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Marketable Securities
 6 Months Ended
Jun. 30, 2012
Marketable securities [Abstract]  
Marketable securities

Note 2 – Marketable securities:

Our marketable securities at June 30, 2012 consist of investments in the publicly-traded shares of related parties: Titanium Metals Corporation (TIMET), Valhi, NL and CompX International Inc. Contran, Mr. Harold Simmons and persons and other entities related to Mr. Simmons own a majority of TIMET’s outstanding common stock, and NL owns a majority of CompX’s outstanding common stock. All of our marketable securities at June 30, 2012 and December 31, 2011 are accounted for as available-for-sale, which are carried at fair value using quoted market prices in active markets for each marketable security, and represent a Level 1 input within the fair value hierarchy. See Note 12. Because we have classified all of our marketable securities as available-for-sale, any unrealized gains or losses on the securities are recognized through other comprehensive income.

 

                                 

Marketable security

   Fair value
measurement
level		     Market
Value		     Cost
Basis		     Unrealized
gains
(losses)		  
          (In millions)  

As of December 31, 2011:

                                

Current assets:

                                

Mutual funds

     1     $ 20.9     $ 21.1     $ (.2 ) 
           

 

 

    

 

 

    

 

 

  
         

Noncurrent assets:

                                

TIMET common stock

     1     $ 63.6     $ 73.9     $ (10.3 ) 

Valhi common stock

     1       34.7       15.3       19.4  

NL and CompX common stocks

     1       .1       .1       —    
           

 

 

    

 

 

    

 

 

  

Total

           $ 98.4     $ 89.3     $ 9.1  
           

 

 

    

 

 

    

 

 

  

As of June 30, 2012:

                                

Noncurrent assets:

                                

TIMET common stock

     1     $ 48.0     $ 73.9     $ (25.9 ) 

Valhi common stock

     1       21.5       15.3       6.2  

NL and CompX common stocks

     1       .1       .1       —    
           

 

 

    

 

 

    

 

 

  

Total

           $ 69.6     $ 89.3     $ (19.7 ) 
           

 

 

    

 

 

    

 

 

  

At December 31, 2011 and June 30, 2012, we held approximately 4.2 million shares, or 2.4%, of TIMET’s outstanding common stock and approximately 1.7 million shares of Valhi’s common stock. At June 30, 2012, the quoted market price of TIMET’s and Valhi’s common stock was $11.31 and $12.49 per share, respectively. At December 31, 2011, such quoted market prices were $14.98 and $20.16 per share, respectively. In May 2012, Valhi implemented a 3-for-1 split of its common stock. We have adjusted all share and per-share disclosures related to our investment in Valhi stock for all periods prior to May 2012 to give effect to the stock split. The stock split had no financial statement impact to us, and our ownership interest in Valhi did not change as a result of the split. We also held a nominal number of shares of CompX and NL common stocks.

The TIMET, Valhi, CompX and NL common stocks we own are subject to the restrictions on resale pursuant to certain provisions of SEC Rule 144. In addition, as a majority-owned subsidiary of Valhi we cannot vote our shares of Valhi common stock under Delaware Corporation Law, but we do receive dividends from Valhi on these shares, when declared and paid.

 

With respect to our investment in TIMET, our cost basis has exceeded its market value since October 2011 but we consider such decline in market price to be temporary at June 30, 2012. We considered all available evidence in reaching this conclusion, including our ability and intent to hold this investment for a reasonable period of time sufficient for the recovery of fair value, as evidenced by the amount of liquidity we currently have with cash on hand. We will continue to monitor the quoted market price for this investment. In this regard, as of August 3, 2012, the aggregate quoted market price for our shares of TIMET common stock was $22.4 million less than our aggregate cost basis. If we conclude in the future that a decline in value of one or more of these securities was other than temporary, we would recognize impairment through an income statement charge at that time. Such income statement impairment charge would be offset in other comprehensive income by the reversal of the previously recognized unrealized losses to the extent they were previously recognized in accumulated other comprehensive income.

At December 31, 2011, we held investments in various mutual funds which had a primary investment objective of holding corporate and government debt securities from U.S. and other markets. These funds were liquidated for cash proceeds in the first quarter of 2012.