<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM________________ TO ____________________
COMMISSION FILE NUMBER 1-8009
UNR INDUSTRIES, INC.
(DELAWARE)
332 South Michigan Avenue
Chicago, Illinois 60604-4385
I.R.S. Employer Identification Number 36-3060977
TELEPHONE NUMBER (312) 341-1234
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Outstanding as of
July 31, 1995
-------------
Common Stock $.01 par value............. 52,162,769
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
1995 1994 1995 1994
------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $ 100,081 $ 91,054 $201,294 $ 175,870
Cost of products sold 76,426 72,054 153,444 138,600
------------ -------- -------- ---------
Gross Profit 23,655 19,000 47,850 37,270
Selling, general & admin.
expenses 10,459 10,205 21,690 20,594
------------ -------- --------- --------
Operating Income 13,196 8,795 26,160 16,676
Interest income (expense), net (201) (291) 208 (726)
------------ -------- --------- --------
Income from continuing operations
before income taxes 12,995 8,504 26,368 15,950
Income tax provision 5,200 3,500 10,700 6,500
------------ -------- -------- --------
Income from continuing operations 7,795 5,004 15,668 9,450
Discontinued operation:
Income from operation,
net of tax --- 405 --- 295
Loss on disposition,
net of $1,500 tax benefit --- (2,500) --- (2,500)
------------ --------- -------- --------
NET INCOME $ 7,795 $ 2,909 $ 15,668 $ 7,245
------------ --------- -------- --------
------------ --------- -------- --------
Net Income Per Share:
Continuing operations $ .15 $ .10 $ .30 $ .19
Discontinued operation:
Income from operation --- .01 --- .01
Loss on disposition --- (.05) --- (.05)
------------ --------- --------- --------
NET INCOME PER SHARE $ .15 $ .06 $ .30 $ .15
------------ --------- --------- --------
------------ --------- --------- --------
Weighted average number of shares
outstanding 51,890 48,763 51,511 48,569
</TABLE>
1
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
ASSETS 1995 1994
------ ------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 11,532 $ 68,991
Accounts, notes and other receivables, less allowance for
doubtful accounts of $4,200 in 1995 and $4,000 in 1994 49,222 51,311
Inventories:
Work-in-process and finished goods 51,040 43,773
Raw materials and supplies 28,644 26,243
Deferred income taxes 15,485 16,000
Prepaid expenses 2,643 2,757
---------- -----------
TOTAL CURRENT ASSETS 158,566 209,075
---------- -----------
PLANT AND EQUIPMENT, at cost 165,440 162,789
Less: Accumulated depreciation (102,635) (98,450)
---------- ----------
TOTAL PLANT AND EQUIPMENT 62,805 64,339
---------- ----------
OTHER ASSETS
Deferred income taxes --- 8,610
Net assets of discontinued operations --- 11,244
Other 8,425 6,179
---------- ----------
TOTAL ASSETS $ 229,796 $ 299,447
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 8,650 $ 14,063
Accrued expenses 30,695 31,602
Current portion of long-term liabilities 3,493 3,470
Accrued income taxes 1,761 907
---------- ----------
TOTAL CURRENT LIABILITIES 44,599 50,042
---------- ----------
LONG-TERM LIABILITIES 20,845 23,278
---------- ----------
WARRANTS --- 5,531
---------- ----------
STOCKHOLDERS' EQUITY
Common stock 524 516
Capital surplus 66,750 130,497
Retained earnings 106,297 102,023
Treasury stock (1,631) (2,751)
Notes receivable from officers (7,104) (9,100)
Unearned portion of restricted stock (484) (589)
---------- -----------
TOTAL STOCKHOLDERS' EQUITY 164,352 220,596
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 229,796 $ 299,447
---------- -----------
---------- -----------
</TABLE>
2
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES 1995 1994
--------- ---------
<S> <C> <C>
Net Income $ 15,668 $ 7,245
Adjustments for noncash items included in net income-
Depreciation and amortization 4,863 4,872
Deferred income taxes 9,125 5,770
Provision for deferred employee compensation 82 140
Operating requirements-
Accounts receivable (increase) (612) (4,715)
Income tax refund receivable decrease --- 52,603
Inventories (increase) (9,668) (12,305)
Prepaid expenses decrease 114 378
Accounts payable & accrued expenses increase (decrease) (7,237) 5,600
---------- ----------
Net cash provided by operating activities $ 12,335 $ 59,588
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment $ (2,756) $ (3,543)
Proceeds from the sale of plant and equipment --- 176
(Increase) decrease in other assets (118) 31
Discontinued operations 13,015 (140)
---------- ----------
Net cash provided by (used for) investing activities $ 10,141 $ (3,476)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) in debt and lease obligations $ (2,411) $ (545)
Payment of short-term borrowings --- (5,100)
Dividends paid (80,211) (9,738)
Repayment of officers loan 1,995 ---
Issuance of common stock 692 547
---------- ----------
Net cash (used for) financing activities $ (79,935) $ (14,836)
---------- ----------
Net increase (decrease) in cash and cash equivalents $ (57,459) $ 41,276
Cash & cash equivalents, beginning of period 68,991 1,226
---------- ----------
Cash & cash equivalents, end of period $ 11,532 $ 42,502
---------- ----------
---------- ----------
Cash paid during the period for interest $ 1,257 $ 1,277
---------- ----------
---------- ----------
Cash paid during the period for income taxes $ 602 $ 888
---------- ----------
---------- ----------
</TABLE>
3
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Principles of Consolidation:
The financial statements include the consolidated accounts of UNR
Industries, Inc. and its subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated in consolidation.
(2) Income Taxes:
On December 21, 1992, the Internal Revenue Service issued final regulations
under Section 468B "Special Rules for Designated Settlement Funds." The Section
468B regulations deal with the tax treatment of the Company's 1989 transfer of
29.4 million shares of UNR stock to the UNR Asbestos-Disease Claims Trust.
Based on these regulations, the Company and Trust elected to treat the Trust as
a Qualified Settlement Fund on January 1, 1993, which entitled the Company to a
tax deduction equivalent to the value of the stock held by the Trust on that
date. This deduction substantially reduced the Company's 1993 income tax
liability and generated tax loss carry-backs and carry-forwards. The Company
received a Federal income tax refund of approximately $48.1 million in the first
quarter of 1994 and a state income tax refund of approximately $4.5 million in
the second quarter of 1994 as a result of these carry-backs.
At December 31, 1994, the Company has available $52.0 million of net
operating loss carry-forwards to offset future taxable income through 2008. The
Company also has general business tax credits of $3.0 million which are
available to reduce future Federal income taxes through 2002. A portion of
these credits begin to expire starting in 1997, to the extent not utilized by
that time. Alternative minimum tax credits of approximately $5.5 million are
available to reduce future Federal income taxes over an indefinite period.
In the fourth quarter of 1994, the Company reversed $10.0 million (or $.20
per share) of the valuation allowance recorded in the fourth quarter of 1992.
This reversal was made based upon management's judgment regarding the
realizability of the net operating loss and credit carry-forwards.
(3) Net Income Per Share:
Net income per share is based on the weighted average number of common
shares outstanding during each period. Dilution, which would result if all
outstanding warrants and options were exercised, is not significant to the net
income per share computation.
(4) Treasury Stock:
In 1990, the Company announced that its Board of Directors had authorized
the acquisition, through both negotiated transactions involving large blocks and
open market purchases, of up to 1.5 million shares of its common stock to be
held as treasury shares and be available to meet requirements of its Key
Executives' Stock Option Plan and other corporate purposes. As of June 30,
1995, 1,133,565 shares have been purchased.
(5) Dividends Declared:
On April 17, 1995, the Company paid a regular cash dividend of $.25 per
share and an extraordinary dividend of $1.30 per share to stockholders of record
as of the close of business on April 3, 1995. On April 1, 1994, the Company
paid a regular cash dividend of $.20 per share to stockholders of record as of
the close of business on March 18, 1994.
(6) Inventories:
The interim determination of inventories under the LIFO method is based on
management's estimates of the expected year-end inventory levels and costs, and
as such, interim financial results are subject to final
4
<PAGE>
year-end inventory amounts. Inventories as presented on the balance sheets are
net of a reserve for LIFO valuation of $9.2 million at June 30, 1995, and $8.7
million at December 31, 1994.
(7) Discontinued Operation:
On January 31, 1995, the Company entered into a definitive agreement to
sell its industrial storage rack business to The Renco Group, Inc., a private
holding company. This sale was consummated on March 31, 1995. Net assets of
this operation for the prior year are classified as "Net assets of discontinued
operations" in the accompanying balance sheets.
(8) Basis of Reporting for Interim Financial Statements:
The unaudited financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report and Form 10-K for the year ended December 31, 1994.
The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary for fair statement of the results of operations for
the three- and six-month periods ended June 30, 1995, and 1994. Results of
operations for interim periods are not necessarily indicative of results to be
expected for an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's 1994 Annual Report and Form 10-K contain management's
discussion and analysis of financial condition and results of operations for the
year ended December 31, 1994. The following discussion and analysis describes
changes in the Company's financial condition from December 31, 1994, and the
Company's financial position at that date. Trends are discussed to the extent
known and considered relevant. The analysis of results of operations compares
the three- and six-month periods ended June 30, 1995, with the corresponding
period of 1994.
RESULTS OF OPERATIONS
Second quarter of 1995 versus second quarter of 1994:
Net sales increased 9.9% to $100.1 million from $91.1 million in the prior
year. Operating income was $13.2 million for the second quarter of 1995 versus
$8.8 million for the same period last year, or an increase of 50.0%. Net income
was $7.8 million or $.15 per share versus $2.9 million or $.06 per share last
year. Prior year second quarter results included an after-tax charge of $2.5
million or $.05 per share relating to the discontinuance of the industrial
storage rack division.
5
<PAGE>
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30
1995 1994
---------- ----------
<S> <C> <C>
NET SALES:
Industrial $ 40,160 $ 47,362
Commercial 59,921 43,692
---------- ----------
Total $ 100,081 $ 91,054
---------- ----------
---------- ----------
OPERATING INCOME:
Industrial $ 4,290 $ 4,855
Commercial 10,285 5,411
Corporate Expense (1,379) (1,471)
---------- ----------
Total $ 13,196 $ 8,795
---------- ----------
---------- ----------
</TABLE>
The Industrial segment (principal products of this segment are steel tubing
and computerized warehouse control systems) reported net sales of $40.2 million
for the second quarter of 1995 versus $47.4 million reported in the same period
last year, or a decrease of 15.2%. The decrease in sales is due entirely to the
steel tube division.
Operating income of the Industrial segment decreased 11.6% to $4.3 million
for the second quarter of 1995 versus $4.9 million for the same period last
year. This decrease is due to a slight slowdown in the economy and additional
competition has come on line in the structural tube market, both of which have
affected results of the steel tube division.
The Commercial segment (principal products of this segment are shopping
carts, steel towers and shelters for the communications industry, and stainless
steel and composite sinks) reported net sales of $59.9 million for the second
quarter of 1995 versus $43.7 million reported in the same period last year or an
increase of 37.1%. The increase in Commercial segment sales is due to the tower
division as continued strong growth within the wireless communication industry
which has resulted in high demand for the tower division's products.
Operating income for the Commercial segment was $10.3 million for the
second quarter of 1995 versus $5.4 million for the same period last year or an
increase of 90.1%. As with sales, this increase is due to strong results of the
tower division.
Selling, general and administrative expenses were $10.5 million or 10.5% of
sales for 1995 versus $10.2 million or 11.2% of sales in 1994. This percentage
reduction reflects cost cutting measures taken throughout the Company and the
resulting ability to produce greater sales with less costs.
Net interest expense in both periods includes the interest earned on short-
term investments reduced by interest paid on secured debt. The net expense
decrease is due to higher interest rates earned on investments in the current
quarter versus last year and less debt outstanding.
Income from continuing operations in the second quarter of 1995 was $7.8
million or $.15 per share versus $5.0 million or $.10 per share for the same
period last year. This increase is due primarily to the strong results at our
tower division.
6
<PAGE>
RESULTS OF OPERATIONS
First six months of 1995 versus first six months of 1994:
Net sales increased 14.5% to $201.3 million from $175.9 million in the
prior year. Operating income was $26.2 million for the first six months of 1995
versus $16.7 million in the same period last year or an increase of 56.9%. Net
income was $15.7 million or $.30 per share in this year's first half versus $7.2
million or $.15 per share in the prior year's first half. Prior year first half
results include the previously mentioned $2.5 million or $.05 per share charge
for the discontinuance of the industrial storage rack division.
The following table shows net sales and operating income by industry
segment (In Thousands):
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
1995 1994
---------- ----------
<S> <C> <C>
NET SALES:
Industrial $ 87,164 $ 91,236
Commercial 114,130 84,634
---------- ---------
Total $ 201,294 $ 175,870
---------- ---------
---------- ---------
OPERATING INCOME:
Industrial $ 9,887 $ 9,096
Commercial 19,098 10,413
Corporate Expense (2,825) (2,833)
---------- ---------
Total $ 26,160 $ 16,676
---------- ---------
---------- ---------
</TABLE>
The Industrial segment reported net sales of $87.2 million for the first
six months of 1995 versus $91.2 million reported in the same period last year,
or a decrease of 4.5%. This decrease is due entirely to the steel tube
division.
Operating income for the Industrial segment increased 8.7% to $9.9 million
for the first six months of 1995 versus $9.1 million reported for the first six
months of 1994. This increase is due primarily to improved results at our
computerized warehouse control system division, although the steel tube division
also reported an increase for the first six months of 1995 versus 1994.
The Commercial segment reported net sales of $114.1 million for the first
six months of 1995 versus $84.6 million reported in the same period last year or
an increase of 34.9%. The tower division accounts for the increase in sales in
this segment.
Operating income for the Commercial segment for the first six months of
1995 was $19.1 million versus $10.4 million reported in the same period last
year. Increased sales of towers and shelters has resulted in double digit
earnings growth at the tower division.
Selling, general and administrative expenses were $21.7 million or 10.8% of
sales for 1995 versus $20.6 million or 11.7% of sales in 1994.
Net interest income (expense) is income in the first half of 1995 versus
expense for the same period in the prior year due to generally higher levels of
available cash.
Income from continuing operations was $15.7 million or $.30 per share in
the first half of 1995 versus $9.5 million or $.19 per share for the same
period last year.
7
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at June 30, 1995,
and December 31, 1994:
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
<S> <C> <C>
Working Capital (in millions) $114.0 $159.0
Working Capital Ratio 3.5 to 1 4.2 to 1
</TABLE>
The Company's financial condition continues to be strong at the end of the
second quarter of 1995, with working capital of $114.0 million at June 30, 1995,
as compared to $159.0 million at December 31, 1994. The decline in working
capital is due to the declaration of the $.25 regular and $1.30 extraordinary
dividend totalling approximately $80.2 million. The Company's working capital
ratio, a measure of short-term liquidity decreased from 4.2 to 1 to 3.5 to 1.
Both measures are considered strong indicators of liquidity. The Company
expects that it will meet its ongoing working capital and capital expenditure
requirements from operating cash flows and borrowings under a $35.0 million
short-term credit facility. In addition, the Company's strong unleveraged
balance sheet allows it access to funds, if needed, from the capital markets.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the May 4, 1995, Annual Meeting of UNR Industries, Inc., the following
matters were voted upon and approved:
(1) The following nominees were elected as Directors to serve until the
1996 Annual Meeting or until their successors are elected and qualify:
<TABLE>
<CAPTION>
VOTES FOR VOTES WITHHELD
--------- --------------
<S> <C> <C>
Charles M. Brennan III 48,449,801 16,013
Darius W. Gaskins, Jr. 48,450,901 14,913
Thomas A. Gildehaus 48,450,901 14,913
Gene Locks 48,415,138 50,676
Ruth R. McMullin 48,443,101 22,713
Thomas F. Meagher 48,449,301 16,513
Robert B. Steinberg 48,412,568 53,246
William J. Williams 49,449,101 22,713
</TABLE>
(2) Approval of the 1994 Nonemployee Director Stock Ownership Plan:
<TABLE>
<S> <C> <C>
Votes for - 47,406,518
Against - 863,058
Abstain - 196,238
Broker Non Votes - 0
</TABLE>
8
<PAGE>
(3) Ratification of the appointment of the firm of Arthur Andersen LLP as
the Company's independent public accountant for 1995:
<TABLE>
<S> <C> <C>
Votes for - 48,407,739
Against - 21,336
Abstain - 36,739
Broker Non Votes - 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
2. Plan of Reorganization incorporated herein by reference from
Exhibit A of the 1989 first quarter Form 10-Q.
4. Warrant Agreement (including form of warrant) issued pursuant to
the provisions of Article III of the Company's Consolidated Plan
of Reorganization incorporated herein by reference from Exhibit A
of the 1989 Form 10-K.
10. None
11. The computation can be determined from the report.
15. None
18. None
19. None
22. None
23. None
24. None
27. Financial data schedule.
(B) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNR INDUSTRIES, INC.
DATED: JULY 31, 1995 /S/ HENRY GREY
-----------------------------------
Henry Grey
Senior Vice President-Finance, Treasurer & Chief
Financial Officer
DATED: JULY 31, 1995 /S/ JOHN A. SALADINO
-----------------------------------
John A. Saladino
Controller & Assistant Secretary
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<CIK> 0000315641
<NAME> UNR INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 11,532
<SECURITIES> 0
<RECEIVABLES> 53,451
<ALLOWANCES> 4,229
<INVENTORY> 79,684
<CURRENT-ASSETS> 158,566
<PP&E> 165,440
<DEPRECIATION> 102,635
<TOTAL-ASSETS> 229,796
<CURRENT-LIABILITIES> 44,599
<BONDS> 20,845
<COMMON> 524
0
0
<OTHER-SE> 163,828
<TOTAL-LIABILITY-AND-EQUITY> 229,796
<SALES> 201,294
<TOTAL-REVENUES> 201,294
<CGS> 153,444
<TOTAL-COSTS> 21,690
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (208)
<INCOME-PRETAX> 26,368
<INCOME-TAX> 10,700
<INCOME-CONTINUING> 15,668
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,668
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
