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, 1996
[ ] 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
June 27, 1997
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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 benefits
of Justin Industries, Inc. Employee Stock Ownership Plan (the Plan) as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for 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 benefits of Justin
Industries, Inc. Employee Stock Ownership Plan at December 31, 1996 and 1995,
and the changes in net assets available for 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, 1996, 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 supplemental
schedules 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
June 19, 1997
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<TABLE>
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Benefits
<CAPTION>
December 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Assets:
Cash and cash investments $ 898,161 $ 21,736
Participants' contributions receivable 255,160 271,467
Company contribution receivable 282,180 1,242,385
Dividends and interest receivable 116,999 119,285
Receivable from merger of ATS Plan - 87,397
Investments, at fair value:
Common stock of Justin Industries, Inc.
($19,000,905 cost and 2,824,777 shares in 1996,
$18,563,327 cost and 2,921,717 shares in 1995) 32,484,935 32,138,890
Mutual funds:
Merrill Lynch Growth Fund 2,118,108 831,262
Merrill Lynch Global Allocation Fund 981,534 536,046
Merrill Lynch Capital Fund 624,951 291,155
Money market funds:
Merrill Lynch Retirement Preservation Trust 431,995 244,651
Merrill Lynch Ready Assets Trust - 325,600
----------- -----------
Total investments 36,641,523 34,367,604
----------- -----------
Total assets 38,194,023 36,109,874
Liabilities:
Participants' contributions refundable 235,415 174,631
----------- -----------
Net assets available for benefits $37,958,608 $35,935,243
=========== ===========
</TABLE>
<TABLE>
Statements of Changes in Net Assets Available for Benefits
<CAPTION>
Year Ended December 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
Investment income (loss):
Dividends and interest $ 782,646 $ 619,921
Net appreciation/(depreciation) in fair value
of investments 1,722,643 (2,816,625)
----------- -----------
Total investment income (loss) 2,505,289 (2,196,704)
Contributions:
Participants 3,165,683 3,143,486
Company 1,180,772 1,242,385
----------- -----------
Total contributions 4,346,455 4,385,871
Participants' withdrawals (4,828,379) (3,558,888)
----------- -----------
2,023,365 (1,369,721)
Merger of ATS Plan - 434,733
Net assets available for benefits at beginning of year 35,935,243 36,870,231
----------- -----------
Net assets available for benefits at end of year $37,958,608 $35,935,243
=========== ===========
<FN>
See accompanying notes.
</TABLE>
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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 primarily 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 $9,500 in
1996 and $9,240 in 1995.
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 1996 and 1995, all employees' contributions were matched at
50 percent up to $7,500.
Any employee of the Company may rollover into the Plan distributions made
from a previous employer's qualified retirement plan.
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.
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.
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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.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Contributions by participants and participating employers are accounted for on
the accrual basis once determined. Benefit payments are recorded when paid.
3. PLAN MERGER
Effective December 29, 1995, the ATS 401(k) Profit Sharing Plan and Trust (the
"ATS Plan") was merged into the Plan. Total assets transferred and related
receivables related to the ATS Plan amounted to $434,733. All participants in
the former ATS Plan were fully vested as of December 29, 1995. Former
participants in the ATS Plan were eligible to participate in the Plan effective
January 1, 1996.
As of December 31, 1995, certain assets of the ATS Plan that were transferred to
the Plan on December 29, 1995 were temporarily invested in the Merrill Lynch
Ready Assets Trust (money market fund) until instructions from participants were
received and allocations could be made to the participant directed investment
funds of the Plan.
4. PLAN AMENDMENT
The Plan was amended in 1995 to incorporate the benefits, rights and features of
the ATS Plan which are protected under Internal Revenue Code Section 411(d)(6).
5. 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.
================================================================================
6. PARTICIPANTS' CONTRIBUTIONS REFUNDABLE
As a result of non-discrimination testing on 1996 and 1995 contributions,
certain "highly compensated" employees received refunds in 1997 and 1996 of
excess contributions. Such amounts have been accrued in the accompanying
financial statements as a liability of the Plan as of the end of each Plan year.
7. ADMINISTRATIVE EXPENSES
All expenses of Plan administration may be paid out of Plan assets unless paid
by the Company at its discretion. In 1996 and 1995, 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.
8. INVESTMENT ACTIVITY
Net assets available for benefits at the end of 1996 and changes in net assets
available for benefits for the years ended December 31, 1996 and 1995 by funds
(fund information) are as follows:
<TABLE>
<CAPTION>
1996
- -------------------------------------------------------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------
Merrill Merrill
Lynch Merrill Lynch Justin Justin
Merrill Global Lynch Retirement Industries, Industries,
Lynch Allocation Capital Preservation Inc. Inc.
Growth Fund Fund Fund Trust Common Stock Common Stock Other Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends and
interest $158,312 $91,149 $54,004 $20,538 $63,660 $402,074 $(7,091) $782,646
Net appreciation
of fair value of
investments 240,265 25,466 9,775 - 378,287 1,068,481 369 1,722,643
Contributions:
Participants' 734,356 393,704 246,200 152,403 1,711,740 - (72,720) 3,165,683
Company - - - - - 1,242,385 (61,613) 1,180,772
Participants'
withdrawals (234,689) (132,519) (55,857) (62,484) (836,166) (3,506,180) (484) (4,828,379)
Interfund transfers 164,077 8,063 41,800 10,084 43,330 (267,470) 116 -
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
1,062,321 385,863 295,922 120,541 1,360,851 (1,060,710) (141,423) 2,023,365
Merger of ATS Plan 224,525 59,625 37,874 66,803 45,906 - (434,733) -
Net assets at
beginning of year 831,262 536,046 291,155 244,651 4,245,466 27,893,422 1,893,241 35,935,243
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
Net assets at end
of year $2,118,108 $981,534 $624,951 $431,995 $5,652,223 $26,832,712 $1,317,085 $37,958,608
========== ========== ========== ========== ========== =========== ========== ===========
</TABLE>
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<TABLE>
<CAPTION>
1995
- -------------------------------------------------------------------------------------------------------------------------------
Non-
Participant
Participant Directed Directed
-----------------------------------------------------------------------------
Merrill Merrill
Lynch Merrill Lynch Justin Justin
Merrill Global Lynch Retirement Industries, Industries,
Lynch Allocation Capital Preservation Inc. Inc.
Growth Fund Fund Fund Trust Common Stock Common Stock Other Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dividends and
interest $68,520 $39,733 $26,702 $9,378 $35,735 $438,775 $1,078 $619,921
Net appreciation/
(depreciation) of
fair value of
investments 57,440 27,279 18,065 - (116,515) (2,802,894) - (2,816,625)
Contributions:
Participants' 540,574 364,548 184,757 149,809 2,014,736 - (110,938) 3,143,486
Company - - - - - 1,239,712 2,673 1,242,385
Participants'
withdrawals (55,741) (16,601) (13,764) (15,365) (299,220) (3,158,197) - (3,558,888)
Interfund transfers 34,370 (3,094) 16,434 52,230 (481,891) 382,052 (101) -
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
645,163 411,865 232,194 196,052 1,152,845 (3,900,552) (107,288) (1,369,721)
Merger of ATS Plan - - - - - - 434,733 434,733
Net assets at
beginning of year 186,099 124,181 58,961 48,599 3,092,621 31,793,974 1,565,796 36,870,231
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
Net assets at end
of year $831,262 $536,046 $291,155 $244,651 $4,245,466 $27,893,422 $1,893,241 $35,935,243
========== ========== ========== ========== ========== =========== ========== ===========
</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.
Year Ended December 31,
------------------------
1996 1995
----------- -----------
Realized gain on sales of investments:
Proceeds from sales of investments $ 5,371,792 $ 4,057,262
Cost of investments 3,793,192 2,842,665
----------- -----------
Realized gain $ 1,578,600 $ 1,214,597
=========== ===========
Unrealized appreciation (depreciation) on investments:
Unrealized appreciation at beginning of year $13,651,690 $17,682,912
Net unrealized appreciation (depreciation)
during the year 144,043 (4,031,222)
----------- -----------
Unrealized appreciation at end of year $13,795,733 $13,651,690
=========== ===========
9. 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.
10. 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 gains using the DOL's method for
1996 amounted to $256,414 and $1,466,229, respectively.
In addition, 1996's net assets available for benefits is $894,237 less and
participants' withdrawals is $894,237 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, 1996 but not yet paid as of that date.
================================================================================
<TABLE>
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Assets Held for Investment Purposes
December 31, 1996
<CAPTION>
Par Amount/
Shares/
Description Units Cost Fair Value
- -------------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
Merrill Lynch Growth Fund for
Investment and Retirement 81,060 $ 1,863,142 $ 2,118,108
Merrill Lynch Global Allocation
Fund, Inc. 67,459 946,538 981,534
Merrill Lynch Capital Fund, Inc. 20,127 603,209 624,951
Merrill Lynch Retirement
Preservation Trust 431,995 431,996 431,995
Justin Industries, Inc.
Common Stock * 2,824,777 19,000,905 32,484,935
----------- -----------
$22,845,790 $36,641,523
=========== ===========
* - Indicates party-in-interest to the Plan.
</TABLE>
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<TABLE>
JUSTIN INDUSTRIES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
Schedule of Reportable Transactions
Year Ended December 31, 1996
<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 31 297,281 $3,476,716 $ - $3,476,716 $ -
Justin Industries, Inc. Common Stock 109 258,227 $ - $2,971,684 $2,154,124 $817,560
<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 1996.
</TABLE>
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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 June 19, 1997, 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, 1996.
/S/ ERNST & YOUNG LLP
Fort Worth, Texas
June 25, 1997
