<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 MARCH 31, 1996
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 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
--- ---
<TABLE>
<CAPTION>
Outstanding as of
April 26, 1996
--------------
<S> <C>
Common Stock $.01 par value................ 52,389,433
</TABLE>
<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 MARCH 31
1996 1995
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<S> <C> <C>
Net Sales $30,957 $37,180
Cost of products sold 21,709 26,116
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Gross Profit 9,248 11,064
Selling, general & administrative expenses 3,433 3,866
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Operating Income 5,815 7,198
Interest income (expense), net (1) 888
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Income from continuing operations before
income taxes 5,814 8,086
Income tax provision 2,300 3,200
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Income from continuing operations 3,514 4,886
Income from discontinued operations 1,412 2,987
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NET INCOME $ 4,926 $ 7,873
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------- -------
Net Income Per Share:
Continuing operations $ .07 $ .10
Discontinued operations .03 .06
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NET INCOME PER SHARE $ .10 $ .16
------- -------
------- -------
Weighted average number of
shares outstanding 52,258 51,197
</TABLE>
1
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
ASSETS 1996 1995
------ -------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,411 5,878
Accounts, notes and other receivables,
less allowance for doubtful accounts
of $2,248 in 1996 and $2,185 in 1995 18,161 17,464
Inventories 29,088 27,549
Deferred income taxes 4,826 7,876
Prepaid expenses 879 988
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TOTAL CURRENT ASSETS 55,365 59,755
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PLANT AND EQUIPMENT, at cost 29,915 29,653
Less: Accumulated depreciation (18,194) (17,827)
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TOTAL PLANT AND EQUIPMENT 11,721 11,826
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OTHER ASSETS
Net assets of discontinued operations 93,785 89,026
Other 701 619
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TOTAL ASSETS $161,572 $ 161,226
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ -- $ 6,000
Accounts payable 6,316 5,236
Accrued expenses 16,675 16,852
Current portion of long-term liabilities 189 190
Accrued income taxes 501 513
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TOTAL CURRENT LIABILITIES 23,681 28,791
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LONG-TERM LIABILITIES 4,624 4,671
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STOCKHOLDERS' EQUITY
Common stock 527 525
Capital surplus 67,845 66,898
Retained earnings 72,769 67,843
Treasury stock (1,595) (1,595)
Notes receivable from officers (5,525) (5,525)
Unearned portion of restricted stock (754) (382)
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TOTAL STOCKHOLDERS' EQUITY 133,267 127,764
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $161,572 $ 161,226
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</TABLE>
2
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 4,926 $ 7,873
Adjustments for noncash items included in
net income-
Depreciation and amortization 380 360
Deferred income taxes 2,300 3,200
Provision for deferred employee compensation 53 --
Operating requirements-
Accounts receivable (increase) (697) (3,643)
Inventories (increase) (1,539) (3,538)
Prepaid expenses decrease 109 142
Accounts payable & accrued expenses increase 890 393
Discontinued operations (4,009) (4,028)
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Net cash provided by operating activities $ 2,413 $ 759
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CASH FLOW FROM INVESTING ACTIVITIES
Purchase of plant and equipment $ (262) $ (535)
Proceeds from the sale of discontinued
operations -- 13,985
(Increase) decrease in other assets (95) 1
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Net cash provided by (used for)
investing activities $ (357) $ 13,451
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CASH FLOW FROM FINANCING ACTIVITIES
Decrease in long-term liabilities $ (47) $ (54)
Proceeds from short-term borrowings 4,000 --
Payment of short-term borrowings (10,000) --
Issuance of common stock 524 767
-------- --------
Net cash provided by (used for)
financing activities $ (5,523) $ 713
-------- --------
Net increase (decrease) in cash and
cash equivalents $ (3,467) $ 14,923
Cash & cash equivalents, beginning of period 5,878 68,991
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Cash & cash equivalents, end of period $ 2,411 $ 83,914
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-------- --------
Cash paid during the period for interest $ 103 $ 163
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Cash paid during the period for income taxes $ 367 $ 7
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</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, personal communications systems (PCS), 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) 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 March 31,
1996, 1,133,565 shares have been purchased.
4
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(6) 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.
(7) 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):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Finished goods $ 13,033 $ 12,254
Work-in-process 3,746 3,791
Raw materials 12,309 11,504
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Total Inventories $ 29,088 $ 27,549
--------- ------------
--------- ------------
</TABLE>
(8) 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 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.
(9) Basis of Reporting for Interim Financial Statements:
The unaudited financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report and Form 10-K for the
year ended December 31, 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
5
<PAGE>
for the three month periods ended March 31, 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 months ended March 31, 1996, with
the corresponding period of 1995.
RESULTS OF OPERATIONS
First quarter of 1996 versus first quarter of 1995:
Net sales from continuing operations decreased 16.7% to $31.0 million
from $37.2 million in the prior year. This decrease is due primarily to the
fact that 1995's first quarter included approximately $9.0 million of
one-time sales for a stand-alone communications network, and severe weather
conditions in several key markets delayed expected shipments in the first
quarter of 1996.
Selling, general and administrative expenses were $3.4 million or 11.1%
of sales for 1996 versus $3.9 million or 10.4% of sales in 1995. The
increase, as a percentage of sales, as with the decline in operating revenue,
is due to the decline in sales compared to last year.
Operating income was $5.8 million for the first quarter of 1996 versus
$7.2 million for the same period last year or a decrease of 19.2%. 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 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 $3.0 million in the
first quarter of 1995 to $1.4 million in the first quarter of 1996 or 52.7%.
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 March 31, 1996,
and December 31, 1995:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Working Capital (in millions) $31.7 $31.0
Working Capital Ratio 2.3 to 1 2.1 to 1
</TABLE>
The Company's financial condition continues to be strong at the end of
the first quarter of 1996, with working capital of $31.7 million at March 31,
1996, as compared to $31.0 million at December 31, 1995. The Company's
working capital ratio at March 31, 1996, was 2.3 to 1 versus 2.1 to 1 at
year-end; 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
6
<PAGE>
under a $35.0 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
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. The
Company and its financial advisor, J.P. Morgan Securities Inc., are engaged
in continuing discussions with possible purchasers for each of the
discontinued businesses.
PART II - OTHER INFORMATION
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. 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: April 26, 1996 /s/ Henry Grey
- ---------------------- -----------------------------------------------
Henry Grey
Senior Vice President-Finance, Treasurer & Chief
Financial Officer
Dated: April 26, 1996 /s/ John A. Saladino
- ---------------------- ------------------------------------------------
John A. Saladino
Controller & Assistant Secretary
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,411
<SECURITIES> 0
<RECEIVABLES> 20,409
<ALLOWANCES> 2,248
<INVENTORY> 29,088
<CURRENT-ASSETS> 55,365
<PP&E> 29,915
<DEPRECIATION> 18,194
<TOTAL-ASSETS> 161,572
<CURRENT-LIABILITIES> 23,681
<BONDS> 4,624
0
0
<COMMON> 527
<OTHER-SE> 132,740
<TOTAL-LIABILITY-AND-EQUITY> 161,572
<SALES> 30,957
<TOTAL-REVENUES> 30,957
<CGS> 21,709
<TOTAL-COSTS> 3,433
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 5,814
<INCOME-TAX> 2,300
<INCOME-CONTINUING> 3,514
<DISCONTINUED> 1,412
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,926
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
