Susan E. Alderton
(281) 423-3332
EXHIBIT 99.3
FOR IMMEDIATE RELEASE
NL REPORTS SECOND QUARTER RESULTS WITH 42% HIGHER OPERATING INCOME
AND $43 MILLION SETTLEMENT GAIN WITH A FORMER INSURANCE CARRIER
HOUSTON, TEXAS -- July 19, 2000 -- NL Industries, Inc. (NYSE: NL) today reported
net income for the second quarter of 2000 of $1.25 per diluted share including a
$.54 per diluted share net-of-tax settlement gain with a former insurance
carrier, discussed below. Net income in the second quarter of 1999 was $2.16 per
diluted share including a $1.73 per diluted share income tax benefit. Excluding
the 2000 settlement gain and 1999 income tax benefit, net income in the second
quarter of 2000 was $.71 per diluted share, up 69% from $.42 per diluted share
reported in the second quarter of 1999.
Net income for the first half of 2000 was $1.71 per diluted share compared to
net income in the first half of 1999 of $2.42 per diluted share. Excluding the
2000 settlement gain and 1999 income tax benefit, net income in the first half
of 2000 was $1.17 per diluted share, up 70% from $.69 per diluted share reported
in the first half of 1999.
Operating income of Kronos' titanium dioxide pigments ("TiO2") business in the
second quarter of 2000 increased 42% to $62.7 million compared to $44.1 million
in the second quarter of 1999. The improved operating income is primarily due to
higher average selling prices in billing currencies (which excludes the effects
of foreign currency translation) and record sales volume, partially offset by
the previously reported second-quarter 1999 $5.3 million foreign currency
transaction gain. Second-quarter operating income improved 36% over the $46.2
million reported in the first quarter of 2000 on strong economic fundamentals
resulting in 3% higher average selling prices in billing currencies, 9% higher
sales volume and 4% higher production volume.
Operating income in the first half of 2000 increased 45% to $109.0 million
compared to $75.1 million in the first half of 1999 due to 3% higher average
selling prices in billing currencies, 16% higher sales volume and 8% higher
production volume.
Kronos' average selling prices in billing currencies during the second quarter
of 2000 were 5% higher than the second quarter of 1999 and at the end of June
were 1% higher than average selling prices during the second quarter. Kronos'
prices were up in all major regions from the second quarter of 1999. Prices were
higher in Europe and export markets from the first quarter of 2000 and were flat
in North America.
Kronos' second-quarter 2000 average selling price expressed in U.S. dollars
computed using actual foreign currency exchange rates prevailing during the
respective periods
decreased 1% from both the second quarter of 1999 and the first quarter of 2000.
Comparisons of Kronos' average selling price using actual foreign currency
exchange rates are significantly affected by the recent volatility of the U.S.
dollar relative to the euro and other European currencies. Since a majority of
Kronos' production and other costs are incurred in currencies other than the
U.S. dollar, foreign currency volatility similarly affects costs, therefore the
effect of fluctuating currency exchange rates on operating income was not
significant.
<PAGE>
Kronos' second-quarter sales volume represents the highest quarter in Kronos'
history. Sales volume increased 9% from both the second quarter of 1999 and the
first quarter of 2000, reflecting sustained demand in all major regions. Sales
volume in the first half of 2000 was 16%, or 31,000 metric tons, higher than the
first half of 1999. The Company's second-quarter 2000 production volume was
slightly higher than the comparable 1999 period with operating rates in both
periods near full capacity.
Dr. Lawrence Wigdor, Kronos' President and CEO, stated, "I am pleased with the
current quarter's operating results and I am optimistic that the tight supply in
the industry will continue to allow prices to rise to more acceptable levels. We
have recently announced price increases of 7% in Europe and 4% in North America,
both of which we expect, depending on market conditions, to implement during the
second half of 2000. Our efforts to debottleneck our production facilities to
meet long-term demand continue to prove successful. We expect Kronos' production
capacity will be increased by 25,000 metric tons, with only modest capital
expenditures, bringing our capacity to approximately 465,000 metric tons by
2002. Kronos is on track to produce more in 2000 than the record 434,000 metric
tons it produced in 1998."
Corporate income and expense in the second quarter of 2000 includes a $43
million pre- tax net gain from a June 2000 settlement with one of NL's two
principal former insurance carriers. The settlement ends a court proceeding
against the carrier that NL initiated to seek reimbursement for legal defense
expenditures and indemnity coverage for certain of its environmental remediation
expenditures. Mr. J. Landis Martin, NL's President and CEO, stated, "The end of
this lengthy litigation and the settlement are very positive developments for
NL's shareholders. We will continue to vigorously pursue resolution of our
remaining coverage disputes." Proceeds from the settlement were transferred by
the carrier in early July to a special purpose trust established to pay future
remediation and other environmental expenditures of NL. Cash held by the trust
will be reported as restricted cash on NL's balance sheet. Corporate income and
expense in the second quarter of 2000 also includes a $5.6 million securities
gain related to common stock received from the demutualization of Met Life, an
insurance company from which NL had purchased certain insurance policies, and is
partially offset by higher corporate expenses associated with higher
environmental and legal expenses.
Interest expense in the second quarter and first half of 2000 was down $1.4
million and $3.3 million, respectively, from the comparable periods in 1999 due
to reduced levels of outstanding debt and lower European borrowing rates. During
the second quarter, the Company repaid $16.7 million of its euro-denominated
short-term debt with excess cash flow from operations.
<PAGE>
The Company's net debt at June 30, 2000 was $126 million (total debt of $281
million less cash of $155 million) down $22 million from March 31, 2000 levels.
Minority interest relates to the Company's majority-owned environmental
management subsidiary.
A conference call for the investment community is scheduled for July 19, 2000 at
9:30 a.m. (EDT). Mr. Martin will host the call. Participants can access the call
by dialing 800-450-0785 (domestic) and 612-332-0228 (international). The
passcode is NL Earnings. A taped replay of the call will be available after
12:30 p.m. (EDT) the day of the call through July 26, 2000 by calling
800-475-6701 (domestic) and 320-365-3844 (international), and using access code
525431. The call will also be broadcast live on the Internet at StreetEvents.com
and an online replay will be available approximately one hour after the call.
NL Industries, Inc. is a major international producer of titanium dioxide
pigments.
The statements in this release (and statements made in the call with the
investment community referred to above) relating to matters that are not
historical facts are forward- looking statements that represent management's
beliefs and assumptions based on currently available information.
Forward-looking statements can be identified by the use of words such as
"believes," "intends," "may," "will," "should," "anticipates," "expects," or
comparable terminology or by discussions of strategy or trends. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it cannot give any assurances that these expectations
will prove to be correct. Such statements by their nature involve risks and
uncertainties, including, but not limited to, the cyclicality of the titanium
dioxide industry, global economic conditions, global productive capacity,
customer inventory levels, changes in product pricing, competitive technology
positions, operating interruptions (including, but not limited to, labor
disputes, leaks, fires, explosions, unscheduled downtime and transportation
interruptions), the ultimate resolution of pending or possible future lead
pigment litigation and legislative developments related to the lead paint
litigation, the outcome of other litigation, and other risks and uncertainties
detailed in the Company's Securities and Exchange Commission filings. Should one
or more of these risks materialize (or the consequences of such a development
worsen), or should the underlying assumptions prove incorrect, actual results
could differ materially from those forecasted or expected. The Company assumes
no duty to update any forward- looking statements.
<PAGE>
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Quarters ended Six months ended
June 30, June 30,
---------------- ------------------
1999 2000 1999 2000
---- ---- ----- ----
<S> <C> <C> <C> <C>
Revenues and other income:
Net sales $232.6 $251.1 $434.1 $482.1
Other income, excluding corporate 6.9 2.5 10.6 4.1
--- --- ---- ---
239.5 253.6 444.7 486.2
Cost of sales 167.8 164.0 314.8 323.3
Selling, general and administrative, excluding
corporate 27.6 26.9 54.8 53.9
---- ---- ---- ----
Operating income 44.1 62.7 75.1 109.0
Corporate income (expense):
Securities earnings 1.5 7.4 3.1 9.2
Litigation settlement gain, net and other
income 1.2 44.1 2.3 45.2
Expenses (5.4) (10.0) (10.7) (16.3)
Interest expense (9.3) (7.9) (19.1) (15.8)
---- ---- ----- -----
Income before income taxes and minority
interest 32.1 96.3 50.7 131.3
Income tax benefit (expense) 81.9 (32.8) 77.4 (44.0)
---- ----- ---- -----
Income before minority interest 114.0 63.5 128.1 87.3
Minority interest 2.2 .1 2.3 .2
--- -- --- --
Net income $111.8 $ 63.4 $125.8 $ 87.1
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Earnings per share:
Basic $ 2.16 $1.26 $ 2.43 $1.72
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Diluted $ 2.16 $1.25 $ 2.42 $1.71
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Weighted average shares used in the calculation of earnings per share:
Basic shares 51.8 50.5 51.8 50.7
Dilutive impact of stock options .1 .4 .1 .3
-- -- -- --
Diluted shares 51.9 50.9 51.9 51.0
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</TABLE>
