SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 - For the quarter ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-640
NL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 13-5267260
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Two Greenspoint Plaza, 16825 Northchase Dr., Suite 1200, Houston, TX 77060-2544
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 423-3300
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Number of shares of common stock outstanding on July 28, 1995: 51,068,716
NL INDUSTRIES, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - December 31, 1994
and June 30, 1995 3-4
Consolidated Statements of Operations - Three and
six months ended June 30, 1994 and 1995 5
Consolidated Statement of Shareholders' Deficit
- Six months ended June 30, 1995 6
Consolidated Statements of Cash Flows - Six
months ended June 30, 1994 and 1995 7-8
Notes to Consolidated Financial Statements 9-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15-18
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 6. Exhibits and Reports on Form 8-K 20
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS December 31, June 30,
1994 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 131,124 $ 137,264
Marketable securities 25,165 2,387
Accounts and notes receivable 137,753 187,524
Refundable income taxes 1,162 11,309
Inventories 185,173 195,608
Prepaid expenses 3,878 9,704
Deferred income taxes 2,177 2,495
Total current assets 486,432 546,291
Other assets:
Marketable securities 21,329 22,414
Investment in joint ventures 187,480 185,989
Prepaid pension cost 19,329 21,684
Deferred income taxes 2,746 692
Other 37,267 36,011
Total other assets 268,151 266,790
Property and equipment:
Land 20,665 22,689
Buildings 147,370 166,709
Machinery and equipment 582,138 647,873
Mining properties 87,035 93,371
Construction in progress 9,579 7,523
846,787 938,165
Less accumulated depreciation and depletion 438,960 486,949
Net property and equipment 407,827 451,216
$1,162,410 $1,264,297
</TABLE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' DEFICIT December 31, June 30,
1994 1995
<S> <C> <C>
Current liabilities:
Notes payable $ - $ 21,782
Current maturities of long-term debt 42,887 40,921
Accounts payable and accrued liabilities 168,327 174,797
Payable to affiliates 11,348 10,509
Income taxes 20,762 10,194
Deferred income taxes 1,590 1,666
Total current liabilities 244,914 259,869
Noncurrent liabilities:
Long-term debt 746,762 765,478
Deferred income taxes 178,332 209,100
Accrued pension cost 76,242 78,956
Accrued postretirement benefits cost 65,299 63,221
Other 141,518 147,955
Total noncurrent liabilities 1,208,153 1,264,710
Minority interest 2,425 2,826
Shareholders' deficit:
Common stock 8,355 8,355
Additional paid-in capital 759,281 759,281
Adjustments:
Currency translation (125,494) (130,142)
Pension liabilities (1,635) (1,635)
Marketable securities (12) 430
Accumulated deficit (567,041) (532,977)
Treasury stock (366,536) (366,420)
Total shareholders' deficit (293,082) (263,108)
$1,162,410 $1,264,297
</TABLE>
Commitments and contingencies (Note 13)
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1995 1994 1995
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $237,113 $283,474 $438,962 $534,349
Other, net 5,200 6,121 28,214 9,015
242,313 289,595 467,176 543,364
Costs and expenses:
Cost of sales 178,925 187,896 325,881 357,664
Selling, general and
administrative 54,250 50,448 110,261 94,620
Interest 21,071 21,052 42,136 41,728
254,246 259,396 478,278 494,012
Income (loss) before
income taxes and
minority interest (11,933) 30,199 (11,102) 49,352
Income tax expense (3,354) (9,056) (10,303) (14,802)
Income (loss) before
minority interest (15,287) 21,143 (21,405) 34,550
Minority interest (247) (141) (496) (486)
Net income (loss) $(15,534) $ 21,002 $(21,901) $ 34,064
Net income (loss) per share
of common stock $ (.30) $ .41 $ (.43) $ .66
Weighted average common and
common equivalent shares
outstanding 51,040 51,552 51,002 51,469
</TABLE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
Six months ended June 30, 1995
(In thousands)
<TABLE>
<CAPTION>
Additional Adjustments
Common paid-in Currency Pension Marketable
stock capital translation liabilities securities
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $8,355 $759,281 $(125,494) $(1,635) $(12)
Net income - - - - -
Adjustments - - (4,648) - 442
Treasury stock reissued - - - - -
Balance at June 30, 1995 $8,355 $759,281 $(130,142) $(1,635) $430
</TABLE>
<TABLE>
<CAPTION>
Accumulated Treasury
deficit stock Total
<S> <C> <C> <C>
Balance at December 31, 1994 $(567,041) $(366,536) $(293,082)
Net income 34,064 - 34,064
Adjustments - - (4,206)
Treasury stock reissued - 116 116
Balance at June 30, 1995 $(532,977) $(366,420) $(263,108)
</TABLE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1994 and 1995
(In thousands)
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(21,901) $ 34,064
Depreciation, depletion and amortization 17,481 19,291
Noncash interest expense 8,921 9,547
Deferred income taxes 30,195 16,259
Other, net (894) (5,073)
33,802 74,088
Change in assets and liabilities:
Accounts and notes receivable (46,791) (37,759)
Inventories 22,715 3,053
Prepaid expenses (2,503) (5,151)
Accounts payable and accrued liabilities (848) (7,013)
Income taxes 75,490 (22,447)
Other, net 15,459 (606)
Marketable trading securities, net 14,254 23,943
Net cash provided by operating activities 111,578 28,108
Cash flows from investing activities:
Capital expenditures (16,564) (26,200)
Investment in joint ventures, net 2,405 1,486
Other, net 562 33
Net cash used by investing activities (13,597) (24,681)
</TABLE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six months ended June 30, 1994 and 1995
(In thousands)
<TABLE>
<CAPTION>
1994 1995
<S> <C> <C>
Cash flows from financing activities:
Indebtedness:
Borrowings $ 31,937 $ 25,839
Principal payments (105,472) (27,326)
Other, net (202) 102
Net cash used by financing activities (73,737) (1,385)
Cash and cash equivalents:
Net change from:
Operating, investing and financing activities 24,244 2,042
Currency translation 4,942 4,098
Balance at beginning of period 106,593 131,124
Balance at end of period $ 135,779 $137,264
Supplemental disclosures - cash paid (received) for:
Interest, net of amounts capitalized $ 35,130 $ 28,273
Income taxes (95,134) 21,296
</TABLE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:
NL Industries, Inc. conducts its operations primarily through its wholly-
owned subsidiaries, Kronos, Inc. (titanium dioxide pigments, or "TiO2") and
Rheox, Inc. (specialty chemicals). Valhi, Inc. and Tremont Corporation, each
affiliates of Contran Corporation, hold 53% and 18%, respectively, of NL's
outstanding common stock. Contran holds, directly or indirectly, approximately
90% of Valhi's and 44% of Tremont's outstanding common stock.
The consolidated balance sheet of NL Industries, Inc. and Subsidiaries
(collectively, the "Company") at December 31, 1994 has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at June 30, 1995 and the consolidated statements of
operations, shareholders' deficit and cash flows for the interim periods ended
June 30, 1994 and 1995, have been prepared by the Company, without audit. In
the opinion of management, all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations and cash flows have been made. The results of operations
for the interim periods are not necessarily indicative of the operating results
for a full year or of future operations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Certain prior year amounts have been
reclassified to conform to the 1995 presentation. The accompanying consolidated
financial statements should be read in conjunction with the consolidated
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1994 (the "1994 Annual Report").
NOTE 2 - NET INCOME (LOSS) PER SHARE OF COMMON STOCK:
Net income (loss) per share of common stock is based on the weighted
average number of common shares and equivalents outstanding. Common stock
equivalents, primarily non-qualified stock options, are excluded from the
computation when their effect is antidilutive.
NOTE 3 - BUSINESS SEGMENT INFORMATION:
The Company's operations are conducted in two business segments - TiO2
conducted by Kronos and specialty chemicals conducted by Rheox.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1995 1994 1995
(In thousands)
<S> <C> <C> <C> <C>
Net sales:
Kronos $206,407 $249,393 $380,667 $466,721
Rheox 30,706 34,081 58,295 67,628
$237,113 $283,474 $438,962 $534,349
Operating income:
Kronos $ 17,664 $ 47,100 $ 33,023 $ 79,553
Rheox 8,578 10,449 15,532 19,964
26,242 57,549 48,555 99,517
General corporate income
(expense):
Securities earnings, net 642 1,926 843 4,395
Expenses, net (17,746) (8,224) (18,364) (12,832)
Interest expense (21,071) (21,052) (42,136) (41,728)
$(11,933) $ 30,199 $(11,102) $ 49,352
</TABLE>
NOTE 4 - INVENTORIES:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
Raw materials $ 30,118 $ 27,791
Work in process 7,655 9,085
Finished products 112,410 120,309
Supplies 34,990 38,423
$185,173 $195,608
</TABLE>
NOTE 5 - MARKETABLE SECURITIES AND SECURITIES TRANSACTIONS:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
Current - U.S. Treasury securities:
Unrealized losses $(1,124) $ (10)
Cost 26,289 2,397
Aggregate market $25,165 $ 2,387
Noncurrent - marketable equity securities:
Unrealized gains $ 3,357 $ 2,818
Unrealized losses (3,374) (2,156)
Cost 21,346 21,752
Aggregate market $21,329 $22,414
</TABLE>
The Company has classified its U.S. Treasury securities as trading
securities and its marketable equity securities as available-for-sale.
Net gains and losses from securities transactions are composed of:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1995 1994 1995
(In thousands)
<S> <C> <C> <C> <C>
Unrealized gains (losses) $(387) $422 $ (775) $1,115
Realized gains (losses) (25) 154 (438) 50
$(412) $576 $(1,213) $1,165
</TABLE>
NOTE 6 - INVESTMENT IN JOINT VENTURES:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
TiO2 manufacturing joint venture $185,122 $183,636
Other 2,358 2,353
$187,480 $185,989
</TABLE>
NOTE 7 - OTHER NONCURRENT ASSETS:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
Intangible assets, net $13,957 $13,863
Deferred financing costs, net 16,079 15,377
Other 7,231 6,771
$37,267 $36,011
</TABLE>
NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
Accounts payable $ 74,903 $ 70,236
Accrued liabilities:
Employee benefits 34,209 36,772
Environmental costs 10,433 10,433
Interest 6,485 10,446
Miscellaneous taxes 7,336 2,649
Other 34,961 44,261
93,424 104,561
$168,327 $174,797
</TABLE>
NOTE 9 - OTHER NONCURRENT LIABILITIES:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
Environmental costs $ 93,655 $102,666
Insurance claims and expenses 14,716 14,649
Employee benefits 12,322 14,319
Deferred technology fee income 18,305 14,064
Other 2,520 2,257
$141,518 $147,955
</TABLE>
NOTE 10 - NOTES PAYABLE AND LONG-TERM DEBT:
<TABLE>
<CAPTION>
December 31, June 30,
1994 1995
(In thousands)
<S> <C> <C>
Notes payable - Kronos $ - $ 21,782
Long-term debt:
NL Industries:
11.75% Senior Secured Notes $250,000 $250,000
13% Senior Secured Discount Notes 116,409 123,976
366,409 373,976
Kronos:
DM bank credit facility (DM 397,609) 255,703 286,756
Joint venture term loan 88,715 81,000
Other 10,507 13,662
354,925 381,418
Rheox:
Bank term loan 67,500 50,263
Other 815 742
68,315 51,005
789,649 806,399
Less current maturities 42,887 40,921
$746,762 $765,478
</TABLE>
NOTE 11 - INCOME TAXES:
The difference between the provision for income tax expense attributable to
income before income taxes and minority interest and the amount that would be
expected using the U.S. federal statutory income tax rate of 35% is presented
below.
<TABLE>
<CAPTION>
Six months ended
June 30,
1994 1995
(In thousands)
<S> <C> <C>
Expected tax benefit (expense) $ 3,886 $(17,273)
Non-U.S. tax rates 2,703 2,263
Incremental tax on income of companies not included
in NL's consolidated U.S. federal income tax return (1,096) (2,462)
Valuation allowance (15,138) 2,479
U.S. state income taxes (283) (350)
Other, net (375) 541
Income tax expense $(10,303) $(14,802)
</TABLE>
NOTE 12 - OTHER INCOME, NET:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1994 1995 1994 1995
(In thousands)
<S> <C> <C> <C> <C>
Securities earnings:
Interest and dividends $1,054 $1,350 $ 2,056 $ 3,230
Securities transactions (412) 576 (1,213) 1,165
642 1,926 843 4,395
Litigation settlement gain - - 20,040 -
Technology fee income 2,453 2,719 4,862 5,305
Currency transaction gains,
(losses), net 502 716 366 (1,917)
Disposition of property and
equipment (292) (591) (1,279) (1,385)
Royalty income 594 - 1,020 -
Other, net 1,301 1,351 2,362 2,617
$5,200 $6,121 $28,214 $ 9,015
</TABLE>
NOTE 13 - COMMITMENTS AND CONTINGENCIES:
For descriptions of certain legal proceedings, income tax and other
commitments and contingencies related to the Company, reference is made to (i)
Part II, Item 1 -"Legal Proceedings," (ii) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1995, and (iii) the 1994 Annual
Report.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The Company's chemical operations are conducted in two business segments -
TiO2 conducted by Kronos and specialty chemicals conducted by Rheox. The
Company's results improved significantly during the first six months of 1995, as
discussed below, and the Company expects to remain profitable for the remainder
of the year.
<TABLE>
<CAPTION>
Three months ended % Six months ended %
June 30, Change June 30, Change
1994 1995 1994 1995
(In millions) (In millions)
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Kronos $206.4 $249.4 +21% $380.7 $466.7 +23%
Rheox 30.7 34.1 +11% 58.3 67.6 +16%
$237.1 $283.5 +20% $439.0 $534.3 +22%
Operating income:
Kronos $ 17.6 $ 47.0 +167% $ 33.1 $ 79.5 +141%
Rheox 8.6 10.5 +22% 15.5 20.0 +29%
$ 26.2 $ 57.5 +119% $ 48.6 $ 99.5 +105%
Percent changes in TiO2:
Sales volume -6% +1%
Average selling prices (in billing
currencies) +19% +15%
</TABLE>
Kronos' TiO2 operating income in the second quarter of 1995 increased from
the second quarter of 1994 primarily due to higher average selling prices. As a
result of increased pricing in all major markets, Kronos' average TiO2 selling
prices in the second quarter of 1995 were 19% higher than the second quarter of
1994 and 6% higher than the first quarter of 1995. Kronos' year-to-date sales
volumes for 1995 approximated sales volumes for the same period in 1994;
however, second quarter 1995 sales volumes were 6% below the second quarter of
1994. Rheox's operating results for both the second quarter and first half of
1995 improved compared to the 1994 periods primarily as a result of higher sales
volumes and average selling prices. A significant amount of sales are
denominated in currencies other than the U.S. dollar, and fluctuations in the
value of the U.S. dollar relative to other currencies increased the dollar value
of sales for the second quarter and first half of 1995 by $20 million and $32
million, respectively, compared to the 1994 periods.
The following table sets forth certain information regarding general
corporate income (expense).
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, Difference June 30, Difference
1994 1995 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Securities earnings $ .7 $ 1.9 $ 1.2 $ .9 $ 4.4 $3.5
Corporate expenses, net (17.7) (8.2) 9.5 (18.5) (12.8) 5.7
Interest expense (21.1) (21.1) - (42.1) (41.7) .4
$(38.1) $(27.4) $10.7 $(59.7) $(50.1) $9.6
</TABLE>
Corporate expenses, net in the six months ended June 30, 1995 were lower
than the comparable 1994 period due to lower provisions for environmental
remediation and other costs, partially offset by the effect of the $20 million
gain related to the first-quarter 1994 settlement of the Company's lawsuit
against Lockheed Corporation. Corporate expenses, net in the second quarter of
1995 were lower than 1994 due to reduced provisions for environmental
remediation and other costs. Interest expense in the first six months of 1995
was slightly lower due to the lower level of debt partially offset by the impact
of changes in currency exchange rates and higher variable U.S. interest rates.
The Company's operations are conducted on a worldwide basis. In 1994, the
Company's income tax expense was impacted by losses in certain countries for
which no current benefit was available and for which the Company believed
recognition of a deferred tax asset was not appropriate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's consolidated cash flows from operating, investing and
financing activities for the six months ended June 30, 1994 and 1995 are
presented below.
<TABLE>
<CAPTION>
Six months ended
June 30,
1994 1995
(In millions)
<S> <C> <C>
Net cash provided (used) by:
Operating activities $111.6 $ 28.1
Investing activities (13.6) (24.7)
Financing activities (73.8) (1.4)
Net cash provided by operating, investing and
financing activities $ 24.2 $ 2.0
</TABLE>
The TiO2 industry is cyclical, with the previous peak in selling prices in
early 1990 and the latest trough in the third quarter of 1993. Excluding the
effects of the receipt of the German tentative tax refunds in the first half of
1994, the Company's cash flows from operations improved during the first six
months of 1995 compared to the 1994 period, primarily due to increased TiO2
selling prices and the sale of $24 million in current marketable securities.
Changes in the Company's inventories, receivables and payables (excluding the
effect of currency translation) used cash in both periods.
Certain of the Company's income tax returns in various U.S. and non-U.S.
jurisdictions, including Germany, are being examined and tax authorities have
proposed tax deficiencies. Additional substantial German proposed tax
deficiency assessments are expected. Although the Company believes that it will
ultimately prevail, the Company has granted a DM 100 million ($72 million at
June 30, 1995) lien on its Nordenham, Germany TiO2 plant and may be required to
provide additional security in favor of the German tax authorities until the
assessments proposing tax deficiencies are resolved. The Company believes that
it has adequately provided accruals for additional income taxes and related
interest expense which may ultimately result from all such examinations and
believes that the ultimate disposition of such examinations should not have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.
During the second quarter of 1995, a non-U.S. subsidiary borrowed $22
million under short-term lines of credit. Repayments of indebtedness in the
first six months of 1995 include payments of $17 million on the Rheox bank term
loan and $8 million on the joint venture term loan. Net repayments of
indebtedness in the first half of 1994 include payments of DM 143 million of the
DM credit facility ($87 million), $8 million on the Rheox bank term loan and $8
million on the joint venture term loan, and borrowings under the DM bank credit
facility of DM 55 million ($33 million).
At June 30, 1995, the Company had cash, cash equivalents and current
marketable securities aggregating $140 million (28% held by non-U.S.
subsidiaries) including restricted cash, cash equivalents and current marketable
securities of $16 million. The Company's subsidiaries had $228 million
available for borrowing under existing credit facilities, of which $90 million
is available only for (i) permanently reducing the DM term loan or (ii) paying
future German income tax assessments, as described above.
The Company has been named as a defendant, potentially responsible party
("PRP"), or both, in a number of legal proceedings associated with environmental
matters, including waste disposal sites or facilities currently or formerly
owned, operated or used by the Company, many of which disposal sites or
facilities are on the U.S. Environmental Protection Agency's (the "U.S. EPA")
Superfund National Priorities List or similar state lists. The Company believes
it has adequate accruals ($94 million at June 30, 1995) for reasonably estimable
costs of such matters. It is not possible to estimate the range of costs for
certain sites. The Company has estimated that the upper end of the range of
reasonably possible costs to the Company for sites for which it is possible to
estimate costs is approximately $162 million. No assurance can be given that
actual costs will not exceed accrued amounts or the upper end of the range for
sites for which estimates have been made, and no assurance can be given that
costs will not be incurred with respect to sites as to which no estimate
presently can be made. Further, there can be no assurance that additional
environmental matters will not arise in the future.
The Company is also a defendant in a number of legal proceedings seeking
damages for personal injury and property damage arising from the sale of lead
pigments and lead-based paints. Based on, among other things, the results of
such litigation to date, the Company believes that the pending lead pigment
litigation is without merit and has not accrued any amounts for such pending
lead pigment litigation. The Company currently believes the disposition of all
claims and disputes, individually and in the aggregate, should not have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity. There can be no assurance that additional
matters of these types will not arise in the future. In addition, various
legislation and administrative regulations have, from time to time, been enacted
or proposed at the state, local and federal levels that seek to impose various
obligations on present and former manufacturers of lead pigment and lead-based
paint with respect to asserted health concerns associated with the use of such
products and to effectively overturn court decisions in which the Company and
other pigment manufacturers have been successful.
The Company periodically evaluates its liquidity requirements, alternative
uses of capital, capital needs and availability of resources in view of, among
other things, its debt service and capital expenditure requirements and
estimated future operating cash flows. As a result of this process, the Company
has in the past and may in the future seek to reduce, refinance or restructure
indebtedness, raise additional capital, restructure ownership interests, sell
interests in subsidiaries or other assets, or take a combination of such steps
or other steps to manage its liquidity and capital resources.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the 1994 Annual Report and the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 for
descriptions of certain previously-reported legal proceedings.
Wright (Alvin) and Wright (Allen) v. Lead Industries, et. al. In an
April 1995 amended complaint, plaintiffs voluntarily dismissed their breach of
warranty claim and added an unfair and deceptive trade practices claim. In July
1995, the trial court granted in part the defendants' motion to dismiss, and
dismissed the plaintiffs' fraud and unfair and deceptive trade practices claims.
A trial date has been set in these consolidated cases for October 1996.
HANO Third-Party Complaints. In June 1995, the District Court
granted motions for summary judgment in several of the remaining cases and,
after such grant, two cases remained pending. The time in which plaintiffs may
file an appeal has not yet expired. The Company understands that the
plaintiffs' counsel in the HANO cases has indicated an intention to file a class
action against the lead pigment defendants on behalf of allegedly injured
plaintiffs.
Wagner, et al. v. Anzon, Inc. and NL Industries, Inc. In May 1995,
plaintiffs filed a notice of appeal.
In re: Asbestos III. The trial date has been delayed until
August 1995.
Rhodes, et al. v. ACF Industries, Inc., et al. (Circuit Court of
Putnam County, West Virginia, No. 95-C-261). Twelve plaintiffs brought this
action against the Company and various other defendants in July 1995.
Plaintiffs allege that they were employed by demolition and disposal
contractors, and claim that as a result of the defendants' negligence they were
exposed to asbestos during such activities on defendants' premises in West
Virginia. Plaintiffs allege personal injuries and seek compensatory damages
totaling $18.5 million and punitive damages totaling $55.5 million. The Company
intends to file an answer denying plaintiffs' allegations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on May 3, 1995.
The only matter voted upon was the election of directors, and all the nominees
for director were elected. The vote with respect to each was as follows:
<TABLE>
<CAPTION>
Director Vote For Vote Withheld
<S> <C> <C>
Joseph S. Compofelice 47,186,917 150,618
J. Landis Martin 47,189,309 148,226
Kenneth R. Peak 47,229,178 108,357
Glenn R. Simmons 47,189,690 147,845
Harold C. Simmons 47,185,803 151,732
Lawrence A. Wigdor 47,201,790 135,745
Admiral Elmo R. Zumwalt, Jr. 47,228,836 117,499
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
27.1 - Financial Data Schedule for the six-month period ended
June 30, 1995.
(b) REPORTS ON FORM 8-K
Reports on Form 8-K for the quarter ended June 30, 1995 and for
the month of July 1995:
April 25, 1995 - reported Items 5 and 7.
July 20, 1995 - reported Items 5 and 7.
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 thereunto duly authorized.
NL INDUSTRIES, INC.
(Registrant)
Date: July 28, 1995 By /s/ Joseph S. Compofelice
Joseph S. Compofelice
Vice President and
Chief Financial Officer
Date: July 28, 1995 By /s/ Dennis G. Newkirk
Dennis G. Newkirk
Vice President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NL
INDUSTRIES INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 137,264
<SECURITIES> 2,387
<RECEIVABLES> 171,543
<ALLOWANCES> 4,177
<INVENTORY> 195,608
<CURRENT-ASSETS> 546,291
<PP&E> 938,165
<DEPRECIATION> 486,949
<TOTAL-ASSETS> 1,264,297
<CURRENT-LIABILITIES> 259,869
<BONDS> 765,478
<COMMON> 8,355
0
0
<OTHER-SE> (271,463)
<TOTAL-LIABILITY-AND-EQUITY> 1,264,297
<SALES> 534,349
<TOTAL-REVENUES> 534,349
<CGS> 357,664
<TOTAL-COSTS> 357,664
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 179
<INTEREST-EXPENSE> 41,728
<INCOME-PRETAX> 49,352
<INCOME-TAX> (14,802)
<INCOME-CONTINUING> 34,064
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,064
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
