1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-4197
UNITED STATES LIME & MINERALS, INC.
-----------------------------------
(Exact name of Registrant as specified in its charter)
TEXAS 75-0789226
- ------------------------ ----------
(State of incorporation) (I.R.S. Employer Identification Number)
12221 MERIT DRIVE, SUITE 500, DALLAS, TEXAS 75251
- ------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 991-8400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of Each Exchange on
------------------- Which Registered
----------------
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.10 par value
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 a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment of this Form 10-K. [ ]
The aggregate market value of Common Stock held by non-affiliates as
of February 1, 1996: $18,554,065.
Number of shares of Common Stock outstanding as of February 1, 1996:
3,836,063.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the Registrant's
definitive proxy statement to be filed for its 1996 Annual Meeting of
Shareholders. Part IV incorporates certain exhibits by reference from the
Registrant's previous filings.
2
TABLE OF CONTENTS
PART I
ITEM I. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business and Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Product Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Order Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Seasonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Limestone Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Mining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Plant and Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Discontinued Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . 5
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . 7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . 11
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-i-
3
UNITED STATES LIME & MINERALS, INC.
FORM 10-K
For the Year Ended December 31, 1995
PART I
ITEM 1. BUSINESS.
GENERAL. The business of United States Lime & Minerals, Inc. (the
"Company" or the "Registrant"), which was incorporated in 1950, is the
production and sale of lime and limestone products. The Company extracts
high-quality limestone from its quarries and then processes the limestone for
sale as aggregate, pulverized limestone, quicklime and hydrated lime. These
operations are conducted through three wholly-owned subsidiaries of the Company:
Arkansas Lime Company, Corson Lime Company and Texas Lime Company. The Company
sold substantially all of the assets and business of its Virginia Lime Company
("VLC") subsidiary on July 15, 1992. See "Disposition of Assets." References to
the Company herein include references to its subsidiaries.
The Company's principal corporate office is located at 12221 Merit
Drive, Suite 500, Dallas, Texas 75251.
BUSINESS AND PRODUCTS. The Company extracts raw limestone and then
processes it for sale as aggregate, pulverized limestone, quicklime and hydrated
lime. Aggregate is raw limestone which has been crushed to specified sizes.
Pulverized limestone is a dried product ground to granular and finer sizes.
Quicklime is produced when carbon dioxide is removed from limestone in a heat
process called calcination. Hydrated lime is formed in a process called
hydration in which water is added to quicklime to produce a soft powder.
Aggregate is used by the construction industry in concrete, asphalt and
road base. Pulverized limestone is used primarily in the production of
construction materials such as asphalt paving and roofing shingles, as an
additive to agriculture feeds and as a soil enhancement. Quicklime is used
primarily in the manufacturing of paper products, in sanitation and water
filtering systems and in metal processing. Hydrated lime is used primarily in
municipal sanitation/water treatment, soil stabilization in highway and building
construction, the production of chemicals and the production of construction
materials such as stucco, plaster and mortar.
PRODUCT SALES. The Company sells its lime and limestone products
primarily in the states of Arkansas, Connecticut, Delaware, Kansas, Louisiana,
Mississippi, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, South
Carolina, Tennessee, Texas and Virginia. Sales are made primarily by the
Company's 10 sales employees. Sales personnel call on potential customers and
solicit orders which are generally made on a purchase-order basis. The Company
also receives orders in response to bids that it prepares and submits to
potential customers.
Principal customers for the Company's lime and limestone products are
highway, street and parking lot contractors, chemical producers, paper
manufacturers, roofing shingle manufacturers, glass manufacturers, municipal
sanitation/water treatment facilities, poultry and cattle feed producers,
governmental agencies, steel producers and electrical utility companies.
-1-
4
During the year ended December 31, 1995, approximately 1,500 customers
accounted for the Company's sales of lime and limestone products. No single
customer accounted for more than 10% of such sales. The Company is not subject
to significant customer risks as its customers are considerably diversified as
to geographic location and industrial concentration. However, given the nature
of the lime and limestone industry, the Company's profits are very sensitive to
changes in volume.
Lime and limestone products are transported by rail and truck to
customers generally within a radius of 400 miles of each of the Company's
processing plants. Sales of lime and limestone products are highest during the
months of March through November.
Substantially all of the Company's sales are made within the United
States.
ORDER BACKLOG. The Company does not believe that backlog information
accurately reflects anticipated annual revenues or profitability from year to
year.
SEASONALITY. The Company's sales have historically reflected
seasonal trends, with the largest percentage of total annual revenues being
realized in the second and third quarters. Low seasonal demand normally results
in reduced shipments and revenues in the first quarter. Inclement weather
conditions have a negative impact on the demand for lime and limestone products.
LIMESTONE RESERVES. The company extracts limestone from three
open-pit quarries, all of which are Company-owned. The Cleburne Quarry is
located 14 miles from Cleburne, Texas; the Batesville Quarry is located near
Batesville, Arkansas; and the Corson Quarry is located at Plymouth Meeting,
Pennsylvania. Access to each location is provided by paved roads.
Texas Lime Company operates out of the Cleburne Quarry, which is
situated upon a tract of land containing approximately 459 acres. In addition,
the Company owns 2,149 acres of land adjacent to the Cleburne tract containing
known high-quality limestone reserves in a bed averaging 28 feet in thickness,
with an overburden which ranges from 0 to 50 feet. The Company also has mineral
interest in the 560 acres of land adjacent to the northwest boundary of the
Company's property. This tract of land has 531 acres of proven limestone
reserves. The calculated reserves are approximately 118,000,000 tons. Assuming
the present level of production at the Quarry is maintained, the Company
estimates the reserves are sufficient to sustain operations for approximately
100 years.
Arkansas Lime Company operates out of the Batesville Quarry, which is
situated upon a tract of approximately 420 acres, 100 of which contain known
deposits of high-quality limestone reserves. The average thickness of the
limestone bed in this deposit is approximately 60 feet, with an overburden
averaging 20 feet. Reserves are calculated at approximately 20,000,000 tons.
Assuming the present level of production at the Quarry is maintained, the
Company estimates that reserves are sufficient to sustain operations in excess
of 40 years. In addition, the Company owns approximately 353 acres with certain
reserves in three tracts of land, which are located adjacent to the Quarry on
its northern, western and southern boundaries. It is probable that these
additional reserves would extend the life of the Quarry by approximately 25
years.
Corson Lime Company operates out of the Corson Quarry, which is
situated at Plymouth Meeting, Pennsylvania upon a tract of land containing
approximately 315 acres, approximately 153 acres of which are underlain by
dolomitic limestone reserves. Permitted reserves are calculated to be
approximately 81,000,000 tons at the Quarry. The overburden averages
approximately 39 feet. The Company estimates that, assuming the present level of
production at the Quarry is maintained, the reserves are sufficient to sustain
operations for approximately 50 years.
-2-
5
MINING. The Company extracts limestone by the open-pit method at its
three operating quarries. The open-pit method, which consists of removing the
top layer of soil, trees and other substances and then extracting the exposed
limestone, is generally less expensive than underground mining. The principal
disadvantage of the open-pit method is that operations are subject to inclement
weather. To extract limestone, the Company utilizes standard mining equipment
which is Company-owned. After extraction, limestone is crushed, screened and
ground in the case of aggregate and pulverized limestone, or further processed
in kilns and hydrators in the case of quicklime and hydrated lime, before
shipment. The Company has no knowledge of any recent changes in the physical
quarrying conditions on any of its properties which have materially affected its
operations, and no such changes are anticipated.
PLANTS AND FACILITIES. The Company produces lime and limestone
products in the following plants:
The Texas plant is located adjacent to the Cleburne Quarry on a tract
of land covering approximately 8.4 acres. This plant is equipped with three
rotary kilns and has a daily-rated capacity of 1,200 tons of quicklime. The
plant has pulverized limestone equipment which has a capacity to produce 550,000
tons of pulverized limestone annually, depending on the product mix. In addition
to this plant, the Company owns a plant which is located near Blum, Texas on a
tract of land covering approximately 40 acres. It is equipped with two vertical
kilns and has a daily-rated capacity of 600 tons of quicklime. The Blum plant
was acquired in 1989 and has not been operated since that time; however, the
plant's storage and shipment facilities are currently being utilized.
The Arkansas plant, situated on a tract of approximately 290 acres, is
located roughly two miles from the Batesville Quarry and is connected to the
Quarry by a Company-owned railway. Utilizing six vertical kilns, this plant has
a daily-rated capacity of 345 tons of quicklime. The plant has two grinding
systems which, depending on the product mix, has the capacity to produce 700,000
tons of pulverized limestone annually.
The Pennsylvania plant is located adjacent to the Corson Quarry on a
tract of land covering approximately 147 acres. It is equipped with a dual
crushing system and six vertical kilns and has a daily-rated capacity of 8,000
tons of aggregate and 300 tons of quicklime.
The Company also maintains a distribution terminal in Mer Rouge,
Louisiana, to service customers in this region.
The Company maintains lime hydrating equipment and limestone drying
equipment at all three plants. Storage facilities at each of its plants consist
primarily of cylindrical tanks, which are considered by the Company to be
adequate to protect its lime and limestone products and to provide an available
supply for customers' needs at the existing volume of shipments. Equipment is
maintained at each plant to load trucks and at the Arkansas and Blum plants to
load railroad cars.
The Company believes that its processing plants are currently being
properly maintained to meet its current needs and are adequately insured. Much
of the equipment in the plants is aging and will require maintenance and repair
in the future. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" regarding the Company's expected capital
expenditures for modernizing and re-equipping the plants.
EMPLOYEES. The Company employed, at December 31, 1995, 338 persons,
45 of whom are engaged in sales, administrative and management activities. Of
the Company's 293 production employees, 235 are covered by collective
bargaining agreements. These agreements expire as follows:
Pennsylvania facility in July 1998
Texas facility in November 1996
Arkansas facility in December 1996
-3-
6
COMPETITION. The lime and limestone industry has certain limiting
factors, including: the availability of high-quality limestone (calcium
carbonate) reserves, the ability to secure mining and operating permits for a
facility, the cost of building processing plants to create the lime and
limestone products and the transportation costs associated with delivering the
products to customers. There is not a large number of producers in the United
States as a whole, but producers tend to concentrate on known limestone
formations where competition takes place on a local basis. The contraction of
the U.S. steel industry in the late 1970's and the early 1980's created an
excess of supply over demand, thus impacting prices and profit levels. The
industry as a whole has expanded its customer base and, while still selling
heavily to the steel industry, also counts paper producers and road builders
among its major customers. Recently, the environmental-related uses for lime
have been expanding, including use in flue gas desulfurization and the
treatment of both waste and potable water.
ENVIRONMENTAL MATTERS. The Company's operations are subject to
various federal, state and local environmental laws and regulations, including
the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act
as well as the Toxic Substances Control Act. Management does not believe that
any lack of compliance by the Company with applicable environmental laws will
have a material adverse effect on the Company. In part in response to
requirements of environmental regulatory agencies, the Company incurred capital
expenditures of approximately $220,000 in 1995 on environmental compliance and
is planning to incur approximately $600,000 in 1996. In the judgment of
management, forecastable expenditure requirements for the future are not of
such dimension as to have a materially adverse effect on the Company's
financial condition, results of operations, liquidity or competitive position.
The Company's recurring costs associated with managing and disposing of
potentially hazardous substances (such as fuels and lubricants used in
operations) and maintaining pollution control equipment amounted to $150,000 in
both 1995 and 1994. The Company has not been named as a potentially
responsible party in any superfund cleanup site.
As discussed in Notes 2 and 9 of Notes to Consolidated Financial
Statements, the Company entered into a settlement agreement with Rangaire
Company and Cameron Energy Company in December 1993. Under the settlement, the
Company received a secured subordinated promissory note for $530,000 and cash
of $200,000. In turn, the Company agreed to reimburse Cameron Energy Company,
up to a maximum of $200,000, for clean-up costs incurred with regard to a
parcel of land sold in 1989. In this regard, the Company accrued $170,000 at
December 31, 1993. In 1994, the Company reimbursed Cameron Energy $165,000 for
the clean-up of this parcel of land.
DISPOSITION OF ASSETS. Effective July 15, 1992, substantially all of
the assets and business of VLC, a wholly owned subsidiary of the Company, were
sold to Eastern Ridge Lime Company, L.P. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 3 of Notes
to Consolidated Financial Statements for a discussion regarding the
disposition.
DISCONTINUED OPERATIONS. Pursuant to an agreement dated June 6, 1989,
the Company sold, effective May 31, 1989, to an unrelated joint venture, all of
the assets of the Company's manufacturing division, which designed,
manufactured and sold appliances and equipment for use in homes and for use in
the construction of homes and commercial buildings. See Notes 2 and 9 of Notes
to Consolidated Financial Statements for a further discussion with respect to
this discontinued operation.
-4-
7
ITEM 2. PROPERTIES.
Reference is made to Item 1 of this Report for a description of the
properties of the Company, and such description is hereby incorporated by
reference in answer to this Item 2. As discussed in Note 4 of Notes to
Consolidated Financial Statements, plant facilities and mineral reserves are
subject to encumbrances to secure the Company's loans.
ITEM 3. LEGAL PROCEEDINGS.
Information regarding legal proceedings is set forth in Note 9 of
Notes to Consolidated Financial Statements and is hereby incorporated by
reference in answer to this Item 3.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company did not submit any matters to a vote of security holders
during the fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol "USLM." As of February 1, 1996, the Company had 943
stockholders of record.
As of December 31, 1995, 500,000 shares of $5.00 par value preferred
stock were authorized, and none was issued.
The high and low sales prices for the Company's Common Stock for the
periods indicated, as well as dividends declared in 1995, were:
1995 1994
----------------------------------- -------------------
MARKET PRICE MARKET PRICE
------------ ------------
LOW HIGH DIVIDENDS LOW HIGH
--- ---- --------- --- ----
DECLARED
--------
First Quarter $5 1/2 $6 1/4 _ $4 3/4 $5 1/4
Second Quarter $5 1/2 $6 3/4 .025 $4 1/2 $5 3/8
Third Quarter $6 1/4 $8 1/4 .025 $4 1/2 $6
Fourth Quarter $7 $8 3/4 .025 $5 1/2 $6 1/4
-5-
8
ITEM 6. SELECTED FINANCIAL DATA.
(dollars in thousands, except per share amounts)
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
--------- ------- ------- -------- --------
Operating Results
Revenues from continuing operations $ 41,419 36,865 32,359 35,950 39,741
========= ======= ======= ======== ========
Net income (loss)
From continuing operations $ 4,260 1,916(1) (441) 9,930 (2) (424)
From discontinued operations - - 480 (462) (550)
--------- ------- ------- -------- --------
$ 4,260 1,916 39 9,468 (974)
========= ======= ======= ======== ========
Income (loss) per share of common stock
From continuing operations $ 1.11 0.50 (0.11) 2.59 (0.11)
From discontinued operations - - 0.12 (0.12) (0.14)
--------- ------- ------- -------- --------
$ 1.11 0.50 0.01 2.47 (0.25)
========= ======= ======= ======== ========
AS OF DECEMBER 31,
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- -------- ------- ------- -------
Total Assets $ 29,793 27,397 29,937 30,182 38,034
========== ======== ======= ======= =======
Long-Term Debt $ 4,381 6,225 9,622 - 28,666
========== ======== ======= ======= =======
Stockholders' Equity Per Share $ 4.89 3.86 3.32 3.32 0.83
========== ======== ======= ======= =======
Cash Dividends Declared Per Share $ 0.075 - - - -
========== ======== ======= ======= =======
Employees at Year-End 338 313 302 317 399
========== ======== ======= ======= =======
1. Includes a gain of $372,000, net of related taxes ($425,000 gross),
due to the expiration of certain potential post-closing obligations
relating to the sale of VLC assets.
2. Includes a gain on sale of VLC assets of $10,679, net of related
taxes.
See Management's Discussion and Analysis of Financial Condition and Results
of Operations and Notes to Consolidated Financial Statements.
-6-
9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The following table sets forth selected financial information of the
Company expressed as a percentage of revenues for the periods indicated:
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----- ----- -----
Revenues 100 % 100 % 100 %
Cost of revenues:
Labor and other operating expenses (66) (70) (69)
Depreciation, depletion and amortization (8) (9) (10)
Amortization of costs in excess of
net assets acquired - (1) (2)
----- ----- -----
GROSS PROFIT 26 20 19
Selling, general and administrative expenses (13) (14) (18)
----- ----- -----
OPERATING PROFIT 13 6 1
Other (deductions) income:
Interest expense (2) (2) (2)
Gain on sale of VLC assets - 1 -
Other - net 1 1 -
Federal and state income tax (2) (1) -
----- ----- -----
Net income (loss) from continuing operations 10 % 5 % (1)%
===== ===== =====
1995 VS 1994
Revenues increased from $36,865,000 in 1994 to $41,419,000 in 1995, an
increase of $4,554,000 or 12.4%. This resulted from a 12.0% increase in sales
volume and a 0.4% increase in sales prices. Volume was up at all plants in
1995. Prices received for lime and limestone products at the Arkansas and
Texas plants slightly increased in 1995 compared to 1994. Prices received for
lime and limestone products, including aggregates, at the Pennsylvania plant
were down slightly when compared to 1994.
The Company's gross profit was $10,847,000 for 1995 compared to $7,629,000
for 1994, a 42.2% increase. In addition to increased revenues, gross profit
was enhanced by improved efficiencies at the plants and lower amortization of
costs in excess of net assets acquired.
Selling, general and administrative ("SG&A") expenses increased by $60,000
in 1995 compared to 1994. SG&A expenses declined as a percent of revenues to
12.5% in 1995, from 13.9% in 1994.
Interest expense decreased by $161,000 in 1995 over 1994. This decrease
was due to lower debt outstanding. The Company's Revolving Credit loan was
completely paid down in September 1995.
The Company's net income for 1995 increased $2,344,000 or 122.3% from
$1,916,000 ($0.50 per share) in 1994, to $4,260,000 ($1.11 per share).
-7-
10
1994 VS 1993
CONTINUING OPERATIONS. Revenues increased from $32,359,000 in 1993
to $36,865,000 in 1994, an increase of $4,506,000 or 13.9%. This resulted
from a 10.8% increase in sales volume and a 3.1% increase in sales prices.
Volume was up at all plants except at Texas, which was down compared to 1993.
Prices received for lime and limestone products at all plants improved in 1994
compared to 1993 except the prices received for aggregates at the Pennsylvania
plant, which were down slightly when compared to 1993. Volume of shipments
were up for aggregate at all plants in 1994.
The Company's gross profit was $7,629,000 for 1994 compared to
$6,073,000 for 1993, a 25.6% increase. In addition to increased revenues,
gross profit was enhanced by lower depreciation costs and lower amortization
of costs in excess of net assets acquired.
SG&A expenses decreased by $730,000 in 1994 compared to 1993. This
decrease was primarily the result of both a $325,000 charge included in the
third quarter of 1993 for a payment due under an employment agreement and a
$392,000 charge in the first quarter of 1993 relating to resolution of the
Company's control and stockholder situation. Excluding these charges, SG&A
expenses decreased by $13,000 in 1994 from 1993, declining as a percent of
revenues to 13.9% in 1994 from 15.9% in 1993.
Interest expense increased by $84,000 in 1994 over 1993. This
increase was due to higher prevailing interest rates, which were partially
offset by lower debt outstanding.
The Company's net income for 1994 increased $2,357,000 from a loss of
$441,000 ($0.11 per share) in 1993, to $1,916,000 ($0.50 per share). Included
in 1994 income was $425,000 ($372,000 net of taxes) due to the expiration of
certain potential post-closing obligations relating to the sale of VLC assets.
See Note 3 of Notes to Consolidated Financial Statements for more information.
DISCONTINUED OPERATIONS. During 1993, income of $480,000 (net of
taxes) was recorded, primarily attributable to a new subordinated secured
promissory note for $530,000 received from the buyer of the discontinued
manufacturing operations. See Notes 2 and 9 of Notes to Consolidated
Financial Statements.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial condition is reflected by the following key
financial measurements:
(dollars in thousands)
-------------------------------------------
1995 1994 1993
---- ---- ----
Total bank debt $ 5,524 7,368 10,765
Total liabilities to
stockholders' equity .59 .85 1.35
Working capital 6,156 5,443 6,094
Current ratio 2.01 1.96 1.96
In 1995, cash flow from operations was $7,943,000, an improvement of
$2,535,000 or 46.9% over 1994. In 1995, this cash flow fully funded the
Company's capital expenditure program and reduced the Company's bank debt by
$1,844,000.
-8-
11
In October 1993, the Company entered into a financing agreement with a
commercial bank to replace its then-existing borrowings. The agreement
provided for a 5-year $8,000,000 Term Loan with a monthly principal repayment
of $95,238, with the remaining principal due in September 1998. The agreement
also provided for a 2-year $6,000,000 Revolving Credit. Both are secured by
substantially all of the Company's assets. The Term Loan originally carried an
interest rate of Prime plus 1%, and the Revolving Credit carried an interest
rate of Prime plus 3/4%, with a 1/2% fee on the unused Revolving Credit loan.
In February 1994, the Company fixed the interest rate on the Term Loan at 7.95%
per annum through February 1997. In September 1995, the loan agreements were
amended to extend the Revolving Credit maturity date to November 1997. For the
period of January 1 to September 29, 1995, the Term Loan, as amended, carried
an interest rate of Prime plus 1/2%, and the Revolving Credit carried an
interest rate of Prime plus 1/4%. In addition, effective September 29, 1995,
the Term Loan carries an interest rate of Prime plus 1/4%, and the Revolving
Credit carries an interest rate of Prime. The new Term Loan rate will go into
effect after the fixed term rate of 7.95% ends in February 1997. The terms of
the financing agreements contain, among other provisions, requirements for
maintaining defined levels of working capital, net worth, financial ratios and
capital expenditure limitations. The covenants restrict incurrence of debt,
liens and lease obligations, mergers, and consolidation or acquisition of
assets.
Capital expenditures for 1995 totaled $4,851,000 compared to
$2,682,000 in 1994. The Company expects to spend $15-25 million over the next
several years to modernize and re-equip plant facilities to improve efficiency
and reduce costs, to effect environmental improvements and to ensure that
capacity is in place to meet market demand. Management believes that the
necessary funds will be obtained through operations. The Company is not
contractually committed to any planned capital expenditures until actual
orders are placed for equipment.
In addition, the Company has completed the feasibility studies for a
new kiln at the Arkansas plant and has decided to proceed with this project.
The new kiln will complement the existing shaft kilns by allowing the Company to
expand its customer base. The lime produced on the new kiln will meet the
specific chemical needs of both the existing customer base and customers the
Company currently is unable to serve. The project is expected to cost
approximately $9-10 million. The Company's progress on this project has been
slowed due to the state regulatory authorities requiring the Arkansas plant to
apply for and obtain a new plant wide permit. This new permit replaced the
existing permit and now allows the Company to proceed with the permitting
process of the new kiln. This permit is expected to be secured by the end of
1996. The new kiln will be financed by internally generated funds and/or
alternative sources of financing.
ENVIRONMENTAL MATTERS
The Company's operations are subject to various environmental laws and
regulations. In part in response to requirements of environmental regulatory
agencies, the Company incurred capital expenditures of approximately $220,000
in 1995. In the judgment of management, forecastable expenditure requirements
for the future are not of such dimension as to have a materially adverse effect
on the Company's financial condition, results of operations, liquidity or
competitive position. See "Business--Environmental Matters."
-9-
12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Auditors F1
Report of Independent Auditors F2
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1995 and 1994 F3
Consolidated Statements of Income for the years ended December
31, 1995, 1994 and 1993 F5
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1995, 1994 and 1993 F6
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 F7
Notes to Consolidated Financial Statements F9
-10-
13
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
United States Lime & Minerals, Inc.
We have audited the consolidated balance sheets of United States Lime &
Minerals, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity, and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of United
States Lime & Minerals, Inc. and subsidiaries at December 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the years then ended in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Dallas, Texas
January 22,1996
-F1-
14
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
United States Lime & Minerals, Inc.
We have audited consolidated statements of income, stockholders' equity and
cash flows of United States Lime & Minerals, Inc. and subsidiaries for the
year ended December 31, 1993. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects the results of operations and cash flows of
United States Lime & Minerals, Inc. for the year ended December 31, 1993, in
conformity with generally accepted accounting principles.
ARONSON, FETRIDGE & WEIGLE
Rockville, Maryland
February 1, 1994
-F2-
15
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
DECEMBER 31,
----------------------------------
ASSETS Notes 1995 1994
------ ----------- ----------- -----------
Current Assets:
Cash and cash equivalents $ 1,161 23
Trade receivables 5,509 6,002
Inventories 1 5,332 4,770
Prepaid expenses and other assets 234 320
------------ ---------
Total current assets 12,236 11,115
Property, plant and equipment, at cost:
Land 2,280 2,240
Buildings and building improvements 2,057 2,030
Machinery and equipment 48,104 44,095
Furniture and fixtures 724 711
Automotive equipment 762 952
------------ ---------
53,927 50,028
Less accumulated depreciation (37,503) (35,052)
------------ ---------
Net property, plant and equipment 16,424 14,976
Note receivable 2 - 343
Other assets, net 1,6 1,133 963
------------ ---------
Total assets $ 29,793 27,397
============ =========
See accompanying notes to consolidated financial statements
-F3-
16
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(dollars in thousands)
LIABILITIES AND DECEMBER 31,
--------------- ----------------------------------
STOCKHOLDERS' EQUITY Notes 1995 1994
-------------------- -------- ------------ ----------
Current Liabilities:
Current installments of long-term debt 4 $ 1,143 1,143
Accounts payable - trade 2,568 2,671
Accrued expenses:
Salaries and wages 383 206
Insurance costs 436 487
Other expenses 1,550 1,165
------------ ---------
Total current liabilities 6,080 5,672
Long-term debt, excluding current installments 4 4,381 6,225
Other liabilities 3,6 583 698
------------ ---------
Total liabilities 11,044 12,595
Commitments and contingencies 9
Stockholders' equity: 6,8
Preferred stock, $5 par value,
Authorized 500,000 shares; none issued - -
Common stock, $.10 par value, authorized
15,000,000 shares; issued 5,294,065 529 529
shares
Additional paid-in capital 15,848 15,848
Retained earnings 17,844 13,897
Less treasury stock at cost; 1,458,002
shares of common stock (15,472) (15,472)
------------ ---------
Total stockholders' equity 18,749 14,802
------------ ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,793 27,397
============ =========
See accompanying notes to consolidated financial statements
-F4-
17
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
YEAR ENDED DECEMBER 31,
------------------------------------------------
Notes 1995 1994 1993
-------- ----------- ----------- ------------
Revenues $ 41,419 36,865 32,359
Cost of revenues:
Labor and other operating expenses 27,375 25,753 22,135
Depreciation, depletion and amortization 3,197 3,191 3,495
Amortization of costs in excess of
net assets acquired - 292 656
----------- --------- ----------
30,572 29,236 26,286
----------- --------- ----------
GROSS PROFIT 10,847 7,629 6,073
Selling, general and administrative expenses 7 5,185 5,125 5,855
----------- --------- ----------
OPERATING PROFIT 5,662 2,504 218
Other deductions (income):
Interest expense 4 723 884 800
Gain on sale of Virginia Lime Company assets 3 - (425) -
Other - net (343) (143) (65)
----------- --------- ----------
380 316 735
Income (loss) from continuing operations
before income taxes 5,282 2,188 (517)
Federal and state income tax: 5 1,022 272 (76)
----------- --------- ----------
Income (loss) from continuing operations 4,260 1,916 (441)
Discontinued operations, net of taxes:
Income from discontinued operations 2,5 - - 480
----------- --------- ----------
NET INCOME $ 4,260 1,916 39
=========== ========= ==========
Income (loss) per share of common stock:
Continuing operations $ 1.11 0.50 (0.11)
Discontinued operations - - 0.12
----------- --------- ----------
NET INCOME $ 1.11 0.50 0.01
=========== ========= ==========
See accompanying notes to consolidated financial statements
-F5-
18
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Years ended December 31, 1995, 1994 and 1993
Common Stock
--------------------- Additional Amount
Shares Paid-In Retained Treasury Due From
Outstanding Amount Capital Earnings Stock ESOP TOTAL
----------- -------- ---------- -------- --------- -------- --------
BALANCES AT JANUARY 1, 1993 3,836,063 $529 15,848 12,092 (15,472) (277) 12,720
Reduction of amount due
from ESOP (Note 6) - - - - - 92 92
Adjustment to reflect minimum
pension liability (Note 6) - - - (109) - - (109)
Net income - - - 39 - - 39
----------- ------- --------- -------- --------- ------ --------
BALANCES AT DECEMBER 31, 1993 3,836,063 529 15,848 12,022 (15,472) (185) 12,742
Reduction of amount due
from ESOP (Note 6) - - - - - 185 185
Adjustment to reflect minimum
pension liability (Note 6) - - - (41) - - (41)
Net income - - - 1,916 - - 1,916
----------- ------- --------- -------- --------- ------ --------
BALANCES AT DECEMBER 31, 1994 3,836,063 529 15,848 13,897 (15,472) - 14,802
Common stock dividends - - - (286) - - (286)
Adjustment to reflect minimum
pension liability (Note 6) - - - (27) - - (27)
Net income - - - 4,260 - - 4,260
----------- ------- --------- -------- --------- ------ --------
BALANCES AT DECEMBER 31, 1995 3,836,063 $529 15,848 17,844 (15,472) - 18,749
=========== ======= ========= ======== ========= ====== ========
See accompanying notes to consolidated financial statements
-F6-
19
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
--------- -------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) from continuing operations $ 4,260 1,916 (441)
Adjustments to reconcile net income (loss) from
continuing operations to net cash provided
by continuing operations:
Depreciation, depletion and amortization 3,354 3,661 4,420
Gain on sale of Virginia Lime Company assets - (425) -
(Gain) / loss on sale of property (127) (11) 47
Amortization of financing costs 139 74 98
Changes in assets and liabilities:
(Increase) / decrease in trade receivables 493 (1,031) (421)
(Increase) / decrease in inventories (562) 1,747 (701)
(Increase) / decrease in prepaid expenses 86 241 (166)
(Increase) / decrease in other assets 34 55 (467)
Increase / (decrease) accounts payable and accrued expenses 408 (272) 796
Increase / (decrease) other liabilities (142) (547) (54)
----------- -------- -------
Total adjustments 3,683 3,492 3,552
----------- -------- -------
Net cash provided by continuing operations 7,943 5,408 3,111
----------- -------- -------
Net income from discontinued operations - - 480
Adjustment to reconcile net income from
discontinued operations to net cash used in
discontinued operations - - (315)
----------- -------- -------
Net cash provided by discontinued operations - - 165
----------- -------- -------
Net cash provided by operations $ 7,943 5,408 3,276
----------- -------- -------
See accompanying notes to consolidated financial statements.
-F7-
20
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(dollars in thousands)
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment $ (4,851) (2,682) (3,440)
Proceeds from sales of property, plant and equipment 176 95 55
Decrease in restricted cash - - 129
--------- -------- --------
Net cash used in investing activities (4,675) (2,587) (3,256)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of common stock dividends (286) - -
Proceeds from borrowings 2,200 1,400 500
Principal payments of debt (4,044) (4,797) (1,592)
Amount due from ESOP, net of income tax - 185 92
--------- -------- --------
Net cash used in financing activities (2,130) (3,212) (1,000)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents 1,138 (391) (980)
Cash and cash equivalents at beginning of period 23 414 1,394
--------- -------- --------
Cash and cash equivalents at end of period $ 1,161 23 414
========= ======== ========
See accompanying notes to consolidated financial statements.
-F8-
21
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Years ended December 31, 1995, 1994, and 1993
(1) Summary of Significant Accounting Policies
(a) Organization
The Company is a manufacturer of lime and limestone products supplying
primarily the steel, paper, agriculture, municipal sanitation/water
treatment and construction industries. The Company is headquartered
in Dallas, Texas and operates lime and aggregate plants in Arkansas,
Pennsylvania and Texas through its wholly owned subsidiaries, Arkansas
Lime Company, Corson Lime Company and Texas Lime Company,
respectively.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and all of its subsidiaries. All material intercompany
balances and transactions have been eliminated.
(c) Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
(d) Statements of Cash Flows
For purposes of reporting cash flows, the Company considers all
certificates of deposit and highly-liquid debt instruments, such as
U.S. Treasury Bills and Notes, with original maturities of three
months or less to be cash equivalents.
Supplemental cash flow information is presented below:
1995 1994 1993
---- ---- ----
Cash paid during the period for:
Interest (net of amounts capitalized) $ 597 $ 811 $ 761
====== ====== ======
Income taxes $ 789 $ 261 $ 58
====== ====== ======
Supplemental information regarding non-cash investing and financing
activities is present as follows:
A secured promissory note for $530 was recorded in 1993. This
transaction has been excluded from the consolidated statements of cash
flows.
(e) Trade Receivables
Trade receivables are presented net of the related allowance for
doubtful accounts, which totaled $115 and $231 at December 31, 1995,
and 1994, respectively.
-F9-
22
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(f) Inventories
Inventories are valued principally at the lower of cost or market
determined using the average cost method. Such costs include
materials, labor and production overhead.
A summary of inventories is as follows:
1995 1994
------ ------
Lime and limestone inventories:
Raw materials $ 1,000 $ 714
Finished goods 2,436 2,440
------- -------
3,436 3,154
Service parts inventories 1,896 1,616
------- -------
$ 5,332 $ 4,770
======= =======
(g) Property, Plant and Equipment
Depreciation of property, plant and equipment is being provided for by
the straight-line and declining-balance methods over estimated useful
lives as follows:
Buildings and building improvements 3-40 years
Machinery and equipment 3-20 years
Furniture and fixtures 3-10 years
Automotive equipment 3-8 years
Maintenance and repairs are charged to expense as incurred; renewals
and betterments are capitalized. When units of property are retired
or otherwise disposed of, their cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or
loss is credited or charged to income.
(h) Other Assets
Other assets consist of the following:
1995 1994
------- -------
Assets held for sale $ 33 $ 34
Deferred stripping costs 783 472
Intangible asset, pension 165 166
Deferred financing costs 152 291
------- ------
$ 1,133 $ 963
======= ======
It is the Company's policy to make available for sale assets
considered excess and no longer necessary for operations. The
carrying values of such assets are periodically reviewed and adjusted
downward to market, when appropriate.
Deferred stripping costs are amortized by the unit-of-production
method based on the estimated recoverable reserves in the underlying
area.
Deferred financing costs are expensed over the shorter of the life of
the debt or expected life of the loan using the interest method.
-F10-
23
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(i) Earnings Per Share of Common Stock
Earnings per share of common stock are based on the weighted average
number of shares outstanding during each year, which amounted to
3,836,063 for the years ended December 31, 1995, 1994 and 1993.
(j) Environmental Expenditures
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to
an existing condition caused by past operations, and which do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments and/or
remedial efforts are probable, and the costs can be reasonably
estimated. Generally, the timing of these accruals will coincide with
completion of a feasibility study or the Company's commitment to a
formal plan of action.
(2) Discontinued Operations
In June 1989, the Company sold the net assets of its manufacturing division
to an unrelated joint venture (Purchaser). As part of this sale, the
Company received a $955 subordinated promissory note, the repayment of
which was contingent upon the Purchaser having sufficient excess cash flow
(as defined). The Company was not receiving interest on the note,
collection of the principal was considered to be doubtful and, accordingly,
at that time the note was not recorded. Subsequent to December 31, 1993,
the Company recorded $200 in cash and a new subordinated note for $530 in
substitution of the old note. The new note was secured by all of the
assets of the Purchaser, and carried an interest rate of 6% per annum. The
new note called for a monthly payment of $10 in interest and principal, and
a final payment of $17 at the end of the 60th month. The new note was
recorded as income from discontinued operations in 1993. The Purchaser
paid the balance of the note in the fourth quarter of 1995.
(3) Gain on Sale of Virginia Lime Company Assets
Effective July 15, 1992, substantially all of the assets and business of
Virginia Lime Company (VLC) were sold to Eastern Ridge Lime Company, L.P.
(Eastern Ridge), an unrelated company. At the time of the sale, a $500
reserve for post-closing adjustments was established. Potential
post-closing adjustments included possible additional expenditures for
claims relating to a water supply system, workers' compensation matters,
environmental matters, representations and warranties made to Eastern Ridge
on various issues, employee benefit matters, legal fees and other
professional charges. Other than a $50 payment in 1993, in connection with
the water supply system, Eastern Ridge asserted no claims for adjustment.
The Company recorded a benefit of $425 in the second quarter of 1994, upon
payment of certain legal and other expenses and expiration of the
post-closing obligations. The Company dissolved this subsidiary in 1995.
-F11-
24
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(4) Long-Term Debt
In October 1993, the Company entered into a financing agreement with a
commercial bank to replace its then-existing borrowings. The agreement
provided for a 5-year $8,000 Term Loan with a monthly principal repayment
of $95, with the remaining principal due in September 1998. The agreement
also provided for a 2-year $6,000 Revolving Credit. Both are secured by
substantially all of the Company's assets. The Term Loan originally
carried an interest rate of Prime plus 1%, and the Revolving Credit carried
an interest rate of Prime plus 3/4%, with a 1/2% fee on the unused
Revolving Credit loan. In February 1994, the Company fixed the interest
rate on the Term Loan at 7.95% per annum through February 1997. In
September 1995, the loan agreements were amended to extend the Revolving
Credit maturity date to November 1997. For the period of January 1 to
September 29, 1995, the Term Loan, as amended, carried an interest rate of
Prime plus 1/2%, and the Revolving Credit carried an interest rate of
Prime plus 1/4%. In addition, effective September 29, 1995, the Term Loan
carries an interest rate of Prime plus 1/4%, and the Revolving Credit
carries an interest rate of Prime. The new Term Loan rate will go into
effect after the fixed term rate of 7.95% ends in February 1997. The terms
of the financing agreements contain, among other provisions, requirements
for maintaining defined levels of working capital, net worth, financial
ratios and capital expenditure limitations. The covenants restrict
incurrence of debt, liens and lease obligations, mergers, and consolidation
or acquisition of assets.
A summary of Long-term debt is as follows:
1995 1994
------- -------
Term Loan $ 5,524 $ 6,667
Revolving Credit - 701
------- -------
Subtotal 5,524 7,368
Less current installments 1,143 1,143
------- -------
Long-term debt, excluding
current installments $ 4,381 $ 6,225
======= =======
Amounts payable on long-term debt in 1996 and thereafter are: 1996,
$1,143; 1997, $1,143; 1998, $3,238.
(5) Federal and State Income Taxes
Income tax expense (benefit) for the years ended December 31, 1995, 1994
and 1993 were as follows:
1995 1994 1993
------- ------ ------
Current - federal $ 743 $ 156 $ -
Current - state and local 279 116 27
------- ----- -----
1,022 272 27
======= ===== =====
Income tax expense (benefit) on income
(loss) from continuing operations 1,022 272 (76)
Income tax expense on income
from discontinued operations - - 103
------- ----- -----
$ 1,022 $ 272 $ 27
======= ===== =====
-F12-
25
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
A reconciliation of the computed "expected" federal and state income tax
expense (benefit) on income (loss) from continuing operations to income
taxes at the effective tax rates is as follows:
Year Ended Year Ended Year Ended
December 31, 1995 December 31, 1994 December 31, 1993
------------------- -------------------- -----------------------
Percent Percent Percent
of pretax of pretax of pretax
Amount income Amount income Amount loss
-------- ---------- --------- ---------- ---------- ----------
Computed "expected" tax
expense (benefit) $1,796 34.0 % $ 745 34.0 % $ (176) 34.0 %
Increase (reductions) in
taxes resulting from:
General business credits
carryforwards (248) (4.6) (130) (6.0) - -
Tax benefit not currently
utilizable - - - - 413 79.8
Excess of statutory depletion
over cost depletion (612) (11.6) (408) (18.6) (340) (65.7)
State income taxes, net of
federal income tax benefit 176 3.3 77 3.5 18 3.4
Other (90) (1.7) (12) (0.5) 9 1.8
------ ------ ----- ------ ------ ------
Taxes on income (loss)
from continuing operations $1,022 19.4 % 272 12.4 % (76) (14.7)%
====== ====== ===== ====== ====== ======
At December 31, 1995, the Company had deferred tax liabilities of $653,
deferred tax assets of $4,188 and a valuation allowance of $3,535. The
principal temporary difference related to the deferred tax liabilities is
depreciation ($653). The principal temporary differences related to the
deferred tax assets were net operating loss (NOL) carryforwards ($1,047),
general business credits ($510), certain financial statement accruals
($656) and alternative minimum tax credit carryforwards ($1,975).
At December 31, 1994, the Company had deferred tax liabilities of $700,
deferred tax assets of $4,508 and a valuation allowance of $3,808. The
principal temporary difference related to the deferred tax liability is
depreciation ($700). The principal temporary differences related to the
deferred tax assets were NOL carryforwards ($1,983), general business
credit ($756), certain financial statement accruals ($785) and alternative
minimum tax credit carryforwards ($984).
The Company has NOL carryforwards for tax purposes of $2,755 which will, if
unused, expire in 2006 ($1,387), and 2008 ($1,368). General business
credits of $510 are available to reduce the Company's federal income tax,
which expire starting 1997 through 2001.
Deferred tax assets have been reduced by a valuation allowance as
realization of some portion of these future tax benefits is dependent on
generating sufficient taxable income. Favorable resolution of these
uncertainties would result in the reduction of the valuation allowance.
-F13-
26
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(6) Employee Retirement Plans
The Company has a noncontributory defined benefit pension plan covering
substantially all union employees of its wholly-owned subsidiary, Corson
Lime Company. Benefits for the Corson Lime Union Pension Plan (Corson
Plan) are based on certain multiples of years of service. The Company's
funding policy is to contribute annually not less than the minimum required
nor more than the maximum amount that can be deducted for Federal income
tax purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned in
the future. The Company funded pension costs of $127 for 1995, $96 for
1994 and $96 for 1993.
A summary of the funding status of the Corson Plan and the amounts
recognized in the consolidated balance sheets are as follows:
1995 1994
-------- --------
Actuarial present value of accumulated benefit obligation:
Vested $ 1,347 $ 1,243
Non-vested 6 1
------- -------
Total $ 1,353 $ 1,244
======= =======
Projected benefit obligation $(1,353) $(1,244)
Plan assets at fair value, primarily listed securities and short-term investments 800 700
------- -------
Projected benefit obligation in excess of plan assets (553) (544)
Unrecognized net loss from past experience different from that assumed 252 223
Unrecognized net obligation at transition, being recognized over 15 years 9 11
Prior service cost not yet recognized in net periodic pension cost 156 155
Adjustment to recognize minimum liability (417) (389)
------- -------
Liability recognized in the consolidated balance sheet $ (553) $ (544)
======= =======
A summary of the components of net periodic pension expense for the Corson Plan
follows:
December 31,
-----------------------------------
1995 1994 1993
------ ------- -------
Service cost - benefits earned during the period $ 41 $ 48 $ 43
Interest cost on projected benefit obligation 100 95 91
Actual return on plan assets (32) (30) (71)
Net liability deferred for later recognition (33) (30) 18
Amortization of unrecognized net liability 10 5 2
Amortization of unrecognized prior service cost 23 23 23
------ ------ -------
Net periodic pension expense $ 109 $ 112 $ 106
====== ====== =======
Significant assumptions used in determination of
pension expense consist of the following:
Discount rate 8% 8% 8%
Long-term rate of return on plan assets 9% 9% 9%
The Company also has a contributory retirement (401k) savings plan for
nonunion employees. The Company contributions to the plan were $58 during
1995, $23 during 1994 and $26 during 1993. The Company has a contributory
retirement (401k) savings plan for union employees of Texas Lime Company.
The Company contributions to this plan were $12 in 1995, $11 in 1994 and
$12 in 1993.
-F14-
27
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
In December 1986, the Company purchased 1,550,000 shares of its outstanding
common stock for $10.50 per share. Subsequent to that purchase, 200,000
shares (300,000 shares after stock split) were sold to the Employee Stock
Ownership Plan (ESOP) for $8.20 per share. The Company obtained a note
receivable from the ESOP for the purchase of the shares, which was
classified as a reduction of stockholders' equity. As of December 1994,
the Company made all of the necessary contributions to the ESOP to repay
all principal and interest due on the note.
Through December 31, 1994, the Company contributed to the ESOP which covers
substantially all full-time nonunion employees. The ESOP is designed to
invest primarily in the Company's common stock. Contributions to the ESOP
are made at the option of the Company, except for certain contributions
which were required in order for the ESOP to repay the note receivable to
the Company. The Company did not make a contribution in 1995 and
contributed $205 during each of the years 1994 and 1993.
(7) Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses for 1993 include $391
for payments related to the termination of employees. In 1993, SG&A
includes $215 of bank fees and professional charges incurred in connection
with a proposed ESOP offer to buy the then-majority owner's shares in the
Company and the related financing of the then-existing borrowings. In May
1993, the then-majority shareholder sold its shares, and, as a consequence,
the proposed ESOP offer was abandoned. SG&A expense also includes
change-in-control payments of $177 made in May 1993.
(8) Stock Option Plan
The Company has a stock option plan under which options for shares of
common stock may be granted to key employees. As of December 31, 1995, the
Company has granted options to purchase a total of 355,000 shares at a
range of $4.75 to $8.25 per share, the fair market value of the Company's
common stock on the date of grant. The options expire ten years from the
date of grant and generally become exercisable after the expiration of one
year from the grant date. As of December 31, 1995, 25,000 shares are
available for future grant.
(9) Commitments and Contingencies
The Company leases some of the equipment used in its operations.
Generally, the leases are for periods varying from one to five years and
are renewable at the option of the Company. Total rent expense was $232
for 1995, $134 for 1994 and $213 for 1993. As of December 31, 1995, future
minimum payments under noncancelable operating leases are as follows:
1996, $81; 1997, $77; 1998, $75; and 1999, $36.
-F15-
28
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
As of December 31, 1993, the Company reached agreements to settle two
lawsuits styled Rangaire Company v. Rangaire Corporation and Cameron Energy
Company v. Scottish Heritable, Inc. In settlement of both lawsuits, the
Company and the plaintiffs entered into mutual releases and agreement for
dismissal with prejudice of all litigation for claims of any kind. In
exchange, the Company (a) agreed to the substitution for an existing
unsecured subordinated cash flow promissory note of $955 payable to it by
Rangaire Company, bearing interest at 10% per annum, of a new secured
subordinated promissory note for $530, bearing interest at 6% per annum,
and (b) received $200 in cash from Rangaire Company to be reimbursed to
Cameron Energy up to $200 for clean-up costs incurred with regard to a
parcel of land sold in 1989. In 1993, the Company accrued $170 for
potential claims by Cameron Energy. The unsecured $955 cash flow
promissory note previously was not recognized as income. The new $530
secured promissory note and the $200 cash payment were recorded in
discontinued operations income in 1993. In 1994, the Company reimbursed
Cameron Energy $165,000 for the clean-up costs. The balance remaining on
the promissory note as of December 31, 1994 of $447 was completely repaid
in the fourth quarter of 1995.
The Company is party to other lawsuit and claims arising in the normal
course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on the Company's financial
condition, results of operation, liquidity or competitive position.
(10) Summary of Quarterly Financial Data (unaudited)
March 31, June 30, Sep. 30, Dec. 31,
1995 1995 1995 1995
-------- -------- -------- --------
Revenues $8,649 $ 11,458 $ 11,106 $ 10,206
====== ======== ======== ========
Gross profit 1,993 3,242 3,001 2,611
====== ======== ======== ========
Net income 426 1,440 1,535 860
====== ======== ======== ========
Net income per share of
common stock $ .11 $ .38 $ .40 $ .22
====== ======== ======== ========
March 31, June 30, Sep. 30, Dec. 31,
1994 1994 1994 1994
-------- -------- -------- ----------
Revenues $ 6,763 $ 10,165 $ 10,534 $ 9,403
======= ======== ======== =======
Gross profit 709 2,327 2,910 1,683
======= ======== ======== =======
Net income (loss) (726) 1,154 1,099 389
======= ======== ======== =======
Net income (loss) per share of
common stock $ (.19) $ .30 $ .29 $ .10
======= ======== ======== =======
-F16-
29
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The information required in response to Item 9 was previously reported in
the Company's Current Report on Form 8-K dated October 28, 1994.
PART III
The information required in response to Items 10, 11, 12 and 13 is hereby
incorporated by reference to the information under the captions "Election of
Directors", "Executive Officers of the Company Who Are Not Also Directors",
"Executive Compensation", "Voting Securities and Principal Shareholders", and
"Shareholdings of Company Directors and Executive Officers" in the Proxy
Statement for the Company's 1996 Annual Meeting of Shareholders. The Company
anticipates that it will file the definitive Proxy Statement with the
Securities and Exchange Commission on or before April 30, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. The following financial statements are included in Item 8:
Report of Independent Auditors
Report of Independent Auditors
Consolidated Financial Statements:
Consolidated Balance Sheets as of December, 31, 1995 and 1994;
Consolidated Statements of Income for the years ended December 31,
1995, 1994 and 1993;
Consolidated Statements of Stockholders' Equity for the years
ended December, 31, 1995, 1994 and 1993;
Consolidated Statements of Cash Flows for the years ended December
31, 1995, 1994 and 1993; and
Notes to Consolidated Financial Statements.
2. All financial statement schedules are omitted because they are not
applicable or the required information is presented in the
consolidated financial statements or the related notes.
-11-
30
3. The following documents are filed with or incorporated by reference
into this Report:
3(a) Articles of Amendment to the Articles of Incorporation of
Scottish Heritable, Inc. dated January 25th, 1994
(incorporated by reference to Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993, File Number 0-4197).
3(b) Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993, File Number 0-4197).
3(c) Composite Copy of Bylaws of the Company, as currently in
effect (incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, File Number 0-4197).
10(a) Summary of the Company's Profit Sharing Bonus Plan
(incorporated by reference to Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the fiscal year ended July
31,1981, File Number 0-4197).
10(b) United States Lime & Minerals, Inc. Employee Stock Ownership
Plan, as restated effective August 1, 1989.
10(c) Rangaire Employee 401(k) Profit Sharing Plan effective as of
August 1, 1983 (incorporated by reference to Exhibit 10(d) to
the Company's Annual Report on Form l0-K for the fiscal year
ended July, 31, 1983, File Number 0-4197).
10(d) Amendments Nos. First, Second, and Third to Rangaire Employee
401(k) Profit Sharing Plan (incorporated by reference to
Exhibit 10(e) to the Company's Annual Report on Form 10-K for
the fiscal year ended July 31, 1986, File Number 0-4197).
10(e) Amendment No. Fourth to Rangaire Employee 401(k) Profit
Sharing Plan effective March 1, 1987 (incorporated by
reference to Exhibit 10(g) to the Company's Annual Report on
Form 10-K for the fiscal year ended July 31, 1987, File Number
0-4197).
10(f) Amendment No. Fifth to Rangaire Employees 401(k) Profit
Sharing Plan effective as of July 14, 1992 (incorporated by
reference to Exhibit 19(g) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992, File Number
0-4197).
10(g) Texas Lime Company Bargaining Unit 401(k) Plan effective as of
January 1, 1992 (incorporated by reference to Exhibit 19(f) to
the Company's Quarterly Report on Form 10-Q for the quarter
ended June, 30, 1992, File Number 0-4197).
10(h) Executive Retention Agreements dated as of June 10, 1992
between the Company and certain officers of the Company
(incorporated by reference to Exhibit 19(b) to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1992, File Number 0-4197).
10(i) Employment Agreements between the Company and certain
officers of the Company (incorporated by reference to Exhibit
19(c) to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1992, File Number 0-4197).
10(j) United States Lime & Minerals, Inc. 1992 Stock Option Plan
(incorporated by reference to Exhibit A to the Company's
definitive Proxy Statement for its 1992 Annual Meeting of
Shareholders held on June 9, 1992, File Number 0-4197).
-12-
31
10(k) Loan and Security Agreement dated October 20, 1993 among
Scottish Heritable, Inc. and subsidiaries and CoreStates Bank,
N.A. (incorporated by reference to Exhibit 10(u) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, File Number 0-4197).
10(l) Stock Purchase Agreement dated October 23,1986 between
Rangaire Corporation and InterFirst Bank Fort Worth, N.A. as
trustee of the Rangaire Corporation Employee Stock Ownership
Trust (incorporated by reference to Exhibit (c) (2) to the
Company's Tender Offer Statement on Schedule 13E-4 for a
tender offer first published sent or given to security holders
on October 30, 1986, File Number 0-4197).
10(m) Purchase and Assumption Agreement dated as of May 31, 1989
between Rangaire Corporation and Rangaire Company
(incorporated by reference to Exhibit A to the Company's
Current Report on Form 8-K dated June 5, 1989, File Number
0-4197).
10(n) Asset Purchase Agreement dated as of June 5, 1989 by and
between Dravo Lime Company and Texas Lime Company
(incorporated by reference to Exhibit B to the Company's
Current Report on Form 8-K dated June 5, 1989, File Number
0-4197).
10(o) Asset Purchase Agreement dated as of July 6, 1989 by and
between Cadenhead Construction Company, Inc., Cadenhead
Rangaire, Inc. and Rangaire Corporation (incorporated by
reference to Exhibit A to the Company's Current Report on Form
8-K dated July 7, 1989, File Number 0-4197).
10(p) Asset Purchase Agreement dated as of July 13, 1992 among
Eastern Ridge Lime Company, L.P., Virginia Lime Company,
Eastern Ridge Lime, Inc., and Scottish Heritable, Inc.
(incorporated by reference to Exhibit 2 to the Company's
Current Report on Form 8-K dated July 15, 1992, File Number
0-4197).
10(q) Agreement and Release dated October 29, 1993 between Scottish
Heritable, Inc. and Peter C. Timms (incorporated by reference
to Exhibit 10(w) to the Company's Annual Report on Form 10-K
for the fiscal year ended December, 31, 1993, File Number
0-4197).
10(r) Employment Agreement dated as of September 27, 1993 between
Scottish Heritable, Inc. and Robert F. Kizer (incorporated by
reference to Exhibit 10(a) to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1994, File Number
0-4197).
10(s) Employment Agreement dated November 24, 1993 between Scottish
Heritable, Inc. and Robert K. Murray (incorporated by
reference to Exhibit 10(b) to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1994, File Number
0-4197).
10(t) First Amendment to Term Note dated as of March 1, 1994, among
United States Lime & Minerals, Inc. and subsidiaries and
CoreStates Bank, N.A. (incorporated by reference to Exhibit
10(b) to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31,1994, File Number 0-4197).
10(u) Amendment No. 1 to Loan and Security Agreement dated as of
December 23, 1994, among United States Lime & Minerals, Inc.
and subsidiaries and CoreStates Bank, N.A. (incorporated by
reference to Exhibit 10(y) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, File
Number 0-4197).
-13-
32
10(v) Amendment No. 2 to Loan and Security Agreement dated as of
April 28, 1995, among United States Lime & Minerals, Inc. and
subsidiaries and CoreStates Bank, N.A. (incorporated by
reference to Exhibit 10(z) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995, File Number
0-4197).
10(w) Amendment No. 3 to Loan and Security Agreement dated as of
September 29, 1995, among United States Lime & Minerals, Inc.
and subsidiaries and CoreStates Bank, N.A. (incorporated by
reference to Exhibit 10(aa) to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995, File
Number 0-4197).
11 Statement regarding computation of per share earnings (loss).
16 Letter dated November 3, 1994, from Aronson, Fetridge &
Weigle to the Securities and Exchange Commission, stating
whether it agrees with the statements made by the Company in
the Company's Current Report on Form 8-K dated October 28,
1994, concerning its dismissal as the Company's principal
accountant (incorporated by reference to Exhibit 16 to the
Company's Current Report on Form 8-K dated October 28, 1994,
File Number 0-4197).
21 Subsidiaries of the Company.
23(a) Consent of Independent Auditors
23(b) Consent of Independent Auditors
27 Financial Data Schedule
- -----------------------
Exhibits 10(a) through 10(j) and 10(q) through 10(s) are
management contracts or compensatory plans or arrangements
required to be filed as exhibits.
(b) The Company did not file any Current Reports on Form 8-K during the fourth
quarter of 1995.
-14-
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
UNITED STATES LIME & MINERALS, INC.
Date: February 28, 1996 By: /s/ Robert F. Kizer
--------------------------------------
Robert F. Kizer, President and
Chief Executive Officer
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.
Date: February 28, 1996 By: /s/ Robert F. Kizer
---------------------------------------
Robert F. Kizer, President,
Chief Executive Officer, and Director
(Principal Executive Officer)
Date: February 28, 1996 By: /s/ Timothy W. Byrne
---------------------------------------
Timothy W. Byrne, Senior Vice President
of Finance & Admin., Chief Financial
Officer, Treasurer, Secretary and
Director (Principal Financial Officer)
Date: February 28, 1996 By: /s/ Larry T. Ohms
---------------------------------------
Larry T. Ohms, Corporate Controller
and Assistant Treasurer
(Principal Accounting Officer)
Date: February 28, 1996 By: /s/ Edward A. Odishaw
---------------------------------------
Edward A. Odishaw, Director and
Chairman of the Board
Date: February 28, 1996 By: /s/ Antoine M. Doumet
---------------------------------------
Antoine M. Doumet, Director and
Vice Chairman of the Board
Date: February 28, 1996 By: /s/ John J. Brown
---------------------------------------
John J. Brown, Director
Date: February 28, 1996 By: /s/ Wallace G. Irmscher
---------------------------------------
Wallace G. Irmscher, Director
Date: February 28, 1996 By: /s/ Robert J. Smith
---------------------------------------
Robert J. Smith, Director
-15-
34
UNITED STATES LIME & MINERALS, INC.
Annual Report on Form 10-K
Index to Exhibits
Certain exhibits to this annual report on Form 10-K have been
incorporated by reference. For a list of these exhibits see Item 14 hereof.
The following exhibits are being filed herewith:
Exhibit No. Exhibit
------------------------------------------------------
10(b) United States Lime & Minerals, Inc. Employee Stock
Ownership Plan, as restated effective August 1, 1989.
11 Statement regarding computation of per share earnings
(loss).
21 Subsidiaries of the Company.
23(a) Consent of Independent Auditors.
23(b) Consent of Independent Auditors.
27 Financial Data Schedule.