FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7159
FLORIDA ROCK INDUSTRIES, INC.
(exact name of registrant as specified in its charter)
Florida 59-0573002
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 East 21st Street, Jacksonville, Florida 32206
(Address of principal executive offices)
(Zip Code)
904/355-1781
(Registrant's telephone number, including area code)
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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of August 1, 1996: 9,313,508 shares of $.10 par value
common stock.
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
June 30, September 30,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 1,615 $ 925
Accounts and notes receivable, less
allowance for doubtful accounts of
$2,402 ($1,726 at September 30, 1995) 52,248 47,923
Inventories 24,775 24,324
Prepaid expenses and other 6,430 5,616
Total current assets 85,068 78,788
Other assets 26,748 26,916
Property, plant and equipment, at cost:
Land 110,198 105,801
Plant and equipment 411,307 386,271
521,505 492,072
Less accumulated depreciation,
depletion and amortization (281,979) (271,747)
Net property, plant and equipment 239,526 220,325
$ 351,342 $ 326,029
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term notes payable to banks $ 14,400 $ 9,400
Accounts payable 27,948 27,499
Dividends payable 2,362 --
Accrued income taxes 3,357 3,052
Accrued liabilities 14,149 13,492
Long-term debt due within one year 2,404 4,171
Total current liabilities 64,620 57,614
Long-term debt 16,983 9,653
Deferred income taxes 30,717 31,005
Accrued employee benefits 10,714 9,565
Other accrued liabilities 7,484 6,937
Stockholders' equity:
Preferred stock, no par value;
10,000,000 shares authorized, - -
none issued
Common stock, $.10 par value;
50,000,000 shares authorized,
9,487,309 shares issued 949 949
Capital in excess of par value 17,400 17,400
Retained earnings 205,507 192,911
Less cost of treasury stock, 120,501
shares (181 shares at September
30, 1995) (3,032) (5)
Total stockholders' equity 220,824 211,255
$ 351,342 $ 326,029
See accompanying notes.
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
(Unaudited)
Three Months ended Nine Months ended
June 30 June 30
1996 1995 1996 1995
Net sales $110,331 $98,256 $288,397 $272,554
Cost of sales 84,760 78,350 232,462 220,876
Gross profit 25,571 19,906 55,935 51,678
Selling, general and
administrative expense 10,098 8,751 27,412 25,785
Operating profit 15,473 11,155 28,523 25,893
Interest expense (647) (625) (1,576) (1,601)
Interest income 136 159 433 441
Other income, net (1,162) 140 (922) 432
Income before income taxes 13,800 10,829 26,458 25,165
Provision for income taxes 4,761 3,736 9,128 8,682
Net income $ 9,039 $ 7,093 $17,330 $16,483
Per common share:
Income $.96 $.74 $1.83 $1.73
Cash dividends $.25 $.25 $.50 $.50
Weighted average number
of shares 9,418,787 9,533,333 9,475,622 9,526,356
See accompanying notes.
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED JUNE, 1996 AND 1995
(In thousands)
(Unaudited)
1996 1995
Cash flows from operating activities:
Net income $17,330 $16,483
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 21,181 19,439
Net changes in operating assets and
liabilities:
(Increase)Decrease in accounts receivable (4,328) 1,430
Increase in inventories (451) (1,357)
Increase in prepaid expenses and other (274) (637)
Increase in accounts payable and
accrued liabilities 3,108 5,207
Decrease in deferred income taxes (829) (1,058)
Gain on disposition of property, plant and
equipment (1,519) (659)
Other, net 1,297 (282)
Net cash provided by operating activities 35,515 38,566
Cash flows from investing activities:
Purchase of property, plant and equipment (40,014) (32,440)
Proceeds from the sale of property, plant and
equipment 1,653 952
Additions to other assets (1,343) (1,283)
Proceeds from the disposition of other assets 148 68
Collections of notes receivable 126 206
Net cash used in investing activities (39,430) (32,497)
Cash flows from financing activities:
Proceeds from long-term debt 6,000 -
Net increase in short-term debt 5,000 8,800
Repayment of long-term debt (996) (11,983)
Repurchase of Company stock (3,027) (2)
Payment of dividends (2,372) (2,372)
Net cash provided by (used in)financing activities 4,605 (5,557)
Net increase in cash and cash
equivalents 690 512
Cash and cash equivalents at beginning of year 925 804
Cash and cash equivalents at end of period $ 1,615 $ 1,316
See accompanying notes.
FLORIDA ROCK INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
(1) Basis of Presentation
The accompanying consolidated condensed financial statements include
the accounts of the Company and its subsidiaries. These statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and the instructions to
Form 10-Q and do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation of the results for the interim period have been
included. Operating results for the nine months ended June 30, 1996,
are not necessarily indicative of the results that may be expected for
the year ended September 30, 1996. The accompanying consolidated
financial statements and the information included under the heading
"Management's Discussion and Analysis" should be read in conjunction
with the consolidated financial statements and related notes of
Florida Rock Industries, Inc. for the year ended September 30, 1995.
(2) Inventories
Inventories consisted of the following (in thousands):
June 30, September 30,
1996 1995
Finished products $ 19,813 $ 19,658
Raw materials 3,891 3,580
Parts and supplies 1,071 1,086
$ 24,775 $ 24,324
(3) Earnings Per Share
Earnings per share are based on the weighted average number of common
shares outstanding and common stock equivalents, where applicable,
during the periods. Fully diluted earnings per share are not reported
because their effect would have been less than 3% dilutive.
(4) Supplemental Disclosures of Cash Flow Information
Cash paid during the nine months ended June 30, 1996 and 1995 for
certain expense items are (in thousands):
1996 1995
Interest expense, net of
amount capitalized $1,581 $1,722
Income taxes $9,654 $8,977
The following schedule summarizes noncash investing and financing
activities for the nine months ended June 30, 1996 and 1995
(in thousands):
1996 1995
Additions to property, plant
and equipment from:
Exchanges $ 347 $ 48
Issuing debt $ 260 107
Additions to other assets
from issuing debt $ 300 -
Additions to notes receivable
from sale of property, plant
and equipment $ 6 -
(5) The Company and its subsidiaries are subject to legal proceedings and
claims arising out of their businesses that cover a wide range of
matters. Additional information concerning these matters is presented
in Note 12 to the consolidated financial statements included in the
Company's 1995 Annual Report to stockholders, Item 3 "Legal
Proceedings" of the Company's Form 10-K for fiscal 1995, and in Part
II, Item 1 "Legal Proceedings" of the Company's Form 10-Q for the
quarters ended December 31, 1995, March 31, 1996 and June 30, 1996.
Such information is incorporated herein by reference.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
For the third quarter and first nine months of fiscal 1996, ended June
30, 1996, consolidated net sales increased 12% and 6%, respectively, from
the same periods last year. The increases were primarily attributed to
price and volume improvements in most markets.
Gross profit for the third quarter and the first nine months increased
approximately 28% and 8%, respectively, from the same periods last year.
Gross profit margin for the third quarter increased from 20.3% to 23.2%
and for the first nine months increased from 19.0% to 19.4% from last
year. The increases in gross profit and gross profit margins in both
current periods were due to the improved sales, a favorable change in the
mix of business and improved capacity utilization in certain markets.
Selling, general and administrative expense increased 15% in the quarter
and 6% in the nine months over the same periods last year. The increases
were due primarily to the increase in sales and in profit sharing and
incentive compensation that are linked to profitability. Selling,
general and administrative expense in the current quarter amounted to
9.1% of sales, up slightly from 8.9% for the third quarter of last year
and amounted to 9.5% of sales, in the current nine months which was level
with last year.
Interest expense for the third quarter and first nine months remained
about level with the same periods last year.
Other income, net, for the third quarter of fiscal 1996 includes a
$1,000,000 loss from the write down in the carrying value of certain
land.
The Company expects construction activity to remain around current levels
for the balances of this year. Based on the current outlook, fiscal
1996 should be a year of improved sales and profitability.
Financial Condition
The Company continues to maintain its sound financial condition with
sufficient resources to meet anticipated capital expenditures and other
operating requirements.
While the Company is affected by environmental regulations, such
regulations are not expected to have a major effect on the Company's
capital expenditures or operating results. Additional information
concerning environmental matters is presented in Note 12 to the
consolidated financial statements included in the Company's 1995 Annual
Report to stockholders, in Part I, Item 3 "Legal Proceedings" of the
Company's Form 10-K for fiscal 1995 and in Part II, Item 1 "Legal
Proceedings" of the Company's Form 10-Q for the quarter ended December
31, 1995 and such information is incorporated herein by reference.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Since May of 1993, a subsidiary of the Company ("Subsidiary") has
contested a Complaint of the National Labor Relations Board ("NLRB")filed
against the Subsidiary based on unfair labor practice charges previously
filed by Teamsters Local 639. However, the Subsidiary has now exhausted
unsuccessfully its administrative and legal remedies with the last action
being an order of the United States Fourth Circuit Court of Appeals dated
May 16, 1996, denying rehearings. The Subsidiary is presently
negotiating with the Teamsters to resolve outstanding issues. It is the
opinion of the Company's management that the ultimate disposition of this
matter will not have a material adverse effect on the Company's
consolidated financial statements. This matter has been previously
reported in the Company's Form 10-K for the fiscal years ended September
30, 1994 and 1995 and Form 10-Q for the quarters ended June 30, 1994,
March 31, 1995 and March 31, 1996 and such information is incorporated
herein by reference.
By letter dated December 12, 1994, the United States Environmental
Protection Agency (EPA) requested information from the Company in
connection with a new Superfund Site in Jacksonville, Florida, which is
the former location of Rouse Steel Drum Company ("Rouse"). Rouse
operated a drum reclamation business at that site between 1965 and 1989.
The Company response to the EPA information request was submitted on
February 3, 1995. The Company believes that empty new oil product drums
may have been delivered to Rouse for a limited period of time at the
request of the vendor, but the residues in such drums were not CERCLA
hazardous substances. By letter dated June 17, 1996, the EPA identified
the potentially responsible parties (PRPs) at the Rouse Steel Drum
Superfund Site ("Site"). The Company is not one of the PRPs identified
by the EPA at this Site. This matter has been previously reported in
the Form 10-Q for the quarter ending December 31, 1994.
Note 12 to the consolidated financial statements included in the
Company's 1995 Annual Report to stockholders, Item 3 "Legal Proceedings"
of the Company's Form 10-K for fiscal 1995 and Part II, Item 1 "Legal
Proceedings" of the Company's Form 10-Q for the quarters ended December
31, 1995 and March 31, 1996 are incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The response to this item is submitted as a separate
section entitled "Exhibit Index" starting on page 9 of this Form 10-Q.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the three months ended June 30, 1996.
SIGNATURES
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.
August 7, 1996 FLORIDA ROCK INDUSTRIES, INC.
RUGGLES B. CARLSON
Ruggles B. Carlson
Vice President-Finance
and Treasurer
(Principal Financial and
Accounting Officer)
FLORIDA ROCK INDUSTRIES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1996
EXHIBIT INDEX
Page No. in
Sequential
Numbering
(2)(a) Agreement and Plan of Reorganization entered into
as of March 5, 1986 between the Company and Florida
Rock & Tank Lines, Inc. ("FRTL") pursuant to the
distribution pro rata to the Company's stockholders
of 100% of the outstanding stock of FRTL has
previously been filed as Appendix I to the
Company's Proxy Statement dated June 11, 1986. File
No. 1-7159.
(3)(a)(1) Restated Articles of Incorporation of Florida Rock
Industries, Inc., filed with the Secretary of State
of Florida on May 9, 1986. Previously filed with
Form 10-Q for the quarter ended December 31, 1986.
File No. 1-7159.
(3)(a)(2) Amendment to the Articles of Incorporation of
Florida Rock Industries, Inc. filed with the
Secretary of State of Florida on February 19, 1992.
Previously filed with Form 10-K for the fiscal year
ended September 30, 1993. File No. 1-7159.
(3)(a)(3) Amendments to the Articles of Incorporation of
Florida Rock Industries, Inc. filed with the
Secretary of State of Florida on February 7, 1995.
Previously filed as appendix to the Company's Proxy
Statement dated December 15, 1994.
(3)(b)(1) Restated Bylaws of Florida Rock Industries, Inc.,
adopted December 1, 1993. Previously filed with
Form 10-K for the fiscal year ended September 30,
1993. File No. 1-7159.
(3)(b)(2) Amendment to the Bylaws of Florida Rock Industries,
Inc. adopted October 5, 1994. Previously filed
with Form 10-K for the fiscal year ended September
30, 1994. File No. 1-7159.
(4)(a) Articles III, VII, and XIII of the Articles of
Incorporation of Florida Rock Industries, Inc.
Previously filed with Form 10-Q for the quarter
Numbering
Page No. in
Sequential
ended December 31, 1986 and Form 10-K for the
fiscal year ended September 30, 1993. And Articles
XIV and XV previously filed as appendix to the
Company's Proxy Statement dated December 15, 1994.
File No. 1-7159.
(4)(b)(1) Amended and Restated Revolving Credit and Term Loan
Agreement dated as of December 5, 1990, among
Florida Rock Industries, Inc.; Continental Bank,
N.A.; Barnett Bank of Jacksonville, N. A.; Sun
Bank, National Association; Crestar Bank; First
Union National Bank of Florida; The First National
Bank of Maryland; Southeast Bank, N. A.; and
Maryland National Bank. Previously filed with Form
10-K for the fiscal year ended September 30, 1990.
File No. 1-7159.
(4)(b)(2) First Amendment dated as of September 30, 1992 to
the Amended and Restated Revolving Credit and Term
Loan Agreement dated as of December 5, 1990.
Previously filed with Form 10-K for the fiscal year
ended September 30, 1992. File No. 1-7159.
(4)(b)(3) Second Amendment dated as of June 30, 1994 to the
Amended and Restated Revolving Credit and Term Loan
Agreement dated as of December 5, 1990. Previously
filed with Form 10-Q for the quarter ended June
30, 1994. File No. 1-7159.
(4)(c) The Company and its consolidated subsidiaries have
other long-term debt agreements which do not exceed
10% of the total consolidated assets of the Company
and its subsidiaries, and the Company agrees to
furnish copies of such agreements and constituent
documents to the Commission upon request.
(10)(a) Retirement Benefits Agreement between Florida Rock
Products Corporation and Thompson S. Baker dated
September 30, 1964. Previously filed with Form S-1
dated June 29, 1972. File No. 2-44839.
(10)(b) Retirement Benefits Agreement between Shands &
Baker, Inc., and Thompson S. Baker dated September
30, 1964 and amendment thereto dated September 22,
1970. Previously filed with Form S-1 dated June
29, 1972. File No. 2-44839.
Numbering
Page No. in
Sequential
(10)(c) Employment Agreement dated June 12, 1972 between
Florida Rock Industries, Inc. and Charles J.
Shepherdson, Sr. and form of Addendum thereto.
Previously filed with Form S-1 dated June 29, 1972.
File No. 2-44839
(10)(d) Addendums dated April 3, 1974 and November 18, 1975
to Employment Agreement dated June 12, 1972 between
Florida Rock Industries, Inc., and Charles J.
Shepherdson, Sr. Previously filed with Form 10-K
for the fiscal year ended September 30, 1975. File
No. 1-7159.
(10)(e) Florida Rock Industries, Inc. 1981 Stock Option
Plan. Previously filed with Form S-8 dated March
3, 1982. File No. 2-76407.
(10)(f) Amended Medical Reimbursement Plan of Florida Rock
Industries, Inc., effective May 24, 1976.
Previously filed with Form 10-K for the fiscal year
ended September 30, 1980. File No. 1-7159.
(10)(g) Amendment No. 1 to Amended Medical Reimbursement
Plan of Florida Rock Industries, Inc. effective
July 16, 1976. Previously filed with Form 10-K for
the fiscal year ended September 30, 1980. File No.
1-7159.
(10)(h) Tax Service Reimbursement Plan of Florida Rock
Industries, Inc. effective October 1, 1976.
Previously filed with Form 10-K for the fiscal year
ended September 30, 1980. File No. 1-7159.
(10)(i) Amendment No. 1 to Tax Service Reimbursement Plan
of Florida Rock Industries, Inc. Previously filed
with Form 10-K for the fiscal year ended September
30, 1981. File No. 1-7159.
(10)(j) Amendment No. 2 to Tax Service Reimbursement Plan
of Florida Rock Industries, Inc. Previously filed
with Form 10-K for the fiscal year ended September
30, 1985. File No. 1-7159.
Page No. in
Sequential
Numbering
(10)(k) Summary of Management Incentive Compensation Plan
as amended effective October 1, 1992. Previously
filed with Form 10-K for the fiscal year ended
September 30, 1993. File No. 1-7159.
(10)(l) Florida Rock Industries, Inc. Management Security
Plan. Previously filed with Form 10-K for the
fiscal year ended September 30, 1985. File No. 1-7159.
(10)(m) Various mining royalty agreements with FRTL or its
subsidiary, none of which are presently believed to
be material individually, but all of which may be
material in the aggregate. Previously filed with
Form 10-K for the fiscal year ended September 30,
1986. File No. 1-7159.
(10)(n) Florida Rock Industries, Inc. 1991 Stock Option
Plan. Previously filed with Form 10-K for the
fiscal year ended September 30, 1992. And February
1, 1995 Amendment to Florida Rock Industries, Inc.
1991 Stock Option Plan. Previously filed as
appendix to the Company's Proxy Statement dated
December 15, 1994. File No. 1-7159.
(10)(o) Split Dollar Insurance Agreement dated January 24,
1994 between Edward L. Baker and Florida Rock
Industries, Inc. Previously filed with Form 10-K
for the fiscal year ended September 30, 1994. File
No. 1-7159.
(10)(p) Split Dollar Insurance Agreement dated January 24,
1994 between John D. Baker II and Florida Rock
Industries, Inc. Previously filed with Form 10-K
for the fiscal year ended September 30, 1994. File
No. 1-7159.
(10)(q) Florida Rock Industries, Inc. 1996 Stock Option
Plan. Previously filed as appendix to the
Company's Proxy Statement dated December 18, 1995.
File No. 1-7159.
(11) Computation of Earnings Per Common Share. 13
(27) Financial Data Schedule
Exhibit (11)
FLORIDA ROCK INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS NINE MONTHS
ENDED JUNE 30 ENDED JUNE 30
1996 1995 1996 1995
Net income $ 9,039,000 $ 7,093,000 $17,330,000 $16,483,000
Common shares:
Weighted average shares
outstanding during the
period 9,415,094 9,487,128 9,462,592 9,487,168
Shares issuable under
stock options which are
potentially dillutive
and affect primary
earnings per share 3,693 46,205 13,030 39,188
Maximum potential shares
includable in computa-
tion of primary earnings
per share 9,418,787 9,533,333 9,475,622 9,526,356
Additional shares issu-
able under stock options
which are potentially
dillutive and affect
fully diluted earnings
per share 7,426 , - , , - 5,150
Maximum potential shares
included in computation
of fully diluted
earnings per share 9,426,213 9,533,333 9,475,622 9,531,506
Primary earnings per
common share $.96 $.74 $1.83 $1.73
Fully diluted earnings
per common share (a) $.96 $.74 $1.83 $1.73
(a) Fully diluted earnings per common share are not presented on the income
statement since the potential effect would have been less than 3%
dilutive.
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