DALLAS, TEXAS - March 12, 2014 -
NL Industries, Inc. (NYSE: NL) today reported a loss from
continuing operations attributable to NL stockholders of $33.0
million, or $.68 per share, in the fourth quarter of 2013 compared
to income from continuing operations attributable to NL
stockholders of $2.7 million, or $.05 per share, in the fourth
quarter of 2012. For the full year of 2013, NL reported a
loss from continuing operations attributable to NL stockholders of
$55.3 million, or $1.14 per share compared to income from
continuing operations attributable to NL stockholders of $56.7
million, or $1.16 per share, in 2012.
Net sales increased 16% in the fourth quarter of
2013 and 11% in the full year of 2013 as compared to the same
periods of 2012 primarily due to higher demand for high security
pin tumbler locks within CompX's Security Products business, and to
a lesser extent from an increase in Marine Component sales outside
of the high performance boat market through gains in market
share. Income from continuing operations attributable to
CompX increased to $2.0 million in the fourth quarter of 2013
compare to nil in the 2012 period, and increased to $9.3 million in
the full year of 2013 compared to $5.4 million in the full year of
2012, primarily due to improved cost efficiencies from higher
sales, offset in part by higher self-insured medical costs in
2013. In addition, the 2012 full-year results include the
impact of write-downs on assets held for sale of $1.2 million ($.02
per share, net of income tax benefit and noncontrolling
interest).
Kronos' net sales of $368.6 million in the fourth
quarter of 2013 were $28.2 million, or 7%, lower than in the fourth
quarter of 2012. Net sales of $1,732.4 million in the full
year of 2013 were $243.9 million, or 12%, lower than in the full
year 2012. Kronos' net sales decreased in the fourth quarter
of 2013 as compared to the fourth quarter of 2012 primarily due to
lower average TiO2 selling
prices. Net sales decreased in the full year of 2013
primarily due to lower average TiO2 selling
prices, partially offset by higher sales volumes. Kronos'
average TiO2 selling
prices decreased 10% in the fourth quarter of 2013 as compared to
the fourth quarter of 2012, and decreased 19% for the full year as
compared to 2012. Average TiO2 selling
prices at the end of 2013 were 7% lower than at the end of 2012 and
were 1% higher in the fourth quarter of 2013 as compared to the
third quarter of 2013. Kronos' TiO2 sales volumes
in the fourth quarter of 2013 were 1% lower than in the fourth
quarter of 2012, while sales volumes for the full year 2013 were 6%
higher than in 2012. TiO2 sales volumes
in the fourth quarter of 2013 were impacted by the continued
lockout of unionized employees at Kronos' Canadian TiO2
facility, and the resulting curtailment of production at such
facility during the lockout. A new collective bargaining
agreement with the Canadian workforce was reached effective the end
of November 2013 and production at the facility resumed in February
2014. Fluctuations in currency exchange rates also impacted
Kronos' net sales comparisons, increasing net sales by
approximately $8 million in the fourth quarter and approximately
$18 million in the full year 2013 as compared to the same periods
in 2012. The table at the end of this press release shows how
each of these items impacted the overall change in Kronos'
sales.
Kronos' income from operations
decreased by $2.0 million from income of $1.1 million in the fourth
quarter of 2012 to a loss of $.9 million in the fourth quarter of
2013 primarily due to the net effects of lower raw materials and
other production costs, lower average TiO2selling prices
and one-time costs of approximately $9 million resulting from the
terms of the new collective bargaining agreement reached with
Kronos' Canadian workforce mentioned above. Such one-time
Canadian costs consist principally of a non-cash pension charge of
approximately $7 million due to the curtailment of one of Kronos'
Canadian defined benefit pension plans, and severance and other
back-to-work expenses. For the full year, Kronos' income
(loss) from operations decreased by $492.2 million from income of
$359.6 million in 2012 to a loss of $132.6 million in 2013
primarily due to the net effects of lower average TiO2selling
prices, higher raw materials and other production costs, higher
sales volumes, a third quarter 2013 $35 million litigation
settlement charge (NL's equity interest was $4.5 million or $.09
per share, net of income tax benefit), and the one-time Canadian
costs as mentioned above. As expected, Kronos' cost of sales
per metric ton of TiO2 sold in the
second half of 2013 was lower than the cost of sales per metric ton
of TiO2 sold in the
second half of 2012, primarily due to lower feedstock ore
costs. Kronos' cost of sales per metric ton of TiO2
sold in the first half of 2013 was significantly higher than
TiO2 sold in the
first half of 2012, as a substantial portion of the TiO2
products sold in the first quarter of 2013 (and a portion of the
TiO2 products sold
in the second quarter of 2013) was produced with significantly
higher-cost feedstock ore purchased in 2012.
Kronos' TiO2
production volumes were 2% higher in the fourth quarter of 2013 as
compared to the fourth quarter of 2012, and were 1% higher for the
year. Kronos' production utilization rates were impacted by
the lockout at its Canadian production facility that began in June
2013, as Kronos operated its Canadian plant at approximately 15% of
the plant's capacity with non-union management employees during the
lockout. Kronos' income (loss) from operations was negatively
impacted in 2013 by approximately $19 million of unabsorbed fixed
production and other manufacturing costs associated with the
lockout at the Canadian production facility, of which approximately
$12 million related to the fourth quarter. Kronos' income
from operations was negatively impacted in 2012 by approximately
$25 million of unabsorbed fixed production costs resulting from
reduced production volumes in 2012, most of which was incurred in
the third quarter. Fluctuations in currency exchange rates
increased Kronos' income from operations by approximately $5
million in the fourth quarter of 2013 and decreased income from
operations by approximately $2 million in the full year 2013 as
compared to the same periods in 2012.
As previously reported, Kronos
recognized an aggregate $7.2 million pre-tax interest charge in the
second quarter of 2012 relating to the early extinguishment of its
remaining Senior Secured Notes. Kronos recognized
an aggregate non-cash pre-tax interest charge of $8.9 million in
2013 associated with the write-off of unamortized original issue
discount costs and deferred financing costs, related to the
voluntary prepayment of its term loan of $290 million principal
amount in the first quarter and the remaining $100 million in the
third quarter. NL's aggregate equity interest in such
charges, net of income tax benefit, was $.9 million in 2012 and
$1.2 million in 2013 (or $.02 per diluted share in each year).
Insurance recoveries reflect in
part amounts we received from certain of our former insurance
carriers, and relate to the recovery of prior lead pigment and
asbestos litigation defense costs incurred by us. Such
insurance recoveries aggregated $9.4 million ($6.1 million, or $.13
per share, net of income taxes) in 2013 as compared to $3.3 million
($2.2 million, or $.04 per share, net of income taxes) in
2012.
The litigation settlement gain in
2012 of $15.0 million ($9.7 million, or $.20 per share, net of
income taxes) relates to the third and final closing associated
with certain real property we formerly owned in New Jersey.
Other operating income in the
fourth quarter of 2012 includes a $3.2 million gain ($2.1 million,
or $.04 per share after taxes) on the sale of certain real property
owned by us. In addition, we recognized a $6.4 million
goodwill impairment charge ($.13 per share) in the fourth quarter
of 2012 associated with our insurance brokerage subsidiary.
There is no income tax benefit associated with such charge.
Corporate expenses increased $55.8
million in the fourth quarter of 2013 as compared to the fourth
quarter of 2012, and increased $58.0 million in the full year 2013
as compared to 2012, primarily due to higher environmental and
related costs.
Securities transaction gain in
the fourth quarter of 2012 consists of a $16.6 million gain ($10.8
million, or $.22 per share after taxes) on the sale, pursuant to a
cash tender offer by a third party, of all of our shares of
Titanium Metals Corporation (TIMET) common stock for $23.9
million.
In December 2012, we completed the sale of CompX's
Furniture Components operations to a competitor for proceeds, net
of expenses, of approximately $58.0 million in cash. We
recognized a pre-tax gain of approximately $23.7 million in the
fourth quarter of 2012 ($14.5 million, or $.30 per share, net of
income taxes and noncontrolling interests). Discontinued
operations in 2012 also includes full-year income related to the
operations of such disposed unit of $3.3 million, or $.07 per share
in 2012, net of income taxes and noncontrolling interest.
In February 2014, NL's Board of Directors deferred
consideration of a first quarter 2014 cash dividend. The
declaration and payment of future dividends, and the amount
thereof, is discretionary and is dependent upon our results of
operations, financial condition, cash requirements for businesses,
contractual restrictions and other factors deemed relevant by our
Board of Directors. The amount and timing of past dividends
is not necessarily indicative of the amount or timing of any future
dividends which might be paid.
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 our products
· The extent
of the dependence of certain of our businesses on certain market
sectors
· The
cyclicality of our businesses (such as Kronos' TiO2
operations)
· Customer
inventory levels
· Unexpected
or earlier-than-expected industry capacity expansion (such as the
TiO2 industry)
· Changes in
raw material and other operating costs (such as energy, ore, zinc
and brass costs) and our ability to pass those costs on to our
customers or offset them with reductions in other operating
costs
· Changes in
the availability of raw material (such as ore)
· 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)
· Competitive
pricing, products and substitute products
· Customer and
competitor strategies
·
Uncertainties associated with the development of new product
features
· Potential
consolidation of Kronos' competitors
· The impact
of pricing and production decisions
· Competitive
technology positions
· Potential
difficulties in integrating future acquisitions
· Potential
difficulties in implementing new manufacturing and accounting
software systems
· The
introduction of trade barriers
· Possible
disruption of Kronos' or CompX's business, or increases in
our cost of doing business resulting from terrorist
activities or global conflicts
· The impact
of current or future government regulations (including employee
healthcare benefit related regulations)
· 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
and the Canadian dollar), or possible disruptions to our business
resulting from potential instability resulting from uncertainties
associated with the euro
· Operating
interruptions (including, but not limited to, labor disputes,
leaks, natural disasters, fires, explosions, unscheduled or
unplanned downtime, transportation interruptions and cyber
attacks)
· Decisions to
sell operating assets other than in the ordinary course of
business
· Kronos'
ability to renew or refinance debt
· Our ability
to maintain sufficient liquidity
· The timing
and amounts of insurance recoveries
· The extent
to which our subsidiaries or affiliates were to become unable to
pay us dividends
· The ultimate
outcome of income tax audits, tax settlement initiatives or other
tax matters
· 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
·
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)
· Government
laws and regulations and possible changes therein (such as changes
in government regulations which might impose various obligations on
former manufacturers of lead pigment and lead-based paint,
including us, with respect to asserted health concerns associated
with the use of such products)
· The ultimate
resolution of pending litigation (such as our lead pigment and
environmental matters)
· 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 and performance marine
components), chemicals (TiO2) and other
businesses.
NL INDUSTRIES,
INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
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(In millions,
except earnings per share) |
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Three months
ended |
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Year ended |
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December
31, |
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December
31, |
|
2012 |
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2013 |
|
2012 |
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2013 |
|
(Unaudited) |
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Net sales |
$ 19.3 |
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$
22.3 |
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$ 83.2 |
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$
92.0 |
Cost of sales |
13.8 |
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15.8 |
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58.9 |
|
64.4 |
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Gross
margin |
5.5 |
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6.5 |
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24.3 |
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27.6 |
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Selling, general and administrative
expense |
4.7 |
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4.5 |
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17.7 |
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18.3 |
Other operating income
(expense): |
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Insurance
recoveries |
.7 |
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5.6 |
|
3.3 |
|
9.4 |
Litigation
settlement gain |
- |
|
- |
|
15.0 |
|
- |
Assets held
for sale write-down |
(.8) |
|
- |
|
(1.2) |
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- |
Other
income, net |
3.6 |
|
.1 |
|
3.6 |
|
.1 |
Goodwill
impairment |
(6.4) |
|
- |
|
(6.4) |
|
- |
Corporate
expense and other, net |
(4.4) |
|
(60.2) |
|
(29.0) |
|
(87.0) |
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Loss from
operations |
(6.5) |
|
(52.5) |
|
(8.1) |
|
(68.2) |
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Equity in earnings (loss) of Kronos
Worldwide, Inc. |
(5.6) |
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.9 |
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66.4 |
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(31.0) |
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Other income (expense): |
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Securities
transaction gain |
16.6 |
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- |
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16.6 |
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- |
Interest and
dividends |
.8 |
|
.7 |
|
3.2 |
|
2.9 |
Interest
expense |
(.2) |
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- |
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(1.1) |
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(.1) |
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Income
(loss) from continuing operations
before income taxes |
5.1 |
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(50.9) |
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77.0 |
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(96.4) |
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Income tax expense (benefit) |
2.4 |
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(18.1) |
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19.9 |
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(41.9) |
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Income
(loss) from continuing operations |
2.7 |
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(32.8) |
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57.1 |
|
(54.5) |
Income from
discontinued operations, net of tax |
18.6 |
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- |
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21.9 |
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- |
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Net income (loss) |
21.3 |
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(32.8) |
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79.0 |
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(54.5) |
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Noncontrolling interest in net income of subsidiary |
3.7 |
|
.2 |
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4.5 |
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.8 |
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Net income (loss) attributable to NL
stockholders |
$ 17.6 |
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$
(33.0) |
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$ 74.5 |
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$
(55.3) |
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NL INDUSTRIES,
INC. |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(CONTINUED) |
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(In millions,
except earnings per share) |
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Three months
ended |
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Year ended |
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December
31, |
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December
31, |
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2012 |
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2013 |
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2012 |
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2013 |
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(Unaudited) |
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Amounts attributable to NL
stockholders: |
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Income (loss) from
continuing operations |
$ 2.7 |
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$
(33.0) |
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$ 56.7 |
|
$
(55.3) |
Income from discontinued
operations |
14.9 |
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- |
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17.8 |
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- |
Net income
(loss) attributable to NL stockholders |
$ 17.6 |
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$
(33.0) |
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$ 74.5 |
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$
(55.3) |
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Net income (loss) per
share: |
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Continuing
operations |
$ .05 |
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$
(.68) |
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$ 1.16 |
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$
(1.14) |
Discontinued
operations |
.31 |
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- |
|
.37 |
|
- |
Net income (loss) per share |
$ .36 |
|
$
(.68) |
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$ 1.53 |
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$
(1.14) |
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Weighted-average shares
used in the calculation |
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of net
income (loss) per share |
48.7 |
|
48.7 |
|
48.7 |
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48.7 |
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NL INDUSTRIES,
INC. |
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COMPONENTS OF LOSS ATTRIBUTABLE |
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TO CONTINUING
OPERATIONS |
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(In
millions) |
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(Unaudited) |
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Three months
ended |
|
Year ended |
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December
31, |
|
December
31, |
|
2012 |
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2013 |
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2012 |
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2013 |
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CompX - component products |
$
- |
|
$
2.0 |
|
$ 5.4 |
|
$
9.3 |
Insurance recoveries |
.7 |
|
5.6 |
|
3.3 |
|
9.4 |
Litigation settlement gain |
- |
|
- |
|
15.0 |
|
- |
Other income, net |
3.6 |
|
.1 |
|
3.6 |
|
.1 |
Goodwill impairment |
(6.4) |
|
- |
|
(6.4) |
|
- |
Corporate expense |
(4.4) |
|
(60.2) |
|
(29.0) |
|
(87.0) |
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Loss from
operations |
$ (6.5) |
|
$
(52.5) |
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$ (8.1) |
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$
(68.2) |
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CHANGE IN
KRONOS' TiO2
SALES |
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(Unaudited) |
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Three months
ended |
|
Year ended |
|
December 31, |
|
December 31, |
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2013 vs.
2012 |
|
2013 vs.
2012 |
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Percentage change in sales: |
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TiO2 product
pricing |
|
(10) |
% |
|
|
(19) |
% |
TiO2 sales
volume |
|
(1) |
% |
|
|
6 |
% |
TiO2 product
mix |
|
2 |
% |
|
|
- |
% |
Changes in currency exchange rates |
|
2 |
% |
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|
1 |
% |
|
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Total |
|
(7) |
% |
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(12) |
% |
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Source: NL Industries,
Inc.
Contact: Gregory M. Swalwell, Vice President, Finance and
Chief Financial Officer, (972) 233-1700
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: NL Industries via Globenewswire
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