<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM TO
----------------- -----------------
COMMISSION FILE NUMBER 1-8009
UNR INDUSTRIES, INC.
(DELAWARE)
332 South Michigan Avenue
Chicago, Illinois 60604-4385
I.R.S. Employer Identification Number 36-3060977
TELEPHONE NUMBER (312) 341-1234
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X No
--- ---
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X No
--- ---
Outstanding as of
August 10, 1994
-----------------
Common Stock $.01 par value................ 48,971,779
Warrants to purchase Common Stock.......... 1,649,163
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
1994 1993 1994 1993
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 91,054 $ 76,703 $ 175,870 $ 147,844
Cost of products sold 72,054 58,163 138,600 115,587
-------- -------- --------- ---------
Gross Profit 19,000 18,540 37,270 32,257
Selling, general & admin.
expenses 10,205 10,636 20,594 19,614
-------- -------- --------- ---------
Operating Income 8,795 7,904 16,676 12,643
Interest (expense), net (291) (501) (726) (727)
-------- -------- --------- ---------
Income from continuing operations
before income taxes 8,504 7,403 15,950 11,916
Income tax provision 3,500 3,000 6,500 4,700
-------- -------- --------- ---------
Income from continuing operations 5,004 4,403 9,450 7,216
Discontinued operation:
Income (loss) from operation,
net of tax 405 (616) 295 (845)
Loss on disposition,
net of $1,500 tax benefit (2,500) -- (2,500) --
-------- -------- --------- ---------
NET INCOME $ 2,909 $ 3,787 $ 7,245 $ 6,371
-------- -------- --------- ---------
-------- -------- --------- ---------
NET INCOME PER SHARE (NOTE 3):
Continuing operations $.10 $.09 $.19 $.16
Discontinued operation:
Income (loss) from operation .01 (.01) .01 (.02)
Loss on disposition (.05) -- (.05) --
-------- -------- --------- ---------
NET INCOME PER SHARE $.06 $.08 $.15 $.14
-------- -------- --------- ---------
-------- -------- --------- ---------
Weighted average number of shares
outstanding 48,763 47,327 48,569 46,885
</TABLE>
1
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1994 1993
--------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 42,502 $ 1,226
Accounts, notes and other receivables, less allowance for doubtful
accounts of $3,101 in 1994 and $2,637 in 1993 45,751 41,036
Income tax refunds receivable -- 53,000
Inventories:
Work-in-process and finished goods 40,905 37,177
Raw materials and supplies 28,808 20,232
Deferred income taxes 12,100 12,100
Prepaid expenses 2,373 2,750
--------- ---------
TOTAL CURRENT ASSETS 172,439 167,521
--------- ---------
PLANT AND EQUIPMENT, at cost 157,525 154,569
Less: Accumulated depreciation (94,996) (91,091)
--------- ---------
TOTAL PLANT AND EQUIPMENT 62,529 63,478
--------- ---------
OTHER ASSETS
Deferred income taxes 10,330 16,100
Net assets of discontinued operations 16,115 15,975
Other, primarily goodwill 6,570 7,157
--------- ---------
TOTAL ASSETS $ 267,983 $ 270,231
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ -- $ 5,100
Accounts payable 14,096 10,644
Accrued expenses 26,765 24,721
Current portion of long-term liabilities 4,297 4,261
Accrued income taxes 119 442
--------- ---------
TOTAL CURRENT LIABILITIES 45,277 45,168
--------- ---------
LONG-TERM LIABILITIES 21,358 21,940
--------- ---------
WARRANTS 7,471 9,739
--------- ---------
STOCKHOLDERS' EQUITY
Common stock 494 488
Capital surplus 119,416 117,011
Retained earnings 77,387 79,230
Treasury stock (2,751) (2,751)
Unearned portion of restricted stock (669) (594)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 193,877 193,384
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 267,983 $ 270,231
--------- ---------
--------- ---------
</TABLE>
2
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 7,245 $ 6,371
Adjustments for noncash items included in net income-
Depreciation and amortization 4,872 4,227
Deferred income taxes 5,770 4,000
Provision for deferred employee compensation 140 85
Operating requirements-
Accounts receivable (increase) (4,715) (4,737)
Income tax refund receivable decrease 52,603 ----
Inventories (increase) (12,305) (6,552)
Prepaid expenses decrease 378 283
Accounts payable & accrued expenses increase 5,600 4,417
--------- ---------
Net cash provided by operating activities $ 59,588 $ 8,094
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Real Time Solutions, Inc. $ -- $ (3,134)
Purchase of plant and equipment (3,543) (1,977)
Proceeds from the sale of plant and equipment 176 175
Proceeds from the sale of Midwest Steel and CATV assets -- 13,756
(Increase) decrease in other assets 31 (4)
Discontinued operations (140) (4,746)
Insurance proceeds -- 4,000
--------- ---------
Net cash provided by (used for) investing activities $ (3,476) $ 8,070
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
(Decrease) in debt and lease obligations $ (545) $ (1,720)
Payment of short-term borrowings (5,100) --
Dividends paid (9,738) (102,517)
Issuance of common stock 547 5,452
--------- ---------
Net cash (used for) financing activities $ (14,836) $ (98,785)
--------- ---------
Net increase (decrease) in cash and cash equivalents $ 41,276 $ (82,621)
Cash & cash equivalents, beginning of period 1,226 112,220
--------- ---------
Cash & cash equivalents, end of period $ 42,502 $ 29,599
--------- ---------
Cash paid during the period for interest $ 1,277 $ 1,314
--------- ---------
Cash paid during the period for income taxes $ 888 $ 2,424
--------- ---------
</TABLE>
3
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Principles of Consolidation:
The financial statements include the consolidated accounts of UNR
Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated in consolidation.
(2) Income Taxes:
On December 21, 1992, the Internal Revenue Service issued final
regulations under Section 468B "Special Rules for Designated Settlement Funds".
The Section 468B regulations deal with the tax treatment of the Company's 1989
transfer of 29.4 million shares of UNR stock to the UNR Asbestos-Disease Claims
Trust. Based on these regulations, the Company and Trust have elected to treat
the Trust as a Qualified Settlement Fund on January 1, 1993, which entitled the
Company to a tax deduction equivalent to the value of the stock held by the
Trust on that date. This deduction substantially reduced the Company's 1993
income tax liability and generated tax loss carry-backs and carry-forwards. The
Company received a Federal income tax refund of approximately $48.1 million in
the first quarter of 1994 and a state income tax refund of approximately $4.6
million in the second quarter of 1994 as a result of these carry-backs.
At December 31, 1993, the Company had available approximately $102.0
million of net operating loss carry-forwards to offset future taxable income
through 2008. The Company also has general business tax credits of $3.0 million
which are available to reduce future Federal income taxes through 2002. A
portion of these credits begin to expire starting in 1997. Alternative minimum
tax (AMT) credits of approximately $5.5 million are available to reduce future
taxable income over an indefinite period.
(3) Net Income Per Share:
Net income per share is based on the weighted average number of common
shares outstanding during each period. Dilution, which would result if all
outstanding warrants and options were exercised, is not significant to the net
income per share computation.
(4) Treasury Stock:
In 1990, the Company announced that its Board of Directors had
authorized the acquisition, through both negotiated transactions involving large
blocks and open market purchases, of up to 1.5 million shares of its common
stock to be held as treasury shares and be available to meet requirements of its
Key Executives' Stock Option Plan and other corporate purposes. As of June 30,
1994, 1,133,565 shares have been purchased.
(5) Dividends Declared:
On April 1, 1994, the Company paid a regular cash dividend of $.20 per
share to stockholders of record as of the close of business on March 18, 1994.
On December 1, 1993, the Company paid an extraordinary cash dividend of $1.20
per share to stockholders of record as of the close of business on November 16,
1993. On February 1, 1993, the Company paid a regular cash dividend of $.20 and
an extraordinary cash dividend of $2.00 per share to stockholders of record as
of the close of business on January 15, 1993.
4
<PAGE>
(6) Inventories:
The interim determination of inventories under the LIFO method is
based on management's estimates of the expected year-end inventory levels and
costs, and as such, interim financial results are subject to final year-end
inventory amounts. Inventories as presented on the Balance Sheets are net of a
reserve for LIFO valuation of $8.0 million at June 30, 1994 and $7.2 million at
December 31, 1993.
(7) Postretirement Benefits:
In December, 1990, the Financial Accounting Standards Board issued a
new standard on accounting for postretirement benefits other than pensions,
primarily related to health care and dental benefit coverage. The new standard
requires that the expected cost of these benefits must be charged to expense
during the years that the employees render service. The Company has no material
liability for postretirement benefits other than pensions.
In November, 1992, the Financial Accounting Standards Board issued a
new standard on accounting for postemployment benefits. The new standard
requires that the expected cost of benefits provided to former or inactive
employees after employment but before retirement be recognized on the accrual
basis of accounting. The company has no material liability for postemployment
benefits.
(8) Discontinued Operations:
The Company has decided to divest itself of its industrial storage
rack business segment of our Material Handling Division. The net assets of this
operation have been reclassified to "Net assets of discontinued operations" in
the accompanying balance sheets. Estimated loss on disposition includes an
after-tax $2.5 million provision for this matter which includes a write-down of
these assets to estimated net realizable values and the estimated costs of
disposing this operation.
(9) Basis of Reporting for Interim Financial Statements:
The unaudited financial statements included herein have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report and Form 10-K for the year ended
December 31, 1993.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary for fair statement of the results of operations for
the three and six month periods ended June 30, 1994 and 1993. Results of
operations for interim periods are not necessarily indicative of results to be
expected for an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's 1993 Annual Report and Form 10-K contain management's
discussion and analysis of financial condition and results of operations for the
year ended December 31, 1993. The following discussion and analysis describes
changes in the Company's financial condition from December 31, 1993 and the
Company's financial position at that date. Trends are discussed to the extent
known and considered relevant. The analysis of results of operations compares
the three and six month periods ended June 30, 1994 with the corresponding
period of 1993.
5
<PAGE>
RESULTS OF OPERATIONS
Second quarter of 1994 versus second quarter of 1993:
Net sales increased 18.8% to $91.1 million from $76.7 million in the
prior year. Operating income was $8.8 million for the second quarter of 1994
versus $7.9 million for the same period last year or an increase of 11.3%. Net
income, after an after-tax provision of $2.5 million or $.05 per share made for
an estimated loss on the disposition of the industrial storage rack business,
was $2.9 million or $.06 per share versus $3.8 million or $.08 per share last
year, or a decrease of 23.2%.
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30
-----------------------
1994 1993
-------- --------
<S> <C> <C>
NET SALES:
Industrial $ 47,362 $ 41,267
Commercial 43,692 35,436
-------- --------
Total $ 91,054 $ 76,703
-------- --------
-------- --------
OPERATING INCOME:
Industrial $ 4,855 $ 6,102
Commercial 5,411 3,611
Corporate Expense (1,471) (1,809)
-------- --------
Total $ 8,795 $ 7,904
-------- --------
-------- --------
</TABLE>
The Industrial segment (principal products of this segment are steel
tubing and computerized warehouse control systems) reported net sales of $47.4
million for the second quarter of 1994 versus $41.3 million reported in the same
period last year, or an increase of 14.8%. The increase in sales is due
entirely to the steel tube division.
Operating income of the Industrial segment decreased 20.4% to $4.9
million for the second quarter of 1994 versus $6.1 million for the same period
last year. This decrease is due primarily to our computerized warehouse control
system division as they experienced a reduction in installation contracts
compared with last year.
The Commercial segment (principal products of this segment are
shopping carts, steel towers and shelters for the communications industry, and
stainless steel sinks) reported net sales of $43.7 million for the second
quarter of 1994 versus $35.4 million reported in the same period last year or an
increase of 23.3%. Although all divisions reported an increase in sales over
last year, the increase in tower division sales was the primary factor in the
increase of the Commercial segment.
Operating income for the Commercial segment was $5.4 million for the
second quarter of 1994 versus $3.6 million for the same period last year or an
increase of 49.8%. As with sales, this increase is mainly due to strong results
of the tower division, although, strong results were also achieved by the sink
and shopping cart divisions.
Selling, general and administrative expenses were $10.2 million or
11.2% of sales for 1994 versus $10.6 million or 13.9% of sales in 1993. This
percentage reduction reflects cost cutting measures taken throughout the
Company and the resulting ability to produce greater sales with less costs.
6
<PAGE>
Net interest expense in both periods includes the interest earned on
short-term investments reduced by interest paid on secured debt. Net interest
expense is lower in the second quarter of 1994 versus the second quarter of 1993
due to increased levels of available cash in the second quarter of 1994 as a
result of both federal and state income tax refunds received in the second
quarter.
The decline in net income for the second quarter of 1994 is due to the
$2.5 million after-tax provision for the estimated loss on disposition of the
industrial storage rack business.
RESULTS OF OPERATIONS
First six months of 1994 versus first six months of 1993:
Net sales increased 19.0% to $175.9 million from $147.8 million in the
prior year. Operating income was $16.7 million for the first six months of 1994
versus $12.6 million in the same period last year or an increase of 31.9%. Net
income, after the previously mentioned $2.5 million charge, was $7.2 million or
$.15 per share versus $6.4 million or $.14 per share for an increase of 13.7%.
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
------------------------
1994 1993
--------- ---------
<S> <C> <C>
NET SALES:
Industrial $ 91,236 $ 80,366
Commercial 84,634 67,478
--------- ---------
Total $ 175,870 $ 147,844
--------- ---------
--------- ---------
OPERATING INCOME:
Industrial $ 9,096 $ 9,569
Commercial 10,413 6,331
Corporate Expense (2,833) (3,257)
--------- ---------
Total $ 16,676 $ 12,643
--------- ---------
--------- ---------
</TABLE>
The Industrial segment reported net sales of $91.2 million for the
first six months of 1994 versus $80.4 million reported in the same period last
year, or an increase of 13.5%. This increase is due entirely to the steel tube
division.
Operating income for the Industrial segment decreased 4.9% to $9.1
million for the first six months of 1994 versus $9.6 million reported for the
first six months of 1993. This decrease, as noted previously, is due primarily
to the computerized warehouse control system division which experienced a
reduction in installation contracts.
The Commercial segment reported net sales of $84.6 million for the
first six months of 1994 versus $67.5 million reported in the same period last
year or an increase of 25.4%. Again, all businesses in this segment reported
increases in net sales over last year, with the steel tower division responsible
for the primary increase as shelters that house communication equipment enjoyed
volume increases from the prior period.
Operating income for the Commercial segment for the first six months
of 1994 was $10. 4 million versus $6.3 million reported in the same period last
year. All divisions showed strong increases over last year's results.
Selling, general and administrative expenses were $20.6 million or
11.7% of sales for 1994 versus $19.6 million or 13.3% of sales in 1993.
7
<PAGE>
Net income, which includes the previously mentioned $2.5 million
after-tax charge, increased 13.7% to $7.2 million for the first six months of
1994 from $6.4 million for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at June 30, 1994
and December 31, 1993:
<TABLE>
<CAPTION>
June 30, 1994 December 31, 1993
------------- -----------------
<S> <C> <C>
Working Capital (in millions) $127.2 $122.4
Working Capital Ratio 3.8 to 1 3.7 to 1
</TABLE>
The Company's financial condition continues to be strong at the end of
the second quarter of 1994, with working capital of $127.2 million at June 30,
1994 as compared to $122.4 million at December 31, 1993. The Company's working
capital ratio, a measure of short-term liquidity increased slightly from 3.7 to
1 to 3.8 to 1. Both measures are considered strong indicators of liquidity.
The Company expects that it will meet its ongoing working capital and capital
expenditure requirements from operating cash flows and borrowings under a $20.0
million short term credit facility. In addition, the Company's strong
unleveraged balance sheet allows it access to funds, if needed, from the capital
markets.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 29, 1982, the Company and certain of its subsidiaries filed
separate voluntary petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for the Northern
District of Illinois, Eastern Division ("Bankruptcy Court").
On March 15, 1989, the Company and its subsidiaries filed a Disclosure
Statement and a Consolidated Plan of Reorganization ("Reorganization Plan") with
the Bankruptcy Court. An order confirming the Reorganization Plan was entered
by the Bankruptcy Court effective June 2, 1989 ("Confirmation Order"). The
Bankruptcy Court also entered orders establishing the UNR Asbestos-Disease
Claims Trust ("Trust Order") and permanently enjoining any actions against the
Company by asbestos-disease claimants ("Injunction"). Certain former employees
of a predecessor company's Bloomington, Illinois plant ("Bloomington Workers")
filed appeals from the Confirmation Order, the Injunction and the Trust Order.
Those appeals were dismissed by the District Court, and the Bloomington Workers
sought review by the United States Court of Appeals for the Seventh Circuit
("Court of Appeals"). On April 5, 1994, the Court of Appeals affirmed the
decision of the District Court. On April 19, 1994 Bloomington Workers filed a
Petition for Rehearing, and on May 27, 1994 that Petition was denied by the
Court of Appeals.
On June 14, 1994 the Bankruptcy Court entered an order holding that
the claims of the 256 former employees of a predecessor company's Paterson, New
Jersey plant should be classified as both Class 2 Claims (Workers' Compensation
Claims which are to be paid in full) and as Class 5 Claims (which claims are
channeled to the UNR Asbestos-Disease Claims Trust) under the Reorganization
Plan. The Company has filed an appeal to the District Court and a Motion for
Consolidation of this appeal with an appeal currently pending in the District
Court concerning similar claims of 111 Bloomington Workers. Based upon the
Company's view of the merits of these claims and upon the advice of counsel, the
Company believes that Paterson Workers' claims and the Bloomington Workers'
claims will not have a material adverse effect on the Company's operations or
its financial condition.
8
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
2. Plan of Reorganization incorporated herein by reference from
Exhibit A of the 1989 first quarter Form 10-Q.
4. Warrant Agreement (including form of warrant) issued pursuant to
the provisions of Article III of the Company's Consolidated Plan
of Reorganization incorporated herein by reference from Exhibit A
of the 1989 Form 10-K.
10. None
11. The computation can be determined from the report.
15. None
18. None
19. None
22. None
23. None
24. None
27. None
(B) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNR INDUSTRIES, INC.
Dated: August 10, 1994 /s/ Henry Grey
- - - - ---------------------- -----------------------------------------------
Henry Grey
Senior Vice President & Chief Financial Officer
Dated: August 10, 1994 /s/ John A. Saladino
- - - - ---------------------- -----------------------------------------------
John A. Saladino
Controller & Assistant Secretary
9
