UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of the earliest event reported)
November 8, 2004
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Valhi, Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 1-5467 87-0110150
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(972) 233-1700
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(Former name or former address, if changed
since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
The registrant hereby amends this current report to correct the reference of
Item 2.01 to be Item 2.02.
Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
Pursuant to Items 2.02 and 7.01 of this current report, the registrant
hereby furnishes the information set forth in its press release issued on
November 8, 2004, a copy of which is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
The information, including the exhibit, the registrant furnishes in
this report is not deemed "filed" for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. Registration statements or other documents filed with the
Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Item No. Exhibit Index
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99.1 Press Release dated November 8, 2004 issued
by the registrant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VALHI, INC.
(Registrant)
By: /s/ Gregory M. Swalwell
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Gregory M. Swalwell
Vice President
Date: November 8, 2004
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release dated November 8, 2004 issued by the registrant.
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PRESS RELEASE
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FOR IMMEDIATE RELEASE CONTACT:
Valhi, Inc. Bobby D. O'Brien
Three Lincoln Centre Vice President
5430 LBJ Freeway, Suite 1700 (972) 233-1700
Dallas, Texas 75240-2697
(972) 233-1700
VALHI REPORTS THIRD QUARTER RESULTS
DALLAS, TEXAS . . November 8, 2004. Valhi, Inc. (NYSE: VHI) reported net
income of $17.4 million, or $.14 per diluted share, in the third quarter of 2004
compared to net income of $8.8 million, or $.07 per diluted share, in the third
quarter of 2003. For the first nine months of 2004, the Company reported income
before cumulative effect of a change in accounting principle of $284.5 million,
or $2.36 per diluted share, compared to income of $28.2 million, or $.23 per
diluted share, in the first nine months of 2003. The primary reason for the
increase in income in the 2004 year-to-date period is due to certain second
quarter income tax benefits discussed below.
Chemicals sales increased $43.2 million in the third quarter of 2004
compared to the third quarter of 2003, and increased $82.6 million for the first
nine months of the year, as the favorable effect of fluctuations in foreign
currency exchange rates, which increased chemicals sales by approximately $11
million and $46 million, respectively, and higher Ti02 sales volumes more than
offset the impact of lower average TiO2 selling prices. Kronos' TiO2 sales
volumes in the third quarter of 2004 increased 16% compared to the third quarter
of 2003, as higher volumes in Europe, United States and export markets more than
offset the effect of lower volumes in Canada, and volumes were 9% higher in the
year-to-date period. Excluding the effect of fluctuations in the value of the
U.S. dollar relative to other currencies, Kronos' average TiO2 selling prices in
billing currencies in the third quarter of 2004 were 1% lower than the third
quarter of 2003, and were 3% lower in the year-to-date period. Expressed in U.S.
dollars computed using actual foreign currency exchange rates prevailing during
the respective periods, Kronos' average TiO2 selling prices in the third quarter
of 2004 were 3% higher than the third quarter of 2003, and 2% higher for the
first nine months of the year. Reflecting the partial implementation of prior
price increase announcements, Kronos' average TiO2 selling prices in billing
currencies in the third quarter of 2004 were 3% higher than the second quarter
of 2004, the first quarter with an upward trend in selling prices since the
third quarter of 2003.
Chemicals operating income in the 2004 year-to-date period includes a
second quarter gain of $6.3 million ($3.5 million, or $.03 per diluted share,
net of income taxes and minority interest) related to the settlement of a
contract dispute with a customer. Kronos' operating income comparisons were also
favorably impacted by higher production levels, which increased 5% in the third
quarter of 2004 compared to the third quarter of 2003, and increased 3% in the
first nine months of 2004. Kronos' operating rates were at near full capacity in
all periods presented, and Kronos' sales and production volumes in the first
nine months of 2004 were both new records for Kronos. Operating income
comparisons were negatively impacted by the lower average selling prices for
TiO2. In addition, fluctuations in currency exchange rates increased chemicals
operating income in the first nine months of 2004 by $7 million as compared to
the same period in 2003, while the effect of currency exchange rate fluctuations
was not significant in the quarter.
Component products sales were higher in the third quarter and first nine
months of 2004 as compared to the same periods in 2003 due primarily to higher
volumes of precision slide and security products and increases in certain slide
product surcharges and prices (primarily to recover the increase in raw material
steel prices experienced during 2004). Sales comparisons were also favorably
impacted by relative changes in foreign currency exchange rates, which increased
component product sales by $1.1 million in the third quarter of 2004 as compared
to the third quarter of 2003, and increased sales by $4.5 million in the first
nine months of the year.
Component products operating income comparisons were favorably impacted by
the effect of certain cost reduction efforts previously undertaken, including
consolidating CompX's two Canadian facilities into one facility and the
restructuring of CompX's operations in the Netherlands. In addition, operating
income comparisons were also impacted by an unfavorable change in product mix of
security products, the effect of selling price increases for certain products,
higher raw material and medical costs and expenses of approximately $900,000
incurred during the first nine months of 2003 (mostly in the first half of the
year) associated with consolidating the two Canadian facilities. In addition,
component products operating income in the third quarter of 2003 includes a $3.5
million restructuring charge associated with the implementation of certain
headcount reductions in CompX's Netherlands operations.
Waste management sales increased, and its operating loss declined, in 2004
due to higher demand for waste management services, offset in part by higher
expenses associated with the additional management and staffing requirements
resulting from recent permitting efforts to expand low-level and mixed-level
radioactive waste disposal capabilities.
TIMET's sales increased from $83.6 million in the third quarter of 2003 to
$120.2 million in the third quarter of 2004. TIMET's operating income improved
from $1.3 million in the third quarter of 2003 to $12.4 million in the 2004
period. The improvement in TIMET's results were due in part to a 34% increase in
sales volumes of mill products (primarily due to increased sales to the
commercial and military aerospace sector and industrial markets) and a 39%
increase in melted product average selling prices. These increases were
partially offset by a 3% decrease in melted product sales volumes. A significant
portion of the increase in melted product average selling prices was due to a
change in product mix relative to a significant sale of slab in the third
quarter of 2003, for which selling prices are lower than ingot.
Equity in earnings of TIMET in the third quarter of 2004 includes income of
$6.3 million ($4.1 million, or $.03 per diluted share, net of income taxes)
related to a nonoperating gain recognized by TIMET upon the exchange of
substantially all of its convertible preferred debt securities for a new issue
of TIMET preferred stock. TIMET's results in the third quarter of 2003 include a
$6.8 million charge related to the termination of TIMET's purchase and sales
agreement with a customer.
General corporate expenses were lower in the third quarter and first nine
months of 2004 compared to the same periods of 2003 due primarily to lower
environmental remediation and legal expenses of NL. The gain on disposal of
fixed assets in the 2003 periods related primarily to the sale of certain real
property of NL, which aggregated $4.1 million, or $.03 per diluted share, net of
income taxes and minority interest, in the third quarter of 2003 (2003
year-to-date period net of $4.7 million, or $.04 per diluted share).
Kronos recognized a $245.6 million income tax benefit in the second quarter
of 2004 ($210.5 million, or $1.75 per diluted share, net of minority interest)
related to the reversal of a deferred income tax asset valuation allowance
attributable to Kronos' income tax attributes in Germany (principally net
operating loss carryforwards). The reversal of the German valuation allowance
reflected the Company's revised estimate of its ability to utilize its German
net operating loss carryforwards in the future under the "more-likely-than-not"
recognition criteria.
Also, in the second quarter of 2004, NL recognized a $43.1 million income
tax benefit ($35.9 million, or $.30 per diluted share, net of minority interest)
related to income tax attributes of NL Environmental Management Services, Inc.
("EMS"), a subsidiary of NL. This income tax benefit resulted from a settlement
agreement reached with the U.S. IRS concerning the IRS' previously-reported
examination of a certain restructuring transaction involving EMS, and included
(i) a $12.6 million tax benefit related to a reduction in the amount of
additional income taxes and interest which NL estimates it will be required to
pay related to this matter as a result of the settlement agreement and (ii) a
$30.5 million tax benefit related to the reversal of a deferred income tax asset
valuation allowance related to certain tax attributes of EMS (including a U.S.
net operating loss carryforward) which NL now believes meet the
"more-likely-than-not" recognition criteria.
The income tax benefit in the 2003 year-to-date period included a second
quarter $24.6 million income tax benefit ($20.8 million, or $.17 per diluted
share, net of minority interest) related to Kronos' previously-reported
favorable German court ruling concerning its claim for refund suit.
The cumulative effect of the change in accounting principle in the first
nine months of 2003 related to the Company's first quarter adoption of Statement
of Financial Accounting Standards No. 143, Accounting for Asset Retirement
Obligations, effective January 1, 2003. Such change in accounting relates
principally to accounting for closure and post-closure obligations at the
Company's waste management operations.
The statements in this release relating to matters that are not historical
facts are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. 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 substantial risks and
uncertainties that could significantly impact expected results, and actual
future results could differ materially from those described in such
forward-looking statements. While it is not possible to identify all factors,
the Company continues to face many risks and uncertainties. Among the factors
that could cause actual future results to differ materially include, but are not
limited to:
o Future supply and demand for the Company's products,
o The extent of the dependence of certain of the Company's businesses on
certain market sectors,
o The cyclicality of certain of the Company's businesses,
o The impact of certain long-term contracts on certain of the Company's
businesses,
o Customer inventory levels,
o Changes in raw material and other operating costs,
o The possibility of labor disruptions,
o General global economic and political conditions,
o Competitive products and substitute products,
o Customer and competitor strategies,
o The impact of pricing and production decisions,
o Competitive technology positions,
o The introduction of trade barriers,
o Fluctuations in currency exchange rates,
o Operating interruptions,
o The ability to implement headcount reductions in certain operations in
a cost effective manner within the constraints of non-U.S.
governmental regulations, and the timing and amount of any such cost
savings realized,
o The ability of the Company to renew or refinance credit facilities,
o Uncertainties associated with new product development,
o The ultimate outcome of income tax audits, tax settlement initiatives
or other tax matters,
o The ultimate ability to utilize income tax attributes, the benefit of
which has been recognized under the "more-likely-than-not" recognition
criteria,
o Environmental matters,
o Government laws and regulations and possible changes therein,
o The ultimate resolution of pending litigation, and
o Possible future litigation.
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 disclaims any intention or obligation to update or revise any
forward-looking statement whether as a result of changes in information, future
events or otherwise.
In an effort to provide investors with additional information regarding the
Company's results of operations as determined by accounting principles generally
accepted in the United States of America ("GAAP"), the Company has disclosed
certain non-GAAP information which the Company believes provides useful
information to investors:
o The Company discloses percentage changes in Kronos' average TiO2
selling prices in billing currencies, which excludes the effects of
foreign currency translation. The Company believes disclosure of such
percentage changes allows investors to analyze such changes without
the impact of changes in foreign currency exchange rates, thereby
facilitating period-to-period comparisons of the relative changes in
average selling prices in the actual various billing currencies.
Generally, when the U.S. dollar either strengthens or weakens against
other currencies, the percentage change in average selling prices in
billing currencies will be higher or lower, respectively, than such
percentage changes would be using actual exchange rates prevailing
during the respective periods.
Valhi, Inc. is engaged in the titanium dioxide pigments, component products
(ergonomic computer support systems, precision ball bearing slides and security
products), titanium metals products and waste management industries.
VALHI, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(Unaudited)
(In millions, except earnings per share)
Three months ended Nine months ended
September 30, September 30,
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2003 2004 2003 2004
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Net sales
Chemicals $242.9 $286.1 $762.5 $ 845.1
Component products 52.6 56.0 153.3 165.9
Waste management .5 4.4 3.0 6.6
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$296.0 $346.5 $918.8 $1,017.6
====== ====== ====== ========
Operating income
Chemicals $ 31.7 $ 25.8 $ 94.1 $ 84.2
Component products (.4) 5.8 1.8 14.6
Waste management (3.1) (.5) (8.7) (7.3)
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Total operating income 28.2 31.1 87.2 91.5
General corporate items, net
Interest and dividend income 8.0 8.2 24.3 24.3
Gain on disposal of fixed assets 7.4 - 8.5 .6
Legal settlement gains, net - - .7 .5
Securities transaction gains, net - - .5 -
Expenses, net (11.7) (6.2) (54.7) (21.6)
Interest expense (14.7) (15.2) (43.8) (45.9)
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17.2 17.9 22.7 49.4
Equity in:
TIMET .2 11.2 (3.7) 13.7
Other .2 2.4 .7 2.5
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Income before income taxes 17.6 31.5 19.7 65.6
Provision for income taxes (benefit) 6.4 11.0 (17.0) (271.5)
Minority interest in after-tax earnings 2.4 3.1 8.5 52.6
------ ------ ------ --------
Income before cumulative effect of
change in accounting principle 8.8 17.4 28.2 284.5
Cumulative effect of change in accounting
Principle - - .6 -
------ ------ ------ -----
Net income $ 8.8 $ 17.4 $ 28.8 $ 284.5
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VALHI, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME (CONTINUED)
(Unaudited)
(In millions, except earnings per share)
Three months ended Nine months ended
September 30, September 30,
---------------------- -----------------------
2003 2004 2003 2004
------ ------ ------- -------
Basic earnings per share
Income before cumulative effect of change
in accounting principle $ .07 $ .14 $ .23 $ 2.37
Cumulative effect of change in accounting
Principle - - .01 -
------ ------ ------ -----
Net income $ .07 $ .14 $ .24 $ 2.37
====== ====== ====== ========
Diluted earnings per share
Income before cumulative effect of change
in accounting principle $ .07 $ .14 $ .23 $ 2.36
Cumulative effect of change in accounting
principle - - .01 -
------ ------ ------ -----
Net income $ .07 $ .14 $ .24 $ 2.36
====== ====== ====== ========
Shares used in calculation of per share amounts
Basic earnings 120.2 120.2 119.5 120.2
====== ====== ====== ========
Diluted earnings 120.4 120.4 119.7 120.4
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VALHI, INC. AND SUBSIDIARIES
RECONCILIATION OF PERCENTAGE CHANGE IN
KRONOS' AVERAGE TIO2 SELLING PRICES
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2004 vs. 2003 2004 vs. 2003
----------------- ---------------
Percentage change in average selling prices
Using actual foreign currency exchange rates +3% +2%
Impact of changes in foreign currency
exchange rates -4% -5%
--- ---
In billing currencies -1% -3%
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