AZZ INC — Interim / Quarterly Report 1995

Jul 6, 1995

================================================================================ 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, 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 May 31, 1995 Common Stock, $1.00 Par Value 5,743,910 ----------------------------- ----------------------------- Class Number of Shares ================================================================================ AZTEC MANUFACTURING CO. INDEX -----

Page 2 ITEM I. FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED BALANCE SHEETS

SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. Page 3 AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED STATEMENTS OF INCOME

SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. Page 4 AZTEC MANUFACTURING CO. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW MAY 31, 1995

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 May 31, 1995, and the results of operations and cash flows for the three-month periods ended May 31, 1995 and May 31, 1994. 3. The revolving loan and term notes are subject to a loan agreement which states that the Company must comply with various financial covenants including minimum requirements with regard to working capital, debt-to-net worth ratio, and cash flows. The Company is in compliance (or has obtained a waiver through May 31, 1995 for the event of noncompliance, including maintaining a debt coverage ratio less than the minimum ratio of 2.25 to 1) with these covenants as of May 31, 1995. The Company amended it's debt facility with it's current lender during the quarter ending May 31, 1995, effective July 1, 1995. The amendments are discussed in Management's Discussion and Analysis of Financial Condition as well as exhibit 10-0 attached. Page 6 AZTEC MANUFACTURING CO. COMPUTATION OF INCOME PER COMMON SHARE --------------------------------------

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 three-month period ending May 31, 1995, was $2,608,000 compared to $1,049,000 during the same period in 1994. This increase is primarily the result of a reduction in outstanding receivables at the Calvert Company. Working capital on May 31, 1995, was $8,465,000, with a current ratio of 2.10 to 1. Uses of cash during the period ended May 31, 1995, included the purchase of equipment in the amount of $453,000 and the repayment of bank debt in the amount of $2,283,000. The Company's credit facility with it's current lender was amended during the period ended May 31, 1995, effective July 1, 1995, from $15,000,000 to $18,500,000. This agreement is made up of a $10,000,000 revolving line of credit and a $8,500,000 term note. Other terms of this agreement are discussed in the attached exhibit 10-0. 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 revolving line is approximately $8,500,000. RESULTS OF OPERATIONS --------------------- Consolidated net sales for the period ending May 31, 1995 as compared to the same period in 1994, were up approximately $793,000, a 7 percent increase. Net sales in the Electrical Products Segment, as compared to the same period in 1994, were up 10 percent. Volumes were up in Aztec's three electrical product companies that make up this segment. Net sales in the Company's Galvanizing Segment were up 36 percent over the same period in 1994, due to the addition of Arizona Galvanizing, as well as increased overall volumes of production. Net sales in the Oil Field Products Segment were down as compared to the same period in 1994, by 68 percent. This segment has continued the decline which started in the fourth quarter of fiscal 1995. Depressed activity in the domestic Oil and Gas industry will continue to have an adverse affect on this segment. Consolidated operating income for the period ending May 31, 1995, as compared to the same period in 1994, was down 12 percent. Gross operating income in the Electrical Products Segment was down due to overall lower margins. The Calvert Company, which experienced a significant write down in the fourth quarter of fiscal 1995, should continue to improve throughout the year as lower margin contracts are replaced in the backlog with higher margin contracts. Continued improvements in production efficiencies and personnel changes are also having a positive affect on Calvert's margins. Gross operating income in the Galvanizing Segment was up 40 percent over the same period last year due to the addition of Arizona Galvanizing as well as increased volumes in overall production. The Oil Field Products Segment showed a gross operating loss due to low volumes of production as compared to an operating income in the same period in 1994. General corporate expenses for the period ending May 31, 1995, as compared to the same period in 1994, were down due to lower accruals for employee benefits and profit sharing expense. Page 8 Interest expense was higher for the period ending May 31, 1995, as compared to 1994 due to increased debt associated with the construction of Arizona Galvanizing and higher interest rates. PART II. OTHER INFORMATION AZTEC MANUFACTURING CO. ITEM 2. CHANGES IN SECURITIES - ------------------------------ Title of Class - Common Stock, $1 par value

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- (A) EXHIBITS - The following exhibit is filed as part of this report: 10 - 0 Loan commitment letter from Marine Midland Business Loans Incorporated for $18.5 million. (B) REPORTS ON FORM 8-K - There were no reports on Form 8-K filed for the three months ended May 31, 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 9 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: June 29, 1995 /s/Dana Perry --------------------- ----------------------------------------- Dana Perry, Vice President for Finance Chief Financial Officer Page 10 EXHIBIT INDEX