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Business and Geographic Segments | 12 Months Ended
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Dec. 31, 2018
Segment Reporting [Abstract] |
Business and Geographic Segments | Note 2—Business and geographic segments:
Business segment |  | Entity |  | % controlled at December 31, 2018 |
Chemicals |  | Kronos |  |  | 80 | %
Component products |  | CompX |  |  | 87 | %
Real estate management and development |  | BMI and LandWell |  |  | 63% - 77 | %
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. We own 63% of BMI. Our control of LandWell includes the 27% we hold directly and 50% held by BMI. 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 (“TiO 2”). TiO 2 is used to impart whiteness, brightness, opacity and durability to a wide variety of products, including paints, plastics, paper, fibers and ceramics. Additionally, TiO 2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, foods and cosmetics. See Note 7.
| • | Component Products—We operate in the component products industry through our majority control of CompX. CompX is a leading manufacturer of security products used in the recreational transportation, postal, office and institutional furniture, cabinetry, tool storage, healthcare and a variety of other industries. CompX is also a leading manufacturer of stainless steel exhaust systems, gauges, throttle controls, wake enhancement systems and trim tabs for the recreational marine industry. All of CompX production facilities are in the United States.
| • | Real Estate Management and Development—We operate in real estate management and development through our majority control of BMI and LandWell. BMI provides utility services to certain industrial and municipal customers and owns real property in Henderson, Nevada. LandWell is engaged in efforts to develop certain land holdings for commercial, industrial and residential purposes in Henderson, Nevada.
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 2016, 2017 or 2018. 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’s assets. Corporate assets are not attributable to any operating segment and consist principally of cash and cash equivalents, restricted cash and restricted cash equivalents and marketable securities. Our Chemicals Segment’s operating income in 2016 includes $4.3 million in business interruption insurance proceeds which is included in the determination of its operating income, see Note 12. Upon acquiring a controlling interest in our Real Estate Management and Development Segment in December 2013, we recognized an indefinite-lived customer relationship intangible asset of $5.1 million for long-term contracts related to water delivery services to the City of Henderson, Nevada and various other users through a water system owned by BMI. Aggregate revenues associated with water delivered under the City of Henderson contract have historically represented approximately 70% of the Segment’s aggregate water delivery revenues. These contracts generally span many years and feature automatic renewing provisions. The initial City of Henderson water delivery contract extended for a period of 25 years, and contained an automatic renewal provision. In January 2016, the water delivery contract with the City of Henderson was amended. As part of such amendment, required minimum volumes were reduced, pricing was lowered, the automatic renewal provision of the contract was eliminated, and the contract term now runs through June 2040. The amendment to the City of Henderson water delivery contract represents an event or change in circumstance which triggered the need to perform a quantitative impairment analysis with respect to the intangible asset in the first quarter of 2016, in accordance with the guidance in ASC 350-30-35. Accordingly, as a result of a quantitative impairment analysis performed in the first quarter of 2016 we concluded that the $5.1 million contract related intangible asset primarily related to the City of Henderson water delivery contract was fully impaired as a result of the amended contract (with its reduced minimum volumes and lower pricing), and we recognized an aggregate $5.1 million contract related intangible impairment loss in 2016.
|  | Years ended December 31, |
|  | 2016 |  |  | 2017 |  |  | 2018 |
|  | (In millions) |
Net sales: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 1,364.3 |  |  | $ | 1,729.0 |  |  | $ | 1,661.9 |
Component products |  |  | 108.9 |  |  |  | 112.0 |  |  |  | 118.2 |
Real estate management and development |  |  | 46.2 |  |  |  | 38.4 |  |  |  | 40.0 |
Total net sales |  | $ | 1,519.4 |  |  | $ | 1,879.4 |  |  | $ | 1,820.1 |
Cost of sales: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 1,101.5 |  |  | $ | 1,161.2 |  |  | $ | 1,101.7 |
Component products |  |  | 73.8 |  |  |  | 77.2 |  |  |  | 79.9 |
Real estate management and development |  |  | 36.2 |  |  |  | 28.1 |  |  |  | 29.3 |
Total cost of sales |  | $ | 1,211.5 |  |  | $ | 1,266.5 |  |  | $ | 1,210.9 |
Gross margin: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 262.8 |  |  | $ | 567.8 |  |  | $ | 560.2 |
Component products |  |  | 35.1 |  |  |  | 34.8 |  |  |  | 38.3 |
Real estate management and development |  |  | 10.0 |  |  |  | 10.3 |  |  |  | 10.7 |
Total gross margin |  | $ | 307.9 |  |  | $ | 612.9 |  |  | $ | 609.2 |
Operating income: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 102.8 |  |  | $ | 358.5 |  |  | $ | 342.9 |
Component products |  |  | 15.6 |  |  |  | 15.2 |  |  |  | 17.8 |
Real estate management and development |  |  | .8 |  |  |  | 6.6 |  |  |  | 10.0 |
Total operating income |  |  | 119.2 |  |  |  | 380.3 |  |  |  | 370.7 |
General corporate items: |  |  |  |  |  |  |  |  |  |  |  |
Securities earnings |  |  | 27.2 |  |  |  | 29.5 |  |  |  | 38.5 |
Insurance recoveries |  |  | .4 |  |  |  | .4 |  |  |  | 1.3 |
Gain on land sales |  |  | — |  |  |  | — |  |  |  | 12.5 |
Other components of net periodic pension expense |  |  | (11.5 | ) |  |  | (17.7 | ) |  |  | (14.5 | )
Litigation settlement expense, net |  |  | — |  |  |  | — |  |  |  | (62.0 | )
Changes in market value of Valhi common stock held by subsidiaries |  |  | — |  |  |  | — |  |  |  | (12.2 | )
General expenses, net |  |  | (37.6 | ) |  |  | (34.7 | ) |  |  | (42.4 | )
Loss on prepayment of debt |  |  | — |  |  |  | (7.1 | ) |  |  | — |
Interest expense |  |  | (58.1 | ) |  |  | (58.9 | ) |  |  | (55.7 | )
Income (loss) from continuing operations before income taxes |  | $ | 39.6 |  |  | $ | 291.8 |  |  | $ | 236.2 |
|  | Years ended December 31, |
|  | 2016 |  |  | 2017 |  |  | 2018 |
|  | (In millions) |
Depreciation and amortization: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 42.6 |  |  | $ | 43.4 |  |  | $ | 52.0 |
Component products |  |  | 3.7 |  |  |  | 3.7 |  |  |  | 3.5 |
Waste management (1) |  |  | 18.3 |  |  |  | 8.9 |  |  |  | — |
Real estate management and development |  |  | 2.9 |  |  |  | 3.0 |  |  |  | 2.9 |
Total |  | $ | 67.5 |  |  | $ | 59.0 |  |  | $ | 58.4 |
Capital expenditures: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 53.0 |  |  | $ | 64.3 |  |  | $ | 56.3 |
Component products |  |  | 3.2 |  |  |  | 2.8 |  |  |  | 3.1 |
Waste management(1) |  |  | .7 |  |  |  | .9 |  |  |  | .1 |
Real estate management and development |  |  | 2.0 |  |  |  | 3.3 |  |  |  | 1.9 |
Total |  | $ | 58.9 |  |  | $ | 71.3 |  |  | $ | 61.4 |
|  | December 31, |
|  | 2016 |  |  | 2017 |  |  | 2018 |
|  | (In millions) |
Total assets: |  |  |  |  |  |  |  |  |  |  |  |
Operating segments: |  |  |  |  |  |  |  |  |  |  |  |
Chemicals |  | $ | 1,548.9 |  |  | $ | 2,190.5 |  |  | $ | 2,266.6 |
Component products |  |  | 97.9 |  |  |  | 104.9 |  |  |  | 120.4 |
Waste management(1) |  |  | 228.6 |  |  |  | 52.0 |  |  |  | — |
Real estate management and development |  |  | 200.9 |  |  |  | 206.9 |  |  |  | 218.5 |
Corporate and eliminations |  |  | 366.9 |  |  |  | 353.2 |  |  |  | 104.1 |
Total |  | $ | 2,443.2 |  |  | $ | 2,907.5 |  |  | $ | 2,709.6 |
(1)Denotes discontinued operations 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, 2018 the net assets of our non-U.S. subsidiaries included in consolidated net assets approximated $614 million (in 2017 the total was also $614 million).
|  | Years ended December 31, |
|  | 2016 |  |  | 2017 |  |  | 2018 |
|  | (In millions) |
Net sales—point of origin: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 819.3 |  |  | $ | 992.3 |  |  | $ | 997.6 |
Germany |  |  | 699.8 |  |  |  | 918.6 |  |  |  | 886.1 |
Canada |  |  | 257.7 |  |  |  | 309.2 |  |  |  | 307.2 |
Belgium |  |  | 187.4 |  |  |  | 279.9 |  |  |  | 272.2 |
Norway |  |  | 164.8 |  |  |  | 216.4 |  |  |  | 209.6 |
Eliminations |  |  | (609.6 | ) |  |  | (837.0 | ) |  |  | (852.6 | )
Total |  | $ | 1,519.4 |  |  | $ | 1,879.4 |  |  | $ | 1,820.1 |
Net sales—point of destination: |  |  |  |  |  |  |  |  |  |  |  |
North America |  | $ | 566.8 |  |  | $ | 668.3 |  |  | $ | 698.7 |
Europe |  |  | 698.2 |  |  |  | 899.2 |  |  |  | 817.6 |
Asia and other |  |  | 254.4 |  |  |  | 311.9 |  |  |  | 303.8 |
Total |  | $ | 1,519.4 |  |  | $ | 1,879.4 |  |  | $ | 1,820.1 |
|  | December 31, |
|  | 2016 |  |  | 2017 |  |  | 2018 |
|  | (In millions) |
Net property and equipment: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 76.2 |  |  | $ | 80.8 |  |  | $ | 74.5 |
Germany |  |  | 223.7 |  |  |  | 259.2 |  |  |  | 245.8 |
Canada |  |  | 60.5 |  |  |  | 69.0 |  |  |  | 66.1 |
Norway |  |  | 75.5 |  |  |  | 81.7 |  |  |  | 81.0 |
Belgium |  |  | 80.1 |  |  |  | 98.0 |  |  |  | 96.1 |
Total |  | $ | 516.0 |  |  | $ | 588.7 |  |  | $ | 563.5 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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