<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 December 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 February 2, 1998: 18,810,684 shares of $.10 par
value common stock.
<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
December 31, September 30,
1997 1997
ASSETS
Current assets:
Cash and cash equivalents $ 14,605 18,433
Accounts and notes receivable, less
allowance for doubtful accounts of
$1,335 ($1,126 at September 30, 1997) 49,441 56,723
Inventories 22,622 22,587
Prepaid expenses and other 5,941 6,451
Total current assets 92,609 104,194
Other assets 33,706 28,417
Property, plant and equipment, at cost:
Land 111,592 111,643
Plant and equipment 469,345 440,928
580,937 552,571
Less accumulated depreciation,
depletion and amortization 308,313 302,566
Net property, plant and equipment 272,624 250,005
$ 398,939 382,616
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term notes payable to banks $ 0 300
Accounts payable 33,365 32,867
Dividends payable 2,351 --
Accrued income taxes 2,046 --
Accrued payroll and benefits 5,183 11,483
Accrued insurance reserve 3,720 2,230
Accrued liabilities, other 4,388 6,349
Long-term debt due within one year 2,297 2,447
Total current liabilities 53,350 55,676
Long-term debt 24,304 10,859
Deferred income taxes 27,499 28,387
Accrued employee benefits 11,814 11,531
Long-term accrued insurance reserves 6,153 6,153
Other accrued liabilities 5,587 5,395
Stockholders' equity:
Preferred stock, no par value; 10,000,000
shares authorized, none issued - -
Common stock, $.10 par value; 50,000,000
shares authorized, 18,974,618 shares issued 1,897 1,897
Capital in excess of par value 18,243 18,053
Retained earnings 252,749 247,733
Less cost of treasury stock, 163,934
shares (195,434 shares at September
30, 1997) (2,657) (3,068)
Total stockholders' equity 270,232 264,615
$ 398,939 382,616
See accompanying notes.<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(In thousands except per share amounts)
(Unaudited)
Three Months ended
December 31,
1997 1996
Net sales $111,624 106,383
Cost of sales 89,860 84,282
Gross profit 21,764 22,101
Selling, general and
administrative expense 10,569 9,448
Operating profit 11,195 12,653
Interest expense (165) (257)
Interest income 235 154
Other income, net 102 (110)
Income before income taxes 11,367 12,440
Provision for income taxes 4,001 4,354
Net income $ 7,366 8,086
Earnings per share:
Basic $.39 .44
Diluted $.38 .44
Cash dividends per common share $.125 .125
Shares used in computing:
Basic earnings per share 18,802 18,400
Diluted earnings per share 19,163 18,495
See accompanying notes.<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER, 1997 AND 1996
(In thousands)
(Unaudited)
1997 1996
Cash flows from operating activities:
Net income $ 7,366 8,086
Adjustments to reconcile net income to net
cash provided from operating activities:
Depreciation, depletion and amortization 7,493 7,454
Net changes in operating assets and
liabilities:
Accounts receivable 7,263 5,191
Inventories (35) 683
Prepaid expenses and other 509 (1,061)
Accounts payable and accrued liabilities (4,225) (3,169)
Decrease in deferred income taxes (888) -
Gain on disposition of property, plant and
equipment (9) (110)
Other, net 473 203
Net cash provided by operating activities 17,947 17,277
Cash flows from investing activities:
Purchase of property, plant and equipment (21,292) (4,801)
Proceeds from the sale of property, plant and
equipment 175 612
Additions to other assets (309) (222)
Proceeds from the disposition of other assets 29 89
Collections of notes receivable 26 24
Net cash used in investing activities (21,371) (4,298)
Cash flows from financing activities:
Net decrease in short-term debt (300) (1,100)
Repayment of long-term debt (705) (6,737)
Exercise of employee stock options 601 956
Repurchase of Company stock - (4,105)
Net cash provided by (used in)financing activities (404) (10,986)
Net increase in cash and cash equivalents (3,828) 1,993
Cash and cash equivalents at beginning of year 18,433 4,995
Cash and cash equivalents at end of period $14,605 6,988
See accompanying notes.<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
DECEMBER 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 three months ended December 31,
1997, are not necessarily indicative of the results that may be
expected for the fiscal year ended September 30, 1998. 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, 1997.
(2) Inventories
Inventories consisted of the following (in thousands):
December 31, September 30,
1997 1997
Finished products $ 17,896 18,151
Raw materials 3,760 3,630
Parts and supplies 966 806
$ 22,622 22,587
(3) Earnings Per Share
Effective December 31, 1997, the Company adopted Statement of
Financial Accounting Standard No. 128, "Earnings per Share" ("SFAS
128"). SFAS 128 replaced the presentation of primary earnings per
share (EPS) and fully diluted EPS with a presentation of basic EPS and
diluted EPS. Basic earnings per share are based on the weighted
average number of common shares outstanding during the periods.
Diluted earnings per share are based on the weighted average number of
common shares outstanding and potential dilution of securities that
could share in earnings. Earnings per share for all prior periods
have been restated.
<PAGE>
(4) Supplemental Disclosures of Cash Flow Information
Cash paid during the three months ended December 31, 1997 and 1996 for
certain expense items are (in thousands):
1997 1996
Interest expense, net of
amount capitalized $ 122 216
Income taxes $1,845 2,643
The following schedule summarizes noncash investing and financing
activities for the three months ended December 31, 1997 and 1996
(in thousands):
1997 1996
Additions to property, plant
and equipment from:
Exchanges $ 15 11
Issuing debt $ - 116
Using escrow cash included
in other assets $ 8,792 -
Additions to inventory
from issuing debt $ - 360
Additions to prepaid expenses
from issuing debt $ - 96
Additions to other assets from
issuing debt $14,000 -
(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 1997 Annual Report to stockholders and Item 3 "Legal
Proceedings" of the Company's Form 10-K for fiscal 1997, and such
information is incorporated herein by reference.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
For the first quarter of fiscal 1998, ended December 31, 1997, consolidated net
sales increased 4.9% to $111,624,000 from $106,383,000 in the same quarter last
year. The increased sales were attributable to continuation of strong
construction activities and demand for construction materials primarily in our
southern markets and modest price increases.
Gross profit decreased 1.5% to $21,764,000 from $22,101,000 last year. The
decrease in gross profit is primarily attributed to higher planned maintenance
expenses and other costs at the quarries. Gross profit margin decreased to
19.5% from 20.8% last year primarily as a result of these costs.
Selling, general and administrative expense increased 11.9%. Selling, general
and administrative expense increased to 9.5% of sales from 8.9% last year.
The increase was due primarily to the increase in sales, additional staffing
and project-related expenses. The additional staffing is in anticipation of
new computer systems and projects.
Interest expense declined to $165,000 from $257,000 last year due to an
increase in the amount of interest capitalized this year and a slight decrease
in the average interest rate partially offset by an increase in the average
debt outstanding. For the first quarter of fiscal 1998, interest capitalized
was $170,000 versus $26,000 last year. Other income, net for the last year
includes a loss of $197,000 on the sale of an asset.
Summary and Outlook. Construction activity remains strong. Residential home
construction and new home sales remain stable at healthy levels as a result of
low interest rates. However, activity varies by market. Non-residential
construction is moving with local supply and demand with evidence that more
speculative construction is underway. Federal and state infrastructure
requirements remains strong. Sales should remain in line with the Southeastern
economy given continued reasonable economic prospects. However, normal
seasonal winter weather in our construction markets during the second quarter
call could adversely impact sales relative to last year.
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 Item 3 "Legal Proceedings" of the Company's Form 10-K for fiscal
1997 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 1997
Annual Report to stockholders, and Item 3 "Legal Proceedings" of the Company's
Form 10-K for fiscal 1997 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 8 of this Form 10-Q.
(b) Reports on Form 8-K. During the three months ended December 31, 1997,
the Company filed a Form 8-K dated October 1, 1997 reporting the
declaration of a 2 for 1 stock split under Item 5, "Other Events".
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.
February 4, 1998 FLORIDA ROCK INDUSTRIES, INC.
JAMES J. GILSTRAP
James J. Gilstrap
Vice President, Treasurer
and Chief Financial Officer
WALLACE A. PATZKE, JR.
Wallace A. Patzke, Jr.
Vice President, Controller
and Chief Accounting Officer
<PAGE>
FLORIDA ROCK INDUSTRIES, INC.
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 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
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.
Page No. in
Sequential
Numbering
(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)(b)(4) Third Amendment dated as of June 30, 1997 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, 1997. 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) 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)(b) 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.
Page No. in
Sequential
Numbering
(10)(c) Florida Rock Industries, Inc. 1981 Stock Option
Plan. Previously filed with Form S-8 dated March
3, 1982. File No. 2-76407.
(10)(d) 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)(e) 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)(f) 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)(g) 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)(h) 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.
(10)(i) 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)(j) 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)(k) 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)(l) 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.
Page No. in
Sequential
Numbering
(10)(m) 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.
(10)(n) 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.
(27) Financial Data Schedule<PAGE>
<PAGE>
Exhibit (11)
FLORIDA ROCK INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
THREE MONTHS ENDED
DECEMBER 31,
1997 1996
Net income $ 7,366,000 8,086,000
Common shares:
Weighted average shares
outstanding during the
period - used for basic
earnings per share 18,801,961 18,399,840
Shares issuable under
stock options which are
potentially dilutive 360,727 94,826
Shares used for diluted
earnings per share 19,162,688 18,494,666
Basic earnings per
common share $.39 .44
Diluted earnings
per common share $.38 .44
<PAGE>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 14605
<SECURITIES> 0
<RECEIVABLES> 50776
<ALLOWANCES> 1335
<INVENTORY> 22622
<CURRENT-ASSETS> 92609
<PP&E> 580937
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<CURRENT-LIABILITIES> 53350
<BONDS> 24304
0
0
<COMMON> 1897
<OTHER-SE> 268335
<TOTAL-LIABILITY-AND-EQUITY> 398939
<SALES> 111624
<TOTAL-REVENUES> 111624
<CGS> 89860
<TOTAL-COSTS> 89860
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<INTEREST-EXPENSE> (165)
<INCOME-PRETAX> 11367
<INCOME-TAX> 4001
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