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
January 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 January 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 January 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: January 29, 1999
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, TX 75240-2697
(972) 233-1700
VALHI REPORTS 1998 RESULTS
DALLAS, TEXAS . . January 29, 1999 . . Valhi, Inc. (NYSE: VHI) reported
income from continuing operations of $10.1 million, or $.09 per diluted share,
in the fourth quarter of 1998 compared to income of $39.2 million, or $.34 per
diluted share, in the fourth quarter of 1997. For the full year, the Company
reported income from continuing operations of $225.8 million, or $1.94 per
diluted share, in 1998 compared to income of $27.1 million, or $.24 per diluted
share, in 1997. The full year 1998 results include previously-reported gains
related to the first quarter sale of 58%-owned NL Industries' specialty
chemicals business unit ($1.31 per diluted share, net of income taxes and
minority interest) and the initial public offering of CompX International common
stock ($.38 per diluted share, net of income taxes).
Total operating income for the full year of 1998 increased 38% due
primarily to higher chemicals operating income. NL's chemicals operating income
improved due primarily to higher average selling prices for titanium dioxide
pigments ("TiO2"), partially offset by lower TiO2 sales volumes. NL's average
TiO2 selling prices for the full year of 1998 were 16% higher than 1997, while
TiO2 sales volumes were 4% lower than the record 1997 period reflecting lower
volumes in Asia and Latin America. NL's operating income in 1997 included
income of $12.9 million ($3.2 million in the fourth quarter) resulting from
refunds of German franchise taxes. The Company's results of operations for 1997
included net sales of $147.2 million and operating income of $43.0 million
related to the disposed specialty chemicals business unit (1998 net sales and
operating income prior to the sale - $12.7 million and $2.7 million,
respectively). NL expects its operating income in 1999 will be lower than 1998
as NL reduces its production rates to better match expected demand for TiO2.
Operating income of the component products segment for 1998, which includes a
$3.3 million first quarter non-recurring pre-tax charge related to CompX's
initial public offering, increased 13% 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 component products net sales resulted from the March and November 1998
acquisitions of two lock competitors.
Total operating income for the fourth quarter of 1998 declined slightly
compared to the fourth quarter of 1997 as the impact of higher TiO2 chemicals
and component products operating income was more than offset by the disposal of
NL's specialty chemicals business unit, which generated net sales of $35.8
million and operating income of $9.8 million in the fourth quarter of 1997.
NL's average TiO2 selling prices in the fourth quarter of 1998 were 11% higher
than the fourth quarter of 1997, and TiO2 sales volumes decreased 11% in the
same period reflecting weakened demand, particularly in Europe and Asia.
As previously-reported, in the second quarter of 1998 the Company acquired
48% of Tremont Corporation's outstanding common stock, and the Company commenced
reporting equity in Tremont's earnings in the third quarter of 1998. Equity in
earnings of Tremont for the fourth quarter of 1998 includes $3.6 million of
earnings related to an adjustment of the deferred income tax asset valuation
allowance related to Tremont's 20% investment in NL. Excluding this item,
equity in earnings of Tremont for the fourth quarter of 1998 was lower than the
third quarter of 1998 due in part to Tremont's lower equity in earnings of its
33%-owned affiliate Titanium Metals Corporation, whose fourth quarter 1998
results of operations included an $18 million pre-tax charge associated with the
closure of certain facilities and implementation of other cost reductions in
response to deteriorating market conditions for titanium metal products. Equity
in losses of Waste Control Specialists increased due in part to ongoing
expenditures associated with the pursuit of permits for the disposal of low-
level and mixed radioactive wastes.
General corporate interest and dividend income decreased in 1998 due
primarily to lower distributions received from The Amalgamated Sugar Company
LLC. Securities transaction gains in all periods relate principally to LYONs
exchanges. General corporate expenses in the fourth quarter of 1998 include $3
million of non-recurring costs related to the termination of NL's agreement to
acquire certain TiO2 operations and production facilities owned by a competitor.
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 based on management's belief and
assumptions using currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot assure that these expectations will prove to be correct.
Such statements 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. Should one or
more of these risks materialize, or should the underlying assumptions prove
incorrect, 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. The
Company's 1998 results are subject to final audit.
* * * * *
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
Net sales
Chemicals $243.9 $208.9 $ 984.4 $ 907.3
Component products 28.4 41.6 108.7 152.1
$272.3 $250.5 $1,093.1 $1,059.4
Operating income
Chemicals $ 37.2 $ 35.0 $ 106.7 $ 154.6
Component products 8.2 9.7 28.3 31.9
Total operating income 45.4 44.7 135.0 186.5
Equity in:
Tremont Corporation - 4.4 - 7.4
Waste Control Specialists (3.8) (5.9) (12.7) (15.5)
Gain on:
Disposal of business unit - - - 330.2
Reduction in interest in CompX - - - 67.9
General corporate items, net:
Interest and dividend income 13.7 12.0 60.2 54.9
Securities transactions 46.8 - 48.9 8.0
Expenses, net (6.9) (8.3) (57.8) (58.0)
Interest expense (27.4) (19.3) (118.9) (91.2)
Income before income taxes 67.8 27.6 54.7 490.2
Provision for income taxes 28.6 7.3 27.6 192.2
Minority interest in after-tax earnings - 10.2 - 72.2
Income from continuing operations 39.2 10.1 27.1 225.8
Discontinued operations (.9) - 33.6 -
Extraordinary item - (3.5) (4.3) (6.2)
Net income $ 38.3 $ 6.6 $ 56.4 $ 219.6
</TABLE>
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS (CONTINUED)
(Unaudited)
(In millions, except earnings per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31,
1997 1998 1997 1998
<S> <C> <C> <C> <C>
BASIC EARNINGS PER COMMON SHARE
Continuing operations $ .34 $ .09 $ .24 $ 1.96
Discontinued operations (.01) - .29 -
Extraordinary item - (.03) (.04) (.05)
NET INCOME $ .33 $ .06 $ .49 $ 1.91
DILUTED EARNINGS PER COMMON SHARE
Continuing operations $ .34 $ .09 $ .24 $ 1.94
Discontinued operations (.01) - .29 -
Extraordinary item - (.03) (.04) (.05)
NET INCOME $ .33 $ .06 $ .49 $ 1.89
SHARES USED IN CALCULATION OF
PER SHARE AMOUNTS
Basic earnings 115.2 115.0 115.0 115.0
Diluted earnings 116.2 116.2 115.9 116.1
</TABLE>
