QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
________________________
(X) Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended March 31, 1995
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
IRS Employer Identification Number 75-0102185
JUSTIN INDUSTRIES, INC.
(a Texas Corporation)
2821 West 7th Street
Fort Worth, Texas 76107
Telephone: (817) 336-5125
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES (X) NO ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 27,043,197 shares of the
Company's Common Stock ($2.50 par value) were outstanding as of April 28, 1995.
(Page 1)
================================================================================
JUSTIN INDUSTRIES, INC.
Index
Page No.
PART I. FINANCIAL INFORMATION
Financial Statements:
Consolidated Balance Sheet
March 31, 1995 and December 31, 1994 3
Consolidated Statement of Income
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statement of Shareholders' Equity
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION 9
SIGNATURE 9
All other schedules and compliance information called for by the instructions to
Form 10-Q have been omitted since the required information is not present or not
present in amounts sufficient to require submission.
(Page 2)
================================================================================
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
In Thousands of Dollars
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash $ 4,813 $ 6,071
Accounts receivable, less allowance for doubtful
accounts of $3,430 and $3,219, respectively 73,530 82,266
Inventories:
Finished goods 130,521 124,340
Work-in-process 6,463 6,834
Raw materials 30,434 29,720
---------- ----------
Total inventories 167,418 160,894
Income taxes 6,813 8,387
Prepaid expenses 2,247 1,953
---------- ----------
Total current assets 254,821 259,571
Assets held for sale 5,506 5,523
Other assets 24,187 24,367
Property, plant, and equipment, at cost:
Land 17,203 17,204
Buildings and equipment 210,535 208,513
Construction-in-progress 6,028 3,935
---------- ----------
233,766 229,652
Less accumulated depreciation 147,488 144,192
---------- ----------
Net property, plant, and equipment 86,278 85,460
---------- ----------
$ 370,792 $ 374,921
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 8,000 $ 5,000
Trade accounts payable 19,601 19,087
Accrued payroll items 10,739 11,775
Other accrued items 26,704 27,967
Dividends payable 1,088 1,089
Current portion of long-term debt 8,927 8,931
---------- ----------
Total current liabilities 75,059 73,849
Long-term debt, less current portion 56,913 65,323
Deferred income taxes 13,849 13,849
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 shares issued 69,674 69,674
Capital in excess of par value 16,906 16,959
Retained earnings 144,773 140,593
Treasury stock, at cost, 724,397 and 637,237 shares, respectively (6,382) (5,326)
---------- ----------
Total shareholders' equity 224,971 221,900
---------- ----------
$ 370,792 $ 374,921
========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
(Page 3)
================================================================================
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
In Thousands of Dollars (Except Per Share Data)
Three Months Ended
March 31,
------------------------
1995 1994
---------- ----------
(Unaudited)
Net sales:
Building materials $ 56,058 $ 46,857
Footwear 57,596 63,034
---------- ----------
113,654 109,891
Costs and expenses:
Cost of goods sold 74,703 72,896
Selling, general, and administrative expenses 29,550 25,609
Interest expense 1,105 801
---------- ----------
105,358 99,306
---------- ----------
Income before income taxes 8,296 10,585
Provision for income taxes 3,028 3,916
---------- ----------
Net income $ 5,268 $ 6,669
========== ==========
Earnings per share $ .19 $ .24
========== ==========
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three Months Ended March 31, 1995 and 1994
In Thousands of Dollars (Except Share and Per Share Data)
<CAPTION>
Capital In
Preferred Common Excess of Retained Treasury
Stock Stock Par Value Earnings Stock
- --------------------------------------- --------- --------- ---------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Balance January 1, 1995 $ - $ 69,674 $ 16,959 $ 140,593 $ (5,326)
Net income - - - 5,268 -
Purchase of 125,800 shares of
stock for treasury - - - - (1,385)
Exercise of stock options - - (53) - 329
Cash dividend declared ($.04 per share) - - - (1,088) -
--------- --------- --------- --------- ---------
Balance March 31, 1995 $ - $ 69,674 $ 16,906 $ 144,773 $ (6,382)
========= ========= ========= ========= =========
Balance January 1, 1994 $ - $ 69,674 $ 17,047 $ 108,038 $ (5,956)
Net income - - - 6,669 -
Purchase of 2,046 shares of
stock for treasury - - - - (30)
Exercise of stock options - - (7) - 164
Cash dividend declared ($.04 per share) - - - (1,087) -
--------- --------- --------- --------- ---------
Balance March 31, 1994 $ - $ 69,674 $ 17,040 $ 113,620 $ (5,822)
========= ========= ========= ========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
(Page 4)
================================================================================
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands of Dollars
<CAPTION>
Three Months Ended
March 31,
-----------------------
1995 1994
-----------------------
(Unaudited)
<S> <C> <C>
Operating activities:
Net income $ 5,268 $ 6,669
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 3,638 3,340
Provision for losses on accounts receivable 203 230
Gain on sale of property, equipment and other assets (44) (50)
Changes in assets and liabilities:
Decrease in accounts receivable 8,533 2,817
Increase in inventories (6,524) (7,681)
(Increase) decrease in other current assets 1,280 (271)
Increase (decrease) in accounts payable and accrued expenses (1,785) 4,540
-------- --------
Net cash provided from operating activities 10,569 9,594
Investing activities:
Proceeds from the sale of property, equipment and other assets 51 66
Capital expenditures (4,464) (3,136)
Decrease in investments and other assets, including reclassifications 198 80
-------- --------
Cash used in investing activities (4,215) (2,990)
Financing activities:
Additions to debt 5,000 2,000
Repayment of debt (10,414) (16,641)
Dividends paid (1,089) (1,086)
Purchases of treasury stock (1,385) (30)
Exercise of stock options 276 157
-------- --------
Cash used in financing activities (7,612) (15,600)
-------- --------
Net decrease in cash (1,258) (8,996)
Cash at beginning of period 6,071 10,587
-------- --------
Cash at end of period $ 4,813 $ 1,591
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
(Page 5)
================================================================================
JUSTIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
Summary of Significant Accounting Policies
A summary of the company's significant accounting policies is presented on
page 21 of its 1994 Annual Report to Shareholders. Users of financial
information produced for interim periods are encouraged to refer to the
footnotes contained in the Annual Report to Shareholders when reviewing interim
financial results. There has been no material change in the accounting policies
followed by the company during 1995.
In the opinion of management, the accompanying interim financial statements
contain all material adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations, cash flows, and shareholders' equity of Justin
Industries, Inc. for interim periods.
Long-Term Debt
Certain loan agreements contain minimum requirements as to working capital,
cash flow from operations, and tangible net worth, redemption of outstanding
stock, and change in control of the company. As of March 31, 1995, the company
was in compliance with all such requirements and restrictions.
Earnings Per Share
Earnings per share are based on the average number of shares of common stock
outstanding during each period and such shares issuable upon assumed exercise of
stock options, using the treasury stock method, adjusted for stock splits. The
number of shares used in the calculation of earnings per share was 27,728,000 in
1995 and 27,864,000 in 1994.
(Page 6)
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales - Consolidated net sales for the three months ended March 31, 1995, of
$113.7 million were 3.4% above the $109.9 million in 1994's first quarter.
Building Materials Segment Sales - Sales in the Building Materials
segment increased $9.2 million or 19.6% over the first quarter of 1994.
The entire increase in revenues was attributable to American Tile Supply
Company ("American Tile") which was acquired in August 1994. Acme Brick
Company ("Acme") and Tradewinds Technologies, Inc. ("Tradewinds") each
posted modest declines in sales that were offset by gains at Featherlite
Building Products Corporation ("Featherlite").
American Tile's sales for the first quarter of 1995 include a new
Houston location and strong sales system wide. Acme's sales for the
current quarter declined due to a reduction in housing starts in its
market area and wet weather offset by somewhat higher selling prices.
Higher mortgage rates have negatively impacted housing starts
nationwide. During the first quarter of 1995, housing starts in Acme's
territory were down by 15%, while brick shipments declined 8% compared
to a year ago. The decline was moderated due to improved market
penetration and an increase in commercial construction in Acme's six-
state area. Acme's sales of purchased products also were less than
1994's first quarter.
Featherlite, who relies more heavily on commercial construction,
posted gains in both volume and average prices due to improved
commercial activity in its market areas. Tradewinds' first quarter
revenues suffered from unusually wet weather in the first quarter of
1995 compared to the same period a year ago.
Footwear Segment Sales - Total Footwear sales for the three months ended
March 31, 1995, declined 8.6% to $57.6 million from 1994's first quarter.
All three operations, Justin Boot Company, Nocona Boot Company and Tony Lama
Company, experienced a slower first quarter in 1995. While the core market
western boot business continues to be stable and Chippewa(R) sales have
increased, sales in fashion markets and ladies' lines have declined.
Costs and Expenses - The consolidated ratio of cost of goods sold to sales
was 65.7% in the first quarter of 1995 versus 66.3% in the 1994 comparable
period. Building Materials' ratio of cost of sales to sales was 59.1% in the
first quarter of 1995, compared to 59.3% in the first quarter of 1994. The
primary reason for this improvement was higher average brick prices. The ratio
of cost of goods sold to sales in the Footwear businesses was 72.1% versus 71.6%
in 1994. The most significant factor affecting the Footwear margin decline was
the reconfiguration of the Fort Worth Justin Boot plant during the first quarter
of 1995. Costs were incurred as the plant was temporarily closed, the workforce
was reduced and production lines were changed to accomodate more efficient
manufacturing techniques.
Selling, general and administrative expenses increased to 26% of sales in the
first quarter of 1995 compared to 23.3% in the first quarter of 1994. The total
of these costs increased $3.9 million from 1994's first quarter. Approximately
60% of this amount was due to American Tile. In addition, expenses were
incurred in connection with the reorganization of administrative functions of
the Footwear segment.
(Page 7)
================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Interest expense increased 38% in the first quarter to $1,105,000 from
$801,000 in the first three months of 1994. Although the average debt level
declined during 1995's first quarter compared to a year ago, expense increased
due to higher average effective rates.
Provision for Income Taxes - The Company's provision for income tax was 36.5%
of pre-tax income in the first quarter of 1995, the current estimated effective
rate for the full year, compared to 37% in the first quarter of 1994.
FINANCIAL CONDITION AND LIQUIDITY
At March 31, 1995, working capital amounted to $179.8 million versus $185.7
million at December 31, 1994. Cash decreased from $6.1 million at year end to
$4.8 million at the end of 1995's first quarter. Normal seasonal changes
occurred between year-end 1994 and the end of the first quarter of 1995 with a
reduction in accounts receivable, primarily due to payments by Footwear
customers early in the year, and an increase in inventories caused by the
seasonal build-up of Building Materials inventories.
Cash provided by operating activities in the first quarter of 1995 totaled
$10.6 million. These funds were used primarily to reduce debt, acquire fixed
assets, pay dividends, and purchase treasury stock.
In the first quarter of 1995, total interest-bearing debt declined to $73.8
million from $79.3 million at year-end 1994. This reduction lowered the ratio
of long-term debt-to-equity to .25 to 1 from .29 to 1 at year end. Borrowings
should increase over the next two quarters to finance the seasonal working
capital needs. At March 31, 1995, unused committed credit facilities totaled
$61 million, an amount well above the company's estimated requirements.
Cash dividends declared in the first quarter of 1995 and 1994 amounted to
$.04 a share.
(Page 8)
================================================================================
JUSTIN INDUSTRIES, INC.
PART II: OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
The company is not presently involved in any lawsuits seeking damages
relating to the normal conduct of its business that if adversely determined
would have a material effect on the consolidated financial statements.
ITEM 4 RESULTS OF VOTES OF SECURITY HOLDERS
The information required by this item has been provided in the company's
definitive proxy statement for its annual meeting of shareholders held March 17,
1995.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, The
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JUSTIN INDUSTRIES, INC.
/S/RICHARD J. SAVITZ
Richard J. Savitz
Vice President-Finance/
Chief Financial Officer
Dated this 5th day of May 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the March
31, 1995 Financial Statements included in the Company's Form 10-Q and is
qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,813
<SECURITIES> 0
<RECEIVABLES> 76,960
<ALLOWANCES> 3,430
<INVENTORY> 167,418
<CURRENT-ASSETS> 254,821
<PP&E> 223,766
<DEPRECIATION> 147,488
<TOTAL-ASSETS> 370,792
<CURRENT-LIABILITIES> 75,059
<BONDS> 0
<COMMON> 69,674
0
0
<OTHER-SE> 155,297
<TOTAL-LIABILITY-AND-EQUITY> 370,792
<SALES> 113,654
<TOTAL-REVENUES> 113,654
<CGS> 74,703
<TOTAL-COSTS> 74,703
<OTHER-EXPENSES> 29,550
<LOSS-PROVISION> 203
<INTEREST-EXPENSE> 1,105
<INCOME-PRETAX> 8,296
<INCOME-TAX> 3,028
<INCOME-CONTINUING> 5,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,268
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
