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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date earliest event reported): January 30, 1998
NL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
New Jersey 1-640 13-5267260
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
16825 Northchase Drive, Suite 1200, Houston, Texas 77060-2544
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 423-3300
Not applicable
(Former name or address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On January 30, 1998 the Company completed the disposition of
substantially all of the net assets of its Rheox specialty chemical
operations to Elementis plc, a U.K.-based corporation, for $465
million cash consideration, including $20 million attributed to a
five-year covenant not to compete. The Company used a portion of the
net proceeds to repay and terminate Rheox's U.S. bank credit
facilities.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro forma financial information
Pro forma condensed consolidated financial statements of the
Registrant, which present the pro forma effects of the
transactions described in Item 2 above, assuming such
transactions had occurred as of the dates set forth in the
accompanying notes, are included herein as Exhibit 99.1.
(c) Exhibit
Item No. Exhibit Index
99.1 Pro forma financial information of the Registrant.
* * * * *
SIGNATURE
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)
/s/ Dennis G. Newkirk
Dennis G. Newkirk
Vice President & Controller
Dated: February 13, 1998
Exhibit 99.1
NL INDUSTRIES, INC. AND SUBSIDIARIES
INDEX TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
---------
Pro Forma Condensed Consolidated Balance Sheet -
September 30, 1997 F-2/F-3
Notes to Pro Forma Condensed Consolidated Balance Sheet F-4
Pro Forma Condensed Consolidated Statement of Operations -
Nine months ended September 30, 1997 F-5
Pro Forma Condensed Consolidated Statement of Operations -
Year ended December 31, 1996 F-6
Notes to Pro Forma Condensed Consolidated Statements of
Operations F-7
These pro forma condensed consolidated financial statements should be read
in conjunction with the historical consolidated financial statements of NL
Industries, Inc. The pro forma condensed consolidated financial statements
are not necessarily indicative of the Company's consolidated financial
position or results of continuing operations as they may be in the future.
F-1
<PAGE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1997
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Pro forma adjustments
--------------------------------
ASSETS Historical (I) (II) (III) Pro forma
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 102.2 $318.1 $20.0 ($125.3) $ 315.0
Accounts and notes receivable 160.6 (23.8) - - 136.8
Inventories 172.3 (18.5) - - 153.8
Other 12.6 (1.2) - - 11.4
--------- ------- ------ -------- ---------
447.7 274.6 20.0 (125.3) 617.0
--------- ------- ------ -------- ---------
Other assets:
Marketable securities 31.1 - - - 31.1
Investment in joint ventures 175.4 (2.1) - - 173.3
Other 45.1 (1.6) - - 43.5
--------- ------- ------ -------- ---------
251.6 (3.7) - - 247.9
--------- ------- ------ -------- ---------
Property and equipment, net 423.9 (29.9) - - 394.0
--------- ------- ------ -------- ---------
$1,123.2 $241.0 $20.0 ($125.3) $1,258.9
========= ======= ====== ======== =========
</TABLE>
F-2
<PAGE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
September 30, 1997
(Unaudited)
(In millions)
<TABLE>
<CAPTION>
Pro forma adjustments
--------------------------------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Historical (I) (II) (III) Pro forma
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Current liabilities:
Notes payable & current long-term debt $ 78.7 $ - $ - ( $15.1) $ 63.6
Accounts payable & accrued liabilities 165.8 (12.8) - - 153.0
Other 19.6 - 4.0 - 23.6
--------- ------- ------- -------- ---------
264.1 (12.8) 4.0 (15.1) 240.2
--------- ------- ------- -------- ---------
Noncurrent liabilities:
Long-term debt 694.6 - - (110.2) 584.4
Deferred income taxes 139.5 (3.6) - - 135.9
Other 253.4 (0.7) 16.0 - 268.7
--------- ------- ------- -------- ---------
1,087.5 (4.3) 16.0 (110.2) 989.0
--------- ------- ------- -------- ---------
Minority interest 0.3 - - - 0.3
--------- ------- ------- -------- ---------
Shareholders' equity (deficit):
Common stock and paid-in capital 767.6 - - - 767.6
Accumulated deficit (509.7) 256.2 - - (253.5)
Adjustments (120.9) 1.9 - - (119.0)
Treasury stock (365.7) - - - (365.7)
--------- ------- ------- -------- ---------
(228.7) 258.1 - - 29.4
--------- ------- ------- -------- ---------
$1,123.2 $241.0 $ 20.0 ($125.3) $1,258.9
========= ======= ======= ======== =========
</TABLE>
See accompanying notes to pro forma condensed consolidated balance sheet.
F-3
<PAGE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
Note 1 - Basis of presentation:
The Pro Forma Condensed Consolidated Balance Sheet assumes the
following transactions, more fully described in Item 2 of this Current
Report on Form 8-K dated February 13, 1998, occurred on September 30, 1997:
I - The Company sells substantially all of Rheox's specialty chemical
net assets, excluding debt, for $445 million cash consideration.
II - The Company agrees with the purchaser not to compete in the
rheological products business for a period of five years for $20
million cash consideration.
III - Rheox repays and terminates its U.S. bank indebtedness.
Note 2 - Pro forma adjustments:
I - Reflect the sale of substantially all of Rheox's net assets
as follows:
<TABLE>
<CAPTION>
Amount
------------
(In millions)
<S> <C>
Aggregate cash consideration, net of estimated fees and
expenses of $10 million $435.0
-------
Carrying value of assets sold and liabilities assumed:
Cash and cash equivalents 6.9
Receivables 23.8
Inventories 18.5
Prepaid expenses 0.7
Investment in joint ventures 2.1
Other assets 1.3
Net property, plant and equipment 29.9
Accounts payable & accrued liabilities (12.8)
Other noncurrent liabilities (0.7)
Foreign currency translation component of equity 1.9
-------
71.6
-------
Pre-tax gain 363.4
Income tax expense 107.2
-------
Net-of-tax gain $256.2
=======
</TABLE>
The Company's actual net-of-tax gain on the sale Rheox's net assets
will differ from the amount shown above because of, among other
things, (a) differences in the net carrying value of the assets
sold and liabilities assumed and (b) differences in income tax
expense resulting from different tax law limitations in the period
the sale actually occurred.
II - Reflect the Company's agreement not to compete with the
purchaser. The $20 million consideration will be amortized over the
five-year non-compete period.
III - Reflect repayment of Rheox's U.S. bank indebtedness.
F-4
<PAGE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Nine months ended September 30, 1997
(Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Pro forma adjustments
---------------------
Historical (I) (II) Pro forma
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $740.4 ($111.3) $ - $629.1
Other, net 11.7 - 3.0 14.7
------- -------- ------- -------
752.1 (111.3) 3.0 643.8
------- -------- ------- -------
Costs and expenses:
Cost of sales 557.4 (55.1) - 502.3
Selling, general and administrative 152.7 (22.1) - 130.6
Interest 57.9 (8.7) - 49.2
------- -------- ------- -------
768.0 (85.9) - 682.1
------- -------- ------- -------
Loss before income taxes (15.9) (25.4) 3.0 (38.3)
Income tax expense (benefit) 7.8 (9.5) - (1.7)
------- -------- ------- -------
Loss from continuing operations ($23.7) ($15.9) $3.0 ($36.6)
======= ======== ======= =======
Loss from continuing operations
per basic share ($0.46) ($0.72)
======= =======
Weighted average common shares outstanding 51.1 51.1
======= =======
</TABLE>
See accompanying notes to pro forma condensed consolidated statements of
operations.
F-5
<PAGE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year ended December 31, 1996
(Unaudited)
(In millions, except per share data)
<TABLE>
<CAPTION>
Pro forma adjustments
---------------------
Historical (I) (II) Pro forma
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $ 986.1 ($134.9) $ - $851.2
Other, net 30.4 (2.8) 4.0 31.6
--------- -------- ------- -------
1,016.5 (137.7) 4.0 882.8
--------- -------- ------- -------
Costs and expenses:
Cost of sales 738.4 (69.8) - 668.6
Selling, general and administrative 177.5 (26.3) - 151.2
Interest 75.0 (5.8) - 69.2
--------- -------- ------- -------
990.9 (101.9) - 889.0
--------- -------- ------- -------
Income (loss) before income taxes 25.6 (35.8) 4.0 (6.2)
Income tax expense (benefit) 14.8 (13.3) - 1.5
--------- -------- ------- -------
Income (loss) from continuing operations $ 10.8 ($22.5) $ 4.0 ($ 7.7)
========= ======== ======= =======
Income (loss) from continuing operations
per basic share $0.21 ($0.15)
========= =======
Weighted average common shares outstanding 51.1 51.1
========= =======
</TABLE>
See accompanying notes to pro forma condensed consolidated statements of
operations.
F-6
<PAGE>
NL INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Note 1 - Basis of presentation:
The Pro Forma Condensed Consolidated Statements of Operations assume
the disposition of the Company's specialty chemical operations, more fully
described in Item 2 of this Current Report on Form 8-K dated February 13,
1998, occurred as of the beginning of 1996.
Note 2 - Pro forma adjustments:
I - Eliminate Rheox's historical results of operations included in
the Company's consolidated statements of operations. In future
filings, the Company will report Rheox's results of operations
through the date of disposal as discontinued operations.
II - Record amortization of the deferred income related to the
Company's agreement not to compete. There is no adjustment of
income tax expense since the incremental income only results in a
reduction of a loss for which no income tax benefit was previously
recognized.
F-7
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