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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-13279
UNOVA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4647021
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
360 NORTH CRESCENT DRIVE
BEVERLY HILLS, CALIFORNIA 90210-4867
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 888-2500
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 [ ] No [X]
On October 31, 1997 there were 54,510,193 shares of Common Stock outstanding.
Pursuant to Article 11 of Regulation S-X, the Registrant hereby amends Note 2
of the "Notes to Combined Financial Statements" section of Part I, Item I --
"Financial Information", to include additional pro forma financial
information, as set forth in the pages attached hereto.
Page 1 of 11
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNOVA INC.
COMBINED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------------
1997 1996
----------- ---------
Sales and Service Revenues $ 1,094,104 $ 814,502
----------- ---------
Costs and Expenses
Cost of sales 753,329 582,670
Selling, general and administrative 234,942 160,624
Depreciation and amortization 30,517 19,584
In-process research and development charge 203,300
Interest, net 12,771 5,131
----------- ---------
Total Costs and Expenses 1,234,859 768,009
----------- ---------
(Loss) Earnings before Taxes on Income (140,755) 46,493
Taxes on Income (25,018) (18,597)
----------- ---------
Net (Loss) Earnings $ (165,773) $ 27,896
----------- ---------
----------- ---------
Net (Loss) Earnings Per Share $ (3.07) $ 0.52
----------- ---------
Shares used in computing net (loss) earnings
per share 53,920,058 53,891,534
See accompanying notes to combined financial statements.
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UNOVA INC.
COMBINED STATEMENTS OF OPERATIONS
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
--------- ---------
Sales and Service Revenues $ 361,761 $ 310,031
--------- ---------
Costs and Expenses
Cost of sales 240,813 226,138
Selling, general and administrative 82,271 56,841
Depreciation and amortization 13,482 6,695
Interest, net 5,672 2,056
--------- ---------
Total Costs and Expenses 342,238 291,730
--------- ---------
Earnings before Taxes on Income 19,523 18,301
Taxes on Income (7,810) (7,320)
--------- ---------
Net Earnings $ 11,713 $ 10,981
--------- ---------
--------- ---------
Net Earnings Per Share $ 0.22 $ 0.20
--------- ---------
--------- ---------
Shares used in computing net earnings
per share 53,962,845 53,891,534
See accompanying notes to combined financial statements.
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UNOVA, INC.
COMBINED BALANCE SHEETS
(THOUSANDS OF DOLLARS)
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
(UNAUDITED)
ASSETS
Current Assets
Cash and cash equivalents $ 13,368 $ 149,467
Accounts receivable, net 493,654 394,572
Inventories (less progress billings) 138,964 94,452
Deferred tax assets 102,966 53,636
Other current assets 7,318 3,664
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Total Current Assets 756,270 695,791
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Property, Plant and Equipment, at cost 378,425 293,985
Less: Accumulated Depreciation (217,339) (161,477)
----------- -----------
Property, Plant and Equipment, Net 161,086 132,508
Goodwill and Other Intangibles, Net 365,986 178,810
Other Assets 66,879 66,684
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Total Assets $ 1,350,221 $ 1,073,793
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LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 293,522 $ 242,168
Payrolls and related expenses 74,611 50,567
Due to Western Atlas Inc. 230,000 109,574
Notes payable and current portion
of long-term obligations 44,043 27,461
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Total Current Liabilities 642,176 429,770
Long-term Obligations 17,133 14,507
Deferred Tax Liabilities 18,248 22,727
Other Long-term Liabilities 53,126 32,281
Equity - Investment by Western Atlas Inc. 619,538 574,508
----------- -----------
Total Liabilities and Equity $ 1,350,221 $ 1,073,793
----------- -----------
----------- -----------
See accompanying notes to combined financial statements.
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UNOVA, INC.
COMBINED STATEMENTS OF CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1997 1996
--------- ---------
Cash and Cash Equivalents at Beginning of Period $ 149,467 $ 103,501
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Cash Flows from Operating Activities:
Net (loss) earnings (165,773) 27,896
Adjustments to reconcile net (loss) earnings
to net cash used in operating activities:
Charge for acquired in-process research and
development costs 203,300
Depreciation and amortization 30,517 19,584
Deferred taxes 1,165 (1,139)
Change in accounts receivable (8,183) (108,160)
Change in inventories (1,068) 12,392
Change in other current assets 10,179 (63)
Change in accounts payable (70,935) 26,792
Other operating activities (5,207) (12,839)
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Net Cash Used in Operating Activities (6,005) (35,537)
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Cash Flows from Investing Activities:
Acquisition of businesses, net of cash acquired (385,247)
Capital expenditures (20,254) (16,406)
Other investing activities (204) 569
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Net Cash Used in Investing Activities (405,705) (15,837)
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Cash Flows from Financing Activities
Net transactions with Western Atlas Inc. 214,490 (12,185)
Due to Western Atlas Inc. 120,426 1,586
Repayment of borrowings (62,375) (253)
Short-term obligations, net 3,069 (809)
Other financing activities 1 1,792
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Net Cash Provided by (Used in) Financing Activities 275,611 (9,869)
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Resulting in Decrease in Cash and Cash Equivalents (136,099) (61,243)
--------- ---------
Cash and Cash Equivalents at End of Period $ 13,368 $ 42,258
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Supplemental disclosure of cash flow information
Interest paid $ 4,343 $ 1,731
Income taxes paid $ 47,520 $ 16,196
See accompanying notes to combined financial statements.
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UNOVA, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
1. UNOVA, Inc. ("UNOVA" or the "Company") became an independent public company
on October 31, 1997 (the "Distribution Date"), when all of the UNOVA
common stock was distributed to holders of common stock of Western Atlas
Inc. ("WAI"), in the form of a dividend. Every WAI shareholder of record
on October 24, 1997, was entitled to receive one share of UNOVA common
stock for each WAI share of common stock held of record.
The financial statements included in this report contain the historical
accounts and operations of the former WAI businesses that now comprise
the Company. The amounts included in this report are unaudited; however
in the opinion of management, all adjustments necessary for a fair
presentation of results of operations, financial position and cash flows
for the stated periods have been included. These adjustments are of a
normal recurring nature. It is suggested that these combined financial
statements be read in conjunction with the audited financial statements
and notes thereto included in the Company's Registration Statement on
Form 10 (File No. 001-13279) under the Securities Exchange Act of 1934 as
originally filed with the Securities and Exchange Commission on August
18, 1997, and as amended on October 1, 1997 and October 22, 1997. The
results of operations for the interim periods presented are not
necessarily indicative of operating results for the entire year.
2. The Company acquired Norand Corporation ("Norand") on March 3, 1997, and
United Barcode Industries ("UBI") on April 4, 1997. Norand designs,
manufactures and markets mobile computing systems and wireless data
communications networks using radio frequency technology. UBI is a
European based automated data collection company headquartered in Sweden.
These companies are currently being integrated into the Automated Data
Systems segment. Both transactions were funded using a combination of
WAI committed credit facilities, short-term uncommitted credit lines and
excess cash, and are being accounted for under the purchase method of
accounting. Accordingly, the acquisition costs (approximately $280
million and $107 million for Norand and UBI, respectively) have been
allocated to the net assets acquired based upon their relative fair
values. Such allocation resulted in $203 million assigned to acquired
in-process research and development activities; $156 million assigned to
goodwill (to be amortized over 25 years using the straight-line method);
and $29 million assigned to other intangibles (to be amortized over
periods ranging from 4 to 18 years using the straight-line method).
During the second quarter, the Company expensed the amounts assigned to
in-process research and development in accordance with Financial
Accounting Standards Board Interpretation No. 4 ("FIN 4").
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NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. (continued)
Unaudited pro forma sales and service revenues, net earnings and earnings per
share for the nine months ended September 30, 1996 are $1,000.2 million,
$15.2 million and $0.28, respectively, reflecting the Norand acquisition as
if it had occurred on January 1, 1996, after giving effect to certain pro
forma adjustments, including amortization of goodwill and other intangibles,
and interest associated with the increase in allocated WAI debt.
The following unaudited pro forma combined statement of operations for the
nine months ended September 30, 1997 has been prepared from the historical
financial statements of the Company and Norand Corporation. Norand's
historical operations for the two months ended March 1, 1997 have been
combined with the Company's operations for the nine months ended September
30, 1997 (which include Norand subsequent to the acquisition date),
reflecting the acquisition as if it had occurred on January 1, 1997.
The unaudited pro forma financial information is not necessarily indicative
of what the results of operations would have been if the combination had
occurred on the above-mentioned dates. Additionally, such information is not
predictive of future results of operations.
<TABLE>
<CAPTION>
UNOVA Norand Combined Pro
Historical Historical Forma
Nine Months Two Months Nine Months
Ended Ended Ended
September 30, March 1, September 30,
1997 1997 Adjustments 1997
------------ --------- ------------- ------------
(thousands of dollars, except per share amounts)
<S> <C> <C> <C> <C>
Sales and Service Revenues $ 1,094,104 $ 36,798 $ 1,130,902
------------ --------- ------------
Costs and Expenses
Cost of sales 753,329 21,675 775,004
Selling, general and administrative 234,942 17,168 252,110
Depreciation and amortization 30,517 1,932 $ 1,127 (a) 33,576
In-process research and development
charge 203,300 (203,300)(b)
Interest, net 12,771 979 2,171 (c)(d) 15,921
------------ --------- -------- ----------
Total Costs and Expenses 1,234,859 41,754 (200,002) 1,076,611
------------ --------- -------- ----------
Earnings (Loss) before Taxes on Income (140,755) (4,956) 200,002 54,291
Taxes on Income (25,018) 1,487 1,815 (e) (21,716)
------------ --------- -------- ----------
Net Earnings (Loss) $ (165,773) $ (3,469) $201,817 $ 32,575
------------ --------- -------- ----------
------------ --------- -------- ----------
Earnings (Loss) per Share
(Equivalent Shares of 53.9 million) $ (3.07) $ (0.07) $ 3.74 $ 0.60
------------ --------- -------- ----------
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</TABLE>
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NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. (continued)
The following pro forma adjustments give effect to the acquisition of
Norand as if it had occurred on January 1, 1997. The pro forma
statements of operations have not been adjusted to include the
acquisition of UBI in March 1997, because such results are not material
to the Company's operations.
a) To record amortization of goodwill and other intangible assets
acquired in the acquisition of Norand.
b) To eliminate the Company's non-recurring, non-tax deductible charge
to expense acquired in-process research and development activities in
accordance with FIN 4.
c) To record incremental interest expense on allocated Western Atlas
corporate debt using the Western Atlas estimated blended historical
7.5% annual rate.
d) To eliminate Norand's historical interest expense related to
short-term borrowings under agreements which were repaid with
additional Western Atlas corporate debt concurrent with the Company's
acquisition of Norand.
e) To adjust the pro forma combined effective federal and state income
tax rate to 40%.
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NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
2. (continued)
The Company acquired the remaining 51% of Honsberg, a German machine tool
maker, in the second quarter of 1997. The original 49% of Honsberg was
acquired during 1995. The Company acquired the stamping, engineering and
prototyping division of Modern Prototype Company in September 1997.
These acquisitions are integral to the Company's goals, though not
currently material in the aggregate to UNOVA's combined financial
statements.
The fair values of Norand, UBI, Honsberg and Modern Prototype assets and
liabilities at their respective acquisition dates are presented below for
supplemental cash flow disclosure purposes:
(in thousands of dollars)
-------------------------
Current assets $ 156,198
Net property, plant & equipment 28,746
Goodwill and intangibles 193,459
Other non-current assets 55,399
Total debt (84,163)
Other current liabilities (145,451)
Other non-current liabilities (11,642)
In-process research and development 203,300
----------
Purchase price 395,846
Less: Cash acquired (10,599)
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Purchase price, net of cash acquired $ 385,247
----------
----------
3. General and administrative costs include allocated charges from WAI
of $12.9 million and $16.3 million for the nine months ended September
30, 1997 and 1996, respectively and $3.8 million and $5.5 million for the
three months ended September 30, 1997 and 1996, respectively.
4. The components of inventory balances are summarized below:
SEPTEMBER 30, DECEMBER 31,
1997 1996
---------------------------
(THOUSANDS OF DOLLARS)
Raw materials and work in process $115,694 $100,078
Finished goods 36,912 18,697
Less progress billings (13,642) (24,323)
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Net inventories $138,964 $ 94,452
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-------- --------
5. Net interest expense is composed of the following:
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---------------------- ----------------------
(THOUSANDS OF DOLLARS) (THOUSANDS OF DOLLARS)
Interest expense $15,736 $8,614 $6,472 $2,850
Interest income (2,965) (3,483) (800) (794)
------- ------ ------ ------
Net interest expense $12,771 $5,131 $5,672 $2,056
------- ------ ------ ------
------- ------ ------ ------
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NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
5. (continued)
Interest expense includes allocated charges from WAI of $10.3 and $6.3
million for the nine months ended September 30, 1997 and 1996,
respectively and $4.0 million and $2.1 million for the three months ended
September 30, 1997 and 1996, respectively.
6. The Company has obtained credit facilities with a group of banks which
permit the Company to borrow in excess of $450 million. These credit
facilities consist of a $400 million committed credit facility and other
uncommitted credit facilities. On October 31, 1997, funds borrowed under
the committed facility were used to pay a $230 million dividend to WAI
in connection with the spin-off.
In November 1997, the Company entered into a three-month agreement to
purchase $100 million of ten-year U.S. treasury securities at a forward
rate, as the Company plans to extend the maturity of some of its existing
short-term debt.
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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.
UNOVA, INC.
(Registrant)
By /s/ Michael E. Keane
----------------------
Michael E. Keane
Senior Vice President and
Chief Financial Officer
January 13, 1998
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