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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the Fiscal Year Ended: FEBRUARY 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
Commission File No. 0-2733
AZTEC MANUFACTURING CO.
(Exact name of registrant as specified in its charter)
TEXAS 75-0948250
(State of incorporation) (I.R.S. Employer Identification Number)
400 NORTH TARRANT
CROWLEY, TEXAS 76036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 297-4361
Securities registered pursuant to section 12(b) of the act: NONE
Securities registered pursuant to section 12(g) of the act:
TITLE OF EACH CLASS
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COMMON STOCK, $1.00 PAR VALUE
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
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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. X
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The aggregate market value of Common Stock held by non-affiliates on May 2,
1996, was approximately $31,309,530. As of May 2, 1996, there were 5,569,042
shares of Aztec Manufacturing Co. Common Stock $1.00 par value outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part I, Part II and Part IV incorporate certain information by reference from
the Registrant's Annual Report to Shareholders for the year ended February 29,
1996. Part III incorporates information by reference from the Proxy Statement
for the 1996 Annual Meeting of Shareholders of Registrant.
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PART I
ITEM 1. BUSINESS
Aztec Manufacturing Co. ("Aztec" or the "Company") was incorporated under the
laws of the state of Texas on March 26, 1956. Aztec, through its subsidiaries,
operates under three segments. These segments are Electrical Products,
Galvanizing and Oil Field Products, which are discussed further below.
Aztec started in 1956 as an oil field-related company servicing oil field supply
companies and steel mills. The Company was located in Fort Worth, Texas, but
subsequently moved to Crowley, Texas. In 1965, Aztec diversified into the
galvanizing industry and opened its first location in Crowley, Texas. Oil field
operations were expanded with the opening of its Houston facility in 1967.
Galvanizing operations were expanded with the formation of Aztec Industries in
Jackson, Mississippi in 1969, the opening of a galvanizing facility in Houston
in 1975, the acquisition of Automatic Processing in Moss Point, Mississippi and
the formation of Aztec Mfg. Co. - Waskom in Waskom, Texas in 1986. Aztec added
to its Oil Field Products Segment in 1986 with the purchase of Parks Machine, a
job shop screw machine facility, located in Crowley, Texas. Aztec closed its
Houston Tubing facility in 1989 due to the depressed domestic oil industry. The
Electrical Products Segment was formed with the purchase of Rig-A-Lite
Partnership, LTD. in Houston, Texas, in March 1990 and the acquisition of The
Calvert Company located in Jackson, Mississippi, in September 1990. Aztec
closed and liquidated Parks Machine in November 1992, due to the low level of
oil field activity. Aztec added to its Electrical Products Segment with the
acquisition of Atkinson Industries, Inc., in March 1993. Gulf Coast
Galvanizing, Inc., located in Citronelle, Alabama, was acquired in January 1994.
Aztec completed and opened in November 1994 a new galvanizing facility in
Goodyear, Arizona, near Phoenix. Arkansas Galvanizing, Inc., located in Prairie
Grove, Arkansas, is the Company's eighth galvanizing facility, and was acquired
in February, 1996.
A three-year summary of sales, operating profit and identifiable assets by
industry segment is included in Note 9 to the Consolidated Financial Statements
on page 15 of the Registrant's 1996 Annual Report to Shareholders. Such
information is hereby incorporated by reference.
Aztec provides services and manufacturing of products in the following areas:
ELECTRICAL PRODUCTS SEGMENT
This segment includes Rig-A-Lite, which manufactures and assembles lighting
fixtures for hostile and hazardous environments in the industrial market. Rig-
A-Lite also engages in the assembly and installation of electrical components
and lighting fixtures on drilling rigs for the petroleum industry. Also in this
segment is Calvert, which designs, manufactures and installs electrical bus duct
systems for the power generation industry. A bus duct consists of insulated
power conductors housed in a metal enclosure. Individual pieces of bus duct are
arranged in whatever physical configuration that may be required to distribute
electrical power to or from a generator, transformer, switching device or other
electrical apparatus. Bus duct systems that can be provided are non-segregated
phase, segregated phase and isolated phase styles with numerous amperage and
voltage ratings. Atkinson Industries, Inc., was acquired in March, 1993 and
added to Aztec's Electrical Products Segment. Atkinson, located in Pittsburg,
Kansas, manufactures factory-fabricated electrical power centers and assemblies
for the industrial and power generation industries. The market for Aztec's
Electrical Products Segment is highly competitive and consists of a few large
national companies, as well as numerous small independents. Competition is
based primarily on product quality, range of product line, price and service.
The Company believes that it can compete favorably with regard to each of these
factors. Copper, aluminum and steel are the primary raw materials used in this
segment and are readily available. This Segment's products are sold through
manufacturers' representatives and its internal sales force. This Segment is
not dependent on any single customer or limited number of customers for sales,
and the loss of any single customer would not have a material adverse effect on
revenues. Backlog of orders was approximately $7,600,000 at February 29, 1996,
$9,100,000 at February 28, 1995, and $8,600,000 at February 28, 1994. All of
the fiscal 1995 backlog will be delivered in the next 18 months. Orders
included in the backlog are represented by contracts and
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purchase orders that the Company believes to be firm. Historically, no material
amount of orders included in the backlog has been canceled. The Company
experiences no seasonal fluctuations in this segment's business nor does it
follow any unusual practices relating to working capital items such as inventory
and rights to return merchandise. Due dates of a portion of certain receivables
are extended for periods of up to one year to insure customer satisfaction with
the Company's product. The Company has established a $200,000 reserve at the end
of fiscal 1996 against receivables for any possible loss of these receivables.
The total number of employees in this segment is 241.
GALVANIZING SEGMENT
Custom hot-dip galvanizing service is provided for industries handling
fabricated metal products. This process provides corrosion protection of
fabricated steel for extended periods up to 50 years. Galvanizing is a highly
competitive business. Aztec competes with other independent galvanizing
companies, captive galvanizing facilities operated by manufacturers, and
alternate forms of corrosion protection such as paint. Market conditions are,
therefore, highly competitive in pricing. Aztec is limited to some extent in
its galvanizing market to areas within a close proximity of its existing
locations, due to freight cost. Zinc is the principal raw material used in the
galvanizing process and currently is readily available. Aztec has a broad
customer base in galvanizing. No one customer represented as much as 10 percent
of consolidated revenues. The backlog of galvanizing orders generally is
nominal due to the short time requirement involved in the process. The Company
experiences no seasonal fluctuations in this segment's business nor does it
follow any unusual practices relating to working capital items such as
inventory, rights to return merchandise, and extended payment terms to
customers. Total employment in this segment is 202 persons.
OIL FIELD PRODUCTS SEGMENT
Aztec processes oil field tubing to the extent of upsetting, threading, testing
and heat treating and also manufacturers oil field pup joints. The principal
market is the oil industry, with distribution through supply houses, steel mills
and other manufacturers in the metal fittings industry. This business is highly
competitive and price sensitive, with competition coming from several small oil
field tubing processors. The current depressed domestic oil and gas market has
had an adverse effect on operations. The Company closed its Houston Tubing
facility in March 1989, and currently is liquidating this facility. The low
level of activity in the Company's screw machine operation prompted the Company
to close this facility in November 1992. Steel is the principal raw material
used in this segment and currently is readily available. Aztec has a limited
customer base in this area, but no one customer represents as much as 10 percent
of consolidated revenues. Backlog consisted of approximately $137,000 at
February 29, 1996, $50,000 at February 28, 1995, and $447,000 at February 28,
1994, respectively. Backlogs are expected to be filled within the coming fiscal
year. The Company experiences no seasonal fluctuations in this segment's
business nor does it follow any unusual practices relating to working capital
items such as inventory, rights to return merchandise, and extended payment
terms to customers. Total employment in this segment is 51 persons.
GENERAL
In fiscal 1996, the Company did not introduce a new product line or a new
industry segment or make public its intentions to introduce a new product or do
business in a new industry segment.
There are no significant patents, trademarks, licenses, franchises or
concessions. The Company does not have a material portion of business that may
be subject to renegotiation of profits or termination of contracts or
subcontracts at the election of the Government. There were no material amounts
spent on research and development activities during the preceding three fiscal
years.
ENVIRONMENTAL
The Company complies, in all material respects, with the relevant legislation
and regulations affecting its operations and the discharge of wastes. The cost
of compliance with such provisions and regulations during 1996 approximated
$176,000. While the Company believes that it will continue to be able to
operate profitably, increasing governmental regulations may continue to reduce
its profitability. The Company has been named in environmental proceedings that
are further described in Item 3 - Legal Proceedings.
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EXECUTIVE OFFICERS OF THE REGISTRANT
Business Experience for Past Five Years;
Name Age Position or Office with Registrant Held Since
- ----------------- --- ---------------------------------------- ----------
L. C. Martin 70 Chairman, President and Chief 1958
Executive Officer
D. L. Perry 47 Vice President of Finance, Chief 1992
Financial Officer Assistant Secretary 1977
F. L. Wright, Jr. 55 Senior Vice President/Galvanizing Segment 1992
Vice President/Galvanizing Segment 1989
General Mgr./Galvanizing Segment 1987
R. O. Grosso 50 Vice President/Electrical Products Segment 1995
Each executive officer was elected by the Board of Directors to hold office
until the next Annual Meeting or until his successor is elected. There are no
family relationships between Executive Officers of the Registrant.
ITEM 2. PROPERTIES
The following table sets forth information about the Company's principal
facilities owned on February 29, 1996:
Location Acres Sq. Footage Segment/Occupant
- -------- ----- ----------- ----------------
Crowley, Texas 152.0 7,772 Corporate Office
25,600 Galvanizing
193,245 Oil Field Products
Houston, Texas 8.7 25,800 Galvanizing
59.1 145,450 Oil Field Products (currently
under contract to sell)*
5.4 67,440 Electrical Products
Waskom, Texas 10.6 30,400 Galvanizing
Moss Point, Mississippi 13.5 16,000 Galvanizing
Jackson, Mississippi 5.6 22,800 Galvanizing
5.1 36,160 Electrical Products
Pittsburg, Kansas 15.3 42,000 Electrical Products
Citronelle, Alabama 10.8 33,960 Galvanizing
Goodyear, Arizona 11.75 36,750 Galvanizing
Prairie Grove, Arkansas 11.5 34,000 Galvanizing
* The Company has a three year lease with a Purchase Option Agreement and a six
month Option To Purchase Agreement to sell this idle facility.
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ITEM 3. LEGAL PROCEEDINGS
ENVIRONMENTAL PROCEEDINGS
In the course of its Galvanizing Operations, the Company is subject to
occasional governmental proceedings and orders pertaining to noise, air
emissions, and water discharges into the environment. As part of its continuing
environmental program, the Company has complied with such proceedings and orders
without any materially adverse effect on its business.
In August 1988, the Company received a letter from the Texas Water Commission
("TWC") regarding remedial actions at a chemical waste disposal site near
Ranger, Texas. Records indicate the Company may have generated a portion of the
waste placed at the site and therefore has been deemed by the TWC to be a
potentially responsible party ("PRP"), with respect to the site under Texas
Solid Waste Disposal Act, Chapter 361, Texas Health and Safety Code. The
Company, together with other companies which also may have generated waste
placed at the site, is participating with the TWC in a clean-up study at the
site. The Company provides for costs related to contingencies when a loss is
probable and the amount is reasonably determinable. It is the opinion of
management, based on past experience, that the ultimate resolution of this
contingency, to the extent not previously provided for, will not have a material
adverse effect on the Company. No material adverse findings have resulted from
the reviews to date.
Other than the matter described in the preceding paragraph, registrant is not a
party to, nor is its property the subject of, any material pending legal
proceedings. The registrant is involved in ordinary routine litigation
incidental to business. For additional information relating to contingencies,
see Note 10 to the Consolidated Financial Statements on page 16 of the
Registrant's 1996 Annual Report to Shareholders.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of fiscal year ended February
29, 1996, to a vote of security holders through the solicitation of proxies or
otherwise.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock, $1.00 par value, of Registrant ("Common Stock") is traded in
the over-the-counter market. The information contained under the caption "Stock
Prices and Dividends Per Share" on Page 7 of Registrant's 1996 Annual Report to
Shareholders is incorporated herein by reference.
The approximate number of holders of record of Common Stock of Registrant at May
2, 1996 was 1,413.
ITEM 6. SELECTED FINANCIAL DATA
The information contained under the caption "Consolidated Summary of Operations
and Other Financial Information" on page 6 of Registrant's 1996 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The information contained under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 4, 5 and 6
of Registrant's 1996 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated balance sheets of Aztec Manufacturing Co. as of February 29,
1996 and 1995, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended February
29, 1996 and the report of the independent auditors and the information required
by item 302 of Regulation of S-K are on pages 7 through 16 of Registrant's 1996
Annual Report to Shareholders and are incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements with accountants on any matter of accounting
principles or practices or financial statement disclosures during the twenty-
four (24) months ended February 29, 1996 or the subsequent interim period.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information required by the item with regard to executive officers is
included in Part I, Item 1 of this report under the heading "Executive Officers
of the Registrant."
The other information required by the item is incorporated herein by reference
to the Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to the
Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference to the
Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference to the
Registrant's Proxy Statement for the 1996 Annual Meeting of Shareholders.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The following financial statements and report of independent auditors have been
incorporated herein by reference to pages 8 through 16 of Registrant's 1996
Annual Report to Shareholders.
Pages of 1996 Annual
Report to Shareholders
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Report of Independent Auditors 7
Consolidated Balance Sheets as of February 29, 1996 and
February 28, 1995 8
Consolidated Statements of Income for the years ended
February 29, 1996, February 28, 1995, and 1994 9
Consolidated Statements of Shareholders' Equity for the
years ended February 29, 1996, February 28, 1995, and 1994 9
Consolidated Statements of Cash Flows for the years ended
February 29, 1996, February 28, 1995, and 1994 10
Notes to Consolidated Financial Statements 11-16
2. FINANCIAL STATEMENT SCHEDULES
All schedules and compliance information have been omitted since the required
information is not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the consolidated financial statements and the notes thereto.
3. EXHIBITS
The following exhibits are filed as a part of this report:
3(i) - Articles of Incorporation, and all amendments thereto (incorporated by
reference to the Annual Report on Form 10-K filed by Registrant for the fiscal
year ended February 28, 1981).
3(ii) - Bylaws including the amendment adopted by the Board of Directors of
registrant on May 17, 1993.
10a - 1982 Incentive Stock Option Plan of Registrant (incorporated by reference
to the Annual Report on Form 10-K filed by Registrant for the fiscal year ended
February 29, 1984).
10b - Employees Benefit Plan and Trust of Aztec Manufacturing Co. (incorporated
by reference to the Annual Report on Form 10-K filed by Registrant for the
fiscal year ended February 28, 1985).
10c - Amendment No. 1 to the Employees Benefit Plan and Trust of Aztec
Manufacturing Co. (incorporated by reference to Exhibit 10c of the Annual Report
on Form 10-K filed by Registrant for the fiscal year ended February 28, 1987).
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10d - 1986 Incentive Stock Option Plan of Aztec Manufacturing Co. (incorporated
by reference to the Annual Report on Form 10-K filed by Registrant for the
fiscal year ended February 28, 1986).
10e - Change In Control Agreement between Registrant and Mr. L. C. Martin dated
March 1, 1986 (incorporated by reference to Exhibit 10e of the Annual Report on
Form 10-K filed by Registrant for the fiscal year ended February 28, 1987).
10g - 1988 Nonstatutory Stock Option Plan of Aztec Manufacturing Co.
(incorporated by reference to Exhibit 10g of the Annual Report on Form 10-K
filed by Registrant for the fiscal year ended February 29, 1988).
10h - 1991 Incentive Stock Option Plan of Aztec Manufacturing Co.
(incorporated by reference to Exhibit 10h of the Annual Report on Form 10-K
filed by Registrant for the fiscal year ended February 28, 1991).
10i - 1991 Nonstatutory Stock Option Plan of Aztec Manufacturing Co.
(incorporated by reference to Exhibit 10i of the Annual Report on Form 10-K
filed by Registrant for the fiscal year ended February 28, 1991).
10j - Buy-Sell and Termination Agreement between Registrant and Mr. L.C. Martin
dated January 27, 1994 (incorporated by reference to Exhibit 10j of the Annual
Report on Form 10-K filed by Registrant for the fiscal year ended February 28,
1994).
13 - Annual Report to Shareholders for the fiscal year ended February 29, 1996
(including the Registrant Proxy Statement for the 1996 Annual Meeting of
Shareholders).*
21 - Subsidiaries of Registrant*.
23 - Consent of Ernst & Young LLP*.
24 - Power of Attorney*.
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*Filed herewith.
(B) REPORTS ON FORM 8-K
The Registrant filed a current report on Form 8-K dated February 21, 1995 (Item
2) to report the signing of a Stock Purchase Agreement between Arkansas
Galvanizing, Inc. and Aztec Manufacturing Co.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
AZTEC MANUFACTURING CO.
(Registrant)
Date: By:
---------------------------- ---------------------------------------
L. C. Martin, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in
the capacities and on the dates indicated.
- ---------------------------------- -------------------------------------------
L. C. Martin, Principal Executive Dana L. Perry, Principal Accounting Officer,
Officer and Director Principal Financial Officer, and Director
- ---------------------------------- -------------------------------------------
Robert H. Johnson, Director Sam Rosen, Director
Dr. H. Kirk Downey* R. J. Schumacher*
- ---------------------------------- -------------------------------------------
Dr. H. Kirk Downey, Director R. J. Schumacher, Director
Martin C. Bowen* John G. Richards*
- ---------------------------------- -------------------------------------------
Martin C. Bowen, Director John G. Richards, Director
W.C. Walker*
- ----------------------------------
W. C. Walker, Director
*
- ----------------------------------
L. C. Martin, Attorney-in-Fact
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