SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
April 30, 1997
(Date of Report, date of earliest event reported)
VALHI, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-5467 87-0110150
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, TX 75240-2697
(Address of principal executive offices) (Zip Code)
(972) 233-1700
(Registrant's telephone number, including area code)
Not applicable
(Former name or address, if changed since last report)
Item 2: Acquisition or Disposition of Assets
On April 30, 1997, the Company completed the disposition of its fast food
operations conducted by its indirect wholly-owned subsidiary, Sybra, Inc. The
disposition was accomplished in two separate, concurrent transactions. The
first transaction involved the sale of certain restaurant real estate owned by
Sybra to U.S. Restaurant Properties Master L.P., a Delaware limited partnership,
for $45 million cash consideration. The second transaction involved the sale of
100% of the common stock of Sybra by Valcor, Inc., a wholly-owned subsidiary of
the Company, to I.C.H. Corporation, a Delaware corporation, for $14 million cash
consideration plus the repayment by I.C.H. of approximately $23.8 million of
Sybra's intercompany indebtedness owed to Valcor. Substantially all of the net-
of-tax proceeds from these transactions are held by Valcor. Under certain
conditions, I.C.H. is obligated to pay an additional contingent consideration of
approximately $2 million to Valcor in the future.
As part of the transactions, the Company purchased 222,222 units of U.S.
Restaurant Properties Master L.P. from U.S. Restaurant Properties for $6 million
cash consideration.
Prior to consummation of these transactions, Sybra increased the
outstanding balance of its intercompany loan owed to Valcor from $20 million to
$23.8 million, and used a portion of the proceeds to completely repay its
outstanding bank indebtedness.
Item 7: Financial Statements, Pro Forma Financial Information
and Exhibits
(b) Pro forma financial information
Pro forma condensed consolidated financial statements of the
Registrant, which present the pro forma effects of the transactions
described in Item 2 above, assuming such transactions had occurred
as of the dates set forth in the accompanying notes, are included
herein as Exhibit 99.2.
(c) Exhibit
Item No. Exhibit Index
99.1 Press release dated May 1, 1997 issued by the Registrant
describing the transactions discussed in Item 2 above.
99.2 Pro forma financial information of the Registrant.
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 hereunto duly authorized.
VALHI, INC.
(Registrant)
By: /s/ Bobby D. O'Brien
Bobby D. O'Brien
Vice President
Date: April 30, 1997
FOR IMMEDIATE RELEASE: CONTACT:
VALHI, INC. BOBBY D. O'BRIEN
THREE LINCOLN CENTRE VICE PRESIDENT
5430 LBJ FREEWAY , SUITE 1700 (972) 233-1700
DALLAS, TEXAS 75240-2697
(972) 233-1700
VALHI ANNOUNCES SALE OF SYBRA OPERATIONS
Dallas, Texas May 1, 1997 Valhi, Inc. (NYSE: VHI) announced that it
had completed the sale of its fast food operations conducted by Sybra, Inc., a
former wholly owned subsidiary of Valcor, Inc., which is a wholly owned
subsidiary of Valhi.
The sale occurred in two separate concurrent transactions. The first
transaction involved the sale of certain restaurant properties owned by Sybra to
U.S. Restaurant Properties Master L.P. (NYSE: USV), a Delaware limited
partnership, for $45 million in cash consideration. The second transaction
involved Valcor's sale of 100% of the stock of Sybra to I.C.H. Corporation (OTC:
ICHD), a Delaware corporation, for $14 million cash consideration plus I.C.H.' s
repayment of approximately $23.8 million of intercompany indebtedness that Sybra
owed to Valcor. Valcor holds substantially all of the net proceeds. Under
certain conditions, I.C.H. is obligated to pay an additional contingent
consideration of approximately $2 million to Valcor in the future.
As part of the transaction, Valhi purchased 222,222 units of U.S.
Restaurant Properties from U.S. Restaurant Properties for $6 million.
Valhi is engaged in the chemicals, component products and waste management
industries.
******
Exhibit 99.2
VALHI, INC. AND SUBSIDIARIES
INDEX TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
---------
Pro Forma Condensed Consolidated Balance Sheet - December 31, 1996 F-2/F-3
Notes to Pro Forma Condensed Consolidated Balance Sheet F-4/F-5
Pro Forma Condensed Consolidated Statement of Income -
Year ended December 31, 1996 F-6
Notes to Pro Forma Condensed Consolidated Statement of Income F-7
These pro forma condensed consolidated financial statements should be read in
conjunction with the historical consolidated financial statements of Valhi,
Inc. The pro forma condensed consolidated financial statements are not
necessarily indicative of Valhi's consolidated financial position or results
of continuing operations as they may be in the future.
VALHI, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Pro forma adjustments
Valhi -------------------------------------- ----------
ASSETS Historical (I) (II) (III) Pro forma
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $255.7 ($1.1) $73.6 ($6.0) $322.2
Marketable securities 142.5 - - - 142.5
Accounts and notes receivable 178.8 - - 178.8
Inventories 251.6 - (1.5) - 250.1
Prepaid expenses 7.5 - (1.0) - 6.5
Deferred income taxes 1.6 - (1.2) - 0.4
----------- ----------- ----------- ---------- ----------
837.7 (1.1) 69.9 (6.0) 900.5
----------- ----------- ----------- ---------- ----------
Other assets:
Marketable securities 17.3 - - 6.0 23.3
Investment in joint ventures 196.7 - - - 196.7
Investment in Amalgamated 34.1 - - - 34.1
Mining properties 36.4 - - - 36.4
Goodwill 258.4 - (5.0) - 253.4
Intangible and other assets 74.2 - (11.0) - 63.2
----------- ----------- ----------- ---------- ----------
617.1 - (16.0) 6.0 607.1
----------- ----------- ----------- ---------- ----------
Property and equipment, net 690.2 - (52.8) - 637.4
----------- ----------- ----------- ---------- ----------
$2,145.0 ($1.1) $1.1 $ - $2,145.0
=========== =========== =========== ========== ==========
</TABLE>
VALHI, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
December 31, 1996
(Unaudited)
(In millions)
<TABLE>
Pro forma adjustments
Valhi -------------------------------------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY Historical (I) (II) (III) Pro forma
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Current liabilities:
Notes payable & current long-term debt $274.3 $ - ($0.9) $ - $273.4
Accounts payable & accrued liabilities 250.7 - (13.6) - 237.1
Income taxes 8.2 - - - 8.2
Deferred income taxes 30.5 - - - 30.5
----------- ----------- ----------- ---------- ----------
563.7 - (14.5) - 549.2
----------- ----------- ----------- ---------- ----------
Noncurrent liabilities:
Long-term debt 844.5 (1.1) (3.6) - 839.8
Accrued pension cost 59.2 - - - 59.2
Accrued OPEB cost 56.3 - - - 56.3
Accrued environmental costs 109.9 - - - 109.9
Deferred income taxes 178.0 - - - 178.0
Other 29.2 - (1.3) - 27.9
----------- ----------- ----------- ---------- ----------
1,277.1 (1.1) (4.9) - 1,271.1
----------- ----------- ----------- ---------- ----------
Minority interest in NL subsidiaries 0.3 - - - 0.3
----------- ----------- ----------- ---------- ----------
Stockholders' equity:
Common stock and paid-in capital 36.5 - - - 36.5
Retained earnings 282.8 - 20.5 - 303.3
Treasury stock (71.1) - - - (71.1)
Adjustments: -
Marketable securities 65.1 - - - 65.1
Currency translation (6.2) - - - (6.2)
Pension liabilities (3.2) - - - (3.2)
----------- ----------- ----------- ---------- ----------
303.9 - 20.5 - 324.4
----------- ----------- ----------- ---------- ----------
$2,145.0 ($1.1) $1.1 $ - $2,145.0
=========== =========== =========== ========== ==========
</TABLE>
See accompanying notes to pro forma condensed consolidated balance sheet.
VALHI, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
Note 1 - Basis of presentation:
The Pro Forma Condensed Consolidated Balance Sheet assumes the following
transactions, more fully described in Item 2 of this Current Report on Form
8-K dated April 30, 1997, occurred on December 31, 1996:
I - Sybra increases its intercompany loan from Valcor by $3.8 million
(bringing its total intercompany loan from Valcor to $23.8 million)
and repays all of its outstanding bank indebtedness ($1.1 million).
II - Sybra sells certain restaurant real estate to U.S. Resaturant
Properties Master L.P., Valcor sells 100% of the common stock of
Sybra to I.C.H. Corporation and I.C.H. repays $23.8 million of
intercompany indebtedness owed to Valcor by Sybra.
III - Valhi purchases 222,222 units of U.S Restaurant Properties Master
L.P. for $6 million.
Note 2 - Pro forma adjustments:
I - Reflect Sybra's borrowing $3.8 million from Valcor and repaying $1.1
million of bank indebtedness.
VALHI, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
(Unaudited)
<TABLE>
II - Reflect Sybra's sale of certain restaurant real estate to U.S.
Restaurant Properties Master L.P., Valcor's sale of 100% of the
common stock of Sybra to I.C.H. Corporation and I.C.H.'s repayment of
$23.8 million of intercompany indebtedness owed to Valcor by Sybra,
as follows: Amount
------------
(In millions)
<S> <C>
Aggregate cash consideration (including repayment of intercompany
indebtedness owed to Valcor), net of estimated fees and expenses $81.0
------------
Carrying value of assets sold and liabilities assumed:
Cash and equivalents 4.0
Inventories 1.5
Prepaid expenses 1.0
Current deferred income taxes 1.2
Goodwill 5.0
Other intangible assets 10.9
Other assets 0.1
Net property, plant and equipment 52.8
Accounts payable & accrued liabilities (13.6)
Long-term debt and capital lease
obligations, including current portion (4.5)
Noncurrent deferred income taxes (0.3)
Other noncurrent liabilities (1.3)
------------
56.8
------------
Pre-tax gain 24.2
------------
Income tax expense:
Current income taxes 3.4
Deferred income taxes 0.3
------------
3.7
------------
Net-of-tax gain $20.5
============
</TABLE>
The overall effective income tax rate applicable to the pre-tax gain
varies from the 35% statutory federal income tax rate due principally
to the excess of tax basis over book basis of the common stock of
Sybra sold for which no deferred income tax benefit was previously
recognized.
III- Reflect purchase of 222,222 units of U.S. Restaurant Properties
Master L.P. for $6 million cash.
VALHI, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 1996
(Unaudited)
(In millions, except per share data)
<TABLE>
Valhi Pro forma
Historical adjustments Pro forma
----------- ----------- -----------
<S> <C> <C> <C>
Revenues and other income:
Net sales $1,190.8 ($116.0)(a) $1,074.8
Other, net 41.4 (0.1)(a)
0.6 (b) 41.9
----------- ----------- -----------
1,232.2 (115.5) 1,116.7
----------- ----------- -----------
Costs and expenses:
Cost of goods sold 909.3 (101.1)(a) 808.2
Selling, general and administrative 211.7 (6.2)(a) 205.5
Interest 100.2 (2.3)(a)
0.6 (b) 98.5
----------- ----------- -----------
1,221.2 (109.0) 1,112.2
----------- ----------- -----------
Income of consolidated companies
before income taxes 11.0 (6.5) 4.5
Equity in Amalgamated Sugar Company 10.0 10.0
Equity in Waste Control Specialists (6.4) - (6.4)
----------- ----------- -----------
Income before income taxes and
minority interest 14.6 (6.5) 8.1
Provision for income taxes 3.5 (2.4)(a) 1.1
Minority interest 6.9 - 6.9
----------- ----------- -----------
Income from continuing operations $4.2 ($4.1) $0.1
=========== =========== ===========
Income from continuing operations per share $0.04 $ -
=========== ===========
Weighted average common shares outstanding 114.6 114.6
=========== ===========
</TABLE>
See accompanying notes to pro forma condensed consolidated statement of income.
VALHI, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Note 1 - Basis of presentation:
The Pro Forma Condensed Consolidated Statement of Income assumes the
disposition of the Company's fast food operations, more fully described in
Item 2 of this Current Report on Form 8-K dated April 30, 1997, occurred as
of the beginning of 1996.
Note 2 - Pro forma adjustments:
(a) Eliminate Sybra's historical results of operations included in Valhi's
consolidated statement of income. In future filings, Valhi will report
Sybra's results of operations through the date of disposal as
discontinued operations.
(b) Reclassification.
