VHI Valhi Inc.

Risks

• Our assets consist primarily of investments in our operating subsidiaries, and we are dependent upon distributions from our subsidiaries to service our liabilities.
• Demand for, and prices of, certain of our Chemicals Segment’s products are influenced by changing market conditions for its products, which may result in reduced earnings or operating losses.
• Higher costs or limited availability of our raw materials may reduce our earnings and decrease our liquidity. In addition, many of our raw material contracts contain fixed quantities we are required to purchase.
• We could incur significant costs related to legal and environmental remediation matters.
• Many of the markets in which our Component Products Segment operates are mature and highly competitive resulting in pricing pressure and the need to continuously reduce costs.
• Our development of innovative features for current products is critical to sustaining and growing our Component Product Segment’s sales.
• If our intellectual property were to be declared invalid, or copied by or become known to competitors, or if our competitors were to develop similar or superior intellectual property or technology, our ability to compete could be adversely impacted.
• Our Real Estate Management and Development Segment owns a significant amount of real property in Henderson, Nevada. A prolonged downturn in the local real estate market in Nevada could negatively impact our ability to successfully complete the development of such real property.
• Our leverage may impair our financial condition or limit our ability to operate our businesses.
• Global climate change legislation could negatively impact our financial results or limit our ability to operate our businesses.
• Technology failures or cyber security breaches could have a material adverse effect on our operations.