SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1996 COMMISSION FILE NUMBER 1-5467
VALHI, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 87-0110150
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5430 LBJ FREEWAY, SUITE 1700, DALLAS, TEXAS 75240-2697
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 233-1700
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS.
YES X NO
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING ON OCTOBER 31, 1996: 114,110,414.
VALHI, INC. AND SUBSIDIARIES
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements.
Consolidated Balance Sheets - December 31, 1995
and September 30, 1996 3-4
Consolidated Statements of Operations - Three months
and nine months ended September 30, 1995 and 1996 5
Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 1996 6
Consolidated Statements of Cash Flows - Nine
months ended September 30, 1995 and 1996 7-8
Notes to Consolidated Financial Statements 9-17
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations. 18-26
PART II. OTHER INFORMATION
Item 1.Legal Proceedings. 26-27
Item 6.Exhibits and Reports on Form 8-K. 28
VALHI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, SEPTEMBER 30,
1995 1996
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 170,908 $ 160,613
Accounts and notes receivable 223,962 238,120
Refundable income taxes 4,978 2,731
Receivable from affiliates 3,529 3,294
Inventories 518,304 318,257
Prepaid expenses 7,249 11,191
Deferred income taxes 2,636 5,655
Total current assets 931,566 739,861
Other assets:
Marketable securities 144,256 155,575
Investment in joint ventures 190,518 191,961
Natural resource properties 95,774 90,252
Prepaid pension cost 24,767 26,138
Goodwill 252,773 258,776
Deferred income taxes 788 -
Other 57,084 48,775
Total other assets 765,960 771,477
Property and equipment:
Land 43,313 42,465
Buildings 212,729 209,313
Equipment 913,763 907,446
Construction in progress 20,709 47,053
1,190,514 1,206,277
Less accumulated depreciation 315,827 348,725
Net property and equipment 874,687 857,552
$2,572,213 $2,368,890
</TABLE>
VALHI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY DECEMBER 31, SEPTEMBER 30,
1995 1996
<S>
Current liabilities: <C> <C>
Notes payable $ 145,932 $ 86,248
Current long-term debt 63,752 118,965
Accounts payable 236,973 146,708
Accrued liabilities 156,146 166,482
Payable to affiliates 10,188 9,325
Income taxes 44,849 39,967
Deferred income taxes 4,496 2,837
Total current liabilities 662,336 570,532
Noncurrent liabilities:
Long-term debt 1,084,284 1,038,682
Accrued pension cost 70,040 58,264
Accrued OPEB cost 78,410 76,836
Accrued environmental costs 115,577 113,031
Deferred income taxes 239,444 215,297
Other 44,765 34,921
Total noncurrent liabilities 1,632,520 1,537,031
Minority interest 3,066 257
Stockholders' equity:
Common stock 1,246 1,248
Additional paid-in capital 34,604 35,258
Retained earnings 263,777 244,636
Adjustments:
Currency translation (7,430) (8,690)
Marketable securities 55,629 62,521
Pension liabilities (2,881) (2,881)
Treasury stock (70,654) (71,022)
Total stockholders' equity 274,291 261,070
$2,572,213 $2,368,890
</TABLE>
[FN]
Commitments and contingencies (Note 1)
VALHI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995* 1996 1995* 1996
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $448,192 $416,429 $1,321,342 $1,255,386
Other, net 9,518 7,180 22,869 33,092
457,710 423,609 1,344,211 1,288,478
Costs and expenses:
Cost of sales 323,968 327,356 949,449 955,686
Selling, general and
administrative 81,777 75,943 237,866 223,173
Interest 28,688 26,373 89,838 81,541
434,433 429,672 1,277,153 1,260,400
23,277 (6,063) 67,058 28,078
Equity in Waste Control Specialists - (1,628) - (4,046)
Income (loss) before taxes 23,277 (7,691) 67,058 24,032
Provision for income taxes
(benefit) 11,207 (3,020) 33,925 8,287
Minority interest (140) 2,299 346 6,919
Income (loss) from continuing
operations 12,210 (6,970) 32,787 8,826
Discontinued operations 1,518 2,060 10,713 (10,674)
Net income (loss) $ 13,728 $ (4,910)$ 43,500 $ (1,848)
Income (loss) per common share:
Continuing operations $.11 $(.06) $.29 $ .08
Discontinued operations .01 .02 .09 (.09)
Net income (loss) $.12 $(.04) $.38 $(.01)
Cash dividends per share $.03 $ .05 $.09 $ .15
Weighted average common shares
outstanding 114,641 114,616
114,438 114,407
</TABLE>
*Reclassified for discontinued operations.
VALHI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS
<S> <C> <C> <C>
Balance at December 31, 1995 $1,246 $34,604 $263,777
Net loss - - (1,848)
Dividends - - (17,293)
Adjustments, net - - -
Other, net 2 654 -
Balance at September 30, 1996 $1,248 $35,258 $244,636
</TABLE>
<TABLE>
<CAPTION>
ADJUSTMENTS TOTAL
CURRENCY MARKETABLE PENSION TREASURY STOCKHOLDERS'
TRANSLATION SECURITIES LIABILITIES STOCK EQUITY
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $(7,430) $55,629 $(2,881) $(70,654) $274,291
Net loss - - - - (1,848)
Dividends - - - - (17,293)
Adjustments, net (1,260) 6,892 - - 5,632
Other, net - - - (368) 288
Balance at September 30, 1996 $(8,690) $62,521 $(2,881) $(71,022) $261,070
</TABLE>
VALHI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 43,500 $ (1,848)
Depreciation, depletion and amortization 65,922 67,974
Plant closure charge - noncash portion - 15,200
Noncash interest expense 23,224 25,111
Deferred income taxes 28,401 (21,712)
Minority interest 346 6,919
Other, net (10,285) (6,998)
151,108 84,646
Change in assets and liabilities:
Accounts and notes receivable (55,574) (19,931)
Inventories 184,461 189,612
Accounts payable/accrued liabilities:
Sugarbeet purchases (108,117) (46,495)
Other, net 8,557 (29,073)
Income taxes (18,749) (1,194)
Other, net (8,406) (17,254)
Trading securities:
Sale proceeds 51,283 -
Purchases (762) -
Net cash provided by operating activities 203,801 160,311
Cash flows from investing activities:
Capital expenditures (83,147) (81,616)
Purchases of minority interest (13,168) (17,973)
Investment in Waste Control Specialists - (10,000)
Purchase of business unit (5,982) -
Proceeds from disposition of property and equipment 208 8,967
Loans to affiliates:
Loans (51,800) (7,600)
Collections 33,300 10,600
Other, net 581 4,428
Net cash used by investing activities (120,008) (93,194)
</TABLE>
VALHI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Cash flows from financing activities:
Indebtedness:
Borrowings $ 555,968 $538,955
Principal payments (636,391) (590,234)
Valhi dividends paid (10,354) (17,293)
Distributions to minority interest (14) (7,416)
Government grants and other, net 3,943 916
Net cash used by financing activities (86,848) (75,072)
Net decrease (3,055) (7,955)
Currency translation 3,645 (2,340)
Cash and equivalents at beginning of period 170,747 170,908
Cash and equivalents at end of period $ 171,337 $160,613
Supplemental disclosures - cash paid for:
Interest, net of amounts capitalized $ 60,056 $ 54,760
Income taxes 35,908 26,871
</TABLE>
VALHI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -BASIS OF PRESENTATION:
The consolidated balance sheet of Valhi, Inc. and Subsidiaries
(collectively, the "Company") at December 31, 1995 has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at September 30, 1996 and the consolidated statements
of operations, cash flows and stockholders' equity for the interim periods ended
September 30, 1995 and 1996 have been prepared by the Company, without audit.
In the opinion of management, all adjustments necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for a full year or of future operations.
Certain information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been condensed or
omitted, and prior period statements of operations have been reclassified to
present the results of operations of Medite Corporation as discontinued
operations. See Note 12. The accompanying consolidated financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "1995 Annual Report"). Commitments and
contingencies are discussed in Note 12, "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Legal Proceedings" and the 1995
Annual Report.
The Company's 55%-owned chemicals subsidiary, NL Industries, Inc.,
separately reported a stockholders' deficit of approximately $199 million at
September 30, 1996 and, accordingly, no minority interest in NL is reported in
the Company's consolidated balance sheet. Until such time as NL reports
positive stockholders' equity, all undistributed income or loss and other
changes in NL's reported stockholders' equity will accrue to the Company for
financial reporting purposes.
Contran Corporation holds, directly or through subsidiaries, approximately
91% of Valhi's outstanding common stock.
NOTE 2 -EARNINGS PER COMMON SHARE:
Earnings per share is based on the weighted average number of common shares
outstanding. Common stock equivalents are excluded from the computation because
they are either antidilutive or the dilutive effect is not material.
NOTE 3 -BUSINESS SEGMENT INFORMATION-CONTINUING OPERATIONS:
OPERATIONS PRINCIPAL ENTITIES % OWNED
Chemicals NL Industries, Inc. 55%
Refined sugar The Amalgamated Sugar Company 100%
Component products CompX International Inc. 100%
Fast food Sybra, Inc. 100%
Waste management Waste Control Specialists LLC 50%
NL's chemicals operations are conducted through Kronos, Inc. (titanium
dioxide pigments or "TiO2") and Rheox, Inc. (specialty chemicals). The
Company's component products and fast food subsidiaries are owned by Valcor,
Inc., a wholly-owned subsidiary of Valhi. Each of NL (NYSE: NL) and Valcor are
subject to the periodic reporting requirements of the Securities Exchange Act of
1934, as amended.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales:
Chemicals $255.4 $248.5 $ 789.7 $ 752.1
Refined sugar 144.0 117.1 387.8 352.7
Component products 19.4 21.8 58.8 64.7
Fast food 29.5 29.0 85.1 85.9
$448.3 $416.4 $1,321.4 $1,255.4
Operating income:
Chemicals $ 45.2 $ 14.1 $ 134.2 $ 81.5
Refined sugar 6.0 1.8 18.7 14.4
Component products 4.5 5.4 15.1 14.8
Fast food 2.0 2.0 4.9 6.0
57.7 23.3 172.9 116.7
Equity in losses of Waste Control - (1.6) - (4.0)
General corporate items:
Securities earnings 2.9 2.4 10.1 7.2
General expenses, net (8.7) (5.4) (26.2) (14.4)
Interest expense (28.7) (26.4) (89.8) (81.5)
Income (loss) before taxes $ 23.2 $ (7.7) $ 67.0 $ 24.0
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
DEPRECIATION,
DEPLETION AND CAPITAL
AMORTIZATION EXPENDITURES
1995 1996 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C>
Chemicals $45.0 $46.1 $42.5 $52.3
Refined sugar 6.0 6.5 21.5 11.3
Building products 8.5 8.4 7.8 12.5
Fast food and other 6.4 7.0 11.3 5.5
$65.9 $68.0 $83.1 $81.6
</TABLE>
NOTE 4 -MARKETABLE SECURITIES:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Noncurrent assets (available-for-sale):
Dresser Industries, Inc. common stock $130,366 $139,298
Other common stocks 13,890 16,277
$144,256 $155,575
</TABLE>
Valhi holds 5.5 million shares of Dresser common stock with a quoted market
price of $29.75 at September 30, 1996, or an aggregate market value of
approximately $162 million (cost $44 million). Such Dresser stock is
exchangeable for Valhi's LYONs, at the option of the LYONs holder, and the
carrying value of the Dresser stock is limited to the accreted LYONs obligation.
At September 30, 1996, the aggregate cost of other available-for-sale securities
was approximately $16 million.
NOTE 5 -INVENTORIES:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Raw materials:
Chemicals $ 35,075 $ 34,548
Sugarbeets 47,420 1,952
Other 15,710 15,718
98,205 52,218
In process products:
Chemicals 9,132 7,556
Refined sugar and by-products 57,967 7,197
Other 6,507 5,776
73,606 20,529
Finished products:
Chemicals 173,195 139,034
Refined sugar and by-products 90,492 20,647
Other 9,052 7,877
272,739 167,558
Supplies 73,754 77,952
$518,304 $318,257
</TABLE>
NOTE 6 - OTHER NONCURRENT ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Joint ventures:
TiO2 manufacturing joint venture $183,129 $179,423
Waste Control Specialists LLC 4,625 10,579
Other 2,764 1,959
$190,518 $191,961
Natural resource properties:
Timber and timberlands $ 53,099 $ 53,748
Mining properties 42,675 36,504
$ 95,774 $ 90,252
Franchise fees and other intangible assets $ 24,786 $ 20,514
Deferred financing costs 19,537 16,460
Other 12,761 11,801
$ 57,084 $ 48,775
</TABLE>
NOTE 7 -ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Accounts payable:
Sugarbeet purchases $ 83,027 $ 36,532
Other 153,946 110,176
$236,973 $146,708
Accrued liabilities:
Employee benefits $ 63,067 $ 51,493
Sugar processing costs 21,569 2,934
LIFO inventory replacement reserve - 21,217
Environmental costs 6,109 6,161
Plant closure costs - 5,039
Interest 13,208 20,243
Miscellaneous taxes 4,275 6,166
Other 47,918 53,229
$156,146 $166,482
</TABLE>
NOTE 8 - OTHER NONCURRENT LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Employee benefits $16,626 $16,048
Insurance claims and expenses 15,354 14,733
Deferred technology fee income 8,456 463
Other 4,329 3,677
$44,765 $34,921
</TABLE>
NOTE 9 - NOTES PAYABLE AND LONG-TERM DEBT:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Notes payable:
Amalgamated:
United States Government loans $ 64,685 $ -
Bank credit agreements 42,000 50,000
106,685 50,000
Kronos - non-U.S. bank credit agreements
(DM 56,000 and DM 40,000) 39,247 26,248
Valhi - bank revolver - 10,000
$ 145,932 $ 86,248
Long-term debt:
Valhi - LYONs $ 130,366 $ 139,298
Valcor Senior Notes 99,000 98,910
Amalgamated bank term loan 24,000 16,000
NL Industries:
Senior Secured Notes 250,000 250,000
Senior Secured Discount Notes 132,034 145,064
Deutsche mark bank credit facility
(DM 397,609 and DM 490,609) 276,895 321,938
Joint venture term loan 73,286 61,714
Rheox bank term loan 37,263 20,284
Other 14,225 11,419
783,703 810,419
Medite:
Bank term loans:
U.S. 59,000 51,000
Ireland 14,770 11,488
Bank working capital facilities:
U.S. 4,000 2,000
Ireland 6,830 9,267
Other 4,117 3,950
88,717 77,705
Other:
Sybra bank credit agreements 16,770 10,500
Sybra capital leases 5,382 4,752
Other 98 63
22,250 15,315
1,148,036 1,157,647
Less current maturities 63,752 118,965
$1,084,284 $1,038,682
</TABLE>
Valcor Senior Notes are stated net of approximately $1 million principal
amount held by Valhi.
NOTE 10 - OTHER INCOME:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1995 1996
(IN THOUSANDS)
<S> <C> <C>
Securities earnings:
Interest and dividends $ 8,910 $ 7,075
Securities transactions 1,222 122
10,132 7,197
Technology fee income 7,990 8,280
Pension curtailment gain - 4,791
Litigation settlement gain - 2,756
Currency transactions, net (865) 4,591
Other, net 5,612 5,477
$22,869 $33,092
</TABLE>
The 1996 pension curtailment gain resulted from NL's reduction of certain
U.S. employee pension benefits, and the litigation settlement gain relates to
the settlement of certain litigation in which NL was a plaintiff.
NOTE 11 - PROVISION FOR INCOME TAXES:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1995 1996
(IN MILLIONS)
<S> <C> <C>
Expected tax expense $23.5 $ 8.4
Non-U.S. tax rates (1.9) (.3)
Incremental tax and rate differences on equity in
earnings of non-tax group companies 14.4 (1.3)
Change in NL's deferred income tax
valuation allowance (3.2) (1.1)
Other, net 1.1 2.6
$33.9 $ 8.3
</TABLE>
NOTE 12 - DISCONTINUED OPERATIONS
In September 1996, Medite Corporation, a wholly-owned subsidiary of Valcor,
announced that it had signed three separate Letters of Intent involving the sale
of substantially all of its assets for total cash consideration of approximately
$230 million, subject to certain adjustments, plus the assumption of
approximately $20 million of foreign debt. The first transaction, the sale of
Medite's timber and timberlands, closed in October 1996 for approximately $118
million cash consideration, of which approximately $53 million of the cash
proceeds were used to pay off and terminate Medite's U.S. bank credit
facilities. Medite has executed a definitive agreement for the second
transaction involving the sale of Medite's Irish subsidiary, and that
transaction is expected to close by the end of November. The third transaction,
involving the sale of Medite's Oregon medium density fiberboard ("MDF") and
timber conversion facilities, is subject to completion of a definitive
agreement, and Medite currently expects to close that transaction by the end of
1996. Accordingly, the accompanying financial statements present Medite's
results of operations as discontinued operations for all periods presented.
Upon consummation of all three transactions, the Company expects to report an
aggregate pre-tax gain on disposal of discontinued operations of approximately
$100 million.
Condensed statements of operations for Medite are presented below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales $46.2 $43.6 $154.2 $138.2
Operating income (loss) $ 4.5 $ 5.0 $ 23.1 $(11.9)
Interest expense and other, net (2.2) (1.7) (6.4) (5.8)
Income (loss) before income
taxes 2.3 3.3 16.7 (17.7)
Income tax benefit (expense) (.8) (1.3) (6.0) 7.0
Net income (loss) $ 1.5 $ 2.0 $ 10.7 $(10.7)
</TABLE>
Condensed balance sheets for Medite, included in the Company's consolidated
balance sheets, are presented below.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(IN MILLIONS)
<S> <C> <C>
Current assets $ 56.1 $ 52.2
Timber and timberlands 53.1 53.7
Property and equipment, net 84.8 69.6
Other assets 6.4 6.4
$200.4 $181.9
Current liabilities $ 33.9 $ 38.3
Long-term debt 77.2 66.2
Deferred income taxes 22.1 17.6
Loan from Valcor (*) 5.0 5.0
Other liabilities 2.9 6.1
Stockholder's equity (*) 59.3 48.7
$200.4 $181.9
(*) Eliminated in consolidation.
</TABLE>
Medite's 1996 results include a first quarter pre-tax restructuring charge
of $24 million based upon the estimated costs of permanently closing its New
Mexico MDF plant. Approximately $15 million of such charge represented non-cash
costs, most of which related to the net carrying value of property and equipment
in excess of estimated net realizable value. These non-cash costs were deemed
utilized upon adoption of the closure plan. Approximately $9 million of the
charge represented workforce, environmental and other estimated cash costs
associated with closure of this facility, of which $2 million had been paid at
September 30, 1996. On August 1, 1996, Medite completed the sale of
substantially all of the building and equipment of the New Mexico facility for
$5.5 million cash, which approximated the previously-estimated net realizable
value.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS:
The Company reported a loss from continuing operations of $6.9 million, or
$.06 per share, for the third quarter of 1996 compared to income of $12.2
million, or $.11 per share, in the third quarter of 1995. For the first nine
months of 1996, income from continuing operations was $8.9 million, or $.08 per
share, compared to $32.8 million, or $.29 per share, in the first nine months of
1995. NL expects average TiO2 prices in the fourth quarter to be below the
third quarter average and, as a result, the Company currently expects to report
a fourth quarter loss from continuing operations.
Discontinued operations represent the results of operations of Medite
Corporation, and in 1996 includes a $15 million first quarter after-tax charge
related to the closure of Medite's New Mexico MDF operations. See Note 12.
The statements in this Quarterly Report on Form 10-Q relating to matters
that are not historical facts, including, but not limited to, statements found
in this `Management's Discussion and Analysis of Financial Condition and
Results of Operations,' are forward looking statements that involve a number of
risks and uncertainties. Factors that could cause actual future results to
differ materially from those expressed in such forward looking statements
include, but are not limited to, future supply and demand for the Company's
products (including cyclicality thereof), general economic conditions,
competitive products, customer and competitor strategies, the impact of pricing
and production decisions, environmental matters, government regulations and
possible changes therein, the ultimate resolution of pending litigation and
possible future litigation and completion of pending asset/business unit
dispositions.
CHEMICALS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, % SEPTEMBER 30, %
1995 1996 CHANGE 1995 1996 CHANGE
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Kronos $222.8 $215.1 - 3% $689.5 $649.7 - 6%
Rheox 32.6 33.4 + 3% 100.2 102.4 + 2%
$255.4 $248.5 - 3% $789.7 $752.1 - 5%
Operating income:
Kronos $35.8 $ 4.7 -87% $105.7 $ 49.8 -53%
Rheox 9.4 9.4 + 1% 28.5 31.7 +11%
$ 45.2 $ 14.1 -69% $134.2 $ 81.5 -39%
</TABLE>
Kronos' operating income in 1996 declined primarily due to lower average
TiO2 selling prices. Kronos' average TiO2 selling prices for the third quarter
of 1996 were 15% lower than the third quarter of 1995 and 6% lower than the
second quarter of this year. Selling prices at the end of the third quarter of
1996 were 15% lower than at the end of 1995. While TiO2 prices declined, demand
for TiO2 has grown. Kronos' third quarter sales volumes increased 17% compared
with the third quarter of 1995, with improved volumes worldwide. Sales volumes
for the first nine months of 1996 were 3% higher than the comparable period in
1995 primarily due to improved sales volumes in the U.S. Rheox's year-to-date
1996 results include a $2.7 million first quarter gain related to the reduction
of certain U.S. employee pension benefits.
A significant amount of NL's sales are denominated in currencies other than
the U.S. dollar, and fluctuations in the value of the U.S. dollar relative to
other currencies decreased the dollar value of sales in the first nine months of
1996 by approximately $7 million compared to 1995.
The Company's purchase accounting adjustments made in conjunction with the
acquisitions of its interest in NL result in additional depreciation, depletion
and amortization expense beyond amounts separately reported by NL. Such
additional non-cash expenses reduce chemicals operating income, as reported by
Valhi, by approximately $20 million annually as compared to amounts separately
reported by NL.
REFINED SUGAR
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, % SEPTEMBER 30, %
1995 1996 CHANGE 1995 1996 CHANGE
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Refined sugar $139.2 $114.9 -17% $358.4 $331.2 - 8%
By-products and other 4.8 2.2 29.4 21.5
$144.0 $117.1 -19% $387.8 $352.7 - 9%
Operating income:
FIFO basis $ 5.4 $ 6.9 +29% $ 15.7 $ 24.2 +54%
LIFO adjustment .6 (5.1) 3.0 (9.8)
LIFO (reporting) basis $ 6.0 $ 1.8 -71% $ 18.7 $ 14.4 -23%
</TABLE>
Average sugar selling prices for the third quarter of 1996 were up 6%
compared to the 1995 third quarter and were up 4% for the 1996 nine-month
period. Sales volumes were down 22% in the third quarter and down 11% year-to-
date due to a smaller crop. Sugar sales volumes during the fourth quarter of
1996 are expected to be below last year's record levels. By-product sales are
lower in 1996 due primarily to the lower size of the crop and implementation of
certain recently-completed productivity improvement capital projects which
result in less by-product volumes generated from the refined sugar production
process.
Sugarbeet purchase cost is the largest cost component of producing refined
sugar and the price paid for sugarbeets is, under the terms of contracts with
the sugarbeet growers, a function of the average net selling price of
Amalgamated's refined sugar. As a result, changes in sugar selling prices
impact sugarbeet purchase costs as well as revenues and serve as a partial hedge
against changing prices. An increased extraction rate, in part due to the
productivity improvement capital projects, along with a higher sugar content of
the beets has resulted in a lower beet cost per hundredweight of sugar produced,
lower aggregate sugar processing costs and improved FIFO-based earnings in 1996
compared with 1995. However, the impact of related LIFO inventory adjustments
can significantly affect operating income and margin comparisons relative to
FIFO-basis comparisons.
Harvesting and processing of the crop planted in the spring of 1996 is in
process. Based on limited harvest results to date, sugar production from the
new crop is expected to approximate that of the prior crop.
In August 1996, Amalgamated signed a new four-year collective bargaining
agreement with the American Federation of Grain Millers International. The new
contract provides for, among other things, wage rate increases of 2% to 3% per
year.
COMPONENT PRODUCTS
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, % SEPTEMBER 30, %
1995 1996 CHANGE 1995 1996 CHANGE
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales $19.4 $21.8 +12% $58.8 $64.7 +10%
Operating income 4.5 5.4 +17% 15.1 14.8 - 2%
</TABLE>
Sales increased primarily from higher volumes in the Company's office
workstation components and drawer slide lines. Margins improved in the third
quarter of 1996 over those of the first half of the year due in part to
favorable changes in both product mix and currency exchange rates.
FAST FOOD
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, % SEPTEMBER 30, %
1995 1996 CHANGE 1995 1996 CHANGE
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Net sales $29.5 $29.0 -2% $85.1 $85.9 + 1%
Operating income 2.0 2.0 +4% 4.9 6.0 +24%
</TABLE>
Comparable store sales, up slightly during the third quarter of 1996,
increased 2% in the first nine months of 1996. Operating income and margins
also improved due to successful promotions, reduced training and recruiting
costs associated with the slower rate of opening new stores in 1996 and the
closure of certain under-performing stores.
A significant portion of Sybra's restaurant employees work on a part-time
basis and are paid at rates related to the minimum wage rate. Restaurant labor
costs currently approximate 29% of sales. The two-step, 90-cent increase in the
minimum wage rate which became effective October 1, 1996 will increase Sybra's
labor costs. Sybra concurrently implemented certain price increases to offset
the impact of the wage rate increase. In addition, Sybra believes agricultural
market factors may result in higher beef costs in the relatively near future.
Although Sybra's competitors would likely experience similar increases, there
can be no assurance that further increases in sales prices can be implemented to
offset future increases in these costs.
Sybra operated 150 restaurants at September 30, 1996, and may close one or
more additional under-performing stores by the end of the year. One store is
under construction which is expected to open in the first quarter of 1997.
The Company is considering various strategic alternatives with respect to
this increasingly competitive business, including possible disposition of one or
more regions. No assurance can be given that any such transactions will be
consummated.
WASTE MANAGEMENT
Construction of Waste Control Specialists' (`WCS'') facility in West Texas
for the processing, treatment, storage and disposal of certain hazardous and
toxic wastes continues. WCS reported a loss of $4 million in the first nine
months of 1996 and expects to continue to report losses during its development
stage. The facility is planned to be ready to accept wastes governed by The
Resource Conservation and Recovery Act (`RCRA'') and the Toxic Substances
Control Act (`TSCA'') in early 1997.
OTHER
General corporate expenses. Net general corporate expenses are lower in
1996 due primarily to lower provisions for environmental remediation costs. In
addition, net corporate expenses in 1996 include a $2.8 million second quarter
litigation settlement gain and a $2.3 million third quarter gain on disposition
of an Amalgamated grain facility.
Interest expense. Interest expense declined due primarily to lower average
variable interest rates. At September 30, 1996, approximately $680 million of
consolidated indebtedness, principally publicly-traded debt, bears interest at
fixed rates averaging 10.9%. The weighted average interest rate on $564 million
of outstanding variable rate borrowings at September 30, 1996 was 5.6%, down
from 6.4% at December 31, 1995 and 7.4% at year-end 1994.
Minority interest. Minority interest in earnings in 1996 consists
principally of NL dividends paid to stockholders other than Valhi. Based on the
continuing decline in TiO2 selling prices during the third quarter and the
current TiO2 industry pricing outlook, NL's Board of Directors suspended its
regular quarterly dividends in the fourth quarter of 1996.
Provision for income taxes. Income tax rates vary by jurisdiction, and
relative changes in the geographic mix of the Company's pre-tax earnings can
result in fluctuations in the effective income tax rate. In addition, because
certain subsidiaries, including NL, are not members of the consolidated U.S. tax
group, Valhi's incremental income taxes on its after-tax earnings or losses
attributable to such subsidiaries can also increase the Company's overall
effective tax rate. See Note 11 to the Consolidated Financial Statements.
Discontinued operations. Discontinued operations represent the results of
operations of Medite Corporation. See Note 12.
LIQUIDITY AND CAPITAL RESOURCES:
Cash flows from operating activities. Cash flows from operating activities
before changes in assets and liabilities in the first nine months of 1996
declined $66 million from the same period in 1995, generally reflecting the
decline in earnings. Changes in assets and liabilities include the impact of
significant fluctuations related to Amalgamated's seasonal purchase and
processing of sugarbeets, as discussed below.
Cash flows from investing and financing activities. Capital expenditures
for all of 1996 are estimated to approximate $94 million, down from $115 million
in 1995 in large part due to completion of certain productivity projects at
Amalgamated during 1995.
During the first nine months of 1996, Valhi purchased an additional $13
million of NL common stock, Rheox acquired the minority interest in its non-U.S.
subsidiaries for $5 million and, as scheduled, Valhi contributed $10 million to
Waste Control Specialists.
Borrowings in 1996 include DM 95 million ($64 million) under NL's DM credit
facility used primarily to fund NL's operations and $10 million under Valhi's
short-term credit facilities used to purchase NL common stock. NL borrowed DM
49 million ($32 million) in October 1996 under the DM credit facility to fund
the German income tax settlement payments described below. Repayments of
indebtedness in both periods include scheduled principal payments under NL,
Amalgamated and Medite bank term loans, reductions in short-term, non-U.S. NL
credit facilities and seasonal decreases in Amalgamated's short-term borrowings.
Credit facilities. At September 30, 1996, unused credit available under
existing credit agreements (excluding Medite) aggregated $208 million, including
$124 million attributable to NL. Of such NL amount, $82 million is available
only for (i) permanently reducing NL's DM term loan or (ii) paying future NL
German income tax assessments, as discussed below. In October 1996, NL's
borrowing availability to pay German income tax assessments under the DM credit
facility was reduced by $32 million, as described above. Valhi has not
guaranteed any subsidiary indebtedness.
NL Industries. The TiO2 industry is cyclical, and changes in economic
conditions within the TiO2 industry can significantly impact NL's earnings and
operating cash flows. During the first nine months of 1996, declining TiO2
selling prices unfavorably impacted NL's operating income and cash flows from
operations comparisons with 1995. Relative changes in NL's assets and
liabilities (excluding the effect of foreign currency translation), including
relative changes in NL's portfolio of marketable trading securities, used $11
million of net cash in the first nine months of 1996 compared to using $37
million in the first nine months of 1995, primarily due to TiO2 production
curtailments and higher sales volumes which reduced inventory levels during
1996.
Average TiO2 selling prices began a downward trend in the last half of
1995, and NL expects the trend to continue at least for the remainder of the
year. NL expects TiO2 prices will begin to increase during 1997. However, no
assurance can be given that price trends will conform to NL's expectations, and
future cash flows will be adversely affected should price trends be lower than
NL's expectations. NL is engaged in discussions with its lenders to modify the
repayment terms and covenants of certain of its indebtedness and to refinance
certain other indebtedness.
Certain of NL's U.S. and non-U.S. income tax returns are being examined and
tax authorities have or may propose tax deficiencies. NL has reached an
agreement with the German tax authorities regarding examinations which resolve
certain significant tax contingencies for years through 1990. NL has received
certain final assessments and expects to pay tax deficiencies of approximately
DM 49 million ($32 million at September 30, 1996), including interest, in the
fourth quarter of 1996 in final settlement of the agreed issues. Certain other
German tax contingencies remain outstanding and will continue to be litigated.
Although NL believes that it will ultimately prevail, NL has granted a DM 100
million lien on its Nordenham, Germany TiO2 plant in favor of the German tax
authorities until the litigation is resolved. No assurance can be given that
this litigation will be resolved in NL's favor in view of the inherent
uncertainties involved in court rulings. NL believes that it has adequately
provided accruals for additional income taxes and related interest expense which
may ultimately result from all such examinations and believes that the ultimate
disposition of such examinations should not have a material adverse effect on
its consolidated financial position, results of operations or liquidity.
NL has been named as a defendant, PRP, or both, in a number of legal
proceedings associated with environmental matters, including waste disposal
sites currently or formerly owned, operated or used by NL, many of which
disposal sites or facilities are on the U.S. EPA's Superfund National Priorities
List or similar state lists. On a quarterly basis, NL evaluates the potential
range of its liability at sites where it has been named as a PRP or defendant.
NL believes it has provided adequate accruals ($114 million at September 30,
1996) for reasonably estimable costs of such matters, and has estimated that the
upper end of the range of reasonably possible costs to NL for sites for which it
is possible to estimate costs is approximately $175 million. NL's estimates of
such liabilities have not been discounted to present value, and NL has not
recognized any potential insurance recoveries. No assurance can be given that
actual costs will not exceed accrued amounts, or the upper end of the range for
sites for which estimates have been made, and no assurance can be given that
costs will not be incurred with respect to sites as to which no estimate
presently can be made. NL is also a defendant in a number of legal proceedings
seeking damages for personal injury and property damage arising out of the sale
of lead pigments and lead-based paints. Although no assurance can be given that
NL will not incur future liability in respect of this litigation, based on,
among other things, the results of such litigation to date, NL believes that the
pending lead pigment and paint litigation is without merit. NL has not accrued
any amounts for the pending lead pigment and paint litigation. Liability that
may result, if any, cannot reasonably be estimated. In addition, various
legislation and administrative regulations are, from time to time, enacted or
proposed at the state, local and federal levels seeking to impose various
obligations on present and former manufacturers of lead pigment and lead-based
paint with respect to asserted health concerns associated with the use of such
products and to effectively overturn court decisions in which NL and other
pigment manufacturers have been successful. NL currently believes the
disposition of all claims and disputes, individually or in the aggregate, should
not have a material adverse effect on its consolidated financial position,
results of operations or liquidity. There can be no assurance that additional
matters of these types will not arise in the future.
NL periodically evaluates its liquidity requirements, alternative uses of
capital, capital needs and availability of resources in view of, among other
things, its debt service and capital expenditure requirements and estimated
future operating cash flows. As a result of this process, NL has in the past
and may in the future seek to reduce, refinance, repurchase or restructure
indebtedness, raise additional capital, modify its dividend policy, restructure
ownership interests, sell interests in subsidiaries or other assets, or take a
combination of such steps or other steps to manage its liquidity and capital
resources. In the normal course of its business, NL may also review
opportunities for acquisitions or other business combinations in the chemicals
industry. In the event of any such transaction, NL may consider using its
available cash, issuing its equity securities or increasing its indebtedness to
the extent permitted by the agreements governing NL's existing debt.
Amalgamated. Cash requirements are seasonal in that a major portion of the
total payments for sugarbeets is made, and the cost of processing the sugarbeets
is incurred, in the fall and winter of each year. Accordingly, Amalgamated's
operating activities typically use significant amounts of cash in the first and
fourth calendar quarters and provide significant cash flow in the second and
third quarters of each year. These seasonal cash requirements are financed with
short-term borrowings under the government sugar price support loan program and
bank credit agreements.
Waste Control Specialists. Estimated capital expenditures to complete
construction of the initial 100,000 cubic yards of landfill airspace capacity
and related infrastructure of the new facility in West Texas are approximately
$12 million and are expected to be incurred during the remainder of 1996 and the
first half of 1997. Such capital expenditures, along with its expected
development stage operating losses, will be funded primarily from Valhi's $25
million of capital contributions ($15 million funded through September 30,
1996). WCS does not expect to begin to generate revenues from its existing RCRA
and TSCA permits until early 1997.
Valhi general corporate. Valhi's operations are conducted principally
through subsidiaries and affiliates (NL Industries, Amalgamated, Valcor and
Waste Control Specialists). Valcor is an intermediate parent company with
operations conducted through its subsidiaries (Medite, CompX International and
Sybra). Accordingly, the Company's long-term ability to meet its corporate
level obligations is dependent in large measure on the receipt of dividends or
other distributions from subsidiaries. Suspension of NL's regular quarterly
dividend will result in approximately $2.6 million per quarter lower net cash
flow from NL to Valhi, but is not currently expected to materially impact
Valhi's financial position or liquidity. Various credit agreements to which
subsidiaries are parties contain customary limitations on the payment of
dividends, typically a percentage of net income or cash flow; however, such
restrictions have not significantly impacted the Company's ability to service
parent company obligations. Neither Valhi nor Valcor has guaranteed any
indebtedness of their respective subsidiaries.
Valhi's remaining $10 million commitment to invest in Waste Control
Specialists ($5 million contributed in October 1996 and $5 million to be
contributed in early 1997) will be provided primarily by cash on hand or through
available credit facilities. At September 30, 1996, Valhi has two bank credit
facilities aggregating $65 million, of which $55 million was available for
borrowing. Of such available amount, $5 million can only be used to purchase
shares of NL common stock. In August 1996, one of the two facilities ($50
million) was extended one year to August 1997.
The after-tax proceeds following the disposition of Medite, net of
repayment of Medite's U.S. bank debt, will be available for Valcor's general
corporate purposes, subject to compliance with certain restrictions contained in
the Valcor Senior Note Indenture. Also under the terms of the Indenture, Valcor
is required to tender for a portion of the Valcor Notes, at par, to the extent
that a specified amount of these proceeds are not used to either permanently
paydown senior indebtedness of Valcor or its subsidiaries or invest in related
businesses, both as defined in the Indenture, within one year of disposition.
If none of the proceeds from the disposition of Medite are so used, a
substantial portion of the Valcor Notes would be subject to a tender offer.
In May 1996, Valhi entered into a nonbinding Letter of Intent with Snake
River Sugar Company regarding the possible transfer of control of Amalgamated's
sugar business, on a tax deferred basis, for consideration of approximately $250
million. Snake River is an agricultural co-op, formed by sugarbeet growers in
Amalgamated's area of operation, to effect the proposed transaction. The Letter
of Intent, as supplemented, includes basic terms of alternative forms of a
transaction and is subject to significant conditions including, among other
things, negotiation and completion of a definitive agreement and Snake River
raising funds necessary to complete a transaction. There can be no assurance
that any transaction will be consummated. The net cash to Valhi from the
proposed transaction, if completed, would be available for Valhi's general
corporate purposes.
The Company routinely compares its liquidity requirements and alternative
uses of capital against the estimated future cash flows to be received from its
subsidiaries, and the estimated sales value of those units. As a result of this
process, the Company has in the past and may in the future seek to raise
additional capital, refinance or restructure indebtedness, repurchase
indebtedness in the market or otherwise, modify its dividend policy, consider
the sale of interests in subsidiaries, affiliates, business units, marketable
securities or other assets, or take a combination of such steps or other steps,
to increase liquidity, reduce indebtedness and fund future activities. Such
activities have in the past and may in the future involve related companies.
The Company routinely evaluates acquisitions of interests in, or
combinations with, companies, including related companies, perceived by
management to be undervalued in the marketplace. These companies may or may not
be engaged in businesses related to the Company's current businesses. The
Company intends to consider such acquisition activities in the future and, in
connection with this activity, may consider issuing additional equity securities
and increasing the indebtedness of the Company, its subsidiaries and related
companies. From time to time, the Company and related entities also evaluate
the restructuring of ownership interests among their respective subsidiaries and
related companies. In this regard, the Indentures governing the publicly-traded
debt of NL and Valcor contain provisions which limit the ability of NL, Valcor
and their respective subsidiaries to incur additional indebtedness or hold
noncontrolling interests in business units.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Reference is made to the 1995 Annual Report and prior 1996 quarterly
periodic reports for descriptions of certain legal proceedings.
A hearing on the plaintiff's appeal in the previously-reported matter of
Alan Russell Kahn v. Tremont Corporation, et al. is scheduled for December 1996.
In September 1996, the court heard the defendants' motion for partial
summary judgment in the previously-reported case American Federation of Grain
Millers International, et al. v. Valhi, Inc., et al.
In September 1996, a complaint was filed in the Superior Court of New
Jersey, Bergen County, Chancery Division (Frank D. Seinfeld v. Harold C.
Simmons, et al., No. C-336-96) against Valhi, NL and certain current and former
members of NL's board of directors. The complaint, a derivative action on
behalf of NL, alleges, among other things, that NL's August 1991 `Dutch
auction' tender offer was an unfair and wasteful expenditure of NL's funds.
The complaint seeks, among other things, to rescind NL's purchase of
approximately 10.9 million shares of its common stock from Valhi pursuant to the
Dutch auction. The Company believes, and understands each of the other
defendants believe, the complaint is without merit and that each intends to
defend the action vigorously.
Ritchie v. NL Industries, et al. (Circuit Court of Marshall County, West
Virginia, No. 96-C-179M). In September 1996, NL was served with a complaint
filed in West Virginia state court that seeks compensatory and punitive damages
for alleged personal injury caused by lead paint and asserts causes of action
against NL and five other former manufacturers of lead pigment for negligence,
strict liability, breach of warranty, fraud, conspiracy, market share liability
and alternative liability. In October 1996, defendants removed the case to
federal court and filed motions to dismiss.
The City of New York, et al. v. Lead Industries Association, Inc., et al.
(No. 89-4617). In September 1996, defendants' request for permission to appeal
was denied.
Skipworth v. Sherwin-Williams Co., et al. (No. 92-3069). Oral argument was
held in this matter in the Pennsylvania Supreme Court in October 1996.
Wright, et al. v. Lead Industries Association, Inc., et al. (Nos. 94-
363042 and 94-363043). In September 1996, the remaining defendants' motion for
summary judgment was granted. Plaintiffs have appealed as to all defendants.
Gates v. American Cyanamid Co., et al. (I1996-2114). In July 1996, NL
filed an answer denying plaintiff's allegations.
Hines v. Gates, et al. (96-616161). In July 1996, plaintiffs voluntarily
dismissed the complaint without prejudice.
NL Industries, Inc. v. Commercial Union Insurance Cos., et al. NL is
seeking interlocutory appellate review of the previously-reported ruling
regarding contribution.
Granite City, Illinois smelter. In August 1996, the district court denied
Granite City's and the PRP's motion for a temporary restraining order and
preliminary injunction seeking to enjoin the U.S. EPA from proceeding with the
residential component of the cleanup.
Wagner, et al. v. Anzon, Inc. and NL Industries, Inc. (No. 87-4420). In
September 1996, the Superior Court of Pennsylvania affirmed the judgment of the
jury verdict for NL. Plaintiffs have filed an application for reargument in the
Superior Court, which NL has opposed. The application is pending before the
Superior Court.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1 - Asset Purchase Agreement between Medite Corporation and Rogue
Resources LLC dated October 7, 1996 - incorporated by reference
to Exhibit 10.1 of Valcor's Quarterly Report on Form 10-Q (File
No. 33-63044) for the quarter ended September 30, 1996.
10.2 - Share Subscription and Redemption Agreement among Medite
Corporation, Willamette Industries, Inc. and Medford
International Holdings dated November 4, 1996 - incorporated by
reference to Exhibit 10.2 of Valcor's Quarterly Report on Form
10-Q (File No. 33-63044) for the quarter ended September 30,
1996.
10.3 - Executive Severance Agreement effective as of February 16, 1994
by and between NL and Joseph S. Compofelice - incorporated by
reference to Exhibit 10.2 of NL's Quarterly Report on Form 10-Q
(File No. 1-640) for the quarter ended September 30, 1996.
27.1 - Financial Data Schedule for the nine-month period ended
September 30, 1996.
27.2 - Reclassified Financial Data Schedule for the (i) three-month
period ended March 31, 1996 and (ii) six-month period ended June
30, 1996.
27.3- Reclassified Financial Data Schedule for the (i) three-month
period ended March 31, 1995, (ii) six-month period ended June 30,
1995, (iii) nine-month period ended September 30, 1995 and (iv)
year ended December 31, 1995.
27.4- Reclassified Financial Data Schedule for the (i) nine-month
period ended September 30, 1994 and (ii) year ended December 31,
1994.
(b) Reports on Form 8-K
Reports on Form 8-K for the quarter ended September 30, 1996 and the
month of October 1996:
July 25, 1996 - Reported Items 5 and 7.
August 16, 1996 - Reported Items 5 and 7.
September 18, 1996 - Reported Items 5 and 7.
October 25, 1996 - Reported Items 5 and 7.
October 28, 1996 - Reported Items 5 and 7.
October 31, 1996 - Reported Items 5 and 7.
SIGNATURES
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 thereunto duly authorized.
VALHI, INC.
(Registrant)
Date November 11, 1996 By /s/ Bobby D. O'Brien
Bobby D. O'Brien
Vice President
(Principal Financial Officer)
Date November 11, 1996 By /s/ Gregory M. Swalwell
Gregory M. Swalwell
Controller
(Principal Accounting Officer)
SIGNATURES
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 thereunto duly authorized.
VALHI, INC.
(Registrant)
Date November 11, 1996 By
Bobby D. O'Brien
Vice President
(Principal Financial Officer)
Date November 11, 1996 By
Gregory M. Swalwell
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALHI, INC.'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 160,613
<SECURITIES> 0
<RECEIVABLES> 243,427
<ALLOWANCES> 5,509
<INVENTORY> 318,257
<CURRENT-ASSETS> 739,861
<PP&E> 1,206,277
<DEPRECIATION> 348,725
<TOTAL-ASSETS> 2,368,890
<CURRENT-LIABILITIES> 579,799
<BONDS> 1,029,415
0
0
<COMMON> 1,248
<OTHER-SE> 259,822
<TOTAL-LIABILITY-AND-EQUITY> 2,368,890
<SALES> 1,255,386
<TOTAL-REVENUES> 1,255,386
<CGS> 955,686
<TOTAL-COSTS> 955,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (142)
<INTEREST-EXPENSE> 81,541
<INCOME-PRETAX> 24,032
<INCOME-TAX> 8,287
<INCOME-CONTINUING> 8,826
<DISCONTINUED> (10,674)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,848)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALHI, INC.'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS NOTED BELOW AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. SUCH
SUMMARY FINANCIAL INFORMATION HAS BEEN RECLASSIFIED TO PRESENT THE RESULTS OF
OPERATIONS OF MEDITE CORPORATION AS DISCONTINUED OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996
<CASH> 142,468 144,669
<SECURITIES> 0 0
<RECEIVABLES> 249,645 258,206
<ALLOWANCES> 5,199 4,698
<INVENTORY> 467,842 373,642
<CURRENT-ASSETS> 872,378 788,665
<PP&E> 1,195,631 1,210,003
<DEPRECIATION> 345,163 359,429
<TOTAL-ASSETS> 2,495,730 2,417,988
<CURRENT-LIABILITIES> 598,036 561,657
<BONDS> 1,105,284 1,078,667
0 0
0 0
<COMMON> 1,247 1,248
<OTHER-SE> 265,390 268,359
<TOTAL-LIABILITY-AND-EQUITY> 2,495,730 2,417,988
<SALES> 416,325 838,957
<TOTAL-REVENUES> 416,325 838,957
<CGS> 307,669 628,330
<TOTAL-COSTS> 307,669 628,330
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 160 (355)
<INTEREST-EXPENSE> 28,321 55,168
<INCOME-PRETAX> 17,883 31,723
<INCOME-TAX> 6,366 11,307
<INCOME-CONTINUING> 9,196 15,796
<DISCONTINUED> (14,884) (12,734)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,688) 3,062
<EPS-PRIMARY> (.05) .03
<EPS-DILUTED> 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALHI, INC.'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS NOTED BELOW AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. SUCH
SUMMARY FINANCIAL INFORMATION HAS BEEN RECLASSIFIED TO PRESENT THE RESULTS OF
OPERATIONS OF MEDITE CORPORATION AS DISCONTINUED OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-START> JAN-01-1995 JAN-01-1995 JAN-01-1995 JAN-01-1995
<PERIOD-END> MAR-31-1995 JUN-30-1995 SEP-30-1995 DEC-31-1995
<CASH> 134,126 165,953 171,337 170,908
<SECURITIES> 26,516 2,387 0 0
<RECEIVABLES> 261,266 271,760 269,539 228,785
<ALLOWANCES> 4,710 5,054 5,116 4,972
<INVENTORY> 470,460 384,647 324,099 518,304
<CURRENT-ASSETS> 922,189 857,368 807,572 931,566
<PP&E> 1,124,388 1,151,261 1,168,215 1,190,514
<DEPRECIATION> 260,905 278,953 294,178 315,827
<TOTAL-ASSETS> 2,549,715 2,493,593 2,447,112 2,572,213
<CURRENT-LIABILITIES> 622,790 548,419 506,660 662,336
<BONDS> 1,123,698 1,102,119 1,083,383 1,084,284
0 0 0 0
0 0 0 0
<COMMON> 1,245 1,245 1,246 1,246
<OTHER-SE> 216,995 237,775 255,775 273,045
<TOTAL-LIABILITY-AND-EQUITY> 2,549,715 2,493,593 2,447,112 2,572,213
<SALES> 409,009 873,150 1,321,342 1,760,850
<TOTAL-REVENUES> 409,009 873,150 1,321,342 1,760,850
<CGS> 294,127 625,481 949,449 1,262,107
<TOTAL-COSTS> 294,127 625,481 949,449 1,262,107
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 23 403 613 665
<INTEREST-EXPENSE> 30,744 61,150 89,838 118,176
<INCOME-PRETAX> 15,892 43,781 67,058 93,793
<INCOME-TAX> 8,089 22,718 33,925 34,709
<INCOME-CONTINUING> 7,458 20,577 32,787 57,908
<DISCONTINUED> 4,957 9,195 10,713 10,607
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 12,415 29,772 43,500 68,515
<EPS-PRIMARY> .11 .26 .38 .60
<EPS-DILUTED> .11 0 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALHI, INC.'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIODS NOTED BELOW AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. SUCH
SUMMARY FINANCIAL INFORMATION HAS BEEN RECLASSIFIED TO PRESENT THE RESULTS OF
OPERATIONS OF MEDITE CORPORATION AS DISCONTINUED OPERATIONS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-START> JAN-01-1994 JAN-01-1994
<PERIOD-END> SEP-30-1994 DEC-31-1994
<CASH> 21,385 170,747
<SECURITIES> 23,706 49,233
<RECEIVABLES> 97,447 204,828
<ALLOWANCES> 774 4,434
<INVENTORY> 94,466 498,097
<CURRENT-ASSETS> 252,494 936,134
<PP&E> 476,400 1,050,427
<DEPRECIATION> 234,026 242,696
<TOTAL-ASSETS> 785,625 2,480,703
<CURRENT-LIABILITIES> 230,789 656,222
<BONDS> 308,521 1,086,654
0 0
0 0
<COMMON> 1,245 1,245
<OTHER-SE> 214,705 197,179
<TOTAL-LIABILITY-AND-EQUITY> 785,625 2,480,703
<SALES> 489,256 642,800
<TOTAL-REVENUES> 489,256 642,800
<CGS> 371,843 488,648
<TOTAL-COSTS> 371,843 488,648
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 222 213
<INTEREST-EXPENSE> 21,417 28,807
<INCOME-PRETAX> (5,701) (383)
<INCOME-TAX> (2,934) (1,705)
<INCOME-CONTINUING> (2,767) 1,322
<DISCONTINUED> 9,706 10,278
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 6,939 11,600
<EPS-PRIMARY> .06 .10
<EPS-DILUTED> .0 .10
</TABLE>
