UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended November 30, 2003 |
| ¨ | 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 incorporation or organization) |
(IRS Employer Identification No.) | |
| 1341 West Mockingbird Lane, Suite 700W, Dallas, Texas | 75247-6913 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code (972) 647-6700
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
As of January 9, 2004, 21,102,734 shares of Registrant’s Common Stock, $1.00 par value, were outstanding.
Page 1 of 41
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| PART I. FINANCIAL INFORMATION |
Page | |||
| Item 1. |
Financial Statements |
|||
| Consolidated Balance Sheets—November 30, 2003 and May 31, 2003 |
3 | |||
| 4 | ||||
| Consolidated Statements of Cash Flows—six months ended November 30, 2003 and November 30, 2002 |
5 | |||
| 6 | ||||
| 25 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 | ||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk—the information required by this item is included in Item 2 |
— | ||
| Item 4. |
34 | |||
| Item 1. |
34 | |||
| Item 4. |
34 | |||
| Item 6. |
34 | |||
-2-
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| (Unaudited) November 30, |
May 31, | |||||||
| In thousands | 2003 | 2003 | ||||||
| ASSETS |
||||||||
| CURRENT ASSETS |
||||||||
| Cash |
$ | 35,150 | $ | 6,204 | ||||
| Receivables—net |
175,508 | 61,831 | ||||||
| Inventories |
264,264 | 270,773 | ||||||
| Deferred taxes and prepaid expenses |
36,052 | 37,375 | ||||||
| TOTAL CURRENT ASSETS |
510,974 | 376,183 | ||||||
| OTHER ASSETS |
||||||||
| Goodwill |
146,474 | 146,474 | ||||||
| Real estate and investments |
48,115 | 43,600 | ||||||
| Deferred charges and intangibles |
38,027 | 23,985 | ||||||
| 232,616 | 214,059 | |||||||
| PROPERTY, PLANT AND EQUIPMENT |
||||||||
| Land and land improvements |
228,751 | 218,687 | ||||||
| Buildings |
101,792 | 101,490 | ||||||
| Machinery and equipment |
1,720,454 | 1,712,285 | ||||||
| Construction in progress |
41,559 | 47,724 | ||||||
| 2,092,556 | 2,080,186 | |||||||
| Less allowances for depreciation |
986,107 | 940,818 | ||||||
| 1,106,449 | 1,139,368 | |||||||
| $ | 1,850,039 | $ | 1,729,610 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Trade accounts payable |
$ | 102,522 | $ | 120,477 | ||||
| Accrued interest, wages and other items |
84,725 | 43,376 | ||||||
| Current portion of long-term debt |
730 | 732 | ||||||
| TOTAL CURRENT LIABILITIES |
187,977 | 164,585 | ||||||
| LONG-TERM DEBT |
606,941 | 477,145 | ||||||
| DEFERRED INCOME TAXES AND OTHER CREDITS |
152,880 | 160,434 | ||||||
| COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY HOLDING SOLELY COMPANY CONVERTIBLE DEBENTURES |
199,937 | 199,937 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock, $1 par value |
25,067 | 25,067 | ||||||
| Additional paid-in capital |
260,745 | 260,936 | ||||||
| Retained earnings |
513,260 | 538,584 | ||||||
| Cost of common stock in treasury |
(90,876 | ) | (91,186 | ) | ||||
| Pension liability adjustment |
(5,892 | ) | (5,892 | ) | ||||
| 702,304 | 727,509 | |||||||
| $ | 1,850,039 | $ | 1,729,610 | |||||
See notes to consolidated financial statements.
-3-
CONSOLIDATED STATEMENTS OF OPERATIONS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| Three months ended November 30, |
Six months ended November 30, |
|||||||||||||||
| In thousands except per share | 2003 | 2002 | 2003 | 2002 | ||||||||||||
| NET SALES |
$ | 368,559 | $ | 337,670 | $ | 744,597 | $ | 703,667 | ||||||||
| COSTS AND EXPENSES (INCOME) |
||||||||||||||||
| Cost of products sold |
333,849 | 315,439 | 686,504 | 639,170 | ||||||||||||
| Selling, general and administrative |
24,672 | 21,410 | 50,275 | 47,833 | ||||||||||||
| Interest |
15,383 | 8,556 | 32,425 | 17,392 | ||||||||||||
| Loss on early retirement of debt |
— | — | 11,246 | — | ||||||||||||
| Other income |
(90 | ) | (1,124 | ) | (6,286 | ) | (2,506 | ) | ||||||||
| 373,814 | 344,281 | 774,164 | 701,889 | |||||||||||||
| INCOME (LOSS) BEFORE THE FOLLOWING ITEMS |
(5,255 | ) | (6,611 | ) | (29,567 | ) | 1,778 | |||||||||
| Income taxes (benefit) |
(585 | ) | (5,057 | ) | (12,050 | ) | (2,371 | ) | ||||||||
| (4,670 | ) | (1,554 | ) | (17,517 | ) | 4,149 | ||||||||||
| Dividends on preferred securities—net of tax |
(1,787 | ) | (1,786 | ) | (3,574 | ) | (3,574 | ) | ||||||||
| INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE |
(6,457 | ) | (3,340 | ) | (21,091 | ) | 575 | |||||||||
| Cumulative effect of accounting change—net of tax |
— | — | (1,071 | ) | — | |||||||||||
| NET INCOME (LOSS) |
$ | (6,457 | ) | $ | (3,340 | ) | $ | (22,162 | ) | $ | 575 | |||||
| Basic earnings (loss) per share: |
||||||||||||||||
| Income (loss) before cumulative effect of accounting change |
$ | (.31 | ) | $ | (.16 | ) | $ | (1.00 | ) | $ | .03 | |||||
| Cumulative effect of accounting change |
— | — | (.05 | ) | — | |||||||||||
| Net income (loss) |
$ | (.31 | ) | $ | (.16 | ) | $ | (1.05 | ) | $ | .03 | |||||
| Diluted earnings (loss) per share: |
||||||||||||||||
| Income (loss) before cumulative effect of accounting change |
$ | (.31 | ) | $ | (.16 | ) | $ | (1.00 | ) | $ | .03 | |||||
| Cumulative effect of accounting change |
— | — | (.05 | ) | — | |||||||||||
| Net income (loss) |
$ | (.31 | ) | $ | (.16 | ) | $ | (1.05 | ) | $ | .03 | |||||
| Average shares outstanding: |
||||||||||||||||
| Basic |
21,153 | 21,118 | 21,150 | 21,114 | ||||||||||||
| Diluted |
21,153 | 21,118 | 21,150 | 21,272 | ||||||||||||
| Cash dividends per share |
$ | .075 | $ | .075 | $ | .15 | $ | .15 | ||||||||
See notes to consolidated financial statements.
-4-
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| Six months ended November 30, |
||||||||
| In thousands | 2003 | 2002 | ||||||
| OPERATING ACTIVITIES |
||||||||
| Net income (loss) |
$ | (22,162 | ) | $ | 575 | |||
| Cumulative effect of accounting change—net of tax |
1,071 | — | ||||||
| Loss on early retirement of debt |
11,246 | — | ||||||
| Loss (gain) on disposal of assets |
(1,292 | ) | 317 | |||||
| Non-cash items |
||||||||
| Depreciation, depletion and amortization |
48,809 | 48,733 | ||||||
| Deferred taxes (benefit) |
(14,334 | ) | (4,677 | ) | ||||
| Other—net |
1,425 | 2,229 | ||||||
| Changes in operat | ||||||||