QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 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 issuers classes of
common stock, as of the latest practicable date: 26,884,500 shares of the
Company's Common Stock ($2.50 par value) were outstanding as of July 31, 1995.
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JUSTIN INDUSTRIES, INC.
Index
Page No.
PART I. FINANCIAL INFORMATION
Financial Statements:
Consolidated Balance Sheet
June 30, 1995 and December 31, 1994 3
Consolidated Statement of Income
Three Months and Six Months Ended
June 30, 1995 and 1994 4
Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 1995 and 1994 4
Consolidated Statement of Cash Flows
Six Months Ended June 30, 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)
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
In Thousands of Dollars
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 4,253 $ 6,071
Accounts receivable, less allowance for doubtful
accounts of $3,694 and $3,219, respectively 78,515 82,266
Inventories:
Finished goods 132,941 124,340
Work-in-process 5,836 6,834
Raw materials 28,678 29,720
------------ ------------
Total inventories 167,455 160,894
Income taxes 11,149 8,387
Prepaid expenses 2,237 1,953
------------ ------------
Total current assets 263,609 259,571
Assets held for sale 4,946 5,523
Other assets 23,891 24,367
Property, plant, and equipment, at cost:
Land 17,175 17,204
Buildings and equipment 214,758 208,513
Construction-in-progress 5,663 3,935
------------ ------------
237,596 229,652
Less accumulated depreciation 149,753 144,192
------------ ------------
Net property, plant, and equipment 87,843 85,460
------------ ------------
$ 380,289 $ 374,921
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 8,000 $ 5,000
Trade accounts payable 12,085 19,087
Accrued payroll items 11,204 11,775
Other accrued items 27,341 27,967
Dividends payable 1,077 1,089
Current portion of long-term debt 8,928 8,931
------------ ------------
Total current liabilities 68,635 73,849
Long-term debt, less current portion 70,652 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 16,876 16,959
Retained earnings 149,730 140,593
Treasury stock, at cost, 985,388 and 637,237 shares, respectively (9,127) (5,326)
------------ ------------
Total shareholders' equity 227,153 221,900
------------ ------------
$ 380,289 $ 374,921
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
(Page 3)
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
In Thousands of Dollars (Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales:
Building materials $ 62,887 $ 58,042 $ 118,945 $ 104,899
Footwear 47,031 56,852 104,627 119,886
---------- ---------- ---------- ----------
109,918 114,894 223,572 224,785
Costs and expenses:
Cost of goods sold 70,642 73,745 145,345 146,641
Selling, general, and administrative expenses 28,508 25,326 58,058 50,935
Interest expense 1,266 819 2,371 1,620
---------- ---------- ---------- ----------
100,416 99,890 205,774 199,196
---------- ---------- ---------- ----------
Income before income taxes 9,502 15,004 17,798 25,589
Provision for income taxes 3,468 5,552 6,496 9,468
---------- ---------- ---------- ----------
Net income $ 6,034 $ 9,452 $ 11,302 $ 16,121
========== ========== ========== ==========
Earnings per share $ .22 $ .34 $ .41 $ .58
========== ========== ========== ==========
</TABLE>
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Six Months Ended June 30, 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 - - - 11,302 -
Purchase of 399,500 shares of
stock for treasury - - - - (4,204)
Exercise of stock options - - (83) - 403
Cash dividend declared ($.08 per share) - - - (2,165) -
---------- ---------- ---------- ---------- ----------
Balance June 30, 1995 $ - $ 69,674 $ 16,876 $ 149,730 $ (9,127)
========== ========== ========== ========== ==========
Balance January 1, 1994 $ - $ 69,674 $ 17,047 $ 108,038 $ (5,956)
Net income - - - 16,121 -
Exercise of stock options - - (8) - 139
Cash dividends declared ($.08 per share) - - - (2,174) -
---------- ---------- ---------- ---------- ----------
Balance June 30, 1994 $ - $ 69,674 $ 17,039 $ 121,985 $ (5,817)
========== ========== ========== ========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
(Page 4)
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands of Dollars
<CAPTION>
Six Months Ended
June 30,
------------------------
1995 1994
------------------------
(Unaudited)
<S> <C> <C>
Operating activities:
Net income $ 11,302 $ 16,121
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 7,317 6,749
Provision for losses on accounts receivable 533 431
Loss on sale of property, equipment and other assets 211 22
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 3,218 (3,950)
Increase in inventories (6,561) (9,540)
Increase in other current assets (3,046) (2,806)
Increase (decrease) in accounts payable and accrued expenses (8,199) 3,679
--------- ---------
Net cash provided from operating activities 4,775 10,706
Investing activities:
Proceeds from the sale of property, equipment and other assets 460 415
Capital expenditures (10,216) (7,616)
Decrease in investments and other assets, including reclassifications 898 247
--------- ---------
Cash used in investing activities (8,858) (6,954)
Financing activities:
Additions to debt 19,000 9,500
Repayment of debt (10,674) (20,157)
Dividends paid (2,177) (2,173)
Purchases of treasury stock (4,204) -
Exercise of stock options 320 131
--------- ---------
Cash provided by (used in) financing activities 2,265 (12,699)
--------- ---------
Net decrease in cash (1,818) (8,947)
Cash at beginning of period 6,071 10,587
--------- ---------
Cash at end of period $ 4,253 $ 1,640
========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
(Page 5)
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JUSTIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 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 and restrictions on redemption
of outstanding stock and change in control of the company. As of June 30, 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 27,575,000 in
1995 and 27,826,000 in 1994.
(Page 6)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Sales - Consolidated net sales for the second quarter of 1995 were $109.9
million versus $114.9 million for the same quarter in 1994, a decrease of 4.3%.
Consolidated net sales were $223.6 million for the six months ended June 30,
1995, .5% below the $224.8 million posted in 1994's first six months.
Building Materials Segment Sales - Sales for the second quarter of
1995 in the Building Materials segment increased 8.4% or $4.8 million
over the same quarter of 1994. For the six months ended June 30, 1995,
net sales increased 13.4% or $14 million over the same period in 1994.
The overall increase in sales is attributable to the acquisition of
American Tile Supply ("ATS") in August 1994 and increased sales at
Featherlite Building Products Corporation ("Featherlite"). ATS's 1995
sales amounted to approximately $9.9 and $19.2 million for the three and
six month periods, respectively. Featherlite's sales, consisting
primarily of commercial building products such as concrete block and cut
limestone, increased 5.8% and 9.7% during 1995's three and six month
periods, respectively. Compared to the same periods a year ago,
commercial construction activity has been greater in Featherlite's
markets. Offsetting these increases, Acme Brick Company ("Acme")
experienced an 8.4% decline in sales in 1995's first half compared to
the same period in 1994 due to reduced housing starts in its market
areas, brought about by rising mortgage rates in 1994 and early 1995.
Cooler weather than normal during the Spring selling season caused
Tradewinds Technologies, Inc.'s sales to decline during the three and
six month periods ended June 30, 1995, compared to the same periods in
1994.
Footwear Segment Sales - Total Footwear sales for the quarter ended
June 30, 1995, declined 17.3% to $47 million from 1994's second quarter
of $56.9 million. For the six months ended June 30, 1995, revenues were
12.7% behind the same period a year ago. Justin Boot Company, Nocona
Boot Company and Tony Lama Company, Inc. each experienced a slower
second quarter and six months in 1995. All lines of footwear except
Chippewa, the company's lace-up work, sport, and utility product,
experienced declines compared to 1994's periods due to slower retail
spending nationwide and changes in fashion trends.
Costs and Expenses - The consolidated ratio of cost of goods sold to sales
was 64.3% in the second quarter of 1995 versus 64.2% in the same quarter of
1994. For the six month periods ended June 30, 1995 and 1994, cost of goods
sold to sales percentage was 65% and 65.2%, respectively.
Building Materials' ratio was 58.5% in the second quarter of 1995 compared to
58.2% in 1994's second quarter. During the first six months of 1995 and 1994,
the ratio for Building Materials was virtually unchanged at 58.8% and 58.7%,
respectively. Despite a decline in unit shipments in 1995, Acme's average brick
selling prices are up over the same periods in 1994, resulting in stable margins
in the period-over-period comparisons. The ratios of cost of goods sold to
sales in the Footwear businesses were 72% for the second quarter of 1995 versus
70.3% for the second quarter of 1994. For the six month periods ended June 30,
the ratios were 72.1% in 1995 and 71% in 1994. The increased ratios in the
second quarter of 1995 over 1994's second quarter are mainly attributable to
reduced sales and production levels in 1995. During the first six months of
1995, the reconfiguration of the Fort Worth Justin Boot plant, during the first
quarter, impacted the ratio as costs were incurred to temporarily close the
plant, reduce the workforce, and change production lines to accommodate more
efficient manufacturing techniques.
(Page 7)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Selling, general and administrative expenses increased to 25.9% of sales in
the second quarter of 1995 compared to 22% in the second quarter of 1994. For
the first six months of 1995, these expenses were 26% of sales compared to 22.7%
during the first six months of 1994. The increases are primarily due to the
acquisition of ATS and lower sales volume in the Footwear businesses.
Interest expense increased 54.6% in the second quarter to $1,266,000 from
$819,000 in the second three month period of 1994. During the six months ended
June 30, 1995, compared to the same period in 1994, interest expense increased
$751,000 or 46.4%. The increases are attributable to higher average effective
interest rates offset by lower average debt levels during the periods.
Provision for Income Taxes - The Company's provision for income tax was 36.5%
of pre-tax income in the second quarter and for the first six months of 1995,
which is the current estimated effective rate for the full year. During the
same periods in 1994, a rate of 37% was used.
FINANCIAL CONDITION AND LIQUIDITY
At June 30, 1995, working capital increased to $195 million versus $185.7
million at December 31, 1994. Cash decreased from $6.1 million at year-end 1994
to $4.3 million at the end of 1995's second quarter. During the first six
months of 1995, net cash of $4.8 million was provided from operations after
usage for the seasonal increase in working captial. Cash from operating
activities and lines of credit were used primarily to purchase $10.2 million of
capital equipment, buy over $4 million of treasury stock, and pay cash dividends
to shareholders of $2.2 million.
Total interest-bearing debt increased to $87.6 million from $79.3 million at
year end 1994. This increase raised the ratio of long-term debt-to-equity to
.31 to 1 from .29 to 1 at year end. Borrowings should increase during the next
quarter to finance additional seasonal working capital needs. At June 30, 1995,
unused credit facilities approximated $65 million, an amount well above the
company's estimated requirements. Effective July 24, 1995, the Company amended
it revolving credit agreement to reduce its credit line by $20,000,000.
Cash dividends of $.04 a share were declared in the second quarter of 1995
and 1994. During each of the six month periods ended June 30 in 1995 and 1994,
dividends were declared amounting to $.08 a share.
(Page 8)
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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 3rd day of August 1995.
(Page 9)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 4253
<SECURITIES> 0
<RECEIVABLES> 82209
<ALLOWANCES> 3694
<INVENTORY> 167455
<CURRENT-ASSETS> 263609
<PP&E> 237596
<DEPRECIATION> 149753
<TOTAL-ASSETS> 380289
<CURRENT-LIABILITIES> 68635
<BONDS> 0
<COMMON> 69674
0
0
<OTHER-SE> 157479
<TOTAL-LIABILITY-AND-EQUITY> 380289
<SALES> 223572
<TOTAL-REVENUES> 223572
<CGS> 145345
<TOTAL-COSTS> 145345
<OTHER-EXPENSES> 58058
<LOSS-PROVISION> 533
<INTEREST-EXPENSE> 2371
<INCOME-PRETAX> 17798
<INCOME-TAX> 6496
<INCOME-CONTINUING> 11302
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11302
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
