<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 February 29, 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 (214) 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 April 8, 1996, 11,075,126 shares of Registrant's Common Stock, $1.00 par
value, were outstanding.
Page 1 of 18
<PAGE>
INDEX
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION Page
- ------------------------------- ----
Item 1. Financial Statements
Consolidated Balance Sheets -- February 29, 1996 and May 31, 1995..3
Consolidated Statements of Income -- three months ended and nine
months ended February 29, 1996 and February 28, 1995............4
Consolidated Statements of Cash Flows -- nine months ended
February 29, 1996 and February 28, 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>
(Unaudited)
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
February 29, May 31,
- -------------------------------------------------------------------------------
In thousands 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 23,279 $ 25,988
Notes and accounts receivable 117,179 99,445
Inventories 136,611 125,384
Prepaid expenses 30,798 41,957
----------- ----------
TOTAL CURRENT ASSETS 307,867 292,774
OTHER ASSETS
Real estate and other investments 19,903 29,392
Goodwill 59,712 61,217
Commissioning costs and other assets 22,759 22,533
----------- ----------
102,374 113,142
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 108,800 105,874
Buildings 55,171 54,749
Machinery and equipment 788,361 737,222
----------- ----------
952,332 897,845
Less allowances for depreciation 577,156 550,706
----------- ----------
375,176 347,139
----------- ----------
$ 785,417 $ 753,055
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 57,280 $ 57,019
Accrued interest, wages and other items 29,178 30,675
Current portion of long-term debt 13,924 17,477
----------- ----------
TOTAL CURRENT LIABILITIES 100,382 105,171
LONG-TERM DEBT 173,600 185,274
DEFERRED FEDERAL INCOME TAXES AND OTHER CREDITS 77,065 80,178
MINORITY INTEREST 38,636 39,323
SHAREHOLDERS' EQUITY
Preferred stock 598 598
Common stock, $1 par value 12,534 12,534
Additional paid-in capital 266,045 266,045
Retained earnings 170,111 119,587
Cost of common shares in treasury (53,554) (55,655)
----------- ----------
395,734 343,109
----------- ----------
$ 785,417 $ 753,055
=========== ==========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
(Unaudited)
CONSOLIDATED STATEMENTS OF INCOME
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three months ended Nine months ended
February February
- -------------------------------------------------------------------------------
In thousands except per share 1996 1995 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $235,040 $198,991 $711,405 $601,053
COSTS AND EXPENSES (INCOME)
Cost of products sold 190,400 168,876 564,088 501,965
Selling, general and administrative 15,951 15,780 50,889 42,331
Interest 4,704 4,735 15,039 15,271
Other income (3,573) (2,213) (11,745) (6,276)
-------- -------- -------- --------
207,482 187,178 618,271 553,291
-------- -------- -------- --------
INCOME BEFORE THE FOLLOWING ITEMS 27,558 11,813 93,134 47,762
Provision for income taxes 9,387 3,856 32,979 15,553
-------- -------- -------- --------
18,171 7,957 60,155 32,209
Minority interest in Chaparral (2,167) (1,081) (5,568) (2,557)
-------- -------- -------- --------
NET INCOME $ 16,004 $ 6,876 $ 54,587 $ 29,652
======== ======== ======== ========
Average common shares 11,400 12,552 11,341 12,621
Net income per common share $ 1.41 $ .55 $ 4.83 $ 2.36
======== ======== ======== ========
Cash dividends $ .10 $ .10 $ .30 $ .20
======== ======== ======== ========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Nine months ended
February
- ------------------------------------------------------------------------------
In thousands 1996 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 54,587 $ 29,652
Loss (gain) on disposal of assets 330 (1,819)
Non-cash items
Depreciation, depletion and amortization 36,378 36,935
Deferred taxes 6,660 3,251
Undistributed minority interest 4,744 1,705
Other - net 4,883 3,165
Changes in operating assets and liabilities
Notes and accounts receivable (16,849) (20,219)
Inventories and prepaid expenses (9,662) 9,036
Accounts payable and accrued liabilities (417) 5,740
Real estate and investments 9,640 645
-------- --------
Net cash provided by operations 90,294 68,091
INVESTING ACTIVITIES
Capital expenditures (66,289) (29,958)
Proceeds from disposition of assets 1,217 2,773
Cash surrender value - insurance (2,303) (3,351)
Other - net (1,284) 717
-------- --------
Net cash used by investing (68,659) (29,819)
FINANCING ACTIVITIES
Repayments of short-term borrowing -- (15,000)
Proceeds from long-term borrowing 22,052 766
Debt retirements (37,263) (40,961)
Purchase of treasury shares (339) (4,526)
Purchase of Chaparral stock (6,402) --
Dividends paid (3,337) (2,510)
Other - net 945 (2,396)
-------- --------
Net cash used by financing (24,344) (64,627)
-------- --------
Decrease in cash (2,709) (26,355)
Cash at beginning of period 25,988 31,766
-------- --------
Cash at end of period $ 23,279 $ 5,411
======== ========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 nine-month period ended February 29,
1996, are not necessarily indicative of the results that may be expected for the
year ended May 31, 1996. 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, 1995.
The consolidated financial statements include the accounts of Texas Industries,
Inc. (the Company) and all subsidiaries. The minority interest represents the
17.6% separate public ownership of Chaparral Steel Company (Chaparral).
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.
For cash flow purposes, temporary investments which have maturities of less than
90 days when purchased are considered cash equivalents.
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, currently being amortized on a straight-line basis over a 40-year
period, is net of accumulated amortization of $13.7 million at February 29, 1996
and $12.2 million at May 31, 1995. Management reviews remaining goodwill with
consideration toward recovery through future operating results (undiscounted) at
the current rate of amortization.
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 $2.3 million in the nine-month periods ended
February 1996 and 1995, based on a five-year period. Total accumulated
amortization is $12.3 million.
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.
WORKING CAPITAL
Working capital totaled $207.5 million at February 29, 1996, compared to $187.6
million at May 31, 1995.
Notes and accounts receivable of $117.2 million at February, compared with $99.4
million at May, are presented net of allowances for doubtful receivables of $3.8
million at February and $3.2 million at May.
-6-
<PAGE>
WORKING CAPITAL-Continued
Inventories are summarized as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
In thousands February May
-------------------------------------------------------------------------
<S> <C> <C>
Finished products $ 59,476 $ 55,874
Work in process 21,343 19,148
Raw materials and supplies 55,792 50,362
-------- --------
$136,611 $125,384
======== ========
</TABLE>
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 $13.1 million at February and $11.6 million at May.
LONG-TERM DEBT
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
In thousands February May
-------------------------------------------------------------------------
<S> <C> <C>
Bank obligations, maturing through 2000, interest
rate 5.69% (.375% over LIBOR) $ 88,500 $93,000
Senior notes of Chaparral, due through 2004,
interest rates average 10.2% 72,000 72,000
First mortgage notes of Chaparral, due through 2000,
interest rate 14.2% 14,320 20,458
First mortgage notes of Chaparral, due through 1995,
interest rate of 9% (2% over LIBOR) -- 1,248
Pollution control bonds, due through 2007, interest
rates from 6.19% to 10% 9,656 10,350
Other, maturing through 2005, interest rates
from 7% to 10% 3,048 5,695
-------- --------
187,524 202,751
Less current maturities 13,924 17,477
-------- --------
$173,600 $185,274
======== ========
</TABLE>
Annual maturities of long-term debt for each of the five succeeding years are
$13.9, $13.7, $13.4, $10.9 and $97.3 million.
The Company has available a bank-financed $150 million long-term line of credit.
In addition to the $88.5 million currently outstanding under this line, $5.4
million has been utilized to support letters of credit. Commitment fees at an
annual rate of .19% are paid on the unused portion of this line.
On April 9, 1996, the Company concluded the placement of $75 million in fixed-
rate senior notes having an average maturity of ten years and average interest
rate of 7.28%. The proceeds were used to repay bank debt.
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 $41.5 million as of February 29, 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 $207.3 million at February 29, 1996 is mortgaged as collateral
for $15.7 million of secured debt.
The amount of interest paid for the nine-month periods presented was $14.0
million in 1996, and $12.2 million in 1995.
SHAREHOLDERS' EQUITY
Common stock consists of:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
In thousands February May
--------------------------------------------------------------------
<S> <C> <C>
Shares authorized 40,000 15,000
Shares outstanding at end of period 11,074 11,011
Average shares outstanding for period,
including equivalents 11,341 12,426
Shares held in treasury 1,460 1,523
Shares reserved for stock options and other 1,239 1,304
</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.
There were 5,976 shares of $5 Cumulative Preferred Stock outstanding at February
29, 1996 and May 31, 1995. On March 29, 1996, the Company redeemed and retired
all outstanding shares of such $5 Cumulative Preferred Stock.
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. There are
outstanding rights, issued to common shareholders under the Company's
Shareholders Protection Plan, to purchase 48,484 shares of Series A Junior
Participating Preferred Shares, none of which were outstanding. Under certain
conditions, each right may be exercised to purchase one two-hundredth of a share
for $100. The rights, which are non-voting, expire in August 1996 and may be
redeemed by the Company at a price of five cents per right at any time.
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 nine-month period ended February 29, 1996,
follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
$ In thousands Shares Under Option Aggregate Option Price
--------------------------------------------------------------------------
<S> <C> <C>
Outstanding at June 1 548,441 $13,928
Granted 187,200 8,514
Exercised (69,082) (1,674)
Cancelled (22,170) (601)
------- -------
Outstanding at February 29 644,389 $20,167
======= =======
</TABLE>
At February 29, 1996, there were 192,199 shares exercisable and 519,420 shares
available for future grants. Outstanding options expire on various dates to
January 17, 2006.
-8-
<PAGE>
INCOME TAXES
Federal income taxes for the interim periods ended February 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 35.4% for 1996
compared with 32.6% 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 $29.9
million in 1996 and $16.6 million in 1995.
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.
-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 February 29, 1996, and the related
condensed consolidated statements of income for the three-month and nine-month
periods ended February 29, 1996 and February 28, 1995, respectively, and the
condensed consolidated statements of cash flows for the nine-month periods ended
February 29, 1996 and February 28, 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, 1995, 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 14, 1995, 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, 1995, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
-------------------------------------
March 15, 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 and nine-
month periods ended February 29, 1996 to the three-month and nine-month periods
ended February 28, 1995.
RESULTS OF OPERATIONS
Consolidated net sales of $235.0 million for the quarter ended February 29, 1996
increased 18% over the prior year period. Steel sales were $159.0 million, up
$26.6 million, a 20% increase resulting from the recovery in the structural beam
market. Both structural mill shipments and average realized prices increased
15% as compared to the prior year quarter. As experienced in the August and
November quarters, demand from service centers, fabricators and the mobile home
industry for structural mill products has increased substantially from the prior
year. Bar mill results continue to reflect the weak condition in U. S.
manufacturing, with shipments 4% below last year and prices 5% lower as well.
Chaparral uses its ability to adjust its product mix in order to maximize profit
margins. Cement/concrete sales, at $76.1 million, grew 14% over the prior year
period as a result of continued price improvements and increased volumes.
Cement average trade pricing was up 13% over the prior year with shipments at
comparable levels. Ready-mix net sales reflect a 19% increase in volume from
expanded capacity and a 5% increase in average trade prices maintaining the
growth experienced in the last two quarters. Aggregate sales improved on higher
volumes, with prices slightly lower overall due to product mix.
BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Three months ended
February
---------------------------------------------------------------
In thousands 1996 1995
---------------------------------------------------------------
<S> <C> <C>
NET SALES
Bar mill $ 38,059 $ 41,565
Structural mills 119,320 89,792
Transportation service 1,575 1,031
------- -------
TOTAL STEEL 158,954 132,388
Cement 28,286 25,597
Ready-mix 33,579 26,567
Stone, sand & gravel 15,974 15,042
Other products 15,882 12,100
Interplant (17,635) (12,703)
------- -------
TOTAL CEMENT/CONCRETE 76,086 66,603
------- -------
TOTAL NET SALES $ 235,040 $ 198,991
======= =======
UNITS SHIPPED
Bar mill (tons) 111 115
Structural mills (tons) 297 258
------- -------
TOTAL STEEL TONS 408 373
Cement (tons) 472 487
Ready-mix (cubic yards) 664 556
Stone, sand & gravel (tons) 3,352 2,809
</TABLE>
-11-
<PAGE>
BUSINESS SEGMENTS-Continued
<TABLE>
<CAPTION>
Three months ended
February
-----------------------------------------------------------------
In thousands 1996 1995
-----------------------------------------------------------------
<S> <C> <C>
STEEL OPERATIONS
Gross profit $ 34,900 $ 23,383
Less: Depreciation & amortization 8,091 8,579
Selling, general & administrative 7,116 5,194
Other income (1,480) (1,533)
------ ------
OPERATING PROFIT 21,173 11,143
CEMENT/CONCRETE OPERATIONS
Gross profit 21,589 19,458
Less: Depreciation, depletion &
amortization 3,981 3,690
Selling, general & administrative 4,559 6,229
Other income (636) (566)
------ ------
OPERATING PROFIT 13,685 10,105
------ ------
TOTAL OPERATING PROFIT 34,858 21,248
CORPORATE RESOURCES
Other income 1,457 114
Less: Depreciation & amortization 186 194
Selling, general & administrative 3,867 4,620
------ ------
(2,596) (4,700)
INTEREST EXPENSE (4,704) (4,735)
------ ------
INCOME BEFORE TAXES & OTHER ITEMS $ 27,558 $ 11,813
====== ======
</TABLE>
Consolidated cost of products sold, including depreciation, depletion and
amortization was $190.4 million, an increase of $21.5 million over the prior
year quarter. Steel cost of sales was $132.1 million, an increase of $14.5
million. The 12% increase was caused predominately by the 35,000 ton increase
in shipments and higher melt shop conversion costs. Cement/concrete costs were
up $7.0 million to $58.3 million on increased volumes.
Operating profit of $34.9 million was $13.6 million higher in the current
quarter over the prior year period due to increased sales and improved margins.
Steel profits, at $21.2 million, were up 90% from the prior year and 6% from the
November quarter. Cement/concrete profits were up $3.6 million in the February
quarter over the prior year period. Following the normal seasonal pattern,
lower volumes in the February quarter contributed to a $8.2 million decline in
profits from the November quarter.
Selling, general and administrative expenses at $16.0 million were slightly
higher than the prior year period. The steel SG&A increase of $1.9 million,
principally due to higher provisions for employee incentive expense were offset
by a reduction in cement/concrete incentive accruals. Corporate resources other
income in the current quarter includes $.9 million from property sales. These
sales increased to $5.8 million the income generated by the Company's real
estate operations during the current nine-month period. Interest expense
remained comparable to the prior year quarter as reduced interest rates offset
increased outstanding debt.
Income tax expense was provided at a 2.8% higher estimated annualized tax rate
which anticipates more pre-tax income in 1996 to be taxed at the 35% U. S.
corporate rate and higher net state income tax expense.
-12-
<PAGE>
CASH FLOWS
Net cash provided by operations, at $90.3 million for the nine-month period
ended February 29, 1996, was $22.2 million higher than the 1995 period.
Chaparral reduced inventories by $12.2 million in 1995, returning the
inventories to more normal historical levels. Chaparral's 1996 inventories grew
$7.5 million in anticipation of higher demand in the spring quarter. Accounts
receivable increases during 1996 were $9.6 million lower overall than the prior
year. Property sales from the Company's real estate operations in the current
period provided $4.9 million in operating cash, net of $6.9 million in
additional notes receivable.
Investing activities used $68.7 million during the 1996 nine-month period
compared to $29.8 million used during the 1995 period. Capital expenditures in
1996 were $36.3 million higher than the prior year. Capital budget plans for
the current fiscal year, estimated at $85 million, include anticipated expansion
projects in the cement/concrete operations, as well as, normal replacement and
technological upgrades of existing equipment. Additional items of
transportation and aggregate handling equipment are expected to be leased.
Financing activities used $40.3 million less cash or $24.3 million in the 1996
nine-month period than in the prior year period. Debt repayments, including the
repayment by Chaparral of $15.0 million of short-term bank debt, were $18.7
million greater in 1995. Borrowing increased $21.3 million in 1996 over the
prior year. Chaparral purchased $6.4 million of its common stock during 1996
pursuant to a decision announced in October, authorizing the repurchase of
shares to satisfy obligations under its stock option program and for other
corporate purposes. TXI's quarterly cash dividend which was increased to $.10
per common share in January 1995 was 50% higher than the 1995 rate on
approximately 10% fewer outstanding shares due to treasury share repurchases in
the February and May 1995 quarters.
FINANCIAL CONDITION
TXI has a $150 million long-term bank line of credit which expires in September
2000. At February 29, 1996, $56.1 million was available for future borrowings.
Chaparral did not renew its short-term credit facilities of $20 million which
expired January 31, 1996. None of Chaparral's bank lines were utilized during
the current nine-month period.
On April 9, 1996, the Company concluded the placement of $75 million in fixed-
rate senior notes having an average maturity of ten years and average interest
rate of 7.28%. The proceeds were used to repay bank debt.
The Company expects that with current 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 February 29, 1996 Consolidated Financial Statements and
is qualified in its entirety by reference to such financial statements.
The Registrant filed a current report on Form 8-K dated February 19, 1996
disclosing that it had on February 16, 1996 called for the redemption of all
outstanding $5 Cumulative Preferred Stock of the Registrant on March 29, 1996.
-14-
<PAGE>
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.
April 11, 1996 /s/ Richard M. Fowler
- -------------- ------------------------------------------------
Richard M. Fowler
Vice President & Chief Financial Officer
April 11, 1996 /s/ James R. McCraw
- -------------- ------------------------------------------------
James R. McCraw
Vice President - Controller
-15-
<PAGE>
INDEX TO EXHIBITS
Exhibits Page
11. Statement re: computation of per share earnings............... 17
15. Letter re: Unaudited Interim Financial Information............ 18
27. Financial Data Schedule........................................ **
** Electronically filed only.
-16-
<PAGE>
EXHIBIT 11
(Unaudited)
COMPUTATION OF EARNINGS PER SHARE
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three months ended Nine months ended
February February
- ------------------------------------------------------------------------------------------------
In thousands except per share 1996 1995 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING
Primary
Average shares outstanding 11,064 12,395 11,045 12,455
Stock options and other equivalents -
treasury stock method using
average market prices 336 157 296 166
------ ------ ------ ------
TOTAL 11,400 12,552 11,341 12,621
====== ====== ====== ======
Fully diluted
Average common shares outstanding 11,064 12,395 11,045 12,455
Stock options and other equivalents -
treasury stock method using end of
quarter market price if higher than
average 376 157 337 166
------ ------ ------ ------
TOTAL 11,440 12,552 11,382 12,621
====== ====== ====== ======
NET INCOME APPLICABLE TO COMMON STOCK
Primary
Net income $16,004 $ 6,876 $54,587 $29,652
Adjustments
Dividend on preferred stock (7) (7) (22) (22)
Contingent price amortization 58 58 174 174
------ ------ ------ ------
TOTAL $16,055 $ 6,927 $54,739 $29,804
====== ====== ====== =======
Fully diluted
Net income $16,004 $ 6,876 $54,587 $29,652
Adjustments
Dividend on preferred stock (7) (7) (22) (22)
Contingent price amortization 58 58 174 174
------ ------ ------ ------
TOTAL $16,055 $ 6,927 $54,739 $29,804
====== ====== ====== ======
PER SHARE
Primary
Net income per common share
and common equivalent share $ 1.41 $ .55 $ 4.83 $ 2.36
====== ====== ====== ======
Fully diluted
Net income per common share and
dilutive common equivalent share $ 1.40 $ .55 $ 4.81 $ 2.36
====== ====== ====== ======
</TABLE>
-17-
<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 March 15, 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 February 29, 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 Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
---------------------------------------
April 11, 1996
Dallas, Texas
-18-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED FEBRUARY 29, 1996 CONSOLIDATED FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> FEB-29-1996
<CASH> 23,279
<SECURITIES> 0
<RECEIVABLES> 120,979
<ALLOWANCES> 3,800
<INVENTORY> 136,611
<CURRENT-ASSETS> 307,867
<PP&E> 952,332
<DEPRECIATION> 577,156
<TOTAL-ASSETS> 785,417
<CURRENT-LIABILITIES> 100,382
<BONDS> 173,600
0
598
<COMMON> 12,534
<OTHER-SE> 382,602
<TOTAL-LIABILITY-AND-EQUITY> 785,417
<SALES> 711,405
<TOTAL-REVENUES> 711,405
<CGS> 564,088
<TOTAL-COSTS> 564,088
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 697
<INTEREST-EXPENSE> 15,039
<INCOME-PRETAX> 93,134
<INCOME-TAX> 32,979
<INCOME-CONTINUING> 54,587
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,587
<EPS-PRIMARY> 4.83
<EPS-DILUTED> 4.81
</TABLE>
