<PAGE>
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: November 29, 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: 0-10095
Unit Instruments, Inc.
(Exact name of registrant as specified in its charter)
California 33-0077406
(State or other jurisdiction (I.R.S. Employer
of Incorporation) Identification Number)
22600 Savi Ranch Parkway, Yorba Linda, California 92887
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (714) 921-2640
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Classes Outstanding at December 31, 1997
------- --------------------------------
<S> <C>
Common Stock $.15 Par Value............... 4,438,428
</TABLE>
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<PAGE>
UNIT INSTRUMENTS, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Condensed Consolidated Balance Sheets........................................ 3-4
November 29, 1997 and May 31, 1997
Condensed Consolidated Statements of Operations.............................. 5
Three months and six months ended November 29, 1997
and November 30, 1996
Condensed Consolidated Statements of Cash Flows.............................. 6
Six months ended November 29, 1997 and
November 30, 1996
Notes to Condensed Consolidated Financial Statements......................... 7-9
Management's Discussion and Analysis of...................................... 9-13
Financial Condition and Results of Operations
Part II. Other Information
Item 4. Submission of Matters of Security-Holders........................ 13
Item 5. Subsequent Event................................................. 14
Item 6. Exhibits and Reports on Form 8-K................................. 14
Signatures................................................................... 15
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
UNIT INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of November 29, 1997 and May 31, 1997
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
November 29, 1997 May 31, 1997
----------------- ------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $16,097 $12,203
Accounts and notes receivable 8,281 7,032
Inventories 9,123 8,700
Income taxes refundable -0- 1,523
Prepaid expenses and other 551 322
Deferred taxes 1,333 1,333
------- -------
Total current assets 35,385 31,113
Property, plant and equipment, at cost:
Buildings and improvements 5,516 5,046
Machinery and equipment 13,465 14,644
------- -------
18,981 19,690
Accumulated depreciation and amortization 9,816 9,767
------- -------
9,165 9,923
Construction in progress 567 226
------- -------
Net property, plant and equipment 9,732 10,149
Goodwill, net of accumulated amortization of
$2,551 and $2,275, respectively 8,301 8,577
Other assets 1,089 1,125
------- -------
$54,507 $50,964
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
UNIT INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
as of November 29, 1997 and May 31, 1997
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
November 29, 1997 May 31, 1997
----------------- ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,230 $ 2,290
Accrued compensation and benefits 1,611 1,113
Current installments on term debt 1,590 1,740
Other current liabilities 2,983 2,274
------- -------
Total current liabilities 9,414 7,417
Deferred income taxes 203 203
Other long-term liabilities and deferred credits 594 683
------- -------
Total liabilities 10,211 8,303
Shareholders' equity:
Common stock, $.15 par value; authorized shares:
12,000,000; issued shares: 4,512,228 as of
November 29, 1997 and 4,384,627 as of
May 31, 1997 677 658
Additional paid-in capital 24,002 23,211
Retained earnings 20,203 19,280
Foreign currency translation adjustment (586) (488)
------- -------
Total shareholders' equity 44,296 42,661
$54,507 $50,964
======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
UNIT INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
November 29, 1997 and November 30, 1996
(amounts in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
11/29/97 11/30/96 11/29/97 11/30/96
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 14,925 $ 8,002 $ 29,521 $ 21,290
Operating costs and expenses:
Cost of goods sold 9,868 7,627 19,829 16,297
Selling and administration 3,032 3,105 6,140 6,364
Restructuring costs -0- 296 -0- 558
Research, development and engineering 1,220 1,072 2,325 2,202
---------- ---------- ---------- ----------
Operating income (loss) 805 (4,098) 1,227 (4,131)
Interest income 220 206 419 410
Interest expense (13) (15) (28) (26)
Other income (expense), net (72) (37) (80) (12)
---------- ---------- ---------- ----------
Income (loss) before income taxes 940 (3,944) 1,538 (3,759)
Provision for income taxes 376 (1,286) 615 (1,203)
---------- ---------- ---------- ----------
Net income (loss) $ 564 $ (2,658) $ 923 $ (2,556)
========== ========== ========== ==========
Per common share:
Net income (loss) per share $0.12 $(0.61) $0.20 $(0.58)
========== ========== ========== ==========
Average shares used in computing
earnings per share 4,588,000 4,373,000 4,535,000 4,379,000
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
UNIT INSTRUMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended November 29, 1997 and November 30, 1996
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------
11/29/97 11/30/96
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 923 $ (2,556)
Adjustments to reconcile net income to
net cash provided from operating activities:
Depreciation and amortization 1,471 1,567
Gain on disposal of assets (1) -0-
Changes in assets and liabilities net of effect of
business acquired:
Accounts receivable (1,249) 5,668
Inventories (423) 1,279
Prepaids and other assets (222) (8)
Accounts payable and accrued liabilities 1,010 (1,569)
Income taxes 2,660 (2,000)
Other liabilities (89) 16
--------- ---------
Net cash flow provided from operating activities 4,080 2,397
Cash Flows from Investing Activities:
Capital expenditures (801) (710)
Net cash paid for acquisition of Control Systems, Inc. -0- (1,127)
Proceeds from asset sales 53 -0-
--------- ---------
Net cash used in investing activities (748) (1,837)
Cash Flows from Financing Activities:
Payments on long-term debt -0- (254)
Change in short-term borrowings, net (150) (678)
Purchase of company common stock -0- (180)
Proceeds from exercise of stock options 810 59
--------- ---------
Net cash flows provided from (used in) financing activities 660 (1,053)
Effect of exchange rate changes on cash and cash equivalents (98) 11
--------- ---------
Net increase (decrease) in cash and cash equivalents 3,894 (482)
Cash and cash equivalents at beginning of year 12,203 14,572
--------- ---------
Cash and cash equivalents at end of year $ 16,097 $ 14,090
--------- =========
Supplemental disclosure of cash flow information:
Interest paid $ 13 $ 26
Net (refunds) or payments of income taxes $ (2,045) $ 757
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
UNIT INSTRUMENTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands)
1. Significant Accounting Policies
The condensed consolidated financial statements included herein are based
in part on estimates and include such adjustments (consisting solely of
normal, recurring adjustments) which management believes are necessary for
a fair presentation of the Company's financial position at November 29,
1997 and May 31, 1997, and the results of its operations for the three
month and six month periods ended November 29, 1997 and November 30, 1996.
The consolidated financial statements and related notes are condensed and
have been prepared in accordance with generally accepted accounting
principles applicable to interim periods; consequently, they do not include
all generally accepted accounting disclosures required for complete annual
financial statements. These condensed consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto contained in the Company's Annual Report on Form 10-K for the year
ended May 31, 1997.
The results of operations for the period presented are not necessarily
indicative of results to be expected for the entire fiscal year. Certain
prior year items have been reclassified to conform to the current year
presentation.
2. Inventories
Inventories at November 29, 1997 and May 31, 1997 consisted of the
following:
<TABLE>
<CAPTION>
November 29, 1997 May 31, 1997
----------------- ------------
<S> <C> <C>
Raw materials $6,755 $6,701
Work in process 1,460 1,058
Finished goods 908 941
------ ------
Total inventories $9,123 $8,700
====== ======
</TABLE>
3. Acquisition of Control Systems, Inc.
The Company acquired Control Systems, Inc. ("CSI") on June 3, 1996 in
exchange for $1.2 million in cash and 289,000 shares of Company stock
valued at $3,977,000. CSI fabricates high purity gas isolation boxes and
gas panels for semiconductor manufacturers. The acquisition has been
accounted for by using the purchase method. Accordingly, the results of
operations of CSI are included with those of the Company for the three
month and six
7
<PAGE>
month periods ended on November 29, 1997 and November 30, 1996. A Current
Report on Form 8-K was filed on August 13, 1996 reporting this transaction.
4. Restructuring Charges
During the first and second quarters of the prior fiscal year, the Company
reduced its workforce by 109 and 22 positions, respectively, in response to
the steep downturn in the semiconductor equipment market. This workforce
reduction represented approximately 26% of the Company's worldwide
employment. A restructuring charge of $262,000 was recorded in the first
quarter and $296,000 was recorded in the second quarter for costs
associated with the consolidation of certain facilities and for additional
severance related expenses.
5. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
on Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128).
SFAS 128 simplifies the computation of earnings per share (EPS) by
replacing the presentation of primary EPS with a presentation of basic EPS.
Basic EPS includes no dilution and is computed by dividing income available
to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution of
securities that could share in the earnings of an entity, similar to
primary EPS. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. Earlier
application is not permitted. SFAS 128 requires restatement of all prior
period earnings per share data.
The Company will report EPS under the SFAS 128 rules beginning with the
next quarterly report on Form 10-Q. If SFAS 128 were applied to the
Statements of Operations presented in this Form 10-Q, EPS would be as
follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------------- --------------------------
11/29/97 11/30/96 11/29/97 11/30/96
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Basic EPS 0.13 (0.61) 0.21 (0.58)
Diluted EPS 0.12 (0.61) 0.20 (0.58)
</TABLE>
8
<PAGE>
6. Subsequent Events
On January 2, 1998 the Company entered into a Stock Repurchase Agreement
with James C. Levinson and Marilyn G. Levinson ("the Levinsons"), as
individuals and as general partners of the J & L Levinson Partnership, to
purchase 368,475 shares of the Company's common stock at a purchase
price of $12.25 per share, and to purchase 18,868 common stock options held
by the Levinsons for an aggregate purchase price of $54,479. In addition,
the Company entered into a similar agreement with various family members of
the Levinson's to purchase approximately 44,000 shares at a purchase price
of $12.25. The combined stock repurchase of approximately 412,000 shares
represents 9.2% of the outstanding stock of the Company. The stock
repurchases provided by these agreements were substantially completed on
January 2, 1998. The Company used available cash resources of
approximately $5.1 million to complete this transaction.
Pursuant to the Stock Purchase Agreement dated January 2, 1998, James C.
Levinson resigned from the Company' Board of Directors effective January
2, 1998.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with Unit
Instruments, Inc.'s condensed consolidated financial statements and related
notes included herein.
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 29, 1997 COMPARED TO THE THREE MONTHS ENDED NOVEMBER
30, 1996
Net sales for the second fiscal quarter ended November 29, 1997 increased 87% to
$14,925,000 from $8,002,000 for the comparable prior year period. Mass flow
controller ("MFC") shipments were up 96% over the prior year period while sales
for high purity gas distribution systems through the Company's wholly owned
subsidiary, Control Systems, Inc. ("CSI"), were up 175% over the corresponding
period last year. During the past year, CSI has expanded its customer base and
has developed new gas delivery systems. These factors, along with a rebound in
the semiconductor equipment market, are primarily responsible for CSI's higher
sales. The Company commenced shipments of Z-Bloc(TM) modular gas systems in the
first quarter of this fiscal year and shipments doubled during the second
quarter over the prior quarter. MFC sales outside the semiconductor equipment
market showed some improvement for the quarter, but were below the Company's
expectation for the period. Sales for the second quarter of the prior fiscal
year were severely impacted by a sharp contraction in the semiconductor
equipment market that began in mid-1996. The Company has experienced a slow
recovery in MFC sales since last year's second quarter that has generally
paralleled the recovery in the semiconductor equipment market.
9
<PAGE>
Gross profit increased to $5,057,000, or 34% of sales, for the current quarter
from $375,000, or 5% of sales, for the prior year's second quarter. The higher
sales achieved for the current period allowed for improved utilization of
manufacturing facilities, which reduced overhead costs as a percentage of sales.
In addition, direct labor productivity increased and material content decreased
because of more favorable product mix, higher operating activity levels and cost
reduction programs.
Selling, general and administrative expenses ("S,G&A") were down slightly for
the current quarter at $3,032,000, as compared to $3,105,000 for the second
quarter last year. As a percentage of sales, S,G&A declined to 20% from 39%
last year. This improvement resulted from substantially higher sales for the
current quarter and continued cost reduction measures.
In the second quarter of the prior fiscal year, a restructuring charge of
$296,000 was recorded for the elimination of 22 positions and the consolidation
of the Tempe, Arizona service center into the CSI facility located in Chandler,
Arizona. The current year's period did not have restructuring charges.
Research, development and engineering ("R,D&E") charges increased 14% to
$1,220,000 from $1,072,000 last year, but declined as a percentage of sales to
8% from 13%. R,D&E activity is primarily directed towards new product
development, including the Company's proprietary Z-Bloc(TM) modular gas system.
The Company believes the continued development of new products and product
enhancements is essential to maintaining and improving its competitive position
within the semiconductor equipment market.
The Company recorded a pretax foreign currency transaction loss of $101,000
during the second quarter because of the dollar's strength relative to Asian
currencies. Income before income tax was $940,000 for the current quarter,
compared with a pretax loss of $3,944,000 for the prior year period. Income
taxes of $376,000 were provided at a 40% rate for this year's second quarter,
compared with a tax benefit of $1,286,000, or a 33% rate, for the prior year
period. Income tax rates were negatively affected in both periods by the non-
deductibility of goodwill amortization and certain foreign losses.
Net income for the current period was $564,000, or $0.12 per share, compared to
a net loss of $2,658,000, or $0.61 per share, for last year's comparable
quarter.
The Company sells directly to Pacific Rim customers and sells indirectly to
Pacific Rim customers through semiconductor equipment manufacturers. The
Company is not able to determine what impact, if any, the current economic
difficulties in the region will have on future business activity levels.
As discussed in Footnote 5 to this Quarterly Report of Form 10-Q, the Company
will adopt SFAS 128 "Earnings Per Share" beginning with its third fiscal
quarter. The adoption to SFAS 128 is not anticipated to have a material impact
on its statements of operations.
The Company installed a new information technology system during fiscal 1997 and
believes it is compliant to year 2000 requirements.
10
<PAGE>
SIX MONTHS ENDED NOVEMBER 29, 1997 COMPARED TO SIX MONTHS ENDED NOVEMBER 30,
1996
Sales for the six-month period ended November 29, 1997 increased 39% to
$29,521,000, from $21,290,000 for the comparable prior year period. This sales
increase is primarily attributable to the semiconductor equipment market
recovery from the downturn that started in mid-1996. MFC shipments were up 29%
over prior year, while sales of high purity gas systems manufactured by CSI were
up 147% for the period. CSI's significantly improved sales are attributable to
higher capital expenditure levels in the semiconductor equipment market, a more
diversified sales base and expanded product capabilities. The Company commenced
shipments of Z-Bloc(TM) systems in the first quarter of the current fiscal year
and this added marginally to sales for the comparative periods.
Gross profit for the first half of fiscal 1998 increased 94% to $9,692,000, or
33% of sales, as compared to $4,993,000, or 24% of sales, for last year's
comparable period. This improvement in gross profit and gross profit margins is
attributable to significantly higher sales, improved direct labor productivity,
cost reduction programs and higher utilization of facilities.
Selling, general and administrative (S,G&A) expenses decreased to $6,140,000, or
21% of sales, for the current six month period from $6,364,000, or 30% of sales,
for the same period last year. This favorable comparison is attributable to the
higher sales for the period and continued cost containment measures.
A restructuring charge of $558,000 was recorded in the first half of the prior
fiscal year for severance related expenses and costs associated with the
consolidation of a service center facility. No restructuring charges were
incurred during the current year period.
The Company's research, development and engineering expenses increased 6% to
$2,325,000 in the current six-month period from $2,202,000 in the comparable
prior year period. This increases reflects continued new product development
programs in conjunction with performance enhancements for current products. The
Company's Z-Bloc(TM) modular gas delivery development program is part of this
new product development activity. The Company believes the continued
development of new products and product enhancements is essential to maintaining
and improving its competitive position within the semiconductor equipment
market.
Income before income tax was $1,538,000 for the current year's six-month period,
compared with a pretax loss of $3,759,000 for the prior year period. Income
taxes of $615,000 were provided at a 40% rate for the current six-month period,
compared with a benefit of $1,203,000, or a 32% rate, for the prior year period.
Income tax rates were negatively affected in both periods by the non-
deductibility of goodwill amortization and certain foreign losses.
Net income was $923,000, or $0.20 per share, for the current six-month period,
compared with a net loss of $2,556,000, or $0.58 per share, for last year's
comparable period.
11
<PAGE>
FINANCIAL CONDITION AND LIQUIDITY
Net cash provided by operations was $4,080,000 for the six month period ended
November 29, 1997. Net income, plus depreciation and amortization, provided
cash of $2,394,000 for the current period. Income taxes provided cash flow of
$2,660,000. This primarily related to the receipt of tax refunds due to the
carryback of the 1997 fiscal year tax loss. Accounts receivable utilized
$1,249,000 of cash for the period reflecting increased sales. Inventories
utilized $423,000 of cash for the current six month period because of higher
sales levels but inventory turnover improved to 4.4 at the end of the second
quarter from 3.9 at last year end. The Company is required to carry substantial
inventories of component parts to meet rapid delivery requirements by its
customers. Accounts payable provided $940,000 of liquidity for the current six
month period reflecting higher inventory purchases and generally higher activity
levels associated with increased sales volume.
Capital expenditures used $801,000 of cash with approximately $500,000 of this
amount for the new service center in Richmond, Virginia. The Company anticipates
capital expenditures of approximately $2 million for fiscal 1998. The exercise
of stock options provided cash flow of $810,000 for the current period. The
exercise of these options was primarily related to expiration of the subject
options and, as such, the Company does not anticipate that this level of option
exercise will continue for the balance of the fiscal year. Net cash provided by
all of the Company's activities for the current six month period was $3,894,000.
Cash and cash equivalents were $16,097,000 as of November 29, 1997. The Company
expects that its current cash resources will be adequate to fund its anticipated
near-term capital requirements.
As is more fully discussed in Part II, Item 5 "Subsequent Event" to this
Quarterly Report on Form 10-Q, the Company repurchased approximately 412,000
shares in January, 1998 and used approximately $5.1 million to complete this
transaction. At November 29, 1997, the Company had cash and cash equivalents of
$16.1 million and the transaction will reduce this balance by approximately $5.1
million.
The Company has a revolving credit line with a bank which provides for an
overall credit limit of $5,000,000 and expires in January, 1998. Interest is
payable monthly at prime, or an Offshore Rate plus 1.5%. The credit facility
provides for the issuance of letters of credit, not to exceed $5,000,000. At
November 29, 1997, there were no amounts borrowed under this agreement. A
$1,900,000 standby letter of credit was issued to support a loan, with a balance
of $1,560,000 at November 29, 1997, from a Japanese bank to Unit Instruments
Japan Inc., a subsidiary of the Company. The revolving credit agreement
contains certain financial covenants with which the Company was in compliance as
of November 29, 1997. The Company anticipates that it will renew the existing
revolving credit agreement in January, 1998 upon comparable terms with the
expiring revolving credit agreement.
FORWARD-LOOKING STATEMENT
This quarterly report on Form 10-Q contains certain forward-looking statements
made in good faith by the Company pursuant to the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. In connection with these
"safe harbor" provisions, the Company identifies important factors that could
cause actual results to differ materially from those contained in any forward-
12
<PAGE>
looking statements made by, or on behalf of, the Company. Any such statements
are qualified by reference to the following cautionary statements.
The Company's businesses operate in a highly competitive market and are subject
to many risks and uncertainties. Such risks and uncertainties include, but are
not limited to, the Company's dependence on a few large customers, the Company's
dependence on the semiconductor market, which is subject to cyclicality and
periodic fluctuations in demand, current economic and financial conditions in
Asia and, in particular, Korea, the successful development and industry
acceptance of new products, failure to gain MFC market share, the replacement of
the Company's products with new technology, pricing pressures, the potential
change in competitive conditions within the markets served by the Company,
expenses for extended product warranties, industry consolidation, the failure to
achieve higher sales and improved operating margins at its Control Systems, Inc.
subsidiary, the failure to retain key technical and management personnel,
material or adverse changes in the Company's operations or business, failure to
diversify into markets other than the semiconductor equipment market, failure to
reduce product costs, failure to commercialize the Z-Bloc(TM) gas distribution
system and failure to accurately anticipate demand for the Company's products.
Although the Company believes that the assumptions underlying the forward-
looking statements are reasonable, any of the assumptions could prove inaccurate
and, therefore, there can be no assurance that the results contemplated in
forward-looking statements will be realized. In addition, the business and
operations of the Company are within a single industrial segment and are
dependent on a few large customers. This concentration on a single market and
limited customer base subjects the Company to substantial risks which increase
the uncertainty inherent in such forward-looking statements. In light of the
significant uncertainties inherent in the forward-looking information included
herein, the inclusion of such information should not be regarded as a
representation by the Company, or any other person, that the objectives or plans
for the Company will be achieved.
PART II. OTHER INFORMATION
Item 4. Submission of Matters of Security-Holders.
The Annual Meeting of Shareholders was held on October 24, 1997 in
Yorba Linda, California. Four incumbent Directors were re-elected
without opposition to serve another one-year term in office. The
results of this election were as follows:
<TABLE>
<CAPTION>
Name of Director Votes For Votes Withheld
---------------- --------- --------------
<S> <C> <C>
George Boyadjieff 3,811,711 36,781
Michael J. Doyle 3,810,711 37,781
James C. Levinson 3,698,444 150,048
Edward Rogas 3,812,211 36,281
</TABLE>
On a proposal to adopt the 1997 Stock Incentive Plan, there were
2,493,936 votes cast in favor; 370,924 votes cast against; 9,550
abstention and 974,082 broker non-votes.
13
<PAGE>
Item 5. Subsequent Events.
(a) On January 2, 1998 the Company entered into a Stock Repurchase
Agreement with James C. Levinson and Marilyn G. Levinson ("the
Levinsons"), as individuals and as general partners of the J & L
Levinson Partnership, to purchase 368,475 shares of the Company's
common stock at a purchase price of $12.25 per share, and to purchase
18,868 common stock options held by the Levinsons for an aggregate
purchase price of $54,479. In addition, the Company entered into a
similar agreement with various family members of the Levinsons to
purchase approximately 44,000 shares at a purchase price of $12.25.
The combined stock repurchase of approximately 412,000 shares
represents 9.2% of the outstanding stock of the Company. The stock
repurchases provided by these agreements were substantially completed
on January 2, 1998. The Company used available cash resources of
approximately $5.1 million to complete this transaction.
(b) Pursuant to the Stock Purchase Agreement dated January 2, 1998, James
C. Levinson resigned from the Company' Board of Directors effective
January 2, 1998.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11.1 - Computation of Earnings per Share
Exhibit 27 - Financial Data Schedule (for electronic filing only)
(b) One Current Report on Form 8-K was filed by the Company during the
quarter ended November 29, 1997. On September 3, 1997 the Company
filed a Current Report on Form 8-K reporting the resignation of A.
Wade Blackman from the Registrant's Board of Directors.
14
<PAGE>
UNIT INSTRUMENTS, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirement 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.
UNIT INSTRUMENTS, INC.
----------------------
Registrant
Date: January 8, 1998 /s/ Michael J. Doyle
----------------------------
Michael J. Doyle, President
and Chief Executive Officer
Date: January 8, 1998 /s/ Gary N. Patten
----------------------------
Gary N. Patten
Chief Financial Officer
15
<PAGE>
EXHIBIT 11.1
UNIT INSTRUMENTS, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------- -------------------
11/29/97 11/30/96 11/29/97 11/30/96
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
NET INCOME (LOSS) $ 564,000 $(2,658,000) $ 923,000 $(2,556,000)
========== =========== ========== ===========
Earnings Per Share
- ------------------
Weighted average number
of shares outstanding 4,509,273 4,372,604 4,495,334 4,378,529
Common share equivalents,
assuming exercise of stock
options and warrants 78,492 -0- 39,246 -0-
---------- ---------- ---------- ----------
Average shares used in
computing earnings per share 4,587,765 4,372,604 4,534,580 4,378,529
========== =========== ========== ===========
Net income per share $ 0.12 $ (0.61) $ 0.20 $ (0.58)
========== =========== ========== ===========
Earnings Per Share Assuming Full Dilution
- -----------------------------------------
Weighted average number
of shares outstanding 4,509,273 4,372,604 4,495,334 4,378,529
Common share equivalents, assuming
exercise of stock options and
warrants 78,492 -0- 39,246 -0-
---------- ---------- ---------- ----------
Average shares used in computing
earnings per share 4,587,765 4,372,604 4,534,580 4,378,529
========== =========== ========== ===========
Net income per share $ 0.12 $ (0.61) $ 0.20 $ (0.58)
========== =========== ========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-30-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> NOV-29-1997
<CASH> 16,097
<SECURITIES> 0
<RECEIVABLES> 8,281
<ALLOWANCES> 0
<INVENTORY> 9,123
<CURRENT-ASSETS> 35,385
<PP&E> 19,548
<DEPRECIATION> 9,816
<TOTAL-ASSETS> 54,507
<CURRENT-LIABILITIES> 9,414
<BONDS> 0
0
0
<COMMON> 677
<OTHER-SE> 43,619
<TOTAL-LIABILITY-AND-EQUITY> 54,507
<SALES> 29,521
<TOTAL-REVENUES> 29,521
<CGS> 19,829
<TOTAL-COSTS> 28,294
<OTHER-EXPENSES> 80
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28
<INCOME-PRETAX> 1,539
<INCOME-TAX> 615
<INCOME-CONTINUING> 923
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 923
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
