<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
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 NO. 1-8009
UNR INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3060977
- -------------------------------------------- --------------------
(State of Organization) (I.R.S. Employer
Identification No.)
332 SOUTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60604-4385
- -------------------------------------------- --------------------
(Address of Principal Executive Office) (Zip Code)
</TABLE>
(312) 341-1234
(Registrant's Telephone Number Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------------------------------------------------------------------------------- --------------------------
<S> <C>
Common Stock $.01 par value................................................................. Chicago Stock Exchange
Warrants to purchase Common Stock........................................................... Chicago Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. __
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 Section 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 ____
As of March 21, 1994, 48,692,103 shares of common stock were outstanding.
The aggregate market value of stock held by non-affiliates is $111,900,000 based
upon the average bid and asked prices of such stock as of March 21, 1994.
Documents incorporated by reference:
(1) Annual Report to Stockholders of Registrant for the fiscal year ended
December 31, 1993. Certain information therein is incorporated by reference into
Part I, Part II and Part IV hereof.
(2) Proxy Statement for the Annual Meeting of Shareholders to be held on May 5,
1994. Certain information therein is incorporated by reference into Part III
hereof.
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<PAGE>
PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS
UNR Industries, Inc., a Delaware Corporation ("Registrant" or "UNR") was
organized in 1979 as a holding company with businesses engaged principally in
metal fabrication.
On July 29, 1982, Registrant and ten 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"). The Registrant was
designated as debtor-in-possession and its operations continued in the ordinary
course of business.
On March 15, 1989, Registrant and the seven subsidiaries not having been
previously discharged, filed a Disclosure Statement and a Consolidated Plan of
Reorganization ("Plan") with the Bankruptcy Court. Effective June 2, 1989, the
Registrant's Plan was confirmed by the Bankruptcy Court following acceptance of
the Plan by the Registrant's creditors and stockholders.
Pursuant to the Plan, 42,404,847 shares of common stock of the reorganized
Registrant were issued to the unsecured creditors and to the existing and future
asbestos claimants in full discharge of all claims. The Plan also provided that
all proceeds from certain litigation against the insurance companies would
become unencumbered assets of the Registrant. Existing shareholders retained
3,687,378 shares of common stock and received six-year warrants to purchase an
additional 3,687,378 shares of common stock at $5.15 per share.
On December 31, 1992, Unarco Industries, Inc. and UNR, Inc. merged into UNR.
All remaining subsidiaries became subsidiaries of UNR except Holco Corporation
which remains a subsidiary of Leavitt Structural Tubing Company, a subsidiary of
UNR.
On April 27, 1993, Registrant acquired Real Time Solutions, Inc., a producer
of automated inventory management products for $4.2 million of cash and 616,102
shares of stock valued at approximately $4.2 million.
On May 3, 1993 the business and principal assets of the Midwest CATV
Division of Midwest Corporation, a wholly owned subsidiary of Registrant
("Midwest"), were sold to Anixter Bros, Inc., and on May 4, 1993 the business
and principal assets of the Midwest Steel Division of Midwest Corporation were
sold to L.B. Foster Company. Operating results of these divisions were
reclassified to discontinued operations in 1992.
On June 11, 1993, UNR received a letter from the UNR Asbestos-Disease Claims
Trust (the "Trust"), holder at that time of 62% of the common stock of
Registrant, proposing that UNR's Board of Directors consider retaining a
financial adviser to solicit third-party proposals for acquisition of UNR
through a merger or other business combination in which UNR's shareholders would
receive cash for their shares and to advise whether any such proposed
transactions would be fair from a financial point of view to UNR's shareholders.
On June 22, 1993, UNR's Board of Directors established a Special Committee
of independent directors to consider and to implement appropriate action in
response to the Trust's proposal, including the solicitation and evaluation of
offers for acquisition of UNR and to make a report and recommendation to the
Board of Directors.
On August 4, 1993, the Special Committee engaged J. P. Morgan Securities
Inc. as its financial adviser. On February 9, 1994, UNR announced that the
proposals received were subject to conditions and that none of the proposals
indicated a per share value greater than $6.50. On February 22, 1994, UNR
announced that the proposals received were either inadequate or too conditional
to warrant recommendations by the Special Committee to the Board of Directors,
that all discussions with potential buyers had been terminated and all efforts
to seek further offers have ceased.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information required under this section appears as Note 11 to the 1993
Consolidated Financial Statements of the Registrant included as Exhibit 13 to
this Form 10-K and incorporated herein by reference.
(c) NARRATIVE DESCRIPTION OF BUSINESS
Registrant's divisions are engaged in the manufacture and sale of steel
products, primarily welded steel tubing, material handling equipment, including
storage racks, shopping carts and supermarket storage and display equipment,
stainless steel sinks and steel communication and lighting towers. The
Registrant employs approximately 2,200 persons, of whom 1,600 are factory
personnel. The Registrant's sales are made through manufacturers'
representatives, as well as through its own employees.
The principal raw material used by Registrant's divisions is steel. These
divisions purchase steel from both foreign and domestic suppliers. In the
opinion of the Registrant's management, no purchase commitments presently
outstanding are at prices which will result in a loss.
1
<PAGE>
INDUSTRIAL PRODUCTS
One of Registrant's industrial products divisions manufactures and sells
mechanical and structural electric resistance welded steel tubing in a variety
of sizes and shapes. Such tubing is a fabricated steel product, the use of which
has increased in a variety of industries in recent years. Registrant's division
currently has sixteen tube-making machines operating in two locations in the
Chicago area, in Hammond, Indiana and in Gluckstadt, Mississippi, which can
produce in excess of 500,000 tons of tubing annually. The size range of tubing
manufactured by the Registrant is 3/8" to 12 3/4" outer diameter.
Substantially all of the Registrant's steel tubing products are sold to
steel service centers and industrial users, with no single customer accounting
for more than 10% of total sales. Sales are made throughout the continental
United States. The tubing ultimately is used by makers of farm equipment,
automotive equipment, vehicle trailers, bicycles and playground equipment, sign
and lamp posts, grocery carts, furniture, storage racks, truck trailer frames
and axles and in industrial and commercial buildings.
The other industrial products division fabricates steel storage rack
components, which are installed primarily by independent contractors. Most sales
are made through a nation-wide network of material handling distributors who
sell and, in some cases, stock storage racks and parts. The Registrant maintains
a regional warehouse, in Somerset, N.J., from which distributors can fill orders
for merchandise they do not have in stock. The main plant is in Springfield,
Tennessee. In addition, this division provides automated inventory management
products to the warehouse and distribution industry, from facilities located in
Berkeley and Napa, California. The primary product is a light directed display
based inventory picking, sorting, packing and shipping system using the
trademark "EASYpick."
COMMERCIAL PRODUCTS
One of the Registrant's commercial products divisions manufactures and sells
wire and plastic shopping carts, self-service luggage carts, office and other
carts, wire baskets and continuous shelving systems. These products are
manufactured primarily from steel tubing, wire and plastic in a plant in
Wagoner, Oklahoma. Sales are made through direct solicitation of customers by
sales agents. In addition, this division manufactures and sells supermarket
equipment for the handling, preparation and display of meats and produce. Sales
are made principally through stocking distributors.
From plants in Peoria, Illinois and Frankfort, Indiana, a second division
manufactures and markets towers, with related accessories, used principally to
support communications equipment for microwave and cellular transmission,
broadcasting, home television and amateur broadcasting. Other towers are
produced to support high level illumination for highways, parking lots, stadiums
and other commercial areas. The division's facility in Bessemer, Alabama
produces equipment shelters from laminated fiberglass and concrete which are
primarily used to house broadcast electronics. These products are marketed
nationally and for export markets.
The third commercial products division manufactures, in a plant in Ruston,
Louisiana, stainless steel sinks which are sold to retail outlets under the
"Federal" and "American" labels and to plumbing wholesalers under the "Republic"
label. In addition, this division manufactures and markets a line of composite
sinks under the trade name "Asterite."
PATENTS
Registrant owns or licenses a number of domestic and foreign patents on
products and processes. Certain domestic and foreign patent applications on
additional products and processes are pending, but there is no assurance that
any of such applications will be granted. Although certain patents were of
considerable value in the growth of the business and will continue to be
important in the future, the Registrant's success or growth are not dependent
upon any one patent or group of related patents.
RESEARCH & DEVELOPMENT
The Registrant spent approximately $797,000 in 1993, $300,000 in 1992 and
$300,000 in 1991 for research on new and improved products. Approximately 29
employees are currently engaged full time in this activity.
COMPETITION
All business segments of the Registrant are highly competitive. Although no
authoritative statistics are available, based on its knowledge of its markets
and information received from customers and salesmen, the Registrant believes
that its sales of grocery shopping carts are greater than those of any
competitor.
Although the Registrant believes it is currently one of the nation's leading
producers of mechanical and structural steel tubing in the size range it
produces ( 3/8" to 12 3/4" outer diameter), there is considerable competition in
all sizes and shapes of steel tubing. The Registrant believes that it is
impossible to state its rank in overall sales of all sizes of steel tubing
(including sizes not manufactured by the Registrant). It is known, however, that
several companies have substantially greater sales of particular sizes of steel
tubing within the size range manufactured by the Registrant and substantially
greater overall sales of all sizes of steel tubing.
The Registrant also believes that because of the wide range of towers
produced by it, there are only a few other companies which manufacture and sell
similar product lines comparable in completeness.
Other products sold by the Registrant compete with products of other
companies, some of which are much larger than the Registrant and enjoy
substantially larger shares of their respective markets.
2
<PAGE>
BACKLOG AND FOREIGN SALES
The backlog of unfilled orders at the end of any period is not a significant
factor and is not material to an understanding of the business of the
Registrant.
Foreign sales in 1993, 1992 and 1991 were approximately $10.4 million, $6.9
million and $7.2 million, respectively.
ITEM 2. PROPERTIES
The following table sets forth information concerning location, size, use
and nature of the principal manufacturing facilities owned or leased by the
Registrant. The Registrant believes its plants are suitable for their purposes,
are well maintained and are adequately insured. Not included in the table are
warehouses, owned and leased, aggregating 455,000 square feet and the
Registrant's executive and sales offices, all of which are leased.
<TABLE>
<CAPTION>
LOCATION USE SQ.FT. LEASED OR OWNED
- ----------------- ----------------------------- --------- ------------------------------
<S> <C> <C> <C>
INDUSTRIAL SEGMENT
Chicago, IL Steel Tubing 525,000 Owned
Chicago, IL Steel Tubing 240,000 Owned
Dixmoor, IL Steel Tubing 100,000 Owned
Hammond, IN Steel Tubing 58,000 Owned
Gluckstadt, MS Steel Tubing 250,000 Owned
Springfield, TN Steel Storage and Rack
Components 330,000 Owned
Napa, CA Automated Inventory
Management Products/
Assembly 14,000 Leased (Expiration 7/31/98)
Berkeley, CA Automated Inventory
Management Products/
Assembly 3,000 Leased (Expiration 12/31/94)
COMMERCIAL SEGMENT
Sacramento, CA Shopping Carts 35,000 Leased (Expiration 3/31/94)
Ruston, LA Sinks 100,000 Owned
Wagoner, OK Shopping Carts 520,000 Owned
Tulsa, OK Powder Coating 42,000 Leased (Expiration 12/31/96)
Peoria, IL Tower/Accessories 260,000 Owned
Frankfort, IN Farm Fencing/Related
Equipment 50,000 Owned
Frankfort, IN Farm Fencing/Related
Equipment 77,500 Leased (Expiration 12/31/95)
Bessemer, AL Equipment Shelters/Custom
Painting 150,000 Leased (Expiration 9/15/11)
OTHER
Birmingham, AL Not used in operations.
To be sold or leased. 79,000 Owned
Hogansville, GA Not used in operations.
To be sold or leased. 55,000 Owned
</TABLE>
The Registrant uses a wide variety of standard and specialized machine
tools, many varying types of equipment and many different manufacturing
processes in producing its products. The Registrant considers, that in general,
its plants are equipped with modern and well-maintained equipment. The
Registrant's operations make virtually full use of all existing facilities
except as noted above.
3
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
(a) On July 29, 1982, Registrant 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 ("Bankruptcy Court"), Eastern Division.
On March 15, 1989, Registrant and its subsidiaries filed a Disclosure
Statement and a Consolidated Plan of Reorganization (the "Reorganization Plan")
with the Bankruptcy Court. An order confirming the 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 Registrant by
asbestos-disease claimants ("Injunction"). On June 9, 1989, certain former
employees of the Registrant's 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"), issued an order
dismissing the appeal from the Confirmation Order as moot, affirming the
Injunction, and remanding to the Bankruptcy Court for a determination of whether
the Appellants' claims fell into Class 2 (Workmen's Compensation Claims) or
Class 5 (Asbestos-Disease Claims) under the Plan. On April 13, 1993, the
District Court dismissed the appeal of the Trust Order.
The Bloomington Workers filed appeals with the United States Court of
Appeals for the Seventh Circuit from the dismissal of their appeals from the
Confirmation Order, the Injunction and the Trust Order. Oral argument occurred
in the Court of Appeals on December 8, 1993. Registrant and its counsel believe
that the Bloomington Workers' appeals are not well founded and that the
decisions of the District Court should be affirmed.
On July 28, 1992, the Bankruptcy Court entered an order holding that the
claims of certain Bloomington Workers to recover compensation under the Illinois
Workers' Occupational Diseases Act should be classified as both Workers'
Compensation Claims and as Asbestos-Disease Claims under the Plan
("Classification Order"). Registrant and its counsel believe that the Bankruptcy
Court ruling was erroneous and filed an appeal to the District Court. On January
18, 1994, the District Court entered an order denying UNR's appeal on the ground
that the Court lacked jurisdiction of the appeal of the Classification Order
because of the appeals pending in the Court of Appeals. UNR believes this order
is in error and has filed a motion for reconsideration. Following the Bankruptcy
Court's July 28, 1992 ruling, certain former employees of the Registrant's
Paterson, New Jersey plant filed Petitions with the New Jersey Department of
Labor, Division of Workers' Compensation, seeking to pursue claims under New
Jersey Workers' Compensation laws. This matter is now pending in the Bankruptcy
Court. It is the opinion of UNR and its counsel that UNR has meritorious
defenses to all of these claims, and even if these claims are allowed to be
pursued, they would not have a material adverse effect on the Registrant's
operations or its financial condition.
(b) Under the terms of the Warrant Agreement dated June 2, 1989, upon
exercise of a warrant and the payment of the exercise price of $5.15 (subject to
adjustment upon the occurrence of certain events), a warrantholder is entitled
to receive, in addition to the one share of common stock (subject to adjustment
upon the occurrence of certain events), the amount of all "extraordinary"
dividends (as such term is defined in the Warrant Agreement) which would have
been paid on the common stock since the issuance of the warrants. On January 15,
1991, the Registrant paid a dividend of $.20 per share of common stock to
stockholders of record on December 20, 1990. On January 15, 1992, the Registrant
paid a regular cash dividend of $.20 per share and an extraordinary cash
dividend of $1.00 per share of common stock to stockholders of record on
December 31, 1991. In December 1991, the Registrant was advised by one of its
warrantholders that it is the warrantholder's position that the $.20 per share
dividend paid in 1991 and the $.20 regular dividend per share paid in 1992,
constituted extraordinary dividends for purposes of the Warrant Agreement. The
Registrant believes this warrantholder's position is without merit.
(c) In addition to the above, the Registrant is involved in certain other
pending litigation and disputes. The Registrant believes that it has adequate
insurance coverage or meritorious defenses, or both, in substantially all such
litigation. It is the opinion of the Registrant, after consultation with its
counsel, that the outcome of all other litigation will not have a material
adverse effect on the Registrant's operations or its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
4
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's Common Stock and Warrants are publicly traded in the
over-the-counter market on the NASDAQ National Market System and are listed on
the Chicago Stock Exchange. The Registrant's Common Stock and Warrants bear the
symbols UNRI and UNRIW, respectively.
The high and low bids are as reported in the Wall Street Journal Quotations
from the NASDAQ National Market System.
<TABLE>
<CAPTION>
DIVIDENDS
COMMON STOCK HIGH LOW PER SHARE
- ------------------------------------------------------------------ --------- --------- ---------------
<S> <C> <C> <C>
1992
First Quarter................................................... $5 1/2 $3 5/8 $ 1.20
Second Quarter.................................................. 6 5 --
Third Quarter................................................... 6 7/8 5 5/8 --
Fourth Quarter.................................................. 8 1/4 5 7/8 --
1993
First Quarter................................................... $8 1/2 $6 1/8 $ 2.20
Second Quarter.................................................. 7 1/4 6 3/8 --
Third Quarter................................................... 7 1/8 6 1/4 --
Fourth Quarter.................................................. 7 3/4 5 7/8 $ 1.20
1994
First Quarter (through March 21)................................ $7 1/8 $5 5/8 --
</TABLE>
As of March 21, 1994, the Registrant had 3,309 record holders of its Common
Stock.
On January 15, 1992, the Registrant paid a $.20 regular and $1.00
extraordinary cash dividend to Stockholders of record on December 31, 1991.
On February 1, 1993, the Registrant paid a $.20 regular and $2.00
extraordinary cash dividend to Stockholders of record on January 15, 1993.
On December 1, 1993, the Registrant paid a $1.20 extraordinary cash dividend
to Stockholders of record on November 16, 1993.
On March 3, 1994, the Registrant declared a $.20 regular cash dividend to be
paid on April 1, 1994 to Stockholders of record on March 18, 1994.
<TABLE>
<CAPTION>
WARRANTS HIGH LOW
- ------------------------------------------------------------------ --------- ---------
<S> <C> <C> <C>
1992
First Quarter................................................... $2 1/8 $ 5/8
Second Quarter.................................................. 2 1/4 1 3/4
Third Quarter................................................... 3 1 7/8
Fourth Quarter.................................................. 3 7/8 2 1/4
1993
First Quarter................................................... $4 5/8 $3 1/4
Second Quarter.................................................. 5 1/8 4 1/4
Third Quarter................................................... 5 4 3/8
Fourth Quarter.................................................. 6 1/2 4 1/2
1994
First Quarter (through March 21)................................ $6 $4 5/8
</TABLE>
As of March 21, 1994, the Registrant had 1,508 record holders of its
warrants.
ITEM 6. SELECTED FINANCIAL DATA
The financial information for the five years ended December 31, 1993,
appearing on page 1 of UNR Industries, Inc. 1993 Annual Report to Stockholders
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's Discussion and Analysis of Results appearing on pages 29
through 31 of UNR Industries, Inc. 1993 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference from the
Statements of Income, Statements of Cash Flows, Balance Sheets, Statements of
Changes in Stockholders' Equity and Notes to Financial Statements included in
the UNR Industries, Inc. 1993 Annual Report to Stockholders.
5
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Information required by this item with respect to the directors of
Registrant is hereby incorporated by reference to Registrant's definitive proxy
statement to be filed pursuant to Regulation 14A promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, which proxy
statement is anticipated to be filed within 120 days after the end of
Registrant's fiscal year ended December 31, 1993.
(b) Executive Officers of the Registrant
The description of tenure included below refers to continuous tenure with
the Registrant.
<TABLE>
<S> <C> <C>
Thomas A. Gildehaus........ 53 Chief Executive Officer and President (since July 1992); Director since July
1992; Director, Executive Vice President of Deere & Company, manufacturer of
farm and construction equipment (1980-1992).
Henry Grey................. 40 Vice President--Finance and Treasurer (since 1986); Senior Manager, Arthur
Andersen & Co. (1974 to 1986).
Victor E. Grimm............ 57 Vice President, Corporate Secretary and General Counsel (since October 1992);
Partner, Bell, Boyd & Lloyd, Attorneys (1967-Present).
</TABLE>
All of the executive officers are elected by the Board of Directors at the
annual meeting for one-year terms and serve until such time as their respective
successors are duly elected and qualified.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item with respect to executive compensation is
hereby incorporated by reference to Registrant's definitive proxy statement to
be filed pursuant to Regulation 14A promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, which proxy statement is
anticipated to be filed within 120 days after the end of Registrant's fiscal
year ended December 31, 1993.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is hereby incorporated by reference to
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, which proxy statement is anticipated to be filed within
120 days after the end of the Registrant's fiscal year ended December 31, 1993.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is hereby incorporated by reference to
Registrant's definitive proxy statement to be filed pursuant to Regulation 14A
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, which proxy statement is anticipated to be filed within
120 days after the end of the Registrant's fiscal year ended December 31, 1993.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
The information required by this item is incorporated by reference
in Item 8 of this report.
2. The following financial schedules for the years 1993, 1992 and 1991
are submitted herewith:
Changes in Plant and Equipment and Related Reserves for Depreciation
Allowance for Doubtful Accounts
Supplementary Profit and Loss Information
3. Exhibits:
The following list sets forth the exhibits to this Form 10-K as required by
Item 601 of Regulation S-K. Certain exhibits are filed herewith, while the
balances are hereby incorporated by reference to documents previously filed with
the Securities and Exchange Commission. Exhibits hereto incorporated by
reference to such other filed documents are indicated by an asterisk.
6
<PAGE>
EXHIBIT NO.
(3) *Amended and Restated Certificate of Incorporation dated March 13, 1980,
filed as an exhibit to the 1990 Form 10-K.
*Certificate of Amendment dated June 2, 1989 to amended and restated
Certificate of Incorporation filed as an exhibit to the 1990 Form 10-K.
*Certificate of Amendment dated July 12, 1990 to amended and restated
Certificate of Incorporation filed as an exhibit to the 1990 Form 10-K.
*Amended and Restated By-laws dated July 12, 1990, filed as an exhibit to
the 1990 Form 10-K.
*Amended and Restated By-laws dated July 30, 1992, filed as an exhibit to
the 1992 Form 10-K.
Eighth Amended and Restated By-laws effective as of May 6, 1993.
Ninth Amended and Restated By-laws effective as of May 5, 1994.
(4) *Warrant Agreement (including form of warrant) issued pursuant to the
provisions of Article III of the Registrant's Consolidated Plan of
Reorganization confirmed on June 2, 1989, filed as an exhibit to the 1989
Form 10-K.
(9) None
(10) Material Contracts
*UNR Industries, Inc. Key Executives' Stock Option Plan, as amended May 30,
1990, filed as an exhibit to the 1990 Form 10K.
*UNR Industries, Inc. 1992 Restricted Stock Plan, filed as an exhibit to the
1992 Form 10-K.
*Employment Agreement entered into between UNR Industries, Inc. and Thomas
A. Gildehaus, President and Chief Executive Officer, filed as an exhibit to
the 1992 Form 10-K.
*Form of Change of Control Agreements entered into between UNR Industries,
Inc., and Henry Grey, Vice President-- Finance & Treasurer and Victor E.
Grimm, Vice President, Corporate Secretary and General Counsel, filed as an
exhibit to the 1992 Form 10-K.
UNR Industries, Inc. Supplemental Executive Retirement Plan effective as of
January 1, 1993.
Agreement with J.P. Morgan Securities Inc. dated August 3, 1993.
The SEC File Number for Unarco Industries, Inc., Registrant's predecessor
was 1-3296; for Registrant the SEC File Number is 1-8009.
(11) The computation can be determined from report.
(12) Not Applicable
(13) Registrant's 1993 Annual Report to Shareholders.
(16) Not Applicable
(18) None
(19) None
(21) List of Subsidiaries of Registrant.
(22) Not Applicable
(23) Consent of Independent Public Accountants.
(24) None
(28) None
(29) None
(b) No Form 8-K was filed for the quarter ended December 31, 1993.
(c) Exhibits--See 3, 10, 13, 21 and 23 above.
7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULES
To the Stockholders and Board of Directors of UNR Industries, Inc.:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in UNR Industries, Inc.'s 1993
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated March 3, 1994. Our audit was made for the
purpose of forming an opinion on the basic consolidated financial statements
taken as a whole. The schedules included in Part IV, Item 14(d) (Changes in
Plant and Equipment and Related Reserves for Depreciation, Allowance for
Doubtful Accounts and Supplementary Profit and Loss Information) are the
responsibility of the Company's management and are presented for purposes of
complying with the Securities and Exchange Commission's rules and are not part
of the basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
March 3, 1994.
8
<PAGE>
(d) Financial statement schedules required by Regulation S-X which are
excluded from the Consolidated Financial Statements included under Item 8 of
this report.
(1) CHANGES IN PLANT AND EQUIPMENT AND RELATED RESERVES FOR DEPRECIATION (IN
THOUSANDS)
PLANT AND EQUIPMENT
YEAR 1991
<TABLE>
<CAPTION>
BALANCE ADDITIONS RETIREMENTS BALANCE
12/31/90 AT COST OR SALES 12/31/91
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Land............................................................ $ 3,260 $ 4,014 $ -- $ 7,274
Buildings...................................................... 29,321 10,760 186 40,267
Machinery & equipment.......................................... 88,128 20,271 (1,821 ) 106,578
Leasehold improvements......................................... 9,988 836 (94 ) 10,730
---------- ----------- ------------ ----------
$ 130,697 $ 35,881 $ (1,729 ) $ 164,849
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
</TABLE>
YEAR 1992
<TABLE>
<CAPTION>
BALANCE ADDITIONS RETIREMENTS BALANCE
12/31/91 AT COST OR SALES 12/31/92
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Land............................................................ $ 7,274 $ -- $ -- $ 7,274
Buildings...................................................... 40,267 337 216 40,820
Machinery & equipment.......................................... 106,578 4,810 (3,110 ) 108,278
Leasehold improvements......................................... 10,730 439 (72 ) 11,097
---------- ----------- ------------ ----------
$ 164,849 $ 5,586 $ (2,966 ) $ 167,469
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
</TABLE>
YEAR 1993
<TABLE>
<CAPTION>
BALANCE ADDITIONS RETIREMENTS BALANCE
12/31/92 AT COST OR SALES 12/31/93
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Land............................................................ $ 7,274 $ -- $ (83 ) $ 7,191
Buildings...................................................... 40,820 417 (613 ) 40,624
Machinery & equipment.......................................... 108,278 4,961 (723 ) 112,516
Leasehold improvements......................................... 11,097 617 -- 11,714
---------- ----------- ------------ ----------
$ 167,469 $ 5,995 $ (1,419 ) $ 172,045
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
</TABLE>
RESERVES FOR DEPRECIATION
YEAR 1991
<TABLE>
<CAPTION>
PROVISION
BALANCE CHARGED TO RETIREMENTS BALANCE
12/31/90 INCOME OR SALES 12/31/91
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Buildings....................................................... $ 11,878 $ 1,540 $ (23) $ 13,395
Machinery & equipment.......................................... 63,829 6,480 (1,697) 68,612
Leasehold improvements......................................... 7,642 503 (129) 8,016
---------- ----------- ------------ ----------
$ 83,349 $ 8,523 $ (1,849) $ 90,023
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
</TABLE>
YEAR 1992
<TABLE>
<CAPTION>
PROVISION
BALANCE CHARGED TO RETIREMENTS BALANCE
12/31/91 INCOME OR SALES 12/31/92
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Buildings....................................................... $ 13,395 $ 1,637 $ -- $ 15,032
Machinery & equipment.......................................... 68,612 6,727 (2,672 ) 72,667
Leasehold improvements......................................... 8,016 466 -- 8,482
---------- ----------- ------------ ----------
$ 90,023 $ 8,830 $ (2,672 ) $ 96,181
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
</TABLE>
YEAR 1993
<TABLE>
<CAPTION>
PROVISION
BALANCE CHARGED TO RETIREMENTS BALANCE
12/31/92 INCOME OR SALES 12/31/93
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Buildings....................................................... $ 15,032 $ 1,659 $ (542) $ 16,149
Machinery & equipment.......................................... 72,667 6,944 (815) 78,796
Leasehold improvements......................................... 8,482 469 -- 8,951
---------- ----------- ------------ ----------
$ 96,181 $ 9,072 $ (1,357) $ 103,896
---------- ----------- ------------ ----------
---------- ----------- ------------ ----------
</TABLE>
9
<PAGE>
(2) ALLOWANCE FOR DOUBTFUL ACCOUNTS (IN THOUSANDS)
Changes in the allowance for doubtful accounts for the three years ended
December 31, are as follows:
<TABLE>
<CAPTION>
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Balance--beginning of year................................................................ $ 3,216 $ 3,025 $ 2,995
Add (deduct)
--Provision charged to income............................................................ 271 835 657
--Bad debts written-off.................................................................. (462) (865) (842)
--------- --------- ---------
Balance--end of year..................................................................... $ 3,025 $ 2,995 $ 2,810
--------- --------- ---------
--------- --------- ---------
</TABLE>
(3) SUPPLEMENTARY PROFIT AND LOSS INFORMATION (IN THOUSANDS)
<TABLE>
<CAPTION>
CHARGED TO COST AND EXPENSE
-------------------------------
1991 1992 1993
--------- --------- ---------
<S> <C> <C> <C>
Maintenance and repairs................................................................... $ 5,061 $ 6,130 $ 6,908
Taxes, other than payroll and income taxes............................................... 1,479 1,708 1,218
</TABLE>
Costs relating to amortization of intangibles, advertising, royalties and
research and development were not listed in the above table because each,
separately, was less than 1% of the net sales.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ THOMAS A. GILDEHAUS
---------------------------------------
Thomas A. Gildehaus
CHIEF EXECUTIVE OFFICER, PRESIDENT &
DIRECTOR
March 21, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
March 21, 1994 /s/ THOMAS A. GILDEHAUS
--------------------------------------------------------
Thomas A. Gildehaus
CHIEF EXECUTIVE OFFICER, PRESIDENT & DIRECTOR
March 21, 1994 /s/ HENRY GREY
--------------------------------------------------------
Henry Grey
VICE PRESIDENT--FINANCE & TREASURER
PRINCIPAL FINANCIAL OFFICER
March 21, 1994 /s/ VICTOR E. GRIMM
--------------------------------------------------------
Victor E. Grimm
VICE PRESIDENT, CORPORATE SECRETARY & GENERAL COUNSEL
March 21, 1994 /s/ JOHN A. SALADINO
--------------------------------------------------------
John A. Saladino
CONTROLLER AND ASSISTANT SECRETARY
March 21, 1994 /s/ CHARLES M. BRENNAN III
--------------------------------------------------------
Charles M. Brennan III
DIRECTOR
March 21, 1994 /s/ DARIUS W. GASKINS, JR.
--------------------------------------------------------
Darius W. Gaskins, Jr.
DIRECTOR
March 21, 1994 /s/ WILLIAM S. LEAVITT
--------------------------------------------------------
William S. Leavitt
DIRECTOR
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
March 21, 1994
--------------------------------------------------------
Gene Locks
DIRECTOR, CHAIRMAN OF THE BOARD
March 21, 1994
--------------------------------------------------------
Ruth R. McMullin
DIRECTOR
March 21, 1994 /s/ THOMAS F. MEAGHER
--------------------------------------------------------
Thomas F. Meagher
DIRECTOR
March 21, 1994 /s/ ROBERT B. STEINBERG
--------------------------------------------------------
Robert B. Steinberg
DIRECTOR
March 21, 1994 /s/ WILLIAM J. WILLIAMS
--------------------------------------------------------
William J. Williams
DIRECTOR
</TABLE>
12
<PAGE>
EXHIBIT 3
EIGHTH AMENDED AND RESTATED
BY-LAWS
OF
UNR INDUSTRIES, INC.
Effective as of May 6, 1993
ARTICLE I
OFFICES
SECTION 1. The registered office shall be established and maintained at
the office of The Prentice Hall Corporation System, Inc., in the City of Dover,
in the County of Kent, in the State of Delaware, and said corporation shall be
the registered agent of this corporation in charge thereof. The Corporation may
have other offices, either within or without the State of Delaware, at such
place or places as the board of directors may from time to time appoint or the
business of the corporation may require.
ARTICLE II
MEETINGS OF HOLDERS OF THE CAPITAL STOCK AND WARRANTHOLDERS
SECTION 1. Except as expressly provided in these By-Laws, the terms
"Stockholder" or "Stockholders" shall collectively refer to the holder or
holders of (i) the corporation's capital stock (the "Holders of the Capital
Stock" or, when referring to the capital stock itself, the "Capital Stock"),
and (ii) the corporation's warrants (the "Warrantholders" or when referring to
the warrants themselves, the "Warrants") issued pursuant to the Plan of
Reorganization dated March 14, 1989 (the "Plan") as confirmed by order of the
United States Bankruptcy Court for the Northern District of Illinois, Eastern
Division. All meetings of the Stockholders for the election of directors shall
be held in Chicago, Illinois, at such place as may be fixed from time to time by
the board of directors, or at such place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of Stockholders for any other
purpose may be held at such time and place, within or without the State
<PAGE>
of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2. Annual meetings of Stockholders, commencing with the year 1991,
shall be held on the first Thursday after the third day in the month of May if
not a legal holiday, and if a legal holiday, then on the next business day
following, at 11:00 a.m., or at such other date and time as shall be designated
from time to time by the board of directors and stated in the notice of the
meeting, at which meeting the stockholders shall elect by plurality vote a board
of directors, and transact such other business as may properly be brought before
the meeting.
SECTION 3. The board of directors may nominate the slate of directors to
be voted upon by Stockholders at the annual or any special meeting of
Stockholders. In addition, any Stockholder entitled to vote at the annual or
any special meeting of Stockholders may nominate any person to the board of
directors without any prior notice to the corporation of such Stockholder's
intention to do so.
SECTION 4. Written notice of the annual or any special meeting of
Stockholders stating the place, date and hour of the meeting shall be given to
each Stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting.
SECTION 5. The officers or agents who have charge of the stock ledger,
register for the Warrants or transfer book of the corporation shall prepare and
make, at least ten days before every meeting of Stockholders, a complete list of
the Stockholders entitled to vote at the meeting, arranged in alphabetical
order, showing the address of each Stockholder and the number of shares of
Capital Stock and the number of shares purchasable upon the exercise of the
Warrants (collectively, the "Shares") registered in the name of each
Stockholder. Such list shall be open to the examination of any Stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any Stockholder
who is present.
SECTION 6. Special meetings of the Stockholders for any purpose or
purposes, unless otherwise prescribed by statute, by these By-Laws or by the
certificate of
2
<PAGE>
incorporation, may be called by the chairman of the board or by the president
and shall be called by the chairman of the board, president or secretary at the
request in writing of a majority of the board of directors, or at the request in
writing of Stockholders owning a majority of the Shares of the corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at any special
meeting of Stockholders shall be limited to the purposes stated in the notice.
SECTION 7. Written notice of a special meeting stating the place, date and
hour of the meeting, and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than forty days before the
date of the meeting to each Stockholder entitled to vote at such meeting.
SECTION 8. The holders of a majority of the Shares issued and outstanding
and entitled to vote thereat, present in person, or represented by proxy, shall
constitute a quorum at all meetings of the Stockholders for the transaction of
business except as otherwise provided by statute, by these By-Laws or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the Stockholders, the Stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each Stockholder of record entitled to
vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the Shares having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes,
these By-Laws or of the certificate of incorporation, a different vote is
required in which case such express provision shall govern and control the
decision of such question.
SECTION 10. Unless otherwise specifically provided by statute, these By-
Laws or the certificate of incorporation, each Stockholder shall at every
meeting of the Stockholders be entitled to one vote for each Share held by such
Stockholder.
3
<PAGE>
SECTION 11. Each Stockholder is entitled to vote at a meeting of
Stockholders or to express consent or dissent to corporate action in writing
without a meeting and may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
SECTION 12. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of Stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such Stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of outstanding Shares having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted and shall be delivered to the corporation by delivery to
its registered office in the State of Delaware, its principal place of business,
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of Stockholders are recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those Stockholders who have not consented in writing.
SECTION 13. The board of directors, in advance of any Stockholders'
meeting, shall appoint one or more inspectors to act at the meeting or any
adjournment thereof and to make a written report thereof. In case any person
appointed fails to appear or act, the vacancy may be filled by appointment made
by the board of directors in advance of the meeting or at the meeting by the
persons presiding thereat. Each inspector, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall ascertain the number of Shares outstanding and the
voting power of each, determine the Shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period of record of the disposition of any challenges
made to any determination by the inspectors, and certify their determination of
the number of Shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
4
<PAGE>
In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the
limited purpose permitted herein, the inspectors at the time they make their
certification pursuant to the paragraph above shall specify the precise
information considered by them, including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
The date and time of the opening and the closing of the polls for each
matter upon which the Stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or
changes thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery of the State of Delaware, upon application by
a Stockholder, shall determine otherwise.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole board
of directors shall be nine (9). The number of directors may be increased or
decreased by an affirmative vote of not less than a majority of the directors
then in office, provided that as long as 66-2/3% of the Warrants are held by the
holders of Class 6 Claims (as defined in the Plan) as of the date upon which the
Warrants were initially issued (or any successor or any such holder in a
transfer by operation of law or without consideration), no decrease in the
number of directors below eleven shall be effected or permitted without the
approval by the vote or written consent of the holders of not less than the
majority (or more if required by law) of the then outstanding Warrants. The
directors shall be elected at the annual meeting of Stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until the next
5
<PAGE>
annual meeting of Stockholders and until his successor is duly elected and
qualified or until his earlier resignation or removal. A special meeting of the
Warrantholders may be called without the presence of the Holders of the Capital
Stock for the sole purpose of determining whether the number of directors shall
be decreased below eleven. Directors need not be Stockholders nor residents of
the State of Illinois or the State of Delaware.
SECTION 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled only by the vote of
Stockholders holding a majority of the Shares, and any director so chosen shall
hold office until the next annual election and until his successor is duly
elected and shall qualify, or until his earlier resignation or removal.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any Stockholder or Stockholders holding at
least ten percent of the total number of the Shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office.
SECTION 3. The business of the corporation shall be managed by its board
of directors which may exercise all such powers of the corporation and do all
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these By-Laws directed or required to be exercised or done
by the Stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware or the
State of Illinois.
SECTION 5. The board of directors shall hold regular meetings at such
times and places as may be designated from time to time by the chairman of the
board or, in his absence, the president; provided that the board shall meet at
least four times during each calendar year.
[SECTION 6 of Article III is hereby deleted in its entirely, but said
Section 6 shall be reserved for future use.]
6
<PAGE>
SECTION 7. Special meetings of the board of directors may be called by the
chairman of the board or by the president on two (2) days notice to each
director, either personally or by mail or by telegram. Special meetings shall be
called by the chairman of the board or the president or the secretary in like
manner and on like notice on the written request of two directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the board of directors need be specified in the notice or waiver of notice of
such meeting except as provided in Article IV of these By-Laws.
SECTION 8. At all meetings of the board of directors, a majority of the
entire board shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the certificate of incorporation
or these By-Laws, any action required or permitted to be taken at any meeting of
the board of directors, or of any committee thereof, may be taken without a
meeting, if all members of the board or committee as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the board or committee.
STANDING COMMITTEES OF DIRECTORS
SECTION 10. The corporation shall have the following Standing Committees:
(a) AN EXECUTIVE COMMITTEE which shall have and may exercise all the
powers and authority of the board of directors during the intervals between
meetings of the board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it; provided that such executive committee shall
not have the power or authority to: (i) amend the certificate of incorporation,
(ii) adopt an agreement of merger or consolidation, (iii) recommend to the
Stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, or
7
<PAGE>
a dissolution of the corporation or a revocation of a dissolution, (iv) amend
the By-Laws of the corporation or (v) declare a dividend or to authorize the
issuance of stock. The committee chairman shall report to the board of
directors at the next regularly held meeting of the board of directors at the
next regularly held meeting of the board the action taken by the committee at
its meeting, which action shall thereupon be confirmed and ratified by the
board of directors. The committee shall consist of as many members as the board
of directors determines from time to time appropriate, and shall include the
chief executive officer and the chairman of the board as members, and such other
members as may be appointed by the board of directors from time to time.
(b) A COMPENSATION COMMITTEE which shall: (i) recommend annually to the
board of directors nominees for corporate officers and annual compensation
levels (salaries and bonuses) for corporate officers; (ii) recommend to the
board of directors changes in compensation plans such as bonuses, deferred
compensation, incentive compensation and stock option plans; (iii) recommend to
the board of directors changes in employee supplemental benefits (such as
pension plans, profit-sharing plans, health care and life insurance coverage);
(iv) recommend to the board of directors organizational changes in the board and
in corporate executive compensation; and (v) recommend to the board of directors
changes in corporate structure and organizational responsibilities. The
committee shall consist of not less than three (3) members of the board of
directors who are not officers or employees of the corporation. The members of
the committee shall be selected by the board of directors from time to time.
(c) AN AUDIT COMMITTEE which shall: (i) select and employ on behalf of
the corporation, subject to ratification of Stockholders, a firm of certified
public accountants whose duty shall be to audit the books and accounts of the
corporation and its subsidiaries and affiliated companies for the fiscal year in
which they are appointed; (ii) confer with the auditors regarding the scope of
the audit and other services and the cost thereof and report periodically to the
board of directors; and (iii) review with the auditors at the conclusion of the
audit and before publication of the audited financial statements, the findings
disclosed during the audit, including compliance with the corporation's conflict
of interest policies, the adequacy of internal controls, the effectiveness of
the internal auditing function, accounting policies and financial reporting, and
the contemplated form of the statements and opinion. The committee shall
consist of not less than three (3) members of the board of directors who are not
officers or employees of the corporation. The members of
8
<PAGE>
the committee shall be selected by the board of directors from time to time.
(d) APPOINTING ADDITIONAL COMMITTEES. The board of directors may from
time to time establish other standing committees or other committees and appoint
the members thereof.
SECTION 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors.
SECTION 12. Directors may be paid such compensation for their services,
and such reimbursement for expenses for attendance at regular, special and
committee meetings, as the board of directors may from time to time determine.
No such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
SECTION 13. The board of directors shall elect one of its members as the
chairman of the board. The chairman of the board, who shall not be considered
an officer of the corporation, shall preside at each meeting of the board of
directors or the Stockholders and shall perform such other duties as may from
time to time be assigned to him by the board of directors.
ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these By-Laws, notice is required to be given
to any director or Stockholder, such notice shall be in writing and shall be
given in person or by mail to such director or Stockholder. If mailed, such
notice shall be addressed to such director or Stockholder at his address as it
appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
9
<PAGE>
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice president, a secretary and a
treasurer. The board of directors may also choose additional vice presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these By-Laws otherwise provide.
SECTION 2. The board of directors at its first meeting after each annual
meeting of Stockholders shall choose a president, one or more vice presidents, a
secretary and one or more assistant secretaries and a treasurer.
SECTION 3. The board of directors may appoint such other officers and
agents as it may deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the board.
SECTION 4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
SECTION 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of a
majority of the whole board of directors. Any vacancy occurring in any office
of the corporation shall be filled by the board of directors.
[SECTION 6 of Article V is hereby deleted in its entirety, but said Section
6 shall be reserved for further use.]
THE PRESIDENT
SECTION 7. The president shall be the chief executive officer and the
chief operating officer of the corporation, shall have the power to call
meetings of the board of directors and special meetings of Stockholders, shall
preside (in the absence of the chairman of the board or in the event of his
inability or refusal to act) at all meetings of the Stockholders and the board
of directors, and shall have general charge of the business of the corporation
and shall see to it that all orders and resolutions of the board of directors
are performed and carried into effect. All current reports and
10
<PAGE>
other day-to-day activities in the ordinary course of the corporation's business
shall be channeled by other officers and divisional executives through or to the
president, except as otherwise provided by these By-Laws.
SECTION 8. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
president to some other officer or agent of the corporation. The president
shall vote all shares of capital stock of any other corporation standing in the
name of this corporation, except where the voting thereof shall be delegated by
the board of directors to some other officer or agent of the corporation, and he
shall employ required or appropriate executive, administrative or professional
personnel. In general, he shall perform all duties incident to the offices of
chief executive officer, chief operating officer and president, and such other
duties as may be prescribed from time to time by the board of directors.
[Section 9 of Article V is hereby deleted in its entirety, but said Section
9 shall be reserved for further use.]
VICE PRESIDENTS
SECTION 10. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
The board of directors, at its discretion, may designate any vice president
as senior vice president, executive vice president, or any other designation as
it may choose.
THE SECRETARY AND ASSISTANT SECRETARY
SECTION 11. The secretary shall attend all meetings of the board of
directors and all meetings of Stockholders and record all the proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given,
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notice of all meetings of the Stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
SECTION 12. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER
AND ASSISTANT TREASURERS
SECTION 13. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuables in the name and to the credit of the corporation in such
depositaries as may be designated by the board of directors.
SECTION 14. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements and shall render to the president and the board of directors when
the president or board of directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
SECTION 15. If required by the board of directors, the treasurer shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
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SECTION 16. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
INTERESTED DIRECTORS AND OFFICERS
SECTION 1. No contract or transaction between the corporation and one or
more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board of directors or a committee thereof which authorized the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(a) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the board of directors or committee,
which in good faith authorizes the contract or transaction by a vote sufficient
for such purpose without counting the vote of the interested director or
directors; or
(b) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the Stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the Stockholders; or
(c) The contract or transaction is fair as to the corporation as of the
time it is authorized, approved or ratified by the board of directors or the
Stockholders.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the board of directors or of a committee which authorizes the
contract or transaction.
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ARTICLE VII
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is a party or
is threatened to be made a party to or is involved in or called as a witness in
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, and any appeal therefrom (hereinafter
collectively a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is, was or had agreed to become a director,
officer, or Delegate (as defined hereinafter) of the corporation, shall be
indemnified and held harmless by the corporation, to the fullest extent
permitted under the Delaware General Corporation Law (the "DGCL") as the same
now exists or may hereafter be amended (but in the case of any such amendment,
only to the extent that such amendment permits the corporation to provide
broader indemnification rights than the DGCL permitted the corporation to
provide prior to such amendment), against all expenses (including, but not
limited to, attorneys' fees and expenses of litigation) reasonably incurred, and
all liabilities and losses (including, but not limited to, judgments, fines,
excise taxes, ERISA penalties and amounts paid in settlement) incurred by him in
connection with such proceeding; provided that except as explicitly provided
herein, the corporation shall indemnify any such person seeking indemnity in
connection with a proceeding (or part thereof) initiated by such person only if
authorization for such proceeding (or part thereof) initiated by such person was
not denied by a majority of the board of directors prior to the earlier of (i)
30 days after receipt of notice thereof from such person or (ii) an Event, as
defined hereinafter. For purposes of this Article VII, a "Delegate" is any
director or officer who is or was serving at the request of the corporation or
the board of directors as a director, officer, trustee, fiduciary, partner,
employee or agent of an entity or enterprise other than the corporation
(including, but no limited to, a partnership, joint venture, trust, other
corporation, or an employee benefit plan or trust); and an "Event" shall be
deemed to have occurred if (i) any "Person" (as that term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or
becomes (except in a transaction approved in advance by the board of directors)
the beneficial owner (as defined in Rule 13d-3 under such Act), directly or
indirectly, of securities of the corporation representing 25% or more of the
combined voting power of the corporation's then outstanding securities,
provided that the UNR Asbestos-Disease Claims Trust (as defined in the Plan)
holding securities of the corporation pursuant to
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the Plan shall not be deemed a Person for purposes of this Article VII, or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the board of directors of the corporation cease for any
reason to constitute at least a majority thereof unless the election of each
director who was not a director at the beginning of the period was approved by
either (x) a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period or (y) the UNR Asbestos-
Disease Claims Trust (as defined in the Plan).
SECTION 2. EXPENSES. Expenses, including attorneys' fees, incurred by a
person indemnified pursuant to Section 1 of this Article VII in defending or
otherwise being involved in a proceeding shall be paid by the corporation in
advance of the final disposition of such proceeding upon receipt of an
undertaking (the "Undertaking") by or on behalf of such person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation; provided that in connection with a proceeding
(or part thereof) initiated by such person except as provided in Section 3 of
this Article VII for proceedings to enforce a person's right to the advancing of
expenses for either a proceeding not initiated by such person or a proceeding
initiated by such person for which authorization was not denied, the corporation
shall pay said expenses in advance of final disposition only if authorization
for such proceeding (or part thereof) was not denied by a majority of the board
of directors of the corporation. A person to whom expenses are advanced
pursuant hereto shall not be obligated to repay pursuant to the Undertaking
until the final determination of any pending proceeding in a court of competent
jurisdiction, including appeals therefrom, concerning the right of such person
to be indemnified or the obligations of such person to repay pursuant to the
Undertaking.
SECTION 3. PROTECTION OF RIGHTS. If a claim under Section 1 of this
Article VII is not promptly paid in full by the corporation after a written
claim has been received by the corporation or if expenses pursuant to Section 2
of this Article VII have not been promptly advanced after a written request for
such advancement accompanied by the Undertaking has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim or the advancement of
expenses. If successful, in whole or in part, in such suit such claimant shall
also be entitled to be paid the reasonable expense thereof. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition
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where the required Undertaking has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the DGCL for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation. If an Event
has occurred, a claimant making a claim under Section 1 of this Article VII or
seeking to avoid repayment to the corporation pursuant to an Undertaking shall
have (i) the right, but not the obligation, to have a determination made by
independent legal counsel as to whether indemnification of the claimant is
proper because he has met the applicable standard of conduct required under the
DGCL, and (ii) the right to select as independent legal counsel for such purpose
any law firm designated for such purpose in a resolution adopted by a majority
of the board of directors prior to the Event and in full force and effect
immediately prior to the Event. If a determination has been made in accordance
with the preceding sentence, no determination inconsistent therewith by other
legal counsel, by the board of directors, or by Stockholders shall be of any
force or effect. Neither the failure of the corporation (including its board of
directors, independent legal counsel, or its Stockholders) to have made a
determination, if required, prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct required under the DGCL, nor an actual
determination by the corporation (including its board of directors, independent
legal counsel, or its Stockholders) that the claimant had not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.
SECTION 4. MISCELLANEOUS.
(a) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by this
Article VII shall not be deemed exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the certificate of
incorporation, By-Law, agreement, vote of Stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity at the request of the corporation while holding such
office, and shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such person. The board of directors shall have the authority, by resolution,
to provide for such indemnification of employees or agents of the corporation or
others and for such other indemnification of directors, officers or Delegates as
it shall deem appropriate.
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(b) INSURANCE. The corporation shall have power to purchase and maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the corporation, or any person who is or was serving at the request
of the corporation in any other capacity with the corporation, another
corporation, a partnership, a joint venture, trust or other enterprise against
any expenses, liabilities or losses, asserted against him or incurred by him in
any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such expenses,
liabilities or losses under the DGCL.
(c) CONTRACTUAL NATURE. The provisions of this Article VII shall be
applicable to all proceedings commenced after its adoption, whether such arise
out of events, acts or omissions which occurred prior or subsequent to such
adoption, and shall continue as to a person who has ceased to be a director,
officer or Delegate and shall inure to the benefit of the heirs, executors and
administrators of such person. This Article VII shall be deemed to be a
contract between the corporation and each person who, at any time that this
Article VII is in effect, serves or agrees to serve in any capacity which
entitles him to indemnification hereunder and any repeal or other modification
of this Article VII or any repeal or modification of the DGCL or any other
applicable law shall not limit any rights of indemnification existing or arising
out of events, acts or omissions occurring prior to such repeal or modification
to enforce this Article VII with regard to acts, omissions or events arising
prior to such repeal or modification.
(d) SEVERABILITY. If this Article VII or any portion hereof shall be
invalidated or held to be unenforceable on any ground by any court of competent
jurisdiction, the decision of which shall not have been reversed on appeal, such
invalidity or unenforceability shall not affect the other provisions hereof, and
this Article VII shall be construed in all respects as if such invalid or
unenforceable provisions had been omitted therefrom.
ARTICLE VIII
CERTIFICATES OF CAPITAL STOCK
SECTION 1. Every holder of shares of Capital Stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman of the board or the president or a vice president,
and by the treasurer or an assistant treasurer, or the secretary or an
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assistant secretary, of the corporation, certifying the number of shares owned
by him in the corporation.
SECTION 2. Any or all of the signatures on the certificate may be
facsimile. In case the chairman of the board, any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
LOST CERTIFICATE
SECTION 3. The board of directors may direct a new certificate or
certificates of Capital Stock to be issued in place of any certificate or
certificates theretofore issued by the corporation, alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of Capital Stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond, in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF CAPITAL STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares of Capital Stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books; provided, however, that such duty shall be subject
to Federal and state securities and other applicable laws, the certificate of
incorporation, and any legends and stop transfer instructions with respect to
such old certificate.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the Stockholders
entitled to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a
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meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of Shares or for the purpose of any other lawful
action ,the board of directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A determination of
Stockholders of record entitled to notice of or to vote at a meeting of
Stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of Shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of Shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
Share or Shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
DIVISIONS
SECTION 1. The president may from time to time designate one or more
divisions of the corporation as the organizations through which the operations
of the corporation are to be conducted, and may also from time to time prescribe
the area of operations for each division so designated.
SECTION 2. The president shall from time to time appoint individuals to
manage the operations of these divisions and these individuals shall be
designated by such titles as may be appropriate. These titles shall include the
name of the division and may include the word president, vice-president or
manager. Such individuals, however, irrespective of such titles, shall not be,
nor shall they be deemed to be, officers of the corporation. Such division
personnel shall be authorized to have general and active management of the
activities of their respective divisions, all subject to the right of the
president to (a) delegate any specific management power, (b) fix their
compensation, and (c) remove such personnel at any time without further prior
authorization of the board of directors.
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ARTICLE X
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the Capital Stock of the corporation, subject
to any additional requirements of the certificate of incorporation, if any, may
be declared by the board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the Capital Stock, subject to the provisions of the certificate of
incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
board of directors from time to time, in its absolute discretion, shall think
proper as a reserve or reserves to meeting contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the board of directors shall think conducive to the
interest of the corporation, and the board of directors may modify or abolish
any such reserve in the manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers, or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall end on December 31.
STOCKHOLDER RECORD
SECTION 5. The corporation shall keep at its principal place of business
in Illinois, or at the office of a transfer agent, an agent for the Warrants
(the "Warrant Agent") or a registrar in Illinois, records of the Stockholders in
the corporation, giving the names and addresses of all Stockholders and the
number of Shares held by each.
SEAL
SECTION 6. The corporate seal shall have inscribed thereon the name of the
corporation and the words "CORPORATE SEAL, DELAWARE". The seal may be used by
causing it or a
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facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE XI
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or repealed and new By-
Laws may be adopted by the board of directors at any meeting thereof, or by the
Stockholders. Notwithstanding the foregoing, no provision of these By-Laws
regarding or affecting the Warrants or the rights of the Warrantholders can be
in any way altered, amended or repealed, nor can any new By-Law be added which
would have such effect, unless such alteration, amendment, repeal or addition is
contained in a written instrument signed by the corporation, and upon the
approval of the holders of not less than 51% of the Warrants, by the Warrant
Agent. On the date when the Warrants expire or upon the secretary's
certification that all Warrants have been exercised and no Warrants remain
outstanding, all provisions in these By-Laws regarding the Warrants shall be
deemed repealed and no longer shall have any force and effect.
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EXHIBIT 3___
NINTH AMENDED AND RESTATED
BY-LAWS
OF
UNR INDUSTRIES, INC.
Effective as of May 5, 1994
ARTICLE I
OFFICES
SECTION 1. The registered office shall be established and maintained
at the office of The Prentice Hall Corporation System, Inc., in the City of
Dover, in the County of Kent, in the State of Delaware, and said corporation
shall be the registered agent of this corporation in charge thereof. The
corporation may have other offices, either within or without the State of
Delaware, at such place or places as the board of directors may from time to
time appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF HOLDERS OF THE CAPITAL STOCK AND WARRANTHOLDERS
SECTION 1. Except as expressly provided in these By-Laws, the terms
"Stockholder" or "Stockholders" shall collectively refer to the holder or
holders of (i) the corporation's capital stock (the "Holders of the Capital
Stock" or, when referring to the capital stock itself, the "Capital Stock"),
and (ii) the corporation's warrants (the "Warrantholders" or when referring to
the warrants themselves, the "Warrants") issued pursuant to the Plan of
Reorganization dated March 14, 1989 (the "Plan") as confirmed by order of the
United States Bankruptcy Court for the Northern District of Illinois, Eastern
Division. All meetings of the Stockholders for the election of directors shall
be held in Chicago, Illinois, at such place as may be fixed from time to time by
the board of directors, or at such place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. Meetings of Stockholders for any other
purpose may be held at such time and place, within or without the State
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of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2. Annual meetings of Stockholders, commencing with the year
1991, shall be held on the first Thursday after the third day in the month of
May if not a legal holiday, and if a legal holiday, then on the next business
day following, at 11:00 a.m., or at such other date and time as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting, at which meeting the stockholders shall elect by plurality vote
a board of directors, and transact such other business as may properly be
brought before the meeting.
SECTION 3. The board of directors may nominate the slate of directors
to be voted upon by Stockholders at the annual or any special meeting of
Stockholders. In addition, any Stockholder entitled to vote at the annual or
any special meeting of Stockholders may nominate any person to the board of
directors without any prior notice to the corporation of such Stockholder's
intention to do so.
SECTION 4. Written notice of the annual or any special meeting of
Stockholders stating the place, date and hour of the meeting shall be given to
each Stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of the meeting.
SECTION 5. The officers or agents who have charge of the stock
ledger, register for the Warrants or transfer book of the corporation shall
prepare and make, at least ten days before every meeting of Stockholders, a
complete list of the Stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each Stockholder and the number of
shares of Capital Stock and the number of shares purchasable upon the exercise
of the Warrants (collectively, the "Shares") registered in the name of such
Stockholder. Such list shall be open to the examination of any Stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any Stockholder
who is present.
SECTION 6. Special meetings of the Stockholders for any purpose or
purposes, unless otherwise prescribed by statute, by these By-Laws or by the
certificate of
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incorporation, may be called by the chairman of the board or by the president
and shall be called by the chairman of the board, president or secretary at the
request in writing of a majority of the board of directors, or at the request in
writing of Stockholders owning a majority of the Shares of the corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting. Business transacted at any special
meeting of Stockholders shall be limited to the purposes stated in the notice.
SECTION 7. Written notice of a special meeting stating the place,
date and hour of the meeting, and the purpose or purposes for which the meeting
is called, shall be given not less than ten nor more than forty days before the
date of the meeting to each Stockholder entitled to vote at such meeting.
SECTION 8. The holders of a majority of the Shares issued and
outstanding and entitled to vote thereat, present in person, or represented by
proxy, shall constitute a quorum at all meetings of the Stockholders for the
transaction of business except as otherwise provided by statute, by these By-
Laws or by the certificate of incorporation. If, however, such quorum shall not
be present or represented at any meeting of the Stockholders, the Stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each Stockholder of record
entitled to vote at the meeting.
SECTION 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the Shares having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes,
these By-Laws or of the certificate of incorporation, a different vote is
required in which case such express provision shall govern and control the
decision of such question.
SECTION 10. Unless otherwise specifically provided by statute, these
By-Laws or the certificate of incorporation, each Stockholder shall at every
meeting of the Stockholders be entitled to one vote for each Share held by such
Stockholder.
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SECTION 11. Each Stockholder is entitled to vote at a meeting of
Stockholders or to express consent or dissent to corporate action in writing
without a meeting and may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
SECTION 12. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special meeting
of Stockholders of the corporation, or any action which may be taken at any
annual or special meeting of such Stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
Shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of Stockholders are recorded. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those Stockholders who have not
consented in writing.
SECTION 13. The board of directors, in advance of any Stockholders'
meeting, shall appoint one or more inspectors to act at the meeting or any
adjournment thereof and to make a written report thereof. In case any person
appointed fails to appear or act, the vacancy may be filled by appointment made
by the board of directors in advance of the meeting or at the meeting by the
persons presiding thereat. Each inspector, before entering upon the discharge
of his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall ascertain the number of Shares outstanding and
the voting power of each, determine the Shares represented at the meeting and
the validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period of record of the disposition of any challenges
made to any determination by the inspectors, and certify their determination of
the number of Shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors.
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In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the
limited purpose permitted herein, the inspectors at the time they make their
certification pursuant to the paragraph above shall specify the precise
information considered by them, including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
The date and time of the opening and the closing of the polls for each
matter upon which the Stockholders will vote at a meeting shall be announced at
the meeting. No ballot, proxies or votes, nor any revocations thereof or
changes thereto, shall be accepted by the inspectors after the closing of the
polls unless the Court of Chancery of the State of Delaware, upon application by
a Stockholder, shall determine otherwise.
ARTICLE III
DIRECTORS
SECTION 1. The number of directors which shall constitute the whole
board of directors shall be eight (8). The number of directors may be increased
or decreased by an affirmative vote of not less than a majority of the directors
then in office, provided that as long as 66-2/3% of the Warrants are held by the
holders of Class 6 Claims (as defined in the Plan) as of the date upon which the
Warrants were initially issued (or any successor of any such holder in a
transfer by operation of law or without consideration), no decrease in the
number of directors below eleven shall be effected or permitted without the
approval by the vote or written consent of the holders of not less than the
majority (or more if required by law) of the then outstanding Warrants. The
directors shall be elected at the annual meeting of Stockholders, except as
provided in Section 2 of this Article, and each director elected shall hold
office until the next
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annual meeting of Stockholders and until his successor is duly elected and
qualified or until his earlier resignation or removal. A special meeting of the
Warrantholders may be called without the presence of the Holders of the Capital
Stock for the sole purpose of determining whether the number of directors shall
be decreased below eleven. Directors need not be Stockholders nor residents of
the State of Illinois or the State of Delaware.
SECTION 2. Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled only by the
vote of Stockholders holding a majority of the Shares, and any director so
chosen shall hold office until the next annual election and until his successor
is duly elected and shall qualify, or until his earlier resignation or removal.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any Stockholder or Stockholders
holding at least ten percent of the total number of the Shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.
SECTION 3. The business of the corporation shall be managed by its
board of directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the certificate of
incorporation or by these By-Laws directed or required to be exercised or done
by the Stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware or the State of Illinois.
SECTION 5. The board of directors shall hold regular meetings at such
times and places as may be designated from time to time by the chairman of the
board or, in his absence, the president; provided that the board shall meet at
least four times during each calendar year.
[SECTION 6 of Article III is hereby deleted in its entirety, but said
Section 6 shall be reserved for future use.]
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SECTION 7. Special meetings of the board of directors may be called
by the chairman of the board or by the president on two (2) days notice to each
director, either personally or by mail or by telegram. Special meetings shall be
called by the chairman of the board or the president or secretary in like
manner and on like notice on the written request of two directors. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the board of directors need be specified in the notice or waiver of notice of
such meeting except as provided in Article IV of these By-Laws.
SECTION 8. At all meetings of the board of directors, a majority of
the entire board shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the certificate of
incorporation or these By-Laws, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting, if all members of the board or committee as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the board or committee.
STANDING COMMITTEES OF DIRECTORS
SECTION 10. The corporation shall have the following Standing
Committees:
(a) AN EXECUTIVE COMMITTEE which shall have and may exercise all the
powers and authority of the board of directors during the intervals between
meetings of the board of directors in the management of the business and affairs
of the corporation, and may authorize the seal of the corporation to be affixed
to all papers which may require it; provided that such executive committee shall
not have the power or authority to: (i) amend the certificate of incorporation,
(ii) adopt an agreement of merger or consolidation, (iii) recommend to the
Stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, or
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a dissolution of the corporation or a revocation of a dissolution, (iv) amend
the By-Laws of the corporation or (v) declare a dividend or to authorize the
issuance of stock. The committee chairman shall report to the board of
directors at the next regularly held meeting of the board of directors at the
next regularly held meeting of the board the action taken by the committee at
its meeting, which action shall thereupon be confirmed and ratified by the
board of directors. The committee shall consist of as many members as the board
of directors determines from time to time appropriate, and shall include the
chief executive officer and the chairman of the board as members, and such other
members as may be appointed by the board of directors from time to time.
(b) A COMPENSATION COMMITTEE which shall: (i) recommend annually to
the board of directors nominees for corporate officers and annual compensation
levels (salaries and bonuses) for corporate officers; (ii) recommend to the
board of directors changes in compensation plans such as bonuses, deferred
compensation, incentive compensation and stock option plans; (iii) recommend to
the board of directors changes in employee supplemental benefits (such as
pension plans, profit-sharing plans, health care and life insurance coverage);
(iv) recommend to the board of directors organizational changes in the board and
in corporate executive compensation; and (v) recommend to the board of directors
changes in corporate structure and organizational responsibilities. The
committee shall consist of not less than three (3) members of the board of
directors who are not officers or employees of the corporation. The members of
the committee shall be selected by the board of directors from time to time.
(c) AN AUDIT COMMITTEE which shall: (i) select and employ on behalf
of the corporation, subject to ratification of Stockholders, a firm of certified
public accountants whose duty shall be to audit the books and accounts of the
corporation and its subsidiaries and affiliated companies for the fiscal year in
which they are appointed; (ii) confer with the auditors regarding the scope of
the audit and other services and the cost thereof and report periodically to the
board of directors; and (iii) review with the auditors at the conclusion of the
audit and before publication of the audited financial statements, the findings
disclosed during the audit, including compliance with the corporation's conflict
of interest policies, the adequacy of internal controls, the effectiveness of
the internal auditing function, accounting policies and financial reporting, and
the contemplated form of the statements and opinion. The committee shall
consist of not less than three (3) members of the board of directors who are not
officers or employees of the corporation. The members of
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the committee shall be selected by the board of directors from time to time.
(d) APPOINTING ADDITIONAL COMMITTEES. The board of directors may
from time to time establish other standing committees or other committees and
appoint the members thereof.
SECTION 11. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors.
SECTION 12. Directors may be paid such compensation for their
services, and such reimbursement for expenses for attendance at regular, special
and committee meetings, as the board of directors may from time to time
determine. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 13. The board of directors shall elect one of its members as
the chairman of the board. The chairman of the board, who shall not be
considered an officer of the corporation, shall preside at each meeting of the
board of directors or the Stockholders and shall perform such other duties as
may from time to time be assigned to him by the board of directors.
ARTICLE IV
NOTICES
SECTION 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these By-Laws, notice is required to be given
to any director or Stockholder, such notice shall be in writing and shall be
given in person or by mail to such director or Stockholder. If mailed, such
notice shall be addressed to such director or Stockholder at his address as it
appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given by
telegram.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
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ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the
board of directors and shall be a president, a vice president, a secretary and a
treasurer. The board of directors may also choose additional vice presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these By-Laws otherwise provide.
SECTION 2. The board of directors at its first meeting after each
annual meeting of Stockholders shall choose a president, one or more vice
presidents, a secretary and one or more assistant secretaries and a treasurer.
SECTION 3. The board of directors may appoint such other officers and
agents as it may deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the board.
SECTION 4. The salaries of all officers of the corporation shall be
fixed by the board of directors.
SECTION 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the whole board of directors. Any vacancy occurring in any office
of the corporation shall be filled by the board of directors.
[SECTION 6 of Article V is hereby deleted in its entirety, but said
Section 6 shall be reserved for further use.]
THE PRESIDENT
SECTION 7. The president shall be the chief executive officer and the
chief operating officer of the corporation, shall have the power to call
meetings of the board of directors and special meetings of Stockholders, shall
preside (in the absence of the chairman of the board or in the event of his
inability or refusal to act) at all meetings of the Stockholders and the board
of directors, and shall have general charge of the business of the corporation
and shall see to it that all orders and resolutions of the board of directors
are performed and carried into effect. All current reports and
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other day-to-day activities in the ordinary course of the corporation's business
shall be channeled by other officers and divisional executives through or to the
president, except as otherwise provided by these By-Laws.
SECTION 8. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
president to some other officer or agent of the corporation. The president
shall vote all shares of capital stock of any other corporation standing in the
name of this corporation, except where the voting thereof shall be delegated by
the board of directors to some other officer or agent of the corporation, and he
shall employ required or appropriate executive, administrative or professional
personnel. In general, he shall perform all duties incident to the offices of
chief executive officer, chief operating officer and president, and such other
duties as may be prescribed from time to time by the board of directors.
[Section 9 of Article V is hereby deleted in its entirety, but said
Section 9 shall be reserved for further use.]
VICE PRESIDENTS
SECTION 10. In the absence of the president or in the event of his
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
The board of directors, at its discretion, may designate any vice president
as senior vice president, executive vice president, or any other designation as
it may choose.
THE SECRETARY AND ASSISTANT SECRETARY
SECTION 11. The secretary shall attend all meetings of the board of
directors and all meetings of Stockholders and record all the proceedings of the
meetings of the corporation and of the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given,
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notice of all meetings of the Stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose supervision he shall be. He shall have
custody of the corporate seal of the corporation and he, or an assistant
secretary, shall have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
SECTION 12. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE TREASURER
AND ASSISTANT TREASURERS
SECTION 13. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuables in the name and to the credit of the corporation in such
depositaries as may be designated by the board of directors.
SECTION 14. The treasurer shall disburse the funds of the corporation
as may be ordered by the board of directors, taking proper vouchers for such
disbursements and shall render to the president and the board of directors when
the president or board of directors so requires, an account of all his
transactions as treasurer and of the financial condition of the corporation.
SECTION 15. If required by the board of directors, the treasurer
shall give the corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the board of directors for the faithful performance
of the duties of his office and for the restoration to the corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money and other property of whatever kind in his possession or
under his control belonging to the corporation.
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SECTION 16. The assistant treasurer, or if there shall be more than
one, the assistant treasurers in the order determined by the board of directors
(or if there be no such determination, then in the order of their election),
shall, in the absence of the treasurer or in the event of his inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
INTERESTED DIRECTORS AND OFFICERS
SECTION 1. No contract or transaction between the corporation and one
or more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of its directors or officers are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or solely because
the director or officer is present at or participates in the meeting of the
board of directors or a committee thereof which authorized the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:
(a) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the board of directors or committee,
which in good faith authorizes the contract or transaction by a vote sufficient
for such purpose without counting the vote of the interested director or
directors; or
(b) The material facts as to his interest and as to the contract or
transaction are disclosed or are known to the Stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of the Stockholders; or
(c) The contract or transaction is fair as to the corporation as of
the time it is authorized, approved or ratified by the board of directors or the
Stockholders.
Interested directors may be counted in determining the presence of a quorum at a
meeting of the board of directors or of a committee which authorizes the
contract or transaction.
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ARTICLE VII
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is a
party or is threatened to be made a party to or is involved in or called as a
witness in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, and any appeal
therefrom (hereinafter collectively a "proceeding"), by reason of the fact that
he, or a person of whom he is the legal representative, is, was or had agreed to
become a director, officer, or Delegate (as defined hereinafter) of the
corporation, shall be indemnified and held harmless by the corporation, to the
fullest extent permitted under the Delaware General Corporation Law (the "DGCL")
as the same now exists or may hereafter be amended (but in the case of any such
amendment, only to the extent that such amendment permits the corporation to
provide broader indemnification rights than the DGCL permitted the corporation
to provide prior to such amendment), against all expenses (including, but not
limited to, attorneys' fees and expenses of litigation) reasonably incurred, and
all liabilities and losses (including, but not limited to, judgments, fines,
excise taxes, ERISA penalties and amounts paid in settlement) incurred by him in
connection with such proceeding; provided that except as explicitly provided
herein, the corporation shall indemnify any such person seeking indemnity in
connection with a proceeding (or part thereof) initiated by such person only if
authorization for such proceeding (or part thereof) initiated by such person was
not denied by a majority of the board of directors prior to the earlier of (i)
30 days after receipt of notice thereof from such person or (ii) an Event, as
defined hereinafter. For purposes of this Article VII, a "Delegate" is any
director or officer who is or was serving at the request of the corporation or
the board of directors as a director, officer, trustee, fiduciary, partner,
employee or agent of an entity or enterprise other than the corporation
(including, but not limited to, a partnership, joint venture, trust, other
corporation, or an employee benefit plan or trust); and an "Event" shall be
deemed to have occurred if (i) any "Person" (as that term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) is or
becomes (except in a transaction approved in advance by the board of directors)
the beneficial owner (as defined in Rule 13d-3 under such Act), directly or
indirectly, of securities of the corporation representing 25% or more of the
combined voting power of the corporation's then outstanding securities,
provided that the UNR Asbestos-Disease Claims Trust (as defined in the Plan)
holding securities of the corporation pursuant to
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the Plan shall not be deemed a Person for purposes of this Article VII, or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the board of directors of the corporation cease for any
reason to constitute at least a majority thereof unless the election of each
director who was not a director at the beginning of the period was approved by
either (x) a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period or (y) the UNR Asbestos-
Disease Claims Trust (as defined in the Plan).
SECTION 2. EXPENSES. Expenses, including attorneys' fees, incurred
by a person indemnified pursuant to Section 1 of this Article VII in defending
or otherwise being involved in a proceeding shall be paid by the corporation in
advance of the final disposition of such proceeding upon receipt of an
undertaking (the "Undertaking") by or on behalf of such person to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation; provided that in connection with a proceeding
(or part thereof) initiated by such person except as provided in Section 3 of
this Article VII for proceedings to enforce a person's right to the advancing of
expenses for either a proceeding not initiated by such person or a proceeding
initiated by such person for which authorization was not denied, the corporation
shall pay said expenses in advance of final disposition only if authorization
for such proceeding (or part thereof) was not denied by a majority of the board
of directors of the corporation. A person to whom expenses are advanced
pursuant hereto shall not be obligated to repay pursuant to the Undertaking
until the final determination of any pending proceeding in a court of competent
jurisdiction, including appeals therefrom, concerning the right of such person
to be indemnified or the obligations of such person to repay pursuant to the
Undertaking.
SECTION 3. PROTECTION OF RIGHTS. If a claim under Section I of this
Article VII is not promptly paid in full by the corporation after a written
claim has been received by the corporation or if expenses pursuant to Section 2
of this Article VII have not been promptly advanced after a written request for
such advancement accompanied by the Undertaking has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim or the advancement of
expenses. If successful, in whole or in part, in such suit such claimant shall
also be entitled to be paid the reasonable expense thereof. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition
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where the required Undertaking has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the DGCL for the corporation to indemnify the claimant for the amount claimed,
but the burden of proving such defense shall be on the corporation. If an Event
has occurred, a claimant making a claim under Section I of this Article VII or
seeking to avoid repayment to the corporation pursuant to an Undertaking shall
have (i) the right, but not the obligation, to have a determination made by
independent legal counsel as to whether indemnification of the claimant is
proper because he has met the applicable standard of conduct required under the
DGCL, and (ii) the right to select as independent legal counsel for such purpose
any law firm designated for such purpose in a resolution adopted by a majority
of the board of directors prior to the Event and in full force and effect
immediately prior to the Event. If a determination has been made in accordance
with the preceding sentence, no determination inconsistent therewith by other
legal counsel, by the board of directors, or by Stockholders shall be of any
force or effect. Neither the failure of the corporation (including its board
of directors, independent legal counsel, or its Stockholders) to have made a
determination, if required, prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he has
met the applicable standard of conduct required under the DGCL, nor an actual
determination by the corporation (including its board of directors, independent
legal counsel, or its Stockholders) that the claimant had not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.
SECTION 4. MISCELLANEOUS.
(a) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Article VII shall not be deemed exclusive of any other right which such
person may have or hereafter acquire under any statute, provision of the
certificate of incorporation, By-Law, agreement, vote of Stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity at the request of the corporation while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person. The board of directors shall have the authority,
by resolution, to provide for such indemnification of employees or agents of the
corporation or others and for such other indemnification of directors, officers
or Delegates as it shall deem appropriate.
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(b) INSURANCE. The corporation shall have power to purchase and
maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of the corporation, or any person who is or was serving at the
request of the corporation in any other capacity with the corporation, another
corporation, a partnership, a joint venture, trust or other enterprise against
any expenses, liabilities or losses, asserted against him or incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such expenses,
liabilities or losses under the DGCL.
(c) CONTRACTUAL NATURE. The provisions of this Article VII shall be
applicable to all proceedings commenced after its adoption, whether such arise
out of events, acts or omissions which occurred prior or subsequent to such
adoption, and shall continue as to a person who has ceased to be a director,
officer or Delegate and shall inure to the benefit of the heirs, executors and
administrators of such person. This Article VII shall be deemed to be a
contract between the corporation and each person who, at any time that this
Article VII is in effect, serves or agrees to serve in any capacity which
entitles him to indemnification hereunder and any repeal or other modification
of this Article VII or any repeal or modification of the DGCL or any other
applicable law shall not limit any rights of indemnification existing or arising
out of events, acts or omissions occurring prior to such repeal or modification
to enforce this Article VII with regard to acts, omissions or events arising
prior to such repeal or modification.
(d) SEVERABILITY. If this Article VII or any portion hereof shall be
invalidated or held to be unenforceable on any ground by any court of competent
jurisdiction, the decision of which shall not have been reversed on appeal, such
invalidity or unenforceability shall not affect the other provisions hereof, and
this Article VII shall be construed in all respects as if such invalid or
unenforceable provisions had been omitted therefrom.
ARTICLE VIII
CERTIFICATES OF CAPITAL STOCK
SECTION 1. Every holder of shares of Capital Stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman of the board or the president or a vice president,
and by the treasurer or an assistant treasurer, or the secretary or an
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assistant secretary, of the corporation, certifying the number of shares owned
by him in the corporation.
SECTION 2. Any or all of the signatures on the certificate may be
facsimile. In case the chairman of the board, any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
LOST CERTIFICATE
SECTION 3. The board of directors may direct a new certificate or
certificates of Capital Stock to be issued in place of any certificate or
certificates theretofore issued by the corporation, alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of Capital Stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond, in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF CAPITAL STOCK
SECTION 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares of Capital Stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books; provided, however, that such duty shall be subject
to Federal and state securities and other applicable laws, the certificate of
incorporation, and any legends and stop transfer instructions with respect to
such old certificate.
FIXING RECORD DATE
SECTION 5. In order that the corporation may determine the
Stockholders entitled to notice of or to vote at any meeting of Stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a
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meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of Shares or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A determination of
Stockholders of record entitled to notice of or to vote at a meeting of
Stockholders shall apply to any adjournment of the meeting; provided, however,
that the board of directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
SECTION 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of Shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of Shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
Share or Shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
DIVISIONS
SECTION 1. The president may from time to time designate one or more
divisions of the corporation as the organizations through which the operations
of the corporation are to be conducted, and may also from time to time prescribe
the area of operations for each division so designated.
SECTION 2. The president shall from time to time appoint individuals
to manage the operations of these divisions and these individuals shall be
designated by such titles as may be appropriate. These titles shall include the
name of the division and may include the word president, vice-president or
manager. Such individuals, however, irrespective of such titles, shall not be,
nor shall they be deemed to be, officers of the corporation. Such division
personnel shall be authorized to have general and active management of the
activities of their respective divisions, all subject to the right of the
president to (a) delegate any specific management power, (b) fix their
compensation, and (c) remove such personnel at any time without further prior
authorization of the board of directors.
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ARTICLE X
GENERAL PROVISIONS
DIVIDENDS
SECTION 1. Dividends upon the Capital Stock of the corporation,
subject to any additional requirements of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the Capital Stock, subject to the provisions of the certificate of
incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out
of any funds of the corporation available for dividends such sum or sums as the
board of directors from time to time, in its absolute discretion, shall think
proper as a reserve or reserves to meeting contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
for such other purpose as the board of directors shall think conducive to the
interest of the corporation, and the board of directors may modify or abolish
any such reserve in the manner in which it was created.
CHECKS
SECTION 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers, or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
SECTION 4. The fiscal year of the corporation shall end on
December 31.
STOCKHOLDER RECORD
SECTION 5. The corporation shall keep at its principal place of
business in Illinois, or at the office of a transfer agent, an agent for the
Warrants (the "Warrant Agent") or a registrar in Illinois, records of the
Stockholders in the corporation, giving the names and addresses of all
Stockholders and the number of Shares held by each.
SEAL
SECTION 6. The corporate seal shall have inscribed thereon the name
of the corporation and the words "CORPORATE SEAL, DELAWARE". The seal may be
used by causing it or a
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facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE XI
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or repealed and new
By-Laws may be adopted by the board of directors at any meeting thereof, or by
the Stockholders. Notwithstanding the foregoing, no provision of these By-Laws
regarding or affecting the Warrants or the rights of the Warrantholders can be
in any way altered, amended or repealed, nor can any new By-Law be added which
would have such effect, unless such alteration, amendment, repeal or addition is
contained in a written instrument signed by the corporation, and upon the
approval of the holders of not less than 51% of the Warrants, by the Warrant
Agent. On the date when the Warrants expire or upon the secretary's
certification that all Warrants have been exercised and no Warrants remain
outstanding, all provisions in these By-Laws regarding the Warrants shall be
deemed repealed and no longer shall have any force and effect.
<PAGE>
EXHIBIT 10
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
UNR Industries, Inc.
November 1993
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
PAGE
----
Article 1. Establishment and Purpose 1
Article 2. Definitions 1
Article 3. Administration 3
Article 4. Eligibility and Participation 3
Article 5. Profit Sharing Benefits 4
Article 6. Forfeiture of Benefits 5
Article 7. Change in Control 6
Article 8. Rights of Participants 6
Article 9. Withholding of Taxes 7
Article 10. Amendment and Termination 7
Article 11. Miscellaneous 7
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE 1. ESTABLISHMENT AND PURPOSE.
1.1 ESTABLISHMENT. UNR Industries, Inc., a Delaware corporation (the
"Company"), hereby establishes, effective as of January 1, 1993, a nonqualified
supplemental executive retirement plan for key employees as described herein,
which shall be known as the "UNR Industries, Inc. Supplemental Executive
Retirement Plan" (the "Plan").
1.2 PURPOSE. The principal purpose of the Plan is to provide protection
against reductions in Company profit sharing contributions and employee
contributions under the UNR Employees' Profit Sharing Plan which are limited by
operation of certain tax laws.
ARTICLE 2. DEFINITIONS
Whenever used herein, the following terms shall have the respective
meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Change in Control" of the Company shall be deemed to have occurred as
of the first day that any one or more of the following conditions
shall have been satisfied:
(i) Any Person (other than those Persons in control of the Company
as of the Effective Date, or other than a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, or a corporation owned directly or indirectly by
the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company),
becomes the beneficial owner, directly or indirectly, of
securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's then
outstanding securities; or
(ii) During any period of two (2) consecutive years (not including
any period to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board (and any
new Director, whose election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were Directors at the
beginning of the period or whose election or nomination for
election was so approved), cease for any reason to constitute a
majority thereof; or
1
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(iii) The stockholders of the Company approve: (a) a plan of complete
liquidation of the Company; or (b) an agreement for the sale or
disposition of all or substantially all the Company's assets;
or (c) a merger, consolidation, or reorganization of the
Company with or involving any other corporation, other than a
merger, consolidation, or reorganization that would result in
the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity), at least fifty percent (50%) of the combined
voting power of the voting securities of the Company (or such
surviving entity) outstanding immediately after such merger,
consolidation or reorganization.
However, in no event shall a Change in Control be deemed to have
occurred, with respect to the executive, if the executive is part of a
purchasing group which consummates the Change-in-Control transaction.
The executive shall be deemed "part of a purchasing group" for
purposes of the preceding sentence if the executive is an equity
participant in the purchasing company or group (except for (i) passive
ownership of less than three percent (3%) of the stock of the
purchasing company; or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not significant, as
determined prior to the Change in Control by a majority of the
nonemployee continuing Directors).
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Compensation Committee, or any other committee
appointed by the Board to administer the Plan.
(e) "Company" means UNR Industries, Inc., a Delaware corporation.
(f) "Compensation" shall have the same meaning as defined in the Qualified
Profit Sharing Plan.
(g) "Disability" shall have the same meaning as defined in the Qualified
Profit Sharing Plan.
(h) "Normal Retirement Age" means the date of a Participant's 65th
birthday.
(i) "Participant" means an individual whose Qualified Profit Sharing Plan
contributions are affected by Sections 415 or 401(a)(17) of the Code,
or other individuals selected by the Committee for participation in
the Plan.
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<PAGE>
(j) "Plan" means the UNR Industries, Inc. Supplemental Executive
Retirement Plan as set forth in this document.
(k) "Qualified Profit Sharing Plan" means the tax qualified defined
contribution profit sharing plan known as the UNR Employees' Profit
Sharing Plan (as amended and restated effective January 1, 1991).
(l) "Retirement" means a voluntary termination of a Participant's
employment at any time following Normal Retirement Age.
(m) "Top-Hat Group" means those executives who comprise a select group of
management or highly compensated employees.
(n) "Year" or "Plan Year" means the calendar year.
ARTICLE 3. ADMINISTRATION
3.1 AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee. However, the Committee may delegate any and all of its authority
granted under the Plan to any executive of executives of the Company.
The Committee shall have the same powers, rights, duties, and obligations
as are extended to the Committee in the Qualified Profit Sharing Plan, including
but not limited to, the right to establish rules for the administration of the
Plan.
3.2 INDEMNIFICATION. The members of the Board, its agents and officers,
directors, and employees of the Company and its affiliates shall be indemnified
and held harmless by the Company in the same manner and to the same extent as
provided under Section 13.4 of the Qualified Profit Sharing Plan.
3.3 DECISIONS BINDING. The Committee shall have the exclusive right and the
maximum discretion permitted by law to construe, interpret, and apply the
provisions of the Plan. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan, and all related orders or resolutions of
the Board and the Committee shall be final, conclusive, and binding on all
persons, including the Company, its stockholders, employees, Participants, and
their estates and beneficiaries.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1 ELIGIBILITY. Persons eligible to participate in the Plan shall include
all individuals in the Top-Hat Group whose Qualified Profit Sharing Plan
contributions are limited by Code Sections 415 or 401(a)(17). In addition, the
Plan may include key executives of the Company, as selected by the Committee, at
its sole discretion. It is the intent of the Company to extend eligibility only
to those executives who comprise a select group of
3
<PAGE>
management or highly compensated employees, such that the Plan shall qualify for
treatment as a "Top-Hat" plan under the Employee Retirement Income Security Act
of 1974, as amended.
In the event a Participant no longer meets the requirements for
participation in the Plan, such Participant shall become an inactive
Participant, retaining all benefits accrued under the Plan, except the right to
any future participation or benefit accruals, until such time that the
Participant again becomes an active Participant.
4.2 NOTIFICATION OF ELIGIBILITY. An employee shall, within thirty (30)
calendar days of becoming eligible to participate in the Plan, be notified by
the Company of such eligibility.
ARTICLE 5. PROFIT SHARING BENEFITS
5.1 COMPANY CONTRIBUTIONS. For each Year in which an employee is a
Participant, the Company shall credit to each Participant's account in the Plan
an amount equal to (a) minus (b) where:
(a) Is the amount which would have been credited to the Participant's
account under the Qualified Profit Sharing Plan from employer profit
sharing contributions and forfeitures for such Year had the amounts
not been limited by Section 415 and/or Section 401(a)(17) of the Code;
and
(b) Is the amount which actually is credited to the Participant's account
under the Qualified Profit Sharing Plan from employer profit sharing
contributions and forfeitures for such Year.
5.2 DISCRETIONARY CONTRIBUTIONS. For each Plan Year, the Committee also
shall have the ability to make discretionary contributions to the Plan, on
behalf of each Participant actively employed by the Company at the end of such
Plan Year; however, the Company is not required to make a contribution in any
Plan Year. The amount of any such discretionary contribution shall be at the
complete discretion of the Committee and may vary for each Participant.
4
<PAGE>
5.3 VESTING OF COMPANY CONTRIBUTIONS. Each Participant shall vest in his or
her Company contributions described under Articles 5.1 and 5.2 herein according
to the following schedule:
- -----------------------------------------------
NUMBER OF YEARS
OF CREDITED SERVICE CUMULATIVE
UNDER THE QUALIFIED PERCENTAGE OF VESTED
PROFIT SHARING PLAN COMPANY CONTRIBUTIONS
- -----------------------------------------------
1 20%
2 40%
3 60%
4 80%
5 100%
- -----------------------------------------------
5.4 FORM AND TIMING OF BENEFIT PAYMENTS. Vested benefit payments under this
Plan shall be paid in cash in a single lump sum and shall be paid out as soon as
practicable following termination of employment.
5.5 EARNINGS ON COMPANY AND PARTICIPANT CONTRIBUTIONS. Company and
Participant contributions under the Plan shall be credited with earnings,
compounded on an annual basis, at a rate determined by the Committee to be equal
to the rate of return earned on those securities held during the corresponding
period by the Qualified Profit Sharing Plan "Regular Fund."
5.6 DISTRIBUTION UPON DEATH OR DISABILITY. In the event of death or
Disability, all benefits payable under this Plan shall vest in full and be paid
to Participants or beneficiaries in the manner set forth in Article 5.4 herein.
5.7 BENEFICIARY. The beneficiary designated by each Participant under the
Qualified Profit Sharing Plan shall be the beneficiary of the Participant's
benefits under this Plan.
ARTICLE 6. FORFEITURE OF BENEFITS.
6.1 TERMINATION OF CAUSE. In the event that a Participant's employment is
terminated by the Company as a result of the Participant's being convicted of a
felony, or because of the Participant's repeated occurrences of grossly
inadequate performance, as determined by the Board in its sole discretion, as of
the date of such determination, the Participant shall forfeit all rights and
entitlement to benefit payments from this Plan.
5
<PAGE>
6.2 OTHER TERMINATIONS. In the event of a Participant's termination of
employment for any reason other than death, Disability, or for "Cause" (as
provided in Article 6.1 herein), the vested portion of the Participant's benefit
shall be paid out in accordance with Article 5.4 herein. All nonvested amounts
shall be forfeited to the Company unless the Committee, at its sole discretion,
should decide otherwise.
ARTICLE 7. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, Participants' contributions,
both employee and Company portions, as well as interest earned thereon, shall
vest in full. If an employee is terminated subsequent to a change in control,
all amounts will be paid in full in accordance with Article 5.4, except for
benefits impacted by Article 6.1.
ARTICLE 8. RIGHTS OF PARTICIPANTS
8.1 CONTRACTUAL OBLIGATION. The Plan shall create a contractual obligation
on the part of the Company to provide the benefits specified in this Plan to
Participants.
8.2 UNSECURED INTEREST. All benefits paid under the Plan shall be paid in
cash from the general assets of the Company. Such amounts shall be reflected on
the accounting records of the Company but shall not be construed to create or
require the creation of a trust, custodial or escrow account, nor create a trust
or fiduciary relationship of any kind between the Company and a Participant or
any other person. No Participant or party claiming an interest in contributions
made on behalf of a Participant shall have any interest whatsoever in any
specific asset of the Company. To the extent that any party acquires a right to
receive payments under the Plan, such right shall be equivalent to that of an
unsecured general creditor of the Company.
The Company may establish one or more trusts, with such trustee as the
Committee may approve, for the purpose of providing for the payment of deferred
amounts and/or contributions. Such trust or trusts may be irrevocable, but the
assets thereof shall be subject to the claims of the Company's general
creditors. To the extent any contributions under the Plan are actually paid from
any such trust, the Company shall have no further obligation with respect
thereto, but to the extent not so paid, such deferred amounts and contributions
shall remain the obligation of, and shall be paid by, the Company.
8.3 EMPLOYMENT. Nothing in the Plan shall interfere with nor limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company.
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<PAGE>
[J P Morgan Letterhead]
EXHIBIT 10___
August 3, 1993
The Board of Directors
UNR Industries, Inc.
332 South Michigan Avenue
Chicago, Illinois 60604
Attention: Mr. Darius W. Gaskins, Jr.
Chairman, Special Committee
Members of the Board:
This letter confirms our understanding (the "Agreement") that UNR Industries,
Inc. (together with its subsidiaries and affiliates, the "Company") has engaged
J.P. Morgan Securities Inc. ("J.P. Morgan") to act as exclusive financial
advisor to the Special Committee of the Board of Directors of the Company for a
period of 12 months commencing upon the Company's acceptance of this Agreement
with respect to any sale, merger, consolidation, or any other business
combination, in one of a series of transactions, involving all or substantially
all of the stock, assets, or business of the Company, any repurchase by the
Company of a significant amount of its securities, any recapitalization of the
Company, or any spin-off, split-off, or other extraordinary dividend of cash,
securities, or other assets to stockholders of the Company (each, a
"Transaction").
As discussed, we propose to undertake certain services on your behalf, including
to the extent requested by you: (i) developing an estimate of the likely range
of values of the Company and its principal component businesses, (ii) analyzing
the options for realizing such values, (iii) assisting you in preparing an
offering memorandum describing the Company, its operations, historical
performance, and future prospects, (iv) identifying and contacting selected
qualified acquirors acceptable to you, (v) arranging for potential acquirors
to conduct business investigations, (vi) negotiating the financial aspects of
any proposed Transaction under your guidance, and (vii) delivering an opinion
to the Board of Directors
<PAGE>
- 2 -
of the Company, if requested, as to the fairness to the Company's stockholders
from a financial point of view of this consideration to be received by the
Company's stockholders in any proposed Transaction (an "Opinion").
As compensation for the services to be rendered hereunder by J.P. Morgan, the
Company agrees to pay J.P. Morgan (i) an engagement fee (the "Engagement Fee")
of $200,000, payable promptly upon execution of this Agreement, (ii) a success
fee as described below (the "Success Fee"), and (iii) a no-go fee (the "No-Go
Fee") of $300,000 payable 12 months from the Company's acceptance of this
Agreement in the event that a bona fide written proposal (or proposals) for a
Transaction (or Transactions), determined by the Board of Directors to be
reasonably acceptable, is received from a third party (or parties) during the
term of this Agreement, but the company decides to reject such proposal (or
proposals) and no alternative Transactions are or become available to the
Company during the term of this Agreement.
The Success Fee referred to in clause (ii) above shall be in an amount equal to
0.7% of the Transaction Value (as hereinafter defined) if there is a single
Transaction or 0.8% of the Transaction Value if there are two or more
Transactions, less any amount paid by the Company pursuant to clause (i) in the
immediately preceding paragraph. Such fee shall be payable with respect to each
Transaction in cash upon consummation of such Transaction.
For purposes of this Agreement, "Transaction Value" means the aggregate amount
of consideration received by the Company and/or its stockholders (treating any
shares issuable upon exercise of options, warrants, or other rights of
conversion as outstanding) in any Transaction, plus the amount of any debt
securities or other liabilities assumed, redeemed, or remaining outstanding
(other than debt securities issued since June 30, 1993 specifically for the
payment of an extraordinary dividend) or equity securities redeemed or remaining
outstanding in connection with any Transaction, plus, without duplication, the
value of any securities, cash, or other assets distributed to stockholders of
the Company.
For purposes of this Agreement, a Transaction shall be deemed to have been
consummated upon the earliest of any of the following events to occur: (a) the
acquisition by another person of at least 80% of the outstanding common stock
of, or voting power in, the Company calculated on a
<PAGE>
- 3 -
fully-diluted basis (b) a merger or consolidation of the Company with another
person; (c) the acquisition by another person of assets of the Company
representing at least 5% of the Company's book value; (d) acquisition by the
Company of at least 20% of its outstanding equity securities; (e) consummation
of any recapitalization; or (f) the receipt by stockholders of the Company of
any cash, securities, or other assets to be distributed in any spin-off, split-
off, or other extraordinary dividend.
If the consideration or other value received in any Transaction is paid in whole
or in part in the form of securities, the value of such securities, for purposes
of calculating the Success Fee, shall be the fair market value thereof, as the
parties hereto shall mutually agree, on the day prior to the consummation of the
Transaction; PROVIDED, HOWEVER, that if such securities consist of securities
with an existing public trading market, the value thereof shall be determined by
the last sales price for such securities on the last trading day thereof prior
to such consummation. If all or a portion of the consideration is related to or
contingent upon the future earnings or operations of the Company, the portion of
J.P. Morgan's compensation relating thereto shall be calculated and shall be
paid at the time the Transaction is consummated based upon the estimated net
present value thereof.
The Company agrees to provide J. P. Morgan all financial and other information
requested by it for the purpose of its assignment hereunder. In performing its
services hereunder (including, without limitation, in giving any Opinion), J.P.
Morgan shall be entitled to rely upon and assume, without independent
verification, the accuracy and completeness of all information that is available
from public sources and of all information that has been furnished to it by the
Company or otherwise reviewed by it, and J.P. Morgan shall have no obligation to
verify the accuracy or completeness of any such information or to conduct any
appraisal of assets. For the execution of its assignment, J.P. Morgan shall
establish a team of qualified individuals from appropriate specialty areas
within J.P. Morgan & Co. Incorporated, including Morgan Guaranty Trust Company
of New York.
Any financial advice rendered by J.P. Morgan pursuant to this Agreement may not
be disclosed publicly in any manner without J.P. Morgan's prior written approval
and will be treated by J.P. Morgan as confidential. J.P. Morgan understands
that its Opinion may be reproduced in full in any proxy or information statement
mailed to
<PAGE>
- 4 -
stockholders of the Company and agrees to provide its written approval for such
use.
In order to coordinate our efforts with respect to possible Transactions, during
the period of our engagement hereunder neither the Company nor any
representative thereof (other than J.P. Morgan) will initiate discussions
regarding a Transaction except through J.P. Morgan. If the Company or its
management receives an inquiry regarding a Transaction, they will promptly
advise J.P. Morgan of such inquiry in order that J.P. Morgan may evaluate the
person making such inquiry and its interest and assist the Company in any
resulting negotiations.
The Company agrees to reimburse J.P. Morgan promptly upon request from time to
time for all out-of-pocket expenses (including, without limitation, travel,
communication, and document production expenses, and the fees and disbursements
of counsel) incurred by J.P. Morgan pursuant to its engagement hereunder,
whether or not a Transaction is consummated. The Company also agrees to
indemnify J.P. Morgan and certain other entities and persons as set forth on
Schedule I attached hereto.
This Agreement may be terminated by either the Company at any time or J.P.
Morgan after six months upon giving written notice to the other party. No such
termination will affect (i) J. P. Morgan's rights to receive fees accrued prior
to such termination or to receive reimbursement of its out-of-pocket expenses as
set forth above, or (ii) the rights of J.P. Morgan or any other Indemnified
Person (as defined in Schedule I hereto) to receive indemnification and
contribution. In addition, if at any time prior to the expiration of 18 months
after any such termination by the Company or expiration of this Agreement a
Transaction is consummated, J.P. Morgan will be entitled to payment in full of
the Success Fee.
It is understood that if a transaction is completed in lieu of any Transaction
for which J.P. Morgan is entitled to compensation pursuant to this Agreement,
J.P. Morgan and the Company will negotiate in good faith appropriate
compensation for J.P. Morgan in an amount to be mutually agreed upon, which will
take into account, among other things, the results obtained and the custom and
practice among investment bankers acting in similar transactions.
<PAGE>
- 5 -
If the foregoing correctly set forth the agreement between the Company and J.P.
Morgan, please sign and return the enclosed copy of this Agreement, whereupon it
shall become our binding agreement to be governed by New York law.
Very truly yours,
J.P. Morgan Securities, Inc.
By: /s/ P. M. Wood
----------------------------------------
Name: Peter M. Wood
Title: Managing Director
Accepted as of the
date first above written:
UNR Industries, Inc.
By: /s/ Darius W. Gaskins, Jr.
----------------------------------------
Name: Darius W. Gaskins, Jr.
Title:
<PAGE>
SCHEDULE I
The company (the "Company") referred to in the attached agreement (the
"Agreement") agrees to indemnify and hold harmless J.P. Morgan Securities Inc.
("J.P. Morgan") and its affiliates, and the respective directors, officers,
agents and employees of J.P. Morgan and its affiliates and each other entity or
person, if any, controlling J.P. Morgan or any of its affiliates within the
meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended, (J.P. Morgan and
each such entity or person being referred to as an "Indemnified Person") from
and against any losses, claims, damages or liabilities (or actions in respect
thereof) relating to or arising out of activities performed pursuant to the
Agreement, the transactions contemplated thereby or J.P. Morgan's role in
connection therewith, and will reimburse J.P. Morgan and any other Indemnified
Person on a current basis for all expenses (including, without limitations,
reasonable fees and disbursements of counsel) incurred by J.P. Morgan or any
such other Indemnified Person in connection with investigating, preparing or
defending any such action or claim, whether or not in connection with pending or
threatened litigation to which J.P. Morgan (or any other Indemnified Person) is
a party, in each case, as such expenses are incurred or paid. The Company will
not, however, be responsible for any such losses, claims, damages, liabilities
or expenses of any Indemnified Person that are determined by final and
nonappealable judgment of a court of competent jurisdiction to have resulted
primarily from actions taken or omitted to be taken by such Indemnified Person
in bad faith or from such Indemnified Person's gross negligence or willful
misconduct. The Company also agrees that no Indemnified Person shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to the
Company for or in connection with the Agreement, any transactions contemplated
thereby or J.P. Morgan's role in connection therewith, except for any such
liability for losses, claims, damages, liabilities or expenses incurred by the
Company that are determined by final and nonappealable judgment of a court of
competent jurisdiction to have resulted primarily from actions taken or omitted
to be taken by such Indemnified Person in bad faith or from such Indemnified
Person's gross negligence or willful misconduct.
Upon receipt by an Indemnified Person of actual notice of a claim, action or
proceeding against such Indemnified Person in respect of which indemnity may be
sought hereunder, such Indemnified Person shall promptly notify the Company with
respect thereto. In addition, an Indemnified Person shall promptly notify the
Company after any notice is commenced (by way of service with a summons or order
legal process giving information as to the nature and basis of the claim)
against such Indemnified Person. In any event, failure so to notify the Company
shall not relieve the Company from any liability which the Company may have on
account of this indemnity or otherwise, except to the extent the Company shall
have been materially prejudiced by such failure. The Company will, if requested
by an Indemnified Person, assume the defense of any litigation or proceeding in
respect of which indemnity may be sought hereunder, including the employment of
counsel reasonably satisfactory to J.P. Morgan and the payment of the fees and
expenses of such counsel, in which event, except as provided below, the Company
shall not be liable for the fees and expenses of any other counsel retained by
any Indemnified Person in connection with such litigation or proceeding. In any
such litigation or proceeding the defense of which the Company shall have so
assumed, any Indemnified Person shall have the right to participate in such
litigation or proceeding and to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Company and such Indemnified Person shall have mutually agreed in
writing to the retention of such counsel or (ii) the named parties to any such
litigation or proceeding (including any implicated parties) include the Company
and such Indemnified Person and representation of both parties by the same
counsel would, in the opinion of counsel to such Indemnified Person, be
inappropriate due to actual or potential differing interests between the Company
and such Indemnified Person. The Company shall not be liable for any settlement
of any litigation or proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify the Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. If the Company assumes the
defense of any litigation or proceeding, the Company will not settle such
litigation or proceeding without J.P. Morgan's written consent, which shall not
be unreasonably withheld.
The provisions contained in this Schedule I shall remain operative and in full
force and effect regardless of the expiration of any termination of the
Agreement.
<PAGE>
<TABLE>
<CAPTION>
FIVE YEAR SUMMARY OF FINANCIAL DATA (in thousands except per share data)
- ----------------------------------------------------------------------------------------------------
FIVE YEAR SUMMARY OF OPERATIONS 1993 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET SALES $363,523 $336,306 $301,199 $320,020 $309,477
Cost of products sold 286,751 263,245 234,691 249,658 250,475
- ----------------------------------------------------------------------------------------------------
GROSS PROFIT 76,772 73,061 66,508 70,362 59,002
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME 31,312 30,380 22,702 26,286 20,499
- ----------------------------------------------------------------------------------------------------
Bankruptcy-related costs -- -- -- -- (3,200)
Insurance recovery -- 13,000 -- -- 47,540
Interest income (expense), net (1,628) 1,134 4,847 8,517 4,819
- ----------------------------------------------------------------------------------------------------
Pre-tax income from continuing
operations 29,684 44,514 27,549 34,803 69,658
Income tax provision (benefit) 10,900 (85,400) 8,100 11,900 26,600
- ----------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING
OPERATIONS 18,784 129,914 19,449 22,903 43,058
Discontinued operations--
Income (loss) from operations -- (31) (2,881) (1,076) 1,679
Loss on dispositions -- (6,200) -- -- (3,802)
Extraordinary items--
Reorganization matters -- -- -- -- (109,619)
- ----------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $18,784 $123,683 $16,568 $21,827 $(68,684)
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share:
Continuing operations $.40 $2.88 $.43 $.50 $.94
Discontinued operations--
Income (loss) from operations -- -- (.06) (.02) .04
Loss on dispositions -- (.14) -- -- (.08)
Extraordinary items--
Reorganization matters -- -- -- -- (2.39)
- ----------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER SHARE $.40 $2.74 $.37 $.48 $(1.49)
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Dividends Declared Per
Common Share $1.20 $2.20 $1.20 $.20 $ --
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
Weighted Average Common Shares
Outstanding 47,369 45,040 44,894 45,769 45,892
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
FIVE YEAR SUMMARY OF FINANCIAL DATA
- ----------------------------------------------------------------------------------------------------
Total Assets $271,400 $394,837 $338,613 $316,683 $296,090
Stockholders' Equity 193,384 232,981 206,272 245,602 235,126
Dividends Declared 57,691 102,517 53,745 9,060 --
Return on Assets 6.9% 31.3% 4.9% 6.9% (23.2%)
Return on Stockholders' Equity 9.7% 53.1% 8.0% 8.9% (29.2%)
Capital Expenditures 5,995 5,586 8,870 5,176 11,836
Depreciation and Amortization 9,908 8,840 8,523 6,946 6,702
Long-Term Liabilities 21,940 26,607 30,082 8,608 9,031
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
Prior year results have been restated to reflect the 1992 discontinuance of
Midwest CATV and Midwest Steel.
1
<PAGE>
TO OUR STOCKHOLDERS:
1993, our Company's 75th anniversary, was another good year. Net sales
increased by 8.1 percent to $363.5 million and operating income rose 3.1
percent to $31.3 million. These results represent record levels of performance
and were achieved during a year of only modest economic growth.
1993 was a particularly challenging year for the Company because the
market price for our single largest cost component, hot rolled steel coils,
increased by $60 a ton or more than 20 percent. This significant cost
increase was absorbed with only a slight reduction in our gross margin
through strict cost controls and a vigorous program of working with
customers to pass on the cost increases in a timely and fair manner. A result
of these rapidly escalating steel costs was a LIFO charge of $3.4 million in
1993 compared to only $.2 million in 1992. This LIFO charge was partially
offset by a favorable $2.9 million settlement of a patent infringement suit by
our Commercial Products Division.
On February 1, 1993, we paid a regular dividend of $.20 per share and an
extraordinary dividend of $2.00 per share. These dividends were followed in
December 1993 with the payment of an additional extraordinary dividend of $1.20
per share. All of these dividends were treated as non-taxable return of capital
payments. Notwithstanding the payment of these dividends, our Company maintains
a strong financial position with 1993 year-end stockholders' equity in excess of
$193 million and total short and long-term debt of $31 million, and a
debt-to-equity ratio of only 16 percent. We are well positioned for continued
growth and for future dividends.
Other notable events in 1993 include the sale of our Midwest Steel and Midwest
CATV Divisions and the purchase of Real Time Solutions, Inc. (RTS), a California
based supplier of automated warehouse management and inventory picking systems.
The Midwest Divisions were sold because, as distribution companies, they did not
fit within our strategic focus on value added manufacturing operations. The
purchase of RTS, the leading manufacturer of "pick-to-light" inventory picking
systems significantly strengthens our Material Handling Division and complements
its strategic focus on total warehouse design and management. We also negotiated
a $20 million line of credit which provides us with increased flexibility to
pursue significant cost reduction and growth opportunities, as well as other
corporate objectives.
In June, 1993, the Company received a request from our largest shareholder, the
UNR Asbestos-Disease Claims Trust, to consider retaining a financial adviser to
solicit offers for the purchase of all the shares of the Company for cash. A
Special Committee of independent directors was established, and they retained
J.P. Morgan Securities Inc. to seek such offers. In February, 1994, proposals
to acquire the shares of the Company were received, and after thorough review,
the Special Committee determined that the proposals were either inadequate or
too conditional to recommend to the full Board. All discussions with interested
parties have terminated, and all efforts to seek additional proposals have
ceased. That process is behind us now, and the Company is rededicated to steady,
profitable growth and continuing to provide a consistently superior total return
to its investors.
DIVISION PERFORMANCE
Sales and income at our Leavitt Tube Division exceeded those of the previous
year despite the $60 per ton market price increase for hot rolled steel coils.
Benefitting from a somewhat stronger economy, especially in the fourth quarter,
tonnage shipments increased by more
Celebrating 75 years [GRAPHICS]
PICTURED ABOVE ARE, LEFT TO RIGHT, VICTOR E. GRIMM, VICE PRESIDENT, CORPORATE
SECRETARY AND GENERAL COUNSEL, THOMAS A. GILDEHAUS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER AND HENRY GREY, VICE PRESIDENT FINANCE, TREASURER AND
CHIEF FINANCIAL OFFICER.
2
<PAGE>
UNR ANNUAL -- 3
than six percent in 1993. While gross margins contracted slightly because of a
lag in Leavitt's ability to pass cost increases on to its customers, total
income grew because of increased tonnage, strict cost control and good inventory
management.
Our Rohn Division also had increased sales and profits in 1993, benefitting from
a strong performance by the fiberglass and concrete shelter segment of their
business and a significant number of offshore tower sales in the fourth quarter.
In 1993 the Company approved plans for a major expansion of Rohn's Bessemer,
Alabama shelter manufacturing facility to be completed by the fourth quarter of
1994. Efforts to exploit offshore markets for cellular towers continue with
increasingly favorable results.
Results at our Unarco Commercial Products Division exceeded those of last year
before inclusion of the net proceeds of $2.9 million from the settlement of a
long pending patent infringement suit. Sales benefitted from the small but
growing new lines of plastic carts and food handling equipment, expanding
overseas sales, and a stronger economy. Cost reduction and capacity expansion
are being realized through a recently initiated program of product line
rationalization, and we anticipate increasing benefits from this program in 1994
and beyond.
The Home Products Division had its best year ever in terms of sales and income.
Its share of the stainless steel sink market increased with the addition of new
customers in the rapidly expanding home products retail distribution centers.
More significantly, the acceptance of its new product, the composite Asterite-R-
sink, exceeded expectations. The Company approved an expansion of the Ruston,
Louisiana facility to manufacture Asterite-R- sinks in-house rather than import
them from Portugal. The in-house manufacturing of these sinks will significantly
increase their availability, reduce their cost, and provide for substantial
growth in future years.
A modest loss in the steel rack segment of our Unarco Material Handling Division
was more than offset by the better than expected performance of our newly
acquired Real Time Solutions, Inc. Rack sales were down 16.6 percent from the
previous year, largely due to a decline in the number of large new distribution
center warehouses built in 1993 compared to 1992. RTS, however, exceeded our
expectations, and we anticipate continued growth as new installations continue
and new products are introduced.
It is rewarding that in our 75th year of operation the Company attained record
levels of sales and operating earnings. It is also an indication of our
potential. Despite the turmoil of the Chapter 11 experience in the eighties, the
reorganization start-up experience of the early nineties, and the uncertainties
associated with the efforts to sell the Company this past year, our Company has
continued to move forward. The initiatives undertaken in 1993--the acquisition
of RTS, the expansion of our shelter manufacturing capacity, the commitment to
the production of Asterite-R- sinks, our growing participation in overseas
markets, and the introduction of new products--all provide a solid base for
continued growth, profitability and enhanced shareholder value. Our people are
good, our market positions strong, our products well accepted, our financial
position sound and our commitment to our stockholders is total. Even after 75
years we are certain that UNR's best years are still ahead.
Sincerely,
Thomas A. Gildehaus
President and Chief Executive Officer
3
<PAGE>
UNR LEAVITT
From swing sets and bicycles to farm implements and United
Airlines' terminal at Chicago's O'Hare International Airport,
UNR Leavitt's products are found in a variety of industries and
in a range of applications.
One of the nation's leading manufacturers of structural and
mechanical steel tubular products, Leavitt is UNR Industries'
largest division. With a product line unmatched in the industry,
Leavitt meets its customers' demands for high quality, low cost
steel tubing. From more than 1.2 million square feet of production
facilities, the Company can supply approximately 500,000 tons of
steel tubing annually, ensuring Leavitt's customers a continuous
stock of steel products--regardless of the product size or range
required or how quickly it is needed.
Sales of structural tubing should enjoy a strong year because of a
projected increase in new plant and low and mid-rise building
construction. While steel tubing already is widely used in Europe
and Japan as a replacement for wood, structural steel shapes and
cement support beams, its construction application in America is
in an early stage of development. For example, Leavitt's structural
tubing was recently used to help repair the damaged World Trade
Center in New York.
On the other hand, mechanical tubing has long been used in a
variety of consumer and industrial applications, including
furniture, exercise equipment, machine tools and toys. As more
applications are developed for this product, sales should increase
substantially.
UNR Leavitt's customers--steel service centers and original
equipment manufacturers--benefit from the industry's highest
quality products, backed by superior customer service. During
the year, the company surveyed the top 20 percent of its customer
base (which generates approximately 80 percent of its sales
volume) about the quality of its service. The results indicated
that Leavitt was ranked first over six major competitors.
The Company's quality control program will be strengthened
even more this year with the installation of a bar-coded delivery
system. This electronic data management system will eliminate
much of the paperwork involved with tracking materials and
orders, while improving Leavitt's overall inventory control.
UNR Leavitt's commitment to providing the highest quality
products and services has resulted in strong, dependable
performance over the past several years. In 1993, Leavitt's sales
and income exceeded the previous year's results, and tonnage of
steel shipped increased six percent. As the economy rebounds in
1994, Leavitt projects another solid year of growth.
[GRAPH]
75 years of excellence [GRAPHICS]
4
<PAGE>
UNR ROHN
For UNR Rohn, the information superhighway already exists--
hundreds of feet above ground, where traffic moves via frequency
bandwaves instead of cables. One of the nation's leading suppliers
of equipment to the telecommunications industry, UNR Rohn
produces communication towers, concrete and steel poles and
concrete and fiberglass equipment shelters used in radio, television
and cellular telephone transmission. Rohn also manufactures
and distributes galvanized steel agricultural products, including
corrals, pens and fencing.
Anticipating that the domestic cellular telephone and communi-
cations tower markets will eventually slow, Rohn is placing
additional emphasis on overseas markets, where demand for
towers and shelters is becoming stronger. In 1993, the Company
achieved growth in international sales of its concrete and fiberglass
storage shelters. To meet future customer demand for these
products, Rohn is expanding its state-of-the-art Bessemer,
Alabama facility, which should be completed in late 1994.
As in the past, emerging technologies, such as personal
communications systems, wireless cable television and enhanced
specialized mobile radio (ESMR) systems, are expected to provide
future revenue growth for Rohn. For example, ESMR systems
have been in use for a number of years, but have suffered from
low quality and limited coverage. New digital technology is now
allowing ESMR systems to compete with cellular telephones.
Compared to cellular telephones, ESMR systems provide voice
communications as well as dispatching, paging, messaging and
data communications, all from a single hand-held unit. As ESMR
systems' popularity grows, new equipment will be needed,
including high-power or low-power transmitters-receivers, which
could be mounted on a Rohn tower, and signalling equipment,
which could be contained in a Rohn equipment shelter.
Helping its customers respond to new markets and technologies
has long been Rohn's competitive advantage. Rohn provides fast
turnaround on orders for towers and shelters, helping its customers
quickly bring new products on-line. Its in-house design and
construction staffs can deliver high-quality towers up to a height
of 1500 feet.
UNR Rohn continues to respond positively to market needs,
providing a steady increase in its sales and market position.
Continued international demand for its products should support
the Company's growth well into the 1990s.
[GRAPH]
75 years of commitment [GRAPHICS]
7
<PAGE>
UNARCO COMMERCIAL PRODUCTS
For more than 50 years, when Americans have gone shopping,
they have used carts built by Unarco Commercial Products. Since
1937 the Company has been the dominant producer of shopping
carts and stock handling equipment. In the steel shopping cart
industry alone, Commercial Products is the primary or exclusive
supplier to nine of the 10 largest supermarket chains.
As new markets emerge, Commercial Products has applied its
industry expertise, manufacturing capacity and marketing skill
to assume a leadership role. For example, when mass merchandise
retail customers asked for steel-framed, plastic-bodied shopping
carts that could be customized with store logos and colors,
Commercial Products responded. Now, two years later, the
Company is a significant supplier of plastic shopping carts to
mass merchandisers.
Commercial Products constantly refines and improves its products.
Already the only domestic cart maker to manufacture its own
wheels, the Company recently introduced the PRINATRAC DX -TM-
Wheel. Unlike other wheels which must be oiled regularly, this
new polyurethane wheel is oil-free and backed by the strongest
guarantee in the industry.
Commercial Products is the only cart manufacturer that also
provides its clients with a wide selection of display, handling and
stocking equipment, including the Vendex -R- and VendAll lines. In
fact, the division's breadth of product allows it to supply virtually
every type of cart required to move merchandise through the store.
From the industry's largest manufacturing facility and from a
new facility in Hong Kong, Commercial Products distributes its
products to 44 countries in North America, South America,
Europe, Africa and Asia. The Company's expanding international
sales network saw revenues nearly double in 1993.
With its position in the domestic steel shopping cart market well
established, a growing presence in the plastic cart and stocking
equipment industries and growing demand for its products over-
seas, Commercial Products is well positioned for profitable growth.
[GRAPH]
75 years of service [GRAPHICS]
8
<PAGE>
UNR HOME PRODUCTS
As the kitchen becomes the design centerpiece of more American
homes, demand has soared for colored sinks that match the
room's decor. UNR Home Products, one of the country's leading
manufacturers of stainless steel and composite sinks, recognized
the trend several years ago and now is capitalizing on this
emerging market.
One of the division's most promising new product lines is its
Ultralux sinks, a composite sink made of Asterite.-R- Ultralux is
available in a variety of colors and, unlike porcelain and cast iron
sinks, will not chip, crack, stain or scratch. In addition, the Ultralux
sinks are more than 60 percent lighter than cast iron sinks,
making one-person, do-it-yourself installation not only possible,
but easy.
Sold exclusively through two of the country's leading home center
retailers, Ultralux sinks completely sold out in 1993. The Company
estimates that the growth in Ultralux's sales contributed to a
two-point increase in overall marketshare during the year.
Currently, the Ultralux sinks are manufactured exclusively for
the Company in Portugal. By mid-1994, Home Products expects
to open a new facility to make Asterite-R- sinks at its Ruston,
Louisiana plant, becoming the only American company to manu-
facture these sinks in-house. The new facility will triple the
Company's production capacity and streamline production costs.
Stainless steel sinks, the mainstay of UNR Home Products, also
performed well in 1993. Distributing these sinks through retail
and plumbing wholesale outlets, Home Products enjoyed robust
international sales, particularly in Mexico. In 1994, Home Products
will introduce its stainless steel sinks to the mobile home market.
With total annual sales of 250,000 units, this market provides a
good opportunity for growth.
UNR Home Products also is an industry leader in innovative store
displays and visual point-of-purchase materials. Its presence at
trade shows and other industry functions has increased the
Company's visibility, helping to make Home Products a well-
recognized name among industry leaders.
UNR Home Products stands ready for solid growth well into the
90s. Its Ultralux product will benefit from growing demand and
additional production capacity, while new markets for its stainless
steel sinks--both here and abroad--will provide a sturdy base for
future growth.
[GRAPH]
75 years of quality [GRAPHICS]
11
<PAGE>
UNARCO MATERIAL HANDLING
For the past 40 years, numerous customers, including many of
America's mass retailers, automotive parts distributors,
pharmaceutical and mail-order companies have relied on Unarco
Material Handling to design and provide inventory material
handling solutions that efficiently move product out the front
door. Material handling is a multi-billion dollar industry that
encompasses a vast array of equipment, systems and activities.
Unarco Material Handling specializes in providing high quality
storage rack and material handling systems, including automated
order-picking programs.
As the storage rack industry has evolved, UNARCO Material
Handling has expanded its product line from static racks to storage
systems creating "flow"--the process by which goods move from
manu]facturing to storage and into productive use.
Unarco Material Handling also pioneered the rapidly growing
market for paperless order-picking systems. Since 1989, the
division has helped to develop the EASYpick-R- system with Real
Time Solutions (RTS), a company it acquired in 1993. EASYpick-R-
is a unique, computerized "pick to light" system in which a
control panel "lights" up to let the employee know what product
to "pick" and the quantity. Using EASYpick,-R- Unarco Material
Handling's clients have reported productivity increases ranging
from 50 to 350 percent, while picking errors have been reduced
dramatically. As a result of increased demand for paperless order-
picking systems, sales of EASYpick-R- doubled in 1993.
From its founding, Unarco Material Handling has been one of the
industry's most innovative companies. Forty years ago, Unarco
introduced Sturdi-Bilt,-R- a line of storage rack. The enhanced
productivity breakthrough of the EASYpick-R- paperless picking
system has given the Company a solid lead in the developing
market for computerized warehouse control systems. Now, Unarco
Material Handling is developing new ways to improve customer
service.
The division is collaborating with other companies that provide
complementary services and products. Unarco Material Handling
expects these strategic alliances--called "value-added teaming"--
to generate numerous new products and services for clients.
With strong demand for its computerized control systems and an
ability to respond efficiently to new customer needs, Unarco
Material Handling projects significant growth in 1994
and beyond.
[GRAPH]
75 years of growth [GRAPHICS]
12
<PAGE>
UNR ANNUAL -- 14
<TABLE>
<CAPTION>
STATEMENTS OF INCOME (in thousands except per share data)
UNR Industries, Inc. and Subsidiaries for the years ended December 31, 1993, 1992, and 1991
- -------------------------------------------------------------------------------------------------
1993 1992 1991
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $363,523 $336,306 $301,199
Cost of products sold 286,751 263,245 234,691
- -------------------------------------------------------------------------------------------------
GROSS PROFIT $ 76,772 $ 73,061 $ 66,508
Selling expense 21,635 20,354 19,381
Administrative and general expenses 23,825 22,327 24,425
- -------------------------------------------------------------------------------------------------
OPERATING INCOME $ 31,312 $ 30,380 $ 22,702
Insurance recovery -- 13,000 --
Interest income 1,256 4,062 7,500
Interest expense (2,884) (2,928) (2,653)
- -------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 29,684 $ 44,514 $ 27,549
Income tax provision (benefit) 10,900 (85,400) 8,100
- -------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $ 18,784 $129,914 $ 19,449
- -------------------------------------------------------------------------------------------------
Discontinued operations:
Loss from operations, net of tax benefits -- (31) (2,881)
Loss on dispositions, net of $3,800 tax benefit -- (6,200) --
- -------------------------------------------------------------------------------------------------
NET INCOME $ 18,784 $123,683 $ 16,568
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share:
Continuing operations $ .40 $ 2.88 $ .43
Discontinued operations--
Loss from operations -- -- (.06)
Loss on dispositions -- (.14) --
- -------------------------------------------------------------------------------------------------
NET INCOME PER SHARE $ .40 $ 2.74 $ .37
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these statements.
</TABLE>
14
<PAGE>
UNR ANNUAL -- 15
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS (in thousands)
UNR Industries, Inc. and Subsidiaries for the years ended December 31, 1993, 1992 and 1991
- ---------------------------------------------------------------------------------------------------------------
1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $18,784 $123,683 $16,568
Adjustments for noncash items included in net income--
Depreciation and amortization 9,908 8,840 8,523
Provision for deferred employee compensation 211 58 --
Deferred income tax 10,900 (90,000) (5,500)
Discontinued operations charge -- 6,200 --
Insurance settlement -- (8,000) --
Disposal of plant and equipment 42 433 (120)
Operating requirements--
Accounts receivable (increase) decrease (9,910) 4,988 815
Inventories (increase) decrease (485) 1,004 1,862
Prepaid expenses (increase) decrease (166) 151 (195)
Accounts payable and accrued expenses increase (decrease) 4,546 (11,145) (1,830)
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 33,830 $ 36,212 $ 20,123
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Real Time Solutions, Inc. (net of cash acquired) $ (3,134) $ -- $ --
Purchase of Holco Corporation, net -- -- (27,011)
Purchase of plant and equipment (5,995) (5,586) (8,870)
Proceeds from the sale of plant and equipment 248 282 --
(Increase) decrease in other assets 76 (1,067) (161)
Proceeds from the sale of discontinued operations 13,757 -- --
Discontinued operations (5,653) 8,235 11,056
Insurance proceeds and sale of note receivable 8,646 33,718 16,067
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities $ 7,945 $ 35,582 $ (8,919)
- ---------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in long-term liabilities $ (3,871) $ (2,849) $ 23,931
Net proceeds from short-term borrowings 5,100 -- --
Dividends paid (160,208) (53,745) (9,060)
Purchase of treasury shares -- -- (2,211)
Common stock issued 6,210 3,221 31
- ---------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities $(152,769) $(53,373) $ 12,691
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $(110,994) $ 18,421 $ 23,895
Cash and cash equivalents, beginning of period 112,220 93,799 69,904
- ---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,226 $112,220 $ 93,799
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest $ 2,587 $ 2,817 $ 2,654
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Cash paid during the year for income taxes $ 2,454 $ 13,430 $ 13,469
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Treasury stock issued for the acquisition of Real Time Solutions, Inc. $ 4,159 $ -- $ --
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS (in thousands)
UNR Industries, Inc. and Subsidiaries as of December 31, 1993 and 1992
- ------------------------------------------------------------------------------------------------------------------------
ASSETS 1993 1992
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 1,226 $112,220
Accounts, notes and other receivables, less allowance
for doubtful accounts of $2,810 in 1993 and $2,995 in 1992 49,000 38,407
Income tax refunds receivable 53,000 -
Notes receivable from insurance companies - 8,316
Inventories, less reserve for LIFO valuation of
$10,515 in 1993 and $7,055 in 1992 61,777 61,292
Deferred income taxes 12,100 63,000
Prepaid expenses 2,891 2,725
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 179,994 285,960
- ------------------------------------------------------------------------------------------------------------------------
PLANT AND EQUIPMENT:
Land 7,191 7,274
Buildings 40,624 40,820
Machinery and equipment 112,516 108,278
Leasehold improvements 11,714 11,097
- ------------------------------------------------------------------------------------------------------------------------
172,045 167,469
Less--Accumulated depreciation (103,896) (96,181)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL PLANT AND EQUIPMENT 68,149 71,288
- ------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS:
Deferred income taxes 16,100 24,000
Net assets of discontinued operations - 13,341
Other-primarily goodwill in 1993 7,157 248
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $271,400 $394,837
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
16
<PAGE>
<TABLE>
<CAPTION>
BALANCE SHEETS (in thousands)
UNR Industries, Inc. and Subsidiaries as of December 31, 1993 and 1992
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1993 1992
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 5,100 $ -
Current portion of long-term liabilities 4,261 3,464
Accounts payable 11,268 6,172
Accrued expenses-
Payroll related 9,016 8,507
Insurance related 4,985 4,530
Customer deposits 3,442 2,497
Income taxes 442 1,951
Dividends payable - 100,255
Other 7,823 7,873
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 46,337 135,249
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES--NOTES AND CAPITAL LEASES 21,940 26,607
- ------------------------------------------------------------------------------------------------------------------------------------
WARRANTS 9,739 -
- ------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value in 1993, $2.50 par value in 1992, authorized-
60,000 shares, issued - 48,842 shares in 1993 and 46,917 shares in 1992 488 117,294
Capital surplus 117,011 -
Retained earnings 79,230 121,586
- ------------------------------------------------------------------------------------------------------------------------------------
196,729 238,880
LESS- 631 treasury shares in 1993 and 1,347 in 1992, at cost (2,751) (5,608)
- Unearned portion of restricted stock (594) (291)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 193,384 232,981
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $271,400 $394,837
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands except per share data)
UNR Industries, Inc. and Subsidiaries for the years ended December 31, 1993, 1992 and 1991
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Common Stock Treasury Stock
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Capital Retained Restricted
Issued Amount Surplus Earnings Shares Amount Stock
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1990 46,106 $115,265 $ 132,419 $ 1,316 (866) $(3,398) $ -
Net Income - - - 16,568 - - -
Treasury stock acquired - - - - (481) (2,210) -
Cash dividends-
$1.20 per share - - (44,788) (8,958) - - -
Stock options exercised 10 24 22 - - - -
Warrants exercised 2 6 6 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1991 46,118 $115,295 $ 87,659 $ 8,926 (1,347) $(5,608) $ -
Net Income - - - 123,683 - - -
Issuance of restricted stock 60 150 199 - - - (349)
Amortization of
restricted shares - - - - - - 58
Cash dividends-
$2.20 per share - - (89,231) (11,023) - - -
Stock options exercised 712 1,781 541 - - - -
Warrants exercised 27 68 44 - - - -
Stock options tax benefit - - 788 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1992 46,917 $117,294 $ - $ 121,586 (1,347) $(5,608) $ (291)
Net Income - - - 18,784 - - -
Issuance of treasury
stock for acquisition - - 1,819 - 616 2,339 -
Issuance of restricted stock 78 122 393 - - - (514)
Amortization of
restricted shares - - - - - - 211
Cash dividends-
$1.20 per share - - (1,806) (58,148) - - -
Stock options exercised 608 597 812 - - - -
Stock options tax benefit - - 1,193 - - - -
Warrants exercised 1,239 1,957 2,065 (200) 100 518 -
Change in stock par value - (119,482) 119,482 - - - -
Warrants reclassification - - (6,947) (2,792) - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1993 48,842 $ 488 $ 117,011 $ 79,230 (631) $(2,751) $ (594)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A. PRINCIPLES OF CONSOLIDATION AND PRESENTATION-
The financial statements include the consolidated accounts of UNR Industries,
Inc. and its subsidiaries ("UNR" or the "Company"). All significant intercompany
transactions have been eliminated in consolidation.
B. CASH EQUIVALENTS-
The Company considers all highly liquid short-term investments purchased with a
maturity of three months or less and all treasury bills to be cash equivalents.
Cash equivalents are carried at cost which approximates market value.
C. INVENTORIES-
Inventories valued using the last-in, first-out ("LIFO") method of determining
cost at the end of the years 1993 and 1992, were $16,530,000 and $17,200,000,
respectively. Under the first-in, first-out ("FIFO") method of determining cost
(which approximates current or replacement cost), these inventories would have
been approximately $10,515,000 and $7,055,000 higher than those reported at the
end of 1993 and 1992, respectively. There was no significant LIFO liquidation
effect on income in the accompanying financial statements. Inventory
costs include material, labor and factory overhead.
Total inventories in 1993 and 1992 included the following classifications (In
Thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1993 1992
<S> <C> <C>
------------------------------------------------------------------
------------------------------------------------------------------
Work in process and finished products $38,524 $40,441
Raw materials and supplies 23,253 20,851
------------------------------------------------------------------
Total Inventories $61,777 $61,292
------------------------------------------------------------------
------------------------------------------------------------------
</TABLE>
D. PLANT AND EQUIPMENT-
Land, buildings and equipment are carried at cost. Expenditures for maintenance
and repairs are charged directly against income; major renewals and betterments
are capitalized. When properties are retired or otherwise disposed of, the
original cost and accumulated depreciation are removed from the respective
accounts and the profit or loss resulting from the disposal is reflected in
income.
The Company provides for depreciation of plant and equipment over the estimated
useful lives of the assets (buildings-20 to 45 years; machinery and equipment-3
to 20 years). Depreciation is generally provided on the straight-line method for
financial reporting purposes and on accelerated methods for tax purposes.
E. INCOME TAXES-
As of January 1, 1992, the Company adopted Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires a
company to recognize deferred tax liabilities and assets for the expected future
tax consequences of events that have been recognized in a company's financial
statements or tax returns. The 1991 financial statements were prepared based on
SFAS 96, and have not been restated to apply the provisions of SFAS 109. There
was no cumulative catch-up adjustment upon adopting SFAS 109.
On December 21, 1992, the Internal Revenue Service issued final regulations
under Section 468B "Special Rules for Designated Settlement Funds." Prior to the
issuance of these tax regulations, the Company had significant unrecorded net
operating loss carry-forwards resulting from extraordinary reorganization
charges included in the 1989 Statement of Income. Through 1992, these charges
were deducted for income tax purposes only to the extent expenditures were
actually made by the UNR Asbestos-Disease Claims Trust. Approximately $31.8
million and $5.9 million of expenditures have been made by the Trust in 1992 and
1991, respectively, and the related tax benefits of $12.1 million and $2.2
million have been recorded by the Company in 1992 and 1991, respectively.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Note 1. Summary of Significant Accounting Policies continued)
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 ("QSF") 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 also generated tax loss carry-backs and
carry-forwards. The Company expects to receive Federal and state income tax
refunds of approximately $53.0 million as a result of the carry-backs. Based on
these developments, the Company recorded a tax benefit (net of a $20.0 million
valuation allowance) of $90.0 million in 1992.
Total income tax expense/(benefit) for the years ended December 31, 1993, 1992,
and 1991, was allocated as follows (In Thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Income from continuing operations $10,900 $(85,400) $ 8,100
Discontinued operations - (3,800) (1,800)
Stockholders' equity, for compensation
expense for tax purposes in excess
of amounts recognized for financial
reporting purposes (1,193) (788) -
- --------------------------------------------------------------------------------
$9,707 $(89,988) $6,300
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Income tax expense/(benefit) attributable to income from continuing operations
consists of a current benefit of $52.6 million and current provision of $17.6
million in 1993 and 1992, respectively, and a deferred provision of $63.5
million and a deferred benefit of $103.0 million in 1993 and 1992, respectively.
On August 10, 1993, the President signed the Omnibus Budget Reconciliation Act
of 1993 into law. One provision of this new law that impacts the Company is the
increase in the regular income tax rate from 34% to 35% retroactive to January
1, 1993. The impact of this tax law was recorded in the third quarter income tax
provision as a benefit of approximately $1.1 million. This is due primarily to
the positive effect of the law change on the value of the Company's NOL
carry-forward.
Income tax expense/(benefit) attributable to income from continuing operations
was $10,900, $(85,400), and $8,100 for the years ended December 31, 1993, 1992
and 1991, respectively, and differed from the U.S. Federal statutory income tax
rate as follows (In Thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------------------------------
Amount % Amount % Amount %
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Computed statutory provision $10,400 35 $15,100 34 $9,400 34
Trust payments - - (12,100) (27) (2,200) (8)
State taxes net of Federal effect 1,600 5 1,600 4 900 3
Enacted tax rate change (1,100) (3) - - - -
QSF deduction (Section 468B) - - (110,000) (248) - -
Valuation allowance - - 20,000 45 - -
- -----------------------------------------------------------------------------------------------------
Total provision/(benefit) $10,900 37 $(85,400) (192) $8,100 29
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Note 1. Summary of Significant Accounting Policies continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred liabilities at December 31, 1993 and
1992 are as follows (In Thousands):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Net operating loss carry-backs $ - $ 54,000
Net operating loss carry-forwards 39,700 47,500
Tax credit carry-forwards (including
general business credits and alternative
minimum tax) 8,500 8,500
Depreciation (3,600) (3,700)
Accrued insurance reserves 2,900 2,900
Other, net 700 (2,200)
Less: Valuation allowance (20,000) (20,000)
- --------------------------------------------------------------------------------
Net deferred tax assets $28,200 $ 87,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
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 federal taxable income over an
indefinite period. The Company had recognized the benefit of approximately $72.0
million of its net operating loss carry-forwards and tax credits expected to be
realized in 1993, 1994 and 1995. The utilization of the net operating loss and
credit carry-forwards depend on future taxable income during the applicable
carry-forward periods. The Company has therefore provided a valuation allowance
as required under SFAS 109 to reflect the inherent uncertainty of projections as
to future events. The remaining net operating loss carry-forwards and the
general business and AMT tax credits available to the Company will be recorded
into income and equity at a future date.
F. NET INCOME PER SHARE-
Net income per share of common stock is based upon the weighted average number
of common shares outstanding during the year. The weighted average common shares
were 47,369,000 in 1993, 45,040,000 in 1992 and 44,894,000 in 1991. Dilution,
which would result if all outstanding warrants and options were exercised, is
not significant to the net income per share computation.
G. PENSION AND PROFIT SHARING PLANS-
The Company and its subsidiaries have various pension plans covering
substantially all of their employees. Included in these plans are certain
union-sponsored plans to which the Company makes annual contributions equal to
the amounts accrued. The total pension expense for union-sponsored plans for
1993, 1992, and 1991 was approximately $1,051,000, $995,000 and $761,000,
respectively. The Company has one trustee-administered profit-sharing plan
covering salaried employees. Discretionary contributions of $1,470,000,
$1,380,000 and $1,131,000 were made and charged to expense in 1993, 1992 and
1991, respectively. Total pension expense/ (benefit) for Company-sponsored plans
for 1993, 1992 and 1991 was $224,000, $(33,000) and $(68,000), respectively.
Pension expense includes the following components (In Thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Service cost-benefits earned during the period $409 $ 336 $ 303
Interest on projected benefit obligations 622 492 449
Actual return on plan assets (768) (863) (814)
Net amortization and deferral (39) 2 (6)
- -----------------------------------------------------------------------------------------------
Net pension expense (benefit) $224 $ (33) $ (68)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Note 1. Summary of Significant Accounting Policies continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The status of the plans at the respective year-ends was as follows
(In Thousands):
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1993 1992 1991
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Fair market value of plan assets $10,270 $9,565 $8,916
- ------------------------------------------------------------------------------------------------------------------------------------
Actuarial present value of benefits for services rendered to date:
Accumulated benefit obligation based on salaries to date, including vested
benefits of $7,521, $5,931 and $5,169 in 1993, 1992 and 1991, respectively $ 7,924 $6,084 $5,519
Additional benefits based on estimated future salary levels 878 780 700
- ------------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligations $ 8,802 $6,864 $6,219
- ------------------------------------------------------------------------------------------------------------------------------------
Excess of plan assets over projected benefit obligations $ 1,468 $2,701 $2,697
Unrecognized net transitional asset (350) (555) (414)
Unrecognized market gain (352) (1,402) (1,765)
- ------------------------------------------------------------------------------------------------------------------------------------
Prepaid pension liability recognized
on the balance sheet at year-end $ 766 $ 744 $ 518
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The expected long-term rate of return on plan assets was 7.9%, 8.5% and 8.7% for
1993, 1992 and 1991, respectively. The weighted average discount rate and rate
of increase in future compensation levels used in determining the actuarial
present value of accumulated benefit obligations were 7.2% and 4.0% in 1993,
7.7% and 4.0% in 1992 and 7.9% and 4.0% in 1991.
H. 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 is required to adopt this standard in 1994 and does not
expect the adoption of this standard to have a material effect on future
operating results.
(2) INSURANCE RECOVERIES:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The 1992 Statement of Income includes a $13.0 million pre-tax insurance recovery
($8.1 million after-tax), or $.18 per share, as a result of a litigation
settlement reached in June, 1992, with one of the Company's previous insurance
carriers. This amount represents the present value of payments due over a three
year period, net of certain costs. Under the terms of this settlement agreement,
$6.0 million and $4.0 million has been paid to the Company in 1992 and 1993,
respectively. On November 29, 1993, the Company sold the remaining note to a
third party for $4.7 million.
On July 15, 1992, the Company received approximately $25.8 million pursuant to a
settlement agreement entered into in 1989 by UNR and another insurance company.
The money had been held by the insurance company until certain conditions in the
settlement agreement were satisfied.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Note 1. Summary of Significant Accounting Policies continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(3) DISCONTINUED OPERATIONS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On March 4, 1993, the Company decided to divest its Midwest CATV Division (a
distributor of products to the cable television industry) and its Midwest Steel
Division (a distributor of rail and trackwork). In May, 1993, the Company sold
assets of the Midwest Steel Division to L.B. Foster Company and assets of the
Midwest CATV Division to Anixter Bros., Inc. At December 31, 1992, the net
assets of these operations were reclassified to "Net assets of discontinued
operations" (Other Assets) in the accompanying balance sheet. Estimated loss on
dispositions included an after-tax $6.2 million provision for this matter which
included a write-down of these assets to estimated net realizable values and the
estimated costs of disposing these operations.
Net sales from discontinued operations were $19.1 million, $54.4 million and
$52.4 million in 1993, 1992 and 1991, respectively.
(4) LITIGATION:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company is involved in various pending legal proceedings and claims arising
in the normal course of its business. Although the outcome of such proceedings
and claims cannot be determined with certainty, the Company is of the opinion,
after consultation with counsel, that such proceedings and claims, individually
or in the aggregate, are not material to its business or financial condition.
(5) LEASES:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company leases certain of its facilities and equipment under operating
leases or capital leases, as defined by SFAS No. 13. The Company's property
under capital leases, which is included in plant and equipment, consists of
$4,194,000 at December 31, 1993, and $4,470,000 at December 31, 1992 (see Note
6).
Future minimum payments for operating leases at December 31, 1993, are
$1,590,000 in 1994, $1,402,000 in 1995, $1,279,000 in 1996, $471,000 in 1997 and
$1,359,000 after 1997. Rental expense under operating leases was approximately
$2,557,000 in 1993, $2,473,000 in 1992 and $3,999,000 in 1991. Some of the
leases contain renewal options for varying periods from two to five years.
(6) LONG-TERM BORROWINGS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total borrowings of the Company at December 31, 1993 and 1992, consisted of the
following (In Thousands):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1993 1992
<S> <C> <C>
- --------------------------------------------------------------------------------
Mortgage notes payable at 6 3/4% to 11% $20,927 $24,416
Capital leases 4,194 4,470
Industrial Revenue Bonds 705 760
Other notes payable 375 425
Short-term borrowings 5,100 -
- --------------------------------------------------------------------------------
Total $31,301 $30,071
- --------------------------------------------------------------------------------
Classified in the balance sheets as follows-
Short-term borrowings $5,100 $ -
Current portion of long-term liabilities 4,261 3,464
Notes and capital leases 21,940 26,607
- --------------------------------------------------------------------------------
Total $31,301 $30,071
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
(Note 6. Long-Term Borrowings continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The mortgage notes payable primarily relate to the Company's steel tubing
manufacturing facilities in Chicago and Indiana. The net book value of property
pledged as collateral for the mortgage loans amounted to approximately
$25,163,000 and $29,204,000 as of December 31, 1993 and 1992, respectively. (See
Note 10)
In October, 1993, the Company established a $20.0 million line of credit for
short-term borrowings with a bank. Under the terms of the agreement, interest
rates are determined at the time of borrowing with interest payable at the
prevailing prime rate or LIBOR rate plus 1 1/2%, at the Company's option.
At December 31, 1993, borrowings outstanding under the facility totaled $5.1
million at an average interest rate of 5.4%. Such credit agreement is secured by
certain accounts receivable of the Company and its subsidiaries. The commitment
fee on the unused portion of the facility is 3/8% per annum.
Aggregate annual payments required on secured debt, including capitalized
leases, are $9,361,000 in 1994, $4,304,000 in 1995, $4,353,000 in 1996,
$4,393,000 in 1997, $1,764,000 in 1998 and $7,126,000 thereafter.
(7) Stock Option Plan:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Key Executives' Stock Option Plan was approved by the shareholders of the
Company on July 12, 1990. The Plan provides for the granting of non-qualified
and incentive stock options and reserves for the issuance of up to 2,500,000
authorized but unissued shares of common stock.
Outstanding options granted under the Plan are exercisable at a price equal to
the fair market value at the date of grant and expire in 10 years. At December
31, 1993, 1,153,000 common shares were available for granting. Information
relating to this Plan is summarized below (In Thousands Except Per Share Data):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
AVERAGE
SHARES SUBJECT OPTION PRICE
TO OPTIONS PER SHARE
- -----------------------------------------------------------------------------
<S> <C> <C>
Outstanding, December 31, 1990 888 $3.625
Granted 950 2.707
Exercised (10) 4.625
Canceled (113) 4.125
- -----------------------------------------------------------------------------
Outstanding, December 31, 1991 1,715 $3.149
Granted -- --
Exercised (712) 3.259
Canceled (378) 3.205
- -----------------------------------------------------------------------------
Outstanding, December 31, 1992 625 $2.961
Granted -- --
Exercised (608) 2.314
Canceled -- --
- -----------------------------------------------------------------------------
Outstanding, December 31, 1993 17 $2.078
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
</TABLE>
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Note 8. Restricted Stock Plan continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(8) RESTRICTED STOCK PLAN:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The UNR Industries, Inc. Restricted Stock Plan was approved by the shareholders
of the Company on July 30, 1992. The Plan provides for the granting of
restricted stock to certain key employees and reserves for issuance of
1,000,000 shares of common stock.
The Company had 133,096 and 60,000 shares of restricted stock outstanding at
December 31, 1993 and 1992, respectively. Of the current shares outstanding,
80,000 were awarded to the Company's President and CEO in connection with his
employment agreement and 53,096 shares were issued to certain key employees of
the Company. These shares have the same dividend and voting rights as other
common stock, except that extraordinary dividends on restricted stock held by
employees other than the President are paid in the form of additional shares of
restricted stock. Restricted stock is considered to be currently issued and
outstanding. The cost of the restricted stock, determined as the fair market
value of the shares at the date of grant, is expensed ratably over a
three-to-five year vesting period. Such expense amounted to $211,000 in 1993 and
$58,000 in 1992.
(9) STOCKHOLDERS' EQUITY:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In connection with the Company's Plan of Reorganization, effective June 2, 1989,
stockholders of record as of that date, retained their common stock and received
one warrant for each share of common stock owned with the right to purchase an
additional share of common stock at $5.15 per share until June 14, 1995.
Additionally, upon exercise, warrantholders are entitled to receive any
extraordinary dividend (as defined) paid or payable by the Company. The amount
related to the Company's potential obligation to pay extraordinary dividends to
such warrantholders upon conversion ($4.20 per warrant) has been reclassified
from Stockholders' Equity and recorded as Warrants in the accompanying balance
sheet. At December 31, 1993 and 1992, the number of outstanding convertible
warrants were 2,318,750 and 3,658,269, respectively.
On September 24, 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. As of December 31, 1993 and 1992, 1,133,565
shares have been purchased.
On May 6, 1993, the Company's stockholders approved a reduction in the par value
per share of common stock from $2.50 to $.01. This resulted in a $119,482,000
reduction in Common Stock and a corresponding increase to Capital Surplus.
On December 1, 1993, the Company paid an extraordinary dividend of $1.20 per
share to stockholders of record as of the close of business on November 16,
1993. This dividend was a non-taxable return of capital distribution.
On February 1, 1993, the Company paid a regular dividend of $.20 and an
extraordinary dividend of $2.00, respectively, on each issued and outstanding
share of the Company's common stock to stockholders of record as of the close of
business on January 15, 1993. Both dividends are non-taxable return of capital
distributions.
On January 15, 1992, a $.20 regular and $1.00 extraordinary dividend was paid to
stockholders of record on December 31, 1991.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Note 11. Business Segment Information continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(10) ACQUISITIONS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
On April 27, 1993, the Company purchased all the issued and outstanding stock of
Real Time Solutions, Inc. ("RTS"). RTS provides automated inventory management
products to the warehouse and distribution industry. Their primary product is a
light directed display based inventory picking, sorting, packing and shipping
system called "EASYpick." The purchase price included $4.2 million of cash and
616,102 shares of common stock valued at approximately $4.2 million. The
purchase price exceeded the fair value of RTS's net assets by approximately $7.7
million which is reported as goodwill in the accompanying balance sheet and is
being amortized over a seven year period. Amortization expense for 1993 was
$823,000.
Effective April 1, 1991, the Company purchased all the issued and outstanding
common stock of Holco Corporation (Holco) for approximately $27.0 million.
Holco's primary asset is a structural tube mill located in Chicago, Illinois.
The Company had leased the facility from its former owner since 1980 and plans
to continue utilization of the facility for the production of structural tubing.
The purchase price of approximately $27.0 million was financed through a $15.0
million first mortgage with a bank, payable over seven years, at prime rate plus
3/4 and a $7.0 million second mortgage provided by the seller, payable in equal
installments over 5 years, beginning July, 1993 at a fixed rate of 11%. The
acquisition has been recorded using the purchase method of accounting, and the
results of operations of Holco have been included in the Company's financial
statements since the effective date of the acquisition.
(11) BUSINESS SEGMENT INFORMATION:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company operates two business segments within the United States.
Net sales include only those to unaffiliated customers, as reported in the
Company's Statements of Income. Intersegment sales are eliminated in the
financial statements and are also eliminated in these tables since they
represent less than 5% of net sales. Operating income includes all costs and
expenses directly related to the segment involved. Corporate assets consist
principally of cash, prepaid expenses and other assets.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
NET SALES FROM CONTINUING OPERATIONS 1993 1992 1991
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Industrial $211,172 $195,591 $164,080
Commercial 152,351 140,715 137,119
- --------------------------------------------------------------------------------------------------------------
$363,523 $336,306 $301,199
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
OPERATING INCOME FROM CONTINUING OPERATIONS
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Industrial $ 16,081 $ 17,668 $ 10,694
Commercial 21,844 18,125 20,411
Corporate Expenses (6,613) (5,413) (8,403)
- --------------------------------------------------------------------------------------------------------------
Operating Income $ 31,312 $ 30,380 $ 22,702
Insurance Recovery - 13,000 -
Interest income (expense), net (1,628) 1,134 4,847
- --------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 29,684 $ 44,514 $ 27,549
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Identifiable Assets Capital Depreciation
At Year-End Expenditures And Amortization
- --------------------------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Industrial $110,872 $ 91,644 $ 98,049 $2,585 $1,848 $2,913 $6,260 $5,380 $5,203
Commercial 92,026 88,093 92,770 3,320 3,678 5,730 3,527 3,325 3,178
Corporate 68,502 215,100 147,794 90 60 227 121 135 142
- --------------------------------------------------------------------------------------------------------------
$271,400 $394,837 $338,613 $5,995 $5,586 $8,870 $9,908 $8,840 $8,523
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
QUARTERLY RESULTS OF OPERATIONS (in thousands except per share data)
(Unaudited)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
First Second Third Fourth Year
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1993
Net Sales $83,539 $88,435 $96,272 $95,277 $363,523
- ---------------------------------------------------------------------------------------------------------
Gross profit 15,367 19,541 20,440 21,424 76,772
- ---------------------------------------------------------------------------------------------------------
Operating income 4,310 6,788 9,020 11,194 31,312
- ---------------------------------------------------------------------------------------------------------
Net Income $ 2,584 $ 3,787 $ 6,302 $ 6,111 $ 18,784
- ---------------------------------------------------------------------------------------------------------
Net Income Per Share $ .06 $ .08 $ .13 $ .13 $ .40
- ---------------------------------------------------------------------------------------------------------
1992
Net Sales $79,114 $84,146 $88,907 $84,139 $336,306
- ---------------------------------------------------------------------------------------------------------
Gross profit 16,438 18,765 19,305 18,553 73,061
- ---------------------------------------------------------------------------------------------------------
Operating income 5,849 8,076 8,755 7,700 30,380
- ---------------------------------------------------------------------------------------------------------
Income from
continuing operations 5,975 16,219 10,374 97,346 129,914
- ---------------------------------------------------------------------------------------------------------
Discontinued operations:
Income (loss) from operations (75) 23 44 (23) (31)
Loss on dispositions - - - (6,200) (6,200)
- ---------------------------------------------------------------------------------------------------------
Net Income $ 5,900 $16,242 $10,418 $91,123 $123,683
- ---------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share
Continuing operations $ .13 $ .36 $ .23 $ 2.15 $ 2.88
Discontinued operations:
Loss from operations - - - - -
Loss from dispositions - - - (.14) (.14)
- ---------------------------------------------------------------------------------------------------------
Net Income Per Share $ .13 $ .36 $ .23 $ 2.01 $ 2.74
- ---------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF UNR INDUSTRIES, INC.:
We have audited the accompanying consolidated balance sheets of UNR INDUSTRIES,
INC. (a Delaware corporation) AND SUBSIDIARIES as of December 31, 1993 and 1992,
and the related consolidated statements of income, cash flows and changes in
stockholders' equity for each of the three years in the period ended December
31, 1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of UNR Industries, Inc.
and Subsidiaries as of December 31, 1993 and 1992 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
March 3, 1994.
28
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
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- --------------------------------------------------------------------------------
YEAR 1993 VERSUS YEAR 1992
NET SALES FROM CONTINUING OPERATIONS. Net sales from continuing operations in
1993 were $363.5 million versus $336.3 million in 1992 or an increase of 8.1%.
Although all of the Company's divisions reported higher sales for the year, the
increase is due largely to greater volume of steel tubing and improved
communication equipment and shelter sales over the prior period. The 1993 sales
are the highest in the Company's history on a continuing operations basis, and
it is the second consecutive year in which the Company achieved a record level
of sales.
GROSS PROFIT. As a percentage of sales, gross profit in 1993 was 21.1% as
compared with 21.7% in 1992. This decrease relates to lower margins due to
rapidly escalating steel costs and competitive pricing pressure in the tower and
steel storage rack market. Also contributing to this decrease is a change in
sales product mix of high volume low margin shopping carts at the Commercial
Products Division. The strong gross margins contributed by the Real Time
Solutions, Inc. (RTS) segment of the Material Handling Division were a positive
offset to the lower margins in the other divisions.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) in 1993 are 12.5% of sales versus 12.7% in 1992.
The 1993 SG&A includes a $2.9 million gain relating to a patent infringement
settlement in the shopping cart division. Excluding this gain, SG&A was 13.3% of
sales versus 12.7%. This increase is due mainly to additional expenses of
approximately $4.0 million at RTS, offset by a reduction in expenses at our
steel tubing, shopping cart and sink divisions.
INTEREST EXPENSE. Interest expense decreased slightly from the prior year due to
lower outstanding debt levels in 1993 versus 1992.
INTEREST INCOME. Interest income decreased $2.8 million from the prior year's
income of $4.1 million. This decrease was due to lower available cash balances,
lower interest rates in 1993 versus 1992 and the collection and sale of
discounted insurance note receivables.
INCOME TAXES. See footnote 1(e) for a complete discussion of UNR's taxes.
INTERNATIONAL. International sales, although a small part of our overall sales
volume, increased 50.8% from the prior year. Sales of shopping carts in Japan
and Hong Kong have increased as has the sales of towers in the Mexican market.
We will continue to explore international opportunities as they present
themselves.
SEGMENTS. The Industrial Segment (principal products of this segment are steel
tubing and steel rack and rack systems) sales increased 7.9% in 1993 to $211.2
million from $195.6 million in 1992. The sales increase is due mainly to a 6.0%
increase in volume of steel tube sales, and the additional sales achieved
through the acquisition of the RTS segment of the Material Handling Division.
Sales for RTS substantially exceeded first year expectations, as its paperless
picking system has been received in the marketplace with positive results.
Operating income in 1993 was $16.1 million versus $17.7 million in 1992 or a
decrease of 9.0%. This decrease is the result of the steel rack business
experiencing severe pricing competition, thereby reducing profitability. As with
the sales increase, operating income was positively affected by the strong
margins achieved by RTS. Leavitt Tube also achieved an 8.8% increase in
profitability through increased sales volume, despite the fact that market
prices for hot rolled steel coils, the largest single cost element rose 20.0%.
Negatively affecting profitability in 1993 was a LIFO accounting charge of $3.4
million due to escalating steel prices, as compared to $.2 million in 1992.
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS Continued
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- --------------------------------------------------------------------------------
The Commercial Segment (principal products of this segment are shopping carts,
steel towers and shelters for the communications industry and stainless steel
sinks) sales increased 8.2% in 1993 to $152.3 million from $140.7 million in
1992. Although all businesses in this segment reported higher sales, the
increase in sales is due largely to an increase in communication tower and
shelter sales over the prior period. Operating income for this segment was $21.8
million in 1993 versus $18.1 million in 1992 or an increase of 20.4%. As
previously mentioned, the 1993 results include a $2.9 million gain from a patent
infringement settlement for the Commercial Products Division. Excluding the $2.9
million patent gain, all businesses in this segment reported slightly higher
operating income in 1993.
YEAR 1992 VERSUS YEAR 1991
NET SALES FROM CONTINUING OPERATIONS. Net sales in 1992 were $336.3 million
versus $301.2 million in 1991 or an increase of 11.7%. This increase, in spite
of poor economic conditions, was fueled by increased sales volume of steel tube
and storage racks. The 1992 sales represented a record year on a continuing
operations basis.
GROSS PROFIT. As a percentage of sales, gross profit in 1992 was 21.7% as
compared with 22.1% in 1991. This decrease was due largely to lower margins in
steel tubing, despite higher sales volume, and to our tower division as their
sales mix changes from communication towers to shelters.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) in 1992 were 12.7% of sales versus 14.5% in 1991.
In addition to the decrease in percentage, there was a $1.1 million decrease in
expenses from 1991 despite a $35.0 million sales increase. This decrease was due
largely to steps taken in 1991 to reduce SG&A costs at all operating units and
decreased corporate expenses.
INTEREST EXPENSE. Interest expense increased slightly from the prior year
because 1991 included only three quarters of interest expense related to the
Holco acquisition versus a full year in 1992.
INTEREST INCOME. Interest income decreased to $4.1 million from the prior year's
income of $7.5 million. This decrease, despite generally higher available cash
balances, was due to lower interest rates in 1992 versus 1991 and lower interest
income due to the collection of discounted insurance receivables.
INCOME TAXES. See footnote 1(e) for a complete discussion of UNR's taxes.
INTERNATIONAL. The Company continued to explore international opportunities. Our
Mexican subsidiary had made inroads in that country's cellular market, and we
continued our efforts in South America with communication towers. Not only were
towers being sold in Mexico but we continued to sell stainless steel sinks and
began to sell tubing. Our shopping cart company continued its efforts in Asia
and South America and continues to make inroads in those markets.
30
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS Continued
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- --------------------------------------------------------------------------------
SEGMENTS. The Industrial Segment (principal products of this segment are steel
tubing and steel rack and rack systems) sales increased 19.2% in 1992 to $195.6
million from $164.1 million in 1991. The sales increase was due to a rebound of
our Material Handling business as sales increased nearly 50.0% although it
continued to experience severe pricing pressure. Leavitt Tube also increased
sales as volume increased over 11.0%, although it also experienced strong
pricing pressure. Operating income of $17.7 million in 1992 represented a 65.2%
increase from 1991's total of $10.7 million. As with the sales increase,
operating income was favorably affected by the rebound of the Material Handling
Division. Not only had this division increased sales volume of rack, but their
new pick-to-light order picking system had shown great acceptance in the
marketplace and contributed substantially to profitability. Leavitt Tube had
also experienced greater profitability as sales volume outpaced price decreases
and contributed to 32.4% higher operating income in 1992 versus 1991.
The Commercial Segment (principal products of this segment are shopping carts,
steel towers and shelters for the communications industry and stainless steel
sinks) experienced a slight sales increase over 1991 levels. Both the Commercial
Products and Home Products Divisions' sales increased while the Rohn Division
results were slightly below last year. Operating income for the Commercial
Segment decreased 11.2%, largely due to the sales decline at the Rohn Division
and a shift in product mix from towers to shelters.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow during 1993 was a negative $111.0 million which included a payment of
$160.2 million for dividends and insurance proceeds and the sale of notes
receivable from insurance companies of $8.6 million. The Company's financial
condition continues to be extremely strong at the end of 1993, with working
capital of $133.7 million. The Company's working capital ratio, a measure of
short term liquidity, increased from 2.1 to 1 to 3.9 to 1. Both measures are
considered strong indicators of liquidity.
Capital expenditures were $6.0 million in 1993 versus $5.6 million in 1992. The
Company's current operating plan calls for capital spending in 1994 to
approximate $11.0 million which is approximately $1.0 million higher than
anticipated depreciation expense and $5.0 million higher than 1993. The current
plan includes the expansion of our Bessemer, Alabama shelter plant and
completion of a new facility at our sink division in Ruston, Louisiana for the
production of Asterite sinks.
On February 22, 1994, the Company received a $48.1 million Federal income tax
refund related to prior years net operating losses (see footnote 1(e) for a more
complete discussion). On March 3, 1994, the Company announced a regular $.20 per
share cash dividend payable on April 1, 1994.
The Company expects that it will meet its ongoing working capital and capital
expenditure requirements from operating cash flows, borrowings under a $20.0
million short-term credit facility and income tax refunds. In addition, the
Company's strong unleveraged balance sheet allows it to access funds, if needed,
from the capital markets.
INFLATION
The impact of inflation on UNR's operations is principally related to steel
price volatility which can moderately affect earnings from time to time.
31
<PAGE>
DIRECTORS
- ---------
- ---------
* Thomas A. Gildehaus
President and Chief Executive Officer
* + Charles M. Brennan III
Chairman and Chief Executive
Officer of L.E. Myers Co.
* - Darius W. Gaskins, Jr.
Senior Partner, High Street
Associates
+ William S. Leavitt
President, Leavitt Financial
Consultants, Inc.
* - Gene Locks
Chairman of the Board of UNR
Industries, Inc.
Partner, Greitzer & Locks
* Ruth R. McMullin
President and Chief Executive
Officer, Harvard Business School
Publishing Group
+ Thomas F. Meagher
Chairman, Howell Tractor &
Equipment Company
Chairman, Continental Air
Transport Co., Inc.
- - Robert B. Steinberg
Partner, Rose, Klein & Marias
* + William J. Williams
Chairman, The Huntington
National Bank
Dwight Rohn
Director Emeritus
President, UNR Rohn
CORPORATE OFFICERS
- ------------------
- ------------------
Thomas A. Gildehaus
President and Chief Executive Officer
Henry Grey
Vice President-Finance,
Treasurer and Chief Financial Officer
Victor E. Grimm
Vice President, Corporate
Secretary and General Counsel
John A. Saladino
Controller and Assistant Secretary
Michael F. Boyle
Director of Taxation and
Assistant Secretary
CORPORATE DATA
Transfer Agent and Registrar
The First National Bank of Chicago
One First National Plaza
Chicago, Illinois 60670
Auditors
Arthur Andersen & Co.
33 West Monroe Street
Chicago, Illinois 60603
General Offices
332 South Michigan Avenue
Chicago, Illinois 60604
DIVISIONAL MANAGEMENT
- ---------------------
- ---------------------
Roy A. Herman
President, UNR LEAVITT
Manufacturer of structural and
mechanical tubing
Dwight Rohn
President, UNR ROHN
Manufacturer of communication
towers and shelters and livestock
confinement equipment
Marvin Weiss
President, UNARCO COMMERCIAL PRODUCTS
Manufacturer of shopping carts and
food service equipment
John M. Buske
President, UNR HOME PRODUCTS
Manufacturer of stainless steel and
composite sinks
D. Bruce Wise
President, UNARCO MATERIAL HANDLING
Manufacturer of storage rack and
material handling systems
* Member, Executive Committee
- - Member, Compensation Committee
+ Member, Audit Committee
FORM 10-K
A copy of the Company's Form 10-K Annual Report to the Securities & Exchange
Commission is available without charge upon written request to, Henry Grey, Vice
President-Finance & Treasurer, UNR Industries, Inc., 332 South Michigan Avenue,
Chicago, Illinois 60604.
STOCK LISTING
The Company's common stock and warrants are listed on the NASDAQ National Market
Systems and the Chicago Stock Exchange under the symbols UNRI and UNRIW,
respectively.
32
<PAGE>
EXHIBIT 21
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
- ------------------ -----------------------------
Anaqueles Unarco, S.A. de C.V. Mexico
Folding Carrier Corporation Delaware
Holco Corporation Illinois
Leavitt Structural Tubing Company Delaware
Midwest Corporation West Virginia
Real Time Solutions, Inc. Delaware
Rohn de Mexico, S.A. de C.V. Mexico
UNR Reality Illinois
UNR-Rohn, Inc. Alabama
UNR-Rohn, Inc. Indiana
UNR-Rohn, Inc. Texas
Unarco Asia Limited Hong Kong
Unarco Canada, Inc. Canada
Unarco Pacific PTY Limited Australia
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports included or incorporated by reference in this Form 10-K, into the
Company's previously filed Registration Statement File No. 33-51732.
ARTHUR ANDERSEN & CO.
Chicago, Illinois,
March 21, 1994.
