<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, 1997
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)
6718 West Plank Road
Peoria, Illinois 61604
I.R.S. Employer Identification Number 36-3060977
TELEPHONE NUMBER (309) 697-4400
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, 1997
-----------------
Common Stock $.01 par value................ 52,543,691
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1997 1996 1997 1996
------- ------- ------- -------
Net Sales $38,867 37,857 76,615 68,814
Cost of products sold 26,785 26,404 52,697 48,113
------- ------- ------- -------
Gross Profit 12,082 11,453 23,918 20,701
Selling, general &
administrative expenses 4,431 3,794 8,448 7,227
------- ------- ------- -------
Operating Income 7,651 7,659 15,470 13,474
Interest expense, net (235) (56) (414) (57)
------- ------- ------- -------
Income from continuing
operations before
income taxes 7,416 7,603 15,056 13,417
Income tax provision 2,825 3,000 5,725 5,300
------- ------- ------- -------
Income from continuing
operations 4,591 4,603 9,331 8,117
Income from discontinued
operations - 2,029 - 3,441
------- ------- ------- -------
NET INCOME $ 4,591 6,632 9,331 11,558
======= ======= ======= =======
Net Income Per Share:
Continuing operations $ 0.09 $ 0.09 0.18 $ 0.16
Discontinued Operations - 0.04 - 0.07
------- ------- ------- -------
NET INCOME PER SHARE $ 0.09 $ 0.13 0.18 $ 0.23
======= ======= ======= =======
Weighted average number
of shares outstanding 52,376 52,400 52,418 52,320
======= ======= ======= =======
The accompanying notes are an integral part of these statements
2
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UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In Thousands)
(unaudited)
JUNE 30 DECEMBER 31
ASSETS 1997 1996
CURRENT ASSETS
Cash and cash equivalents $ 2,100 $ 5,030
Accounts, notes and other receivables,
less allowance for doubtful accounts
of $1,285 in 1997 and $2,309 in 1996 26,555 28,048
Inventories 39,223 30,717
Deferred income taxes 4,450 4,000
Prepaid expenses 676 1,093
--------- ----------
TOTAL CURRENT ASSETS 73,004 68,888
--------- ----------
PLANT AND EQUIPMENT, at cost 46,168 41,091
Less: Accumulated depreciation (20,427) (19,269)
--------- ----------
TOTAL PLANT AND EQUIPMENT 25,741 21,822
--------- ----------
OTHER ASSETS 2,750 2,662
--------- ----------
TOTAL ASSETS $ 101,495 $ 93,372
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 5,000 $ 2,000
Accounts payable 6,868 8,735
Accrued expenses 18,582 17,729
Current portion of long-term liabilities 918 831
Net liabilities of discontinued operations 3,333 9,365
Accrued income taxes 2,411 10
--------- ----------
TOTAL CURRENT LIABILITIES 37,112 38,670
--------- ----------
LONG-TERM LIABILITIES 11,737 12,191
--------- ----------
STOCKHOLDERS' EQUITY
Common Stock 532 528
Capital surplus 11,492 9,837
Retained earnings 46,117 36,786
Treasury stock (3,895) (1,595)
Notes receivable from officers 0 (2,300)
Unearned portion of restricted stock (1,600) (745)
--------- ----------
TOTAL STOCKHOLDERS' EQUITY 52,646 42,511
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 101,495 $ 93,372
========= ==========
The accompanying notes are an integral part of these statements.
3
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UNR INDUSTRIES, INC.
AND SUBSIDIARIES
STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(In Thousands)
(unaudited)
CASH FLOW FROM OPERATING ACTIVITIES 1997 1996
-------- ------
Net Income $ 9,331 $ 11,558
Adjustments for noncash items included
in net income-
Depreciation and amortization 1,183 776
Deferred income taxes (450) 4,170
Provision for deferred employee compensation 270 146
Operating requirements-
Accounts receivable decrease (increase) 1,493 (4,993)
Inventories (increase) (8,506) (1,167)
Prepaid expenses decrease 417 74
Accounts payable & accrued expenses
increase (decrease) 1,387 (265)
Discontinued operations (6,032) 2,962
-------- --------
Net cash (used in) provided by
operating activities $ (907) $ 13,261
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of plant and equipment $ (5,077) $ (1,713)
(Increase) in other assets (113) (5,996)
-------- --------
Net cash provided by (used for)
investing activities $ (5,190) $ (7,709)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Decrease in long-term liabilities (367) (95)
Increase in long-term liabilities - 6,000
Proceeds from short-term borrowings 17,620 4,000
Payment of short-term borrowings (14,620) (10,000)
Issuance of common stock 534 709
-------- --------
Net cash provided by financing activities $ 3,167 $ 614
-------- --------
Net (decrease) increase in cash and
cash equivalents $ (2,930) $ 6,166
Cash & cash equivalents, beginning of period 5,030 5,878
-------- --------
Cash & cash equivalents, end of period $ 2,100 $ 12,044
======== ========
Cash paid during the period for interest $ 678 $ 355
======== ========
Cash paid during the period for income taxes $ 3,281 $ 2,927
======== ========
The accompanying notes are an integral part of these statements.
4
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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:
The Company's remaining NOL carry forwards, general business credit
carry forwards, and AMT credit carry forwards, were fully utilized during
1996.
(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 June 30, 1997, 1,133,565 shares have been purchased.
Pursuant to the UNR Industries, Inc. 1994 Executive Stock Purchase Plan,
during the first quarter of 1997 the Company retained 308,625 treasury shares
from certain officers to satisfy the unpaid principal portion of promissory
notes due to the Company. See Item 13 in Form 10-K/A Amendment No. 1 for
further details.
(6) Dividends Declared:
On September 27, 1996, the Company paid an extraordinary cash dividend
of $2.00 per share to stockholders of record as of the close of business on
September 17, 1996. On December 23, 1996, the Company paid a regular cash
dividend of $.25 per share and an extraordinary cash dividend of $.35 per
share to stockholders of record as of the close of business on December 16,
1996.
5
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(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):
June 30, December 31,
1997 1996
----------- --------------
Finished goods $ 19,098 $ 13,065
Work-in-process 6,388 5,678
Raw materials 13,737 11,974
----------- --------------
Total Inventories $ 39,223 $ 30,717
=========== ==============
(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 sold were 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 liabilities of these
divisions are classified as "Net liabilities 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, Inc. for
$95.0 million cash, subject to closing adjustments. This transaction closed 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 in July, 1996.
On August 27, 1996 the Company entered into a definitive agreement to
sell the assets of its Home Products Division to Franke, Inc. for $21.4
million cash, subject to closing adjustments. This transaction closed in
September, 1996.
On December 19, 1996, the Company announced the sale of its Real Time
Solutions, Inc. subsidiary to Pinnacle Automation. This transaction closed in
December, 1996.
The sale of these divisions in 1996 resulted in a gain of $21.9 million,
net of $14.6 million of taxes, which was recorded in the third quarter of
1996.
(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
6
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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, 1996.
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, 1997 and 1996. 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 1996 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, 1996. The following discussion and analysis
describes changes in the Company's financial condition from December 31,
1996, 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, 1997, with the corresponding periods of 1996.
RESULTS OF OPERATIONS
SECOND QUARTER OF 1997 VERSUS SECOND QUARTER OF 1996:
Net sales from continuing operations increased 2.6% to $38.9 million from
$37.9 million in the prior year.
Selling, general and administrative expenses were $4.4 million or 11.4%
of sales for 1997 versus $3.8 million or 10.0% of sales in 1996. The
increase is due primarily to costs in connection with the implementation of a
new management information system.
Operating income was $7.7 million, or 19.7% of sales for the second
quarter of 1997 and $7.7 million or 20.2% of sales for the same period last
year.
Net interest in both periods includes the interest earned on short-term
investments reduced by interest paid on secured debt. The increase in net
interest expense for the second quarter of 1997 versus net interest expense
for the same period last year is due to long term borrowings for the management
information system being installed, and the use of the Company's line of
credit.
FIRST SIX MONTHS OF 1997 VERSUS FIRST SIX MONTHS OF 1996:
Net sales from continuing operations increased 11.3% to $76.6 million
from $68.8 million in the prior year. This increase is due in part to the
continuing build-out of the Personal Communications System (PCS)
infastructure.
Selling, general and administrative expenses were $8.4 million or 11.0%
of sales for 1997 versus $7.2 million or 10.5% of sales in 1996
Operating income was $15.5 million, or 20.1% of sales for the first
half of 1997 versus $13.5 million, or 19.6% of sales for the same period
last year.
Net interest in both periods includes the interest earned on short-term
investments reduced by interest paid on secured debt. The increase in net
interest expense is due to long term borrowings for the Frankfort, IN
facility and for the management information system being installed.
7
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LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at June 30, 1997,
and December 31, 1996:
June 30, 1997 December 31, 1996
------------- -----------------
Working Capital (in millions) $35.9 $30.2
Working Capital Ratio 2.0 to 1 1.8 to 1
The Company's financial condition continues to be strong at the end of
the second quarter of 1997, with working capital of $35.9 million at June 30,
1997, as compared to $30.2 million at December 31, 1996. The Company's
working capital ratio at June 30, 1997, was 2.0 to 1 versus 1.8 to 1 at
December 31, 1996; 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. 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 8, above.
ACCOUNTING CHANGES
The Financial Accounting Standards board has issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings per Share, which is
effective for financial statements for both interim and annual periods ending
after December 15, 1997, and SFAS No. 129, Disclosure of Information about
Capital Structure, which is effective for periods ending after December 15,
1997. Earlier application is not permitted. The expected impact of the
adoption of these standards will not be material.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Some comments and information included in this report are forward looking
and involve risks and uncertainties that could significantly impact expected
results. While it is impossible to itemize the many factors and specific
events that could affect the outlook of the Company, the Company's outlook
for 1997 is based predominately on assumptions related to the growth of the
various wireless technologies.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
1. Disposition of Assets - See Notes to Financial Statements #8, in Part I.
2. Brian B. Pemberton was elected as President and Chief Executive Officer
of UNR Industries, Inc. effective April 14, 1997. Refer to Item 11,
Form 10-K/A Amendment No. 1 for the fiscal year ended December 31, 1996.
8
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3. Henry Grey, Senior Vice President-Finance, Treasurer and Chief
Financial Officer announced on May 12, 1997, his retirement from UNR
Industries, Inc. effective June 30, 1997. Rodney B. Harrison,
Chief Financial Officer of the ROHN Division of UNR Industries, Inc. has
been appointed Vice President, Treasurer and Controller effective
July 1, 1997.
4. The Company's annual meeting of stockholders has been postponed
and is presently expected to occur on or about November 10, 1997.
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.
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 13, 1997 /s/ Rodney B. Harrison
____________________________
Rodney B. Harrison
Vice President, Treasurer and Controller
9
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<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,100
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<RECEIVABLES> 27,840
<ALLOWANCES> 1,285
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