-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Psw0OxCYrBIt9NArM5c9ZOu4isAciCa9lpTAttkwxvhdbsXl7DZWiE5U0jsHNXc+ j7mpiDVmqOzX89dvXSMDSQ== 0000930661-00-000044.txt : 20000202 0000930661-00-000044.hdr.sgml : 20000202 ACCESSION NUMBER: 0000930661-00-000044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991130 FILED AS OF DATE: 20000114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AZTEC MANUFACTURING CO CENTRAL INDEX KEY: 0000008947 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 750948250 STATE OF INCORPORATION: TX FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12777 FILM NUMBER: 507363 BUSINESS ADDRESS: STREET 1: 400 N TARRANT RD CITY: CROWLEY STATE: TX ZIP: 76036 BUSINESS PHONE: 8172974361 MAIL ADDRESS: STREET 1: P O BOX 668 STREET 2: P O BOX 668 CITY: CROWLEY STATE: TX ZIP: 76036 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended: November 30, 1999 ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________________ to _________________________ Commission File Number 0-2733 AZTEC MANUFACTURING CO. (Exact name of registrant as specified in its charter) TEXAS 75-0948250 - ------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 400 North Tarrant, Crowley, Texas 76036 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (817) 297-4361 --------------------------- NONE - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- _____ Indicate the number of outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Outstanding at November 30, 1999 Common Stock, $1.00 Par Value 4,756,891 ----------------------------- ------------------------------------ Class Number of Shares AZTEC MANUFACTURING CO. INDEX ----- PART I. Financial Information Page No. --------------------- -------- Item 1. Financial Statements Consolidated Condensed Balance Sheets at November 30, 1999 and February 28, 1999 3 Consolidated Condensed Statements of Income for the Periods Ended November 30, 1999 and November 30, 1998 4 Consolidated Condensed Statements of Cash Flow for the Periods Ended November 30, 1999 and November 30, 1998 5 Notes to Consolidated Condensed Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. Other Information ----------------- Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 11 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED BALANCE SHEETS
11/30/1999 02/28/1999 ASSETS UNAUDITED AUDITED - ------------------------------------ -------------------- ------------------- CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 977,595 $ 800,183 ACCOUNTS RECEIVABLE (NET OF ALLOWANCE) 18,951,810 13,472,637 INVENTORIES: RAW MATERIALS 9,073,856 7,306,510 WORK-IN-PROCESS 1,463,831 1,000,480 FINISHED GOODS 1,616,738 2,884,373 PREPAID EXPENSES AND OTHER 128,208 323,176 REVENUE IN EXCESS OF BILLINGS 446,090 0 -------------------- ------------------- TOTAL CURRENT ASSETS 32,658,128 25,787,359 LONG TERM INVESTMENT 200,000 200,000 PROPERTY, PLANT AND EQUIPMENT, NET 24,061,785 23,078,880 INTANGIBLE ASSETS, NET 15,189,638 8,989,573 OTHER ASSETS 339,508 343,149 -------------------- ------------------- TOTAL ASSETS $ 72,449,059 $ 58,398,961 ==================== =================== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: LONG TERM DEBT DUE WITHIN ONE YEAR $ 3,135,238 $ 3,135,238 ACCOUNTS PAYABLE 7,468,112 3,826,238 ACCRUED LIABILITIES 6,655,079 3,792,596 -------------------- ------------------- TOTAL CURRENT LIABILITIES 17,258,429 10,754,072 LONG-TERM DEBT DUE AFTER ONE YEAR 23,341,837 20,266,266 DEFERRED INCOME TAX 64,655 493,173 SHAREHOLDERS' EQUITY: COMMON STOCK, $1 PAR VALUE SHARES AUTHORIZED - 25,000,000 SHARES ISSUED - 6,304,580 6,304,580 6,304,580 CAPITAL IN EXCESS OF PAR VALUE 11,330,302 11,422,536 RETAINED EARNINGS 28,521,263 23,736,974 LESS COMMON STOCK HELD IN TREASURY (1,547,689 AND 1,569,822 SHARES AT COST RESPECTIVELY) (14,372,007) (14,578,640) -------------------- ------------------- TOTAL SHAREHOLDERS' EQUITY 31,784,138 26,885,450 -------------------- ------------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 72,449,059 $ 58,398,961 ==================== ===================
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. Page 3 AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED STATEMENTS OF INCOME
THREE MONTHS ENDED NINE MONTHS ENDED 11/30/99 11/30/1998 11/30/1999 11/30/1998 UNAUDITED UNAUDITED UNAUDITED UNAUDITED -------------------- -------------------- ------------------- --------------------- NET SALES $ 24,653,795 $ 19,414,282 $ 66,310,882 $ 60,863,730 COSTS AND EXPENSES: COST OF SALES 17,847,320 14,988,317 48,688,086 46,161,748 SELLING/G & A EXPENSE 3,254,155 2,353,447 8,601,507 7,400,051 INTEREST EXPENSE 475,998 228,800 1,150,931 688,798 OTHER (INCOME) EXPENSE 186,024 4,966 214,347 (59,392) -------------------- -------------------- ------------------- --------------------- 21,763,497 17,575,530 58,654,871 54,191,205 -------------------- -------------------- ------------------- --------------------- INCOME BEFORE INCOME TAXES 2,890,298 1,838,752 7,656,011 6,672,525 PROVISION FOR INCOME TAXES 1,083,876 689,865 2,871,472 2,502,534 -------------------- -------------------- ------------------- --------------------- NET INCOME $ 1,806,422 $ 1,148,887 $ 4,784,539 $ 4,169,991 ==================== ==================== =================== ===================== INCOME PER SHARE: BASIC EARNINGS PER SHARE $ 0.38 $ 0.20 $ 1.01 $ 0.71 ==================== ==================== =================== ===================== DILUTED EARNINGS PER SHARE $ 0.38 $ 0.20 $ 1.00 $ 0.71 ==================== ==================== =================== =====================
Page 4 AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
NINE MONTHS ENDED 11/30/1999 11/30/1998 UNAUDITED UNAUDITED ---------------------- ---------------------- CASH FLOWS PROVIDED BY OPERATIONS: NET INCOME $ 4,784,539 $ 4,169,991 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATIONS: PROVISION FOR BAD DEBTS 138,409 106,622 AMORTIZATION AND DEPRECIATION 3,276,839 2,625,624 GAINS ON SALE OF PROPERTY (47,335) 0 INCREASE (DECREASE) FROM CHANGES IN ASSETS & LIABILITIES: ACCOUNTS RECEIVABLE (4,255,767) 559,594 INVENTORIES 138,269 922,558 PREPAID EXPENSES 258,521 158,542 OTHER ASSETS 6,770 (2,402) REVENUE IN EXCESS OF BILLINGS 1,574,584 0 ACCOUNTS PAYABLE 3,230,410 893,196 ACCRUED LIABILITIES 1,007,056 (914,858) ---------------------- ---------------------- NET CASH PROVIDED BY OPERATIONS 10,112,295 8,518,867 ---------------------- ---------------------- CASH FLOWS USED FOR INVESTING ACTIVITIES: PURCHASE OF PROPERTY/PLANT/EQUIPMENT (1,953,524) (6,042,612) ACQUISITION OF BUSINESS, NET OF CASH (11,171,080) 0 ---------------------- ---------------------- CASH FLOWS USED FOR INVESTING ACTIVITIES: (13,124,604) (6,042,612) ---------------------- ---------------------- PROCEEDS FROM EXERCISE OF STOCK OPTIONS 114,399 34,903 NET CHANGES IN LONG TERM NOTES 3,075,570 749,999 ADJUSTMENTS TO DIVIDENDS PAID (248) 1,050 PURCHASE OF TREASURY STOCK 0 (4,022,939) ---------------------- ---------------------- NET CASH (USED FOR)/PROVIDED BY FINANCING ACTIVITIES 3,189,721 (3,236,987) ---------------------- ---------------------- INCREASE/(DECREASE) IN CASH & CASH EQUIVALENTS 177,412 (760,732) CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 800,183 765,912 ---------------------- ---------------------- CASH & CASH EQUIVALENTS, END OF PERIOD $ 977,595 $ 5,180 ====================== ======================
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. Page 5 AZTEC MANUFACTURING CO. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS ---------------------------------------------------- Summary of Significant Accounting Policies ------------------------------------------ 1. A summary of the Company's significant accounting policies is presented on Page 22, 23 and 24 of its 1999 Annual Shareholders' Report. 2. In the opinion of Management of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of November 30, 1999, and the results of its operations and cash flows for the periods ended November 30, 1999 and 1998. 3. Earnings per share is based on the month-end average number of shares outstanding during each year, adjusted for the dilutive effect of stock options. The following table sets forth the computation of basic and diluted earnings per share:
Three months ended Nov. 30 Nine months ended Nov. 30 1999 1998 1999 1998 ---------------- ---------------- ---------------- ---------------- (Dollars in thousands except earnings per share) Numerator: Net income for basic and diluted earnings per common share $ 1,806 $ 1,149 $ 4,785 $ 4,170 Denominator: Denominator for basic earnings per common share -weighted average shares 4,755,054 5,669,236 4,746,253 5,833,256 Effect of dilutive securities: Employee and Director stock options 44,097 3,713 43,933 47,462 ---------------- ---------------- ---------------- ---------------- Denominator for diluted earnings per common share -adjusted weighted- average shares and assumed conversions 4,799,151 5,672,949 4,790,186 5,880,718 ================ ================ ================ ================ Basic earnings per common share $ .38 $ .20 $ 1.01 $ .71 ================ ================ ================ ================ Diluted earnings per common share $ .38 $ .20 $ 1.00 $ .71 ================ ================ ================ ================
4. A summary of the Company's operating segments is defined on page 30 of its 1999 Annual Shareholders' Report. Page 6 Information regarding operations and assets by segment in thousands is as follows:
Three Months Ended Nov 30, Nine Months Ended Nov 30, 1999 1998 1999 1998 ----------------- ----------------- ----------------- ----------------- Net Sales: Manufactured Products $14,381 $10,499 $36,493 $34,971 Services 10,273 8,915 29,818 25,893 ----------------- ----------------- ----------------- ----------------- $24,654 $19,414 $66,311 $60,864 Operating Income (a): Manufactured Products $ 2,158 $ 814 $ 4,811 $ 3,956 Services 2,379 1,997 7,050 5,789 ----------------- ----------------- ----------------- ----------------- $ 4,537 $ 2,811 $11,861 $ 9,745 General Corporate Expense $ 1,160 $ 735 $ 3,023 $ 2,420 Interest Expense 476 229 1,151 689 Other (Income) Exp., Net (b) 11 8 31 (37) ----------------- ----------------- ----------------- ----------------- $ 1,647 $ 972 $ 4,205 $ 3,072 Income Before Income Taxes $ 2,890 $ 1,839 $ 7,656 $ 6,673 ================= ================= ================= ================= Total Assets: Manufactured Products $41,874 $30,166 $41,874 $30,166 Services 27,990 27,286 27,990 26,286 Corporate 2,585 1,361 2,585 1,361 ================= ================= ================= ================= $72,449 $58,813 $72,449 $58,813 ================= ================= ================= =================
(a) Operating income consists of net sales less cost of sales, specifically identifiable general and administrative expenses and selling expenses. (b) Other (income) expense, net includes gains and losses on sale of property, plant and equipment and other (income) expense not specifically identifiable to a segment. 5. Impact of Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is required to be adopted in years beginning after June 15, 2000. The Statement permits early adoption as of the beginning of any fiscal quarter after its issuance. The expected date of adoption by the Company is not yet known. The Statement will require the Company to recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, Page 7 or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. The Company has not yet determined what the effect of Statement No. 133 will be on the earnings and financial position of the Company. 6. Effective September 1, 1999, Aztec Manufacturing Co. acquired the operating assets of ABB's Compressed Gas Insulation Transmission Bus Duct division. The new entity will be known as CGIT Westboro, Inc. The acquisition was accounted for using the purchase method of accounting. The assets of CGIT were acquired for a consideration of approximately $11.2 million, which resulted in approximately $7.2 million in goodwill. Listed below is the unaudited pro forma results of summary financial information which includes the Company's historical results of operations for the nine months ending November 30, 1999 and 1998, and that of CGIT Westboro, Inc. for the same periods, adjusted for purchase accounting and other pro forma adjustments. This summary may not be indictive of what would have occurred had the acquisition been made at the date or of results which may occur in the future.
Nine Months Ended 11/30/99 11/30/98 Unaudited Unaudited -------------- --------------- Net Sales $ 71,780 $ 69,336 Net Income $ 4,756 $ 4,109 ============== =============== Income Per Share Basic Earnings Per Share $ 1.00 $ 0.70 ============== =============== Diluted Earnings Per Share $ 0.99 $ 0.70 ============== ===============
Item 2. Management's Discussion and Analysis of Financial Condition and - ------------------------------------------------------------------------ Results of Operations - --------------------- RESULTS OF OPERATIONS ---------------------- Consolidated net sales were up 27% and 9% for the three-month and nine-month periods ended November 30, 1999 as compared to the same periods in 1998. Net sales in the Manufactured Products Segment were up $3.9 million or 37% for the three-month period ended November 30, 1999, and $1.5 million or 4% for the nine- month period ended November 30, 1999, as compared to the same periods in 1998. Sales of electrical products in the Manufactured Products Segment increased $4.6 million or 54% and $4.7 million or 17% for the three and nine month periods ended November 30,1999, as compared to the same periods in 1998. The acquisition of CGIT Westboro, Inc. on September 1, 1999, added $2.5 million to the electrical products revenues for the period ended November 30, 1999. Backlog for the Manufactured Products Segment increased 84% to $31 million for the period ended November 30, 1999. Backlog for electrical products in this segment increased 98% to $31.7 million due primarily to deregulation of the electrical industry and the increased demand for domestic power generation. CGIT added $4.1 million to the backlog for the period ended November 30, 1999. Tubular products backlog was down $904,000 or 55% to $732,000 from the previous years backlog of $1.6 million. Net Page 8 sales in the Services Segment, which is made up of galvanizing services, were up $1.4 million or 15% and $3.9 million or 15% for the three and nine-month periods ended November 30, 1999 as compared to the same periods in 1998. Total pounds produced were 65.8 million and 191.9 million for the three and nine month periods ended November 30, 1999 as compared to 56.7 million and 165.3 million during the same periods in 1998. The volume of steel processed increased 16% for the three and nine-month periods ended November 30, 1999 versus the same periods last year. The year to date average selling price was virtually the same for the periods compared. Consolidated operating income (net sales less operating expenses) was up 61% and 22% for the three and nine-month periods ended November 30, 1999 as compared to the same periods in 1998. Operating income in the Manufactured Products Segment was up 165% or $1.3 million for the three-month period ended November 30, 1999 and 22% or $855,000 for the nine-month period ended November 30, 1999 as compared to the same periods in 1998. Operating income generated from our electrical products operations was up 129% or $1.2 million and 31% or $1.2 million for the three and nine months period ended November 30, 1999, as compared to the same periods in 1998. The acquisition of CGIT Westboro on September 1, 1999 added $234,000 to operating income for the period ended November 30, 1999. Our tubular products portion of this segment has not rebounded showing a loss of $8,000 and $393,000 for the three and nine month periods ended November 30, 1999, as compared to a loss of $134,000 and $11,000 for the same periods last year. In the Service Segment, operating income was up $382,000 or 19% and $1.3 million or 22% for three and nine months periods ended November 30, 1999, compared to the same periods in 1998. Increased operating income in the Service Segment was due to increased volumes coupled with improved operational efficiencies for the compared periods. General corporate expenses (selling, G & A expense and other (income) expense) were up for the three and nine month periods ended November 30, 1999, as compared to the same periods in 1998. This is a direct result of the acquisition of CGIT Westboro, Inc.; as well as increased profit sharing and bonus accruals. Net interest expense for the three and nine-month periods ended November 30, 1999, increased $247,000 and $462,000 over the same periods in the prior year. The additional interest expense is due to a higher outstanding loan balance associated with stock repurchases of Aztec common stock in fiscal 1999, coupled with the recent acquisition of CGIT Westboro on September 1, 1999. With reduced shares outstanding due to stock repurchases in fiscal 1999 and increased net income, diluted earnings per share increased to $.38 and $1.00 per share for the three and nine month periods ended November 30, 1999, versus $.20 and $.71 per share for the same periods in 1998. Page 9 LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Net cash provided by operations was $10.1 million for the first nine months of fiscal 2000, compared to $8.5 million for the same period in fiscal 1999. Net cash provided by operations was generated by $4.8 million in net income, $3.3 million in depreciation and amortization, and $2.0 million in other changes in assets and liabilities. During the nine month period ended November 30, 1999, proceeds from operating activities were used to repay long-term debt and purchase plant equipment. The balance of the proceeds from operating activities plus a draw against the Company's revolving line of credit was used to acquire CGIT Westboro on September 1, 1999. The Company's current credit facility is made up of two term notes in the amount of $10 million each of which $13.1 million is still outstanding. The Company also has a revolving line of credit in the amount of $22 million of which $5.6 million is available for future use. Management believes that it's current credit facility coupled with the Company's borrowing capacity along with cash generated from operations will be sufficient to accommodate the Company's current operations, internal growth and possible acquisitions. Year 2000 Compliance - -------------------- The Company is in the process of reviewing and making necessary modifications to its computer systems for year 2000 compliance. Costs incurred to date to modify the Company's computer systems have not been material and future costs are not expected to be material. Although the Company expects its modifications will be successfully completed on a timely basis, there can be no assurance that it will be completed on the time schedule anticipated. The Company is also communicating with vendors and others with which it does business to coordinate Year 2000 compliance. There can be no assurance that the systems of other companies and agencies on which the Company relies will be timely converted or that such failure by other entities would not have an adverse impact on the Company's operations. Forward Looking Statements - -------------------------- This Report contains, and from time to time the Company or certain of its representatives may make, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally identified by the use of words such as "anticipate," "expect," "estimate," "intend," "should," "may," "believe," and terms with similar meanings. Although the Company believes that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations, and the related statements, are inherently subject to risks, uncertainties, and other factors, many of which are not under the Company's control. Those risks, uncertainties, and other factors could cause the actual results to differ materially from these in the forward-looking statements. Those risks, uncertainties, and factors include, but are not limited to, many of the matters described in this Report: change in demand, prices and raw material cost, including zinc which is used in the hot dip galvanizing process; changes in the economic conditions of the various markets the Company serves, foreign and domestic, including the market price for oil and natural gas; acquisition opportunities, adequacy of financing, and availability of experienced management employees to implement the Company's growth strategy; and customer demand and response to products and services offered by the Company. The Company expressly disclaims any obligations to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. Page 10 PART II. OTHER INFORMATION AZTEC MANUFACTURING CO. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (A) Exhibits - There were no exhibits filed with this 10-Q for the three months ended November 30, 1999. (B) Reports on Form 8-K - Aztec filed one report on Form 8-K and one report on Form 8-KA during the three-months ended November 30, 1999 in association with the purchase of ABB's Compressed Gas Insulation Transmission Bus Duct division located in Westborough, Massachusetts. All other schedules and compliance information called for by the instructions for Form 10-Q have been omitted since the required information is not present or not present in amounts sufficient to require submission. 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. AZTEC MANUFACTURING CO. ------------------------------------ (Registrant) Date: 1/14/99 /s/ Dana Perry ------- ------------------------------------ Dana Perry, Vice President for Finance Chief Financial Officer Page 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS FEB-28-2000 MAR-01-1999 NOV-30-1999 977,595 0 19,261,741 592,473 12,154,425 32,658,128 43,174,434 19,112,649 72,449,059 17,258,429 23,341,837 0 0 6,304,580 25,479,558 72,449,059 66,310,882 66,310,882 48,688,086 57,503,940 0 0 1,150,931 7,656,011 2,871,472 4,784,539 0 0 0 4,784,539 1.01 1.00
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