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)
November
5, 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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The
registrant hereby furnishes the information set forth in its press release
entitled “Valhi Reports Third Quarter 2008 Results” that the registrant issued
on November 5, 2008, a copy of which is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
The press
release the registrant furnishes as Exhibit 99.1 to this current 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
7.01 Regulation
FD Disclosures.
The
registrant hereby furnishes the information set forth in its press release
entitled “Valhi Declares Quarterly Dividend” that the registrant also issued on
November 5, 2008, a copy of which is attached hereto as Exhibit 99.2 and
incorporated herein by reference.
The press
release the registrant furnishes as Exhibit 99.2 to this current report is not
“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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Description
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99.1*
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Press
release dated November 5, 2008 entitled “Valhi Reports Third Quarter 2008
Results” and issued by the registrant.
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99.2*
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Press
release dated November 5, 2008 entitled “Valhi Declares Quarterly
Dividend” and issued by the
registrant.
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*
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Filed
herewith
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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: November
5, 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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Description
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99.1*
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Press
release dated November 5, 2008 entitled “Valhi Reports Third Quarter 2008
Results” and issued by the registrant.
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||
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99.2*
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Press
release dated November 5, 2008 entitled “Valhi Declares Quarterly
Dividend” and issued by the
registrant.
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*
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Filed
herewith
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VALHI
REPORTS THIRD QUARTER 2008 RESULTS
DALLAS, TEXAS . . November 5,
2008. Valhi, Inc. (NYSE: VHI) reported a net loss of $23.2 million,
or $.20 per diluted share, in the third quarter of 2008 as compared to a net
loss of $52.7 million, or $.46 per diluted share, in the third quarter of
2007. For the first nine months of 2008, Valhi reported a net loss of
$29.3 million, or $.25 per diluted share, compared to a net loss of $31.5
million, or $.27 per diluted share, in the first nine months of
2007.
The
Chemicals Segment’s sales increased $2.3 million in the third quarter of 2008 as
compared to the third quarter of 2007, and increased $70.1 million in the first
nine months of 2008 as compared to the same period in 2007. In the third quarter
the favorable effect of fluctuations in currency exchange rates, which increased
sales by approximately $24 million, and increases in average TiO2 prices
more than offset the effect of lower sales volumes. In the first nine
months of 2008 the favorable effect of fluctuations in currency exchange rates,
which increased sales by approximately $77 million, more than offset the decline
in sales volumes. Kronos’ average TiO2 selling
prices in the third quarter of 2008 were 6% higher than the third quarter of
2007, and prices were flat in the year-to-date period. Kronos'
TiO2
sales volumes in each of the third quarter and first nine months of 2008
decreased 12% and 3%, respectively, as compared to the same periods of 2007, due
to lower demand due to the general downturn in economic growth in all markets
slightly offset by an increase in sales to export markets for the first nine
months of 2008. 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 $14.6 million and $47.7 million in
the third quarter and first nine months of 2008, respectively, as compared to
the same periods in 2007 due primarily to lower sales volumes and higher raw
material and utility costs, partially offset by the favorable effect of higher
average TiO2 prices in
the third quarter. Kronos’ TiO2 production
volumes were flat in the third quarter of 2008 as compared to the third quarter
of 2007, and volumes were 1% higher in the year-to-date
period. Kronos’ TiO2 production
volumes in the first nine months of 2008 were a new record for
Kronos. Chemicals operating income comparisons were also impacted by
fluctuations in foreign currency exchange rates, which increased chemicals
operating income by $1 million in the third quarter and decreased chemicals
operating income by approximately $14 million year-to-date period.
The Component Products Segment’s sales
decreased $2.5 million in the third quarter of 2008 as compared to the same
quarter of 2007, and declined $7.1 million in the year-to-date period, primarily
due to lower order rates from many of its 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. In addition, the favorable effect of relative changes
in foreign currency exchange rates increased sales by $1.0 million for the
year-to-date period. The Component Products Segment’s operating
income declined $9.5 million in the quarter and $12.4 million in the
year-to-date period primarily due to a $10.1 million goodwill impairment charge
($.06 per diluted share, net of minority interest) recognized in the third
quarter of 2008 related to our marine components reporting
unit. Excluding the effects of the goodwill impairment charge,
Component Products operating income increased by $.6 million in the third
quarter primarily as a result of facility consolidation costs incurred during
the third quarter of 2007, cost reductions and improved product mix, while
operating income declined $2.3 million in the year-to-date period due to the
unfavorable effect of lower sales.
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 August 2008, the Texas Commission on Environmental Quality
(“TCEQ”) issued to the Company a draft license for the near-surface disposal of
Class A, B and C low-level radioactive waste (“LLRW”) at the Company’s site in
Andrews County, Texas. The LLRW disposal operations will be very
similar to those activities WCS is currently permitted to perform under a
byproduct disposal license issued by TCEQ in May 2008. Both types of
waste are primarily soil-like and the disposal methods and disposal sites are
similar. The Company currently expects to receive a final disposal
license in early 2009, although the timing of issuance of any such license is
uncertain. Construction of the byproduct facilities is underway with
disposal operations expected to start in the third quarter of 2009.
Securities earnings were lower in the
third quarter of 2008 as compared to the same period of 2007 primarily due lower
average cash balances in 2008. Securities earnings increased slightly
in the first nine months of 2008 compared to 2007 due to the receipt of $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 which offset the effect of lower
average cash balances. 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 $.02 per diluted share in the first nine months of 2007 and $.01 in
the first nine months of 2008.
General corporate expenses were lower
in the third quarter and first nine 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 our Component Products Segment 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 second quarter $7.2 million
non-cash deferred income tax benefit ($.04 per diluted share, net of minority
interest) 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. In addition, the Company’s provision
for income taxes in 2008 includes an $8.7 million non-cash income tax charge
($.07 per diluted share, net of minority interest), mostly in the third quarter,
due to a net increase in the Company’s reserves for uncertain tax
positions.
The
provision for income taxes in 2007 includes (i) a second quarter $8.7 million
non-cash charge ($.05 per diluted share, net of minority interest) related to
the adjustment of certain German income tax attributes, (ii) a third quarter
non-cash charge of $87.5 million ($.52 per diluted share, net of minority
interest) related to the reduction of our net deferred income tax asset in
Germany resulting from the reduction in its income tax rates and (iii) a third
quarter $4.7 million non-cash income tax benefit ($.04 per diluted share, net of
minority interest) due to a net decrease in the Company’s reserves for uncertain
tax positions.
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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·
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Future
supply and demand for our products;
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·
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The
cyclicality of certain of our
businesses;
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·
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Customer
inventory levels;
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Changes
in our raw material and other operating
costs;
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·
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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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·
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Our
ability to renew or refinance credit
facilities;
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Our
ability to maintain sufficient
liquidity;
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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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·
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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
September 30,
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Nine
months ended
September 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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$ | 343.3 | $ | 345.6 | $ | 999.9 | $ | 1,070.0 | ||||||||
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Component
products
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46.4 | 43.9 | 135.2 | 128.1 | ||||||||||||
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Waste
management
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.9 | .7 | 3.5 | 2.2 | ||||||||||||
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Total net
sales
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$ | 390.6 | $ | 390.2 | $ | 1,138.6 | $ | 1,200.3 | ||||||||
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Operating
income (loss)
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Chemicals
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$ | 23.4 | $ | 8.8 | $ | 78.3 | $ | 30.6 | ||||||||
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Component
products
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4.3 | (5.2 | ) | 14.7 | 2.3 | |||||||||||
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Waste
management
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(3.5 | ) | (5.7 | ) | (9.7 | ) | (15.6 | ) | ||||||||
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Total operating
income
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24.2 | (2.1 | ) | 83.3 | 17.3 | |||||||||||
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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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1.3 | (.2 | ) | 1.8 | (.8 | ) | ||||||||||
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General
corporate items:
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||||||||||||||||
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Securities
earnings
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7.6 | 6.6 | 23.9 | 24.2 | ||||||||||||
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Insurance
recoveries
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1.2 | .7 | 4.2 | 2.4 | ||||||||||||
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General
expenses, net
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(7.8 | ) | (4.9 | ) | (24.8 | ) | (19.5 | ) | ||||||||
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Interest
expense
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(16.0 | ) | (17.7 | ) | (47.5 | ) | (52.8 | ) | ||||||||
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Income (loss) before income
taxes
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10.5 | (17.6 | ) | 67.8 | (29.2 | ) | ||||||||||
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Provision
for income taxes
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69.1 | 7.9 | 102.2 | 1.0 | ||||||||||||
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Minority
interest in after-tax losses
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(5.9 | ) | (2.3 | ) | (2.9 | ) | (.9 | ) | ||||||||
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Net
loss
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$ | (52.7 | ) | $ | (23.2 | ) | $ | (31.5 | ) | $ | (29.3 | ) | ||||
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Basic
and diluted net loss per share
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$ | (.46 | ) | $ | (.20 | ) | $ | (.27 | ) | $ | (.25 | ) | ||||
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Basic
and diluted weighted average shares
outstanding
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114.6 | 114.4 | 114.8 | 114.4 | ||||||||||||
VALHI,
INC. AND SUBSIDIARIES
IMPACT
OF PERCENTAGE CHANGE IN CHEMICALS NET SALES
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Three
months ended
September
30,
2008 vs. 2007
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Nine
months ended
September
30,
2008 vs. 2007
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|||||||
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(unaudited)
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||||||||
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Percent
change in net sales:
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||||||||
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TiO2
product pricing
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6 | % | - | % | ||||
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TiO2
sales volumes
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(12 | ) | (3 | ) | ||||
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TiO2
product mix
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- | 2 | ||||||
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Changes
in currency exchange rates
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7 | 8 | ||||||
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Total
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1 | % | 7 | % | ||||
VALHI
DECLARES QUARTERLY DIVIDEND
DALLAS, TEXAS . . . November 5,
2008 . . . Valhi, Inc. (NYSE: VHI) announced today that its board of directors
has declared a regular quarterly dividend of ten cents ($0.10) per share on its
common stock, payable on December 31, 2008 to stockholders of record at the
close of business on December 10, 2008.
Valhi, Inc. is engaged in the
titanium dioxide pigments, component products (security products, furniture
components and performance marine components) and waste management
industries.
* * * * *