The following description of the Astec Industries, Inc. 401(k) Retirement Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
The Plan is a defined contribution plan covering all full-time employees of Astec Industries, Inc. and its subsidiaries (the Company) who have reached age eighteen. It is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Plan is administered by a committee appointed by the Company.
Participants may elect to contribute up to 40% of their base salary through payroll deductions, as defined under the provisions of the Plan document, subject to Internal Revenue Code (Code) limitations. The Company matches 75% of each participant’s contribution up to 4% of the participant’s compensation. Participants who will attain age 50 before the close of the Plan year are eligible to make additional catch-up contributions, subject to Code limitations. Catch-up contributions are not eligible for the match contribution.
Each participant’s account is credited with the participant’s contributions, the Company’s matching contributions and Plan investment results. Allocations of Plan earnings are based on participant account balances, as defined. Participants may change their investment options daily. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s account.
Participants are immediately vested in their entire account balance.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
|
1. Description of Plan (continued)
|
Participants may borrow from their accounts a minimum of $1,000 up to a maximum of $50,000, reduced by certain items identified in the Plan document, or 50% of their vested account balance, whichever is lower. Loan terms range from one to five years or up to twenty years for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest at a rate of prime plus one percent. Principal and interest are paid ratably through payroll deductions.
Upon termination of service, a participant may receive a lump-sum amount equal to the value of his or her account on the date of distribution.
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERlSA. If the Plan is terminated or contributions are permanently discontinued, benefits will remain 100% vested and be distributed in accordance with the provisions of the Plan.
|
2. Summary of Significant Accounting Policies
|
The financial statements of the Plan are presented on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.
The Plan’s investments are stated at fair value. The shares of common stock are valued at the closing price reported on the active market on which the individual securities are traded. Shares of mutual funds are valued at the net asset value (NAV) of shares held which is based on the closing price reported in the active market. The common collective trust fund is valued at the underlying investments of the fund minus its liabilities and then divided by the number of shares outstanding. The loans to participants are valued at amortized cost, which approximates fair value.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
|
2. Summary of Significant Accounting Policies (continued)
|
As described in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 962 (formerly known as FASB issued staff position No. AAG INV-1 and Statement of Position (SOP) 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans), investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in an investment contract through its J.P. Morgan Stable Value Investment Fund (the Stable Value Fund). As required by the ASC, the Statements of Net Assets Available for Benefits present the fair value of the Stable Value Fund and the adjustment from fair value to contract value. The fair value of the Plan’s interest in the Stable Value Fund is based on information reported by the issuer of the common collective trust at year-end. The contract value of the Stable Value Fund represents contributions plus earnings, less participant withdrawals and administrative expenses.
Purchases and sales of securities are recorded on a trade date basis. Dividends are recorded on the ex-dividend date. Interest is recognized when earned.
|
New Accounting Pronouncement
|
In April 2009, the FASB issued FASB Staff Position 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4). FSP 157-4 amended FASB Statement No. 157 (codified as ASC 820) to provide additional guidance on estimating fair value when the volume and level of activity for an asset or liability have significantly decreased in relation to its normal market activity. FSP 157-4 also provided additional guidance on circumstances that may indicate that a transaction is not orderly and on defining major categories of debt and equity securities to comply with the disclosure requirements of ASC 820. The Plan adopted the guidance in FSP 157-4 for the reporting period ended December 31, 2009. Adoption of FSP 157-4 did not have a material effect on the Plan’s net assets available for benefits or its changes in net assets available for benefits.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
|
2. Summary of Significant Accounting Policies (continued)
|
In May 2009, the FASB issued FASB Statement No. 165, Subsequent Events, which was codified into ASC 855, Subsequent Events, to provide general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. ASC 855 was amended in February 2010. The Plan has adopted ASC 855, as amended.
In September 2009, the FASB issued Accounting Standards Update 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2009-12). ASU 2009-12 amended ASC 820 to allow entities to use net asset value (NAV) per share (or its equivalent), as a practical expedient, to measure fair value when the investment does not have a readily determinable fair value and the net asset value is calculated in a manner consistent with investment company accounting. The Plan adopted the guidance in ASU 2009-12 for the reporting period ended December 31, 2009 and has utilized the practical expedient to measure the fair value of investments within the scope of this guidance based on the investment’s NAV. Adoption of ASU 2009-12 did not have a material effect on the Plan’s net assets available for benefits or its changes in net assets available for benefits.
In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements, (ASU 2010-06). ASU 2010-06 amended ASC 820 to clarify certain existing fair value disclosures and require a number of additional disclosures. The guidance in ASU 2010-06 clarified that disclosures should be presented separately for each “class” of assets and liabilities measured at fair value and provided guidance on how to determine the appropriate classes of assets and liabilities to be presented. ASU 2010-06 also clarified the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. In addition, ASU 2010-06 introduced new requirements to disclose the amounts (on a gross basis) and reasons for any significant transfers between Levels 1, 2 and 3 of the fair value hierarchy and present information regarding the purchases, sales, issuances and settlements of Level 3 assets and liabilities on a gross basis. With the exception of the requirement to present changes in Level 3 measurements on a gross basis, which is delayed until 2011, the guidance in ASU 2010-06 becomes effective for reporting periods beginning after December 15, 2009. Plan management is currently evaluating the effect that the provisions of ASU 2010-06 will have on the Plan’s financial statements.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
|
2. Summary of Significant Accounting Policies (continued)
|
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires Plan management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
The Plan sponsor pays administrative fees other than those for recordkeeping and trustee functions. The administrative fees paid by the Plan sponsor in 2009 and 2008 included those for the annual audit, legal and discrimination testing. Loan administrative fees are charged to the borrowing participant’s account.
|
3. Fair Value Measurements
|
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e., an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 – Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
3. Fair Value Measurements (continued)
Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:
|
·
|
quoted prices for similar assets and liabilities in active markets
|
|
·
|
quoted prices for identical or similar assets or liabilities in markets that are not active
|
|
·
|
observable inputs other than quoted prices that are used in the valuation of the asset or liabilities (e.g., interest rate and yield
curve quotes at commonly quoted intervals)
|
|
·
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means
|
Level 3 – Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).
The level in the fair value hierarchy within which the fair value measurement is classified is determined based the lowest level input that is significant to the fair value measure in its entirety.
Following is a description of the valuation methodologies used for major categories of assets measured at fair value by the Plan.
Common stock: Valued at the closing price reported on the active market on which the individual securities are traded.
Mutual funds: Valued at the net asset value (NAV) of shares held by the Plan at year-end which is based on the closing price reported in the active market.
Common Collective Trust Fund: Valued at the underlying investments of the fund minus its liabilities and then divided by the number of shares outstanding.
Participant Loans: Valued at amortized cost, which approximates fair value.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
3. Fair Value Measurements (continued)
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2009:
| |
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
|
|
$ |
97,454,272 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
97,454,272 |
|
|
Common stock
|
|
|
5,107,197 |
|
|
|
– |
|
|
|
– |
|
|
|
5,107,197 |
|
|
Common collective trust
|
|
|
– |
|
|
|
21,557,046 |
|
|
|
– |
|
|
|
21,557,046 |
|
|
Participation loans
|
|
|
– |
|
|
|
– |
|
|
|
5,405,457 |
|
|
|
5,405,457 |
|
|
Total
|
|
$ |
102,561,469 |
|
|
$ |
21,557,046 |
|
|
$ |
5,405,457 |
|
|
$ |
129,523,972 |
|
The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 assets for the year ended December 31, 2009.
| |
|
Participants Loans
|
|
| |
|
|
|
|
Balance, beginning of year
|
|
$ |
5,107,418 |
|
|
Purchases, sales, issuance and settlements (net)
|
|
|
298,039 |
|
|
Balance, end of year
|
|
$ |
5,405,457 |
|
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
During 2009, the Plan’s investments appreciated (depreciated) in fair value as follows:
| |
|
Net Appreciation (Depreciation) in Fair Value
of Investments
|
|
| |
|
|
|
|
Fair value as determined by quoted market prices:
|
|
|
|
|
Common stock
|
|
$ |
(945,570 |
) |
|
Shares of registered investment companies
|
|
|
20,395,518 |
|
|
Fair value as determined by quoted redemption value:
|
|
|
|
|
|
Common collective trust fund
|
|
|
458,011 |
|
| |
|
$ |
19,907,959 |
|
Investments that represent 5% or more of the fair value of the Plan’s net assets are as follows:
| |
|
December 31
|
|
| |
|
2009
|
|
|
2008
|
|
| |
|
|
|
|
|
|
|
J.P. Morgan Stable Asset Investment Fund*
|
|
$ |
21,557,046 |
|
|
$ |
18,905,265 |
|
|
J.P. Morgan Intrepid Growth fund
|
|
|
10,338,201 |
|
|
|
7,590,897 |
|
|
J.P. Morgan Smart Retirement 2020
|
|
|
8,660,538 |
|
|
|
6,624,226 |
|
|
American Century Growth Fund
|
|
|
8,930,909 |
|
|
|
6,927,088 |
|
|
Harbour International Administrative Fund
|
|
|
10,696,246 |
|
|
|
5,227,860 |
|
|
Eaton Vance Large Capital Growth Fund
|
|
|
10,453,597 |
|
|
|
8,558,128 |
|
|
UBS US Large Capital Growth Fund
|
|
|
14,888,381 |
|
|
|
11,028,049 |
|
|
Astec Industries, Inc. Common Stock**
|
|
|
5,107,197 |
|
|
|
6,690,957 |
|
| |
|
|
|
|
|
|
|
|
|
*
|
The J.P. Morgan Stable Asset Investment Fund is shown at fair value, the contract value at
|
|
|
December 31, 2009 and 2008, is $22,479,569 and $21,064,471, respectively.
|
|
**
|
Investment is less than 5% of net assets at December 31, 2009.
|
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
|
5. Risks and Uncertainties
|
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
The Plan has received a determination letter from the Internal Revenue Service (IRS), dated June 10, 2008, stating that the Plan is qualified under Section 401 (a) of the Code and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualified status. The Company believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax exempt.
|
7. Party-in-Interest Transactions
|
Transactions with parties in interest include investments in the Company’s common stock, participant loans, investments in JP Morgan Funds and investments through JP Morgan Chase Bank &Trust, the trustee.
|
8. Excess Participant Contributions Payable
|
During 2009 and 2008, the Company determined that excess participant contributions had been made based on nondiscrimination testing performed for the Plan. Accordingly, the Plan refunded the excess participant contributions, plus or minus earnings or losses thereon, of $137,424 and $36,009 in 2009 and 2008, respectively, subsequent to year end to comply with the applicable requirements of the Code. These amounts are recorded as excess participant contributions payable in the accompanying Statements of Net Assets Available for Benefits.
Astec Industries, Inc. 401(k) Retirement Plan
Notes to Financial Statements (continued)
|
9. Reconciliation Between Financial Statements and Form 5500
|
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
| |
|
December 31
|
|
| |
|
2009
|
|
|
2008
|
|
| |
|
|
|
|
|
|
| Net assets available for benefits per the financial statements |
|
$ |
130,390,324 |
|
|
$ |
104,611,365 |
|
|
Deemed loans not reported on Form 5500
|
|
|
(69,666 |
) |
|
|
(68,235 |
) |
|
Adjustment to report common collective trust fund at fair value
|
|
|
(922,523 |
) |
|
|
(2,159,206 |
) |
|
Net assets available for benefits per the Form 5500
|
|
$ |
129,398,135 |
|
|
$ |
102,383,924 |
|
The following is a reconciliation of the net increase in net assets available for benefits per the financial statements to net income per the Form 5500:
| |
|
Year Ended
December 31, 2009
|
|
| |
|
|
|
|
Net increase in net assets available for benefits per the financial statement
|
|
$ |
25,778,959 |
|
|
Less: deemed loans not reported on Form 5500 at December 31, 2009
|
|
|
(69,666 |
) |
|
Plus: deemed loans not reported on Form 5500 at December 31, 2008
|
|
|
68,235 |
|
|
Less: adjustment to report common collective trust fund at fair value at December 31, 2009
|
|
|
(922,523 |
) |
|
Plus: adjustment to report common collective trust fund at fair value at December 31, 2008
|
|
|
2,159,206 |
|
|
Net income per the Form 5500
|
|
$ |
27,014,211 |
|
Supplemental Schedule
Astec Industries, Inc. 401(k) Retirement Plan
EIN: 62-0873632 Plan Number: 001
Schedule H, Line 4(i) – Schedule of Assets
(Held at End of Year)
December 31, 2009
|
(a)
|
|
(b)
Identity of Issue, Borrower, Lessor, or
Similar party
|
(c)
Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value
|
|
(e)
Current
Value
|
|
| |
|
|
|
|
|
|
| |
|
American Century
|
Growth Fund
|
|
$ |
8,930,909 |
|
| |
|
American Century
|
Vista Fund
|
|
|
4,192,106 |
|
| |
|
American Century
|
Small Capital Value Fund
|
|
|
5,425,737 |
|
| |
* |
|
J.P. Morgan
|
Stable Asset Investment Fund
|
|
|
21,557,046 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2010 Fund
|
|
|
4,728,100 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2015 Fund
|
|
|
5,953,981 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2020 Fund
|
|
|
8,660,538 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2025 Fund
|
|
|
457,663 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2030 Fund
|
|
|
6,170,841 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2035 Fund
|
|
|
379,534 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2040 Fund
|
|
|
3,110,556 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2045 Fund
|
|
|
316,551 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement 2050 Fund
|
|
|
305,603 |
|
| |
* |
|
J.P. Morgan
|
Smart Retirement Income Fund
|
|
|
1,634,253 |
|
| |
* |
|
J.P. Morgan
|
Intrepid Growth Fund
|
|
|
10,338,201 |
|
| |
* |
|
J.P. Morgan
|
US Dollar DDA Fund
|
|
|
11,029 |
|
| |
|
|
UBS
|
US Large Capital Growth Fund
|
|
|
14,888,381 |
|
| |
|
|
Harbor Funds
|
International Administrative Fund
|
|
|
10,696,246 |
|
| |
|
|
Eaton Vance
|
Value Capital Large Company Fund
|
|
|
10,453,597 |
|
| |
|
|
Schwab
|
Brokerage accounts
|
|
|
800,446 |
|
| |
* |
|
Astec Industries, Inc.
|
Common stock
|
|
|
5,107,197 |
|
| |
* |
|
Participant loans
|
Interest rates ranging from 5.0-10.0%, maturity varies
through 2028
|
|
|
5,405,457 |
|
| |
|
|
Total assets held for investments
|
|
|
$ |
129,523,972 |
|
|
*
|
Represents a party-in-interest to the Plan.
|
|
|
Note: Cost information has not been included because all investments are participant-directed.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan have duly caused this Annual Report to be signed on its behalf by the undersigned, hereunto duly authorized, in the City of Chattanooga, State of Tennessee, on June 29, 2010.
ASTEC INDUSTRIES, INC.
401(k) RETIREMENT PLAN
By /s/ McKamy Hall, Member
Astec Industries, Inc.
401(k) Retirement Plan Committee
Date: June 29, 2010