PART I ITEM I FINANCIAL STATEMENTS
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ACCOUNT DESCRIPTION MARCH 31 DECEMBER 31 MARCH 31
1995 1994 1994
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $2,725 $10,471 $7,208
RECEIVABLES - NET 36,974 30,068 22,937
INVENTORIES 69,585 56,310 48,712
PREPAID EXPENSES AND OTHER 5,760 5,288 1,542
PATENT DAMAGE ESCROW FUNDS 0 0 12,387
TOTAL CURRENT ASSETS 115,044 102,137 92,786
PROPERTY AND EQUIPMENT - NET 46,715 42,349 31,063
OTHER ASSETS 12,865 11,478 2,511
TOTAL ASSETS $174,624 $155,964 $126,360
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
NOTES PAYABLE $7,887 $8,073 $0
CURRENT MATURITIES OF LONG-TERM DEBT 517 500 500
ACCOUNTS PAYABLE - TRADE 20,641 14,262 16,464
RESERVE FOR PATENT DAMAGES 0 0 13,327
OTHER ACCRUED LIABILITIES 28,048 26,302 15,359
TOTAL CURRENT LIABILITIES 57,093 49,137 45,650
LONG-TERM DEBT, LESS CURRENT MATURITIE 23,310 16,155 10,605
OTHER LONG-TERM LIABILITIES 295 299 3,123
TOTAL SHAREHOLDERS' EQUITY 93,926 90,373 66,982
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $174,624 $155,964 $126,360
<PAGE>
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
UNAUDITED
THREE MONTHS ENDED
MARCH 31 MARCH 31
1995 1994
NET SALES $57,544 $46,226
COST OF SALES 43,907 35,197
GROSS PROFIT 13,637 11,029
S,G, & A EXPENSES 9,508 7,698
PATENT SUIT DAMAGES & EXPENSES 91
INCOME FROM OPERATIONS 4,129 3,240
INTEREST EXPENSE 467 71
OTHER INCOME, NET OF EXPENSE 543 (194)
INCOME BEFORE INCOME TAXES 4,205 2,975
INCOME TAXES 1,689 99
NET INCOME $2,516 $2,876
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $0.25 $0.29
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 10,010,574 9,796,258
<PAGE>
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
THREE MONTHS ENDED
MARCH 31 MARCH 31
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $2,516 $2,876
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 1,317 921
PROVISION FOR DOUBTFUL ACCOUNTS 87 124
PROVISION FOR INVENTORY RESERVE 490 372
PROVISION FOR WARRANTY RESERVE 941 695
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (10)
GAIN ON SALE OF FIXED ASSETS (52) (8)
(INCREASE) DECREASE IN:
RECEIVABLES (6,673) (4,581)
INVENTORIES (13,073) (9,078)
PREPAID EXPENSES AND OTHER (374) 60
PATENT DAMAGE ESCROW FUNDS (78)
OTHER RECEIVABLES (76) 611
OTHER ASSETS (106) 269
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 6,229 6,294
ACCRUED PRODUCT WARRANTY (726) (341)
OTHER ACCRUED LIABILITIES 75 3,327
TAXES PAYABLE 1,129 (612)
RESERVE FOR PATENT DAMAGES 0 78
TOTAL ADJUSTMENTS (10,822) (1,947)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (8,306) 929
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY
AND EQUIPMENT - NET 10 22
EXPENDITURES FOR PROPERTY AND EQUIPMENT (5,266) (8,297)
CASH PAYMENTS IN CONNECTION WITH BUSINESS
COMBINATION, NET OF CASH ACQUIRED (835)
NET CASH USED BY INVESTING ACTIVITIES (6,091) (8,275)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET BORROWINGS UNDER REVOLVING
CREDIT LOAN 7,615 5,105
BORROWINGS (REPAYMENTS) UNDER LOAN
AND NOTE AGREEMENTS (964) 5,990
PROCEEDS FROM ISSUANCE OF COMMON STOCK 1
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,651 11,096
NET INCREASE (DECREASE) IN CASH (7,746) 3,750
CASH AT BEGINNING OF PERIOD 10,471 3,458
CASH AT END OF PERIOD $2,725 $7,208
SUPPLEMENTAL CASH FLOW INFORMATION
EXCLUDED FROM THE CONSOLIDATED
STATEMENTS OF CASH FLOWS IS THE FOLLWING
EFFECT OF NON-CASH INVESTING ACTIVITIES:
CAPITAL STOCK ISSUED FOR
PURCHASE OF SUBSIDIARY:
INVESTMENT IN SUBSIDIARY $1,048
CAPITAL STOCK (17)
ADDITIONAL PAID-IN-CAPITAL (1,031)
<PAGE>
FORM 10-Q
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended March 31, 1995.
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934. For the Transition period from _______________
to _______________.
Commission File Number 0-14714
Astec Industries, Inc.
(Exact Name of Registrant as Specified in its Charter)
Tennessee 62-0873631
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4101 Jerome Avenue, Chattanooga, Tennessee 37407
(Address of Principal Executive Offices) (Zip Code)
(615) 867-4210
(Registrant's Telephone Number, Including Area Code)
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__________
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of registrant's Common Stock, par value $0.20
per share, as of March 31, 1995 was 10,089,191.
<PAGE>
ASTEC INDUSTRIES, INC.
INDEX
Page Number
PART I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1995, December 31, 1994
and March 31, 1994
Consolidated Statements of Income
for the Three Months Ended
March 31, 1995 and 1994
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995
and 1994
Notes to Unaudited Consolidated Financial
Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
PART II - Other Information
Item 1. Legal Proceedings
Item 6. Exhibits
Signature Page
<PAGE>
ASTEC INDUSTRIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. The information contained in the unaudited consolidated balance sheets, the
unaudited consolidated statements of income, and the unaudited consolidated
statements of cash flows reflect all adjustments consisting of normal
recurring accruals which are, in the opinion of management, necessary to
present a fair statement of the results for the periods covered.
2. Receivables are net of allowance for doubtful accounts of $ 1,864,000,
$1,684,000 and $1,306,000 for March 31, 1995, December 31, 1994 and March 31,
1994, respectively.
3. Inventories are stated at the lower of first-in, first-out, cost or market
and consist of the following:
(in thousands)
March 31, 1995 December 31, 1994 March 31,1994
Raw Materials $ 23,822 $ 26,705 $ 21,394
Work-in-Process 20,390 14,380 8,162
Finished Goods 25,373 15,225 19,156
$ 69,585 $ 56,310 $ 48,712
4. Property and equipment is stated at cost. Property and equipment is net of
accumulated depreciation of $22,493,000, $23,529,000 and $20,866,000 for
March 31, 1995, December 31, 1994 and March 31, 1994, respectively.
5. Earnings per share are computed in accordance with APB No. 15 and are based
on the weighted average number of shares outstanding for each respective period.
6. Certain customers have financed purchases of Astec products through
arrangements in which Astec is contingently liable for customer debt
aggregating approximately $12,485,000 at March 31,1995, $13,800,000 at
December 31, 1994, and $14,557,000 at March 31, 1994.
7. There have been no material developments in legal proceedings previously
reported. See "Management's Discussion and Analysis of Financial Conditions
and Results of Operations" in Part I - Item 2 "Contingencies" of this Report.
8. Approximately 20-30% of Astec's business volume normally occurs during the
first three months of each year.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONT.
9. As disclosed in Note 2 to the Company's financial statements included in the
1994 Annual Report, the Company acquired the remaining shares of Wibau-Astec
on November 7, 1995 and on October 17, 1994 the Company acquired the operating
assets and liabilities of Gibat Ohl. The following unaudited pro forma
summary presents the consolidated results of operations for the three months
ended March 31, 1994 as if the acquisitions of Wibau-Astec and Gibat Ohl had
occurred at the beginning of 1994 after giving effect to
certain adjustments. The pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results that would
have occurred had the acquisitions occurred at the beginning of 1994 or of
results which may occur in the future.
Three months ended
March 31, 1994
Net sales $ 54,052,000
Net income 2,229,000
Net income per common and common equivalent shares .23
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Results of Operations
For the three-month period ended March 31, 1995, net sales increased by
$11,318,000, compared to sales for the three-month period ended March 31, 1994,
representing a 24.5% increase. International sales increased $136,000, to
$8,036,000 for the quarter ended March 31, 1995 compared to the quarter ended
March 31, 1994. International sales represent 14.0% and 17.1% of total sales
for the three months ended March 31, 1995 and 1994, respectively.
Gross profit increased $2,608,000 for the quarter ended March 31, 1995
compared to the quarter ended March 31, 1994. The gross profit percentage for
the three months ended March 31, 1995 remained relatively stable at 23.7%
compared to 23.9% for the same period in 1994.
Selling, general, and administrative expenses for the first quarter of 1995
were $9,508,000 compared to $7,698,000 for the same period of 1994. Selling,
general and administrative expenses as a percentage of net sales were 16.5%
for the quarter ended March 31, 1995 compared to 16.7% in the first quarter of
1994.
Interest expense increased to $467,000 for the quarter ended March 31, 1995
from $71,000 for the quarter ended March 31, 1994. Interest expense as a
percentage of net sales increased to .8% for the quarter ended March 31, 1995
from .2% for the same period of 1994. Approximately a third of the increase
from 1994 to 1995 relates to interest expense on Industrial Revenue Bonds used
for 1994 capital expenditures. The remainder of the increase in interest
expense for the first quarter of 1995 is attributable to usage of the
Company's revolving line of credit and increased interest rates on the credit
line compared to the same period in 1994.
Other income, net of other expense, was $543,000, or .9% of net sales for the
quarter ended March 31, 1995, compared to net other expense of $194,000, or
.4% of net sales for the quarter ended March 31, 1994. Included in other
income, net of expense for the quarter ended March 31, 1994 was a loss of
$723,000 from the Wibau-Astec joint venture. Excluding the effect of the loss
from joint venture for the first quarter of 1994, the other income, net of
expense as a percentage of net sales was 1.1% for the first quarter of
1994. The Company now owns 100% of Wibau-Astec and their operations are
included in consolidated operating results.
Income tax expense increased to $1,689,000 at March 31, 1995 from $99,000 at
March 31, 1994. Years prior to 1995 benefited from tax loss carryforwards but
most of 1995 and future earnings will be fully taxed.
Backlog at March 31, 1995 was $67,862,000 compared to $54,593,000 at March
31, 1994. The backlog at March 31, 1995 includes amounts from the newly
acquired CEI Enterprises, Inc., and from Wibau-Astec and Gibat Ohl. Excluding
the backlog of these companies, the backlog at March 13, 1995 compared the that
of March 31, 1994 for the remaining companies, in total, has remained stable.
Earnings per share were $.25 for the first quarter of 1995 compared to $.29
for the same period of 1994.
Liquidity and Capital Resources
As of March 31, 1995, the Company had working capital of $57,951,000
compared to $47,136,000 at March 31, 1994.
Total short-term borrowings, including current maturities of long-term debt,
were $8,404,000 at March 31, 1995. Long-term debt less current maturities was
$23,310,000 at March 31,1995. Debt outstanding at March 31, 1995 consists of
industrial revenue bonds issued to finance capital expenditures, short term
notes payable issued to foreign subsidiaries for working capital and the
outstanding balance on the revolving line of credit.
Capital expenditures in 1995, for plant expansion and for further modern-
ization of the Company's manufacturing processes, are expected to approach
$10,000,000 which is $2,000,000 above budgeted capital expenditures. These
expenditures are being financed using internally generated funds. Capital
expenditures at March 31, 1995 were $5,266,000.
In July, 1994, a new loan agreement was signed for $15,000,000 with The First
National Bank of Chicago that expires June 30, 1997. The new loan agreement is
an unsecured revolving line of credit. The outstanding balance on the revolving
line of credit at March 31, 1995 was $10,270,000. The Company was in compliance
with all financial covenants at March 31, 1995.
On March 29, 1995, the Company announced completion of the acquisition of
CEI Enterprises ("CEI") of Albuquerque, New Mexico for cash and Astec stock.
CEI manufactures heat transfer equipment and rubber blending systems for the
hot mix asphalt industry. Astec plans to expand the CEI product line utilizing
Heatec's industrial products technology and to use CEI as an outlet for
products in the western part of the United States.
Contingencies
The Company is engaged in certain pending litigation involving claims or other
matters arising in the normal course of business. Most of these claims involve
product liability or other tort claims for property damage or personal injury
against which the Company is insured. As a part of its litigation management
program, the Company maintains general liability insurance covering product
liability and other similar tort claims providing the Company coverage of
$8,000,000 subject to a substantial self-insured retention under the terms
of which the Company has the right to coordinate and control the management
of its claims and the defense of these actions.
The Company's Milwaukee based subsidiary, Telsmith, Inc., was a defendant in a
patent infringement action brought by Nordberg, Inc., a manufacturer of a
competing line of rock crushing equipment, seeking monetary damages and an
injunction to cease an alleged infringement of a patent on certain components
used in the production of its rock crushing equipment. In the patent suit
on March 30, 1995, the United States district Court for the Eastern District
of Wisconsin issued a ruling in favor of the Company and entered a declaratory
judgment in favor of Telsmith, Inc. and against Plaintiff Nordberg, Inc.
declaring that claims 8 through 11 and 13 of Nordberg's United States patent
No. 4,478, 373, entitled "Conical Crusher" are invalid. The Court also entered
judgment in favor of Telsmith, Inc. and against Nordberg, Inc. dismissing
Nordberg's claim of infringement against Telsmith. The Company was naturally
pleased with the court's decision, but has filed a Notice of Appeal asking
the United States Court of Appeals for the Federal Circuit to overturn the
trial court's decision not to award Telsmith its attorney's fees in the
case. As of May 1, 1995, Nordberg has not appealed, although it has
additional time to do so.
In the event of an appeal by Nordberg, the Company's patent counsel are
confident that the trial court's decision on invalidity and infringement will
stand and are hopeful that the Federal Circuit will overturn the trial court's
decision not to award Telsmith's attorney's fees.
On October 28, 1993, the Company was also named as a defendant in a patent
infringement action brought by Gencor, Inc., a manufacturer of a competing line
of asphalt plants, seeking monetary damages and an injunction to cease an
alleged plant product line. This case was filed in the U.S. District Court
for the Middle District of Florida, Orlando Division, and is currently in
the discovery phase. Management believes this case to be without merit and
intends to vigorously defend this suit; however, due to the uncertainties
inherent in the litigation process, the Company is unable to predict the
ultimate outcome of this litigation.
Management has reviewed all claims and lawsuits and, upon the advice of its
litigation counsel, has made provision for any estimable losses; however, the
Company is unable to predict the ultimate outcome of the outstanding claims and
lawsuits.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been material developments in the legal proceedings previously
reported by the registrant since the filing of its Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, described on Part I-Item 2,
"Contingencies" of this report. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Part I - Item 2
"Contingencies" of this Report.
Item 6. Exhibits
(a) The following Exhibits are filed with this Report:
11 Statement Regarding Computation of Per Share Earnings.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed for the three months ended
March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASTEC INDUSTRIES, INC.
(Registrant)
5/8/95 /s/ J. Don Brock
Date J. Don Brock
Chairman of the Board
and President
5/8/95 /s/ Albert E. Guth
Date Albert E. Guth
Senior Vice President
Treasurer , Secretary
and Principal Financial
Officer
<PAGE>
EXHIBIT 11
Statement Regarding Computation of Per Share Earnings
ASTEC INDUSTRIES, INC.
EXHIBIT (11) - COMPUTATIONS OF EARNINGS PER SHARE
3/31/95
(in thousands)
Shares for Earnings Per Share Computations:
Primary:
Weighted average outstanding during year 10,011
Common Stock equivalents for stock options 127
TOTAL 10,138
Fully Diluted:
Weighted average outstanding during year 10,011
Common Stock equivalents for stock options 127
TOTAL 10,138
Earnings Applicable to Common Stock:
Net Income 2,516
Earnings Per Share (Based on Weighted Average Number
of Common and Common Equivalent Shares Outstanding):
Net Income .25
Additional Computations of EPS:
Fully Diluted:
Net Income .25
<PAGE>
The Exhibits are numbered in accordance with Item 601 of Regulation S-K.
Dilutive effect of common stock equivalents on both primary and fully diluted
Earnings Per Share is less than 3% and, in accordance with APB Opinion No. 15,
Earnings Per Share on the face of the Statements of Income is based on only
the weighted average number of common shares outstanding. The above
calculations have been provided for reporting purposes only.
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