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)
August
8, 2007
Valhi,
Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
1-5467
|
87-0110150
|
|
|
(State
or other jurisdiction of incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
|
5430
LBJ Freeway, Suite 1700, Dallas, Texas
|
75240-2697
|
||
|
(Address
of principal executive offices)
|
(Zip
Code)
|
||
Registrant’s
telephone number, including area code
(972)
233-1700
|
(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):
|
o
|
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.
|
The
registrant hereby furnishes the information set forth in its press release
issued on August 8, 2007, 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
U.S. 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.
|
|
(d)
|
Exhibits
|
||
|
Item
No.
|
Exhibit
Index
|
||
|
99.1
|
Press
release dated August 8, 2007 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
|
|
|
Date: August
8, 2007
|
Gregory
M. Swalwell, Vice President and
Controller
|
INDEX
TO EXHIBITS
|
Item
No.
|
Exhibit
Index
|
|
|
99.1
|
Press
release dated August 8, 2007 issued by the
registrant.
|
VALHI
REPORTS SECOND QUARTER RESULTS
DALLAS,
TEXAS . . August 8,
2007. Valhi, Inc. (NYSE: VHI) reported a net loss of $4.9 million, or
$.04 per diluted share, in the second quarter of 2007 as compared to net income
of $17.7 million, or $.15 per diluted share, in the second quarter of
2006. For the first six months of 2007, Valhi reported net income of
$21.2 million, or $.18 per diluted share, compared to net income of $41.1
million, or $.35 per diluted share, in the first six months of
2006.
Chemicals
sales decreased $2.5 million in the second quarter of 2007 as compared to the
second quarter of 2006 due primarily to net effects of lower average TiO2
selling prices and sales volumes, partially offset by the favorable fluctuations
in currency exchange rates which increased chemicals sales by approximately
$15
million. For the first six months of 2007, chemical sales increased
$7.2 million as compared to the same period in 2006 as the favorable effect
of
fluctuations in currency exchange rates, which increased chemicals sales by
approximately $31 million, more than offset the unfavorable effect of lower
average TiO2 selling prices and sales volumes. Kronos’ average TiO2
selling prices in the second quarter of 2007 were 4% lower than the second
quarter of 2006, and prices were 3% lower in the year-to-date
period. Kronos' TiO2 sales volumes in the second quarter of 2007
decreased 2% as compared to the second quarter of 2006, and volumes were 1%
lower in the year-to-date period, as higher volumes in Europe and export markets
were more than offset by lower volumes in North America. The table at the end
of
this press release shows how each of these items impacted the overall changes
in
chemicals sales.
Chemicals
operating income declined $8.6 million and $11.5 million in the second quarter
and first six months of 2007, respectively, as compared to the same periods
in
2006 due primarily to lower average TiO2 selling prices and sales volumes and
higher raw material and energy costs, partially offset by the favorable effects
of fluctuations in currency exchange rates which increased chemicals operating
income by approximately $4 million and $7 million, in the second quarter and
first six months of 2007, respectively. Chemicals operating income
comparisons were also impacted by changes in Kronos’ TiO2 production volumes,
which increased 2% in the year-to-date period but decreased 2% in the second
quarter. Kronos’ TiO2 production volumes in the first six months of
2007 were a company record.
In
December 2006, Kronos adopted a new
accounting standard related to planned major maintenance
expense. Under the new standard, Kronos no longer accrues the cost of
planned major maintenance expense in advance but instead recognizes the cost
of
planned major maintenance when incurred. The new standard was adopted
retroactively, and accordingly the Company’s net income in the second quarter of
2006 is approximately $.5 million lower than previously reported. The
effect of adopting the new standard did not have a material impact on the 2006
year-to-date results.
Component
product net sales decreased
$4.9 million in the second quarter of 2007 as compared to the same quarter
of
2006, and declined $8.4 million in the year-to-date period, due to lower sales
to the office furniture market where, for certain products, Asian competitors
have established selling prices at a level below which CompX considers would
return an acceptable margin, partially offset by new sales volumes as a result
of a performance marine acquisition in April 2006. Component product
operating income declined $.9 million in the quarter and $.4 million in the
year-to-date period, as the unfavorable effect of lower sales and higher raw
material costs more than offset the favorable effect of a change in product
mix
and a continued focus on reducing costs and improving
efficiency. Component product operating income comparisons were also
negatively impacted by relative changes in foreign currency exchange rates,
which decreased operating income by $.7 million for the quarter and $.5 million
for the year-to-date period. Waste management sales decreased, and
its operating loss increased, due to lower utilization of waste management
services.
As
previously reported, in March 2007
the Company paid a special dividend in the form of all of the shares of TIMET
common stock it previously held. As a result, the Company no longer
reports equity in earnings of TIMET after the first quarter of
2007.
General
corporate interest and dividend income declined in 2007 as compared to the
same
periods of 2006 due primarily to lower dividend distributions from The
Amalgamated Sugar Company LLC. Insurance recoveries relate
principally to NL’s recovery from certain former insurance carriers in
settlements of claims related to certain environmental, indemnity and past
litigation defense costs. These insurance recoveries (net of tax and
minority interest) aggregated $.01 per diluted share in each of the first six
months of 2006 and 2007. General corporate expenses increased in the
second quarter and first six months of 2007 as compared to the same periods
in
2006 primarily due to higher litigation and related expenses at NL partially
offset by lower environmental and pension expenses.
The
$22.3
million loss on prepayment of debt in the second quarter of 2006 ($.09 per
diluted share, net of income tax benefit and minority interest) relates to
Kronos’ May 2006 redemption of its 8.875% Senior Secured Notes, using the
proceeds from its April 2006 issuance of 6.5% Senior Secured
Notes. Interest expense was lower in the 2007 periods due to the
replacement of the 8.875% Notes with the lower rate 6.5% Notes.
The
Company’s effective income tax rate varies significantly from the U.S. statutory
federal income tax rate in both periods of 2006 and 2007. In the
second quarter of 2007, and following a recent court decision in the European
Union Court of Justice that we believe may favorably impact us, we initiated
a
tax planning strategy. In part as a result of this tax planning
strategy, in the second quarter of 2007 we filed amended prior-year income
tax
returns in Germany. As a result of the amended returns, our aggregate
German corporate and trade net operating loss carryforward was reduced by $8.7
million. Consequently, we recognized an $8.7 million ($.05 per
diluted share, net of minority interest) non-cash provision for deferred income
taxes in the second quarter of 2007 related to the German tax attribute
adjustment. In 2006 we recognized an aggregate tax benefit of $12.6
million ($.07 per diluted share, net of minority interest) primarily related
to
the withdrawal of certain income tax assessments previously made by the Belgian
and Norwegian tax authorities, the favorable resolution of certain income tax
issues related to Germany and Belgium and the enactment of a reduction in
Canadian federal income tax rates. Substantially all of this aggregate $12.6
million income tax benefit was recognized in the second quarter of
2006.
The
statements in this press 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 the expectations reflected in such forward-looking statements
are reasonable, it cannot give any assurances that these expectations will
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 predicted. 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:
|
|
·
|
Future
supply and demand for the Company’s
products,
|
|
|
·
|
The
cyclicality of certain of the Company's
businesses,
|
|
|
·
|
Customer
inventory levels,
|
|
|
·
|
Changes
in the Company’s raw material and other operating
costs,
|
|
|
·
|
The
possibility of labor disruptions,
|
|
|
·
|
General
global economic and political
conditions,
|
|
|
·
|
Competitive
products and substitute products,
|
|
|
·
|
Possible
disruption of business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts,
|
|
|
·
|
Customer
and competitor strategies,
|
|
|
·
|
The
impact of pricing and production
decisions,
|
|
|
·
|
Competitive
technology positions,
|
|
|
·
|
The
introduction of trade barriers,
|
|
|
·
|
Restructuring
transactions involving us and our
affiliates,
|
|
|
·
|
Potential
consolidation of our competitors,
|
|
|
·
|
The
extent to which our subsidiaries were to become unable to pay
dividends,
|
|
|
·
|
Fluctuations
in currency exchange rates,
|
|
|
·
|
Operating
interruptions,
|
|
|
·
|
The
timing and amount of insurance
recoveries,
|
|
|
·
|
The
ability of the Company to renew or refinance credit
facilities,
|
|
|
·
|
Uncertainties
associated with new product
development,
|
|
|
·
|
The
ultimate outcome of income tax audits, tax settlement initiatives
or other
tax matters,
|
|
|
·
|
The
ultimate ability to utilize income tax attributes or changes in income
tax
rates related to such attributes, the benefit of which has been recognized
under the more-likely-than-not recognition
criteria,
|
|
|
·
|
Environmental
matters,
|
|
|
·
|
Government
laws and regulations and possible changes
therein,
|
|
|
·
|
The
ultimate resolution of pending litigation,
and
|
|
|
·
|
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 currently 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.
Valhi,
Inc. is engaged in the titanium dioxide pigments, component products (security
products, furniture components and performance marine components) and waste
management industries.
*
* * *
*
VALHI,
INC. AND SUBSIDIARIES
CONDENSED
SUMMARY OF OPERATIONS
(In
millions, except earnings per share)
|
Three
months ended
June
30,
|
Six
months ended
June
30,
|
|||||||||||||||
|
2006
|
2007
|
2006
|
2007
|
|||||||||||||
|
(unaudited)
|
||||||||||||||||
|
Net
sales
|
||||||||||||||||
|
Chemicals
|
$ |
345.1
|
$ |
342.6
|
$ |
649.4
|
$ |
656.6
|
||||||||
|
Component
products
|
50.2
|
45.3
|
97.2
|
88.8
|
||||||||||||
|
Waste
management
|
4.3
|
1.1
|
7.3
|
2.6
|
||||||||||||
|
Total
net sales
|
$ |
399.6
|
$ |
389.0
|
$ |
753.9
|
$ |
748.0
|
||||||||
|
Operating
income (loss)
|
||||||||||||||||
|
Chemicals
|
$ |
33.2
|
$ |
24.6
|
$ |
66.4
|
$ |
54.9
|
||||||||
|
Component
products
|
5.7
|
4.8
|
10.8
|
10.4
|
||||||||||||
|
Waste
management
|
(1.1 | ) | (3.2 | ) | (3.7 | ) | (6.2 | ) | ||||||||
|
Total
operating income
|
37.8
|
26.2
|
73.5
|
59.1
|
||||||||||||
|
Equity
in:
|
||||||||||||||||
|
TIMET
|
20.4
|
-
|
42.5
|
26.9
|
||||||||||||
|
Other
|
(.3 | ) |
1.0
|
(2.0 | ) |
.5
|
||||||||||
|
General
corporate items:
|
||||||||||||||||
|
Interest
and dividend income
|
10.6
|
7.9
|
20.4
|
15.8
|
||||||||||||
|
Insurance
recoveries
|
.6
|
.5
|
2.8
|
3.0
|
||||||||||||
|
Securities
transaction gains, net
|
-
|
.2
|
.2
|
.5
|
||||||||||||
|
Loss
on prepayment of debt
|
(22.3 | ) |
-
|
(22.3 | ) |
-
|
||||||||||
|
General
expenses, net
|
(8.6 | ) | (11.0 | ) | (15.0 | ) | (17.0 | ) | ||||||||
|
Interest
expense
|
(19.2 | ) | (15.9 | ) | (36.0 | ) | (31.5 | ) | ||||||||
|
Income
before income taxes
|
19.0
|
8.9
|
64.1
|
57.3
|
||||||||||||
|
Provision
(benefit) for income taxes
|
(1.1 | ) |
13.3
|
18.0
|
33.1
|
|||||||||||
|
Minority
interest in after-tax earnings
|
2.4
|
.5
|
5.0
|
3.0
|
||||||||||||
|
Net
income (loss)
|
$ |
17.7
|
$ | (4.9 | ) | $ |
41.1
|
$ |
21.2
|
|||||||
|
Basic
and diluted net income (loss) per share
|
$ |
.15
|
$ | (.04 | ) | $ |
.35
|
$ |
.18
|
|||||||
|
Shares
used in calculation of per share amounts
|
||||||||||||||||
|
Basic
earnings
|
116.4
|
114.9
|
116.5
|
114.8
|
||||||||||||
|
Diluted
earnings
|
116.8
|
115.1
|
116.9
|
115.1
|
||||||||||||
VALHI,
INC. AND SUBSIDIARIES
IMPACT
OF PERCENTAGE CHANGE IN CHEMICALS NET SALES
|
Three
months ended
June
30,
2007
vs. 2006
|
Six
months ended
June
30,
2007
vs. 2006
|
|||||||
|
(unaudited)
|
||||||||
|
Percent
change in net sales:
|
||||||||
|
TiO2
product
pricing
|
(4 | )% | (3 | )% | ||||
|
TiO2
sales
volumes
|
(2 | ) | (1 | ) | ||||
|
TiO2
product
mix
|
1
|
-
|
||||||
|
Changes
in currency exchange rates
|
4
|
5
|
||||||
|
Total
|
(1 | )% | 1 | % | ||||