FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
( X ) ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the year ended December 31, 1994
( ) ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ______________ to ______________
Commission file number 0-3041
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below.
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
JUSTIN INDUSTRIES, INC.
2821 West 7th Street
Fort Worth, Texas 76107
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
(Name of Plan)
/S/ RICHARD J. SAVITZ
(Signature)
Richard J. Savitz
Vice President-Finance
July 13, 1995
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ERNST & YOUNG LLP
REPORT OF INDEPENDENT AUDITORS
Plan Participants
Justin Industries, Inc.
Employee Stock Ownership Plan
We have audited the accompanying statements of net assets available for plan
benefits of Justin Industries, Inc. Employee Stock Ownership Plan as of December
31, 1994 and 1993, and the related statements of changes in net assets available
for plan benefits for the years then ended. 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 net assets available for plan benefits of Justin
Industries, Inc. Employee Stock Ownership Plan at December 31, 1994 and 1993,
and the changes in net assets available for plan benefits for the years then
ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1994 and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The fund information in
Note 7 to the financial statements is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and fund information have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/S/ ERNST & YOUNG LLP
Fort Worth, Texas
July 10, 1995
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JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Benefits
December 31,
----------------------------
1994 1993
------------ ------------
Assets:
Cash and cash investments $ 101 $ 2,522
Participants' contributions receivable 323,465 -
Company contribution receivable 1,239,219 -
Dividends and interest receivable 118,207 118,898
Investments, at fair value:
Common stock of Justin Industries, Inc.
($17,188,378 cost and 2,937,819 shares in
1994, $15,913,437 cost and 2,972,443 shares
in 1993) 34,886,595 43,843,534
Mutual funds:
Merrill Lynch Growth Fund 186,099 -
Merrill Lynch Global Allocation Fund 124,181 -
Merrill Lynch Capital Fund 58,961 -
Money market fund:
Merrill Lynch Retirement Preservation Trust 48,599 -
----------- -----------
Total investments 35,304,435 43,843,534
----------- -----------
Total assets 36,985,427 43,964,954
Liabilities:
Cash advances from the Company - 165,688
Other payables - 853,099
Participants' contributions refundable 115,196 -
----------- -----------
Total liabilities 115,196 1,018,787
----------- -----------
Net assets available for plan benefits $36,870,231 $42,946,167
=========== ===========
Statements of Changes in Net Assets Available for Plan Benefits
Year Ended December 31,
------------------------------
1994 1993
------------- -------------
Investment income (loss):
Dividends and interest $ 473,438 $ 440,034
Net depreciation in fair value of investments (8,471,738) (11,077,780)
------------ ------------
Total investment loss (7,998,300) (10,637,746)
Contributions:
Participants 2,946,556 2,432,410
Company 1,239,219 896,070
------------ ------------
Total contributions 4,185,775 3,328,480
Participants' withdrawals (2,263,411) (5,550,854)
------------ ------------
(6,075,936) (12,860,120)
Net assets available for plan benefits at
beginning of year 42,946,167 55,806,287
------------ ------------
Net assets available for plan benefits at end
of year $ 36,870,231 $ 42,946,167
============ ============
See accompanying notes.
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JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
1. DESCRIPTION OF PLAN
The following description of the Justin Industries, Inc. (the Company) Employee
Stock Ownership Plan (the Plan) provides only general information. Participants
should refer to the Plan documents for a more complete description of the Plan's
provisions.
a. General. 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 subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
b. Contributions. The Plan is funded by two types of contributions:
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
$9,240 in 1994 and $8,994 in 1993.
Company matching contributions are 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 1994, all employees'
contributions were matched at 50 percent up to $7,500. 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, up to $8,994.
c. Participants' Accounts. Each participant's account is credited with the
employee's contribution and an allocation of the Company's contribution and
investment earnings. Allocations are based on participants' earnings or
account balances, as defined. The benefit to which a participant is
entitled is the benefit that can be provided from the participant's
account.
d. Vesting. Participants have a fully vested, nonforfeitable right to
employee contributions. Company matching contributions are fully vested
and nonforfeitable once allocated.
e. Investment Options. Employee contributions prior to September 1, 1994 and
all Company matching contributions are invested in Company common stock.
Subsequent to September 1, 1994, participants direct investments from
employee contributions among a combination of Company common stock and any
of the following four investment funds.
Merrill Lynch Growth Fund - Funds are invested in shares of a registered
investment company that invests primarily in equity securities.
Merrill Lynch Global Allocation Fund - Funds are invested in shares of a
registered investment company that invests primarily in U.S. and
foreign equity, debt and money market securities.
Merrill Lynch Capital Fund - Funds are invested in shares of a
registered investment company that invests primarily in equity, debt
and convertible securities.
Merrill Lynch Retirement Preservation Trust - Funds are invested in
shares of a registered investment company that invests primarily in
guaranteed investment contracts, U.S. government agency securities and
money market securities.
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f. Payment of Benefits. 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.
2. SUMMARY OF ACCOUNTING POLICIES
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices, which represent the net
asset value of shares held by the Plan at year end. The Company stock is valued
at its quoted market price. Gains and losses on the sale of investments are
accounted for on an average cost basis.
Purchases and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
Contributions by participants and participating employers are accounted for on
the accrual basis once determined. Benefit payments are recorded when paid.
3. PLAN AMENDMENTS
During 1994, the Plan was amended to allow for additional investment options
other than Company common stock for employee contributions after September 1,
1994. Participants' contributions prior to September 1, 1994, except for
certain amounts subject to diversification provisions provided by ERISA, and all
Company matching contributions are invested in Company stock.
During 1994, the Plan was amended to conform with the Tax Reform Act of 1986.
The primary effect on the Plan of this amendment was the limitation on eligible
compensation to $150,000 for non-discrimination testing purposes.
4. 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 Company common stock for the Plan. A favorable
determination letter of qualification was received on October 26, 1994, from the
Internal Revenue Service stating that the Plan is qualified under Section 401(a)
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 Company common stock is generally not taxable to
participants until the stock is sold. Once qualified, the Plan is required to
operate in conformity with regulations promulgated by the Department of the
Treasury and the Department of Labor to maintain its qualified status. The
Plan's Administrative Committee is not aware of any course of action or series
of events that have occurred that might adversely affect the Plan's tax status.
5. PARTICIPANTS' CONTRIBUTIONS REFUNDABLE
As a result of non-discrimination testing on 1994 contributions, certain "highly
compensated" employees received refunds of 1994 excess contributions in 1995.
Such amounts have been accrued in the accompanying financial statements as a
liability of the Plan as of December 31, 1994.
6. ADMINISTRATIVE EXPENSES
All expenses of Plan administration may be paid out of Plan assets unless paid
by the Company at its discretion. In 1994 and 1993, 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, and in 1994, the Trustee's check processing fees
on withdrawals, which were paid by participants.
7. INVESTMENT ACTIVITY
Net assets available for benefits at the end of 1994 and changes in net assets
available for benefits for the year ended December 31, 1994 by funds (fund
information) are as follows:
<TABLE>
<CAPTION>
Non-
Participant Directed Participant
Directed
- ----------------------------------------------------------------------------------------- -------------
Merrill Lynch Merrill Lynch Justin Justin
Global Retirement Industries, Industries,
Merrill Lynch Allocation Merrill Lynch Preservation Inc. Common Inc. Common
Growth Fund Fund Capital Fund Trust Stock Stock Other Total
------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends and
interest $ 2,366 $ 3,939 $ 2,028 $ 368 $ 489 $ 346,041 $ 118,207 $ 473,438
Net depreciation
of fair value of
investments (7,331) (5,736) (2,295) - 1,476,971 (9,933,347) - (8,471,738)
Contributions:
Participants' 192,850 126,533 59,897 47,218 733,475 1,578,314 208,269 2,946,556
Company - - - - - - 1,239,219 1,239,219
Participants'
withdrawals (851) (555) (262) (87) (2,129) (2,259,527) - (2,263,411)
Interfund
transfers (935) - (407) 1,100 883,815 (883,674) 101 -
--------- --------- --------- --------- ----------- ----------- ----------- -----------
186,099 124,181 58,961 48,599 3,092,621 (11,152,193) 1,565,796 (6,075,936)
Net assets at
beginning of
year - - - - - 42,946,167 - 42,946,167
--------- --------- --------- --------- ----------- ----------- ----------- -----------
Net assets at end
of year $ 186,099 $ 124,181 $ 58,961 $ 48,599 $ 3,092,621 $31,793,974 $ 1,565,796 $36,870,231
========= ========= ========= ========= =========== =========== =========== ===========
</TABLE>
The Plan's investment activity for each of the two years ended December 31
(including investments bought and sold, as well as held during the year)
depreciated in fair value as shown below. The 1993 investments consist only of
Company common stock:
Year Ended December 31,
---------------------------
1994 1993
---------- ----------
Realized gain on sales of investments:
Proceeds from sales of investments $ 3,117,865 $ 5,440,524
Cost of investments 1,342,418 1,207,271
----------- -----------
Realized gain $ 1,775,447 $ 4,233,253
=========== ===========
Unrealized depreciation on investments:
Unrealized appreciation at beginning of year $ 27,930,097 $ 43,241,130
Net unrealized depreciation during the year (10,247,185) (15,311,033)
------------ ------------
Unrealized appreciation at end of year $ 17,682,912 $ 27,930,097
============ ============
As of December 31, 1994 and 1993, the only asset that represents 5% or more of
the Plan's net assets was the Company's common stock. The net depreciation in
the fair value of the Company's common stock in 1993 was $11,077,780.
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8. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
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 and unrealized losses using the DOL's method
for 1994 amounted to $255,934 and $8,215,804, respectively.
In addition, 1994's net assets available for benefits is $340,216 less and
participants' withdrawals is $340,216 more per Form 5500 than shown in the
accompanying financial statements. These differences are due to the DOL's
requirements for Form 5500 to accrue withdrawals processed and approved for
payment prior to December 31, 1994 but not yet paid as of that date.
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JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Assets Held for Investment Purposes
December 31, 1994
Par Amount/
Shares/
Description Units Cost Fair Value
- --------------------------------- ------------ ----------- -----------
Merrill Lynch Growth Fund for
Investment and Retirement 10,640 $ 193,405 $ 186,099
Merrill Lynch Global Allocation
Fund,Inc. 10,154 129,914 124,181
Merrill Lynch Capital Fund, Inc. 2,294 61,227 58,961
Merrill Lynch Retirement
Preservation Trust 48,599 48,599 48,599
Justin Industries, Inc.
Common Stock 2,937,819 17,188,378 34,886,595
----------- -----------
$17,621,523 $35,304,435
=========== ===========
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<TABLE> JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Reportable Transactions
Year Ended December 31, 1994
<CAPTION>
Number of Number of Purchase Selling Cost of Net Gain
Description of Assets Transactions Shares Price Price (1) Asset (1) (Loss)
- ------------------------------------------ ------------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) - series of transactions in
excess of 5% of plan assets:
Justin Industries, Inc. Common Stock 14 118,414 $1,547,587 $ - $1,547,587 $ -
Justin Industries, Inc. Common Stock 6 60,749 $ - $ 750,979 $ 391,563 $359,416
Institutional Liquid Assets
U. S. Government Securities 19 1,155,732 $1,155,732 $ - $1,155,732 $ -
Institutional Liquid Assets
U. S. Government Securities 13 1,151,485 $ - $1,151,485 $1,151,485 $ -
<FN>
(1) - Also represents market value at date of transaction.
Note: All transactions were made on the market. There were no category (i),
(ii), or (iv) reportable transactions during 1994.
</TABLE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-52783) pertaining to the Employee Stock Ownership Plan of Justin
Industries, Inc. of our report dated July 10, 1995, with respect to the
financial statements and schedules of the Justin Industries, Inc. Employee Stock
Ownership Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1994.
/S/ ERNST & YOUNG LLP
Fort Worth, Texas
July 10, 1995
