WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: August 3, 2005
NL INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
New Jersey 1-640 13-5267260
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, TX 75240-2697
(Address of principal executive offices) (Zip Code)
(972) 233-1700
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
Item 7.01 Regulation FD Disclosure.
Pursuant to Items 2.02 and 7.01 of this current report, the registrant
hereby furnishes the information set forth in its press release issued on August
3, 2005, a copy of which is attached hereto as Exhibit 99.1 and incorporated
herein by reference.
The information, including the exhibit, the registrant furnishes in this
report is not deemed "filed" for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. Registration statements or other documents filed with the
Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Item No. Exhibit Index
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99.1 Press Release dated August 3, 2005 issued by the
registrant.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NL INDUSTRIES, INC.
(Registrant)
By: /s/ Gregory M. Swalwell
-----------------------
Gregory M. Swalwell
Vice President, Finance
Date: August 3, 2005
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- --------------------------------------------------
99.1 Press release dated August 3, 2005 issued by NL Industries, Inc.
NL Industries, Inc. Contact: Gregory M. Swalwell
Three Lincoln Centre Vice President, Finance and Chief
5430 LBJ Freeway, Suite 1700 Financial Officer
Dallas, TX 75240-2697 (972) 233-1700
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News Release
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FOR IMMEDIATE RELEASE
[LOGO GOES HERE]
NL REPORTS SECOND QUARTER RESULTS
DALLAS, TEXAS...August 3, 2005...NL Industries, Inc. (NYSE:NL) today reported
income from continuing operations of $10.0 million, or $.20 per diluted share,
in the second quarter of 2005 compared to $189.7 million, or $3.92 per diluted
share, in the second quarter of 2004. For the first six months of 2005, the
Company reported income from continuing operations of $23.4 million, or $.46 per
diluted share, compared to income from continuing operations of $194.8 million,
or $4.03 per diluted share, in the first six months of 2004. The Company's
results in 2004 include certain significant income tax benefits, as described
below.
Component products segment profit for the second quarter of 2005 was $4.7
million compared to $5.1 million in the second quarter of 2004. Component
product sales and segment profit were lower in the second quarter of 2005
compared to the second quarter of 2004 primarily due to the net effect of lower
sales volumes partially offset by higher selling prices for certain products.
For the first six months of 2005, component products segment profit was $8.9
million compared to $7.6 million a year ago. Component products sales and
segment profit were higher in the first six months of 2005 as compared to the
same period in 2004 as the effect of higher selling prices for certain products
more than offset the impact of lower sales volume for certain products.
Following the Company's July 2004 dividend in the form of shares of Kronos
Worldwide, Inc. common stock distributed to NL stockholders, the Company's
ownership of Kronos was reduced to less than 50%. Consequently, effective July
1, 2004, the Company ceased to consolidate Kronos' financial position, results
of operations and cash flows, and the Company commenced accounting for its
interest in Kronos by the equity method. The Company continued to report Kronos
as a consolidated subsidiary through June 30, 2004, including the consolidation
of Kronos' results of operations and cash flows for the first half of 2004.
Kronos' net sales of $311.7 million in the second quarter of 2005 were $15.9
million, or 5%, higher than the second quarter of 2004. Net sales of $603.5
million for the first six months of 2005 were $44.4 million, or 8%, higher than
the first six months of 2004. Both increases are due to the net effects of
higher average TiO2 selling prices, lower sales volumes and the favorable effect
of fluctuations in foreign currency exchange rates, which increased sales by
approximately $10 million and $21 million, respectively.
Kronos' average selling prices in billing currencies (which excludes the effects
of fluctuations in the value of the U.S. dollar relative to other currencies)
during the second quarter and first six months of 2005 were 11% and 10% higher
than the respective periods of 2004. Expressed in U.S. dollars computed using
actual foreign currency exchange rates prevailing during the respective periods,
Kronos' average selling prices in the second quarter of 2005 were 15% higher
than the second quarter of 2004 and 14% higher for the first six months of 2005
compared with 2004. Reflecting the continued implementation of price increase
announcements, Kronos' average selling prices in billing currencies in the
second quarter of 2005 were 2% higher compared to the first quarter of 2005.
Kronos' second quarter 2005 TiO2 sales volumes decreased 10% from the second
quarter of 2004, as sales volumes were lower in all markets. Kronos' TiO2 sales
volumes for the first six months of 2005 decreased 7% from the first six months
of 2004. Kronos' TiO2 production volumes were 4% higher in each of the second
quarter and first six months of 2005 as compared to the same periods in 2004,
with operating rates at near full capacity in all periods. Kronos' production
volume in the first six months of 2005 was a new record.
Kronos' segment profit for the second quarter of 2005 was $59.2 million compared
with $40.1 million in the second quarter of 2004, and was $107.2 million for the
first six months of 2005 compared with $66.3 million for the first six months of
2004. Kronos' segment profit improved due to the net effects of higher average
TiO2 selling prices, higher production volumes and lower sales volumes.
Furthermore, fluctuations in foreign currency exchange rates favorably impacted
Kronos' segment profit comparisons by approximately $2 million and $3 million
for the quarter and year-to-date periods, respectively.
Kronos' segment profit in the second quarter of 2004 includes $6.3 million of
income ($2.1 million, or $.04 per diluted share, net of income taxes and
minority interest) related to settlement of a contract dispute with a customer.
Kronos' results in the second quarter of 2005 include a $5.4 million gain ($1.3
million, or $.03 per diluted share, net of income taxes and minority interest to
the Company) related to the sale of its passive interest in a Norwegian smelting
operation.
Securities transactions gains in the first six months of 2005 relate principally
to a $14.7 million gain ($8.0 million, or $.17 per diluted share, net of income
taxes) related to the Company's sale of shares of Kronos common stock in market
transactions. Insurance recoveries in the second quarter of 2005 relate
primarily to the Company's expected recovery from certain insolvent former
insurance carriers relating to settlement of excess insurance coverage claims.
Interest expense decreased primarily due to the change in accounting for Kronos
to the equity method as of July 1, 2004. Prior to July 1, 2004, interest expense
related to Kronos' debt was included in the Company's consolidated financial
statements. CompX International Inc. has a nominal amount of outstanding debt at
June 30, 2005.
As previously reported, the Company's income tax benefit in the second quarter
of 2004 includes (i) a $268.6 million tax benefit ($135.7 million, or $2.80 per
diluted share, net of minority interest) related to the reversal of a deferred
income tax asset valuation allowance attributable to Kronos' income tax
attributes in Germany (principally net operating loss carryforwards) and (ii) a
$43.7 million income tax benefit ($.90 per diluted share) related to income tax
attributes of a subsidiary of the Company.
As previously reported, in January 2005 CompX completed the sale of its Thomas
Regout operations in The Netherlands, and accordingly the results of operations
of Thomas Regout (which reported a nominal amount of net income in the second
quarter and first six months of 2004) are classified as discontinued operations
for all periods presented. Discontinued operations in 2005 relate primarily to
additional expenses associated with the disposal of the Thomas Regout
operations.
The statements in this release relating to matters that are not historical facts
are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it cannot give any assurances that these expectations will prove to
be correct. Such statements by their nature involve substantial risks and
uncertainties that could significantly impact expected results, and actual
future results could differ materially from those described in such
forward-looking statements. While it is not possible to identify all factors,
the Company continues to face many risks and uncertainties. The factors that
could cause actual future results to differ materially include, but are not
limited to, the following:
o Future supply and demand for the Company's products,
o The extent of the dependence of certain of the Company's businesses on
certain market sectors,
o The cyclicality of certain of the Company's businesses,
o Customer inventory levels,
o Changes in raw material and other operating costs,
o The possibility of labor disruptions,
o General global economic and political conditions,
o Demand for office furniture,
o Competitive products and substitute products, including increased
competition from low-cost manufacturing sources,
o Customer and competitor strategies,
o The impact of pricing and production decisions,
o Competitive technology positions,
o The introduction of trade barriers,
o Service industry employment levels,
o Fluctuations in currency exchange rates,
o Operating interruptions,
o The ability of the Company to renew or refinance credit facilities,
o The ultimate outcome of income tax audits, tax settlement initiatives or
other tax matters,
o Potential difficulties in integrating completed or future acquisitions,
o Decisions to sell operating assets other than in the ordinary course of
business,
o Uncertainties associated with new product development,
o The ultimate ability to utilize income tax attributes, the benefit of which
has been recognized under the "more-likely-than-not" recognition criteria,
o Environmental matters,
o Government laws and regulations and possible changes therein,
o The ultimate resolution of pending litigation, and
o Possible future litigation.
Should one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those forecasted or expected. The
Company disclaims any intention or obligation to update or revise any
forward-looking statement whether as a result of changes in information, future
events or otherwise.
In an effort to provide investors with additional information regarding the
Company's results as determined by GAAP, the Company has disclosed certain
non-GAAP information the Company believes provides useful information to
investors:
o The Company discloses percentage changes in Kronos' average TiO2 selling
prices in billing currencies, which excludes the effects of foreign
currency translation. The Company believes disclosure of such percentage
changes allows investors to analyze such changes without the impact of
changes in foreign currency exchange rates, thereby facilitating
period-to-period comparisons of relative changes in average selling prices
in the actual various billing currencies. Generally, when the U.S. dollar
either strengthens or weakens against other currencies, the percentage
change in average selling prices in billing currencies will be higher or
lower, respectively, than such percentage changes would be using actual
exchange rates prevailing during the respective periods.
NL Industries, Inc. is engaged in the component products (precision ball bearing
slides, security products and ergonomic computer support systems), titanium
dioxide pigments and other businesses.
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except earnings per share)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-----------------------------------------------------
-----------------------------------------------------
2004 2005 2004 2005
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Net sales:
Chemicals $ 295.8 $ - $ 559.1 $ -
Component products 46.2 45.8 89.8 92.6
---------- ----------- --------- ---------
$ 342.0 $ 45.8 $ 648.9 $ 92.6
========= ========== ========== =========
Segment profit:
Chemicals $ 40.1 $ - $ 66.3 $ -
Component products 5.1 4.7 7.6 8.9
--------- --------- ---------- ---------
Total segment profit 45.2 4.7 73.9 8.9
General corporate items:
Interest and dividend income from affiliates .8 .6 1.7 1.2
Other interest income .4 .8 .7 1.7
Securities transactions gains, net - .1 - 14.7
Insurance recoveries .5 1.2 .5 1.2
Other income .1 .1 .1 .2
General corporate expenses, net (4.6) (4.3) (11.3) (10.1)
Interest expense (8.8 (.1) (18.2) (.2)
--------- --------- ---------- ---------
33.6 3.1 47.4 17.6
Equity in earnings of Kronos Worldwide, Inc. - 11.8 - 19.6
--------- --------- ---------- ---------
Income from continuing operations before
income taxes and minority interest 33.6 14.9 47.4 37.2
Income tax expense (benefit) (298.6) 4.1 (295.2) 12.3
Minority interest in after-tax earnings 142.5 .8 147.8 1.5
--------- --------- ---------- ---------
Income from continuing operations 189.7 10.0 194.8 23.4
Discontinued operations .2 - .2 (.3)
--------- --------- ---------- ---------
Net income $ 189.9 $ 10.0 $ 195.0 $ 23.1
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Earnings per share:
Basic net income per share $ 3.93 $ .20 $ 4.04 $ .46
========= ========= ========== =========
Diluted net income per share $ 3.92 $ .20 $ 4.03 $ .46
========= ========= ========== =========
Weighted-average shares used in the
calculation of earnings per share:
Basic shares 48.4 48.6 48.3 48.5
Dilutive impact of stock options - - .1 .1
--------- --------- ---------- ---------
Diluted shares 48.4 48.6 48.4 48.6
========= ========= ========== =========
NL INDUSTRIES, INC.
RECONCILIATION OF PERCENTAGE CHANGE IN
KRONOS' AVERAGE TiO2 SELLING PRICES
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2005 vs. 2004 2005 vs. 2004
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Percentage change in average selling prices:
Using actual foreign currency exchange rates +15% +14%
Impact of changes in foreign currency exchange rates -4% -4%
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In billing currencies +11% +10%
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