UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1993
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
JUSTIN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Texas 75-0102185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2821 West 7th Street, Fort Worth, Texas 76107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 336-5125
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $2.50 Par Value
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.
$246,064,910 as of February 15, 1994
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
27,174,075 Common Shares as of March 18, 1994
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II, and IV incorporate certain information by reference from the
Annual Report to Shareholders for the year ended December 31, 1993. Part III
incorporates information by reference from the Proxy Statement for the Annual
Meeting of Shareholders held on March 18, 1994.
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(PAGE 1)
PART I
ITEM 1. BUSINESS
Justin Industries, Inc. ("Justin") and its subsidiaries are herein
collectively and/or singly referred to as the "company". The company where
specifically indicated has incorporated by reference certain information
contained in its 1993 Annual Report to Shareholders. Other references made to
that report are for information purposes only and the information in the Annual
Report to Shareholders is not deemed incorporated in this Form 10-K.
GENERAL DEVELOPMENT OF BUSINESS
Justin's business origins can be traced back to 1879, when H. J. Justin began
making boots at Spanish Fort, Texas on the Chisholm Trail. Justin was
incorporated under the laws of the State of Texas on April 26, 1916, as Acme
Brick Company, the successor to an Illinois company incorporated in 1891. In
August 1968, the company changed its name to First Worth Corporation and created
a division, later incorporated with the name "Acme Brick Company" ("Acme"), to
handle the company's business relating to brick, concrete block, concrete
panels, and prestressed concrete structural components. The company changed its
name in October 1972 to Justin Industries, Inc.
In 1968, Justin purchased for cash and promissory notes all the outstanding
Common Stock of Louisiana Concrete Products, Inc. ("Louisiana Concrete"). Also
during 1968, Justin acquired the net assets or the outstanding stock of six
additional small firms in the concrete products field for cash and shares of
Justin Common Stock. The operations of Louisiana Concrete and the six small
firms were combined with the concrete products operations of Featherlite
Building Products Corporation and Featherlite Precast Corporation (whose
acquisition is discussed below).
In December 1968, Justin acquired all of the outstanding common stock of
Justin Belt Company, Inc., H. J. Justin & Sons, Inc., and its subsidiary, Justin
Leathergoods Company, which companies were reorganized in 1984 to be known as
the "Justin Boot Company" ("Justin Boot"). Justin Boot's stock was acquired in
exchange for Justin Common Stock and Justin voting Preferred Stock (subsequently
converted into shares of Justin Common Stock). The acquisition of Justin Boot
was treated as a pooling of interests for accounting purposes.
In May 1973, Justin acquired all of the outstanding common stock of Northland
Publishing Company, Inc. ("Northland") in exchange for shares of Justin Common
Stock. The acquisition was accounted for as a purchase. In April 1974, Justin
acquired for cash all the outstanding capital stock of Sanford Brick Corporation
("Sanford"), Sanford, North Carolina. The acquisition was accounted for as a
purchase. On April 30, 1984, all of the common stock of Sanford was sold.
In August 1976, Justin acquired 62.6% of the outstanding common stock of
Kingstip, Inc. ("Kingstip") for cash and effective January 31, 1977, acquired
the remaining 37.4% of Kingstip's capital stock in exchange for shares of Justin
Common Stock. The acquisition was accounted for as a purchase. Through 1983,
all operations of Kingstip were conducted through its subsidiary, The
Featherlite Corporation. Effective December 31, 1983, these operations were
reorganized into two distinct operating entities, Featherlite Building Products
Corporation and Featherlite Precast Corporation.
Ceramic Cooling Tower Company ("CCT") was incorporated by Justin in 1968, as
an outgrowth of Acme's operations in the design and sale of water cooling
systems. Effective December 31, 1991, the net assets and business of CCT were
sold for $20 million cash.
In June 1981, Justin issued shares of Justin Common Stock for all the
outstanding common stock of Nocona Boot Company ("Nocona").
In September 1984, the company's Featherlite Building Products Corporation
subsidiary purchased all of the common stock of Gulde Block and Brick, Inc. for
cash.
In 1985, the company acquired the operations of four additional companies for
cash and the assumption of certain liabilities. These acquisitions were
Chippewa Shoe Company, Builders Block Company, Inc., RLI, Inc. (name changed to
Tradewinds Technologies, Inc. ("Tradewinds")), and MEGA Equipment Company.
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In 1986, the company acquired the operating assets of Parr Block Company for
cash and notes.
Pursuant to a tender offer and subsequent merger effective October 15, 1990,
the company acquired all of the outstanding shares of Tony Lama Company, Inc.
("Tony Lama") at a price of $9.00 per share in cash with the aggregate purchase
price for such shares and related costs totalling approximately $18,787,000.
Tony Lama is in the business of designing, manufacturing, and selling western
style boots and leather accessories. The acquisition was accounted for as a
purchase.
On October 7, 1991, the company purchased the brick manufacturing assets of
Elgin-Butler Brick Company for cash and subordinated notes totalling
approximately $4,527,000.
In December 1987, the company made the decision to discontinue operations of
two of its businesses, Featherlite Precast Corporation (manufacturers of
precast/prestressed concrete components) and MEGA Equipment Company (distributor
of John Deere construction and utility earthmoving equipment). Both of these
companies were more severely affected by the cyclical nature of the building
industry and it was felt that Justin and its shareholders would be better served
by concentrating the company's resources in its remaining core group of
businesses. In 1988, the operations of MEGA Equipment Company and two of the
three Featherlite Precast Corporation plants were sold to third parties.
Justin's continuing operations are in two principal business areas: (i)
manufacture and sale of building materials, which includes the operations of
Acme, Featherlite Building Products Corporation, and Tradewinds, and (ii)
manufacture and sale of footwear products, which includes the operations of
Justin Boot, Nocona and Tony Lama.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS (LINES OF BUSINESS)
A five year analysis of sales and operating profit contribution by industry
segment is presented on page 17 of the company's 1993 Annual Report to
Shareholders and additional financial information, including identifiable
assets, by industry segment is included in Note 9 of Notes to Consolidated
Financial Statements on page 26 of the shareholders' report. Such information
is hereby incorporated by reference.
NARRATIVE DESCRIPTION OF BUSINESS
The following information is presented in addition to the information included
in the Report on Operations contained on pages 5 through 11 of the company's
1993 Annual Report to Shareholders, which is incorporated herein by reference.
MANUFACTURE AND SALE OF BUILDING MATERIALS
The building materials segment includes clay brick manufactured and sold under
the name Acme Brick for use in residential and commercial construction. The
primary market for Acme Brick is the Central and Southwest United States where
distribution is mainly through company operated sales offices. Acme also
distributes through independent dealerships in other parts of the United States.
Acme is one of the largest manufacturers of face brick in the United States.
Other products in the company's building materials segment include concrete
block manufactured and sold under the trade name Featherlite Building Products
and cut limestone manufactured under the name Texas Quarries. The primary
markets for these products are in Texas and its neighboring states.
The company also represents other manufacturers as a distributor of such items
as clay brick, glass block, glazed and unglazed tile and masonry units,
fireplace equipment, masonry cleaners, masonry saws, wall reinforcements,
masonry tools, masonry cement, and purchased used brick for resale.
Tradewinds manufactures a unique line of premium quality evaporative coolers
used primarily for central residential cooling and light commercial and spot
cooling.
In the states of Texas, Louisiana, Arkansas, Oklahoma, New Mexico, Kansas,
Tennessee, and Missouri, Acme and Featherlite market their building materials
through approximately 300 full-time company sales employees serving architects,
contractors, home builders, and others in the construction market. These direct
sales comprise the majority of
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the company's building materials sales. In the other states, sales are made
principally through independent distributors and dealers. The majority of these
building materials manufactured by the company are utilized within a 250 mile
radius of the plant where they are produced. Tradewinds' coolers are sold by
direct sales personnel in selected major markets and by distribution elsewhere.
MANUFACTURE AND SALE OF FOOTWEAR PRODUCTS
Footwear operations include the design, manufacture and distribution of men's,
women's, and children's western style, safety, work and sports boots and shoes,
primarily for sale in the United States under the trade names "Justin(R)",
"Nocona(R)", "Tony Lama(R)", "Chippewa(R)", and Diamond "J(R)".
Justin Boot Company, headquartered in Fort Worth, Texas, started business in
1879 as H. J. Justin & Sons, Inc. The company owns and operates footwear
manufacturing plants in Fort Worth, Texas, Cassville, Sarcoxie, and Carthage,
Missouri. Nocona Boot Company, headquartered in Nocona, Texas, started business
in 1925 and owns and operates its boot manufacturing plant in Nocona. Tony Lama
Company, Inc., headquartered in El Paso, Texas, was established in 1911. The
company owns and operates a western boot manufacturing plant in El Paso, Texas.
The company's footwear products are marketed by company salesmen and
independent sales representatives who are compensated on a commission basis.
Sales are made throughout the United States to a network of approximately 7,000
authorized retail outlets and dealers such as western goods stores, department
stores, chain stores, and mail order houses. Footwear products are sold in the
general price range of other medium to high quality lines and are manufactured
using a wide range of leathers.
OTHER
Northland's primary activity is publishing books about the history and art of
the West. Many of these books have won awards for fine design, printing, and
binding in major book competitions including the Western Heritage Awards at the
National Cowboy Hall of Fame. Northland's books are marketed by company
personnel and through independent sales representatives covering the entire
United States.
RAW MATERIALS
The principal raw materials for the company's brick are clay and shale mined
from company-owned or leased properties. The company has developed adequate
clay reserves located at or near plant sites to supply its needs for the
foreseeable future. Other raw materials used in the building materials
operations, such as cement, aggregate, and additives, are purchased by the
company in the open market and appear to be readily available for the
foreseeable future from numerous domestic suppliers. Materials for evaporative
coolers are purchased in the open market or manufactured to the company's
specifications and all appear to be readily available for the foreseeable future
from numerous suppliers.
The company consumes large quantities of natural gas and other combustible
fuels in the drying and firing of its clay products. In periods of severe cold
weather and occasionally at other times, the company's natural gas supplies have
been limited by its suppliers at certain locations. The company believes it
will be able to obtain an adequate supply of energy in the future to meet its
requirements.
The primary raw material used in the footwear product line is finished
leather. Finished leather, which is readily available, is purchased from
various tanneries in the United States and from tanneries in foreign countries
and their representatives in the United States. Inventories are maintained to
meet production requirements. Other raw materials incidental to the production
of these products such as thread, tacks, staples, buckles, and clasps appear to
be readily available for the foreseeable future from numerous domestic
suppliers.
PATENTS AND TRADEMARKS
Many of the company's products and processes are patented. In addition, most
of the company's products are marketed under registered trademarks.
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SEASONAL NATURE OF BUSINESS
Demand for building materials and evaporative coolers is seasonal, with sales
during periods of warm weather representing a higher than average proportion of
total yearly sales while sales of footwear products are generally highest in the
fourth quarter.
WORKING CAPITAL REQUIREMENTS
It is the company's policy to increase inventory levels during periods when
production capabilities exceed sales. The company may also from time to time
increase its inventory of raw materials in its footwear business segment to
assure itself of an adequate supply of such raw materials.
Historically, funds required for working capital have been generated from
operations and from borrowings from commercial banks.
SIGNIFICANT CUSTOMERS
No material part of the company's business is dependent upon a single customer
or upon a few customers, the loss of any one or more of whom would have a
material adverse effect on the company's business.
BACKLOG OF ORDERS AT END OF FISCAL YEAR
An analysis of backlog orders is presented on page 16 of the company's 1993
Annual Report to Shareholders, which is incorporated herein by reference. In
accordance with industry practice, unfilled orders for clay brick and footwear
products are generally cancelable by customers at any time and for this reason
may not be considered firm backlog in the traditional sense, despite the fact
that in the past orders have been canceled only infrequently. Substantially all
unfilled orders are expected to be filled within one year.
COMPETITION
The business environment in which the company operates is highly competitive
in the areas of price, service, and product quality. Unless otherwise indicated
below, the company's relative competitive position within its product lines and
market areas is not readily available due to constant changes in the number and
identity of competitors and types of competitive products.
In the building materials segment, competition includes other suppliers of
brick and concrete products, as well as suppliers of diverse alternative
building materials such as steel, aluminum, glass, plastic, and wood products.
There are numerous manufacturers of various types of brick and concrete products
in the United States, virtually all of which operate on a regional or local
basis. In every geographical area served by the company, there are numerous
competitors in all significant building product lines. The company is one of
the largest face brick manufacturers in the United States and the largest in the
Southwest. There are numerous plants manufacturing concrete products in the
area in which the company owns and operates plants. Tradewinds' evaporative
coolers compete with approximately ten other major manufacturers, two of which
currently have approximately 70 percent of the market. None of the competition,
however, manufactures coolers constructed of injection molded polypropylene
material.
The company's western style boots and other footwear products compete with
approximately 25 other major manufacturers of high quality merchandise, and many
more manufacturers of lesser quality footwear.
RESEARCH ACTIVITIES
In the normal course of business, the company conducts research and
development activities to improve existing products and to develop new products
within its current product lines. These activities include developing new
styles, effective use of new materials, and developing new manufacturing
techniques. The amount spent during each of the last three fiscal years on
these activities did not exceed one percent of the company's total operating
revenues.
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ENVIRONMENT
There are numerous federal, state, and local statutes, regulations and
ordinances regulating discharge of materials into the environment or otherwise
relating to the protection of the environment, including those concerning clean
air, water, and waste disposal. In management's opinion, none of these will
materially affect the company's earnings or competitive position and should not
require any material increase in capital expenditures.
EMPLOYEES
The company had 5,106 employees in its operations as of December 31, 1993.
The number of employees by job position at December 31, 1993, was as follows:
Building Parent
Materials Footwear and Other Total
--------- -------- --------- -----
Production 1,346 2,489 3 3,838
Sales 571 331 7 909
Administrative, Engineering,
Clerical, and Other 135 192 32 359
----- ----- --- -----
2,052 3,012 42 5,106
FOREIGN OPERATIONS
Footwear products are marketed in foreign countries, primarily Canada, Western
Europe, and Japan. Foreign operations are not material to consolidated
operations.
ITEM 2. PROPERTIES
Information concerning the company's principal production facilities is as
follows:
The company's current annual brick manufacturing capacity is approximately 775
million brick. The company's 16 operating brick plants are located on
approximately 6,000 acres of land, which includes associated clay mining
operations. The plants have individual production capacities ranging from 16.5
million to 128 million brick each year.
The company's concrete operations include 8 concrete block plants operated by
Featherlite and one plant operated by Acme on tracts of land ranging from 5
acres to 24 acres. In addition, Featherlite operates a limestone mill on a 36
acre tract of land and owns 62 acres of volcanic cinder mines and leases mining
rights on 2,100 acres of land for quarrying architectural limestone.
Tradewinds manufactures its evaporative coolers in Phoenix, Arizona, in a
leased facility containing approximately 90,000 square feet.
The footwear manufacturing facilities consist of 7 plants and related
warehouses containing approximately 784,000 square feet, located on land owned
by the company. These plants have a designed capacity to produce in excess of 3
million pair of footwear annually.
The company's corporate administrative headquarters in Fort Worth, Texas, is
contained in 26,000 square feet of modern office facilities.
The company owns various interests in oil and gas mineral leases in Texas,
Oklahoma, Louisiana, and Arkansas. Revenues received to date from these
interests have not and are not anticipated to have a material effect on
consolidated revenues.
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ITEM 3. LEGAL PROCEEDINGS
The company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, these claims and lawsuits in the
aggregate will not have a material adverse effect on the company's consolidated
financial statements.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the company's security holders during
the last quarter of its fiscal year ended December 31, 1993.
EXECUTIVE OFFICERS
Certain information regarding the executive officers is as follows:
Employed
by Date First
Company Appointed
Name Age In an Officer Title
- - - ------------------- --- -------- ------------- -------------------------
John Justin 77 1936 December 1969 Chairman of the Board and
Chief Executive Officer
J. T. Dickenson 64 1974 September 1983 President and Chief
Operating Officer
Richard J. Savitz 47 1979 March 1982 Vice President-Finance
and Treasurer
Jon M. Bennett 62 1969 December 1979 Vice President-
Administration and
Secretary
Edward L. Stout, Jr. 68 1949 March 1974 Vice President-Brick
Operations
Judy B. Hunter (1) 35 1990 October 1990 Controller, Assistant
Treasurer
There are no family relationships among any of the above officers and there
are no known arrangements or understandings between any executive officer and
any other person pursuant to which any of the above named persons was selected
as an officer.
(1) For more than five years prior to her employment with the company, Ms.
Hunter was employed by Ernst & Young, Fort Worth. She was a senior manager.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Incorporated by reference from the 1993 Annual Report to Shareholders, pages
28, 29, and 30.
As of February 15, 1994, there were 1,731 common shareholders of record. In
addition, approximately 2,263 shareholders are participants in the Justin
Industries, Inc. Employee Stock Ownership Plan.
Dividends declared for the most recent two fiscal years are as follows:
Quarter Ended Cash Dividend Declared
------------- ----------------------
3/31/92 - (a)
6/30/92 $.07 (a)
9/30/92 $.035
12/31/92 $.035
3/31/93 $.04
6/30/93 $.04
9/30/93 $.04
12/31/93 $.04
(a) No dividends were declared in the first quarter, and two dividends
were declared in the second quarter of 1992 since the regular first quarter
Board of Directors' meeting was not held until April 2, 1992.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the 1993 Annual Report to Shareholders, pages
28 and 29.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated by reference from the 1993 Annual Report to Shareholders, pages
13 through 17.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets of the company at December 31, 1993 and 1992
and the consolidated statements of income, shareholders' equity, and cash flows
for the years 1993, 1992, and 1991 and the report of independent auditors
thereon, and the company's unaudited quarterly financial data for the two-year
period ended December 31, 1993 are incorporated by reference from the 1993
Annual Report to Shareholders, pages 18 through 27 and page 30.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Incorporated herein by reference from the company's definitive proxy statement
for the Annual Meeting of Shareholders held March 18, 1994 ("Proxy Statement"),
pages 3, 4 and 7.
Information regarding the executive officers is included in Part I.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference from the Proxy Statement, pages 7 through 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required as to security ownership is incorporated herein by
reference from the Proxy Statement, pages 5 and 6.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference from the Proxy Statement, page 14.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Reference
-------------------------
Annual
Report to
Shareholders
Form 10-K (page)
--------- ------------
Data incorporated by reference from attached
Annual Report to Shareholders of Justin
Industries, Inc.:
Report of independent auditors 27
Consolidated balance sheet at December 31, 1993 18
and 1992
For the years ended December 31, 1993, 1992, and
1991:
Consolidated statement of income 19
Consolidated statement of shareholders' equity 19
Consolidated statement of cash flows 20
Notes to consolidated financial statements 21-26
2. Financial Statement Schedules
Report of Independent Auditors and Consent of S-1
Independent Auditors
Schedules for years ended December 31, 1993, 1992,
and 1991:
V - Property, plant, and equipment S-2
VI - Accumulated depreciation, depletion, S-3
and amortization of property, plant,
and equipment
VIII - Valuation and qualifying accounts S-4
IX - Short-term borrowings S-5
X - Supplementary income statement S-6
information
All other schedules and compliance information have been omitted since the
required information is not present or is not present in amounts sufficient to
require submission of the schedule, or because the information required is
included in the financial statements and the notes thereto.
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3. Exhibits
Exhibit
No. Description
- - - ------- -------------------------------------------------------------------
3.1 Articles of Incorporation of Registrant, as amended (incorporated
by reference to the Registrant's Current Report on Form S-8 dated
March 22, 1994)
3.2 By-Laws of Registrant, as amended (incorporated by reference to the
Registrant's Current Report on Form 8-K dated September 7, 1990)
4.1 Rights Agreement dated as of October 6, 1989 between Registrant and
Team Bank, as Rights Agent (incorporated by reference to
Registrant's Registration Statement on Form 8-A dated October 10,
1989)
4.2 First Amendment to Rights Agreement dated as of October 4, 1990
between Registrant and Ameritrust Texas, N.A., as successor Rights
Agent (incorporated by reference to Registrant's Amendment No. 1 on
Form 8 to Registration Statement on Form 8-A dated October 4, 1990)
10.1 Registrant's 1981 Stock Option Plan*
10.2 Registrant's 1984 Incentive Stock Option Plan*
10.3 Registrant's 1992 Stock Option Plan (incorporated by reference from
the company's definitive proxy statement for the Annual Meeting of
Shareholders held on April 3, 1992)
10.4 Registrant's Deferred Compensation Plan*
10.5 Form of Registrant's Special Executive Benefit Program*
10.6 Registrant's Supplemental Executive Retirement Plan of 1992
(incorporated by reference to Registrant's 1992 Annual Report on
Form 10-K)
10.7 Registrant's Employee Stock Ownership Plan, as restated January 1,
1989 (incorporated by reference to the Registrant's Current Report
on Form S-8 dated March 22, 1994)
10.8 Employment Agreement dated as of September 15, 1989 between
Registrant and John S. Justin, Jr.*
10.9 Form of Severance Agreement dated March 23, 1990 between Registrant
and its executive officers*
10.10 Form of Severance Agreement dated March 23, 1990 between Registrant
and certain of its officers and employees*
10.11 Revolving Loan Agreement between Registrant, NationsBank of Texas,
N.A. (formerly NCNB Texas National Bank) as Administrative Lender
and the several banks listed on the signature pages thereof, as
amended in the First and Second Amendments through June 9, 1990*
10.12 Third Amendment to the Revolving Loan Agreement dated as of
December 3, 1990 among Registrant, NationsBank of Texas, N.A.
(formerly NCNB Texas National Bank), Bank One, Texas, N.A.
(formerly Team Bank), Citibank, N.A., The Bank of New York and
Texas Commerce Bank--Fort Worth, N.A. (incorporated by reference to
Registrant's Current Report on Form 8-K dated December 3, 1990)
10.13 Fourth Amendment to the Revolving Loan Agreement dated as of
December 31, 1991 among Registrant, certain subsidiaries of the
Registrant, NationsBank of Texas, N.A., as Administrative Lender,
NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team
Bank), Citibank, N.A., The Bank of New York and Texas Commerce
Bank, National Association (successor by merger to Texas Commerce
Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's
1991 Annual Report on Form 10-K)
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10.14 Fifth Amendment to the Revolving Loan Agreement dated as of May 1,
1992 among Registrant, certain subsidiaries of the Registrant,
NationsBank of Texas, N.A., as Administrative Lender, NationsBank
of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank),
Citibank, N.A., The Bank of New York and Texas Commerce Bank,
National Association (successor by merger to Texas Commerce Bank--
Fort Worth, N.A.) (incorporated by reference to Registrant's 1992
Annual Report on Form 10-K)
10.15 Sixth Amendment to the Revolving Loan Agreement dated as of
December 31, 1993 among Registrant, certain subsidiaries of the
Registrant, NationsBank of Texas, N.A., as Administrative Lender,
NationsBank of Texas, N.A., Bank One, Texas, N.A., Citibank, N.A.,
The Bank of New York and Texas Commerce Bank, National Association
10.16 Term Loan Agreement dated as of December 3, 1990 among the
Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas
National Bank), Bank One, Texas, N.A. (formerly Team Bank),
Citibank, N.A. and Texas Commerce Bank--Fort Worth, N.A.
(incorporated by reference to Amendment No. 4 to Registrant's
Schedule 14D-9 dated December 6, 1990)
10.17 First Amendment to the Term Loan Agreement dated as of December 31,
1991 among Registrant, certain subsidiaries of the Registrant,
NationsBank of Texas, N.A., as Administrative Lender, NationsBank
of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank),
Citibank, N.A. and Texas Commerce Bank, National Association
(successor by merger to Texas Commerce Bank--Fort Worth, N.A.)
(incorporated by reference to Registrant's 1991 Annual Report on
Form 10-K)
10.18 Second Amendment to the Term Loan Agreement dated as of May 1, 1992
among Registrant, certain subsidiaries of the Registrant,
NationsBank of Texas, N.A., as Administrative Lender, NationsBank
of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank),
Citibank, N.A. and Texas Commerce Bank, National Association
(successor by merger to Texas Commerce Bank--Fort Worth, N.A.)
(incorporated by reference to Registrant's 1992 Annual Report on
Form 10-K)
10.19 Third Amendment to the Term Loan Agreement dated as of December 31,
1993 among Registrant, certain subsidiaries of the Registrant,
NationsBank of Texas, N.A., as Administrative Lender, NationsBank
of Texas, N.A., Bank One, Texas, N.A., Citibank, N.A. and Texas
Commerce Bank, National Association
13 Annual report to shareholders for the year ended December 31, 1993
21 Subsidiaries of the Registrant
23 Report of Independent Auditors and Consent of Independent Auditors
(included herein at page S-1)
99.1 Financial statements required by Form 11-K for registrant's
Employee Stock Ownership Plan for the year ended December 31, 1993
*Incorporated by reference to Registrant's Amendment No. 1 on Form 8 to Annual
Report on Form 10-K dated August 23, 1990.
(b) Reports on Form 8-K
None.
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(PAGE 12)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JUSTIN INDUSTRIES, INC.
(Registrant)
By: /S/ JOHN JUSTIN
John Justin
Chairman of the Board and Chief Executive Officer
March 18, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
/S/ JOHN JUSTIN /S/ BAYARD H. FRIEDMAN
John Justin Bayard H. Friedman
Chairman of the Board and Director, March 18, 1994
Chief Executive Officer
March 18, 1994
/S/ J. T. DICKENSON /S/ DEE J. KELLY
J. T. Dickenson Dee J. Kelly
Director, President and Chief Director, March 18, 1994
Operating Officer
March 18, 1994
/S/ RICHARD J. SAVITZ /S/ JOSEPH R. MUSOLINO
Richard J. Savitz Joseph R. Musolino
Vice President-Finance, Principal Director, March 18, 1994
Finance and Accounting Officer
March 18, 1994
/S/ MARVIN GEARHART /S/ JOHN V. ROACH
Marvin Gearhart John V. Roach
Director, March 18, 1994 Director, March 18, 1994
/S/ ROBERT E. GLAZE /S/ WILLIAM E. TUCKER
Robert E. Glaze William E. Tucker
Director, March 18, 1994 Director, March 18, 1994
===========================================================================
(PAGE S-1)
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Justin Industries, Inc.
as of December 31, 1993 and 1992, and for each of the three years in the period
ended December 31, 1993, and have issued our report thereon dated January 27,
1994, incorporated by reference in this Annual Report (Form 10-K). Our audits
also included the financial statement schedules listed in Item 14(a) of the
Annual Report (Form 10-K). These schedules are the responsibility of the
company's management. Our responsibility is to express an opinion based on our
audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/S/ ERNST & YOUNG
Fort Worth, Texas
January 27, 1994
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of Justin Industries, Inc. of our report dated January 27, 1994, included in the
1993 Annual Report to Shareholders of Justin Industries, Inc.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-11915) pertaining to the Justin Industries, Inc. 1981 Stock
Option Plan and the Justin Industries, Inc. 1984 Incentive Stock Option Plan and
in the related Prospectus of our reports dated January 27, 1994, with respect to
the consolidated financial statements and schedules of Justin Industries, Inc.
included or incorporated by reference in this Annual Report (Form 10-K) for the
year ended December 31, 1993.
We also consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the Justin Industries, Inc. Employee Stock Ownership
Plan and in the related Prospectus of our reports (a) dated January 27, 1994,
with respect to the consolidated financial statements and schedules of Justin
Industries, Inc. included or incorporated by reference in this Annual Report
(Form 10-K) for the year ended December 31, 1993 and (b) dated March 10, 1994,
with respect to the financial statements of Justin Industries, Inc. Employee
Stock Ownership Plan included as Exhibit 99.1 to this Annual Report (Form 10-K)
for the year ended December 31, 1993.
We also consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-61776) pertaining to the Justin Industries, Inc. 1992 Stock
Option Plan and in the related Prospectus of our reports dated January 27, 1994,
with respect to the consolidated financial statements and schedules of Justin
Industries, Inc. included or incorporated by reference in this Annual Report
(Form 10-K) for the year ended December 31, 1993.
/S/ ERNST & YOUNG
Fort Worth, Texas
March 21, 1994
===========================================================================
(PAGE S-2)
JUSTIN INDUSTRIES, INC.
CONSOLIDATED
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
Years Ended December 31,
(in thousands of dollars)
Balance Transfers Balance
at Additions Retire- & at
Beginning at Cost ments Reclassi- Close
of Year (1) or Sales fications of Year
---------- --------- ---------- --------- -------
1991:
- - - -----
Land $ 19,713 $ 1,227 $ 8 $ (2,493) $ 18,439
Buildings & Equipment:
Buildings & Leasehold
Improvements 45,074 4,833 676 (259) 48,972
Machinery & Equipment 115,692 9,098 5,241 (663) 118,886
Office Furniture &
Fixtures 10,090 808 1,842 - 9,056
Unfinished Improvements 2,630 (1,498) - - 1,132
-------- ------- ------- -------- --------
173,486 13,241 7,759 (922) 178,046
-------- ------- ------- -------- --------
$193,199 $14,468 $ 7,767 $ (3,415) $196,485
======== ======= ======= ======== ========
1992:
- - - -----
Land $ 18,439 $ 62 $ 5 $ (1,761) $ 16,735
Buildings & Equipment:
Buildings & Leasehold
Improvements 48,972 1,251 184 (563) 49,476
Machinery & Equipment 118,886 10,168 2,878 51 126,227
Office Furniture &
Fixtures 9,056 1,137 956 6 9,243
Unfinished Improvements 1,132 (612) - - 520
-------- ------- ------- -------- --------
178,046 11,944 4,018 (506) 185,466
-------- ------- ------- -------- --------
$196,485 $12,006 $ 4,023 $ (2,267) $202,201
======== ======= ======= ======== ========
1993:
- - - -----
Land $16,735 $ 174 $ 230 $ (21) $16,658
Buildings & Equipment:
Buildings & Leasehold
Improvements 49,476 3,184 440 558 52,778
Machinery & Equipment 126,227 11,434 3,069 (489) 134,103
Office Furniture &
Fixtures 9,243 800 302 (47) 9,694
Unfinished Improvements 520 1,686 - - 2,206
-------- ------- ------- -------- --------
185,466 17,104 3,811 22 198,781
-------- ------- ------- -------- --------
$202,201 $17,278 $ 4,041 $ 1 $215,439
======== ======= ======= ======== ========
(1) 1991 additions include $3,451 of property, plant, and equipment acquired in
the acquisition of Elgin-Butler Brick Company.
===========================================================================
(PAGE S-3)
JUSTIN INDUSTRIES, INC.
CONSOLIDATED
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND
AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
Years Ended December 31,
(in thousands of dollars)
Additions
Balance Charged Transfers Balance
at to Retire- & at
Beginning Expense ments Reclassi- Close
of Year (1) or Sales fications of Year
---------- --------- ---------- --------- -------
1991:
- - - -----
Land $ 271 $ 5 $ - $ (1) $ 275
Buildings & Equipment:
Buildings & Leasehold
Improvements 21,130 2,764 500 57 23,451
Machinery & Equipment 78,906 9,253 3,936 (292) 83,931
Office Furniture &
Fixtures 8,239 796 1,699 1 7,337
-------- ------- ------- -------- --------
108,275 12,813 6,135 (234) 114,719
-------- ------- ------- -------- --------
$108,546 $12,818 $ 6,135 $ (235) $114,994
======== ======= ======= ======== ========
1992:
- - - -----
Land $ 275 $ 5 $ - $ 75 $ 355
Buildings & Equipment:
Buildings & Leasehold
Improvements 23,451 2,649 168 380 26,312
Machinery & Equipment 83,931 10,377 2,587 51 91,772
Office Furniture &
Fixtures 7,337 806 931 6 7,218
-------- ------- ------- -------- --------
114,719 13,832 3,686 437 125,302
-------- ------- ------- -------- --------
$114,994 $13,837 $ 3,686 $ 512 $125,657
======== ======= ======= ======== ========
1993:
- - - -----
Land $ 355 $ 5 $ - $ - $ 360
Buildings & Equipment:
Buildings & Leasehold
Improvements 26,312 2,784 310 77 28,863
Machinery & Equipment 91,772 9,861 2,939 (453) 98,241
Office Furniture &
Fixtures 7,218 823 301 (35) 7,705
-------- ------- ------- -------- --------
125,302 13,468 3,550 (411) 134,809
-------- ------- ------- -------- --------
$125,657 $13,473 $ 3,550 $ (411) $135,169
======== ======= ======= ======== ========
(1) The company's 1991 balance sheet has been restated for certain of these
reclassifications.
===========================================================================
(PAGE S-4)
JUSTIN INDUSTRIES, INC.
CONSOLIDATED
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31,
(in thousands of dollars)
Balance at Additions Balance at
Beginning Charged to Deductions End of
of Year Income (1) Year (2)
---------- ---------- ---------- ----------
Reserve Deducted from
Related Assets:
1991:
- - - -----
Doubtful Accounts $ 2,558 $ 1,564 $ 1,470 $ 2,652
1992:
- - - -----
Doubtful Accounts $ 2,652 $ 1,613 $ 1,211 $ 3,054
1993:
- - - -----
Doubtful Accounts $ 3,054 $ 1,004 $ 1,044 $ 3,014
(1) Accounts written off, less recoveries.
(2) The reserve for doubtful accounts is deducted from accounts receivable in
the financial statements.
===========================================================================
(PAGE S-5)
JUSTIN INDUSTRIES, INC.
CONSOLIDATED
SCHEDULE IX - SHORT-TERM BORROWINGS
Years Ended December 31
Weighted
Average
Maximum Average Interest
Amount Amount Rate
Category of Balance Weighted Outstanding Outstanding During
Aggregate at End Average During the During the the
Short-Term of Period Interest Period Period Period
Borrowings (000 omitted) Rate (000 omitted) (000 omitted) (2)
------------- ------------- --------- ------------- ------------- ---------
1991:
- - - -----
Notes Payable
to Banks (1) $ - - % $16,500 $ 8,325 6.8%
1992:
- - - -----
Notes Payable
to Banks (1) $5,000 4.125% $ 8,000 $ 6,255 4.5%
1993:
- - - -----
Notes Payable
to Banks (1) $ - - % $12,500 $ 7,742 3.9%
(1) Notes payable to banks represent unsecured borrowings generally for periods
up to 90 days pursuant to credit arrangements with commercial banks.
(2) Computed using the total interest expense on short-term indebtedness during
the year as a percentage of the daily average amount outstanding during the
year.
===========================================================================
(PAGE S-6)
JUSTIN INDUSTRIES, INC.
CONSOLIDATED
SCHEDULE X - SUPPLEMENTARY INCOME
STATEMENT INFORMATION
Years Ended December 31,
(in thousands of dollars)
Amounts Charged to Operations in
1993 1992 1991
------ ------ ------
Maintenance and Repairs $12,822 $11,599 $9,865
======= ======= =======
Depreciation $13,473 $13,837 $12,818
======= ======= =======
Advertising Expense $14,494 $12,712 $10,063
======= ======= =======
Note: For the three years presented, the amounts for amortization of intangible
assets, pre-operating costs, and similar deferrals, royalties, and taxes other
than payroll and income are less than 1% of total sales. The information
presented above is for continuing operations.
===========================================================================
JUSTIN INDUSTRIES, INC.
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit
No. Description Page
- - - ------- ------------------------------------------------------------ ----
3.1 Articles of Incorporation of Registrant, as amended
(incorporated by reference to the Registrant's Current
Report on Form S-8 dated March 22, 1994)
3.2 By-Laws of Registrant, as amended (incorporated by reference
to the Registrant's Current Report on Form 8-K dated
September 7, 1990)
4.1 Rights Agreement dated as of October 6, 1989 between
Registrant and Team Bank, as Rights Agent (incorporated by
reference to Registrant's Registration Statement on Form 8-A
dated October 10, 1989)
4.2 First Amendment to Rights Agreement dated as of October 4,
1990 between Registrant and Ameritrust Texas, N.A., as
successor Rights Agent (incorporated by reference to
Registrant's Amendment No. 1 on Form 8 to Registration
Statement on Form 8-A dated October 4, 1990)
10.1 Registrant's 1981 Stock Option Plan*
10.2 Registrant's 1984 Incentive Stock Option Plan*
10.3 Registrant's 1992 Stock Option Plan (incorporated by
reference from the company's definitive proxy statement for
the Annual Meeting of Shareholders held on April 3, 1992)
10.4 Registrant's Deferred Compensation Plan*
10.5 Form of Registrant's Special Executive Benefit Program*
10.6 Registrant's Supplemental Executive Retirement Plan of 1992
(incorporated by reference to Registrant's 1992 Annual
Report on Form 10-K)
10.7 Registrant's Employee Stock Ownership Plan, as restated
January 1, 1989 (incorporated by reference to the
Registrant's Current Report on Form S-8 dated March 22,
1994)
10.8 Employment Agreement dated as of September 15, 1989 between
Registrant and John S. Justin, Jr.*
10.9 Form of Severance Agreement dated March 23, 1990 between
Registrant and its executive officers*
10.10 Form of Severance Agreement dated March 23, 1990 between
Registrant and certain of its officers and employees*
10.11 Revolving Loan Agreement between Registrant, NationsBank of
Texas, N.A. (formerly NCNB Texas National Bank) as
Administrative Lender and the several banks listed on the
signature pages thereof, as amended in the First and Second
Amendments through June 9, 1990*
10.12 Third Amendment to the Revolving Loan Agreement dated as of
December 3, 1990 among Registrant, NationsBank of Texas,
N.A. (formerly NCNB Texas National Bank), Bank One, Texas,
N.A. (formerly Team Bank), Citibank, N.A., The Bank of New
York and Texas Commerce Bank--Fort Worth, N.A. (incorporated
by reference to Registrant's Current Report on Form 8-K
dated December 3, 1990)
10.13 Fourth Amendment to the Revolving Loan Agreement dated as of
December 31, 1991 among Registrant, certain subsidiaries of
the Registrant, NationsBank of Texas, N.A., as
Administrative Lender, NationsBank of Texas, N.A., Bank One,
Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank
of New York and Texas Commerce Bank, National Association
(successor by merger to Texas Commerce Bank--Fort Worth,
N.A.) (incorporated by reference to Registrant's 1991 Annual
Report on Form 10-K)
10.14 Fifth Amendment to the Revolving Loan Agreement dated as of
May 1, 1992 among Registrant, certain subsidiaries of the
Registrant, NationsBank of Texas, N.A., as Administrative
Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A.
(formerly Team Bank), Citibank, N.A., The Bank of New York
and Texas Commerce Bank, National Association (successor by
merger to Texas Commerce Bank--Fort Worth, N.A.)
(incorporated by reference to Registrant's 1992 Annual
Report on Form 10-K)
10.15 Sixth Amendment to the Revolving Loan Agreement dated as of
December 31, 1993 among Registrant, certain subsidiaries of
the Registrant, NationsBank of Texas, N.A., as
Administrative Lender, NationsBank of Texas, N.A., Bank One,
Texas, N.A., Citibank, N.A., The Bank of New York and Texas
Commerce Bank, National Association
10.16 Term Loan Agreement dated as of December 3, 1990 among the
Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas
National Bank), Bank One, Texas, N.A. (formerly Team Bank),
Citibank, N.A. and Texas Commerce Bank--Fort Worth, N.A.
(incorporated by reference to Amendment No. 4 to
Registrant's Schedule 14D-9 dated December 6, 1990)
10.17 First Amendment to the Term Loan Agreement dated as of
December 31, 1991 among Registrant, certain subsidiaries of
the Registrant, NationsBank of Texas, N.A., as
Administrative Lender, NationsBank of Texas, N.A., Bank One,
Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas
Commerce Bank, National Association (successor by merger to
Texas Commerce Bank--Fort Worth, N.A.) (incorporated by
reference to Registrant's 1991 Annual Report on Form 10-K)
10.18 Second Amendment to the Term Loan Agreement dated as of May
1, 1992 among Registrant, certain subsidiaries of the
Registrant, NationsBank of Texas, N.A., as Administrative
Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A.
(formerly Team Bank), Citibank, N.A. and Texas Commerce
Bank, National Association (successor by merger to Texas
Commerce Bank--Fort Worth, N.A.) (incorporated by reference
to Registrant's 1992 Annual Report on Form 10-K)
10.19 Third Amendment to the Term Loan Agreement dated as of
December 31, 1993 among Registrant, certain subsidiaries of
the Registrant, NationsBank of Texas, N.A., as
Administrative Lender, NationsBank of Texas, N.A., Bank One,
Texas, N.A., Citibank, N.A. and Texas Commerce Bank,
National Association
13 Annual report to shareholders for the year ended December
31, 1993
21 Subsidiaries of the Registrant
23 Report of Independent Auditors and Consent of Independent
Auditors (included herein at page S-1)
99.1 Financial statements required by Form 11-K for registrant's
Employee Stock Ownership Plan for the year ended December
31, 1993
* Incorporated by reference to Registrant's Amendment No. 1 on Form 8 to
Annual Report on Form 10-K dated August 23, 1990.
===========================================================================
(EXHIBIT 10.15)
SIXTH AMENDMENT TO
LOAN AGREEMENT
This Sixth Amendment to Loan Agreement (this "Sixth Amendment"), dated as
of December 31, 1993, is entered into among Justin Industries, Inc., a Texas
corporation ("Borrower"), each Subsidiary which is a party hereto, the banks
listed on the signature pages hereof (singly, a "Lender," and collectively
"Lenders") and NationsBank of Texas, N.A. (formerly known as NCNB Texas National
Bank), as Administrative Lender ("Administrative Lender").
BACKGROUND
A. Borrower, certain banks and Administrative Lender have entered into
that certain Loan Agreement dated as of May 15, 1989, as amended by that certain
First Amendment to Loan Agreement, dated as of February 12, 1990, that certain
Second Amendment to Loan Agreement, dated as of August 31, 1990, that certain
Third Amendment to Loan Agreement, dated as of December 3, 1990, that certain
Fourth Amendment to Loan Agreement, dated as of June 1, 1991, that certain
Fourth Amendment to Loan Agreement, dated as of December 31, 1991, and that
certain Fifth Amendment to Loan Agreement, dated as of May 1, 1992 (said Loan
Agreement, as amended, the "Loan Agreement"; capitalized terms used herein shall
have the meaning given to them in the Loan Agreement).
B. Borrower has or will have no later than January 3, 1994 (i) merged two
direct Subsidiaries with and into another direct Subsidiary, (ii) formed four
new corporations through cash contributions which corporations have become
direct Subsidiaries, (iii) caused certain direct Subsidiaries to form three
limited partnerships through asset contributions, which limited partnerships
have become indirect Subsidiaries and (iv) merged one indirect Subsidiary with
and in to one other indirect Subsidiary, (collectively, the "Restructure").
Borrower has requested that Lenders amend the Loan Agreement to reflect the
Restructure.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, Borrower, each
Subsidiary, Lenders and Administrative Lender covenant and agree as follows:
AGREEMENT
1. Amendments.
a. The definition of "Guaranty" set forth in Article I of the Loan
Agreement is hereby amended to read as follows:
"'Guaranty' shall mean the guaranty or guaranties by certain
Subsidiaries substantially in the form of Exhibit "A" hereto, duly
completed, as amended, modified, supplemented or restated from time to
time."
b. The definition of "Special Counsel" set forth in Article I of the
Loan Agreement is amended by deleting the name "Donohoe, Jameson & Kolb,
L.L.P." and substituting, in lieu thereof, the name "Donohoe, Jameson &
Carroll, P.C."
c. The definition of "Subsidiaries" set forth in Article I of the
Loan Agreement is hereby amended to read as follows:
"'Subsidiary' shall mean (i) any corporation at least a majority
of whose securities having voting power for the election of directors
(other than securities having such power only by reason of a happening
of a contingency) are at the time owned by the Borrower, directly or
through one or more intermediaries, and (ii) any partnership or other
entity (A) at least a majority of the outstanding equity interest of
which is owned by the Borrower, directly or through one or more
intermediaries, or (B) which is otherwise Controlled or capable of
being Controlled by the Borrower, directly or through one or more
intermediaries."
d. Section 3.1(b) of the Loan Agreement is hereby amended to read as
follows:
"(b) Maintenance of Existence. Cause to be done all things
necessary to preserve and keep in full the corporate or partnership
existence, as appropriate, of Borrower and each Subsidiary."
e. Section 5.1 of the Loan Agreement is hereby amended to read as
follows:
"5.1 Organization and Qualification. Each Company (a) is a
corporation or partnership, as appropriate, duly organized, validly
existing, and in good standing under the Laws of its jurisdiction of
incorporation or organization, as appropriate; (b) is duly licensed
and in good standing as a foreign corporation or foreign partnership,
as appropriate, in each jurisdiction in which the nature of the
business transacted or the property owned is such as to require
licensing as such; and (c) possesses all requisite authority and power
to execute, deliver and comply with the terms of the Loan Papers to be
executed by it, all of which have been duly authorized and approved by
all necessary corporate action or partnership action, as appropriate,
and for which no approval or consent of any Tribunal is required.
Borrower has no Subsidiaries except as set forth on Exhibit "D"
hereto, all of which are wholly-owned, except as set forth therein.
The consolidated assets of the Subsidiaries which have not executed
the Guaranty do not comprise more than 3% of the assets of Borrower
and its Subsidiaries, on a consolidated basis."
f. Existing Exhibit D to the Loan Agreement is deleted and a new
Exhibit D, in the form of Annex A hereto, is substituted in lieu thereof.
2. Waiver. Subject to the terms and conditions set forth in this Sixth
Amendment, Lenders hereby waive any Default or Event of Default with respect to
Sections 3.1(b), 4.8, 4.9, 4.10, and 5.1 of the Loan Agreement that has or may
have occurred or that will occur as a result of the Restructure. The waiver
provided herein is limited to (i) the Restructure, (ii) the specific Sections of
the Loan Agreement referred to in the immediately preceding sentence, and
(iii) with respect to Section 4.10, to no more than $1,000 in the aggregate
being invested in Subsidiaries that do not execute a Guaranty.
3. Representations and Warranties. Borrower represents and warrants to
Administrative Lender and each Lender that, as of the date hereof and after
giving effect to the amendments provided in Section 1 and the waiver provided in
Section 2:
a. the representations and warranties contained in the Loan
Agreement and each of the other Loan Papers are true and correct in all
material respects on and as of the date hereof as though made on and as of
such date;
b. no event has occurred and is continuing which constitutes a
Default or an Event of Default;
c. Borrower has full power and authority to execute and deliver this
Sixth Amendment, and this Sixth Amendment and the Loan Agreement, as
amended hereby, constitute the legal, valid and binding obligation of
Borrower, enforceable in accordance with their terms, except as
enforceability may be limited by Debtor Relief Laws and except as rights to
indemnity may be limited by federal or state securities laws;
d. each Subsidiary executing a Guaranty has full power and authority
to execute and deliver the Guaranty, and the Guaranty constitutes the
legal, valid and binding obligation of each Subsidiary enforceable in
accordance with its terms, except as enforceability may be limited by
Debtor Relief Laws and except as rights to indemnity may be limited by
federal or state securities laws; and
e. no authorization, approval, consent or other action by, notice
to, or filing with, any Tribunal or other Person (other than the Board of
Directors of Borrower and each Subsidiary which is a party hereto), is
required for the (i) execution, delivery or performance by Borrower of this
Sixth Amendment or (ii) the execution, delivery or performance by each
Subsidiary which is a party hereto of this Sixth Amendment and the
Guaranty;
f. as part of the Restructure:
Tradewinds Technologies, Inc., a Delaware corporation and wholly-
owned Subsidiary of the Borrower ("TTI"), has been merged with and
into Justin Management Company, a Delaware corporation and wholly-
owned Subsidiary of the Borrower ("JMC"), and all of the assets and
liabilities of TTI will be assumed by JMC as of January 1, 1994.
Northland Publishing Co., Inc., an Arizona corporation and
wholly-owned Subsidiary of the Borrower ("NPC"), has been merged with
and into JMC, and all of the assets and liabilities of NPC will be
assumed by JMC as of January 1, 1994.
El Paso Leather Components, Inc., a Texas corporation ("EPLC")
and wholly-owned Subsidiary of Footwear Management Company, a Delaware
corporation and wholly-owned Subsidiary of the Borrower ("FMC"), has
been merged with and into FMC, and all of the assets and liabilities
of EPLC have been assumed by FMC.
JI Company, a Delaware corporation and wholly-owned Subsidiary of
the Borrower ("JIC"), was organized as a result of a capital
contribution from the Borrower.
Footwear Investment Company, a Delaware corporation and wholly-
owned Subsidiary of the Borrower ("FIC"), was organized as a result of
a capital contribution from the Borrower.
Brick Investment Company, a Delaware corporation and wholly-owned
Subsidiary of the Borrower ("BIC") was organized as a result of a
capital contribution from the Borrower.
Justin FSC, Inc., a Barbados corporation and wholly-owned
Subsidiary of the Borrower, will be organized as of January 3, 1994 as
a result of a capital contribution from the Borrower.
Justin Management Company, L.P., a Delaware limited partnership
and Subsidiary of JMC will be organized as of January 1, 1994 as a
result of asset contributions from JMC, its 1% general partner, and
JIC, its 99% limited partner.
Acme Royalty Company, L.P., a Delaware limited partnership and
Subsidiary of BIC, was organized as a result of asset contributions
from BIC, its 1% general partner, and Acme Royalty Company, a Delaware
corporation and wholly-owned Subsidiary of the Borrower, its 99%
limited partner.
Boot Royalty Company, L.P., a Delaware limited partnership and
Subsidiary of FIC, was organized as a result of asset contributions
from FIC, its 1% general partner, and Boot Royalty Company, a Delaware
corporation and wholly-owned Subsidiary of the Borrower, its 99%
limited partner.
Neither Borrower nor any Subsidiary (other than as noted in this
Section 3.f.) was subject to any change in capital structure or
jurisdiction of ownership, and no Subsidiary (other than as noted in this
Section 3.f.) was subject to any change of ownership of any of its capital
stock.
g. Annex A correctly describes the name and jurisdiction of
incorporation or organization of each Subsidiary, the name and jurisdiction
of incorporation or organization of the shareholder or owner of all
authorized, issued and outstanding capital stock or partnership interests
of such Subsidiary and the amount or percentage interest and type of
capital stock or partnership interests owned. No Company owns any capital
stock, partnership interest or other equity or debt instrument convertible
into an equity security of any Person except as described on Annex A.
4. Representations and Warranties of Each Subsidiary. Each Subsidiary
which is a party hereto represents and warrants to Administrative Lender and
each Lender that, as of the date hereof and after giving effect to the
amendments provided in Section 1 and the waiver provided in Section 2:
a. the representations and warranties contained in each Loan Paper
to which such Subsidiary is a party are true and correct in all material
respects on and as of the date hereof as though made on and as of such
date;
b. no event has occurred and is continuing which constitutes a
Default or an Event of Default;
c. such Subsidiary has full power and authority to execute and
deliver this Sixth Amendment and the Guaranty, and this Sixth Amendment and
the Guaranty constitute the legal, valid and binding obligation of such
Subsidiary enforceable in accordance with their respective terms, except as
enforceability may be limited by Debtor Relief Laws and except as rights to
indemnity may be limited by federal or state securities laws; and
d. no authorization, approval, consent or other action by, notice
to, or filing with, any Tribunal or other Person (other than the Board of
Directors of such Subsidiary, or if such Subsidiary is a limited
partnership, the Board of Directors of the general partner of such
Subsidiary), is required for the execution, delivery or performance of such
Subsidiary of this Sixth Amendment and the Guaranty.
5. Conditions of Effectiveness. Sections 1 and 2 shall be effective as
of December 31, 1993 ("Effective Date"), subject to the following:
a. Lenders shall have each executed a counterpart of this Sixth
Amendment;
b. Administrative Lender shall have received counterparts of this
Sixth Amendment executed by Borrower and each Subsidiary which is a party
hereto;
c. Administrative Lender shall have received counterparts of the
Guaranty executed by each Subsidiary which is a party thereto;
d. Administrative Lender shall have received certified corporate
resolutions of the Board of Directors of Borrower and each Subsidiary (or,
with respect to Subsidiaries which are limited partnerships, the Board of
Directors of the general partner of such Subsidiary) authorizing and
approving the execution and delivery of this Sixth Amendment and the
Guaranty and each other agreement required by Lenders, as appropriate;
e. Administrative Lender shall have received the opinion of Messrs.
Kelly, Hart and Hallman in a form satisfactory to Administrative Lender and
Special Counsel;
f. Administrative Lender shall have received a certificate of the
Secretary of Borrower certifying (i) as to the names, offices and
signatures of officers of Borrower authorized to execute this Sixth
Amendment, (ii) that the Articles of Incorporation and the bylaws of
Borrower have not been amended since December 3, 1990, other than as
therein disclosed, (iii) the resolutions of the Board of Directors of
Borrower authorizing the transactions related to this Sixth Amendment and
(iv) such other matters as Administrative Lender may request;
g. Administrative Lender shall have received a certificate of the
Secretary of each Subsidiary incorporated prior to December 31, 1991
certifying (i) as to the names, offices and signatures of officers of such
Subsidiary authorized to execute this Sixth Amendment, (ii) that the
Articles of Incorporation and the bylaws of such Subsidiary have not been
amended December 31, 1991, other than as therein disclosed, (iii) the
resolutions of the Board of Directors of such Subsidiary authorizing the
transactions related to this Sixth Amendment, and (iv) such other matters
as Administrative Lender may request;
h. Administrative Lender shall have received a certificate of the
Secretary of each Subsidiary incorporated or organized on or after
December 31, 1991 certifying (i) as to the names, offices and signatures of
officers of such Subsidiary authorized to execute this Sixth Amendment,
(ii) the complete Articles of Incorporation or Articles of Limited
Partnership and the bylaws or limited partnership agreement of such
Subsidiary, (iii) the resolutions of the Board of Directors of such
Subsidiary (or the general partner of such Subsidiary if such Subsidiary is
a limited partnership) authorizing the transactions related to this Sixth
Amendment, and (iv) such other matters as Administrative Lender may
request;
i. Administrative Lender shall have received an original certificate
of the appropriate officer of the jurisdiction of incorporation or
organization of each Company certifying as to the good standing of such
Company as at the date of execution hereof;
j. Administrative Lender shall have received an original certificate
and/or articles of merger, as appropriate, of the appropriate officer of
the jurisdiction of the incorporation of those former Subsidiaries which
were merged;
k. Borrower shall have received a certificate of an authorized
officer of Administrative Lender acknowledging satisfaction of all of the
foregoing conditions; and
l. Administrative Lender shall have received, in form and substance
satisfactory to Administrative Lender and Special Counsel, such other
documents, certificates, and instruments as Administrative Lender shall
require.
6. Reference to the Loan Agreement.
6.1. Upon the effectiveness of this Sixth Amendment, each reference in the
Loan Agreement to "this Agreement", "hereunder", "herein", or words of like
import shall mean and be a reference to the Loan Agreement, as affected and
amended hereby.
6.2. The Loan Agreement, as amended by the amendment and waiver referred to
above, shall remain in full force and effect and is hereby ratified and
confirmed.
6.3. THE LOAN AGREEMENT, AS AMENDED BY THE AMENDMENTS REFERRED TO ABOVE,
TOGETHER WITH EACH OTHER LOAN PAPER, REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
REGARDING THE SUBJECT MATTER HEREIN.
7. Costs, Expenses and Taxes. Borrower agrees to pay within five days
after demand all costs and expenses of Administrative Lender in connection with
the preparation, reproduction, execution and delivery of this Sixth Amendment
and the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for Administrative Lender
with respect thereto and with respect to advising Administrative Lender as to
its rights and responsibilities under the Loan Agreement, as hereby amended).
8. Execution in Counterparts. This Sixth Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
9. Governing Law; Binding Effect. This Sixth Amendment shall be governed
by and construed in accordance with the laws of the State of Texas and be
binding upon Borrower and Lenders and their respective successors and assigns.
10. Headings. Section headings in this Sixth Amendment are included
herein for convenience of reference only and shall not constitute part of this
Sixth Amendment for any other purpose.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF, the parties hereto have executed this Sixth Amendment
as of the date first above written.
NATIONSBANK OF TEXAS, N.A. (formerly
known as NCNB Texas National Bank), as a
Lender and as Administrative Lender
By: /S/ Vincent Liberio
Senior Vice President, Vincent Liberio
(Print Title (Print Name)
BANK ONE, TEXAS, N.A. (Successor to Team
Bank, successor to Team Bank, N.A., formerly
known as Texas American Bridge Bank, N.A.,
assignee of the Federal Deposit Insurance
Corporation, as receiver for Texas American
Bank/Fort Worth, N.A.)
By: /S/ J. Michael Wilson_
Vice President, J. Michael Wilson
(Print Title) (Print Name)
CITIBANK, N.A.
By: /S/ Carolyn R. Bodmer
Vice President, Carolyn R. Bodmer
(Print Title) (Print Name)
THE BANK OF NEW YORK
By: /S/ Julie E. Brennan
Vice President, Julie E. Brennan
(Print Title) (Print Name)
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION (Successor by merger to
Texas Commerce Bank-Fort Worth, N.A.)
By: /S/ Loren K. Jensen
Senior Vice President, Loren K. Jensen
(Print Title) (Print Name)
JUSTIN INDUSTRIES, INC., a
Texas corporation
FEATHERLITE BUILDING PRODUCTS
CORPORATION,
a Delaware corporation
FEATHERLITE PRECAST
CORPORATION, a Texas corporation
JUSTIN MANAGEMENT COMPANY, a Delaware
corporation
ACME BRICK COMPANY, a Delaware
corporation
ALPHA CARGO MOTOR EXPRESS, INC., a Texas
corporation
FOOTWEAR MANAGEMENT COMPANY, a Delaware
corporation
JUSTIN BELT COMPANY, a Texas corporation
H. J. JUSTIN & SONS, INC., a Texas
corporation
KINGSTIP, INC., a Delaware corporation
FOOTWEAR INVESTMENT COMPANY
a Delaware corporation
BRICK INVESTMENT COMPANY, a
Delaware corporation
By: Richard J. Savitz
Richard J. Savitz
Vice President - Finance of All
JUSTIN MANAGEMENT COMPANY,
L.P., a Delaware limited partnership
By:JUSTIN MANAGEMENT
COMPANY, General Partner
By: Richard J. Savitz
Richard J. Savitz
Vice President - Finance
ACME ROYALTY COMPANY, L.P., a
Delaware limited partnership
By:BRICK INVESTMENT COMPANY,
General Partner
By: Richard J. Savitz
Richard J. Savitz
Vice President - Finance
BOOT ROYALTY COMPANY, L.P., a
Delaware limited partnership
By: FOOTWEAR INVESTMENT
COMPANY, General Partner
By: Richard J. Savitz
Richard J. Savitz
Vice President - Finance
ACME ROYALTY COMPANY, a Delaware
corporation
BOOT ROYALTY COMPANY, a Delaware
corporation
J I COMPANY, a Delaware corporation
By: James Green
James Green, President of all
ANNEX A
EXHIBIT "D"
% of Stock
or
Partnership
Interest
Jurisdiction Owned by
of Borrower
Incorporation or a Direct Direct
or Parent Parent
Subsidiary Name Entity Type Organization or Partner or Partner
--------------- ----------- ------------ ---------- ----------
Acme Royalty Company Corporation Delaware 100% Borrower
Justin Management Corporation Delaware 100% Borrower
Company
Acme Brick Company Corporation Delaware 100% Borrower
Alpha Cargo Motor Corporation Delaware 100% Acme Brick
Express, Inc. Company
Boot Royalty Company Corporation Delaware 100% Borrower
Footwear Management Corporation Delaware 100% Boot
Company Royalty
Company
Justin Belt Corporation Texas 100% Footwear
Company, Inc. Management
Company
H. J. Justin & Corporation Texas 100% Footwear
Sons, Inc. Management
Company
Featherlite Precast Corporation Texas 100% Borrower
Corporation
Featherlite Building Corporation Delaware 100% Borrower
Products
Corporation
Kingstip, Inc. Corporation Delaware 100% Borrower
J I Company Corporation Delaware 100% Borrower
Brick Investment Corporation Delaware 100% Borrower
Company
Footwear Investment Corporation Delaware 100% Borrower
Company
Justin Management Limited Delaware 1% General Justin
Company, L.P. Partnership Partner Management
Company
99% Limited J I Company
Partner
Acme Royalty Limited Delaware 1% General Brick
Company, L.P. Partnership Partner Investment
Company
99% Limited Acme
Partner Royalty
Company
Boot Royalty Limited Delaware 1% General Footwear
Company, L.P. Partnership Partner Investment
Company
99% Limited Boot Royalty
Partner Company
===============================================================================
(EXHIBIT 10.19)
THIRD AMENDMENT TO
LOAN AGREEMENT
This Third Amendment to Loan Agreement (this "Third Amendment"), dated as
of December 31, 1993, is entered into among Justin Industries, Inc., a Texas
corporation ("Borrower"), each Subsidiary which is a party hereto, the banks
listed on the signature pages hereof (singly, a "Lender," and collectively
"Lenders") and NationsBank of Texas, N.A. (formerly known as NCNB Texas National
Bank), as Administrative Lender ("Administrative Lender").
BACKGROUND
A. Borrower, certain banks and Administrative Lender have entered into
that certain Loan Agreement dated as of December 3, 1990, as amended by that
certain First Amendment to Loan Agreement, dated as of December 31, 1991 (said
Loan Agreement, as amended, the "Loan Agreement"; capitalized terms used herein
shall have the meaning given to them in the Loan Agreement).
B. Borrower has or will have no later than January 3, 1994 (i) merged two
direct Subsidiaries with and into another direct Subsidiary, (ii) formed four
new corporations through cash contributions which corporations have become
direct Subsidiaries, (iii) caused certain direct Subsidiaries to form three
limited partnerships through asset contributions, which limited partnerships
have become indirect Subsidiaries and (iv) merged one indirect Subsidiary with
and in to one other indirect Subsidiary, (collectively, the "Restructure").
Borrower has requested that Lenders amend the Loan Agreement to reflect the
Restructure.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, Borrower, each
Subsidiary, Lenders and Administrative Lender covenant and agree as follows:
AGREEMENT
1. Amendments.
a. The definition of "Guaranty" set forth in Article I of the Loan
Agreement is hereby amended to read as follows:
"'Guaranty' shall mean the guaranty or guaranties by certain
Subsidiaries substantially in the form of Exhibit "A" hereto, duly
completed, as amended, modified, supplemented or restated from time to
time."
b. The definition of "Special Counsel" set forth in Article I of the
Loan Agreement is amended by deleting the name "Donohoe, Jameson & Kolb,
L.L.P." and substituting, in lieu thereof, the name "Donohoe, Jameson &
Carroll, P.C."
c. The definition of "Subsidiaries" set forth in Article I of the
Loan Agreement is hereby amended to read as follows:
"'Subsidiary' shall mean (i) any corporation at least a majority
of whose securities having voting power for the election of directors
(other than securities having such power only by reason of a happening
of a contingency) are at the time owned by the Borrower, directly or
through one or more intermediaries, and (ii) any partnership or other
entity (A) at least a majority of the outstanding equity interest of
which is owned by the Borrower, directly or through one or more
intermediaries, or (B) which is otherwise Controlled or capable of
being Controlled by the Borrower, directly or through one or more
intermediaries."
d. Section 3.1(b) of the Loan Agreement is hereby amended to read as
follows:
"(b) Maintenance of Existence. Cause to be done all things
necessary to preserve and keep in full the corporate or partnership
existence, as appropriate, of Borrower and each Subsidiary."
e. Section 5.1 of the Loan Agreement is hereby amended to read as
follows:
"5.1 Organization and Qualification. Each Company (a) is a
corporation or partnership, as appropriate, duly organized, validly
existing, and in good standing under the Laws of its jurisdiction of
incorporation or organization, as appropriate; (b) is duly licensed
and in good standing as a foreign corporation or foreign partnership,
as appropriate, in each jurisdiction in which the nature of the
business transacted or the property owned is such as to require
licensing as such; and (c) possesses all requisite authority and power
to execute, deliver and comply with the terms of the Loan Papers to be
executed by it, all of which have been duly authorized and approved by
all necessary corporate action or partnership action, as appropriate,
and for which no approval or consent of any Tribunal is required.
Borrower has no Subsidiaries except as set forth on Exhibit "C"
hereto, all of which are wholly-owned, except as set forth therein.
The consolidated assets of the Subsidiaries which have not executed
the Guaranty do not comprise more than 3% of the assets of Borrower
and its Subsidiaries, on a consolidated basis."
f. Existing Exhibit C to the Loan Agreement is deleted and a new
Exhibit C, in the form of Annex A hereto, is substituted in lieu thereof.
2. Waiver. Subject to the terms and conditions set forth in this Third
Amendment, Lenders hereby waive any Default or Event of Default with respect to
Sections 3.1(b), 4.8, 4.9, 4.10, and 5.1 of the Loan Agreement that has or may
have occurred or that will occur as a result of the Restructure. The waiver
provided herein is limited to (i) the Restructure, (ii) the specific Sections of
the Loan Agreement referred to in the immediately preceding sentence, and
(iii) with respect to Section 4.10, to no more than $1,000 in the aggregate
being invested in Subsidiaries that do not execute a Guaranty.
3. Representations and Warranties. Borrower represents and warrants to
Administrative Lender and each Lender that, as of the date hereof and after
giving effect to the amendments provided in Section 1 and the waiver provided in
Section 2:
a. the representations and warranties contained in the Loan
Agreement and each of the other Loan Papers are true and correct in all
material respects on and as of the date hereof as though made on and as of
such date;
b. no event has occurred and is continuing which constitutes a
Default or an Event of Default;
c. Borrower has full power and authority to execute and deliver this
Third Amendment, and this Third Amendment and the Loan Agreement, as
amended hereby, constitute the legal, valid and binding obligation of
Borrower, enforceable in accordance with their terms, except as
enforceability may be limited by Debtor Relief Laws and except as rights to
indemnity may be limited by federal or state securities laws;
d. each Subsidiary executing a Guaranty has full power and authority
to execute and deliver the Guaranty, and the Guaranty constitutes the
legal, valid and binding obligation of each Subsidiary enforceable in
accordance with its terms, except as enforceability may be limited by
Debtor Relief Laws and except as rights to indemnity may be limited by
federal or state securities laws; and
e. no authorization, approval, consent or other action by, notice
to, or filing with, any Tribunal or other Person (other than the Board of
Directors of Borrower and each Subsidiary which is a party hereto), is
required for the (i) execution, delivery or performance by Borrower of this
Third Amendment or (ii) the execution, delivery or performance by each
Subsidiary which is a party hereto of this Third Amendment and the
Guaranty;
f. as part of the Restructure:
Tradewinds Technologies, Inc., a Delaware corporation and wholly-
owned Subsidiary of the Borrower ("TTI"), has been merged with and
into Justin Management Company, a Delaware corporation and wholly-
owned Subsidiary of the Borrower ("JMC"), and all of the assets and
liabilities of TTI will be assumed by JMC as of January 1, 1994.
Northland Publishing Co., Inc., an Arizona corporation and
wholly-owned Subsidiary of the Borrower ("NPC"), has been merged with
and into JMC, and all of the assets and liabilities of NPC will be
assumed by JMC as of January 1, 1994.
El Paso Leather Components, Inc., a Texas corporation ("EPLC")
and wholly-owned Subsidiary of Footwear Management Company, a Delaware
corporation and wholly-owned Subsidiary of the Borrower ("FMC"), has
been merged with and into FMC, and all of the assets and liabilities
of EPLC have been assumed by FMC.
JI Company, a Delaware corporation and wholly-owned Subsidiary of
the Borrower ("JIC"), was organized as a result of a capital
contribution from the Borrower.
Footwear Investment Company, a Delaware corporation and wholly-
owned Subsidiary of the Borrower ("FIC"), was organized as a result of
a capital contribution from the Borrower.
Brick Investment Company, a Delaware corporation and wholly-owned
Subsidiary of the Borrower ("BIC") was organized as a result of a
capital contribution from the Borrower.
Justin FSC, Inc., a Barbados corporation and wholly-owned
Subsidiary of the Borrower, will be organized as of January 3, 1994 as
a result of a capital contribution from the Borrower.
Justin Management Company, L.P., a Delaware limited partnership
and Subsidiary of JMC will be organized as of January 1, 1994 as a
result of asset contributions from JMC, its 1% general partner, and
JIC, its 99% limited partner.
Acme Royalty Company, L.P., a Delaware limited partnership and
Subsidiary of BIC, was organized as a result of asset contributions
from BIC, its 1% general partner, and Acme Royalty Company, a Delaware
corporation and wholly-owned Subsidiary of the Borrower, its 99%
limited partner.
Boot Royalty Company, L.P., a Delaware limited partnership and
Subsidiary of FIC, was organized as a result of asset contributions
from FIC, its 1% general partner, and Boot Royalty Company, a Delaware
corporation and wholly-owned Subsidiary of the Borrower, its 99%
limited partner.
Neither Borrower nor any Subsidiary (other than as noted in this
Section 3.f.) was subject to any change in capital structure or
jurisdiction of ownership, and no Subsidiary (other than as noted in this
Section 3.f.) was subject to any change of ownership of any of its capital
stock.
g. Annex A correctly describes the name and jurisdiction of
incorporation or organization of each Subsidiary, the name and jurisdiction
of incorporation or organization of the shareholder or owner of all
authorized, issued and outstanding capital stock or partnership interests
of such Subsidiary and the amount or percentage interest and type of
capital stock or partnership interests owned. No Company owns any capital
stock, partnership interest or other equity or debt instrument convertible
into an equity security of any Person except as described on Annex A.
4. Representations and Warranties of Each Subsidiary. Each Subsidiary
which is a party hereto represents and warrants to Administrative Lender and
each Lender that, as of the date hereof and after giving effect to the
amendments provided in Section 1 and the waiver provided in Section 2:
a. the representations and warranties contained in each Loan Paper
to which such Subsidiary is a party are true and correct in all material
respects on and as of the date hereof as though made on and as of such
date;
b. no event has occurred and is continuing which constitutes a
Default or an Event of Default;
c. such Subsidiary has full power and authority to execute and
deliver this Third Amendment and the Guaranty, and this Third Amendment and
the Guaranty constitute the legal, valid and binding obligation of such
Subsidiary enforceable in accordance with their respective terms, except as
enforceability may be limited by Debtor Relief Laws and except as rights to
indemnity may be limited by federal or state securities laws; and
d. no authorization, approval, consent or other action by, notice
to, or filing with, any Tribunal or other Person (other than the Board of
Directors of such Subsidiary, or if such Subsidiary is a limited
partnership, the Board of Directors of the general partner of such
Subsidiary), is required for the execution, delivery or performance of such
Subsidiary of this Third Amendment and the Guaranty.
5. Conditions of Effectiveness. Sections 1 and 2 shall be effective as
of December 31, 1993 ("Effective Date"), subject to the following:
a. Lenders shall have each executed a counterpart of this Third
Amendment;
b. Administrative Lender shall have received counterparts of this
Third Amendment executed by Borrower and each Subsidiary which is a party
hereto;
c. Administrative Lender shall have received counterparts of the
Guaranty executed by each Subsidiary which is a party thereto;
d. Administrative Lender shall have received certified corporate
resolutions of the Board of Directors of Borrower and each Subsidiary (or,
with respect to Subsidiaries which are limited partnerships, the Board of
Directors of the general partner of such Subsidiary) authorizing and
approving the execution and delivery of this Third Amendment and the
Guaranty and each other agreement required by Lenders, as appropriate;
e. Administrative Lender shall have received the opinion of Messrs.
Kelly, Hart and Hallman in a form satisfactory to Administrative Lender and
Special Counsel;
f. Administrative Lender shall have received a certificate of the
Secretary of Borrower certifying (i) as to the names, offices and
signatures of officers of Borrower authorized to execute this Third
Amendment, (ii) that the Articles of Incorporation and the bylaws of
Borrower have not been amended since December 3, 1990, other than as
therein disclosed, (iii) the resolutions of the Board of Directors of
Borrower authorizing the transactions related to this Third Amendment and
(iv) such other matters as Administrative Lender may request;
g. Administrative Lender shall have received a certificate of the
Secretary of each Subsidiary incorporated prior to December 31, 1991
certifying (i) as to the names, offices and signatures of officers of such
Subsidiary authorized to execute this Third Amendment, (ii) that the
Articles of Incorporation and the bylaws of such Subsidiary have not been
amended December 31, 1991, other than as therein disclosed, (iii) the
resolutions of the Board of Directors of such Subsidiary authorizing the
transactions related to this Third Amendment, and (iv) such other matters
as Administrative Lender may request;
h. Administrative Lender shall have received a certificate of the
Secretary of each Subsidiary incorporated or organized on or after
December 31, 1991 certifying (i) as to the names, offices and signatures of
officers of such Subsidiary authorized to execute this Third Amendment,
(ii) the complete Articles of Incorporation or Articles of Limited
Partnership and the bylaws or limited partnership agreement of such
Subsidiary, (iii) the resolutions of the Board of Directors of such
Subsidiary (or the general partner of such Subsidiary if such Subsidiary is
a limited partnership) authorizing the transactions related to this Third
Amendment, and (iv) such other matters as Administrative Lender may
request;
i. Administrative Lender shall have received an original certificate
of the appropriate officer of the jurisdiction of incorporation or
organization of each Company certifying as to the good standing of such
Company as at the date of execution hereof;
j. Administrative Lender shall have received an original certificate
and/or articles of merger, as appropriate, of the appropriate officer of
the jurisdiction of the incorporation of those former Subsidiaries which
were merged;
k. Borrower shall have received a certificate of an authorized
officer of Administrative Lender acknowledging satisfaction of all of the
foregoing conditions; and
l. Administrative Lender shall have received, in form and substance
satisfactory to Administrative Lender and Special Counsel, such other
documents, certificates, and instruments as Administrative Lender shall
require.
6. Reference to the Loan Agreement.
6.1. Upon the effectiveness of this Third Amendment, each reference in the
Loan Agreement to "this Agreement", "hereunder", "herein", or words of like
import shall mean and be a reference to the Loan Agreement, as affected and
amended hereby.
6.2. The Loan Agreement, as amended by the amendment and waiver referred to
above, shall remain in full force and effect and is hereby ratified and
confirmed.
6.3. THE LOAN AGREEMENT, AS AMENDED BY THE AMENDMENTS REFERRED TO ABOVE,
TOGETHER WITH EACH OTHER LOAN PAPER, REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
REGARDING THE SUBJECT MATTER HEREIN.
7. Costs, Expenses and Taxes. Borrower agrees to pay within five days
after demand all costs and expenses of Administrative Lender in connection with
the preparation, reproduction, execution and delivery of this Third Amendment
and the other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for Administrative Lender
with respect thereto and with respect to advising Administrative Lender as to
its rights and responsibilities under the Loan Agreement, as hereby amended).
8. Execution in Counterparts. This Third Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
9. Governing Law; Binding Effect. This Third Amendment shall be governed
by and construed in accordance with the laws of the State of Texas and be
binding upon Borrower and Lenders and their respective successors and assigns.
10. Headings. Section headings in this Third Amendment are included
herein for convenience of reference only and shall not constitute part of this
Third Amendment for any other purpose.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment
as of the date first above written.
NATIONSBANK OF TEXAS, N.A., (formerly known
as NCNB Texas National Bank), as a Lender and
as Administrative Lender
By: /S/ Vincent Liberio
Vincent Liberio, Senior Vice President
(Print Name) (Print Title)
BANK ONE, TEXAS, N.A. (Successor to Team
Bank, successor to Team Bank, N.A., formerly
known as Texas American Bridge Bank, N.A.,
assignee of the Federal Deposit Insurance
Corporation, as receiver for Texas American
Bank/Fort Worth, N.A.)
By: /S/ J. Michael Wilson
J. Michael Wilson, Vice President
(Print Name) (Print Title)
CITIBANK, N.A.
By: /S/ Carolyn R. Bodmer
Carolyn R. Bodmer, Vice President
(Print Name) (Print Title)
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(Successor by merger to Texas Commerce Bank -
Fort Worth, N.A.)
By: /S/ Loren K. Jensen
Loren K. Jensen, Senior Vice President
(Print Name) (Print Title)
JUSTIN INDUSTRIES, INC., a
Texas corporation
FEATHERLITE BUILDING PRODUCTS CORPORATION, a
Delaware corporation
FEATHERLITE PRECAST
CORPORATION, a Texas corporation
JUSTIN MANAGEMENT COMPANY, a Delaware
corporation
ACME BRICK COMPANY, a Delaware corporation
ALPHA CARGO MOTOR EXPRESS, INC., a Texas
corporation
FOOTWEAR MANAGEMENT COMPANY, a Delaware
corporation
JUSTIN BELT COMPANY, a Texas corporation
H. J. JUSTIN & SONS, INC., a Texas
corporation
KINGSTIP, INC., a Delaware corporation
FOOTWEAR INVESTMENT COMPANY,
a Delaware corporation
BRICK INVESTMENT COMPANY, a
Delaware corporation
By: /S/ Richard J. Savitz
Richard J. Savitz
Vice President - Finance of All
JUSTIN MANAGEMENT COMPANY, L.P.,
a Delaware limited partnership
By: JUSTIN MANAGEMENT COMPANY,
General Partner
By: /S/ Richard J. Savitz
Richard J. Savitz
Vice President - Finance
ACME ROYALTY COMPANY, L.P., a
Delaware limited partnership
By: BRICK INVESTMENT COMPANY,
General Partner
By: /S/ Richard J. Savitz
Richard J. Savitz
Vice President - Finance
BOOT ROYALTY COMPANY, L.P., a
Delaware limited partnership
By: FOOTWEAR INVESTMENT
COMPANY, General Partner
By: /S/ Richard J. Savitz
Richard J. Savitz
Vice President - Finance
ACME ROYALTY COMPANY, a Delaware corporation
BOOT ROYALTY COMPANY, a Delaware corporation
J I COMPANY, a Delaware corporation
By: /S/ James Green
James Green, President of all
================================================================================
<TABLE>
ANNEX A
EXHIBIT "C"
<CAPTION>
% of Stock or
Partnership
Interest
Jurisdiction Owned by
of Borrower
Incorporation or a Direct
or Parent or Direct Parent
Subsidiary Name Entity Type Organization Partner or Partner
- - - --------------------- -------------- ------------- --------------- ------------------------
<S> <C> <C> <C> <C>
Acme Royalty Company Corporation Delaware 100% Borrower
Justin Management Corporation Delaware 100% Borrower
Company
Acme Brick Company Corporation Delaware 100% Borrower
Alpha Cargo Motor Delaware 100% Acme Brick Company
Express, Inc. Corporation
Boot Royalty Company Corporation Delaware 100% Borrower
Footwear Management Corporation Delaware 100% Boot Royalty Company
Company
Justin Belt Company, Corporation Texas 100% Footwear Management Company
Inc.
H. J. Justin & Sons, Corporation Texas 100% Footwear Management Company
Inc.
Featherlite Precast Corporation Texas 100% Borrower
Corporation
Featherlite Building Corporation Delaware 100% Borrower
Products Corporation
Kingstip, Inc. Corporation Delaware 100% Borrower
J I Company Corporation Delaware 100% Borrower
Brick Investment Corporation Delaware 100% Borrower
Company
Footwear Investment Corporation Delaware 100% Borrower
Company
Justin Management Limited Delaware 1% General Justin Management Company
Company, L.P. Partnership Partner
99% Limited J I Company
Partner
Acme Royalty Company, Limited Delaware 1% General Brick Investment Company
L.P. Partnership Partner
99% Limited Acme Royalty Company
Partner
Boot Royalty Company, Limited Delaware 1% General Footwear Investment Company
L.P. Partnership Partner
99% Limited Boot Royalty Company
Partner
</TABLE>
===============================================================================
(EXHIBIT 13)
(COVER)
(Illustration of brick home and picture of boots)
JUSTIN INDUSTRIES
1993 ANNUAL REPORT
===============================================================================
(INSIDE FRONT COVER)
Financial Highlights
% % %
1993 Change 1992 Change 1991 Change
- - - -------------------- -------- ------ -------- ------ -------- ------
Net Sales $474,931 +4.8 $453,267 +23.1 $368,350 +22.7
Income from
Continuing
Operations* 36,035 +33.0 27,093 +220.5 8,453 +11.6
Net Income 37,141 +37.1 27,093 +40.9 19,233 +163.7
Earnings Per Share
from Continuing
Operations* 1.29 +31.6 .98 +206.3 .32 +10.3
Earnings Per Share 1.33 +35.7 .98 +34.2 .73 +160.7
Return on
Shareholders'
Equity* 23.2% +9.4 21.2% +178.9 7.6% +6.9
Capital
Expenditures** 17,278 +43.9 12,006 +12.6 10,666 -15.7
Working Capital 185,193 +12.4 164,822 +8.7 151,588 +2.9
Total Assets 346,680 +9.6 316,368 +6.9 295,947 +1.0
Long-Term Debt 88,504 -11.8 100,362 -13.5 116,040 -7.0
Shareholders' Equity 188,803 +21.6 155,270 +21.7 127,549 +14.8
Book Value Per Share 6.95 +20.9 5.75 +17.0 4.92 +14.2
Cash Dividends Per
Share .16 +14.3 .14 +3.7 .135 ---
Average Number of
Shares Outstanding 27,953 +.7 27,772 +5.3 26,382 -.1
- - - -----------------------------------------------------------------------------
*continuing operations before in thousands,
cumulative effect on prior years except per share
of change in accounting for data
income taxes
**continuing operations
===============================================================================
(PAGE 1)
CORPORATE PROFILE
(Illustrations of brick and boot products are included on this page)
Justin Industries, headquartered in Fort Worth, Texas, is a leader in each of
its principal businesses:
BUILDING MATERIALS--with Acme Brick Company, one of the nation's largest
producers of face brick; Featherlite Building Products Corporation, the
Southwest leader in manufactured concrete building products; and Tradewinds
Technologies, Inc., producer of Tradewinds evaporative coolers for home and
light commercial applications.
FOOTWEAR--consisting of Justin Boot Company, Nocona Boot Company, and Tony Lama
Company, whose products give Justin Industries a national identity as the
preeminent producer of quality western boots. Northland Publishing, a
distinguished publisher of western and southwestern Americana, art, and Native
American culture, is also part of Justin Industries.
Justin Industries common stock is traded in the Nasdaq National Market
System using the symbol "JSTN."
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(PAGE 2)
TO OUR SHAREHOLDERS
(Ghosted image of boots, brick and block)
JUSTIN INDUSTRIES CONTINUED to post new records in both sales and earnings
in 1993. Consolidated net sales increased for the seventh consecutive year to a
new high of $474.9 million, and the 1993 net income of $37.1 million (which
includes an additional $1.1 million due to a required accounting change)
reflects an increase of 37 percent over 1992. Shareholders' equity in the
company increased by 22 percent, reaching $189 million at the close of the year.
Key to the company's success in 1993 was the Building Materials segment,
with the pace set by Acme Brick Company's outstanding performance. Acme posted a
banner year due to strong levels of brick shipments and sales of purchased
products, reflecting residential construction growth in the company's markets,
as well as improved pricing coupled with the efficiencies of increased
production. Featherlite Building Products Corporation and Tradewinds
Technologies, Inc. likewise contributed to the year's achievement, recording
gains in both sales and earnings. Featherlite's success was attributable to
further progress in improving cost efficiency, increased sales volume and market
share, and a renewal of non-residential construction, especially institutional
buildings, such as schools, where concrete block is a major component.
Tradewinds' unique evaporative cooling system continues to gain consumer
acceptance, adding to revenue and earnings, and with the introduction of a new
line of larger commercial units and a new single inlet unit designed for home
use, further increases should be realized in 1994.
While Building Materials' activity surged to levels not seen since 1984-85,
Footwear sales relaxed somewhat from the 20 percent annual growth rates of prior
years. Footwear results in 1993 were affected by the tentative level of sales
seen by other footwear manufacturers and throughout the apparel industry, as
retail customers were apparently apprehensive of the strength of the economy,
the prospects of higher taxes, and workforce reductions in many industries.
Earnings from Footwear operations contributed strongly to the company's overall
profitability, with gains expected in 1994 and subsequent years when all of the
synergistic benefits of the formation of Footwear Management Company are
realized. This organization--which brings together under one management
structure the operations of Justin Boot Company (including its Chippewa
division), Nocona Boot Company, and Tony Lama Company--will coordinate
advertising and promotional activities, purchasing, customer-related functions,
and other tasks, while continuing to capitalize on the individual brand
identities of Justin, Nocona, Tony Lama, and Chippewa products.
Additional domestic market share and distribution of footwear products to
foreign markets will be major objectives in 1994. Long-term growth, especially
in our core markets, continues as our credo in the Footwear business, as we
emphasized in our letter to you in the 1992 annual report.
================================================================================
(PAGE 3)
(Picture of Chairman and Chief Executive Officer, John Justin, and President and
Chief Operating Officer, J. T. Dickenson)
Justin Industries' financial condition was further strengthened in 1993.
Cash generated from operations enabled the company to reduce interest-bearing
debt by $16 million during the year, bringing indebtedness to the lowest level
in over three years.
Capital expenditures in 1993 were up $5.3 million from the prior year, and
it is expected that 1994 will see a further substantial increase, primarily at
Acme Brick Company, where one new brick plant is planned for construction. The
new plant, in one of the company's key market areas, will add much-needed
capacity at relatively low unit costs. A second key plant is targeted for major
improvements to increase its efficiency and enhance product quality.
Ben J. Fortson, who has ably served as a director of the company since
1991, has decided to not stand for reelection at the next annual meeting of
shareholders. Mr. Fortson indicated that the responsibilities and time
constraints in his own business led him to make this decision. We appreciate his
contributions to the company and its shareholders.
For 1994, we expect another strong year in the Building Materials area,
with Acme Brick Company leading the way with its robust market share, and
continued growth in its purchased products operations. We also expect that
continued growth in non-residential construction will enable Featherlite to
contribute at a meaningful level.
In the Footwear group, growth is expected to be maintained at an acceptable
level in our core business area, with added revenue gained from further
improvements in marketing the four major product lines: Justin, Tony Lama,
Nocona and Chippewa.
Justin Industries is poised in all segments of our business to capitalize
on our past investments, hard work, and experienced and dedicated workforce.
Although some uncertainties exist, especially concerning the growth of the
economy in 1994, we are prepared to take the actions required to continue the
company's success.
/S/ JOHN JUSTIN /S/ J. T. DICKENSON
JOHN JUSTIN J. T. DICKENSON
Chairman and Chief Executive Officer President and Chief Operating Officer
January 27, 1994
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(PAGE 4)
(Illustration of house showing brick/glass product with following caption:
"Justin's Building Materials segment surpassed previous records for revenues and
profitability in 1993 as all three operations posted impressive gains over
1992.")
================================================================================
(PAGE 5)
Report on Operations
BUILDING MATERIALS
(Picture of brick products and verbage, "Acme completed its 102nd year in
business, establishing a new all-time record volume for bricks shipped.")
JUSTIN INDUSTRIES' BUILDING MATERIALS segment surpassed previous records
for revenues and profitability in 1993 as all three operations--Acme Brick
Company, Featherlite Building Products Corporation, and Tradewinds Technologies,
Inc.--posted impressive gains over 1992.
Acme completed its 102nd year in business, establishing a new all-time
record volume for bricks shipped, exceeding the prior record set in 1992. With
manufacturing plants operating at or near capacity and delivery capability well
utilized, it was possible to continue firming prices, resulting in all-time
record profits. Acme's purchased products division also set new records for
sales through the company's seven-state retail distribution system. Significant
gains were achieved for ceramic tile, glass block, bagged goods, fireplace
equipment, glazed products, mortar color, and pavers. High-quality new products
are continually being added to the purchased products category, giving Acme the
opportunity to increase sales when brick manufacturing is at capacity.
With a market share in Acme's sales territory estimated at over 50 percent,
constant attention to advertising and brick promotional programs is essential.
Publicity and advertising continued to establish Acme's brand awareness among
architects, homebuilders, and consumers. One of the current advertising
campaigns features Pro Bowl quarterback Troy Aikman as spokesman for Acme in all
of its major markets.
Brick profit margins rose dramatically in 1993. While higher selling prices
were the primary reason for margin gains, cost controls also positively affected
earnings. Natural gas fuel, a major manufacturing cost component, was
significantly reduced in 1993. This reduction has been the result of not only an
ongoing energy management program, but also operating all facilities at virtual
full capacity, and realizing the effects of new fuel-efficient facilities
constructed in the last seven years. While fuel costs have risen during the same
period, efficiencies have minimized their impact. Ongoing programs of equipment
maintenance and upgrades
================================================================================
(PAGE 6)
are important elements of effective production management. Capital improvements
continue at existing facilities throughout the system. One of the more
significant items was the replacement of existing brick extruders at the Denton
plant with the largest available state-of-the-art machines. These additions will
provide lower operating costs per brick produced as well as increased operating
efficiencies.
Residential housing starts rose in Acme's market territory in 1993, and
further gains are anticipated in 1994. To meet demand, production levels will be
increased where possible, and both delivery capability and the purchased
products division will be expanded.
(Ghosted image of building block, Featherlite logo, picture of block & brick,
verbage, "Featherlite Building Products Corporation had its best year since
1986.")
Featherlite Building Products Corporation had its best year since 1986, as
non-residential construction levels increased in most of the company's market.
Non-residential construction in 1993 was made up largely of institutional
building, such as that of schools and prisons, and commercial "low-rise"
construction, such as that of retail outlets, manufacturing facilities, and
warehouses. Institutional construction has steadily increased in recent years
and was again a significant part of the market in 1993. An increase in
construction along the Mexican border, where business activity has increased in
anticipation of NAFTA, also contributed to the market improvement.
Featherlite continually searches for ways to grow profitably. During 1993,
construction of a new concrete mix bagging operation in El Paso was completed,
more than doubling capacity. This addition will solidify Featherlite's position
as the leading supplier of bagged goods in the El Paso and southern New Mexico
area. A concrete brick and paver machine will be added to this facility in 1994,
further enhancing its product line. The new machine will enable the El Paso
location to offer popular colors and textures of brick, pavers, and patio stones
at competitive prices.
In an effort to improve product quality and service to customers, and to
enhance the working environment, Featherlite embarked on a program of total
quality management (TQM) during 1993. Through a partnership with customers,
employees, and suppliers, Featherlite's goal is to achieve total customer
satisfaction by providing the highest quality products and services. A key
element to the success of the TQM program is the inclusion of employees in the
decision-making process as it involves their jobs. The area of workplace safety
provides a good example of how successful this program can be. Safety committees
made up of non-management personnel have elevated safety awareness to new
heights. In 1993, there were only two lost-time accidents in all of
Featherlite's twelve locations, the best record in the history of the company.
================================================================================
(PAGE 7)
Texas Quarries, Featherlite's architectural limestone division, continues
to improve profit margins through selective bidding and increased efficiency of
its operations. Additions and improvements to its manufacturing facilities were
made during 1993, including a new high-speed limestone slabbing saw. This new
saw replaced old and inefficient gangsaws, increased production capacity, and
improved flexibility for production scheduling. Split-face limestone automation
was also installed, increasing production capacity by 75 percent and lowering
labor costs.
Featherlite begins 1994 with an optimistic outlook. Forecasts for growth of
non-residential construction are good. With its continued emphasis on market
share, product quality, and production efficiency, Featherlite should have a
very successful 1994.
(Ghosted image of Tradewinds evaporative cooler, Tradewinds logo, picture of
building block and verbage, "At Tradewinds, plant productivity improvements,
lower operating costs, and increased unit sales enabled the company to achieve
record profitability in 1993.")
At Tradewinds Technologies, Inc., plant productivity improvements, lower
operating costs, and increased unit sales enabled the company to achieve record
profitability in 1993. Increases in unit sales were attributed primarily to the
retail segment of the market. Continued advertising and promotion by Tradewinds
and its distributors have created more visibility and consumer awareness.
Consumer trends toward purchases of more durable and lower maintenance products
also helped bolster sales. Purchases for government buildings and housing
authorities also increased in 1993.
Continued promotion of evaporative cooling as an alternative to
conventional air conditioning and as a practical solution to the indoor air-
quality issue has begun to be supported by utilities and regulatory agencies. As
the indoor air-quality (or sick building) issue continues to draw more
attention, evaporative cooling equipment will become more important to the
design and construction of both residential and commercial structures.
Tradewinds recently introduced a new line of larger commercial units. These
new units range from 8,000 to 18,000 CFM (cubic feet per minute) and are
designed for both retro-fit and new commercial buildings. These units have
generated significant customer interest and are expected to bolster sales in
1994.
The company has continued to stress quality and service in order to support
its distinction of being the maker of the highest quality evaporative air
conditioning product on the market. The non-rust, low-maintenance features of
the Tradewinds units have no equal in competitive products. With the expanded
product line and a firm backlog of orders, Tradewinds' prospects for 1994 are
very encouraging.
================================================================================
(PAGE 8)
(Illustration of bull rider and caption, "The continuing success of Justin,
Nocona, and Tony Lama over the years is attributable to the highest standards of
quality in their products and customer service.")
================================================================================
(PAGE 9)
Report on Operations
FOOTWEAR
(Picture of boots and Justin boot box and caption, "Effective product
development programs are essential for maintaining Justin Industries' leadership
position in the western boot industry.")
JUSTIN INDUSTRIES' FOOTWEAR operations, consisting of Justin Boot Company,
Nocona Boot Company, and Tony Lama Company, experienced a challenging year in
1993. Changing market conditions in the western boot and apparel business, along
with caution in retail spending nationally, contributed to a flattening of the
double-digit growth rates of recent years.
While the popularity of country and western music and apparel continued to
expand in 1993, consumer concerns over higher taxes and the uncertain direction
of the national economy had a softening effect on retail in general. During the
year, the footwear and apparel industries were no exception; however, the steady
and reliable demand for the companies' products in the core western markets
offset any weakness experienced elsewhere and enabled the Footwear group to
achieve record-high sales once again for 1993.
The continuing success of Justin, Nocona, and Tony Lama over the years is
attributable to the highest standards of quality in their products and customer
service. Each company continually strives to achieve improvements in all areas
of operations. In manufacturing, for example, further equipment upgrades were
made in 1993 to improve production efficiencies. At Tony Lama, plans are
underway to install a "transporter" system in the factory to improve efficiency
and reduce cost. This state-of-the-art system has previously been installed in
certain Justin factories. During 1993, Nocona
================================================================================
(PAGE 10)
continued its move to a modular manufacturing concept. In addition, a new
leather-cutting system was installed, resulting in significant material yield
gains and cost savings. Programs on safety, ergonomics, and environmental
awareness are reviewed regularly to further enhance their effectiveness.
(Ghosted image of boots, picture of boots and Nocona boot box and verbage,
"Advertising and promotional programs develop and maintain customer awareness of
Justin's Footwear brands and encourage dealers to sell the companies'
products.")
Effective product development programs are essential for maintaining Justin
Industries' leadership position in the western boot industry. Constant attention
to styling and new leathers are key elements of these programs at all three
companies. In 1993, Justin, Nocona, and Tony Lama introduced soft tanned
leathers to bring a new texture and visual appeal to the product lines. Along
with distressed rugged leathers, these new styles quickly became top-selling
products. Other new leathers and styles are currently being test-marketed with
very encouraging results. To capitalize on the growth of the leisure shoe
market, Justin expanded its Chippewa line and doubled production. Chippewa
experienced exceptional growth in 1993, and the outlook for future gains is
positive. The lower-priced Diamond J line has been redesigned for 1994 to
include some of the new high-demand leathers used in other products.
Advertising and promotional programs develop and maintain customer
awareness of Justin's Footwear brands and encourage dealers to sell the
companies' products. A key element of this strategy is participation and
visibility at rodeos and other sporting events. The "Justin Healer" medical and
rehabilitation program is nationally recognized for its outstanding work. This
fully equipped mobile sports medicine facility travels the rodeo circuit,
tending to the needs of injured contestants. Justin is also the proud sponsor of
the Cowboy Crisis Fund, which has been established to assist needy cowboys.
Nocona's trademark "Let's Rodeo" is displayed through its January 1994
sponsorship of the IPRA Longhorn World Championship Rodeo. Tony
================================================================================
(PAGE 11)
Lama has received favorable consumer reaction to its highly successful "Lama
Vision" video replay screens, which travel the major rodeo circuits throughout
the country. In another innovative effort at promoting the Tony Lama name, the
company now sponsors the Tony Lama Human Performance Center for Motor Sports, a
mobile facility providing on-site conditioning and rehabilitation training to
drivers, crews, and officials at NASCAR and Indycar series auto racing events.
The companies also participate heavily with dealers in cooperative newspaper,
billboard, radio, and television advertising programs.
(Ghosted image of boots, picture and boots and Tony Lama boot box and verbage,
"Studies are ongoing to maximize efficiencies while maintaining the identity and
integrity of the separate brand names and products.")
To provide additional coordination among the companies, to capitalize on
available synergies, and to facilitate the implementation of long-range goals
and objectives of the Footwear group, several organizational changes were made
during 1993. Frank Scivetti, president of Tony Lama since its acquisition in
1990, was promoted to chief executive of the Footwear segment. Also, actions
have been taken to coordinate advertising and promotion, purchasing, and certain
customer-related functions. In addition, studies are ongoing in other
operational areas to maximize efficiencies while maintaining the identity and
integrity of the separate brand names and products. Justin, Nocona, and Tony
Lama have developed strategic plans individually and as a group to help assure
their continued success. Among the components of their long-term strategic plans
are steps to improve profit margins by further development of synergies;
additional penetration of domestic markets; and coordinated promotion and
distribution of footwear to foreign countries.
The Justin Industries Footwear operations are managed by a focused group of
talented individuals, and with the benefit of a hard-working and dedicated group
of employees, the future of this segment is bright.
================================================================================
(PAGE 12)
(Illustrated collage of financial documents with caption, "In 1993, Justin
Industries once again set records for earnings and revenues. These excellent
operating results further strengthened the company's financial condition.")
================================================================================
(PAGE 13)
FINANCIAL DISCUSSION
(Five year graph of Net Sales by Line of Business)
Justin Industries once again set records for revenues and earnings in 1993
as the company's Building Materials segment provided operating profits almost
double those of 1992 and significantly greater than the previous high in 1984
when construction levels were at their peak. Results in the company's Footwear
operations were relatively unchanged in 1993 from the all-time highs established
in 1992. While Footwear sales were slightly above the prior year, operating
profits declined 5%.
The table on page 30, "Quarterly Financial Data," presents summarized
operating results for each quarter in the two years ended December 31, 1993. As
noted, earnings increased in each quarter in 1993 and were also significantly
ahead of the comparable quarter in 1992. These results follow the normal
seasonal pattern of the company's businesses. As with earnings, revenues
increased each quarter in 1993, and with the exception of the fourth quarter,
exceeded the comparable quarterly periods of 1992. In 1993, quarterly revenues
in the Building Materials segment exceeded those of 1992 by 12-14%. While
Footwear revenues in the first and second quarter of 1993 exceeded the
comparable periods of 1992, uncertain retail markets resulted in lower sales in
the last half of 1993 versus the prior year.
OPERATIONS
In 1993, consolidated net sales of $474.9 million represented an increase
of 4.8% over 1992. Revenues of $453.3 million in 1992 were 23.1% above those
recorded in 1991.
Revenues in the company's Building Materials segment reached $179.7 million
in 1993, up 13.2% over the prior year, following an increase of 29.1% in 1992
over 1991. All three Building Materials businesses--Acme Brick Company,
Featherlite Building Products Corporation, and Tradewinds Technologies, Inc.--
posted sales gains in 1993. Acme's sales improved 14.7% in 1993 over 1992 as
unit
================================================================================
(PAGE 14)
brick shipments increased 1.4% and average pricing rose almost 11%. In addition,
sales of purchased products grew approximately 15% in 1993. Acme's revenue gains
in 1992 of 33% over the previous year were due to selling 25% more brick than in
1991 at prices approximately 6% in excess of the prior year. Featherlite's
revenues grew almost 9% in 1993 over 1992, following a 20% gain in 1992 from the
prior year. Featherlite's gains in both years are attributable to rising unit
concrete block sales as pricing has remained virtually unchanged over the last
few years. Tradewinds, which represents only about 3% of segment sales, has
realized modest revenue gains over the last few years due to increased unit
cooler sales.
(Five year graph of Income from Continuing Operations (before effect of
accounting change))
(Five year graph of Net Income)
Following five consecutive years of double-digit Footwear revenue growth,
sales in this segment in 1993 increased less than 1% over 1992. An increase of
almost 2% in the number of pairs sold was offset by a slightly lower average
selling price in 1993. The lower price was due to more rapid growth in the
Chippewa line, which is generally priced lower than western boots. In 1992,
Footwear sales exceeded those of the prior year by 20%. Approximately 16% of
this increase was due to additional unit sales, with the remainder from average
price increases and product mix changes.
Justin Industries' Building Materials business operates primarily in an
eight-state region in the central and southwestern United States, while Footwear
segment sales are made to customers nationwide.
As a percentage of net sales, cost of goods sold was 66.2%, compared with
69.3% in 1992 and 70.8% in 1991. The significant improvement in the last two
years is primarily attributable to the Building Materials operations. Rising
levels of residential construction over the last few years have enabled the
company's brick operations to gradually increase selling prices during this
period. These price increases have greatly increased gross profit margins as the
costs of manufacturing brick in 1993 were generally unchanged from 1992. In
1993, the Building Materials' gross profit margin increased to 39.4% from 31.7%
in 1992 and 30.9% in 1991. Brick pricing has been the primary reason for the
increase, although in 1993, both Featherlite's and Tradewinds' margins improved,
due mainly to volume gains, following two years of relatively unchanged gross
profit levels.
Footwear gross profit margins were 30.3% in 1993, 30.2% in 1992, and 28.3%
in 1991. Gross profit margins in 1993 changed little from the prior year as
sales volume was relatively flat. The improvement in 1992's gross profit margin
from 1991 was due to gains at Tony Lama resulting from changes in manufacturing
systems.
Selling, general, and administrative expenses were 21.2% of net sales in
1993, compared to 20.2% in 1992 and 22.8% in 1991. The increase in 1993 was due
mainly to increased expenditures in Footwear operations for promotion and
cooperative advertising programs with dealers while 1992's decline was
attributable to that year's significant increase in revenues. While selling
costs generally fluctuate with sales levels, administrative expenses are
primarily fixed in nature. Included in such costs in 1991 were approximately
$1.1 million of expenses incurred to defend and settle litigation related to a
hostile takeover attempt of the company.
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(PAGE 15)
(Five year graph of Capital Expenditures)
(Five year graph of Interest-Bearing Debt)
Interest expense in 1993 was $4.0 million compared to $5.2 million in 1992
and $9.5 million in 1991. The declining costs over this period are due to
reduced borrowing levels and lower prevailing interest rates. The average
effective interest rate on interest-bearing debt in 1993 was 3.9%, compared with
4.6% in 1992 and 6.8% in 1991. Note 5 to the Consolidated Financial Statements
on page 22 describes the company's borrowing arrangements.
Income tax expense from continuing operations as a percentage of pre-tax
income was 35.7% in 1993, 36.1% in 1992, and 38.4% in 1991. The federal
statutory tax rate was increased to 35% in 1993 from 34% in 1992 and 1991. See
Note 8 to the Consolidated Financial Statements on page 25 for a reconciliation
of the actual tax rate to the federal statutory tax rate and other information
relating to income tax.
In the first quarter of 1993, the company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." This statement,
issued in 1992, established new financial accounting reporting standards for the
effect of income taxes that result from the company's activities during the
current and preceding years. A credit to net income of $1.106 million was
realized in 1993, resulting from the cumulative effect of the change in
accounting for income taxes under the new statement.
Inflation has not had a significant impact on the company's operations in
recent years; however, the company attempts to recover any cost increases
through improvements to its manufacturing processes and through price increases
where competitively feasible.
FINANCIAL CONDITION, CASH FLOW, AND LIQUIDITY
Excellent operating results and continued emphasis on asset management
generated further strengthening of the company's financial condition in 1993. At
year-end 1993, interest-bearing debt had declined to $93.4 million, the lowest
level since September 1990, just prior to the acquisition of Tony Lama Company.
Shareholders' equity grew to $188.8 million from $155.3 million at the end of
1992. The reduced debt levels and increased equity resulted in significant
reductions in the company's debt-to-equity ratios. The ratio of long-term debt
to equity stood at .47 to 1 at year-end 1993 compared to .65 to 1 at December
31, 1992. Working capital at year-end 1993 reached $185.2 million, bringing the
current ratio to 4.4 to 1 versus 4.0 to 1 in the previous year.
In 1993, net cash provided by operating activities totaled $42.8 million,
compared to $18.7 million and $7.3 million in 1992 and 1991, respectively. The
major uses of cash flow provided from operating activities were to reduce debt
levels, increase working capital, invest in capital equipment, and pay
dividends. Among the more significant additions to fixed assets in 1993 was the
mid-year expansion of the Denton, Texas, brick plant. This addition to Acme's
largest plant added approximately 3% to total brick production capacity. The
company plans to increase capital spending again in 1994 to further add brick
manufacturing capacity,
================================================================================
(PAGE 16)
upgrade sales locations, and enhance production efficiency in the Footwear
operations.
(Five year graph of Shareholders' Equity)
(Five year graph of Book Value Per Share)
For the second consecutive year and third time in the last four years,
dividends were increased. The 1993 increase in rate was approximately 14% and
reflects management's optimistic outlook towards the prospects of continued
success in the company's operations. Management and the Board of Directors
regularly review dividend rates, and changes are considered based on the
company's current and expected operating results and financial condition.
The company's primary source of cash is from operations. In addition, the
company has credit facilities available from commercial banks. The company
believes that its borrowing arrangements are adequate to support its
requirements for the foreseeable future. Unused lines of credit available to the
company at December 31, 1993, were $42 million.
BACKLOGS
The company maintains information on sales backlogs in order to plan for
future production levels and to project sales volume. At December 31, 1993, the
backlog for clay brick was $26.0 million, compared with $21.9 million at year-
end 1992. The sales backlog for Footwear products at year-end 1993 was $15.9
million, compared with $18.8 million in 1992.
MANAGEMENT'S RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS
The Consolidated Financial Statements for Justin Industries, Inc. and its
subsidiaries are prepared by the company in conformity with consistently
applied, generally accepted accounting principles. Management selects
appropriate accounting principles, makes necessary estimates, and uses its
judgment to ensure the objectivity, accuracy, and integrity of the data
presented. The company has established and maintains systems of management
reporting and internal controls that are designed to provide reasonable
assurance that company policies are followed and that company assets are
safeguarded. These systems are constantly monitored and revised where necessary
to meet changing requirements and to strengthen controls while maintaining a
cost-effective method of providing credible and timely information necessary to
the operations of Justin Industries.
The Board of Directors carries out its oversight responsibility for the
financial statements through its Audit Committee. This committee is composed of
directors who are neither officers nor employees of the company. The committee
meets periodically with the independent auditors and representatives of
management to assure that each is carrying out its responsibilities. To ensure
the integrity of the Audit Committee function, the company's outside auditors
have complete access to the committee, without company representatives present.
The results of their audits and their reviews of the adequacy of internal
controls and the quality of financial reporting are freely discussed during
these conferences.
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(PAGE 17)
BALANCE SHEET TRENDS
Percent of Total Assets
Assets: 1993 1992 1991 1990 1989
- - - -------------------------------- ----- ----- ----- ----- -----
Receivables 22% 26% 24% 25% 24%
Inventories 42 41 41 40 37
Property, plant, and equipment 23 24 27 29 31
All other assets 13 9 8 6 8
----- ----- ----- ----- -----
100% 100% 100% 100% 100%
===== ===== ===== ===== =====
Liabilities and Equity:
- - - --------------------------------
Interest-bearing debt 27% 35% 40% 43% 28%
All other liabilities 19 16 17 19 22
Equity 54 49 43 38 50
----- ----- ----- ----- -----
100% 100% 100% 100% 100%
===== ===== ===== ===== =====
OPERATING TRENDS
Percent of Net Sales
1993 1992 1991 1990 1989
- - - ---------------------------------- ------- ------- ------- ------- -------
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales 66.2 69.3 70.8 70.4 71.1
------- ------- ------- ------- -------
Gross profit 33.8 30.7 29.2 29.6 28.9
Operating expenses 22.0 21.4 25.4 25.9 25.9
Income taxes 4.2 3.3 1.4 1.2 .9
------- ------- ------- ------- -------
Income from continuing operations 7.6 6.0 2.4 2.5 2.1
Discontinued operations --- --- 2.8 (.1) .7
Cumulative effect on prior years
of change in accounting for
income taxes .2 --- --- --- ---
------- ------- ------- ------- -------
Net income 7.8% 6.0% 5.2% 2.4% 2.8%
======= ======= ======= ======= =======
<TABLE>
FIVE YEAR ANALYSIS OF SALES AND OPERATING PROFIT FROM CONTINUING OPERATIONS BY PRODUCT LINES
(in thousands of dollars)
<CAPTION>
1993 1992 1991 1990 1989
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Building Materials:
Net sales $179,740 38% $158,808 35% $123,004 33% $118,943 40% $113,662 44%
Operating profit 31,445 48 16,423 31 4,979 18 3,698 17 604 4
Footwear:
Net sales 295,191 62 294,459 65 245,346 67 181,370 60 142,707 56
Operating profit 34,168 52 36,054 69 22,934 82 17,748 83 15,650 96
-------- ---- -------- ---- -------- ---- -------- ---- -------- ----
Totals:
Net sales $474,931 100% $453,267 100% $368,350 100% $300,313 100% $256,369 100%
Operating profit $ 65,613 100% $ 52,477 100% $ 27,913 100% $ 21,446 100% $ 16,254 100%
Less interest and
parent company
operations 9,583 10,080 14,180 10,173 8,541
-------- -------- -------- -------- --------
Income from
continuing
operations before
income taxes and
cumulative effect
on prior years of
change in
accounting for
income taxes $ 56,030 $ 42,397 $ 13,733 $ 11,273 $ 7,713
======== ======== ======== ======== ========
</TABLE>
================================================================================
(PAGE 18)
CONSOLIDATED BALANCE SHEET
In Thousands of Dollars, Except Share Data, at
December 31, 1993 1992
-------- --------
ASSETS
Current assets:
Cash $10,587 $2,393
Accounts receivable, less allowance for doubtful
accounts of $3,014 and $3,054, respectively 76,966 82,464
Inventories 145,274 128,197
Federal and state income taxes 5,750 3,944
Prepaid expenses 1,517 1,941
-------- --------
Total current assets 240,094 218,939
Investments and other assets, at cost 20,793 14,270
Assets held for sale 5,523 6,615
Property, plant, and equipment, at cost:
Land 16,658 16,735
Buildings and equipment 196,575 184,946
Construction in progress 2,206 520
-------- --------
215,439 202,201
Less accumulated depreciation 135,169 125,657
-------- --------
Net property, plant, and equipment 80,270 76,544
-------- --------
$346,680 $316,368
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Notes payable to banks $ - $5,000
Trade accounts payable 16,088 14,467
Accrued payroll items 7,702 6,952
Accrued insurance 14,594 11,442
Accrued state and local taxes 1,784 2,244
Other accrued expenses 8,742 8,966
Dividends payable 1,086 945
Current portion of long-term debt 4,905 4,101
-------- --------
Total current liabilities 54,901 54,117
Long-term debt, less current portion 88,504 100,362
Deferred income taxes 14,472 6,619
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 and 13,934,944
shares issued, respectively 69,674 34,837
Capital in excess of par value 17,047 16,510
Retained earnings 108,038 110,072
Treasury stock, at cost, 713,402 and 435,535
shares, respectively (5,956) (5,899)
ESOP loan guarantee - (250)
-------- --------
Total shareholders' equity 188,803 155,270
-------- --------
$346,680 $316,368
======== ========
See accompanying notes.
================================================================================
(PAGE 19)
CONSOLIDATED STATEMENT OF INCOME
In Thousands of Dollars, Except Per Share Data,
for Years Ending December 31, 1993 1992 1991
-------- -------- --------
Net sales $474,931 $453,267 $368,350
Costs and expenses:
Cost of goods sold 314,431 313,961 260,968
Selling, general, and administrative expenses 100,465 91,695 84,167
Interest expense 4,005 5,214 9,482
-------- -------- --------
418,901 410,870 354,617
-------- -------- --------
Income from continuing operations before income
taxes and cumulative effect on prior years of
change in accounting for income taxes 56,030 42,397 13,733
Income taxes 19,995 15,304 5,280
-------- -------- --------
Income from continuing operations before
cumulative effect on prior years of change
in accounting for income taxes 36,035 27,093 8,453
Discontinued operations:
Income from discontinued operations, net of
taxes of $527 - - 955
Gain on sale of discontinued operations, net
of taxes of $4,931 - - 9,825
-------- -------- --------
Income from discontinued operations - - 10,780
Cumulative effect on prior years of change in
accounting for income taxes 1,106 - -
-------- -------- --------
Net income $37,141 $27,093 $19,233
======== ======== ========
Earnings per share:
Continuing operations before cumulative
effect on prior years of change in
accounting for income taxes $1.29 $.98 $.32
Discontinued operations - - .41
Cumulative effect on prior years of change in
accounting for income taxes .04 - -
-------- -------- --------
$1.33 $.98 $.73
======== ======== ========
See accompanying notes.
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
In Thousands of Dollars, Except Share Data, for Capital
Years Ending on December 31, 1993, 1992, and 1991 in excess ESOP loan
Preferred Common of par Retained Treasury guaran-
stock stock value earnings stock tee
--------- --------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1991 $ - $23,225 $12,359 $82,528 $(6,227) $ (750)
----- ------- ------- ------- ------- ------
Purchase of 5,068 shares of stock for treasury - - - - (72) -
Issuance of 43,815 shares of stock from treasury
upon exercise of stock options - - 50 - 403 -
Repayment of ESOP debt - - - - - 250
Net income - - - 19,233 - -
Cash dividends declared -- $.135 per share - - - (3,450) - -
----- ------- ------- ------- ------- ------
Balance December 31, 1991 - 23,225 12,409 98,311 (5,896) (500)
----- ------- ------- ------- ------- ------
Issuance of 4,644,789 shares in connection
with a 3-for-2 stock split effected in the form
of a 50% stock dividend - 11,612 - (11,612) - -
Purchase of 161,336 shares of stock for treasury - - - - (5,276) -
Issuance of 691,714 shares of stock from treasury
upon exercise of stock options - - 4,101 - 5,273 -
Repayment of ESOP debt - - - - - 250
Net income - - - 27,093 - -
Cash dividends declared -- $.14 per share - - - (3,720) - -
----- ------- ------- ------- ------- ------
Balance December 31, 1992 - 34,837 16,510 110,072 (5,899) (250)
----- ------- ------- ------- ------- ------
Issuance of 13,934,944 shares in connection with
a 2-for-1 stock split effected in the form of
a 100% stock dividend - 34,837 - (34,837) - -
Purchase of 92,355 shares of stock for treasury - - - - (1,886) -
Issuance of 250,023 shares of stock from treasury
upon exercise of stock options - - 537 - 1,829 -
Repayment of ESOP debt - - - - - 250
Net income - - - 37,141 - -
Cash dividends declared -- $.16 per share - - - (4,338) - -
----- ------- ------- ------- ------- ------
Balance December 31, 1993 $ - $69,674 $17,047 $108,038 $(5,956) $ -
===== ======= ======= ======== ======= ======
<FN>
See accompanying notes.
</TABLE>
================================================================================
(PAGE 20)
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands of Dollars
for Years Ending on December 31, 1993 1992 1991
------- ------- -------
Cash Flows from Operating Activities:
Net income $37,141 $27,093 $19,233
Adjustments to reconcile net income to cash
provided by operating activities:
Cumulative effect of change in accounting
method for income taxes (1,106) - -
Depreciation 13,473 13,837 12,818
Provision for losses on accounts receivable 1,004 1,613 1,564
Gain on sale of property, plant, and
equipment (589) (327) (201)
Deferred income taxes (2,566) (3,188) (901)
Gain on sale of discontinued operations,
net of taxes - - (9,825)
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable 4,494 (14,254) (1,758)
Increase in inventories (17,077) (7,850) (7,307)
(Increase) decrease in other current assets 3,042 (1,263) 1,392
Increase (decrease) in accounts payable
and accrued expenses 4,839 3,057 (7,723)
Effect of adoption of SFAS No. 109 107 - -
------- ------- -------
Net cash provided by operating activities 42,762 18,718 7,292
Cash Flows from Investing Activities:
Proceeds from the sale of property, plant,
and equipment 1,080 664 484
Purchase of property, plant, and equipment (17,278) (12,006) (11,017)
(Increase) decrease in investments and other
assets (including reclassifications) 1,151 (178) 195
Payment for purchase of business, net of
cash acquired - - (1,500)
Proceeds from sale of discontinued operations - - 20,000
------- ------- -------
Net cash provided by (used in) investing
activities (15,047) (11,520) 8,162
Cash Flows from Financing Activities:
Borrowings 41,058 30,000 55,500
Repayment of borrowings (56,862) (39,389) (65,261)
Dividends paid (4,197) (3,639) (3,447)
Purchase of treasury stock (1,886) (5,276) (72)
Proceeds from exercise of stock options 2,366 9,374 453
------- ------- -------
Net cash used in financing activities (19,521) (8,930) (12,827)
------- ------- -------
Net increase (decrease) in cash 8,194 (1,732) 2,627
Cash at beginning of year 2,393 4,125 1,498
------- ------- -------
Cash at end of year $10,587 $ 2,393 $ 4,125
======= ======= =======
Supplemental Disclosures of Cash Information:
Cash paid during the year for:
Interest $ 4,335 $ 4,995 $ 8,813
Income taxes, net of refunds $17,801 $17,899 $ 1,269
Supplemental Schedule of Non-Cash Investing
and Financing Activities:
Purchase of business (See Note 3):
Fair value of assets acquired $ - $ - $ 4,527
Cash paid for assets and related costs - - (1,500)
Subordinated debt issued - - (2,927)
------- ------- -------
Liabilities assumed $ - $ - $ 100
Decrease in ESOP Loan Guarantee $ (250) $ (250) $ (250)
======= ======= =======
See accompanying notes.
================================================================================
(PAGE 21)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ending on December 31
1. Summary of Significant Accounting Policies
A summary of the company's significant accounting policies is presented to
assist the reader in evaluating the financial statements and other information
contained in this report. Certain reclassifications have been made in December
31, 1992 and 1991 amounts to conform with the 1993 presentation.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the company and its subsidiaries. All material intercompany
accounts and transactions are eliminated upon consolidation.
INVENTORIES. Inventories are valued at the lower of cost or market.
Finished products and work-in-process are costed using an average cost method,
while raw materials and manufacturing supplies are costed on the first-in,
first-out method.
PROPERTY, PLANT, AND EQUIPMENT. Depreciation is computed principally by the
straight-line method for financial reporting purposes. The annual depreciation
provision has been based upon the following estimated lives:
Buildings 10 to 33 years
Equipment 3 to 20 years
REVENUE RECOGNITION. Revenue from sale of manufactured products is
recognized primarily upon passage of title to the customer, which generally
coincides with physical delivery and acceptance. Revenue from large, long-term
contracts, included in discontinued operations, was recognized by the
percentage-of-completion method.
EARNINGS PER SHARE. Earnings per share is determined by dividing net income
by the average number of common shares outstanding, plus common stock
equivalents. Common stock equivalents include shares issuable under outstanding
stock options reduced by shares assumed to be purchased from the proceeds of
such options upon exercise and the effect of the possible conversion of the
voting preferred stock. Earnings per share, as presented, is both primary and
fully diluted.
PENSION AND EMPLOYEE BENEFIT PLANS. The company and its subsidiaries have
pension plans for the benefit of substantially all employees. Benefits are
primarily based on years of service and the employees' average compensation
during the last five years of employment. The company's policy is to fund
pension cost accrued, but not in excess of the maximum allowable deduction for
federal income tax purposes.
Proceeds from common stock issued pursuant to the company's employee stock
option plans are credited to common stock or treasury stock and capital in
excess of par value at the time an option is exercised. No charges are made
against income in accounting for stock options.
The company has no postretirement health benefits and, therefore, realizes
no effect from recent accounting requirements under Statement of Financial
Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions."
================================================================================
(PAGE 22)
STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash
includes cash on hand and unrestricted time deposits that have an original
maturity of three months or less.
2. Discontinued Operations
On November 27, 1991, the company entered into an agreement to sell
substantially all of the net assets of its subsidiary, Ceramic Cooling Tower
Company, for $20,000,000. The sale was completed on December 31, 1991. The
company will continue to be liable for certain warranty and other claims.
Management believes adequate provision has been made to cover such future
obligations. In December 1987, the company adopted a plan to discontinue
operations of its precast/prestressed concrete business (Featherlite Precast
Corporation) and its earthmoving and roadbuilding equipment business (MEGA
Equipment Company).
Phase-out costs incurred in 1993 and 1992 related to discontinued
operations and charged to reserves amounted to approximately $272,000 and
$337,000, respectively, net of taxes. At December 31, 1993, management estimates
that no additional reserves are necessary since the estimated gain on disposal
of remaining assets is sufficient to absorb costs incurred in excess of previous
estimates and future phase-out costs associated with the remaining assets.
At December 31, 1993 and 1992, identifiable assets of all discontinued
operations amounted to $4,992,000 and $5,455,000, respectively. Such assets
remaining at December 31, 1993, relate primarily to the net realizable value of
idled facilities and long-term notes receivable. It is the company's intent to
sell the idled facilities to third parties. Revenues from discontinued
operations in 1993, 1992, and 1991 amounted to $0, $0, and $14,563,000,
respectively.
Assets held for sale represents certain properties from discontinued
operations and facilities no longer used in other businesses.
3. Acquisition
On October 7, 1991, the company purchased the brick manufacturing operations of
Elgin-Butler Brick Company. The total purchase price of the acquisition was
approximately $4,527,000. Operations of the business, which are immaterial to
consolidated operations, are included in the Consolidated Statement of Income
from date of acquisition.
4. Inventories
Inventories include the following:
(in thousands of dollars)
1993 1992
-------- --------
Finished products $103,261 $ 94,485
Work-in-process 9,971 9,847
Raw materials and supplies 32,042 23,865
-------- --------
$145,274 $128,197
======== ========
5. Borrowings
Long-term debt consists of the following:
(in thousands of dollars)
1993 1992
-------- --------
Revolving credit loans $ 40,000 $ 46,000
Term loans 30,000 33,000
Industrial Revenue Bonds 18,745 19,555
Notes payable to banks 4,500 5,500
Other, unsecured 164 408
-------- --------
93,409 104,463
Less current portion 4,905 4,101
-------- --------
$ 88,504 $100,362
======== ========
The company may borrow up to a total of $72,000,000 in revolving credit
loans pursuant to an agreement among five commercial banks originally entered
into in May 1989. The revolving credit loans are repayable beginning in April
1996 when outstanding amounts are converted to term loans payable over four
years. The conversion date may be extended annually for an additional twelve
months by consent of all participating banks.
The $30,000,000 term loan is an agreement among four commercial banks
providing for annual principal reductions that began in November 1992 of
$2,000,000, increasing $1,000,000 each year thereafter until 1998 when the final
payment is due.
Borrowings under the revolving credit and term loan agreements bear
interest at rates determined on certain margins based on prime, certificates of
================================================================================
(PAGE 23)
deposit, and Eurodollar auction rates. Interest on all of these borrowings at
December 31, 1993 was based on Eurodollar auction rates in effect at the time of
origination plus 62.5 basis points and averaged 4%. Interest rate margins may
fluctuate in increments of 12.5 basis points based on attaining certain
quarterly funded debt-to-equity ratios stipulated in the loan agreements. The
loans are unsecured; however, the loan agreements contain certain minimum
requirements for working capital, cash flow from operations, and tangible net
worth, redemption of outstanding stock, and change in control of the company. As
of December 31, 1993, the company was in compliance with all such requirements
and restrictions.
The Industrial Revenue Bonds are payable in varying amounts through 2014,
plus interest at fixed rates of 6.5% to 7.1% and varying rates based on certain
indices (approximately 3.3% at December 31, 1993), secured by property, plant,
and equipment with a net book value of approximately $13,466,000. In certain
circumstances, the company may be required to purchase up to $16,250,000 of its
Industrial Revenue Bonds prior to their maturity. In such circumstances, the
company may borrow the purchase price under long-term standby letter of credit
agreements and also has the right to resell the bonds.
Notes payable to banks are unsecured borrowings due in varying amounts
through 1995. Interest is based on fixed and floating rates ranging from 4.0% to
4.9% at December 31, 1993.
Notes payable to banks included in current liabilities in 1992 were
unsecured borrowings due in 1993 pursuant to a $10,000,000 one-year credit
facility from a commercial bank. Interest was based on the Eurodollar auction
rate plus 62.5 basis points and was 4.125% at December 31, 1992.
At December 31, 1992, the Justin Industries, Inc. Employee Stock Ownership
Plan (ESOP) had a loan of $250,000 outstanding to a commercial bank. The loan
was for the purchase of shares of common stock of the company in the open
market. The company guaranteed repayment of the loan through contributions to
the ESOP. As a result of this guarantee, the indebtedness was considered a
liability of the company at December 31, 1992, and therefore was included in
other long-term debt with a corresponding amount, classified as ESOP loan
guarantee, reflected as a separate reduction of shareholders' equity. The loan
was paid in 1993.
The aggregate maturities of long-term debt through 1998 are as follows:
1994, $4,905,000; 1995, $9,928,000; 1996, $13,103,000; 1997, $20,741,000; and
1998, $21,493,000.
At December 31, 1993, unused lines of credit for short-term, revolving, and
term credit agreements were approximately $42,000,000. Outstanding standby
letters of credit at December 31, 1993, amounted to approximately $22,932,000.
Since interest rates on the majority of the company's borrowings float with
prevailing market rates, the fair value of such debt approximates carrying value
at December 31, 1993 and 1992. Based on fixed interest rates currently available
to the company for bank loans and industrial revenue bonds with similar terms
and maturities, the fair value of fixed rate borrowings approximates carrying
value at December 31, 1993 and 1992.
6. Shareholders' Equity
On April 27, 1993 the shareholders approved an increase in the number of
authorized shares of common stock from 20 million to 100 million. The average
number of shares outstanding used to calculate earnings per share was 27,953,000
in 1993, 27,772,000 in 1992, and 26,382,000 in 1991. All per share data and
applicable share data have been restated to reflect a 2-for-1 stock split on May
18, 1993.
The company has options to purchase its common stock under qualified
incentive stock option plans and non-qualified stock option agreements (the
Plans) with certain of its employees. The Plans, as amended, provide for the
granting of either incentive stock options or stock options that are not
qualified under the Internal Revenue Code, at the discretion of the Compensation
Committee of the Board of Directors. The Plans, as amended, provide for exercise
of stock options without regard to the sequence of dates of original grants. All
outstanding stock
================================================================================
(PAGE 24)
options are non-qualified and expire over a period of ten years. Options are
granted at the fair market value at the date of grant and vest over a five-year
period. Stock option activity, as adjusted for the 2-for-1 stock split on May
18, 1993, is summarized as follows:
1993 1992 1991
------------- ------------- -------------
Outstanding at
January 1 1,542,856 2,667,114 2,441,604
Granted 152,250 272,600 364,050
Canceled (38,206) (13,408) (7,095)
Exercised (250,023) (1,383,450) (131,445)
------------ ------------ ------------
Outstanding at
December 31 1,406,877 1,542,856 2,667,114
============ ============ ============
Exercise price per
share $2.42-$18.00 $2.42-$18.00 $2.22-$5.42
============ ============ ============
Aggregate purchase
price
(in thousands) $ 11,201 $ 10,637 $ 10,630
============ ============ ============
Exercisable options
outstanding 641,787 568,160 1,633,780
============ ============ ============
At December 31, 1993, 1,003,750 additional shares were reserved for future
grants.
The preferred stock is convertible into 2,826 shares of common stock at
December 31, 1993. The Board of Directors is empowered to set the dividend,
redemption, and liquidation rights pertaining to the preferred stock and to
establish the voting rights and any special rights or restrictions.
One Common Stock Purchase Right is outstanding for each share of common
stock. Following Board of Directors approval, the rights will be exercisable at
an exercise price of $13.33 if a person or group acquires 20% or more of the
company's common stock or announces a tender offer that would result in
ownership of 30% or more of the common stock. The rights may be redeemed at five
cents per right at any time before a 20% position has been acquired. The rights
expire on October 6, 1999.
7. Retirement Plans
The following table sets forth the funded status and amounts recognized in the
company's balance sheet at December 31, 1993 and 1992 related to the company's
pension plans: (in thousands of dollars)
1993 1992
---------- ----------
Actuarial present value of benefit
obligations:
Vested $ 39,009 $ 31,515
Non-vested 1,786 1,358
--------- ---------
$ 40,795 $ 32,873
========= =========
Projected benefit obligations for
service rendered to date $ (48,917) $ (38,401)
Plan assets at fair value 72,732 73,352
--------- ---------
Plan assets in excess of projected
benefit obligations 23,815 34,951
Unrecognized net gain from past
experience different from that
assumed and effect of changes in
assumptions (14,040) (24,873)
Prior service cost not yet recognized
in net periodic pension cost 547 668
Unrecognized net asset at January 1,
1985 being recognized over 15 years (4,745) (5,536)
--------- ---------
Prepaid pension cost $ 5,577 $ 5,210
========= =========
Plan assets at December 31, 1993, are invested primarily in listed stocks
and bonds or cash equivalents. The company's own common stock accounts for
approximately 20% of plan assets at December 31, 1993.
Net pension credit includes the following components: (in thousands of
dollars)
1993 1992 1991
-------- -------- --------
Service cost - benefits
earned during the
period $ 1,731 $ 1,400 $ 1,322
Interest cost on projected
benefit obligations 3,439 2,960 2,724
Actual return on plan assets (4,857) (19,174) (11,062)
Net amortization and
deferral (671) 14,033 6,011
-------- -------- --------
Net pension credit $ (358) $ (781) $ (1,005)
======== ======== ========
The weighted-average discount rates used in determining the actuarial
present value of the projected benefit obligations were 7.5% in 1993 and 8.5% in
1992. The rate of increase in future compensation was 4.5% in 1993 and 5.5% in
1992. The expected long-term rate of return on assets was 9% for all years.
Contributions to the plans, limited by federal income tax regulations, for
1993, 1992, and 1991, were $9,400, $9,500, and $10,000, respectively.
================================================================================
(PAGE 25)
The company also has an Employee Stock Ownership Plan (ESOP) for the
benefit of substantially all employees. Eligible employees may contribute up to
the lesser of 15% of their compensation or the maximum amount authorized by the
company ($8,994 in 1993, $5,000 in 1992 and 1991). During 1993, contributions by
"highly compensated" and "non-highly compensated" employees, as defined by the
Internal Revenue Code, were matched 25% and 50%, respectively, up to 5% of total
compensation. In 1992 and 1991, 50% of the amount contributed by all employees
was matched by the company, up to 5% of total compensation. Pursuant to Internal
Revenue Service Regulation 401(k), the employees' contributions are on a pre-tax
basis. For 1994, employees may contribute up to the lesser of 15% of their
compensation or the maximum allowable amount under IRS regulations ($9,240).
The amount of company contributions made to the ESOP and charged to expense
was $896,000, $830,000, and $667,000 in 1993, 1992, and 1991, respectively.
8. Income Taxes
During the first quarter of 1993, the company adopted SFAS No. 109, "Accounting
for Income Taxes," effective January 1, 1993. Under SFAS No. 109, deferred tax
assets and liabilities are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse. As of January 1, 1993, the company recognized a one-time
benefit to consolidated income of $1,106,000 for the change in accounting for
income taxes from the deferred method to the liability method, as required by
SFAS No. 109. As permitted under the new rules, the financial statements for
1992, 1991, and prior years have not been restated.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the company's deferred tax assets and liabilities as of December 31, 1993 are as
follows: (in thousands of dollars)
Deferred tax assets:
Insurance and claims accruals $ 5,255
Asset valuation allowances 3,198
Other 471
Discontinued operations 303
--------
$ 9,227
========
Deferred tax liabilities:
Intangible assets $ 4,567
Depreciation 8,556
Employee benefit plans 1,349
--------
Total continuing operations 14,472
Discontinued operations 431
--------
$ 14,903
========
Significant components of the provision for income taxes from continuing
operations are as follows:
Liability Deferred
Method Method
--------- -------------------------
1993 1992 1991
-------- -------- --------
Current $ 22,735 $ 18,603 $ 5,497
Deferred (2,740) (3,299) (217)
-------- -------- --------
Total income tax expense $ 19,995 $ 15,304 $ 5,280
======== ======== ========
In addition, the company recognized income tax benefits of $1,420,000,
$4,535,000, and $107,000 in 1993, 1992, and 1991, respectively, upon the
exercise by employees of non-qualified stock options. Such benefits were
recognized as an increase in shareholders' equity when realized.
The components of the provision for deferred income taxes for the years
ended December 31, 1992 and 1991 (prior to adoption of SFAS No. 109) are as
follows: (in thousands of dollars)
1992 1991
-------- --------
Depreciation methods $ (871) $ (878)
Employee benefit plans 438 323
Asset valuation allowances (512) 640
Installment sales - (474)
Insurance and claims accruals (2,426) -
Other items 72 172
-------- --------
Total continuing operations (3,299) (217)
Discontinued operations 111 (684)
-------- --------
Total deferred taxes $ (3,188) $ (901)
======== ========
In August 1993, the U. S. Congress enacted an increase in the statutory
federal income tax rate from 34% to 35% retroactive to January 1, 1993.
Therefore,
================================================================================
(PAGE 26)
in the third quarter of 1993, the company recognized a charge of approximately
$220,000 to account for the impact of such increased rate on deferred income
taxes. A reconciliation of the statutory federal income tax rate and the
effective tax rate related to continuing operations follows:
Liability Deferred
Method Method
--------- ------------------------
1993 1992 1991
----- ----- -----
Statutory tax rate 35.0 34.0 34.0
State taxes .3 1.9 4.5
Federal income tax
rate increase .4 - -
Other - .2 (.1)
----- ----- -----
Effective tax rate 35.7 36.1 38.4
===== ===== =====
In October 1990, the company acquired all of the outstanding shares of
common stock of Tony Lama Company, Inc. (Tony Lama). The adoption of SFAS No.
109 in the first quarter of 1993, as noted above, resulted in a restatement of
certain assets and liabilities of Tony Lama, as this rule requires the
recognition of deferred taxes previously netted against these assets and
liabilities. As a result, other assets and deferred taxes increased by
approximately $6.3 million upon adoption of the new standard.
In connection with the acquisition of Tony Lama, the company acquired a tax
net operating loss carryforward. During 1992, the company utilized approximately
$2,945,000 of this carryforward. As a result, Tony Lama's net assets' values at
date of acquisition were adjusted by $1,001,000 in 1992. None was utilized in
1993. Approximately $802,000 of the acquired carryforward is available to offset
future taxable income. The carryforward will expire in 2004. Future utilization
of such carryforward will also be recognized through adjustment of the value of
acquired net assets.
9. Financial Information by Product Lines
The five-year analysis of sales and operating profit from continuing operations
by product lines on page 17, as it pertains to the last three years, is an
integral part of the company's consolidated financial statements. A discussion
of the company's products and business is located on pages 5 to 11. The
following additional information is presented by industry segments: (in
thousands of dollars)
Identifiable Depreciation Capital
Assets Expense Expenditures
------------ ------------ ------------
1993
Building Materials $ 110,310 $ 8,175 $ 11,232
Footwear 210,839 5,035 5,931
Corporate assets 20,539 263 115
Discontinued operations 4,992 - -
--------- --------- ---------
Total $ 346,680 $ 13,473 $ 17,278
========= ========= =========
1992
Building Materials $ 104,300 $ 9,005 $ 6,892
Footwear 193,319 4,595 4,969
Corporate assets 13,294 237 145
Discontinued operations 5,455 - -
--------- --------- ---------
Total $ 316,368 $ 13,837 $ 12,006
========= ========= =========
1993
Building Materials $ 103,147 $ 7,932 $ 7,268
Footwear 173,609 4,043 3,377
Corporate assets 13,499 363 21
Discontinued operations 5,692 480 351
--------- --------- ---------
Total $ 295,947 $ 12,818 $ 11,017
========= ========= =========
10. Lease Commitments
At December 31, 1993, approximate future minimum rental commitments for all
noncancelable operating leases are as follows: (in thousands of dollars)
1994 $ 3,242
1995 2,794
1996 2,092
1997 1,553
1998 644
Thereafter 603
--------
$ 10,928
========
Total rent expense for all operating leases amounted to approximately
$3,359,000, $3,350,000, and $3,748,000, in 1993, 1992, and 1991, respectively.
Commitments under capital leases are not significant.
================================================================================
(PAGE 27)
REPORT OF ERNST & YOUNG
Independent Auditors
Board of Directors
Justin Industries, Inc.
We have audited the accompanying consolidated balance sheets of Justin
Industries, Inc. as of December 31, 1993 and 1992, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1993. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Justin Industries,
Inc. at December 31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
As discussed in Note 8 to the financial statements, in 1993 the company changed
its method of accounting for income taxes.
/S/ ERNST & YOUNG
Fort Worth, Texas
January 27, 1994
================================================================================
(PAGE 28-29)
<TABLE>
ELEVEN YEAR FINANCIAL SUMMARY
<CAPTION>
Years ending on December 31, 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Summary of operations: (see note)
(in thousands of dollars)
Net sales:
Building Materials 179,740 158,808 123,004 118,943 113,662 108,864
Footwear 295,191 294,459 245,346 181,370 142,707 123,455
-------- -------- -------- -------- -------- --------
474,931 453,267 368,350 300,313 256,369 232,319
-------- -------- -------- -------- -------- --------
Operating profit (loss):
Building Materials 31,445 16,423 4,979 3,698 604 4,369
Footwear 34,168 36,054 22,934 17,748 15,650 12,223
-------- -------- -------- -------- -------- --------
65,613 52,477 27,913 21,446 16,254 16,592
-------- -------- -------- -------- -------- --------
Selected costs and expenses:
Cost of goods sold 314,431 313,961 260,968 211,559 182,365 164,596
Selling, general, and administrative 100,465 91,695 84,167 70,666 60,251 54,590
Interest 4,005 5,214 9,482 6,815 6,402 4,574
Depreciation 13,473 13,837 12,338 10,164 10,003 10,263
Income taxes 19,995 15,304 5,280 3,697 2,432 2,696
-------- -------- -------- -------- -------- --------
Income:
From continuing operations (before accounting
change in 1993) 36,035 27,093 8,453 7,576 5,281 5,954
Net income 37,141 27,093 19,233 7,293 7,198 7,469
-------- -------- -------- -------- -------- --------
Income per share:
From continuing operations (before accounting
change in 1993) 1.29 .98 .32 .29 .21 .24
Net income 1.33 .98 .73 .28 .28 .30
-------- -------- -------- -------- -------- --------
Dividends declared per share .16 .14 .135 .135 .10 .09
Capital expenditures* 17,278 12,006 10,666 12,646 7,405 8,681
-------- -------- -------- -------- -------- --------
Year-end statistics: (in thousands of dollars)
Working capital 185,193 164,822 151,588 147,307 97,983 105,114
Net property, plant, and equipment 80,270 76,544 78,750 84,653 64,261 67,682
Total assets 346,680 316,368 295,947 292,923 211,308 214,403
Long-term debt 88,504 100,362 116,040 124,724 56,238 69,590
Shareholders' equity 188,803 155,270 127,549 111,135 106,431 98,687
Key financial ratios:
Pre-tax profit margin (%)* 11.80 9.35 3.73 3.75 3.01 3.72
Income-return on sales (%)* 7.59 5.98 2.29 2.52 2.06 2.56
Return on shareholders' equity (%)* 23.21 21.24 7.61 7.12 5.35 6.41
Return on assets (%)* 10.87 8.85 2.87 3.00 2.48 2.75
Effective income tax rate (%)* 35.7 36.1 38.4 32.8 31.5 31.2
Ratio of long-term debt to shareholders' equity .47:1 .65:1 .91:1 1.12:1 .53:1 .71:1
Ratio of total interest-bearing debt to
shareholders' equity .49:1 .70:1 .93:1 1.14:1 .56:1 .73:1
Ratio of current assets to current liabilities 4.4:1 4.0:1 4.4:1 4.1:1 3.5:1 3.9:1
Shareholders' statistics:
Number of shareholders 9,484 5,301 4,965 4,886 5,091 4,309
Average number of shares outstanding (in
thousands) 27,953 27,772 26,382 26,412 25,668 25,134
Book value per share 6.95 5.75 4.92 4.31 4.15 3.98
Dividends as a percent of net income 11.7 13.7 17.9 47.1 35.1 29.5
Market price of common stock:
High 25 3/8 19 6 5 7/8 5 5/8 3 5/8
Low 11 3/4 5 5/8 3 5/8 3 5/8 3 3/8 2 5/8
<FN>
*Continuing Operations (before accounting change in 1993)
Note: Per share income amounts have been computed on the average number of common and common
equivalent shares outstanding during each year and include preferred stock as common share
equivalents. Book value per equivalent share of common stock has been computed on the number of
common shares outstanding at December 31. All per share information has been adjusted for the
3-for-2 stock splits in 1984, 1989, and 1992, and a 2-for-1 stock split in 1993. Operating profit
for the business segments is income before interest, allocation of parent-company overhead expenses,
and income taxes.
<CAPTION>
ELEVEN YEAR FINANCIAL SUMMARY (Continued)
Years ending on December 31, 1987 1986 1985 1984 1983
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Summary of operations: (see note)
(in thousands of dollars)
Net sales:
Building Materials 113,204 119,104 134,454 139,750 133,561
Footwear 109,662 101,195 103,892 91,525 82,914
-------- -------- -------- -------- --------
222,866 220,299 238,346 231,275 216,475
-------- -------- -------- -------- --------
Operating profit (loss):
Building Materials 6,685 7,437 17,861 22,969 17,199
Footwear 10,184 9,946 9,997 8,204 6,820
-------- -------- -------- -------- --------
16,869 17,383 27,858 31,173 24,019
-------- -------- -------- -------- --------
Selected costs and expenses:
Cost of goods sold 154,600 148,503 158,231 153,172 152,893
Selling, general, and administrative 53,590 57,682 53,565 48,751 41,613
Interest 4,369 4,140 4,975 4,347 6,111
Depreciation 10,152 10,218 8,839 8,236 8,505
Income taxes 3,121 4,131 8,980 10,200 6,317
-------- -------- -------- -------- --------
Income:
From continuing operations (before accounting
change in 1993) 7,382 5,843 16,131 13,861 10,739
Net income 752 5,033 15,050 13,720 7,685
-------- -------- -------- -------- --------
Income per share:
From continuing operations (before accounting
change in 1993) .29 .22 .61 .52 .39
Net income .03 .19 .57 .52 .28
-------- -------- -------- -------- --------
Dividends declared per share .09 .09 .09 .065 ---
Capital expenditures* 4,540 5,922 30,047 11,987 5,076
-------- -------- -------- -------- --------
Year-end statistics: (in thousands of dollars)
Working capital 90,206 87,407 78,873 67,421 70,841
Net property, plant, and equipment 75,205 80,362 84,743 62,357 64,591
Total assets 219,013 224,608 231,119 199,863 173,105
Long-term debt 70,509 69,489 68,089 64,154 57,054
Shareholders' equity 92,938 96,321 95,382 84,053 75,563
Key financial ratios:
Pre-tax profit margin (%)* 4.71 3.47 10.54 10.40 7.88
Income-return on sales (%)* 3.31 2.08 6.77 5.99 4.96
Return on shareholders' equity (%)* 7.66 4.81 19.19 18.34 15.83
Return on assets (%)* 3.33 2.01 7.49 7.43 5.79
Effective income tax rate (%)* 29.7 40.0 35.8 42.4 37.0
Ratio of long-term debt to shareholders' equity .76:1 .72:1 .71:1 .76:1 .76:1
Ratio of total interest-bearing debt to
shareholders' equity .79:1 .75:1 .77:1 .82:1 .83:1
Ratio of current assets to current liabilities 2.9:1 2.8:1 2.4:1 2.6:1 3.2:1
Shareholders' statistics:
Number of shareholders 4,063 4,018 4,150 4,064 3,983
Average number of shares outstanding (in
thousands) 25,408 26,218 26,358 26,640 27,502
Book value per share 3.76 3.78 3.71 3.25 2.80
Dividends as a percent of net income 296.7 45.5 15.3 12.7 ---
Market price of common stock:
High 3 7/8 4 5/8 4 5/8 3 1/2 3 3/8
Low 2 1/4 2 7/8 3 1/8 2 1/2 2 1/2
<FN>
*Continuing Operations (before accounting change in 1993)
Note: Per share income amounts have been computed on the average number of common and common
equivalent shares outstanding during each year and include preferred stock as common share
equivalents. Book value per equivalent share of common stock has been computed on the number of
common shares outstanding at December 31. All per share information has been adjusted for the
3-for-2 stock splits in 1984, 1989, and 1992, and a 2-for-1 stock split in 1993. Operating profit
for the business segments is income before interest, allocation of parent-company overhead expenses,
and income taxes.
</TABLE>
================================================================================
(PAGE 30)
SHAREHOLDER INFORMATION
Annual Meeting
The annual meeting of shareholders will be held on Friday, March 18, 1994, at
the Fort Worth Club Building, twelfth floor, 306 West Seventh Street, Fort
Worth, Texas, at 10:30 A.M. All shareholders are cordially invited to attend
and are urged to be represented by proxy if unable to attend.
Dividend Reinvestment and Shareholder Savings Program
Any shareholder of record may have dividends automatically reinvested, or make
voluntary investments in the company's common stock through a service offered by
Society National Bank. For additional information, contact Vice President
Finance, Justin Industries, Inc., P. O. Box 425, Fort Worth, Texas 76101 (817)
336-5125; or Society National Bank, c/o Society Shareholder Services, 1201 Elm
Street, 32nd Floor, Dallas, Texas 75270 (800) 527-7844 or (214) 871-8844.
Form 10-K/10-Q
Investors who wish to receive a copy of the company's annual report on Form 10-K
or quarterly 10-Q reports filed with the Securities and Exchange Commission, or
other shareholder mailings, may obtain them upon request to Investor Relations,
Justin Industries, Inc., P. O. Box 425, Fort Worth, Texas 76101 (817) 336-5125.
Stock Listing
Justin Industries, Inc., common stock is traded over the counter using the
symbol "JSTN." Justin Industries common stock is included in the Nasdaq
National Market System.
Stock Transfer and Dividend Disbursing Agent
Society National Bank, c/o Society Shareholder Services, 1201 Elm Street, 32nd
Floor, Dallas, Texas 75270 (800) 527-7844 or (214) 871-8844.
Independent Auditors
Ernst & Young, 500 Throckmorton Street, Suite 2200, Fort Worth, Texas 76102.
Executive Offices
Justin Industries, Inc., 2821 West Seventh Street, Fort Worth, Texas 76107
(817) 336-5125.
Quarterly Financial Data
The following table presents summarized quarterly operating results for the two-
year period ending December 31, 1993.
Unaudited--In thousands, except per share data
Quarter Ended
1993
----------------------------------------------
3/31 6/30 9/30 12/31
--------- --------- --------- ---------
Net sales $ 110,105 $ 116,068 $ 118,328 $ 130,430
Gross profit 34,176 38,868 41,740 45,716
Income before cumulative
effect on prior years
of change in accounting
for income taxes 5,626 7,864 9,806 12,739
Net income 6,732 7,864 9,806 12,739
Per share*:
Before cumulative effect
on prior years of
change in accounting
for income taxes .20 .28 .35 .46
Net income .24 .28 .35 .46
Dividends paid .035 .04 .04 .04
*All per share amounts have been adjusted to reflect a 2-for-1 stock split
effective May 18, 1993.
Quarter Ended
1992
----------------------------------------------
3/31 6/30 9/30 12/31
--------- --------- --------- ---------
Net sales $ 97,296 $ 104,502 $ 112,895 $ 138,574
Gross profit 28,806 32,166 36,222 42,112
Income before cumulative
effect on prior years
of change in accounting
for income taxes 3,107 5,270 7,495 11,221
Net income 3,107 5,270 7,495 11,221
Per share*:
Before cumulative effect
on prior years of
change in accounting
for income taxes .12 .19 .27 .40
Net income .12 .19 .27 .40
Dividends paid .033 .035 .035 .035
*All per share amounts have been adjusted to reflect a 2-for-1 stock split
effective May 18, 1993.
Market Makers
as of January 27, 1994
Bear, Stearns & Co., Inc.
Dean Witter Reynolds, Inc.
First Southwest Company
Herzog, Heine, Geduld, Inc.
Jefferies & Company, Inc.
Lehman Brothers, Inc.
Mayer & Schweitzer, Inc.
Merrill Lynch, Pierce, Fenner & Smith, Inc.
Mitchum Jones & Templeton, Inc.
Nash Weiss/Div. of Shatkin Inv.
PaineWebber, Inc.
The Principal/Eppler, Guerin & Turner
Rauscher Pierce Refsnes, Inc.
Sherwood Securities Corp.
Smith Barney Shearson, Inc.
Southwest Securities, Inc.
Sutro & Company
Troster Singer Corp.
Market Price of Common Stock*
Price
Year ---------------------------------
Quarter High Low Close
- - - ------- ------- ------- -------
1991
1 4 3/4 3 5/8 4 1/2
2 4 1/2 3 3/4 3 3/4
3 4 5/8 3 3/4 4 5/8
4 6 4 1/2 6
1992
1 10 1/2 5 5/8 9 5/8
2 14 1/4 9 12 3/8
3 14 1/2 11 5/8 12 1/4
4 19 11 7/8 18 1/2
1993
1 25 3/8 17 5/8 24 3/4
2 24 7/8 16 1/2 17 1/2
3 22 1/4 15 18
4 19 11 3/4 14 3/4
*All prices have been adjusted to reflect a 2-for-1 stock split effective
May 18, 1993.
================================================================================
(PAGE 31)
DIRECTORS
John Justin
Chairman and Chief Executive Officer of Justin Industries
J. T. Dickenson
President and Chief Operating Officer of Justin Industries
Ben J. Fortson
Oil and Gas Producer
Bayard H. Friedman
Investment Advisor
Marvin Gearhart
Chairman of the Board of Rock Bit International, Inc.
Robert E. Glaze
Personal Investments
Dee J. Kelly
Shareholder and Director of the law firm of Kelly, Hart & Hallman
Joseph R. Musolino
Vice Chairman of NationsBank of Texas
John V. Roach
Chairman, President, and Chief Executive Officer of Tandy Corporation
Dr. William E. Tucker
Chancellor of Texas Christian University
COMMITTEES
Audit Committee
Bayard H. Friedman
Robert E. Glaze
Dr. William E. Tucker
Compensation Committee
Bayard H. Friedman
Marvin Gearhart
OFFICERS
John Justin
Chairman of the Board and Chief Executive Officer
J. T. Dickenson
President and Chief Operating Officer
Richard J. Savitz
Vice President Finance and Treasurer
Jon M. Bennett
Vice President Administration and Secretary
Edward L. Stout, Jr.
Vice President Brick Operations and President Acme Brick Company
Judy B. Hunter
Controller
W. O. Burrough
Assistant Treasurer
================================================================================
(PAGE 32)
PLANT LOCATIONS
(Illustrated map showing plant locations)
ACME BRICK COMPANY
Bennett, Texas
Bridgeport, Texas
Denton, Texas
Elgin, Texas
Garrison, Texas
McQueeney, Texas
San Felipe (Houston), Texas
Fort Smith, Arkansas
Malvern, Arkansas
Perla, Arkansas (2)
Kanopolis, Kansas
Weir, Kansas
Jamestown, Louisiana
Oklahoma City, Oklahoma
Tulsa, Oklahoma
Concrete Block
Baton Rouge, Louisiana
TRADEWINDS TECHNOLOGIES, INC.
Phoenix, Arizona
FEATHERLITE BUILDING PRODUCTS CORPORATION
Concrete Block
Abilene, Texas
Amarillo, Texas
Austin, Texas
Beaumont/Port Arthur, Texas
Dallas, Texas
El Paso, Texas
Lubbock, Texas
San Antonio, Texas
d/b/a VOLCANIC CINDER COMPANY
Volcanic Cinders
New Mexico
d/b/a TEXAS QUARRIES
Architectural Stone
Cedar Park, Texas
JUSTIN BOOT COMPANY
Fort Worth, Texas
Cassville, Missouri (2)
Sarcoxie, Missouri
Carthage, Missouri
NOCONA BOOT COMPANY
Nocona, Texas
TONY LAMA COMPANY
El Paso, Texas
NORTHLAND PUBLISHING COMPANY, INC.
Flagstaff, Arizona
================================================================================
(INSIDE BACK COVER)
This report was designed by Northland Publishing, a Justin Company.
Primary photographer Britt Stokes, Acme Brick Co.
Illustrations Copyright 1994 by John MacDonald.
================================================================================
(BACK COVER)
(Illustration of bull rider)
JUSTIN INDUSTRIES, INC.
2821 WEST SEVENTH STREET / BOX 425
FORT WORTH, TEXAS 76101 / (817) 336-5125
===============================================================================
(EXHIBIT 22)
LISTING OF SUBSIDIARIES
Percentage
of Voting
Place of Securities
Name Organization Owned
- - - ------------------------------------------ ------------ ----------
Significant subsidiaries of the company:
Acme Brick Company Delaware 100%
Featherlite Building Products Corporation Delaware 100%
Footwear Management Company Delaware 100%
d/b/a Justin Boot Company
d/b/a Nocona Boot Company
d/b/a Tony Lama Company, Inc.
Northland Publishing Company, Inc. Arizona 100%
Tradewinds Technologies, Inc. Delaware 100%
Justin Management Company Delaware 100%
All other subsidiaries are omitted from this list because they do not,
considered in the aggregate as a single subsidiary, constitute a significant
subsidiary. All wholly-owned subsidiaries are included in the consolidated
financial statements.
================================================================================
(EXHIBIT 28)
ERNST & YOUNG
REPORT OF INDEPENDENT AUDITORS
Plan Participants
Justin Industries, Inc.
Employee Stock Ownership Plan
We have audited the accompanying statements of plan equity of Justin Industries,
Inc. Employee Stock Ownership Plan as of December 31, 1993 and 1992, and the
related statements of income and changes in plan equity for each of the three
years in the period ended December 31, 1993. These financial statements are the
responsibility of the Plan's Administrative Committee. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the plan equity of Justin Industries, Inc. Employee Stock
Ownership Plan at December 31, 1993 and 1992, and the income and changes in plan
equity for each of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles.
/S/ ERNST & YOUNG
Fort Worth, Texas
March 10, 1994
================================================================================
(PAGE 1)
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Plan Equity
December 31,
-------------------------
1993 1992
----------- -----------
ASSETS
Cash and cash investments $ 2,522 $ 38,867
Company contributions receivable - 381,423
Net interest receivable - 1,262
Dividends receivable 118,898 108,754
Common stock of Justin Industries, Inc.,
at market
($15,913,437 cost and 2,972,443
shares in 1993, $13,028,766 cost
and 3,041,616 shares in 1992) 43,843,534 56,269,896
----------- -----------
Total assets 43,964,954 56,800,202
LIABILITIES
Cash advances from the Company 165,688 -
Withdrawals and interest payable 853,099 743,915
Long-term debt - 250,000
----------- -----------
1,018,787 993,915
----------- -----------
PLAN EQUITY $42,946,167 $55,806,287
=========== ===========
See accompanying notes.
================================================================================
(PAGE 2)
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Income and Changes in Plan Equity
Year Ended December 31,
1993 1992 1991
----------- ----------- -----------
Investment income:
Dividends $ 436,879 $ 396,299 $ 397,792
Interest 3,155 2,272 13,850
----------- ----------- -----------
Total investment income 440,034 398,571 411,642
Net realized gain on sales of
stock 4,233,253 1,725,418 146,119
Net unrealized appreciation
(depreciation) in fair market
value of stock (15,311,033) 36,403,046 4,406,348
Contributions:
Participants 2,432,410 1,783,331
Company 896,070 829,657 665,323
----------- ----------- -----------
Total contributions 3,328,480 2,612,988 2,168,106
Participants' withdrawals (5,550,854) (2,554,581) (2,223,596)
----------- ----------- -----------
(12,860,120) 38,585,442 4,908,619
Plan equity at beginning of year 55,806,287 17,220,845 12,312,226
----------- ----------- -----------
Plan equity at end of year $42,946,167 $55,806,287 $17,220,845
=========== =========== ===========
See accompanying notes.
================================================================================
(PAGE 3)
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
1. SUMMARY OF ACCOUNTING POLICIES
Justin Industries, Inc. Employee Stock Ownership Plan (the Plan) invests in
common stock of Justin Industries, Inc. (the Company). The investment is stated
at quoted market values in an active market as of the end of the plan year.
Gains and losses on the sale of stock are accounted for on an average cost
basis. All 1992 shares have been restated to reflect the 2-for-1 stock split on
May 18, 1993.
Dividend income is accrued on the record date for payment of dividends.
Contributions by participants and participating employers, as well as
withdrawals, are accounted for on the accrual basis once determined.
2. TAX STATUS OF PLAN
The Plan is subject to the provisions of Internal Revenue Code Section 401(k),
whereby the participants' pre-tax contributions are made through a written
salary deferral election. The Plan also includes a provision whereby the Plan's
Administrative Committee may direct the Trustee to incur debt obligations to
finance the acquisition of Justin Industries, Inc. Common Stock for the Plan. A
favorable determination letter of qualification was received on February 13,
1987, from the Internal Revenue Service stating that the Plan is qualified under
Sections 401(a) and 409 of the Internal Revenue Code, as amended. As such, the
Plan is exempt from federal income tax, and participants' voluntary pre-tax
contributions, Company matching contributions, investment income and realized
gains (losses) are not taxable to participants until withdrawal. Cash
withdrawals are generally taxable to participants in the year of withdrawal.
The net unrealized appreciation on withdrawals of stock is generally not taxable
to participants until the stock is sold.
3. PLAN DESCRIPTION (See plan document for full description)
All employees (except those employees covered under collective bargaining
agreements that do not provide for plan participation) of participating
employers are eligible to participate in the Plan beginning on January l or July
l after each employee has completed one year of service and reached the age of
twenty-one.
The Plan is funded by two types of contributions in which the participants have
a fully vested, nonforfeitable right to benefits once they are allocated:
Employee voluntary pre-tax contributions through salary deferrals, limited
to 15 percent of each employee's eligible earnings, but not more than the
maximum allowed by law. The maximum employee contribution was $8,994 in
1993 ($5,000 in 1992 and 1991).
Company matching contributions equal to a percentage of each employee's
voluntary pre-tax contributions up to 5 percent of the employee's eligible
earnings. The Board of Directors annually determines the matching
percentage. In 1993, eligible contributions by "highly compensated" and
"non-highly compensated" employees, as defined by the Internal Revenue
Code, were matched 25 percent and 50 percent, respectively. In 1992 and
1991 all employees were matched at 50 percent.
Withdrawals of employer contributions from the Plan by participants can be made
at normal retirement (age 65), early retirement (age 55), when a participant
dies, becomes disabled or a break in service occurs. Distributions upon
withdrawal are made in accordance with the plan document.
================================================================================
(PAGE 4)
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements (Continued)
4. ADMINISTRATIVE EXPENSES
In 1993, 1992, and 1991, the Company elected to pay directly all administrative
expenses of the Plan with the exception of brokerage commissions and transfer
taxes on stock purchases which are included in the cost of the stock purchased.
5. INVESTMENT ACTIVITY
Investment activity for each of the three years ended December 31 is as follows:
Year Ended December 31,
---------------------------------------------
1993 1992 1991
----------- ----------- -----------
Realized gain on sales of stock:
Proceeds from sales of stock $ 5,440,524 $ 3,347,952 $ 1,020,344
Cost of stock sold 1,207,271 1,622,534 874,225
----------- ----------- -----------
Realized gain $ 4,233,253 $ 1,725,418 $ 146,119
=========== =========== ===========
Unrealized appreciation
(depreciation) on stock:
Unrealized appreciation at
beginning of year $43,241,130 $ 6,838,084 $ 2,431,736
Net unrealized appreciation
(depreciation) during the year (15,311,033) 36,403,046 4,406,348
----------- ----------- -----------
Unrealized appreciation at end
of year $27,930,097 $43,241,130 $ 6,838,084
=========== =========== ===========
The Department of Labor (DOL) requires realized and unrealized gains (losses) to
be calculated in a different manner than required by generally accepted
accounting principles. Realized gains and unrealized losses using the DOL's
method for 1993 amounted to $662,566 and $11,740,346, respectively.
================================================================================
(PAGE 5)
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements (Continued)
6. CONTRIBUTIONS
Contributions by employer are as follows:
Year Ended December 31,
----------------------------------
1993 1992 1991
--------- --------- ---------
Acme Brick Company
Participants $1,052,769 $ 750,069 $ 591,341
Company 380,917 343,876 255,019
Featherlite Building Products Corporation
Participants 182,451 133,645 116,667
Company 68,856 60,716 50,240
Tradewinds Technologies, Inc.
Participants 16,442 16,911 14,703
Company 6,758 8,331 6,968
Justin Boot Company
Participants 898,154 678,474 532,708
Company 337,770 319,530 242,061
Nocona Boot Company
Participants 149,517 118,342 89,628
Company 57,573 57,122 42,295
Northland Publishing Company, Inc.
Participants 9,654 5,938 5,291
Company 3,968 2,925 2,507
Justin Management Company
Participants 123,423 79,952 59,929
Company 40,228 37,157 26,139
Ceramic Cooling Tower Company
Participants - - 92,517
Company - - 40,094
---------- ---------- ----------
Total Participants $2,432,410 $1,783,331 $1,502,784
========== ========== ==========
Total Company $ 896,070 $ 829,657 $ 665,323
========== ========== ==========
