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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ___________ to
___________
Commission file number: 1-4252
UNITED INDUSTRIAL CORPORATION
- ---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 95-2081809
- -------------------------------- --------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
18 East 48th Street, New York, NY 10017
(212) 752-8787
- ---------------------------------------------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code
of Registrant's Principal Executive Offices)
Not Applicable
- ---------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [x] No [_]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 12,167,493 shares of
common stock as of May 1, 1995.
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UNITED INDUSTRIAL CORPORATION
INDEX
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Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - Unaudited
March 31, 1995 and December 31, 1994 1
Consolidated Condensed Statements of Operations -
Three Months Ended March 31, 1995 and 1994 2
Consolidated Condensed Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 3
Notes to Consolidated Condensed Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II - Other Information 6
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PART I - FINANCIAL INFORMATION
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1995 1994
------------ -----------
<S> (Unaudited)
ASSETS <C> <C>
- ------
Current Assets
Cash & cash equivalents $ 16,416 $ 6,132
Note receivable - 8,540
Trade receivables 26,661 33,564
Inventories
Finished goods & work-in-process 54,251 49,034
Materials & supplies 4,318 4,452
-------- --------
58,569 53,486
Deferred income taxes 5,927 3,169
Prepaid expenses & other current assets 1,194 1,667
-------- --------
Total Current Assets 108,767 106,558
Other assets 37,804 37,022
Property & equipment - less allowances
for depreciation (1995-$82,849; 1994-$81,767) 45,473 45,214
-------- --------
$192,044 $188,794
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
- -------------------
Short term borrowings $ 3,000 $ 4,200
Accounts payable 10,819 8,769
Accrued employee compensation & taxes 8,180 6,526
Customer advances 7,747 6,981
Federal income taxes 4,552 3,333
Other liabilities 2,089 5,664
Provision for contract losses 12,051 10,474
-------- --------
Total Current Liabilities 48,438 45,947
Long-term liabilities (less current maturities) 24,879 24,580
Deferred income taxes 9,160 9,228
Postretirement benefits other than pensions 20,858 20,618
Shareholders' Equity
- --------------------
Common stock $1.00 par value
Authorized - 15,000,000 shares; outstanding
12,167,493 shares (net of shares in treasury) 14,374 14,374
Additional capital 93,744 94,596
Retained earnings (deficit) (2,059) (3,199)
Treasury stock, at cost, 2,206,655 shares (17,350) (17,350)
-------- --------
88,709 88,421
-------- --------
$192,044 $188,794
======== ========
</TABLE>
See accompanying notes
1<PAGE>
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31
----------------------------
1995 1994
------------ -----------
(Unaudited)
<S> <C> <C>
Net Sales $ 51,653 $ 50,076
Operating costs & expenses
Cost of sales 38,880 38,087
Selling & administrative 11,068 10,281
Other income (309) (205)
Interest expense 588 596
Interest income (445) (389)
-------- --------
49,782 48,370
-------- --------
Income before income taxes 1,871 1,706
Income taxes 731 652
-------- --------
Net income $ 1,140 $ 1,054
======== ========
Net earnings per share $ 0.09 $ 0.09
======= ======
</TABLE>
See accompanying notes
2
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
-------------------------------
1995 1994
-------- --------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 1,140 $ 1,054
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,006 1,636
Deferred income taxes (2,826) (2,435)
Increase (decrease) in contract loss provision 1,577 (625)
Changes in operating assets and liabilities:
Decrease in accounts receivable 6,903 5,067
Increase in inventories (5,083) (231)
Decrease (increase) in prepaid expenses
and other current assets 473 (127)
Increase (decrease) in accounts payable,
accruals, advances and other 895 (1,039)
Increase in federal income taxes 1,219 2,963
Increase (decrease) in long-term liabilities 507 (678)
--------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 6,811 5,585
INVESTING ACTIVITIES
- --------------------
Decrease in note receivable 8,540 8,540
Purchase of property and equipment (1,773) (628)
Increase in other assets - net (1,274) (794)
Acquisition of business - net of
cash received --- (1,489)
--------- ---------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 5,493 5,629
FINANCING ACTIVITIES
- --------------------
Increase in long-term liabilities 32 1,138
Proceeds from borrowings 3,000 -
Payments on long-term debt & borrowings (4,200) (13,700)
Dividends (852) (858)
--------- ----------
NET CASH USED IN FINANCING ACTIVITIES (2,020) (13,420)
--------- ----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 10,284 (2,206)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 6,132 3,906
--------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 16,416 $ 1,700
========= ==========
</TABLE>
See accompanying notes
3
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
March 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1995 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1995. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1994.
NOTE B - DIVIDENDS
A quarterly dividend of $.07 per share is payable May 31, 1995.
NOTE C - LEGAL PROCEEDINGS
The Company, along with various other parties, has been named in five
claims (including four tort claims) relating to environmental matters based
on allegations principally related to a predecessor's operations. These
tort actions seek recovery for personal injury and property damage among
other damages. In one tort claim, class certification was granted as to
both property damage and medical monitoring classes. The Company has
joined the other defendants in appealing the class certification issue to
the Arizona Supreme Court.
The Company owned and operated a small facility at a site in the State of
Arizona that manufactured semi-conductors between 1959 and 1960. All such
operations of the Company were sold prior to 1962. This facility may have
used trichloroethylene ("TCE") in small quantities. However, to date,
there is no evidence that this facility released or disposed of TCE at this
site.
On May 18, 1993, the State of Arizona filed suit against the Company
seeking the recovery of investigative costs, injunctive relief to require
the Company to perform a Remedial Investigation and Feasibility Study, and
ultimately to require the remediation of alleged soil and groundwater
contamination at and near a certain industrial site. Since then the State
has brought in co-defendants whose operations at the site were
substantially larger than those of the Company. The parties are engaged in
active discovery.
Management intends to vigorously contest these actions and believes that
the resolution of these actions will not be material to the Company.
4
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The Company is involved in various other lawsuits and claims, including
certain other environmental matters, arising out of the normal course of
its business. In the opinion of management, the ultimate amount of
liability, if any, under pending litigation, including claims described
above, will not have a materially adverse effect on the consolidated
financial position of the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
- ---------------------
Net sales increased 3.1% to $51,653,000 in 1995, as compared to $50,076,000
in 1994. This growth primarily resulted from improvements at the Company s
Energy segment, and the non-Department of Defense (DOD) markets served by
the Company s Defense segment, partially offset by the continued
contraction of the defense market.
The Defense segment has succeeded in maintaining its gross profit
percentages because of efficiencies gained through its cost reduction
program. The gross profit percentage at the Energy segment approximately
doubled in the first quarter of 1995, as compared to the same period in
1994, primarily due to ongoing operational changes at the company s foundry
operation, where new management has been installed.
Selling and Administrative expenses have continued their downward trend as
a result of the Company s cost reduction program, but this decline was
partially offset in 1995 by certain litigation costs. Excluding such costs,
Selling and Administrative expenses as a percentage of net sales were 20%
for the first quarter of 1995, as compared to 21% for the same period in
1994.
The Company recorded an increase in net income of 8.2% to $1,140,00 or .09
per share in 1995, as compared to net income of $1,054,000 or $.09 per
share in 1994. The improvement was primarily attributable to increases in
net income at the operating segments, partially offset by certain charges
at the corporate office principally related to litigation costs. The
elevated performance at the Defense segment resulted essentially from non-
DOD markets and reduced interest expense due to lower borrowings. The
Energy segment's improved operating results were primarily due to strong
sales and ongoing operational changes, particularly at the Company s
foundry operation, as noted above.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents increased $10,284,000 from December 31, 1994.
The principal cause of this increase was the final installment payment of
$8,540,000 on the Company s note receivable. The Company currently has no
significant fixed commitment for capital expenditures or for investments.
Its capital requirements consist primarily of its obligations to fund
operations and interest payments on indebtedness. The Company expects that
available cash and existing lines of credit will be sufficient to meet its
normal operating requirements.
5
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
PART II - Other Information
ITEM 4 - Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of the Registrant
was held on May 8, 1995.
(b) Rick S. Bierman and Howard M. Bloch were elected directors
at the meeting, for terms ending in 1998. P. David Bocksch
was also elected a director at the meeting for a term ending
in 1997. The incumbent directors whose terms of office
continued after the meeting are Maurice Rosenthal, Myron
Simons and Bernard Fein.
(c) Voting for the election of directors of the Registrant:
<TABLE>
<CAPTION>
WITHHELD (including
FOR broker non-votes)
--- -------------------
<S> <C> <C>
Rick S. Bierman 9,247,486 150,898
Howard M. Bloch 9,278,126 120,258
P. David Bocksch 9,274,890 123,494
</TABLE>
9,305,281 shares were voted in favor of the proposal to
ratify the appointment of Ernst & Young LLP as independent
auditors of the Registrant for 1995, with 44,542 shares
voted against, 48,561 abstentions and no broker non-votes.
4,887,839 shares were voted against the stockholder
proposal concerning elimination of a classified Board of
Directors, with 2,269,547 shares voted for, 204,703 votes
abstained, and 2,036,295 broker non-votes. Reference is
made to the Registrant's Proxy Statement dated March 30,
1995 for its 1995 Annual Meeting for additional information
concerning the matters voted on at the meeting.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
11 - Computation of Earnings per share
20 - The Registrant's Proxy Statement dated March 30, 1995 for
its 1995 Annual Meeting, which is incorporated herein by
reference.
27 - Financial Data Schedule
(b) The Registrant did not file any reports on Form 8-K during the
quarter ended March 31, 1995.
6
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SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNITED INDUSTRIAL CORPORATION
Date: May 12, 1995 By: /s/ Thomas J. Carmody
-------------- ----------------------------
Thomas J. Carmody
Vice President - Finance
and Chief Financial Officer
7
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
INDEX OF EXHIBITS FILED HEREWITH
Exhibit No. Page
- ---------- ----
11 Computation of Earnings Per Share 9
20 The Registrant's Proxy Statement dated March 30, 10
1995 for its 1995 Annual Meeting, which is
incorporated herein by reference.
27 Financial Data Schedule 11
8
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EXHIBIT 11 - Computation of Earnings Per Share
Item 6(a)
Exhibit 11
Computation of Earnings per Share
United Industrial Corporation and Subsidiaries
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
----------------------------
1995 1994
-------- -------
<S> <C> <C>
Primary:
Average shares outstanding 12,171,528 12,258,693
========== ==========
Net income $ 1,140,000 $ 1,054,000
============ ===========
Earnings per share $ .09 $ .09
====== =====
</TABLE>
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the financial
statements contained in the body of the
accompanying Form 10-Q and is qualified in its
entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 16,416
<SECURITIES> 0
<RECEIVABLES> 26,661
<ALLOWANCES> 0
<INVENTORY> 58,569
<CURRENT-ASSETS> 108,767
<PP&E> 128,322
<DEPRECIATION> 82,849
<TOTAL-ASSETS> 192,044
<CURRENT-LIABILITIES> 48,438
<BONDS> 24,879
0
0
<COMMON> 14,374
<OTHER-SE> 74,335
<TOTAL-LIABILITY-AND-EQUITY> 192,044
<SALES> 51,653
<TOTAL-REVENUES> 51,653
<CGS> 38,880
<TOTAL-COSTS> 49,948
<OTHER-EXPENSES> (309)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 588
<INCOME-PRETAX> 1,871
<INCOME-TAX> 731
<INCOME-CONTINUING> 1,140
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,140
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
