EX-99.1 5 valhiproforma.htm VALHI PRO FORMA EXHIBIT 99.1 Valhi Pro Forma Exhibit 99.1

    
      
Exhibit 99.1 
  
           
   
Valhi, Inc. and Subsidiaries
      
Index to Unaudited Pro Forma Condensed Consolidated Financial Statements
          
           
               
                    
          
Page
 		  
               
Unaudited Pro Forma Condensed Consolidated Balance Sheet -
              
December 31, 2006
          
F-2
  
               
Notes to Unaudited Pro Forma Condensed Consolidated
         
F-3
  
Balance Sheet
              
               
Unaudited Pro Forma Condensed Consolidated Statement of Income -
              
Year ended December 31, 2006
          
F-4
  
               
Notes to Unaudited Pro Forma Condensed Consolidated Statement
              
of Income
          
F-5
  
               
               
               
These unaudited pro forma condensed consolidated financial statements should be
              
read in conjunction with our historical consolidated financial statements. These
              
unaudited pro forma condensed consolidated financial statements are not necessarily
              
indicative of our consolidated financial position or results of operations as they may
              
be in the future.
              
               
               
               
               
               
               
               
F - 1
              
 
 


       
Valhi, Inc. and Subsidiaries
      
       
Pro Forma Condensed Consolidated Balance Sheet
  
       
December 31, 2006
      
       
(In thousands)
      
       
(Unaudited)
      
                         
       
Pro forma adjustments
   
Historical
  
I
  
II
  
III
  
IV
  
V
  
Pro forma
                             
Cash and equivalents
  
$189,153
 
$ -
 
$ -
 
$ -
 
$ -
 
$ -
 
$189,153
                             
Other current assets
  
590,204
 
-
 
-
 
-
 
-
 
-
 
590,204
                             
Investment in TIMET
  
264,302
 
(264,302)
 
10,470
 
55,924
 
-
 
-
 
66,394
                             
Other assets
  
1,761,067
 
-
 
-
 
-
 
-
 
-
 
1,761,067
                             
   
$2,804,726
 
($264,302)
 
$10,470
 
$55,924
 
$ -
 
$ -
 
$2,606,818
                             
                             
Taxes payable to affiliate
  
$ -
 
$ -
 
$ -
 
$ -
 
$521,600
 
($521,600)
 
$0
                             
Other current liabilities
  
253,262
 
-
 
-
 
-
 
-
 
-
 
253,262
                             
Noncurrent deferred income taxes
  
479,161
 
(48,345)
 
-
 
-
 
20,200
 
 
 
451,016
                             
Other noncurrent liabilities
  
1,081,828
 
-
 
-
 
-
 
-
 
-
 
1,081,828
                             
Minority interest
  
123,696
 
-
 
-
 
-
 
-
 
-
 
123,696
                             
Stockholders equity:
                            
  Preferred stock
  
-
 
-
 
-
 
-
 
-
 
521,600
 
521,600
  Common stock at par value
  
1,189
 
-
 
-
 
-
 
-
 
-
 
1,189
  Additional paid-in capital
  
107,444
 
-
 
-
 
-
 
-
 
-
 
107,444
  Retained earnings
  
839,188
 
(221,982)
 
10,470
 
-
 
(522,227)
 
-
 
105,449
  Accumulated other comprehensive
                          
    income (loss)
  
(43,100)
 
6,025
 
-
 
55,924
 
(19,573)
 
-
 
(724)
  Treasury stock
  
(37,942)
 
-
 
-
 
-
 
-
 
-
 
(37,942)
                             
    Total stockholders' equity
  
866,779
 
(215,957)
 
10,470
 
55,924
 
(541,800)
 
521,600
 
697,016
                             
   
$2,804,726
 
($264,302)
 
$10,470
 
$55,924
 
$0
 
$0
 
$2,606,818
                             
               
F-2
            
                             
                             
 

   
Valhi, Inc. and Subsidiaries
            
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
        
                     
   
(Unaudited)
                
                     
Note 1 - Basis of presentation:
                    
                     
We have prepared the Unaudited Pro Forma Condensed Consolidated Balance Sheet
        
assumming the following transactions, more fully described elsewhere in this Current Report
    
on Form 8-K, had occurred on December 31, 2006:
                
                     
*
Our distribution of shares of TIMET common stock to our
    
 
stockholders in a pro-rata distribution.
          
                     
*
Our issuance to Contran of 5,000 shares of Valhi 6% Series A
    
 
Preferred Stock in exchange for the satisfaction of our income
    
 
tax liability generated from the distribution of TIMET shares.
    
                     
Note 2 - Pro forma adjustments:
                    
                     
I -
Reflect our distribution of shares of TIMET common stock
    
 
to our stockholders in a pro-rata distribution. We will
        
 
account for this distribution by reducing our equity for the
    
 
carrying value of our shares of TIMET common stock, net
    
 
of applicable deferred income taxes, that we distribute to
    
 
our stockholders. We will also reverse the accumulated
      
 
amount of other comprehensive income items we have
      
 
recognized with respect to our investment in TIMET, net of
    
 
applicable deferred income taxes.
            
                     
II -
As discussed in our Annual Report on Form 10-K for the
    
 
year ended December 31, 2006, NL Industries, Inc., one
    
 
of our majority-owned subsidiaries, owns shares of our common
    
 
stock. Under Delaware corporation law, NL receives dividends
    
 
on these shares. Therefore, NL will receive a portion of the
    
 
TIMET shares we will distribute to our stockholders. The
   
 
TIMET shares we distribute to NL will initially be reflected in
    
 
our Consolidated Balance Sheet at our carryover basis.
      
 
This pro forma adjustment reinstates the carrying value of the TIMET
    
 
shares that will be distributed to NL at our carryover basis.
    
 
However, since we expect that following the distribution NL will only own
    
 
approximately 1% of the total number of TIMET common
   
 
shares outstanding, following the distribution we and NL will
    
 
account for these TIMET shares as an available-for-sale
      
 
marketable security carried at fair value. See pro forma adjustment III.
    
                     
III -
Increase the carrying value of the TIMET shares that will be
    
 
distributed to NL to their aggregate fair market value, based on the December
 
31, 2006 quoted market price for TIMET common stock of $29.51
    
 
per share.
                
                     
IV -
Recognize the current income tax liability that will be generated from our
    
 
distribution of the TIMET shares. At December 31, 2006, Valhi had a net operating
 
loss carryforward for U.S. federal income tax purposes (approximately $20.2 million
 
tax effected), and the amount of the current income tax liability that will be
  
 
generated from the distribution will be reduced by the amount of such
    
 
carryforward. The amount of the current income tax liability as presented herein
 
is based on the December 31, 2006 quoted market price for TIMET common stock.
 
The actual current income tax liability that will be generated will be based on the
 
quoted market price of TIMET common stock on the actual date of distribution.
                     
                     
V -
Record the settlement of the current income tax liablity generated
   
 
from the distribution of the shares of TIMET common stock through
   
 
our issuance to Contran of 5,000 shares of Valhi 6% Series A preferred
    
 
stock.
                
                     
       
F-3
            
 


   
Valhi, Inc. and Subsidiaries
          
   
Pro Forma Condensed Consolidated Statement of Income
          
   
Year ended December 31, 2006
          
   
(In thousands)
          
   
(Unaudited)
          
                   
   
Historical
  
Pro forma
adjustment
  
Pro forma
  
                     
Revenues and other income:
                    
  Net sales
  
$
1,481,363
  
$
-
  
$
1,481,363
  
  Other, net
    
89,971
    
-
    
89,971
 
  Equity in earnings of:
                    
    TIMET
    
101,157
    
(101,157
)
  
-
  
    Other
    
3,751
   
-
    
3,751
 
                     
    Total revenues and other income
    
1,676,242
   
(101,157
)
  
1,575,085
 
                     
Costs and expenses:
                    
  Cost of sales
    
1,139,439
   
-
    
1,139,439
 
  Selling, general and administrative
    
229,417
   
-
    
229,417
 
  Loss on prepayment of debt
    
22,311
   
-
    
22,311
 
  Interest
    
67,607
   
-
    
67,607
 
                     
    Total costs and expenses
    
1,458,774
   
-
    
1,458,774
 
                     
Income before income taxes
    
217,468
   
(101,157
)
  
116,311
 
                     
Provision for income taxes
    
63,835
   
(35,405
)
  
28,430
 
                     
Minority interest in after-tax earnings
    
11,951
   
-
    
11,951
 
                     
    Net income
  
$
141,682
  
$
(65,752
)
$
75,930
  
                     
                     
Weighted average shares of
                    
 common stock outstanding
    
116,110
          
116,110
  
                     
Basic earnings per share
  
$
1.22
        
$
0.65
  
                     
                     
F-4

 



   
Valhi, Inc. and Subsidiaries
          
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Income
      
                   
   
(Unaudited)
              
                   
Note 1 - Basis of presentation:
                  
                   
We have prepared the Unaudited Pro Forma Condensed Consolidated Statement of Income
      
assuming the following transactions, more fully described elsewhere in this Current Report
      
on Form 8-K,  had occurred as of January 1, 2006:
              
                   
*
Our distribution of shares of TIMET common stock to our
      
 
stockholders in a pro-rata distribution.
          
                   
                   
Note 2 - Pro forma adjustment:
                  
                   
* 
Reflect the elimination of our equity in earnings of TIMET,
      
 
net of applicable deferred income taxes.
        
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
                   
       
F-5