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Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993 Commission file
number 1-7795
UNC INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 54-1078297
(State of incorporation) (I.R.S. employer
identification number)
175 Admiral Cochrane Drive, Annapolis, Maryland 21401
(Address of principal executive offices) (Zip code)
(410)266-7333
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock,
Par Value $0.20 Per Share New York Stock Exchange
9-1/8% Senior Notes due 2003 New York Stock Exchange
7-1/2% Convertible Subordinated
Debentures due 2006 New York Stock Exchange
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-
affiliates of the Registrant at March 1, 1994 was
approximately $185,400,000.
The number of shares of Registrant's Common Stock
outstanding on March 1, 1994 was 17,388,334 (excluding 700,000
shares held in treasury). (Cover page continued)
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement,
expected to be filed by March 30, 1993, specifically excluding
the sections titled "Statement of Management Development and
Compensation Committee on Executive Compensation" and
"Comparison of Five-Year Cumulative Total Return Among UNC
Incorporated, NYSE Market Value Index and Peer Group Index",
in connection with the solicitation of proxies for its 1994
Annual Meeting of Shareholders, are incorporated into Items
10, 11, 12 and 13 under Part III.
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UNC INCORPORATED AND SUBSIDIARIES
---------------------------------
Item 1. Business
The Company is a diversified supplier of products and
services to the aviation industry. The Company derives
approximately 79% of its revenues from a number of aftermarket
businesses which include the overhaul of aircraft engines, the
overhaul of aircraft accessories, the remanufacture of jet
engine and aircraft components, the refurbishing and overhaul
of helicopters and the provision of contract services for
aircraft maintenance and pilot training to the United States
and foreign military. Approximately 21% of the Company's
revenues are derived from manufacturing jet engine and
aircraft components for original equipment manufacturers
("OEMs").
The Company has changed significantly during the last eight
years as a result of a comprehensive acquisition and
divestiture program that has created an aviation focused
company. Since 1985, the Company has (i) entered the aircraft
engine overhaul business through the acquisition of both
Airwork Corporation and Pacific Airmotive Corporation; (ii)
entered the aviation contract services business through the
acquisition of Burnside-Ott Aviation Training Center, Inc.;
(iii) entered the business of fabricating precision turbine
engine components through the acquisition of Tri-Industries,
Inc.; (iv) entered the accessory overhaul business through the
acquisition of its Accessory Services operations; (v) entered
the airframe manufacturing business and expanded its engine
manufacturing capabilities in the area of chemical milling
through its acquisition of Chemical Dynamics, Inc.; (vi)
expanded its remanufacturing and repair capabilities by
forming Tri-Remanufacturing; (vii) entered the helicopter
refurbishment business through the acquisition of certain
operating assets of Southern Aero Corporation ( subsequently
renamed UNC Helicopter); (viii) further expanded its
remanufacturing capabilities with the acquisition of the
operating assets of Artex Tool Corporation; (ix) further
expanded its engine components manufacturing capabilities
through its acquisition of Johnson Technology; (x) further
expanded its airframe capabilities through its acquisition of
All Fab, Inc.; (xi) further expanded its aviation contract
services business through the acquisition of Lear Siegler
Management Services; and (xii) further expanded its industrial
turbine engine overhaul business through the acquisition of
Metcalf Servicing Company. Over the same time period, the
Company withdrew from all of its non-aviation businesses by
closing or divesting twenty-one non-aviation businesses,
including companies engaged in nuclear, environmental and
telecommunications businesses.
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Also, the Company announced in October 1993 its intention to
withdraw from the third party JT8 engine overhaul business
(See Note 4 of Notes to Consolidated Financial Statements.)
The Company has a diverse base of over 8,000 customers
including major, national, regional, foreign, charter and
package/cargo airlines, business aircraft operators, engine
and airframe OEMs and the United States and foreign military.
Overhaul Division
The Company's Overhaul Division includes UNC Airwork, UNC
Pacific Airmotive ("UNC PAC"), UNC CAMCO, UNC Texas-CAMCO and
UNC ARDCO (collectively, "UNC Accessory Services"), and UNC
Metcalf Servicing.
UNC Airwork, founded in 1946 and acquired by the Company in
1985, provides overhaul and maintenance service on small to
medium-sized turbine engines. UNC Airwork also provides
overhaul services on industrial derivatives of aircraft
turbine engines used by electric utilities, and in marine and
other industrial applications. UNC Airwork is authorized by
the leading turbine engine OEMs, including Pratt & Whitney,
General Electric, Rolls Royce, Garrett Corporation and
Allison, to provide after-sale product support and to act on
such manufacturers' behalf in warranty administration. UNC
Airwork's services are provided to domestic and international
customers through two major production facilities and four
smaller satellite repair bases throughout the country. All of
the group's overhaul and repair facilities are certified by
the Federal Aviation Administration (the "FAA"). The group
serves over 6,000 companies and 75 regional airlines. The
Company also has sales agreements with 112 independent fixed
base operators that provide aircraft services to the corporate
aircraft markets.
UNC PAC, founded in 1928 and also acquired by the Company
in 1985, concentrates on the overhaul and maintenance of small
turbine engines. UNC PAC is the only facility in the United
States authorized for the overhaul of the Pratt & Whitney PT6T
(Twin-PAC) engine. The PT6T engine powers a world-wide fleet
of Bell, Sikorsky and Agusta helicopters. In addition, the
T400 engine, the military version of the PT6T also serviced by
UNC PAC, powers the Bell UH-IN, AH-1J, AH-1T and CH-135
helicopters. Throughout the world there are currently flying
over 2,200 commercial PT6T, and over 1,400 military T400,
powered helicopters.
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UNC Airwork and UNC PAC also operate as a Pratt & Whitney
Canada licensed overhaul facility for the PT6 turboprop
engine, one of the most populous operating engines in the
world with 23,000 engines in the fleet. This engine is used
on over 20 aircraft models including Beech, Cessna, Dornier,
Embraer and Piaggio, and Short.
The Company announced in October its intention to withdraw
from the third party JT8 engine overhaul business. This
decision was reached because of the continuing deterioration
of the JT8 overhaul market which began in late 1992. The
downturn in the JT8 market is due to the large number of
surplus JT8 engines available on the market, resulting from
the earlier than expected retirement of JT8 powered aircraft.
These surplus engines are being purchased or leased by
customers in lieu of overhauling their own engines. The
Company believes that the current glut of surplus JT8 engines
will continue for several more years. Because of this long
term outlook, it was determined that it would be in the
Company's best interest to exit the third party JT8 overhaul
business and thereby eliminate the operating losses of this
business rather than wait for an uncertain improvement in
market conditions sometime in the future. JT8 revenues in
1993 amounted to approximately $27.2 million.
UNC Accessory Services consists of three operating units,
which operate certified FAA repair station facilities
providing accessory overhaul services to aircraft operators
including major airlines, national airlines, regional
airlines, package carriers, corporate operators, independent
aircraft engine overhaul facilities and after-market
distributors. Accessory services are provided on over 50
categories of commercial aircraft accessories, translating to
more than 28,000 different parts. Aircraft accessories
include items such as landing gear, constant speed drives,
radar components, generators, transponders, airstairs,
auxiliary power units, pneumatic valves, cooling turbines,
flight actuators, propellers, electrical systems, fuel
systems, hydraulic systems and anti-skid brake systems.
Accessory Services is continuing to expand the broad variety
of aircraft accessory overhaul services it offers to its
customers, concentrating on new generation jet liners and
regional commuter aircraft.
UNC Accessory Services was founded in 1951 and acquired by
the Company in 1989. UNC Accessory Services is an authorized
service center for leading OEMs, such as, Allied Signal
Aerospace Products, Garret General Aviation Services, APPH,
Chandler Evans and HR Textron. The Company believes it is the
largest independent supplier of accessory overhaul support for
mature and new aircraft types.
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UNC Metcalf Servicing, founded in 1980 and whose assets
were acquired by the Company in August 1993, serves the
industrial turbine engine market with overhauls, repairs,
parts, replacement and exchange units, and contract
maintenance support services for Solar Centaur and Saturn
power generator packages. These services, paralleling
aircraft engine overhaul processes, support hospitals, and
major oil and utility companies' need for power generation and
pumping.
The Company entered the business of leasing aviation assets
in 1993 with the acquisition of a McDonnell Douglass DC-10-30
aircraft in freighter configuration; subject to an existing 18
year term, and leveraged with non-recourse financing. This
transaction is accounted for as a leveraged lease and
generated $1.3 million of pre-tax income in 1993. The Company
also acquired 13 JT8D-7B engines in the fourth quarter with
the intention of overhauling and leasing such engines under
short-term operating leases. Through strategic alliances and
other arrangements with third parties, the Company is
currently investigating opportunities to acquire and lease
aviation assets for their own account, to arrange for the
finance and/or lease of aviation assets in return for a fee
and/or residual interest in such assets and to acquire
aviation assets with the intention of dismantling such assets
and selling the parts.
Revenues of the Overhaul Division were $205.3 million in
1993 (47% of the Company's 1993 revenues).
Aviation Services
The Company's Aviation Services Division includes UNC
Aviation Services, UNC Lear Siegler and UNC Helicopter. UNC
Aviation Services founded in 1964 and acquired by the Company
in 1986, provides aircraft logistics support maintenance,
ground support services and aircrew academic, simulator, and
advanced flight training for the United States Department of
Defense. Work is performed at military aviation training
sites throughout the United States. Contracts are both fixed
price and cost plus incentive award fee for multiple years
with options. This business is managed centrally at the
Company's Annapolis, Maryland headquarters.
The market for military contract services results from the
Department of Defense turning to the private sector to obtain
services for less than they would cost if they were performed
by government personnel. Awards of these contracts are
generally based on best value to the government. As a result,
success in obtaining the awards of these contracts requires
both high technical rating and low price.
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In the third quarter of 1993, UNC Aviation Services was
awarded a fixed price indefinite delivery requirements
contract to provide all organizational and intermediate level
maintenance services for the T-2C and TA-4J aircraft for the
U.S. Naval Air Training Command at four sites in Florida,
Texas, and Mississippi. This one year contract has four
option years and total five-year value of approximately $178
million.
Founded in 1961, UNC Lear Siegler, located in Oklahoma
City, Oklahoma, was acquired by the Company in October 1993.
UNC Lear Siegler provides contract services for the operation,
maintenance and repair of aircraft, land vehicles and marine
vehicles to the U.S. Department of Defense and the armed
services of foreign governments, as well as fleet and facility
management and maintenance services to both U.S. and foreign
government agencies. The Company has a major presence with
the Royal Saudi Air Force.
UNC Lear Siegler is one of four contractors that are part
of the U.S. Air Force Material Command's Contractor Field Team
(CFT) Program. Under a recurring CFT time and materials
contract, the company provides intermediate and depot-level
maintenance for aircraft and other equipment to U.S. military
agencies and selected foreign governments. In 1993, the
company held approximately one third of the total CFT market
estimated at $250 to $300 million for the government's fiscal
year 1993. The company's current CFT contract runs through
September 1997. UNC Lear Siegler has been in the CFT program
since the company's founding.
UNC Helicopter, located in Ozark, Alabama and acquired by
the Company in 1992, sells, overhauls, refurbishes, and
repairs helicopters and their components. UNC Helicopter
holds the U.S. Army UH-1 Retirement contract to overhaul up to
250 helicopters over five years for sale by the U.S.
Government under the Foreign Military Sales program. Changes
in Government FMS funding procedures resulted in slower sales
of UH-1 aircraft in the last half of 1993. To compensate, UNC
Helicopter reduced its workforce in the fourth quarter to
match the contract requirements. In the second quarter of
1993, the company signed a helicopter logistics support
contract with the emergency relief arm of a foreign government
with a value of $950,000.
The Aviation Services Division had revenues of $142.2
million in 1993 (32% of the Company's 1993 revenues).
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Manufacturing
The turbine engine parts manufacturing operations of the
Company's Manufacturing Division includes UNC Tri-
Manufacturing, UNC Chemical Dynamics and UNC Johnson
Technology. Customers include OEMs of both engines and
aircraft, aircraft component suppliers, commercial airlines,
and U.S. military maintenance depots. The Company believes
that its capabilities are advanced in the industry and include
large computer controlled multi-axis machinery, laser milling,
electro-chemical and electrical-discharge machining, vacuum
brazing and heat treating, electron beam, resistance and
fusion welding, chemical milling and state-of-the-art
non-destructive testing.
UNC Tri-Manufacturing, founded in 1955 and acquired by the
Company in 1988, is the largest of the three manufacturing
units and is a leading manufacturer of precision components,
aircraft parts and assemblies for turbine engines for
commercial and military aviation applications. Primary
customers include General Electric, Pratt & Whitney and the
Department of Defense.
UNC Chemical Dynamics, founded in 1973 and acquired by the
Company in 1990, chemically mills turbine engine components
and chemically mills and anodizes large airframe structures
for both commercial and military applications. Customers
include Bell Helicopter, Boeing, Vought Aircraft, Lockheed,
Grumman and UNC Tri-Manufacturing. The addition of UNC
Chemical Dynamics has allowed UNC Tri-Manufacturing to
manufacture complex chemically milled fabricated ducts for
military engines.
The remanufacturing operations of the Company's
Manufacturing Division includes UNC Tri-Remanufacturing and
UNC Artex. UNC Tri-Remanufacturing, which was started by the
Company in 1991, restores aircraft and engine components to
serviceable condition. The Company's remanufacturing business
is supported by market driven repair development and
customers' desires to minimize repair and overhaul cost. UNC
Tri-Remanufacturing's significant customers are the commercial
airlines that directly perform their own engine overhauls and
the independent airmotives that overhaul engines for airlines.
Airlines typically outsource remanufacturing to suppliers such
as UNC Tri-Remanufacturing because they do not generally have
the repair expertise and licenses required to perform these
operations.
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UNC Artex, founded in 1957 and whose assets were acquired
by the Company in April 1993, expands the Company's repair and
remanufacturing capabilities through proprietary processes to
repair engine gearboxes and cases as well as aircraft
component housings and other engine and aircraft parts and
accessories. UNC Artex primary customers are the major
commercial airlines.
UNC Johnson Technology, founded in 1963 and acquired by the
Company in July 1993, provides high technology turbine nozzles
and vane manufacturing and repair, and specialized non-
conventional machining of super alloys such as electro-
chemical deep hole drilling, laser drilling, and electrical-
discharge machining. Customers include General Electric,
Pratt & Whitney, and the Department of Defense.
UNC All Fab, together with UNC Chemical Dynamics, represent
the aerostructure operations of the Company's Manufacturing
Division. UNC All Fab, founded in 1965 and located in
Everett, Washington, was acquired by the Company in August
1993. UNC All Fab serves the aviation industry as a
manufacturer of machined and formed sheet metal structural
components and sub-assemblies for aircraft, including the
largest commercial airlines in service.
Revenues for Manufacturing Division were $90.8 million in
1993 (21% of the Company's 1993 revenues).
Competition
The businesses and markets in which the Company operates
are highly competitive.
The Company's engine overhaul operations compete primarily
with, and largely at the discretion of, the aircraft OEMs
including Garrett, General Electric, Pratt & Whitney and
Rolls-Royce. These operations also face significant
competition from a large number of other domestic and foreign
overhaulers such as Aviall, Standard Aero, National Airmotive,
BizJet, Keystone Helicopters, Aeromaritime, PHI, Celma, Turbo
Power, Turbotech Repairs, Desert Turbines, Air Force Turbines
and others. As exemplified by the Company's recent withdrawal
from the JT8 business, the Company's overhaul operations also
compete with sales of used engines. The Company's accessory
services operations compete with a large number of smaller
service facilities and with certain OEM's that provide
aftermarket services for their products.
Quality and reliability of service, prompt turn-around
time, price and availability to customers of computerized on-
line access systems (such as UNC Access) are major competitive
factors in the engine overhaul and accessory overhaul
businesses.
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In providing contract aviation services to the military,
the Company's major competitors are Dyncorp, Reflectone, Serv-
Air, Northrop Worldwide Aviation Services, Beech Aviation
Services, Inc., Grumman Technical Services, and Lockheed
Support Services, Inc.
UNC Lear Siegler holds a prominent position in providing
aviation and other maintenance services to the U.S. Department
of Defense and selected foreign governments. The Company is
one of only four holding a recurring contract under the
Contract Field Team (CFT) program. The program allows these
companies to provide maintenance services to the Government on
an as-needed basis through individual orders. Other CFT
contractors are Dyncorp, Lockheed, and Serv-Air.
In respect of the Company's manufacturing operations, UNC
Tri-Manufacturing's principle competitors are The Barnes
Group, Ketema and Chemtronics, and UNC Johnson Technology's
competition exists in the form of OEM in-house capabilities
and Chromalloy, Howmet and Walbar. UNC's aerostructures
operation, comprised of both UNC All Fab and UNC Chemical
Dynamics, competes with Ace Clearwater, Dynabil Industries,
Monitor Aerospace, AeroChem and ChemFab. UNC Tri-
Remanufacturing and UNC Artex's principal competitors are
Windsor Airmotive, Chromalloy, NORDAM PSD and Pyromet. Price,
quality and service are major competitive factors in this
business.
Research and Development; Patents:
The Company does not currently have any employees who are
engaged full-time in research and development activities;
however, certain employees from time to time render services
of a research and development nature as part of their regular
duties. The Company owns a number of patents, but does not
consider that patent protection is essential to the successful
operation of its businesses.
Government Regulation:
UNC Airwork, UNC Pacific Airmotive, UNC Accessory Services,
UNC Tri-Remanufacturing, UNC Johnson Technology and UNC
Helicopter are all licensed FAA repair stations in their
respective specialties. All of UNC Accessory Services units
are certified by the FAA and hold current C.A.S.E. Registry as
well as various approvals by international aviation
administration organizations. The principal activities of the
Company's discontinued submarine propulsion unit manufacturing
business is regulated by the Department of Energy ("DOE") and
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the Nuclear Regulatory Commission ("NRC"). DOE has general
responsibility for energy research, development and
administration, and NRC has responsibility for licensing and
regulating activities. The Company is also subject to
comprehensive regulations designed to maximize safety in the
handling of hazardous materials. In addition, certain
properties of the Company relating to its discontinued
minerals business are affected by special federal and state
environmental laws and regulations. See the description of
environmental proceedings included in Note 10 to the Company's
Consolidated Financial Statements included on pages 43 through
48.
Backlog:
As of December 31, 1993, the total contract price of the
backlog of orders for manufactured engine and airframe parts
and for helicopter overhaul and aviation contract services for
the military, including option years, believed to be firm was
approximately $776.8 million, and approximately 38% of the
orders or services represented thereby have been or are
currently expected to be filled during 1994. As of December
31, 1992, such total was approximately $303.1 million.
Employees:
As of December 31, 1993, the Company had 6,430 employees,
of whom 6,341 were employed in the Company's aviation related
businesses. The Company's other operations (including
discontinued operations and general administration) employed
89 persons. Of the Company's employees, 2,555 were subject to
collective bargaining agreements.
Export Sales:
For information related to sales to foreign countries,
reference is made to Note 17 to the Company's Consolidated
Financial Statements included on pages 59 and 60.
Item 2. Properties.
The principal executive offices of the Company are located
at 175 Admiral Cochrane Drive, Annapolis, Maryland. The
executive offices are subject to a lease expiring in 1996 with
renewal options and an option to purchase and are comprised of
approximately 34,000 square feet in a modern office building.
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The following table sets forth certain information
regarding the Company's operating facilities as of December
31, 1993.
<TABLE>
<CAPTION> Approximate
Location Square Footage Title
------------ -------------- ------
<S> <C> <C>
Overhaul Division (1)
Burbank, California 120,000 Owned
Bayshore, New York 41,000 Owned
Grand Prairie, Texas 41,700 Owned
Millville, New Jersey 244,000 Leased
Miami, Florida 46,000 Leased
Odessa, Texas 32,000 Leased
Ft. Lauderdale, Florida 21,000 Leased
Ronkonkoma, New York 60,000 Leased
Burbank, California 21,000 Leased
Aviation Services Division
Annapolis, Maryland 5,100 Leased
Ozark, Alabama 120,500 Leased
Oklahoma City, Oklahoma 36,700 Leased
San Antonio, Texas 21,300 Leased
Pensacola, Florida 2,600 Leased
Manufacturing Division
Terre Haute, Indiana 124,000 Owned
Muskegan, Michigan 101,600 Owned
Terre Haute, Indiana 66,000 Leased
Weatherford, Texas 110,000 Leased
Addison, Texas 20,000 Leased
Everett, Washington 35,000 Leased
______________________
</TABLE>
(1) The Overhaul Division also leases facilities in
four states aggregating approximately 7,300 square
feet.
The Company owns its former engine parts manufacturing
plant in Norwich, Connecticut containing approximately 72,000
square feet and leases a plant containing approximately 51,000
square feet in Montville, Connecticut. In addition, the
Company owns the facilities of its discontinued submarine
propulsion unit manufacturing business in Montville,
Connecticut which includes a modern steel frame building
containing approximately 432,000 square feet.
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Item 3. Legal Proceedings.
See the description of a litigation settlement and
litigation and contingencies appearing in Notes 3 and 10 of
Notes to Consolidated Financial Statements included on pages 36
and 37 and pages 43 through 48.
Item 4. Submission of Matters to a Vote of Security
Holders.
Not Applicable.
PART II
Item 5. Market for the Company's Common Equity and Related
Stockholder Matters.
The principal market for the common stock of UNC
Incorporated is the New York Stock Exchange. At December 31,
1993, there were 7,029 holders of record of common stock. The
accompanying table sets forth the high and low prices for
UNC's common stock in the periods indicated. See Note 7 of
Notes to Consolidated Financial Statements for a description
of restrictions on the payment of dividends.
<TABLE>
<CAPTION>
1993 1992
Quarter Ended High Low High Low
- ------------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
March 31 $ 6.38 $ 5.50 $ 7.50 $ 5.63
June 30 $ 7.00 $ 5.63 $ 7.13 $ 5.75
September 30 $ 6.88 $ 6.00 $ 6.25 $ 5.50
December 31 $ 9.38 $ 6.63 $ 5.88 $ 5.00
--------------------------------
Closing Price,
December 31: $ 9.38 $ 5.50
--------------------------------
</TABLE>
The closing price of the Company's common stock on February
25, 1994 was $10.75.
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Item 6. Selected Financial Data.
SELECTED FINANCIAL INFORMATION
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Revenues $438,293 $365,152 $360,571 $356,255 $305,240
======== ======== ======== ======== ========
Earnings (loss) from:
Continuing operations
before extraordinary
item $ 11,594 $ 11,369 $(25,485) $ 5,219 $ (3,416)
Discontinued operations 34,100 (128) 3,427
Extraordinary item -
early retirement of
debt (532) (1,700)
-------- -------- -------- -------- --------
Net earnings $ 11,062 $ 11,369 $ 6,915 $ 5,091 $ 11
======== ======== ======== ======== ========
Earnings (loss) per share:
Continuing operations
before extraordinary
item $ .67 $ .66 $ (1.49) $ .31 $ (.20)
Discontinued operations 1.99 (.01) .20
Extraordinary item (.03) (.10)
-------- -------- -------- -------- --------
Net earnings $ .64 $ .66 $ .40 $ .30 $
======== ======== ======== ======== ========
Average number of shares
outstanding 17,356 17,279 17,128 17,082 16,994
</TABLE>
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SELECTED FINANCIAL INFORMATION
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
FINANCIAL POSITION DATA
Working capital $150,200 $128,150 $ 88,379 $130,266 $128,218
Current ratio 2.5 to 1 3.1 to 1 1.5 to 1 3.2 to 1 2.5 to 1
Total assets $506,133 $391,082 $455,094 $409,980 $481,706
Total long-term debt,
including current
portion $197,283 $125,723 $177,829 $186,971 $230,873
Shareholders' equity $165,486 $155,639 $143,492 $136,488 $131,216
Total debt to
capitalization 54.4% 44.7% 55.3% 57.8% 64.0%
Return on average
shareholders' equity 6.9% 7.6% 4.9% 3.8%
OTHER
Capital expenditures $ 11,250 $ 6,602 $ 7,280 $ 24,235 $ 49,092
Depreciation and
amortization $ 11,477 $ 10,378 $ 10,196 $ 12,345 $ 15,089
Employees 6,430 3,383 3,852 4,612 5,014
Shareholders 7,029 7,371 8,936 9,193 9,389
</TABLE>
See Notes 11 and 18 of Notes to Consolidated Financial
Statements for matters affecting continuing operations and
Notes 2 and 3 of Notes to Consolidated Financial Statements
for a description of acquisitions and dispositions.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Continuing Operations
Overview
The Company's operations are conducted in one business
segment which includes: the manufacture and remanufacture of
jet engine and aircraft components, the overhaul of aircraft
accessories, aircraft engines and industrial gas turbine
engines, the refurbishment and overhaul of helicopters, and
providing maintenance and training, repair and logistical
contract services.
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The Company has been expanding its market share and
revenue base in its core Divisions through strategic business
acquisitions. During 1993 the Company made strategic
acquisitions in its Manufacturing Division through the
acquisition of substantially all of the assets of Johnson
Technology, a division of Freedom Forge Corporation, Artex
Tool Corporation and Stockton Enterprises (collectively
"Artex") and All Fab, Inc. and the award of substantial
contract backlog previously performed by the Heintz
Corporation; in its Overhaul Division through the acquisition
of the assets of Metcalf Servicing Company; and in its
Aviation Services Division by acquiring the assets of Lear
Siegler Management Services, Inc. These acquisitions have
significantly increased the Company's base business in these
Divisions. See Note 2 of Notes to Consolidated Financial
Statements.
1993 Compared with 1992
Revenues were $438.3 million in 1993 compared with $365.2
million in 1992, an increase of $73.1 million (20%).
Operating income in 1993 was $23.9 million compared with $25.8
million in 1992, a decrease of $1.9 million (7%). The
reduction in operating income in 1993 is principally due to
losses recorded on the JT8 product line, which were partially
offset by higher levels of income from the Manufacturing and
Aviation Services Divisions.
The Company's Manufacturing Division revenues for 1993 of
$90.8 million increased $35.1 million (63%) compared with 1992
and operating income increased $5.5 million to $12.6 million.
The increase in revenues in 1993 is due to activities on new
contracts received during 1993, revenues of $19.7 million
generated by the newly acquired businesses, UNC Artex, UNC
Johnson Technology and UNC All Fab acquired during 1993 and
the contract backlog acquired from Heintz. Revenues and
operating income in 1993 and 1992 include claims filed under
U.S. government contracts of approximately $2.0 million and
$2.2 million, respectively. The 1993 claim is to recover
amounts related to increased performance costs resulting from
constructive changes, defective specifications, government-
caused delays and other items; the 1992 claim is for costs
associated with termination of a contract for the convenience
of the government. The increase in operating income is
attributable to $4.1 million generated by the businesses
acquired in 1993, and the positive effects of manufacturing
and quality improvement programs, partially offset by reduced
margins on new contracts due to competitive pressures within
the industry.
14
<PAGE>
<PAGE> 17
Revenues for the Overhaul Division in 1993 decreased
$15.0 million (6.8%) to $205.3 million and operating income
decreased $6.3 million to $12.0 million. The reduction in
revenues is due to a decrease in airline JT8 engine overhauls
and a reduction in accessory overhauls, partially offset by an
increase in business aviation and regional airline engine
overhauls, revenues of $2.6 million generated by the newly
acquired business, UNC Metcalf, and $1.3 million from a
leveraged lease transaction (see Note 15 of Notes to
Consolidated Financial Statements). The decrease in JT8
revenues of $17.5 million reflects the prevailing economic
conditions within the industry which have significantly
reduced the demand for the overhaul of airline JT8 engines,
and the Company's resultant decision to withdraw from third
party JT8 overhaul business. The Company announced in October
its intention to withdraw from the third-party JT8 engine
overhaul business. This decision was reached because of the
continuing deterioration of the JT8 overhaul market which
began in 1992. The downturn in the JT8 market is due to the
large number of surplus JT8 engines available on the market,
resulting from the earlier than expected retirement of JT8
powered aircraft. These surplus engines are being purchased
or leased by customers in lieu of overhauling their own
engines. The Company believes that the current glut of
surplus JT8 engines will continue for several more years.
Because of this long term outlook, it was determined that it
would be in the Company's best interest to exit the third-
party JT8 overhaul business and thereby eliminate the
operating losses of this business rather than wait for an
uncertain improvement in market conditions sometime in the
future. The Company's investment in JT8 product line is
approximately $14.0 million, consisting of inventory, tooling
and a test cell facility. Management believes this amount
will be fully recovered through the successful implementation
of the Company's plans. See Note 4 of Notes to Consolidated
Financial Statements.
Additionally, accessory overhaul revenues decreased
approximately $3.6 million due to the decision to eliminate
certain lower-margin product lines and from increased pricing
pressures from existing competitors. Operating income of the
Overhaul Division decreased to $12.0 million due to lower
volumes in the JT8 and accessory overhaul markets and reduced
margins in the competitive business aviation and commuter
airline markets partially offset by income generated by a
leveraged lease transaction of $1.3 million.
Aviation Services Division revenues of $142.2 million
increased $53.1 million (60%) in 1993. The acquisition of UNC
Lear Siegler in October 1993 contributed $41.6 million to 1993
revenues, and the revenues of UNC Helicopter, acquired in
June 1992, increased $4.1 million. Revenues under U.S.
15
<PAGE>
<PAGE> 18
government contracts to provide aviation training and
maintenance increased $4.8 million, primarily due to increased
helicopter maintenance business which was partially offset by
reduced pilot training activities. Also, 1993 revenues
include a $2.0 million contract claim against the
U.S. government following a favorable Federal Circuit Court of
Appeals ruling in February 1993 (See Note 10 of Notes to
Consolidated Financial Statements) and $0.6 million related to
a claim for fees improperly withheld under a government
contract. Operating income increased $3.1 million to $8.5
million due to income generated by Lear Siegler of $2.3
million and the $2.6 million in claims, which were partially
offset by lower margins at UNC Helicopter and the effects of
reduced pilot training activities on certain contracts.
Selling, general and administrative expenses in 1993 were
$53.5 million or 12.2% of sales compared with $44.9 million or
12.3% of sales in 1992. Although selling, general and
administrative expenses decreased as a percentage of revenues,
total costs increased in 1993 primarily due to the expenses
associated with companies acquired during 1993, increased
international marketing efforts and a nonrecurring reduction
in 1992 of a $1.3 million accrual for certain costs associated
with the termination of an equipment lease.
Activity under certain of the Company's Aviation Services
operations, which principally involve basic aviation training
and maintenance of aircraft, has decreased as defense spending
has decreased. The Defense Department is closing various
military bases, including one that has been closed where the
Company provided contract services. The Company's Aviation
Services Division has also continued to experience a reduction
in flight hours and related maintenance as training schedules
have been reduced. Further consolidation of military training
and maintenance contracts is expected as bases are eliminated
and other defense cuts reduce the value of individual
contracts. However, the Company expects that continued
pressures on defense spending could increase the outsourcing
of services currently being provided by military and other
government personnel to lower cost contractors, particularly
with respect to the recommended closing of three Navy depots
made by the Base Closing Commission. In August, the Company
was awarded a contract to provide all organizational and
intermediate-level maintenance for designated aircraft under
the U.S. Naval Air Training Command. This contract is a
consolidation of activities previously covered by three
contracts, only two of which were previously performed by the
Company. The contract runs for one year with four one-year
options, with total potential revenues of approximately $178
million.
16
<PAGE>
<PAGE> 19
Continued effort on the part of the U.S. government to
further reduce defense spending could affect the demand for
aircraft engines used in military applications and could have
a impact on the Company's manufacturing operations. In an
effort to reduce the potential effect of these reductions, the
Company's manufacturing operations have focused their business
for the past several years more on commercial rather than
military products. The Company also believes that trends in
the reduction of the manufacturers' subcontractor base will
continue to offset any impact from reduced government
spending. The Company's original equipment manufacturer
customers have reduced significantly their number of suppliers
and their own procurement staffs. The Company's manufacturing
operations remain a part of the reduced subcontractor base and
as such have obtained new contracts that the Company believes
may have not been available to the Company in the past when
the base of suppliers was much larger. Additionally, one of
the Company's engine manufacturer customers previously
announced plans to significantly reduce in-house manufacturing
facilities which will result in further outsourcing of
component manufacturing, and the Company may be a beneficiary
of such action. Although the Company's Manufacturing Division
provided its principal customers with price concessions during
1992 and 1993 in anticipation of receiving additional future
orders, the Company believes that increased volume from these
anticipated additional orders, together with on-going
productivity enhancement and cost reduction programs should
compensate for the effect of the price concessions.
Furthermore, during the second half of 1993, the Company was
awarded major sole source long-term aviation manufacturing
contracts which were previously held by a former competitor
who has filed for protection under Chapter 11 of the Federal
Bankruptcy law. The Company also acquired from the former
competitor certain inventory, tooling and equipment which will
be used to manufacture the product under the long-term
contracts.
Total interest expense increased $2.3 million (18%) in
1993 due to additional expense of the Senior Notes issued July
29, 1993, and continuing expense on the 11-1/2% debentures
which could not be redeemed until September 7, 1993. Interest
expense related to continuing and discontinued operations
increased $2.6 million and decreased $0.3 million,
respectively. The decrease in interest expense related to
discontinued operations is expected to continue as cash
proceeds generated by the discontinued operations through the
disposal date are used to repay debt attributable to
discontinued operations and as the net assets of discontinued
operations decrease.
17
<PAGE>
<PAGE> 20
The income tax benefit for 1993 of $3.8 million was $5.3
million higher than the $1.5 million tax provision for 1992.
This difference is due principally to recognition in the third
quarter of 1993 of $5.8 million of income tax benefits.
Statement of Financial Accounting Standard No. 109 (SFAS No.
109), "Accounting for Income Taxes" requires recognition of
income tax benefits for loss carryforwards, credit
carryforwards and certain temporary differences for which tax
benefits have not previously been recorded when realization of
those benefits becomes more likely than not. Various events
occurred during the year that caused the Company to re-
evaluate the probable realization of the benefits from
existing tax assets. Specifically, the acquisition of four
new businesses, the awarding of approximately $227 million in
new contracts increasing the Company's backlog in the third
quarter to approximately $522 million, the decision to
withdraw from the unprofitable third-party JT8 airline engine
overhaul product line and other events caused the Company to
conclude that the realization of various future tax benefits
is more likely than not. As a result, the carrying value of
the Company's net deferred tax asset was increased in 1993 by
$7.6 million of which $1.8 million was allocated to reduce
goodwill arising from acquisition of new businesses and $5.8
million was recognized as a current period tax benefit. (See
Note 12 of Notes to Consolidated Financial Statements.)
1992 Compared with 1991
Aviation revenues were $365.2 million in 1992 compared
with $358.1 million in 1991, an increase of $7.1 million (2%).
Total revenues in 1991 of $360.6 million included sales of
$2.5 million related to a non-aviation subsidiary which was
sold in 1991. Operating income in 1992 was $25.8 million
compared with a loss of $6.6 million in 1991. Operating
income in 1991 was affected by adjustments related to the
carrying value of certain inventories, increases in allowances
for doubtful accounts receivable related to services performed
for certain commercial airlines which were in liquidation or
in troubled financial condition and the write-down of goodwill
related to a defense oriented business.
The Company's Manufacturing Division revenues for 1992 of
$55.7 million decreased $12.5 million (18%) compared with 1991
due to reduced volume at the Company's Terre-Haute, Indiana
manufacturing facilities resulting from the completion of
certain low margin military contracts in 1991 and lower sales
of approximately $3.7 million at the Alloy Spot Welders
division, which was sold in June 1992. Partially offsetting
these decreases was approximately $2.2 million of revenue in
1992 related to a claim filed under a U.S. government contract
for costs associated with the termination of the contract for
the convenience of the government. Operating income, however,
increased $4.1 million to $7.1 million in 1992 due in part to
18
<PAGE>
<PAGE> 21
the results of manufacturing and quality control improvement
programs initiated in the latter part of 1991, and the
recoupment of certain costs associated with the claim for the
contract terminated for the convenience of the government.
This increase was partially offset by a $1.2 million reduction
in operating income from the Alloy Spot Welders division and
the adverse effect of certain price concessions provided to
principal customers in 1991.
Revenues of $220.3 million in 1992 from the Overhaul
Division increased $17.0 million (8%) and operating income
increased $10.5 million to $18.3 million in 1992. The higher
revenues generated were chiefly due to an increase in the
number of large engine overhauls during 1992 and an increase
in accessory overhaul business due to aggressive marketing
initiatives particularly in foreign markets while small engine
sales remained level with 1991 activity. The increase in
operating income is principally due to 1991 being affected by
the write-down of certain inventories, increases in the
allowances for doubtful accounts related to receivables from
troubled airlines and a non-recurring charge applicable to the
write-down to the appraised value of property underlying an
investment in a non-affiliated company. Exclusive of these
items, operating income in 1992 would have decreased $1.4
million from 1991 principally as a result of competitive
pricing pressures on large engine overhauls partially offset
by a reduction in the labor force and income generated by
accessory overhauls.
Aviation Services Division revenues of $89.1 million
increased $2.5 million (3%) in 1992 due to the acquisition in
June 1992 of UNC Helicopter, a company engaged in the overhaul
of helicopters, which generated $3.3 million in revenues,
offsetting a reduction of $0.8 million in other contract
services. Activities under certain contracts involving
aviation training and maintenance decreased in 1992 due to
reduced pilot training requirements. This decrease was offset
by the phase-in of activities on new contracts and expanded
work scope under certain existing contracts. Operating income
for 1991 was adversely affected by a $1.3 million unfavorable
contract cost adjustment, a $1.1 million reduction in contract
profitability upon re-award after competitive bid and an $8.0
million write-down of the Company's investment in this
business. Exclusive of these adjustments operating income
increased $2.6 million, to $5.4 million, due to contract price
redetermination, improvements resulting from cost reduction
programs implemented under fixed price contracts and the
acquisition of the higher margin helicopter business.
19
<PAGE>
<PAGE> 22
Selling, general and administrative expenses decreased
from $49.1 million or 13.6% of sales in 1991 to $44.9 million
or 12.3 % of sales in 1992 reflecting Company-wide cost-
containment efforts and a $1.3 million reduction of an accrual
for certain costs associated with the termination of an
equipment lease.
Total interest expense decreased $7.3 million (36%) in
1992 principally due to a significant reduction in debt levels
and lower interest rates. Interest expense related to
continuing and discontinued operations decreased $5.3 million
and $2.0 million, respectively. The decrease in interest
expense related to discontinued operations is expected to
continue as cash proceeds generated by the discontinued
operations through the disposal date are used to repay debt
attributable to discontinued operations and as the net assets
of discontinued operations decrease.
1991 Compared with 1990
Revenues from aviation-related businesses, increased $9.4
million in 1991. This increase was partially offset by a
decrease in revenues of $5.1 million due to the sale of a non-
aviation subsidiary in 1991, resulting in a net increase of
$4.3 million. Total revenues for 1991 amounted to $360.6
million compared with $356.3 million in 1990. Operating
income decreased $29.0 million due to adjustments related to
the carrying value of certain inventories, increases in
allowances for doubtful accounts receivable related to
services performed for certain commercial airlines which are
currently in liquidation or in troubled financial condition
and the write-down of goodwill related to a defense oriented
business, as well as other operating items described below.
The Company's Manufacturing Division revenues for 1991 of
$68.2 million increased $13.9 million (26%) over 1990. $8.7
million of this increase was attributable to existing
operations and $5.2 million was attributable to Chemical
Dynamics Incorporated, a company engaged in chemical milling
and specialty manufacturing operations which the Company
acquired in October of 1990. The increase in revenues from
existing operations was principally due to new orders received
in 1991 for the manufacture of aircraft parts. Operating
income of $3.0 million in 1991 decreased $4.0 million (57%)
principally due to price concessions provided to principal
customers in anticipation of receiving additional future
orders, costs incurred in the latter part of the year to
increase future manufacturing and quality control efficiencies
and costs related to the relocation of the remanufacturing
operations to modern and more efficient facilities.
20
<PAGE>
<PAGE> 23
Revenues from the Overhaul Division of $203.3 million
decreased $5.1 million (2%) and operating income of $7.8
million decreased $11.5 million (60%) in 1991. The decrease
in revenues reflects the prevailing economic climate which
reduced the demand for the overhaul of engines, especially
during the first half of 1991. This decrease was partially
offset by a $1.8 million increase in accessory overhaul
operations. Operating income decreased due to the write-down
of certain inventories, increases in the allowances for
doubtful accounts related to receivables from troubled
airlines and non-recurring charges applicable to the write-
down to the appraised value of property underlying an
investment in a non-affiliated company and an accrual related
to the termination of an agreement covering certain leased
assets, which aggregated $11.9 million.
Revenues generated by the Aviation Services Division in
1991 of $86.6 million increased $0.6 million and operating
income decreased $10.5 million due to the incurrance of a
$7.6 million operating loss in 1991. The decrease in
operating income was due, in part to a $1.3 million
unfavorable contract cost adjustment, a $1.1 million reduction
in profitability on an existing contract upon re-award after
competitive bid and an $8.0 million write-down of the
Company's investment in this business as a result of recent
events in the defense industry.
Selling, general and administrative expenses rose from
$44.0 million or 12.4% of sales in 1990 to $49.1 million or
13.6% of sales in 1991. The increase in 1991 was principally
due to higher expenses related to a full year of activity for
a company acquired in October 1990, employee health costs,
selling costs associated with efforts to increase market share
of the Company's businesses, and increased employee relocation
costs.
Total interest expense in 1991 was $3.2 million lower
than in 1990. Interest expense related to continuing
operations increased $1.6 million and interest related to
discontinued operations decreased $4.8 million. The decrease
in interest expense relating to discontinued operations
continues as cash proceeds generated by the discontinued
operations through the disposal date are used to repay debt
attributable to discontinued operations and as the net assets
of discontinued operations decrease. Although the Company's
aggregate borrowings decreased in 1991, borrowings related
specifically to continuing operations increased reflecting
normal business cycles. This resulted in the increase in
continuing operations interest expense.
21
<PAGE>
<PAGE> 24
Liquidity and Capital Resources
The elements contributing to the Company's free cash flow
for the years 1993 and 1992 are shown in the following table.
<TABLE>
<CAPTION>
(Dollars in thousands)
1993 1992
-------- --------
<S> <C> <C>
Net earnings $ 11,062 $ 11,369
Depreciation and amortization 11,477 10,378
Change in working capital and other (19,854) (14,549)
Capital expenditures (11,250) (6,602)
Naval Products phase out 68 6,580
Funds provided (used) by other
discontinued operations (5,692) 3,784
--------- ---------
Free cash flow (14,189) 10,960
Other:
Litigation settlement, net 48,000
Acquisition of subsidiaries (48,477) (7,741)
Debt assumed in acquisitions (8,415)
Sale of subsidiaries 1,000
Less:
Bond discount 479 113
--------- --------
Net (increase) reduction of debt (71,560) 52,106
Total debt, beginning of year 125,723 177,829
--------- --------
Total debt, end of year $197,283 $125,723
========= ========
</TABLE>
Long-term debt, including current portion, was $197.3
million at December 31, 1993, compared with $125.7 million at
December 31, 1992. The increase in long-term debt of
$71.6 million was principally the result of the issuance in
July 1993 of $100.0 million 9-1/8% Senior Note Subordinated
Debentures due 2003, offset by the redemption of $24.0 million
11-1/2% Senior Subordinated Debentures due 1996 in
September 1993. The Company's debt-to-capitalization ratio at
December 31, 1993, was 54.4% compared with 44.7% at
December 31, 1992. In May 1993, the borrowing capacity under
the Company's Revolving Credit Facility was increased to $65.0
million, reduced by outstanding letters of credit which
aggregated $10.4 million at December 31, 1993. The Company's
unused availability under the Revolving Credit Facility was
$38.1 million at December 31, 1993. At December 31, 1993, the
Company's working capital was $150.2 million with a current
ratio of 2.5 to 1 compared with $128.2 million and a current
ratio of 3.1 to 1 at December 31, 1992.
22
<PAGE>
<PAGE> 25
Capital expenditures in 1993 amounted to $11.2 million,
including $3.5 million of equipment purchased in connection
with the award of contract backlog previously performed by the
Heintz Corporation, compared with $6.6 million in the 1992
period. It is anticipated that capital expenditures for 1994
will be approximately $12.0 million and will be financed from
internally generated funds, lease arrangements and revolving
credit borrowings. In addition, the Company is continuing to
pursue its program to acquire aviation companies. To the
extent the Company is successful in identifying such
companies, it may incur additional debt in connection with
their acquisition.
The Company's operations are subject to a variety of
federal, state and local laws and regulations relating to the
environment. The Company believes that its facilities are
operated substantially in compliance with applicable
environmental laws and regulations on an overall basis;
however, as described below some areas require remedial
action.
A subsidiary of the Company has been involved in
environmental reclamation of a former uranium mill and mill
tailings facility since 1988. The reclamation plan has been
approved by the U.S. Nuclear Regulatory Commission and the
U.S. Environmental Protection Agency ("EPA") and reclamation
activities are proceeding on schedule and within budget. Site
reclamation is scheduled to be completed by the end of 1997.
Also, the State of Texas has requested that a site assessment
be performed at a manufacturing subsidiary which the Company
acquired in 1990. Dependent upon the outcome of the
assessment, the acquired subsidiary or its former owner may be
required to take steps to remediate any discharges of
hazardous materials into the environment from these facilities
and may be required to install pollution control and other
equipment. The Company believes that, based on recent
discussions with the State and indemnification included in the
Company's purchase agreement, the cost of the site assessment
and required remediation, if any, will be charged to the
former owner by the State or recoverable under the purchase
agreement.
During 1993, the State of New Mexico passed the New
Mexico Mining Act ("Act"), which imposes certain reclamation
and other regulatory obligations on owners and operators of
existing and new mining operations. A number of mines
operated by the Company's subsidiary, United Nuclear, at
various times during the period 1970 through 1982 may be
covered by the Act. While legislation was passed in 1993,
regulations for compliance with the Act have not been issued.
Therefore, it is impossible to estimate the cost of
remediation or the timing and extent of remedial action which
may be required to comply with the Act.
23
<PAGE>
<PAGE> 26
Based on the Company's assessment of the matters
described above, the Company does not believe that costs and
expenses to be incurred by the Company in connection with
these and other environmental matters will have a material
adverse impact on the Company. For further details with
respect to environmental matters, see Note 10 of Notes to
Consolidated Financial Statements.
Impact of Inflation
The Company believes that inflation did not have a
material effect on the results of operations or financial
condition in 1993.
24
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<PAGE> 27
Item 8. Financial Statements and Supplementary Data.
UNC Incorporated and Subsidiaries
Consolidated Statements of Earnings
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1993 1992 1991
-------- -------- -------- --------
<S> <C> <C> <C>
Sales and operating revenues $438,293 $365,152 $360,571
Costs and expenses
Costs and operating expenses 360,869 294,489 304,101
Selling, general and administrative
expenses 53,516 44,901 49,084
Other operating expenses 14,015
-------- -------- --------
414,385 339,390 367,200
-------- -------- --------
Operating income (loss) 23,908 25,762 (6,629)
Other income (expense)
Interest income 396 331 532
Interest expense (14,802) (12,204) (17,531)
Other (1,751) (1,038) (505)
-------- -------- --------
(16,157) (12,911) (17,504)
Earnings (loss) from continuing operations
before income taxes and extraordinary
item 7,751 12,851 (24,133)
Income tax benefit (provision) 3,843 (1,482) (1,352)
-------- -------- --------
Earnings (loss) from continuing operations,
before extraordinary item 11,594 11,369 (25,485)
Earnings from discontinued operations,
net of income taxes 34,100
-------- -------- --------
Earnings before extraordinary item 11,594 11,369 8,615
Extraordinary item - early retirement of debt,
net of income taxes (532) (1,700)
-------- -------- --------
Net earnings $ 11,062 $ 11,369 $ 6,915
======== ======== ========
Earnings (loss) per share
Continuing operations $ .67 $ .66 $ (1.49)
Discontinued operations 1.99
Extraordinary item (.03) (.10)
-------- -------- --------
Net earnings $ .64 $ .66 $ .40
======== ======== ========
</TABLE>
25
<PAGE>
<PAGE> 28
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
December 31,
-------------------
1993 1992
-------- --------
<S> <C> <C>
Assets
Current assets
Cash and short-term investments $ 1,494 $ 1,968
Accounts receivable, less allowance for doubtful accounts
of $6,366 and $5,041, respectively 91,058 71,809
Unbilled costs and accrued profits on
contracts in progress 28,384 16,545
Inventories 109,766 94,682
Other 18,378 5,437
-------- --------
Total current assets 249,080 190,441
Net assets of discontinued operations 20,600 22,271
Property, plant and equipment, at cost
Land, buildings and improvements 27,073 25,560
Machinery and equipment 71,995 64,264
-------- --------
99,068 89,824
Less accumulated depreciation and amortization 32,037 31,967
-------- --------
Net property, plant and equipment 67,031 57,857
Cost in excess of net assets of acquired
companies, less accumulated amortization
of $19,257 and $15,742, respectively 141,718 97,489
Other noncurrent assets 27,704 23,024
-------- --------
Total assets $506,133 $391,082
======== ========
</TABLE>
26
<PAGE>
<PAGE> 29
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
December 31,
-------------------
1993 1992
-------- --------
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities
Current portion of long-term debt $ 6,529 $ 158
Accounts payable 38,625 33,482
Income taxes 2,062 574
Accruals and other current liabilities 51,664 28,077
-------- --------
Total current liabilities 98,880 62,291
Long-term debt, less current portion
Revolving Senior Bank Debt, prime plus 1/2% due 1995 16,500 27,000
9-1/8% Senior Notes due 2003 100,000
11-1/2% Senior Subordinated Debentures due 1996, less discount 23,521
7-1/2% Convertible Subordinated Debentures due 2006 69,000 69,000
Other 5,254 6,044
-------- --------
Total long-term debt, less current portion 190,754 125,565
Deferred income taxes 5,366
Other noncurrent liabilities 51,013 42,221
-------- --------
Total liabilities 340,647 235,443
Shareholders' equity
Series preferred stock, par value $1 per share;
Authorized 12,000,000 shares; 250,000 designated Series
A Junior Participating Preferred Stock, none issued
Common stock, par value $0.20 per share;
Authorized 50,000,000 shares, issued 18,085,334 and
18,002,334 shares, respectively 3,617 3,600
Additional paid-in capital 121,746 121,292
Retained earnings 50,559 39,497
-------- --------
175,922 164,389
Less
Treasury stock, at cost (700,000 shares) 8,750 8,750
Minimum pension liability adjustment 1,345
Unearned compensation - restricted stock 341
-------- --------
Total shareholders' equity 165,486 155,639
-------- --------
Total liabilities and shareholders' equity $506,133 $391,082
======== ========
</TABLE>
27
<PAGE>
<PAGE> 30
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 11,062 $ 11,369 $ 6,915
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation and amortization 11,477 10,378 10,196
Provision for losses on accounts receivable 1,602 2,450 7,340
Income from leveraged lease (1,263)
Inventory write-down 7,000
Provision for loss on disposal of discontinued
operations 15,700
Provision for deferred income taxes (benefit) (5,258) 1,440 (4,091)
Gain on litigation settlement, net (63,300)
Gain on disposition of assets and other (583) (6) (317)
Non-recurring operating expenses, including
goodwill write-down 10,400
Extraordinary loss on retirement of debt 625 1,900
Changes in assets and liabilities net of
effect of acquisitions and divestitures:
(Increase) decrease in accounts receivable 33 (1,417) (11,871)
Decrease in receivable from litigation
settlement 67,500
(Increase) in unbilled costs and
accrued profits on contracts in progress (8,974) (2,609) (6,172)
(Increase) in inventories (9,082) (5,238) (7,471)
(Increase) decrease in other current assets (7,111) 1,333 23
(Increase) decrease in other noncurrent assets (640) (4,497) 174
Increase (decrease) in accounts payable (3,408) (6,026) 15,677
Increase (decrease) in accruals and other
current liabilities 5,855 (2,384) 2,463
Increase (decrease) in income taxes payable 1,195 (14,629) 17,824
Increase (decrease) in other noncurrent
liabilities (1,446) (1,429) 1,286
(Decrease) in discontinued operations
liabilities (5,721) (4,986) (4,427)
--------- -------- --------
Total adjustments (22,699) 39,880 (7,666)
--------- -------- --------
Net cash and short-term investments
provided (used) by operating activities (11,637) 51,249 (751)
--------- -------- --------
</TABLE>
28
<PAGE>
<PAGE> 31
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------
1993 1992 1991
--------- -------- --------
<S> <C> <C> <C>
Cash flows from investing activities:
Net proceeds from sale of assets 10,843 4,738 2,021
Additions to property, plant and equipment (11,250) (6,602) (7,280)
Acquisition of subsidiaries, net of cash
acquired (48,477) (7,741) (5,218)
Investment in leveraged lease (2,697)
Proceeds received from sale of subsidiaries 1,000 712
Naval Products phase out 68 9,979 20,378
Other transactions, net (67) 93 (1,617)
--------- -------- --------
Net cash and short-term investments
provided (used) by investing activities (51,580) 1,467 8,996
--------- -------- --------
Cash flows from financing activities:
Additions to debt 228,632 204,500 190,000
Reductions in debt (265,966) (256,719) (200,538)
Issuance of 9-1/8% Senior Notes 100,000
Exercise of stock options 77 231 89
-------- -------- --------
Net cash and short-term investments
provided (used) by financing activities 62,743 (51,988) (10,449)
-------- -------- --------
Net increase (decrease) in cash and short-term
investments (474) 728 (2,204)
Cash and short-term investments at beginning
of year 1,968 1,240 3,444
-------- -------- --------
Cash and short-term investments at end of year $ 1,494 $ 1,968 $ 1,240
======== ======== ========
</TABLE>
29
<PAGE>
<PAGE> 32
UNC Incorporated and Subsidiaries
Consolidated Statements of Changes in Shareholders' Equity
(Dollars in thousands)
<TABLE>
<CAPTION>
Additional
Common Stock
--------------------- Paid-in Retained
Shares Par Value Capital Earnings Other Total
---------- --------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1990 17,816,259 $ 3,563 $ 120,462 $ 21,213 $ (8,750)* $136,488
Net earnings 6,915 6,915
Exercise of stock options 23,225 5 84 89
---------- --------- ---------- -------- -------- --------
Balance at
December 31, 1991 17,839,484 3,568 120,546 28,128 (8,750) 143,492
Net earnings 11,369 11,369
Award of restricted
stock under the
employees' stock plan 113,000 22 525 547
Exercise of stock
options 49,850 10 221 231
---------- --------- ---------- -------- -------- --------
Balance at
December 31, 1992 18,002,334 3,600 121,292 39,497 (8,750) 155,639
Net earnings 11,062 11,062
Award of restricted
stock under the
employees' stock plan 65,000 13 381 394
Exercise of stock
options 18,000 4 73 77
Minimum pension
liability adjustment (1,345) (1,345)
Unearned compensation -
restricted stock (341) (341)
---------- --------- ---------- -------- -------- --------
Balance at
December 31, 1993 18,085,334 $ 3,617 $ 121,746 $ 50,559 $(10,436) $165,486
========== ========= ========== ======== ======== =========
</TABLE>
*Treasury Stock
30
<PAGE>
<PAGE> 33
UNC Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Presentation. The accompanying financial
statements include the accounts of the Company and its
subsidiaries after elimination of all significant intercompany
accounts and transactions. Certain prior year amounts have
been reclassified to conform to the 1993 presentation.
(b) Short-Term Investments. Short-term investments,
consisting principally of Eurodollar deposits and bank
certificates of deposit, are carried at cost, which
approximates market. The Company considers all highly liquid
debt investments purchased with a maturity of three months or
less to be cash equivalents.
(c) Long-Term Contracts. Revenues under fixed-price
production contracts are primarily recognized under the
percentage-of-completion method and are measured principally
on a cost-to-cost basis. Cost estimates are reviewed
periodically as the work progresses, and adjustments to
revenues are reflected in the period in which revisions to
such estimates are deemed necessary. Revenues under fixed
rate per hour service contracts are recognized as services are
performed based on actual hours incurred under the contracts.
Performance award fees incorporated in certain government
contracts are recognized when there is sufficient information
to assess expected contract performance. Provisions for
estimated losses on contracts are recorded when identified.
(d) Inventories. Valuation of inventories is at the
lower of cost or market, utilizing the first-in, first-out and
average cost methods.
(e) Depreciation and Amortization. The Company's
property, plant and equipment are depreciated and amortized
over their estimated useful lives by the straight-line method,
using periods ranging from 10 to 30 years for buildings and
improvements and from 3 to 10 years for machinery and
equipment.
(f) Cost in Excess of Net Assets of Acquired Companies.
The excess of acquisition cost over the fair value of tangible
and identifiable intangible net assets of acquired companies
at date of acquisition is amortized on a straight-line basis
over periods ranging from 20 to 40 years. The Company
assesses the recoverability of cost in excess of net assets of
acquired companies by determining whether the amortization of
this intangible asset over its remaining life can be recovered
through estimated future operating cash flows.
31
<PAGE>
<PAGE> 34
(g) Pension Plans and Postretirement Benefits.
Substantially all of the employees of the Company and its
subsidiaries are covered by various pension and retirement
benefit plans. Certain of the Company's employees are covered
under a defined benefit pension plan which is noncontributory
and provides for benefits based on stated amounts for years of
service. The Company's policy is to fund at least the minimum
amount required by the Employee Retirement Income Security
Act. The cost of defined contribution plans is a fixed
percentage of the participants' eligible compensation. In
addition, the Company provides benefits to a limited number of
active and retired employees under an unfunded contributory
defined benefit postretirement plan and participates in a
multi-employer health, welfare and defined benefit pension
plan for certain active and retired union employees.
(h) Income Taxes. Effective January 1, 1993, the Company
adopted Financial Accounting Standards No. 109, Accounting for
Income Taxes ("SFAS No. 109"). Under SFAS No. 109, deferred
income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax
rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of
existing assets and liabilities. Additionally, the benefits
of utilization of net operating loss carryforwards affects the
income tax provision of continuing and discontinued
operations. Investment tax credits are accounted for using
the flow-through method. The new standard of accounting
replaces SFAS No. 96 which the Company adopted on January 1,
1988. There was no cumulative effect of adopting SFAS No. 109
on the consolidated financial statements.
(i) Earnings Per Share. The calculation of earnings per
share of common stock is based on the weighted average number
of shares outstanding, assuming the exercise of stock options
where the impact is dilutive.
2. Acquisitions
------------
During 1993 and 1992, the Company acquired the entities
described below, which were accounted for by the purchase
method of accounting. The results of operations of the
acquired companies are included in the Company's statement of
earnings for the periods in which they were owned by the
Company.
32
<PAGE>
<PAGE> 35
Effective April 1, 1993 the Company acquired
substantially all of the assets and technology, and assumed
certain liabilities of Artex Tool Corporation and Stockton
Enterprises (collectively "Artex") for $5.2 million which was
funded through a borrowing under the Company's revolving
credit agreement. Artex is engaged in the remanufacture and
repair of aircraft engine gear box housings, wheels and other
aircraft and engine parts and accessories. Following its
acquisition this operation was renamed UNC Artex. Under the
terms of the purchase agreement, the Company may be required
to make additional payments beginning in 1994, of up to $1.2
million, contingent upon Artex achieving certain profit levels
during the three year period ending May 1, 1996. The excess
of the purchase price over the estimated fair value of the
tangible and identifiable intangible net assets acquired is
amortized over a period of twenty-five years using the
straight-line method. Any future amounts earned under the
terms of this agreement will be recorded as additional cost in
excess of net assets of acquired companies.
On July 30, 1993, the Company acquired substantially all
of the assets and technology, and assumed certain liabilities
of Johnson Technology ("Johnson"), a division of Freedom Forge
Corporation for $14.5 million in cash and $4 million in notes,
payable in annual installments through July 1997. The cash
portion of the purchase price was funded from proceeds
received from the sale of 9-1/8% Senior Notes (see Note 7 of
Notes to Consolidated Financial Statements). Johnson provides
proprietary turbine nozzle and vane manufacturing and repairs,
and specialized non-conventional machining of super alloys
such as electro-chemical deep hole drilling, laser milling,
and electro-discharge machining. Following its acquisition,
this operation was renamed UNC Johnson Technology. Under the
terms of the purchase agreement, the Company may be required
to make additional payments beginning in 1994, of up to $5
million, contingent upon Johnson achieving certain gross
profit levels during a five year period ending in September
1998. The excess of the purchase price over the estimated
fair value of the tangible and identifiable intangible net
assets acquired is amortized over a period of forty years
using the straight-line method. Any future amounts earned
under the terms of this agreement will be recorded as
additional cost in excess of net assets of acquired companies.
33
<PAGE>
<PAGE> 36
On August 26, 1993, the Company acquired the assets and
technology and assumed certain liabilities of All Fab, Inc.
("All Fab") an aerostructure supplier for a major airframe
manufacturer. All Fab serves the aviation industry as a
manufacturer of major aircraft structural components and sheet
metal sub-assemblies. Following its acquisition, this
operation was renamed UNC All Fab, Inc. The purchase price
consisted of $2.7 million in cash and $3.1 million in notes.
The notes consist of a $1.8 million note bearing interest at
8% and a $1.3 million note bearing interest at the prime rate
plus one half of one percent and payable in variable
installments through December 1998. The excess of the
purchase price over the estimated fair value of the tangible
and identifiable intangible net assets acquired is amortized
over a period of forty years using the straight-line method.
On August 31, 1993, the Company acquired substantially
all of the assets and technology, and assumed certain
liabilities of Metcalf Servicing Company ("Metcalf") for $4.5
million in cash and the Company elected to retire $1.3 million
of bank indebtedness of Metcalf. Metcalf serves the
industrial turbine engine market with overhauls, repairs,
parts, replacement and exchange units, and contract
maintenance services. Following its acquisition, this
operation was renamed UNC Metcalf Servicing, Inc. The excess
of the purchase price over the estimated fair value of the
tangible and identifiable intangible net assets acquired is
amortized over a period of twenty-five years using the
straight-line method.
Effective October 2, 1993, the Company acquired
substantially all the assets and assumed certain liabilities
of Lear Siegler Management Services Corp. ("Lear Siegler").
Lear Siegler provides contract services for the operation,
maintenance and repair of aircraft, land vehicles and marine
vehicles for the U.S. Department of Defense and the armed
services of foreign governments. Following its acquisition,
this operation was renamed UNC Lear Siegler. The purchase
price was $17.4 million. The excess of the purchase price
over the estimated fair value of the tangible and identifiable
intangible net assets acquired is amortized over a period of
twenty-five years using the straight-line method.
Effective June 1, 1992, the Company acquired
substantially all of the assets and assumed certain
liabilities of Southern Aero Corporation ("SAC"). SAC is
engaged in helicopter overhaul, maintenance and sales,
specializing in both the military and civilian models of the
34
<PAGE>
<PAGE> 37
Bell UH-1 helicopter. Following its acquisition, this
operation was renamed UNC Helicopter. The initial acquisition
price was approximately $1.8 million in cash and the
assumption of approximately $2.5 million in liabilities.
Contingent upon the sale of a certain number and type of
helicopters, the purchase price could be increased by
approximately $1.2 million. The excess of the purchase price
over the estimated fair value of the tangible and identifiable
intangible net assets acquired is amortized over a period of
twenty-five years using the straight-line method. Any future
amounts earned under the terms of the agreement will be
recorded as additional cost in excess of net assets of
acquired companies.
The following unaudited pro forma consolidated results of
operations give effect to the above acquisitions as though
they had occurred on January 1, 1992.
<TABLE>
<CAPTION>
Year Ended
December 31,
(In thousands except per share amounts) 1993 1992
-------- --------
<S> <C> <C>
Sales and operating revenues $612,229 $572,737
Earnings before extraordinary item 13,633 11,857
Net earnings 13,101 11,857
Earnings per share:
Earnings before extraordinary item $ .79 $ .69
Net earnings .76 .69
</TABLE>
The unaudited pro forma information is not necessarily
indicative either of results of operation that would have
occurred had the purchases been made on January 1, 1992, or of
future results of operations of the combined companies.
Under the terms of the earn-out provisions of agreements
related to acquisitions prior to 1992, the Company paid $3.7
million in 1993, $3.7 million in 1992 and $4.7 million in 1991
and may be required to pay up to an additional $3.7 million
contingent upon the achievement of certain future sales and
profitability goals through June 1994. Any such payments will
be recorded as additional cost in excess of net assets of
acquired companies in the year earned.
35
<PAGE>
<PAGE> 38
3. Discontinued Operations
-----------------------
The following table summarizes the activities of
discontinued operations for the year ended December 31, 1991.
<TABLE>
<CAPTION>
Year Ended
(Dollars in thousands) December 31,
1991
--------
<S> <C>
Net gain on litigation settle-
ment related to minerals
business $ 63,300
Estimated loss on disposal, principally
minerals business (15,700)
--------
Earnings before income
taxes 47,600
Income tax expense (13,500)
--------
Earnings from discontinued
operations $ 34,100
========
</TABLE>
As a result of the condition of the real estate and
minerals markets and a change in its approach to disposal of
certain of these assets in 1991, the Company provided for
additional losses it expected to incur in connection with the
disposition of certain properties of its former minerals
business and accrued the estimated costs to be incurred in
connection with certain litigation involving the discontinued
businesses. These charges amounted to $15.7 million.
In December 1991, a subsidiary of the Company entered
into an agreement with the U.S. government to settle claims
against the U.S. government for the taking of uranium mining
leases in 1978 by the Secretary of the Interior. The total
amount of the settlement was $67.5 million which was recorded
as a receivable from litigation settlement at December 31,
1991, and subsequently received by the Company in
January 1992. This settlement, net of related costs, is
reflected above as a net gain on litigation settlement related
to the minerals business.
36
<PAGE>
<PAGE> 39
Income tax expense for 1991 reflected in the above table
consists of current federal and state income tax of
$12,749,000 and $4,748,000, respectively, offset by a net
deferred tax benefit of $3,997,000. General business tax
credits of approximately $5.7 million were used in 1991 to
reduce current federal income tax expense.
The net assets of discontinued operations, which are
stated at their estimated net realizable value, consist
principally of real estate and facilities related to the
Company's submarine propulsion manufacturing and minerals
segments. Based on appraisals and other information, the
Company expects to recover its investment in these assets from
the proceeds of their sale.
Interest is allocated to discontinued operations based on
an allocation of interest on debt that is not directly
attributable to other operations of the Company, proportionate
to the net assets of discontinued operations. Approximately
$0.3 million, $0.6 million and $2.5 million of interest was
charged to discontinued operations for 1993, 1992 and 1991,
respectively.
4. JT8 Overhaul Business
---------------------
In October 1993, the Company announced its intention to
withdraw from the third party JT8 engine overhaul business due
to the continuing deterioration in the JT8 overhaul market,
which began in 1992, and the long term prospects in this
market. The Company, however, will continue to perform
overhauls required on its own JT8 engines which will be used
in its JT8 lease-engine program. In addition, the Company is
discussing various transactions with an investment partner
that may include additional JT8 overhaul requirements. The
Company's investment in the JT8 product line is approximately
$14.0 million, consisting of inventory, tooling and a test
cell facility. Management believes this amount will be fully
recoverable through the successful implementation of the
Company's plans. These plans include the continued overhaul
of JT8 engines used in the Company's leased engine program,
the support of transactions with investment partners, the
overhaul of selected customers engines requiring major
overhauls, the orderly liquidation of excess parts and tooling
and the possible rental of its test cell facility to
commercial west coast carriers.
37
<PAGE>
<PAGE> 40
5. Contracts in Progress
---------------------
Unbilled costs and accrued profits on production
contracts in progress consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------
(Dollars in thousands) 1993 1992
-------- --------
<S> <C> <C>
U.S. government contracts and
subcontracts:
Costs incurred and accrued profits
on contracts in progress $ 22,826 $ 8,078
Less progress billings to date 8,974 395
-------- --------
Unbilled costs and accrued profits
on contracts in progress 13,852 7,683
Commercial contracts:
Costs incurred and accrued profits
on contracts in progress 14,532 8,862
-------- --------
Total unbilled costs and accrued
profits on contracts in progress $ 28,384 $ 16,545
======== ========
</TABLE>
Amounts billed under contracts in progress and included
in accounts receivable at December 31, 1993 were $4.4 million
under U.S. government prime and subcontracts and $3.0 million
under commercial contracts. At December 31, 1992 these
amounts were $1.0 million and $1.5 million, respectively.
Also, included in accounts receivable at December 31, 1993 and
1992, were other amounts due from the U.S. government totaling
$31.0 million and $11.3 million, respectively, including
unbilled amounts of $17.1 million and $3.0 million in 1993 and
1992, respectively.
Unbilled amounts are recoverable from the customer upon
shipment of the product, presentation of bills or completion
of the contract. The Company believes that a substantial
portion (approximately 80%) of these unbilled amounts will be
collected in 1994.
Included in unbilled costs at December 31, 1993 is $2.0
million of cost applicable to a $3.2 million claim for
equitable adjustment recently filed by the Company under a
38
<PAGE>
<PAGE> 41
contract with the U.S. government. The claim, which includes
direct costs, overhead, general and administrative costs and
profit, arises from constructive change orders on the part of
the government, defective specifications, government caused
delays and other issues in connection with a contract to
provide aircraft nozzle segment assemblies to the U.S. Air
Force. The Company has been advised by outside legal counsel
that a basis for entitlement exists and that recovery of the
recorded amount of the claim is probable.
Also included in unbilled costs at December 31, 1993 is
a claim for $630,000 which the Company believes were
improperly withheld by the U.S. government in connection with
a contract to provide aircraft intermediate level maintenance,
repair and overhaul services at six Naval Air Stations. The
claim arises from the U.S. government unilaterally imposing a
previously undisclosed conversion formula to the determination
of the amount earned, contrary to contract terms. In December
1993 the Company received a favorable ruling on the claim from
the Armed Services Board of Contract Appeals which overturned
the government's previous position and instructed the
government to reconsider the matter. The Company believes it
will prevail in realizing the amount of the claim that has
been recorded in accordance with the terms of the contract.
See Note 10 of Notes to Consolidated Financial Statements
for a description of unbilled amounts of approximately $2.0
million applicable to a wage determination claim under a
contract with the U.S. Navy.
6. Inventories
-----------
Inventories as of December 31, 1993 and 1992, consist of
the following:
<TABLE>
<CAPTION>
December 31,
-------------------
(Dollars in thousands) 1993 1992
-------- --------
<S> <C> <C>
Component parts and materials $ 84,016 $ 72,231
Work in progress 23,429 21,105
Supplies 2,321 1,346
-------- --------
$109,766 $ 94,682
======== ========
</TABLE>
39
<PAGE>
<PAGE> 42
As a result of the Company's assessment in 1991 of
various factors affecting future inventory requirements,
including the changing mix of certain aircraft engines in
service, and the identification of certain inventory costs
that were not expected to be recoverable from customers, the
Company reduced the carrying value of inventory by $7.0
million in 1991.
7. Long-Term Debt
--------------
<TABLE>
<CAPTION>
December 31,
-------------------
(Dollars in thousands) 1993 1992
-------- --------
<S> <C> <C>
Revolving Senior Bank Debt,
prime plus 1/2% due 1995 $ 16,500 $ 27,000
9-1/8% Senior Notes due 2003 100,000
11-1/2% Senior Subordinated Debentures
due 1996 24,000
7-1/2% Convertible Subordinated
Debentures due 2006 69,000 69,000
Other 11,783 6,202
-------- --------
197,283 126,202
Less: Current portion 6,529 158
Unamortized discount 479
-------- --------
$190,754 $125,565
======== ========
</TABLE>
The Company has a revolving credit agreement which
provides for a credit line through July 1995 with a borrowing
capacity of $65 million, reduced by outstanding letters of
credit which aggregated $10.4 million at December 31, 1993.
The Company's unused availability under the agreement was
$38.1 million at December 31, 1993. Interest payable on the
borrowings is prime-based with decreasing rates available
based on the Company's performance under certain covenants and
at December 31, 1993 was 6-1/2%. The Company has agreed to
pay an annual commitment fee of 1/2 of 1% on the unused
portion of the line and certain other fees. The revolving
credit is collateralized by the Company's accounts receivable
40
<PAGE>
<PAGE> 43
and inventories. The agreement contains covenants which,
among other things, include provisions for the maintenance of
certain financial ratios and limitations on the sale of assets
and prohibits the payment of cash dividends.
On July 29, 1993 the Company issued $100.0 million of 9-
1/8% Senior Notes due July 15, 2003. The Notes are redeemable
on or after July 15, 1998 at the option of the Company at
declining premiums through 2000 and at principal amount
thereafter. The debt indenture contains certain covenants
which, among other things, allow additional borrowings based
on certain financial ratios and restrict the payment of cash
dividends.
In September 1993, the Company redeemed the remaining
balance of its 11-1/2% Senior Subordinated Debentures due 1996
in the amount of $24.0 million and recorded an extraordinary
charge of $0.6 million ($0.5 million net of income taxes) for
unamortized discount and issue expense.
The 7-1/2% Convertible Subordinated Debentures due 2006
are convertible into shares of the Company's common stock at
a conversion price of $15.40 per share and are redeemable
(subject to certain restrictions) at the option of the Company
at declining premiums through 1996 and at the principal amount
thereafter. Annual sinking fund payments of $4.2 million
commence in 1996.
Other debt, incurred in connection with acquisitions,
consists primarily of a $5.2 million note due in June 1994
with a 10% interest rate and a $4.0 million note, payable in
annual installments through July 1997, with an interest rate
of prime plus 1%.
Included in other assets at December 31, 1993 was
approximately $4.3 million of unamortized issue expense
incurred in connection with the issuance of the 9-1/8% Senior
Notes and the 7-1/2% Convertible Subordinated Debentures. At
December 31, 1992, other assets included approximately $1.7
million related to the 7-1/2% Convertible Subordinated and the
11-1/2% Senior Subordinated Debentures.
Annual maturities of long-term debt during the next five
years are as follows: 1994, $6,529,000; 1995, $18,200,000;
1996, $6,008,000; 1997, $5,561,000; 1998, $4,317,000.
41
<PAGE>
<PAGE> 44
The estimated fair values of the 7-1/2% Convertible
Subordinated Debentures, and the 9-1/8% Senior Notes, based on
quoted market prices, were approximately $65.6 million and
$103.0 million at December 31, 1993. At December 31, 1992 the
estimated fair value of the 7-1/2% Convertible Subordinated
Debentures was approximately $55.0 million. The Company
believes that the carrying amount of its remaining debt
approximates fair value.
8. Other Liabilities
-----------------
Accruals and other current liabilities consist of the
following:
<TABLE>
<CAPTION>
December 31,
-------------------
(Dollars in thousands) 1993 1992
-------- --------
<S> <C> <C>
Pension plans $ 2,405 $ 2,382
Payroll and related expenses 26,652 9,289
Accrued interest 5,817 2,515
Accruals related to discontinued
operations 4,228 3,725
Other 12,562 10,166
-------- --------
$ 51,664 $ 28,077
======== ========
</TABLE>
At December 31, 1993 and 1992, other noncurrent
liabilities include approximately $21.6 million and $27.6
million, respectively, of accruals related to discontinued
operations, including amounts accrued for environmental
remediation activities of approximately $17.0 million at
December 31, 1993.
9. Preferred Stock Purchase Rights
-------------------------------
On September 25, 1987, the Board of Directors of the
Company declared a dividend of one Preferred Share Purchase
Right for each share of common stock outstanding on October
19, 1987. Each Right entitles the holder to acquire one-
hundredth of a share of newly created Series A Junior
Participating Preferred Stock at an exercise price of $50 per
one one-hundredth of a Preferred Share. The Rights trade with
the common stock and are not exercisable or transferable apart
42
<PAGE>
<PAGE> 45
from the common stock until 10 days after a person or group
acquires, or announces a tender offer for 20% or more of the
Company's outstanding common stock.
If the Company is acquired in a merger or other business
combination, each Right will entitle its holder to purchase,
at the Right's then-current exercise price, a number of the
acquiring company's shares having a market value at that time
of twice the Right's exercise price. In addition, if someone
acquires 20% or more of the Company's outstanding common
stock, each Right will entitle its holder (other than the
acquiring person) to purchase, at the Right's then-current
exercise price, a number of the Company's common shares having
a market value of twice the Right's exercise price.
Prior to the acquisition by someone of beneficial
ownership of 20% or more of the Company's common stock, the
Rights are redeemable for $.01 per Right either at the option
of the Board of Directors or automatically in connection with
the consummation of any tender offer at a cash price per share
equal to or greater than the price approved by stockholders at
a special meeting which would be called under certain
circumstances in accordance with procedures contained in the
Rights Plan. The Rights expire on October 19, 1997.
10. Litigation and Contingencies
----------------------------
During 1986, new wage determinations issued by the U.S.
Department of Labor were incorporated into a contract under
which a subsidiary of the Company, Burnside-Ott Aviation
Training Center, Inc. ("Burnside-Ott"), performed helicopter
maintenance services for the U.S. Navy. The new wage
determinations had the effect of increasing wages being paid
to employees engaged under the contract, including those
technicians who were required to be reclassified as aircraft
workers. In 1989 and 1990, Burnside-Ott paid approximately
$2.2 million in back wages and additional wages to such
reclassified employees and filed a claim for equitable
adjustment under the Contract. The Navy's Contracting Officer
denied the claim, and Burnside-Ott filed a complaint in the
Court of Federal Claims (formerly the U.S. Claims Court) in
October 1990, seeking recovery of back and additional wages
paid to such employees under the contract, plus administrative
expenses, profit and other costs aggregating $3.2 million. In
November 1991, the Court of Federal Claims issued an order
granting the U.S. government's motion to dismiss and motion
for summary judgement on the claim, which Burnside-Ott
43
<PAGE>
<PAGE> 46
appealed. In February 1993, the Court of Appeals for the
Federal Circuit reversed the decision of the Court of Federal
Claims as to all counts in Burnside-Ott's complaint and
remanded the case to the Court of Federal Claims. The Company
believes that the legal bases for the claim under the contract
have been established by the appellate court as a matter of
law and that collection of the recorded amount of the claim is
probable. Accordingly, during the first quarter of 1993, the
Company recorded revenue of approximately $2.0 million due
from the U.S. government for only that portion of the total
claim related to costs incurred for back wages and additional
wages previously paid by Burnside-Ott during the option years
of the contract, which management believes is recoverable
under the price adjustment clause of the contract. However,
Burnside-Ott intends to continue to pursue vigorously recovery
of the entire claim, which with interest and legal fees
recoverable under the contract now totals approximately $4.0
million.
A uranium mill and mill tailings facility of a subsidiary
of the Company, United Nuclear Corporation ("United Nuclear"),
located in Church Rock, New Mexico, was placed on the National
Priorities List by the U.S. Environmental Protection Agency
("EPA") in 1982 pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA").
EPA issued an administrative order in 1989, which prescribes
remediation activities relating to ground water on or adjacent
to the site that are the same as those contained in the
reclamation plan submitted by the Company to the Nuclear
Regulatory Commission ("NRC") in 1988. On September 30, 1991,
the United States filed a legal action against United Nuclear
in U.S. District Court for the District of New Mexico, at the
request of the Administrator of EPA, seeking to recover
approximately $2.2 million in alleged response costs incurred
by EPA with respect to United Nuclear's Church Rock facility.
In December 1992, the District Court granted EPA's motion for
summary judgement on the issue of United Nuclear's liability
without determining the amount for which it may be liable. In
September 1993, the District Court awarded the EPA $2.5
million in response costs. This amount, which had been
accrued by the Company in a prior year, was paid by United
Nuclear in November 1993. The Company believes that adequate
provision for reclamation and remediation expenses presently
anticipated at the Church Rock facility has been accrued in
the accompanying financial statements.
44
<PAGE>
<PAGE> 47
During 1993, the State of New Mexico passed the New
Mexico Mining Act ("Act"), which imposes certain reclamation
and other regulatory obligations on owners and operators of
existing and new mining operations. A number of mines
operated by the Company's subsidiary, United Nuclear, at
various times during the period 1970 through 1982 may be
covered by the Act. While legislation was passed in 1993,
regulations for compliance with the Act have not been issued.
Therefore, it is impossible to estimate the cost of
remediation or the timing and extent of remedial action which
may be required to comply with the Act.
One of the Company's manufacturing subsidiaries is
negotiating with the State of Texas environmental authorities
regarding a number of environmental matters at the
subsidiary's facilities, which were acquired in 1990. The
State has requested that a site assessment be performed.
Dependent upon the outcome of the assessment the acquired
subsidiary or its former owner may be required to remediate
discharges of hazardous materials into the environment that
may have occurred prior to acquisition, or to install
pollution control and other equipment at these sites. The
Company believes that, based on recent discussions with the
State and indemnifications included in the Company's purchase
agreement, the cost of the site assessment and required
remediation, if any, will be charged to the former owner by
the State or recoverable under the purchase agreement. The
subsidiary has commenced legal action against the former owner
to obtain such indemnification. Accordingly, the Company does
not believe that costs incurred in connection with these
matters will have a material adverse impact on the financial
condition of the Company.
A subsidiary of the Company, UNC Nuclear Industries, Inc.
("UNI"), is one of several corporate defendants in a
consolidated legal action commenced in U.S. District Court for
the Western District of Washington in 1990, alleging that the
defendants, as government contractors with the U.S. Department
of Energy ("DOE") at the Hanford Nuclear Reservation, caused
property damage and personal injuries by releases of toxic and
radioactive substances into the environment since
approximately 1945 and seeking compensatory and punitive
damages. In October 1991, the Court dismissed several counts
of the consolidated complaint, including claims for
remediation and abatement, medical monitoring and
surveillance, response costs and punitive damages. The
defendants are conducting a joint defense effort in keeping
with litigation plans and budgets submitted to DOE. The U.S.
45
<PAGE>
<PAGE> 48
government is reimbursing UNI's legal fees and expenses on an
ongoing basis. Based on contractual provisions, applicable
federal statutes, discussions with DOE officials and advice of
counsel, the Company expects that the U.S. government will
indemnify UNI against any liability it incurs as a result of
the litigation. In addition, although not binding on the U.S.
government because it is not a party to the litigation, the
Court stated in dismissing certain counts of the complaint in
the action that any amounts recovered by plaintiffs would be
ultimately borne by the U.S. government.
The Company also has been named under CERCLA, along with
a number of other parties, as a Potentially Responsible Party
at several waste disposal sites. The Company believes that
the cost associated with the cleanup of certain of these sites
will be recoverable under U.S. government contracts and the
cost associated with the other sites will not have a material
adverse effect on the Company.
On April 8, 1992, the Federal Communications Commission
("FCC") took steps to continue a proceeding with respect to
retrospective rates charged by the former Western Union to
several carriers, including TRT Communications, Inc. ("TRT"),
a former subsidiary of the Company. The proceeding is on
remand from a federal appeals court which in 1988 vacated an
earlier determination by the FCC with respect to such rates on
the ground that there was no legal basis for it. If the FCC
acts to determine that the rates being sought by the former
Western Union are appropriate, and if such determination were
upheld following an appeal, the amount that would be payable
by TRT, and indemnified by the Company to the purchaser of
TRT, including interest to December 31, 1993, would be
approximately $8.3 million. Outside counsel to the Company
has opined that the likelihood of recovery by the former
Western Union against TRT is remote.
The Company is involved in litigation with respect to a
promissory note issued by the Company in July 1981 in
connection with the acquisition of Normco Contractors, Inc.
("Normco"), a former subsidiary of the Company that was
discontinued in 1984 and sold in 1985. The plaintiff, a
former owner of Normco, has brought this action to obtain
payment of $2.2 million allegedly due under the note. The
Company did not make payment on the note because the Company
believes that, under the terms of the note and the related
purchase agreement, payment was contingent upon Normco
attaining certain operating profit levels that were not
achieved during the period it was in operation. The
46
<PAGE>
<PAGE> 49
plaintiff's motion for summary judgment was granted in March
1992. However, in July 1993 the appellate court reversed and
remanded the case for trial. While the ultimate outcome of
this litigation cannot be determined at this time, the Company
continues to believe that it has meritorious defenses with
respect to any liability under the note.
In 1986 the Company sold a subsidiary, National Automatic
Tool Company to NATCO, Inc. for cash and notes secured by the
assets of the former subsidiary. Following a default by
NATCO, Inc. in making payments under the secured notes, the
Company exercised its rights in 1990 under its security
interest and the assets were surrendered to the Company by
NATCO, Inc. The Company subsequently liquidated the assets
and applied the proceeds to the indebtedness due the Company
from NATCO, Inc. A petition under Chapter 7 of the Federal
Bankruptcy Code was filed in July 1991, by certain creditors
of NATCO, Inc. The Trustee in bankruptcy for NATCO, Inc.
filed an action against the Company in October 1992 seeking,
among other things, to set aside the transfer of NATCO, Inc.'s
assets to the Company on the basis that such transfer was a
fraudulent conveyance. Because of the preliminary nature of
this action, the ultimate outcome of the litigation cannot be
determined at this time. However, the Company believes it had
a valid lien on the assets of NATCO, Inc. and intends to
defend this action vigorously.
The Company and a subsidiary, UNC Airwork Corporation,
are defendants in litigation commenced in New York by Energy
Services, Inc. ("ESI") seeking $3.4 million in alleged
contract damages relating to a proposal to provide and install
electrical generating and other related equipment for a third
party. The Company and Airwork believe they have meritorious
defenses to ESI's claims. Airwork has filed a counterclaim
for more than $1.7 million.
In June 1992, the Company sold substantially all of the
operating assets and technology of Alloy Spot Welders
("Alloy") for $3.4 million, which approximated the Company's
investment in Alloy. The sales price consisted of $1.0
million in cash and $2.4 million in notes, payable over five
years and collateralized by the assets of the business. The
purchaser of Alloy filed for protection under Chapter 11 of
the Federal Bankruptcy Code in December 1993. The Company has
filed its claim in bankruptcy as a secured creditor and has
filed suit against the parent company of the purchaser as
guarantor of the purchaser's obligation under the notes. The
Company intends to pursue full collection of the remaining
$2.2 million due under the notes.
47
<PAGE>
<PAGE> 50
The Company and its subsidiaries are also parties to
various other legal actions and administrative proceedings and
subject to various claims arising in the ordinary course of
business. The Company believes that the disposition of these
matters will not have a material adverse effect on the
financial position of the Company.
11. Other Operating Expenses
------------------------
In the fourth quarter of 1991, the Company recorded a
non-recurring charge of $8.0 million for the write-down of
goodwill arising from the purchase of the contract aviation
services business. The adjustment of goodwill was made after
evaluating the existing and proposed reductions in defense
spending and the effect that these reductions were having on
the ability of this business to generate sufficient cash and
earnings to recover the Company's investment in the contract
aviation services business. In addition, a $2.4 million non-
recurring charge was recorded for the write-down to appraised
value of the property underlying its investment in a non-
affiliated company and an accrual related to the termination
of an agreement covering certain leased assets.
As a result of the announcement of liquidation
proceedings by certain of the Company's airline customers
during the fourth quarter of 1991, the Company increased its
allowance for doubtful accounts by approximately $3.6 million
for receivables from airline customers under bankruptcy
protection.
12. Income Taxes
------------
During 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard No. 109
(SFAS No. 109), "Accounting for Income Taxes" which supersedes
SFAS No. 96. Similar to SFAS No. 96, SFAS No. 109 retains an
asset and liability approach to accounting for income taxes.
This standard also requires recognition of income tax benefits
for loss carryforwards, credit carryforwards and certain
temporary differences for which tax benefits have not
previously been recorded. The tax benefits recognized must be
reduced by a valuation allowance where it is more likely than
not that the benefits may not be realized. The Company
adopted SFAS No. 109 as of January 1, 1993. There was no
cumulative effect of this change in accounting for income
taxes on the consolidated financial statements.
48
<PAGE>
<PAGE> 51
The income tax provision for continuing operations
consists of the following:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
(Dollars in thousands) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Federal: Current $ 396 $ (1,668)
Deferred (5,664) 1,557
-------- -------- --------
(5,268) (111)
State: Current 1,019 1,710 $ 1,245
Deferred 406 (117) 107
-------- -------- --------
1,425 1,593 1,352
-------- -------- --------
Total tax provision (benefit) $ (3,843) $ 1,482 $ 1,352
======== ======== ========
</TABLE>
The tax provision for continuing operations differs from
the amount computed using the statutory federal income tax
rate as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
(Dollars in thousands) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Tax expense (benefit) at statutory rate $ 2,635 $ 4,370 $ (8,205)
Amortization and write-off of cost in
excess of net assets of acquired companies 1,019 1,008 4,255
State taxes, net of federal tax benefit
and reduction of state tax accrual 1,238 566 929
Utilization of net operating loss carryforwards (4,353)
Effect of unused operating loss 4,256
Change in the beginning of the year balance of
the valuation allowance for deferred tax
assets allocated to income tax expense (8,242)
Foreign sales tax benefits (302)
Other (191) (109) 117
-------- -------- --------
Tax expense at actual rate $ (3,843) $ 1,482 $ 1,352
======== ======== ========
</TABLE>
49
<PAGE>
<PAGE> 52
The significant components of deferred income tax
(benefit) expense attributable to income from continuing
operations for the year ended December 31, 1993 are as
follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------
(Dollars in thousands) 1993
--------
<S> <C>
Reduction of accrual for disposal of discontinued operations $ 3,551
Depreciation of plant and equipment 1,749
Increase in insurance accruals (1,624)
Contract income recognized for financial reporting purposes 1,496
General business credit and AMT credit carryforwards (2,378)
Decrease in beginning-of-the-year balance of
the valuation allowance for deferred tax assets (8,242)
Other, net 190
-------
Total deferred income tax (benefit) expense $(5,258)
=======
</TABLE>
For the years ended December 31, 1992, and 1991 the
significant components of deferred income tax expense
attributable to income from continuing operations are as
follows:
<TABLE>
<CAPTION>
1992 1991
------- -------
<S> <C> <C>
Inventory write-offs $ 561
Reduction of accrued liabilities 1,050
Reduction of state income tax accrual (446)
Other, net 275 $ 107
------- -------
$ 1,440 $ 107
======= =======
</TABLE>
As a result of the finalization of a state income tax
examination in late 1992, the Company reduced its estimated
state tax liability by $0.4 million. The deferred income tax
liability presented in the 1992 and 1991 consolidated balance
sheets represents state income taxes at statutory rates on
50
<PAGE>
<PAGE> 53
temporary differences. Temporary differences consist
primarily of differences between tax and book accrued
liabilities and depreciation methods.
The tax effects of temporary differences that give rise
to significant portions of the deferred tax assets and
deferred tax liabilities at December 31, 1993 are presented
below.
<TABLE>
<CAPTION>
(Dollars in thousands)
----------------------
<S> <C>
Deferred tax assets:
Accounts receivable, principally due to allowance
for doubtful accounts $ 2,270
Inventories, principally due to additional cost
inventoried for tax purposes and financial
statement allowances 5,199
Employee benefits, principally due to accrual
for financial reporting purposes 4,413
Accrual for disposal of discontinued operations 7,914
Alternative minimum tax credit carryforwards 2,528
General business credit carryforwards 1,552
Other 4,389
--------
Total gross deferred tax assets 28,265
Less - valuation allowance (1,974)
--------
Net deferred tax assets 26,291
--------
Deferred tax liabilities:
Plant and equipment, principally due to basis
differences (12,454)
Contract income recognized for financial
reporting purposes (3,570)
Other (367)
--------
Total gross deferred tax liabilities (16,391)
--------
Net deferred tax asset $ 9,900
========
</TABLE>
51
<PAGE>
<PAGE> 54
The valuation allowance for deferred tax assets as of
January 1, 1993 was $12,044,000. The net change in the total
valuation allowance for the twelve months ended December 31,
1993 was a decrease of $10,070,000. Of this amount,
$2,451,000 resulted from the realization of tax benefits of
temporary differences which reversed during the year ended
December 31, 1993. The remaining $7,619,000 decrease resulted
from the Company's re-evaluation of the realizability of
future income tax benefit occasioned by various events which
occurred during the third quarter. Specifically, the
acquisition of four new businesses, the awarding of
approximately $227 million in new contracts, the decision to
withdraw from the unprofitable third party JT8 engine overhaul
product line and other events which affected the period ended
September 30, 1993, made the realization of various tax
benefits more likely than not. As a result, in the third
quarter of 1993 the carrying value of the net deferred tax
benefit was increased by $7,619,000 of which $1,828,000 was
allocated to reduce goodwill arising from the acquisition of
new businesses and $5,791,000 was recognized as a current
period income tax benefit. These income tax benefits will be
realized upon the Company earning approximately $40 million of
taxable income during the carryforward period.
At December 31, 1993 and 1992, other current assets
includes net deferred tax assets of approximately $6.8 million
and $1.3 million and other noncurrent assets includes net
deferred tax assets of approximately $3.1 million and $1.4
million, respectively. Also, at December 31, 1993, other
current liabilities include $2.1 million of income taxes
payable and at December 31, 1992 accounts receivable includes
recoverable income taxes of approximately $1.7 million.
At December 31, 1993 the Company has alternative minimum
tax credit carryforwards of approximately $2,528,000 which are
available to reduce future Federal regular income taxes over
an indefinite period and general business credits of
$1,552,000 which will expire from the year 1997 through 2002.
13. Incentive Compensation Plans
----------------------------
The Company has stock plans, approved by the
shareholders, which provide for the granting of options and
restricted stock to officers and key employees. Options are
granted at no less than fair market value on the date of
grant, become exercisable in increments, in some instances
partially conditioned on the attainment of specific
performance objectives, and expire between six and ten years
from the date of grant.
52
<PAGE>
<PAGE> 55
In May 1990 the Company amended the 1985 Stock Option Plan
for Key Employees by requiring each future recipient of a stock
option grant to purchase an additional number of shares in the
open market equal to 25% of the number of shares covered by
the option, and to hold such shares in order to be eligible to
exercise the option over the five year vesting period. Only
treasury stock can be issued upon the exercise of an option.
Options which are not vested will terminate to the extent that
the related purchased stock is sold within three years from
the date of purchase, unless the option holder remains the
beneficial owner with full power to vote and to dispose of the
stock.
Also, in 1990 the Company adopted the 1990 Stock Option
Plan for Key Employees, which was approved by shareholders at
the 1991 Annual Meeting. Under the plan, 1,125,000 shares of
common stock, either previously unissued shares or shares held
in treasury, were reserved for issuance upon the exercise of
options or as stock appreciation rights or as restricted stock
awards. The exercise of an option is conditioned upon the
holder, (i) purchasing at fair market value, within ninety
days of the grant, stock equal to twenty-five percent of the
number of options granted, and (ii) continuing as beneficial
owner of all such stock through the time of exercise. Options
are granted at no less than fair market value on the date of
grant, expire in ten years and vest in five annual
installments of twenty percent each January 1 following the
date of grant.
As of December 31, 1993, officers and employees eligible
under the 1985 and 1990 plans have purchased 326,250 shares of
the Company's common stock in the open market in order to
qualify under the terms of these plans and held outstanding
options to purchase an additional 1,095,700 shares.
53
<PAGE>
<PAGE> 56
A summary of certain plan information is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
(Number of Shares) 1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Outstanding at beginning of year 1,735,946 1,958,677 1,627,310
Granted 159,000 62,500 619,600
Exercised (18,000) (49,850) (23,600)
Expired or canceled (88,050) (235,381) (264,633)
--------- --------- ---------
Outstanding at end of year 1,788,896 1,735,946 1,958,677
========= ========= =========
Exercisable at end of year 1,281,521 1,075,421 940,356
Available for grant at end of year 132,470 203,420 30,539
Price range of options
Outstanding $ 3.19- $ 3.19- $ 3.19-
8.63 8.63 10.38
Exercised $ 3.88- $ 3.19- $ 3.69-
5.75 6.06 4.57
</TABLE>
14. Pension Plans and Other Postretirement Benefits
-----------------------------------------------
The Company sponsors defined contribution plans that
cover substantially all of its employees. Contributions are
based upon a percentage of the employee's compensation. The
cost of these plans was $3,283,000, $2,543,000 and $2,535,000
in 1993, 1992 and 1991, respectively.
A defined benefit plan is also maintained for a limited
number of union personnel in two of the Company's overhaul
units. The cost of this plan was $193,000 in 1993, $169,000
in 1992 and $141,000 in 1991. The following table sets forth
the status of the plan:
54
<PAGE>
<PAGE> 57
<TABLE>
<CAPTION>
December 31,
--------------------------
(Dollars in thousands) 1993 1992
----------- -----------
<S> <C> <C>
Projected benefit obligation $ (1,400) $ (1,080)
Plan assets at fair value 1,018 806
----------- -----------
Projected benefit obligation in
excess of plan assets (382) (274)
Unrecognized prior service cost 217 235
Unrecognized net loss 326 178
Unrecognized net transition obligation 28 32
----------- -----------
Prepaid pension liability $ 189 $ 171
=========== ===========
Accumulated benefit obligation $ 1,400 $ 1,080
Vested benefit obligation 1,267 937
=========== ===========
</TABLE>
The weighted-average discount rate used in determining
the actuarial present value of the projected benefit
obligation was 7.25% in 1993 and 8% in 1992. The expected
long-term rate of return on assets was 8% in 1993 and 1992.
Plan assets consist principally of investments in commercial
paper, marketable securities, certificates of deposit and U.S.
government obligations. Actuarial gains and losses not yet
recognized in net periodic pension costs and unrecognized
prior service costs, resulting from the increase in certain
benefit levels, are recognized over the estimated remaining
service period of plan participants.
In addition to the defined benefit plan described above,
the Company contributes to a union sponsored multi-employer
benefit plan; the amounts expensed for this plan were
$1,927,000, $1,272,000, and $1,346,000 in 1993, 1992 and 1991,
respectively.
The Company has non-qualified unfunded supplementary
executive retirement plans covering certain officers and
directors for which the Company has purchased cost recovery
life insurance. The Company is the sole owner and beneficiary
of such policies. The amount of coverage is designed to
provide sufficient revenues to recover substantially all costs
55
<PAGE>
<PAGE> 58
of the plans if the assumptions made regarding mortality
experience, policy earnings and other factors are realized.
As of December 31, 1993 and 1992 the projected benefit
obligation was $13,003,000 and $10,086,000, respectively, and
the accumulated benefit obligation was $12,589,000 and
$9,761,000, respectively, which is included in other
noncurrent liabilities. The cost for these plans was
$1,232,000, $976,000 and $914,000 for 1993, 1992 and 1991,
respectively. Principally as a result of reducing the
discount rate used in determining the pension liabilities from
9% at December 31, 1992 to 7.25% at December 31, 1993, the
additional minimum liability exceeded the unamortized
transition amount by $1,345,000, net of deferred income taxes
at December 31, 1993. This excess has been reflected in the
accompanying consolidated balance sheets as a reduction in
stockholders' equity at December 31, 1993.
Postretirement health care and life insurance benefits
are provided to a limited number of participating employees
who become eligible for benefits after reaching normal
retirement age while employed by the Company. The plan, which
is an unfunded contributory defined benefit plan, covers less
than 5% of the Company's employees. Effective January 1,
1993, the Company adopted the provisions of the Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."
SFAS No. 106 requires the Company to accrue the estimated cost
of such retiree benefits payments, other than pensions, during
employee's active service period. The Company previously
expensed the cost of these benefits as claims were paid. The
Company is amortizing the unrecognized net loss and
unrecognized transition obligation over 20 years.
56
<PAGE>
<PAGE> 59
The actuarial and recorded liabilities for the
postretirement health care and life insurance benefits at
December 31, 1993, were as follows:
<TABLE>
<CAPTION>
(Dollars in thousands)
<S> <C>
Accumulated postretirement
benefit obligation:
Retirees $ 1,935
Full eligible active plan participants 65
Other active participants 466
-------
Total accumulated postretirement benefit
obligation $ 2,466
Unrecognized net loss (674)
Unrecognized transition obligation (1,732)
-------
Accrued postretirement benefit cost $ 60
=======
</TABLE>
The net periodic postretirement benefit cost for 1993 was
$240,000 and included $25,000 of service cost, $135,000 of
interest and $80,000 amortization of the transition
obligation.
For measurement purposes, a 7.25% discount rate was used
in determining the accumulated postretirement benefit
obligation as of December 31, 1993. Also, a 12% annual rate
of increase in the per capita cost of covered health care
benefits was assumed for 1994; the rate was assumed to
decrease gradually to 6% for 2003 and remain at that level
thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. A 1% increase in
the assumed health care cost trend rates would increase the
accumulated postretirement benefit obligation as of December
31, 1993 by approximately $288,000 and the aggregate of the
service and interest cost components of net periodic
postretirement benefit cost for the year then ended by
approximately $42,000.
15. Leases
------
During 1993 the Company acquired a McDonnell Douglas DC-
10-30 aircraft in freighter configuration, subject to an
existing leveraged lease with a remaining term of 18 years.
The Company's equity investment represented approximately 5%
57
<PAGE>
<PAGE> 60
of the purchase price; the remaining 95% was furnished by
long-term debt in the form of Equipment Trust Certificates
that provide for no recourse against the Company and are
secured solely by the lease payments and a first lien on the
aircraft. At the end of the lease term, the equipment is
returned to the Company. For Federal income tax purposes, the
Company has the benefit of tax deductions for depreciation on
the entire leased asset and for interest on the long-term
debt. Since during the early years of the lease, these
deductions exceed the lease rental income, substantial excess
deductions are available to be applied against the Company's
other taxable income. In the later years of the lease, rental
income will exceed the deductions and taxes will be payable.
Deferred taxes are provided to reflect this reversal.
Income from the leveraged lease in 1993 was $1.3 million
($0.8 million net of income taxes). Rentals under the
leveraged lease are equal to the principal and interest on
non-recourse debt.
The Company's net investment in this leveraged lease is
comprised of the following elements:
<TABLE>
<S> <C>
(Dollars in thousands)
Estimated residual value of leased assets $ 17,407
Less unearned and deferred income (13,384)
--------
4,023
Deferred taxes arising from leveraged lease (2,598)
--------
Net investment in leveraged lease $ 1,425
========
</TABLE>
The Company has entered into several agreements for the
sale and leaseback of certain equipment which has resulted in
gains totaling approximately $2.6 million. The gains have
been deferred and are being credited in income as rent expense
adjustments over the lease terms. The leases are classified
as operating leases and the rental commitments and rental
expenses are included in the following summary.
58
<PAGE>
<PAGE> 61
The Company has noncancellable operating leases covering
certain real property and equipment used in its operations.
Minimum rental commitments under these leases at December 31,
1993, were as follows: 1994, $7,082,000; 1995, $5,574,000;
1996, $4,728,000; 1997, $3,484,000; 1998, $3,020,000; and
thereafter, $3,437,000. Rental expenses for the years 1993,
1992 and 1991 were $5,702,000, $6,147,000, and $6,995,000,
respectively.
16. Cash Flows
----------
Cash payments for income taxes were $1.8 million, $14.1
million, and $1.8 million in 1993, 1992 and 1991,
respectively. In these years, interest payments were $10.7
million, $13.0 million and $18.1 million, respectively.
In connection with the acquisition of companies, the
Company assumed liabilities of $44.5 million in 1993 and $2.5
million in 1992 (see Note 2 of Notes to Consolidated Financial
Statements).
17. Business Segment Information
----------------------------
The Company's operations are conducted within one
business segment which includes: the manufacture and
remanufacture of jet engine and aircraft components, the
overhaul of aircraft accessories, aircraft engines, and
industrial gas turbine engines, the refurbishment and overhaul
of helicopters, and providing maintenance and training, repair
and logistical contract services.
The Company provides services to a wide variety of
aviation related businesses, including commercial airlines.
Over the past few years, economic conditions in the commercial
airline industry have deteriorated. A portion of the
Company's accounts receivable as of December 31, 1993 are due
from several commercial airline customers in troubled
financial condition. The Company believes that sufficient
allowances for doubtful accounts have been provided as of
December 31, 1993 in relation to these accounts receivable.
59
<PAGE>
<PAGE> 62
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
(Dollars in thousands) 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Sales to federal government $161,562 $102,049 $124,505
======== ======== ========
Sales to foreign countries $ 46,662 $ 36,097 $ 25,911
======== ======== ========
Capital additions $ 11,250 $ 6,602 $ 7,280
======== ======== ========
Depreciation and amortization expense $ 11,477 $ 10,378 $ 10,196
======== ======== ========
</TABLE>
18. Quarterly Summary (Unaudited)
-----------------------------
<TABLE>
<CAPTION>
(Dollars in thousands First Second Third Fourth Total
except per share amounts) Quarter Quarter Quarter Quarter Year
--------- --------- --------- --------- ---------
Year Ended December 31, 1993
- ----------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 82,971 $ 94,742 $ 105,529 $ 155,051 $ 438,293
Operating income 6,029 7,120 2,341 8,418 23,908
Earnings before extra-
ordinary item 2,215 2,921 3,702 2,756 11,594
Net earnings 2,215 2,921 3,170 2,756 11,062
Earnings per share:
Earnings before extra-
ordinary item .13 .17 .21 .16 .67
Net earnings .13 .17 .18 .16 .64
Year Ended December 31, 1992
- ----------------------------
Revenues $ 86,185 $ 87,563 $ 95,285 $ 96,119 $ 365,152
Operating income 6,004 6,523 6,603 6,632 25,762
Net earnings 2,236 2,894 3,232 3,007 11,369
Net earnings per share .13 .17 .18 .17 .66
</TABLE>
60
<PAGE>
<PAGE> 63
See Note 5 for a description of amounts recorded related
to certain contract claims against the U.S. government of $2.0
million in the first quarter and $2.6 million in the fourth
quarter of 1993.
See Note 7 for extraordinary loss in the third quarter of
1993 related to early extinguishment of debt.
See Note 12 for a description of a tax benefit of $5.8
million recorded in the third quarter of 1993.
See Note 15 for a description of income from a leveraged
lease of $1.3 million ($0.8 million net of income taxes)
recorded in the fourth quarter of 1993.
As a result of a favorable resolution of the termination
of an agreement covering certain leased assets, which included
consummation of a new lease agreement for a portion of these
assets and the purchase of the remaining assets, the Company
determined that an accrual which had been established
previously related to the matter, was no longer required.
Accordingly, the Company reduced this accrual in the amount of
$1.3 million in the fourth quarter of 1992.
See Note 12 for a description of an adjustment to a state
income tax accrual in the fourth quarter of 1992.
19. Guarantor Subsidiaries
----------------------
In July 1993, the Company issued $100 million principal
amount of 9-1/8% Senior Notes due 2003 (see Note 7 of Notes to
Consolidated Financial Statements). The notes are guaranteed
by all of the Company's subsidiaries in the manner described
below. The combined guarantors are jointly and severally
liable under the subsidiary guarantees.
The Company's obligations under the Notes are
unconditionally guaranteed by each of the Company's
subsidiaries (the "Guarantees"). Each Guarantee is a senior
unsecured obligation of the subsidiary providing such
Guarantee and ranks pari passu with all senior unsecured
indebtedness of such subsidiary. The subsidiaries also have
guaranteed the indebtedness outstanding under the Company's
revolving credit facility (the "Subsidiary Bank Guarantees").
The Subsidiary Bank Guarantees are collateralized, in general,
by the accounts receivable and inventory of the subsidiaries
and therefore effectively rank senior to the Guarantees. The
Guarantees are in effect only for as long as the Subsidiary
61
<PAGE>
<PAGE> 64
Bank Guarantees remain in effect. If the Guarantees are
terminated the Notes will be obligations solely of the Company
and will be effectively subordinated to all existing and
future indebtedness of the subsidiaries.
The following condensed consolidating information
presents:
(1) Condensed financial statements as of December 31, 1993
and 1992 and for the years ended December 31, 1993, 1992
and 1991 of (a) the Company on a parent company only
basis (Parent Company), (b) the Combined Guarantors, and
(c) the Company on a consolidated basis.
(2) The Parent Company with its investments in subsidiaries
accounted for on the equity method.
(3) Elimination entries necessary to consolidate the Parent
Company and its subsidiaries.
62
<PAGE>
<PAGE> 65
UNC INCORPORATED
Condensed Consolidating Balance Sheet
As of December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
Assets
- ------
<S> <C> <C> <C> <C>
Current assets:
Cash & short-term investments $ 857 $ 637 $ 1,494
Accounts receivable, net 1,456 89,602 91,058
Unbilled costs and accrued
profits on contracts in progress 28,384 28,384
Inventories 109,766 109,766
Other 5,334 13,044 18,378
-------- -------- ---------
Total current assets 7,647 241,433 249,080
-------- -------- ---------
Net assets of discontinued operations 18,000 2,600 20,600
Property, plant & equipment, net 3,042 63,989 67,031
Cost in excess of net assets
of acquired companies, net 141,718 141,718
Other noncurrent assets 20,147 7,557 27,704
Investments in and advances
to subsidiaries 336,762 $(336,762)
-------- -------- --------- ---------
Total assets $385,598 $457,297 $(336,762) $ 506,133
======== ======== ========= =========
</TABLE>
63
<PAGE>
<PAGE> 66
UNC INCORPORATED
Condensed Consolidating Balance Sheet
As of December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,000 $ 5,529 $ 6,529
Accounts payable 935 37,690 38,625
Accruals and other current liabilities 16,530 37,196 53,726
-------- -------- ---------
Total current liabilities 18,465 80,415 98,880
-------- -------- ---------
Long-term debt 180,500 10,254 190,754
Other noncurrent liabilities 12,397 38,616 51,013
-------- -------- ---------
Total liabilities 211,362 129,285 340,647
-------- -------- ---------
Common stock and additional paid
in capital 125,363 125,363
Retained earnings 50,559 50,559
Equity of subsidiaries and
advances of parent 336,762 $(336,762)
-------- -------- --------- ---------
175,922 336,762 (336,762) 175,922
Less:
Treasury stock at cost
(700,000 shares) 8,750 8,750
Minimum pension liability adjustment 1,345 1,345
Unearned compensation-restricted
stock 341 341
-------- -------- --------- ---------
Total shareholders' equity 174,236 328,012 (336,762) 165,486
-------- -------- --------- ---------
Total liabilities and
shareholders' equity $385,598 $457,297 $(336,762) $ 506,133
======== ======== ========= =========
</TABLE>
64
<PAGE>
<PAGE> 67
UNC INCORPORATED
Condensed Consolidating Balance Sheet
As of December 31, 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
Assets
- ------
<S> <C> <C> <C> <C>
Current assets:
Cash & short-term investments $ 1,646 $ 322 $ 1,968
Accounts receivable, net 2,425 69,384 71,809
Unbilled costs and accrued
profits on contracts in progress 16,545 16,545
Inventories 94,682 94,682
Other 1,030 4,407 5,437
-------- -------- --------
Total current assets 5,101 185,340 190,441
-------- -------- --------
Net assets of discontinued operations 19,851 2,420 22,271
Property, plant & equipment, net 3,121 54,736 57,857
Cost in excess of net assets
of acquired companies, net 97,489 97,489
Other noncurrent assets 13,909 9,115 23,024
Investments in and advances
to subsidiaries 235,542 $(235,542)
-------- -------- --------- --------
Total assets $277,524 $349,100 $(235,542) $391,082
======== ======== ========= ========
</TABLE>
65
<PAGE>
<PAGE> 68
UNC INCORPORATED
Condensed Consolidating Balance Sheet
As of December 31, 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
Liabilities and Shareholders' Equity
- ------------------------------------
<S> <C> <C> <C> <C>
Current liabilities:
Current portion of long-term debt $ $ 158 $ 158
Accounts payable 1,139 32,343 33,482
Accruals and other current liabilities 7,558 21,093 28,651
-------- -------- --------
Total current liabilities 8,697 53,594 62,291
-------- -------- --------
Long-term debt 94,521 31,044 125,565
Other noncurrent liabilities 9,917 37,670 47,587
-------- -------- --------
Total liabilities 113,135 122,308 235,443
-------- -------- --------
Common stock and additional paid
in capital 124,892 124,892
Retained earnings 39,497 39,497
Equity of subsidiaries and
advances of parent 235,542 $(235,542)
-------- -------- --------- --------
164,389 235,542 (235,542) 164,389
Less treasury stock at cost
(700,000 shares) 8,750 8,750
-------- -------- --------- --------
Total shareholders' equity 164,389 226,792 (235,542) 155,639
-------- -------- --------- --------
Total liabilities and
shareholders' equity $277,524 $349,100 $(235,542) $391,082
======== ======== ========= ========
</TABLE>
66
<PAGE>
<PAGE> 69
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Year Ended December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ 1,263 $ 437,030 $ 438,293
Costs and expenses
Costs and operating expenses 360,869 360,869
Selling, general and administrative
expenses 12,385 41,131 53,516
Allocated expenses (15,481) 15,481
--------- --------- ---------
(3,096) 417,481 414,385
--------- --------- ---------
Operating income 4,359 19,549 23,908
Other income (expense)
Interest income 374 22 396
Interest expense (12,834) (1,968) (14,802)
Other (1,777) 26 (1,751)
Equity in income of subsidiaries 17,658 $ (17,658)
--------- --------- --------- ---------
3,421 (1,920) (17,658) (16,157)
--------- --------- --------- ---------
Earnings before income taxes and
extraordinary items 7,780 17,629 (17,658) 7,751
Income tax benefit 3,814 29 3,843
--------- --------- --------- ---------
Earnings before extraordinary items 11,594 17,658 (17,658) 11,594
Extraordinary item-early retirement of
debt, net of income taxes (532) (532)
--------- --------- --------- ---------
Net earnings $ 11,062 $ 17,658 $ (17,658) $ 11,062
========= ========= ========= =========
</TABLE>
67
<PAGE>
<PAGE> 70
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Year Ended December 31, 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ 365,152 $ 365,152
Costs and expenses
Costs and operating expenses 294,489 294,489
Selling, general and administrative
expenses $ 10,709 34,192 44,901
Allocated expenses (7,236) 7,236
--------- --------- ---------
3,473 335,917 339,390
--------- --------- ---------
Operating income (loss) (3,473) 29,235 25,762
Other income (expense)
Interest income 299 32 331
Interest expense (9,882) (2,322) (12,204)
Other (1,405) 367 (1,038)
Equity in income of subsidiaries 20,590 $ (20,590)
--------- --------- --------- ---------
9,602 (1,923) (20,590) (12,911)
--------- --------- --------- ---------
Earnings before income taxes 6,129 27,312 (20,590) 12,851
Income tax provision 5,240 (6,722) (1,482)
--------- --------- --------- ---------
Net earnings $ 11,369 $ 20,590 $ (20,590) $ 11,369
========= ========= ========= =========
</TABLE>
68
<PAGE>
<PAGE> 71
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Year Ended December 31, 1991
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
-------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ 360,571 $ 360,571
Costs and expenses
Costs and operating expenses 304,101 304,101
Selling, general and administrative
expenses $ 9,964 39,120 49,084
Other operating expenses 14,015 14,015
Allocated expenses (6,480) 6,480
--------- --------- ---------
3,484 363,716 367,200
--------- --------- ---------
Operating income (loss) (3,484) (3,145) (6,629)
Other income (expense)
Interest income 529 3 532
Interest expense (14,458) (3,073) (17,531)
Other (1,266) 761 (505)
Equity in income of subsidiaries 26,432 $ (26,432)
--------- --------- --------- ---------
11,237 (2,309) (26,432) (17,504)
--------- --------- --------- ---------
Earnings (loss) from continuing
operations before income taxes
and extraordinary item 7,753 (5,454) (26,432) (24,133)
Income tax provision 862 (2,214) (1,352)
--------- --------- --------- ---------
Earnings (loss) from continuing
operations before extraordinary item 8,615 (7,668) (26,432) (25,485)
Earnings from discontinued
operations, net of income taxes 34,100 34,100
Earnings before extraordinary item 8,615 26,432 (26,432) 8,615
Extraordinary item early retirement
of debt, net of income taxes (1,700) (1,700)
--------- --------- --------- ---------
Net earnings $ 6,915 $ 26,432 $ (26,432) $ 6,915
========= ========= ========= =========
</TABLE>
69
<PAGE>
<PAGE> 72
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 1993
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ------------
<S> <C> <C> <C>
Net cash flow from (used by) operations $ (384) $ (11,253) $ (11,637)
Cash flows from investing activities:
Net proceeds from sale of assets 10,843 10,843
Additions to property, plant and
equipment (331) (10,919) (11,250)
Acquisition of subsidiaries, net of
cash acquired (48,477) (48,477)
Investment in leveraged lease (2,697) (2,697)
Naval Products phase out 68 68
Other transactions, net (67) (67)
--------- --------- ---------
Net cash and short-term investments
provided (used) by investing
activities (2,960) (48,620) (51,580)
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 193,132 35,500 228,632
Reductions in debt (210,632) (55,334) (265,966)
Issuance of 9-1/8% Senior Notes 100,000 100,000
Other transactions, net 77 77
Net cash transfers to (from) parent (80,022) 80,022
--------- --------- ---------
Net cash and short-term investments
provided (used) by financing
activities 2,555 60,188 62,743
--------- --------- ---------
Net decrease in cash and
short-term investments (789) 315 (474)
Cash and short-term investments at
beginning of year 1,646 322 1,968
--------- --------- ---------
Cash and short-term investments at
end of year $ 857 $ 637 $ 1,494
========= ========= =========
</TABLE>
70
<PAGE>
<PAGE> 73
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 1992
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ------------
<S> <C> <C> <C>
Net cash flow from operations $ (17,133) $ 68,382 $ 51,249
Cash flows from investing activities:
Net proceeds from sale of assets 4,738 4,738
Additions to property, plant and
equipment (417) (6,185) (6,602)
Acquisition of subsidiaries, net of
cash acquired (7,741) (7,741)
Proceeds received from sale of
subsidiaries 1,000 1,000
Naval Products phase out 9,979 9,979
Other transactions, net 93 93
--------- --------- ---------
Net cash and short-term investments
provided (used) by investing
activities 9,562 (8,095) 1,467
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 147,500 57,000 204,500
Reductions in debt (197,887) (58,832) (256,719)
Other transactions, net 231 231
Net cash transfers to (from) parent 58,198 (58,198)
--------- --------- ---------
Net cash and short-term investments
provided (used) by financing
activities 8,042 (60,030) (51,988)
--------- --------- ---------
Net increase in cash and
short-term investments 471 257 728
Cash and short-term investments at
beginning of year 1,175 65 1,240
--------- --------- ---------
Cash and short-term investments at
end of year $ 1,646 $ 322 $ 1,968
========= ========= =========
</TABLE>
71
<PAGE>
<PAGE> 74
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Year Ended December 31, 1991
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ------------
<S> <C> <C> <C>
Net cash flow from (used by) operations $ (10,798) $ 10,047 $ (751)
Cash flows from investing activities:
Net proceeds from sale of assets 2,021 2,021
Additions to property, plant and
equipment (679) (6,601) (7,280)
Acquisition of subsidiaries, net of
cash acquired (5,218) (5,218)
Proceeds received from sale of
subsidiaries 712 712
Naval Products phase out 20,378 20,378
Other transactions, net (1,617) (1,617)
--------- --------- ---------
Net cash and short-term investments
provided (used) by investing
activities 19,699 (10,703) 8,996
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 190,000 190,000
Reductions in debt (200,000) (538) (200,538)
Other transactions, net 89 89
Net cash transfers to (from) parent (427) 427
--------- --------- ---------
Net cash and short-term investments
(used) by financing activities (10,338) (111) (10,449)
--------- --------- ---------
Net (decrease) in cash and
short-term investments (1,437) (767) (2,204)
Cash and short-term investments at
beginning of year 2,701 743 3,444
--------- --------- ---------
Cash and short-term investments at
end of year $ 1,264 $ (24) $ 1,240
========= ========= =========
</TABLE>
72
<PAGE>
<PAGE> 75
Independent Auditors' Report
The Board of Directors and Shareholders
UNC Incorporated:
We have audited the accompanying consolidated balance
sheets of UNC Incorporated and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of
earnings, changes in shareholders' equity and cash flows for
each of the years in the three-year period ended December 31,
1993. In connection with our audits of the aforementioned
consolidated financial statements, we also have audited the
related financial statement schedule as listed in the
accompanying index under Item 14. These consolidated
financial statements and the financial statement schedule are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule
based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of UNC Incorporated and subsidiaries as
of December 31, 1993 and 1992, and the results of their
operations and their cash flows for each of the years in the
three-year period ended December 31, 1993, in conformity with
generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
As discussed in Note 12 to the consolidated financial
statements, the Company adopted the provisions of the
Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes in
1993. ---------------------------
KPMG PEAT MARWICK
Washington, D.C.
February 9, 1994
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<PAGE>
<PAGE> 76
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
KPMG Peat Marwick were previously the principal certifying
accountants for the Company. Following discussions between
KPMG Peat Marwick and representatives of the Company, the
parties determined that KPMG Peat Marwick would cease to serve
as the Company's auditors effective February 22, 1994. The
Company's Audit Committee was advised of these discussions and
approved of this action.
In connection with the audits of the Company's consolidated
financial statements for the fiscal years ended December 31,
1993 and 1992, and in the subsequent interim period through
February 22, 1994, there were no disagreements between the
Company and KPMG Peat Marwick on any matter of accounting
principles or practices, financial statement disclosures or
auditing scope or procedures, which disagreements, if not
resolved to KPMG Peat Marwick's satisfaction, would have
caused them to make reference in connection with their opinion
to the subject of the disagreement.
The audit report of KPMG Peat Marwick on the consolidated
financial statements of the Company and its subsidiaries as of
and for the years ended December 31, 1993 and 1992, did not
contain any adverse opinion or disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope, or
accounting principles, except that, as required with respect
to changes in accounting principles, the 1993 audit report
made reference to the Company's adoption in 1993 of the
provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes.
Members of the management of the Company interviewed four
of the "Big 6" public accounting firms and requested that two
of these firms present proposals to the Audit Committee. On
March 17, 1994, the two firms presented their proposals to the
Audit Committee, which, after due consideration, recommended
to the Company's Board of Directors that the firm of Coopers
& Lybrand be appointed as the Company's independent
accountants for the year ending December 31, 1994. The Board
of Directors approved of the appointment of the firm of
Coopers & Lybrand on March 21, 1994, subject to ratification
by the Company's Annual Meeting of Shareholders to be held on
April 29, 1994.
PART III
Item 10. Directors and Executive Officers of the Company.
(a) Directors of the Company. The information regarding
directors in response to Item 401 of Regulation S-K which will
appear in the definitive Proxy Statement of the Company in
connection with the solicitation of proxies for its 1994
Annual Meeting of Shareholders is incorporated herein by
reference.
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<PAGE>
<PAGE> 77
(b) Executive Officers of the Company.
The following table sets forth the names and ages of all
executive officers of the Company, their positions and office
with the Company, and the period during which each person has
served as such.
<TABLE>
<CAPTION>
Positions and Served as
Office Currently Held Officer
Name Age with the Company Since (1)
- ------ --- --------------------- ---------
<S> <C> <C> <C>
Dan A. Colussy 62 Chairman of the Board, President 1984
and Chief Executive Officer
and Director
John J. Bonasia 60 Executive Vice President and Chief 1990
Operating Officer, Manufacturing
John H. Moellering 55 Executive Vice President and 1993
Chief Operating Officer,
UNC Aviation Services
Ronald G. Kiripolsky 54 Senior Vice President and Chief 1991
Operating Officer, Overhaul
Robert L. Pevenstein 47 Senior Vice President and 1987
Chief Financial Officer
R. Bruce Andrews 51 Vice President, Quality and 1992
Technology
Gerald J. Knapp 51 Vice President, Human Resources 1991
Richard H. Lange 60 Vice President, General Counsel 1987
and Secretary
Mark W. Decker 37 Vice President, Corporate Development 1993
Gregory M. Bubb 42 Vice President and Treasurer 1992
William R. Capel 45 Vice President and Controller 1992
Paul X. McLain 53 Vice President, Financial Controls 1982
______________________
</TABLE>
(1) The dates indicated include service in offices other
than current office, but do not include any previous service
as a Director.
75
<PAGE>
<PAGE> 78
There is no family relationship between any director,
executive officer,
or person nominated or chosen by the Company to become a
director or executive officer and any other such person,
director or executive officer.
The following information relates to the business
experience during the past five years of each Executive
Officer named above:
Mr. Colussy has served as Chairman of the Board,
President and Chief Executive Officer of the Company since
April 1989 and previously as President and Chief Executive
Officer since December 1984.
Mr. Bonasia has served as Executive Vice President and
Chief Operating Officer, Manufacturing since August 1993 and
as Executive Vice President and Chief Operating Officer since
February 1992. He was elected Senior Vice President and Chief
Operating Officer in January 1991. Previously he served as
Group Vice President Overhaul Operations since August 1990 and
President of the Company's Airwork division since July 1989.
He joined Airwork Corporation in June 1988 as Senior Vice
President, Sales and Marketing.
Mr. Moellering joined the Company as Executive Vice
President and Chief Operating Officer, UNC Aviation Services
in October 1993. Previously he was President and Chief
Executive Officer of Lear Siegler Management Services
Corporation from 1990 to 1993 and prior to that he was
Corporate Vice President with Automotive Data Processing from
1987 to 1990.
Mr. Kiripolsky has served as Senior Vice President and
Chief Operating Officer, Overhaul since August 1993. He
joined the Company as Vice President, Corporate Development in
April 1991. Previously, he was President and Chief Executive
Officer of Dalfort Aviation from 1988 to 1991 and prior
thereto he was President of Pacific Southwest Airmotive for
more than five years.
Mr. Pevenstein has served as Senior Vice President and
Chief Financial Officer of the Company since February 1992 and
previously as Vice President Finance and Chief Financial
Officer since October 1987. He joined the Company as
Controller in September 1987.
Mr. Andrews has served as Vice President, Quality and
Technology since August 1993, and previously as Vice
President, Manufacturing since January 1992. Prior to such
time he served in various senior management positions with the
Company for more than five years.
76
<PAGE>
<PAGE> 79
Mr. Knapp joined the Company as Vice President, Human
Resources in April 1991. Prior to such time he was Manager,
Human Resources Management, for Thomason Consumer Electronics,
Inc. for more than five years.
Mr. Lange was elected Vice President, General Counsel and
Secretary of the Company in July 1987.
Mr. Decker has served as Vice President, Corporate
Development since August 1993. Previously he served as
President of the Company's Accessory Services Group since
January 1992 and prior to that he served in various senior
management positions with the Company for more than five
years.
Mr. Bubb has served as Vice President and Treasurer since
May 1992. He joined the Company as Treasurer in March 1988.
Mr. Capel joined the Company as Vice President and
Controller in May 1992. Prior to such time he was Director -
Business Management and Contracts for Textron Lycoming for
more than five years.
Mr. McLain joined the Company as Vice President,
Financial Controls in August 1982.
Item 11. Executive Compensation.
The information regarding executive compensation in
response to Item 402 of Regulation S-K which will appear in
the definitive Proxy Statement of the Company in connection
with the solicitation of proxies for its 1994 Annual Meeting
of Shareholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information regarding security ownership of certain
beneficial owners and management in response to Item 403 of
Regulation S-K which will appear in the definitive Proxy
Statement of the Company in connection with the solicitation
of proxies for its 1994 Annual Meeting of Shareholders is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information regarding certain relationships and
related transactions in response to Item 404 of Regulation S-K
which will appear in the definitive Proxy Statement of the
Company in connection with the solicitation of proxies for its
1994 Annual Meeting of Shareholders is incorporated herein by
reference.
77
<PAGE>
<PAGE> 80
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a) The following documents are filed as part of this Report:
(1) and (2) Financial Statements and Financial Statement
Schedules.
<TABLE>
<CAPTION>
Page Number
Financial Statements: in this Report
- -------------------- --------------
<S> <C>
Consolidated statements of earnings -
years ended December 31, 1993, 1992 and 1991 25
Consolidated balance sheets - as of
December 31, 1993 and 1992 26-27
Consolidated statements of cash flows -
years ended December 31, 1993, 1992 and 1991 28-29
Consolidated statements of changes in
shareholders' equity - years ended
December 31, 1993, 1992 and 1991 30
Notes to consolidated financial statements 31-72
Independent Auditors' Report 73
</TABLE>
<TABLE>
<CAPTION>
Page Number
Index to Consolidated Financial Statement Schedules: in this Report
- --------------------------------------------------- --------------
<S> <C>
Schedule VIII Valuation and qualifying
accounts - for the three
years ended December 31, 1993 S-1
</TABLE>
Schedules other than those listed above have been omitted
since they are either not required, are not applicable,
or the required information is shown in the consolidated
financial statements or related notes.
(3) Exhibits:
3.1 Certificate of Incorporation, as amended by
Certificate of Designations of Series A Preferred
Stock, of the Company (filed as Exhibit 4-H to
Company's Registration Statement No. 33-13762 and
incorporated herein by reference).
78
<PAGE>
<PAGE> 81
3.2 Form of Certificate of Designations of Series A
Junior Participating Preferred Stock of Company
(filed as Exhibit A to the Company's Form 8.A
dated October 9, 1987, and incorporated herein by
reference).
3.3 Amended and Restated By-Laws of the Company
(including resolutions of the Board of Directors
of the Company on February 5, 1992 amending the
By-Laws of the Company) (filed as Exhibit 3-C to
the Company's Annual Report on Form 10-K for the
year ended December 31, 1991 -- File No. 1-7795
and incorporated herein by reference).
4.1 Rights Agreement, dated as of September 25, 1987,
between the Company and Manufacturers Hanover
Trust Company (filed as Exhibit No. 1 to the
Company's Form 8-A dated October 9, 1987 and
incorporated herein by reference).
4.2 Indenture, dated as of May 1, 1986, between the
Company and Maryland National Bank, Trustee,
relating to the Company's 7 1/2% Convertible
Subordinated Debentures due 2006 (filed as
Exhibit 4-A to the Company's Registration
Statement No. 33-5136 and incorporated herein by
reference).
4.3 First Supplemental Indenture, dated as of
April 26, 1987, between Maryland National Bank,
Trustee (supplementing the Indenture, dated
May 1, 1986, between the Company and Maryland
National Bank, Trustee, relating to the Company's
7 1/2% Convertible Subordinated Debentures due
2006) (filed as Exhibit 4-J to Registrant's
Registration Statement No. 33-13762 and
incorporated herein by reference).
4.4 Indenture, dated as of July 15, 1993, between the
Company and Continental Bank, National
Association, Trustee, relating to the Company's
9-1/8% Senior Notes due 2003 (filed as Exhibit 4-
B to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993 -- File No.
1-7795 and incorporated herein by reference).
4.5 First Supplemental Indenture, dated as of
August 14, 1993, between the Company and
Continental Bank, National Association, Trustee
(supplementing the Indenture, dated July 15,
1993, between the Company and Continental Bank,
National Association, Trustee, relating to the
Registrant's 9-1/8% Senior Notes due 2003)
79
<PAGE>
<PAGE> 82
4.6 Second Supplemental Indenture, dated as of
November 5, 1993, between the Company and
Continental Bank, National Association, Trustee
(supplementing the Indenture, dated July 15,
1993, between the Company and Continental Bank,
National Association, Trustee, relating to the
Registrant's 9-1/8% Senior Notes due 2003)
10.1 1977 Stock Plan for Key Employees of United
Nuclear Corporation and Its Subsidiaries, as
amended on June 25, 1982 (filed as
Exhibit 10-F(i) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1982 --
File No. 1-7795 and incorporated herein by
reference).
10.2 1985 Stock Plans for Key Employees of UNC
Resources, Inc. and Its Subsidiaries (filed as
Exhibit 28-C to the Company's Registration
Statement No. 2-99656, and incorporated herein by
reference).
10.3 Resolutions adopted by the Board of Directors of
the Company on February 27, 1987, amending the
1985 Stock Plans for Key Employees of UNC
Resources, Inc. and Its Subsidiaries (filed as
Exhibit 10-A(ii) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1986
-- File No. 1-7795 and incorporated herein by
reference).
10.4 Extract from September 20, 1984 minutes of the
Board of Directors of the Company interpreting
various general provisions of all stock plans
(filed as Exhibit 10-C(iv) to the Company's
Annual Report on Form 10-K, as amended by Form 8
dated April 7, 1986 for the year ended
December 31, 1985 -- File No. 1-7795 and
incorporated herein by reference).
10.5 Resolutions adopted by the Board of Directors of
the Company on December 17, 1987, minutes of the
Board of Directors of UNC Incorporated, ratifying
and confirming action of the Management
Development and Compensation Committee on
December 16, 1987 amending the outstanding stock
options issued pursuant to the Company's stock
option plans (filed as Exhibit 10-A(vi) to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1987 -- File No. 1-7795 and
incorporated herein by reference).
80
<PAGE>
<PAGE> 83
10.6 UNC Incorporated Share Purchase/Incentive Plan
(filed as Exhibit 4 to the Company's S-8
Registration Statement No. 33-37586 dated
November 2, 1990 and incorporated herein by
reference).
10.7 UNC Incorporated 1990 Stock Option Plan for Key
Employees (filed as Exhibit 4 to the Company's
S-8 Registration Statement No. 33-37585 dated
November 2, 1990 and incorporated herein by
reference).
10.8 Resolutions adopted by the Board of Directors of
the Company on March 22, 1991, amending the 1990
Stock Option Plan for Key Employees referred to
in Exhibit 10-7 hereof to (1) permit qualifying
shares purchases to be made either from the
Company or on the open market and (2) comply with
Rule 16b-3 (filed as Exhibit 19-A to the
Company's Annual Report on Form 10-K for the year
ended December 31, 1992 -- File No. 1-7795 and
incorporated herein by reference).
10.9 UNC Resources, Inc. Outside Directors
Compensation Plan (filed as Exhibit 10-F to the
Company's Annual Report on Form 10-K, as amended
by Form 8 dated April 7, 1986, of the year ended
December 31, 1985 -- File No. 1-7795 and
incorporated herein by reference).
10.10 Outside Directors Separation from Service Plan
of Company effective July 31, 1987 (filed as
Exhibit 19-B to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1987 -- File No. 1-7795 and incorporated
herein by reference).
10.11 UNC Resources, Inc. Incentive Compensation
Plan (filed as Exhibit 10-H to the Company's
Annual Report on Form 10-K, as amended by
Form 8 dated April 7, 1986, for the year ended
December 31, 1985 -- File No. 1-7795 and
incorporated herein by reference).
10.12 Resolutions adopted by the Board of Directors
of the Company on March 22, 1991, amending
Section 6.1 of the UNC Resources, Inc.
Incentive Compensation Plan referred to in
Exhibit 10.11 hereof to permit the committee
to base incentive awards for employees of a
specific unit on the performance of other
units and the Company as a whole (filed as
Exhibit 19-B to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992
-- File No. 1-7795 and incorporated herein by
reference).
81
<PAGE> 84
10.13 Amended and Restated Supplemental Executive
Retirement Plan for Key Employees of Company
and its Subsidiaries effective July 31, 1987
(filed as Exhibit 19-A to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1987 -- File No. 1-7795 and
incorporated herein by reference).
10.14 Resolutions adopted by the Board of Directors
of the Company on October 30, 1987, amending
the change in control language contained in
the Amended and Restated Supplemental
Executive Retirement Plan for Key Employees of
the Company referred to in Exhibit 10.13
hereof and in the Outside Directors Separation
from Service Plan of the Company referred to
in Exhibit 10-9 hereof (filed as Exhibit 10-H
to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990 --
File No. 1-7795 and incorporated herein by
reference).
10.15 Resolutions adopted by the Board of Directors
of the Company on October 23, 1992, amending
Sections 8(a) and 8(b) of the Amended and
Restated Supplemental Executive Retirement
Plan for Key Employees of the Company referred
to in Exhibit 10.13 hereof to require two
years of service before a participant is
entitled to benefits under the plan and a
participant's years of service to commence on
the date such employee becomes a participant
under the plan, respectively.
10.16 Resolutions adopted by the Board of Directors
of the Company on March 22, 1991, deleting
Section 2(o)(i) of the Amended and Restated
Supplemental Executive Retirement Plan for Key
Employees of the Company referred to in
Exhibit 10.13 hereof relating to the offset
from Plan benefits of the actuarial equivalent
of the Company's annual contributions to the
Participants' Retirement Income Savings Plan
account (filed as Exhibit 19-C to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1992 -- File
No. 1-7795 and incorporated herein by
reference).
82
<PAGE>
<PAGE> 85
10.17 Form of Agreement relating to a change in
control executed by the Company with certain
key employees (filed as Exhibit 10-Q to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1987 -- File
No. 1-7795 and incorporated herein by
reference).
10.18 Form of Agreement relating to severance pay
and benefits executed by the Company with
certain key employees (filed as Exhibit 10-O
to the Company's Annual Report on Form 10-K
for the year ended December 31, 1986 -- File
No. 1-7795 and incorporated herein by
reference).
10.19 Employment Agreement, dated as of November 1,
1984, between UNC Resources, Inc. and Dan A.
Colussy (filed as Exhibit 10-T to the
Company's Annual Report on Form 10-K for the
year ended December 31, 1984 -- File
No. 1-7795 and incorporated herein by
reference).
10.20 Agreement, dated as of October 20, 1987,
between the Company and Dan A. Colussy
amending the Employment Agreement referred to
in Exhibit 10.19 hereof (filed as Exhibit 10-U
to the Company's Annual Report on Form 10-K
for the year ended December 31, 1987 -- File
No. 1-7795 and incorporated herein by
reference).
10.21 Agreement, dated as of December 18, 1989,
between the Company and Dan A. Colussy
amending the employment agreement referred to
in Exhibit 10.19 hereof, (filed as
Exhibit 10-EE to Company's Annual Report on
Form 10-K for the year ended December 31, 1989
-- File No. 1-7795 and incorporated herein by
reference).
10.22 Second Amended and Restated Credit Agreement,
dated as of July 24, 1992, among the Company,
the Company's wholly-owned subsidiary Airwork
Corporation, the several banks and other
financial institutions from time to time
parties to this Agreement and Chemical Bank, a
New York banking corporation, as agent for the
Banks hereunder (filed as Exhibit 10 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1992 -- File No. 1-
7795 and incorporated herein by reference).
83
<PAGE>
<PAGE> 86
10.23 Waiver and Amendment, dated as of December 7,
1992, to the Second Amended and Restated
Credit Agreement dated as of July 24, 1992,
among UNC Incorporated, a Delaware
corporation, Airwork Corporation, a Delaware
corporation, the several banks and other
financial institutions from time to time
parties thereto and Chemical Bank, a New York
banking corporation, as agent for the Banks,
referred to in Exhibit 10.22 hereof (filed as
Exhibit 10-C to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992
-- File No. 1-7795 and incorporated herein by
reference).
10.24 Waiver and Amendment, dated as of December 28,
1992, to the Second Amended and Restated
Credit Agreement dated as of July 24, 1992,
among UNC Incorporated, a Delaware
corporation, Airwork Corporation, a Delaware
corporation, the several banks and other
financial institutions from time to time
parties thereto and Chemical Bank, a New York
banking corporation, as agent for the Banks,
referred to in Exhibit 10.22 hereof (filed as
Exhibit 10-D to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992
-- File No. 1-7795 and incorporated herein by
reference).
10.25 Amendment, dated as of May 27, 1993, to the
Second Amended and Restated Credit Agreement
dated as of July 24, 1992, among UNC
Incorporated, a Delaware corporation, Airwork
Corporation, a Delaware corporation, the
several banks and other financial institutions
from time to time parties thereto and Chemical
Bank, a New York banking corporation, as agent
for the Banks, referred to in Exhibit 10.22
hereof.
10.26 Waiver and Amendment, dated as of July 20,
1993, to the Second Amended and Restated
Credit Agreement dated as of July 24, 1992,
among UNC Incorporated, a Delaware
corporation, Airwork Corporation, a Delaware
corporation, the several banks and other
financial institutions from time to time
parties thereto and Chemical Bank, a New York
banking corporation, as agent for the Banks,
referred to in Exhibit 10.22 hereof (filed as
Exhibit 10 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September
30, 1993 -- File No. 1-7795 and incorporated
herein by reference).
84
<PAGE>
<PAGE> 87
10.27 Waiver and Amendment, dated as of October 22,
1993, to the Second Amended and Restated
Credit Agreement dated as of July 24, 1992,
among UNC Incorporated, a Delaware
corporation, Airwork Corporation, a Delaware
corporation, the several banks and other
financial institutions from time to time
parties thereto and Chemical Bank, a New York
banking corporation, as agent for the Banks,
referred to in Exhibit 10.22 hereof.
10.28 Operating Agreement of Aviation Alliance &
Capital Group, L.C., dated as of the 10th day
of November, 1992, by and among Integrated
Aircraft Services Corp., Transcapital Air
Alliance Corporation and UNC Air Capital
Incorporated (filed as Exhibit 10-E to the
Company's Annual Report on Form 10-K/A for the
year ended December 31, 1992 -- File
No. 1-7795 and incorporated herein by
reference).
10.29 Sale and Purchase Agreement dated July 30,
1993 between UNC Johnson Technology, Inc. and
Freedom Forge Corporation (filed as Exhibit 1
to the Company's Annual Report on Form 8-K
dated July 30, 1993 -- File No. 1-7795 and
incorporated herein by reference).
11 Statement re: Computation of Earnings per Share.
16 Letter dated March 1, 1994 of KPMG Peat Marwick
(filed as Exhibit 16 to the Company's Report on
Form 8-K dated March 1, 1994 -- File No. 1-7795
and incorporated herein by reference).
21 Subsidiaries of the Company.
23 Independent Auditors' Consent.
24 Powers of Attorney.
____________________
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during
the quarter ended December 31, 1993.
(c) Exhibits Filed:
A listing of exhibits required to be filed is given in
the Sequential Exhibit Index.
(d) Financial Schedules:
The information regarding Financial Statement Schedules
in this item is provided in Item 14(a) 1 and 2.
85
<PAGE>
<PAGE> 88
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
UNC INCORPORATED
March 25, 1994
By: /s/ Robert L. Pevenstein
---------------------------
Robert L. Pevenstein
Senior Vice President
and Chief Financial Officer
(principal financial and
accounting officer)
86
<PAGE>
<PAGE> 89
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the Company and in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Dan A. Colussy Chairman of the Board, President March 25, 1994
- ------------------------ and Chief Executive Officer
(Dan A. Colussy and Director
/s/ Robert L. Pevenstein Senior Vice President and March 25, 1994
- ------------------------ Chief Financial Officer
(Robert L. Pevenstein) (principal financial and
accounting officer)
Berl Bernhard * Director March 25, 1994
- ------------------------
(Berl Bernhard)
John K. Castle * Director March 25, 1994
- ------------------------
(John K. Castle)
William C. Hittinger * Director March 23, 1994
- ------------------------
(William C. Hittinger)
J. L. Holloway III * Director March 25, 1994
- ------------------------
(J. L. Holloway III)
George V. McGowan * Director March 25, 1994
- ------------------------
(George V. McGowan)
Jack Moseley * Director March 25, 1994
- ------------------------
(Jack Moseley)
Lawrence A. Skantze * Director March 25, 1994
- ------------------------
(Lawrence A. Skantze)
Beverly B. Byron * Director March 25, 1994
- ------------------------
(Beverly B. Byron)
</TABLE>
* By /s/ Richard H. Lange
--------------------
(Richard H. Lange)
Attorney-in-Fact
87
<PAGE>
<PAGE> 90
UNC INCORPORATED AND SUBSIDIARIES
Schedule VIII - Valuation and Qualifying Accounts
For the Three Years Ended December 31, 1993
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Costs & at End
Description of Year Expenses Deductions (1) of Year
----------- --------- ---------- -------------- ------------
Allowance for Doubtful Accounts Receivable:
<S> <C> <C> <C> <C>
Year ended December 31, 1993 $5,041,000 $1,602,000 $ 277,000 $6,366,000
========== ========== ========== ==========
Year ended December 31, 1992 $6,949,000 $2,450,000 $4,358,000 $5,041,000
========== ========== ========== ==========
Year ended December 31, 1991 $3,200,000 $7,340,000 $3,591,000 $6,949,000
========== ========== ========== ==========
</TABLE>
(1) Uncollected receivables written off, net of
recoveries.
S-1
<PAGE>
<PAGE> 91
SEQUENTIAL EXHIBIT INDEX
The following exhibits are being filed herewith:
Exhibit
Number Description
- ------ -----------
4.5 First Supplemental Indenture, dated as of August 14,
1993, between the Company and Continental Bank,
National Association, Trustee (supplementing the
Indenture, dated July 15, 1993, between the Company
and Continental Bank, National Association, Trustee,
relating to the Registrant's 9-1/8% Senior Notes due
2003).
4.6 Second Supplemental Indenture, dated as of November 5,
1993, between the Company and Continental Bank,
National Association, Trustee (supplementing the
Indenture, dated July 15, 1993, between the Company
and Continental Bank, National Association, Trustee,
relating to the Registrant's 9-1/8% Senior Notes due
2003).
10.25 Amendment, dated as of May 27, 1993, to the Second
Amended and Restated Credit Agreement dated as of July
24, 1992, among UNC Incorporated, a Delaware
corporation, Airwork Corporation, a Delaware
corporation, the several banks and other financial
institutions from time to time parties thereto and
Chemical Bank, a New York banking corporation, as
agent for the Banks, referred to in Exhibit 10-22
hereof.
10.27 Waiver and Amendment, dated as of October 22, 1993, to
the Second Amended and Restated Credit Agreement dated
as of July 24, 1992, among UNC Incorporated, a
Delaware corporation, Airwork Corporation, a Delaware
corporation, the several banks and other financial
institutions from time to time parties thereto and
Chemical Bank, a New York banking corporation, as
agent for the Banks, referred to in Exhibit 10-22
hereof.
11 Statement re: Computation of Earnings per Share.
21 Subsidiaries of the Company.
23 Independent Auditors' Consent.
24 Powers of Attorney.
____________________
<PAGE>
<PAGE> 1
EXHIBIT 4.5
______________________________________________________________
______________________________________________________________
UNC INCORPORATED
9 1/8% Senior Notes Due 2003
FIRST SUPPLEMENTAL INDENTURE
Dated as of August 14, 1993
Supplement to Indenture
Dated as of July 15, 1993
Continental Bank, National Association,
Trustee
______________________________________________________________
______________________________________________________________
<PAGE>
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE, dated as of August 14,
1993, among UNC INCORPORATED, a Delaware corporation (the
"Company"), UNC JOHNSON TECHNOLOGY, INC. a Delaware
corporation ("Johnson Technology") and CONTINENTAL BANK,
NATIONAL ASSOCIATION, a national banking association, as
Trustee (the "Trustee").
WHEREAS, the Company, the Guarantors and the Trustee
entered into an Indenture dated as of July 15, 1993 (the
"Indenture"), providing for the issuance by the Company of its
9 1/8% Senior Notes Due 2003 (the "Notes") and the related
guarantees of the Guarantors (the "Guarantees") (the Notes and
the Guarantees are sometimes collectively referred to herein
as the "Securities");
WHEREAS, on July 30, 1993, Johnson Technology, a wholly
owned subsidiary of the Company, acquired substantially all of
the assets of the Johnson Technology division of the Freedom
Forge Corporation.
WHEREAS, in accordance with SECTION 10.05 of the
Indenture the Company, as the beneficial owner of all of the
outstanding capital stock of Johnson Technology, wishes to
provide for the greater security of the Holders of the
Securities by causing Johnson Technology to guarantee the due
and punctual payment of the principal of, premium, if any, and
interest, if any, on the Notes;
WHEREAS, Johnson Technology is duly authorized to so
guarantee the Notes and to enter into, execute and deliver
this First Supplemental Indenture;
WHEREAS, SECTION 9.01(4) of the Indenture provides that
the Company, the Guarantors and the Trustee may amend the
Indenture to add guarantees with respect to the Notes without
notice to or consent of any Securityholder;
WHEREAS, the Company and the Guarantors deem it advisable
and not materially adverse to the rights of any Securityholder
to amend and supplement the Indenture as provided in this
First Supplemental Indenture; and
WHEREAS, the Company, the Guarantors and the Trustee have
done all things necessary under the Indenture to enter into
this First Supplemental Indenture, and Johnson Technology and
the Company have done all things necessary to make the
guarantee herein the valid obligation of Johnson Technology in
accordance with its terms;
NOW, THEREFORE, in consideration of these premises, it
is mutually covenanted and agreed for the equal and
proportionate benefit of all Holders of Securities as follows:
<PAGE>
<PAGE> 3
ARTICLE I
Unconditional Guarantee
-----------------------
Section 1.01. For value received, Johnson Technology,
jointly and severally with the Guarantors, hereby fully,
unconditionally and absolutely guarantees to the Holders and
to the Trustee, the complete and punctual payment and
performance by the Company of the Obligations, and further
agrees to pay any and all expenses (including, without
limitation, fees and disbursements of counsel) which may be
paid or incurred by the Trustee or the Holders in enforcing
their rights under the Guarantees all in accordance with the
terms of the Securities and of the Indenture.
SECTION 1.02. Johnson Technology hereby agrees to be
bound by each of the terms of the Indenture that apply to the
Guarantors to the same extent as the Guarantors as if Johnson
Technology were a party to the Indenture on the date thereof.
Section 1.03. No references herein to the Indenture and
no provision of this First Supplemental Indenture or of the
Indenture shall alter or impair the guarantee of Johnson
Technology, which is absolute and unconditional, of the due
and punctual payment of the principal of, premium, if any, and
interest, if any, on any Security.
ARTICLE II
Miscellaneous
-------------
Section 2.01. Except as hereby expressly modified, the
Indenture and the Securities issued thereunder are in all
respects ratified and confirmed and all the terms, conditions
and provisions thereof shall remain in full force and effect.
Section 2.02. The Trustee shall have no responsibility
for the recitals in this First Supplemental Indenture or for
the validity or the sufficiency of this First Supplemental
Indenture. The Trustee accepts the trust created by this
First Supplemental Indenture upon the terms and subject to the
conditions of the Indenture.
Section 2.03. Any notices or demands hereafter required
or permitted by the Indenture to be given to or served upon
the Guarantor or the Corporation shall be given to or served
upon the Guarantor or the Corporation, as the case may be, at
175 Admiral Cochrane Drive, Annapolis, Maryland 21401-7394,
Attention: Treasurer.
Section 2.04. Capitalized terms used herein which are
not defined herein shall have the meanings specified in the
Indenture.
Section 2.05. The parties may sign any number of copies
of this First Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same
instrument.
<PAGE>
<PAGE> 4
Section 2.06. This First Supplemental Indenture shall
be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed, all as of
the day and year first above written.
ATTEST: UNC INCORPORATED
/s/ Herbert D. Frerichs, Jr. By: /s/ Richard H. Lange
______________________________ _________________________
ATTEST: UNC JOHNSON TECHNOLOGY, INC.
/s/ Herbert D. Frerichs, Jr. By: /s/ Richard H. Lange
______________________________ _________________________
ATTEST: CONTINENTAL BANK, NATIONAL
ASSOCIATION, as Trustee
/s/ Michel A. Pantone By: /s/ John W. Porter
______________________________ _________________________
TRI-INDUSTRIES, INC. PACIFIC AIRMOTIVE
CORPORATION, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
BURNSIDE-OTT AVIATION TRAINING ARDCO INCORPORATED
TRAINING CENTER INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
ENGINE & ENGINE PARTS, INC. AVMAR INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
<PAGE>
<PAGE> 5
TEXAS CAMCO INCORPORATED AIRWORK CORPORATION
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC AVIATION SERVICES, INC. UNC ACCESSORY OVERHAUL
GROUP, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
CHEMICAL DYNAMICS INCORPORATED UNC HELICOPTER, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC ARTEX, INC. CAMCO INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC HOLDINGS INC. AIRCRAFT TURBINE SERVICE,
INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC INTERNATIONAL SALES, INC. ASW LIQUIDATING, INC.
By: /s/ James P. Fahey By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Treasurer Title: Vice President
UNC AIR CAPITAL INCORPORATED UNC MANUFACTURING
TECHNOLOGY, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
<PAGE>
<PAGE> 6
UNC NUCLEAR INDUSTRIES, INC. SEMSA INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
RECLAMATION INC. UNC RECOVERY CORPORATION
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNITED NUCLEAR CORPORATION UNC CORNUCOPIA MINING CO., INC.
By: /s/ Richard H. Lange By: /s/ James P. Fahey
___________________________ ___________________________
Title: Vice President Title: Treasurer
<PAGE>
<PAGE> 1
EXHIBIT 4.6
______________________________________________________________
______________________________________________________________
UNC INCORPORATED
9 1/8% Senior Notes Due 2003
SECOND SUPPLEMENTAL INDENTURE
Dated as of November 5, 1993
Supplement to Indenture
Dated as of July 15, 1993
Continental Bank, National Association,
Trustee
_____________________________________________________________
_____________________________________________________________
<PAGE>
<PAGE> 2
SECOND SUPPLEMENTAL INDENTURE, dated as of November 5,
1993, among UNC INCORPORATED, a Delaware corporation (the
"Company"), UNC LEAR SEIGLER, INC., a Delaware corporation
("Lear Seigler"), UNC ALL FAB, INC., a Delaware corporation
("All Fab"), UNC METCALF SERVICING, INC., a Delaware
corporation ("Metcalf") and CONTINENTAL BANK, NATIONAL
ASSOCIATION, a national banking association, as Trustee (the
"Trustee").
WHEREAS, the Company, the Guarantors and the Trustee
entered into an Indenture dated as of July 15, 1993, as
amended by the First Supplemental Indenture, dated August 14,
1993 (the "Indenture"), providing for the issuance by the
Company of its 9 1/8% Senior Notes Due 2003 (the "Notes")
and the related guarantees of the Guarantors (the
"Guarantees") (the Notes and the Guarantees are sometimes
collectively referred to herein as the "Securities");
WHEREAS, on October 26, 1993, the Company acquired all of
the issued and outstanding capital stock of Lear Seigler.
WHEREAS, the Company (or a subsidiary of the Company)
also owns all of the outstanding capital stock of All Fab and
Metcalf;
WHEREAS, in accordance with SECTION 10.05 of the
Indenture the Company, as the beneficial owner of all of the
outstanding capital stock of Lear Seigler, All Fab and
Metcalf, wishes to provide for the greater security of the
Holders of the Securities by causing Lear Seigler, All Fab and
Metcalf to guarantee the due and punctual payment of the
principal of, premium, if any, and interest, if any, on the
Notes;
WHEREAS, Lear Seigler, All Fab and Metcalf each are duly
authorized to so guarantee the Notes and to enter into,
execute and deliver this Second Supplemental Indenture;
WHEREAS, SECTION 9.01(4) of the Indenture provides that
the Company, the Guarantors and the Trustee may amend the
Indenture to add guarantees with respect to the Notes without
notice to or consent of any Securityholder;
WHEREAS, the Company deems it advisable and not
materially adverse to the rights of any Securityholder to
amend and supplement the Indenture as provided in this Second
Supplemental Indenture;
WHEREAS, the Company and the Guarantors, and each of
them, desire to appoint the Company as their agent for the
purpose described herein; and
<PAGE>
<PAGE> 3
WHEREAS, the Company, the Guarantors and the Trustee have
done all things necessary under the Indenture to enter into
this Second Supplemental Indenture, and Lear Seigler, All Fab,
Metcalf and the Company have done all things necessary to make
the guarantee herein the valid obligation of Lear Seigler, All
Fab and Metcalf, respectively, in accordance with its terms;
NOW, THEREFORE, in consideration of these premises, it is
mutually covenanted and agreed for the equal and proportionate
benefit of all Holders of Securities as follows:
ARTICLE I
Unconditional Guarantee
-----------------------
Section 1.01. For value received, each of Lear Seigler,
All Fab and Metcalf, jointly and severally with the
Guarantors, hereby fully, unconditionally and absolutely
guarantees to the Holders and to the Trustee, the complete and
punctual payment and performance by the Company of the
Obligations, and further agrees to pay any and all expenses
(including, without limitation, fees and disbursements of
counsel) which may be paid or incurred by the Trustee or the
Holders in enforcing their rights under the Guarantees all in
accordance with the terms of the Securities and of the
Indenture.
SECTION 1.02. Each of Lear Seigler, All Fab and Metcalf
hereby agrees to be bound by each of the terms of the
Indenture that apply to the Guarantors to the same extent as
the Guarantors as if each of Lear Seigler, All Fab and Metcalf
were a party to the Indenture on the date thereof.
Section 1.03. No references herein to the Indenture and
no provision of this Second Supplemental Indenture or of the
Indenture shall alter or impair the guarantee of each of Lear
Seigler, All Fab and Metcalf, which is absolute and
unconditional, of the due and punctual payment of the
principal of, premium, if any, and interest, if any, on any
Security.
ARTICLE II
Appointment of Agent
--------------------
Section 2.01. Each of the Guarantors hereby constitute
and appoint the Company, with power of substitution, its true
and lawful attorney-in-fact with full power to execute and
deliver on its behalf, and in its capacity as a Guarantor of
the Notes, any and all amendments to or supplements of the
Indenture and any other agreements reasonably necessary or
desirable for the following purposes:
<PAGE>
<PAGE> 4
(i) to cure any ambiguity, omission, defect or
inconsistency;
(ii) to comply with Article 5;
(iii) to provide for uncertificated Securities in
addition to or in place of certificated
Securities; provided, however, that the
uncertificated Securities are issued in
registered form for purposes of Section 163(f)
of the Internal Revenue Code of 1986, as
amended, or in the manner such that the
uncertificated Securities are described in
Section 163(f)(2)(B) of the Internal Revenue
Code of 1986, as amended;
(iv) to add guarantees with respect to the
Securities;
(v) to add to the covenant of the Company for the
benefit of the Holders or to surrender any
right or power herein conferred upon the
Company;
(vi) to reflect the release of any Guarantor from
its Guaranty, or the addition of any
Subsidiary of the Company as a Guarantor, in
the manner provided by the Indenture;
(vii) to comply with the requirements of the SEC in
connection with the qualifying of the
Indenture under the TIA; or
(viii) to make any change that does not adversely
effect the rights of any Securityholder.
Section 2.02. Any action taken by the Company on behalf
of a Guarantor in accordance with the provisions of
Section 2.01
shall be binding upon the Guarantor to the same extent as if
the Guarantor had taken such action on its own.
ARTICLE III
Miscellaneous
-------------
Section 3.01. Except as hereby expressly modified, the
Indenture and the Securities issued thereunder are in all
respects ratified and confirmed and all the terms, conditions
and provisions thereof shall remain in full force and effect.
<PAGE>
<PAGE> 5
Section 3.02. The Trustee shall have no responsibility
for the recitals in this Second Supplemental Indenture or for
the validity or the sufficiency of this Second Supplemental
Indenture. The Trustee accepts the trust created by this
Second Supplemental Indenture upon the terms and subject to
the conditions of the Indenture.
Section 3.03. Any notices or demands hereafter required
or permitted by the Indenture to be given to or served upon
the Guarantor or the Corporation shall be given to or served
upon the Guarantor or the Corporation, as the case may be, at
175 Admiral Cochrane Drive, Annapolis, Maryland 21401-7394,
Attention: Treasurer.
Section 3.04. Capitalized terms used herein which are
not defined herein shall have the meanings specified in the
Indenture.
Section 3.05. The parties may sign any number of copies
of this Second Supplemental Indenture. Each signed copy shall
be an original, but all of them together represent the same
instrument.
Section 3.06. This Second Supplemental Indenture shall
be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Second Supplemental Indenture to be duly executed, all as of
the day and year first above written.
ATTEST: UNC INCORPORATED
/s/ Herbert D. Frerichs, Jr. By: /s/ Richard H. Lange
____________________________ ___________________________
UNC LEAR SEIGLER, INC. CONTINENTAL BANK, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Richard H. Lange By: /s/ Michelle Gallo
___________________________ ___________________________
UNC ALL FAB, INC. UNC METCALF SERVICING, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
<PAGE>
<PAGE> 6
TRI-INDUSTRIES, INC. PACIFIC AIRMOTIVE
CORPORATION, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
BURNSIDE-OTT AVIATION TRAINING ARDCO INCORPORATED
TRAINING CENTER INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
ENGINE & ENGINE PARTS, INC. AVMAR INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
TEXAS CAMCO INCORPORATED AIRWORK CORPORATION
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC AVIATION SERVICES, INC. UNC ACCESSORY OVERHAUL
GROUP, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
CHEMICAL DYNAMICS INCORPORATED UNC HELICOPTER, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC ARTEX, INC. CAMCO INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC HOLDINGS INC. AIRCRAFT TURBINE SERVICE,
INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
<PAGE>
<PAGE> 7
UNC INTERNATIONAL SALES, INC. ASW LIQUIDATING, INC.
By: /s/ James P. Fahey By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Treasurer Title: Vice President
UNC AIR CAPITAL INCORPORATED UNC MANUFACTURING
TECHNOLOGY, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC NUCLEAR INDUSTRIES, INC. SEMSA INCORPORATED
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
RECLAMATION INC. UNC RECOVERY CORPORATION
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNITED NUCLEAR CORPORATION UNC CORNUCOPIA MINING CO., INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
UNC JOHNSON TECHNOLOGY, INC.
By: /s/ Richard H. Lange By: /s/ Richard H. Lange
___________________________ ___________________________
Title: Vice President Title: Vice President
<PAGE>
<PAGE> 1
EXHIBIT 10.25
AMENDMENT, dated as of May 27, 1993 (this
"Amendment"), to the Second Amended and Restated Credit
Agreement, dated as of July 24, 1992 (as amended, supplemented
or otherwise modified from time to time, the "Credit
Agreement"), among UNC INCORPORATED, a Delaware corporation
("UNC"), AIRWORK CORPORATION, a Delaware corporation
("Airwork"; together with UNC, the "Borrowers"), the several
banks and other financial institutions from time to time
parties thereto (the "Banks") and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks (in such capacity,
the "Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrowers have requested that the
Aggregate Commitment under the Credit Agreement be increased
to $65,000,000 and that certain provisions of the Credit
Agreement be amended as set forth herein;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements herein contained, the parties hereto
agree as follows:
1. Definitions. (a) As used in this Amendment,
terms defined herein are used as so defined and, unless
otherwise defined, terms defined in the Credit Agreement are
used herein as therein defined. Unless otherwise indicated,
all Section and subsection references are to the Credit
Agreement.
(b) For purposes of this Amendment, the following
term shall have the following meaning:
"Amendment Effective Date": May 27, 1993 or such
later date on which all conditions precedent set
forth in the Amendment shall have been satisfied or
waived.
2. Amendment of Subsection 1.1. Subsection 1.1 of
the Credit Agreement is hereby amended by deleting the
definition of the term "Aggregate Commitment" in its entirety
and inserting in lieu thereof the following definition:
"'Aggregate Commitment': the aggregate amount of
the Banks' Commitments, as reduced from time to
time in accordance with subsection 2.5."
3. Amendment of Subsection 2.1. Subsection 2.1 of
the Credit Agreement is hereby amended by deleting subsection
2.1(a) thereof in its entirety and inserting in lieu thereof
the following subsection:
<PAGE>
<PAGE> 2
"(a) Subject to the terms and conditions hereof,
each Bank severally agrees to make revolving credit
loans to UNC (individually, a "UNC Loan";
collectively, the "UNC Loans") and to Airwork
(individually, an "Airwork Loan"; collectively, the
"Airwork Loans") from time to time during the
Commitment Period in an aggregate principal amount
at any one time outstanding not to exceed the
Commitment Percentage of such Bank times the lesser
of (i) the Aggregate Commitment at such time, minus
the amount of the Exposure at such time and (ii)
the Borrowing Base in effect at such time. The
Commitments shall be available to each of the
Borrowers in an aggregate amount not to exceed the
amount set forth opposite its name below (as such
amounts may be reduced upon any reduction of the
Commitments in accordance with subsection 2.5, each
Borrower's "Commitment Portion"):
<TABLE>
<CAPTION>
Borrower Commitment Portion
-------- ------------------
<S> <C>
UNC $65,000,000
Airwork $34,000,000
</TABLE>
provided, however, that in no event shall the
aggregate amount of the Loans outstanding to all
the Borrowers plus the outstanding Exposure exceed
the amount of the Commitments then in effect.
During the Commitment Period the Borrowers may use
the Commitments by borrowing, prepaying the Loans
in whole or in part, and reborrowing, all in
accordance with the terms and conditions hereof."
4. Amendment of Schedule II. The Credit Agreement
is hereby amended by deleting Schedule II thereto in its
entirety and inserting in lieu thereof, and designating as
Schedule II to the Credit Agreement, Schedule I attached
hereto.
5. Amendment of Commitments. On the Amendment
Effective Date, the following events shall occur:
(1) each of the Borrowers shall make such borrowings
from and repayments to the Banks as shall be required to cause
the aggregate principal amount of outstanding Loans of each
Bank under the Credit Agreement to equal such Bank's
Commitment Percentage (after giving effect to the provisions
of this Amendment) of the total Loans outstanding after giving
effect to such borrowings and repayments and the other
provisions of this Amendment; and
<PAGE>
<PAGE> 3
(2) if any Letters of Credit are outstanding on the
Amendment Effective Date, each of the Banks shall be deemed to
have unconditionally and irrevocably sold and/or purchased, in
each case without recourse or warranty, such undivided
interests and participations in all outstanding Letters of
Credit as shall be required to cause each Bank's percentage
participation in the obligations under each outstanding Letter
of Credit to equal such Bank's Commitment Percentage (after
giving effect to the provisions of this Amendment) of the
obligations under such Letter of Credit.
6. Conditions Precedent. The agreement of each
Bank and the Agent to enter into this Amendment is subject to
the satisfaction of the following conditions precedent:
(1) the Agent shall have received, with a
counterpart for each Bank, this Amendment, duly executed and
delivered by the parties hereto;
(2) each of the Borrowers shall have duly executed
and delivered to the Agent for the account of each Bank as to
which the Commitment after giving effect to the Amendment will
be different from its Commitment prior to the Amendment
Effective Date an Endorsement to the Note previously executed
by such Borrower in favor of such Bank, which Endorsement
shall be in substantially the form of Exhibit A hereto, with
appropriate insertions;
(3) the Agent shall have received a consent in the
form of Exhibit B attached hereto, duly executed and delivered
by each of the Subsidiary Guarantors;
(4) no Default or Event of Default shall have
occurred and be continuing;
(5) all representations and warranties of each of
the Borrowers contained in the Credit Agreement, or otherwise
made in connection therewith, shall be true and correct in all
material respects on and as of the Amendment Effective Date as
if made on and as of such date (unless stated to relate to a
specific earlier date, in which case such representations and
warranties shall be true and correct in all material respects
as of such earlier date);
(6) all fees payable by each of the Borrowers to
the Agent and the Banks on or before the Amendment Effective
Date shall have been paid in full;
<PAGE>
<PAGE> 4
(7) the Agent shall have received, with a
counterpart for each Bank, copies of the resolutions, in form
and substance satisfactory to the Agent, of the board of
directors of each of the Borrowers authorizing such Borrower
to enter into the Amendment, certified by the Secretary or an
Assistant Secretary of such Borrower as of the Amendment
Effective Date, which certificate shall state that such
resolutions have not been amended, modified, revoked or
rescinded;
(8) the Agent shall have received a certificate,
dated the Amendment Effective Date, of a Responsible Officer
of each of the Borrowers as to the facts specified in
paragraphs (4) through (6) above; and
(9) the Agent shall have received, with a
counterpart for each Bank, a written legal opinion of Richard
Lange, Esq., General Counsel to the Borrowers, confirming in
substance the legal opinions rendered by such General Counsel
on the Effective Date.
7. Consent of Banks to Amendments. Execution and
delivery of the Amendment by each Bank shall constitute the
consent of such Bank to the amendment, if any, of such Bank's
Commitment as set forth on Schedule I attached hereto and to
all further amendments as set forth in the Amendment.
8. Limited Effect. Except as expressly amended
herein, the Credit Agreement shall continue to be, and shall
remain, in full force and effect in accordance with its terms.
9. Counterparts. The Amendment may be executed by
the parties hereto in any number of separate counterparts and
all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
10. GOVERNING LAW. THE AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
11. Expenses. The Borrowers jointly and severally
agree (i) to pay or reimburse the Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of the Amendment
and any other documents prepared in connection herewith, and
consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees
and disbursements of counsel to the Agent and (ii) to pay or
reimburse the Agent for all its reasonable out-of-pocket costs
and expenses incurred in connection with the enforcement or
preservation of any rights under the Amendment and any other
such documents.
<PAGE>
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this
Amendment to be duly executed and delivered in New York, New
York by their properly and duly authorized officers as of the
day and year first above written.
UNC INCORPORATED
By: /s/ Gregory M. Bubb
-----------------------------
Title: Vice President & Treasurer
AIRWORK CORPORATION
By: /s/ Gregory M. Bubb
-----------------------------
Title: Vice President & Treasurer
CHEMICAL BANK
as Agent and as a Bank
By: /s/ John D. Mindnich
-----------------------------
Title: Vice President
CONTINENTAL BANK, N.A.
By: /s/ Elizabeth Rice
----------------------------
Title: Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Robert Gillison
----------------------------
Title: Vice President
<PAGE>
<PAGE> 6
SCHEDULE I
----------
COMMITMENTS
-----------
<TABLE>
<CAPTION>
Commitment
Bank Commitment Percentage*
---- ---------- -----------
<S> <C> <C>
CHEMICAL BANK $22,500,000 34.61%
CONTINENTAL BANK, N.A. $22,500,000 34.61%
NATIONSBANK OF NORTH
CAROLINA, N.A. $20,000,000 30.77%
-----------
$65,000,000 100%**
=========== ======
</TABLE>
________________
* Rounded to the nearest one hundredth of a percent.
** Percentages do not total one hundred percent as a result of
rounding.
<PAGE>
<PAGE> 1
EXHIBIT 10.27
AMENDMENT AND WAIVER
--------------------
AMENDMENT AND WAIVER, dated as of October 22, 1993
(this "Amendment") among UNC INCORPORATED, a Delaware
corporation (the "Company"), AIRWORK CORPORATION, a Delaware
corporation ("Airwork"; together with the Company, the
"Borrowers"), UNC HOLDINGS INC., a Delaware corporation
("Holdings"), the several banks and other financial
institutions from time to time parties to the Credit Agreement
described below (the "Banks") and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks (in such capacity,
the "Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrowers, the Banks and the Agent are
parties to a certain Second Amended and Restated Credit
Agreement, dated as of July 24, 1992 (as amended, supplemented
or otherwise modified from time to time, the "Credit
Agreement");
WHEREAS, the Company has requested that certain
provisions of the Credit Agreement be amended and waived as
set forth herein; and
WHEREAS, the Banks and the Agent are willing to
agree to the requested amendments and waivers, but only upon
the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the premises, the
parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined
herein, terms which are defined in the Credit Agreement are
used herein as so defined. Unless otherwise indicated, all
Section and subsection references are to the Credit Agreement.
2. Waiver of Subsection 6.6. The Agent and
the Banks hereby waive the provisions of subsection 6.6 of the
Credit Agreement to the extent and only to the extent
necessary to permit the Company to acquire Lear Siegler
Management Services, Inc.
<PAGE>
<PAGE> 2
3. Amendment to Subsection 2.17. Subsection
2.17 of the Credit Agreement is hereby amended by deleting the
dollar amount "$10,000,000" in clause (a) therein and
substituting in lieu thereof the dollar amount "$20,000,000".
4. Representations and Warranties. On the
Effective Date (as defined below), the Company hereby confirms
that the representations and warranties contained in the
Credit Agreement are true and correct as of the date hereof,
except for those representations and warranties expressly
stated to relate to a specific earlier date, in which case
such representations and warranties are true and correct as of
such earlier date.
5. Effectiveness. This Amendment shall
become effective as of the date first written above (the
"Effective Date") upon receipt by the Agent of counterparts of
this Amendment duly executed by the Company and the Required
Banks.
6. Continuing Effect; No Other Amendments or
Waivers. Except as expressly amended and waived hereby, all
of the terms and provisions of the Credit Agreement are and
shall remain in full force and effect. The amendments and
waivers contained herein shall not constitute an amendment or
waiver of any other provision of the Credit Agreement or for
any purpose except as expressly set forth herein. The
amendments and waivers provided for herein are limited to the
specific subsections of the Credit Agreement specified herein
and shall not constitute an amendment or waiver of, or an
indication of the Agent's or the Banks' willingness to amend
or waive, any other provisions of the Credit Agreement or the
same subsection for any other date or time period (whether or
not such other provisions or compliance with such subsections
for another date or time period are affected by the
circumstances addressed in this Waiver).
7. Expenses. The Company agrees to pay and
reimburse the Agent for all its reasonable costs and out-of-
pocket expenses incurred in connection with the preparation
and delivery of this Amendment, including, without limitation,
the fees and disbursements of counsel to the Agent.
8. Counterparts. This Amendment may be
executed in any number of counterparts by the parties hereto,
each of which counterparts when so executed shall be an
original, but all the counterparts shall together constitute
one and the same instrument.
9. GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed and delivered by their
respective duly authorized officers as of the date first above
written.
UNC INCORPORATED
By: /s/ Gregory M. Bubb
-----------------------------
Title: Vice President & Treasurer
AIRWORK CORPORATION
By: /s/ Gregory M. Bubb
----------------------------
Title: Treasurer
UNC HOLDINGS INC.
By: /s/ Gregory M. Bubb
----------------------------
Title: Treasurer
CHEMICAL BANK
as Agent and as a Bank
By: /s/ John D. Mindnich
-----------------------------
Title: Vice President
CONTINENTAL BANK, N.A.
By: /s/ Adam Balbach
----------------------------
Title: Vice President
NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Robert Gillison
----------------------------
Title: Vice President
<PAGE>
<PAGE> 1
EXHIBIT 11
UNC INCORPORATED AND SUBSIDIARIES
Earnings Per Share
For the Three Years Ended December 31, 1993
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1993 1992 1991
------------ ------------ -----------
<S> <C> <C> <C>
Earnings (loss) from continuing operations
before extraordinary items $ 11,594 $ 11,369 $ (25,485)
Earnings from discontinued operations 34,100
Extraordinary item (532) (1,700)
--------- --------- ---------
Net earnings $ 11,062 $ 11,369 $ 6,915
========= ========= =========
Calculation of primary earnings
per share:
Average common shares outstanding
during the year-primary (1) 17,356 17,279 17,128
--------- --------- ---------
Earnings (loss) per share, primary:
Continuing operations $ .67 $ .66 $ (1.49)
Discontinued operations 1.99
Extraordinary item (.03) (.10)
--------- --------- ---------
Net earnings $ .64 $ .66 $ .40
========= ========= =========
Calculation of fully diluted
earnings per share:
Average common shares outstanding
during the year (1) 17,356 17,279 17,128
Increase in common stock equivalents:
Stock options under treasury stock method 503 390 408
--------- --------- ---------
Adjusted average shares outstanding for
the year-fully diluted 17,859 17,669 17,536
--------- --------- ---------
Earnings (loss) per share, fully diluted:
Continuing operations $ .65 $ .64 $ (1.45)
Discontinued operations 1.94
Extraordinary item (.03) (.10)
--------- --------- ---------
Net earnings $ .62 $ .64 $ .39
========= ========= =========
(1) Exclusive of 700,000 treasury shares for all years presented.
</TABLE>
<PAGE>
<PAGE> 1
EXHIBIT 21
Subsidiaries of the Registrant
------------------------------
<TABLE>
<CAPTION>
Jurisdiction Percentage of
Name of Incorporation Voting Securities
---- ---------------- -----------------
<S> <C> <C>
UNC Holdings, Inc. Delaware 100
UNC Tri-Industries, Inc. Delaware 100
UNC Airwork Corporation Delaware 100
UNC Pacific Airmotive Corporation, Inc. Delaware 100
UNC Accessory Overhaul Group, Inc. Delaware 100
UNC ARDCO Incorporated Delaware 100
UNC CAMCO Incorporated Delaware 100
UNC Engine & Engine Parts, Incorporated Delaware 100
UNC Texas CAMCO Incorporated Delaware 100
UNC Aviation Services, Inc. Delaware 100
UNC Chemical Dynamics, Inc. Delaware 100
UNC Helicopter, Inc. Delaware 100
UNC Artex, Inc. Delaware 100
UNC Johnson Technology, Inc. Delaware 100
UNC Metcalf Servicing, Inc. Delaware 100
UNC Lear Siegler, Inc. Delaware 100
UNC All Fab, Inc. Delaware 100
</TABLE>
The subsidiaries omitted from the foregoing list do not,
considered in the aggregate, constitute a significant
subsidiary.
<PAGE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors and Shareholders
UNC Incorporated:
We consent to incorporation by reference in the registration
statements No. 33-37585, No. 33-37586, No. 33-41703, No. 33-
41704, No. 2-62043 and No. 2-99656 on Form S-8 of UNC
Incorporated of our report dated February 9, 1994, relating to
the consolidated balance sheets of UNC Incorporated and
subsidiaries as of December 31, 1993 and 1992 and the related
consolidated statements of earnings, changes in shareholders'
equity, and cash flows and the related consolidated financial
statement schedule for each of the years in the three-year
period ended December 31, 1993, which report appears in the
December 31, 1993 annual report on Form 10-K of UNC
Incorporated.
Our report refers to the Company's adoption of the provisions
of the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, Accounting for Income
---------------------
Taxes in 1993.
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KPMG PEAT MARWICK
Washington, D.C.
March 28, 1994
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<PAGE> 1
EXHIBIT 24
1 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ William C. Hittinger
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 23, 1994
<PAGE>
<PAGE> 2
2 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ Berl Bernhard
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
<PAGE>
<PAGE> 3
3 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ John K. Castle
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
<PAGE>
<PAGE> 4
4 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ J. L. Holloway
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
<PAGE>
<PAGE> 5
5 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ George V. McGowan
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
<PAGE>
<PAGE> 6
6 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ Jack Moseley
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
<PAGE>
<PAGE> 7
7 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ Lawrence A. Skantze
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
<PAGE>
<PAGE> 8
8 of 8
POWER OF ATTORNEY
-----------------
The undersigned Director of UNC Incorporated (the
"Company") hereby authorizes the proper officers of the
Company to file the Company's annual report on Form 10-K for
the year ended December 31, 1993 with the Securities and
Exchange Commission, in substantially the form presented to
the members of the Board of Directors on March 25, 1994, with
such changes as may be approved by the officers of the Company
who sign such Form 10-K, their signing to be conclusive
evidence of such approval.
The undersigned Director of the Company hereby appoints
Richard H. Lange, with full power of substitution, his true
and lawful attorney and agent, acting in the name and on
behalf of the undersigned, to execute and to file such annual
report on Form 10-K with the Securities and Exchange
Commission.
/s/ Beverly B. Byron
-------------------------
Director
Witness:
/s/ Sylvia N. Mitchell
- ----------------------
Date: March 25, 1994
