UNITED
STATES
|
SECURITIES
AND EXCHANGE COMMISSION
|
Washington,
DC 20549
|
|
FORM
10-Q
|
(Mark
One)
|
ý
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR
15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
|
|
For
the quarterly period ended March 31, 2009
|
OR
|
o
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
001-11595
|
|
Astec
Industries, Inc.
|
(Exact
name of registrant as specified in its charter)
|
|
Tennessee
|
62-0873631
|
(State
or other jurisdiction of
|
(I.R.S.
Employer Identification No.)
|
incorporation
or organization)
|
|
|
1725
Shepherd Road, Chattanooga, Tennessee
|
37421
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
(423)
899-5898
|
(Registrant's
telephone number, including area code)
|
|
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
ý
|
NO
o
|
|
Indicate
by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
|
YES
o
|
NO
o
|
|
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
|
Large Accelerated Filer
ý
|
Accelerated
Filer
o
|
Non-accelerated filer
o
(Do
not check if a smaller reporting company)
|
Smaller
Reporting Company
o
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
|
YES
o
|
NO
ý
|
|
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable
date.
|
Class
|
Outstanding
at May 5, 2009
|
Common
Stock, par value $0.20
|
22,515,677
|
|
ASTEC INDUSTRIES, INC.
|
INDEX
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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Item 1. Financial
Statements
Condensed
Consolidated Balance Sheets
(in
thousands)
|
|
|
|
March
31, 2009
(unaudited)
|
|
|
December
31,
2008
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
10,563
|
|
|
$
|
9,674
|
|
Trade
receivables, net
|
|
|
79,091
|
|
|
|
71,630
|
|
Other
receivables
|
|
|
1,365
|
|
|
|
3,531
|
|
Inventories
|
|
|
277,994
|
|
|
|
285,817
|
|
Prepaid
expenses and other
|
|
|
9,649
|
|
|
|
13,747
|
|
Deferred
income tax assets
|
|
|
10,817
|
|
|
|
10,700
|
|
Total
current assets
|
|
|
389,479
|
|
|
|
395,099
|
|
Property
and equipment, net
|
|
|
168,196
|
|
|
|
169,130
|
|
Investments
|
|
|
8,707
|
|
|
|
9,912
|
|
Goodwill
|
|
|
29,488
|
|
|
|
29,658
|
|
Other
|
|
|
9,520
|
|
|
|
9,013
|
|
Total
assets
|
|
$
|
605,390
|
|
|
$
|
612,812
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
|
|
|
|
|
|
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Current
liabilities:
|
|
|
|
|
|
|
|
|
Revolving
lines of credit
|
|
$
|
18,379
|
|
|
$
|
3,427
|
|
Accounts
payable
|
|
|
41,953
|
|
|
|
51,053
|
|
Accrued
product warranty
|
|
|
9,513
|
|
|
|
10,050
|
|
Customer
deposits
|
|
|
25,257
|
|
|
|
41,385
|
|
Accrued
payroll and related liabilities
|
|
|
4,922
|
|
|
|
10,553
|
|
Accrued
loss reserves
|
|
|
4,259
|
|
|
|
3,303
|
|
Other
accrued liabilities
|
|
|
26,774
|
|
|
|
24,065
|
|
Total
current liabilities
|
|
|
131,057
|
|
|
|
143,836
|
|
Deferred
income tax liabilities
|
|
|
13,526
|
|
|
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13,065
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Other
|
|
|
14,036
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|
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15,877
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|
Total
liabilities
|
|
|
158,619
|
|
|
|
172,778
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|
Shareholders’
equity
|
|
|
446,025
|
|
|
|
439,226
|
|
Noncontrolling
interest
|
|
|
746
|
|
|
|
808
|
|
Total
equity
|
|
|
446,771
|
|
|
|
440,034
|
|
Total
liabilities and equity
|
|
$
|
605,390
|
|
|
$
|
612,812
|
|
See Notes
to Unaudited Condensed Consolidated Financial Statements
Condensed
Consolidated Statements of Operations
(in
thousands, except share and per share amounts)
(unaudited)
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Net
sales
|
|
$
|
205,304
|
|
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$
|
263,072
|
|
Cost
of sales
|
|
|
161,842
|
|
|
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196,852
|
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Gross
profit
|
|
|
43,462
|
|
|
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66,220
|
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Selling,
general, administrative and engineering expenses
|
|
|
31,426
|
|
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38,779
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Income
from operations
|
|
|
12,036
|
|
|
|
27,441
|
|
Interest
expense
|
|
|
183
|
|
|
|
131
|
|
Other
income, net of expense
|
|
|
214
|
|
|
|
426
|
|
Income
before income taxes
|
|
|
12,067
|
|
|
|
27,736
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|
Income
taxes
|
|
|
4,671
|
|
|
|
10,160
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|
Net
income
|
|
|
7,396
|
|
|
|
17,576
|
|
Net
income (loss) attributable to noncontrolling interest
|
|
|
(35
|
)
|
|
|
57
|
|
Net
income attributable to controlling interest
|
|
$
|
7,431
|
|
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$
|
17,519
|
|
|
|
|
|
|
|
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Earnings
per common share
|
|
|
|
|
|
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Net
income attributable to controlling interest:
|
|
|
|
|
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Basic
|
|
$
|
0.33
|
|
|
$
|
0.79
|
|
Diluted
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$
|
0.33
|
|
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$
|
0.78
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Weighted
average common shares outstanding:
|
|
|
|
|
|
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Basic
|
|
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22,430,546
|
|
|
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22,237,100
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Diluted
|
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22,663,415
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|
|
|
22,550,536
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See Notes
to Unaudited Condensed Consolidated Financial Statements
Condensed
Consolidated Statements of Cash Flows
(in
thousands)
(unaudited)
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
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|
Net
income
|
|
$
|
7,396
|
|
|
$
|
17,576
|
|
Adjustments
to reconcile net income to net cash (used) provided
by
operating activities:
|
|
|
|
|
|
|
|
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Depreciation
and amortization
|
|
|
4,737
|
|
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|
4,255
|
|
Provision
for doubtful accounts, net
|
|
|
204
|
|
|
|
(89
|
)
|
Provision
for inventory reserve
|
|
|
714
|
|
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|
791
|
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Provision
for warranty reserve
|
|
|
3,103
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4,447
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|
Deferred
compensation provision (benefit)
|
|
|
(464
|
)
|
|
|
139
|
|
Trading
securities transactions, net
|
|
|
174
|
|
|
|
(806
|
)
|
Stock-based
compensation
|
|
|
86
|
|
|
|
548
|
|
Tax
benefit from stock option exercise
|
|
|
-
|
|
|
|
(335
|
)
|
Deferred
income tax provision (benefit)
|
|
|
360
|
|
|
|
(1,006
|
)
|
(Gain)
loss on sale and disposition of fixed assets
|
|
|
124
|
|
|
|
(11
|
)
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(Increase)
decrease in:
|
|
|
|
|
|
|
|
|
Trade
and other receivables
|
|
|
(5,499
|
)
|
|
|
(27,621
|
)
|
Inventories
|
|
|
7,109
|
|
|
|
(9,000
|
)
|
Prepaid
expenses and other
|
|
|
5,453
|
|
|
|
738
|
|
Other
assets
|
|
|
(1,054
|
)
|
|
|
(152
|
)
|
Increase
(decrease) in:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(9,100
|
)
|
|
|
7,966
|
|
Accrued
product warranty
|
|
|
(3,640
|
)
|
|
|
(3,412
|
)
|
Customer
deposits
|
|
|
(16,128
|
)
|
|
|
872
|
|
Income
taxes payable
|
|
|
420
|
|
|
|
9,524
|
|
Other
accrued liabilities
|
|
|
(3,764
|
)
|
|
|
(3,802
|
)
|
Net
cash provided (used) by operating activities
|
|
|
(9,769
|
)
|
|
|
622
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Expenditures
for property and equipment
|
|
|
(4,112
|
)
|
|
|
(6,110
|
)
|
Proceeds
from sale of property and equipment
|
|
|
205
|
|
|
|
20
|
|
Net
cash used by investing activities
|
|
|
(3,907
|
)
|
|
|
(6,090
|
)
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Net
borrowings under revolving line of credit
|
|
|
14,952
|
|
|
|
--
|
|
Tax
benefit from stock option exercise
|
|
|
-
|
|
|
|
335
|
|
Supplemental
Executive Retirement Plan transactions, net
|
|
|
1
|
|
|
|
11
|
|
Proceeds
from issuance of common stock
|
|
|
-
|
|
|
|
942
|
|
Net
cash provided by financing activities
|
|
|
14,953
|
|
|
|
1,288
|
|
Effect
of exchange rate changes
|
|
|
(388
|
)
|
|
|
(1,302
|
)
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
889
|
|
|
|
(5,482
|
)
|
Cash
and cash equivalents at beginning of period
|
|
|
9,674
|
|
|
|
34,636
|
|
Cash
and cash equivalents at end of period
|
|
$
|
10,563
|
|
|
$
|
29,154
|
|
|
|
|
|
|
|
|
|
|
See Notes
to Unaudited Condensed Consolidated Financial Statements
Astec
Industries, Inc.
|
|
|
|
For
the Three Months Ended March 31, 2009
|
|
(in
thousands, except shares)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
Shares
|
|
|
Common
Stock
Amount
|
|
|
Additional
Paid
in
Capital
|
|
|
Accum-
ulated
Other
Compre-
hensive
Income
(Loss)
|
|
|
Company
Shares
Held
by
SERP
|
|
|
Retained
Earnings
|
|
|
Non-
controlling
Interest
|
|
|
Total
Equity
|
|
Balance
December
31,
2008
|
|
|
22,508,332
|
|
|
$
|
4,502
|
|
|
$
|
121,968
|
|
|
$
|
(2,799
|
)
|
|
$
|
(1,966
|
)
|
|
$
|
317,521
|
|
|
$
|
808
|
|
|
$
|
440,034
|
|
Net
income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,431
|
|
|
|
(35
|
)
|
|
|
7,396
|
|
Other
comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency
translation
adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(733
|
)
|
|
|
|
|
|
|
|
|
|
|
(27
|
)
|
|
|
(760
|
)
|
Change
in
unrecognized
pension
and post
retirement
benefit
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,650
|
|
Stock
incentive plan
expense
|
|
|
3,174
|
|
|
|
|
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86
|
|
SERP
transactions,
net
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
|
(19
|
)
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Balance,
March
31,
2009
|
|
|
22,511,506
|
|
|
$
|
4,502
|
|
|
$
|
122,074
|
|
|
$
|
(3,518
|
)
|
|
$
|
(1,985
|
)
|
|
$
|
324,952
|
|
|
$
|
746
|
|
|
$
|
446,771
|
|
See Notes
to Unaudited Condensed Consolidated Financial Statements
ASTEC
INDUSTRIES, INC.
Note
1. Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the
Securities Act of 1933. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended March
31, 2009 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2009. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Astec Industries, Inc. Annual
Report on Form 10-K for the year ended December 31, 2008.
The
condensed consolidated balance sheet at December 31, 2008 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements.
Recent
Accounting Pronouncements
In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, “Fair Value Measurements”, (“SFAS 157”), which provides guidance on how to
measure assets and liabilities at fair value. SFAS 157 applies whenever another
US GAAP standard requires (or permits) assets or liabilities to be measured at
fair value but does not expand the use of fair value to any new circumstances.
This standard also requires additional disclosures in both annual and quarterly
reports. Portions of SFAS 157 were effective for financial statements issued for
fiscal years beginning after November 15, 2007, and the Company began applying
those provisions effective January 1, 2008. In February 2008, the
FASB issued Staff Position No. 157-2, (“FSP 157-2”), which delayed the effective
date of SFAS 157 one year for all nonfinancial assets and nonfinancial
liabilities, except those recognized at fair value in the financial statements
on a recurring basis. The Company adopted the remaining provisions of SFAS 157
as of January 1, 2009. The adoption of SFAS 157 and FSP-157-2 did not have a
significant impact on the Company’s financial statements.
In
December 2007, the FASB issued Statement of Financial Accounting Standards No.
141 (revised 2007), “Business Combinations” (“SFAS 141R”), and Statement of
Financial Accounting Standards No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 141R establishes
principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
any non-controlling interest in the acquiree and the goodwill acquired. This
standard also establishes disclosure requirements which will enable users to
evaluate the nature and financial effects of the business combination. SFAS 160
clarifies that a noncontrolling interest in a subsidiary should be reported as
equity in the consolidated financial statements. Consolidated net
income should include the net income for both the parent and the noncontrolling
interest with disclosure of both amounts on the consolidated statement of
income. The calculation of earnings per share will continue to be based on
income amounts attributable to the parent. Both statements were effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and the Company began applying its provisions effective January 1,
2009. The adoption of these statements has not had a significant
impact on the Company’s financial position or results of operations to
date.
In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities - an amendment
of FASB Statement No. 133” (“SFAS 161”). The objective of this statement is to
require enhanced disclosures about an entity’s derivative and hedging activities
and to improve the transparency of financial reporting. Entities are required to
provide enhanced disclosures about (1) how and why an entity uses derivative
instruments, (2) how derivative instruments and related hedged items are
accounted for under Statement No. 133 and its related interpretations, and (3)
how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. This statement encourages,
but does not require, comparative disclosures for earlier periods at initial
adoption. The Company adopted the standard as of January 1, 2009. Because SFAS
161 applies only to financial statement presentation and disclosure, its
adoption did not have a significant impact on the Company’s financial position
or results of operations.
In April
2008, the FASB issued Staff Position No. 142-3, “Determination of the Useful
Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
“Goodwill and Other Intangible Assets”. The intent of FSP 142-3 is to improve
the consistency between the useful life of a recognized intangible asset under
SFAS 142 and the period of expected cash flows used to measure the fair value of
the asset under SFAS No. 141R and other applicable accounting literature. FSP
142-3 is effective for financial statements issued for fiscal years beginning
after December 15, 2008 and must be applied prospectively to intangible assets
acquired after the effective date. The Company will apply the provisions of the
FSP for any new intangible assets acquired after January 1, 2009. The
adoption of this statement has not had a significant impact on the Company’s
financial position or results of operations to date.
In April
2009, the FASB issued Staff Position No. 141(R)-1, “Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies” (“FSP 141(R)-1”). FSP 141(R)-1 amends the guidance in
FASB Statement No. 141 (Revised December 2007), “Business Combinations” to
require that assets acquired and liabilities assumed in a business combination
that arise from contingencies be recognized at fair value if fair value can
reasonably be estimated. FSP 141(R)-1 further requires that
contingent consideration arrangements of an acquiree assumed by the acquirer in
a business combination be treated as a contingent consideration of the acquirer
and should be initially and subsequently measured at fair value in accordance
with Statement 141R. FSP 141(R)-1 is effective for assets or
liabilities arising from contingencies in business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. As such the Company
began applying the provisions of the FSP on January 1, 2009. The
adoption of this statement has not had a significant impact on the Company’s
financial position or results of operations to date.
In April
2009, the FASB issued Staff Position No. 157-4, “Determining Fair Value When the
Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly” (“FSP
157-4”). FSP 157-4 affirms that the objective of fair value when the
market for an asset is not active is the price that would be received to sell
the asset in an orderly transaction; clarifies and includes additional factors
for determining whether there has been a significant decrease in market activity
for an asset when the market for that asset is not active; and eliminates the
proposed presumption that all transactions are distressed (not orderly) unless
proven otherwise. FSP 157-4 is effective for interim and annual
periods ending after June 15, 2009. The Company will begin applying
its provision effective April 1, 2009. The adoption of this statement
is not expected to have a significant impact on the Company’s financial
statements.
In April
2009, the FASB issued Staff Position Nos. 115-2 and 124-2, “Recognition and
Presentation of Other-Than-Temporary Impairments” (“FSP’s 115-2 and
124-2”). FSP’s 115-2 and 124-2 changes existing guidance for
determining whether an impairment is other than temporary for debt securities;
replaces existing requirements that the entity’s management assert it has both
the intent and ability to hold an impaired security until recovery with a
requirement that management assert that it does not have the intent to sell the
security and that it is more likely than not it will not have to sell the
security before recovery of its cost basis; requires that an entity recognize
noncredit losses on held-to-maturity debt securities in other comprehensive
income and amortize the amount over the remaining life of the security; requires
an entity to present the total other-than-temporary impairment in the statement
of earnings with an offset for the amount recognized in other comprehensive
income; and requires a cumulative effect adjustment as of the beginning of the
period of adoption to reclassify the noncredit component of a previously
recognized other-than-temporary impairment from retained earnings to accumulated
other comprehensive income in certain instances. The FSP is
effective for interim and annual periods ending after June 15,
2009. The Company will begin applying its provision effective April
1, 2009. The adoption of this statement is not expected to have a
significant impact on the Company’s financial statements.
In April
2009, the FASB issued Staff Position No. 107-1 and APB 28-1, “Interim
Disclosures about Fair Value of Financial Instruments” (“FSP 107-1 & APB
28-1”). FSP 107-1 and APB 28-1 require an entity to provide
disclosures about fair value of financial instruments in both interim and annual
financial reports. The statement is effective for interim and annual
periods ending after June 15, 2009. The Company will begin applying
its disclosure requirements in its June 30, 2009 financial
statements.
Note
2. Earnings per Share
Basic and
diluted earnings per share are calculated in accordance with SFAS No. 128 and
SFAS No. 123(R). Basic earnings per share exclude any dilutive
effects of stock options and restricted stock units.
The
following table sets forth the computation of basic and diluted earnings per
share:
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Numerator:
|
|
|
|
|
|
|
Net
income attributable to controlling interest
|
|
$
|
7,431,000
|
|
|
$
|
17,519,000
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Denominator
for basic earnings per share
|
|
|
22,430,546
|
|
|
|
22,237,100
|
|
Effect
of dilutive securities:
|
|
|
|
|
|
|
|
|
Employee
stock option & incentive plans
|
|
|
140,401
|
|
|
|
227,712
|
|
Supplemental
Executive Retirement Plan
|
|
|
92,468
|
|
|
|
85,724
|
|
Denominator
for diluted earnings per share
|
|
|
22,663,415
|
|
|
|
22,550,536
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to controlling interest
per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.33
|
|
|
$
|
0.79
|
|
Diluted
|
|
$
|
0.33
|
|
|
$
|
0.78
|
|
A total
of 2,569 and 1,840 options were antidilutive for the three months ended March
31, 2009 and 2008, respectively, and were therefore not included in the diluted
earnings per share computation.
Note
3. Receivables
Receivables
are net of allowances for doubtful accounts of $1,622,000 and $1,496,000 as of
March 31, 2009 and December 31, 2008, respectively.
Note
4. Inventories
Inventories
are stated at the lower of first-in, first-out cost or market and consist of the
following:
|
|
(in
thousands)
|
|
|
|
March
31, 2009
|
|
|
December
31, 2008
|
|
Raw
materials and parts
|
|
$
|
110,470
|
|
|
$
|
116,254
|
|
Work-in-process
|
|
|
49,909
|
|
|
|
57,776
|
|
Finished
goods
|
|
|
102,215
|
|
|
|
99,807
|
|
Used
equipment
|
|
|
15,400
|
|
|
|
11,980
|
|
Total
|
|
$
|
277,994
|
|
|
$
|
285,817
|
|
The above
inventory amounts are net of reserves totaling $13,646,000 and $13,157,000 as of
March 31, 2009 and December 31, 2008, respectively.
Note
5. Property and Equipment
Property
and equipment is stated at cost, less accumulated depreciation of $139,945,000
and $135,617,000 as of March 31, 2009 and December 31, 2008,
respectively.
Note
6. Fair Value of Investments
The
Company’s investments consist of the following (amounts in
thousands):
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Estimated
Fair
Value
(Net
Carrying
Amount)
|
|
March
31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
equity securities
|
|
$
|
2,192
|
|
|
$
|
24
|
|
|
$
|
120
|
|
|
$
|
2,096
|
|
Trading
debt securities
|
|
|
8,937
|
|
|
|
53
|
|
|
|
381
|
|
|
|
8,609
|
|
|
|
$
|
11,129
|
|
|
$
|
77
|
|
|
$
|
501
|
|
|
$
|
10,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading
equity securities
|
|
$
|
2,875
|
|
|
$
|
--
|
|
|
$
|
423
|
|
|
$
|
2,452
|
|
Trading
debt securities
|
|
|
8,686
|
|
|
|
48
|
|
|
|
259
|
|
|
|
8,475
|
|
|
|
$
|
11,561
|
|
|
$
|
48
|
|
|
$
|
682
|
|
|
$
|
10,927
|
|
The
investments noted above are valued at their estimated fair value based on quoted
market prices for identified or similar assets or, where no quoted prices exist,
other observable inputs for the asset.
A
significant portion of the trading equity securities are in equity mutual funds
and approximate a portion of the Company’s liability under the Supplemental
Executive Retirement Plan (“SERP”), an unqualified defined contribution
plan.
Trading
debt securities are comprised mainly of marketable debt securities held by Astec
Insurance Company. Astec Insurance has an investment strategy that focuses on
providing regular and predictable interest income from a diversified portfolio
of high-quality fixed income securities. At March 31, 2009 and December 31,
2008, $1,998,000 and $1,015,000, respectively, of trading debt securities were
due to mature within twelve months and, accordingly, are included in other
current assets.
As
indicated in the table below, the Company has determined that its investments at
March 31, 2009 are level 1 and level 2 in the fair value hierarchy:
|
|
Investments
at March 31, 2009
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Trading
equity securities
|
|
$
|
2,096
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,096
|
|
Trading
debt securities
|
|
$
|
1,147
|
|
|
|
7,462
|
|
|
|
-
|
|
|
|
8,609
|
|
Total
|
|
$
|
3,243
|
|
|
$
|
7,462
|
|
|
$
|
-
|
|
|
$
|
10,705
|
|
Note
7. Goodwill
At March
31, 2009 and December 31, 2008, the Company had goodwill in the amount of
$29,488,000 and $29,658,000, respectively.
The change in the carrying amount of goodwill by operating segment for the
period ended March 31, 2009 is as follows:
|
(in
thousands)
|
|
Asphalt
Group
|
|
|
Aggregate
and
Mining
Group
|
|
|
Mobile
Asphalt
Paving
Group
|
|
|
Underground
Group
|
|
|
Other
|
|
|
Total
|
|
Balance
December 31, 2008
|
|
$
|
5,961
|
|
|
$
|
16,244
|
|
|
$
|
1,646
|
|
|
$
|
-
|
|
|
$
|
5,807
|
|
|
$
|
29,658
|
|
Foreign
currency translation
|
|
|
-
|
|
|
|
(170
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(170
|
)
|
Balance
March 31, 2009
|
|
$
|
5,961
|
|
|
$
|
16,074
|
|
|
$
|
1,646
|
|
|
$
|
-
|
|
|
$
|
5,807
|
|
|
$
|
29,488
|
|
Note
8. Debt
During
April 2007, the Company entered into an unsecured credit agreement with Wachovia
Bank, National Association (“Wachovia”), whereby Wachovia has extended to the
Company an unsecured line of credit of up to $100,000,000, including a sub-limit
for letters of credit of up to $15,000,000.
The
Wachovia credit facility is unsecured and has an original term of three years
(which is subject to further extensions as provided therein). In
February 2009, the Company exercised its right to extend the credit facility’s
term for a one-year period to May 15, 2011. An additional one year
extension is available. The interest rate for borrowings is a
function of the Adjusted LIBOR Rate or Adjusted LIBOR Market Index Rate, as
elected by the Company, plus a margin based upon a leverage ratio pricing grid
ranging between 0.5% and 1.5%. As of March 31, 2009 the applicable
margin based upon the leverage ratio pricing grid was equal to
0.5%. The unused facility fee is 0.125%. The interest rate
at March 31, 2009 was 1.00063%. The Wachovia credit facility requires
no principal amortization and interest only payments are due, in the case of
loans bearing interest at the Adjusted LIBOR Market Index Rate, monthly in
arrears and, in the case of loans bearing interest at the Adjusted LIBOR Rate,
at the end of the applicable interest period therefore. The Wachovia
credit agreement contains certain financial covenants related to minimum fixed
charge coverage ratios, minimum tangible net worth and maximum allowed capital
expenditures. At March 31, 2009, the Company had borrowings
outstanding under the credit facility of $16,988,000 resulting in additional
borrowing availability of $74,409,000, net of letters of credits of $8,603,000,
on the Wachovia credit facility. The borrowings are classified as
current liabilities as the Company plans to repay the debt within the next
twelve months.
The
Company was in compliance with the financial covenants under its credit facility
as of March 31, 2009.
The
Company's South African subsidiary, Osborn Engineered Products SA (Pty) Ltd.
(“Osborn”), has an available credit facility of approximately $5,904,000 (ZAR
50,000,000) to finance short-term working capital needs, as well as to cover the
short-term establishment of letter of credit performance guarantees. As of March
31, 2009, Osborn had $1,391,000 in outstanding borrowings under the credit
facility at 13% interest and approximately $1,615,000 in performance bonds which
were guaranteed under the facility. The facility is secured by
Osborn's buildings and improvements, accounts receivable and cash balances and a
$2,000,000 letter of credit issued by the parent Company. The portion
of the available facility not secured by the $2,000,000 letter of credit
fluctuates monthly based upon 75% of Osborn's accounts receivable plus total
cash balances at the end of the prior month and $1,505,000 allocated for
buildings and improvements. As of March 31, 2009, Osborn had
available credit under the facility of approximately $2,898,000. The
facility expires on July 30, 2009 and the Company plans to renew the facility
prior to expiration. There is not a charge for the unused portion of
the facility.
During
the first quarter of 2009 the Company’s Australian subsidiary, Astec Australia
Pty, Ltd. (“Astec Australia”) entered into a banking agreement which provides
Astec Australia with an available credit facility to finance short-term working
capital needs of approximately $1,955,000 (AUD 2,800,000), to finance foreign
exchange dealer limit orders of approximately $1,746,000 (AUD 2,500,000) and to
provide bank guarantees to others of approximately $140,000 (AUD
200,000). The facility is secured by a $2,500,000 letter of credit
issued by the parent Company. No amounts were outstanding under the
credit facility at March 31, 2009.
Note
9. Product Warranty Reserves
Changes
in the Company's product warranty liability for the three month period ended
March 31, 2009 and 2008 are as follows:
|
|
(in
thousands)
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Reserve
balance at the beginning of the period
|
|
$
|
10,050
|
|
|
$
|
7,827
|
|
Warranty
liabilities accrued during the period
|
|
|
3,103
|
|
|
|
4,447
|
|
Warranty
liabilities settled during the period
|
|
|
(3,620
|
)
|
|
|
(3,413
|
)
|
Other
|
|
|
(20
|
)
|
|
|
--
|
|
Reserve
balance at the end of the period
|
|
$
|
9,513
|
|
|
$
|
8,861
|
|
The
Company warrants its products against manufacturing defects and performance to
specified standards. The warranty period and performance standards vary by
market and uses of its products. The Company estimates the costs that may be
incurred under its warranties and records a liability at the time product sales
are recorded. The product warranty liability is primarily based on
historical claim rates, nature of claims and the associated cost.
Note
10. Accrued Loss Reserves
The
Company accrues reserves for losses related to known workers' compensation and
general liability claims that have been incurred but not yet paid or are
estimated to have been incurred but not yet reported to the
Company. The undiscounted reserves are actuarially determined based
on the Company's evaluation of the type and severity of individual claims and
historical information, primarily its own claims experience, along with
assumptions about future events. Changes in assumptions, as well as
changes in actual experience, could cause these estimates to change in the
future. Total accrued loss reserves were $8,923,000 at March 31, 2009
compared to $9,022,000 at December 31, 2008, of which $4,663,000 and $5,719,000
was included in other long-term liabilities at March 31, 2009 and December 31,
2008, respectively.
Note
11. Uncertainty in Income Taxes
The
Company's liability recorded for uncertain tax positions as of March 31, 2009
has not changed significantly in amount or composition since December 31,
2008.
Note 12. Segment
Information
The
Company has four reportable operating segments, which include the Asphalt Group,
the Aggregate and Mining Group, the Mobile Asphalt Paving Group and the
Underground Group. The business units in the Asphalt Group design,
manufacture and market a complete line of asphalt plants and related components,
heating and heat transfer processing equipment and storage tanks for the asphalt
paving and other non-related industries. The business units in the
Aggregate and Mining Group design, manufacture and market equipment for the
aggregate, metallic mining and recycling industries. The business
units in the Mobile Asphalt Paving Group design, manufacture and market asphalt
pavers, material transfer vehicles, milling machines and screeds. The
business units in the Underground Group design, manufacture and market a
complete line of trenching equipment and directional drills for the underground
construction market. Business units that do not meet the requirements for
separate disclosure as operating segments are shown in the "All Others"
category, including Peterson Pacific Corp. (“Peterson”), Astec Australia, Pty,
Ltd., (“Astec Australia”), Astec Insurance Company and the parent company, Astec
Industries, Inc. Peterson designs, manufactures and markets
whole-tree pulpwood chippers, horizontal grinders and blower
trucks. Astec Australia is the Australian and New Zealand distributor
for the range of equipment manufactured by Astec Industries,
Inc. Astec Insurance Company is a captive insurance
provider.
|
|
(in
thousands)
|
|
|
|
Three
Months Ended March 31, 2009
|
|
|
|
Asphalt
Group
|
|
|
Aggregate
and
Mining
Group
|
|
|
Mobile
Asphalt
Paving
Group
|
|
|
Underground
Group
|
|
|
All
Others
|
|
|
Total
|
|
Net
sales to external
customers
|
|
$
|
83,252
|
|
|
$
|
51,577
|
|
|
$
|
31,404
|
|
|
$
|
20,246
|
|
|
$
|
18,825
|
|
|
$
|
205,304
|
|
Intersegment
sales
|
|
|
4,222
|
|
|
|
3,901
|
|
|
|
1,299
|
|
|
|
77
|
|
|
|
-
|
|
|
|
9,499
|
|
Gross
profit
|
|
|
20,623
|
|
|
|
10,904
|
|
|
|
6,620
|
|
|
|
2,760
|
|
|
|
2,555
|
|
|
|
43,462
|
|
Gross
profit percent
|
|
|
24.8
|
%
|
|
|
21.1
|
%
|
|
|
21.1
|
%
|
|
|
13.6
|
%
|
|
|
13.6
|
%
|
|
|
21.2
|
%
|
Segment
profit (loss)
|
|
$
|
11,999
|
|
|
$
|
1,772
|
|
|
$
|
2,004
|
|
|
$
|
(2,341
|
)
|
|
$
|
(6,835
|
)
|
|
$
|
6,599
|
|
|
|
(in
thousands)
|
|
|
|
Three
Months Ended March 31, 2008
|
|
|
|
Asphalt
Group
|
|
|
Aggregate
and
Mining
Group
|
|
|
Mobile
Asphalt
Paving
Group
|
|
|
Underground
Group
|
|
|
All
Others
|
|
|
Total
|
|
Net
sales to external
customers
|
|
$
|
71,585
|
|
|
$
|
91,090
|
|
|
$
|
47,131
|
|
|
$
|
32,643
|
|
|
$
|
20,623
|
|
|
$
|
263,072
|
|
Intersegment
sales
|
|
|
4,187
|
|
|
|
5,972
|
|
|
|
1,787
|
|
|
|
1,502
|
|
|
|
-
|
|
|
|
13,448
|
|
Gross
profit
|
|
|
19,606
|
|
|
|
23,157
|
|
|
|
12,592
|
|
|
|
7,103
|
|
|
|
3,762
|
|
|
|
66,220
|
|
Gross
profit percent
|
|
|
27.4
|
%
|
|
|
25.4
|
%
|
|
|
26.7
|
%
|
|
|
21.8
|
%
|
|
|
18.2
|
%
|
|
|
25.2
|
%
|
Segment
profit (loss)
|
|
$
|
11,845
|
|
|
$
|
10,259
|
|
|
$
|
6,528
|
|
|
$
|
1,845
|
|
|
$
|
(12,725
|
)
|
|
$
|
17,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
reconciliation of total segment profits to the Company's consolidated totals is
as follows:
|
|
(in
thousands)
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Total
segment profits
|
|
$
|
6,599
|
|
|
$
|
17,752
|
|
Net
(income) loss attributable to noncontrolling
interest
in subsidiary
|
|
|
35
|
|
|
|
(57
|
)
|
Recapture
(elimination) of intersegment profit
|
|
|
797
|
|
|
|
(176
|
)
|
Net
income attributable to controlling interest
|
|
$
|
7,431
|
|
|
$
|
17,519
|
|
Note
13. Contingent Matters
The
Company is contingently liable under letters of credit totaling approximately
$8,603,000 as of March 31, 2009, including a $2,500,000 and a $2,000,000 letter
of credit issued on behalf of Astec Australia and Osborn, respectively, two of
the Company’s foreign subsidiaries. The outstanding letters of credit
expire at various dates through May 2010. Osborn is contingently
liable for a total of $1,615,000 in performance and retention
bonds. As of March 31, 2009, the maximum potential amount of future
payments under these letters of credit and bonds for which the Company could be
liable is approximately $10,218,000.
The
Company is currently a party to various claims and legal proceedings that have
arisen in the ordinary course of business. If management believes
that a loss arising from such claims and legal proceedings is probable and can
reasonably be estimated, the Company records the amount of the loss (excluding
estimated legal fees), or the minimum estimated liability when the loss is
estimated using a range, and no point within the range is more probable than
another. As management becomes aware of additional information
concerning such contingencies, any potential liability related to these matters
is assessed and the estimates are revised, if necessary. If
management believes that a loss arising from such claims and legal proceedings
is either (i) probable but cannot be reasonably estimated or (ii) reasonably
possible but not probable, the Company does not record the amount of the loss,
but does make specific disclosure of such matter, if material. Based
upon currently available information and with the advice of counsel, management
believes that the ultimate outcome of its current claims and legal proceedings,
individually and in the aggregate, will not have a material adverse effect on
the Company’s financial position, cash flows or results of
operations. However, claims and legal proceedings are subject to
inherent uncertainties and rulings unfavorable to the Company could
occur. If an unfavorable ruling were to occur, there exists the
possibility of a material adverse effect on the Company’s financial position,
cash flows or results of operations.
The
Company has received notice that Johnson Crushers International, Inc. is subject
to an enforcement action brought by the U.S. Environmental Protection Agency and
the Oregon Department of Environmental Quality related to an alleged failure to
comply with federal and state air permitting regulations. Each agency is
expected to seek sanctions that will include monetary penalties. No penalty has
yet been proposed. The Company believes that it has cured the alleged violations
and is cooperating fully with the regulatory agencies. At this stage of the
investigations, the Company is unable to predict the outcome and the amount of
any such sanctions.
The
Company has also received notice from the Environmental Protection Agency that
it may be responsible for a portion of the costs incurred in connection with an
environmental cleanup in Illinois. The discharge of hazardous materials and
associated cleanup relate to activities occurring prior to the Company’s
acquisition of Barber-Greene in 1986. The Company believes that over 300 other
parties have received similar notice. At this time, the Company cannot predict
whether the EPA will seek to hold the Company liable for a portion of the
cleanup costs or the amount of any such liability.
The
Company has not recorded a liability with respect to either matter because no
estimates of the amount of any such liabilities can be made at this
time.
Note
14. Stock-based Compensation
Under
terms of the Company’s stock option plans, officers and certain other employees
have been granted options to purchase the Company’s common stock at no less than
100% of the market price on the date the option was granted. The
Company has reserved unissued shares of common stock for exercise of outstanding
non-qualified options and incentive options of officers and employees of the
Company and its subsidiaries at prices determined by the Board of
Directors. In addition, a Non-employee Directors Stock Incentive Plan
has been established to allow non-employee directors to have a personal
financial stake in the Company through an ownership
interest. Directors may elect to receive their compensation in cash,
common stock, deferred stock or stock options. For 2009, all the
directors elected to receive their compensation in either common stock or
deferred stock. The shares reserved under the 1998 Long-term
Incentive Plan and the 1998 Non-employee Directors Stock Plan total 323,095 and
158,635, respectively, as of March 31, 2009. The fair value of stock
awards granted to non-employee directors totaled $56,000 and $42,000 for the
three month period ended March 31, 2009 and 2008,
respectively. Options granted under the Non-employee Directors Stock
Incentive Plan vest and become fully exercisable
immediately. Generally, other options granted vested over 12
months. All stock options have a ten-year term. All granted options
were vested prior to December 31, 2006; therefore, no stock option expense was
recorded in the three months ended March 31, 2009 and 2008, and there are no
unrecognized compensation costs related to stock options previously granted as
of those dates.
In August
2006, the Compensation Committee of the Board of Directors implemented a
five-year plan to award key members of management restricted stock units each
year. The details of the plan were formulated under the 2006 Incentive Plan
approved by the Company’s shareholders in their annual meeting held in April
2006. The plan allows up to 700,000 shares to be granted to
employees. Units granted each year will be determined based upon the
performance of individual subsidiaries and consolidated annual financial
performance. Additional units may be granted in 2011 based upon five-year
cumulative performance. Each award will vest at the end of five years
from the date of grant, or at the time a recipient reaches age 65, if earlier.
The cumulative change in the fair value of awards due to changes in the
estimated number of shares to be granted and changes in the per share value of
fair value of awards prior to the grant date are booked in the period the change
in estimate occurs. Compensation expense of $31,000 and $506,000 has been
recorded in the three month periods ended March 31, 2009 and 2008, respectively,
to reflect the fair value of the total shares amortized over the portion of the
vesting period occurring during the periods.
Note
15. Seasonality
Based
upon historical results of the past several years and expected results for this
year, 25% to 27% of the Company's business volume typically occurs during the
first three months of the year. During the usual seasonal trend, the
first three quarters of the year are the Company's stronger quarters for
business volume, with the fourth quarter normally being the weakest
quarter.
Note
16. Comprehensive Income
Total
comprehensive income attributable to controlling interest for the three-month
periods ended March 31, 2009 and 2008 was $6,712,000 and $15,524,000,
respectively. The components of comprehensive income attributable to
controlling interest for the periods indicated are set forth below:
|
|
(in
thousands)
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Net
income
|
|
$
|
7,396
|
|
|
$
|
17,576
|
|
Change
in unrecognized pension and post
retirement
benefit costs, net of tax
|
|
|
14
|
|
|
|
14
|
|
Unrealized
gain on available for sale
securities,
net of tax
|
|
|
-
|
|
|
|
310
|
|
Foreign
currency translation adjustments
|
|
|
(760
|
)
|
|
|
(2,457
|
)
|
Comprehensive
income
|
|
|
6,650
|
|
|
|
15,443
|
|
Comprehensive
income attributable to noncontrolling interest
|
|
|
62
|
|
|
|
81
|
|
Comprehensive
income attributable to controlling interest
|
|
$
|
6,712
|
|
|
$
|
15,524
|
|
Note
17. Other Income, net of expenses
For the
three months ended March 31, 2009 and 2008, the Company had other income, net of
expenses, totaling $214,000 and $426,000, respectively. Major items
comprising the net totals for the periods are as follows:
|
|
(in
thousands)
|
|
|
|
Three
Months Ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
Interest
income
|
|
$
|
75
|
|
|
$
|
358
|
|
Realized
loss on investments
|
|
|
(127
|
)
|
|
|
-
|
|
Gain
(loss) on foreign currency transactions
|
|
|
248
|
|
|
|
(69
|
)
|
Other
|
|
|
18
|
|
|
|
137
|
|
Total
|
|
$
|
214
|
|
|
$
|
426
|
|
Note
18. Derivative Financial Instruments
The
Company is exposed to certain risks relating to its ongoing business
operations. The primary risk managed by using derivative
instruments is foreign currency risk. From time to time the Company’s
foreign subsidiaries enter into foreign currency exchange contracts to mitigate
exposure to fluctuations in currency exchange rates. The fair value
of the derivative financial instrument is recorded on Company’s balance sheet
and is adjusted to fair value at each measurement date based on the contractual
forward exchange rate and the forward exchange rate at the measurement
date. The changes in fair value are recognized in the consolidated
statements of operation in the current period. The Company does not
engage in speculative transactions nor does it hold or issue financial
instruments for trading purposes. There were no significant foreign
exchange contracts outstanding at March 31, 2009 or December 31, 2008 nor were
there any significant gains or losses related to foreign exchange contracts
recognized during the three-month periods ended March 31, 2009 and
2008. There were no derivatives that qualified for hedge accounting
at March 31, 2009 or December 31, 2008.
Forward-Looking
Statements
This
Quarterly Report on Form 10-Q contains forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Statements contained anywhere in this Quarterly Report on Form
10-Q that are not limited to historical information are considered
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are
sometimes identified by the words “will,” “would,” “should,” “could,”
“believes,” “anticipates,” “intends,” and “expects” and similar
expressions. Such forward-looking statements include, without
limitation, statements regarding the Company's expected sales and results of
operations during 2009, the Company's expected effective tax rates for 2009, the
Company's expected capital expenditures in 2009, the expected benefit and impact
of financing arrangements, the ability of the Company to meet its working
capital and capital expenditure requirements through March 31, 2010, the impact
of the enactment of Safe, Accountable, Flexible and Efficient Transportation
Equity Act - A Legacy for Users (SAFETEA-LU), the American Recovery and
Reinvestment Act of 2009, or any future state or federal funding for
transportation construction programs, the need for road improvements, the impact
of other public sector spending and funding mechanisms, the Company's backlog
levels, changes in the economic environment as it affects the Company, the
timing and impact of changes in the economy, the market confidence of customers
and dealers, the Company's general liability insurance coverage for product
liability and other similar tort claims, the Company being called upon to
fulfill certain contingencies, the expected contributions by the Company to its
pension plan, its post-retirement plan and other benefits, the expected dates of
granting of restricted stock units, changes in interest rates and the impact of
such changes on the financial results of the Company, changes in the prices of
steel and oil, the ability of the Company to offset future changes in prices in
raw materials, the change in the level of the Company's presence and sales in
international markets, the seasonality of the Company’s business, the outcome of
audits by taxing authorities, the amount or value of unrecognized tax benefits,
the Company’s discussion of its critical accounting policies and the ultimate
outcome of the Company's current claims and legal proceedings.
These
forward-looking statements are based largely on management's expectations, which
are subject to a number of known and unknown risks, uncertainties and other
factors discussed in this Report and in other documents filed by the Company
with the Securities and Exchange Commission, which may cause actual results,
financial or otherwise, to be materially different from those anticipated,
expressed or implied by the forward-looking statements. All forward-looking
statements included in this document are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update any
such forward-looking statements to reflect future events or
circumstances.
In
addition to the risks and uncertainties identified herein under the caption
“Item 1A. Risk Factors” in Part II of this Report, elsewhere herein and in other
documents filed by the Company with the Securities and Exchange Commission, most
recently in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, the risk factors described in the section under the caption
“Risk Factors” should be carefully considered when evaluating the Company's
business and future prospects.
Overview
Astec
Industries, Inc., (“the Company”) is a leading manufacturer and marketer of road
building equipment. The Company’s businesses:
|
•
|
design,
engineer, manufacture and market equipment that is used in each phase of
road building, from quarrying and crushing the aggregate to applying the
asphalt;
|
|
•
|
design,
engineer, manufacture and market equipment and components unrelated to
road construction, including trenching, auger boring, directional
drilling, industrial heat transfer, wood chipping and grinding;
and
|
•
manufacture and sell replacement parts for equipment in each of its product
lines.
The
Company has 14 manufacturing companies, 13 of which fall within four reportable
operating segments, which include the Asphalt Group, the Aggregate and Mining
Group, the Mobile Asphalt Paving Group and the Underground Group. The business
units in the Asphalt Group design, manufacture and market a complete line of
asphalt plants and related components, heating and heat transfer processing
equipment and storage tanks for the asphalt paving and other unrelated
industries. In early 2009, the Company introduced a new line of concrete mixing
plants. The business units in the Aggregate and Mining Group design, manufacture
and market equipment for the aggregate, metallic mining and recycling
industries. The business units in the Mobile Asphalt Paving Group design,
manufacture and market asphalt pavers, material transfer vehicles, milling
machines, stabilizers and screeds. The business units in the Underground Group
design, manufacture and market a complete line of trenching equipment,
directional drills and auger boring machines for the underground construction
market as well as vertical drills for gas and oil field development. The Company
also has one other category that contains the business units that do not meet
the requirements for separate disclosure as an operating segment. The business
units in the Other category include Peterson Pacific Corp. (Peterson), Astec
Australia Pty Ltd. (Astec Australia), Astec Insurance Company and Astec
Industries, Inc., the parent company. Peterson designs, manufactures and
markets whole-tree pulpwood chippers, horizontal grinders and blower
trucks. Astec Australia is the Australian and New Zealand distributor
of equipment manufactured by Astec Industries, Inc. Astec Insurance
Company is a captive insurance provider.
The
Company’s financial performance is affected by a number of factors, including
the cyclical nature and varying conditions of the markets it serves. Demand in
these markets fluctuates in response to overall economic conditions and is
particularly sensitive to the amount of public sector spending on infrastructure
development, privately funded infrastructure development, changes in the price
of crude oil, which affects the cost of fuel and liquid asphalt, and changes in
the price of steel.
In August
2005, President Bush signed into law the Safe, Accountable, Flexible and
Efficient Transportation Equity Act - A Legacy for Users (SAFETEA-LU), which
authorizes appropriation of $286.5 billion in guaranteed federal funding for
road, highway and bridge construction, repair and improvement of the federal
highways and other transit projects for federal fiscal years October 1, 2004
through September 30, 2009. The Company believes that the federal highway
funding significantly influences the purchasing decisions of the Company’s
customers who are more comfortable making purchasing decisions with the
legislation in place. The federal funding provides for approximately 25% of
highway, street, roadway and parking construction funding in the United States.
President Bush signed into law on September 30, 2008 a funding bill for the 2009
fiscal year, which fully funds the highway program at $41.2
billion.
On
February 17, 2009, President Obama signed into law the American Recovery and
Reinvestment Act of 2009. The measure includes approximately $27.5 billion for
highway and bridge construction activities. These funds are in addition to the
$41.2 billion apportioned to the federal highway program for fiscal year 2009.
The measure requires the funding to be apportioned to the states within 21 days
of the bill’s enactment. Half of the funds must be obligated by the states
within 120 days with the remaining portion required to be under contract one
year after the bill’s enactment. The bill also provides for favorable tax
policies regarding the deduction of certain expenses relating to the purchase of
business equipment.
The
Canadian government has approved spending $9.5 billion on road, bridge, public
transit, water and other infrastructure over the next two years. The list of
approximately 2,200 “shovel-ready” projects, derived from a survey of federation
members, range from simple rehabilitation to major new
construction.
The
Company believes the spending programs will have a positive impact on its
financial performance; however, the magnitude of that impact cannot be
determined.
The
public sector spending described above is needed to fund road, bridge and mass
transit improvements. The Company believes that increased funding is
unquestionably needed to restore the nation’s highways to a quality level
required for safety, fuel efficiency and mitigation of congestion. In the
Company’s opinion, amounts needed for such improvements are significantly
greater than amounts approved to date, and funding mechanisms such as the
federal usage fee per gallon of gasoline, which has not been increased in 15
years, would need to be increased along with other measures to generate the
funds needed.
In
addition to public sector funding, the economies in the markets the Company
serves, the price of oil and its impact on customers’ purchase decisions and the
price of steel may each affect the Company’s financial performance. Economic
downturns, like the one experienced from 2001 through 2003, generally result in
decreased purchasing by the Company’s customers, which, in turn, causes
reductions in sales and increased pricing pressure on the Company’s products.
Rising interest rates typically have the effect of negatively impacting
customers’ attitudes toward purchasing equipment. The Federal Reserve has
maintained historically low interest rates in response to the current economic
downturn and the Company expects only slight changes, if any, in interest rates
in 2009 and does not expect such changes to have a material impact on the
financial results of the Company.
Significant
portions of the Company’s revenues relate to the sale of equipment involved in
the production, handling and installation of asphalt mix. A major component of
asphalt is oil. An increase in the price of oil increases the cost of providing
asphalt, which could likely decrease demand for asphalt, and therefore, decrease
demand for certain Company products. While increasing oil prices may have an
impact on the Company’s customers, the Company’s equipment can use a significant
amount of recycled asphalt pavement, thereby mitigating the cost of asphalt for
the customer. The Company continues to develop products and initiatives to
reduce the amount of oil and related products required to produce asphalt mix.
Oil price volatility makes it difficult to predict the costs of oil-based
products used in road construction such as liquid asphalt and gasoline. The
Company’s customers appear to be adapting their prices in response to the
fluctuating oil prices and the fluctuations did not appear to significantly
impair equipment purchases in 2008. The Company expects oil prices to continue
to fluctuate in 2009 but does not foresee the fluctuation to have a significant
impact on customers’ buying decisions.
Steel is
a major component in the Company’s equipment. Steel prices increased
significantly during the first eight months of 2008, and the Company increased
sales prices during the first half of 2008 to offset these rising steel costs.
Late in the third quarter of 2008, steel prices began to retreat from their 2008
highs. Steel pricing declined sharply in the fourth quarter of 2008 and the
first quarter of 2009. We expect favorable pricing to continue through the first
half of 2009 and pricing levels throughout 2009 to remain well below the peak
levels reached in the third quarter of 2008. However, moderate increases are
possible during 2009 due to reduced mill output and reductions in automotive and
appliance output which reduce the amount of high-quality scrap, a prime input
factor for steel pricing. In addition, spending under the American Recovery and
Reinvestment Act of 2009 may impact steel prices by slowing the price retraction
or even causing steel prices to rise. Although the Company would institute price
increases in response to rising steel and component prices, if the Company is
not able to raise the prices of its products enough to cover increased costs,
the Company’s financial results will be negatively affected. If the Company sees
increases in upcoming steel prices, it will take advantage of buying
opportunities to offset such future pricing where possible.
In
addition to the factors stated above, many of the Company’s markets are highly
competitive, and its products compete worldwide with a number of other
manufacturers and distributors that produce and sell similar products. During
most of 2008, the reduced value of the dollar relative to many foreign
currencies and the positive economic conditions in certain foreign economies had
a positive impact on the Company’s international sales. During the latter months
of 2008, the dollar began to strengthen as the current economic recession began
to have an impact around the world. During the first quarter of 2009,
the dollar stabilized somewhat but at a stronger position than in the first nine
months of 2008. This had a negative impact on the Company’s
international sales during the first quarter of 2009 and, if the dollar remains
strong, will have an impact on the Company’s international sales during the
remainder of 2009.
In the
United States and internationally, the Company’s equipment is marketed directly
to customers as well as through dealers. During 2008, approximately 75% to 80%
of equipment sold by the Company was sold directly to the end
user. The Company expects this ratio to remain relatively consistent
throughout 2009.
The
Company is operated on a decentralized basis and there is a complete management
team for each operating subsidiary. Finance, insurance, legal, shareholder
relations, corporate accounting and other corporate matters are primarily
handled at the corporate level (i.e. Astec Industries, Inc., the parent
company). The engineering, design, sales, manufacturing and basic accounting
functions are all handled at each individual subsidiary. Standard accounting
procedures are prescribed and followed in all reporting.
The
non-union employees of each subsidiary have the opportunity to earn bonuses in
the aggregate up to 10% of the subsidiary’s after-tax profit if such subsidiary
meets established goals. These goals are based on the subsidiary’s return on
capital employed, cash flow on capital employed and safety. The bonuses for
subsidiary presidents are paid from a separate corporate pool.
Results
of Operations
For the
three months ended March 31, 2009, net sales decreased $57,768,000, or 22.0%, to
$205,304,000 from $263,072,000 for the three months ended March 31,
2008. Sales are generated primarily from new equipment purchases made
by customers for use in construction for privately funded infrastructure
development and public sector spending on infrastructure
development. The overall decline in sales for the three months ended
March 31, 2009 compared to the three months ended March 31, 2008 is reflective
of the weak overall economic conditions, both domestic and
international. A stronger dollar also negatively impacted
international sales. For the quarter ended March 31, 2009 compared to
the quarter ended March 31, 2008, (1) net sales for the Asphalt Group increased
approximately $11,667,000, or 16.3%; (2) net sales for the Aggregate and Mining
Group decreased approximately $39,513,000, or 43.4%; (3) net sales for the
Underground Group decreased approximately $12,397,000, or 38.0%; and (4) net
sales for the Mobile Asphalt Paving Group decreased approximately $15,727,000,
or 33.4%. Parts sales for the quarter ended March 31, 2009 were
$45,624,000, compared to $52,590,000 for the quarter ended March 31, 2008, for a
decrease of $6,966,000, or 13.2%.
For the
quarter ended March 31, 2009 compared to the same quarter in 2008, domestic
sales decreased 22.7% from $170,586,000 to $131,931,000. Domestic
sales for the first quarter increased in the Asphalt Group by 27.4%, while the
Aggregate and Mining, Underground and Mobile Asphalt Paving segments experienced
declines of 51.9%, 52.1% and 24.3%, respectively. Domestic sales
accounted for 64.3% of sales and international sales accounted for 35.7% of
sales for the three months ended March 31, 2009, compared to 64.8% for domestic
sales and 35.2% for international sales for three months ended March 31,
2008. Domestic sales were impacted by weakened economic conditions in
the U.S. during the first quarter.
International
sales for the three months ended March 31, 2009, compared to the same period of
2008, decreased $19,113,000, or 20.7%, from $92,486,000 to
$73,373,000. Although international sales for the first quarter of
2009 increased in the Middle East, West Indies, and Australia in comparison with
the first quarter of 2008, international sales for the first quarter of 2009
decreased in Central America, South America, Canada, China, Asia, Africa, and
Europe in comparison with the first quarter of 2008. There were only
nominal changes in all other geographic markets. The Company believes
the decrease in the overall level of international sales is the result of the
weakening of economic conditions in certain foreign markets and the
strengthening of the U.S. dollar compared to most foreign
currencies. Compared to the same quarter in 2008, international sales
decreased 64.6% in the Mobile Asphalt Paving segment, 30.0% in the Aggregate and
Mining segment, 24.0% in the Underground segment and 15.1% in the Asphalt Group
segment.
Gross
profit for the three months ended March 31, 2009 decreased $22,758,000, or
34.4%, to $43,462,000 from $66,220,000 for the three months ended March 31,
2008. Gross profit as a percentage of sales decreased 400 basis
points to 21.2% from 25.2%. The primary reasons for the decrease in
gross margin as a percent of sales are reduced plant utilization due to lower
production volumes and increased pricing pressure as a result of the weakened
global economic conditions.
For the
quarter ended March 31, 2009 compared to the same period in 2008, gross profit
for the Asphalt Group increased to $20,623,000 compared to $19,606,000, and
gross profit as a percentage of sales decreased from 27.4% to 24.8%, or 260
basis points. For the quarter ended March 31, 2009 compared to the
same period in 2008, gross profit for the Aggregate and Mining Group decreased
to $10,904,000 from $23,157,000, a decrease of $12,253,000, or 52.9% and gross
profit as a percentage of sales decreased from 25.4% to 21.1%, or 430 basis
points. For the quarter ended March 31, 2009 compared to the same
period in 2008, gross profit for the Mobile Asphalt Paving Group decreased from
$12,592,000 to $6,620,000, a decrease of $5,972,000, or 47.4%, resulting in a
decrease in gross profit as a percentage of sales from 26.7% to 21.1%, or 560
basis points. For the quarter ended March 31, 2009 compared to the
same period in 2008, gross profit for the Underground Group decreased from
$7,103,000 to $2,760,000, a decrease of $4,343,000, or 61.1%, resulting in a
decrease in gross profit as a percentage of sales from 21.8% to 13.6%, or 820
basis points.
Selling,
general, administrative and engineering expenses for the quarter ended March 31,
2009 were $31,426,000, or 15.3% of net sales, compared to $38,779,000, or 14.7%
of net sales, for the quarter ended March 31, 2008, a decrease of $7,353,000, or
19.0%. The decrease in selling, general, administrative and
engineering expenses for the three months ended March 31, 2009, compared to the
same period of 2008, was primarily due to the absence in 2009 of exhibit
expenses of $3,670,000 related to ConExpo, a triennial trade show, which
occurred in early 2008. In addition, profit sharing expense decreased
$1,166,000, commissions decreased $926,000 and payroll related expenses
decreased $647,000 in the first quarter of 2009 compared to the same quarter in
2008.
For the
quarter ended March 31, 2009 compared to the quarter ended March 31, 2008,
interest expense increased $52,000, or 39.7%, to $183,000 from
$131,000. Interest expense as a percentage of net sales was 0.09% and
0.05% for the quarters ended March 31, 2009 and 2008,
respectively. The increase in interest expense for the three months
ended March 31, 2009 over the same period in 2008 related primarily to increased
borrowings under the Company’s credit facility.
Other
income, net was $214,000 for the quarter ended March 31, 2009 compared to other
income, net of $426,000 for the quarter ended March 31, 2008, a decrease of
$212,000. Other income, net for the quarter ended March 31, 2009 was
primarily due to gains on foreign currency transactions while other income, net
in 2008 consisted primarily of interest income earned on the Company’s cash
balances and investments. The decrease in other income, net is
primarily a result of a decrease in cash invested in interest bearing
investments.
For the
three months ended March 31, 2009, the Company recorded income tax expense of
$4,671,000, compared to income tax expense of $10,160,000 for the three months
ended March 31, 2008. This resulted in effective tax rates for the
three months ended March 31, 2009 and 2008 of 38.7% and 36.6%,
respectively. The reasons for the 210 basis point difference in
effective tax rates include an increase in the number of states requiring
unitary filings as well as an increase in the number of states in which the
Company files returns.
For the
three months ended March 31, 2009, the Company had net income attributable to
controlling interest of $7,431,000, compared to net income attributable to
controlling interest of $17,519,000 for the three months ended March 31, 2008, a
decrease of $10,088,000, or 57.6%. Earnings per diluted share for the
three months ended March 31, 2009 were $0.33, compared to $0.78 for the three
months ended March 31, 2008, a decrease of $0.45, or 57.7%. Diluted
shares outstanding for the three months ended March 31, 2009 and 2008 were
22,663,415 and 22,550,536, respectively. The increase in shares
outstanding is primarily due to the exercise of stock options by employees of
the Company.
The
backlog of orders at March 31, 2009 was $140,100,000 compared to $275,024,000 at
March 31, 2008, a decrease of $134,924,000, or 49.1%. The decrease in the
backlog of orders at March 31, 2009 compared to March 31, 2008 related primarily
to a decrease in domestic backlog of $98,971,000. The decrease in
domestic backlog at March 31, 2009 occurred primarily in the Asphalt and
Aggregate and Mining segments. International backlog at March 31,
2009 was $61,123,000 compared to $97,076,000 at March 31, 2008, a decrease of
$35,953,000, or 37.0%. The Company is unable to determine whether the
decline in backlogs was experienced by the industry as a whole.
Liquidity
and Capital Resources
The
Company’s primary sources of liquidity and capital resources are its cash on
hand, investments, borrowing capacity under a $100 million revolving credit
facility and cash flows from operations. The Company had $10,563,000 of cash
available for operating purposes as of March 31, 2009. In addition, the
Company had borrowings outstanding under its credit facility with Wachovia Bank,
National Association (“Wachovia”) of $16,988,000 as of March 31, 2009,
resulting in additional borrowing availability under the credit facility of
$74,409,000, which amount is net of letters of credits of $8,603,000. The
borrowings are classified as current liabilities as the Company plans to repay
the debt within the next twelve months.
During
April 2007, the Company entered into an unsecured credit agreement with
Wachovia, whereby Wachovia extended to the Company an unsecured line of credit
of up to $100 million including a sub-limit for letters of credit of up to $15
million. The Wachovia credit facility is unsecured and has an
original term of three years (which is subject to further extensions as provided
therein). In February 2009, the Company exercised its right to extend
the credit facility’s term for a one period to May 15, 2011. An
additional one year extension is available. The interest rate for
borrowings is a function of the Adjusted LIBOR Rate or Adjusted LIBOR Market
Index Rate, as elected by the Company, plus a margin based upon a leverage ratio
pricing grid ranging between 0.5% and 1.5%. As of March 31, 2009 the
applicable margin based upon the leverage ratio pricing grid was equal to
0.5%. The Wachovia credit facility requires no principal amortization
and interest only payments are due, in the case of loans bearing interest at the
Adjusted LIBOR Market Index Rate, monthly in arrears and, in the case of loans
bearing interest at the Adjusted LIBOR Rate, at the end of the applicable
interest period therefore. The Wachovia credit agreement contains
certain financial covenants related to minimum fixed charge coverage ratios,
minimum tangible net worth and maximum allowed capital
expenditures. The Company was in compliance with the financial
covenants under its credit facility as of March 31, 2009.
The
Company's South African subsidiary, Osborn Engineered Products SA (Pty) Ltd.
(“Osborn”), has an available credit facility of approximately $5,904,000 (ZAR
50,000,000) to finance short-term working capital needs, as well as to cover the
short-term establishment of letter of credit performance guarantees. As of March
31, 2009, Osborn had $1,391,000 in outstanding borrowings under the credit
facility at 13% interest and approximately $1,615,000 in performance bonds which
were guaranteed under the facility. The facility is secured by
Osborn's buildings and improvements, accounts receivable and cash balances and a
$2,000,000 letter of credit issued by the parent Company. The portion
of the available facility not secured by the $2,000,000 letter of credit
fluctuates monthly based upon 75% of Osborn's accounts receivable plus total
cash balances at the end of the prior month and $1,505,000 allocated for
buildings and improvements. As of March 31, 2009, Osborn had
available credit under the facility of approximately $2,897,000. The
facility expires on July 30, 2009 and the Company plans to renew the facility
prior to expiration. There is no charge for the unused portion of the
facility.
During
the first quarter of 2009 the Company’s Australian subsidiary, Astec Australia,
entered into a banking agreement which provides Astec Australia with an
available credit facility to finance short-term working capital needs of
approximately $1,955,000 (AUD 2,800,000), to finance foreign exchange dealer
limit orders of approximately $1,746,000 (AUD 2,500,000) and to provide bank
guarantees to others of approximately $140,000 (AUD 200,000). The
facility is secured by a $2,500,000 letter of credit issued by the parent
Company. No amounts were outstanding under the facilities at March
31, 2009.
Net cash
used by operating activities for the three months ended March 31, 2009 was
$9,769,000, compared to cash provided by operating activities of $622,000 for
the three months ended March 31, 2008, a decrease in cash provided of
$10,391,000. The primary reasons for the decrease in operating cash
flows are a decrease in earnings of $10,088,000 and decreases in cash from
accounts payable of $17,066,000, cash from customer deposits of $17,000,000 and
cash from income taxes payable of $9,104,000. These decreases are
offset by increases in cash from trade and other receivables of $22,122,000,
cash from inventories of $16,109,000 and cash from prepaid expenses and other
current assets of $4,715,000.
Net cash
used by investing activities for the three months ended March 31, 2009 was
$3,907,000, compared to $6,090,000 for the three months ended March 31, 2008, a
decline of $2,183,000. The decrease in net cash used by investing
activities is due to a reduction of $1,998,000 in capital expenditures in the
current quarter compared to the same period last year.
Net cash
provided by financing activities for the three months ended March 31, 2009 was
$14,953,000, compared to $1,288,000 for the three months ended March 31, 2008,
an increase of $13,665,000. The increase is due to borrowings of
$14,952,000 under the Company’s credit facilities in the current
quarter. The Company did not borrow any funds under the credit
facilities during the first quarter of 2008.
Capital
expenditures for 2009 are forecasted to total approximately
$30,473,000. The Company expects to finance these expenditures using
currently available cash balances, internally generated funds and available
credit under the Company’s credit facility.
The
Company believes that its current working capital, cash flows generated from
future operations and available capacity under its credit facilities will be
sufficient to meet the Company's working capital and capital expenditure
requirements through March 31, 2010.
Financial
Condition
The
Company’s current assets decreased to $389,479,000 at March 31, 2009 from
$395,099,000 at December 31, 2008, a decrease of $5,620,000, or
1.4%. The decrease is primarily attributable to a $7,823,000 decrease
in inventory combined with a decrease of $3,963,000 in prepaid
expenses. The decrease in inventory is due primarily to the sale of
goods during the first quarter of 2009 out of the inventory that was built up in
the fourth quarter of 2008 in anticipation of the seasonal demand for the
Company’s goods during the first half of the fiscal year. The Company
also cut purchases of inventory during the first quarter of 2009. The
decrease in prepaid expenses is primarily attributable to a decrease in prepaid
income taxes due to the application of those prepaid amounts to the current tax
liability. These decreases were offset by an increase in trade
receivables, net of $7,461,000, which was due to increased sales in the first
quarter of 2009 compared to the fourth quarter of 2008.
Property
and Equipment, net, decreased $934,000 to $168,196,000 at March 31, 2009 from
$169,130,000 at December 31, 2008. The decrease is primarily a result
of additions to the Company’s fixed assets of $4,112,000 offset by current year
depreciation of $4,513,000.
The
Company’s combined short and long term investments, recorded at their fair
value, decreased by $222,000 to $10,705,000 at March 31, 2009 from $10,927,000
at December 31, 2008. This decrease is primarily attributed to
distributions made under the Company’s Supplemental Executive Retirement
Plan.
The
Company’s current liabilities decreased $12,779,000 from December 31, 2008 to
March 31, 2009. The primary decrease of $16,128,000 occurred in
customer deposits and was due to the overall decline in the global economy
resulting in declining backlogs. Accounts payable decreased
$9,100,000 which reflects the Company’s reduction of inventory purchases during
the quarter. Accrued payroll and related liabilities decreased
$5,631,000 and was primarily affected by decreases in the profit sharing accrual
and accrued salaries and wages resulting from the Company’s staff reduction of
approximately 400 employees since December 31, 2008.
Off-balance
Sheet Arrangements
As of
March 31, 2009, the Company does not have any off-balance sheet arrangements as
defined by Item 303(a)(4) of Regulation S-K.
Seasonality
The
Company’s businesses are subject to the effects of seasonality. Consequently,
the operating results for the quarter ended March 31, 2009 for each business
segment, and for the Company as a whole, are not necessarily indicative of
results to be expected for the full year. Based upon historical
results of the past several years and expected results for this year, 25% to 27%
of the Company's business volume typically occurs during the first three months
of the year. During the usual seasonal trend, the first three
quarters of the year are the Company's stronger quarters for business volume,
with the fourth quarter normally being the weakest quarter.
Contingencies
During
the three months ended March 31, 2009, there were no substantial changes in our
commitments or contractual liabilities.
We have
no material changes to the disclosure on this matter made in our Annual Report
on Form 10-K for the year ended December 31, 2008.
Disclosure Controls and
Procedures
The
Company’s Chief Executive Officer and Chief Financial Officer evaluated the
effectiveness of the design and operation of the Company's “disclosure controls
and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended (the Exchange Act)) as of the end of the period covered by
this report. Based upon that evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that, as of the end of the period
covered by this report, the Company's disclosure controls and procedures were
effective in timely making known to them material information relating to the
Company and the Company's subsidiaries required to be disclosed in the Company's
reports filed or submitted under the Exchange Act.
Internal Control over
Financial Reporting
There
have been no changes in the Company’s internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) under the Securities exchange Act
of 1934, as amended) that occurred during the quarter ended March 31, 2009 that
have materially affected or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
The
Company is involved from time to time in legal actions arising in the ordinary
course of our business. Other than as set forth in Part I, “Item 3. Legal
Proceedings” in our Annual Report on Form 10-K for the year ended December 31,
2008, we currently have no pending or threatened litigation that we believe will
result in an outcome that would materially affect our business. Nevertheless,
there can be no assurance that future litigation to which we become a party will
not have a material adverse effect on our business.
In
addition to the other information set forth in this Report, you should carefully
consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2008, which could materially
affect our business, financial condition or future results. There have been no
material changes in our risk factors from those disclosed in our Annual Report
on Form 10-K for the year ended December 31, 2008. The risks described
in our Annual Report on Form 10-K for the year ended December 31, 2008 and in
this Quarterly Report on Form 10-Q are not the only risks facing our
Company. Additional risks and uncertainties not currently known to us
or that we currently deem to be immaterial also may materially adversely affect
our business, financial condition or operating results.
Exhibit No.
|
|
Description
|
|
10.1
|
|
Agreement
dated February 5, 2009 to extend Credit Agreement dated as of April 13,
2007 between Astec
Industries,
Inc. and Certain of Its Subsidiaries and Wachovia Bank, National
Association.
|
|
31.1
|
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32
|
*
|
Certification
of Chief Executive Officer and Chief Financial Officer of Astec
Industries, Inc. pursuant
to
Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18
U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
The
Exhibits are numbered in accordance with Item 601 of Regulation
S-K. Inapplicable Exhibits are not included in the list.
* In
accordance with Release No. 34-47551, this exhibit is hereby furnished to the
SEC as an accompanying document and is not to be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference into any filing under the Securities Act of 1933, as
amended.
Items
2, 3, 4 and 5 are not applicable and have been omitted.
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.
|
ASTEC INDUSTRIES, INC
.
(Registrant)
|
|
|
|
|
Date
May 8, 2009
|
/s/ J.
Don
Brock
|
|
J.
Don Brock
Chairman
of the Board and President
|
|
|
Date
May 8, 2009
|
/s/ F. McKamy
Hall
|
|
F.
McKamy Hall
Chief
Financial Officer, Vice President, and
Treasurer
|
|
|
EXHIBIT
INDEX
|
|
10.1
|
|
Agreement
dated February 5, 2009 to extend Credit Agreement dated as of April 13,
2007 between Astec
Industries,
Inc. and Certain of Its Subsidiaries and Wachovia Bank, National
Association
|
|
31.1
|
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to
Section
302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as
adopted pursuant to
Section
302 of the Sarbanes-Oxley Act of 2002.
|
|
32
|
|
Certification
of Chief Executive Officer and Chief Financial Officer of Astec
Industries, Inc. pursuant to
Rule
13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
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