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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, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
------------------ TO
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COMMISSION FILE NO. 1-8009
UNR INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3060977
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(State of Incorporation) (I.R.S. Employer
Identification No.)
332 SOUTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60604-4385
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(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
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<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 ____
As of March 15, 1995, 51,360,354 shares of common stock were outstanding.
The aggregate market value of stock held by non-affiliates is $137,400,000 based
upon the average bid and asked prices of such stock as of March 15, 1995.
Documents incorporated by reference:
(1) Annual Report to Stockholders of Registrant for the fiscal year ended
December 31, 1994. 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 4,
1995. Certain information therein is incorporated by reference into Part III
hereof.
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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. 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 of Reorganization 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 the litigation against certain 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
Industries, Inc. All remaining subsidiaries became subsidiaries of UNR except
Holco Corporation which remains a subsidiary of Leavitt Structural Tubing
Company, a subsidiary of UNR.
In 1994, the Registrant decided to sell the industrial storage rack business
of its Material Handling Division. In 1993, the Registrant sold its Midwest
Steel and Midwest CATV Divisions. In 1989, the Registrant sold its Unarco Rubber
Products Division. Accordingly, operating results of these divisions were
reclassified to discontinued operations.
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 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 12 to the 1994
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, shopping carts and supermarket storage
and display equipment, stainless steel and composite sinks, steel towers and
equipment shelters for communication and other uses and computerized warehouse
control systems. 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.
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
1
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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 manufactured tubing 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 of the Registrant provides automated
inventory management products to the warehouse and distribution industry from
facilities located in Berkeley and Napa, California. Its primary product is a
light directed display based inventory picking, sorting, packing and shipping
system using the trademark "Easypick".-Registered Trademark-
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 of
the Registrant manufactures and markets towers, with related accessories, used
principally to support communications equipment for microwave and cellular
transmission, commercial and amateur broadcasting and home television. Other
towers are produced to support high level illumination for highways, parking
lots, stadiums and other commercial areas. The Registrant'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."-Registered Trademark-
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 $1,253,000 in 1994, $797,000 in 1993 and
$300,000 in 1992 for research on new and improved products. Approximately 37
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
similarly complete product lines.
The Registrant also believes that its sales of computerized warehouse
control systems are greater than those of any competitor.
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.
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 of the Registrant in 1994, 1993 and 1992 were approximately
$10.6 million, $10.4 million and $6.9 million, respectively.
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OTHER
The Registrant employs some environmentally hazardous materials in its
manufacturing processes, including oils and solvents. The Registrant has made
expenditures to comply with environmental laws and regulations, including
investigations and remediation of ground and water contamination, and expects to
make such expenditures in the future to comply with existing and future
requirements. While such expenditures to date have not materially affected the
Registrant's capital expenditures, competitive position, financial condition or
results of operations, there can be no assurance that more stringent regulations
or enforcement in the future will not have such effects.
In some cases, the Registrant has notified state or federal authorities of a
possible need to remediate sites it previously operated. The Registrant has also
been notified by various state and federal governmental authorities that they
believe it may be a "potentially responsible party" or otherwise have
responsibility with respect to clean-up obligations at certain hazardous and
other waste disposal sites which were not owned or operated by the Registrant.
In some such cases, the Registrant has effected settlements with the relevant
authorities or other parties for immaterial amounts. In other cases, the
Registrant is participating in negotiations for settlement with the relevant
authorities or other parties or has notified the authorities that it denies
liability for clean-up obligations. At all such sites, costs which may be
incurred are difficult to accurately predict until the level of contamination is
determined. The Registrant, after consultation with legal counsel and with
environmental experts, believes that the ultimate outcome with respect to all of
these sites will not have a material effect on the Registrant's financial
condition or on the results of its operations.
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 120,000 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
Napa, CA Automated Inventory
Management Products/
Assembly 14,000 Leased (Expiration 7/31/03)
Berkeley, CA Automated Inventory
Management Products/
Assembly 6,000 Leased (Expiration 8/31/97)
COMMERCIAL SEGMENT
Ruston, LA Sinks 200,000 Owned
Wagoner, OK Shopping Carts 520,000 Owned
Memphis, TN Shopping Carts 83,000 Owned
Sacramento, CA Shopping Carts 35,000 Leased (Expiration 4/30/99)
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 240,000 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>
3
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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.
ITEM 3. LEGAL PROCEEDINGS
On July 29, 1982 the Registrant and certain of its subsidiaries filed
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 Registrant and certain of 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 Registrant by asbestos-disease claimants ("Injunction").
Certain former employees of a predecessor to the Registrant'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"). The Court of
Appeals affirmed the decision of the District Court on April 5, 1994, and on May
27, 1994, Bloomington Workers' Petition for Rehearing was denied. On November
14, 1994, the Supreme Court denied the Bloomington Workers' Petition for Writ of
Certiorari. Therefore, the Confirmation Order, the Injunction and the Trust
Order are now final.
On July 28, 1992, the Bankruptcy Court entered an order holding that the
asbestos-disease claims of certain Bloomington Workers to recover compensation
under the Illinois Workers' Occupational Diseases Act 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. On June 14, 1994, the Bankruptcy
Court entered an order holding that asbestos-disease claims of the 256 former
employees of a predecessor company's Paterson, New Jersey plant (Paterson
Workers) should also be classified as both Class 2 Claims and as Class 5 Claims.
The Registrant filed an appeal to the District Court in both of those matters,
contending that the former employees' asbestos-disease claims should be
classified only as Class 5 Claims. On September 22, 1994, the District Court
reversed the decision of the Bankruptcy Court in the Bloomington Workers' case
and remanded that matter to the Bankruptcy Court for further proceedings. On
December 28, 1994, the District Court, adopting the reasoning of the District
Court in the Bloomington Workers case, also reversed the Bankruptcy Court in the
Paterson Workers case and remanded that matter to the Bankruptcy Court for
further proceedings. Based upon the Registrant's view of the merits of these
claims and upon the advice of legal counsel, the Registrant believes that
ultimate resolution of the Paterson Workers' claims and the Bloomington Workers'
claims will not have a material adverse effect on the Registrant's operations or
its financial condition.
The Registrant is also involved in certain other pending lawsuits and claims
arising in the ordinary course of business. The Registrant, after consultation
with legal counsel, considers that any liability resulting from such matters
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
On November 1, 1994, a special meeting of Security Holders was held for the
purpose of considering and voting upon:
(a) approval of the UNR Industries, Inc. 1994 Stock Option Plan designed
to provide Registrant's executives and key employees an opportunity to
become holders of Common Stock of the Registrant over a period of years; and
(b) approval of the UNR Industries, Inc. 1994 Executive Stock Purchase
Plan designed to encourage and facilitate the acquisition of a larger
financial interest in the Registrant through direct stock purchase by those
key executives.
Both plans had been adopted by the Board of Directors subject to the
approval of the Security Holders.
The Security Holders voted as follows:
<TABLE>
<S> <C>
1994 Stock Option Plan --
For....................................................................... 43,978,990
Against................................................................... 1,577,369
Abstentions............................................................... 258,574
1994 Executive Stock Purchase Plan --
For....................................................................... 43,948,771
Against................................................................... 1,611,375
Abstentions............................................................... 254,787
</TABLE>
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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>
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................ $7 1/8 $5 5/8 $ .20
Second Quarter............... 6 5 1/4 --
Third Quarter................ 6 1/8 5 1/8 --
Fourth Quarter............... 6 5/8 5 7/8 --
1995
First Quarter (through March
15)......................... $7 1/8 $6 1/8 $1.55
</TABLE>
As of March 15, 1995, the Registrant had 3,228 record holders of its Common
Stock.
On January 15, 1991, the Registrant paid a $.20 regular cash dividend to
Stockholders of record on December 20, 1990.
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 April 1, 1994, the Registrant paid a $.20 regular cash dividend to
Stockholders of record on March 18, 1994.
On March 2, 1995, the Registrant declared a $.25 regular cash dividend and a
$1.30 extraordinary cash dividend to be paid on April 17, 1995 to Stockholders
of record on April 3, 1995.
<TABLE>
<CAPTION>
WARRANTS HIGH LOW
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<S> <C> <C>
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............................. $6 $4 5/8
Second Quarter............................ 4 5/8 4 1/8
Third Quarter............................. 5 4 1/4
Fourth Quarter............................ 5 3/8 4 7/8
1995
First Quarter (through March 15).......... $6 $5 1/8
</TABLE>
As of March 15, 1995, the Registrant had 1,398 record holders of its
warrants.
ITEM 6. SELECTED FINANCIAL DATA
The financial information for the five years ended December 31, 1994,
appearing on page 1 of UNR Industries, Inc. 1994 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 27
through 28 of UNR Industries, Inc. 1994 Annual Report to Stockholders is
incorporated herein by reference.
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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. 1994 Annual Report to Stockholders.
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, 1994.
(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...... 54 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............... 41 Senior Vice President, Chief Financial Officer and
Treasurer (since 1994); Vice President--Finance and
Treasurer (1986 to 1994); 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, 1994.
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, 1994.
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, 1994.
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 schedule for the years 1994, 1993 and 1992 is
submitted herewith:
Schedule VIII--Allowance for Doubtful Accounts
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
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EXHIBIT NO.
(2) *Plan of Reorganization incorporated herein by reference from Exhibit A of
the 1989 first quarter form 10-Q.
(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 May 5, 1994, filed as an exhibit to the
1993 Form 10-K.
(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. 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 filed as an exhibit to the 1993 10-K.
*Agreement with J.P. Morgan Securities Inc. dated August 3, 1993, filed as
an exhibit to the 1993 10-K.
*1994 Stock Option Plan incorporated by reference from Exhibit A of Proxy
Statement dated October 11, 1994.
*1994 Executive Stock Purchase Plan incorporated by reference from Exhibit B
of Proxy Statement dated October 11, 1994.
*Form of Executive Stock Purchase Agreement with Thomas A. Gildehaus, Henry
Grey and Victor E. Grimm dated September 9, 1994, filed as an exhibit to the
1994 third quarter 10-Q.
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 1994 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
(b) No Form 8-K was filed for the quarter ended December 31, 1994.
(c) Exhibits--See 13, 21 and 23 above.
7
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SUPPLEMENTAL SCHEDULE
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 1994
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated March 2, 1995. Our audit was made for the
purpose of forming an opinion on the basic consolidated financial statements
taken as a whole. The supplemental schedule included in Part IV, Item
14(d)(Allowance for Doubtful Accounts) is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states 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 LLP
Chicago, Illinois,
March 2, 1995.
8
<PAGE>
SCHEDULE VIII
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>
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Balance--beginning of year....................................................................... $ 2,673 $ 2,684 $ 2,637
Add (deduct)
- --Provision charged to income.................................................................... 494 471 1,580
- --Bad debts written-off.......................................................................... (483) (518) (258)
--------- --------- ---------
Balance--end of year............................................................................. $ 2,684 $ 2,637 $ 3,959
--------- --------- ---------
--------- --------- ---------
</TABLE>
9
<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 15, 1995
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 15, 1995 /s/ THOMAS A. GILDEHAUS
--------------------------------------------------------
Thomas A. Gildehaus
CHIEF EXECUTIVE OFFICER, PRESIDENT & DIRECTOR
March 15, 1995 /s/ HENRY GREY
--------------------------------------------------------
Henry Grey
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
PRINCIPAL FINANCIAL OFFICER
March 15, 1995 /s/ VICTOR E. GRIMM
--------------------------------------------------------
Victor E. Grimm
VICE PRESIDENT, CORPORATE SECRETARY & GENERAL COUNSEL
March 15, 1995 /s/ JOHN A. SALADINO
--------------------------------------------------------
John A. Saladino
CONTROLLER AND ASSISTANT SECRETARY
March 15, 1995 /s/ CHARLES M. BRENNAN III
--------------------------------------------------------
Charles M. Brennan III
DIRECTOR
March 15, 1995 /s/ DARIUS W. GASKINS, JR.
--------------------------------------------------------
Darius W. Gaskins, Jr.
DIRECTOR
March 15, 1995 /s/ GENE LOCKS
--------------------------------------------------------
Gene Locks
DIRECTOR, CHAIRMAN OF THE BOARD
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
March 15, 1995 /s/ RUTH R. MCMULLIN
--------------------------------------------------------
Ruth R. McMullin
DIRECTOR
March 15, 1995 /s/ THOMAS F. MEAGHER
--------------------------------------------------------
Thomas F. Meagher
DIRECTOR
March 15, 1995 /s/ ROBERT B. STEINBERG
--------------------------------------------------------
Robert B. Steinberg
DIRECTOR
March 15, 1995 /s/ WILLIAM J. WILLIAMS
--------------------------------------------------------
William J. Williams
DIRECTOR
</TABLE>
11
<PAGE>
OUR BEST YET
OUR BEST YET
1 9 9 4
1 9 9 4
<PAGE>
UNR INDUSTRIES, INC. ANNUAL REPORT
UNR LEAVITT
UNR ROHN
UNARCO COMMERCIAL PRODUCTS
UNR HOME PRODUCTS
OUR BEST YET
1 9 9 4
1 9 9 4
UNR
INDUSTRIES, INC.
ANNUAL REPORT
UNR
INDUSTRIES, INC.
1994
ANNUAL REPORT
UNR
INDUSTRIES, INC.
1994
ANNUAL REPORT
<PAGE>
FIVE YEAR SUMMARY OF FINANCIAL DATA (in thousands except per share data)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIVE YEAR SUMMARY OF OPERATIONS 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------------
NET SALES $372,385 $312,873 $281,776 $257,978 $264,329
Cost of products sold 287,975 242,008 217,588 197,571 203,110
- ----------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 84,410 70,865 64,188 60,407 61,219
- ----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME 40,077 33,091 30,303 26,138 27,055
- ----------------------------------------------------------------------------------------------------------------------
Insurance recovery -- -- 13,000 -- --
Interest income (expense), net (747) (1,628) 1,134 4,847 8,517
- ----------------------------------------------------------------------------------------------------------------------
Pre-tax income from
continuing operations 39,330 31,463 44,437 30,985 35,572
Income tax provision (benefit) 5,800 11,700 (85,400) 9,300 12,200
- ----------------------------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 33,530 19,763 129,837 21,685 23,372
Discontinued operations--
Income (loss) from operations 295 (979) 46 (5,117) (1,545)
Loss on dispositions (2,500) -- (6,200) -- --
- ----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 31,325 $ 18,784 $123,683 $ 16,568 $ 21,827
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share:
Continuing operations $ .68 $ .42 $ 2.88 $ .48 $ .51
Discontinued operations--
Income (loss) from operations .01 (.02) -- (.11) (.03)
Loss on dispositions (.05) -- (.14) -- --
- ----------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE $ .64 $ .40 $ 2.74 $ .37 $ .48
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Dividends Declared Per
Common Share $ .20 $ 1.20 $ 2.20 $ 1.20 $ .20
- ----------------------------------------------------------------------------------------------------------------------
Weighted Average Common
Shares Outstanding 49,318 47,369 45,040 44,894 45,769
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
FIVE-YEAR SUMMARY OF FINANCIAL DATA
- ----------------------------------------------------------------------------------------------------------------------
Total Assets $299,447 $270,231 $391,049 $335,365 $311,645
Stockholders' Equity 220,596 193,384 232,981 206,272 245,602
Dividends Declared 9,738 57,691 102,517 53,745 9,060
Return on Assets 10.5% 7.0% 31.6% 4.9% 7.0%
Return on Stockholders' Equity 14.2% 9.7% 53.1% 8.0% 8.9%
Capital Expenditures 9,197 4,790 4,848 7,713 3,981
Depreciation and Amortization 9,247 8,864 7,822 7,446 5,951
Long-Term Liabilities 23,278 21,940 26,607 30,082 8,608
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Prior year results have been restated to reflect the 1992 discontinuance of
Midwest CATV and Midwest Steel, and the 1994 discontinuance
of Unarco Material Handling.
1
<PAGE>
TO OUR STOCKHOLDERS:
As the cover on this Annual Report suggests, the year 1994 was "Our Best Yet."
Net sales increased 19 percent to $372.4 million and, more importantly,
operating income rose 21 percent to $40.1 million, both record levels of
performance. Four of our five operating divisions posted record sales and two
established record levels of operating income.
Our 1994 reported net income was $31.3 million or $.64 per share compared to
$18.8 million or $.40 per share in 1993. 1994 net income was favorably impacted
by a $10.0 million, or $.20 per share, tax benefit generated by a reduction in a
valuation reserve established in 1992.
A major financial event in 1994 was the receipt of $52.6 million in Federal and
state tax refunds. These refunds were derived from the tax treatment accorded
the Company's 1989 transfer of 29.4 million shares of UNR common stock to the
UNR Asbestos-Disease Claims Trust. The timely receipt of this $52.6 million tax
refund resulted from some truly outstanding work by our corporate tax
department.
On April 1, 1994, the Company paid a regular cash dividend of $.20 per share. On
April 17, 1995, the Company will pay a $.25 per share regular cash dividend and
a $1.30 per share extraordinary cash dividend. The payment of these April
dividends will bring the total dividends paid over the last five years to $6.55
a share.
In June, 1994, we elected to sell our UNARCO Material Handling Division ("UMH"),
a leading supplier of steel rack to the warehousing and distribution industries.
We expect to close on the sale of UMH on March 31, 1995. The sale of UMH will
permit greater focus on the Company's five higher performing core businesses.
DIVISION PERFORMANCE
1994 was a spectacular year for our Rohn Division. Sales grew 45 percent to
$107.0 million, passing the $100 million level for the first time. Operating
income was 73 percent higher in 1994 than in 1993. Rohn, as a leading supplier
of towers and shelters to the telecommunications industry, has directly
benefitted from the explosive growth of that industry. Our decision last year to
double the capacity of Rohn's Bessemer, Alabama shelter manufacturing facility
allowed them to significantly increase their shelter sales. Tower demand was
exceptionally strong also, and Rohn's Peoria, Illinois plant set new production
and shipment records. Rohn's outlook is very bright as the telecommunications
industry continues to expand.
Leavitt Tube also had record sales in 1994. Shipments of steel tubing increased
7 percent over 1993. Volume and sales dollars reached $175.1 million, an
increase of 17 percent. Steel prices continued to escalate in 1994 and gross
margins at Leavitt were squeezed because of a lag in their ability to pass on
the full amount of steel cost increases. Nevertheless, Leavitt's operating
income rose by 16 percent in 1994 and was the second highest level of operating
earnings in Leavitt's history. The entire Leavitt organization continues to give
an outstanding performance.
2
<PAGE>
UNARCO Commercial Products, our shopping cart division, also set new records in
unit and dollar volume. UNARCO shipped in excess of 675,000 shopping carts and
had sales of $62.0 million. Recent investments in plating capacities have
provided UNARCO with the ability to continue to expand sales of shopping carts
and food handling equipment for supermarkets. Marvin Weiss, long time President
of UNARCO, retired on December 31, 1994, after 42 years with the Company. Marvin
was a strong leader and was instrumental in establishing UNARCO as the industry
leader in shopping carts. Russell Begley assumed the division presidency, and we
look forward to the division's continued growth under his leadership.
Our Home Products Division, which manufactures stainless steel and Asterite*
sinks, also set new records for unit and dollar sales. Sales dollars increased
to $24.1 million. Operating income fell slightly because of increases in
stainless steel prices which Home Products could not entirely pass on to their
customers. The new Asterite* production facility in Ruston, Louisiana became
fully operational in the third quarter of 1994, and high quality composite sinks
are now being produced in quantity. Initial acceptance of the Asterite* sinks
has been favorable and the division anticipates significant new sales in 1995.
Real Time Solutions ("RTS") had a disappointing year in 1994. Sales were down
because of delays in signing a number of large contracts. However, operations
were profitable for the year, and 1995 is expected to show considerable growth
in bookings, sales and profitability.
This year marked the fifth year of operations of the "new" UNR that emerged from
Chapter 11 in 1989. On the two pages that follow this letter, the Company's five
year performance is briefly reviewed. We believe the results speak for
themselves.
In summary, 1994 was great--and we look forward to the challenges of 1995 and
beyond. We have set demanding performance targets for each of our operating
divisions and our corporate staff groups and are confident that we will meet
them with the same intensity, commitment and teamwork that was brought to bear
in 1994. While 1994 was "The Best Yet," we remain certain that the best is yet
to come.
Sincerely,
Thomas A. Gildehaus
President and Chief Executive Officer
3
<PAGE>
UNR INDUSTRIES, INC.
- --FIVE YEARS LATER
On July 29, 1982, UNR sought protection under Chapter 11 of the Bankruptcy Laws
because of an overwhelming and ever growing number of asbestos claims related to
a predecessor company's asbestos manufacturing business. On June 2, 1989, after
operating for seven years in Chapter 11, UNR emerged as a reorganized company.
Under the Plan of Reorganization, approximately 64 percent of the Company's
common stock was allocated to a newly created UNR Asbestos-Disease Claims Trust
(the Trust) in full discharge of all past, present and future asbestos-related
claims. This reorganization effectively removed the asbestos albatross from
UNR's corporate neck and provided the foundation for renewed growth and
profitability.
The "new" UNR remained a public company with the Trust as its largest
shareholder. The Trust supported the election of an experienced and talented
Board of Directors to lead the Company. Since 1989, UNR's Board of Directors has
pursued three objectives: maximizing cash flow available for distribution to
shareholders; maintaining and improving the Company's fundamental operating
capabilities through adequate reinvestment and excellent financial and operating
management; and generating shareholder returns through a combination of high
dividend payments and enhanced market value. This last objective could be
achieved only through significant growth in sales and profits.
Given this context for UNR's situation in 1989, it is appropriate to examine the
Company's performance "Five Years Later," and to evaluate its progress toward
achieving the Board's objectives.
[GRAPH: SALES]
[GRAPH: OPERATING INCOME]
[GRAPH: OPERATING INCOME AS A PERCENTAGE OF ENDING STOCKHOLDERS' EQUITY]
[GRAPH: CUMULATIVE DIVIDENDS PAID]
[GRAPH: FIVE-YEAR CUMULATIVE STOCK RETURN]
4
<PAGE>
DIVISION PERFORMANCE
- - UNR now consists of five divisions instead of the seven that existed in 1989.
The Midwest Steel and Midwest CATV Divisions were sold in 1993, and the UNARCO
Material Handling Division in 1995. Real Time Solutions, Inc. (RTS) was
purchased in 1993 and has proven to be an excellent investment with outstanding
growth prospects.
- - In the past five years, UNR Rohn's sales have increased more than 118
percent--from $49.1 million in 1989 to $107.0 million in 1994. Its operating
earnings rose over 240 percent. In the Company's two major markets--towers and
shelters for the rapidly-expanding telecommunications industry--Rohn's position
has never been stronger and more secure.
- - Since 1989, Leavitt Tube Division sales have increased from $148.1 million to
more than $175.1 million, and operating income rose 25 percent. Leavitt's
management team is experienced, its operations are continually improving and its
market position is solid.
- - Sales at the UNARCO Commercial Products Division have expanded 44 percent
since 1989: from $43.2 million in 1989 to $62.0 million. Operating earnings
increased 83 percent in the same period. The nation's largest manufacturer of
shopping carts, UNARCO Commercial Products shipped a record number of wire and
plastic shopping carts in 1994.
- - Sales at the Home Products Division have increased 30 percent over the past
five years to $24.1 million in 1994. Operating income rose 32 percent over the
same period. With the introduction of the Asterite [REGISTERED TRADEMARK] sink
to supplement the Company's popular stainless steel lines, Home Products is
poised for accelerated growth.
The operating divisions' progress and performance have been extremely
encouraging. By combining their manufacturing and marketing expertise with
strong financial, tax, and legal management, the Company has improved its
overall financial performance.
CORPORATE PERFORMANCE
SALES GROWTH--Sales have grown to $372.4 million from $254.2 million, a
compounded, annual growth rate of eight percent. The principal engines of this
growth have been the Leavitt and Rohn Divisions.
OPERATING EARNINGS GROWTH--Largely due to the performance of Leavitt and Rohn,
operating earnings have grown to $40.1 million from $19.0 million, a compound
growth rate of 16.1 percent.
OPERATING RETURN ON EQUITY--Operating income as a percent of equity has risen to
18 percent in 1994 from eight percent five years ago. The Company has achieved
this increase by reducing its equity base through regular and extraordinary
dividend payments and by substantially increasing its earnings.
DIVIDENDS PAID--Since its reorganization in 1989, the Company has paid a total
of $232.8 million in dividends, or $5.00 per share. These funds have been
generated from earnings, tax refunds, asset sales and insurance recoveries. This
amount does not include the $80.0 million ($1.55 per share) dividend payment to
be made on April 17, 1995.
TOTAL RETURN TO SHAREHOLDERS--Total annual return to shareholders (the
combination of dividends paid and stock price) has averaged 24 percent over the
past five years. In other words, $100.00 invested in UNR stock in 1989 would
have a value of $296.00 on December 31, 1994, a 196 percent increase over the
five-year period.
The performance of the Company during the past five years has been rewarding.
The key factors in the Company's success include:
- - A reorganization plan that removed the asbestos albatross.
- - A majority shareholder who understood our business and supported the election
of outstanding directors.
- - An active and involved Board of Directors that established strategic
objectives and closely monitored management's plans and actions toward
accomplishing those objectives.
- - Management teams at corporate and division levels that provided leadership,
vision, and dedicated hard work.
And most important, the several thousand men and women of the UNR organization
who, individually and collectively, have worked smarter and harder to accomplish
these results.
5
<PAGE>
UNR
LEAVITT [GRAPH: SALES]
Known in the industry as the "Tube People," UNR Leavitt ranks among the nation's
leading manufacturers of structural and mechanical steel tubular products.
Leavitt's unmatched line of steel tubing materials is found in a broad range of
consumer and commercial products, including furniture, housewares, exercise
equipment, lawn care products, toys, shopping carts, business furniture and
fixtures, storage racks, ornamental iron products, and animal confinement
equipment. By producing strong, durable, yet lightweight steel materials,
Leavitt has also expanded its presence in the industrial sector as demand
remains strong for products with high strength-to-weight ratios. In this market,
Leavitt's products are used in manufacturing, construction and farm equipment,
non-residential construction projects, electrical and mechanical equipment, and
various other structural fabrication applications.
With more than 1.1 million square feet of production facilities located in
Illinois, Indiana, and Mississippi, Leavitt has the capacity to produce more
than 500,000 tons of steel tubing per year, ensuring Leavitt's customers a
continuous supply of steel tubing products--regardless of the size of their
order or how quickly it is needed.
UNR Leavitt celebrated a record year in 1994 both in terms of sales revenues and
tons-of-steel shipped. Operating income was near the Division's historic high.
The economy's expansion fueled much of Leavitt's growth this year, and the
Division's superior service, quality, and inventory capacity contributed
significantly to Leavitt's gains.
As the economy grows, Leavitt's success should continue throughout 1995. By
forging stronger ties to its customers, Leavitt will enhance overall client
service, which it predicts will translate to improved bottomline results. UNR
Leavitt continues to explore new product possibilities and to make further
improvements in productivity and quality.
6
<PAGE>
UNR
[GRAPH: SALES] ROHN
In 1948, UNR Rohn produced its first tower for home television reception. Today,
UNR Rohn stands as one of the world leaders in the design, manufacture and
installation of communication towers and fiberglass and concrete shelters. The
Rohn product line is used in cellular telephone transmission, radio/television
broadcasting, two-way communications, private microwave systems, governmental
communications systems and many other applications. Rohn also manufactures and
distributes galvanized agricultural livestock equipment. With more than 600,000
square feet of production facilities in Illinois, Indiana and Alabama, Rohn
keeps pace with the global market for communication towers and equipment
shelters. In 1994, approximately 100,000 square feet were added to its
state-of-the-art production facility in Alabama to meet industry demand for
concrete and fiberglass equipment shelters.
As Rohn's production capacity grows, so does its workforce of nearly 700 people.
Rohn's experienced professionals help customers respond quickly to new markets
and technologies. With an extensive product inventory, Rohn provides fast
turnaround on orders for towers and equipment shelters, helping its customers
bring new products on-line. Its in-house design and construction staffs can
deliver high-quality towers up to a maximum height of 1,500 feet.
In 1994, Rohn enjoyed its best year with sales exceeding 1993 results by 45
percent. Strong demand in the cellular telephone industry for both towers and
equipment shelters has fueled the Division's excellent performance. UNR Rohn's
future remains bright based on a U.S. telecommunications market that shows few
signs of slowing and an expanding international market. These markets will keep
production of Rohn's towers and equipment shelters running at full throttle.
Looking ahead to 1995 and beyond, emerging technologies, such as personal
communications systems (PCS) and enhanced specialized mobile radio
(ESMR) systems, the continued growth in cellular telephone systems and the new
wireless cable television technologies are all expected to provide revenue
growth opportunities for Rohn.
7
<PAGE>
UNARCO
COMMERCIAL [GRAPH: SALES]
PRODUCTS
More than 55 years ago, UNARCO Commercial Products was founded with one goal in
mind--to make the first, and the best, shopping cart. Today, UNARCO is the
nation's largest manufacturer of shopping carts and serves as the primary or
exclusive supplier of steel shopping carts to nine of the ten largest
supermarket chains. UNARCO also manufactures a full line of steel-framed carts
with plastic baskets that clients customize with store logos and colors. After
only three years, the Division has become a leading supplier to the plastic
shopping cart market.
UNARCO is the only manufacturer that also provides supermarkets with a wide
selection of display, handling and stocking equipment, including the "Vendex"
and "VendAll" product lines. In fact, the division's breadth of product
allows it to supply virtually every type of cart required to move merchandise
through a store.
UNARCO's 500,000 square-foot production facility in Oklahoma, which employs more
than 700 people, is the industry's largest and most fully-integrated
manufacturing facility. From this facility, UNARCO distributes its products to
44 countries in North America, South America, Europe, Africa and Asia.
As major retailers continue to benefit from a strong economic climate, the
Division continued to grow through 1994, setting record levels in sales and
volume of carts shipped.
With a well-established position in the U.S. shopping cart market, UNARCO
anticipates 1995 to be a year of continued growth on several fronts, including
its "back room" storage products for grocery stores, its plastic shopping cart
line and its lines of luggage carriers.
8
<PAGE>
UNR
[GRAPH: SALES] HOME PRODUCTS
UNR Home Products is one of the top three manufacturers of residential stainless
steel kitchen sinks in the United States. Marketing its products under three
well-known brand names--"Federal/American, [REGISTERED TRADEMARK]"
"Republic, [REGISTERED TRADEMARK]" and "Luxus [REGISTERED TRADEMARK]"-- Home
Products distributes its stainless steel sinks through retail and plumbing
wholesale outlets to U.S. and international markets.
Home Products also manufactures and distributes the "Ultralux -TM-" sink,
a composite sink made of Asterite [REGISTERED TRADEMARK]. Ultralux is available
in a variety of colors and, unlike porcelain and cast iron sinks, will not chip,
crack, stain or scratch. More than 60 percent lighter than cast iron sinks and
easily installed by one person, Ultralux sinks have quickly become popular among
do-it-yourself customers. The Ultralux line is manufactured at a modern,
10,000-square-foot facility in Louisiana. Completed in mid 1994, the new
facility has tripled Home Products' production capabilities and has made Home
Products the only U.S. sink producer to manufacture composite-based sinks
in-house.
UNR Home Products celebrated its best sales year in 1994. Operating income for
the Division reached near record levels even accounting for the start-up costs
related to bringing the new Ultralux facility on-line.
Although stainless steel costs continue to rise, UNR Home Products is optimistic
about 1995. The Division is strengthening its marketing efforts, and it
continues to reduce manufacturing costs in its stainless steel plant. The
Division also is optimistic about the potential benefits of having a full year
of production capacity at its Ultralux facility.
9
<PAGE>
REAL TIME
SOLUTIONS [GRAPH: SALES]
As corporations seek new ways to reduce costs and improve productivity, material
handling--the efficient movement and management of inventory--has blossomed into
a multi- billion dollar industry that encompasses a vast array of equipment,
systems and activities. One of the industry's rapidly expanding markets includes
paperless order-picking systems. Real Time Solutions (RTS) is the industry
leader in "pick-to-light" or paperless systems. Marketed under the trade name
EASYpick [REGISTERED TRADEMARK], RTS innovative, computerized system lights up a
control panel to let employees know what product to pick and the quantity.
Customers using EASYpick [REGISTERED TRADEMARK] have reported productivity
increases ranging from 50 to 350 percent, while order fulfillment errors have
dropped by approximately 90 percent.
RTS had a disappointing year in 1994 as both sales and operating income fell
well below 1993 results. Most of the fall-off is attributable to delays in
closing installation contracts. Nevertheless, RTS remains confident that its
technological edge, combined with a more focused sales force, will provide
better results in the future.
A growing U.S. economy will continue to drive interest in warehouse automation.
As a result, RTS anticipates a solid year of growth in 1995. Besides a more
focused sales effort, RTS will introduce two promising products: PUT, a new,
"put-to-light" system designed to accelerate complex cross dock store
distribution; and a receiving and replenishment control system (RCS) which is
fully integrated with the EASYpick [REGISTERED TRADEMARK] system.
10
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME (in thousands except per share data)
UNR INDUSTRIES, INC. AND SUBSIDIARIES for the years ended December 31, 1994, 1993 and 1992
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
NET SALES $372,385 $312,873 $281,776
Cost of products sold 287,975 242,008 217,588
GROSS PROFIT $ 84,410 $ 70,865 $ 64,188
Selling expense 20,884 17,605 16,280
Administrative and general expenses 23,449 20,169 17,605
OPERATING INCOME $ 40,077 $ 33,091 $ 30,303
Insurance recovery -- -- 13,000
Interest income 1,798 1,256 4,062
Interest expense (2,545) (2,884) (2,928)
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES $ 39,330 $ 31,463 $ 44,437
Income tax provision (benefit) 5,800 11,700 (85,400)
INCOME FROM CONTINUING OPERATIONS $ 33,530 $ 19,763 $129,837
Discontinued operations:
Income (loss) from operations, net of tax benefits 295 (979) 46
Loss on dispositions, net of $1,500 and $3,800 tax benefit
in 1994 and 1992, respectively (2,500) -- (6,200)
NET INCOME $ 31,325 $ 18,784 $123,683
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share:
Continuing operations $ .68 $ .42 $ 2.88
Discontinued operations--
Income (loss) from operations .01 (.02) --
Loss on dispositions (.05) -- (.14)
NET INCOME PER SHARE $ .64 $ .40 $ 2.74
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
11
<PAGE>
BALANCE SHEETS (in thousands)
UNR INDUSTRIES, INC. AND SUBSIDIARIES as of December 31, 1994 and 1993
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
ASSETS 1994 1993
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 68,991 $ 1,226
Accounts, notes and other receivables, less allowance
for doubtful accounts of $3,959 in 1994 and $2,637 in 1993 51,311 41,036
Income tax refunds receivable -- 53,000
Inventories, less reserve for LIFO valuation of $8,720 in 1994
and $7,230 in 1993 70,016 57,409
Deferred income taxes 16,000 12,100
Prepaid expenses 2,757 2,750
- ----------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 209,075 167,521
- ----------------------------------------------------------------------------------------------
PLANT AND EQUIPMENT:
Land 6,985 7,162
Buildings 51,074 47,823
Machinery and equipment 104,730 99,584
- ----------------------------------------------------------------------------------------------
162,789 154,569
Less--Accumulated depreciation (98,450) (91,091)
- ----------------------------------------------------------------------------------------------
TOTAL PLANT AND EQUIPMENT 64,339 63,478
OTHER ASSETS:
Deferred income taxes 8,610 16,100
Net assets of discontinued operations 11,244 15,975
Other-primarily goodwill 6,179 7,157
TOTAL ASSETS $299,447 $270,231
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
12
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
CURRENT LIABILITIES:
Short-term borrowings $ -- $ 5,100
Current portion of long-term liabilities 3,470 4,261
Accounts payable 14,063 10,644
Accrued expenses--
Payroll related 10,574 8,163
Insurance related 5,800 4,985
Customer deposits 5,831 3,442
Income taxes 907 442
Other 9,397 8,131
TOTAL CURRENT LIABILITIES 50,042 45,168
LONG-TERM LIABILITIES--NOTES AND CAPITAL LEASES 23,278 21,940
WARRANTS 5,531 9,739
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, authorized--60,000 shares, issued--
51,577 shares in 1994 and 48,842 shares in 1993 516 488
Capital surplus 130,497 117,011
Retained earnings 102,023 79,230
233,036 196,729
Less--631 treasury shares, at cost (2,751) (2,751)
--Notes receivable from officers (9,100) --
--Unearned portion of restricted st (589) (594)
TOTAL STOCKHOLDERS' EQUITY 220,596 193,384
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $299,447 $270,231
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
13
<PAGE>
STATEMENTS OF CASH FLOWS (in thousands)
UNR INDUSTRIES, INC. AND SUBSIDIARIES for the years ended December 31, 1994,
1993 and 1992
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $31,325 $18,784 $123,683
Adjustments for noncash items included in net income--
Depreciation and amortization 9,247 8,864 7,822
Provision for deferred employee compensation 383 211 58
Deferred income tax 3,590 10,900 (90,000)
Discontinued operations charge 2,500 -- 6,200
Insurance settlement -- -- (8,000)
Disposal of plant and equipment 44 42 433
Operating requirements--
Accounts receivable (increase) decrease (10,275) (10,011) 1,806
Income tax refund receivable decrease 52,603 -- --
Inventories (increase) (12,607) (106) (1,240)
Prepaid expenses (increase) decrease (7) (85) 132
Accounts payable and accrued expenses increase (decrease) 11,193 5,845 (11,685)
Net cash provided by operating activities $87,996 $34,444 $29,209
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Real Time Solutions, Inc. (net of cash acquired) $ -- $(3,134) $ --
Purchase of plant and equipment (9,197) (4,790) (4,848)
Proceeds from the sale of plant and equipment 178 248 283
(Increase) decrease in other assets (154) 25 (1,171)
Proceeds from the sale of discontinued operations 1,412 13,757 --
Discontinued operations 818 (7,421) 14,603
Insurance proceeds and sale of receivable -- 8,646 33,718
Net cash provided by (used for) investing activities $(6,943) $7,331 $42,585
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in long-term liabilities $ 547 $(3,871) $(2,849)
(Payment) proceeds of short-term borrowings (5,100) 5,100 --
Dividends paid (9,738) (160,208) (53,745)
Loans to officers (9,100) -- --
Common stock issued 10,103 6,210 3,221
Net cash (used for) financing activities $(13,288) $(152,769) $(53,373)
Net increase (decrease) in cash and cash equivalents $67,765 $(110,994) $ 18,421
Cash and cash equivalents, beginning of period 1,226 112,220 93,799
Cash and cash equivalents, end of period $68,991 $ 1,226 $112,220
- ---------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest $ 2,546 $ 2,587 $ 2,817
- ---------------------------------------------------------------------------------------------------------------
Cash paid during the year for income taxes $ 1,602 $ 2,454 $ 13,430
- ---------------------------------------------------------------------------------------------------------------
Treasury stock issued for the acquisition of Real Time Solutions, Inc. $ -- $ 4,159 $ --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
14
<PAGE>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands except per share
data)
UNR INDUSTRIES, INC. AND SUBSIDIARIES for the years ended December 31, 1994,
1993 and 1992
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK
N/R
SHARES CAPITAL RETAINED RESTRICTED FROM
ISSUED AMOUNT SURPLUS EARNINGS SHARES AMOUNT STOCK OFFICERS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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) $ --
Net Income -- -- -- 31,325 -- -- -- --
Issuance of restricted stock 66 1 377 -- -- -- (378) --
Amortization of restricted
shares -- -- -- -- -- -- 383 --
Notes receivable from
officers for stock purchase 1,650 17 9,100 -- -- -- -- (9,100)
Cash dividends--$.20 per share -- -- -- (9,738) -- -- -- --
Stock options exercised 17 -- 35 -- -- -- -- --
Stock options tax benefit -- -- 31 -- -- -- -- --
Warrants exercised 1,002 10 3,943 1,206 -- -- -- --
BALANCE DECEMBER 31, 1994 51,577 $516 $130,497 $102,023 (631) $(2,751) $(589) $(9,100)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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.
INVENTORIES
Inventories valued using the last-in, first-out ("LIFO") method of determining
cost at the end of the years 1994 and 1993, were $18,330,000 and $14,160,000,
respectively. Under the first-in, first-out ("FIFO") method of determining cost
(which approximates current or replacement cost), these inventories would have
been approximately $8,720,000 and $7,230,000 higher than those reported at the
end of 1994 and 1993, respectively. There was no significant LIFO liquidation
effect on income in the accompanying financial statements. Inventory costs
include material, labor and factory overhead.
<TABLE>
<CAPTION>
Total inventories in 1994 and 1993 included the following classifications (In
Thousands):
- ---------------------------------------------------------------------------
1994 1993
<S> <C> <C>
Work in process and finished products $43,773 $36,423
Raw materials and supplies 26,243 20,986
Total Inventories $70,016 $57,409
- ---------------------------------------------------------------------------
</TABLE>
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.
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.
16
<PAGE>
INCOME TAXES (CONTINUED)
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 of expenditures were made by the Trust in 1992, and the related tax
benefit of $12.1 million was recorded by the Company in that year.
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 ("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 received Federal and state income tax refunds of $52.6 million as a
result of the carry-backs. Based on these developments, the Company recorded a
tax benefit (net of a valuation allowance of approximately $20.0 million) of
$90.0 million or $1.99 per share in the fourth quarter of 1992.
Total income tax expense/(benefit) for the years ended December 31, 1994, 1993,
and 1992, was allocated as follows (In Thousands):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Income from continuing operations $ 5,800 $11,700 $(85,400)
Discontinued operations (1,300) (800) (3,800)
Stockholders equity, for compensation
expense for tax purposes in excess
of amounts recognized for financial
reporting purposes (31) (1,193) (788)
$ 4,469 $ 9,707 $(89,988)
- ----------------------------------------------------------------------------
</TABLE>
Income tax expense/(benefit) attributable to income from continuing operations
consists of a current provision of $1.5 million, a deferred provision of $14.3
million and a reduction in the valuation allowance of $10.0 million.
Income tax expense/(benefit) attributable to income from continuing operations
was $5,800, $11,700 and $(85,400), for the years ended December 31, 1994, 1993
and 1992, respectively, and differed from the U.S. Federal statutory income tax
rate as follows (In Thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
1994 1993 1992
AMOUNT % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C>
Computed statutory provision $ 13,800 35 $11,000 35 $ 15,100 34
Trust payments -- -- -- -- (12,100) (27)
State taxes net of Federal effect 2,000 5 1,800 5 1,600 4
Enacted tax rate change -- -- (1,100) (3) -- --
QSF deduction (Section 468B) -- -- -- -- (110,000) (248)
Valuation allowance (10,000) (25) -- -- 20,000 45
Total provision/(benefit) $ 5,800 15 $11,700 37 $(85,400) (192)
- --------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred liabilities at December 31, 1994, 1993
and 1992 are as follows (In Thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Net operating loss carry-backs $ -- $ -- $54,000
Net operating loss carry-forwards 20,400 39,700 47,500
Tax credit carry-forwards (including general business
credits and alternative minimum tax) 8,500 8,500 8,500
Depreciation (3,500) (3,600) (3,700)
Accrued insurance reserves 3,500 2,900 2,900
Other, net 5,710 700 (2,200)
Less: Valuation allowance (10,000) (20,000) (20,000)
Net deferred tax assets $24,610 $28,200 $87,000
- ------------------------------------------------------------------------------------------
</TABLE>
The Company has available approximately $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. Alternative minimum tax (AMT) credits of approximately
$5.5 million are available to reduce future Federal taxable income over an
indefinite period. As a result of adopting SFAS 109 in 1992, the Company has
recognized the benefit of approximately $98.0 million of its net operating loss
carry-forwards and tax credits realized or expected to be realized through 1996.
The utilization of the net operating loss and credit carry-forwards depends 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. This
valuation allowance has been reduced to $10.0 million as of December 31, 1994.
The reduction in the valuation allowance to $10.0 million relates to
management's judgment concerning the realizability of benefits arising from net
operating loss and credit carry-forwards. The remaining net operating loss
carry-forwards and the general business and AMT tax credits available to the
Company may be recorded into income and equity at a future date.
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 49,318,000 in 1994, 47,369,000 in 1993 and 45,040,000 in 1992. Dilution,
which would result if all outstanding warrants and options were exercised, is
not significant to the net income per share computation.
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
In December, 1990, the Financial Accounting Standards Board issued a new
standard on accounting for postretirement benefits other than pensions,
primarily related to health care and dental benefit coverage. The new standard
requires that the expected cost of these benefits must be charged to expense
during the years that the employees render service. The Company has no material
liability for postretirement benefits other than pensions.
In November, 1992, the Financial Accounting Standards Board issued a new
standard on accounting for postemployment benefits. The new standard requires
that the expected cost of benefits provided to former or inactive employees
after employment but before retirement be recognized on the accrual basis of
accounting. The Company has no material liability for postemployment benefits.
18
<PAGE>
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
1994, 1993, and 1992 was approximately $1,038,000, $839,000 and $806,000,
respectively. The Company has one trustee-administered profit-sharing plan
covering salaried employees. Discretionary contributions of $1,073,000, $998,000
and $975,000 were made and charged to expense in 1994, 1993 and 1992,
respectively. Total pension expense/(benefit) for Company-sponsored plans for
1994, 1993 and 1992 was $271,000, $224,000 and $(33,000), respectively. Pension
expense includes the following components (In Thousands):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Service cost--benefits earned during the period $419 $409 $336
Interest on projected benefit obligations 691 622 492
Actual return on plan assets (805) (768) (863)
Net amortization and deferral (34) (39) 2
Net pension expense (benefit) $271 $224 $(33)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
The status of the plans at the respective year-ends was as follows (In Thousands):
- -----------------------------------------------------------------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Fair market value of plan assets $11,075 $10,270 $ 9,565
Actuarial present value of benefits for services rendered to date:
Accumulated benefit obligation based on salaries
to date, including vested benefits of $8,376, $7,521
and $5,931 in 1994, 1993 and 1992, respectively $ 8,773 $ 7,924 $ 6,084
Additional benefits based on estimated future
salary levels 1,056 878 780
Projected benefit obligations $ 9,829 $ 8,802 $ 6,864
Excess of plan assets over projected
benefit obligations $ 1,246 $ 1,468 $ 2,701
Unrecognized net transitional asset (317) (350) (555)
Unrecognized market (gain) or loss 466 (352) (1,402)
Prepaid pension liability recognized
on the balance sheet at year-end $ 1,395 $ 766 $ 744
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The expected long-term rate of return on plan assets was 8.0%, 7.9% and 8.5% for
1994, 1993 and 1992, 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 7.5% and 4.0% in 1994,
7.2% and 4.0% in 1993 and 7.7% and 4.0% in 1992.
19
<PAGE>
(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.
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.
(3) DISCONTINUED OPERATIONS
In June of 1994, the Company decided to divest itself of the industrial storage
rack business of the Material Handling Division. On February 2, 1995, the
Company announced the sale of this business to the Renco Group, Inc. The net
assets of this operation have been reclassified to "Net assets of discontinued
operations" (Other Assets) in the accompanying balance sheets. The after-tax
$2.5 million provision for estimated loss on disposition includes a write-down
of these assets to estimated net realizable values and the estimated costs of
disposing this operation.
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 $57.6 million, $72.1 million and
$108.9 million in 1994, 1993 and 1992, 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
$6,021,000 at December 31, 1994, and $4,194,000 at December 31, 1993 (see
Note 6).
Future minimum payments for operating leases at December 31, 1994, are
$1,483,000 in 1995, $1,365,000 in 1996, $734,000 in 1997, $514,000 in 1998 and
$1,736,000 after 1998. Rental expense under operating leases was approximately
$2,121,000 in 1994, $1,792,000 in 1993 and $1,832,000 in 1992. Some of the
leases contain renewal options for varying periods from two to five years.
20
<PAGE>
(6) LONG-TERM BORROWINGS
Total borrowings of the Company at December 31, 1994 and 1993, consisted of the
following (In Thousands):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1994 1993
<S> <C> <C>
Mortgage notes payable at 7.0% to 11% $19,758 $20,927
Capital leases 6,021 4,194
Industrial Revenue Bonds 644 705
Other notes payable 325 375
Short-term borrowings -- 5,100
Total $26,748 $31,301
- ----------------------------------------------------------------------------
Classified in the balance sheets as follows-
Short-term borrowings $ -- $ 5,100
Current portion of long-term liabilities 3,470 4,261
Notes and capital leases 23,278 21,940
Total $26,748 $31,301
- ----------------------------------------------------------------------------
</TABLE>
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
$22,914,000 and $25,163,000 as of December 31, 1994 and 1993.
In October 1994, the Company expanded its line of credit for short-term
borrowings with a bank from $20.0 million to $35.0 million. 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 1-1/4%, at the
Company's option. There were no outstanding borrowings at December 31, 1994, and
at December 31, 1993, outstanding borrowings totalled $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 $3,470,000 in 1995, $4,196,000 in 1996, $3,559,000 in 1997,
$3,583,000 in 1998, $3,612,000 in 1999 and $8,328,000 thereafter.
(7) 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 197,563 and 133,096 shares of restricted stock outstanding at
December 31, 1994 and 1993, respectively. Of the current shares outstanding,
110,000 were awarded to the Company's President and CEO in connection with his
employment agreement and 87,563 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 $383,000 in 1994 and
$211,000 in 1993.
21
<PAGE>
(8) STOCK OPTION PLAN
The Company had two stock option plans at December 31, 1994, the Key Executives'
Stock Option Plan and the 1994 Stock Option Plan.
The Key Executives' Stock Option Plan was approved by the shareholders of the
Company on July 12, 1990. This Plan provides for 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 this 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, 1994, 1,153,000 common
shares were available for granting under this Plan. There are no outstanding
options under this Plan at December 31, 1994.
The 1994 Stock Option Plan was approved by the shareholders of the Company on
November 1, 1994. This Plan provides for granting of non-qualified options and
reserves for the issuance of up to 500,000 shares. Outstanding options granted
under this Plan are exercisable at a price equal to the fair market value at the
date of grant, reduced by the amount of any "Extraordinary Dividend" made after
the date of grant, and expire in five years. Each option is exercisable upon the
attainment of certain stock price thresholds, adjusted for extraordinary
dividends, or fifty four months, whichever comes earlier. At December 31, 1994,
95,000 common shares were available for granting under this Plan.
Information relating to these Plans are summarized below (In Thousands Except
Per Share Data):
<TABLE>
<CAPTION>
Average
Shares Option
Subject To Price Per
Options Share
- -----------------------------------------------------------------------
<S> <C> <C>
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
Granted 405 5.525
Exercised (17) 2.078
Canceled -- --
Outstanding December 31, 1994 405 $5.525
- -----------------------------------------------------------------------
</TABLE>
(9) 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 sheets and is
being amortized over a seven-year period. Amortization expense for 1994 was
$1,097,000 and $823,000 in 1993.
22
<PAGE>
(10) 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
sheets. At December 31, 1994 and 1993, the number of outstanding convertible
warrants were 1,316,881 and 2,318,750, 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, 1994 and 1993, 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 March 3, 1995, the Company declared a regular dividend of $.25 per share and
an extraordinary dividend of $1.30 per share to be paid on April 17, 1995 to
Stockholders of record on April 3, 1995.
On April 1, 1994, the Company paid a regular 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 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.
(11) RELATED PARTY TRANSACTIONS
The Company presently holds three notes receivable for a total of $9,100,000
from executive officers of the Company. These notes are related to the 1994
Executive Stock Purchase Plan approved by shareholders of the Company on
November 1, 1994. Under the Plan, executive officers purchased 1,650,000 shares
of common stock from the Company, at the then fair market value. Shares were
paid for in cash in the amount of the par value of the stock and the balance in
promissory notes due in three years. The notes are interest free (although
interest is imputed for tax purposes), except in the event a participant resigns
from the Company, is terminated for cause or, if the stock is sold within three
years, the notes become due and interest at the applicable Federal rate is
applied retroactively from the date of the notes. Dividends, net of Federal and
state taxes, are applied to the principal of the notes. If the stock is not
sufficient to satisfy the loan balance at maturity, the participant can transfer
the shares in partial payment of the note and is personally liable for that
portion of the note exceeding 25% of the loan balance.
23
<PAGE>
(12) 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 consists
principally of cash, prepaid expenses and other assets. (In Thousands):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
NET SALES FROM CONTINUING OPERATIONS 1994 1993 1992
<S> <C> <C> <C>
Industrial $179,772 $160,522 $141,061
Commercial 192,613 152,351 140,715
$372,385 $312,873 $281,776
- -------------------------------------------------------------------------------------------------
OPERATING INCOME FROM CONTINUING OPERATIONS
Industrial $18,201 $17,860 $17,591
Commercial 27,833 21,844 18,125
Corporate Expenses (5,957) (6,613) (5,413)
Operating Income $40,077 $33,091 $30,303
Insurance Recovery -- -- 13,000
Interest income (expense), net (747) (1,628) 1,134
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $39,330 $31,463 $44,437
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Identifiable Assets Capital Depreciation
At Year-End Expenditures And Amortization
1994 1993 1992 1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Industrial $96,734 $90,310 $77,904 $2,579 $1,380 $1,110 $5,441 $5,216 $4,362
Commercial 109,831 92,026 89,526 6,437 3,320 3,678 3,717 3,527 3,325
Corporate 92,882 87,895 223,619 181 90 60 89 121 135
$299,447 $270,231 $391,049 $9,197 $4,790 $4,848 $9,247 $8,864 $7,822
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
QUARTERLY RESULTS OF OPERATIONS (in thousands except per share data)
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
First Second Third Fourth Year
<S> <C> <C> <C> <C> <C>
1994
Net Sales $84,816 $91,054 $94,169 $102,346 $372,385
Gross profit 18,270 19,000 20,701 26,439 84,410
Operating income 7,881 8,795 10,098 13,303 40,077
Income from
continuing operations 4,446 5,004 6,005 18,075 33,530
Discontinued operation:
Income (loss) from operation (110) 405 -- -- 295
Loss on disposition -- (2,500) -- -- (2,500)
Net Income $4,336 $2,909 $6,005 $18,075 $31,325
- -------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share
Continuing operations $.09 $.10 $.12 $.36 $.68
Discontinued operation:
Income from operation -- .01 -- -- .01
Loss on disposition -- (.05) -- -- (.05)
Net Income Per Share $.09 $.06 $.12 $.36 $.64
- -------------------------------------------------------------------------------------------------------
1993
Net Sales $71,141 $76,703 $81,235 $83,794 $312,873
Gross Profit 13,717 18,540 18,643 19,965 70,865
Operating income 4,739 7,904 8,864 11,584 33,091
Income from
continuing operations 2,813 4,403 6,146 6,401 19,763
Discontinued operations:
Income (loss) from operation (229) (616) 156 (290) (979)
Loss on disposition -- -- -- -- --
Net Income $2,584 $3,787 $6,302 $6,111 $18,784
- -------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share
Continuing operations $.07 $.09 $.13 $.13 $.42
Discontinued operations:
Loss from operation (.01) (.01) -- -- (.02)
Loss on disposition -- -- -- -- --
Net Income Per Share $.06 $.08 $.13 $.13 $.40
- -------------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
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, 1994 and 1993,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1994. 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
bymanagement, 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 financial statements referred to above present fairly, in
all material respects, the financial position of UNR Industries, Inc. and
Subsidiaries as of December 31, 1994 and 1993 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 2, 1995.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR 1994 VERSUS YEAR 1993
NET SALES FROM CONTINUING OPERATIONS. Net sales from continuing operations in
1994 were $372.4 million versus $312.9 million in 1993 or an increase of 19.0%.
The sales increase is due primarily to greater volume of steel tubing, greatly
improved sales of communication towers and shelters and higher volume of
shopping cart sales over the prior year. The 1994 sales are the highest in the
Company's history and the third consecutive year of record sales.
GROSS PROFIT. In 1994, gross profit as a percentage of sales was 22.7%, just
above the prior year's 22.6%. Although sales volume grew substantially,
increases in the cost of raw materials (primarily steel) and competitive pricing
pressures kept margins flat. In contrast to last year, Real Time Solutions, Inc.
(RTS) experienced weak sales, had a down year and the resulting drop in gross
profit negatively impacted results.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) in 1994 were 11.9% of sales versus 12.1% in 1993.
SG&A in 1993 included a $2.9 million gain relating to a patent infringement
settlement in the shopping cart division. Excluding this gain, 1993 SG&A was
13.0% of sales. The reduction is due to cost control measures and to cost
reduction efforts made during the year.
INTEREST EXPENSE. Despite generally higher debt levels, interest expense
decreased from the prior year, due to the renegotiation of an outstanding
mortgage at a lower interest rate and to generally lower rates prevailing during
the year versus last year.
INTEREST INCOME. Interest income increased over the prior year due to generally
greater levels of available cash offset somewhat by lower prevailing interest
rates during 1994 versus 1993.
INCOME TAXES. See footnote 1 for a complete discussion of UNR taxes.
INTERNATIONAL. International sales, which represented 2.8% of sales of the
Company, increased slightly from the prior year as increased sales of towers
were offset by decreased sales of shopping carts. The Hong Kong and Australian
shopping cart operations have recently been closed, but the Company will
continue to do business in these areas through sales agents.
SEGMENTS. The Industrial Segment (principal products of this segment are steel
tubing and computerized warehouse control systems) sales increased 12.0% in 1994
to $179.8 million from $160.5 in 1993. This increase is due entirely to greater
volume of steel tube sales at the Leavitt Tube Division. RTS (computerized
warehouse controls) sales decreased primarily because of delays in finalizing
installation contracts. Operating income for 1994 was $18.2 million versus $17.9
million in the prior year or an increase of 1.9%. A 15.9% increase at Leavitt
Tube was offset by a decrease at RTS. Leavitt Tube achieved this increase in
operating income despite a cost increase of approximately 10.0% in hot and cold
rolled steel coils, its largest single element of cost.
The Commercial Segment (principal products of this segment are shopping carts,
steel towers and concrete shelters for the telecommunications industry and
stainless steel and composite sinks) sales increased 26.4% in 1994 to $192.6
million from $152.4 million in 1993. Although all businesses in this segment
reported higher sales, the increase is due primarily to greater sales volume of
communication towers and shelters. Operating income for this segment was $27.8
million in 1994 versus $21.8 million in 1993, an increase of 27.4%. This
increase, as with the segment's sales increase, was due largely to the strong
performance in the tower and shelter business.
YEAR 1993 VERSUS YEAR 1992
NET SALES FROM CONTINUING OPERATIONS. Net sales from continuing operations in
1993 were $312.9 million versus $281.8 million in 1992 or an increase of 11.0%.
Although all of the Company's divisions reported higher sales for the year, the
increase in sales is due largely to the increase in sales volume of steel tubing
and communication towers and shelters sales over the prior period.
GROSS PROFIT. In 1993, gross profit as a percentage of sales was 22.6% as
compared with 22.8% in the prior year. This decrease largely related to lower
margins due to rapidly escalating steel costs and competitive pricing pressure
in the tower market. Also contributing to this decrease was 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
Division were a positive offset to the lower margins in the other divisions.
27
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) in 1993 were 12.1% of sales versus 12.0% in 1992.
The 1993 SG&A included a $2.9 million gain relating to a patent infringement
settlement in the shopping cart division. Excluding this gain, SG&A was 13.0% of
sales in 1993, versus 12.0% in 1992 or an increase of 8.3%. This increase was
due mainly to additional expenses of approximately $4.0 million at Real Time
Solutions, Inc., offset by a reduction in expenses at the 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 for a complete discussion of UNR's taxes.
INTERNATIONAL. International sales, although a small part of overall sales
volume, increased 50.8% from the prior year. Sales of shopping carts into Japan
and Hong Kong increased as well as the sales of towers into the Mexican market.
The Company continued to explore international opportunities as they presented
themselves. The overall impact of foreign operations on 1993's results was
minimal.
SEGMENTS. The Industrial Segment (principal products of this segment are steel
tubing and computerized warehouse control systems) sales increased 13.8% in 1993
to $160.5 million from $141.1 million in 1992. The sales increase was due mainly
to a 6.0% increase in volume of steel tube sales, and the additional sales
achieved through the acquisition of Real Time Solutions, Inc. Sales for RTS
substantially exceeded first year expectations, as its paperless picking system
was widely received in the marketplace, with extremely positive results.
Operating income in 1993 was $17.9 million versus $17.6 million in 1992 or an
increase of 1.5%. As with the sales increase, this increase was the result of
operating income 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 an accounting charge of $2.7 million, due to escalating steel prices
as compared to zero in 1992.
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 8.3% 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 was 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 20.5%. As
previously mentioned the 1993 results included a $2.9 million gain from a patent
infringement settlement for the Commercial Products Division. Excluding the $2.9
million gain, operating income increased 4.5%.
LIQUIDITY AND CAPITAL RESOURCES. Cash flow during 1994 was a positive $67.8
million which included a payment of $9.7 million in dividends and the receipt of
$52.6 million of income tax refunds. The Company's financial condition continues
to be strong with working capital of $159.0 million. The Company's working
capital ratio, a measure of short term liquidity, increased from 3.7 to 1 in
1993 to 4.2 to 1 in 1994. Both measures are considered strong indicators of
liquidity.
Capital expenditures were $9.2 million in 1994 versus $4.8 million in 1993.
Capital expenditures in 1994 included the expansion of the Rohn plant in
Bessemer, Alabama, which produces concrete and fiberglass shelters and the
completion of the composite sink facility of the Home Products Division in
Ruston, Louisiana. The Company's current operating plan calls for capital
spending in 1995 to be approximately $10.0 million, which approximates
depreciation.
The Company expects to meet its ongoing working capital and capital expenditure
requirements from operating cash flows, borrowings under a $35.0 million
short-term credit facility and the proceeds from the sale of the Unarco Material
Handling Division. 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.
28
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS CORPORATE OFFICERS DIVISIONAL MANAGEMENT
<S> <C> <C>
- - Thomas A. Gildehaus Thomas A. Gildehaus Roy A. Herman
President and Chief Executive Officer President and Chief Executive Officer President, UNR LEAVITT
Manufacturer of structural and
- -+ Charles M. Brennan III Henry Grey mechanical tubing
Chairman and Chief Executive Senior Vice President
Officer of L.E. Myers Co. Chief Fiancial Officer and Treasurer Dwight Rohn
President, UNR ROHN
- -* Darius W. Gaskins, Jr. Victor E. Grimm Manufacturer of communication
Chairman, Leaseway Transportation Vice President, Corporate towers and shelters and livestock
Corp. Secretary and General Counsel confinement equipment
- -* Gene Locks John A. Saladino Russel D. Begley
Chairman of the board of UNR Controller and ASsistant Secretary President, UNARCO COMMERCIAL
Industries, Inc. PRODUCTS
Partner, Greitzer & Locks Michael F. Boyle Manufacturer of shopping carts and
Director of Taxation and food service equipment
- -+ Ruth R. McMullin Assistant Secretary
Managment Fellow John Buske
Yale School of Management President UNR HOME PRODUCTS
Manufacturer of stainless steel and
+ Thomas E. Meagher CORPORATE DATA composite sinks
Chairman, Howell Tractor & Transter Agent and Registrar
Equipment Company First Chicago Trust Company William C. Dixon
One First National Plaza President, REAL TIME
- Robert B. Steinberg Chicago, Illinois 60670 SOLUTIONS
Partner, Rose Klein & Marias Manufacturer of computeriaed
Auditors warehouse control systems
- -* William J. Williams Arthur Andersen LLP
Retire Chairman, The Huntington 33 West Monroe Street
National Bank Chicago, Illinois 60603
Dwight Rohn General Offices
Director Emeritus 332 South Michigan Avenue
President, UNR Rohn Chicago, Illinois 60604
<FN>
- Member, Executive Committee
* Member, Compensation Committee
+ Member, Audit Committee
</TABLE>
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,
Senior Vice President and Chief Financial Officer, 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.
<PAGE>
EXHIBIT 21
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION
- ------------------------------ ------------------------------
<S> <C>
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 Realty, Inc. 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
</TABLE>
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports dated March 2, 1995, included or incorporated by reference in this
Form 10-K, into the Company's previously filed Registration Statement File No.
33-51732.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 27, 1995.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000315641
<NAME> UNR INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 68,991
<SECURITIES> 0
<RECEIVABLES> 51,311
<ALLOWANCES> 3,959
<INVENTORY> 70,016
<CURRENT-ASSETS> 209,075
<PP&E> 64,339
<DEPRECIATION> 98,450
<TOTAL-ASSETS> 299,447
<CURRENT-LIABILITIES> 50,042
<BONDS> 23,278
<COMMON> 516
0
0
<OTHER-SE> 220,080
<TOTAL-LIABILITY-AND-EQUITY> 299,447
<SALES> 372,385
<TOTAL-REVENUES> 372,385
<CGS> 287,975
<TOTAL-COSTS> 44,333
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 747
<INCOME-PRETAX> 39,330
<INCOME-TAX> 5,800
<INCOME-CONTINUING> 33,530
<DISCONTINUED> 2,205
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,325
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
