PART I
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ACCOUNT DESCRIPTION MARCH 31 DECEMBER MARCH 31
1996 1995 1995
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $1,190 $3,133 $2,725
RECEIVABLES - NET 29,999 27,671 36,974
INVENTORIES 59,805 55,883 69,585
REFUNDABLE INCOME TAX 2,342
PREPAID EXPENSES AND OTHER 9,216 7,567 5,760
TOTAL CURRENT ASSETS 100,210 96,596 115,044
PROPERTY AND EQUIPMENT - NET 53,500 51,709 46,715
OTHER ASSETS 3,270 6,051 12,865
TOTAL ASSETS $156,980 $154,356 $174,624
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
NOTES PAYABLE $1,222 $3 $7,887
CURRENT MATURITIES OF
LONG-TERM DEBT 598 771 517
ACCOUNTS PAYABLE - TRADE 18,930 15,878 20,641
OTHER ACCRUED LIABILITIES 20,131 21,929 28,048
TOTAL CURRENT LIABILITIES 40,881 38,581 57,093
LONG-TERM DEBT, LESS
CURRENT MATURITIES 17,795 17,150 23,310
OTHER LONG-TERM LIABILITIES 317 2,724 295
TOTAL SHAREHOLDERS' EQUITY 97,987 95,901 93,926
TOTAL LIABILITIES AND
SHAREHOLDER' EQUITY $156,980 $154,356 $174,624
<PAGE>
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1996 1995
NET SALES $59,570 $57,544
COST OF SALES 45,748 43,907
GROSS PROFIT 13,822 13,637
S,G, & A EXPENSES 8,779 9,448
PATENT SUIT EXPENSES 219 60
INCOME FROM OPERATIONS 4,824 4,129
INTEREST EXPENSE 282 467
OTHER INCOME, NET OF EXPENSE 231 543
INCOME BEFORE INCOME TAXES 4,773 4,205
INCOME TAXES 1,947 1,689
NET INCOME $2,826 $2,516
EARNINGS PER COMMON SHARE $0.28 $0.25
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
OUTSTANDING 10,078,397 10,010,574
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $2,826 $2,516
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 1,396 1,317
PROVISION FOR DOUBTFUL ACCOUNTS 113 87
PROVISION FOR INVENTORY RESERVE 472 490
PROVISION FOR WARRANTY RESERVE 627 941
FOREIGN CURRENCY TRANSLATION ADJUSTMENT (10)
(GAIN) LOSS ON SALE OF FIXED ASSETS (7) (52)
(INCREASE) DECREASE IN:
RECEIVABLES (2,535) (6,673)
INVENTORIES (4,394) (13,073)
PREPAID EXPENSES AND OTHER 692 (374)
OTHER RECEIVABLES 95 (76)
OTHER ASSETS 2,697 (106)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 3,052 6,229
ACCRUED PRODUCT WARRANTY (565) (726)
OTHER ACCRUED LIABILITIES (7,271) 75
TAXES PAYABLE 2,990 1,129
TOTAL ADJUSTMENTS (2,638) (10,822)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 188 (8,306)
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY
AND EQUIPMENT - NET 50 10
EXPENDITURES FOR PROPERTY AND EQUIPMENT (3,146) (5,266)
CASH PAYMENTS IN CONNECTION WITH BUSINESS
COMBINATION, NET OF CASH ACQUIRED (835)
NET CASH USED BY INVESTING ACTIVITIES (3,096) (6,091)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET BORROWINGS UNDER REVOLVING
CREDIT LOAN 472 7,615
BORROWINGS (REPAYMENTS) UNDER LOAN
AND NOTE AGREEMENTS 1,219 (964)
CASH PAID FOR TREASURY STOCK (768)
PROCEEDS FROM ISSUANCE OF COMMON STOCK 42
NET CASH PROVIDED BY FINANCING ACTIVITIES 965 6,651
NET (DECREASE) IN CASH (1,943) (7,746)
CASH AT BEGINNING OF PERIOD 3,133 10,471
CASH AT END OF PERIOD $1,190 $2,725
<PAGE>
SECURITIES & EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended March 31, 1996.
[ ] 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
incorporation or organization) Identification No.)
4101 Jerome Avenue, Chattanooga, Tennessee 37407
(Address of Principal Executive Offices) (Zip Code)
(423) 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, 1996 was 10,037,199.
ASTEC INDUSTRIES, INC.
INDEX Page Number
PART I - Financial Information
Item 1. Financial Statements-Unaudited
Consolidated Balance Sheets as of
March 31, 1996, December 31, 1995
and March 31, 1995
Consolidated Statements of Income
for the Three Months Ended March 31,
1996 and 1995
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1996
and 1995
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
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 $1,257,000,
$1,279,000 and $1,864,000 for March 31, 1996, December 31, 1995 and March 31,
1995, 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, December 31, March 31,
1996 1995 1995
Raw Materials $25,639 $23,710 $23,822
Work-in-Process 11,607 10,385 20,390
Finished Goods 22,559 21,788 25,373
Total $59,805 $55,883 $69,585
4. Property and equipment is stated at cost. Property and equipment is net of
accumulated depreciation of $24,164,000, $22,957,000 and $22,493,000 for
March 31, 1996, December 31, 1995, and March 31, 1995, 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 the Company is contingently liable for customer debt
aggregating approximately $7,423,000 at March 31, 1996, $7,362,000 at
December 31, 1995, and $12,485,000 at March 31, 1995.
7. There has been one development in legal proceedings previously reported.
See "Management's Discussion and Analysis of Financial Condition 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.
9. As disclosed in Note 2 to the Company's financial statements included in
the 1995 Annual Report, the Company acquired the remaining shares of
Wibau-Astec on November 7, 1994 and on October 17, 1994 the Company acquired
the operating assets and liabilities of
Gibat Ohl, and subsequently changed its name to Astec-Europa. Effective
June 30, 1995 the Company sold 100% of the stock of Wibau-Astec to Wirtgen
Gesellschaft mit beschrankter Haftung, a German equipment manufacturer.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONT.
Also, as disclosed in Note 3 to the Company's financial statements included in
the 1995 Annual Report, the Company determined that it would no longer support
Astec-Europa and on February 6, 1996, Astec-Europa management filed a request
for bankruptcy in Germany. The following unaudited pro forma summary presents
the consolidated results of operations for the three months ended March 31,
1995 as if the disposition of Wibau-Astec and the abandonment of
Astec-Europa had occurred at the beginning of 1995 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 transactions occurred at the beginning of 1995 or of results which may
occur in the future.
(in thousands)
Three months ended
March 31, 1995
Net sales $53,224
Net income 3,009
Net income per common and
common equivalent share $ .30
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Results of Operations
For the three-months ended March 31, 1996, net sales increased to $59,570,000
from $57,544,000 for the three-months ended March 31, 1995, representing a
3.5% increase. International sales for the first quarter of 1996 were
$10,087,000 compared to $8,036,000 for the first quarter of 1995, an increase
of $2,051,000 or 25.50%. International sales represent 16.9%
and 14.0% of total sales for the first quarter of 1996 and 1995, respectively.
Gross profit for the quarter ended March 31, 1996 increased slightly to
$13,822,000, from $13,637,000 for the quarter ended March 31, 1995. The gross
profit percentage for the three months ended March 31, 1996 and 1995 was 23.2%
and 23.7%, respectively. Competition has been intense in the asphalt plant
industry during late 1995 and early 1996 with aggressive
pricing by several competitors negatively affecting industry margins.
Selling, general, and administrative expenses for the first quarter of 1996
were $8,998,000 or 15.1% of net sales, compared to $9,508,000 or 16.5% of net
sales for the same period of 1995. During the first quarter of 1995 the
selling, general and administrative expenses for the German operations,
totaling $1,399,000, were included in consolidated operations.
Selling, general and administrative expenses increased approximately $889,000
for the first quarter of 1996 over the first quarter of 1995, excluding
German operations. Expenses related to the Con-Expo trade show and legal fees
related to the Gencor patent litigation were
approximately $255,000 and $219,000, respectively in the first quarter of 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION - CONT.
Interest expense decreased to $282,000 for the quarter ended March 31, 1996
from $467,000 for the quarter ended March 31, 1995. Interest expense as a
percentage of net sales decreased to .5% for the quarter ended March 31, 1996
from .8% for the same period of 1995.
The decrease in interest expense for the first quarter of 1996 is attributable
to lower daily balances on the Company's revolving line of credit.
Other income, net of other expense, was $231,000, or .4% of net sales for the
quarter ended March 31, 1996, compared to other income, net of other expense
of $543,000, or .9% of net sales for the quarter ended March 31, 1995.
Income tax expense for the first quarter of 1996 increased to $1,947,000 from
$1,689,000 at March 31, 1995, an increase of $258,000 or 15.3%. Tax expense is
3.3% and 2.9% of net sales for the quarters ended March 31, 1996 and 1995,
respectively. The effective tax rate for the first quarter of 1996 is 40.8%
compared to an effective rate of 40.2% for the first quarter of 1995.
Backlog of orders at March 31, 1996 was $33,702,000 compared to $54,790,000
at March 31, 1995. The backlog at March 31, 1995 included $12,000,000 of
international orders for one subsidiary. Although international prospects are
strong, that subsidiary has no international orders as of March 31, 1996.
Our current backlog is much weaker than in 1995,
but we expect sales to improve.
Earnings per share were $.28 for the first quarter of 1996 compared to $.25
for the same period of 1995. See Note 9 to "Notes to Unaudited Consolidated
Financial Statements" for discussion of earnings per share excluding the
operations of Germany for 1995.
Liquidity and Capital Resources
As of March 31, 1996, the Company had working capital of $59,329,000 compared
to $57,951,000 at March 31, 1995.
Total short-term borrowings, including current maturities of long-term debt,
were $1,820,000 at March 31, 1996. Long-term debt less current maturities
was $17,795,000 at March 31, 1996. Debt outstanding at March 31, 1996
consists of industrial revenue bonds issued to finance capital expenditures, a
demand note payable to a related party (See Part -2, Item 13, "Certain
Relationships and Related Transactions" of this Report) and the revolving
line of credit.
Capital expenditures in 1996, for plant expansion and for further
modernization of the Company's manufacturing processes, are expected to
approach $5,500,000. The Company expects to finance these expenditures using
internally generated funds. Capital expenditures at March 31, 1996 were
$3,146,000.
The Company maintains a $22,000,000 unsecured revolving line of credit with
The First National Bank of Chicago that expires June 30, 1997. The
outstanding balance on the revolving line of credit at March 31, 1996 was
$5,295,000. The Company was in compliance with all financial covenants at
March 31, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION - CONT.
Contingencies
The Company is engaged in certain pending litigation involving claims or
other matters arising in the ordinary 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.
On October 28, 1993, the Company was 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 infringement of a patent on certain
components used in the production of its asphalt plant product line. This case
was filed in the
U.S. District Court for the Middle District of Florida, Orlando Division, and
went to trial on
January 22, 1996. On February 3, 1996, the jury returned a verdict in the
Company's favor holding that Astec's Double Barrel drum mixer does not infringe
the Gencor patent in question. Judgment on that jury verdict was entered by
the Court on February 5, 1996. It is anticipated that
Gencor will appeal. Management believes that Gencor's anticipated appeal is
without merit.
In a personal injury and product liability case styled Juana Irma Suarez and
Susana Medina Juarez v. Astec Industries, Inc., Barber-Greene Company, et al.,
in the District Court of Tarrant County Texas, 153rd Judicial District, Civil
Action No. 153-123018-89, after the first
case ended in a mistrial, the jury in a second trial during the week of
September 19, 1994, returned a verdict against the Company for compensatory
damages in the amount of $485,300, plus statutory prejudgment interest
commonly allowed in such cases under Texas law. The
Company appealed to the Texas Court of Appeals which on April 11, 1996
affirmed the judgment. The affirmed judgment, together with estimated
prejudgment interest, will be approximately $900,000. Settlement discussions
are under way with the plaintiffs under the
terms of which the Company would forego a further appeal to the Texas Supreme
Court in return for a reduced amount being paid to the Plaintiffs. The
Company has already asked the Texas
Court of Appeals to reconsider its ruling. Regardless of the outcome, the
Company anticipates asking its liability insurance carrier to reimburse it for
that portion of any amount paid to the Plaintiffs and incurred in defense costs
which exceeds the $1,000,000 self-insured retention that
is in effect in this case.
With the exception of the Suarez litigation, for which the Company
did not anticipate an adverse verdict and, therefore, did not establish
a reserve, management has reviewed all claims and lawsuits and, upon the
advice of its litigation counsel, has made provision for any estimable
losses, not withstanding the foregoing, the Company is unable to predict the
ultimate outcome of the outstanding claims and lawsuits.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There has been one development in the legal proceedings previously reported
by the registrant since the filing of its Annual Report on Form 10K for the
year ended December 31, 1995, 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 and Reports on Form 8-K
(a) The following Exhibits are filed with this Report:
11 Statement Regarding Computation of Per Share Earnings.
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K on February 9, 1996 and a report on
Form 8-K/A on February 9, 1996.
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)
5/7 /96 /s/ J. Don Brock
Date J. Don Brock
Chairman of the Board
and President
5/7 /96 /s/ Albert E. Guth
Date Albert E. Guth
Senior Vice President
Treasurer , Secretary
and Principal Financial
Officer
EXHIBIT 11
Statement Regarding Computation of Per Share Earnings
ASTEC INDUSTRIES, INC.
EXHIBIT (11) - COMPUTATIONS OF EARNINGS PER SHARE
3/31/96
(in thousands)
Shares for Earnings Per Share Computations:
Primary:
Weighted average outstanding during year 10,078
Common Stock equivalents for stock options 113
TOTAL 10,191
Fully Diluted:
Weighted average outstanding during year 10,078
Common Stock equivalents for stock options 114
TOTAL 10,192
Earnings Applicable to Common Stock:
Net Income $ 2,826
Earnings Per Share (Based on Weighted Average Number
of Common and Common Equivalent Shares Outstanding):
Net Income $.28
Additional Computations of EPS:
Fully Diluted:
Net Income $ .28
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.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1995
<CASH> 1,190
<SECURITIES> 0
<RECEIVABLES> 29,999
<ALLOWANCES> 1,257
<INVENTORY> 59,805
<CURRENT-ASSETS> 100,210
<PP&E> 77,664
<DEPRECIATION> 24,164
<TOTAL-ASSETS> 156,980
<CURRENT-LIABILITIES> 40,881
<BONDS> 0
0
0
<COMMON> 2,020
<OTHER-SE> 95,967
<TOTAL-LIABILITY-AND-EQUITY> 156,980
<SALES> 59,570
<TOTAL-REVENUES> 59,570
<CGS> 45,748
<TOTAL-COSTS> 54,746
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 113
<INTEREST-EXPENSE> 282
<INCOME-PRETAX> 4,773
<INCOME-TAX> 1,947
<INCOME-CONTINUING> 2,826
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,826
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
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