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, 2000.
[ ] 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 _______
Indicate the number of shares outstanding of each of the registrant's classes
of stock as of the latest practicable date.
Class Outstanding at May 5, 2000
Common Stock, par value $0.20 19,208,062
ASTEC INDUSTRIES, INC.
INDEX Page Number
PART I - Financial Information
Item 1. Financial Statements-Unaudited
Consolidated Balance Sheets as of
March 31, 2000 and December 31, 1999 1
Consolidated Statements of Income
for the Three Months Ended March 31, 2000
and 1999 2
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2000
and 1999 3
Notes to Unaudited Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 6
PART II - Other Information
Item 1. Legal Proceedings 12
Item 5. Other Items 12
Item 6. Exhibits and Reports on Form 8-K 12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ACCOUNT DESCRIPTION MARCH 31, DECEMBER 31,
2000 1999
UNAUDITED (Note 1)
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 6,478 $ 3,725
RECEIVABLES - NET 102,197 72,948
INVENTORIES 108,845 104,842
PREPAID EXPENSES AND OTHER 10,987 11,734
TOTAL CURRENT ASSETS 228,507 193,249
PROPERTY AND EQUIPMENT - NET 110,412 109,388
GOODWILL 35,496 36,300
OTHER ASSETS 5,761 15,604
TOTAL ASSETS $380,176 $354,541
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
NOTES PAYABLE $85 $85
CURRENT MATURITIES OF LONG-TERM DEBT 511 511
ACCOUNTS PAYABLE - TRADE 43,526 36,430
OTHER ACCRUED LIABILITIES 42,050 41,334
TOTAL CURRENT LIABILITIES 86,172 78,360
LONG-TERM DEBT,
LESS CURRENT MATURITIES 111,893 102,685
OTHER LONG-TERM LIABILITIES 6,070 6,763
TOTAL SHAREHOLDERS' EQUITY 176,041 166,733
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $380,176 $354,541
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
NET SALES $140,872 $112,478
COST OF SALES 107,114 84,469
GROSS PROFIT 33,758 28,009
S,G, & A EXPENSES 18,255 13,940
INCOME FROM OPERATIONS 15,503 14,069
INTEREST EXPENSE 2,186 694
OTHER INCOME, NET OF EXPENSE 802 643
INCOME BEFORE INCOME TAXES 14,119 14,018
INCOME TAXES 5,492 5,451
NET INCOME $ 8,627 $ 8,567
EARNINGS PER COMMON SHARE
BASIC $ 0.45 $ 0.45
DILUTED $ 0.44 $ 0.43
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 19,140,293 18,988,549
DILUTED 19,828,565 19,814,701
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 8,627 $ 8,567
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
DEPRECIATION AND AMORTIZATION 3,445 2,727
PROVISION FOR DOUBTFUL ACCOUNTS 92 506
PROVISION FOR INVENTORY RESERVE 802 698
PROVISION FOR WARRANTY RESERVE 990 1,880
(GAIN) ON SALE OF FIXED ASSETS (3,325) (103)
(GAIN) ON SALE OF LEASE PORTFOLIO (465) (80)
FOREIGN CURRENCY TRANSACTION (GAIN) (42)
(INCREASE) DECREASE IN:
TRADE RECEIVABLES (14,138) (13,193)
FINANCE RECEIVABLES (4,522) (11,983)
INVENTORIES (3,715) (7,370)
PREPAID EXPENSES AND OTHER 1,926 (41)
OTHER RECEIVABLES (1,361) (83)
OTHER NON-CURRENT ASSETS (394) (14)
INCREASE (DECREASE) IN:
ACCOUNTS PAYABLE 6,918 11,499
ACCRUED PRODUCT WARRANTY (1,280) (1,423)
OTHER ACCRUED LIABILITIES (292) 2,711
INCOME TAXES PAYABLE 4,305 3,146
TOTAL ADJUSTMENTS (11,056) (11,123)
NET CASH (USED) BY
OPERATING ACTIVITIES (2,429) (2,556)
CASH FLOWS FROM INVESTING ACTIVITIES
PROCEEDS FROM SALE OF
PROPERTY AND EQUIPMENT - NET 7 3,194
EXPENDITURES FOR - PROPERTY
AND EQUIPMENT (4,918) (5,282)
NET CASH USED BY INVESTING ACTIVITIES (4,911) (2,088)
CASH FLOWS FROM FINANCING ACTIVITIES:
NET BORROWINGS UNDER REVOLVING
CREDIT AGREEMENT 9,669 5,727
PROCEEDS FROM ISSUANCE OF
COMMON STOCK 424 755
NET CASH PROVIDED BY
FINANCING ACTIVITIES 10,093 6,482
NET INCREASE IN CASH 2,753 1,838
CASH AT BEGINNING OF PERIOD 3,725 5,353
CASH AT END OF PERIOD $ 6,478 $ 7,191
ASTEC INDUSTRIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X promulgated under the Securities Act of 1933.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000.
The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Astec Industries, Inc. and subsidiaries
annual report on Form 10-K for the year ended December 31, 1999.
Note 2. Receivables.
Receivables are net of allowance for doubtful accounts of $1,989,000 and
$1,966,000 for March 31, 2000 and December 31, 1999, respectively.
Note 3. Inventories
Inventories are stated at the lower of first-in, first-out cost or market and
consist of the following:
(in thousands)
March 31, 2000 December 31, 1999
Raw Materials $ 38,351 $ 45,641
Work-in-Process 25,405 15,884
Finished Goods 45,089 43,317
Total $ 108,845 $ 104,842
Note 4. Property and Equipment
Property and equipment is stated at cost. Property and equipment is net of
accumulated depreciation of $46,655,000 and $44,503,000 for March 31, 2000 and
December 31, 1999, respectively.
Note 5. Earnings Per Share
Basic and diluted earnings per share are calculated in accordance with SFAS
No. 128. Basic earnings per share exclude any dilutive effects of options,
warrants and convertible securities.
Notes to Unaudited Financial Statements - Continued
The following table sets forth the computation of basic and diluted
earnings per share:
Three Months Ended
March 31,
2000 1999
Numerator:
Net income $8,627,000 $8,567,000
Denominator:
Denominator for basic
earnings per share 19,140,293 18,988,549
Effect of dilutive
securities:
Employee stock options 688,272 826,152
Denominator for
diluted earnings per share 19,828,565 19,814,701
Earnings per common
share: Basic Diluted
$0.45 $0.45
$0.44 $0.43
Note 6. Comprehensive Income
Total comprehensive income was $8,627,000 for the three months ended
March 31, 2000 and $8,567,000 for the three months ended March 31, 1999.
Note 7. Contingent Matters
Certain customers have financed purchases of Astec products through
arrangements in which the Company is contingently liable for customer debt
aggregating approximately $11,039,000 at March 31, 2000 and $11,776,000 at
December 31, 1999.
Note 8. Segment Information
(in thousands)
Three months ended
March 31, 2000
Hot-mix Aggregate Mobile Asphalt Pipeline and
Asphalt Processing Construction Underground
Plants Equipment Equipment Construction All
Group Others Total
Revenues
from
external
customers $43,189 $53,752 $18,193 $17,692 $8,046 $140,872
Intersegment
revenues 6,524 4,559 0 505 210 11,798
Segment
profit $ 5,072 $ 6,898 $ 3,361 $ 1,033 ($7,362) $ 9,002
Three months ended
March 31, 1999
Hot-mix Aggregate Mobile Asphalt Pipeline and
Asphalt Processing Construction Underground
Plants Equipment Equipment Utility
Construction All
Group Others Total
Revenues
from
external
customers $49,700 $38,207 $17,503 $6,759 $308 $112,477
Intersegment
revenues 2,414 2,916 0 6 1,151 6,487
Segment
profit $6,852 $5,444 $3,180 $329 ($7,058) $8,747
Notes to Unaudited Financial Statements - Continued
In prior periods the Pipeline and Underground Utility Construction Group
did not meet the requirements for disclosure as a separate reportable segment.
American Augers, Inc., which the Company acquired in October 1999 and Trencor,
Inc. comprise the Pipeline and Underground Utility Construction segment.
Reconciliations of the reportable segment totals for profit or loss to the
Company's consolidated totals are as follows:
(in thousands)
Three months ended
March 31,
2000 1999
Profit:
Total profit for
reportable segments $16,364 $15,805
Other profit (loss) (7,362) (7,058)
Equity in (loss)/income
of joint venture (32) 43
Elimination of
intersegment profit (343) (223)
Total consolidated net
income $8,627 $8,567
Note 9. Legal Matters
There have been no material developments in legal proceedings previously
reported. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Contingencies" in Part I - Item 2 of this Report.
Note 10. Seasonality
Due to varied product lines, the Company's business is becoming less
seasonal. Approximately 25% of the Company's business volume typically occurs
during the first three months of the year.
Item 2. Management's Discussion and Analysis Of Financial Condition And
Results Of Operations
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 (within the meaning of the Private Securities Litigation Reform Act
of 1995) 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, which include the risk factors discussed
in this report, and other risk factors that are discussed from time to time in
the Company's reports filed with the SEC. 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, 2000, net sales increased to
$140,872,000 from $112,478,000 for the three months ended March 31, 1999,
representing a 25.2% increase. The acquisition of Breaker Technology, Inc. in
August 1999, American Augers, Inc. in October 1999, and Superior Industries of
Morris, Inc. in November 1999 accounted for 94% of the increase in net sales
during the first quarter of 2000 over the first quarter of 1999.
International sales for the first quarter of 2000 increased to $12,258,000
from $10,236,000 for the same period of 1999.
Gross profit for the three months ended March 31, 2000 increased to
$33,758,000 from $28,009,000 for the three months ended March 31, 1999, while
the gross profit percentage for the three months ended March 31, 2000
decreased slightly to 24.0% from 24.9% for the three months ended March 31,
1999. The decrease in gross profit percentage relates primarily to
production inefficiencies relating to the implementation of improvements to
the manufacturing process at the Astec, Inc. subsidiary and a combination of
less than expected sales volume and under utilization of plant capacity due to
product mix at Telsmith, Inc. Sales at Telsmith during the first quarter
included individual machine sales but did not include the normal aggregate
"system" sales.
Selling, general and administrative expenses for the three months ended March
31, 2000 were $18,255,000 or 13.0% of net sales, compared to $13,940,000 or
12.4% of net sales for the three months ended March 31, 1999. Approximately
$2,898,000, or 67.2% of the increase in selling, general and administrative
expenses for the three months ended March 31, 2000 compared to the same
quarter in 1999, relates to the acquisitions of Breaker Technology, Inc.,
American Augers, Inc., and Superior Industries of Morris, Inc. The remaining
increase was primarily attributed to increased salaries and related benefit
expense for additional personnel in various departments.
Interest expense increased to $2,186,000 for the three months ended March 31,
2000 from $694,000 for the three months ended March 31, 1999. Interest
expense as a percentage of net sales increased to approximately 1.7% for the
three months ended March 31, 2000 from .6% for the quarter ended March 31,
1999. The increase in interest expense relates mainly to debt incurred in
connection with the acquisitions of Breaker Technology, Inc., American Augers,
Inc., and Superior Industries of Morris, Inc. during the third and fourth
quarters of 1999.
Other income, net of other expense, was $802,000, or .6% of net sales for the
quarter ended March 31, 2000, compared to other income, net of expense of
$643,000, or .6% of net sales for the quarter ended March 31, 1999.
Income tax expense for the first quarter of 2000 increased to $5,492,000 from
$5,451,000 at March 31, 1999, an increase of $41,000 or .8%. Tax expense is
3.9% and 4.8% of net sales for the three months ended March 31, 2000 and 1999,
respectively. The effective tax rate for the three months ended March 31,
2000 and 1999, was 38.9%.
Backlog of orders at March 31, 2000 was $116,299,000 compared to $114,520,000
at March 31, 1999, restated for acquisitions.
Liquidity and Capital Resources
As of March 31, 2000, the Company had working capital of $142,335,000
compared to $114,889,000 at December 31, 1999.
Total short-term borrowings, including current maturities of long-term debt,
were $596,000 at March 31, 2000 and December 31, 1999. The current portion of
outstanding Industrial Development Revenue Bonds accounted for $500,000 of the
current maturities of long-term debt at March 31, 2000 and December 31, 1999.
Long-term debt, less current maturities, increased to $111,893,000 at
March 31, 2000 from $102,685,000 at December 31, 1999, an increase of
$9,208,000. At March 31, 2000 debt of approximately $92,120,000 was
outstanding under the revolving credit facility and $19,700,000 was the
aggregate principal amount of Industrial Revenue Bonds was outstanding. The
increase in debt from December 31, 2000 relates to the funding of working
capital needs using the revolving credit facility.
Capital expenditures in 2000 for plant expansion and for further
modernization of the Company's manufacturing processes are expected to be
approximately $19,100,000. The Company expects to finance these expenditures
using the revolving credit facility. Capital expenditures for the three
months ended March 31, 2000 were $5,627,000.
Effective April 7, 2000, the Company renegotiated its revolving credit
facility and increased the amount of available credit from $90,000,000 to
$150,000,000. As part of the revolving credit facility, Astec Industries,
Inc. may borrow up to $130,000,000, while Astec Financial Services, Inc. has a
segregated portion of up to $50,000,000. The Company had two term loans
outstanding at December 31, 1999 totaling $35,000,000, which were rolled into
the revolving credit facility. At March 31, 2000, Astec Financial Services,
Inc. had utilized $23,244,000 of facility. Advances under this line of credit
are limited to "Eligible Receivables" of Astec Financial Services, Inc. as
defined in the credit agreement that governs the credit facility. The Company
was in compliance with all financial covenants related to the line of credit
at March 31, 2000.
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 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.
Risk Factors
A decrease in government funding of highway construction and maintenance
may adversely affect our operating results
Many of our customers depend substantially on government funding of highway
construction and maintenance and other infrastructure projects. Federal
government funding of infrastructure projects is usually accomplished through
bills, which establish funding over a multi-year period. The most recent
spending bill was signed into law in June 1998 and covers federal spending
through 2003. We cannot assure you that this legislation will not be revised
in future congressional sessions, that recent increases in federal funding of
infrastructure will continue or that federal funding will not decrease in the
future, especially in the event of an economic recession. In addition,
Congress could pass legislation in future sessions, which would allow for the
diversion of highway funds for other national purposes or could restrict
funding of infrastructure projects unless states comply with certain federal
policies. Any decrease or delay in government funding of highway construction
and maintenance and other infrastructure projects could reduce our revenues
and profits.
Downturns in the general economy or the commercial construction industry may
adversely affect our revenues and operating results
Demand for many of our products, especially in the commercial construction
industry, is cyclical. Sales of our products are sensitive to the state of
the U.S., foreign and regional economies in general, and in particular,
changes in commercial construction spending and government infrastructure
spending. We could face a downturn in the commercial construction industry
based upon a number of factors, including:
- -- the level of interest rates;
- -- availability of funds for construction;
- -- labor disputes in the construction industry causing work stoppages;
- -- energy or building materials shortages; and
- -- inclement weather.
General economic downturns, including any downturns in the commercial
construction industry, could result in a material decrease in our revenues and
operating results.
Acquisitions that we have made in the past and future acquisitions involve
risks that could adversely affect our future financial results
We have completed eight acquisitions since 1994 and plan to acquire
additional businesses in the future. We cannot guarantee that we will achieve
the benefits expected to be realized from our acquisitions. Our future
success may be limited because of unforeseen expenses, difficulties,
complications, delays and other risks inherent in acquiring businesses,
including the following:
- -- we may have difficulty integrating the financial and administrative
functions of acquired businesses
- -- acquisitions may divert management's attention from our existing operations
- -- we may have difficulty in competing successfully for available acquisition
candidates, completing future acquisitions or accurately estimating the
financial effect of any businesses we acquire
- -- we may have delays in realizing the benefits of our strategies for an
acquired business
- -- we may not be able to retain key employees necessary to continue the
operations of the acquired business
- -- acquisition costs may deplete significant cash amounts or may decrease our
operating income
- -- we may choose to acquire a company that is less profitable than we are or
has lower profit margins than we do
- -- future acquired companies may have unknown liabilities that could require
us to spend significant amounts of additional capital
Competition could reduce revenue from our products and services
We currently face strong competition in product performance, price and
service. Some of our national competitors have greater financial, product
development and marketing resources than we have. If competition in our
industry intensifies or our current competitors lower their prices for
competing products, we may be required to lower the prices we charge for our
products. We may also lose sales and be required to lower our prices as our
competitors further develop and enhance their product lines. This may reduce
revenue from our products and services.
We may face product liability claims or other liabilities due to the nature of
our business
We manufacture heavy machinery, which is used by our customers at excavation
and construction sites and on high-traffic roads. Any defect in, or improper
operation of, our equipment can result in personal injury and death, and
damage to or destruction of property, any of which could cause product
liability claims to be filed against us. The amount and scope of our
insurance coverage may not be adequate to cover all losses or liabilities we
may incur in the event of a product liability claim. We may not be able to
maintain insurance of the types or at the levels we deem necessary or adequate
or at rates we consider reasonable. Any liabilities not covered by insurance
could reduce our profitability or have an adverse effect on our financial
condition.
We may be adversely affected by governmental regulations
Our hot-mix asphalt plants contain air pollution control equipment that must
comply with performance standards promulgated by the Environmental Protection
Agency. We cannot assure you that these performance standards will not be
increased in the future. Changes in these requirements could cause us to
undertake costly measures to redesign or modify our equipment or otherwise
adversely affect the manufacturing processes of our products. Such changes
could have a material adverse effect on our operating results.
Also, due to the size and weight of some of the equipment that we
manufacture, we often are required to comply with conflicting state
regulations on the maximum weight transportable on highways and roads. In
addition, some states regulate the operation of our component equipment,
including asphalt mixing plants and soil remediation equipment, and most
states regulate the accuracy of weights and measures, which affect some of the
control systems that we manufacture. We cannot assure you that we will not
incur material costs or liabilities in connection with the regulatory
requirements applicable to our business.
An increase in the price of oil or decrease in the availability of oil could
reduce demand for our products.
A significant portion of our revenues relates to the sale of equipment that
produces asphalt mix. A major component of asphalt is oil and asphalt prices
correlate with the price and availability of oil. A material rise in the
price of oil or a material decrease in the availability of oil would increase
the cost of producing asphalt, which would likely decrease demand for asphalt,
resulting in decreased demand for our products. This could have a material
adverse effect on our revenues and results of operations.
We rely on proprietary technologies that we may be unable to protect from
infringement or which may infringe technology owned by others
We hold numerous patents covering technology and applications related to
many of our products and systems, and numerous trademarks and trade names
registered with the U.S. Patent and Trademark Office and in foreign countries.
There can be no assurance that the breadth or degree of protection of our
existing or future patents or trademarks will adequately protect us against
infringements, or that any pending patent or trademark applications will
result in issued patents or trademarks. There can also be no assurance that
our patents, registered trademarks or patent applications, if any, will be
upheld if challenged, or that competitors will not develop similar or superior
methods or products outside the protection of our patents. This could reduce
demand for our products and materially decrease our revenues. It is possible
that our existing patents, trademarks or other rights may not be valid or that
we may infringe existing or future patents, trademarks or proprietary rights
of our competitors. In the event that our products are deemed to infringe upon
the patents or proprietary rights of others, we could be required to modify
the design of our products, change the name of our products or obtain a
license for the use of some of the technologies used in our products. There
can be no assurance that we would be able to do any of the foregoing in a
timely manner, upon acceptable terms and conditions, or at all, and the
failure to do so could have an adverse effect on our business and results of
operations.
Our success depends on key members of our management and other employees
Dr. J. Don Brock, our Chairman and President, is of significant importance to
our business and operations. The loss of his services may adversely affect
our business. In addition, our ability to attract and retain qualified
engineers, skilled manufacturing personnel and other professionals, either
through direct hiring, or acquisition of other businesses employing such
professionals, will also be an important factor in determining our future
success.
We face risks of managing and expanding in international markets
For the first quarter of 2000, international sales represented approximately
8.6% of our total sales. We plan to continue to increase our presence in
international markets. In connection with any increase in international sales
efforts, we will need to hire, train and retain qualified personnel in
countries where language, cultural or regulatory barriers may exist. In
addition, international revenues are subject to the following risks:
- -- fluctuating currency exchange rates which can reduce the profitability of
foreign sales;
- -- the burden of complying with a wide variety of foreign laws and
regulations;
- -- dependence on foreign sales agents;
- -- political and economic instability of governments; and
- -- the imposition of protective legislation such as import or export barriers.
Our quarterly operating results are likely to fluctuate, which may
decrease our stock price
Our quarterly revenues, expenses and operating results have varied
significantly in the past and are likely to vary significantly from
quarter to quarter in the future. As a result, our operating results
may fall below the expectations of securities analysts and investors in
some quarters, which could result in a decrease in the market price of
our common stock. The reasons our quarterly results may fluctuate
include:
- -- general competitive and economic conditions;
- -- delays in, or uneven timing in the delivery of, customer orders;
- -- the introduction of new products by us or our competitors;
- -- product supply shortages; and
- -- reduced demand due to adverse weather conditions.
Period to period comparisons of such items are not necessarily
meaningful and, as a result, should not be relied on as indications of
future performance.
Our Articles of Incorporation, Bylaws, Rights Agreement and Tennessee
law may inhibit a takeover
Our charter, bylaws and Tennessee law contain provisions that may delay,
deter or inhibit a future acquisition, or an attempt to obtain control, of
Astec. This could occur even if our shareholders are offered an attractive
value for their shares or if a substantial number or even a majority of our
shareholders believe the takeover is in their best interest. These provisions
are intended to encourage any person interested in acquiring us or obtaining
control of us to negotiate with and obtain the approval of our Board of
Directors in connection with the transaction. Provisions that could delay,
deter or inhibit a future acquisition, or an attempt to obtain control, of us
include the following:
- -- a staggered Board of Directors;
- -- requiring a two-thirds vote of the total number of shares issued and
outstanding to remove directors other than for cause;
- -- requiring advanced notice of actions proposed by shareholders for
consideration at shareholder meetings;
- -- limiting the right of shareholders to call a special meeting of
shareholders;
- -- requiring that all shareholders entitled to vote on an action provide
written consent in order for shareholders to act without holding a
shareholders meeting; and
- -- the Tennessee Control Share Acquisition Act.
In addition, the rights of holders of our common stock will be subject
to, and may be adversely affected by, the rights of the holders of our
preferred stock that may be issued in the future and that may be senior to the
rights of holders of our common stock. On December 22, 1995, our Board of
Directors approved a Shareholder Protection Rights Agreement, which provides
for one preferred stock purchase right in respect of each share of our common
stock. These rights become exercisable upon a person or group of affiliated
persons acquiring 15% or more of our then-outstanding common stock by all
persons other than an existing 15% shareholder. This Rights Agreement also
could discourage bids for your shares of common stock at a premium and could
have a material adverse effect on the market price of your shares.
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 10-K
for the year ended December 31, 1999. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Contingencies" in
Part I - Item 2 of this Report.
Item 5. Other Items
The proxy statement solicited by the Board of Directors of the Company with
respect to the 2000 Annual Meeting of Shareholders will confer discretionary
authority on the proxies named therein to vote on any shareholder proposals
intended to be presented for consideration at such Annual Meeting that are
submitted to the Company after November 23, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit No. Description
3.1 Restated Charter of the Company (incorporated by reference to the
Company's Registration Statement on Form S-1, effective June 18,
1986, File No. 33-5348).
3.2 Articles of Amendment to the Restated Charter of the Company, effective
September 12, 1988 (incorporated by reference to the Company's
Annual Report on Form 10-K for the year ended December 31, 1988,
File No. 0-14714).
3.3 Articles of Amendment to the Restated Charter of the Company, effective
June 8, 1989 (incorporated by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1989, File No.
0-14714).
3.4 Articles of Amendment to the Restated Charter of the Company, effective
January 15, 1999 (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999,
File No. 0-14714).
3.5 Amended and Restated Bylaws of the Company, adopted March 14, 1990
(incorporated by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1989, File No. 0-14714).
4.1 Trust Indenture between City of Mequon and FirstStar Trust Company, as
Trustee, dated as of February 1, 1994 (incorporated by reference
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 0-14714).
4.2 Indenture of Trust, dated April 1, 1994, by and between Grapevine
Industrial Development Corporation and Bank One, Texas, NA, as
Trustee (incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993, File No. 0-14714).
4.3 Shareholder Protection Rights Agreement, dated December 22, 1995
(incorporated by reference to the Company's Current Report on Form
8-K dated December 22, 1995, File No. 0-14714).
27 Financial Data Schedule (EDGAR Filing Only).
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter ended March 31, 2000.
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)
/s/ J. Don Brock
Date J. Don Brock
Chairman of the Board
and President
/s/ F. McKamy Hall
Date F. McKamy Hall
Vice President and Chief
Financial Officer
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In Thousands
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
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<RECEIVABLES> 104,186
<ALLOWANCES> (1,989)
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<PP&E> 157,067
<DEPRECIATION> (46,655)
<TOTAL-ASSETS> 380,176
<CURRENT-LIABILITIES> 86,172
<BONDS> 0
0
0
<COMMON> 3,841
<OTHER-SE> 172,200
<TOTAL-LIABILITY-AND-EQUITY> 380,176
<SALES> 140,872
<TOTAL-REVENUES> 140,872
<CGS> 107,114
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<INCOME-TAX> 5,493
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