<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 November 30, 1995
[ ] 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 January 5, 1996, 11,060,181 shares of Registrant's Common Stock, $1.00 par
value, were outstanding.
Page 1 of 18
<PAGE>
INDEX
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
- -----------------------------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets -- November 30, 1995
and May 31, 1995........................................ 3
Consolidated Statements of Income -- three months
ended and six months ended November 30, 1995 and
November 30, 1994...................................... 4
Consolidated Statements of Cash Flows -- six months
ended November 30, 1995 and November 30, 1994........... 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 4. Submission of Matters to a Vote of Security Holders...... 14
Item 6. Exhibits and Reports on Form 8-K......................... 14
SIGNATURES
- ----------
</TABLE>
2
<PAGE>
(Unaudited)
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
November 30, May 31,
- ------------------------------------------------------------------------------
In thousands 1995 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 25,405 $ 25,988
Notes and accounts receivable 108,427 99,445
Inventories 131,012 125,384
Prepaid expenses 35,552 41,957
-------- -------
TOTAL CURRENT ASSETS 300,396 292,774
OTHER ASSETS
Real estate and other investments 21,067 29,392
Goodwill 60,214 61,217
Commissioning costs and other assets 22,205 22,533
-------- -------
103,486 113,142
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 106,567 105,874
Buildings 55,464 54,749
Machinery and equipment 762,679 737,222
-------- -------
924,710 897,845
Less allowances for depreciation 570,030 550,706
-------- -------
354,680 347,139
-------- -------
$ 758,562 $ 753,055
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 53,477 $ 57,019
Accrued interest, wages and other items 37,721 30,675
Current portion of long-term debt 13,973 17,477
-------- -------
TOTAL CURRENT LIABILITIES 105,171 105,171
LONG-TERM DEBT 160,723 185,274
DEFERRED FEDERAL INCOME TAXES AND OTHER CREDITS 76,413 80,178
MINORITY INTEREST 35,847 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 155,375 119,587
Cost of common shares in treasury (54,144) (55,655)
-------- -------
380,408 343,109
-------- -------
$ 758,562 $ 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 Six months ended
November 30, November 30,
- ----------------------------------------------------------------------------------
In thousands except per share 1995 1994 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $244,261 $201,095 $476,365 $402,062
COSTS AND EXPENSES (INCOME)
Cost of products sold 190,593 165,668 373,688 333,089
Selling, general and administrative 18,459 13,883 34,938 26,551
Interest 5,124 5,024 10,335 10,536
Other income (6,696) (2,942) (8,172) (4,063)
-------- -------- -------- --------
207,480 181,633 410,789 366,113
-------- -------- -------- --------
INCOME BEFORE THE FOLLOWING ITEMS 36,781 19,462 65,576 35,949
Provision for income taxes 13,254 6,390 23,592 11,697
-------- -------- -------- --------
23,527 13,072 41,984 24,252
Minority interest in Chaparral (2,075) (1,062) (3,401) (1,476)
------- ------- -------- -------
NET INCOME $21,452 $12,010 $38,583 $22,776
======= ======= ======= =======
Average common shares 11,358 12,648 11,312 12,655
Net income per common share $ 1.89 $ .96 $ 3.42 $ 1.81
======= ======= ======= =======
Cash dividends $ .10 $ .05 $ .20 $ .10
======= ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six months ended
November 30,
- --------------------------------------------------------------------
In thousands 1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 38,583 $ 22,776
Loss (gain) on disposal of assets 395 (483)
Non-cash items
Depreciation, depletion and amortization 24,120 24,473
Deferred taxes 5,222 3,363
Undistributed minority interest 2,833 908
Other - net 3,309 1,789
Changes in operating assets and liabilities
Notes and accounts receivable (8,955) (8,455)
Inventories and prepaid expenses (10,155) 12,390
Accounts payable and accrued liabilities 4,303 3,948
Real estate and investments 8,426 678
-------- --------
Net cash provided by operations 68,081 61,387
INVESTING ACTIVITIES
Capital expenditures (30,160) (19,676)
Proceeds from disposition of assets 616 909
Cash surrender value - insurance (2,106) (2,288)
Other - net (280) 72
-------- --------
Net cash used by investing (31,930) (20,983)
FINANCING ACTIVITIES
Repayments of short-term borrowing -- (15,000)
Proceeds from long-term borrowing 52 63
Debt retirements (28,120) (31,106)
Purchase of treasury shares (281) (2,034)
Purchase of Chaparral stock (6,402) --
Dividends paid (2,223) (1,264)
Other - net 240 (1,457)
-------- --------
Net cash used by financing (36,734) (50,798)
-------- --------
Decrease in cash (583) (10,394)
Cash at beginning of period 25,988 31,766
-------- --------
Cash at end of period $ 25,405 $ 21,372
======== ========
</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 six-month period ended November 30,
1995, 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
18.0% 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 $13.2 million at November 30, 1995
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 $1.5 million in the six-month periods ended
November 30, 1995 and 1994, based on a five-year period. Total accumulated
amortization is $11.6 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 $195.2 million at November 30, 1995, compared to $187.6
million at May 31, 1995.
Notes and accounts receivable of $108.4 million at November, compared with $99.4
million at May, are presented net of allowances for doubtful receivables of $3.8
million at November and $3.2 million at May.
6
<PAGE>
WORKING CAPITAL-Continued
Inventories are summarized as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------
In thousands November May
---------------------------------------------------------------
<S> <C> <C>
Finished products $ 51,620 $ 55,874
Work in process 20,494 19,148
Raw materials and supplies 58,898 50,362
-------- --------
$131,012 $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 $12.3 million at November and $11.6 million at May.
LONG-TERM DEBT
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
In thousands November May
--------------------------------------------------------------------
<S> <C> <C>
Bank obligations, maturing through 2000, interest
rates from 6.44% to 6.5% (.625% over LIBOR) $ 69,000 $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% 20,458 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 6.56% to 10% 10,010 10,350
Other, maturing through 2005, interest rates
from 7% to 10% 3,228 5,695
-------- -------
174,696 202,751
Less current maturities 13,973 17,477
-------- -------
$160,723 $185,274
======== ========
</TABLE>
Annual maturities of long-term debt for each of the five succeeding years are
$14.0, $13.8, $13.7, $13.0 and $81.9 million.
The Company has available a bank-financed $150 million long-term line of credit.
In addition to the $69.0 million currently outstanding under this line, $5.4
million has been utilized to support letters of credit. Commitment fees at an
annual rate of .22% are paid on the unused portion of this line.
Chaparral has available bank lines of credit of $20 million, which are due to
expire in January 1996, if not renewed. The interest rate charged on borrowings
is .45% over LIBOR. Commitment fees at an annual rate of 1/4 of 1% are paid on
the unused portions of these lines.
7
<PAGE>
LONG-TERM DEBT-Continued
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 $38.8 million as of November 30, 1995. The Company and
Chaparral are in compliance with all loan covenant restrictions.
Property, plant and equipment, principally Chaparral's, carried at a net amount
of approximately $212.2 million at November 30, 1995 is mortgaged as collateral
for $21.9 million of secured debt.
SHAREHOLDERS' EQUITY
Common stock consists of:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
In thousands November May
--------------------------------------------------------------------------------
<S> <C> <C>
Shares authorized 40,000 15,000
Shares outstanding at end of period 11,055 11,011
Average shares outstanding for period, including equivalents 11,312 12,426
Shares held in treasury 1,478 1,523
Shares reserved for stock options and other 1,261 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 November
and May 1995.
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 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 six-month period ended November 30, 1995,
follows:
8
<PAGE>
STOCK OPTION PLANS-Continued
<TABLE>
<CAPTION>
----------------------------------------------------------------------
$ In thousands Shares Under Option Aggregate Option Price
----------------------------------------------------------------------
<S> <C> <C>
Outstanding at June 1 548,441 $13,928
Granted 158,450 7,055
Exercised (49,436) (1,180)
Cancelled (18,810) (531)
------- -------
Outstanding at November 30 638,645 $19,272
======= =======
</TABLE>
At November 30, 1995, there were 148,315 shares exercisable and 548,110 shares
available for future grants. Outstanding options expire on various dates to
October 17, 2005.
INCOME TAXES
Federal income taxes for the interim periods ended November 30, 1995 and 1994,
have been included in the accompanying financial statements on the basis of an
estimated annual rate. The estimated annualized tax rate is 36.0% for 1995
compared with 32.5% for 1994. 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 $17.7
million in 1995 and $11.2 million in 1994.
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 November 30, 1995, and the related
condensed consolidated statements of income for the three-month and six-month
periods ended November 30, 1995 and 1994, and the condensed consolidated
statements of cash flows for the six-month periods ended November 30, 1995 and
1994. 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
----------------------
December 14, 1995
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 six-
month periods ended November 30, 1995 to the three-month and six-month periods
ended November 30, 1994.
RESULTS OF OPERATIONS
Consolidated net sales of $244.3 million for the quarter ended November 30,
1995, increased 21% over the prior year period. Steel sales were $155.0
million, up $28.7 million, a 23% increase resulting from the recovery in the
structural beam market. Shipments and average realized prices both increased
10% as compared to the prior year quarter. Demand from service centers,
fabricators and the mobile home industry for structural mill products has
increased substantially from the prior year. Chaparral continued a trend begun
in the spring of 1995 by announcing December price increases on most structural
products which make up approximately half of total steel shipments. Bar mill
results reflect weak conditions in U. S. manufacturing, with shipments 11% below
last year. Realized prices remain equal with the prior year but down 4% from
the August 1995 quarter. Chaparral continues to use its ability to adjust its
product mix in order to maximize profit margins. Cement/concrete sales grew 19%
to $89.3 million over the prior year period as a result of both volume and price
improvements for all major products. Margins have continued to expand as the
level of construction activity in the Texas region has been maintained. Cement
average trade pricing was up 12% over the prior year with shipments remaining at
levels near productive capacity. Ready-mix net sales reflect a 37% increase in
volume from expanded capacity and a 5% increase in average trade prices
maintaining the growth experienced in the August quarter. Aggregate prices
improved slightly, primarily due to product mix on increased sales volume over
the prior year.
BUSINESS SEGMENTS
<TABLE>
<CAPTION>
Three months ended
November 30,
---------------------------------------------------------
In thousands 1995 1994
---------------------------------------------------------
<S> <C> <C>
NET SALES
Bar mill $ 37,564 $ 41,373
Structural mills 116,104 83,973
Transportation service 1,322 927
------- -------
TOTAL STEEL 154,990 126,273
Cement 35,588 25,744
Ready-mix 38,802 26,889
Stone, sand & gravel 19,354 15,371
Other products 15,224 14,146
Interplant (19,697) (7,328)
------- -------
TOTAL CEMENT/CONCRETE 89,271 74,822
------- -------
TOTAL NET SALES $ 244,261 $ 201,095
======= =======
UNITS SHIPPED
Bar mill (tons) 106 119
Structural mills (tons) 297 246
------- -------
TOTAL STEEL TONS 403 365
Cement (tons) 627 513
Ready-mix (cubic yards) 781 569
Stone, sand & gravel (tons) 3,838 2,970
</TABLE>
11
<PAGE>
BUSINESS SEGMENTS-Continued
<TABLE>
<CAPTION>
Three months ended
November 30,
-------------------------------------------------------------------
In thousands 1995 1994
-------------------------------------------------------------------
<S> <C> <C>
STEEL OPERATIONS
Gross profit $ 33,623 $ 23,200
Less: Depreciation & amortization 8,090 8,410
Selling, general & administrative 6,778 4,673
Other income (1,137) (888)
------ ------
OPERATING PROFIT 19,892 11,005
CEMENT/CONCRETE OPERATIONS
Gross profit 31,761 24,081
Less: Depreciation, depletion &
amortization 3,845 3,633
Selling, general & administrative 6,417 4,924
Other income (404) (978)
------ ------
OPERATING PROFIT 21,903 16,502
------ ------
TOTAL OPERATING PROFIT 41,795 27,507
CORPORATE RESOURCES
Other income 5,155 1,076
Less: Depreciation & amortization 207 196
Selling, general & administrative 4,838 3,901
------ ------
110 (3,021)
INTEREST EXPENSE (5,124) (5,024)
------ ------
INCOME BEFORE TAXES & OTHER ITEMS $ 36,781 $ 19,462
====== ======
</TABLE>
Consolidated cost of products sold including depreciation and amortization was
$190.6 million, an increase of $24.9 million over the prior year quarter. Steel
cost of sales was $129.4 million, an increase of $17.9 million. The 16%
increase was caused predominately by the increase in shipments of 38,000 tons
and higher melt shop conversion costs. Cement/concrete costs were up $7.0
million to $61.2 million on increased volumes.
Operating profit of $41.8 million in the current quarter was $14.3 million
higher than the prior year quarter due to increased sales and improved margins.
Steel profits were $6.5 million higher in the current quarter over the August
quarter which were reduced due to the normal scheduled summer shut-down to
refurbish the production facilities. Cement/concrete profits were up $5.4
million in the November quarter over the prior year period. Following the
normal seasonal pattern, lower volumes in the November quarter contributed to a
$2.9 million decline in profits over the August quarter.
Selling, general and administrative expenses at $18.5 million increased $4.6
million, principally due to higher provisions for employee incentive expense in
both the steel and cement/concrete operations. Corporate resources other income
in the current quarter includes $4.9 million from property sales generated by
the Company's real estate operations. Interest expense increased slightly
compared to the prior year period on increased average outstanding debt.
Income tax expense was provided at a 3.5% higher estimated annualized tax rate
which anticipates more pre-tax income in 1995 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 $68.1 million for the six-month period ended
November 30, 1995, was $6.7 million higher than the 1994 period. Chaparral
reduced inventories by $15.0 million in the 1994 six-month period returning the
inventories to more normal historical levels. Chaparral's 1995 inventories grew
$5.5 million due to raw materials purchases made in anticipation of winter
quarter price increases. Property sales from the Company's real estate
operations in the 1995 period provided $4.7 million in operating cash and $6.0
million in additional notes receivable. Accounts receivable increases during
the 1995 period were $4.5 million lower overall than the prior year period.
Average days' sales remained unchanged from the prior year.
Investing activities used $31.9 million in 1995 compared to $21.0 million in
1994, as capital expenditures were $10.5 million higher than the same period
last year. 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. Additional items of transportation and aggregate handling
equipment are expected to be leased.
Financing activities used $14.1 million less cash or $36.7 million in 1995.
Debt repayments were $18.0 million greater in the 1994 period, including the
repayment by Chaparral of $15.0 million of short-term bank debt. Chaparral
purchased $6.4 million of its common stock during the current quarter 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 double the 1994 rate on approximately 12% fewer
outstanding shares due to treasury share repurchases in the February and May
quarters.
FINANCIAL CONDITION
TXI has a $150 million long-term bank line of credit which expires in September
2000. At November 30, 1995, $75.6 million was available for future borrowings.
Chaparral has short-term credit facilities of $20 million, none of which was
utilized during the current six-month period. Chaparral's bank lines expire
January 31, 1996. Management believes that it will be able to renew these lines
or obtain similar credit facilities.
The Company expects that with its present 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 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of the Shareholders held October 17, 1995, shareholders
voted on the following matters:
1. To elect as Directors of the Company, Gerald R. Heffernan, Robert D.
Rogers and Ian Wachtmeister to terms expiring in 1998. Votes cast to
elect Gerald R. Heffernan were 9,155,161 affirmative, 390,318
opposed and 1,495,626 abstained or non-voted. Votes cast to elect
Robert D. Rogers were 9,067,066 affirmative, 478,413 opposed and
1,495,626 abstained or non-voted. Votes cast to elect Ian
Wachtmeister were 9,154,173 affirmative, 391,306 opposed and
1,495,626 abstained or non-voted. Terms of office expire for the
continuing directors, Robert Alpert, Richard I. Galland and
Elizabeth C. Williams in 1996 and for the continuing directors
Gordon E. Forward, James M. Hoak, Jr. and Ralph B. Rogers in 1997.
2. To amend the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock which the Company is
authorized to issue from 15,000,000 shares presently authorized to
40,000,000 shares. Votes cast were 6,244,301 affirmative, 3,298,878
opposed and 1,495,626 abstained or non-voted.
3. To amend the Texas Industries 1993 Stock Option Plan to increase the
number of shares of Common Stock covered by the option automatically
granted to non-employee Directors from 5,000 shares to 10,000
shares. Votes cast were 9,195,270 affirmative, 350,209 opposed and
1,495,626 abstained or non-voted.
4. To approve the performance-based incentive compensation provision of
the employment contract of the Company's Chief Executive Officer.
Votes cast were 9,040,668 affirmative, 504,111 opposed and 1,495,626
abstained or non-voted.
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 November 30, 1995 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 November 30, 1995.
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.
January 11, 1996 /s/ Richard M. Fowler
- ---------------- ----------------------
Richard M. Fowler
Vice President & Chief Financial Officer
January 11, 1996 /s/ James R. McCraw
- ---------------- --------------------
James R. McCraw
Vice President - Controller
15
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits Page
<S> <C> <C>
11. Statement re: computation of per share earnings... 17
15. Letter re: Unaudited Interim Financial Information 18
27. Financial Data Schedule............................ **
</TABLE>
** Electronically filed only.
16
<PAGE>
EXHIBIT 11
(Unaudited)
COMPUTATION OF EARNINGS PER SHARE
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three months ended Six months ended
November 30, November 30,
- ------------------------------------------------------------------------------------------------
In thousands except per share 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING
Primary
Average shares outstanding 11,047 12,479 11,035 12,484
Stock options and other equivalents -
treasury stock method using
average market prices 311 169 277 171
------- ------- ------- -------
TOTAL 11,358 12,648 11,312 12,655
======= ======= ======= =======
Fully diluted
Average common shares outstanding 11,047 12,479 11,035 12,484
Stock options and other equivalents -
treasury stock method using end of
quarter market price if higher than
average 319 169 318 171
------- ------- ------- -------
TOTAL 11,366 12,648 11,353 12,655
======= ======= ======= =======
NET INCOME APPLICABLE TO COMMON STOCK
Primary
Net income $21,452 $12,010 $38,583 $22,776
Adjustments
Dividend on preferred stock (7) (7) (15) (15)
Contingent price amortization 58 58 116 116
------- ------- ------- -------
TOTAL $21,503 $12,061 $38,684 $22,877
======= ======= ======= =======
Fully diluted
Net income $21,452 $12,010 $38,583 $22,776
Adjustments
Dividend on preferred stock (7) (7) (15) (15)
Contingent price amortization 58 58 116 116
------- ------- ------- -------
TOTAL $21,503 $12,061 $38,684 $22,877
======= ======= ======= =======
PER SHARE
Primary
Net income per common share
and common equivalent share $ 1.89 $ .96 $ 3.42 $ 1.81
======= ======= ======= =======
Fully diluted
Net income per common share and
dilutive common equivalent share $ 1.89 $ .96 $ 3.41 $ 1.81
======= ======= ======= =======
</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 December 14, 1995, 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 November 30, 1995.
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
----------------------
January 10, 1996
Dallas, Texas
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED NOVEMBER 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 25,405
<SECURITIES> 0
<RECEIVABLES> 112,188
<ALLOWANCES> 3,761
<INVENTORY> 131,012
<CURRENT-ASSETS> 300,396
<PP&E> 924,710
<DEPRECIATION> 570,030
<TOTAL-ASSETS> 758,562
<CURRENT-LIABILITIES> 105,171
<BONDS> 160,723
0
598
<COMMON> 12,534
<OTHER-SE> 367,276
<TOTAL-LIABILITY-AND-EQUITY> 758,562
<SALES> 476,365
<TOTAL-REVENUES> 476,365
<CGS> 373,688
<TOTAL-COSTS> 373,688
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 520
<INTEREST-EXPENSE> 10,335
<INCOME-PRETAX> 65,576
<INCOME-TAX> 23,592
<INCOME-CONTINUING> 38,583
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,583
<EPS-PRIMARY> 3.42
<EPS-DILUTED> 3.41
</TABLE>
