-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L7egoXiBChehShvbeOCSIFgFF1cjA0BVnyNS31+v585Y9J6adQ6i916vyDAAoUX4 0NkgDhphTwG+wkjyLT62ug== 0000054182-96-000015.txt : 19961113 0000054182-96-000015.hdr.sgml : 19961113 ACCESSION NUMBER: 0000054182-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JUSTIN INDUSTRIES INC CENTRAL INDEX KEY: 0000054182 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 750102185 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03041 FILM NUMBER: 96659134 BUSINESS ADDRESS: STREET 1: 2821 W 7TH ST CITY: FORT WORTH STATE: TX ZIP: 76107 BUSINESS PHONE: 8173365125 MAIL ADDRESS: STREET 1: 2821 W 7TH ST CITY: FORT WORTH STATE: TX ZIP: 76107 FORMER COMPANY: FORMER CONFORMED NAME: ACME PRESS BRICK CO DATE OF NAME CHANGE: 19820223 FORMER COMPANY: FORMER CONFORMED NAME: ACME BRICK CO DATE OF NAME CHANGE: 19690519 FORMER COMPANY: FORMER CONFORMED NAME: FIRST WORTH CORP DATE OF NAME CHANGE: 19680509 10-Q 1 SEP 1996 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________________ [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended September 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ ________________________ Commission file number 0-3041 IRS Employer Identification Number 75-0102185 JUSTIN INDUSTRIES, INC. (a Texas Corporation) 2821 West 7th Street Fort Worth, Texas 76107 Telephone: (817) 336-5125 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES XX NO Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date: 26,448,298 shares of the Company's Common Stock ($2.50 par value) were outstanding as of November 8, 1996. ================================================================================ JUSTIN INDUSTRIES, INC. Index Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheet September 30, 1996 and December 31, 1995 3 Consolidated Statement of Income Three Months and Nine Months Ended September 30, 1996 and 1995 4 Consolidated Statement of Shareholders' Equity Nine Months Ended September 30, 1996 and 1995 4 Consolidated Statement of Cash Flows Nine Months Ended September 30, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II. OTHER INFORMATION 9 Item 1. Legal Proceedings 9 Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURE 9 All other schedules and compliance information called for by the instructions to Form 10-Q have been omitted since the required information is not present or not present in amounts sufficient to require submission. (Page 2) ================================================================================ PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS JUSTIN INDUSTRIES, INC. CONSOLIDATED BALANCE SHEET In Thousands of Dollars September 30, December 31, 1996 1995 ------------- ------------ (Unaudited) ASSETS Current assets: Cash $ 4,075 $ 2,180 Accounts receivable, less allowance for doubtful accounts of $3,636 and $3,340, respectively 71,730 78,213 Inventories: Finished goods 113,714 121,835 Work-in-process 4,706 6,068 Raw materials 28,186 30,427 ------------ ------------ Total inventories 146,606 158,330 Income taxes 13,673 9,800 Prepaid expenses 1,508 2,155 ------------ ------------ Total current assets 237,592 250,678 Other assets, at cost 25,588 24,195 Assets held for sale 2,817 4,879 Property, plant, and equipment, at cost: Land 19,438 18,558 Buildings and equipment 243,945 222,576 Construction-in-progress 4,334 11,069 ------------ ------------ 267,717 252,203 Less accumulated depreciation 161,986 155,546 ------------ ------------ Net property, plant, and equipment 105,731 96,657 ------------ ------------ $ 371,728 $ 376,409 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable to banks $ 4,000 $ 10,000 Trade accounts payable 15,492 14,152 Other accrued items 41,456 38,705 Current portion of long-term debt 6,390 6,436 ------------ ------------ Total current liabilities 67,338 69,293 Long-term debt, less current portion 45,125 57,137 Deferred income taxes 13,456 13,490 Shareholders' equity: Voting preferred stock, $2.50 par value; 1,000,000 shares authorized - Series Two convertible, 100 shares issued and outstanding - - Common stock, $2.50 par value; 100,000,000 shares authorized, 27,869,888 shares issued 69,674 69,674 Capital in excess of par value 16,544 16,800 Retained earnings 174,139 161,932 Treasury stock, at cost, 1,435,069 and 1,234,585 shares, respectively (14,548) (11,917) ------------ ------------ Total shareholders' equity 245,809 236,489 ------------ ------------ $ 371,728 $ 376,409 ============ ============ See notes to consolidated financial statements. (Page 3) ================================================================================ JUSTIN INDUSTRIES, INC CONSOLIDATED STATEMENT OF INCOME In Thousands of Dollars (Except Per Share Data) Three Months Ended Nine Months Ended September 30, September 30, -------------------- ---------------------- 1996 1995 1996 1995 -------- -------- --------- --------- (Unaudited) (Unaudited) Net sales: Building materials $ 68,622 $ 61,852 $ 197,277 $ 180,797 Footwear 41,757 50,569 128,113 155,196 -------- -------- --------- --------- 110,379 112,421 325,390 335,993 Costs and expenses: Cost of goods sold 72,453 72,610 214,057 217,955 Selling, general, and administrative expenses 27,774 29,368 84,384 87,426 Interest expense 798 1,345 2,708 3,716 -------- -------- --------- --------- 101,025 103,323 301,149 309,097 -------- -------- --------- --------- Income before income taxes 9,354 9,098 24,241 26,896 Provision for income taxes 3,414 3,320 8,848 9,816 -------- -------- --------- --------- Net income $ 5,940 $ 5,778 $ 15,393 $ 17,080 ======== ======== ========= ========= Earnings per share $ .22 $ .21 $ .57 $ .62 ======== ======== ========= ========= JUSTIN INDUSTRIES, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Nine Months Ended September 30, 1996 and 1995 In Thousands of Dollars (Except Share and Per Share Data) Capital in Preferred Common Excess of Retained Treasury Stock Stock Par Value Earnings Stock - ----------------------- --------- -------- ---------- -------- -------- (Unaudited) Balance January 1, 1996 $ - $ 69,674 $ 16,800 $161,932 $(11,917) Net income - - - 15,393 - Purchase of 323,000 shares of stock for treasury - - - - (3,821) Exercise of stock options - - (256) - 1,190 Cash dividends declared ($.12 per share) - - - (3,186) - -------- -------- -------- -------- -------- Balance September 30, 1996 $ - $ 69,674 $ 16,544 $174,139 $(14,548) ======== ======== ======== ======== ======== Balance January 1, 1995 $ - $ 69,674 $ 16,959 $140,593 $ (5,326) Net income - - - 17,080 - Purchase of 569,000 shares of stock for treasury - - - - (6,082) Exercise of stock options - - (118) - 537 Cash dividends declared ($.12 per share) - - - (3,241) - -------- -------- -------- -------- -------- Balance September 30, 1995 $ - $ 69,674 $ 16,841 $154,432 $(10,871) ======== ======== ======== ======== ======== See notes to consolidated financial statements. (Page 4) ================================================================================ JUSTIN INDUSTRIES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS In Thousands of Dollars Nine Months Ended September 30, -------------------- 1996 1995 -------------------- (Unaudited) Cash flows from operating activities: Net income $15,393 $17,080 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 11,010 11,019 Provision for losses on accounts receivable 1,662 1,045 (Gain) loss on sale of property, plant, and equipment (198) 177 Deferred federal income tax (34) (10) Changes in assets and liabilities: (Increase) decrease in accounts receivable 4,821 (7,744) (Increase) decrease in inventories 11,724 (9,419) Increase in other current assets (3,226) (3,277) Increase in accounts payable and accrued expenses 4,105 3,429 ------- ------- Net cash provided from operating activities 45,257 12,300 Cash flows from investing activities: Proceeds from the sale of property, plant, and equipment 562 500 Capital expenditures (20,113) (18,338) Decrease in other long-term assets 334 720 ------- ------- Net cash used in investing activities (19,217) (17,118) Cash flows from financing activities: Borrowings 12,000 35,000 Repayment of borrowings (30,058) (23,947) Dividends paid (3,200) (3,254) Purchase of treasury stock (3,821) (6,082) Proceeds from exercise of stock options 934 419 ------- ------- Net cash provided by (used in) financing activities (24,145) 2,136 ------- ------- Net increase (decrease) in cash 1,895 (2,682) Cash at beginning of period 2,180 6,071 ------- ------- Cash at end of period $ 4,075 $ 3,389 ======= ======= See notes to consolidated financial statements. (Page 5) ================================================================================ JUSTIN INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 1996 Summary of Significant Accounting Policies A summary of the company's significant accounting policies is presented on page 21 of its 1995 Annual Report to Shareholders. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the Annual Report to Shareholders when reviewing interim financial results. There has been no material change in the accounting policies followed by the company during 1996. In the opinion of management, the accompanying interim financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations, cash flows, and shareholders' equity of Justin Industries, Inc. for interim periods. Long-Term Debt Certain loan agreements contain minimum requirements as to working capital, cash flow from operations, and tangible net worth and restrictions on redemption of outstanding stock and change in control of the company. As of September 30, 1996, the company was in compliance with all such requirements and restrictions. Earnings Per Share Earnings per share are based on the average number of shares of common stock outstanding during each period and such shares issuable upon assumed exercise of stock options, using the treasury stock method, adjusted for stock splits. The number of shares used in the calculation of earnings per share was 27,029,000 in 1996 and 27,494,000 in 1995. (Page 6) ================================================================================ ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales - Consolidated net sales for the third quarter of 1996 were $110.4 million versus $112.4 million for the same quarter in 1995, a decrease of 1.8%. Consolidated net sales for the first nine months of 1996 were $325.4 million compared to $336 million for the nine months ended September 30, 1995. Building Materials Segment Sales - Sales in the Building Materials segment for 1996's third quarter increased 11% to $68.6 million compared to the same quarter of 1995. For the nine months ended September 30, 1996, net sales increased 9.1% to $197.3 million compared to the same period in 1995. Sales for Acme Brick Company ("Acme") improved approximately 13.4% in the third quarter and 12.2% for the nine month period of 1996, compared to the same periods a year ago. Increased brick shipments produced most of the gains, while floor and wall tile sales at both Acme and American Tile Supply Company posted good improvements over 1995's third quarter and nine month periods. Featherlite Building Products Corporation's sales for the third quarter and year-to-date are comparable to last year's pace. Although the number of block units shipped is down about 7% in 1996, primarily due to a decrease in commercial construction activity in certain markets, improved average pricing and gains in cut limestone products have offset the block volume shrinkage. Tradewinds Technologies, Inc., manufacturer of evaporative cooling units, posted declines in revenues for the 1996 periods compared to a year ago. This company, which contributes approximately 1% of consolidated revenues, is retooling its plant in 1996 to provide additional product enhancements. Footwear Segment Sales - Total Footwear sales for the quarter ended September 30, 1996, declined 17.4% to $41.8 million from 1995's third quarter of $50.6 million. For the nine month period ended September 30, 1996, revenues were 17.5% behind the same period a year ago. Justin Boot Company, Nocona Boot Company and Tony Lama Company experienced a slower third quarter in 1996, while sales in the Chippewa product line increased during the quarter. Changes in fashion trends have affected the western apparel industry. Costs and Expenses - The consolidated gross profit margin declined in the third quarter of 1996 to 34.4% compared to 35.4% in the same quarter of 1995. For the nine month periods ended September 30, 1995 and 1996, the gross profit margins declined from 35.1% in 1995 to 34.2% in 1996. Building Materials' margins decreased slightly from 41.5% in 1995's third quarter to 41% in the third quarter of 1996. During the first nine months of 1996, the ratio for Building Materials declined to 40% from 41.3% for the same period in 1995. Brick margins continue to be lower than comparable periods in 1995 due to higher natural gas prices in 1996 and start-up costs incurred from a new plant. Gross margins in the Footwear business were 23.5% for the third quarter and 25.4% for the first nine months of 1996, versus 27.9% for the third quarter and the first nine months of 1995. Reduced Footwear sales and special inventory reduction programs have negatively impacted margins. At the same time, however, the inventory reduction programs have significantly improved working capital requirements. Selling, general and administrative expenses decreased to 25.2% of sales in the third quarter of 1996 compared to 26.1% in the third quarter of 1995. For the first nine months of 1996, such expenses were 25.9% of sales compared to 26% during the first nine months of 1995. The improvements are primarily due to higher sales in the Building Materials segment and reduced general and administrative expenses in Footwear. Beginning in the third quarter of 1995, a program was initiated in the Footwear segment to reduce general and administrative costs on a long-term basis. Costs associated with this reorganization were incurred throughout 1995. The program, which included consolidation of various administrative and accounting functions, was completed in early 1996. (Page 7) ================================================================================ Interest expense decreased 40.7% in 1996's third quarter to $798,000 from $1,345,000 in the same three month period of 1995. During the nine months ended September 30, 1996, compared to the same period in 1995, interest expense decreased $1,008,000 or 27.1%. These decreases are primarily attributable to significantly lower debt levels due to Footwear's aggressive inventory reduction strategies, combined with lower average effective interest rates. Provision for Income Taxes - The Company's provision for income tax was 36.5% of pre-tax income in the third quarter and for the first nine months of 1996 and 1995, which is the current estimated effective rate for the full year. FINANCIAL CONDITION AND LIQUIDITY At September 30, 1996, working capital amounted to $170.3 million versus $181.4 million at December 31, 1995. Cash increased from $2.2 million at year- end 1995 to $4.1 million at the end of 1996's third quarter. During the first nine months of 1996, net cash of $45.3 million was provided from operations. As such, the company was able to reduce debt levels by $18.1 million during the 1996 nine month period. Other uses of cash during the nine month period include the purchase of 323,000 shares of treasury stock at a cost of $3.8 million, concluding the company's stock repurchase program that began in late 1994; purchase of capital equipment, primarily the new Bennett brick plant; and payment of cash dividends to shareholders. Total interest-bearing debt decreased to $55.5 million from $73.6 million at year-end 1995. The ratio of long-term debt-to-equity was .18 to 1 at September 30, 1996, compared to .24 to 1 at year-end 1995. Borrowings should decrease further during the next quarter as receivables from Footwear's seasonal sales become due. At September 30, 1996, unused credit facilities totaled $68 million, an amount well above the company's estimated requirements. Cash dividends declared in the third quarter of 1996 and 1995 amounted to $.04 a share. During each of the nine month periods ended September 30 in 1996 and 1995, dividends were declared amounting to $.12 a share. (Page 8) ================================================================================ PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The company is not presently involved in any lawsuits seeking damages relating to the normal conduct of its business that if adversely determined would have a material effect on the consolidated financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The information required by this item has been provided in the company's definitive proxy statement for its annual meeting of shareholders held April 11, 1996. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (27) Financial Data Schedule for the period ended September 30, 1996. (b) Reports on Form 8-K None. SIGNATURE Pursuant to the requirements 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. JUSTIN INDUSTRIES, INC. S/RICHARD J. SAVITZ Richard J. Savitz Vice President-Finance/ Chief Financial Officer Dated this 12th day of November 1996. (Page 9) ================================================================================ EX-27 2 SEP 1996 10-Q FDS
5 This schedule contains summary financial information extracted from the September 30, 1996 Financial Statements included in the Company's Form 10-Q and is qualified in its entirety by reference to such Form 10-Q. 1000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 4075 0 75366 3636 146606 237592 267717 161986 371728 67338 0 0 0 69674 176135 371728 325390 325390 214057 214057 0 1662 2708 24241 8848 15393 0 0 0 15393 .57 .57
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