1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For
the Quarterly period Ended
DECEMBER 31, 1999
OR
[ ] 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 1-12984
(COMPANY LOGO)
CENTEX CONSTRUCTION PRODUCTS, INC.
A Delaware Corporation
IRS Employer Identification No. 75-2520779
3710 Rawlins, Suite 1600 LB 78
Dallas, Texas 75219
(214) 559-6514
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 the close of business on February 7, 2000, 18,682,232 shares of Centex
Construction Products, Inc. common stock were outstanding.
- --------------------------------------------------------------------------------
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
FORM 10-Q TABLE OF CONTENTS
DECEMBER 31, 1999
PAGE
----
PART I. FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. Consolidated Financial Statements 1
Consolidated Statements of Earnings
for the Three Months Ended
December 31, 1999 and 1998 2
Consolidated Statements of Earnings
for the Nine Months Ended
December 31, 1999 and 1998 3
Consolidated Balance Sheets as of
December 31, 1999 and March 31, 1999 4
Consolidated Statements of Cash Flows
for the Nine Months Ended
December 31, 1999 and 1998 5
Notes to Consolidated Financial
Statements 6-8
ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 8-13
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
3
CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
ITEM 1.
The consolidated financial statements include the accounts of Centex
Construction Products, Inc. and subsidiaries ("CXP" or the "Company"), and have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these unaudited consolidated financial
statements be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on Form 10-K.
In the opinion of the Company, all adjustments necessary to present fairly the
information in the following unaudited consolidated financial statements of the
Company have been included. The results of operations for such interim periods
are not necessarily indicative of the results for the full year.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
FOR THE THREE MONTHS ENDED December 31,
----------------------
1999 1998
--------- ---------
REVENUES
Cement . . . . . . . . . . . . . . . . . $ 38,982 $ 39,097
Gypsum Wallboard . . . . . . . . . . . . 56,506 35,206
Concrete and Aggregates . . . . . . . . 14,017 11,637
Other, net . . . . . . . . . . . . . . . 320 490
Less: Intersegment Sales . . . . . . . . (1,455) (1,567)
--------- ----------
108,370 84,863
--------- ----------
COSTS AND EXPENSES
Cement . . . . . . . . . . . . . . . . . 27,238 22,793
Gypsum Wallboard . . . . . . . . . . . . 24,892 21,209
Concrete and Aggregates . . . . . . . . 11,843 9,807
Less: Intersegment Purchases . . . . . . (1,455) (1,567)
Corporate General & Administrative . . . 1,230 1,201
Interest Income, net . . . . . . . . . . (1,123) (617)
--------- ----------
62,625 52,826
--------- ----------
EARNINGS BEFORE INCOME TAXES 45,745 32,037
Income Taxes . . . . . . . . . . . . . . 16,651 11,720
--------- ----------
NET EARNINGS $ 29,094 $ 20,317
========= ==========
EARNINGS PER SHARE:
BASIC . . . . . . . . . . . . . . . . . $ 1.53 $ 1.00
========= ==========
DILUTED . . . . . . . . . . . . . . . . $ 1.52 $ 0.99
========= ==========
AVERAGE SHARES OUTSTANDING:
BASIC . . . . . . . . . . . . . . . . . 19,014,622 20,349,761
========== ==========
DILUTED . . . . . . . . . . . . . . . . 19,093,019 20,443,870
========== ==========
CASH DIVIDENDS PER SHARE $ 0.05 $ 0.05
========== ==========
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
FOR THE NINE MONTHS ENDED December 31,
----------------------
1999 1998
--------- ---------
REVENUES
Cement . . . . . . . . . . . . . . . . . $ 128,047 $ 122,020
Gypsum Wallboard . . . . . . . . . . . . 155,976 102,243
Concrete and Aggregates . . . . . . . . 43,296 35,820
Other, net . . . . . . . . . . . . . . . 820 1,333
Less: Intersegment Sales . . . . . . . . (4,748) (4,931)
---------- ----------
323,391 256,485
---------- ----------
COSTS AND EXPENSES
Cement . . . . . . . . . . . . . . . . . 83,916 74,968
Gypsum Wallboard . . . . . . . . . . . . 73,713 62,054
Concrete and Aggregates . . . . . . . . 35,667 29,681
Less: Intersegment Purchases . . . . . . (4,748) (4,931)
Corporate General & Administrative . . . 3,512 2,977
Interest Income, net . . . . . . . . . . (2,371) (2,230)
---------- ----------
189,689 162,519
---------- ----------
EARNINGS BEFORE INCOME TAXES 133,702 93,966
Income Taxes . . . . . . . . . . . . . . 48,667 34,016
---------- ----------
NET EARNINGS $ 85,035 $ 59,950
========== ===========
EARNINGS PER SHARE:
BASIC . . . . . . . . . . . . . . . . . $ 4.41 $ 2.86
========== ===========
DILUTED . . . . . . . . . . . . . . . . $ 4.39 $ 2.84
========== ===========
AVERAGE SHARES OUTSTANDING:
BASIC . . . . . . . . . . . . . . . . . 19,285,458 20,957,716
========== ===========
DILUTED . . . . . . . . . . . . . . . . 19,375,700 21,090,736
========== ===========
CASH DIVIDENDS PER SHARE $ 0.15 $ 0.15
========== ===========
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
Dec. 31, March 31,
ASSETS 1999 1999
- ------ -------- --------
(Unaudited) (*)
Current Assets
Cash and Cash Equivalents . . . . . . . $ 97,011 $ 49,646
Accounts and Notes Receivable, net . . 47,147 43,192
Inventories . . . . . . . . . . . . . . 33,308 33,030
-------- --------
Total Current Assets . . . . . . . . 177,466 125,868
-------- --------
Property, Plant and Equipment . . . . . . 408,391 392,302
Less Accumulated Depreciation . . . . . (173,791) (163,745)
-------- --------
Property, Plant & Equipment, net . . 234,600 228,557
Notes Receivable, net . . . . . . . . . . 503 664
Other Assets . . . . . . . . . . . . . . . 14,576 9,594
-------- --------
$427,145 $364,683
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts Payable . . . . . . . . . . . $ 20,067 $ 18,276
Accrued Liabilities . . . . . . . . . . 47,546 40,849
Current Portion of Long-term Debt . . . 80 80
Income Taxes Payable . . . . . . . . . 2,863 -
-------- --------
Total Current Liabilities . . . . . 70,556 59,205
-------- --------
Long-term Debt . . . . . . . . . . . . . . 400 400
Deferred Income Taxes . . . . . . . . . . 24,581 25,158
Stockholders' Equity -
Common Stock, Par Value $0.01;
Authorized 50,000,000 Shares;
Issued and Outstanding 18,927,652 and
19,744,465 Shares, respectively . . . 189 197
Capital in Excess of Par Value . . . . 31,914 62,376
Retained Earnings . . . . . . . . . . . 299,505 217,347
-------- --------
Total Stockholders' Equity . . . . . . . . 331,608 279,920
-------- --------
$427,145 $364,683
======== ========
* From audited financial statements.
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
FOR THE NINE MONTHS ENDED December 31,
---------------------
1999 1998
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings . . . . . . . . . . . . . . $ 85,035 $ 59,950
Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating
Activities -
Depreciation, Depletion and
Amortization . . . . . . . . . 13,928 12,021
Deferred Income Tax
Benefit . . . . . . . . . . . (577) (725)
(Increase) Decrease in Accounts and
Notes Receivable . . . . . . . . . . (3,794) 463
(Increase) Decrease in Inventories . . . (278) 3,875
Increase in Accounts Payable
and Accrued Liabilities . . . . . . . 8,488 1,436
(Increase) Decrease in
Other, net . . . . . . . . . . . . . (3,014) 1,715
Increase in Income Taxes Payable . . . . 2,863 3,778
-------- --------
Net Cash Provided by Operating
Activities . . . . . . . . . . . . 102,651 82,513
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, Plant and Equipment
Additions, net . . . . . . . . . . . (21,898) (23,460)
-------- --------
Net Cash Used in Investing
Activities . . . . . . . . . . . . (21,898) (23,460)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid To Shareholders . . . . . (2,918) (3,197)
Retirement of Common Stock . . . . . . . (31,234) (54,185)
Proceeds from Stock Option Exercises . . 764 3,031
-------- --------
Net Cash Used in Financing
Activities . . . . . . . . . . . . (33,388) (54,351)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . 47,365 (4,702)
CASH AT BEGINNING OF PERIOD . . . . . . . 49,646 62,090
-------- --------
CASH AT END OF PERIOD . . . . . . . . . . $ 97,011 $ 66,792
======== ========
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
(A) A summary of changes in stockholders' equity is presented below.
Capital in
Common Excess of Retained
Stock Par Value Earnings Total
---------- --------- --------- -------
(dollars in thousands)
Balance, March 31, 1998 $ 215 $ 130,413 $ 144,175 $ 274,803
Net Earnings - - 77,289 77,289
Stock Option Exercises - 3,806 - 3,806
Stockholders' Dividends - - (4,117) (4,117)
Retirement of Common Stock (18) (71,843) - (71,861)
---------- --------- --------- ---------
Balance March 31, 1999 197 62,376 217,347 279,920
Net Earnings - - 85,035 85,035
Stock Option Exercises - 764 - 764
Stockholders' Dividends - - (2,877) (2,877)
Retirement of Common Stock (8) (31,226) - (31,234)
---------- --------- --------- ---------
BALANCE DECEMBER 31, 1999 $ 189 $ 31,914 $ 299,505 $ 331,608
========== ========= ========= =========
(B) Inventories:
Inventories are stated at the lower of average cost (including applicable
material, labor, depreciation, and plant overhead) or market. Inventories
consist of the following:
Unaudited Audited
December 31, March 31,
1999 1999
------------- ---------
Raw Materials and Materials-in-Progress $ 8,429 $ 9,124
Finished Cement 5,517 5,601
Aggregates 1,308 1,577
Gypsum Wallboard 2,325 1,289
Repair Parts and Supplies 14,774 14,770
Fuel and Coal 955 669
------------- ---------
$ 33,308 $ 33,030
============= =========
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(C) Earnings Per Share:
The Company computes earnings per share in accordance with the provisions
of Financial Accounting Standards No. 128, "Earnings Per Share". Basic earnings
per share is computed using the average number of common shares outstanding in
each of the three and nine month periods ended December 31, 1999 and 1998.
Diluted earnings per share for the periods ended December 31, 1999 and 1998
assume the dilutive impact of stock options. Anti-dilutive options to purchase
shares of common stock that were excluded from the computation of diluted
earnings per share were 317,000 shares at an average price of $36.87 and 221,000
shares at an average price of $36.83 for the three months and nine months ended
December 31, 1999, respectively. The anti-dilutive options have expiration dates
ranging from April 2008 to July 2009.
(D) Segment Information:
The Company operates in three business segments: Cement, Gypsum Wallboard,
and Concrete and Aggregates, with Cement and Gypsum Wallboard being the
Company's principal lines of business. These operations are conducted in the
United States and include the mining and extraction of limestone; the
manufacture, production, distribution and sale of Portland cement (a basic
construction material which is the essential binding ingredient in concrete);
the mining and extraction of gypsum and the manufacture and sale of gypsum
wallboard; the sale of ready-mix concrete; and the mining, extraction and sale
of aggregates (crushed stone, sand and gravel). These products are used
primarily in commercial and residential construction, public construction
projects and projects to build, expand and repair roads and highways.
Intersegment sales are recorded at prices which approximate market prices.
Segment operating earnings represent revenues less direct operating expenses,
segment depreciation, and segment selling, general and administrative expenses.
Corporate general and administrative expense includes corporate overhead and
other administrative expenses.
The following table sets forth certain business segment information:
For the Three Months Ended For the Nine Months Ended
December 31, December 31,
1999 1998 1999 1998
--------- --------- --------- ---------
(Dollars in thousands) (Dollars in thousands)
Revenues (External Customers):
Cement $ 37,650 $ 37,560 $ 123,677 $ 117,374
Gypsum Wallboard 56,506 35,206 155,976 102,243
Concrete and Aggregates 13,894 11,607 42,918 35,535
Other, net 320 490 820 1,333
--------- --------- --------- ---------
$ 108,370 $ 84,863 $ 323,391 $ 256,485
========= ========= ========= ---------
Intersegment Sales:
Cement $ 1,332 $ 1,537 $ 4,370 $ 4,646
Concrete and Aggregates 123 30 378 285
--------- --------- --------- ---------
$ 1,455 $ 1,567 $ 4,748 $ 4,931
========= ========= ========= =========
Operating Income:
Cement $ 11,744 $ 16,304 $ 44,131 $ 47,052
Gypsum Wallboard 31,614 13,997 82,263 40,189
Concrete and Aggregates 2,174 1,830 7,629 6,139
Other, net 320 490 820 1,333
--------- --------- --------- ---------
Total 45,852 32,621 134,843 94,713
Corporate General and Administrative (1,230) (1,201) (3,512) (2,977)
Interest Income, net 1,123 617 2,371 2,230
--------- --------- --------- ---------
Earnings Before Income Taxes $ 45,745 $ 32,037 $ 133,702 $ 93,966
========= ========= ========= =========
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Total assets by segment are as follows:
December 31, March 31,
1999 1999
------------ ---------
(Dollars in thousands)
Cement $141,772 $139,183
Gypsum Wallboard 154,370 143,464
Concrete and Aggregates 27,529 23,634
Corporate and Other 103,474 58,402
-------- --------
$427,145 $364,683
======== ========
The increase in Cement segment assets resulted primarily from the
completion of the Illinois Cement plant's finish mill project. The increase in
Gypsum Wallboard assets is due to the completion of the Eagle Gypsum wallboard
plant expansion project early in fiscal 2000 and increased accounts receivable
balances. Concrete and Aggregates assets increased due to the Texas Highway 190
aggregates project. Corporate and other assets consist primarily of cash and
cash equivalents, general office assets and miscellaneous other assets.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Benefitting from increased sales volume and higher net sales prices in its
Gypsum Wallboard and Concrete and Aggregates segments, the Company reported the
highest financial results in its history for both the quarter ended December 31,
1999, the third quarter of fiscal 2000, and for the nine months of fiscal 2000.
Revenues for the third quarter of fiscal 2000 were $108,370,000, a 28% increase
over revenues of $84,863,000 for the same quarter last year. CXP's net earnings
for the quarter ended December 31, 1999 were $29,094,000, a 43% increase over
$20,317,000 for the same quarter last year. Diluted earnings per share for this
year's quarter of $1.52 increased 54% over $0.99 per share for the same quarter
in fiscal 1999.
For the nine months ended December 31, 1999, CXP's net earnings increased
42% to $85,035,000 or $4.39 per diluted share from $59,950,000 or $2.84 per
diluted share for the same period a year ago. Revenues for the nine months rose
26% to $323,391,000 from $256,485,000 for the same period in the prior fiscal
year. Diluted earnings per share for the quarter and nine months increased more
than net earnings due to fewer average shares outstanding in the current year's
periods versus the same periods a year ago. A strong national economy has
resulted in U.S. cement and gypsum wallboard consumption for 1999 exceeding last
year's same period record consumption.
The following table compares sales volume, average unit sales prices and
unit operating margins for the Company's operations:
Gypsum
Cement Wallboard Concrete Aggregates
(Ton) (MSF) (Cubic Yard) (Ton)
------------------- ------------------- ------------------- -------------------
Quarter Ended December 31, 1999 1998 1999 1998 1999 1998 1999 1998
- -------------------------- -------- -------- -------- -------- -------- -------- -------- ------
Sales Volume (M) 568 568 341 283 186 163 964 817
Average Net Sales Price $68.72 $68.84 $165.53 $124.38 $52.89 $51.21 $ 4.31 $ 4.00
Operating Margin(1) $20.70 $28.71 $92.61 $49.45 $ 6.73 $ 6.31 $ 0.95 $ 0.98
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Gypsum
Cement Wallboard Concrete Aggregates
(Ton) (MSF) (Cubic Yard) (Ton)
------------------- ------------------- ------------------- -------------------
Nine Months Ended December 31, 1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------ -------- -------- -------- -------- -------- -------- -------- ------
Sales Volume (M) 1,837 1,771 994 860 611 538 2,651 2,261
Average Net Sales Price $69.72 $68.90 $156.86 $118.94 $52.17 $49.65 $ 4.30 $ 4.03
Operating Margin(1) $24.03 $26.57 $82.73 $46.75 $ 7.94 $ 7.65 $ 1.05 $ 0.90
- ---------
(1) Segment operating margins represent revenues less direct operating expenses,
segment depreciation, and segment selling, general and administrative expenses.
Cement revenues of $38,982,000 for the quarter were level with the same
quarter in the prior year. Operating earnings of $11,744,000 decreased 28% from
$16,304,000 for last year's third quarter due to higher cost of sales. Sales
volume of 568,000 tons for the quarter was level with the prior year's quarter.
Sales volume declines at the Texas and Wyoming operations were offset by
increased purchased cement sales at the Illinois and Nevada operations.
Purchased cement sales for this year's quarter totaled 70,800 tons, up 96% over
the same period last year. Manufactured sales volume at the Wyoming plant
declined due to one of its kilns being down 35 days for a major rebuild. Demand
continues to be strong in all of the Company's cement markets. Average cement
sales prices of $68.72 per ton declined from $68.84 per ton for the same quarter
last year. Imports have caused pricing in the Texas and northern California
markets to soften. Cost of sales increased $7.89 per ton due to the Laramie
plant kiln outage and a higher proportion of purchased cement sales.
For the current year's nine months, Cement revenues were $128,047,000
million, a 5% increase over $122,020,000 for the same period a year ago.
Operating earnings from Cement were $44,131,000, down 6% from $47,052,000 for
the similar period last year due to higher cost of sales. Cement sales volume of
1,837,000 tons was 4% higher than sales volume for the first nine months of
fiscal 1999, mostly due to an increase in purchased cement sales. Purchased
cement sales volume of 222,300 tons for this year's period was 80% higher than
last year's nine months sales volume. Cost of sales increased 8% to $45.69 per
ton due to the Laramie plant kiln outage and additional purchased cement sales.
Gypsum Wallboard revenues of $56,506,000 for the quarter increased 61% over
last year's same quarter revenues of $35,206,000. Operating earnings for the
quarter were $31,614,000, up 126% over $13,997,000 for the same period last
year. Increased sales volume and higher operating margins resulted in the
quarterly gain. Sales volume of 341 million square feet ("MMSF") for this year's
quarter was 20% greater than 283 MMSF sold during the prior year's quarter. The
sales volume increase resulted from the Albuquerque and Eagle plant expansion
projects completed in late fiscal 1999 and early fiscal 2000. National wallboard
consumption for calendar 1999 set an all time high record as single-family home
construction and repair and remodeling activities remained strong. Supported by
record demand and an October price increase, the Company's average net sales
price for the third quarter improved to $165.53 per thousand feet ("MSF"), 33%
above $124.38 per MSF for the same quarter last year. Although gypsum wallboard
demand remains strong, new industry capacity additions during the last half of
calendar 1999 have resulted in the industry being in an "over supply" position
and consequently, a softening in wallboard pricing.
For the current nine month period, Gypsum Wallboard revenues were
$155,976,000, a 53% increase over $102,243,000 for the same period a year ago.
Operating earnings from Gypsum
9
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Wallboard rose 105% to $82,263,000 for the first nine months of this fiscal year
from $40,189,000 for last year's similar period. The operating earnings gain
resulted from increased sales volume and a 77% operating margin increase. Gypsum
Wallboard sales volume for the nine months increased 16% to 994 MMSF due to
increased plant efficiencies and higher production speeds resulting from the
Albuquerque and Eagle plant expansion projects. The operating margin gain
resulted from the combination of a 32% sales price increase partially offset by
a 3% increase in cost of sales. Cost of sales were negatively impacted by
start-up costs associated with the Eagle plant expansion early in the fiscal
year.
Revenues from Concrete and Aggregates were $14,017,000 for the quarter, up
20% from $11,637,000 for the same quarter a year ago. Concrete and Aggregates
reported operating earnings for the quarter of $2,174,000, up 19% from
$1,830,000 for the same quarter last year. Concrete earnings of $1,255,000
increased 22% over last year's comparable quarter mainly due to a 14% increase
in sales volume. Concrete sales volume for the quarter was 186,000 cubic yards,
compared to 163,000 cubic yards for the same quarter last year. The gain was
primarily attributable to strong demand in the Austin, Texas market. The
Company's average Concrete net sales price of $52.89 per cubic yard for the
quarter was 3% higher than $51.21 for the same quarter a year ago. Aggregates
earnings of $919,000 increased 15% from the prior year's quarter due to
increased sales volume. The Company's Aggregates operation reported sales volume
of 964,000 tons for the quarter, 18% above sales volume of 817,000 tons for the
same quarter last year. The gain resulted from a 218,000 ton increase in
California sales volume partially offset by lower road construction aggregates
sales at the Texas operation. Product mix and higher net sales prices raised the
Aggregates net sales price to $4.31 per ton, an increase of 8% over $4.00 per
ton for the same quarter last year. Cost of sales increased 11% to $3.36 per ton
due to start-up costs associated with the new Texas aggregates plant and
increased related administrative expenses.
For the nine months, Concrete and Aggregates revenues were $43,296,000 this
fiscal year, up 21% from $35,820,000 for the same period last year. Operating
earnings were $7,629,000 for the nine months this year, a 24% increase over
$6,139,000 for the same period last year. Concrete earnings of $4,856,000
increased 18% due to higher sales volume and improved operating margins. Sales
volume of 611,000 cubic yards for the first nine months of fiscal 2000 was 14%
above the prior year's nine month total due to a strong Texas residential
market. Aggregates operating earnings for the nine months this year were
$2,773,000, up 37% over the same period last year. Increased operating margins
and higher sales volume resulted in the improvement.
Corporate general and administrative expenses increased $535,000 for the
nine months due to higher incentive compensation and the cost of additional
corporate personnel.
Net interest income of $1,123,000 and $2,371,000 was $506,000 and $141,000
above last year's quarter and nine months, respectively, due to higher cash
balances during this year's comparable periods.
The Company's annual effective tax rate increased to 36.4% from 36.2% due
to higher state income taxes.
10
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STOCK REPURCHASE PROGRAM
The Company's Board of Directors previously approved the repurchase of up
to five million shares of the Company's common stock. During the third quarter,
the Company's Board of Directors approved the repurchase of an additional
688,630 shares. The Company has repurchased 1,114,600 shares from the public
since March 31, 1999. As of February 9, 2000, there are approximately 705,000
shares remaining under the Company's current repurchase authorization. Centex
Corporation owns approximately 64.0% of the outstanding shares of CXP common
stock as of February 9, 2000.
FINANCIAL CONDITION
The Company has a $35 million unsecured revolving credit facility that
expires on March 31, 2001 to finance its working capital and capital
expenditures requirements. Based on its financial condition and a virtually
debt-free balance sheet at December 31, 1999, CXP believes that its internally
generated cash flow coupled with funds available under the credit facility will
enable CXP to provide adequately for its current operations and future growth.
Working capital at December 31, 1999 was $106.9 million as compared to
$66.7 million at March 31, 1999. The increase resulted mainly from a $47.4
million increase in cash. The $4.0 million increase in accounts and notes
receivable offset by higher accounts payable and accrued liabilities. Stock
repurchases of 849,600 shares during the nine months amounted to $31.2 million.
Capital spending of $21.9 million for this year's nine months included the
completion of the Eagle wallboard plant expansion, the Illinois finish mill
project, and the Texas Highway 190 aggregates project. Cash payments for income
taxes totaled $43.1 million and $28.8 million in the first nine months of fiscal
2000 and 1999, respectively.
YEAR 2000
Beginning in fiscal year 1997, the Company engaged in an ongoing process of
evaluating and implementing changes to its systems in order to ensure Year 2000
compliance. As a result of this process, a small number of non-critical systems
were identified as not being Year 2000 compliant and were upgraded or replaced
accordingly during 1999. The Company and its subsidiaries tested all critical
systems by December 31, 1999. The cost of replacing, upgrading or otherwise
changing non-compliant systems was not material to the Company as a whole, or
to the Company's individual subsidiaries. The Company used internally generated
cash to fund the correction of non-compliant systems. The Company's Year 2000
compliance preparation included the completion of a contingency plan, the hiring
of a third party consultant and the surveying of material vendors and suppliers.
As a result of the attention that the Company paid to addressing its Year
2000 readiness, the Company has not, to date, experienced an adverse effect on
the Company's operations or financial condition or the operations or financial
condition of any of its individual subsidiaries as a result of Year 2000
readiness. In addition, the Company is not aware of any of its vendors,
subcontractors or other third parties experiencing any effects as a result of
Year 2000 compliance issues. Furthermore, if any of those third parties were
affected by Year 2000 compliance issues, such compliance issues have not caused,
to date, any adverse effects on the Company's operations or financial condition,
or the operations or financial condition of any of its individual subsidiaries.
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Although the Company has not been affected to date by the change from
December 31, 1999 to January 1, 2000, Year 2000 issues could arise subsequent to
the filing of this report. As an example, the Company's Systems could fail to
recognize 2000 as a leap year. The Company believes that such circumstances are
highly unlikely to occur and that, even if they were to occur, it is highly
unlikely that the Company's operations or financial condition would be
materially adversely affected. Nevertheless, the Company intends to continue to
monitor Year 2000 related issues and immediately address any issues that may
arise.
Year 2000 Forward-Looking Statements
Certain statements in this section, other than historical information, are
"forward-looking" statements. See "Forward-Looking Statements," below. These
statements involve risks and uncertainties relative to the Company's ability to
assess and remediate any Year 2000 compliance issues, the ability of third
parties to correct material non-compliant systems and the Company's assessment
of the Year 2000 issue's impact on its financial results and operations.
OTHER DEVELOPMENTS
The Company's Laramie cement plant had one of its kilns down approximately
35 days during the third quarter for a major rebuild. Late in the third quarter,
production commenced at the Company's new aggregates facility north of Austin,
Texas. The Company implemented an $8.00 per MSF average Gypsum Wallboard price
increase during the first week of October, 1999. However, the Company
experienced some deterioration in gypsum wallboard demand and softening in
pricing during December 1999 and January 2000. Also, cement pricing in the
Houston, Texas and northern California markets has softened due to additional
cement imports.
OUTLOOK
Positive market fundamentals continue to sustain the high level of demand
for the Company's products. Given the current and anticipated levels of pricing,
the Company expects to post record fourth quarter results and a sixth
consecutive year of record earnings for fiscal 2000.
FORWARD-LOOKING STATEMENTS
Certain sections of this Management's Discussion and Analysis of Financial
Condition and Results of Operations contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Litigation Reform Act of 1995.
Forward-looking statements may be identified by the context of the statement and
generally arise when the Company is discussing its beliefs, estimates or
expectations. These statements involve known and unknown risks and uncertainties
that may cause the Company's actual results to be materially different from
planned or expected results. Those risks and uncertainties include, but are not
limited to, the cyclical and seasonal nature of the Company's business, public
infrastructure expenditures, adverse weather, availability of raw materials,
unexpected operational difficulties, governmental regulation and changes in
governmental and public policy, changes in economic conditions specific to any
one or more of the Company's markets, competition, announced increases in
capacity in the gypsum wallboard and cement industries, general economic
conditions, interest rates and the Year 2000 compliance readiness of the
Company's suppliers and service producers. Investors should take such risks and
uncertainties into
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account when making investment decisions. These and other factors are described
in the Annual Report on Form 10-K for Centex Construction Products, Inc. for the
fiscal year ended March 31, 1999. The report is filed with the Securities and
Exchange Commission. The Company undertakes no obligation to update publicly any
forward-looking statement as a result of new information, future events or other
factors.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
All other items required under Part II are omitted because they are not
applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTEX CONSTRUCTION PRODUCTS, INC.
----------------------------------
Registrant
February 10, 2000 /s/ RICHARD D. JONES, JR.
--------------------------------
Richard D. Jones, Jr.
President and Chief Executive
Officer
February 10, 2000 /s/ ARTHUR R. ZUNKER, JR.
---------------------------------
Arthur R. Zunker, Jr.
Senior Vice President-Finance
and Treasurer (principal financial
and chief accounting officer)
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTIONS
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27 Financial Data Schedule