<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 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 is 000-4197
UNITED STATES LIME & MINERALS, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-0789226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12221 MERIT DRIVE, SUITE 500, DALLAS, TX 75251
(Address of principal executive offices) (Zip Code)
(972) 991-8400
(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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of May 3, 1999, 3,977,189
shares of common stock, $0.10 par value, were outstanding.
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PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
--------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 815 $ 688
Trade receivables, net 2,949 3,360
Inventories 3,542 3,154
Prepaid expenses and other assets 116 139
-------- --------
Total current assets 7,422 7,341
Property, plant and equipment, at cost: 74,774 73,228
Less accumulated depreciation and depletion (33,268) (32,152)
-------- --------
Property, plant and equipment, net 41,506 41,076
Deferred tax assets 2,136 2,465
Other assets, net 265 208
-------- --------
Total assets $ 51,329 $ 51,090
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt and
revolving credit facility $ 5,643 $ 2,643
Accounts payable 2,085 3,668
Accrued expenses 1,498 1,666
-------- --------
Total current liabilities 9,226 7,977
Long-term debt, excluding current installments 14,536 16,196
Other liabilities 545 253
-------- --------
Total liabilities 24,307 24,426
Stockholders' Equity:
Common stock 529 529
Additional paid-in-capital 14,866 14,866
Retained earnings 25,601 25,243
-------- --------
40,996 40,638
Less treasury stock at cost:
1,316,876 shares of common stock (13,974) (13,974)
-------- --------
Total stockholders' equity 27,022 26,664
-------- --------
Total liabilities and stockholders' equity $ 51,329 $ 51,090
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------------
1999 1998
----------------------- -----------------------
<S> <C> <C> <C> <C>
REVENUES $ 6,931 100.0% $ 6,469 100.0%
Cost of revenues:
Labor and other operating expenses 3,981 57.4% 4,527 70.0%
Depreciation, depletion and amortization 1,073 15.5% 666 10.3%
------- ------ ------- -----
5,054 72.9% 5,193 80.3%
------- ------ ------- -----
GROSS PROFIT 1,877 27.1% 1,276 19.7%
Selling, general and administrative expenses 918 13.2% 926 14.3%
OPERATING PROFIT 959 13.9% 350 5.4%
Other deductions (income):
Interest expense 343 4.9% 3 0.0%
Other income, net (11) (0.0%) (74) (1.1%)
------- ------ ------- -----
332 4.9% (31) (1.1%)
------- ------ ------- -----
INCOME BEFORE INCOME TAXES 627 9.0% 421 6.5%
------- ------ ------- -----
Income taxes 169 2.4% 118 1.8%
------- ------ ------- -----
NET INCOME $ 458 6.6% $ 303 4.7%
======= ====== ======= =====
INCOME PER SHARE OF COMMON STOCK:
Basic $ 0.12 $ 0.08
======= =======
Diluted $ 0.12 $ 0.08
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 1998
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 458 $ 303
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation, depletion and amortization 1,116 686
Deferred income tax 329 32
Loss on sale of property, plant and equipment 1 1
Current assets, net change[1] 46 (809)
Other assets (57) 8
Current liabilities, net change[2] (1,751) (2,083)
Other liabilities 292 --
------- -------
Net cash provided by (used in) operating activities $ 434 $(1,862)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment $(1,607) $(5,228)
Proceeds from sale of property, plant and equipment 60 1
------- -------
Net cash used in investing activities $(1,547) $(5,227)
FINANCING ACTIVITIES:
Payment of common stock dividends $ (99) $ (99)
Proceeds from borrowings on term loan -- 6,000
Principal payments on term loan (661) (95)
Proceeds from borrowing on revolving credit facility 2,000 --
------- -------
------- -------
Net cash provided by financing activities $ 1,240 $ 5,806
------- -------
Net increase in cash 127 1,283
Cash at beginning of period 688 2,787
------- -------
Cash at end of period $ 815 $ 1,504
======= =======
Supplemental cash flow information:
Interest paid $ 347 $ 125
======= =======
Income taxes paid $ -- $ --
======= =======
</TABLE>
[1] Exclusive of net change in cash
[2] Exclusive of net change in current portion of debt
See accompanying notes to condensed consolidated financial statements.
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UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements included herein have been
prepared by the Company without independent audit. In the opinion of the
Company's management, all adjustments of a normal and recurring nature
necessary to present fairly the financial position, results of operations
and cash flows for the periods presented have been made. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the period ended December 31,
1998. The results of operations for the three-month period ended March 31,
1999 are not necessarily indicative of operating results for the full
year.
2. Inventories
Inventories consisted of the following at:
<TABLE>
<CAPTION>
(In thousands of dollars) MARCH 31, DECEMBER 31,
1999 1998
--------- -----------
<S> <C> <C>
Lime and limestone inventories:
Raw materials $ 844 $ 927
Finished goods 1,076 671
------ ------
1,920 1,598
Service parts 1,622 1,556
------ ------
Total inventories $3,542 $3,154
====== ======
</TABLE>
3. Outstanding Debt
Effective August 31, 1998, the Company amended its amended and restated
loan agreement with a commercial bank to provide for an $18,500,000
five-year secured term loan; a separate secured line of credit of
$5,000,000 for capital expenditures related to the Arkansas modernization
and expansion project; a $20,000,000 capital expenditure and acquisition
line of credit, subject to bank approval; and a $4,000,000 revolving credit
facility. The term loan and the committed capital expenditure line of
credit bore interest at LIBOR plus 1.50%, and the revolving credit facility
bore interest at LIBOR plus 1.40%.
In April 1998, the Company entered into an interest rate protection
agreement with the bank (the "Swap Agreement") to modify the interest
characteristics of $9,000,000 of its then-outstanding term debt from a
variable rate to a fixed rate. The Swap Agreement involved the exchange of
interest obligations based on a fixed rate of 7.45%, for interest
obligations based on variable 30-day LIBOR rates plus 1.65%, over the
five-year life of the Swap Agreement without an exchange of notional
amounts upon which such interest obligations are based. The interest rate
differential to
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be paid or received as rates changed was accrued and recognized as an
adjustment to interest expense. The related amounts payable to, or
receivable from, the bank were included as an adjustment to accrued
expenses. To the extent amounts were not material, the fair value of the
Swap Agreement and changes in the fair value as a result of changes in
market interest rates were not recognized in the financial statements. In
the event of the early termination of the term debt obligations, or an
early termination of the Swap Agreement, any realized gain or loss from
the Swap Agreement would be recognized as an adjustment to interest
expense.
A summary of outstanding debt at the dates indicated is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars) MARCH 31, DECEMBER 31,
1999 1998
-------- -----------
<S> <C> <C>
Term loan $17,179 $17,839
Revolving credit facility 3,000 1,000
------- -------
Subtotal 20,179 18,839
Less current installments and revolving credit facility 5,643 2,643
------- -------
Long-term debt, excluding current installments $14,536 $16,196
======= =======
</TABLE>
The carrying amount of the Company's long-term debt approximates its fair
value.
The additional amounts borrowed in the first three months of 1999 were
used primarily to fund the working capital of the Company during the
usually slower demand of the first quarter.
4. Subsequent Event
On April 22, 1999, the Company entered into a new credit agreement with a
consortium of commercial banks for a $50,000,000 Senior Secured Term Loan
(the "Loan"). The Loan is repayable over a period of approximately 8
years, maturing on March 30, 2007, and requires monthly principal payments
of $277,777.78 beginning April 30, 2000, with a final principal payment of
$26,944,444.26 on March 30, 2007, which equates to a 15-year amortization.
The Company agreed to pay a fee equivalent to 2-1/2% of the Loan value to
the placement agent. The fee due on the first $30,000,000 advanced was
paid on closing, and the fee due on the remaining $20,000,000 will become
payable when the first installment of this portion is funded.
Upon execution of the Loan agreement, the first $30,000,000 was advanced,
of which approximately $20,000,000 was used to retire all existing bank
loans, with the balance to be used primarily for the modernization and
expansion of the Arkansas operations. The remaining $20,000,000 of the
Loan facility will be drawn down in four equal quarterly installments
beginning June 30, 1999, and ending March 30, 2000, and will be used
exclusively for the Arkansas project. Commencement of the draw down of the
quarterly installments is conditional upon the Company receiving an air
operating permit for the first phase of the Arkansas project by December
31, 1999.
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In the event that the Company does not receive the air permit by December
31, 1999, and is unable to draw down the final $20,000,000 of
installments, a break fee of 0.25% will be payable to the lenders.
On April 22, 1999, the Company also retired its $4,000,000 revolving
credit facility and entered into a letter agreement with the lead bank to
provide an equivalent replacement facility, on essentially the same terms.
The new revolving credit facility is subject to definitive documentation.
The Loan is secured by a first lien on substantially all of the Company's
assets, with the exception of accounts receivable and inventories which
will be used to secure the new $4,000,000 revolving credit facility. The
interest rate on the first $30,000,000 of the Loan is 8-7/8%, and
subsequent installment draw downs will bear interest from the date they
are funded at 3.52% above the secondary market yield of the United States
Treasury obligation maturing May 15, 2005. The new revolving credit
facility is expected to bear interest at LIBOR plus 1.40%, which rate will
increase in accordance with a defined rate spread based upon the Company's
then-current ratio of total funded debt to earnings before interest,
taxes, depreciation and amortization (EBITDA).
In connection with the repayment of the prior term loan, the Company
terminated the Swap Agreement. As a result of the termination of the Swap
Agreement, the Company was obligated to pay the bank a $102,000
termination payment, which amount will be expensed in the second quarter
as an adjustment to interest expense.
The Loan agreement contains covenants that restrict the incurrence of
debt, guaranties and liens, and place certain restrictions on the payment
of dividends and the sale of significant assets. The Company is also
required to meet minimum debt service coverage ratios on an on-going basis
and maintain a minimum level of tangible net worth.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $434,000 for the three months
ended March 31, 1999, as compared to net cash used of $1,862,000 for the three
months ended March 31, 1998. The increase in cash provided by operating
activities was primarily attributable to the collection of accounts receivable
and a smaller decrease in accounts payable in the first quarter of 1999, as
compared to the first quarter of 1998.
The Company invested $1,607,000 in capital expenditures in the first three
months of 1999, compared to $5,228,000 in the same period last year. Capital
expenditures of approximately $4,600,000 were related to the modernization and
expansion project at the Texas facility in the first three months of 1998. The
Texas project was completed in the fourth quarter of 1998.
As currently planned, the Arkansas modernization and expansion project will be
completed in two phases: Phase I will cover the redevelopment of the quarry
plant, rebuilding of the railroad, establishment of an out-of-state terminal,
and installation of a rotary kiln with a preheater, along with increased
product storage and loading capacity. Depending on such factors as securing
satisfactory permits, Phase I is scheduled to be completed mid-year 2000.
Phase II of the Arkansas project would further expand the plant capacity
through the installation of a second kiln with additional storage capacity.
Although the Company could determine to defer Phase II depending upon such
factors as market demand and the availability of financing, it currently plans
to complete Phase II in the first half of 2001.
The Arkansas improvements should allow the Company to better serve its
customers by improving both quality and service while increasing the production
capacity of quicklime and hydrated lime. With the improvements, the Company
expects to be in a better position to compete for customers who currently
cannot use the Company's lime in their processes due to insufficient production
capacity at the plant or quality constraints. The rotary kiln will have lower
operating costs and a greater capacity than the six shaft kilns currently in
use. In addition to increasing capacity, this kiln will also be able to
consistently produce high-quality lime for use by certain manufacturing
customers who currently do not buy lime from the Arkansas facility. The
storage, screening, and load-out facilities will also substantially reduce the
amount of time required for the loading of bulk quicklime trucks and railcars.
The planned modernization and expansion project will increase both production
and shipping capacity, will lower operating costs, and will allow for a more
efficient utilization of the work force.
Phase I of the Arkansas project is currently projected to cost approximately
$21,500,000. If Phase II proceeds on schedule, it is currently estimated to
cost approximately $11,000,000. The Company intends to finance the Arkansas
project through a combination of internally generated funds and bank
borrowings. There can be no assurance that sufficient funds will be available
to the Company to complete Phase II of the Arkansas project as currently
contemplated.
The Company is not contractually committed to any planned capital expenditures
until actual orders are placed for equipment. As of March 31, 1999, the Company
had no liability for open equipment and construction orders. All future
billings related to the Arkansas project will be recorded as work is performed
and billed to the Company.
8
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As of March 31, 1999, the Company had approximately $20,179,000 in total debt
outstanding, up from the $18,839,000 at December 31, 1998. The additional
borrowings in 1999 have been used primarily to fund the Company's working
capital during the usually slower demand of the first quarter.
RESULTS OF OPERATIONS
Revenues increased from $6,469,000 in the first quarter of 1998 to $6,931,000
in the first quarter of 1999, an increase of $462,000, or 7.1%. This resulted
from a 5.4% increase in sales volume and a 1.7% increase in prices. Demand
remained strong in both the Texas and Arkansas markets, but sales volumes were
somewhat slowed by inclement weather in March. However, those sales volumes are
expected to be recovered during the remainder of the year.
The Company's gross profit was $1,877,000 for the first quarter of 1999,
compared to $1,276,000 for the first quarter of 1998, a 47.1% increase. Gross
profit margin as a percentage of revenues for the first quarter of 1999
increased to 27.1% from 19.7% in 1998. The improved gross profit and gross
profit margins were attributable to increased production efficiencies and
volumes at the Texas facility. Lower fuel costs also contributed to the
improved gross profit and gross profit margins.
Selling, general and administrative expenses ("SG&A") decreased by $8,000, or
0.9%, to $918,000 in the first quarter of 1999, as compared to $926,000 in the
first quarter of 1998. SG&A as a percentage of sales decreased to 13.2% as
compared to 14.3% in the first quarter a year ago.
Interest expense in the first quarter of 1999 was $343,000 as compared to
$3,000 in 1998. In 1998, $101,000 of incurred interest costs were capitalized
as part of the Texas modernization and expansion project. The remaining
increase in interest was attributable to the increased debt incurred to finance
the now-completed project at Texas Lime Company.
The Company reported net income of $458,000 ($0.12 per share) during the first
quarter of 1999, compared to net income of $303,000 ($0.08 per share) during
the first quarter of 1998.
YEAR 2000 COMPLIANCE
The Company continues to address the potential impact of the Year 2000 ("Y2K")
issue on its operations. The Y2K problem arises because of computer programs
which use two digits rather than four digits to define a year. This may result
in miscalculations or complete system failures in processing data with programs
using date sensitive information.
The Company has inventoried its information technology ("IT") and non-IT
systems, including embedded systems in its production operating equipment, in an
effort to identify potential Y2K problems. The Company continues to asses and
quantify the extent of potential problems, and has begun to prioritize the
problems uncovered. In the second quarter, the Company will move to the
remediation and testing phases of its Y2K compliance program, which it expects
to complete by the third quarter.
The Company has been using certain customized accounting software which is not
Y2K compliant. To address this problem, the Company has selected, and is in the
process of installing, a commercially available accounting software which is
Y2K compliant. The cost of this installation is approximately $200,000.
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The Company has begun to obtain confirmation from its suppliers and customers
that they are or will be Y2K compliant. The cost of replacing, or of
implementing alternative means of communication with, non-compliant or
non-responsive suppliers will not be possible to determine until the review
process has been completed.
While the Company will not complete its contingency planning until specific Y2K
problems are fully identified, quantified, and prioritized, it continues to
identify the types of actions and alternatives that it may have to consider in
order to ensure continuity of operations and service to customers. Other than
as a result of serious systemic failures in external services, or due to a
significant and extended decline in customer demand as a result of an
inadequate response to the Y2K problem by the Company's customers and their
industries, the Company does not expect the Y2K challenge to have a material
adverse effect on its financial condition, results of operations, or cash
flows.
FORWARD-LOOKING STATEMENTS. Any statements contained in this Quarterly Report
that are not statements of historical fact are forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements in this Report, including without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions, and adequacy of resources, are identified by such
words as "will," "could," "should," "believe," "expect," "intend," "plan,"
"schedule," "estimate," and "project." The Company undertakes no obligation to
publicly update or revise any forward-looking statements. Investors are
cautioned that forward-looking statements involve risks and uncertainties that
could cause actual results to differ materially from expectations, including
without limitation the following: (i) the Company's plans, strategies,
objectives, expectations, and intentions are subject to change at any time at
the discretion of the Company; (ii) the Company's plans and results of
operations will be affected by the Company's ability to manage its growth and
modernization; and (iii) other risks and uncertainties, including without
limitation, those risks and uncertainties indicated from time to time in the
Company's filings with the Securities and Exchange Commission, including the
Company's Form 10-K for the fiscal year ended December 31, 1998.
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PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
10 Employment Agreement, dated as of October 11, 1989,
between the Company and Billy R.
Hughes
11 Statement re computation of per share earnings
27 Financial Data Schedule
b. Reports on Form 8-K:
The Company filed no Reports on Form 8-K during the
quarter ended March 31, 1999.
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SIGNATURES
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.
UNITED STATES LIME & MINERALS, INC.
May 7, 1999 By: /s/ Herbert G.A. Wilson
--------------------------------------------
Herbert G.A. Wilson
President and Chief Executive Officer
(Principal Executive Officer)
May 7, 1999 By: /s/ Larry T. Ohms
--------------------------------------------
Larry T. Ohms
Corporate Controller and Treasurer
(Principal Financial and Accounting Officer)
12
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UNITED STATES LIME & MINERALS, INC.
Quarterly Report on Form 10-Q
Quarter Ended
March 31, 1999
Index to Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10 Employment Agreement, dated as of October 11, 1989, between the Company and
Billy R. Hughes
11 Statement re computation of per share earnings
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into as
of the 11th day of October, 1989, by and between Rangaire Corporation, a Texas
corporation (herein, together with its successors and assigns, "Employer"), and
Bill Hughes, an individual ("Employee"),
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee, and Employee desires to
be employed by Employer, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Employer and Employee hereby agree as follows:
1. Employment. Employer hereby employs Employee in the capacity of V.P.
Sales/Marketing to undertake and discharge, in accordance with the terms and
conditions of this Agreement, such duties, functions and responsibilities as are
from time to time delegated to Employee by Employer. Employee shall devote his
full business time and his best efforts to the performance and fulfillment of
such duties, functions and responsibilities.
2. Term. The term of this Agreement shall commence as of the date first
above written and shall continue until terminated by Employer or Employee as
hereafter provided. Either Employer or Employee may terminate this Agreement by
giving at least one year's prior written notice to the other. Notwithstanding
the foregoing, however, this Agreement and the term of Employee's employment
hereunder may be terminated by Employer without liability immediately if
Employee is guilty of fraud, dishonesty or willful misconduct with respect to
Employer. In addition, this Agreement shall automatically terminate upon the
death of Employee. Upon any such termination or expiration, Employee, his
personal representatives or his estate, as the case may be, shall be entitled to
receive only the amounts payable to Employee hereunder through the date of such
termination or expiration and no other amounts or benefits.
3. Compensation. In consideration of the services to be rendered by
Employee hereunder, Employer shall compensate Employee during the term of this
Agreement in accordance with the schedule attached hereto as Exhibit A. All
services which Employee may render to Employer or any of its affiliates in any
capacity during the term of this Agreement shall be deemed to be
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services required by this Agreement in consideration for the compensation
provided for herein. Employee shall also be entitled to participate in all plans
or arrangements providing for employee benefits from time to time made available
by Employer to similarly situated employees.
4. Confidential Information. Employee agrees that he shall not, during
the term of his employment hereunder or at any time thereafter, disclose or
reveal to any person (except in the course of the proper performance of his
duties hereunder), nor use or appropriate to his own personal use or benefit,
any trade secret or confidential or proprietary information of any kind or
character (whether or not acquired, learned, obtained or developed by Employee
alone or in conjunction with others) belonging to or concerning Employer, its
customers or others with whom Employer now or hereafter has a business
relationship. The provisions of this Section 4 shall survive any termination of
this Agreement.
5. Covenant Not to Compete. Employee agrees that he shall not, during
the term of this Agreement and for a period of two (2) years thereafter,
without the prior written consent of Employer, engage directly or indirectly in,
or carry on, on his own behalf or for anyone whomsoever, whether as an officer,
director, stockholder, owner, member, partner, joint venturer, employee,
consultant, agent, representative, proprietor, manager, associate, investor or
otherwise, any business or activity in which the training provided to Employee
by Employer, the knowledge of Employee of information concerning Employer, or
the familiarity of Employee with Employer's employees and customers and
prospects therefor, is or may be used, directly or indirectly, in competition
with Employer in or with respect to the principal geographical areas in which
Employer conducted its business during the term of this Agreement, unless
Employee is terminated by Employer for reasons not involving Employee's fraud,
dishonesty or willful misconduct with respect to Employer. Employee expressly
acknowledges that he possesses skills and abilities of a general nature that may
be used in employment other than that which would be in competition with
Employer as set forth in the preceding sentence, and therefore further
acknowledges that compliance by Employee with the covenants made by Employee
herein will not deprive him of his personal goodwill or the ability to be
gainfully employed. The provisions of this Section 5 shall survive any
termination of this Agreement.
6. Enforcement. Employee recognizes and agrees that in the event of his
breach of the provisions of Sections 4 or 5 of this Agreement, Employer may not
have an adequate remedy at law. Accordingly, Employee hereby agrees that in the
event of such a breach by Employee, Employer shall be entitled to enforce the
provisions of Sections 4 or 5 of this Agreement by injunction, in
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addition to recovering any monetary damages which Employer may sustain as a
result of such breach.
7. GOVERNING LAW. THIS AGREEMENT AND THE EMPLOYMENT RELATIONSHIP
BETWEEN EMPLOYER AND EMPLOYEE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
8. Severability of Provisions. If any provision of this Agreement is
held to be unenforceable, this Agreement shall be considered divisible and
inoperative as to such provision to the extent it is deemed unenforceable, and
in all other respects this Agreement shall remain in full force and effect. If
any provision of this Agreement is held to be unenforceable as written but may
be made enforceable by limitation thereof, then such provision shall be
enforceable to the maximum extent permitted by applicable law.
9. Sole Agreement and Amendment. This Agreement, together with the
exhibits hereto, constitutes the sole and only agreement between Employer and
Employee concerning the within subject matter, and supersedes any and all prior
oral or written communications between Employer and Employee regarding the
within subject matter. No amendment, modification or supplement to this
Agreement shall be effective unless it is in writing and signed by the party
against which it is sought to be enforced.
10. No Assignment. This Agreement is personal in nature and no party
hereto shall assign or transfer this Agreement or any of its or his respective
rights or obligations hereunder without the prior written consent of the other
party hereto.
11. Notices. Any notice required or permitted to be given hereunder
shall be in writing and shall be delivered in person or by certified or
registered United States mail, return receipt requested, at the address set
forth opposite the intended recipient's name below. Either party may by notice
to the other party hereto change the address of the party to whom notice is to
be given. The date of notice shall be the date delivered, if delivered in
person, or the date received, if delivered by mail.
12. Waiver. The waiver by either party of any term or provision of this
Agreement in any one or more instances shall not be construed as a further or
continuing waiver of such term or provision or of any other term or provision of
this Agreement.
IN WITNESS WHEREOF, Employer and Employee have executed this Agreement
as of the date first set forth above.
-3-
<PAGE> 4
Rangaire Corporation
---------------------------------
[Employer's Name]
P. O. Box 198 By: /s/ [ILLEGIBLE]
- ---------------------------- ------------------------------
[Employer's address] Title: President
Cleburne, Texas 76033 ---------------------------
- ----------------------------
Arkansas Lime Co. /s/ BILL R. HUGHES
- ---------------------------- ------------------------------
[Employee's address] [Employee's name]
P.O. Box 2356
- ----------------------------
Batesville, Ar. 72503
- ----------------------------
-4-
<PAGE> 5
EXHIBIT A
<TABLE>
<CAPTION>
Current Salary Effective Date Employee Corporation
- -------------- -------------- -------- -----------
<S> <C> <C> <C>
$70,000 August 1, 1989 B.H. ?
- -------------- -------------- -------- -----------
- -------------- -------------- -------- -----------
- -------------- -------------- -------- -----------
- -------------- -------------- -------- -----------
- -------------- -------------- -------- -----------
- -------------- -------------- -------- -----------
- -------------- -------------- -------- -----------
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</TABLE>
<PAGE> 1
Exhibit 11
STATEMENT RE COMPUTATION
OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 1998
---------- -----------
<S> <C> <C>
Numerator:
Net income for basic and diluted earnings per share $ 458,000 $ 303,000
---------- -----------
Denominator:
Denominator for basic earnings per common share - weighted-average
shares
3,977,189 3,954,196
Effect of dilutive securities:
Employee stock options 2,310 --
---------- -----------
Denominator for diluted earnings per common share - weighted-average
shares
3,979,499 3,954,196
========== ===========
Basic earnings per common share $ 0.12 $ 0.08
========== ===========
Diluted earnings per common share $ 0.12 $ 0.08
========== ===========
</TABLE>
E-2
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 815
<SECURITIES> 0
<RECEIVABLES> 2,949
<ALLOWANCES> 0
<INVENTORY> 3,542
<CURRENT-ASSETS> 7,422
<PP&E> 74,774
<DEPRECIATION> (33,268)
<TOTAL-ASSETS> 41,506
<CURRENT-LIABILITIES> 9,226
<BONDS> 0
0
0
<COMMON> 529
<OTHER-SE> 26,493
<TOTAL-LIABILITY-AND-EQUITY> 51,329
<SALES> 6,931
<TOTAL-REVENUES> 6,931
<CGS> 5,054
<TOTAL-COSTS> 5,054
<OTHER-EXPENSES> 907
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 343
<INCOME-PRETAX> 627
<INCOME-TAX> 169
<INCOME-CONTINUING> 458
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 458
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
</TABLE>
