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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended: May 31, 2002
[_] 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 1-12777
AZZ incorporated
(Exact name of registrant as specified in its charter)
TEXAS 75-0948250
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
1300 South University Drive, Fort Worth, Texas 76107
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 810-0095
----------------------------
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---
Indicate the number of outstanding of each of the issuer's classes of common
stock, as of the close of the period covered by this report.
Outstanding at May 31, 2002
Common Stock, $1.00 Par Value 5,278,488
----------------------------- ---------
Class Number of Shares
AZZ incorporated
INDEX
PART I. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets at
May 31, 2002 and February 28, 2002 3
Consolidated Condensed Statements of Income for the
Periods Ended May 31, 2002 and May 31, 2001 4
Consolidated Condensed Statements of Cash Flow for the
Periods Ended May 31, 2002 and May 31, 2001 5
Notes to Consolidated Condensed Financial
Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. Other Information 13
-----------------
SIGNATURES 14
2
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AZZ incorporated
Consolidated Condensed Balance Sheet
05/31/02 02/28/02
ASSETS UNAUDITED AUDITED
- ------ ------------ ------------
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 1,778,805 $ 1,737,876
ACCOUNTS RECEIVABLE (NET OF ALLOWANCE) 29,795,326 32,927,725
INVENTORIES
RAW MATERIAL 11,400,073 11,640,049
WORK-IN-PROCESS 10,160,801 9,782,620
FINISHED GOODS 1,852,281 1,913,559
REVENUE IN EXCESS OF BILLINGS ON
UNCOMPLETED CONTRACTS 2,563,320 4,130,982
DEFERRED INCOME TAXES 1,684,251 1,706,294
PREPAID EXPENSES AND OTHER 679,809 990,438
------------- ------------
TOTAL CURRENT ASSETS 59,914,666 64,829,543
PROPERTY, PLANT AND EQUIPMENT, NET 38,346,209 38,809,608
GOODWILL, NET OF ACCUMULATED AMORTIZATION 41,262,104 41,262,104
OTHER ASSETS 2,080,124 2,142,615
------------- ------------
TOTAL ASSETS $141,603,103 $147,043,870
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
LONG TERM DEBT DUE WITHIN ONE YEAR $ 10,045,000 $ 10,045,000
ACCOUNTS PAYABLE 10,747,997 17,150,563
BILLINGS IN EXCESS OF REVENUE ON
UNCOMPLETED CONTRACTS 7,882 18,132
ACCRUED LIABILITIES 11,399,940 10,855,257
------------- ------------
TOTAL CURRENT LIABILITIES 32,200,819 38,068,952
LONG TERM DEBT DUE AFTER ONE YEAR 51,050,000 53,550,000
DEFFERRED INCOME TAXES 673,663 673,663
SHAREHOLDERS' EQUITY:
COMMON STOCK, $1 PAR VALUE
SHARES AUTHORIZED-25,000,000
SHARES ISSUED 6,304,580 6,304,580 6,304,580
CAPITAL IN EXCESS OF PAR VALUE 13,767,028 13,689,392
ACCUMULATED OTHER COMPREHENSIVE INCOME (200,615) (241,123)
RETAINED EARNINGS 47,352,782 44,740,066
LESS COMMON STOCK HELD IN TREASURY
(1,026,092 AND 1,047,199 SHARES AT COST RESPECTIVELY) (9,545,154) (9,741,660)
------------- ------------
TOTAL SHAREHOLDERS' EQUITY 57,678,621 54,751,255
------------- ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $141,603,103 $147,043,870
============= ============
See Accompaning Notes to Consolidated Condensed Financial Statements
3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AZZ incorporated
Conslidated Condensed Income Statement
THREE MONTHS ENDED
05/31/02 05/31/01
UNAUDITED UNAUDITED
---------------- ---------------
NET SALES $49,682,725 $34,305,642
COSTS AND EXPENSES
COST OF SALES 38,483,488 26,245,257
SELLING/G & A EXPENSES 5,747,447 4,013,617
INTEREST EXPENSE 1,152,359 465,504
OTHER EXPENSE 119,715 71,683
---------------- ---------------
45,503,009 30,796,061
---------------- ---------------
INCOME BEFORE INCOME TAXES 4,179,716 3,509,581
PROVISION FOR INCOME TAXES 1,567,000 1,333,800
---------------- ---------------
NET INCOME $ 2,612,716 $ 2,175,781
================ ===============
EARNINGS PER SHARE
(BASIC) $ 0.50 $ 0.44
(DILUTED) $ 0.49 $ 0.43
CASH DIVIDEND PER SHARE DECLARED $ 0.00 $ 0.16
See Accompaning Notes to Consolidated Condensed Financial Statements
4
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AZZ incorporated
Conslidated Condensed Statements of Cash Flows
THREE MONTHS ENDING
05/31/02 05/31/01
UNAUDITED UNAUDITED
--------------- ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 2,612,716 $ 2,175,781
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
PROVISION FOR BAD DEBTS 99,341 76,917
AMORTIZATION AND DEPRECIATION 1,744,852 1,494,425
NET GAIN ON SALE OF PROPERTY, PLANT & EQUIPMENT (4,500) (8,250)
INCREASE (DECREASE) FROM CHANGES IN ASSETS & LIABILITIES
ACCOUNTS RECEIVABLE 3,033,058 (1,788,415)
INVENTORIES (76,927) (289,646)
PREPAID EXPENSES 310,629 8,277
OTHER ASSETS (203,376) (52)
NET CHANGE IN BILLINGS RELATED TO COSTS AND ESTIMATED
EARNINGS ON UNCOMPLETED CONTRACTS 1,557,412 3,171,844
ACCOUNTS PAYABLE (6,402,566) (2,268,374)
ACCRUED LIABILITIES 607,235 319,201
--------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,277,874 2,891,708
CASH FLOWS FROM INVESTING ACTIVITIES:
PROCEEDS FROM THE SALE OF EQUIPMENT 4,500 14,150
PURCHASE OF PROPERTY PLANT AND EQUIPMENT (1,015,587) (2,419,108)
ACQUISITION OF SUBSIDIARY, PURCHASE PRICE ADJUSTMENT 0 371,615
--------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (1,011,087) (2,033,343)
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 274,142 652,031
PAYMENTS ON LONG TERM DEBT (2,500,000) (1,076,320)
CASH DIVIDENDS PAID 0 (795,762)
--------------- ----------------
NET CASH USED IN FINANCING ACTIVITIES (2,225,858) (1,220,051)
--------------- ----------------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 40,929 (361,686)
CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,737,876 1,446,502
--------------- ----------------
CASH & CASH EQUIVALENTS AT END OF PERIOD $ 1,778,805 $ 1,084,816
=============== ================
See Accompaning Notes to Consolidated Condensed Financial Statements
5
AZZ incorporated
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Summary of Significant Accounting Policies
1. A summary of the Company's significant accounting policies is presented on
Page 20 thru 23 of its 2002 Annual Shareholders' Report.
2. In the opinion of Management of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the financial position of the Company as of May 31, 2002, and the
results of its operations and cash flows for the periods ended May 31, 2002
and 2001.
3. Earnings per share is based on the weighted average number of shares
outstanding during each period, adjusted for the dilutive effect of stock
options.
The following table sets forth the computation of basic and diluted
earnings per share:
Three months ended May 31,
2002 2001
---------------------------------
(unaudited)
(in 000's except share and per
share data)
Numerator:
Net income for basic and diluted
earnings per common share $2,612,716 $2,175,781
============== ===============
Denominator:
Denominator for basic earnings per
common share-weighted average shares 5,263,167 4,980,791
Effect of dilutive securities:
Employee and Director stock options 45,578 109,542
-------------- ---------------
Denominator for diluted earnings per
common share 5,308,745 5,090,333
============== ===============
Basic earnings per common share $ .50 $ .44
============== ===============
Diluted earnings per common share $ .49 $ .43
============== ===============
4. Total comprehensive income for the quarter ended May 31, 2002 was
$2,653,224, consisting of net income of $2,612,716 and net changes in
accumulated other comprehensive income of $40,508 resulting from the
Company's cash flow hedges.
Total comprehensive income for the quarter ended May 31, 2001 was
$1,974,659 consisting of net income of $2,175,781 and net changes in
accumulated other comprehensive income of $201,122. The change in
accumulated other comprehensive income included $185,000 as the
accumulative effect of adopting SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities."
6
5. A summary of the Company's operating segments is defined on page 30 and 31
of its 2002 Annual Shareholders' Report.
Information regarding operations and assets by segment is as follows:
Three Months Ended May 31,
2002 2001
------------------------------------
(unaudited) (in thousands)
Net Sales:
Electrical and Industrial Products $ 37,028 $ 20,931
Galvanizing Services 12,655 13,375
-------------- --------------
$ 49,683 $ 34,306
============== ==============
Operating Income (a):
Electrical and Industrial Products $ 4,578 $ 3,549
Galvanizing Services 2,472 1,854
-------------- --------------
$ 7,050 $ 5,403
General Corporate Expense $ 1,676 $ 1,409
Interest Expense 1,152 465
Other (Income) Expense, Net (b) 42 19
-------------- --------------
$ 2,870 $ 1,893
Income Before Income Taxes $ 4,180 $ 3,510
============== ==============
Total Assets:
Electrical and Industrial Products $ 93,961 $ 46,611
Galvanizing Services 43,998 39,799
Corporate 3,644 2,096
-------------- --------------
$141,603 $ 88,506
============== ==============
(a) Operating income consists of net sales less cost of sales, specifically
identifiable general and administrative expenses and selling expenses.
(b) Other (income) expense, net includes gains and losses on sale of property,
plant and equipment and other (income) expense not specifically
identifiable to a segment.
6. New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141
"Business Combinations", and SFAS No. 142 "Goodwill and Other Intangible
Assets", (Statement 142) effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and certain intangible
assets deemed to have indefinite lives will no longer be amortized but will
be subject to annual impairment tests in accordance with the Statements.
Other intangible assets will continue to be amortized over their useful
lives.
The Company adopted the new rules on accounting for goodwill and other
intangible assets as of March 1, 2002, except, as provided for under
Statement 142, goodwill and indefinite-lived intangible assets resulting
from acquisitions completed after June 30, 2001 were not amortized in
fiscal 2002. As of March 1, 2002, in accordance with the new standard the
Company ceased amortization of all goodwill and performed the first of the
required impairment tests of goodwill and indefinite lived intangible
assets and has determined that these tests did not result in an impairment
of goodwill.
7
Listed below is the unaudited pro forma results of summary financial
information for the three month period ended May 2002, and 2001 to
reflect the elimination of goodwill amortization included in the
quarter ended May 31, 2001, as if SFAS No. 142 had been in effect at
that time.
Three Months Ended May 31,
2002 2001
---------------- --------------
(unaudited)
(in thousands except per share data)
Reported Net Income $2,613 $2,176
Add back: Goodwill amortization
net of income tax 0 226
--------------- --------------
Adjusted Net Income $2,613 $2,402
=============== ==============
Fully Diluted Earnings Per Share as reported:
Fully Diluted Earnings Per Share $ .49 $ .43
Add Back: Goodwill amortization
net of income tax 0 .04
--------------- --------------
Adjusted Diluted Earnings Per Share $ .49 $ .47
=============== ==============
Other intangible assets consisted of the following at May 31, 2002 and
February 28, 2002:
May 31, February 28,
2002 2002
---------------- ---------------
(unaudited) (in thousands)
Acquired backlog $ 302 $ 302
Non-compete agreements 883 883
Debt issue costs 1,187 966
Other 204 204
Goodwill 46,618 46,618
--------------- ---------------
49,194 48,973
Less accumulated amortization 5,918 5,624
--------------- ---------------
$43,276 $43,349
=============== ===============
Accumulated amortization related to debt issue costs, non-compete
agreements, backlog and other were $267,000, $65,000 $76,000 and
$154,000 respectively, at May 31, 2002 and $80,000, $37,000, none, and
$151,000, respectively at February 28, 2002. Accumulated amortization
for goodwill was $5,356,000 at the end of February 28, 2002 and May
31, 2002.
The Company recorded amortization expenses for the three months ending
May 31, 2002 in the amount of $294,000. The following table projects
the estimated amortization expense for the five succeeding fiscal
years.
Amortization Expense
-----------------------------
(unaudited) (in thousands)
2003 $ 597
2004 476
2005 346
2006 155
2007 112
Thereafter 328
---
Total $2,114
8
In July 2001, the Financial Accounting Standards Board issued SFAS No. 143,
"Accounting for Asset Retirement Obligations," effective for fiscal years
beginning after June 15, 2002. This Statement addresses financial
accounting and reporting for legal obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement costs. The Company is currently evaluating the effect, if any,
this Statement will have on its financial statements and related
disclosures.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," effective for fiscal years
beginning after December 15, 2001. The new Statement supercedes current
accounting guidance relating to impairment of long-lived assets and
provides a single accounting methodology for long-lived assets to be
disposed of, and also supercedes existing guidance with respect to
reporting the effects of the disposal of a business. There was no affect on
the Company's financial statements related to this adoption.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Consolidated net revenues increased 45% to $49.7 million for the three-month
period ended May 31, 2002 as compared to $34.3 million for the same period in
fiscal 2002. Revenues excluding acquisitions were $32.2 million a decrease of
6%. The Electrical and Industrial Segment's revenues increased $16.1 million or
77% for the three-month period ended May 31, 2002, as compared to the same
period in fiscal 2002. Revenues for this segment, excluding acquisitions
decreased 6.7% to $19.5 million as compared to $20.9 million for the same period
in fiscal 2002. Revenues for this segment's electrical products increased 122%
to $32.4 million for the quarter, as compared to $14.6 million for the same
period in fiscal 2002. Excluding the acquisitions of Central Electric Company
and Carter & Crawley Inc., the electrical products revenues increased 2% to
$14.9 million. Revenues for this segment's industrial products decreased 26.7%
to $4.6 million for the first quarter of fiscal 2003 as compared to $6.3 million
for the same period in fiscal 2002. Despite improvement in overall economic
indicators, the Company has seen little improvement in the industrial market
served.
The Electrical and Industrial Segment's backlog, including acquisitions, was
$77.7 million for the first quarter as compared $36.9 million for the same
period in fiscal 2002. Backlog from the Company's November 1, 2002 acquisitions
accounted for $36 million or 88% of the increase. The electrical products
backlog increased $41.6 million to $72.7 million while the industrial products
backlog decreased $800,000 to $5 million.
Net revenues in the Galvanizing Services Segment decreased 5% to $12.7 million
for the three-month period ended May 31, 2002 as compared to $13.4 million for
the same period ended May 31, 2001. The Galvanizing Services Segment revenues
continue to be negatively impacted by a slow down in the general economy.
Consolidated operating income (net sales less operating expenses) increased by
31% for the three-month period ended May 31, 2002 as compared to the same period
in fiscal 2002. Operating income was aided by the adoption of SFAS No. 142,
which discontinued the amortization of goodwill in the amount of $286,000 for
the first quarter of fiscal 2003 as compared to the same period in fiscal 2002.
9
Operating income in the Electrical and Industrial Products Segment increased $1
million or 29% for the three-month period ended May 31, 2002 as compared to the
same period in fiscal 2002. Excluding acquisitions, operating income decreased
12.4% to $3.1 million for the three-month period ended May 31, 2002 as compared
to $3.5 million for the same period in fiscal 2002. The Company's industrial
products accounted for the majority of this decrease. Operating income for this
segment's electrical products increased 59% to $4.1 million for the three-month
period ended May 31, 2002 as compared to the same period in fiscal 2002.
Acquisitions made on November 1, 2001 accounted for 95% of the increase while
the eliminations of goodwill amortization accounted for the remainder of the
increase. Operating income for this segment's industrial products decreased
53.5% to $439,000 for the three-month period ended May 31, 2002 as compared to
$945,000 for the same period in fiscal 2002. Operating income and margins were
significantly impacted by lower sales volumes due to the downturn in the
industrial market and the loss of an automotive customer in the fourth quarter
of fiscal 2002. The loss of the automotive product line accounted for
approximately 16% of the decrease. During the first quarter the Company
instituted cost reductions for it's industrial products, but was unable to over
come the 27% reduction in sales volumes.
In the Galvanizing Services Segment, operating income increased $618,000 to $2.5
million for the three-month period ended May 31, 2002 as compared to the same
period in fiscal 2002. The elimination of goodwill amortization accounted for
$171,000 of the increased operating profits. This segment also benefited from
lower zinc and natural gas cost for the current quarter as compared to same
period in fiscal 2002.
General corporate expenses (selling, general and administrative expense, and
other (expense)) for the three-month period ended May 31, 2002 increased $1.8
million or 43% as compared to the same period in fiscal 2002. As a percent of
sales, general corporate expenses were 11.8% for the three-month period ended
May 31, 2002 compared to 11.9% for the same period ended May 31, 2001.
Net interest expense for the three-month period ended was $1.2 million, an
increase of 148% from the same period in fiscal 2002. The additional debt
required to purchase the acquisitions of Central Electric and Carter & Crawley
Inc. created the additional interest expense.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations was $3.3 million for the three-month period
ended May 31, 2002, as compared to $2.9 million for the same period in fiscal
2002. Net cash provided by operations was generated from $2.6 million in net
income and $1.7 million in depreciation and amortization, offset by net changes
in operating assets and liabilities and other of $1 million. During the
three-month period ended May 31, 2002, capital improvements were made in the
amount of $1 million and long-term debt was repaid in the amount of $2.5
million.
On November 1, 2001 the Company entered a new syndicated credit facility, which
replaced the previous term notes and revolving line of credit. This agreement
included a $40 million term facility and a $45 million revolving credit
facility. The revolving credit is contingent on asset-based collateral of
inventories and accounts receivables. The $40 million term note is payable in
$10 million installments over the next four years. At May 31, 2002, the Company
had $39 million outstanding under the term note and $22 million outstanding on
the revolving credit facility. At May 31, 2002, the Company had approximately
$5.1 million available under the revolving line of credit.
10
Interest on borrowings under the term note and revolving line of credit bear
interest at a rate per annum equal to the lesser of the base rate plus
applicable margin for the base rate borrowings for the applicable facility, or
the adjusted eurodollar rate plus the applicable margin for eurodollar rate
borrowings for the applicable facility. The applicable margin range is based on
the leverage ratio, which was 2.50% at May 31, 2002 and correlated to an
interest rate of 6.14% on the term note and 4.50% on the revolving line of
credit at May 31, 2002. Additionally, the Company is obligated to pay a
commitment fee based on the leverage ratio at a rate ranging from .25% to .5% on
the unused revolving credit facility.
The Company utilizes interest rate swap agreements to protect against volatile
interest rates and manage interest expense. At May 31, 2002, the Company has a
$5.4 million interest rate swap agreement entered into in February 1999 at a
fixed rate of 6.8%. On November 1, 2001 the Company entered into an interest
rate swap agreement covering an additional $40 million of term debt at a fixed
rate of 6.14%. In conjunction with the Company's new financing agreement the
Company discontinued hedge accounting for the February 1999 interest rate swap
effective November 1, 2001. The Company continued to amortize the amount that
was in other comprehensive income as of November 1, 2001. Subsequent changes in
fair value have been recognized in earnings. At May 31, 2002 the fair value of
the February 1999 swap was a liability of $200,000. The November 2001 interest
rate swap, which was designated as a hedge of the Company's variable rate
interest, has an unrealized loss of $54,000 as of May 31, 2002. The accumulated
balance in other comprehensive income is $201,000, net of tax of $123,000, as of
May 31, 2002. This amount will be charged to interest expense over the
respective terms of the two swaps.
The Company has not experienced any significant changes in market risk
exposures.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the consolidated financial statements requires the Company to
make estimates that affect the reported value of assets, liabilities, revenues
and expenses. The Company's estimates are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, and form the basis for the Company's conclusions. The Company
continually evaluates the information used to make these estimates as the
business and the economic conditions change. The use of estimates is pervasive
throughout the Company's financial statements, but accounting policies and
estimates considered most critical are allowances for doubtful accounts,
accruals for contingent liabilities and revenue recognition. More information
regarding significant accounting policies can be found in Note 1 of Notes to
Consolidated Financial Statements in the Annual Report on Form 10-K.
Allowance for Doubtful Accounts- The carrying value of the accounts receivables
is continually evaluated based on the likelihood of collection. An allowance is
maintained for estimated losses resulting from our customer's inability to make
required payments. The allowance is determined by historical experience of
uncollected accounts, the level of past due accounts, overall level of
outstanding accounts receivables, information about specific customers with
respect of their inability to make payments and future expectations of
conditions that might impact the collectibility of accounts receivables. If the
financial condition of the Company's customers were to deteriorate, resulting in
an impairment of their ability to make payments, additional allowances may be
required.
Accruals for Contingent Liabilities- The amounts the Company recognizes for
claims such as insurance recoverables, warranty and other contingent liabilities
requires the Company to make judgments regarding
11
the amount of expenses that will ultimately be incurred. The Company uses past
history and experience, as well as other specific circumstances surrounding
these claims in evaluating the amount of liability that should be recorded.
Actual results may be different than the Company's estimates.
Revenue Recognition - Revenue is recognized for the Galvanizing Services segment
upon completion of the galvanizing services or shipment of product. Revenue is
recognized for the Electrical and Industrial Products segment upon shipment of
product or customer receipt of product, or based upon percentage of completion
method as contract services are performed. The extent of progress for revenue
recognized using the percentage of completion method is measured by the ratio of
contract costs incurred to date to estimated total contract costs at completion.
Contract costs include direct labor and material, and certain indirect costs.
Selling, general and administrative costs are charged to expense as incurred.
Provisions for estimated losses, if any, on uncompleted contracts are made in
the period in which such losses are estimable. The assumptions made in
determining the estimated cost could differ from actual performance resulting in
a different outcome for profits or losses than anticipated.
FORWARD LOOKING STATEMENTS
This Report contains, and from time to time the Company or certain of its
representatives may make, "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are generally
identified by the use of words such as "anticipate," "expect," "estimate,"
"intend," "should," "may," "believe," and terms with similar meanings. Although
the Company believes that the current views and expectations reflected in these
forward-looking statements are reasonable, those views and expectations, and the
related statements, are inherently subject to risks, uncertainties, and other
factors, many of which are not under the Company's control. Those risks,
uncertainties, and other factors could cause the actual results to differ
materially from these in the forward-looking statements. Those risks,
uncertainties, and factors include, but are not limited to, many of the matters
described in this Report: change in demand, prices and raw material cost,
including zinc and natural gas which is used in the hot dip galvanizing process;
changes in the economic conditions of the various markets the Company serves,
foreign and domestic, including the market price for oil and natural gas;
customer requested delay of shipments, acquisition opportunities, adequacy of
financing, and availability of experienced management employees to implement the
Company's growth strategy; and customer demand and response to products and
services offered by the Company. The Company expressly disclaims any obligations
to release publicly any updates or revisions to these forward-looking statements
to reflect any change in its views or expectations. The Company can give no
assurances that such forward-looking statements will prove to be correct.
12
PART II. OTHER INFORMATION
AZZ incorporated
Item 1. Legal Proceedings - Not applicable.
Item 2. Changes in Securities - Not applicable.
Item 3. Defaults Upon Senior Securities - Not applicable.
Item 4. Submissions of Matters to a Vote of Security Holders
Shareholders at the Annual Meeting on July 9, 2002 reelected three incumbent
directors, Martin C. Bowen, Kevern R. Joyce, and Sam Rosen. Of the 4,659,008
shares represented at the meeting, 4,632,989 shares (88%) were voted for Mr.
Bowen, 4,634,779 shares (88%) were voted for Mr. Joyce, and 4,635,598 shares
(88%) were voted for Mr. Rosen. Other directors continuing in office are L.C.
Martin, David Dingus, Dr. H. Kirk Downey, R. J. Schumacher, Dana Perry, Daniel
Berce and Daniel Feehan.
One proposal by the Board of Directors was submitted to the stockholders at the
Annual Meeting, with the following vote tabulation.
Approval of Ratification of the Appointment Approved/Failed to Approve
--------------------------
of Ernst & Young LLP as Auditors.
Shares for: 4,637,613 99.6%
Shares Against: 11,140 .2% APPROVED
Shares Abstained: 10,255 .2%
Item 5. Other Information - Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits - There were no exhibits filed with this 10-Q for the three
months ended May 31, 2002.
(B) Reports on Form 8-K - There were no 8-K's filed during the three months
ended May 31, 2002.
All other schedules and compliance information called for by the instructions
for Form 10-Q have been omitted since the required information is not present or
not present in amounts sufficient to require submission.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AZZ incorporated
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(Registrant)
Date: 7/12/02 /s/ Dana Perry
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Dana Perry, Vice President for Finance
Chief Financial Officer
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