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, 1997.
[ ] 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)
(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, 1997 was 10,044,199.
<PAGE>
ASTEC INDUSTRIES, INC.
INDEX Page Number
PART I - Financial Information
Item 1. Financial Statements-Unaudited
Consolidated Balance Sheets as of
March 31, 1997, December 31, 1996
and March 31, 1996
Consolidated Statements of Income
for the Three Months Ended March 31,
1997 and 1996
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1997
and 1996
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
PART I ITEM I FINANCIAL STATEMENTS
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
ACCOUNT DESCRIPTION MARCH 31 DECEMBER 31
1997 1996
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 5,380 $ 3,382
RECEIVABLES - NET 40,394 34,603
INVENTORIES 61,257 56,764
REFUNDABLE INCOME TAX 2,071
PREPAID EXPENSES AND OTHER 8,765 7,507
TOTAL CURRENT ASSETS 115,796 104,327
PROPERTY AND EQUIPMENT - NET 56,035 54,317
OTHER ASSETS 13,018 9,209
TOTAL ASSETS $184,849 $167,853
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
NOTES PAYABLE $ 473 $ 1,551
CURRENT MATURITIES OF LONG-TERM DEBT 1,452 500
ACCOUNTS PAYABLE - TRADE 21,865 14,614
OTHER ACCRUED LIABILITIES 23,776 17,778
TOTAL CURRENT LIABILITIES 47,566 34,443
LONG-TERM DEBT, LESS CURRENT MATURITIES 29,309 30,497
OTHER LONG-TERM LIABILITIES 5,024 3,520
TOTAL SHAREHOLDERS' EQUITY 102,950 99,393
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $184,849 $167,853
<PAGE>
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
1997 1996
NET SALES $62,980 $59,570
COST OF SALES 47,105 45,748
GROSS PROFIT 15,875 13,822
S,G, & A EXPENSES 9,573 8,998
INCOME FROM OPERATIONS 6,302 4,824
INTEREST EXPENSE 553 282
OTHER INCOME, NET OF EXPENSE 104 231
INCOME BEFORE INCOME TAXES 5,853 4,773
INCOME TAXES 2,328 1,947
NET INCOME $3,525 $2,826
EARNINGS PER COMMON SHARE $0.35 $0.28
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 10,039,921 10,078,397
<PAGE>
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, MARCH 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $3,525 $2,826
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 1,491 1,396
PROVISION FOR DOUBTFUL ACCOUNTS 74 113
PROVISION FOR INVENTORY RESERVE 380 472
PROVISION FOR WARRANTY RESERVE 491 627
(GAIN) LOSS ON SALE OF FIXED ASSETS 296 (7)
(INCREASE) DECREASE IN:
TRADE RECEIVABLES (6,017) (2,535)
FINANCE RECEIVABLES (4,198)
INVENTORIES (6,997) (4,394)
PREPAID EXPENSES AND OTHER (1,256) 692
OTHER RECEIVABLES 451 95
OTHER ASSETS 29 2,697
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 7,252 3,052
ACCRUED PRODUCT WARRANTY (70) (565)
OTHER ACCRUED LIABILITIES 3,821 (7,271)
TAXES PAYABLE 5,328 2,990
TOTAL ADJUSTMENTS 1,075 (2,638)
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 4,600 188
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF PROPERTY
AND EQUIPMENT - NET 271 50
EXPENDITURES FOR PROPERTY AND
EQUIPMENT (1,591) (3,146)
NET CASH USED BY INVESTING ACTIVITIES (1,320) (3,096)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET BORROWINGS (REPAYMENTS) UNDER
REVOLVING CREDIT LOAN (3,322) 472
NET BORROWINGS UNDER LOAN AND NOTE
AGREEMENTS 2,008 1,219
CASH PAID FOR TREASURY STOCK (768)
PROCEEDS FROM ISSUANCE OF COMMON
STOCK 32 42
NET CASH PROVIDED BY FINANCING
ACTIVITIES (1,282) 965
NET (DECREASE) IN CASH 1,998 (1,943)
CASH AT BEGINNING OF PERIOD 3,382 3,133
CASH AT END OF PERIOD $5,380 $1,190
<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
$1,258,000, $1,267,000 and $1,257,000 for March 31, 1997, December 31, 1996
and March 31, 1996, 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,
1997 1996 1996
Raw Materials $ 24,813 $ 23,541 $ 25,639
Work-in-Process 11,252 9,038 11,607
Finished Goods 25,192 24,185 22,559
Total $ 61,257 $ 56,764 $ 59,805
4. Property and equipment is stated at cost. Property and equipment
is net of accumulated depreciation of $28,353,000, $27,066,000 and
$24,164,000 for March 31, 1997, December 31, 1996, and
March 31, 1996, 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 $3,278,000 at March 31,
1997, $4,618,000 at December 31, 1996, and $7,423,000 at March 31, 1996.
7. There have been no material developments 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. In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per share
and to restate all prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of
stock options will be excluded. The Company has not yet determined what
the impact of Statement 128 will be on the calculation of fully diluted
earnings per share.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
When used in this report, press releases and elsewhere by
management or the Company from time to time, the words, "believes,"
"anticipates," and "expects" and similar expressions are intended to identify
forward-looking statements that involve certain risks and uncertainties. A
variety of factors could cause actual results to differ materially from those
anticipated in the Company's forward-looking statements,
some of which include market conditions in the road building and related
construction equipment industry, competition in the Company's markets
from existing and new competitors and the products or services
they provide, the ability to expand in existing markets and penetrate new
markets, federal and state legislation affecting infrastructure, and other risk
factors that are discussed from time to time in the
Company's SEC reports. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date such
statements are made. The Company undertakes no
obligations to publicly release the results of any revisions to these forward-
looking statements that may be made to reflect events or circumstances after
the date such statements are made or to reflect the occurrence of
unanticipated events.
Results of Operations
For the three-months ended March 31, 1997, net sales increased to
$62,980,000 from $59,570,000 for the three-months ended March 31, 1996,
representing a 5.7% increase. International sales
for the first quarter of 1997 were $10,921,000 compared to $10,087,000 for
the first quarter of 1996, an increase of $834,000 or 8.30%. International
sales represent 17.3% and 16.9% of total sales for the first quarter of 1997
and 1996, respectively.
Gross profit for the quarter ended March 31, 1997 increased to
$15,875,000, from $13,822,000 for the quarter ended March 31, 1996, while the
gross profit percentage for the three months ended March
31, 1997 increased to 25.2% from 23.2% at March 31, 1996. Increased
gross profit relates to improved margins on some product lines and improved
efficiencies at some manufacturing locations.
Selling, general, and administrative expenses for the first quarter of
1997 were $9,573,000 or 15.2% of net sales, compared to $8,998,000 or 15.1%
of net sales for the same period of 1996.
Interest expense increased to $553,000 for the quarter ended March
31, 1997 from $282,000 for the quarter ended March 31, 1996. Interest expense
as a percentage of net sales increased to .9% for the
quarter ended March 31, 1997 from .5% for the same period of 1996. The
increase in interest expense for the first quarter of 1997 is mainly
attributable to increased usage of the Company's revolving line of credit
in connection with increased inventory and accounts receivable. The
increase in interest expense is also attributable to additional debt at the
subsidiary level. Additional debt at the subsidiary level consists of
notes payable for financing of equipment in inventory at one location and
the revolving line of credit at the Company's captive finance company.
Other income, net of other expense, was $104,000, or .2% of net
sales for the quarter ended March 31, 1997, compared to other income,
net of other expense, of $231,000, or .4% of net sales for the
quarter ended March 31, 1996. The decrease in other income, net of other
expense, relates to decreased license fee and interest income
during 1997 compared to 1996.
Income tax expense for the first quarter of 1997 increased to
$2,328,000 from $1,947,000 at March 31, 1996, an increase of $381,000 or 19.6%.
Tax expense is 3.7% and 3.3% of net sales for the
quarters ended March 31, 1997 and 1996, respectively. The effective tax
rate for the first quarter of 1997 is 39.7% compared to an effective rate of
40.8% for the first quarter of 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION - CONT.
Backlog of orders at March 31, 1997 was $60,193,000 compared to
$33,702,000 at March 31, 1996. The majority of the increase relates to a
significant increase in domestic orders for the products of one subsidiary.
Liquidity and Capital Resources
As of March 31, 1997, the Company had working capital of
$68,230,000 compared to $59,329,000 at March 31, 1996.
Total short-term borrowings, including current maturities of long-
term debt, were $1,925,000 at March 31, 1997 compared to $1,820,000 at March
31, 1996. Long-term debt less current maturities was
$29,309,000 at March 31, 1997 and $17,795,000 at March 31, 1996. The
increase of debt outstanding at March 31, 1997 compared to the same period of
1996 is due to the utilization of revolving lines of credit for
working capital needs, and the issuance of notes payable to finance equipment
in inventory by one subsidiary.
Capital expenditures in 1997, for plant expansion and for further
modernization of the Company's manufacturing processes, are expected to
approach $7,700,000. The Company expects to finance these
expenditures using internally generated funds. Capital expenditures at
March 31, 1997 were $1,591,000.
During April, 1997 the Company's Board of Directors approved an
issuer self-tender offer to purchase up to 2,000,000 shares of the Company's
Common Stock, representing approximately 20% of the
Company's outstanding shares of common stock as of March 10, 1997. On
May 2, 1997 the Company announced that the Company accepted for payment all
shares validly tendered and not withdrawn prior to
the expiration date at the purchase price of $10.50. The Company purchased
726,619 shares of its common stock in connection with their self-tender offer.
In connection with the above stock purchase, the Company entered into an
amended and restated Credit Agreement, dated as of May 5, 1997, with the First
National Bank of Chicago for an unsecured
revolving line of credit in the amount of $40,000,000 which expires on May
3, 2002. Due to the increased level of borrowing, the new loan agreement
contains restrictive principal covenant requirements and
interest rates that fluctuate in relation to the leverage ratio.
The captive finance company which operates as a subsidiary of the
Company, maintains a $15,000,000 revolving line of credit with AmSouth Bank.
The line of credit is guaranteed by the
Company. At March 3, 1997, the outstanding balance on the First Chicago
revolving line of credit was $10,000,000 while the outstanding balance on the
line of credit of the subsidiary was $6,308,000. Both
lines of credit contain principal covenants which require the Company to
maintain certain levels of net worth, leverage, fixed charge and interest
expense ratios, and limits capital expenditures. The Company
was in compliance with all financial covenants at March 31, 1997.
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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION - CONT.
Management has reviewed all claims and lawsuits and, upon the advice of
its litigation counsel, has made provision for any estimable losses.
Notwithstanding the foregoing, the Company is unable to
predict the ultimate outcome of any outstanding claims and lawsuits.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material developments 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, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" in Part I - Item 2 "Contingencies" of this Report.
PART II - OTHER INFORMATION - CONT.
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.
No reports on Form 8-K have been filed during the quarter ended
March 31, 1997.
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)
5/12 /97 /s/ J. Don Brock
Date J. Don Brock
Chairman of the Board
and President
5/12 /97 /s/ Richard W. Bethea, Jr.
Date Richard W. Bethea
Vice President, Corporate
Counsel and Secretary
<PAGE>
EXHIBIT 11
Statement Regarding Computation of Per Share Earnings
<PAGE>
ASTEC INDUSTRIES, INC.
EXHIBIT (11) - COMPUTATIONS OF EARNINGS PER SHARE
March 31, 1997 and 1996
(in thousands)
Shares for Earnings Per Share Computations: 1997 1996
Primary:
Weighted average outstanding during the year 10,040 10,078
Common Stock equivalents for stock options 103 113
Total 10,143 10,191
Fully Diluted:
Weighted average outstanding during the year 10,040 10,078
Common Stock equivalents for stock options 111 114
Total 10,151 10,192
Earnings applicable to Common Stock:
Net Income $3,525 $2,826
Earnings Per Share (Based on Weighted
Average Number of Common Equivalent
Shares Outstanding):
Net Income $.35 $.28
Additional Computations of EPS:
Fully Diluted:
Net Income $.35 $.28
[FN]
Dilutive effect of common stock 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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<PERIOD-END> MAR-31-1997
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0
0
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<OTHER-SE> 100928
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