<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 SEPTEMBER 30, 1995
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
--- ---
Outstanding as of
November 10, 1995
-----------------
Common Stock $.01 par value................ 52,162,769
<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 SEPT 30 NINE MONTHS ENDED SEPT 30
1995 1994 1995 1994
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 91,921 $ 94,169 $ 293,215 $ 270,039
Cost of products sold 70,893 73,468 224,337 212,068
----------- ------------ ------------ ------------
Gross Profit 21,028 20,701 68,878 57,971
Selling, general & admin.
expenses 9,067 10,603 30,757 31,197
----------- ------------ ------------ ------------
Operating Income 11,961 10,098 38,121 26,774
Interest income (expense), net (190) (93) 18 (819)
----------- ------------ ------------ ------------
Income from continuing operations
before income taxes 11,771 10,005 38,139 25,955
Income tax provision 4,700 4,000 15,400 10,500
----------- ------------ ------------ ------------
Income from continuing operations 7,071 6,005 22,739 15,455
Discontinued operation:
Income from operation,
net of tax --- --- --- 295
Loss on disposition,
net of $1,500 tax benefit --- --- --- (2,500)
----------- ------------ ------------ ------------
NET INCOME $ 7,071 $ 6,005 $ 22,739 $ 13,250
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Net Income Per Share:
Continuing operations $ .14 $ .12 $ .44 $ .31
Discontinued operation:
Income from operation --- --- --- .01
Loss on disposition --- --- --- (.05)
----------- ------------ ------------ ------------
NET INCOME PER SHARE $ 14 $ .12 $ .44 $ .27
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
Weighted average number of shares
outstanding 52,142 49,349 51,704 48,857
</TABLE>
1
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
-------------------------------------
BALANCE SHEETS
--------------
(In Thousands)
--------------
(unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
ASSETS 1995 1994
------ ------------ -----------
CURRENT ASSETS
- --------------
<S> <C> <C>
Cash and cash equivalents $ 31,828 $ 68,991
Accounts, notes and other receivables, less allowance for doubtful
accounts of $4,400 in 1995 and $4,000 in 1994
Inventories:
Work-in-process and finished goods 49,707 43,773
Raw materials and supplies 28,481 26,243
Deferred income taxes 11,126 16,000
Prepaid expenses 2,787 2,757
------------ -----------
TOTAL CURRENT ASSETS 172,709 209,075
------------ -----------
PLANT AND EQUIPMENT, at cost 166,225 162,789
- -------------------
Less: Accumulated depreciation (104,091) (98,450)
TOTAL PLANT AND EQUIPMENT 62,134 64,339
OTHER ASSETS
- ------------
Deferred income taxes --- 8,610
Net assets of discontinued operations --- 11,244
Other 8,207 6,179
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
- -------------------
Accounts payable $ 16,499 $ 14,063
Accrued expenses 29,998 31,602
Current portion of long-term liabilities 3,505 3,470
Accrued income taxes 1,424 907
------------ -----------
TOTAL CURRENT LIABILITIES 51,426 50,042
------------ -----------
LONG-TERM LIABILITIES 19,964 23,278
- --------------------- ------------ -----------
WARRANTS ---- 5,531
- -------- ------------ -----------
STOCKHOLDERS' EQUITY
- --------------------
Common stock 525 516
Capital surplus 66,932 130,497
Retained earnings 113,368 102,023
Treasury stock (1,630) (2,751)
Notes receivable from officers (7,104) (9,100)
Unearned portion of restricted stock (431) (589)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 171,660 220,596
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 243,050 $ 299,447
------------ -----------
------------ -----------
</TABLE>
2
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 22,739 $ 13,250
Adjustments for noncash items included in net income-
Depreciation and amortization 7,258 7,303
Deferred income taxes 13,484 9,020
Disposal of plant and equipment --- 1
Provision for deferred employee compensation 134 253
Operating requirements-
Accounts receivable (increase) (169) (10,962)
Income tax refund receivable decrease --- 52,603
Inventories (increase) (8,172) (12,134)
Prepaid expenses decrease 154 93
Accounts payable & accrued expenses increase (decrease) (63) 6,089
---------- ---------
Net cash provided by operating activities $ 35,365 $ 65,516
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment $ (4,197) $ (6,593)
Proceeds from the sale of plant and equipment --- 176
(Increase) in other assets (185) (178)
Discontinued operations 12,657 4,549
---------- ---------
Net cash provided by (used for) investing activities $ 8,275 $ (2,046)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in debt and lease obligations $ (3,279) $ 731
Payment of short-term borrowings --- (5,100)
Dividends paid (80,211) (9,738)
Loans to officers --- (9,100)
Repayment of officers' loans 1,995 ---
Issuance of common stock 692 9,839
---------- ---------
Net cash (used for) financing activities $ (80,803) $(13,368)
Net increase (decrease) in cash and cash equivalents $ (37,163) $ 50,102
Cash & cash equivalents, beginning of period 68,991 1,226
---------- ---------
Cash & cash equivalents, end of period $ 31,828 $ 51,328
---------- ---------
---------- ---------
Cash paid during the period for interest $ 1,858 $ 1,872
---------- ---------
---------- ---------
Cash paid during the period for income taxes $ 1,253 $ 1,182
---------- ---------
---------- ---------
</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 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 $4.5 million in
the second quarter of 1994 as a result of these carry-backs.
At December 31, 1994, the Company has available $52.0 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, to the extent not utilized by
that time. Alternative minimum tax credits of approximately $5.5 million are
available to reduce future Federal income taxes over an indefinite period.
In the fourth quarter of 1994, the Company reversed $10.0 million (or $.20
per share) of the valuation allowance recorded in the fourth quarter of 1992.
This reversal was made based upon management's judgment regarding the
realizability of the net operating loss and credit carry-forwards.
(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 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 September 30,
1995, 1,133,565 shares have been purchased.
(5) Dividends Declared:
On April 17, 1995, the Company paid a regular cash dividend of $.25 per
share and an extraordinary dividend of $1.30 per share to stockholders of record
as of the close of business on April 3, 1995. 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.
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 $8.1 million at September 30, 1995, and $8.7 million at
December 31, 1994.
(7) Discontinued Operation:
On January 31, 1995, the Company entered into a definitive agreement to
sell its industrial storage rack business to The Renco Group, Inc., a private
holding company. This sale was consummated on March 31, 1995. Net assets of
this operation for the prior year are classified as "Net assets of discontinued
operations" in the accompanying balance sheets.
(8) Sale of the Company:
On September 7, 1995, the Company announced that its Board of Directors had
authorized Company management to explore the sale of all or a majority of the
common stock of the Company. J.P. Morgan Securities Inc., the Company's
financial advisor, will assist in the process.
(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, 1994.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary for fair a statement of the results of operations for
the three- and nine-month periods ended September 30, 1995, and 1994. 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 1994 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, 1994. The following discussion and analysis describes
changes in the Company's financial condition from December 31, 1994, 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 nine-month periods ended September 30, 1995, with the
corresponding period of 1994.
RESULTS OF OPERATIONS
Third quarter of 1995 versus third quarter of 1994:
Net sales decreased 2.4% to $91.9 million from $94.2 million in the prior
year. Operating income was $12.0 million for the third quarter of 1995 versus
$10.1 million for the same period last year, or an increase of 18.4%. Net
income was $7.1 million or $.14 per share versus $6.0 million or $.12 per share
last year.
5
<PAGE>
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30
--------------------
1995 1994
------------ -----------
<S> <C> <C>
NET SALES:
Industrial $ 38,594 $ 43,721
Commercial 53,327 50,448
------------ -----------
Total $ 91,921 $ 94,169
------------ -----------
------------ -----------
OPERATING INCOME:
Industrial $ 3,695 $ 4,164
Commercial 9,448 7,188
Corporate Expense (1,182) (1,254)
------------ -----------
Total $ 11,961 $ 10,098
------------ -----------
------------ -----------
</TABLE>
The Industrial segment (principal products of this segment are steel tubing
and computerized warehouse control systems) reported net sales of $38.6 million
for the third quarter of 1995 versus $43.7 million reported in the same period
last year, or a decrease of 11.7%. The decrease in sales is due entirely to the
steel tube division.
Operating income of the Industrial segment decreased 11.3% to $3.7 million
for the third quarter of 1995 versus $4.2 million for the same period last year.
This decrease is due to a result of pressure on margin due to lower steel prices
and lower shipments caused by a slight downturn in the economy and inventory
adjustments by many customers.
The Commercial segment (principal products of this segment are shopping
carts, steel towers and shelters for the communications industry, and stainless
steel and composite sinks) reported net sales of $53.3 million for the third
quarter of 1995 versus $50.4 million reported in the same period last year or an
increase of 5.7%. The increase in Commercial segment sales is due to the tower
division as continued strong growth within the wireless communication industry
has resulted in high demand for the tower division's products and to an increase
in sales of sinks.
Operating income for the Commercial segment was $9.4 million for the third
quarter of 1995 versus $7.2 million for the same period last year, or an
increase of 31.4%. As with sales, this increase is due primarily to strong
results of the tower division.
Selling, general and administrative expenses were $9.1 million or 9.9% of
sales for 1995 versus $10.6 million or 11.3% of sales in 1994. This percentage
reduction reflects cost cutting measures taken throughout the Company and the
resulting ability to produce greater sales with less costs.
Net interest expense in both periods includes the interest earned on short-
term investments reduced by interest paid on secured debt. The net expense
increase is due to the lower level of available cash in the third quarter of
1995 versus the same period last year.
Income from continuing operations in the third quarter of 1995 was $7.1
million or $.14 per share versus $6.0 million or $.12 per share for the same
period last year. This increase is due primarily to the strong results at our
tower division.
6
<PAGE>
RESULTS OF OPERATIONS
First nine months of 1995 versus first nine months of 1994:
Net sales increased 8.6% to $293.2 million from $270.0 million in the prior
year. Operating income was $38.1 million for the first nine months of 1995
versus $26.8 million in the same period last year or an increase of 42.4%. Net
income was $22.7 million or $.44 per share in this year's first nine months
versus $13.2 million or $.27 per share in the prior year's first nine months.
Prior year first nine months' results include an after-tax charge of $2.5
million or a $.05 per share charge for the discontinuance of the industrial
storage rack division.
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED SEPTEMBER 30
--------------------
1995 1994
------------ -----------
<S> <C> <C>
NET SALES:
Industrial $ 125,758 $ 134,957
Commercial 167,457 135,082
------------ -----------
Total $ 293,215 $ 270,039
------------ -----------
------------ -----------
OPERATING INCOME:
Industrial $ 13,583 $ 13,261
Commercial 28,546 17,601
Corporate Expense (4,008) (4,088)
------------ -----------
Total $ 38,121 $ 26,774
------------ -----------
------------ -----------
</TABLE>
The Industrial segment reported net sales of $125.8 million for the first
nine months of 1995 versus $135.0 million reported in the same period last year,
or a decrease of 6.8%. This decrease is due entirely to the steel tube
division.
Operating income for the Industrial segment increased 2.4% to $13.6 million
for the first nine months of 1995 versus $13.3 million reported for the first
nine months of 1994. Results have been favorably affected by a LIFO credit due
to decreasing steel prices.
The Commercial segment reported net sales of $167.4 million for the first
nine months of 1995 versus $135.1 million reported in the same period last year,
or an increase of 24.0%. The tower division accounts for the increase in sales
in this segment.
Operating income for the Commercial segment for the first nine months of
1995 was $28.5 million versus $17.6 million reported in the same period last
year. Increased sales of towers and shelters have resulted in double-digit
earnings growth at the tower division.
Selling, general and administrative expenses were $30.8 million or 10.5% of
sales for 1995 versus $31.2 million or 11.6% of sales in 1994.
Net interest income (expense) is income in the first nine months of 1995
versus expense for the same period in the prior year due to generally higher
levels of available cash in 1995.
7
<PAGE>
Income from continuing operations was $22.7 million or $.44 per share in
the first nine months of 1995 versus $15.5 million or $.31 per share for the
same period last year.
SALE OF THE COMPANY
As stated in Note 8 to the Financial Statements, above, the Company
announced that the Board of Directors authorized Company management to explore
the sale of all or a majority of the common stock of the Company. Management is
working with J.P. Morgan Securities Inc., the Company's financial advisor, in
this process. The successful negotiation or consummation of a transaction cannot
be predicted. If a transaction is consummated, it would likely affect future
operations and the financial condition of the Company.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at September 30,
1995, and December 31, 1994:
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Working Capital (in millions) $121.3 $159.0
Working Capital Ratio 3.4 to 1 4.2 to 1
</TABLE>
The Company's financial condition continues to be strong at the end of the
third quarter of 1995, with working capital of $121.3 million at September 30,
1995, as compared to $159.0 million at December 31, 1994. The decline in
working capital is due to the declaration of the $.25 regular and $1.30
extraordinary dividend totalling approximately $80.2 million. The Company's
working capital ratio, a measure of short-term liquidity, decreased from 4.2 to
1 to 3.4 to 1. Both measures are considered strong indicators of liquidity.
The Company expects that it will meet its ongoing working capital and capital
expenditure requirements from operating cash flows and borrowings under a $35.0
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
As described in Item 3, Legal Proceedings, of UNR's Form 10-K for the
fiscal year ended December 31, 1994, certain former employees of a predecessor
company's Bloomington, Illinois, plant ("Bloomington Workers") and Paterson, New
Jersey, plant ("Paterson Workers") contended that their asbestos-disease claims
should be classified as Class 2 claims (workers' compensation claims to be paid
in full by UNR) under UNR's 1989 Plan of Reorganization. UNR contended that the
workers' claims should be classified solely as Class 5 claims which are
channeled to the UNR Asbestos-Disease Claims Trust (the "Trust"). On July 31,
1995, the United States Bankruptcy Court for the Northern District of Illinois,
Eastern Division (the "Bankruptcy Court"), entered an agreed order finding that
the claims of the Paterson Workers are solely Class 5 claims under the Plan of
Reorganization. On September 18, 1995, the Bankruptcy Court, pursuant to a
settlement agreement, entered an agreed order finding that Bloomington Workers
accepted the Trust's offer with respect to each claim and removing the matter
from adjudication. The parties have agreed that the specific terms of the
settlement agreement are to remain confidential. The disposition of these
claims will not have any material adverse effect on Registrant'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. Financial data schedule.
(B) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements to 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: November 10, 1995 /s/ Henry Grey
- ------------------------ -------------------------------
Henry Grey
Senior Vice President-Finance, Treasurer & Chief
Financial Officer
Dated: November 10, 1995 /s/ John A. Saladino
- ------------------------ -------------------------------
John A. Saladino
Controller & Assistant Secretary
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000315641
<NAME> UNR INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 31,828
<SECURITIES> 0
<RECEIVABLES> 53,195
<ALLOWANCES> 4,415
<INVENTORY> 78,188
<CURRENT-ASSETS> 172,709
<PP&E> 166,225
<DEPRECIATION> 104,091
<TOTAL-ASSETS> 243,050
<CURRENT-LIABILITIES> 51,426
<BONDS> 19,964
<COMMON> 525
0
0
<OTHER-SE> 171,135
<TOTAL-LIABILITY-AND-EQUITY> 243,050
<SALES> 293,215
<TOTAL-REVENUES> 293,215
<CGS> 224,337
<TOTAL-COSTS> 30,757
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (18)
<INCOME-PRETAX> 38,139
<INCOME-TAX> 15,400
<INCOME-CONTINUING> 22,739
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,739
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
