SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: May 1, 2003
VALHI, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-5467 87-0110150
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, TX 75240-2697
(Address of principal executive offices) (Zip Code)
(972) 233-1700
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
Item 7: Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibit
Item No. Exhibit Index
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99.1 Press release dated May 1, 3003
issued by Valhi, Inc.
Item 9: Regulation FD Disclosure
The registrant hereby furnishes the information set forth in the press
release issued on May 1, 2003, a copy of which is attached hereto as Exhibit
99.1 and incorporated herein by reference. The registrant furnishes this
information under this Item 9 and under "Item 12. Results of Operations and
Financial Condition," pursuant to the interim guidance contained in the
Securities and Exchange Commission Release 34-47583 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), among other
statutes.
The information, including the exhibit, the registrant furnishes in this
report is not deemed "filed" for purposes of section 18 of the Exchange Act or
otherwise subject to the liabilities of that section. Registration statements or
other documents filed with the Securities and Exchange Commission shall not
incorporate this information by reference, except as otherwise expressly stated
in such filing.
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
----------------------------
Gregory M. Swalwell
Secretary
Date: May 1,2003
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- --------------------------------------------------
99.1 Press release dated May 1, 2003 issued by Valhi, Inc.
FOR IMMEDIATE RELEASE CONTACT:
Valhi, Inc. Bobby D. O'Brien
Three Lincoln Centre Vice President
5430 LBJ Freeway, Suite 1700 (972) 233-1700
Dallas, Texas 75240-2697
(972) 233-1700
VALHI REPORTS FIRST QUARTER RESULTS
DALLAS, TEXAS . . May 1, 2003. Valhi, Inc. (NYSE: VHI) reported income
before cumulative effect of a change in accounting principle of $1.6 million, or
$.01 per diluted share, in the first quarter of 2003 compared to a loss of $3.7
million, or $.03 per diluted share, in the first quarter of 2002. Excluding the
effect of the items summarized in the accompanying table, the Company would have
reported income before cumulative effect of change in accounting principle of
$.01 per diluted share in the first quarter of 2003 compared to nil per share in
the first quarter of 2002.
Chemicals sales and operating income increased in the first quarter of 2003
compared to the first quarter of 2002 due primarily to higher average selling
prices for titanium dioxide pigments ("TiO2") and higher TiO2 sales and
production volumes, partially offset by higher operating costs (particularly for
energy). Excluding the effect of fluctuations in the value of the U.S. dollar
relative to other currencies, NL's average TiO2 selling prices in billing
currencies in the first quarter of 2003 were 6% higher than the first quarter of
2002. Expressed in U.S. dollars computed using actual foreign currency exchange
rates prevailing during the periods, NL's average TiO2 selling prices in the
first quarter of 2003 were 18% higher than the first quarter of 2002. NL's TiO2
sales volumes in the first quarter of 2003, a first quarter record for NL,
increased 5% compared to the first quarter of 2002. NL's TiO2 production volumes
in the first quarter of 2003, an all-time record for NL for any quarter, were
11% higher than the first quarter of 2002.
NL's average Ti02 selling prices in billing currencies increased 1% in the
first quarter of 2003 compared to the fourth quarter of 2002 (6% increase
including the effect of fluctuations in foreign currency exchange rates). NL
currently expects its full-year 2003 TiO2 sales volumes will increase slightly
compared to 2002, with average selling prices higher in 2003 compared to 2002.
Overall, NL currently expects its TiO2 operating income in 2003 will be higher
than 2002, reflecting the improvement in pricing and volumes. However, NL
remains cautious about the outlook for the second half of 2003, as there remains
a high degree of uncertainty concerning worldwide economic conditions.
Component products sales were slightly higher in the first quarter of 2003
compared to the same quarter in 2002 due primarily to the favorable effect of
fluctuations in the value of the U.S. dollar relative to the euro. Despite the
increase in sales, component products operating income declined in the first
quarter of 2003 as compared to the same quarter in 2002 due to the unfavorable
effect of fluctuations in the value of the U.S. dollar relative to the Canadian
dollar, relative changes in product mix and costs associated with the
consolidation of its two Canadian facilities into one facility. Waste management
sales declined due to continued weak demand for waste management services, but
the operating loss in the first quarter of 2003 was comparable to the first
quarter of 2002 due to the effect of continued emphasis on cost controls.
TIMET reported lower sales, and a higher operating loss, in the first
quarter of 2003 compared to the first quarter of 2002. During the first quarter
of 2003, TIMET's sales volumes for mill products decreased 14% compared to the
first quarter of 2002, while volumes for melted products increased 53%. TIMET's
average selling prices in billing currencies for mill products in the first
quarter of 2003 were 6% lower than the first quarter of 2002, and selling prices
for melted products declined 12%. Expressed in U.S. dollars computed using
actual foreign currency exchange rates prevailing during the periods, TIMET's
average selling prices for mill products decreased 1% in the first quarter of
2003 compared to the first quarter of 2002. Substantially all of TIMET's melted
products are sold in U.S. dollars. TIMET continues to work on reducing its costs
in all areas, as well as lowering its inventories and improving its margins. The
Company's equity in losses of TIMET in the first quarter of 2002 includes $10.6
million related to TIMET's previously-reported impairment charge for an other
than temporary decline in value of certain preferred securities held by TIMET.
General corporate expenses were higher in the first quarter of 2003
compared to the first quarter of 2002 due primarily to higher environmental
remediation expenses of NL. The legal settlement gains in the first quarter of
2002 related to legal settlements with certain of NL's former insurance
carriers, and securities transactions gains in both periods relate to the
disposal of certain marketable securities. The cumulative effect of the change
in accounting principle in the first quarter of 2003 relates to the Company's
adoption of Statement of Financial Accounting Standards No. 143, Accounting for
Asset Retirement Obligations, effective January 1, 2003. Such change in
accounting relates principally to accounting for closure and post-closure
obligations at the Company's waste management operations.
The statements in this release relating to matters that are not historical
facts are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements by their nature involve substantial risks and
uncertainties that could significantly impact expected results, and actual
future results could differ materially from those described in such
forward-looking statements. While it is not possible to identify all factors,
the Company continues to face many risks and uncertainties. Among the factors
that could cause actual future results to differ materially include, but are not
limited to;
o Future supply and demand for the Company's products,
o The extent of the dependence of certain of the Company's businesses on
certain market sectors,
o The cyclicality of certain of the Company's businesses,
o The impact of certain long-term contracts on certain of the Company's
businesses,
o Customer inventory levels,
o Changes in raw material and other operating costs,
o The possibility of labor disruptions,
o General global economic and political conditions,
o Competitive products and substitute products,
o Customer and competitor strategies,
o The impact of pricing and production decisions,
o Competitive technology positions,
o The introduction of trade barriers,
o Fluctuations in currency exchange rates,
o Operating interruptions,
o Recoveries from insurance claims and the timing thereof,
o Potential difficulties in integrating completed acquisitions,
o Uncertainties associated with new product development,
o The ultimate outcome of income tax audits,
o Environmental matters,
o Government laws and regulations and possible changes therein, and
o 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 forecasted or expected. The
Company disclaims any intention or obligation to update or revise any
forward-looking statement whether as a result of new information, future events
or otherwise.
Valhi, Inc. is engaged in the titanium dioxide pigments, component products
(ergonomic computer support systems, precision ball bearing slides and security
products), titanium metals products and waste management industries.
In an effort to provide investors with additional information regarding the
Company's results of operations as determined by accounting principles generally
accepted in the United States of America ("GAAP"), the Company has disclosed
certain non-GAAP information which the Company believes may provide useful
information to investors:
o The Company discloses percentage changes in its average TiO2 and mill
product selling prices in billing currencies (which excludes the effects of
foreign currency translation), so that such changes can be analyzed without
the impact of changes in foreign currency exchange rates, thereby
facilitating period-to-period comparisons. Generally, when the U.S. dollar
either strengthens or weakens against other currencies, the percentage
change in average selling prices in billing currencies will be higher or
lower, respectively, than such percentage changes would be using actual
exchange rates prevailing during the respective periods.
* * * * *
VALHI, INC. AND SUBSIDIARIES
SUMMARY OF OPERATIONS
(Unaudited)
Quarters ended March 31, 2002 and 2003
(In millions, except earnings per share)
2002 2003
---- ----
Net sales
Chemicals .............................................. $ 202.4 $ 253.0
Component products ..................................... 48.5 51.0
Waste management ....................................... 2.8 1.4
------- -------
$ 253.7 $ 305.4
Operating income
Chemicals .............................................. $ 19.3 $ 30.7
Component products ..................................... 2.1 1.3
Waste management ....................................... (2.0) (2.0)
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Total operating income ............................... 19.4 30.0
Equity in:
TIMET .................................................. (11.8) (2.8)
Other .................................................. .3 .7
General corporate items, net
Interest and dividend income ........................... 8.5 8.3
Securities transaction gains, net ...................... 1.9 .3
Legal settlement gains, net ............................ 1.9 --
Expenses, net .......................................... (11.5) (17.1)
Interest expense ......................................... (14.4) (14.4)
------- -------
Income (loss) before income taxes .................... (5.7) 5.0
Provision for income taxes (benefit) ..................... (1.2) 2.0
Minority interest in after-tax earnings (losses) ......... (.8) 1.4
------- -------
Income (loss) before cumulative effect of change
in accounting principle ............................. (3.7) 1.6
Cumulative effect of change in accounting principle ...... -- .6
------- -------
Net income (loss) .................................... $ (3.7) $ 2.2
======= =======
Basic and diluted earnings (loss) per share:
Income (loss) before cumulative effect
of change in accounting principle ..................... $ (.03) $ .01
Cumulative effect of change in accounting principle .... -- .01
------- -------
Net income (loss) .................................... $ (.03) $ .02
======= =======
Shares used in calculation of per share amounts
Basic earnings ......................................... 115.2 118.3
======= =======
Diluted earnings ....................................... 115.2 118.4
======= =======
VALHI, INC. AND SUBSIDIARIES
COMPONENTS OF INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE - DILUTED EARNINGS (LOSS) PER SHARE
(Unaudited)
The Company believes the analysis presented in the following table is
useful in obtaining an understanding of the comparability of the Company's
results of operations for the periods presented.
Three months ended
March 31,
2002 2003
---- ----
Legal settlement gains, net (1) ................... $.01 $--
Equity in earnings of TIMET -
impairment provision (2) ......................... (.05) --
Securities transactions, net ...................... .01 --
Other, net ........................................ -- .01
---- ----
$(.03) $.01
==== ====
(1) Settlements NL reached with certain of its principal former insurance
carriers.
(2) TIMET's provision for an other than temporary decline in value of the
convertible preferred securities of Special Metals Corporation held by
TIMET.
