================================================================================ 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, 1995 ( ) 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, 1995 Common Stock, $1.00 Par Value 5,748,060 ----------------------------- ------------------------------ Class Number of Shares ================================================================================
AZTEC MANUFACTURING CO. INDEX ----- <TABLE> <CAPTION> PART I. Financial Information Page No. --------------------- -------- <S> <C> <C> Item 1. Financial Statements Consolidated Condensed Balance Sheets at November 30, 1995 and February 28, 1995 3 Consolidated Condensed Statements of Income Periods Ended November 30, 1995 and November 30, 1994 4 Consolidated Condensed Statements of Cash Flow Periods Ended November 30, 1995 and November 30, 1994 5 Notes to Consolidated Condensed Financial Statements 6 Computation of Income per Common Share 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 9 <CAPTION> PART II. Other Information ----------------- <S> <C> <C> Item 2. Changes in Securities 10 Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 </TABLE> Page 2
ITEM I. FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED BALANCE SHEETS <TABLE> <CAPTION> 11/30/95 2/28/95 ASSETS UNAUDITED AUDITED - ------------------------------------------ -------------- -------------- <S> <C> <C> CURRENT ASSETS CASH AND CASH EQUIVALENTS $ 52,961 $ 192,764 ACCOUNTS RECEIVABLE (NET OF ALLOWANCE) 9,941,558 10,896,521 INVENTORIES: RAW MATERIALS 4,980,334 5,020,587 WORK-IN-PROCESS 1,043,168 1,471,331 FINISHED GOODS 700,421 741,360 PREPAID EXPENSES AND OTHER 34,465 97,217 -------------- -------------- TOTAL CURRENT ASSETS 16,752,907 18,419,780 PROPERTY, PLANT AND EQUIPMENT, NET 15,870,888 15,265,814 PROPERTY HELD FOR SALE, NET 1,958,198 2,038,288 INTANGIBLE ASSETS, NET 4,561,451 4,781,581 OTHER ASSETS 320,014 285,704 -------------- -------------- TOTAL ASSETS $ 39,463,458 $ 40,791,167 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY - ----------------------------------------- CURRENT LIABILITIES LONG TERM DEBT DUE WITHIN ONE YEAR $ 1,515,593 $ 1,515,593 ACCOUNTS PAYABLE 3,517,651 4,131,414 ACCRUED LIABILITIES 3,692,807 2,656,137 -------------- -------------- TOTAL CURRENT LIABILITIES 8,726,051 8,303,144 LONG-TERM DEBT DUE AFTER ONE YEAR 7,583,493 10,484,094 DEFERRED INCOME TAX 627,849 627,856 SHAREHOLDERS' EQUITY: COMMON STOCK, $1 PAR VALUE SHARES AUTHORIZED - 25,000,000 SHARES ISSUED - 5,748,060 and 5,741,260 RESPECTIVELY 5,748,060 5,741,260 CAPITAL IN EXCESS OF PAR VALUE 9,233,598 9,219,998 LESS: TREASURY STOCK AT COST - 232,362 SHARES (726,131) 0 RETAINED EARNINGS 8,270,538 6,414,815 -------------- -------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 39,463,458 $ 40,791,167 ============== ============== </TABLE> SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. Page 3
AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED STATEMENTS OF INCOME <TABLE> <CAPTION> THREE MONTHS ENDED NINE MONTHS ENDED 11/30/95 11/30/94 11/30/95 11/30/94 UNAUDITED UNAUDITED UNAUDITED UNAUDITED -------------- -------------- -------------- -------------- <S> <C> <C> <C> <C> NET SALES $ 12,975,185 $ 10,501,914 $ 36,376,044 $ 32,866,901 COSTS AND EXPENSES: COST OF SALES 9,479,516 7,955,716 27,027,391 23,738,715 SELLING/G & A EXPENSE 1,905,227 1,514,220 5,461,153 5,065,153 INTEREST EXPENSE 210,919 189,458 738,353 537,359 OTHER (INCOME) EXPENSE 166,431 (55,134) 47,069 285,832 RESEARCH & DEVELOPMENT 3,432 2,439 34,546 36,959 -------------- -------------- -------------- -------------- 11,765,525 9,606,699 33,308,512 29,664,018 -------------- -------------- -------------- -------------- INCOME BEFORE INCOME TAXES 1,209,660 895,215 3,067,532 3,202,883 PROVISION FOR INCOME TAXES 477,797 353,629 1,211,809 1,264,294 -------------- -------------- -------------- -------------- NET INCOME $ 731,863 $ 541,586 $ 1,855,723 $ 1,938,589 ============== ============== ============== ============== INCOME PER SHARE: NET INCOME FULLY DILUTED $ 0.13 $ 0.09 $ 0.33 $ 0.33 ============== ============== ============== ============== </TABLE> SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. Page 4
AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS NOVEMBER 30, 1995 <TABLE> <CAPTION> NINE MONTHS ENDING 11/30/95 11/30/94 UNAUDITED UNAUDITED -------------- -------------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 1,855,723 $ 1,938,589 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATIONS: PROVISION (CREDIT) FOR BAD DEBTS (56,668) 116,238 AMORTIZATION AND DEPRECIATION 1,623,128 1,237,627 GAIN ON SALE OR PROPERTY/PLANT/EQUIPMENT 397 2,153 INCREASE (DECREASE) FROM CHANGES IN ASSETS & LIABILITIES: ACCOUNTS RECEIVABLE 1,011,631 (518,657) INVENTORIES 509,355 (2,846,239) PREPAID EXPENSES 62,752 112,279 OTHER ASSETS (34,310) 23,644 ACCOUNTS PAYABLE (613,763) 2,034,531 ACCRUED LIABILITIES 1,036,670 52,327 -------------- -------------- NET CASH PROVIDED BY OPERATIONS 5,394,915 2,152,492 -------------- -------------- CASH FLOWS USED FOR INVESTING ACTIVITIES: PURCHASE OF PROPERTY/PLANT/EQUIPMENT (1,928,386) (3,399,120) -------------- -------------- NET CASH PROVIDED BY (USED FOR) (1,928,386) (3,399,120) -------------- -------------- INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES: EXERCISE OF STOCK OPTIONS 20,400 244,222 REPAYMENT OF REVOLVING LOAN (1,795,570) 2,661,266 PAYMENTS ON LONG TERM NOTES (1,105,031) (1,609,407) DIVIDENDS PAID 0 (112,910) PURCHASE OF TREASURY STOCK (726,131) 0 -------------- -------------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES (3,606,332) 1,183,171 -------------- -------------- (DECREASE) IN CASH & CASH EQUIVALENTS (139,803) (63,457) CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 192,764 117,249 -------------- -------------- CASH & CASH EQUIVALENTS, END OF PERIOD $ 52,961 $ 53,792 ============== ============== </TABLE> 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 12 of its 1995 Annual Shareholders' Report. 2. In the opinion of Management of the Company, the accompanying unaudited consolidated 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, 1995, and the results of operations for the three-month and nine-month periods ended November 30, 1995 and November 30, 1994, and cash flows for the nine-month periods ended November 30, 1995 and November 30, 1994. Page 6
AZTEC MANUFACTURING CO. COMPUTATION OF INCOME PER COMMON SHARE -------------------------------------- <TABLE> <CAPTION> =============================================================================================================== THREE MONTHS ENDING NINE MONTHS ENDING ---------------------------------------------------------------------- 11/30/95 11/30/94 11/30/95 11/30/94 - --------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Net Income Applicable to Common Shares $ 731,863 $ 541,586 $1,855,723 $1,938,589 - --------------------------------------------------------------------------------------------------------------- Weighted Average Common And Common 5,515,698 5,816,680 5,668,762 5,795,215 Equivalent Shares Outstanding - --------------------------------------------------------------------------------------------------------------- Income per Common Share Fully Diluted $ .13 $ .09 $ .33 $ .33 - --------------------------------------------------------------------------------------------------------------- Cash Dividend $ - 0 - $ - 0 - $ - 0 - $ .025 - --------------------------------------------------------------------------------------------------------------- </TABLE> Page 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES ------------------------------- Net Cash provided from operations for the nine-month period ending November 30, 1995, was $5,395,000 compared to $2,152,000 during the same period in 1994. This increase is primarily the result of a reduction in outstanding receivables at the Calvert Company as well as a reduction in inventories. Working capital on November 30, 1995, was $8,027,000, with a current ratio of 1.92 to 1. Uses of cash during the period ended November 30, 1995, included the purchase of fixed assets in the amount of $1,928,000 and the repayment of bank debt in the amount of $2,901,000. The Company also repurchased 232,362 shares of Aztec common Stock from an estate in the amount of $726,000. The Company has an $18,500,000 credit agreement with its current lender. This agreement is made up of a $10,000,000 revolving line of credit and a $8,500,000 term note. The Company's primary sources of liquidity and capital resources in the near term will consist of cash flow from operations and available borrowings under the Company's revolving line of credit mentioned above. The Company's current availability under the total credit agreement is approximately $9,400,000. RESULTS OF OPERATIONS ---------------------- Consolidated net sales were up for the three-month and nine-month periods ending November 30, 1995 as compared to the same periods in 1994. Net sales in the Electrical Products Segment were up 29 percent for the three-month period ending November 30, 1995 and were up 13 percent for the nine-month period ending November 30, 1995, as compared to the same periods in 1994. Backlogs in the Electrical Products Segment remained steady throughout the quarter. Net sales in the Company's Galvanizing Segment were up 34 and 32 percent for the three and nine-month periods ending November 30, 1995, as compared to the same periods in 1994. These increases were due to higher volumes of steel processed as well as improved selling prices. Net sales in the Oil Field Products Segment were down 45 and 58 percent for the three and nine-month periods ending November 30, 1995, as compared to the same periods in 1994. Depressed activity in the domestic Oil and Gas industry will continue to have an adverse affect on this segment. Consolidated operating income for the three-month and nine-month periods ending November 30, 1995, as compared to the same periods in 1994, were up 37 and 2 percent, respectively. Gross operating income in the Electrical Products Segment was up 57 and 11 percent for the three and nine-month periods ending November 30, 1995, as compared to the same periods in 1994. The Calvert Company continues to improve as lower margin contracts are replaced in the backlog with higher margin contracts. The Galvanizing Segment's gross operating income was up 49 and 34 percent for the three and nine-month periods ending November 30, 1995, as compared to the same periods in 1994. This increase was a result of improved volumes and selling prices as well as improved operating efficiencies. The Oil Field Products Segment showed a gross operating loss of $63,000 and $206,000 for the three and nine month periods ending November 30, 1995 as compared to a gross operating profit of $238,000 and $1,083,000 for the same periods in 1994. General corporate expenses for the three and nine-month periods ending November 30, 1995, were up as compared to the same periods in 1994. These increases were attributed to higher employee benefit and profit sharing expense, as well as increased selling expenses associated with higher volumes. Page 8
Interest expense was higher for the periods ending November 30, 1995, as compared to 1994 due to increased debt associated with the construction of Arizona Galvanizing and higher interest rates. Page 9
PART II. OTHER INFORMATION AZTEC MANUFACTURING CO. ITEM 2. CHANGES IN SECURITIES - ------------------------------ Title of Class - Common Stock, $1 par value <TABLE> <CAPTION> Number of Common Stock Capital in Shares $1 Par Value Excess of Par -------- ------------ ------------- <S> <C> <C> <C> Balance at February 28, 1995 5,741,260 $5,741,260 $9,219,998 Exercise of Stock Options 6,800 $ 6,800 $ 13,600 Balance at November 30, 1995 5,748,060 $5,748,060 $9,233,598 </TABLE> ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- (A) EXHIBITS - There were no exhibits filed with this 10-Q for the three-month period ended November 30, 1995. (B) REPORTS ON FORM 8-K - There were no reports on Form 8-K filed for the three months ended November 30, 1995. 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. Page 10
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: December 22, 1995 /s/Dana Perry -------------------------- ----------------------------------------- Dana Perry, Vice President for Finance Chief Financial Officer Page 11