<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
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, 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 NO. 1-8009
UNR INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-3060977
- ------------------------------------- --------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
6718 WEST PLANK ROAD, PEORIA, 61604
ILLINOIS --------------------
- -------------------------------------
(Address of Principal Executive (Zip Code)
Office)
</TABLE>
(309)-697-4400
(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
- -------------------------------------------------------------------------------------------- --------------------------
<S> <C>
Common Stock $.01 par value................................................................. Chicago Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by checkmark 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 ____
Indicate by checkmark 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. __
As of March 14, 1997, 52,838,707 shares of common stock were outstanding.
The aggregate market value of stock held by nonaffiliates is $170,000,000 based
upon the average bid and asked prices of such stock as of March 14, 1997.
Documents incorporated by reference:
(1) Annual Report to Stockholders of Registrant for the fiscal year ended
December 31, 1996. 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. Certain information
therein is incorporated by reference into Part III hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
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 UNR Asbestos-Disease Claims Trust (the "Trust"),
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.
On January 26, 1996, the Registrant announced that previous 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 and focus on the growth and development of its UNR-ROHN
Division ("ROHN").
The four divisions, which are treated as discontinued operations for
financial reporting purposes, were all sold during 1996:
- UNR Leavitt Division, a manufacturer of structural and mechanical steel
tubing, was sold to Chase Brass Industries for $95.0 million cash, subject to
closing adjustments. This transaction was closed in August, 1996.
- Unarco Commercial Products Division, a manufacturer of steel and plastic
shopping carts, was sold to Richards Capital Fund. L.P. for $41.0 million cash
subject to closing adjustments. This transaction was closed in July, 1996.
- UNR Home Products Division, a manufacturer of stainless steel and
composite sinks, was sold to Franke, Inc. for $21.4 million cash subject to
closing adjustments. This transaction was closed in September, 1996.
- The assets of Real Time Solutions, Inc., a provider of computerized
warehouse management and control systems, were sold to Pinnacle Automation. This
transaction was closed in December, 1996.
On March 6, 1997, UNR moved its principal executive office from 332 South
Michigan Avenue, Chicago Illinois to 6718 West Plank Road, Peoria, Illinois.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
Information required under this section appears as Note 11 to the 1996
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 manufactures, markets and installs towers, poles, masts and
mounts used as support structures for antennae, receivers and transmitting
devices and concrete and fiberglass shelters and cabinets to house electronic
telecommunications equipment. Registrant's products are sold through
distributors and directly to customers in telecommunications markets including
cellular, personal communications systems, enhanced specialized mobile radio,
paging services, radio and television broadcast, wireless cable, private
microwave systems, military communications systems and direct broadcast
satellite.
Registrant also manufactures a line of livestock handling products sold to
farmers, ranchers, fairs and exposition and equestrian facilities, privacy
fencing sold to the military and other customers and provides custom fabrication
and hot-dip galvanizing services. These items represent in the aggregate less
than ten percent of Registrant's revenues.
Registrant's telecommunications products are distributed directly and
through distributors to customers throughout the United States and to
international markets.
All of the raw materials required for the manufacture of Registrant's
products are readily available from a number of different suppliers.
PATENTS
The Registrant has a number of patents and trademarks, none of which are
considered material to the consolidated operations.
1
<PAGE>
RESEARCH & DEVELOPMENT
The Registrant spent approximately $210,000 in 1996, $170,000 in 1995, and
$24,000 in 1994 for research on new and improved products. Approximately four
employees are currently engaged full time in this activity.
EMPLOYEES
As of December 31, 1996, the Registrant employed approximately 700 people.
Collective bargaining agreements cover approximately 300 employees at its
facilities in Peoria, Illinois, and Frankfort, Indiana. The unions are the
United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)
in Peoria and the Retail, Wholesale and Department Store Union (RWDSU) in
Frankfort. The Registrant considers its relations with its employees to be good.
COMPETITION
The Registrant competes with a number of manufacturers in each of its
products lines. Although the available information does not permit the
Registrant to provide accurate data as to its precise competitive position, the
Registrant believes it has a significant share in the product classes in which
it participates. The principal methods of competition are price, quality and
product service.
CUSTOMER, BACKLOG AND FOREIGN SALES
The Registrant has one customer to which it sold towers and shelter for use
in both the PCS and Cellular markets that provided approximately 11% of the
registrant's 1996 net sales.
The Registrant's backlog of firm orders was approximately $53.0 million at
December 31, 1996, and $26.9 million at December 31, 1995. It is anticipated
that all of the backlog orders will be filled during the current year. The
stated backlog is not necessarily indicative of company sales or profits for any
future period.
Foreign sales of the Registrant in 1996, 1995 and 1994 were approximately
$7.1 million, $8.5 million and $7.4 million, respectively.
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
investigation and remediation of ground and water contamination, and expects to
make such expenditures in the future to comply with existing and probable
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 remedy 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 approximately 21,200 square feet.
<TABLE>
<CAPTION>
LOCATION USE SQUARE FOOTAGE LEASED OR OWNED
- -------------- -------------------------------- ---------------- ------------------------------
<S> <C> <C> <C>
Peoria, IL Tower & Poles 375,000 Owned
Frankfort, IN Towers & Livestock Equipment 50,000 Owned
Frankfort, IN Towers & Livestock Equipment 87,500 Leased (Expiration 4/30/97)
Frankfort, IN Towers & Livestock Equipment 180,000 Owned
Bessemer, AL Equipment Shelters 250,000 Leased (Expiration 9/15/11)
</TABLE>
The Company occupied the 180,000 square foot facility, in Frankfort, IN, in
January, 1997 and will vacate the 87,500 square foot leased facility around
April 30, 1997.
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.
2
<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
The Registrant is involved in various pending legal proceedings and claims
arising in the normal course of business. Although the outcome of such
proceedings and claims cannot be determined with certainty, the Registrant,
after consultation with legal counsel, considers that such matters, individually
or in the aggregate, will not have a materially adverse effect on the
Registrant's operations or its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no matters submitted to a vote of security holders during
the fourth quarter of 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Registrant are as follows:
<TABLE>
<CAPTION>
NAME AGE EXPERIENCE/TENURE
- ------------------------- ---- ---------------------------------------------------------
<S> <C> <C>
Thomas A. Gildehaus...... 56 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).
On December 19, 1996, Registrant announced that it was
undertaking a search for a President and Chief
Executive Officer who would replace Mr. Gildehaus. On
March 17, 1996, Registrant announced that Brian B.
Pemberton was appointed President and Chief Executive
Officer effective April 14, 1997, and that Mr.
Gildehaus would be leaving the Company.
Henry Grey............... 43 Senior Vice President, Chief Financial Officer and
Treasurer (since 1994); Vice President--Finance and
Treasurer (1986-1994); Senior Manager, Arthur Andersen
& Co., (1974-1986).
</TABLE>
Victor E. Grimm resigned as Vice President effective December 31, 1996. He
continues to serve as Corporate Secretary.
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.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Registrant's Common Stock is publicly traded in the over-the-counter
market on the NASDAQ National Market System and is listed on the Chicago Stock
Exchange. The Registrant's Common Stock bears the symbol UNRI.
The high and low bids are as reported in the Wall Street Journal Quotations
from the NASDAQ National Market System.
<TABLE>
<CAPTION>
DIVIDENDS
PER
COMMON STOCK HIGH LOW SHARE
- -------------------------------------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
1995
First Quarter........................................................... $ 7 1/8 $ 5 1/4 $1.55
Second Quarter.......................................................... 7 7/8 5 3/8 --
Third Quarter........................................................... 9 3/8 7 1/4 --
Fourth Quarter.......................................................... 9 3/8 7 1/16 1.00
1996
First Quarter........................................................... $ 9 $ 7 5/8 $ --
Second Quarter.......................................................... 10 7 15/16 --
Third Quarter........................................................... 10 1/4 6 1/2 2.00
Fourth Quarter.......................................................... 7 3/8 5 7/8 .60
1997
First Quarter (through March 14).......................................... $ 8 $ 5 7/8 $ --
</TABLE>
As of March 14, 1997, the Registrant had 3,016 record holders of its Common
Stock
On April 17, 1995, the Registrant paid a $.25 regular cash dividend and a
$1.30 extraordinary cash dividend to Stockholders of record on April 3, 1995.
On December 28, 1995, the Registrant paid a $1.00 extraordinary cash
dividend to Stockholders of record on December 18, 1995.
On September 27, 1996, the Registrant paid a $2.00 extraordinary cash
dividend to Stockholders of record on September 17, 1996.
On December 23, 1996, the Registrant paid a $.25 regular cash dividend and a
$.35 extraordinary cash dividend to Stockholders of record on December 16, 1996.
3
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Five Year Summary of Operations 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales $ 154,434 $ 142,216 $ 107,026 $ 73,811 $ 67,262
Cost of products sold 106,847 98,996 73,060 51,846 46,250
- -----------------------------------------------------------------------------------------------------------------
Gross Profit 47,587 43,220 33,966 21,965 21,012
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Operating Income 32,498 29,862 18,580 9,710 9,579
- -----------------------------------------------------------------------------------------------------------------
Interest income, net 884 1,839 1,174 551 3,586
- -----------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 33,382 31,701 19,754 10,261 13,165
Income tax provision 13,100 12,700 7,900 4,100 5,000
- -----------------------------------------------------------------------------------------------------------------
Income from Continuing Operations 20,282 19,001 11,854 6,161 8,165
Discontinued operations--
Income from operations, net of tax 3,859 10,275 21,971 12,623 121,718
Gain(loss) on dispositions, net of tax 21,900 -- (2,500) -- (6,200)
- -----------------------------------------------------------------------------------------------------------------
Net Income $ 46,041 $ 29,276 $ 31,325 $ 18,784 $ 123,683
- -----------------------------------------------------------------------------------------------------------------
Net Income (Loss) Per Share:
Continuing operations $ .39 $ .37 $ .24 $ .13 $ .18
Discontinued operations--
Income from operations $ .08 .20 .45 .27 2.70
Gain(loss) on dispositions $ .42 -- (.05) -- (.14)
- -----------------------------------------------------------------------------------------------------------------
Net Income Per Share $ .89 $ .57 $ .64 $ .40 $ 2.74
- -----------------------------------------------------------------------------------------------------------------
Dividends Declared Per Common Share $ 2.60 $ 2.55 $ .20 $ 1.20 $ 2.20
- -----------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares Outstanding 52,383 51,813 49,318 47,369 45,040
- -----------------------------------------------------------------------------------------------------------------
Five-Year Summary of Financial Data
- -----------------------------------------------------------------------------------------------------------------
Total Assets $ 93,372 $ 161,226 $ 258,106 $ 229,505 $ 353,624
Stockholders' Equity 42,511 127,764 220,596 193,384 232,981
Dividends Declared 136,368 132,274 9,738 57,691 102,517
Return on Assets 49.3% 18.2% 12.1% 8.2% 35.0%
Return on Stockholders' Equity 108.3% 22.9% 14.2% 9.7% 53.1%
Capital Expenditures 11,658 2,303 3,335 781 683
Depreciation and Amortization 1,672 1,433 1,358 1,353 1,341
Long-Term Liabilities 12,191 4,671 4,867 2,949 3,136
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Prior year results have been restated to reflect the 1992 discontinuance of
Midwest CATV and Midwest Steel, the 1994 discontinuance of Unarco Material
Handling and the 1995 discontinuance of UNR Leavitt, Unarco Commercial Products,
UNR Home Products and Real Time Solutions, Inc.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's Discussion and Analysis appearing on pages 26 through 27 of UNR
Industries, Inc. 1996 Annual Report to Stockholders is incorporated herein by
reference.
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. 1996 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.
Information required by this item with respect to the directors and the
Executive Officers of the 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, 1996.
4
<PAGE>
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, 1996.
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, 1996.
On December 11, 1996, the UNR Asbestos Disease Claims Trust filed Schedule
13D with the Securities and Exchange Commission indicating that it has reviewed
its investment in UNR and has determined it will explore a possible sale of its
block of Common Stock to a potential acquiror of UNR, merger or recapitalization
of UNR, or a future sale of its shares in one or more public or private
offerings. The Trust stated that it has retained an investment banker to advise
the Trust with respect to its options and to assist the Trust in implementing a
program to achieve the Trust's objectives of maximizing the value of its
investment in UNR and liquidating such investment as promptly as it is practical
to do so.
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, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE 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 1996, 1995 and 1994 is
submitted herewith:
Schedule II--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
balance 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.
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, Senior 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 Form 10-K.
*1994 Stock Option Plan incorporated by reference from Exhibit A of Proxy
Statement dated October 11, 1994.
5
<PAGE>
*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.
Agreements with J.P. Morgan Securities Inc. dated June 22, 1995, and
February 9, 1996.
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 1996 Annual Report to Shareholders.
(16)Not applicable.
(18)None.
*(21)List of Subsidiaries of Registrant.
(22)Not applicable.
(23)Consent of Independent Public Accountants.
(24)None.
(27)Financial data schedule.
(99)None.
(b)No Form 8-K was filed for the quarter ended December 31, 1996.
(c)Exhibits--See 10, 13, 21, 23 and 27 above.
(d)None.
6
<PAGE>
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 1996
Annual Report to Stockholders incorporated by reference in this Form 10-K, and
have issued our report thereon dated March 6, 1997. 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 6, 1997
7
<PAGE>
SCHEDULE II
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>
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Balance--beginning of year....................................................................... $ 1,256 $ 2,300 $ 2,185
Add (deduct)
- --Provision charged to income.................................................................... 1,340 4 186
- --Bad debts written-off.......................................................................... (296) (119) (1,235)*
--------- --------- ---------
Balance--end of year............................................................................. $ 2,300 $ 2,185 $ 1,136
--------- --------- ---------
--------- --------- ---------
</TABLE>
*The 1996 bad debts written-off include $1,009 related to the ancillary hot dip
galvanizing services, and are not related to the registrant's operations in the
telecommunications markets.
8
<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 14, 1997
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 14, 1997 /s/ THOMAS A. GILDEHAUS
--------------------------------------------------------
Thomas A. Gildehaus
CHIEF EXECUTIVE OFFICER, PRESIDENT & DIRECTOR
March 14, 1997 /s/ HENRY GREY
--------------------------------------------------------
Henry Grey
SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
PRINCIPAL FINANCIAL OFFICER
March 14, 1997 /s/ RODNEY B. HARRISON
--------------------------------------------------------
Rodney B. Harrison
PRINCIPAL ACCOUNTING OFFICER
March 14, 1997 /s/ CHARLES M. BRENNAN III
--------------------------------------------------------
Charles M. Brennan III
DIRECTOR
March 14, 1997 /s/ DARIUS W. GASKINS, JR.
--------------------------------------------------------
Darius W. Gaskins, Jr.
DIRECTOR
March 14, 1997 /s/ GENE LOCKS
--------------------------------------------------------
Gene Locks
DIRECTOR, CHAIRMAN OF THE BOARD
March 14, 1997 /s/ RUTH R. MCMULLIN
--------------------------------------------------------
Ruth R. McMullin
DIRECTOR
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
March 14, 1997 /s/ THOMAS F. MEAGHER
--------------------------------------------------------
Thomas F. Meagher
DIRECTOR
March 14, 1997 /s/ ROBERT B. STEINBERG
--------------------------------------------------------
Robert B. Steinberg
DIRECTOR
March 14, 1997 /s/ WILLIAM J. WILLIAMS
--------------------------------------------------------
William J. Williams
DIRECTOR
</TABLE>
10
<PAGE>
TECHNOLOGY FOR A GROWING WORLD OF COMMUNICATIONS...
1996
ANNUAL REPORT
ROHN
INDUSTRIES, INC.
UNR INDUSTRIES, INC.
<PAGE>
1
FINANCIAL HIGHLIGHTS
2
PRESIDENT'S LETTER
4
CORPORATE REVIEW
11
FINANCIALS
26
MANAGEMENT'S ANALYSIS
28
DIRECTORS AND OFFICERS
<PAGE>
FINANCIAL HIGHLIGHTS
UNR Industries, Inc. and Subsidiaries for the years ended December 31, 1996,
1995, 1994
<TABLE>
<CAPTION>
(in thousands except per share data)
- ------------------------------------------------------------------------------------------
THREE YEAR SUMMARY OF OPERATIONS 1996 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $154,434 $142,216 $107,026
Cost of products sold 106,847 98,996 73,060
- ------------------------------------------------------------------------------------------
GROSS PROFIT 47,587 43,220 33,966
- ------------------------------------------------------------------------------------------
OPERATING INCOME 32,498 29,862 18,580
- ------------------------------------------------------------------------------------------
Interest income, net 884 1,839 1,174
- ------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 33,382 31,701 19,754
Income tax provision 13,100 12,700 7,900
- ------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS 20,282 19,001 11,854
Discontinued operations--
Income from operations, net of tax 3,859 10,275 21,971
Gain (Loss) on sales, net of tax 21,900 -- (2,500)
- ------------------------------------------------------------------------------------------
NET INCOME $46,041 $29,276 $31,325
- ------------------------------------------------------------------------------------------
Net Income Per Share:
Continuing operations $.39 $.37 $.24
Discontinued operations--
Income from operations .08 .20 .45
Gain (Loss) on sales .42 -- (.05)
- ------------------------------------------------------------------------------------------
NET INCOME PER SHARE $.89 $.57 $.64
- ------------------------------------------------------------------------------------------
Dividends Declared Per Common Share $2.60 $2.55 $.20
- ------------------------------------------------------------------------------------------
Weighted Average Common Shares Outstanding 52,383 51,813 49,318
- ------------------------------------------------------------------------------------------
THREE-YEAR SUMMARY OF FINANCIAL DATA
- ------------------------------------------------------------------------------------------
Total Assets $93,372 $161,226 $258,106
Stockholders' Equity 42,511 127,764 220,596
Dividends 136,368 132,274 9,738
Capital Expenditures 11,658 2,303 3,335
Depreciation and Amortization 1,672 1,433 1,358
Long-Term Liabilities 12,191 4,671 4,867
- ------------------------------------------------------------------------------------------
</TABLE>
PRIOR YEAR RESULTS HAVE BEEN RESTATED TO REFLECT THE 1995 DISCONTINUANCE OF UNR
LEAVITT, UNARCO COMMERCIAL PRODUCTS, UNR HOME PRODUCTS AND REAL TIME SOLUTIONS,
INC. AND THE 1994 DISCONTINUANCE OF UNARCO MATERIAL HANDLING.
ROHN1996 ANNUAL REPORT 1
<PAGE>
TO OUR STOCKHOLDERS:
1996 was a busy and successful year. Sales of $154.4 million and income of
$20.3 million from our continuing operations at ROHN set new records for the
third consecutive year. A$12 million capital expenditure program at ROHN was
initiated and largely completed in 1996. The planned divestiture of four of
our operating divisions, announced in January, 1996, was completed in
December, 1996. We sold our Leavitt Tube, Unarco Commercial Products, UNR
Home Products divisions and our Real Time Solutions, Inc. (RTS) subsidiary
for approximately $162 million. Extraordinary dividends of $2.35 per share
were paid during the year as well as a regular dividend of $.25 per share, a
total of $2.60 per share.
The sale of the four operating divisions in 1996 completed a process of
strategic focus on ROHN and the wireless communication industry begun in 1993
with the sale of UNR's Midwest Steel and Midwest CATV divisions and continued in
1995 with the sale of our Unarco Material Handling division. The proceeds from
these sales, combined with cash flows from earnings and other sources, has
allowed the company to pay dividends of $10.15 per share, or $502 million,
during the period 1991-1996. Over the last four years, ROHN's sales have grown
from $67 million to $154 million, a compound growth rate of 23 percent
per year. ROHN's earnings grew from $8.2 million to $20.3 million, a
compound growth rate of 25 percent, over that same period.
As a result of these divestitures, our company today is soundly focused on a
single business which is the market leader in supplying a full range of selected
infrastructure products, principally towers, poles, masts, mounts, shelters, and
cabinets to one of the fastest growing sectors of our economy--wireless
communications. ROHN's growth over the past four years has been fueled by the
growth of the cellular phone and other types of wireless communication systems,
and importantly, by the introduction and rapid growth of its shelter product
lines. The impact of the build-out of a new wireless communication system, the
Personal Communications System (PCS), was not felt to any significant degree
until the second half of 1996 as the long anticipated PCS build-out got under
way. As the industry leader in the sales of towers and shelters, ROHN should
continue to benefit from the expanding build-out of existing cellular and new
PCS systems as well as other wireless systems such as Enhanced Specialized
Mobile Radio (ESMR),
2
<PAGE>
wireless local loop and high definition television (HDTV). In the pages that
follow, the drivers of ROHN's future growth are more fully discussed.
Capital expenditures in 1996 and early 1997 have significantly increased our
capacities. In January, 1997, a new 180,000 square foot manufacturing facility
was completed in Frankfort, Indiana, which provides new capacity for tower
components, masts and mounts. In the second quarter of 1997 we will complete the
installation of a new $4 million galvanizing facility in Peoria, Illinois, which
increases our galvanizing capacity. Also, in 1997, we will complete the
installation of a $2.5 million new Management Information System which will
improve our customer response, production scheduling, inventory control and cost
control capabilities. For 1997 and 1998, we have approved capital expenditures
for additional capacity expansions at our Bessemer, Alabama, shelter
manufacturing facility, new office space at our Peoria, Illinois, tower
manufacturing facility and several important new product programs. Total capital
expenditures over the three year period 1996-1998 will approximate $25 million
and will position the company to meet expected increases in demand with an
expanded product line.
The company closed its Chicago office in March, 1997, transferring corporate
headquarters to Peoria, Illinois. At our annual meeting in May, 1997, we will
ask shareholders to approve a corporate name change from UNR Industries, Inc. to
ROHN Industries, Inc. We are recommending this to reflect our change from a
holding company to a focused operating company.
1996 was a year of closure on one phase of our company's 77 year life. 1997
represents the beginning of another. Just as the company has met the challenges
of the past to survive and prosper, the company is prepared to meet the
challenges of profitable growth in the years ahead. The ROHN management team,
introduced in the pages that follow, is experienced, proven and dedicated to
continue to meet the expanding needs of its customers and provide a superior
return to our shareholders.
Thomas A. Gildehaus
President and Chief Executive Officer
<PAGE>
In 1948, ROHN produced its first tower for home television reception. Today,
ROHN stands as a world leader in the design, manufacture and installation of
telecommunications infrastructure. The ROHN product line is used by the
cellular, personal communications systems (PCS), enhanced specialized mobile
radio (ESMR), paging, radio and television, wireless cable, private microwave
and many other telecommunications markets. Its key products consist of
self-supporting and guyed (cable-supported) towers, steel and concrete poles,
concrete, fiberglass and lightweight equipment shelters, equipment cabinets,
antenna mounts and installation services. ROHN also manufactures galvanized
steel agricultural products, including horse stalls, cattle equipment, fencing
and gates.
STRONG GROWTH IN TELECOMMUNICATIONS
EQUIPMENT MARKET
The use of cellular telephones in the United States has shown rapid growth in
recent years from about 5 million subscribers in 1990 to over 40 million today.
The number of cell sites has risen from about 6,000 in 1990 to over 20,000 today
and is expected to grow to as many as 33,000 by the year 2000. Each site
requires an expenditure of up to $100,000 for the tower and shelter thus
providing a potential demand of as much as $1.0 billion for ROHN's products from
this market segment over that period.
A new wireless technology, PCS, has successfully been used in Europe for several
years, and is beginning to be used in the U.S. PCSclaims to have a number of
advantages over cellular, but most of these will not be realized until a greater
number of cell sites are built in each market. PCS is digital, while cellular,
for the most part is analog. Thus, PCShas a clearer signal, without noise, and
fewer dropped signals. PCScan carry data and images as well as voice and is
suitable for computer to computer communication, paging, short messaging and
fax, and offers better privacy and security than analog. With increased
competition, PCSis eventually (in 10 years) expected to decrease the cost of
wireless service until it approaches the cost of existing land line service.
Industry estimates are for roughly 100,000 PCS cell sites by the year 2000. Some
of these cell sites may use an existing tower or other structure, but a large
number of new towers and poles will be required and all
5
<PAGE>
sites will require a shelter or cabinet.
The cost of shelters, towers and other mounting equipment for a PCSsite is
expected to range from $10,000 to $100,000 depending on the location, providing
a potential demand in excess of $2.0 billion for ROHN's products from this
market segment over that period.
Cellular, instead of fading away, is beginning its own expensive conversion from
analog to digital, and will eventually be very similar to PCS, except that it
will operate at a different frequency than PCS. Competition among the various
carriers is launching a rush to offer the new digital services in each market.
This will provide enormous benefits for the telephone consumer--as well as for
those companies, such as ROHN,involved in building the infrastructure.
Broadcast and ESMR(enhanced special mobile radio) are two other markets which
ROHNsupplies that provide further opportunity for growth. ESMRoperates on a
specialized frequency and is rapidly being developed both in the United States
and internationally as an alternative to cellular and PCS systems for dispatch
applications involving private mobile fleets. The introduction of HDTV(high
denfinition television) will result in additional opportunities for ROHN as new
antenna support systems are required for this new broadcasting system.
ROHN's international operations are also expanding. ROHN has a substantial
international presence, having sold towers and other equipment in more than 55
countries, and currently operates a sales office in Mexico City. During the
coming years, ROHNplans to continue to develop overseas markets through its U.S.
customers and through the establishment of partnerships and facilities in key
developing countries.
PRODUCTS
TOWERS ROHN manufactures literally every configuration of tower possible, from
one that reaches 1500 feet in the air to a small antenna mount. Its principal
tower product is the self supporting tower ranging to heights of 900 feet. ROHN
towers can be found in use all across the world for television broadcast, AM/FM
radio broadcast, microwave, cellular telephone, personal communication systems,
radar, surveillance
5
<PAGE>
camera mounts, solar power stations and weather stations.
"OUR JOB, SIMPLY PUT, IS TO MAKE THE BEST TOWERS IN THE WORLD AND TO PROVIDE THE
WORLD'S BEST SERVICE TO OUR CUSTOMERS."
DONALD D. ROHN PRESIDENT--
TOWER OPERATIONS
[PHOTO]
GUYED TOWERS
[PHOTO]
SELF-SUPPORTING
TOWERS
[PHOTO]
POLES ROHN's line of steel and concrete poles are generally used when there is
not enough space to erect a tower. In an urban area where space is limited, a
ROHNpole can be installed virtually anywhere, greatly reducing the cost of the
land used. All poles have an infinitely rotatable mounting frame or platform and
are easily installed, so that in some instances they can be ready for equipment
in less than a day, minimizing the costs of labor and equipment.
SHELTERS/CABINETS/ENCLOSURES Housing highly valuable electronic components and
power systems is a major concern for communications companies. ROHNconcrete
shelters are made of lightweight concrete with steel reinforcements for added
toughness. ROHNfiberglass shelters are made of laminated fiberglass and are
lightweight, highly portable, strong and secure. ROHN has recently developed a
non-combustible shelter for roof-top applications. This shelter is
manufactured with a steel frame instead of wood to meet the strictest fire
codes. Also new to the ROHNline of shelters is a metal shelter
constructed as an ISO container that can be shipped anywhere in the world
without expensive packaging.
ROHN equipment cabinets are made of lightweight concrete or molded fiberglass
for a waterproof, rustproof and maintenance-free structure designed for compact
equipment installations. To conserve space and eliminate the high price of
certain zoning and permitting restrictions, some ROHNcabinets are partially
imbedded into the ground. ROHN works extensively with equipment providers and
carriers to design and produce a variety of equipment enclosures to meet the
needs of any particular site or application.
SUPPORT STRUCTURES ROHN's complete line of antenna mounts are all Hot-Dip
Galvanized to prevent corrosion. From non-penetrating roof mounts that spread
the ballast weight over a large area to mounts that concentrate the weight for
compact installation, each mount is designed to meet the client's needs.
ROHNalso provides tower mounts, wall mounts for corners or flat walls, square
pole mounts, and standard roof mounts for flat or sloped roofs.
6
<PAGE>
"QUALITY AND CUSTOMER SATISFACTION ARE THE
TWO PRINCIPAL CONCEPTS WHICH DRIVE OUR
SHELTER OPERATIONS." RICHARD L. ROHN
PRESIDENT--SHELTER OPERATIONS
[PHOTO]
LEADING MARKET SHARE POSITIONS
Since entering the market in 1948, ROHNhas established itself as a leader in the
telecommunications equipment industry. Currently, ROHNis the market leader in
towers and shelters, with an estimated U.S. market share of 30 percent and 25
percent, respectively. Management estimates ROHN's share in the U.S. pole market
to be between 5 and 10 percent.
MANUFACTURING FACILITIES
ROHN has over 900,000 square feet of manufacturing facilities located in
Illinois, Alabama and Indiana. The Company is currently investing over $25
million to expand capacity, improve productivity and introduce new products at
its facilities in order to keep pace with the telecommunications industry's
explosive growth.
ROHN's world headquarters is located in Peoria, Illinois. Here ROHN manufactures
towers and steel poles and performs all of its unique
in-house Hot-Dip Galvanizing processes.
ROHN's clean and modern manufacturing plant in Bessemer, Alabama is devoted
entirely to the production of shelters and cabinets. It is the world's largest
shelter-manufacturing plant and spans over 25 acres of land.
The recently completed, 180,000 square foot Frankfort, Indiana facility focuses
on manufacturing tower and pole components, telescoping masts and related
accessories, agricultural products and contract manufacturing.
ENGINEERING EXCELLENCE
ROHN's team of highly skilled and industry experienced engineers design with one
goal in mind ... to meet stringent client specifications. By utilizing the
latest techniques in computer-aided design and drafting, they assure all
ROHNproducts meet exacting standards of strength and durability. ROHNengineers
work closely with the team
of sales professionals who personally track orders through fabrication,
galvanizing and shipping to make sure customers are informed
FIBERGLASS SHELTERS
[PHOTO]
CABINETS
[PHOTO]
CONCRETE SHELTERS
[PHOTO]
7
<PAGE>
"WE SEE CONTINUED GROWTH BOTH DOMESTICALLY AND INTERNATIONALLY IN OUR MAJOR
MARKETS AND ARE MAKING THE INVESTMENTS NECESSARY TO MAINTAIN AND EXPAND OUR
LEADERSHIP POSITION." JAMES R. COTE
VICE PRESIDENT--MARKETING AND SALES
[PHOTO]
on the progress of their purchase from design to installation, assuring on-time
delivery of their order.
Quality control is also a top priority. To ensure that the products are the best
they can be, ROHNuses only the highest quality steel and other materials. All
ROHNproducts and manufacturing techniques are constantly being tested and
evaluated using electronic testing to ensure product durability and reliability
under the harshest elements.
EXPANDING CAPACITY AND NEW PRODUCTS
ROHN is currently initiating or completing significant capital expenditure
projects in order to expand the company's facilities and production capabilities
and to introduce new products.
In January 1997, ROHN completed a $6.5 million manufacturing facility in
Frankfort, Indiana which consolidates its current operations into a single
factory, enhances production efficiency and increases capacities. ROHN will be
updating machinery and equipment throughout the transition, including a high
rise storage rack system and a new 500 ton forming press for tower components
supplied to the Peoria facility.
A new $4.0 million "state of the art" galvanizing facility, including a 51 foot
galvanizing kettle, is being installed at Peoria. This expansion is necessary to
meet increasing demands for towers, poles and other support structures. The
facility, to be in full operation by the third quarter, 1997, will not only
increase capacity but will allow for galvanizing larger materials resulting in
improved turn-around and lower costs.
ROHN is in the final phases of implementing a new Management Information System
which will improve customer response times, production scheduling, inventory
control and cost control capabilities. This new $2.5 million project will also
generate improved management information and will allow constant on-line
communication among the Peoria, Bessemer and Frankfort facilities and with the
field sales force.
The Bessemer facility is being expanded by approximately 83,000 square feet.
This project includes expansion of the electrical installation and staging
areas, additional concrete casting production
ANTENNA MOUNTS
[PHOTO]
CONSTRUCTION SERVICES
[PHOTO]
8
<PAGE>
"OUR NEW MIS SYSTEM GREATLY INCREASES OUR CONTROL AND COSTING CAPABILITIES BY
INTEGRATING ALL OUR OPERATIONS ON A REAL TIME BASIS FOR THE FIRST TIME."
RODNEY B. HARRISON
CHIEF FINANCIAL OFFICER--UNR-ROHN
[PHOTO]
capabilities and additional office space. This expansion is expected to be
completed by the 4th quarter 1997 and will allow ROHN to meet the growing demand
for shelters and cabinets.
A major expansion of office space at Peoria will start in 1997. This expansion
will provide new and improved engineering facilities, relieve crowded conditions
generated by previous growth and provide space for continued growth.
Several new product programs are underway which will provide significant new
sales opportunities by 1998. New product development and introduction has been
and continues to be a fundamental strategic priority at ROHN in order to support
continued growth and to meet the needs of changing markets and technologies.
ROHN IS READY TO CONTINUE TO PROFITABLY MEET THE NEEDS OF THE RAPIDLY EXPANDING
WIRELESS COMMUNICATIONS INDUSTRY. ITS PRODUCT LINE IS BROAD AND EXPANDING, ITS
MARKET POSITION IS STRONG, ITS MANUFACTURING AND ENGINEERING CAPABILITIES ARE
SECOND TO NONE, ITS CAPACITIES CONTINUE TO GROW AND THE MANAGEMENT IS PROVEN,
EXPERIENCED AND COMMITTED TO BEING THE LEADING SUPPLIER OF SUPPORT STRUCTURES,
ENCLOSURES AND OTHER SELECTED PRODUCTS TO THE WIRELESS COMMUNICATIONS INDUSTRY
ON A GLOBAL BASIS.
CUSTOM GALVANIZING
[PHOTO]
STEEL POLES
[PHOTO]
CONCRETE POLES
[PHOTO]
9
<PAGE>
PRINCIPAL PRODUCTS PRINCIPAL MARKETS
SELF SUPPORTING TOWERS Cellular Broadcast
PCS Export
Microwave Lighting
ESMR
GUYED TOWERS Cellular Wireless Cable
PCS Microwave
Broadcast Export
Government
STEEL AND CONCRETE POLES Cellular Export
PCS
ANTENNA MOUNTS AND MASTS Wireless Cable Cellular
Home Television PCS
Direct Broadcast Paging
Television
CONCRETE AND FIBERGLASS SHELTERS Cellular Fiber Optics
PCS Wireless Cable
ESMR Telephone
Microwave Utilities
CONCRETE AND FIBERGLASS CABINETS PCS Cellular
Telephone ESMR
CONSTRUCTION/ERECTION Cellular Microwave
PCS ESMR
EQUIPMENT INSTALLATION Cellular Microwave
PCS ESMR
ENGINEERING SERVICES Cellular Wireless Cable
PCS Microwave
Broadcast Export
Government
10
<PAGE>
STATEMENTS OF INCOME
UNR Industries, Inc. and Subsidiaries for the Years ended December 31, 1996,
1995 and 1994
<TABLE>
<CAPTION>
(in thousands except per share data)
- ----------------------------------------------------------------------------------------------------
1996 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $154,434 $142,216 $107,026
Cost of products sold 106,847 98,996 73,060
- ----------------------------------------------------------------------------------------------------
GROSS PROFIT $ 47,587 $ 43,220 $ 33,966
Selling expense 5,986 5,232 6,256
Administrative and general expenses 9,103 8,126 9,130
- ----------------------------------------------------------------------------------------------------
OPERATING INCOME $ 32,498 $ 29,862 $ 18,580
Interest income 1,864 2,445 1,786
Interest expense (980) (606) (612)
- ----------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES $ 33,382 $ 31,701 $ 19,754
Income tax provision 13,100 12,700 7,900
- ----------------------------------------------------------------------------------------------------
INCOME FROM CONTINUING OPERATIONS $ 20,282 $ 19,001 $ 11,854
- ----------------------------------------------------------------------------------------------------
Discontinued operations:
Income from operations, net of ($2,400), $7,000, and
($1,900) taxes in 1996, 1995 and 1994, respectively 3,859 10,275 21,971
Gain (Loss) on sales, net of $14,600 and ($1,500)
taxes in 1996 and 1994, respectively 21,900 -- (2,500)
- ----------------------------------------------------------------------------------------------------
NET INCOME $ 46,041 $ 29,276 $31,325
- ----------------------------------------------------------------------------------------------------
Net Income Per Share:
Continuing operations $ .39 $ .37 $ .24
Discontinued operations--
Income from operations .08 .20 .45
Gain (Loss) on sales .42 -- (.05)
- ----------------------------------------------------------------------------------------------------
NET INCOME PER SHARE $ .89 $ .57 $ .64
- ----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
11
<PAGE>
BALANCE SHEETS
UNR Industries, Inc. and Subsidiaries as of December 31, 1996 and 1995
<TABLE>
<CAPTION>
(in thousands)
- -------------------------------------------------------------------------------------
ASSETS 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,030 $ 5,878
Accounts, notes and other receivables, less allowance
for doubtful accounts of $1,136 in 1996 and $2,185 in 1995 28,048 17,464
Inventories 30,717 27,549
Deferred income taxes 4,000 7,876
Prepaid expenses 1,093 988
- -------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 68,888 59,755
- -------------------------------------------------------------------------------------
PLANT AND EQUIPMENT:
Land 1,008 1,008
Buildings 18,590 11,516
Machinery and equipment 21,493 17,129
- -------------------------------------------------------------------------------------
41,091 29,653
Less-Accumulated depreciation (19,269) (17,827)
- -------------------------------------------------------------------------------------
TOTAL PLANT AND EQUIPMENT 21,822 11,826
- -------------------------------------------------------------------------------------
OTHER ASSETS:
Net assets of discontinued operations -- 89,026
Other 2,662 619
- -------------------------------------------------------------------------------------
TOTAL ASSETS $ 93,372 $161,226
- -------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
12
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
(in thousands)
- -------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Short-term borrowings $ 2,000 $ 6,000
Current portion of long-term liabilities 831 190
Accounts payable 8,735 5,236
Accrued expenses--
Payroll related 2,974 2,445
Insurance related 4,104 5,600
Customer deposits 4,725 4,150
Income taxes 10 513
Other 5,926 4,657
Net liabilities of discontinued operations 9,365 --
- -------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 38,670 28,791
- -------------------------------------------------------------------------------------
LONG-TERM LIABILITIES--NOTES AND CAPITAL LEASES 12,191 4,671
- -------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, authorized--60,000 shares,
issued--52,838 shares in 1996 and 52,495 shares in 1995 528 525
Capital surplus 9,837 66,898
Retained earnings 36,786 67,843
Less--326 treasury shares, at cost (1,595) (1,595)
Less--Notes receivable from officers (2,300) (5,525)
Less--Unearned portion of restricted stock (745) (382)
- -------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 42,511 127,764
- -------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 93,372 $161,226
- -------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
STATEMENTS OF CASH FLOWS
UNR Industries, Inc. and Subsidiaries for the years ended December 31, 1996,
1995 and 1994
<TABLE>
<CAPTION>
(in thousands)
- -------------------------------------------------------------------------------------------------------------------
1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 46,041 $ 29,276 $ 31,325
Adjustments for noncash items included in net income-
Depreciation and amortization 1,672 1,433 1,358
Provision for deferred employee compensation 261 183 383
Deferred income tax 1,270 12,700 7,900
Discontinued operations (gain) loss (21,900) -- 2,500
Operating requirements-
Accounts receivable (increase) decrease (10,584) 2,311 (7,314)
Income tax refund receivable decrease -- -- 52,603
Inventories (increase) (3,168) (6,339) (6,754)
Prepaid expenses (increase) decrease (105) 162 (556)
Accounts payable and accrued expenses increase (decrease) (3,990) (3,322) 9,206
Discontinued operations (26,329) 11,286 (8,802)
- -------------------------------------------------------------------------------------------------------------------
Net cash (used for) provided by operating activities $ (16,832) $ 47,690 $ 81,849
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment $ (11,658) $ (2,303) $ (3,335)
Increase in other assets (2,093) (118) (245)
Proceeds from the sale of discontinued operations 157,669 13,820 1,412
- -------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) investing activities $ 143,918 $ 11,399 $ (2,168)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in long-term liabilities $ (257) $ (195) $ (181)
Increase in long-term liabilities 8,418 -- 2,100
Proceeds from short-term borrowings 6,000 6,000 --
Payment of short-term borrowings (10,000) -- (5,100)
Dividends paid (136,368) (132,274) (9,738)
Loans to officers -- -- (9,100)
Repayment of officers' loans 3,225 3,575 --
Common stock issued 1,048 692 10,103
- -------------------------------------------------------------------------------------------------------------------
Net cash (used for) financing activities $(127,934) $(122,202) $ (11,916)
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents $ (848) $ (63,113) $ 67,765
Cash and cash equivalents, beginning of period 5,878 68,991 1,226
- -------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 5,030 $ 65,878 $ 68,991
- -------------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest $ 980 $ 606 $ 612
- -------------------------------------------------------------------------------------------------------------------
Cash paid during the year for income taxes $ 21,072 $ 1,792 $ 1,602
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
14
<PAGE>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
UNRIndustries, Inc. and Subsidiaries for the years ended December 31, 1996, 1995
and 1994
<TABLE>
<CAPTION>
(in thousands except per share data)
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK TREASURY STOCK
- ---------------------------------------------------------------------------------------------------------------------------------
Shares Capital Retained Restricted N/R
Issued Amount Surplus Earnings Shares Amount Stock From
Officers
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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)
Net Income -- -- -- 29,276 -- -- -- --
Issuance of restricted stock 19 -- -- -- -- -- -- --
Amortization of restricted shares -- -- -- -- -- -- 183 --
Repayment of officers' loans -- -- -- -- -- -- -- 3,575
Cash dividends--$2.55 per share -- -- (67,257) (65,017) -- -- -- --
Restricted stock canceled -- -- (72) -- -- -- 24 --
Warrants exercised 868 9 2,820 1,377 305 1,156 -- --
Warrants canceled -- -- 726 184 -- -- -- --
Directors' stock plan 31 -- 184 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1995 52,495 $525 $66,898 $67,843 (326) $(1,595) $(382) $(5,525)
Net Income -- -- -- 46,041 -- -- -- --
Issuance of restricted stock 90 1 876 -- -- -- (877) --
Amortization of restricted shares -- -- -- -- -- -- 400 --
Repayment of officers' loans -- -- -- -- -- -- -- 3,225
Cash dividends--$2.60 per share -- -- (59,270) (77,098) -- -- -- --
Restricted stock canceled (13) -- (114) -- -- -- 114 --
Directors' stock plan 21 -- 185 -- -- -- -- --
Stock options exercised 245 2 804 -- -- -- -- --
Stock options tax benefit -- -- 458 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
BALANCE DECEMBER 31, 1996 52,838 $528 $9,837 $36,786 (326) $(1,595) $(745) $(2,300)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
15
<PAGE>
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).
The Company's products are sold through distributors and directly to customers
throughout the United States and to international markets. The Company has one
customer to which it sold towers and shelters for use in both the PCS and
cellular markets that provided approximately 11% of its 1996 net sales.
International sales accounted for approximately five percent in each of the
years presented in the accompanying Consolidated Statements of Income.
The Company has a number of patents and trademarks. Management believes the loss
of any one of these patents or trademarks would not have a materially adverse
effect on its operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) PRINCIPLES OF CONSOLIDATION AND PRESENTATION
The financial statements include the consolidated accounts of UNR and its
subsidiaries. All significant intercompany transactions have been eliminated
in consolidation.
(b) 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.
(c) 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 in 1996 and 1995 included the following classifications (In
Thousands):
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Finished goods $13,065 $12,254
Work-in-process 5,678 3,791
Raw materials 11,974 11,504
- --------------------------------------------------------------------------------
Total Inventories $30,717 $27,549
- --------------------------------------------------------------------------------
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(d) 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 40 years; machinery and
equipment--3 to 15 years). Depreciation is generally provided on the
straight-line method for financial reporting purposes and on accelerated methods
for tax purposes.
(e) INCOME TAXES
Under Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (SFAS 109), the Company recognizes deferred tax liabilities and assets
for the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns.
Total income tax expense/(benefit) for the years ended December 31, 1996, 1995,
and 1994, was allocated as follows
(In Thousands):
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Income from continuing operations $13,100 $12,700 $07,900
Discontinued operations (net of $10,000
valuation allowance reversal in 1994) 12,200 7,000 (3,400)
Stockholders' equity, for compensation
expense for tax purposes in excess
of amounts recognized for financial
reporting purposes (458) (155) (31)
- --------------------------------------------------------------------------------
$24,842 $19,545 $ 4,469
- --------------------------------------------------------------------------------
Income tax expense attributable to income from continuing operations consists of
current provisions of $17.0 million, $1.6 million and $1.5 million and deferred
provisions of $(3.9) million, $11.1 million and $6.4 million for the years ended
December 31, 1996, 1995 and 1994, respectively.
Income tax expense attributable to income from continuing operations was $13.1
million, $12.7 million, and $7.9 million, for the years ended December 31, 1996,
1995 and 1994, respectively, and differed from the U.S. Federal statutory income
tax rate as follows (In Thousands):
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Amount % Amount % Amount %
- --------------------------------------------------------------------------------
Computed statutory provision $11,700 35 $11,100 35 $6,900 35
State taxes net of Federal effect 1,400 4 1,600 5 1,000 5
- --------------------------------------------------------------------------------
Total provision $13,100 39 $12,700 40 $7,900 40
- --------------------------------------------------------------------------------
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(e) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1996 and
1995 are as follows (In Thousands):
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Net operating loss carry-forwards $ -- $ 5,700
Depreciation (341) (1,018)
Accrued insurance reserves 1,642 2,099
Other, net 2,699 1,095
- --------------------------------------------------------------------------------
Net deferred tax assets $ 4,000 $ 7,876
- --------------------------------------------------------------------------------
The Company's remaining NOL carry forwards, which originated in 1993, were
fully utilized during 1996.
(f) 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 52,383,000 in 1996, 51,813,000 in 1995 and 49,318,000 in
1994. Dilution, which would result if all outstanding options were exercised,
is not significant to the net income per share computation.
(g) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(h) PENSION AND PROFIT SHARING PLANS
The Company and its subsidiaries have defined benefit or defined contribution
retirement 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 1996, 1995, and 1994 was $720,000, $660,000,
and $460,000, respectively. The Company has one trustee-administered profit
sharing plan covering all eligible employees. Discretionary contributions of
$218,000, $96,000 and $83,000 were charged to expense in 1996, 1995 and 1994,
respectively. Total pension expense for Company-sponsored plans for 1996,
1995 and 1994 was $130,000, $184,000, and $148,000, respectively.
18
<PAGE>
(h) PENSION AND PROFIT SHARING PLANS (CONTINUED)
Pension expense includes the following components (In Thousands):
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Service cost--benefits earned during the period $ 237 $ 220 $ 202
Interest on projected benefit obligations 415 365 315
Actual return on plan assets (538) (417) (356)
Net amortization and deferral 16 16 (13)
- --------------------------------------------------------------------------------
Net pension expense $ 130 $ 184 $ 148
- --------------------------------------------------------------------------------
The status of the plans at the respective year ends was as follows (In
Thousands):
- --------------------------------------------------------------------------------
1996 1995 1994
- --------------------------------------------------------------------------------
Fair market value of plan assets $6,888 $6,043 $4,959
- --------------------------------------------------------------------------------
Actuarial present value of benefits for services rendered to date:
Accumulated benefit obligation based on salaries
to date, including vested benefits of $4,866, $3,928
and $3,496 in 1996, 1995 and 1994, respectively $4,894 $3,952 $3,508
Additional benefits based on estimated future
salary levels 1,633 1,237 1,057
- --------------------------------------------------------------------------------
Projected benefit obligations $6,527 $5,189 $4,565
- --------------------------------------------------------------------------------
Excess of plan assets over projected
benefit obligations $ 361 $ 854 $ 394
Unrecognized net transitional asset 40 56 64
Unrecognized market (gain) loss 350 (391) (290)
Unrecognized prior service costs 67 84 92
- --------------------------------------------------------------------------------
Prepaid pension asset $ 818 $ 603 $ 260
- --------------------------------------------------------------------------------
The expected long-term rate of return on plan assets was 8.0% for 1996, 1995 and
1994. 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 8.0% and 4.0%, respectively, in 1996, 1995
and 1994.
(3) 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
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(3) DISCONTINUED OPERATIONS (CONTINUED)
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
(RTS) subsidiary, a supplier of "pick-to-light" inventory picking systems. Total
sales of these operations were $157 million, $242 million and $265 million for
the years ended December 31, 1996, 1995 and 1994, respectively.
On May 16, 1996, the Company entered into a definitive 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 entered into a definitive 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.
Net assets of these operations for the prior year are classified as "Net assets
of discontinued operations" in the accompanying balance sheets. The sale of
these divisions in 1996 resulted in a gain of $21.9 million, net of $14.6
million of taxes.
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. In 1994, the after-tax
$2.5 million provision for estimated loss on disposition of the industrial
storage rack business included a write-down of those assets to estimated net
realizable values and estimated costs of disposing of this operation.
(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
$4,919,000 at December 31, 1996, and $2,743,000 at December 31, 1995 (see Note
6).
Future minimum payments for operating leases at December 31, 1996, are $197,000
in 1997, $146,000 in 1998, and $143,000 in 1999. Rental expense under operating
leases was approximately $1,220,000 in 1996, $1,248,000 in 1995 and $1,186,000
in 1994.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(6) LONG-TERM BORROWINGS
Total borrowings of the Company at December 31, 1996 and 1995, consisted of the
following (In Thousands):
- --------------------------------------------------------------------------------
1996 1995
- --------------------------------------------------------------------------------
Mortgage notes payable at 7.5% to 8.0% $ 8,103 $ 2,118
Capital leases 4,919 2,743
Short-term borrowings 2,000 6,000
- --------------------------------------------------------------------------------
Total $15,022 $10,861
- --------------------------------------------------------------------------------
Classified in the balance sheets as follows:
Short-term borrowings $ 2,000 $ 6,000
Current portion of long-term liabilities 831 190
Notes and capital leases 12,191 4,671
- --------------------------------------------------------------------------------
Total $15,022 $10,861
- --------------------------------------------------------------------------------
The Company has a $20.0 million line of credit for short-term borrowings with a
bank. 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%, at the Company's option.
At December 31, 1996, outstanding borrowings totaled $2.0 million at an average
interest rate of 6.5%. 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 1/4% per annum.
Aggregate annual payments required on secured debt, including capitalized
leases, are $2,830,000 in 1997, $927,000 in 1998, $995,000 in 1999, $1,067,000
in 2000, $891,000 in 2001 and $8,312,000 thereafter.
(7) STOCK OPTION PLANS
The Company measures compensation cost using the intrinsic value-based method of
accounting pursuant to the provisions of APB Opinion No. 25. Had compensation
cost been determined on the fair market value-based accounting method proscribed
by Statement of Financial Accounting Standards (SFAS) No. 123 on Accounting for
Stock-Based Compensation for options granted in 1996 and 1995, the impact on the
financial position or results of operations of the Company would not be
material. Therefore, no additional disclosures related to SFAS No. 123 are
presented. Because the Statement 123 method of accounting has not been applied
to options granted prior to January 1, 1995, the resulting pro forma
compensation cost, which is immaterial in 1996 and 1995, may not be
representative of that to be expected in future years.
The Company had two stock option plans at December 31, 1996, 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. Options granted under this Plan
were exercisable at a price equal to the fair market value at the date of grant
and expired in ten years. At December 31, 1996, 1,153,000 common shares were
available for granting under this Plan. There were no outstanding options under
this Plan at December 31, 1996.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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, 1996,
55,000 common shares were available for granting under this plan.
Information relating to these plans are summarized below (In Thousands Except
per Share Data):
- --------------------------------------------------------------------------------
Average
Shares Option
Subject to Price per
Options Share
- --------------------------------------------------------------------------------
Outstanding December 31, 1993 17 $2.078
Granted 405 5.525
Exercised (17) 2.078
Canceled -- --
- --------------------------------------------------------------------------------
Outstanding December 31, 1994 405 $5.525
Granted 40 6.780
Exercised -- --
Canceled -- --
- --------------------------------------------------------------------------------
Outstanding December 31, 1995 445 $5.638
Granted -- --
Exercised (245) 3.084
Cancelled -- --
- --------------------------------------------------------------------------------
Outstanding December 31, 1996,
adjusted for extraordinary dividends 200 $0.838
- --------------------------------------------------------------------------------
(8) 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 170,869 and 162,264 shares of restricted stock outstanding at
December 31, 1996, and 1995, respectively. Of the current shares outstanding,
30,000 were awarded to the Company's President and CEO in connection with his
employment agreement and 140,869 shares were issued to certain key employees of
the Company. These shares have the same dividend and voting rights as other
common 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 $261,000 in 1996; $183,000
in 1995 and $383,000 in 1994.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(9) STOCKHOLDERS' EQUITY
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, 1996 and 1995, 1,133,565
shares have been purchased.
On December 23, 1996, the Company paid a regular dividend of $.25 per share and
an extraordinary dividend of $.35 per share to stockholders of record as of the
close of business on December 16, 1996.
On September 27, 1996, the Company paid an extraordinary dividend of $2.00 per
share to stockholders of record as of the close of business on September 17,
1996.
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 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 dividend of $.20 per share to
stockholders of record as of the close of business on March 18, 1994.
(10) RELATED PARTY TRANSACTIONS
The Company presently holds three notes receivable for a total of $2,300,000
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. In 1996, dividends
reduced the outstanding balance from $5,525,000 at December 31, 1995, to
$2,300,000 at December 31, 1996. In 1995, dividends reduced the outstanding
balance from $9,100,000 at December 31, 1994, to $5,525,000 at December 31,
1995. 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.
(11) BUSINESS SEGMENT INFORMATION
The Company operates predominantly in a single industry as a manufacturer of
towers, poles and shelters for the telecommunications industry. This industry is
strongly influenced by the growth in demand for wireless telecommunications
services.
The Company's export sales are less than 10% of total revenues. Revenues and
identifiable assets are related to its U.S. operations and no one other
geographic area accounts for more than 10% of total revenues or 10% of total
assets.
23
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) (in thousands except per share data)
- -------------------------------------------------------------------------------------------------------
First Second Third Fourth Year
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996
Net Sales $30,957 $37,857 $41,910 $43,710 $154,434
- -------------------------------------------------------------------------------------------------------
Gross profit 9,248 11,453 12,610 14,276 47,587
- -------------------------------------------------------------------------------------------------------
Operating income 5,815 7,659 8,786 10,238 32,498
- -------------------------------------------------------------------------------------------------------
Income from continuing operations 3,514 4,603 5,780 6,385 20,282
- -------------------------------------------------------------------------------------------------------
Discontinued operations:
Income from operations, net of tax 1,412 2,029 418 -- 3,859
Gain on sales, net of tax -- -- 21,900 -- 21,900
- -------------------------------------------------------------------------------------------------------
Net Income $4,926 $6,632 $28,098 $6,385 $46,041
- -------------------------------------------------------------------------------------------------------
Net Income Per Share
Continuing operations $ .07 $ .09 $ .11 $ .12 $ .39
Discontinued operations:
Income from operations .03 .04 .01 -- .08
Gain on sales -- -- .42 -- .42
- -------------------------------------------------------------------------------------------------------
Net Income Per Share $ .10 $ .13 $ .54 $ .12 $ .89
- -------------------------------------------------------------------------------------------------------
1995
Net Sales $37,180 $41,080 $32,994 $30,962 $142,216
- -------------------------------------------------------------------------------------------------------
Gross profit 11,064 12,345 10,067 9,744 43,220
- -------------------------------------------------------------------------------------------------------
Operating income 7,198 8,524 7,449 6,691 29,862
- -------------------------------------------------------------------------------------------------------
Income from continuing operations 4,886 5,292 4,606 4,217 19,001
- -------------------------------------------------------------------------------------------------------
Discontinued operations:
Income from operations, net of tax 2,987 2,502 2,465 2,321 10,275
- -------------------------------------------------------------------------------------------------------
Net Income $ 7,873 $ 7,794 $ 7,071 $ 6,538 $ 29,276
- -------------------------------------------------------------------------------------------------------
Net Income Per Share
Continuing operations $ .10 $ .10 $ .09 $ .08 $ .37
Discontinued operations:
Income from operations .06 .05 .05 .04 .20
- -------------------------------------------------------------------------------------------------------
Net Income Per Share $ .16 $ .15 $ .14 $ .12 $ .57
- -------------------------------------------------------------------------------------------------------
</TABLE>
24
<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, 1996 and 1995,
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, 1996. 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 acordance 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 by
management, 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of UNR Industries, Inc.
and Subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 6, 1997
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
YEAR 1996 VERSUS YEAR 1995
NET SALES FROM CONTINUING OPERATIONS. Net sales from continuing operations in
1996 were $154.4 million versus $142.2 million in 1995 or an increase of 8.5%.
The sales increase is due primarily to the growth of wireless
telecommunications, especially the growth of the infrastructure for personal
communications systems (PCS). Although the 1996 growth rate of 8.5% is smaller
than the 1995 gowth rate of 32.9%, 1995 sales included $15.0 million of sales
(recorded in the first half of 1995) from a one-time stand alone communications
network. The 1996 sales were the highest in the Company's history on a
continuing operations basis, and 1996 is the fourth consecutive year of record
sales.
GROSS PROFIT. In 1996, gross profit increased to 30.8% from the 30.4% level
achieved during 1995. The increase is due to a greater mix of tower products
compared to 1995.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses (SG&A) in 1996 were 9.8% of sales compared with 9.4% of sales during
1995. The percentages between the year are actually comparable, since 1995
included a $600,000 gain on the sale of real esate that reduced the 1995
percentage by over .4%.
INTEREST EXPENSE. Interest expense increased during 1996 resulting from
long-term borrowings for the new Frankfort, Indiana facility and for the
management information system being installed.
INTEREST INCOME. Interest income decreased due to generally lower levels of cash
available during 1996 compared to 1995 as a result of dividends paid to
shareholders.
INCOME TAXES. See footnote 2(e) for a complete discussion of UNR's taxes.
INTERNATIONAL. International sales, which approximated 5% of the Company's
sales, declined slightly from 1995.
YEAR 1995 VERSUS YEAR 1994
NET SALES FROM CONTINUING OPERATIONS. Net sales from continuing operations in
1995 were $142.2 million versus $107.0 million in 1994 or an increase of 32.9%.
The sales increase was due primarily to the rapid growth of wireless
telecommunications services. In addition, 1995 represented the first full year
of production in the expanded Bessemer, Alabama, shelter facility.
GROSS PROFIT. In 1995, gross profit as a percentage of sales was 30.4%, just
below the prior year's 31.7%. This decrease was due to competitive pressures in
the tower market and the fact that shelters, which carry a lower gross margin
percentage, now represented a greater portion of sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses (SG&A) in 1995 were 9.4% of sales versus 14.4% in 1994.
This reduction reflected cost containment measures taken throughout the Company,
a $600,000 gain on the sale of real estate included in 1995, and the operating
leverage created as a result of a 32.9% increase in sales and many fixed
expenses increasing by inflation.
INTEREST EXPENSE. Interest expense decreased due to lower average levels of
borrowings versus the prior year.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
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 1995 versus 1994.
INCOME TAXES. See footnote 2(e) for a complete discussion of UNR's taxes.
INTERNATIONAL. International sales, which represented slightly more than 5% of
the Company's sales, increased 14.9% from the prior year. Gains were made
primarily in South America and the Far East, while last year's sales increase
driver, Mexico, suffered this year due to economic problems.
LIQUIDITY AND CAPITAL RESOURCES. Cash flow during 1996 was a negative $850,000.
The 1996 cash flows included certain significant items, including dividends paid
of $136.4 million, and proceeds from the sales of discontinued operations of
$157.7 million. The Company's financial condition continues to be strong at the
end of 1996, with working capital of $30.2 million. The Company's working
capital ratio, a measure of short-term liquidity, decreased from 2.1 to 1 in
1995 to 1.8 to 1 in 1996. Both measures are considered strong indicators of
liquidity.
Capital expenditures were $11.7 million in 1996 versus $2.3 million in 1995.
Capital expenditures in 1996 included the construction of a new plant in
Frankfort, Indiana, which produces tower and shelter components, as well as a
full line of wireless communications mounts. The 1996 capital expenditures also
included the initial phases of a new galvanizing facility and expenditures on a
new management information system, both of which are to be implemented during
1997. The Company's current operating plan calls for capital spending in 1997 to
be approximately $12.5 million, which includes the construction of new
facilities in Peoria, Illinois for new products, expansion of the Bessemer,
Alabama shelter facility, and completion of the galvanizing and management
information system projects.
The Company expects to meet its ongoing working capital and capital expenditure
requirements from operating cash flows, borrowing through industrial development
revenue bonds and under a $20.0 million short-term credit facility. 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 may moderately affect earnings from time to time.
1997 COMPANY OUTLOOK
Company sales are expected to continue to grow from the demand created by the
continuing buildout of the PCS infrastructure, and the continuing growth of the
other wireless communications markets, including cellular. As international
opportunities continue to present themselves, ROHN plans to be aggressive in
pursuing those opportunities.
Through the capital expansion projects at all 3 manufacturing locations, ROHN
believes that it is increasing its capacity to meet its customers' demands for
wireless communications products.
Safe Harbor under the Private Securities Litigation Reform Act of 1995: The
information included in the Outlook section is forward looking and involves
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 any company, the company's outlook for 1997 is based
predominantly on the assumptions related to the growth of the various wireless
technologies discussed in this annual report.
27
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS
- Thomas A. Gildehaus
President and Chief Executive Officer
-+ Charles M. Brennan III
Chairman and Chief Executive Officer
of MYR Group, Inc.
-* Darius W. Gaskins, Jr.
Co-Founding Partner, Carlisle,
Fagan, Gaskins & Wise, Inc.
-* Gene Locks
Chairman of the Board of UNR
Industries, Inc.
Partner, Greitzer & Locks
+ Ruth R. McMullin
Private Investor
+ Thomas F. Meagher
Chairman, Howell Tractor &
Equipment Company
* Robert B. Steinberg
Partner, Rose Klein & Marias
* William J. Williams
Retired Chairman, The Huntington
National Bank
Dwight Rohn
Director Emeritus
Founder, UNR-ROHN
- Member, Executive Committee
* Member, Compensation Committee
+ Member, Audit Committee
CORPORATE OFFICERS
Thomas A. Gildehaus
President and Chief Executive Officer
Henry Grey
Senior Vice President and
Chief Financial Officer
Victor E. Grimm
Secretary and General Counsel
CORPORATE DATA
Transfer Agent and Registrar
First Chicago Trust Company of
New York
One First National Plaza
Chicago, Illinois 60670
Independent Auditors
Arthur Andersen LLP
33 West Monroe Street
Chicago, Illinois 60603
General Offices
6718 West Plank Road
P.O. Box 2000
Peoria, Illinois 61656
(309) 697-4400
DIVISIONAL MANAGEMENT
Dwight Rohn
Founder, UNR-ROHN
Donald D. Rohn
President, UNR-ROHN
Peoria, Illinois
Richard L. Rohn
President, UNR-ROHN
Bessemer, Alabama
Frankfort, Indiana
Rodney B. Harrison
Chief Financial Officer, UNR-ROHN
James R. Cote
Vice President--Marketing & Sales
UNR-ROHN
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., 6718
West Plank Road, P.O. Box 2000, Peoria, IL 61656.
STOCK LISTING
The Company's common stock is listed on the NASDAQ National Market Systems and
the Chicago Stock Exchange under the symbol UNRI.
28
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports 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 26, 1997
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0
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