<PAGE>
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 March 31, 1997
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 May 1, 1997: 9,188,311 shares of $.10 par value
common stock. <PAGE>
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
March 31, September 30,
1997 1996
ASSETS
Current assets:
Cash and cash equivalents $ 2,219 $ 4,995
Accounts and notes receivable, less
allowance for doubtful accounts of
$1,564 ($1,393 at September 30, 1996) 48,335 52,436
Inventories 24,769 23,475
Prepaid expenses and other 7,189 6,176
Total current assets 82,512 87,082
Other assets 24,757 25,769
Property, plant and equipment, at cost:
Land 107,159 107,644
Plant and equipment 427,739 411,882
534,898 519,526
Less accumulated depreciation,
depletion and amortization (295,547) (285,668)
Net property, plant and equipment 239,351 233,858
$ 346,620 $ 346,709
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term notes payable to banks $ 300 $ 1,400
Accounts payable 30,470 28,602
Accrued income taxes 708 3,507
Accrued payroll and benefits 6,418 7,710
Accrued insurance reserve 4,167 2,679
Accrued liabilities, other 4,470 5,445
Long-term debt due within one year 2,494 2,514
Total current liabilities 49,027 51,857
Long-term debt 10,573 16,862
Deferred income taxes 28,628 29,699
Accrued employee benefits 11,075 10,726
Other accrued liabilities 9,703 9,415
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 17,599 17,400
Retained earnings 227,525 215,195
Less cost of treasury stock, 298,998
shares (212,928 shares at September
30, 1996) (8,459) (5,394)
Total stockholders' equity 237,614 228,150
$ 346,620 $ 346,709
See accompanying notes.<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Dollars in thousands except per share amounts)
(Unaudited)
Three Months Ended Six Months ended
March 31 March 31
1997 1996 1997 1996
Net sales $101,611 $85,801 $207,994 $178,066
Cost of sales 80,819 72,336 165,101 147,702
Gross profit 20,792 13,465 42,893 30,364
Selling, general and
administrative expense 10,731 8,993 20,179 17,314
Operating profit 10,061 4,472 22,714 13,050
Interest expense (258) (535) (515) (929)
Interest income 171 157 325 297
Other income, net 84 174 (26) 240
Income before income taxes 10,058 4,268 22,498 12,658
Provision for income taxes 3,521 1,472 7,875 4,367
Net income $ 6,537 $ 2,796 $14,623 $ 8,291
Per common share:
Income $.70 $.29 $1.57 $.87
Cash dividends $. - $. - $.25 $.25
Weighted average number
of shares 9,277,125 9,505,378 9,321,989 9,511,132
See accompanying notes.<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED MARCH, 1997 AND 1996
(In thousands)
(Unaudited)
1997 1996
Cash flows from operating activities:
Net income $14,623 $ 8,291
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 15,163 13,940
Net changes in operating assets and liabilities:
Accounts receivable 4,065 2,582
Inventories (932) (632)
Prepaid expenses and other (324) (1,477)
Accounts payable and accrued liabilities (1,073) (5,260)
Decrease in deferred income taxes (1,694) (894)
Gain on disposition of property, plant and
equipment (462) (722)
Other, net 284 142
Net cash provided by operating activities 29,650 15,970
Cash flows from investing activities:
Purchase of property, plant and equipment (20,188) (30,836)
Proceeds from the sale of property, plant and
equipment 980 804
Additions to other assets (266) (1,275)
Proceeds from the disposition of other assets 136 114
Collections of notes receivable 53 104
Net cash used in investing activities (19,285) (31,089)
Cash flows from financing activities:
Proceeds from long-term debt 0 6,000
Net increase in short-term debt (1,100) 12,900
Repayment of long-term debt (6,882) (812)
Repurchase of Company stock (4,631) (315)
Exercise of stock options 1,765 -
Payment of dividends (2,293) (2,372)
Net cash provided by (used in)financing activities(13,141) 15,401
Net increase in cash and cash equivelents (2,776) 282
Cash and cash equivalents at beginning of year 4,995 925
Cash and cash equivalents at end of period $ 2,219 $ 1,207
See accompanying notes.
<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1997
(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 six months ended March 31, 1997,
are not necessarily indicative of the results that may be expected for
the fiscal year ended September 30, 1997. 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, 1996.
(2) Inventories
Inventories consisted of the following (in thousands):
March 31, September 30,
1997 1996
Finished products $ 19,748 $ 18,719
Raw materials 4,200 3,825
Parts and supplies 821 931
$ 24,769 $ 23,475
(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 six months ended March 31, 1997 and 1996 for
certain expense items are (in thousands):
1997 1996
Interest expense, net of
amount capitalized $ 484 $ 832
Income taxes $12,209 $9,133
The following schedule summarizes noncash investing and financing
activities for the six months ended March 31, 1997 and 1996
(in thousands):
1997 1996
Additions to property, plant
and equipment from:
Exchanges $ 11 $ 69
Issuing debt $ 116 260
Additions to inventory
from issuing debt $ 360 -
Additions to other assets from
issuing debt $ - 300
Additions to notes receivable
from sales of property, plant
and equipment $ - 6
Addition to notes receivable from
sales of other assets $ 200
Additions to prepaid expenses
from issuing debt $ 96 -
(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 1996 Annual Report to stockholders and Item 3 "Legal
Proceedings" of the Company's Form 10-K for fiscal 1996, and such
information is incorporated herein by reference.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
For the second quarter and first six months of fiscal 1997, ended March
31, 1997, consolidated net sales increased 18% and 17%, respectively,
from the same periods last year. The increase in net sales was primarily
attributable to the very mild winter in our non Florida markets,
continued growth in construction activities and modest price increases.
During the second quarter, there was only limited curtailment of
construction activity due to inclement weather or freezing temperatures.
Conversely last year's severe winter stopped construction for extended
periods of time. Much of the modest prices increases were in response
to higher cement and other cost increases.
Gross profit increased 54.4% for the second quarter and 41.3% for the
first six months from the same periods last year. The increase in gross
profit is a function of higher revenues and the strong marginal
contribution due to the high fixed cost nature of the business. Gross
profit margin for the second quarter improved to 20.5% from 15.7% and for
the first six months improved to 20.6% from 17.0% from last year. These
improvements were due primarily to increased volumes as sales price
increases were substantially offset by higher cement and other cost
increases.
Selling, general and administrative expense increased 19.3% for the
second quarter and 16.6% for the first six months from the same periods
last year. Approximately 60% of the increase was due to increases in
profit sharing and incentive compensation which are linked to
profitability. Selling, general and administrative expense amounted to
10.6% of sales in current quarter and 9.7% for the first six months.
These are level with the same periods last year.
Interest expense for the second quarter declined to $258,000 from
$535,000 and for the first six months declined to $515,000 from
$929,000 last year primarily due to reduced debt. Other income,
net for the first six months of this year includes a loss of
$197,000 on the sale of an asset.
Summary and Outlook. The condition of our construction markets
remains good. Given the strong levels of construction activity that
were maintained during the normally depressed second quarter, we do not
anticipate the usual very strong improvement in the third quarter as
compared to the second. Construction activity continues at healthy
levels in all segments in most of our Southeast markets. Vacancy rates
remain at low to reasonable levels. Rising interest rates have yet to
depress activity as demand continues to be the major driver of activity.
However, if rates continue to rise, they will undoubtedly start to dampen
construction activity.
Management expects the results for fiscal 1997 to show substantial
improvement over last year's results.
Financial Condition
The Company continues to maintain its sound financial condition with
sufficient resources to meet anticipated capital expenditures and other
operating requirements.
Other
The Florida Department of Environment Protection has issued an air permit
and Alachua County has approved a site permit for the construction of the
cement plant. While the air permit is being appealed, the Company is
confident that it will prevail and on April 7, 1997 began construction
of the plant.
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 Item 3 "Legal Proceedings"
of the Company's Form 10-K for fiscal 1996 and such information is
incorporated herein by reference.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Note 12 to the consolidated financial statements included in the
Company's 1996 Annual Report to stockholders, and Item 3 "Legal
Proceedings" of the Company's Form 10-K for fiscal 1996 are incorporated
herein by reference.
Item 4. Submission of Matters to a Vote Security Holders
On February 5, 1997, the Company held its annual shareholders meeting.
At the meeting the stockholders elected the following directors by the
vote shown:
Not Voted
Term Votes Votes Broker/
Ending For Withheld Nominees
Thompson S. Baker 2001 8,045,620 51,940 -0-
Frank M. Hubbard 2001 8,045,616 51,944 -0-
Thompson S. Baker died on February 24, 1997.
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 six months ended March 31, 1997.
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.
May 6, 1997 FLORIDA ROCK INDUSTRIES, INC.
RUGGLES B. CARLSON
Ruggles B. Carlson
Vice President-Finance
and Treasurer
(Principal Financial and
Accounting Officer)<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
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) Form of Split Dollar Insurance Agreement and
Assignment of Life Insurance Policy as collateral
between Florida Rock Industries, Inc. and each of
Edward L. Baker and John D. Baker, II with
aggregate face amounts of $5.4 million and $8.0
million, respectively. Previously filed with Form
10-Q for the quarter ended December 31, 1996.
(10)(p) 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
<PAGE>
<PAGE>
Exhibit (11)
FLORIDA ROCK INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS SIX MONTHS
ENDED MARCH 31 ENDED MARCH 31
1997 1996 1997 1996
Net income $ 6,537,000 $ 2,796,000 $14,623,000 $ 8,291,000
Common shares:
Weighted average shares
outstanding during the
period 9,181,130 9,485,302 9,239,354 9,486,210
Shares issuable under
stock options which are
potentially dillutive
and affect primary
earnings per share 95,995 20,076 82,635 24,922
Maximum potential shares
includable in computa-
tion of primary earnings
per share 9,277,125 9,505,378 9,321,989 9,511,132
Additional shares issu-
able under stock options
which are potentially
dillutive and affect
fully diluted earnings
per share , - , - , , - , , -
Maximum potential shares
included in computation
of fully diluted
earnings per share 9,277,125 9,505,378 9,321,989 9,511,132
Primary earnings per
common share $.70 $.29 $1.57 $ .87
Fully diluted earnings
per common share (a) $.70 $.29 $1.57 $ .87
(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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<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
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<BONDS> 10573
0
0
<COMMON> 949
<OTHER-SE> 236506
<TOTAL-LIABILITY-AND-EQUITY> 346620
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