<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, 1996
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
AUGUST 5, 1996
-----------------
Common Stock $.01 par value................ 52,435,160
<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
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 37,857 $ 41,080 $ 68,814 $ 78,260
Cost of products sold 26,404 28,735 48,113 54,851
---------- ---------- ---------- ----------
Gross Profit 11,453 12,345 20,701 23,409
Selling, general & admin.
expenses 3,794 3,821 7,227 7,687
---------- ---------- ---------- -----------
Operating Income 7,659 8,524 13,474 15,722
Interest income (expense), net ( 56) 268 (57) 1,156
---------- ---------- ---------- -----------
Income from continuing operations
before income taxes 7,603 8,792 13,417 16,878
Income tax provision 3,000 3,500 5,300 6,700
---------- ---------- ---------- -----------
Income from continuing operations 4,603 5,292 8,117 10,178
Income from discontinued operations 2,029 2,502 3,441 5,489
---------- ---------- ---------- -----------
Net Income $ 6,632 $ 7,794 $ 11,558 $ 15,667
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Net Income Per Share:
Continuing operations $ .09 $ .10 $ .16 $ .20
Discontinued operations .04 .05 .07 .11
---------- ---------- ---------- -----------
Net Income Per Share $ .13 $ .15 $ .23 $ .31
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
Weighted average number of shares
outstanding 52,400 51,890 52,320 51,511
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In Thousands)
(unaudited)
JUNE 30 DECEMBER 31
ASSETS 1996 1995
------ ------- -----------
<S> <C> <C>
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 12,044 5,878
Accounts, notes and other receivables, less allowance for
doubtful accounts of $2,309 in 1996 and $2,185 in 1995 22,457 17,464
Inventories 28,716 27,549
Deferred income taxes 2,056 7,876
Prepaid expenses 914 988
---------- ----------
TOTAL CURRENT ASSETS 66,187 59,755
---------- ----------
PLANT AND EQUIPMENT, at cost 31,350 29,653
- -------------------
Less: Accumulated depreciation (18,563) (17,827)
---------- ----------
TOTAL PLANT AND EQUIPMENT 12,787 11,826
---------- ----------
OTHER ASSETS
- ------------
Net assets of discontinued operations 87,714 89,026
Other (primarily restricted cash in 1996) 6,590 619
---------- ----------
TOTAL ASSETS $ 173,278 $ 161,226
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
- -------------------
Short-term borrowings $ - $ 6,000
Accounts payable 5,479 5,236
Accrued expenses 16,414 16,852
Current portion of long-term liabilities 185 190
Accrued income taxes 100 513
---------- ----------
TOTAL CURRENT LIABILITIES 22,178 28,791
---------- ----------
LONG-TERM LIABILITIES 10,581 4,671
- --------------------- ---------- ----------
STOCKHOLDERS' EQUITY
- --------------------
Common stock 527 525
Capital surplus 68,579 66,898
Retained earnings 79,401 67,843
Treasury stock (1,595) (1,595)
Notes receivable from officers (5,525) (5,525)
Unearned portion of restricted stock (868) (382)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 140,519 127,764
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 173,278 $ 161,226
---------- ----------
---------- ----------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(In Thousands)
(unaudited)
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
- -----------------------------------
Net Income $ 11,558 $ 15,667
Adjustments for noncash items included in net income-
Depreciation and amortization 776 721
Deferred income taxes 4,170 6,700
Provision for deferred employee compensation 146 82
Operating requirements-
Accounts receivable (increase) (4,993) (1,855)
Inventories (increase) (1,167) (4,863)
Prepaid expenses decrease 74 249
Accounts payable & accrued expenses (decrease) (265) (2,699)
Discontinued operations 2,962 (6,698)
---------- ----------
Net cash provided by operating activities $ 13,261 $ 7,304
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
- -----------------------------------
Purchase of plant and equipment $ (1,713) $ (1,004)
Proceeds from the sale of discontinued operations -- 13,985
(Increase) in other assets (5,996) (119)
---------- ----------
Net cash provided by (used for) investing activities $ (7,709) $ 12,862
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
- -----------------------------------
Decrease in long-term liabilities $ (95) (101)
Increase in long-term liabilities 6,000 --
Proceeds from short-term borrowings 4,000 --
Payment of short-term borrowings (10,000) --
Dividends paid -- (80,211)
Repayment of officer's loans -- 1,995
Issuance of common stock 709 692
---------- ----------
Net cash provided by (used for) financing activities $ 614 $ (77,625)
---------- ----------
Net increase (decrease) in cash and cash equivalents $ 6,166 $ (57,459)
Cash & cash equivalents, beginning of period 5,878 68,991
---------- ----------
Cash & cash equivalents, end of period $ 12,044 $ 11,532
---------- ----------
Cash paid during the period for interest $ 355 $ 308
---------- ----------
---------- ----------
Cash paid during the period for income taxes $ 2,927 $ 602
---------- ----------
---------- ----------
</TABLE>
3
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Nature of Operations:
UNR Industries, Inc. ("UNR" or the "Company") manufactures towers,
poles, mounts and related accessories used principally to support
telecommunications antennae for wireless communications, such as private
microwave, cellular telephone, PCS (personal communications systems),
commercial and amateur broadcasting and home television. The Company also
produces shelters and cabinets of concrete and fiberglass to house
electronic telecommunications equipment.
The Company conducts its business principally through its ROHN Division
which has manufacturing facilities in Peoria, Illinois (towers and poles),
Frankfort, Indiana (tower components and mounts), and Bessemer, Alabama
(shelters).
(2) Principles of Consolidation:
The financial statements include the consolidated accounts of UNR and
its subsidiaries. All significant intercompany transactions have been
eliminated in consolidation.
(3) 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.
At December 31, 1995, the Company had available approximately $15.0
million of net operating loss carry-forwards for both continuing and
discontinued operations, to offset future taxable income through 2008. The
Company also had general business tax credits of $3.4 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 $6.3 million are available to reduce future
Federal taxable income over an indefinite period.
(4) Net Income Per Share:
Net income per share is based on the weighted average number of common
shares outstanding during each period. Dilution, which would result if all
outstanding options were exercised, is not significant to the net income
per share computation.
(5) Other Assets:
Other assets at June 30, 1996, includes approximately $5.8 million of
unused proceeds of a $6.0 million industrial revenue bond incurred for the
purpose of financing the acquisition and construction of a new
manufacturing facility in Frankfort, Indiana. These funds have been invested
in U.S. Treasury Bills, and are carried at cost which approximates market.
4
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(6) 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, 1996, 1,133,565 shares have been purchased.
(7) Dividends Declared:
On December 28, 1995, the Company paid an extraordinary dividend of
$1.00 per share to stockholders of record as of the close of business on
December 18, 1995. 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.
(8) Inventories:
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) method. Inventory costs
include material, labor and factory overhead.
Total inventories included the following classifications (In Thousands):
June 30, December 31,
1996 1995
----------- -----------
Finished goods $ 12,805 $ 12,254
Work-in-process 3,614 3,791
Raw materials 12,297 11,504
----------- -----------
Total Inventories $ 28,716 $ 27,549
----------- -----------
----------- -----------
(9) Discontinued Operations:
On September 7, 1995, the Company announced that its Board of Directors
authorized Company management to explore the sale of all or a majority of
the common stock of the Company. On January 26, 1996, the Company announced
that efforts to sell the entire Company did not result in a satisfactory
offer and that it would begin discussions with multiple parties regarding
the sale of four of its five operating divisions in order to focus fully on
the strategic growth and development of its ROHN Division, a supplier of
goods and services to the telecommunications industry. The divisions to be
sold are the Leavitt Tube division, a producer of mechanical and structural
steel tubing, the Commercial Products division, a manufacturer of steel and
plastic shopping carts, the Home Products division, a manufacturer of
stainless steel and composite sinks and the Real Time Solutions, Inc.
subsidiary, a supplier of "pick-to-light" inventory picking systems. Net
assets of these divisions are classified as "Net assets of discontinued
operations" in the accompanying balance sheets.
On May 16, 1996, the Company announced the signing of a definitive sales
agreement to sell its UNR-Leavitt Division to Chase Brass, Industries for
$95.0 million cash, subject to closing adjustments. This transaction is
expected to close in August, 1996.
On June 19, 1996, the Company announced the signing of a definitive sales
agreement to sell its Unarco Commercial Products Division to Richards
Capital Fund, L.P. for $41.0 million cash, subject to closing adjustments.
This transaction closed on July 26, 1996.
5
<PAGE>
(10) 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, 1995.
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, 1996 and 1995. 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 1995 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, 1995. The following discussion and
analysis describes changes in the Company's financial condition from
December 31, 1995, 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, 1996, with the corresponding period of 1995.
RESULTS OF OPERATIONS
Second quarter of 1996 versus Second quarter of 1995:
Net sales from continuing operations decreased 7.8% to $37.9 million
from $41.1 million in the prior year. This decrease is due primarily to
the fact that the second quarter of 1995 included approximately $6.0 million
of one-time sales for a stand-alone communications network.
Selling, general and administrative expenses were $3.8 million or
10.0% of sales for 1996 versus $3.8 million or 9.3% of sales in 1995. The
increase, as a percentage of sales is due to the decline in sales compared
to last year.
Operating income was $7.7 million for the second quarter of 1996
versus $8.5 million for the same period last year or a decrease of
10.1%. This decline is due largely to the decline in sales.
Net interest in both periods includes the interest earned on
short-term investments reduced by interest paid on secured debt. Net
interest expense for the second quarter of 1996 versus net interest income
for the same period last year is due to substantially greater levels of
cash available last year versus this year. This cash was distributed to
shareholders during 1995.
Income from discontinued operations declined from $2.5 million in the
second quarter of 1995 to $2.0 million in the second quarter of 1996 or
18.9%. This decrease is due primarily to a decline in earnings at the
Leavitt Tube division due to the reduction in selling price of tube
outpacing the reduction in steel prices.
6
<PAGE>
First six months of 1996 versus first six months of 1995:
Net sales from continuing operations decreased 12.1% to $68.8
million from $78.3 million in the prior year. This decrease is due
primarily to the fact that net sales in 1995 included approximately
$15.0 million of one-time sales for a stand-alone communications network.
Selling, general and administrative expenses were $7.2 million or
10.5% of sales for 1996 versus $7.7 million or 9.8% of sales in 1995. The
increase, as a percentage of sales, as with the decline in operating income,
is due to the decline in sales compared to last year.
Operating income was $13.5 million for the first half of 1996 versus
$15.7 million for the same period last year or a decrease of 14.3%. This
decline is due largely to the decline in sales.
Net interest in both periods includes the interest earned on
short-term investments reduced by interest paid on secured debt. Net
interest expense for the first half of 1996 versus net interest income for
the same period last year is due to substantially greater levels of cash
available last year versus this year. This cash was distributed to
shareholders during 1995.
Income from discontinued operations declined from $5.5 million in the
first half of 1995 to $3.4 million in the first six months of 1996 or 37.3%.
This decrease is due primarily to a decline in earnings at the Leavitt Tube
division due to reduced steel prices.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at
June 30, 1996, and December 31, 1995:
June 30, 1996 December 31, 1995
------------- -----------------
Working Capital (in millions) $44.0 $31.0
Working Capital Ratio 3.0 to 1 2.1 to 1
The Company's financial condition continues to be strong at the end of
the second quarter of 1996, with working capital of $44.0 million at
June 30, 1996, as compared to $31.0 million at December 31, 1995. The
Company's working capital ratio at June 30, 1996, was 3.0 to 1 versus 2.1
to 1 at December 31, 1995; both are considered strong measures of liquidity.
The Company expects that it will meet its ongoing working capital and
capital expenditure requirements from operating cash flows, borrowings
through industrial revenue bonds and under a $20.0 million short-term
credit facility and the proceeds from the sale of its discontinued
operations. In addition, the Company's strong unleveraged balance sheet
allows it access to funds, if needed, from the capital markets.
SALE OF DISCONTINUED BUSINESSES
See Item 5, Part II of this report.
7
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the May 9, 1996, 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 1997 Annual Meeting or until their successors are elected and qualify:
VOTES FOR VOTES WITHHELD
Charles M. Brennan III 48,014,187 67,341
Darius W. Gaskins, Jr. 48,013,822 67,706
Thomas A. Gildehaus. 48,014,174 67,354
Gene Locks 47,486,346 595,182
Ruth R. McMullin 48,010,587 70,941
Thomas F. Meagher 48,013,687 67,841
Robert B. Steinberg 47,484,496 597,032
William J. Williams 48,012,957 68,571
(2) Ratification of the appointment of the firm of Arthur Andersen
LLP as the Company's independent public accountant for 1996:
Votes for - 47,874,952
Against - 31,061
Abstain - 175,515
Broker Non Votes - 0
ITEM 5. OTHER INFORMATION
DISPOSITION OF ASSETS
On January 26, 1996, the Company announced that it would begin
discussions with multiple parties regarding the sale of four of its five
operating divisions and focus on the development of the ROHN Division, a
supplier of goods and services to the telecommunications industry. See
Note (9) of Notes to Financial Statements in Part I hereof. The Company
engaged J.P. Morgan Securities Inc. to act as its financial advisor and to
provide other services, including assistance in identifying qualified
purchasers, soliciting acquisition proposals and negotiating financial
aspects of proposed acquisitions. As a result of this process, the
Company entered into a definitive agreement on May 15, 1996, to sell the
assets and business of its UNR Leavitt Division to Chase Brass Industries,
Inc. for $95.0 million in cash, subject to certain closing adjustments.
On June 18, 1996 the Company entered into a definitive agreement to sell
the assets and business of its Unarco Commercial Products Division to
Richards Capital Fund, L.P. for $41.0 million cash, subject to certain
closing adjustments. On July 26, 1996, the sale of the Unarco Commercial
Products Division was consummated, and the sale of the UNR Leavitt Division
is scheduled to close in the third quarter. The purchase prices were
determined by arms-length negotiations with the purchasers. The Company is
engaged in continuing discussions with possible purchasers of the other
discontinued divisions which are expected to be sold by the end of 1996.
8
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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.
10. Sale and purchase agreement dated May 15, 1996, between Chase
Brass Industries, Inc. and UNR Industries, Inc. (incorporated
by reference to Exhibit 2 to the Company's current report on
Form 8-K filed July 24, 1996).
Sale and purchase agreement dated June 18, 1996, between
Richards Capital Fund, L.P. and UNR Industries, Inc.
(incorporated by reference to Exhibit 2 to the Company's
current report on Form 8-K filed July 24, 1996).
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: August 5, 1996 /s/ Henry Grey
- ---------------------- ------------------------------------------------------
Henry Grey
Senior Vice President-Finance, Treasurer & Chief
Financial Officer
Dated: August 5, 1996 /s/ John A. Saladino
- ---------------------- ------------------------------------------------------
John A. Saladino
Vice President & Controller
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,044
<SECURITIES> 0
<RECEIVABLES> 24,766
<ALLOWANCES> 2,309
<INVENTORY> 28,716
<CURRENT-ASSETS> 66,187
<PP&E> 31,350
<DEPRECIATION> 18,563
<TOTAL-ASSETS> 173,278
<CURRENT-LIABILITIES> 22,178
<BONDS> 10,581
0
0
<COMMON> 527
<OTHER-SE> 139,992
<TOTAL-LIABILITY-AND-EQUITY> 173,278
<SALES> 68,814
<TOTAL-REVENUES> 68,814
<CGS> 48,113
<TOTAL-COSTS> 7,227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57
<INCOME-PRETAX> 13,417
<INCOME-TAX> 5,300
<INCOME-CONTINUING> 8,117
<DISCONTINUED> 3,441
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,558
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
