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
4, 2009
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 2009 Results” that the registrant issued
on November 4, 2009, 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 4, 2009, 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 4, 2009 entitled “Valhi Reports Third Quarter 2009
Results” and issued by the registrant.
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||
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99.2*
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Press
release dated November 4, 2009 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
4, 2009
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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 4, 2009 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 4, 2009 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 2009 RESULTS
DALLAS, TEXAS . . November 4,
2009. Valhi, Inc. (NYSE: VHI) reported net income attributable to
Valhi stockholders of $8.4 million, or $.07 per diluted share, in the third
quarter of 2009 as compared to a net loss of $23.2 million, or $.20 per diluted
share, in the third quarter of 2008. For the first nine months of
2009, Valhi reported a net loss attributable to Valhi stockholders of $30.6
million, or $.27 per diluted share, compared to a net loss of $29.3 million, or
$.25 per diluted share, in the first nine months of 2008.
The Chemicals Segment’s sales decreased
$35.5 million in the third quarter of 2009 compared to the third quarter of
2008. Net sales of $840.2 million for the first nine months of
2009 were $229.8 million lower than the first nine months of
2008. Net sales decreased in the third quarter of 2009 primarily due
to lower average TiO2 selling
prices and unfavorable changes in product mix, partially offset by the favorable
impact of higher TiO2 sales
volumes. Net sales were lower in the first nine months of 2009
primarily due to a 14% decrease in sales volumes and unfavorable changes in
product mix. Additionally, the unfavorable effects of fluctuations in
currency exchange rates decreased the Chemicals Segment’s sales by approximately
$17 million for the quarter and $56 million in the year-to-date
period. Although the Chemicals Segment’s average selling prices were
5% lower in the third quarter of 2009 as compared to the third quarter of 2008,
average selling prices at the end of the third quarter 2009 were 1% higher than
at the end of the second quarter 2009. The table at the end of this
release shows how each of these items impacted the overall decrease in
sales.
The Chemicals Segment’s operating
income for the third quarter of 2009 was $22.3 million compared with $8.8
million in the third quarter of 2008. For the year-to-date period,
the Chemicals Segment’s operating loss was $23.2 million compared with operating
income of $30.6 million for the first nine months of 2008. Operating
income increased in the third quarter of 2009 as compared to the third quarter
of 2008 as the unfavorable effect of lower average TiO2 selling
prices was more than offset by the favorable effect of lower maintenance and
other costs as well as higher sales volumes and fluctuations in currency
exchange rates, which increased operating income by approximately $2
million. For the first nine months of 2009, operating income declined
primarily due to the negative effects of production curtailments which resulted
in significantly higher manufacturing costs per ton of pigment production during
the first six months of the year, as well as the effect of lower sales
volumes. This was partially offset by lower maintenance costs and the
favorable effects of fluctuations in currency exchange rates, which increased
operating income by approximately $50 million. In late
2008, as a result of the sharp decline in global demand, the Chemicals Segment
experienced a build up in inventory levels. In order to decrease inventory
levels and improve liquidity, the Chemicals Segment implemented production
curtailments during the first half of 2009. In addition, throughout
all of 2009 the Chemicals Segment implemented cost controls and reduced capital
spending. Through these actions the Chemicals Segment has
successfully reduced inventory levels and increased liquidity, although the
resulting curtailments led to an operating loss in the first six months of 2009
due to the large amount of unabsorbed fixed production costs charged to expense
as incurred. TiO2 production
volumes were 3% higher in the third quarter of 2009 and 28% lower in
first nine months of 2009 as compared to the same periods in 2008 and finished
goods inventories at September 30, 2009, which represented less than 2 months of
average sales, were lower compared to December 31, 2008.
The
Component Products Segment’s sales decreased $14.5 million in the third quarter
of 2009 as compared to the same quarter of 2008, and declined $41.0 million in
the year-to-date period, primarily due to lower order rates from its customers
resulting from unfavorable economic conditions in North America. The Component
Products Segment’s operating loss was $.1 million in the third quarter of 2009
compared to an operating loss of $5.2 million in the same period of 2008 which
included a $10.1 million goodwill impairment charge ($.06 per diluted share, net
of noncontrolling interest) related to our marine components reporting unit. The
Component Products Segment’s operating loss was $2.0 million in the first nine
months of 2009 compared to operating income of $2.3 million in the first nine
months of 2008. These declines in operating income were primarily due
to reduced coverage of overhead and fixed manufacturing costs from lower sales
volume and the related under-utilized capacity, which was partially offset by
cost reductions implemented in response to lower sales. The
year-to-date 2009 operating loss also includes $3.2 million related
to a write-down of assets held for sale and patent litigation expenses ($1.5
million in the third quarter).
The Waste
Management Segments’ sales increased in both the third quarter and first nine
months of 2009 compared to the same periods in 2008. The Waste
Management Segments’ operating loss increased, in part because we have not
achieved sufficient revenues to offset the higher cost structure associated with
operating under our new byproduct disposal license as well as because we have
not been able to undertake new projects without the receipt of our pending
licenses and completion of our new disposal facilities. The Waste
Management Segment is continuing to seek opportunities to obtain certain types
of new business that, if obtained, would increase its waste management sales and
decrease its waste management operating loss. In this regard, in
January 2009, the Texas Commission on Environmental Quality (“TCEQ”) issued to
the Waste Management Segment a final license for the near-surface disposal of
Class A, B and C low-level radioactive waste (“LLRW”) at its site in Andrews
County, Texas. The LLRW disposal operations will be very similar to
those activities it 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 byproduct site began disposal operations in October
2009. Construction of the LLRW site is expected to commence in early
2010, following the completion of some pre-construction licensing and
administrative matters, and is expected to be operational in late 2010 or early
2011.
Litigation settlement gains in 2009
include (i) a second quarter gain of $11.1 million ($6.0 million, or $.05 per
share, net of income taxes and noncontrolling interest) related to the second
closing associated with the settlement of condemnation proceedings on certain
real property NL formerly owned that is subject to environmental remediation and
(ii) a first quarter gain of $11.9 million ($7.8 million, or $.07 per diluted
share, net of income taxes) related to amounts we received in recovery of past
environmental remediation and is related legal costs we had previously
incurred. The $6.3 million gain ($4.1 million or $.04 per diluted
share, net of income taxes) on the sale of a business related to the January
2009 sale of the assets of our research, laboratory and quality control business
to Amalgamated Sugar Company LLC.
Securities earnings were higher in the
first nine months of 2008 as compared to the same period of 2009 primarily due
to $4.3 million of interest income ($2.3 million, or $.02 per diluted share, net
of income taxes and noncontrolling interest) related to certain escrow funds
that were received by NL in the second quarter of 2008. Insurance
recoveries relate principally to NL’s receipt 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 2009 compared to $.01 per diluted share in the same period of
2008.
General corporate expenses were higher
in 2009 as compared to 2008 due to higher defined benefit pension expense and
higher environmental expenses, partially offset by lower litigation and related
costs for the first nine months of 2009 at NL. Interest expense was
lower in 2009 primarily due the favorable effects of currency exchange rates on
the Chemicals Segments’ European debt and lower debt balances at our Component
Products Segment.
Valhi’s
effective income tax rate varies significantly from the U.S. statutory federal
income tax rate in all periods of 2008 and 2009. The Company’s income
tax benefit in 2009 includes a $7.1 million non-cash income tax benefit ($.06
per diluted share, net of noncontrolling interest), mostly in the third quarter,
due to a net decrease in the Company’s reserves for uncertain tax
positions. 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 noncontrolling 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
noncontrolling interest), mostly in the third quarter, due to a net increase 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 (such as Kronos’ TiO2
operations);
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·
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Customer
inventory levels (such as the extent to which Kronos’ customers may, from
time to time, accelerate purchases of TiO2 in
advance of anticipated price increases or defer purchases of TiO2in
advance of anticipated price
decreases;
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·
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Changes
in our raw material and other operating costs (such as energy
costs);
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·
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General
global economic and political conditions (such as changes in the level of
gross domestic product in various regions of the world and the impact of
such changes on demand for, among other things, TiO2);
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·
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Competitive
products and substitute products;
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·
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Possible
disruption of our business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts;
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·
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Customer
and competitor strategies;
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·
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The
impact of pricing and production
decisions;
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·
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Competitive
technology positions;
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·
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The
introduction of trade barriers;
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·
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Restructuring
transactions involving us and our
affiliates;
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·
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Potential
consolidation or solvency of our
competitors;
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·
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Demand
for high performance marine
components;
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·
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The
ability of our subsidiaries to pay us dividends (such as Kronos’
suspension of its dividend in
2009);
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·
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Uncertainties
associated with new product
development;
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·
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Fluctuations
in currency exchange rates (such as changes in the exchange rate between
the U.S. dollar and each of the euro, the Norwegian krone, the Canadian
dollar and the New Taiwan dollar);
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·
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Operating
interruptions (including, but not limited to, labor disputes, leaks,
natural disasters, fires, explosions, unscheduled or unplanned downtime
and transportation interruptions);
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·
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The
timing and amounts of insurance
recoveries;
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·
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Our
ability to renew, amend, refinance or establish credit
facilities;
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·
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Our
ability to maintain sufficient
liquidity;
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·
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The
ultimate outcome of income tax audits, tax settlement initiatives or other
tax matters;
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·
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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 (such as Kronos’
ability to utilize its German net operating loss
carryforwards);
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·
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Environmental
matters (such as those requiring compliance with emission and discharge
standards for existing and new facilities, or new developments regarding
environmental remediation at sites related to our former
operations);
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·
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Government
laws and regulations and possible changes therein (such as changes in
government regulations which might impose various obligations on present
and former manufacturers of lead pigment and lead-based paint, including
NL, with respect to asserted health concerns associated with the use of
such products);
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·
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The
ultimate resolution of pending litigation (such as NL's lead pigment
litigation, environmental and other
litigation;
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·
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Our
ability to comply with covenants contained in our revolving bank credit
facilities; 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. We disclaim 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 high performance marine components) and waste
management industries.
* * * *
*
VALHI,
INC. AND SUBSIDIARIES
CONDENSED
SUMMARY OF OPERATIONS
(In
millions, except earnings per share)
|
Three
months ended
September 30,
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Nine
months ended
September 30,
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|||||||||||||||
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2008
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2009
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2008
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2009
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(unaudited)
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||||||||||||||||
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Net
sales
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||||||||||||||||
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Chemicals
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$ | 345.6 | $ | 310.1 | $ | 1,070.0 | $ | 840.2 | ||||||||
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Component
products
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43.9 | 29.4 | 128.1 | 87.1 | ||||||||||||
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Waste
management
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.7 | 2.1 | 2.2 | 3.7 | ||||||||||||
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Total net
sales
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$ | 390.2 | $ | 341.6 | $ | 1,200.3 | $ | 931.0 | ||||||||
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Operating
income (loss)
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||||||||||||||||
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Chemicals
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$ | 8.8 | $ | 22.3 | $ | 30.6 | $ | (23.2 | ) | |||||||
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Component
products
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(5.2 | ) | (.1 | ) | 2.3 | (2.0 | ) | |||||||||
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Waste
management
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(5.7 | ) | (9.0 | ) | (15.6 | ) | (22.2 | ) | ||||||||
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Total operating income
(loss)
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(2.1 | ) | 13.2 | 17.3 | (47.4 | ) | ||||||||||
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Equity
in losses of investee
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(.2 | ) | (.1 | ) | (.8 | ) | (.8 | ) | ||||||||
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General
corporate items, net:
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||||||||||||||||
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Securities
earnings
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6.6 | 7.0 | 24.2 | 20.0 | ||||||||||||
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Insurance
recoveries
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.7 | 1.4 | 2.4 | 4.1 | ||||||||||||
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Gain
on litigation settlements
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- | - | - | 23.0 | ||||||||||||
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Gain
on sale of business
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- | - | - | 6.3 | ||||||||||||
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General
expenses, net
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(4.9 | ) | (8.6 | ) | (19.5 | ) | (26.5 | ) | ||||||||
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Interest
expense
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(17.7 | ) | (17.2 | ) | (52.8 | ) | (49.9 | ) | ||||||||
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Loss before income
taxes
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(17.6 | ) | (4.3 | ) | (29.2 | ) | (71.2 | ) | ||||||||
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Provision
for income taxes (benefit)
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7.9 | (13.7 | ) | (1.0 | ) | (36.6 | ) | |||||||||
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Net
income (loss)
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(25.5 | ) | 9.4 | (30.2 | ) | (34.6 | ) | |||||||||
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Noncontrolling
interest in net income (loss)
of subsidiaries
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(2.3 | ) | 1.0 | (.9 | ) | (4.0 | ) | |||||||||
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Net income (loss) attributable
to Valhi
stockholders
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$ | (23.2 | ) | $ | 8.4 | $ | (29.3 | ) | $ | (30.6 | ) | |||||
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Basic
and diluted net income (loss) attributable
to
Valhi stockholders per share
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$ | (.20 | ) | $ | .07 | $ | (.25 | ) | $ | (.27 | ) | |||||
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Basic
and diluted weighted average shares
outstanding
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114.4 | 114.3 | 114.4 | 114.3 | ||||||||||||
VALHI,
INC. AND SUBSIDIARIES
IMPACT
OF PERCENTAGE CHANGE IN CHEMICALS NET SALES
|
Three
months ended
September
30,
2009 vs. 2008
|
Nine
months ended
September
30,
2009 vs. 2008
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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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(5 | )% | - | % | ||||
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TiO2
sales volumes
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3 | (14 | ) | |||||
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TiO2
product mix
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(3 | ) | (2 | ) | ||||
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Changes
in currency exchange rates
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(5 | ) | (5 | ) | ||||
|
Total
|
(10 | )% | (21 | )% | ||||
VALHI
DECLARES QUARTERLY DIVIDEND
DALLAS,
TEXAS . . . November 4, 2009 . . . 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, 2009 to
stockholders of record at the close of business on December 10,
2009.
Valhi,
Inc. is engaged in the titanium dioxide products, component products (security
products, furniture components and performance marine components) and waste
management industries.
* * * *
*