SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 2000
NL INDUSTRIES, INC.
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(Exact name of registrant as specified in charter)
New Jersey 1-640 13-5267260
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(State or other (Commission File No.) (Employer ID No.)
jurisdiction of
incorporation)
16825 Northchase Dr., Suite 1200, Houston, Texas 77060
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (281) 423-3300
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Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
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On October 18, 2000 , the Registrant issued the press release attached
hereto as Exhibit 99.1 and incorporated herein in its entirety by this
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits
(i) Exhibit 99.1. Press Release dated October 18, 2000 .
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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 thereunto duly authorized.
NL INDUSTRIES, INC.
(Registrant)
/s/Robert D. Hardy
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Robert D. Hardy
Vice President & Controller
Dated: October 20, 2000
Susan E. Alderton
Chief Financial Officer
(281) 423-3332
Exhibit 99.1
FOR IMMEDIATE RELEASE
NL REPORTS 82% INCREASE IN THIRD QUARTER EARNINGS PER SHARE
HOUSTON, TEXAS -- October 18, 2000 -- NL Industries, Inc. (NYSE: NL) today
reported net income of $.60 per diluted share for the third quarter of 2000, an
82% improvement from the $.33 per diluted share reported in the third quarter of
1999.
Net income for the first nine months of 2000 was $2.31 per diluted share
including a second-quarter $.54 per diluted share settlement gain with a former
insurance carrier. Net income in the first nine months of 1999 was $2.75 per
diluted share including a second- quarter $1.73 per diluted share income tax
benefit. Excluding the 2000 settlement gain and 1999 income tax benefit, net
income in the first nine months of 2000 was $1.77 per diluted share, up 74% from
$1.02 per diluted share reported in the first nine months of 1999.
Operating income of Kronos' titanium dioxide pigments ("TiO2") business in the
third quarter of 2000 increased 65% to $57.5 million compared to $34.8 million
in the third quarter of 1999. The improved operating income is primarily due to
10% higher average selling prices in billing currencies and 14% higher
production volume, partially offset by 4% lower sales volume. Third-quarter
operating income declined from the $62.7 million reported in the second quarter
of 2000 due to 6% lower sales volume partially offset by 3% higher average
selling prices in billing currencies and 3% higher production volume. The second
quarter of 2000 also reflects $4.1 million of accrued insurance reimbursements.
Operating income in the first nine months of 2000 increased 52% to $166.5
million compared to $109.9 million in the first nine months of 1999 due to 5%
higher average selling prices in billing currencies, 10% higher production
volume and 8% higher sales volume.
Kronos' average selling prices in billing currencies (which excludes the effects
of foreign currency translation) during the third quarter of 2000 were 10%
higher than in the third quarter of 1999. Prices at the end of September were
slightly higher than average selling prices during the third quarter. Kronos'
prices were up in all major regions from the third quarter of 1999 with the
greatest improvement being realized in the European and export markets. Compared
to the second quarter of 2000, prices were 5% higher in Europe and 4% higher in
the export markets. Prices were flat in North America versus the second quarter
of 2000.
Kronos' third-quarter 2000 average selling prices expressed in U.S. dollars
computed using actual foreign currency exchange rates prevailing during the
respective periods increased 4% from the third quarter of 1999 and 2% from the
second quarter of 2000. Comparisons of Kronos' average selling prices using
actual foreign currency exchange rates are
significantly affected by the recent strength of the U.S. dollar relative to the
euro and other European currencies. Since a majority of Kronos' net sales and a
majority of its production and other costs are incurred in currencies other than
the U.S. dollar, the net effect of foreign currency volatility on Kronos'
operating income was not significant.
Susan E. Alderton, Chief Financial Officer, stated, "The continued strength of
the U.S. dollar relative to European currencies has hurt the earnings of many
U.S. multinational companies. Fortunately, NL's cost structure mitigates a large
part of the impact of currency volatility on our earnings."
Kronos' third-quarter 2000 sales volume was at near record levels and decreased
4% from the third quarter of 1999 and 6% from the second quarter of 2000. Sales
volume in the first nine months of 2000 was 8% higher than the first nine months
of 1999. The Company's third-quarter 2000 production volume was 14% higher than
the comparable 1999 period with operating rates near full capacity in 2000
compared to 90% in the third quarter of 1999. Finished goods inventory levels at
the end of September remained even with June 2000 levels representing about 1.5
months of sales in inventory.
J. Landis Martin, President and Chief Executive Officer, stated, "We are pleased
with NL's operating results in the third quarter. We expect TiO2 prices during
the fourth quarter of 2000 to be slightly higher than average TiO2 prices in the
third quarter of 2000. TiO2 sales volume declined modestly from the record
levels achieved in third quarter of 1999 and the second quarter of 2000 and we
expect TiO2 demand in the fourth quarter of 2000 will also be moderately below
that of the record fourth quarter of 1999. For the remainder of the year we
intend to operate our plants near full capacity to meet anticipated customer
demand."
Corporate income in 2000 includes a second-quarter $43 million net gain from a
settlement with a former insurance carrier. Securities earnings in 2000 includes
a second-quarter $5.6 million securities gain related to common stock received
from the demutualization of an insurance company from which NL had purchased
certain insurance policies.
Corporate expense in the third quarter of 2000 was $6.8 million or $2.0 million
higher than the third quarter of 1999, primarily as a result of higher legal
expenses. Corporate expense in the nine months ended September 30, 2000 was
$23.0 million or $7.2 million higher than the 1999 period, primarily as a result
of higher legal expenses and higher environmental remediation accruals.
Interest expense in the third quarter and first nine months of 2000 was down
$1.4 million and $4.6 million, respectively, from the comparable periods in 1999
primarily due to reduced levels of outstanding euro-denominated debt. During the
third quarter of 2000, the Company repaid $12.2 million of its euro-denominated
short-term debt with cash flow from operations.
The Company's net debt at September 30, 2000 was $79 million, down $47 million
from June 30, 2000. Net debt at September 30, 2000 is comprised of total debt of
$267 million less cash and restricted cash of $188 million.
Minority interest relates to the Company's majority-owned environmental
management subsidiary.
A conference call regarding NL's earnings announcement is scheduled for October
18, 2000 at 11:00 a.m. (EDT). Mr. Martin will host the call. Participants can
access the call by dialing 888-273-9891 (domestic) and 612-332-0226
(international). The passcode is ll NL Earnings. A taped replay of the call will
be available after 2:30 p.m. (EDT) the day of ll the call through October 25,
2000 by calling 800-475-6701 (domestic) and 320-365-3844 ll (international), and
using access code 541757. The call will also be broadcast live on the ll
Internet at StreetEvents.com and an online replay will be available
approximately one hour ll after the call. ll
NL Industries, Inc. is a major international producer of titanium dioxide
pigments.
The statements in this release (and statements made in the conference call
referred to above) relating to matters that are not historical facts are
forward-looking statements that represent management's beliefs and assumptions
based on currently available information. Forward-looking statements can be
identified by the use of words such as "believes," "intends," "may," "will,"
"should," "anticipates," "expects," or comparable terminology or by discussions
of strategy or trends. 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 risks and uncertainties, including, but not limited to, the
cyclicality of the titanium dioxide industry, global economic conditions, global
productive capacity, customer inventory levels, changes in product pricing,
competitive technology positions, operating interruptions (including, but not
limited to, labor disputes, leaks, fires, explosions, unscheduled downtime and
transportation interruptions), the ultimate resolution of pending or possible
future lead pigment litigation and legislative developments related to the lead
paint litigation, the outcome of other litigation, and other risks and
uncertainties detailed in the Company's Securities and Exchange Commission
filings. 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 assumes no duty to update any forward-looking statements.
NL INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
(Unaudited)
Quarters ended Nine months ended
September 30, September 30,
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1999 2000 1999 2000
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Revenues and other income:
Net sales .................................. $ 242.6 $ 242.3 $ 676.8 $ 724.4
Other income, excluding corporate .......... 1.2 1.4 11.7 5.6
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243.8 243.7 688.5 730.0
Cost of sales ................................ 181.7 159.0 496.6 482.3
Selling, general and administrative, excluding
corporate ................................... 27.3 27.2 82.0 81.2
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Operating income ......................... 34.8 57.5 109.9 166.5
Corporate income (expense):
Securities earnings ........................ 1.7 2.5 4.8 11.6
Litigation settlement gain, net and other
income ................................... 1.1 1.0 3.5 46.2
Expenses ................................... (4.8) (6.8) (15.8) (23.0)
Interest expense ........................... (9.1) (7.7) (28.1) (23.5)
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Income before income taxes and minority
interest ................................ 23.7 46.5 74.3 177.8
Income tax benefit (expense) ................. (6.6) (14.8) 70.9 (58.8)
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Income before minority interest .......... 17.1 31.7 145.2 119.0
Minority interest ............................ -- 1.5 2.3 1.7
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Net income ............................... $ 17.1 $ 30.2 $ 142.9 $ 117.3
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Earnings per share:
Basic ...................................... $ .33 $ .60 $ 2.76 $ 2.32
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Diluted .................................... $ .33 $ .60 $ 2.75 $ 2.31
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Weighted average shares used in the
calculation of earnings per share:
Basic shares ............................... 51.8 50.2 51.8 50.5
Dilutive impact of stock options ........... .1 .4 .1 .4
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Diluted shares ............................. 51.9 50.6 51.9 50.9
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