<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, 1997
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 8,
1997:
18,463,767 (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
Three and Six Months Ended June 30, 1997 and 1996 1
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 2
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 24
Signature Page 25
Exhibit Index 26
<PAGE>
<PAGE> 3
UNC Incorporated and Subsidiaries
Consolidated Statements of Earnings
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales and operating revenues $ 275,929 $ 181,292 $ 537,746 $ 322,801
Costs and expenses:
Cost and operating expenses 239,950 155,028 466,004 275,964
Selling, general and
administrative expenses 22,015 17,497 44,439 32,205
--------- --------- --------- ---------
261,965 172,525 510,443 308,169
--------- --------- --------- ---------
Operating income 13,964 8,767 27,303 14,632
Other income (expense):
Interest expense (9,488) (6,281) (18,689) (11,145)
Other, net (666) (413) (1,175) (737)
--------- --------- --------- ---------
(10,154) (6,694) (19,864) (11,882)
--------- --------- --------- ---------
Earnings before income taxes 3,810 2,073 7,439 2,750
Income tax provision 762 622 1,488 825
--------- --------- --------- ---------
Net earnings 3,048 1,451 5,951 1,925
Preferred dividends 531 187 1,062 187
--------- --------- --------- ---------
Net earnings applicable
to common stock $ 2,517 $ 1,264 $ 4,889 $ 1,738
========= ========= ========= =========
Primary and fully diluted
earnings per common share $ .13 $ .07 $ .26 $ .10
========= ========= ========= =========
/TABLE
<PAGE>
<PAGE> 4
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- ---------
Assets
- ------
<S> <C> <C>
Current assets:
Cash $ 5,142 $ 18,368
Accounts receivable, less allowance for
doubtful accounts of $6,919 and $6,678,
respectively 220,610 203,939
Unbilled costs and accrued profits on
contracts in progress 2,877 6,325
Inventories 159,851 127,777
Assets held for sale 6,413 6,773
Other 19,528 18,638
--------- ---------
Total current assets 414,421 381,820
--------- ---------
Assets held for sale - noncurrent 8,961 9,262
Property, plant and equipment, at cost 116,385 113,124
Less accumulated depreciation 44,285 39,714
--------- ---------
Net property, plant and equipment 72,100 73,410
Cost in excess of net assets of acquired
companies, less accumulated amortization of
$39,668 and $35,237, respectively. 248,380 252,647
Other assets 33,639 32,657
--------- ---------
Total assets $ 777,501 $ 749,796
========= =========
</TABLE>
<PAGE>
<PAGE> 5
UNC Incorporated and Subsidiaries
Consolidated Balance Sheets (cont.)
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------- ---------
<S> <C> <C>
Liabilities and Shareholders' Equity
- ------------------------------------
Current liabilities:
Current portion of long-term debt $ 5,317 $ 5,317
Accounts payable 141,421 122,575
Income taxes payable 1,660 2,006
Accruals and other current liabilities 70,070 76,743
--------- ---------
Total current liabilities 218,468 206,641
Long-term debt, less current portion:
Revolving Senior Bank Debt, interest rate
at June 30, 1997, 8.53% due 2000 90,449 76,285
9 1/8% Senior Notes due 2003 100,000 100,000
11% Senior Subordinated Notes due 2006 125,000 125,000
7 1/2% Convertible Subordinated Debentures
due 2006 56,379 60,600
Other 5,702 5,744
--------- ---------
Total long-term debt, less current portion 377,530 367,629
Other noncurrent liabilities 39,219 39,247
--------- ---------
Total liabilities 635,217 613,517
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 250 250
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 18,914,517 and
18,763,181 shares, respectively 3,783 3,753
Additional paid-in capital 148,394 148,672
Retained earnings (deficit) (1,875) (7,826)
--------- ---------
150,552 144,849
Less:
Treasury stock, at cost (486,500 shares) 5,143 5,143
Minimum pension liability adjustment 1,790 1,790
Unearned compensation-restricted stock 1,335 1,637
--------- ---------
Total shareholders' equity 142,284 136,279
--------- ---------
Total liabilities and shareholders' equity $ 777,501 $ 749,796
========= =========
</TABLE>
<PAGE>
<PAGE> 6
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 5,951 $ 1,925
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation and amortization 10,864 7,270
Provision for losses on accounts receivable 1,034 476
Deferred income taxes 854 262
Gain on disposition of assets (179)
Changes in assets and liabilities, net of
effect of acquisitions and divestitures:
(Increase) in accounts receivable (17,705) (5,145)
Decrease in unbilled costs & accrued
profits on contracts in progress 3,448 2,200
(Increase) in inventories (32,074) (11,298)
(Increase) in other current assets (1,744) (141)
(Increase) in other noncurrent assets (1,530) (1,258)
Increase in accounts payable and in accruals
and other current liabilities 12,173 2,926
Increase (decrease) in income taxes payable (346) 93
(Decrease) in other noncurrent liabilities (28) (2,547)
--------- ---------
Total adjustments (25,233) (7,162)
--------- ---------
Net cash provided (used) by operating activities (19,282) (5,237)
--------- ---------
</TABLE>
<PAGE>
<PAGE> 7
UNC Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (cont.)
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from investing activities:
Net proceeds from sale of assets 947 1,490
Additions to property, plant and equipment (4,464) (6,945)
Acquisition of Subsidiary (148,293)
Other (80)
--------- ---------
Net cash provided (used) by investing activities (3,597) (153,748)
--------- ---------
Cash flows from financing activities:
Additions to debt 542,805 333,545
Reductions in debt (532,883) (309,785)
Issuance of 11% Senior Subordinated Notes 125,000
Issuance of Convertible Preferred Stock 25,000
Payment of preferred stock dividend (1,062) (187)
Other 793 (4,504)
--------- ---------
Net cash provided (used) by financing activities 9,653 169,069
--------- ---------
Net increase (decrease) in cash (13,226) 10,084
Cash at beginning of year 18,368 1,671
--------- ---------
Cash at end of period $ 5,142 $ 11,755
========= =========
/TABLE
<PAGE>
<PAGE> 8
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, 1996,
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.
Certain prior period amounts have been reclassified to conform to the
June 30, 1997, presentation.
2. Inventories at June 30, 1997 and December 31, 1996 consist of the
following:
<TABLE>
<CAPTION>
(Dollars in thousands)
1997 1996
-------- --------
<S> <C> <C>
Component parts and materials $ 87,783 $ 82,224
Work in process 65,430 39,116
Supplies and other 6,638 6,437
-------- --------
$159,851 $127,777
======== ========
</TABLE>
3. Net sales of tangible products in the three and six-month periods ended
June 30, 1997 amounted to $217.1 million and $417.8 million,
respectively, and cost and operating expenses related to tangible goods
sold amounted to $185.6 million and $355.2 million, respectively.
4. On February 13, 1997, the Company entered into an Agreement and Plan of
Reorganization (the "Original Merger Agreement") with Greenwich Air
Services, Inc. ("Greenwich") pursuant to which the Company would be
merged into, and thereby become, a wholly-owned subsidiary of
Greenwich. Under the Original Merger Agreement, each of the Company's
"Common Stock Equivalents" (as defined in the Original Merger
Agreement) would be valued at not less than $14.00 and each holder of
the Company's Common Stock Equivalents would be entitled to receive
that number of shares of Class B nonvoting Common Stock, par value $.01
per share, of Greenwich ("Greenwich Class B Stock") as is determined by
multiplying the number of shares of the Company's Common Stock
Equivalents held by such holder by the Exchange Ratio.
Subject to adjustment upon the occurrence of certain events set forth
in the Original Merger Agreement, "Exchange Ratio" means the fraction
(expressed as a decimal to the nearest ten thousandth) determined as
follows:
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<PAGE> 9
(a) if the average of the closing prices of a share of Greenwich
Class B Stock, as reported on The Nasdaq National Market, for the
twenty trading days immediately preceding the closing date(the
"Closing Date Market Value") is less than or equal to $24.86, the
Exchange Ratio is $14.00 divided by the Closing Date Market
Value;
(b) if the Closing Date Market Value exceeds $24.86, but is less than
or equal to $28.59, the Exchange Ratio is 0.5632; and
(c) if the Closing Date Market Value exceeds $28.59, then the
Exchange Ratio is $16.10 divided by the Closing Date Market
Value.
In general, the merger consideration would be payable to the holders of
the Company's Common Stock Equivalents solely in shares of Greenwich
Class B Stock. Subject to the limitations and conditions set forth in
the Original Merger Agreement, however, such holders would be entitled,
in accordance with the procedures set forth in the Original Merger
Agreement, to elect to receive all or a portion of the merger
consideration in cash; provided, however, that Greenwich would not be
obligated to pay in cash an aggregate amount which exceeds fifty (50%)
percent of the aggregate merger consideration payable to all holders of
the Company's Common Stock Equivalents computed at $14.00 per share.
On March 9, 1997, the Company entered into an Amended and Restated
Agreement and Plan of Merger (the "Amended Merger Agreement") modifying
and restating the terms of the Original Merger Agreement. The Amended
Merger Agreement modifies, among other things, the consideration to be
received by holders of shares of the Company's Common Stock and Series
B Preferred Stock by virtue of the UNC-Greenwich Merger. Pursuant to
the Amended Merger Agreement, holders of the Company's Common Stock
will be entitled to receive at the Effective Time (as defined in the
Amended Merger Agreement) $15.00 in cash for each share of Common Stock
then currently issued and outstanding and holders of the Company's
Series B Preferred Stock will be entitled to receive an amount equal to
$15.00 multiplied by the number of shares of the Company's Common Stock
into which such Series B Preferred Stock is convertible immediately
before the Effective Time.
Concurrently with the execution and delivery of the Amended Merger
Agreement, Greenwich, General Electric Company, a New York corporation
("GE"), and GB Merger Corp., a wholly-owned subsidiary of GE, entered
into an Agreement and Plan of Merger pursuant to which those parties
have agreed that Greenwich will merge with GB Merger Corp. (the "GE-
Greenwich Merger"), thereby becoming a wholly-owned subsidiary of GE.
Consummation of the UNC-Greenwich Merger pursuant to the Amended Merger
Agreement is subject to a number of conditions, including approval by
the stockholders of the Company entitled to vote thereon, certain
regulatory approvals, and satisfaction or waiver of all conditions to
the GE-Greenwich Merger. The GE-Greenwich Merger is, in turn, subject
to a
<PAGE>
<PAGE> 10
number of conditions, including approval by the Greenwich stockholders
entitled to vote thereon and certain regulatory approvals. If the GE-
Greenwich Merger is terminated for any reason, the Amended Merger
Agreement provides, in effect, that the terms of the Original Merger
Agreement will once again become effective, with certain
modifications.
5. A subsidiary of the Company, Pacific Airmotive Corporation ("PAC"),
acquired by the Company in 1985 from Purex Corporation, conducted
aircraft engine overhaul operations on two adjacent parcels (the "PAC
parcels") in Burbank, California. In 1994, Lockheed Martin Corporation
("Lockheed") commenced an action against PAC and other parties in
United States District Court for the Central District of California
under the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, to allocate and recover environmental
response costs Lockheed alleged it incurred and would incur in
remediating groundwater in the vicinity of the parcels as required by
the U.S. Environmental Protection Agency. In December 1995, Lockheed
amended its complaint to include remediation of soil and groundwater
with respect to a third Burbank parcel that Lockheed had purchased in
1981 from a subsidiary of Purex Corporation (the "Lockheed parcel") and
to add the Company and its Airwork subsidiary as parties to the case.
Trial on the Lockheed claims was held in August 1996. On April 7,
1997, the trial court issued findings of fact and conclusions of law
determining that PAC is liable for contamination on and from the
Lockheed parcel, based on a series of assumptions of liability among
participants in a leveraged buyout of Purex Corporation in 1982, and
liable for contamination on and from the PAC parcels. It is
anticipated that the court's determination will be reduced to a final
judgement against the Company, Airwork, and PAC for approximately $10.3
million (including prejudgment interest) and a declaration that they
are jointly and severally liable for 11% of any additional remediation
costs incurred by Lockheed after June 30, 1996 with respect to the
Lockheed parcel, which additional remediation costs could approach or
exceed those incurred to date. The Company and PAC believe that the
trial court's conclusions are clearly at odds with the undisputed
facts, and consequently are prepared to post the necessary bond and
pursue an appeal of the trial court's decision to the United States
Court of Appeals at such time as the trial court's judgment becomes
final. In addition, the Company and PAC have joined Purex Industries,
Inc. (as successor by merger to Purex Corporation) ("Purex") as a
third-party defendant in the Lockheed action, asserting that Purex is
liable to the Company and PAC to the extent that they may be found
liable with respect to the Lockheed claims. No trial has yet been held
on the claims of the Company and PAC against Purex, and it is not known
whether the trial court will enter a final judgment in the Lockheed
phase of the action (which would require the Company to appeal) before
there is a trial of the related Purex phase. In addition, the Company
has notified its own insurance carriers of its potential exposure and
has requested that these carriers provide indemnification for any
recovery by Lockheed. The Company has been advised by counsel that
<PAGE>
<PAGE> 11
there are valid and meritorious appellate issues that are available to
the Company. However, because of the uncertainties associated with
this litigation, the Company is unable to determine its ultimate
liability, if any, in this matter. The Company intends to vigorously
pursue an appeal as well as vigorously pursue its claims against Purex
and its insurance carriers as well as the Company's carriers.
The Company acquired TRT Telecommunications Corporation ("TRT") from
United Brands Company in 1985. At that time, TRT was one of a number
of so-called international record carriers that were parties to a
proceeding before the Federal Communications Commission ("FCC") in
which the former Western Union Telegraph Company sought to collect
additional retroactive charges for interconnecting message traffic that
Western Union had carried on its facilities in the late 1970's and
early 1980's. The Company subsequently sold TRT and its parent
corporation, ICC Communications Corp., to Pacific Telecom, Inc. ("PTI")
in 1988, while the FCC proceeding was still pending. As part of that
transaction, the Company agreed to indemnify PTI, ICC and defined
subsidiaries including TRT against losses, reasonable costs and
expenses, damages or liabilities incurred in connection with the FCC
proceeding. Following several corporate reorganizations, PTI sold
certain PTI subsidiaries, including the former TRT, to IDB
Communications Group, Inc. (now known as WorldCom, Inc.) ("IDB") in
1993. In connection with that transaction, PTI agreed to indemnify IDB
against losses, damages, or expenses incurred or sustained as a result
of the FCC proceeding. In a decision released in January 1995, the FCC
determined that the former Western Union was entitled to the additional
charges it sought. This determination was upheld by the U.S. Court of
Appeals for the D.C. Circuit in February 1996. PTI has asserted that
its indemnification of IDB would be a "loss" incurred in connection
with the FCC proceeding under its 1988 agreement with the Company. The
Company has rejected PTI's claim, and in April 1996 filed a declaratory
judgment action in Delaware Superior Court against PTI, seeking a
determination that it has no obligation to indemnify PTI under the 1988
agreement. In November 1996, PTI paid IDB $4.9 million as
indemnification against the former TRT's liability in the FCC
proceeding and obtained purported assignments and subrogation of rights
allegedly held by IDB as indirect parent corporation of TRT and by the
present IDB WorldCom Services, Inc. as alleged "corporate successor in
interest" to the former TRT. PTI has added claims based on these
purported assignments and subrogation to its original counterclaims
against the Company for indemnification under the 1988 agreement. It
is the Company's position that it is not obligated to indemnify PTI
because any amounts PTI voluntarily paid to IDB pursuant to its 1993
agreement with IDB do not constitute a "loss" in connection with the
FCC proceeding within the meaning of the 1988 agreement. It is also
the Company's position that PTI's separate and unconditional agreement
to indemnify IDB superseded any obligation the Company may have had to
indemnify TRT or any successor against the same liability. The Company
has also asserted that, pursuant to the 1988 agreement between the
Company and PTI, any indemnification by the Company would have to be
reduced by the benefit of available federal and state income tax
deductions by the indemnified party. In addition, the Company has
asserted claims: against the former United Brands for breach of
<PAGE>
<PAGE> 12
representations and warranties relating to the FCC proceeding made in
connection with the Company's acquisition of TRT in 1985; against the
public accounting firm that prepared the closing balance sheet
underlying the Company's purchase of TRT, which did not adequately
reflect the potential liability; and against two law firms which
represented the Company in its purchase of TRT. The Company is unable
to estimate its liability, if any, in this matter. However, the range
of any possible loss could be from zero to $4.9 million. The Company
believes it has meritorious defenses against any claim by PTI.
A uranium mill and mill tailings facility of a subsidiary of the
Company, United Nuclear Corporation, 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 that 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 costs for such remediation of $1.4 million, $2.1
million and $2.2 million in 1996, 1995, and 1994, respectively. It is
anticipated, based on the approved reclamation plan, that the cost of
future remediation will be approximately $2.6 million. Such cost has
been accrued as part of reserves established for the discontinued
operation.
United Nuclear Corporation was engaged in mining uranium ore at a
number of leased sites in New Mexico, ceasing all such operations in
1982. In June 1993, the State of New Mexico enacted the New Mexico
Mining Act (the "Mining Act"), requiring existing mining operations to
perform site assessments, obtain permits, and effect any required
remediation regarding such mines. The Mining Act defines "existing
mining operations" as those that were in operation for two or more
years between 1970 and June 18, 1993, the effective date of the Mining
Act. United Nuclear has taken the position with respect to these mines
that it was not an owner or operator of those mining operations when
the Mining Act was enacted and that the Mining Act is instead
applicable to current owners or operators of existing mining operations
as defined in the Mining Act. The New Mexico Mining Commission (the
"Commission") determined in July 1996 that the Mining Act and
Regulations apply to three former operations. An appeal of the
Commission's determination has been made to the New Mexico District
Court. The appeal has been fully briefed, and oral argument has been
requested and is anticipated in the near future. The Company has
notified a number of its insurance carriers and is currently in the
process of notifying its remaining carriers of this potential exposure.
Counsel to United Nuclear believes that United Nuclear has a
meritorious legal position and United Nuclear is pursuing its appeal
vigorously. The extent of reclamation that the Commission might
require, if it is determined that the Mining Act applies to the three
former mining operations, is not known. As a result, no range of loss
can be established regarding United Nuclear's possible costs should the
Mining Act be held to apply to its former mining operations.
<PAGE>
<PAGE> 13
The Company and one of its subsidiaries have been named under CERCLA,
along with a number of other parties, as a Potentially Responsible
Party at several waste disposal sites. The Company believes that any
cost assessed with regard to these sites will not have a material
adverse effect on the financial condition, results of operations or
liquidity of the Company.
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.
6. The Company's obligations under the 9 1/8% Senior Notes, 11% Senior
Subordinated Notes and the revolving credit facility are
unconditionally guaranteed by each of the Company's domestic wholly-
owned operating subsidiaries (the "Guarantees"). The combined
guarantors are jointly and severally liable under the subsidiary
guarantees. Each Guarantee under the Notes is a senior unsecured
obligation of the subsidiary providing such Guarantee and ranks pari
passu with all senior unsecured indebtedness of such subsidiary. The
Guarantees under the revolving credit facility are collateralized, in
general, by the accounts receivable and inventory of the subsidiaries
and, therefore, effectively rank senior to the Guarantees. The
Guarantees under the Notes are in effect only for as long as the
Guarantees under the revolving credit agreement remain in effect. If
the Guarantees under the Notes 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, 1997 and December
1996 and for the six-month period ended June 30, 1997 and 1996 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>
<PAGE> 14
UNC INCORPORATED
Condensed Consolidating Balance Sheet
June 30, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
--------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Assets
- ------
Current assets:
Cash $ 4,230 $ 912 $ $ 5,142
Accounts receivable, net 18 220,592 220,610
Unbilled costs and accrued
profits on contracts in progress 2,877 2,877
Inventories 159,851 159,851
Assets held for sale 2,332 4,081 6,413
Other 1,069 18,459 19,528
--------- --------- ---------
Total current assets 7,649 406,772 414,421
--------- --------- ---------
Assets held for sale-noncurrent 2,414 6,547 8,961
Property, plant & equipment, net 270 71,830 72,100
Cost in excess of net assets
of acquired companies, net 248,380 248,380
Other noncurrent assets 16,961 16,678 33,639
Investments in and advances
to subsidiaries 550,668 (550,668)
--------- --------- --------- ---------
Total assets $ 577,962 $ 750,207 $(550,668) $ 777,501
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE> 15
UNC INCORPORATED
Condensed Consolidating Balance Sheet (cont.)
June 30, 1997
(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 24 141,397 141,421
Accruals and other current liabilities 23,334 48,396 71,730
--------- --------- ---------
Total current liabilities 28,558 189,910 218,468
--------- --------- ---------
Long-term debt 371,828 5,702 377,530
Other noncurrent liabilities 30,149 9,070 39,219
--------- --------- ---------
Total liabilities 430,535 204,682 635,217
--------- --------- ---------
Cumulative preferred stock 250 250
Common stock and additional paid
in capital 152,177 152,177
Retained earnings (deficit) (1,875) (1,875)
Equity of subsidiaries and
advances of parent 550,668 (550,668)
--------- --------- --------- ---------
150,552 550,668 (550,668) 150,552
Less:
Treasury stock, at cost
(486,500 shares) 5,143 5,143
Minimum pension liability adjustment 1,790 1,790
Unearned compensation-restricted
stock 1,335 1,335
--------- --------- --------- ---------
Total shareholders' equity 147,427 545,525 (550,668) 142,284
--------- --------- --------- ---------
Total liabilities and
shareholders' equity $ 577,962 $ 750,207 $(550,668) $ 777,501
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE> 16
UNC INCORPORATED
Condensed Consolidating Balance Sheet
December 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Assets
- ------
Current assets:
Cash $ 18,332 $ 36 $ $ 18,368
Accounts receivable, net 190 203,749 203,939
Unbilled costs and accrued
profits on contracts in progress 6,325 6,325
Inventories 127,777 127,777
Assets held for sale 2,541 4,232 6,773
Other 1,405 17,233 18,638
-------- -------- ---------
Total current assets 22,468 359,352 381,820
-------- -------- ---------
Assets held for sale noncurrent 2,414 6,848 9,262
Property, plant & equipment, net 468 72,942 73,410
Cost in excess of net assets
of acquired companies, net 252,647 252,647
Other noncurrent assets 17,343 15,314 32,657
Investments in and advances
to subsidiaries 523,986 (523,986)
-------- -------- --------- ---------
Total assets $566,679 $707,103 $(523,986) $ 749,796
======== ======== ========= =========
</TABLE>
<PAGE>
<PAGE> 17
UNC INCORPORATED
Condensed Consolidating Balance Sheet (cont.)
December 31, 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 1,899 120,676 122,575
Accruals and other current liabilities 25,129 53,620 78,749
-------- -------- ---------
Total current liabilities 32,228 174,413 206,641
-------- -------- ---------
Long-term debt 361,885 5,744 367,629
Other noncurrent liabilities 31,144 8,103 39,247
-------- -------- ---------
Total liabilities 425,257 188,260 613,517
-------- -------- ---------
Cumulative preferred stock 250 250
Common stock and additional paid
in capital 152,425 152,425
Retained earnings (deficit) (7,826) (7,826)
Equity of subsidiaries and
advances of parent 523,986 (523,986)
-------- -------- --------- ---------
144,849 523,986 (523,986) 144,849
Less:
Treasury stock, at cost
(486,500 shares) 5,143 5,143
Minimum pension liability adjustment 1,790 1,790
Unearned compensation-restricted
stock 1,637 1,637
-------- -------- --------- ---------
Total shareholders' equity 141,422 518,843 (523,986) 136,279
-------- -------- --------- ---------
Total liabilities and
shareholders' equity $566,679 $707,103 $(523,986) $ 749,796
======== ======== ========= =========
</TABLE>
<PAGE>
<PAGE> 18
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Six Months Ended June 30, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Eliminations Consolidated
------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Sales and operating revenues $ $ 537,746 $ $ 537,746
Costs and expenses
Costs and operating expenses 466,004 466,004
Selling, general and
administrative expenses 5,615 38,824 44,439
Allocated expenses (2,004) 2,004
--------- --------- ---------
3,611 506,832 510,443
--------- --------- ---------
Operating income (loss) (3,611) 30,914 27,303
Other income (expense)
Interest expense (18,294) (395) (18,689)
Other, net (1,256) 81 (1,175)
Equity in income of
subsidiaries 24,480 (24,480)
--------- --------- --------- ---------
4,930 (314) (24,480) (19,864)
--------- --------- --------- ---------
Earnings before income taxes 1,319 30,600 (24,480) 7,439
Income tax benefit (provision) 4,632 (6,120) (1,488)
--------- --------- --------- ---------
Net earnings 5,951 24,480 (24,480) 5,951
Preferred dividends (1,062) (1,062)
--------- --------- --------- ---------
Net Earnings applicable to common stock $ 4,889 $ 24,480 $ (24,480) $ 4,889
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE> 19
UNC INCORPORATED
Condensed Consolidating Statement of Earnings
Six Months Ended June 30, 1996
(Dollars in thousands)
<TABLE>
<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 (loss) (3,661) 18,293 14,632
Other income (expense)
Interest expense (11,097) (48) (11,145)
Other, net (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
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Parent Combined
Company Guarantors Consolidated
------- ---------- ----------
<S> <C> <C> <C>
Net cash flow provided (used) by
operations $ (21,903) $ 2,621 $ (19,282)
--------- --------- ---------
Cash flows from investing activities:
Net proceeds from sale of assets 209 738 947
Additions to property, plant and
equipment (4,464) (4,464)
Other (80) (80)
--------- --------- ---------
Net cash provided (used) by
investing activities 209 (3,806) (3,597)
--------- --------- ---------
Cash flows from financing activities:
Additions to debt 542,805 542,805
Reductions in debt (532,841) (42) (532,883)
Other transactions, net 793 793
Payment of preferred stock dividend (1,062) (1,062)
Net cash transfers to (from) parent (2,103) 2,103
--------- --------- ---------
Net cash provided (used) by
financing activities 7,592 2,061 9,653
--------- --------- ---------
Net increase (decrease) in cash (14,102) 876 (13,226)
Cash at beginning of year 18,332 36 18,368
--------- --------- ---------
Cash at end of period $ 4,230 $ 912 $ 5,142
========= ========= =========
</TABLE>
<PAGE>
<PAGE> 21
UNC INCORPORATED
Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 1996
(Dollars in thousands)
<TABLE>
<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 2,671
--------- --------- ---------
Cash at end of period $ 183 $ 11,572 $ 11,755
========= ========= =========
</TABLE>
<PAGE>
<PAGE> 22
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
engines and accessories 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. The
Company groups these operations into three major businesses: Business
Aviation, Military Aviation Services and Manufacturing.
Quarter Ended June 30, 1997 Compared with Quarter Ended June 30, 1996
- ---------------------------------------------------------------------
Revenues were $275.9 million in the 1997 quarter compared with $181.3 million
in the 1996 quarter, an increase of $94.6 million (52%). Contributing to
this overall increase were revenues generated by Garrett Aviation Services
("Garrett") and Stearns Company ("Stearns"), acquired in May and September
1996, respectively, as well as increased volume from the Manufacturing and
Military Aviation Services businesses. Operating income in the 1997 quarter
increased $5.2 million (59%) to $14.0 million due to increased volume and the
acquisition of Garrett and Stearns.
Revenues for Business Aviation increased $86.6 million in the 1997 quarter to
$162.5 million. The higher revenues were due to the acquisition of Garrett
which contributed $87.3 million and increased volume from industrial engine
sales of $10.1 million. These increases were partially offset by lower
volumes in non-Garrett engine overhauls of $7.0 million and $3.8 million in
accessory overhauls. Operating income increased $4.5 million in the 1997
quarter to $8.4 million principally due to the Garrett acquisition which
contributed $5.4 million and increased volume of industrial engines of $2.5
million, offset by lower volume in non-Garrett engine overhauls of $3.4
million. The lower volume in non-Garrett engine overhauls is believed to be
a result of customer concern regarding the continuation of the Pratt &
Whitney engine overhaul business after the merger with GE and Greenwich. As
a result of the commitment to continue quality overhaul services for the
Pratt & Whitney engines after the merger, management believes this product
line will return to its normal levels of performance once the merger is
consummated.
Military Aviation Services revenues of $72.3 million increased $0.8 million
(1%) in the 1997 quarter. Contract Field Services revenues increased $6.2
million due to increased activities on existing and new contracts. This
increase was partially offset by a $2.0 million reduction in Federal Services
Contract revenues of which approximately $5.9 million is attributable to
reduced revenues due to the completion of activities on a major contract
<PAGE>
<PAGE> 23
offset by a volume increase of $3.9 million on existing contracts.
International revenues decreased $3.4 million due principally to the wind-
down of activities on a supply and logistics contract. Operating income
decreased $0.4 million in the 1997 quarter due principally to the loss of a
contract claim in the amount of $0.6 million offset by higher volume on new
and existing contracts.
The Company's Manufacturing business revenues in the 1997 quarter increased
$7.2 million (21%) to $41.1 million compared with the 1996 quarter. The
increase in revenues is principally due to the higher volume on U.S.
Government contracts and commercial programs for engine and airframe
components of $6.5 million, including $2.4 million from the acquisition of
Stearns in September 1996, and increased volume from specialized repairs of
$0.7 million. Operating income increased $1.4 million (39%) to $5.1 million
in the 1997 quarter principally due to these higher volumes.
Selling, general and administrative expenses in the 1997 quarter were $22.0
million or 8.0% of sales compared with $17.5 million or 9.7% of sales in
1996. This improvement is attributable principally to the economies of scale
as a result of the acquisition of Garrett.
Interest expense increased $3.2 million in the 1997 quarter as a result of
higher average debt levels, principally due to the acquisition of Garrett and
Stearns.
Six Months Ended June 30, 1997 Compared with Six Months Ended June 30, 1996
- ---------------------------------------------------------------------------
Revenues were $537.7 million in the first half of 1997 compared with $322.8
in the 1996 period, an increase of $214.9 million (67%). Contributing to
this overall increase were revenues generated by Garrett Aviation Services
("Garrett") and the Stearns Company ("Stearns"), acquired in May and
September 1996, respectively, as well as increased volume from the
Manufacturing and Military Aviation Services businesses. Operating income in
the first half of 1997 increased $12.7 million (87%) to $27.3 million due to
the acquisition of Garrett and Stearns and increased volumes.
Revenues for Business Aviation increased $191.6 million in the first half of
1997 to $309.9 million. The higher revenues were principally due to the
Garrett acquisition on May 29, 1996, which contributed $197.0 million, and
increased volume of industrial engine sales of $7.7 million, offset by lower
volume in non-Garrett engine overhauls of $4.2 million and accessory
overhauls of $8.9 million. Operating income increased $8.8 million to $15.3
million principally due to the Garrett acquisition which contributed $10.8
million and increased volume of industrial engines of $1.3 million, offset by
lower volume in non-Garrett engine overhauls of $3.3 million.
Military Aviation Services revenues of $147.7 million increased $4.6 million
(3%) in the first half of 1997. Contract Field Services revenues increased
$10.5 million due to increased activities on existing and new contracts.
<PAGE>
<PAGE> 24
Federal Services revenues increased $3.3 million as a result of an $8.1
million increase in activities on continuing contracts, offset by a $4.9
million reduction in revenues due to the completion of activities on a major
contract. International revenues decreased $9.2 million as a result of a
$6.1 million reduction of revenues due to the wind-down of activities on a
supply and logistics contract and a $3.1 million reduction in the volume of
on-going contracts. Operating income increased $1.1 million (23%) to $5.7
million principally due to increased volume from Contract Field Services and
Federal Services Contracts partially offset by the loss of a contract claim
in the amount of $0.6 million.
The Company's Manufacturing business revenues in the first half of 1997
increased $18.7 million (30%) to $80.2 million compared with the 1996 period.
The increase in revenues is principally due to the higher volume on U.S.
Government contracts and commercial programs for engine and airframe
components of $16.8 million, including $4.5 million from the acquisition of
Stearns in September 1996 and increased volume from specialized repairs of
$1.9 million. Operating income increased $2.7 million (38%) to $10.0 million
in the first half of 1997 principally due to these higher volumes.
Selling, general and administrative expenses in the first half of 1997, were
$44.4 millon or 8.3% of sales compared with $32.2 million or 10.0% in the
1996 period. This improvement is attributable principally to the economies
of scale as a result of the acquisition of Garrett.
Interest expenses increased $7.5 million in the first half of 1997 as a
result of higher average debt levels, principally due to the acquisition of
Garrett and Stearns.
The effective income tax rate as a percent of earnings before income taxes
was 20% and 30% for the six-month periods ended June 30, 1997 and 1996,
respectively. The decrease in the effective tax rate for 1997 compared with
1996 is due to the reduction of the deferred tax valuation allowance based on
management's evaluation of the net realizability of income tax benefits,
considering expiration of net operating losses, predictability of future
income, and reversal of temporary differences.
The Department of Defense 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 Military Aviation Services'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. 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.<PAGE>
<PAGE> 25
Over the past several years the Company's Manufacturing business continues to
receive pricing pressure from certain customers, principally OEMs. Price
concessions have been provided to certain 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 at higher prices 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 have resulted in increased profitability.
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 Department of Defense bypassing OEMs and placing orders
directly with subcontractors such as the Company. The Company's Michigan
engine component manufacturing facility continues to receive orders under
multi-year contracts for military spare parts, which include the production
of high pressure turbine vanes for the F110 and F404 engines. The Company's
manufacturing operations will continue to capitalize on the opportunities in
the military market. At the same time, the commercial manufacturing business
is expanding as a result of increased demand by airlines for new airplanes
and engines.
Liquidity and Capital Resources
- -------------------------------
The Company's operating activities used $19.3 million in the first half of
1997 which consisted of $18.5 million generated by earnings after adjusting
for noncash items, offset by a $36.2 millon investment in additional working
capital and $1.6 million related to changes in noncurrent assets and
liabilities. Investing activities used $3.6 million during the first half of
1997 of which $4.5 million was invested in capital expenditures, reduced by
$0.9 millon in proceeds from the sale of assets. Net cash provided by
financing activities of $9.7 million includes $14.2 million in revolving
credit borrowings which were used to fund a $4.2 million sinking fund
installment on the 7 1/2 % Convertible Subordinated Debentures, and to
provide a portion of the funds used by operating activities.
The Company's debt-to-capitalization ratio at June 30, 1997 was 72.9%
compared with 73.2% at December 31, 1996. At June 30, 1997, the Company's
working capital was $196.0 million, with a current ratio of 1.9 to 1 compared
with working capital of $175.2 million and a current ratio of 1.8 to 1 at
December 31, 1996. Capital expenditures in the first half of 1997 amounted
to $4.5 million compared with $6.9 million in the 1996 period.
<PAGE>
<PAGE> 26
The Company's Amended and Restated Revolving Credit Agreement provides for a
borrowing capacity of up to $112 million through May 2000, subject to
borrowing base limitations as defined in the agreement, reduced by
outstanding letters of credit. In addition to the $5.1 million in cash on
hand, the Company's unused availability under the credit line was $12.7
million at June 30, 1997. The Company considers these resources, coupled
with cash expected to be generated by earnings adjusted for noncash items, to
be sufficient to meet its foreseeable funding needs, including anticipated
capital expenditures.
Under the terms of the Amended and Restated Credit Agreement dated May 22,
1996, the Company is required to meet certain financial covenants. As of
June 29, 1997 the covenant for the ratio of consolidated total funded
indebtedness to EBITDA (earnings before interest, taxes, depreciation and
amortization) was scheduled to change from a ratio of 6.0 to 1 to a ratio of
5.0 to 1. Because of the proposed Merger the Company has not been in a
position to follow through with its planned equity offering and, as a result,
the Company's ratio at June 30, 1997 was 5.19 to 1. Consequently, the
lenders amended the Amended and Restated Credit Agreement to provide for a
covenant of 5.5 to 1 from June 30, 1997 through September 30, 1997 at which
time the covenant becomes 5.0 to 1.
Many of the Company's restructuring goals have been achieved since the
program was implemented in June 1994. The Company has generated $50.0
million from the sale of assets, including $25.0 million from the sale of the
Company's Connecticut property, $12.2 million from the sale of other under-
utilized property and equipment, $12.8 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 $9.1 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 receivables and generate additional cash.
Since the restructuring program was implemented, the Company has incurred
$23.0 million of cash expenditures against its restructuring accrual. These
cash expenditures include employee severance and related costs of $2.5
million, $20.5 million of costs associated with the sale, closing and
consolidation of businesses and operations, including $3.8 million of third-
party costs associated with shutdowns, consolidations and sales programs.
The Company believes that adequate accruals are available to complete the
program.
<PAGE>
<PAGE> 27
The Company discontinued its minerals and offshore products and services
operations in 1984, its telecommunications operation in 1988 and its
submarine propulsion unit manufacturing operation and its environmental
services operation in 1990. In connection with these actions, the Company
has approximately $10.5 million accrued to cover the cost of certain long-
term remediation activities, wind down and final closure of certain long-
term U. S. Government contracts, resolution of certain litigation and
disposition of remaining properties. The Company anticipates that these
activities will be completed over the next three years.
On February 13, 1997, the Company entered into an Agreement and Plan of
Reorganization (the "Original Merger Agreement") with Greenwich Air Services,
Inc. ("Greenwich") pursuant to which the Company would be merged into, and
thereby become, a wholly-owned subsidiary of Greenwich. Under the Original
Merger Agreement, each of the Company's "Common Stock Equivalents" (as
defined in the Original Merger Agreement) would be valued at not less than
$14.00 and each holder of the Company's Common Stock Equivalents would be
entitled to receive that number of shares of Class B nonvoting Common Stock,
par value $.01 per share, of Greenwich ("Greenwich Class B Stock") as is
determined by multiplying the number of shares of the Company's Common Stock
Equivalents held by such holder by the Exchange Ratio.
Subject to adjustment upon the occurrence of certain events set forth in the
Original Merger Agreement, "Exchange Ratio" means the fraction (expressed as
a decimal to the nearest ten thousandth) determined as follows:
(a) if the average of the closing prices of a share of Greenwich Class B
Stock, as reported on The Nasdaq National Market, for the twenty
trading days immediately preceding the closing date(the "Closing Date
Market Value") is less than or equal to $24.86, the Exchange Ratio is
$14.00 divided by the Closing Date Market Value;
(b) if the Closing Date Market Value exceeds $24.86, but is less than or
equal to $28.59, the Exchange Ratio is 0.5632; and
(c) if the Closing Date Market Value exceeds $28.59, then the Exchange
Ratio is $16.10 divided by the Closing Date Market Value.
In general, the merger consideration would be payable to the holders of the
Company's Common Stock Equivalents solely in shares of Greenwich Class B
Stock. Subject to the limitations and conditions set forth in the Original
Merger Agreement, however, such holders would be entitled, in accordance with
the procedures set forth in the Original Merger Agreement, to elect to
receive all or a portion of the merger consideration in cash; provided,
however, that Greenwich would not be obligated to pay in cash an aggregate
amount which exceeds fifty (50%) percent of the aggregate merger
consideration payable to all holders of the Company's Common Stock
Equivalents computed at $14.00 per share.
<PAGE>
<PAGE> 28
On March 9, 1997, the Company entered into an Amended and Restated Agreement
and Plan of Merger (the "Amended Merger Agreement") modifying and restating
the terms of the Original Merger Agreement. The Amended Merger Agreement
modifies, among other things, the consideration to be received by holders of
shares of the Company's Common Stock and Series B Preferred Stock by virtue
of the UNC-Greenwich Merger. Pursuant to the Amended Merger Agreement,
holders of the Company's Common Stock will be entitled to receive at the
Effective Time (as defined in the Amended Merger Agreement) $15.00 in cash
for each share of Common Stock then currently issued and outstanding and
holders of the Company's Series B Preferred Stock will be entitled to receive
an amount equal to $15.00 multiplied by the number of shares of the Company's
Common Stock into which such Series B Preferred Stock is convertible
immediately before the Effective Time.
Concurrently with the execution and delivery of the Amended Merger Agreement,
Greenwich, General Electric Company, a New York corporation ("GE"), and GB
Merger Corp., a wholly-owned subsidiary of GE, entered into an Agreement and
Plan of Merger pursuant to which those parties have agreed that Greenwich
will merge with GB Merger Corp. (the "GE-Greenwich Merger"), thereby becoming
a wholly-owned subsidiary of GE.
Consummation of the UNC-Greenwich Merger pursuant to the Amended Merger
Agreement is subject to a number of conditions, including approval by the
stockholders of the Company entitled to vote thereon, certain regulatory
approvals, and satisfaction or waiver of all conditions to the GE-Greenwich
Merger. The GE-Greenwich Merger is, in turn, subject to a number of
conditions, including approval by the Greenwich stockholders entitled to vote
thereon and certain regulatory approvals. If the GE-Greenwich Merger is
terminated for any reason, the Amended Merger Agreement provides, in effect,
that the terms of the Original Merger Agreement will once again become
effective, with certain modifications.
Environmental
- -------------
The Company's operations are subject to a variety of federal, state and local
laws and regulations relating to the environment. The Company believes that
its facilities are operated substantially in compliance with applicable
environmental laws and regulations on an overall basis. However, as
described below, some areas require remedial action.
A subsidiary of the Company, Pacific Airmotive Corporation ("PAC"), acquired
by the Company in 1985 from Purex Corporation, conducted aircraft engine
overhaul operations on two adjacent parcels (the "PAC parcels") in Burbank,
California. In 1994, Lockheed Martin Corporation ("Lockheed") commenced an
action against PAC and other parties in United States District Court for the
Central District of California under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, to allocate and recover
environmental response costs Lockheed alleged it incurred and would incur in
remediating groundwater in the vicinity of the parcels as required by the
U.S. Environmental Protection Agency. In December 1995, Lockheed amended its
<PAGE>
<PAGE> 29
complaint to include remediation of soil and groundwater with respect to a
third Burbank parcel that Lockheed had purchased in 1981 from a subsidiary of
Purex Corporation (the "Lockheed parcel") and to add the Company and its
Airwork subsidiary as parties to the case. Trial on the Lockheed claims was
held in August 1996. On April 7, 1997, the trial court issued findings of
fact and conclusions of law determining that PAC is liable for contamination
on and from the Lockheed parcel, based on a series of assumptions of
liability among participants in a leveraged buyout of Purex Corporation in
1982, and liable for contamination on and from the PAC parcels. It is
anticipated the court's determination will be reduced to a final judgement
against the Company, Airwork, and PAC for approximately $10.3 million
(including prejudgment interest) and a declaration that they are jointly and
severally liable for 11% of any additional remediation costs incurred by
Lockheed after June 30, 1997 with respect to the Lockheed parcel, which
additional remediation costs could approach or exceed those incurred to date.
The Company and PAC believe that the trial court's conclusions are clearly at
odds with the undisputed facts, and consequently are prepared to post the
necessary bond and pursue an appeal of the trial court's decision to the
United States Court of Appeals at such time as the trial court's judgment
becomes final. In addition, the Company and PAC have joined Purex
Industries, Inc. (as successor by merger to Purex Corporation) ("Purex") as
a third-party defendant in the Lockheed action, asserting that Purex is
liable to the Company and PAC to the extent that they may be found liable
with respect to the Lockheed claims. No trial has yet been held on the
claims of the Company and PAC against Purex, and it is not known whether the
trial court will enter a final judgment in the Lockheed phase of the action
(which would require the Company to appeal) before there is a trial of the
related Purex phase. In addition, the Company has notified its own insurance
carriers of its potential exposure and has requested that these carriers
provide indemnification for any recovery by Lockheed. The Company has been
advised by counsel that there are valid and meritorious appellate issues that
are available to the Company. However, because of the uncertainties
associated with this litigation, the Company is unable to determine its
ultimate liability, if any, in this matter. The Company intends to
vigorously pursue an appeal as well as vigorously pursue its claims against
Purex and its insurance carriers as well as the Company's carriers.
A subsidiary of the Company, United Nuclear Corporation, has been involved in
environmental reclamation of a former uranium mill and mill tailing facility
since 1988. The reclamation plan has been approved by the U.S. Nuclear
Regulatory Commission and the U.S. Environmental Protection Agency and
reclamation activities are proceeding on schedule. The cost of this
remediation was $0.3 million in 1997, $1.4 million in 1996, $2.1 million in
1995 and $2.2 million in 1994. It is anticipated, based on the approved
reclamation plan, that the cost of future remediation will be approximately
$2.3 million. Such cost has been accrued as part of the discontinued
operation.
<PAGE>
<PAGE> 30
United Nuclear Corporation was engaged in mining uranium ore at a number of
leased sites in New Mexico, ceasing all such operations in 1982. In June
1993, the State of New Mexico enacted the New Mexico Mining Act (the "Mining
Act"), requiring existing mining operations to perform site assessments,
obtain permits, and effect any required remediation regarding such mines.
The Mining Act defines "existing mining operations" as those that were in
operation for two or more years between 1970 and June 18, 1993, the effective
date of the Mining Act. United Nuclear has taken the position with respect to
these mines that it was not an owner or operator of those mining operations
when the Mining Act was enacted and that the Mining Act is instead applicable
to current owners or operators of existing mining operations as defined in
the Mining Act. The New Mexico Mining Commission (the "Commission")
determined in July 1996 that the Mining Act and regulations apply to three
former operations. An appeal of the Commission's determination has been made
to the New Mexico District Court. The appeal has been fully briefed and oral
argument has been requested and is anticipated in the near future. The
Company has notified a number of its insurance carriers and is in the process
of notifying its remaining carriers of this potential exposure. Counsel to
United Nuclear believes that United Nuclear has a meritorious legal position
and United Nuclear is pursuing its appeal vigorously. The extent of
reclamation that the Commission might require if it is determined that the
Mining Act applies to the three former mining operations is not known. As a
result, no range of loss can be established regarding United Nuclear's
possible costs should the Mining Act be held to apply to its former mining
operations.
Based on the Company's assessment of the matters described above, the Company
believes that these and other environmental matters will not have a material
adverse impact on the Company's financial condition, results of operation or
liquidity. (For further details with respect to environmental matters, see
Note 5 of "Notes to Consolidated Financial Statements.")
New Accounting Standards
- ------------------------
In 1997, the Financial Accounting Standards Board issued the following
Statements of Financial Accounting Standards:
No. 128 - "Earnings per Share". This statement, which becomes effective for
fiscal years ending after December 15, 1997, replaces the presentations of
primary earnings per share with a presentation of basic earnings per share
and also requires dual presentation of basic and diluted earnings per share
on the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and denominator of
the basic earnings per share computation to the numerator and denominator of
the diluted earnings per share computation. The adoption of this Standard
would not have had a material effect on the Company's computation of earnings
per share for the three and six month periods ended June 30, 1997 and 1996.
No. 129 - "Disclosure of Information about Capital Structures". This
statement becomes effective for fiscal years ending after December 15, 1997,
and continues the previous requirements to disclose certain information about
an entity's capital structure found in previously issued Opinions and
Standards. The Company currently follows the provisions of this Standard.
<PAGE>
<PAGE> 31
No. 130 - "Reporting Comprehensive Income". This statement becomes effective
for fiscal years ending after December 15, 1997, and requires that changes in
the amounts of comprehensive income items be shown in a primary financial
statement. The Company intends to adopt the disclosures required by this
Statement for the year ending December 31, 1997.
No. 131 - "Disclosures about Segments of an Enterprise and Related
Information". This statement becomes effective for fiscal years ending after
December 15, 1997, and changes the way public companies report information
about segments of their business in their annual financial statements and
requires them to report selected segment information in their quarterly
reports issued to shareholders. The Company intends to adopt the disclosures
required by this Statement for the year ending December 31, 1997.
<PAGE>
<PAGE> 32
PART 11 - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits Description
- ------------- -----------------------------------
Exhibit 10.59 Amendment No. 3 to Amended and
Restated Credit Agreement
Exhibit 11 Computation of Earnings Per Common
Share
Exhibit 27 Financial Data Schedule
(electronically filed)
(b) Reports on Form 8-K
- ------------------------
No reports on Form 8-K were filed during the quarter ended June 30, 1997.
<PAGE>
<PAGE> 33
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 14, 1997 By:/s/ Robert L. Pevenstein
-------------------------
Robert L. Pevenstein
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE>
<PAGE> 34
UNC Incorporated and Subsidiaries
SEQUENTIAL EXHIBIT INDEX
Exhibit
Number Description
- -------- ---------------------------------------
Exhibit 10.59 Amendment No. 3 to Amended and Restated Credit
Agreement
Exhibit 11 Computation of Earnings Per Common Share
Exhibit 27 Financial Data Schedule (electronically filed)
<PAGE>
<PAGE> 35
EXHIBIT 10.59
AMENDMENT NO. 3 TO
--------------------
AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 3 TO AMENDED AND RESTATED CREDIT AGREEMENT
("AMENDMENT") is dated as of the 13th day of August, 1997, by and among UNC
INCORPORATED, a corporation organized under the laws of the State of Delaware
("BORROWER"), FIRST UNION COMMERCIAL CORPORATION, as administrative agent
("ADMINISTRATIVE AGENT"), FIRST UNION COMMERCIAL CORPORATION, as collateral
agent ("COLLATERAL AGENT"), FIRST UNION NATIONAL BANK OF NORTH CAROLINA, as
issuer of certain letters of credit ("ISSUING BANK"), the various
corporations identified on the signature pages hereto as a GUARANTOR (each a
"GUARANTOR" and collectively, the "GUARANTORS") and the various banks and
lending institutions identified on the signature pages hereto (collectively,
"LENDERS").
STATEMENT OF PURPOSE
--------------------
Pursuant to the terms and provisions of the Amended And Restated Credit
Agreement dated as of May 22, 1996 by and among the BORROWER, the
ADMINISTRATIVE AGENT, the COLLATERAL AGENT, the ISSUING BANK and the LENDERS,
as amended by the Amendment No. 1 To Amended And Restated Credit Agreement
dated October 2, 1996, Amendment No. 2 To Amended And Restated Credit
Agreement dated as of December 19, 1996 and a letter agreement dated March 7,
1997 ("CREDIT AGREEMENT"), the LENDERS have extended certain credit
facilities to the BORROWER in the maximum principal amount of One Hundred
Twelve Million Dollars ($112,000,000.00) ("CREDIT FACILITY"). The BORROWER
from time to time makes advances and other credit accommodations to each of
the GUARANTORS with proceeds of the CREDIT FACILITY and such advances and
credit accommodations to each GUARANTOR are evidenced by a secured promissory
note from each such GUARANTOR to the order of the BORROWER which has been
assigned by the BORROWER to the COLLATERAL AGENT (all of such secured
promissory notes are collectively herein referred to as the "GUARANTOR
NOTES").
The BORROWER'S obligations under the CREDIT FACILITY are secured by,
among other things, the security interests and liens granted by the BORROWER
to the COLLATERAL AGENT, pursuant to the terms of the Security Agreement
dated May 22, 1996 executed by the BORROWER ("SECURITY AGREEMENT"). The
GUARANTORS have guaranteed the obligations of the BORROWER under the CREDIT
FACILITY pursuant to the terms of various Guaranty And Security Agreements
(individually "GUARANTY" and collectively, "GUARANTIES").
The BORROWER has requested an amendment to the CREDIT AGREEMENT. The
LENDERS, ADMINISTRATIVE AGENT, COLLATERAL AGENT, and ISSUING BANK are willing
to amend the CREDIT AGREEMENT as requested by the BORROWER as set forth
herein.
<PAGE>
<PAGE> 36
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties hereto agree as follows:
Section I. RECITALS. The parties hereto hereby acknowledge the
accuracy of the above Statement Of Purpose and hereby incorporate the
Statement Of Purpose into this AMENDMENT.
Section II. AMENDMENT TO CREDIT AGREEMENT. Section 9.2 of the
CREDIT AGREEMENT is hereby amended by deleting the following ratios and
dates:
03/31/97 to 06/29/97 6.00 to 1
06/30/97 and THEREAFTER 5.00 to 1
and substituting in lieu thereof the following:
03/31/97 to 06/29/97 6.00 to 1
06/30/97 to 09/29/97 5.50 to 1
09/30/97 and THEREAFTER 5.00 to 1
Section III. CONSENT AND AGREEMENT OF GUARANTORS. The GUARANTORS
hereby consent to the modifications contained in this AMENDMENT.
Section IV. OTHER TERMS. Except as specifically modified herein,
all other terms and provisions of the CREDIT AGREEMENT and all other
documents executed in connection therewith remain in full force and effect
and are hereby ratified and confirmed. All security interests and liens
previously granted by the BORROWER or the GUARANTORS to secure their
respective obligations under the CREDIT FACILITY remain in full force and
effect and secure their respective obligations under the CREDIT FACILITY as
amended herein. The modifications contained herein shall not constitute a
novation of the BORROWER'S or any of the GUARANTORS' obligations under the
documents evidencing, securing or otherwise documenting the CREDIT FACILITY.
Section V. BINDING NATURE. This AMENDMENT shall be binding upon
and inure to the benefit of the parties hereto, and their respective
successors and assigns.
Section VI. GOVERNING LAW. This AMENDMENT shall be governed by
and construed and enforced in accordance with the laws of the State of
Maryland, without reference to the conflicts or choice of law principles
thereof.
Section VII. DELIVERY BY TELECOPIER. This AMENDMENT may be
delivered by telecopier and a telefacsimile of any parties signature hereto
shall constitute an original signature for all purposes.
Section VIII. COUNTERPARTS. This AMENDMENT may be executed in
multiple counterparts, any one of which need not contain the signatures of
more than one party, but all of which, taken together, shall constitute one
and the same agreement.
<PAGE>
<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT
under seal as of the date first above written.
WITNESS/ATTEST: BORROWER:
UNC INCORPORATED,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ ROBERT L. PEVESTEIN
- ------------------------ ------------------------(SEAL)
Robert L. Pevenstein,
Senior Vice President and
Chief Financial Officer
ADMINISTRATIVE AGENT:
FIRST UNION COMMERCIAL CORPORATION,
A North Carolina Corporation
/S/ WILLIAM DYER By: /S/ TERRI K. LINS
- ------------------------- --------------------------(SEAL)
Name: TERRI K. LINS
--------------------
Title: VICE PRESIDENT
--------------------
COLLATERAL AGENT:
FIRST UNION COMMERCIAL CORPORATION,
A North Carolina Corporation
/S/ WILLIAM DYER By: /S/ TERRI K. LINS
- ------------------------- --------------------------(SEAL)
Name: TERRI K. LINS
--------------------
Title: VICE PRESIDENT
--------------------
ISSUING BANK:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
/S/ WILLIAM DYER By: /S/ TERRI K. LINS
- ------------------------- --------------------------(SEAL)
Name: TERRI K. LINS
--------------------
Title: VICE PRESIDENT
--------------------
<PAGE>
<PAGE> 38
LENDERS:
FIRST UNION COMMERCIAL CORPORATION
/S/ WILLIAM DYER By: /S/ TERRI K. LINS
- ------------------------- -------------------------(SEAL)
Name: TERRI K. LINS
-------------------
Title: VICE PRESIDENT
--------------------
BNY FINANCIAL CORPORATION
BLANK By: /S/ ROBERT LANE
- ------------------------- -------------------------(SEAL)
Name: ROBERT LANE
-------------------
Title: ASSISTANT VICE PRESIDENT
-------------------
IBJ SCHRODER BANK & TRUST COMPANY
/S/ JAMES STEFFY By: /S/ WING LOUIE
- ------------------------- -------------------------(SEAL)
Name: WING LOUIE
--------------------
Title: VICE PRESIDENT
--------------------
BANK ONE, COLUMBUS, N.A.
By: /S/ CHRISTOPHER MANGER
- -------------------------- -------------------------(SEAL)
Name: CHRISTOPHER MANGER
-------------------
Title: VICE PRESIDENT
--------------------
SANWA BUSINESS CREDIT CORPORATION
BLANK By: /S/ STANLEY KAMINSKI
- -------------------------- -------------------------(SEAL)
Name: STANLEY KAMINSKI
-------------------
Title: VICE PRESIDENT
--------------------
<PAGE>
<PAGE> 39
PROVIDENT BANK OF MARYLAND
/S/ THOMAS FREEZE By: /S/ CARRIE LAPE
- ------------------------- -------------------------(SEAL)
Name: CARRIE LAPE
-------------------
Title: COMMERCIAL BANKING OFFICER
-------------------
GUARANTORS:
UNC HOLDINGS, INC.,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ KENNETH G. MOSESIAN
- ------------------------- -------------------------(SEAL)
Kenneth M. Mosesian,
Treasurer
UNC/LEAR SERVICES, INC.,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC ALL FAB, INC.,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC METCALF SERVICING, INC.,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
<PAGE>
<PAGE> 40
UNC JOHNSON TECHNOLOGY, INC.,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC ARTEX, INC.,
A Delaware Corporation
/S/ SHARON A. KROUPA By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC CAMCO INCORPORATED,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC TEXAS CAMCO INCORPORATED,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC ARDCO INCORPORATED,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
<PAGE>
<PAGE> 41
UNC ENGINE & ENGINE PARTS, INC.,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC ACCESSORY OVERHAUL GROUP, INC.,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC AVIATION SERVICES, INC.,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC TRI-INDUSTRIES, INC.,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC AIRWORK CORPORATION,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC PACIFIC AIRMOTIVE CORPORATION, INC.,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
President
<PAGE>
<PAGE> 42
UNC PARTS COMPANY,
A Maryland Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
President
UNC/CFC ACQUISITION CO.,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President
UNC STEARNS COMPANY,
A Delaware Corporation
/S/ K.G. MOSESIAN By: /S/ ROBERT L. PEVENSTEIN
- ------------------------- --------------------------(SEAL)
Robert L. Pevenstein,
Vice President<PAGE>
<PAGE> 43
EXHIBIT 11
UNC INCORPORATED AND SUBSIDIARIES
Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net earnings $ 3,048 $ 1,451 $ 5,951 $ 1,925
Preferred stock dividends 531 187 1,062 187
--------- --------- --------- --------
Net earnings applicable to common stock -
primary earnings applicable to common stock 2,517 1,264 4,889 1,738
Adjustments - fully diluted
earnings per share:
Elimination of preferred stock dividends
upon assumed conversion 531 187 1,062 187
Decrease in interest expense
related to convertible debt, net
of income tax effect (1)(3) 909 850 1,881 1,701
--------- --------- --------- --------
Adjusted net earnings - fully
diluted earnings applicable to common stock $ 3,957 $ 2,301 $ 7,832 $ 3,626
========= ========= ========= ========
Calculation of primary net earnings
per common share:
Average common shares outstanding
during the period (2) 18,399 17,949 18,364 17,859
Increase for common stock equivalents:
Stock options under treasury stock
method 621 382 600 344
--------- --------- --------- --------
Adjusted average shares outstanding
for the period - primary 19,020 18,331 18,964 18,203
========= ========= ========= ========
Primary earnings per common share $ .13 $ .07 $ .26 $ .10
========= ========= ========= ========
Calculation of fully diluted
earnings per common share:
Average common shares outstanding
during the period (2) 18,399 17,949 18,364 17,859
Increase for common stock equivalents:
Assumed conversion of preferred stock 3,571 1,256 3,571 628
Stock options under treasury stock
method 632 386 639 386
Dilutive shares issuable upon
conversion of convertible debt (1) 3,934 4,208 4,071 4,208
--------- --------- --------- --------
Adjusted average shares outstanding
for the period - fully diluted 26,536 23,799 26,645 23,081
========= ========= ========= ========
Fully diluted earnings per common share $ .15 $ .10 $ .29 $ .16
========= ========= ========= ========
/TABLE
<PAGE>
<PAGE> 44
(1) The convertible subordinate debentures and preferred stock were anti-
dilutive for all periods presented.
(2) Exclusive of 486,500 treasury shares for the three and six months period
ended June 30, 1997, and 625,000 and 662,000 average shares for the three
and six months period ended June 30, 1996.
(3) The convertible subordinated debentures and the preferred stock are not
common stock equivalents in the calculation of primary earnings per
share.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of 6/30/97 and the related consolidated
statement of earnings, cash flows and notes to consolidated financial
statements for the six months ended 6/30/97 and is qualified in its entirety
by reference to such finacial statements and notes.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,142
<SECURITIES> 0
<RECEIVABLES> 227,529
<ALLOWANCES> 6,919
<INVENTORY> 159,851
<CURRENT-ASSETS> 414,421
<PP&E> 116,385
<DEPRECIATION> 44,285
<TOTAL-ASSETS> 777,501
<CURRENT-LIABILITIES> 218,468
<BONDS> 377,530
0
250
<COMMON> 3,783
<OTHER-SE> 138,251
<TOTAL-LIABILITY-AND-EQUITY> 777,501
<SALES> 417,799<F1>
<TOTAL-REVENUES> 537,746
<CGS> 355,237<F1>
<TOTAL-COSTS> 466,004
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,034<F2><F3>
<INTEREST-EXPENSE> 18,689
<INCOME-PRETAX> 7,439
<INCOME-TAX> 1,488
<INCOME-CONTINUING> 5,951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,889<F4>
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
<FN>
<F1>Seen 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>Net of Preferred Dividends.
</FN>
</TABLE>
