Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, TX 75240-2697
(972) 233-1700
(972) 448-1445 (Fax)
Kronos Worldwide
2009
ANNUAL REPORT
KRONOS WORLDWIDE, INC. CORPORATE AND OTHER INFORMATION
Board of Directors
Kieth R. Coogan (a) (b)
Private Investor
C. H. Moore, Jr. (a)
Retired Partner
KPMG LLP
George E. Poston(a)(b)
President
Poston Real Estate Co. and
Poston Capital Co.
Glenn R. Simmons
Vice Chairman
Valhi, Inc.
Harold C. Simmons
Chairman
Dr. R. Gerald Turner(a)(b)
President
Southern Methodist University
Steven L. Watson
Vice Chairman
and Chief Executive Officer
Board Committees
(a) Audit Committee
(b) Management Development and
Compensation Committee
Product Information
Information about our products and services is
available online or by contacting:
Kronos Worldwide, Inc.
5 Cedar Brook Drive
Cranbury, NJ. 08512
Phone: (609) 860-6200
Customer Service: 1-800-866-5600
Email: kronos.marketing@kronosww.com
Transfer Agent
Computershare Trust Company acts as transfer
agent, registrar and dividend paying agent for
the Company’s common stock.
Communications regarding stockholder
accounts, dividends and change of address
should be directed to:
Computershare Trust Company, N. A.
250 Royal St.
Canton, Massachusetts 02012
Telephone: (781) 575-2723
Internet address:
http://www.computershare.com/investor
Visit us on the Web
http://www.kronosww.com
Corporate and
Operating Management
Harold C. Simmons
Chairman
Steven L. Watson
Vice Chairman
and Chief Executive Officer
Robert D. Graham
Executive Vice President
and General Counsel
Gregory M. Swalwell
Executive Vice President
and Chief Financial Officer
Douglas C. Weaver
Chairman, Executive Management Committee
Dr Ulfert Fiand
Vice Chairman, Executive Management Committee
and Chief Technology Officer
Klemens T. Schlueter
President, Manufacturing
H. Joseph Maas
President, Sales and Marketing
Robert V. Cottone
Senior Vice President, Information Technology
Tim C. Hafer
Vice President and Controller
Kelly D. Luttmer
Vice President and Tax Director
John A. St. Wrba
Vice President and Treasurer
A. Andrew R. Louis
Secretary and Associate General Counsel
Annual Meeting
Form 10-K Report
The 2010 Annual Meeting of Stockholders will be held at the office
of the Company, Three Lincoln Centre, 5430 LBJ Freeway, Suite
1700, Dallas, Texas 75240-2697, on the date and time as set forth
in the notice of the meeting, proxy statement and form of proxy
that will be mailed to stock holders in advance of the meeting
The Company’s Annual Report on Form 10-K for the year ended
December 31, 200 , as filed with the Securities and Exchange
Commission is printed as part of this Annual Report. Additional
copies are available without charge upon written request to:
9
A. Andrew R. Louis, Secretary
Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
Stock and Bond Exchanges
Kronos’ common shares are listed on the New York Stock
Exchange under the symbol “KRO.”
Kronos International, Inc.’s 6.5% Senior Secured Notes Due 2013
are listed on the Luxembourg Stock Exchange and are quoted in the
over-the-counter market in the U.S.
Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, TX 75240-2697
News Release
FOR IMMEDIATE RELEASE
Contact: Gregory M. Swalwell
Executive Vice President and
Chief Financial Officer
(972) 233-1700
KRONOS WORLDWIDE REPORTS FOURTH QUARTER RESULTS
DALLAS, TEXAS…March 9, 2010… Kronos Worldwide, Inc. (NYSE:KRO) today reported net income for the
fourth quarter of 2009 of $5.1 million, or $.11 per diluted share, compared to net income of $7.2 million, or
$.15 per diluted share, in the fourth quarter of 2008. For the full year of 2009, Kronos reported a net loss of
$34.7 million, or $.71 per diluted share, compared with net income of $9.0 million, or $.18 per diluted share in
2008. Comparability of the Company’s results was impacted by lower income from operations resulting
principally from lower sales volumes and higher manufacturing costs as a result of temporary plant
curtailments the Company implemented during the first half of 2009.
Net sales of $301.9 million in the fourth quarter of 2009 were $55.0 million, or 22%, higher than the fourth
quarter of 2008. Net sales of $1,142.0 million for the full year 2009 were $174.9 million, or 13%, lower than
the full year 2008. Net sales increased in the fourth quarter of 2009 primarily due to higher TiO2 sales
volumes and the favorable effect of fluctuations in currency exchange rates, which increased sales by
approximately $20 million, partially offset by lower average selling prices. For the full year period, net sales
were lower in 2009 primarily due to lower sales volumes and average selling prices and the unfavorable effect
of fluctuations in currency exchange rates, which decreased sales by approximately $35 million. Although the
Company’s average selling prices were 5% lower in the fourth quarter of 2009 as compared to the fourth
quarter of 2008, the Company’s average selling prices at the end of the fourth quarter 2009 were 2% higher
than at the end of the third quarter 2009. The table at the end of this release shows how each of these items
impacted the overall decrease in sales.
The Company’s TiO2 segment profit (see description of non-GAAP information below) for the fourth quarter of
2009 was $13.3 million compared with $22.0 million in the fourth quarter of 2008. For the full year period, the
Company’s segment loss was $8.1 million compared with a segment profit of $54.6 million for the full year
2008. Segment profit decreased in the fourth quarter of 2009 as compared to the fourth quarter of 2008 due
to lower average TiO2 selling prices and the unfavorable effect of fluctuations in currency exchange rates,
which decreased segment profit by approximately $10 million. For the full year 2009, segment profit declined
primarily due to the negative effects of production curtailments in the first half of the year, which resulted in
higher manufacturing costs per ton of pigment production during the year, as well as the effect of lower sales
volumes and lower average TiO2 selling prices. This was partially offset by lower maintenance costs and the
favorable effects of fluctuations in currency exchange rates, which increased segment profit by approximately
$40 million. The Company’s TiO2 production volumes were 1% lower in the fourth quarter of 2009 and 22%
lower in the full year 2009 as compared to the same periods in 2008. Finished goods inventories at December
31, 2009, which represented approximately 2 months of average sales, were lower compared to December
31, 2008.
Steven L. Watson, Vice Chairman and Chief Executive Officer, said, “During the fourth quarter, we continued
our near full capacity production rates from the third quarter following the production curtailments we
implemented in the first half of the year in order to reduce our finished goods inventories to an appropriate
level necessary to meet customer requirements in each of our markets during the year. The higher capacity
utilization during the second half of 2009 significantly decreased our per unit fixed cost of production, which,
along with higher selling prices produced a return to profitability in the second half of 2009. The increased
capacity utilization is expected to continue into 2010. Despite the economic downturn negatively impacting all
TiO2 producers during 2009, we believe the continuing improvement in demand in all key market segments
and the continued implementation of both previously-announced and future price increases will result in
Page 1 of 5
continued improved operating and financial performance for 2010. In addition, and as a result of a European
Court ruling that resulted in the favorable resolution of certain income tax issues in Germany, we expect to
report a non-cash income tax benefit in the first quarter of 2010 of approximately $35.2 million (or $.72 per
diluted share).”
The Company’s effective income tax rate varies from the U.S. statutory federal income tax rate in both periods
of 2008 and 2009. The Company’s income tax benefit in 2008 includes a $7.2 million ($.15 per diluted share)
non-cash deferred income tax benefit in the second quarter related to a European Court ruling that resulted in
the favorable resolution of certain income tax issues related to our German operations and an increase in the
amount of our German corporate and trade tax net operating loss carryforwards. The Company’s income tax
benefit in 2009 includes a $4.7 million ($.10 per diluted share) non-cash deferred income tax benefit in the
fourth quarter related to a net decrease in our reserve for uncertain tax positions.
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 our products
The extent of the dependence of certain of our businesses on certain market sectors
The cyclicality of our businesses
Customer inventory levels (such as the extent to which our 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)
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
Competitive technology positions
Potential consolidation or solvency of our competitors
The impact of pricing and production decisions
Possible disruption of our business or increases in the cost of doing business resulting from
terrorist activities or global conflicts
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 krone 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
Our ability to renew or refinance credit facilities
Our ability to maintain sufficient liquidity
The ultimate outcome of income tax audits, tax settlement initiatives or other tax matters
The ultimate ability to utilize income tax attributes, the benefits of which have been
recognized under the more-likely-than-not recognition criteria
Environmental matters (such as those requiring compliance with emission and discharge
standards for existing and new facilities)
Government laws and regulations and possible changes therein
The ultimate resolution of pending litigation
Possible future litigation
Should one or more of these risks materialize (or the consequences of such a development worsen), or
Page 2 of 5
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 (loss), 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 (loss) 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 (loss) as income (loss) before income
taxes, interest expense and certain general corporate items. Corporate items excluded from the
determination of segment profit (loss) 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 products.
Page 3 of 5
KRONOS WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share and metric ton data)
(Unaudited)
Net sales
Cost of sales
Gross margin
Selling, general and administrative expense
Other operating income (expense):
Currency transactions, net
Disposition of property & equipment
Other Income, net
Corporate expense
Three months ended
December 31,
Twelve months ended
December 31,
2008
2009
2008
2009
$ 246.9
193.0
$
301.9 $ 1,316.9 $ 1,142.0
1,011.7
249.3
1,096.3
53.9
33.2
.9
(.3)
.6
(2.0)
52.6
40.0
.8
(.6)
.5
(2.0)
220.6
130.3
167.4
148.2
.6
(.9)
.7
(6.4)
9.9
(.9)
.6
(7.4)
Income (loss) from operations
19.9
11.3
47.2
(15.7)
Other income (expense):
Trade interest income
Interest expense
Income (loss) before income taxes
Provision for income taxes (benefit)
Net income (loss)
Basic and diluted net income (loss) per share
.1
(9.2)
10.8
3.6
7.2
.15
$
$
-
(10.8)
1.0
(42.2)
.2
(41.4)
.5
6.0
(56.9)
(4.6)
(3.0)
(22.2)
$
$
5.1
$
9.0
$ (34.7)
.11
$
.18
$
(.71)
Basic and diluted weighted-average shares
used in the calculation of net income per share
49.0
49.0
49.0
49.0
TiO2 data – metric tons in thousands:
Sales volumes
Production volumes
88
124
110
122
478
514
445
402
Page 4 of 5
KRONOS WORLDWIDE, INC.
RECONCILIATION OF SEGMENT PROFIT TO
INCOME FROM OPERATIONS
(In millions)
(Unaudited)
Segment profit (loss)
Adjustments:
Trade interest income
Corporate expense
Three months ended
December 31,
Twelve months ended
December 31,
2008
2009
2008
2009
$
22.0
$ 13.3
$ 54.6
$ (8.1)
(.1)
(2.0)
-
(2.0)
(1.0)
(6.4)
(.2)
(7.4)
Income (loss) from operations
$
19.9
$ 11.3
$ 47.2
$ (15.7)
IMPACT OF PERCENTAGE CHANGE IN SALES
(Unaudited)
Percent change in sales:
TiO2 product pricing
TiO2 sales volume
TiO2 product mix
Changes in foreign currency exchange rates
Total
Three months ended
December 31,
2009 vs. 2008
Twelve months ended
December 31,
2009 vs. 2008
(5)%
25%
(6)%
8%
22%
(1)%
(7)%
(2)%
(3)%
(13)%
Page 5 of 5
Kronos Worldwide, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1700
Dallas, TX 75240-2697
(972) 233-1700
(972) 448-1445 (Fax)
Kronos Worldwide
2009
ANNUAL REPORT