<PAGE>
<PAGE> 1
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 June 30, 1996
Commission File Number 1-7795
UNC INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 54-1078297
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Admiral Cochrane Drive
Annapolis, MD 21401
(Address of principal executive (Zip Code)
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 August 5, 1996:
18,244,481 (excluding 486,500 treasury shares held by a subsidiary).
<PAGE>
<PAGE> 2
UNC Incorporated, and Subsidiaries
INDEX
Page No.
--------
Part I. Financial Information
Consolidated Statements of Earnings
Six Months Ended June 30, 1996 and 1995 1
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 2
Consolidated Statements of Cash Flows
Six Months Ended June 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 4. Submission of Matters to a Vote of Security
Holders 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature Page 22
Exhibit Index 23
<PAGE>
<PAGE> 3
<TABLE>
UNC Incorporated and Subsidiaries
Consolidated Statements of Earnings
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales and operating revenues $ 181,292 $ 131,342 $ 322,801 $ 257,045
Costs and expenses:
Cost and operating expenses 155,028 111,614 275,964 217,999
Selling, general and
administrative expenses 17,497 13,363 32,205 27,448
--------- --------- --------- ---------
172,525 124,977 308,169 245,447
--------- --------- --------- ---------
Operating income 8,767 6,365 14,632 11,598
Other income (expense):
Interest expense (6,281) (5,085) (11,145) (10,223)
Other (413) 196 (737) 176
--------- --------- --------- ---------
(6,694) (4,889) (11,882) (10,047)
Earnings before income taxes 2,073 1,476 2,750 1,551
Income tax provision 622 517 825 543
--------- --------- --------- ---------
Net Earnings 1,451 959 1,925 1,008
Preferred dividends 187 187
--------- --------- --------- ---------
Net earnings applicable
to common stock $ 1,264 $ 959 $ 1,738 $ 1,008
========= ========= ========= =========
Earnings per common share $ .07 $ .05 $ .10 $ .05
========= ========= ========= =========
</TABLE> <PAGE>
<PAGE> 4
<TABLE>
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<CAPTION>
June 30, December 31,
1996 1995
--------- ---------
<S> <C> <C>
Assets
- ------
Current assets:
Cash $ 11,755 $ 1,671
Accounts receivable, less allowance for
doubtful accounts of $4,531 and $3,186,
respectively 150,066 102,462
Unbilled costs and accrued profits on
contracts in progress 8,928 11,128
Inventories 121,573 91,130
Assets held for sale 4,766 5,099
Other 11,121 10,156
--------- ---------
Total current assets 308,209 221,646
--------- ---------
Assets held for sale - noncurrent 12,004 12,796
Property, plant and equipment, at cost 125,555 82,449
Less accumulated depreciation 37,396 34,381
--------- ---------
Net property, plant and equipment 88,159 48,068
Cost in excess of net assets of acquired
companies, less accumulated amortization of
$30,866 and $28,175, respectively. 234,419 136,298
Other assets 34,733 27,453
--------- ---------
Total assets $ 677,524 $ 446,261
========= =========
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)
(Dollars in thousands)
<CAPTION>
June 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 69,953 39,614
Income taxes 1,485 1,392
Accruals and other current liabilities 75,445 54,794
--------- ---------
Total current liabilities 152,200 97,548
Long-term debt, less current portion:
Revolving Senior Bank Debt, interest rate
at June 30, 1996, 9.75% due 2000 61,675 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 6,670 1,352
--------- ---------
Total long-term debt, less current portion 353,945 203,333
--------- ---------
Other noncurrent liabilities 40,137 45,228
--------- ---------
Total liabilities 546,282 346,109
</TABLE>
<PAGE>
<PAGE> 6
<TABLE>
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets (continued)
(Dollars in thousands)
<CAPTION>
June 30, December 31,
1996 1995
--------- ---------
<S> <C> <C>
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 18,723,868 and
18,393,868 shares, respectively 3,745 3,679
Additional paid-in capital 149,562 123,717
Retained earnings (deficit) (13,525) (15,450)
--------- ---------
140,032 111,946
Less:
Treasury stock, at cost (486,500 and
700,000 shares, respectively) 5,143 8,750
Minimum pension liability adjustment 1,801 1,801
Unearned compensation-restricted stock 1,846 1,243
--------- ---------
Total shareholders' equity 131,242 100,152
--------- ---------
Total liabilities and shareholders' equity $ 677,524 $ 446,261
========= =========
</TABLE>
<PAGE>
<PAGE> 7
<TABLE>
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
<CAPTION>
Six Months Ended
June 30,
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,925 $ 1,008
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and amortization 7,270 6,258
Provision for losses on accounts receivable 476 473
Provision for deferred income taxes 262 450
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (5,145) 600
Decrease in unbilled costs & accrued
profits on contracts in progress 2,200 1,539
(Increase) decrease in inventories (11,298) 1,229
(Increase) in other current assets (141) (813)
(Increase) in other noncurrent assets (1,258) (5,160)
(Decrease) in accounts payable (8,213) (12,267)
Increase (decrease) in accruals and other current
liabilities 11,139 (3,090)
Increase in income taxes payable 93 217
Increase (decrease) in other noncurrent
liabilities (170) 3
(Decrease) in discontinued operations
liabilities (2,377) (2,732)
--------- ---------
Total adjustments (7,162) (13,293)
--------- ---------
Net cash provided (used) by operating
activities (5,237) (12,285)
--------- ---------
Cash flows from investing activities:
Net proceeds from sale of assets 1,490 6,834
Additions to property, plant and equipment (6,945) (2,720)
Acquisition of subsidiary (148,293)
--------- ---------
Net cash provided (used) by investing
activities (153,748) 4,114
--------- ---------
</TABLE>
<PAGE>
<PAGE> 8
<TABLE>
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
<CAPTION>
Six Months Ended
June 30,
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from financing activities:
Additions to debt 333,545 139,676
Reductions in debt (309,785) (132,573)
Issuance of 11% Senior Subordinated Notes 125,000
Issuance of Convertible Preferred Stock 25,000
Payment of preferred stock dividend (187)
Other (4,504) 65
--------- ---------
Net cash provided (used) by financing
activities 169,069 7,168
--------- ---------
Net increase (decrease) in cash 10,084 (1,003)
Cash at beginning of year 1,671 2,619
--------- ---------
Cash at end of period $ 11,755 $ 1,616
========= =========
/TABLE
<PAGE>
<PAGE> 9
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 June 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
(Dollars in thousands)
1996 1995
-------- -------
<S> <C> <C>
Component parts and materials $ 84,645 $ 70,317
Work in process 32,283 17,436
Supplies 4,645 3,377
-------- --------
$121,573 $ 91,130
======== ========
</TABLE>
3. Net sales of tangible products in the six-month period ended June 30,
1996 amounted to $210.7 million and cost and operating expenses related
to tangible goods sold amounted to $171.7 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 exceeded the amount of funds generated
from the issuance of the notes and Preferred Stock. The Acquisition
will be accounted for as a purchase, and the purchase price will be
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 June 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 stock
<PAGE>
<PAGE> 10
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.
5. On May 30, 1996 in connection with the financing of the acquisition of
Garrett, the Company issued $25 million in Convertible 8.5% Preferred
Stock and $125 million in principal amount of 11% Senior Subordinated
Notes due 2006. In October 1995, the Company reached an 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 will be convertible to common stock at a price of $7 per
share. The Company will have the option to pay dividends in the form
of a pay-in-kind Series C Cumulative Preferred Stock. 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. 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 Claims. 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 Claims, the FCC
determined that the Claims were 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
<PAGE>
<PAGE> 11
Western Union. The case is in the discovery phase, and a trial date has
been initially scheduled in June 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 August 1994. In that 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. A
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. Based on several series of soil tests conducted on PAC's property
and consultants' reports since approximately 1989, the Company
concluded, and continues to conclude, that there is no demonstration
that contaminants of concern identified in the groundwater by the U.S.
Environmental Protection Agency have been transmitted from the surface
of PAC's property to the underlying groundwater approximately 200 feet
below ground surface. PAC is also pursuing alternative remedies against
Purex Industries, Inc. which owned and operated the property prior to
1985. The Company and Airwork have filed motions to dismiss the action
as to them on the ground, among others, that they did not own or operate
PAC's property, or control PAC's operations. These motions to dismiss
the Lockheed action filed by the Company and Airwork were denied.
Whether, as alleged by Lockheed, the Company and Airwork owned or
operated PAC's property, or controlled its operations, and whether the
Company is subject to jurisdiction in California, remain issues for
trial in the Lockheed case. Trial of the case is currently scheduled
for early August 1996. 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.
The Company during 1995 was 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, brought 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 believed 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. The plaintiff's motion for summary judgment was
<PAGE>
<PAGE> 12
granted in March 1992. However, in July 1993 the appellate court
reversed and remanded the case for trial. Following trial in April
1994, a jury verdict was rendered in plaintiff's favor for the amount
of the note plus interest and attorney's fees. The Company appealed the
verdict on the grounds of prejudicial conduct by the trial judge as well
as on legal grounds that were essentially the same as those argued in
its previous successful appeal. The Appellate Court ruled in favor of
the plaintiff, and the Company paid the judgment of approximately $3.5
million in October 1995. The Company is currently evaluating seeking
recovery of all or part of the judgment from the legal firm that
represented the Company in the 1981 acquisition of Normco.
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
against ESI and an affiliate, Energy Maintenance Corporation ("EMC") for
more than $3.7 million. In December 1994, the trial court granted
Airwork's motion for partial summary judgment against EMC, on a separate
claim, in the amount of $458,000. The trial court subsequently awarded
$1.5 million of ESI's claims against the Company and Airwork on a theory
of unjust enrichment, based apparently on the opinion that the Company,
Airwork and ESI in 1992 were implementing an agreement between Airwork
and ESI's affiliate dated August 19, 1991. The Company and Airwork are
preparing for trial on Airwork's claim for more than $3.7 million, and
will appeal the trial court's award to ESI. The Company believes it is
probable that ESI and an affiliate will be found liable for Airwork's
remaining claims, and that any recovery against the Company and Airwork
is not predictable.
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
<PAGE>
<PAGE> 13
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 de minimus 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.
7. 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
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<PAGE> 14
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 June 30, 1996 and for the six
months ended June 30, 1996 and 1995 of (a) the Company on a parent
company only basis (Parent Company), 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>
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<TABLE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet
June 30, 1996
(Dollars in thousands)
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Assets
- ------
Current assets:
Cash $ 183 $ 11,572 $ 11,755
Accounts receivable, net 497 149,569 150,066
Unbilled costs and accrued
profits on contracts in progress 8,928 8,928
Inventories 121,573 121,573
Assets held for sale 114 4,652 4,766
Other 733 10,388 11,121
--------- --------- ---------
Total current assets 1,527 306,682 308,209
--------- --------- ---------
Assets held for sale-noncurrent 1,169 10,835 12,004
Property, plant & equipment, net 585 87,574 88,159
Cost in excess of net assets
of acquired companies, net 234,419 234,419
Other noncurrent assets 16,247 18,486 34,733
Investments in and advances
to subsidiaries 511,474 $(511,474)
--------- --------- --------- ---------
Total assets $ 531,002 $ 657,996 $(511,474) $ 677,524
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE> 16
<TABLE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet (continued)
June 30, 1996
(Dollars in thousands)
<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 731 69,222 69,953
Accruals and other current liabilities 24,750 52,180 76,930
--------- --------- ---------
Total current liabilities 30,681 121,519 152,200
--------- --------- ---------
Long-term debt 348,275 5,670 353,945
Other noncurrent liabilities 15,661 24,476 40,137
--------- --------- ---------
Total liabilities 394,617 151,665 546,282
--------- --------- ---------
Cumulative preferred stock 250 250
Common stock and additional paid
in capital 153,307 153,307
Retained earnings (deficit) (13,525) (13,525)
Equity of subsidiaries and
advances of parent 511,474 $(511,474)
--------- --------- --------- ---------
140,032 511,474 (511,474) 140,032
Less:
Treasury stock, at cost 5,143 5,143
Minimum pension liability adjustment 1,801 1,801
Unearned compensation-restricted
stock 1,846 1,846
--------- --------- --------- ---------
Total shareholders' equity 136,385 506,331 (511,474) 131,242
Total liabilities and --------- --------- --------- ---------
shareholders' equity $ 531,002 $ 657,996 $(511,474) $ 677,524
========= ========= ========= =========
</TABLE> <PAGE>
<PAGE> 17
<TABLE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet
December 31, 1995
(Dollars in thousands)
<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>
<PAGE> 18
<TABLE>
UNC INCORPORATED
Condensed Consolidating Balance Sheet (continued)
December 31, 1995
(Dollars in thousands)
<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>
<PAGE> 19
<TABLE>
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Six Months Ended June 30, 1996
(Dollars in thousands)
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ $ 322,801 $ 322,801
Costs and expenses
Costs and operating expenses 275,964 275,964
Selling, general and
administrative expenses 6,163 26,042 32,205
Allocated expenses (2,502) 2,502
--------- --------- ---------
3,661 304,508 308,169
--------- --------- ---------
Operating income (3,661) 18,293 14,632
Other income (expense)
Interest expense (11,097) (48) (11,145)
Other (758) 21 (737)
Equity in income of
subsidiaries 12,786 $ (12,786)
--------- --------- --------- ---------
931 (27) (12,786) (11,882)
--------- --------- ---------
Earnings before income taxes (2,730) 18,266 (12,786) 2,750
Income tax provision 4,655 (5,480) (825)
--------- --------- --------- ---------
Net earnings 1,925 12,786 (12,786) 1,925
Preferred dividends 187 187
--------- --------- --------- ---------
Net Earnings applicable to common stock $ 1,738 $ 12,786 $ (12,786) $ 1,738
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE> 20
<TABLE>
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Six Months Ended June 30 1995
(Dollars in thousands)
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ $ 257,045 $ 257,045
Costs and expenses
Costs and operating expenses 217,999 217,999
Selling, general and administrative
expenses 5,953 21,495 27,448
Allocated expenses (2,214) 2,214
--------- --------- ---------
3,739 241,708 245,447
--------- --------- ---------
Operating income (3,739) 15,337 11,598
Other income (expense)
Interest expense (8,065) (2,158) (10,223)
Other 204 (28) 176
Equity in income of subsidiaries 8,548 $ (8,548)
--------- --------- --------- ---------
687 (2,186) (8,548) (10,047)
--------- --------- --------- ---------
Earnings before income taxes (3,052) 13,151 (8,548) 1,551
Income tax provision 4,060 (4,603) (543)
--------- --------- --------- ---------
Net earnings $ 1,008 $ 8,548 $ (8,548) $ 1,008
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE> 21
<TABLE>
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 1996
(Dollars in thousands)
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ------------
<S> <C> <C> <C>
Net cash flow provided (used) by
operations $ (11,873) $ 6,636 $ (5,237)
--------- --------- ---------
Cash flows from investing activities:
Net proceeds from sale of assets 102 1,388 1,490
Additions to property, plant and
equipment (48) (6,897) (6,945)
Acquisition of Subsidiary (148,293) (148,293)
Net cash provided (used) by --------- --------- ---------
investing activities 54 (153,802) (153,748)
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 458,531 14 458,545
Reductions in debt (309,668) (117) (309,785)
Issuance of preferred stock 25,000 25,000
Other transactions, net (4,504) (4,504)
Payment of preferred stock dividend (187) (187)
Net cash transfers to (from) parent (157,293) 157,293
Net cash provided (used) by --------- --------- ---------
financing activities 11,879 157,190 169,069
--------- --------- ---------
Net increase in cash 60 10,024 10,084
Cash at beginning of year 123 1,548 1,671
--------- --------- ---------
Cash at end of period $ 183 $ 11,572 $ 11,755
========= ========= =========
</TABLE>
<PAGE>
<PAGE> 22
<TABLE>
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 1995
(Dollars in thousands)
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ------------
<S> <C> <C> <C>
Net cash flow provided (used) by operations $ (18,227) $ 5,942 $ (12,285)
--------- --------- ---------
Cash flows from investing activities:
Net proceeds from sale of assets 1,070 5,764 6,834
Additions to property, plant and
equipment (180) (2,540) (2,720)
Net cash provided (used) by --------- --------- ---------
investing activities 890 3,224 4,114
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 139,676 139,676
Reductions in debt (104,631) (27,942) (132,573)
Other transactions, net 65 65
Net cash transfers to (from) parent (19,225) 19,225
Net cash provided (used) by --------- --------- ---------
financing activities 15,885 (8,717) 7,168
--------- --------- ---------
Net increase (decrease) in cash (1,452) 449 (1,003)
Cash at beginning of year 1,519 1,100 2,619
--------- --------- ---------
Cash at end of period $ 67 $ 1,549 $ 1,616
========= ========= =========
</TABLE>
<PAGE>
<PAGE> 23
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 June 30, 1996 Compared with Quarter Ended June 30, 1995
- ---------------------------------------------------------------------
Revenues were $181.3 million in the second quarter of 1996 compared with
$131.3 million in the 1995 period, an increase of $50.0 million (38%).
Contributing to this increase were revenues of $30.9 million generated by
Garrett, acquired May 30, 1996, as well as increases in the volume of other
engine overhauls and in Manufacturing Division and Aviation Services Division
revenues, including a $3.0 million increase in international revenues. These
increases were partially offset by a decrease in Accessory Services Division
revenues. Operating income in the 1996 quarter increased $2.4 million (38%)
to $8.8 million, principally due to the addition of Garrett and a net increase
in volume.
Concurrent with the acquisition of Garrett, the Company's Engine Overhaul
Division joined with Garrett to form a new division, the "Garrett Aviation
Services Division." Revenues for this newly formed division in the 1996
quarter increased $34.3 million to $66.8 million. The higher revenues are due
to $30.9 million generated by Garrett, which was acquired May 30, 1996, and
an increase in the overhaul and repair of other turbine engines and auxiliary
power units. These increases were partially offset by a decrease in revenue
from the sale of engine parts for small gas turbine engines, principally due
to competitive conditions in the market place. Operating income in the 1996
quarter increased $2.9 million to $4.9 million principally due to increased
volume in the overhaul and repair of other turbine engines and auxiliary power
units and the addition of Garrett.
The Aviation Services Division revenues of $71.4 million increased $11.1
million (18%) in the 1996 quarter. The increase in the 1996 quarter is due
to increased activities on federal services type contracts awarded towards the
end of 1995, increased activities on field services contracts and
international services contracts. Operating income increased $0.9 million
(45%) to $2.8 million in the 1996 quarter due to increased volume.
The Company's Manufacturing Division revenues in the 1996 quarter increased
$9.7 million (40%) to $33.9 million. The increase in revenues is principally
due to higher volume on U.S. government spares and other commercial programs
at the Company's Michigan and Indiana component manufacturing facilities and,
to a lesser extent, higher volume at other manufacturing facilities,
principally due to increased activities on Boeing and Northrop contracts at
the Aerostructures manufacturing facility and an increase in volume at UNC
Artex from specialized repairs of engine gearboxes and cases for commercial
airlines. These increases were partially offset by the loss of revenues
<PAGE>
<PAGE> 24
attributable to the Company's chemical milled aircraft and engine component
business, which was sold in June 1995. Operating income increased $1.2
million (48%) to $3.7 million in the 1996 quarter principally due to higher
volume.
Revenues of the Accessory Services Division in the 1996 quarter decreased $3.9
million (32%) to $8.1 million due to lower volume on domestic and
international business as a result of increased competition from OEMs.
Operations for the 1996 quarter resulted in a loss of $1.3 million due to
lower volume compared with income of $0.7 million in the 1995 quarter. The
Company has taken certain actions in the second quarter of 1996, to reduce
costs which should have a favorable impact on future results.
Revenues of $1.1 million and operating income of $0.3 million were generated
from the sale of aircraft parts by the Company's Trading Division in the 1996
quarter. In the 1995 period, revenues and operating income were $2.4 million
and $0.7 million, respectively.
Selling, general and administrative expenses in the 1996 quarter were $17.5
million or 9.7% of sales compared with $13.4 million or 10.2% of sales in the
1995 quarter. The increase in selling, general and administrative expenses
in the 1996 quarter of $4.1 million is principally due to the acquisition of
Garrett, and to a lesser extent, 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 $3.0 million (11%) to $30.9 million in the 1996 quarter.
Interest expense increased $1.2 million in the second quarter of 1996 compared
with the corresponding quarter of 1995, principally due to increased debt
incurred in connection with the acquisition of Garrett.
Six Months Ended June 30, 1996 Compared with Six Months Ended June 30, 1995
- ---------------------------------------------------------------------------
Revenues were $322.8 million in the first half of 1996 compared with $257.0
million in the 1995 period, an increase of $65.8 million (26%). Contributing
to this increase were revenues of $30.9 million generated by Garrett, acquired
May 30, 1996, as well as increases in the volume of other engine overhaul
revenues and in Manufacturing Division and Aviation Services Division revenues
including a $9.2 million increase in international revenues. These increases
were partially offset by a decrease in Accessory Services revenues. Operating
income in the 1996 period increased $3.0 million (26%) to $14.6 million due
to the addition of Garrett and the previously noted increases in volume.
Revenues for the newly formed Garrett Aviation Services Division in the 1996
period increased $36.8 million (59%) to $98.9 million. The higher revenues
are due to $30.9 million generated by Garrett, acquired May 30, 1996, an
increase in other small turbine engine overhauls for both domestic and
international customers, and an increase in the overhaul and repair of
auxiliary power units. These increases were partially offset by a decrease in
revenues from the sale of engine parts for small gas turbine engines,
principally due to competitive conditions in the marketplace. Operating
income in the first half of 1996 increased $3.0 million (71%) to $7.3 million,
principally due to increased volume and the addition of Garrett.
<PAGE>
<PAGE> 25
The Aviation Services Division revenues of $143.1 million increased $23.6
million (20%) in the 1996 period. The increase in the 1996 period is due to
increased activities on federal services type contracts awarded towards the
end of 1995, increased activities on contract field service contracts and
international services contracts. Operating income increased $1.0 million
(28%) to $4.6 million in the 1996 period due to these increased volumes.
The Company's Manufacturing Division revenues in the 1996 period increased
$12.6 million (26%) to $61.5 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 at the Company's Michigan and Indiana
component manufacturing facilities and, to a lesser extent, higher volume at
other manufacturing facilities, principally due to increased activities on
Boeing and Northrop contracts at the Aerostructures manufacturing facility in
the State of Washington and an increase in volume at UNC Artex from
specialized repairs of engine gearboxes and cases for commercial airlines.
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 $2.4 million (51%) to $7.2
million in the 1996 period principally due to higher volume.
Revenues of the Accessory Services Division in the 1996 period decreased $6.6
million (28%) to $17.5 million due to lower volume on domestic and
international business, principally due to lower volume as a result of
increased competition from OEMs. Operations for the 1996 first half resulted
in a loss of $1.2 million compared with income of $2.0 million in the 1995
period. The Company has taken certain actions in the second quarter of 1996
to reduce costs which should have a favorable impact on future results.
Revenues of $1.8 million and operating income of $0.4 million were generated
from the sale of aircraft parts by the Company's Trading Division in the 1996
period. In the 1995 period revenues and operating income were 2.4 million and
$0.7 million, respectively.
Selling, general and administrative expenses in the first half of 1996 were
$32.2 million or 10.0% of sales compared with $27.5 million or 10.7% of sales
in the 1995 period. The increase in selling, general and administrative
expenses in the 1996 period of $4.8 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 $9.2 million (18%) to $61.6 million in the 1996 period.
Interest expense increased $0.9 million in the first half of 1996 due to
higher average debt levels, principally due to the acquisition of Garrett.
The effective income tax rate as a percent of earnings before income taxes was
30% and 35% for the six-month period ended June 30, 1996 and 1995,
respectively. The decrease in the effective rate for 1996 compared with 1995
is due to the expected realization of certain deferred tax assets not
previously realized.
The Defense Department is continuing to close various military bases. A
<PAGE>
<PAGE> 26
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 outsource significant
amounts of additional work to entities such as the Company or that federal
budgetary pressures will not adversely affect the Company.
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 on-going productivity enhancements and cost reduction
programs instituted by the Company over the past several years has resulted
in increased profitability for the Division. Due to the past uncertainty
within the airline industry, continuation of additional orders cannot be
assured. 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 last half of 1995, the Company
was awarded contracts to produce T56, F10 and F404 High Pressure Turbine
Nozzle Segments valued at $16 million, $9 million and $7 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 $5.2 million in the first half
of 1996, which consisted of $9.9 million generated by earnings after adjusting
for non-cash items, offset by an $11.3 million investment in additional
working capital and $3.8 million related to changes in noncurrent assets and
liabilities. Net cash flows from investing activities used $153.7 million,
of which $148.3 million relates to the purchase of Garrett, including related
transaction costs, and $6.9 million for capital expenditures, which was
partially funded by $1.5 million generated from the sale of assets. Net cash
provided by financing activities of $169.1 million includes proceeds from the
<PAGE>
<PAGE> 27
issuance of 11% Senior Subordinated Notes and Convertible Preferred Stock used
in the acquisition of Garrett and an increase in revolving credit borrowing,
which was used to pay certain transaction costs related to the Garrett
acquisition, 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 $48.9 million from
the sale of assets, including $25.0 million from the sale of the Company's
Connecticut property, $12.9 million from the sale of other under utilized
property and equipment, $11.0 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. 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 $8.8 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
$17.6 million of cash expenditures against its restructuring accrual. These
cash expenditures include employee severance and related costs of $2.5
million, $15.1 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 $2.9 million
should be adequate to complete the program.
Capital expenditures in the first half of 1996 amounted to $6.9 million
compared with $2.7 million in the 1995 period. It is anticipated that capital
expenditures for the full year 1996 will approximate $11 million, excluding
the impact of the acquisition of Garrett Aviation Services, and that
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. The Company's unused
availability under the credit line was $37.1 million at June 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 June 30, 1996, was 73.2% compared with 67.2% at December 31, 1995.
<PAGE>
<PAGE> 28
At June 30, 1996, the Company's working capital was 156.0 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 exceeded the amount of funds generated from the
issuance of the notes and Preferred Stock.
<PAGE>
<PAGE> 29
PART 11 - OTHER INFORMATION
Item. 4 Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The 1996 Annual Meeting of Stockholders was held on June 28, 1996, for the
election of directors and to ratify the selection of Coopers & Lybrand L.L.P.
as independent accountants for the Corporation for fiscal year 1996. A total
of 16,138,214 of the 17,808,981 votes entitled to be cast at the meeting were
present in person or by proxy. At the meeting, the stockholders:
(1) Elected the following directors:
<TABLE>
<CAPTION>
Number of
Number of Shares --
Shares Voted AUTHORITY
Directors FOR WITHHELD
--------- ---------- --------
<S> <C> <C>
Berl Bernhard 16,075,959 62,255
Beverly B. Byron 16,074,112 64,102
John K. Castle 16,078,382 59,832
Dan A. Colussy 16,077,161 61,053
Freeman A. Hrabowski III 16,073,279 64,935
George V. McGowan 16,073,538 64,676
Jack Moseley 16,076,518 61,696
Lawrence A. Skantze 16,077,006 61,208
</TABLE>
(2) Ratified the selection of Coopers & Lybrand L.L.P. as independent
accountants for the Corporation for fiscal year 1996 by an
affirmative vote of 16,096,691; shares voted against ratification
were 13,520 and shares abstained were 28,003.
No other matters were submitted to a vote of the stockholders at the meeting.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits Description -
- ------------- ------------------------------------
Exhibit 11 Computation of Earnings Per Common
Share
(b) Reports on Form 8-K
- ------------------------
On May 7, 1996, the Company filed a Form 8-K covering, as announced
previously, that UNC Incorporated (the "Company") entered into a definitive
Purchase Agreement pursuant to which it agreed to acquire substantially all
of the assets and business of Garrett Aviation Services.
On June 11, 1996, the Company filed a Form 8-K covering the announcement that
it had consummated the previously announced acquisition of substantially all
of the assets and business of Garrett Aviation Services on May 30, 1996.
<PAGE>
<PAGE> 30
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: August 9, 1996 By:/s/ Robert L. Pevenstein
------------------------
Robert L. Pevenstein
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
<PAGE> 31
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>
<PAGE>
<PAGE> 1
EXHIBIT 11
<TABLE>
UNC INCORPORATED AND SUBSIDIARIES
Earnings Per Share
(In thousands except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net earnings $ 1,451 $ 959 $ 1,925 $ 1,008
Preferred stock dividends 187 187
Net earnings applicable to common stock - --------- --------- --------- ---------
primary earnings applicable to common stock 1,264 959 1,738 1,008
Adjustments - fully diluted
earnings per share:
Elimination of preferred stock dividends
upon assumed conversion 187 187
Decrease in interest expense
related to convertible debt, net
of income tax effect (1)(3) 850 841 1,701 1,682
--------- --------- --------- ---------
Adjusted net earnings - fully
diluted earnings applicable to common stock $ 2,301 $ 1,800 $ 3,626 $ 2,690
========= ========= ========= =========
Calculation of primary net earnings
per common share:
Average common shares outstanding
during the period (2) 17,949 17,658 17,859 17,645
Increase for common stock equivalents:
Stock options under treasure stock
method 382 205 344 215
--------- --------- --------- ---------
Adjusted average shares outstanding
for the period - primary 18,331 17,863 18,203 17,860
========= ========= ========= =========
Primary earnings per common share $ .07 $ .05 $ .10 $ .05
========= ========= ========= =========
Calculation of fully diluted
earnings per common share:
Average common shares outstanding
during the period (2) 17,949 17,658 17,859 17,645
Increase for common stock equivalents:
Assumed conversion of preferred stock 1,256 628
Stock options under treasure stock
method 386 218 386 218
Dilutive shares issuable upon
conversion of convertible debt (1) 4,208 4,481 4,208 4,481
Adjusted Average shares outstanding --------- --------- --------- ---------
for the period - fully diluted 23,799 22,357 23,081 22,344
========= ========= ========= =========
Fully diluted earnings per common share $ .10 $ .08 $ .16 $ .12
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE 2
(1) The convertible subordinate debentures and preferred stock were
anti-dilutive for all years presented.
(2) Exclusive of 625,000 and 662.000 average treasury shares for the
three and six month periods ended June 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.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of 6/30/96 and the related consolidated
statement of earnings, cash flows and notes to consolidated financial
statements for the six months ended 6/30/96 and is qualified in its
entirety by reference to such financial statements and notes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 11,755
<SECURITIES> 0
<RECEIVABLES> 154,597
<ALLOWANCES> 4,531
<INVENTORY> 121,573
<CURRENT-ASSETS> 308,209
<PP&E> 125,555
<DEPRECIATION> 37,396
<TOTAL-ASSETS> 677,524
<CURRENT-LIABILITIES> 152,200
<BONDS> 353,945
0
250
<COMMON> 3,745
<OTHER-SE> 127,247
<TOTAL-LIABILITY-AND-EQUITY> 677,524
<SALES> 210,724<F1>
<TOTAL-REVENUES> 322,801
<CGS> 171,667<F1>
<TOTAL-COSTS> 275,964
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 476<F2><F3>
<INTEREST-EXPENSE> 11,145
<INCOME-PRETAX> 2,750
<INCOME-TAX> 825
<INCOME-CONTINUING> 1,925
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,925
<EPS-PRIMARY> .10
<EPS-DILUTED> .10<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>
