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Business And Geographic Segments
 12 Months Ended
Dec. 31, 2011
Business And Geographic Segments [Abstract]  
Business And Geographic Segments

Note 2—Business and geographic segments:

 

Business segment

    Entity    % controlled at
December  31, 2011		  

Chemicals

    Kronos      80 % 

Component products

    CompX      87 % 

Waste management

    WCS      100 % 

Our control of Kronos includes 50% we hold directly and 30% held directly by NL. We own 83% of NL. Our control of CompX is through NL. See Note 3.

We are organized based upon our operating subsidiaries. Our operating segments are defined as components of our consolidated operations about which separate financial information is available that is regularly evaluated by our chief operating decision maker in determining how to allocate resources and in assessing performance. Each operating segment is separately managed, and each operating segment represents a strategic business unit offering different products.

 

We have the following three consolidated reportable operating segments.

 

  •  

Chemicals—Our chemicals segment is operated through our majority control of Kronos. Kronos is a leading global producer and marketer of value-added titanium dioxide pigments ("TiO2"), a base industrial product used in a diverse range of customer applications and end-use markets, including coatings, plastics, paper, food, cosmetics, inks, textile fibers, rubber, pharmaceuticals, glass, ceramics and other industrial and consumer markets. See Note 7.

 

  •  

Component Products—We operate in the component products industry through our majority control of CompX. CompX is a leading manufacturer of engineered components utilized in a variety of applications and industries. CompX manufactures engineered components that are sold to a variety of industries including office furniture, recreational transportation (including boats), mailboxes, toolboxes, home appliances, banking equipment, vending equipment and computer related equipment. CompX has production facilities in North America and Asia.

 

  •  

Waste Management—WCS is our subsidiary which operates a West Texas facility for the processing, treatment, storage and disposal of a broad range of low-level radioactive, hazardous, toxic and other wastes. WCS obtained a byproduct disposal license in 2008 and began disposal operations at this facility in October 2009. In January 2009 WCS received a LLRW disposal license, which was signed in September 2009. Construction of the Compact and Federal LLRW disposal facilities began in January 2011. Construction of the Compact LLRW disposal facility was substantially complete in November 2011, and the Federal LLRW disposal facility was substantially complete in February 2012. We currently expect the Compact LLRW disposal facility will be fully certified and operational by the end of March 2012, with the Federal LLRW disposal facility fully certified and operational later in 2012.

We evaluate segment performance based on segment operating income, which we define as income before income taxes and interest expense, exclusive of certain non-recurring items (such as gains or losses on disposition of business units and other long-lived assets outside the ordinary course of business and certain legal settlements) and certain general corporate income and expense items (including securities transactions gains and losses and interest and dividend income), which are not attributable to the operations of the reportable operating segments. The accounting policies of our reportable operating segments are the same as those described in Note 1. Segment results we report may differ from amounts separately reported by our various subsidiaries and affiliates due to purchase accounting adjustments and related amortization or differences in how we define operating income. Intersegment sales are not material.

Interest income included in the calculation of segment operating income is not material in 2009, 2010 or 2011. Capital expenditures include additions to property and equipment but exclude amounts we paid for business units acquired in business combinations. Depreciation and amortization related to each reportable operating segment includes amortization of any intangible assets attributable to the segment. Amortization of deferred financing costs and any premium or discount associated with the issuance of indebtedness is included in interest expense.

 

Segment assets are comprised of all assets attributable to each reportable operating segment, including goodwill and other intangible assets. Our investment in the TiO2 manufacturing joint venture (see Note 7) is included in the Chemicals Segment assets. Corporate assets are not attributable to any operating segment and consist principally of cash and cash equivalents, restricted cash equivalents, marketable securities and loans to third parties. At December 31, 2011, approximately 22% of corporate assets were held by NL (in 2010 the percentage was 18%), with substantially all of the remainder held directly by Valhi.

 

     Years ended December 31,  
     2009     2010     2011  
     (In millions)  

Net sales:

       

Chemicals

    $ 1,142.0      $ 1,449.7      $ 1,943.3   

Component products

      116.1        135.3        138.8   

Waste management

      14.0        7.7        2.0   
  

 

 

    

 

 

    

 

 

  

Total net sales

    $ 1,272.1      $ 1,592.7      $ 2,084.1   
  

 

 

    

 

 

    

 

 

  

Cost of sales:

       

Chemicals

    $ 1,014.0      $ 1,106.7      $ 1,197.5   

Component products

      92.3        99.3        103.6   

Waste management

      29.4        23.9        25.3   
  

 

 

    

 

 

    

 

 

  

Total cost of sales

    $ 1,135.7      $ 1,229.9      $ 1,326.4   
  

 

 

    

 

 

    

 

 

  

Gross margin:

       

Chemicals

    $ 128.0      $ 343.0      $ 745.8   

Component products

      23.8        36.0        35.2   

Waste management

      (15.4 )      (16.2 )      (23.3 ) 
  

 

 

    

 

 

    

 

 

  

Total gross margin

    $ 136.4      $ 362.8      $ 757.7   
  

 

 

    

 

 

    

 

 

  

Operating income (loss):

       

Chemicals

    $ (10.6 )    $ 183.2      $ 553.0   

Component products

      (4.0 )      9.4        15.5   

Waste management

      (27.0 )      (30.8 )      (38.0 ) 
  

 

 

    

 

 

    

 

 

  

Total operating income (loss)

      (41.6 )      161.8        530.5   

Equity in earnings of joint venture

      (1.1 )      (.4 )      (.5 ) 

General corporate items:

       

Securities earnings

      26.6        26.3        28.6   

Insurance recoveries

      4.6        18.8        16.9   

Litigation settlement gains

      23.1        6.3        —     

Litigation settlement expense

      —          (32.2 )      —     

Gain on sale of business

      6.3        —          —     

General expenses, net

      (40.1 )      (29.9 )      (40.6 ) 

Loss on prepayment of debt, net

      —          —          (3.1 ) 

Interest expense

      (66.7 )      (68.4 )      (61.9 ) 
  

 

 

    

 

 

    

 

 

  

Income (loss) before income taxes

    $ (88.9 )    $ 82.3      $ 469.9   
  

 

 

    

 

 

    

 

 

  

 

     Years ended December 31,  
     2009      2010      2011  
     (In millions)  

Depreciation and amortization:

         

Chemicals

    $ 49.5       $ 47.4       $ 50.2   

Component products

      8.2         7.7         6.8   

Waste management

      9.6         7.0         6.8   

Corporate

      .1         —           —     
  

 

 

     

 

 

     

 

 

  

Total

    $ 67.4       $ 62.1       $ 63.8   
  

 

 

     

 

 

     

 

 

  

Capital expenditures:

         

Chemicals

    $ 23.6       $ 37.7       $ 68.6   

Component products

      2.3         2.1         3.2   

Waste management

      31.6         4.9         74.3   

Corporate

      —           —           .1   
  

 

 

     

 

 

     

 

 

  

Total

    $ 57.5       $ 44.7       $ 146.2   
  

 

 

     

 

 

     

 

 

  
     December 31,  
     2009      2010      2011  
     (In millions)  

Total assets:

         

Operating segments:

         

Chemicals

    $ 1,726.4       $ 2,101.4       $ 2,189.7   

Component products

      149.2         141.5         141.4   

Waste management

      129.7         166.4         223.4   

Joint venture accounted for by the equity method

      17.4         17.0         16.5   

Corporate and eliminations

      387.6         288.0         267.0   
  

 

 

     

 

 

     

 

 

  

Total

    $ 2,410.3       $ 2,714.3       $ 2,838.0   
  

 

 

     

 

 

     

 

 

  

Geographic information. We attribute net sales to the place of manufacture (point-of-origin) and the location of the customer (point-of-destination); we attribute property and equipment to their physical location. At December 31, 2011 the net assets of our non-U.S. subsidiaries included in consolidated net assets approximated $726 million (in 2010 the total was $558 million).

 

     Years ended December 31,  
     2009     2010     2011  
     (In millions)  

Net sales—point of origin:

       

United States

    $ 521.4      $ 668.4      $ 837.0   

Germany

      616.5        714.2        1,039.7   

Canada

      206.3        281.5        353.2   

Norway

      139.5        188.3        245.1   

Belgium

      164.4        209.1        301.8   

Taiwan

      5.8        8.8        9.3   

Eliminations

      (381.8 )      (477.6 )      (702.0 ) 
  

 

 

    

 

 

    

 

 

  

Total

    $ 1,272.1      $ 1,592.7      $ 2,084.1   
  

 

 

    

 

 

    

 

 

  

Net sales—point of destination:

       

North America

    $ 444.3      $ 550.2      $ 629.9   

Europe

      671.0        822.2        1,141.3   

Asia and other

      156.8        220.3        312.9   
  

 

 

    

 

 

    

 

 

  

Total

    $ 1,272.1      $ 1,592.7      $ 2,084.1   
  

 

 

    

 

 

    

 

 

  
     December 31,  
     2009     2010     2011  
     (In millions)  

Net property and equipment:

       

United States

    $ 122.3      $ 120.1      $ 189.0   

Germany

      299.7        267.8        259.6   

Canada

      77.9        80.4        80.0   

Norway

      107.0        100.5        101.5   

Belgium

      66.4        69.4        86.0   

Taiwan

      7.3        7.9        7.7   
  

 

 

    

 

 

    

 

 

  

Total

    $ 680.6      $ 646.1      $ 723.8