<PAGE>
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
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
ROHN INDUSTRIES, INC.
---------------------
(DELAWARE)
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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 9, 1998
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Common Stock $.01 par value.......................... 52,821,009
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
--------- --------
<S> <C> <C>
Net sales $ 41,065 $ 37,748
Cost of products sold 29,736 25,912
--------- --------
Gross profit 11,329 11,836
--------- --------
Selling, general & administrative expenses 4,859 4,017
--------- --------
Operating income 6,470 7,819
Interest income/(expense), net (136) (179)
--------- --------
Income before provision for income taxes 6,334 7,640
Income tax provision 2,375 2,900
--------- --------
Net income $ 3,959 $ 4,740
--------- --------
--------- --------
Net Income Per Share:
Basic and diluted $ 0.08 $ 0.09
--------- --------
--------- --------
Weighted average number of shares outstanding
Basic 52,634 52,418
Diluted 52,646 52,585
</TABLE>
The accompanying notes are an integral part of these statements
2
<PAGE>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, 1998
(unaudited) December 31, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,087 $ 5,994
Accounts, notes and other receivables,
less allowance for doubtful accounts
of $1,448 in 1998 and $1,451 in 1997 30,674 33,748
Inventories 36,449 33,744
Deferred income taxes 4,450 4,450
Prepaid expenses 769 669
-------- --------
TOTAL CURRENT ASSETS 75,429 78,605
-------- --------
PLANT AND EQUIPMENT, at cost 47,941 46,596
Less: Accumulated depreciation (19,854) (19,101)
-------- --------
TOTAL PLANT AND EQUIPMENT 28,087 27,495
-------- --------
OTHER ASSETS 2,730 2,558
-------- --------
TOTAL ASSETS $106,246 $108,658
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 12,383 12,029
Accrued expenses 11,545 19,817
Current portion of long-term liabilities 966 948
Net liabilities of discontinued operations 212 842
Accrued income taxes 8,026 5,709
-------- --------
TOTAL CURRENT LIABILITIES 33,132 39,345
-------- --------
LONG-TERM LIABILITIES 11,030 11,271
-------- --------
STOCKHOLDERS' EQUITY
Common Stock 535 532
Capital surplus 13,069 11,602
Retained earnings 54,419 50,460
Treasury stock (3,896) (3,896)
Unearned portion of restricted stock (2,043) (656)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 62,084 58,042
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $106,246 $108,658
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(IN THOUSANDS)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1998 1997
---- ----
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 3,959 $ 4,740
Adjustments for noncash items included in net income:
Depreciation and amortization 753 558
Deferred income taxes -- (225)
Provision for deferred employee compensation -- 154
Operating requirements:
Accounts receivable decrease 3,074 760
Inventories (increase) (2,705) (3,872)
Prepaid expenses (increase) decrease (100) 50
Accounts payable & accrued expenses (decrease) increase (5,583) 1,268
Discontinued operations (decrease) (630) (2,675)
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Net cash (used in) provided by operating activities (1,232) 758
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CASH FLOW FROM INVESTING ACTIVITIES
Purchase of plant and equipment, net of retirements (1,345) (2,746)
(Increase) in other assets (172) 597
------- -------
Net cash provided by (used for) investing activities (1,517) (2,149)
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CASH FLOW FROM FINANCING ACTIVITIES
Decrease in long-term liabilities (241) (152)
Proceeds from short-term borrowings -- 7,570
Payment of short-term borrowings -- (9,570)
Issuance of common stock 83 --
------- -------
Net cash used in provided by financing activities (158) (2,152)
------- -------
Net increase (decrease) in cash and cash equivalents (2,907) (3,543)
Cash & cash equivalents, beginning of period 5,994 5,030
------- -------
Cash & cash equivalents, end of period $ 3,087 $ 1,487
------- -------
------- -------
Cash paid during the period for interest $ 264 $ 347
Cash paid during the period for income taxes $ 92 $ 86
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
ROHN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) 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 on Form 10-K for the
year ended December 31, 1997.
The financial statements presented herewith reflect all adjustments
(including normal and recurring accruals) which, in the opinion of
management, are necessary for fair presentation of the results of operations
for the three month period ended March 31, 1998 and 1997. The results of
operations for interim periods are not necessarily indicative of results to
be expected for an entire year.
(2) PRINCIPLES OF CONSOLIDATION
The financial statements include the consolidated accounts of Rohn and
its subsidiaries. All significant inter-company transactions have been
eliminated in consolidation.
(3) EARNINGS PER SHARE
Basic earnings per share were computed by dividing net income by the
weighted average number of shares outstanding during each period. Diluted
earnings per share were calculated by including the effect of all dilutive
securities. For the three months ended March 31, 1998 and 1997, the effect
of potentially dilutive stock options was 12,000 and 167,000, respectively.
The Company had additional outstanding stock options of 100,000 as of March
31, 1998, which were not included in the computation of diluted earnings per
share because the options' exercise price was greater than the average market
price of the common shares.
(4) INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) method. Inventory costs
include material, labor and factory overhead.
Total inventories included the following classifications (In Thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- -----------
<S> <C> <C>
Finished goods $ 15,666 $ 12,181
Work-in-process 7,626 7,060
Raw materials 13,157 14,503
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Total Inventories $ 36,449 $ 33,744
--------- -----------
</TABLE>
(5) COMPREHENSIVE INCOME
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income," which requires companies
to report all changes in equity during a period, except those resulting in
investment by owners and distribution to owners, in a financial statement for
the period in which they are recognized. The Company has not had any
transactions that would cause any difference in the amount reported as net
income and comprehensive income.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following discussion summarizes the significant factors affecting
the consolidated operating results and financial condition of Rohn
Industries, Inc. ("Rohn" or "the Company") for the three months ended March
31, 1998. This discussion should be read in conjunction with the
consolidated financial statements and notes to the consolidated financial
statements. Reference should be made to the consolidated financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.
In 1996, the Company completed the sale of four of its five operating
divisions while maintaining ownership of the Rohn Division. This has allowed
the Company to focus on the strategic growth and development of Rohn, a
leading manufacturer and installer of wireless infrastructure equipment for
the communications industry. The following table summarizes the four
divestitures:
<TABLE>
<CAPTION>
(Dollars in Millions)
Date Business Purchaser Sales Price
- ---- -------- --------- -----------
<S> <C> <C> <C>
July 1996 Unarco Commercial Products Richards Capital Fund, L.P. $41.0
Aug. 1996 UNR Leavitt Division Chase Brass Industries, Inc. 95.0
Sept. 1996 UNR Home Products Franke, Inc. 21.4
Dec. 1996 Real Time Solutions, Inc. Pinnacle Automation 4.0
</TABLE>
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. The final sales price of these operations were subject to the normal
closing adjustments. Total sales of these operations were $157 million and
$242 million for the years ended December 31, 1996 and 1995, respectively.
RESULTS OF OPERATIONS
Rohn is a leading manufacturer and installer of wireless infrastructure
equipment for the communications industry including cellular, PCS, radio and
television broadcast markets. The Company's products include towers,
enclosures/shelters, cabinets, poles and antenna mounts. The following table
sets forth, for the fiscal periods indicated, the percentage of net sales
represented by certain items reflected in the Company's consolidated
statements of income.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 72.4 68.6
----- -----
Gross profit 27.6 31.4
Selling, general and administrative expense 11.8 10.7
----- -----
Operating income 15.8 20.7
Interest (income) expense, net (.4) (.5)
----- -----
Income before provision
for income taxes 15.4 20.2
Provision for income taxes 5.8 7.7
----- -----
Net income from continuing operations 9.6% 12.5%
----- -----
----- -----
</TABLE>
6
<PAGE>
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Net sales for the first quarter ended March 31, 1998, were $41.1 million
in comparison to $37.7 million, an increase of 8.8% from the same period a
year ago. The increase in sales was primarily in the equipment
enclosure/shelter product line as the Company benefited from a wider range of
applications for these products within the communications industry. At the
same time, the sales of towers decreased in the first quarter due to a
slowdown in the build out of PCS systems and due to some loss of market
share. The Company believes that it may have lost market share in the first
quarter as certain competitors lowered unit prices significantly in response
to reduced demand for tower products in comparison to a year ago.
Gross profit for the first quarter of 1998 was $11.3 million versus
$11.8 million in the first quarter of 1997, a decrease of 4.3%. As a percent
to sales, gross margin was 27.6% for the current quarter in comparison to
31.4% for the same period a year ago. The 3.8 percentage point decrease was
primarily due to a change in sales mix as equipment enclosures accounted for
a higher percentage of sales in the current quarter than the tower product
line. Traditionally, the Company's tower product line has had higher gross
margins than its other primary products - equipment enclosures. The
difference in gross margins between the product lines is due to the higher
content in the equipment enclosures of relatively sophisticated environmental
and electrical equipment which is purchased from third party suppliers.
Another factor affecting product margins is continuing competitive price
pressure in the tower market.
Selling, general and administrative ("SG&A") expenses were $4.9 million
in the first quarter of 1998 versus $4.0 million in the first quarter of
1997. In comparison to the prior year, SG&A expenses increased by $0.9
million or by 21.0%. The increase in SG&A expenses was attributable to $0.5
million increase in sales related expenses and $0.4 million increase in
general and administrative related costs. The increase in sales related
expenses was attributable to an increase in the number of domestic and
international field sales representatives, an increase in sales management
and an increase in customer service related personnel. The Company believed
it was necessary to invest in personnel and systems to enhance the market
presence of Rohn in the communications industry. The increase in general and
administrative expenses was attributable to salaries for the new senior
management team during the Company's transition from a holding company to a
more narrowly focused operating company and the costs associated with the
Company's new enterprise resource planning software system.
Earnings per share (basic and diluted) from continuing operations in the
first quarter of 1998 was $0.08 versus $0.09 in the first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The following table sets forth selected information concerning the
Company's financial condition:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash $ 3.1 $ 6.0
Working capital 42.3 39.3
Total debt 12.0 12.2
Current ratio 2.28:1 2.00:1
</TABLE>
7
<PAGE>
The Company's working capital was $42.3 million at March 31, 1998
compared to $39.3 million at December 31, 1997, an increase of $3.0 million.
This increase in working capital primarily reflected a $2.7 million increase
in inventories. The increase in inventory was primarily in finished shelters
ready for delivery to customers and tower related inventory. The shelter
units are currently on hold pending authorization from the customer to
release to a specific construction site. In the majority of these
situations, the units have been completed, progress billed to the customer
and paid for by the customer. The first quarter of 1998 was also unusually
adversely impacted by weather related construction delays due to heavy rains
throughout the United States.
At March 31, 1998, the Company had aggregate indebtedness of $12.0
million. The Company's outstanding indebtedness was related to mortgage
notes payable and capital leases.
The Company expects that it will meet its ongoing working capital and
capital expenditure requirements from operating cash flows. In addition, the
Company's strong balance sheet allows it substantial financial flexibility.
INFLATION
Inflation has not had a material effect on the Company's business or
results of operation.
SEASONALITY
The operations of the Company are generally not subject to seasonal
fluctuations. However, in the past, the Company has seen disruptions in its
customer's ability to accept shipments due to unusual and prolonged
weather-related construction delays.
RECENT DEVELOPMENTS
The UNR Asbestos-Disease Claims Trust ("the Trust") informed the Company
that it has recently reviewed its investment in Rohn and has decided to seek
a sale of its shares, a merger or a like transaction that would involve
liquidating its entire investment in the Company, and that the Trust has
retained an investment banker to assist in soliciting proposals which might
achieve its objective. The Company has agreed to pay the fees of the
investment banker (one percent of the consideration received, plus debt
assumed) and to indemnify the investment banker against certain liabilities
only if a transaction involving a disposition of all of the common stock of
the Company is effected
YEAR 2000 COMPLIANCE
The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including , among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business activities.
The Company believes that its internal systems are year 2000 compliant.
However, the Company is uncertain as to the extent its customers and vendors
may be affected by year 2000 issues that require commitment of significant
resources and may cause disruptions in the customers' and vendors' businesses.
RECENT ACCOUNTING PRONOUNCEMENT
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income," which requires
companies to report all changes in equity during a period, except those
resulting in investment by owners and distribution to owners, in a financial
statement for the period in which they are recognized. The Company has not
had any transactions that would cause any difference in the amount reported
as net income and comprehensive income.
8
<PAGE>
FORWARD-LOOKING INFORMATION
From time to time, in written reports and oral statements, the Company
discusses the expectations regarding future performance. These
"forward-looking statements" are based on currently available competitive,
financial and economic data and operating plans. These statements are
inherently uncertain. Investors should recognize that actual results could
differ materially from those expressed or implied in forward-looking
statements.
PART II - OTHER INFORMATION
ITEM 5 OTHER INFORMATION
The Company's annual meeting of stockholders has been postponed
and will be scheduled by the Board of Directors of the Company during the
second half of 1998.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8K
(A.) Exhibits
11. The computation can be determined from the report.
27. Financial data schedule
(B.) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROHN INDUSTRIES, INC.
Dated: May 14, 1998 /s/ David V. LaRusso
- -------------------- --------------------------------------------------
David V. LaRusso
Vice President and Chief Financial Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,087
<SECURITIES> 0
<RECEIVABLES> 32,122
<ALLOWANCES> (1,448)
<INVENTORY> 36,449
<CURRENT-ASSETS> 75,429
<PP&E> 47,941
<DEPRECIATION> (19,854)
<TOTAL-ASSETS> 106,246
<CURRENT-LIABILITIES> 33,132
<BONDS> 11,030
0
0
<COMMON> 535
<OTHER-SE> 61,549
<TOTAL-LIABILITY-AND-EQUITY> 106,246
<SALES> 41,065
<TOTAL-REVENUES> 41,065
<CGS> 29,736
<TOTAL-COSTS> 34,595
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 136
<INCOME-PRETAX> 6,334
<INCOME-TAX> 2,375
<INCOME-CONTINUING> 3,959
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,959
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
