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NL Reports Fourth Quarter Results

DALLAS, March 9 /PRNewswire-FirstCall/ -- NL Industries, Inc. (NYSE: NL) today reported a net loss attributable to NL stockholders of $.9 million, or $.02 per share, in the fourth quarter of 2009 compared to net income of $36.3 million, or $.75 per diluted share, in the fourth quarter of 2008.  For the full year 2009, NL reported a net loss attributable to NL stockholders of $11.8 million, or $.24 per share compared to net income of $33.2 million, or $.68 per diluted share, for 2008.

Net sales decreased 22% in the fourth quarter of 2009 as compared to the fourth quarter of 2008, and decreased 30% in 2009 compared to 2008.  The decreases were principally due to lower order rates from many of CompX's customers resulting from the economic slowdown in North America.  Net sales were also impacted by relative changes in currency exchange rates, which increased sales by $.2 million for the quarter and decreased sales by $.8 million for the year.  Loss from operations attributable to CompX was $2.0 million in the fourth quarter of 2009 compared to income from operations of $3.1 million in the same period of 2008.  During the third quarter of 2008, we recorded a noncash impairment charge of $10.1 million for our marine components reporting unit.  Excluding this goodwill impairment charge, income from operations attributable to CompX decreased in 2009 to a loss of $4.0 million compared to income $15.4 million in 2008.  The decrease is primarily due to reduced coverage of overhead and fixed manufacturing costs as well as selling and general administrative costs as a result of lower sales volumes and approximately $2.1 million and $4.6 million in patent litigation expenses incurred in the fourth quarter and full year, respectively, of 2009.  Changes in currency exchange rates negatively impacted component products income from operations comparisons by a negligible amount for the quarter and year in 2009 compared to the same periods in 2008.

Kronos' net sales of $301.9 million in the fourth quarter of 2009 were $55.0 million, or 22%, higher than in the fourth quarter of 2008.   Net sales of $1,142.0 million for the full year of 2009 were $174.9 million, or 13%, lower than in the full year of 2008.  Kronos' net sales increased in the fourth quarter of 2009 primarily due to higher TiO2 sales volumes and the favorable effect of fluctuations in currency exchange rates, which increased sales by approximately $20 million, partially offset by lower average selling prices.  For the full year period, Kronos' net sales were lower in 2009 primarily due to lower sales volumes and lower average selling prices and the unfavorable effect of fluctuations in currency exchange rates, which decreased sales by approximately $35 million.  Although average selling prices were 5% lower in the fourth quarter of 2009 as compared to the fourth quarter of 2008, Kronos' average selling prices at the end of the fourth quarter 2009 were 2% higher than at the end of the third quarter 2009.  The table at the end of this release shows the impact of each of these items on Kronos' sales.

Kronos' income from operations decreased by $8.6 million from $19.9 million in the fourth quarter of 2008 to $11.3 million in the fourth quarter of 2009.  For the full year, Kronos' income from operations decreased by $62.9 million from $47.2 million in 2008 to a loss from operations of $15.7 million in 2009.  Kronos' income from operations decreased in the fourth quarter of 2009 as compared to the fourth quarter of 2008 due to lower average TiO2 selling prices and the unfavorable effect of fluctuations in currency exchange rates, which decreased income from operations by approximately $10 million.  For the full year 2009, income from operations declined primarily due to the negative effects of production curtailments in the first half of the year, which resulted in higher manufacturing costs per ton of pigment production during the year, as well as to the effect of lower sales volumes and lower average TiO2 selling prices.  This was partially offset by lower maintenance costs and the favorable effects of fluctuations in currency exchange rates, which increased Kronos' income from operations by approximately $40 million.  Kronos' TiO2 production volumes were 1% lower in the fourth quarter of 2009 and 22% lower in the full year 2009 as compared to the same periods in 2008.

Kronos' income tax benefit in 2008 includes a $7.2 million (NL's equity interest was $1.7 million, or $.03 per diluted share, net of tax) non-cash deferred income tax benefit related to a European Court ruling that resulted in the favorable resolution of certain income tax issues related to its German operations and an increase in the amount of its German corporate and trade tax net operating loss carryforwards.  Kronos' income tax benefit in 2009 includes a $4.7 million (NL's equity interest was $1.1 million, or $.02 per share, net of tax) non-cash deferred income tax benefit in the fourth quarter related to a net decrease in its reserve for uncertain tax positions.

Insurance recoveries relate to amounts we received from certain of our former insurance carriers, and relate principally to the recovery of prior lead pigment and asbestos litigation defense costs incurred by us.  These recoveries aggregated $4.6 million in 2009 ( $3.0 million, or $.06 per share, net of income taxes) and $9.6 million in 2008 ( $6.2 million, or $.13 per share, net of income taxes).

Litigation settlement gains of $48.8 million ( $31.5 million, or $.65 per diluted share, net of income taxes) in the fourth quarter of 2008 and $11.3 million ( $7.3 million, or $.15 per share, net of income taxes) in the second quarter of 2009 relate to the first and second closings, respectively, associated with the settlement of condemnation proceedings on certain real property we formerly owned that is subject to environmental remediation.  

Corporate expenses were lower in the fourth quarter and full year of 2009 as compared to the same periods of 2008 primarily due to lower litigation and related expenses and lower environmental expenses offset in part by higher defined benefit pension expense.

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