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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE,
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1997
COMMISSION FILE NO. 1-12984
CENTEX CONSTRUCTION PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OF INCORPORATION)
75-2520779
(I.R.S. EMPLOYER IDENTIFICATION NO.)
3710 RAWLINS, SUITE 1600, LB 78, DALLAS, TEXAS 75219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(214) 559-6514
(REGISTRANT'S TELEPHONE NUMBER)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH
EXCHANGE ON WHICH
TITLE OF EACH CLASS REGISTERED
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COMMON STOCK NEW YORK STOCK
(PAR VALUE $.01 PER SHARE) EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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
such registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X. No .
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Indicate by 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 the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to Form 10-K.____.
Indicate the number of shares of the registrant's classes of common
stock (or other similar equity securities) outstanding as of the close of
business on June 24, 1997:
Common Stock 21,991,514 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in Parts I,
II, and III, of this Report:
(a) 1997 Annual Report to Stockholders of Centex Construction
Products, Inc. for the fiscal year ended March 31, 1997.
(b) Proxy statement for the annual meeting of stockholders of Centex
Construction Products, Inc. to be held on July 17, 1997.
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TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business:
General 1
Industry Segment Information 1
Employees 13
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 15
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 15
Item 6. Selected Financial Data 16
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 16
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 16
PART III
Item 10. Directors and Executive Officers of the Registrant 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of Certain Beneficial Owners and Management 17
Item 13. Certain Relationships and Related Transactions 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 17
SIGNATURES 19
INDEX TO EXHIBITS 20-21
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PART I
ITEM 1. BUSINESS
GENERAL
Centex Construction Products, Inc. ("CXP" or the "Company") is a
producer of a variety of basic construction products used in residential,
industrial, commercial and infrastructure applications. The Company produces
and sells cement, aggregates, readymix concrete and gypsum wallboard. The
Company is incorporated in the state of Delaware. Prior to April 19, 1994, the
Company was a wholly owned subsidiary of Centex Corporation ("Centex"). On
April 19, 1994, the Company completed an Initial Public Offering ("IPO") of 51%
of its common stock. As a result of the IPO, Centex's ownership of the Company
was reduced to 49%. Unless the context indicates to the contrary, the terms
"CXP" and the "Company" as used herein, should be understood to include
subsidiaries of CXP and predecessor corporations. The Company's common stock,
par value $0.01 per share ("CXP Common Stock"), began trading publicly on April
19, 1994. As of June 24, 1997, 21,991,514 shares of CXP Common Stock, which
are traded on the New York Stock Exchange, were outstanding.
As previously disclosed, CXP's Board of Directors authorized CXP
management to repurchase up to two million shares of CXP Common Stock as
management determines advisable. As a result of repurchases during fiscal year
1997 by CXP of its common stock from the public and recent purchases of CXP
Common Stock by Centex, Centex now owns approximately 54.4% of the outstanding
shares of CXP Common Stock.
CXP's involvement in the construction products business dates to 1963,
when it began construction of its first cement plant. Since that time, the
Company's operations have been expanded to include additional cement production
and distribution facilities and the production, distribution and sale of
aggregates, readymix concrete and gypsum wallboard.
The Company operates four quarrying and manufacturing facilities and a
network of 12 terminals for the production and distribution of portland and
masonry cement. These facilities are primarily in Texas, northern Illinois,
the Rocky Mountains, Nevada and northern California. The Company is also
vertically integrated, to a limited extent, with readymix concrete operations
in the Austin, Texas area and a portion of northern California. The Company
extracts and produces aggregates from its deposits near Sacramento, California
(the largest single permitted sand and gravel deposit in northern California)
and Austin, Texas. The Company operates a quarry located in close proximity to
two of its gypsum wallboard manufacturing facilities which are located in
Albuquerque and nearby Bernalillo, New Mexico. On February 26, 1997 the
Company purchased the equity interest of a company that owned a gypsum quarry,
a gypsum wallboard plant and an associated cogeneration power facility all
located at Gypsum (near Vail), Colorado. The Company's wallboard production is
shipped by rail and truck to markets throughout the continental United States.
The Company's corporate office is in Dallas, Texas.
INDUSTRY SEGMENT INFORMATION
The following table presents revenues and earnings before interest
expense and income taxes contributed by each of the Company's industry segments
during the periods indicated. Identifiable assets, depreciation, depletion and
amortization and capital expenditures by segment are presented in Note E of the
Notes to the Consolidated Financial Statements of CXP on page 24 of CXP's
Annual Report to Stockholders for the fiscal year ended March 31, 1997 (the
"1997 CXP Annual Report").
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For The Fiscal Years Ended March 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
(In Millions)
Contribution to Revenues:
Cement $133.3 $125.7 $109.9 $101.7 $ 85.6
Gypsum Wallboard 72.2 58.3 51.7 32.8 21.4
Concrete and Aggregates 36.8 39.9 35.2 35.1 30.0
Other, Net 1.8 2.8 1.6 1.2 2.8
------ ------ ------ ------ ------
244.1 226.7 198.4 170.8 139.8
Less Intersegment Sales (4.7) (4.1) (4.1) (4.0) (3.3)
------ ------ ------ ------ ------
Total Net Revenues $239.4 $222.6 $194.3 $166.8 $136.5
====== ====== ====== ====== ======
Contribution to Operating
Earnings (Loss):
Cement $ 39.8 $ 35.3 $ 26.0 $ 15.9 $ 12.4
Gypsum Wallboard 20.5 11.9 7.2 (0.1) (4.7)
Concrete and Aggregates 4.8 5.6 2.6 1.7 (3.2)
Other, Net 1.8 2.8 1.6 1.2 2.8
------ ------ ------ ------ ------
66.9 55.6 37.4 18.7 7.3
Corporate Overhead (3.9) (2.5) (2.3) (1.8) (2.0)
------ ------ ------ ------ ------
Total Earnings Before
Interest and Income Taxes $ 63.0 $ 53.1 $ 35.1 $ 16.9 $ 5.3
====== ====== ====== ====== ======
Revenues for the past three years from each of the Company's industry
segments, expressed as a percentage of total consolidated net revenues, were as
follows:
Percentage of Total
Consolidated Net Revenues
--------------------------------------------
Segment: 1997 1996 1995
------ ------ ------
Cement 53.8% 54.8% 54.5%
Gypsum Wallboard 30.2 26.2 26.6
Concrete/Aggregates:
Readymix Concrete 11.8 12.9 12.9
Aggregates 3.4 4.8 5.2
----- ----- ------
15.2 17.7 18.1
Other 0.8 1.3 0.8
----- ----- ------
Total Consolidated Net Revenues 100.0% 100.0% 100.0%
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CEMENT OPERATIONS
Company Operations. The Company's cement production facilities
are located in or near Buda, Texas; LaSalle, Illinois; Laramie, Wyoming; and
Fernley, Nevada. The Laramie, Wyoming and Fernley, Nevada facilities are
wholly-owned. The Buda, Texas plant is owned by Texas-Lehigh Cement Company, a
joint venture owned 50% by the Company and 50% by Lehigh Portland Cement
Company, a subsidiary of Heidelberger Zement AG. The LaSalle, Illinois plant is
owned by Illinois Cement Company, a joint venture owned 50% by CXP and 50% by
RAAM Limited Partnership, a partnership controlled by members of the Pritzker
family. The Company receives a management fee of $150,000 per year to manage
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\the Illinois joint venture. The Company's Laramie, Wyoming plant operates
under the name of Mountain Cement Company and the Fernley, Nevada plant under
the name of Nevada Cement Company.
Cement is the basic binding agent for concrete, a primary construction
material. The manufacture of portland cement primarily involves the
extracting, crushing, grinding and blending of limestone and other raw
materials into a chemically proportioned mixture which is then burned in a
rotary kiln at extremely high temperatures to produce an intermediate product
known as clinker. The clinker is cooled and interground with a small amount of
gypsum to the consistency of face powder to produce finished cement. Clinker
can be produced utilizing either of two basic methods, a "wet" or a "dry"
process. In the wet process, the raw materials are mixed with water to the
advantage of greater ease in the handling and mixing of the raw materials.
However, additional heat, and therefore fuel, is required to evaporate the
moisture before the raw materials can react to form clinker. The dry process,
a more fuel efficient technology, excludes the addition of water into the
process. Dry process plants are either pre-heater plants, in which hot air is
recycled from the rotary kiln to pre-heat materials, or are precalciner plants,
in which separate burners are added to accomplish a significant portion of the
chemical reaction prior to the introduction of the raw materials into the kiln.
As fuel is a major component in the cost of producing clinker, most
modern cement plants, including all four of the plants operated by the Company,
incorporate the more fuel efficient dry process technology. At present,
approximately 84% of the Company's clinker capacity is from preheater or
preheater/precalciner kilns, compared to approximately one-half of U.S. cement
capacity manufactured from such kilns. Cement production is capital-intensive
and involves high fixed costs. As a result, plant capacity utilization levels
are an important measure of a plant's profitability, since incremental sales
volumes tend to generate increasing profit margins.
Rated Annual Estimated
Clinker Minimum
Capacity Number Limestone
(Thousand Manufacturing of Dedication Reserves
Location short tons)(1) Process Kilns Date (Years)
- -------- ----------- ------------- ------ ---------- ---------
Buda, Texas (2) 1,080 Dry - 4 Stage 1 1978 60
Preheater
Flash Calciner 1983
LaSalle, Illinois (2) 530 Dry - 4 Stage 1 1974 60
Preheater
Laramie, Wyoming 630 Dry - 2 Stage 1 1988 40
Preheater
Dry - Long Dry 1 1996 (4)
Kiln
Fernley, Nevada 480 Dry - Long Dry 1 1964 20
Kiln
Dry - 1 Stage 1 1969
Preheater
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Total (3) 2,720
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(1) One short ton equals 2,000 pounds.
(2) The amounts shown represent 100% of plant capacity and production.
These plants are owned by joint ventures in which the Company has a
50% interest.
(3) Generally, a plant's cement grinding production capacity is greater
than its clinker production capacity.
(4) Commenced production during the fourth quarter of the fiscal year
ended March 31, 1996.
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The Company's net cement production, excluding the joint venture
partners' 50% interest in the Buda and LaSalle plants, totaled 1.9 million tons
both in fiscal 1997 and fiscal 1996. Total net cement sales were 2.1 million
tons both in fiscal 1997 and in fiscal 1996, as all four cement plants sold all
of the product they produced. During the past two years, the Company purchased
minimal amounts of cement from others to be resold. Purchased cement sales
typically occur at lower gross profit margins. In fiscal 1997, 8.8% of the
cement sold by the Company was acquired from outside sources, the same
percentage as in fiscal 1996.
Raw Materials and Fuel Supplies. The principal raw material used in
the production of portland cement is calcium carbonate in the form of
limestone. Limestone is obtained by mining and extracting from quarries owned
or leased by the Company (including its joint ventures) and located in close
proximity to its plants. The Company believes that the estimated recoverable
limestone reserves owned or leased by it (or its joint ventures) will permit
each of its plants to operate at its present production capacity for at least
40 years or, in the case of the Company's Nevada plant, at least 20 years. The
Company expects that additional limestone reserves for its Nevada plant will be
available when needed on an economically feasible basis, although they may be
more distant and more expensive to transport than the Company's existing
reserves. Other raw materials used in substantially smaller quantities than
limestone are sand, clay, iron ore and gypsum, which are either obtained from
Company-owned or leased reserves or are purchased from outside suppliers.
The Company's cement plants use coal as their primary fuel, but are
equipped to burn natural gas as an alternative. The Company has not used
hazardous waste-derived fuels in its plants. The Company's LaSalle, Illinois
and Buda, Texas plants have been permitted to burn, and are burning, scrap
tires as a partial fuel alternative. Electric power is also a major cost
component in the manufacture of cement. The Company has sought to diminish
overall power costs by adopting interruptible power supply agreements which may
expose the Company to some production interruptions during periods of power
curtailment.
Marketing and Distribution. Demand for cement is highly cyclical and
derived from the demand for concrete products which, in turn, is derived from
demand for construction. According to estimates of the Portland Cement
Association (the "PCA"), the industry's primary trade organization, the three
construction sectors that are the major components of cement consumption are
(i) public works construction, including public buildings, (ii) commercial and
industrial construction and (iii) residential construction, which comprised
54%, 18% and 22%, respectively, of U.S. cement consumption in 1995, the most
recent period for which such data are available. Construction spending and
cement consumption have historically fluctuated widely. The construction
sector is affected by the general condition of the economy and can exhibit
substantial variations across the country as a result of the differing
structures of the regional economies. Regional cement markets experience peaks
and valleys correlated with regional construction cycles. Also, demand for
cement is seasonal, particularly in northern states where inclement weather
affects construction activity. While the impact on the Company of construction
cycles in individual regions may be mitigated to some degree by the geographic
diversification of the Company, profitability is very sensitive to shifts in
the balance between supply and demand. As a consequence, the Company's cement
segment sales and earnings follow a similar cyclical pattern.
The following table sets forth certain information regarding the
market area served by each of the Company's cement plants and the location of
the Company's distribution terminals in each area. The Company has a total of
12 cement storage and distribution terminals, which are strategically located
to extend the marketing areas of its plants.
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Plant Location Principal Market Area Distribution Terminals
-------------- --------------------- ----------------------
Buda, Texas Texas and western Louisiana Corpus Christi, TX
Houston, TX
Orange, TX
Roanoke (D/FW), TX
Waco, TX
LaSalle, Illinois Illinois and southern Wisconsin Hartland, WI
Laramie, Wyoming Wyoming, Utah, southern Idaho, Rock Springs, WY
northern Colorado, western Salt Lake City, UT
Nebraska and eastern Nevada Bliss, ID
Denver, CO
North Platte, NE
Fernley, Nevada Nevada (except Las Vegas) and Sacramento, CA
northern California
Cement is distributed directly to customers principally by common
carriers, customer pick-up and, to a lesser extent, trucks owned by the
Company. The Company transports cement principally by rail to its storage and
distribution terminals. Cement is distributed primarily in bulk, but also in
paper bags. No single customer accounted for as much as 10% of the Company's
cement sales during fiscal 1997.
Sales are made on the basis of competitive prices in each market area.
As is customary in the industry, the Company does not typically enter into
long-term sales contracts, except with respect to major construction projects.
Competition. The cement industry is extremely competitive as a result
of multiple domestic suppliers and, beginning in the 1980s, the importation of
foreign cement through various terminal operations. Despite price inelasticity
of overall cement demand, competition among producers and suppliers of cement
is based primarily on price, with consistency of quality and service to
customers being important but of lesser significance. Price competition among
individual producers and suppliers of cement within a marketing area is intense
because of the fungible nature of the product. The U.S. cement industry is
fragmented into regional markets rather than a single national market. Because
of cement's low value-to-weight ratio, the relative cost of transporting cement
is high and limits the geographic area in which each company can market its
products economically. No one cement company has a distribution of plants
extensive enough to serve all markets. The number of principal competitors of
the Company's Texas, Illinois, Wyoming, and Nevada plants are seven, eight,
four and six, respectively, operating in these regional markets.
The United States cement industry comprises approximately 50 companies
which own 107 gray cement plants with approximately 83.0 million tons of
clinker manufacturing capacity (approximately 87.1 million tons of cement
manufacturing capacity assuming a 105% conversion ratio). The PCA estimates
that cement demand totaled approximately 102 million tons in 1996, with
approximately 15 million tons of such demand being satisfied by imported
cement. Based on the level of demand, the Company estimates that the cement
industry as a whole operated in excess of 95% of its aggregate manufacturing
capacity during 1996. During 1996, several companies announced or began
capital projects to enhance the productivity and incrementally expand the
capacity of existing cement manufacturing facilities.
Cement imports into the United States occur primarily to supplement
domestic cement production during peak demand periods. Throughout most of the
1980's, however, competition from low-priced imported cement in most coastal
and border areas of the U.S. grew significantly, which included the
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company's Fernley, Nevada and Buda, Texas plant's markets. According to the
PCA, the 1980's was a period of relatively high cement imports. This high
level of imports depressed cement prices during a period of strong U.S. cement
demand. As a result of antidumping petitions filed by a group of domestic
cement producers, significant antidumping duty cash deposit requirements have
been imposed on cement imported from Mexico since 1990 and from Japan since
1991. Venezuela signed a suspension agreement requiring it not to export to
the U.S. at dumped prices. The existing antidumping orders and suspension
agreement have contributed substantially to an improvement in the condition of
the U.S. cement industry.
In the case of Mexico, margins to calculate cash deposit rates and the
resulting antidumping duties are subject to annual review by the Department of
Commerce and appeal to the U.S. Court of International Trade and the U.S. Court
of Appeals for the Federal Circuit or to binational dispute panels under the
North American Free Trade Agreement ("NAFTA").
Pursuant to the Uruguay Round Agreement, the General Agreement on
Tariffs and Trade ("GATT") and the GATT Antidumping Code were superseded on
January 1, 1995, by a new GATT, which will be administered by the newly created
World Trade Organization. The antidumping orders outstanding against cement
and clinker from Mexico and Japan and the suspension agreement on cement and
clinker from Venezuela will remain in force. New legislation passed by
Congress in December 1994, however, requires the initiation of "sunset" reviews
of the antidumping orders against Mexico and Japan and the suspension agreement
with Venezuela prior to January 2000 to determine whether these antidumping
orders and the suspension agreement should terminate or remain in effect.
NAFTA thus far has had no material adverse effect on the antidumping
duty cash deposit rates imposed on gray portland cement and clinker imported
from Mexico. The Company does not believe that NAFTA will have a material,
adverse effect on the foregoing antidumping duty cash deposit rates in the near
future. A substantial reduction or elimination of the existing antidumping
duties as a result of GATT, NAFTA, or any other reason could adversely affect
the Company's results of operations.
Capital Expenditures. Capital expenditures during fiscal 1997,
amounted to $2.9 million for the cement segment compared with $13.1 million and
$3.7 million in fiscal 1996 and 1995, respectively. Capital outlays in fiscal
1998, have been budgeted at approximately $4.2 million. Approximately 9% of
the budgeted fiscal 1998 total is related to compliance with environmental
regulations. Approximately $10.5 million of fiscal 1996 total was for the
reactivation of the second kiln at the Laramie plant.
Environmental Matters. The cement manufacturing industry, including
the operations of the Company, is regulated by federal, state and local laws
and regulations pertaining to several areas including human health and safety
and environmental compliance. The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986, as well as analogous laws in
certain states, create joint and several liability for the cost of cleaning up
or correcting releases to the environment of designated hazardous substances.
Among those who may be held jointly and severally liable are those who
generated the waste, those who arranged for disposal, those who owned or
operated the disposal site or facility at the time of disposal, and current
owners. In general, this liability is imposed in a series of governmental
proceedings initiated by the identification of a site for initial listing as a
"Superfund site" on the National Priorities List or a similar state list and
the identification of potentially responsible parties who may be liable for
cleanup costs. None of the Company's sites are listed as a "Superfund site."
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The Company's operations are also potentially affected by the Resource
Conservation and Recovery Act ("RCRA"), which is the primary federal statute
governing the management of solid waste and which includes stringent regulation
of solid waste that is considered hazardous waste. The Company's operations
generate nonhazardous solid waste which may include cement kiln dust ("CKD").
Because of a RCRA exemption, known as the Bevill Amendment, CKD generated in
the Company's operations is currently not considered a hazardous waste under
RCRA, pending completion of a study and recommendations to Congress by the U.S.
Environmental Protection Agency ("U.S. EPA"). Nevertheless, such CKD is still
considered a solid waste and is regulated primarily under state environmental
laws and regulations. The U.S. EPA completed its review of CKD and has decided
to promulgate regulations to govern the handling and disposal of CKD which will
supersede the Bevill Amendment. The Bevill Amendment will remain in effect
until those regulations are in place.
In the past, the Company collected and stored CKD on-site at its
cement plants. The Company continues to store such CKD at its Illinois, Nevada
and Wyoming cement plants and at a former plant site in Corpus Christi, Texas,
which is no longer in operation. The Company's cement kilns utilize coal,
natural gas, minimal amounts of self-generated waste oil, and scrap tires in
the Illinois and Texas plants, as fuel. Currently, the Company recycles
substantially all CKD related to present operations at all of its cement
facilities. When the U.S. EPA removes the CKD exemption and develops
particular CKD management standards in the future, the Company might be
required to incur significant costs in connection with its CKD. CKD that comes
in contact with water might produce a leachate with an alkalinity high enough
to be classified as hazardous and might also leach certain hazardous trace
metals therein.
In April 1992, one of the Company's subsidiaries, Nevada Cement
Company ("NCC"), was identified as a potentially responsible party under CERCLA
by the U.S. EPA at the North American Environmental, Inc. storage facility in
Clearfield, Utah ("North American Environmental Site") because of allegations
that NCC arranged for the disposal of hazardous substances at that site. The
Company has records indicating that all of the hazardous substances originating
from NCC that were temporarily stored at the North American Environmental Site
were removed from the storage facility and destroyed in accordance with
applicable laws. The Company is aware of no current estimates of the total
remediation costs or the total volume of waste associated with this site. The
U.S. EPA has also identified the NCC cement plant site in Fernley, Nevada, as a
potential hazardous waste site and entered it into the Comprehensive
Environmental Response, Compensation, and Liability Information System
("CERCLIS") data base in January 1992. U.S. EPA performed an assessment in
1992, under CERCLA at the NCC plant because of concerns over an unlined
disposal pond and a citizen complaint about disposal of wastes. NCC cleaned up
the contaminated soil in the vicinity of this pond under the jurisdiction of
the Nevada Department of Conservation and Natural Resources, Division of
Environmental Protection at an immaterial cost to NCC. There is no assurance
that the Company will not incur material liability in connection with the North
American Environmental Site or the contamination concerns at the Fernley,
Nevada plant site.
Another RCRA concern in the cement industry involves the historical
disposal of refractory brick containing chromium. Such refractory brick was
formerly widely used in the cement industry to line cement kilns. The Company
currently crushes spent refractory brick and uses it as raw feed, but such
brick does not contain chromium.
The Clean Air Act Amendments of 1990 (the "Amendments") provided
comprehensive federal regulation of all sources of air pollution and
established a new federal operating permit and fee program for virtually all
manufacturing operations. The Amendments will likely result in increased
capital and operational expenses for the Company in the future, the amounts of
which are not presently determinable. The Company's U.S. operations have
submitted detailed permit applications and will pay increased recurring permit
fees. In addition, the U.S. EPA is developing regulations for toxic air
pollutants under these Amendments for a broad spectrum of industrial sectors,
including portland cement manufacturing.
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The U.S. EPA has indicated that the new maximum available control technology
standards could require significant reduction of air pollutants below existing
levels prevalent in the industry. Management has no reason to believe,
however, that these new standards would place the Company at a competitive
disadvantage.
The Federal Water Pollution Control Act, commonly known as the Clean
Water Act ("Clean Water Act"), provides comprehensive federal regulation of all
sources of water pollution. In September 1992, the Company filed a number of
applications under the Clean Water Act for National Pollutant Discharge
Elimination System ("NPDES") stormwater permits.
Management believes that the Company's current procedures and
practices in its operations, including those for handling and managing
materials, are consistent with industry standards. Nevertheless, because of
the complexity of operations and compliance with environmental laws, there can
be no assurance that past or future operations will not result in operational
errors, violations, remediation or other liabilities, or claims. Moreover, the
Company cannot predict what environmental laws will be enacted or adopted in
the future or how such future environmental laws will be administered or
interpreted. Compliance with more stringent environmental laws, as well as
potentially more vigorous enforcement policies of regulatory agencies or
stricter interpretation of existing environmental laws, could necessitate
significant capital outlays.
With respect to some of the Company's quarries used for the extraction
of raw materials for its cement and gypsum operations and for the mining of
aggregates for its aggregate operations, the Company is obligated under certain
of its permits and certain regulations to engage in reclamation of land within
the quarries upon completion of extraction and mining. The Company generally
accrues the reclamation costs for a specific quarry over the life of the
quarry.
GYPSUM WALLBOARD OPERATIONS
Company Operations. The Company owns and operates three gypsum
wallboard manufacturing facilities, two located in Albuquerque and nearby
Bernalillo, New Mexico and one located at Gypsum, Colorado. The Company mines
and extracts gypsum and then manufactures gypsum wallboard by first pulverizing
quarried gypsum, then placing it in a calciner for conversion into plaster.
The plaster is mixed with various chemicals and water to produce a mixture
known as slurry, which is inserted between two continuous sheets of recycled
paperboard on a high-speed production line and allowed to harden. The
resulting sheets of gypsum wallboard are then cut to appropriate lengths, dried
and bundled for sale.
The Albuquerque plant was acquired in 1985, and was operated until
early 1991. Following the start-up of the new Bernalillo plant in the spring
of 1990, the Company elected to discontinue operations at the Albuquerque plant
due to weak market conditions. Operations at the Albuquerque plant were
recommenced in May 1993, due to improvements in wallboard demand and prices.
The Gypsum, Colorado gypsum wallboard plant and accompanying electric power
cogeneration facility were purchased on February 26, 1997. The plant
originally commenced production in early 1990 and had been operated by an
independent producer until the acquisition by CXP.
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The following table sets forth certain information regarding these plants:
Rated Annual Estimated Minimum
Wallboard Capacity Gypsum Rock
Location (MMSF)(1) Reserves (years)
-------- ------------------ ------------------
Albuquerque, New Mexico 250 100 (2)
Bernalillo, New Mexico 420 100 (2)
Gypsum, Colorado 400 20 (3)
------
Total 1,070
======
------------------------------------------
(1) Million Square Feet ("MMSF")
(2) The same reserves serve both plants.
(3) Proven reserves only. See Raw Materials and Fuel
Supplies section for additional reserves.
The Company's net wallboard production totaled 715 MMSF in fiscal
1997, and 672 MMSF in fiscal 1996. Total wallboard sales were 726 MMSF in
fiscal 1997, and 661 MMSF in fiscal 1996.
Raw Materials and Fuel Supplies. The Company mines and extracts
gypsum rock, the principal raw material used in the manufacture of wallboard,
from mines and quarries owned, leased or subject to claims owned by the Company
and located near its plants. The New Mexico and Colorado mines and quarries
are estimated to contain approximately 60 million tons and 7 million tons of
proven and probable gypsum reserves, respectively. Based on its current
production capacity, the Company estimates that the life of its existing gypsum
rock reserves is approximately 100 years and 20 years, respectively.
The Colorado plant controls 99 unpatented placer mining claims on
1,980 acres of land under the jurisdiction of the U.S. Bureau of Land
Management. The land, which is adjacent to the present quarry, has not been
drilled and therefore, the reserves cannot be classified as proven or probable.
Management believes that these claims contain substantial quantities of gypsum
rock.
Paper used in manufacturing gypsum wallboard is purchased by the
Company from third party suppliers. Approximately 40% of the Company's
requirements are under contract for a two year period with an annual automatic
renewal. The remainder of the paper requirements are purchased on the open
market from various suppliers. The Company does not believe that the loss of a
supplier would have a material, adverse effect on its business.
The Company's wallboard manufacturing operations use large quantities
of natural gas and electrical power. Substantially all of the Company's
natural gas requirements for its wallboard plants are currently provided by two
gas producers under gas supply agreements expiring in May, 1998 for both the
New Mexico and Colorado plants. If the agreements are not renewed, the Company
expects to obtain its gas supplies from other local gas producers at
competitive prices. Electrical power is supplied to the Company's New Mexico
plants at standard industrial rates by a local utility. The Company's
Albuquerque plant adopted an interruptible power supply agreement which may
expose it to some production interruptions during periods of power curtailment.
The Gypsum, Colorado plants power is supplied by the cogeneration power
facility acquired along with the gypsum wallboard plant in February, 1997.
Currently, the cogeneration power facility supplies only the power needs of the
gypsum wallboard plant and does not sell any power to third parties.
Marketing and Distribution. The principal sources of demand for
gypsum wallboard are (i) residential construction, (ii) repair and remodeling
and (iii) non-residential construction, which the Company estimates accounted
for approximately 45%, 37% and 18%, respectively, of historical industry
9
12
sales. While the gypsum wallboard industry remains highly cyclical, recent
growth in the repair and remodeling segment, together with certain trends in
new residential construction activity, have partially mitigated the impact of
fluctuations in overall levels of new construction.
Although the percentage of wallboard shipments accounted for by new
residential construction has declined in recent years, new residential
construction remains the largest single source of gypsum wallboard demand. In
recent years, demand has been favorably impacted by a shift toward more single-
family detached housing within the new residential construction segment and by
an increase in the size of the average single family detached home.
The size of the total residential repair and remodel market grew to a
record $116 billion in 1995, from $46 billion in 1980. Although data on
commercial repair and remodel activity is not readily available, the Company
believes that this segment has also grown significantly in recent years. The
growth of the repair and remodeling market is primarily due to the aging of
housing stock, remodeling of existing buildings and tenant turnover in
commercial space. In addition, repair and remodeling activity has benefitted
from the fact that it has increasingly come to be viewed by the homeowner,
particularly in recessionary periods, as a low cost alternative to purchasing a
new house.
The Company markets wallboard to numerous building materials dealers,
wallboard specialty distributors, home center chains and other customers
located throughout the United States. No single customer accounted for as much
as 10% of the Company's total gypsum wallboard sales during fiscal 1997.
During fiscal 1997, the principal states in which the Company had
wallboard sales were Florida, Texas, New Mexico, Colorado and Illinois. Prior
to fiscal 1992, most of the Company's wallboard sales were made in the western
United States, with significant sales in California. However, due to the sharp
decline in construction activity in California during the early 1990s, the
Company has focused the distribution of its wallboard in various other areas of
the country.
Although wallboard is distributed principally in regional markets, the
Company and certain other producers have the ability to ship wallboard by rail
outside their usual regional distribution area to take advantage of these other
regional increases in demand. The Company owns or leases 167 railcars for
transporting wallboard. In addition, in order to facilitate distribution in
certain strategic areas, the Company maintains a distribution center in
Albuquerque, New Mexico and four reload yards in Florida, Alabama and
Illinois. The Company's rail distribution capabilities permit it to reach
customers in all states west of the Mississippi River and many eastern states.
During fiscal 1997, approximately 38% of the Company's sales volume of gypsum
wallboard was transported by rail.
Competition. The gypsum wallboard industry is highly competitive.
There are nine principal manufacturers of wallboard operating a total of 73
plants. The Company estimates that the three largest producers, including USG
Corporation, National Gypsum Company, and Georgia-Pacific Corporation, account
for over 80% of wallboard sales in the United States. In 1996 and early 1997,
the industry experienced some consolidation, the largest being Georgia-Pacific
Corporation's purchase of the gypsum business of Domtar, Inc. In general, a
number of the Company's competitors in the wallboard industry have greater
financial, manufacturing, marketing and distribution resources than the
Company. Furthermore, certain of its competitors have vertically integrated
operations consisting of wallboard manufacturing plants, paper mills and
distribution centers, which may provide them with certain cost advantages over
the Company.
Competition among wallboard producers is primarily on a regional
basis, with local producers benefiting from lower transportation costs, and to
a lesser extent on a national basis. Because of the
10
13
commodity nature of the product, competition is based principally on price and,
to a lesser extent, on product quality and customer service.
Total United States wallboard production capacity is estimated
currently at 26.0 billion square feet per year. The Gypsum Association, an
industry trade group, estimates that total 1996 wallboard shipments were
approximately 25.0 billion square feet, resulting in industry capacity
utilization of over 95%. Imports are not a major factor in the wallboard
industry.
Capital Expenditures. Capital expenditures during fiscal 1997
amounted to $52,758,000 (including $52 million for the Eagle acquisition) for
the wallboard segment compared with $889,000 in fiscal year 1996, and $279,000
for fiscal year 1995. Capital outlays in fiscal 1998 have been budgeted at
approximately $6.2 million with no expenditures related to compliance with
environmental regulation.
Environmental Matters. The gypsum industry is subject to
environmental regulations similar to those governing the Company's cement
operations. None of the Company's gypsum operations are presently the subject
of any local, state or federal environmental proceedings or inquiries. The
Company does not and has not used asbestos in any of its gypsum products.
In the fiscal year ended March 31, 1996, the Company's gypsum
subsidiary entered into a consent order with the U.S. EPA to settle claims of
the U.S. EPA against potentially responsible parties with respect to a waste
disposal facility in Broomfield, Colorado. The Company's subsidiary contracted
with the facility for the disposal of a small amount of liquid waste. The
facility was eventually closed by governmental agencies. The Company's
subsidiary settled this matter by entering into the consent order and paying
approximately $50 into a settlement fund.
CONCRETE AND AGGREGATES OPERATIONS
Company Operations. Readymix concrete, a versatile building material
used in almost all construction, involves the mixing of cement, sand, gravel,
crushed stone and water to form concrete which is then marketed and distributed
to numerous construction contractors. Concrete is produced in batch plants and
transported to the customer's job site in mixer trucks.
The construction aggregates business consists of the mining,
extraction, production and sale of crushed stone, sand, gravel and lightweight
aggregates such as expanded clays and shales. Construction aggregates of
suitable characteristics are employed in virtually all types of construction,
including the production of portland and asphaltic cement concrete mixes and in
highway construction and maintenance.
As in the cement industry, the demand for readymix concrete and
aggregates largely depends on regional levels of construction activity. The
construction sector is subject to the vagaries of weather conditions, the
availability of financing at reasonable rates and overall fluctuations in
regional economies, and therefore tends to be cyclical. Both the concrete and
aggregates industries are highly fragmented, with numerous participants
operating in local markets. Because the cost of transporting concrete and
aggregates is very high relative to product values, producers of concrete and
aggregates typically can market their products only in areas within 100 miles
of their production facilities. Barriers to entry in each industry are low,
except with respect to environmental permitting requirements for new aggregate
production facilities and zoning of land to permit mining and extraction of
aggregates.
The Company produces and distributes readymix concrete north of
Sacramento, California and in Austin, Texas. The following table sets forth
certain information regarding these operations:
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14
Location Number of Plants Number of Trucks
-------- ---------------- ----------------
Northern California 5 35
Austin, Texas 5 57
------ ------
Total 10 92
====== ======
The Company's production of readymix concrete reached a ten-year peak
of 992,000 cubic yards in 1986. Since such date, production has declined in
response to decreased demand in the northern California and Austin markets.
The Company believes that it has the capacity to significantly increase its
concrete production from existing levels by adding to its fleet of trucks in
the event that market conditions improve.
The Company conducts aggregate operations near its concrete facilities
in northern California and Austin, Texas. During fiscal 1996, the Company sold
its aggregates-only, marginally profitable, non-strategic production facility
near Fort Worth, Texas. Aggregates are obtained principally by mining and
extracting from quarries owned or leased by the Company and located in close
proximity to its plants. The following table sets forth certain information
regarding these operations.
Estimated Annual
Production Capacity Estimated Minimum
Location Types of Aggregates (Thousand tons)(1) Reserves (Years)
- -------- ------------------- ----------------- -----------------
Northern California Sand and Gravel 1,285 100
Austin, Texas Limestone 1,020 70
-----
Total 2,305
=====
- ------------------------------------------------------
(1) Based on single-shift operation.
The Company's net readymix concrete production was 603,000 cubic yards
in fiscal 1997, and 629,000 cubic yards in fiscal 1996. Total net aggregate
sales were 2.1 million tons in fiscal 1997, and 2.8 million tons in fiscal
1996.
Raw Materials. The Company supplies all of its cement requirements
for its Austin and northern California concrete operations. The Company
supplies approximately 38% and 33%, respectively, of its aggregates
requirements for its Austin and northern California concrete operations. The
Company obtains the balance of its aggregates requirements from multiple
sources in each of these markets.
The Company is engaged in a dispute with two federal government
agencies over title to a portion of its principal aggregates deposit in
northern California. Of the property's 10,000 acres and estimated two billion
tons of aggregates, approximately 6,500 acres containing reserves which the
Company estimates at over one billion tons are not in dispute. See "Item 3,
Legal Proceedings."
Marketing and Distribution. The Company sells readymix concrete to
numerous contractors and other customers in each plant's marketing area. The
Company's batch plants in Austin and northern California are strategically
located to serve each marketing area. Concrete is delivered from batch plants
by trucks owned by the Company.
The Company sells aggregates to building contractors and other
customers engaged in a wide variety of construction activities. Aggregates are
delivered from the Company's aggregate plants by common carriers, customer
pick-up and, to a lesser extent, trucks owned by the Company. No single
customer accounted for as much as 10% of the Company's concrete and aggregates
sales during fiscal 1997.
12
15
During the past several years, the Company has been engaged in
negotiations with government officials to obtain the rights to build a rail
line across Beale Air Force Base that would permit the Company to transport
aggregates from its principal deposit north of Sacramento, California to the
San Francisco Bay Area. The north Bay Area, in particular, is expected to
experience a shortage of sand and gravel within the next ten years. In early
1997, the Company received a letter from certain representatives of the
United States Department of the Air Force ("USAF") indicating that the USAF
intended to terminate lease negotiations for the proposed right-of-way for the
rail line due to the changing mission of Beale Air Force Base. The Company is
attempting to re-commence negotiations with the USAF to conclude a lease
agreement for the right-of-way across Beale Air Force Base. However, in light
of the letter from the USAF, there can be no assurances that the Company will
execute a lease with the USAF to construct the rail line across Beale Air Force
Base or, even if it does so, whether the rail line will ever be constructed.
Competition. Competition among concrete producers within the
Company's northern California and Austin markets is strong. The Company's
competitors include five small and four large concrete producers in the
northern California and Austin markets, respectively.
Both concrete and aggregates are commodity products. Each type of
aggregate is sold in competition with other types of aggregates and in
competition with other producers of the same type of aggregates. Accordingly,
competition in both the concrete and aggregates businesses is based principally
on price and, to a lesser extent, on product quality and customer service.
Environmental matters. The concrete and aggregates industry is
subject to environmental regulations similar to those governing the Company's
cement operations. None of the Company's concrete or aggregates operations are
presently the subject of any local, state or federal environmental proceeding
or inquiries.
EMPLOYEES
The Company and its subsidiaries had approximately 1,053 employees at
March 31, 1997. Approximately 22% of the employees are represented by
collective bargaining units.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this annual report and Form 10-K
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are based on current expectations, estimates
and projections concerning the general state of the economy and the industry
and market conditions in certain geographic locations in which the Company
operates. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions which are difficult to
predict. Therefore, actual results and outcomes may differ materially from
what is expressed or forecasted in such forward-looking statements. The
Company undertakes no obligation to update publicly any forward-looking
statements as a result of new information, future events or other factors.
The Company's business is cyclical and seasonal, the effects of which
cannot be accurately predicted. Risks and uncertainties include changes in
general economic and market conditions such as changes in interest rates,
adverse weather, unexpected operational difficulties, changes in governmental
and public policy including increased environmental regulation, public
infrastructure expenditures, competition, and the availability of raw materials.
Other risks and uncertainties could also affect the outcome of the
forward-looking statements.
13
16
ITEM 2. PROPERTIES
The Company operates cement plants, quarries and related facilities at
Buda, Texas; LaSalle, Illinois; Fernley, Nevada and Laramie, Wyoming. The Buda
and LaSalle plants are each owned by separate joint ventures in which CXP has a
50% interest. The Company's principal aggregate plants and quarries are
located in Austin, Texas and Marysville, California. In addition, the Company
operates gypsum wallboard plants in Albuquerque and nearby Bernalillo, New
Mexico and Gypsum, Colorado. None of the Company's facilities are pledged as
security for any debts.
See "Item 1. Business" on pages 1-13 of this Report for additional
information relating to the Company's properties.
ITEM 3. LEGAL PROCEEDINGS
The Company's Western Aggregates, Inc. subsidiary ("WAI") has received
notices of possible claims against WAI in a title dispute relating to WAI's
leasehold interest under a 99-year mineral lease on the aggregates in 10,000
acres of property north of Sacramento, California commonly known as the Yuba
Goldfields. WAI is currently negotiating with the State Lands Commission of
the State of California to resolve title problems in the Yuba Goldfields
involving the historic and current riverbeds of the Yuba River. Additionally,
the Company has received preliminary indications that the U.S. Bureau of Land
Management and U.S. Army Corps of Engineers will assert claims to property
interests affecting the aggregates in approximately 3,500 acres in the Yuba
Goldfields. The United States has also indicated that it may have certain
other property interests in an additional 1,300 acres in the Yuba Goldfields
that may affect WAI's ability to mine aggregates from this property and WAI has
requested further clarification from the United States regarding the effect of
these other property interests. WAI has also been involved in negotiations
with the United States in an attempt to negotiate a land exchange in an effort
to resolve the federal claims to lands within the Yuba Goldfields.
WAI notified its lessor, Yuba West Gold, Inc. ("Yuba"), and the
lessor's successor-in-interest, Western Water Company ("Western Water"), of
WAI's claims against both parties for title defects in the Yuba Goldfields.
Yuba filed for protection under Chapter 11 of the United States Bankruptcy Code
in September 1992, and subsequent to the April 1994 confirmation of Yuba's plan
of reorganization, WAI received payments in cash from Yuba's bankruptcy estate
amounting to approximately $1.05 million in satisfaction of the claims filed by
WAI in such bankruptcy proceedings. In April 1994, WAI completed a transaction
with Western Water to settle WAI's claims that Western Water breached its
obligations to cure the Yuba Goldfields title defects. As a part of the
settlement, Western Water released WAI from its obligation under the mineral
lease to pay annual production royalties to Western Water for the remainder of
the lease term.
At the time WAI entered into its mineral lease in 1987, WAI obtained a
$5.525 million policy of title insurance from Western Title Insurance Company
to insure a significant majority of its leasehold estate in the Yuba
Goldfields. WAI notified Western Title Insurance Company's successor, Fidelity
National Title Insurance Company of California ("Fidelity"), of possible
insured claims of the United States to lands within the Yuba Goldfields and
made demands upon Fidelity to take action to cure the title claims of the
United States that encumbered WAI's leasehold estate. Because WAI believes
that Fidelity breached its obligation under the title policy and acted in bad
faith, in October 1996, WAI filed a civil action against Fidelity in Superior
Court in Orange County, California seeking compensatory and punitive damages.
Although management cannot predict the outcome of this action, it intends to
pursue its rights and remedies vigorously.
14
17
In summary, although both the state and federal governments assert
certain claims to portions of the Yuba Goldfields, the majority of the losses
are covered by title insurance, and unless WAI's current mining plan changes,
the portion of WAI's mineral lease which is not in dispute contains sufficient
estimated reserves to meet WAI's current mining requirements for aggregates for
a period of more than 100 years.
In addition to the proceedings described above, the Company is a party
to certain other ordinary routine legal proceedings incidental to its business.
In general, although the outcome of litigation is inherently uncertain, the
Company believes that none of the litigation matters in which CXP or any
subsidiary is involved, if determined unfavorable to CXP or any subsidiary,
would have a material, adverse effect on the consolidated financial condition
or operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF CXP (See Item 10 of Part III)
The following is an alphabetical listing of the Company's executive
officers, as such term is defined under the rules and regulations of the
Securities and Exchange Commission. All of these executive officers have been
employed by the Company and/or one or more subsidiaries of the Company for the
past five years. All of these executive officers were elected by the Board of
Directors of the Company on July 18, 1996, to serve until the next Annual
Meeting of Directors or until their respective successors are duly elected and
qualified. There is no family relationship between any of these officers.
Name Age Positions with CXP
-------- ------- ------------------------------------------
O. G. (Greg) Dagnan 57 President and Chief Executive Officer
(President and Chief Executive Officer
since January 1990; Senior Vice President
- Operations from August 1989, to January
1990).
Richard D. Jones, Jr. 51 Executive Vice President and Chief Operating
Officer (since January 1990).
Arthur R. Zunker, Jr. 53 Senior Vice President - Finance and Treasurer
(Senior Vice President - Finance and Treasurer since
January 1994; Senior Vice President - Administration
from August 1984, to January 1994).
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(See Item 7 below.)
15
18
ITEM 6. SELECTED FINANCIAL DATA
(See Item 7 below.)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information called for by Items 5, 6 and 7 is incorporated herein
by reference to the information set forth under the following captions (on the
page or pages indicated) in the 1997 CXP Annual Report:
Items Caption in the 1997 CXP Annual Report Pages
----- ------------------------------------- -----
5 Stock Prices and Dividends 37
5 Indebtedness (Note (C) to Consolidated Financial Statements
of CXP) 21
6 Summary of Selected Financial Data 34-35
7 Short-term Borrowings and Long-term Debt (Note (C) to Consolidated
Financial Statements of CXP) 21
7 Management's Discussion and Analysis of Financial Condition and
Results of Operations 29-32
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for in this Item 8 is incorporated herein by
reference to the 1997 CXP Annual Report as set forth in the index to
consolidated financial statements and schedules on page 17 of this Report (see
Item 14).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(See Item 11 below.)
ITEM 11. EXECUTIVE COMPENSATION
Except for the information relating to the executive officers of the
Company, which follows Item 4 of Part I of this Report, the information called
for by Items 10, 11, 12 and 13 is incorporated herein by reference to the
information included and referenced under the following captions (on the page
or pages indicated) in the Company's Proxy Statement dated June 26, 1997, for
the Company's July 17, 1997 Annual Meeting of Stockholders (the "1997 CXP Proxy
Statement"):
16
19
Items Caption in the 1997 CXP Proxy Statement Pages
----- --------------------------------------- -----
10 Election of Directors 2-4
10 Section 16(a) Compliance 15
11 Executive Compensation 9-14
12 Security Ownership of Management and
Certain Beneficial Owners 7-8
13 Certain Transactions 15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(See Item 11 above.)
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(See Item 11 above.)
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Report.
(1) and (2) See the Index to Consolidated Financial Statements and Schedules
below for a list of the Financial Statements and Financial Statement schedules
filed herewith.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
Reference
------------------
1997 CXP
CENTEX CONSTRUCTION PRODUCTS, INC. Annual Report Page
------------------
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Statements of Consolidated Earnings for the years ended March 31, 1997, 1996 and 1995 . . . . . . . 14
Consolidated Balance Sheets as of March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . 15
Statements of Consolidated Cash Flows for the years ended March 31, 1997, 1996 and 1995 . . . . . . 16
Statements of Consolidated Stockholders' Equity for the years ended March 31, 1997, 1996 and 1995 . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-27
Quarterly Results (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
17
20
Consolidated supporting schedules have been omitted either because the
required information is contained in notes to the consolidated financial
statements or because such schedules are not required or are not applicable.
(3) Exhibits
The information on exhibits required by this Item 14 is set forth in
the CXP Index to Exhibits appearing on page 20 and 21 of this Report.
(b) Reports on Form 8-K:
On March 12, 1997, the Company filed with the Securities and Exchange
Commission a Current Report on Form 8-K to report the acquisition on February
26, 1997 of all of the equity interests in the owner of a gypsum mine, gypsum
wallboard plant, and a related cogeneration power facility, all located near
Vail, Colorado. See "Item 1. Business - General" and "Item 1. Business -
Gypsum Wallboard Operations".
On May 12, 1997, the Company filed with the Securities and Exchange
Commission an amended Current Report on Form 8-K/A to amend its prior Form 8-K
filing to include the audited financial statements of the businesses acquired
and the pro forma financial information of the Company required by Form 8-K.
18
21
SIGNATURES
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 in the capacities and on the dates indicated.
June 25, 1997 /s/ O. G. DAGNAN
----------------------------------------------
O. G. Dagnan, Director, President and
Chief Executive Officer
(principal executive officer)
June 25, 1997 /s/ ARTHUR R. ZUNKER, JR.
----------------------------------------------
Arthur R. Zunker, Jr., Senior Vice President -
Finance and Treasurer
(principal financial and accounting officer)
June 25, 1997 /s/ ROBERT L. CLARKE
----------------------------------------------
Robert L. Clarke, Director
June 25, 1997 /s/ LAURENCE E. HIRSCH
----------------------------------------------
Laurence E. Hirsch, Director
June 25, 1997 /s/ DAVID W. QUINN
----------------------------------------------
David W. Quinn, Director
June 25, 1997 /s/ HAROLD K. WORK
----------------------------------------------
Harold K. Work, Director
19
22
INDEX TO EXHIBITS
CENTEX CONSTRUCTION PRODUCTS, INC.
AND SUBSIDIARIES
Exhibit
Number Description of Exhibits
- ------- -----------------------
3.1 Restated Certificate of Incorporation of Centex
Construction Products, Inc. (the "Company")(filed
as Exhibit 3.1 to the Form S-8 Registration Statement
of the Company (No. 33-82928)(the "S-8 Registration
Statement"), filed on August 16, 1994, and incorporated
herein by reference)
3.2 Amended and Restated Bylaws of the Company (filed as
Exhibit 3.2 to the S-8 Registration Statement and
incorporated herein by reference)
4.1 Form of Certificate evidencing Common Stock (filed as
Exhibit 4.1 to Amendment No. 3 to the Form S-1
Registration Statement of the Company (No. 33-74816),
filed on April 4, 1994, ("Amendment No. 3"), and
incorporated by reference herein)
4.2 Credit Agreement dated as of April 18, 1994, among the
Company, The First National Bank of Chicago,
Individually and as Agent, and the other Lenders named
therein (filed as Exhibit 4.2 to the Annual Report on Form
10-K of the Company (File No. 1-12984) for the fiscal
year ended March 31, 1995 (the "Form 10-K") and
incorporated herein by reference)
4.3 Amendment No. 1 to the Credit Agreement, dated as of
March 20, 1996, among the Company, the First National
Bank of Chicago, individually and as agent, and the other
lenders named therein (filed as Exhibit 4.3 to the Annual
Report on Form 10-K of the Company (File No. 1-12984)
for the fiscal year ended March 31, 1996 and incorporated
herein by reference)
10.1 Joint Venture Agreement between Ilce, Inc. (f/k/a
Illinois Cement Company, Inc.) and RAAM Limited
Partnership, dated April 1, 1972, as amended (filed
as Exhibit 10.1 to the Form S-1 Registration
Statement (No. 33-74816) of the Company, filed on
February 4, 1994, (the "S-1 Registration Statement")
and incorporated herein by reference)
10.2 Joint Venture Agreement by and among Texas Cement
Company, the Company, and Lehigh Portland Cement
Company, dated March 25, 1986, as amended (filed as
Exhibit 10.2 to the S-1 Registration Statement) and
incorporated herein by reference)
10.3* The Centex Construction Products, Inc. amended and restated
Stock Option Plan(1)
20
23
10.4 Supplemental Executive Retirement Plan of Centex
Construction Products, Inc. (filed as Exhibit 10.4 to the
1995 Form 10-K and incorporated herein by reference)(1)
10.5 Indemnification Agreement dated as of April 19, 1994,
between the Company and Centex Corporation ("Centex")
(filed as Exhibit 10.5 to the 1995 Form 10-K
and incorporated herein by reference)
10.6 Tax Separation Agreement dated as of April 1, 1994,
among Centex, the Company and its subsidiaries
(filed as Exhibit 10.6 to the 1995 Form 10-K
and incorporated herein by reference)
10.7 Administrative Services Agreement dated as of
April 1, 1994, between the Company and Centex
Service Company (filed as Exhibit 10.7 to the 1995
Form 10-K and incorporated herein by reference)
10.8 Trademark License Agreement dated as of April 19, 1994,
between the Company and Centex (filed as Exhibit 10.8 to the
1995 Form 10-K and incorporated herein by reference)
10.9 Form of Indemnification Agreement between the
Company and each of its directors (filed as Exhibit
10.9 to Amendment No. 3 and incorporated herein by
reference)(1)
10.10 Limited Liability Company Unit Purchase Agreement (EGP),
dated as of December 5, 1997, among Centex American Gypsum
Company, Centex Eagle Gypsum Company, and Eagle-Gypsum
Products (filed as Exhibit 2.1 to the Company's Current Report
on Form 8-K (File No. 1-12984), filed on March 12, 1997,
(the "Form 8-K") and incorporated herein by reference)
10.11 Limited Liability Company Unit Purchase Agreement (NES),
dated as of December 5, 1997, among Centex American Gypsum
Company, CEGC Holding Company, and National Energy Systems,
Inc. (filed as Exhibit 2.2 to the Form 8-K and incorporated herein
by reference)
13** Annual Report to Stockholders of the Company for fiscal
year ended March 31, 1997 (the "Annual Report to Stockholders")
21* Subsidiaries of the Company
23* Consent of Independent Public Accountants
27* Financial Data Schedule
- -------------------------------
* Filed herewith.
** With the exception of the information expressly incorporated by reference
in this Annual Report on Form 10-K from the Annual Report to Stockholders,
the Annual Report to Stockholders is not deemed filed with the Commission
as a part of this Annual Report on Form 10-K.
(1) Required to be identified as a management contract or a compensatory plan
or arrangement pursuant to Item 14(a)(3) of Form 10-K.
21