ITEM 1. BUSINESS
Justin Industries, Inc. ("Justin") and its subsidiaries are herein collectively and/or singly referred to as the "company". The company where specifically indicated has incorporated by reference certain information contained in its 1993 Annual Report to Shareholders. Other references made to that report are for information purposes only and the information in the Annual Report to Shareholders is not deemed incorporated in this Form 10-K.
GENERAL DEVELOPMENT OF BUSINESS
Justin's business origins can be traced back to 1879, when H. J. Justin began making boots at Spanish Fort, Texas on the Chisholm Trail. Justin was incorporated under the laws of the State of Texas on April 26, 1916, as Acme Brick Company, the successor to an Illinois company incorporated in 1891. In August 1968, the company changed its name to First Worth Corporation and created a division, later incorporated with the name "Acme Brick Company" ("Acme"), to handle the company's business relating to brick, concrete block, concrete panels, and prestressed concrete structural components. The company changed its name in October 1972 to Justin Industries, Inc.
In 1968, Justin purchased for cash and promissory notes all the outstanding Common Stock of Louisiana Concrete Products, Inc. ("Louisiana Concrete"). Also during 1968, Justin acquired the net assets or the outstanding stock of six additional small firms in the concrete products field for cash and shares of Justin Common Stock. The operations of Louisiana Concrete and the six small firms were combined with the concrete products operations of Featherlite Building Products Corporation and Featherlite Precast Corporation (whose acquisition is discussed below).
In December 1968, Justin acquired all of the outstanding common stock of Justin Belt Company, Inc., H. J. Justin & Sons, Inc., and its subsidiary, Justin Leathergoods Company, which companies were reorganized in 1984 to be known as the "Justin Boot Company" ("Justin Boot"). Justin Boot's stock was acquired in exchange for Justin Common Stock and Justin voting Preferred Stock (subsequently converted into shares of Justin Common Stock). The acquisition of Justin Boot was treated as a pooling of interests for accounting purposes.
In May 1973, Justin acquired all of the outstanding common stock of Northland Publishing Company, Inc. ("Northland") in exchange for shares of Justin Common Stock. The acquisition was accounted for as a purchase. In April 1974, Justin acquired for cash all the outstanding capital stock of Sanford Brick Corporation ("Sanford"), Sanford, North Carolina. The acquisition was accounted for as a purchase. On April 30, 1984, all of the common stock of Sanford was sold.
In August 1976, Justin acquired 62.6% of the outstanding common stock of Kingstip, Inc. ("Kingstip") for cash and effective January 31, 1977, acquired the remaining 37.4% of Kingstip's capital stock in exchange for shares of Justin Common Stock. The acquisition was accounted for as a purchase. Through 1983, all operations of Kingstip were conducted through its subsidiary, The Featherlite Corporation. Effective December 31, 1983, these operations were reorganized into two distinct operating entities, Featherlite Building Products Corporation and Featherlite Precast Corporation.
Ceramic Cooling Tower Company ("CCT") was incorporated by Justin in 1968, as an outgrowth of Acme's operations in the design and sale of water cooling systems. Effective December 31, 1991, the net assets and business of CCT were sold for $20 million cash.
In June 1981, Justin issued shares of Justin Common Stock for all the outstanding common stock of Nocona Boot Company ("Nocona").
In September 1984, the company's Featherlite Building Products Corporation subsidiary purchased all of the common stock of Gulde Block and Brick, Inc. for cash.
In 1985, the company acquired the operations of four additional companies for cash and the assumption of certain liabilities. These acquisitions were Chippewa Shoe Company, Builders Block Company, Inc., RLI, Inc. (name changed to Tradewinds Technologies, Inc. ("Tradewinds")), and MEGA Equipment Company.
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In 1986, the company acquired the operating assets of Parr Block Company for cash and notes.
Pursuant to a tender offer and subsequent merger effective October 15, 1990, the company acquired all of the outstanding shares of Tony Lama Company, Inc. ("Tony Lama") at a price of $9.00 per share in cash with the aggregate purchase price for such shares and related costs totalling approximately $18,787,000. Tony Lama is in the business of designing, manufacturing, and selling western style boots and leather accessories. The acquisition was accounted for as a purchase.
On October 7, 1991, the company purchased the brick manufacturing assets of Elgin-Butler Brick Company for cash and subordinated notes totalling approximately $4,527,000.
In December 1987, the company made the decision to discontinue operations of two of its businesses, Featherlite Precast Corporation (manufacturers of precast/prestressed concrete components) and MEGA Equipment Company (distributor of John Deere construction and utility earthmoving equipment). Both of these companies were more severely affected by the cyclical nature of the building industry and it was felt that Justin and its shareholders would be better served by concentrating the company's resources in its remaining core group of businesses. In 1988, the operations of MEGA Equipment Company and two of the three Featherlite Precast Corporation plants were sold to third parties.
Justin's continuing operations are in two principal business areas: (i) manufacture and sale of building materials, which includes the operations of Acme, Featherlite Building Products Corporation, and Tradewinds, and (ii) manufacture and sale of footwear products, which includes the operations of Justin Boot, Nocona and Tony Lama.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS (LINES OF BUSINESS)
A five year analysis of sales and operating profit contribution by industry segment is presented on page 17 of the company's 1993 Annual Report to Shareholders and additional financial information, including identifiable assets, by industry segment is included in Note 9 of Notes to Consolidated Financial Statements on page 26 of the shareholders' report. Such information is hereby incorporated by reference.
NARRATIVE DESCRIPTION OF BUSINESS
The following information is presented in addition to the information included in the Report on Operations contained on pages 5 through 11 of the company's 1993 Annual Report to Shareholders, which is incorporated herein by reference.
MANUFACTURE AND SALE OF BUILDING MATERIALS
The building materials segment includes clay brick manufactured and sold under the name Acme Brick for use in residential and commercial construction. The primary market for Acme Brick is the Central and Southwest United States where distribution is mainly through company operated sales offices. Acme also distributes through independent dealerships in other parts of the United States. Acme is one of the largest manufacturers of face brick in the United States.
Other products in the company's building materials segment include concrete block manufactured and sold under the trade name Featherlite Building Products and cut limestone manufactured under the name Texas Quarries. The primary markets for these products are in Texas and its neighboring states.
The company also represents other manufacturers as a distributor of such items as clay brick, glass block, glazed and unglazed tile and masonry units, fireplace equipment, masonry cleaners, masonry saws, wall reinforcements, masonry tools, masonry cement, and purchased used brick for resale.
Tradewinds manufactures a unique line of premium quality evaporative coolers used primarily for central residential cooling and light commercial and spot cooling.
In the states of Texas, Louisiana, Arkansas, Oklahoma, New Mexico, Kansas, Tennessee, and Missouri, Acme and Featherlite market their building materials through approximately 300 full-time company sales employees serving architects, contractors, home builders, and others in the construction market. These direct sales comprise the majority of
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the company's building materials sales. In the other states, sales are made principally through independent distributors and dealers. The majority of these building materials manufactured by the company are utilized within a 250 mile radius of the plant where they are produced. Tradewinds' coolers are sold by direct sales personnel in selected major markets and by distribution elsewhere.
MANUFACTURE AND SALE OF FOOTWEAR PRODUCTS
Footwear operations include the design, manufacture and distribution of men's, women's, and children's western style, safety, work and sports boots and shoes, primarily for sale in the United States under the trade names "Justin(R)", "Nocona(R)", "Tony Lama(R)", "Chippewa(R)", and Diamond "J(R)".
Justin Boot Company, headquartered in Fort Worth, Texas, started business in 1879 as H. J. Justin & Sons, Inc. The company owns and operates footwear manufacturing plants in Fort Worth, Texas, Cassville, Sarcoxie, and Carthage, Missouri. Nocona Boot Company, headquartered in Nocona, Texas, started business in 1925 and owns and operates its boot manufacturing plant in Nocona. Tony Lama Company, Inc., headquartered in El Paso, Texas, was established in 1911. The company owns and operates a western boot manufacturing plant in El Paso, Texas.
The company's footwear products are marketed by company salesmen and independent sales representatives who are compensated on a commission basis. Sales are made throughout the United States to a network of approximately 7,000 authorized retail outlets and dealers such as western goods stores, department stores, chain stores, and mail order houses. Footwear products are sold in the general price range of other medium to high quality lines and are manufactured using a wide range of leathers.
OTHER
Northland's primary activity is publishing books about the history and art of the West. Many of these books have won awards for fine design, printing, and binding in major book competitions including the Western Heritage Awards at the National Cowboy Hall of Fame. Northland's books are marketed by company personnel and through independent sales representatives covering the entire United States.
RAW MATERIALS
The principal raw materials for the company's brick are clay and shale mined from company-owned or leased properties. The company has developed adequate clay reserves located at or near plant sites to supply its needs for the foreseeable future. Other raw materials used in the building materials operations, such as cement, aggregate, and additives, are purchased by the company in the open market and appear to be readily available for the foreseeable future from numerous domestic suppliers. Materials for evaporative coolers are purchased in the open market or manufactured to the company's specifications and all appear to be readily available for the foreseeable future from numerous suppliers.
The company consumes large quantities of natural gas and other combustible fuels in the drying and firing of its clay products. In periods of severe cold weather and occasionally at other times, the company's natural gas supplies have been limited by its suppliers at certain locations. The company believes it will be able to obtain an adequate supply of energy in the future to meet its requirements.
The primary raw material used in the footwear product line is finished leather. Finished leather, which is readily available, is purchased from various tanneries in the United States and from tanneries in foreign countries and their representatives in the United States. Inventories are maintained to meet production requirements. Other raw materials incidental to the production of these products such as thread, tacks, staples, buckles, and clasps appear to be readily available for the foreseeable future from numerous domestic suppliers.
PATENTS AND TRADEMARKS
Many of the company's products and processes are patented. In addition, most of the company's products are marketed under registered trademarks.
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SEASONAL NATURE OF BUSINESS
Demand for building materials and evaporative coolers is seasonal, with sales during periods of warm weather representing a higher than average proportion of total yearly sales while sales of footwear products are generally highest in the fourth quarter.
WORKING CAPITAL REQUIREMENTS
It is the company's policy to increase inventory levels during periods when production capabilities exceed sales. The company may also from time to time increase its inventory of raw materials in its footwear business segment to assure itself of an adequate supply of such raw materials.
Historically, funds required for working capital have been generated from operations and from borrowings from commercial banks.
SIGNIFICANT CUSTOMERS
No material part of the company's business is dependent upon a single customer or upon a few customers, the loss of any one or more of whom would have a material adverse effect on the company's business.
BACKLOG OF ORDERS AT END OF FISCAL YEAR
An analysis of backlog orders is presented on page 16 of the company's 1993 Annual Report to Shareholders, which is incorporated herein by reference. In accordance with industry practice, unfilled orders for clay brick and footwear products are generally cancelable by customers at any time and for this reason may not be considered firm backlog in the traditional sense, despite the fact that in the past orders have been canceled only infrequently. Substantially all unfilled orders are expected to be filled within one year.
COMPETITION
The business environment in which the company operates is highly competitive in the areas of price, service, and product quality. Unless otherwise indicated below, the company's relative competitive position within its product lines and market areas is not readily available due to constant changes in the number and identity of competitors and types of competitive products.
In the building materials segment, competition includes other suppliers of brick and concrete products, as well as suppliers of diverse alternative building materials such as steel, aluminum, glass, plastic, and wood products. There are numerous manufacturers of various types of brick and concrete products in the United States, virtually all of which operate on a regional or local basis. In every geographical area served by the company, there are numerous competitors in all significant building product lines. The company is one of the largest face brick manufacturers in the United States and the largest in the Southwest. There are numerous plants manufacturing concrete products in the area in which the company owns and operates plants. Tradewinds' evaporative coolers compete with approximately ten other major manufacturers, two of which currently have approximately 70 percent of the market. None of the competition, however, manufactures coolers constructed of injection molded polypropylene material.
The company's western style boots and other footwear products compete with approximately 25 other major manufacturers of high quality merchandise, and many more manufacturers of lesser quality footwear.
RESEARCH ACTIVITIES
In the normal course of business, the company conducts research and development activities to improve existing products and to develop new products within its current product lines. These activities include developing new styles, effective use of new materials, and developing new manufacturing techniques. The amount spent during each of the last three fiscal years on these activities did not exceed one percent of the company's total operating revenues.
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ENVIRONMENT
There are numerous federal, state, and local statutes, regulations and ordinances regulating discharge of materials into the environment or otherwise relating to the protection of the environment, including those concerning clean air, water, and waste disposal. In management's opinion, none of these will materially affect the company's earnings or competitive position and should not require any material increase in capital expenditures.
EMPLOYEES
The company had 5,106 employees in its operations as of December 31, 1993.
The number of employees by job position at December 31, 1993, was as follows:
Building Parent Materials Footwear and Other Total --------- -------- --------- ----- Production 1,346 2,489 3 3,838 Sales 571 331 7 909 Administrative, Engineering, Clerical, and Other 135 192 32 359 ----- ----- --- ----- 2,052 3,012 42 5,106
FOREIGN OPERATIONS
Footwear products are marketed in foreign countries, primarily Canada, Western Europe, and Japan. Foreign operations are not material to consolidated operations.
ITEM 2.
ITEM 2. PROPERTIES
Information concerning the company's principal production facilities is as follows:
The company's current annual brick manufacturing capacity is approximately 775 million brick. The company's 16 operating brick plants are located on approximately 6,000 acres of land, which includes associated clay mining operations. The plants have individual production capacities ranging from 16.5 million to 128 million brick each year.
The company's concrete operations include 8 concrete block plants operated by Featherlite and one plant operated by Acme on tracts of land ranging from 5 acres to 24 acres. In addition, Featherlite operates a limestone mill on a 36 acre tract of land and owns 62 acres of volcanic cinder mines and leases mining rights on 2,100 acres of land for quarrying architectural limestone.
Tradewinds manufactures its evaporative coolers in Phoenix, Arizona, in a leased facility containing approximately 90,000 square feet.
The footwear manufacturing facilities consist of 7 plants and related warehouses containing approximately 784,000 square feet, located on land owned by the company. These plants have a designed capacity to produce in excess of 3 million pair of footwear annually.
The company's corporate administrative headquarters in Fort Worth, Texas, is contained in 26,000 square feet of modern office facilities.
The company owns various interests in oil and gas mineral leases in Texas, Oklahoma, Louisiana, and Arkansas. Revenues received to date from these interests have not and are not anticipated to have a material effect on consolidated revenues.
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ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
The company is involved in various claims and lawsuits incidental to its business. In the opinion of management, these claims and lawsuits in the aggregate will not have a material adverse effect on the company's consolidated financial statements.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the company's security holders during the last quarter of its fiscal year ended December 31, 1993.
EXECUTIVE OFFICERS
Certain information regarding the executive officers is as follows:
Employed by Date First Company Appointed Name Age In an Officer Title - - - ------------------- --- -------- ------------- -------------------------
John Justin 77 1936 December 1969 Chairman of the Board and Chief Executive Officer
J. T. Dickenson 64 1974 September 1983 President and Chief Operating Officer
Richard J. Savitz 47 1979 March 1982 Vice President-Finance and Treasurer
Jon M. Bennett 62 1969 December 1979 Vice President- Administration and Secretary
Edward L. Stout, Jr. 68 1949 March 1974 Vice President-Brick Operations
Judy B. Hunter (1) 35 1990 October 1990 Controller, Assistant Treasurer
There are no family relationships among any of the above officers and there are no known arrangements or understandings between any executive officer and any other person pursuant to which any of the above named persons was selected as an officer.
(1) For more than five years prior to her employment with the company, Ms. Hunter was employed by Ernst & Young, Fort Worth. She was a senior manager.
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PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Incorporated by reference from the 1993 Annual Report to Shareholders, pages 28, 29, and 30.
As of February 15, 1994, there were 1,731 common shareholders of record. In addition, approximately 2,263 shareholders are participants in the Justin Industries, Inc. Employee Stock Ownership Plan.
Dividends declared for the most recent two fiscal years are as follows:
Quarter Ended Cash Dividend Declared ------------- ---------------------- 3/31/92 - (a) 6/30/92 $.07 (a) 9/30/92 $.035 12/31/92 $.035 3/31/93 $.04 6/30/93 $.04 9/30/93 $.04 12/31/93 $.04
(a) No dividends were declared in the first quarter, and two dividends were declared in the second quarter of 1992 since the regular first quarter Board of Directors' meeting was not held until April 2, 1992.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the 1993 Annual Report to Shareholders, pages 28 and 29.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Incorporated by reference from the 1993 Annual Report to Shareholders, pages 13 through 17.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets of the company at December 31, 1993 and 1992 and the consolidated statements of income, shareholders' equity, and cash flows for the years 1993, 1992, and 1991 and the report of independent auditors thereon, and the company's unaudited quarterly financial data for the two-year period ended December 31, 1993 are incorporated by reference from the 1993 Annual Report to Shareholders, pages 18 through 27 and page 30.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Incorporated herein by reference from the company's definitive proxy statement for the Annual Meeting of Shareholders held March 18, 1994 ("Proxy Statement"), pages 3, 4 and 7.
Information regarding the executive officers is included in Part I.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference from the Proxy Statement, pages 7 through 12.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required as to security ownership is incorporated herein by reference from the Proxy Statement, pages 5 and 6.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference from the Proxy Statement, page 14.
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PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
Reference ------------------------- Annual Report to Shareholders Form 10-K (page) --------- ------------ Data incorporated by reference from attached Annual Report to Shareholders of Justin Industries, Inc.:
Report of independent auditors 27 Consolidated balance sheet at December 31, 1993 18 and 1992 For the years ended December 31, 1993, 1992, and 1991: Consolidated statement of income 19 Consolidated statement of shareholders' equity 19 Consolidated statement of cash flows 20 Notes to consolidated financial statements 21-26
2. Financial Statement Schedules
Report of Independent Auditors and Consent of S-1 Independent Auditors
Schedules for years ended December 31, 1993, 1992, and 1991:
V - Property, plant, and equipment S-2
VI - Accumulated depreciation, depletion, S-3 and amortization of property, plant, and equipment
VIII - Valuation and qualifying accounts S-4
IX - Short-term borrowings S-5
X - Supplementary income statement S-6 information
All other schedules and compliance information have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements and the notes thereto.
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3. Exhibits
Exhibit No. Description - - - ------- ------------------------------------------------------------------- 3.1 Articles of Incorporation of Registrant, as amended (incorporated by reference to the Registrant's Current Report on Form S-8 dated March 22, 1994)
3.2 By-Laws of Registrant, as amended (incorporated by reference to the Registrant's Current Report on Form 8-K dated September 7, 1990)
4.1 Rights Agreement dated as of October 6, 1989 between Registrant and Team Bank, as Rights Agent (incorporated by reference to Registrant's Registration Statement on Form 8-A dated October 10, 1989)
4.2 First Amendment to Rights Agreement dated as of October 4, 1990 between Registrant and Ameritrust Texas, N.A., as successor Rights Agent (incorporated by reference to Registrant's Amendment No. 1 on Form 8 to Registration Statement on Form 8-A dated October 4, 1990)
10.1 Registrant's 1981 Stock Option Plan*
10.2 Registrant's 1984 Incentive Stock Option Plan*
10.3 Registrant's 1992 Stock Option Plan (incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Shareholders held on April 3, 1992)
10.4 Registrant's Deferred Compensation Plan*
10.5 Form of Registrant's Special Executive Benefit Program*
10.6 Registrant's Supplemental Executive Retirement Plan of 1992 (incorporated by reference to Registrant's 1992 Annual Report on Form 10-K)
10.7 Registrant's Employee Stock Ownership Plan, as restated January 1, 1989 (incorporated by reference to the Registrant's Current Report on Form S-8 dated March 22, 1994)
10.8 Employment Agreement dated as of September 15, 1989 between Registrant and John S. Justin, Jr.*
10.9 Form of Severance Agreement dated March 23, 1990 between Registrant and its executive officers*
10.10 Form of Severance Agreement dated March 23, 1990 between Registrant and certain of its officers and employees*
10.11 Revolving Loan Agreement between Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas National Bank) as Administrative Lender and the several banks listed on the signature pages thereof, as amended in the First and Second Amendments through June 9, 1990*
10.12 Third Amendment to the Revolving Loan Agreement dated as of December 3, 1990 among Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas National Bank), Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank of New York and Texas Commerce Bank--Fort Worth, N.A. (incorporated by reference to Registrant's Current Report on Form 8-K dated December 3, 1990)
10.13 Fourth Amendment to the Revolving Loan Agreement dated as of December 31, 1991 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank of New York and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1991 Annual Report on Form 10-K)
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10.14 Fifth Amendment to the Revolving Loan Agreement dated as of May 1, 1992 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank of New York and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank-- Fort Worth, N.A.) (incorporated by reference to Registrant's 1992 Annual Report on Form 10-K)
10.15 Sixth Amendment to the Revolving Loan Agreement dated as of December 31, 1993 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A., Citibank, N.A., The Bank of New York and Texas Commerce Bank, National Association
10.16 Term Loan Agreement dated as of December 3, 1990 among the Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas National Bank), Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas Commerce Bank--Fort Worth, N.A. (incorporated by reference to Amendment No. 4 to Registrant's Schedule 14D-9 dated December 6, 1990)
10.17 First Amendment to the Term Loan Agreement dated as of December 31, 1991 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1991 Annual Report on Form 10-K)
10.18 Second Amendment to the Term Loan Agreement dated as of May 1, 1992 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1992 Annual Report on Form 10-K)
10.19 Third Amendment to the Term Loan Agreement dated as of December 31, 1993 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A., Citibank, N.A. and Texas Commerce Bank, National Association
13 Annual report to shareholders for the year ended December 31, 1993
21 Subsidiaries of the Registrant
23 Report of Independent Auditors and Consent of Independent Auditors (included herein at page S-1)
99.1 Financial statements required by Form 11-K for registrant's Employee Stock Ownership Plan for the year ended December 31, 1993
*Incorporated by reference to Registrant's Amendment No. 1 on Form 8 to Annual Report on Form 10-K dated August 23, 1990.
(b) Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.
JUSTIN INDUSTRIES, INC. (Registrant)
By: /S/ JOHN JUSTIN John Justin Chairman of the Board and Chief Executive Officer March 18, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
/S/ JOHN JUSTIN /S/ BAYARD H. FRIEDMAN John Justin Bayard H. Friedman Chairman of the Board and Director, March 18, 1994 Chief Executive Officer March 18, 1994
/S/ J. T. DICKENSON /S/ DEE J. KELLY J. T. Dickenson Dee J. Kelly Director, President and Chief Director, March 18, 1994 Operating Officer March 18, 1994
/S/ RICHARD J. SAVITZ /S/ JOSEPH R. MUSOLINO Richard J. Savitz Joseph R. Musolino Vice President-Finance, Principal Director, March 18, 1994 Finance and Accounting Officer March 18, 1994
/S/ MARVIN GEARHART /S/ JOHN V. ROACH Marvin Gearhart John V. Roach Director, March 18, 1994 Director, March 18, 1994
/S/ ROBERT E. GLAZE /S/ WILLIAM E. TUCKER Robert E. Glaze William E. Tucker Director, March 18, 1994 Director, March 18, 1994
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REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of Justin Industries, Inc. as of December 31, 1993 and 1992, and for each of the three years in the period ended December 31, 1993, and have issued our report thereon dated January 27, 1994, incorporated by reference in this Annual Report (Form 10-K). Our audits also included the financial statement schedules listed in Item 14(a) of the Annual Report (Form 10-K). These schedules are the responsibility of the company's management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
/S/ ERNST & YOUNG
Fort Worth, Texas January 27, 1994
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Justin Industries, Inc. of our report dated January 27, 1994, included in the 1993 Annual Report to Shareholders of Justin Industries, Inc.
We also consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-11915) pertaining to the Justin Industries, Inc. 1981 Stock Option Plan and the Justin Industries, Inc. 1984 Incentive Stock Option Plan and in the related Prospectus of our reports dated January 27, 1994, with respect to the consolidated financial statements and schedules of Justin Industries, Inc. included or incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 1993.
We also consent to the incorporation by reference in the Registration Statement on Form S-8 pertaining to the Justin Industries, Inc. Employee Stock Ownership Plan and in the related Prospectus of our reports (a) dated January 27, 1994, with respect to the consolidated financial statements and schedules of Justin Industries, Inc. included or incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 1993 and (b) dated March 10, 1994, with respect to the financial statements of Justin Industries, Inc. Employee Stock Ownership Plan included as Exhibit 99.1 to this Annual Report (Form 10-K) for the year ended December 31, 1993.
We also consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-61776) pertaining to the Justin Industries, Inc. 1992 Stock Option Plan and in the related Prospectus of our reports dated January 27, 1994, with respect to the consolidated financial statements and schedules of Justin Industries, Inc. included or incorporated by reference in this Annual Report (Form 10-K) for the year ended December 31, 1993.
/S/ ERNST & YOUNG
Fort Worth, Texas March 21, 1994
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JUSTIN INDUSTRIES, INC. CONSOLIDATED
SCHEDULE V - PROPERTY, PLANT, AND EQUIPMENT
Years Ended December 31, (in thousands of dollars)
Balance Transfers Balance at Additions Retire- & at Beginning at Cost ments Reclassi- Close of Year (1) or Sales fications of Year ---------- --------- ---------- --------- ------- 1991: - - - ----- Land $ 19,713 $ 1,227 $ 8 $ (2,493) $ 18,439 Buildings & Equipment: Buildings & Leasehold Improvements 45,074 4,833 676 (259) 48,972 Machinery & Equipment 115,692 9,098 5,241 (663) 118,886 Office Furniture & Fixtures 10,090 808 1,842 - 9,056 Unfinished Improvements 2,630 (1,498) - - 1,132 -------- ------- ------- -------- -------- 173,486 13,241 7,759 (922) 178,046 -------- ------- ------- -------- -------- $193,199 $14,468 $ 7,767 $ (3,415) $196,485 ======== ======= ======= ======== ========
1992: - - - ----- Land $ 18,439 $ 62 $ 5 $ (1,761) $ 16,735 Buildings & Equipment: Buildings & Leasehold Improvements 48,972 1,251 184 (563) 49,476 Machinery & Equipment 118,886 10,168 2,878 51 126,227 Office Furniture & Fixtures 9,056 1,137 956 6 9,243 Unfinished Improvements 1,132 (612) - - 520 -------- ------- ------- -------- -------- 178,046 11,944 4,018 (506) 185,466 -------- ------- ------- -------- -------- $196,485 $12,006 $ 4,023 $ (2,267) $202,201 ======== ======= ======= ======== ========
1993: - - - ----- Land $16,735 $ 174 $ 230 $ (21) $16,658 Buildings & Equipment: Buildings & Leasehold Improvements 49,476 3,184 440 558 52,778 Machinery & Equipment 126,227 11,434 3,069 (489) 134,103 Office Furniture & Fixtures 9,243 800 302 (47) 9,694 Unfinished Improvements 520 1,686 - - 2,206 -------- ------- ------- -------- -------- 185,466 17,104 3,811 22 198,781 -------- ------- ------- -------- -------- $202,201 $17,278 $ 4,041 $ 1 $215,439 ======== ======= ======= ======== ========
(1) 1991 additions include $3,451 of property, plant, and equipment acquired in the acquisition of Elgin-Butler Brick Company.
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JUSTIN INDUSTRIES, INC. CONSOLIDATED
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF PROPERTY, PLANT, AND EQUIPMENT
Years Ended December 31, (in thousands of dollars)
Additions Balance Charged Transfers Balance at to Retire- & at Beginning Expense ments Reclassi- Close of Year (1) or Sales fications of Year ---------- --------- ---------- --------- ------- 1991: - - - ----- Land $ 271 $ 5 $ - $ (1) $ 275 Buildings & Equipment: Buildings & Leasehold Improvements 21,130 2,764 500 57 23,451 Machinery & Equipment 78,906 9,253 3,936 (292) 83,931 Office Furniture & Fixtures 8,239 796 1,699 1 7,337 -------- ------- ------- -------- -------- 108,275 12,813 6,135 (234) 114,719 -------- ------- ------- -------- -------- $108,546 $12,818 $ 6,135 $ (235) $114,994 ======== ======= ======= ======== ========
1992: - - - ----- Land $ 275 $ 5 $ - $ 75 $ 355 Buildings & Equipment: Buildings & Leasehold Improvements 23,451 2,649 168 380 26,312 Machinery & Equipment 83,931 10,377 2,587 51 91,772 Office Furniture & Fixtures 7,337 806 931 6 7,218 -------- ------- ------- -------- -------- 114,719 13,832 3,686 437 125,302 -------- ------- ------- -------- -------- $114,994 $13,837 $ 3,686 $ 512 $125,657 ======== ======= ======= ======== ========
1993: - - - ----- Land $ 355 $ 5 $ - $ - $ 360 Buildings & Equipment: Buildings & Leasehold Improvements 26,312 2,784 310 77 28,863 Machinery & Equipment 91,772 9,861 2,939 (453) 98,241 Office Furniture & Fixtures 7,218 823 301 (35) 7,705 -------- ------- ------- -------- -------- 125,302 13,468 3,550 (411) 134,809 -------- ------- ------- -------- -------- $125,657 $13,473 $ 3,550 $ (411) $135,169 ======== ======= ======= ======== ========
(1) The company's 1991 balance sheet has been restated for certain of these reclassifications.
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JUSTIN INDUSTRIES, INC. CONSOLIDATED
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, (in thousands of dollars)
Balance at Additions Balance at Beginning Charged to Deductions End of of Year Income (1) Year (2) ---------- ---------- ---------- ----------
Reserve Deducted from Related Assets:
1991: - - - ----- Doubtful Accounts $ 2,558 $ 1,564 $ 1,470 $ 2,652
1992: - - - ----- Doubtful Accounts $ 2,652 $ 1,613 $ 1,211 $ 3,054
1993: - - - ----- Doubtful Accounts $ 3,054 $ 1,004 $ 1,044 $ 3,014
(1) Accounts written off, less recoveries.
(2) The reserve for doubtful accounts is deducted from accounts receivable in the financial statements.
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JUSTIN INDUSTRIES, INC. CONSOLIDATED
SCHEDULE IX - SHORT-TERM BORROWINGS
Years Ended December 31
Weighted Average Maximum Average Interest Amount Amount Rate Category of Balance Weighted Outstanding Outstanding During Aggregate at End Average During the During the the Short-Term of Period Interest Period Period Period Borrowings (000 omitted) Rate (000 omitted) (000 omitted) (2) ------------- ------------- --------- ------------- ------------- ---------
1991: - - - ----- Notes Payable to Banks (1) $ - - % $16,500 $ 8,325 6.8%
1992: - - - ----- Notes Payable to Banks (1) $5,000 4.125% $ 8,000 $ 6,255 4.5%
1993: - - - ----- Notes Payable to Banks (1) $ - - % $12,500 $ 7,742 3.9%
(1) Notes payable to banks represent unsecured borrowings generally for periods up to 90 days pursuant to credit arrangements with commercial banks.
(2) Computed using the total interest expense on short-term indebtedness during the year as a percentage of the daily average amount outstanding during the year.
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JUSTIN INDUSTRIES, INC. CONSOLIDATED
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years Ended December 31, (in thousands of dollars)
Amounts Charged to Operations in 1993 1992 1991 ------ ------ ------
Maintenance and Repairs $12,822 $11,599 $9,865 ======= ======= =======
Depreciation $13,473 $13,837 $12,818 ======= ======= =======
Advertising Expense $14,494 $12,712 $10,063 ======= ======= =======
Note: For the three years presented, the amounts for amortization of intangible assets, pre-operating costs, and similar deferrals, royalties, and taxes other than payroll and income are less than 1% of total sales. The information presented above is for continuing operations.
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JUSTIN INDUSTRIES, INC.
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit No. Description Page - - - ------- ------------------------------------------------------------ ----
3.1 Articles of Incorporation of Registrant, as amended (incorporated by reference to the Registrant's Current Report on Form S-8 dated March 22, 1994)
3.2 By-Laws of Registrant, as amended (incorporated by reference to the Registrant's Current Report on Form 8-K dated September 7, 1990)
4.1 Rights Agreement dated as of October 6, 1989 between Registrant and Team Bank, as Rights Agent (incorporated by reference to Registrant's Registration Statement on Form 8-A dated October 10, 1989)
4.2 First Amendment to Rights Agreement dated as of October 4, 1990 between Registrant and Ameritrust Texas, N.A., as successor Rights Agent (incorporated by reference to Registrant's Amendment No. 1 on Form 8 to Registration Statement on Form 8-A dated October 4, 1990)
10.1 Registrant's 1981 Stock Option Plan*
10.2 Registrant's 1984 Incentive Stock Option Plan*
10.3 Registrant's 1992 Stock Option Plan (incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Shareholders held on April 3, 1992)
10.4 Registrant's Deferred Compensation Plan*
10.5 Form of Registrant's Special Executive Benefit Program*
10.6 Registrant's Supplemental Executive Retirement Plan of 1992 (incorporated by reference to Registrant's 1992 Annual Report on Form 10-K)
10.7 Registrant's Employee Stock Ownership Plan, as restated January 1, 1989 (incorporated by reference to the Registrant's Current Report on Form S-8 dated March 22, 1994)
10.8 Employment Agreement dated as of September 15, 1989 between Registrant and John S. Justin, Jr.*
10.9 Form of Severance Agreement dated March 23, 1990 between Registrant and its executive officers*
10.10 Form of Severance Agreement dated March 23, 1990 between Registrant and certain of its officers and employees*
10.11 Revolving Loan Agreement between Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas National Bank) as Administrative Lender and the several banks listed on the signature pages thereof, as amended in the First and Second Amendments through June 9, 1990*
10.12 Third Amendment to the Revolving Loan Agreement dated as of December 3, 1990 among Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas National Bank), Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank of New York and Texas Commerce Bank--Fort Worth, N.A. (incorporated by reference to Registrant's Current Report on Form 8-K dated December 3, 1990)
10.13 Fourth Amendment to the Revolving Loan Agreement dated as of December 31, 1991 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank of New York and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1991 Annual Report on Form 10-K)
10.14 Fifth Amendment to the Revolving Loan Agreement dated as of May 1, 1992 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A., The Bank of New York and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1992 Annual Report on Form 10-K)
10.15 Sixth Amendment to the Revolving Loan Agreement dated as of December 31, 1993 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A., Citibank, N.A., The Bank of New York and Texas Commerce Bank, National Association
10.16 Term Loan Agreement dated as of December 3, 1990 among the Registrant, NationsBank of Texas, N.A. (formerly NCNB Texas National Bank), Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas Commerce Bank--Fort Worth, N.A. (incorporated by reference to Amendment No. 4 to Registrant's Schedule 14D-9 dated December 6, 1990)
10.17 First Amendment to the Term Loan Agreement dated as of December 31, 1991 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1991 Annual Report on Form 10-K)
10.18 Second Amendment to the Term Loan Agreement dated as of May 1, 1992 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A. (formerly Team Bank), Citibank, N.A. and Texas Commerce Bank, National Association (successor by merger to Texas Commerce Bank--Fort Worth, N.A.) (incorporated by reference to Registrant's 1992 Annual Report on Form 10-K)
10.19 Third Amendment to the Term Loan Agreement dated as of December 31, 1993 among Registrant, certain subsidiaries of the Registrant, NationsBank of Texas, N.A., as Administrative Lender, NationsBank of Texas, N.A., Bank One, Texas, N.A., Citibank, N.A. and Texas Commerce Bank, National Association
13 Annual report to shareholders for the year ended December 31, 1993
21 Subsidiaries of the Registrant
23 Report of Independent Auditors and Consent of Independent Auditors (included herein at page S-1)
99.1 Financial statements required by Form 11-K for registrant's Employee Stock Ownership Plan for the year ended December 31, 1993
* Incorporated by reference to Registrant's Amendment No. 1 on Form 8 to Annual Report on Form 10-K dated August 23, 1990.