FORM 10-K   
SECURITIES AND EXCHANGE COMMISSION   
Washington, D.C.   
   
(Mark One)   
   
X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)   
      OF THE SECURITIES EXCHANGE ACT OF 1934 	For the   
      fiscal year ended December 31, 19941995   
   
OR   
   
     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 0-14714   
   
ASTEC INDUSTRIES,  INC.                                                      .    
(Exact name of registrant as specified in its charter)   
   
  Tennessee                 					         			    62-0873631   
(State or other jurisdiction of					         		(I.R.S. Employer   
 incorporation or organization)		              Identification No.)   
   
   
P. O. Box 72787, 4101 Jerome Avenue, Chattanooga, Tennessee  37407     
    (Address of principal executive offices)        	(Zip Code)   
   
   
Registrant's telephone number, including area code:  (615)(423) 867-4210   
   
Securities registered pursuant to Section 12(b) of the Act:   
   
	Title of each class	                NONE

Name of each exchange on which registered  
  
             NONE    
             NONE                                 
   
Securities registered pursuant to Section 12(g) of the Act:   
    
Common Stock, $.20 par value   
    (Title of class)   
   
   
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	    
   
   
Exhibit Index Appears at Page 49
  
  
(Form 10-K Cover Page - Continued)   
   
Indicate by check mark if disclosure of delinquent filers pursuant to   
Item 405 of Regulation S-K is not contained herein, and will not be   
contained, to the best of registrant's knowledge, in definitive proxy or   
information statements incorporated by reference in Part III of this   
Form 10-K or any amendment to this Form 10-K.  [     ]   
   
State theThe aggregate market value of the voting stock held by non-  
affiliatesnon-affiliates   
of the registrant.  The aggregate market value shall be   
computed by reference to the price at which the stockregistrant was sold,   
or the average bid and asked prices of such stock, as of a specified   
date within 60 days prior to the date of filing:  
  
$93,105,764$68,094,670 based upon the closing sales price   
inreported by the NASDAQ National Market System on March 10, 1995,11, 1996, using   
beneficial ownership of stock rules adopted pursuant to Section 13 of   
the Securities Exchange Act of 1934 to exclude voting stock owned   
by all directors and executive officers of the registrant, some of   
whom may not be held to be affiliates upon judicial determination.   
   
   
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)   
   
Indicate the number of shares outstanding of each of the registrant's   
classes of common stock, as of the latest practicable date:   
   
   
As of March 10, 199511, 1996   
Common Stock, par value $.20 10,001,858-- 10,037,199 shares   
   
   
DOCUMENTS INCORPORATED BY REFERENCE   
   
	Portions of the following documents have been incorporated   
by reference into the Parts of this Annual Report on Form 10-K   
indicated:   
   
		Document					                               	
	Form 10-K   
   
	Proxy Statement relating to				              		Part III   
	Annual Meeting of Shareholders   
	to be held on April 27, 199525, 1996   
   
   
ASTEC INDUSTRIES, INC.   
19941995 FORM 10-K ANNUAL REPORT   
   
TABLE OF CONTENTS   
   
								  
                                                              					Page   
PART I   
   
Item  1.	Business		 
Item  2.	Properties		 
Item  3.	Legal Proceedings		 
Item  4.	Submission of Matters to a Vote of Security Holders	 
Executive Officers of the Registrant		 
   
   
PART II   
   
Item  5.	Market for Registrant's Common Equity and Related   
       		Shareholder Matters		 
Item  6.	Selected Financial Data		 
Item  7.	Management's Discussion and Analysis of Financial   
       		Condition and Results of Operations	 
Item  8.	Financial Statements and Supplementary Data	 
Item  9.	Changes in and Disagreements With Accountants on   
         Accounting and Financial Disclosure		 
   
   
PART III   
   
Item 10.	Directors and Executive Officers of the Registrant		 
Item 11.	Executive Compensation		 
Item 12.	Security Ownership of Certain Beneficial Owners   
       		and Management		 
Item 13.	Certain Relationships and Related Transactions		 
   
   
PART IV   
Item 14.	Exhibits, Financial Statement Schedules, and   
		       Reports on Form 8-K		 
   
Appendix A		  
  
SIGNATURES		   
   
PART I                   Item 1.  BUSINESS   
   
General   
   
	Astec Industries, Inc. (the "Company") is a Tennessee corporation   
which was incorporated in 1972.  The   
Company designs, engineers, manufactures and markets equipment and   
components used primarily in road building   
and related construction activities.  The Company's products are used in   
each phase of road building, from quarrying   
and crushing the aggregate to application of the road surface.  The   
Company also manufactures certain equipment   
and components unrelated to road construction, including trenching and   
excavating equipment, environmental   
remediation equipment, log loading and industrial heat transfer equipment.    
The Company holds over 10070 United   
States and foreign patents, and has been responsible for many technological   
and engineering innovations in the   
industry.  The Company currently manufactures over 125135 different products   
which it markets both domestically and   
internationally.  In addition to plant and equipment sales, the Company   
manufactures and sells replacement parts for   
equipment in each of its product lines.  The distribution and sale of   
replacement parts is an integral part of the   
Company's business.   
   
	The Company's sevensix operating divisions and   
subsidiaries each of which operates as an autonomous company, are: (i) the Astec division (effective January 1, 1995 Astec, Inc.),   
which manufactures a line of hot mix asphalt   
plants, soil purification and environmental remediation equipment and   
related components; (ii) Telsmith, Inc., which   
manufactures aggregate processing equipment for the production and   
classification of sand, gravel and crushed stone   
for road and other construction applications; (iii) Heatec, Inc., which   
manufactures thermal oil heaters, asphalt heaters   
and other heat transfer equipment used in the Company's asphalt mixing   
plants and in other industries; (iv) Roadtec,   
Inc., which manufactures milling machines used to recycle asphalt and   
concrete, asphalt paving equipment and   
material transfer vehicles; (v) Trencor, Inc., which manufactures chain and   
wheel trenching equipment, excavating   
equipment and log loaders;loaders and; (vi) Wibau-Astec   
Maschinenfabrik GmbH, located in Germany, which represents   
Astec in international sales and manufactures and sells Wibau   
parts in Europe, Africa and the Middle East and Astec continuous   
mix plants in Europe and the Eastern bloc countries; (vii) Gibat   
Ohl Ingenieurgesellschaft fur Anlagentechnik mbH, located in   
Germany,CEI Enterprises, Inc., which   
manufactures heat transfer equipment and sells batchrecycled   
rubber blending systems for the hot mix asphalt plants,   
parts and controlsindustry.  CEI was acquired   
in Europe and the Eastern bloc countries.first quarter of 1995.   
   
	The Company's strategy is to become the high quality, low cost   
producer in each of its product lines while   
continuing to develop innovative new products for its customers.  ManagementWith the   
disposition of its foreign operations   
described below, management believes that this strategy will provide the Company with a   
competitive advantage in the marketplace and position itis well positioned   
to capitalize on rebuilding the current need to   
rebuild and enhance roadway infrastructure both in the United States and   
abroad.   
   
   
Disposition of Foreign Operating Subsidiaries   
   
	In 1993, the Company acquired a 50% ownership interest in   
Wibau-Astec Maschinenfabrik GmbH, a newly   
formed German limited liability company to engage in the manufacture and   
marketing of asphalt plants and certain   
related equipment in Granadau, Germany.  The Company acquired the   
remaining 50% interest in Wibau-Astec in   
1994, making it a wholly owned subsidiary of the Company.  In June 1995   
the Company sold Wibau-Astec to Wirtgen   
Gesellschaft mit beschr*nkter Haftung, a German equipment manufacturer.   
See Note 2 to the Consolidated Financial   
Statements included in the Company's Annual Report to Shareholders for   
the fiscal year ended December 31, 1995,   
which information is incorporated by reference under item 8 of this Report.   
   
	In an unrelated transaction, the Company acquired Gibat Ohl   
Ingenieurgesellschaft fur Anlagentechnik mbH   
located in Hasselroth, Germany in October 1994.  The  Gibat Ohl name was   
changed to Astec-Europa in the third   
quarter of 1995.  In connection with the sale of Wibau-Astec, the   
Company's technology was purchased by Astec-  
Europa which manufactured asphalt batch plants and certain related   
equipment.  In February 1996, the Board of   
Directors of the Company decided to abandon the operations of Astec-  
Europa to avoid continuing losses related to its   
operations.  As a result of the Company's decision, on February 9, 1996, the   
management of Astec-Europa filed a   
request for bankruptcy in Germany.  Due to the abandonment of Astec-  
Europa, the Company will not recover any   
amounts related to Astec-Europa's assets nor does it expect to be required to   
liquidate any of Astec-Europa's   
liabilities, except to the extent such liabilities were guaranteed by the   
Company.  Total losses recognized in 1995   
related to Astec-Europa, including net losses from operations and the loss   
on abandonment, were approximately   
$9,945,000 before taxes and $6,037,000 after taxes.  The Company does not   
expect to incur any additional losses   
related to this subsidiary.  See Note 3 to the Consolidated Financial   
Statements included in the Company's Annual   
Report to Shareholders for the fiscal year ended December 31, 1995, which   
information is incorporated by reference   
under item 8 of this Report.   
   
	As a result of the disposition of Wibau-Astec and the abandonment   
of Astec-Europa, the Company no longer   
conducts foreign manufacturing operations and instead has decided to   
concentrate all of its manufacturing activities,   
whether or not related to international sales, with its more efficient   
domestic operations.   
   
   
Products   
   
	The Company operates in a single business segment.  In 19941995 it   
manufactured and marketed products in five   
principal categories: (i) hot mix asphalt plants, soil purification and   
environmental remediation equipment and related   
components; (ii) mobile construction equipment, including asphalt pavers,   
from Roadtec,   
milling machines and material transfer   
vehicles and other auxiliary equipment; (iii) hot oil heaters, asphalt heaters 
and other heat transfer equipment; (iv)   
aggregates processing equipment; and (v) chain and wheel trenching and   
excavating equipment.  The following table following   
shows the Company's sales for each product category which accounted for   
10% or more of consolidated revenue for   
the periods indicated.   
   
Years Ended December 31	  
(in thousands) 
                                      1995           1994            1993         1992
                                                (in thousands)  
 
Asphalt plants and components         $110,321       $100,514        $88,116  
$81,438Mobile construction equipment         29,706         30,291          22,120  
Aggregate processing equipment        46,586         38,823          40,108      33,298  
Trenching and excavating equipment    21,110         25,867          16,535      14,803  
Mobile construction equipment           30,291       22,120      14,660  
  
  
   
Financial information in connection with the Company's international sales   
is included in Note 1 to "Notes to   
Consolidated Financial Statements - Segment Information", appearing at   
Page A-11 of this report.   
   
   
Hot Mix Asphalt Plants   
   
	The Astec, divisionInc. designs, engineers, manufactures and markets a   
complete line of portable, stationary and   
relocatable hot mix asphalt plants and related components under the   
"ASTEC" trademark.  An asphalt mixing plant   
typically consists of heating and storage equipment for liquid asphalt   
(manufactured by Heatec), cold feed bins for   
storing aggregates, a drum mixer for drying, heating and mixing, a   
baghouse composed of air filters and other   
pollution control devices, hot storage bins or silos for temporary storage of   
hot mix asphalt and a control house.  The   
Company introduced the concept of plant portability in 1979.  Its current   
generation of portable asphalt plants is   
marketed as the "Six Pack" and consists of six portable components which   
can be disassembled and moved to the   
construction site to reduce relocation expenses.  Plant portability represents 
an industry innovation developed and   
successfully marketed by the Company.    
   
	The components in the Company's asphalt mixing plants are fully   
automated and use microprocessor based   
control systems for efficient operation.  The plants are manufactured to   
meet or exceed federal and state clean air   
standards.   
   
	The Company has also developed specialized asphalt recycling   
equipment for use with its hot mix asphalt   
plants.  Many of the existing Astec products are suited for blending,   
vaporizing, drying and incinerating contaminated   
products.  As a result, the Astec, divisionInc. has developed a line of thermal   
purification equipment for the remediation of   
petroleum contaminated soil.   
   
   
Mobile Construction Equipment   
   
	Roadtec, Inc. designs, engineers, manufactures and markets   
asphalt pavers, material transfer vehicles and   
milling machines.  Roadtec engineers emphasize simplicity, productivity,   
versatility and accessibility in product design   
and use.   
   
	Asphalt Pavers.  Asphalt pavers are used in the application of hot   
mix asphalt to the road surface.  Roadtec   
pavers have been designed to minimize maintenance costs while exceeding   
road surface smoothness requirements.    
AIn 1994, Roadtec introduced several new effective and efficient paver has been introducedmodels, including one   
which must be used with thea material transfer   
vehicle.  Other additional new   
paver models have also been introduced in 1994.vehicle described below.   
   
	Material Transfer Vehicles.  The "Shuttle Buggy" is a mobile, self-propelledself-  
propelled material transfer vehicle which   
allows continuous paving by separating truck unloading from the paving   
process while remixing the asphalt surface   
material.  A typical asphalt paver must stop paving to permit truck   
unloading of asphalt mix.  By permitting continuous   
paving, the "Shuttle Buggy" allows the asphalt paver to produce a smoother   
road surface.  Certain states are now   
requiring the use of the "Shuttle Buggy" on their jobs.   
   
	Milling Machines.  Roadtec milling machines are designed to   
remove old asphalt from the road surface before   
new asphalt mix is applied.  They are manufactured with a simplified   
control system, wide conveyors, direct drives   
and a wide range of horsepower and cutting capabilities to provide   
versatility in product application.  Additional   
models were introduced in 1994 to meet contractor needs.needs and additional   
upgrades and options have been added in   
1995.   
   
   
Heat Transfer Equipment   
   
	Heatec, Inc. designs, engineers, manufactures and markets a   
variety of heaters and heat transfer processing   
equipment under the "HEATEC" trade name for use in various industries   
including the asphalt industry.   
   
	CEI Enterprises, Inc. ("CEI") designs, engineers, manufactures   
and markets heating equipment and storage   
tanks mainly for the  asphalt paving industry.  CEI located in Albuquerque,   
New Mexico was acquired by the Company   
in the first quarter of 1995.   
   
	Asphalt Heating Equipment.  Heatec manufactures a complete line   
of heating and liquid storage equipment   
for the asphalt paving industry. Heaters are offered in both direct-fired and   
helical coil models while CEI's heating   
equipment is hot oil, direct fired or electric.  The equipment includes   
portable and stationary tank models with   
capacities up to 35,000 gallons each.  Heaters are offered in both direct-fired and helical coil   
models.   
   
	Industrial Heating Equipment.  Heatec builds a wide variety of   
industrial heaters to fit a broad range of   
applications, including equipment for emulsion plants, roofing material   
plants, refineries, chemical processing, rubber   
plants and the agribusiness.  Heatec has the technical staff to custom design   
heating systems and has systems   
operating as large as 40,000,000 BTU's per hour.   
   
   
Aggregates Processing Equipment   
   
	Founded in 1906, Telsmith, has served the quarry business since 1906.    
TelsmithInc. designs, engineers, manufactures   
and markets a wide range of portable and   
stationary equipment for the production and classification of sand, gravel,   
and quarried stone and recycled concrete   
and asphalt for road and other construction applications.applications worldwide.    
Telsmith's products include jaw, cone and impact   
crushers; several types of feeders which transport the aggregate from the storage sitevirgin, recycled, or   
crushed material to theprimary, secondary, or   
tertiary crushing equipment; vibrating screens to separate the aggregate into   
various mixes; and washing and   
conveying equipment.  Telsmith markets its products individually and as   
complete systems, incorporating   
microprocessor based automated controls for the efficient operation of its   
equipment.   
   
   
Trenching and Excavating Equipment   
   
	Trencor, Inc. designs, engineers, manufactures and markets chain   
and wheel trenching equipment, canal   
excavators, rock saws, road miners and log loading equipment.  In August   
1994, Trencor acquired the product line   
and related manufacturing rights, trademarks, patents, intellectual property   
and engineering designs of Capitol   
Trencher Corporation ("CTC"), also a manufacturer of trenching and   
excavation equipment.  This purchase excluded   
the manufacturing plant and equipment operated by CTC.  The acquisition of the CTC   
product line strengthens and broadens Trencor's position in the   
construction market. The fabrication   
of the CTC product line has been relocated   
to Trencor's new facility in Grapevine, Texas.   
   
	Chain Trenchers.  Trencor chain trenching machines utilize a   
heavy duty chain (equipped with cutting teeth   
attached to steel plates) wrapped around a long moveable boom.  These   
machines, with weights up to 400,000   
pounds, are capable of cutting a trench up to eight feet wide and thirty feet   
deep through rock.  Trencor also makes   
foundation trenchers used in areas where drilling and blasting are   
prohibited.   
   
	Wheel Trenchers.  Trencor wheel trenching machines are used in   
pipeline excavation in soil and soft rock.    
The wheel trenchers weigh up to 390,000 pounds and have a trench   
capacity of up to seven feet in width and ten feet   
in depth.   
   
	Canal Excavator.  Trencor canal excavators are used to make   
finished and trimmed trapezoidal canal   
excavations within close tolerances.  The canals are primarily used for   
irrigation systems.   
   
	Rock Saws.  Trencor manufactures a rock saw which is utilized for   
laying water and gas lines, fiber optics   
cable, constructing highway drainage systems and for other applications.   
   
	Road Miners.Roadminers.  Trencor manufactures four "Road Miner" models   
weighing up to 400,000 pounds with an   
attachment which allows it to cut a path up to twelve and a half feet wide   
and five feet deep on a single pass.  The   
Road MinerRoadminer has applications in the road construction industry and in mining   
and aggregates processing operations.   
   
	Log Loaders.  Trencor also manufactures several different models   
of log loaders.  Its products include   
mobile/truck mounted models, as well as track mounted and stationary   
models, each of which is used in harvesting   
and processing wood products.  The equipment is sold under the Log-Hog   
name.   
   
   
Manufacturing   
   
	The Company manufactures many of the component parts and   
related equipment for its products.  In many   
cases, the Company designs, engineers and manufactures custom   
component parts and equipment to meet the   
particular needs of individual customers.  Manufacturing operations during   
19941995 took place at seven separate   
locations.  The Company's manufacturing operations consist primarily of   
fabricating steel components and the   
assembly and testing of its products to ensure quality control standards have   
been achieved.   
   
   
Marketing   
   
	The Company markets its products both domestically and   
internationally.  The principal purchasers of the   
Company's products include highway and heavy equipment contractors,   
utility contractors, pipeline contractors, open   
mine operators, quarry operators and foreign and domestic governmental   
agencies. The Astec division (now Astec, Inc.) sells directly to its   
customers with domestic, soil remediation and international sales   
departments.  Astec, Inc. also has a branch in   
Chino, California to service customers in the western United States.    
Telsmith products are sold through two leased   
branch locations in San Francisco, California and Sharon, Massachusetts,   
as well as through a combination of direct   
sales, both domestic and international, and dealer sales.  Heatec, CEI,   
Roadtec and Trencor products are marketed   
through a combination of direct sales and dealer sales.  Approximately 18   
manufacturers' representatives sell Heatec   
products for applications in industries other than the asphalt industry with   
such sales comprising approximately 30% of   
Heatec's sales volume during 1994.1995.  Direct sales employees are paid salaries   
and are generally entitled to   
commissions after obtaining certain sales quotas.  See "Business -   
Properties"   
   
	The Company's international sales efforts are decentralized with   
each division and subsidiary maintaining responsibility for   
its own international marketing efforts.  
  
  
German Subsidiaries  
  
	Effective July 1, 1993, the Company entered into an   
agreement with Putzmeister-Werk Maschinenfabrik GmbH   
("Putzmeister"), a company organized under the laws of the   
Federal Republic of Germany, to form a new German limited   
liability company, Wibau-Astec, to be jointly owned by the   
Company and Putzmeister (the "Joint Venture").  Wibau-Astec   
designs, engineers and manufactures asphalt plants, stabilization   
plants, asphalt and thermal heaters, hot storage systems and soil   
remediation equipment (including their respective parts and   
components) which it markets in Europe, Africa and the Middle   
East.  Initially Putzmeister owned 50% of the Joint Venture and   
Astec owned 50%.  In consideration for their respective   
interests in the Joint Venture, Putzmeister contributed the   
operating assets, other than real estate, and related liabilities of   
its asphalt plant manufacturing business located in Germany to   
the Joint Venture; and Astec contributed, among other things, an   
interest in the Company's technology related to asphalt plants,   
asphalt heating equipment and soil remediation equipment.  In   
November 1994, Astec acquired the other 50% interest in   
Wibau-Astec, making it a wholly owned subsidiary of the   
Company.    
  
In an unrelated transaction, Astec acquired Gibat Ohl   
Ingenieurgesellschaft fur Anlagentechnik mbH located in   
Hasselroth, Germany for cash and Astec stock in October 1994.    
Gibat Ohl is a manufacturer of asphalt batch plants and related   
equipment.  The management of Gibat Ohl is composed of former   
Wibau employees who are very knowledgeable about the asphalt   
plant market.  The completion of these acquisitions strengthens   
Astec's position in the European market.   
    
Seminars and Technical Bulletins   
   
	The Company periodically conducts technical and service seminars   
which are primarily for contractors,   
employees and owners of asphalt mixing plants.  In 1994,1995, approximately   
200290 representatives of contractors and   
owners of hot mix asphalt plants attended seminars held by the Company in   
Chattanooga, Tennessee.  These   
seminars, which are taught by Company management and employees, cover   
a range of subjects including   
technological innovations in the hot mix asphalt business and other industry   
segments in which the Company   
manufactures products.   
	   
	In addition to the seminars, the Company published a number of   
detailed technical bulletins covering various   
technological and business issues relating to the asphalt industry.   
   
   
Patents and Trademarks   
   
	The Company seeks to obtain patents to protect the novel features   
of its products.  The Company and its   
subsidiaries hold 6777 United States patents and 3962 foreign patents.  There are   
2416 United States and 16 foreign patent   
applications pending.   
   
	The Company and its subsidiaries have approximately 40   
trademarks registered in the United States,   
including logos for Astec, Telsmith, Roadtec and Trencor, and the names   
ASTEC, TELSMITH, HEATEC, LOG HOG,   
ROADTEC and TRENCOR.  Many of these trademarks are also registered   
in foreign countries, including Canada,   
Great Britain, Mexico, Australia and Japan.   
   
	The Company and its subsidiaries also license their technology to   
manufacturers.   
   
Engineering and Product Development   
   
	The Company dedicates substantial resources to its engineering   
and product development.  At December 31,   
1994,1995, the Company and its subsidiaries had 143122 individuals employed   
domestically full-time in engineering and   
design capacities.   
   
Raw Materials   
   
	Raw materials used by the Company in the manufacture of its   
products include carbon steel and various   
types of alloy steel which are normally purchased from steel mills and other   
sources.    
  
Seasonality and Backlog   
   
	The Company's business is somewhat seasonal.  The Company's   
sales tend to be stronger from January   
through June each year which is attributable largely to orders placed in the   
fourth quarter in anticipation of warmer   
summer months when most asphalt paving is done.   
   
	As of December 31, 1994,1995, the Company had a backlog for delivery   
of products at certain dates in the future   
of approximately $50,500,000.$34,751,000 At December 31, 19931994 the total backlog was   
approximately $33,100,000.$50,465,000, excluding   
Wibau-Astec and Astec-Europa.  The Company's backlog is subject to some   
seasonality as noted above.   
   
	The  Company's  contracts  reflected  in  the  backlog are not, by   
their terms, subject to termination.     
Management believes that the Company is in substantial compliance with   
all manufacturing and delivery timetables   
relating to its products.   
   
Competition   
   
	The Company faces strong competition in price, service and   
product performance in each product category.    
While the Company does not compete with any one manufacturer in all of   
its product lines, it competes as to certain   
products with both large publicly held companies with resources   
significantly greater than those of the Company and   
various smaller manufacturers.  Hot mix asphalt plant competitors include   
CMI Corporation; Cedarapids, Inc., a   
division of Raytheon Company; and Gencor Industries, Inc.  Paving   
equipment competitors include Caterpillar Paving   
Products Inc. (including the Company's former Barber-Greene product   
line), a subsidiary of Caterpillar Inc.; Blaw-KnoxBlaw-  
Knox Construction Equipment Company, a subsidiary of Clark Equipment   
Co.; Ingersoll-Rand Company; and   
Cedarapids, Inc.   
   
	The market for the Company's heat transfer equipment is diverse   
because of the multiple applications for   
such equipment.  Its principal competitor is Gencor/Hyway Heat Systems.    
The Company's milling machine   
equipment competitors include Ingersoll-Rand Company; CMI Corporation;   
Cedarapids, Inc.; Caterpillar; and Wirtgen   
America, Inc.  Aggregates processing equipment competitors include the   
Pioneer Division of Portec, Inc.; Nordberg,   
Inc.; Eagle Iron Works; Boliden Allis, a member of the Trelleborg Group;   
Cedarapids, Inc.; and other smaller   
manufacturers, both domestic and foreign.  Competition for sales of   
trenching and excavating equipment includes   
Ditch Witch; J.I. Case; Vermeer and other smaller manufacturers in the   
small utility trencher market.   
   
	As a whole, imports do not constitute significant competition in the   
United States; however, in international   
sales, the Company generally competes with foreign manufacturers which   
may have a local presence in the market   
the Company is attempting to penetrate.   
   
	Asphalt and concrete are generally considered competitive   
products as a surface choice for new roads and   
highways.  A portion of the interstate highway system is paved in concrete,   
but a majority of all surfaced roads in the   
United States are paved with asphalt.  Although concrete is used for some   
new road surfaces, asphalt is used for   
virtually all resurfacing, even the resurfacing of most concrete roads.    
Management does not believe that concrete, as   
a competitive surface choice, materially impacts the Company's business   
prospects.   
   
Regulation   
   
	The Company does not operate within a highly regulated industry.    
However, air pollution equipment   
manufactured by the Company principally for hot mix asphalt plants must   
comply with certain performance standards   
promulgated by the federal Environmental Protection  Agency  under  the    
Clean  Air  Act applicable to "new sources"   
or new plants.  Management  believes  that  the Company's products meet   
all material requirements of such   
regulations and of applicable state pollution standards and environmental   
protection laws.   
   
	In addition, due to the size and weight of certain equipment, the   
Company and its customers sometimes   
confront conflicting state regulations on maximum weights transportable on   
highways and roads.  This problem occurs   
most frequently in the movement of portable asphalt mixing plants.  Also,   
some states have regulations governing the   
operation of asphalt mixing plants and most states have regulations relating   
to the accuracy of weights and measures   
which affect some of the control systems manufactured by the Company.   
   
   
Employees   
	On August 3, 1995, a union election was held at the Trencor plant   
in which a unit of Trencor production and   
maintenance employees voted to be represented by The United States   
Steelworkers of America, AFL-CIO, CLC.  Due   
to alleged improper activity and interference, Trencor has asserted that the   
election was illegal and has requested a   
new election.  The proceeding is currently pending before the National   
Labor Relations Board.   
   
	At December 31, 1994,1995, the Company and its subsidiaries employed   
1,5311,402 persons, of which 1,0451,048 were   
engaged in manufacturing operations, 176122 in engineering and design   
functions and 310232 in selling, administrative and   
management functions.  Telsmith has a labor agreement expiring on    
October 14, 1995.  None1998.  Except as set forth above,   
none of the Company's other employees are covered by a collective   
bargaining agreement.  TheNotwithstanding the   
current preceding before the National Labor Relations Board, the Company   
considers its employee relations to be   
good.     
   
Item 2.  Properties   
   
	The location, approximate square footage, acreage occupied and   
principal function of the properties owned or   
leased by the Company are set forth below:   
   
                     		Approximate        	Approximate	  Principal 
Location              	Square Footage     	Acreage       Principal	      Function   
Chattanooga, Tennessee 265,000 26.0361,000 56.6 Corporate and Division Offices,subsidiary offices, manufacturing - Astec division Chattanooga, Tennessee 0 63.0 Storage yard - Astec division Chattanooga, Tennessee 66,200 5.0 Offices, manufacturing - Heatec Chattanooga, Tennessee 125,000 13.6 Offices, manufacturing - Roadtec Milwaukee, Wisconsin 120,000 6.1 Former Offices, manufacturing - Telsmith (property for sale) Mequon, Wisconsin 203,000 30.0 Offices, manufacturing - Telsmith North Aurora, Illinois 16,700 3.5 Roadtec (sales and service office) San Francisco, California 5,000 1.0 Leased sales and service office and warehouse - Telsmith St. Charles, Illinois 300 0 Leased international sales office - Telsmith Chino, California 4,762 1.0 Leased parts warehouse - Astec Rossville, Georgia 40,500 2.6 Manufacturing and sales office facility - Astec division Grapevine, Texas 140,000175,000 51.67 Offices, manufacturing - Trencor Grand Prairie, Texas 83,000 6.1 Former Offices,offices, manufacturing - Trencor, Inc.(property for sale) Sharon, Massachusetts 4,000 1.0 Leased sales and service office - Telsmith Odessa, Texas 4,072 0.8.8 Sales office and parts warehouse - Trencor, Inc. Inman, South Carolina 13,600 8.0 Property for saleLeased with option to buy (office and warehouse of former Soil Purification of Carolina, Inc.) Houston, Texas 120 0 Leased sales office - Heatec Germany, Hasselroth 13,000 7.0Albuquerque, New Mexico 28,592 9.0 Leased offices, warehouse and limited manufacturing - Gibat Ohl Germany, Hasselroth 11,000 7.0 Leased offices and warehouseplant - Wibau-AstecCEI Albuquerque, New Mexico 111,908 14.0 New plant and offices- CEI
In an effort to improve efficiency1995 significant office and consolidate manufacturing space, the Company consolidated all of Telsmith's manufacturing operations in an expanded Mequon facility. The expansion began in late 1993plant improvements were made at Roadtec and was completed in 1994. On February 18, 1994, Trencor,Astec, Inc. acquired facilities in Grapevine, Texas and has relocated its manufacturing and office operations to this location. Except as set forth above, managementManagement believes that each of the Company's facilities provide office or manufacturing space suitable for its current needs and considers the terms under which it leases facilities to be reasonable. Astec, Inc. is in the process of expanding its offices and manufacturing facilities. In 1995 its manufacturing space will increase by approximately 14,000 square feet. Existing facilities will undergo some remodeling also. Item 3. Legal Proceedings During 1994, and in previous years, the Company and its former Barber-GreeneThe Company's subsidiary, (now Telsmith, Inc.) were defendants in two patent infringement actions brought by Robert L. Mendenhall and CMI Corporation ("CMI"), a competitor, seeking monetary damages and an injunction to cease the alleged infringement. In 1990, CMI was awarded damages of $4,457,000 and prejudgment interest of $2,838,000 or a total of $7,295,000 from Barber-Greene. During 1991, in a separate trial, CMI was awarded damages of $8,463,000, prejudgment interest of $5,309,000 and attorney's fees of $737,000 for a total of $14,509,000 from Astec; and Astec was awarded damages of $667,000 plus $391,000 of prejudgment interest or a total of $1,058,000 from CMI. The total damages and expenses awarded to CMI were $20,746,000, net of the $1,058,000 awarded to Astec. Both Astec and CMI appealed the judgments. In connection with its appeals, the Company was directed by the courts to pledge substantially all of its real property and to deposit funds in an escrow account to secure the judgments against the Company pending the outcome of appeals. On June 9, 1994, the Company announced that the United States Court of Appeals for the Federal Circuit had reversed the lower court decision and did not remand to the lower court for further proceedings the judgments previously entered against Astec and its former Barber-Greene subsidiary in the Robert L. Mendenhall and CMI patent litigation. Those judgments had totaled approximately $22 million. The Federal Circuit Court ruled in favor of Astec because the allegedly infringing patents had been held invalid in a separate third party case. CMI asked the Federal Circuit to reconsider its decision and to have all of the Federal Circuit judges rehear the appeal. The Company responded to this request. On September 20, 1994, the Company announced that the United States Court of Appeals for the Federal Circuit denied the request from Mendenhall and CMI to reconsider its earlier reversal. With the issuance of this ruling, The Federal Circuit's review of this ongoing patent litigation ended. On October 11, 1994, CMI Corporation and Robert L. Mendenhall filed a Petition of Writ Certiorari asking the U.S. Supreme Court to review the decision of the Federal Circuit Court of Appeals. The Company filed a response opposing the Petition and on November 28, 1994, the Supreme Court issued an Order denying the Petition thus bringing the patent litigation to an end. As a result of the Supreme Court's refusal to grant certiorari, the Company received approximately $12.9 million which was being held in escrow pending the Company's appeal of the two judgments. In addition, on December 16, 1994, the Company received approximately $1.3 million from CMI in satisfaction of the judgment entered in favor of the Company on its counterclaim against CMI. The receipt of these funds effectively concluded the litigation between the Company and CMI and Robert L. Mendenhall which had been pending for a number of years. As a result, the Company has reversed its accrued liability for patent damages. The reversal of $13,870,000 in accrued patent damages and the receipt of $1,309,000 in patent damages from CMI total $15,179,000 and are shown net of accruals and related legal expenses in the Consolidated Statements of Income as Patent Suit Damages and Expenses (Net Recoveries and Accrual Adjustments). In an unrelated case, the Company's Telsmith subsidiary is a defendant in a patent infringement action brought by Nordberg, Inc., a manufacturer of a competing line of rock crushing equipment, seeking monetary damages and an injunction to cease an alleged infringement of a patent on certain components used in the production of its rock crushing equipment. This case, being heard beforeOn March 30, 1995, the U.S.United States District Court for the Eastern District of Wisconsin has been bifurcated into liability and damages phases. The liability phase was tried on January 11, 1993; however, no decision had been rendered by the Court. Becauseissued a ruling in favor of the uncertainties inherentCompany and entered a declaratory judgment in favor of Telsmith, and against Plaintiff Nordberg, Inc. declaring that claims 8 through 11 and 13 of Nordberg's United States patent No. 4,478,373, entitled "Conical Crusher" are invalid. The Court also entered judgment in favor of Telsmith, Inc. and against Nordberg, Inc. dismissing Nordberg's claim of infringement against Telsmith. The Company was pleased with the Court's decision, but has filed an appeal asking the United States Court of Appeals for the Federal Circuit to overturn the trial court's decision not to award Telsmith its attorney's fees in the litigation process,case. Nordberg did not cross-appeal to the Company is unableFederal Circuit on the Telsmith judgment. The time for doing so has now expired. The judgment has therefore become "final" as to predict the ultimate outcome of this litigation.those issues not raised by Telsmith on appeal. On October 28, 1993, the Company was also named as a defendant in a patent infringement action brought by Gencor, Inc., a manufacturer of a competing line of asphalt plants, seeking monetary damages and an injunction to cease an alleged infringement of a patent on certain components used in the production of its asphalt plant product line. This case was filed in the U.S. District Court for the Middle District of Florida, Orlando Division, and is currentlywent to trial on January 22, 1996. On February 3, 1996, the jury returned a verdict in the discovery phase.Company's favor holding that Astec's Double Barrel drum mixer does not infringe the Gencor patent in question. Judgment on that jury verdict was entered by the Court on February 5, 1996. It is anticipated that Gencor will appeal. Management believes this casethat Gencor's anticipated appeal is without merit. During 1994, the United States Supreme Court refused to be without merithear CMI Corporation's petition to overturn the United States Court of Appeals for the Federal Circuit's reversal of patent damages awarded to CMI Corporation and intendsRobert L. Mendenhall by a lower court. As a result of the Supreme Court's refusal to vigorously defend this suit; however, due togrant certiorari, in 1994 the uncertainties inherentCompany received $12,917,000 which was being held in escrow pending the Company's appeal of the two judgments. In addition, on December 31, 1994, the Company received $1,309,000 from CMI in satisfaction of the judgment entered in favor of the Company on its counterclaim against CMI. The receipt of these funds effectively concluded the litigation between the Company and CMI and Robert L. Mendenhall which had been pending for a number of years. As a result, in 1994 the Company reversed its accrued liability for patent damages. The reversal of $13,870,000 in accrued patent damages and the receipt of $1,309,000 in patent damages from CMI total $15,179,000 and are included in the litigation process, the Company is unable to predict the ultimate outcomeConsolidated Statements of this litigation.Income as Patent suit damages and expenses (net recoveries and accrual adjustments). Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made provision for any estimable losses; however, the Company is unable to predict the ultimate outcome of the outstanding claims and lawsuits. Item 4. Submission of Matters to a Vote of Security Holders None. Executive Officers of the Registrant The name, title, ages and business experience of the executive officers of the Company are listed below. J. Don Brock has been President and a director of Astec since its incorporation in 1972 and assumed the additional position of Chairman of the Board in 1975. He was the Treasurer of the Company from 1972 until 1994. From 1969 to 1972, Dr. Brock was President of the Asphalt Division of CMI Corporation. Dr. Brock earned his Ph.D. degree in mechanical engineering from the Georgia Institute of Technology. Dr. Brock and Thomas R. Campbell, President of Roadtec, are first cousins. Dr. Brock is 56.57. Albert E. Guth has been Chief Financial Officer of the Company since 1987, Senior Vice President since 1984, Secretary of the Company since 1972 and Treasurer since 1994. Mr. Guth, who has been a director since 1972, was the Vice President of the Company from 1972 until 1984. From 1969 to 1972, Mr. Guth was the Controller of the Asphalt Division of CMI Corporation. He is 55.56. F. McKamy Hall, a Certified Public Accountant, has served as Controller of the Company since May 1987. From 1985 to 1987, Mr. Hall was Vice President-Finance of Quadel Management Corporation, a company engaged in real estate management. He is 52.53. Thomas R. Campbell has served as President of Roadtec, Inc. since 1988. From 1981 to 1988 he served as Operations Manager of Roadtec. Mr. Campbell and J. Don Brock, President of the Company, are first cousins. Mr. Campbell is 45.46. W. Norman Smith has served as the President of Astec, Inc. since December 1, 1994. He formerly served as President of Heatec, Inc. from 1977 to 1994. From 1972 to 1977, Mr. Smith was a Regional Sales Manager with the Company. From 1969 to 1972, Mr. Smith was an engineer with the Asphalt Division of CMI Corporation. Mr. Smith has also served as a director of the Company since 1972. He is 55.56. Jerry F. Gilbert has served as President of Trencor, Inc. since 1981. From 1973 to 1980, Mr. Gilbert was self- employed in the real estate investment1981 and insurance field. Mr. Gilbert has also served as a director of the Company since May, 1991. He is 49.50. Robert G. Stafford has served as President of Telsmith, Inc., formerly the Barber-Greene Company, since April 1991. Between January 1987 and January 1991, Mr. Stafford served as President of Telsmith, Inc., a subsidiary of Barber-Greene. From 1984 until the Company's acquisition of Barber-GreeneBarber- Greene in December 1986, Mr. Stafford was Vice President - Operations of Barber-Greene and General Manager of Telsmith. From 1979 to 1984 he served as Director-Engineering and Operations for Telsmith. He became a director of the Company in March 1988. He is 56.57. James G. May has served as President of Heatec, Inc. since December 1, 1994. From 19831984 until 1994 he served as Vice President of Engineering of Astec, Inc. He is 50.51. M. Brent England has served as president of CEI Enterprises, Inc. since March 1995. Previously, Mr. England served as president of Trace Industries, Inc. d/b/a CEI Enterprises, since April 1992. Prior to joining CEI, Mr. England served as a trustee for the U.S. Bankruptcy Court for three years. Mr. England has also served as general manager of N.C. Ribble Company, a large construction equipment distributor, in Albuquerque, New Mexico. He is 63. PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters The Company's Common Stock is traded in the National Association of Securities Dealers Automated Quotation System (NASDAQ) National Market System under the symbol "ASTE". The Company has never paid any dividends on its Common Stock. The high and low sales prices of the Company's Common Stock as reported on the NASDAQ National Market System for each quarter during the last two fiscal years, which have been restated to retroactively reflect the two-for-one stock split effected in the form of a dividend on August 12, 1993, were as follows: Price Per Share 1995 High Low 1st Quarter 14 1/4 11 2nd Quarter 13 1/8 10 7/8 3rd Quarter 11 3/4 9 7/8 4th Quarter 12 1/4 9 3/4 Price Per Share 1994 High Low
1st Quarter 20 1/8 13 1/2 2nd Quarter 17 5/8 13 3rd Quarter 15 12 1/2 4th Quarter 15 7/8 11 5/8 Price Per Share 1993 High Low 1st Quarter 13 8 1/2 2nd Quarter 14 9 7/8 3rd Quarter 14 7/8 11 3/8 4th Quarter 15 3/4 11
The number of holders of record of the Company's Common Stock as of March 10,1995,11, 1996, was 821.748. Item 6. Selected Financial Data Selected financial data appear on page A-1 of this Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis of financial condition and results of operations appears on pages A-2 to A-4A-5 of this Report. Item 8. Financial Statements and Supplementary Data Financial statements and supplementary financial information appear on pages A-5A-6 to A-22A-23 of this Report. Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure None required to be reported in this item. PART III Item 10. Directors and Executive Officers of the Registrant Information regarding the Company's directors included under the caption "Election of Directors - Certain Information Concerning Nominees and Directors" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April 27, 199525, 1996 is incorporated herein by reference. Required information regarding the Company's executive officers is contained in Part I of this Report under the heading "Executive Officers of the Registrant". Information regarding compliance with Section 16(a) of the Exchange Act is included under "Election of Directors - Section 16(a) Filing Requirements" in the Company's definitive Proxy Statement which is incorporated herein by reference. Item 11. Executive Compensation Information included under the caption, "Election of Directors - Executive Compensation" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April 27, 199525, 1996 is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management Information included under the captions "Election of Directors - Certain Information Concerning Nominees and Directors", "Election of Directors - Common Stock Ownership of Management" and "Election of Directors - Common Stock Ownership of Certain Beneficial Owners" in the Company's definitive Proxy Statement to be delivered to the shareholders of the Company in connection with the Annual Meeting of Shareholders to be held on April 27, 199525, 1996 is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions In September 1991,On March 20, 1995, the Company's Chairman, its Senior Vice President, and the President of its Telsmith, Inc. subsidiary formed a general partnership whichCompany acquired 25%all of the common stockissued and outstanding shares of American Rock Products,Trace Industries, Inc., an Ohioa New Mexico corporation engageddoing business as CEI Enterprises ("CEI"), in the businessexchange for $852,004 in cash and 87,333 shares of supplying crushed rock to concrete and asphalt producers in the southeastern Oklahoma area ("Amrock"). These individuals own interests in the partnershipCompany Common Stock. The deemed effective date of 50%, 25% and 25%, respectively. In December 1992, the rock crushing business of Amrockthis transaction for financial reporting purposes was sold to a competitor, exclusive of two used rock crushing machines and certain other miscellaneous inventory and equipment. In March 1994, Amrock sold two of these used rock crushing machines to Telsmith for $50,000 and $70,000, respectively.February 28, 1995. The purchase price for each of these machines was determined by the Senior Vice President of Telsmiththe Company based on his opinion of theirthe fair market value of CEI following arm's length negotiation. Prior to this acquisition, CEI was a closely held company with four shareholders including Mr. Brent England, its President. In connection with this transaction, CEI was merged into a wholly owned subsidiary of the Company with Mr. England continuing to serve as President of the successor corporation and, as such, is now an executive officer of the Company. In lieu of providing registration rights to the former shareholders of CEI with respect to the shares of Company Common Stock being issued in this transaction, the Company granted each such shareholder the right to require the Company to redeem the shares at any time within two years of the closing date at a price of $12.00 per share. Mr. England received 23,333 shares of Company Common Stock in connection with this transaction and, consistent with the rights granted to each other former shareholder of CEI, has the right to require the redemption of such shares by the Company for $12.00 per share at any time of purchase. Telsmith intends to market both rock crushing machines to its customers for sale in the ordinary course of business.on or before March 20, 1997. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1) The following financial statements and other information appear in Appendix "A" to this Report and are filed as a part hereof: . Selected Consolidated Financial Data. . Management's Discussion and Analysis of Financial Condition and Results of Operations. . Report of Independent Auditors. . Consolidated Balance Sheets at December 31, 19941995 and 1993.1994. . Consolidated Statements of Income for the Years Ended December 31, 1995, 1994 1993 and 1992.1993. . Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1995, 1994 1993 and 1992.1993. . Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 1993 and 1992.1993. . Notes to Consolidated Financial Statements. (a)(2) Other than as described below, Financial Statement Schedules are not filed with this Report because the Schedules are either inapplicable or the required information is presented in the Financial Statements or Notes thereto. The following Schedules appear in Appendix "A" to this Report and are filed as a part hereof: . Report of Independent Auditors. . Schedule VIII - Valuation and Qualifying Accounts. (a)(3) The following Exhibits* are incorporated by reference into or are filed with this Report: 2.1 Share Purchase and Transfer Agreement, dated October 13, 1994, between the Company and Wibau-Astec Maschinenfabrik GmbH (incorporated by reference to the Form 8-K effective November 7, 1994, File No. 0-14714). 2.2 Share Purchase and Transfer Agreement by and between the Company and Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH, dated as of October 5, 1994.1994 (incorporated by reference to the Form 8-K dated November 7, 1994, File No. 0-14714). 3.1 Restated Charter of the Company (incorporated by reference to the Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348). 3.2 Articles of Amendment to the Restated Charter of the Company, effective September 12, 1988 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). [FN] The Exhibits are numbered in accordance with Item 601 of Regulation S-K. Inapplicable Exhibits are not included in the list. 3.3 Articles of Amendment to the Restated Charter of the Company, effective June 8, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 3.4 Amended and Restated Bylaws of the Company, adopted March 14, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 4.1 Trust Indenture between City of Mequon and Firstar Trust Company, as Trustee, dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 4.2 Indenture of Trust, dated April 1, 1994, by and between Grapevine Industrial Development Corporation and Bank One, Texas, NA, as Trustee. 10.1 Agreement, dated December 24, 1976, between the Company and Jemco International, Inc. (incorporated by reference to the Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348). 10.2 Supplemental Agreement, dated December 30, 1982, between the Company and Jemco International, Inc. (incorporated by reference to Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348). 10.3 Restated License and Trademark Agreement, dated March 25, 1988, between the Company and Barber-Greene Europa B.V.Trustee (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988,1993, File No. 0-14714). 10.4 License and Trademark4.3 Shareholder Protection Rights Agreement, dated May 5, 1988, between the Company and BM Group PLC incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.5 1986 Stock Option Plan of the Company22, 1995 (incorporated by reference to the Company's Registration Statement on Form S- 1, effective June 18, 1986, File No. 33-5348). 10.6 Loan Agreement, dated July 1, 1980, between the Company and the Industrial Development Board of the City of Chattanooga (incorporated by reference to the Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348). 10.7 Trust Indenture, dated July 1, 1980, between the Industrial Development Board of the City of Chattanooga and Pioneer Bank (incorporated by reference to Company's Registration Statement on Form S-1, effective June 18, 1986, File No. 33-5348). 10.8 Warrant Agreement, dated as of December 29, 1986, between the Company and The Citizens and Southern National Bank, as Warrant Agent (incorporated by reference to the Company's Registration Statement on Form S-4, effective November 26, 1986, File No. 33-10403). 10.9 Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's AnnualCurrent Report on Form 10-K for the year ended8-K dated December 31, 1987, File No. 0-14714). 10.10 Amendment No. One, dated January 4, 1988, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987, File No. 0-14714). 10.11 Amendment No. Two, dated March 17, 1988, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987, File No. 0-14714). 10.12 Amendment, dated August 17, 1988, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.13 Second Amendment, dated October 21, 1988, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.14 Amendment, dated as of January 19, 1989, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.15 Consent, Waiver and Release, dated as of January 31, 1989, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.16 Waiver, dated March 8, 1989, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.17 Senior Note Agreement, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.18 Subordinated Note Agreement, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.19 Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.20 Amendment, dated as of March 26, 1990, to the Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.21 Consent, Waiver and Release, dated as of November 1, 1989, to Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.22 Consent, Waiver and Release, dated as of November 10, 1989, to Senior and Subordinated Note Agreements dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.23 Consent, Waiver and Release, dated as of March 14, 1990, to Credit Agreement, dated as of September 17, 1987, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.24 Lease Agreement, dated as of July 1, 1974, between Barber-Greene Company and the City of Mequon, Wisconsin (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.25 Lease Agreement, dated November 10, 1986, between Barber-Greene Company and Stephen P. and Sandra S. Davenport (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.26 Lease Agreement, dated as of March 31, 1988, between Telsmith, Inc. and AEW #79 Trust (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.27 Lease Agreement, dated June 20, 1988, between Barber-Greene Company and 8000 Cypress Parkway Corporation (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, File No. 0-14714). 10.28 Lease Agreement, dated February 1, 1989, between Barber-Greene Company and Lee Steinberg (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1988,22, 1995, File No. 0-14714). 10.29 Lease Agreement, dated as of August 28, 1989, between Telsmith, Inc., and Pine Hill Developers (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.30 Lease Agreement, dated as of March 24, 1989, between the Company and Robert D. Ingersoll (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.31 Assignment, dated as of February 5, 1990, of lease dated November 10, 1986, between Barber-Greene Company and Castro and Davenport (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.32 Sublease, dated as of December 29, 1989, of lease dated February 1, 1989, between Barber-Greene Company and Lee Steinberg (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, File No. 0-14714). 10.33 Waiver and Agreement, dated March 30, 1990, with respect to Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.34 Waiver, dated August 24, 1990, with respect to Senior Note Agreement, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.35 Waiver, dated December 18, 1990, with respect to Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.36 Waivers, dated October 18, 1990, with respect to Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and the First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.37 Waivers, dated December 20, 1990, with respect to Credit Agreement, dated as of April 27, 1989, between the Company and the First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.38 Lease Agreement, dated as of March 1, 1991 between Astec Industries, Inc. and Carl M. Krueger (dba Krueger Instruments), (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.39 Asset Purchase Agreement by and between Caterpillar Paving Products Inc., Barber-Greene Company, and Astec Industries, Inc., dated December 17, 1990 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.40 Waiver, dated April 11, 1991, with respect to Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and the First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.41 Waiver, dated April 11, 1991, with respect to Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1990, File No. 0-14714). 10.42 Consent and Waiver, dated April 17, 1991, with respect to the Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.43 Consent and Waiver, dated April 17, 1991, with respect to the Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.44 Consent of Barber-Greene Company (now Telsmith, Inc.), Heatec, Inc., Roadtec, Inc., and Trencor Jetco, Inc., dated April 17, 1991, with respect to the (i) Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago, and (ii) Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.45 Collateral Trust Indenture, dated as of March 1, 1991, between the Company, The First National Bank of Chicago, Principal Mutual Life Insurance Company and Citizens and Southern Trust Company (Georgia), N.A. (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.46 Consent, Waiver and Release of Security Interest by The First National Bank of Chicago ("First Chicago"), Principal Mutual Life Insurance Company ("PMLIC") and Citizens and Southern Trust Company (Georgia), N.A. ("C&S"), dated April 17, 1991, with respect to the (i) Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and First Chicago, (ii) Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and PMLIC, (iii) Collateral Trust Indenture, dated as of March 1, 1991, between the Company, First Chicago, PLMIC, and C&S, and (iv) certain collateral documents related thereto (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.47 Release of Security Interest by the Citizens and Southern Trust Company (Georgia), N.A., The First National Bank of Chicago ("First Chicago") and Principal Mutual Life Insurance Company ("PMLIC"), dated April 17, 1991, with respect to certain trademarks, trademark registrations, trademark applications and trademark licenses pledged as collateral under the Pledge and Security Agreement, dated as of March 26, 1990 between the Barber-Greene Company, Ameacon, Inc., Heatec, Inc., Roadtec, Inc., Trencor Jetco, Inc., Barber-Greene Overseas, Inc. and Telsmith, Inc., and First Chicago acting in its capacity as collateral agent for itself and PMLIC (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.48 Release of Security Interest by the Citizens and Southern Trust Company (Georgia), N.A., The First National Bank of Chicago ("First Chicago") and Principal Mutual Life Insurance Company ("PMLIC"), dated April 17, 1991, with respect to certain patents, patent applications and patent licenses pledged as collateral under the Pledge and Security Agreement, dated as of March 26, 1990 between the Barber-Greene Company, Ameacon, Inc., Heatec, Inc., Roadtec, Inc., Trencor Jetco, Inc., Barber-Greene Overseas, Inc. and Telsmith, Inc., and First Chicago acting in its capacity as collateral agent for itself and PMLIC (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.49 Bank response to requests for waivers for quarter ended 6/30/91 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.50 Waiver, dated March 23, 1992, with respect to the Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.51 Fourth Amendment, dated March 23, 1992 between the Company and The First National Bank of Chicago, with respect to the Amended and Restated Credit Agreement, dated April 27, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.52 Waiver, dated March 23, 1992, with respect to the Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.53 Third Amendment, dated March 23, 1992 between the Company and Principal Mutual Life Insurance Company, with respect to the Senior Note Agreement dated January 31, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.54 Third Amendment, dated March 23, 1992 between the Company and Principal Mutual Life Insurance Company, with respect to the Subordinated Note Agreement dated January 31, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991, File No. 0-14714). 10.55 Consent and Waiver, dated April 29, 1992, with respect to the Amended and Restated Credit Agreement, dated as of April 27, 1989, between the Company and The First National Bank of Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.56 Waiver, dated April 29, 1992, with respect to the Senior and Subordinated Note Agreements, dated as of January 31, 1989, between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.57 License Agreement, dated July 2, 1992, between Telsmith, Inc. and Gerlach Industries (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.58 Deed of Trust from the Company to Milligan-Reynolds Guaranty Title Agency, Inc., Trustee, pledging certain property located in Hamilton County, Tennessee, recorded August 24, 1992 in Book 4029, Page 417 in the Office of the Register of Deeds of Hamilton County, Tennessee (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.59 Deed of Trust from Heatec, Inc. to Milligan-Reynolds Guaranty Title Agency, Inc., Trustee, pledging certain property located in Hamilton County, Tennessee, recorded August 24, 1992 in Book 4029, Page 423 in the Office of the Register of Deeds of Hamilton County, Tennessee (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.60 Deed of Trust from Roadtec, Inc. to Milligan-Reynolds Guaranty Title Agency, Inc., Trustee, pledging certain property located in Hamilton County, Tennessee, recorded August 24, 1992 in Book 4029, Page 428 in the Office of the Register of Deeds of Hamilton County, Tennessee (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.61 Deed to Secure Debt from the Company to CMI Corporation pledging certain property located in Walker County, Georgia, recorded August 25, 1992 in deed Book 683, Page 506 in the Office of the Superior Court Clerk of Walker County, Georgia (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.62 Deed of Trust from Trencor Jetco, Inc. to Craig Bishop, Trustee, pledging certain property located in Dallas County, Texas, recorded August 25, 1992 in Book 92166, Page 891 in the Office of the County Clerk of Dallas County, Texas (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.63 Mortgage from Telsmith, Inc. to CMI Corporation pledging certain property located in Ozaukee County, Wisconsin, recorded August 25, 1992 in Volume 768, Page 74 in the Office of the Register of Deeds of Ozaukee County, Wisconsin (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.64 Mortgage from Telsmith, Inc. to CMI Corporation pledging certain property located in Milwaukee County, Wisconsin, recorded August 25, 1992 in Reel 2850, image 427 in the Office of the Register of Deeds of Milwaukee County, Wisconsin (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.65 Fifth Amendment, dated December 31, 1992 between the Company and The First National Bank of Chicago, with respect to the Amended and Restated Credit Agreement, dated April 27, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.66 Letter of Intent between the Company and Putzmeister-Werk, Maschinenfabrik GmbH dated December 12, 1992 in connection with the formation of WIBAU/ASTEC GmbH (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, File No. 0-14714). 10.67 First Amendment to Note Agreement (for Senior Notes) dated April 1, 1991 between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Registration Statement on Form S- 2, effective June 8, 1993, as Exhibit 10.54, File No. 33-61952). 10.68 First Amendment to Note Agreement (for Subordinated Notes) dated April 11, 1991 between the Company and Principal Mutual Life Insurance Company (incorporated by reference to the Company's Registration Statement on Form S-2, effective June 8, 1993, as Exhibit 10.55, File No. 33-61952). 10.69 Fourth Amendment, dated March 31, 1993 between the Company and Principal Mutual Life Insurance Company, with respect to the Amended and Restated Credit Agreement dated January 31, 1989 (incorporated by reference to the Company's Registration Statement on Form S-2, effective June 8, 1993, as Exhibit 10.56, File No. 33-61952). 10.70 Sixth Amendment, dated March 31, 1993 between the Company and the First National Bank of Chicago, with respect to the Amended and Restated Credit Agreement, dated April 27, 1989 (incorporated by reference to the Company's Registration Statement on Form S-2, effective June 8, 1993, as Exhibit 10.57, File No. 33-61952). 10.71 Consent of Telsmith, Inc.; Heatec, Inc.; Roadtec, Inc.; and Trencor Jetco, Inc.; dated March 31, 1993, with respect to (i) the Fourth Amendment to Note Agreement; (ii) the Senior Guaranty; and (iii) the Security Documents (incorporated by reference to the Company's Registration Statement on Form S-2, effective June 8, 1993, as Exhibit 10.58, File No. 33-61952). 10.72 Joint Venture Agreement, dated June 6, 1993, between the Company and Putzmeister-Werk Maschinenfabrik GmbH (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.73 Technology Contribution Agreement, dated July 12, 1993, between the Company and Wibau- Astec Maschinenfabrik GmbH (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.74 Seventh Amendment, dated January 21, 1994 between the Company and The First National Bank of Chicago, with respect to the Amended and Restated Credit Agreement, dated April 27, 1989 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.75 Loan Agreement between City of Mequon, Wisconsin and Telsmith, Inc. dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). *The Exhibits are numbered in accordance with Item 601 of Regulation S-K. Inapplicable Exhibits are not included in the list. 10.76 Credit Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.77 Security Agreement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.78 Mortgage and Security Agreement and Fixture Financing Statement by and between Telsmith, Inc. and M&I Marshall & Ilsley Bank, dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.79 Guarantee of Astec Industries, Inc. in favor of M&I Ilsley Bank, dated as of February 1, 1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993, File No. 0-14714). 10.80 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Dresdner Bank Aktiengensellschaft,dated as of December 22, 1993.1993 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.81 Letter of Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Berliner Hondels - und Frankfurter Bank, dated as of December 22, 1993.1993 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.82 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Bayerische Vereinsbank, dated as of December 22, 1993.1993 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.83 Loan Agreement dated as of April 1,1994,1, 1994, between Grapevine Industrial Development Corporation and Trencor, Inc. (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.84 Letter of Credit Agreement, dated April 1, 1994, between The First National Bank of Chicago and Trencor, Inc. (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.85 Guaranty Agreement, dated April 1, 1994, between Astec Industries, Inc. and Bank One, Texas, NA, as Trustee.Trustee (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.86 Astec Guaranty, dated April 29, 1994, of debitdebt of Trencor, Inc. in favor of The First National Bank of Chicago.Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.87 Credit Agreement, dated as of July 20, 1994, between the Company and The First National Bank of Chicago.Chicago (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0- 14714). 10.88 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Bayerische Vereinsbank, dated as of January 16, 1995.1995 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.89 Waiver for December 31, 1994, dated February 24, 1995 with respect to the First National Bank of Chicago Credit Agreement dated July 20, 1994. 11.1994 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, File No. 0-14714). 10.90 First Amendment to Guaranty of Payment, dated March 21, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago. 10.91 First Amendment to Credit Agreement, dated May 22, 1995 between the Company and The First National Bank of Chicago. 10.92 Second Amendment to Guaranty of Payment, dated May 22, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago. 10.93 Guaranty of all obligations of Astec-Europa Strassenbaumaschinen GmbH executed by the Company in favor of Bayerische Vereinsbank Aktiengesellschaft, dated December 6, 1995. 10.94 Guaranty of a DM3,000,000 credit facility to Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH executed by the Company in favor of Deutsche Bank AG, dated December 13, 1995. 10.95 Waiver for December 31, 1995, dated November 10, 1995 with respect to The First National Bank of Chicago Credit Agreement dated July 20, 1994, as amended. 10.96 English translation of Application for Commencement of Bankruptcy Proceedings filed on behalf of Astec-Europa Strassenbaumaschinen in Gelnhausen, Germany on February 9, 1996. 10.97 Limited Consent of The First National Bank of Chicago dated as of March 21, 1995 related to the acquisition of Trace Industries, Inc. and the assignment of certain assets to Astec, Inc. Executive Compensation Plans and Arrangements 10.98 Supplemental Executive Retirement Plan, dated February 1, 1996 to be effective as of January 1, 1995. 10.99 Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996. 11 Statement Regarding Computation of Per Share Earnings. 22.22 Subsidiaries of the Registrant. 23.23 Consent of Independent Auditors (b) A reportNo reports on Form 8-K waswere filed duringin the fourth quarter of 1994 in connection with the Wibau-Astec Maschinenfabrik GmbH acquisition.quarter. (c) The Exhibits to this Report are listed under Item 14(a)(3) above. (d) The Financial Statement Schedules to this Report are listed under Item 14(a)(2) above. APPENDIX "A" to ANNUAL REPORT ON FORM 10-K ITEMS 8 and 14(a)(1) and (2), (c) and (d) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES ASTEC INDUSTRIES, INC. Contents Page Selected Consolidated Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Report of Independent Auditors Consolidated Balance Sheets at December 31, 19941995 and 19931994 Consolidated Statements of Income for the Years Ended December 31, 1995, 1994 and 1993 and1992 Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1995, 1994 1993 and 19921993 Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994 1993 and 19921993 Notes to Consolidated Financial Statements Report of Independent Auditors Schedule VIII - Valuation and Qualifying Accounts REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Astec Industries, Inc. We have audited the accompanying consolidated balance sheets of Astec Industries, Inc. and subsidiaries and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedule listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Astec Industries, Inc. and subsidiaries at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. As discussed in Note 1, in 1995 the Company changed its method of accounting for the impairment of long-lived assets and for long-lived assets to be disposed of. /s/ ERNST & YOUNG LLP Chattanooga, Tennessee February 27, 1996 ASTEC INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE (VIII) VALUATION AND QUALIFYING ACCOUNTS FOR CONTINUING OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 ADDITIONS CHARGES TO BEGINNING COSTS & OTHER
ENDING DESCRIPTION BALANCE EXPENSES ADDITIONS DEDUCTIONS BALANCE December 31, 1995: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 1,684,242 $ 533,136 $ 20,000 (3) $ 958,740 (1) $ 1,278,638 Reserve for inventory $ 4,994,035 $ 1,196,876 $ 0 $ 752,401 $ 5,438,510 Other Reserves: Product warranty$ 3,470,703 $ 3,194,240 $ 0 $ 4,194,168 (2) $ 2,470,775 December 31, 1994: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 1,191,083 $ 362,089 $ 467,607 (3) $ 336,537 (1) $ 1,684,242 Reserve for inventory $6,494,533 $ 3,621,218 $ 0 $ 5,121,716 $ 4,994,035 Other Reserves: Product warranty $ 1,781,733 $ 2,616,565 $ 0 $ 927,595 (2) $ 3,470,703 Reserve for patent damages $ 13,250,048 $ 620,290 $ 0 $ 13,870,338 $ 0 December 31, 1993: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $1,060,588 $742,752 $ 21,609 $ 633,866 (1) $ 1,191,083 Reserve for inventory $ 5,948,084 $ 2,952,918 $ 0 $ 2,406,469 $ 6,494,533 Other Reserves: Product warranty$1,551,850 $ 2,689,441 $ 0 $ 2,459,558 (2) $ 1,781,733 Reserve for patent damages $ 12,554,640 $ 695,408 $ 0 $ 0 $ 13,250,048
[FN] (1) Uncollectible accounts written off, net of recoveries. (2) Warranty costs charged to the reserve. (3) Represents reserve balances of subsidiaries acquired in the year. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Astec Industries, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ASTEC INDUSTRIES, INC. BY: /s/ J. Don Brock J. Don Brock, Chairman of the Board and President (Principal Executive Officer) BY: /s/ Albert E. Guth Albert E. Guth, Senior Vice President Secretary and Treasurer (Principal Financial and Accounting Officer) Date: March 1, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by a majority of the Board of Directors of the Registrant on the dates indicated: SIGNATURE TITLE DATE /s/ J. Don Brock Chairman of the Board March 1, 1996 J. Don Brock and President /s/ Albert E. Guth Senior Vice President, March 1, 1996 Albert E. Guth Secretary, Treasurer and Director /s/ W. Norman Smith President - Astec, Inc. March 1, 1996 W. Norman Smith and Director /s/ Robert G. Stafford President - Telsmith, Inc. March 1, 1996 Robert G. Stafford and Director /s/ Jerry F. Gilbert President - Trencor, Inc. March 1, 1996 Jerry F. Gilbert and Director SIGNATURE TITLE DATE /s/ E.D. Sloan Jr. Director March 1, 1996 E.D. Sloan, Jr. /s/ William B. Sansom Director March 1, 1996 William B. Sansom /s/ Joseph Martin, Jr. Director March 1, 1996 Joseph Martin, Jr. /s/ George C. Dillon Director March 1, 1996 George C. Dillon /s/ G.W. Jones Director March 1, 1996 G.W. Jones /s/ Daniel K. Frierson Director March 1, 1996 Daniel K. Frierson Commission File No. 0-14714 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS FILED WITH ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 ASTEC INDUSTRIES, INC. 4101 Jerome Avenue Chattanooga, Tennessee 37407 ASTEC INDUSTRIES, INC. FORM 10-K INDEX TO EXHIBITS Sequentially Exhibit Number Description Numbered Page Exhibit 10.90 First Amendment to Guaranty of Payment, dated March 21, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago. Exhibit 10.91 First Amendment to Credit Agreement, dated May 22, 1995 between the Company and The First Nationa Exhibit 10.92 Second Amendment to Guaranty of Payment, dated May 22, 1995 by and between Heatec, Inc.; Roadtec, Inc.; Trencor, Inc.; Telsmith, Inc.; Astec Transportation, Inc.; ACI, Inc.; Astec, Inc.; CEI Enterprises, Inc.; and The First National Bank of Chicago. Exhibit 10.93 Guaranty of all obligations of Astec-Europa Strassenbaumaschinen GmbH executed by the Company in favor of Bayerische Vereinsbank Aktiengesellschaft, dated December 6, 1995. Exhibit 10.94 Guaranty of a DM3,000,000 credit facility to Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH executed by the Company in favor of Deutsche Bank AG, dated December 13, 1995. Exhibit 10.95 Waiver for December 31, 1995, dated November 10, 1995 with respect to The First National Bank of Chicago Credit Agreement dated July 20, 1994, as amended. Exhibit 10.96 English translation of Application for Commencement of Bankruptcy Proceedings filed on behalf of Astec-Europa Strassenbaumaschinen in Gelnhausen, Germany on February 9, 1996. Exhibit 10.97 Limited Consent of The First National Bank of Chicago dated as of March 21, 1995 related to the acquisition of Trace Industries, Inc. and the assignment of certain assets to Astec, Inc. Executive Compensation Plans and Arrangements Exhibit 10.98 Supplemental Executive Retirement Plan, dated February 1, 1996 to be effective as of January 1, 1995. Exhibit 10.99 Trust under Astec Industries, Inc. Supplemental Retirement Plan, dated January 1, 1996. Exhibit 11 Statement Regarding Computation of Per Share Earnings. Exhibit 22 Subsidiaries of the Registrant. Exhibit 23 Consent of Independent Auditors. For a list of certain Exhibits not filed with this Report that are incorporated by reference into this Report, see Item 14(a)(3). SELECTED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT AS NOTED*EXHIBIT 11 Statement Regarding Computation of Per Share Earnings ASTEC INDUSTRIES, INC. EXHIBIT (11) - COMPUTATIONS OF EARNINGS PER SHARE 12/31/95 (In Thousands) Shares for Earnings Per Share Computations Primary: Weighted average outstanding during year 10,072 Common Stock equivalent for stock options & warrants 124 TOTAL 10,196 Fully Diluted: Weighted average outstanding during year 10,072 Common Stock equivalent for stock options & warrants 125 TOTAL 10,197 Earnings Applicable to Common Stock: Income from continuing operations $ 4,560 Net Income $ 4,560 Earnings Per Common Share (Based on Weighted Average Number of Common and Uncommon Equivalent Shares Outstanding): Income from continuing operations $ .45 Net Income $ .45 Additional Computations of EPS: Fully Diluted: Income from continuing operations $ .45 Net Income $ .45 EXHIBIT 22 Subsidiaries of the Registrant LIST OF SUBSIDIARIES Jurisdiction of Name Owned Incorporation Astec, Inc. 100 Tennessee Astec Transportation, Inc. 100 Tennessee CEI Enterprises, Inc. 100 Tennessee Heatec, Inc. 100 Tennessee Roadtec, Inc. 100 Tennessee Telsmith, Inc. 100 Delaware Trencor, Inc. 100 Texas Exhibit 23 Consent of Independent Auditors CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 No. 33-14738 and 0-14714) pertaining to the Astec Industries, Inc. 1986 and 1992 Stock Option Plans of our report dated February 27, 1996, with respect to the consolidated financial statements and schedule of Astec Industries, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 1995. /s/ERNST & YOUNG LLP Chattanooga, Tennessee March 15, 1996 SELECTED CONSOLIDATED FINANCIAL DATA (in thousands, except as noted*) Consolidated Income Statement Data (1)
1995 1994 1993 1992 1991 1990
Net sales $213,806 $172,801 $149,133$242,601 $ 213,806 $ 172,801 $ 149,133 $134,512 $134,982 Selling, general and administrative expenses 34,326 31,142 28,624 23,969 20,456 21,946 Patent suit damages and expenses net(net recoveries and accrual adjustmentsadjustments) 699 (14,947) 375 567 3,868 8,329 Research and development 5,128 3,166 2,923 2,580 2,503 1,918Loss on abandonment of foreign subsidiary 7,037 Interest expense 2,125 713 1,788 3,241 4,597 6,310 Income loss from continuing operations 4,560 23,436 9,338 6,014 524 (13,463) Discontinued operations 3,530 (2,771) Net income loss4,560 23,436 9,338 6,014 4,054 (16,234) Income loss per common share from continuing operations* (2)(1) .45 2.38 1.07 .82 .07 (1.87) Consolidated Balance Sheet Data Working capital $ 58,015 $ 53,000 $ 40,767 $ 33,641 $ 31,167 $ 49,776 Total assets 154,356 155,964 102,967 87,885 90,989 112,414 Total short-term debt 774 8,573 10 3,103 4,862 8,836 Long-term debt, less current maturities 17,150 16,155 0 22,660 29,387 50,305 Shareholders' equity 95,901 90,373 64,105 27,631 21,279 17,208 Book value per common share at year-end* (2) 9.04 6.54 3.78 2.95 2.39 Quarterly Financial Highlights (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 1994 Net sales $ 46,226 $ 62,694 $ 49,021 $ 55,865 Gross profit 11,029 14,013 11,216 11,839 Net income 2,876 5,212 3,131 12,217 Net income per common share* (2) .29 .53 .32 1.23 1993 Net sales $ 43,401 $ 52,436 $ 38,838 $ 38,126 Gross profit 10,380 11,878 9,268 10,369 Net income 1,578 3,481 2,116 2,163 Net income per common share* (2) .22 .45 .22 .22 Common Stock Price* (2)(1) 9.50 9.04 6.54 3.78 2.95
Quarterly Financial Highlight (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 1995 Net sales $ 57,544 $ 70,368 $ 65,015 $ 49,674 Gross profit 13,637 14,011 13,298 8,811 Net income 2,516 4,730 2,768 (5,454) Net income per common share* .25 .47 .27 (.54) 1994 Net sales $ 46,226 $ 62,694 $ 49,021 $ 55,865 Gross profit 11,029 14,013 11,216 11,839 Net income 2,876 5,212 3,131 12,217 Net income per common share* .29 .53 .32 1.23 Common Stock Price* 1995 High 14-1/4 13-1/8 11-3/4 12-1/4 1995 Low 11 10-7/8 9-7/8 9-3/4 1994 High 20-1/8 17-5/8 15 15-7/8 1994 Low 13-1/2 13 12-1/2 11-5/8 1993 High 13 14 14-7/8 15-3/4 1993 Low 8-1/2 9-7/8 11-3/8 11 The Company's common stock is traded on the National Association of Securities Dealers Automated Quotation System (NASDAQ) National Market System under the symbol ASTE. Prices shown are the high and low bid prices as announced by NASDAQ. The Company has never paid any dividends on its common stock. The number of shareholders of record is approximately 900. [FN] 1 Restated to reflect paving equipment business of Barber-Greene as a discontinued operation. 2750. (1) Restated to retroactively reflect the two-for-one stock split effected in the form of a dividend on August 12, 19931993. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations 1995 vs. 1994 Net income for 1995 was $4,560,000 or $.45 per share compared to net income of $23,436,000 or $2.38 per share in 1994. Net income for 1994 included $14,947,000 in non-recurring gains as a result of final judgments entered in connection with the CMI litigation. The decline in 1995 also reflects a $7,037,000 loss resulting from the abandonment of Astec-Europa, as well as continuing losses from foreign operations during 1995. Income before income taxes was $6,141,000 in 1995 compared to $25,737,000 in 1994. This is shown in the following table: Year Ended December 31, 1995 1994 Income before income taxes $ 6,141,000 $ 25,737,000 Patent suit recoveries - CMI litigation (14,947,000) Gain on sale of Wibau-Astec (2,449,000) Loss on abandonment of Astec-Europa 7,037,000 Loss from foreign subsidiaries 3,598,000 5,366,000 Adjusted pre-tax income from domestic operations 14,327,000 16,156,000 Income taxes for domestic operations (5,487,000) (916,000) Net income from domestic operations $ 8,840,000 $ 15,240,000 The decrease in adjusted pre-tax income for domestic operations of $1,829,000 in 1995 as compared to 1994 is the result of increased gross profit margin due to increased sales of domestic subsidiaries which were more than offset by increased interest, research and development expenses and a decrease in other income from domestic subsidiaries. Net sales for 1995 were $242,601,000, an increase of $28,795,000 or approximately 13.5% compared to 1994. Of this increase, $14,615,000 is attributable to the acquisition of Gibat Ohl and the acquisition of the remaining 50% interest in Wibau-Astec. CEI, which was acquired in 1995, accounted for $3,543,000 in sales. Excluding the increase from the German operations and the CEI acquisition, sales increased $10,637,000 or 5.2%. International sales by domestic subsidiaries were 24.3% of total sales in both 1995 and 1994. The net increase in sales reflects a strong sales increase in asphalt plants, heaters and rock crushing equipment, but reduced sales in mobile equipment and trenchers. The gross profit margin for 1995 was 20.5% compared to 22.5% for 1994. This decrease is primarily due to lower gross profit margins from our foreign operations which had gross profit margins of 3.4% in 1995 compared to 11.4% in 1994. Domestic operations gross profit margin for 1995 was 22.5% compared to 23.0% for 1994. In 1995, selling, general, and administrative expenses decreased to 14.1% of net sales from 14.6% in 1994. The Gencor patent litigation accounted for $699,000 of legal fees which are included in 1995 patent damages and expenses. Research and development expenses increased from 1.5% of net sales in 1994 to 2.1% in 1995 primarily due to foreign operations. As noted above, income from operations was significantly impacted by the losses of Astec-Europa in 1995. The total pre-tax loss, including the cost of abandonment, was approximately $9,945,000. Astec-Europa incurred pre- tax operating losses in 1995 of approximately $2,908,000. Due to Astec- Europa's poor operating results and its negative net worth at December 31, 1995, the Company declined to contribute additional capital to Astec- Europa, electing instead to abandon the subsidiary in accordance with German law. Astec-Europa management filed a request for bankruptcy in Germany on February 9, 1996. Consequently, the Company does not believe that it will be required to fund Astec-Europa's liabilities except for certain liabilities previously guaranteed by the Company. The loss on abandonment of approximately $7,037,000 includes the liabilities of Astec- Europa that were guaranteed by the Company and the remainder of the original investment recorded on the books of the Company. Interest expense for 1995 increased to .9% of net sales from .3% in 1994. The increase resulted from increased inventories in anticipation of sales which did not materialize and investment in capital expenditures of $15,160,000. Other income increased by approximately $722,000 or 36.7% in 1995, resulting primarily from Astec-Europa (formerly Gibat Ohl) receiving $1,430,000 to settle various claims related to Astec-Europa's business operations. The gain on sale of foreign subsidiary of $2,449,000 in 1995 is due to the sale of Wibau-Astec as described in Note 2 to Consolidated Financial Statements. Income tax expense for 1995 was $1,580,000 or approximately 25.7% of pre-tax income compared to $2,300,000 or approximately 8.9% of pre-tax income in 1994. The reason for the variance from the normal corporate tax rate in 1994 was the utilization of net operating loss carryforwards and establishment of a deferred tax benefit relative to net deductible temporary differences which could be recovered against future taxes or taxes previously paid. The variance in 1995 is primarily attributed to foreign operations. See Note 9 to Consolidated Financial Statements. Due to the utilization of the majority of its credit carryforwards, the Company's tax rate for 1996 and subsequent years will approximate the normal corporate rate. The backlog at December 31, 1995 is $34,751,000 compared to $50,465,000 at December 31, 1994 which represents a 31.1% decrease. The Company's backlog for 1994 was unusually large primarily due to the optimism of many of our major customers about the strength of the economy and increased demand resulting from the renewed emphasis to rebuild infrastructure. The Company's current backlog is more consistent with the historical trend experienced by the Company. Results of Operations 1994 vs. 1993 Net sales for 1994 increased $41,005,000 or approximately 23.7% compared to 1993. Of this increase, $10,133,000 iswas attributable to the acquisition of Gibat Ohl and the remaining 50% of Wibau-Astec. Excluding these acquisitions, sales increased $30,872,000 or 17.9%. International sales by domestic subsidiaries were 24.3% in 1994 and 17.2% in 1993. The increase in sales reflectsreflected the strength of our economy, the attitude of our customers toward the economy, expectations for infrastructure contracts and the quality, performance and competitiveness of our products as a result of many years of investment in research and development. The gross profit margin for 1994 was 22.5% compared to 24.2% for 1993. Domestic operations gross profit margin for 1994 was 23.0% compared to 24.2% for 1993. Foreign operations gross profit margin was 11.4%. The domestic gross profit margin was negatively effected in 1994 for several reasons: 1) Telsmith's consolidation of plant operations with many inefficiencies involved. 2) Trencor's relocation to facilities in Grapevine, Texas from Grand Prairie, Texas. 3) Inefficiencies related to the training of a significant number of new manufacturing employees at Trencor and training of replacements for retirees at Telsmith. 4) Trencor's introduction of the Log Hog product line. Offsetting these negative factors were improved margins at Heatec and increased manufacturing efficiencies at Roadtec, both of which positively affected the gross profit margin. In 1994, selling, general, and administrative expenses decreased to 14.6% of net sales from 16.6% in 1993. The increase in sales iswas the primary reason for the percentage reduction. Research and development expensesexpense declined from 1.7% of net sales in 1993 to 1.5% in 1994, again, primarily due to the increase in sales. In October 1994, the decision by the United States Supreme Court to deny certiorari in connection with the appeal filed by CMI Corporation "CMI"("CMI") brought to a successful end the Company's long-standing patent litigation with CMI. The Supreme Court's actions effectively denied CMI's request to appeal a lower court ruling that found that Astec did not have any liability for infringement of CMI patents and left intact damages payable by CMI to Astec. As a result, previously established liabilities of $13,870,000, payable by the Company, were reversed and patent damages of $1,309,000 were received from CMI. These amounts are shown in Consolidated Statements of Income as net recoveries and accrual adjustments of patent damages. See Contingencies"Contingencies" and Note 910 to the Consolidated Financial Statements. Because our joint venture, Wibau-Astec, continued to be unprofitable, it became apparent that major changes were necessary and we began a plan of restructuring. Restructuring costs of $1,500,000 related to Wibau-Astec are discussed in Note 12 to Consolidated Financial Statements. The anticipated effect of the restructuring plan iswas reflected in the pro forma summary included in Note 2. Interest expense for 1994 decreased to 0.3% of net sales from 1.0% in 1993. This iswas due to a decrease in overall interest expense combined with the increase in sales. Plant expansion and improvements were financed by industrial revenue bonds at favorable interest rates. Other income decreased by approximately $371,000 or 15.9% in 1994. As noted inThis was due to the 1993 Management Discussion and Analysis,fact that one international licensee that was not renewed for 1994 produced $665,000 in license fees in 1993. The equity in loss of joint venture of $3,177,000 reflects 50% of the losses from the joint venture for the ten months prior to the purchase of the remaining 50% interest in Wibau-Astec. Income tax expense for 1994 was $2,300,000 or approximately 8.9% of pre- tax income. The primary reasons for the variance from the normal corporate tax rate arewere the utilization of net operating loss carryforwards and establishment of a deferred tax benefit relative to net deductible temporary differences which could be recovered against future taxes or taxes previously paid. See Note 89 to Consolidated Financial Statements. In the first quarter of 1993, the Company adopted SFAS No. 109, "Accounting for Income Taxes". At December 31, 1994, there were net deferred tax assets of approximately $14,799,000, which arewere comprised of temporary differences, the tax benefit of net operating loss and credit carryforwards and foreign net operating loss carryforwards. Temporary differences relaterelated primarily to inventory reserves, warranty reserves and bad debt reserves. At December 31, 1994, a valuation allowance of approximately $10,070,000 was recorded. This valuation allowance offsets the deferred tax assets relative to net operating loss and credit carryforwards as well as foreign net operating loss carryforwards. Both the net operating loss and credit carryforwards are SRLY carryforwards and can be used to offset only the income of a certain subsidiary of the Company. As a result, the Company determined that a valuation allowance was necessary for these items as well as the foreign net operating loss carryforward, the utilization of which iswas uncertain. Due to the utilization of the majority of its credit carryforwards, the Company expects its tax rate for 1995 to approximate the normal corporate rate. The backlog at December 31, 1994 was $50,465,000 compared to $33,100,000 at December 31, 1993 which represents a 52.4% increase. The increase iswas primarily due to the optimism of our customers about the strength of the economy and the performance and competitiveness of our products. Results of Operations, 1993 vs. 1992 Net sales from continuing operations for 1993 increased $23,668,000, or approximately 15.9% compared to 1992. International sales declined from 21.9% of total company net sales in 1992 to 17.2% in 1993. Domestic sales increased by 22.9% in 1993 and 18% in 1992. The improved sales reflect the optimism of our customers with respect to both the continued improvement of the economy and the federal role in providing funding for the nation's surface transportation systems through 1997 with the passage of the Intermodal Surface Transportation Efficiency Act at the end of 1991. The gross profit margin for 1993 was 24.2% compared to 22.9% for 1992. Pricing improved slightly in 1993, but the greatest impact on gross profit margins was the manufacturing efficiency achieved with improved volume. In 1993, selling, general, and administrative expenses increased to 16.6% of net sales from 16.1% in 1992. Large increases were incurred for exhibition expense for the Conexpo show, legal expenses, international dealer commissions and profit sharing bonuses. Research and development expenses as a percentage of sales remained constant at 1.7% of sales for both 1993 and 1992. Patent suit damages and expenses decreased by $192,000 compared to 1992 and were 0.2% of 1993 net sales compared to .4% in 1992. The patent suit damages and expenses relate to the patent suits by CMI against Astec and its former Barber-Greene subsidiary and the countersuit by Astec against CMI. See "Contingencies" and Note 9 to the Consolidated Financial Statements. Interest expense for 1993 decreased to 1.0% of net sales from 2.2% of net sales in 1992. This decrease was primarily the result of the Company's reduction of its debt by approximately $25,753,000 resulting primarily from funds generated by a secondary public stock offering of 1,195,000 shares of common stock, which raised approximately $27,000,000 for the Company. In connection with the prepayment of substantially all of its debt, the Company incurred approximately $545,000 in prepayment penalties and expenses. Other income in 1993 increased by approximately $370,000 or 16.6% over 1992. The increase is primarily due to increased license fee income which more than offset a nonrecurring refund of unemployment taxes in 1992. Increases in service income and the forfeiture of two customer deposits also contributed to the increase. One international licensee was not renewed for 1994 that produced approximately $665,000 of license fee income in 1993. The equity in loss of joint venture of $720,000 reflects 50% of the loss from the Wibau-Astec joint venture in 1993. This loss reflects the continued European recession in 1993. Due to the existence of net operating loss carryforwards, income tax expense for 1993 consisted primarily of state income taxes, foreign income taxes and federal alternative minimum tax. Liquidity and Capital Resources Working capital increased to $53,000,000$58,015,000 at December 31, 19941995 from $40,767,000$53,000,000 at DecemberResourcesDecember 31, 1993.1994. The Company's debt to equity ratio was .19 to 1 at December 31, 1995 and .27 to 1 at December 31, 19941994. The debt for foreign subsidiaries has been removed from the balance sheet as a result of the sale of Wibau-Astec and .0001 to 1 at December 31, 1993. The increase in 1994 reflects the utilizationabandonment of industrial revenue bonds to expand and modernize plant facilities as well as debt assumed in connection with acquisitions.Astec- Europa. Total short-term borrowings, including current maturities of long-term debt, were $774,000 at December 31, 1995 and $8,573,000 at December 31, 1994 and $10,000 at December 31, 1993.1994. Long-term debt, less current maturities was $17,150,000 at December 31, 1995 and $16,155,000 at December 31, 1994 and zero at December 31, 1993.1994. Capital expenditures of $21,886,000$15,160,000 were made in 19941995 as compared to capital expenditures in 19931994 of $8,767,000.$21,886,000. The Company utilized industrial revenue bonds in 1994 in the amount of $8,000,000 to finance the Grapevine, Texas (Trencor) project which included improvements to the existing facility as well as additions of new equipment. Industrial bonds were issued in February 1994 in the amount of $6,000,000 to assist in financing the Telsmith expansion at Mequon, Wisconsin. The Company has aan unsecured revolving credit loan agreement with The First National Bank of Chicago. The line of credit is $15,000,000.$22,000,000. This credit facility expires June 30, 1997. At December 31, 1994, $2,655,0001995, $4,150,000 of the line of credit was utilized. The credit line is unsecured. At December 31, 1994,1995 the Company was in violation of the covenant relative to$10,000,000 limit on capital expenditures and has received a waiver for such violation. Wibau-Astec has GermanAs a result of the Company's decision to abandon Astec-Europa (see Note 3 to the Consolidated Financial Statements), the Company will be required to pay approximately $2,116,000 for bank linesloans made to Astec-Europa that were guaranteed by the Company and $1,228,000 in warranties guaranteed by the Company. It is expected that these amounts will be funded from cash from operations or by use of credit available totaling $11,253,669 (17,500,000 DM) of which $8,069,577 was outstanding at December 31, 1994. Gibat Ohl has a German bankthe Company's line of credit available of $2,122,000 (3,300,000 DM), $2,925 of which was utilized at December 31, 1994. On January 31, 1989, the Company placed $10,000,000credit. The guaranteed payments required for loans and warranties have been accrued and are included in Senior Notes and $10,000,000 in Senior Subordinated Notes with Principal Mutual Life Insurance Company. These notes were repaid during the second and third quarters of 1993 using cash received from the secondary public stock offering.other liabilities. For additional information on current and long-term debt, see Note 67 to the Consolidated Financial Statements. Contingencies See Note 910 to Consolidated Financial Statements for information on certain pending litigation and contingent liabilities arising from recourse financing arrangements. Environmental Matters Based on information available from environmental consultants, the Company has no material reserve requirements for potential environmental liabilities. REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Astec Industries, Inc. We have audited the accompanying consolidated balance sheets of Astec Industries, Inc. and subsidiaries as ofCONSOLIDATED BALANCE SHEET December 31, 1995 1994 Assets Current assets: Cash and 1993,cash equivalents note 1 $ 3,133,070 $ 10,471,444 Trade receivables less allowance for doubtful accounts of $1,279,000 in 1995 and the related consolidated statements$1,684,000 in 1994 27,075,401 29,852,180 Notes and other receivables 596,134 215,390 Inventories note 1,4 55,882,679 56,309,735 Prepaid expenses 894,593 2,149,795 Refundable income taxes 2,341,849 Deferred tax asset note 9 6,667,052 2,901,799 Other current assets 5,214 236,229 Total current assets 96,595,992 102,136,572 Property and equipment, net note 5 51,709,033 42,348,792 Other assets: Goodwill 4,066,152 8,370,662 Notes receivable 572,829 Deferred tax asset note 9 1,827,494 Other 1,412,326 1,280,069 Total other assets 6,051,307 11,478,225 Total $ 154,356,332 $ 155,963,589 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 3,249 $ 8,072,502 Current maturities of income,long-term debt note 7 771,025 500,000 Accounts payable 15,877,964 14,262,518 Customer deposits 4,989,557 6,301,481 Accrued product warranty 2,470,775 3,470,703 Income taxes payable note 9 1,987,511 Other accrued liabilities 14,468,042 14,541,920 Total current liabilities 38,580,612 49,136,635 Long-term debt, less current maturities note 7 17,150,000 16,155,000 Deferred tax liability note 9 2,351,283 Deferred retirement costs note 8 373,310 192,242 Other 106,716 Total liabilities 58,455,205 65,590,593 Shareholders' equity: note 1,11 Preferred stock - authorized 2,000,000 shares of $1.00 par value; none issued Common stock - authorized 20,000,000 shares of $.20 par value; issued and outstanding - 10,092,199 in 1995 and 10,001,831 in 1994 2,018,440 2,000,366 Additional paid-in-capital 51,940,580 50,900,908 Foreign currency translation adjustment 89,975 Retained earnings 41,942,107 37,381,747 Total shareholders' equity and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Astec Industries, Inc. and subsidiaries at December 31, 1994 and 1993, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1994, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chattanooga, Tennessee February 18, 1995 CONSOLIDATED BALANCE SHEET December 31, 1994 1993 Assets Current assets:
Cash and cash equivalents note 1 $ 10,471,444 $ 3,458,218 Trade receivables less allowance for doubtful accounts of $1,684,000 in 1994 and $1,191,000 in 1993 29,852,180 18,116,77395,901,127 90,372,996 Total $ 154,356,332 $ 155,963,589 See Notes and other receivables 215,390 973,507 Inventories note 1, 3 56,309,735 40,005,281 Prepaid expenses 2,149,795 1,272,524 Deferred tax asset note 8 2,901,799 Other current assets 236,229 349,886 Patent damage escrow funds note 9 12,309,420 Total current assets 102,136,572 76,485,609 Property and equipment, net note 4 42,348,792 23,659,015 Other assets: Goodwill 8,370,662 1,966,233 Notes receivable 9,541 Deferred tax asset note 8 1,827,494 572,498 Other 1,280,069 274,038 Total other assets 11,478,225 2,822,310 Total $ 155,963,589 $ 102,966,934 Liabilities and Shareholders' Equity Current liabilities: Notes payable $ 8,072,502 Current maturities of long-term debt note 6 500,000 $ 9,520 Accounts payable 14,262,518 10,169,871 Customer deposits 6,301,481 1,430,449 Accrued product warranty 3,470,703 1,781,733 Income taxes payable note 8 1,987,511 1,111,928 Reserve for patent damages note 9 13,250,048 Other accrued liabilities 14,541,920 7,965,112 Total current liabilities 49,136,635 35,718,661 Long-term debt, less current maturities note 6 16,155,000 Deferred retirement costs note 7 192,242 3,033,536 Other 106,716 109,838 Total liabilities 65,590,593 38,862,035 Shareholders' equity: note 1,10 Preferred stock, authorized 2,000,000 shares of $1.00 par value; none issued Common stock, authorized 20,000,000 shares of $.20 par value; issued and outstanding, 10,001,831 in 1994 and 9,795,402 in 1993 2,000,366 1,959,080 Additional paid-in capital 50,900,908 48,200,446 Foreign currency translation adjustment 89,975 Retained earnings 37,381,747 13,945,373 Total shareholders' equity 90,372,996 64,104,899 Total $ 155,963,589 $ 102,966,934
[FN] See notes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 1994 1993 1992
Net sales $ 213,806,411 $ 172,801,465 $ 149,132,958 Cost of sales 165,709,245 130,906,009 114,960,249 Gross profit 48,097,166 41,895,456 34,172,709 Selling, general, and administrative expenses 31,142,335 28,624,179 23,968,553 Research and development expenses 3,165,795 2,922,921 2,580,146 Patent suit damages and expenses (net recoveries and accrual adjustments) note 9 (14,947,498) 374,740 566,502 Restructuring costs note 12 1,500,469 Income from operations 27,236,065 9,973,616 7,057,508 Other income (expense): Interest expense (712,853) (1,787,742) (3,241,066) Loan prepayment penalty and expenses note 6 (544,783) Interest income 426,489 516,957 392,798 Other income - net 1,963,633 2,334,407 2,226,820 Equity in loss of joint venture note 2 (3,176,834) (720,000) Income before income taxes 25,736,500 9,772,455 6,436,060 Income taxes note 8 2,300,126 434,246 421,807 Net income $ 23,436,374 $ 9,338,209 $ 6,014,253 Earnings per Common and Common Equivalent Share: Net income: note 1 Primary $ 2.38 $ 1.07 $ .82 Fully diluted .81 Weighted average number of common and common equivalent shares outstanding: note 1 PrimaryCONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 1995 1994 1993 Net sales $ 242,601,351 $ 213,806,411 $ 172,801,465 Cost of sales 192,844,160 165,709,245 130,906,009 Gross profit 49,757,191 48,097,166 41,895,456 Selling, general, and administrative expenses 34,325,974 31,142,335 28,624,179 Research and development expenses 5,128,495 3,165,795 2,922,921 Patent suit damages and expenses (net recoveries and accrual adjustments) note 10 699,222 (14,947,498) 374,740 Restructuring costs note 12 1,500,469 Loss on abandonment of foreign subsidiary note 3 7,037,105 Income from operations 2,566,395 27,236,065 9,973,616 Other income(expense): Interest expense (2,125,261) (712,853) (1,787,742) Loan prepayment penalty and expenses note 7 (544,783) Interest income 565,724 426,489 516,957 Other income - net 2,685,161 1,963,633 2,334,407 Gain on sale of foreign subsidiary note 2 2,448,551 Equity in loss of joint venture note 2 (3,176,834) (720,000) Income before income taxes 6,140,570 25,736,500 9,772,455 Income taxes note 9 1,580,210 2,300,126 434,246 Net income $ 4,560,360 $ 23,436,374 $ 9,338,209 Earnings per Common and Common Equivalent Share: Net income $ .45 $2.38 $ 1.07 Weighted average number of common and common equivalent shares outstanding note 1 10,071,930 9,843,980 8,694,478 7,349,612 Fully diluted 7,459,304
[FN] See notesNotes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Years Ended December 31, 1994, 1993 and 1992
Common Stock note 1 Additional Foreign Currency Retained Shares Amount Paid-InPaid-in Capital Translation Adjustment Earnings
Balance December 31, 1991 3,604,063 $ 720,813 $ 21,965,755 $ (1,407,089) Issuance of common stock 54,571 10,900 325,950 Net income 6,014,253 Balance, December 31, 1992 3,658,634 $ 731,713 $ 22,291,705 $0 $ 4,607,164 Issuance of common stock 1,243,067 248,627 26,887,481 Stock dividend 4,893,701 978,740 (978,740) Net income 9,338,209 Balance December 31, 1993 9,795,402 1,959,080 48,200,446 13,945,373 Issuance of common stock 206,429 41,286 2,700,462 Change during year $89,975$ 89,975 Net income 23,436,374 Balance December 31, 1994 10,001,831 $2,000,366 $50,900,908 $89,975 $37,381,7472,000,366 50,900,908 89,975 37,381,747 Issuance of common stock 90,368 18,074 1,039,672 Change during year (89,975) Net income 4,560,360 Balance December 31, 1995 10,092,199 $ 2,018,440 $ 51,940,580 $ 0 $ 41,942,107
[FN] See notesNotes to Consolidated Financial Statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1994 1993 1992 Cash Flows from Operating Activities
Net income $ 23,436,374 $ 9,338,209 $ 6,014,253 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,941,871 3,105,694 3,448,398 Provision for doubtful accounts 362,089 742,752 719,117 Provision for inventory reserves 3,621,218 2,952,918 2,937,459 Provision for warranty 2,616,565 2,689,441 2,699,657 Provision for patent damages (net recoveries and accrual adjustments) (13,250,048) 13,697 Foreign currency translation adjustment 89,975 (Gain) loss on sale of fixed assets 322,587 (19,976) (224,367) Equity in loss of joint venture 3,176,834 720,000 (Increase) decrease in: Receivables (7,660,990) (7,105,758) (2,646,546) Inventories (3,537,955) (2,988,734) (563,442) Prepaid expenses (803,177) (337,248) (38,676) Patent damage escrow funds 12,309,420 (705,431) (3,667,305) Deferred tax asset (4,156,695) (572,598) Other assets (1,916,921) (400,318) 198,238 Increase (decrease) in: Accounts payable 2,138,449 1,054,970 (138,856) Customer deposits (1,738,643) 113,091 (555,655) Accrued product warranty (2,256,128) (2,459,558) (2,421,631) Income taxes payable 400,355 877,225 169,777 Reserve for patent damages 681,711 642,237 Other accrued liabilities (947,201) 1,376,519 (1,363,786) Total adjustments (7,288,395) (261,603) (805,381) Net cash provided by operating activities 16,147,979 9,076,606 5,208,872 Cash Flows From Investing Activities Proceeds from sale of property and equipment - net 307,099 74,284 1,827,358 Expenditures for property and equipment (21,886,011) (8,767,135) (2,492,249) Repayments on notes receivable 600,499 47,672 89,071 Investment in joint venture (635,700) (589,900) Cash payments in connection with business combination, net of cash acquired 1,447,965 Net cash (used by) investing activities (20,166,148) (9,235,079) (575,820)
[FN]CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 1995 1994 1993 Cash Flows From Operating Activities Net income $ 4,560,360 $ 23,436,374 $ 9,338,209 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,697,862 3,941,871 3,105,694 Provision for doubtful accounts 533,136 362,089 742,752 Provision for inventory reserves 1,196,876 3,621,218 2,952,918 Provision for warranty 3,194,240 2,616,565 2,689,441 Provision for patent damages (net recoveries and accrual adjustments) (13,250,048) 13,697 Foreign currency translation adjustment (74,519) 89,975 (Gain) loss on sale of fixed assets (263,195) 322,587 (19,976) Equity in loss of joint venture 3,176,834 720,000 Gain on sale of foreign subsidiary (2,448,551) Loss on abandonment of foreign subsidiary 7,037,105 (Increase) decrease in: Receivables (2,551,526) (7,660,990) (7,105,758) Inventories (5,921,052) (3,537,955) (2,988,734) Prepaid expenses (2,071,266) (803,177) (337,248) Patent damage escrow funds 12,309,420 (705,431) Deferred tax asset 413,524 (4,156,695) (572,598) Other assets (993,322) (1,916,921) (400,318) Increase (decrease) in: Accounts payable 6,062,733 2,138,449 1,054,970 Customer deposits (1,211,925) (1,738,643) 113,091 Accrued product warranty (3,433,374) (2,256,128) (2,459,558) Income taxes payable (1,117,518) 400,355 877,225 Reserve for patent damages 681,711 Other accrued liabilities (2,373,657) (947,201) 1,376,519 Total adjustments 1,675,571 (7,288,395) (261,603) Net cash provided by operating activities 6,235,931 16,147,979 9,076,606 Cash Flows From Investing Activities Proceeds from sale of property and equipment - net 953,766 307,099 74,284 Expenditures for property and equipment (15,159,921) (21,886,011) (8,767,135) Cash received in connection with sale of subsidiary (36,687) Cash balance abandoned with subsidiary (203,643) Repayments on notes receivable 95,256 600,499 47,672 Investment in joint venture (635,700) (589,900) Cash payments in connection with business combination, net of cash acquired (834,591) 1,447,965 Net cash (used by) investing activities (15,185,820) (20,166,148) (9,235,079) Cash Flows From Financing Activities Proceeds from industrial bonds 14,000,000 Proceeds form issuance of common stock 9,750 34,750 27,136,109 Net (repayments) borrowings under revolving credit loan 1,495,000 2,655,000 (4,675,000) Principal repayments of industrial bonds, loans and notes payable (1,523,213) (5,658,355) (21,078,374) Proceeds from debt and notes payable 1,629,978 Net cash provided by financing activities 1,611,515 11,031,395 1,382,735 Increase (decrease) in cash and cash equivalents (7,338,374) 7,013,226 1,224,262 Cash and cash equivalents, beginning of period 10,471,444 3,458,218 2,233,956 Cash and cash equivalents end of period $ 3,133,070 $ 10,471,444 $3,458,218 Supplemental Cash Flow Information Cash paid during the year for: Interest $ 1,800,598 $ 595,767 $ 2,600,688 Income taxes $ 5,088,465 $ 6,282,709 $ 176,021 Excluded from the Consolidated Statements of Cash Flows were the following effects of non-cash investing and financing activities: Capital stock issued for purchase of subsidiary: Investment in subsidiary $ 1,047,996 $ 2,706,996 Capital stock (17,467) (39,871) Additional paid-in-capital (1,030,529) (2,667,125) Non-cash sale of assets by assumption of receivable: Property and equipment $ (8,244) Receivable - other 8,244 Non-cash transfer of assets: Trade receivables $ 90,435 Notes receivables (90,435) Non-cash purchase of assets: Property, plant and equipment $ 547,587 Accrued liability (547,587) Non-cash assets assumed in connection with recourse customer financing: Notes receivables $ 369,229 Inventory (369,229) See notesNotes to Consolidated Financial Statements. Year Ended December 31, 1994 1993 1992 Cash Flows From Financing Activities
Proceeds from industrial bonds 14,000,000 Proceeds from issuance of common stock 34,750 27,136,109 336,850 Net (repayments) borrowings under revolving credit loan 2,655,000 (4,675,000) (1,655,000) Principal repayments of loans and notes payable (5,658,355) (21,078,374) (6,831,560) Net cash provided by (used by) financing activities 11,031,395 1,382,735 (8,149,710) Increase (decrease) in cash and cash equivalents 7,013,226 1,224,262 (3,516,658) Cash and cash equivalents, beginning of period 3,458,218 2,233,956 5,750,614 Cash and cash equivalents, end of period $ 10,471,444 $ 3,458,218 $ 2,233,956 Supplemental Cash Flow Information Cash paid during the year for: Interest $ 595,767 $ 2,600,688 $ 3,213,499 Income taxes $ 6,282,709 $ 176,021 $ 462,210 Excluded from the Consolidated Statements of Cash Flows were the following effects of non-cash investing and financing activities: Non-cash assets assumed in connection with repossessions: Trade receivables $ (1,421,239) Notes receivable (183,855) Inventories 1,421,239 Other current assets 183,855 Capital stock issued for purchase of foreign subsidiary: Investment in foreign subsidiary $2,706,996 Capital stock (39,871) Additional paid-in-capital (2,667,125) Non-cash sale of assets by assumption of receivable: Property and equipment $ (8,244) Receivable - other 8,244 Non-cash transfer of assets: Trade receivables $90,435 Notes receivable (90,435)
[FN] See notes to Consolidated Financial Statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Basis of Presentation - The consolidated financial statements include the accounts of Accounting Policies Astec Industries, Inc. and its subsidiaries. The Company's wholly-owned subsidiaries at December 31, 19941995 are as follows: Astec, Inc. Heatec,Roadtec, Inc. CEI Enterprises, Inc. Telsmith, Inc. Roadtec,Heatec, Inc. Trencor, Inc.Inc During 1995 Wibau-Astec Maschinenfabrik GmbH (Wibau-Astec)("Wibau-Astec") was sold and Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik (Gibat Ohl)("Gibat Ohl") was abandoned. See Notes 2 and 3. All significant intercompany transactions have been eliminated in consolidation. Use of Estimates - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Segment Information - The Company operates in one industry segment. Its products are used predominately for road construction and for the manufacture and processing of construction aggregates. International sales by domestic subsidiaries were $58,965,000, $52,031,000, $29,693,000, and $32,659,000,$29,693,000 for the years ended December 31, 1995, 1994 1993 and 1992,1993, respectively. Net sales and net loss (including equity in loss of joint venture)losses of foreign operations were $24,748,000 and $3,044,000 for the year ended December 31, 1994, were1995, and $10,133,000 and $5,394,000 respectively.for the year ended December 31, 1994. At December 31, 1994, assets of foreign subsidiaries were $23,953,000. See Notes 2 and 3. Cash Equivalents - The Company considers all highly liquid instruments purchased with a maturity of less than three months to be cash equivalents. Inventories - Inventories excluding(excluding used equipmentequipment) are stated at the lower of first-in, first-out cost or market. Used equipment inventories are stated on the specific unit cost method, which in the aggregate is less than market. Property and Equipment - Property and equipment is stated at cost. Depreciation is computed generally on the straight-line method for financial reporting purposes at rates considered sufficient to amortize costs over estimated useful lives. Depreciation is computed generally on both accelerated and straight-line methods for tax reporting purposes. Maintenance and repairs are expensed as incurred. Goodwill - Goodwill represents the excess of cost over the fair value of net assets acquired. Goodwill amounts are being amortized using the straight-linestraight- line method over twenty years. Additions to goodwill in 19941995 reflect the purchase of the Capital Trencher product line, the Log Hog product line, the additional 50% of Wibau-Astec, and Gibat Ohl.CEI Enterprises, Inc. Product Warranty - The Company provides product warranties against defects in materials and workmanship for periods ranging from ninety days to one year following the date of sale. Estimated costs of product warranties are charged to cost of sales in the period of the sale. Revenue Recognition - A portion of the Company's equipment sales represents equipment produced in the Company's plants under short-term contracts for a specific customer project or equipment designed to meet a customer's specific requirements. Equipment revenues are recognized in compliance with the terms and conditions of each contract, which is ordinarily at the time the equipment is shipped. Certain contracts include terms and conditions through which the Company recognizesrecognized revenues upon completion of equipment production which is subsequently stored at the Company's plant at the customer's request. Revenue is recorded on such contracts upon the customer's assumption of title and all risks of ownership. Credit Risk1. Summary of Significant Accounting Policies Foreign Currency Translation - The financial statements of foreign subsidiaries have been translated into U.S. Dollars in accordance with FASB Statement No. 52, "Foreign Currency Translation". All balance sheet accounts have been translated using the exchange rate in effect at the balance sheet date. Income statement amounts have been translated using average exchange rate for the year. The gains and losses resulting from the changes in exchange rates from year to year have been reported separately as a component of shareholders' equity. Stock Based Compensation - The Company sells productsgrants stock options for a fixed number of shares to a wide varietyemployees with an exercise price equal to the fair value of customers.the shares at the date of grant. The Company performs ongoing credit evaluations of its customersaccounts for stock options granted in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees" and, generally does not require collateral. The Company maintains an allowanceaccordingly, recognizes no compensation expense for doubtful accounts at a level which management believes is sufficient to cover potential credit losses. As of December 31, 1994 concentrations of credit risk with respect to trade receivables are limited due to the wide variety of customers.stock option grants. Earnings Per Share - Primary and fully diluted earnings per share are based on the weighted average number of common and common equivalent shares outstanding and include the potentially dilutive effects of the exercise of stock options in years where there are earnings. Fully diluted earnings per share are not presented for 1995, 1994, andor 1993 since the dilution is not material. Earnings per share information has been restated to retroactively reflect the two-for-one stock split effected in the form of a dividend on August 12, 1993. Accounting Change - Effective, January 1, 1995, the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. During 1995, events and circumstances indicated that approximately $4,400,000 of assets of the Company's subsidiary, Astec-Europa might be impaired. As further discussed in Note 3, these assets were written off in connection with the abandonment of Astec-Europa. 2. Business CombinaionsCombinations On February 28, 1995, the Company acquired the operating assets and liabilities of Trace Industries, Inc., a New Mexico corporation doing business as CEI Enterprises ("CEI") in exchange for 87,333 shares of the Company's common stock and approximately $852,000 in cash. The operations of CEI are included in the consolidated statements of income from the effective date of acquisition. The transaction was accounted for as a purchase and the purchase price of approximately $1,900,000 was allocated to the net tangible assets acquired based on the estimated fair market values of the assets acquired. The excess of the purchase price over the fair market value of CEI's net tangible assets was recorded as goodwill and is being amortized using the straight-line method over 20 years. A summary of the net assets acquired is as follows: Current assets $ 1,035,148 Property, plant and equipment 243,877 Current liabilities (768,647) Other liabilities (39,683) Goodwill 1,411,892 Net assets acquired excluding cash 1,882,587 Cash 17,413 Net assets acquired $ 1,900,000 Effective July 1, 1993, the Company entered into a joint venture with Putzmeister-Werk Maschinenfabrik GmbH (Putzmeister)("Putzmeister") to form a new German limited liability company,Wibau-Astec Maschinenfabrik GmbH (Wibau-Astec)("Wibau-Astec"). Wibau-Astec designed, engineered, manufactured and marketed asphalt plants, stabilization plants, asphalt and thermal heaters, hot storage systems and soil remediation equipment. Putzmeister and the Company each owned 50% of Wibau-Astec.Wibau- Astec. On November 7, 1994, the Company acquired the remaining shares of Wibau-Astec from Putzmeister for $67,400. The acquisition was accounted for as a purchase effective November 7, 1994 and accordingly, the results of operations and accounts of Wibau-Astec subsequent to November 7, 1994 are included in the Company's consolidated financial statements. The purchase price was allocated to the net tangible assets of Wibau-Astec based on the estimated fair market valuesvalue of the assets acquired. As required by the purchase method of accounting, the excess amount of the purchase price over the fair value of Wibau-Astec's net tangible assets was recorded as goodwill and iswas being amortized using the straight-line method over 20 years. Subsequent to the acquisition of Wibau-Astec, the Company undertook a plan to restructure Wibau-Astec's operations. See Note 12 - Restructuring Costs. Effective June 30, 1995, the Company sold Wibau- Astec to Wirtgen Gesellschaft mit beschrankter Haftung for approximately $1,109,000. For the six months ended June 30, 1995, Wibau-Astec had a net loss of approximately $688,000. The Company realized a gain of approximately $2,449,000 on the sale of Wibau-Astec. Effective October 17, 1994, the Company acquired the operating assets and liabilities of Gibat Ohl Ingenieurgesellschaft fur Anlagentechnic (Gibat Ohl)Anlagentechnik ("Gibat Ohl") in exchange for 193,357 shares of the Company's common stock and approximately $2,760,000 in cash. The acquisition was accounted for as a purchase effective October 17, 1994, and accordingly, the results of operations and accounts of Gibat Ohl subsequent to October 17, 1994 are included in the Company's consolidated financial statements. The purchase price of approximately $5,460,000 was allocated to the net tangible assets of Gibat Ohl based on the estimated fair market valuesvalue of the assets acquired. The excess of the purchase price over the fair market value of Gibat Ohl's net tangible assets was recorded as goodwill and iswas being amortized using the straight-line method over 20 years. During 1995, Gibat Ohl's name was changed to Astec-Europa and in February 1996, the Company abandoned Astec-Europa. See Note 3. A summary of the net assets acquired is as follows: Wibau-Astec Gibat Ohl Current assets $ 4,938,766 $ 11,007,164 Property, plant and equipment 412,193 300,657 Current liabilities (8,678,984) (10,029,223) Other liabilities (2,038,165) Goodwill 1,193,259 4,153,364 Net assets acquired excluding cash (4,172,931) 5,431,962 Cash 4,240,331 32,984 Net assets acquired $ 67,400 $ 5,464,946 The following unaudited pro forma summary presents the consolidated results of operations as if the acquisition of Wibau-Astec and Gibat Ohlacquisitions discussed above had occurred at the beginning of each periodof the periods presented. Pro forma adjustments have been made to 1994 and 1993 to reflect the restructuring of Wibau-Astec as described in Note 12. The pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results that would have occurredincurred had the acquisition occurred at the beginning of the periods presented or of results which may occur in the future. Year Ended December 31, 1995 1994 1993 Net sales $ 223,887,000243,493,000 $ 227,891,000 $ 188,823,000 Income from operations 28,380,0006,213,000 28,814,000 10,576,000 Net income 24,619,0004,619,000 24,863,000 9,638,000 Per common and common equivalent share: Net income $ 2.50.46 $ 2.53 $ 1.11 Prior to its acquisition of the remaining 50% interest in Wibau-Astec, the Company's investment in Wibau-Astec was accounted for by the equity method. Accordingly, net income as presented in the Consolidated Statements of Income for 1994 and 1993 includes the Company's share of Wibau-Astec's losses for periods prior to the acquisition of $3,177,000 and $720,000, respectively. 3. Abandonment of Foreign Subsidiary During 1995, the Company's subsidiary, Astec-Europa, incurred a net loss of approximately $2,354,000 and had a negative net worth at December 31, 1995. The Company determined that it would no longer support Astec-Europa and on February 9, 1996, Astec-Europa management filed a request for bankruptcy in Germany. Due to its decision to abandon Astec-Europa, the Company will not recover any amounts related to Astec- Europa's assets nor will it be required to liquidate Astec-Europa's liabilities except to the extent such liabilities were guaranteed by the Company. Accordingly, Astec-Europa's assets and liabilities at December 31, 1995 were adjusted to liquidation basis values. This, along with the write-off of the Company's investment in Astec-Europa and the remaining goodwill associated with Astec-Europa of approximately $3,911,000 resulted in a total write-off related to the abandonment of approximately $7,037,000 before tax and $3,683,000 after tax. Total losses recognized in 1995, including net loss from operations and the loss on abandonment, related to Astec-Europa were approximately $9,945,000 before tax or $6,037,000 after tax. 4. Inventories Inventories consisted of the following: December 31, 1995 1994 1993 Raw materials and parts $ 23,709,839 $ 26,705,110 $ 18,418,839 Work-in-process 10,384,847 14,380,192 6,017,940 Finished goods 14,583,127 7,745,709 7,802,956 Used equipment 7,204,866 7,478,724 7,765,546 Total $ 55,882,679 $ 56,309,735 $ 40,005,281 4.5. Property and Equipment Property and equipment consisted of the following: December 31, 1995 1994 1993 Land, land improvements, and buildings $ 35,220,996 $ 26,676,486 $ 14,062,161 Equipment 39,322,961 37,497,348 27,955,598 Less accumulated depreciation (22,864,623) (21,880,823) (18,437,672) Land, buildings, and equipment - net 51,679,334 42,293,011 23,580,087 Rental property: Equipment 1,703,608122,347 1,703,608 Less accumulated depreciation (92,648) (1,647,827) (1,624,680) Rental property - net 29,699 55,781 78,928 Total $ 51,709,033 $ 42,348,792 $ 23,659,015 5.6. Leases The Company leases certain land, buildings and equipment which are used in its operations. Total rental expense charged to operations under operating leases was approximately $1,213,000, $615,000 $427,000 and $384,000$427,000 for the years ended December 31, 1995, 1994 1993 and 19921993 respectively. Minimum rental commitments for all noncancelable operating leases at December 31, 1994,1995 are as follows: 19951996 $ 718,000 1996 492,000691,000 1997 246,000444,000 1998 97,000230,000 1999 122,000 2000 and beyond 189,000100,000 The Company also leases equipment to customers under short-term contracts generally ranging from 2two months to 6six months. Rental income under such leases was $1,630,000, $1,394,000 $1,719,000 and $2,470,000,$1,719,000 for the years ended December 31, 1995, 1994 and 1993, and 1992, respectively. 6.7. Long-term Debt Long termLong-term debt consisted of the following: December 31, 1995 1994 1993 Revolving credit loan of $22,000,000 at December 31, 1995 and $15,000,000 at December 31, 1994, and 1993, available through June 30, 1997 at an interest rate of prime less a quarter, which was 8.25% and 6.0% at December 31, 1995 and 1994 and 1993, respectively$ 4,150,000 $ 2,655,000 Loans payable in monthly installments maturing at various dates through 19951996 at interest rates from 7.25%8.5% to 14.85% $ 9,5209.25% 271,025 Industrial Development Revenue Bonds payable in semi-annualannual installments through 2006 at weekly negotiated interest rates 5,500,000 6,000,000 Industrial Development Revenue Bonds due in 20092019 at weekly negotiated interest rates 8,000,000 8,000,000 Total long-term debt 17,921,025 16,655,000 Less current maturities 771,025 500,000 9,520 Long-term debt less current maturities $ 17,150,000 $ 16,155,000 $ 0 On January 31, 1989,During 1995, the Company placed $10,000,000 in Senior Notes and $10,000,000 in Senior Subordinated Notes with Principal Mutual Life Insurance Company ("Principal"). The proceeds of the notes placed with Principal were applied to the outstanding revolving credit loan with The First National Bank of Chicago ("FNBC"). During 1993, both the Senior and Subordinated Notes with Principal were repaid in full. Related prepayment penalties and expenses are reflected on a separate line in the Consolidated Statements of Income. During 1994, the Company negotiated a newamended its unsecured revolving loan agreement. Theagreement negotiated in 1994 thereby increasing the line of credit is $15,000,000to $22,000,000. The loan agreement contains certain restrictive covenants relative to operating ratios and expires June 30, 1997.capital expenditures and also restricts the payment of dividends. At December 31, 1994,1995, the Company was in violation of the covenant relative to capital expenditures and has received a waiver for such violation. The aggregate of all maturities of long-term debt in each of the next five years is asa follows: 19951996 $ 500,000 1996 500,000771,025 1997 3,155,0004,650,000 1998 500,000 1999 500,000 2000 and beyond 11,500,000 For 1994,1995, the weighted average interest rate on short term borrowings, which include current maturities of Industrial Revenue Bonds and notes payable, were 3.46%4.16% and 8.75%8.62%, respectively. 7.8. Retirement Benefits A former subsidiary of the Company, the Barber-Greene Company, had defined benefit pension plans ("Barber-Greene Plans") covering substantially all of its employees. Non-union benefits were frozen as of September 1, 1986, and certain union benefits were frozen as of October 31, 1986. The Company retained responsibility for the Barber-Greene Plans when it sold the Barber-Greene Company in 1991. Telsmith, Inc. also sponsors a defined benefit pension plan covering certain employees hired prior to October 14, 1987 who have chosen not to participate in the Company's 401(k) savings plan. The benefit is based on years of benefit service multiplied by a monthly benefit as specified in the plan. The Company's funding policy for its pension plans is to make the minimum annual contributions required by applicable regulations. During 1994, the Company made the decision to terminate the Barber- Greene Plans and purchased annuities to fund the benefits provided for in the plans. TheIn 1995, the Company has requestedreceived approval from the Internal Revenue Service to terminate the plans but has yet to receive such approval.plans. As a result, nothe settlement loss of the plan will occur until 1995. The annuities purchased by the Company during 1994 areapproximately $46,000 is included in plan assets.Other income-net in 1995. A reconciliation of the funded status of the Plans, which is based on a valuation date of September 30, with amounts reported in the Company's consolidated balance sheets, is as follows: Year Ended December 31, 1995 1994 1993 Actuarial present value of benefit obligations: Vested $ 2,991,159 $ 40,574,462 $ 38,229,010 Nonvested 90,781 85,245 251,677 Accumulated benefit obligation $ 40,659,7073,081,940 $ 38,480,68740,659,707 Projected benefit obligation $ 40,659,7073,081,940 $ 38,480,68740,659,707 Plan assets at fair value 2,539,151 40,589,417 43,018,508 Projected benefit obligation in excess of (less than) plan assets 542,789 70,290 (4,537,821) Unrecognized net gain 6,046 450,751 7,976,321 Prior service cost not yet recognized in net periodic pension cost (148,819) (320,665) (357,323) Pension liability in the consolidated balance sheets $ 200,376400,016 $ 3,081,177200,376 Net periodic pension cost for 1995, 1994 1993, and 19921993 included the following components: Year Ended December 31, 1995 1994 1993 1992 Service cost - benefits earned during the period $ 24,585 $ 31,503 $ 26,873 $ 34,426 Interest cost on projected benefit obligation 219,465 2,565,355 2,754,319 2,761,195 Actual return on plan assets (238,493) 2,148,873 12,318,009 833,167(12,318,009) Net amortization and deferral 5,405,871(6,682) (5,405,871) 9,345,175 1,948,268 Net (income) expense $ 660,140(1,125) $ 191,642(660,140) $ 14,186(191,642) The weighted average discount rate used in determining the actuarial present value of the projected benefit obligation was 7.5% and 8.5% at September 30, 1995 and 1994, and 7.0% at September 30, 1993.respectively. The expected long-term rate of return on assets was 9.0% for the years ending September 30, 19941995 and 1993.1994. Plan assets are primarily comprised of corporate equity and corporate and U.S. Treasury debt securities. In 1987, the Company adopted deferred savings plans (Savings Plans)plan ("Savings Plans") under Section 401 (k)401(k) of the Internal Revenue Code, under which substantially all employees of the Company and its subsidiaries are eligible. In 1991, the Savings Plans were consolidated and provide that the Company will match an amount equal to 50% of employee savings subject to certain limitations. The total expense for such matching was approximately $777,000, $696,000, $567,000 and $485,000$567,000 for the years ended December 31, 1995, 1994 1993 and 1992,1993 respectively. In addition to the retirement plans discussed above, the Company has an unfunded postretirement medical and life insurance plan covering employees of its Telsmith, Inc. subsidiary and retirees of its former Barber-GreeneBarber- Greene subsidiary. Effective January 1, 1993, the Company adopted SFAS No. 106, (Employers'"Employers' Accounting for Postretirement Benefits Other than Pensions)Pensions". The accumulated postretirement benefit obligation (APBO)("APBO") at adoption was approximately $674,000 and is being amortized over twenty20 years. The accumulated postretirement benefit obligation and the amount recognized in the Company's consolidated balance sheets, is as follows: December 31, 1995 1994 1993 Accumulated postretirement benefit obligation: Retirees $ 130,600246,300 $ 207,500130,600 Active employees 393,500 473,000 425,800639,800 603,600 633,300 Unamortized transition obligation 605,600 639,300(571,900) (605,600) Unrecognized net gain 118,800 29,800118,800 Accrued postretirement benefit cost $ 116,800186,700 $ 23,800116,800 Net periodic postretirement benefit cost included the following components: Year Ended December 31, 1995 1994 1993 Service cost $ 53,50053,300 $ 53,500 Interest cost 42,90050,200 42,900 Amortization of transition obligation 33,700 33,700 Amortization of net gain (1,900) Net expense $ 130,100135,300 $ 130,100 Postretirement benefit costs for 1992 were not material. A discount rate of 8.5% was used in calculating the APBO. The APBO assumes a 13.5% increase in per capita health care costs decreasing gradually to 5.8% for years 2012 and later. A 1% increase in the medical inflation rate would increase the APBO by approximately $26,800$29,400 and the expense by approximately $6,000. 8.$7,500. 9. Income Taxes Effective January 1, 1993, the Company adopted SFAS No. 109.109, "Accounting for Income Taxes". Prior years' financial statements have not been restated norThere was there anyno cumulative effect on income from the adoption of SFAS No. 109. For financial reporting purposes, income before income taxes includes the following components: Year Ended December 31, 1995 1994 1993 1992 United States $ 16,497,616 $ 30,726,395 $ 9,474,455 $ 6,436,060 Foreign: License income 277,855 404,000 1,018,000 Equity in loss of joint venture (3,176,834) (720,000) Loss from foreign subsidiarysubsidiaries (3,597,796) (2,217,061) Loss on adandonment (7,037,105) Income before income taxes $ 25,736,5006,140,570 $25,736,500 $ 9,772,455 $ 6,436,060 The provision for income taxes consisted of the following: Year Ended December 31, 1995 1994 1993 1992 Current $ 1,166,956 $ 7,029,419 $ 434,246 $ 421,807 Deferred (benefit) 413,254 (4,729,293) Total provision for income taxes $ 1,580,210 $ 2,300,126 $ 434,246 $ 421,807 A reconciliation of the provision for income taxes at the statutory rate to those provided is as follows: Year Ended December 31, 1995 1994 199 19921993 Tax at statutory rates $ 2,087,794 $ 9,007,775 $ 3,322,635 $ 2,188,260 Effect of utilization of net operating loss carryforwards net of alternative minimum tax (1,344,000) (3,008,000) (3,155,253) (1,921,766) Effect of utilization of alternative minimum tax credits (382,000) Benefit from foreign sales corporation (327,000) (265,000) State taxes, net of federal income tax benefit 522,000 212,000 115,271 155,313 Income taxes of other countries (553,000) 27,000 151,593 Loss from foreign operations (413,000) 2,636,000 Recognition of deferred tax asset 1,827,000 (4,729,000) Reversal of prior temporary differences (1,937,000) Other items (219,584) 738,351 Income Taxestaxes $ 1,580,210 $ 2,300,126 $ 434,246 $ 421,807 At December 31, 1994, the Company had federal net operating loss carryforwards of approximately $3,800,000 for tax purposes, all of which are limited by consolidated return rules to use in offsetting only the taxable income of a subsidiary of the Company. The net operating loss carryforwards expire at various dates from 1997 through 2005. For financial reporting purposes, the federal net operating loss carryforwards approximate $11,600,000. At December 31, 1994, the Company had foreign net operating loss carryforwards of approximately $14,000,000 available to offset future income of Wibau-Astec. At December 31, 1994,1995, the Company had investment tax and other credit carryforwards of approximately $641,000$98,000 expiring at various dates principally from 1995 through 1999. Utilization of these credits will be limited to use in offsetting only the taxable income of a subsidiary of the Company. As a result of utilizing the net operating loss carryforwards, net income from continuing operations increased by approximately $3,008,000, $3,155,000$.13, $.31 and $1,922,000 and related per share amounts increased by approximately $.31, $.36 and $.26 for the years ended December 31, 1995, 1994 1993 and 1992,1993, respectively. At December 31, 1994,1995, the companyCompany had deferred tax assets of approximately $16,861,000,$6,889,000, and deferred tax liabilities of approximately $2,062,000,$2,475,000, related to temporary differences and tax loss and credit carryforwards. At December 31, 1994,1995, a valuation allowance of approximately $10,070,000$98,000 was recorded. This valuation allowance offsets the deferred tax assets relative to net operating loss and credit carryforwards as well as foreign net operating loss carryforwards. Both the net operating loss andThe credit carryforwards are SRLY carryforwards and can be used to offset only the income of a certain subsidiary. Due to this, the Company determined that a valuation allowance was necessary for these items as well asitems. The change in valuation allowance in 1995 is due to the loss of foreign net operating loss carryforward,carryforwards ($8,085,000) due to the sale of the subsidiary, expiration of ITC credit carryforwards ($543,000) and the utilization of which is uncertain.operating loss carryforwards ($1,344,000). Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets are as follows: Year Ended December 31, 1995 1994 1993 Deferred tax assets: Inventory reserves $ 1,753,0002,067,000 $ 2,270,0001,753,000 Legal reserves 152,000 100,000 487,000 Pension expense 112,000 109,000 1,098,000 Investment in foreign joint venture 1,827,000 747,000 Other accrued expenses 3,076,000 3,002,000 2,703,000 Alternative minimum tax credits 1,216,000 Net operating loss carryforwards 1,344,000 4,216,000 Foreign net operating loss carryforwards 1,384,000 8,085,000 Other credit carryforwards 98,000 641,000 760,000 Total deferred tax assets 6,889,000 16,861,000 13,497,000 Deferred tax liabilities: Property and equipment 2,475,000 2,062,000 1,742,000 Total deferred tax liabilities 2,475,000 2,062,000 1,742,000 Net deferred tax assets 4,414,000 14,799,000 11,755,000 Valuation allowance (98,000) (10,070,000) (11,182,000) Deferred tax asset $ 4,316,000 $ 4,729,000 $ 573,000 9.10. Contingencies During 1994, and in previous years, the Company and its former Barber-GreeneThe Company's subsidiary, (now Telsmith, Inc.) were defendants in two patent infringement actions brought by Robert L. Mendenhall and CMI Corporation ("CMI"), a competitor, seeking monetary damages and an injunction to cease the alleged infringement. In 1990, CMI was awarded damages of $4,457,000 and prejudgment interest of $2,838,000 or a total of $7,295,000 from Barber-Greene. During 1991, in a separate trial, CMI was awarded damages of $8,463,000, prejudgment interest of $5,309,000 and attorney's fees of $737,000 for a total of $14,509,000 from Astec, and Astec was awarded damages of $667,000 plus $391,000 of prejudgment interest or a total of $1,058,000 from CMI. The total damages and expenses awarded to CMI were $20,746,000, net of the $1,058,000 awarded to Astec. Both Astec and CMI appealed the judgments. In connection with its appeals, the Company was directed by the courts to pledge substantially all of its real property and to deposit funds in an escrow account to secure the judgments against the Company pending the outcome of appeals. On June 9, 1994, the Company announced that the United States Court of Appeals for the Federal Circuit had reversed the lower court decision and did not remand to the lower court for further proceedings the judgments previously entered against Astec and its former Barber-Greene subsidiary in the Robert L. Mendenhall and CMI patent litigation. Those judgments totaled approximately $22,000,000. The Federal Circuit Court ruled in favor of Astec because the allegedly infringing patents had been held invalid in a separate third party case. CMI asked the Federal Circuit to reconsider its decision and to have all of the Federal Circuit judges rehear the appeal. The Company responded to this request. On September 20, 1994, the Company announced that the United States Court of Appeals for the Federal Circuit denied the request from Mendenhall and CMI to reconsider its earlier reversal. With the issuance of this ruling, the Federal Circuit's review of this ongoing patent litigation ended. On October 11, 1994, CMI and Robert L. Mendenhall filed a Petition of Writ Certiorari asking the U.S. Supreme Court to review the decision of the Federal Circuit Court of Appeals. The Company filed a response opposing the Petition and on November 28, 1994, the Supreme Court issued an Order denying the Petition thus bringing the patent litigation to an end. As a result of the Supreme Court's refusal to grant certiorari, the Company received $12,917,000 which was being held in escrow pending the Company's appeal of the two judgments. In addition, on December 15, 1994, the Company received $1,309,000 from CMI in satisfaction of the judgment entered in favor of the Company on its counterclaim against CMI. The receipt of these funds effectively concluded the litigation between the Company and CMI and Robert L. Mendenhall which had been pending for a number of years. As a result, the Company has reversed its accrued liability for patent damages. The reversal of $13,870,000 in accrued patent damages and the receipt of $1,309,000 in patent damages from CMI total $15,179,000 and are included in the Consolidated Statements of Income as Patent suit damages and expenses net recoveries and accrual adjustments. In an unrelated case, the Company's Telsmith subsidiary is a defendant in a patent infringement action brought by Nordberg, Inc., a manufacturer of a competing line of rock crushing equipment, seeking monetary damages and an injunction to cease an alleged infringement of a patent on certain components used in the production of its rock crushing equipment. This case, being heard beforeOn March 30, 1995, the U.S.United States District Court for the Eastern District of Wisconsin has been bifurcated into liability and damages phases. The liability phase was tried on January 11, 1993; however, no decision has been rendered by the Court. Becauseissued a ruling in favor of the uncertainties inherentCompany and entered a declaratory judgment in favor of Telsmith, and against Plaintiff Nordberg, Inc. declaring that claims 8 through 11 and 13 of Nordberg's United States patent No. 4,478,373, entitled "Conical Crusher" are invalid. The Court also entered judgment in favor of Telsmith, Inc. and against Nordberg, Inc. dismissing Nordberg's claim of infringement against Telsmith. The Company was pleased with the Court's decision, but has filed an appeal asking the United States Court of Appeals for the Federal Circuit to overturn the trial court's decision not to award Telsmith its attorney's fees in the litigation process,case. Nordberg did not cross-appeal to the Company is unableFederal Circuit on the Telsmith judgment. The time for doing so has now expired. The judgment has therefore become "final" as to predict the ultimate outcome of this litigation.those issues not raised by Telsmith on appeal. On October 28, 1993, the Company was also named as a defendant in a patent infringement action brought by Gencor, Inc., a manufacturer of a competing line of asphalt plants, seeking monetary damages and an injunction to cease an alleged infringement of a patent on certain components used in the production of its asphalt plant product line. This case was filed in the U.S. District Court for the Middle District of Florida, Orlando Division, and is currentlywent to trial on January 22, 1996. On February 3, 1996, the jury returned a verdict in the discovery phase.Company's favor holding that Astec's Double Barrel drum mixer does not infringe the Gencor patent in question. Judgment on that jury verdict was entered by the Court on February 5, 1996. It is anticipated that Gencor will appeal. Management believes this casethat Gencor's anticipated appeal is without merit. During 1994, the United States Supreme Court refused to be without merithear CMI Corporation's petition to overturn the United States Court of Appeals for the Federal Circuit's reversal of patent damages awarded to CMI Corporation and intendsRobert L. Mendenhall by a lower court. As a result of the Supreme Court's refusal to vigorously defend this suit; however, due togrant certiorari, the uncertainties inherentCompany received $12,917,000 which was being held in escrow pending the Company's appeal of the two judgments. In addition, on December 31, 1994, the Company received $1,309,000 from CMI in satisfaction of the judgment entered in favor of the Company on its counterclaim against CMI. The receipt of these funds effectively concluded the litigation between the Company and CMI and Robert L. Mendenhall which had been pending for a number of years. As a result, in 1994 the Company reversed its accrued liability for patent damages. The reversal of $13,870,000 in accrued patent damages and the receipt of $1,309,000 in patent damages from CMI total $15,179,000 and are included in the litigation process, the Company is unable to predict the ultimate outcomeConsolidated Statements of this litigation.Income as Patent suit damages and expenses (net recoveries and accrual adjustments). Management has reviewed all claims and lawsuits and, upon the advice of counsel, has made provision for any estimable losses; however, the Company is unable to predict the ultimate outcome of the outstanding claims and lawsuits. Recourse Customer Financing - Certain customers have financed purchases of the Company's products through arrangements in which the Company is contingently liable for customer debt aggregating approximately $13,800,000$7,362,000 and $13,700,000$13,800,000 at December 31, 19941995 and 1993,1994, respectively. These obligations average five years in duration and have minimal risk. Other - The Company is contingently liable for letters of credit of approximately $2,082,000$3,390,000 issued for bid bonds and performance bonds. 10.11. Shareholders' Equity Stock Optionsoptions - The Company has reserved 300,000 shares of common stock under the 1986 Stock Option Plan and 500,000 shares of common stock under the 1992 Stock Option Plan for issuance upon exercise of nonqualified options, incentive options and stock appreciation rights to officers and employees of the Company and its subsidiaries at prices determined by the Board of Directors. At December 31, 1994,1995, a total of 328,800261,800 shares of common stock related to the 1992 Stock Option Plan are available for options to be granted. Nonqualified options are exercisable at a price not less than 85% of the Board of Directors' determination of the fair market value of the Company's common stock on the date of the grant. Nonqualified options are exercisable starting one year from the date of the grant and expire ten years after the date of the grant. Incentive stock options granted by the Board of Directors must be exercisable at a price not less than 100% of the fair market value of the Company's common stock on the date of grant. Incentive stock options are exercisable immediately after the date of the grant, except for certain officers of the Company, and expire ten years after the date of the grant. Stock appreciation rights may be granted by the Board of Directors in conjunction with the grant of an incentive or nonqualified option. A stock appreciation right permits a grantee to receive payment in either cash or shares of the Company's common stock equal to the difference between the fair market value of the common stock and the exercise price for the related option. The following is a summary of stock option information: Number Option Price of Shares Range Per Share Outstanding, December 31, 1991 238,800 $ 1.375 - 4.675 Granted 140,000 3.25 Expired (12,800) 4.675 Exercised (109,000) 1.375 - 4.675 Outstanding, December 31, 1992 257,000 $ 1.375 - 4.675 Exercised (87,000) 1.375 - 4.675 Outstanding, December 31, 1993 170,000 1.375 - 4.675 Granted 87,000 14.875 - 16.363 Exercised (13,000) 1.375 - 3.25 Outstanding, December 31, 1994 244,000 1.375 - 16.363 Granted 67,000 12.875 - 14.163 Exercised (3,000) 3.25 Outstanding, December 31, 1995 308,000 $ 1.375 - 16.363 On July 29, 1993, the Company's Board of Directors approved a two-for-one split of the Company's common stock in the form of a 100% stock dividend for shareholders of record as of August 12, 1993. A total of 4,893,701 shares of common stock were issued in connection with the split. The stated par value of each share was not changed. A total of $978,740 was reclassified from additional paid-in capitalpaid-in-capital to the Company's common stock account. All share and per share amounts for 1993 and prior years have been restated to retroactively reflect the stock split. 11. Related Party Transactions In September 1991,The Company has adopted a Shareholder Protection Rights Agreement and declared a distribution of one right (the "Right") for each outstanding share of Company common stock, par value $0.20 per share (the "Common Stock"). Each Right entitles the Company's Chairman, its Senior Vice President,registered holder to purchase from the Company one one-hundreth of a share (a "Unit") of Series A Participating Preferred Stock, par value $1.00 per share (the "Preferred Stock"), at a purchase price of $36.00 per Unit, subject to adjustment. The rights currently attach to the certificates representing shares of outstanding Company Common Stock, and no separate Rights certificates will be distributed. The Rights will separate from the PresidentCommon Stock upon the earlier of its Telsmith, Inc. subsidiary formedten business days (unless otherwise delayed by the Board) following the (i) public announcement that a general partnership whichperson or group of affiliated or associated persons (the "Acquiring Person") has acquired, 25%obtained the right to acquire, or otherwise obtained beneficial ownership of 15% or more of the common stockthen outstanding shares of American Rock Products, Inc.,Common Stock, or (ii) commencement of a tender offer or exchange offer that would result in an Ohio corporation engaged inAcquiring Person beneficially owning 15% or more of the then outstanding shares of Common Stock. The Board of Directors may terminate the Rights without any payment to the holders thereof at any time prior to the close of business of supplying crushed rock to concrete and asphalt producers in the southeastern Oklahoma area ("Amrock"). These individuals own interests in the partnership of 50%, 25% and 25%, respectively. In December 1992, the rock crushingten business of Amrock was sold to a competitor, exclusive of two used rock crushing machines and certain other miscellaneous inventory and equipment. In March 1994, Amrock sold two of these used rock crushing machines to Telsmith for $50,000 and $70,000, respectively. The purchase price for each of these machines was determineddays following announcement by the presidentCompany that a person has become an Acquiring Person. The Rights, which do not have voting power and are not entitled to dividends, expire on December 21, 2005. In the event of Telsmith based on his opiniona merger, consolidation, statutory share exchange or other transaction in which shares of their fair market value atCommon Stock are exchanged, each Unit of Preferred Stock will be entitled to receive the timeper share amount paid in respect of purchase. Telsmith intends to market both rock crushing machines to its customers for sale in the ordinary courseeach share of business.Common Stock. 12. Restructuring Costs In the fourth quarter of 1994, the Company developed and implemented a plan to restructure the operations of Wibau-Astec. In connection with the restructuring, the Company accrued costs of $1,500,000 $1,250,000,($1,250,000, net of tax, or $0.12 per share.share). The plan included, among other things, the cessation of manufacturing operations at Wibau-Astec along with related personnel reductions as well as personnel reductions in engineering and administration. Total personnel reductions were approximately 150. The plan was communicated to employees and severance notices given during the fourth quarter of 1994. As of the end of 1994, the restructuring was substantially complete. Total costs incurred were for the write-down of certain assets to estimated fair market value, severance payments and lease termination expenses. Severance costs and exit costs incurred were approximately $1,137,000 and $363,000, respectively. Costs incurred during 1995 were substantially the same as the amounts accrued as of December 31, 1994. Wibau-Astec will sellsold Astec asphalt plants either manufactured in the United States or subcontracted in Europe. Wibau-Astec will continue to sellWibau- Astec also sold Wibau-Astec parts and serviceserviced a large customer base and will utilizeutilized subcontractors as needed for parts and/or manufacturing components in Europe. ASTEC INDUSTRIES, INC. AND SUBSIDIARIES SCHEDULE (VIII) VALUATION AND QUALIFYING ACCOUNTS FOR CONTINUING OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992 ADDITIONS CHARGES TO BEGINNING COSTS & OTHER ENDING DESCRIPTION BALANCE EXPENSES ADDITIONS DEDUCTIONS BALANCE December 31, 1994: Reserves deducted from assets to which they apply: AllowanceAs described in Note 2, Wibau-Astec was sold in 1995. 13. Financial Instruments Credit Risk - The Company sells products to a wide variety of customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains an allowance for doubtful
accounts $ 1,191,083 $ 362,089 $ 467,607 (3) $ 336,537 $1,684,242 Reserve for inventory $ 6,494,533 $3,621,218 $ 0 $5,121,716 $4,994,035 Other Reserves: Product warranty $1,781,733 $2,616,565 $ 0 $927,595 $3,470,703 Reserve for patent damages $13,250,048 $ 620,290 $ 0 13,870,338 $0 ADDITIONS CHARGES TO BEGINNING COSTS & OTHER ENDING DESCRIPTION BALANCE EXPENSES ADDITIONS DEDUCTIONS BALANCE December 31, 1993: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 1,060,588 $ 742,752 $ 21,609 $ 633,866 (1) $ 1,191,083 Reserve for inventory $ 5,948,084 $ 2,952,918 $ 0 $ 2,406,469 $ 6,494,533 Other Reserves: Product warranty $1,551,850 $ 2,689,441 $0 $ 2,459,558 (2) $ 1,781,733 Reserve for patent damages 12,554,640 $ 695,408 $ 0 $ 0 13,250,048 ADDITIONS CHARGES TO BEGINNING COSTS & OTHER ENDING DESCRIPTION BALANCE EXPENSES ADDITIONS DEDUCTIONS BALANCE December 31, 1992: Reserves deducted from assets to which they apply: Allowance for doubtful accounts $ 1,038,155 $ 719,117 $ 152,052 848,736 (1) $ 1,060,588 Reserve for inventory $ 8,567,872 $ 2,937,459 $ 0 5,557,247 $ 5,948,084 Other Reserves: Product warranty $ 1,273,824 $ 2,699,657 $ 0 $2,421,631 (2) $ 1,551,850 Reserve for patent damages $ 11,912,403 $ 642,237 $ 0 0 $12,554,640
[FN] (1) Uncollectible accounts written off, netat a level which management believes is sufficient to cover potential credit losses. As of recoveries. (2) Warranty costs chargedDecember 31, 1995, concentrations of credit risk with respect to trade receivables are limited due to the reserve. (3) Represents reserve balanceswide variety of subsidiaries acquired in 1994. SIGNATURES Pursuant to the requirementscustomers. Fair Value of Section 13 or 15(d)Financial Instruments - The book value of the Securities Exchange ActCompany's financial instruments approximates their fair values. Financial instruments include cash, accounts receivable, accounts payable and long and short-term debt. Substantially all of 1934,the Company's short and long-term debt is floating rate debt and, accordingly, book value approximates its fair value. REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Astec Industries, Inc. has duly caused this reportWe have audited the accompanying consolidated balance sheets of Astec Industries, Inc. and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Astec Industries, Inc. and subsidiaries at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note 1, in 1995 the Company changed its method of accounting for the impairment of long-lived assets and for long-lived assets to be signed on its behalf by the undersigned, thereunto duly authorized. ASTEC INDUSTRIES, INC. BY:disposed of. /s/ J. Don BrockERNST & YOUNG LLP Chattanooga, Tennessee February 27, 1996 CORPORATE INFORMATION Corporate and Subsidiary Executive Officers J. Don Brock Chairman of the Board and President (Principal Executive Officer) BY: /s/ Albert E. GuthThomas R. Campbell President, Roadtec, Inc. M. Brent England President, CEI Enterprises, Inc. Jerry F. Gilbert President, Trencor, Inc. Albert E. Guth Senior Vice President, Secretary and Treasurer (Principal Financial and Accounting Officer) Date: March 2, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by a majority of theF. McKamy Hall Corporate Controller James G. May President, Heatec, Inc. W. Norman Smith President, Astec, Inc. Robert G. Stafford President, Telsmith, Inc. Board of Directors of the Registrant on the dates indicated: SIGNATURE TITLE DATE Chairman of the Board March 2, 1995 J. Don Brock and President Senior Vice President, March 2, 1995 Albert E. Guth Secretary, Treasurer and Director President - Astec, Inc. March 2, 1995 W. Norman Smith and Director President - Telsmith, Inc. March 2, 1995 Robert G. Stafford and Director President - Trencor, Inc. March 2, 1995 Jerry F. Gilbert and Director SIGNATURE TITLE DATE Director March 2, 1995 E. D. Sloan, Jr. Director March 2, 1995 James R. Spear Director March 2, 1995 Joseph Martin, Jr. Director March __, 1995 George C. Dillon Director March 2, 1995 G.W. Jones Director March 2, 1995 Daniel K. Frierson SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Astec Industries, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ASTEC INDUSTRIES, INC. BY: /s/ J. Don Brock J. Don Brock, Chairman+#Chairman of the Board and President (Principal Executive Officer) BY: /s/George C. Dillon *Former Chairman, Manville Corporation Daniel K. Frierson *Chairman and CEO, Dixie Yarns Inc. Jerry F. Gilbert President, Trencor, Inc. Albert E. Guth Albert E. Guth, Senior+Senior Vice President, Secretary and Treasurer(Principal FinancialTreasurer G. W. Jones *Former President of APAC, Inc. Joseph Martin, Jr. *Partner, Martin and Accounting Officer) Date: March 2, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by a majorityLacy William B. Sansom *Chairman and CEO , The H.T. Hackney Co. E.D. Sloan, Jr. *Chairman of the Board, of DirectorsNolas Trading Co, Inc. W. Norman Smith +#President, Astec, Inc. Robert G. Stafford #President, Telsmith, Inc. *Member of the Registrant on the dates indicated: SIGNATURE TITLE DATE /s/ J. Don Brock ChairmanAudit and Compensation Committees +Member of the Board March 2, 1995 J. Don BrockExecutive Committee #Member of the Technical Committee Subsidiaries Astec, Inc. Chattanooga, Tennessee Heatec, Inc. Chattanooga, Tennessee CEI Enterprises, Inc. Albuquerque, New Mexico Roadtec, Inc. Chattanooga, Tennessee Telsmith, Inc. Mequon, Wisconsin Trencor, Inc. Grapevine, Texas Transfer Agent Registrar Chemical Mellon Shareholder Services, L.L.C. Overpeck Centre 85 Challenger Road Ridgefield Park, NJ 07660 Stock Exchange NASDAQ National Market - ASTE Auditors Ernst & Young LLP Chattanooga, Tennessee General Counsel and President /s/ Albert E. GuthLitigation Stophel & Stophel, P.C. Chattanooga, Tennessee Securities Counsel Alston & Bird Atlanta, Georgia Corporate Office Astec Industries, Inc. 4101 Jerome Avenue P.O. Box 72787 Chattanooga, Tennessee 37407 Telephone 423-867-4210 The Form 10-K, as filed with the Securities and Exchange Commission, may be obtained at no cost by any shareholder upon written request to the Senior Vice President March 2, 1995 Albert E. Guth Secretary, Treasurer and Director /s/ W. Norman Smith President -of Astec Industries, Inc. March 2, 1995 W. Norman Smith and Director /s/ Robert G. Stafford President - Telsmith, Inc. March 2, 1995 Robert G. Stafford and Director /s/ Jerry F. Gilbert President - Trencor, Inc. March 2, 1995 Jerry F. Gilbert and Director SIGNATURE TITLE DATE /s/ E.D. Sloan Jr. Director March 2, 1995 E.D. Sloan, Jr. /s/ James R. Spear Director March 2, 1995 James R. Spear /s/ Joseph Martin, Jr. Director March 2, 1995 Joseph Martin, Jr. /s/ George C. Dillon Director March ,1995 George C. Dillon /s/ G.W. Jones Director March 2, 1995 G.W. Jones /s/ Daniel K. Frierson Director March 2, 1995 Daniel K. Frierson Commission File No. 0-14714 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS FILED WITH ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 ASTEC INDUSTRIES, INC.The Annual Meeting will be held at 10:00 a.m. on Thursday, April 25, 1996 in the Training Center at the Corporate office located at 4101 Jerome Avenue, Chattanooga, Tennessee 37407 ASTEC INDUSTRIES, INC. FORM 10-K INDEX TO EXHIBITS Sequentially Exhibit Number Description Numbered Page Exhibit 2.2 Share Purchase and Transfer Agreement by and between the Company and Gibat Ohl Ingenieurgesellschaft fur Anlagentechnik mbH, dated as of October 5, 1994. Exhibit 4.2 Indenture of Trust, dated April 1, 1994, by and between Grapevine Industrial Development Corporation and Bank One, Texas, NA, as Trustee. Exhibit 10.80 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Dresdner Bank Aktiengensellschaft, dated as of December 22, 1993. Exhibit 10.81 Letter of Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Berliner Hondels - und Frankfurter Bank, dated as of December 22, 1993. Exhibit 10.82 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Bayerische Vereinsbank, dated as of December 22, 1993. Exhibit 10.83 Loan Agreement dated as of April 1, 1994, between Grapevine Industrial Development Corporation and Trencor, Inc. Exhibit 10.84 Letter of Credit Agreement, dated April 1, 1994, between The First National Bank of Chicago and Trencor, Inc. Exhibit 10.85 Guaranty Agreement, dated April 1, 1994, between Astec Industries, Inc. and Bank One, Texas, NA, as Trustee. Exhibit 10.86 Astec Guaranty, dated April 29, 1994, of debit of Trencor, Inc. in favor of The First National Bank of Chicago. Exhibit 10.87 Credit Agreement, dated as of July 20, 1994, between the Company and The First National Bank of Chicago. Exhibit 10.88 Guarantee of Wibau-Astec Maschinenfabrik GmbH in favor of Bayerische Vereinsbank, dated as of January 16, 1995. Exhibit 10.89 Waiver for December 31, 1994, dated February 24, 1995 with respect to the First National Bank of Chicago Credit Agreement dated July 29, 1994. Exhibit 11 Statement Regarding Computation of Per Share Earnings. Exhibit 22 Subsidiaries of the Registrant. Exhibit 23 Consent of Independent Auditors. For a list of certain Exhibits not filed with this Report that are incorporated by reference into this Report, see Item 14(a)(3).Tennessee.