<PAGE> 1
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 29, 1996, or
[ ] Transition Report, Pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period to
------- ------
Commission File Number 0-22914
----------------------
UNION SWITCH & SIGNAL INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
----------------------
<TABLE>
<S> <C>
Delaware 25-1579001
- - ------------------------------------------ ---------------------------------------------
(State of Incorporation) (IRS Employer Identification Number)
1901 Main Street, Suite 1150
Columbia, South Carolina 29201
- - ------------------------------------------ ---------------------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
(803) 929-1200
(Registrant's telephone no., including area code)
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>
<S> <C>
Common Stock, $0.01 par value 9,737,500
----------------------------- ---------------------
Class Outstanding as of
April 30, 1996
</TABLE>
<PAGE> 2
UNION SWITCH & SIGNAL INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 29, 1996
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements
Consolidated Balance Sheet as of March 29, 1996 and
December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations and Accumulated
Earnings for the three month periods ended
March 29, 1996 and March 31, 1995. . . . . . . . . . . . . . . . . 2
Consolidated Statement of Cash Flows for the three month
periods ended March 29, 1996 and March 31, 1995. . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . 7
</TABLE>
<TABLE>
<S> <C>
PART II. OTHER INFORMATION
Item 3. Defaults upon Senior Securities. . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 10
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
UNION SWITCH & SIGNAL INC.
CONSOLIDATED BALANCE SHEET
($ IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 29, December 31,
1996 1996
ASSETS (unaudited) (unaudited)
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 509 $ 2,873
Receivables - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,942 29,641
Inventory (Note 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,870 24,807
Costs and estimated earnings in excess of billings
on uncompleted contracts (Note 4). . . . . . . . . . . . . . . . . . . 54,950 51,409
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . 3,539 4,814
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 106,810 113,544
Contract receivables - retentions. . . . . . . . . . . . . . . . . . . . . . 13,686 13,624
Property, plant and equipment - net. . . . . . . . . . . . . . . . . . . . . 37,642 37,944
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,669 5,249
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 162,807 $ 170,361
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term borrowings and current
obligations under capital leases (Note 5). . . . . . . . . . . . . . . $ 15,684 $ 6,040
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,857 14,833
Accured liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,818 7,135
Billings in excess of costs and estimated earnings
on uncompleted contracts (Note 4). . . . . . . . . . . . . . . . . . . 13,178 15,201
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 46,537 43,209
Accounts payable - retentions. . . . . . . . . . . . . . . . . . . . . . . . 1,998 2,493
Accrued post-retirement benefits . . . . . . . . . . . . . . . . . . . . . . 2,419 2,359
Long-term borrowings and obligations under capital leases (Note 6) . . . . . 42,047 52,128
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 93,001 100,189
---------- ----------
Shareholders' equity:
Preferred stock, $.01 par value, authorized 1,000,000
shares, no shares issued and outstanding . . . . . . . . . . . . . . . 0 0
Common stock, $.01 par value, authorized 30,000,000
shares, issued and outstanding 9,737,500 . . . . . . . . . . . . . . . 97 97
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . 59,302 59,302
Accumulated earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,407 10,773
---------- ----------
Total shareholders' equity. . . . . . . . . . . . . . . . . . . . . 69,806 70,172
Commitments and contingencies. . . . . . . . . . . . . . . . . . . . . . . . 0 0
---------- ----------
Total liabilities and shareholders' equity. . . . . . . . . . . . . $ 162,807 $ 170,361
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
UNION SWITCH & SIGNAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
AND ACCUMULATED EARNINGS
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months ended
------------------
March 29, March 31,
1996 1995
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,779 $ 42,661
Cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 33,098 32,614
------------ ------------
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . 6,681 10,047
Operating expenses:
Selling, general and administrative. . . . . . . . . . . . . . . 4,561 5,635
Research and development - net . . . . . . . . . . . . . . . . . 1,635 1,616
------------ ------------
Operating expenses. . . . . . . . . . . . . . . . . . . . . . 6,196 7,251
------------ ------------
Operating income. . . . . . . . . . . . . . . . . . . . . . . 485 2,796
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . 1,018 619
------------ ------------
Income (loss) before income taxes . . . . . . . . . . . . . . (533) 2,177
Provision for income taxes. . . . . . . . . . . . . . . . . . . . . (167) 896
------------ ------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . (366) 1,281
Accumulated earnings beginning of period. . . . . . . . . . . . . . 10,773 7,149
------------ ------------
Accumulated earnings, end of period . . . . . . . . . . . . . . . . $ 10,407 $ 8,430
============ ============
Earnings (loss) per share of common stock:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ (0.04) $ 0.13
============ ============
Weighted average number of common shares outstanding. . . . . . . . 9,737,500 9,737,500
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
2
<PAGE> 5
UNION SWITCH & SIGNAL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($ IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months ended,
-------------------
March 29, March 31,
1996 1995
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Increase (decrease in cash and cash equivalents:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (366) $ 1,281
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . 1,385 1,326
Changes in:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,699 (3,010)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,063) (1,358)
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,888 (739)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,976) 369
Accrued liabilites. . . . . . . . . . . . . . . . . . . . . . . . . . . (2,030) (1,293)
Contracts - net (a) . . . . . . . . . . . . . . . . . . . . . . . . . . (6,121) (11,302)
----------- ------------
Net cash used in operating activities. . . . . . . . . . . . . . . . (1,284) (14,726)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . (643) (1,800)
Net cash used in operating activities. . . . . . . . . . . . . . . . (643) (1,800)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from short term borrowings. . . . . . . . . . . . . . . . . 9,685 6,000
Proceeds from long term borrowings . . . . . . . . . . . . . . . . . . . 0 4,900
Payments on long term borrowings . . . . . . . . . . . . . . . . . . . . (10,000) 0
Payments on capital leases . . . . . . . . . . . . . . . . . . . . . . . (122) (11)
----------- ------------
Net cash (used in) provided by financing activities. . . . . . . . . (437) 10,889
Net decrese in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . (2,364) (5,637)
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . 2,873 8,573
----------- ------------
Cash and cash equivalents at end of period. . . . . . . . . . . . . . . . . . . $ 509 $ 2,936
=========== ============
Interest paid during period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,686 $ 1,198
=========== ============
Income taxes paid (refund received) during period . . . . . . . . . . . . . . . $ (996) $ 3,438
=========== ============
</TABLE>
(a) Contract accounting includes costs and estimated earnings in excess of
billings, contract receivables - retentions, billings in excess of costs
and estimated earnings on uncompleted contracts and accounts payable -
retentions.
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 6
UNION SWITCH & SIGNAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1996
(Unaudited)
($ in thousands, except per share amounts)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Union Switch &
Signal Inc. (the "Company") include all adjustments which are, in the opinion
of management, necessary for a fair statement of the operating results for the
three month periods ended March 29, 1996 and March 31, 1995. The consolidated
financial statements for the three month periods include only normal recurring
adjustments. These consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and therefore do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and changes in cash
flows in conformity with generally accepted accounting principles. The
information contained in this Form 10-Q should be read in conjunction with
Management's Discussion and Analysis and the financial statements as well as
the notes thereto contained in the Company's 1995 Annual Report.
NOTE 2 - RELATED-PARTY TRANSACTIONS
The Company is periodically involved in providing certain products and services
to affiliated entities and in purchasing certain products and services from
affiliated entities. During the period ending March 29, 1996, the Company
provided to Ansaldo Trasporti S.p.A. certain advisory and consulting services
which were reflected as a reduction of operating expense of $240.
The Company relies on affiliated entities for certain financial and management
services. Such services include guaranteeing a $200,000 surety bond facility
(of which $58,933 was utilized at March 29, 1996) and a $5,000 standby letter
of credit facility (of which $3,521 was utilized at March 29, 1996). Fees are
paid to Ansaldo Trasporti S.p.A. (ATR) and/or Finmeccanica S.p.A. for these
services provided. Said fees are equal to 1.0% per annum on the aggregate
principal amount of credit enhanced and 0.50% per annum of any surety bond or
letter of credit for which ATR and/or Finmeccanica provides an indemnity. For
the three-month period ended March 29, 1996 such fee was $81. Management
expects these services to continue to be provided by affiliates, to the extent
required, through at least 1997.
NOTE 3 - INVENTORY
Components of inventory at March 29, 1996 were as follows:
<TABLE>
<CAPTION>
March 29, 1996
--------------
<S> <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,641
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,423
Finished components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,806
----------
$ 25,870
==========
</TABLE>
4
<PAGE> 7
UNION SWITCH & SIGNAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1996
(Unaudited)
($ In thousands, except per share amounts)
NOTE 4 - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Components of cost and estimated earnings on uncompleted contracts
at March 29, 1996 were as follows:
<TABLE>
<CAPTION>
March 29, 1996
--------------
<S> <C>
Costs incurred on uncompleted contracts . . . . . . . . . . . . . . . . . . . . $ 415,856
Estimated earnings 52,062
------------
467,918
Less - Billings to date and advances on contracts . . . . . . . . . . . . . . . 426,146
------------
$ 41,772
============
</TABLE>
The net amount above is included in the consolidated balance sheet under
the following captions:
<TABLE>
<CAPTION>
March 29, 1996
--------------
<S> <C>
Costs and estimated earnings in excess
of billings on uncompleted contracts. . . . . . . . . . . . . . . . . . . . . . $ 54,950
Billings in excess of costs and estimated earnings
on uncompleted contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,178)
------------
$ 41,772
============
</TABLE>
NOTE 5 - SHORT TERM BORROWINGS AND CAPITAL LEASES
Short term borrowings consisted of the following at March 29, 1996:
<TABLE>
<S> <C>
Borrowings (unsecured) under various lines of credit expiring
within one year with interest payable at least quarterly. The interest rates
in effect at March 29, 1996 were from 5.89% to 6.04%.. . . . . . . . . . . . . . . . . . $ 12,384
Borrowings (unsecured) in Australia by Union Switch & Signal Pty. Ltd.
under a revolving credit facility expiring May 31, 1996, with interest payable
quarterly. The interest rate in effect at March 29, 1996 was 6.50%.. . . . . . . . . . 2,949
Current portion of obligations under capital leases. . . . . . . . . . . . . . . . . . . 351
---------
Total short term borrowings and current portion of obligations
under capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,684
=========
</TABLE>
5
<PAGE> 8
UNION SWITCH & SIGNAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 29, 1996
(Unaudited)
($ in thousands, except per share amounts)
NOTE 6 - LONG TERM BORROWINGS AND CAPITAL LEASES
Long term borrowings consisted of the following at March 29, 1996:
<TABLE>
<S> <C>
Borrowings (unsecured) under revolving credit facility expiring
May 28, 1998 with interest payable quarterly. The interest rate
in effect at March 29, 1996 was 6.69% . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000
Senior Notes (unsecured) due 2004, with a
fixed interest rate of 8% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Long term obligations under capital leases. . . . . . . . . . . . . . . . . . . . . . . . 7,047
---------
Total long term borrowings and long term portion of obligations
under capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,047
=========
</TABLE>
The Company has a three-year revolving credit facility in the amount of $35,000
which is used to fund working capital needs as well as provide commercial and
stand-by letters of credit and which will expire on May 28, 1998. At March 29,
1996, $5,000 in borrowings and $9,651 in letters of credit were utilized. In
addition, on September 29, 1994, the Company issued senior, unsecured
promissory notes to various lenders in the total amount of $30,000 at an 8
percent fixed rate with a ten year term and principal payments beginning in
1998.
As of March 29, 1996, the Company was in violation of certain financial
covenants associated with its Senior Notes (the Fixed Charge Coverage Ratio).
These violations constitute Events of Default under the loan agreement
associated with the Senior Notes. The Company remains current in all interest
and principal payments due. The Company expects that it will be in compliance
with these covenants by year end. The note holders have waived their rights to
an acceleration of principal payments granted to them under the loan agreement
with the Company through the end of 1996.
The Company maintains a $100 million surety bonding facility ($11.7 million
outstanding at March 29, 1996) in addition to a $200 million surety bonding
facility provided by Finmeccanica (see Note 2).
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
($ in thousands except per share amounts)
OVERVIEW
Union Switch & Signal's business strategy emphasizes the design, engineering,
production, distribution and after-sale service of integrated railway
signaling, automation and control systems and related component products that
provide a variety of train control and operations management capabilities.
Unless otherwise indicated, all figures set forth below are for the quarter
ended March 29, 1996 compared to the quarter ended March 31, 1995.
Net income (loss) for the first three months of 1996 decreased to ($366) (4
cents loss per share) from $1,281 (13 cents per share) for the comparable
period last year. This decrease is due to a decrease in gross profit of
$3,366 and an increase in interest of $399, partially offset by reductions in
operating expense of $1,055 and income taxes of $1,063.
BACKLOG
The Company's backlog at March 29, 1996 was $140,700, a decrease from the
December 31, 1995 year end backlog of approximately $147,000. Orders for first
quarter 1996 were $35,692 as compared to $50,287 for the first quarter of 1995.
Recent and proposed consolidations and mergers among U.S. Class 1 railroads
have had a continuing adverse affect on customer orders, revenue and gross
profit. In addition, anticipated uncertainty concerning federal government
funding has resulted in delays in the award of transit projects. These
factors, combined with longer than anticipated lead times in the international
market and increased domestic competition, have resulted in lower backlog.
NET REVENUE
Net revenue decreased 6.8% to $39,779 in 1996 from $42,661 in 1995 due
to lower volume in Wayside Control Products Division shipments, which was
partially offset by higher volume in system engineering by the Transportation
Control Systems Division. These decreases were due primarily to the
aforementioned lower order levels and resultant lower backlog. The
Transportation Control System Division's revenue for the first three months of
1996 includes $1,906 of revenue from the Australian operation, which was not in
the comparable period of 1995.
7
<PAGE> 10
Revenue by product line is as follows
<TABLE>
<CAPTION>
THOUSANDS OF $ REVENUE PRODUCT LINE % CHANGE
1996 1995 1996-95
---- ---- --------
<S> <C> <C> <C>
$ 28,416 $ 26,544 Transportation Control Systems 7.1
10,251 14,883 Wayside Control Products (31.1)
1,112 1,234 Vehicle Control Systems (9.9)
-------- --------
$ 39,779 $ 42,661 Total Revenue (6.8)
</TABLE>
GROSS PROFIT
Gross profit fluctuates as a result of production volume and the mix
between industry sector and geographical location. The following table sets
forth gross profit in thousands of dollars and as a percentage of total
revenue, and the percent of change from year to year:
<TABLE>
<CAPTION>
THOUSANDS OF $ REVENUE GROSS PROFIT % CHANGE
1996 1995 1996-95
---- ---- --------
<S> <C> <C> <C>
$ 39,779 $ 42,661 Total Revenue (6.8)
33,098 32,614 Cost of Revenue 1.5
-------- --------
$ 6,681 $ 10,047 Gross Profit (33.5)
16.8% 23.6%
</TABLE>
Gross profit decreased to $6,681 or 16.8% of revenue in 1996 from
$10,047 or 23.6% of revenue in 1995. The decrease in gross profit is due
primarily to lower revenue in the Wayside Control Products Division and lower
gross profit rates on existing contracts in the Transportation Control Systems
Division.
OPERATING EXPENSES
The following table sets forth certain consolidated expense items in
thousands of dollars for the periods indicated and the percentage change from
year to year:
<TABLE>
<CAPTION>
THOUSANDS OF $ REVENUE EXPENSE ITEMS % CHANGE
1996 1995 1996-95
---- ---- --------
<S> <C> <C> <C>
$ 4,561 $ 5,635 Selling, general and administrative (19.1)
1,635 1,616 Research and development - net 1.2
-------- --------
$ 6,196 $ 7,251 Total operating expenses (14.5)
</TABLE>
Selling, general and administrative expense decreased to $4,561 in
1996 from $5,635 in 1995, and decreased as a percent of revenue to 11.5% in
1996 from 13.2% in 1995. The reduction in selling, general and administrative
expense in 1996 results from a reduction in the number of employees during the
second half of 1995, which continued into 1996, and the elimination of certain
one time costs associated with the move to the Pittsburgh Systems and Research
Center, which were included in the comparable 1995 period.
8
<PAGE> 11
Although net research and development remained at approximately the same level
in 1996, when compared to 1995 ($1,635 to $1,616), net research and development
increased as a percent of revenue to 4.1% in 1996 from 3.8% in 1995.
FINANCIAL CONDITION
The Company's total assets decreased $7,554 to $162,807 at March 29,
1996 from $170,361 at December 31, 1995. The principal changes for the period
were decreases in Receivables of $7,699, Cash of $2,364 and Prepaid assets and
other current assets of $1,275, which were partially offset by an increase in
Cost and estimated earnings in excess of billings on uncompleted contracts of
$3,541. The decrease in Receivables of $7,699 is the result of improved cash
receipts in the first quarter of 1996. In spite of these cash receipts, Cash
and cash equivalents decreased in the period by $2,364, which is due to use of
$1,284 of cash in operating activities, a decrease in total borrowing of $437
and spending of $643 on new capital equipment.
Costs in excess of billings on uncompleted contracts were $54,950 as
of March 29, 1996 as compared to $51,409 as of December 31, 1995. Billings in
excess of costs and estimated earnings on uncompleted contracts were $13,178 as
of March 29, 1996 compared to $15,201 as of December 31, 1995. The net change
reflects the increased volume in systems contracts and an industry-wide trend
toward longer term contracts with invoicing and payment terms based on delivery
or installation of material as opposed to milestones for engineering or
manufacturing. Management expects this trend will continue to lengthen the
invoicing and collection cycle.
Capital expenditures for the three months ended March 29, 1996 totaled
$643. Capital expenditures for the three months ended March 31, 1995 totaled
$1,800. The reduction reflects the elimination of one time 1995 expenditures
related to furniture and equipment for the new Pittsburgh Systems and Research
Center.
The Company's operating activities used cash of $1,284 in the three
months ended March 29, 1996 compared to using cash of $14,726 in the three
months ended March 31, 1995, which is an improvement of $13,442. This results
principally from changes in receivables which decreased $7,699 in the first
quarter of 1996 as compared to an increase of $3,010 in the comparable period
of 1995. This is an improvement of $10,709 in the cash flow in 1996 over 1995.
The Company's cash flows have historically been subject to quarterly
fluctuations due to the cyclical pattern of contract bookings and subsequent
contract milestones. The number, size and timing of contracts awarded will
continue to impact future cash flows.
The Company maintains $35,000 in fully committed revolving credit
facilities with commercial banks. In addition, the Company currently maintains
$44,453 in uncommitted lines of credit on an "as available" basis. Total
unused and available credit was $49,469 at March 29, 1996. The company has
also issued senior, unsecured promissory notes to various lenders in the total
amount of $30,000 at an 8% fixed rate with a ten year term and principal
payments beginning in 1998. Management believes these facilities are
sufficient to meet the Company's foreseeable cash needs.
(See Footnote 6 of the Notes to Consolidated Financial Statements, page 6
hereof, with respect to the Company's failure to be in compliance with certain
loan covenants as of March 29, 1996.)
9
<PAGE> 12
PART II. OTHER INFORMATION
Item 3. Defaults upon Senior Securities
Reference is made to Footnote 6 of the Notes to Consolidated
Financial Statements, which appears on page 6 hereof and which
is hereby incorporated herein in response to this item.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required in connection with this quarterly report on
Form 10-Q are listed in the Exhibit Index following the
signature page. Certain of such exhibits, which have
heretofore been filed with the Securities and Exchange
Commission and which are designated by reference to their
exhibit numbers in prior filings are incorporated herein as
exhibits by such reference and made a part hereof.
(b) No reports on Form 8-K were filed during the quarter ended
March 29, 1996.
10
<PAGE> 13
SIGNATURE
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.
<TABLE>
<S> <C>
UNION SWITCH & SIGNAL INC.
Date: April 30, 1996 By: /s/ Walter Alessandrini
----------------------------------------------------
Walter Alessandrini
President, Chief Executive Officer
Date: April 30, 1996 By: /s/ Joseph A. Kirby
----------------------------------------------------
Joseph A. Kirby
Vice President and Chief Financial
Officer (principal financial and accounting officer)
</TABLE>
11
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NUMBERS
----------- ----------- ------------
<S> <C>
3.1 Restated Certificate of Incorporation of the *
Registrant, incorporated by reference to Exhibit 3.1 of the
Registrant's Registration No. 33-69226
3.2 Bylaws of the Registrant incorporated by reference to Exhibit 3.2 *
of the Registrant's Registration No. 33-69226
4.1 Specimen Certificate of Registrant's Common Stock, incorporated *
by reference to Exhibit 4.1 of the Registrant's Registration No. 33-69226
4.2 Specimen Certificate of Registrant's Preferred Stock, incorporated *
by reference to Exhibit 4.2 of the Registrant's Registration No. 33-69226
4.3 Note Purchase Agreements between the Registrant and Connecticut *
General Life Insurance Company, CIGNA Property and Casualty
Insurance Company and Insurance Company of North America, all
dated September 29, 1994, incorporated by reference to Exhibit 4.3 of the
Registrant's Quarterly Report on Form 10Q for the period ended September
30, 1994
10.1 Registration Rights Agreement, dated as of November 24, 1993, *
between the Registrant, ATR and Finmeccanica incorporated by reference to
Exhibit 10.1 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993
10.2 Preemptive Rights Agreement dated as of November 24, 1993, *
between the Registrant, ATR and Finmeccanica incorporated by reference to
Exhibit 10.2 of the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1993
10.3 Union Switch & Signal Inc. Performance Unit Plan incorporated *
by reference to Exhibit 10.3 of the Registrant's Registration No. 33-69226
10.4 Union Switch & Signal Inc. Executive Variable Compensation Plan *
incorporated by reference to Exhibit 10.4 of the Registrant's
Registration No. 33-69226
10.5 Union Switch & Signal Inc. 1993 Long-Term Stock Incentive Plan *
incorporated by reference to Exhibit 10.5 of the Registrant's
Registration No. 33-69226
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT NO. DESCRIPTION PAGE NUMBERS
----------- ----------- ------------
<S> <C>
10.6 Union Switch & Signal Inc. Retirement/Savings Plan Effective *
August 1, 1988 incorporated by reference to Exhibit 10.6 of the
Registrant's Registration No. 33-69226
a. Amendment No. 1 to the Union Switch & Signal Inc. *
Retirement/Savings Plan effective January 1, 1995
incorporated by reference to Exhibit 10.6a of the
Registrant's Quarterly Report on Form 10Q for the
period ended September 29, 1995
b. Amendment No. 2 to the Union Switch & Signal Inc. *
Retirement/Savings Plan effective January 1, 1995
incorporated by reference to Exhibit 10.6b of the
Registrant's Quarterly Report on Form 10Q for the
period ended September 29, 1995
10.7 Development Agreement dated as of September 14, 1993 between *
Regional Industrial Development Corporation of Southwestern
Pennsylvania, Urban Redevelopment Authority of Pittsburgh and
Union Switch & Signal Inc. relating to the Pittsburgh Technology
Center Project (without exhibits) incorporated by reference to Exhibit
10.9 to the Registrant's Registration No. 33-69226
10.8 Lease dated September 14, 1993 between Regional Industrial *
Development Corporation of Southwestern Pennsylvania and the Registrant
incorporated by reference to Exhibit 10.10 of the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993
10.9 Bonding Support Agreement dated as of January 1, 1993 among *
Finmeccanica, ATR and the Registrant incorporated by reference to
Exhibit 10.10 of the Registrant's Registration No. 33-69226
10.10 Credit Support Agreement dated as of January 1, 1993 among *
Finmeccanica, ATR and the Registrant incorporated by reference to
Exhibit 10.11 of the Registrant's Registration No. 33-69226
10.11 Services Agreement dated as of January 1, 1993 between ATR *
and the Registrant incorporated by reference to Exhibit 10.12 of the
Registrant's Registration No. 33-69226
10.12 Loan Agreement dated November 30, 1993 between Regional *
Industrial Development Corporation of Southwestern Pennsylvania and the
Pennsylvania Industrial Development Authority incorporated by
reference to Exhibit 10.16 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993
</TABLE>
13
<PAGE> 16
<TABLE>
<S> <C>
10.13 Consent, Subordination and Assumption Agreement dated *
November 30, 1993 among the Registrant, Regional Industrial Development
Corporation of Southwestern Pennsylvania and the Pennsylvania Industrial
Development Authority incorporated by reference to Exhibit 10.17
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993
10.14 Management Services Agreement dated November 1, 1995 between the *
Registrant and Ansaldo Trasporti S.p.A.
27 Financial Data Schedule (For SEC use only)
</TABLE>
* Previously filed; incorporated herein by reference
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET & THE CONSOLIDATED STATEMENT OF OPERATIONS AND
ACCUMULATED EARNINGS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10-Q, QUARTERLY REPORT, PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 29, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-29-1996
<EXCHANGE-RATE> 1
<CASH> 509
<SECURITIES> 0
<RECEIVABLES> 21,942
<ALLOWANCES> 0
<INVENTORY> 80,820
<CURRENT-ASSETS> 106,810
<PP&E> 37,642
<DEPRECIATION> 0
<TOTAL-ASSETS> 162,807
<CURRENT-LIABILITIES> 46,537
<BONDS> 42,047
0
0
<COMMON> 97
<OTHER-SE> 59,302
<TOTAL-LIABILITY-AND-EQUITY> 162,807
<SALES> 39,779
<TOTAL-REVENUES> 39,779
<CGS> 33,098
<TOTAL-COSTS> 33,098
<OTHER-EXPENSES> 6,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,018
<INCOME-PRETAX> (533)
<INCOME-TAX> (167)
<INCOME-CONTINUING> (366)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (366)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
