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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
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to
____________________
Commission file number 0-14714
ASTEC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-0873631
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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.
EX-10
2
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
EX-27
3
5
YEAR
DEC-31-1995
DEC-31-1995
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