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 September 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: 26,698,583 shares of the
Company's Common Stock ($2.50 par value) were outstanding as of October 26,
1995.
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JUSTIN INDUSTRIES, INC.
Index
Page No.
PART I. FINANCIAL INFORMATION
Financial Statements:
Consolidated Balance Sheet
September 30, 1995 and December 31, 1994 3
Consolidated Statement of Income
Three Months and Nine Months Ended
September 30, 1995 and 1994 4
Consolidated Statement of Shareholders' Equity
Nine Months Ended September 30, 1995 and 1994 4
Consolidated Statement of Cash Flows
Nine Months Ended September 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>
September 30, December 31,
1995 1994
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,389 $ 6,071
Accounts receivable, less allowance for doubtful
accounts of $3,925 and $3,219, respectively 88,965 82,266
Inventories:
Finished goods 133,241 124,340
Work-in-process 5,923 6,834
Raw materials 31,149 29,720
------------- -------------
Total inventories 170,313 160,894
Income taxes 11,274 8,387
Prepaid expenses 2,343 1,953
------------- -------------
Total current assets 276,284 259,571
Assets held for sale 4,945 5,523
Other assets 23,609 24,367
Property, plant, and equipment, at cost:
Land 17,486 17,204
Buildings and equipment 219,025 208,513
Construction-in-progress 9,086 3,935
------------- -------------
245,597 229,652
Less accumulated depreciation 152,879 144,192
------------- -------------
Net property, plant, and equipment 92,718 85,460
------------- -------------
$ 397,556 $ 374,921
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 10,000 $ 5,000
Trade accounts payable 20,627 19,087
Accrued payroll items 13,197 11,775
Other accrued items 28,434 27,967
Dividends payable 1,076 1,089
Current portion of long-term debt 8,928 8,931
------------- -------------
Total current liabilities 82,262 73,849
Long-term debt, less current portion 71,379 65,323
Deferred income taxes 13,839 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 16,841 16,959
Retained earnings 154,432 140,593
Treasury stock, at cost, 1,140,365 and 637,237 shares, respectively (10,871) (5,326)
------------- -------------
Total shareholders' equity 230,076 221,900
------------- -------------
$ 397,556 $ 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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales:
Building Materials $ 61,852 $ 62,435 $180,797 $167,334
Footwear 50,569 57,257 155,196 177,143
--------- --------- --------- ---------
112,421 119,692 335,993 344,477
Costs and expenses:
Cost of goods sold 72,610 76,519 217,955 223,160
Selling, general, and administrative expenses 29,368 27,342 87,426 78,277
Interest expense 1,345 1,167 3,716 2,787
--------- --------- --------- ---------
103,323 105,028 309,097 304,224
--------- --------- --------- ---------
Income before income taxes 9,098 14,664 26,896 40,253
Provision for income taxes 3,320 5,224 9,816 14,692
--------- --------- --------- ---------
Net income $ 5,778 $ 9,440 $ 17,080 $ 25,561
========= ========= ========= =========
Earnings per share $ .21 $ .34 $ .62 $ .92
========= ========= ========= =========
</TABLE>
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Nine Months Ended September 30, 1995 and 1994
In Thousands of Dollars (Except 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 - - - 17,080 -
Purchase of 569,000 shares of
stock for treasury - - - - (6,082)
Exercise of stock options - - (118) - 537
Cash dividends declared ($.12 per share) - - - (3,241) -
---------- ---------- ---------- ---------- ----------
Balance September 30, 1995 $ - $ 69,674 $ 16,841 $ 154,432 $ (10,871)
========== ========== ========== ========== ==========
Balance January 1, 1994 $ - $ 69,674 $ 17,047 $ 108,038 $ (5,956)
Net income - - - 25,561 -
Exercise of stock options - - (31) - 368
Cash dividends declared ($.12 per share) - - - (3,262) -
---------- ---------- ---------- ---------- ----------
Balance September 30, 1994 $ - $ 69,674 $ 17,016 $ 130,337 $ (5,588)
========== ========== ========== ========== ==========
<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>
Nine Months Ended
September 30,
---------------------
1995 1994
---------------------
(Unaudited)
<S> <C> <C>
Operating activities:
Net income $17,080 $25,561
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 11,019 10,324
Provision for losses on accounts receivable 1,045 1,378
(Gain) loss on sale of property, equipment and other assets 177 (11)
Deferred federal income tax (10) (43)
Changes in assets and liabilities:
Increase in accounts receivable (7,744) (11,087)
Increase in inventories (9,419) (17,538)
Increase in other current assets (3,277) (4,020)
Increase in accounts payable and accrued expenses 3,429 8,093
-------- --------
Net cash provided from operating activities 12,300 12,657
Investing activities:
Proceeds from the sale of property, equipment and other assets 500 556
Capital expenditures (18,338) (11,307)
(Increase) decrease in investments and other assets, including reclassifications 720 (1,084)
Acquisition of American Tile Supply, net of cash acquired - (9,332)
-------- --------
Cash used in investing activities (17,118) (21,167)
Financing activities:
Additions to debt 35,000 27,500
Repayment of debt (23,947) (22,171)
Dividends paid (3,254) (3,260)
Purchases of treasury stock (6,082) (30)
Exercise of stock options 419 367
-------- --------
Cash provided by financing activities 2,136 2,406
-------- --------
Net decrease in cash (2,682) (6,104)
Cash at beginning of period 6,071 10,587
-------- --------
Cash at end of period $ 3,389 $ 4,483
======== ========
See notes to consolidated financial statements.
</TABLE>
(Page 5)
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JUSTIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 September 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 27,494,000 in
1995 and 27,810,000 in 1994.
1994 Acquisition
Effective August 1, 1994, the Company purchased American Tile Supply Company
and its related companies ("American Tile"). Results of operations of American
Tile are included in the accompanying 1994 statements from the date of
acquisition.
(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 third quarter of 1995 were $112.4
million versus $119.7 million for the same quarter in 1994, a decrease of 6.1%.
Consolidated net sales for the first nine months of 1995 were $336 million
compared to $344.5 for the nine months ended September 30, 1994.
Building Materials Segment Sales - Sales in the Building Materials
segment for 1995's third quarter decreased .9% to $61.9 million compared
to the same quarter of 1994. For the nine months ended September 30,
1995, net sales increased 8% to $180.8 million compared to the same
period in 1994. Sales for Acme Brick Company ("Acme") declined
approximately 10.3% in the third quarter and 9.1% for the nine month
period of 1995 compared to the same periods a year ago due to declines
in housing starts in Acme's six state market area in 1995. The
acquisition of American Tile Supply Company ("American Tile"), effective
August 1, 1994, contributed approximately $10 million in revenues during
1995's third quarter and $29.2 million for the nine month period of
1995. Sales for the two months after American Tile's acquisition in
1994 totaled $6 million. Featherlite Building Products Corporation's
sales are ahead of last year's pace by approximately 6.4%, reaching an
all-time high of $33.5 million for the nine month period. Increased
commercial construction activity in its market areas and improved
pricing contributed to higher sales in both block and cut limestone
products. Tradewinds Technologies, Inc., manufacturer of evaporative
cooling units, posted declines in revenues for the 1995 periods compared
to a year ago due to unusually mild summer weather in its market areas.
Footwear Segment Sales - Total Footwear sales for the quarter ended
September 30, 1995 declined 11.7% to $50.6 million from 1994's third
quarter of $57.3 million. For the nine months ended September 30, 1995,
revenues were 12.4% behind the same period a year ago. All three
operations, Justin Boot Company, Nocona Boot Company and Tony Lama
Company, Inc., experienced a slower third quarter in 1995. While
average pricing improved, units shipped declined compared to a year ago.
All lines of footwear experienced declines compared to 1994's periods
due to slower retail spending nationwide and changes in fashion trends.
Costs and Expenses - The consolidated gross profit margin declined in the
third quarter of 1995 to 35.4% compared to 36.1% in the same quarter of 1994.
For the nine month periods ended September 30, 1994 and 1995, the gross profit
margins were relatively unchanged at 35.2% in 1994 compared to 35.1% in 1995.
Building Materials' margins decreased from 42.5% in 1994's third quarter to
41.5% in the third quarter of 1995. During the first nine months of 1995, the
ratio for Building Materials declined to 41.3% from 41.8% for the same period in
1994. While brick margins exceeded those of last year, American Tile's lower
margins for purchased products contributed to the overall decline. The gross
margin in the Footwear business was 27.9% for the third quarter and first nine
months of 1995 versus 29% for the third quarter and for the first nine months of
1994. Reduced Footwear sales and production levels have contributed to the
decline in margins.
Selling, general and administrative expenses increased to 26.1% of sales in
the third quarter of 1995 compared to 22.8% in the third quarter of 1994. For
the first nine months of 1995, such expenses were 26% of sales compared to 22.7%
during the first nine months of 1994. The increases are primarily due to lower
sales volumes in the Footwear segment and the acquisition of American Tile
during the third quarter of 1994. Beginning in the third quarter of 1994, a
program was initiated to reduce general and administrative costs in the Footwear
segment on a long-term basis. Costs associated with this reorganization have
been incurred throughout 1995. The program, which includes consolidation of
various administrative and accounting functions, is expected to be completed in
late 1995, with resultant savings to begin in 1996.
(Page 7)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Interest expense increased 15.3% in the third quarter to $1,345,000 from
$1,167,000 in the same three month period of 1994. During the nine months ended
September 30, 1995 compared to the same period in 1994, interest expense
increased $929,000 or 33.3%. These increases are attributable to higher average
effective rates during the periods, offset by lower average debt levels.
Provision for Income Taxes - The Company's provision for income tax was 36.5%
of pre-tax income in the third quarter and for the first nine months of 1995,
which is the current estimated effective rate for the full year. During the
same periods in 1994, effective annual rates of 35.6% and 36.5%, respectively,
were estimated.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 1995, working capital amounted to $194 million versus $185.7
million at December 31, 1994. Cash decreased from $6.1 million at year-end 1994
to $3.4 million at the end of 1995's third quarter. During the first nine
months of 1995, net cash of $12.3 million was provided from operations after
usage for the seasonal increase in accounts receivable and inventories. Net
cash advances of $11.1 million were provided under the company's credit
facilities. Uses of cash during the 1995 nine month period include the purchase
of 569,000 shares of treasury stock at a cost of $6 million, purchase of capital
equipment, and payment of cash dividends to shareholders.
Total interest-bearing debt increased to $90.3 million from $79.2 million at
year end 1994. The ratio of long-term debt-to-equity was .31 to 1 at September
30, 1995 compared to .29 to 1 at year-end 1994. Borrowings should decrease
during the next quarter as receivables from Footwear's seasonal sales become
due. At September 30, 1995, unused credit facilities totaled $25 million, an
amount well above the company's estimated requirements.
Cash dividends declared in the third quarter of 1995 and 1994 amounted to
$.04 a share. During each of the nine month periods ended September 30 in 1995
and 1994, dividends were declared amounting to $.12 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 26th day of October 1995.
(Page 9)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 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> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 3389
<SECURITIES> 0
<RECEIVABLES> 92890
<ALLOWANCES> 3925
<INVENTORY> 170313
<CURRENT-ASSETS> 276284
<PP&E> 245597
<DEPRECIATION> 152879
<TOTAL-ASSETS> 397556
<CURRENT-LIABILITIES> 82262
<BONDS> 0
<COMMON> 69674
0
0
<OTHER-SE> 160402
<TOTAL-LIABILITY-AND-EQUITY> 397556
<SALES> 335993
<TOTAL-REVENUES> 335993
<CGS> 217955
<TOTAL-COSTS> 217955
<OTHER-EXPENSES> 87426
<LOSS-PROVISION> 1045
<INTEREST-EXPENSE> 3716
<INCOME-PRETAX> 26896
<INCOME-TAX> 9816
<INCOME-CONTINUING> 17080
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17080
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
