UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of the earliest event reported)
May 10, 2005
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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))
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 May
10, 2005, 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 May 10, 2005 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: May 10, 2005
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release dated May 10, 2005 issued by the registrant.
[LOGO GOES HERE]
FOR IMMEDIATE RELEASE: CONTACT:
Valhi, Inc. Bobby D. O'Brien
Three Lincoln Centre Vice President
5430 LBJ Freeway (972) 233-1700
Suite, 1700
Dallas, Texas 75240-2697
VALHI REPORTS FIRST QUARTER RESULTS
DALLAS, TEXAS . . May 10, 2005. Valhi, Inc. (NYSE: VHI) reported income
from continuing operations of $30.3 million, or $.25 per diluted share, in the
first quarter of 2005 compared to income of $3.6 million, or $.03 per diluted
share, in the first quarter of 2004.
Chemicals sales increased $28.6 million in the first quarter of 2005
compared to the first quarter of 2004 due to net effects of higher average TiO2
selling prices, lower TiO2 sales volumes as well as the favorable effect of
fluctuations in foreign currency exchange rates, which increased chemicals sales
by approximately $11 million. 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 first quarter of 2005 were 8% higher as
compared to the first quarter of 2004. When translated from billing currencies
to U.S. dollars using actual foreign currency exchange rates prevailing during
the respective periods, Kronos' average TiO2 selling prices in the first quarter
of 2005 increased 13% compared to the first quarter of 2004.
Kronos' TiO2 sales volumes in the first quarter of 2005 decreased 3%
compared to the first quarter of 2004, due primarily to lower volumes in export
markets. Kronos' operating income comparisons were favorably impacted by higher
production levels, which increased 4% in the first quarter of 2005 as compared
to the same period in 2004. Kronos' operating rates were near full capacity in
both periods, and Kronos' production volumes in the first quarter of 2005 were a
new record for Kronos for a first quarter. Fluctuations in foreign currency
exchange rates did not have a significant effect on chemicals operating income
comparisons.
Component products operating income comparisons in 2005 were favorably
impacted by the effect of certain cost reduction initiatives previously
undertaken. Component products operating income comparisons were also favorably
impacted by the net effects of increases in the cost of steel (the primary raw
material for CompX's products) and a favorable change in product mix of security
products. Waste management sales increased, and its operating loss declined, in
the first quarter of 2005 as compared to the first quarter of 2004 due to higher
utilization of waste management services, offset in part by higher operating
costs.
Effective January 1, 2005, TIMET changed its method of accounting for
approximately 40% of its inventories from the last-in, first-out ("LIFO") method
to the specific identification cost method, representing all of its inventories
previously accounted for under the LIFO method. In accordance with accounting
principles generally accepted in the United States of America ("GAAP"), the
Company has retroactively restated its consolidated financial statements to
reflect its results of operations as if TIMET had accounted for such inventories
under the new method for all periods presented. As a result, the Company's
income from continuing operations in the first quarter of 2004 is approximately
$200,000, or nil per diluted share, higher than previously reported.
TIMET's sales increased from $120.5 million in the first quarter of 2004 to
$155.2 million in the first quarter of 2005, and TIMET's operating income
increased from $3.3 million to $19.4 million. The improvement in TIMET's
operating results in 2005 was due in part to a 1% increase in sales volumes of
melted products (ingot and slab), a 6% increase in sales volumes of mill
products and 27% and 19% increases in average selling prices for melted and mill
products, respectively. TIMET's operating results in the first quarter of 2004
include $1.9 million of income related to a change in TIMET's vacation policy.
TIMET's operating results comparisons were favorably impacted by improved plant
operating rates, which increased from 73% in the first quarter of 2004 to 80% in
the first quarter of 2005, and TIMET's continued cost management efforts. In
addition, TIMET's operating results comparisons were negatively impacted by
higher costs for raw materials (scrap and alloys) and energy and a $1.2 million
impairment charge related to certain abandoned manufacturing equipment of TIMET.
TIMET's results in the first quarter of 2005 also include a $29.9 million income
tax benefit ($7.9 million, or $.07 per diluted share, net of minority interest
to Valhi) related to the reversal of its deferred income tax asset valuation
allowances in the U.S. and the U.K.
General corporate interest and dividend income is higher in the first
quarter of 2005 as compared to the first quarter of 2004 due primarily to a
higher level of funds available for investment. Net securities transactions
gains in the first quarter of 2005 relate principally to a $14.6 million gain
($6.6 million, or $.05 per diluted share, net of income taxes and minority
interest) related to NL's sale of shares of Kronos common stock in market
transactions. General corporate expenses were lower in the first quarter of 2005
due primarily to lower environmental remediation and legal expenses of NL.
Interest expense was higher due primarily to higher outstanding levels of debt
at Kronos.
As previously-reported, in January 2005 CompX completed the sale of its
Thomas Regout operations in The Netherlands, and accordingly the results of
operations of Thomas Regout (which reported a nominal amount of net income in
the first quarter of 2004) are classified as discontinued operations for all
periods presented. Discontinued operations in 2005 relate primarily to
additional expenses associated with the disposal of the Thomas Regout
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 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 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
(precision ball bearing slides, security products and ergonomic computer support
systems), titanium metals products and waste management industries.
* * * * *
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(Unaudited)
Three months ended March 31, 2004 and 2005
(In millions, except earnings per share)
2004 2005
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Net sales
Chemicals $263.3 $291.9
Component products 43.6 46.8
Waste management .8 2.5
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$307.7 $341.2
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Operating income
Chemicals $ 22.2 $ 43.6
Component products 2.5 4.1
Waste management (3.2) (2.8)
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Total operating income 21.5 44.9
General corporate items, net
Interest and dividend income 8.5 10.2
Securities transaction gains, net - 14.6
Expenses, net (9.0) (8.2)
Interest expense (15.6) (17.9)
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5.4 43.6
Equity in:
TIMET .7 16.8
Other .1 .1
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Income before income taxes 6.2 60.5
Provision for income taxes .8 25.0
Minority interest in after-tax earnings 1.8 5.2
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Income from continuing operations 3.6 30.3
Discontinued operations - (.3)
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Net income $ 3.6 $ 30.0
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Basic and diluted earnings per share
Income from continuing operations $ .03 $ .25
Discontinued operations - -
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Net income $ .03 $ .25
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Shares used in calculation of per share amounts
Basic earnings 120.2 120.2
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Diluted earnings 120.5 120.6
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VALHI, INC. AND SUBSIDIARIES
RECONCILIATION OF PERCENTAGE CHANGE IN
KRONOS' AVERAGE TIO2 SELLING PRICES
(Unaudited)
Three months ended
March 31,
2005 vs. 2004
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Percentage change in average selling prices:
Using actual foreign currency exchange rates +13%
Impact of changes in foreign currency
exchange rates -5%
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In billing currencies +8%
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