<PAGE>
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 August 31, 1996
[_] 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 1-4887
TEXAS INDUSTRIES, INC.
(Exact name of registrant as specified in the charter)
Delaware 75-0832210
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1341 West Mockingbird Lane, Suite 700W, Dallas, Texas 75247-6913
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 647-6700
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
--- ---
As of October 7, 1996, 11,163,458 shares of Registrant's Common Stock, $1.00 par
value, were outstanding.
Page 1 of 17
<PAGE>
INDEX
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION Page
- -----------------------------
Item 1. Financial Statements
Consolidated Balance Sheets -- August 31, 1996 and May 31, 1996..... 3
Consolidated Statements of Income -- three months ended
August 31, 1996 and August 31, 1995.............................. 4
Consolidated Statements of Cash Flows -- three months ended
August 31, 1996 and August 31, 1995.............................. 5
Notes to Consolidated Financial Statements.......................... 6
Independent Accountants' Review Report.............................. 10
Item 2. Management's Discussion and Analysis of Operating Results
and Financial Condition.......................................... 11
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K.................................... 14
SIGNATURES
- ----------
-2-
<PAGE>
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited)
August 31, May 31,
- --------------------------------------------------------------------------------
In thousands 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 11,310 $ 28,055
Notes and accounts receivable 116,357 113,762
Inventories 159,241 150,526
Prepaid expenses 39,219 32,574
-------- --------
TOTAL CURRENT ASSETS 326,127 324,917
OTHER ASSETS
Real estate and other investments 18,064 19,751
Goodwill 58,708 59,210
Other 21,919 21,880
-------- --------
98,691 100,841
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 110,868 110,836
Buildings 60,759 60,610
Machinery and equipment 789,990 766,434
-------- --------
961,617 937,880
Less allowances for depreciation 574,416 562,575
-------- --------
387,201 375,305
-------- --------
$812,019 $801,063
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 52,585 $ 56,652
Accrued interest, wages and other items 42,783 35,446
Current portion of long-term debt 13,452 13,474
-------- --------
TOTAL CURRENT LIABILITIES 108,820 105,572
LONG-TERM DEBT 151,186 160,209
DEFERRED FEDERAL INCOME TAXES AND OTHER CREDITS 79,431 80,139
MINORITY INTEREST 32,542 35,121
SHAREHOLDERS' EQUITY
Common stock, $1 par value 12,534 12,534
Additional paid-in capital 266,303 266,303
Retained earnings 212,378 193,929
Cost of common shares in treasury (51,175) (52,744)
-------- --------
440,040 420,022
-------- --------
$812,019 $801,063
======== ========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
(Unaudited)
CONSOLIDATED STATEMENTS OF INCOME
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three months ended
August 31,
- -----------------------------------------------------------
In thousands except per share 1996 1995
- -----------------------------------------------------------
<S> <C> <C>
NET SALES $245,942 $232,104
COSTS AND EXPENSES (INCOME)
Cost of products sold 192,691 183,095
Selling, general and administrative 18,531 16,479
Interest 4,698 5,211
Other income (2,098) (1,476)
-------- --------
213,822 203,309
-------- --------
INCOME BEFORE THE FOLLOWING ITEMS 32,120 28,795
Provision for income taxes 10,827 10,338
-------- --------
21,293 18,457
Minority interest in Chaparral (1,409) (1,326)
-------- --------
NET INCOME $ 19,884 $ 17,131
======== ========
Average common shares 11,483 11,266
Net income per common share $1.74 $ 1.53
======== ========
Cash dividends $.10 $ .10
======== ========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three months ended
August 31,
- ---------------------------------------------------------------------
In thousands 1996 1995
- ---------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 19,884 $ 17,131
Loss on disposal of assets 96 211
Non-cash items
Depreciation, depletion and amortization 13,444 11,978
Deferred taxes (1,007) 2,051
Undistributed minority interest 1,191 1,042
Other - net 1,502 1,590
Changes in operating assets and liabilities
Notes and accounts receivable (2,528) (6,420)
Inventories and prepaid expenses (15,408) (12,495)
Accounts payable and accrued liabilities 3,407 957
Real estate and investments 1,687 2,660
-------- --------
Net cash provided by operations 22,268 18,705
INVESTING ACTIVITIES
Capital expenditures (24,716) (14,716)
Proceeds from disposition of assets 536 463
Cash surrender value - insurance 329 234
Other - net (1,078) (498)
-------- --------
Net cash used by investing (24,929) (14,517)
FINANCING ACTIVITIES
Proceeds of long-term borrowing 105 --
Debt retirements (9,158) (15,416)
Purchase of treasury shares (135) (36)
Purchase of Chaparral stock (3,770) --
Dividends paid (1,114) (1,111)
Other - net (12) (1,624)
-------- --------
Net cash used by financing (14,084) (18,187)
-------- --------
Decrease in cash (16,745) (13,999)
Cash at beginning of period 28,055 25,988
-------- --------
Cash at end of period $ 11,310 $ 11,989
======== ========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Texas Industries, Inc. (the Company or TXI), directly or through subsidiaries,
is a producer of steel and cement/concrete products for the construction and
manufacturing industries. Chaparral Steel Company (Chaparral) produces beams,
merchant and special bar quality rounds, reinforcing bars and channels,
primarily for markets in North America and, under certain market conditions,
Europe and Asia. Cement/concrete operations supply cement and aggregates, ready-
mix, pipe, block and brick from facilities concentrated primarily in Texas and
Louisiana, with several products marketed throughout the U.S.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited 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 Rule 10-01 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. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended August 31,
1996, are not necessarily indicative of the results that may be expected for the
year ended May 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended May 31, 1996.
Estimates: The preparation of financial statements and accompanying notes in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported. Actual results
could differ from those estimates.
Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and all subsidiaries. The minority interest
represents the separate public ownership of Chaparral, 15.4% at August 31, 1996
and 16.4% at May 31, 1996.
Property, Plant and Equipment: Property, plant and equipment is recorded at
cost. Provisions for depreciation are computed generally using the straight-line
method. Provisions for depletion of mineral deposits are computed on the basis
of the estimated quantity of recoverable raw materials.
Cash Equivalents: For cash flow purposes, temporary investments which have
maturities of less than 90 days when purchased are considered cash equivalents.
Earnings per Share: Earnings per share are computed by deducting preferred
dividends from net income and adjusting for amortization of additional goodwill
in connection with the contingent payment for the acquisition of Chaparral, then
dividing this amount by the weighted average number of common shares outstanding
during the period, including common stock equivalents.
Goodwill: Goodwill, currently being amortized on a straight-line basis over a
40-year period, is net of accumulated amortization of $14.7 million at
August 31, 1996 and $14.2 million at May 31, 1996. Management reviews remaining
goodwill with consideration toward recovery through future operating results
(undiscounted) at the current rate of amortization.
Commissioning Costs: The Company's policy for new facilities is to capitalize
certain costs until the facility is substantially complete and ready for its
intended use. Chaparral began the commissioning of the large beam mill in
February 1991. The mill was substantially complete and ready for its intended
use in the third quarter of fiscal 1992 with a total of $15.1 million of costs
deferred. The amount of amortization charged to income was $754,000 in the
three-month periods ended August 31, 1996 and 1995, based on a five-year period.
Total accumulated amortization is $13.8 million.
Income Taxes: Accounting for income taxes uses the liability method of
recognizing and classifying deferred income taxes. The Company joins in filing a
consolidated return with its subsidiaries. Current and deferred tax expense is
allocated among the members of the group based on a stand-alone calculation of
the tax of the individual member.
-6-
<PAGE>
WORKING CAPITAL
Working capital totaled $217.3 million at August 31, 1996, compared to $219.3
million at May 31, 1996.
Notes and accounts receivable of $116.4 million at August, compared with $113.8
million at May, are presented net of allowances for doubtful receivables of $3.2
million at August and $3.1 million at May.
Inventories are stated at cost (not in excess of market) generally using the
last-in, first-out method (LIFO). If the average cost method (which approximates
current replacement cost) had been used, inventory values would have been higher
by $14.2 million at August and May.
Inventories are summarized as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
In thousands August May
--------------------------------------------------------------------------
<S> <C> <C>
Finished products $ 69,232 $64,347
Work in process 21,008 23,345
Raw materials and supplies 69,001 62,834
-------- -------
$159,241 $150,526
======== ========
</TABLE>
LONG-TERM DEBT
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
In thousands August May
--------------------------------------------------------------------------
<S> <C> <C>
Bank obligations, maturing through 2001, interest rate
6.06% (.625% over LIBOR) $ -- $ 9,000
Senior notes due through 2008, interest rates
average 7.28% 75,000 75,000
Senior notes of Chaparral, due through 2004,
interest rates average 10.2% 64,000 64,000
First mortgage notes of Chaparral, due through 2000,
interest rate 14.2% 14,320 14,320
Pollution control bonds, due through 2007, interest rate
6.19% (75% of prime) 8,615 8,615
Other, maturing through 2005, interest rates
from 8% to 10% 2,703 2,748
-------- -------
164,638 173,683
Less current maturities 13,452 13,474
-------- -------
$151,186 $160,209
======== ========
</TABLE>
Annual maturities of long-term debt for each of the five succeeding years are
$13.5, $13.4, $13.2, $10.9 and $8.8 million.
The Company has available a bank-financed $100 million long-term line of credit
of which $8.1 million has been utilized to support letters of credit. Commitment
fees at a current annual rate of .22% are paid on the unused portion of this
line.
Loan agreements contain covenants which provide for minimum working capital,
restrictions on purchases of treasury stock and payment of dividends on common
stock, and limitations on incurring certain indebtedness and making certain
investments. Under the most restrictive of these agreements, the aggregate
amount of annual cash dividends on common stock is limited based on the ratio,
excluding Chaparral, of earnings before interest, taxes, depreciation and
amortization plus dividends from Chaparral to fixed charges. Chaparral loan
agreements also restrict dividends and advances to its shareholders, including
the parent company, to $40.1 million as of August 31, 1996. The Company and
Chaparral are in compliance with all loan covenant restrictions.
-7-
<PAGE>
LONG-TERM DEBT-Continued
Property, plant and equipment, principally Chaparral's, carried at a net amount
of approximately $195.7 million at August 31, 1996 is mortgaged as collateral
for $15.6 million of secured debt.
The amount of interest paid for the three-month periods presented was $1.2
million in 1996 and $3.4 million in 1995.
SHAREHOLDERS' EQUITY
Common stock consists of:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
In thousands August May
--------------------------------------------------------------------
<S> <C> <C>
Shares authorized 40,000 40,000
Shares outstanding at end of period 11,152 11,100
Average shares outstanding including equivalents 11,483 11,371
Shares held in treasury 1,381 1,434
Shares reserved for stock options and other 1,155 1,211
</TABLE>
There are authorized 100,000 shares of Cumulative Preferred Stock, no par value,
of which 20,000 shares are designated $5 Cumulative Preferred Stock (Voting),
redeemable at $105 per share and entitled to $100 per share upon dissolution. An
additional 50,000 shares are designated Series A Junior Participating Preferred
Stock, redeemable under certain conditions at a redemption price, subject to
adjustment, equal to 200 times the aggregate amount to be distributed per share
to holders of Common Stock but not less than $100. As of August and May 1996
there were no shares of Cumulative Preferred Stock outstanding.
STOCK OPTION PLANS
The Company's stock option plans provide that non-qualified and incentive stock
options to purchase Common Stock may be granted to directors, officers and key
employees at market prices at date of grant. Generally, options become
exercisable in installments beginning one or two years after date of grant and
expire six or ten years later depending on the initial date of grant. A summary
of option transactions for the three-month period ended August 31, 1996,
follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
$ In thousands Shares Under Option Aggregate Option Price
--------------------------------------------------------------------
<S> <C> <C>
Outstanding at June 1 616,299 $19,694
Granted 97,050 6,314
Exercised (53,373) (1,313)
Cancelled (2,700) (131)
------- -------
Outstanding at August 31 657,276 $24,564
======= =======
</TABLE>
At August 31, 1996, there were 182,526 shares exercisable and 425,170 shares
available for future grants. Outstanding options expire on various dates to
July 12, 2006.
INCOME TAXES
Federal income taxes for the interim periods ended August 31, 1996 and 1995,
have been included in the accompanying financial statements on the basis of an
estimated annual rate. The estimated annualized tax rate is 33.7% for 1996
compared with 35.9% for 1995. The primary reason that these respective tax rates
differ from the 35% statutory corporate rate is due to goodwill expense which is
not tax deductible, percentage depletion which is tax deductible and the net
state income tax expense. The Company made income tax payments of $1.8 million
in 1996 and $2.0 million in 1995.
-8-
<PAGE>
LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES
The Company is subject to federal, state and local environmental laws and
regulations concerning, among other matters, air emissions, furnace dust
disposal and wastewater discharge. The Company believes it is in substantial
compliance with applicable environmental laws and regulations. Notwithstanding
such compliance, if damage to persons or property or contamination of the
environment has been or is caused by the conduct of the Company's business or by
hazardous substances or wastes used in, generated or disposed of by the Company,
the Company may be held liable for such damages and be required to pay the cost
of investigation and remediation of such contamination. The amount of such
liability could be material. Changes in federal or state laws, regulations or
requirements or discovery of unknown conditions could require additional
expenditures by the Company.
The Company and subsidiaries are defendants in lawsuits which arose in the
normal course of business. In management's judgment (based on the opinion of
counsel) the ultimate liability, if any, from such legal proceedings will not
have a material effect on the consolidated financial position of the Company.
-9-
<PAGE>
EXHIBIT A
---------
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors
Texas Industries, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of Texas
Industries, Inc. and subsidiaries as of August 31, 1996, and the related
condensed consolidated statements of income and cash flows for the three-month
periods ended August 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Texas Industries, Inc. and
subsidiaries as of May 31, 1996, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then ended [not
presented herein] and in our report dated July 12, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of May 31, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
----------------------
September 18, 1996
-10-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of operations and financial condition for the three-month period
ended August 31, 1996 to the three-month period ended August 31, 1995.
RESULTS OF OPERATIONS
Consolidated net sales of $245.9 million increased 6% over the prior year
period. Steel sales were $149.5 million, up $11.4 million, as a result of a 7%
increase in shipments on slightly higher average selling prices. Structural mill
pricing increased 7% over the prior year quarter with shipments 3% lower. The
continued strength of U.S. nonresidential construction and manufactured housing
activity has sustained demand for structural products. Bar mill shipments
increased 34% over the prior year. Increased volumes for reinforcing bar along
with lower prices for specialty steels and reinforcing bar resulted in 10% lower
overall realized prices for bar products. With demand and prices for bar
products stabilizing, bar product margins should improve due to the anticipated
recovery of the Special Bar Quality market and Chaparral's shift of its product
mix to SBQ products. Cement/concrete sales grew 3% over the prior year period.
Cement average pricing increased 13% with shipments down 90,000 tons. Ready-mix
pricing increased 7% with volumes 11% lower. Aggregate prices and volumes
improved 4%. Unusually wet summer weather impacted construction activity in
Texas and Louisiana. Weather permitting, construction starts and contract awards
continue to result in a balance in supply and demand for building materials.
BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Three months ended
August 31,
----------------------------------------------------------
In thousands 1996 1995
----------------------------------------------------------
<S> <C> <C>
NET SALES
Bar mill $ 44,906 $ 37,235
Structural mills 103,325 99,718
Transportation service 1,296 1,188
------- -------
TOTAL STEEL 149,527 138,141
Cement 35,230 36,091
Ready-mix 39,272 41,059
Stone, sand & gravel 22,203 20,454
Other products 21,484 17,592
Interplant (21,774) (21,233)
------- -------
TOTAL CEMENT/CONCRETE 96,415 93,963
------- -------
TOTAL NET SALES $ 245,942 $ 232,104
======= =======
UNITS SHIPPED
Bar mill (tons) 134 101
Structural mills (tons) 254 262
------- -------
TOTAL STEEL TONS 388 363
Cement (tons) 553 643
Ready-mix (cubic yards) 749 840
Stone, sand & gravel (tons) 4,353 4,183
</TABLE>
-11-
<PAGE>
BUSINESS SEGMENTS-Continued
<TABLE>
<CAPTION>
Three months ended
August 31,
---------------------------------------------------------------------
In thousands 1996 1995
---------------------------------------------------------------------
<S> <C> <C>
STEEL OPERATIONS
Gross profit $ 30,662 $ 26,060
Less: Depreciation & amortization 8,872 8,088
Selling, general & administrative 7,344 5,732
Other income (1,062) (1,106)
------ ------
OPERATING PROFIT 15,508 13,346
CEMENT/CONCRETE OPERATIONS
Gross profit 35,606 34,534
Less: Depreciation, depletion &
amortization 4,367 3,721
Selling, general & administrative 6,130 6,213
Other income (404) (244)
------ ------
OPERATING PROFIT 25,513 24,844
------ ------
TOTAL OPERATING PROFIT 41,021 38,190
CORPORATE RESOURCES
Other income 632 126
Less: Depreciation & amortization 205 169
Selling, general & administrative 4,630 4,141
------ ------
(4,203) (4,184)
INTEREST EXPENSE (4,698) (5,211)
------ ------
INCOME BEFORE TAXES & OTHER ITEMS $ 32,120 $ 28,795
====== ======
</TABLE>
Consolidated cost of products sold including depreciation, depletion and
amortization was $192.7 million, an increase of $9.6 million over the prior year
quarter. Steel costs of $127.7 million, increased $7.6 million due primarily to
a 25,000 ton increase in shipments and higher raw material costs. Operating
efficiencies resulted in decreased combined rolling conversion costs in 1996.
Cement/concrete costs were $65.0 million, an increase of $2.0 million due in
part to higher than normal plant maintenance costs.
Operating profit of $41.0 million in 1996 was $2.8 million higher than the prior
year quarter. Steel profits were up 16%, on 7% higher shipments and increased
prices. August quarter steel profits were $5.9 million lower than the May
quarter due in part to the normal scheduled summer shutdown to refurbish the
production facilities. Shutdown expenditures were 23% lower than last year and
will be amortized over the remainder of the fiscal year. Work performed during
the shutdown and that scheduled for later in the year is expected to increase
melting capacity by approximately 100,000 tons. Cement/concrete profits were up
3% over the prior year on increased prices. Volumes declined as wet summer
weather hindered construction activity.
Selling, general and administrative expenses including depreciation and
amortization at $18.5 million increased $2.1 million over the prior year. Steel
SG&A expense increased $1.6 million to $7.4 million primarily due to increased
employee incentive accruals and training costs. Cement/concrete SG&A expense at
$6.3 million was slightly lower than the prior year period. Corporate resources
SG&A increased $.5 million to $4.8 million. The expense was offset by increased
other income from routine asset retirements and investment income. Interest
expense decreased $.5 million compared to the prior year due to a reduction in
average outstanding debt. Income tax expense was provided at a 2.2% lower
estimated annualized tax rate which anticipates lower net state income tax
expense in 1996.
-12-
<PAGE>
CASH FLOWS
Net cash provided by operations at $22.3 million in 1996 increased $3.6 million
over 1995 due to higher net income and changes in working capital items.
Receivable increases were $3.9 million lower overall in 1996. While Chaparral's
receivables increased in the current quarter due to changes in its cash discount
policy, cement/concrete receivables declined as the wet summer weather reduced
shipments. Inventory increases were $5.3 million higher in 1996. Chaparral's raw
material inventories grew in anticipation of higher fall prices. Better
production levels resulting from the shorter summer shutdown period in 1996 also
increased finished goods inventories. Cement/concrete inventories, which had
declined in 1995, grew in 1996. Prepaid expense increases were $2.4 million
lower overall in 1996, due to the reduced cost of Chaparral's summer shutdown.
Accounts payable and accrued liability increases were up $2.5 million overall in
1996 on higher income tax accruals. Real estate and investments decreases were
$1.0 million lower in 1996.
Investing activities used $24.9 million compared to $14.5 million in 1995.
Capital expenditures at $24.7 million, increased $10.0 million over the prior
year period. Capital budget plans for the current fiscal year, estimated at $100
million, include anticipated expansion projects in the cement/concrete
operations, as well as, normal replacement and technological upgrades of
existing equipment.
Financing activities used $4.1 million less cash in 1996. Debt retirements in
1995 were $6.2 million higher than in 1996. Chaparral purchased $3.8 million of
its common stock in 1996 pursuant to a decision announced in October 1995
authorizing the repurchase of shares to satisfy obligations under its stock
option program and for other corporate purposes. TXI's quarterly cash dividend
at $.10 per common share remained unchanged from 1995 on 2% higher average
shares outstanding.
FINANCIAL CONDITION
TXI has a $100 million long-term bank line of credit which expires in September
2001. At August 31, 1996, $8.1 million was utilized to support letters of
credit. The Company expects that with this or similar credit facilities and
anticipated cash from operations, funds will be adequate to provide for capital
expenditures, scheduled debt repayments and other known working capital needs.
-13-
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included herein:
(11) Statement re: Computation of earnings per share
(15) Letter re: Unaudited Interim Financial Information
(27) Financial Data Schedule
This schedule contains summary financial information extracted from the
Registrant's Unaudited August 31, 1996 Consolidated Financial Statements and is
qualified in its entirety by reference to such financial statements.
The Registrant did not file any reports on Form 8-K during the three months
ended August 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
TEXAS INDUSTRIES, INC.
October 10, 1996 /s/ Richard M. Fowler
- ---------------- ----------------------
Richard M. Fowler
Vice President & Chief Financial Officer
October 10, 1996 /s/ James R. McCraw
- ---------------- --------------------
James R. McCraw
Vice President - Controller
-14-
<PAGE>
INDEX TO EXHIBITS
Exhibits Page
11. Statement re: computation of per share earnings..... 16
15. Letter re: Unaudited Interim Financial Information.. 17
27. Financial Data Schedule.............................. **
** Electronically filed only.
-15-
<PAGE>
EXHIBIT 11
(Unaudited)
COMPUTATION OF EARNINGS PER SHARE
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
August 31,
- -------------------------------------------------------------
In thousands except per share 1996 1995
- -------------------------------------------------------------
<S> <C> <C>
AVERAGE SHARES OUTSTANDING
Primary
Average shares outstanding 11,129 11,023
Stock options and other equivalents -
treasury stock method using
average market prices 354 243
------- -------
TOTAL 11,483 11,266
======= =======
Fully diluted
Average common shares outstanding 11,129 11,023
Stock options and other equivalents -
treasury stock method using end of
quarter market price if higher than
average 354 318
------- -------
TOTAL 11,483 11,341
======= =======
NET INCOME APPLICABLE TO COMMON STOCK
Primary
Net income $19,884 $17,131
Adjustments
Dividend on preferred stock -- (7)
Contingent price amortization 58 58
------- -------
TOTAL $19,942 $17,182
======= =======
Fully diluted
Net income $19,884 $17,131
Adjustments
Dividend on preferred stock -- (7)
Contingent price amortization 58 58
------- -------
TOTAL $19,942 $17,182
======= =======
PER SHARE
Primary
Net income per common share
and common equivalent share $ 1.74 $ 1.53
======= =======
Fully diluted
Net income per common share and
dilutive common equivalent share $ 1.74 $ 1.52
======= =======
</TABLE>
-16-
<PAGE>
EXHIBIT 15
Board of Directors
Texas Industries, Inc.
We are aware of the incorporation by reference in the Registration Statement
Number 2-95879 on Form S-8, Post-Effective Amendment Number 9 to Registration
Statement Number 2-48986 on Form S-8, and Registration Statement Number 33-53715
on Form S-8 of Texas Industries, Inc. and in the related Prospectuses of our
report dated September 18, 1996, relating to the unaudited condensed
consolidated interim financial statements of Texas Industries, Inc., which are
included in its Form 10-Q for the quarter ended August 31, 1996.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part
of the Registration Statement prepared or certified by accountants within the
meaning of the Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
----------------------
October 9, 1996
Dallas, Texas
-17-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED AUGUST 31, 1996 CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> AUG-31-1996
<CASH> 11,310
<SECURITIES> 0
<RECEIVABLES> 119,519
<ALLOWANCES> 3,162
<INVENTORY> 159,241
<CURRENT-ASSETS> 326,127
<PP&E> 961,617
<DEPRECIATION> 574,416
<TOTAL-ASSETS> 812,019
<CURRENT-LIABILITIES> 108,820
<BONDS> 151,186
0
0
<COMMON> 12,534
<OTHER-SE> 427,506
<TOTAL-LIABILITY-AND-EQUITY> 812,019
<SALES> 245,942
<TOTAL-REVENUES> 245,942
<CGS> 192,691
<TOTAL-COSTS> 192,691
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 229
<INTEREST-EXPENSE> 4,698
<INCOME-PRETAX> 32,120
<INCOME-TAX> 10,827
<INCOME-CONTINUING> 19,884
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,884
<EPS-PRIMARY> 1.74
<EPS-DILUTED> 1.74
</TABLE>
