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 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)
<PAGE>
Item 5: Other Events
On October 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 October 29, 1999
issued by the Registrant
<PAGE>
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 29, 1999
<PAGE>
[LOGO GOES HERE]
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 REPORTS THIRD QUARTER RESULTS
DALLAS, TEXAS . . October 29, 1999. Valhi, Inc. (NYSE: VHI) reported
income from continuing operations for the first nine months of 1999 of $72.4
million, or $.62 per diluted share, compared to income of $215.7 million, or
$1.86 per diluted share, in the first nine months of 1998. For the third quarter
of 1999, Valhi reported income from continuing operations of $8.2 million, or
$.07 per diluted share, compared to income of $13.1 million, or $.11 per diluted
share, in the third quarter of 1998.
The 1999 year-to-date results include a $90 million non-cash income tax
benefit ($52 million, or $.45 per diluted share, net of minority interest)
recognized by the Company's majority-owned subsidiary, NL Industries. The 1998
year-to-date results include previously-reported net gains aggregating $374
million ($180 million, or $1.55 per diluted share, net of income taxes and
minority interest) related to the sale of NL's specialty chemicals business, the
initial public offering of CompX International common stock, the settlement of
two lawsuits in which Valhi was a defendant and a third quarter tax benefit
resulting from refunds of prior-year German withholding taxes received by NL.
Total operating income in the third quarter of 1999 decreased 22%
compared to the third quarter of 1998 as higher component products operating
income reported by CompX was more than offset by lower chemicals operating
income at NL and operating losses in the Company's waste management segment
operated by Waste Control Specialists, consolidated effective July 1, 1999.
Chemicals operating income in the third quarter of 1999 declined
compared to the same period in 1998 due primarily to lower average selling
prices and lower production volumes of titanium dioxide pigments ("TiO2"),
partially offset by higher sales volumes. NL's average TiO2 selling prices in
the third quarter of 1999 were 4% lower than the third quarter of 1998 and were
2% lower than the second quarter of this year. NL's selling prices at the end of
the third quarter of 1999 were the same as the average for the quarter. NL's
Ti02 sales volumes in the third quarter of 1999 increased 18% compared to the
third quarter of 1998 with strong demand in all major regions. NL's TiO2
production volumes in the third quarter of 1999 were 10% lower than the
comparable period in 1998 and were 8% lower than the second quarter of this
year. NL expects strong market conditions will continue, which should result in
increased TiO2 selling prices in all major regions. Due to these industry
fundamentals and NL's moderate inventory levels, NL intends to increase its
production volumes somewhat in the fourth quarter of 1999, but NL does not
expect its production volumes will exceed its sales volumes for the full year.
The Company's 1998 year-to-date results of operations include 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 45% in the third quarter of 1999
compared to the same period in 1998 due primarily to CompX's acquisition of
Timberline Lock and Thomas Regout (acquired in November 1998 and January 1999,
respectively) and increased demand for CompX's office furniture products.
Excluding the effect of these acquisitions, slide and ergonomic products sales
increased 13% in the third quarter of 1999 compared to the third quarter of 1998
and security products sales increased 3%. Component products operating income in
the first nine 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.
Waste Control Specialists continued to report losses due principally to
weak demand for its hazardous and toxic waste disposal services, however its
operating loss in the third quarter of 1999 was less than the second quarter of
this year due in part to the favorable effect of certain cost control measures
implemented.
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 third quarter of 1999
include equity in earnings of NL of $2.5 million and equity in losses of TIMET
of $2.7 million, compared to equity in earnings of NL and TIMET of $4.8 million
and $5 million, respectively, in the third quarter of 1998. TIMET reported a net
loss for the third quarter of 1999 due primarily to lower sales volumes and
product mix changes, as lower priced industrial products represented a higher
percentage of TIMET's mill product sales volumes. The decline in sales volumes
resulted from a decline in demand, including cancellations and push-outs by
major aerospace customers, and production difficulties and inefficiencies at its
North American operations. TIMET currently believes its results in the fourth
quarter of 1999 will improve somewhat from third quarter levels, although the
mid-October failure of a press at TIMET's Ohio facility may result in lower
sales volumes. TIMET is currently evaluating alternatives for production
originally scheduled on this press. TIMET is considering further personnel
reductions and rationalization of plant capacity in light of its revised market
outlook and, as a result, TIMET believes it will likely incur a restructuring
charge in the fourth quarter of 1999.
General corporate interest and dividend income increased in the third
quarter of 1999 compared to the third quarter of 1998 due primarily to a higher
level of dividend distributions received from The Amalgamated Sugar Company LLC,
partially offset by a lower level of funds available for investment. General
corporate interest and dividend income was lower in the first nine months of
1999 compared to the same period in 1998 due primarily to a lower level of funds
available for investment, offset in part by a higher level of LLC dividend
distributions. Securities transaction gains in all periods relate principally to
LYONs exchanges. General corporate expenses in the 1998 year-to-date period
include a $32 million aggregate charge related to the settlement of the two
lawsuits discussed above. Interest expense declined due primarily to a lower
level of outstanding indebtedness.
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), the extent of
the dependence of certain of the Company's businesses on certain market sectors,
the impact of certain long-term contracts with customers and vendors on certain
of the Company's businesses, 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
security products), titanium metals products and waste management industries.
* * * * *
<PAGE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1999 1998 1999
Net sales
<S> <C> <C> <C> <C>
Chemicals ............................ $221.5 $242.7 $698.4 $676.8
Component products ................... 38.7 55.9 110.5 166.1
Waste management (after consolidation) -- 4.7 -- 4.7
------ ------ ------ ------
$260.2 $303.3 $808.9 $847.6
====== ====== ====== ======
Operating income
Chemicals ............................ $ 40.2 $ 30.0 $119.6 $ 95.2
Component products ................... 8.8 9.8 22.2 29.0
Waste management (after consolidation) -- (1.5) -- (1.5)
------ ------ ------ ------
Total operating income ............. 49.0 38.3 141.8 122.7
Equity in:
Tremont Corporation .................. 3.0 (1.1) 3.0 3.4
Waste Control Specialists
(prior to consolidation) .......... (2.8) -- (9.6) (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 ......... 8.2 10.7 42.9 32.2
Securities transactions .............. .1 .1 8.0 .7
Expenses, net ........................ (5.6) (5.0) (49.7) (17.0)
Interest expense ....................... (23.0) (18.0) (71.9) (54.4)
------ ------ ------ ------
Income before income taxes ......... 28.9 25.0 462.6 79.1
Provision for income taxes (benefit) ... .5 7.4 184.9 (61.8)
Minority interest in after-tax earnings 15.3 9.4 62.0 68.5
------ ------ ------ ------
Income from continuing operations .. 13.1 8.2 215.7 72.4
Discontinued operations ................ -- -- -- 2.0
Extraordinary item ..................... (1.4) -- (2.7) --
------ ------ ------ ------
Net income ......................... $ 11.7 $ 8.2 $213.0 $ 74.4
====== ====== ====== ======
</TABLE>
<PAGE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS (CONTINUED)
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1999 1998 1999
Basic earnings per common share
<S> <C> <C> <C> <C>
Continuing operations ................ $ .11 $ .07 $ 1.87 $ .63
Discontinued operations .............. -- -- -- .02
Extraordinary item ................... (.01) -- (.02) --
------ ------ ------ ------
Net income ......................... $ .10 $ .07 $ 1.85 $ .65
====== ====== ====== ======
Diluted earnings per common share
Continuing operations ................ $ .11 $ .07 $ 1.86 $ .62
Discontinued operations .............. -- -- -- .02
Extraordinary item ................... (.01) -- (.02) --
------ ------ ------ ------
Net income ......................... $ .10 $ .07 $ 1.84 $ .64
====== ====== ====== ======
Shares used in calculation of per share
amounts
Basic earnings ....................... 114.9 115.1 115.0 115.0
====== ====== ====== ======
Diluted earnings ..................... 116.3 116.3 116.1 116.2
====== ====== ====== ======
</TABLE>
