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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM __________________ TO _________________
COMMISSION FILE NUMBER 1-8009
UNR INDUSTRIES, INC.
(DELAWARE)
332 South Michigan Avenue
Chicago, Illinois 60604-4385
I.R.S. Employer Identification Number 36-3060977
TELEPHONE NUMBER (312) 341-1234
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X No
----- -----
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X No
----- -----
Outstanding as of
MAY 9, 1994
Common Stock $.01 par value................ 48,788,619
Warrants to purchase Common Stock... 1,802,323
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
1994 1993
--------- --------
<S> <C> <C>
Net Sales $ 96,308 $ 83,539
Cost of products sold 76,686 68,172
--------- --------
Gross Profit 19,622 15,367
Selling, general & administrative expenses 12,051 11,057
--------- --------
Operating Income 7,571 4,310
Interest (expense), net (436) (226)
--------- --------
Income before taxes 7,135 4,084
Income tax provision 2,800 1,500
--------- --------
NET INCOME $ 4,335 $ 2,584
--------- --------
--------- --------
NET INCOME PER SHARE $ .09 $ .06
--------- --------
--------- --------
Weighted average number of
shares outstanding 48,403 46,406
</TABLE>
1
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UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1994 1993
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 49,471 $ 1,226
Accounts, notes and other receivables, less allowance for doubtful
accounts of $3,100 in 1994 and $2,800 in 1993 48,135 49,000
Income tax refunds receivable 4,935 53,000
Inventories:
Work-in-process and finished goods 42,234 38,524
Raw materials and supplies 25,085 23,253
Deferred income taxes 12,100 12,100
Prepaid expenses 2,862 2,891
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TOTAL CURRENT ASSETS 184,822 179,994
----------- -----------
PLANT AND EQUIPMENT, at cost 174,145 172,045
Less: Accumulated depreciation (106,328) (103,896)
----------- -----------
TOTAL PLANT AND EQUIPMENT 67,817 68,149
----------- -----------
OTHER ASSETS
Deferred income taxes 13,300 16,100
Other - primarily goodwill 6,806 7,157
----------- -----------
TOTAL ASSETS $ 272,745 $ 271,400
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ -- $ 5,100
Accounts payable 16,469 11,268
Accrued expenses 22,970 25,266
Dividends payable 9,727 --
Current portion of long-term liabilities 4,336 4,261
Accrued income taxes 188 442
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TOTAL CURRENT LIABILITIES 53,690 46,337
----------- -----------
LONG-TERM LIABILITIES 20,807 21,940
----------- -----------
WARRANTS 7,975 9,739
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STOCKHOLDERS' EQUITY
Common stock 493 488
Capital surplus 118,944 117,011
Retained earnings 74,333 79,230
Treasury stock (2,751) (2,751)
Unearned portion of restricted stock (746) (594)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 190,273 193,384
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 272,745 $ 271,400
----------- -----------
----------- -----------
</TABLE>
2
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UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 4,335 $ 2,584
Adjustments for noncash items included in net income-
Depreciation and amortization 2,729 2,251
Deferred income taxes 2,800 1,500
Provision for deferred employee compensation 63 39
Operating requirements-
Accounts receivable (increase) decrease 865 (6,079)
Income tax refund receivable decrease 48,065 --
Inventories (increase) (5,541) (1,456)
Prepaid expenses decrease 29 151
Accounts payable & accrued expenses increase 3,860 3,294
---------- ----------
Net cash provided by operating activities $ 57,205 $ 2,284
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of plant and equipment $ (2,120) $ (1,360)
Decrease in other assets 73 20
Discontinued operations (1,189) (2,368)
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Net cash (used for) investing activities $ (3,236) $ (3,708)
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CASH FLOW FROM FINANCING ACTIVITIES
Decrease in debt and lease obligations $ (1,058) $ (711)
Payment of short-term borrowings (5,100) --
Dividends paid -- (102,517)
Issuance of common stock 434 4,564
---------- ----------
Net cash (used for) financing activities $ (5,724) $ (98,664)
---------- ----------
Net increase (decrease) in cash and cash equivalents $ 48,245 $ (100,088)
Cash & cash equivalents, beginning of period 1,226 112,220
---------- ----------
Cash & cash equivalents, end of period $ 49,471 $ 12,132
---------- ----------
---------- ----------
Cash paid during the period for interest $ 603 $ 648
---------- ----------
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Cash paid during the period for income taxes $ 193 $ 1,543
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</TABLE>
3
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UNR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Principles of Consolidation:
The financial statements include the consolidated accounts of UNR
Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated in consolidation.
(2) Income Taxes:
On December 21, 1992, the Internal Revenue Service issued final
regulations under Section 468B "Special Rules for Designated Settlement Funds".
The Section 468B regulations deal with the tax treatment of the Company's 1989
transfer of 29.4 million shares of UNR stock to the UNR Asbestos-Disease Claims
Trust. Based on these regulations, the Company and Trust have elected to treat
the Trust as a Qualified Settlement Fund on January 1, 1993, which entitled the
Company to a tax deduction equivalent to the value of the stock held by the
Trust on that date. This deduction substantially reduced the Company's 1993
income tax liability and generated tax loss carry-backs and carry-forwards. The
Company received a Federal income tax refund of approximately $48.1 million in
the first quarter of 1994 and expects to receive approximately $4.9 million of
state income tax refunds as a result of the carry-backs.
At December 31, 1993, the Company has available approximately $102.0
million of net operating loss carry-forwards to offset future taxable income
through 2008. The Company also has general business tax credits of $3.0 million
which are available to reduce future Federal income taxes through 2002. A
portion of these credits begin to expire starting in 1997. Alternative minimum
tax (AMT) credits of approximately $5.5 million are available to reduce future
taxable income over an indefinite period.
(3) Net Income Per Share:
Net income per share is based on the weighted average number of common
shares outstanding during each period. Dilution, which would result if all
outstanding warrants and options were exercised, is not significant to the net
income per share computation.
(4) Treasury Stock:
In 1990, the Company announced that its Board of Directors had
authorized the acquisition, through both negotiated transactions involving large
blocks and open market purchases, of up to 1.5 million shares of its common
stock to be held as treasury shares and be available to meet requirements of its
Key Executives' Stock Option Plan and other corporate purposes. As of March 31,
1994, 1,133,565 shares have been purchased.
(5) Dividends Declared:
On April 1, 1994, the Company paid a regular cash dividend of $.20 per
share to stockholders of record as of the close of business on March 18, 1994.
On December 1, 1993, the Company paid an extraordinary cash dividend of $1.20
per share to stockholders of record as of the close of business on November 16,
1993. On February 1, 1993, the Company paid a regular cash dividend of $.20 and
an extraordinary cash dividend of $2.00 per share to stockholders of record as
of the close of business on January 15, 1993.
(6) Inventories:
The interim determination of inventories under the LIFO method is
based on management's estimates of the expected year-end inventory levels and
costs and as such, interim financial results are subject to final year-end
inventory amounts. Inventories as presented on the Balance Sheets are net of a
reserve for LIFO valuation of $10.9 million at March 31, 1994 and $10.5 million
at December 31, 1993.
4
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(7) Postretirement and Postemployment Benefits:
In December, 1990, the Financial Accounting Standards Board issued a
new standard on accounting for postretirement benefits other than pensions,
primarily related to health care and dental benefit coverage. The new standard
requires that the expected cost of these benefits must be charged to expense
during the years that the employees render service. The Company has no material
liability for postretirement benefits other than pensions.
In November, 1992, the Financial Accounting Standards Board issued a
new standard on accounting for postemployment benefits. The new standard
requires that the expected cost of benefits provided to former or inactive
employees after employment but before retirement be recognized on the accrual
basis of accounting. The Company has no material liability for postemployment
benefits.
(8) Basis of Reporting for Interim Financial Statements:
The unaudited financial statements included herein have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report and Form 10-K for the year ended
December 31, 1993.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary for fair statement of the results of operations for
the three month periods ended March 31, 1994 and 1993. Results of operations
for interim periods are not necessarily indicative of results to be expected for
an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's 1993 Annual Report and Form 10-K contains management's
discussion and analysis of financial condition and results of operations for the
year ended December 31, 1993. The following discussion and analysis describes
changes in the Company's financial condition from December 31, 1993 and the
Company's financial position at that date. Trends are discussed to the extent
known and considered relevant. The analysis of results of operations compares
the three months ended March 31, 1994 with the corresponding period of 1993.
RESULTS OF OPERATIONS
First quarter of 1994 versus first quarter of 1993:
Net sales increased 15.3% to $96.3 million from $83.5 million in the
prior year. Operating income was $7.6 million for the first quarter of 1994
versus $4.3 million for the same period last year or an increase of 75.7%. Net
income was $4.3 million or $.09 per share versus $2.6 million or $.06 per share
last year, or an increase of 67.8%.
5
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The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31
1994 1993
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<S> <C> <C>
NET SALES:
Industrial $ 55,366 $ 51,498
Commercial 40,942 32,041
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Total $ 96,308 $ 83,539
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OPERATING INCOME:
Industrial $ 3,931 $ 3,038
Commercial 5,002 2,720
Corporate Expense (1,362) (1,448)
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Total $ 7,571 $ 4,310
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</TABLE>
The Industrial segment (principal products of this segment are steel
tubing and steel storage racks and systems) reported net sales of $55.4 million
for the first quarter of 1994 versus $51.5 million reported in the same period
last year, or an increase of 7.5%. The increase in sales is due entirely to the
steel tube division.
Operating income of the Industrial segment increased 29.4% to $3.9
million for the first quarter of 1994 versus $3.0 million for the same period
last year. This increase is due to strong results from our steel tube division.
We continue to experience unsatisfactory results at our steel storage rack
division and have taken steps to improve its profitability.
The Commercial segment (principal products of this segment are
shopping carts, steel towers and shelters for the communication industry and
stainless steel sinks) reported net sales of $40.9 million for the first quarter
of 1994 versus $32.0 million reported in the same period last year or an
increase of 27.8%. The increase in sales is due primarily to strong
performances of the tower and shopping cart units. Additionally, all businesses
in this segment reported slightly higher sales.
Operating income for the Commercial segment was $5.0 million for the
first quarter of 1994 versus $2.7 million for the same period last year or an
increase of 83.9%. As with sales, this increase is due to strong results of the
tower and shopping cart divisions. We have benefitted from the continued
economic recovery, an order backlog carryover from the prior year and increased
efficiencies in our plants.
Selling, general and administrative expenses were $12.1 million or
12.5% of sales for 1994 versus $11.1 million or 13.2% of sales in 1993. This
percentage reduction reflects cost cutting measures taken throughout the Company
and the resulting ability to produce greater sales with less costs.
Net interest expense in both periods includes the interest earned on
short-term investments reduced by interest paid on secured debt. Net interest
expense is higher in the first quarter of 1994 versus the first quarter of 1993
due to substantially lower levels of available cash because of the large
dividends paid in 1993.
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LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at March 31, 1994
and December 31, 1993:
<TABLE>
<CAPTION>
March 31, 1994 December 31, 1993
-------------- -----------------
<S> <C> <C>
Working Capital (in millions) $131.1 $133.7
Working Capital Ratio 3.4 to 1 3.9 to 1
</TABLE>
The Company's financial condition continues to be strong at the end of
the first quarter of 1994, with working capital of $131.1 million at March 31,
1994 as compared to $133.7 million at December 31, 1993. The Company's working
capital ratio, a measure of short-term liquidity, decreased slightly from 3.9 to
1 to 3.4 to 1. Both measures are considered strong indicators of liquidity.
The Company expects that it will meet its ongoing working capital and capital
expenditure requirements from operating cash flows and borrowings under a $20.0
million short-term credit facility. In addition, the Company's strong
unleveraged balance sheet allows it access to funds, if needed, from the capital
markets.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 29, 1982, the Company and certain of its subsidiaries filed
separate voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Northern
District of Illinois, Eastern Division ("Bankruptcy Court").
On March 15, 1989, the Company and its subsidiaries filed a Disclosure
Statement and a Consolidated Plan of Reorganization ("Reorganization Plan") with
the Bankruptcy Court. An order confirming the Reorganization Plan was entered
by the Bankruptcy court effective June 2, 1989 ("Confirmation Order"). The
Bankruptcy Court also entered orders establishing the UNR Asbestos-Disease
Claims Trust ("Trust Order") and permanently enjoining any actions against the
Company by asbestos-disease claimants ("Injunction"). On June 9, 1989, certain
past employees of the Company's former Bloomington, Illinois plant ("Bloomington
Workers") filed an appeal from the Confirmation Order, the Injunction and the
Trust Order.
On December 6, 1990, the United States District Court for the Northern
District of Illinois, Eastern Division ("District Court"), entered an order
dismissing the appeal from the Confirmation Order as moot and affirming the
Injunction. On April 13, 1993, the District Court dismissed the appeal from the
Trust Order.
Bloomington Workers sought review by the United States Court of
Appeals for the Seventh Circuit ("Court of Appeals") of the dismissal of their
appeals from the Confirmation Order, the Injunction and the Trust Order by the
District Court. On April 5, 1994, the Court of Appeals affirmed the decision of
the District Court. On April 19, 1994, Bloomington Workers filed a Petition for
Rehearing before the Court of Appeals.
Classification of the Bloomington Workers' claims and the claims of
certain former Patterson, New Jersey plant workers under the Reorganization Plan
remain pending in the District Court and in the Bankruptcy court, respectively.
7
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the May 5, 1994 Annual Meeting of UNR Industries, Inc., the
following matters were voted upon and approved:
(1) The following nominees were elected as Directors to serve until
the 1995 Annual Meeting or until their successors are elected and
qualify:
Votes For Votes Withheld
--------- --------------
Charles M. Brennan III 45,058,423 105,314
Darius W. Gaskins, Jr. 45,057,073 106,666
Thomas A. Gildehaus 45,052,983 110,754
Gene Locks 45,048,340 115,397
Ruth R. McMullin 45,058,289 105,449
Thomas F. Meagher 45,106,423 57,314
Robert B. Steinberg 45,097,647 66,092
William J. Williams 45,105,523 58,214
(2) Ratification of the appointment of the firm of Arthur Andersen &
Co. as the Company's independent public accountant for 1994.
Votes for - 45,090,737
Against - 19,198
Abstain - 33,802
Broker Non Votes - 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
2. Plan of Reorganization incorporated herein by reference from
Exhibit A of the 1989 first quarter Form 10-Q.
4. Warrant Agreement (including form of warrant) issued
pursuant to the provisions of Article III of the Company's
Consolidated Plan of Reorganization incorporated herein by
reference from Exhibit A of the 1989 Form 10-K.
10. None
11. The computation can be determined from the report.
15. None
18. None
19. None
22. None
23. None
24. None
27. None
(B) Reports on Form 8-K
None
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNR INDUSTRIES, INC.
Dated: May 9, 1994 /s/ Henry Grey
- - ------------------- -----------------------------------
Henry Grey
Senior Vice President-Finance,
Treasurer & Chief Financial Officer
Dated: May 9, 1994 /s/ John A. Saladino
- - ------------------- -----------------------------------
John A. Saladino
Controller & Assistant Secretary
9
