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 9,
2010
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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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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5430
LBJ Freeway, Suite 1700, Dallas, Texas
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75240-2697
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code
(972)
233-1700
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(Former
name or former address, if changed since last report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2):
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
2.02
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Results
of Operations and Financial
Condition.
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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 9, 2010, 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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Item
No.
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Exhibit
Index
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99.1
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Press
release dated March 9, 2010 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
9, 2010
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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 9, 2010 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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News
Release
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||
FOR IMMEDIATE
RELEASE
NL
REPORTS FOURTH QUARTER RESULTS
DALLAS,
TEXAS – March 9, 2010 - NL Industries, Inc. (NYSE:NL) today reported a net loss
attributable to NL stockholders of $.9 million, or $.02 per share, in the fourth
quarter of 2009 compared to net income of $36.3 million, or $.75 per diluted
share, in the fourth quarter of 2008. For the full year 2009, NL
reported a net loss attributable to NL stockholders of $11.8 million, or $.24
per share compared to net income of $33.2 million, or $.68 per diluted share,
for 2008.
Net sales
decreased 22% in the fourth quarter of 2009 as compared to the fourth quarter of
2008, and decreased 30% in 2009 compared to 2008. The decreases were
principally due to lower order rates from many of CompX’s customers resulting
from
the
economic slowdown in North America. Net sales were also impacted by
relative changes in currency exchange rates, which increased sales by $.2
million for the quarter and decreased sales by $.8 million for the
year. Loss from operations attributable to CompX was $2.0 million in
the fourth quarter of 2009 compared to income from operations of $3.1
million in the same period of 2008. During the third quarter of
2008, we recorded a noncash impairment charge of $10.1 million for our marine
components reporting unit. Excluding this goodwill impairment charge,
income from operations attributable to CompX decreased in 2009 to a loss of $4.0
million compared to income $15.4 million in 2008. The decrease is
primarily due to reduced coverage of overhead and fixed manufacturing costs as
well as selling and general administrative costs as a result of lower sales
volumes and approximately $2.1 million and $4.6 million in patent litigation
expenses incurred in the fourth quarter and full year, respectively, of
2009. Changes in currency exchange rates negatively impacted
component products income from operations comparisons by a negligible amount for
the quarter and year in 2009 compared to the same periods in 2008.
Kronos’
net sales of $301.9 million in the fourth quarter of 2009 were $55.0 million, or
22%, higher than in the fourth quarter of 2008. Net sales of
$1,142.0 million for the full year of 2009 were $174.9 million, or 13%, lower
than in the full year of 2008. Kronos’ net sales increased in the
fourth quarter of 2009 primarily due to higher TiO2 sales
volumes and the favorable effect of fluctuations in currency exchange rates,
which increased sales by approximately $20 million, partially offset by lower
average selling prices. For the full year period, Kronos’ net sales
were lower in 2009 primarily due to lower sales volumes and lower average
selling prices and the unfavorable effect of fluctuations in currency exchange
rates, which decreased sales by approximately $35 million. Although
average selling prices were 5% lower in the fourth quarter of 2009 as compared
to the fourth quarter of 2008, Kronos’ average selling prices at the end of the
fourth quarter 2009 were 2% higher than at the end of the third quarter
2009. The table at the end of this release shows the impact of each
of these items on Kronos’ sales.
Kronos’
income from operations decreased by $8.6 million from $19.9 million in the
fourth quarter of 2008 to $11.3 million in the fourth quarter of
2009. For the full year, Kronos’ income from operations decreased by
$62.9 million from $47.2 million in 2008 to a loss from operations of $15.7
million in 2009. Kronos’ income from operations decreased in the
fourth quarter of 2009 as compared to the fourth quarter of 2008 due to lower
average TiO2 selling
prices and the unfavorable effect of fluctuations in currency exchange rates,
which decreased income from operations by approximately $10
million. For the full year 2009, income from operations declined
primarily due to the negative effects of production curtailments in the first
half of the year, which resulted in higher manufacturing costs per ton of
pigment production during the year, as well as to the effect of lower sales
volumes and lower average TiO2 selling
prices. This was partially offset by lower maintenance costs and the
favorable effects of fluctuations in currency exchange rates, which increased
Kronos’ income from operations by approximately $40 million. Kronos’
TiO2
production volumes were 1% lower in the fourth quarter of 2009 and 22% lower in
the full year 2009 as compared to the same periods in 2008.
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’ income tax benefit in 2009 includes a $4.7
million (NL’s equity interest was $1.1 million, or $.02 per share, net of tax)
non-cash deferred income tax benefit in the fourth quarter related to a net
decrease in its reserve for uncertain tax positions.
Insurance
recoveries relate to amounts we received from certain of our former insurance
carriers, and relate principally to the recovery of prior lead pigment and
asbestos litigation defense costs incurred by us. These recoveries
aggregated $4.6 million in 2009 ($3.0 million, or $.06 per share, net of income
taxes) and $9.6 million in 2008 ($6.2 million, or $.13 per share, net of income
taxes).
Litigation
settlement gains of $48.8 million ($31.5 million, or $.65 per diluted share, net
of income taxes) in the fourth quarter of 2008 and $11.3 million ($7.3 million,
or $.15 per share, net of income taxes) in the second quarter of 2009 relate to
the first and second closings, respectively, associated with the settlement of
condemnation proceedings on certain real property we formerly owned that is
subject to environmental remediation.
Corporate
expenses were lower in the fourth quarter and full year of 2009 as compared to
the same periods of 2008 primarily due to lower litigation and related expenses
and lower environmental expenses offset in part by higher defined benefit
pension expense.
Interest
income in 2008 includes $4.3 million ($.06 per share) related to interest
received in the second quarter related to certain escrow funds.
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 2009 includes a $.6 million ($.01 per share) benefit related to a
net 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 our products,
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·
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The
extent of the dependence of certain of our businesses on certain market
sectors,
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·
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The
cyclicality of our businesses (such as Kronos’ titanium dioxide pigments
(“TiO2”)
operations),
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·
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Customer
inventory levels (such as the extent to which Kronos’ customers may, from
time to time, accelerate purchases of TiO2 in
advance of anticipated price increases or defer purchases of TiO2 in
advance of anticipated price
decreases),
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·
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Changes
in raw material and other operating costs (such as energy and steel
costs),
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·
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General
global economic and political conditions (such as changes in the level of
gross domestic product in various regions of the world and the impact of
such changes on demand for, among other things, TiO2 and
component products),
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·
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Possible
disruption of our business or increases in the cost of doing business
resulting from terrorist activities or global
conflicts,
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Competitive
products and substitute products, including increased competition from
low-cost manufacturing sources (such as
China),
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Customer
and competitor strategies,
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Potential
consolidation or solvency of our
competitors,
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Demand
for office furniture,
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·
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Demand
for high performance marine
components,
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·
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Substitute
products,
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·
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The
impact of pricing and production
decisions,
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·
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Competitive
technology positions,
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·
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The
introduction of trade barriers,
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·
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Service
industry employment levels,
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·
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Fluctuations
in currency exchange rates (such as changes in the exchange rate between
the U.S. dollar and each of the euro, the Norwegian krone, the Canadian
dollar and the New Taiwan dollar),
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·
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Operating
interruptions (including, but not limited to, labor disputes, leaks,
natural disasters, fires, explosions, unscheduled or unplanned downtime
and transportation interruptions),
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·
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The
timing and amounts of insurance
recoveries,
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·
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Our
ability to maintain sufficient
liquidity,
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·
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The
extent to which our subsidiaries were to become unable to pay us
dividends,
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·
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CompX’s
and Kronos’ ability to renew or refinance credit
facilities,
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·
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CompX’s
ability to comply with covenants contained in its revolving bank credit
facility,
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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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Potential
difficulties in integrating completed or future
acquisitions,
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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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Uncertainties
associated with new product
development,
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·
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Our
ability to utilize income tax attributes or changes in income tax rates
related to such attributes, the benefits of which have been recognized
under the more-likely-than-not recognition
criteria,
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·
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Environmental
matters (such as those requiring compliance with emission and discharge
standards for existing and new facilities or new developments regarding
environmental remediation at sites related to our former
operations),
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·
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Government
laws and regulations and possible changes therein (such as changes in
government regulations which might impose various obligations on present
and former manufacturers of lead pigment and lead-based paint, including
us, with respect to asserted health concerns associated with the use of
such products),
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·
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The
ultimate resolution of pending litigation (such as our lead pigment and
environmental matters) 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)
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Three
months ended
December 31,
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Year
ended
December 31,
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|||||||||||||||
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2008
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2009
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2008
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2009
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(Unaudited)
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||||||||||||||||
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Net
sales
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$ | 37.4 | $ | 29.0 | $ | 165.5 | $ | 116.1 | ||||||||
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Cost
of goods sold
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29.2 | 23.2 | 125.7 | 92.3 | ||||||||||||
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Gross
margin
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8.2 | 5.8 | 39.8 | 23.8 | ||||||||||||
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Selling,
general and administrative expense
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5.6 | 7.7 | 24.8 | 26.7 | ||||||||||||
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Other
operating income (expense):
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||||||||||||||||
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Insurance
recoveries
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7.2 | .5 | 9.6 | 4.6 | ||||||||||||
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Assets
held for sale write-down
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- | - | - | (.7 | ) | |||||||||||
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Goodwill
impairment
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- | - | (10.1 | ) | - | |||||||||||
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Litigation
settlement gains
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48.8 | - | 48.8 | 11.3 | ||||||||||||
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Corporate
expense and other, net
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(10.6 | ) | (9.3 | ) | (24.5 | ) | (23.9 | ) | ||||||||
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Income
(loss) from operations
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48.0 | (10.7 | ) | 38.8 | (11.6 | ) | ||||||||||
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Equity
in net income (loss) of Kronos Worldwide, Inc.
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2.5 | 1.9 | 3.2 | (12.5 | ) | |||||||||||
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General
corporate items:
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||||||||||||||||
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Interest
and dividend income
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1.1 | .7 | 8.0 | 2.8 | ||||||||||||
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Interest
expense
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(.6 | ) | (.3 | ) | (2.4 | ) | (1.1 | ) | ||||||||
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Income
(loss) before income taxes
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51.0 | (8.4 | ) | 47.6 | (22.4 | ) | ||||||||||
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Provision
for income taxes (benefit)
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14.6 | (7.4 | ) | 14.8 | (10.3 | ) | ||||||||||
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Net
income (loss)
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36.4 | (1.0 | ) | 32.8 | (12.1 | ) | ||||||||||
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Noncontrolling
interest in net income (loss)
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.1 | (.1 | ) | (.4 | ) | (.3 | ) | |||||||||
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Net
income (loss) attributable to NL stockholders
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$ | 36.3 | $ | (.9 | ) | $ | 33.2 | $ | (11.8 | ) | ||||||
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Net
income (loss) per basic and diluted share
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$ | .75 | $ | (.02 | ) | $ | .68 | $ | (.24 | ) | ||||||
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Basic
and diluted average shares outstanding
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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,
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|||||||||||||||
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2008
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2009
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2008
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2009
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|||||||||||||
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CompX
– component products
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$ | 3.1 | $ | (2.0 | ) | $ | 5.3 | $ | (4.0 | ) | ||||||
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Insurance
recoveries
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7.2 | .5 | 9.6 | 4.6 | ||||||||||||
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Litigation
settlement gain
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48.8 | - | 48.8 | 11.3 | ||||||||||||
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Corporate
expense and other, net
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(11.1 | ) | (9.2 | ) | (24.9 | ) | (23.5 | ) | ||||||||
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||||||||||||||||
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Income
(loss) from operations
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$ | 48.0 | $ | (10.7 | ) | $ | 38.8 | $ | (11.6 | ) | ||||||
CHANGE
IN KRONOS’ TiO2
SALES
(Unaudited)
|
Three
months ended
December 31,
2009
vs. 2008
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Year
ended
December 31,
2009
vs. 2008
|
|||||||
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Percentage
change in sales:
|
||||||||
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TiO2
product pricing
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(5 | )% | (1 | )% | ||||
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TiO2
sales volume
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25 | % | (7 | )% | ||||
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TiO2
product mix
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(6 | )% | (2 | )% | ||||
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Changes
in currency exchange rates
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8 | % | (3 | )% | ||||
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||||||||
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Total
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22 | % | (13 | )% | ||||