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 JUNE 30, 1999
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
JUSTIN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Texas 75-0102185
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2821 West 7th Street
Fort Worth, TX 76107
(Address of principal executive officers)
(Zip Code)
(817) 336-5125
(Registrant's telephone number including area code)
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 XX NO ____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 25,461,987 shares of the
Company's Common Stock ($2.50 par value) were outstanding as of August 11, 1999.
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JUSTIN INDUSTRIES, INC.
Table of Contents
Page No.
PART I. FINANCIAL INFORMATION --------
Item 1. Financial Statements:
Consolidated Balance Sheet
June 30, 1999 and December 31, 1998 3
Consolidated Statement of Income
Three and Six Months Ended June 30, 1999 and 1998 4
Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 1999 and 1998 4
Consolidated Statement of Cash Flows
Six Months Ended June 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 14
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.
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
<CAPTION>
In Thousands of Dollars
June 30, December 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash $ 11,916 $ 5,100
Accounts receivable, less allowance for doubtful
accounts of $3,773 and $3,534, respectively 84,245 80,155
Inventories:
Finished goods 102,745 106,706
Work-in-process 4,210 4,663
Raw materials 26,502 25,206
------------ ------------
Total inventories 133,457 136,575
Income taxes 7,081 7,093
Prepaid expenses 2,436 2,472
------------ ------------
Total current assets 239,135 231,395
Other assets, at cost 40,155 40,766
Assets held for sale 2,809 2,809
Property, plant, and equipment, at cost:
Land 20,134 20,704
Buildings and equipment 298,897 277,134
Construction-in-progress 26,466 10,913
------------ ------------
345,497 308,751
Less accumulated depreciation 191,044 186,829
------------ ------------
Net property, plant, and equipment 154,453 121,922
------------ ------------
$ 436,552 $ 396,892
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Trade accounts payable $ 20,288 $ 18,925
Other accrued items 39,119 36,575
------------ ------------
Total current liabilities 59,407 55,500
Long-term debt 62,750 30,750
Deferred income taxes 20,613 18,074
Shareholders' equity 293,782 292,568
------------ ------------
$ 436,552 $ 396,892
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
In Thousands of Dollars (Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $127,451 $119,090 $240,478 $222,870
Costs and expenses:
Cost of goods sold 80,357 74,698 150,751 141,881
Selling, general, and 33,806 30,876 67,057 60,070
administrative expenses
Interest expense 596 502 1,067 889
-------- -------- -------- --------
114,759 106,076 218,875 202,840
-------- -------- -------- --------
Income before income taxes 12,692 13,014 21,603 20,030
Provision for income taxes 4,524 4,750 7,777 7,311
-------- -------- -------- --------
Net income $ 8,168 $ 8,264 $ 13,826 $ 12,719
======== ======== ======== ========
Earnings per share:
Basic $ .32 $ .31 $ .54 $ .48
======== ======== ======== ========
Diluted $ .32 $ .31 $ .54 $ .48
======== ======== ======== ========
</TABLE>
<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Six Months Ended June 30, 1999 and 1998
<CAPTION>
In Thousands of Dollars (Except Share and Per Share Data)
Capital In Unearned
Preferred Common Excess of Retained Compen- Treasury
Stock Stock Par Value Earnings sation Stock
- ----------------------- --------- -------- ---------- -------- -------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1999 $ - $ 69,674 $ 15,685 $223,915 $ - $ (16,706)
Net income - - - 13,826 - -
Purchase of 935,200
shares of stock
for treasury - - - - - (10,166)
Issuance of 70,000 shares
of restricted stock - 175 1,010 - (1,174) -
Exercise of stock options - - (26) - - 114
Cash dividends declared
($.10 per share) - - - (2,545) - -
--------- -------- ---------- -------- -------- ---------
Balance June 30, 1999 $ - $ 69,849 $ 16,669 $235,196 $ (1,174) $ (26,758)
========= ======== ========== ======== ======== =========
Balance January 1, 1998 $ - $ 69,674 $ 16,040 $202,645 $ - $ (15,379)
Net income - - - 12,719 - -
Exercise of stock options - - (55) - - 490
Cash dividends declared
($.10 per share) - - - (2,640) - -
--------- -------- ---------- -------- --------- ---------
Balance June 30, 1998 $ - $ 69,674 $ 15,985 $212,724 $ - $ (14,889)
========= ======== ========== ======== ========= =========
<FN>
See notes to consolidated financial statements.
</TABLE>
4
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<TABLE>
JUSTIN INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
In Thousands of Dollars
Six Months Ended
June 30,
------------------------
1999 1998
---------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 13,826 $ 12,719
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 8,836 8,683
Amortization 1,110 430
Provision for losses on accounts receivable 417 875
(Gain) loss on sale of property, plant, and equipment 107 (83)
Non-cash compensation expense 11 -
Changes in assets and liabilities:
Increase in accounts receivable (2,469) (5,794)
(Increase) decrease in inventories 5,786 (1,433)
Decrease in other current assets 400 270
Increase (decrease) in accounts payable
and accrued expenses 2,187 (6,253)
---------- ----------
Net cash provided from operating activities 30,211 9,414
Cash flows from investing activities:
Proceeds from the sale of property, plant, and equipment 1,146 129
Capital expenditures (23,384) (11,102)
(Increase) decrease in other long-term assets 75 (3,343)
Acquisition of Texas Clay and Eureka Brick
in 1999, net of cash acquired (20,566) -
---------- ----------
Net cash used in investing activities (42,729) (14,316)
Cash flows from financing activities:
Borrowings 42,000 15,000
Repayment of borrowings (10,000) (7,000)
Dividends paid (2,588) (2,638)
Purchase of treasury stock (10,166) (36)
Proceeds from exercise of stock options 88 471
---------- ----------
Net cash provided from financing activies 19,334 5,797
---------- ----------
Net increase in cash 6,816 895
Cash at beginning of period 5,100 5,113
---------- ----------
Cash at end of period $ 11,916 $ 6,008
========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
5
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JUSTIN INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
1. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. Interim results are not necessarily indicative of results
for a full year.
A summary of the company's significant accounting policies is presented on
page 24 of its 1998 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 1999.
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.
2. 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 June 30, 1999, the company
was in compliance with all such requirements and restrictions.
3. Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share: (in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
Numerator for basic and
diluted earnings per share $ 8,168 $ 8,264 $ 13,826 $ 12,719
======== ======== ======== ========
Denominator for basic
earnings per share--
weighted average shares 25,377 26,372 25,565 26,399
Effect of dilutive securities:
Employee stock options 242 387 213 304
Convertible preferred stock 3 3 3 3
-------- -------- -------- --------
Dilutive potential common shares 245 390 216 307
-------- -------- -------- --------
Denominator for diluted
earnings per share--
adjusted weighted average
shares and assumed conversions 25,622 26,762 25,781 26,706
======== ======== ======== ========
Basic earnings per share $ .32 $ .31 $ .54 $ .48
======== ======== ======== ========
Diluted earnings per share $ .32 $ .31 $ .54 $ .48
======== ======== ======== ========
6
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4. Employment Agreements and Other Performance Awards
In April 1999, the Company executed employment agreements with two executive
officers and entered into other agreements with the Chairman, another executive
officer and the Chief Executive of the Building Materials group.
Two of the employment agreements expire on December 31, 2000 and provide for,
in addition to continued compensation, the award of performance based restricted
stock and the grant of stock options that vest in two years. The agreement with
the Building Materials executive provides for the award of restricted stock and
stock options that vest over a two year period. The agreement with the Chairman
awards performance based restricted stock and grants stock options that vest in
two years. The third executive officer was granted stock options that vest in
two years.
A total of 70,000 shares of restricted stock was awarded in accordance with
these agreements under the 1999 Performance Incentive Plan. The restricted
stock awards had a weighted average fair market value of $16.93 per share when
granted. These shares vest 50% if Justin's common stock closes at $16 and vest
25% if it closes at $18 and $20 for any 10 consecutive trading days during the
next five years. Unearned compensation expense for these awards of $1,185,000
will be recognized over the vesting period, or for performance based awards,
when it becomes probable that the performance criteria will be met. A total of
133,000 stock options were granted under these agreements at the current market
price on date of grant of $13.06.
5. Segment Disclosures
The following information is presented as required by Statement No. 131: (in
thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended Building Total
June 30, 1999 Materials Footwear All Other Totals
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 87,623 $ 39,828 $ - $127,451
Operating profit (loss) 16,409 (1,880) (1,241) 13,288
Depreciation and amortization expense 3,437 1,436 170 5,043
Identifiable assets 240,724 169,893 25,935 436,552
Expenditures for acquisition of Eurika Brick 7,817 - - 7,817
Expenditures for long-lived assets 13,508 657 4 14,169
- --------------------------------------------------------------------------------------------
Three Months Ended
June 30, 1998
- --------------------------------------------
Net sales (1) $ 75,980 $ 41,764 $ 1,346 $119,090
Operating profit (loss) 14,521 510 (1,515) 13,516
Depreciation and amortization expense 3,327 1,231 81 4,639
Identifiable assets 187,254 171,347 29,730 388,331
Expenditures for long-lived assets 5,244 1,816 53 7,113
- --------------------------------------------------------------------------------------------
</TABLE>
7
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<TABLE>
<CAPTION>
Six Months Ended Building Total
June 30, 1999 Materials Footwear All Other Totals
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $165,515 $ 74,963 $ - $240,478
Operating profit (loss) 30,166 (4,636) (2,860) 22,670
Depreciation and amortization expense 7,089 2,623 234 9,946
Identifiable assets 240,724 169,893 25,935 436,552
Expenditures for acquisition of Texas Clay
and Eureka Brick 19,887 - - 19,887
Expenditures for long-lived assets 21,981 1,248 155 23,384
- --------------------------------------------------------------------------------------------
Six Months Ended
June 30, 1998
- --------------------------------------------
Net sales (1) $138,358 $ 81,629 $ 2,883 $222,870
Operating profit (loss) 22,367 1,106 (2,554) 20,919
Depreciation and amortization expense 6,645 2,253 215 9,113
Identifiable assets 187,254 171,347 29,730 388,331
Expenditures for long-lived assets 7,807 3,232 63 11,102
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1999 June 30, 1999
------------------ ------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Reconciliation
Total operating profit above $ 13,288 $ 13,516 $ 22,670 $ 20,919
Interest expense 596 502 1,067 889
-------- -------- -------- --------
Consolidated income before income taxes $ 12,692 $ 13,014 $ 21,603 $ 20,030
======== ======== ======== ========
<FN>
(1) Net sales from reportable segments below the quantitative thresholds are
attributable to the Company's evaporative cooler business. This segment has
never met the quantitative thresholds for determining reportable segments. This
business was sold effective December 31, 1998.
</TABLE>
6. Acquisitions and Disposition
Effective December 31, 1998, the Company sold its evaporative cooler
business, Tradewinds Technologies, Inc., for cash of approximately $3.2 million.
The effects of the sale and the operations of Tradewinds, which are included in
All Other in the reportable segments disclosures, are immaterial to consolidated
operations.
Effective July 1, 1998, the Company's subsidiary, Acme Brick Company,
purchased Witt Brick for a total purchase price of approximately $2,400,000.
Assets acquired primarily included accounts receivable and inventory. Witt
Brick was a brick distributor in Temple, Texas. Operations of the business,
which are immaterial to consolidated operations, are included in the
Consolidated Statement of Income from date of acquisition.
In early January 1999, Acme Brick Company acquired the assets of Texas Clay
Industries, a division of Temtex Industries, Inc. The total purchase price of
approximately $13.7 million was paid $12.7 million in cash plus assumption of
approximately $1 million in liabilities. The assets acquired consisted of
approximately $1.2 million in accounts receivable, $1.3 million in inventory and
supplies, and $11.2 million in land, buildings, and equipment related to one
brick plant and associated clay reserves in Malakoff, Texas, approximately 70
miles southeast of the Fort Worth/Dallas metroplex area. Sales generated by
this plant in 1998 approximated $11.7 million, which are considered immaterial
to consolidated operations. The plant added about 7% to Acme's production
capacity. The acquisition has been accounted for as a purchase in 1999, and as
such, the results of operations of the plant, which are immaterial to
consolidated operations, are included with that of the Company from the date of
closing, January 5, 1999.
8
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Effective June 30, 1999, Acme Brick Company acquired Eureka Brick and Tile.
The total purchase price, net of cash acquired, was approximately $7.8 million.
The assets acquired consisted of approximately $.8 million in accounts
receivable, $1.7 million in inventory and supplies, and $8 million in land,
buildings, and equipment related to one brick plant and associated clay reserves
in Clarksville, Arkansas, about 60 miles east of Fort Smith and about 100 miles
from Little Rock. Sales generated by this plant prior to acquisition are
considered immaterial to consolidated operations. The plant added about 5% to
Acme's production capacity. The acquisition has been accounted for as a
purchase in 1999, and as such, the results of operations of the plant, which are
immaterial to consolidated operations, will be included with that of the Company
from the date of closing, June 30, 1999.
7. Commitments and Contingencies
Commitments to Construct New Brick and Block Plants - The Company is
currently constructing new brick and block plants in South Texas. At June 30,
1999, the remaining commitments for these capital projects, expected to be
completed in late 1999, were approximately $15.9 million.
Footwear Computer System - As previously reported, the Footwear division
has had significant difficulties with new computer systems activated at the
beginning of October 1998. It appears these problems have been substantially
solved; however, the Company believes higher than normal amounts will be spent
in this area over the remainder of the year.
Restructuring Charges - In July 1999, the Company's Footwear division
committed to specific steps to be taken as part of its new strategic planning
initiatives to improve Footwear operating results. These steps include
repositioning certain product lines, reducing the number of stock items,
expanding distribution channels, plant closings, and realigning other
administrative operations. These steps are currently being evaluated as to the
costs of exiting certain activities. A restructuring charge for exit costs of
between $4 and $6 million is expected to be recognized during the third quarter
of 1999. In addition, inventories are being evaluated in light of these changes
and additional valuation reserves may be necessary.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Sales - Consolidated net sales for the three months ended June 30, 1999, of
$127.4 million were 7% over the $119.1 million reported for 1998's second
quarter. For the first six months of 1999, consolidated net sales were $240.5
million, 7.9% greater than 1998's first half sales of $222.9 million.
Building Materials Segment Sales - Sales in the Building Materials
segment increased approximately 15.3% from the second quarter of 1998.
For the first six months of 1998, segment sales were $165.5 million, an
increase of 19.6% over 1998. Acme Brick Company ("Acme") shipped 9.6%
more brick in 1999's second quarter than the previous year while average
unit pricing during the quarter was 6.6% above 1998. A strong
construction environment in Acme's market areas and the acquisition of
additional capacity through the purchase of Texas Clay in January 1999
account for these excellent results. Acme completed the acquisition of
another brick plant in Arkansas effective June 30, 1999 that will add
another 5% to production capacity. In addition, a new brick plant is
currently under construction near Austin, Texas that is expected to open
in late 1999. At the end of June 1999, backlogs were at record levels
and 55% higher than a year ago.
American Tile Supply Company's ("American Tile") revenues grew 11.8%
compared to the first half of 1998. New locations added during 1998
accounted for the majority of the increases in 1999. In May 1999,
American Tile opened a new location in Little Rock, Arkansas.
Featherlite Building Products Corporation's ("Featherlite") increased
sales 18.2% in 1999 over the same six month period a year ago. Units
shipped were higher, while average price per unit remained steady.
Featherlite's Dallas and Austin plants posted particularly strong
results, and the company is scheduled to open another new plant in San
Antonio late in 1999.
Footwear Segment Sales - Footwear achieved a 7.7% increase in net
units shipped for the three months ended June 30, 1999 compared to
1998's second quarter; however, net sales dollars declined 4.6%. These
results were primarily due to changes in product mix as Justin Boot
Company ("Justin") introduced new products at lower price points in
1999. In addition, during 1999, Tony Lama sold a collection of
discontinued products at discounted prices. Also, a portion of the
decline in sales dollars can be attributed to the discontinued Diamond J
product line that was active during 1998's first six months but had no
sales in 1999.
Comparing the six-month periods ended June 30, net units shipped were
down 2.1% while net sales dollars were down 8.2%. Shipping problems
experienced early in 1999 had much less impact on the business in the
second quarter of 1999. Backlogs remain good as demand for new products
withstood some continued shortages in supply during the quarter.
Costs and Expenses - The consolidated gross margin improved 2.7% to 37.3%
during 1999's first six months compared to 1998, although for the quarter-over-
quarter comparison, margins declined slightly. Building Materials' gross margin
increased to 41.7% in the first half of 1999 compared to 40.4% in the same
period of 1998, due primarily to Acme's higher volumes and higher average brick
selling prices. Footwear saw its average margins decline from 29.3% to 27.6%
for the six-month period primarily due to high returns and sale of discontinued
products at discounted prices.
Selling, general and administrative expenses were 26.5% of sales in the
second quarter of 1999 compared to 25.9% in the second quarter of 1998. For the
first six months of 1999, these expenses were 27.9% of net sales compared to 27%
for the first six months of 1998. This percentage for Building Materials'
improved in 1999's first quarter and year-to-date due to significant increases
in sales, while Footwear's percentage worsened significantly in 1999 as
warehousing and general and administrative costs associated with computer
problems were incurred in 1999 that were absent in 1998's first quarter.
10
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While the average effective interest rates decreased slightly in the first
half of 1999 compared to 1998, average debt levels increased during the same
period, resulting in an increase in interest expense from $889,000 in 1998's
first half to $1,067,000 in the first six months of 1999.
Provision for Income Taxes - The Company's provision for income tax was 36%
of pre-tax income in the first six months of 1999, the current estimated
effective rate for the full year, compared to 36.5% in the same period of 1998.
In July 1999, the Company's Footwear division committed to specific steps
to be taken as part of its new strategic planning initiatives to improve
Footwear operating results. These steps include repositioning certain product
lines, reducing the number of stock items, expanding distribution channels,
plant closings, and realigning other administrative operations. These steps are
currently being evaluated as to the costs of exiting certain activities. A
restructuring charge for exit costs of between $4 and $6 million is expected to
be recognized during the third quarter of 1999. In addition, inventories are
being evaluated in light of these changes and additional valuation reserves may
be necessary.
The information above contains forward-looking statements, including, without
limitation, statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequate resources that are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that forward-looking statements about the Company's
future business prospects should be read in conjunction with the Company's
disclosures under the heading Forward Looking Information.
FINANCIAL CONDITION AND LIQUIDITY
At June 30, 1999, working capital amounted to $179.7 million versus $175.9
million at December 31, 1998. Cash increased from $5.1 million at year-end to
$11.9 million at the end of 1999's second quarter. Building Materials'
receivables were up more than $5.6 million compared to year-end 1998 due to
higher sales volumes while Footwear inventories declined.
Cash provided by operating activities in the first half of 1999 totaled $30.2
million. These funds and bank financing were used primarily to acquire two
brick companies for approximately $20.6 million, net of cash obtained; purchase
$23.4 million of capital assets; buy 935,200 shares of treasury stock totaling
$10.2 million; and pay $2.6 million in dividends.
In the first half of 1999, total interest-bearing debt increased $32 million
to $62.8 million from $30.8 million at year-end 1998, and the ratio of long-term
debt-to-equity was increased to .21 to 1 from .11 to 1 at year-end. Borrowings
may increase over the next two quarters to finance seasonal working capital
needs as well as new plants under construction. At June 30, 1999, unused credit
facilities approximated $34 million, an amount well above the company's
estimated requirements.
Cash dividends declared in the first and second quarters of 1999 and 1998
were $.05 a share.
GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE
YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS
As more completely described on page 19 of the Company's 1998 Annual Report
to Shareholders, the Company has determined that only minor modifications or
replacement of portions of its IT software systems and non-IT systems, such as
those used in production, would be necessary in order to properly utilize dates
beyond December 31, 1999. Many of these changes have already been made.
Although the Company anticipates all remaining modifications or replacements
will be completed in the Fall of 1999, if such modifications and replacements
were not made, or were not completed timely, management believes the Year 2000
Issue would still not have a material impact on the operations of the Company.
To date, the Company is not aware of any external agent with a Year 2000 issue
that would materially affect the Company's results of operations, liquidity, or
capital resources. However, the Company has no means of ensuring that external
agents will be Year 2000 ready. The inability of external agents to complete
their Year 2000 resolution process in a timely fashion could materially impact
the Company. The effect of non-compliance by external agents is not
determinable.
11
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The information above contains forward-looking statements, including, without
limitation, statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequate resources that are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that forward-looking statements about the Year 2000
should be read in conjunction with the Company's disclosures under the heading
Forward Looking Information.
FORWARD LOOKING INFORMATION
Certain statements in this Item and elsewhere in this report are forward-
looking in nature and relate to trends and events that may affect the Company's
future financial position and operating results. Such statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The terms "expect," "anticipate," "intend," and "project"
and similar words or expressions are intended to identify forward-looking
statements. These statements speak only as of the date of this report. The
statements are based on current expectations, are inherently uncertain, are
subject to risks, and should be viewed with caution. Actual results and
experience may differ materially from the forward-looking statements as a result
of many factors, including changes in economic conditions in the markets served
by the Company, increasing competition, fluctuations in raw materials and energy
prices, increases in interest rates, and other unanticipated events and
conditions. It is not possible to foresee or identify all such factors. The
Company makes no commitment to update any forward-looking statement or to
disclose any facts, events, or circumstances after the date hereof that may
affect the accuracy of any forward-looking statement.
12
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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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders was held on April 16, 1999.
(b) The only matters submitted to a vote of security holders were for the
election of directors and approval of the 1999 Performance Incentive Plan. Each
of the persons named in the Proxy Statement as a nominee for director was
elected. The 1999 Performance Incentive Plan was also approved by the
shareholders. Following are the voting results for each of nominees for
director and for the 1999 Performance Incentive Plan:
Votes Votes
Election of Directors For Withheld
--------------------------- ------------ ------------
John Justin 23,139,256 716,827
J. T. Dickenson 23,142,091 713,992
Marvin Gearhart 23,140,969 715,114
Robert E. Glaze 23,132,387 723,696
Dee J. Kelly 22,991,291 864,792
Joseph R. Musolino 22,993,438 862,645
John V. Roach 23,146,721 709,362
Dr. William E. Tucker 23,149,750 706,333
Adoption of 1999 Votes Votes
Performance Incentive Plan For Withheld
-------------------------- ------------ ------------
22,622,092 1,233,991
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule for the period ended June 30, 1999
(b) Reports on Form 8-K
None.
13
===============================================================================
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
Senior Vice President/
Chief Financial Officer
Dated this 16th day of August 1999.
14
===============================================================================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 11916
<SECURITIES> 0
<RECEIVABLES> 88018
<ALLOWANCES> 3773
<INVENTORY> 133457
<CURRENT-ASSETS> 239135
<PP&E> 345497
<DEPRECIATION> 191044
<TOTAL-ASSETS> 436552
<CURRENT-LIABILITIES> 59407
<BONDS> 62750
0
0
<COMMON> 69849
<OTHER-SE> 223933
<TOTAL-LIABILITY-AND-EQUITY> 436552
<SALES> 240478
<TOTAL-REVENUES> 240478
<CGS> 150751
<TOTAL-COSTS> 150751
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 417
<INTEREST-EXPENSE> 1067
<INCOME-PRETAX> 21603
<INCOME-TAX> 7777
<INCOME-CONTINUING> 13826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13826
<EPS-BASIC> .54
<EPS-DILUTED> .54
</TABLE>
