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 29, 1999
(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 29, 1999, 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 29, 1999
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 29, 1999
PRESS RELEASE
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 SECOND QUARTER RESULTS
DALLAS, TEXAS . . July 29, 1999. Valhi, Inc. (NYSE: VHI) reported income
from continuing operations for the first six months of 1999 of $64.2 million, or
$.55 per diluted share, compared to income of $202.6 million, or $1.75 per
diluted share, in the first six months of 1998. For the second quarter of 1999,
Valhi reported income from continuing operations of $61.8 million, or $.53 per
diluted share, compared to a loss from continuing operations of $2.1 million, or
$.02 per diluted share, in the second quarter of 1998. Results in the second
quarter of 1999 include a $90 million income tax benefit ($52 million, or $.45
per diluted share, net of minority interest) recognized by the Company's
majority-owned subsidiary, NL Industries, as discussed below. The 1998 year-to-
date results include gains of $196 million, or $1.69 per diluted share, net of
income taxes and minority interest, related to the sale of NL's specialty
chemicals business and the initial public offering of CompX International common
stock. 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 settlement of two lawsuits.
Total operating income in the second quarter of 1999 decreased 4% compared
to the second quarter of 1998, and decreased 9% in the first six months of 1999
compared to the same period in 1998, as higher component products operating
income reported by CompX was more than offset by lower chemicals operating
income at NL. Chemicals operating income declined primarily due to lower sales
and production volumes for titanium dioxide pigments ("TiO2"), partially offset
by a $5.3 million foreign currency transaction gain in the second quarter of
1999 related to certain of NL's short-term cross-border financings. NL's TiO2
sales volumes in the second quarter of 1999 decreased 1% from the record sales
volumes in the second quarter of 1998, but increased 24% from the first quarter
of 1999 sales volumes. NL's production rates continue to closely match its
sales volumes. NL's average TiO2 selling prices during the second quarter of
1999 approximated the second quarter of 1998, but were 2% lower than the first
quarter of this year. NL believes its TiO2 selling prices in the second half of
1999 will be below those of the first half of the year. However, NL does not
expect the downward pressures on Ti02 selling prices will be long-term in nature
due to the continuing recovery in Asia and NL's positive view of the worldwide
economy. The Company's 1998 year-to-date results of operations include net
sales of $12.7 million and operating income of $2.7 million related to NL's
disposed specialty chemicals business unit.
Component products sales increased 39% and 53% in the second quarter and
first six months of 1999, respectively, compared to the same periods in 1998.
The inclusion of the results for the second quarter of 1999 of Timberline Lock
and Thomas Regout (acquired in November 1998 and January 1999, respectively) and
continued strong sales of CompX's security products more than offset the effect
of weak demand in the office furniture industry on CompX's slide and ergonomics
business. Component products operating income in the first six months of 1998
included a $3.3 million non-recurring pre-tax charge related to certain stock
awarded in conjunction with CompX's March 1998 initial public offering.
Excluding the effect of the Thomas Regout acquisition, slide and ergonomic
products net sales declined 3% in the second quarter of 1999 compared to the
second quarter of 1998. Excluding the effect of the Timberline acquisition,
security products net sales increased 6% in the second quarter of 1999 compared
to the same quarter of last year.
As previously-reported, the Company commenced reporting equity in earnings
of Tremont Corporation in the third quarter of 1998. Tremont directly owns 20%
of NL and 39% of Titanium Metals Corporation ("TIMET"), and Tremont accounts for
such interests by the equity method. Tremont's results for the second quarter
of 1999 include equity in earnings of NL of $21.4 million and equity in losses
of TIMET of $.7 million. Tremont's equity in earnings of NL for the quarter
includes its pro-rata share of NL's tax benefit discussed below. TIMET reported
a net loss for the quarter due primarily to lower sales volumes resulting from
weak demand in both its aerospace and industrial markets, offset in part by the
favorable impact of certain cost reduction programs implemented by TIMET.
Waste Control Specialists continued to report losses due in part to
expenditures associated with the ongoing pursuit of permits for the disposal of
low-level and mixed radioactive wastes. General corporate interest and dividend
income decreased in 1999 due primarily to a lower level of funds available for
investment, and interest expense declined due primarily to a lower level of
outstanding indebtedness.
NL's $90 million non-cash income tax benefit in the second quarter of 1999
relates to (i) a favorable resolution of NL's previously-reported tax
contingency in Germany ($36 million) and (ii) a change in estimate of NL's
ability to utilize certain income tax attributes for which the benefit had not
been previously recognized ($54 million) due primarily to the net effects of a
tax law change in Germany and a legal restructuring of NL's German subsidiaries.
With respect to the German tax contingency, the German government has conceded
substantially all of its income tax claims against NL, and a DM 94 million ($50
million) lien on one of NL's German facilities has been released. NL stated
that the favorable resolution of its tax contingency in Germany removed a
potentially significant risk for NL.
Minority interest in after-tax earnings relates principally to NL and
CompX. Discontinued operations in 1999 represents additional consideration
received by the Company related to the 1997 disposal of the Company's former
fast food operations. 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 represent management's belief and
assumptions based on currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements by their nature involve substantial risks and
uncertainties that could significantly impact expected results, and actual
future results could differ materially from those described in such forward-
looking statements. Among the factors that could cause actual future results to
differ materially include, but are not limited to, future supply and demand for
the Company's products (including cyclicality thereof), general global economic
conditions, competitive products and substitute products, customer and
competitor strategies, the impact of pricing and production decisions, potential
difficulties in integrating completed acquisitions, environmental matters,
governmental regulations and possible changes therein, the ultimate resolution
of pending litigation, possible future litigation and possible disruptions of
normal business activity from Year 2000 issues. Should one or more of these
risks materialize (or the consequences of such a development worsen), or should
the underlying assumptions prove incorrect, actual results could differ
materially from those forecasted or expected. The Company disclaims any duty to
update or revise any forward-looking statement whether as a result of new
information, future events or otherwise.
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 ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1998 1999 1998 1999
<S> <C> <C> <C> <C>
NET SALES
Chemicals $241.6 $232.5 $476.9 $434.1
Component products 39.7 55.0 71.8 110.2
$281.3 $287.5 $548.7 $544.3
OPERATING INCOME
Chemicals $ 42.0 $ 39.2 $ 79.4 $ 65.2
Component products 9.1 9.7 13.4 19.2
TOTAL OPERATING INCOME 51.1 48.9 92.8 84.4
Equity in:
Tremont Corporation - 5.2 - 4.5
Waste Control Specialists (3.6) (3.3) (6.8) (8.5)
Gain on:
Disposal of business unit - - 330.2 -
Reduction in interest in CompX - - 67.9 -
General corporate items, net:
Interest and dividend income 17.5 10.9 34.7 21.5
Securities transactions 7.8 .6 7.9 .6
Expenses, net (36.3) (5.6) (44.1) (12.0)
Interest expense (23.5) (18.0) (48.9) (36.4)
Income before income taxes 13.0 38.7 433.7 54.1
Provision for income taxes (benefit) 2.8 (74.3) 184.4 (69.2)
Minority interest in after-tax earnings 12.3 51.2 46.7 59.1
INCOME (LOSS) FROM CONTINUING (2.1) 61.8 202.6 64.2
OPERATIONS
Discontinued operations - 2.0 - 2.0
Extraordinary item - - (1.3) -
NET INCOME (LOSS) $ (2.1) $ 63.8 $201.3 $ 66.2
</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,
1998 1999 1998 1999
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ (.02) $ .54 $ 1.76 $ .56
Discontinued operations - .02 - .02
Extraordinary item - - (.01) -
NET INCOME (LOSS) $ (.02) $ .56 $ 1.75 $ .58
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ (.02) $ .53 $ 1.75 $ .55
Discontinued operations - .02 - .02
Extraordinary item - - (.01) -
NET INCOME (LOSS) $ (.02) $ .55 $ 1.74 $ .57
SHARES USED IN CALCULATION OF PER SHARE
AMOUNTS
Basic earnings 115.0 115.0 115.0 115.0
Diluted earnings 115.0 116.2 116.0 116.2
</TABLE>
