10-Q 1 d10q.txt 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: May 31, 2002 [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________________ to _________________ Commission File Number 1-12777 AZZ incorporated (Exact name of registrant as specified in its charter) TEXAS 75-0948250 -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification No.) 1300 South University Drive, Fort Worth, Texas 76107 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (817) 810-0095 ---------------------------- NONE -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- Indicate the number of outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Outstanding at May 31, 2002 Common Stock, $1.00 Par Value 5,278,488 ----------------------------- --------- Class Number of Shares AZZ incorporated INDEX
PART I. Financial Information Page No. --------------------- -------- Item 1. Financial Statements Consolidated Condensed Balance Sheets at May 31, 2002 and February 28, 2002 3 Consolidated Condensed Statements of Income for the Periods Ended May 31, 2002 and May 31, 2001 4 Consolidated Condensed Statements of Cash Flow for the Periods Ended May 31, 2002 and May 31, 2001 5 Notes to Consolidated Condensed Financial Statements 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II. Other Information 13 ----------------- SIGNATURES 14
2 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS AZZ incorporated Consolidated Condensed Balance Sheet
05/31/02 02/28/02 ASSETS UNAUDITED AUDITED ------ ------------ ------------ CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 1,778,805 $ 1,737,876 ACCOUNTS RECEIVABLE (NET OF ALLOWANCE) 29,795,326 32,927,725 INVENTORIES RAW MATERIAL 11,400,073 11,640,049 WORK-IN-PROCESS 10,160,801 9,782,620 FINISHED GOODS 1,852,281 1,913,559 REVENUE IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS 2,563,320 4,130,982 DEFERRED INCOME TAXES 1,684,251 1,706,294 PREPAID EXPENSES AND OTHER 679,809 990,438 ------------- ------------ TOTAL CURRENT ASSETS 59,914,666 64,829,543 PROPERTY, PLANT AND EQUIPMENT, NET 38,346,209 38,809,608 GOODWILL, NET OF ACCUMULATED AMORTIZATION 41,262,104 41,262,104 OTHER ASSETS 2,080,124 2,142,615 ------------- ------------ TOTAL ASSETS $141,603,103 $147,043,870 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: LONG TERM DEBT DUE WITHIN ONE YEAR $ 10,045,000 $ 10,045,000 ACCOUNTS PAYABLE 10,747,997 17,150,563 BILLINGS IN EXCESS OF REVENUE ON UNCOMPLETED CONTRACTS 7,882 18,132 ACCRUED LIABILITIES 11,399,940 10,855,257 ------------- ------------ TOTAL CURRENT LIABILITIES 32,200,819 38,068,952 LONG TERM DEBT DUE AFTER ONE YEAR 51,050,000 53,550,000 DEFFERRED INCOME TAXES 673,663 673,663 SHAREHOLDERS' EQUITY: COMMON STOCK, $1 PAR VALUE SHARES AUTHORIZED-25,000,000 SHARES ISSUED 6,304,580 6,304,580 6,304,580 CAPITAL IN EXCESS OF PAR VALUE 13,767,028 13,689,392 ACCUMULATED OTHER COMPREHENSIVE INCOME (200,615) (241,123) RETAINED EARNINGS 47,352,782 44,740,066 LESS COMMON STOCK HELD IN TREASURY (1,026,092 AND 1,047,199 SHARES AT COST RESPECTIVELY) (9,545,154) (9,741,660) ------------- ------------ TOTAL SHAREHOLDERS' EQUITY 57,678,621 54,751,255 ------------- ------------ TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $141,603,103 $147,043,870 ============= ============
See Accompaning Notes to Consolidated Condensed Financial Statements 3 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS AZZ incorporated Conslidated Condensed Income Statement
THREE MONTHS ENDED 05/31/02 05/31/01 UNAUDITED UNAUDITED ---------------- --------------- NET SALES $49,682,725 $34,305,642 COSTS AND EXPENSES COST OF SALES 38,483,488 26,245,257 SELLING/G & A EXPENSES 5,747,447 4,013,617 INTEREST EXPENSE 1,152,359 465,504 OTHER EXPENSE 119,715 71,683 ---------------- --------------- 45,503,009 30,796,061 ---------------- --------------- INCOME BEFORE INCOME TAXES 4,179,716 3,509,581 PROVISION FOR INCOME TAXES 1,567,000 1,333,800 ---------------- --------------- NET INCOME $ 2,612,716 $ 2,175,781 ================ =============== EARNINGS PER SHARE (BASIC) $ 0.50 $ 0.44 (DILUTED) $ 0.49 $ 0.43 CASH DIVIDEND PER SHARE DECLARED $ 0.00 $ 0.16
See Accompaning Notes to Consolidated Condensed Financial Statements 4 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS AZZ incorporated Conslidated Condensed Statements of Cash Flows
THREE MONTHS ENDING 05/31/02 05/31/01 UNAUDITED UNAUDITED --------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 2,612,716 $ 2,175,781 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: PROVISION FOR BAD DEBTS 99,341 76,917 AMORTIZATION AND DEPRECIATION 1,744,852 1,494,425 NET GAIN ON SALE OF PROPERTY, PLANT & EQUIPMENT (4,500) (8,250) INCREASE (DECREASE) FROM CHANGES IN ASSETS & LIABILITIES ACCOUNTS RECEIVABLE 3,033,058 (1,788,415) INVENTORIES (76,927) (289,646) PREPAID EXPENSES 310,629 8,277 OTHER ASSETS (203,376) (52) NET CHANGE IN BILLINGS RELATED TO COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS 1,557,412 3,171,844 ACCOUNTS PAYABLE (6,402,566) (2,268,374) ACCRUED LIABILITIES 607,235 319,201 --------------- ---------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 3,277,874 2,891,708 CASH FLOWS FROM INVESTING ACTIVITIES: PROCEEDS FROM THE SALE OF EQUIPMENT 4,500 14,150 PURCHASE OF PROPERTY PLANT AND EQUIPMENT (1,015,587) (2,419,108) ACQUISITION OF SUBSIDIARY, PURCHASE PRICE ADJUSTMENT 0 371,615 --------------- ---------------- NET CASH USED IN INVESTING ACTIVITIES (1,011,087) (2,033,343) --------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: PROCEEDS FROM EXERCISE OF STOCK OPTIONS 274,142 652,031 PAYMENTS ON LONG TERM DEBT (2,500,000) (1,076,320) CASH DIVIDENDS PAID 0 (795,762) --------------- ---------------- NET CASH USED IN FINANCING ACTIVITIES (2,225,858) (1,220,051) --------------- ---------------- NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 40,929 (361,686) CASH & CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,737,876 1,446,502 --------------- ---------------- CASH & CASH EQUIVALENTS AT END OF PERIOD $ 1,778,805 $ 1,084,816 =============== ================
See Accompaning Notes to Consolidated Condensed Financial Statements 5 AZZ incorporated NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Summary of Significant Accounting Policies 1. A summary of the Company's significant accounting policies is presented on Page 20 thru 23 of its 2002 Annual Shareholders' Report. 2. In the opinion of Management of the Company, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position of the Company as of May 31, 2002, and the results of its operations and cash flows for the periods ended May 31, 2002 and 2001. 3. Earnings per share is based on the weighted average number of shares outstanding during each period, adjusted for the dilutive effect of stock options. The following table sets forth the computation of basic and diluted earnings per share:
Three months ended May 31, 2002 2001 --------------------------------- (unaudited) (in 000's except share and per share data) Numerator: Net income for basic and diluted earnings per common share $2,612,716 $2,175,781 ============== =============== Denominator: Denominator for basic earnings per common share-weighted average shares 5,263,167 4,980,791 Effect of dilutive securities: Employee and Director stock options 45,578 109,542 -------------- --------------- Denominator for diluted earnings per common share 5,308,745 5,090,333 ============== =============== Basic earnings per common share $ .50 $ .44 ============== =============== Diluted earnings per common share $ .49 $ .43 ============== ===============
4. Total comprehensive income for the quarter ended May 31, 2002 was $2,653,224, consisting of net income of $2,612,716 and net changes in accumulated other comprehensive income of $40,508 resulting from the Company's cash flow hedges. Total comprehensive income for the quarter ended May 31, 2001 was $1,974,659 consisting of net income of $2,175,781 and net changes in accumulated other comprehensive income of $201,122. The change in accumulated other comprehensive income included $185,000 as the accumulative effect of adopting SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." 6 5. A summary of the Company's operating segments is defined on page 30 and 31 of its 2002 Annual Shareholders' Report. Information regarding operations and assets by segment is as follows:
Three Months Ended May 31, 2002 2001 ------------------------------------ (unaudited) (in thousands) Net Sales: Electrical and Industrial Products $ 37,028 $ 20,931 Galvanizing Services 12,655 13,375 -------------- -------------- $ 49,683 $ 34,306 ============== ============== Operating Income (a): Electrical and Industrial Products $ 4,578 $ 3,549 Galvanizing Services 2,472 1,854 -------------- -------------- $ 7,050 $ 5,403 General Corporate Expense $ 1,676 $ 1,409 Interest Expense 1,152 465 Other (Income) Expense, Net (b) 42 19 -------------- -------------- $ 2,870 $ 1,893 Income Before Income Taxes $ 4,180 $ 3,510 ============== ============== Total Assets: Electrical and Industrial Products $ 93,961 $ 46,611 Galvanizing Services 43,998 39,799 Corporate 3,644 2,096 -------------- -------------- $141,603 $ 88,506 ============== ==============
(a) Operating income consists of net sales less cost of sales, specifically identifiable general and administrative expenses and selling expenses. (b) Other (income) expense, net includes gains and losses on sale of property, plant and equipment and other (income) expense not specifically identifiable to a segment. 6. New Accounting Pronouncements In June 2001, the Financial Accounting Standards Board issued SFAS No. 141 "Business Combinations", and SFAS No. 142 "Goodwill and Other Intangible Assets", (Statement 142) effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and certain intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. Other intangible assets will continue to be amortized over their useful lives. The Company adopted the new rules on accounting for goodwill and other intangible assets as of March 1, 2002, except, as provided for under Statement 142, goodwill and indefinite-lived intangible assets resulting from acquisitions completed after June 30, 2001 were not amortized in fiscal 2002. As of March 1, 2002, in accordance with the new standard the Company ceased amortization of all goodwill and performed the first of the required impairment tests of goodwill and indefinite lived intangible assets and has determined that these tests did not result in an impairment of goodwill. 7 Listed below is the unaudited pro forma results of summary financial information for the three month period ended May 2002, and 2001 to reflect the elimination of goodwill amortization included in the quarter ended May 31, 2001, as if SFAS No. 142 had been in effect at that time.
Three Months Ended May 31, 2002 2001 ---------------- -------------- (unaudited) (in thousands except per share data) Reported Net Income $2,613 $2,176 Add back: Goodwill amortization net of income tax 0 226 --------------- -------------- Adjusted Net Income $2,613 $2,402 =============== ============== Fully Diluted Earnings Per Share as reported: Fully Diluted Earnings Per Share $ .49 $ .43 Add Back: Goodwill amortization net of income tax 0 .04 --------------- -------------- Adjusted Diluted Earnings Per Share $ .49 $ .47 =============== ==============
Other intangible assets consisted of the following at May 31, 2002 and February 28, 2002:
May 31, February 28, 2002 2002 ---------------- --------------- (unaudited) (in thousands) Acquired backlog $ 302 $ 302 Non-compete agreements 883 883 Debt issue costs 1,187 966 Other 204 204 Goodwill 46,618 46,618 --------------- --------------- 49,194 48,973 Less accumulated amortization 5,918 5,624 --------------- --------------- $43,276 $43,349 =============== ===============
Accumulated amortization related to debt issue costs, non-compete agreements, backlog and other were $267,000, $65,000 $76,000 and $154,000 respectively, at May 31, 2002 and $80,000, $37,000, none, and $151,000, respectively at February 28, 2002. Accumulated amortization for goodwill was $5,356,000 at the end of February 28, 2002 and May 31, 2002. The Company recorded amortization expenses for the three months ending May 31, 2002 in the amount of $294,000. The following table projects the estimated amortization expense for the five succeeding fiscal years. Amortization Expense ----------------------------- (unaudited) (in thousands) 2003 $ 597 2004 476 2005 346 2006 155 2007 112 Thereafter 328 --- Total $2,114 8 In July 2001, the Financial Accounting Standards Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations," effective for fiscal years beginning after June 15, 2002. This Statement addresses financial accounting and reporting for legal obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company is currently evaluating the effect, if any, this Statement will have on its financial statements and related disclosures. In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," effective for fiscal years beginning after December 15, 2001. The new Statement supercedes current accounting guidance relating to impairment of long-lived assets and provides a single accounting methodology for long-lived assets to be disposed of, and also supercedes existing guidance with respect to reporting the effects of the disposal of a business. There was no affect on the Company's financial statements related to this adoption. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Consolidated net revenues increased 45% to $49.7 million for the three-month period ended May 31, 2002 as compared to $34.3 million for the same period in fiscal 2002. Revenues excluding acquisitions were $32.2 million a decrease of 6%. The Electrical and Industrial Segment's revenues increased $16.1 million or 77% for the three-month period ended May 31, 2002, as compared to the same period in fiscal 2002. Revenues for this segment, excluding acquisitions decreased 6.7% to $19.5 million as compared to $20.9 million for the same period in fiscal 2002. Revenues for this segment's electrical products increased 122% to $32.4 million for the quarter, as compared to $14.6 million for the same period in fiscal 2002. Excluding the acquisitions of Central Electric Company and Carter & Crawley Inc., the electrical products revenues increased 2% to $14.9 million. Revenues for this segment's industrial products decreased 26.7% to $4.6 million for the first quarter of fiscal 2003 as compared to $6.3 million for the same period in fiscal 2002. Despite improvement in overall economic indicators, the Company has seen little improvement in the industrial market served. The Electrical and Industrial Segment's backlog, including acquisitions, was $77.7 million for the first quarter as compared $36.9 million for the same period in fiscal 2002. Backlog from the Company's November 1, 2002 acquisitions accounted for $36 million or 88% of the increase. The electrical products backlog increased $41.6 million to $72.7 million while the industrial products backlog decreased $800,000 to $5 million. Net revenues in the Galvanizing Services Segment decreased 5% to $12.7 million for the three-month period ended May 31, 2002 as compared to $13.4 million for the same period ended May 31, 2001. The Galvanizing Services Segment revenues continue to be negatively impacted by a slow down in the general economy. Consolidated operating income (net sales less operating expenses) increased by 31% for the three-month period ended May 31, 2002 as compared to the same period in fiscal 2002. Operating income was aided by the adoption of SFAS No. 142, which discontinued the amortization of goodwill in the amount of $286,000 for the first quarter of fiscal 2003 as compared to the same period in fiscal 2002. 9 Operating income in the Electrical and Industrial Products Segment increased $1 million or 29% for the three-month period ended May 31, 2002 as compared to the same period in fiscal 2002. Excluding acquisitions, operating income decreased 12.4% to $3.1 million for the three-month period ended May 31, 2002 as compared to $3.5 million for the same period in fiscal 2002. The Company's industrial products accounted for the majority of this decrease. Operating income for this segment's electrical products increased 59% to $4.1 million for the three-month period ended May 31, 2002 as compared to the same period in fiscal 2002. Acquisitions made on November 1, 2001 accounted for 95% of the increase while the eliminations of goodwill amortization accounted for the remainder of the increase. Operating income for this segment's industrial products decreased 53.5% to $439,000 for the three-month period ended May 31, 2002 as compared to $945,000 for the same period in fiscal 2002. Operating income and margins were significantly impacted by lower sales volumes due to the downturn in the industrial market and the loss of an automotive customer in the fourth quarter of fiscal 2002. The loss of the automotive product line accounted for approximately 16% of the decrease. During the first quarter the Company instituted cost reductions for it's industrial products, but was unable to over come the 27% reduction in sales volumes. In the Galvanizing Services Segment, operating income increased $618,000 to $2.5 million for the three-month period ended May 31, 2002 as compared to the same period in fiscal 2002. The elimination of goodwill amortization accounted for $171,000 of the increased operating profits. This segment also benefited from lower zinc and natural gas cost for the current quarter as compared to same period in fiscal 2002. General corporate expenses (selling, general and administrative expense, and other (expense)) for the three-month period ended May 31, 2002 increased $1.8 million or 43% as compared to the same period in fiscal 2002. As a percent of sales, general corporate expenses were 11.8% for the three-month period ended May 31, 2002 compared to 11.9% for the same period ended May 31, 2001. Net interest expense for the three-month period ended was $1.2 million, an increase of 148% from the same period in fiscal 2002. The additional debt required to purchase the acquisitions of Central Electric and Carter & Crawley Inc. created the additional interest expense. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operations was $3.3 million for the three-month period ended May 31, 2002, as compared to $2.9 million for the same period in fiscal 2002. Net cash provided by operations was generated from $2.6 million in net income and $1.7 million in depreciation and amortization, offset by net changes in operating assets and liabilities and other of $1 million. During the three-month period ended May 31, 2002, capital improvements were made in the amount of $1 million and long-term debt was repaid in the amount of $2.5 million. On November 1, 2001 the Company entered a new syndicated credit facility, which replaced the previous term notes and revolving line of credit. This agreement included a $40 million term facility and a $45 million revolving credit facility. The revolving credit is contingent on asset-based collateral of inventories and accounts receivables. The $40 million term note is payable in $10 million installments over the next four years. At May 31, 2002, the Company had $39 million outstanding under the term note and $22 million outstanding on the revolving credit facility. At May 31, 2002, the Company had approximately $5.1 million available under the revolving line of credit. 10 Interest on borrowings under the term note and revolving line of credit bear interest at a rate per annum equal to the lesser of the base rate plus applicable margin for the base rate borrowings for the applicable facility, or the adjusted eurodollar rate plus the applicable margin for eurodollar rate borrowings for the applicable facility. The applicable margin range is based on the leverage ratio, which was 2.50% at May 31, 2002 and correlated to an interest rate of 6.14% on the term note and 4.50% on the revolving line of credit at May 31, 2002. Additionally, the Company is obligated to pay a commitment fee based on the leverage ratio at a rate ranging from .25% to .5% on the unused revolving credit facility. The Company utilizes interest rate swap agreements to protect against volatile interest rates and manage interest expense. At May 31, 2002, the Company has a $5.4 million interest rate swap agreement entered into in February 1999 at a fixed rate of 6.8%. On November 1, 2001 the Company entered into an interest rate swap agreement covering an additional $40 million of term debt at a fixed rate of 6.14%. In conjunction with the Company's new financing agreement the Company discontinued hedge accounting for the February 1999 interest rate swap effective November 1, 2001. The Company continued to amortize the amount that was in other comprehensive income as of November 1, 2001. Subsequent changes in fair value have been recognized in earnings. At May 31, 2002 the fair value of the February 1999 swap was a liability of $200,000. The November 2001 interest rate swap, which was designated as a hedge of the Company's variable rate interest, has an unrealized loss of $54,000 as of May 31, 2002. The accumulated balance in other comprehensive income is $201,000, net of tax of $123,000, as of May 31, 2002. This amount will be charged to interest expense over the respective terms of the two swaps. The Company has not experienced any significant changes in market risk exposures. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of the consolidated financial statements requires the Company to make estimates that affect the reported value of assets, liabilities, revenues and expenses. The Company's estimates are based on historical experience and various other factors that are believed to be reasonable under the circumstances, and form the basis for the Company's conclusions. The Company continually evaluates the information used to make these estimates as the business and the economic conditions change. The use of estimates is pervasive throughout the Company's financial statements, but accounting policies and estimates considered most critical are allowances for doubtful accounts, accruals for contingent liabilities and revenue recognition. More information regarding significant accounting policies can be found in Note 1 of Notes to Consolidated Financial Statements in the Annual Report on Form 10-K. Allowance for Doubtful Accounts- The carrying value of the accounts receivables is continually evaluated based on the likelihood of collection. An allowance is maintained for estimated losses resulting from our customer's inability to make required payments. The allowance is determined by historical experience of uncollected accounts, the level of past due accounts, overall level of outstanding accounts receivables, information about specific customers with respect of their inability to make payments and future expectations of conditions that might impact the collectibility of accounts receivables. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Accruals for Contingent Liabilities- The amounts the Company recognizes for claims such as insurance recoverables, warranty and other contingent liabilities requires the Company to make judgments regarding 11 the amount of expenses that will ultimately be incurred. The Company uses past history and experience, as well as other specific circumstances surrounding these claims in evaluating the amount of liability that should be recorded. Actual results may be different than the Company's estimates. Revenue Recognition - Revenue is recognized for the Galvanizing Services segment upon completion of the galvanizing services or shipment of product. Revenue is recognized for the Electrical and Industrial Products segment upon shipment of product or customer receipt of product, or based upon percentage of completion method as contract services are performed. The extent of progress for revenue recognized using the percentage of completion method is measured by the ratio of contract costs incurred to date to estimated total contract costs at completion. Contract costs include direct labor and material, and certain indirect costs. Selling, general and administrative costs are charged to expense as incurred. Provisions for estimated losses, if any, on uncompleted contracts are made in the period in which such losses are estimable. The assumptions made in determining the estimated cost could differ from actual performance resulting in a different outcome for profits or losses than anticipated. FORWARD LOOKING STATEMENTS This Report contains, and from time to time the Company or certain of its representatives may make, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally identified by the use of words such as "anticipate," "expect," "estimate," "intend," "should," "may," "believe," and terms with similar meanings. Although the Company believes that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations, and the related statements, are inherently subject to risks, uncertainties, and other factors, many of which are not under the Company's control. Those risks, uncertainties, and other factors could cause the actual results to differ materially from these in the forward-looking statements. Those risks, uncertainties, and factors include, but are not limited to, many of the matters described in this Report: change in demand, prices and raw material cost, including zinc and natural gas which is used in the hot dip galvanizing process; changes in the economic conditions of the various markets the Company serves, foreign and domestic, including the market price for oil and natural gas; customer requested delay of shipments, acquisition opportunities, adequacy of financing, and availability of experienced management employees to implement the Company's growth strategy; and customer demand and response to products and services offered by the Company. The Company expressly disclaims any obligations to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct. 12 PART II. OTHER INFORMATION AZZ incorporated Item 1. Legal Proceedings - Not applicable. Item 2. Changes in Securities - Not applicable. Item 3. Defaults Upon Senior Securities - Not applicable. Item 4. Submissions of Matters to a Vote of Security Holders Shareholders at the Annual Meeting on July 9, 2002 reelected three incumbent directors, Martin C. Bowen, Kevern R. Joyce, and Sam Rosen. Of the 4,659,008 shares represented at the meeting, 4,632,989 shares (88%) were voted for Mr. Bowen, 4,634,779 shares (88%) were voted for Mr. Joyce, and 4,635,598 shares (88%) were voted for Mr. Rosen. Other directors continuing in office are L.C. Martin, David Dingus, Dr. H. Kirk Downey, R. J. Schumacher, Dana Perry, Daniel Berce and Daniel Feehan. One proposal by the Board of Directors was submitted to the stockholders at the Annual Meeting, with the following vote tabulation. Approval of Ratification of the Appointment Approved/Failed to Approve -------------------------- of Ernst & Young LLP as Auditors. Shares for: 4,637,613 99.6% Shares Against: 11,140 .2% APPROVED Shares Abstained: 10,255 .2% Item 5. Other Information - Not applicable. Item 6. Exhibits and Reports on Form 8-K (A) Exhibits - There were no exhibits filed with this 10-Q for the three months ended May 31, 2002. (B) Reports on Form 8-K - There were no 8-K's filed during the three months ended May 31, 2002. All other schedules and compliance information called for by the instructions for Form 10-Q have been omitted since the required information is not present or not present in amounts sufficient to require submission. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AZZ incorporated ------------------------------------------- (Registrant) Date: 7/12/02 /s/ Dana Perry ------- -------------------------------------------- Dana Perry, Vice President for Finance Chief Financial Officer 14