Stability, Consistency,
Commitment.
2013 AnnuAl RepoRt
Energy
Infrastructure
Mining
Contents
01 | Financial Overview
02 | Letter to Shareholders
06 | New Products and Technologies
Aggregate and Mining Group
Mobile Asphalt Paving Group
08 | Telsmith, Inc.
10 | Breaker Technology
12 | Osborn Engineered Products SA
28 | Roadtec, Inc.
30 | Carlson Paving Products, Inc.
32 | Astec Mobile Machinery GmbH
(PTY) LTD
14 | Kolberg-Pioneer, Inc.
16 | Johnson Crushers International, Inc.
18 | Astec Mobile Screens, Inc.
20 | Astec do Brasil Fabricação de
Equipamentos Ltda.
Asphalt Group
22 | Astec, Inc.—Dillman Equipment
24 | Heatec, Inc.
26 | CEI Enterprises, Inc.
Underground Group
34 | GEFCO, Inc.
Other Group
36 | Peterson Pacific Corp.
38 | Astec Australia PTY LTD
40 | Corporate Executive Officers
Astec Industries, Inc. was founded in 1972 with the vision to apply creative
thinking and state-of-the-art technology to traditional construction industries,
bolstered by a corporate culture renowned for putting customer service first.
Based in Chattanooga, Tennessee, the Astec Industries, Inc. family of companies
has become America’s leading manufacturer of equipment for asphalt road building,
aggregate processing, oil, gas and water well drilling and wood processing.
2013 Financial Overview
(in thousands, except noted*)
Operating results
Net sales
2013
2012
2011
2010
2009
$ 932,998
$ 936,273
$ 908,641
$ 737,084
$ 698,056
Net income attributable to controlling interest1,2,3
39,042
40,828
40,563
33,237
3,731
Financial position3
Total assets
Working capital
Equity
Per common share*
Net income attributable to controlling interest1,2,3
Basic
Diluted
Book value per common share at year end
Other data
Weighted average number of common shares outstanding
Basic
Diluted
Associates*
$ 749,291
$ 728,783
$ 719,481
$ 651,549
$ 591,564
388,880
358,536
333,719
318,936
278,721
580,511
550,734
531,298
494,276
452,923
$
1.72
1.69
$
$
1.80
1.77
1.80
1.76
$
24.99
23.82
23.09
1.48
1.46
21.63
$
0.17
0.16
19.92
22,749
23,081
3,708
22,680
23,051
3,860
22,589
22,984
3,885
22,517
22,830
3,284
22,447
22,716
3,137
(1) During the fourth quarter of 2012, the Company had a pre-tax gain on the sale of a subsidiary of $5,357,000.
(2) The fourth quarter of 2009 includes impairment charges, primarily goodwill, of $17,036,000 or $13,627,000, net of tax benefit of $3,409,000.
(3) Amounts for 2009–2012 have been restated from previously reported amounts.
Astec Industries, Inc. | 01
Letter to Shareholders
2013 marked the fifth year of an extended recession
in the United States. In spite of the loss in 2013 of
revenue contributions from the sale of product lines
(American Augers, Inc., Trencor and Astec Underground,
Inc. trenchers) late in 2012, we were able to maintain
our revenues and grow earnings during 2013. Earnings
from our continuing operations grew from $34,210,000
to $39,214,000.
We entered the year with a strong balance sheet and
looked for acquisitions, but were unable to conclude
any during 2013. Our Board of Directors decided to
institute a quarterly $0.10 per share dividend which
began at the end of the first quarter of 2013.
During the year, domestic sales grew from $572,522,000
to $599,054,000, and international sales decreased
from $363,751,000 to $333,944,000. Inter national
sales’ percentage of total sales dropped from 38.9%
to 35.8% during the year. We saw practically no growth
in infrastructure spending in the United States, and
the uncertainty of future spending made contractors
reluctant to invest in new equipment. To overcome
this, we increased our presence internationally by
strategically expanding into new markets. We also
developed new products to sell to the infrastructure,
energy, and mining industries. While we are not losing
focus on infrastructure equipment, we are trying to
become less dependent on highway spending as the
Government’s ability to fund infrastructure continues
to be uncertain. On the positive side, we are seeing
a number of states increase their gas taxes and fund-
ing with less dependence on the Federal Highway
Trust Fund.
Benjamin G. Brock
J. Don Brock
We strive to deliver continuous
increases in shareholder value
through stable long-term growth
in earnings per share. To that
end, we plan to expand and
enhance the scope and profit-
ability of our core business
through internal growth and
strategic acquisitions.
02 | Astec Industries, Inc.
In the meantime, we are developing and improving our
equipment for the energy and mining business. We
have successfully sold a number of our 500K oil and
gas drilling rigs, pump trailers, hot water heaters for
fracking, and thermal oil heaters for natural gas pro-
cessing. On the renewable side of the energy business,
we have completed installation of the first line of a
large wood pellet plant for FRAM Renewable Fuels in
Hazlehurst, Georgia. The plant was started at the end
of the year and the customer has given us the order
for two additional lines to go with the plant. We are
optimistic we will sell additional pellet plants in 2014,
based on the performance of this new facility.
In the mining segment, we are constructing a manu-
facturing facility to fabricate crushing and screening
equipment in Brazil. This plant should be operational
during the second half of 2014. We are also developing
the T-Series cone crushers at Telsmith, Inc. The large
900 horsepower unit is finished and is being proto-
typed at this time. We see growth in track mounted
crushers and screens, both in units we sell through
our Aggregate and Mining Group and unit machines we
sell to other OEM’s to mount on their track chassis.
These highly mobile units are changing the landscape
of crushing equipment in the United States as well as
other countries around the world. To our surprise,
these units are also being used in many mining appli-
cations, particularly for opening new sites and for
maintaining leases on existing sites.
Through our R&D efforts in the asphalt side of the
business, we have developed equipment that will
allow our customers to produce up to 70% recycled
material through our existing Double Barrel facilities.
We have also developed a new 100% recycle plant.
Carlson Paving Products, Inc. has successfully designed
and marketed a line of commercial pavers and is grow-
ing that business. Roadtec, Inc. is expanding in the
European market with its product lines, and we con-
tinue to introduce new products from our domestic
companies into the Australian market. Astec Australia
sold its first major crushing plant during 2013 into the
mining market there.
We are investing in our international sales effort in
all of our companies. We also remain diligent with
our focus groups, lean manufacturing, and safety
initiatives.
Per our previously announced succession plan, I stepped
down as CEO of the Company effective January 1, 2014.
I remain with the Company as Chairman of the Board.
In my new role, I will mentor our new CEO and COO
while continuing to be active in our R&D and sales
efforts. Our new President and CEO is Benjamin G. Brock
(Ben), who has been with the Company for over 20
years, most recently as President of the Astec, Inc.
operation and as Group President of the Asphalt Group.
Also changing roles as a result of our succession
planning is W. Norman Smith (Norm). Norm stepped
down as President and Chief Operating Officer of the
Company. Norm is now Vice Chairman of the Board. In
his new role, he will remain Group President of Mobile
Asphalt Paving and continue to be active in sales. Our
new Executive Vice President and COO is Richard J.
Dorris (Rick) who has been in the asphalt equipment
industry for over 30 years, and previously served as
President of Heatec, Inc. and Group President of the
Energy Group.
With the succession of these two men, along with
retirements in other areas, we now have five recently
appointed presidents effective January 1, 2014. We are
extremely pleased that all of the new subsidiary pres-
idents, as well as our new CEO and COO, have come
from within the Company. Over the last forty years, it
has been my desire to not only grow the Company, but
to also grow the management team. It is extremely
rewarding to see us have succession plans in place
where we can promote from within our existing orga-
nization. This group of individuals will continue to
maintain our core values and focus on the growth of
our companies through innovative and new product
development, coupled with industry leading customer
service. We believe that our new executive manage-
ment team is well-seasoned and prepared to take the
Company to the next level. The skills that Norm and
Astec Industries, Inc. | 03
I applied over the last 41 years in building a company
from zero to nearly $1 billion in volume are not neces-
sarily the skills needed in the future. We look forward to
these enthusiastic individuals taking our Company to the
next level and we will support their every effort.
Regarding the topic of support, I want to take this
opportunity to thank all of our Shareholders for
the support over the twenty-seven years that our
Company has been public. I will continue to be an
active part of our Board of Directors while also being
helpful in the engineering, innovation, and sales side
of the business.
Sincerely,
J. Don Brock
Chairman of the Board
Astec Industries, Inc.
Our goal is to grow the Company strategically through
existing divisions along with acquisitions in the industries
that we currently serve—infrastructure, energy, and
mining. We remain vigilant in our efforts to create new
products to fill customer needs and help them to be
successful in what they do.
Fellow Shareholders
It is an honor to be writing you this letter as the new
President and CEO of our Company. Astec Industries, Inc.
(Astec) has been blessed for the past 40 years to have
had a single President and CEO, Dr. J. Don Brock, who is
also the Founder and Chairman of the Board. Astec has
also been blessed to have successfully grown to nearly
$1 billion in annual revenues under his guidance.
And while I am also blessed to have the ultimate good
fortune of calling that same person my father, I am also
thankful for our strong group of outside directors that
executed an extensive succession planning process over
the last several years. Astec is fortunate to have a
strong board of directors, a strong management team,
and strong associates throughout the 17 diversified
divisions that make up our Company.
So, where do we go from here? Our goal is to grow the
Company strategically through existing divisions (mar-
ket share gains and new product development) along
with acquisitions in the industries that we currently
serve—infrastructure, energy, and mining.
of North America. We will work on this in all of our
groups to meet our goal of a 50% domestic, 50% inter-
national revenue split within 3–5 years. In addition, we
remain vigilant in our efforts to create new products to
fill customer needs and help them to be successful in
what they do. As an example, we will be displaying
41 new products at the Con Expo show in March this year.
We did not complete any acquisitions in 2013. We will
work to do so in 2014. Acquisitions are not ego-driven,
so we will acquire only if there is a strategic fit with
our business and cultural fit with our core values.
Thank you for taking the time to read this letter and
thank you for your support as we move ahead to grow
our Company. Astec’s best is yet to come!
Sincerely,
Our companies are well positioned in the North American
market, yet several still have opportunities to grow. We
also have opportunities across the board to grow outside
Ben Brock
President and Chief Executive Officer
Astec Industries, Inc.
04 | Astec Industries, Inc.
1000000
800000
600000
400000
200000
10
0
8
6
4
2
0
Net Sales (in thousands)
$891,328
$817,801
$737,084
$698,056
$908,641
$936,273 $932,998
$663,735
$583,812
$480,797
$1,000,000
800,000
600,000
400,000
200,000
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Operating Profit (in %)
9.54%
8.91%
8.37%
7.81%
4.78%
4.39%
6.86%
6.43%
6.00%
5.46%
10.00%
8.00
6.00
4.00
2.00
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Astec Industries, Inc. | 05
Investing in New Products, Technologies and Markets
Astec Industries and its family of companies have the most creative and innovative engineering groups
in the industry. Through the efforts and ingenuity of these talented individuals, we are able to continually
invest in improvements to current products and in developing new products to meet the needs of customers
or address changes in the market. Astec Industries also actively seeks to find new opportunities where our
equipment and expertise could be applied in new and innovative ways to other industries.
Carlson
CP100
Commercial
Class
Asphalt
Paver
With the heaviest components in the commercial class market the Carlson
CP 100 brings owners longer lifecycle in the material handling system. Easy
access for adjustments and remote greasing stations make maintenance
quick and simple. With a one piece construction that includes the track
frames, the platform of the CP 100 will outlast and outperform any paver
in its weight class.
Roadtec
SX-8e/ex Soil
Stabilizer
The Roadtec SX-8e/ex soil stabilizer-reclaimer features a clean-running
755 hp (563 kW) CAT® C18 engine. It is the largest, most powerful model in the
company’s line of stabilizers-reclaimers. The SX-8e/ex complies with Tier 4
interim and Stage IIIb emission standards. Weighing in at approximately
75,000 lbs. (34,090 kg), the SX-8e/ex is balanced and powerful. Four cutting
speeds and right-hand flush cut allow you to use the SX-8e/ex for a range
of projects including stabilizing, pulverizing, or cold recycling.
Astec Wood
Pelletizing
Plant
Astec’s ground-breaking, state-of-the-art wood pellet plant features a
number of industry-firsts and is poised to change the wood pellet production
industry. The modular design with replicated parallel lines results in there
being very few points in the process where any equipment failure can shut
the entire plant down. In most other plants, a dryer outage would mean a
total plant shutdown. In a 60 TPH Astec plant, a dryer outage means the plant
continues to operate at 40 TPH. In fact, there are very few reasons why the
plant would ever be completely shut down. Even major maintenance cycles
may be performed line-by-line while the plant continues to operate on the
other lines. Redundant design reduces down time.
Breaker
Technology
Mine Runner
Breaker Technology’s Mine Runner is a modern day solution for a future
focused mining operation aimed at safety, lower emissions, and increased
productivity. Not to be confused with a customized road vehicle or generic
people carrier, the Mine Runner has Hydraulic Wheel Drive (HWD) motors,
providing greater power, and extended maintenance and duty cycles. With
HWD for power and braking, there are no brakes to wear and fail, increasing
passenger safety. Designed with one of the cleanest engine configurations,
Tier 4 Interim, the mine runner meets and exceeds air quality standards.
06 | Astec Industries, Inc.
08
04
15
12
05
02
10
14
06
14
08
01
02
09
11
13
07
03
16
01 | Telsmith, Inc.
02 | Breaker Technology
03 | Osborn Engineered Products SA
(PTY) LTD
04 | Kolberg-Pioneer, Inc.
05 | Johnson Crushers International, Inc.
06 | Astec Mobile Screens, Inc.
07 | Astec do Brasil Fabricação de
Equipamentos Ltda.
08 | Astec, Inc.—Dillman Equipment
Chattanooga, Prairie du Chien
09 | Heatec, Inc.
10 | CEI Enterprises, Inc.
| Roadtec, Inc.
11
12 | Carlson Paving Products, Inc.
13 | Astec Mobile Machinery GmbH
14 | GEFCO, Inc.—Loudon, Enid
15 | Peterson Pacific Corp.
16 | Astec Australia PTY LTD
GEFCO 500K
Drilling Rig
The GEFCO 500K is the most advanced and easy-to-operate rig in the world.
The safe, efficient operation keeps your 2–3 man crew out of danger zones.
Only ten loads for the rig, power packs, Driller’s Cabin and Pipe Handler makes
for fast mobility, fast rig up and fast rig down while leaving a small footprint.
The GEFCO 500K has a hook load of 500,000 lbs. (226 Tonnes). The Top Head
Drive, Rack & Pinion rig also features a Slip Spindle, prolonging the life of the
pipe threads. The GEFCO 500K is equipped with a Self-Erecting Driller’s Control
Cabin, Hydraulic Wrenches for Make Up & Break Out, Driller’s Cabin operated
Pipe Handling System, 27½ in. (698.5 mm) Master Bushing and Accommodates
Range III Drill Pipe as well as Drill Collars & Casing to 20 in. (508 mm).
Astec Mobile
Screens
GT165DF
KPI-JCI and Astec Mobile Screens has released the Global Track GT165DF for
contractors and producers seeking a rugged, mobile screening tool in a highly
portable configuration. The GT165DF screening plant was designed as a tool
for overburden, to scalp ahead or behind of a primary crusher, as well as
screen a wide array of materials, from aggregates to recycle to organic
materials. The large loading hopper with a variable speed feeder can with-
stand heavy loads while metering feed material to the screen to optimize
screening production and efficiency.
Astec Industries, Inc. | 07
Telsmith, Inc.
Industries Served:
Infrastructure and Mining
Location: Mequon, Wisconsin, USA
For over 100 years, Telsmith, Inc. has provided inte-
grated minerals processing solutions to the global
aggregate and mining industries through a commit-
ment to ethical business practices, technologically
advanced products, manufacturing excellence and
world-class customer support.
With a focus on improving efficiency, profitability, and
safety in customer operations, Telsmith designs and
manufactures processing equipment for the reduction
and sizing of raw material. Industries served include
precious metals mining, processing of aggregates for
construction materials and recycling of recovered
materials including concrete, asphalt and glass. Core
products include jaw crushers, cone crushers, impact
crushers, vibrating screens and feeders.
In addition to core components, Telsmith also designs
and manufactures complete processing systems.
Telsmith capabilities include custom solutions ranging
from track mobile crushing systems, to large modular
processing plants that deliver high production results
with low operating costs.
Offering a full spectrum of services including con-
sulting, engineering and construction management,
Telsmith brings a truly integrated package of solutions
to the market place.
In 2013 Telsmith continued the roll-out of the T-Series
line of crushers into the global marketplace with the
introduction and initial sale of the T300 to a major
mining company.
08 | Astec Industries, Inc.
Infrastructure
Mining
Aggregate and
Mining Group
Crushing Equipment
Vibrating Equipment
Screening Equipment
Track Plants
Portable Plants
Modular Plants
Photos
1 Telsmith 44CCP closed circuit cone crushing plant
used for recycling operations.
2 Telsmith modular plant in operation.
3 The Telsmith JCP2238-38 is truly an all-in-one porta-
ble processing solution with a H2238 Hydra-Jaw™
crusher, 38 SBS cone, and screen.
4 Telsmith 820 Screen Track Plant processes up to
907 mtph and produces up to four products
simultaneously.
5 The Telsmith T300 cone crusher capable of processing
between 138–406 mtph.
1
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3
4
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2
5
6
Breaker Technology
Industries Served:
Infrastructure and Mining
Locations: Thornbury, Ontario, CA/Riverside,
California, USA/Solon, Ohio, USA
Breaker Technology (BTI) has been a manufacturer
of a wide range of mining, quarry and construction
equipment since 1958. BTI specializes in hydraulic
breakers and stationary rockbreaker systems for
breaking oversize rocks at primary crushers, grizzlies,
drawpoints and stopes. BTI is taking reach to the
extreme with its new TRX Series Rockbreaker System,
representing our 2,000th Boom System produced. The
NT-E Series Rockbreaker System is the 5th generation
of small booms from BTI. With enhanced coverage and
a larger breaker capability, this boom has an optimized
structural design. Robust connections, improved ped-
estal mounting and common cylinders make for a
maintenance friendly boom system.
BTI also produces a full line of rugged, low-profile,
underground utility vehicles for the mining sector
including mobile rockbreakers, scalers, scissors lifts,
crane trucks, lube trucks, ANFO loaders, shotcrete
mixers and placers, cassette systems and personnel
vehicles. Our all new Mine Runner (all purpose vehicle)
is a modern day solution for a future focused mining
operation, aimed at safety, lower emissions, and
increased productivity.
Well-recognized as a leader in global mining and
quarry markets, BTI offers unparalleled experience
and product support through its network of strategi-
cally located international distributors. When your
jobs become bigger and results become tougher to
achieve, rely on BTI to continue to exceed your needs.
Astec Industries, Inc. | 11
Infrastructure
Mining
Aggregate and
Mining Group
Mine, Quarry and
Construction Equipment
Rockbreaker Systems
Hydraulic Breakers
Mobile Rockbreakers
Dedicated Scalers
Underground Utility
Vehicles
Demolition and
Construction
Attachments
Photos
1 NT-E20 Rockbreaker System with a BX30 Hydraulic
Breaker.
2 TRX64 Rockbreaker System with a BXR65 Hydraulic
Breaker.
3 MINE RUNNER All Purpose Vehicle has Hydraulic
Wheel Drive.
4 Mobile Mine Truck.
5 Scissor lift truck.
6 TM15 Mobile Rockbreaker.
Osborn Engineered
Products SA (PTY) LTD
Industries Served:
Infrastructure and Mining
Location: Johannesburg, South Africa
Osborn Engineered Products SA, a name synonymous
with robustness and reliability, has the confidence of
more than 90 years’ experience to back their product
range and service. From design concept and manu-
facture, to installation and commissioning, Osborn
provides the world’s mining and aggregate industries
with a full range of crushers, feeders, screens, min-
eral sizers, grinding mills, hydraulic hammers and
conveyor idlers. As one of South Africa’s foremost
mining equipment manufacturers, Osborn offers a
complete solution, from the primary tip to the milling
discharge circuits.
During 2013 a full range of robust vertical and hori-
zontal shaft impact crushers has been added to our
product offering. These versatile crushers meet the
need for sand production in the aggregate environment.
Osborn now also offers an imported range of equip-
ment sourced from the Astec group of companies in
America. The range includes asphalt plants, asphalt
paving equipment, trenching technology, directional
drills and high frequency screens.
Osborn’s installed base of operating machines is ever
expanding across the globe and to support them we
have a network of direct agents in numerous coun-
tries. We are able to demonstrate established working
examples to prospective customers, in materials and
processes, close to their home markets.
12 | Astec Industries, Inc.
Infrastructure
Mining
Aggregate and
Mining Group
Jaw and Cone Crushers
Modular Plants
Coal Crushers
Vibrating Screens
Aggregate Feeders and
Conveyors
Rotary Scrubbers
Photos
1 1,000 tons per hour Rotary Coal Breaker.
2 Modular Jaw Crushing Plant.
3 D8 Apron Feeder.
4 GBEX Heavy Duty Vibrating Grizzly.
5 57SBS Cone Crusher.
1
2
5
3
4
1
3
4
2
5
Kolberg-Pioneer, Inc.
Industries Served:
Infrastructure and Mining
Location: Yankton, South Dakota, USA
Kolberg-Pioneer, Inc. (KPI) is a worldwide leader in man-
u facturing equipment for the aggregate, construction,
paving and recycling industries. As an innovative,
high-integrity manufacturer, KPI develops quality,
state-of-the-art products and has the ability to engi-
neer custom products because of its highly-qualified
engineering staff.
Marketed under the KPI-JCI and Astec Mobile Screens
brand, Kolberg-Pioneer, Inc. designs, manufactures
and markets full lines of washing, conveying, crushing,
screening, classifying and portable and mobile plant
equipment. For more than 75 years, Kolberg-Pioneer’s
products and its dedicated KPI-JCI and Astec Mobile
Screens dealer network have been recognized within
the aggregate and recycling industries as suppliers of
dependable equipment and experienced application-
oriented support.
In 2013, Kolberg-Pioneer, Inc. rolled out innovations
and improvements that provided its customers
with the total solution for successful operations.
New product innovations include the new 170’ long
SuperStacker™, the new generation Vanguard Jaw
Crusher with optional tramp iron relief system, the
new generation Global Track GT125 jaw crusher, and
the Series 9000 Dewatering Screen. These advances
demonstrate the emphasis placed on product line
diversification and new market development, as well
as the company’s commitment to providing complete
aggregate solutions. In 2013, KPI-JCI and Astec Mobile
Screens was also awarded a contract with Naval Facil-
ities Engineering and Expeditionary Warfare Center
(NAVFAC EXWC) for four self-contained systems that
the Navy Seabees could deploy in the Galaxy C5 aircraft.
Astec Industries, Inc. | 15
Infrastructure
Mining
Aggregate and
Mining Group
Material Handling
Equipment
Crushing Equipment
Screening Equipment
Track Mount Equipment
Washing and Classifying
Equipment
Photos
1 The FastPack system is an innovative, patented
combination of crushing, screening and stockpiling
equipment from KPI-JCI and Astec Mobile Screens.
2 The new 36” x 170’ SuperStacker™ is the latest model
of KPI-JCI and Astec Mobile Screens telescoping
stackers.
3 The FT2650 Fast Trax® Jaw Crusher produc es up to
500 tons per hour, and is effective in aggregate or
recycle applications.
4 The FT5260CC Fast Trax® Impact Crusher fea tures
the Andreas Series Impact Crusher with production
rates up to 750 tons per hour.
5 The Global Track GT125 Jaw Crusher features a
Vanguard Jaw Crusher and provides a large feed
opening of up to 400 tons per hour.
Johnson Crushers
International, Inc.
Industries Served:
Infrastructure and Mining
Location: Eugene, Oregon, USA
Johnson Crushers International, Inc. (JCI) designs,
manufactures and markets full lines of cone crushers,
horizontal and incline vibrating screens, track-mounted,
portable and stationary crushing and screening plants
under the KPI-JCI and Astec Mobile Screens brand.
In 2013, Johnson Crushers International launched the
Kodiak Plus® K500+ Cone Crusher as well as the por-
table Kodiak Plus® K500+PM. The Kodiak Plus® K500+
is a 500-horsepower, remote-adjust cone crusher and
is the latest addition to the Kodiak Plus® Cone Crusher
family that includes the K200+, K300+, and K400+. The
new model fills a demand for larger secondary and
tertiary cone crushers that are used by high production
aggregate facilities. The company also launched a
new 8’ x 24’ horizontal screen plant and expanded its
PDQ parts offerings.
Johnson Crushers International continued to broaden
its line of portable crushing and screening plants. Those
additions included complete new designs as well as
customizations to existing designs. In 2013 it delivered
an updated version of the Fast Pack system. KPI-JCI
and Astec Mobile Screens was awarded a contract
with Naval Facilities Engineering and Expeditionary
Warfare Center (NAVFAC EXWC). In 2013, JCI accom-
plished acceptance and delivery of four self-contained
systems that the Navy Seabees could deploy in the
Galaxy C5 aircraft.
16 | Astec Industries, Inc.
Infrastructure
Mining
Aggregate and
Mining Group
Material Handling
Equipment
Crushing Equipment
Screening Equipment
Track Mount Equipment
Washing and Classifying
Equipment
Photos
1 The GT200DF features a quarry-duty, state-of-the-art
cone crusher design in a highly mobile package.
2 The FT6203 is a track-mounted screening plant fea-
turing a large 6’ wide x 20’ long 3-deck horizontal
screen.
3 The Global Track GT200CC features the Kodiak Plus®
K200+ Cone Crusher, the heaviest, most efficient cone
crusher in its class, and a large 6’ wide, 2-deck incline
screen.
4 The Combo® Screen combines the best characteristics
of both incline and horizontal screens, and has proven
to deliver unsurpassed productivity, efficiency and
flexibility in wet or dry applications.
5 The Kodiak Plus® K500+ is a new 500-horse power,
remote-adjust cone crusher. It is the latest addition to
the Kodiak Plus® Cone Crusher family.
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4
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Astec Mobile Screens, Inc.
Industries Served:
Infrastructure and Mining
Location: Sterling, Illinois, USA
Astec Mobile Screens, Inc. is the world’s premier sup-
plier of innovative screening solutions. The full line of
products includes mobile screening plants, portable
and stationary screen structures and high frequency
screens for the quarry, recycle, sand and gravel and
other material processing industries. Operating con-
ditions for the material pro ducer can vary and Astec
Mobile Screens responds by offering a broad range of
operating systems.
In 2013, Astec Mobile Screens continued to broaden
the Global Track product line by launching the GT145S
and the GT165 screen plants. Astec Mobile Screens also
introduced a new high frequency screen designed for
the industrial sands market. The new high frequency
screen for the industrial sands market is a redesigned
version of Astec Mobile Screens’ original Vari-Vibe®
High Frequency Screen. Engineered to be a versatile
screen, the high frequency screen is designed to oper-
ate in numerous markets, including fractionated
reclaimed asphalt pavement (FRAP), wood pelleting
and now industrial sands. Astec Mobile Screens con-
tinues its focus on the ever-growing RAP market with
the ProSizer, which uses the Vari-Vibe® screen to
separate RAP millings.
Astec Mobile Screens also recently completed an
extensive renovation, adding much-needed space to
the facility to accommodate the company’s growth.
Astec Industries, Inc. | 19
Energy
Infrastructure
Mining
Aggregate and Mining Group
Mobile Screening
Plants
Portable Screening
Plants
Stationary Screen
Structures
High Frequency
Screens
Photos
1 The Global Track GT165DF was designed to provide
contractors and producers with a versatile screening
plant that would handle high volumes of material in
both scalping and sizing applications.
2 The FT710 KDS is a track-mounted screening plant
capable of processing recycled materials, crushed
stone, demolition waste, topsoil and more.
3 The High Frequency Screen from Astec Mobile Screens
features aggressive vibration applied directly to the
screen that allows for the highest capacity in the mar-
ket for removal of fine material, as well as chip sizing,
dry manufactured sand and more.
4 The PTSC 2618VM is a portable for in-line material
processing and durability for site-to-site movement.
5 The Global Track GT3660 is a self-contained, track-
mounted mobile conveyor that can be used as a
transfer or stacking conveyor with portable or track
crushing and screening equipment.
6 The ProSizer from Astec Mobile Screens incorporates
a double-deck PEP Vari-Vibe high frequency screen
with horizontal shaft impactor.
Astec do Brasil
Fabricação de
Equipamentos Ltda.
Industries Served:
Infrastructure and Mining
Location: Vespasiano, Minas Gerais, Brasil
Astec do Brasil Fabricação de Equipamentos (Astec
do Brasil) began its operations in 2011 by reselling
equipment and spare parts for Telsmith, KPI-JCI, Astec
Mobile Screens and BTI. The operation grew with Astec
do Brasil starting to assemble the first crushers in
Brazil. During 2014, Astec do Brazil looks forward to
starting operations in a new facility of approximately
12,300 m2 and around 120 employees.
Products initially manufactured at the new facility will
include stationary jaw and crushers, vibrating feeders
and screens as well as the Astec Voyager 120 portable
asphalt plant. Astec do Brasil also represents the track-
mounted crushing and screening units from the brands
Astec Mobile Screens, KPI-JCI and Telsmith, as well as
acting as a support base to underground mining prod-
ucts from BTI.
By combining a customer-oriented sales team with
after-sales support and technical assistance, Astec
do Brasil focuses on acquiring new customers while
maintaining its current customer base. Intending to
expand and attend the demand of mining and aggre-
gate market, Astec do Brasil reaches all potential cus-
tomers through a network of local representatives.
Astec do Brasil is a joint venture between Astec
Industries, Inc. and MDE, a recognized leader in pro-
viding material handling solutions to the Brazilian
market. Both partners are committed to successfully
positioning Astec do Brazil as a vehicle to achieve
market share growth for Astec brands throughout
Brazil and South America.
20 | Astec Industries, Inc.
Infrastructure
Mining
Aggregate and
Mining Group
Mobile Screening Plants
Portable Screening
Plants
Stationary Screen
Structures
High Frequency Screens
Crushing and Vibrating
Equipment
Asphalt Production
Equipment
Photos
1 The GT200DF features a quarry-duty, state-of-the-art
cone crusher design in a highly mobile package.
2 Telsmith cone crusher with hydraulic overload protec-
tion, chamber clearing, push button adjustment, and
Telsmith’s exclusive Anti-Spin system.
3 Voyager 120 highly portable asphalt plant capable of
running 30% RAP (Reclaimed Asphalt Pavement).
4 The GT205S mobile track screening plant features
a double-or-triple deck screen for processing sand
and gravel, top soil, slag, crushed stone and recycled
materials.
5 Telsmith screen installation at an aggregate process-
ing plant.
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Chattanooga
Prairie du Chien
Energy
Infrastructure
Asphalt Group
Portable Asphalt Plants
Relocatable Asphalt
Plants
Stationary Asphalt
Plants
Soil Remediation
Equipment
Wood Pellet Processing
Plants
Control Systems
Photos
1 Astec relocatable asphalt plants provide the capacity
of a full-size plant with lower set-up cost.
2 Dillman relocatable asphalt plants are offered in both
relocatable and portable arrangements.
3 Dillman offers asphalt producers a heavy-duty drum that
generates high quality asphalt mix.
4 Astec Six PackTM portable asphalt plant is engineered
for hassle-free transporting, and quick and easy setup
at the job site.
5 Astec offers the first USA manufactured complete low
emission, state-of-the-art wood pellet plant.
6 Double Barrel aggregate dryer/mixer can produce
asphalt mix with up to 50% recycled asphalt product.
Astec, Inc.—
Dillman Equipment
Industries Served:
Infrastructure and Energy
Locations: Chattanooga, Tennessee, USA/
Prairie du Chien, Wisconsin, USA
Astec, Inc. continues to be a world leader in Hot and
Warm Mix Asphalt (HMA/WMA) equipment technology,
support and training and is renowned for excellent
customer service and nationwide parts and service
teams. Astec offers a complete line of portable, relo-
catable and stationary asphalt plant equipment pro-
duced under the Astec and the Dillman brands. In
addition, Astec also manufactures soil remediation
equipment and wood pellet processing plants. Core
products include the Double Barrel® Drum Mixer; TCII
PC-based computer control system; the Phoenix®
burner series; Six Pack® Portable Asphalt plants; and
New Generation long-term Storage Silos.
In 2013 Astec achieved its goal of seeing the first Astec
Wood Pellet Plant begin production. This is a signifi-
cant new product and a new industry for Astec. This
groundbreaking, state-of-the-art wood pellet plant
features a unique modular design with replicated par-
allel lines. Astec is very excited about the potential
for this new product line and is very pleased to have
orders for this plant.
Astec continues to innovate and meet the challenges
that face the industry. In 2013, Astec brought to mar-
ket the V-Pack™ stack temperature control system,
which helps control plant exhaust temperature while
increasing efficiency when running a wide range of
mix types. Astec also developed a concept for a High
RAP Double Barrel option, with the first retrofit version
currently in operation.
Astec continues to grow and maintain customer loyalty
through innovative equipment designs, industry lead-
ing customer service and state-of-the-art technical
education.
Astec Industries, Inc. | 23
Heatec, Inc.
Industries Served:
Infrastructure and Energy
Location: Chattanooga, Tennessee, USA
Heatec makes, sells and services a broad line of heat-
ers, liquid storage tanks and related products. These
products are used mostly at facilities of producers
and manufacturers. Key users are hot-mix asphalt
(HMA) plants, asphalt terminals, emulsion terminals
and concrete producers. Other key users include oil
and gas producers, chemical producers, food produc-
ers, roofing manufacturers, power plants, etc.
Heatec is heavily involved in building new asphalt
storage terminals and emulsion plants. The company
does major mechanical design and electrical engineer-
ing work for these facilities and builds much of the
equipment. Heatec polymer blending systems are
also used at numerous terminals for making Polymer
Modified Asphalt Cement. The company also assists
in on-site installation.
Industrial heaters, unrelated to asphalt, make up a large
share of the products Heatec produces. Customers
for industrial heaters are mainly chemical and oil-gas
industries. Heatec built and delivered a variety of
large heaters for the gas and oil industry.
Heatec is providing large convection heaters for wood
pellet plants developed by Astec.
24 | Astec Industries, Inc.
Energy
Infrastructure
Asphalt Group
Hot Oil Heaters
Industrial Heaters
Direct Contact Water
Heaters
Asphalt and Fuel Tanks
Polymer Blending
Systems
Steam Generators
Asphalt Terminals
Asphalt Emulsion
Plants
Photos
1 Firestream® water heater for fracking.
2 Asphalt storage tanks at a HMA plant.
3 Helitank™ portable asphalt storage tank and
thermal fluid header.
4 Thermecon® thermal fluid heater for inland
waterway barge.
5 Firestorm® water heater at a food processing facility.
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CEI Enterprises, Inc.
Industries Served:
Infrastructure and Energy
Location: Albuquerque, New Mexico, USA
CEI Enterprises, founded in 1969, is a well-known mar-
ket leader in production, design and service of asphalt
heating & storage systems, asphalt-rubber blending
systems, and fuel handling systems. The company’s
product offerings extend well beyond its core market
of hot mix asphalt, into other industries including oil
& gas refining, chemical processing, and industrial
fabrication.
Based in Albuquerque, New Mexico, CEI regularly meets
the challenges of designing production equipment to
meet increasingly stringent air quality regulations in
the American West. The resourcefulness and adapt-
ability of CEI’s engineering & manufacturing capabili-
ties have propelled CEI to the forefront of producing
high-efficiency, low-emission equipment. In 2013, CEI
expanded its product line to include turn-key asphalt
emulsion plants. Additional types of production facili-
ties are forecast for the coming year.
CEI is a market leader in asphalt-rubber blending
systems. These systems utilize ground rubber from
recycled tires, blended with liquid asphalt, to produce
better-quality, safer, and longer-lasting roads. CEI
asphalt rubber systems are among the most techno-
logically advanced, lowest-emission, easiest to use,
and best-supported in the world.
Asphalt Group
Asphalt Rubber
Blending Systems
Energy
Infrastructure
Hot Oil Heaters
Asphalt Storage Tanks
Heavy Fuel Preheaters
Emission Control
Equipment
Liquid Additive Systems
Concrete Plants
Photos
1 New CEI asphalt emulsion plant installed in Nevada.
2 CEI produced this vertical helical coil heater for use in
the food processing industry.
Other products include thermal oil heaters, heat
transfer systems, storage tanks for liquid asphalt
and fuel oils, and emissions control equipment.
3 CEI emulsifier tank located indoors at an asphalt
emulsion plant.
4 Reaction tank component of a CEI asphalt-rubber
blending system.
5 Mixing trailer component of a CEI asphalt-rubber
blending system.
6 CEI asphalt storage tanks.
Astec Industries, Inc. | 27
Roadtec, Inc.
Industry Served:
Infrastructure
Location: Chattanooga, Tennessee, USA
Founded in 1981, Roadtec, Inc. (Roadtec) began as a
manufacturer of asphalt pavers. Today, Roadtec offers
an extensive product line, including cold planers, soil
stabilizers, brooms and material transfer vehicles.
In 2013 Roadtec’s two biggest innovations were the
Guardian Telematics System and Edge Extended War-
ranties. The Guardian system allows Roadtec and its
customers to always be connected to the equipment
and monitor and diagnose it. The equipment can also
report any faults and production totals to the cus-
tomer in real time. It is truly like Roadtec is always
there with the machine. The Edge Warranties provide
a warranty for any piece of equipment Roadtec builds.
This covers the machine for 3 years or 3,000 hours
and the engine for 5 years or 6,000 hours. With this
warranty it even allows Roadtec to reimburse the cus-
tomer for any time they may have spent repairing the
machine. These two programs have allowed Roadtec
to far surpass its competition in the level of service
we can provide.
Roadtec debuted many new products in 2013, one of
the most important being the new Tier 4 powered
RP-190e and RP-195e. These two 10’ pavers have
many industry leading features that have made them
extremely popular and Roadtec is excited to carry this
momentum into 2014.
28 | Astec Industries, Inc.
Mobile Asphalt Paving Group
Milling Machines
Cold In Place Asphalt Recyclers
Infrastructure
Commercial Class Asphalt Pavers
Highway Class Asphalt Pavers
Material Transfer Vehicles
Self-Propelled Brooms
Photos
1 The RP-2505 is a powerful 8’ (2.5 m) steel-tracked paver
built to operate with a high density dual tamper bar screed.
Visibility, maintenance access, and operator comfort high-
light the RP-2505. The versatile RP-2505 is capable of paving
roller compacted concrete as well as asphalt pavements.
2 Tier 4i engine, CAN-bus communication system, and hydrau-
lically swinging operators’ stations are just some of the
newest innovations for the RP-190e. Now equipped with the
Guardian® Telematics System, more time can be dedicated
to paving and less to worrying.
3 Roadtec continues its commitment to providing the industry
with the longest lasting and best producing front mounted
brooms. With an 85 horsepower engine, positive pressure
cab and side-shift pivoting broom head, the FB-85 can get
the job done for years to come.
4 The Roadtec SX-8e/ex soil stabilizer-reclaimer features
a clean-running 755 hp (563 kW) CAT® C18 engine. It is the
largest, most powerful model in the company’s line of
stabilizers-reclaimers.
5 The SB-2500e/ex Shuttle Buggy® material transfer vehicle
(MTV) can store and transfer hot-mixed asphalt material
from a truck to a paver for continuous paving.
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Carlson Paving
Products, Inc.
Industry Served:
Infrastructure
Location: Tacoma, Washington, USA
Carlson Paving Products, the leader in screed technol-
ogy for over 25 years, continues its upward march in
the highway class asphalt industry. With its offering of
seven individually unique highway class screeds and
the ability of being attached to highway class pavers
that are built by the six major tractor manufacturers
in the world, Carlson’s product line-up has been able
to maintain a dominant market share of the important
infrastructure building community.
Engineered, designed, built, and supported by the
industry’s most qualified personnel, Carlson products
have been able to dominate a very demanding market
segment.
Acquired by Astec Industries in 2000, Carlson Paving
Products has enjoyed continued growth into the com-
mercial paving market. With the introduction of the next
generation of commercial paver, the CP-100, a heavy
duty feature rich commercial class paver, Carlson pro-
vides a high quality and longer life cycle paver to a
very important segment of the industry that has been
long overlooked.
Carlson continues to offer industry leading attach-
ments and innovations designed to improve produc-
tivity, safety, and durability of roads to the motoring
public and maximize road dollars spent worldwide.
With unmatched support and technical knowledge,
Carlson Paving Products and its customer base of
paving contractors, dealers, and top OEM paver man-
ufacturers will continue to bring innovative changes
to the asphalt industry.
Astec Industries, Inc. | 31
Mobile Asphalt Paving Group
Asphalt Paving Screeds
Commercial Class Asphalt Pavers
Infrastructure
Windrow Pick-Up Machines
Photos
1 The CP-75 with its revolutionary new material delivery
system takes this class of paving to new heights.
Incorporating onboard generator, electric heat and
screed mounted controls, the CP-75 is sure to become
the new standard in small class paving.
2 EZIII Paving Screeds use an advanced design in heating
elements to deliver even controllable heat.
3 Carlson’s newly designed EZ R2 10 rear mount asphalt
screed.
4 Carlson’s EZIV Asphalt Screed.
5 Carlson’s exclusive LED safety Blade Light.
6 The Safety Edge Endgate attachment made for all
Carlson screeds, as well as all other manufacturers’
screeds, produces a compacted and extruded road
edge at a 30° angle for greater public safety.
Astec Mobile
Machinery GmbH
Industry Served:
Infrastructure
Location: Hameln, Germany
Astec Mobile Machinery (AMM) GmbH is Astec’s
European technology and marketing company with
German roots. The focus of the company is to get
technical excellence in product design and service
in a very competitive manner.
Located in Hameln, a road machinery center for
Germany, AMM designs road machinery and sells and
services other Astec group products, like the Roadtec
Shuttle Buggy® Material Transfer Vehicle and Cold
Planers. Modern facilities allow high technology stan-
dards, combined with an extraordinary quality of the
local supplier base and educated employees. Local
area agents assist the AMM sales organization, to
coordinate the marketing and service efforts for the
individual product.
AMM produces roadside pavers, soil compactors,
high-density paver screeds and material remix hop-
pers for stabilized soil and asphalt mixes. The newly
released twin tamper screeds and the RMH (remix
hopper) is the engineering answer for the better
roads of the 21st century campaign of the German
Department of transportation.
With the introduction of Shuttle Buggy® MTV remix
technology in Europe, the governments are becoming
more sensitive to road pavement quality improvements
by new technology. AMM will invest further into new
products of this segment to serve this market to offer
efficient and powerful products. AMM is pleased to be
able to say that after one year of actively promoting
the Roadtec Buggies, they are becoming the standard
material transfer vehicle for the German market.
32 | Astec Industries, Inc.
Infrastructure
Mobile Asphalt Paving Group
Material Transfer Vehicle
Asphalt Pavers—Asphalt Screeds
Milling Machines
Cold In Place Recyclers
Front Mounted Brooms
Road Wideners
Photos
1 Newly developed self-propelled Remix hopper insert
for pavers.
2 Shuttle Buggy material transfer vehicle.
3 High Density paver screed.
4 New Boxer soil compactor roller with integrated
compaction monitor.
5 Largest rental fleet of Shuttle Buggies in Europe.
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Enid
Loudon
Energy
Infrastructure
Mining
Underground Group
Fluid Pump Trailers
Drills for Oil and Gas
Water Well Drills
Drills for Mining Core
Samples
Photos
1 GEFCO 500K—Top Head Drilling Rig.
2 GEFCO 135—Rotary Table Drilling Rig.
3 GEFCO 500K—Top Head Drilling Rig.
4 GEFCO DP 2000—Double Pumper.
5 GEFCO 50K—Top Head Drilling Rig.
6 GEFCO 22RC—Rotary Table Drilling Rig.
GEFCO, Inc.
Industries Served:
Infrastructure and Energy
Locations: Enid, Oklahoma, USA/
Loudon, Tennessee, USA
GEFCO is a world leader in the design and manufacture
of portable drilling rigs and related equipment for the
water well, environmental, groundwater monitoring,
construction, mining and shallow oil & gas exploration
and production industries. With two plants located in
Enid, Oklahoma and Loudon, Tennessee, our facilities
include fully-integrated machine shops, fabrication and
weld shops, assembly, painting and testing facilities.
The Enid facility currently manufactures top head
drive drilling rigs, rotary table drilling rigs and the
King Oil Tools product line.
The Loudon facility currently manufactures the GEFCO
500K, a vertical drilling rig and the GEFCO DP 2000, both
products for the oil and gas industry. Both locations
manufacture equipment that targets similar markets
and products.
For more than 82 years, GEFCO has provided rugged
and dependable equipment that has been delivered to
over 100 countries. GEFCO will continue its long tradi-
tion of providing the highest quality drilling equipment
and service available in the marketplace. Their primary
focus is meeting the needs and expectations of the
customers and the industries that they serve.
Astec Industries, Inc. | 35
Peterson Pacific Corp.
Industries Served:
Infrastructure and Energy
Location: Eugene, Oregon, USA
Peterson Pacific Corp. is a Eugene, Oregon based man-
ufacturer of horizontal grinders, disc and drum chip-
pers, wood debarkers, blower trucks, and screens that
are sold worldwide. The company has 110,000 square
feet of modern manufacturing space with an innovative
engineering group. The company also has an East Coast
Parts Distribution Warehouse to better serve their
East Coast customers. Peterson machines are sold
and supported through a worldwide network of dis-
tributors and direct sales and service representatives.
Peterson Horizontal Grinders reduce wood, low value
logs and other organic materials; the reduced material
is used in the compost, mulch and biomass energy
markets. Peterson grinders can also reduce certain
construction and demolition materials such as asphalt
shingles that can be then recycled and used in hot mix
asphalt paving. Peterson drum and disc chippers and
debarkers are used to produce wood chips for pulp
and paper production as well as biomass energy mar-
kets. Peterson blower trucks and trailers are used to
broadcast compost and mulch for landscaping and
erosion control. Peterson deck screens are used for
classifying materials to maximize the value of each
product. Many Peterson machines are available in
either electric or diesel power depending on the appli-
cation. For increased mobility at a job site, both tracked
and wheeled versions of many of their products are
available.
36 | Astec Industries, Inc.
Infrastructure
Energy
Other Group
Whole Tree Chippers
Whole Tree Debarkers
Horizontal Grinders
Blower Trucks and
Trailers
Screening Equipment
Photos
1 A Peterson 5710C Horizontal Grinder paired with a
Peterson GT-3660 Stacking Conveyor allows mobility
and larger piles of ground material.
2 Peterson 5000H Whole Tree Chippers are the premier
in-field chipping solution for clean pulp and paper
chips.
3 The Peterson DS6162 Deck Screen is ideal for opera-
tions that need multiple classifications of screened
material.
4 The Peterson 7900EL Disc Chipper paired with a 6830
chain flail debarker is the ultimate in-field chipping
application for really large wood.
5 Peterson’s new 5710D Horizontal Grinder is their latest
in a long line of recycling machines.
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Astec Australia PTY LTD
Industries Served:
Infrastructure, Mining and Energy
Location: Acacia Ridge, Queensland, Australia
Committed to providing exceptional service and deliv-
ering quality equipment, Astec Australia PTY LTD
(Astec Australia) continues to expand operations in
Australia and New Zealand for the Astec Industries
Family of Companies.
Achievements for 2013 were the installation of two
full crushing and processing plants for the mining
industry and mobile underground rock breakers for
the precious minerals industry. These products con-
tributed strongly to the growth of Astec’s Aggregate
and Mining Group, doubling sales from 2012 that were
double that for 2011. Installations of asphalt plants
and paving equipment were achieved throughout the
year maintaining Astec’s reputation as a leading sup-
plier in the Australian Asphalt Industry.
Astec Australia added service offerings through the
introduction of the Astec Asphalt Plant Operators
Schools. These schools, facilitated with Astec Inc.,
are now an extremely popular annual event on our
calendar.
Astec Australia will continue to develop opportunities
for the Astec Industries Family of Companies, main-
taining its asphalt and paving focus while building on
its entry into the aggregate and mining industry and
seeking opportunities for the Energy Group. With a
service network now established in Perth, Melbourne,
Sydney and Brisbane backed up by additional ware-
houses in Perth and Melbourne, Astec Australia is well
placed to grow its after-market business.
Astec Industries, Inc. | 39
Energy
Infrastructure
Mining
Other Group
REPRESENTING:
Astec, Inc.
Astec Underground
Carlson Paving Products
Heatec
CEI Enterprises
KPI-JCI and Astec Mobile Screens
Osborn Engineered Products
Roadtec
Telsmith
Breaker Technology
Photos
1 Modular aggregate crushing and screening plant.
2 Astec portable asphalt production plant.
3 Astec Australia offers state-of-the-art training
classes for plant operators.
4 Roadtec RP-170 rubber-tire asphalt paver.
5 Roadtec RX-700 milling machine.
6 KPI-JCI Fast Trax® mobile aggregate processing plant.
Corporate Information
Board of Directors
Corporate Executive Officers
J. Don Brock, PhD
Chairman of the Board of
Astec Industries, Inc.
Chairman—Executive Committee
W. Norman Smith
Vice Chairman and Group President—
Mobile Asphalt Paving of Astec
Industries, Inc.
Member—Executive Committee
James B. Baker
Managing Partner of River Associates
Investments, LLC
Member—Audit Committee
Member—Compensation Committee
Phillip E. Casey
Former Chairman of the Board of
Gerdau Ameristeel Corporation
Member—Audit Committee
Member—Compensation Committee
Willliam G. Dorey
Former Chief Executive Officer and
President of Granite Construction, Inc.
Member—Nominating and Corporate
Governance Committee
Member—Compensation Committee
Daniel K. frierson
Chairman of the Board and
Chief Executive Officer of the
Dixie Group, Inc.
Member—Executive Committee
Chairman—Nominating and Corporate
Governance Committee
William D. Gehl
Chairman of the Board of IBD
Southeastern Wisconsin
Chairman of the Board of
FreightCar America
Chairman—Compensation Committee
Member—Audit Committee
Willliam B. Sansom
Chairman of the Board and Chief Executive
Officer of The H.T. Hackney Co.
Member—Audit Committee
Member—Nominating and Corporate
Governance Committee, Lead
Independent Director
Glen E. Tellock
Chairman of the Board, President
and Chief Executive Officer of
The Manitowoc Company, Inc.
Chairman—Audit Committee
Member—Nominating and Corporate
Governance Committee
Benjamin G. Brock
President and Chief Executive Officer of
Astec Industries, Inc.
40 | Astec Industries, Inc.
PICTURED ABOvE, fROM LEfT
TO RIGhT, TOP TO BOTTOM:
Benjamin G. Brock
President and
Chief Executive Officer
J. Don Brock
Chairman of the Board
W. Norman Smith
Vice Chairman and
Group President—
Mobile Asphalt Paving
Richard J. Dorris
Executive Vice President and
Chief Operating Officer
Richard A. Patek
Group President
Aggregate & Mining Group
Joseph P. vig
Group President
AggReCon Group
David C. Silivious
Vice President, CFO
and Treasurer
Stephen C. Anderson
V.P. of Administration,
Corporate Secretary and
Director of Investor Relations
Robin A. Leffew
Corporate Controller
Other Information
Transfer Agent
Computershare
250 Royall Street, Canton, MA 02021
800.617.6437
www.computershare.com/investor
Stock Exchange
NASDAQ, National Market—ASTE
Auditors
Ernst & Young LLP, Chattanooga, TN
General Counsel and Litigation
Chambliss, Bahner & Stophel, P.C.,
Chattanooga, TN
Securities Counsel
Alston & Bird LLP, Atlanta, GA
Investor Relations
Stephen C. Anderson, Director, 423.553.5934
Corporate Office
Astec Industries, Inc., 1725 Shepherd Road,
Chattanooga, TN 37421
Ph 423.899.5898 Fax 423.899.4456
www.astecindustries.com
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 Astec Industries, Inc., Attention Investor
Relations.
The Company’s Code of Conduct is posted at
www.astecindustries.com.
The Annual Meeting will be held on April 24,
2014 at 10:00 A.M., EST in the Training Center
of Astec, Inc. located at 4101 Jerome Avenue,
Chattanooga, TN 37407.
FINANCIAL
INFORMATION
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except as noted*)
Consolidated Statement of Income Data
Net sales
Gross profit1, 4
Gross profit %4
Selling, general and administrative expenses2
Intangible asset impairment charge3
Research and development
Income from operations4
Interest expense
Other income (expense), net
Net income from continuing operations4
Income (loss) from discontinued operations,
net of tax
Gain on sale of subsidiary, net of tax
Net income4
Net income attributable to controlling interest4
Earnings (loss) per common share*4
Net income attributable to controlling
interest from continuing operations
Basic
Diluted
Income (loss) from discontinued operations
Basic
Diluted
Net income attributable to controlling interest
Basic
Diluted
Consolidated Balance Sheet Data
Working capital4
Total assets4
Total short-term debt
Long-term debt, less current maturities
Total equity4
Cash dividends declared per common share*
Book value per diluted common share
2013
2012
2011
2010
2009
$932,998
207,119
$936,273
207,951
$908,641
211,533
$737,084
175,929
$698,056
147,540
22.2%
22.2%
23.3%
23.9%
21.1%
133,337
136,323
132,371
109,354
--
18,101
55,681
423
1,937
39,214
--
--
39,214
39,042
1.72
1.69
--
--
1.72
1.69
--
20,520
51,108
339
1,783
34,210
3,401
3,378
40,989
40,828
1.50
1.48
0.30
0.29
1.80
1.77
--
20,764
58,398
190
1,082
40,440
225
--
40,665
40,563
1.79
1.76
0.01
0.01
1.80
1.76
--
15,987
50,588
339
632
34,648
(1,269)
--
33,379
33,237
1.53
1.51
(0.06)
(0.06)
1.48
1.46
100,651
17,036
16,257
13,596
532
1,118
5,849
(2,080)
--
3,769
3,731
0.26
0.26
(0.09)
(0.09)
0.17
0.16
$388,880
749,291
$358,536
728,783
$333,719
719,481
$318,936
651,549
$278,721
591,564
--
--
--
--
--
--
--
--
--
--
580,511
0.30
550,734
1.00
531,298
494,276
452,923
--
--
--
at year-end*4
24.99
23.82
23.09
21.63
19.92
12011 Gross profit includes charges of $2,162,000 related to sale of utility product line assets in the Underground Group.
22011 Selling, general and administrative expenses include an impairment charge of $2,304,000 related to aviation
equipment classified as held for sale during 2011.
32009 includes impairment charges, primarily goodwill, of $17,036,000, or $15,022,000 after tax.
4Amounts shown for 2009-2012 have been increased from amounts previously reported in Forms 10-K due to a restatement
for an error related to the elimination of intercompany profit on interdivisional sales. See Note 2 to the accompanying
consolidated financial statements for additional details.
42 I Astec Industries, Inc.
SUPPLEMENTARY FINANCIAL DATA
(in thousands, except as noted*)
Quarterly Financial Highlights
(Unaudited)
2013 Net sales
Gross profit
Net income from continuing operations
Net income
Net income attributable to controlling interest
Earnings per common share*
Net income attributable to controlling interest
Basic
Diluted
2012 Net sales
Gross profit1
Net income from continuing operations1
Income from discontinued operations
Net income1
Net income attributable to controlling interest1
Earnings per common share*
Net income attributable to controlling interest
from continuing operations1:
Basic
Diluted
Income from discontinued operations:
Basic
Diluted
Net income attributable to controlling interest1:
Basic
Diluted
Common Stock Price*
2013 High
2013 Low
2012 High
2012 Low
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$247,833
58,567
13,251
13,251
13,171
$248,127
55,442
11,152
11,152
11,092
$213,177
45,787
6,527
6,527
6,514
$223,861
47,323
8,284
8,284
8,265
0.58
0.57
0.49
0.48
0.29
0.28
0.36
0.36
$251,967
59,020
12,293
234
12,527
12,514
$238,275
53,323
9,741
848
10,589
10,526
$218,391
47,297
6,633
318
6,951
6,903
$227,640
48,311
5,543
5,379
10,922
10,885
0.54
0.53
0.01
0.01
0.55
0.54
0.42
0.42
0.04
0.04
0.46
0.46
0.29
0.29
0.01
0.01
0.30
0.30
0.24
0.24
0.24
0.23
0.48
0.47
$36.99
33.50
$40.68
32.60
$35.85
30.87
$37.12
26.48
$37.50
33.15
$34.10
27.01
$39.01
33.23
$33.47
26.09
1Amounts shown have been increased from amounts previously reported in Forms 10Q and 10K due to a restatement of 2012
financial statements (See Note 2 to the accompanying financial statements for additional details). The quarterly impact of the
restatement is as follows:
a. Gross profit increased by $423,000, $262,000, $82,000 and $245,000 in the first, second, third and fourth quarters of 2012,
respectively.
b. Net income from continuing operations, net income and net income attributable to controlling interest increased by $269,000,
$160,000, $51,000 and $141,000 in the first, second, third and fourth quarters of 2012, respectively.
c. Basic earnings per share on net income attributable to controlling interest from continuing operations increased $0.01 in the
first and second quarters of 2012.
d. Diluted earnings per share on net income attributable to controlling interest from continuing operations increased $0.01 in the
first, second and fourth quarters of 2012.
e. Basic earnings per share on net income attributable to controlling interest increased $0.01 in the first and fourth quarters of
2012.
f. Diluted earnings per share on net income attributable to controlling interest increased $0.01 in the first and fourth quarters of
2012.
The Company’s common stock is traded in the Nasdaq National Market under the symbol ASTE. Prices shown are the high and low
sales prices as announced by the Nasdaq National Market. The Company paid a dividend of $1.00 per share on its common stock
in the fourth quarter of 2012. On February 28, 2013, the Company’s Board of Directors approved a dividend policy pursuant to which
the Company began paying a quarterly $0.10 per share dividend on its common stock beginning in the second quarter of 2013. The
Company paid quarterly dividends of $0.10 per common share to shareholders in the second, third and fourth quarters of 2013. As
determined by the proxy search on the record date for the Company’s 2014 annual shareholders’ meeting, the number of holders of
record is approximately 300.
Astec Industries, Inc. I 43
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements that involve inherent risks and uncertainties.
Actual results may differ materially from those contained in these forward-looking statements. For additional
information regarding forward-looking statements, see “Forward-looking Statements” on page 59.
Overview
Astec Industries, Inc. (the “Company”) is a leading manufacturer and seller of equipment for the road building,
aggregate processing, geothermal, water and oil and gas and wood processing industries. The Company’s
businesses:
•
•
design, engineer, manufacture and market equipment that is used in each phase of road building,
including quarrying and crushing the aggregate, producing asphalt or concrete, recycling old asphalt
or concrete and applying the asphalt;
design, engineer, manufacture and market additional equipment and components, including
geothermal drilling, oil and natural gas drilling, industrial heat transfer, wood chipping and grinding,
wood pellet processing; and
• manufacture and sell replacement parts for equipment in each of its product lines.
The Company has 15 manufacturing companies, 14 of which fall within four reportable operating segments,
which include the Asphalt Group, the Aggregate and Mining Group, the Mobile Asphalt Paving Group and the
Underground Group. The business units in the Asphalt Group design, manufacture and market a complete line
of asphalt plants and related components, heating and heat transfer processing equipment and storage tanks
for the asphalt paving and other unrelated industries including energy production, concrete mixing plants and
wood pellet processing equipment. The business units in the Aggregate and Mining Group design, manufacture
and market equipment for the aggregate, metallic mining and recycling industries. The business units in the
Mobile Asphalt Paving Group design, manufacture and market asphalt pavers, material transfer vehicles,
milling machines, stabilizers and screeds. The business units in the Underground Group design, manufacture
and market portable drilling rigs and related equipment for the water well, environmental, groundwater
monitoring, construction, geothermal, mining and shallow oil and gas exploration and production industries.
The Company also has one other category that contains the business units that do not meet the requirements
for separate disclosure as an operating segment. The business units in the Other category include Peterson
Pacific Corp. (“Peterson”), Astec Australia Pty Ltd (“Astec Australia”), Astec Insurance Company (“Astec
Insurance” or “the captive”) and Astec Industries, Inc., the parent company. Peterson designs, manufactures
and markets whole-tree pulpwood chippers, horizontal grinders and blower trucks. Astec Australia markets
and installs equipment, services and provides parts for many of the products produced by the Company’s
manufacturing companies. Astec Insurance is a captive insurance company.
The Company’s financial performance is affected by a number of factors, including the cyclical nature and
varying conditions of the markets it serves. Demand in these markets fluctuates in response to overall
economic conditions and is particularly sensitive to the amount of public sector spending on infrastructure
development, privately funded infrastructure development, changes in the price of crude oil, which affects the
cost of fuel and liquid asphalt, and changes in the price of steel.
The Company believes that federal highway funding influences the purchasing decisions of the Company’s
customers, who are typically more comfortable making capital equipment purchases with such legislation in
place. Federal funding provides for approximately 25% of all highway, street, roadway and parking construction
in the United States.
The U.S. Congress funded federal transportation expenditures for the fiscal year ending September 30, 2011
at the 2010 level of $41.1 billion, and it approved short-term funding of federal transportation expenditures for
the six-month period ending on March 31, 2012 at the same levels.
In July 2012, President Obama signed into law the “Moving Ahead for Progress in the 21st Century Act”
(“Map-21”), which authorizes $105 billion of federal spending on highway and public transportation programs
through fiscal year 2014. Map-21 was the first long-term highway legislation enacted since 2005 and continued
federal highway and transit funding at 2012 levels with modest increases for inflation. Although Map-21 helped
stabilize the federal highway program in the near term, the Company believes a longer multi-year highway
44 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
program would have the greatest positive impact on the road construction industry and allow its customers to
plan and execute longer-term projects. The level of future federal highway construction is uncertain and any
future funding may be at lower levels than in the past.
Several other countries have implemented infrastructure spending programs to stimulate their economies.
The Company believes these spending programs have had a positive impact on its financial performance;
however, the magnitude of that impact cannot be determined.
The public sector spending described above is needed to fund road, bridge and mass transit improvements.
The Company believes that increased funding is unquestionably needed to restore the nation’s highways
to a quality level required for safety, fuel efficiency and mitigation of congestion. In the Company’s opinion,
amounts needed for such improvements are significantly greater than amounts approved to date, and funding
mechanisms such as the federal usage fee per gallon of gasoline, which has not been increased in 20 years,
would likely need to be increased along with other measures to generate the funds needed.
In addition to public sector funding, the economies in the markets the Company serves, the price of oil and
its impact on customers’ purchasing decisions and the price of steel may each affect the Company’s financial
performance. Economic downturns generally result in decreased purchasing by the Company’s customers,
which, in turn, causes reductions in sales and increased pricing pressure on the Company’s products. Rising
interest rates also typically negatively impact customers’ attitudes toward purchasing equipment. The Federal
Reserve has maintained historically low interest rates in response to the economic downturn which began in
2009; however, interest rates may increase in 2014.
Significant portions of the Company’s revenues relate to the sale of equipment involved in the production,
handling, recycling or installation of asphalt mix. Liquid asphalt is a by-product of oil production. An increase
in the price of oil increases the cost of asphalt, which is likely to decrease demand for asphalt and therefore
decrease demand for certain Company products. While increasing oil prices may have a negative financial
impact on many of the Company’s customers, the Company’s equipment can use a significant amount of
recycled asphalt pavement, thereby mitigating the effect of increased oil prices on the final cost of asphalt for
the customer. The Company continues to develop products and initiatives to reduce the amount of oil and
related products required to produce asphalt mix. Oil price volatility makes it difficult to predict the costs of
oil-based products used in road construction such as liquid asphalt and gasoline. The Company’s customers
appear to be adapting their prices in response to the fluctuating oil prices, and the fluctuations did not appear
to significantly impair equipment purchases in 2013. The Company expects oil prices to continue to fluctuate
in 2014. Minor fluctuations in oil prices should not have a significant impact on customers’ buying decisions.
However, political uncertainty in oil producing countries, interruptions in oil production due to disasters,
whether natural or man-made, or other economic factors could significantly impact oil prices which could
negatively impact demand for the Company’s products.
Contrary to the negative impact of higher oil prices on many of the Company’s products as discussed above,
sales of several of the Company’s products, including products manufactured by the Underground Group,
which are used to drill for oil and natural gas, would benefit from higher oil and natural gas prices, to the extent
that such higher prices lead to further development of oil and natural gas production. The Company believes
further development of domestic oil and natural gas production capabilities is needed and would positively
impact the domestic economy and the Company’s business.
Steel is a major component in the Company’s equipment. Moderate steel price increases occurred during
the fourth quarter of 2013. Steel prices have stabilized in the first quarter of 2014 with moderate demand and
relatively short mill lead times for most products. The Company expects steel prices to remain near current
levels in the short term unless there is significant demand increases due to growth in the broader economy. It
is uncertain, however, if these trends will continue throughout the remainder of 2014. The Company continues
to utilize forward-looking contracts coupled with advanced steel purchases to minimize the impact of increased
steel prices. The Company will continue to review the trends in steel prices in future months and establish
future contract pricing accordingly.
In addition to the factors stated above, many of the Company’s markets are highly competitive, and its
products compete worldwide with a number of other manufacturers and dealers that produce and sell similar
products. During 2011 and a portion of 2012, a weak dollar, combined with improving economic conditions
in certain foreign economies, had a positive impact on the Company’s international sales. In 2013, the dollar
Astec Industries, Inc. I 45
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
strengthened against many foreign currencies which had a negative effect on pricing in certain foreign markets
the Company serves. The Company expects the dollar to remain strong in the near-term relative to most
foreign currencies. Increasing domestic interest rates or weakening economic conditions abroad could cause
the dollar to continue to strengthen, which could negatively impact the Company’s international sales.
In the United States and internationally, the Company’s equipment is marketed directly to customers as well
as through dealers. During 2013, approximately 75% to 80% of equipment sold by the Company was sold
directly to the end user. The Company expects this ratio to remain relatively consistent through 2014.
The Company is operated on a decentralized basis with a complete management team for each operating
subsidiary. Finance, insurance, legal, shareholder relations, corporate accounting and other corporate matters
are primarily handled at the corporate level (i.e., Astec Industries, Inc., the parent company). The engineering,
design, sales, manufacturing and basic accounting functions are all handled at each individual subsidiary.
Standard accounting procedures are prescribed and followed in all reporting.
The non-union employees of each subsidiary have the opportunity to earn profit-sharing incentives in the
aggregate of up to 10% of each subsidiary’s after-tax profit if such subsidiary meets established goals. These
goals are based on the subsidiary’s return on capital employed, cash flow on capital employed and safety. The
profit-sharing incentives for subsidiary presidents and corporate officers are normally paid from a separate
formula-driven pool based on the same key performance indicators used in the employee incentive plan.
Explanatory Note
The Company has restated its previously filed consolidated balance sheets as of December 31, 2012 and
2011 and its consolidated income statements for the years ended December 31, 2012 and 2011 to correct
immaterial accounting errors related to the elimination of intercompany profits on interdivisional sales within
the Company’s Asphalt Group. Management discovered the error during its routine month-end review of
its September 2013 internal financial statements while investigating an unexpected variance at one of its
subsidiaries. The errors caused the financial results and inventory levels previously reported for 2009 through
2012 to be understated by an immaterial amount each period. Although the impact of the errors was immaterial
in each period, the cumulative impact of the correcting the errors, when aggregated together, would have
been material to the Company’s consolidated income statement for the year ended December 31, 2013. A
description of the error follows.
As part of the process to consolidate each of the Company’s subsidiaries’ financial statements each month,
intercompany and interdivisional sales and cost of sales recorded on the Company’s subsidiaries’ books
must be eliminated. Additionally, inventory levels must be decreased and margins deferred for the portion
of these products that have not yet been sold to non-affiliated customers. Beginning in 2009, sales and
cost of sales on interdivisional transactions between the two divisions of the Company’s subsidiary, Astec,
Inc., were properly eliminated at the time of the interdivision sales; however, the related margins were not
subsequently recognized when the products were eventually sold to non-affiliated customers. This resulted
in an understatement of margins, related income taxes and inventory levels as reported in the Company’s
consolidated financial statements for each period.
For further details on the nature of the corrections and the related impact on the Company’s previously issued
consolidated financial statements, see Note 2, “Restatement of Previously issued Financial States” included
in the notes to the consolidated financial statements.
46 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Results of Operations: 2013 vs. 2012
Net Sales
Net sales decreased $3,275,000 or 0.3%, from $936,273,000 in 2012 to $932,998,000 in 2013. Sales are
generated primarily from new equipment purchases made by customers for use in construction for privately
funded infrastructure and public sector spending on infrastructure as well as equipment for the aggregate,
mining, quarrying and recycle markets and the oil and gas and geothermal industries.
Domestic sales for 2013 were $599,054,000 or 64.2% of consolidated net sales compared to $572,522,000
or 61.1% of consolidated net sales for 2012, an increase of $26,532,000 or 4.6%. The overall increase in
domestic sales for 2013 compared to 2012 reflects the strengthening economic conditions for the Company’s
products in the domestic market.
International sales for 2013 were $333,944,000 or 35.8% of consolidated net sales compared to $363,751,000
or 38.9% of consolidated net sales for 2012, a decrease of $29,807,000 or 8.2%. International sales decreased
due to the economic uncertainties in several countries in which the Company markets its products as well as
a strengthening U.S. dollar against many foreign currencies. The Company continues its efforts to grow its
international business by increasing its presence in the markets it serves.
Parts sales as a percentage of consolidated net sales increased 20 basis points to 26.5% in 2013 from 26.3%
in 2012. In dollars, parts sales increased 0.4% to $246,905,000 in 2013 from $245,851,000 in 2012.
Gross Profit
Consolidated gross profit as a percentage of sales remained constant at 22.2% in 2013 and 2012.
Selling, General and Administrative Expense
Selling, general and administrative expenses for 2013 were $133,337,000 or 14.3% of net sales, compared
to $136,323,000 or 14.6% of net sales for 2012, a decrease of $2,986,000 or 2.2%. In 2013, the Company
recorded $799,000 of expense related to the 2014 ConExpo Show compared to $143,000 in 2012. The
decrease in selling, general and administrative expense from prior year was primarily due to a decrease in
legal and professional expenses of $1,525,000.
Research and Development
Research and development expenses decreased $2,419,000 or 11.8% to $18,101,000 in 2013 from
$20,520,000 in 2012. During 2013 and 2012, the Company invested heavily in research and development
across all segments for numerous new equipment offerings which will be showcased at the 2014 ConExpo
Show.
Interest Expense
Interest expense in 2013 increased $84,000, or 24.8%, to $423,000 from $339,000 in 2012. The increase
in interest expense in 2013 compared to 2012 related primarily to the increase in bank fees related to the
Company’s line of credit agreement with Wells Fargo.
Interest Income
Interest income decreased $98,000 or 8.6% to $1,047,000 in 2013 from $1,145,000 in 2012.
Other Income (Expense), Net
Other income (expense), net was $1,937,000 in 2013 compared to $1,783,000 in 2012, an increase of
$154,000 or 8.6% due to an increase in investment income on a portion of the Company’s excess cash
invested in mutual funds beginning in 2013.
Income Tax
Income tax expense on continuing operations for 2013 was $19,028,000, compared to income tax expense
of $19,487,000 for 2012. The effective tax rates for 2013 and 2012 were 32.7% and 36.3%, respectively. The
primary reason for the decrease in the effective tax rate from 2012 to 2013 is tax legislation passed in early
2013 that allowed the Company to obtain a tax credit in 2013 based upon amounts expensed for research and
development in 2012 in addition to research and development costs incurred in 2013.
Net Income Attributable To Controlling Interest
The Company had net income attributable to controlling interest of $39,042,000 in 2013 compared to
$40,828,000 in 2012 (which includes $6,779,000 of income from discontinued operations) for a decrease
of $1,786,000, or 4.4%. Earnings per diluted share decreased $0.08 from $1.77 in 2012 to $1.69 in 2013.
Weighted average diluted shares outstanding for the years ended December 31, 2013 and 2012 were
23,081,000 and 23,051,000, respectively. The increase in shares outstanding is primarily due to the granting
of restricted stock units.
Astec Industries, Inc. I 47
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Backlog
The backlog of orders at December 31, 2013 was $290,242,000 compared to $263,791,000 at December 31,
2012, an increase of $26,451,000, or 10.0%. The increase in the backlog of orders was due to an increase
in domestic backlog of $43,880,000 or 28.0% offset by a decrease in international backlog of $17,429,000 or
16.3%. The Aggregate and Mining Group backlog increased $16,899,000 or 19.2% from 2012 to 2013 due in
part to an order received in late 2013 for a large crushing, screening and wash plant for a domestic customer.
The Asphalt Group backlog increased $13,891,000 or 9.9% from 2012. The Underground Group backlog
increased $669,000 or 4.8% from 2012 due to the increased demand for units for the oil and gas industry in
the latter part of 2013. The Mobile Asphalt Paving Group backlog increased $1,826,000 or 42.8%. The Mobile
Asphalt Paving Group typically operates with a smaller backlog than the other segments due to the nature of
its products. The Company is unable to determine whether the increase in backlogs was experienced by the
industry as a whole.
Net Sales by Segment (in thousands)
Asphalt Group
Aggregate and Mining Group
Mobile Asphalt Paving Group
Underground Group
Other Group
2013
$ 237,959
350,514
168,444
73,104
102,977
2012
$ 234,562
355,428
158,115
82,802
105,366
$ Change % Change
1.4%
$ 3,397
(1.4%)
(4,914)
6.5%
10,329
(11.7%)
(9,698)
(2.3%)
(2,389)
Asphalt Group: Sales in this group increased to $237,959,000 in 2013 compared to $234,562,000 in 2012, an
increase of $3,397,000 or 1.4%. Domestic sales for the Asphalt Group increased 11.4% in 2013 compared
to 2012 due to the strengthening of the U.S. domestic economy. International sales for the Asphalt Group
decreased 23.8% in 2013 compared to 2012. The decrease in international sales occurred primarily in
Canada, Mexico, Asia, India and Central America. Parts sales for the Asphalt Group increased 4.8% in 2013
compared to 2012.
Aggregate and Mining Group: Sales in this group were $350,514,000 in 2013 compared to $355,428,000 in
2012, a decrease of $4,914,000 or 1.4%. Domestic sales for the Aggregate and Mining Group increased 1.9%
in 2013 compared to 2012 primarily due to improving economic conditions and improved demand related
to infrastructure, particularly in the oil and gas producing regions of the country. International sales for the
Aggregate and Mining Group decreased 4.6% in 2013 compared to 2012. The decrease in international
sales occurred primarily in Europe, Post-Soviet States, South America, China and Brazil. Parts sales for the
Aggregate and Mining Group increased 5.5% in 2013 compared to 2012.
Mobile Asphalt Paving Group: Sales in this group were $168,444,000 in 2013 compared to $158,115,000 in
2012, an increase of $10,329,000 or 6.5%. Domestic sales for the Mobile Asphalt Paving Group increased
8.8% in 2013 over 2012. The Mobile Asphalt Paving Group completed the first phase of the redesign of
equipment models affected by the federally mandated switch to Tier IV engines which resulted in an increase
in interest from domestic customers for the newly designed models in 2013. International sales for the Mobile
Asphalt Paving Group decreased 3.9% in 2013 compared to 2012. The decrease internationally occurred
primarily in Russia offset by an increase in Europe. Parts sales for this group remained relatively flat in 2013
compared to 2012.
Underground Group: Sales in this group were $73,104,000 in 2013 compared to $82,802,000 in 2012, a
decrease of $9,698,000 or 11.7%. Domestic sales for the Underground Group decreased 27.9% in 2013
compared to 2012 due to the sale of the small utility trencher and drill line of products in 2012. International
sales for the Underground Group increased 38.9% in 2013 compared to 2012. The increase in international
sales occurred in the Post-Soviet States and Africa, and was primarily related to water well drilling rigs sales.
Parts sales for the Underground Group decreased 31.3% in 2013 due to the sale of the small utility trencher
and drill line of products in 2012.
48 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Other Group: Sales for the Other Group were $102,977,000 in 2013 compared to $105,366,000 in 2012,
a decrease of $2,389,000 or 2.3%. Domestic sales for the Other Group, which are generated by Peterson
Pacific Corp., increased 28.1% in 2013 compared to 2012. The increase in sales was a result of land clearing
projects for a large pipeline project in the northeastern U.S., as well as an improvement in the U.S. grinder
and recycler market. International sales for the Other Group, which are generated primarily by Astec Australia,
decreased 17.8% in 2013 compared to 2012. The decrease in international sales is due primarily to 2012
including abnormally high asphalt plant sales. Astec Australia functions as a dealer for the Company’s other
subsidiaries and sells, installs and services equipment for the asphalt, aggregate and mining, mobile asphalt
and underground construction markets of Australia. Parts sales for the Other Group increased 7.7% in 2013.
Segment Profit (Loss) (in thousands)
Asphalt Group
Aggregate and Mining Group
Mobile Asphalt Paving Group
Underground Group
Other Group
2013
$ 26,962
33,031
11,767
(4,902)
(27,375)
2012
$ 22,012
34,687
10,721
(2,238)
(30,453)
$ Change % Change
22.5%
$ 4,950
(4.8%)
(1,656)
9.8%
1,046
(119.0%)
(2,664)
10.1%
3,078
Asphalt Group: Profit for this group was $26,962,000 for 2013 compared to $22,012,000 for 2012, an increase
of $4,950,000 or 22.5%. This group had an increase of $4,962,000 in gross profit compared to 2012 as a result
of the $3,397,000 increase in sales.
Aggregate and Mining Group: Profit for this group was $33,031,000 in 2013 compared to $34,687,000 in 2012,
a decrease of $1,656,000 or 4.8%. This group had a decrease of $2,705,000 in gross profit during 2013 as
a result of the $4,914,000 decrease in sales offset by a $1,305,000 reduction in research and development
expenses.
Mobile Asphalt Paving Group: Profit for this group was $11,767,000 in 2013 compared to profit of $10,721,000
in 2012, an increase of $1,046,000 or 9.8%. This group had an increase of $2,092,000 in gross profit during
2013 as a result of the $10,329,000 increase in sales.
Underground Group: This group had a loss of $2,238,000 in 2012 compared to a loss of $4,902,000 in 2013, an
increase of $2,664,000 or 119.0%. This group had a decrease of $4,314,000 in gross profit during 2013 driven
by a decrease in sales of $9,698,000 offset by a reduction in selling, general and administrative expenses of
$2,108,000.
Other Group: The Other Group had a loss of $27,375,000 in 2013 compared to a loss of $30,453,000 in 2012,
an improvement of $3,078,000 or 10.1%. Gross profit for this group decreased $867,000 or 4.7% year over
year due in part to decreased sales of $2,389,000 for this group. The profit in this group was also significantly
impacted by U.S. federal income tax expense, which is recorded at the parent company.
Results of Operations: 2012 vs. 2011
Net Sales
Net sales increased $27,632,000 or 3.0%, from $908,641,000 in 2011 to $936,273,000 in 2012. Sales are
generated primarily from new equipment purchases made by customers for use in construction for privately
funded infrastructure and public sector spending on infrastructure as well as equipment for the aggregate,
mining, quarrying and recycle markets and the oil and gas and geothermal industries. The overall increase in
sales for 2012 compared to 2011 reflects the strengthening economic conditions in domestic markets.
Domestic sales for 2012 were $572,522,000 or 61.1% of consolidated net sales compared to $543,527,000
or 59.8% of consolidated net sales for 2011, an increase of $28,995,000 or 5.3%. The overall increase in
domestic sales for 2012 compared to 2011 reflects the strengthening economic conditions for the Company’s
products in the domestic market.
International sales for 2012 were $363,751,000 or 38.9% of consolidated net sales compared to $365,114,000
or 40.2% of consolidated net sales for 2011, a decrease of $1,363,000 or 0.4%. International sales remained
relatively flat but still strong as a percentage of 2012 total sales due to strong economic conditions in the
international markets the Company serves as well as the continued efforts of the Company to grow its
international business.
Astec Industries, Inc. I 49
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Parts sales as a percentage of consolidated net sales increased 210 basis points to 26.3% in 2012 from 24.2%
in 2011. In dollars, parts sales increased 11.8% to $245,851,000 in 2012 from $219,963,000 in 2011.
Gross Profit
Consolidated gross profit as a percentage of sales decreased 110 basis points to 22.2% in 2012 from 23.3% in
2011. The decrease in gross margin is partially due to the costs associated with the redesign of certain of our
products as a result of the switch to Tier 4 engines mandated by the federal government as well as increased
production costs associated with new products recently introduced to the market and the underutilization of
plant capacity at certain of our facilities. Sales price increases lagging behind raw material price increases on
the aged backlog of equipment orders and competitive pricing pressures also contributed to the decrease in
gross profit as a percent of sales.
Selling, General and Administrative Expense
Selling, general and administrative expenses for 2012 were $136,323,000 or 14.6% of net sales, compared
to $132,371,000 or 14.6% of net sales for 2011, an increase of $3,952,000 or 3.0%. The increase was
primarily due to an increase in payroll and related expenses of $6,638,000, an increase in travel expenses of
$1,501,000, and an increase in health insurance of $4,125,000. These expenses were offset by a decrease
in expenses of $3,159,000 related to the triennial Con-Expo Show which took place in 2011, profit sharing
expense of $1,911,000, the write down of aviation assets held for sale of $2,304,000 (2011 only) and stock
based compensation expense of $1,548,000.
Research and Development
Research and development expenses decreased $244,000 or 1.2% to $20,520,000 in 2012 from $20,764,000
in 2011. During 2012 and 2011 the Company invested heavily in research and development across all
segments for numerous new equipment offerings, including the continued development of a wood pellet
processing plant.
Interest Expense
Interest expense in 2012 increased $149,000, or 78.4%, to $339,000 from $190,000 in 2011. The increase
in interest expense in 2012 compared to 2011 related primarily to the increase in bank fees related to the
Company’s new line of credit agreement with Wells Fargo.
Interest Income
Interest income increased $262,000 or 29.7% to $1,145,000 in 2012 from $883,000 in 2011. The increase in
interest income resulted from an increase in amounts invested in 2012 compared to 2011 and interest earned
on notes receivable from customers.
Other Income (Expense), Net
Other income (expense), net was $1,783,000 in 2012 compared to $1,082,000 in 2011, an increase of
$701,000 or 64.8% due to increased licensing fee income.
Income Tax
Income tax expense on continuing operations for 2012 was $19,487,000, compared to income tax expense
of $19,733,000 for 2011. The effective tax rates for 2012 and 2011 were 36.3% and 32.8%, respectively.
The primary reason for the increase in the effective tax rate from 2011 to 2012 was the unavailability of the
research and development tax credit for 2012. Tax legislation passed in early 2013 allowed the Company to
obtain a tax credit in 2013 based upon amounts expensed for research and development in 2012 in addition
to research and development costs expensed in 2013.
Net Income Attributable To Controlling Interest
The Company had net income attributable to controlling interest of $40,828,000 in 2012 (which includes
$6,779,000 income from discontinued operations) compared to $40,563,000 in 2011 for an increase of
$265,000, or 0.7%. Earnings per diluted share increased slightly to $1.77 in 2012 from $1.76 in 2011. Weighted
average diluted shares outstanding for the years ended December 31, 2012 and 2011 were 23,051,000 and
22,984,000, respectively. The increase in shares outstanding is primarily due to the vesting of restricted stock
units and the exercise of stock options by employees of the Company.
Backlog
The backlog of orders at December 31, 2012 was $263,791,000 compared to $268,618,000 (adjusted for
discontinued operations) at December 31, 2011, a decrease of $4,827,000, or 1.8%. The decrease in the
backlog of orders was due to an increase in domestic backlog of $11,578,000 or 8.0% offset by a decrease in
international backlog of $16,405,000 or 13.3%. The Asphalt Group backlog increased $24,053,000 or 20.8%
from 2011. The Asphalt Group increase was to related domestic orders and was primarily due to an order for
a wood pellet processing plant. The Aggregate and Mining Group backlog decreased $10,139,000 or 10.3%.
50 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
The decrease in backlog for the Aggregate and Mining Group occurred in both domestic and international
orders. The Underground Group backlog decreased $7,438,000 or 34.8% from 2011 due to the decreased
demand for units for the oil and gas industry in the latter part of 2012. The Mobile Asphalt Paving Group
backlog decreased $1,884,000 or 30.6%. The Mobile Asphalt Paving Group typically operates with a smaller
backlog than the other segments due to the nature of their products. The Company is unable to determine
whether the decrease in backlogs was experienced by the industry as a whole.
Net Sales by Segment (in thousands)
Asphalt Group
Aggregate and Mining Group
Mobile Asphalt Paving Group
Underground Group
Other Group
2012
$ 234,562
355,428
158,115
82,802
105,366
2011
$ 260,404
333,278
187,988
37,683
89,288
$ Change % Change
(9.9%)
$ (25,842)
6.6%
22,150
(15.9%)
(29,873)
119.7%
45,119
18.0%
16,078
Asphalt Group: Sales in this group decreased to $234,562,000 in 2012 compared to $260,404,000 in 2011, a
decrease of $25,842,000 or 9.9%. Domestic sales for the Asphalt Group decreased 8.9% in 2012 compared
to 2011 due primarily to delayed approval of a federal long-term highway funding bill, which impacted
orders that typically require a long production lead time, in addition to state budgetary concerns. The federal
highway funding was passed in July 2012 but was well after most states let their jobs for construction in
2012. International sales for the Asphalt Group decreased 12.4% in 2012 compared to 2011. The decrease in
international sales occurred primarily in Europe, the Middle East, Post-Soviet States and South America. Parts
sales for the Asphalt Group remained flat in 2012 compared to 2011.
Aggregate and Mining Group: Sales in this group were $355,428,000 in 2012 compared to $333,278,000 in
2011, an increase of $22,150,000 or 6.6%. Domestic sales for the Aggregate and Mining Group increased
16.2% in 2012 compared to 2011 primarily due to improving economic conditions and improved demand
related to infrastructure, particularly in the oil and gas producing regions of the country. International sales for
the Aggregate and Mining Group decreased 1.3% in 2012 compared to 2011. The decrease in international
sales occurred primarily in South America, Africa, and the Middle East. Parts sales for the Aggregate and
Mining Group increased 7.6% in 2012 compared to 2011.
Mobile Asphalt Paving Group: Sales in this group were $158,115,000 in 2012 compared to $187,988,000 in
2011, a decrease of $29,873,000 or 15.9%. Domestic sales for the Mobile Asphalt Paving Group decreased
15.3% in 2012 over 2011. Domestic sales of equipment for this Group were negatively affected by the
federal government mandated switch to Tier IV engines as well as increased competition from international
manufacturers that had a longer transition time to implement the Tier IV engines on their imports to the U.S.
market. The decrease in domestic sales for the Mobile Asphalt Paving Group is also due in part to the increase
of available rental units in the market. International sales for the Mobile Asphalt Paving Group decreased
18.7% in 2012 compared to 2011. The decrease internationally occurred primarily in Canada, South America
and Mexico. Parts sales for this group increased 4.5% in 2012.
Underground Group: Sales in this group were $82,802,000 in 2012 compared to $37,683,000 in 2011, an
increase of $45,119,000 or 119.7%. Domestic sales for the Underground Group increased 177.4% in 2012
compared to 2011. International sales for the Underground Group increased 33.1% in 2012 compared to
2011. The increase in international sales occurred in Asia, South America, and Australia. Parts sales for the
Underground Group increased 148.5% in 2012. GEFCO, which was acquired by the Company in the fourth
quarter of 2011, accounted for $34,643,000 of the increase in the Underground Group’s sales and positively
impacted both domestic and international sales, including parts sales, of this Group.
Other Group: Sales for the Other Group were $105,366,000 in 2012 compared to $89,288,000 in 2011, an
increase of $16,078,000 or 18.0%. Domestic sales for the Other Group, which are generated by Peterson
Pacific Corp., increased 13.3% in 2012 compared to 2011. International sales for the Other Group, which are
generated primarily by Astec Australia, increased 20.6% in 2012 compared to 2011. Astec Australia functions
as a dealer for the Company’s other subsidiaries and has increased its focus to sell, install and service
equipment for the asphalt, aggregate and mining, mobile asphalt and underground construction markets of
Australia. Parts sales for the Other Group increased 4.2% in 2012.
Astec Industries, Inc. I 51
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Segment Profit (Loss) (in thousands)
Asphalt Group
Aggregate and Mining Group
Mobile Asphalt Paving Group
Underground Group
Other Group
2012
$ 22,012
34,687
10,721
(2,238)
(30,453)
2011
$ 30,275
31,493
26,485
(7,318)
(38,549)
$ Change % Change
(27.3%)
$ (8,263)
10.1%
3,194
(59.5%)
(15,764)
69.4%
5,080
21.0%
8,096
Asphalt Group: Profit for this group was $22,012,000 for 2012 compared to $30,275,000 for 2011, a decrease
of $8,263,000 or 27.3%. This group had a decrease of $7,712,000 in gross profit compared to 2011 as a result
of the $25,842,000 decrease in sales.
Aggregate and Mining Group: Profit for this group was $34,687,000 in 2012 compared to $31,493,000 in 2011,
an increase of $3,194,000 or 10.1%. This group had an increase of $7,165,000 in gross profit during 2012 as
a result of the $22,150,000 increase in sales. This gross profit increase was offset by increases of $3,761,000
in selling, general and administrative expenses, including payroll related expenses, travel expense, sales
commission expense, and research and development expenses.
Mobile Asphalt Paving Group: Profit for this group was $10,721,000 in 2012 compared to profit of $26,485,000
in 2011, a decrease of $15,764,000 or 59.5%. This group had a decrease of $15,235,000 in gross profit during
2012 as a result of the $29,873,000 decrease in sales and also due to the costs associated with the redesign
of certain products as a result of the switch to Tier 4 engines mandated by the federal government. This group
had an increase in selling, general and administrative expenses of $747,000, which was primarily attributed to
payroll related expense, travel expense, sales commission expense and research and development expenses.
Underground Group: This group had a loss of $2,238,000 in 2012 compared to a loss of $7,318,000 in 2011
for an improvement of $5,080,000 or 69.4%. This group had an increase of $9,386,000 in gross profit during
2012 driven by the $45,119,000 increase in sales. Selling, general and administrative expenses increased
$4,391,000 due primarily to increases in payroll related expenses, bad debt expense, exhibit expense and
research and development expenses. These results included GEFCO, Inc. results for the entire year of 2012
compared to three months of 2011.
Other Group: The Other Group had a loss of $30,453,000 in 2012 compared to a loss of $38,549,000 in
2011, an improvement of $8,096,000 or 21.0%. Gross profit for this group increased $2,814,000 or 18.1%
year over year due in part to $16,078,000 in increased sales for this group. The results for this group were
positively impacted by the decrease in selling, general and administrative expense of $3,500,000 that resulted
from decreases in profit sharing and stock based compensation expenses. In addition, the write down of
aviation assets held for sale of $2,304,000 only occurred in 2011. The profit in this group was also significantly
impacted by U.S. federal income tax expense, which is recorded at the parent company. Income tax expense
in this group increased $1,691,000 in 2012 compared to 2011.
Liquidity and Capital Resources
The Company’s primary sources of liquidity and capital resources are its cash on hand, investments, borrowing
capacity under a $100,000,000 revolving credit facility and cash flows from operations. The Company had
$35,564,000 (of which $12,442,000 was held by our foreign subsidiaries) of cash and $16,073,000 of short-
term investments available for operating purposes at December 31, 2013. In addition, the Company had
no borrowings outstanding under its credit facility with Wells Fargo Bank, N.A. (“Wells Fargo”) at any time
during the year ended December 31, 2013. The Company had outstanding letters of credit of $6,943,000 and
borrowing availability of $93,057,000 under the credit facility as of December 31, 2013.
52 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
On April 12, 2012, the Company and certain of its subsidiaries entered into an amended and restated credit
agreement with Wells Fargo whereby Wells Fargo extended to the Company an unsecured line of credit of
up to $100,000,000, including a sub-limit for letters of credit of up to $25,000,000. The amended and restated
credit agreement replaced the expiring $100,000,000 credit facility between the Company and Wells Fargo.
The amended and restated agreement has a five-year term expiring in April 2017. Borrowings under the
agreement are subject to an interest rate equal to the daily one-month LIBOR rate plus a 0.75% margin. The
unused facility fee is 0.175%. Interest only payments are due monthly. The amended and restated credit
agreement contains certain financial covenants, including provisions concerning required levels of annual
net income, minimum tangible net worth and maximum allowed capital expenditures. The Company was in
compliance with these covenants as of December 31, 2013.
The Company’s South African subsidiary, Osborn Engineered Products SA (Pty) Ltd (“Osborn”), has a credit
facility of $7,146,000 (ZAR 75,000,000) to finance short-term working capital needs, as well as to cover
performance letters of credit, advance payment and retention guarantees. As of December 31, 2013, Osborn
had no cash borrowings under the credit facility, and $648,000 in performance, advance payment and retention
guarantees under the facility. The facility is unsecured. As of December 31, 2013, Osborn had available credit
under the facility of $6,498,000. The interest rate is 0.25% below the South Africa prime rate, resulting in a
rate of 8.25% at December 31, 2013.
Cash Flows from Operating Activities (in thousands)
Net income
Adjustments:
Depreciation and amortization
Provision for warranty
Sale / purchase of trading securities, net
Gain on sale of subsidiary
Stock based compensation
Deferred income tax provision (benefits)
Other, net
Changes in working capital:
2013
2012
Increase /
Decrease
$ 39,214
$ 40,989
$ (1,775)
22,265
12,199
(1,350)
--
1,461
(2,220)
1,075
23,048
11,152
(146)
(5,358)
1,285
6,223
511
(783)
1,047
(1,204)
5,358
176
(8,443)
564
(Increase) decrease in receivables
(Increase) decrease in inventories
(Increase) decrease in prepaid expenses
Increase (decrease) in accounts payable
Increase (decrease) in customer deposits
Increase (decrease) in accrued product warranties
Increase (decrease) in other accrued liabilities
Other, net
Net cash provided by operating activities
(8,849)
(36,561)
(5,433)
1,028
(5,436)
(10,163)
1,085
(2,454)
$ 5,861
7,555
(41,145)
(1,655)
(6,425)
4,918
(11,021)
298
(1,596)
$ 28,633
(16,404)
4,584
(3,778)
7,453
(10,354)
858
787
(858)
$ (22,772)
Net cash provided by operating activities decreased $22,772,000 in 2013 compared to 2012. The primary
reasons for the decrease in operating cash flows relate to receivables and customer deposits.
Cash Flows from Investing Activities (in thousands)
Expenditures for property and equipment
Proceeds from sale of subsidiary
Purchase of short-term investments
Other
Net cash provided (used) by investing activities
2013
$ (27,673)
--
(15,000)
424
$ (42,249)
2012
Increase /
Decrease
$ (26,018) $ (1,655)
(42,940)
(15,000)
49
$ (59,546)
42,940
--
375
$ 17,297
Astec Industries, Inc. I 53
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Investing activities used cash of $42,249,000 in 2013 compared to cash provided of $17,297,000 in 2012.
The change is primarily due to a $15,000,000 purchase of short-term investments in 2013 and a non-recurring
proceed from the sale of a subsidiary of 2012.
Cash Flows from Financing Activities (in thousands)
Payment of dividends
Other, net
Net cash used by financing activities
2013
2012
Increase /
Decrease
$ (6,856)
270
$ (6,586)
$ (22,790) $ 15,934
(48)
$ (22,472) $ 15,886
318
Financing activities used cash of $6,586,000 in 2013 and $22,472,000 in 2012 for a net change of $15,886,000
due primarily to the payment of the Company’s initial $1.00 per common share dividend in December 2012
compared to $.10 per share quarterly dividends beginning in the second quarter of 2013.
Capital expenditures for 2014 are forecasted to total $39,244,000. The Company expects to finance these
expenditures using currently available cash balances, short-term investments, internally generated funds and
available credit under the Company’s credit facility as well as local financing for the equipment in the new
Brazilian manufacturing facility. Capital expenditures are generally for machinery, equipment and facilities
used by the Company in the production of its various products.
The Company sold American Augers, Inc. on November 30, 2012. Cash flows from the operations of American
Augers are reflected in the statements of cash flows through the date of sale. Cash flows from the operations
of American Augers were not material during the periods presented, and the absence of cash flows related to
American Augers is not expected to impact the Company’s future liquidity or capital resources. See Note 22,
Discontinued Operations, for additional information regarding the sale of American Augers.
Financial Condition
The Company’s current assets increased to $522,411,000 at December 31, 2013 from $504,084,000 at
December 31, 2012, an increase of $18,327,000. The increase is primarily due to an increase of $29,630,000
in inventory.
The Company’s current liabilities decreased to $133,531,000 at December 31, 2013 from $145,548,000
at December 31, 2012, a decrease of $12,017,000. The decrease is primarily attributable to decreases in
customer deposits of $6,726,000 and other accrued liabilities of $7,095,000.
Market Risk and Risk Management Policies
The Company is exposed to changes in interest rates, primarily from its revolving credit agreements. A
hypothetical 100 basis point adverse move (increase) in interest rates would not have materially affected
interest expense for the year ended December 31, 2013, since there were no amounts outstanding on the
revolving credit agreements during the year. The Company does not hedge variable interest.
The Company is subject to foreign exchange risk at its foreign operations. Foreign operations represent
14.9% and 16.3% of total assets at December 31, 2013 and 2012, respectively, and 14.0% and 14.4% of total
revenue for the years ended December 31, 2013 and 2012, respectively. Each period the balance sheets
and related results of operations of the Company’s foreign subsidiaries are translated from their functional
foreign currency into U.S. dollars for reporting purposes. As the dollar strengthens against those foreign
currencies, the foreign denominated net assets and operating results become less valuable in the Company’s
reporting currency. When the dollar weakens against those currencies, the foreign denominated net assets
and operating results become more valuable in the Company’s reporting currency. At each reporting date,
the fluctuation in the value of the net assets and operating results due to foreign exchange rate changes is
recorded as an adjustment to other comprehensive income in equity. The Company views its investments in
foreign subsidiaries as long-term and does not hedge the net investments in foreign subsidiaries.
54 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
From time to time the Company’s foreign subsidiaries enter into transactions not denominated in their functional
currency. In these situations, the Company evaluates the need to hedge those transactions against foreign
currency rate fluctuations. When the Company determines a need to hedge a transaction, the subsidiary
enters into a foreign currency exchange contract. The Company does not apply hedge accounting to these
contracts and, therefore, recognizes the fair value of these contracts in the consolidated balance sheets and
the change in the fair value of the contracts in current earnings.
Due to the limited exposure to foreign exchange rate risk, a 10% fluctuation in the foreign exchange rates
at December 31, 2013 or 2012 would not have a material impact on the Company’s consolidated financial
statements.
Contractual Obligations
Contractual obligations and the period in which payments are due as of December 31, 2013 are as follows (in
thousands):
Contractual Obligations
Operating lease obligations
Inventory purchase obligations
Total
Payments Due by Period
Total
$ 2,442
1,652
$ 4,094
Less Than
1 Year
$ 1,272
1,652
$ 2,924
1 to 3 Years 3 to 5 Years
$ 945
--
$ 945
$ 188
--
$ 188
More Than
5 Years
$ 37
--
$ 37
The above table excludes our liability for unrecognized tax benefits, which totaled $1,933,000 at December
31, 2013, since we cannot predict with reasonable reliability the timing of cash settlements to the respective
taxing authorities.
In 2013, the Company made contributions of approximately $811,000 to its pension plan, compared to
$755,000 in 2012. The Company estimates that it will contribute $353,000 to the pension plan during 2014.
The Company’s funding policy is to make the minimum annual contributions required by applicable regulations.
Contingencies
Management has reviewed all claims and lawsuits and has made adequate provision for any losses that
can be reasonably estimated. Based upon currently available information and with the advice of counsel,
management believes that the ultimate outcome of its current claims and legal proceedings, individually and
in the aggregate, will not have a material adverse effect on the Company’s financial position, cash flows or
results of operations. However, claims and legal proceedings are subject to inherent uncertainties and rulings
unfavorable to the Company could occur. If an unfavorable ruling were to occur, there exists the possibility of
a material adverse effect on the Company’s financial position, cash flows or results of operations.
Certain customers have financed purchases of the Company’s products through arrangements in which the
Company is contingently liable for customer debt aggregating $693,000 and $2,091,000 at December 31,
2013 and 2012, respectively. These obligations have average remaining terms of 1.4 years. The Company
has recorded a liability of $121,000 related to these guarantees at December 31, 2013.
The Company is contingently liable under letters of credit of approximately $8,442,000, primarily for
performance guarantees to customers, banks or insurance carriers.
Off-balance Sheet Arrangements
As of December 31, 2013 the Company does not have off-balance sheet arrangements as defined by Item
303(a)(4) of Regulation S-K.
Astec Industries, Inc. I 55
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Environmental Matters
During 2004, the Company received notice from the Environmental Protection Agency that it may be
responsible for a portion of the costs incurred in connection with an environmental cleanup in Illinois. The
discharge of hazardous materials and associated cleanup relate to activities occurring prior to the Company’s
acquisition of Barber-Greene in 1986. The Company believes that over 300 other parties have received similar
notice. At this time, the Company cannot predict whether the EPA will seek to hold the Company liable for a
portion of the cleanup costs or the amount of any such liability. The Company has not recorded a liability with
respect to this matter because no estimate of the amount of any such liability can be made at this time.
Critical Accounting Policies
The Company’s consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States. Application of these principles requires the Company to make
estimates and judgments that affect the amounts as reported in the consolidated financial statements.
Accounting policies that are critical to aid in understanding and evaluating the results of operations and
financial position of the Company include the following:
Inventory Valuation: Inventories are valued at the lower of a first-in first-out cost or market. The most significant
component of the Company’s inventories is steel. Open market prices, which are subject to volatility, determine
the cost of steel for the Company. During periods when open market prices decline, the Company may need to
reduce the carrying value of the inventory. In addition, certain items in inventory become obsolete over time,
and the Company reduces the carrying value of these items to their net realizable value. These reductions
are determined by the Company based on estimates, assumptions and judgments made from the information
available at that time. The Company does not believe it is reasonably likely that the inventory values will
materially change in the near future.
Self-Insurance Reserves: The Company insures the retention portion of workers’ compensation claims and
general liability claims by way of a captive insurance company, Astec Insurance Company. The objectives
of Astec Insurance are to improve control over and reduce retained loss costs; to improve focus on risk
reduction with development of a program structure which rewards proactive loss control; and to ensure active
management participation in the defense and settlement process for claims.
For general liability claims, the captive is liable for the first $1,000,000 per occurrence and $3,000,000 per
year in the aggregate. The Company carries general liability, excess liability and umbrella policies for claims
in excess of those covered by the captive.
For workers’ compensation claims, the captive is liable for the first $350,000 per occurrence and $2,750,000 per
year in the aggregate. The Company utilizes a large national insurance company as third-party administrator
for workers’ compensation claims and carries insurance coverage for claims liabilities in excess of amounts
covered by the captive.
The financial statements of the captive are consolidated into the financial statements of the Company. The
short-term and long-term reserves for claims and probable claims related to general liability and workers’
compensation under the captive are included in accrued loss reserves and other long-term liabilities,
respectively, in the consolidated balance sheets depending on the expected timing of future payments. The
undiscounted reserves are actuarially determined based on the Company’s evaluation of the type and severity
of individual claims and historical information, primarily its own claims experience, along with assumptions
about future events. Changes in assumptions, as well as changes in actual experience, could cause these
estimates to change in the future. However, the Company does not believe it is reasonably likely that the
reserve level will materially change in the near future.
At all but one of the Company’s domestic manufacturing subsidiaries, the Company is self-insured for health
and prescription claims under its Group Health Insurance Plan. The Company carries reinsurance coverage
to limit its exposure for individual health claims above certain limits. Third parties administer health claims and
prescription medication claims. The Company maintains a reserve for the self-insured health plan which is
included in accrued loss reserves on the Company’s consolidated balance sheets. This reserve includes both
unpaid claims and an estimate of claims incurred but not reported, based on historical claims and payment
experience. Historically the reserves have been sufficient to provide for claims payments. Changes in actual
claims experience, or payment patterns, could cause the reserve to change, but the Company does not
believe it is reasonably likely that the reserve level will materially change in the near future.
56 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
The remaining U.S. subsidiary is covered under a fully insured group health plan. Employees of the Company’s
foreign subsidiaries are insured under health plans in accordance with their local governmental requirements.
No reserves are necessary for these fully insured health plans.
Product Warranty Reserve: The Company accrues for the estimated cost of product warranties at the time
revenue is recognized. Warranty obligations by product line or model are evaluated based on historical
warranty claims experience. For machines, the Company’s standard product warranty terms generally include
post-sales support and repairs of products at no additional charge for periods ranging from three months to
two years or up to a specified number of hours of operation. For parts from component suppliers, the Company
relies on the original manufacturer’s warranty that accompanies those parts. Generally, fabricated parts are
not covered by specific warranty terms. Although failure of fabricated parts due to material or workmanship is
rare, if it occurs, the Company’s policy is to replace fabricated parts at no additional charge.
The Company engages in extensive product quality programs and processes, including actively monitoring
and evaluating the quality of component suppliers. Estimated warranty obligations are based upon warranty
terms, product failure rates, repair costs and current period machine shipments. If actual product failure rates,
repair costs, service delivery costs or post-sales support costs differ from estimates, revisions to the estimated
warranty liability would be required. The Company does not believe it is reasonably likely that the warranty
reserve will materially change in the near future.
Revenue Recognition: Revenue is generally recognized on sales at the point in time when persuasive evidence
of an arrangement exists, the price is fixed or determinable, the product has been delivered or services have
been rendered and there is reasonable assurance of collection of the sales proceeds. The Company generally
obtains purchase authorizations from its customers for a specified amount of product at a specified price
with specified delivery terms. A significant 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. Most of the equipment sold by the Company is based on
standard configurations, some of which are modified to meet customer needs or specifications. The Company
provides customers with technical design and performance specifications and performs pre-shipment testing
to ensure the equipment performs according to design specifications, regardless of whether the Company
provides installation services in addition to selling the equipment.
Certain contracts include terms and conditions through which the Company recognizes 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 risk of ownership
and when collectability is reasonably assured. In addition, there must be a fixed schedule of delivery of the
goods consistent with the customer’s business practices, the Company must not have retained any specific
performance obligations such that the earnings process is not complete and the goods must have been
segregated from the Company’s inventory prior to revenue recognition.
The Company has certain sales accounted for as multiple-element arrangements, whereby revenue attributable
to the sale of a product is recognized when it is shipped, and the revenue attributable to services provided
with respect to the product (such as installation services) is recognized when the service is performed.
Consideration is determined using the fair value method and approximates the sales price of the product
shipped or services performed. The Company evaluates sales with multiple deliverable elements (such as
an agreement to deliver equipment and related installation services) to determine whether revenue related
to individual elements should be recognized separately, or as a combined unit. In addition to the previously
mentioned general revenue recognition criteria, the Company only recognizes revenue on individual delivered
elements when there is objective and reliable evidence that the delivered element has a determinable value
to the customer on a standalone basis and there is no right of return.
Goodwill and Other Intangible Assets: Intangible assets are classified into two categories: (1) intangible assets
with definite lives subject to amortization, and (2) goodwill. Intangible assets with definite lives are tested for
impairment if conditions exist that indicate the carrying value may not be recoverable. Risk factors that may be
considered include an economic downturn in the general economy, a geographic market or the commercial
and residential construction industries, a change in the assessment of future operations as well as the cyclical
nature of our industry and the customization of the equipment we sell, each of which may cause adverse
fluctuations in operating results. Other risk factors considered would be an increase in the price or a decrease
in the availability of oil that could reduce the demand for our products in addition to the significant fluctuations
Astec Industries, Inc. I 57
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
in the purchase price of raw materials that could have a negative impact on the cost of production and gross
margins as well as others more fully described in the Risk Factors section of our Form 10-K. An impairment
charge is recorded when the carrying value of the definite lived intangible asset is not recoverable by the
cash flows generated from the use of the asset. Some of the inputs used in the impairment testing are highly
subjective and are affected by changes in business factors and other conditions. Changes in any of the inputs
could have an effect on future tests and result in impairment charges.
Goodwill is not amortized but is tested for impairment annually or more frequently if events or circumstances
indicate that such intangible assets or goodwill might be impaired. See Note 1, Summary of Significant
Accounting Policies, for a detailed description of testing performed by the Company to determine if the
recorded value of intangible assets or goodwill has been impaired.
The useful lives of identifiable intangible assets are determined after considering the specific facts and
circumstances related to each intangible asset. Factors considered when determining useful lives include
the contractual term of any agreement, the history of the asset, the Company’s long-term strategy for the
use of the asset, any laws or other local regulations which could impact the useful life of the asset, and other
economic factors, including competition and specific market conditions. Intangible assets that are deemed to
have definite lives are amortized, generally on a straight-line basis, over their useful lives, ranging from 6 to
15 years.
Stock-based Compensation: Beginning in 2006 and again in 2011, the Company implemented five-year plans
to award key members of management restricted stock units (“RSUs”) each year based upon annual financial
performance of the Company and its subsidiaries. Each five-year plan allows up to 700,000 of newly issued
shares of Company stock to be granted to employees. The number of RSUs granted each year is determined
based upon the performance of individual subsidiaries and consolidated annual financial performance with
additional RSUs available for cumulative five-year results. Generally, each award vests at the end of five
years from the date of grant, or at the time a recipient retires after reaching age 65, if earlier. These plans are
more fully described in Note 17, Shareholders’ Equity, to the consolidated financial statements.
Recent Accounting Pronouncements
There are no recently promulgated accounting pronouncements (either recently adopted or yet to be adopted)
that are likely to have a material impact on the Company’s financial reporting in the foreseeable future.
58 I Astec Industries, Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
Forward-Looking Statements
This annual report contains forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Statements contained anywhere in this Annual Report that
are not limited to historical information are considered forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
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•
•
•
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execution of the Company’s growth and operation strategy;
plans for technological innovation;
compliance with covenants in our credit facility;
liquidity and capital expenditures;
sufficiency of working capital, cash flows and available capacity under the Company’s credit facilities;
compliance with government regulations;
compliance with manufacturing and delivery timetables;
forecasting of results;
general economic trends and political uncertainty;
government funding and growth of highway construction and commercial projects;
taxes or usage fees;
interest rates;
integration of acquisitions;
industry trends;
pricing, demand and availability of steel, oil and liquid asphalt;
development of domestic oil and natural gas production;
condition of the economy;
strength of the dollar relative to foreign currencies;
the success of new product lines;
presence in the international marketplace;
suitability of our current facilities;
future payment of dividends;
competition in our business segments;
product liability and other claims;
protection of proprietary technology;
demand for products;
future fillings of backlogs;
employees;
the seasonality of our business;
tax assets and reserves for uncertain tax positions;
critical accounting policies and the impact of accounting changes;
anticipated start-up dates for our Brazilian operations;
our backlog;
ability to satisfy contingencies;
contributions to retirement plans and plan expenses;
reserve levels for self-insured insurance plans and product warranties;
construction of new manufacturing facilities;
supply of raw materials;
inventory; and
changes in the composition of the Company’s reportable segments.
These forward-looking statements are based largely on management’s expectations, which are subject to a
number of known and unknown risks, uncertainties and other factors discussed in this report and in documents
filed by the Company with the Securities and Exchange Commission, which may cause actual results, financial
or otherwise, to be materially different from those anticipated, expressed or implied by the forward-looking
statements. All forward-looking statements included in this document are based on information available to
the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking
statements to reflect future events or circumstances. You can identify these statements by forward-looking
words such as “expect”, “believe”, “anticipate”, “goal”, “plan”, “intend”, “estimate”, “may”, “will”, “should” and
similar expressions.
Astec Industries, Inc. I 59
MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED)
In addition to the risks and uncertainties identified elsewhere herein and in documents filed by the Company
with the Securities and Exchange Commission, the following factors should be carefully considered when
evaluating the Company’s business and future prospects: changes or delays in highway funding; rising interest
rates; changes in oil prices; changes in steel prices; changes in the general economy; unexpected capital
expenditures and decreases in liquidity; the timing of large contracts; production capacity; general business
conditions in the industry; non-compliance with covenants in the Company’s credit facilities; demand for the
Company’s products; and those other factors listed from time to time in the Company’s reports filed with the
Securities and Exchange Commission. Certain of the risks, uncertainties and other factors discussed or noted
above are more fully described in the section entitled “Risk Factors” in the Company’s Annual Report on Form
10-K for the year ended December 31, 2013.
60 I Astec Industries, Inc.
Astec Industries, Inc. I 61
ASTEC INDUSTRIES, INC.
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of Astec Industries, Inc. (the “Company”) is responsible for establishing and maintaining
adequate internal control over financial reporting for the Company. The Company’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with U.S. generally
accepted accounting principles. The Company’s internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies and procedures may deteriorate.
Management, under the supervision and with the participation of the Company’s principal executive officer
and principal financial officer, has evaluated the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2013. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated
Framework: 1992. Based on its assessment, management concluded that, as of December 31, 2013, the
Company’s internal control over financial reporting was effective.
Ernst & Young LLP, the Company’s independent registered public accounting firm, has issued an attestation
report on the Company’s internal control over financial reporting as of December 31, 2013.
62 I Astec Industries, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Astec Industries, Inc.
We have audited Astec Industries, Inc.’s internal control over financial reporting as of December 31, 2013,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (1992 framework) (the COSO criteria). Astec Industries, Inc.’s
management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion
on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our
audit included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
In our opinion, Astec Industries, Inc. maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2013 based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the accompanying consolidated balance sheets of Astec Industries, Inc. as of December 31,
2013 and 2012 and the related consolidated statements of income, comprehensive income, equity and cash
flows for each of the three years in the period ended December 31, 2013 of Astec Industries, Inc. and our
report dated March 3, 2014 expressed an unqualified opinion thereon.
Chattanooga, Tennessee
March 3, 2014
Astec Industries, Inc. I 63
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Astec Industries, Inc.
We have audited the accompanying consolidated balance sheets of Astec Industries, Inc. as of December 31,
2013 and 2012 and the related consolidated statements of income, comprehensive income, equity, and cash
flows for each of the three years in the period ended December 31, 2013. 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 the standards of the Public Company Accounting Oversight Board
(United States). 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 financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Astec Industries, Inc. at December 31, 2013 and 2012, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), Astec Industries, Inc.’s internal control over financial reporting as of December 31, 2013,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (1992 framework) and our report dated March 3, 2014 expressed
an unqualified opinion thereon.
Chattanooga, Tennessee
March 3, 2014
64 I Astec Industries, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
Assets
Current assets:
Cash and cash equivalents
Investments
Trade receivables
Notes and other receivables
Inventories
Prepaid expenses
Deferred income tax assets
Other current assets
Total current assets
Property and equipment, net
Investments
Goodwill
Notes receivable
Other long-term assets
Total assets
Liabilities and Equity
Current liabilities:
Accounts payable
Customer deposits
Accrued product warranty
Accrued payroll and related liabilities
Accrued loss reserves
Other accrued liabilities
Total current liabilities
Deferred income tax liabilities
Other long-term liabilities
Total liabilities
Equity:
Preferred stock - authorized 4,000 shares of $1.00 par
value; none issued
Common stock - authorized 40,000 shares of $.20 par
value; issued and outstanding - 22,859 in 2013 and
22,799 in 2012
Additional paid-in capital
Accumulated other comprehensive income (loss)
Company shares held by SERP, at cost
Retained earnings
Shareholders’ equity
Non-controlling interest
Total equity
Total liabilities and equity
See Notes to Consolidated Financial Statements
December 31
2013
2012
$ 35,564
17,176
92,055
2,734
342,313
13,636
14,924
4,009
522,411
184,520
12,085
15,057
6,284
8,934
$ 749,291
$ 80,929
1,334
85,595
3,453
312,683
8,520
10,215
1,355
504,084
182,839
10,232
15,011
6,437
10,180
$ 728,783
$ 45,845
37,498
12,716
16,988
3,328
17,156
133,531
17,455
17,794
168,780
$ 46,210
44,224
11,052
16,590
3,221
24,251
145,548
15,171
17,330
178,049
--
--
4,572
134,730
(4,894)
(2,786)
445,254
576,876
3,635
580,511
$ 749,291
4,560
133,809
502
(2,855)
413,074
549,090
1,644
550,734
$ 728,783
Astec Industries, Inc. I 65
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Research and development expenses
Income from operations
Other income:
Interest expense
Interest income
Other income (expense), net
Income from continuing operations before income taxes
Income taxes on continuing operations
Net income from continuing operations
Discontinued operations:
Income from discontinued operations, net of tax
Gain on sale of subsidiary, net of tax
Income from discontinued operations
Net income
Net income attributable to non-controlling interest
Net income attributable to controlling interest
Earnings per Common Share
Net income attributable to controlling interest from
continuing operations:
Basic
Diluted
Income from discontinued operations:
Basic
Diluted
Net income attributable to controlling interest:
Basic
Diluted
Weighted average number of common shares
outstanding:
Basic
Diluted
See Notes to Consolidated Financial Statements
Year Ended December 31
2012
2011
2013
$ 932,998
725,879
207,119
133,337
18,101
55,681
$ 936,273
728,322
207,951
136,323
20,520
51,108
$ 908,641
697,108
211,533
132,371
20,764
58,398
423
1,047
1,937
58,242
19,028
39,214
339
1,145
1,783
53,697
19,487
34,210
190
883
1,082
60,173
19,733
40,440
--
--
--
39,214
172
$ 39,042
3,401
3,378
6,779
40,989
161
$ 40,828
225
--
225
40,665
102
$ 40,563
$ 1.72
1.69
$ 1.50
1.48
$ 1.79
1.76
--
--
1.72
1.69
0.30
0.29
1.80
1.77
0.01
0.01
1.80
1.76
22,749
23,081
22,680
23,051
22,589
22,984
66 I Astec Industries, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
Net income
Other comprehensive income (loss):
Change in unrecognized pension and post-
retirement benefit costs
Tax expense (benefit) on change in unrecognized
pension and post-retirement benefit costs
Foreign currency translation adjustments
Tax expense on foreign currency translation
adjustments
Other comprehensive income (loss)
Comprehensive income (loss) attributable to
non-controlling interest
Comprehensive income attributable to controlling
Year Ended December 31
2012
2011
2013
$ 39,214
$ 40,989
$ 40,665
2,742
(974)
(8,821)
1,657
(5,396)
(236)
(157)
(10)
(626)
454
(339)
(15)
(2,687)
976
(5,723)
229
(7,205)
93
interest
$ 34,054
$ 40,665
$ 33,367
See Notes to Unaudited Condensed Consolidated Financial Statements
Astec Industries, Inc. I 67
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of subsidiary
Depreciation
Amortization
Provision for doubtful accounts
Provision for warranty
Deferred compensation provision (benefit)
Deferred income tax provision (benefit)
Asset impairment charges
Gain on disposition of fixed assets
Tax expense (benefit) from stock incentive exercises
Stock-based compensation
Sale (purchase) of trading securities, net
(Increase) decrease in:
Trade and other receivables
Inventories
Prepaid expenses
Other assets
Increase (decrease) in:
Accounts payable
Customer deposits
Accrued product warranty
Income taxes payable
Accrued retirement benefit costs
Accrued loss reserves
Other accrued liabilities
Other
Year Ended December 31
2013
2012
2011
$ 39,214
$ 40,989
$ 40,665
--
20,966
1,299
629
12,199
601
(2,220)
--
(163)
8
1,461
(1,350)
(8,849)
(36,561)
(5,433)
(3,215)
1,028
(5,436)
(10,163)
(823)
(324)
199
1,085
1,709
(5,358)
20,945
2,103
759
11,152
115
6,223
--
(256)
(107)
1,285
(146)
7,555
(41,145)
(1,655)
(1,566)
(6,425)
4,918
(11,021)
1,611
(218)
(1,435)
298
12
--
18,551
708
1,510
13,029
(45)
(1,982)
2,724
(54)
(310)
2,800
1,733
(24,554)
(33,058)
177
45
9,002
6,235
(10,524)
816
(446)
342
4,983
(40)
Net cash provided by operating activities
5,861
28,633
32,307
Cash Flows from Investing Activities
Business acquisitions
Proceeds from sale of subsidiary
Proceeds from sale of property and equipment
Expenditures for property and equipment
Purchase of short-term investments
Sale of intangible assets acquired
--
--
424
(27,673)
(15,000)
--
--
42,940
375
(26,018)
--
--
(33,407)
--
260
(36,130)
--
500
Net cash provided (used) by investing activities
(42,249)
17,297
(68,777)
See Notes to Consolidated Financial Statements
68 I Astec Industries, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
Cash Flows from Financing Activities
Payment of dividends
Proceeds from issuance of common stock
Tax (expense) benefit from stock option exercise
Cash from sale of shares of subsidiaries
Sale (purchase) of company shares by
Supplemental Executive Retirement Plan, net
Withholding tax paid upon vesting of restricted
stock units
Net cash provided (used) by financing activities
Effect of exchange rates on cash
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental Cash Flow Information
Cash paid during the year for:
Interest
Income taxes, net of refunds
See Notes to Consolidated Financial Statements
Year Ended December 31
2013
2012
2011
$ (6,856) $ (22,790)
514
107
904
112
(8)
735
$ --
812
310
29
213
(373)
(266)
(782)
(6,586)
(2,391)
(45,365)
80,929
$ 35,564
(834)
(22,472)
(34)
23,424
57,505
$ 80,929
--
885
(1,507)
(37,092)
94,597
$ 57,505
$ 229
$ 20,331
$ 366
$ 13,722
$ 193
$ 21,473
Astec Industries, Inc. I 69
CONSOLIDATED STATEMENTS OF EQUITY
For the Years Ended December 31, 2013, 2012 and 2011 (in thousands)
Common Stock
Shares
Amount
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Company
Shares Held
by SERP
Retained
Earnings
Non-
Controlling
Interest
Total
Equity
Balance December 31, 2010 (As previously
reported)
Restatement (See Note 2)
22,647
$ 4,529
$ 128,831
$ 8,046
$ (2,217) $ 353,019
$ 598
$ 492,806
1,470
1,470
Restated Balance December 31, 2010
22,647
4,529
128,831
8,046
(2,217)
354,489
598
494,276
Net income
Other comprehensive loss
Change in ownership percentage of subsidiary
Stock-based compensation
Exercise of stock options, including tax benefit
Purchase of Company stock held by SERP, net
(7,205)
40,563
5
59
1
12
2,799
1,110
4
(270)
Balance December 31, 2011
22,711
4,542
132,744
841
(2,487)
395,052
Net income
Dividends ($1.00 per share)
Other comprehensive loss
Change in ownership percentage of subsidiary
Stock-based compensation
Exercise of stock options and RSU vesting,
including tax benefit
Withholding tax on vested RSUs
Purchase of Company stock held by SERP, net
6
82
1
17
16
1,284
604
(834)
(5)
40,828
(22,806)
(339)
(368)
102
(93)
(1)
606
161
15
862
40,665
(7,298)
(1)
2,800
1,122
(266)
531,298
40,989
(22,790)
(324)
862
1,285
621
(834)
(373)
Balance December 31, 2012
22,799
4,560
133,809
502
(2,855)
413,074
1,644
550,734
Net income
Quarterly dividends ($.10 per share for 3
quarters)
Other comprehensive loss
Change in ownership percentage of subsidiary
Capital contributed by minority shareholder
Stock-based compensation
Exercise of stock options and RSU vesting,
including tax benefit
Withholding tax on vested RSUs
Sale of Company stock held by SERP, net
39,042
172
39,214
6
(6,862)
(5,396)
6
54
1
11
1,460
93
(782)
144
69
236
(802)
2,385
(6,856)
(5,160)
(802)
2,385
1,461
104
(782)
213
Balance December 31, 2013
22,859
$ 4,572
$ 134,730
$ (4,894) $ (2,786) $ 445,254
$ 3,635
$ 580,511
See Notes to Consolidated Financial Statements
70 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation - The consolidated financial statements include the accounts of Astec Industries,
Inc. and its domestic and foreign subsidiaries. The Company’s significant wholly-owned and consolidated
subsidiaries at December 31, 2013 are as follows:
Astec Australia Pty Ltd
Astec, Inc.
Astec Mobile Machinery GmbH
Astec Underground, Inc.
Breaker Technology Ltd.
CEI Enterprises, Inc.
Heatec, Inc.
Kolberg-Pioneer, Inc.
Peterson Pacific Corp.
Telsmith, Inc.
Astec do Brasil Fabricacao de Equipamentos LTDA
Astec Insurance Company
Astec Mobile Screens, Inc.
Breaker Technology, Inc.
Carlson Paving Products, Inc.
GEFCO, Inc.
Johnson Crushers International, Inc.
Osborn Engineered Products SA (Pty) Ltd (93% owned)
Roadtec, Inc.
On November 30, 2012, the Company sold its former American Augers, Inc. subsidiary to The Charles Machine
Works, Inc. American Augers’ results of operations have been reclassified as discontinued operations in 2012
and 2011.
All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the
amounts reported and disclosed in the financial statements and accompanying notes. Actual results could
differ from those estimates.
Foreign Currency Translation - Subsidiaries located in Australia, Brazil, Canada, Germany and South Africa
operate primarily using local functional currencies. Accordingly, assets and liabilities of these subsidiaries are
translated using exchange rates in effect at the end of the period, and revenues and costs are translated using
average exchange rates for the period. The resulting adjustments are presented as a separate component of
accumulated other comprehensive income. Foreign currency transaction gains and losses, net are included
in cost of sales and amounted to a loss of $522,000 in 2013 and gains of $867,000 and $490,000 in 2012 and
2011, respectively.
Fair Value of Financial Instruments - For cash and cash equivalents, trade receivables, other receivables,
revolving debt and accounts payable, the carrying amount approximates the fair value because of the short-
term nature of those instruments. Trading equity investments are valued at their estimated fair value based on
their quoted market prices and debt securities are valued based upon a mix of observable market prices and
model driven prices derived from a matrix of observable market prices for assets with similar characteristics
obtained from a nationally recognized third party pricing service.
Financial assets and liabilities are categorized as of the end of each reporting period based upon the level
of judgment associated with the inputs used to measure their fair value. The inputs used to measure the fair
value are identified in the following hierarchy:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - Unadjusted quoted prices in active markets for similar assets or liabilities; or
unadjusted quoted prices for identical or similar assets or liabilities in markets
that are not active; or inputs other than quoted prices that are observable for
the asset or liability.
Level 3 - Inputs reflect management’s best estimate of what market participants would
use in pricing the asset or liability at the measurement date. Consideration is
given to the risk inherent in the valuation technique and the risk inherent in
the inputs to the model.
Astec Industries, Inc. I 71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All financial assets and liabilities held by the Company at December 31, 2013 and 2012 are classified as Level
1 or Level 2 as summarized in Note 4, Fair Value Measurements.
Cash and Cash Equivalents - All highly liquid investments with an original maturity of three months or less
when purchased are considered to be cash and cash equivalents.
Investments - Investments consist primarily of investment-grade marketable securities. Trading securities
are carried at fair value, with unrealized holding gains and losses included in net income. Realized gains and
losses are accounted for on the specific identification method. Purchases and sales are recorded on a trade
date basis. Management determines the appropriate classification of its investments at the time of acquisition
and reevaluates such determination at each balance sheet date.
Concentration of Credit Risk - The Company sells products to a wide variety of customers. Accounts
receivable are carried at their outstanding principal amounts, less an allowance for doubtful accounts. The
Company extends credit to its customers based on an evaluation of the customers’ financial condition generally
without requiring collateral although the Company normally requires advance payments or letters of credit on
large equipment orders. Credit risk is driven by conditions within the economy and the industry and is principally
dependent on each customer’s financial condition. To minimize credit risk, the Company monitors credit levels
and financial conditions of customers on a continuing basis. After considering historical trends for uncollectible
accounts, current economic conditions and specific customer recent payment history and financial stability,
the Company records an allowance for doubtful accounts at a level which management believes is sufficient
to cover probable credit losses. Amounts are deemed past due when they exceed the payment terms agreed
to by the customer in the sales contract. Past due amounts are charged off when reasonable collection efforts
have been exhausted and the amounts are deemed uncollectible by management. As of December 31, 2013,
concentrations of credit risk with respect to receivables are limited due to the wide variety of customers and
industries in which the Company operates.
Allowance for Doubtful Accounts - The following table represents a rollforward of the allowance for doubtful
accounts for the years ended December 31, 2013, 2012 and 2011 (in thousands):
Reserve balance, beginning of year
Provision
Write offs
Other
Reserve balance, end of year
Year Ended December 31
2012
$ 2,398
759
(764)
(250)
$ 2,143
2013
$ 2,143
629
(1,042)
(22)
$ 1,708
2011
$ 1,820
1,510
(884)
(48)
$ 2,398
Inventories - Inventory costs include materials, labor and overhead. Inventories (excluding used equipment)
are stated at the lower of first-in, first-out cost or market. Used equipment inventories are stated at the lower
of specific unit cost or market.
When the Company determines that the value of inventory has become impaired through damage, deterioration,
obsolescence, changes in price levels, excessive levels of inventory or other causes, the Company reduces
the carrying value to estimated market value based on estimates, assumptions and judgments made from the
information available at that time. Abnormal amounts of idle facility expense, freight, handling cost and wasted
materials are recognized as current period charges.
Property and Equipment - Property and equipment is stated at cost. Depreciation is calculated for financial
reporting purposes using the straight-line method based on the estimated useful lives of the assets as follows:
airplanes (20 years), buildings (40 years) and equipment (3 to 10 years). Both accelerated and straight-line
methods are used for tax compliance purposes. Routine repair and maintenance costs and planned major
maintenance are expensed when incurred.
Goodwill and Other Intangible Assets - The Company’s intangible assets are classified as either intangible
assets with definite lives subject to amortization or goodwill.
72 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company tests intangible assets with definite lives for impairment if conditions exist that indicate the
carrying value may not be recoverable. Such conditions may include an economic downturn in a geographic
market or a change in the assessment of future operations. An impairment charge is recorded when the
carrying value of the definite lived intangible asset is not recoverable by the future undiscounted cash flows
generated from the use of the asset.
The Company determines the useful lives of identifiable intangible assets after considering the specific facts
and circumstances related to each intangible asset. Factors considered when determining useful lives include
the contractual terms of agreements, the history of the asset, the Company’s long-term strategy for the use
of the asset, any laws or other local regulations which could impact the useful life of the asset, and other
economic factors, including competition and specific market conditions. Intangible assets that are deemed to
have definite lives are amortized over their useful lives, ranging from 6 to 15 years.
Goodwill is not amortized. The Company tests goodwill for impairment annually or more frequently if events
or circumstances indicate that goodwill might be impaired. The tests utilize a two-step method at the reporting
unit level. The Company’s reporting units are typically defined as either subsidiaries or a combination of two
subsidiaries. No impairment was indicated in these tests in 2013, 2012 and 2011.
The first step of the goodwill impairment test compares book value of a reporting unit, including goodwill,
with the unit’s fair value. In this first step, the Company estimates the fair values of each of its reporting units
that have goodwill using the income approach. The income approach uses a reporting unit’s projection of
estimated future operating results and cash flows which are then discounted using a weighted average cost
of capital determined based on current market conditions for the individual reporting unit. The projection uses
management’s best estimates of cash flows over the projection period based on estimates of annual and
terminal growth rates in sales and costs, changes in operating margins, selling, general and administrative
expenses, working capital requirements and capital expenditures.
The fair value of the operating subsidiaries/reporting units that do not have goodwill are estimated using either
the income or market approaches, depending on which approach is the most appropriate for each reporting
unit. The fair value of the reporting units that serve operating units in supporting roles, such as the captive
insurance company and the corporate reporting unit, are estimated using the cost approach. The sum of the
fair values of all reporting units is compared to its calculation of the fair value of the consolidated Company
using the market approach, which is inferred from the market capitalization of the Company at the date of the
valuation, to confirm that the Company’s estimation of the fair value of its reporting units is reasonable.
If the book value of a reporting unit exceeds its fair value, an indication of possible goodwill impairment, the
second step of the impairment test must be performed to determine the amount, if any, of goodwill impairment.
In this second step, the total implied fair value of the reporting unit’s goodwill is estimated by allocating the fair
value of the reporting unit to all its assets, including any unrecognized intangible assets and liabilities other
than goodwill. The difference between the total fair value of the reporting unit and the fair value of its assets
and liabilities other than goodwill is the implied fair value of its goodwill. The amount of any impairment loss is
equal to the excess, if any, of the book value of the goodwill over the implied fair value of its goodwill.
Determining the “step one” fair values of the Company’s reporting units involves the use of significant estimates
and assumptions. Due to the inherent uncertainty involved in making these estimates and assumptions, actual
results could differ materially from those estimates.
Impairment of Long-lived Assets - In the event that facts and circumstances indicate the carrying amounts
of long-lived assets may be impaired, an evaluation of recoverability is performed. If an evaluation is required,
the estimated future undiscounted cash flows associated with the asset are compared to the carrying amount
for each asset (or group of assets) to determine if a writedown is required. If this review indicates that the
assets will not be recoverable, the carrying values of the impaired assets are reduced to their estimated
fair value. Fair value is estimated using discounted cash flows, prices for similar assets or other valuation
techniques.
Astec Industries, Inc. I 73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Self-Insurance Reserves - The Company retains the risk for a portion of its workers’ compensation claims and
general liability claims by way of a captive insurance company, Astec Insurance Company, (“Astec Insurance”
or “the captive”). Astec Insurance is incorporated under the laws of the state of Vermont. The objectives of
Astec Insurance are to improve control over and reduce the cost of claims; to improve focus on risk reduction
with development of a program structure which rewards proactive loss control; and to ensure management
participation in the defense and settlement process for claims.
For general liability claims, the captive is liable for the first $1,000,000 per occurrence and $3,000,000 per
year in the aggregate. The Company carries general liability, excess liability and umbrella policies for claims
in excess of those covered by the captive.
For workers’ compensation claims, the captive is liable for the first $350,000 per occurrence and $2,750,000 per
year in the aggregate. The Company utilizes a large national insurance company as third party administrator
for workers’ compensation claims and carries insurance coverage for claims liabilities in excess of amounts
covered by the captive.
The financial statements of the captive are consolidated into the financial statements of the Company. The
short-term and long-term reserves for claims and potential claims related to general liability and workers’
compensation under the captive are included in accrued loss reserves or other long-term liabilities,
respectively, in the consolidated balance sheets depending on the expected timing of future payments. The
undiscounted reserves are actuarially determined to cover the ultimate cost of each claim based on the
Company’s evaluation of the type and severity of individual claims and historical information, primarily its own
claims experience, along with assumptions about future events. Changes in assumptions, as well as changes
in actual experience, could cause these estimates to change in the future. However, the Company does not
believe it is reasonably likely that the reserve level will materially change in the foreseeable future.
At all but one of the Company’s domestic manufacturing subsidiaries, the Company is self-insured for health
and prescription claims under its Group Health Insurance Plan. The Company carries reinsurance coverage
to limit its exposure for individual health claims above certain limits. Third parties administer health claims and
prescription medication claims. The Company maintains a reserve for the self-insured health plan which is
included in accrued loss reserves on the Company’s consolidated balance sheets. This reserve includes both
unpaid claims and an estimate of claims incurred but not reported, based on historical claims and payment
experience. Historically the reserves have been sufficient to provide for claims payments. Changes in actual
claims experience or payment patterns could cause the reserve to change, but the Company does not believe
it is reasonably likely that the reserve level will materially change in the near future.
The remaining U.S. subsidiary is covered under a fully insured group health plan. Employees of the Company’s
foreign subsidiaries are insured under separate health plans. No reserves are necessary for these fully insured
health plans.
Revenue Recognition - Revenue is generally recognized on sales at the point in time when persuasive
evidence of an arrangement exists, the price is fixed or determinable, the product has been delivered or
services have been rendered and there is a reasonable assurance of collection of the sales proceeds. The
Company generally obtains purchase authorizations from its customers for a specified amount of products
at a specified price with specified delivery terms. A significant 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. Most of the equipment sold by
the Company is based on standard configurations, some of which are modified to meet customer needs
or specifications. The Company provides customers with technical design and performance specifications
and performs pre-shipment testing to ensure the equipment performs according to design specifications,
regardless of whether the Company provides installation services in addition to selling the equipment.
Certain contracts include terms and conditions pursuant to which the Company recognizes 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 risk of ownership
and when collectability is reasonably assured. In addition, there must be a fixed schedule of delivery of the
goods consistent with the customer’s business practices, the Company must not have retained any specific
performance obligations such that the earnings process is not complete and the goods must have been
segregated from the Company’s inventory prior to revenue recognition.
74 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company accounts for certain sales as multiple-element arrangements, whereby the revenue attributable
to the sale of a product is recognized when the product is shipped and the revenue attributable to services
provided with respect to the product (such as installation services) is recognized when the service is
performed. Consideration is determined using the fair value method and approximates sales price of the
product shipped or service performed. The Company evaluates sales with multiple deliverable elements (such
as an agreement to deliver equipment and related installation services) to determine whether revenue related
to individual elements should be recognized separately, or as a combined unit. In addition to the previously
mentioned general revenue recognition criteria, the Company only recognizes revenue on individual delivered
elements when there is objective and reliable evidence that the delivered element has a determinable value
to the customer on a standalone basis and there is no right of return.
The Company presents in the statements of income any taxes assessed by a governmental authority that are
directly imposed on revenue-producing transactions between the Company and its customers, such as sales,
use, value-added and some excise taxes, on a net (excluded from revenue) basis.
Advertising Expense - The cost of advertising is expensed as incurred. The Company incurred $3,770,000,
$4,223,000, and $3,346,000 in advertising costs during 2013, 2012 and 2011, respectively, which is included
in selling, general and administrative expenses.
Income Taxes - Income taxes are based on pre-tax financial accounting income. Deferred tax assets and
liabilities are recognized for the expected tax consequences of temporary differences between the tax bases
of assets and liabilities and their reported amounts. The Company periodically assesses the need to establish
valuation allowances against its deferred tax assets to the extent the Company no longer believes it is more
likely than not that the tax assets will be fully utilized.
The Company evaluates a tax position to determine whether it is more likely than not that the tax position will
be sustained upon examination, based upon the technical merits of the position. A tax position that meets the
more-likely-than-not recognition threshold is subject to a measurement assessment to determine the amount
of benefit to recognize and the appropriate reserve to establish, if any. If a tax position does not meet the
more-likely-than-not recognition threshold, no benefit is recognized. The Company is periodically audited by
U.S. federal and state as well as foreign tax authorities. While it is often difficult to predict final outcome or
timing of resolution of any particular tax matter, the Company believes its reserve for uncertain tax positions
is adequate to reduce the uncertain positions to the greatest amount of benefit that is more likely than not
realizable.
Product Warranty Reserve - The Company accrues for the estimated cost of product warranties at the
time revenue is recognized. Warranty obligations by product line or model are evaluated based on historical
warranty claims experience. For machines, the Company’s standard product warranty terms generally include
post-sales support and repairs of products at no additional charge for periods ranging from three months
to two years or up to a specified number of hours of operation. For parts from component suppliers, the
Company relies on the original manufacturer’s warranty that accompanies those parts. Generally, Company
fabricated parts are not covered by specific warranty terms. Although failure of fabricated parts due to material
or workmanship is rare, if it occurs, the Company’s policy is to replace fabricated parts at no additional charge.
The Company engages in extensive product quality programs and processes, including actively monitoring
and evaluating the quality of our component suppliers. Estimated warranty obligations are based upon
warranty terms, product failure rates, repair costs and current period machine shipments. If actual product
failure rates, repair costs, service delivery costs or post-sales support costs differ from our estimates, revisions
to the estimated warranty liability would be required.
Pension and Retirement Plans - The determination of obligations and expenses under the Company’s
pension plan is dependent on the Company’s selection of certain assumptions used by independent actuaries
in calculating such amounts. Those assumptions are described in Note 13, Pension and Retirement Plans
and include among others, the discount rate, expected return on plan assets and the expected mortality rates.
In accordance with accounting principles generally accepted in the United States, actual results that differ
from assumptions are accumulated and amortized over future periods and, therefore, generally affect the
recognized expense in such periods. Significant differences in actual experience or significant changes in the
assumptions used may materially affect the pension obligations and future expenses.
Astec Industries, Inc. I 75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company recognizes the overfunded or underfunded status of its pension plan as an asset or liability.
Actuarial gains and losses, amortization of prior service cost (credit) and amortization of transition obligations
are recognized through other comprehensive income in the year in which the changes occur. The Company
measures the funded status of its pension plan as of the date of the Company’s fiscal year-end.
Stock-based Compensation - The Company currently has stock-based compensation plans in effect for its
employees whereby participants may earn restricted stock units. The plans were put in place during 2006 and
2011 and will continue through at least 2015. These plans are more fully described in Note 17, Shareholders’
Equity. The Company recognizes the cost of employee services received in exchange for equity awards in the
financial statements based on the grant date calculated fair value of the awards. The Company recognizes
stock-based compensation expense over the period during which an employee is required to provide service
in exchange for the award (the vesting period).
Restricted stock units (“RSUs”) awarded under the Company’s 2006 Incentive Plan were granted shortly
after the end of each year through 2010 based upon the performance of the Company and its individual
subsidiaries. RSUs were granted for performance in each of the years from 2006 through 2010 with additional
RSUs granted based upon cumulative five-year performance. Upon the expiration of the 2006 Incentive Plan,
the Company adopted a 2011 Incentive Plan which operates similar to the 2006 Incentive Plan for each of the
five years ending December 31, 2015. The Company estimates the number of shares that will be granted for
the most recent fiscal year end and the five-year cumulative performance based on actual and expected future
operating results. Compensation expense for RSUs expected to be granted for the most recent fiscal year and
the cumulative five-year based awards is calculated using the fair value of the Company stock at each period
end and is adjusted to the fair value as of each future period-end until granted.
Earnings Per Share - Basic earnings per share is based on the weighted average number of common shares
outstanding and diluted earnings per share includes potential dilutive effects of options, restricted stock units
and shares held in the Company’s supplemental executive retirement plan.
The following table sets forth the compensation of net income attributable to controlling interest from continuing
operations and the number of basic and diluted earnings per share (in thousands):
Year Ended December 31
2012
2011
2013
Numerator:
Net income from continuing operations
Net income attributable to non-controlling interests
Net income attributable to controlling interest from
continuing operations
$ 39,214
172
$ 34,210
161
$ 40,440
102
$ 39,042
$ 34,049
$ 40,338
Denominator:
Denominator for basic earnings per share
Effect of dilutive securities:
Employee stock options and restricted stock units
Supplemental executive retirement plan
Denominator for diluted earnings per share
22,749
22,680
22,589
218
114
23,081
262
109
23,051
294
101
22,984
Antidilutive options were not included in the diluted EPS computation for the years presented. The number of
antidilutive options in the three years ended December 31, 2013 was not material.
Derivatives and Hedging Activities - The Company recognizes all derivatives in the consolidated balance
sheets at their fair value. Derivatives that are not hedges are adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives are either
offset against the change in fair value of assets, liabilities, or firm commitments through income or recognized
in other comprehensive income until the hedged item is recognized in income. The ineffective portion of
a derivative’s change in fair value is immediately recognized in income. From time to time the Company’s
foreign subsidiaries enter into foreign currency exchange contracts to mitigate exposure to fluctuation in
currency exchange rates. See Note 14, Derivative Financial Instruments, regarding foreign exchange contracts
outstanding at December 31, 2013 and 2012.
76 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Shipping and Handling Fees and Cost - The Company records revenues earned for shipping and handling
as revenue, while the cost of shipping and handling is classified as cost of goods sold.
Litigation Contingencies - In the normal course of business in the industry, the Company is named as a
defendant in a number of legal proceedings associated with product liability and other matters. See Note 16,
Contingent Matters for additional discussion of the Company’s legal contingencies.
Business Combinations - The Company accounts for business combinations using the acquisition method.
Accordingly, intangible assets are recorded apart from goodwill if they arise from contractual or legal rights
or if they are separable from goodwill. Related third party acquisition costs are expensed as incurred and
contingent consideration is booked at its fair value as part of the purchase price.
Subsequent Events Review - Management has evaluated events occurring between December 31, 2013
and the date these financial statements were filed with the Securities and Exchange Commission for proper
recording or disclosure therein.
2. Restatement of Previously Issued Financial Statements
During 2013, the Company identified errors related to the elimination of intercompany profits on interdivisional
sales within the Asphalt Group from 2009 through June 30, 2013. Management discovered the errors during
its month-end review of its September 2013 internal financial statements while investigating a variance at one
of its subsidiaries. The errors caused the gross margins, income taxes, profits, retained earnings and inventory
levels previously reported for 2009 through June 30, 2013 to be understated each period. The adjustments
necessary to correct the errors do not have a material impact on our previously presented financial statements
as of any date; however, the correction of the cumulative effect of the errors would have been material to our
income statement for 2013. The impact of the errors on the Company’s first two quarters of 2013 results was
not material, and as such, the correction of the 2013 year-to-date error was recorded in the third quarter of
2013. The errors had no impact on total cash flows from operations as previously reported.
In accordance with applicable accounting guidance, an adjustment to the financial statements for each
individual period presented is required to reflect the correction of the period-specific effects of the errors
described above. Consequently, the Company has restated the consolidated financial statements included
herein to correct for these errors. The cumulative impact of the errors was an understatement of finished
goods inventory and retained earnings at December 31, 2012 by $4,061,000 and $2,736,000, at December
31, 2011 by $3,049,000 and $2,115,000 and at December 31, 2010 by $2,008,000 and $1,470,000,
respectively. The December 31 consolidated balance sheets for each of these periods have been restated
accordingly. Additionally, the accompanying consolidated income statements for the periods ended
December 31, 2012 and 2011 have been restated to reflect the correction by increasing gross profit and
pretax income by $1,012,000 and $1,041,000 and increasing net income from continuing operations by
$621,000 and $645,000, respectively. Basic and diluted earnings per share for the years ending December
31, 2012 and 2011 were increased by $0.03 in the restated financial statements.
3. Inventories
Inventories consist of the following (in thousands):
Raw materials and parts
Work-in-process
Finished goods
Used equipment
Total
December 31
2013
$ 139,372
74,663
99,812
28,466
$ 342,313
2012
$ 129,676
76,052
85,061
21,894
$ 312,683
Astec Industries, Inc. I 77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Fair Value Measurements
The Company has various financial instruments that must be measured at fair value on a recurring basis,
including marketable debt and equity securities held by Astec Insurance Company (“Astec Insurance”), the
Company’s captive insurance company, and marketable equity securities held in an unqualified Supplemental
Executive Retirement Plan (“SERP”). The financial assets held in the SERP also constitute a liability of the
Company for financial reporting purposes. The Company’s subsidiaries also occasionally enter into foreign
currency exchange contracts to mitigate exposure to fluctuations in currency exchange rates.
For cash and cash equivalents, trade receivables, other receivables, revolving debt and accounts payable, the
carrying amount approximates the fair value because of the short-term nature of these instruments. Investments
are carried at their fair value based on quoted market prices for identical or similar assets or, where no quoted
prices exist, other observable inputs for the asset. The fair values of foreign currency exchange contracts are
based on quotations from various banks for similar instruments using models with market based inputs.
As indicated in the tables below, the Company has determined that its financial assets and liabilities at
December 31, 2013 and 2012 are level 1 and level 2 in the fair value hierarchy (in thousands):
December 31, 2013
Level 1
Level 2
Level 3
Total
Financial Assets:
Trading equity securities:
SERP money market fund
SERP mutual funds
Preferred stocks
Short-term investments in mutual funds
$ 783
2,813
1,170
16,073
$ --
--
--
--
$ --
--
--
--
--
--
--
--
--
--
$ --
$ 783
2,813
1,170
16,073
4,851
1,908
549
250
864
452
$ 29,713
3,696
--
103
250
--
--
$ 24,888
1,155
1,908
446
--
864
452
$ 4,825
$ --
$ --
$ 7,828
$ 7,828
$ --
$ --
$ 7,828
$ 7,828
Trading debt securities:
Corporate bonds
Municipal bonds
Floating rate notes
U.S. Treasury bill
Other government bonds
Derivative financial instruments
Total financial assets
Financial Liabilities:
SERP liabilities
Total financial liabilities
78 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Assets:
Trading equity securities:
SERP money market fund
SERP mutual funds
Preferred stocks
Trading debt securities:
Corporate bonds
Municipal bonds
Floating rate notes
U.S. Treasury bill
Other government bonds
Total financial assets
Financial Liabilities:
SERP liabilities
Derivative financial instruments
Total financial liabilities
December 31, 2012
Level 1
Level 2
Level 3
Total
$ 996
1,835
720
$ --
--
--
$ --
--
--
$ 996
1,835
720
3,342
1,449
749
200
--
$ 9,291
909
957
--
--
409
$ 2,275
--
--
--
--
--
$ --
4,251
2,406
749
200
409
$ 11,566
$ --
--
$ --
$ 6,674
145
$ 6,819
$ --
--
$ --
$ 6,674
145
$ 6,819
The Company reevaluates the volume of trading activity for each of its investments at the end of each
reporting period and adjusts the level within the fair value hierarchy as needed. Due to decreased trading
activity, $564,000 of investments included in Level 1 at December 31, 2012 were transferred to Level 2 at
December 31, 2013.
5. Investments
The Company’s trading securities consist of the following (in thousands):
December 31, 2013
Trading equity securities
Trading debt securities
Total
December 31, 2012
Trading equity securities
Trading debt securities
Total
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair Value
(Net Carrying
Amount)
$ 19,411
8,385
$ 27,796
$ 1,459
174
$ 1,633
$ 31
137
$ 168
$ 20,839
8,422
$ 29,261
$ 3,432
7,836
$ 11,268
$ 130
228
$ 358
$ 11
49
$ 60
$ 3,551
8,015
$ 11,566
Trading equity investments noted above are valued at their estimated fair value based on their quoted market
prices and trading debt securities are valued based upon a mix of observable market prices and model driven
prices derived from a matrix of observable market prices for assets with similar characteristics obtained from
a nationally recognized third party pricing service. Additionally, a significant portion of the trading equity
securities are in equity money market and mutual funds and also comprise a portion of the Company’s liability
under its SERP. See Note 13, Pension and Retirement Plans, for additional information on these investments
and the SERP.
Trading debt securities are comprised mainly of marketable debt securities held by Astec Insurance. Astec
Insurance has an investment strategy that focuses on providing regular and predictable interest income from
a diversified portfolio of high-quality fixed income securities.
Net unrealized gains or (losses) incurred during 2013, 2012 and 2011 on investments still held as of the end
of each reporting period, amounted to $175,000, $173,000 and ($77,000), respectively.
Astec Industries, Inc. I 79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in
business combinations. Current U.S. accounting guidance provides that goodwill and indefinite-lived intangible
assets be tested for impairment at least annually. The Company performs the required valuation procedures
each year as of December 31 after the following year’s forecasts are submitted and reviewed. The valuations
performed in 2013, 2012 and 2011 indicated no impairment of goodwill.
The changes in the carrying amount of goodwill by reporting segment during the years ended December 31,
2013 and 2012 are as follows (in thousands):
Asphalt
Group
Aggregate
and Mining
Group
Mobile
Asphalt Paving
Group
Underground
Group
Balance, December 31, 2011 $ 5,922
--
Foreign currency translation
5,922
Balance, December 31, 2012
Foreign currency translation
--
Balance, December 31, 2013 $ 5,922
$ 6,339
--
6,339
--
$ 6,339
$ 2,728
22
2,750
46
$ 2,796
$ --
--
--
--
$ --
Other
$ --
--
--
--
$ --
Total
$ 14,989
22
15,011
46
$ 15,057
7. Long-lived and Intangible Assets
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the
carrying value of the assets may not be recoverable. Impairment losses for long-lived assets “held and used”
are recorded if the sum of the estimated future undiscounted cash flows used to test for recoverability is less
than the carrying value.
As a result of certain aviation equipment being classified as held for sale in 2011, an impairment charge was
recorded in the amount of $2,304,000 in selling, general and administrative expenses by the All Others Group
to reduce the carrying value of the asset to its fair value as determined based upon the industry blue book
valuations of used aircraft (level 3 in the fair value hierarchy). Additional impairment charges of $394,000 were
recorded in 2011 related to long-lived assets in the Underground Group. Other charges related to inventory
valuation of $1,845,000 due to the sale of the utility product line assets were included in cost of sales in the
Underground Group. An additional impairment charge of $26,000 was recorded in 2011 by the Asphalt Group
related to long-lived assets.
Amortization expense on intangible assets was $1,066,000, $1,855,000 and $573,000 for 2013, 2012 and
2011, respectively. Intangible assets, which are included in other long-term assets on the accompanying
consolidated balance sheets, consisted of the following at December 31, 2013 and 2012 (in thousands):
2013
2012
Gross Carrying
Value
Accumulated
Amortization
Net Carrying
Value
Gross Carrying
Value
Accumulated
Amortization
Net Carrying
Value
Dealer network and
customer relationships
Trade names
Other
Total
$ 6,678
2,575
1,535
$ 10,788
$ (3,019) $ 3,659
2,222
662
$ (4,245) $ 6,543
(353)
(873)
$ 7,062
2,609
1,524
$ 11,195
$ (2,527) $ 4,535
2,425
865
$ (3,370) $ 7,825
(184)
(659)
Intangible asset amortization expense is expected to be $932,000, $831,000, $807,000, $693,000, and
$601,000 in the years ending December 31, 2014, 2015, 2016, 2017 and 2018, respectively, and $2,679,000
thereafter.
80 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. Property and Equipment
Property and equipment consist of the following (in thousands):
Land
Building and land improvements
Manufacturing and office equipment
Aviation equipment
Less accumulated depreciation
Total
December 31
2013
$ 13,952
136,000
227,641
14,913
(207,986)
$ 184,520
2012
$ 13,000
130,105
217,047
14,852
(192,165)
$ 182,839
Depreciation expense was $20,966,000, $20,945,000 and $18,551,000 for the years ended December 31,
2013, 2012 and 2011, respectively.
9. Leases
The Company leases certain land, buildings and equipment for use in its operations under various operating
leases. Total rental expense charged to operations under operating leases was approximately $2,436,000,
$2,753,000 and $2,472,000 for the years ended December 31, 2013, 2012 and 2011, respectively.
Minimum rental commitments for all noncancelable operating leases at December 31, 2013 are as follows (in
thousands):
2013
2014
2015
2016
2017
Thereafter
$1,272
578
367
109
79
37
$2,442
10. Debt
On April 12, 2012, the Company and certain of its subsidiaries entered into an amended and restated credit
agreement with Wells Fargo whereby Wells Fargo extended to the Company an unsecured line of credit of
up to $100,000,000, including a sub-limit for letters of credit of up to $25,000,000. The amended and restated
credit agreement replaced the expiring $100,000,000 credit facility between the Company and Wells Fargo.
There were no outstanding revolving or term loan borrowings under the credit facilities at the time of transition
or as of December 31, 2013. Letters of credit totaling $6,943,000 were outstanding under the new agreement
as of December 31, 2013, resulting in additional borrowing ability of $93,057,000 on the Wells Fargo credit
facility as of December 31, 2013. The amended and restated agreement has a five-year term expiring in April
2017. Borrowings under the agreement are subject to an interest rate equal to the daily one-month LIBOR
rate plus a 0.75% margin. The unused facility fee is 0.175%. Interest only payments are due monthly. The
amended and restated credit agreement contains certain financial covenants, including provisions concerning
required levels of annual net income, minimum tangible net worth and maximum allowed capital expenditures.
The Company was in compliance with these covenants as of December 31, 2013.
The Company’s South African subsidiary, Osborn Engineered Products SA (Pty) Ltd (“Osborn”), has a credit
facility of $7,146,000 (ZAR 75,000,000) to finance short-term working capital needs, as well as to cover
performance letters of credit, advance payment and retention guarantees. As of December 31, 2013, Osborn
had no cash borrowings and $648,000 in performance, advance payment and retention guarantees outstanding
under the facility. The facility is unsecured and no unused facility fees are charged. As of December 31, 2013,
Osborn had available credit under the facility of $6,498,000. The interest rate is 0.25% less than the South
Africa prime rate, resulting in a rate of 8.25% as of December 31, 2013.
Astec Industries, Inc. I 81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. Product Warranty Reserves
The Company warrants its products against manufacturing defects and performance to specified standards.
The warranty period and performance standards vary by product, but generally range from three months
to two years or up to a specified number of hours of operation. The Company estimates the costs that may
be incurred under its warranties and records a liability at the time product sales are recorded. The warranty
liability is primarily based on historical claim rates, nature of claims and the associated costs.
Changes in the Company’s product warranty liability during 2013, 2012 and 2011 are as follows (in thousands):
Reserve balance, beginning of year
Warranty liabilities accrued
Warranty liabilities settled
Other
Reserve balance, end of year
12. Accrued Loss Reserves
2013
$ 11,052
12,199
(10,171)
(364)
$ 12,716
2012
$ 12,663
11,152
(11,022)
(1,741)
$ 11,052
2011
$ 9,891
13,029
(10,567)
310
$ 12,663
The Company accrues reserves for losses related to known workers’ compensation and general liability
claims that have been incurred but not yet paid or are estimated to have been incurred but not yet reported to
the Company. The undiscounted reserves are actuarially determined based on the Company’s evaluation of
the type and severity of individual claims and historical information, primarily its own claim experience, along
with assumptions about future events. Changes in assumptions, as well as changes in actual experience,
could cause these estimates to change in the future. Total accrued loss reserves at December 31, 2013
were $7,344,000 compared to $7,315,000 at December 31, 2012, of which $4,016,000 and $4,094,000 was
included in other long-term liabilities at December 31, 2013 and 2012, respectively.
13. Pension and Retirement Plans
Prior to December 31, 2003, all employees of the Company’s Kolberg-Pioneer, Inc. subsidiary were covered
by a defined benefit pension plan. After December 31, 2003, all benefit accruals under the plan ceased and
no new employees could become participants in the plan. Benefits paid under this plan are based on years of
service multiplied by a monthly amount. The Company’s funding policy for the plan is to make the minimum
annual contributions required by applicable regulations.
The Company’s investment strategy for the plan is to earn a rate of return sufficient to match or exceed the long-
term growth of pension liabilities. The investment policy states that the Plan Committee in its sole discretion
shall determine the allocation of plan assets among the following four asset classes: cash equivalents, fixed-
income securities, domestic equities and international equities. The Plan Committee attempts to ensure
adequate diversification of the invested assets through investment in an exchange traded mutual fund that
invests in a diversified portfolio of stocks, bonds and money market securities.
82 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following provides information regarding benefit obligations, plan assets and the funded status of the plan
(in thousands, except as noted *):
Change in benefit obligation
Benefit obligation, beginning of year
Interest cost
Actuarial (gain)/loss
Benefits paid
Benefit obligation, end of year
Accumulated benefit obligation
Change in plan assets
Fair value of plan assets, beginning of year (Level 1)
Actual gain on plan assets
Employer contribution
Benefits paid
Fair value of plan assets, end of year (Level 1)
Funded status, end of year
Amounts recognized in the consolidated balance sheets
Noncurrent liabilities
Net amount recognized
Amounts recognized in accumulated other comprehensive income
consist of
Net loss
Net amount recognized
Weighted average assumptions used to determine benefit obligations
as of December 31*
Discount rate
Expected return on plan assets
Rate of compensation increase
The measurement date used for the plan was December 31.
Pension Benefits
2012
2013
$ 14,958
561
(1,178)
(526)
13,815
$ 13,815
$ 13,699
599
1,161
(501)
14,958
$ 14,958
$ 10,784
1,624
811
(526)
12,693
$ 9,378
1,152
755
(501)
10,784
$ (1,122) $ (4,174)
$ (1,122) $ (4,174)
$ (1,122) $ (4,174)
$ 4,076
$ 4,076
$ 6,721
$ 6,721
4.60%
7.00%
N/A
3.82%
7.00%
N/A
In determining the expected return on plan assets, the historical experience of the plan assets, the current and
expected allocation of the plan assets and the expected long-term rates of return were considered.
All assets in the plan are invested in an exchange traded mutual fund. The allocation of assets within the
mutual fund as of the measurement date (December 31) and the target asset allocation ranges by asset
category are as follows:
Asset Category
Equity securities
Debt securities
Money market funds
Total
Actual Allocation
2013
2012
65.4%
27.8%
6.8%
100.0%
63.5%
32.6%
3.9%
100.0%
2013 & 2012 Target
Allocation Ranges
53 - 73%
21 - 41%
0 - 15%
Astec Industries, Inc. I 83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net periodic benefit cost for 2013, 2012 and 2011 included the following components (in thousands, except
as noted *):
Pension Benefits
2012
2013
2011
Components of net periodic benefit cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Net periodic benefit cost
Other changes in plan assets and benefit obligations recognized in
other comprehensive income
Net actuarial (gain)/loss for the year
Amortization of net gain/(loss)
Total recognized in other comprehensive income
Total recognized in net periodic benefit cost and other comprehensive
income
Weighted average assumptions used to determine net periodic
benefit cost for years ended December 31*
Discount rate
Expected return on plan assets
The Company expects to contribute $353,000 to the plan during 2014.
$ 561 $ 599 $ 604
(741)
257
$ 404 $ 453 $ 120
(648)
502
(693)
536
$ (2,109) $ 656 $ 2,864
(257)
2,607
(536)
(2,645)
(502)
154
$ (2,241) $ 607 $ 2,727
3.82%
7.00%
4.46%
7.00%
5.40%
8.00%
Amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit cost
in 2014 for the amortization of a net loss is $295,000.
The following estimated future benefit payments are expected to be paid in the years indicated (in thousands):
2014
2015
2016
2017
2018
2019 - 2023
Pension Benefits
$ 680
720
750
790
820
4,370
The Company sponsors a 401(k) defined contribution plan to provide eligible employees with additional
income upon retirement. The Company’s contributions to the plan are based on employee contributions.
The Company’s contributions totaled $4,941,000, $5,099,000, and $4,515,000 in 2013, 2012 and 2011,
respectively.
The Company maintains a Supplemental Executive Retirement Plan (“SERP”) for certain of its executive
officers. The plan is a non-qualified deferred compensation plan administered by the Board of Directors of
the Company, pursuant to which the Company makes quarterly cash contributions of a certain percentage
of executive officers’ compensation. Investments are self-directed by participants and can include Company
stock. Upon retirement, participants receive their apportioned share of the plan assets in the form of cash.
84 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assets of the SERP consist of the following (in thousands):
Company stock
Equity securities
Total
December 31, 2013
Cost
$ 2,786
3,241
$ 6,027
Market
$ 4,232
3,596
$ 7,828
December 31, 2012
Cost
$ 2,855
2,745
$ 5,600
Market
$ 3,844
2,830
$ 6,674
The Company periodically adjusts the deferred compensation liability such that the balance of the liability
equals the total fair market value of all assets held by the trust established under the SERP. Such liabilities are
included in other long-term liabilities on the consolidated balance sheets. The equity securities are included
in investments in the consolidated balance sheets and classified as trading equity securities. See Note 5,
Investments, for additional information. The cost of the Company stock held by the plan is included as a
reduction in shareholders’ equity in the consolidated balance sheets.
The change in the fair market value of Company stock held in the SERP results in a charge or credit to selling,
general and administrative expenses in the consolidated statements of income because the acquisition cost
of the Company stock in the SERP is recorded as a reduction of shareholders’ equity and is not adjusted
to fair market value; however, the related liability is adjusted to the fair market value of the stock as of each
period end. The Company recognized expense of $601,000 and $115,000 in 2013 and 2012, respectively,
and income of $45,000 in 2011 related to the change in the fair value of the Company stock held in the SERP.
14. Derivative Financial Instruments
The Company is exposed to certain risks relating to its ongoing business operations. The primary risk
managed by using derivative instruments is foreign currency risk. From time to time the Company’s foreign
subsidiaries enter into foreign currency exchange contracts to mitigate exposure to fluctuations in currency
exchange rates. The fair value of the derivative financial instrument is recorded on the Company’s balance
sheet and is adjusted to fair value at each measurement date. The changes in fair value are recognized in
the consolidated statements of income in the current period. The Company does not engage in speculative
transactions nor does it hold or issue derivative financial instruments for trading purposes. The average U.S.
dollar equivalent notional amount of outstanding foreign currency exchange contracts was $11,543,000 during
2013. At December 31, 2013, the Company reported $452,000 of derivative assets in other current assets.
The Company reported $145,000 of derivative liabilities in other accrued liabilities as of December 31, 2012.
The Company recognized, as a component of cost of sales, a net gain on the change in fair value of derivative
instruments of $1,061,000 for the year ended December 31, 2013. The Company recognized, as a component
of cost of sales, a net loss on the change in fair value of derivative instruments of $594,000 and $144,000 for
the years ended December 31, 2012 and 2011, respectively. There were no derivatives that were designated
as hedges at December 31, 2013 or 2012.
15. Income Taxes
For financial reporting purposes, income from continuing operations before income taxes includes the following
components (in thousands):
Continuing operations
United States
Foreign
Income from continuing operations before income taxes
$ 53,315
4,927
$ 58,242
$ 47,400
6,297
$ 53,697
$ 52,583
7,590
$ 60,173
Year Ended December 31
2012
2011
2013
Astec Industries, Inc. I 85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The provision for income taxes consists of the following (in thousands):
Continuing operations
Current provision:
Federal
State
Foreign
Total current provision
Deferred provision (benefit):
Federal
State
Foreign
Total deferred provision (benefit)
Total provision:
Federal
State
Foreign
Income tax provision on continuing operations
Income tax provision (benefit) on discontinued operations
Total tax provision
Year Ended December 31
2012
2011
2013
$ 16,239
2,785
2,664
21,688
$ 9,637
2,096
1,996
13,729
$ 17,167
3,245
1,481
21,893
(885)
(923)
(852)
(2,660)
6,135
(768)
391
5,758
(1,903)
(677)
420
(2,160)
15,354
1,862
1,812
19,028
--
$ 19,028
15,772
1,328
2,387
19,487
3,796
$ 23,283
15,264
2,568
1,901
19,733
(56)
$ 19,677
The Company’s income tax provision is computed based on the domestic and foreign federal statutory rates
and the average state statutory rates, net of related federal benefit.
The provision for income taxes differs from the amount computed by applying the statutory federal income tax
rate to income before income taxes. A reconciliation of the provision for income taxes at the statutory federal
income tax rate to the amount provided is as follows (in thousands):
Continuing operations
Tax at the statutory federal income tax rate
Qualified production activity deduction
State income tax, net of federal income tax
Other permanent differences
Research and development tax credits
Change in valuation allowance
Other items
Income tax provision on continued operations
Income tax provision (benefit) on discontinued operations
Total tax provision
Year Ended December 31
2012
2011
2013
$ 20,385
(1,395)
1,105
464
(2,054)
810
(287)
19,028
--
$ 19,028
$ 18,794
(958)
758
360
(419)
1,034
(82)
19,487
3,796
$ 23,283
$ 21,061
(1,228)
1,651
370
(2,135)
62
(48)
19,733
(56)
$ 19,677
86 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
Deferred tax assets:
Inventory reserves
Warranty reserves
Bad debt reserves
State tax loss carryforwards
Accrued vacation
SERP
Deferred compensation
Restricted stock units
Foreign exchange gains/losses
Pension and post-employment benefits
Other
Valuation allowances
Total deferred tax assets
Deferred tax liabilities:
Property and equipment
Amortization
Goodwill
Pension
Foreign tax rate differential
Total deferred tax liabilities
Total net deferred liabilities
December 31
2013
2012
$ 6,340
3,558
636
2,100
1,805
1,245
1,226
2,601
2,345
1,498
6,684
(4,354)
25,684
$ 3,702
2,894
678
2,001
1,797
1,180
790
2,963
683
2,475
4,856
(3,065)
20,954
19,711
1,200
2,012
1,132
3,681
27,736
18,933
1,120
1,770
1,186
2,873
25,882
$ (2,052) $ (4,928)
As of December 31, 2013, the Company has state net operating loss carryforwards of $48,342,000, foreign net
operating loss carryforwards of approximately $5,181,000, and state tax credit carryforwards of $1,200,000
for tax purposes, which will be available to offset future taxable income. If not used, these carryforwards
will expire between 2014 and 2027. A significant portion of the valuation allowance for deferred tax assets
relates to the future utilization of state and foreign net operating loss and state tax credit carryforwards.
Future utilization of these net operating loss and state tax credit carryforwards is evaluated by the Company
on a periodic basis and the valuation allowance is adjusted accordingly. In 2013, the valuation allowance on
these carryforwards was increased by $1,322,000 due to uncertainty about whether certain entities will realize
their state net operating loss and state tax credit carryforwards. The Company has also determined that the
recovery of certain other deferred tax assets is uncertain. The valuation allowance for these deferred tax
assets was decreased by $33,000.
Undistributed earnings of the Company’s Canadian subsidiary, Breaker Technology Ltd., are considered to be
indefinitely reinvested; accordingly, no provision for U.S. federal and state income taxes has been provided
thereon. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be
subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes
payable to Canada. The cumulative amount of Breaker Technology, Ltd.’s unrecovered basis difference is
$8,100,000 as of December 31, 2013. The determination of the unrecognized deferred tax liability on the basis
difference is not practical at this time.
The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign
jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by authorities for
years prior to 2010. With few exceptions, the Company is no longer subject to state and local or non-U.S.
income tax examinations by authorities for years prior to 2007.
Astec Industries, Inc. I 87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has a liability for unrecognized tax benefits of $1,933,000 and $2,095,000 (excluding accrued
interest and penalties) as of December 31, 2013 and 2012, respectively. The Company recognizes interest
and penalties accrued related to unrecognized tax benefits in tax expense. The Company recognized tax
benefits of $101,000 and $178,000 in 2013 and 2012, respectively, for penalties and interest related to
amounts that were settled for less than previously accrued. The net total amount of unrecognized tax benefits
that, if recognized, would affect the Company’s effective tax rate is $1,954,000 and $2,125,000 at December
31, 2013 and 2012, respectively. The Company does not expect a significant increase or decrease to the total
amount of unrecognized tax benefits within the next twelve months.
A reconciliation of the beginning and ending unrecognized tax benefits excluding interest and penalties is as
follows (in thousands):
Balance, beginning of year
Additions for tax positions related to the current year
Additions for tax positions related to prior years
Reductions due to lapse of statutes of limitations
Decreases related to settlements with tax authorities
Balance, end of year
Year Ended December 31
2012
$ 1,682
396
90
(73)
--
$ 2,095
2013
$ 2,095
102
128
(149)
(243)
$ 1,933
2011
$ 1,025
546
192
(81)
--
$ 1,682
The December 31, 2013 balance of unrecognized tax benefits includes no tax positions for which the ultimate
deductibility is highly certain but the timing of such deductibility is uncertain. Accordingly, there is no impact to
the deferred tax accounting for certain tax benefits.
16. Contingent Matters
Certain customers have financed purchases of Company products through arrangements in which the
Company is contingently liable for customer debt of $693,000 and $2,091,000 at December 31, 2013 and
2012, respectively. At December 31, 2013, the maximum potential amount of future payments for which
the Company would be liable is equal to $693,000. These arrangements also provide that the Company
will receive the lender’s full security interest in the equipment financed if the Company is required to fulfill
its contingent liability under one of these arrangements. The Company has recorded a liability of $121,000
related to these guarantees at December 31, 2013.
In addition, the Company is contingently liable under letters of credit issued by Wells Fargo totaling $6,943,000
as of December 31, 2013, including a $1,600,000 letter of credit issued on behalf of Astec Australia. The
outstanding letters of credit expire at various dates through November 2017. As of December 31, 2013,
Osborn and Astec Australia are contingently liable for a total of $648,000 and $851,000, respectively, in
performance advance payment and retention guarantees. As of December 31, 2013, the maximum potential
amount of future payments under these letters of credit and guarantees for which the Company could be liable
is $8,442,000.
The Company is currently a party to various claims and legal proceedings that have arisen in the ordinary
course of business. If management believes that a loss arising from such claims and legal proceedings is
probable and can reasonably be estimated, the Company records the amount of the loss (excluding estimated
legal fees), or the minimum estimated liability when the loss is estimated using a range, and no point within the
range is more probable than another. As management becomes aware of additional information concerning
such contingencies, any potential liability related to these matters is assessed and the estimates are revised,
if necessary. If management believes that a material loss arising from such claims and legal proceedings
is either (i) probable but cannot be reasonably estimated or (ii) reasonably possible but not probable, the
Company does not record the amount of the loss, but does make specific disclosure of such matter. Based
upon currently available information and with the advice of counsel, management believes that the ultimate
outcome of its current claims and legal proceedings, individually and in the aggregate, will not have a material
adverse effect on the Company’s financial position, cash flows or results of operations. However, claims and
legal proceedings are subject to inherent uncertainties and rulings unfavorable to the Company could occur. If
an unfavorable ruling were to occur, there exists the possibility of a material adverse effect on the Company’s
financial position, cash flows or results of operations.
88 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 2004, the Company received notice from the Environmental Protection Agency that it may be
responsible for a portion of the costs incurred in connection with an environmental cleanup in Illinois. The
discharge of hazardous materials and associated cleanup relate to activities occurring prior to the Company’s
acquisition of Barber-Greene in 1986. The Company believes that over 300 other parties have received similar
notice. At this time, the Company cannot predict whether the EPA will seek to hold the Company liable for a
portion of the cleanup costs or the amount of any such liability. The Company has not recorded a liability with
respect to the matter because no estimate of the amount, if any, of any such liability can be made at this time.
17. Shareholders’ Equity
Beginning in 2006 and again in 2011, the Company implemented five-year plans to award key members
of management restricted stock units (“RSUs”) each year based upon annual financial performance of the
Company and its subsidiaries. Each five-year plan allows up to 700,000 of newly issued shares of Company
stock to be granted to employees. The number of RSUs granted each year is determined based upon the
performance of individual subsidiaries and consolidated annual financial performance, with additional RSUs
available for cumulative five-year results. Generally, each award vests at the end of five years from the date
of grant, or at the time a recipient retires after reaching age 65, if earlier. The fair value of the RSUs that
vested during 2013, 2012 and 2011 was $2,405,000, $2,719,000 and $406,000, respectively. The grant date
tax benefit was reduced by $77,000 and $67,000 upon the vesting of RSUs in 2013 and 2012, respectively.
Compensation expense of $1,231,000, $1,054,000 and $2,602,000 was recorded in the years ended
December 31, 2013, 2012 and 2011, respectively, to reflect the fair value of RSUs granted (or anticipated
to be granted for 2013 performance) less estimated forfeitures, amortized over the portion of the vesting
period occurring during the period. Related income tax benefits of $417,000, $387,000 and $848,000 were
recorded in 2013, 2012 and 2011, respectively. Based upon the grant date fair value of RSUs, it is anticipated
that $2,431,000 of additional compensation costs will be recognized in future periods through 2021 for RSUs
earned through December 31, 2013. The weighted average period over which this additional compensation
cost will be expensed is 3.8 years. RSUs do not participate in Company paid dividends.
Changes in restricted stock units during the year ended December 31, 2013 are as follows:
Unvested restricted stock units, beginning of year
Restricted stock units granted
Restricted stock units forfeited
Restricted stock units vested
Unvested restricted stock units, end of year
Weighted Average
Grant Date
Fair Value
$ 31.87
35.61
34.97
37.95
30.54
2012013
312,496
21,432
(3,595)
(68,629)
261,704
The grant date fair value of the restricted stock units granted during 2013, 2012 and 2011 was $763,000,
$1,303,000 and $4,240,000, respectively.
The Company has adopted an Amended and Restated 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 registered holder (other than the “Acquiring
Person” as defined below) to purchase from the Company one one-hundredth 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
$72.00 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 Common Stock upon the earlier of ten business days (unless otherwise delayed by the
Board) following the: 1) public announcement that a person or group of affiliated or associated persons (the
“Acquiring Person”) has acquired, obtained the right to acquire, or otherwise obtained beneficial ownership
of fifteen percent (15%) or more of the then outstanding shares of Common Stock, or 2) commencement of
a tender offer or exchange offer that would result in an Acquiring Person beneficially owning fifteen percent
(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 ten business days
following announcement by the Company that a person has become an Acquiring Person. Once the Rights
Astec Industries, Inc. I 89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
are separated from the Common Stock, then the Rights entitle the holder (other than the Acquiring Person) to
purchase shares of Common Stock (rather than Preferred Stock) having a current market value equal to twice
the Unit purchase price. The Rights, which do not have voting power and are not entitled to dividends, expire
on December 22, 2015. In the event of a merger, consolidation, statutory share exchange or other transaction
in which shares of Common Stock are exchanged, each Unit of Preferred Stock will be entitled to receive the
per share amount paid in respect of each share of Common Stock.
18. Operations by Industry Segment and Geographic Area
The Company has four reportable segments. These segments are combinations of business units that offer
similar products and services. A brief description of each segment is as follows:
Asphalt Group - This segment consists of three business units that design, engineer, manufacture and
market a complete line of portable, stationary and relocatable hot-mix asphalt plants and related components
and a variety of heaters, heat transfer processing equipment, thermal fluid storage tanks, concrete plants
and wood pellet plants. The principal purchasers of these products are asphalt producers, highway heavy
equipment contractors, wood pellet processors and foreign and domestic governmental agencies.
Aggregate and Mining Group - This segment consists of seven business units that design, engineer,
manufacture and market a complete line of rock crushers, feeders, conveyors, screens and washing
equipment. The principal purchasers of these products are open-mine and quarry operators.
Mobile Asphalt Paving Group - This segment consists of three business units that design, engineer,
manufacture and market asphalt pavers, asphalt material transfer vehicles, milling machines and paver
screeds. The principal purchasers of these products are highway and heavy equipment contractors and
foreign and domestic governmental agencies.
Underground Group - This segment consists of two business units that design, engineer, manufacture and
market a complete line of drilling rigs for the oil and gas, geothermal and water well industries, and high
pressure diesel pump trailers for fracking and cleaning oil and gas wells. This segment previously included
American Augers, Inc., which was sold in November 2012.
All Others - This category consists of the Company’s other business units, including Peterson Pacific Corp.,
Astec Australia Pty Ltd, Astec Insurance Company and the parent company, Astec Industries, Inc., that do not
meet the requirements for separate disclosure as an operating segment.
The Company evaluates performance and allocates resources based on profit or loss from operations before
U.S. federal income taxes and corporate overhead. The accounting policies of the reportable segments are
the same as those described in the summary of significant accounting policies.
90 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Intersegment sales and transfers are valued at prices comparable to those for unrelated parties. For
management purposes, the Company does not allocate U.S. federal income taxes or corporate overhead
(including interest expense) to its business units.
Segment information for 2013 (in thousands)
Aggregate
and Mining
Group
Asphalt
Group
Mobile
Asphalt Paving
Group
Revenues from
Underground
Group
All
Others
Total
external customers $ 237,959
14,577
11
Intersegment revenues
Interest expense
Depreciation and
amortization
Income taxes
Segment profit (loss)
4,591
1,573
26,962
Segment assets
Capital expenditures
407,483
3,300
$ 350,514
45,435
12
$ 168,444
17,658
6
$ 73,104
2,304
--
$102,977
--
394
$ 932,998
79,974
423
7,906
2,642
33,031
427,565
15,649
3,439
884
11,767
174,743
3,343
3,526
(406)
(4,902)
2,803
14,335
(27,375)
22,265
19,028
39,483
78,297
3,831
381,257
1,550
1,469,345
27,673
Segment information for 2012 (in thousands)
Aggregate
and Mining
Group
Asphalt
Group
Mobile
Asphalt Paving
Group
Revenues from
Underground
Group
All
Others
Total
$ 355,428
25,776
32
$ 158,115
16,474
3
$ 82,802
1,688
--
$105,366
168
255
$ 936,273
74,803
339
external customers $ 234,562
30,697
49
Intersegment revenues
Interest expense
Depreciation and
amortization
4,729
7,381
3,262
2,934
2,629
20,935
Income taxes on
continuing operations
Segment profit (loss)
829
22,012
Segment assets
Capital expenditures
386,478
4,430
1,582
34,687
399,832
9,376
(348)
10,721
157,675
3,239
(230)
(2,238)
17,654
(30,453)
19,487
34,729
83,744
7,137
392,833
1,836
1,420,562
26,018
Segment information for 2011 (in thousands)
Aggregate
and Mining
Group
Asphalt
Group
Mobile
Asphalt Paving
Group
Revenues from
Underground
Group
All
Others
Total
$ 333,278
25,219
3
$ 187,988
18,629
5
$ 37,683
5,083
--
$ 89,288
--
168
$ 908,641
73,856
190
external customers $ 260,404
24,925
14
Intersegment revenues
Interest expense
Depreciation and
amortization
4,268
6,932
2,788
1,566
2,451
18,005
Income taxes on
continuing operations
Segment profit (loss)
1,476
30,275
Segment assets
Capital expenditures
373,186
9,172
1,834
31,493
359,931
8,138
1,009
26,485
155,676
6,678
(550)
(7,318)
15,964
(38,549)
19,733
42,386
134,376
945
408,903
11,197
1,432,072
36,130
Astec Industries, Inc. I 91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The totals of segment information for all reportable segments reconciles to consolidated totals as follows (in
thousands):
Sales
Total external sales for reportable segments
Intersegment sales for reportable segments
Other sales
Elimination of intersegment sales
Total consolidated sales
Net income attributable to controlling interest
Total profit for reportable segments
Other losses
Net income attributable to non-controlling interest
Elimination of intersegment profit
Income from discontinued operations, net of tax
Gain on disposal of discontinued operations, net of tax
2013
2012
2011
$ 830,021
79,974
102,977
(79,974)
$ 932,998
$ 830,907
74,635
105,366
(74,635)
$ 936,273
$ 819,353
73,856
89,288
(73,856)
$ 908,641
$ 66,858
(27,375)
(172)
(269)
--
--
$ 65,182
(30,453)
(161)
(519)
3,401
3,378
$ 80,935
(38,549)
(102)
(1,946)
225
--
Total consolidated net income attributable to controlling interest
$ 39,042
$ 40,828
$ 40,563
Assets
Total assets for reportable segments
Other assets
Elimination of intercompany profit in inventory
Elimination of intercompany receivables
Elimination of investment in subsidiaries
Other eliminations
Total consolidated assets
$ 1,088,088
381,257
(4,679)
(482,768)
(195,199)
(37,408)
$ 749,291
$ 1,027,729
392,833
(4,410)
(469,254)
(186,556)
(31,559)
$ 728,783
$ 1,023,169
408,903
(3,890)
(461,721)
(160,988)
(85,541)
$ 719,932
Interest expense
Total interest expense for reportable segments
Other interest expense
Total consolidated interest expense
Depreciation and amortization
Total depreciation and amortization for reportable segments $ 19,462
2,803
Other depreciation and amortization
Depreciation from discontinued operations
--
$ 22,265
Total consolidated depreciation and amortization
$ 29
394
$ 423
$ 84
255
$ 339
$ 22
168
$ 190
$ 18,306
2,629
2,113
$ 23,048
$ 15,554
2,451
1,254
$ 19,259
Capital expenditures
Total capital expenditures for reportable segments
Other capital expenditures
$ 26,123
1,550
$ 24,182
1,836
$ 24,933
11,197
Total consolidated capital expenditures
$ 27,673
$ 26,018
$ 36,130
92 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sales into major geographic regions were as follows (in thousands):
United States
Canada
Africa
Australia and Oceania
South America (excluding Brazil)
Post-Soviet States (excluding Russia)
Russia
Mexico
Other European Countries
Brazil
Middle East
Other Asian Countries
Central America (excluding Mexico)
West Indies
China
India
Japan and Korea
Other
Total foreign
Total consolidated sales
2013
$ 599,054
70,991
62,911
47,505
33,526
25,849
17,440
15,917
15,428
11,620
6,699
5,836
5,620
5,294
3,857
3,672
1,749
30
333,944
$ 932,998
2012
$ 572,522
79,554
60,811
62,683
38,049
11,533
14,641
23,084
20,249
15,675
6,705
8,315
6,843
2,765
6,687
4,648
1,509
--
363,751
$ 936,273
2011
$ 543,527
82,853
65,472
48,890
57,616
12,526
8,494
9,885
23,653
11,602
18,215
7,200
4,156
5,461
2,923
4,476
1,672
20
365,114
$ 908,641
Long-lived assets by major geographic region are as follows (in thousands):
United States
Brazil
South Africa
Australia
Canada
Germany
Total foreign
Total
December 31
2013
2012
$ 156,927
9,024
7,203
5,680
4,145
1,541
27,593
$ 184,520
$ 157,344
1,234
8,973
9,630
4,120
1,538
25,495
$ 182,839
19. Accumulated Other Comprehensive Income (Loss)
The balance of related after-tax components comprising accumulated other comprehensive income (loss) is
summarized below (in thousands):
Foreign currency translation adjustment
Unrecognized pension and post-retirement benefit cost, net of tax of
$1,498 and $2,471, respectively
Accumulated other comprehensive income (loss)
December 31
2013
2012
$ (2,484) $ 4,679
(2,410)
(4,177)
$ (4,894) $ 502
See Note 13, Pension and Retirement Plans, for discussion of the amounts recognized in accumulated other
comprehensive income related to the Company’s Kolberg-Pioneer, Inc. defined pension plan.
Astec Industries, Inc. I 93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
20. Other Income (Expense) - Net
Other income (expense), net from continuing operations consists of the following (in thousands):
Investment income
Licensing fees
Other
Total
21. Business Combinations
Year Ended December 31
2013
2012
2011
$ 853
764
320
$ 1,937
$ 116
1,211
456
$ 1,783
$ 27
449
606
$ 1,082
On August 10, 2011, the Company purchased substantially all of the assets of Protec Technology and
Machinery GmbH (“Protec”), a German corporation; Construction Machinery GmbH (“Construction
Machinery”), a German corporation; and Protec Technology Ltd. (“Protec, Ltd.”), a Hong Kong corporation,
for $3,000,000. The Company formed a new subsidiary, Astec Mobile Machinery GmbH (“AMM”), located in
Hameln, Germany, to operate the acquired businesses. AMM designs, manufactures and markets asphalt
rollers, screeds and a road widener attachment and distributes products produced by other Company
subsidiaries, primarily Roadtec, Inc.
On October 1, 2011, the Company acquired the GEFCO division of Blue Tee Corp. for $30,407,000. The
Company formed a new subsidiary, GEFCO, Inc., to operate the acquired business. This purchase resulted
in the recognition of $3,877,000 of amortizable intangible assets which consist of trade names (15 year useful
life) and customer relationships (8 year useful life). The effective date of the purchase was October 1, 2011,
and the results of GEFCO Inc.’s operations have been included in the Company’s consolidated financial
statements since that date. During January 2012, the purchase price allocation was finalized and funds
previously held in escrow were distributed.
GEFCO (formerly known as George E. Failing Company) was established in 1931 and was a leading
manufacturer of portable drilling rigs and related equipment for the water well, environmental, groundwater
monitoring, construction, mining and shallow oil & gas exploration and production industries. GEFCO, Inc.
continues to manufacture Failing, SpeedStar and King Oil Tools equipment from its Enid, Oklahoma facilities.
The revenue and pre-tax income of Protec, Protec, Ltd., Construction Machinery and GEFCO were not
significant in relation to the Company’s 2011 financial statements and would not have been significant on a
pro forma basis to any earlier periods.
The Company has funded an investment of $12,835,000 in Astec do Brasil Fabricação de Equipamentos
LTDA (“Astec Brazil”) located in Vespasiano, Minas Gerais, Brazil, a consolidated subsidiary of the Company.
When fully funded by both the Company and MDE, a minority Brazil based shareholder, the Company
anticipates a 75% ownership in Astec Brazil. In 2013, Astec Brazil operated by selling imported products from
other Astec subsidiaries with some equipment assembled locally. The Astec Brazil manufacturing facility is
currently under construction and is expected to open for production by mid to late 2014. The expected cost of
the manufacturing facility is approximately $23,000,000. The acquisition cost of the manufacturing facility is
being funded by capital contributions and loans from the parent company, borrowings from a Brazilian bank
and capital contributions by MDE. The Company expects to increase its international market penetration in
Brazil and Latin American countries with the aggregate, mining and asphalt segment’s product lines to be
produced in the Astec Brazil manufacturing facility.
22. Discontinued Operations
In October 2012, the Company entered into an agreement to sell its American Augers, Inc. (“Augers”)
subsidiary, as well as certain assets related to the Trencor large trencher product line of Astec Underground,
Inc., to The Charles Machine Works, Inc. of Perry, Oklahoma. Augers and the Trencor large trencher product
line were part of the Company’s Underground Group. The sale of Augers included substantially all the assets
and liabilities of Augers and was completed on November 30, 2012 for $42,940,000, net of cash included in
the sale and subject to closing adjustments. The Company retained the Augers vertical oil and gas drill rig
94 I Astec Industries, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
product line and relocated it to Astec Underground, the Company’s subsidiary located in Loudon, Tennessee.
The sale of the Trencor product line was immaterial to the transaction and is included in the Company’s
consolidated financial statements in continuing operations. This divestiture, as well as the sale of the small
utility trencher and drill line of products to Toro earlier in 2012, is part of the Company’s strategy to exit the
cyclical underground sector.
The Company calculated the post-closing adjustments to the sale price and recorded the resulting $288,000
purchase price adjustment in other accrued liabilities in the December 31, 2012 consolidated balance sheet.
The post-closing adjustment to the sales price was increased to a total of $499,000 when finalized and paid
in early 2013.
The results of operations and the gain on the sale of Augers are presented as discontinued operations for
2012 and 2011. Summarized financial information for Augers is below (in thousands):
Revenues
Discontinued operations
Operating income before tax
Income tax provision (benefit)
Income from operations
Gain on sale of subsidiary
Gain on sale of subsidiary before tax
Income tax provision
Gain on sale of subsidiary
Income from discontinued operations
Year Ended December 31
2012
$ 53,619
2011
$ 47,088
$ 5,218
1,817
3,401
$ 169
(56)
225
5,357
1,979
3,378
$ 6,779
--
--
--
$ 225
The carrying amounts of the major classes of assets and liabilities disposed on November 30, 2012 were as
follows (in thousands):
Assets
Cash
Receivables
Inventories
Prepaid and other assets
Property and equipment, net
Other assets
Total assets
Liabilities
Accounts payable
Other liabilities
Total liabilities
Net assets disposed
2012
$ 636
5,334
26,568
430
13,500
465
46,933
2,518
6,484
9,002
$ 37,931
Astec Industries, Inc. I 95
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96 I Astec Industries, Inc.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
Performance Graph for Astec Industries, Inc.
300.00
250.00
200.00
150.00
100.00
50.00
0.00
Astec Industries Inc
NYSE/AMEX/NASDAQ Market
(US Companies)
NYSE/AMEX/NASDAQ Stocks
(SIC 3530-3537 US Comp)
Construction, Mining, and
Materials Handling Machinery
and Equipment
2008
100.00
2009
85.99
2010
103.45
2011
102.81
2012
110.52
2013
129.10
100.00
128.90
151.92
153.35
178.24
238.02
100.00
153.08
234.75
227.33
229.53
275.30
Notes:
A. Data complete through last fiscal year.
B. Corporate Performance Graph with peer group uses peer group only performance
(excludes only company).
C. Peer group indices use beginning of period market capitalization weighting.
D. Calculated (or Derived) based from CRSP NYSE/AMEX/NASDAQ Market (US
Companies), Center for Research in Security Prices (CRSP®), Graduate School of
Business, The University of Chicago. Copyright 2014. Used with permission. All rights
reserved.
E. The graph assumes $100 invested at the closing price of the Company’s common stock on
December 31, 2008 and assumes that all dividends were invested on the date paid.
Astec Industries, Inc. I 97
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Corporate Headquarters:
1725 Shepherd Road
Chattanooga, Tennessee 37421 USA
Tel: 423.899.5898 • Fax: 423.899.4456
www.astecindustries.com