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
October 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 October 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 October 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: October 23, 1998
P R E S S R E L E A S E
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
VALHI REPORTS THIRD QUARTER RESULTS
DALLAS, TEXAS . . October 23, 1998. Valhi, Inc. (NYSE: VHI) reported income
from continuing operations of $13.1 million, or $.11 per diluted share, in the
third quarter of 1998 compared to income of $8.4 million, or $.07 per diluted
share, in the third quarter of 1997. For the first nine months of 1998, Valhi
reported income from continuing operations of $215.7 million, or $1.86 per
diluted share, compared to a loss from continuing operations of $12.1 million,
or $.10 per diluted share, in the first nine months of 1997.
The year-to-date 1998 results include (i) gains related to the first
quarter sale of NL Industries' specialty chemicals business unit ($152 million,
or $1.31 per diluted share, net of income taxes and minority interest) and
initial public offering of shares of CompX International common stock ($44
million, or $.38 per diluted share, net of income taxes), (ii) securities
transaction gains ($5 million, or $.04 per diluted share, net of income taxes)
resulting principally from LYONs exchanges and (iii) an aggregate second quarter
charge of $32 million ($21 million, or $.18 per diluted share, net of income
taxes) related to the cash payments made by Valhi as part of the settlement of
two shareholder derivative lawsuits in which Valhi was a defendant. 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, partially offset by lower sales 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 third quarter of 1998
were 17% higher than the third quarter of 1997 and were 2% higher than the
second quarter of this year. NL's TiO2 sales volumes in the third quarter of
1998 decreased 9% from the record sales volumes in the third quarter of 1997 as
demand moderated. Sales volumes in the first nine months of 1998 were 2% lower
than the 1997 period reflecting lower volumes in Asia, partially offset by
higher volumes in Europe. NL expects demand for TiO2 in the fourth quarter of
1998 will be moderately below that of the fourth quarter of 1997. NL's
operating income in the third quarter of 1997 included income of $9.7 million
resulting from refunds of German franchise taxes. In addition, the provision for
income taxes in the third quarter of 1998 reflects an $8 million tax benefit ($5
million, or $.04 per diluted share, net of minority interest) resulting from a
refund of prior-year German dividend withholding taxes received by NL. The
Company's results of operations for the first nine months of 1997 included net
sales of $111.4 million and operating income of $33.2 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).
CompX's component products business 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 third quarter of 1998 compared to the third quarter of 1997.
Component products operating income for the nine-month 1998 period 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.
As previously-reported, in late June 1998 the Company acquired 2.9 million
shares of Tremont Corporation common stock in a privately-negotiated
transaction. Such shares, along with an additional 141,000 Tremont common
shares purchased by Valhi in open market transactions during the first nine
months of 1998, represents approximately 48% of Tremont's outstanding common
stock at September 30, 1998. Valhi accounts for its interest in Tremont by the
equity method, and commenced reporting equity in Tremont's earnings in the third
quarter of 1998.
General corporate interest and dividend income decreased in 1998 due
primarily to lower distributions received from The Amalgamated Sugar Company
LLC. 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.
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
(ergonomic computer support systems, precision ball bearing slides and locking
systems), 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 ENDEDNINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
NET SALES
Chemicals $248.3 $221.5 $740.5 $698.4
Component products 27.0 38.7 80.3 110.5
$275.3 $260.2 $820.8 $808.9
OPERATING INCOME
Chemicals $ 32.1 $ 40.2 $ 69.5 $119.6
Component products 6.9 8.8 20.1 22.2
TOTAL OPERATING INCOME 39.0 49.0 89.6 141.8
Equity in:
Tremont Corporation - 3.0 - 3.0
Waste Control Specialists (3.4) (2.8) (8.9) (9.6)
Gain on:
Disposal of business unit - - - 330.2
Reduction in interest in CompX - - - 67.9
General corporate items, net:
Securities transactions 1.9 .1 2.1 8.0
Interest and dividend income 15.4 8.2 46.5 42.9
Expenses, net (7.8) (5.6) (50.9) (49.7)
Interest expense (30.2) (23.0) (91.5) (71.9)
Income (loss) before income taxes 14.9 28.9 (13.1) 462.6
Provision for income taxes (benefit) 6.5 .5 (1.0) 184.9
Minority interest in after-tax earnings - 15.3 - 62.0
INCOME (LOSS) FROM CONTINUING OPERATION 8.4 13.1 (12.1) 215.7
Discontinued operations (.9) - 34.5 -
Extraordinary item (3.9) (1.4) (4.3) (2.7)
NET INCOME $ 3.6 $ 11.7 $ 18.1 $213.0
</TABLE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS (CONTINUED)
(UNAUDITED)
(IN MILLIONS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDEDNINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ .07 $ .11 $ (.10) $ 1.87
Discontinued operations (.01) - .30 -
Extraordinary item (.03) (.01) (.04) (.02)
NET INCOME $ .03 $ .10 $ .16 $ 1.85
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ .07 $ .11 $ (.10) $ 1.86
Discontinued operations (.01) - .30 -
Extraordinary item (.03) (.01) (.04) (.02)
NET INCOME $ .03 $ .10 $ .16 $ 1.84
SHARES USED IN CALCULATION OF PER SHARE
AMOUNTS
Basic earnings 115.1 114.9 115.0 115.0
Diluted earnings 116.0 116.3 115.0 116.1
</TABLE>
