanding shares entitled to vote or consent to this
Amendment was [31,849,538] shares of Common Stock. A majority of the outstanding
shares of Common Stock, voting together as a single class, voted in favor of
this Certificate of Amendment of Amended and Restated Certificate of
Incorporation. The vote required was a majority of the outstanding shares of
Common Stock, voting together as a single class.
IN WITNESS WHEREOF, Titanium Metals Corporation has caused this Certificate
of Amendment to be signed by its _______________ as of _________________ ___,
200_.
TITANIUM METALS CORPORATION
By: ________________________
Name: ______________________
Title: _____________________
* By approving this amendment, stockholders will be approving the combination of
any whole number of shares of TIMET common stock between and including eight (8)
and ten (10) into one (1) share of TIMET common stock as the exchange ratio and
authorizing the Board of Directors to select one of the approved exchange
ratios. The Certificate of Amendment that will be filed with the Secretary of
State of the State of
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Delaware will include only that exchange ratio determined by the Board of
Directors to be in the best interests of the Corporation and its stockholders.
The Board of Directors will not implement any amendment providing for a
different exchange ratio, and may elect to implement no amendment.
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TITANIUM METALS CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 4, 2003
The undersigned hereby appoints Robert E. Musgraves, Joan H. Prusse and
Matt O'Leary and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, to vote all of the shares of common stock of
Titanium Metals Corporation (the "Company") which the undersigned may be
entitled to vote at the Special Meeting of Stockholders of the Company to be
held at the offices of Valhi, Inc., Three Lincoln Center, 5430 LBJ Freeway,
Suite 1700, Dallas, Texas 75240 on February 4, 2003 at 9:45 a.m. (local time),
and at any and all postponements, continuations and adjournments thereof, with
all powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
THE PROPOSAL, AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Please Sign on Reverse Side)
--------------------------------------------------------------------------------
Please date, sign and mail your
proxy card back as soon as possible.
Special Meeting of Stockholders
TITANIUM METALS CORPORATION
February 4, 2003
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to EquiServe P.O. Box 2500, Jersey City, New
Jersey 07303-2500.
MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSAL.
1. To approve the amendment of the Company's Amended and Restated
Certificate of Incorporation to to the following:
a) effect a reverse stock split of the Company's common stock
pursuant to which any whole number of outstanding shares between
and including eight and ten would be combined into one share of
our common stock and to authorize the Company's Board of
Directors to select the final exchange ratio within the
identified range, as determined by the T Board of Directors to be
in the best interests of the Company and its stockholders ; d and
(b) reduce the number of shares of capital stock the Company is
authorized to issue from 100,000,000 shares (99,000,000 shares of
common stock and 1,000,000 shares of preferred stock), par value
$.01 per share, to 10,000,000 shares (9,900,000 shares of common
stock and 100,000 shares of preferred stock), par value $.01 per
share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment or postponement thereof.
Signature(s) Dated
------------------ ------------------ ------------------
------------------ ------------------ ------------------
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
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