Delaware
|
87-0110150
|
|
(State
or other jurisdiction of
Incorporation
or organization)
|
(IRS
Employer
Identification
No.)
|
5430
LBJ Freeway, Suite 1700, Dallas, Texas
|
75240-2697
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code:
|
(972)
233-1700
|
Title of each class
|
Name of each exchange
on
which
registered
|
|
Common
stock ($.01 par value per share)
|
New York Stock
Exchange
|
|
·
|
1979
– Contran acquires control of LLC;
|
|
·
|
1981
- Contran acquires control of our other predecessor
company;
|
|
·
|
1982 - Contran
acquires control of Keystone Consolidated Industries, Inc., a predecessor
to CompX;
|
|
·
|
1984 - Keystone
spins-off an entity that includes what is to become CompX; this entity
subsequently merges with LLC;
|
|
·
|
1986
- Contran acquires control of NL, which at the time owns 100% of Kronos
and a 50% interest in TIMET;
|
|
·
|
1987
- LLC and another Contran controlled company merge to form Valhi, our
current corporate structure;
|
|
·
|
1988
- NL spins-off an entity that includes its investment in
TIMET;
|
|
·
|
1995
- WCS begins start-up operations;
|
|
·
|
1996
- TIMET completes an initial public
offering;
|
|
·
|
2003
– NL completes the spin-off of Kronos through the pro-rata distribution of
Kronos shares to its shareholders including
us;
|
|
·
|
2004
through 2005 - NL distributes Kronos shares to its shareholders, including
us, through quarterly dividends;
and
|
|
·
|
2007
– We distribute all of our TIMET common stock to our shareholders through
a stock dividend.
|
|
·
|
Future
supply and demand for our products;
|
|
·
|
The
cyclicality of certain of our businesses (such as Kronos’ TiO2
operations;
|
|
·
|
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;
|
|
·
|
Changes
in our raw material and other operating costs (such as energy
costs);
|
|
·
|
The
possibility of labor disruptions;
|
|
·
|
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);
|
|
·
|
Competitive
products and substitute products;
|
|
·
|
Possible
disruption of our business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts;
|
|
·
|
Customer
and competitor strategies;
|
|
·
|
The
impact of pricing and production
decisions;
|
|
·
|
Competitive
technology positions;
|
|
·
|
The
introduction of trade barriers;
|
|
·
|
Restructuring
transactions involving us and our
affiliates;
|
|
·
|
Potential
consolidation of our competitors;
|
|
·
|
The
extent to which our subsidiaries were to become unable to pay us
dividends;
|
|
·
|
Uncertainties
associated with new product
development;
|
|
·
|
Fluctuations
in currency exchange rates (such as changes in the exchange rate between
the U.S. dollar and each of the euro, the Norwegian kroner and the
Canadian dollar);
|
|
·
|
Operating
interruptions (including, but not limited to, labor disputes, leaks,
natural disasters, fires, explosions, unscheduled or unplanned downtime
and transportation interruptions);
|
|
·
|
The
timing and amounts of insurance
recoveries;
|
|
·
|
Our
ability to renew or refinance credit
facilities;
|
|
·
|
The
ultimate outcome of income tax audits, tax settlement initiatives or other
tax matters;
|
|
·
|
The
ultimate ability to utilize income tax attributes or changes in income tax
rates related to such attributes, the benefit of which has been recognized
under the more likely than not recognition criteria (such as Kronos’
ability to utilize its German net operating loss
carryforwards);
|
|
·
|
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);
|
|
·
|
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);
|
|
·
|
The
ultimate resolution of pending litigation (such as NL's lead pigment
litigation and litigation surrounding environmental matters of NL and
Tremont); and
|
|
·
|
Possible
future litigation.
|
Chemicals
Kronos
Worldwide, Inc.
|
Our
chemicals segment is operated through our majority ownership of
Kronos. Kronos is a leading global producer and marketer of
value-added titanium dioxide pigments (“TiO2”). TiO2,
which imparts whiteness, brightness and opacity, is used for a variety of
manufacturing applications including: plastics, paints, paper and other
industrial products. Kronos has production facilities in Europe
and North America. TiO2
sales were over 90% of Kronos’ sales in 2007.
|
Component
Products
CompX
International Inc.
|
We
operate in the component products industry through our majority ownership
of CompX. CompX is a leading manufacturer of security products,
precision ball bearing slides and ergonomic computer support systems used
in the office furniture, transportation, postal, tool storage, appliance
and a variety of other industries. CompX is also a leading
manufacturer of stainless steel exhaust systems, gauges and throttle
controls for the performance marine industry. CompX has
production facilities in North America and Asia.
|
Waste
Management
Waste
Control Specialists LLC
|
WCS
is our wholly-owned subsidiary which owns and operates a West Texas
facility for the processing, treatment, storage and disposal of hazardous,
toxic and certain types of low-level radioactive waste. WCS is
in the process of seeking to obtain regulatory authorization to expand its
low-level and mixed low-level radioactive waste handling
capabilities.
|
|
·
|
We
own and operate an ilmenite mine in Norway pursuant to a governmental
concession with an unlimited term, and we are currently excavating a
second mine located near the first mine. Ilmenite is a raw
material used directly as a feedstock by some sulfate-process TiO2
plants, including all of our European sulfate-process
plants. We also sell ilmenite ore to third-parties, some of
whom are our competitors. The mines have estimated aggregate
reserves that are expected to last for at least another 60
years.
|
|
·
|
We
manufacture and sell iron-based chemicals, which are co-products and
processed co-products of the TiO2
pigment production process. These co-product chemicals are
marketed through our Ecochem division, and are used primarily as treatment
and conditioning agents for industrial effluents and municipal wastewater
as well as in the manufacture of iron pigments, cement and agricultural
products.
|
|
·
|
We
manufacture and sell titanium oxychloride and titanyl sulfate, which are
side-stream products from the production of TiO2. Titanium
oxychloride is used in specialty applications in the formulation of
pearlescent pigments, production of electroceramic capacitors for cell
phones and other electronic devices. Titanyl sulfate products
are used primarily in pearlescent
pigments.
|
Location
|
Description
|
|
Leverkusen,
Germany (1)
|
Chloride
and sulfate process TiO2
production
|
|
Nordenham,
Germany
|
Sulfate
process TiO2
production
|
|
Langerbrugge,
Belgium
|
Chloride
process TiO2
production
|
|
Fredrikstad,
Norway (2)
|
Sulfate
process TiO2
production
|
|
Varennes,
Quebec
|
Chloride
and sulfate process TiO2
production,
slurry
facility
|
|
Lake
Charles, Louisiana (3)
|
Chloride
process TiO2
production
|
|
Lake
Charles, Louisiana
|
Slurry
facility
|
|
Hauge
I Dalane, Norway (4)
|
Ilmenite
mine
|
|
(1)
|
The
Leverkusen facility is located within an extensive manufacturing complex
owned by Bayer AG. We own the Leverkusen facility, which represents about
one-third of our current Ti02
production capacity, but we lease the land under the facility from Bayer
AG under a long term agreement which expires in 2050. Lease
payments are periodically negotiated with Bayer for periods of at least
two years at a time. Bayer provides some raw materials,
including chlorine, auxiliary and operating materials, utilities and
services necessary to operate the Leverkusen facility under separate
supplies and services agreements.
|
|
(2)
|
The
Fredrikstad plant is located on public land and is leased until 2013, with
an option to extend the lease for an additional 50
years.
|
|
(3)
|
We
operate this facility in a 50/50 joint venture with Huntsman Holdings
LLC. See Note 7 to the Consolidated Financial
Statements.
|
|
(4)
|
We
are currently excavating a second mine located near our current mine in
Norway.
|
Production Process/Raw
Material
|
Raw
Materials
Procured or Mined
|
|||
(In
thousands of metric tons)
|
||||
Chloride process plants
-
|
||||
purchased slag or
natural rutile ore
|
470 | |||
Sulfate process
plants:
|
||||
Raw ilmenite ore
mined and used
internally
|
311 | |||
Purchased
slag
|
25 |
Europe
|
1,940 | |||
Canada
|
410 | |||
United
States(1)
|
50 | |||
Total
|
2,400 |
|
·
|
disc
tumbler locks, which provide moderate security and generally represent the
lowest cost lock to produce;
|
|
·
|
pin
tumbler locking mechanisms, which are more costly to produce and are used
in applications requiring higher levels of security, including our KeySet high security
system, which allows the user to change the keying on a single lock 64
times without removing the lock from its enclosure;
and
|
|
·
|
our
innovative eLock®
electronic locks, which provide stand alone security and audit trail
capability for drug storage and other valuables through the use of a
proximity card, magnetic stripe, or keypad
credentials.
|
|
·
|
our
patented Integrated
Slide Lock, which allows a file cabinet manufacturer to reduce the
possibility of multiple drawers being opened at the same
time;
|
|
·
|
our
patented adjustable Ball
Lock, which reduces the risk of heavily-filled drawers, such as
auto mechanic tool boxes, from opening while in
movement;
|
|
·
|
our
Self-Closing
Slide, which is designed to assist in closing a drawer and is used
in applications such as bottom mount
freezers;
|
|
·
|
articulating
computer keyboard support arms (designed to attach to desks in the
workplace and home office environments to alleviate possible strains and
stress and maximize usable workspace), along with our patented LeverLock keyboard
arm, which is designed to make the adjustment of an ergonomic keyboard arm
easier;
|
|
·
|
CPU
storage devices which minimize adverse effects of dust and moisture;
and
|
|
·
|
complimentary
accessories, such as ergonomic wrist rest aids, mouse pad supports and
flat screen computer monitor support
arms.
|
|
·
|
original
equipment and aftermarket stainless steel exhaust headers, exhaust pipes,
mufflers, other exhaust components and billet accessories;
and
|
|
·
|
high
performance gauges and related components such as GPS
speedometers, throttles, controls, tachometers and
panels.
|
Furniture Components
|
Security Products
|
Marine Components
|
||
Kitchener,
Ontario
|
Mauldin,
SC
|
Neenah,
WI
|
||
Byron
Center, MI
|
Grayslake,
IL
|
Grayslake,
IL
|
||
Taipei,
Taiwan
|
|
·
|
zinc
(used in the manufacture of locking
mechanisms);
|
|
·
|
coiled
steel (used in the manufacture of precision ball bearing slides and
ergonomic computer support
systems);
|
|
·
|
stainless
steel (used in the manufacture of exhaust headers and pipes and other
marine components); and
|
|
·
|
plastic
resins (used for injection molded plastics in the manufacture of ergonomic
computer support systems).
|
Furniture
Components
|
Security
Products
|
Marine Components
|
||
CompX
Precision Slides®
|
CompX
Security Products®
|
Custom
Marine®
|
||
CompX
Waterloo®
|
National
Cabinet Lock®
|
Livorsi
Marine®
|
||
CompX
ErgonomX®
|
Fort
Lock®
|
CMI
Industrial Mufflers™
|
||
CompX
DurISLide®
|
Timberline®
|
Custom
Marine Stainless
|
||
Dynaslide®
|
Chicago
Lock®
|
Exhaust™
|
||
Waterloo
Furniture
|
STOCK
LOCKS®
|
The
#1 Choice in
|
||
Components
Limited®
|
KeSet®
|
Performance
Boating®
|
||
TuBar®
|
Mega
Rim™
|
|||
ACE
II®
|
Race
Rim™
|
|||
eLocks®
|
||||
United
States
|
636 | |||
Canada(1)
|
259 | |||
Taiwan
|
134 | |||
Total
|
1,029 | |||
|
·
|
making
it more difficult for us to satisfy our obligations with
respect to our liabilities;
|
|
·
|
increasing
our vulnerability to
adverse general economic and industry
conditions;
|
|
·
|
requiring
that a portion of our cash flow from operations be used for the
payment of interest on our debt, reducing our ability to use our cash flow
to fund working capital, capital expenditures, dividends on our common
stock, acquisitions and general corporate
requirements;
|
|
·
|
limiting
our ability to obtain additional financing to fund future working capital,
capital expenditures, acquisitions or general corporate
requirements;
|
|
·
|
limiting
our flexibility in planning for, or reacting to, changes in our business
and the industry in which we operate;
and
|
|
·
|
placing
us at a competitive disadvantage relative to other less leveraged
competitors.
|
|
·
|
complexity
and differing interpretations of governmental
regulations;
|
|
·
|
number
of PRPs and their ability or willingness to fund such allocation of
costs;
|
|
·
|
financial
capabilities of the PRPs and the allocation of costs among
them;
|
|
·
|
solvency
of other PRPs;
|
|
·
|
multiplicity
of possible solutions; and
|
|
·
|
number
of years of investigatory, remedial and monitoring activity
required.
|
|
·
|
to
recover response and remediation costs incurred at the
site;
|
|
·
|
a
declaration of the parties’ liability for response and remediation costs
incurred at the site;
|
|
·
|
a
declaration of the parties’ liability for response and remediation costs
to be incurred in the future at the site;
and
|
|
·
|
a
declaration regarding the obligation of Tremont to indemnify Halliburton
and DII for costs and expenses attributable to the
site.
|
ITEM
5.
|
MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND
ISSUER PURCHASES OR EQUITY
SECURITIES
|
High
|
Low
|
Cash
dividends
paid
|
||||||||||
Year
ended December 31, 2006
|
||||||||||||
First Quarter
|
$ | 18.90 | $ | 17.00 | $ | .10 | ||||||
Second Quarter
|
25.81 | 18.14 | .10 | |||||||||
Third Quarter
|
27.50 | 22.75 | .10 | |||||||||
Fourth Quarter
|
27.92 | 22.92 | .10 | |||||||||
Year ended December 31, 2007
|
||||||||||||
First Quarter
|
$ | 31.32 | $ | 13.20 | $ | .10 | ||||||
Second Quarter
|
19.56 | 14.90 | .10 | |||||||||
Third Quarter
|
25.15 | 15.44 | .10 | |||||||||
Fourth Quarter
|
26.69 | 15.94 | .10 | |||||||||
First
Quarter 2008 through February 29
|
$ | 20.62 | $ | 14.14 | $ | - |
December
31,
|
||||||||||||||||||||||||
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
|||||||||||||||||||
Valhi
common stock
|
$ | 100 | $ | 184 | $ | 202 | $ | 237 | $ | 338 | $ | 475 | ||||||||||||
S&P
500 Composite Stock Price Index
|
100 | 129 | 143 | 150 | 173 | 183 | ||||||||||||||||||
S&P
500 Industrial Conglomerates Index
|
100 | 135 | 161 | 155 | 168 | 176 |
Period
|
Total
number of shares purchased
|
Average
price
paid
per
share, including
commissions
|
Total
number of shares purchased as part of a publicly-announced plan
|
Maximum
number of shares that may yet be purchased under the publicly-announced
plan at end of
period
|
||||||||||||
November 1, 2007
to November 30,
2007
|
61,100 | $ | 21.48 | 61,100 | 4,006,600 |
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
Years ended December 31,
|
||||||||||||||||||||
2003
|
2004
|
2005
|
2006
|
2007
|
||||||||||||||||
(In
millions, except per share data)
|
||||||||||||||||||||
STATEMENTS
OF OPERATIONS DATA:
|
||||||||||||||||||||
Net sales:
|
||||||||||||||||||||
Chemicals
|
$ | 1,008.2 | $ | 1,128.6 | $ | 1,196.7 | $ | 1,279.5 | $ | 1,310.3 | ||||||||||
Component products
|
173.9 | 182.6 | 186.3 | 190.1 | 177.7 | |||||||||||||||
Waste management
|
4.1 | 8.9 | 9.8 | 11.8 | 4.2 | |||||||||||||||
Total
net sales
|
$ | 1,186.2 | $ | 1,320.1 | $ | 1,392.8 | $ | 1,481.4 | $ | 1,492.2 | ||||||||||
Operating income
(loss):
|
||||||||||||||||||||
Chemicals
|
$ | 123.6 | $ | 102.4 | $ | 165.6 | $ | 138.1 | $ | 88.6 | ||||||||||
Component products
|
9.1 | 16.2 | 19.3 | 20.6 | 16.0 | |||||||||||||||
Waste management
|
(11.5 | ) | (10.2 | ) | (12.1 | ) | (9.5 | ) | (14.1 | ) | ||||||||||
Total
operating income
|
$ | 121.2 | $ | 108.4 | $ | 172.8 | $ | 149.2 | $ | 90.5 | ||||||||||
Equity in earnings (losses) of TIMET
|
$ | (2.3 | ) | $ | 22.7 | $ | 64.9 | $ | 101.1 | $ | 26.9 | |||||||||
Income (loss) from continuing
operations
|
$ | (84.8 | ) | $ | 225.5 | $ | 82.1 | $ | 141.7 | $ | (45.7 | ) | ||||||||
Discontinued operations
|
(2.9 | ) | 3.7 | (.2 | ) | - | - | |||||||||||||
Cumulative effect of change in accounting principle
|
.6 | - | - | - | - | |||||||||||||||
Net income (loss)
|
$ | (87.1 | ) | $ | 229.2 | $ | 81.9 | $ | 141.7 | $ | (45.7 | ) | ||||||||
DILUTED EARNINGS PER SHARE DATA:
|
||||||||||||||||||||
Income (loss) from continuing operations
|
$ | (.71 | ) | $ | 1.87 | $ | .69 | $ | 1.20 | $ | (.40 | ) | ||||||||
Net income (loss)
|
$ | (.73 | ) | $ | 1.90 | $ | .69 | $ | 1.20 | $ | (.40 | ) | ||||||||
Cash dividends
|
$ | .24 | $ | .24 | $ | .40 | $ | .40 | $ | .40 | ||||||||||
Weighted average common shares outstanding
|
119.9 | 120.4 | 118.5 | 116.5 | 114.7 | |||||||||||||||
STATEMENTS OF CASH FLOW DATA:
|
||||||||||||||||||||
Cash provided by
(used in):
|
||||||||||||||||||||
Operating activities
|
$ | 108.5 | $ | 142.1 | $ | 104.3 | $ | 86.3 | $ | 63.5 | ||||||||||
Investing activities
|
(33.8 | ) | (58.1 | ) | 20.4 | (89.5 | ) | (65.4 | ) | |||||||||||
Financing activities
|
(71.2 | ) | 78.4 | (115.8 | ) | (87.6 | ) | (56.1 | ) | |||||||||||
BALANCE SHEET DATA (at year end):
|
||||||||||||||||||||
Total assets
(1)
|
$ | 2,307.2 | $ | 2,690.5 | $ | 2,578.4 | $ | 2,804.7 | $ | 2,603.0 | ||||||||||
Long-term debt
|
632.5 | 769.5 | 715.8 | 785.3 | 889.8 | |||||||||||||||
Stockholders’ equity
(1)(2)
|
631.2 | 876.1 | 797.3 | 866.8 | 618.4 |
(1)
|
We
adopted the asset and liability recognition provisions of Statement of
Financial Accounting Standard (“SFAS”) No. 158 as of December 31, 2006 and
the measurement date provisions of SFAS No. 158 as of December 31,
2007. See Notes 11 and 18 to our Consolidated Financial
Statements.
|
(2)
|
We
adopted FASB Interpretation Number (“FIN”) 48 as of January 1,
2007. See Note 18 to our Consolidated Financial
Statements.
|
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
·
|
Chemicals – Our
chemicals segment is operated through our majority ownership of
Kronos. Kronos is a leading global producer and marketer of
value-added titanium dioxide pigments (“TiO2”). TiO2 is
used for a variety of manufacturing applications, including plastics,
paints, paper and other industrial
products.
|
|
·
|
Component Products – We
operate in the component products industry through our majority ownership
of CompX. CompX is a leading global manufacturer of security
products, precision ball bearing slides and ergonomic computer support
systems used in the office furniture, transportation, tool storage and a
variety of other industries. CompX is also a leading
manufacturer of stainless steel exhaust systems, gauges and throttle
controls for the performance marine
industry.
|
|
·
|
Waste Management – WCS
is our wholly-owned subsidiary which owns and operates a West Texas
facility for the processing, treatment and, storage of hazardous, toxic
and low level radioactive waste as well as the disposal of hazardous,
toxic and certain low level radioactive waste. WCS is in the
process of seeking to obtain regulatory authorization to expand its
low-level and mixed low-level radioactive waste disposal
capabilities.
|
|
·
|
an
income tax charge recognized by our Chemicals Segment in 2007 primarily as
a result of a reduction in German tax
rates;
|
|
·
|
an
income tax benefit due to a net decrease in our reserve for uncertain tax
positions in 2007;
|
|
·
|
lower
effective income tax rate in 2006 primarily due to the favorable
resolution in 2006 related to audits in our Chemicals Segment’s operations
in Germany, Belgium and Norway;
|
|
·
|
ceasing
to record equity in earnings from TIMET due to the distribution of our
TIMET shares in the first quarter of
2007;
|
|
·
|
the
gain in 2006 from the sale of certain land in
Nevada;
|
|
·
|
lower
operating income from each of our segments in
2007;
|
|
·
|
a
charge in 2006 from the redemption of our 8.875% Senior Secured
Notes;
|
|
·
|
lower
interest expense in 2007 resulting from the April 2006 refinancing of our
Senior Secured Notes; and
|
|
·
|
lower
dividend income from Amalgamated Sugar Company in 2007 as the additional
dividend it owed to us was completely paid in
2006.
|
|
·
|
a
net income tax benefit of $.21 per diluted share at our Chemicals Segment
related to the net effect of the withdrawal of certain income tax
assessments previously made by Belgian and Norwegian tax authorities, the
favorable resolution of certain income tax issues related to our German
and Belgian operations and the enactment of a reduction in Canadian
federal income tax rates offset by the unfavorable resolution of certain
other income tax issues related to our German
operations;
|
|
·
|
income
of $.20 per diluted share related to the sale of our land in
Nevada;
|
|
·
|
a
charge related to the redemption of our 8.875% Senior Secured Notes of
$.09 per diluted share;
|
|
·
|
a
gain of $.09 per diluted share related to TIMET’s sale of its minority
interest in VALTIMET, a manufacturing joint venture located in France;
and
|
|
·
|
income
of $.03 per diluted share related to certain insurance recoveries
recognized by NL.
|
|
·
|
a
charge of $.52 per diluted share as a result of the effect of a reduction
of the German income tax rates in
2007;
|
|
·
|
a
charge of $.05 per diluted share related to the adjustment of certain
German tax attributes within our Chemicals
Segment;
|
|
·
|
an
income tax benefit of $.03 per diluted share due to a net decrease in our
reserve for uncertain tax positions;
and
|
|
·
|
income
of $.03 per diluted share related to certain insurance recoveries
recognized by NL.
|
|
·
|
a
lower effective income tax rate in 2006 primarily due to the favorable
resolution in 2006 related to audits in our Chemicals Segment’s operations
in Germany, Belgium and Norway and a provision in 2005 related to a change
in the permanent reinvestment conclusion for earnings of certain foreign
subsidiaries of our Component Products
Segment;
|
|
·
|
higher
equity in earnings from TIMET in
2006.
|
|
·
|
the
gain in 2006 from the sale of certain land in
Nevada;
|
|
·
|
lower
total operating income in 2006 as improvements in operating income from
our Component Products and Waste Management Segments were more than offset
by a decline in operating income at our Chemicals
Segment;
|
|
·
|
a
charge in 2006 from the redemption of our 8.875% Senior Secured
Notes;
|
|
·
|
the
write-off of accrued interest in 2005 on our prior loan to Snake River
Sugar Company;
|
|
·
|
securities
transaction gains realized in 2005;
and
|
|
·
|
lower
interest and dividend income in 2006 primarily due to lower distributions
received from The Amalgamated Sugar Company LLC in
2006.
|
|
·
|
income
related to certain income tax benefits recognized by TIMET of $.11 per
diluted share;
|
|
·
|
gains
from NL’s sales of shares of Kronos common stock of $.05 per diluted
share;
|
|
·
|
a
non-cash income tax expense of $.03 per diluted share related to
developments in certain income tax audits at NL and our Chemicals Segment
and a change in the permanent reinvestment conclusion for earnings of
certain foreign subsidiaries of our Component Products
Segment;
|
|
·
|
a
gain from the sale of our passive interest in a Norwegian smelting
operation of $.02 per diluted
share;
|
|
·
|
income
related to TIMET’s sale of certain real property adjacent to its Nevada
operations of $.02 per diluted share;
and
|
|
·
|
income
of $.01 per diluted share related to certain insurance recoveries
recognized by NL.
|
|
·
|
a
net income tax benefit of $.21 per diluted share at our Chemicals Segment
related to the net effect of the withdrawal of certain income tax
assessments previously made by Belgian and Norwegian tax authorities, the
favorable resolution of certain income tax issues related to our German
and Belgian operations and the enactment of a reduction in Canadian
federal income tax rates offset by the unfavorable resolution of certain
other income tax issues related to our German
operations;
|
|
·
|
income
of $.20 per diluted share related to the sale of our land in
Nevada;
|
|
·
|
a
charge related to the redemption of our 8.875% Senior Secured Notes of
$.09 per diluted share;
|
|
·
|
a
gain of $.09 per diluted share related to TIMET’s sale of its minority
interest in VALTIMET, a manufacturing joint venture located in France;
and
|
|
·
|
income
of $.03 per diluted share related to certain insurance recoveries
recognized by NL.
|
|
·
|
lower
income taxes as the unfavorable effect of the reduction in German income
taxes rates was recognized 2007;
|
|
·
|
no
equity in earnings from TIMET as we ceased to account for our interest in
TIMET by the equity method following our March 2007 special distribution
of TIMET common stock; and
|
|
·
|
lower
expected operating income from our Chemicals Segment due to continued
lower average selling prices and increases in raw material
costs.
|
|
·
|
Marketable securities -
We own investments in certain companies that we account for as
marketable securities carried at fair value or that we account for under
the equity method. For these investments, we evaluate the fair
value at each balance sheet date. We use quoted market prices,
Level 1 inputs as defined in SFAS No. 157, to determine fair value for our
marketable debt securities and publicly traded investees. We
use Level 3 inputs to determine fair value for our other marketable
securities, primarily our investment in Amalgamated Sugar Company LLC. See
Note 18 to our Consolidated Financial Statements. We
record an impairment charge when we believe an investment has experienced
an other than temporary decline in fair value below its cost basis (for
marketable securities) or below its carrying value (for equity method
investees). Future adverse changes in market conditions or poor operating
results of underlying investments could result in losses or our inability
to recover the carrying value of the investments that may not be reflected
in an investment’s current carrying value, thereby possibly requiring us
to recognize an impairment charge in the
future.
|
|
·
|
Goodwill – Our goodwill
totaled $406.8 million at December 31, 2007 resulting primarily from our
various step acquisitions of Kronos and NL. In accordance with
SFAF No. 142, Goodwill
and Other Intangible Assets, we do not amortize
goodwill.
|
|
Goodwill
is evaluated for impairment at least annually. Goodwill is also
evaluated for impairment if the book value of its reporting unit exceeds
its estimated fair value. A reporting unit can be a segment or
an operating division. For our Chemicals Segment, we use Level
1 inputs of publicly traded market prices to compare the book value to
assess impairment. For our Component Products Segment, we use
Level 3 inputs of a discounted cash flow technique. If the fair
value is less than the book value, the asset is written down to the
estimated fair value.
|
|
Considerable
management judgment is necessary to evaluate the impact of operating
changes and to estimate future cash flows. Assumptions used in
our impairment evaluations, such as forecasted growth rates and our cost
of capital, are consistent with our internal projections and operating
plans.
|
|
·
|
Long-lived assets – We
account for our long-lived assets, including our investment in WCS, in
accordance with SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. We assess property, equipment and
capitalized permit costs for impairment only when circumstances indicate
an impairment may exist. During 2007, as a result of continued
operating losses, certain long-lived assets of our Waste Management
Segment were evaluated for impairment as of December 31,
2007. Our analysis, based on estimated future undiscounted cash
flows of WCS’ operations, indicated no impairment was present
as the estimate exceeded the carrying value of WCS’ net
assets. Considerable management judgment is necessary to
evaluate the impact of operating changes and to estimate future cash
flows. Assumptions used in our impairment evaluations, such as
forecasted growth rates and our cost of capital, are consistent with our
internal projections and operating
plans.
|
|
·
|
Employee benefit plan costs -
We provide a range of benefits including various defined benefit
pension and other postretirement benefits for our employees. We
record annual amounts related to these plans based upon calculations
required by GAAP, which make use of various actuarial assumptions, such
as: discount rates, expected rates of returns on plan assets, compensation
increases, employee turnover rates, mortality rates and expected health
care trend rates. We review our actuarial assumptions annually
and make modifications to the assumptions based on current rates and
trends when we believe appropriate. As required by GAAP,
modifications to the assumptions are generally recorded and amortized over
future periods. Different assumptions could result in the
recognition of different expense amounts over different periods of
times. These assumptions are more fully described below under
“—Assumptions on defined benefit pension plans and postretirement benefit
plans.”
|
|
·
|
Income taxes – We
recognize deferred taxes for future tax effects of temporary differences
between financial and income tax reporting in accordance with SFAS 109 Accounting for Income
Taxes. While we have considered future taxable income
and ongoing prudent and feasible tax planning strategies in assessing the
need for uncertain tax positions, it is possible that in the future we may
change our estimate of the amount of the deferred income tax assets that
would more-likely-than-not be realized in the future. If such
changes take place, there is a risk that an adjustment to our deferred
income tax asset valuation allowance may be required that would either
increase or decrease, as applicable, our reported net income in the period
such change in estimate was made.
|
|
·
|
Litigation and environmental
liabilities - We are involved in numerous legal and environmental
actions in part due to NL’s former involvement in the manufacture of
lead-based products. In accordance with SFAS No. 5, Accounting for Contingencies,
we record accruals for these liabilities when estimated future
expenditures associated with such contingencies become probable, and we
can reasonably estimate the amounts of such future
expenditures. However, new information may become available to
us, or circumstances (such as applicable laws and regulations) may change,
thereby resulting in an increase or decrease in the amount we are required
to accrue for such matters (and therefore a decrease or increase in our
reported net income in the period of such change). At December 31, 2007 we
have recorded total accrued environmental liabilities of $55.7
million.
|
|
·
|
Chemicals
– reserves for obsolete or unmarketable inventories, impairment of equity
method investees, goodwill and other long-lived assets, defined benefit
pension and OPEB plans and loss
accruals.
|
|
·
|
Component
Products – reserves for obsolete or unmarketable inventories, impairment
of long-lived assets and loss
accruals.
|
|
·
|
Waste
Management – impairment of long-lived assets and loss
accruals.
|
|
·
|
TiO2
average selling prices;
|
|
·
|
foreign
currency exchange rates (particularly the exchange rate for the U.S.
dollar relative to the euro and the Canadian
dollar);
|
|
·
|
TiO2
sales and production volumes; and
|
|
·
|
manufacturing
costs, particularly maintenance and energy-related
expenses.
|
Years ended December 31,
|
% Change
|
|||||||||||||||||||
2005
|
2006
|
2007
|
2005-06 | 2006-07 | ||||||||||||||||
(Dollars
in millions)
|
||||||||||||||||||||
Net sales
|
$ | 1,196.7 | $ | 1,279.5 | $ | 1,310.3 | 7 | % | 2 | % | ||||||||||
Cost of goods
sold
|
884.1 | 980.8 | 1,062.2 | 11 | % | 8 | % | |||||||||||||
Gross margin
|
$ | 312.6 | $ | 298.7 | $ | 248.1 | (4 | )% | (17 | )% | ||||||||||
Operating income
|
$ | 165.6 | $ | 138.1 | $ | 88.6 | (17 | )% | (36 | )% | ||||||||||
Percent of net sales:
|
||||||||||||||||||||
Cost of
sales
|
74 | % | 77 | % | 81 | % | ||||||||||||||
Gross margin
|
26 | % | 23 | % | 19 | % | ||||||||||||||
Operating income
|
14 | % | 11 | % | 7 | % | ||||||||||||||
TiO2 operating statistics:
|
||||||||||||||||||||
Sales volumes*
|
478 | 511 | 519 | 7 | % | 1 | % | |||||||||||||
Production volumes*
|
492 | 516 | 512 | 5 | % | (1 | )% | |||||||||||||
Production rate as
percent of capacity
|
99 | % |
Full
|
98 | % | |||||||||||||||
Percent change in net sales:
|
||||||||||||||||||||
TiO2 product pricing
|
- | % | (4 | )% | ||||||||||||||||
TiO2 sales volumes
|
7 | % | 1 | % | ||||||||||||||||
TiO2 product mix
|
- | % | - | % | ||||||||||||||||
Changes
in currency exchange rates
|
- | % | 5 | % | ||||||||||||||||
Total
|
7 | % | 2 | % |
Increase
(decrease) –
Year ended December
31,
|
||||||||
2005 vs. 2006
|
2006 vs. 2007
|
|||||||
(In
millions)
|
||||||||
Impact
on:
|
||||||||
Net
sales
|
$ | 2 | $ | 65 | ||||
Operating
income
|
(20 | ) | (4 | ) |
Years ended December 31,
|
% Change
|
|||||||||||||||||||
2005
|
2006
|
2007
|
2005-06 | 2006-07 | ||||||||||||||||
(Dollars
in millions)
|
||||||||||||||||||||
Net
sales
|
$ | 186.3 | $ | 190.1 | $ | 177.7 | 2 | % | (7 | )% | ||||||||||
Cost
of goods sold
|
142.6 | 143.6 | 132.5 | 1 | % | (8 | )% | |||||||||||||
Gross
margin
|
$ | 43.7 | $ | 46.5 | $ | 45.2 | 6 | % | (3 | )% | ||||||||||
Operating
income
|
$ | 19.3 | $ | 20.6 | $ | 16.0 | 7 | % | (22 | )% | ||||||||||
Percent
of net sales:
|
||||||||||||||||||||
Cost
of goods sold
|
77 | % | 76 | % | 75 | % | ||||||||||||||
Gross
margin
|
23 | % | 24 | % | 25 | % | ||||||||||||||
Operating
income
|
10 | % | 11 | % | 9 | % |
Increase
(decrease) –
Year ended December
31,
|
||||||||
2005 vs. 2006
|
2006 vs. 2007
|
|||||||
(In
millions)
|
||||||||
Impact
on:
|
||||||||
Net
sales
|
$ | 1.1 | $ | .9 | ||||
Operating
income
|
(1.1 | ) | (2.4 | ) |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
sales
|
$ | 9.8 | $ | 11.8 | $ | 4.2 | ||||||
Cost
of goods sold
|
15.4 | 15.0 | 11.7 | |||||||||
Gross
margin
|
$ | (5.6 | ) | $ | (3.2 | ) | $ | (7.5 | ) | |||
Operating
loss
|
$ | (12.1 | ) | $ | (9.5 | ) | $ | (14.1 | ) |
|
·
|
a
charge of $87.4 million related to the reduction of our net deferred
income tax asset in Germany resulting from the reduction in their income
tax rates;
|
|
·
|
a
charge of $8.7 million related to the adjustment of certain German income
tax attributes; and
|
|
·
|
a
$3.8 million benefit resulting from a net reduction in our reserve for
uncertain tax positions.
|
|
·
|
an
income tax benefit of $21.7 million related to an increase in the amount
of our German trade tax net operating loss carryforward, as a result of
the resolution of certain income tax audits in
Germany;
|
|
·
|
an
income tax benefit of $10.4 million primarily resulting from the reduction
in our income tax contingency reserves related to favorable developments
of income tax audit issues in Belgium, Norway and
Germany;
|
|
·
|
an
income tax benefit of $1.4 million related to the favorable resolution of
certain income tax audit issues in Germany and Belgium;
and
|
|
·
|
a
$1.3 million benefit resulting from the enactment of a reduction in
Canadian income tax rates.
|
|
·
|
an
income tax benefit of $11.5 million related to the favorable effects of
developments with respect to certain non-U.S. income tax audits of Kronos,
principally in Belgium and Canada;
|
|
·
|
an
income tax benefit of $7.0 million related to the favorable effect of
developments with respect to certain income tax items of
NL;
|
|
·
|
a
$17.5 million provision for income taxes related to the loss of certain
income tax attributes of Kronos in Germany;
and
|
|
·
|
a
provision for income taxes of $9.0 million related to a change in CompX’s
permanent reinvestment conclusion regarding certain of its non-U.S.
subsidiaries.
|
Discount
rates used for:
|
||||||||||||
Obligations
at
December
31, 2005 and expense in 2006
|
Obligations
at
December
31, 2006 and expense in 2007
|
Obligations
at
December
31, 2007 and expense in 2008
|
||||||||||
Kronos
and NL plans:
|
||||||||||||
Germany
|
4.0 | % | 4.5 | % | 5.5 | % | ||||||
Canada
|
5.0 | 5.0 | 5.3 | |||||||||
Norway
|
4.5 | 4.8 | 5.5 | |||||||||
U.S.
|
5.5 | 5.8 | 6.1 | |||||||||
Medite
plan
|
5.5 | 5.8 | 6.4 |
|
·
|
During
2007, substantially all of the Kronos, NL and Medite plan, assets in the
U.S. were invested in The Combined Master Retirement Trust (“CMRT”), a
collective investment trust sponsored by Contran to permit the collective
investment by certain master trusts which fund certain employee benefits
plans sponsored by Contran and certain of its
affiliates. Harold C. Simmons is the sole trustee of the
CMRT. The CMRT’s long-term investment objective is to provide a
rate of return exceeding a composite of broad market equity and fixed
income indices (including the S&P 500 and certain Russell indices),
while utilizing both third-party investment managers as well as
investments directed by Mr. Simmons. During the 19-year history
of the CMRT through December 31, 2007, the average annual rate of return
of the CMRT (excluding the CMRT’s investment in TIMET common stock) has
been approximately 14% (including a 17% return during 2006 and an 11%
return during 2007).
|
|
·
|
In
Germany, the composition of our plan assets is established to satisfy the
requirements of the German insurance
commissioner.
|
|
·
|
In
Canada, we currently have a plan asset target allocation of 60% to equity
securities and 40% to fixed income securities, with an expected long-term
rate of return for such investments to average approximately 125 basis
points above the applicable equity or fixed income
index.
|
|
·
|
In
Norway, we currently have a plan asset target allocation of 14% to equity
securities, 64% to fixed income securities and the remainder primarily to
cash and liquid investments. The expected long-term rate of
return for such investments is approximately 8.5%, 5.0% and 4.5%,
respectively.
|
December 31, 2006
|
||||||||||||||||
CMRT
|
Germany
|
Canada
|
Norway
|
|||||||||||||
Equity
securities and limited
partnerships
|
97 | % | 23 | % | 66 | % | 13 | % | ||||||||
Fixed
income securities
|
2 | 48 | 32 | 64 | ||||||||||||
Real
estate
|
1 | 14 | - | - | ||||||||||||
Cash,
cash equivalents and other
|
- | 15 | 2 | 23 | ||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % |
December 31, 2007
|
||||||||||||||||
CMRT
|
Germany
|
Canada
|
Norway
|
|||||||||||||
Equity
securities and limited
partnerships
|
98 | % | 28 | % | 60 | % | 18 | % | ||||||||
Fixed
income securities
|
- | 49 | 34 | 68 | ||||||||||||
Real
estate
|
2 | 12 | - | - | ||||||||||||
Cash,
cash equivalents and other
|
- | 11 | 6 | 14 | ||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % |
2005
|
2006
|
2007
|
||||||||||
Kronos
and NL plans:
|
||||||||||||
Germany
|
5.5 | % | 5.3 | % | 5.8 | % | ||||||
Canada
|
7.0 | 7.0 | 6.8 | |||||||||
Norway
|
5.5 | 6.5 | 5.5 | |||||||||
U.S.
|
10.0 | 10.0 | 10.0 | |||||||||
Medite
plan
|
10.0 | 10.0 | 10.0 |
|
·
|
lower
consolidated operating income in 2007 of $58.7 million, due to lower
earnings across all of our segments, particularly at our Chemicals
Segment;
|
|
·
|
the
$20.9 million call premium we paid in 2006 when we prepaid our 8.85%
Senior Secured Notes, which is required to be included in cash flows from
operating activities;
|
|
·
|
lower
net cash used by changes in receivables, inventories, payables and accrued
liabilities in 2007 of $11.6 million, due primarily to relative changes in
Kronos’ inventory levels;
|
|
·
|
lower
cash paid for income taxes in 2007 of $10.6 million due in part to the
2006 payment of certain income taxes associated with the settlement of
prior year income tax audits; and
|
|
·
|
higher
net cash contributed to our Ti02
joint venture which increased $7.2 million in 2007 as compared to
2006.
|
|
·
|
higher
net cash provided by changes in receivables, inventories, payables and
accrued liabilities in 2006 of $39.0 million, due primarily to relative
changes in Kronos’ inventory
levels;
|
|
·
|
lower
consolidated operating income in 2006 of $23.6 million, due primarily to
the lower earnings in our Chemicals
Segment;
|
|
·
|
the
$20.9 million call premium we paid in 2006 when we prepaid our 8.875%
Senior Secured Notes, which GAAP requires to be included in the
determination of cash flows from operating
activities;
|
|
·
|
lower
general corporate interest and dividends received in 2006 of $16.2
million, primarily due to a lower level of distributions received from The
Amalgamated Sugar Company LLC in
2006;
|
|
·
|
lower
cash paid for environmental remediation expenditures of $6.7 million in
2006;
|
|
·
|
lower
cash paid for income taxes in 2006 of $11.2 million, due in part to the
$21.0 million tax payment we made in 2005 to settle NL’s prior-year income
tax audit that was offset in part by the 2006 payment of approximately
$19.2 million of income taxes associated with the settlement of prior year
income tax audits;
|
|
·
|
lower
cash paid for interest in 2006 of $7.0 million, primarily as a result of
the May 2006 redemption of our 8.875% Senior Secured Notes (which paid
interest semiannually in June and December) and the April 2006 issuance of
our 6.5% Senior Secured Notes (which pay interest semiannually in April
and October starting in October 2006);
and
|
|
·
|
lower
distributions received from our Louisiana joint venture of $2.6 million
due to relative changes in their cash requirements in
2006.
|
|
·
|
Kronos’
average days sales outstanding (“DSO”) increased from 61 days at December
31, 2006 to 63 days at December 31, 2007, due to the timing of collection
of higher accounts receivables balances at the end of
2007. CompX’s average DSO increased from 41 days at December
31, 2006 to 44 days at December 31, 2007 due to timing of collection on
the higher accounts receivable balance at the end of
2007.
|
|
·
|
Kronos’
average number of days in inventory (“DII”) decreased from 68 days at
December 31, 2006 to 59 days at December 31, 2007 due to the effects of
higher sales volumes and lower production volumes. CompX’s
average DII increased from 57 days at December 31, 2006 to 66 days at
December 31, 2007 due primarily to higher commodity raw material costs
during 2007.
|
|
·
|
Kronos’
average DSO increased from 55 days at December 31, 2005 to 61 days at
December 31, 2006 due to the timing of collection on higher accounts
receivable balances at the end of December. CompX’s average DSO
increased slightly from 40 days at December 31, 2005 to 41 days at
December 31, 2006 due to slightly higher accounts receivable balance at
the end of 2005.
|
|
·
|
Kronos’
average DII increased from 59 days at December 31, 2005 to 68 days at
December 31, 2006, as their record TiO2
production volumes in 2006 exceeded their record TiO2
sales volumes during the period. CompX’s average DII decreased
slightly from 59 days at December 31, 2005 to 57 days at December 31, 2006
due primarily to reductions in raw materials during 2006 as we utilized
the higher than normal balance in inventory at the end of 2005 that was
acquired during 2005 as part of our efforts to mitigate the impact of
volatility in raw material prices.
|
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Cash
provided by (used in) operating activities:
|
||||||||||||
Kronos
|
$ | 97.8 | $ | 71.8 | $ | 89.9 | ||||||
NL
Parent
|
(20.1 | ) | 6.9 | (11.2 | ) | |||||||
CompX
|
20.0 | 27.4 | 11.9 | |||||||||
Waste
Control Specialists
|
(7.7 | ) | (3.9 | ) | (11.2 | ) | ||||||
Tremont
|
(5.0 | ) | (1.5 | ) | (3.1 | ) | ||||||
Valhi
Parent
|
101.4 | 96.6 | 59.9 | |||||||||
Other
|
(.7 | ) | (1.1 | ) | (.7 | ) | ||||||
Eliminations
|
(81.4 | ) | (109.9 | ) | (72.0 | ) | ||||||
Total
|
$ | 104.3 | $ | 86.3 | $ | 63.5 | ||||||
|
·
|
other
marketable securities of $23.3
million;
|
|
·
|
CompX
common stock through their stock repurchase program for $3.3 million;
and
|
|
·
|
TIMET
common stock for $.7 million.
|
|
·
|
shares
of Kronos common stock for $25.4
million;
|
|
·
|
shares
of TIMET common stock for $18.7
million;
|
|
·
|
shares
of CompX common stock for $2.3 million;
and
|
|
·
|
other
marketable securities for $43.4
million.
|
|
·
|
sold
other marketable securities for $42.9
million;
|
|
·
|
sold
certain land holdings in Nevada for $37.9
million;
|
|
·
|
acquired
a performance marine components products company for $9.8 million;
and
|
|
·
|
capitalized
$8.3 million of expenditures related to WCS’ permitting
efforts.
|
|
·
|
shares
of TIMET common stock for $18.0
million;
|
|
·
|
shares
of Kronos common stock for $7.0
million;
|
|
·
|
shares
of CompX common stock for $3.6 million;
and
|
|
·
|
other
marketable securities for $29.4
million.
|
|
·
|
sold
shares of Kronos common stock for $19.2
million;
|
|
·
|
sold
other marketable securities for $19.7
million;
|
|
·
|
collected
$80 million on our loan to Snake River Sugar
Company;
|
|
·
|
collected
$10 million on our loan to one of the Contran family trusts described in
Note 1 to the Consolidated Financial
Statements;
|
|
·
|
collected
a net $4.9 million on our short-term loan to
Contran;
|
|
·
|
received
a net $18.1 million from the sale of our European Thomas Regout operations
(which had $4.0 million of cash at the date of
disposal);
|
|
·
|
received
$3.5 million from the sale of our Norwegian smelting
operation;
|
|
·
|
acquired
a performance marine components products company for $7.3 million;
and
|
|
·
|
capitalized
$4.1 million of expenditures related to WCS’ permitting
efforts.
|
|
·
|
repaid
$2.6 million under CompX’s promissory note payable to TIMET;
and
|
|
·
|
net
borrowings of $9 million under Kronos’ U.S. bank credit
facility.
|
|
·
|
borrowed
and repaid $4.4 million under Kronos’ Canadian revolving credit
facility;
|
|
·
|
repaid
a net $5.1 million under Kronos’ U.S. bank credit facility;
and
|
|
·
|
repaid
$1.5 million of certain of CompX’s
indebtedness.
|
|
·
|
repaid
an aggregate euro 10 million ($12.9 million when repaid) under Kronos’
European revolving credit facility;
|
|
·
|
borrowed
a net $11.5 million under Kronos’ U.S. credit
facility;
|
|
·
|
entered
into additional capital lease arrangements for certain mining equipment
for the equivalent of $4.4 million;
and
|
|
·
|
borrowed
and repaid $5 million under Valhi’s revolving bank credit
facility.
|
|
·
|
KII’s
euro 400 million aggregate principal amount 6.5% Senior Secured Notes
($585.5 million at December 31, 2007, including the effect of the
unamortized original issue discount) due in
2013;
|
|
·
|
Our
$250 million loan from Snake River Sugar Company due in
2027;
|
|
·
|
CompX’s
promissory note payable to TIMET ($50 million outstanding at December 31,
2007) which bears interest at LIBOR plus 1% (6.0% at December 31, 2007)
and has quarterly principal repayments of $250,000 commencing in September
2008 due in 2014;
|
|
·
|
Kronos’
U.S. revolving bank credit facility ($15.4 million outstanding) due in
September 2008; and
|
|
·
|
$5.7
million of other indebtedness.
|
|
·
|
$152
million under Kronos’ various U.S. and non-U.S. credit
facilities;
|
|
·
|
$99
million under Valhi’s revolving bank credit facility;
and
|
|
·
|
$50
million under CompX’s revolving credit
facility.
|
Amount
|
||||
(In
millions)
|
||||
Valhi
Parent
|
$ | 40.9 | ||
Kronos
|
77.2 | |||
NL
Parent
|
71.9 | |||
CompX
|
18.4 | |||
Tremont
|
10.6 | |||
Waste
Control Specialists
|
3.7 | |||
Total
cash, cash equivalents and marketable securities
|
$ | 222.7 |
|
·
|
certain
income tax examinations which are underway in various U.S. and non-U.S.
jurisdictions;
|
|
·
|
certain
environmental remediation matters involving NL, Tremont and Valhi;
|
|
·
|
certain
litigation related to NL’s former involvement in the manufacture of lead
pigment and lead-based paint; and
|
|
·
|
certain
other litigation to which we are a
party.
|
Payment due date
|
||||||||||||||||||||
Contractual commitment
|
2008
|
2009/2010 | 2011/2012 |
2013
and
after
|
Total
|
|||||||||||||||
(In
millions)
|
||||||||||||||||||||
Indebtedness:
|
||||||||||||||||||||
Principal
|
$ | 16.8 | $ | 4.3 | $ | 4.3 | $ | 881.2 | $ | 906.6 | ||||||||||
Interest
|
65.9 | 129.7 | 129.3 | 346.5 | 671.4 | |||||||||||||||
Operating
leases
|
9.9 | 12.5 | 6.2 | 21.6 | 50.2 | |||||||||||||||
Kronos’
long-term supply
contracts
for the
purchase of
TiO2
feedstock
|
208.0 | 404.0 | 100.0 | - | 712.0 | |||||||||||||||
CompX
raw material and
other
purchase commitments
|
16.2 | - | - | - | 16.2 | |||||||||||||||
Fixed
asset acquisitions
|
35.6 | - | - | - | 35.6 | |||||||||||||||
Income
taxes
|
9.8 | - | - | - | 9.8 | |||||||||||||||
Total
|
$ | 362.2 | $ | 550.5 | $ | 239.8 | $ | 1,249.3 | $ | 2,401.8 |
Amount
|
|||||||||||||
Indebtedness*
|
Carrying
value
|
Fair
value
|
Interest
rate
|
Maturity
Date
|
|||||||||
(In
millions)
|
|||||||||||||
Fixed-rate
indebtedness:
|
|||||||||||||
Euro-denominated KII
6.5%
Senior Secured Notes
|
$ | 585.5 | $ | 507.7 | 6.5 | % |
2013
|
||||||
Valhi loans from Snake River
|
250.0 | 250.0 | 9.4 | % |
2027
|
||||||||
Other
|
.4 | .4 |
Various
|
Various
|
|||||||||
fixed-rate
|
$ | 835.9 | $ | 758.1 | 7.4 | % | |||||||
Variable-rate indebtedness -
|
|||||||||||||
CompX
promissory note to TIMET
|
50.0 | 50.0 | 6.0 | % |
2014
|
||||||||
Kronos U.S. revolver
|
15.4 | 15.4 | 7.5 | % |
2008
|
||||||||
variable-rate
|
$ | 65.4 | $ | 65.4 | 6.4 | % | |||||||
Total
|
$ | 901.3 | $ | 823.5 | 7.3 | % |
ITEM 9.
|
CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
|
·
|
pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect our transactions and dispositions of our
assets,
|
|
·
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that our
receipts and expenditures are made only in accordance with authorizations
of our management and directors,
and
|
|
·
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on our Condensed Consolidated Financial
Statements.
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
(a)
and (c)
|
Financial
Statements and Schedules
|
|
Our
Consolidated Financial Statements and schedules listed on the accompanying
Index of Financial Statements and Schedules (see page F-1) are filed
as part of this Annual Report.
|
|
TIMET’s
condensed consolidated financial statements are filed as Exhibit 99.1 of
this Annual Report pursuant to Rule 3-09 of Regulation
S-X. TIMET’s Management’s Report on Internal Control Over
Financial Reporting is not included as part of Exhibit 99.1. We
are not required to provide any other consolidated financial statements
pursuant to Rule 3-09 of Regulation
S-X.
|
(b)
|
Exhibits
|
Item No.
|
Exhibit Item
|
3.1
|
Restated
Articles of Incorporation of the Registrant - incorporated by reference to
Exhibit 3.1 to our Current Report on Form 8-K/A (File No. 1-5467)
dated March 26, 2007 and filed by us on March 29, 2007.
|
3.2
|
By-Laws
of the Registrant as amended - incorporated by reference to Exhibit 3.1 of
our Current Report on Form 8-K (File No. 1-5467) dated November 6,
2007.
|
4.1
|
Indenture
dated April 11, 2006 between Kronos International, Inc. and The Bank of
New York, as Trustee, governing Kronos International's 6.5% Senior Secured
Notes due 2013 - incorporated by reference to Exhibit 4.1 to Kronos
International, Inc.’s Current Report on Form 8-K (File No. 333-100047)
filed with the SEC on April 11, 2006.
|
10.1
|
Intercorporate Services Agreement
between the Registrant and Contran Corporation effective as of January 1,
2004 – incorporated by reference to Exhibit 10.1 to our Quarterly Report
on Form 10-Q for the quarter ended March 31,
2004.
|
10.2
|
Intercorporate
Services Agreement between Contran Corporation and NL effective as of
January 1, 2004 - incorporated by reference to Exhibit 10.1 to NL's
Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended
March 31, 2004.
|
10.3
|
Intercorporate
Services Agreement between Contran Corporation and CompX effective January
1, 2004 – incorporated by reference to Exhibit 10.2 to CompX’s Annual
Report on Form 10-K (File No. 1-13905) for the year ended December 31,
2003.
|
10.4
|
Intercorporate
Services Agreement between Contran Corporation and Kronos Worldwide, Inc.
effective January 1, 2004 - incorporated by reference to Exhibit No. 10.1
to Kronos’ Quarterly Report on Form 10-Q (File No. 1-31763) for the
quarter ended March 31, 2004.
|
10.5
|
Stock
Purchase Agreement dated April 1, 2005 between Valhi, Inc. and Contran
Corporation – incorporated by reference to Exhibit 99.1 to our Current
Report on Form 8-K (File No. 1-5467) dated April 1,
2005.
|
10.6
|
Stock
Purchase Agreement dated November 1, 2006 between Valhi, Inc. and Valhi
Holding Company – incorporated by reference to Exhibit 10.1 – to our
Current Report on Form 8-K (File No. 1-5467) dated November 1,
2006.
|
10.7
|
Stock
Purchase Agreement dated as of March 26, 2007 between Valhi, Inc. and
Contran Corporation - incorporated by reference to Exhibit 10.1 to our
Current Report on Form 8-K (File No. 1-5467) dated March 26, 2007 and
filed by us on March 27, 2007.
|
10.8
|
Consent
Agreement dated as of March 29, 2007 between Valhi, Inc. and Contran
Corporation – incorporated by reference to Exhibit 10.2 to our Current
Report on Form 8-K/A (File No. 1-5467) dated March 26, 2007 and filed by
us on March 29, 2007.
|
Item No.
|
Exhibit Item
|
10.9
|
Stock
Purchase Agreement dated as of October 16, 2007 between TIMET Finance
Management Company and CompX International Inc. - incorporated by
reference to Exhibit 10.1 of CompX’s Current Report on Form
8-K (File No. 1-13905) dated October 22,
2007.
|
10.10
|
Agreement
and Plan of Merger dated as of October 16, 2007 among CompX International
Inc., CompX Group, Inc. and CompX KDL LLC - incorporated by reference to
Exhibit 10.2 of CompX’s Current Report on Form 8-K (File No. 1-13905)
dated October 22, 2007.
|
10.11
|
Subordinated
Term Loan Promissory Note dated October 26, 2007 executed by CompX
International Inc. and payable to the order of TIMET Finance Management
Company – incorporated by reference to Exhibit 10.4 of CompX’s Quarterly
Report on Form 10-Q (File No. 1-13905) for the quarter ended September 30,
2007.
|
10.12
|
Form
of Subordination Agreement among TIMET Finance Management Company, CompX
International Inc., CompX Security Products, Inc., CompX Precision Slides
Inc., CompX Marine Inc., Custom Marine Inc., Livorsi Marine Inc., Wachovia
Bank, National Association as administrative agent for itself, Compass
Bank and Comerica Bank - incorporated by reference to Exhibit 10.4 of
CompX’s Current Report on Form 8-K dated October 22,
2007.
|
10.13*
|
Valhi,
Inc. 1997 Long-Term Incentive Plan - incorporated by reference to Exhibit
10.12 to the Registrant's Annual Report on Form 10-K (File No. 1-5467) for
the year ended December 31, 1996.
|
10.14*
|
CompX
International Inc. 1997 Long-Term Incentive Plan - incorporated by
reference to Exhibit 10.2 to CompX's Registration Statement on Form S-1
(File No. 333-42643).
|
10.15*
|
NL
Industries, Inc. 1998 Long-Term Incentive Plan – incorporated by reference
to Appendix A to NL’s Proxy Statement on Schedule 14A (File No. 1-640) for
the annual meeting of shareholders held on May 9, 1998.
|
10.16*
|
Kronos
Worldwide, Inc. 2003 Long-Term Incentive Plan – incorporated by reference
to Exhibit 10.4 to Kronos’ Registration Statement on Form 10 (File No.
001-31763).
|
10.17
|
Agreement
Regarding Shared Insurance dated as of October 30, 2003 by and between
CompX International Inc., Contran Corporation, Keystone Consolidated
Industries, Inc., Kronos Worldwide, Inc., NL Industries, Inc., Titanium
Metals Corporation and Valhi, Inc. – incorporated by reference to Exhibit
10.32 to Kronos’ Annual Report on Form 10-K (File No. 1-31763) for the
year ended December 31, 2003.
|
10.18
|
Formation
Agreement of The Amalgamated Sugar Company LLC dated January 3, 1997 (to
be effective December 31, 1996) between Snake River Sugar Company and The
Amalgamated Sugar Company - incorporated by reference to Exhibit 10.19 to
the Registrant's Annual Report on Form 10-K (File No. 1-5467) for the year
ended December 31, 1996.
|
Item No.
|
Exhibit Item
|
10.19
|
Master
Agreement Regarding Amendments to The Amalgamated Sugar Company Documents
dated October 19, 2000 – incorporated by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended September 30, 2000.
|
10.20
|
Prepayment
and Termination Agreement dated October 14, 2005 among Valhi, Inc., Snake
River Sugar Company and Wells Fargo Bank Northwest, N.A. – incorporated by
reference to Exhibit No. 10.1 to the Registrant’s Amendment No. 1 to its
Current Report on Form 8-K (File No. 1-5467) dated October 18,
2005.
|
10.21
|
Company
Agreement of The Amalgamated Sugar Company LLC dated January 3, 1997 (to
be effective December 31, 1996) - incorporated by reference to Exhibit
10.20 to the Registrant's Annual Report on Form 10-K (File No. 1-5467) for
the year ended December 31, 1996.
|
10.22
|
First
Amendment to the Company Agreement of The Amalgamated Sugar Company LLC
dated May 14, 1997 - incorporated by reference to Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended June 30, 1997.
|
10.23
|
Second
Amendment to the Company Agreement of The Amalgamated Sugar Company LLC
dated November 30, 1998 - incorporated by reference to Exhibit 10.24 to
the Registrant's Annual Report on Form 10-K (File No. 1-5467) for the year
ended December 31, 1998.
|
10.24
|
Third
Amendment to the Company Agreement of The Amalgamated Sugar Company LLC
dated October 19, 2000 – incorporated by reference to Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended September 30, 2000.
|
10.25
|
Amended
and Restated Company Agreement of The Amalgamated Sugar Company LLC dated
October 14, 2005 among The Amalgamated Sugar Company LLC, Snake River
Sugar Company and The Amalgamated Collateral Trust – incorporated by
reference to Exhibit No. 10.7 to the Registrant’s Amendment No. 1 to its
Current Report on Form 8-K (File No. 1-5467) dated October 18,
2005.
|
10.26
|
Subordinated
Promissory Note in the principal amount of $37.5 million between Valhi,
Inc. and Snake River Sugar Company, and the related Pledge Agreement, both
dated January 3, 1997 - incorporated by reference to Exhibit
10.21 to the Registrant's Annual Report on Form 10-K (File No. 1-5467) for
the year ended December 31, 1996.
|
10.27
|
Limited
Recourse Promissory Note in the principal amount of $212.5 million between
Valhi, Inc. and Snake River Sugar Company, and the related Limited
Recourse Pledge Agreement, both dated January 3, 1997 -
incorporated by reference to Exhibit 10.22 to the Registrant's Annual
Report on Form 10-K (File No. 1-5467) for the year ended December 31,
1996.
|
10.28
|
Subordinated
Loan Agreement between Snake River Sugar Company and Valhi, Inc., as
amended and restated effective May 14, 1997 - incorporated by
reference to Exhibit 10.9 to the Registrant's Quarterly Report on Form
10-Q (File No. 1-5467) for the quarter ended June 30,
1997.
|
Item No.
|
Exhibit Item
|
10.29
|
Second
Amendment to the Subordinated Loan Agreement between Snake River Sugar
Company and Valhi, Inc. dated November 30, 1998 - incorporated by
reference to Exhibit 10.28 to the Registrant's Annual Report on Form 10-K
(File No. 1-5467) for the year ended December 31, 1998.
|
10.30
|
Third
Amendment to the Subordinated Loan Agreement between Snake River Sugar
Company and Valhi, Inc. dated October 19, 2000 – incorporated by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q (File
No. 1-5467) for the quarter ended September 30, 2000.
|
10.31
|
Fourth
Amendment to the Subordinated Loan Agreement between Snake River Sugar
Company and Valhi, Inc. dated March 31, 2003 - incorporated by reference
to Exhibit No. 10.1 to the Registrant's Quarterly Report on Form 10-Q
(file No. 1-5467) for the quarter ended March 31, 2003.
|
10.32
|
Contingent
Subordinate Pledge Agreement between Snake River Sugar Company and Valhi,
Inc., as acknowledged by First Security Bank National Association as
Collateral Agent, dated October 19, 2000 – incorporated by reference to
Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q (File No.
1-5467) for the quarter ended September 30, 2000.
|
10.33
|
Contingent
Subordinate Security Agreement between Snake River Sugar Company and
Valhi, Inc., as acknowledged by First Security Bank National Association
as Collateral Agent, dated October 19, 2000 – incorporated by reference to
Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q (File No.
1-5467) for the quarter ended September 30, 2000.
|
10.34
|
Contingent
Subordinate Collateral Agency and Paying Agency Agreement among Valhi,
Inc., Snake River Sugar Company and First Security Bank National
Association dated October 19, 2000 – incorporated by reference to Exhibit
10.6 to the Registrant's Quarterly Report on Form 10-Q (File No. 1-5467)
for the quarter ended September 30, 2000.
|
10.35
|
Deposit
Trust Agreement related to the Amalgamated Collateral Trust among ASC
Holdings, Inc. and Wilmington Trust Company dated May 14,
1997 - incorporated by reference to Exhibit 10.2 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended June 30, 1997.
|
10.36
|
First
Amendment to Deposit Trust Agreement dated October 14, 2005 among ASC
Holdings, Inc. and Wilmington Trust Company – incorporated by reference to
Exhibit No. 10.2 to the Registrant’s Amendment No. 1 to its Current Report
on Form 8-K (File No. 1-5467) dated October 18, 2005.
|
10.37
|
Pledge
Agreement between The Amalgamated Collateral Trust and Snake River Sugar
Company dated May 14, 1997 - incorporated by reference to
Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q (File No.
1-5467) for the quarter ended June 30, 1997.
|
Item No.
|
Exhibit Item
|
||
10.38
|
Second
Pledge Amendment (SPT) dated October 14, 2005 among The Amalgamated
Collateral Trust and Snake River Sugar Company – incorporated by reference
to Exhibit No. 10.4 to the Registrant’s Amendment No. 1 to its Current
Report on Form 8-K (File No. 1-5467) dated October 18,
2005.
|
||
10.39
|
Guarantee
by The Amalgamated Collateral Trust in favor of Snake River Sugar Company
dated May 14, 1997 - incorporated by reference to Exhibit 10.4
to the Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for
the quarter ended June 30, 1997.
|
||
10.40
|
Second
SPT Guaranty Amendment dated October 14, 2005 among The Amalgamated
Collateral Trust and Snake River Sugar Company – incorporated by reference
to Exhibit No. 10.5 to the Registrant’s Amendment No. 1 to its Current
Report on Form 8-K (File No. 1-5467) dated October 18,
2005.
|
||
10.41
|
Voting
Rights and Collateral Deposit Agreement among Snake River Sugar Company,
Valhi, Inc., and First Security Bank, National Association dated May 14,
1997 - incorporated by reference to Exhibit 10.8 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended June 30, 1997.
|
||
10.42
|
Subordination
Agreement between Valhi, Inc. and Snake River Sugar Company dated May 14,
1997 - incorporated by reference to Exhibit 10.10 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended June 30, 1997.
|
||
10.43
|
First
Amendment to the Subordination Agreement between Valhi, Inc. and Snake
River Sugar Company dated October 19, 2000 – incorporated by reference to
Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q (File No.
1-5467) for the quarter ended September 30, 2000.
|
||
10.44
|
Form
of Option Agreement among Snake River Sugar Company, Valhi, Inc. and the
holders of Snake River Sugar Company’s 10.9% Senior Notes Due 2009 dated
May 14, 1997 - incorporated by reference to Exhibit 10.11 to
the Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended June 30, 1997.
|
||
10.45
|
Option
Agreement dated October 14, 2005 among Valhi, Inc., Snake River Sugar
Company, Northwest Farm Credit Services, FLCA and U.S. Bank National
Association – incorporated by reference to Exhibit No. 10.6 to the
Registrant’s Amendment No. 1 to its Current Report on Form 8-K (File No.
1-5467) dated October 18, 2005.
|
||
10.46
|
First
Amendment to Option Agreements among Snake River Sugar Company, Valhi
Inc., and the holders of Snake River's 10.9% Senior Notes Due 2009 dated
October 19, 2000 – incorporated by reference to Exhibit 10.8 to the
Registrant's Quarterly Report on Form 10-Q (File No. 1-5467) for the
quarter ended September 30, 2000.
|
||
10.47
|
Formation
Agreement dated as of October 18, 1993 among Tioxide Americas Inc., Kronos
Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by
reference to Exhibit 10.2 of NL's Quarterly Report on Form 10-Q (File
No. 1-640) for the quarter ended September 30, 1993.
|
||
Item No.
|
Exhibit Item
|
||
10.48
|
Joint
Venture Agreement dated as of October 18, 1993 between Tioxide Americas
Inc. and Kronos Louisiana, Inc. - incorporated by reference to Exhibit
10.3 of NL's Quarterly Report on Form 10-Q (File No. 1-640) for the
quarter ended September 30, 1993.
|
||
10.49
|
Kronos
Offtake Agreement dated as of October 18, 1993 by and between Kronos
Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by
reference to Exhibit 10.4 of NL's Quarterly Report on Form 10-Q (File No.
1-640) for the quarter ended September 30, 1993.
|
||
10.50
|
Amendment
No. 1 to Kronos Offtake Agreement dated as of December 20, 1995 between
Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated
by reference to Exhibit 10.22 of NL’s Annual Report on Form 10-K (File No.
1-640) for the year ended December 31 1995.
|
||
10.51
|
Allocation
Agreement dated as of October 18, 1993 between Tioxide Americas Inc., ICI
American Holdings, Inc., Kronos Worldwide, Inc. (f/k/a Kronos, Inc.) and
Kronos Louisiana, Inc. - incorporated by reference to Exhibit 10.10 to
NL's Quarterly Report on Form 10-Q (File No. 1-640) for the quarter ended
September 30, 1993.
|
||
10.52
|
Lease
Contract dated June 21, 1952, between Farbenfabrieken Bayer
Aktiengesellschaft and Titangesellschaft mit beschrankter Haftung (German
language version and English translation thereof) - incorporated by
reference to Exhibit 10.14 of NL's Annual Report on Form 10-K (File No.
1-640) for the year ended December 31, 1985.
|
||
10.53
|
Administrative
Settlement for Interim Remedial Measures, Site Investigation and
Feasibility Study dated July 7, 2000 between the Arkansas Department of
Environmental Quality, Halliburton Energy Services, Inc., M I, LLC and TRE
Management Company - incorporated by reference to Exhibit 10.1 to Tremont
Corporation's Quarterly Report on Form 10-Q (File No. 1-10126) for the
quarter ended June 30, 2002.
|
||
21.1***
|
Subsidiaries
of the Registrant.
|
||
23.1***
|
Consent
of PricewaterhouseCoopers LLP with respect to Valhi’s Consolidated
Financial Statements
|
||
23.2***
|
Consent
of PricewaterhouseCoopers LLP with respect to TIMET’s Consolidated
Financial Statements
|
||
31.1***
|
Certification
|
||
31.2***
|
Certification
|
||
32.1***
|
Certification
|
||
99.1
|
Consolidated
financial statements of Titanium Metals Corporation incorporated by
reference to TIMET’s Annual Report on Form 10-K (File No. 0-28538) for the
year ended December 31, 2007.
|
||
VALHI,
INC.
(Registrant)
|
|
By: /s/ Steven L.
Watson
|
|
Steven
L. Watson, March 13, 2008
(President
and Chief Executive Officer)
|
/s/ Harold C.
Simmons
|
/s/ Steven L.
Watson
|
|
Harold
C. Simmons, March 13, 2008
(Chairman
of the Board)
|
Steven
L. Watson, March 13, 2008
(President,
Chief Executive Officer
and
Director)
|
|
/s/ Thomas E.
Barry
|
/s/ Glenn R.
Simmons
|
|
Thomas
E. Barry, March 13, 2008
(Director)
|
Glenn
R. Simmons, March 13, 2008
(Vice
Chairman of the Board)
|
|
/s/ Norman S.
Edelcup
|
/s/ Bobby D.
O’Brien
|
|
Norman
S. Edelcup, March 13, 2008
(Director)
|
Bobby
D. O’Brien, March 13, 2008
(Vice
President and Chief Financial Officer, Principal Financial
Officer)
|
|
/s/ W. Hayden
McIlroy
|
/s/ Gregory M.
Swalwell
|
|
W.
Hayden McIlroy, March 13, 2008
(Director)
|
Gregory
M. Swalwell, March 13, 2008
(Vice
President and Controller,
Principal
Accounting Officer)
|
|
/s/ J. Walter Tucker,
Jr.
|
||
J.
Walter Tucker, Jr. March 13, 2008
(Director)
|
||
Financial
Statements
|
Page
|
Report of Independent Registered
Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets -
December 31, 2006 and 2007
|
F-4
|
Consolidated Statements of
Operations –
Years ended December 31, 2005,
2006 and 2007
|
F-6
|
Consolidated Statements of
Comprehensive Income (Loss) –
Years ended December 31, 2005,
2006 and 2007
|
F-7
|
Consolidated Statements of
Stockholders’ Equity –
Years ended December 31, 2005,
2006 and 2007
|
F-9
|
Consolidated Statements of Cash
Flows –
Years ended December 31, 2005,
2006 and 2007
|
F-10
|
Notes to Consolidated Financial
Statements
|
F-13
|
Financial
Statement Schedule
|
|
Schedule I – Condensed Financial
Information of Registrant
|
S-1
|
We omitted Schedules II, III and
IV because they are not applicable or the required amounts are either not
material or are presented in the Notes to the Consolidated Financial
Statements.
|
ASSETS
|
||||||||
December 31,
|
||||||||
2006
|
2007
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 189.2 | $ | 138.3 | ||||
Restricted
cash equivalents
|
9.1 | 7.2 | ||||||
Marketable
securities
|
12.6 | 7.2 | ||||||
Accounts
and other receivables, net
|
228.3 | 241.4 | ||||||
Refundable
income taxes
|
1.9 | 7.7 | ||||||
Receivable
from affiliates
|
.8 | 4.6 | ||||||
Inventories,
net
|
309.0 | 337.9 | ||||||
Prepaid
expenses and other
|
17.9 | 16.2 | ||||||
Deferred
income taxes
|
10.6 | 10.4 | ||||||
Total
current assets
|
779.4 | 770.9 | ||||||
Other
assets:
|
||||||||
Marketable
securities
|
259.0 | 319.8 | ||||||
Investment
in affiliates
|
396.7 | 137.9 | ||||||
Pension
asset
|
40.1 | 47.6 | ||||||
Goodwill
|
385.2 | 406.8 | ||||||
Other
intangible assets
|
3.9 | 2.7 | ||||||
Deferred
income taxes
|
264.4 | 168.7 | ||||||
Other
assets
|
64.7 | 67.3 | ||||||
Total
other assets
|
1,414.0 | 1,150.8 | ||||||
Property
and equipment:
|
||||||||
Land
|
42.1 | 48.2 | ||||||
Buildings
|
242.2 | 277.1 | ||||||
Equipment
|
928.4 | 1,051.9 | ||||||
Mining
properties
|
30.7 | 39.8 | ||||||
Construction
in progress
|
20.6 | 48.9 | ||||||
1,264.0 | 1,465.9 | |||||||
Less
accumulated depreciation
|
652.7 | 784.6 | ||||||
Net
property and equipment
|
611.3 | 681.3 | ||||||
Total
assets
|
$ | 2,804.7 | $ | 2,603.0 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
December 31,
|
||||||||
2006
|
2007
|
|||||||
Current
liabilities:
|
||||||||
Current
maturities of long-term debt
|
$ | 1.2 | $ | 16.8 | ||||
Accounts
payable
|
101.8 | 115.6 | ||||||
Accrued
liabilities
|
119.7 | 133.2 | ||||||
Payable
to affiliates
|
17.2 | 19.0 | ||||||
Income
taxes
|
11.1 | 9.8 | ||||||
Deferred
income taxes
|
2.2 | 3.3 | ||||||
Total
current liabilities
|
253.2 | 297.7 | ||||||
Noncurrent
liabilities:
|
||||||||
Long-term
debt
|
785.3 | 889.8 | ||||||
Deferred
income taxes
|
479.2 | 402.8 | ||||||
Accrued
pension costs
|
188.7 | 140.0 | ||||||
Accrued
postretirement benefits cost
|
33.6 | 33.6 | ||||||
Accrued
environmental costs
|
46.1 | 40.3 | ||||||
Other
|
28.1 | 89.9 | ||||||
Total
noncurrent liabilities
|
1,561.0 | 1,596.4 | ||||||
Minority
interest in net assets of subsidiaries
|
123.7 | 90.5 | ||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $.01 par value; 5,000
shares authorized;
0 and 5,000 shares issued
|
- | 667.3 | ||||||
Common
stock, $.01 par value; 150.0 million
shares authorized;
118.9 million and 118.4
million
shares issued
|
1.2 | 1.2 | ||||||
Additional
paid-in capital
|
107.4 | 10.4 | ||||||
Retained
earnings
|
839.2 | (74.1 | ) | |||||
Accumulated
other comprehensive income (loss)
|
(43.1 | ) | 51.5 | |||||
Treasury
stock, at cost – 4.0 million and
4.0
million shares
|
(37.9 | ) | (37.9 | ) | ||||
Total
stockholders' equity
|
866.8 | 618.4 | ||||||
Total
liabilities, minority interest and
stockholders'
equity
|
$ | 2,804.7 | $ | 2,603.0 | ||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Revenues
and other income:
|
||||||||||||
Net
sales
|
$ | 1,392.8 | $ | 1,481.4 | $ | 1,492.2 | ||||||
Other
income, net
|
68.0 | 89.9 | 42.3 | |||||||||
Equity
in earnings of:
|
||||||||||||
Titanium
Metals Corporation ("TIMET")
|
64.9 | 101.1 | 26.9 | |||||||||
Other
|
3.6 | 3.8 | 1.7 | |||||||||
Total
revenue and other income
|
1,529.3 | 1,676.2 | 1,563.1 | |||||||||
Cost
and expenses:
|
||||||||||||
Cost
of goods sold
|
1,042.1 | 1,139.4 | 1,206.3 | |||||||||
Selling,
general and administrative
|
219.7 | 229.4 | 238.4 | |||||||||
Loss
on prepayment of debt
|
- | 22.3 | - | |||||||||
Interest
|
69.2 | 67.6 | 64.4 | |||||||||
Total
costs and expenses
|
1,331.0 | 1,458.7 | 1,509.1 | |||||||||
Income
before taxes
|
198.3 | 217.5 | 54.0 | |||||||||
Provision
for income taxes
|
104.6 | 63.8 | 103.2 | |||||||||
Minority
interest in after-tax earnings
(losses)
|
11.6 | 12.0 | (3.5 | ) | ||||||||
Income
(loss) from continuing operations
|
82.1 | 141.7 | (45.7 | ) | ||||||||
Discontinued
operations, net of tax
|
(.2 | ) | - | - | ||||||||
Net
income (loss)
|
$ | 81.9 | $ | 141.7 | $ | (45.7 | ) | |||||
Net
income (loss) per share:
|
||||||||||||
Basic
|
$ | .69 | $ | 1.22 | $ | (.40 | ) | |||||
Diluted
|
$ | .69 | $ | 1.20 | $ | (.40 | ) | |||||
Cash
dividends per share
|
$ | .40 | $ | .40 | $ | .40 | ||||||
Weighted average shares outstanding:
|
||||||||||||
Basic
|
118.2 | 116.1 | 114.7 | |||||||||
Diluted
|
118.5 | 116.5 | 114.7 | |||||||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Net
income (loss)
|
$ | 81.9 | $ | 141.7 | $ | (45.7 | ) | |||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||
Marketable
securities
|
(1.3 | ) | 2.0 | 23.3 | ||||||||
Currency
translation
|
(25.3 | ) | 27.5 | 29.4 | ||||||||
Defined
benefit pension plans
|
(24.2 | ) | 5.6 | 32.1 | ||||||||
Other
postretirement benefit plans
|
- | - | .6 | |||||||||
Total
other comprehensive income (loss), net
|
(50.8 | ) | 35.1 | 85.4 | ||||||||
Comprehensive
income
|
$ | 31.1 | $ | 176.8 | $ | 39.7 | ||||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Accumulated
other comprehensive income (net
of tax):
|
||||||||||||
Marketable
securities:
|
||||||||||||
Balance at beginning of year
|
$ | 5.5 | $ | 4.2 | $ | 6.2 | ||||||
Other
comprehensive income (loss)
|
(1.3 | ) | 2.0 | 23.3 | ||||||||
TIMET
distribution
|
- | - | (2.4 | ) | ||||||||
Balance at end of year
|
$ | 4.2 | $ | 6.2 | $ | 27.1 | ||||||
Currency translation:
|
||||||||||||
Balance at beginning of year
|
$ | 36.9 | $ | 11.6 | $ | 39.1 | ||||||
Other
comprehensive income (loss)
|
(25.3 | ) | 27.5 | 29.4 | ||||||||
TIMET
distribution
|
- | - | (4.0 | ) | ||||||||
Balance at end of year
|
$ | 11.6 | $ | 39.1 | $ | 64.5 | ||||||
Minimum pension liabilities:
|
||||||||||||
Balance at beginning of year
|
$ | (53.9 | ) | $ | (78.1 | ) | $ | - | ||||
Other
comprehensive income (loss)
|
(24.2 | ) | 5.6 | - | ||||||||
Adoption of SFAS No. 158
|
- | 72.5 | - | |||||||||
|
||||||||||||
Balance at end of year
|
$ | (78.1 | ) | $ | - | $ | - | |||||
Defined benefit pension plans:
|
||||||||||||
Balance at beginning of year
|
$ | - | $ | - | $ | (85.0 | ) | |||||
Other
comprehensive income (loss):
|
||||||||||||
Amortization
of prior service cost and net losses included in net periodic
pension cost
|
- | - | 4.1 | |||||||||
Net
actuarial gain arising during year
|
- | - | 28.0 | |||||||||
Adoption of SFAS No. 158
|
- | (85.0 | ) | 1.2 | ||||||||
TIMET
distribution
|
- | - | 12.9 | |||||||||
Balance at end of year
|
$ | - | $ | (85.0 | ) | $ | (38.8 | ) | ||||
OPEB plans:
|
||||||||||||
Balance at beginning of year
|
$ | - | $ | - | $ | (3.4 | ) | |||||
Other
comprehensive income (loss):
|
||||||||||||
Amortization
of prior service cost and net losses included in net periodic
pension cost
|
- | - | - | |||||||||
Net
actuarial gain arising during year
|
- | - | .6 | |||||||||
Adoption of SFAS No. 158
|
- | (3.4 | ) | - | ||||||||
TIMET
distribution
|
- | - | 1.5 | |||||||||
Balance at end of year
|
$ | - | $ | (3.4 | ) | $ | (1.3 | ) | ||||
Total accumulated other comprehensive income
(loss):
|
||||||||||||
Balance at beginning of year
|
$ | (11.5 | ) | $ | (62.3 | ) | $ | (43.1 | ) | |||
Other
comprehensive income (loss)
|
(50.8 | ) | 35.1 | 85.4 | ||||||||
Adoption of SFAS No. 158
|
- | (15.9 | ) | 1.2 | ||||||||
TIMET
distribution
|
- | - | 8.0 | |||||||||
Balance at end of year
|
$ | (62.3 | ) | $ | (43.1 | ) | $ | 51.5 |
Preferred
stock
|
Common
stock
|
Additional
paid-in
capital
|
Retained
earnings
|
Accumulated
other
comprehensive
income (loss)
|
Treasury
stock
|
Total
stockholders'
equity
|
||||||||||||||||||||||
Balance
at December 31, 2004
|
$ | - | $ | 1.2 | $ | 111.0 | $ | 813.4 | $ | (11.5 | ) | $ | (37.9 | ) | $ | 876.2 | ||||||||||||
Net
income
|
- | - | - | 81.9 | - | - | 81.9 | |||||||||||||||||||||
Cash
dividends
|
- | - | - | (48.8 | ) | - | - | (48.8 | ) | |||||||||||||||||||
Other
comprehensive loss, net
|
- | - | - | - | (50.8 | ) | - | (50.8 | ) | |||||||||||||||||||
Treasury
stock:
|
- | |||||||||||||||||||||||||||
Acquired
|
- | - | - | - | - | (62.1 | ) | (62.1 | ) | |||||||||||||||||||
Retired
|
- | - | (3.2 | ) | (58.9 | ) | - | 62.1 | - | |||||||||||||||||||
Other,
net
|
- | - | 1.0 | - | - | - | 1.0 | |||||||||||||||||||||
Balance
at December 31, 2005
|
- | 1.2 | 108.8 | 787.6 | (62.3 | ) | (37.9 | ) | 797.4 | |||||||||||||||||||
Net
income
|
- | - | - | 141.7 | - | - | 141.7 | |||||||||||||||||||||
Cash
dividends
|
- | - | - | (48.0 | ) | - | - | (48.0 | ) | |||||||||||||||||||
Other
comprehensive income, net
|
- | - | - | - | 35.1 | - | 35.1 | |||||||||||||||||||||
Change
in accounting SFAS No.
158 – asset
and liability
recognition provisions
of SFAS
No. 158
|
- | - | - | - | (15.9 | ) | - | (15.9 | ) | |||||||||||||||||||
Treasury
stock:
|
||||||||||||||||||||||||||||
Acquired
|
- | - | - | - | - | (43.8 | ) | (43.8 | ) | |||||||||||||||||||
Retired
|
- | - | (1.7 | ) | (42.1 | ) | - | 43.8 | - | |||||||||||||||||||
Other,
net
|
- | - | .3 | - | - | - | .3 | |||||||||||||||||||||
Balance
at December 31, 2006
|
- | 1.2 | 107.4 | 839.2 | (43.1 | ) | (37.9 | ) | 866.8 | |||||||||||||||||||
Net
loss
|
- | - | - | (45.7 | ) | - | - | (45.7 | ) | |||||||||||||||||||
Cash
dividends
|
- | - | (34.2 | ) | (11.4 | ) | - | - | (45.6 | ) | ||||||||||||||||||
Dividend
of TIMET common stock
|
- | - | (55.0 | ) | (850.4 | ) | 8.0 | - | (897.4 | ) | ||||||||||||||||||
Change
in accounting:
|
||||||||||||||||||||||||||||
FIN
No. 48
|
- | - | - | (1.6 | ) | - | - | (1.6 | ) | |||||||||||||||||||
SFAS
No. 158 - measurement
date provisions
|
- | - | - | (2.2 | ) | 1.2 | - | (1.0 | ) | |||||||||||||||||||
Issuance
of preferred stock
|
667.3 | - | - | - | - | - | 667.3 | |||||||||||||||||||||
Other
comprehensive income, net
|
- | - | - | - | 85.4 | - | 85.4 | |||||||||||||||||||||
Treasury
stock:
|
||||||||||||||||||||||||||||
Acquired
|
- | - | - | - | - | (11.1 | ) | (11.1 | ) | |||||||||||||||||||
Retired
|
- | - | (9.2 | ) | (1.9 | ) | - | 11.1 | - | |||||||||||||||||||
Other,
net
|
- | - | 1.4 | (.1 | ) | - | - | 1.3 | ||||||||||||||||||||
Balance
at December 31, 2007
|
$ | 667.3 | $ | 1.2 | $ | 10.4 | $ | (74.1 | ) | $ | 51.5 | $ | (37.9 | ) | $ | 618.4 |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | 81.9 | $ | 141.7 | $ | (45.7 | ) | |||||
Depreciation
and amortization
|
74.5 | 72.5 | 66.3 | |||||||||
Securities
transactions, net
|
(20.3 | ) | (.7 | ) | .1 | |||||||
Write-off
of accrued interest receivable
|
21.6 | - | - | |||||||||
Loss
on prepayment of debt
|
- | 22.3 | - | |||||||||
Call
premium paid on redemption of Senior
Secured Notes
|
- | (20.9 | ) | - | ||||||||
Loss
(gain) on disposal of property and equipment
|
1.6 | (35.3 | ) | 1.3 | ||||||||
Noncash
interest expense
|
3.0 | 2.0 | 1.6 | |||||||||
Benefit
plan expense greater (less) than cash
funding requirements:
|
||||||||||||
Defined
benefit pension expense
|
(6.4 | ) | (5.3 | ) | (4.6 | ) | ||||||
Other
postretirement benefit expense
|
(3.0 | ) | (1.5 | ) | .9 | |||||||
Deferred
income taxes:
|
||||||||||||
Continuing
operations
|
42.7 | 37.3 | 86.4 | |||||||||
Discontinued
operations
|
(.7 | ) | - | - | ||||||||
Minority
interest:
|
||||||||||||
Continuing
operations
|
11.6 | 12.0 | (3.5 | ) | ||||||||
Discontinued
operations
|
(.2 | ) | - | - | ||||||||
Equity
in:
|
||||||||||||
TIMET
|
(64.9 | ) | (101.2 | ) | (26.9 | ) | ||||||
Other
|
(3.6 | ) | (3.8 | ) | (1.7 | ) | ||||||
Net
distributions from (contributions to):
|
||||||||||||
TiO2
manufacturing joint venture
|
4.9 | 2.3 | (4.9 | ) | ||||||||
Other
|
1.0 | 2.3 | 1.0 | |||||||||
Other,
net
|
.3 | 1.0 | 1.9 | |||||||||
Change
in assets and liabilities:
|
||||||||||||
Accounts
and other receivables, net
|
(4.1 | ) | 8.2 | 9.1 | ||||||||
Inventories,
net
|
(48.9 | ) | (3.8 | ) | 3.9 | |||||||
Accounts
payable and accrued liabilities
|
.7 | (6.8 | ) | (4.8 | ) | |||||||
Income
taxes
|
16.1 | (21.1 | ) | (9.6 | ) | |||||||
Accounts
with affiliates
|
3.8 | 1.4 | (2.0 | ) | ||||||||
Other
noncurrent assets
|
(4.6 | ) | 6.0 | (2.7 | ) | |||||||
Other
noncurrent liabilities
|
(2.3 | ) | (13.8 | ) | (4.3 | ) | ||||||
Other,
net
|
(.4 | ) | (8.5 | ) | 1.7 | |||||||
Net
cash provided by operating activities
|
$ | 104.3 | $ | 86.3 | $ | 63.5 | ||||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Cash
flows from investing activities:
|
||||||||||||
Capital
expenditures
|
$ | (62.8 | ) | $ | (63.8 | ) | $ | (63.8 | ) | |||
Purchases
of:
|
||||||||||||
Kronos
common stock
|
(7.0 | ) | (25.4 | ) | - | |||||||
TIMET
common stock
|
(18.0 | ) | (18.7 | ) | (.7 | ) | ||||||
CompX
common stock
|
(3.6 | ) | (2.3 | ) | (3.3 | ) | ||||||
NL
common stock
|
- | (.4 | ) | - | ||||||||
Business
units
|
(7.3 | ) | (9.8 | ) | - | |||||||
Marketable
securities
|
(29.4 | ) | (43.4 | ) | (23.3 | ) | ||||||
Capitalized
permit costs
|
(4.1 | ) | (8.3 | ) | (7.1 | ) | ||||||
Proceeds
from disposal of:
|
||||||||||||
Marketable
securities
|
19.7 | 42.9 | 28.5 | |||||||||
Property
and equipment
|
.6 | 39.4 | .6 | |||||||||
Business
unit
|
18.1 | - | - | |||||||||
Kronos
common stock
|
19.2 | - | - | |||||||||
Interest
in Norwegian smelting operation
|
3.5 | - | - | |||||||||
Change
in restricted cash equivalents, net
|
(1.8 | ) | (2.9 | ) | 2.4 | |||||||
Collection
of loan to Snake River Sugar Company
|
80.0 | - | - | |||||||||
Cash
of disposed business unit
|
(4.0 | ) | - | - | ||||||||
Loans
to affiliates:
|
||||||||||||
Loans
|
(11.0 | ) | - | - | ||||||||
Collections
|
25.9 | - | - | |||||||||
Other,
net
|
2.4 | 3.2 | 1.3 | |||||||||
Net
cash provided by (used in) investing activities
|
20.4 | (89.5 | ) | (65.4 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Indebtedness:
|
||||||||||||
Borrowings
|
57.0 | 772.7 | 331.1 | |||||||||
Principal
payments
|
(54.2 | ) | (751.6 | ) | (324.4 | ) | ||||||
Deferred
financing costs paid
|
(.1 | ) | (9.0 | ) | - | |||||||
Valhi
cash dividends paid
|
(48.8 | ) | (48.0 | ) | (45.6 | ) | ||||||
Distributions
to minority interest
|
(12.0 | ) | (8.9 | ) | (8.5 | ) | ||||||
Treasury
stock acquired
|
(62.1 | ) | (43.8 | ) | (11.1 | ) | ||||||
NL
common stock issued
|
2.5 | .1 | - | |||||||||
Issuance
of Valhi common stock and other, net
|
1.9 | .9 | 2.4 | |||||||||
Net
cash used in financing activities
|
(115.8 | ) | (87.6 | ) | (56.1 | ) | ||||||
Net
increase (decrease)
|
$ | 8.9 | $ | (90.8 | ) | $ | (58.0 | ) |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Cash
and cash equivalents - net change from:
|
||||||||||||
Operating,
investing and financing
activities
|
$ | 8.9 | $ | (90.8 | ) | $ | (58.0 | ) | ||||
Currency
translation
|
(1.7 | ) | 5.0 | 7.1 | ||||||||
Net
change for the year
|
7.2 | (85.8 | ) | (50.9 | ) | |||||||
Balance
at beginning of year
|
267.8 | 275.0 | 189.2 | |||||||||
Balance
at end of year
|
$ | 275.0 | $ | 189.2 | $ | 138.3 | ||||||
Supplemental
disclosures:
Cash
paid for:
|
||||||||||||
Interest,
net of amounts capitalized
|
$ | 65.0 | $ | 57.9 | $ | 62.5 | ||||||
Income
taxes, net
|
54.1 | 42.9 | 32.3 | |||||||||
Noncash
investing activities:
Note
receivable received upon
disposal
of business unit
|
4.2 | - | - | |||||||||
Inventories
received as partial
consideration
for disposal of
interest
in Norwegian smelting
operation
|
1.9 | - | - | |||||||||
Accruals
for capital expenditures
|
- | - | 9.7 | |||||||||
Noncash
financing activities:
|
||||||||||||
Dividend
of TIMET common stock
|
- | - | 897.4 | |||||||||
Issuance
of preferred stock in settlement of tax obligation
|
- | - | 667.3 | |||||||||
Issuance
of note payable to TIMET
for
acquisition of minority interest
|
- | - | 52.6 |
Asset
|
Useful lives
|
|
Patents
|
15 years
|
|
Customer lists
|
7 to 8
years
|
Asset
|
Useful lives
|
|
Buildings and
improvements
|
10 to 40
years
|
|
Machinery and
equipment
|
3 to 20
years
|
Business
segment
|
Entity
|
%
owned at
December 31, 2007
|
||
Chemicals
|
Kronos
|
95%
|
||
Component
products
|
CompX
|
86%
|
||
Waste
management
|
WCS
|
100%
|
|
·
|
Chemicals – Our
Chemicals Segment is operated through our majority ownership of
Kronos. Kronos is a leading global producer and marketer of
value-added titanium dioxide pigments (“TiO2”). TiO2 is
used for a variety of manufacturing applications, including plastics,
paints, paper and other industrial products. Kronos has production
facilities located throughout North America and Europe. Kronos
also owns a one-half interest in a TiO2
production facility located in Louisiana. See Note
7.
|
|
·
|
Component Products – We
operate in the component products industry through our majority ownership
of CompX. CompX is a leading manufacturer of security products,
precision ball bearing slides and ergonomic computer support systems used
in the office furniture, transportation, tool storage and a variety of
other industries. CompX is also a leading manufacturer of
stainless steel exhaust systems, gauges and throttle controls for the
performance marine industry.
|
|
·
|
Waste Management – WCS
is our wholly-owned subsidiary that owns and operates a West Texas
facility for the processing, treatment, storage and disposal of hazardous,
toxic and certain types of low level radioactive waste. WCS is
in the process of obtaining regulatory authorization to expand its
low-level and mixed low-level radioactive waste handling
capabilities.
|
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
sales:
|
||||||||||||
Chemicals
|
$ | 1,196.7 | $ | 1,279.5 | $ | 1,310.3 | ||||||
Component
products
|
186.3 | 190.1 | 177.7 | |||||||||
Waste
management
|
9.8 | 11.8 | 4.2 | |||||||||
Total
net sales
|
$ | 1,392.8 | $ | 1,481.4 | $ | 1,492.2 | ||||||
Cost
of goods sold:
|
||||||||||||
Chemicals
|
$ | 884.1 | $ | 980.8 | $ | 1,062.2 | ||||||
Component
products
|
142.6 | 143.6 | 132.4 | |||||||||
Waste
management
|
15.4 | 15.0 | 11.7 | |||||||||
Total
cost of goods sold
|
$ | 1,042.1 | $ | 1,139.4 | $ | 1,206.3 | ||||||
Gross
margin:
|
||||||||||||
Chemicals
|
$ | 312.6 | $ | 298.7 | $ | 248.1 | ||||||
Component
products
|
43.7 | 46.5 | 45.3 | |||||||||
Waste
management
|
(5.6 | ) | (3.2 | ) | (7.5 | ) | ||||||
Total
gross margin
|
$ | 350.7 | $ | 342.0 | $ | 285.9 | ||||||
Operating
income (loss):
|
||||||||||||
Chemicals
|
$ | 165.6 | $ | 138.1 | $ | 88.6 | ||||||
Component
products
|
19.3 | 20.6 | 16.0 | |||||||||
Waste
management
|
(12.1 | ) | (9.5 | ) | (14.1 | ) | ||||||
Total
operating income
|
172.8 | 149.2 | 90.5 | |||||||||
Equity
in:
|
||||||||||||
TIMET
|
64.9 | 101.1 | 26.9 | |||||||||
Other
|
3.6 | 3.8 | 1.7 | |||||||||
General
corporate items:
|
||||||||||||
Interest
and dividend income
|
57.8 | 41.6 | 30.9 | |||||||||
Securities
transaction gains, net
|
20.2 | .7 | (.1 | ) | ||||||||
Write-off
of accrued interest
|
(21.6 | ) | - | - | ||||||||
Gain
on disposal of fixed assets
|
- | 36.4 | - | |||||||||
Insurance
recoveries
|
3.0 | 7.6 | 6.1 | |||||||||
General
expenses, net
|
(33.2 | ) | (33.0 | ) | (37.6 | ) | ||||||
Loss
on prepayment of debt
|
- | (22.3 | ) | - | ||||||||
Interest
expense
|
(69.2 | ) | (67.6 | ) | (64.4 | ) | ||||||
Income
before income taxes
|
$ | 198.3 | $ | 217.5 | $ | 54.0 |
Years ended December
31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Depreciation
and amortization:
|
||||||||||||
Chemicals
|
$ | 60.1 | $ | 57.4 | $ | 52.5 | ||||||
Component
products
|
10.9 | 11.8 | 11.0 | |||||||||
Waste
management
|
2.8 | 2.7 | 2.3 | |||||||||
Corporate
|
.7 | .6 | .5 | |||||||||
Total
|
$ | 74.5 | $ | 72.5 | $ | 66.3 | ||||||
Capital
expenditures:
|
||||||||||||
Chemicals
|
$ | 43.4 | $ | 50.9 | $ | 47.4 | ||||||
Component
products
|
10.5 | 12.1 | 13.8 | |||||||||
Waste
management
|
7.0 | .5 | 2.4 | |||||||||
Corporate
|
1.9 | .3 | .2 | |||||||||
Total
|
$ | 62.8 | $ | 63.8 | $ | 63.8 | ||||||
December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Total
assets:
|
||||||||||||
Operating
segments:
|
||||||||||||
Chemicals
|
$ | 1,694.1 | $ | 1,826.8 | $ | 1,862.6 | ||||||
Component
products
|
155.2 | 169.2 | 185.4 | |||||||||
Waste
management
|
49.6 | 53.4 | 59.7 | |||||||||
Investments
accounted for by the
equity
method:
|
||||||||||||
TIMET
common stock
|
138.7 | 264.1 | - | |||||||||
Other
joint ventures
|
16.5 | 18.8 | 19.4 | |||||||||
Corporate
and eliminations
|
524.3 | 472.4 | 475.9 | |||||||||
Total
|
$ | 2,578.4 | $ | 2,804.7 | $ | 2,603.0 | ||||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
sales - point of origin:
|
||||||||||||
United
States
|
$ | 618.8 | $ | 667.1 | $ | 638.4 | ||||||
Germany
|
613.1 | 672.0 | 700.6 | |||||||||
Canada
|
266.0 | 265.2 | 260.7 | |||||||||
Belgium
|
186.9 | 192.9 | 209.8 | |||||||||
Norway
|
160.5 | 173.5 | 184.3 | |||||||||
Taiwan
|
14.2 | 15.9 | 11.7 | |||||||||
Eliminations
|
(466.7 | ) | (505.2 | ) | (513.3 | ) | ||||||
Total
|
$ | 1,392.8 | $ | 1,481.4 | $ | 1,492.2 | ||||||
Net
sales - point of destination:
|
||||||||||||
North
America
|
$ | 589.2 | $ | 609.9 | $ | 545.8 | ||||||
Europe
|
693.6 | 732.9 | 811.8 | |||||||||
Asia
and other
|
110.0 | 138.6 | 134.6 | |||||||||
Total
|
$ | 1,392.8 | $ | 1,481.4 | $ | 1,492.2 | ||||||
December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
property and equipment:
|
||||||||||||
United
States
|
$ | 75.2 | $ | 78.2 | $ | 82.3 | ||||||
Germany
|
278.9 | 301.4 | 332.1 | |||||||||
Canada
|
87.9 | 80.6 | 89.6 | |||||||||
Norway
|
64.4 | 76.2 | 95.8 | |||||||||
Belgium
|
61.7 | 67.2 | 74.1 | |||||||||
Taiwan
|
8.3 | 7.7 | 7.4 | |||||||||
Total
|
$ | 576.4 | $ | 611.3 | $ | 681.3 | ||||||
Amount
|
||||
(In
millions)
|
||||
Investment
in TIMET
|
$ | 276.7 | ||
Deferred
income taxes previously recognized:
|
||||
Investment
in TIMET
|
(56.9 | ) | ||
NOL
and AMT carryforwards
|
21.4 | |||
Income
taxes generated from the special dividend:
|
||||
Valhi
level, net of amount included in other comprehensive
income
|
646.9 | |||
NL
level
|
9.3 | |||
Total
|
$ | 897.4 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Current
assets (available-for-sale):
|
||||||||
Restricted
debt securities
|
$ | 10.0 | $ | 5.9 | ||||
Other
debt securities
|
2.6 | 1.3 | ||||||
Total
|
$ | 12.6 | $ | 7.2 | ||||
Noncurrent
assets (available-for-sale):
|
||||||||
The
Amalgamated Sugar Company LLC
|
$ | 250.0 | $ | 250.0 | ||||
TIMET
|
- | 60.2 | ||||||
Restricted
debt securities
|
2.8 | 3.2 | ||||||
Other
debt securities and common stocks
|
6.2 | 6.4 | ||||||
Total
|
$ | 259.0 | $ | 319.8 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Accounts
receivable
|
$ | 228.0 | $ | 239.2 | ||||
Notes
receivable
|
3.2 | 4.5 | ||||||
Accrued
interest and dividends receivable
|
.1 | .1 | ||||||
Allowance
for doubtful accounts
|
(3.0 | ) | (2.4 | ) | ||||
Total
|
$ | 228.3 | $ | 241.4 |
December
31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Raw
materials:
|
||||||||
Chemicals
|
$ | 46.1 | $ | 66.2 | ||||
Component
products
|
5.8 | 6.3 | ||||||
Total
raw materials
|
51.9 | 72.5 | ||||||
Work
in process:
|
||||||||
Chemicals
|
25.7 | 19.9 | ||||||
Component
products
|
8.7 | 9.8 | ||||||
Total
in-process products
|
34.4 | 29.7 | ||||||
Finished
products:
|
||||||||
Chemicals
|
168.4 | 171.6 | ||||||
Component
products
|
7.1 | 8.2 | ||||||
Total
finished products
|
175.5 | 179.8 | ||||||
Supplies
(primarily chemicals)
|
47.2 | 55.9 | ||||||
Total
|
$ | 309.0 | $ | 337.9 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Investment
in affiliates:
|
||||||||
TIMET:
|
||||||||
Common stock
|
$ | 264.1 | $ | - | ||||
Preferred stock
|
.2 | - | ||||||
Total investment in TIMET
|
264.3 | - | ||||||
Ti02 manufacturing joint venture
|
113.6 | 118.5 | ||||||
Basic Management and Landwell
|
18.8 | 19.4 | ||||||
Total
|
$ | 396.7 | $ | 137.9 | ||||
Other assets:
|
||||||||
Waste disposal site operating permits, net
|
$ | 22.8 | $ | 29.8 | ||||
Deferred financing costs
|
9.2 | 8.2 | ||||||
IBNR receivables
|
6.6 | 7.8 | ||||||
Loans and other receivables
|
3.2 | 1.8 | ||||||
Restricted cash equivalents
|
.4 | .1 | ||||||
Other
|
22.5 | 19.6 | ||||||
Total
|
$ | 64.7 | $ | 67.3 |
December
31,
2006
|
||||
(In
millions)
|
||||
Current assets
|
$ | 757.6 | ||
Property and equipment
|
329.8 | |||
Marketable securities
|
56.8 | |||
Other noncurrent assets
|
72.7 | |||
Total assets
|
$ | 1,216.9 | ||
Current liabilities
|
$ | 211.1 | ||
Accrued pension and postretirement benefits
|
80.2 | |||
Other noncurrent liabilities
|
25.4 | |||
Minority interest
|
21.3 | |||
Stockholders’ equity
|
878.9 | |||
Total liabilities, minority interest and
stockholders’ equity
|
$ | 1,216.9 |
Years ended December 31,
|
||||||||
2005
|
2006
|
|||||||
(In
millions)
|
||||||||
Net
sales
|
$ | 749.8 | $ | 1,183.2 | ||||
Cost
of sales
|
550.4 | 747.1 | ||||||
Operating
income
|
171.1 | 382.8 | ||||||
Net
income attributable to common stockholders
|
143.7 | 274.5 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Current assets
|
$ | 56.2 | $ | 68.3 | ||||
Property and equipment
|
192.6 | 195.2 | ||||||
Total assets
|
$ | 248.8 | $ | 263.5 | ||||
Liabilities, primarily current
|
$ | 18.8 | $ | 23.8 | ||||
Partners’ equity
|
230.0 | 239.7 | ||||||
Total liabilities and partners’ equity
|
$ | 248.8 | $ | 263.5 |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
sales:
|
||||||||||||
Kronos
|
$ | 109.4 | $ | 124.1 | $ | 124.6 | ||||||
Tioxide
|
110.4 | 125.2 | 125.0 | |||||||||
Cost
of sales
|
219.6 | 249.3 | 249.6 | |||||||||
Net
income
|
- | - | - |
September 30,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Current assets
|
$ | 45.7 | $ | 39.6 | ||||
Property and equipment
|
11.7 | 11.1 | ||||||
Prepaid costs and other
|
5.0 | 4.7 | ||||||
Land and development costs
|
15.6 | 15.4 | ||||||
Notes and other receivables
|
2.8 | 1.6 | ||||||
Investment in undeveloped land and water rights
|
41.4 | 45.7 | ||||||
Total assets
|
$ | 122.2 | $ | 118.1 | ||||
Current liabilities
|
$ | 17.6 | $ | 15.2 | ||||
Long-term debt
|
20.3 | 18.2 | ||||||
Deferred income taxes
|
6.1 | 6.5 | ||||||
Other noncurrent liabilities
|
1.3 | 1.3 | ||||||
Equity
|
76.9 | 76.9 | ||||||
Total liabilities and equity
|
$ | 122.2 | $ | 118.1 |
Twelve months ended September
30,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Total
revenues
|
$ | 30.4 | $ | 31.4 | $ | 23.5 | ||||||
Income
before income taxes
|
14.9 | 16.6 | 10.2 | |||||||||
Net
income
|
12.8 | 13.5 | 9.0 |
Operating segment
|
||||||||||||
Chemicals
|
Component
Products
|
Total
|
||||||||||
(In
millions)
|
||||||||||||
Balance
at December 31, 2004
|
$ | 339.7 | $ | 14.4 | $ | 354.1 | ||||||
Goodwill
acquired
|
1.3 | 8.0 | 9.3 | |||||||||
Assets
sold
|
- | (1.4 | ) | (1.4 | ) | |||||||
Changes
in foreign exchange rates
|
- | (.2 | ) | (.2 | ) | |||||||
Balance
at December 31, 2005
|
341.0 | 20.8 | 361.8 | |||||||||
Goodwill
acquired during the year
|
17.6 | 5.6 | 23.2 | |||||||||
Changes
in foreign exchange rates
|
- | .2 | .2 | |||||||||
Balance
at December 31, 2006
|
358.6 | 26.6 | 385.2 | |||||||||
Goodwill
acquired during the year
|
(.1 | ) | 21.7 | 21.6 | ||||||||
Balance
at December 31, 2007
|
$ | 358.5 | $ | 48.3 | $ | 406.8 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Definite-lived
customer list intangible asset
|
$ | 1.3 | $ | .6 | ||||
Patents
and other intangible assets
|
2.6 | 2.1 | ||||||
Total
|
$ | 3.9 | $ | 2.7 |
2008
|
$.7 million
|
|
2009
|
.6
million
|
|
2010
|
.6
million
|
|
2011
|
.6
million
|
|
2012
|
.3
million
|
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Valhi
– Snake River Sugar Company
|
$ | 250.0 | $ | 250.0 | ||||
Subsidiary
debt:
|
||||||||
Kronos International 6.5% Senior Secured Notes
|
525.0 | 585.5 | ||||||
CompX
promissory note payable to TIMET
|
- | 50.0 | ||||||
Kronos U.S. bank credit facility
|
6.4 | 15.4 | ||||||
Other
|
5.1 | 5.7 | ||||||
Total subsidiary debt
|
536.5 | 656.6 | ||||||
Total debt
|
786.5 | 906.6 | ||||||
Less current maturities
|
1.2 | 16.8 | ||||||
Total long-term debt
|
$ | 785.3 | $ | 889.8 |
Years ending December 31,
|
Amount
|
|||
(In
millions)
|
||||
2008
|
$ | 16.8 | ||
2009
|
2.1 | |||
2010
|
2.2 | |||
2011
|
2.1 | |||
2012
|
2.2 | |||
2013
and thereafter
|
881.2 | |||
Total
|
$ | 906.6 | ||
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Current:
|
||||||||
Employee
benefits
|
$ | 37.4 | $ | 37.6 | ||||
Environmental
costs
|
13.6 | 15.4 | ||||||
Accrued
sales discounts and rebates
|
8.5 | 15.3 | ||||||
Reserve
for uncertain tax positions
|
- | .3 | ||||||
Deferred
income
|
4.9 | 4.0 | ||||||
Interest
|
7.6 | 8.3 | ||||||
Other
|
47.7 | 52.3 | ||||||
Total
|
$ | 119.7 | $ | 133.2 | ||||
Noncurrent:
|
||||||||
Reserve
for uncertain tax positions
|
$ | - | $ | 59.4 | ||||
Insurance
claims and expenses
|
13.9 | 15.2 | ||||||
Employee
benefits
|
7.2 | 8.4 | ||||||
Deferred
income
|
.5 | 1.1 | ||||||
Other
|
6.5 | 5.8 | ||||||
Total
|
$ | 28.1 | $ | 89.9 |
2008
|
$ 28.0
million
|
|
2009
|
26.9
million
|
|
2010
|
25.5
million
|
|
2011
|
26.6
million
|
|
2012
|
29.1
million
|
|
Next 5 years
|
148.6
million
|
Years ended December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Change
in projected benefit obligations ("PBO"):
|
||||||||
Balance
at beginning of the year
|
$ | 520.5 | $ | 547.9 | ||||
Service cost
|
7.8 | 7.9 | ||||||
Interest cost
|
23.8 | 26.8 | ||||||
Participants’ contributions
|
1.5 | 2.1 | ||||||
Actuarial gains
|
(19.8 | ) | (75.1 | ) | ||||
Change
in measurement date
|
- | 7.9 | ||||||
Plan
amendments
|
- | 4.4 | ||||||
Change in foreign currency exchange rates
|
40.3 | 53.0 | ||||||
Benefits paid
|
(26.2 | ) | (36.8 | ) | ||||
Balance
at end of the year
|
$ | 547.9 | $ | 538.1 | ||||
Change in plan assets:
|
||||||||
Fair value
at beginning of the year
|
$ | 338.1 | $ | 399.0 | ||||
Actual return on plan assets
|
36.7 | 18.3 | ||||||
Employer contributions
|
28.1 | 28.0 | ||||||
Participants’ contributions
|
1.5 | 2.1 | ||||||
Change
in measurement date
|
- | (.6 | ) | |||||
Change in foreign currency exchange rates
|
20.8 | 35.4 | ||||||
Benefits paid
|
(26.2 | ) | (36.8 | ) | ||||
Fair value at end of year
|
$ | 399.0 | $ | 445.4 | ||||
Funded
status
|
$ | (148.9 | ) | $ | (92.7 | ) | ||
Amounts recognized in the Consolidated
Balance Sheets:
|
||||||||
Pension asset
|
$ | 40.1 | $ | 47.6 | ||||
Accrued pension costs:
|
||||||||
Current
|
(.3 | ) | (.3 | ) | ||||
Noncurrent
|
(188.7 | ) | (140.0 | ) | ||||
Total
|
(148.9 | ) | (92.7 | ) | ||||
Accumulated other comprehensive loss:
|
||||||||
Actuarial losses
|
169.6 | 94.9 | ||||||
Prior service cost
|
7.4 | 6.6 | ||||||
Net transition obligations
|
4.3 | 3.7 | ||||||
Total
|
181.3 | 105.2 | ||||||
Total
|
$ | 32.4 | $ | 12.5 | ||||
Accumulated
benefit obligations (“ABO”)
|
$ | 488.0 | $ | 466.9 |
Year
ended
|
||||
December 31, 2007
|
||||
(In
millions)
|
||||
Changes
in plan assets and benefit obligations recognized
in other comprehensive income:
|
||||
Net
actuarial gain arising during the year
|
$ | 69.6 | ||
Plan
amendment
|
(4.4 | ) | ||
Change
in measurement date:
|
||||
Prior
service cost
|
.2 | |||
Transaction
obligation
|
.1 | |||
Actuarial
losses
|
2.5 | |||
Amortization
of unrecognized:
|
||||
Prior service cost
|
.7 | |||
Net transition obligations
|
.5 | |||
Net
actuarial losses
|
8.2 | |||
Total
|
$ | 77.4 | ||
Years ended December
31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
periodic pension cost:
|
||||||||||||
Service cost
|
$ | 7.4 | $ | 7.8 | $ | 7.9 | ||||||
Interest cost
|
22.6 | 23.8 | 26.8 | |||||||||
Expected return on plan assets
|
(22.2 | ) | (25.7 | ) | (28.5 | ) | ||||||
Amortization
of unrecognized:
|
||||||||||||
Prior service cost
|
.6 | .6 | .7 | |||||||||
Net transition obligations
|
.3 | .4 | .5 | |||||||||
Net
actuarial losses
|
4.4 | 9.1 | 8.2 | |||||||||
Total
|
$ | 13.1 | $ | 16.0 | $ | 15.6 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Projected
benefit obligations:
|
||||||||
U.S.
plans
|
$ | 92.4 | $ | 87.4 | ||||
Foreign
plans
|
455.5 | 450.7 | ||||||
Total
|
$ | 547.9 | $ | 538.1 | ||||
Fair
value of plan assets:
|
||||||||
U.S.
plans
|
$ | 130.3 | $ | 133.1 | ||||
Foreign
plans
|
268.7 | 312.3 | ||||||
Total
|
$ | 399.0 | $ | 445.4 | ||||
Plans
for which the accumulated benefit obligation exceeds
plan assets:
|
||||||||
Projected
benefit obligations
|
$ | 428.0 | $ | 287.4 | ||||
Accumulated
benefit obligations
|
372.7 | 240.6 | ||||||
Fair
value of plan assets
|
236.4 | 164.4 | ||||||
December 31,
|
||||||||
Rate
|
2006
|
2007
|
||||||
Discount
rate
|
4.8 | % | 5.6 | % | ||||
Increase
in future compensation levels
|
2.5 | % | 2.5 | % |
Years ended December 31,
|
||||||||||||
Rate
|
2005
|
2006
|
2007
|
|||||||||
Discount
rate
|
5.3 | % | 4.5 | % | 4.9 | % | ||||||
Increase
in future compensation levels
|
2.3 | % | 2.3 | % | 2.5 | % | ||||||
Long-term
return on plan assets
|
7.2 | % | 7.3 | % | 7.3 | % |
|
·
|
Germany
- the composition of our plan assets is established to satisfy the
requirements of the German insurance
commissioner.
|
|
·
|
Canada
- we currently have a plan asset target allocation of 60% to equity
securities and 40% to fixed income securities. We expect the
long term rate of return for such investments to average approximately 125
basis points above the applicable equity or fixed income
index.
|
|
·
|
Norway
- we currently have a plan asset target allocation of 14% to equity
securities and 64% to fixed income securities and the remainder to liquid
investments such as money markets. The expected long-term rate
of return for such investments is approximately 8.5%, 5.0% and 4.5%,
respectively.
|
December 31, 2006
|
||||||||||||||||
CMRT
|
Germany
|
Canada
|
Norway
|
|||||||||||||
Equity
securities and limited partnerships
|
97 | % | 23 | % | 66 | % | 13 | % | ||||||||
Fixed
income securities
|
2 | 48 | 32 | 64 | ||||||||||||
Real
estate
|
1 | 14 | - | - | ||||||||||||
Cash,
cash equivalents and other
|
- | 15 | 2 | 23 | ||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % |
December 31, 2007
|
||||||||||||||||
CMRT
|
Germany
|
Canada
|
Norway
|
|||||||||||||
Equity
securities and limited partnerships
|
98 | % | 28 | % | 60 | % | 18 | % | ||||||||
Fixed
income securities
|
- | 49 | 34 | 68 | ||||||||||||
Real
estate
|
2 | 12 | - | - | ||||||||||||
Cash,
cash equivalents and other
|
- | 11 | 6 | 14 | ||||||||||||
Total
|
100 | % | 100 | % | 100 | % | 100 | % |
2008
|
$ 3.5
million
|
|
2009
|
3.4
million
|
|
2010
|
3.3
million
|
|
2011
|
3.3
million
|
|
2012
|
3.1
million
|
|
Next 5 years
|
13.3
million
|
Years ended December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Actuarial
present value of accumulated OPEB obligations:
|
||||||||
Balance
at beginning of the year
|
$ | 36.0 | $ | 37.4 | ||||
Service cost
|
.3 | .3 | ||||||
Interest cost
|
2.1 | 2.2 | ||||||
Actuarial losses (gains)
|
3.4 | (.7 | ) | |||||
Plan
amendments
|
- | (.5 | ) | |||||
Change in foreign currency exchange rates
|
- | 1.3 | ||||||
Benefits paid from
employer contributions
|
(4.4 | ) | (2.9 | ) | ||||
Balance at end of the year
|
$ | 37.4 | $ | 37.1 | ||||
Fair
value of plan assets
|
$ | - | $ | - | ||||
Funded
status
|
$ | (37.4 | ) | $ | (37.1 | ) | ||
Accrued OPEB costs recognized in the Consolidated Balance Sheets:
|
||||||||
Current
|
$ | (3.8 | ) | $ | (3.5 | ) | ||
Noncurrent
|
(33.6 | ) | (33.6 | ) | ||||
Total
|
(37.4 | ) | (37.1 | ) | ||||
Accumulated
other comprehensive income (loss):
|
||||||||
Net actuarial losses
|
4.7 | 3.4 | ||||||
Prior service credit
|
(1.6 | ) | (1.8 | ) | ||||
Total
|
3.1 | 1.6 | ||||||
Total
|
$ | (34.3 | ) | $ | (35.5 | ) |
Year
ended
|
||||
December 31, 2007
|
||||
(In
millions)
|
||||
Changes
in benefit obligations recognized in other
comprehensive income (loss):
|
||||
Net
actuarial loss (gain) arising during the year
|
$ | .8 | ||
Plan
amendments
|
.5 | |||
Amortization
of unrecognized:
|
||||
Prior service cost
|
(.3 | ) | ||
Net
actuarial losses
|
.2 | |||
Total
|
$ | 1.2 | ||
Years ended December
31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Net
periodic OPEB cost (credit):
|
||||||||||||
Service cost
|
$ | .2 | $ | .3 | $ | .3 | ||||||
Interest cost
|
2.0 | 2.1 | 2.2 | |||||||||
Amortization
of unrecognized:
|
||||||||||||
Prior service credit
|
(.9 | ) | (.2 | ) | (.3 | ) | ||||||
Actuarial losses (gains)
|
(.1 | ) | .1 | .2 | ||||||||
Total
|
$ | 1.2 | $ | 2.3 | $ | 2.4 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
Healthcare
inflation:
|
||||||||
Initial
rate
|
7% - 7.5 | % | 5.8% - 8.5 | % | ||||
Ultimate
rate
|
4% – 5.5 | % | 4.0% - 5.5 | % | ||||
Year
of ultimate rate achievement
|
2009 - 2010 | 2010 - 2014 | ||||||
Discount
rate
|
5.8 | % | 6.1 | % |
1% Increase
|
1% Decrease
|
|||||||
(In
millions)
|
||||||||
Effect
on net OPEB cost during 2007
|
$ | .3 | $ | (.3 | ) | |||
Effect
at December 31, 2007 on postretirement
obligation
|
3.5 | (2.4 | ) |
Years ended December
31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Pre-tax
income:
|
||||||||||||
United States
|
$ | 80.1 | $ | 151.4 | $ | 3.0 | ||||||
Non-U.S. subsidiaries
|
118.2 | 66.1 | 51.0 | |||||||||
Total
|
$ | 198.3 | $ | 217.5 | $ | 54.0 | ||||||
Expected tax expense, at U.S. federal statutory income tax rate of 35%
|
$ | 69.4 | $ | 76.1 | $ | 18.9 | ||||||
Non-U.S. tax rates
|
(.1 | ) | (2.1 | ) | .1 | |||||||
Incremental U.S. tax and rate differences on equity in earnings
|
23.6 | 18.4 | (14.1 | ) | ||||||||
Excess of book basis over tax basis of shares of Kronos common stock sold
|
1.9 | - | - | |||||||||
Change
in German income tax attributes
|
17.5 | (21.7 | ) | 8.7 | ||||||||
Income tax related
to distribution of shares of Kronos
|
.7 | - | - | |||||||||
Assessment (refund) of prior year income taxes, net
|
2.3 | (1.4 | ) | (.8 | ) | |||||||
U.S. state income taxes, net
|
4.3 | 2.9 | 1.5 | |||||||||
Tax contingency reserve adjustment, net
|
(19.1 | ) | (10.4 | ) | (3.8 | ) | ||||||
Nondeductible expenses
|
5.2 | 4.9 | 3.6 | |||||||||
German
tax rate change
|
- | - | 87.4 | |||||||||
Canadian
tax rate change
|
- | (1.3 | ) | .4 | ||||||||
Other, net
|
(1.1 | ) | (1.6 | ) | 1.3 | |||||||
Provision for income taxes
|
$ | 104.6 | $ | 63.8 | $ | 103.2 | ||||||
Components of income tax expense (benefit):
|
||||||||||||
Currently payable
(refundable):
|
||||||||||||
U.S. federal and state
|
$ | 25.9 | $ | 2.1 | $ | (1.9 | ) | |||||
Non-U.S.
|
35.9 | 24.4 | 14.4 | |||||||||
Total
|
61.8 | 26.5 | 12.5 | |||||||||
Deferred income taxes (benefit):
|
||||||||||||
U.S. federal and state
|
20.8 | 71.3 | (11.3 | ) | ||||||||
Non-U.S.
|
22.0 | (34.0 | ) | 102.0 | ||||||||
Total
|
42.8 | 37.3 | 90.7 | |||||||||
Provision for income taxes
|
$ | 104.6 | $ | 63.8 | $ | 103.2 | ||||||
Comprehensive provision for income taxes (benefit) allocable to:
|
||||||||||||
Income from continuing operations
|
$ | 104.6 | $ | 63.8 | $ | 103.2 | ||||||
Discontinued operations
|
(.4 | ) | - | - | ||||||||
Dividend
of TIMET common stock
|
.2 | - | 668.3 | (1) | ||||||||
Other comprehensive income:
|
||||||||||||
Marketable securities
|
- | 3.3 | 11.3 | |||||||||
Currency translation
|
(8.6 | ) | 9.6 | 8.7 | ||||||||
Pension
plans
|
(38.7 | ) | 9.2 | 38.5 | ||||||||
OPEB
plans
|
- | - | .5 | |||||||||
Other
|
- | - | (.6 | ) | ||||||||
Adoption
of SFAS No. 158:
|
||||||||||||
Pension
plans
|
- | (19.6 | ) | (1.4 | ) | |||||||
OPEB
plans
|
- | (1.7 | ) | - | ||||||||
Total
|
$ | 57.1 | $ | 64.6 | $ | 828.5 | ||||||
(1)
|
Represents
the current income taxes generated at the Valhi level and the associated
utilization of NOL and AMT carryforwards resulting from the TIMET special
dividend. See Note 3.
|
December 31,
|
||||||||||||||||
2006
|
2007
|
|||||||||||||||
Assets
|
Liabilities
|
Assets
|
Liabilities
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Tax effect of temporary differences
related to:
|
||||||||||||||||
Inventories
|
$ | 3.3 | $ | (2.6 | ) | $ | 1.6 | $ | (3.2 | ) | ||||||
Marketable securities
|
- | (129.0 | ) | 4.4 | (116.6 | ) | ||||||||||
Property and equipment
|
20.1 | (81.3 | ) | .5 | (81.9 | ) | ||||||||||
Accrued OPEB costs
|
12.3 | - | 12.3 | - | ||||||||||||
Pension
asset
|
- | (49.7 | ) | - | (46.9 | ) | ||||||||||
Accrued
pension cost
|
69.5 | - | 38.4 | - | ||||||||||||
Accrued environmental liabilities and other deductible differences
|
51.0 | - | 49.6 | - | ||||||||||||
Other taxable differences
|
- | (77.6 | ) | - | (27.6 | ) | ||||||||||
Investments in subsidiaries and affiliates
|
- | (268.1 | ) | - | (218.8 | ) | ||||||||||
Tax
loss and tax credit carryforwards
|
245.7 | - | 164.2 | - | ||||||||||||
Valuation
allowance
|
- | - | (2.9 | ) | - | |||||||||||
Adjusted gross deferred tax assets (liabilities)
|
401.9 | (608.3 | ) | 268.1 | (495.0 | ) | ||||||||||
Netting of items by tax jurisdiction
|
(126.9 | ) | 126.9 | (89.0 | ) | 88.9 | ||||||||||
275.0 | (481.4 | ) | 179.1 | (406.1 | ) | |||||||||||
Less net current deferred tax asset (liability)
|
10.6 | (2.2 | ) | 10.4 | (3.3 | ) | ||||||||||
Net noncurrent deferred tax asset (liability)
|
$ | 264.4 | $ | (479.2 | ) | $ | 168.7 | $ | (402.8 | ) |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Minority
interest in net assets:
|
||||||||
NL
Industries
|
$ | 56.0 | $ | 55.6 | ||||
Kronos
Worldwide
|
22.3 | 20.5 | ||||||
CompX
International
|
45.4 | 14.4 | ||||||
Total
|
$ | 123.7 | $ | 90.5 |
Years ended December
31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Minority
interest in after-tax earnings (losses)– continuing
operations:
|
||||||||||||
NL
Industries
|
$ | 6.4 | $ | 4.4 | $ | (2.8 | ) | |||||
Kronos
Worldwide
|
4.9 | 4.1 | (3.3 | ) | ||||||||
CompX
International
|
.3 | 3.5 | 2.6 | |||||||||
Total
|
$ | 11.6 | $ | 12.0 | $ | (3.5 | ) |
Shares of common
stock
|
||||||||||||
Issued
|
Treasury
|
Outstanding
|
||||||||||
(In
millions)
|
||||||||||||
Balance
at December 31, 2004
|
124.2 | (4.0 | ) | 120.2 | ||||||||
Issued
|
.1 | - | .1 | |||||||||
Acquired
|
- | (3.5 | ) | (3.5 | ) | |||||||
Retired
|
(3.5 | ) | 3.5 | - | ||||||||
Balance
at December 31, 2005
|
120.8 | (4.0 | ) | 116.8 | ||||||||
Acquired
|
- | (1.9 | ) | (1.9 | ) | |||||||
Retired
|
(1.9 | ) | 1.9 | - | ||||||||
Balance
at December 31, 2006
|
118.9 | (4.0 | ) | 114.9 | ||||||||
Issued
|
.1 | - | .1 | |||||||||
Acquired
|
- | (.6 | ) | (.6 | ) | |||||||
Retired
|
(.6 | ) | .6 | - | ||||||||
Balance
at December 31, 2007
|
118.4 | (4.0 | ) | 114.4 |
Shares
|
Exercise
price
per
share
|
Amount
payable
upon
exercise
|
||||||||||
(In
thousands, except
per
share amounts)
|
||||||||||||
NL
Industries
|
97 | $ | 2.66 - $11.49 | $ | 960 | |||||||
CompX
|
349 | $ | 12.15 - $20.00 | $ | 6,643 |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Securities
earnings:
|
||||||||||||
Dividends
and interest
|
$ | 57.8 | $ | 41.6 | $ | 30.9 | ||||||
Securities
transactions, net
|
20.3 | .7 | (.1 | ) | ||||||||
Write-off
of accrued interest
|
(21.6 | ) | - | - | ||||||||
Total
|
56.5 | 42.3 | 30.8 | |||||||||
Insurance
recoveries
|
3.0 | 7.7 | 6.1 | |||||||||
Currency
transactions, net
|
5.2 | (3.5 | ) | (.8 | ) | |||||||
Disposal
of property and equipment, net
|
(1.6 | ) | 35.3 | (1.3 | ) | |||||||
Other,
net
|
4.9 | 8.1 | 7.5 | |||||||||
Total
|
$ | 68.0 | $ | 89.9 | $ | 42.3 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Current
receivables from affiliates:
|
||||||||
Contran
- income taxes, net
|
$ | .6 | $ | 4.4 | ||||
Other
|
.2 | .2 | ||||||
Total
|
$ | .8 | $ | 4.6 | ||||
Current payables to affiliates:
|
||||||||
Louisiana Pigment Company
|
$ | 11.7 | $ | 11.4 | ||||
Contran – trade items
|
5.5 | 7.1 | ||||||
TIMET
|
- | .5 | ||||||
Total
|
$ | 17.2 | $ | 19.0 | ||||
CompX
promissory note payable to TIMET(1)
|
$ | - | $ | 50.0 | ||||
|
·
|
complexity
and differing interpretations of governmental
regulations;
|
|
·
|
number
of PRPs and their ability or willingness to fund such allocation of
costs;
|
|
·
|
financial
capabilities of the PRPs and the allocation of costs among
them;
|
|
·
|
solvency
of other PRPs;
|
|
·
|
multiplicity
of possible solutions; and
|
|
·
|
number
of years of investigatory, remedial and monitoring activity
required.
|
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Balance
at the beginning of the year
|
$ | 76.7 | $ | 65.7 | $ | 59.7 | ||||||
Additions
charged to expense, net
|
5.7 | 4.0 | 4.4 | |||||||||
Payments,
net
|
(16.7 | ) | (10.0 | ) | (8.4 | ) | ||||||
Balance
at the end of the year
|
$ | 65.7 | $ | 59.7 | $ | 55.7 | ||||||
Amounts recognized in our Consolidated Balance Sheet at the end of the year:
|
||||||||||||
Current liabilities
|
$ | 16.6 | $ | 13.6 | $ | 15.4 | ||||||
Noncurrent liabilities
|
49.1 | 46.1 | 40.3 | |||||||||
Total
|
$ | 65.7 | $ | 59.7 | $ | 55.7 |
|
·
|
to
recover response and remediation costs incurred at the
site;
|
|
·
|
a
declaration of the parties’ liability for response and remediation costs
incurred at the site;
|
|
·
|
a
declaration of the parties’ liability for response and remediation costs
to be incurred in the future at the site;
and
|
|
·
|
a
declaration regarding the obligation of Tremont to indemnify Halliburton
and DII for costs and expenses attributable to the
site.
|
|
·
|
facts
concerning our historical
operations;
|
|
·
|
the
rate of new claims;
|
|
·
|
the
number of claims from which we have been dismissed;
and
|
|
·
|
our
prior experience in the defense of these
matters,
|
Years ending December 31,
|
Amount
|
|||
(In
millions)
|
||||
2008
|
$ | 9.9 | ||
2009
|
7.2 | |||
2010
|
5.3 | |||
2011
|
3.3 | |||
2012
|
2.9 | |||
2013 and thereafter
|
21.6 | |||
Total(1)
|
$ | 50.2 |
Amount
|
||||
(In
millions)
|
||||
Unrecognized
tax benefits:
|
||||
Amount
at adoption of FIN No. 48
|
$ | 51.7 | ||
Tax
positions take in prior periods:
|
||||
Gross
increases
|
.1 | |||
Gross
decreases
|
(1.9 | ) | ||
Tax
positions taken in current period:
|
||||
Gross
increases
|
11.3 | |||
Gross
decreases
|
(.5 | ) | ||
Settlements
with taxing authorities –
cash
paid
|
(.6 | ) | ||
Lapse
of applicable statute of limitations
|
(6.5 | ) | ||
Foreign
currency translation
|
1.0 | |||
Amount
at December 31, 2007
|
$ | 54.6 | ||
December 31,
|
||||||||||||||||
2006
|
2007
|
|||||||||||||||
Carrying
amount
|
Fair
value
|
Carrying
amount
|
Fair
value
|
|||||||||||||
(In
millions)
|
||||||||||||||||
Cash,
cash equivalents and restricted cash equivalents
|
$ | 198.7 | $ | 198.7 | $ | 145.6 | $ | 145.6 | ||||||||
Marketable
securities:
|
||||||||||||||||
Current
|
$ | 12.6 | $ | 12.6 | $ | 7.2 | $ | 7.2 | ||||||||
Noncurrent
|
259.0 | 259.0 | 319.8 | 319.8 | ||||||||||||
Long-term
debt (excluding capitalized leases):
|
||||||||||||||||
Publicly-traded
fixed rate debt -
|
||||||||||||||||
KII
Senior Secured Notes
|
$ | 525.0 | $ | 512.5 | $ | 585.5 | $ | 507.7 | ||||||||
CompX
variable rate promissory note
|
- | - | 50.0 | 50.0 | ||||||||||||
Snake
River Sugar Company fixed rate loans
|
250.0 | 250.0 | 250.0 | 250.0 | ||||||||||||
Other
fixed-rate debt
|
.3 | .3 | .4 | .4 | ||||||||||||
Variable
rate debt
|
6.5 | 6.5 | 15.4 | 15.4 | ||||||||||||
Minority
interest in:
|
||||||||||||||||
NL
common stock
|
$ | 56.0 | $ | 84.8 | $ | 55.7 | $ | 93.1 | ||||||||
Kronos
common stock
|
22.3 | 79.5 | 20.4 | 42.7 | ||||||||||||
CompX
common stock
|
45.4 | 91.0 | 14.4 | 25.2 | ||||||||||||
Valhi
common stockholders' equity
|
$ | 866.8 | $ | 2,985.0 | $ | 618.4 | $ | 1,823.6 |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions, except per share data)
|
||||||||||||
Basic
EPS computation:
|
||||||||||||
Numerator
-
|
||||||||||||
Income
(loss) from continuing operations
|
$ | 82.1 | $ | 141.7 | $ | (45.7 | ) | |||||
Denominator
-
|
||||||||||||
Weighted
average common shares
|
118.2 | 116.1 | 114.7 | |||||||||
Basic
EPS from continuing operations
|
$ | .69 | $ | 1.22 | $ | (.40 | ) | |||||
Diluted
EPS computation:
|
||||||||||||
Numerator:
|
||||||||||||
Income
(loss) from continuing operations
|
$ | 82.1 | $ | 141.7 | $ | (45.7 | ) | |||||
Net
effect of diluted earnings per share
of TIMET(1)
|
- | (2.3 | ) | - | ||||||||
Income
(loss) from continuing operations
for diluted earnings per share
|
$ | 82.1 | $ | 139.4 | $ | (45.7 | ) | |||||
Denominator:
|
||||||||||||
Weighted
average common shares – Basic
|
118.2 | 116.1 | 114.7 | |||||||||
Stock
option conversion(2)
|
.3 | .4 | - | |||||||||
Weighted
average common shares – Diluted
|
118.5 | 116.5 | 114.7 | |||||||||
Diluted
EPS from continuing operations
|
$ | .69 | $ | 1.20 | $ | (.40 | ) |
(1)
|
The
dilutive effect of dilutive earnings per share for Kronos, NL and CompX in
2005, 2006 and 2007 and for TIMET in 2005 and 2007 was not
significant.
|
(2)
|
Stock
option conversion excludes anti-dilutive shares of 267,000 during
2007.
|
Quarter ended
|
||||||||||||||||
March 31
|
June 30
|
Sept. 30
|
Dec. 31
|
|||||||||||||
(In
millions, except per share data)
|
||||||||||||||||
Year ended December 31, 2006
|
||||||||||||||||
Net sales
|
$ | 354.3 | $ | 399.6 | $ | 383.1 | $ | 344.4 | ||||||||
Gross
margin
|
82.7 | 90.0 | 84.7 | 84.6 | ||||||||||||
Operating income
|
35.7 | 37.8 | 36.8 | 38.9 | ||||||||||||
Income from continuing operations
|
$ | 23.4 | $ | 17.8 | $ | 20.1 | $ | 80.4 | ||||||||
Discontinued operations
|
- | (.1 | ) | - | .1 | |||||||||||
Net income(1)
|
$ | 23.4 | $ | 17.7 | $ | 20.1 | $ | 80.5 | ||||||||
Per basic share:
|
||||||||||||||||
Continuing operations
|
$ | .20 | $ | .15 | $ | .17 | $ | .70 | ||||||||
Discontinued operations
|
- | - | - | - | ||||||||||||
Net
income
|
$ | .20 | $ | .15 | $ | .17 | $ | .70 | ||||||||
Year
ended December 31, 2007
|
||||||||||||||||
Net sales
|
$ | 359.0 | $ | 389.0 | $ | 390.6 | $ | 353.6 | ||||||||
Gross
margin
|
80.1 | 72.9 | 76.3 | 56.6 | ||||||||||||
Operating income
|
32.9 | 26.2 | 24.2 | 7.2 | ||||||||||||
Net income
(loss)
|
$ | 26.1 | $ | (4.9 | ) | $ | (52.7 | ) | $ | (14.2 | ) | |||||
Per basic share:
|
||||||||||||||||
Net
income (loss)
|
$ | .23 | $ | (.04 | ) | $ | (.46 | ) | $ | (.12 | ) |
|
·
|
an
after-tax gain of $23.6 million, or $.20 per diluted share, related to the
sale of certain land in Nevada;
|
|
·
|
an
income tax benefit of $17.8 million, or $.15 per diluted share, net of
minority interest related to the favorable development with certain income
tax audits of Kronos; and
|
|
·
|
after-tax
income of $10.2 million, or $.09 per diluted share, related to our
pro-rata share of a gain recognized by TIMET on its sale of a business
investment.
|
December 31,
|
||||||||
2006
|
2007
|
|||||||
Current
assets:
|
||||||||
Cash and cash equivalents
|
$ | 67.3 | $ | 18.4 | ||||
Restricted cash equivalents
|
.3 | .4 | ||||||
Accounts and notes receivable
|
.8 | .5 | ||||||
Receivables from subsidiaries and affiliates:
|
||||||||
Income
taxes, net
|
1.8 | - | ||||||
Other
|
3.0 | - | ||||||
Deferred income taxes
|
1.7 | 1.6 | ||||||
Other
|
.2 | .3 | ||||||
Total current assets
|
75.1 | 21.2 | ||||||
Other assets:
|
||||||||
Marketable securities
|
250.0 | 271.9 | ||||||
Restricted cash equivalents
|
.4 | - | ||||||
Investment in and advances to subsidiaries and affiliate
|
1,102.7 | 918.0 | ||||||
Other assets
|
.2 | .3 | ||||||
Property and equipment, net
|
.9 | .9 | ||||||
Total other assets
|
1,354.2 | 1,191.1 | ||||||
Total
assets
|
$ | 1,429.3 | $ | 1,212.3 | ||||
Current liabilities:
|
||||||||
Payables to subsidiaries and affiliates:
|
||||||||
Income taxes, net
|
$ | - | $ | 1.5 | ||||
Other
|
- | .7 | ||||||
Accounts payable and accrued liabilities
|
3.1 | 3.1 | ||||||
Total current liabilities
|
3.1 | 5.3 | ||||||
Noncurrent liabilities:
|
||||||||
Long-term debt – Snake River Sugar Company
|
250.0 | 250.0 | ||||||
Deferred income taxes
|
308.7 | 321.4 | ||||||
Other
|
.7 | 17.2 | ||||||
Total noncurrent liabilities
|
559.4 | 588.6 | ||||||
Stockholders' equity
|
866.8 | 618.4 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 1,429.3 | $ | 1,212.3 |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Revenues
and other income:
|
||||||||||||
Interest and dividend income
|
$ | 52.4 | $ | 36.0 | $ | 29.2 | ||||||
Write-off of accrued interest on loan to Snake River Sugar Company
|
(21.6 | ) | - | - | ||||||||
Equity
in earnings of subsidiaries and
affiliates
|
88.8 | 151.6 | (63.0 | ) | ||||||||
Other
income, net
|
2.2 | 3.9 | 3.8 | |||||||||
Total
revenues and other income
|
121.8 | 191.5 | (30.0 | ) | ||||||||
Costs and expenses:
|
||||||||||||
General and administrative
|
8.5 | 7.9 | 7.6 | |||||||||
Interest
|
24.1 | 24.1 | 24.1 | |||||||||
Total
costs and expenses
|
32.6 | 32.0 | 31.7 | |||||||||
Income (loss)
before income taxes
|
89.2 | 159.5 | (61.7 | ) | ||||||||
Provision for income taxes (benefit)
|
7.1 | 17.8 | (16.0 | ) | ||||||||
Income from continuing operations
|
82.1 | 141.7 | (45.7 | ) | ||||||||
Discontinued operations
|
(.2 | ) | - | - | ||||||||
Net income (loss)
|
$ | 81.9 | $ | 141.7 | $ | (45.7 | ) | |||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net income
(loss)
|
$ | 81.9 | $ | 141.7 | $ | (45.7 | ) | |||||
Write-off of accrued interest receivable
|
21.6 | - | - | |||||||||
Deferred income taxes
|
10.9 | 20.7 | (19.5 | ) | ||||||||
Equity in earnings of subsidiaries and affiliate:
|
||||||||||||
Continuing operations
|
(88.8 | ) | (151.6 | ) | 63.0 | |||||||
Discontinued operations
|
.2 | - | - | |||||||||
Dividends from subsidiaries and affiliates
|
58.6 | 87.0 | 49.2 | |||||||||
Other, net
|
(.3 | ) | (.7 | ) | .1 | |||||||
Net change in assets and liabilities
|
17.3 | (.6 | ) | 12.8 | ||||||||
Net cash provided by operating
activities
|
101.4 | 96.5 | 59.9 | |||||||||
Cash flows from investing activities:
|
||||||||||||
Purchases of:
|
||||||||||||
Kronos common stock
|
(7.0 | ) | (25.4 | ) | - | |||||||
TIMET common stock
|
(18.0 | ) | (18.7 | ) | (27.5 | ) | ||||||
NL
common stock
|
- | (.4 | ) | - | ||||||||
Loans to subsidiaries and affiliates:
|
||||||||||||
Loans
|
(35.4 | ) | (12.9 | ) | (20.1 | ) | ||||||
Collections
|
18.1 | .8 | - | |||||||||
Investment in other subsidiary
|
(2.9 | ) | (2.4 | ) | (5.3 | ) | ||||||
Collection of loan to Snake River Sugar Company
|
80.0 | - | - | |||||||||
Change in restricted cash equivalents, net
|
- | - | .1 | |||||||||
Other, net
|
- | 1.5 | - | |||||||||
Net cash provided by (used
in)
investing activities
|
34.8 | (57.5 | ) | (52.8 | ) | |||||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Cash
flows from financing activities:
|
||||||||||||
Indebtedness:
|
||||||||||||
Borrowings
|
$ | 5.0 | $ | - | $ | - | ||||||
Principal payments
|
(5.0 | ) | - | - | ||||||||
Cash
dividends
|
(48.8 | ) | (48.0 | ) | (45.6 | ) | ||||||
Treasury stock acquired
|
(62.1 | ) | (43.8 | ) | (11.1 | ) | ||||||
Other, net
|
.1 | .3 | .7 | |||||||||
Net cash used by financing activities
|
(110.8 | ) | (91.5 | ) | (56.0 | ) | ||||||
Cash and cash equivalents:
|
||||||||||||
Net increase (decrease)
|
25.4 | (52.5 | ) | (48.9 | ) | |||||||
Balance at beginning of year
|
94.4 | 119.8 | 67.3 | |||||||||
Balance at end of year
|
$ | 119.8 | $ | 67.3 | $ | 18.4 | ||||||
Supplemental disclosures –
Cash paid (received) for:
|
||||||||||||
Interest
|
$ | 23.3 | $ | 24.7 | $ | 24.0 | ||||||
Income taxes, net
|
(8.0 | ) | 1.3 | (10.9 | ) | |||||||
Noncash
financing activity:
|
||||||||||||
Dividend
of TIMET common stock
|
- | - | 897.4 | |||||||||
Issuance
of preferred stock in settlement
of tax obligation
|
- | - | 667.3 |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Investment
in:
|
||||||||
NL
Industries (NYSE: NL)
|
$ | 300.0 | $ | 334.7 | ||||
Kronos
Worldwide, Inc. (NYSE: KRO)
|
528.4 | 509.2 | ||||||
Tremont
LLC
|
179.6 | 13.4 | ||||||
Valcor
and subsidiary
|
2.2 | 13.7 | ||||||
Waste
Control Specialists LLC
|
36.3 | 40.8 | ||||||
TIMET
(NYSE: TIE) common stock
|
51.4 | - | ||||||
TIMET
preferred stock
|
.2 | - | ||||||
Total
|
1,098.1 | 911.8 | ||||||
Noncurrent
loans to Waste Control Specialists LLC
|
4.6 | 6.2 | ||||||
Total
|
$ | 1,102.7 | $ | 918.0 | ||||
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Equity
in earnings of subsidiaries and affiliate
from continuing operations
|
||||||||||||
NL
Industries
|
$ | 23.2 | $ | 22.7 | $ | (29.9 | ) | |||||
Kronos
Worldwide
|
34.3 | 43.4 | (39.0 | ) | ||||||||
Tremont
LLC
|
40.6 | 86.4 | 16.6 | |||||||||
Valcor
|
- | 1.4 | 2.6 | |||||||||
Waste
Control Specialists LLC
|
(13.4 | ) | (10.3 | ) | (15.2 | ) | ||||||
TIMET
|
4.1 | 8.0 | 1.9 | |||||||||
Total
|
$ | 88.8 | $ | 151.6 | $ | (63.0 | ) | |||||
Cash
dividends from subsidiaries
|
||||||||||||
NL
Industries
|
$ | 30.3 | $ | 20.1 | $ | 20.2 | ||||||
Kronos
Worldwide
|
27.9 | 29.0 | 29.0 | |||||||||
Tremont
LLC
|
.4 | 37.9 | - | |||||||||
Total
|
$ | 58.6 | $ | 87.0 | $ | 49.2 |
Years ended December 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
(In
millions)
|
||||||||||||
Components of provision for income taxes (benefit):
|
||||||||||||
Currently payable (refundable)
|
$ | (3.8 | ) | $ | (2.9 | ) | $ | .2 | ||||
Deferred income taxes (benefit)
|
10.9 | 20.7 | (16.2 | ) | ||||||||
Total
|
$ | 7.1 | $ | 17.8 | $ | (16.0 | ) | |||||
Cash paid (received) for income taxes, net:
|
||||||||||||
Received from subsidiaries
|
$ | (9.0 | ) | $ | - | $ | (16.8 | ) | ||||
Paid to Contran
|
.5 | 1.2 | 5.8 | |||||||||
Paid to tax authorities
|
.5 | .1 | .1 | |||||||||
Total
|
$ | (8.0 | ) | $ | 1.3 | $ | (10.9 | ) |
December 31,
|
||||||||
2006
|
2007
|
|||||||
(In
millions)
|
||||||||
Components of the net deferred tax asset (liability) -
|
||||||||
tax effect of temporary differences related to:
|
||||||||
Investment
in:
|
||||||||
The
Amalgamated Sugar Company LLC
|
$ | (123.2 | ) | $ | (114.6 | ) | ||
Kronos Worldwide
|
(200.2 | ) | (204.7 | ) | ||||
Federal
and state loss carryforwards and other income
tax attributes
|
26.0 | 5.2 | ||||||
Accrued liabilities and other deductible differences
|
3.2 | 6.2 | ||||||
Other taxable differences
|
(12.8 | ) | (11.9 | ) | ||||
Total
|
$ | 307.0 | $ | (319.8 | ) | |||
Current
deferred tax asset
|
$ | 1.7 | $ | 1.6 | ||||
Noncurrent
deferred tax liability
|
(308.7 | ) | (321.4 | ) | ||||
Total
|
$ | (307.0 | ) | $ | (319.8 | ) |