Exhibit 99.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
|X| Annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934 - for the year ended December 31, 1999
or
|_| Transition report pursuant to Section 15(d) of the Securities
Exchange Act of 1934 - for the transition period from to
Commission file number 1-640
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
NL INDUSTRIES, INC.
16825 Northchase Drive, Suite 1200
Houston, Texas 77060-2544
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
INDEX
Page
Signature Page 2
Financial Statements and Supplemental Schedules
with Report of Independent Accountants F-1 to F-15
Exhibit I - Consent of Independent Accountants
- 1 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the
Administrator has duly caused this Annual Report to be signed by the undersigned
thereunto duly authorized.
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
By: NL INDUSTRIES, INC.
PENSION AND EMPLOYEE
BENEFITS COMMITTEE,
Administrator of
NL Industries, Inc.
Retirement Savings Plan
By: /s/ Robert D. Hardy
Robert D. Hardy
Chairman, Pension and
Employee Benefits Committee
June 27, 2000
- 2 -
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS, FUND INFORMATION AND SUPPLEMENTAL SCHEDULES
WITH REPORT OF INDEPENDENT ACCOUNTANTS
December 31, 1999
<PAGE>
NL INDUSTRIES INC.
RETIREMENT SAVINGS PLAN
INDEX
Page
Report of Independent Accountants F-2
Financial Statements:
---------------------
Statements of Net Assets Available for Benefits
- December 31, 1998 and 1999 F-3
Statements of Changes in Net Assets Available for Benefits with
Fund Information - Years ended December 31, 1998 and 1999 F-4 to F-7
Notes to Financial Statements F-8 to F-13
Supplemental Schedules:
-----------------------
Schedule of Assets Held for Investment Purposes
at End of Year - December 31, 1999 F-14
Schedule of Reportable Transactions -
Year ended December 31, 1999 F-15
All other schedules are omitted because they are not applicable or not required.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Pension and Employee Benefits Committee of
NL Industries, Inc.:
In our opinion, the accompanying statements of net assets available
for benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available for
benefits of the NL Industries, Inc. Retirement Savings Plan (the "Plan") at
December 31, 1998 and 1999, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental schedules, as
listed on the accompanying index, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The fund information in the statements of changes in net
assets available for benefits is presented for purposes of additional analysis
rather than to present the changes in net assets available for benefits of each
fund. These supplemental schedules and fund information are the responsibility
of the Plan's management. The supplemental schedules and fund information have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
PricewaterhouseCoopers LLP
Houston, Texas
June 8, 2000
F-2
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1998 and 1999
<TABLE>
<CAPTION>
1998 1999
----------- -----------
ASSETS
<S> <C> <C>
Investments at fair value:
Common stock ............................... $ 2,347,862 $ 2,429,229
Other securities ........................... 23,406,941 23,331,334
Employer contributions receivable ............ 598,532 307,458
Cash ......................................... -- 36,427
----------- -----------
Net assets available for benefits .......... $26,353,335 $26,104,448
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION
Year ended December 31, 1998
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------
AIM
MFS Emerging Templeton International AIM Value
Growth Fund World Fund Equity Fund Fund
------------ ---------- ------------- ---------
<S> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in the fair value
of investments ................................. $ 354,126 $ (85,801) $ 46,443 $ 420,196
Dividend income:
NL Industries, Inc. ........................... -- -- -- --
Halliburton Company ........................... -- -- -- --
Dresser Industries ............................ -- -- -- --
Tremont Corporation ........................... -- -- -- --
Other ......................................... 11,692 132,397 5,780 62,572
Interest income ................................. -- -- -- --
----------- ----------- ----------- -----------
Total investment income ......................... 365,818 46,596 52,223 482,768
----------- ----------- ----------- -----------
Contributions:
Participants .................................... 65,968 29,445 40,487 78,531
Employer ........................................ 45,032 24,465 19,677 59,013
----------- ----------- ----------- -----------
Total contributions ........................... 111,000 53,910 60,164 137,544
----------- ----------- ----------- -----------
Total additions ................................. 476,818 100,506 112,387 620,312
Deductions - distributions .......................... 46,915 8,701 29,944 129,760
Net interfund transfers ............................. (59,634) (957,929) (34,577) (1,125,860)
----------- ----------- ----------- -----------
Net increase (decrease) ............................. 370,269 (866,124) 47,866 (635,308)
Assets transferred to another plan .................. (923,408) (278,015) (183,021) (727,621)
Net assets available for benefits:
Beginning of year ................................. 1,876,572 1,783,781 422,276 2,449,561
----------- ----------- ----------- -----------
End of year ....................................... $ 1,323,433 $ 639,642 $ 287,121 $ 1,086,632
=========== =========== =========== ===========
<CAPTION>
<PAGE>
Fund Information
--------------------------------------------
ML Global
MFS Government ML Equity Allocation
Securities Fund Index Trust Fund, Inc.
--------------- ----------- -----------
<S> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in the fair value
of investments ................................. $ 7,294 $ 333,231 $ (11,565)
Dividend income:
NL Industries, Inc. ........................... -- -- --
Halliburton Company ........................... -- -- --
Dresser Industries ............................ -- -- --
Tremont Corporation ........................... -- -- --
Other ......................................... 21,304 -- 28,954
Interest income ................................. -- -- --
----------- ----------- -----------
Total investment income ......................... 28,598 333,231 17,389
----------- ----------- -----------
Contributions:
Participants .................................... 13,359 38,208 22,453
Employer ........................................ 12,398 36,780 18,762
----------- ----------- -----------
Total contributions ........................... 25,757 74,988 41,215
----------- ----------- -----------
Total additions ................................. 54,355 408,219 58,604
Deductions - distributions .......................... 3,206 46,079 21,963
Net interfund transfers ............................. (64,127) (142,787) (173,518)
----------- ----------- -----------
Net increase (decrease) ............................. (12,978) 219,353 (136,877)
Assets transferred to another plan .................. (138,924) (1,291,724) (225,360)
Net assets available for benefits:
Beginning of year ................................. 435,437 1,571,231 630,476
----------- ----------- -----------
End of year ....................................... $ 283,535 $ 498,860 $ 268,239
=========== =========== ===========
</TABLE>
F-4
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION (CONTINUED)
Year ended December 31, 1998 (Continued)
<TABLE>
<CAPTION>
Fund Information (Continued)
------------------------------------------------------------------------------------
ML Federal ML Capital ML Basic ML Retirement Mercury Global
Securities Fund, Value Preservation Holdings,
Trust Inc. Fund Trust Inc.
----------- ---------- -------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in
the fair value of investments ... $ 1,923 $ 188,576 $ 316,966 $ -- $ 45,144
Dividend income:
NL Industries, Inc. ............ -- -- -- -- --
Halliburton Company ............ -- -- -- -- --
Dresser Industries ............. -- -- -- -- --
Tremont Corporation ............ -- -- -- -- --
Other .......................... 29,733 176,522 229,209 -- 41,011
Interest income .................. -- -- -- 1,002,946 --
------------ ------------ ------------ ------------ ------------
Total investment income .......... 31,656 365,098 546,175 1,002,946 86,155
------------ ------------ ------------ ------------ ------------
Contributions:
Participants ..................... 25,955 87,075 133,404 100,027 --
Employer ......................... 29,422 71,739 136,427 99,794 --
------------ ------------ ------------ ------------ ------------
Total contributions ............ 55,377 158,814 269,831 199,821 --
------------ ------------ ------------ ------------ ------------
Total additions .................. 87,033 523,912 816,006 1,202,767 86,155
Deductions - distributions ........... 7,325 343,832 234,611 3,836,816 46,539
Net interfund transfers .............. (47,098) (401,387) 341,380 4,321,992 (148,928)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) .............. 32,610 (221,307) 922,775 1,687,943 (109,312)
Assets transferred to another plan ... (167,043) (2,295,582) (2,519,905) (8,251,803) (173,185)
Net assets available for benefits:
Beginning of year .................. 604,321 5,507,309 4,787,468 19,196,152 572,551
------------ ------------ ------------ ------------ ------------
End of year ........................ $ 469,888 $ 2,990,420 $ 3,190,338 $ 12,632,292 $ 290,054
============ ============ ============ ============ ============
<PAGE>
<CAPTION>
Fund Information (Continued)
-----------------------------
Common Stock Funds
-----------------------------
Halliburton/ Cash
NL Tremont Fund Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation) in
the fair value of investments ... $ 672,669 $ (146,054) $ -- $ 2,143,148
Dividend income:
NL Industries, Inc. ............ 13,803 -- -- 13,803
Halliburton Company ............ -- 1,239 -- 1,239
Dresser Industries ............. -- 6,057 -- 6,057
Tremont Corporation ............ -- 453 -- 453
Other .......................... -- -- -- 739,174
Interest income .................. -- -- (8,895) 994,051
------------ ------------ ------------ ------------
Total investment income .......... 686,472 (138,305) (8,895) 3,897,925
------------ ------------ ------------ ------------
Contributions:
Participants ..................... 74,125 -- (44,594) 664,443
Employer ......................... 45,020 -- 1,370 599,899
------------ ------------ ------------ ------------
Total contributions ............ 119,145 -- (43,224) 1,264,342
------------ ------------ ------------ ------------
Total additions .................. 805,617 (138,305) (52,119) 5,162,267
Deductions - distributions ........... 35,384 5,434 15,554 4,812,063
Net interfund transfers .............. (1,373,683) (133,844) -- --
------------ ------------ ------------ ------------
Net increase (decrease) .............. (603,450) (277,583) (67,673) 350,204
Assets transferred to another plan ... (409,376) -- -- (17,584,967)
Net assets available for benefits:
Beginning of year .................. 3,041,977 641,313 67,673 43,588,098
------------ ------------ ------------ ------------
End of year ........................ $ 2,029,151 $ 363,730 $ -- $ 26,353,335
============ ============ ============ ============
</TABLE>
F-5
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
BENEFITS WITH FUND INFORMATION (CONTINUED)
Year ended December 31, 1999
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------
AIM
MFS Emerging Templeton International AIM Value
Growth Fund World Fund Equity Fund Fund
------------ ---------- ------------- ---------
<S> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in
the fair value of investments ... $ 518,333 $ 118,136 $ 142,437 $ 288,492
Dividend income:
NL Industries, Inc. .......... -- -- -- --
Halliburton Company .......... -- -- -- --
Tremont Corporation .......... -- -- -- --
Other ........................ 7,352 56,641 14,768 124,316
Interest income ................ -- -- -- --
----------- ----------- ----------- -----------
Total investment income ........ 525,685 174,777 157,205 412,808
----------- ----------- ----------- -----------
Contributions:
Participants ................... 74,441 28,241 20,758 85,351
Employer ....................... 37,774 20,306 17,214 40,660
----------- ----------- ----------- -----------
Total contributions .......... 112,215 48,547 37,972 126,011
----------- ----------- ----------- -----------
Total additions ................ 637,900 223,324 195,177 538,819
Deductions - distributions ......... 81,362 50,707 23,543 98,892
Net interfund transfers ............ (267,567) (3,145) 20,048 470,320
----------- ----------- ----------- -----------
Net increase (decrease) ............ 288,971 169,472 191,682 910,247
Net assets available for benefits:
Beginning of year ................ 1,323,433 639,642 287,121 1,086,632
----------- ----------- ----------- -----------
End of year ...................... $ 1,612,404 $ 809,114 $ 478,803 $ 1,996,879
=========== =========== =========== ===========
<PAGE>
<CAPTION>
ML Global
MFS Government ML Equity Allocation
Securities Fund Index Trust Fund, Inc.
--------------- ----------- -----------
<S> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in
the fair value of investments ... $ (24,919) $ 114,469 $ 24,805
Dividend income:
NL Industries, Inc. .......... -- -- --
Halliburton Company .......... -- -- --
Tremont Corporation .......... -- -- --
Other ........................ 16,991 -- 40,600
Interest income ................ -- -- --
----------- ----------- -----------
Total investment income ........ (7,928) 114,469 65,405
----------- ----------- -----------
Contributions:
Participants ................... 8,304 60,162 15,788
Employer ....................... 3,455 33,690 5,181
----------- ----------- -----------
Total contributions .......... 11,759 93,852 20,969
----------- ----------- -----------
Total additions ................ 3,831 208,321 86,374
Deductions - distributions ......... 29,000 85,815 72,139
Net interfund transfers ............ (19,420) 79,097 9,574
----------- ----------- -----------
Net increase (decrease) ............ (44,589) 201,603 23,809
Net assets available for benefits:
Beginning of year ................ 283,535 498,860 268,239
----------- ----------- -----------
End of year ...................... $ 238,946 $ 700,463 $ 292,048
=========== =========== ===========
</TABLE>
F-6
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
WITH FUND INFORMATION (CONTINUED)
Year ended December 31, 1999 (Continued)
<TABLE>
<CAPTION>
Fund Information (Continued)
--------------------------------------------------------------------------------
Mercury
ML Federal ML Capital ML Basic ML Retirement Global
Securities Fund, Value Preservation Holdings,
Trust Inc. Fund Trust Inc.
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in
the fair value of investments ... $ (20,367) $ (183,315) $ 12,462 $ -- $ 31,467
Dividend income:
NL Industries, Inc. ............ -- -- -- -- --
Halliburton Company ............ -- -- -- -- --
Tremont Corporation ............ -- -- -- -- --
Other .......................... 21,110 309,531 328,016 -- 99,114
Interest income .................. -- -- -- 699,089 --
------------ ------------ ------------ ------------ ------------
Total investment income .......... 743 126,216 340,478 699,089 130,581
------------ ------------ ------------ ------------ ------------
Contributions:
Participants ..................... 26,749 59,046 135,093 78,060 --
Employer ......................... 10,816 20,089 61,242 42,939 --
------------ ------------ ------------ ------------ ------------
Total contributions ............ 37,565 79,135 196,335 120,999 --
------------ ------------ ------------ ------------ ------------
Total additions .................. 38,308 205,351 536,813 820,088 130,581
Deductions - distributions ........... 216,318 228,954 190,792 3,024,555 11,475
Net interfund transfers .............. (57,983) (264,869) (388,612) 579,246 (3,777)
------------ ------------ ------------ ------------ ------------
Net increase (decrease) .............. (235,993) (288,472) (42,591) (1,625,221) 115,329
Net assets available for benefits:
Beginning of year .................. 469,888 2,990,420 3,190,338 12,632,292 290,054
------------ ------------ ------------ ------------ ------------
End of year ........................ $ 233,895 $ 2,701,948 $ 3,147,747 $ 11,007,071 $ 405,383
============ ============ ============ ============ ============
<PAGE>
<CAPTION>
Fund Information (Continued)
-----------------------------
Common Stock Funds
-----------------------------
Halliburton/ Cash
NL Tremont Fund Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depreciation) in
the fair value of investments ... $ 132,645 $ 75,437 $ -- $ 1,230,082
Dividend income:
NL Industries, Inc. ............ 20,054 -- -- 20,054
Halliburton Company ............ -- 4,027 -- 4,027
Tremont Corporation ............ -- 594 -- 594
Other .......................... -- -- -- 1,018,439
Interest income .................. -- -- -- 699,089
------------ ------------ ------------ ------------
Total investment income .......... 152,699 80,058 -- 2,972,285
------------ ------------ ------------ ------------
Contributions:
Participants ..................... 50,052 -- 35,374 677,419
Employer ......................... 14,092 -- -- 307,458
------------ ------------ ------------ ------------
Total contributions ............ 64,144 -- 35,374 984,877
------------ ------------ ------------ ------------
Total additions .................. 216,843 80,058 35,374 3,957,162
Deductions - distributions ........... 90,570 2,980 (1,053) 4,206,049
Net interfund transfers .............. (38,612) (114,300) -- --
------------ ------------ ------------ ------------
Net increase (decrease) .............. 87,661 (37,222) 36,427 (248,887)
Net assets available for benefits:
Beginning of year .................. 2,029,151 363,730 -- 26,353,335
------------ ------------ ------------ ------------
End of year ........................ $ 2,116,812 $ 326,508 $ 36,427 $ 26,104,448
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1 - Summary of significant accounting policies:
The financial statements of the NL Industries, Inc. Retirement
Savings Plan (the "Plan") have been prepared in accordance with accounting
principles generally accepted in the United States. The following is a summary
of the significant accounting policies followed by the Plan.
Investments
Investments are recorded at fair value based upon the quoted market
price reported on the last trading day of the period for those securities listed
on a national securities exchange. Listed securities for which no sale was
reported on that date are valued at the mean between the last reported bid and
ask prices. Short-term investments are stated at fair value.
Purchases and sales of investments are reflected on a trade-date
basis. Gains or losses on sales of securities are based on average cost. The
Plan presents in the statements of changes in net assets available for plan
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Contributions
Contributions from employees are recorded in the period the employer
makes payroll deductions from Plan participants. Employer contributions, if any,
are accrued at the end of each year and are received in the subsequent year.
Investment income
Income from investments is recorded as earned on an accrual basis.
Dividend income is recorded at the ex-dividend date.
Termination of Plan
Although it has not expressed any intent to do so, NL Industries,
Inc. has the right under the Plan to discontinue contributions and to terminate
the Plan at any time subject to penalties set forth in the Employee Retirement
Income Security Act of 1974 ("ERISA"). In the event of such a discontinuance or
termination of the Plan, the net assets of the Plan would be allocated to the
Plan participants as prescribed by the Plan document, ERISA, and the Internal
Revenue Code.
Management's Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of net assets
available for benefits at the date of the financial statements, the changes in
net assets available for benefits during the reporting period and, when
applicable, the disclosures of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those estimates.
Note 2 - Plan description:
The Plan's principal objective is to provide eligible employees of NL
Industries, Inc. and its U.S. subsidiaries (the "Company") with a convenient way
to save on a regular and long-term basis. The majority of the Company's U.S.
employees are eligible to voluntarily participate in the Plan after six months
of employment. At December 31, 1999, there were 74 active participants
(participants currently employed by the Company) and 504 total participants.
Active participants may make basic contributions of between 0% and 8% of their
eligible compensation. Basic contributions may consist of a combination of
F-8
<PAGE>
pre-tax and after- tax earnings. Generally, pre-tax contributions are excluded
from the employee's taxable income until they are distributed. Eligible
employees that have elected to make the maximum basic contribution of 8% may
also make a supplemental pre-tax or after-tax contribution of between 1% and 4%
of their eligible compensation.
In accordance with the Tax Reform Act of 1986, participants are
limited in the amount of salary reduction contributions which they may make to
the Plan under Section 402(g) of the Internal Revenue Code ($10,000 annual
maximum for 1999). Highly compensated participants may be required to adjust the
amount of their contributions in order to permit the Plan to satisfy the
nondiscrimination requirements of Sections 401(k) and 401(m) of the Internal
Revenue Code.
Employer contributions include funds that (i) match a portion of
participants' contributions and (ii) represent an annual contribution of 3% of
employees eligible earnings. The Company's level of matching contributions is
determined annually and is based upon the attainment of certain operating income
target levels approved by the Management, Development and Compensation Committee
of the Board of Directors of the Company (the "MD&C Committee"). The Company
match applies only to participants' basic contributions. The level of match
approved by the MD&C Committee for 1998 and 1999 was 75% and 50%, respectively.
Employees who are eligible to participate in the Plan receive an annual
contribution to their investment account of 3% of their eligible compensation,
subject to IRS limitations on eligible compensation, which for 1999 was
$160,000. The Company makes this annual contribution for each eligible employee
regardless of whether the employee elects to otherwise participate in the Plan.
Beginning in 2000, the Company intends to increase the employer contribution
from 3% to 4%.
A participant with less than three years of service is 0% vested in
employer contributions, 50% vested following three years of service, 75% vested
following four years of service and fully vested in all employer contributions
following five years of service. Employer contributions are fully vested upon
death, retirement, or disability, as provided in the Plan.
Forfeitures of employer contributions may occur if a participant
terminates employment prior to the full vesting period or if a participant or
beneficiary, to whom a distribution is payable, cannot be located within five
years of the date on which such distribution became payable. Forfeitures were
$18,015 in 1998 and $20,067 in 1999. Amounts forfeited are used in the following
order: (i) to restore the accounts of reemployed participants, (ii) to restore
the accounts of participants or beneficiaries who apply for forfeited benefits,
and (iii) to reduce employer contributions. The balance in the forfeiture
account at December 31, 1999 was $236,139. Substantially all of this balance
is expected to be used to reduce future employer contributions.
The Plan was amended effective January 1, 2000 to provide
participants with the opportunity to borrow cash from their vested savings
balance. Participants will be able to borrow from their fund accounts a minimum
of $1,000 up to a maximum that is generally equal to the lesser of $50,000 or 50
percent of their account balance, whichever is less. The loans will be
collateralized by the balance in the participant's account and bear interest at
rates which are commensurate with local prevailing rates. Principal and interest
will be repaid ratably through monthly payroll deductions.
The specialty chemical business of Rheox, Inc., a wholly owned
subsidiary of the Company, was sold to Elementis plc in January 1998 and $18
million of the Plan's assets were distributed to Elementis America Inc. Rheox
Inc. Retirement Savings Plan, a retirement plan administered by Elementis plc.
Merrill Lynch Trust Company ("Merrill Lynch" or "ML") serves as
trustee for the Plan.
Employees may elect to have their own contributions invested in one
or more funds, whose investment objectives are as follows:
F-9
<PAGE>
<TABLE>
<CAPTION>
Number of
participants at
December 31,
---------------
1998 1999
---- ----
<S> <C> <C>
MFS Emerging Growth Fund - Class A Shares - managed with the objective of 62 65
providing long-term growth of capital by investing primarily in common stocks of
companies that are early in their life cycles or are major enterprises whose
rates of earnings growth are expected to accelerate.
Templeton World Fund - Class A Shares - managed with the objective of seeking 44 47
long-term capital growth by investing in securities of companies or governments
located throughout the world. The fund's portfolio is invested in securities of
both U.S. and foreign issuers.
AIM International Equity Fund - Class A Shares - managed with the objective of 37 40
seeking long-term return of capital by investing in a diversified portfolio of
international equity securities.
AIM Value Fund - Class A Shares - managed with the objective of achieving 58 72
long-term growth of capital by investing primarily in equity securities of large
companies with strong earnings prospects that are undervalued relative to the
equity market as a whole.
MFS Government Securities Fund - Class A Shares - managed with the objective of 27 21
providing current income and preservation of principal by investing in
Government Securities and by investing in obligations that are fully
collateralized or otherwise fully secured by Government Securities.
Merrill Lynch Equity Index Trust - managed with the objective of approximating 46 55
the total return of the Standard & Poor's 500 Composite Stock Index. This index
is a means to measure the performance of a broad base of large U.S.
corporations.
Merrill Lynch Global Allocation Fund, Inc. - Class A Shares - managed with the 38 35
objective of seeking a high total investment return, consistent with the prudent
risk, through a fully managed investment policy utilizing United States and
foreign equity, debt and money market securities the combination of which will
be varied from time to time both with respect to types of securities and markets
in response to changing market and economic trends.
Merrill Lynch Federal Securities Trust - Class A Shares - managed with the 72 40
objective of seeking a high current return through investments in U.S.
government and government agency securities.
Merrill Lynch Capital Fund, Inc. - Class A Shares - managed with the objective 98 94
of seeking the highest total investment return through a fully managed
investment policy utilizing equity, debt (including money market) and
convertible securities.
Merrill Lynch Basic Value Fund, Inc. - Class A Shares - managed with the 94 92
objective of seeking capital appreciation and, secondarily, income by investing
in securities, primarily equities, that fund management believes to be
undervalued.
Merrill Lynch Retirement Preservation Trust - managed with the objective of 300 174
providing preservation of capital, liquidity and current income at levels
typically higher than those provided by money market funds. The trust invests
primarily in a broadly diversified portfolio of Guaranteed Investment Contracts
and in high-quality money market securities.
NL Stock Fund - invested in NL common stock. 377 354
</TABLE>
F-10
<PAGE>
In addition to the funds listed above, the Halliburton/Tremont Stock
Fund holds investments in Halliburton for 44 participants and Tremont
Corporation common stock for 32 participants. Investments in the Mercury Global
Holdings Fund (formerly the Merrill Lynch Global Holdings Fund), with 17
participants, were frozen in 1996. Contributions or transfers into the
Halliburton/Tremont Stock Fund and the Mercury Global Holdings Fund are no
longer allowed.
Prior to the investment in securities of a type consistent with the
objectives of any fund, cash may be temporarily invested in securities with
maturities of less than one year issued or guaranteed by the U.S. government or
any agency or instrumentality thereof or deposited in a bank savings account.
Interfund transfers may be made daily, except that only one transfer
per participant per quarter may affect amounts in the NL Stock Fund. Only one
transfer is permitted out of the Halliburton/Tremont Stock Fund which must be a
transfer of the total value of the participant's account in that fund.
Distributions to employees may occur during active service or upon
termination and under prescribed circumstances. Distributions may be in the form
of lump sums, installments, annuities, or combinations thereof, or distributions
of employer securities.
The Company bears the responsibility of all administrative expenses
of the Plan.
Note 3 - Related party transactions:
The NL Stock Fund and the Halliburton/Tremont Stock Fund invest in
the common stock of NL and Tremont, both of which entities are considered
related parties. The activity of these securities for the years ended December
31, 1998 and 1999 was as follows:
<TABLE>
<CAPTION>
Sales and
distributions, Realized
Purchases at cost gain (loss)
----------- -------------- -----------
<S> <C> <C> <C>
Year ended December 31, 1998:
NL common stock ........... $ 302,532 $1,155,944 $ 758,178
Tremont common stock ...... 453 3,085 18,782
Year ended December 31, 1999:
NL common stock ........... $ 158,787 $ 289,856 $ (117,013)
Tremont common stock ...... 594 541 544
</TABLE>
Note 4 - Tax status:
The Plan, as amended, is designed to constitute a qualified trust
under Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as
amended (the "Code"); as such the Plan is exempt from federal income tax, and
amounts contributed by the Company will not be taxed to the participant until
the participant receives a distribution from the Plan.
The Plan has received a favorable determination as of March 1998,
indicating it is a "Qualified Plan" under the requirements of Sections 401(a)
and 401(k) of the Code and is qualified for favorable tax treatment. The Company
intends to file an application with the Internal Revenue Service for a
determination of the qualified status of the Plan under Section 401(a) of the
code for all amendments made to the Plan since the last determination letter.
F-11
<PAGE>
Note 5 - Investments:
The historical cost and fair value of each of the investments and the
employer contributions receivable balances at December 31, 1998 and 1999 were as
follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------------------
1998 1999
-------------------------------------------- ------------------------------------------
Employer Employer
Historical contributions Historical contributions
Fund description cost Fair value receivable cost Fair value receivable
---------------------------------------- ---------- ---------- ------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
NL Stock Fund .......................... $ 1,915,419 $ 1,984,132 $ 45,019 $ 1,784,350 $ 2,102,721 $ 14,091
Halliburton/Tremont Stock Fund:
Halliburton common stock ............. 111,251 292,779 -- 83,352 294,938 --
Tremont common stock ................. 18,061 70,951 -- 18,113 31,570 --
----------- ----------- ----------- ----------- ----------- -----------
Total common stock ............... 2,044,731 2,347,862 45,019 1,885,815 2,429,229 14,091
----------- ----------- ----------- ----------- ----------- -----------
MFS Emerging Growth Fund -
Class A Shares ........................ 970,670 1,278,402 45,031 839,743 1,574,630 37,774
Templeton World Fund -
Class A Shares ........................ 651,335 615,177 24,465 710,937 788,808 20,306
AIM International Equity Fund -
Class A Shares ........................ 238,380 267,444 19,677 295,501 461,589 17,214
AIM Value Fund - Class A Shares ........ 856,310 1,027,619 59,013 1,530,196 1,956,219 40,660
MFS Government Securities Fund -
Class A Shares ........................ 259,186 271,136 12,399 243,810 235,490 3,456
Merrill Lynch Equity Index Trust ....... 321,945 462,080 36,780 439,237 666,773 33,690
Merrill Lynch Global Allocation Fund,
Inc. - Class A Shares ................. 287,551 249,476 18,763 294,057 286,867 5,181
Merrill Lynch Federal Securities Trust -
Class A Shares ........................ 435,316 440,463 29,425 230,397 223,078 10,817
Merrill Lynch Capital Fund, Inc. -
Class A Shares ........................ 2,490,537 2,918,680 71,740 2,511,013 2,681,860 20,088
Merrill Lynch Basic Value Fund, Inc. -
Class A Shares ........................ 2,396,955 3,053,911 136,427 2,605,534 3,086,505 61,242
Merrill Lynch Retirement Preservation
Trust ................................. 12,532,499 12,532,499 99,793 10,964,132 10,964,132 42,939
Mercury Global Holdings, Inc. -
Class I Shares ........................ 274,766 290,054 -- 360,422 405,383 --
----------- ----------- ----------- ----------- ----------- -----------
Total other securities ........... 21,715,450 23,406,941 553,513 21,024,979 23,331,334 293,367
----------- ----------- ----------- ----------- ----------- -----------
$23,760,181 $25,754,803 $ 598,532 $22,910,794 $25,760,563 $ 307,458
=========== =========== =========== =========== =========== ===========
</TABLE>
Investments whose fair value exceeds five percent of net assets
available for benefits were the NL Stock Fund, Merrill Lynch Capital Fund,
Merrill Lynch Basic Value Fund, and Merrill Lynch Retirement Preservation Trust
Fund at December 31, 1998 and 1999 and the MFS Emerging Growth Fund and the AIM
Value Fund at December 31, 1999.
F-12
<PAGE>
Cash at December 31, 1999 of $36,427 represents rollover
contributions from participants which have not yet been allocated to individual
funds. At June 8, 2000, the market value of the shares of NL, Halliburton and
Tremont stock held at December 31, 1999 was $2,399,450, $341,659 and $37,094,
respectively.
The Plan's assets are invested principally in common stock of NL,
Halliburton and Tremont, and with investment funds managed by (i) Merrill Lynch,
ii) Massachusetts Financial Services ("MFS"), iii) AIM Advisors, Inc., and iv)
Templeton Global Advisors Limited. At December 31, 1999, 71% of the Plan's
investments were managed by Merrill Lynch.
F-13
<PAGE>
SUPPLEMENTAL SCHEDULES
<PAGE>
NL INDUSTRIES, INC. RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 31, 1999
Employer Identification No. 13-5267260
Plan No. 003
<TABLE>
<CAPTION>
Cost Fair value
----------- -----------
<S> <C> <C>
MFS Emerging Growth Fund - Class A shares ...................... $ 839,743 $ 1,574,630
Templeton World Fund - Class A shares .......................... 710,937 788,808
AIM International Equity Fund - Class A shares ................. 295,501 461,589
AIM Value Fund - Class A shares ................................ 1,530,196 1,956,219
MFS Government Securities Fund - Class A shares ................ 243,810 235,490
* Merrill Lynch Equity Index Trust ............................... 439,237 666,773
* Merrill Lynch Global Allocation Fund, Inc.- Class A shares ..... 294,057 286,867
* Merrill Lynch Federal Securities Trust - Class A shares ........ 230,397 223,078
* Merrill Lynch Capital Fund, Inc. - Class A shares .............. 2,511,013 2,681,860
* Merrill Lynch Basic Value Fund, Inc. - Class A shares .......... 2,605,534 3,086,505
* Merrill Lynch Retirement Preservation Trust .................... 10,964,132 10,964,132
* Mercury Global Holdings, Inc. - Class I shares (formerly Merrill
Lynch Global Holdings) ....................................... 360,422 405,383
* NL Stock Fund - common stock ................................... 1,784,350 2,102,721
Halliburton/Tremont Stock Fund - common stock:
Halliburton Company ......................................... 83,352 294,938
* Tremont Corporation ......................................... 18,113 31,570
----------- -----------
$22,910,794 $25,760,563
=========== ===========
</TABLE>
Note: Cost is determined based on historical cost. Gains and losses on
sales of investments are calculated based on average cost.
* Investment in a "Party-in-interest" entity, as defined by ERISA.
F-14
<PAGE>
NL INDUSTRIES, INC.
RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
Year ended December 31, 1999
Employer Identification No. 13-5267260
Plan No. 003
<TABLE>
<CAPTION>
Fair value
of asset on
Number of Purchase Selling Cost of transaction
Description of Asset Transactions price price asset date Net gain
-------------------- ------------ ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Merrill Lynch Retirement Preservation Trust:
Purchases ................................ 97 $2,030,303 $ -- $2,030,303 $2,030,303 $ --
Sales .................................... 58 -- 3,598,571 3,598,571 3,598,571 --
Merrill Lynch Basic Value Fund Class A:
Purchases ................................ 44 828,671 -- 828,671 828,671 --
Sales .................................... 33 -- 789,896 601,449 789,896 188,447
</TABLE>
F-15
<PAGE>
EXHIBIT I
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the:
(i) Registration Statement No. 33-29287 on Form S-8 and related
Prospectus with respect to the 1989 Long Term Performance
Incentive Plan of NL Industries, Inc.; and
(ii) Registration Statement No. 33-25913 on Form S-8 and related
Prospectus with respect to the NL Industries, Inc. Retirement
Savings Plan; and
(iii) Registration Statement No. 33-48145 on Form S-8 and related
Prospectus with respect to the NL Industries, Inc. 1992
Non-Employee Directors Stock Option Plan; and
(iv) Registration Statement No. 333-65817 on Form S-8 and related
Prospectus with respect to the NL Industries, Inc. 1998 Long-Term
Incentive Plan.
of our report dated June 8, 2000 relating to the financial statements of the NL
Industries, Inc. Retirement Savings Plan which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Houston, Texas
June 27, 2000
