FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR |
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.) |
P. O. Box 72787, 4101 Jerome Avenue, Chattanooga, Tennessee 37407
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (423) 867-4210
Securities registered pursuant to Section 12(b) of the Act:
Title of each class NONE
Name of each exchange on which registered
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.20 par value
(Title of class)
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
Exhibit Index Appears at Page 49
(Form 10-K Cover Page - Continued)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the registrant was $68,094,670 based upon the closing sales price reported by the NASDAQ National Market on March 11, 1996, using beneficial ownership of stock rules adopted pursuant to Section 13 of the Securities Exchange Act of 1934 to exclude voting stock owned by all directors and executive officers of the registrant, some of whom may not be held to be affiliates upon judicial determination.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:
As of March 11, 1996
Common Stock, par value $.20 -- 10,037,199 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents have been incorporated by reference into the Parts of this Annual Report on Form 10-K indicated:
Document
Form 10-K
Proxy Statement relating to Part III
Annual Meeting of Shareholders
to be held on April 25, 1996
ASTEC INDUSTRIES, INC.
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS Page PART I Item 1. Business Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders Executive Officers of the Registrant PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure PART III Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Appendix A SIGNATURES |
PART I Item 1. BUSINESS
General
Astec Industries, Inc. (the "Company") is a Tennessee corporation
which was incorporated in 1972. The
Company designs, engineers, manufactures and markets equipment and
components used primarily in road building
and related construction activities. The Company's products are used in
each phase of road building, from quarrying
and crushing the aggregate to application of the road surface. The
Company also manufactures certain equipment
and components unrelated to road construction, including trenching and
excavating equipment, environmental
remediation equipment, log loading and industrial heat transfer equipment.
The Company holds over 70 United
States and foreign patents, and has been responsible for many technological
and engineering innovations in the
industry. The Company currently manufactures over 135 different products
which it markets both domestically and
internationally. In addition to plant and equipment sales, the Company
manufactures and sells replacement parts for
equipment in each of its product lines. The distribution and sale of
replacement parts is an integral part of the
Company's business.
The Company's six operating subsidiaries are: (i) Astec, Inc.,
which manufactures a line of hot mix asphalt
plants, soil purification and environmental remediation equipment and
related components; (ii) Telsmith, Inc., which
manufactures aggregate processing equipment for the production and
classification of sand, gravel and crushed stone
for road and other construction applications; (iii) Heatec, Inc., which
manufactures thermal oil heaters, asphalt heaters
and other heat transfer equipment used in the Company's asphalt mixing
plants and in other industries; (iv) Roadtec,
Inc., which manufactures milling machines used to recycle asphalt and
concrete, asphalt paving equipment and
material transfer vehicles; (v) Trencor, Inc., which manufactures chain and
wheel trenching equipment, excavating
equipment and log loaders and; (vi) CEI Enterprises, Inc., which
manufactures heat transfer equipment and recycled
rubber blending systems for the hot mix asphalt industry. CEI was acquired
in the first quarter of 1995.
The Company's strategy is to become the high quality, low cost
producer in each of its product lines while
continuing to develop innovative new products for its customers. With the
disposition of its foreign operations
described below, management believes that the Company is well positioned
to capitalize on the current need to
rebuild and enhance roadway infrastructure both in the United States and
abroad.
Disposition of Foreign Operating Subsidiaries
In 1993, the Company acquired a 50% ownership interest in
Wibau-Astec Maschinenfabrik GmbH, a newly
formed German limited liability company to engage in the manufacture and
marketing of asphalt plants and certain
related equipment in Granadau, Germany. The Company acquired the
remaining 50% interest in Wibau-Astec in
1994, making it a wholly owned subsidiary of the Company. In June 1995
the Company sold Wibau-Astec to Wirtgen
Gesellschaft mit beschr*nkter Haftung, a German equipment manufacturer.
See Note 2 to the Consolidated Financial
Statements included in the Company's Annual Report to Shareholders for
the fiscal year ended December 31, 1995,
which information is incorporated by reference under item 8 of this Report.
In an unrelated transaction, the Company acquired Gibat Ohl
Ingenieurgesellschaft fur Anlagentechnik mbH
located in Hasselroth, Germany in October 1994. The Gibat Ohl name was
changed to Astec-Europa in the third
quarter of 1995. In connection with the sale of Wibau-Astec, the
Company's technology was purchased by Astec-
Europa which manufactured asphalt batch plants and certain related
equipment. In February 1996, the Board of
Directors of the Company decided to abandon the operations of Astec-
Europa to avoid continuing losses related to its
operations. As a result of the Company's decision, on February 9, 1996, the
management of Astec-Europa filed a
request for bankruptcy in Germany. Due to the abandonment of Astec-
Europa, the Company will not recover any
amounts related to Astec-Europa's assets nor does it expect to be required to
liquidate any of Astec-Europa's
liabilities, except to the extent such liabilities were guaranteed by the
Company. Total losses recognized in 1995
related to Astec-Europa, including net losses from operations and the loss
on abandonment, were approximately
$9,945,000 before taxes and $6,037,000 after taxes. The Company does not
expect to incur any additional losses
related to this subsidiary. See Note 3 to the Consolidated Financial
Statements included in the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1995, which
information is incorporated by reference
under item 8 of this Report.
As a result of the disposition of Wibau-Astec and the abandonment
of Astec-Europa, the Company no longer
conducts foreign manufacturing operations and instead has decided to
concentrate all of its manufacturing activities,
whether or not related to international sales, with its more efficient
domestic operations.
Products
The Company operates in a single business segment. In 1995 it
manufactured and marketed products in five
principal categories: (i) hot mix asphalt plants, soil purification and
environmental remediation equipment and related
components; (ii) mobile construction equipment, including asphalt pavers,
milling machines and material transfer
vehicles and other auxiliary equipment; (iii) hot oil heaters, asphalt heaters
and other heat transfer equipment; (iv)
aggregates processing equipment; and (v) chain and wheel trenching and
excavating equipment. The following table
shows the Company's sales for each product category which accounted for
10% or more of consolidated revenue for
the periods indicated. Years Ended December 31 (in thousands) 1995 1994 1993 Asphalt plants and components $110,321 $100,514 $88,116 Mobile construction equipment 29,706 30,291 22,120 Aggregate processing equipment 46,586 38,823 40,108 Trenching and excavating equipment 21,110 25,867 16,535 |
Financial information in connection with the Company's international sales
is included in Note 1 to "Notes to
Consolidated Financial Statements - Segment Information", appearing at
Page A-11 of this report.
Hot Mix Asphalt Plants
Astec, Inc. designs, engineers, manufactures and markets a
complete line of portable, stationary and
relocatable hot mix asphalt plants and related components under the
"ASTEC" trademark. An asphalt mixing plant
typically consists of heating and storage equipment for liquid asphalt
(manufactured by Heatec), cold feed bins for
storing aggregates, a drum mixer for drying, heating and mixing, a
baghouse composed of air filters and other
pollution control devices, hot storage bins or silos for temporary storage of
hot mix asphalt and a control house. The
Company introduced the concept of plant portability in 1979. Its current
generation of portable asphalt plants is
marketed as the "Six Pack" and consists of six portable components which
can be disassembled and moved to the
construction site to reduce relocation expenses. Plant portability represents
an industry innovation developed and
successfully marketed by the Company.
The components in the Company's asphalt mixing plants are fully
automated and use microprocessor based
control systems for efficient operation. The plants are manufactured to
meet or exceed federal and state clean air
standards.
The Company has also developed specialized asphalt recycling equipment for use with its hot mix asphalt plants. Many of the existing Astec products are suited for blending, vaporizing, drying and incinerating contaminated products. As a result, Astec, Inc. has developed a line of thermal purification equipment for the remediation of petroleum contaminated soil.
Mobile Construction Equipment
Roadtec, Inc. designs, engineers, manufactures and markets asphalt pavers, material transfer vehicles and milling machines. Roadtec engineers emphasize simplicity, productivity, versatility and accessibility in product design and use.
Asphalt Pavers. Asphalt pavers are used in the application of hot
mix asphalt to the road surface. Roadtec
pavers have been designed to minimize maintenance costs while exceeding
road surface smoothness requirements.
In 1994, Roadtec introduced several new paver models, including one
which must be used with a material transfer
vehicle described below.
Material Transfer Vehicles. The "Shuttle Buggy" is a mobile, self-
propelled material transfer vehicle which
allows continuous paving by separating truck unloading from the paving
process while remixing the asphalt surface
material. A typical asphalt paver must stop paving to permit truck
unloading of asphalt mix. By permitting continuous
paving, the "Shuttle Buggy" allows the asphalt paver to produce a smoother
road surface. Certain states are now
requiring the use of the "Shuttle Buggy" on their jobs.
Milling Machines. Roadtec milling machines are designed to
remove old asphalt from the road surface before
new asphalt mix is applied. They are manufactured with a simplified
control system, wide conveyors, direct drives
and a wide range of horsepower and cutting capabilities to provide
versatility in product application. Additional
models were introduced in 1994 to meet contractor needs and additional
upgrades and options have been added in
1995.
Heat Transfer Equipment
Heatec, Inc. designs, engineers, manufactures and markets a variety of heaters and heat transfer processing equipment under the "HEATEC" trade name for use in various industries including the asphalt industry.
CEI Enterprises, Inc. ("CEI") designs, engineers, manufactures
and markets heating equipment and storage
tanks mainly for the asphalt paving industry. CEI located in Albuquerque,
New Mexico was acquired by the Company
in the first quarter of 1995.
Asphalt Heating Equipment. Heatec manufactures a complete line
of heating and liquid storage equipment
for the asphalt paving industry. Heaters are offered in both direct-fired and
helical coil models while CEI's heating
equipment is hot oil, direct fired or electric. The equipment includes
portable and stationary tank models with
capacities up to 35,000 gallons each.
Industrial Heating Equipment. Heatec builds a wide variety of
industrial heaters to fit a broad range of
applications, including equipment for emulsion plants, roofing material
plants, refineries, chemical processing, rubber
plants and the agribusiness. Heatec has the technical staff to custom design
heating systems and has systems
operating as large as 40,000,000 BTU's per hour.
Aggregates Processing Equipment
Founded in 1906, Telsmith, Inc. designs, engineers, manufactures
and markets a wide range of portable and
stationary equipment for the production and classification of sand, gravel,
and quarried stone and recycled concrete
and asphalt for road and other construction applications worldwide.
Telsmith's products include jaw, cone and impact
crushers; several types of feeders which transport virgin, recycled, or
crushed material to primary, secondary, or
tertiary crushing equipment; vibrating screens to separate the aggregate into
various mixes; and washing and
conveying equipment. Telsmith markets its products individually and as
complete systems, incorporating
microprocessor based automated controls for the efficient operation of its
equipment.
Trenching and Excavating Equipment
Trencor, Inc. designs, engineers, manufactures and markets chain
and wheel trenching equipment, canal
excavators, rock saws, road miners and log loading equipment. In August
1994, Trencor acquired the product line
and related manufacturing rights, trademarks, patents, intellectual property
and engineering designs of Capitol
Trencher Corporation ("CTC"), also a manufacturer of trenching and
excavation equipment. This purchase excluded
the manufacturing plant and equipment operated by CTC. The fabrication
of the CTC product line has been relocated
to Trencor's new facility in Grapevine, Texas.
Chain Trenchers. Trencor chain trenching machines utilize a
heavy duty chain (equipped with cutting teeth
attached to steel plates) wrapped around a long moveable boom. These
machines, with weights up to 400,000
pounds, are capable of cutting a trench up to eight feet wide and thirty feet
deep through rock. Trencor also makes
foundation trenchers used in areas where drilling and blasting are
prohibited.
Wheel Trenchers. Trencor wheel trenching machines are used in
pipeline excavation in soil and soft rock.
The wheel trenchers weigh up to 390,000 pounds and have a trench
capacity of up to seven feet in width and ten feet
in depth.
Canal Excavator. Trencor canal excavators are used to make
finished and trimmed trapezoidal canal
excavations within close tolerances. The canals are primarily used for
irrigation systems.
Rock Saws. Trencor manufactures a rock saw which is utilized for laying water and gas lines, fiber optics cable, constructing highway drainage systems and for other applications.
Roadminers. Trencor manufactures four "Road Miner" models
weighing up to 400,000 pounds with an
attachment which allows it to cut a path up to twelve and a half feet wide
and five feet deep on a single pass. The
Roadminer has applications in the road construction industry and in mining
and aggregates processing operations.
Log Loaders. Trencor also manufactures several different models
of log loaders. Its products include
mobile/truck mounted models, as well as track mounted and stationary
models, each of which is used in harvesting
and processing wood products. The equipment is sold under the Log-Hog
name.
Manufacturing
The Company manufactures many of the component parts and
related equipment for its products. In many
cases, the Company designs, engineers and manufactures custom
component parts and equipment to meet the
particular needs of individual customers. Manufacturing operations during
1995 took place at seven separate
locations. The Company's manufacturing operations consist primarily of
fabricating steel components and the
assembly and testing of its products to ensure quality control standards have
been achieved.
Marketing
The Company markets its products both domestically and
internationally. The principal purchasers of the
Company's products include highway and heavy equipment contractors,
utility contractors, pipeline contractors, open
mine operators, quarry operators and foreign and domestic governmental
agencies. Astec, Inc. sells directly to its
customers with domestic, soil remediation and international sales
departments. Astec, Inc. also has a branch in
Chino, California to service customers in the western United States.
Telsmith products are sold through two leased
branch locations in San Francisco, California and Sharon, Massachusetts,
as well as through a combination of direct
sales, both domestic and international, and dealer sales. Heatec, CEI,
Roadtec and Trencor products are marketed
through a combination of direct sales and dealer sales. Approximately 18
manufacturers' representatives sell Heatec
products for applications in industries other than the asphalt industry with
such sales comprising approximately 30% of
Heatec's sales volume during 1995. Direct sales employees are paid salaries
and are generally entitled to
commissions after obtaining certain sales quotas. See "Business -
Properties"
The Company's international sales efforts are decentralized with each subsidiary maintaining responsibility for its own international marketing efforts.
Seminars and Technical Bulletins
The Company periodically conducts technical and service seminars
which are primarily for contractors,
employees and owners of asphalt mixing plants. In 1995, approximately
290 representatives of contractors and
owners of hot mix asphalt plants attended seminars held by the Company in
Chattanooga, Tennessee. These
seminars, which are taught by Company management and employees, cover
a range of subjects including
technological innovations in the hot mix asphalt business and other industry
segments in which the Company
manufactures products.
In addition to the seminars, the Company published a number of detailed technical bulletins covering various technological and business issues relating to the asphalt industry.
Patents and Trademarks
The Company seeks to obtain patents to protect the novel features
of its products. The Company and its
subsidiaries hold 77 United States patents and 62 foreign patents. There are
16 United States and 16 foreign patent
applications pending.
The Company and its subsidiaries have approximately 40
trademarks registered in the United States,
including logos for Astec, Telsmith, Roadtec and Trencor, and the names
ASTEC, TELSMITH, HEATEC, LOG HOG,
ROADTEC and TRENCOR. Many of these trademarks are also registered
in foreign countries, including Canada,
Great Britain, Mexico, Australia and Japan.
The Company and its subsidiaries also license their technology to manufacturers.
Engineering and Product Development
The Company dedicates substantial resources to its engineering and product development. At December 31, 1995, the Company and its subsidiaries had 122 individuals employed domestically full-time in engineering and design capacities.
Raw Materials
Raw materials used by the Company in the manufacture of its products include carbon steel and various types of alloy steel which are normally purchased from steel mills and other sources.
Seasonality and Backlog
The Company's business is somewhat seasonal. The Company's
sales tend to be stronger from January
through June each year which is attributable largely to orders placed in the
fourth quarter in anticipation of warmer
summer months when most asphalt paving is done.
As of December 31, 1995, the Company had a backlog for delivery
of products at certain dates in the future
of approximately $34,751,000 At December 31, 1994 the total backlog was
approximately $50,465,000, excluding
Wibau-Astec and Astec-Europa. The Company's backlog is subject to some
seasonality as noted above.
The Company's contracts reflected in the backlog are not, by
their terms, subject to termination.
Management believes that the Company is in substantial compliance with
all manufacturing and delivery timetables
relating to its products.
Competition
The Company faces strong competition in price, service and
product performance in each product category.
While the Company does not compete with any one manufacturer in all of
its product lines, it competes as to certain
products with both large publicly held companies with resources
significantly greater than those of the Company and
various smaller manufacturers. Hot mix asphalt plant competitors include
CMI Corporation; Cedarapids, Inc., a
division of Raytheon Company; and Gencor Industries, Inc. Paving
equipment competitors include Caterpillar Paving
Products Inc. (including the Company's former Barber-Greene product
line), a subsidiary of Caterpillar Inc.; Blaw-
Knox Construction Equipment Company, a subsidiary of Clark Equipment
Co.; Ingersoll-Rand Company; and
Cedarapids, Inc.
The market for the Company's heat transfer equipment is diverse
because of the multiple applications for
such equipment. Its principal competitor is Gencor/Hyway Heat Systems.
The Company's milling machine
equipment competitors include Ingersoll-Rand Company; CMI Corporation;
Cedarapids, Inc.; Caterpillar; and Wirtgen
America, Inc. Aggregates processing equipment competitors include the
Pioneer Division of Portec, Inc.; Nordberg,
Inc.; Eagle Iron Works; Boliden Allis, a member of the Trelleborg Group;
Cedarapids, Inc.; and other smaller
manufacturers, both domestic and foreign. Competition for sales of
trenching and excavating equipment includes
Ditch Witch; J.I. Case; Vermeer and other smaller manufacturers in the
small utility trencher market.
As a whole, imports do not constitute significant competition in the
United States; however, in international
sales, the Company generally competes with foreign manufacturers which
may have a local presence in the market
the Company is attempting to penetrate.
Asphalt and concrete are generally considered competitive
products as a surface choice for new roads and
highways. A portion of the interstate highway system is paved in concrete,
but a majority of all surfaced roads in the
United States are paved with asphalt. Although concrete is used for some
new road surfaces, asphalt is used for
virtually all resurfacing, even the resurfacing of most concrete roads.
Management does not believe that concrete, as
a competitive surface choice, materially impacts the Company's business
prospects.
Regulation
The Company does not operate within a highly regulated industry.
However, air pollution equipment
manufactured by the Company principally for hot mix asphalt plants must
comply with certain performance standards
promulgated by the federal Environmental Protection Agency under the
Clean Air Act applicable to "new sources"
or new plants. Management believes that the Company's products meet
all material requirements of such
regulations and of applicable state pollution standards and environmental
protection laws.
In addition, due to the size and weight of certain equipment, the
Company and its customers sometimes
confront conflicting state regulations on maximum weights transportable on
highways and roads. This problem occurs
most frequently in the movement of portable asphalt mixing plants. Also,
some states have regulations governing the
operation of asphalt mixing plants and most states have regulations relating
to the accuracy of weights and measures
which affect some of the control systems manufactured by the Company.
Employees
On August 3, 1995, a union election was held at the Trencor plant
in which a unit of Trencor production and
maintenance employees voted to be represented by The United States
Steelworkers of America, AFL-CIO, CLC. Due
to alleged improper activity and interference, Trencor has asserted that the
election was illegal and has requested a
new election. The proceeding is currently pending before the National
Labor Relations Board.
At December 31, 1995, the Company and its subsidiaries employed
1,402 persons, of which 1,048 were
engaged in manufacturing operations, 122 in engineering and design
functions and 232 in selling, administrative and
management functions. Telsmith has a labor agreement expiring on
October 14, 1998. Except as set forth above,
none of the Company's other employees are covered by a collective
bargaining agreement. Notwithstanding the
current preceding before the National Labor Relations Board, the Company
considers its employee relations to be
good.
Item 2. Properties
The location, approximate square footage, acreage occupied and principal function of the properties owned or leased by the Company are set forth below:
Approximate Approximate Principal Location Square Footage Acreage Function Chattanooga, Tennessee 361,000 56.6 Corporate and subsidiary offices, manufacturing - Astec Chattanooga, Tennessee 0 63.0 Storage yard - Astec Chattanooga, Tennessee 66,200 5.0 Offices, manufacturing - Heatec Chattanooga, Tennessee 125,000 13.6 Offices, manufacturing - Roadtec North Aurora, Illinois 16,700 3.5 Roadtec (sales and service office) San Francisco, California 5,000 1.0 Leased sales and service office and warehouse - Telsmith St. Charles, Illinois 300 0 Leased international sales office - Telsmith Chino, California 4,762 1.0 Leased parts warehouse - Astec Rossville, Georgia 40,500 2.6 Manufacturing and sales office facility - Astec Grapevine, Texas 175,000 51.67 Offices, manufacturing - Trencor Grand Prairie, Texas 83,000 6.1 Former offices, manufacturing - Trencor, Inc.(property for sale) Sharon, Massachusetts 4,000 1.0 Leased sales and service office - Telsmith Odessa, Texas 4,072 .8 Sales office and parts warehouse - Trencor, Inc. Inman, South Carolina 13,600 8.0 Leased with option to buy (office and warehouse of former Soil Purification of Carolina, Inc.) Houston, Texas 120 0 Leased sales office - Heatec Albuquerque, New Mexico 28,592 9.0 Leased - offices and plant - CEI Albuquerque, New Mexico 111,908 14.0 New plant and offices- CEI |
In 1995 significant office and plant improvements were made at
Roadtec and Astec, Inc. Management
believes that each of the Company's facilities provide office or
manufacturing space suitable for its current needs and
considers the terms under which it leases facilities to be reasonable.
Item 3. Legal Proceedings
The Company's subsidiary, Telsmith, 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. 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, 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 pleased with the Court's decision,
but has filed an 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. Nordberg did
not cross-appeal to the Federal Circuit on
the Telsmith judgment. The time for doing so has now expired. The
judgment has therefore become "final" as to
those issues not raised by Telsmith on appeal.
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 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.
During 1994, the United States Supreme Court refused to hear
CMI Corporation's petition to overturn the
United States Court of Appeals for the Federal Circuit's reversal of patent
damages awarded to CMI Corporation and
Robert L. Mendenhall by a lower court. As a result of the Supreme Court's
refusal to grant certiorari, in 1994 the
Company received $12,917,000 which was being held in escrow pending
the Company's appeal of the two judgments.
In addition, on December 31, 1994, the Company received $1,309,000 from
CMI in satisfaction of the judgment
entered in favor of the Company on its counterclaim against CMI. The
receipt of these funds effectively concluded
the litigation between the Company and CMI and Robert L. Mendenhall
which had been pending for a number of
years. As a result, in 1994 the Company reversed its accrued liability for
patent damages. The reversal of
$13,870,000 in accrued patent damages and the receipt of $1,309,000 in
patent damages from CMI total $15,179,000
and are included in the Consolidated Statements of Income as Patent suit
damages and expenses (net recoveries and
accrual adjustments).
Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made provision for any estimable losses; however, the Company is unable to predict the ultimate outcome of the outstanding claims and lawsuits.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
The name, title, ages and business experience of the executive officers of the Company are listed below.
J. Don Brock has been President and a director of Astec since its
incorporation in 1972 and assumed the
additional position of Chairman of the Board in 1975. He was the
Treasurer of the Company from 1972 until 1994.
From 1969 to 1972, Dr. Brock was President of the Asphalt Division of
CMI Corporation. Dr. Brock earned his Ph.D.
degree in mechanical engineering from the Georgia Institute of Technology.
Dr. Brock and Thomas R. Campbell,
President of Roadtec, are first cousins. Dr. Brock is 57.
Albert E. Guth has been Chief Financial Officer of the Company
since 1987, Senior Vice President since
1984, Secretary of the Company since 1972 and Treasurer since 1994. Mr.
Guth, who has been a director since
1972, was the Vice President of the Company from 1972 until 1984. From
1969 to 1972, Mr. Guth was the Controller
of the Asphalt Division of CMI Corporation. He is 56.
F. McKamy Hall, a Certified Public Accountant, has served as
Controller of the Company since May 1987.
From 1985 to 1987, Mr. Hall was Vice President-Finance of Quadel
Management Corporation, a company engaged in
real estate management. He is 53.
Thomas R. Campbell has served as President of Roadtec, Inc. since
1988. From 1981 to 1988 he served as
Operations Manager of Roadtec. Mr. Campbell and J. Don Brock,
President of the Company, are first cousins. Mr.
Campbell is 46.
W. Norman Smith has served as the President of Astec, Inc. since December 1, 1994. He formerly served as President of Heatec, Inc. from 1977 to 1994. From 1972 to 1977, Mr. Smith was a Regional Sales Manager with the Company. From 1969 to 1972, Mr. Smith was an engineer with the Asphalt Division of CMI Corporation. Mr. Smith has also served as a director of the Company since 1972. He is 56.
Jerry F. Gilbert has served as President of Trencor, Inc. since 1981
and as a director of the Company since
May, 1991. He is 50.
Robert G. Stafford has served as President of Telsmith, Inc., formerly the Barber-Greene Company, since April 1991. Between January 1987 and January 1991, Mr. Stafford served as President of Telsmith, Inc., a subsidiary of Barber-Greene. From 1984 until the Company's acquisition of Barber- Greene in December 1986, Mr. Stafford was Vice President - Operations of Barber-Greene and General Manager of Telsmith. From 1979 to 1984 he served as Director-Engineering and Operations for Telsmith. He became a director of the Company in March 1988. He is 57.
James G. May has served as President of Heatec, Inc. since December 1, 1994. From 1984 until 1994 he served as Vice President of Engineering of Astec, Inc. He is 51.
M. Brent England has served as president of CEI Enterprises, Inc.
since March 1995. Previously, Mr.
England served as president of Trace Industries, Inc. d/b/a CEI Enterprises,
since April 1992. Prior to joining CEI, Mr.
England served as a trustee for the U.S. Bankruptcy Court for three years.
Mr. England has also served as general
manager of N.C. Ribble Company, a large construction equipment
distributor, in Albuquerque, New Mexico. He is 63.
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
The Company's Common Stock is traded in the National
Association of Securities Dealers Automated
Quotation System (NASDAQ) National Market under the symbol "ASTE".
The Company has never paid any
dividends on its Common Stock.
The high and low sales prices of the Company's Common Stock as
reported on the NASDAQ National Market
for each quarter during the last two fiscal years, were as follows:
Price Per Share 1995 High Low 1st Quarter 14 1/4 11 2nd Quarter 13 1/8 10 7/8 3rd Quarter 11 3/4 9 7/8 4th Quarter 12 1/4 9 3/4 Price Per Share 1994 High Low 1st Quarter 20 1/8 13 1/2 2nd Quarter 17 5/8 13 3rd Quarter 15 12 1/2 4th Quarter 15 7/8 11 5/8 |
The number of holders of record of the Company's Common Stock as of March 11, 1996, was 748.
Item 6. Selected Financial Data
Selected financial data appear on page A-1 of this Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's discussion and analysis of financial condition and results of operations appears on pages A-2 to A-5 of this Report.
Item 8. Financial Statements and Supplementary Data
Financial statements and supplementary financial information appear on pages A-6 to A-23 of this Report.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None required to be reported in this item.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding the Company's directors included under the
caption "Election of Directors - Certain
Information Concerning Nominees and Directors" in the Company's
definitive Proxy Statement to be delivered to the
shareholders of the Company in connection with the Annual Meeting of
Shareholders to be held on April 25, 1996 is
incorporated herein by reference. Required information regarding the
Company's executive officers is contained in
Part I of this Report under the heading "Executive Officers of the
Registrant". Information regarding compliance with
Section 16(a) of the Exchange Act is included under "Election of Directors -
Section 16(a) Filing Requirements" in the
Company's definitive Proxy Statement which is incorporated herein by
reference.
Item 11. Executive Compensation
Information included under the caption, "Election of Directors - Executive Compensation" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April 25, 1996 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information included under the captions "Election of Directors -
Certain Information Concerning Nominees
and Directors", "Election of Directors - Common Stock Ownership of
Management" and "Election of Directors -
Common Stock Ownership of Certain Beneficial Owners" in the Company's
definitive Proxy
Statement to be delivered to the shareholders of the Company in connection
with the Annual Meeting of Shareholders
to be held on April 25, 1996 is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
On March 20, 1995, the Company acquired all of the issued and
outstanding shares of Trace Industries, Inc.,
a New Mexico corporation doing business as CEI Enterprises ("CEI"), in
exchange for $852,004 in cash and 87,333
shares of Company Common Stock. The deemed effective date of this
transaction for financial reporting purposes
was February 28, 1995. The purchase price was determined by the Senior
Vice President of the Company based on
his opinion of the fair market value of CEI following arm's length
negotiation. Prior to this acquisition, CEI was a
closely held company with four shareholders including Mr. Brent England,
its President. In connection with this
transaction, CEI was merged into a wholly owned subsidiary of the
Company with Mr. England continuing to serve as
President of the successor corporation and, as such, is now an executive
officer of the Company. In lieu of providing
registration rights to the former shareholders of CEI with respect to the
shares of Company Common Stock being
issued in this transaction, the Company granted each such shareholder the
right to require the Company to redeem
the shares at any time within two years of the closing date at a price of
$12.00 per share. Mr. England received
23,333 shares of Company Common Stock in connection with this
transaction and, consistent with the rights granted
to each other former shareholder of CEI, has the right to require the
redemption of such shares by the Company for
$12.00 per share at any time on or before March 20, 1997.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) The following financial statements and other information appear in Appendix "A" to this Report and are filed as a part hereof:
. Selected Consolidated Financial Data.
. Management's Discussion and Analysis of Financial Condition and Results of Operations.
. Report of Independent Auditors.
. Consolidated Balance Sheets at December 31, 1995 and 1994.
. Consolidated Statements of Income for the Years Ended December 31, 1995, 1994 and 1993.
. Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1995, 1994 and 1993.
. Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993.
. Notes to Consolidated Financial Statements.
(a)(2) Other than as described below, Financial Statement
Schedules are not filed with this Report because
the Schedules are either inapplicable or the required information is
presented in the Financial Statements or Notes
thereto. The following Schedules appear in Appendix "A" to this Report
and are filed as a part hereof:
. Report of Independent Auditors.
. Schedule VIII - Valuation and Qualifying Accounts.
(a)(3) The following Exhibits* are incorporated by reference into or are filed with this Report:
2.2 Share Purchase and Transfer Agreement by and between the Company and Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH, dated as of October 5, 1994 (incorporated by reference to the Form 8-K dated November 7, 1994, File No. 0-14714).
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 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 Firstar 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).
10.29 Lease Agreement, dated as of August 28, 1989, between Telsmith, Inc., and Pine Hill Developers (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714).
10.57 License Agreement, dated July 2, 1992, between Telsmith, Inc. and Gerlach Industries (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714).
10.75 Loan Agreement between City of Mequon, Wisconsin and Telsmith, Inc. 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).
*The Exhibits are numbered in accordance with Item 601 of Regulation S-K. Inapplicable Exhibits are not included in the list.
10.76 Credit Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, 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).
10.77 Security Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, 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).
10.78 Mortgage and Security Agreement and Fixture Financing Statement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, 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).
10.79 Guarantee of Astec Industries, Inc. in favor of M&I Ilsley Bank, 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).
10.80 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Dresdner Bank Aktiengensellschaft, dated as of December 22, 1993 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.81 Letter of Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Berliner Hondels - und Frankfurter Bank, dated as of December 22, 1993 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.82 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Bayerische Vereinsbank, dated as of December 22, 1993 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.83 Loan Agreement dated as of April 1, 1994, between Grapevine Industrial Development Corporation and Trencor, Inc. (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.84 Letter of Credit Agreement, dated April 1, 1994, between The First National Bank of Chicago and Trencor, Inc. (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.85 Guaranty Agreement, dated April 1, 1994, between Astec Industries, Inc. 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, 1994, File No. 0-14714).
10.86 Astec Guaranty, dated April 29, 1994, of debt of Trencor, Inc. in favor of The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.87 Credit Agreement, dated as of July 20, 1994, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0- 14714).
10.88 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Bayerische Vereinsbank, dated as of January 16, 1995 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.89 Waiver for December 31, 1994, dated February 24, 1995 with respect to the First National Bank of Chicago Credit Agreement dated July 20, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714).
10.90 First Amendment to Guaranty of Payment, dated March 21, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago.
10.91 First Amendment to Credit Agreement, dated May 22, 1995 between the Company and The First National Bank of Chicago.
10.92 Second Amendment to Guaranty of Payment, dated May 22, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago.
10.93 Guaranty of all obligations of Astec-Europa Strassenbaumaschinen GmbH executed by the Company in favor of Bayerische Vereinsbank Aktiengesellschaft, dated December 6, 1995.
10.94 Guaranty of a DM3,000,000 credit facility to Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH executed by the Company in favor of Deutsche Bank AG, dated December 13, 1995.
10.95 Waiver for December 31, 1995, dated November 10, 1995 with respect to The First National Bank of Chicago Credit Agreement dated July 20, 1994, as amended.
10.96 English translation of Application for Commencement of Bankruptcy Proceedings filed on behalf of Astec-Europa Strassenbaumaschinen in Gelnhausen, Germany on February 9, 1996.
10.97 Limited Consent of The First National Bank of Chicago dated as of March 21, 1995 related to the acquisition of Trace Industries, Inc. and the assignment of certain assets to Astec, Inc.
Executive Compensation Plans and Arrangements
10.98 Supplemental Executive Retirement Plan, dated February 1, 1996 to be effective as of January 1, 1995.
10.99 Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996.
11 Statement Regarding Computation of Per Share Earnings.
22 Subsidiaries of the Registrant.
23 Consent of Independent Auditors
(b) No reports on Form 8-K were filed in the fourth quarter.
(c) The Exhibits to this Report are listed under Item 14(a)(3) above.
(d) The Financial Statement Schedules to this Report are listed under Item 14(a)(2) above.
APPENDIX "A" to ANNUAL REPORT ON FORM 10-K
ITEMS 8 and 14(a)(1) and (2), (c) and (d)
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
ASTEC INDUSTRIES, INC.
Contents Page
Selected Consolidated Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Income for the Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Independent Auditors
Schedule VIII - Valuation and Qualifying Accounts
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Astec Industries, Inc.
We have audited the accompanying consolidated balance sheets of Astec
Industries, Inc. and subsidiaries and the
related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the
period ended December 31, 1995. Our audits also included the financial
statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility
of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the
consolidated financial position of Astec Industries, Inc. and subsidiaries at
December 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material
respects the information set forth therein.
As discussed in Note 1, in 1995 the Company changed its method of accounting for the impairment of long-lived assets and for long-lived assets to be disposed of.
/s/ ERNST & YOUNG LLP Chattanooga, Tennessee February 27, 1996 |
ASTEC INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE (VIII)
VALUATION AND QUALIFYING ACCOUNTS FOR CONTINUING OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
ADDITIONS CHARGES TO BEGINNING COSTS & OTHER ENDING DESCRIPTION BALANCE EXPENSES ADDITIONS DEDUCTIONS BALANCE December 31, 1995: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 1,684,242 $ 533,136 $ 20,000 (3) $ 958,740 (1) $ 1,278,638 Reserve for inventory $ 4,994,035 $ 1,196,876 $ 0 $ 752,401 $ 5,438,510 Other Reserves: Product warranty$ 3,470,703 $ 3,194,240 $ 0 $ 4,194,168 (2) $ 2,470,775 December 31, 1994: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 1,191,083 $ 362,089 $ 467,607 (3) $ 336,537 (1) $ 1,684,242 Reserve for inventory $6,494,533 $ 3,621,218 $ 0 $ 5,121,716 $ 4,994,035 Other Reserves: Product warranty $ 1,781,733 $ 2,616,565 $ 0 $ 927,595 (2) $ 3,470,703 Reserve for patent damages $ 13,250,048 $ 620,290 $ 0 $ 13,870,338 $ 0 December 31, 1993: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $1,060,588 $742,752 $ 21,609 $ 633,866 (1) $ 1,191,083 Reserve for inventory $ 5,948,084 $ 2,952,918 $ 0 $ 2,406,469 $ 6,494,533 Other Reserves: Product warranty$1,551,850 $ 2,689,441 $ 0 $ 2,459,558 (2) $ 1,781,733 Reserve for patent damages $ 12,554,640 $ 695,408 $ 0 $ 0 $ 13,250,048 |
[FN]
(1) Uncollectible accounts written off, net of recoveries.
(2) Warranty costs charged to the reserve.
(3) Represents reserve balances of subsidiaries acquired in the year.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Astec Industries, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ASTEC INDUSTRIES, INC.
BY: /s/ J. Don Brock J. Don Brock, Chairman of the Board and President (Principal Executive Officer) BY: /s/ Albert E. Guth Albert E. Guth, Senior Vice President Secretary and Treasurer (Principal Financial and Accounting Officer) Date: March 1, 1996 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by a majority of the Board of Directors of the Registrant on the dates indicated:
SIGNATURE TITLE DATE /s/ J. Don Brock Chairman of the Board March 1, 1996 J. Don Brock and President /s/ Albert E. Guth Senior Vice President, March 1, 1996 Albert E. Guth Secretary, Treasurer and Director /s/ W. Norman Smith President - Astec, Inc. March 1, 1996 W. Norman Smith and Director /s/ Robert G. Stafford President - Telsmith, Inc. March 1, 1996 Robert G. Stafford and Director /s/ Jerry F. Gilbert President - Trencor, Inc. March 1, 1996 Jerry F. Gilbert and Director SIGNATURE TITLE DATE /s/ E.D. Sloan Jr. Director March 1, 1996 E.D. Sloan, Jr. /s/ William B. Sansom Director March 1, 1996 William B. Sansom /s/ Joseph Martin, Jr. Director March 1, 1996 Joseph Martin, Jr. /s/ George C. Dillon Director March 1, 1996 George C. Dillon /s/ G.W. Jones Director March 1, 1996 G.W. Jones /s/ Daniel K. Frierson Director March 1, 1996 Daniel K. Frierson |
Commission File No. 0-14714
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS FILED WITH ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
ASTEC INDUSTRIES, INC.
4101 Jerome Avenue
Chattanooga, Tennessee 37407
ASTEC INDUSTRIES, INC. FORM 10-K
INDEX TO EXHIBITS
Sequentially
Exhibit Number Description Numbered Page
Exhibit 10.90 First Amendment to Guaranty of Payment, dated March 21, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago. Exhibit 10.91 First Amendment to Credit Agreement, dated May 22, 1995 between the Company and The First Nationa Exhibit 10.92 Second Amendment to Guaranty of Payment, dated May 22, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago. Exhibit 10.93 Guaranty of all obligations of Astec-Europa Strassenbaumaschinen GmbH executed by the Company in favor of Bayerische Vereinsbank Aktiengesellschaft, dated December 6, 1995. Exhibit 10.94 Guaranty of a DM3,000,000 credit facility to Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH executed by the Company in favor of Deutsche Bank AG, dated December 13, 1995. Exhibit 10.95 Waiver for December 31, 1995, dated November 10, 1995 with respect to The First National Bank of Chicago Credit Agreement dated July 20, 1994, as amended. Exhibit 10.96 English translation of Application for Commencement of Bankruptcy Proceedings filed on behalf of Astec-Europa Strassenbaumaschinen in Gelnhausen, Germany on February 9, 1996. Exhibit 10.97 Limited Consent of The First National Bank of Chicago dated as of March 21, 1995 related to the acquisition of Trace Industries, Inc. and the assignment of certain assets to Astec, Inc. Executive Compensation Plans and Arrangements Exhibit 10.98 Supplemental Executive Retirement Plan, dated February 1, 1996 to be effective as of January 1, 1995. Exhibit 10.99 Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996. Exhibit 11 Statement Regarding Computation of Per Share Earnings. Exhibit 22 Subsidiaries of the Registrant. Exhibit 23 Consent of Independent Auditors. |
For a list of certain Exhibits not filed with this Report that are incorporated by reference into this Report, see Item 14(a)(3).
EXHIBIT 11
Statement Regarding Computation of Per Share Earnings
ASTEC INDUSTRIES, INC. EXHIBIT (11) - COMPUTATIONS OF EARNINGS PER SHARE 12/31/95 (In Thousands) Shares for Earnings Per Share Computations Primary: Weighted average outstanding during year 10,072 Common Stock equivalent for stock options & warrants 124 TOTAL 10,196 Fully Diluted: Weighted average outstanding during year 10,072 Common Stock equivalent for stock options & warrants 125 TOTAL 10,197 |
Earnings Applicable to Common Stock:
Income from continuing operations $ 4,560 Net Income $ 4,560 Earnings Per Common Share (Based on Weighted Average Number of Common and Uncommon Equivalent Shares Outstanding): Income from continuing operations $ .45 Net Income $ .45 |
Additional Computations of EPS:
Fully Diluted: Income from continuing operations $ .45 Net Income $ .45 |
EXHIBIT 22 |
Subsidiaries of the Registrant
LIST OF SUBSIDIARIES
Jurisdiction of Name Owned Incorporation Astec, Inc. 100 Tennessee Astec Transportation, Inc. 100 Tennessee CEI Enterprises, Inc. 100 Tennessee Heatec, Inc. 100 Tennessee Roadtec, Inc. 100 Tennessee Telsmith, Inc. 100 Delaware Trencor, Inc. 100 Texas |
Exhibit 23 Consent of Independent Auditors |
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-14738 and 0-14714) pertaining to the Astec Industries, Inc. 1986 and 1992 Stock Option Plans of our report dated February 27, 1996, with respect to the consolidated financial statements and schedule of Astec Industries, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1995.
/s/ERNST & YOUNG LLP Chattanooga, Tennessee March 15, 1996 |
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except as noted*)
Consolidated Income Statement Data
1995 1994 1993 1992 1991 Net sales $242,601 $ 213,806 $ 172,801 $ 149,133 $134,512 Selling, general and administrative expenses 34,326 31,142 28,624 23,969 20,456 Patent suit damages and expenses (net recoveries and accrual adjustments) 699 (14,947) 375 567 3,868 Research and development 5,128 3,166 2,923 2,580 2,503 Loss on abandonment of foreign subsidiary 7,037 Interest expense 2,125 713 1,788 3,241 4,597 Income from continuing operations 4,560 23,436 9,338 6,014 524 Discontinued operations 3,530 Net income 4,560 23,436 9,338 6,014 4,054 Income per common share from continuing operations*(1) .45 2.38 1.07 .82 .07 Consolidated Balance Sheet Data Working capital $ 58,015 $ 53,000 $ 40,767 $ 33,641 $ 31,167 Total assets 154,356 155,964 102,967 87,885 90,989 Total short-term debt 774 8,573 10 3,103 4,862 Long-term debt, less current maturities 17,150 16,155 0 22,660 29,387 Shareholders' equity 95,901 90,373 64,105 27,631 21,279 Book value per common share at year-end*(1) 9.50 9.04 6.54 3.78 2.95 |
Quarterly Financial Highlight (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 1995 Net sales $ 57,544 $ 70,368 $ 65,015 $ 49,674 Gross profit 13,637 14,011 13,298 8,811 Net income 2,516 4,730 2,768 (5,454) Net income per common share* .25 .47 .27 (.54) 1994 Net sales $ 46,226 $ 62,694 $ 49,021 $ 55,865 Gross profit 11,029 14,013 11,216 11,839 Net income 2,876 5,212 3,131 12,217 Net income per common share* .29 .53 .32 1.23 Common Stock Price* 1995 High 14-1/4 13-1/8 11-3/4 12-1/4 1995 Low 11 10-7/8 9-7/8 9-3/4 1994 High 20-1/8 17-5/8 15 15-7/8 1994 Low 13-1/2 13 12-1/2 11-5/8 |
The Company's common stock is traded on the National Association of Securities Dealers Automated Quotation (NASDAQ) National Market under the symbol ASTE. Prices shown are the high and low bid prices as announced by NASDAQ. The Company has never paid any dividends on its common stock.
The number of shareholders of record is approximately 750.
(1) Restated to retroactively reflect the two-for-one stock split effected in the form of a dividend on August 12, 1993.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
1995 vs. 1994
Net income for 1995 was $4,560,000 or $.45 per share compared to net
income of
$23,436,000 or $2.38 per share in 1994. Net income for 1994 included
$14,947,000 in non-recurring gains as a result of final judgments entered in
connection with the CMI litigation. The decline in 1995 also reflects a
$7,037,000 loss resulting from the abandonment of Astec-Europa, as well as
continuing losses from foreign operations during 1995. Income before
income taxes was $6,141,000 in 1995 compared to $25,737,000 in 1994.
This is shown in the following table:
Year Ended December 31, 1995 1994 Income before income taxes $ 6,141,000 $ 25,737,000 Patent suit recoveries - CMI litigation (14,947,000) Gain on sale of Wibau-Astec (2,449,000) Loss on abandonment of Astec-Europa 7,037,000 Loss from foreign subsidiaries 3,598,000 5,366,000 Adjusted pre-tax income from domestic operations 14,327,000 16,156,000 Income taxes for domestic operations (5,487,000) (916,000) Net income from domestic operations $ 8,840,000 $ 15,240,000 |
The decrease in adjusted pre-tax income for domestic operations of $1,829,000 in 1995 as compared to 1994 is the result of increased gross profit margin due to increased sales of domestic subsidiaries which were more than offset by increased interest, research and development expenses and a decrease in other income from domestic subsidiaries.
Net sales for 1995 were $242,601,000, an increase of $28,795,000 or approximately 13.5% compared to 1994. Of this increase, $14,615,000 is attributable to the acquisition of Gibat Ohl and the acquisition of the remaining 50% interest in Wibau-Astec. CEI, which was acquired in 1995, accounted for $3,543,000 in sales. Excluding the increase from the German operations and the CEI acquisition, sales increased $10,637,000 or 5.2%. International sales by domestic subsidiaries were 24.3% of total sales in both 1995 and 1994. The net increase in sales reflects a strong sales increase in asphalt plants, heaters and rock crushing equipment, but reduced sales in mobile equipment and trenchers.
The gross profit margin for 1995 was 20.5% compared to 22.5% for 1994. This decrease is primarily due to lower gross profit margins from our foreign operations which had gross profit margins of 3.4% in 1995 compared to 11.4% in 1994. Domestic operations gross profit margin for 1995 was 22.5% compared to 23.0% for 1994.
In 1995, selling, general, and administrative expenses decreased to 14.1% of net sales from 14.6% in 1994.
The Gencor patent litigation accounted for $699,000 of legal fees which are included in 1995 patent damages and expenses.
Research and development expenses increased from 1.5% of net sales in 1994 to 2.1% in 1995 primarily due to foreign operations.
As noted above, income from operations was significantly impacted by the losses of Astec-Europa in 1995. The total pre-tax loss, including the cost of abandonment, was approximately $9,945,000. Astec-Europa incurred pre- tax operating losses in 1995 of approximately $2,908,000. Due to Astec- Europa's poor operating results and its negative net worth at December 31, 1995, the Company declined to contribute additional capital to Astec- Europa, electing instead to abandon the subsidiary in accordance with German law. Astec-Europa management filed a request for bankruptcy in Germany on February 9, 1996. Consequently, the Company does not believe that it will be required to fund Astec-Europa's liabilities except for certain liabilities previously guaranteed by the Company. The loss on abandonment of approximately $7,037,000 includes the liabilities of Astec- Europa that were guaranteed by the Company and the remainder of the original investment recorded on the books of the Company.
Interest expense for 1995 increased to .9% of net sales from .3% in 1994. The increase resulted from increased inventories in anticipation of sales which did not materialize and investment in capital expenditures of $15,160,000.
Other income increased by approximately $722,000 or 36.7% in 1995, resulting primarily from Astec-Europa (formerly Gibat Ohl) receiving $1,430,000 to settle various claims related to Astec-Europa's business operations. The gain on sale of foreign subsidiary of $2,449,000 in 1995 is due to the sale of Wibau-Astec as described in Note 2 to Consolidated Financial Statements.
Income tax expense for 1995 was $1,580,000 or approximately 25.7% of pre-tax income compared to $2,300,000 or approximately 8.9% of pre-tax income in 1994. The reason for the variance from the normal corporate tax rate in 1994 was the utilization of net operating loss carryforwards and establishment of a deferred tax benefit relative to net deductible temporary differences which could be recovered against future taxes or taxes previously paid. The variance in 1995 is primarily attributed to foreign operations. See Note 9 to Consolidated Financial Statements. Due to the utilization of the majority of its credit carryforwards, the Company's tax rate for 1996 and subsequent years will approximate the normal corporate rate.
The backlog at December 31, 1995 is $34,751,000 compared to $50,465,000 at December 31, 1994 which represents a 31.1% decrease. The Company's backlog for 1994 was unusually large primarily due to the optimism of many of our major customers about the strength of the economy and increased demand resulting from the renewed emphasis to rebuild infrastructure. The Company's current backlog is more consistent with the historical trend experienced by the Company.
Results of Operations
1994 vs. 1993
Net sales for 1994 increased $41,005,000 or approximately 23.7%
compared to 1993. Of
this increase, $10,133,000 was attributable to the acquisition of Gibat Ohl
and the remaining 50% of Wibau-Astec. Excluding these acquisitions, sales
increased $30,872,000 or 17.9%. International sales by domestic
subsidiaries were 24.3% in 1994 and 17.2% in 1993. The increase in sales
reflected the strength of our economy, the attitude of our customers toward
the economy, expectations for infrastructure contracts and the quality,
performance and competitiveness of our products as a result of many years
of investment in research and development.
The gross profit margin for 1994 was 22.5% compared to 24.2% for 1993. Domestic operations gross profit margin for 1994 was 23.0% compared to 24.2% for 1993. Foreign operations gross profit margin was 11.4% The domestic gross profit margin was negatively effected in 1994 for several reasons:
1) Telsmith's consolidation of plant operations with many inefficiencies involved.
2) Trencor's relocation to facilities in Grapevine, Texas from Grand Prairie, Texas.
3) Inefficiencies related to the training of a significant number of new manufacturing employees at Trencor and training of replacements for retirees at Telsmith.
4) Trencor's introduction of the Log Hog product line.
Offsetting these negative factors were improved margins at Heatec and increased manufacturing efficiencies at Roadtec, both of which positively affected the gross profit margin.
In 1994, selling, general, and administrative expenses decreased to 14.6% of net sales from 16.6% in 1993. The increase in sales was the primary reason for the percentage reduction.
Research and development expense declined from 1.7% of net sales in 1993 to 1.5% in 1994, again, primarily due to the increase in sales.
In October 1994, the decision by the United States Supreme Court to deny certiorari in connection with the appeal filed by CMI Corporation ("CMI") brought to a successful end the Company's long-standing patent litigation with CMI. The Supreme Court's actions effectively denied CMI's request to appeal a lower court ruling that found Astec did not have liability for infringement of CMI patents and left intact damages payable by CMI to Astec. As a result, previously established liabilities of $13,870,000, payable by the Company, were reversed and patent damages of $1,309,000 were received from CMI. These amounts are shown in Consolidated Statements of Income as net recoveries and accrual adjustments of patent damages. See "Contingencies" and Note 10 to the Consolidated Financial Statements.
Because our joint venture, Wibau-Astec, continued to be unprofitable, it became apparent that major changes were necessary and we began a plan of restructuring. Restructuring costs of $1,500,000 related to Wibau-Astec are discussed in Note 12 to Consolidated Financial Statements. The anticipated effect of the restructuring plan was reflected in the pro forma summary included in Note 2.
Interest expense for 1994 decreased to 0.3% of net sales from 1.0% in 1993. This was due to a decrease in overall interest expense combined with the increase in sales. Plant expansion and improvements were financed by industrial revenue bonds at favorable interest rates.
Other income decreased by approximately $371,000 or 15.9% in 1994. This was due to the fact that one international licensee that was not renewed for 1994 produced $665,000 in license fees in 1993. The equity in loss of joint venture of $3,177,000 reflects 50% of the losses from the joint venture for the ten months prior to the purchase of the remaining 50% interest in Wibau-Astec.
Income tax expense for 1994 was $2,300,000 or approximately 8.9% of pre- tax income. The primary reasons for the variance from the normal corporate tax rate were the utilization of net operating loss carryforwards and establishment of a deferred tax benefit relative to net deductible temporary differences which could be recovered against future taxes or taxes previously paid. See Note 9 to Consolidated Financial Statements.
In the first quarter of 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes". At December 31, 1994, there were net deferred tax assets of approximately $14,799,000, which were comprised of temporary differences, the tax benefit of net operating loss and credit carryforwards and foreign net operating loss carryforwards. Temporary differences related primarily to inventory reserves, warranty reserves and bad debt reserves. At December 31, 1994, a valuation allowance of approximately $10,070,000 was recorded. This valuation allowance offsets the deferred tax assets relative to net operating loss carryforwards. Both the net operating loss and credit carryforwards are SRLY carryforwards and can be used to offset only the income of a certain subsidiary of the Company. As a result, the Company determined that a valuation allowance was necessary for these items as well as the foreign net operating loss carryforward, the utilization of which was uncertain.
The backlog at December 31, 1994 was $50,465,000 compared to $33,100,000 at December 31, 1993 which represents a 52.4% increase. The increase was primarily due to the optimism of our customers about the strength of the economy and the performance and competitiveness of our products.
Liquidity and Capital Resources
Working capital increased to $58,015,000 at December 31, 1995 from $53,000,000 at ResourcesDecember 31, 1994. The Company's debt to equity ratio was .19 to 1 at December 31, 1995 and .27 to 1 at December 31, 1994. The debt for foreign subsidiaries has been removed from the balance sheet as a result of the sale of Wibau-Astec and the abandonment of Astec- Europa.
Total short-term borrowings, including current maturities of long-term debt, were $774,000 at December 31, 1995 and $8,573,000 at December 31, 1994. Long-term debt, less current maturities was $17,150,000 at December 31, 1995 and $16,155,000 at December 31, 1994.
Capital expenditures of $15,160,000 were made in 1995 as compared to capital expenditures in 1994 of $21,886,000. The Company utilized industrial revenue bonds in 1994 in the amount of $8,000,000 to finance the Grapevine, Texas (Trencor) project which included improvements to the existing facility as well as additions of new equipment. Industrial bonds were issued in February 1994 in the amount of $6,000,000 to assist in financing the Telsmith expansion at Mequon, Wisconsin.
The Company has an unsecured revolving credit loan agreement with The First National Bank of Chicago. The line of credit is $22,000,000. This credit facility expires June 30, 1997. At December 31, 1995, $4,150,000 of the line of credit was utilized. At December 31, 1995 the Company was in violation of the $10,000,000 limit on capital expenditures and has received a waiver for such violation.
As a result of the Company's decision to abandon Astec-Europa (see Note 3 to the Consolidated Financial Statements), the Company will be required to pay approximately $2,116,000 for bank loans made to Astec-Europa that were guaranteed by the Company and $1,228,000 in warranties guaranteed by the Company. It is expected that these amounts will be funded from cash from operations or by use of the Company's line of credit. The guaranteed payments required for loans and warranties have been accrued and are included in other liabilities.
For additional information on current and long-term debt, see Note 7 to the Consolidated Financial Statements.
Contingencies
See Note 10 to Consolidated Financial Statements for information on certain pending litigation and contingent liabilities arising from recourse financing arrangements.
Environmental Matters
Based on information available from environmental consultants, the Company has no material reserve requirements for potential environmental liabilities.
CONSOLIDATED BALANCE SHEET
December 31, 1995 1994 Assets Current assets: Cash and cash equivalents note 1 $ 3,133,070 $ 10,471,444 Trade receivables less allowance for doubtful accounts of $1,279,000 in 1995 and $1,684,000 in 1994 27,075,401 29,852,180 Notes and other receivables 596,134 215,390 Inventories note 1,4 55,882,679 56,309,735 Prepaid expenses 894,593 2,149,795 Refundable income taxes 2,341,849 Deferred tax asset note 9 6,667,052 2,901,799 Other current assets 5,214 236,229 Total current assets 96,595,992 102,136,572 Property and equipment, net note 5 51,709,033 42,348,792 Other assets: Goodwill 4,066,152 8,370,662 Notes receivable 572,829 Deferred tax asset note 9 1,827,494 Other 1,412,326 1,280,069 Total other assets 6,051,307 11,478,225 Total $ 154,356,332 $ 155,963,589 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 3,249 $ 8,072,502 Current maturities of long-term debt note 7 771,025 500,000 Accounts payable 15,877,964 14,262,518 Customer deposits 4,989,557 6,301,481 Accrued product warranty 2,470,775 3,470,703 Income taxes payable note 9 1,987,511 Other accrued liabilities 14,468,042 14,541,920 Total current liabilities 38,580,612 49,136,635 Long-term debt, less current maturities note 7 17,150,000 16,155,000 Deferred tax liability note 9 2,351,283 Deferred retirement costs note 8 373,310 192,242 Other 106,716 Total liabilities 58,455,205 65,590,593 Shareholders' equity: note 1,11 Preferred stock - authorized 2,000,000 shares of $1.00 par value; none issued Common stock - authorized 20,000,000 shares of $.20 par value; issued and outstanding - 10,092,199 in 1995 and 10,001,831 in 1994 2,018,440 2,000,366 Additional paid-in-capital 51,940,580 50,900,908 Foreign currency translation adjustment 89,975 Retained earnings 41,942,107 37,381,747 Total shareholders' equity 95,901,127 90,372,996 Total $ 154,356,332 $ 155,963,589 |
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31, 1995 1994 1993 Net sales $ 242,601,351 $ 213,806,411 $ 172,801,465 Cost of sales 192,844,160 165,709,245 130,906,009 Gross profit 49,757,191 48,097,166 41,895,456 Selling, general, and administrative expenses 34,325,974 31,142,335 28,624,179 Research and development expenses 5,128,495 3,165,795 2,922,921 Patent suit damages and expenses (net recoveries and accrual adjustments) note 10 699,222 (14,947,498) 374,740 Restructuring costs note 12 1,500,469 Loss on abandonment of foreign subsidiary note 3 7,037,105 Income from operations 2,566,395 27,236,065 9,973,616 Other income(expense): Interest expense (2,125,261) (712,853) (1,787,742) Loan prepayment penalty and expenses note 7 (544,783) Interest income 565,724 426,489 516,957 Other income - net 2,685,161 1,963,633 2,334,407 Gain on sale of foreign subsidiary note 2 2,448,551 Equity in loss of joint venture note 2 (3,176,834) (720,000) Income before income taxes 6,140,570 25,736,500 9,772,455 Income taxes note 9 1,580,210 2,300,126 434,246 |
Net income $ 4,560,360 $ 23,436,374 $ 9,338,209
Earnings per Common and Common Equivalent Share:
Net income $ .45 $2.38 $ 1.07 Weighted average number of common and common equivalent shares outstanding note 1 10,071,930 9,843,980 8,694,478 |
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock note 1 Additional Foreign Currency Retained Shares Amount Paid-in Capital Translation Adjustment Earnings Balance December 31, 1992 3,658,634 $ 731,713 $ 22,291,705 $0 $ 4,607,164 Issuance of common stock 1,243,067 248,627 26,887,481 Stock dividend 4,893,701 978,740 (978,740) Net income 9,338,209 Balance December 31, 1993 9,795,402 1,959,080 48,200,446 13,945,373 Issuance of common stock 206,429 41,286 2,700,462 Change during year $ 89,975 Net income 23,436,374 Balance December 31, 1994 10,001,831 2,000,366 50,900,908 89,975 37,381,747 Issuance of common stock 90,368 18,074 1,039,672 Change during year (89,975) Net income 4,560,360 Balance December 31, 1995 10,092,199 $ 2,018,440 $ 51,940,580 $ 0 $ 41,942,107 |
See Notes to Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, 1995 1994 1993 Cash Flows From Operating Activities Net income $ 4,560,360 $ 23,436,374 $ 9,338,209 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,697,862 3,941,871 3,105,694 Provision for doubtful accounts 533,136 362,089 742,752 Provision for inventory reserves 1,196,876 3,621,218 2,952,918 Provision for warranty 3,194,240 2,616,565 2,689,441 Provision for patent damages (net recoveries and accrual adjustments) (13,250,048) 13,697 Foreign currency translation adjustment (74,519) 89,975 (Gain) loss on sale of fixed assets (263,195) 322,587 (19,976) Equity in loss of joint venture 3,176,834 720,000 Gain on sale of foreign subsidiary (2,448,551) Loss on abandonment of foreign subsidiary 7,037,105 (Increase) decrease in: Receivables (2,551,526) (7,660,990) (7,105,758) Inventories (5,921,052) (3,537,955) (2,988,734) Prepaid expenses (2,071,266) (803,177) (337,248) Patent damage escrow funds 12,309,420 (705,431) Deferred tax asset 413,524 (4,156,695) (572,598) Other assets (993,322) (1,916,921) (400,318) Increase (decrease) in: Accounts payable 6,062,733 2,138,449 1,054,970 Customer deposits (1,211,925) (1,738,643) 113,091 Accrued product warranty (3,433,374) (2,256,128) (2,459,558) Income taxes payable (1,117,518) 400,355 877,225 Reserve for patent damages 681,711 Other accrued liabilities (2,373,657) (947,201) 1,376,519 Total adjustments 1,675,571 (7,288,395) (261,603) Net cash provided by operating activities 6,235,931 16,147,979 9,076,606 Cash Flows From Investing Activities Proceeds from sale of property and equipment - net 953,766 307,099 74,284 Expenditures for property and equipment (15,159,921) (21,886,011) (8,767,135) Cash received in connection with sale of subsidiary (36,687) Cash balance abandoned with subsidiary (203,643) Repayments on notes receivable 95,256 600,499 47,672 Investment in joint venture (635,700) (589,900) Cash payments in connection with business combination, net of cash acquired (834,591) 1,447,965 Net cash (used by) investing activities (15,185,820) (20,166,148) (9,235,079) Cash Flows From Financing Activities Proceeds from industrial bonds 14,000,000 Proceeds form issuance of common stock 9,750 34,750 27,136,109 Net (repayments) borrowings under revolving credit loan 1,495,000 2,655,000 (4,675,000) Principal repayments of industrial bonds, loans and notes payable (1,523,213) (5,658,355) (21,078,374) Proceeds from debt and notes payable 1,629,978 Net cash provided by financing activities 1,611,515 11,031,395 1,382,735 Increase (decrease) in cash and |
cash equivalents (7,338,374) 7,013,226 1,224,262
Cash and cash equivalents,
beginning of period 10,471,444 3,458,218 2,233,956
Cash and cash equivalents
end of period $ 3,133,070 $ 10,471,444 $3,458,218
Supplemental Cash Flow Information
Cash paid during the year for:
Interest $ 1,800,598 $ 595,767 $ 2,600,688
Income taxes $ 5,088,465 $ 6,282,709 $ 176,021
Excluded from the Consolidated
Statements of Cash Flows were
the following effects of non-cash
investing and financing activities:
Capital stock issued for purchase of subsidiary: Investment in subsidiary $ 1,047,996 $ 2,706,996 Capital stock (17,467) (39,871) Additional paid-in-capital (1,030,529) (2,667,125) Non-cash sale of assets by assumption of receivable: Property and equipment $ (8,244) Receivable - other 8,244 Non-cash transfer of assets: Trade receivables $ 90,435 Notes receivables (90,435) Non-cash purchase of assets: Property, plant and equipment $ 547,587 Accrued liability (547,587) Non-cash assets assumed in connection with recourse customer financing: Notes receivables $ 369,229 Inventory (369,229) |
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Basis of Presentation - The consolidated financial statements include the accounts of Accounting Policies Astec Industries, Inc. and its subsidiaries. The Company's wholly-owned subsidiaries at December 31, 1995 are as follows:
Astec, Inc. Roadtec, Inc. CEI Enterprises, Inc. Telsmith, Inc. Heatec, Inc. Trencor, Inc
During 1995 Wibau-Astec Maschinenfabrik GmbH ("Wibau-Astec") was sold and Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik ("Gibat Ohl") was abandoned. See Notes 2 and 3.
All significant intercompany transactions have been eliminated in consolidation.
Use of Estimates - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Segment Information - The Company operates in one industry segment. Its products are used predominately for road construction and for the manufacture and processing of construction aggregates. International sales by domestic subsidiaries were $58,965,000, $52,031,000, and $29,693,000 for the years ended December 31, 1995, 1994 and 1993, respectively. Net sales and net losses of foreign operations were $24,748,000 and $3,044,000 for the year ended December 31, 1995, and $10,133,000 and $5,394,000 for the year ended December 31, 1994. At December 31, 1994, assets of foreign subsidiaries were $23,953,000. See Notes 2 and 3.
Cash Equivalents - The Company considers all highly liquid instruments purchased with a maturity of less than three months to be cash equivalents.
Inventories - Inventories (excluding used equipment) are stated at the lower of first-in, first-out cost or market. Used equipment inventories are stated on the specific unit cost method, which in the aggregate is less than market.
Property and Equipment - Property and equipment is stated at cost. Depreciation is computed generally on the straight-line method for financial reporting purposes at rates considered sufficient to amortize costs over estimated useful lives. Depreciation is computed generally on both accelerated and straight-line methods for tax reporting purposes. Maintenance and repairs are expensed as incurred.
Goodwill - Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill amounts are being amortized using the straight- line method over twenty years. Additions to goodwill in 1995 reflect the purchase of CEI Enterprises, Inc.
Product Warranty - The Company provides product warranties against defects in materials and workmanship for periods ranging from ninety days to one year following the date of sale. Estimated costs of product warranties are charged to cost of sales in the period of the sale.
Revenue Recognition - A portion of the Company's equipment sales represents equipment produced in the Company's plants under short-term contracts for a specific customer project or equipment designed to meet a customer's specific requirements. Equipment revenues are recognized in compliance with the terms and conditions of each contract, which is ordinarily at the time the equipment is shipped. Certain contracts include terms and conditions through which the Company recognized revenues upon completion of equipment production which is subsequently stored at the Company's plant at the customer's request. Revenue is recorded on such contracts upon the customer's assumption of title and all risks of ownership.
1. Summary of Significant Accounting Policies
Foreign Currency Translation - The
financial statements of foreign subsidiaries have been translated into
U.S. Dollars in
accordance with FASB Statement No. 52, "Foreign Currency
Translation". All balance sheet accounts have
been translated using the exchange rate in effect at the balance sheet date.
Income statement amounts have been translated using average exchange
rate for the year. The gains and losses resulting from the changes in
exchange rates from year to year have been reported separately as a
component of shareholders' equity.
Stock Based Compensation - The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for stock options granted in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees" and, accordingly, recognizes no compensation expense for the stock option grants.
Earnings Per Share - Primary and fully diluted earnings per share are based on the weighted average number of common and common equivalent shares outstanding and include the potentially dilutive effects of the exercise of stock options in years where there are earnings. Fully diluted earnings per share are not presented for 1995, 1994, or 1993 since the dilution is not material. Earnings per share information has been restated to retroactively reflect the two-for-one stock split effected in the form of a dividend on August 12, 1993.
Accounting Change - Effective, January 1, 1995, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. During 1995, events and circumstances indicated that approximately $4,400,000 of assets of the Company's subsidiary, Astec-Europa might be impaired. As further discussed in Note 3, these assets were written off in connection with the abandonment of Astec-Europa.
2. Business Combinations On February 28, 1995, the Company acquired the operating assets and liabilities of Trace Industries, Inc., a New Mexico corporation doing business as CEI Enterprises ("CEI") in exchange for 87,333 shares of the Company's common stock and approximately $852,000 in cash. The operations of CEI are included in the consolidated statements of income from the effective date of acquisition. The transaction was accounted for as a purchase and the purchase price of approximately $1,900,000 was allocated to the net tangible assets acquired based on the estimated fair market values of the assets acquired. The excess of the purchase price over the fair market value of CEI's net tangible assets was recorded as goodwill and is being amortized using the straight-line method over 20 years.
A summary of the net assets acquired is as follows:
Current assets $ 1,035,148 Property, plant and equipment 243,877 Current liabilities (768,647) Other liabilities (39,683) Goodwill 1,411,892 Net assets acquired excluding cash 1,882,587 Cash 17,413 Net assets acquired $ 1,900,000 |
Effective July 1, 1993, the Company entered into a joint venture with Putzmeister-Werk Maschinenfabrik GmbH ("Putzmeister") to form a new German limited liability company, Wibau-Astec Maschinenfabrik GmbH ("Wibau-Astec"). Wibau-Astec designed, engineered, manufactured and marketed asphalt plants, stabilization plants, asphalt and thermal heaters, hot storage systems and soil remediation equipment. Putzmeister and the Company each owned 50% of Wibau- Astec. On November 7, 1994, the Company acquired the remaining shares of Wibau-Astec from Putzmeister for $67,400. The acquisition was accounted for as a purchase effective November 7, 1994 and accordingly, the results of operations and accounts of Wibau-Astec subsequent to November 7, 1994 are included in the Company's consolidated financial statements. The purchase price was allocated to the net tangible assets of Wibau-Astec based on the estimated fair market value of the assets acquired. As required by the purchase method of accounting, the excess amount of the purchase price over the fair value of Wibau-Astec's net tangible assets was recorded as goodwill and was being amortized using the straight-line method over 20 years. Subsequent to the acquisition of Wibau-Astec, the Company undertook a plan to restructure Wibau-Astec's operations. See Note 12 - Restructuring Costs. Effective June 30, 1995, the Company sold Wibau- Astec to Wirtgen Gesellschaft mit beschrankter Haftung for approximately $1,109,000. For the six months ended June 30, 1995, Wibau-Astec had a net loss of approximately $688,000. The Company realized a gain of approximately $2,449,000 on the sale of Wibau-Astec.
Effective October 17, 1994, the Company acquired the operating assets and liabilities of Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik ("Gibat Ohl") in exchange for 193,357 shares of the Company's common stock and approximately $2,760,000 in cash. The acquisition was accounted for as a purchase effective October 17, 1994, and accordingly, the results of operations and accounts of Gibat Ohl subsequent to October 17, 1994 are included in the Company's consolidated financial statements. The purchase price of approximately $5,460,000 was allocated to the net tangible assets of Gibat Ohl based on the estimated fair market value of the assets acquired. The excess of the purchase price over the fair market value of Gibat Ohl's net tangible assets was recorded as goodwill and was being amortized using the straight-line method over 20 years. During 1995, Gibat Ohl's name was changed to Astec-Europa and in February 1996, the Company abandoned Astec-Europa. See Note 3.
A summary of the net assets acquired is as follows:
Wibau-Astec Gibat Ohl Current assets $ 4,938,766 $ 11,007,164 Property, plant and equipment 412,193 300,657 Current liabilities (8,678,984) (10,029,223) Other liabilities (2,038,165) Goodwill 1,193,259 4,153,364 Net assets acquired excluding cash (4,172,931) 5,431,962 Cash 4,240,331 32,984 Net assets acquired $ 67,400 $ 5,464,946 |
The following unaudited pro forma summary presents the consolidated results of operations as if the acquisitions discussed above had occurred at the beginning of each of the periods presented. Pro forma adjustments have been made to 1994 and 1993 to reflect the restructuring of Wibau-Astec as described in Note 12. The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results that would have incurred had the acquisition occurred at the beginning of the periods presented or of results which may occur in the future.
Year Ended December 31, 1995 1994 1993 Net sales $ 243,493,000 $ 227,891,000 $ 188,823,000 Income from operations 6,213,000 28,814,000 10,576,000 Net income 4,619,000 24,863,000 9,638,000 Per common and common |
equivalent share:
Net income $ .46 $ 2.53 $ 1.11
Prior to its acquisition of the remaining 50% interest in Wibau-Astec, the Company's investment in Wibau-Astec was accounted for by the equity method. Accordingly, net income as presented in the Consolidated Statements of Income for 1994 and 1993 includes the Company's share of Wibau-Astec's losses for periods prior to the acquisition of $3,177,000 and $720,000, respectively.
3. Abandonment of Foreign Subsidiary
During 1995, the Company's subsidiary, Astec-Europa, incurred a net loss of approximately $2,354,000 and had a negative net worth at December 31, 1995. The Company determined that it would no longer support Astec-Europa and on February 9, 1996, Astec-Europa management filed a request for bankruptcy in Germany. Due to its decision to abandon Astec-Europa, the Company will not recover any amounts related to Astec- Europa's assets nor will it be required to liquidate Astec-Europa's liabilities except to the extent such liabilities were guaranteed by the Company. Accordingly, Astec-Europa's assets and liabilities at December 31, 1995 were adjusted to liquidation basis values. This, along with the write-off of the Company's investment in Astec-Europa and the remaining goodwill associated with Astec-Europa of approximately $3,911,000 resulted in a total write-off related to the abandonment of approximately $7,037,000 before tax and $3,683,000 after tax. Total losses recognized in 1995, including net loss from operations and the loss on abandonment, related to Astec-Europa were approximately $9,945,000 before tax or $6,037,000 after tax.
4. Inventories
Inventories consisted of the following:
December 31, 1995 1994 Raw materials and parts $ 23,709,839 $ 26,705,110 Work-in-process 10,384,847 14,380,192 Finished goods 14,583,127 7,745,709 Used equipment 7,204,866 7,478,724 Total $ 55,882,679 $ 56,309,735 5. Property and Equipment Property and equipment consisted of the following: December 31, 1995 1994 Land, land improvements, and buildings $ 35,220,996 $ 26,676,486 Equipment 39,322,961 37,497,348 Less accumulated depreciation (22,864,623) (21,880,823) Land, buildings, and equipment - net 51,679,334 42,293,011 Rental property: Equipment 122,347 1,703,608 Less accumulated depreciation (92,648) (1,647,827) Rental property - net 29,699 55,781 Total $ 51,709,033 $ 42,348,792 |
6. Leases The Company leases certain land, buildings and equipment which are used in its operations. Total rental expense charged to operations under operating leases was approximately $1,213,000, $615,000 and $427,000 for the years ended December 31, 1995, 1994 and 1993 respectively.
Minimum rental commitments for all noncancelable operating leases at December 31, 1995 are as follows:
1996 $ 691,000 1997 444,000 1998 230,000 1999 122,000 2000 and beyond 100,000 |
The Company also leases equipment to customers under short-term contracts generally ranging from two months to six months. Rental income under such leases was $1,630,000, $1,394,000 and $1,719,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
7. Long-term Debt Long-term debt consisted of the following: December 31, 1995 1994 Revolving credit loan of $22,000,000 at December 31, 1995 and $15,000,000 at December 31, 1994, available through June 30, 1997 at an interest rate of prime less a quarter, which was 8.25% at December 31, 1995 and 1994 $ 4,150,000 $ 2,655,000 Loans payable maturing at various dates through 1996 at interest rates from 8.5% to 9.25% 271,025 Industrial Development Revenue Bonds payable in annual installments through 2006 at weekly negotiated interest rates 5,500,000 6,000,000 Industrial Development Revenue Bonds due in 2019 at weekly negotiated interest rates 8,000,000 8,000,000 Total long-term debt 17,921,025 16,655,000 Less current maturities 771,025 500,000 Long-term debt less current maturities $ 17,150,000 $ 16,155,000 |
During 1995, the Company amended its unsecured revolving loan agreement negotiated in 1994 thereby increasing the line of credit to $22,000,000. The loan agreement contains certain restrictive covenants relative to operating ratios and capital expenditures and also restricts the payment of dividends. At December 31, 1995, the Company was in violation of the covenant relative to capital expenditures and has received a waiver for such violation.
The aggregate of all maturities of long-term debt in each of the next five years is a follows:
1996 $ 771,025 1997 4,650,000 1998 500,000 1999 500,000 |
2000 and beyond 11,500,000
For 1995, the weighted average interest rate on short term borrowings, which include current maturities of Industrial Revenue Bonds and notes payable, were 4.16% and 8.62%, respectively.
8. Retirement Benefits A former subsidiary of the Company, the Barber-Greene Company, had defined benefit pension plans ("Barber-Greene Plans") covering substantially all of its employees. Non-union benefits were frozen as of September 1, 1986, and certain union benefits were frozen as of October 31, 1986. The Company retained responsibility for the Barber-Greene Plans when it sold the Barber-Greene Company in 1991. Telsmith, Inc. also sponsors a defined benefit pension plan covering certain employees hired prior to October 14, 1987 who have chosen not to participate in the Company's 401(k) savings plan. The benefit is based on years of benefit service multiplied by a monthly benefit as specified in the plan. The Company's funding policy for its pension plans is to make the minimum annual contributions required by applicable regulations.
During 1994, the Company made the decision to terminate the Barber- Greene Plans and purchased annuities to fund the benefits provided for in the plans. In 1995, the Company received approval from the Internal Revenue Service to terminate the plans. As a result, the settlement loss of approximately $46,000 is included in Other income-net in 1995.
A reconciliation of the funded status of the Plans, which is based on a valuation date of September 30, with amounts reported in the Company's consolidated balance sheets, is as follows:
Year Ended December 31, 1995 1994 Actuarial present value of benefit obligations: Vested $ 2,991,159 $ 40,574,462 Nonvested 90,781 85,245 Accumulated benefit obligation $ 3,081,940 $ 40,659,707 Projected benefit obligation $ 3,081,940 $ 40,659,707 Plan assets at fair value 2,539,151 40,589,417 Projected benefit obligation in excess of plan assets 542,789 70,290 Unrecognized net gain 6,046 450,751 Prior service cost not yet recognized in net periodic pension cost (148,819) (320,665) Pension liability in the consolidated |
balance sheets $ 400,016 $ 200,376
Net periodic pension cost for 1995, 1994 and 1993 included the following components:
Year Ended December 31, 1995 1994 1993 Service cost - benefits earned during the period $ 24,585 $ 31,503 $ 26,873 Interest cost on projected benefit obligation 219,465 2,565,355 2,754,319 Actual return on plan assets (238,493) 2,148,873 (12,318,009) Net amortization and deferral (6,682) (5,405,871) 9,345,175 Net (income) $ (1,125) $ (660,140) $ (191,642) |
The weighted average discount rate used in determining the actuarial present value of the projected benefit obligation was 7.5% and 8.5% at September 30, 1995 and 1994, respectively. The expected long-term rate of return on assets was 9.0% for the years ending September 30, 1995 and 1994. Plan assets are primarily comprised of corporate equity and corporate and U.S. Treasury debt securities.
In 1987, the Company adopted deferred savings plan ("Savings Plans") under Section 401(k) of the Internal Revenue Code, under which substantially all employees of the Company and its subsidiaries are eligible. In 1991, the Savings Plans were consolidated and provide that the Company match an amount equal to 50% of employee savings subject to certain limitations. The total expense for such matching was approximately $777,000, $696,000, and $567,000 for the years ended December 31, 1995, 1994 and 1993 respectively.
In addition to the retirement plans discussed above, the Company has an unfunded postretirement medical and life insurance plan covering employees of its Telsmith, Inc. subsidiary and retirees of its former Barber- Greene subsidiary. Effective January 1, 1993, the Company adopted SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions". The accumulated postretirement benefit obligation ("APBO") at adoption was approximately $674,000 and is being amortized over 20 years.
The accumulated postretirement benefit obligation and the amount recognized in the Company's consolidated balance sheets, is as follows:
December 31, 1995 1994 Accumulated postretirement benefit obligation: Retirees $ 246,300 $ 130,600 Active employees 393,500 473,000 639,800 603,600 Unamortized transition obligation (571,900) (605,600) Unrecognized net gain 118,800 118,800 Accrued postretirement benefit cost $ 186,700 $ 116,800 Net periodic postretirement benefit cost included the following components: December 31, 1995 1994 Service cost $ 53,300 $ 53,500 Interest cost 50,200 42,900 Amortization of transition obligation 33,700 33,700 Amortization of net gain (1,900) |
Net expense $ 135,300 $ 130,100
A discount rate of 8.5% was used in calculating the APBO. The APBO assumes a 13.5% increase in per capita health care costs decreasing gradually to 5.8% for years 2012 and later. A 1% increase in the medical inflation rate would increase the APBO by approximately $29,400 and the expense by approximately $7,500.
9. Income Taxes
Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes". There was no cumulative effect on income from the adoption of SFAS No. 109.
For financial reporting purposes, income before income taxes includes the following components:
Year Ended December 31, 1995 1994 1993 United States $ 16,497,616 $ 30,726,395 $ 9,474,455 Foreign: License income 277,855 404,000 1,018,000 Equity in loss of joint venture (3,176,834) (720,000) Loss from foreign subsidiaries (3,597,796) (2,217,061) Loss on adandonment (7,037,105) |
Income before income taxes $ 6,140,570 $25,736,500 $ 9,772,455
The provision for income taxes consisted of the following:
Year Ended December 31, 1995 1994 1993 Current $ 1,166,956 $ 7,029,419 $ 434,246 Deferred (benefit) 413,254 (4,729,293) Total provision for |
income taxes $ 1,580,210 $ 2,300,126 $ 434,246
A reconciliation of the provision for income taxes at the statutory rate to those provided is as follows:
Year Ended December 31, 1995 1994 1993 Tax at statutory rates $ 2,087,794 $ 9,007,775 $ 3,322,635 Effect of utilization of net operating loss carryforwards net of alternative minimum tax (1,344,000) (3,008,000) (3,155,253) Effect of utilization of alternative minimum tax credits (382,000) Benefit from foreign sales corporation (327,000) (265,000) State taxes, net of federal income tax benefit 522,000 212,000 115,271 Income taxes of other countries (553,000) 27,000 151,593 Loss from foreign operations (413,000) 2,636,000 Recognition of deferred tax asset 1,827,000 (4,729,000) Reversal of prior temporary differences (1,937,000) Other items (219,584) 738,351 |
Income taxes $ 1,580,210 $ 2,300,126 $ 434,246
At December 31, 1995, the Company had investment tax and other credit carryforwards of approximately $98,000 expiring at various dates principally from 1995 through 1999. Utilization of these credits will be limited to use in offsetting only the taxable income of a subsidiary of the Company.
As a result of utilizing the net operating loss carryforwards, net income from continuing operations increased by approximately $.13, $.31 and $.36 for the years ended December 31, 1995, 1994 and 1993, respectively.
At December 31, 1995, the Company had deferred tax assets of approximately $6,889,000, and deferred tax liabilities of approximately $2,475,000, related to temporary differences and tax loss and credit carryforwards. At December 31, 1995, a valuation allowance of approximately $98,000 was recorded. This valuation allowance offsets the deferred tax assets relative to credit carryforwards. The credit carryforwards are SRLY carryforwards and can be used to offset only the income of a certain subsidiary. Due to this, the Company determined that a valuation allowance was necessary for these items. The change in valuation allowance in 1995 is due to the loss of foreign net operating loss carryforwards ($8,085,000) due to the sale of the subsidiary, expiration of ITC credit carryforwards ($543,000) and the utilization of operating loss carryforwards ($1,344,000).
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities and assets are as follows:
Year Ended December 31, 1995 1994 Deferred tax assets: Inventory reserves $ 2,067,000 $ 1,753,000 Legal reserves 152,000 100,000 Pension expense 112,000 109,000 Investment in foreign joint venture 1,827,000 Other accrued expenses 3,076,000 3,002,000 Net operating loss carryforwards 1,344,000 Foreign net operating loss carryforwards 1,384,000 8,085,000 Other credit carryforwards 98,000 641,000 Total deferred tax assets 6,889,000 16,861,000 Deferred tax liabilities: Property and equipment 2,475,000 2,062,000 Total deferred tax liabilities 2,475,000 2,062,000 Net deferred tax assets 4,414,000 14,799,000 Valuation allowance (98,000) (10,070,000) Deferred tax asset $ 4,316,000 $ 4,729,000 |
10. Contingencies
The Company's subsidiary, Telsmith, 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. 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, 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 pleased with the Court's decision, but has filed an 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. Nordberg did not cross-appeal to the Federal Circuit on the Telsmith judgment. The time for doing so has now expired. The judgment has therefore become "final" as to those issues not raised by Telsmith on appeal.
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 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.
During 1994, the United States Supreme Court refused to hear CMI Corporation's petition to overturn the United States Court of Appeals for the Federal Circuit's reversal of patent damages awarded to CMI Corporation and Robert L. Mendenhall by a lower court. As a result of the Supreme Court's refusal to grant certiorari, the Company received $12,917,000 which was being held in escrow pending the Company's appeal of the two judgments. In addition, on December 31, 1994, the Company received $1,309,000 from CMI in satisfaction of the judgment entered in favor of the Company on its counterclaim against CMI. The receipt of these funds effectively concluded the litigation between the Company and CMI and Robert L. Mendenhall which had been pending for a number of years. As a result, in 1994 the Company reversed its accrued liability for patent damages. The reversal of $13,870,000 in accrued patent damages and the receipt of $1,309,000 in patent damages from CMI total $15,179,000 and are included in the Consolidated Statements of Income as Patent suit damages and expenses (net recoveries and accrual adjustments).
Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made provision for any estimable losses; however, the Company is unable to predict the ultimate outcome of the outstanding claims and lawsuits.
Recourse Customer Financing - Certain customers have financed purchases of the Company's products through arrangements in which the Company is contingently liable for customer debt aggregating approximately $7,362,000 and $13,800,000 at December 31, 1995 and 1994, respectively. These obligations average five years in duration and have minimal risk.
Other - The Company is contingently liable for letters of credit of approximately $3,390,000 issued for bid bonds and performance bonds.
11. Shareholders' Equity
Stock options - The Company has
reserved 300,000 shares of common stock under the 1986 Stock Option
Plan and 500,000 shares of common stock under the 1992 Stock Option
Plan for issuance upon exercise of nonqualified options, incentive options
and stock appreciation rights to officers and employees of the Company and
its subsidiaries at prices determined by the Board of Directors. At
December 31, 1995, a total of 261,800 shares of common stock
related to the 1992 Stock Option Plan are available for options to
be granted.
Nonqualified options are exercisable at a price not less than 85% of the Board of Directors' determination of the fair market value of the Company's common stock on the date of the grant. Nonqualified options are exercisable starting one year from the date of the grant and expire ten years after the date of the grant. Incentive stock options granted by the Board of Directors must be exercisable at a price not less than 100% of the fair market value of the Company's common stock on the date of grant. Incentive stock options are exercisable immediately after the date of the grant, except for certain officers of the Company, and expire ten years after the date of the grant. Stock appreciation rights may be granted by the Board of Directors in conjunction with the grant of an incentive or nonqualified option. A stock appreciation right permits a grantee to receive payment in either cash or shares of the Company's common stock equal to the difference between the fair market value of the common stock and the exercise price for the related option.
The following is a summary of stock option information:
Outstanding, December 31, 1992 257,000 $ 1.375 - 4.675 Exercised (87,000) 1.375 - 4.675 Outstanding, December 31, 1993 170,000 1.375 - 4.675 Granted 87,000 14.875 - 16.363 Exercised (13,000) 1.375 - 3.25 Outstanding, December 31, 1994 244,000 1.375 - 16.363 Granted 67,000 12.875 - 14.163 Exercised (3,000) 3.25 Outstanding, December 31, 1995 308,000 $ 1.375 - 16.363 |
On July 29, 1993, the Company's Board of Directors approved a two-for-one split of the Company's common stock in the form of a 100% stock dividend for shareholders of record as of August 12, 1993. A total of 4,893,701 shares of common stock were issued in connection with the split. The stated par value of each share was not changed. A total of $978,740 was reclassified from additional paid-in-capital to the Company's common stock account. All share and per share amounts for 1993 and prior years have been restated to retroactively reflect the stock split. The Company has adopted a Shareholder Protection Rights Agreement and declared a distribution of one right (the "Right") for each outstanding share of Company common stock, par value $0.20 per share (the "Common Stock"). Each Right entitles the registered holder to purchase from the Company one one-hundreth of a share (a "Unit") of Series A Participating Preferred Stock, par value $1.00 per share (the "Preferred Stock"), at a purchase price of $36.00 per Unit, subject to adjustment. The rights currently attach to the certificates representing shares of outstanding Company Common Stock, and no separate Rights certificates will be distributed. The Rights will separate from the Common Stock upon the earlier of ten business days (unless otherwise delayed by the Board) following the (i) public announcement that a person or group of affiliated or associated persons (the "Acquiring Person") has acquired, obtained the right to acquire, or otherwise obtained beneficial ownership of 15% or more of the then outstanding shares of Common Stock, or (ii) commencement of a tender offer or exchange offer that would result in an Acquiring Person beneficially owning 15% or more of the then outstanding shares of Common Stock. The Board of Directors may terminate the Rights without any payment to the holders thereof at any time prior to the close of business ten business days following announcement by the Company that a person has become an Acquiring Person. The Rights, which do not have voting power and are not entitled to dividends, expire on December 21, 2005. In the event of a merger, consolidation, statutory share exchange or other transaction in which shares of Common Stock are exchanged, each Unit of Preferred Stock will be entitled to receive the per share amount paid in respect of each share of Common Stock.
12. Restructuring Costs In the fourth quarter of 1994, the Company developed and implemented a plan to restructure the operations of Wibau-Astec. In connection with the restructuring, the Company accrued costs of $1,500,000 ($1,250,000, net of tax, or $0.12 per share). The plan included, among other things, the cessation of manufacturing operations at Wibau-Astec along with related personnel reductions as well as personnel reductions in engineering and administration. Total personnel reductions were approximately 150. The plan was communicated to employees and severance notices given during the fourth quarter of 1994.
As of the end of 1994, the restructuring was substantially complete. Total costs incurred were for the write-down of certain assets to estimated fair market value, severance payments and lease termination expenses. Severance costs and exit costs incurred were approximately $1,137,000 and $363,000, respectively. Costs incurred during 1995 were substantially the same as the amounts accrued as of December 31, 1994.
Wibau-Astec sold Astec asphalt plants either manufactured in the United States or subcontracted in Europe. Wibau- Astec also sold Wibau-Astec parts and serviced a large customer base and utilized subcontractors as needed for parts and/or manufacturing components in Europe. As described in Note 2, Wibau-Astec was sold in 1995.
13. Financial Instruments Credit Risk - The Company sells products to a wide variety of customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains an allowance for doubtful accounts at a level which management believes is sufficient to cover potential credit losses. As of December 31, 1995, concentrations of credit risk with respect to trade receivables are limited due to the wide variety of customers.
Fair Value of Financial Instruments - The book value of the Company's financial instruments approximates their fair values. Financial instruments include cash, accounts receivable, accounts payable and long and short-term debt. Substantially all of the Company's short and long-term debt is floating rate debt and, accordingly, book value approximates its fair value.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Astec Industries, Inc.
We have audited the accompanying consolidated balance sheets of Astec Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Astec Industries, Inc. and subsidiaries at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles.
As discussed in Note 1, in 1995 the Company changed its method of accounting for the impairment of long-lived assets and for long-lived assets to be disposed of.
/s/ ERNST & YOUNG LLP Chattanooga, Tennessee February 27, 1996 |
CORPORATE INFORMATION
Corporate and Subsidiary Executive Officers J. Don Brock Chairman of the Board and President Thomas R. Campbell President, Roadtec, Inc. M. Brent England President, CEI Enterprises, Inc. Jerry F. Gilbert President, Trencor, Inc. Albert E. Guth Senior Vice President, Secretary and Treasurer F. McKamy Hall Corporate Controller James G. May President, Heatec, Inc. W. Norman Smith President, Astec, Inc. Robert G. Stafford President, Telsmith, Inc. Board of Directors J. Don Brock +#Chairman of the Board and President George C. Dillon *Former Chairman, Manville Corporation Daniel K. Frierson *Chairman and CEO, Dixie Yarns Inc. Jerry F. Gilbert President, Trencor, Inc. Albert E. Guth +Senior Vice President, Secretary and Treasurer G. W. Jones *Former President of APAC, Inc. Joseph Martin, Jr. *Partner, Martin and Lacy William B. Sansom *Chairman and CEO , The H.T. Hackney Co. E.D. Sloan, Jr. *Chairman of the Board, Nolas Trading Co, Inc. W. Norman Smith +#President, Astec, Inc. Robert G. Stafford #President, Telsmith, Inc. |
*Member of the Audit and Compensation Committees
+Member of the Executive Committee
#Member of the Technical Committee
Subsidiaries Astec, Inc. Chattanooga, Tennessee Heatec, Inc. Chattanooga, Tennessee CEI Enterprises, Inc. Albuquerque, New Mexico Roadtec, Inc. Chattanooga, Tennessee Telsmith, Inc. Mequon, Wisconsin Trencor, Inc. Grapevine, Texas |
Transfer Agent Registrar
Chemical Mellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, NJ 07660
Stock Exchange NASDAQ National Market - ASTE
Auditors Ernst & Young LLP Chattanooga, Tennessee General Counsel and Litigation Stophel & Stophel, P.C. Chattanooga, Tennessee Securities Counsel Alston & Bird Atlanta, Georgia Corporate Office Astec Industries, Inc. 4101 Jerome Avenue P.O. Box 72787 Chattanooga, Tennessee 37407 Telephone 423-867-4210 |
The Form 10-K, as filed with the Securities and Exchange Commission, may be obtained at no cost by any shareholder upon written request to the Senior Vice President of Astec Industries, Inc.
The Annual Meeting will be held at 10:00 a.m. on Thursday, April 25, 1996 in the Training Center at the Corporate office located at 4101 Jerome Avenue, Chattanooga, Tennessee.
Exhibit 10.90
First Amendment to Guaranty of Payment, dated March 21, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago.
EXHIBIT 10.90
FIRST AMENDMENT TO GUARANTY OF PAYMENT
THIS FIRST AMENDMENT TO GUARANTY OF PAYMENT
(this "First Amendment") is made as of March 21, 1995 by HEATEC, INC., a Tennessee corporation ("Heatec"), ROADTEC, INC., a Tennessee corporation ("Roadtec"), TRENCOR, INC., a Texas Corporation ("Trencor"), TELSMITH, INC., a Delaware corporation, ("Telsmith"), ASTEC TRANSPORTATION, INC., a Tennessee corporation ("Astec Transportation"), ACI, INC., a Tennessee corporation (formerly known as Astec Corporation--"ACI"), ASTEC, INC., a Tennessee corporation ("Astec, Inc."), and CEI ENTERPRISES, INC., a Tennessee corporation ("CEI"), in favor of THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, organized and existing under the laws of the United States of America (the "Bank"). Heatec, Roadtec, Trencor, Telsmith, Astec Transportation and ACI are referred to herein as the "Original Guarantors".
RECITALS
A. Astec Industries, Inc. (the "Borrower") and the Bank entered into a certain Credit Agreement dated as of July 20, 1994 (as amended, modified, restated or extended from time to time, the "Agreement"), pursuant to the terms of which the Bank agreed to make a revolving credit loan to the Borrower in an original principal amount not to exceed $15,000,000. Defined terms used herein shall have the meanings ascribed to them in the Guaranty (as hereinafter defined) unless expressly provided otherwise herein.
B. Each of the Original Guarantors executed a certain Guaranty of Payment dated as of July 20, 1994 (the "Guaranty"), pursuant to which each Original Guarantor guaranteed the obligations of the Borrower under the Agreement.
C. Effective January 1, 1995, the Borrower created Astec, Inc., a Wholly-Owned Subsidiary, and transferred to Astec, Inc. a substantial portion of the Borrower's assets (other than the stock of its Subsidiaries), including without limitation the assets of the so-called Astec Division of the Borrower (collectively, the "Astec, Inc. Transaction").
D. The Borrower intends to purchase all of the capital stock of Trace Industries, Inc. ("Trace") and merge Trace into CEI, a newly formed Wholly-Owned Subsidiary of the Borrower (the "Acquisition").
E. The Borrower, Astec, Inc., CEI and each Original Guarantor have requested, and the Bank has agreed, to enter into this First Amendment to amend the Guaranty to make each of Astec, Inc. and CEI a Guarantor thereunder.
AGREEMENT
NOW, THEREFORE, to induce the Bank to consent to the Astec, Inc. Transaction and the Acquisition, and in consideration of the premises and mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower, Astec, Inc., CEI and each Original Guarantor agrees as follows:
1. Conflict. In the event any of the terms and provisions of this First Amendment shall conflict with the terms and provisions of the Guaranty, the terms and provisions of this First Amendment shall govern and control.
2. Astec, Inc. and CEI as Guarantor. The Guaranty is amended by adding each of Astec, Inc. and CEI as an additional Guarantor. Each reference to Guarantor in the Guaranty shall include each of Astec, Inc. and CEI as if each of Astec, Inc. and CEI was an Original Guarantor. Each of Astec, Inc. and CEI agrees to be bound by all of the terms and provisions of the Guaranty.
3. Guaranty. Each Original Guarantor expressly acknowledges and agrees to the terms of this First Amendment and joins in this First Amendment for the purpose of acknowledging, agreeing and consenting to such agreements as such Original Guarantor, and unconditionally ratifying and affirming the Guaranty.
4. Interpretation. Reference in any of this First Amendment, the Agreement or any other Loan Document to the Guaranty shall be reference to the Guaranty as amended hereby and as further amended, modified, restated or extended from time to time and any reference to Guarantor therein shall be reference to each of Astec, Inc. and CEI and each Original Guarantor.
5. Effective Date. This First Amendment shall be effective from and after the date first written above, provided, however, that each of the conditions set forth in Section 6 below shall have been satisfied.
6. Conditions to First Amendment. This First Amendment is subject to the satisfaction in full of all of the following conditions precedent, each of which must be in form and substance satisfactory to Bank in its sole discretion.
(a) First Amendment. The Borrower, Astec, Inc., CEI and each Original Guarantor shall have executed and delivered to the Bank this First Amendment.
(b) Astec, Inc. Authorization and Organization. Astec, Inc. shall have delivered to the Bank (i) certified corporate resolutions of the Board of Directors of Astec, Inc. authorizing the Astec, Inc. Transaction and the execution and delivery of this First Amendment, and the transactions contemplated hereby, (ii) an officer's certificate as to its certificate of incorporation, by-laws and incumbency of officers of Astec, Inc. signing this First Amendment, (iii) a good standing certificate of the State of Tennessee for Astec, Inc. and (iv) documents evidencing the Astec, Inc. Transaction.
(c) Astec Industries, Inc. Authorization. The Borrower shall have delivered to the Bank certified corporate resolutions of the Board of Directors of the Borrower authorizing the Astec, Inc. Transaction.
(d) CEI Authorization and Organization. CEI shall have delivered to the Bank (i) certified corporate resolutions of the Board of Directors of CEI authorizing the execution and delivery of this First Amendment, and the transactions contemplated hereby and (ii) an officer's certificate as to its certificate of incorporation, by-laws and incumbency of officers of CEI signing this First Amendment.
(e) Expenses. The Borrower shall have paid all of the Bank's fees and expenses (including attorneys' fees and expenses) incurred in connection with this First Amendment and the transactions contemplated hereby.
7. Affirmation. Except as expressly amended hereby, the Guaranty is and shall continue in full force and effect.
8. Counterparts. This First Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute one contract.
9. Further Assurances. The Borrower, Astec, Inc., CEI and each Original Guarantor agree to execute, deliver and properly record or file, if applicable, in form and substance satisfactory to the Bank such further documents, instruments, amendments and financing statements and to take such further action, as may be necessary from time to time to effectuate the intent and purposes of this First Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date first written above.
GUARANTORS:
ASTEC, INC.
By: /s/ Albert E. Guth Its: Secretary CEI ENTERPRISES, INC. By:/s/ Albert E. Guth Its: Secretary Its: HEATEC, INC. By: /s/ Albert E. Guth Its: Secretary ROADTEC, INC. By: /s/ Albert E. Guth Its: Secretary TRENCOR, INC. By: /s/ Albert E. Guth Its: Secretary TELSMITH, INC. By: /s/ Albert E. Guth Its: Secretary ASTEC TRANSPORTATION, INC. By: /s/ Albert E. Guth Its: Secretary |
ACI, INC. (formerly known as Astec Corporation)
By: /s/ Albert E. Guth Its: Secretary |
Agreed and Accepted:
ASTEC INDUSTRIES, INC.
By: /s/ Albert E. Guth Its: Senior Vice President |
Exhibit 10.91
First Amendment to Credit Agreement, dated May 22, 1995 between the Company and The First National Bank of Chicago.
EXHIBIT 10.91
FIRST AMENDMENT TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this
"First Amendment") is made as of this 22nd day of May, 1995 by ASTEC INDUSTRIES, INC., a Tennessee corporation (the "Borrower"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association organized and existing under the laws of the United States of America (the "Bank").
RECITALS
A. Borrower and Bank entered into a certain Credit Agreement dated as of July 20, 1994 (as amended, modified, restated or extended from time to time, the "Agreement"), pursuant to which Bank agreed to make a revolving credit loan to Borrower in an original principal amount not to exceed $15,000,000. Defined terms used herein shall have the meanings ascribed to them in the Agreement (as hereinafter defined) unless expressly provided otherwise herein.
B. Borrower and Bank desire to amend the Agreement to increase the Commitment to $22,000,000, subject to the terms and provisions contained herein.
AGREEMENT
NOW, THEREFORE, in consideration for the premises and mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Bank agree as follows:
1. Conflict. In the event any of the terms and provisions of this First Amendment shall conflict with the terms and provisions of the Agreement, the terms and provisions of this First Amendment shall govern and control.
2. General Amendment to Agreement and Other Loan Documents. The Agreement and each of the other Loan Documents are hereby amended to include within the description of the indebtedness or other obligations evidenced or covered thereby any and all of the indebtedness and obligations owing under, and any and all sums advanced or payable pursuant to the Agreement, as modified by this First Amendment, and the Amended Note (as defined below), and any and all replacements, renewals, extensions, amendments or modifications thereof (collectively, the "Additional Indebtedness"). Without limitation to the foregoing, (a) the defined term "Obligations" in the Agreement and the defined term "Guaranteed Obligations" in the Guaranty shall include the Additional Indebtedness, (b) the defined term "Loan Documents" in the Agreement and each of the other Loan Documents, as applicable, shall include this First Amendment and the Amended Note, (c) each usage of the terms "Agreement" or "Credit Agreement" and "Note" in the Loan Documents shall mean the Agreement, as modified by this First Amendment, and the Amended Note, respectively, as applicable and (d) the defined term "Loan" in the Agreement shall include the increased Commitment provided for herein.
3. Amendments to Article I of the Agreement. Article I of the Agreement is amended by (a) changing "$15,000,000" to "$22,000,000" in the defined term "Commitment" and (b) deleting the defined term "Guarantor" in its entirety and inserting in lieu thereof the following:
"Guarantor" means Heatec, Inc., a Tennessee corporation, Roadtec, Inc., a Tennessee corporation, Trencor, Inc., a Texas corporation (formerly known as Trencor Jetco, Inc.), Telsmith, Inc., a Delaware corporation, Astec Transportation, Inc., a Tennessee corporation, ACI, Inc., a Tennessee corporation (formerly known as Astec Corporation), Astec, Inc., a Tennessee corporation, CEI Enterprises, Inc., a Tennessee corporation, and their respective successors and assigns.
4. Additional Agreements of Borrower. As a condition to the effectiveness of this First Amendment and the Bank's acceptance of the Amended Note, Borrower agrees:
(a) to deliver this First Amendment, a Second Amendment to Guaranty of Payment of even date herewith (the "Second Amendment to Guaranty") executed by each of the Guarantors, and an Amended and Restated Note of even date herewith (the "Amended Note") executed by Borrower made payable to Bank in the principal amount not to exceed $22,000,000, each duly executed on behalf of Borrower and each Guarantor, as applicable, and each in form acceptable to Bank;
(b) to pay to Bank any and all fees and expenses, including without limitation reasonable attorneys' fees and expenses, incurred by Bank in connection with the negotiation and delivery of this First Amendment, the Amended Note and all other documents in connection therewith;
(c) to deliver to Bank (i) certified corporate resolutions of the Board of Directors of Borrower and each Guarantor authorizing the execution and delivery of this First Amendment, the Amended Note and the Second Amendment to Guaranty, and authorizing the transactions contemplated in connection therewith, as applicable, and (ii) an officer's certificate for Borrower and each Guarantor certifying such entity's charter and by-laws and incumbency of such entity's officers;
(d) to pay to Bank an arrangement fee in the amount of $7,000 payable on or before the date hereof, which fee shall be deemed fully earned on the date hereof whether or not the Loan (as the definition of that term is modified hereby) is disbursed in whole or in part;
(e) a certificate signed by the chief financial officer of Borrower, stating that no Default or Unmatured Default has occurred and is continuing, in form acceptable to Bank;
(f) a written opinion of Borrower's and each Guarantor's counsel, addressed to Bank, in form acceptable to Bank;
(g) a solvency certificate executed by an officer of Borrower; and
(h) such other documents as Bank or its counsel may have reasonably requested.
If each of the foregoing conditions are not satisfied, this First Amendment shall be null and void and of no further force and effect and Borrower shall repay the portion of the Loan advanced pursuant to this First Amendment upon demand from Bank.
5. Effective Date. This First Amendment shall be effective from and after the date first above written, provided that each of the conditions set forth in Section 4 above have been satisfied.
6. Representations. Borrower hereby restates and remakes each of the representations and warranties of Borrower that are made in the Agreement.
7. Affirmation. Except as expressly amended hereby, the Agreement is and shall continue in full force and effect.
8. Severability of Provisions. Any provision in this First Amendment that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this First Amendment are declared to be severable.
9. CHOICE OF LAW. THIS FIRST AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
10. Counterparts. This First Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute one contract.
11. Further Assurances. Borrower agrees to execute, deliver and properly record or file, if applicable, in form and substance satisfactory to Bank such further documents, instruments, amendments and financing statements and to take such further action, as may be necessary from time to time to effectuate the intent and purposes of this First Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed as of the date first above written.
ASTEC INDUSTRIES, INC.
By: /s/ Albert E. Guth Its: Senior Vice President |
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ John Runger Its: Vice President CONSENTED AND AGREED TO BY GUARANTORS: HEATEC, INC. By: /s/ Albert E. Guth Its: Secretary ROADTEC, INC. By: /s/ Albert E. Guth Its: Secretary TRENCOR, INC. By: /s/ Albert E. Guth Its: Secretary TELSMITH, INC. By: /s/ Albert E. Guth Its: Secretary ASTEC TRANSPORTATION, INC. By: /s/ Albert E. Guth Its: Secretary ACI, INC. By: /s/ Albert E. Guth Its: Secretary |
ASTEC, INC.
By: /s/ Albert E. Guth Its: Secretary |
CEI ENTERPRISES, INC.
By: /s/ Albert E. Guth Its: Secretary |
AMENDED AND RESTATED
NOTE
Chicago, Illinois
$22,000,000 May 22, 1995
FOR VALUE RECEIVED, ASTEC INDUSTRIES, INC., a
Tennessee corporation (the "Borrower"), promises to pay to the order of THE FIRST NATIONAL BANK OF CHICAGO (the "Lender") the lesser of the principal sum of TWENTY-TWO MILLION AND NO/100 UNITED STATES DOLLARS (U.S. $22,000,000) or the aggregate unpaid principal amount of all Loans made by the Lender to the Borrower pursuant to Article II of the Credit Agreement dated as of July 20, 1994 (as the same may be amended or modified from time to time, including without limitation by the First Amendment to Credit Agreement dated as of May 22, 1995, executed by the Lender and the Borrower, the "Agreement") executed by the Borrower and the Lender, in lawful money of the United States in immediately available funds at the main office of the Lender in Chicago, Illinois, together with interest on the unpaid principal amount hereof at the rates and on the dates set forth in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Facility Termination Date and shall make such mandatory payments as are required to be made under the terms of Article II of the Agreement. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.
The Lender is hereby authorized to record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the principal amount and date of each of the Loans and the date and amount of each principal and interest payment hereunder, and such other reasonable information, provided, however, that the failure to so record (or any error in such recording) shall not affect the Borrower's obligations under this Note or the other Loan Documents.
This Note is issued pursuant to, and is entitled to the benefits of the Agreement, to which Agreement, as it may be amended, reference is hereby made for a statement of the terms and conditions governing this Note, including without limitation the terms and conditions under which this Note may be prepaid or its maturity date accelerated.
The Borrower hereby waives any rights to receive any notice or demand not expressly provided in this Note or the Agreement with respect to the Borrower's obligations hereunder.
This Note is made in substitution for and not in payment of that certain Note dated July 20, 1994 in the principal amount of $15,000,000 (the "Initial Note") executed by the Borrower and made payable to the Lender. The Lender is the legal holder of the Initial Note.
This Note shall be governed by and construed in accordance with the law of the State of Illinois, without giving effect to Illinois choice of law principles.
ASTEC INDUSTRIES, INC., a Tennessee corporation
By: /s/ Albert E. Guth Print Name: Albert E. Guth Title: Senior Vice President |
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
AMENDED AND RESTATED NOTE OF ASTEC INDUSTRIES, INC.,
DATED MAY 22, 1995
Date Principal Maturity of Principal Amount and Type Interest Amount Interest Unpaid of Loan Period Paid Paid Balance |
SOLVENCY CERTIFICATE |
Pursuant to Section 4 of that certain First Amendment to Credit Agreement dated as of May 22, 1995 ("First Amendment") executed by The First National Bank of Chicago ("Lender") and Astec Industries, Inc., a Tennessee corporation ("Borrower"), the undersigned hereby certifies to Lender as follows (terms not otherwise defined herein shall have the meanings given them in the First Amendment or in that certain Credit Agreement dated as of July 20, 1994 executed by Lender and Borrower ("Credit Agreement"):
1. The undersigned is the duly qualified and acting Chief Financial Officer of Borrower and each of the Subsidiaries, has responsibility for the management of financial affairs of Borrower and each of the Subsidiaries and the preparation of their respective financial statements, and is familiar with their respective properties, business and assets, and the Transactions (as defined below).
2. The undersigned has reviewed the contents of this Certificate and conferred with the President of Borrower and each of the Subsidiaries, and with counsel for Borrower and each of the Subsidiaries, for the purpose of discussing the meanings of its contents.
3. For the purposes of this Certificate, the term "Transactions" means the transactions contemplated by the Credit Agreement and the First Amendment.
4. The undersigned has reviewed such documents and made such investigations and inquiries as the undersigned deems necessary and prudent. The financial information and assumptions which underlie and form the basis for the certifications made in this Certificate were reasonable when made and were made in good faith and continue to be reasonable as of the date hereof.
5. The undersigned hereby certifies that:
A. Neither Borrower nor any Subsidiary is insolvent and the execution and delivery of the First Amendment nor any document in connection therewith and the consummation of the Transactions will not render Borrower or any Subsidiary insolvent. Each of the fair value and present fair saleable value of the assets of Borrower and its Subsidiaries on a consolidated basis exceeds their liabilities on a consolidated basis. The undersigned understands that in this context "insolvent" means that the present fair saleable value of the total assets of Borrower and its Subsidiaries on a consolidated basis is less than the amount of the total liabilities of Borrower and its Subsidiaries on a consolidated basis. The undersigned also understands that the term "liabilities" includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent (with contingent liabilities valued based on Borrower's good faith estimate of the probability of occurrence).
B. Borrower and its Subsidiaries would be able to pay their debts as they become absolute and mature. If the maximum amount available under the Credit Agreement, as modified by the First Amendment, is borrowed by Borrower, Borrower and its Subsidiaries will not incur debts beyond their ability to pay as they mature.
C. The borrowing of the maximum amount available under the Credit Agreement, as modified by the First Amendment, will not leave Borrower and its Subsidiaries with property remaining in their hands constituting "unreasonably small capital" with which to conduct their businesses.
D. Neither Borrower nor any Subsidiary has taken any actions with respect to the Credit Agreement, the First Amendment or the other Loan Documents executed pursuant thereto with actual intent to hinder, delay or defraud either present or future creditors.
6. In reaching the conclusions and making the certifications set forth in this Certificate, the undersigned has considered, among other things:
A. the cash and other current assets of Borrower and each of the Subsidiaries;
B. all net contingent liabilities of Borrower and each of the Subsidiaries, including without limitation, claims arising out of pending and threatened litigation against Borrower or any Subsidiary, and in so doing, Borrower has estimated the amount of such liabilities at the maximum amount which, in light of all the facts and circumstances existing on the date hereof, can reasonably be expected to become actual or matured liabilities;
C. all obligations and liabilities of Borrower and each of the Subsidiaries, whether matured or unmatured, liquidated or unliquidated, disputed or undisputed, secured or unsecured, subordinated, absolute, fixed or contingent, including without limitation, claims arising out of pending and threatened litigation against Borrower or any Subsidiary; and
D. the level of capital customarily maintained by other entities engaged in the same or similar businesses as the business of Borrower and the Subsidiaries.
The undersigned understands that Lender is relying on this Certificate in connection with the consummation of the Transactions and the extension of credit in connection therewith. The undersigned certifies that the foregoing information is true, complete and correct.
/s/ Albert E. Guth Name: Albert E. Guth Date: May 22, 1995 |
CERTIFICATE OF NO DEFAULTS
TO: THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza
Chicago, Illinois 60670
This Certificate of No Defaults is furnished pursuant to Section 4 of that certain First Amendment to Credit Agreement dated as of May 22, 1995 (the "First Amendment"), executed by Astec Industries, Inc. (the "Borrower") and The First National Bank of Chicago (the "Bank"). Reference is made to that certain Credit Agreement dated as of July 20, 1994 (the "Agreement") executed by Borrower and Bank. Unless otherwise defined herein, the terms used in this Certificate shall have the same meanings as set forth in the Agreement, as modified by the First Amendment.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
I am the duly elected Chief Financial Officer of Borrower.
I have reviewed the terms of the Agreement and the First Amendment and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of Borrower and its Subsidiaries during the relevant accounting periods.
The examinations described in Paragraph 2 above did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the relevant accounting periods or as of the date of this Certificate.
Attached hereto is a schedule setting forth financial data and computations evidencing the Borrower's compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct.
The foregoing certifications and the attached
computations are made and delivered this 22nd day of May, 1995.
ASTEC INDUSTRIE S, INC.
By: /s/ Albert E. Guth (Albert E. Guth) Chief Financial Officer FIRST CHICAGO COVENANTS FOR THE QUARTER ENDING MARCH 31, 1995 (IN THOUSANDS) |
CURRENT RATIO
I. Current Assets 115,044
II. Current Liabilities 57,193
III. Current Ratio, 1 divided by 2 2.01
IV. Required Ratio 1.50
V. Excess (Shortfall) 0.51
MINIMUM TANGIBLE NET WORTH
VI. Consolidated Stockholders' Equity 93,826
VII. Less: Consolidated Intangible Assets 14,750
VIII. Consolidated Tangible Net Worth 79,076
IX. Required Net Worth, $50,000,000 Plus
Fifty Percent (50%) of Cumulative
Consolidated Net Income Subsequent
to December 31, 1993 62,926
I. Excess (Shortfall) 16,150
LEVERAGE RATIO
I. Consolidated Funded Debt (Excluding Recourse) 23,310 II. Consolidated Net Worth + Consolidated Funded Debt 117,136 III. 11 Divided by 12 .20 IV. Required Minimum .50 V. Excess (Shortfall) .30 |
FIXED CHARGE COVERAGE (4 QUARTERS)
I. Pre-Tax Income Excluding Non-Recurring Gains and Losses 13,426
FIXED CHARGES
I. Interest Expense 1,109 II. Amortization of Debt Discount and related expenses 24 III. Payments of Principal and Indebtedness 500 IV. Fixed Charges (17 - 20) 1,633 V. Fixed Charge Coverage Ratio (16 divided by 21) 8.22 VI. Required 2.50 |
VII. Excess (Shortfall) 5.72
Exhibit 10.92
Second Amendment to Guaranty of Payment, dated May 22, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago.
EXHIBIT 10.92
SECOND AMENDMENT TO GUARANTY OF PAYMENT
THIS SECOND AMENDMENT TO GUARANTY OF PAYMENT (this "Second Amendment") is made as of May 22, 1995 by HEATEC, INC., a Tennessee corporation ("Heatec"), ROADTEC, INC., a Tennessee corporation ("Roadtec"), TRENCOR, INC., a Texas Corporation ("Trencor"), TELSMITH, INC., a Delaware corporation ("Telsmith"), ASTEC TRANSPORTATION, INC., a Tennessee corporation ("Astec Transportation"), ACI, INC., a Tennessee corporation (formerly known as Astec Corporation--"ACI"), ASTEC, INC., a Tennessee corporation ("Astec, Inc."), and CEI ENTERPRISES, INC., a Tennessee corporation ("CEI"), in favor of THE FIRST NATIONAL BANK OF CHICAGO, a national banking association organized and existing under the laws of the United States of America (the "Bank"). Heatec, Roadtec, Trencor, Telsmith, Astec Transportation, ACI, Astec, Inc. and CEI are referred to herein as the "Guarantors."
RECITALS
A. Astec Industries, Inc. (the "Borrower") and the Bank entered into a certain Credit Agreement dated as of July 20, 1994 (as amended, modified, restated or extended from time to time, including pursuant to a certain First Amendment to Credit Agreement dated as of May 22, 1995 ("First Amendment") executed by the Bank and the Borrower, the "Agreement"), pursuant to the terms of which the Bank agreed to make a revolving credit loan to the Borrower in an original principal amount not to exceed $22,000,000.
B. Each of the Guarantors executed a certain Guaranty of Payment dated as of July 20, 1994 (as amended by that certain First Amendment to Guaranty of Payment dated as of March 21, 1995, the "Guaranty"), pursuant to which each Guarantor guaranteed the obligations of the Borrower under the Agreement. Defined terms used herein shall have the meanings ascribed to them in the Guaranty or the Agreement unless expressly provided otherwise herein.
C. Each Guarantor is a wholly-owned subsidiary of Borrower, and will therefore benefit from the First Amendment and the increased Commitment pursuant thereto.
D. Borrower and each Guarantor have requested, and the Bank has agreed, to enter into this Second Amendment to amend the Guaranty to expressly cover the First Amendment.
AGREEMENT
NOW, THEREFORE, to induce the Bank to enter into the First Amendment and in consideration of the premises and mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and each Guarantor agree as follows:
1. Conflict. In the event any of the terms and provisions of this Second Amendment shall conflict with the terms and provisions of the Guaranty, the terms and provisions of this Second Amendment shall govern and control.
2. First Amendment; Guaranty. Each Guarantor expressly
(a) acknowledges, consents and agrees to the terms of the First Amendment,
(b) confirms and agrees that the Guaranteed Obligations shall include
without limitation all liabilities and obligations of Borrower under the First
Amendment and the Amended and Restated Note executed pursuant
thereto, and (c) unconditionally ratifies and affirms the Guaranty.
3. Interpretation. Reference in any of this Second Amendment, the Agreement, the First Amendment or any other Loan Document to the Guaranty shall be reference to the Guaranty as amended hereby and as further amended, modified, restated or extended from time to time.
4. Effective Date. This First Amendment shall be effective from and after the date first above written.
5. Affirmation. Except as expressly amended hereby, the Guaranty is and shall continue in full force and effect.
6. Counterparts. This Second Amendment may be executed in two or more counterparts, each of which shall constitute an original, but all of which when taken together shall constitute one contract.
7. Further Assurances. The Borrower and each Guarantor agree to execute, deliver and properly record or file, if applicable, in form and substance satisfactory to the Bank such further documents, instruments, amendments and financing statements and to take such further action, as may be necessary from time to time to effectuate the intent and purposes of this Second Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed as of the date first above written.
GUARANTORS:
HEATEC, INC.
By: /s/ Albert E. Guth Its: Secretary ROADTEC, INC. By: /s/ Albert E. Guth Its: Secretary TRENCOR, INC. By: /s/ Albert E. Guth Its: Secretary TELSMITH, INC. By: /s/ Albert E. Guth Its: Secretary ASTEC TRANSPORTATION, INC. By: /s/ Albert E. Guth Its: Secretary ACI, INC. By: /s/ Albert E. Guth Its: Secretary ASTEC, INC. By: /s/ Albert E. Guth Its: Secretary CEI ENTERPRISES, INC. By: /s/ Albert E. Guth Its: Secretary Agreed and Accepted: ASTEC INDUSTRIES, INC. By: /s/ Albert E. Guth Its: Senior Vice President |
Exhibit 10.93
Guaranty of all obligations of Astec-Europa Strassenbaumaschinen GmbH executed by the Company in favor of Bayerische Vereinsbank Aktiengesellschaft, dated December 6, 1995.
EXHIBIT 10.93
TO: Bayerische Vereinsbank
Aktiengesellschaft
Frankfurt Branch
GUARANTEE
For valuable consideration, and to induce Bayerische Vereinsbank Aktiengesellschaft, Munich, Federal Republic of German and/or any of its offices and branches ("Bank"), to grant or continue to grant overdraft credit facilities or other credit or banking facilities ("Credit") from time to time as it may deem fit and at its discretion to Astec Europa Strassen-baumaschinen GmbH ("Borrower") the undersigned Astec Industries, Inc. ("Guarantor") hereby unconditionally guarantees and promises that all obligations (including principal, interest and charges) at any time owing by the Borrower to the Bank in respect of such Credit will be promptly paid in full when due (at stated maturity, by acceleration or otherwise).
The liability of the Guarantor under this Guarantee shall not exceed at anyone time the sum of DM 3,000,000 (Deutsche Mark three million), plus all interest, cost and fees upon the Credit or upon such part thereof as shall not exceed the foregoing limitation. Notwithstanding the foregoing the Bank may permit the Credit of the Borrower to exceed Guarantor's liability.
This is a continuing guarantee. The Guarantor consents that without notice to it the maturity of any obligation of the Borrower may be renewed or the terms thereof waived or varied, or any collateral or other security therefore may be released, exchanged or otherwise dealt with, all as the bank may determine. The Guarantor agrees that its liability hereunder shall be unconditional irrespective of any circumstances which might otherwise constitutes a discharge of a surety or guarantor, and waives diligence, presentment, protest and all notices and demands whatsoever, including notice of acceptance of this Guarantee or of any extension of credit and any requirement that any right or power be exhausted or any action be taken against the Borrower or against any collateral or other security held by the Bank.
The Guarantor agrees that all payments (whether of principal, interest or
otherwise) to be made by it hereunder shall be made to the Bank at its Head
Office in Munich in the legal currency of the Federal Republic of Germany.
All payments (whether of principal, interest or otherwise) to be made by
the Guarantor to the Bank hereunder shall be made free and clear of and
without deduction for any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, restrictions or conditions of any nature now or
hereinafter imposed by any governmental authority in any jurisdiction or
any political subdivision or banking authority thereof or therein. If at any
time any applicable law requires the Guarantor to make any such deduction
or withholding from any such payment, the sum due from the Guarantor in
respect of such payment shall be increased to the extent necessary to insure
that, after the making of such deduction or withholding, the Bank receives a
net sum equal to the sum which it would have received if no such deduction
or withholding had been required to be made.
No payment by the Guarantor hereunder shall entitle the Guarantor, by subrogation to the rights of the Bank or otherwise, to any payment by the Borrower or out of the property of the Borrower, except after payment in full of all obligations (whether or not guaranteed hereby) which may be or become payable by the Borrower to the Bank. The Bank's statement of account shall represent conclusive proof of the claim of the Bank against the Borrower, except for manifest error.
The obligations of the Guarantor hereunder shall not be affected by the receipt by the Bank of the proceeds of any collateral or other security held by the Bank. In case at any time the Bank shall be required for any reason to repay any amount received by it from the Borrower or from any collateral or other security held by the Bank on account of any obligation guaranteed hereby, then the liability of the Guarantor in respect of such obligation shall be restored. The Guarantor's liability hereunder shall not be affected by termination of its position as partner or shareholder of the Borrower.
The Guarantor shall pay all taxes (including stamp taxes and registration fees) imposed in the United States with respect to this Guarantee, and the obligation of the Guarantor to pay such amount shall survive the discharge of the other obligations of the Guarantor hereunder.
This Guarantee shall be valid until receipt by the Bank of written notice of cancellation of this Guarantee by guarantor. The effect of any such termination shall be prospective only.
This Guarantee shall be governed by the law of the State of New York of the United States of America.
In connection with any dispute which may arise under this Guarantee the Guarantor hereby irrevocably submits to consents to and waives any objection to the jurisdiction of the courts of the State of New York located in the County of New York and of the United States District Court for the Southern District of New York or at the Bank's option to the Courts of any jurisdiction in which the Guarantor or any of its assets may be located and waives any objection to the laying of such venue in such court. The Guarantor admits that any such disputes may be resolved at least as conveniently in such a court as in any other court and will not seek dismissal or a change of venue on the ground that resolution of such a dispute in any such court is not convenient or in the interest of justice.
IN WITNESS thereof, the undersigned has caused this instrument to be duly executed by its proper officers this 6th day of December , 1995.
Astec Industries, Inc.
By: /s/ Albert E. Guth Seal Attest: Janice G. Ritchie |
Exhibit 10.94
Guaranty of a DM3,000,000 credit facility to Gibat Ohl
Ingenieurgesellschaft fur
Anlagentechnik mbH executed by the Company in favor of Deutsche Bank AG,
dated December 13, 1995.
EXHIBIT 10.94
To:
Deutsche Bank AG
Filiale Koblenz
Lobastrasse 66d
56068 Koblenz
Federal Republic of Germany
GUARANTEE
We have been informed that you are prepared to grant
Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH, 63594
Hasselroth, Germany
credit facilities up to the amount of DM 3,000,000 against our irrevocable
and unconditional Guarantee.
The purpose of this undertaking is to ensure that you, under any and all circumstances, whether factual or legal and regardless of the motives and considerations or other circumstances by reasons of which the borrower may fail to effect payment and/or to convert into the effective and freely available currency and/or to transfer to the place designated shall receive all monies unpaid under the unforesaid credit line on their due dates, without deduction for or on account of any present or future taxes or duties of any kind whatsoever.
This being promised, we, Astec Industries, Inc. of Chattanooga (TN), USA hereby irrevocably and unconditionally undertake to pay you without delay on your first demand without any deduction under any and all circumstances and irrespective of all objections or exceptions, from third parties also, in Koblenz, Federal Republic of Germany, or as any other place designated by you in effective Deutsche Mark or in any other freely available and convertible currency designated by you any amount up to
DM 3,000,000
(say: Deutsche Mark three million)
Over and above the aforesaid amount we undertake to pay you such additional amounts as correspond to the interest on the aforementioned amount and charges, expenses, fees and other amounts under the aforesaid credit line.
The issuance of this Guarantee is permitted according to the laws of the United States of America.
We confirm that we have taken all necessary steps and undertake, should the need only arise later to ensure immediately that any amount can be transferred to you in case of your demand free of costs and charges.
This Guarantee is effective as of its date if issuance.
We hereby waive notice of acceptance and agree with you that acceptance will be deemed to be effected with receipt of this instrument by you.
All rights and obligations arising from this undertaking shall in all respects exclusively by governed by the laws of the Federal Republic of Germany and your General Business Conditions. Place of jurisdiction is Koblenz, Federal Republic of Germany; we however, may also be sued before any other competent court.
In the case of legal action arising from this Guarantee within the Federal Republic of Germany we hereby irrevocably appoint Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH as our agent for any service of process or summons in connection with the start or continuance of a legal proceeding (including any execution proceeding).
December 13, 1995 /s/ Albert E. Guth Date ASTEC INDUSTRIES, INC. Albert E. Guth Senior Vice President |
Exhibit 10.95
Waiver for December 31, 1995, dated November 10, 1995 with respect to
The
First National Bank of Chicago Credit Agreement dated
July 20, 1994, as amended.
EXHIBIT 10.95
November 10, 1995
Astec Industries, Inc.
PO Box 72787
4101 Jerome Avenue
Chattanooga, TN 37407
Gentlemen:
We refer to that certain Credit Agreement dated as of July 20, 1994 (together with all amendments and modifications thereto, the "Agreement"), by and between Astec Industries, Inc. (the "Company") and The First National Bank of Chicago ("FNBC"). All capitalized terms used herein and not otherwise defined shall have the meanings attributed to such terms in the Agreement.
You have requested that we waive certain currently existing Defaults under the Agreement as and to the extent hereinafter described. This is to advise you that, subject to the conditions contained in this letter, FNBC hereby waives any and all objections that it may have to Astec's non-compliance with Section 6.19 of the Agreement solely for the fiscal year ending December 31, 1995 and only to the extent that expenditures in the acquisition of fixed assets does not exceed $18,000,000 for such fiscal year.
All of the terms, conditions and agreements contained in the Agreement, as previously modified, if applicable, shall remain in full force and effect as written and are hereby ratified and affirmed. Other than as expressly provided herein, FNBC does not waive any, and hereby expressly reserves all, rights and remedies available to it at law or in equity.
Please acknowledge your acceptance of this letter by signing and returning a copy of this letter to the undersigned. Upon receipt by the undersigned of such signed copy the specific waivers contained herein shall become effective as of the date first written above, subject to the conditions contained herein.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ John Runger Title: Vice President |
Exhibit 10.96
English translation of Application for Commencement of Bankruptcy Proceedings filed on behalf of Astec-Europa Strassenbaumaschinen in Gelnhausen, Germany on February 9, 1996.
EXHIBIT 10.96
Translation of the Filing of Bankruptcy for Astec Europa Strassenbaumaschinen GmbH:
N 16/96 Present: Gunther, JHS as registrant of the Court
[Stamp with date and time Feb. 9, 1996, 11:45 a.m.]
Record of the Application
for commencement of bankruptcy proceedings n the assets of Astec Europa
Strassenbaumaschinen GmbH.
It appears the managing director
Mr. Adolf Herrlein, Nansenring 15, 60589 Frankfurt/Main, identified by
and declares:
I am/We are managing director of the limited liability company Astec Europa Strassenbaumaschinen GmbH, registered in the Commercial Register of the Lower Court Gelnhausen under HR B 1794.
Seat of the company is 63594 Hasselroth/Neuenhasslau.
Place of Business is Industriestrasse 1.
Purpose of the Company is Development, planning and manufacturing of industrial products of all kinds, etc.
A now prepared profit and loss statement has shown over-indebtedness as the assets of the Company do not cover the liabilities.
Because of the suspension of payments the Company is insolvent. As there are no means available, the creditors will no longer be satisfied.
As attachment to this protocol
the Court receives a list of all creditors and debtors and a summary of the assets.
Application: Hereby it is applied to commence bankruptcy proceedings by resolution of the Lower Court Gelnhausen.
Venue of the Lower Court Gelhausen is based on general jurisdiction or on the place of business.
The questionnaire as to the financial status of the bankrupt Company is attached
Read, approved and signed:
/s/ Adolf Herrlein /s/ Gunther, JHS |
Exhibit 10.97
Limited Consent of The First National Bank of Chicago dated as of March 21, 1995 related to the acquisition of Trace Industries, Inc. and the assignment of certain assets to Astec, Inc.
EXHIBIT 10.97
LIMITED CONSENT
THIS LIMITED CONSENT (this "Consent") is made as of this
21st day of March, 1995 by THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association organized and existing under
the laws of the United States of America (the "Bank").
RECITALS
A. The Bank and Astec Industries, Inc. ("Astec") have entered into that certain Credit Agreement dated as of July 20, 1994 (the "Agreement"), pursuant to which the Bank made a revolving credit loan to Astec in an aggregate principal amount not to exceed $15,000,000. Defined terms used herein shall have the meanings ascribed to them in the Agreement unless expressly otherwise provided herein.
B. Each of Heatec, Inc., Roadtec, Inc., Trencor, Inc., Telsmith, Inc., Astec Transportation, Inc. and Astec Corporation (each, a "Guarantor") executed that certain Guaranty of Payment dated as of July 20, 1994, pursuant to which each Guarantor guaranteed Astec's obligations under the Agreement. Astec Corporation has changed its name to ACI, Inc., a Tennessee corporation.
C. Effective January 1, 1995, Astec created a Wholly-Owned Subsidiary, Astec, Inc., a Tennessee corporation ("Astec, Inc."), and transferred to Astec, Inc. a substantial portion of Astec's assets (other than the stock of its Subsidiaries), including without limitation the assets of the so-called Astec Division of Astec (collectively, the "Astec, Inc. Transaction").
D. Astec intends to purchase all of the capital stock of Trace Industries, Inc. ("Trace") and merge Trace into a newly formed Wholly- Owned Subsidiary, CEI Enterprises, Inc. (collectively, the "Acquisition"). The purchase price for the Acquisition will be paid in part in cash and in part in capital stock of Astec.
E. Astec has requested that the Bank consent to the Astec, Inc. Transaction and the Acquisition.
The Bank hereby consents to the Astec, Inc. Transaction and the Acquisition and waives any and all objections that it may have to noncompliance by the Company with Sections 6.2, 6.12, 6.13, 6.16 and 6.26 of the Agreement with respect thereto.
The effectiveness of this Consent is subject to the execution and
delivery to the Bank by Astec, Astec, Inc., the Guarantors and CEI
Enterprises, Inc. of that certain First Amendment to Guaranty of Payment of
even date herewith, and to the satisfaction of the conditions set forth in
Section 6 thereof. This Consent is limited to its terms and shall not
constitute a consent or waiver of any other rights the Bank may have from
time to time. All of the terms, conditions and agreements contained in the
Agreement shall remain in full force and effect as written and are hereby
ratified and affirmed. Other than as expressly provided herein, the Bank
does not waive any of the terms, conditions or agreements contained in the
Agreement. The Bank hereby expressly reserves all rights and remedies
available to it at law or in equity.
The Bank has duly executed this Consent as of the date first written above.
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ John Runger Its: Vice President Agreed and Accepted: |
BORROWER:
ASTEC INDUSTRIES, INC.
By: /s/Albert E. Guth Its: Senior Vice President |
GUARANTORS:
HEATEC, INC.
By: /s/ Albert E. Guth Its: Secretary |
ROADTEC, INC.
By: /s/ Albert E. Guth Its: Secretary |
TRENCOR, INC.
By: /s/ Albert E. Guth Its: Secretary |
TELSMITH, INC.
By: /s/ Albert E. Guth Its: Secretary |
ASTEC TRANSPORTATION, INC.
By: /s/ Albert E. Guth Its: Secretary |
ACI, INC. (formerly known as Astec Corporation)
By: /s/ Albert E. Guth Its: Secretary |
Exhibit 10.98
Supplemental Executive Retirement Plan, dated February 1, 1996 to be effective as of January 1, 1995.
EXHIBIT 10.98
ASTEC INDUSTRIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE JANUARY 1, 1995
ASTEC INDUSTRIES, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Supplemental Executive Retirement Plan, hereinafter referred to as the Plan, effective January 1, 1995 is being adopted by Astec Industries, Inc. to enhance for certain highly compensated Executive Officers the retirement benefit provided by Astec Industries, Inc.
ARTICLE 1 - DEFINITIONS
As used herein, the following terms shall have the following meanings unless a different meaning is plainly required by the context:
1.1 ADMINISTRATOR: The Committee designated by the Board to administer the Basic Plan.
1.2 BASIC PLAN: The Astec Industries, Inc. 401(K) Retirement Plan, as in effect on December 31, 1994 and as it may be amended from time to time.
1.3 BENEFICIARY: The party or parties entitled to receive a Participant's Benefit in the event of the Participant's death.
1.4 BENEFIT: The Benefit payable to the Participant pursuant to Article 3.
1.5 BOARD: The Board of Directors of Astec Industries, Inc.
1.6 CODE: The Internal Revenue Code of 1986, as amended.
1.7 COMPANY: Astec Industries, Inc.
1.8 COMPENSATION: The total W-2 compensation paid by Astec Industries, Inc. to the Participant during each calendar year beginning with 1995.
1.9 INVESTMENT RESULTS: The actual return on the investment by Astec Industries, Inc. of the contributions on behalf of each Participant during each calendar year. Participants may not direct the investment of contributions to the plan, however, the Company may, if it chooses, use the Participant's investment choices in the Basic Plan as guidance to investing each Participant's Supplemental Executive Savings Account.
1.10 PARTICIPANT: Those Executive Officers of Astec Industries, Inc. determined by the Board to be eligible and designated by the Board as participants from time to time.
The following terms shall have the same meanings as contained in the Basic Plan unless a different meaning is plainly required by the context:
Plan Year, Spouse, Termination Date, and Years of Service
ARTICLE 2 - PARTICIPATION
Participation in the Supplemental Executive Retirement Plan shall be limited to those key Executive Officers responsible for the ultimate efficient and profitable operation of the Company, who have been selected by the Board of Directors. The executives listed below will become a Participant on January 1, 1995, every other eligible employee will participate as of the January 1 of the year he is first designated a participant by the Board. Participation in the Plan shall cease on the Participant's Termination Date.
The initial Participants are:
J. Don Brock
Thomas R. Campbell
Jerry F. Gilbert
Albert E. Guth
F. McKamy Hall
James G. May
W. Norman Smith
Robert A. Stafford
ARTICLE 3 - RETIREMENT BENEFITS
3.1 ELIGIBILITY: A Participant whose employment terminates on or after December 31, 1995, shall receive the benefit accrued under this plan paid in accordance with benefit payment option selected by the Participant for his benefit from the Basic Plan.
3.2 AMOUNT: The Employer will make annual contributions to each Participant's Supplemental Executive Savings Account. The Account will be credited with the Employer contributions and adjusted for investment results. The amount of the annual contribution will be determined at the date an Employee becomes a Participant in this Plan; but is subject to be increased at a later date by the Board of Directors.
The initial contribution rate for the Participants designated in Article 2 is 10% of total Compensation.
3.3 PAYMENT OF BENEFITS: The retirement benefit payable under the Plan to Participants in 100% of the value of their Supplemental Executive Savings Account on the distribution date. However, the Participant may request that his entire vested interest be paid in equal annual installments for the period of time elected by the Participant not to exceed the lesser of 10 years or the life expectancy of the Participant.
ARTICLE 4 - AMENDMENT AND TERMINATION
4.1 AMENDMENT: The Company may amend any or all of the provisions of this Plan at any time without the consent of any Participant or Beneficiary; provided, however, that no such amendment shall deprive any Participant or Beneficiary of any Benefit which had accrued prior to the effective date of such amendment.
4.2 TERMINATION: The Company may terminate the Plan at any time and shall cease paying Benefits hereunder immediately upon the effective date of such termination. Within 90 days following such effective date, the Company shall pay to each Participant or Beneficiary an amount equal to the value of the Supplemental Executive Savings Account as of such date.
ARTICLE 5 - ADMINISTRATION
5.1 ADMINISTRATION: The Administrator shall administer the Plan and shall have all powers necessary or appropriate to enable it to carry out its duties including, without limitation, the power to interpret the Plan and to make, establish and change rules and procedures with respect to the operation of the Plan. The Administrator shall have the authority to decide all questions arising under the Plan including those involving an individual's eligibility for Benefits and to determine the amount of any Benefit to be paid to any Participant or Beneficiary hereunder. All such decisions shall be conclusive and binding on all persons.
5.2 REQUIRED INFORMATION: Each Participant and Beneficiary shall furnish the Administrator such information as it shall consider necessary or desirable for purposes of administering the Plan. The provisions of the Plan respecting the payment of any Benefit are conditional upon the Administrator's prompt receipt of such information. The Company, the Administrator and any other party involved in the administration of the Plan shall be entitled to rely upon any information furnished by a Participant or Beneficiary with respect to any matters required to be determined hereunder and shall not be liable on account of the payment of any moneys or the doing of any act or failure to act in reliance thereon.
5.3 CLAIMS: Any person having a claim for the payment of a Benefit shall file such claim with the Administrator in writing on a form furnished by it.
(a) Denial of Claims: In the event any such claim is denied or not paid within 60 days after the date of the filing thereof, the Administrator shall notify the claimant in writing of the specific reasons for the denial or nonpayment, the specific provisions of this Plan upon which such denial or nonpayment is based and the appeal procedures set forth below.
(b) Appeal Procedures: The Administrator shall review appeals of claims which have been denied or have not been paid. Any claimant whose claim has been denied or has not been paid within said 60 day period may file a written appeal of such denial or nonpayment with the Administrator within 90 days after the expiration of said 60 day period together with such information concerning such claim as the claimant desires the Administrator to consider in its review of such denial or nonpayment. Not later than 60 days after its receipt of any such appeal, the Administrator shall notify the claimant in writing of its decision on such appeal setting forth the specific reasons for its decision and the provisions of the Plan upon which its decision is based.
5.4 DISPUTES: If a dispute arises as to the proper recipient of any payment, the Administrator, in its sole discretion, may withhold or cause such payment to be withheld until the dispute shall have been settled or determined by a court of competent jurisdiction.
ARTICLE 6 - MISCELLANEOUS
6.1 OWNERSHIP OF ASSETS: Any assets which may be used to discharge the Company's obligations under this Plan shall be and remain the property of the Company no person other than the Company shall, by virtue of this Plan, have any interest in such assets and no Participant or Beneficiary shall have any right, title or interest in , or claim to, any investments the Company may make to aid the Company in meeting its obligations hereunder. To the extent that any person acquires a right to receive payments from the Company under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Company.
6.2 NO ASSIGNMENT: No Benefit payable hereunder shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance and any attempt to anticipate, alienate, sell, transfer, assign, pledge or encumber or charge the same shall be void. No such Benefit shall in any manner be subject to the debts or liabilities of any Participant or Beneficiary nor shall it be subject to attachment or legal process for or against such person and the same shall not be recognized hereunder except to such extent as may be required by law.
6.3 EFFECT ON EMPLOYMENT: Nothing contained herein shall give any Participant the right to be retained in the service of the Company or to interfere with the right of the Company to discharge any Participant at any time regardless of the effect which such discharge shall or may have upon such individual as a Participant.
6.4 PAYMENTS TO MINOR OR INCOMPETENT: In making any payment to or for the benefit of any minor or incompetent person or any other person who, in the opinion of the Administrator, is otherwise unable to apply such distribution to his own best interest and advantage, the Administrator, in its such discretion may direct that such distribution be made directly to such person, to the legal guardian, conservator or custodian of such person for the use and benefit of such person or to a relative of such person to be expended by such relative for the benefit of such person. The Administrator shall not be obligated to see to the application of any such payment.
6.5 INDEMNIFICATION: The Company agrees to hold harmless and indemnify the members of the Committee and all directors, officers and employees of the Company against any and all parties whomsoever, and all losses therefrom, including without limitation, costs of defense and attorneys' fees, based upon or arising out of any act or omission relating to, or in connection with, this Plan other than losses resulting from such person's fraud or willful misconduct.
6.6 BINDING ON EMPLOYER, PARTICIPANTS AND THEIR SUCCESSORS: This Plan shall be binding upon and inure to the benefit of the Company and to any other Employers participating in this Plan, their successors and assigns and the participant and his heirs, executors, administrators, and duly appointed legal representatives.
6.7 RIGHTS OF AFFILIATES TO PARTICIPATE: Any Employer participating in the Basic Plan may, in the future, adopt this Plan provided that proper action is taken by the Board of Directors of such Employer and the participation of such Employer is approved by the Board of Directors of the Company. The administrative powers and control of the Company, as provided in this Plan, shall not be deemed diminished under this Plan by reason of the participation of any other Employer and the administrative powers and control granted hereunder to the Committee shall be binding upon any Employer adopting this Plan. Each Employer adopting this Plan shall have the obligation to pay the benefits to its employees hereunder and no other Employer shall have such obligation and any failure by a particular Employer to live up to its obligations under this Plan shall have no effect on any other Employer. Any Employer may discontinue this Plan at any time by proper action of its Board of Directors subject to the provisions of Article 4.
6.8 APPLICABLE LAW: The provisions of this Plan shall be interpreted and construed according to the laws of the State of Tennessee.
6.9 EFFECTIVE DATE: This Plan shall be effective January 1, 1995, with respect to of participants on and after such date.
IN WITNESS WHEREOF, Astec Industries, Inc., has caused this instrument to be executed by its duly authorized officers on this 1st day of February, 1996, effective as of January 1, 1995.
(CORPORATE SEAL)
ATTEST: ASTEC INDUSTRIES, INC.
F. McKamy Hall By: /s/Albert E. Guth Witness Janice G. Ritchie Title: Senior Vice President Witness |
Exhibit 10.99
Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996.
EXHIBIT 10.99
TRUST UNDER
ASTEC INDUSTRIES, INC.
SUPPLEMENTAL RETIREMENT PLAN
January 1, 1996
TRUST UNDER
ASTEC INDUSTRIES, INC.
SUPPLEMENTAL RETIREMENT PLAN
(A) This agreement made this 1st day of February, 1996 by and between Astec
Industries, Inc. (Company) and ________________________________ (Trustee);
(B) WHEREAS, Company has adopted the nonqualified deferred
compensation plan(s) as listed in Appendix A;
(C) WHEREAS, Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the individuals
participating in such Plan(s);
(D) WHEREAS, Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that shall be held
therein, subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to Plan participants and their
beneficiaries in such manner and at such times as specified in the Plan(s);
(E) WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the status of the
Plan(s) as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees for purposes of Title I of the Employee Retirement Income Security
Act of 1974;
(F) WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of funds to assist
it in the meeting of its liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust and
agree that the Trust shall be comprised, held and disposed of as follows:
SECTION 1
ESTABLISHMENT OF TRUST
(A) Company hereby deposits with Trustee in trust ten dollars
($10.00), which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(B) The Trust shall become irrevocable 30 days following
execution by authorized officers of the Company.
(C) The Trust is intended to be a grantor Trust, of which
Company is the grantor, within the meaning of subpart E, part I subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.
(D) The principal of the Trust, and any earnings thereon shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purses of Plan participants and general creditors
as herein set forth. Plan participants and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any assets of the
Trust. Any rights created under the Plan(s) and this Trust Agreement shall be
mere unsecured contractual rights of Plan participants and their beneficiaries
against Company. Any assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(A) herein.
(E) Company, in its sole discretion, may at any time, or from time
to time, make additional deposits of cash or other property in Trust with
Trustee to augment the principal to be held, administered and disposed of by
Trustee as provided in this Trust Agreement. Neither Trustee nor any plan
participant or beneficiary shall have any right to compel such additional
deposits.
SECTION 2
PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES
(A) Company shall deliver to Trustee a schedule (the "Payment Schedule")
that indicates the amounts payable in respect of each Plan participant
(and his or her beneficiaries), that provides a formula or other instructions
acceptable to Trustee for determining the amounts so payable, the form in which
such amount is to be paid (as provided for or available under the Plan(s)), and
the time of commencement for payment of such amounts. Except as otherwise
provided herein, Trustee shall make payments to the Plan participants and their
beneficiaries in accordance with such Payment Schedule. The Trustee shall
make provision for the reporting and withholding of any federal, state or local
taxes that may be required to be withheld with respect to the payment of
benefits pursuant to the terms of the Plan(s) and shall pay amounts withheld to
the appropriate taxing authorities or determine that such amounts have been
reported, withheld and paid by Company.
(B) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan(s) shall be determined by Company or
such party as it shall designate under the Plan(s), and any claim for such
benefits
shall be considered and reviewed under the procedures set out in the Plan(s).
(C) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan(s). Company shall notify Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to participants or
their beneficiaries. In addition, if the principal of the Trust, and any
earnings thereon, are not sufficient to make payments of benefits in accordance
with the terms of
the Plan(s), Company shall make the balance of each such payment as it falls
due. Trustee shall notify Company where principal and earnings are not
sufficient.
SECTION 3
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO
TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT
(A) Trustee shall cease payment of benefits to Plan participants
and their beneficiaries if the Company is Insolvent. Company shall be
considered "Insolvent" for purposes of this Trust Agreement if (i) Company is
unable to pay its debts as they become due, or (ii) Company is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code.
(B) At all times during the continuance of this Trust, as provided
in Section 1(D) hereof, the principal and income of the Trust shall be subject
to claims of general creditors of Company under federal and state law as set
forth below.
(1) The Board of Directors and the Chief Executive Officer of
Company shall have the duty to inform Trustee in writing of
Company's Insolvency. If a person claiming to be a creditor
of Company alleges in writing to Trustee that Company has
become Insolvent, Trustee shall determine whether Company
is Insolvent and pending such determination, Trustee shall
discontinue payment of benefits to Plan participants or their
beneficiaries.
(2) Unless Trustee has actual knowledge of Company's Insolvency, or has received notice from Company or a person claiming to be a creditor alleging that Company is Insolvent, Trustee shall have no duty to inquire whether Company is Insolvent. Trustee may in all events rely on such evidence concerning Company's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for making a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is Insolvent, Trustee shall discontinue payments to Plan participants or their beneficiaries and shall hold the assets of the Trust for the benefit of Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights as general creditors of Company with respect to benefits due under the Plan(s) or otherwise.
(4) Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with Section 2 of this Trust Agreement only after Trustee has determined that Company is not Insolvent (or is no longer Insolvent).
(C) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(B)
hereof and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all payments due to
Plan participants or their beneficiaries under the terms of the Plan(s) for the
period of such discontinuance, less the aggregate amount of any payments made
to Plan participants or their beneficiaries by Company in lieu of the payments
provided for hereunder during any such period of discontinuance.
SECTION 4
PAYMENTS TO COMPANY
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return
to Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant
to the terms of the Plan(s).
SECTION 5
INVESTMENT AUTHORITY
(A) In no event may Trustee invest in securities (including stock
or rights to acquire stock) or obligations issued by Company, other than a de
minimis amount held in common investment vehicles in which Trustee invests.
All rights associated with assets of the Trust shall be exercised by Trustee or
the person designated by Trustee, and shall in no event be exercisable by or
rest with Plan participants.
SECTION 6
DISPOSITION OF INCOME
(A) During the term of this Trust, all income received by the
Trust, net of expenses and taxes, shall be accumulated and reinvested.
SECTION 7
ACCOUNTING BY TRUSTEE
Trustee shall keep accurate and detailed records of all investment,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee within 60 days following the close of each calendar year
and within 60 days after the removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last preceding year to
the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued interest paid or receivable being shown separately), and
showing all cash, securities and other property held in the Trust at the end of
such year or as of the date of such removal or resignation, as the case may be.
SECTION 8
RESPONSIBILITY OF TRUSTEE
(A) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise like character and with like aims, provided, however, that Trustee
shall incur no liability to any person for any action taken pursuant to a
direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Plan(s) or this Trust and is given in
writing by
Company in the event of a dispute between Company and a party, Trustee may
apply to a court of competent jurisdiction to resolve the dispute.
(B) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses) relating thereto and to be primarily liable for
such payments.
If Company does not pay such costs, expenses and liabilities in a reasonably
timely manner, Trustee may obtain payment from the Trust.
(C) Trustee may consult with legal counsel (who may also be
counsel for Company generally) with respect to any of its duties or obligations
hereunder.
(D) Trustee may hire agents, accounts, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(E) Trustee shall have, without exclusion, all powers conferred on
Trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign
the policy (as distinct from conversion of the policy to a different form)
other than to a successor Trustee, or to loan to any person the proceeds of any
borrowing against such policy.
(F) Notwithstanding any powers granted to Trustee pursuant to
this Trust Agreement or to applicable law, Trustee shall not have any power
that could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of section 301.7701-2 of the Procedure
and Administrative Regulations promulgated pursuant to the Internal Revenue
Code.
SECTION 9
COMPENSATION AND EXPENSES OF TRUSTEE
Company shall pay all administrative and Trustee's fees and expenses.
If not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10
RESIGNATION AND REMOVAL OF TRUSTEE
(A) Trustee may resign at any time by written notice to Company,
which shall be effective 30 days after receipt of such notice unless Company
and Trustee agree otherwise.
(B) Trustee may be removed by Company on 30 days notice or
upon shorter notice accepted by Trustee.
(C) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the
successor trustee. The transfer shall be completed within 30 days after
receipt of notice of resignation, removal or transfer, unless Company extends
the time limit. (D) If Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 11 hereof, by the effective date of
resignation or removal under paragraph(s) (A) or (B) of this section. If no
such
appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses
of Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.
SECTION 11
APPOINTMENT OF SUCCESSOR
(A) If Trustee resigns or is removed in accordance with Section
10(A) or (B) hereof, Company may appoint any third party, such as a bank trust
department or other party that may be granted corporate trustee powers under
state law, as a successor to replace Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new Trustee, who
shall have all of the rights and powers of the former Trustee, including
ownership rights in the Trust assets. The former Trustee shall execute any
instrument necessary or reasonably requested by Company or the successor
Trustee to evidence the transfer.
(B) The successor Trustee need not examine the records and acts
of any prior Trustee and may retain or dispose of existing Trust assets,
subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for
and Company shall indemnify and defend the successor Trustee from any claim
or liability resulting from any action or inaction of any prior Trustee or
from any
other past event, or any condition existing at the time it becomes successor
Trustee.
SECTION 12
AMENDMENT OR TERMINATION
(A) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company. Notwithstanding the foregoing,
no such amendment shall conflict with the terms of the Plan(s) or shall make
the Trust revocable after it has become irrevocable in accordance with Section
1(B) hereof.
(B) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan(s) unless sooner revoked in accordance with
Section 1(B)
hereof. Upon termination of the Trust any assets remaining in the Trust shall
be returned to Company.
(C) Upon written approval of participants or beneficiaries entitled
to payment of benefits pursuant to the terms of the Plan(s), Company may
terminate this Trust prior to the time all benefit payments under the Plan(s)
have been made. All assets in the Trust at termination shall be returned to
Company.
SECTION 13
MISCELLANEOUS
(A) Any provision of this Trust Agreement prohibited by law
shall be ineffective to the extent of any such prohibition, without
invalidating the remaining provisions hereof.
(B) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or
in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.
(C) This Trust Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.
SECTION 14
EFFECTIVE DATE
The effected date of this Trust Agreement shall be January 1, 1996.
IN WITNESS WHEREOF, the Company and the Trustee
have executed this Agreement as of the date first above written.
ASTEC INDUSTRIES,
INC.
By: /s/ J. Don Brock Title: President |
TRUSTEE
/s/ Albert E. Guth Albert E. Guth /s/ F. McKamy Hall F. McKamy Hall |
TRUST UNDER
ASTEC INDUSTRIES, INC.
SUPPLEMENTAL RETIREMENT PLAN
Effective January 1, 1996
TABLE OF CONTENTS SECTION 1 - ESTABLISHMENT OF TRUST 1.1 SECTION 2 - PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES 2.1 SECTION 3 - TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT 3.1 SECTION 4 - PAYMENTS TO COMPANY 4.1 SECTION 5 - INVESTMENT AUTHORITY 5.1 SECTION 6 - DISPOSITION OF INCOME 6.1 SECTION 7 - ACCOUNTING BY TRUSTEE 7.1 SECTION 8 - RESPONSIBILITY OF TRUSTEE 8.1 SECTION 9 - COMPENSATION AND EXPENSES OF TRUSTEE 9.1 SECTION 10 - RESIGNATION AND REMOVAL OF TRUSTEE 10.1 SECTION 11 - APPOINTMENT OF SUCCESSOR 11.1 SECTION 12 - AMENDMENT OR TERMINATION 12.1 SECTION 13 - MISCELLANEOUS 13.1 SECTION 14 - EFFECTIVE DATE 14.1 |
ARTICLE 5 |
PERIOD TYPE | YEAR |
FISCAL YEAR END | DEC 31 1995 |
PERIOD END | DEC 31 1995 |
CASH | 3133070 |
SECURITIES | 0 |
RECEIVABLES | 27075401 |
ALLOWANCES | 1279000 |
INVENTORY | 55882679 |
CURRENT ASSETS | 96595992 |
PP&E | 51709033 |
DEPRECIATION | 22957271 |
TOTAL ASSETS | 154356332 |
CURRENT LIABILITIES | 14468042 |
BONDS | 0 |
PREFERRED MANDATORY | 0 |
PREFERRED | 0 |
COMMON | 2018440 |
OTHER SE | 93882687 |
TOTAL LIABILITY AND EQUITY | 154356332 |
SALES | 242601351 |
TOTAL REVENUES | 242601351 |
CGS | 192844160 |
TOTAL COSTS | 192844160 |
OTHER EXPENSES | 47190796 |
LOSS PROVISION | 533136 |
INTEREST EXPENSE | 2125261 |
INCOME PRETAX | 6140570 |
INCOME TAX | 1580210 |
INCOME CONTINUING | 4560360 |
DISCONTINUED | 0 |
EXTRAORDINARY | 0 |
CHANGES | 0 |
NET INCOME | 4560360 |
EPS PRIMARY | .45 |
EPS DILUTED | .45 |