Tronox Limited
Tronox Ltd (Form: 8-K, Received: 05/04/2017 06:05:49)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K
 
CURRENT REPORT
 
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported):   May 4, 2017 (May 3, 2017)
 

TRONOX LIMITED
  (Exact name of registrant as specified in its charter)
 
Western Australia, Australia
001-35573
98-1026700
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
263 Tresser Boulevard, Suite 1100
 
Lot 22 Mason Road
Stamford, Connecticut 06901
 
Kwinana Beach, WA 6167 Australia
(Address of principal executive offices, including zip code)
 
(203) 705-3800
(Registrant s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02. Results of Operations and Financial Condition.
 
Attached as Exhibit 99.1 is a copy of a press release of Tronox Limited (the Company ), dated May 3, 2017, reporting the Company s financial results for the first quarter ended March 31, 2017. Such information, including the Exhibit attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit No.
 
Description
99.1
 
Press Release of Tronox Limited, dated May 3, 2017, reporting Tronox Limited s financial results for the first quarter ended March 31, 2017.

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
TRONOX LIMITED
 
 
 
 
 
By: /s/ Richard L. Muglia
Date: May 4, 2017
Name: Richard L. Muglia
 
Title: Senior Vice President, General Counsel and Secretary
 
Exhibit Index
 
Exhibit No.
 
Description
 
Press Release of Tronox Limited, dated May 3, 2017, reporting Tronox Limited s financial results for the first quarter ended March 31, 2017.
 



Exhibit 99.1

Tronox Reports First Quarter 2017 Financial Results

First Quarter Highlights:
 
·
Revenue of $569 million up 20 percent versus prior year; TiO 2 up 33 percent
 
·
GAAP diluted EPS of ($0.35); adjusted EPS of ($0.26) (Non-GAAP)
 
·
Income from operations of $16 million (GAAP); adjusted EBITDA of $101 million up 153 percent or $61 million versus prior year (Non-GAAP)
 
·
TiO 2 income from operations of $32 million; adjusted EBITDA of $85 million up 286 percent or $63 million versus prior year; free cash flow of $91 million (1)
 
·
Alkali income from operations of $19 million; adjusted EBITDA of $38 million up 6 percent versus prior year; free cash flow of $41 million (1)
 
·
TiO 2 pigment selling prices up 4 percent sequentially and 16 percent above prior year
 
·
Cristal TiO 2 acquisition integration planning and process to market Alkali business both underway
 
·
Cash of $265 million and total liquidity of $560 million (2)
 
·
Board declared quarterly dividend of $0.045 per share payable on May 25, 2017 to shareholders of record of company’s Class A and Class B ordinary shares at close of business on May 15, 2017
 
  (1)
Free cash flow equals cash flow provided by (used in) operating activities less capital expenditures (Non-GAAP)
  (2)
Total liquidity includes cash on hand and availability under current revolvers

 
STAMFORD, Conn., (May 3, 2017) – Tronox Limited (NYSE:TROX) reported revenue of $569 million for the first quarter 2017, up 20 percent compared to $476 million in the first quarter 2016 and up 4 percent compared to $549 million in the fourth quarter 2016.  Income from operations of $16 million in the quarter improved from a loss from operations of $31 million in the year-ago quarter and compared to income from operations of $33 million in the prior quarter.  Net loss attributable to Tronox Limited of $41 million, or ($0.35) per diluted share, improved from a net loss attributable to Tronox Limited of $93 million, or ($0.80) per diluted share in the year-ago quarter and compared to net income attributable to Tronox Limited of $122 million, or $1.00 per diluted share in the prior quarter, which included a corporate reorganization tax benefit and a restructuring benefit totaling $138 million, or $1.14 per diluted share.  Adjusted net loss attributable to Tronox Limited (Non-GAAP) was $30 million, or ($0.26) per diluted share.  Adjusted EBITDA of $101 million was 153 percent, or $61 million, higher than the $40 million reported in the year-ago quarter and compared to $105 million in the prior quarter.

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Tom Casey, chairman and CEO of Tronox, said: “Our first quarter performance provided a very strong start to 2017 as our TiO 2 and Alkali businesses combined to deliver $123 million of adjusted EBITDA and $132 million of free cash flow.  Our TiO 2 business exceeded the aggressive goals we set for first quarter performance with revenue growth of 33 percent and adjusted EBITDA growth of 286 percent compared to the year-ago quarter.  Driving this strong performance in TiO 2 were higher pigment selling prices, up 4 percent sequentially and 16 percent above prior year, higher sales volumes, including the highest single-month pigment sales volumes since June 2009 achieved in March, significantly higher titanium feedstock and zircon sales and continued cost savings from our Operational Excellence program.  Alkali delivered adjusted EBITDA of $38 million and free cash flow of $41 million despite record severe winter weather conditions at our Wyoming production facility which impacted adjusted EBITDA by $4 million in the quarter.  Our cash generation performance further strengthened our balance sheet, as we closed the quarter with $265 million of cash on hand and liquidity of $560 million.

“We see the momentum in our TiO 2 business continuing across the balance of this year and expect to benefit from additional pigment selling price increases, firming market conditions for titanium feedstock and co-products, continued margin expansion from top line growth in both pigment and historically higher margin feedstock as well as cost savings from our Operational Excellence program,” said Casey.

Casey concluded, “The first quarter was a milestone one for Tronox, marked by the signing of a definitive agreement to acquire Cristal’s TiO 2 business.  Our integration planning is underway so that we can from day one realize the substantial value creation enabled by our combination.  We also began a process to market our Alkali business and have received strong initial expressions of interest from both strategic and financial parties.  At the same time, we continue our laser-like focus on generating high performance from our current portfolio.  We are confident that 2017 will be a year of strong performance and that 2018 will be a transformational one for Tronox.”

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First Quarter 2017

Tronox TiO 2

TiO 2 segment revenue of $378 million was 33 percent higher than $285 million in the year-ago quarter, driven by higher pigment sales volumes and selling prices coupled with higher zircon and CP slag sales volumes.  Pigment sales of $272 million increased 26 percent compared to $216 million in the year-ago quarter, as sales volumes increased 9 percent and average selling prices increased 16 percent (17 percent on a local currency basis).  Pigment selling prices were higher in all regions.  Titanium feedstock and co-products sales of $92 million increased 61 percent from $57 million in the year-ago quarter.  Zircon sales volumes increased 89 percent as a result of healthy demand coupled with tighter inventories, while selling prices were 10 percent lower than year-ago levels. CP slag shipments sold under a contract for 100,000 metric tons began in the first quarter whereas there were no sales of CP slag in the prior-year quarter.  Ilmenite sales volumes increased 35 percent.  Sales volumes for natural rutile were 4 percent lower while selling prices increased 4 percent.  Pig iron sales volumes were 8 percent lower while selling prices were 28 percent above the prior-year quarter.  Pig iron selling prices tend to follow iron ore selling prices.

Compared sequentially, TiO 2 segment revenue of $378 million increased 7 percent versus $352 million in the fourth quarter, driven by higher pigment sales volumes and selling prices.  Pigment sales of $272 were 11 percent higher than sales of $246 million in the fourth quarter, as sales volumes increased 6 percent and selling prices increased 4 percent (4 percent on a local currency basis).  Selling prices were higher in all regions.  Titanium feedstock and co-products sales of $92 million were level to the fourth quarter.  CP titanium slag sales were level while ilmenite sales volumes increased 86 percent.  Zircon sales volumes were 4 percent lower while selling prices improved by 1 percent.  Natural rutile sales volumes were level and selling prices were 3 percent lower.  Pig iron sales volumes increased 11 percent and selling prices were 26 percent higher.

TiO 2 segment adjusted EBITDA of $85 million was 286 percent, or $63 million, higher than $22 million in the year-ago quarter driven by higher pigment sales volumes and selling prices, significant cost reductions resulting from its Operational Excellence program and the benefit of higher pigment production efficiency and plant utilization.  Compared sequentially, adjusted EBITDA of $85 million improved by 6 percent from $80 million in the fourth quarter, driven by higher pigment sales volumes and selling prices.  TiO 2 segment income from operations of $32 million improved from a loss of $36 million in the year-ago quarter and income from operations of $18 million in the prior quarter.  TiO 2 delivered free cash flow of $91 million in the first quarter, as cash provided by operating activities was $111 million and capital expenditures were $20 million.

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Tronox Alkali

Alkali segment revenue of $191 million was level to the year-ago quarter as sales volumes were 5 percent higher and selling prices were 4 percent lower.  Revenue in the quarter was reduced by $5 million as lower sales volumes resulted from lower production volumes due to record severe winter weather conditions at its Wyoming production facility early in the quarter.  In the domestic market, sales volumes were 3 percent lower due to lower demand from container glass and detergent markets while selling prices were 2 percent lower due to customer mix and freight pass-through costs.  In export markets, sales volumes increased 13 percent driven by strong demand in Asia-Pacific and Latin America while selling prices were 2 percent lower than the year-ago quarter.

Compared sequentially, Alkali revenue of $191 million declined 3 percent from $197 million in the fourth quarter, as sales volumes declined 3 percent driven by lower production volumes resulting from the record severe winter weather conditions in Wyoming.  Selling prices were level to the fourth quarter.  Domestic sales volumes declined 4 percent while selling prices were 2 percent higher.  Export sales volumes and selling prices were both 2 percent lower than the prior quarter.

Alkali segment adjusted EBITDA of $38 million increased from $36 million in the year-ago quarter driven by operating cost reductions and higher plant efficiencies.  Adjusted EBITDA in the quarter was reduced by $4 million as a result of the record severe winter weather conditions.  Compared sequentially, Alkali segment adjusted EBITDA of $38 million declined from $46 million in the fourth quarter driven by lower sales and production volumes and higher energy and operating costs, primarily resulting from the record severe winter weather conditions.  Alkali segment income from operations of $19 million compared to $21 million in the year-ago quarter and $31 million in the prior quarter.  Alkali delivered free cash flow of $41 million in the first quarter, as cash provided by operating activities was $53 million and capital expenditures were $12 million.

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Corporate

Corporate loss from operations was $35 million compared to a loss from operations of $16 million in the year-ago quarter and a loss from operations of $16 million in the fourth quarter.  The higher loss from operations in the first quarter resulted from higher professional fees of $15 million primarily related to the Cristal transaction and the process to market our Alkali business, as well as certain non-cash employee retirement-related and other costs of $10 million.  Corporate adjusted EBITDA was ($22) million compared to adjusted EBITDA of ($18) million in the year-ago quarter and adjusted EBITDA of ($21) million in the prior quarter.  Corporate cash used in operations was $104 million which included a semi-annual bond interest payment of $51 million made in the first and third quarters each year.

Consolidated

Selling, general and administrative expenses were $74 million in the first quarter compared to $50 million in the year-ago quarter and $59 million in the prior quarter. The higher expenses in the first quarter also resulted from higher professional fees of $15 million primarily related to the Cristal transaction and the process to market our Alkali business, as well as certain non-cash employee retirement-related and other costs of $10 million.  Interest and debt expense of $46 million was level to $46 million in the year-ago quarter and compared to $47 million in the prior quarter.  On March 31, 2017, gross consolidated debt was $3,053 million, and debt, net of cash and cash equivalents, was $2,788 million.  Liquidity was $560 million and cash and cash equivalents on the balance sheet were $265 million.  Capital expenditures were $32 million and depreciation, depletion and amortization expense was $61 million.

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Webcast Conference Call

Tronox will conduct a conference call on Thursday, May 4, 2017, at 8:30 a.m. ET (New York).  The live call is open to the public via Internet broadcast and telephone.

Internet Broadcast:  http://www.tronox.com/
Dial-in telephone numbers:
U.S. / Canada: +1.877.831.3840
International: +1.253.237.1184
Conference ID: 4010868
Conference Call Presentation Slides will be used during the conference call and are available on our website at http://www.tronox.com/

Webcast Conference Call Replay: Available via the Internet and telephone beginning on Thursday, May 4, 2017, at 11:30 a.m. ET (New York), until 11:30 p.m. ET (New York), on Tuesday, May 9, 2017

Internet Replay: www.tronox.com
Replay dial-in telephone numbers:
U.S. / Canada: +1.855.859.2056
International: +1.404.537.3406
Conference ID: 4010868

Upcoming Conferences

During the second quarter 2017 a member of management is scheduled to present at the following conferences:

·
Wells Fargo Industrials Conference, New York, May 9, 2017
 
·
Goldman Sachs Basic Materials Conference, New York, May 17, 2017
 
·
Vertical Research Basic Materials Conference, Westbrook, CT, June 14-15, 2017

Accompanying conference materials will be available at http://investor.tronox.com

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About Tronox

Tronox Limited operates two vertically integrated mining and inorganic chemical businesses. Tronox TiO 2 mines and processes titanium ore, zircon and other minerals, and manufactures titanium dioxide pigments that add brightness and durability to paints, plastics, paper, and other everyday products. Tronox Alkali mines trona ore and manufactures natural soda ash, sodium bicarbonate, caustic soda, and other compounds which are used in the production of glass, detergents, baked goods, animal nutrition supplements, pharmaceuticals, and other essential products.  For more information, visit www.tronox.com

Forward Looking Statements

Statements in this release that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. These and other risk factors are discussed in the company's filings with the Securities and Exchange Commission (SEC), including those under the heading entitled “Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016.

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information or future developments.

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Use of Non-U.S. GAAP Financial Information

To provide investors and others with additional information regarding Tronox Limited's operating results, we have disclosed in this press release certain non-U.S. GAAP financial measures, including EBITDA, Adjusted EBITDA, free cash flow and adjusted net loss attributable to Tronox.  These non-U.S. GAAP financial measures are a supplement to and not a substitute for or superior to, the company's results presented in accordance with U.S. GAAP.  The non-U.S. GAAP financial measures presented by the company may be different than non-U.S. GAAP financial measures presented by other companies.  The non-U.S. GAAP financial measures are provided to enhance the user's overall understanding of the company's operating performance. Specifically, the company believes the non-U.S. GAAP information provides useful measures to investors regarding the company's financial performance by excluding certain costs and expenses that the company believes are not indicative of its core operating results.  The presentation of these non-U.S. GAAP financial measures are not meant to be considered in isolation or as a substitute for results or guidance prepared and presented in accordance with U.S. GAAP.  A reconciliation of the non-U.S. GAAP financial measures to U.S. GAAP results is included herein.

Management believes these non-U.S. GAAP financial measures:

·
Reflect Tronox Limited's ongoing business in a manner that allows for meaningful period-to-period comparison and analysis of trends in its business, as they exclude income and expense that are not reflective of ongoing operating results;
 
·
Provide useful information to investors and others in understanding and evaluating Tronox Limited's operating results and future prospects in the same manner as management and in comparing financial results across accounting periods;
 
·
Provide additional view of the operating performance of the company by adding interest expenses, taxes, depreciation, depletion and amortization to the net income. Further adjustments due to purchase accounting and stock-based compensation charges attempt to exclude items that are either non-cash or unusual in nature;
 
·
Assist investors to assess the company's compliance with financial covenants under its debt instruments;
 
·
Adjusted EBITDA is one of the primary measures management uses for planning and budgeting processes and to monitor and evaluate financial and operating results. Adjusted EBITDA is not a recognized term under U.S. GAAP and does not purport to be an alternative to measures of our financial performance as determined in accordance with U.S. GAAP, such as net income (loss). Because other companies may calculate EBITDA and Adjusted EBITDA differently than Tronox, EBITDA may not be, and Adjusted EBITDA as presented in this release is not, comparable to similarly titled measures reported by other companies, and
 
·
We believe that the non-U.S. GAAP financial measure “Adjusted net loss attributable to Tronox Limited” and its presentation on a per share basis provide useful information about our operating results to investors and securities analysts. We also believe that excluding the effects of these items from operating results allows management and investors to compare more easily the financial performance of our underlying businesses from period to period.

Media Contact: Bud Grebey
Direct: +1.203.705.3721

Investor Contact: Brennen Arndt
Direct: +1.203.705.3722
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TRONOX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (US GAAP)
(UNAUDITED)
(Millions of U.S. dollars, except share and per share data)

   
Three Months Ended March 31,
 
   
2017
   
2016
 
Net sales
 
$
569
   
$
476
 
Cost of goods sold
   
479
     
455
 
Gross profit
   
90
     
21
 
Selling, general and administrative expenses
   
(74
)
   
(50
)
Restructuring expense
   
-
     
(2
)
Income (loss) from operations
   
16
     
(31
)
Interest and debt expense, net
   
(46
)
   
(46
)
Gain on extinguishment of debt
   
-
     
4
 
Other income (expense), net
   
(6
)
   
(9
)
Loss before income taxes
   
(36
)
   
(82
)
Income tax provision
   
(2
)
   
(12
)
Net loss
   
(38
)
   
(94
)
Net income (loss) attributable to noncontrolling interest
   
3
     
(1
)
Net loss attributable to Tronox Limited
 
$
(41
)
 
$
(93
)
                 
Loss per share, basic and diluted
 
$
(0.35
)
 
$
(0.80
)
                 
Weighted average shares outstanding, basic and diluted (in thousands)
   
116,815
     
115,920
 
                 
Other Operating Data:
               
Capital expenditures
 
$
32
   
$
33
 
Depreciation, depletion and amortization expense
 
$
61
   
$
55
 

The unaudited condensed consolidated financial statement information as of and for the three months ended March 31, 2016 has been revised. See revised schedules herein.

RECONCILIATION OF NON-U.S. GAAP FINANCIAL MEASURES
(UNAUDITED)
(Millions of U.S. dollars, except share and per share data)

RECONCILIATION OF NET LOSS
ATTRIBUTABLE TO TRONOX LIMITED  (U.S. GAAP)
TO ADJUSTED NET LOSS
ATTRIBUTABLE TO TRONOX LIMITED (NON-U.S. GAAP)

   
Three Months Ended March 31,
 
   
2017
   
2016
 
             
Net loss attributable to Tronox Limited (U.S. GAAP)
 
$
(41
)
 
$
(93
)
                 
Transaction costs (a)
   
11
     
-
 
Restructuring expense (b)
   
-
     
2
 
Gain on extinguishment of debt (c)
   
-
     
(4
)
Adjusted net loss attributable to Tronox Limited (Non-U.S. GAAP) (d)
 
$
(30
)
 
$
(95
)
                 
Basic and diluted loss per share attributable to Tronox Limited (U.S. GAAP)
 
$
(0.35
)
 
$
(0.80
)
                 
Transaction costs, per share
   
0.09
     
-
 
Restructuring expense, per share
   
-
     
0.02
 
Gain on extinguishment of debt, per share
   
-
     
(0.04
)
Basic and diluted adjusted loss per share attributable to Tronox Limited (Non-U.S. GAAP)
 
$
(0.26
)
 
$
(0.82
)
                 
Weighted average shares outstanding, basic and diluted (in thousands)
   
116,815
     
115,920
 

(a) Represents transaction costs associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations.
 
(b) Represents severance and other costs associated with the shutdown of our sodium chlorate plant, and other global restructuring efforts which was recorded in "Restructuring expense" in the unaudited Condensed Consolidated Statements of Operations.
 
(c)  Represents the gain associated with the repurchase of $20 million face value of the $900 million aggregate principal amount of senior notes (Senior Notes due 2020) and $600 million aggregate principal amount of senior notes (Senior Notes due 2022), which was recorded in "Gain on extinguishment of debt" in the unaudited Condensed Consolidated Statements of Operations.
 
(d) No income tax impact given full valuation allowance except for South Africa restructuring related costs of less than $1 million.

TRONOX LIMITED
SEGMENT INFORMATION
(UNAUDITED)
(Millions of U.S. dollars)

   
Three Months Ended March 31,
 
   
2017
   
2016
 
             
TiO 2 segment
 
$
378
   
$
285
 
Alkali segment
   
191
     
191
 
Net sales
 
$
569
   
$
476
 
                 
Income (loss) from operations
               
TiO 2 segment
 
$
32
   
$
(36
)
Alkali segment
   
19
     
21
 
Corporate
   
(35
)
   
(16
)
Income (loss) from operations
   
16
     
(31
)
Interest and debt expense, net
   
(46
)
   
(46
)
Gain on extinguishment of debt
   
-
     
4
 
Other income (expense), net
   
(6
)
   
(9
)
Loss before income taxes
   
(36
)
   
(82
)
Income tax provision
   
(2
)
   
(12
)
Net loss
   
(38
)
   
(94
)
Net income (loss) attributable to noncontrolling interest
   
3
     
(1
)
Net loss attributable to Tronox Limited
 
$
(41
)
 
$
(93
)


TRONOX LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Millions of U.S. dollars, except share and per share data)

ASSETS
 
March 31,
2017
   
December 31,
2016
 
Current Assets
           
Cash and cash equivalents
 
$
265
   
$
248
 
Restricted cash
   
2
     
3
 
Accounts receivable, net of allowance for doubtful accounts
   
428
     
424
 
Inventories, net
   
510
     
532
 
Prepaid and other assets
   
40
     
49
 
Total current assets
   
1,245
     
1,256
 
                 
Noncurrent Assets
               
Property, plant and equipment, net
   
1,816
     
1,831
 
Mineral leaseholds, net
   
1,606
     
1,607
 
Intangible assets, net
   
217
     
223
 
Inventories, net
   
14
     
14
 
Other long-term assets
   
24
     
22
 
Total assets
 
$
4,922
   
$
4,953
 
                 
LIABILITIES AND EQUITY
               
Current Liabilities
               
Accounts payable
 
$
198
   
$
181
 
Accrued liabilities
   
143
     
185
 
Short-term debt
   
150
     
150
 
Long-term debt due within one year
   
16
     
16
 
Income taxes payable
   
3
     
1
 
Total current liabilities
   
510
     
533
 
                 
Noncurrent Liabilities
               
Long-term debt
   
2,887
     
2,888
 
Pension and postretirement healthcare benefits
   
120
     
122
 
Asset retirement obligations
   
74
     
73
 
Long-term deferred tax liabilities
   
155
     
152
 
Other long-term liabilities
   
32
     
32
 
Total liabilities
   
3,778
     
3,800
 
                 
Commitments and Contingencies
               
                 
Shareholders’ Equity
               
Tronox Limited Class A ordinary shares, par value $0.01 — 66,966,397 shares issued and 66,241,691 shares outstanding at March 31, 2017 and 65,998,306  shares issued and 65,165,672  shares outstanding at December 31, 2016
   
1
     
1
 
Tronox Limited Class B ordinary shares, par value $0.01 — 51,154,280 shares issued and outstanding at March 31, 2017 and December 31, 2016
   
-
     
-
 
Capital in excess of par value
   
1,536
     
1,524
 
Accumulated deficit
   
(66
)
   
(19
)
Accumulated other comprehensive loss
   
(480
)
   
(497
)
Total Tronox Limited shareholders' equity
   
991
     
1,009
 
Noncontrolling interest
   
153
     
144
 
Total equity
   
1,144
     
1,153
 
Total liabilities and equity
 
$
4,922
   
$
4,953
 


TRONOX LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Millions of U.S. dollars)

   
Three Months Ended March 31,
 
   
2017
   
2016
 
Cash Flows from Operating Activities:
           
Net loss
 
$
(38
)
 
$
(94
)
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Depreciation, depletion and amortization
   
61
     
55
 
Deferred income taxes
   
(1
)
   
(1
)
Share-based compensation expense
   
14
     
5
 
Amortization of deferred debt issuance costs and discount on debt
   
3
     
3
 
Pension and postretirement healthcare benefit expense
   
2
     
2
 
Gain on extinguishment of debt
   
-
     
(4
)
Other, net
   
7
     
15
 
Contributions to employee pension and postretirement plans
   
(5
)
   
(4
)
Changes in assets and liabilities:
               
(Increase) decrease in accounts receivable, net
   
(3
)
   
26
 
(Increase) decrease in inventories, net
   
26
     
36
 
(Increase) decrease in prepaid and other assets
   
9
     
3
 
Increase (decrease) in accounts payable and accrued liabilities
   
(17
)
   
(52
)
Increase (decrease) in income taxes payable
   
2
     
11
 
Cash provided by operating activities
   
60
     
1
 
                 
Cash Flows from Investing Activities:
               
Capital expenditures
   
(32
)
   
(33
)
Proceeds from the sale of assets
   
-
     
1
 
Cash used in investing activities
   
(32
)
   
(32
)
                 
Cash Flows from Financing Activities:
               
Repayments of debt
   
(4
)
   
(19
)
Dividends paid
   
(6
)
   
(30
)
Tax payments for share-based compensation
   
(2
)
   
-
 
Cash used in financing activities
   
(12
)
   
(49
)
Effects of exchange rate changes on cash and cash equivalents
   
1
     
3
 
Net increase (decrease) in cash and cash equivalents
   
17
     
(77
)
Cash and cash equivalents at beginning of period
   
248
     
229
 
Cash and cash equivalents at end of period
 
$
265
   
$
152
 


TRONOX LIMITED
CONDENSED STATEMENT OF FREE CASH FLOWS (NON-U.S. GAAP)
(UNAUDITED)
(Millions of U.S. dollars)

   
Three Months Ended March 31, 2017
 
                         
   
TiO 2
   
Alkali
   
Corporate
   
Consolidated
 
                         
Income (loss) from operations (U.S. GAAP)
 
$
32
   
$
19
   
$
(35
)
 
$
16
 
Depreciation, depletion and amortization expense
   
44
     
16
     
1
     
61
 
Other
   
9
     
3
     
12
     
24
 
Adjusted EBITDA (non-U.S. GAAP)
 
$
85
   
$
38
   
$
(22
)
 
$
101
 
                                 
Adjusted EBITDA (non-U.S. GAAP)
 
$
85
   
$
38
   
$
(22
)
 
$
101
 
Interest paid, net of capitalized interest and interest income
   
-
     
-
     
(68
)
   
(68
)
Income tax provision
   
-
     
-
     
(2
)
   
(2
)
Transaction costs
   
-
     
-
     
(11
)
   
(11
)
Contributions to employee pension and postretirement plans
   
(4
)
   
(1
)
   
-
     
(5
)
Deferred income taxes
   
-
     
-
     
(1
)
   
(1
)
Other
   
3
     
-
     
26
     
29
 
                                 
Changes in assets and liabilities
                               
(Increase) decrease in accounts receivable, net
   
(10
)
   
7
     
-
     
(3
)
(Increase) decrease in inventories, net
   
27
     
(1
)
   
-
     
26
 
(Increase) decrease in prepaid and other assets
   
5
     
5
     
(1
)
   
9
 
Increase (decrease) in accounts payable and accrued liabilities
   
5
     
5
     
(27
)
   
(17
)
Increase (decrease) in income taxes payable
   
-
     
-
     
2
     
2
 
Subtotal
   
27
     
16
     
(26
)
   
17
 
                                 
Cash provided by (used in) operating activities (U.S. GAAP)
   
111
     
53
     
(104
)
   
60
 
                                 
Capital expenditures
   
(20
)
   
(12
)
   
-
     
(32
)
Free cash flow (non-U.S. GAAP)
 
$
91
   
$
41
   
$
(104
)
 
$
28
 


TRONOX LIMITED
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA (NON-U.S. GAAP)
(UNAUDITED)
(Millions of U.S. dollars)

   
Three Months Ended March 31,
 
   
2017
   
2016
 
             
Net loss
 
$
(38
)
 
$
(94
)
                 
Interest and debt expense, net
   
46
     
46
 
Interest income
   
(1
)
   
(1
)
Income tax provision
   
2
     
12
 
Depreciation, depletion and amortization expense
   
61
     
55
 
EBITDA
   
70
     
18
 
                 
Share-based compensation (a)
   
14
     
5
 
Restructuring expense (b)
   
-
     
2
 
Foreign currency remeasurement (c)
   
3
     
14
 
Gain on extinguishment of debt (d)
   
-
     
(4
)
Transaction costs (e)
   
11
     
-
 
Other items (f)
   
3
     
5
 
                 
Adjusted EBITDA (g)
 
$
101
   
$
40
 
 
(a)
Represents non-cash share-based compensation.
 
(b)
Represents severance and other costs associated with the shutdown of our sodium chlorate plant, and other global restructuring efforts which was recorded in "Restructuring expense" in the unaudited Condensed Consolidated Statements of Operations.
 
(c)
Represents foreign currency remeasurement which is included in “Other income (expense), net” in the unaudited Condensed Consolidated Statements of Operations.
 
(d)
During 2016, we recognized $4 million of gain associated with the repurchase of $20 million face value of our Senior Notes due 2020 and Senior Notes due 2022, which was recorded in "Gain (loss) on extinguishment of debt" in the unaudited Condensed Consolidated Statements of Operations.
 
(e)
Represents transaction costs associated with the Cristal Transaction which were recorded in “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statements of Operations.
 
(f)
Includes noncash pension and postretirement costs, severance expense, and other items included in “Selling, general and administrative expenses” and “Cost of goods sold” in the unaudited Condensed Consolidated Statements of Operations.
 
(g)
No income tax impact given full valuation allowance except for South Africa related restructuring costs.

The following table reconciles income (loss) from operations, the comparable measure for segment reporting under U.S. GAAP, to Adjusted EBITDA by segments for the periods presented:

   
Three Months Ended March 31,
 
   
2017
   
2016
 
             
TiO 2 segment
 
$
32
   
$
(36
)
Alkali segment
   
19
     
21
 
Corporate
   
(35
)
   
(16
)
Income (loss) from operations (U.S. GAAP)
   
16
     
(31
)
                 
TiO 2 segment
   
44
     
40
 
Alkali segment
   
16
     
14
 
Corporate
   
1
     
1
 
Depreciation, depletion and amortization expense
   
61
     
55
 
                 
TiO 2 segment
   
9
     
18
 
Alkali segment
   
3
     
1
 
Corporate
   
12
     
(3
)
Other
   
24
     
16
 
                 
TiO 2 segment
   
85
     
22
 
Alkali segment
   
38
     
36
 
Corporate
   
(22
)
   
(18
)
Adjusted EBITDA (non-U.S. GAAP)
 
$
101
   
$
40
 


TRONOX LIMITED
REVISION OF PREVIOUSLY ISSUED INTERIM UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Millions of U.S. dollars)

Unaudited Condensed Consolidated Statement of Operations

   
Three Months Ended March 31, 2016
 
   
As Reported
   
Adjustment
   
Revised
 
Net sales
 
$
475
   
$
1
   
$
476
 
Gross profit
   
20
     
1
     
21
 
Selling, general and administrative expenses
   
(47
)
   
(3
)
   
(50
)
Loss from operations
   
(29
)
   
(2
)
   
(31
)
Loss before income taxes
   
(80
)
   
(2
)
   
(82
)
Net loss
   
(92
)
   
(2
)
   
(94
)
Net loss attributable to Tronox Limited
   
(91
)
   
(2
)
   
(93
)
Loss per share, basic and diluted
   
(0.78
)
   
(0.02
)
   
(0.80
)
                         
Unaudited Condensed Consolidated Balance sheet
                 
                         
   
December 31, 2016
 
   
As Reported
   
Adjustment
   
Revised
 
Accounts receivable, net of allowance for doubtful accounts
 
$
421
   
$
3
   
$
424
 
Total current assets
   
1,253
     
3
     
1,256
 
Total assets
   
4,950
     
3
     
4,953
 
Accrued liabilities
   
174
     
11
     
185
 
Total current liabilities
   
522
     
11
     
533
 
Total liabilities
   
3,789
     
11
     
3,800
 
Accumulated deficit
   
(13
)
   
(6
)
   
(19
)
Accumulated other comprehensive loss
   
(495
)
   
(2
)
   
(497
)
Total Tronox Limited shareholders' equity
   
1,017
     
(8
)
   
1,009
 
Total equity
   
1,161
     
(8
)
   
1,153
 
Total liabilities and equity
   
4,950
     
3
     
4,953
 
                         
Unaudited Condensed Consolidated Statement of Cash Flows
         
                         
   
Three Months Ended March 31, 2016
 
   
As Reported
   
Adjustment
   
Revised
 
Net loss
 
$
(92
)
 
$
(2
)
 
$
(94
)
Other, net
   
14
     
1
     
15
 
(Increase) decrease in inventories, net
   
37
     
(1
)
   
36
 
Increase (decrease) in accounts payable and accrued liabilities
   
(54
)
   
2
     
(52
)
                         
Unaudited Condensed Consolidated Statement of Operations
         
                         
   
Three Months Ended December 31, 2016
 
   
As Reported
   
Adjustment
   
Revised
 
Net sales
 
$
548
   
$
1
   
$
549
 
Gross profit
   
90
     
1
     
91
 
Income from operations
   
32
     
1
     
33
 
Interest and debt expense, net
   
46
     
1
     
47