<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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Commission File Number 1-7035
CALMAT CO.
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(Exact name of registrant as specified in its charter)
Delaware 95-0645790
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
3200 San Fernando Road, Los Angeles, California 90065
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(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (213) 258-2777
--------------
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 [X] NO [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES [ ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
23,394,761 shares of Common Stock were outstanding at November 5, 1997.
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CALMAT CO.
INDEX
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PART I - FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
(a) Consolidated Balance Sheets:
September 30, 1997 and December 31, 1996 3
(b) Consolidated Statements of Operations:
For the Three and Nine Months Ended September 30, 1997 and 1996 4
(c) Consolidated Statements of Cash Flows:
For the Nine Months Ended September 30, 1997 and 1996 5
(d) 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
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
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CALMAT CO.
CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
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(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,259 $ 17,127
Cash held in trust for section 1031 exchanges 425 8,648
Trade accounts receivable, less allowance
for discounts and doubtful accounts
($6,240 in 1997 and $5,309 in 1996) 86,348 52,558
Income taxes receivable - 1,395
Inventories 16,988 13,972
Prepaid expenses and other 4,558 4,335
Deferred income taxes 11,867 11,867
Installment notes receivable-current portion 233 337
-------- ---------
Total current assets 122,678 110,239
Installment notes receivable and other assets 35,544 28,602
Costs in excess of net assets of businesses acquired, net 49,142 50,410
Property, plant and equipment, at cost:
Land and deposits 195,909 183,516
Buildings, machinery and equipment 514,266 495,320
Construction in progress 33,846 31,763
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744,021 710,599
Less: Accumulated depreciation and depletion (313,195) (299,134)
-------- ---------
Property, plant and equipment, net 430,826 411,465
-------- ---------
Total assets $638,190 $ 600,716
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,212 $ 20,208
Accrued liabilities 42,215 34,905
Notes and bonds payable - current portion 331 100
Income taxes payable 3,285 -
Dividends payable 2,327 2,324
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Total current liabilities 80,370 57,537
Notes and bonds payable - long term portion 121,651 116,233
Other liabilities and deferred credits 38,342 38,429
Deferred income taxes 56,490 56,325
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Total liabilities 296,853 268,524
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Stockholders' equity:
Common stock 23,349 23,240
Additional paid-in capital 43,435 41,521
Retained earnings 274,553 267,431
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Total stockholders' equity 341,337 332,192
-------- ---------
Total liabilities and stockholders' equity $638,190 $ 600,716
======== =========
</TABLE>
See accompanying notes to consolidated financial statements.
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CALMAT CO.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenues:
Net sales and operating revenues $132,074 $114,978 $336,580 $300,542
Gains on sales of real estate 2,607 832 4,173 2,632
Other income 1,662 750 4,646 2,724
-------- -------- -------- --------
136,343 116,560 345,399 305,898
-------- -------- -------- --------
Costs and expenses:
Cost of products sold and operating expenses 109,885 96,573 286,024 257,379
Selling, general and administrative expenses 10,894 9,208 31,930 28,532
Interest expense 1,941 1,668 5,787 3,945
Other expense 337 516 797 1,346
-------- -------- -------- --------
123,057 107,965 324,538 291,202
-------- -------- -------- --------
Income before income taxes 13,286 8,595 20,861 14,696
Federal and state income taxes 4,022 3,401 6,749 5,658
-------- -------- -------- --------
Net income $ 9,264 $ 5,194 $ 14,112 $ 9,038
======== ======== ======== ========
Per Share Data:
Net income $ 0.39 $ 0.22 $ 0.60 $ 0.39
======== ======== ======== ========
Weighted average shares outstanding 23,503 23,252 23,360 23,236
======== ======== ======== ========
Cash dividends per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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CALMAT CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
1997 1996
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 14,112 $ 9,038
Depreciation, cost depletion and amortization 26,213 23,309
Other (25,532) (4,649)
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Cash provided by operating activities 14,793 27,698
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INVESTING ACTIVITIES:
Purchase of property, plant and equipment (28,223) (50,323)
Proceeds from sale of real estate 11,272 2,827
Businesses acquired (23,610) -
Installment notes receivable 398 6,395
Other 1,187 767
-------- --------
Cash used for investing activities (38,976) (40,334)
-------- --------
FINANCING ACTIVITIES:
Notes payable to banks 9,000 19,250
Principal payments on notes and bonds payable (3,127) (60)
Payment of cash dividends (6,972) (6,960)
Other 2,191 1,259
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Cash provided by financing activities 1,092 13,489
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Increase/(decrease) in cash (23,091) 853
Increase/(decrease) in cash held in trust for section 1031 exchanges (8,223) 853
-------- --------
Decrease in cash and cash equivalents (14,868) -
Cash and cash equivalents, beginning of period 17,127 -
-------- --------
Cash and cash equivalents, end of period $ 2,259 $ -
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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CALMAT CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. In the opinion of management, information furnished herein reflects all
adjustments necessary for a fair presentation of the financial position and
results of operations for the interim periods. There have been no changes in
the significant accounting policies as discussed in Note 1 of Notes to
Financial Statements contained in the Company's 1996 Annual Report on Form
10-K.
2. Earnings per common equivalent share (common shares adjusted for dilutive
effect of common stock options) have been computed by dividing net income for
each period by the weighted-average equivalent shares of common stock
outstanding.
3. In February 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". SFAS
No. 128 is required to be implemented for financial statements for both
interim and annual periods ending after December 15, 1997. Based on a review
of the requirements of SFAS No. 128, management does not anticipate any
material change in previously reported earnings per share.
4. Certain prior year amounts have been restated to conform to the current
year's presentation.
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CALMAT CO.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Results of Operations
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The Company reported net income of $9.3 million, or $0.39 per share, for the
third quarter of 1997, compared with $5.2 million, or $0.22 per share, for the
prior year's third quarter. Net income was $14.1 million, or $0.60 per share,
for the nine months ended September 30, 1997, compared with net income of $9.0
million, or $0.39 per share, for the comparable period in 1996.
Business segment information for the three and nine months ended September 30,
1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
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(unaudited, amounts in thousands)
<S> <C> <C> <C> <C>
Revenues:
Construction Materials $126,887 $109,448 $321,310 $284,077
Properties - Operations 5,187 5,530 15,270 16,465
Properties - Real Estate Gains 2,607 832 4,173 2,632
Corporate and Other 1,662 750 4,646 2,724
-------- -------- -------- --------
$136,343 $116,560 $345,399 $305,898
======== ======== ======== ========
Income before income taxes:
Construction Materials $ 12,462 $ 9,743 $ 22,294 $ 16,974
Properties - Operations 2,229 2,658 6,998 7,486
Properties - Real Estate Gains 2,607 832 4,173 2,632
Corporate and Unallocated Expenses, Net (3,348) (2,927) (9,943) (8,946)
Interest Expense (1,941) (1,668) (5,787) (3,945)
Other Income (Expense) 1,277 (43) 3,126 495
-------- -------- -------- --------
$ 13,286 $ 8,595 $ 20,861 $ 14,696
======== ======== ======== ========
</TABLE>
Income before income taxes by segment represents total revenues less direct
operating expenses, segment selling, general and administrative expenses and
certain allocated corporate general and administrative expenses. Corporate and
Unallocated Expenses, Net includes corporate administrative expenses and support
expenses not allocated to business segments. Other Income (Expense) includes
interest income and other miscellaneous items.
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CALMAT CO.
Construction Materials Division
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Sales volumes are shown below.
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<CAPTION>
Amounts in Thousands (unaudited) Three Months Ended Nine Months Ended
- - -------------------- September 30, September 30,
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Aggregates:
Tons sold to outside customers 5,357 4,603 14,671 12,883
Tons used in ready mixed concrete 832 767 2,305 2,331
Tons used in asphalt 1,807 1,573 4,303 3,801
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7,996 6,943 21,279 19,015
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Tons of hot-mix asphalt sold 2,585 2,297 6,067 5,448
===== ===== ====== ======
Yards of ready mixed concrete sold 667 630 1,861 1,800
===== ===== ====== ======
</TABLE>
Revenues in the Construction Materials Division were $126.9 million in the third
quarter of 1997, up $17.4 million, or 16% compared with the corresponding 1996
period, and $321.3 million in the first nine months of 1997, up $37.2 million,
or 13% compared with the same period in 1996. The revenue increase for the
current quarter and nine-month period was due to higher unit sales volumes and
average selling prices for aggregates, ready mixed concrete and asphalt
operations.
The Division's pre-tax income from operations was $12.5 million in the third
quarter compared with $9.7 million in the year earlier period. The improved
results reflect higher earnings from our aggregates and asphalt operations.
Sales volumes increased 15% for aggregates and 13% for asphalt, while average
selling prices increased 2% for both aggregates and asphalt. Ready mixed
concrete results were lower despite a 6% increase in sales volumes and 2% higher
average selling prices. The decline was due to 5% higher unit production costs,
which was largely the result of higher cement costs.
The Division's pre-tax income from operations for the first nine months was
$22.3 million compared with $17.0 million in the 1996 period. The improved
earnings largely stem from the Company's aggregates operations which had 12%
higher sales volumes, 6% higher average selling prices and flat unit production
costs. Also contributing to the improved earnings were the Company's asphalt
operations which had 11% higher sales volumes, 1% higher average selling prices
and flat unit production costs. Ready mixed concrete results were lower despite
a 3% increase in sales volumes and 2% higher average selling prices. The
decline was due to 4% higher unit production costs, with more than one-half the
result of increased cement costs.
Properties Division
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Revenues in the Properties Division, excluding gains on sales of real estate,
were $5.2 million in the third quarter of 1997 compared with $5.5 million in the
corresponding 1996 period, and $15.3 million in the first nine months of 1997
compared with $16.5 million in the first nine months of 1996. The decrease in
revenue for the current quarter and nine-month period was largely due to
decreased revenues from developed properties which, in turn, was caused by
recent sales of such properties.
The Division's pre-tax income from operations increased to $4.8 million for the
third quarter of 1997 compared with $3.5 million in the prior year's third
quarter. The current quarter includes $2.6 million of gains from real estate
sales, compared with gains of $0.8 million in the prior year's quarter.
Excluding real estate gains, the Division's pre-tax income from operations
declined $0.4 million, due in part to recent sales of income-producing property.
The Division's pre-tax income from operations increased to $11.2 million in the
first nine months of 1997 compared with $10.1 million in the prior period. Gains
from real estate sales of $4.2 million are included in 1997 versus gains of $2.6
million in 1996. Excluding real estate gains, the Division's pre-tax income from
operations decreased $0.5 million, due in part to recent sales of income-
producing property.
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CALMAT CO.
Other
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Interest expense was $0.3 million higher in the third quarter of 1997, compared
with the prior year's quarter, and $1.8 million higher in the first nine months
of 1997, compared with the prior year, due to higher levels of average debt
outstanding and higher weighted-average interest rates. The higher average
interest rate results from a long-term debt refinancing accomplished in late
1996.
The income tax provision in the third quarter and in the first nine months of
1997 includes a $0.8 million tax benefit as a result of a settlement of a prior
year tax claim related to the sale of a landfill operation.
Other income in the third quarter and in the first nine months of 1997 includes
$1.0 million of interest income related to the landfill tax settlement. Other
income in the first nine months of 1997 also includes a $1.1 million refund
received as settlement of a prior year tax claim of a former subsidiary.
Liquidity and Capital Resources
- - -------------------------------
Cash and cash equivalents were $2.3 million at September 30, 1997 compared with
$17.1 million at December 31, 1996. Cash provided by operating activities was
$14.8 million for the nine months ended September 30, 1997. Cash used for
investing activities was $39.0 million, including $28.2 million for the purchase
of property, plant and equipment and $23.6 million for business acquisitions,
partially offset by proceeds from the sales of real estate of $11.3 million.
Cash provided by financing activities was $1.1 million, including a $5.9 million
net increase in debt, and a $2.0 million increase in stock options exercised,
partially offset by cash dividends of $7.0 million.
Working capital totaled $42.3 million at September 30, 1997, a $10.4 million
decrease from $52.7 million at December 31, 1996. The decrease in working
capital was due to a $23.1 million decrease in cash and a $19.3 million
increase in accounts payable and accrued liabilities, partially offset by a
$33.8 million increase in trade accounts receivable. Current ratios were 1.5
and 1.9 at September 30, 1997 and December 31, 1996, respectively.
Total consolidated long-term and short-term borrowings at September 30, 1997 and
December 31, 1996 were $122.0 million and $116.3 million, respectively. Debt as
a percent of total capitalization was 26.3% and 25.9%, at September 30, 1997 and
December 31, 1996, respectively.
Other
- - -----
The Company announced on October 7, 1997 that it will emphasize growth of its
core construction materials business by selling its industrial and office
properties, and by accelerating the sale of 9,584 acres of property not being
used in its construction materials business, including prime sites currently
available for development. These properties are located in Los Angeles, San
Diego, Phoenix and Albuquerque and have a book value of approximately $93
million. The Company expects to sell these assets over the next two years with
expected proceeds of between $150 million and $170 million. The Company will
continue to own in excess of 20,000 acres, and will sell properties as they are
no longer used in the construction materials business.
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CALMAT CO.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Operating Industries, Inc. Landfill Site
- - ----------------------------------------
In 1988, the U.S. Environmental Protection Agency ("EPA"), the State of
California and the California Hazardous Substance Account named the Company and
over 200 other parties defendants in a civil action alleging joint and several
liability pursuant to certain California statutes and the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") in connection
with the cleanup of the former Operating Industries, Inc. landfill site in
Monterey Park, California. The EPA's current allegation is that the Company
disposed of hazardous substances representing 0.0675 percent of the total volume
of waste at the site. The Company believes, however, that the substances
attributed to it at the site were not hazardous.
To date, the Company has contributed approximately $300,000 to fund certain
interim remedial actions at the site, as part of two partial settlements of this
matter (which in part remain subject to court approval). The EPA recently
reached a decision as to the Final Remedy to be implemented for the site and
currently estimates the total cost for implementation to be shared by all
parties to be $289 million.
Although the Company's share of any liability is still undetermined, and the
ultimate outcome of this action cannot be predicted with certainty, the Company
believes that this matter will be resolved without a material adverse effect on
its financial position or results of operations. The Company's belief is based
on its position that the wastes attributed to it at the site were not
hazardous, its extremely small share of the waste at the site compared to wastes
attributable to the other defendants, and its belief that it has recourse to
insurance coverage for at least a substantial portion of any resulting
liability.
Item 6. Exhibits and Reports on Form 8-K
- - ----------------------------------------
(a) Exhibit 4.1: Amendment #1 to Form 8-A for Registration of Certain Classes
of Securities, dated and filed with the Securities and Exchange Commission
on September 30, 1997, is incorporated herein by reference.
(b) Exhibit 27. Financial Data Schedule
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CALMAT CO.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CALMAT CO.
--------------------------------
(Registrant)
Date: November 10, 1997 By:/s/H. James Gallagher
----------------------------------
H. James Gallagher
Executive Vice President, Finance,
Chief Financial Officer and
Treasurer
Date: November 10, 1997 By:/s/Brent L. Stumme
------------------------------------
Brent L. Stumme
Vice President, Corporate Controller
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,684
<SECURITIES> 0
<RECEIVABLES> 92,588
<ALLOWANCES> (6,240)
<INVENTORY> 16,988
<CURRENT-ASSETS> 122,678
<PP&E> 744,021
<DEPRECIATION> (313,195)
<TOTAL-ASSETS> 638,190
<CURRENT-LIABILITIES> 80,370
<BONDS> 121,651
0
0
<COMMON> 23,349
<OTHER-SE> 317,988
<TOTAL-LIABILITY-AND-EQUITY> 638,190
<SALES> 336,580
<TOTAL-REVENUES> 345,399
<CGS> 286,024
<TOTAL-COSTS> 316,841
<OTHER-EXPENSES> 797
<LOSS-PROVISION> 1,113
<INTEREST-EXPENSE> 5,787
<INCOME-PRETAX> 20,861
<INCOME-TAX> 6,749
<INCOME-CONTINUING> 14,112
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,112
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
