UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of
Report (Date of the earliest event reported)
March
11, 2009
NL
Industries, Inc.
(Exact
name of registrant as specified in its charter)
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New Jersey
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1-640
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13-5267260
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|
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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5430
LBJ Freeway, Suite 1700, Dallas, Texas
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75240-2697
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||
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(Address
of principal executive offices)
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(Zip
Code)
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||
Registrant’s
telephone number, including area code
(972)
233-1700
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(Former
name or former address, if changed since last report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02
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Results
of Operations and Financial
Condition.
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Item
7.01
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Regulation
FD Disclosure.
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The
registrant hereby furnishes the information set forth in its press release
issued on March 11, 2009, 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
U.S. Securities and Exchange Commission shall not incorporate this information
by reference, except as otherwise expressly stated in such filing.
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
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Exhibits
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||
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Item
No.
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Exhibit
Index
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||
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99.1
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Press
release dated March 11, 2009 issued by the
registrant.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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NL Industries, Inc.
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(Registrant)
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By:
/s/ Gregory M. Swalwell
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Date: March
11, 2009
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Gregory
M. Swalwell, Vice President and
Controller
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INDEX
TO EXHIBITS
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Item
No.
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Exhibit
Index
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99.1
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Press
release dated March 11, 2009 issued by the
registrant.
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NL
Industries, Inc.
Three
Lincoln Centre
5430
LBJ Freeway, Suite 1700
Dallas,
TX 75240-2697
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Contact: Gregory
M. Swalwell
Vice
President, Finance and Chief Financial Officer
(972)
233-1700
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|
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News
Release
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||
FOR IMMEDIATE
RELEASE
NL
REPORTS FOURTH QUARTER RESULTS
DALLAS,
TEXAS – March 11, 2009 - NL Industries, Inc. (NYSE:NL) today reported net income
of $36.3 million, or $.75 per diluted share, in the fourth quarter of 2008
compared to $10.0 million, or $.21 per diluted share, in the fourth quarter of
2007. For the full year 2008, NL reported net income of $33.2
million, or $.68 per diluted share compared to a net loss of $1.7 million, or
$.04 per diluted share, for 2007.
Net sales
decreased 12% in the fourth quarter of 2008 as compared to the fourth quarter of
2007, and decreased 7% in 2008 compared to 2007. The decreases were
principally due to lower order rates from many of CompX’s customers resulting
from the economic slowdown in North America. Income from operations
attributable to CompX was $3.1 million in the fourth quarter of 2008 compared
to $1.3
million in the same period of 2007. Operating income in the fourth
quarter of 2007 was negatively impacted by $1.9 million in expenses relating to
the consolidation of three of the company’s northern Illinois facilities into
one new facility. Fourth quarter 2008 income from operations was
positively impacted by the favorable effect of changes in currency exchange
rates of $1.4 million compared to the previous year. Additionally, income
from operations comparisons were impacted by increased raw material costs offset
by the favorable effects of the continuation of cost reductions throughout
2008.
During
the third quarter of 2008 we recorded a noncash impairment charge of $10.1
million relating to CompX’s marine components operations.
For the full year 2008, excluding the 2008 goodwill impairment charge, income
from operations attributable to CompX was $15.4 million in 2008 compared to $15.4
million in 2007, although 2007 income from operations was impacted by $2.7
million in facility consolidation costs. Excluding the goodwill impairment
charge, income from operations comparisons were primarily impacted by the net
result of lower order rates from many of our customers due to unfavorable
economic conditions in North America and increased raw material costs, offset by
the favorable effects of facility consolidation costs incurred in 2007, the
continuation of cost reductions throughout 2008 and changes in currency exchange
rates.
Kronos’
net sales of $246.9 million in the fourth quarter of 2008 were $63.5 million, or
21%, lower than the fourth quarter of 2007. Net sales of
$1,316.9 million for the full year of 2008 were $6.6 million, or 1%, higher than
the full year of 2007. Kronos’ net sales decreased in the fourth
quarter of 2008 primarily due to lower sales volumes and to the unfavorable
effect of fluctuations in foreign currency exchange rates, which decreased sales
by approximately $16 million, partially offset by higher average TiO2 selling
prices. For the full year period, net sales increased due to the
favorable effect of fluctuations in foreign currency exchange rates, which
increased sales by approximately $61 million, and higher average TiO2 selling
prices, partially offset by lower sales volumes. Kronos’ average
selling prices were 9% higher in the fourth quarter of 2008 compared to the
fourth quarter of 2007, and prices were 2% higher for the year. The
table at the end of this release shows the impact of each of these items on
Kronos’ sales.
Kronos’
income from operations for the fourth quarter of 2008 increased by 99% compared
to the fourth quarter 2007 and declined by 44% for the full year 2008 compared
to 2007. The fluctuations were due primarily to higher average
TiO2
selling prices and the positive effect of fluctuations in foreign currency
exchange rates. This increase was partially offset by lower sales
volumes and higher energy and raw materials costs. Full year income
from operations decreased due to higher raw materials, energy, and other
manufacturing costs, lower TiO2 sales
volumes, and the negative effects of fluctuations in foreign currency exchange
rates.
Changes
in currency exchange rates affected Kronos’ income from operations by increasing
income from operations by approximately $10 million in the fourth quarter of
2008 compared to the same period in 2007 and decreased income from operations by
approximately $4 million for the full year of 2008 compared to
2007.
Kronos’
TiO2
sales volumes were 26% lower in the fourth quarter of 2008 as compared to the
fourth quarter of 2007, and volumes were 8% lower for the year, as poor overall
economic conditions lead to a global weakening of demand. Kronos’ TiO2 production
volumes were 1% lower in the fourth quarter of 2008 as compared to the same
period in 2007, while production volumes increased slightly for the full
year.
Kronos’
income tax benefit in 2008 includes a $7.2 million (NL’s equity interest was
$1.7 million, or $.03 per diluted share, net of tax) non-cash deferred income
tax benefit related to a European Court ruling that resulted in the favorable
resolution of certain income tax issues related to its German operations and an
increase in the amount of its German corporate and trade tax net operating loss
carryforwards. Kronos’ provision for income taxes in 2007 includes
(i) a non-cash charge of $90.8 million (NL’s equity interest was $21 million
after tax or $.43 per diluted share) primarily related to the reduction in
Kronos’ net deferred income tax asset in Germany resulting from the enactment of
legislation reducing the income tax rates, (ii) a non-cash charge of $8.7
million (NL’s equity interest was $2 million, or $.04 per diluted share, net of
tax benefit) related to the adjustment of certain tax attributes of its German
subsidiary, and (iii) a non-cash income tax benefit of $2.0 million due to a net
decrease in its reserve for uncertain tax positions.
Litigation
settlement gain relates to a $48.8 million pre-tax gain ($31.5 million, or $.65
per diluted share, net of tax) recognized in the fourth quarter of 2008 related
to the initial closing associated with the settlement of condemnation
proceedings on certain real property we owned that is subject to environmental
remediation.
Securities
transactions gains in 2007 relate principally to a $22.7 million pre-tax gain
($14.7 million, or $.30 per diluted share, net of income taxes) recognized from
the sale of 800,000 shares of TIMET common stock.
Insurance
recoveries relate to amounts we received from certain of our former insurance
carriers, and are principally associated with the recovery of prior lead pigment
and asbestos litigation defense costs incurred by us. These
recoveries aggregated $9.6 million ($6.2 million, or $.13 per diluted share, net
of income taxes) in 2008 and $5.6 million ($3.7 million, or $.08 per diluted
share, net of income taxes) in 2007.
Corporate
expenses were lower in the fourth quarter and full year of 2008 as compared to
the fourth quarter and full year of 2007 primarily due to lower litigation and
related expenses offset in part by higher environmental expenses.
Interest
income in 2008 includes $4.3 million ($.06 per diluted share) related to
interest received on escrow funds related to the litigation settlement gain
discussed earlier in this release.
The
goodwill impairment charge of $10.1 million discussed above is non-deductible
goodwill for income tax purposes. Accordingly, there is no income tax
benefit associated with the impairment charge. Our income tax expense
in 2008 includes a $2.1 million ($.04 per diluted share) benefit related to a
net reduction in our reserve for uncertain tax positions. Our income
tax benefit in 2007 includes income of $1.3 million ($.03 per diluted share) due
to a reduction in our reserve for uncertain tax positions.
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 NL believes that
the expectations reflected in such forward-looking statements are reasonable, we
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, we continue to face many risks and uncertainties. Among the
factors that could cause actual future results to differ materially include, but
are not limited to:
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·
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Future
supply and demand for the Company’s
products,
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·
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The
extent of the dependence of the Company’s businesses on certain market
sectors,
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·
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The
cyclicality of certain of the Company's
businesses,
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·
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The
impact of certain long-term contracts on certain of the Company's
businesses,
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·
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Customer
inventory levels,
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·
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Changes
in raw material and other operating
costs,
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·
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The
possibility of labor disruptions,
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·
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General
global economic and political
conditions,
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·
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Competitive
products and substitute products,
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·
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Possible
disruption of business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts,
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·
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Customer
and competitor strategies,
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·
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Potential
consolidation or solvency of
competitors,
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·
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The
impact of pricing and production
decisions,
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·
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Competitive
technology positions,
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·
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Service
industry employment levels,
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·
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Demand
for high performance marine
components,
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·
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The
introduction of trade barriers,
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·
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Fluctuations
in currency exchange rates,
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·
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Operating
interruptions,
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·
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The
timing and amount of insurance
recoveries,
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·
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The
ability of the Company to renew or refinance credit
facilities,
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·
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The
ability of the Company to maintain sufficient
liquidity,
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·
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The
extent to which the Company’s subsidiaries were to become unable to pay
dividends to the Company,
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·
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Uncertainties
associated with new product
development,
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·
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The
ultimate outcome of income tax audits, tax settlement initiatives or other
tax matters,
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·
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The
ultimate ability to utilize income tax attributes or changes in income tax
rates related to such attributes, the benefit of which has been recognized
under the more-likely-than-not recognition
criteria,
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·
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Potential
difficulties in integrating completed or future
acquisitions,
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·
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Decisions
to sell operating assets other than in the ordinary course of
business,
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·
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Environmental
matters,
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·
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Government
laws and regulations and possible changes
therein,
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·
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The
ultimate resolution of pending litigation,
and
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·
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Possible
future litigation.
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Should
one or more of these risks materialize (or the consequences of such a
development worsen), or should the underlying assumptions prove incorrect,
actual results could differ materially from those currently forecasted or
expected. We disclaim any intention or obligation to update or revise
any forward-looking statement whether as a result of changes in information,
future events or otherwise.
NL
Industries, Inc. is engaged in the component products (security products,
furniture components and performance marine components), chemicals (TiO2) and other
businesses.
NL
INDUSTRIES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In
millions, except earnings per share)
|
Three
months ended
December 31,
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Year
ended
December 31,
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|||||||||||||||
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2007
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2008
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2007
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2008
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|||||||||||||
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(Unaudited)
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||||||||||||||||
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Net
sales
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$ | 42.5 | $ | 37.4 | $ | 177.7 | $ | 165.5 | ||||||||
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Cost
of goods sold
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33.2 | 29.2 | 132.5 | 125.7 | ||||||||||||
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Gross
margin
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9.3 | 8.2 | 45.2 | 39.8 | ||||||||||||
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Selling,
general and administrative expense
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6.1 | 5.6 | 25.8 | 24.8 | ||||||||||||
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Other
operating income (expense):
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||||||||||||||||
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Insurance
recoveries
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1.8 | 7.2 | 5.6 | 9.6 | ||||||||||||
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Facility
consolidation expense
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(1.9 | ) | - | (2.7 | ) | - | ||||||||||
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Goodwill
impairment
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- | - | - | (10.1 | ) | |||||||||||
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Litigation
settlement gain
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- | 48.8 | - | 48.8 | ||||||||||||
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Currency
transaction gains (losses)
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(.1 | ) | .6 | (1.1 | ) | .7 | ||||||||||
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Corporate
expense and other, net
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(11.9 | ) | (11.2 | ) | (31.5 | ) | (25.2 | ) | ||||||||
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Income
(loss) from operations
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(8.9 | ) | 48.0 | (10.3 | ) | 38.8 | ||||||||||
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Equity
in earnings (losses) of Kronos Worldwide, Inc.
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.6 | 2.5 | (23.9 | ) | 3.2 | |||||||||||
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General
corporate items:
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||||||||||||||||
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Interest
and dividend income
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1.2 | 1.1 | 4.8 | 8.0 | ||||||||||||
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Securities
transactions gains, net
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22.7 | - | 22.7 | - | ||||||||||||
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Interest
expense
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(.6 | ) | (.6 | ) | (.7 | ) | (2.4 | ) | ||||||||
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Income
(loss) before income taxes and minority interest
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15.0 | 51.0 | (7.4 | ) | 47.6 | |||||||||||
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Provision
for income taxes (benefit)
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4.9 | 14.6 | (8.3 | ) | 14.8 | |||||||||||
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Minority
interest in after-tax earnings (losses)
|
.1 | .1 | 2.6 | (.4 | ) | |||||||||||
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Net
income (loss)
|
$ | 10.0 | $ | 36.3 | $ | (1.7 | ) | $ | 33.2 | |||||||
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Net
income (loss) per basic and diluted share
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$ | .21 | $ | .75 | $ | (.04 | ) | $ | .68 | |||||||
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Basic
and diluted weighted-average shares used in the calculation of net income
(loss) per share
|
48.6 | 48.6 | 48.6 | 48.6 | ||||||||||||
NL
INDUSTRIES, INC.
COMPONENTS
OF INCOME (LOSS) FROM OPERATIONS
(In
millions)
(Unaudited)
|
Three
months ended
December 31,
|
Year
ended
December 31,
|
|||||||||||||||
|
2007
|
2008
|
2007
|
2008
|
|||||||||||||
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CompX
– component products
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$ | 1.3 | $ | 3.1 | $ | 15.4 | $ | 5.3 | ||||||||
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Insurance
recoveries
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1.8 | 7.2 | 5.6 | 9.6 | ||||||||||||
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Litigation
settlement gain
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- | 48.8 | - | 48.8 | ||||||||||||
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Corporate
expense and other, net
|
(12.0 | ) | (11.1 | ) | (31.3 | ) | (24.9 | ) | ||||||||
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Income
(loss) from operations
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$ | (8.9 | ) | $ | 48.0 | $ | (10.3 | ) | $ | 38.8 | ||||||
CHANGE
IN KRONOS’ TiO2
SALES
(Unaudited)
|
Three
months ended
December 31,
2008
vs. 2007
|
Year
ended
December 31,
2008
vs. 2007
|
|||||||
|
Percentage
change in sales:
|
||||||||
|
TiO2
product pricing
|
9 | % | 2 | % | ||||
|
TiO2
sales volume
|
(26 | )% | (8 | )% | ||||
|
TiO2
product mix
|
1 | % | 2 | % | ||||
|
Changes
in foreign currency exchange
rates
|
(5 | )% | 5 | % | ||||
|
|
||||||||
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Total
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(21 | )% | 1 | % | ||||