<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
-----------------------------------
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM TO
-------- -----------
COMMISSION FILE NUMBER 1-8009
UNR INDUSTRIES, INC.
(DELAWARE)
6718 West Plank Road
Peoria, Illinois 61604
I.R.S. Employer Identification Number 36-3060977
TELEPHONE NUMBER (309) 697-4400
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Outstanding as of
May 8, 1997
-----------
Common Stock $.01 par value................ 52,353,691
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(In Thousands Except Per Share Data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
1997 1996
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<S> <C> <C>
Net Sales $ 37,748 $ 30,957
Cost of products sold 25,912 21,709
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Gross Profit 11,836 9,248
Selling, general &
administrative expenses 4,017 3,433
-------- --------
Operating Income 7,819 5,815
Interest (expense), net (179) (1)
-------- --------
Income from continuing operations
before income taxes 7,640 5,814
Income tax provision 2,900 2,300
-------- --------
Income from continuing operations 4,740 3,514
Income from discontinued operations - 1,412
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NET INCOME $ 4,740 $ 4,926
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-------- --------
Net Income Per Share:
Continuing operations $ 0.09 $ 0.07
Discontinued Operations - 0.03
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NET INCOME PER SHARE $ 0.09 $ 0.10
-------- --------
-------- --------
Weighted average number of shares
outstanding 52,418 52,258
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-------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,487 $ 5,030
Accounts, notes and other receivables, less allowance for doubtful
accounts of $1,209 in 1997 and $2,248 in 1996 27,288 28,048
Inventories 34,589 30,717
Deferred income taxes 4,225 4,000
Prepaid expenses 1,043 1,093
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TOTAL CURRENT ASSETS 68,632 68,888
--------- -----------
PLANT AND EQUIPMENT, AT COST 43,837 41,091
Less: Accumulated depreciation (19,814) (19,269)
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TOTAL PLANT AND EQUIPMENT 24,023 21,822
--------- -----------
OTHER ASSETS 2,056 2,662
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TOTAL ASSETS $ 94,711 $ 93,372
--------- -----------
--------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ - $ 2,000
Accounts payable 7,437 8,735
Accrued expenses 17,172 17,729
Current portion of long-term liabilities 883 831
Net Liabilities of Discontinued Operations 6,690 9,365
Accrued income taxes 3,137 10
--------- -----------
TOTAL CURRENT LIABILITIES 35,319 38,670
--------- -----------
LONG-TERM LIABILITIES 11,987 12,191
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STOCKHOLDERS' EQUITY
Common Stock 529 528
Capital surplus 10,211 9,837
Retained earnings 41,526 36,786
Treasury stock (3,895) (1,595)
Notes receivable from officers - (2,300)
Unearned portion of restricted stock (966) (745)
--------- -----------
TOTAL STOCKHOLDERS' EQUITY 47,405 42,511
--------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 94,711 $ 93,372
--------- -----------
--------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
CASH FLOW FROM OPERATING ACTIVITIES 1997 1996
--------- --------
<S> <C> <C>
Net Income $ 4,740 $ 4,926
Adjustments for noncash items included in net income-
Depreciation and amortization 558 380
Deferred income taxes (225) 2,300
Provision for deferred employee compensation 154 53
Operating requirements-
Accounts receivable (increase) 760 (697)
Inventories (increase) (3,872) (1,539)
Prepaid expenses (increase) 50 109
Accounts Payable & accrued expenses (decrease) 1,268 890
Discontinued operations (2,675) (4,009)
--------- --------
Net cash provided by operating activities $ 758 $ 2,413
--------- --------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of plant and equipment $ (2,746) $ (262)
(Increase) in other assets 597 (95)
--------- --------
Net cash (used for) investing activities $ (2,149) $ (357)
--------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Decrease in long-term liabilities (152) (47)
Proceeds from short-term borrowings 7,570 4,000
Payment of short-term borrowings (9,570) (10,000)
Issuance of common stock - 524
--------- --------
Net cash (used for) financing activities $ (2,152) $ (5,523)
--------- --------
Net (decrease) in cash and cash equivalents $ (3,543) $ (3,467)
Cash & cash equivalents, beginning of period 5,030 5,878
--------- --------
Cash & cash equivalents, end of period $ 1,487 $ 2,411
--------- --------
--------- --------
Cash paid during the period for interest $ 347 $ 103
--------- --------
--------- --------
Cash paid during the period for income taxes $ 86 $ 367
--------- --------
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</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
UNR INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) Nature of Operations:
UNR Industries, Inc. ("UNR" or the "Company") manufactures towers, poles,
mounts and related accessories used principally to support telecommunications
antennae for wireless communications, such as private microwave, cellular
telephone, PCS (personal communications systems), commercial and amateur
broadcasting and home television. The Company also produces shelters and
cabinets of concrete and fiberglass to house electronic telecommunications
equipment.
The Company conducts its business principally through its ROHN Division
which has manufacturing facilities in Peoria, Illinois (towers and poles),
Frankfort, Indiana (tower components and mounts), and Bessemer, Alabama
(shelters).
(2) Principles of Consolidation:
The financial statements include the consolidated accounts of UNR and its
subsidiaries. All significant intercompany transactions have been eliminated in
consolidation.
(3) Income Taxes:
The Company's remaining NOL carry forwards, general business credit carry
forwards, and AMT credit carry forwards, were fully utilized during 1996.
(4) Net Income Per Share:
Net income per share is based on the weighted average number of common
shares outstanding during each period. Dilution, which would result if all
outstanding options were exercised, is not significant to the net income per
share computation.
(5) Treasury Stock:
In 1990, the Company announced that its Board of Directors had authorized
the acquisition, through both negotiated transactions involving large blocks and
open market purchases, of up to 1.5 million shares of its common stock to be
held as treasury shares and be available to meet requirements of its Key
Executives' Stock Option Plan and other corporate purposes. As of March 31,
1997, 1,133,565 shares have been purchased.
Pursuant to the UNR Industries, Inc. 1994 Executive Stock Purchase Plan,
during the first quarter of 1997 the Company retained 308,625 treasury shares
from certain officers to satisfy the unpaid principal portion of promissory
notes due to the Company. See Item 13 in Form 10-K/A Amendment No. 1 for
further details.
(6) Dividends Declared:
On September 27, 1996, the Company paid an extraordinary cash dividend of
$2.00 per share to stockholders of record as of the close of business on
September 17, 1996. On December 23, 1996, the Company paid a regular cash
dividend of $.25 per share and an extraordinary cash dividend of $.35 per share
to stockholders of record as of the close of business on December 16, 1996.
(7) Inventories:
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Inventory costs include material,
labor and factory overhead.
5
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Total inventories include the following classifications (In Thousands):
March 31, December 31,
1997 1996
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Finished goods $ 14,216 $ 13,065
Work-in-process 5,522 5,678
Raw materials 14,851 11,974
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Total Inventories $ 34,589 $ 30,717
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(8) Discontinued Operations:
On September 7, 1995, the Company announced that its Board of Directors
authorized Company management to explore the sale of all or a majority of the
common stock of the Company. On January 26, 1996, the Company announced that
efforts to sell the entire Company did not result in a satisfactory offer and
that it would begin discussions with multiple parties regarding the sale of four
of its five operating divisions in order to focus fully on the strategic growth
and development of its ROHN Division, a supplier of goods and services to the
telecommunications industry. The divisions sold were the Leavitt Tube Division,
a producer of mechanical and structural steel tubing, the Commercial Products
Division, a manufacturer of steel and plastic shopping carts, the Home Products
Division, a manufacturer of stainless steel and composite sinks and the Real
Time Solutions, Inc. subsidiary, a supplier of "pick-to-light" inventory picking
systems. Net liabilities of these divisions are classified as "Net liabilities
of discontinued operations" in the accompanying balance sheets.
On May 16, 1996, the Company announced the signing of a definitive sales
agreement to sell its UNR-Leavitt Division to Chase Brass Industries, Inc. for
$95.0 million cash, subject to closing adjustments. This transaction closed in
August, 1996.
On June 19, 1996, the Company announced the signing of a definitive sales
agreement to sell its Unarco Commercial Products Division to Richards Capital
Fund, L.P. for $41.0 million cash, subject to closing adjustments. This
transaction closed in July, 1996.
On August 27, 1996 the Company entered into a definitive agreement to sell the
assets of its Home Products Division to Franke, Inc. for $21.4 million cash,
subject to closing adjustments. This transaction closed in September, 1996.
On December 19, 1996, the Company announced the sale of its Real Time solutions,
Inc. subsidiary to Pinnacle Automation. This transaction closed in December,
1996.
The sale of these divisions in 1996 resulted in a gain of $21.9 million, net of
$14.6 million of taxes, which was recorded in the third quarter of 1996.
(9) Basis of Reporting for Interim Financial Statements:
The unaudited financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Company's Annual Report and Form 10-K for the year ended December 31, 1996.
6
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The financial statements presented herewith reflect all adjustments
(consisting of normal and recurring accruals) which, in the opinion of
management, are necessary for fair statement of the results of operations for
the three month periods ended March 31, 1997 and 1996. Results of operations
for interim periods are not necessarily indicative of results to be expected
for an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's 1996 Annual Report and Form 10-K contain management's
discussion and analysis of financial condition and results of operations for the
year ended December 31, 1996. The following discussion and analysis describes
changes in the Company's financial condition from December 31, 1996, and the
Company's financial position at that date. Trends are discussed to the extent
known and considered relevant. The analysis of results of operations compares
the three-month period ended March 31, 1997, with the corresponding period of
1996.
RESULTS OF OPERATIONS
First quarter of 1997 versus First quarter of 1996:
Net sales from continuing operations increased approximately 22% to $37.7
million from $31.0 million in the same period last year. This increase is
due in part to the continuing build-out of the Personal Communications System
(PCS) infrastructure.
Selling, general and administrative expenses were $4.0 million or 10.6%
of sales for 1997 versus $3.4 million or 11.0% of sales in 1996.
Operating income was $7.8 million for the first quarter of 1997 versus
$5.8 million for the same period last year or an increase of over 34%. This
increase is due largely to the increase in sales.
Net interest in both periods includes the interest earned on short-term
investments reduced by interest paid on secured debt. Increase in net interest
expense for the first quarter of 1997 versus net interest expense for the same
period last year is due to the long term borrowings for the Frankfort, IN
facility and for the management information system being installed.
LIQUIDITY AND CAPITAL RESOURCES
The following is a comparison of the working capital at March 31, 1997,
and December 31, 1996:
March 31, 1997 December 31, 1996
-------------- -----------------
Working Capital (in millions) $33.3 $30.2
Working Capital Ratio 1.9 to 1 1.8 to 1
The Company's financial condition continues to be strong at the end of the
first quarter of 1997, with working capital of $33.3 million at March 31, 1997,
as compared to $30.2 million at December 31, 1996. The Company's working
capital ratio at March 31, 1997, was 1.9 to 1 versus 1.8 to 1 at December 31,
1996; both are considered strong measures of liquidity. The Company expects
that it will meet its ongoing working capital and capital expenditure
requirements from operating cash flows, borrowings through industrial revenue
bonds and under a $20.0 million short-term credit facility. In addition, the
Company's strong unleveraged balance sheet allows it access to funds, if needed,
from the capital markets.
7
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SALE OF DISCONTINUED BUSINESSES
See Item 8, above.
ACCOUNTING CHANGES
The Financial Accounting Standards board has issued Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings per Share which is effective for
financial statements for both interim and annual periods ending after December
15, 1997, and SFAS No. 129, Disclosure of Information about Capital Structure,
which is effective for periods ending after December 15, 1997. Earlier
application is not permitted. The expected impact of the adoption of these
standards will not be material.
SAFE HARBOR UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Some comments and information included in this report are forward looking
and involve risks and uncertainties that could significantly impact expected
results. While it is impossible to itemize the many factors and specific events
that could affect the outlook of the company, the company's outlook for 1997 is
based predominately on assumptions related to the growth of the various wireless
technologies.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
1. Disposition of Assets - See Notes to Financial Statements #8, in Part I.
2. Brian B. Pemberton was elected as President and Chief Executive Officer of
UNR Industries, Inc. effective April 14, 1997. Refer to Item 11,
Form 10-K/A Amendment No. 1 for the fiscal year ended December 31, 1996.
3. Henry Grey, Senior Vice President-Finance, Treasurer and Chief Financial
Officer announced on May 12, 1997, his retirement from UNR Industries,
Inc. effective June 30, 1997. Rodney B. Harrison, Chief Financial
Officer of the ROHN Division of UNR Industries, Inc., has been appointed
Vice President and Treasurer effective July 1, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
2. Plan of Reorganization incorporated herein by reference from
Exhibit A of the 1989 first quarter Form 10-Q.
10. Employment Agreement dated March 13, 1997, between registrant
and Brian B. Pemberton.
11. The computation can be determined from the report.
15. None
18. None
19. None
22. None
23. None
24. None
27. Financial data schedule.
(B) Reports on Form 8-K
None
8
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNR INDUSTRIES, INC.
Dated: May 14, 1997 /s/ Henry Grey
-----------------------------------------
Henry Grey
Senior Vice President-Finance,
Treasurer & Chief Financial Officer
Dated: May 14, 1997 /s/ Rodney B. Harrison
-----------------------------------------
Rodney B. Harrison
Principal Accounting Officer
9
<PAGE>
[LETTERHEAD]
March 13, 1997
Mr. Brian B. Pemberton
Dear Brian:
The Board of Directors of UNR Industries, Inc. (the "Company") is pleased
to present to you this offer of employment as President and Chief Executive
officer of the Company on the following terms and conditions:
1. Your employment will commence on April 14, 1997. You would be elected
President and Chief Executive Officer of the Company as of that date and, as
soon as feasible thereafter, you would be elected a Director of the Company.
2. Your base salary will be $325,000 per year, subject to annual review
and adjustment by the Compensation Committee of the Company's Board of
Directors.
3. Your annual bonus will be based upon the Rohn Bonus Plan under which
there is a maximum bonus opportunity for senior executives of 100% of base
salary. Attached is a summary of the Rohn Bonus Plan. At the discretion of
the Compensation Committee, some portion of annual bonuses may be provided in
the form of additional equity in the Company.
4. You will be awarded 100,000 shares of restricted stock of the Company
pursuant to the Company's Restricted Stock Plan and you would receive options
to acquire an additional 100,000 shares under the Company's Stock Option
Plan. Restricted stock would vest at the rate of 25% per year during a four
year period of continuous employment or in the event of your death,
disability or a change of control of the Company. Stock options would be
exercisable after one year of employment at the market price of the stock as
of April 1, 1997, and shall expire after 5 years.
10
<PAGE>
Mr. Brian B. Pemberton
March 13, 1997
Page 2
5. You will be covered by the Company's health, disability and life
insurance programs and other benefits generally provided to Company
executives.
6. The Company will pay reasonable moving expenses associated with your
relocation to Peoria, Illinois.
7. Your employment will be at-will, and either party may terminate the
employment relationship at any time for any reason. However, in the event
your employment were to be terminated by the Company without cause during the
first three years, you will be entitled to a severance payment equal to one
year's base salary then in effect plus the amount of the target bonus for the
year in which termination occurred. In the event that your employment is
terminated by the Company after the first three years of employment, you will
be entitled to such termination compensation as the Board of Directors
considers reasonable and appropriate. In the event you are terminated for
cause at any time, no severance or termination payment shall be made. The
term "cause" as used herein shall mean an act or acts of dishonesty in the
course of employment, the conviction of a felony or the failure to perform
duties or responsibilities reasonably assigned by the Board of Directors.
8. During the course of your employment you will receive confidential
information and trade secrets of the Company, and you will agree to maintain
confidentiality and refrain from disclosing all such information and trade
secrets to any other party (except as may be required in the course of the
Company's business) during and after termination of your employment. You will
agree not to become employed by, have an ownership interest in, or engage in
any business in competition with the Company for a period of two years after
termination of your employment.
Please indicate your acceptance of this offer by signing a copy of this
letter and returning it to me.
Yours very truly,
/s/ Darius W. Gaskins
- ------------------------------
Darius W. Gaskins, Jr.
Chair, Compensation Committee
UNR Industries, Inc.
Accepted and agreed to:
/s/ Brian B. Pemberton
------------------------------
Brian B. Pemberton
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1487
<SECURITIES> 0
<RECEIVABLES> 28497
<ALLOWANCES> 1209
<INVENTORY> 34589
<CURRENT-ASSETS> 68632
<PP&E> 43837
<DEPRECIATION> 19814
<TOTAL-ASSETS> 94711
<CURRENT-LIABILITIES> 35319
<BONDS> 11987
0
0
<COMMON> 529
<OTHER-SE> 46876
<TOTAL-LIABILITY-AND-EQUITY> 94711
<SALES> 37748
<TOTAL-REVENUES> 37748
<CGS> 25912
<TOTAL-COSTS> 4017
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 179
<INCOME-PRETAX> 7640
<INCOME-TAX> 2900
<INCOME-CONTINUING> 4740
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4740
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>
