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 February 29, 2004
| ¨ | 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 April 5, 2004, 21,169,594 shares of Registrant’s Common Stock, $1.00 par value, were outstanding.
Page 1 of 40
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| Page | ||||
| PART I. FINANCIAL INFORMATION | ||||
| Item 1. | Financial Statements | |||
| Consolidated Balance Sheets—February 29, 2004 and May 31, 2003 | 3 | |||
| Consolidated Statements of Operations—three months and nine months ended February 29, 2004 and February 28, 2003 | 4 | |||
| Consolidated Statements of Cash Flows—nine months ended February 29, 2004 and February 28, 2003 | 5 | |||
| Notes to Consolidated Financial Statements | 6 | |||
| Independent Accountants’ Review Report | 24 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk—the information required by this item is included in Item 2 |
— | ||
| Item 4. | Controls and Procedures | 33 | ||
| PART II. OTHER INFORMATION | ||||
| Item 1. | Legal Proceedings | 33 | ||
| Item 6. | Exhibits and Reports on Form 8-K | 33 | ||
| SIGNATURES | 34 | |||
-2-
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| In thousands |
(Unaudited) February 29, 2004 |
May 31, 2003 |
||||||
| ASSETS |
||||||||
| CURRENT ASSETS |
||||||||
| Cash |
$ | 56,802 | $ | 6,204 | ||||
| Receivables—net |
196,368 | 61,831 | ||||||
| Inventories |
261,969 | 270,773 | ||||||
| Deferred taxes and prepaid expenses |
33,063 | 37,375 | ||||||
| TOTAL CURRENT ASSETS |
548,202 | 376,183 | ||||||
| OTHER ASSETS |
||||||||
| Goodwill |
146,474 | 146,474 | ||||||
| Real estate and investments |
48,880 | 43,600 | ||||||
| Deferred charges and intangibles |
40,945 | 23,985 | ||||||
| 236,299 | 214,059 | |||||||
| PROPERTY, PLANT AND EQUIPMENT |
||||||||
| Land and land improvements |
227,432 | 218,687 | ||||||
| Buildings |
99,944 | 101,490 | ||||||
| Machinery and equipment |
1,711,772 | 1,712,285 | ||||||
| Construction in progress |
44,977 | 47,724 | ||||||
| 2,084,125 | 2,080,186 | |||||||
| Less depreciation and depletion |
996,266 | 940,818 | ||||||
| 1,087,859 | 1,139,368 | |||||||
| $ | 1,872,360 | $ | 1,729,610 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Trade accounts payable |
$ | 109,972 | $ | 120,477 | ||||
| Accrued interest, wages and other items |
57,331 | 43,376 | ||||||
| Current portion of long-term debt |
703 | 732 | ||||||
| TOTAL CURRENT LIABILITIES |
168,006 | 164,585 | ||||||
| LONG-TERM DEBT |
610,937 | 477,145 | ||||||
| CONVERTIBLE SUBORDINATED DEBENTURES |
199,937 | 199,937 | ||||||
| DEFERRED INCOME TAXES AND OTHER CREDITS |
169,871 | 160,434 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock, $1 par value |
25,067 | 25,067 | ||||||
| Additional paid-in capital |
261,256 | 260,936 | ||||||
| Retained earnings |
532,563 | 538,584 | ||||||
| Cost of common stock in treasury |
(89,385 | ) | (91,186 | ) | ||||
| Pension liability adjustment |
(5,892 | ) | (5,892 | ) | ||||
| 723,609 | 727,509 | |||||||
| $ | 1,872,360 | $ | 1,729,610 | |||||
See notes to consolidated financial statements.
-3-
(Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| Three months ended |
Nine months ended |
|||||||||||||||
| In thousands except per share |
February 29, 2004 |
February 28, 2003 |
February 29, 2004 |
February 28, 2003 |
||||||||||||
| NET SALES |
$ | 407,970 | $ | 296,411 | $ | 1,152,567 | $ | 1,000,078 | ||||||||
| COSTS AND EXPENSES (INCOME) |
||||||||||||||||
| Cost of products sold |
368,746 | 288,169 | 1,055,250 | 927,339 | ||||||||||||
| Selling, general and administrative |
22,877 | 23,394 | 73,152 | 71,227 | ||||||||||||
| Interest |
17,961 | 11,231 | 55,884 | 34,121 | ||||||||||||
| Loss on early retirement of debt |
— | — | 11,246 | — | ||||||||||||
| Other income |
(36,601 | ) | (447 | ) | (42,887 | ) | (2,953 | ) | ||||||||
| 372,983 | 322,347 | 1,152,645 | 1,029,734 | |||||||||||||
| INCOME (LOSS) BEFORE THE FOLLOWING ITEMS |
34,987 | (25,936 | ) | (78 | ) | (29,656 | ) | |||||||||
| Income taxes (benefit) |
14,098 | (8,718 | ) | 124 | (13,013 | ) | ||||||||||
| INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE |
20,889 | (17,218 | ) | (202 | ) | (16,643 | ) | |||||||||
| Cumulative effect of accounting change—net of tax |
— | — | (1,071 | ) | — | |||||||||||
| NET INCOME (LOSS) |
$ | 20,889 | $ | (17,218 | ) | $ | (1,273 | ) | $ | (16,643 | ) | |||||
| Basic earnings (loss) per share: |
||||||||||||||||
| Income (loss) before cumulative effect of accounting change |
$ | .99 | $ | (.81 | ) | $ | (.01 | ) | $ | (.79 | ) | |||||
| Cumulative effect of accounting change |
— | — | (.05 | ) | — | |||||||||||
| Net income (loss) |
$ | .99 | $ | (.81 | ) | $ | (.06 | ) | $ | (.79 | ) | |||||
| Diluted earnings (loss) per share: |
||||||||||||||||
| Income (loss) before cumulative effect of accounting change |
$ | .92 | $ | (.81 | ) | $ | (.01 | ) | $ | (.79 | ) | |||||
| Cumulative effect of accounting change |
— | — | (.05 | ) | — | |||||||||||
| Net income (loss) |
$ | .92 | $ | (.81 | ) | $ | (.06 | ) | $ | (.79 | ) | |||||
| Average shares outstanding: |
||||||||||||||||
| Basic |
21,189 | 21,129 | 21,163 | 21,119 | ||||||||||||
| Diluted |
24,688 | 21,129 | 21,163 | 21,119 | ||||||||||||
| Cash dividends per share |
$ | .075 | $ | .075 | $ | .225 | $ | .225 | ||||||||
See notes to consolidated financial statements.
-4-
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
| Nine months ended |
||||||||
| In thousands |
February 29, 2004 |
February 28, 2003 |
||||||
| OPERATING ACTIVITIES |
||||||||
| Net loss |
$ | (1,273 | ) | $ | (16,643 | ) | ||
| Cumulative effect of accounting change—net of tax |
1,071 | — | ||||||
| Loss on early retirement of debt |
11,246 | — | ||||||
| Loss (gain) on disposal of assets |
(35,516 | ) | 1,053 | |||||
| Non-cash items |
||||||||
| Depreciation, depletion and amortization |
72,897 | 72,977 | ||||||
| Deferred taxes (benefit) |
(731 | ) | (13,426 | ) | ||||
| Other—net |
5,204 | 4,861 | ||||||
| Changes in operating assets and liabilities |
||||||||
| Receivables repurchased |
(115,514 | ) | (14,071 | ) | ||||
| Receivables—net |
(19,249 | ) | 22,227 | |||||
| Inventories and prepaid expenses |
15,082 | (15,067 | ) | |||||
| Accounts payable and accrued liabilities |
5,186 | 6,735 | ||||||
| Real estate and investments |
618 | 2,351 | ||||||
| Net cash provided (used) by operations |
(60,979 | ) | 50,997 | |||||
| INVESTING ACTIVITIES |
||||||||
| Capital expenditures |
(24,725 | ) | (41,094 | ) | ||||
| Proceeds from disposal of assets |
40,065 | 10,974 | ||||||
| Other—net |
(1,575 | ) | (683 | ) | ||||
| Net cash provided (used) by investing |
13,765 | (30,803 | ) | |||||
| FINANCING ACTIVITIES |
||||||||
| Long-term borrowings |
718,097 | 221,940 | ||||||
| Debt retirements |
(592,052 | ) | (238,415 | ) | ||||
| Debt issuance costs |
(16,373 | ) | ||||||