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
July 23, 1998
(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 5: Other Events
On July 23, 1998, the Registrant issued the press release attached
hereto as Exhibit 99.1 which is incorporated herein by reference.
Item 7: Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibit
Item No. Exhibit Index
99.1 Press release dated July 23, 1998
issued by 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: July 23, 1998
VALHI REPORTS SECOND QUARTER RESULTS
DALLAS, TEXAS . . July 23, 1998. Valhi, Inc. (NYSE: VHI) reported income
from continuing operations for the first six months of 1998 of $202.6 million,
or $1.75 per diluted share, compared to a loss from continuing operations of
$20.5 million, or $.18 per diluted share, in the first six months of 1997.
Valhi reported a loss from continuing operations of $2.1 million, or $.02 per
diluted share, in the second quarter of 1998 compared to income of $2.6 million,
or $.02 per diluted share, in the second quarter of 1997. The loss in the
second quarter of 1998 includes an aggregate charge of $32 million ($21 million,
or $.18 per diluted share, net of income taxes) related to the previously-
reported June 1998 cash payments made by Valhi as part of the settlement of two
shareholder derivative lawsuits in which Valhi was a defendant.
The 1998 results also include (i) a gain related to the January 1998 sale
of NL Industries' specialty chemicals business unit ($152 million, or $1.31 per
diluted share, net of income taxes and minority interest), (ii) a gain related
to the March 1998 initial public offering of shares of CompX International
common stock ($44 million, or $.38 per diluted share, net of income taxes) and
(iii) securities transaction gains ($5 million, or $.04 per diluted share, net
of income taxes) resulting principally from LYONs exchanges. General corporate
expenses in the first quarter of 1997 included a $30 million pre-tax charge
($19.5 million, or $.17 per diluted share, net of income taxes) related to the
adoption of a new accounting standard regarding accounting for environmental
remediation liabilities at NL.
NL's chemicals operating income improved due primarily to higher average
selling prices and improved production volumes. NL's average selling prices for
titanium dioxide pigments ("Ti02") have continued to increase since early 1997,
and NL's average TiO2 selling prices in the second quarter of 1998 were 18%
higher than the second quarter of 1997 and were 3% higher than the first quarter
of this year. Ti02 selling prices at the end of the second quarter of 1998 were
1% higher than the average for the quarter. TiO2 sales volumes in the second
quarter of 1998 approximated volumes in the record second quarter of 1997 with
higher volumes in Europe offsetting lower volumes in Asia. Year-to-date TiO2
sales volumes in 1998 were 1% higher than the first six months of 1997. NL
believes demand for TiO2 will remain healthy in the near-term and expects
industry conditions will continue to improve. The Company's results of
operations for the first six months of 1997 included net sales of $73.5 million
and operating income of $21.5 million related to NL's disposed specialty
chemicals business unit (1998 net sales and operating income prior to the sale -
$12.7 million and $2.7 million, respectively).
The Company's component products business, operated by CompX, reported
increased sales in 1998 due primarily to higher sales volumes in all three of
its major product lines (ergonomic computer support systems, precision ball
bearing slides and locking systems). A portion of the increase in net sales
resulted from the March 1998 acquisition of a lock competitor. Operating
margins in each product line improved in the second quarter of 1998 compared to
the second quarter of 1997. Component products operating income in the first
quarter of 1998 includes a $3.3 million non-recurring pre-tax charge related to
the award of certain shares of CompX common stock in connection with completion
of its initial public offering.
Interest expense declined in 1998 due primarily to a lower level of
outstanding indebtedness. Minority interest in after-tax earnings in 1998
relates to NL and CompX. Discontinued operations in 1997 consist of the
Company's former building products and fast food operations, and the
extraordinary item in 1998 relates to the early extinguishment of certain NL
indebtedness.
As previously-reported, in late June 1998 the Company acquired 2.9 million
shares of Tremont Corporation common stock held by the Company's majority
stockholder, Contran Corporation, and certain of Contran's subsidiaries. Such
shares, along with an additional 129,000 Tremont common shares purchased by
Valhi in open market transactions during the first six months of 1998,
represents approximately 48% of Tremont's outstanding common stock at June 30,
1998. Valhi accounts for its interest in Tremont by the equity method, and will
commence reporting equity in Tremont's earnings beginning in the third quarter
of 1998.
The statements in this release relating to matters that are not historical
facts are forward-looking statements that involve risks and uncertainties,
including, but not limited to, future supply and demand for the Company's
products (including cyclicality thereof), future global economic and political
conditions, changes in government regulations, competitive products, customer
and competitor strategies, the impact of pricing and production decisions,
environmental matters, the ultimate resolution of pending litigation and any
possible future litigation and other risks and uncertainties detailed in the
Company's SEC filings. Actual results could differ materially from those
forecasted or expected. The Company assumes no duty to publicly update such
statements.
Valhi, Inc. is engaged in the titanium dioxide pigments, component products,
titanium metals products and waste management industries.
* * * * *
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(UNAUDITED)
(IN MILLIONS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
NET SALES
Chemicals $252.7 $241.6 $492.2 $476.9
Component products 27.5 39.7 53.3 71.8
$280.2 $281.3 $545.5 $548.7
OPERATING INCOME
Chemicals $ 23.9 $ 42.0 $ 37.4 $ 79.4
Component products 6.9 9.1 13.2 13.4
TOTAL OPERATING INCOME 30.8 51.1 50.6 92.8
Equity in Waste Control Specialists (2.8) (3.6) (5.5) (6.8)
Gain on:
Disposal of business unit - - - 330.2
Reduction in interest in CompX - - - 67.9
General corporate items, net:
Securities transactions .1 7.8 .2 7.9
Interest and dividend income 16.5 17.5 31.1 34.7
Expenses, net (8.2) (36.3) (43.1) (44.1)
Interest expense (30.6) (23.5) (61.3) (48.9)
Income (loss) before income taxes 5.8 13.0 (28.0) 433.7
Provision for income taxes (benefit) 3.2 2.8 (7.5) 184.4
Minority interest in after-tax earnings - 12.3 - 46.7
INCOME (LOSS) FROM CONTINUING
OPERATIONS 2.6 (2.1) (20.5) 202.6
Discontinued operations 19.8 - 35.4 -
Extraordinary item (.4) - (.4) (1.3)
NET INCOME (LOSS) $ 22.0 $ (2.1) $ 14.5 $201.3
</TABLE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS (CONTINUED)
(UNAUDITED)
(IN MILLIONS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ .02 $ (.02) $ (.18) $ 1.76
Discontinued operations .17 - .31 -
Extraordinary item - - - (.01)
NET INCOME (LOSS) $ .19 $ (.02) $ .13 $ 1.75
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ .02 $ (.02) $ (.18) $ 1.75
Discontinued operations .17 - .31 -
Extraordinary item - - - (.01)
NET INCOME (LOSS) $ .19 $ (.02) $ .13 $ 1.74
SHARES USED IN CALCULATION OF
PER SHARE AMOUNTS
Basic earnings 115.0 115.0 114.9 115.0
Diluted earnings 115.9 115.0 114.9 116.0
</TABLE>
