<PAGE>
SECURITIES AND 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: November 30, 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 0-2733
AZTEC MANUFACTURING CO.
(Exact name of registrant as specified in its charter)
TEXAS 75-0948250
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
400 North Tarrant, Crowley, Texas 76036
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 297-4361
----------------------------
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 outstanding of each of the issuer's classes of common
stock, as of the close of the period covered by this report.
Outstanding at November 30, 1996
Common Stock, $1.00 Par Value 6,089,244
----------------------------- ---------------------------------
Class Number of Shares
<PAGE>
AZTEC MANUFACTURING CO.
INDEX
-----
PART I. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets at
November 30, 1996 and February 29, 1996 3
Consolidated Condensed Statements of Income
Periods Ended November 30, 1996 and November 30, 1995 4
Consolidated Condensed Statements of Cash Flow
Periods Ended November 30, 1996 and November 30, 1995 5
Notes to Consolidated Condensed Financial
Statements 6
Computation of Income per Common Share 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
PART II. Other Information
-----------------
Item 2. Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
Page 2
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AZTEC MANUFACTURING CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
11/30/96 2/29/96
ASSETS UNAUDITED AUDITED
- ---------------------------------- -------------- -------------
<S> <C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 5,382,048 $ 416,223
ACCOUNTS RECEIVABLE (NET OF ALLOWANCE) 8,684,627 9,483,471
INVENTORIES:
RAW MATERIALS 4,415,848 4,934,538
WORK-IN-PROCESS 887,251 991,197
FINISHED GOODS 851,679 746,813
PREPAID EXPENSES AND OTHER 21,789 192,047
-------------- --------------
TOTAL CURRENT ASSETS $ 20,243,242 $ 16,764,289
PROPERTY, PLANT AND EQUIPMENT, NET 16,775,663 16,824,952
PROPERTY HELD FOR SALE, NET 398,971 1,504,756
INTANGIBLE ASSETS, NET 6,983,112 7,292,973
OTHER ASSETS 534,340 234,340
-------------- --------------
TOTAL ASSETS $ 44,935,328 $ 42,621,310
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
LONG TERM DEBT DUE WITHIN ONE YEAR $ 1,716,667 $ 1,558,926
ACCOUNTS PAYABLE 3,016,978 4,077,754
ACCRUED LIABILITIES 3,756,089 3,248,920
-------------- --------------
TOTAL CURRENT LIABILITIES $ 8,489,734 $ 8,885,600
LONG-TERM DEBT DUE AFTER ONE YEAR 8,013,888 9,516,472
DEFERRED INCOME TAX 1,058,993 1,058,993
SHAREHOLDERS' EQUITY:
COMMON STOCK, $1 PAR VALUE
SHARES AUTHORIZED - 25,000,000
SHARES ISSUED - 6,089,244 and 5,772,895 6,089,244 5,772,895
CAPITAL IN EXCESS OF PAR VALUE 10,176,885 9,283,268
RETAINED EARNINGS 11,832,715 8,830,213
LESS COMMON STOCK HELD IN TREASURY
(232,362 SHARES AT COST) (726,131) (726,131)
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY $ 27,372,713 $ 23,160,245
-------------- --------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 44,935,328 $ 42,621,310
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
Page 3
<PAGE>
AZTEC MANUFACTURING CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
11/30/96 11/30/95 11/30/96 11/30/95
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 14,287,180 $ 12,975,185 $ 42,411,873 $ 36,376,044
COSTS AND EXPENSES:
COST OF SALES 10,370,522 9,479,516 30,565,114 27,027,391
SELLING/G & A EXPENSE 1,993,807 1,908,659 6,062,102 5,495,699
INTEREST EXPENSE 197,089 210,919 686,600 738,353
OTHER (INCOME) EXPENSE (149,113) 166,431 135,815 47,069
------------- ------------- ------------- -------------
$ 12,412,305 $ 11,765,525 $ 37,449,631 $ 33,308,512
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 1,874,875 1,209,660 4,962,242 3,067,532
PROVISION FOR INCOME TAXES 740,726 477,797 1,959,657 1,211,809
------------- ------------- ------------- -------------
NET INCOME $ 1,134,149 $ 731,863 $ 3,002,585 $ 1,855,723
============= ============= ============= =============
INCOME PER SHARE:
INCOME PER SHARE - PRIMARY $ 0.20 $ 0.13 $ 0.53 $ 0.33
INCOME PER SHARE- FULLY DILUTED $ 0.20 $ 0.13 $ 0.52 $ 0.33
============= ============= ============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
Page 4
<PAGE>
AZTEC MANUFACTURING CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
NINE MONTHS ENDING
11/30/96 11/30/95
UNAUDITED UNAUDITED
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 3,002,585 $ 1,855,723
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATIONS:
PROVISION FOR BAD DEBTS 236,731 (56,668)
AMORTIZATION AND DEPRECIATION 1,984,988 1,623,128
GAINS ON SALE OF PROPERTY 1,310 397
INCREASE (DECREASE) FROM CHANGES IN ASSETS & LIABILITIES:
ACCOUNTS RECEIVABLE 562,113 1,011,631
INVENTORIES 517,770 509,355
PREPAID EXPENSE 170,258 62,752
OTHER ASSETS 17,191 (34,310)
ACCOUNTS PAYABLE (1,060,776) (613,763)
ACCRUED LIABILITIES 507,169 1,036,670
----------- -----------
NET CASH PROVIDED BY OPERATIONS 5,939,339 5,394,915
----------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
PURCHASE OF INVESTMENTS (300,000) 0
PURCHASE OF PROPERTY/PLANT/EQUIPMENT (1,538,053) (1,928,386)
PROCEEDS FROM THE SALE OF PROPERTY HELD FOR SALE 999,505 0
----------- -----------
NET CASH USED FOR
INVESTING ACTIVITIES (838,548) (1,928,386)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 1,209,966 20,400
CHANGE IN REVOLVING LOAN (6,420,378) (1,795,570)
CHANGE IN LONG TERM DEBT 5,075,446 (1,105,031)
----------- -----------
PURCHASE OF TREASURY STOCK 0 (726,131)
----------- -----------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (134,966) (3,606,332)
----------- -----------
INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS 4,965,825 (139,803)
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 416,223 192,764
----------- -----------
CASH & CASH EQUIVALENTS, END OF PERIOD $ 5,382,048 $ 52,961
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
Page 5
<PAGE>
AZTEC MANUFACTURING CO.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
1. A summary of the Company's significant accounting policies is presented on
Page 11 of its 1996 Annual Shareholders' Report.
2. In the opinion of Management of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position of the Company as of November 30, 1996, and the
results of operations and cash flows for the three-month and nine-month
periods ended November 30, 1996 and November 30, 1995.
3. The Company arranged a new credit facility with a new lender effective July
1, 1996. The arrangement is discussed in Management's Discussion and
Analysis of Financial Conditions. The facility included a $10 Million term
note for 6 years at a fixed rate of 7.86 percent and a $10 million
revolving note for 3 years at LIBOR plus 1 percent.
Page 6
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AZTEC MANUFACTURING CO.
COMPUTATION OF INCOME PER COMMON SHARE
--------------------------------------
<TABLE>
<CAPTION>
=========================================================================================
THREE MONTHS ENDING NINE MONTHS ENDING
11/30/96 11/30/95 11/30/9 6 11/30/95
<S> <C> <C> <C> <C>
=========================================================================================
Net Income Applicable to Common Shares $1,134,149 $ 731,863 $3,002,585 $1,855,723
=========================================================================================
Weighted Average Common and Common 5,823,924 5,515,698 5,823,924 5,668,762
Equivalent Shares Outstanding
=========================================================================================
Income Per Common Share: Primary $ .20 $ .13 $ .53 $ .33
Income Per Common Share: Fully Diluted $ .20 $ .13 $ .52 $ .33
=========================================================================================
Cash Dividend $ 0 $ 0 $ 0 $ 0
=========================================================================================
</TABLE>
Page 7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash provided from operations for the nine-month period ending November 30,
1996 was $5,939,000 compared to $5,395,000 during the same period in 1995.
Working capital on November 30, 1996, was $11,754,000, with a current ratio of
2.38 to 1. Improvements in utilization of working capital continued through
lower accounts receivable days outstanding and higher inventory turns.
Uses of cash during the period ended November 30, 1996 included the purchase of
equipment in the amount of $1,538,000 and the repayment of bank debt. Cash
generated from the exercise of stock options amounted to $1,210,000. The sale of
the idle Houston tubing property generated cash in the amount of $999,500. The
amount realized from the sale of this property was equal to the net book value
carried by the Company.
The Company arranged a new credit facility with a new lender effective July 1,
1996. This agreement is made up of a three year $10,000,000 revolving line of
credit and a six year $10,000,000 term note. The revolving line of credit will
be used for future acquisitions and working capital.
The Company's primary sources of liquidity and capital resources in the near
term will consist of cash flow from operations and available borrowings under
the Company's credit facility mentioned above. The Company's current
availability under the credit facility is approximately $10,000,000.
RESULTS OF OPERATIONS
----------------------
Consolidated net sales were up for the three-month and nine-month periods ending
November 30, 1996 as compared to the same periods in 1995. Net sales in the
Electrical Products Segment were down 9 percent for the three-month period
ending November 30, 1996 and were flat for the nine-month period ending November
30, 1996, as compared to the same periods in 1995. Backlogs at each of the three
companies that make up the Electrical Products Segment continue to improve. Net
sales in the Company's Galvanizing Segment were up 44 percent for the three and
nine-month periods ending November 30, 1996, as compared to the same periods in
1995. These increases were due to higher volumes of steel processed as well as
improved selling prices. The addition of Arkansas Galvanizing, the Company's
eighth galvanizer, also had a positive impact. Net sales in the Oil Field
Products Segment were up 54 and 38 percent for the three and nine-month periods
ending November 30, 1996, as compared to the same periods in 1995. This can be
accounted for by higher prices of crude oil and natural gas.
Consolidated operating income for the three-month and nine-month periods ending
November 30, 1996, as compared to the same periods in 1995, was up 19 and 40
percent, respectively. Gross operating income in the Electrical Products Segment
was down 5 percent for the three month period ending November 30, 1996, and was
up 26 percent for the nine-month period ending November 30, 1996, as compared to
the same periods in 1995. The Calvert Company continues to improve as lower
margin contracts are replaced in the backlog with higher margin contracts. The
Galvanizing Segment's gross operating income was up 53 and 46 percent for the
three and nine-month periods ending November 30, 1996 as compared the same
periods in 1995. This increase was a result of improved volumes and selling
prices as well as improved operating efficiencies. The addition of Arkansas
Galvanizing also had a positive impact on margins. The Oil Field
Page 8
<PAGE>
Products Segment showed a lower gross operating loss for the periods ending
November 30, 1996, as compared to the same periods in 1995 due to improved
volumes.
General corporate expenses for the three month and nine month periods ending
November 30, 1996, as compared to the same periods in 1995, were up due to
higher accruals for employee benefits and profit sharing expense.
Interest expense was lower for the nine month period ending November 30, 1996,
as compared to 1995, due to reduced debt and lower interest rates.
Page 9
<PAGE>
PART II. OTHER INFORMATION
AZTEC MANUFACTURING CO.
ITEM 2. CHANGES IN SECURITIES
- -------------------------------
Title of Class - Common Stock, $1 par value
<TABLE>
<CAPTION>
Number of Common Stock Capital in
Shares $1 Par Value Excess of Par
--------- ------------ -------------
<S> <C> <C> <C>
Balance at February 29, 1996 5,772,895 $5,772,895 $ 9,283,268
Exercise of Stock Options 316,349 $ 316,349 $ 893,617
Balance at November 30, 1996 6,089,244 $6,089,244 $10,176,885
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(A) EXHIBITS - There were no exhibits filed with this 10-Q for the nine-
months ended November 30, 1996.
(B) REPORTS ON FORM 8-K - There were no reports on Form 8-K filed for the
nine-months ended November 30, 1996.
All other schedules and compliance information called for by the instructions
for Form 10-Q have been omitted since the required information is not present or
not present in amounts sufficient to require submission.
Page 10
<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.
AZTEC MANUFACTURING CO.
----------------------------------------
(Registrant)
Date: January 10, 1997 /s/Dana Perry
---------------------- ----------------------------------------
Dana Perry, Vice President for Finance
Chief Financial Officer
Page 11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 5,302,048
<SECURITIES> 0
<RECEIVABLES> 9,121,358
<ALLOWANCES> (436,731)
<INVENTORY> 6,154,778
<CURRENT-ASSETS> 20,243,242
<PP&E> 29,520,331
<DEPRECIATION> 12,345,697
<TOTAL-ASSETS> 44,935,328
<CURRENT-LIABILITIES> 8,489,734
<BONDS> 8,013,888
0
0
<COMMON> 6,089,244
<OTHER-SE> 21,283,469
<TOTAL-LIABILITY-AND-EQUITY> 44,935,328
<SALES> 42,411,873
<TOTAL-REVENUES> 42,411,873
<CGS> 30,565,114
<TOTAL-COSTS> 36,763,031
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 686,600
<INCOME-PRETAX> 4,962,242
<INCOME-TAX> 1,959,657
<INCOME-CONTINUING> 3,002,585
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,002,585
<EPS-PRIMARY> .53
<EPS-DILUTED> .52
</TABLE>
