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 September 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
Commission file number 1-10126
Tremont Corporation
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(Exact name of registrant as specified in its charter)
Delaware 76-0262791
-------------------------------------- -------------------------------
(State or other jurisdiction of
incorporation or organization) (IRS Employer
Identification No.)
1999 Broadway, Suite 4300, Denver, Colorado 80202
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 296-5652
----------------------
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 October 31, 2000: 6,422,658
<PAGE>
FORWARD-LOOKING INFORMATION
The statements contained in this Report on Form 10-Q ("Quarterly Report") that
are not historical facts, including, but not limited to, statements found in the
Notes to Consolidated Financial Statements and under the captions "Results of
Operations" and "Liquidity and Capital Resources" (both contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations), 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," "looks," "should," "anticipates," "expected" or comparable
terminology or by discussions of strategy or trends. Although Tremont 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 substantial risks and
uncertainties that could significantly affect expected results. Actual future
results could differ materially from those described in such forward-looking
statements, and Tremont disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Among the factors that could cause actual results to
differ materially are the risks and uncertainties discussed in this Quarterly
Report, including those portions referenced above, and those described from time
to time in Tremont's other filings with the Securities and Exchange Commission,
such as the cyclicality of TIMET's and NL's businesses, TIMET's dependence on
the aerospace industry, the sensitivity of TIMET's and NL's businesses to global
industry capacity, global economic conditions, changes in product pricing, the
performance of The Boeing Company and other aerospace manufacturers under their
long-term purchase agreements with TIMET, the impact of long-term contracts with
vendors on TIMET's ability to reduce or increase supply or achieve lower costs,
the possibility of labor disruptions, the outcome of litigation, control by
certain stockholders and possible conflicts of interest, potential difficulties
in integrating acquisitions, uncertainties associated with new product
development and the supply of raw materials and services. 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.
<PAGE>
<TABLE>
<CAPTION>
TREMONT CORPORATION
INDEX
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 1999 and
September 30, 2000 2-3
Consolidated Statements of Income - Three and nine months ended
September 30, 1999 and 2000 4
Consolidated Statements of Comprehensive Income (Loss) - Three
and nine months ended September 30, 1999 and 2000 5
Consolidated Statements of Cash Flows - Nine months ended
September 30, 1999 and 2000 6
Consolidated Statement of Stockholders' Equity - Nine months
ended September 30, 2000 7
Notes to Consolidated Financial Statements 8-12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13-31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 32-34
Item 6. Exhibits and Reports on Form 8-K 34
</TABLE>
-1-
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<TABLE>
<CAPTION>
TREMONT CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
December 31, September 30,
1999 2000
-------------------- ---------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,002 $ 3,340
Accounts and notes receivable 2,614 2,631
Receivables from related parties 1,847 1,932
Prepaid expenses and other 1,788 3,611
-------------------- ---------------------
Total current assets 9,251 11,514
-------------------- ---------------------
Other assets:
Investment in TIMET 85,772 73,660
Investment in NL Industries 113,574 114,362
Investment in joint ventures 13,658 14,400
Receivables from related parties 1,161 1,083
Other 8,570 10,490
-------------------- ---------------------
Total other assets 222,735 213,995
-------------------- ---------------------
Net property and equipment 588 548
-------------------- ---------------------
$ 232,574 $ 226,057
==================== =====================
</TABLE>
See accompanying notes to consolidated financial statements.
-2-
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<TABLE>
<CAPTION>
TREMONT CORPORATION
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
December 31, September 30,
1999 2000
---------------------- ----------------------
<S> <C> <C>
Current liabilities:
Loan payable to related party $ 13,743 $ 13,943
Accounts payable and accrued liabilities 4,623 6,268
Other payables to related parties 426 284
---------------------- ----------------------
Total current liabilities 18,792 20,495
---------------------- ----------------------
Noncurrent liabilities:
Insurance claims and claim expenses 10,292 11,970
Accrued postretirement benefit cost 21,329 21,006
Accrued environmental cost 5,736 5,974
Deferred income taxes 8,598 9,606
---------------------- ----------------------
Total noncurrent liabilities 45,955 48,556
---------------------- ----------------------
Minority interest 4,159 4,394
---------------------- ----------------------
Stockholders' equity:
Preferred stock - -
Common stock 7,781 7,793
Additional paid-in capital 290,218 290,330
Accumulated deficit (60,898) (57,145)
Accumulated other comprehensive loss (14,075) (23,616)
---------------------- ----------------------
223,026 217,362
Less treasury stock, at cost 59,358 64,750
---------------------- ----------------------
Total stockholders' equity 163,668 152,612
---------------------- ----------------------
$ 232,574 $ 226,057
====================== ======================
</TABLE>
Commitments and contingencies (Notes 1 and 8).
See accompanying notes to consolidated financial statements.
-3-
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<TABLE>
<CAPTION>
TREMONT CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
------------------------------ -------------------------------
1999 2000 1999 2000
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Equity in earnings (loss) of:
TIMET $ (2,659) $ (1,486) $ (4,591) $ (7,655)
NL Industries 2,476 5,294 25,658 21,138
Other joint ventures 20 554 665 823
------------- ------------- -------------- -------------
(163) 4,362 21,732 14,306
Corporate expenses, net 725 607 2,033 1,819
Interest expense 241 326 642 915
------------- ------------- -------------- -------------
Income (loss) before income taxes
and minority interest (1,129) 3,429 19,057 11,572
Income tax expense (benefit) (664) 1,364 6,563 5,900
Minority interest 15 150 197 235
------------- ------------- -------------- -------------
Income (loss) before extraordinary (480) 1,915 12,297 5,437
item
Equity in extraordinary loss of TIMET-
early extinguishment of debt - - - (342)
------------- ------------- -------------- -------------
Net income (loss) $ (480) $ 1,915 $12,297 $ 5,095
============= ============= ============== =============
Earnings (loss) per share:
Before extraordinary item:
Basic $ (.08) $ .31 $ 1.92 $ .86
Diluted (.08) .30 1.90 .85
Net income :
Basic $ (.08) $ .31 $ 1.92 $ .81
Diluted (.08) .30 1.90 .80
Weighted average shares outstanding:
Common shares 6,387 6,229 6,385 6,295
Diluted shares 6,459 6,312 6,459 6,362
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
TREMONT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Three months ended Nine months ended
September 30, September 30,
---------------------------- ------------------------------
1999 2000 1999 2000
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net income (loss) $ (480) $ 1,915 $ 12,297 $ 5,095
Other comprehensive income (loss), net of applicable taxes:
Currency translation adjustments 1,691 (4,042) (4,282) (9,801)
Unrealized gains (losses) on marketable
securities (176) 250 (238) 260
------------ ------------ ------------- -------------
Total other comprehensive income
(loss), net 1,515 (3,792) (4,520) (9,541)
------------ ------------ ------------- -------------
Comprehensive income (loss) $ 1,035 $ (1,877) $ 7,777 $ (4,446)
============ ============ ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
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<TABLE>
<CAPTION>
TREMONT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1999 and 2000
(In thousands)
1999 2000
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,297 $ 5,095
(Earnings) loss of affiliates:
Before extraordinary item (21,732) (14,306)
Extraordinary item - 342
Distributions 2,903 4,678
Deferred income taxes 7,285 5,897
Minority interest 197 235
Other, net (189) (59)
Change in assets and liabilities:
Accounts with related parties 925 (149)
Prepaid expenses (1,432) (1,823)
Accounts payable and accrued liabilities 1,483 1,645
Other, net (711) (299)
-------------- --------------
Net cash provided by operating activities 1,026 1,256
-------------- --------------
Cash flows from investing activities:
Purchase of TIMET common stock (15,988) -
Other, net (9) 100
-------------- --------------
Net cash provided (used) by investing activities (15,997) 100
-------------- --------------
Cash flows from financing activities:
Borrowings from related parties 6,275 2,900
Repayments to related parties - (2,700)
Letters of credit cash collateral 9,872 -
Dividends paid (1,341) (1,342)
Issuance of common stock 79 124
-------------- --------------
Net cash provided (used) by financing activities 14,885 (1,018)
-------------- --------------
Net increase (decrease) in cash and cash equivalents (86) 338
Balance at beginning of period 3,132 3,002
-------------- --------------
Balance at end of period $ 3,046 $ 3,340
============== ==============
Supplemental disclosures - cash paid for:
Income taxes (refund), net $ (640) $ 5
Interest 401 915
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
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<TABLE>
<CAPTION>
TREMONT CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Nine months ended September 30, 2000
(In thousands)
Accumulated other
Common stock comprehensive income (loss)
-------------- --------------------------------
Additional Total
Shares Treasury Common paid-in Accumulated Currency Marketable Pension Treasury stockholders'
issued shares stock capital deficit translation securities liabilities stock equity
------ -------- ------- --------- ----------- ----------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 7,781 1,392 $ 7,781 $290,218 $ (60,898) $(13,352) $ 286 $(1,009) $(59,358) $ 163,668
Net income - - - - 5,095 - - - - 5,095
Other comprehensive
income (loss) - - - - - (9,801) 260 - - (9,541)
Dividends ($.21 per share) - - - - (1,342) - - - - (1,342)
Common stock issued 12 - 12 112 - - - - - 124
Treasury stock - 211 - - - - - - (5,392) (5,392)
------ -------- ------ -------- ----------- ----------- ---------- --------- --------- ------------
Balance at September 30, 2000 7,793 1,603 $ 7,793 $290,330 $ (57,145) $ (23,153) $ 546 $(1,009) $(64,750) $ 152,612
====== ======== ======= ========= ========== =========== ========== ========= ========= ============
</TABLE>
See accompanying notes to consolidated financial statements.
-7-
<PAGE>
TREMONT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and basis of presentation:
Tremont Corporation ("Tremont") is principally a holding company with
operations conducted through 39%-owned Titanium Metals Corporation ("TIMET"),
20%-owned NL Industries, Inc. ("NL") and other joint ventures of 75%-owned TRECO
L.L.C. At September 30, 2000, Valhi, Inc. and Tremont, each affiliates of
Contran Corporation, held approximately 60% and 20%, respectively, of NL's
outstanding common stock, and together they may be deemed to control NL. At
September 30, 2000, Contran and its subsidiaries held approximately 93% of
Valhi's outstanding common stock, and Valhi and other entities related to Harold
C. Simmons held approximately 79% of Tremont's outstanding common stock. At
September 30, 2000, the Combined Master Retirement Trust ("CMRT"), a trust
formed by Valhi to permit the collective investment by trusts that maintain
assets of certain employee benefit plans adopted by Valhi and related entities,
owned an additional 8% of TIMET's outstanding common stock. Substantially all of
Contran's outstanding common voting stock is held either by trusts established
for the benefit of certain children and grandchildren of Mr. Simmons, of which
Mr. Simmons is the sole trustee, or by Mr. Simmons directly. Mr. Simmons may be
deemed to control each of Contran, Valhi, Tremont, NL and TIMET. Mr. Simmons is
sole trustee of the CMRT and is a member of the trust investment committee of
the CMRT.
The consolidated balance sheet of Tremont Corporation and subsidiaries
(collectively, the "Company") at December 31, 1999 has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at September 30, 2000 and the consolidated statements
of income, cash flows, comprehensive income (loss) and stockholders' equity for
the interim periods ended September 30, 1999 and 2000 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 interim periods are not necessarily
indicative of the operating results of a full year or of future operations.
Certain prior year amounts have been reclassified to conform to the current year
presentation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. 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, 1999 (the "1999 Annual Report").
For information concerning certain legal proceedings, income tax and
other contingencies related to the Company, TIMET and NL, see (i) Part I, Item 2
-- "Management's Discussion and Analysis of Financial Condition and Results of
Operations" ("MD&A"), (ii) Part II, Item 1 -- "Legal Proceedings," and (iii) the
1999 Annual Report, including certain information concerning TIMET's and NL's
legal proceedings incorporated therein by reference.
-8-
<PAGE>
The Company, NL and TIMET will adopt Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended, no later than the first quarter of 2001. SFAS No. 133
establishes accounting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
Under SFAS No. 133, all derivatives will be recognized as either assets or
liabilities and measured at fair value. The accounting for changes in fair value
of derivatives will depend upon the intended use of the derivative. The Company,
NL and TIMET are currently studying this new accounting rule and the impact of
adopting SFAS No. 133, if any, will be dependent upon the extent to which the
companies are then parties to derivative contracts or engaged in hedging
activities. As permitted by the transition requirements of SFAS No. 133, as
amended, the companies will exempt all host contracts containing embedded
derivatives which were issued or acquired prior to January 1, 1999.
The Company, NL and TIMET will adopt the Securities and Exchange
Commission's ("SEC") Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition," as amended, in the fourth quarter of 2000. SAB No. 101 provides
guidance on the recognition, presentation and disclosure of revenue, including
specifying basic criteria that must be met before revenue can be recognized. The
Company understands that TIMET expects that the adoption of SAB No. 101 will not
have a material impact on TIMET's consolidated financial position, liquidity or
results of operations. The impact on NL, and therefore the Company, of adopting
SAB No. 101, if any, has not yet been determined. If the impact of adopting SAB
No. 101 is material, the Company and NL will adopt SAB No. 101 retroactively to
the beginning of 2000, and previously-reported results of operations for the
first three quarters of 2000 would be restated.
Note 2 - Stockholders' equity:
In the first nine months of 2000, NL purchased an additional 1,000,000
shares of Tremont common stock in market transactions for $26.0 million, and at
September 30, 2000, NL held approximately 16% of the Company's outstanding
common stock. For financial reporting purposes, the Company has classified its
proportional interest of Tremont common stock held by NL as treasury stock.
Under Delaware corporate law, the Tremont shares held by NL are not considered
treasury stock for voting or quorum purposes. Accordingly, shares outstanding
for financial reporting purposes differ from those outstanding for such other
purposes.
Note 3 - Unconsolidated affiliates and joint ventures:
Summarized information relating to the results of operations, financial
position and cash flows of TIMET and NL is included in MD&A, which information
is incorporated herein by reference.
TIMET. At September 30, 2000, Tremont held 12.3 million shares, or
approximately 39%, of TIMET's outstanding common stock. At September 30, 2000,
the net carrying amount of the Company's interest in TIMET was approximately
$6.00 per share, while the market price of TIMET common stock at that date was
$8.19 per share. During the second quarter of 2000, TIMET issued 467,500 shares
of restricted (nonvested) stock under its Long-Term Performance Incentive Plan,
which reduced the Company's ownership in TIMET from 39.1% to 38.5%.
-9-
<PAGE>
NL Industries. At September 30, 2000, Tremont held 10.2 million shares
of NL's outstanding common stock. At September 30, 2000, the net carrying amount
of the Company's interest in NL was approximately $11.19 per share while the
market price of NL common stock at that date was $21.19 per share.
Joint Ventures. Investment in joint ventures represents holdings of
75%-owned TRECO, which is principally comprised of (i) a 12% direct interest in
The Landwell Company ("Landwell"), which is actively engaged in efforts to
develop certain real estate, and (ii) a 32% equity interest in Basic Management,
Inc. ("BMI"), which, among other things, provides utility services in the
industrial park where one of TIMET's plants is located. BMI, through a
wholly-owned subsidiary, owns an additional 50% interest in Landwell.
Note 4 - Income taxes:
The difference between the Company's income tax expense attributable to
pretax income and the amounts that would be expected using the U.S. federal
statutory income tax rate of 35% is summarized below.
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------------------------------
1999 2000
------------------- --------------------
(In thousands)
<S> <C> <C>
Expected income tax expense, at 35% $6,670 $4,050
Adjustment of deferred tax valuation allowance - 2,904
Incremental tax and rate differences on equity
in income of companies not included in
the consolidated tax group (127) (1,075)
State income taxes and other, net 20 21
------------------- --------------------
$6,563 $5,900
=================== ====================
</TABLE>
The deferred tax valuation allowance adjustment in 2000 relates
primarily to the Company not recognizing a deferred income tax asset with
respect to its equity in losses of TIMET, because the Company currently believes
such asset does not meet the "more-likely-than-not" recognition criteria.
<TABLE>
<CAPTION>
Note 5 - Accounts payable and accrued liabilities:
December 31, September 30,
1999 2000
-------------------- ---------------------
(In thousands)
<S> <C> <C>
Postretirement benefits $ 1,535 $ 1,535
Unearned insurance premiums 1,725 3,563
Environmental cost 385 175
Other 978 995
-------------------- ---------------------
$ 4,623 $ 6,268
==================== =====================
</TABLE>
-10-
<PAGE>
Note 6 - Related party transactions:
Receivables from related parties principally include amounts due from
NL under insurance loss sharing arrangements and amounts due from TIMET for
exercises of Tremont stock options. Current payables to related parties include
amounts due to TIMET under an intercorporate services agreement.
During 1998, the Company entered into an advance agreement with Contran
pursuant to which each party may advance funds to the other, at the prime rate
less 0.5%. At September 30, 2000, the interest rate was 9%. Obligations under
this agreement are payable upon demand. At September 30, 2000, Tremont owed
Contran $13.9 million pursuant to this agreement, which amount was borrowed
primarily to purchase shares of NL and TIMET common stock during 1998 and 1999.
Note 7 - Earnings per share:
Basic earnings per share is based on the weighted average number of
common shares outstanding during each period. Diluted earnings per share is
based upon the weighted average number of common shares and dilutive common
stock options outstanding. A reconciliation of the numerator and denominator
used in the calculation of basic and diluted earnings per share is presented
below. The effect of conversion of TIMET's Convertible Preferred Securities
would be a net reduction of the Company's equity in earnings of TIMET. The
reduction results from dilution of the Company's ownership percentage offset in
part by increased TIMET net income resulting from elimination of dividends on
the Convertible Preferred Securities. Due to TIMET net losses in the 1999 and
2000 three and nine-month periods, the effect of the assumed conversion of
TIMET's Convertible Preferred Securities would be antidilutive and is omitted
from the numerator of the calculation. Tremont stock options omitted from the
denominator because they were antidilutive were not material.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------------- -------------------------------
1999 2000 1999 2000
------------- -------------- -------------- -------------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ (480) $ 1,915 $ 12,297 $ 5,095
Effect of dilutive securities
of equity investees (11) - (56) -
------------- -------------- -------------- -------------
Diluted net income (loss) $ (491) $ 1,915 $ 12,241 $ 5,095
============= ============== ============== =============
Denominator:
Average common shares outstanding 6,387 6,229 6,385 6,295
Average dilutive stock options 72 83 74 67
------------- -------------- -------------- -------------
Diluted shares 6,459 6,312 6,459 6,362
============= ============== ============== =============
</TABLE>
-11-
<PAGE>
Note 8 - Commitments and contingencies:
The Company entered into a voluntary settlement agreement effective in July
2000 with the Arkansas Department of Environmental Quality and certain other
potentially responsible parties, pursuant to which the Company and the other
potentially responsible parties will undertake certain interim investigatory and
remediation activities at a former mining site located in Hot Spring County,
Arkansas. The Company currently believes it has accrued adequate amounts to
cover its share of the costs for such activities. The Company believes that to
the extent it has any additional liability at this site, it is only one of a
number of apparently solvent potentially responsible parties that would
ultimately share in any such costs. As of September 30, 2000, the Company had
accrued approximately $6 million related to these matters.
The Company records liabilities related to environmental remediation
obligations when estimated future expenditures are probable and reasonably
estimable. Such accruals are adjusted as further information becomes available
or circumstances change. Estimated future expenditures are not discounted to
their present value. It is not possible to estimate the range of costs for
certain sites. The imposition of more stringent standards or requirements under
environmental laws or regulations, the results of future testing and analysis
undertaken by the Company at its properties, or a determination that the Company
is potentially responsible for the release of hazardous substances at other
sites, could result in expenditures in excess of amounts currently estimated to
be required for such matters. No assurance can be given that actual costs will
not exceed accrued amounts or that costs will not be incurred with respect to
sites as to which no problem is currently known or where no estimate can
presently be made. Further, there can be no assurance that additional
environmental matters will not arise in the future.
-12-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Tremont's operations are conducted through TIMET, NL and TRECO. The
results of TIMET, NL, TRECO, and general corporate and other items are discussed
below. The information included below relating to the financial position,
results of operations and liquidity and capital resources of TIMET and NL has
been summarized from reports filed with the Securities and Exchange Commission
by TIMET (File No. 0-28538) and NL (File No. 1-640), which reports contain more
detailed information concerning TIMET and NL, respectively, including financial
statements.
The Company reported third quarter 2000 net income of $1.9 million, or
$.30 per diluted share, compared to a net loss of $0.5 million, or $.08 per
diluted share, for the same quarter in 1999. The Company's net income for the
nine months ended September 30, 2000 and 1999 was $5.1 million and $12.3
million, or $.80 and $1.90 per diluted share, respectively. Tremont's results
for the nine months ended September 30, 2000 included the Company's equity in
NL, whose results included a $27.5 million net-of-tax gain from an insurance
settlement, representing income to the Company of $.54 per diluted share.
Tremont's results for the nine months ended September 30, 1999 included the
Company's equity in NL's $90 million non-cash income tax benefit, representing
income to the Company of $1.70 per diluted share.
The Company's equity in earnings of 39%-owned TIMET was a loss of $1.5
million in the third quarter of 2000 compared to a loss of $2.7 million in the
third quarter of 1999. TIMET reported a third quarter 2000 net loss of $7.9
million compared to a net loss of $7.5 million in the third quarter of 1999.
TIMET's sales of $106.8 million in the third quarter of 2000 were 5% lower than
the year-ago period. This resulted principally from a 6% decline in average mill
product selling prices offset by a 1% increase in sales volume. Ingot and slab
sales volume increased 71% from year-ago levels, while average selling prices
were unchanged. As compared to the second quarter of 2000, TIMET's mill product
sales volume in the third quarter of 2000 decreased 2%, while average selling
prices were unchanged. Ingot and slab sales volume in the third quarter of 2000
increased 5% compared to the second quarter of 2000, while average selling
prices increased 2%.
The Company's equity in earnings of 20%-owned NL was $5.3 million in
the third quarter of 2000 compared to $2.5 million for the same quarter of 1999.
NL reported net income of $30.2 million in the third quarter of 2000 compared to
net income of $17.1 million in 1999. Excluding the 2000 settlement gain and 1999
income tax benefit, NL's net income in the first nine months of 2000 was $89.8
million, up 70% from $52.9 million in the first nine months of 1999. Operating
income of NL's titanium dioxide pigments business increased 65% to $57.5 million
in the third quarter of 2000 compared to $34.8 million in the third quarter of
1999. NL's improved operating income is primarily due to 10% higher average
selling prices in billing currencies and 14% higher production volume, partially
offset by 4% lower sales volume. Third quarter 2000 operating income declined
from the $62.7 million reported in the second quarter of 2000 due to 6% lower
sales volume partially offset by 3% higher average selling prices in billing
currencies and 3% higher production volume. Operating income in the first nine
months of 2000 increased 52% to $166.5 million compared to $109.9 million in the
first nine months of
-13-
<PAGE>
1999 due to 5% higher average selling prices in billing currencies, 10%
higher production volume and 8% higher sales volume. NL's third quarter 2000
sales volume decreased 4% from the third quarter of 1999 and 6% from the
second quarter of 2000. Sales volume in the first nine months of 2000 was 8%
higher than the first nine months of 1999. NL's third quarter 2000 production
volume was 14% higher than the comparable 1999 period with operating rates near
full capacity in 2000 compared to 90% in the third quarter of 1999.
The Company's equity in earnings of other joint ventures principally
represents earnings from its real estate development partnership.
As discussed above, the Company's major assets are its interests in NL
(TiO2) and TIMET (titanium metals). Tremont periodically evaluates the net
carrying value of its long-term assets, principally its interests in TIMET and
NL, to determine if there has been any decline in value that is other than
temporary and would, therefore, require a writedown which would be accounted for
as a realized loss. At December 31, 1999, after considering what it believed to
be all relevant factors, including, among other things, TIMET's operating
results, financial position, estimated asset values and prospects, the Company
recorded a $61 million pre-tax non-cash charge to earnings to reduce the net
carrying value of its investment in TIMET for an other than temporary
impairment. In determining the amount of the impairment charge, the Company
considered, among other things, then-recent ranges of TIMET's NYSE market price
and estimates of TIMET's future operating losses which would further reduce the
Company's carrying value of its investment in TIMET as it records additional
equity in losses of TIMET. The Company's per share net carrying value of its
interest in TIMET at September 30, 2000 was $6.00 per share, compared to a per
share market price of $8.19 at that date. While the accounting rules may require
an investment in a security accounted for by the equity method to be written
down if the market value of that security declines, they do not permit a writeup
if the market value subsequently recovers. The Company's per share net carrying
amount of its interest in NL at September 30, 2000 was $11.19 per share,
compared to a per share market price of $21.19 at that date. The Company will
continue to monitor and evaluate its interests in NL and TIMET based upon, among
other things, their respective results of operations, financial condition,
liquidity and business outlook. In the event Tremont determines that any further
decline in value of its interests below their net carrying value has occurred
which is other than temporary, it would report an appropriate writedown at that
time.
The Company's income tax rate in the three and nine-month periods ended
September 30, 2000 varied from the U.S. statutory rate principally because the
Company did not recognize a deferred tax asset with respect to its equity in
losses of TIMET, because the Company currently believes such asset does not meet
the "more-likely-than-not" recognition criteria.
TIMET
The Company's 39% interest in TIMET is reported by the equity method.
Tremont's equity in earnings of TIMET differs from the amount that would be
expected by applying Tremont's ownership percentage to TIMET's separately
reported earnings because of the effect of amortization of basis differences
related to purchase accounting adjustments made by Tremont in conjunction with
the acquisitions of its interest in TIMET and amortization of the basis
difference related to the writedown of the Company's investment in TIMET
recorded in the fourth quarter of 1999 for an other than temporary decline in
the market value of its investment. Amortization of such basis differences
increases earnings, and reduces losses, attributable to TIMET as reported by
Tremont.
-14-
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------- -------------------------
1999 2000 Change 1999 2000 Change
-------- ----------- ----------- ---------- ----------- ----------
(In millions) (In millions)
<S> <C> <C> <C> <C> <C> <C>
Net sales $112.7 $106.7 -5% $ 374.5 $ 320.3 -15%
-------- ----------- ---------- -----------
Operating loss $ (7.8) $ (7.7) $ .1 $ (8.2) $ (35.5) $( 27.3)
Dividend and interest income 1.4 1.5 4.4 4.6
General corporate income
(expense), net .5 (.2) (.9) .2
Interest expense 2.1 1.9 5.0 6.0
-------- ----------- ---------- -----------
(8.0) (8.3) (9.7) (36.7)
Income tax benefit (2.8) (2.9) (3.4) (12.8)
Minority interest 2.3 2.5 7.6 7.7
-------- ----------- ---------- -----------
Loss before extraordinary
item (7.5) (7.9) (13.9) (31.6)
Extraordinary item - early
extinguishment of debt,
net of tax - - - (.9)
-------- ----------- ---------- -----------
Net loss $ (7.5) $(7.9) $(.4) $ (13.9) $ (32.5) $ (18.6)
======== =========== ========== ===========
Tremont's equity in TIMET's
losses before extraordinary
item, including amortization
of basis differences $ (2.7) $(1.5) $ 1.2 $ (4.6) $ (7.7) $ (3.1)
Percent change in mill products:
Sales volume +1% 8,600 8,430 -2%
Average selling prices -6% -7%
</TABLE>
Sales and operating income (loss). TIMET's results of operations before
previously reported special items for the nine months ended September 30, 2000
decreased from the comparable period in 1999 due primarily to a 7% decline in
average mill product selling prices caused by lower demand in the aerospace
market and competitive pricing pressures in certain product lines. Mill product
sales volume for the first nine months of 2000 decreased 2% from the comparable
period in 1999. Ingot and slab sales volume, which represents about 11% of
TIMET's net sales, increased 18% for the first nine months of 2000 as compared
to year-ago levels, while average selling prices declined 3%. Net sales of
$106.7 million in the third quarter of 2000 were 5% lower than the year-ago
period resulting principally from a 6% decline in average mill product selling
prices offset by a 1% increase in sales volume. Ingot and slab volume for the
third quarter of 2000 increased 71% from year-ago levels, while average selling
prices were unchanged.
-15-
<PAGE>
As compared to the second quarter of 2000, mill product sales volume in
the third quarter of 2000 decreased 2%, while average selling prices were
unchanged. Ingot and slab sales volume in the third quarter of 2000 increased 5%
compared to the second quarter of 2000, while average selling prices increased
2%.
Cost of sales (excluding special charges of $6.7 million in the first
quarter of 2000) as a percentage of net sales in the third quarter and for the
first nine months of 2000 (97% and 97%, respectively) increased from the
comparable periods in 1999 (96% and 92%, respectively) primarily due to the
reduction in selling prices more than offsetting the benefits received from
various cost reduction programs.
As previously reported, TIMET implemented a plan to address
then-current market and operating conditions, which resulted in the recognition
of a $3.7 million restructuring charge in the first quarter of 2000. During the
second quarter of 2000, the restructuring accrual was reduced by $.9 million
primarily related to a reduction in the previously-reported number of employee
terminations from 250 to 200 people due to production levels that are expected
to be somewhat higher than previously anticipated. The $2.8 million net
restructuring charge is principally related to personnel severance and benefits
for the approximately 200 employees terminated.
In September 2000, TIMET entered into a new, four year collective
bargaining agreement with the union representing approximately 250 hourly
production and maintenance workers at its Henderson, Nevada facility. The new
agreement, which expires in October 2004, provides for modest increases in wages
and pensions over its term.
TIMET's firm order backlog at the end of September 2000 was
approximately $200 million. Comparable backlogs at the end of June 2000 and
September 1999 were approximately $160 million and $260 million, respectively.
The Company believes the increase in backlog primarily reflects the normal
seasonal order cycle of TIMET's customer base.
During the third quarter TIMET announced selling price increases on
certain products. The price increases did not apply to existing backlog, to
orders under existing long-term agreements containing specific provisions
governing selling prices or to orders for industrial products. Accordingly, only
about 35% of TIMET's sales volume is expected to be eligible for such price
increases. The average prices on eligible new orders have thus far been
substantially in line with the new price list. However, the volume of
transactions to which such price increases are applicable has been relatively
low given the short time period since the announcement, and TIMET expects the
price increases will not have any significant effect on TIMET's results of
operations in the fourth quarter of 2000. TIMET is also currently in
negotiations with several customers regarding product requirements and pricing
for 2001. Until such negotiations are concluded TIMET cannot determine what
sales volume or selling prices will actually be realized with such customers.
TIMET believes the excess amount of titanium that has been present in
the supply chain this year will have been significantly reduced by year end and
is expected to have less of an impact on TIMET's results of operations in 2001.
Current indications are that sales and operating results in the fourth quarter
of 2000 will be similar to those in the third quarter of 2000.
-16-
<PAGE>
TIMET believes worldwide industry mill product shipments will aggregate
approximately 48,000 metric tons in 2000. TIMET currently projects that
worldwide industry mill product shipments will increase in 2001 by approximately
10% to 53,000 metric tons. The expected increase is primarily attributable to an
anticipated increase in demand for aerospace products resulting from an increase
in the number of aircraft forecasted to be produced and a decrease in the amount
of excess titanium in the supply chain as mentioned above. According to the
Airline Monitor, a leading aerospace publication, large commercial aircraft
build rates at Boeing and Airbus combined are expected to increase from 786
planes in 2000 to 866 planes in 2001 and 918 planes in 2002.
Principally as a result of the anticipated increase in demand for
titanium aerospace products, TIMET currently expects its sales volume in 2001 to
increase by up to 15% from 2000 levels. Sales revenue is expected to be between
$450 million and $500 million in 2001, reflecting the anticipated additional
sales volume, certain price increases, and anticipated changes in product mix.
TIMET presently expects to report operating and net losses in 2001; however,
TIMET believes the losses in 2001 will be substantially reduced from 2000
levels.
TIMET has substantial operations and assets located in Europe,
principally the United Kingdom, with smaller operations in France, Italy and
Germany. Titanium is a worldwide market and the factors influencing TIMET's U.S.
and European operations are substantially similar.
Approximately one-half of TIMET's European sales are denominated in
currencies other than the U.S. dollar, principally the British pound and
European currencies tied to the euro. Certain purchases of raw materials,
principally titanium sponge and alloys, for TIMET's European operations are
denominated in U.S. dollars, while labor and other production costs are
primarily denominated in local currencies. The functional currencies of TIMET's
European subsidiaries are those of their respective countries; thus, the U.S.
dollar value of these subsidiaries' sales and costs denominated in currencies
other than their functional currency, including sales and costs denominated in
U.S. dollars, is subject to exchange rate fluctuations that may impact reported
earnings and may affect the comparability of period-to-period operating results.
Borrowings of TIMET's European operations may be in U.S. dollars or in
functional currencies. TIMET's export sales from the U.S. are denominated in
U.S. dollars and as such are not subject to currency exchange rate fluctuations.
The U.S. dollar sales and purchases of TIMET's European operations
described above provide some natural hedge of non-functional currencies, and
TIMET does not use currency contracts to hedge its currency exposures. Net
currency transaction losses were $1.0 million during the nine months ended
September 30, 2000 and during the same period in 1999. At September 30, 2000,
consolidated assets and liabilities denominated in currencies other than
functional currencies were approximately $20 million and $15 million,
respectively, consisting primarily of U.S. dollar cash, accounts receivable,
accounts payable and borrowings.
-17-
<PAGE>
Dividends and interest income. Dividends and interest income consists
principally of dividends on $80 million of non-voting preferred securities of
Special Metals Corporation which accrue at an annual rate of 6.625%.
General corporate income (expense), net. General corporate income
(expense), net includes currency transaction losses described above. The
reduction in general corporate income in the third quarter of 2000 as compared
to the year-ago period is primarily due to increased currency transaction
losses. The decrease in general corporate expense for the nine months ended
September 30, 2000 is due to a $1.2 million gain on the sale of TIMET's interest
in its castings joint venture in the first quarter of 2000.
Interest expense. Interest expense in the third quarter of 2000
decreased $.2 million from the comparable period in 1999 due to the net effects
of lower average outstanding borrowings and a lower level of interest
capitalized in the 2000 period. Interest expense for the nine months ended
September 30, 2000 increased $1.0 million from the comparable 1999 period due to
the net effects of increased interest rates related to TIMET's credit facilities
completed in February 2000, lower average outstanding borrowings and a lower
level of interest capitalized in the 2000 period.
Income taxes. TIMET operates in several tax jurisdictions and is
subject to various income tax rates. As a result, the geographical mix of pretax
income (loss) can impact TIMET's effective tax rate.
Minority interest. Dividends related to TIMET's 6.625% Convertible
Preferred Securities approximated $10 million in both the 1999 and 2000 nine
month periods, and are reported as minority interest, net of allocable income
taxes.
-18-
<PAGE>
NL Industries
The Company's 20% interest in NL is reported by the equity method.
Tremont's equity in earnings of NL differs from the amount that would be
expected by applying Tremont's ownership percentage to NL's separately-reported
earnings because of the effect of amortization of purchase accounting
adjustments made by Tremont in conjunction with the acquisitions of its interest
in NL and basis differences related to the writedown in the Company's investment
in NL recorded in 1993 for an other than temporary decline in the market value
of its investment. Amortization of such basis differences generally reduces
earnings, and increases losses, attributable to NL as reported by Tremont.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------- -----------------------
1999 2000 Change 1999 2000 Change
--------- --------- ---------- ---------- ---------- ----------
(In millions) (In millions)
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 242.6 $ 242.3 0% $676.8 $724.4 +7%
--------- --------- ---------- ----------
Operating income $ 34.8 $ 57.5 +65% $109.9 $166.5 +52%
General corporate items:
Securities earnings, net 1.7 2.5 4.8 11.6
Litigation settlement gain, net
and other corporate income 1.1 1.0 3.5 46.2
Corporate expenses (4.8) (6.8) (15.8) (23.0)
Interest expense (9.1) (7.7) (28.1) (23.5)
--------- --------- ---------- ----------
23.7 46.5 $22.8 74.3 177.8 $103.5
Income tax expense (benefit) 6.6 14.8 (70.9) 58.8
--------- --------- ---------- ----------
Income before minority interest 17.1 31.7 $14.6 145.2 119.0 $(26.2)
Minority interest - 1.5 2.3 1.7
--------- --------- ---------- ----------
Net income $ 17.1 $ 30.2 $13.1 $142.9 $117.3 $(25.6)
========= ========= ========== ==========
Percent changes in TiO2:
Sales volume -4% +8%
Average selling prices (in billing
currencies) +10% +5%
</TABLE>
Net sales and operating income. NL conducts its titanium dioxide
("TiO2") pigments operations through its wholly-owned subsidiary, Kronos, Inc.
Kronos' operating income in the third quarter of 2000 increased $22.7 million or
65% from the comparable period in 1999 due to higher average selling prices in
billing currencies and higher production volume, partially offset by lower sales
volume. Kronos' operating income in the first nine months of 2000 increased from
the comparable period in 1999 primarily due to higher average selling prices in
billing currencies and higher production and sales volumes.
Average TiO2 selling prices in billing currencies (which excludes the
effects of foreign currency translation) during the third quarter of 2000 were
10% higher than in the third quarter of 1999 and were 3% higher than in the
second quarter of 2000. Average selling prices in billing currencies at the end
of the third quarter were slightly higher than the average during the quarter.
Kronos' prices were up in all major regions from the third quarter of 1999 with
the greatest improvement being realized in the European and export markets.
Compared to the
-19-
<PAGE>
second quarter of 2000, prices were 5% higher in Europe and 4%
higher in the export markets. Prices were flat in North America versus the
second quarter of 2000. Average selling prices in billing currencies for the
first nine months of 2000 were 5% higher than the first nine months of 1999 with
increases in all major regions. NL expects average selling prices during the
fourth quarter of 2000 will be slightly higher than in the third quarter of
2000.
Kronos' third-quarter 2000 sales volume was at near record
third-quarter levels and decreased 4% from the third quarter of 1999 and 6% from
the second quarter of 2000. Sales volume in the first nine months of 2000 was 8%
higher than the first nine months of 1999. Although Kronos believes its TiO2
sales volume for the fourth quarter of 2000 will be lower than the record sales
volume in the fourth quarter of 1999, Kronos anticipates its TiO2 sales volume
for full-year 2000 will be higher than that of 1999.
NL's third-quarter 2000 production volume was 14% higher than the
comparable 1999 period with operating rates near full capacity in 2000 compared
to 90% in the third quarter of 1999. Kronos' production volume in the first nine
months of 2000 was 10% higher than the comparable 1999 period with operating
rates near full capacity in 2000 compared to 91% capacity utilization in the
first nine months of 1999. Finished goods inventory levels at the end of
September remained even with June 2000 levels representing about 1.5 months of
sales in inventory.
NL's efforts to debottleneck Kronos' production facilities to meet
long-term demand continue to prove successful. NL expects Kronos' production
capacity will be increased by approximately 25,000 metric tons primarily at its
chloride facilities, with only moderate capital expenditures, bringing Kronos'
capacity to approximately 465,000 metric tons by 2002. Kronos expects to produce
more in 2000 than the record 434,000 metric tons it produced in 1998.
Kronos expects its full-year 2000 operating income will be higher than
1999 primarily because of higher average selling prices in billing currencies,
higher production and sales volumes and its continued focus on controlling
costs. The extent of the improvement will be determined primarily by the
magnitude of realized price increases.
Compared to the year-earlier periods, cost of sales as a percentage of
net sales decreased in the three and nine months ended September 2000 primarily
due to higher average selling prices in billing currencies and higher production
volume.
Excluding the effects of foreign currency translation, which reduced
NL's selling, general and administrative expenses ("SG&A") in the three and nine
months ended September 2000 compared to the year-earlier periods, SG&A,
excluding corporate expenses, increased in the third quarter of 2000 due to
higher variable compensation expense and increased in the first nine months of
2000 due to higher distribution expenses associated with higher sales volume in
the first nine months of 2000.
A significant amount of Kronos' sales and operating costs are
denominated in currencies other than the U.S. dollar. Fluctuations in the value
of the U.S. dollar relative to other currencies, primarily a stronger U.S.
dollar compared to the euro, decreased the dollar value of sales for the third
quarter and first nine months of 2000 by a net $16 million and $47 million,
respectively, when compared to the year-earlier periods. When translated from
billing currencies to U.S. dollars using currency exchange rates prevailing
during the respective
-20-
<PAGE>
periods, Kronos' average selling prices in U.S. dollars for the third quarter
of 2000 increased 4% from the third quarter of 1999. Kronos' average selling
prices in U.S. dollars for the first nine months of 2000 decreased 1% from the
first nine months of 1999. Kronos' operating costs that are not denominated
in U.S. dollars were also lower when translated to U.S. dollars in the third
quarter and first nine months of 2000 compared to the year-earlier periods
and, accordingly, Kronos' average cost per metric ton in U.S. dollar terms
were lower in the third quarter and first nine months of 2000 compared to the
same periods last year. In addition, sales to export markets are typically
denominated in U.S. dollars and a stronger U.S. dollar improves margins at
NL's non-U.S. subsidiaries on their export sales. This helps to offset the
unfavorable effect of translating local currency profits to U.S. dollars
when the dollar is stronger. As a result, the net impact of currency exchange
rate fluctuations on operating income in the third quarter and first nine
months of 2000, excluding the second-quarter 1999 $5.3 million gain
described above, was not significant when compared to the year-earlier periods.
General corporate. Securities earnings in 2000 includes a
second-quarter $5.6 million securities gain related to common stock received
from the demutualization of an insurance company from which NL had purchased
certain insurance policies. Corporate income in 2000 includes a second-quarter
$43 million net gain from a settlement with a former insurance carrier.
Corporate expense was higher in the third quarter of 2000 primarily due
to higher legal expenses. Corporate expense was higher in the first nine months
of 2000 primarily due to higher legal expenses and higher environmental
remediation accruals.
Interest expense in the third quarter and first nine months of 2000
decreased 15% and 17%, respectively, from the comparable periods in 1999
primarily due to reduced levels of outstanding euro-denominated debt. As a
result, NL expects its full-year 2000 interest expense will be lower than 1999.
Provision for income taxes. NL reduced its deferred income tax
valuation allowance by $12.3 million in the first nine months of 1999 and $2.1
million in the first nine months of 2000 primarily as a result of utilization of
certain tax attributes for which the benefit had not been previously recognized
under the "more-likely-than-not" recognition criteria.
In October 2000, a reduction in the German "base" income tax rate from
30% to 25%, to be effective January 1, 2001, was enacted. Such reduction in the
German tax rate is expected to result in an additional tax expense to NL in the
fourth quarter of 2000 of about $5 million due to a revaluation of NL's German
tax attributes. The reduction in the German income tax rate results in an
additional income tax expense to NL because NL has recognized a net deferred
income tax asset with respect to Germany. NL does not expect its future current
income tax expense will be affected by this reduction.
Tremont's equity in earnings of NL in the fourth quarter of 2000 is
expected to include a charge of about $680,000 related to this revaluation of
NL's German tax attributes, $440,000 net of incremental tax benefit on equity in
earnings of NL, including the effect of revaluing certain deferred income tax
purchase accounting adjustments with respect to NL's German assets.
-21-
<PAGE>
Other. Minority interest primarily relates to NL's majority-owned
environmental management subsidiary, NL Environmental Management Services, Inc.
("EMS").
-22-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $3.3 million at September
30, 2000. Tremont's 12.3 million shares of TIMET common stock and 10.2 million
shares of NL common stock had a quoted market value of approximately $101
million and $216 million, respectively, at September 30, 2000.
The Company's equity in earnings of affiliates are primarily noncash.
The Company received cash distributions from Landwell of $.4 million and $.1
million in the first nine months of 1999 and 2000, respectively, primarily to
cover taxes associated with Landwell's income from land sales. In the nine
months ended September 30, 1999 and 2000, TIMET and NL paid cash dividends to
Tremont aggregating $2.5 million and $4.6, respectively. TIMET suspended its
quarterly dividend in the fourth quarter of 1999 and TIMET's U.S. credit
agreement now prohibits the payment of dividends on TIMET's common stock. In
October 2000, NL's Board of Directors approved an increase in the quarterly
dividend on its common stock from $.15 per share to $.20 per share, payable
December 27, 2000 to shareholders of record as of December 13, 2000. Payments
and amounts of NL dividends in the future are at the discretion of NL's Board of
Directors.
Relative changes in the Company's assets and liabilities did not have a
material impact on its cash flow from operating activities for the 1999 and 2000
periods.
At September 30, 2000, the Company owed Contran $13.9 million including
accrued interest pursuant to an advance agreement with Contran, which amount was
borrowed primarily to purchase shares of NL and TIMET common stock in 1998 and
1999. In the three and nine-month periods ended September 30, 2000, the Company
repaid $1.9 million and $2.7 million, respectively, of the advances from
Contran. The Company currently expects to use any available excess cash flow to
reduce its borrowings from Contran.
The Contran advance agreement and dividends from NL are currently
Tremont's primary sources of liquidity. Unless the Company decides to purchase
additional shares of NL, TIMET or Tremont securities, the Company does not
currently believe it will need to borrow additional amounts from Contran.
Tremont's current quarterly dividend rate is $.07 per share. On October
25, 2000, the Company's Board of Directors declared a regular quarterly dividend
of $.07 per common share, payable on December 29, 2000 to stockholders of record
as of December 15, 2000.
The Company periodically evaluates its liquidity requirements, capital
needs and availability of resources in view of, among other things, its
alternative uses of capital, its debt service requirements, the cost of debt and
equity capital, 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 obtain
financing from related entities or third parties, raise additional capital,
modify its dividend policy, restructure ownership interests of subsidiaries and
affiliates, incur, refinance or restructure indebtedness, repurchase shares of
capital stock, consider the sale of interests in subsidiaries, affiliates,
marketable securities or other assets, or take a combination of such steps or
other steps to increase or manage its liquidity and capital resources.
-23-
<PAGE>
In the normal course of business, the Company may investigate,
evaluate, discuss and engage in acquisition, joint venture and other business
combination opportunities. In the event of any future acquisition or joint
venture opportunities, the Company may consider using then-available liquidity,
issuing equity securities or incurring additional indebtedness.
As previously reported, based upon the technical provisions of the
Investment Company Act of 1940 (the "1940 Act") and Tremont's ceasing to own a
majority of TIMET's common stock following the acquisition of IMI Titanium by
TIMET in February 1996, Tremont might arguably be deemed to have become an
"investment company" under the 1940 Act, despite the fact that Tremont does not
now engage, nor has it engaged or intended to engage in the business of
investing, reinvesting, owning, holding or trading of securities. Tremont has
taken the steps necessary to give itself the benefits of a temporary exemption
under the 1940 Act and has sought an order from the Commission that Tremont is
primarily engaged, through TIMET and NL, in a non-investment company business.
-24-
<PAGE>
<TABLE>
<CAPTION>
TIMET - Summarized balance sheet and cash flow information.
December 31, September 30,
1999 2000
------------------- ---------------------
(In millions)
<S> <C> <C>
Cash and equivalents $ 20.7 $ 5.5
Other current assets 321.9 241.1
Goodwill and other intangible assets 71.1 64.5
Other noncurrent assets 136.0 144.1
Property and equipment, net 333.4 304.2
------------------- ---------------------
$ 883.1 $ 759.4
=================== =====================
Current liabilities $ 194.4 $ 110.1
Long-term debt and capital lease obligations 32.2 30.6
Accrued postretirement benefit cost 19.9 19.0
Other noncurrent liabilities 19.9 26.6
Minority interest - Convertible Preferred Securities 201.3 201.3
Other minority interest 7.3 7.9
Stockholders' equity 408.1 363.9
------------------- ---------------------
$ 883.1 $ 759.4
=================== =====================
Nine months ended
September 30,
--------------------------------------------
1999 2000
------------------- ---------------------
(In millions)
Net cash provided (used) by:
Operating activities:
Excluding changes in assets and liabilities $ 19.4 $ (4.5)
Changes in assets and liabilities 1.6 45.8
------------------- ---------------------
21.0 41.3
Investing activities (15.4) .3
Financing activities (13.3) (57.0)
------------------- ---------------------
$ (7.7) $ (15.4)
=================== =====================
Cash paid for:
Interest, net of amounts capitalized $ 4.7 $ 5.3
Convertible Preferred Securities dividends 10.0 3.3
Income taxes (refund), net (5.2) (6.4)
</TABLE>
-25-
<PAGE>
At September 30, 2000, TIMET had net debt of $52 million ($58 million
of notes payable and long-term debt and $6 million of cash and equivalents).
TIMET also had approximately $106 million of borrowing availability under its
U.S. and European credit lines. TIMET believes its U.S. and European credit
lines will provide it with the liquidity necessary for current market and
operating conditions.
Operating activities. Cash provided by operating activities was $41
million for the nine-month period ended September 30, 2000, up from $21 million
for the same period in 1999.
Cash from operating activities, excluding changes in assets and
liabilities, generally followed the trend in operating results as operating
losses increased to $35.5 million for the first nine months of 2000 as compared
to $8.2 million for the comparable 1999 period. Results of operations in 2000
included non-cash special charges of $6.7 million.
Changes in assets and liabilities reflect primarily the timing of
purchases, production and sales and can vary significantly from period to
period. TIMET's plan to address current market conditions includes effective
working capital management, particularly inventories and receivables, both of
which were reduced in the first nine months of 2000. The significant reduction
in receivables in the first nine months of 2000 was also attributable to $16
million of customer payments received in the first quarter of 2000 related to a
bill-and-hold shipment from 1999. TIMET received tax refunds of $7.4 million
during the first nine months of 2000.
Dividends on the $80 million of Special Metals Corporation ("SMC")
6.625% convertible preferred securities held by TIMET had previously been
deferred by SMC due to limitations imposed by SMC's bank credit agreements.
However, TIMET received two quarterly dividends of $1.3 million per quarter
during the first nine months of 2000. In October 2000, TIMET received an
additional quarterly dividend of $1.3 million. There can be no assurances that
TIMET will continue to receive regular quarterly dividends during 2001.
Investing activities. TIMET's capital expenditures were $6.7 million
for the nine months ended September 30, 2000 compared to $18.7 million for the
same period in 1999. Capital expenditures for 2000 are expected to approximate
$10 million and are planned to include those principally intended for capital
maintenance and environmental, health and safety purposes. Proceeds from the
sale of property and equipment in 1999 included the sale of an interest in a
corporate aircraft and assets sold as part of TIMET's restructuring activities.
In the first quarter of 2000, TIMET sold its interest in the castings
joint venture to Wyman-Gordon for $7 million and recorded a pretax gain of $1.2
million.
Financing activities. Net repayments in the 2000 period reflect
reductions of outstanding borrowings principally in the U.S. resulting from
collection of receivables, reduction in inventories and the sale of the castings
joint venture. Net repayments in 1999 reflect reductions of outstanding
borrowings in both the U.S. and U.K.
In November 1999, TIMET's Board of Directors voted to suspend the
regular quarterly dividend on TIMET's common stock in view of, among other
things, the continuing weakness in overall market demand for titanium metal
products. TIMET's U.S. credit agreement now prohibits the payment of dividends
on TIMET's common stock.
-26-
<PAGE>
TIMET's Convertible Preferred Securities do not require principal
amortization, and TIMET has the right to defer dividend payments for one or more
periods of up to 20 consecutive quarters for each period. As previously
reported, TIMET has exercised its right to defer future dividend payments on
these securities for a period of 10 quarters (subject to possible further
extension for up to an additional 10 quarters), although interest will continue
to accrue at the coupon rate on the principal and unpaid dividends. TIMET's goal
is to resume dividends on the Convertible Preferred Securities when the outlook
for TIMET's results from operations improves substantially. As of September 30,
2000, accrued dividends on TIMET's Convertible Securities are reflected as
noncurrent liabilities in the consolidated balance sheet.
TIMET periodically evaluates its liquidity requirements, capital needs
and availability of resources in view of, among other things, its alternative
uses of capital, its debt service requirements, the cost of debt and equity
capital, and estimated future operating cash flows. As a result of this process,
TIMET in the past has sought, and in the future may seek, to raise additional
capital, modify its common and preferred dividend policies, restructure
ownership interests, incur, refinance or restructure indebtedness, repurchase
shares of capital stock, sell assets, or take a combination of such steps or
other steps to increase or manage its liquidity and capital resources.
In the normal course of business, TIMET investigates, evaluates,
discusses and engages in acquisition, joint venture, strategic relationship and
other business combination opportunities in the titanium, specialty metal and
related industries. In the event of any future acquisition or joint venture
opportunities, TIMET may consider using then-available liquidity, issuing equity
securities or incurring additional indebtedness.
Legal matters. In September 2000, TIMET was named in an action filed by
the U.S. Equal Employment Opportunity Commission in federal district court in
Las Vegas, Nevada (U.S. Equal Employment Opportunity Commission v. Titanium
Metals Corporation, CV-S-00-1172DWH-RJJ). The complaint alleges that several
female employees at TIMET's Henderson, Nevada plant were the subject of sexual
harassment. TIMET intends to vigorously defend this action, but in any event
does not presently anticipate that any adverse outcome in this case would be
material to TIMET's consolidated financial position, results of operations or
liquidity.
In March 2000, TIMET filed a lawsuit against The Boeing Company seeking
damages estimated in excess of $600 million in connection with TIMET's long-term
sales agreement with Boeing. In June 2000, Boeing filed its answer to TIMET's
complaint denying substantially all of TIMET's allegations and making certain
counterclaims against TIMET. TIMET believes such counterclaims are without merit
and intends to vigorously defend against such claims. The litigation is
progressing in the discovery phase and a court date has been set for the end of
January 2002. TIMET and Boeing have been in discussions to determine if a
settlement can be reached. Those discussions are on going; however, no assurance
can be given that a settlement will be achieved.
-27-
<PAGE>
<TABLE>
<CAPTION>
NL Industries - Summarized balance sheet and cash flow information.
December 31, September 30,
1999 2000
--------------------- ----------------------
(In millions)
<S> <C> <C>
Cash and cash equivalents $ 151.8 $ 187.7
Other current assets 354.6 343.9
Noncurrent securities 15.1 45.1
Investments in joint ventures 157.6 150.0
Other noncurrent assets 28.7 25.0
Property and equipment 348.4 309.6
--------------------- ----------------------
$ 1,056.2 $ 1,061.3
===================== ======================
Current liabilities $ 264.8 $ 250.3
Long-term debt 244.3 244.1
Deferred income taxes 108.2 135.0
Accrued OPEB cost 37.1 29.6
Environmental liabilities 64.5 48.3
Other noncurrent liabilities 62.3 46.0
Minority interest 3.9 5.5
Stockholders' equity 271.1 302.5
--------------------- ----------------------
$ 1,056.2 $ 1,061.3
===================== ======================
Nine months ended
September 30,
-----------------------------------------------
1999 2000
--------------------- ----------------------
(In millions)
Net cash provided (used) by:
Operating activities:
Before changes in assets and liabilities $ 87.8 $ 123.2
Changes in assets and liabilities (5.7) (4.0)
--------------------- ----------------------
82.1 119.2
Investing activities (36.1) (45.6)
Financing activities (42.2) (79.4)
--------------------- ----------------------
$ 3.8 $ (5.8)
===================== ======================
Cash paid for:
Interest, net of amounts capitalized $ 19.7 $ 16.4
Income taxes, net 3.6 18.8
</TABLE>
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<PAGE>
Operating activities. The TiO2 industry is cyclical and changes in
economic conditions within the industry significantly affect the earnings and
operating cash flows of NL. Cash flow from operations, before changes in assets
and liabilities, in the first nine months of 2000 increased from the comparable
period in 1999 primarily due to higher operating income, partially offset by
higher current tax expense and lower cash distributions from NL's TiO2
manufacturing joint venture. Changes in NL's inventories, receivables and
payables (excluding the effect of currency translation) provided $2.2 million of
cash in the first nine months of 1999 primarily due to reductions in inventory
levels and used $2.3 million of cash in the first nine months of 2000 primarily
due to increases in receivables.
Investing activities. NL purchased 500,000 shares of Tremont's common
stock in market transactions in each of the first and third quarters of 2000 for
$9.5 million and $16.5 million, respectively. In the first nine months of 1999,
NL collateralized letters of credit with $12.4 million of NL's cash, and
classified such amounts as current restricted cash equivalents.
Financing activities. In the second and third quarters of 2000 NL
repaid euro 17.9 million ($16.7 million when paid) and euro 13.0 million ($12.2
million when paid), respectively, of its euro-denominated short-term debt with
cash flow from operations.
In the third quarter of 2000 NL paid a regular quarterly dividend of
$.15 per share to shareholders aggregating $7.6 million, and dividends paid
during the first nine months of 2000 totaled $.45 per share or $22.7 million. In
October 2000, NL's Board of Directors increased the regular quarterly dividend
to $.20 per share and declared a dividend to shareholders of record as of
December 13, 2000 to be paid on December 27, 2000.
Pursuant to its share repurchase programs, NL purchased 668,000 shares
of its common stock at an aggregate cost of $15.2 million in the third quarter
of 2000 and 1,595,000 shares at an aggregate cost of $29.2 million in the first
nine months of 2000. An additional 87,000 shares at an aggregate cost of $1.7
million were purchased in October 2000.
Cash, cash equivalents, restricted cash equivalents and borrowing
availability. At September 30, 2000, NL had cash and cash equivalents
aggregating $125 million ($70 million held by non-U.S. subsidiaries) and an
additional $63 million of restricted cash equivalents. NL's subsidiaries had $38
million available for borrowing at September 30, 2000 under existing non-U.S.
credit facilities.
Income tax contingencies. Certain of NL's tax returns in various U.S. and
non-U.S. jurisdictions are being examined and tax authorities have proposed or
may propose tax deficiencies, including non-income tax related items and
interest.
NL has received tax assessments from the Norwegian tax authorities
proposing tax deficiencies of NOK 30 million ($3 million at September 30, 2000)
relating to 1994 and 1996. NL is currently litigating the primary issue related
to the 1994 assessment in a Norwegian appeals court, and NL believes that the
outcome of the 1996 case is dependent on the eventual outcome of the 1994 case.
NL has granted a lien for the 1994 and 1996 tax assessments on its Fredrikstad,
Norway TiO2 plant in favor of the Norwegian tax authorities.
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<PAGE>
No assurance can be given that these or other tax matters will be
resolved in NL's favor in view of the inherent uncertainties involved in court
proceedings. NL believes that it has provided adequate accruals for additional
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 NL's consolidated financial
position, results of operations or liquidity.
Environmental matters and litigation. NL 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, mining
locations and facilities currently or previously owned, operated or used by NL,
certain of which are on the U.S. Environmental Protection Agency's (the "U.S.
EPA") Superfund National Priorities List or similar state lists. On a quarterly
basis, NL evaluates the potential range of its liability at sites where it has
been named as a PRP or defendant, including sites for which EMS has
contractually assumed NL's obligation. NL believes it has adequate accruals
($110 million at September 30, 2000) for reasonably estimable costs of such
matters, but NL's ultimate liability may be affected by a number of factors,
including changes in remedial alternatives and costs and the allocations of such
costs among PRPs. It is not possible to estimate the range of costs for certain
sites. The upper end of the range of reasonably possible costs to NL for sites
for which it is possible to estimate costs is approximately $170 million. NL's
estimates of such liabilities have not been discounted to present value, and NL
has not recognized any potential insurance recoveries other than the June 2000
settlement discussed below. No assurance can be given that actual costs will not
exceed either 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.
The imposition of more stringent standards or requirements under environmental
laws or regulations, new developments or changes with respect to site cleanup
costs or allocation of such costs among PRPs, or a determination that NL is
potentially responsible for the release of hazardous substances at other sites
could result in expenditures in excess of amounts currently estimated by NL to
be required for such matters. Furthermore, there can be no assurance that
additional environmental matters will not arise in the future.
In June 2000 NL settled a lawsuit with one of its two principal former
insurance carriers. NL had sought reimbursement from the insurance carrier for
legal defense expenditures and indemnity coverage for certain of its
environmental remediation expenditures. In July 2000 proceeds of $45 million
from the settlement were transferred by the carrier to a special purpose trust
established to pay future remediation and other environmental expenditures of
NL. NL is continuing to pursue similar claims with other insurance carriers.
Lead pigment litigation. NL is also a defendant in a number of legal
proceedings seeking damages for personal injury and property damage arising out
of the sale of lead pigments and lead-based paints, including cases in which
plaintiffs purport to represent a class and cases brought on behalf of
governmental entities. There is no assurance that NL will not incur future
liability in respect of this pending litigation in view of the inherent
uncertainties involved in court and jury rulings in pending and possible future
cases. However, based on, among other things, the results of such litigation to
date, NL believes that the pending lead pigment and paint litigation is without
merit. NL has not accrued any amounts for such pending litigation. Liability
that may result, if any, cannot reasonably be estimated. In addition, various
legislation and administrative regulations have, from time to time, been enacted
or proposed that seek to (a) impose various obligations on present and former
manufacturers of lead
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<PAGE>
pigment and lead-based paint with respect to asserted health concerns associated
with the use of such products and (b) effectively overturn court decisions in
which NL and other pigment manufacturers have been successful. Examples of such
proposed legislation include bills which would permit civil liability for
damages on the basis of market share, rather than requiring plaintiffs to prove
that the defendant's product caused the alleged damage and bills which would
revive actions barred by the statute of limitations. NL currently believes
the disposition of all claims and disputes, individually and in the aggregate,
should not have a material adverse effect on NL'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.
Other. NL 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, NL in
the past has sought, and in the future may seek, to reduce, refinance,
repurchase or restructure indebtedness; raise additional capital; issue
additional securities; repurchase shares of its common stock; modify its
dividend policy; 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. In the normal course of its business, NL
may review opportunities for the acquisition, divestiture, joint venture or
other business combinations in the chemicals or other industries, as well as the
acquisition of interests in related companies. In the event of any acquisition
or joint venture transaction, NL may consider using available cash, issuing
equity securities or increasing its indebtedness to the extent permitted by the
agreements governing NL's existing debt.
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<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
-----------------
Reference is made to the 1999 Annual Report on Form 10-K and the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 for each
of the Company, TIMET and NL for descriptions of certain legal proceedings.
TIMET
In September 2000, TIMET was named in an action filed by the U.S. Equal
Employment Opportunity Commission in federal district court in Las Vegas, Nevada
(U.S. Equal Employment Opportunity Commission v. Titanium Metals Corporation,
CV-S-00-1172DWH-RJJ). The complaint alleges that several female employees at
TIMET's Henderson, Nevada plant were the subject of sexual harassment. TIMET
intends to vigorously defend this action, but in any event does not presently
anticipate that any adverse outcome in this case would be material to TIMET's
consolidated financial position, results of operations or liquidity.
In March 2000, TIMET filed a lawsuit against The Boeing Company seeking
damages estimated in excess of $600 million in connection with TIMET's long-term
sales agreement with Boeing. In June 2000, Boeing filed its answer to TIMET's
complaint denying substantially all of TIMET's allegations and making certain
counterclaims against TIMET. TIMET believes such counterclaims are without merit
and intends to vigorously defend against such claims. The litigation is
progressing in the discovery phase and a court date has been set for the end of
January 2002. TIMET and Boeing have been in discussions to determine if a
settlement can be reached. Those discussions are on going; however, no assurance
can be given that a settlement will be achieved.
NL Industries
City of New York, et al. v. Lead Industries Association, et al. (No.
89-4617). In September 2000 the First Department denied plaintiffs' appeal of
the trial court's denial of plaintiffs' motion for summary judgment on the
market share issue.
Brenner, et al. v. American Cyanamid, et al. (No. 12596-93). Plaintiffs
have filed a notice of appeal.
Sabater, et al. v. Lead Industries Association, et al. (No. 25533/98). In
October 2000 defendants filed a third-party complaint against the Federal Home
Loan Mortgage Corporation (FHLMC), and FHLMC removed the case to federal court
in the Southern District of New York.
Cofield, et al. v. Lead Industries Association, et al. (No. 24-C-99004491).
In August 2000 the federal court dismissed the fraud, indemnification, and
nuisance claims, and remanded the case to Maryland state court.
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<PAGE>
Spring Branch Independent School District v. Lead Industries Association,
et al. (No. 2000-31175) and Houston Independent School District v. Lead
Industries Association, et al. (No. 2000-33725). In October 2000 NL filed
answers in both cases denying all allegations of wrongdoing and liability.
Lewis et al. v. Lead Industries Association, et al.(No. 00CH09800). In
October 2000 defendants moved to dismiss all claims. Briefing is not yet
completed.
In October 2000 NL was served with a complaint filed in California
state court. Carletta Justice, et al. v. Sherwin-Williams Company, et al.
(Superior Court of California, County of San Francisco, No. 314686). Plaintiffs
are two minors who seek general, special and punitive damages for injuries
alleged to be due to ingestion of paint containing lead in their residence.
Defendants are NL, the Lead Industries Association, and nine other companies
sued as former manufacturers of lead paint. Plaintiffs allege claims for
negligence, strict products liability, concert of action, market share
liability, and intentional tort. NL intends to deny all allegations of
wrongdoing and liability and to defend the case vigorously.
Batavia, New York Landfill. In September 2000 NL finalized the
previously reported consent decree allocating cleanup costs at this site among
the PRPs. NL's expected costs pursuant to the consent decree are within
previously accrued amounts.
In August and September 2000 NL and one of its subsidiaries, NLO, Inc.
("NLO"), were named as defendants in four lawsuits filed in federal court in the
western district of Kentucky against the Department of Energy ("DOE") and a
number of other defendants alleging that nuclear material supplied by, among
others, the Feed Material Production Center ("FMPC") in Fernald, Ohio, owned by
the DOE and formerly managed under contract by NLO, caused injury to employees
and others at the DOE's Paducah, Kentucky Gaseous Diffusion Plant ("PGDP"). With
respect to each of the cases listed below, NL believes that the DOE is obligated
to provide defense and indemnification pursuant to its contract with NLO, and
pursuant to its statutory obligation to do so, as it has in several previous
cases relating to management of the FMPC, and has so advised the DOE. Answers in
the four cases have not been filed; NL and NLO intend to deny all allegations of
wrongdoing and liability and to defend the cases vigorously.
In Rainer, et al. v. E.I. du Pont de Nemours, et al., ("Rainer I") No.
5:00CV-223-J, plaintiffs purport to represent a class of former employees
at the PGDP and members of their households and seek actual and punitive
damages of $5 billion each for alleged negligence, infliction of
emotional distress, ultra-hazardous activity/strict liability and strict
products liability.
In Rainer, et al. v. Bill Richardson, et al., No. 5:00CV-220-J,
plaintiffs purport to represent the same classes regarding the same
matters alleged in Rainer I, and allege a violation of constitutional
rights and seek the same recovery sought in Rainer I.
In Dew, et al. v. Bill Richardson, et al., No. 5:00CV00221R, plaintiffs
purport to represent classes of all PGDP employees who sustained
pituitary tumors or cancer as a result of exposure to radiation and
seek actual and punitive damages of $2 billion each for alleged
violation of constitutional rights, assault and battery, fraud and
misrepresentation, infliction of emotional distress, negligence,
ultra-hazardous activity/strict liability, strict products liability,
conspiracy, concert of action, joint venture and enterprise liability,
and equitable estoppel.
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<PAGE>
In Shaffer, et al. v. Atomic Energy Commission, et al., No. 5:00CV00307M,
plaintiffs purport to represent classes of PGDP employees and household
members, subcontractors at PGDP, and landowners near the PGDP and
seek actual and punitive damages of $1 billion each and medical
monitoring for the same counts alleged in Dew.
In October 2000 NL was served with a complaint in Pulliam, et al. v. NL
Industries, Inc., et al., No. 49DO20010CT001423, filed in superior court in
Marion County, Indiana, on behalf of an alleged class of all persons and
entities who own or have owned property or have resided within a one-mile radius
of an industrial facility formerly owned by NL in Indianapolis, Indiana.
Plaintiffs allege that they and their property have been injured by lead dust
and particulates from the facility and seek unspecified actual and punitive
damages and a removal of all alleged lead contamination. The time for NL to file
its answer has not yet expired. NL intends to deny all allegations of wrongdoing
and liability and to defend the case vigorously.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
---------------------------------
(a) Exhibits:
27.1 Financial Data Schedule for the quarter ended September 30, 2000.
(b) Reports on Form 8-K filed by the Registrant for the quarter ended
September 30, 2000 and through October 2000:
Filing Date Items Reported
---------------------------------- ------------------------
August 4, 2000 - 5 and 7
October 27, 2000 - 5 and 7
October 27, 2000 - 5 and 7
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<PAGE>
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.
TREMONT CORPORATION
-------------------------------------------
(Registrant)
Date: November 14, 2000 By /s/ Mark A. Wallace
-------------------------- -------------------------------------------
Mark A. Wallace
Vice President and Chief Financial Officer
Date: November 14, 2000 /s/ Margaret Von der Schmidt
-------------------------- -------------------------------------------
Margaret Von der Schmidt
Controller
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