NLI HOLDINGS, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures We maintain disclosure controls and procedures which, as defined in Exchange Act Rule 13a-15(e), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the Act), is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports we file or submit to the SEC under the Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of Courtney J. Riley, our President and Chief Executive Officer and Amy Allbach Samford, our Executive Vice President and Chief Financial Officer, have evaluated the design and effectiveness of our disclosure controls and procedures as of December 31, 2022. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of the date of this evaluation. Management’s report on internal control over financial reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting which, as defined by Exchange Act Rule 13a-15(f) means a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the -50- ​ preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”), and includes those policies and procedures that: ● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and ● provide reasonable assurance regarding prevention or timely detection of an unauthorized acquisition, use or disposition of assets that could have a material effect on our Consolidated Financial Statements. Our evaluation of the effectiveness of internal control over financial reporting is based upon the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013 (commonly referred to as the “2013 COSO” framework). Based on our evaluation under that framework, we have concluded that our internal control over financial reporting was effective as of December 31, 2022. PricewaterhouseCoopers LLP, the independent registered public accounting firm that has audited our consolidated financial statements included in this Annual Report, has audited the effectiveness of our internal control over financial reporting as of December 31, 2022, as stated in their report, which is included in this Annual Report on Form 10-K. Other As permitted by the SEC, our assessment of internal control over financial reporting excludes (i) internal control over financial reporting of equity method investees and (ii) internal control over the preparation of any financial statement schedules which would be required by Article 12 of Regulation S-X. However, our assessment of internal control over financial reporting with respect to equity method investees did include controls over the recording of amounts related to our investment that are recorded in the consolidated financial statements, including controls over the selection of accounting methods for our investments, the recognition of equity method earnings and losses and the determination, valuation and recording of our investment account balances. Changes in internal control over financial reporting There has been no change to our internal control over financial reporting during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Certifications Our chief executive officer is required to annually file a certification with the New York Stock Exchange (NYSE), certifying our compliance with the corporate governance listing standards of the NYSE. During 2022, our chief executive officer filed such annual certification with the NYSE. The 2022 certification was unqualified. Our chief executive officer and chief financial officer are also required to, among other things, quarterly file certifications with the SEC regarding the quality of our public disclosures, as required by Section 302 of the Sarbanes-Oxley Act of 2002. We have filed the certifications for the quarter ended December 31, 2022 as Exhibits 31.1 and 31.2 to this Annual Report on Form 10-K. ITEM 9B. OTHER INFORMATION Not applicable ​ ITEM 9C. DISCLOSURE REGARDING FOREIGN JURSIDICTIONS THAT PREVENT INSPECTIONS ​ Not applicable ​ -51- ​ ​ PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item is incorporated by reference to our 2023 definitive proxy statement to be filed with the SEC pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report. ​ ITEM 11. EXECUTIVE COMPENSATION The information required by this Item is incorporated by reference to our 2023 proxy statement. ​ ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item is incorporated by reference to our 2023 proxy statement. ​ ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item is incorporated by reference to our 2023 proxy statement. See also Note 15 to our Consolidated Financial Statements. ​ ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The Information required by this Item is incorporated by reference to our 2023 proxy statement. ​ -52- ​ PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) and (c) Financial Statements The Registrant The consolidated financial statements of the Registrant listed on the accompanying Index of Financial Statements (see page F-1) are filed as part of this Annual Report. 50%-or-less persons The consolidated financial statements of Kronos (31%-owned at December 31, 2022) are incorporated by reference in Exhibit 99.1 of this Annual Report pursuant to Rule 3-09 of Regulation S-X. Management’s Report on Internal Control Over Financial Reporting of Kronos is not included as part of Exhibit 99.1. The Registrant is not required to provide any other consolidated financial statements pursuant to Rule 3-09 of Regulation S-X. (b) Exhibits We have included as exhibits the items listed in the Exhibit Index. We will furnish a copy of any of the exhibits listed below upon payment of $4.00 per exhibit to cover our cost to furnish the exhibits. Pursuant to Item 601(b)(4)(iii) of Regulation S-K, any instrument defining the rights of holders of long-term debt issues and other agreements related to indebtedness which do not exceed 10% of consolidated total assets as of December 31, 2022 will be furnished to the Commission upon request. ​ ​ ​ ​ Item No. Exhibit Index ​ 3.1 Certificate of Amended and Restated Certificate of Incorporation dated May 22, 2008 - incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K (File No. 001-00640) filed with the U.S. Securities and Exchange Commission on May 23, 2008. ​ 3.2 ​ Amended and Restated Bylaws of NL Industries, Inc. as of May 23, 2008 - incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K (File No. 001-00640) filed with the U.S. Securities and Exchange Commission on May 23, 2008. ​ 4.1 ​ ​ Description of the Registrant’s Capital Stock. - incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 2019. ​ 10.1 ​ Lease Contract dated June 21, 1952, between Farbenfabriken Bayer Aktiengesellschaft and Titangesellschaft mit beschrankter Haftung (German language version and English translation thereof) - incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 1985. (P) ​ 10.2 ​ Formation Agreement dated as of October 18, 1993 among Tioxide Americas Inc., Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended September 30, 1993. (P) ​ 10.3 ​ Joint Venture Agreement dated as of October 18, 1993 between Tioxide Americas Inc. and Kronos Louisiana, Inc. - incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended September 30, 1993. (P) ​ 10.4 ​ Kronos Offtake Agreement dated as of October 18, 1993 between Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended September 30, 1993. (P) -53- ​ ​ ​ ​ ​ Item No. Exhibit Index ​ ​ 10.5 ​ Amendment No. 1 to Kronos Offtake Agreement dated as of December 20, 1995 between Kronos Louisiana, Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 1995. (P) ​ 10.6 ​ Tioxide Americas Offtake Agreement dated as of October 18, 1993 between Tioxide Americas Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended September 30, 1993. (P) ​ 10.7 ​ Amendment No. 1 to Tioxide Americas Offtake Agreement dated as of December 20, 1995 between Tioxide Americas Inc. and Louisiana Pigment Company, L.P. - incorporated by reference to Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 1995. (P) ​ 10.8 ​ Parents’ Undertaking dated as of October 18, 1993 between ICI American Holdings Inc. and Kronos Worldwide, Inc. (f/k/a Kronos, Inc.) - incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended September 30, 1993. (P) ​ 10.9 ​ Allocation Agreement dated as of October 18, 1993 between Tioxide Americas Inc., ICI American Holdings, Inc., Kronos Worldwide, Inc. (f/k/a Kronos, Inc.). and Kronos Louisiana, Inc. - incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended September 30, 1993. (P) ​ 10.10 ​ Form of Assignment and Assumption Agreement, dated as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc. - incorporated by reference to Exhibit 10.9 to Kronos International, Inc.’s Registration Statement on Form S-4 (File No. 333-100047) . (P) ​ 10.11 ​ Form of Cross License Agreement, effective as of January 1, 1999, between Kronos Inc. (formerly known as Kronos (USA), Inc.) and Kronos International, Inc. - incorporated by reference to Exhibit 10.10 to Kronos International, Inc.’s Registration Statement on Form S-4 (File No. 333-100047). (P) ​ 10.12** ​ ​ Unsecured Revolving Demand Promissory Note dated December 31, 2022 in the principal amount of $25.0 million executed by Valhi, Inc. and payable to the order of Kronos Worldwide, Inc. ​ 10.13 ​ ​ Restated and Amended Agreement by and between Richards Bay Titanium (Proprietary) Limited (acting through its sales agent Rio Tinto Iron & Titanium Limited) and Kronos (US), Inc. effective January 1, 2016 – incorporated by reference to Exhibit 10.26 to the Kronos Worldwide, Inc. Annual Report on Form 10-K (File No. 001-31763) for the year ended December 31, 2015. ​ 10.17 * ​ Kronos Worldwide, Inc. 2012 Director Stock Plan - incorporated by reference to Exhibit 4.4 of Kronos Worldwide, Inc. Registration statement on Form S-8 (File No. 333-113425). ​ 10.18 * ​ CompX International Inc. 2012 Director Stock Plan - incorporated by reference to Exhibit 10.2 of CompX International Inc.’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 2012. ​ 10.19 * ​ NL Industries, Inc. 2012 Director Stock Plan - incorporated by reference to Exhibit 4.4 of Registrant’s statement on Form S-8 (File No. 001-00640) Filed on May 31, 2012. ​ 10.20 ​ Second Amended and Restated Agreement Regarding Shared Insurance among CompX International Inc., Contran Corporation, Kronos Worldwide, Inc., NL Industries, Inc. and Valhi, Inc. dated January 25, 2019 – incorporated by reference to Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 2018. -54- ​ ​ ​ ​ ​ Item No. Exhibit Index ​ ​ 10.21 ​ Intercorporate Services Agreement by and between Contran Corporation and Kronos Worldwide, Inc. - incorporated by reference to Exhibit 10.1 to the Kronos Worldwide, Inc. Quarterly Report on Form 10-Q (File No. 001-31763) for the quarter ended March 31, 2004. ​ 10.22 ​ Intercorporate Services Agreement between CompX International Inc. and Contran Corporation effective as of January 1, 2004 - incorporated by reference to Exhibit 10.2 to the CompX International Inc. Annual Report on Form 10-K (File No. 1-13905) for the year ended December 31, 2003. ​ 10.23 ​ Intercorporate Services Agreement by and between Contran Corporation and NL Industries, Inc. effective as of January 1, 2004 - incorporated by reference to Exhibit 10.1 to the NL Industries, Inc. Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended March 31, 2004. ​ 10.24 ​ Tax Agreement between Valhi, Inc. and Kronos Worldwide, Inc. dated as of January 1, 2020 - incorporated by reference to Exhibit 10.1 to the Kronos Worldwide, Inc. Annual Report on Form 10-K (File No. 001-31763) for the year ended December 31, 2019. ​ 10.25 ​ Tax Agreement among NL Industries, Inc., Valhi, Inc. and Contran Corporation dated as of January 1, 2020 - incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K (File No. 001-00640) for the year ended December 31, 2019. ​ 10.26 ​ Unsecured Revolving Demand Promissory Note dated December 31, 2022 in the principal amount of $25 .0 million executed by Valhi, Inc. and payable to the order of CompX International Inc. - incorporated by reference to Exhibit 10.5 to the Annual Report on Form 10-K of CompX International Inc. (File No. 1-13905) for the year ended December 31, 2022. ​ 10.27 ​ ​ Loan Agreement between NLKW Holding, LLC, as Borrower, and Valhi, Inc., as Lender, dated as of November 14, 2016 incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-00640) of the Registrant dated November 14, 2016 and filed on November 15, 2016. ​ 10.28 ​ ​ Pledge and Security Agreement made by and between NLKW Holding, LLC in favor of Valhi, Inc., dated as of November 14, 2016 incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-00640) of the Registrant dated November 14, 2016 and filed on November 15, 2016. ​ 10.29 ​ ​ Back-to-Back Loan Agreement between the registrant, as Borrower, and NLKW Holding, LLC, as Lender, dated as of November 14, 2016 incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-00640) of the Registrant dated November 14, 2016 and filed on November 15, 2016. ​ 10.30 ​ ​ Back-to-Back Pledge and Security Agreement made by and between the registrant in favor of Valhi, Inc., dated as of November 14, 2016 incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K (File No. 001-00640) of the Registrant dated November 14, 2016 and filed on November 15, 2016. ​ 10.31 ​ ​ Indenture, dated as of September 13, 2017, among Kronos International, Inc., the guarantors named therein, and Deutsche Bank Trust Company Americas, as trustee, collateral agent, paying agent, transfer agent and registrar – incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-31763) of Kronos Worldwide, Inc. dated September 13, 2017 and filed on September 13, 2017. ​ 10.32 ​ ​ Pledge Agreement, dated as of September 13, 2017, among Kronos International, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as collateral agent – incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-31763) of Kronos Worldwide, Inc. dated September 13, 2017 and filed on September 13, 2017. ​ ​ ​ -55- ​ ​ ​ ​ ​ Item No. Exhibit Index ​ 10.33 ​ Credit Agreement dated as of April 20, 2021 by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos Europe NV, Kronos Titan GmbH and Wells Fargo Bank, National Association as administrative agent and lender – incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended March 31, 2021. ​ ​ ​ 10.34 ​ Guaranty and Security Agreement dated as of April 20, 2021, by and among Kronos Worldwide, Inc., Kronos Louisiana, Inc., Kronos (US), Inc., Kronos Canada, Inc., Kronos International, Inc. and Wells Fargo Bank, National Association as administrative agent and lender – incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-00640) for the quarter ended March 31, 2021. ​ ​ 10.35 ​ First Amendment to Loan Agreement between NLKW Holding, LLC, as Borrower, and Valhi, Inc. as Lender, dated as of November 9, 2022 incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-00640) of the Registration dated November 9, 2022 . ​ ​ 10.36 ​ First Amendment to Back-to-Back Loan Agreement between NL Industries, Inc., as Borrower, and NLKW Holding, LLC, as Lender, dated as of November 9, 2022 incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-00640) of the Registrant dated November 9, 2022 . ​ ​ 21.1 ** Subsidiaries of the Registrant ​ 23.1 ** ​ Consent of PricewaterhouseCoopers LLP with respect to NL’s consolidated financial statements . ​ 23.2 ** ​ Consent of PricewaterhouseCoopers LLP with respect to Kronos’ consolidated financial statements. ​ 31.1 ** ​ Certification ​ 31.2 ** ​ Certification ​ 32.1 ** ​ ​ Certification ​ 99.1 ​ ​ Consolidated financial statements of Kronos Worldwide, Inc. - incorporated by reference to Kronos’ Annual Report on Form 10-K (File No. 1-31763) for the year ended December 31, 2022. ​ 101.INS** ​ Inline XBRL Instance – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document ​ 101.SCH** ​ Inline XBRL Taxonomy Extension Schema ​ 101.CAL** ​ Inline XBRL Taxonomy Extension Calculation Linkbase ​ 101.DEF** ​ Inline XBRL Taxonomy Extension Definition Linkbase ​ 101.LAB** ​ Inline XBRL Taxonomy Extension Label Linkbase ​ 101.PRE** ​ Inline XBRL Taxonomy Extension Presentation Linkbase ​ 104 ​ Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Management contract, compensatory plan or arrangement. ** Filed herewith (P) Paper exhibits -56- ​ ​ SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ ​ ​ ​ NL Industries, Inc. ​ (Registrant) ​ ​ ​ By: /s/Courtney J. Riley ​ ​ Courtney J. Riley, March 8, 2023 ​ ​ (President and Chief Executive Officer) ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: ​ ​ ​ /s/ Loretta J. Feehan /s/ John E. Harper Loretta J. Feehan, March 8, 2023 John E. Harper, March 8, 2023 (Chair of the Board (non-executive)) (Director) ​ ​ ​ /s/ Michael S. Simmons /s/ Meredith W. Mendes Michael S. Simmons, March 8, 2023 Meredith W. Mendes, March 8, 2023 (Vice Chairman and Director) (Director) ​ ​ ​ /s/ Amy Allbach Samford /s/ Cecil H. Moore, Jr. Amy Allbach Samford, March 8, 2023 Cecil H. Moore, Jr., March 8, 2023 (Executive Vice President and Chief Financial Officer, Principal Financial Officer) (Director) ​ ​ ​ /s/ Amy E. Ruf /s/ Thomas P. Stafford Amy E. Ruf, March 8, 2023 Thomas P. Stafford, March 8, 2023 (Vice President and Controller, Principal Accounting Officer) (Director) ​ ​ ​ ​ -57- ​ NL INDUSTRIES, INC. Annual Report on Form 10-K Items 8, 15(a) and 15(c) Index of Financial Statements ​ ​ ​ Financial Statements Page ​ ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) ​ F-2 ​ ​ ​ Consolidated Balance Sheets - December 31, 2021 and 2022 ​ F-5 ​ ​ ​ Consolidated Statements of Income - Years ended December 31, 2020, 2021 and 2022 ​ F-7 ​ ​ ​ Consolidated Statements of Comprehensive Income - Years ended December 31, 2020, 2021 and 2022 ​ F-8 ​ ​ ​ Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2020, 2021 and 2022 ​ F-9 ​ ​ ​ Consolidated Statements of Cash Flows - Years ended December 31, 2020, 2021 and 2022 ​ F-10 ​ ​ ​ Notes to Consolidated Financial Statements ​ F-12 ​ All financial statement schedules have been omitted either because they are not applicable or required, or the information that would be required to be included is disclosed in the Notes to the Consolidated Financial Statements. ​ F-1 ​ ​ ​ ​ ​ Report of Independent Registered Public Accounting Firm ​ To the Board of Directors and Stockholders of NL Industries, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of NL Industries, Inc. and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's report on internal control over financial reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. F-2 ​ Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Environmental Remediation and Related Matters As described in Note 16 to the consolidated financial statements, management evaluates the potential range of the Company’s liability for environmental remediation and related costs at sites where the Company has been named as a potentially responsible party (PRP) or defendant. As of December 31, 2022, management accrued approximately $92 million related to approximately 33 sites associated with remediation and related matters. Liabilities related to environmental remediation and related matters (including costs associated with damages for property damage and/or damages for injury to natural resources) are recorded when management determines that estimated future expenditures are probable and reasonably estimable. As disclosed by management, environmental remediation and related costs accruals (and the potential range of the Company’s liabilities) are adjusted as further information becomes available or as circumstances change which involves management’s judgment regarding current facts and circumstances for each site and is subject to various assumptions and estimates. The principal considerations for our determination that performing procedures relating to environmental remediation and related matters is a critical audit matter is the significant judgment by management when assessing the accruals and the potential range of the Company’s liabilities and when determining whether estimated future expenditures are probable and reasonably estimable, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating evidence related to management’s assessment of the accruals and the potential range of the liabilities. ​ F-3 ​ Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s evaluation of environmental remediation and related matters (including costs and estimates associated with damages for property damage and/or damages for injury to natural resources), including controls over determining whether estimated future expenditures are probable and reasonably estimable, as well as the related financial statement disclosures. These procedures also included, among others, (i) obtaining the rollforward of environmental accrual activity for each matter and, for a sample of sites, reviewing and discussing site activity with management, (ii) obtaining and evaluating responses to letters of audit inquiry from internal and external legal counsel, and (iii) evaluating the sufficiency of the Company’s environmental remediation and related matters disclosures. ​ ​ ​ ​ ​ /s/ PricewaterhouseCoopers LLP Dallas, Texas March 8, 2023 We have served as the Company’s auditor since 1924. ​ F-4 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ASSETS ​ ​ ​ ​ ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 147,002 ​ $ 68,868 Restricted cash and cash equivalents ​ 2,765 ​ 2,864 Marketable securities ​ ​ — ​ ​ 70,164 Accounts and other receivables, net ​ 15,609 ​ 17,870 Receivables from affiliates ​ ​ — ​ ​ 636 Inventories, net ​ 25,642 ​ 31,290 Prepaid expenses and other ​ 2,630 ​ 2,276 ​ ​ ​ ​ ​ ​ ​ Total current assets ​ 193,648 ​ 193,968 ​ ​ ​ ​ ​ ​ ​ Other assets: ​ ​ Restricted cash and cash equivalents ​ 25,475 ​ 25,770 Note receivable from affiliate ​ 18,700 ​ 13,200 Marketable securities ​ 34,435 ​ 26,350 Investment in Kronos Worldwide, Inc. ​ 264,803 ​ 292,206 Goodwill ​ 27,156 ​ 27,156 Other assets, net ​ 2,753 ​ 2,523 ​ ​ ​ ​ ​ ​ ​ Total other assets ​ 373,322 ​ 387,205 ​ ​ ​ ​ ​ ​ ​ Property and equipment: ​ ​ Land ​ 5,071 ​ 5,390 Buildings ​ 23,161 ​ 23,181 Equipment ​ 70,664 ​ 74,113 Construction in progress ​ 2,028 ​ 722 ​ ​ 100,924 ​ 103,406 Less accumulated depreciation ​ 71,742 ​ 74,712 ​ ​ ​ ​ ​ ​ ​ Net property and equipment ​ 29,182 ​ 28,694 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 596,152 ​ $ 609,867 ​ ​ F-5 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 LIABILITIES AND EQUITY ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 3,408 ​ $ 3,537 Accrued litigation settlement ​ 11,830 ​ 11,830 Accrued and other current liabilities ​ 12,017 ​ 13,388 Accrued environmental remediation and related costs ​ 2,643 ​ 2,627 Payables to affiliates ​ 691 ​ 665 Income taxes ​ ​ 8 ​ ​ 5 ​ ​ ​ ​ ​ ​ ​ Total current liabilities ​ 30,597 ​ 32,052 ​ ​ ​ ​ ​ ​ ​ Noncurrent liabilities: ​ ​ ​ ​ ​ ​ Long-term debt from affiliate ​ 500 ​ 500 Accrued environmental remediation and related costs ​ 90,297 ​ 89,731 Long-term litigation settlement ​ 38,519 ​ 27,427 Deferred income taxes ​ 44,056 ​ 50,119 Accrued pension costs ​ 3,722 ​ 3,012 Other ​ 3,490 ​ 4,279 ​ ​ ​ ​ ​ ​ ​ Total noncurrent liabilities ​ 180,584 ​ 175,068 ​ ​ ​ ​ ​ ​ ​ Equity: ​ ​ ​ ​ ​ ​ NL stockholders' equity: ​ ​ ​ ​ ​ ​ Preferred stock, no par value; 5,000 shares authorized; none issued ​ ​ — ​ ​ — Common stock; $ .125 par value; 150,000 shares authorized; 48,803 and 48,816 shares issued and outstanding ​ 6,100 ​ 6,101 Additional paid-in capital ​ 299,775 ​ 298,598 Retained earnings ​ 297,351 ​ 300,442 Accumulated other comprehensive loss ​ ( 240,756 ) ​ ( 222,991 ) ​ ​ ​ ​ ​ ​ ​ Total NL stockholders' equity ​ 362,470 ​ 382,150 ​ ​ ​ ​ ​ ​ ​ Noncontrolling interest in subsidiary ​ 22,501 ​ 20,597 ​ ​ ​ ​ ​ ​ ​ Total equity ​ 384,971 ​ 402,747 ​ ​ ​ ​ ​ ​ ​ Total liabilities and equity ​ $ 596,152 ​ $ 609,867 ​ Commitments and contingencies (Notes 13 and 16) See accompanying Notes to Consolidated Financial Statements. ​ F-6 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 114,537 ​ $ 140,815 ​ $ 166,562 Cost of sales ​ 81,689 ​ 98,066 ​ 117,763 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross margin ​ 32,848 ​ 42,749 ​ 48,799 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative expense ​ 21,031 ​ 22,223 ​ 23,363 Corporate expense ​ 9,460 ​ 10,035 ​ 11,705 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 2,357 ​ 10,491 ​ 13,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equity in earnings of Kronos Worldwide, Inc. ​ 19,437 ​ 34,323 ​ 31,873 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ Interest and dividend income ​ 2,599 ​ 1,603 ​ 3,797 Marketable equity securities ​ ( 8,671 ) ​ 16,229 ​ ( 8,085 ) Other components of net periodic pension and OPEB cost ​ ( 784 ) ​ ( 665 ) ​ ( 1,134 ) Interest expense ​ ( 1,350 ) ​ ( 1,142 ) ​ ( 941 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 13,588 ​ 60,839 ​ 39,241 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income tax expense (benefit) ​ ( 2,515 ) ​ 7,479 ​ 2,785 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 16,103 ​ 53,360 ​ 36,456 Noncontrolling interest in net income of subsidiary ​ 1,423 ​ 2,172 ​ 2,612 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to NL stockholders ​ $ 14,680 ​ $ 51,188 ​ $ 33,844 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts attributable to NL stockholders: ​ ​ ​ Basic and diluted net income per share ​ $ .30 ​ $ 1.05 ​ $ .69 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares used in the calculation of net income per share ​ 48,776 ​ 48,797 ​ 48,811 ​ See accompanying Notes to Consolidated Financial Statements. ​ F-7 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 Net income ​ $ 16,103 ​ $ 53,360 ​ $ 36,456 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss), net of tax: ​ ​ ​ Currency translation ​ 3,268 ​ ( 1,660 ) ​ ( 6,956 ) Defined benefit pension plans ​ ( 2,447 ) ​ 12,236 ​ 24,611 Other postretirement benefit plans ​ ( 320 ) ​ ( 143 ) ​ 110 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total other comprehensive income, net ​ 501 ​ 10,433 ​ 17,765 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income ​ 16,604 ​ 63,793 ​ 54,221 Comprehensive income attributable to noncontrolling interest ​ 1,423 ​ 2,172 ​ 2,612 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income attributable to NL stockholders ​ $ 15,181 ​ $ 61,621 ​ $ 51,609 ​ See accompanying Notes to Consolidated Financial Statements. ​ F-8 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years ended December 31, 2020, 2021 and 2022 (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Noncontrolling ​ ​ ​ ​ ​ Common ​ paid-in ​ Retained ​ comprehensive ​ interest in ​ Total ​ stock capital earnings loss subsidiary equity Balance at December 31, 2019 ​ $ 6,094 ​ $ 299,102 ​ $ 251,000 ​ $ ( 251,690 ) ​ $ 22,707 ​ $ 327,213 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ — ​ — ​ 14,680 ​ — ​ 1,423 ​ 16,103 Other comprehensive income, net of tax ​ — ​ — ​ — ​ 501 ​ — ​ 501 Issuance of NL common stock ​ 4 ​ 96 ​ — ​ — ​ — ​ 100 Dividends paid - $.16 per share ​ — ​ — ​ ( 7,805 ) ​ — ​ — ​ ( 7,805 ) Dividends paid to noncontrolling interest ​ — ​ — ​ — ​ — ​ ( 676 ) ​ ( 676 ) Other, net ​ — ​ ( 105 ) ​ — ​ — ​ 18 ​ ( 87 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2020 ​ 6,098 ​ 299,093 ​ 257,875 ​ ( 251,189 ) ​ 23,472 ​ 335,349 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ — ​ — ​ 51,188 ​ — ​ 2,172 ​ 53,360 Other comprehensive income, net of tax ​ — ​ — ​ — ​ 10,433 ​ — ​ 10,433 Issuance of NL common stock ​ 2 ​ 99 ​ — ​ — ​ — ​ 101 Dividends paid - $.24 per share ​ — ​ — ​ ( 11,712 ) ​ — ​ — ​ ( 11,712 ) Dividends paid to noncontrolling interest ​ — ​ — ​ — ​ — ​ ( 1,324 ) ​ ( 1,324 ) Other, net ​ — ​ 583 ​ — ​ — ​ ( 1,819 ) ​ ( 1,236 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2021 ​ 6,100 ​ 299,775 ​ 297,351 ​ ( 240,756 ) ​ 22,501 ​ 384,971 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ — ​ — ​ 33,844 ​ — ​ 2,612 ​ 36,456 Other comprehensive income, net of tax ​ — ​ — ​ — ​ 17,765 ​ — ​ 17,765 Issuance of NL common stock ​ 1 ​ 119 ​ — ​ — ​ — ​ 120 Dividends paid - $.63 per share ​ — ​ — ​ ( 30,753 ) ​ — ​ — ​ ( 30,753 ) Dividends paid to noncontrolling interest ​ — ​ — ​ — ​ — ​ ( 4,304 ) ​ ( 4,304 ) Other, net ​ — ​ ( 1,296 ) ​ — ​ — ​ ( 212 ) ​ ( 1,508 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 ​ $ 6,101 ​ $ 298,598 ​ $ 300,442 ​ $ ( 222,991 ) ​ $ 20,597 ​ $ 402,747 ​ See accompanying Notes to Consolidated Financial Statements. ​ F-9 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 16,103 ​ $ 53,360 ​ $ 36,456 Depreciation and amortization ​ 3,827 ​ 3,839 ​ 3,977 Deferred income taxes ​ ( 2,530 ) ​ 7,453 ​ 2,291 Equity in earnings of Kronos Worldwide, Inc. ​ ( 19,437 ) ​ ( 34,323 ) ​ ( 31,873 ) Dividends received from Kronos Worldwide, Inc. ​ 25,356 ​ 25,356 ​ 26,766 Marketable equity securities ​ 8,671 ​ ( 16,229 ) ​ 8,085 Benefit plan expense greater (less) than cash funding ​ ​ ( 792 ) ​ ​ ( 220 ) ​ ​ 130 Noncash interest expense ​ 1,321 ​ 1,116 ​ 908 Other, net ​ 93 ​ ( 31 ) ​ ( 288 ) Change in assets and liabilities: ​ ​ ​ ​ ​ Accounts and other receivables, net ​ 1,121 ​ ( 4,488 ) ​ ( 2,275 ) Inventories, net ​ ( 193 ) ​ ( 7,479 ) ​ ( 5,832 ) Prepaid expenses and other ​ ( 237 ) ​ ( 991 ) ​ 353 Accounts payable and accrued liabilities ​ ( 13,163 ) ​ ( 9,399 ) ​ ( 10,395 ) Income taxes ​ ​ ( 77 ) ​ ​ 13 ​ ​ ( 3 ) Accounts with affiliates ​ 193 ​ 279 ​ ( 662 ) Accrued environmental remediation and related costs ​ ( 1,092 ) ​ ( 476 ) ​ ( 582 ) Other noncurrent assets and liabilities, net ​ ( 141 ) ​ ( 171 ) ​ ( 125 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by operating activities ​ 19,023 ​ 17,609 ​ 26,931 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ Capital expenditures ​ ( 1,740 ) ​ ( 4,094 ) ​ ( 3,695 ) Note receivable from affiliate: ​ ​ ​ ​ ​ ​ Collections ​ 33,428 ​ 40,600 ​ 29,800 Loans ​ ( 34,828 ) ​ ( 29,800 ) ​ ( 24,300 ) Purchases of marketable securities ​ — ​ — ​ ( 69,959 ) Other, net ​ — ​ 2 ​ 284 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by (used in) investing activities ​ ( 3,140 ) ​ 6,708 ​ ( 67,870 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ Dividends paid ​ ( 7,805 ) ​ ( 11,712 ) ​ ( 30,753 ) Subsidiary treasury stock acquired ​ ​ — ​ ​ ( 1,311 ) ​ ​ ( 1,744 ) Dividends paid to noncontrolling interests in subsidiary ​ ( 676 ) ​ ( 1,324 ) ​ ( 4,304 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash used in financing activities ​ ( 8,481 ) ​ ( 14,347 ) ​ ( 36,801 ) ​ ​ F-10 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 Cash and cash equivalents and restricted cash and cash equivalents - net change from: ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating, investing and financing activities ​ $ 7,402 ​ $ 9,970 ​ $ ( 77,740 ) Balance at beginning of year ​ 157,870 ​ 165,272 ​ 175,242 Balance at end of year ​ $ 165,272 ​ $ 175,242 ​ $ 97,502 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures - cash paid for: ​ ​ ​ Interest ​ $ 27 ​ $ 26 ​ $ 34 Income taxes, net ​ 46 ​ 32 ​ 1,140 ​ See accompanying Notes to Consolidated Financial Statements. ​ F-11 ​ NL INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2022 Note 1 - Summary of significant accounting policies: Nature of our business - NL Industries, Inc. (NYSE: NL) is primarily a holding company. We operate in the component products industry through our majority-owned subsidiary, CompX International Inc. (NYSE American: CIX). We operate in the chemicals industry through our noncontrolling interest in Kronos Worldwide, Inc. (NYSE: KRO). Organization - At December 31, 2022, Valhi, Inc. (NYSE: VHI) held approximately 83 % of our outstanding common stock and a wholly-owned subsidiary of Contran Corporation held approximately 92 % of Valhi’s outstanding common stock. A majority of Contran’s outstanding voting stock is held directly by Lisa K. Simmons and various family trusts established for the benefit of Ms. Simmons, Thomas C. Connelly (the husband of Ms. Simmons’ late sister) and their children and for which Ms. Simmons or Mr. Connelly, as applicable, serve as trustee (collectively, the “Other Trusts”). With respect to the Other Trusts for which Mr. Connelly serves as trustee, he is required to vote the shares of Contran voting stock held by such trusts in the same manner as Ms. Simmons. Such voting rights of Ms. Simmons last through April 22, 2030 and are personal to Ms. Simmons. The remainder of Contran’s outstanding voting stock is held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and her late sister and their children and for which a third-party financial institution serves as trustee. Consequently, at December 31, 2022 Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi and us. Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to NL Industries, Inc. and its subsidiaries and affiliate, Kronos, taken as a whole. Management’s estimates - In preparing our financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), we are required to make estimates and assumptions that affect the reported amounts of our assets and liabilities and disclosures of contingent assets and liabilities at each balance sheet date and the reported amounts of our revenues and expenses during each reporting period. Actual results may differ significantly from previously-estimated amounts under different assumptions or conditions. Principles of consolidation - Our consolidated financial statements include the financial position, results of operations and cash flows of NL and our wholly-owned and majority-owned subsidiaries, including CompX. We account for the 13 % of CompX stock we do not own as a noncontrolling interest. We eliminate all material intercompany accounts and balances. Changes in ownership of our wholly-owned and majority-owned subsidiaries are accounted for as equity transactions with no gain or loss recognized on the transaction unless there is a change in control. Currency translation - The financial statements of Kronos’ non-U.S. subsidiaries are translated to U.S. dollars. The functional currency of Kronos’ non-U.S. subsidiaries is generally the local currency of their country. Accordingly, Kronos translates the assets and liabilities at year-end rates of exchange, while it translates its revenues and expenses at average exchange rates prevailing during the year. We accumulate the resulting translation adjustments in stockholders’ equity as part of accumulated other comprehensive income (loss), net of related deferred income taxes. Kronos recognizes currency transaction gains and losses in income which is reflected as part of our equity in earnings (losses) of Kronos. C ash and cash equivalents - We classify bank time deposits and highly liquid investments, including government and commercial notes and bills, with original maturities of three months or less as cash equivalents. Restricted cash and cash equivalents - We classify cash equivalents that have been segregated or are otherwise limited in use as restricted. Such restrictions include cash pledged as collateral with respect to performance obligations or letters of credit required by regulatory agencies for certain environmental remediation sites and cash pledged as collateral F-12 ​ with respect to certain workers compensation liabilities or legal settlements. To the extent the restricted amount relates to a recognized liability, we classify such restricted amount as either a current or noncurrent asset to correspond with the classification of the liability. To the extent the restricted amount does not relate to a recognized liability, we classify restricted cash as a current asset. Restricted cash equivalents classified as a current asset or a noncurrent asset are presented separately on our Consolidated Balance Sheets. Marketable securities and securities transactions - We carry marketable debt and equity securities at fair value. Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures , establishes a consistent framework for measuring fair value and (with certain exceptions) this framework is generally applied to all financial statement items required to be measured at fair value. The standard requires fair value measurements to be classified and disclosed in one of the following three categories: ● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; ● Level 2 - Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the assets or liability; and ● Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. We classify all of our marketable securities as available-for-sale. We accumulate unrealized gains and losses on marketable debt securities as part of accumulated other comprehensive income (loss), net of related deferred income taxes. We recognize unrealized gains or losses on the marketable equity securities in Marketable equity securities on our Consolidated Statements of Income. We base realized gains and losses upon the specific identification of the securities sold. See Notes 5 and 11. Accounts receivable - We provide an allowance for doubtful accounts for known and estimated potential losses arising from sales to customers based on a periodic review of these accounts. See Note 3. Inventories and cost of sales - We state inventories at the lower of cost or net realizable value. We record a provision for obsolete and slow-moving inventories. We generally base inventory costs for all inventory categories on an average cost that approximates the first-in, first-out method. Inventories include the costs for raw materials, the cost to manufacture the raw materials into finished goods and overhead. Depending on the inventory’s stage of completion, our manufacturing costs can include the costs of packing and finishing, utilities, maintenance and depreciation, shipping and handling, and salaries and benefits associated with our manufacturing process. We allocate fixed manufacturing overhead costs based on normal production capacity. Unallocated overhead costs resulting from periods with abnormally low production levels are charged to expense as incurred. As inventory is sold to third parties, we recognize the cost of sales in the same period that the sale occurs. We periodically review our inventory for estimated obsolescence or instances when inventory is no longer marketable for its intended use and we record any write-down equal to the difference between the cost of inventory and its estimated net realizable value based on assumptions about alternative uses, market conditions and other factors. See Note 4. Investment in Kronos Worldwide, Inc. - We account for our 31 % non-controlling interest in Kronos by the equity method. Distributions received from Kronos are classified for statement of cash flow purposes using the “nature of distribution” approach under ASC Topic 230. See Note 6. Goodwill - Goodwill represents the excess of cost over fair value of individual net assets acquired in business combinations. Goodwill is not subject to periodic amortization. We evaluate goodwill for impairment annually, or when circumstances indicate the carrying value may not be recoverable. See Note 7. Leases - We enter into various arrangements (or leases) that convey the rights to use and control identified underlying assets for a period of time in exchange for consideration. We lease various facilities and equipment. From time F-13 ​ to time, we may also enter into an arrangement in which the right to use and control an identified underlying asset is embedded in another type of contract. We determine if an arrangement is a lease (including leases embedded in another type of contract) at inception. All of our leases are classified as operating leases under ASC Topic 842 Leases . Operating leases are not material. Property and equipment; depreciation expense - We state property and equipment, including purchased computer software for internal use, at cost. We compute depreciation of property and equipment for financial reporting purposes principally by the straight-line method over the estimated useful lives of 15 to 40 years for buildings and 3 to 20 years for equipment and software. We use accelerated depreciation methods for income tax purposes, as permitted. Upon sale or retirement of an asset, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized in income currently. Expenditures for maintenance, repairs and minor renewals are expensed; expenditures for major improvements are capitalized. We perform impairment tests when events or changes in circumstances indicate the carrying value may not be recoverable. We consider all relevant factors. We perform impairment tests by comparing the estimated future undiscounted cash flows associated with the asset to the asset’s net carrying value to determine whether impairment exists. Employee benefit plans - Accounting and funding policies for our defined benefit pension and defined contribution retirement plans are described in Note 11. We also provide certain postretirement benefits other than pensions (OPEB), consisting of health care and life insurance benefits, to certain U.S. and Canadian retired employees, which are not material. See Note 12. Income taxes - We, Valhi and our qualifying subsidiaries are members of Contran’s consolidated U.S. federal income tax group (the Contran Tax Group) and we and certain of our qualifying subsidiaries also file consolidated unitary state income tax returns with Contran in qualifying U.S. jurisdictions. As a member of the Contran Tax Group, we are jointly and severally liable for the federal income tax liability of Contran and the other companies included in the Contran Tax Group for all periods in which we are included in the Contran Tax Group. See Note 16. As a member of the Contran Tax Group, we are party to a tax sharing agreement with Valhi and Contran which provides that we compute our provision for income taxes on a separate-company basis using the tax elections made by Contran. Pursuant to our tax sharing agreement, we make payments to or receive payments from Valhi in amounts that we would have paid to or received from the U.S. Internal Revenue Service or the applicable state tax authority had we not been a member of the Contran Tax Group. We made net payments to Valhi for income taxes of nil in each of 2020 and 2021 and $ 1.1 million in 2022. We recognize deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the income tax and financial reporting carrying amounts of assets and liabilities, including investments in our subsidiaries and affiliates who are not members of the Contran Tax Group and undistributed earnings of non-U.S. subsidiaries which are not deemed to be permanently reinvested. In addition, we recognize deferred income taxes with respect to the excess of the financial reporting carrying amount over the income tax basis of our direct investment in Kronos common stock because the exemption under GAAP to avoid recognition of such deferred income taxes is not available to us. Deferred income tax assets and liabilities for each tax-paying jurisdiction in which we operate are netted and presented as either a noncurrent deferred income tax asset or liability, as applicable. We periodically evaluate our deferred tax assets in the various taxing jurisdictions in which we operate and adjust any related valuation allowance based on the estimate of the amount of such deferred tax assets that we believe does not meet the more-likely-than-not recognition criteria. We account for the tax effects of a change in tax law as a component of the income tax provision related to continuing operations in the period of enactment, including the tax effects of any deferred income taxes originally established through a financial statement component other than continuing operations (i.e. other comprehensive income). Changes in applicable income tax rates over time as a result of changes in tax law, or times in which a deferred income tax asset valuation allowance is initially recognized in one year and subsequently reversed in a later year, can give rise to “stranded” tax effects in accumulated other comprehensive income in which the net accumulated income tax (benefit) remaining in accumulated other comprehensive income does not correspond to the then-applicable income tax rate applied F-14 ​ to the pre-tax amount which resides in accumulated other comprehensive income. As permitted by GAAP, our accounting policy is to remove any such stranded tax effect remaining in accumulated other comprehensive income, by recognizing an offset to our provision for income taxes related to continuing operations, only at the time when there is no remaining pre-tax amount in accumulated other comprehensive income. For accumulated other comprehensive income related to currency translation, this would occur only upon the sale or complete liquidation of one of our non-U.S. subsidiaries. For defined pension benefit plans and OPEB plans, this would occur whenever one of our subsidiaries which previously sponsored a defined benefit pension or OPEB plan had terminated such a plan and had no future obligation or plan asset associated with such a plan. We record a reserve for uncertain tax positions for tax positions where we believe it is more-likely-than-not our position will not prevail with the applicable tax authorities. The amount of the benefit associated with our uncertain tax positions that we recognize is limited to the largest amount for which we believe the likelihood of realization is greater than 50 %. We accrue penalties and interest on the difference between tax positions taken on our tax returns and the amount of benefit recognized for financial reporting purposes. We classify our reserves for uncertain tax positions in a separate current or noncurrent liability, depending on the nature of the tax position. See Note 13. Environmental remediation costs - We record liabilities related to environmental remediation obligations when estimated future expenditures are probable and reasonably estimable. We adjust these accruals as further information becomes available to us or as circumstances change. We generally do not discount estimated future expenditures to present value. We recognize any recoveries of remediation costs from other parties when we deem their receipt probable. At December 31, 2021 and 2022, we had not recognized any such receivables for recoveries. We expense any environmental remediation related legal costs as incurred. See Note 16. Net sales - Our sales involve single performance obligations to ship our products pursuant to customer purchase orders. In some cases, the purchase order is supported by an underlying master sales agreement, but our purchase order verification notice generally evidences the contract with our customer by specifying the key terms of product and quantity ordered, price and delivery and payment terms. In accordance with ASC Topic 606, Revenue from Contracts with Customers, we record revenue when we satisfy our performance obligations to our customers by transferring control of our products to them, which generally occurs at point of shipment or upon delivery. Such transfer of control is also evidenced by transfer of legal title and other risks and rewards of ownership (giving the customer the ability to direct the use of, and obtain substantially all of the benefits of, the product), and our customers becoming obligated to pay us and it is probable we will receive payment. In certain arrangements we provide shipping and handling activities after the transfer of control to our customer (e.g. when control transfers prior to delivery). In such arrangements shipping and handling are considered fulfillment activities, and accordingly, such costs are accrued when the related revenue is recognized. Revenue is recorded in an amount that reflects the net consideration we expect to receive in exchange for our products. Prices for our products are based on terms specified in published list prices and purchase orders, which generally do not include financing components, noncash consideration or consideration paid to our customers. As our standard payment terms are less than one year, we have elected the practical expedient under ASC 606 and we have not assessed whether a contract has a significant financing component. We state sales net of price, early payment and distributor discounts as well as volume rebates (collectively, variable consideration). Variable consideration, to the extent present, is not material and is recognized as the amount to which we are most-likely to be entitled, using all information (historical, current and forecasted) that is reasonably available to us, and only to the extent that a significant reversal in the amount of the cumulative revenue recognized is not probable of occurring in a future period. Differences, if any, between estimates of the amount of variable consideration to which we will be entitled and the actual amount of such variable consideration have not been material in the past. We occasionally receive partial or full consideration from our customers prior to the completion of our performance obligation (shipment of product). We record estimated deferred revenue on the amount to which we are most likely to be entitled and deferred revenue is recognized into revenue as our performance obligation has been satisfied. Deferred revenue has not been material in the past. We report any tax assessed by a governmental authority that we collect from our customers that is both imposed on and concurrent with our revenue-producing activities (such as sales, use, value added and excise taxes) on a net basis (meaning we do not recognize these taxes either in our revenues or in our costs and expenses). F-15 ​ Frequently, we receive orders for products to be delivered over dates that may extend across reporting periods. We invoice for each delivery upon shipment and recognize revenue for each distinct shipment when all sales recognition criteria for that shipment have been satisfied. As scheduled delivery dates for these orders are within a one year period, under the optional exemption provided by ASC 606, we do not disclose sales allocated to future shipments of partially completed contracts. Selling, general and administrative expenses; advertising costs; research and development costs - Selling, general and administrative expenses include costs related to marketing, sales, distribution, research and development, and administrative functions such as accounting, treasury and finance, as well as costs for salaries and benefits, travel and entertainment, promotional materials and professional fees. We expense advertising costs and research and development costs as incurred. Advertising and research and development costs were no t significant in any year presented. Corporate expenses - Corporate expenses include environmental, legal and other costs attributable to formerly-owned business units. ​ Note 2 - Business and geographic information: We operate in the security products industry and marine components industry through our majority ownership of CompX. CompX manufactures and sells security products including locking mechanisms and other security products for sale to the postal, transportation, office and institutional furniture, cabinetry, tool storage, healthcare and other industries. CompX also manufactures and distributes wake enhancement systems, stainless steel exhaust systems, gauges, throttle controls, trim tabs and related hardware and accessories primarily for ski/wakeboard boats and performance boats. The following table disaggregates our net sales by reporting unit, which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (as required by ASC 606). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In thousands) Net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ Security Products ​ $ 87,863 ​ $ 105,124 ​ $ 114,519 Marine Components ​ 26,674 ​ 35,691 ​ 52,043 Total ​ $ 114,537 ​ $ 140,815 ​ $ 166,562 ​ For geographic information, the point of origin (place of manufacture) for all net sales is the U.S., the point of destination for net sales is based on the location of the customer. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In thousands) Net sales - point of destination: ​ ​ ​ ​ ​ ​ ​ ​ ​ United States ​ $ 107,712 ​ $ 129,160 ​ $ 153,982 Canada ​ 4,423 ​ 8,061 ​ 9,227 Mexico ​ 431 ​ 589 ​ 722 Other ​ 1,971 ​ 3,005 ​ 2,631 Total ​ $ 114,537 ​ $ 140,815 ​ $ 166,562 ​ ​ ​ ​ ​ ​ ​ F-16 ​ Note 3 - Accounts and other receivables, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Trade receivables - CompX ​ $ 15,616 ​ $ 17,910 Accrued insurance recoveries ​ 43 ​ — Other receivables ​ 20 ​ 30 Allowance for doubtful accounts ​ ( 70 ) ​ ( 70 ) Total ​ $ 15,609 ​ $ 17,870 ​ Accrued insurance recoveries are discussed in Note 16. ​ Note 4 - Inventories, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Raw materials ​ $ 5,042 ​ $ 6,245 Work in process ​ 16,767 ​ 19,983 Finished products ​ 3,833 ​ 5,062 Total ​ $ 25,642 ​ $ 31,290 ​ ​ Note 5 - Marketable securities: Our current marketable securities are invested in U.S. government treasuries with original maturities ranging in length from 4 months to 12 months . The fair value of our current marketable securities are determined using Level 2 inputs (because although these securities are traded, in many cases the market is not active and the year-end valuation is generally based on the last trade of the year, which may be several days prior to December 31). Our noncurrent marketable securities consist of investments in the publicly-traded shares of our immediate parent company Valhi, Inc. Our shares of Valhi common stock are accounted for as available-for-sale securities, which are carried at fair value using quoted market prices in active markets and represent a Level 1 input within the fair value hierarchy. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value ​ ​ ​ ​ Cost or ​ ​ ​ ​ ​ measurement ​ Market ​ amortized ​ Unrealized ​ level value cost gain (loss) ​ ​ ​ ​ (In thousands) December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncurrent assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Valhi common stock 1 ​ $ 34,435 ​ $ 24,347 ​ $ 10,088 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current assets - fixed income securities ​ 2 ​ $ 70,164 ​ $ 70,226 ​ $ ( 62 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noncurrent assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Valhi common stock 1 ​ $ 26,350 ​ $ 24,347 ​ $ 2,003 ​ At December 31, 2021 and 2022, we held approximately 1.2 million shares of our immediate parent company, Valhi. See Note 1. The per share quoted market price of Valhi common stock at December 31, 2021 and 2022 was $ 28.75 and $ 22.00 , respectively. F-17 ​ The Valhi common stock we own is subject to the restrictions on resale pursuant to certain provisions of the SEC Rule 144. In addition, as a majority-owned subsidiary of Valhi we cannot vote our shares of Valhi common stock under Delaware General Corporation Law, but we do receive dividends from Valhi on these shares, when declared and paid. ​ Note 6 - Investment in Kronos Worldwide, Inc.: At December 31, 2021 and 2022, we owned approximately 35.2 million shares of Kronos common stock. The per share quoted market price of Kronos common stock at December 31, 2021 and 2022 was $ 15.01 and $ 9.40 per share, respectively, or an aggregate market value of $ 528.6 million and $ 331.1 million, respectively. The change in the carrying value of our investment in Kronos during the past three years is summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In millions) Balance at the beginning of the period ​ $ 248.4 ​ $ 242.4 ​ $ 264.8 Equity in earnings of Kronos ​ 19.4 ​ 34.3 ​ 31.9 Dividends received from Kronos ​ ( 25.4 ) ​ ( 25.4 ) ​ ( 26.8 ) Equity in Kronos' other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency translation ​ ​ 4.1 ​ ( 2.1 ) ​ ( 8.8 ) Defined benefit pension plans ​ ​ ( 3.7 ) ​ 15.6 ​ 30.9 Other postretirement benefit plans ​ ​ ( .1 ) ​ ​ — ​ ​ — Other ​ ​ ( .3 ) ​ — ​ .2 Balance at the end of the period ​ $ 242.4 ​ $ 264.8 ​ $ 292.2 ​ Selected financial information of Kronos is summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In millions) Current assets ​ $ 1,258.0 ​ $ 1,242.2 Property and equipment, net ​ 503.4 ​ 484.5 Investment in TiO 2 joint venture ​ 101.9 ​ 112.9 Other noncurrent assets ​ 149.5 ​ 94.8 Total assets ​ $ 2,012.8 ​ $ 1,934.4 ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ $ 288.8 ​ $ 326.7 Long-term debt ​ 449.8 ​ 424.1 Accrued pension costs ​ 287.4 ​ 128.6 Other noncurrent liabilities ​ 116.6 ​ 97.8 Stockholders’ equity ​ 870.2 ​ 957.2 Total liabilities and stockholders’ equity ​ $ 2,012.8 ​ $ 1,934.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In millions) Net sales ​ $ 1,638.8 ​ $ 1,939.4 ​ $ 1,930.2 Cost of sales ​ 1,287.6 ​ 1,493.2 ​ 1,539.1 Income from operations ​ 116.2 ​ 187.1 ​ 159.6 Income tax expense ​ 16.1 ​ 40.5 ​ 29.4 Net income ​ 63.9 ​ 112.9 ​ 104.5 ​ ​ F-18 ​ ​ Note 7 - Goodwill: All of our goodwill is related to our component products operations and was generated from CompX’s acquisitions of certain business units. There have been no changes in the carrying amount of our goodwill during the past three years. We assign goodwill based on the reporting unit (as that term is defined in ASC Topic 350-20-20 Goodwill ) which corresponds to CompX’s security products operations. We test for goodwill impairment at the reporting unit level. In accordance with ASC 350-20-35, we test for goodwill impairment during the third quarter of each year or when circumstances arise that indicate an impairment might be present. In 2020, 2021 and 2022, our goodwill was tested for impairment only in the third quarter of each year in connection with our annual testing. No impairment was indicated as part of such annual review of goodwill. As permitted by GAAP, during 2020, 2021 and 2022 we used the qualitative assessment of ASC 350-20-35 for our annual impairment test and determined it was not necessary to perform the quantitative goodwill impairment test. Prior to 2020, all of the goodwill related to CompX’s marine components operations (which aggregated $ 10.1 million) was impaired, and all of the goodwill related to our wholly-owned subsidiary EWI Re, Inc., (EWI) which was formerly an insurance brokerage and risk management services company (which aggregated $ 6.4 million), was impaired. Our gross goodwill at December 31, 2022 was $ 43.7 million. Note 8 - Other assets, net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Pension asset ​ $ 1,356 ​ $ 1,105 Other ​ 1,397 ​ 1,418 Total ​ $ 2,753 ​ $ 2,523 ​ ​ ​ ​ ​ ​ Note 9 - Accrued and other current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Employee benefits ​ $ 10,345 ​ $ 11,023 Other ​ 1,672 ​ 2,365 Total ​ $ 12,017 ​ $ 13,388 ​ ​ Note 10 - Long-term debt: In November 2016, we entered into a financing transaction with Valhi. Previously, and in contemplation of the financing transaction described herein, we formed NLKW Holding, LLC and capitalized it with 35.2 million shares of the common stock of Kronos held by us. The financing transaction consisted of two steps. Under the first step, NLKW entered into a $ 50 million revolving credit facility (the “Valhi Credit Facility”) pursuant to which NLKW can borrow up to $ 50 million from Valhi (with such commitment amount subject to increase from time to time at Valhi’s sole discretion). Proceeds from any borrowings by NLKW under the Valhi Credit Facility would be available for one or more loans from NLKW to us in accordance with the terms of the second step of the financing transaction: a Back-to-Back Credit Facility, as described below. Outstanding borrowings under the Valhi Credit Facility bear interest at the prime rate plus 1.875 % per annum, payable quarterly , with F-19 ​ all amounts due on the maturity date. The maximum principal amount which may be outstanding from time-to-time under the Valhi Credit Facility is limited to 50 % of the amount determined by multiplying the number of shares of Kronos common stock pledged by the most recent closing price of such security on the New York Stock Exchange. Borrowings under the Valhi Credit Facility are collateralized by the assets of NLKW (consisting primarily of the shares of Kronos common stock pledged) and 100 % of the membership interest in NLKW held by us . The Valhi Credit Facility contains a number of covenants and restrictions which, among other things, restrict NLKW’s ability to incur additional debt, incur liens, and merge or consolidate with, or sell or transfer substantially all of NLKW’s assets to, another entity, and require NLKW to maintain a minimum specified level of consolidated net worth. Upon an event of default, Valhi will be entitled to terminate its commitment to make further loans to NLKW, to declare the outstanding loans (with interest) immediately due and payable, and, in the case of certain insolvency events with respect to NLKW or us, to exercise its rights with respect to the collateral. Such collateral rights include the right to purchase all of the shares of Kronos common stock pledged at a purchase price equal to the aggregate market value of such stock (with such market value determined by an independent third-party valuation provider), less amounts owing to Valhi under the Valhi Credit Facility, with up to 50 % of such purchase price being payable by Valhi in the form of an unsecured promissory note bearing interest at the prime rate plus 2.75 % per annum, payable quarterly, with all amounts due no later than five years from the date of purchase, and with the remainder of such purchase price payable in cash at the date of purchase. Contemporaneously with the entering into the Valhi Credit Facility, NLKW entered into a $ 50 million revolving credit facility (the “Back-to-Back Credit Facility”) with us, pursuant to which we can borrow up to $ 50 million from NLKW (with such commitment amount subject to increase from time to time at NLKW’s sole discretion). Proceeds from any borrowings under the Back-to-Back Credit Facility would be available for our general corporate purposes, including providing resources to assist us in the resolution of certain claims and contingent liabilities which may be asserted against us. Outstanding borrowings under the Back-to-Back Credit Facility bear interest at the same rate and are payable on the same maturity date as are borrowings by NLKW under the Valhi Credit Facility. Borrowings under the Back-to-Back Credit Facility are on an unsecured basis; however, as a condition thereto, we pledged to Valhi as collateral for the Valhi Credit Facility our 100 % membership interest in NLKW. Any outstanding borrowings and interest on such borrowings under the Back-to-Back Credit Facility are eliminated in the preparation of the consolidated financial statements. In November 2022, NLKW and Valhi entered into a first amendment to the Valhi Credit Facility to extend the latest maturity date (and consequently the latest borrowing date) under the Valhi Credit Facility from December 31, 2023 to December 31, 2030; and NLKW and NL entered into a first amendment to the Back-to-Back Credit Facility to extend the latest maturity date (and consequently the latest borrowing date) under the Back-to-Back Credit Facility from December 31, 2023 to December 31, 2030. The related collateral arrangements remained unchanged by these amendments. ​ We had outstanding borrowings under the Valhi Credit Facility of $ .5 million as of December 31, 2021 and 2022 . The interest rate as of December 31, 2022 was 9.4 % and the average interest rate for the year then ended was 6.7 %. See Note 15. NLKW is in compliance with all of the covenants contained in the Valhi Credit Facility at December 31, 2022. ​ Note 11 - Employee benefit plans: Defined contribution plans - We maintain various defined contribution pension plans. Company contributions are based on matching or other formulas. Defined contribution plan expense approximated $ 3.0 million in 2020, $ 3.7 million in 2021 and $ 3.9 million in 2022. Defined benefit pension plans - We maintain a defined benefit pension plan in the U.S. We also maintain a plan in the United Kingdom (U.K.) related to a former disposed business unit in the U.K. The benefits under our defined benefit plans are based upon years of service and employee compensation. The plans are closed to new participants and no additional benefits accrue to existing plan participants. Our funding policy is to contribute annually the minimum amount required under ERISA (or equivalent non-U.S.) regulations plus additional amounts as we deem appropriate. In accordance with applicable U.K. pension regulations, we entered into an agreement in March 2021 for the bulk annuity purchase, or “buy-in” with a specialist insurer of defined benefit pension plans. Following the buy-in, individual F-20 ​ policies will replace the bulk annuity policy in a “buy-out” which is expected to be completed in 2023. The buy-out is expected to be completed with existing plan funds. At the completion of the buy-out we will remove the assets and liabilities of the U.K. pension plan from our Consolidated Financial Statements and a final plan settlement gain or loss (which we are currently unable to estimate) will be included in net periodic pension cost. At December 31, 2022, the U.K. plan had a benefit obligation of $ 5.8 million, plan assets of $ 6.9 million and a pension plan asset of $ 1.1 million was recognized in our Consolidated Balance Sheet. We expect to contribute approximately $ 1.2 million to our defined benefit pension plans during 2023. Benefit payments to all plan participants out of plan assets are expected to be the equivalent of: ​ ​ ​ ​ ​ Years ending December 31, Amount ​ ​ (In thousands) 2023 ​ $ 3,441 2024 ​ 3,368 2025 ​ 3,295 2026 ​ 3,237 2027 ​ 3,164 Next 5 years ​ 14,426 ​ F-21 ​ The funded status of our defined benefit pension plans is presented in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Change in projected benefit obligations (PBO): ​ ​ ​ ​ ​ ​ Benefit obligations at beginning of the year ​ $ 52,873 ​ $ 50,367 Interest cost ​ 947 ​ 1,138 Plan settlement ​ ​ — ​ ​ ( 188 ) Actuarial (gains) losses ​ 295 ​ ( 10,777 ) Change in currency exchange rates ​ ( 73 ) ​ ( 965 ) Benefits paid ​ ( 3,675 ) ​ ( 3,485 ) Benefit obligations at end of the year ​ 50,367 ​ 36,090 ​ ​ ​ ​ ​ ​ ​ Change in plan assets: ​ ​ Fair value of plan assets at beginning of the year ​ 50,260 ​ 47,940 Actual return on plan assets ​ 226 ​ ( 10,263 ) Employer contributions ​ 1,169 ​ 1,228 Change in currency exchange rates ​ ( 40 ) ​ ( 1,294 ) Benefits paid ​ ( 3,675 ) ​ ( 3,485 ) Fair value of plan assets at end of year ​ 47,940 ​ 34,126 Funded status ​ $ ( 2,427 ) ​ $ ( 1,964 ) ​ ​ ​ ​ ​ ​ ​ Amounts recognized in the balance sheet: ​ ​ Noncurrent pension asset ​ $ 1,356 ​ $ 1,105 Accrued pension costs: ​ ​ ​ ​ Current ​ ( 61 ) ​ ( 57 ) Noncurrent ​ ( 3,722 ) ​ ( 3,012 ) Total ​ ( 2,427 ) ​ ( 1,964 ) ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive loss - actuarial losses, net ​ 28,265 ​ 27,530 Total ​ $ 25,838 ​ $ 25,566 ​ ​ ​ ​ ​ ​ ​ Accumulated benefit obligations (ABO) ​ $ 50,367 ​ $ 36,090 ​ The amounts shown in the table above for actuarial (gains) losses at December 31, 2021 and 2022 have not been recognized as components of our periodic defined benefit pension cost as of those dates. These amounts will be recognized as components of our periodic defined benefit cost in future years. These amounts, net of deferred income taxes, are recognized in our accumulated other comprehensive income (loss) at December 31, 2021 and 2022. The total net underfunded status of our defined benefit pension plans decreased from $ 2.4 million at December 31, 2021 to $ 2.0 million at December 31, 2022 due to the change in our PBO exceeding the change in plan assets during 2022. The decrease in our PBO in 2022 was primarily attributable to actuarial gains due to the increase in discount rates from year end 2021. The decrease in our plan assets in 2022 was primarily attributable to negative plan asset returns in 2022. F-22 ​ The table below details the changes in other comprehensive income (loss) during 2020, 2021 and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In thousands) Changes in plan assets and benefit obligations recognized in other comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net actuarial gain (loss) arising during the year ​ $ ( 934 ) ​ $ 1,618 ​ $ ( 1,034 ) Plan settlement ​ ​ — ​ ​ — ​ ​ 104 Amortization of unrecognized net actuarial gain (loss) ​ 1,412 ​ ( 1,562 ) ​ 1,664 Total ​ $ 478 ​ $ 56 ​ $ 734 ​ The components of our net periodic defined benefit pension cost are presented in the table below. The amounts shown below for recognized actuarial losses in 2020, 2021 and 2022, net of deferred income taxes, was recognized as a component of our accumulated other comprehensive income at December 31, 2019, 2020 and 2021, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2020 2021 ​ 2022 ​ ​ ​ (In thousands) ​ Net periodic pension cost: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest cost ​ $ 1,483 ​ $ 947 ​ $ 1,138 ​ Expected return on plan assets ​ ( 1,850 ) ​ ( 1,603 ) ​ ( 1,552 ) ​ Plan settlement ​ ​ — ​ ​ — ​ ​ 104 ​ Recognized actuarial losses ​ ​ 1,412 ​ ​ 1,562 ​ ​ 1,664 ​ Total ​ $ 1,045 ​ $ 906 ​ $ 1,354 ​ ​ Certain information concerning our defined benefit pension plans (including information concerning certain plans for which ABO exceeds the fair value of plan assets as of the indicated date) is presented in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) PBO at end of the year: ​ ​ ​ ​ ​ ​ U.S. plan ​ $ 40,254 ​ $ 30,254 U.K. plan ​ 10,113 ​ 5,836 Total ​ $ 50,367 ​ $ 36,090 Fair value of plan assets at end of the year: ​ ​ ​ ​ ​ ​ U.S. plan ​ $ 36,471 ​ $ 27,185 U.K. plan ​ 11,469 ​ 6,941 Total ​ $ 47,940 ​ $ 34,126 ​ ​ ​ ​ ​ ​ ​ Plans for which the ABO exceeds plan assets (only our U.S. plan): ​ ​ ​ ​ ​ ​ PBO ​ $ 40,254 ​ $ 30,254 ABO ​ 40,254 ​ 30,254 Fair value of plan assets ​ 36,471 ​ 27,185 ​ The weighted-average discount rate assumptions used in determining the actuarial present value of our benefit obligations as of December 31, 2021 and 2022 are 2.3 % and 5.1 %, respectively. Such weighted-average rates were determined using the projected benefit obligations at each date. Since our plans are closed to new participants and no new additional benefits accrue to existing plan participants, assumptions regarding future compensation levels are not F-23 ​ applicable. Consequently, the accumulated benefit obligations for all of our defined benefit pension plans were equal to the projected benefit obligations at December 31, 2021 and 2022. The weighted-average rate assumptions used in determining the net periodic pension cost for 2020, 2021 and 2022 are presented in the table below. Such weighted-average discount rates were determined using the projected benefit obligations as of the beginning of each year and the weighted-average long-term return on plan assets was determined using the fair value of plan assets as of the beginning of each year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, Rate 2020 2021 2022 Discount rate 2.9 % 2.1 % 2.3 % Long-term rate of return on plan assets 4.2 % 3.3 % 3.3 % ​ Variances from actuarially assumed rates will result in increases or decreases in accumulated pension obligations, pension expense and funding requirements in future periods. In determining the expected long-term rate of return on our U.S. and non-U.S. plan asset assumptions, we consider the long-term asset mix (e.g. equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components. In addition, we receive third-party advice about appropriate long-term rates of return. In the U.S. we currently have a plan asset target allocation of 34 % to equity securities, 59 % to fixed income securities, and the remainder is allocated to multi-asset strategies. The expected long-term rate of return for such investments is approximately 7 %, 5 % and 4 %, respectively (before plan administrative expenses). Approximately 90 % of our U.S. plan assets are invested in funds that are valued at net asset value (NAV) and, in accordance with ASC 820-10, not subject to classification in the fair value hierarchy. The non-U.S. plan assets are invested primarily in insurance contracts and are a Level 3 input. We regularly review our actual asset allocation for each plan, and will periodically rebalance the investments in each plan to more accurately reflect the targeted allocation and/or maximize the overall long-term return when considered appropriate. The composition of our pension plan assets by fair value level at December 31, 2021 and 2022 is shown in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ ​ ​ ​ Quoted prices ​ Significant other ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ in active ​ observable ​ unobservable ​ Assets measured ​ Total markets (Level 1) inputs (Level 2) inputs (Level 3) at NAV ​ ​ (In thousands) December 31, 2021: ​ ​ ​ ​ ​ U.S. ​ ​ ​ ​ ​ Equities ​ $ 12,951 ​ $ 831 ​ $ — ​ $ 108 ​ $ 12,012 Fixed income ​ 21,299 ​ — ​ — ​ — ​ 21,299 Cash and other ​ 2,221 ​ 1,352 ​ — ​ — ​ 869 U.K. - Other ​ 11,469 ​ 1,324 ​ — ​ 10,145 ​ — Total ​ $ 47,940 ​ $ 3,507 ​ $ — ​ $ 10,253 ​ $ 34,180 ​ ​ F-24 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ ​ ​ ​ ​ Quoted prices ​ Significant other ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ in active ​ observable ​ unobservable ​ Assets measured ​ Total markets (Level 1) inputs (Level 2) inputs (Level 3) at NAV ​ ​ (In thousands) December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Equities ​ $ 8,591 ​ $ 694 ​ $ — ​ $ — ​ $ 7,897 Fixed income ​ ​ 15,954 ​ ​ 149 ​ ​ — ​ ​ — ​ ​ 15,805 Cash and other ​ ​ 2,640 ​ ​ 1,903 ​ ​ — ​ ​ 44 ​ ​ 693 U.K. - Other ​ ​ 6,941 ​ ​ 1,104 ​ ​ — ​ ​ 5,837 ​ ​ — Total ​ $ 34,126 ​ $ 3,850 ​ $ — ​ $ 5,881 ​ $ 24,395 ​ ​ As noted above, in March 2021 we purchased a bulk annuity for our U.K. pension plan and such annuity is considered a Level 3 asset included with “U.K. – Other” in the table above. ​ Note 12 - Other noncurrent liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Reserve for uncertain tax positions ​ $ 1,724 ​ $ 2,714 OPEB ​ 787 ​ 637 Insurance claims and expenses ​ 632 ​ 625 Other ​ 347 ​ 303 Total ​ $ 3,490 ​ $ 4,279 ​ Our reserve for uncertain tax positions is discussed in Note 13. ​ ​ F-25 ​ Note 13 - Income taxes: The provision for income taxes and the difference between such provision for income taxes and the amount that would be expected using the U.S. federal statutory income tax rate are presented below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In millions) Expected tax expense, at U.S. federal statutory income tax rate of 21 % ​ $ 2.9 ​ $ 12.8 ​ $ 8.2 Nontaxable dividends received from Kronos ​ ( 5.3 ) ​ ( 5.3 ) ​ ( 5.6 ) U.S. state income taxes and other, net ​ ( .1 ) ​ — ​ .2 Income tax expense (benefit) ​ $ ( 2.5 ) ​ $ 7.5 ​ $ 2.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Components of income tax expense (benefit): ​ ​ ​ Currently payable ​ $ — ​ $ — ​ $ .5 Deferred income tax expense (benefit) ​ ( 2.5 ) ​ 7.5 ​ 2.3 Income tax expense (benefit) ​ $ ( 2.5 ) ​ $ 7.5 ​ $ 2.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive provision (benefit) for income taxes allocable to: ​ ​ ​ Net income ​ $ ( 2.5 ) ​ $ 7.5 ​ $ 2.8 Additional paid-in capital ​ ( .1 ) ​ — ​ — Other comprehensive income: ​ ​ ​ ​ Currency translation ​ .9 ​ ( .4 ) ​ ( 1.8 ) Pension plans ​ ( .7 ) ​ 3.2 ​ 6.5 OPEB plans ​ ( .1 ) ​ — ​ .1 Total ​ $ ( 2.5 ) ​ $ 10.3 ​ $ 7.6 ​ In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings (losses) of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. We received aggregate dividends from Kronos of $ 25.4 million in each of 2020 and 2021 and $ 26.8 million in 2022. See Note 6. F-26 ​ The components of the net deferred tax liability at December 31, 2021 and 2022 are summarized in the following table. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2022 ​ Assets Liabilities Assets Liabilities ​ ​ (In millions) Tax effect of temporary differences related to: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventories ​ $ .5 ​ $ — ​ $ .4 ​ $ — Marketable securities ​ — ​ ( 7.0 ) ​ — ​ ( 5.3 ) Property and equipment ​ — ​ ( 2.7 ) ​ — ​ ( 2.0 ) Accrued OPEB costs ​ .2 ​ — ​ .2 ​ — Accrued pension costs ​ .5 ​ — ​ .4 ​ — Accrued employee benefits ​ 1.3 ​ — ​ 1.3 ​ — Accrued environmental liabilities ​ 26.7 ​ — ​ 24.3 ​ — Goodwill ​ — ​ ( 1.7 ) ​ — ​ ( 1.7 ) Other accrued liabilities and deductible differences ​ .2 ​ — ​ .2 ​ — Other taxable differences ​ — ​ ( 2.3 ) ​ — ​ ( 2.4 ) Investment in Kronos Worldwide, Inc. ​ — ​ ( 59.8 ) ​ — ​ ( 65.5 ) Adjusted gross deferred tax assets (liabilities) ​ 29.4 ​ ( 73.5 ) ​ 26.8 ​ ( 76.9 ) Netting of items by tax jurisdiction ​ ( 29.4 ) ​ 29.4 ​ ( 26.8 ) ​ 26.8 Net noncurrent deferred tax liability ​ $ — ​ $ ( 44.1 ) ​ $ — ​ $ ( 50.1 ) ​ At December 31, 2022, we had NOL carryforwards for federal income tax purposes of approximately $ 21.9 million all of which have an indefinite carryforward period subject to an 80 % annual usage limitation . Our deferred tax asset for such NOL carryforward is net of a portion of our uncertain tax positions as discussed below. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. At December 31, 2020, 2021, and 2022, the gross amount of our uncertain tax positions (exclusive of the effect of interest and penalties) was $ 7.3 million, and there was no change in such amount during the past three years. Previously, we made certain pro-rata distributions to our stockholders in the form of Kronos common stock and we recognized a taxable gain related to such distributions. Our uncertain tax positions are attributable to such prior period distribution of Kronos common stock. As discussed in Note 1, we are part of the Contran Tax Group and we have not paid this liability because Contran has not paid the liability to the applicable tax authority. This liability would be payable by Contran to the applicable tax authority only if the shares of Kronos common stock were to be sold or otherwise disposed outside of the Contran Tax Group. At December 31, 2022, $ 4.6 million of our uncertain tax position is classified as a component of our noncurrent deferred tax liability. If our uncertain tax position at December 31, 2022 was recognized, a benefit of $ 7.3 million would affect our effective income tax rate. We currently estimate that our unrecognized tax benefits will not change materially during the next twelve months. We and Contran file income tax returns in U.S. federal and various state and local jurisdictions. Our U.S. income tax returns prior to 2019 are generally considered closed to examination by applicable tax authorities. Income tax matters related to Kronos Kronos has substantial net operating loss (NOL) carryforwards in Germany (the equivalent of $ 414 million for German corporate tax purposes at December 31, 2022) and in Belgium (the equivalent of $ 13 million for Belgian corporate tax purposes at December 31, 2022). At December 31, 2022, Kronos has concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such F-27 ​ carryforwards have an indefinite carryforward period, (ii) Kronos has utilized a portion of such carryforwards during the most recent three-year period and (iii) Kronos currently expects to utilize the remainder of such carryforwards over the long term. However, prior to the complete utilization of such carryforwards, if Kronos were to generate additional losses in its German or Belgian operations for an extended period of time, or if applicable law were to change such that the carryforward period was no longer indefinite, it is possible that Kronos might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point Kronos would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards. Prior to the enactment of the 2017 Tax Act, the undistributed earnings of Kronos’ European subsidiaries were deemed to be permanently reinvested (Kronos had not made a similar determination with respect to the undistributed earnings of its Canadian subsidiary). Pursuant to the one-time repatriation tax (Transition Tax) provisions of the 2017 Tax Act which imposed a one-time repatriation tax on post-1986 undistributed earnings, Kronos recognized current income tax expense of $ 74.5 million and elected to pay such tax over an eight year period beginning in 2018. At December 31, 2022 the balance of its unpaid Transition Tax is $ 44.7 million, which will be paid in annual installments over the remainder of the eight-year period, which ends in 2025. Of such $ 44.7 million, $ 33.5 million is recorded as a noncurrent payable to affiliate (income taxes payable to Valhi) classified as a noncurrent liability in its Consolidated Balance Sheet at December 31, 2022, and $ 11.2 million is included with its current payable to affiliate (income taxes payable to Valhi) classified as a current liability (a portion of its noncurrent income tax payable to affiliate was reclassified to its current payable to affiliate for the portion of its 2022 Transition Tax installment due within the next twelve months). On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, modifications to the limitation of business interest for tax years beginning in 2019 and 2020 and technical corrections to tax depreciation methods for qualified improvement property. The 2017 Tax Act limited Kronos’ business interest expense to the sum of its business interest income and 30% of its adjusted taxable income as defined in the Tax Act. Any business interest expense disallowed as a deduction as a result of the limitation may be carried forward indefinitely. Kronos determined its interest expense was limited under these provisions and recorded deferred tax assets for the carryforwards associated with the nondeductible portion of its interest expense. Kronos also concluded that it is required to recognize a valuation allowance for such deferred tax asset under the more-likely-than-not recognition criteria. The CARES Act modification to the business interest provisions increased the business interest limitation from 30 % of adjusted taxable income to 50 % of adjusted taxable income which increased Kronos’ allowable interest expense deduction for 2019 and 2020. Consequently, in the first quarter of 2020 Kronos recognized a cash tax benefit of $ .5 million related to the reversal of the valuation allowance recognized in 2019 for the portion of the disallowed interest expense Kronos did not expect to fully utilize at December 31, 2019 and Kronos has considered such modifications in its 2020 provision for income taxes. The CARES Act provisions expired at the end of 2020, and in 2021 Kronos recognized additional disallowed interest expense and increased the valuation allowance by $ 2.8 million for the portion of the carryforward Kronos believed did not meet the more-likely-than-not measurement criteria. During 2022, Kronos determined it was able to utilize a portion of the business interest expense carryforward and accordingly it recognized an aggregate non-cash income tax benefit of $ 3.5 million as a reduction of the valuation allowance. ​ On August 16, 2022, the Inflation Reduction Act was signed into law. Among other things, this legislation provides for a 15% corporate alternative minimum tax on certain large corporations, imposes a 1% excise tax on qualifying stock buybacks occurring after December 31, 2022, and provides for certain energy-related tax credits. Kronos has evaluated the relevant provisions of the Act and does not expect them to have a material impact on its tax provision. ​ Tax authorities may in the future examine certain of Kronos’ U.S. and non-U.S. tax returns and may propose tax deficiencies, including penalties and interest. Because of the inherent uncertainties involved in settlement initiatives and court and tax proceedings, Kronos cannot guarantee that these tax matters, if any, will be resolved in Kronos’ favor, and therefore its potential exposure, if any, is also uncertain. Kronos believes it has adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. Kronos believes the ultimate disposition of F-28 ​ tax examinations should not have a material adverse effect on its consolidated financial position, results of operations or liquidity. Note 14 - Stockholders’ equity: Long-term incentive compensation plan - We have a long-term incentive plan that provides for the award of stock to our board of directors, up to a maximum of 200,000 shares. We awarded 33,250 shares in 2020, 13,750 shares in 2021 and 15,000 shares in 2022 under this plan. At December 31, 2022, 51,150 shares were available for future grants. Long-term incentive compensation plans of subsidiaries and affiliates - CompX and Kronos each have a share-based incentive compensation plan pursuant to which an aggregate of up to 200,000 shares of their common stock can be awarded to members of their board of directors. At December 31, 2022, Kronos had 111,800 shares available for award and CompX had 131,050 shares available for award. Dividends - During 2020, 2021 and 2022 our board of directors approved and we paid quarterly dividends of $ .04 , $ .06 and $ .07 , respectively, per share to stockholders aggregating $ 7.8 million, $ 11.7 million and $ 13.7 million, respectively. In addition, our board of directors declared a special dividend on our common stock which totaled $ 17.1 million ($ .35 per share) that we paid on August 31, 2022. The declaration and payment of future dividends, and the amount thereof, is discretionary and is dependent upon our financial condition, cash requirements, contractual obligations and restrictions and other factors deemed relevant by our board of directors. The amount and timing of past dividends is not necessarily indicative of the amount or timing of any future dividends which might be paid. There are currently no contractual restrictions on the amount of dividends which we may pay. F-29 ​ Accumulated other comprehensive loss - Changes in accumulated other comprehensive loss attributable to NL stockholders, including amounts resulting from our investment in Kronos Worldwide (see Note 6), are presented in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In thousands) Accumulated other comprehensive loss, net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency translation: ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 172,843 ) ​ $ ( 169,575 ) ​ $ ( 171,235 ) Other comprehensive income (loss) ​ 3,268 ​ ( 1,660 ) ​ ( 6,956 ) Balance at end of period ​ $ ( 169,575 ) ​ $ ( 171,235 ) ​ $ ( 178,191 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Defined benefit pension plans: ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 78,257 ) ​ $ ( 80,704 ) ​ $ ( 68,468 ) Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of prior service cost and net losses included in net periodic pension cost ​ 4,330 ​ 4,813 ​ 3,592 Net actuarial gain (loss) arising during the year ​ ( 6,777 ) ​ 7,423 ​ 20,881 Plan settlement ​ — ​ — ​ 138 Balance at end of period ​ $ ( 80,704 ) ​ $ ( 68,468 ) ​ $ ( 43,857 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPEB plans and other: ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 590 ) ​ $ ( 910 ) ​ $ ( 1,053 ) Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of net gain included in net periodic OPEB cost ​ ( 320 ) ​ ( 143 ) ​ ( 369 ) Net actuarial gain arising during the year ​ ​ — ​ — ​ ​ 529 Change in value of debt securities ​ ​ — ​ — ​ ​ ( 50 ) Balance at end of period ​ $ ( 910 ) ​ $ ( 1,053 ) ​ $ ( 943 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total accumulated other comprehensive loss: ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ ( 251,690 ) ​ $ ( 251,189 ) ​ $ ( 240,756 ) Other comprehensive income ​ 501 ​ 10,433 ​ 17,765 Balance at end of period ​ $ ( 251,189 ) ​ $ ( 240,756 ) ​ $ ( 222,991 ) ​ See Note 5 for further discussion on our marketable securities and Note 11 for amounts related to our defined benefit pension plans. ​ Other – During 2022, we purchased 2,000 shares of our common stock from Kronos for a nominal amount in a private transaction that was approved in advance by our independent directors. We cancelled these treasury shares and allocated their cost to common stock at par value and additional paid-in capital. ​ During 2022, CompX acquired 78,900 shares of its Class A common stock for an aggregate amount of approximately $ 1.7 million under prior repurchase authorizations. Of these shares, 70,000 shares were purchased in a market transaction, and 8,900 shares were purchased from two of its affiliates in two separate private transactions that were also approved in advance by CompX’s independent directors. During 2021, CompX purchased 75,000 shares of its Class A common stock in a market transaction for approximately $ 1.3 million. At December 31, 2022, 523,647 shares were available for purchase under CompX’s prior repurchase authorizations. ​ F-30 ​ Note 15 - Related party transactions: We may be deemed to be controlled by Ms. Simmons and the Family Trust. See Note 1. Corporations that may be deemed to be controlled by or affiliated with such individuals sometimes engage in (a) intercorporate transactions such as guarantees, management and expense sharing arrangements, shared fee arrangements, joint ventures, partnerships, loans, options, advances of funds on open account, and sales, leases and exchanges of assets, including securities issued by both related and unrelated parties and (b) common investment and acquisition strategies, business combinations, reorganizations, recapitalizations, securities repurchases, and purchases and sales (and other acquisitions and dispositions) of subsidiaries, divisions or other business units, which transactions have involved both related and unrelated parties and have included transactions which resulted in the acquisition by one related party of a publicly-held noncontrolling interest in another related party. While no transactions of the type described above are planned or proposed with respect to us other than as set forth in these financial statements, we continuously consider, review and evaluate, and understand that Contran and related entities consider, review and evaluate such transactions. Depending upon the business, tax and other objectives then relevant, it is possible that we might be a party to one or more such transactions in the future. Current receivables and payables to affiliates are summarized in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2022 ​ ​ (In thousands) Current receivables from affiliates: ​ ​ ​ ​ ​ ​ Income taxes receivable from Valhi ​ $ — ​ $ 636 ​ ​ ​ ​ ​ ​ ​ Current payables to affiliates: ​ ​ ​ ​ ​ ​ Other - trade items ​ $ 682 ​ $ 665 Income taxes payable to Valhi ​ 9 ​ — Total ​ $ 691 ​ $ 665 ​ From time to time, we may have loans and advances outstanding between us and various related parties, pursuant to term and demand notes. We generally enter into these loans and advances for cash management purposes. When we loan funds to related parties, we are generally able to earn a higher rate of return on the loan than the lender would earn if the funds were invested in other instruments and when we borrow from related parties, we are generally able to pay a lower rate of interest than we would pay if we borrowed from unrelated parties. While certain of such loans may be of a lesser credit quality than cash equivalent instruments otherwise available to us, we believe that we have evaluated the credit risks involved and reflected those credit risks in the terms of the applicable loans. NLKW had borrowings outstanding of $ .5 million as of December 31, 2021 and 2022 under the Valhi Credit Facility, and we incurred a nominal amount of interest expense under such credit facility for the years ended December 31, 2020, 2021 and 2022. See Note 10. In addition, prior to 2020, CompX entered into an unsecured revolving demand promissory note with Valhi under which, as amended, CompX has agreed to loan Valhi up to $ 25 million. CompX’s loan to Valhi, as amended, bears interest at prime plus 1.00 %, payable quarterly, with all principal due on demand, but in any event no earlier than December 31, 2024. Loans made to Valhi at any time are at CompX’s discretion. At December 31, 2021 and 2022, the outstanding principal balance receivable from Valhi under the promissory note was $ 18.7 million and $ 13.2 million, respectively. Interest income (including unused commitment fees) on CompX’s loan to Valhi was $ 1.5 million in 2020, $ 1.2 million in 2021 and $ 1.0 million in 2022. Under the terms of various intercorporate services agreements (ISAs) we enter into with Contran, employees of Contran will provide certain management, tax planning, financial and administrative services to the Company on a fee basis. Such fees are based on the compensation of individual Contran employees providing services for us and/or estimates of time devoted to our affairs by such persons. Because of the number of companies affiliated with Contran, we believe we benefit from cost savings and economies of scale gained by not having certain management, financial and administrative staffs duplicated at each entity, thus allowing certain Contran employees to provide services to multiple companies but only be compensated by Contran. We, CompX and Kronos negotiate fees annually and agreements renew F-31 ​ quarterly. The net ISA fees charged to us by Contran, (including amounts attributable to Kronos for all periods) aggregated approximately $ 33.4 million in 2020, $ 33.2 million in 2021 and $ 33.5 million in 2022. Contran and certain of its subsidiaries and affiliates, including us, purchase certain of their insurance policies and risk management services as a group, with the costs of the jointly-owned policies and services being apportioned among the participating companies. Tall Pines Insurance Company, a subsidiary of Valhi, underwrites certain insurance policies for Contran and certain of its subsidiaries and affiliates, including us. Tall Pines purchases reinsurance from highly rated (as determined by A.M. Best or other internationally recognized ratings agency) third-party insurance carriers for substantially all of the risks it underwrites. Consistent with insurance industry practices, Tall Pines receives commissions from the reinsurance underwriters and/or assesses fees for certain of the policies that it underwrites. During 2020, 2021 and 2022 we paid $ 22.2 million, $ 26.3 million and $ 24.3 million, respectively, under the group insurance program (including amounts attributable to Kronos for all periods, including its Louisiana Pigment Company joint venture) which amounts principally represent insurance premiums, including $ 15.6 million, $ 19.5 million and $ 18.2 million in 2020, 2021 and 2022, respectively, for policies written by Tall Pines. Amounts paid under the group insurance program also include payments to insurers or reinsurers for the reimbursement of claims within our applicable deductible or retention ranges that such insurers and reinsurers paid to third parties on our behalf, as well as amounts for claims and risk management services and various other third-party fees and expenses incurred by the program. We expect these relationships will continue in 2023. With respect to certain of such jointly-owned policies, it is possible that unusually large losses incurred by one or more insured party during a given policy period could leave the other participating companies without adequate coverage under that policy for the balance of the policy period. As a result, and in the event that the available coverage under a particular policy would become exhausted by one or more claims, Contran and certain of its subsidiaries and affiliates, including us, have entered into a loss sharing agreement under which any uninsured loss arising because the available coverage had been exhausted by one or more claims will be shared ratably by those entities that had submitted claims under the relevant policy. We believe the benefits in the form of reduced premiums and broader coverage associated with the group coverage for such policies justifies the risk associated with the potential for any uninsured loss. Contran and certain of its subsidiaries, including us, participate in a combined information technology data services program that Contran provides for primary data processing and failover. The program apportions its costs among the participating companies. The aggregate amount Kronos paid to Contran for such services was $ .3 million in each of 2020, 2021 and 2022. Under the terms of a sublease agreement between Contran and Kronos, Kronos leases certain office space from Contran. Kronos paid Contran $ .4 million in both 2020 and 2021 and $ .5 million in 2022 for such rent and related ancillary services. We expect that these relationships with Contran will continue in 2023. ​ Note 16 - Commitments and contingencies: Lead pigment litigation Our former operations included the manufacture of lead pigments for use in paint and lead-based paint. We, other former manufacturers of lead pigments for use in paint and lead-based paint (together, the “former pigment manufacturers”), and the Lead Industries Association (LIA), which discontinued business operations in 2002, have been named as defendants in various legal proceedings seeking damages for personal injury, property damage and governmental expenditures allegedly caused by the use of lead-based paints. Certain of these actions have been filed by or on behalf of states, counties, cities or their public housing authorities and school districts, and certain others have been asserted as class actions. These lawsuits seek recovery under a variety of theories, including public and private nuisance, negligent product design, negligent failure to warn, strict liability, breach of warranty, conspiracy/concert of action, aiding and abetting, enterprise liability, market share or risk contribution liability, intentional tort, fraud and misrepresentation, violations of state consumer protection statutes, supplier negligence and similar claims. The plaintiffs in these actions generally seek to impose on the defendants responsibility for lead paint abatement and health concerns associated with the use of lead-based paints, including damages for personal injury, contribution F-32 ​ and/or indemnification for medical expenses, medical monitoring expenses and costs for educational programs. To the extent the plaintiffs seek compensatory or punitive damages in these actions, such damages are generally unspecified. In some cases, the damages are unspecified pursuant to the requirements of applicable state law. A number of cases are inactive or have been dismissed or withdrawn. Most of the remaining cases are in various pre-trial stages. Some are on appeal following dismissal or summary judgment rulings or a trial verdict in favor of either the defendants or the plaintiffs. We believe these actions are without merit, and we intend to continue to deny all allegations of wrongdoing and liability and to defend against all actions vigorously. We do not believe it is probable we have incurred any liability with respect to pending lead pigment litigation cases to which we are a party, and with respect to all such lead pigment litigation cases to which we are a party, we believe liability to us that may result, if any, in this regard cannot be reasonably estimated, because: ● we have never settled any of the market share, intentional tort, fraud, nuisance, supplier negligence, breach of warranty, conspiracy, misrepresentation, aiding and abetting, enterprise liability, or statutory cases (other than the Santa Clara case discussed below) , ● no final, non-appealable adverse judgments have ever been entered against us, and ● we have never ultimately been found liable with respect to any such litigation matters, including over 100 cases over a thirty-year period for which we were previously a party and for which we have been dismissed without any finding of liability. Accordingly we have not accrued any amounts for any of the pending lead pigment and lead-based paint litigation cases filed by or on behalf of states, counties, cities or their public housing authorities and school districts, or those asserted as class actions. In addition, we have determined that liability to us which may result, if any, cannot be reasonably estimated at this time because there is no prior history of a loss of this nature on which an estimate could be made and there is no substantive information available upon which an estimate could be based. In the matter titled County of Santa Clara v. Atlantic Richfield Company, et al . (Superior Court of the State of California, County of Santa Clara, Case No. 1-00-CV-788657) on July 24, 2019, an order approving a global settlement agreement entered into among all of the plaintiffs and the three defendants remaining in the case (the Sherwin Williams Company, ConAgra Grocery Products and us) was entered by the court and the case was dismissed with prejudice. The global settlement agreement provides that an aggregate $ 305 million will be paid collectively by the three co-defendants in full satisfaction of all claims resulting in a dismissal of the case with prejudice and the resolution of (i) all pending and future claims by the plaintiffs in the case, and (ii) all potential claims for contribution or indemnity between us and our co-defendants in respect to the case . In the agreement, we expressly deny any and all liability and the dismissal of the case with prejudice was entered by the court without a final judgment of liability entered against us. The settlement agreement fully concludes this matter. Under the terms of the global settlement agreement, each defendant must pay an aggregate $ 101.7 million to the plaintiffs as follows: $ 25.0 million within sixty days of the court’s approval of the settlement and dismissal of the case, and the remaining $ 76.7 million in six annual installments beginning on the first anniversary of the initial payment ($ 12.0 million for the first five installments and $ 16.7 million for the sixth installment). Our sixth installment will be made with funds already on deposit at the court, which is included in noncurrent restricted cash on our Consolidated Balance Sheets, that are committed to the settlement, including all accrued interest at the date of payment, with any remaining balance to be paid by us (and any amounts on deposit in excess of the final payment would be returned to us). Pursuant to the settlement agreement, we placed an additional $ 9.0 million into an escrow account which is included in noncurrent restricted cash on our Consolidated Balance Sheets. For financial reporting purposes, using a discount rate of 1.9 % per annum, we discounted the aggregate $ 101.7 million settlement to the estimated net present value of $ 96.3 million. We made the initial $ 25.0 million payment in September 2019 and the first, second and third annual installment payments of $ 12.0 million each in September 2020, 2021, and 2022. We recognized an aggregate accretion expense of $ 1.3 million, $ 1.1 million, and $ .9 million in 2020, 2021, and 2022 respectively. F-33 ​ New cases may continue to be filed against us. We do not know if we will incur liability in the future in respect of any of the pending or possible litigation in view of the inherent uncertainties involved in court and jury rulings. In the future, if new information regarding such matters becomes available to us (such as a final, non-appealable adverse verdict against us or otherwise ultimately being found liable with respect to such matters), at that time we would consider such information in evaluating any remaining cases then-pending against us as to whether it might then have become probable we have incurred liability with respect to these matters, and whether such liability, if any, could have become reasonably estimable. The resolution of any of these cases could result in the recognition of a loss contingency accrual that could have a material adverse impact on our net income for the interim or annual period during which such liability is recognized and a material adverse impact on our consolidated financial condition and liquidity. Environmental matters and litigation Our operations are governed by various environmental laws and regulations. Certain of our businesses are and have been engaged in the handling, manufacture or use of substances or compounds that may be considered toxic or hazardous within the meaning of applicable environmental laws and regulations. As with other companies engaged in similar businesses, certain of our past and current operations and products have the potential to cause environmental or other damage. We have implemented and continue to implement various policies and programs in an effort to minimize these risks. Our policy is to maintain compliance with applicable environmental laws and regulations at all of our plants and to strive to improve environmental performance. From time to time, we may be subject to environmental regulatory enforcement under U.S. statutes, the resolution of which typically involves the establishment of compliance programs. It is possible that future developments, such as stricter requirements of environmental laws and enforcement policies, could adversely affect our production, handling, use, storage, transportation, sale or disposal of such substances. We believe all of our facilities are in substantial compliance with applicable environmental laws. Certain properties and facilities used in our former operations, including divested primary and secondary lead smelters and former mining locations, are the subject of civil litigation, administrative proceedings or investigations arising under federal and state environmental laws and common law. Additionally, in connection with past operating practices, we are currently involved as a defendant, potentially responsible party (PRP) or both, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the Superfund Amendments and Reauthorization Act (CERCLA), and similar state laws in various governmental and private actions associated with waste disposal sites, mining locations, and facilities that we or our predecessors, our subsidiaries or their predecessors currently or previously owned, operated or used, certain of which are on the United States Environmental Protection Agency’s (EPA) Superfund National Priorities List or similar state lists. These proceedings seek cleanup costs, damages for personal injury or property damage and/or damages for injury to natural resources. Certain of these proceedings involve claims for substantial amounts. Although we may be jointly and severally liable for these costs, in most cases we are only one of a number of PRPs who may also be jointly and severally liable, and among whom costs may be shared or allocated. In addition, we are occasionally named as a party in a number of personal injury lawsuits filed in various jurisdictions alleging claims related to environmental conditions alleged to have resulted from our operations. Obligations associated with environmental remediation and related matters are difficult to assess and estimate for numerous reasons including the: ● complexity and differing interpretations of governmental regulations, ● number of PRPs and their ability or willingness to fund such allocation of costs, ● financial capabilities of the PRPs and the allocation of costs among them, ● solvency of other PRPs, ● multiplicity of possible solutions, ● number of years of investigatory, remedial and monitoring activity required, F-34 ​ ● uncertainty over the extent, if any, to which our former operations might have contributed to the conditions allegedly giving rise to such personal injury, property damage, natural resource and related claims, and ● number of years between former operations and notice of claims and lack of information and documents about the former operations. In addition, the imposition of more stringent standards or requirements under environmental laws or regulations, new developments or changes regarding site cleanup costs or the allocation of costs among PRPs, solvency of other PRPs, the results of future testing and analysis undertaken with respect to certain sites or a determination that we are potentially responsible for the release of hazardous substances at other sites, could cause our expenditures to exceed our current estimates. Actual costs could exceed accrued amounts or the upper end of the range for sites for which estimates have been made, and costs may be incurred for sites where no estimates presently can be made. Further, additional environmental and related matters may arise in the future. If we were to incur any future liability, this could have a material adverse effect on our consolidated financial statements, results of operations and liquidity. We record liabilities related to environmental remediation and related matters (including costs associated with damages for personal injury or property damage and/or damages for injury to natural resources) when estimated future expenditures are probable and reasonably estimable. We adjust such accruals as further information becomes available to us or as circumstances change. Unless the amounts and timing of such estimated future expenditures are fixed and reasonably determinable, we generally do not discount estimated future expenditures to their present value due to the uncertainty of the timing of the payout. We recognize recoveries of costs from other parties, if any, as assets when their receipt is deemed probable. At December 31, 2021 and 2022, we had no t recognized any receivables for recoveries. We do not know and cannot estimate the exact time frame over which we will make payments for our accrued environmental and related costs. The timing of payments depends upon a number of factors, including but not limited to the timing of the actual remediation process; which in turn depends on factors outside of our control. At each balance sheet date, we estimate the amount of our accrued environmental and related costs which we expect to pay within the next twelve months, and we classify this estimate as a current liability. We classify the remaining accrued environmental costs as a noncurrent liability. ​ The table below presents a summary of the activity in our accrued environmental costs during the past three years. The amount charged to expense is included in corporate expense on our Consolidated Statements of Income. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ 2020 2021 2022 ​ ​ (In thousands) Balance at the beginning of the period ​ $ 94,508 ​ $ 93,416 ​ $ 92,940 Additions charged to expense, net ​ 82 ​ 788 ​ 486 Payments, net ​ ( 1,174 ) ​ ( 1,264 ) ​ ( 1,068 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at the end of the period ​ $ 93,416 ​ $ 92,940 ​ $ 92,358 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts recognized in the balance sheet: ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liability ​ $ 2,027 ​ $ 2,643 ​ $ 2,627 Noncurrent liability ​ ​ 91,389 ​ ​ 90,297 ​ ​ 89,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at the end of the period ​ $ 93,416 ​ $ 92,940 ​ $ 92,358 ​ On a quarterly basis, we evaluate the potential range of our liability for environmental remediation and related costs at sites where we have been named as a PRP or defendant, including sites for which our wholly-owned environmental management subsidiary, NL Environmental Management Services, Inc. (EMS), has contractually assumed our obligations. At December 31, 2022, we had accrued approximately $ 92 million related to approximately 33 sites associated with F-35 ​ remediation and related matters we believe are at the present time and/or in their current phase reasonably estimable. The upper end of the range of reasonably possible costs to us for remediation and related matters for which we believe it is possible to estimate costs is approximately $ 119 million, including the amount currently accrued. These accruals have not been discounted to present value. We believe it is not reasonably possible to estimate the range of costs for certain sites. At December 31, 2022, there were approximately five sites for which we are not currently able to reasonably estimate a range of costs. For these sites, generally the investigation is in the early stages, and we are unable to determine whether or not we actually had any association with the site, the nature of our responsibility, if any, for the contamination at the site, if any, and the extent of contamination at and cost to remediate the site. The timing and availability of information on these sites is dependent on events outside of our control, such as when the party alleging liability provides information to us. At certain of these previously inactive sites, we have received general and special notices of liability from the EPA and/or state agencies alleging that we, sometimes with other PRPs, are liable for past and future costs of remediating environmental contamination allegedly caused by former operations. These notifications may assert that we, along with any other alleged PRPs, are liable for past and/or future clean-up costs. As further information becomes available to us for any of these sites which would allow us to estimate a range of costs, we would at that time adjust our accruals. Any such adjustment could result in the recognition of an accrual that would have a material effect on our consolidated financial statements, results of operations and liquidity. Insurance coverage claims We are involved in certain legal proceedings with a number of our former insurance carriers regarding the nature and extent of the carriers’ obligations to us under insurance policies with respect to certain lead pigment and asbestos lawsuits. The issue of whether insurance coverage for defense costs or indemnity or both will be found to exist for our lead pigment and asbestos litigation depends upon a variety of factors and we cannot assure you that such insurance coverage will be available. We have agreements with certain of our former insurance carriers pursuant to which the carriers reimburse us for a portion of our future lead pigment litigation defense costs, and one such carrier reimburses us for a portion of our future asbestos litigation defense costs. We are not able to determine how much we will ultimately recover from these carriers for defense costs incurred by us because of certain issues that arise regarding which defense costs qualify for reimbursement. While we continue to seek additional insurance recoveries, we do not know if we will be successful in obtaining reimbursement for either defense costs or indemnity. Accordingly, we recognize insurance recoveries in income only when receipt of the recovery is probable and we are able to reasonably estimate the amount of the recovery. Other litigation In addition to the litigation described above, we and our affiliates are also involved in various other environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to present and former businesses. In certain cases, we have insurance coverage for these items, although we do not expect additional material insurance coverage for environmental matters. We currently believe the disposition of all of these various other claims and disputes (including asbestos-related claims), individually and in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or liquidity beyond the accruals already provided. Concentrations of credit risk Component products are sold primarily in North America to original equipment manufacturers. The ten largest customers related to our Component Products operations accounted for approximately 48 % of total sales in 2020, 51 % in 2021 and 52 % in 2022. One customer of CompX’s Security Products business accounted for 17 % of total sales in 2020, 16 % in 2021 and 14 % in 2022. One customer of CompX’s Marine Components business accounted for 12 % of consolidated sales in 2022. F-36 ​ Income taxes We are a party to a tax sharing agreement with Contran and Valhi providing for the allocation of tax liabilities and tax payments as described in Note 1. Under applicable law, we, as well as every other member of the Contran Tax Group, are each jointly and severally liable for the aggregate federal income tax liability of Contran and the other companies included in the Contran Tax Group for all periods in which we are included in the Contran Tax Group. Valhi has agreed, however, to indemnify us for any liability for income taxes of the Contran Tax Group in excess of our tax liability computed in accordance with the tax sharing agreement. Note 17 - Financial instruments: See Note 5 for information on how we determine fair value of our marketable securities. The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure as of December 31, 2021 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ December 31, 2022 ​ ​ Carrying ​ Fair ​ Carrying ​ Fair ​ amount value amount value ​ ​ (In thousands) Cash, cash equivalents and restricted cash ​ $ 175,242 ​ $ 175,242 ​ $ 97,502 ​ $ 97,502 ​ Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. ​ ​ ​ F-37