FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Period ended September 30, 1996
Commission File Number 1-7795
UNC INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 54-107897
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
175 Admiral Cochrane Drive, Annapolis, 21401
MD (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code (410) 266-7333
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.
[x] Yes [ ] No
Number of shares of Common Stock, par $0.20, outstanding as of November 7,
1996: 18,465,181 (excluding 486,500 treasury shares held by a subsidiary).
<PAGE>
UNC Incorporated and Subsidiaries
INDEX
Page No.
Part I. Financial Information
Consolidated Statements of Earnings
Three and Nine Months Ended September 30, 1996 and 1995 1
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 2
Consolidated Statements of Cash Flows
Three and Nine Months Ended September 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 20
Signature Page 21
Exhibit Index 22
<PAGE>
UNC Incorporated and Subsidiaries
Consolidated Statements of Earnings
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales and operating revenues $ 247,895 $ 137,437 $ 570,696 $ 394,482
Costs and expenses:
Costs and operating expenses 211,381 116,010 487,345 334,009
Selling, general and
administrative expenses 24,024 15,026 56,229 42,474
--------- --------- --------- ---------
235,405 131,036 543,574 376,483
--------- --------- --------- ---------
Operating income 12,490 6,401 27,122 17,999
Other income (expense):
Interest expense (8,846) (5,189) (19,991) (15,412)
Other (314) 78 (1,051) 254
--------- --------- --------- ---------
(9,160) (5,111) (21,042) (15,158)
--------- --------- --------- ---------
Earnings before income taxes 3,330 1,290 6,080 2,841
Income tax provision 999 451 1,824 994
--------- --------- --------- ---------
Net earnings 2,331 839 4,256 1,847
Preferred dividends 531 718
--------- --------- --------- ---------
Net earnings applicable
to common stock $ 1,800 $ 839 $ 3,538 $ 1,847
========= ========= ========= =========
Earnings per common share $ .10 $ .05 $ .20 $ .10
========= ========= ========= =========
</TABLE>
<PAGE>
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------- ---------
<S> <C> <C>
Assets
- ------
Current assets:
Cash $ 6,463 $ 1,671
Accounts receivable, less allowance for
doubtful accounts of $4,650 and $3,186,
respectively 175,033 102,462
Unbilled costs and accrued profits on
contracts in progress 8,980 11,128
Inventories 146,012 91,130
Assets held for sale 4,647 5,099
Other 11,039 10,156
--------- ---------
Total current assets 352,174 221,646
Assets held for sale - noncurrent 8,685 12,796
Property, plant and equipment, at cost 129,809 82,449
Less accumulated depreciation 40,143 34,381
--------- ---------
Net property, plant and equipment 89,666 48,068
Cost in excess of net assets of acquired
companies, less accumulated amortization of
$33,002 and $28,175, respectively. 239,474 136,298
Other assets 37,719 27,453
--------- ---------
Total assets $ 727,718 $ 446,261
========= =========
</TABLE>
<PAGE>
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
--------- ---------
<S> <C> <C>
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 5,317 $ 1,748
Accounts payable 98,956 39,614
Income taxes 1,687 1,392
Accruals and other current liabilities 73,325 54,794
--------- ---------
Total current liabilities 179,285 97,548
Revolving Senior Bank Debt, interest rate
at September 30, 1996, 8.46% due 2000 88,739 37,181
9 1/8% Senior Notes due 2003 100,000 100,000
11% Senior Subordinated Notes due 2006 125,000
7 1/2% Convertible Subordinated Debentures
due 2006 60,600 64,800
Other 5,706 1,352
--------- ---------
Total long-term debt, less current portion 380,045 203,333
Other noncurrent liabilities 35,136 45,228
--------- ---------
Total liabilities 594,466 346,109
Shareholders' equity:
Series preferred stock, par value $1.00 per share;
Authorized 12,000,000 shares:
Series A Junior Participating Preferred Stock,
250,000 shares authorized, none issued
Series B Senior Cumulative Preferred Stock,
250,000 shares authorized and issued
$25,000,000 liquidation preference 250
Series C Senior Cumulative Preferred Stock,
250,000 shares authorized, none issued
Common stock, par value $0.20 per share; authorized
50,000,000 shares, issued 18,739,068 and
18,393,868 shares, respectively 3,747 3,679
Additional paid-in capital 149,112 123,717
Retained earnings (deficit) (11,194) (15,450)
--------- ---------
141,915 111,946
Less:
Treasury stock, at cost (486,500 and
700,000 common shares, respectively) 5,143 8,750
Minimum pension liability adjustment 1,801 1,801
Unearned compensation-restricted stock 1,719 1,243
--------- ---------
Total shareholders' equity 133,252 100,152
--------- ---------
Total liabilities and shareholders' equity $ 727,718 $ 446,261
========= =========
</TABLE>
<PAGE>
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 4,256 $ 1,847
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and amortization 12,833 9,426
Provision for losses on accounts receivable 504 1,492
Provision for deferred income taxes 747 491
Changes in assets and liabilities:
(Increase) in accounts receivable (29,665) (2,583)
(Increase) in inventories (33,432) (1,154)
Decrease in other current assets 1,639 1,540
(Increase) in other noncurrent assets (8,022) (5,186)
Increase (decrease) in accounts payable 20,397 (8,740)
Increase (decrease) in accruals and other
current liabilities 8,668 (6,309)
Increase in income taxes payable 295 419
Increase (decrease) in other noncurrent liabilities (865) 610
(Decrease) in discontinued operations liabilities (3,683) (3,932)
--------- ---------
Total adjustments (30,584) (13,926)
--------- ---------
Net cash provided (used) by operating activities (26,328) (12,079)
--------- ---------
Cash flows from investing activities:
Net proceeds from sale of assets 1,977 33,279
Additions to property, plant and equipment (7,649) (5,161)
Acquisition of subsidiaries (157,350) (947)
--------- ---------
Net cash provided (used) by investing
activities (163,022) 27,171
--------- ---------
Cash flows from financing activities:
Additions to debt 606,166 262,827
Reductions in debt (556,306) (279,489)
Issuance of 11% Senior Subordinated Notes 125,000
Issuance of Convertible Preferred Stock 25,000
Payment of preferred stock dividend (718)
Other (5,000) 220
--------- ---------
Net cash provided (used) by financing
activities 194,142 (16,442)
--------- ---------
Net increase (decrease) in cash 4,792 (1,350)
Cash at beginning of year 1,671 2,619
--------- ---------
Cash at end of period $ 6,463 $ 1,269
========= =========
</TABLE>
<PAGE>
UNC Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
1. The accompanying financial statements, which should be read in
conjunction with the Consolidated Financial Statements included in the
Annual Report filed on Form 10-K for the year ended December 31, 1995,
are unaudited. The statements have been prepared in the ordinary course
of business for the purpose of providing information with respect to the
interim periods, and are subject to audit at the close of the year. It
is the opinion of the management of the Company that all adjustments
(none of which were other than normal recurring accruals) necessary for a
fair presentation of such periods have been included. Results of interim
periods are not necessarily indicative of results to be expected for the
full year.
2. Inventories at September 30, 1996 and December 31, 1995:
(Dollars in thousands)
1996 1995
--------- ---------
Component parts and materials $ 102,063 $ 70,317
Work in process 39,094 17,436
Supplies 4,855 3,377
--------- ---------
$ 146,012 $ 91,130
========= =========
3. Net sales of tangible products in the nine-month period ended September
30, 1996 amounted to $409.5 million and cost and operating expenses
related to tangible goods sold amounted to $338.1 million.
4. On May 30, 1996, the Company acquired substantially all of the assets and
certain liabilities of Garrett Aviation Services ("Garrett"), a leading
provider of aviation services in the business aviation aftermarket. The
purchase price of approximately $145 million was paid in cash. The
financing of the acquisition was accomplished through the issuance of
$125 million in 11% Senior Subordinated Notes due 2006 and $25 million in
Convertible 8.5% Preferred Stock. In addition, borrowings were made
under the Company's Revolving Senior Bank Debt for various transaction
costs which, combined with the purchase price, exceeded the amount of
funds generated from the issuance of the notes and Preferred Stock. The
acquisition was accounted for as a purchase, and the purchase price was
allocated to the assets and liabilities of Garrett based on their fair
values. The assets and liabilities of Garrett are included in the
consolidated balance sheet at September 30, 1996 at values reflecting
preliminary allocation of the purchase price. The final allocation of
the purchase price is subject to final determination based on valuations
and other studies currently being performed by the Company. The excess
of the preliminary allocation of the purchase cost over the estimated
fair value of the net assets acquired is being amortized over a period of
thirty years using the straight line method. Also in connection with the
acquisition, the Company issued 213,500 shares of its treasury common
stock to certain Garrett executives it employed following the closing at
a purchase price of $5.75 per share, the closing price on the date the
purchase agreement was executed.
In September 1996, the Company acquired substantially all of the assets
and certain liabilities of Stearns Company, a manufacturer and supplier
of aircraft parts, primarily to original equipment manufacturers. The
purchase price was approximately $6.0 million, which was funded through a
borrowing under the Company's revolving credit facility. The excess of
the purchase price over the estimated fair value of the net assets
acquired will be amortized over a twenty-year period using the straight-
line method.
5. On May 30, 1996, in connection with the financing of the acquisition of
Garrett, the Company issued $25 million in Convertible 8.5% Series B
Preferred Stock and $125 million in principal amount of 11% Senior
Subordinated Notes due 2006. The preferred stock was issued in accordance
with an October 1995 agreement with Gildea Investment Company ("Gildea")
and other investors to provide up to $25 million of equity financing to
assist in the funding of acquisitions. The Series B Preferred Stock was
issued at $100 per share with an annual cumulative dividend rate of 8.5%,
with no mandatory redemption, and is convertible to common stock at a
price of $7 per share.
The 11% Senior Subordinated Notes are redeemable on or after June 1, 2001
at the option of the Company at declining premiums through 2003 and at
principal amount thereafter.
6. During September 1996, the Company settled a previously established
pension withdrawal liability. In addition, in connection with its
continuing assessment of the net realizability of assets held for sale,
the Company reduced the carrying value of assets held for sale. As a
result, costs and operating expenses were reduced by $3.0 million, net,
during the third quarter of 1996.
7. Since 1985 the former Western Union has been seeking recoupment (the
"Claim") from various providers of international telex services ("ITPs")
for interconnect charges with respect to the use of Western Union's
domestic telex network during the late 1970s and early 1980s. Among
these ITPs was TRT Communications, Inc. ("TRT"), which the Company had
acquired in September 1985. As part of the Company's acquisition of TRT,
the Company had received certain representations and warranties from the
seller of TRT with respect to the Claim. In January 1995, nearly seven
years after a 1988 remand from the U.S. Court of Appeals for the District
of Columbia (the "Appeals Court"), which had vacated an earlier
determination by the FCC with respect to the Claim, the FCC determined
that the Claim was appropriate. The FCC's determination was again
appealed to the Appeals Court, which on February 6, 1996 rendered a
judgment upholding the FCC's determination with respect to these matters.
As a result, TRT may be liable to the former Western Union for claims and
interest of approximately $5.0 million. However, the Company sold its
interest in TRT in 1988 and, in connection therewith, the Company
provided the purchaser with certain specific indemnities. The Company
has been informed that its purchaser has in turn sold TRT to a third
party with whom the Company has no contract for indemnity. As a
consequence, the Company does not believe that it has any indemnity
liability to the current owner of TRT. The Company sought a rehearing by
the Appeals Court, to assert a protective claim against the seller of
TRT, and to reject any claim by the current owner of TRT. Appeals Court
denied the Company's petition for rehearing and reconsideration on April
11, 1996. The proceeding is presently before the FCC for further
determination. On April 12, 1996, the Company filed a declaratory
judgement action in Delaware, seeking a judicial determination that the
Company is not required to indemnify its purchaser for any amount for
which TRT may be liable to the former Western Union. The case is in the
discovery phase, and a trial date has been initially scheduled in June
1997, however, motions for summary judgment may be filed as early as
February 1997. Both the Company and its outside legal counsel believe
the Company has meritorious defenses against any claim under its
indemnification agreement.
Lockheed-Martin Corporation ("Lockheed") began an action in United States
District Court of the Central District of California under the
Comprehensive Environmental Response Compensation and Liability Act of
1980 ("CERCLA") in 1994. A Delaware subsidiary of the Company, Pacific
Airmotive Corporation ("PAC"), was made one of the defendants in the action.
The Company and a second subsidiary, Airwork Corporation, were added as
defendants in December 1995. In the action, Lockheed seeks to have owners
and operators of property situated above the San Fernando Valley aquifer
contribute to the costs incurred or to be incurred by Lockheed to clean up
contaminated groundwater constituting the aquifer. Lockheed has also
contended that PAC is liable for contamination of a parcel of property sold
to Lockheed in 1981 by a separate and distinct California corporation,
"Pacific Airmotive Corporation," formed by Purex Industries, Inc. ("Purex")
in 1967, and merged into Purex in 1982. Purex formed a Delaware subsidiary,
"Pacific Airmotive Corporation," which the Company acquired in 1985. The
Company has filed a third-party complaint against Purex claiming that Purex
is responsible for all or most of the damages claimed by Lockheed. The court
has severed the third-party complaint for trial at a later date. The trial
on Lockheed's claims was concluded in August 1996, and the court has issued
its findings of fact in this phase. The Company does not agree with a
number of such findings and is responding to the Court's request that the
parties object to or provide the Court with supplemental information
concerning such findings. The Company expects that a decision on the
Lockheed claim alone will be reached during the fourth quarter of 1996 or
during the first quarter of 1997. The Company is not able to determine
whether it or a subsidiary of the Company will be held liable as a result
of the Lockheed action, or to establish a range of loss. If the Company or
a subsidiary is held liable, the Company believes it will have sufficient
recourse available from Purex and Purex's insurance carriers.
The Company and a subsidiary, UNC Airwork Corporation, were 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. Airwork filed a counterclaim against ESI and an
affiliate, Energy Maintenance Corporation ("EMC") for more than $3.7
million. In September 1996, both parties agreed to drop their respective
claims in exchange for consulting services to be provided by the
plaintiffs over a three-year period in satisfaction of outstanding
accounts receivable of $0.7 million.
During 1993, the State of New Mexico passed the New Mexico Mining Act
("Act"), which imposes certain reclamation obligations on owners and
operators of existing and new mining operations. The State has asserted
that a number of mines operated by the Company's subsidiary, United
Nuclear Corporation ("United Nuclear"), at various times during the
period 1970 through 1982 may be covered by the Act. Regulations for
compliance with the Act were issued in 1994. However, the regulations
did not clarify the extent to which mines previously operated by United
Nuclear may be covered by the Act. The New Mexico Mining Commission has
ruled that three mines are covered by the regulations, and United Nuclear
is preparing to appeal that ruling to the State courts. Consequently, it
is impossible to estimate the cost of reclamation or the timing and
extent of reclamation that may be required. The Company has been advised
by outside counsel that United Nuclear's defenses have merit, and it is
contesting the State's assertions.
A uranium mill and mill tailings facility of a subsidiary of the Company,
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 requiring remediation of ground water on or
adjacent to the site that is the same as those contained in the
reclamation plan submitted to the Nuclear Regulatory Commission ("NRC")
in 1988 by United Nuclear in accordance with its license with the NRC.
United Nuclear has been remediating the site in accordance with the
Administrative Order and the NRC license and has incurred cost for such
remediation of $0.6 million and $0.9 million in 1996 and 1995,
respectively. It is anticipated, based on the approved reclamation plan,
that the cost of future remediation through 1997 will be approximately
$3.4 million. Such cost has been accrued as part of reserves established
for the discontinued operation.
The Company's former Naval Products Division has been named under CERCLA,
along with a number of other parties, as a Potentially Responsible Party
at several waste disposal sites. In each case, the Division has been
named as a minimum party. The Company believes that any cost, estimated
to be less than a total of $100,000, that may be assessed to the
Division, is recoverable under its U.S. government contracts.
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 condition, results of operations or liquidity of the
Company
8. In July 1993, the Company issued $100 million principal amount of 9-1/8%
Senior Notes due 2003. The notes are guaranteed by the Company's
domestic operating 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 domestic operating subsidiaries (the
"Guarantees"). Each Guarantee is a senior unsecured obligation of the
domestic operating subsidiary providing such Guarantee and ranks pari
passu with all senior unsecured indebtedness of such subsidiary. The
domestic operating 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 domestic operating subsidiaries and, therefore, effectively rank
senior to the Guarantees. The Guarantees are in effect only for as long
as the Subsidiary 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 September 30, 1996 and for the
nine months ended September 30, 1996 and 1995 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.
<PAGE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet
September 30, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
-------- --------- ----------- -------------
<S> <C> <C> <C> <C>
Assets
- ------
Current assets:
Cash $ 2,236 $ 4,227 $ 6,463
Accounts receivable, net 298 174,735 175,033
Unbilled costs and accrued
profits on contracts in progress 8,980 8,980
Inventories 146,012 146,012
Assets held for sale 114 4,533 4,647
Other 544 10,495 11,039
--------- --------- ---------
Total current assets 3,192 348,982 352,174
Assets held for sale-noncurrent 1,087 7,598 8,685
Property, plant & equipment, net 510 89,156 89,666
Cost in excess of net assets
of acquired companies, net 239,474 239,474
Other noncurrent assets 16,299 21,420 37,719
Investments in and advances
to subsidiaries 541,511 (541,511)
--------- --------- --------- ---------
Total assets $ 562,599 $ 706,630 $(541,511) $ 727,718
========= ========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet (conintued)
September 30, 1996
(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 $ 5,200 $ 117 $ 5,317
Accounts payable 175 98,781 98,956
Accruals and other current liabilities 28,844 46,168 75,012
--------- --------- ---------
Total current liabilities 34,219 145,066 179,285
Long-term debt 374,339 5,706 380,045
Other noncurrent liabilities 15,646 19,490 35,136
--------- --------- ---------
Total liabilities 424,204 170,262 597,466
Cumulative preferred stock 250 250
Common stock and additional paid
in capital 152,859 152,859
Retained earnings (deficit) (11,194) (11,194)
Equity of subsidiaries and
advances of parent 541,511 (541,511)
--------- --------- --------- ---------
141,915 541,511 (541,511) 141,915
Less:
Treasury stock, at cost 5,143 5,143
Minimum pension liability adjustment 1,801 1,801
Unearned compensation-restricted
stock 1,719 1,719
--------- --------- --------- ---------
Total shareholders' equity 138,395 536,368 (541,511) 133,252
Total liabilities and
shareholders' equity $ 562,599 $ 706,630 $(541,511) $ 727,718
========= ========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet
December 31, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
-------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Assets
- ------
Current assets:
Cash $ 123 $ 1,548 $ 1,671
Accounts receivable, net 410 102,052 102,462
Unbilled costs and accrued
profits on contracts in progress 11,128 11,128
Inventories 91,130 91,130
Assets held for sale 114 4,985 5,099
Other 1,125 9,031 10,156
--------- --------- ---------
Total current assets 1,772 219,874 221,646
Assets held for sale-noncurrent 2,834 9,962 12,796
Property, plant & equipment, net 706 47,362 48,068
Cost in excess of net assets
of acquired companies, net 136,298 136,298
Other noncurrent assets 9,748 17,705 27,453
Investments in and advances
to subsidiaries 343,366 $(343,366)
--------- --------- --------- ---------
Total assets $ 358,426 $ 431,201 $(343,366) $ 446,261
========= ========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet (continued)
December 31, 1995
(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 $ 1,631 $ 117 $ 1,748
Accounts payable 2,784 36,830 39,614
Accruals and other current liabilities 21,253 34,933 56,186
--------- --------- ---------
Total current liabilities 25,668 71,880 97,548
Long-term debt 202,981 352 203,333
Other noncurrent liabilities 20,875 24,353 45,228
--------- --------- ---------
Total liabilities 249,524 96,585 346,109
Common stock and additional paid
in capital 127,396 127,396
Retained earnings (deficit) (15,450) (15,450)
Equity of subsidiaries and
advances of parent 343,366 $(343,366)
--------- --------- --------- ---------
111,946 343,366 (343,366) 111,946
Less:
Treasury stock, at cost 8,750 8,750
Minimum pension liability adjustment 1,801 1,801
Unearned compensation-restricted
stock 1,243 1,243
--------- --------- --------- ---------
Total shareholders' equity 108,902 334,616 (343,366) 100,152
Total liabilities and --------- --------- --------- ---------
shareholders' equity $ 358,426 $ 431,201 $(343,366) $ 446,261
========= ========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Nine Months Ended September 30, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Sales and operating revenues $ $ 570,696 $ 570,696
Costs and expenses:
Costs and operating expenses 487,345 487,345
Selling, general and
administrative expenses 10,318 45,911 56,229
Allocated expenses (3,753) 3,753
--------- --------- ---------
6,565 537,009 543,574
--------- --------- ---------
Operating income (6,565) 33,687 27,122
Other income (expense)
Interest expense (19,850) (141) (19,991)
Other (1,438) 387 (1,051)
Equity in income of subsidiaries 23,753 $ (23,753)
--------- --------- --------- ---------
2,465 246 (23,753) (21,042)
--------- --------- --------- ---------
Earnings before income taxes (4,100) 33,933 (23,753) 6,080
Income tax provision 8,356 (10,180) (1,824)
--------- --------- --------- ---------
Net earnings 4,256 23,753 (23,753) 4,256
Preferred dividends 718 718
--------- --------- --------- ---------
Net Earnings applicable to
common stock $ 3,538 $ 23,753 $ (23,753) $ 3,538
========= ========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Nine Months Ended September 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ $ 394,482 $ 394,482
Costs and expenses:
Costs and operating expenses 334,009 334,009
Selling, general and administrative
expenses 9,554 32,920 42,474
Allocated expenses (3,300) 3,300
--------- --------- ---------
6,254 370,229 376,483
--------- --------- ---------
Operating income (6,254) 24,253 17,999
Other income (expense)
Interest expense (10,591) (4,821) (15,412)
Other 275 (21) 254
Equity in earnings of subsidiaries 19,411 $ (19,411)
--------- --------- --------- ---------
9,095 (4,842) (19,411) (15,158)
--------- --------- --------- ---------
Earnings before income taxes 2,841 19,411 (19,411) 2,841
Income tax benefit (provision) (994) (6,793) 6,793 (994)
--------- --------- --------- ---------
Net Earnings $ 1,847 $ 12,618 $ (12,618) $ 1,847
========= ========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ------------
<S> <C> <C> <C>
Net cash provided (used) by operating
activities $ (25,437) $ (891) $ (26,328)
--------- --------- ---------
Cash flows from investing activities:
Net proceeds from sale of assets 184 1,793 1,977
Additions to property, plant and
equipment (58) (7,591) (7,649)
Acquisition of Subsidiary (157,350) (157,350)
--------- --------- ---------
Net cash provided (used) by
investing activities 126 (163,148) (163,022)
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 731,116 50 731,166
Reductions in debt (556,189) (117) (556,306)
Issuance of preferred stock 25,000 25,000
Other transactions, net (5,000) (5,000)
Payment of preferred stock dividend (718) (718)
Net cash transfers to (from) parent (166,785) 166,785
--------- --------- ---------
Net cash provided (used) by
financing activities 27,424 166,718 194,142
--------- --------- ---------
Net increase in cash 2,113 2,679 4,792
Cash at beginning of year 123 1,548 1,671
--------- --------- ---------
Cash at end of period $ 2,236 $ 4,227 $ 6,463
========= ========= =========
</TABLE>
<PAGE>
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Nine Months Ended September 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Consolidated
-------- ---------- ------------
<S> <C> <C> <C>
Net cash provided (used) by operating
activities $ (21,623) $ 9,544 $ (12,079)
--------- --------- ---------
Cash flows from investing activities:
Net proceeds from sales of assets 22,553 10,726 33,279
Additions to property, plant and
equipment (204) (4,957) (5,161)
Acquisition of subsidiaries, net
of cash acquired (947) (947)
--------- --------- ---------
Net cash provided (used) by
investing activities 22,349 4,822 27,171
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 262,827 262,827
Reductions in debt (251,233) (28,256) (279,489)
Other transactions, net 220 220
Net cash transfers to (from) parent (13,882) 13,882
--------- --------- ---------
Net cash provided (used) by
financing activities (2,068) (14,374) (16,442)
--------- --------- ---------
Net increase (decrease) in cash (1,342) (8) (1,350)
Cash at beginning of year 1,519 1,100 2,619
--------- --------- ---------
Cash at end of period $ 177 $ 1,092 $ 1,269
========= ========= =========
</TABLE>
<PAGE>
UNC Incorporated and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
- --------
The Company's operations are conducted in one business segment which includes:
airframe maintenance, modification and retrofit services; avionics and
aircraft interior installations; the overhaul and repair of aircraft
accessories, aircraft engines and industrial gas turbine engines; the
provision of aircraft maintenance and pilot training contract services and the
manufacturing and remanufacturing of jet engine and aircraft components.
Quarter Ended September 30, 1996 Compared With Quarter Ended
- ------------------------------------------------------------
September 30, 1995
- ------------------
Revenues were $247.9 million in the third quarter of 1996 compared with $137.4
million in the 1995 period, an increase of $110.5 million (80%). Contributing
to this increase were revenues of $101.8 million generated by Garrett,
acquired May 30, 1996, as well as increases in the volume of other engine
overhaul businesses and the Manufacturing and Aviation Services Divisions.
These increases were partially offset by a decrease in Accessory Services
Division revenues. Operating income in the 1996 quarter increased $6.1
million (95%) to $12.5 million, principally due to the addition of Garrett
including $3.0 million of adjustments, net, to previously established
restructuring allowances and a multi-employer pension plan withdrawal
liability to reflect the impact of the continuing assessment of the net
realizability of assets held for sale and the settlement of a multi-employer
pension plan withdrawal liability.
Concurrent with the acquisition of Garrett, the Company's overhaul businesses,
formerly the Engine Overhaul, Accessory Overhaul and Trading Divisions joined
with Garrett to form a new division, the "Garrett Aviation Services Division."
Revenues for this newly formed division in the 1996 quarter increased $97.3
million to $143.2 million. The higher revenues are due to $101.8 generated by
Garrett, which was acquired May 30, 1996, and an increase in international
revenues from other engine overhaul businesses. These increases were
partially offset by a decrease in revenues from accessory overhauls due to
lower volume of domestic and international business resulting from increased
competition from OEM's and initiatives to strengthen the accessory overhaul
business by temporarily closing certain operations in the third quarter to
improve quality standards in order to meet expected new Federal Aviation
Administration regulations. Operating income in the 1996 quarter increased
$1.9 million to $5.7 million principally due to the addition of Garrett as
discussed above. The increase was partially offset by an operating loss from
accessory overhauls principally due to the factors mentioned above and a
nonrecurring gain of $2.0 million provided by the Trading Company in the 1995
quarter in connection with the sale of certain property.
The Aviation Services Division revenues of $69.5 million increased $3.8
million (5.7%) in the 1996 quarter. The increase in the 1996 quarter is due
to increased activities on federal service type contracts including activities
on new programs and increased activities on field service contracts. These
increases were partially offset by a decrease in activities on certain
international contracts. Operating income of $2.4 million decreased $0.4
million in the 1996 quarter due to lower margins on certain field service and
federal contracts.
The Company's Manufacturing Division revenues in the 1996 quarter increased
$9.4 million (37%) to $35.2 million. The increase in revenues is principally
due to higher volume on U.S. government spares and other commercial engine and
airframe programs. Operating income increased $1.9 million (83%) to $4.3
million in the 1996 quarter, principally due to these higher volumes.
Selling, general and administrative expenses in the 1996 quarter were $24.0
million or 9.7% of sales compared with $15.0 million or 10.9% of sales in the
1995 quarter. The increase in selling, general and administrative expenses in
the 1996 quarter of $9.0 million is principally due to the acquisition of
Garrett.
Interest expense increased $3.7 million in the 1996 quarter compared with the
corresponding quarter of 1995, principally due to increased debt incurred in
connection with the acquisition of Garrett and the Stearns Company.
Nine Months Ended September 30, 1996 Compared With Nine Months Ended
- --------------------------------------------------------------------
September 30, 1995
- ------------------
Revenues were $570.7 million in the nine-month period ended September 30,
1996, compared with $394.5 million in the 1995 period, an increase of $176.2
million (45%). Contributing to this increase were revenues of $132.7 million
generated by Garrett, acquired May 30, 1996, as well as increases in the
volume of other engine overhaul businesses and in Manufacturing and Aviation
Services Divisions, including a $5.5 million increase in international
revenues. These increases were partially offset by a decrease in Accessory
Services Division revenues. Operating income in the 1996 period increased
$9.1 million (51%) to $27.1 million due to increased volume as previously
noted, the addition of Garrett, including $3.0 million of adjustments, net, to
previously established restructuring allowances and a multi-employer pension
plan withdrawal liability to reflect the impact of the continuing assessment
of the net realizability of assets held for sale and the settlement of a
multi-employer pension plan withdrawal liability.
Revenues for the newly formed Garrett Aviation Services Division in the 1996
period increased $126.8 million to $261.4 million. The higher revenues are
due to $132.7 million generated by Garrett, acquired May 30, 1996, and an
increase in international revenues from other engine overhaul businesses.
These increases were partially offset by a decrease in revenues from accessory
overhauls due to lower volume on domestic and international businesses
resulting from increased competition from OEM's and initiatives to strengthen
the accessory overhaul business by temporarily closing certain operations in
the third quarter of 1996 to improve quality standards in order to meet
expected new Federal Aviation Administration regulations. Operating income in
the nine-month period in 1996 increased $1.5 million to $12.1 million,
principally due to the addition of Garrett as discussed above and increased
volume. These increases were partially offset by an operating loss from
accessory overhauls, principally due to the factors mentioned above and a
nonrecurring gain of $2.0 million provided by the Trading Company in the 1995
period in connection with the sale of certain property.
The Aviation Services Division revenues of $212.6 million increased $27.4
million (15%) in the 1996 period. The increase in the 1996 period is due to
increased activities on federal service type contracts awarded in 1996 and
toward the end of 1995, increased activities on contract field service
contracts and international service contracts. Operating income increased
$0.5 million (8%) to $7.0 million in the 1996 period due to increased volume.
The Company's Manufacturing Division revenues in the 1996 period increased
$22.0 million (30%) to $96.7 million compared with the 1995 period. The
increase in revenues is principally due to higher volume on U.S. government
spares and other commercial programs and, to a lesser extent, increased volume
from specialized repairs. These increases were partially offset by the loss
of revenues attributable to the Company's chemical milled aircraft and engine
component business, which was sold in June 1995. Operating income increased
$4.4 million (62%) to $11.5 million in the 1996 period, principally due to the
higher volumes.
Selling, general and administrative expenses in the 1996 period were $56.2
million or 9.9% of sales compared with $42.5 million or 10.7% of sales in the
1995 period. The increase in selling, general and administrative expenses in
the 1996 period of $13.8 million is principally due to the acquisition of
Garrett, and an increase in domestic sales and marketing activities, which
includes an investment for increased international marketing efforts by the
Company's international offices located in Singapore, The Netherlands, China
and Miami, Florida, serving Latin America. International revenues increased
$5.5 million (7%) to $89.4 million in the 1996 period.
Interest expense increased $4.6 million in the 1996 period as a result of
higher average debt levels, principally due to the acquisition of Garrett and
the Stearns Company.
The effective income tax rates as a percent of earnings before income taxes
were 30% and 35% for the nine-month period ended September 30, 1996 and 1995,
respectively. The decrease in the effective rate for 1996 compared with 1995
is due to the expected benefit of certain deferred tax assets not previously
realized.
The Defense Department is continuing to close various military bases. A
portion of the workload of these bases is being relocated to bases where the
Company already performs aircraft maintenance functions. Further
consolidation of military training and maintenance contracts is expected as
bases are eliminated. Many of Aviation Services Division's contracts are
funded by the operations and maintenance ("O&M") budget of the United States
Department of Defense. The O&M budget has remained stable over the last four
years and is projected to remain relatively flat through the end of the
decade, despite a decline in the Department of Defense's overall budget. The
Company believes that more maintenance work under the O&M budget will be
outsourced in the future to lower cost private sector suppliers, such as the
Company, to meet ongoing Department of Defense budget pressures in other
budget areas, such as new or modernized weapons systems. There can be no
assurance, however, that the Department of Defense will out source significant
amounts of additional work to entities such as the Company or that federal
budgetary pressures will not adversely affect the Company. In October, the
Company was notified that it had been awarded the Fort Rucker training
contract ($101.6 million) for the third consecutive five-year period.
The Company's Manufacturing Division continues to receive pricing pressure
from certain customers, principally OEMs. The Division has provided price
concessions to its principal OEM customers during each of the past four years
in anticipation of continuing to receive future orders and to maintain OEM
business relationships. The industry is currently experiencing an economic
turnaround after several years of depressed conditions due to increased demand
for new aircraft. The Company has recently experienced an increase in new
commercial orders as a result of this increased demand. These additional
orders, along with ongoing productivity enhancements and cost reduction
programs instituted by the Company over the past several years has resulted in
increased profitability for the Division. However, the OEM customers continue
to apply pricing pressure on all suppliers, and the Company expects continuing
pressures from certain OEM customers on future pricing.
Continued effort on the part of the U.S. government to reduce defense spending
is affecting the demand for military aircraft engines and could also have an
impact on the Company's manufacturing operations. This trend is being offset
by the Defense Department bypassing OEMS and placing orders directly with
subcontractors such as the Company. During the first nine months of 1996 the
Company's Johnson Technology unit has booked $44.5 million in military spares
orders, which include the production of F110, F404 and TF34 high pressure
turbine vanes valued at $28.8 million, $9.2 million and $2.4 million,
respectively. The Company's manufacturing operations will capitalize on the
opportunities in the military market while focussing its efforts on building
the commercial market.
Liquidity and Capital Resources
- -------------------------------
Net cash flows from operating activities used $26.3 million in the nine-month
period of 1996, which consists of $18.3 million generated by earnings after
adjusting for non-cash items, offset by a $32.1 million investment in
additional working capital, principally related to the Garrett Aviation
Services Division, and an investment of $12.5 million related to changes in
noncurrent assets and liabilities. Net cash flows from investing activities
used $163.0 million, of which $149.3 million relates to the purchase of
Garrett and $6.0 million to the acquisition of the Stearns Company, including
related transaction costs, $2.0 million in payments under the terms of earn-out
provisions of agreements related to prior acquisitions, and $7.6 million
for capital expenditures, which was partially funded by $2.0 million generated
from the sale of assets. Net cash provided by financing activities of $194.1
million includes proceeds from the issuance of 11% Senior Subordinated Notes
and Convertible Preferred Stock used in the acquisition of Garrett and an
increase in revolving credit borrowings, which was used to pay certain
transaction costs related to the Garrett acquisition, to fund the acquisition
of the Stearns Company, to finance the funds used by operating activities and
to fund the additions to property, plant and equipment net of the proceeds
from asset sales.
Many of the Company's restructuring goals have been achieved since the program
was implemented in June 1994. The Company has generated $49.2 million from
the sales of assets, including $25.0 million from the sale of the Company's
Connecticut property, $12.0 million from the sale of other under utilized
property and equipment, $12.2 million from the sale of other assets, including
its helicopter overhaul and refurbishing business in Ozark, Alabama and its
chemical milled aircraft and engine component business in Weatherford, Texas.
In addition, the Company has closed its JT8 engine overhaul facility in
Burbank, California and consolidated the engine overhaul business at its
facilities in Millville, New Jersey, and Miami, Florida, and has leased, with
an option to purchase for $3.2 million, a portion of the Burbank facility.
Two accessory services facilities in Long Island, New York, have also been
consolidated. The disposal of these assets and consolidation of operations,
along with implementation of productivity enhancements and staff reductions,
have resulted in a reduced cost structure for the Company.
In addition to the cash described above, since June 30, 1994, the Company
generated approximately $9.0 million of proceeds from the collection of
certain disputed receivables and notes that were written down at the time of
the restructuring in connection with efforts made by the Company to accelerate
the collection of these troubled receivables and generate additional cash.
Since the restructuring program was implemented, the Company has incurred
$19.7 million of cash expenditures against its restructuring accrual. These
cash expenditures include employee severance and related costs of $2.5
million, $17.2 million of costs associated with the sale, closing and
consolidations of businesses and operations, including $3.8 million of third-
party costs associated with the shutdowns, consolidations and sales programs.
The Company believes that the remaining restructuring accrual of $1.1 million
should be adequate to complete the program.
Capital expenditures in the nine-month period of 1996 amounted to $7.6 million
compared with $5.2 million in the 1995 period. It is anticipated that capital
expenditures for the balance of 1996 will be financed from internally
generated funds, lease arrangements and, if necessary, revolving credit
borrowings.
On May 22, 1996, the Company entered into an Amended and Restated Revolving
Credit Facility through May 2000, which provides for a borrowing capacity of
up to $110 million, subject to borrowing base limitations as defined in the
agreement and reduced by outstanding letters of credit. In addition to the
$6.5 million in cash on hand, the Company's unused availability under the
credit line was $8.1 million at September 30, 1996. In January 1996, the
Company purchased in the open market $0.6 million of the 7 1/2% Convertible
Subordinated Debentures to satisfy the remaining balance of the March 1996
sinking fund requirement. The Company's debt-to-capitalization ratio at
September 30, 1996, was 74.3% compared with 67.2% at December 31, 1995. At
September 30, 1996, the Company's working capital was 172.9 million, with a
current ratio of 2.0 to 1 compared with $124.1 million with a current ratio of
2.3 to 1 at December 31, 1995.
On May 30, 1996, the Company acquired substantially all of the assets and
certain liabilities of Garrett, a leading provider of aviation services in the
business aviation aftermarket. The purchase price of approximately $145
million was paid in cash. The financing of the acquisition was accomplished
through the issuance of $125 million in 11% Senior Subordinated Notes due 2006
and $25 million in Convertible 8.5% Preferred Stock. In addition, borrowings
were made under the Company's Revolving Senior Bank Debt for various
transaction costs which, combined with the purchase price, exceeded the amount
of funds generated from the issuance of the notes and Preferred Stock.
In September 1996 the Company acquired substantially all of the assets and
certain liabilities of the Stearns Company, a manufacturer and supplier of
aircraft parts, primarily to original equipment manufacturers. The purchase
price was $6.0 million, which was funded through a borrowing under the
Company's revolving credit facility.
<PAGE>
PART 11 - OTHER INFORMATION
Item 6. Exhibits and Reports of Form 8-K
- -----------------------------------------
(a) Exhibits Description
Exhibit 11 Computation of Earnings Per Common
Share
(b) Reports on Form 8-K
- -----------------------
On August 12, 1996, the Company filed a Form 8-K/A Amendment to its original
Current Report on Form 8-K dated June 11, 1996, in order to file the audited
financial statements with respect to the operations of the Garrett Aviation
Services business prior to its divestiture by AlliedSignal which were not
available at the time the Current Report on Form 8-K was filed.
<PAGE>
UNC Incorporated and Subsidiaries
SIGNATURE
Pursuant to requirements 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
Date: November 12, 1996 By: /s/Robert L. Pevenstein
-----------------------
Robert L. Pevenstein
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
UNC Incorporated and Subsidiaries
SEQUENTIAL EXHIBIT INDEX
Exhibit Sequential
Number Description Page
- ------- ---------------------------------------- ----------
Exhibit 11 Computation of Earnings Per Common Share
Exhibit 27 Financial Data Schedule (electronically filed)
<PAGE>
EXHIBIT 11
UNC INCORPORATED AND SUBSIDIARIES
Earnings Per Share
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net earnings $ 2,331 $ 839 $ 4,256 $ 1,847
Preferred stock dividends 531 718
--------- --------- --------- ---------
Net earnings applicable to common stock -
primary earnings applicable to common stock 1,800 839 3,538 1,847
Adjustments - fully diluted
earnings per share:
Elimination of preferred stock dividends
upon assumed conversion 531 718
Decrease in interest expense related to con-
vertible debt, net of income tax effect(1)(3) 851 841 2,552 2,523
--------- --------- --------- ---------
Adjusted net earnings - fully diluted
earnings applicable to common stock $ 3,182 $ 1,680 $ 6,808 $ 4,370
========= ========= ========= =========
Calculation of primary net earnings per common share:
Average common shares outstanding
during the period (2) 18,247 17,679 17,988 17,657
Increase for common stock equivalents:
Stock options under treasure stock method 381 251 355 227
--------- --------- --------- ---------
Adjusted average shares outstanding
for the period - primary 18,628 17,930 18,343 17,884
========= ========= ========= =========
Primary earnings per common share $ .10 $ .05 $ .19* $ .10
========= ========= ========= =========
Calculation of fully diluted earnings per common share:
Average common shares outstanding 18,247 17,679 17,988 17,657
during the period (2)
Increase for common stock equivalents:
Assumed conversion of preferred stock 3,571 1,609
Stock options under treasure stock method 419 263 419 263
Dilutive shares issuable upon
conversion of convertible debt (1) 4,208 4,480 4,208 4,480
--------- --------- --------- ---------
Adjusted Average shares outstanding
for the period - fully diluted 26,445 22,422 24,224 22,400
========= ======== ========= =========
Fully diluted earnings per common share $ .12 $ .07 $ .28 $ .20
========= ========= ========= =========
</TABLE>
<PAGE>
(1) The convertible subordinate debentures and preferred stock were anti-
dilutive for all years presented.
(2) Exclusive of 486,500 and 603,400 average treasury shares for the three
and nine month periods ended September 30, 1996, respectively, and
700,000 shares for all periods presented for 1995.
(3) The convertible subordinated debentures and the preferred stock are not
common stock equivalents in the calculation of primary net earnings per
share.
* Differs from face of income statement due to rounding dilution; based upon
actual calculation being less than 3%.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of 9/30/96 and the related consolidated statement
of earnings, cash flows and notes to consolidated financial statements for the
nine months ended 9/30/96 and is qualified in its entirety by reference to such
financial statements and notes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,463
<SECURITIES> 0
<RECEIVABLES> 179,683
<ALLOWANCES> 4,650
<INVENTORY> 146,012
<CURRENT-ASSETS> 352,174
<PP&E> 129,809
<DEPRECIATION> 40,143
<TOTAL-ASSETS> 727,718
<CURRENT-LIABILITIES> 179,285
<BONDS> 380,045
0
250
<COMMON> 3,747
<OTHER-SE> 129,255
<TOTAL-LIABILITY-AND-EQUITY> 727,718
<SALES> 409,492<F1>
<TOTAL-REVENUES> 570,696
<CGS> 338,055
<TOTAL-COSTS> 487,345
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 504<F2><F3>
<INTEREST-EXPENSE> 19,991
<INCOME-PRETAX> 6,080
<INCOME-TAX> 1,824
<INCOME-CONTINUING> 4,256
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,256
<EPS-PRIMARY> .19<F4>
<EPS-DILUTED> .28<F4>
<FN>
<F1>See Note 3 of Notes to Consolidated Financial Statements.
<F2>The provision for doubtful accounts and notes is included with Selling,
General and Administrative Expenses in the Consolidated Statement of Earnings.
<F3>It also appears in the Consolidated Statement of Cash Flows under the title
"Provision for losses on accounts receivables."
<F4>See Exhibit 11.
</FN>
</TABLE>
