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
During the third quarter of 2008 we recorded a noncash impairment charge of
Kronos' net sales of
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
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
Litigation settlement gain relates to a
Securities transactions gains in 2007 relate principally to a
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
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
The goodwill impairment charge of
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:
- Future supply and demand for the Company's products,
- The extent of the dependence of the Company's businesses on certain market sectors,
- The cyclicality of certain of the Company's businesses,
- The impact of certain long-term contracts on certain of the Company's businesses,
- Customer inventory levels,
- Changes in raw material and other operating costs,
- The possibility of labor disruptions,
- General global economic and political conditions,
- Competitive products and substitute products,
- Possible disruption of business or increases in the cost of doing business resulting from terrorist activities or global conflicts,
- Customer and competitor strategies,
- Potential consolidation or solvency of competitors,
- The impact of pricing and production decisions,
- Competitive technology positions,
- Service industry employment levels,
- Demand for high performance marine components,
- The introduction of trade barriers,
- Fluctuations in currency exchange rates,
- Operating interruptions,
- The timing and amount of insurance recoveries,
- The ability of the Company to renew or refinance credit facilities,
- The ability of the Company to maintain sufficient liquidity,
- The extent to which the Company's subsidiaries were to become unable to pay dividends to the Company,
- Uncertainties associated with new product development,
- 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,
- Potential difficulties in integrating completed or future acquisitions,
- Decisions to sell operating assets other than in the ordinary course of business,
- Environmental matters,
- Government laws and regulations and possible changes therein,
- The ultimate resolution of pending litigation, and
- 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 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 Year ended
December 31, December 31,
------------ ------------
2007 2008 2007 2008
---- ---- ---- ----
(Unaudited)
Net sales $42.5 $37.4 $177.7 $165.5
Cost of goods sold 33.2 29.2 132.5 125.7
---- ---- ----- -----
Gross margin 9.3 8.2 45.2 39.8
Selling, general and
administrative
expense 6.1 5.6 25.8 24.8
Other operating income
(expense):
Insurance recoveries 1.8 7.2 5.6 9.6
Facility consolidation
expense (1.9) - (2.7) -
Goodwill impairment - - - (10.1)
Litigation settlement
gain - 48.8 - 48.8
Currency transaction
gains (losses) (.1) .6 (1.1) .7
Corporate expense and
other, net (11.9) (11.2) (31.5) (25.2)
------ ------ ------ ------
Income (loss) from
operations (8.9) 48.0 (10.3) 38.8
Equity in earnings
(losses) of Kronos
Worldwide, Inc. .6 2.5 (23.9) 3.2
General corporate items:
Interest and dividend
income 1.2 1.1 4.8 8.0
Securities transactions
gains, net 22.7 - 22.7 -
Interest expense (.6) (.6) (.7) (2.4)
---- ---- ---- -----
Income (loss) before
income taxes and
minority interest 15.0 51.0 (7.4) 47.6
Provision for income
taxes (benefit) 4.9 14.6 (8.3) 14.8
Minority interest in
after-tax earnings
(losses) .1 .1 2.6 (.4)
-- -- --- ----
Net income (loss) $10.0 $36.3 $(1.7) $33.2
===== ===== ====== =====
Net income (loss) per
basic and diluted
share $.21 $.75 $(.04) $.68
======= ======= ======== =======
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 Year ended
December 31, December 31,
------------ ------------
2007 2008 2007 2008
---- ---- ---- ----
CompX - component products $1.3 $3.1 $15.4 $5.3
Insurance recoveries 1.8 7.2 5.6 9.6
Litigation settlement gain - 48.8 - 48.8
Corporate expense and other,
net (12.0) (11.1) (31.3) (24.9)
------ ------ ------ ------
Income (loss) from
operations $(8.9) $48.0 $(10.3) $38.8
====== ===== ======= =====
CHANGE IN KRONOS' TiO2 SALES
(Unaudited)
Three months ended Year ended
December 31, December 31,
2008 vs. 2007 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 %
---- ---
Total (21)% 1 %
===== ===
SOURCE NL Industries, Inc.
