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
6, 2008
Valhi,
Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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1-5467
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87-0110150
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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5430
LBJ Freeway, Suite 1700, Dallas, Texas
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75240-2697
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
(972)
233-1700
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(Former
name or former address, if changed since last report.)
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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):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 2.02
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Results
of Operations and Financial
Condition.
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Item
7.01
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Regulation
FD Disclosure.
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The
registrant hereby furnishes the information set forth in its press release
issued on August 6, 2008, 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.
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
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Exhibits
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Item
No.
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Exhibit
Index
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99.1
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Press
release dated August 6, 2008 issued by the
registrant.
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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.
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Valhi,
Inc.
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(Registrant)
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By: /s/ Gregory M. Swalwell
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Date: August
6, 2008
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Gregory
M. Swalwell, Vice President and
Controller
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INDEX
TO EXHIBITS
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Item
No.
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Exhibit
Index
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99.1
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Press
release dated August 6, 2008 issued by the
registrant.
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VALHI
REPORTS SECOND QUARTER 2008 RESULTS
DALLAS, TEXAS . . August 6,
2008. Valhi, Inc. (NYSE: VHI) reported a net loss of $.2 million, or
nil per diluted share, in the second quarter of 2008 as compared to a net loss
of $4.9 million, or $.04 per diluted share, in the second quarter of
2007. For the first six months of 2008, Valhi reported a net loss of
$6.1 million, or $.05 per diluted share, compared to net income of $21.2
million, or $.18 per diluted share, in the first six months of
2007.
The
Chemicals Segment’s sales increased $49.2 million in the second quarter of 2008
as compared to the second quarter of 2007, and increased $67.8 million in the
first six months of 2008 as compared to the same period in 2007, as the
favorable effect of fluctuations in currency exchange rates, which increased
sales by approximately $33 million for the quarter and $54 million for the
year-to-date period, and increases in sales volumes more than offset the effect
of lower average Ti02 selling
prices. Kronos’ average TiO2 selling
prices in the second quarter of 2008 were 1% lower than the second quarter of
2007, and prices were 3% lower in the year-to-date period. Kronos'
TiO2
sales volumes in each of the second quarter and first six months of 2008
increased 3% as compared to the same periods of 2007, due primarily to higher
volumes in export markets. Kronos’ sales volumes for both the second
quarter and first six months of 2008 were each a new record for
us. The table at the end of this press release shows how each of
these items impacted the overall increase in the Chemicals Segment’s
sales.
The
Chemicals Segment’s operating income declined $13.8 million and $33.1 million in
the second quarter and first six months of 2008, respectively, as compared to
the same periods in 2007 due primarily to lower average TiO2 selling
prices and higher raw material and utility costs, partially offset by the
favorable effect of higher TiO2 sales and
production volumes. Kronos’ TiO2 production
volumes were 4% and 2% higher in the second quarter and first six months of
2008, respectively, as compared to the same periods of 2007. Kronos’
production volumes for both the second quarter and first six months of 2008 were
each also a new record for us. Chemicals operating income comparisons
were also impacted by fluctuations in foreign currency exchange rates, which
decreased chemicals operating income by approximately $8 million for the quarter
and $16 million for the year-to-date period.
The Component Products Segment’s sales
decreased $1.6 million in the second quarter of 2008 as compared to the same
quarter of 2007, and declined $4.6 million in the year-to-date period, primarily
due to lower order rates from many customers resulting from unfavorable economic
conditions in North America, offset in part by the effect of sales price
increases for certain products to mitigate the effect of higher raw material
costs and the favorable effect of relative changes in foreign currency exchange
rates, which increased sales by $.3 million for the quarter and $1.0 million for
the year-to-date period. The Component Products Segment’s operating
income declined $.3 million in the quarter and $2.9 million in the year-to-date
period due to the
unfavorable
effect of lower sales, changes in product mix and higher raw material
costs. Changes in foreign currency exchange rates negatively impacted
component products operating income comparisons by $.4 million in the
year-to-date period while favorably impacting operating income comparisons by
$.2 million for the quarter.
Waste
management sales decreased, and its operating loss increased, due to lower
utilization of waste management services in 2008, primarily due to the
completion in 2007 of a few projects that have not yet been replaced with new
business. The Company is continuing to seek opportunities to obtain
certain types of new business that, if obtained, would increase our waste
management sales and decrease our waste management operating loss. In
this regard, in May 2008 the Texas Commission on Environmental Quality issued to
the Company a license for the disposal of byproduct material at the Company’s
site in Andrews County, Texas. Byproduct material includes uranium or
thorium mill tailings as well as equipment, pipe and other materials used to
handle and process the mill tailings. This license allows the Company
to safely dispose of approximately 3,800 canisters received from the Fernald,
Ohio site remediation and currently in storage at the Company’s West Texas site,
as well as provide a more economical disposal facility for uranium miners in
Texas and New Mexico.
Securities earnings were higher in 2008
as compared to the same periods of 2007 due primarily to $4.3 million of
interest income ($2.3 million, or $.02 per diluted share, net of income taxes
and minority interest) related to certain escrow funds that were received by NL
in the second quarter of 2008. 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 2007 and 2008.
General corporate expenses were lower
in the second quarter and first six months of 2008 as compared to the same
periods in 2007 due primarily to lower litigation and related expenses at
NL. Interest expense was higher in 2008 primarily due to unfavorable
changes in foreign currency exchange rates in 2008 compared to 2007, a higher
average balance of outstanding borrowings under our Chemical Segment’s revolving
credit facilities in 2008, primarily in Europe, and the interest on the
promissory note CompX issued in the fourth quarter of 2007.
The
Company’s effective income tax rate varies significantly from the U.S. statutory
federal income tax rate in both periods of 2007 and 2008. The
Company’s income tax benefit in 2008 includes a $7.2 million ($.04 per diluted
share, net of minority interest) non-cash deferred income tax benefit in the
second quarter related to a European Court ruling that resulted in the favorable
resolution of certain income tax issues related to Kronos’ German operations and
an increase in the amount of Kronos’ German corporate and trade tax net
operating loss carryforwards. The provision for income taxes in 2007
includes an $8.7 million ($.05 per diluted share, net of minority interest)
non-cash charge in the second quarter related to the adjustment of certain
German income tax attributes.
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 our actual future results to differ materially include, but are
not limited to, the following:
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Future
supply and demand for our products;
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The
cyclicality of certain of our
businesses;
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Customer
inventory levels;
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Changes
in our raw material and other operating
costs;
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The
possibility of labor disruptions;
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General
global economic and political
conditions;
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Competitive
products and substitute products;
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Possible
disruption of business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts;
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Customer
and competitor strategies;
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The
impact of pricing and production
decisions;
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Competitive
technology positions;
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The
introduction of trade barriers;
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Restructuring
transactions involving us and our
affiliates;
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Potential
consolidation or solvency of our
competitors;
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Demand
for high performance marine
components;
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The
extent to which our subsidiaries were to become unable to pay us
dividends;
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Uncertainties
associated with new product
development;
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Fluctuations
in currency exchange rates;
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Operating
interruptions;
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The
timing and amounts of insurance
recoveries;
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Our
ability to renew or refinance credit
facilities;
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The
ultimate outcome of income tax audits, tax settlement initiatives or other
tax matters;
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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;
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Environmental
matters;
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Government
laws and regulations and possible changes
therein;
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The
ultimate resolution of pending litigation;
and
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Possible
future litigation.
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Should
one or more of these risks materialize (or the consequences of such 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)
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Three
months ended
June 30,
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Six
months ended
June 30,
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2007
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2008
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2007
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2008
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(unaudited)
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Net
sales
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Chemicals
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$ | 342.6 | $ | 391.8 | $ | 656.6 | $ | 724.4 | ||||||||
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Component
products
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45.3 | 43.7 | 88.8 | 84.2 | ||||||||||||
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Waste
management
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1.1 | .6 | 2.6 | 1.5 | ||||||||||||
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Total net
sales
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$ | 389.0 | $ | 436.1 | $ | 748.0 | $ | 810.1 | ||||||||
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Operating
income (loss)
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Chemicals
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$ | 24.6 | $ | 10.8 | $ | 54.9 | $ | 21.8 | ||||||||
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Component
products
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4.8 | 4.5 | 10.4 | 7.5 | ||||||||||||
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Waste
management
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(3.2 | ) | (5.5 | ) | (6.2 | ) | (9.9 | ) | ||||||||
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Total operating
income
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26.2 | 9.8 | 59.1 | 19.4 | ||||||||||||
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Equity
in earnings of:
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||||||||||||||||
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TIMET
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- | - | 26.9 | - | ||||||||||||
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Other
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1.0 | (.2 | ) | .5 | (.6 | ) | ||||||||||
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General
corporate items, net:
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Securities
earnings
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8.1 | 11.0 | 16.3 | 17.6 | ||||||||||||
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Insurance
recoveries
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.5 | 1.6 | 3.0 | 1.7 | ||||||||||||
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General
expenses, net
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(11.0 | ) | (9.0 | ) | (17.0 | ) | (14.6 | ) | ||||||||
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Interest
expense
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(15.9 | ) | (17.7 | ) | (31.5 | ) | (35.1 | ) | ||||||||
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Income (loss) before income
taxes
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8.9 | (4.5 | ) | 57.3 | (11.6 | ) | ||||||||||
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Provision
for income taxes (benefit)
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13.3 | (5.6 | ) | 33.1 | (6.9 | ) | ||||||||||
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Minority
interest in after-tax earnings
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.5 | 1.3 | 3.0 | 1.4 | ||||||||||||
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Net income
(loss)
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$ | (4.9 | ) | $ | (.2 | ) | $ | 21.2 | $ | (6.1 | ) | |||||
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Basic
and diluted net income (loss) per share
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$ | (.04 | ) | $ | - | $ | .18 | $ | (.05 | ) | ||||||
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Shares
used in calculation of per share amounts
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Basic
earnings
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114.9 | 114.4 | 114.8 | 114.4 | ||||||||||||
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Diluted
earnings
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114.9 | 114.4 | 115.1 | 114.4 | ||||||||||||
VALHI,
INC. AND SUBSIDIARIES
IMPACT
OF PERCENTAGE CHANGE IN CHEMICALS NET SALES
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Three
months ended
June
30,
2008 vs. 2007
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Six
months ended
June
30,
2008 vs. 2007
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(unaudited)
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Percent
change in net sales:
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||||||||
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TiO2
product pricing
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(1 | )% | (3 | )% | ||||
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TiO2
sales volumes
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3 | 3 | ||||||
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TiO2
product mix
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2 | 2 | ||||||
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Changes
in foreign currency exchange rates
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10 | 8 | ||||||
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Total
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14 | % | 10 | % | ||||