-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JzeKEwfhmzd1anATwUewfpGbXe79Chna3RLSAmYQUasRS+wTQMMTXKhCfMP56hgd iSEcBK8GW2CYU77l5U0LrA== 0000909518-98-000321.txt : 19980515 0000909518-98-000321.hdr.sgml : 19980515 ACCESSION NUMBER: 0000909518-98-000321 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED INDUSTRIAL CORP /DE/ CENTRAL INDEX KEY: 0000101271 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 952081809 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04252 FILM NUMBER: 98620528 BUSINESS ADDRESS: STREET 1: 18 E 48TH ST CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2127528787 MAIL ADDRESS: STREET 1: 18 E 48TH STREET CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: TOPP INDUSTRIES CORP DATE OF NAME CHANGE: 19710510 FORMER COMPANY: FORMER CONFORMED NAME: HAYES MANUFACTURING CORP DATE OF NAME CHANGE: 19660911 10-Q 1 UNITED INDUSTRIAL CORPORATION 10Q 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 March 31, 1998 -------------- 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 #1-4252 UNITED INDUSTRIAL CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 95-2081809 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Identification No.) incorporation or organization) 570 Lexington Avenue, New York, NY 10022 - -------------------------------------------------------------------------------- (Address of principal executive offices) Not Applicable - -------------------------------------------------------------------------------- FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT. 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 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. 12,288,959 shares of common stock as of May 1, 1998. UNITED INDUSTRIAL CORPORATION INDEX ----- Page # ------ Part I - Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets - Unaudited March 31, 1998 and December 31, 1997 1 Consolidated Condensed Statements of Operations - Three Months Ended March 31, 1998 and 1997 2 Consolidated Condensed Statements of Cash Flows Three Months Ended March 31, 1998 and 1997 3 Notes to Consolidated Condensed Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 4 PART II - Other Information 7 PART I - FINANCIAL INFORMATION ITEM I - FINANCIAL STATEMENTS UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands)
MARCH 31 DECEMBER 31 1998 1997 ----------- ------------ (Unaudited) ASSETS Current Assets Cash & cash equivalents $ 24,192 $ 23,098 Marketable securities 2,031 6,102 Trade receivables 27,132 27,819 Inventories Finished goods & work-in-process 31,499 28,551 Materials & supplies 3,267 3,239 -------- -------- 34,766 31,790 Assets held for sale 12,309 12,516 Deferred income taxes 4,945 4,982 Prepaid expenses & other current assets 10,561 11,282 -------- -------- Total Current Assets 115,936 117,589 Other assets 40,095 40,126 Property & equipment - less allowances for depreciation (1998-$78,941; 1997-$77,307) $ 26,454 25,576 -------- -------- $182,485 $183,291 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 6,914 $ 7,604 Accrued employee compensation & taxes 8,222 7,777 Customer advances 3,763 3,542 Federal income taxes 1,573 630 Current portion of long-term debt 1,250 1,250 Other liabilities 10,952 13,134 Provision for contract losses 5,583 5,776 -------- -------- Total Current Liabilities 38,257 39,713 Long-term liabilities (less current maturities) 8,746 9,508 Deferred income taxes 9,671 9,690 Postretirement benefits other than pensions 22,506 22,356 Shareholders' Equity Common stock $1.00 par value Authorized - 15,000,000 shares; outstanding 12,284,059 and 12,249,309 shares - 1998 and 1997 (net of shares in treasury) 14,374 14,374 Additional capital 89,844 89,929 Retained earnings 15,262 14,165 Treasury stock, at cost, 2,090,089 at 1998 and 2,124,839 shares at 1997 (16,175) (16,444) -------- -------- 103,305 102,024 -------- -------- $182,485 $183,291 ======== ========
See accompanying notes UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts)
Three Months Ended March 31 1998 1997 ------------ -------- (Unaudited) Net sales $ 47,227 $ 58,444 Operating costs & expenses Cost of sales 33,653 45,268 Selling & administrative 10,375 9,811 Other (income) expense - net (91) 371 Interest expense 108 510 Interest income (575) (335) -------- -------- 43,470 55,625 -------- -------- Income before income taxes 3,757 2,819 Income taxes 1,434 1,056 -------- -------- Net income $ 2,323 $ 1,763 ======== ======== Earnings per share: Basic $ .19 $ .14 ===== ----- Diluted $ .18 $ .14 ===== -----
See accompanying notes 2 UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
THREE MONTHS ENDED MARCH 31 1998 1997 -------- ------ (Unaudited) OPERATING ACTIVITIES Net income $ 2,323 $ 1,763 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,223 2,514 Deferred income taxes 18 137 (Decrease) increase in contract loss provision (193) (1,239) Changes in operating assets and liabilities (3,774) 5,346 Increase in federal income taxes 943 768 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,540 9,289 INVESTING ACTIVITIES Decrease in marketable securities 4,071 - Purchase of property and equipment (2,513) (1,783) (Increase) decrease in other assets - net (254) 413 -------- -------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 1,304 (1,370) FINANCING ACTIVITIES (Decrease) increase in long-term liabilities (404) 200 Proceeds from exercise of stock options 87 - Payments on long-term debt & borrowings (208) (13,750) Dividends (1,225) (852) -------- -------- NET CASH USED IN FINANCING ACTIVITIES (1,750) (14,402) -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,094 (6,483) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 23,098 13,427 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,192 $ 6,944 ======== ========
See accompanying notes 3 UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements March 31, 1998 NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1997. NOTE B - DIVIDENDS A quarterly dividend of $.10 per share is payable May 29, 1998. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Information - --------------------------- Except for the historical information contained herein, information set forth in this quarterly report may contain forward looking statements subject to risks and uncertainties which could cause the Company's actual results or performance to differ materially from those expressed or implied in such statements. Such forward looking statements, including, but not limited to, projections of revenues, earnings, segment performance, cash flows and contract awards, are based on management's expectations, estimates, projections and assumptions. For additional information about the Company and its various risk factors, reference is made to the Company's most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Results of Operations - --------------------- Three months ended March 31, 1998 compared to three months ended March 31, 1997: 4 Consolidated net sales decreased by $11,217,000, or 19%, to $47,227,000 in the first quarter of 1998, as compared to $58,444,000 in the same period in 1997. In the Defense segment, sales decreased $10,575,000, or 22%. This decrease in the Defense segment is primarily due to timing related to the level of work effort on certain contracts. The commencement of work on new programs did not coincide with the completion of other programs. The Weather Systems Business, which was sold in September 1997, accounted for net sales of $7,952,000 during the first three months of 1997. In the Company's Energy segment, increased prices and volume accounted for its $1,014,000, or 11%, rise in sales. Excluding net sales of Neo Products Co. (the operating assets of which were substantially sold in August 1997) and the net sales of the Weather Systems Business (which was sold in September 1997) (together the "Disposed Businesses") during 1997, net sales in the first quarter of 1998 decreased $1,609,000 or 3% from the same period in 1997. However, the Company booked $73.6 million of new orders during the first quarter of 1998 which increased the backlog at March 31, 1998 by 63% to $214 million from $131 million (excluding $24 million from the "Disposed Businesses") at March 31, 1997. Gross margin increased to 28.7% in the first quarter of 1998 from 22.5% in the first quarter of 1997, primarily due to the Defense segment and partially by increases in the Energy segment. The gross margin percentage in the Defense segment increased 6.1% to 26.2% for the three months ended March 31, 1998 from 20.1% for the same period in 1997. Excluding the Disposed Businesses in 1997 the gross margin increased 5.8% to 28.7% and by $2,368,000 to $13,574,000, in the first quarter of 1998 from the same period in 1997. The increase in margin basically resulted from a shift in the mix of Defense segment contracts. Selling and administrative expenses for the three months ended March 31, 1998 increased $564,000, or 5.8%, to $10,375,000 from $9,811,000 during the three months ended March 31, 1997. Excluding the Disposed Businesses in 1997, the selling and administrative expenses increased by $1,738,000, or 20.1%, in the first three months of 1998 compared to the same period in 1997. This increase occurred primarily in the Defense segment and was due to increased research and development as well as bid and proposal expenses. Other (income) expense-net was $91,000 income in the first quarter of 1998 and an expense of $371,000 in the first quarter of 1997. The increase in income of $462,000 was primarily due to the collection of profits on assets previously sold and a reduction in losses of a joint venture. Interest expense decreased by $402,000 due to reduced borrowings. Interest income increased by $240,000 due to increased investments. Net income increased by 31.8% to $2,323,000 or $.18 per diluted share, in the first three months of 1998, compared to net income of $1,763,000, or $.14 per diluted share, in the same period of 1997. Excluding net income generated by the Disposed Businesses of $498,000, or $.04 per diluted share, in the first quarter of 1997, net income increased by $1,058,000, or 84%, in the first quarter of 1998. The improvement was primarily attributable to greater gross margin and lower interest expense. 5 Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents increased by $1,094,000, and marketable securities decreased by $4,071,000 from December 31, 1997. The increase in inventories and reduction of other liabilities were the major classifications in the change in operating assets and liabilities. The Company currently has no significant fixed commitment for capital expenditures or for investments. The Company expects that available cash and existing lines of credit will be sufficient to meet its cash requirements for the remainder of the calendar year. Its cash requirements consist primarily of its obligations to fund operations and to make interest and principal payments on debt, if necessary. Subsequent Events - ----------------- In April 1998, the Company sold $12,516,000 of the assets held for sale (see Consolidated Condensed Balance Sheets, page 1) for cash in excess of their carrying value and paid off the term loan debt due the bank of $5,516,000. Contingent Matters - ------------------ Reference is made to Item 3. Legal Proceedings, in the December 31, 1997 Form 10-K which is incorporated herein by reference. 6 UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES PART II - Other Information ITEM 6 - Exhibits and Reports on Form 8-K (a) Exhibits 11 - Computation of Earnings per share 27 - Financial Data Schedule (b) The Registrant did not file any reports on Form 8-K during the quarter ended March 31, 1998. 7 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. UNITED INDUSTRIAL CORPORATION Date May 14, 1998 By: /s/ James H. Perry ----------------- -------------------------------- James H. Perry Chief Financial Officer and Treasurer 8 UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES INDEX OF EXHIBITS FILED HEREWITH Exhibit No. - ---------- 11 Computation of Earnings Per Share 27 Financial Data Schedule 9 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 - Computation of Earnings Per Share Item 6(a) Exhibit 11 Computation of Earnings per Share United Industrial Corporation and Subsidiaries
THREE MONTHS ENDED MARCH 31 1998 1997 -------- -------- Net income $2,323,000 $1,763,000 ========== ========== Basic earnings per share: Weighted average shares 12,254,363 12,174,943 ========== ========== Effect of dilutive securities: Employee and non-employee director stock options 344,542 109,152 ========== ========== Diluted earnings per share: Adjusted weighted-average and assumed conversions 12,598,905 12,284,095 ========== ========== Basic earnings per share $ .19 $ .14 ===== ===== Diluted earnings per share $ .18 $ .14 ===== =====
10 EX-27 3 FINANCIAL DATA SCHEDULE
5 This Schedule contains summary financial information extracted from the financial statements contained in the body of the accompanying Form 10-Q and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1997 MAR-31-1998 24,192 2,031 27,132 0 34,766 115,936 105,395 78,941 182,485 38,257 8,746 0 0 14,374 88,931 182,485 47,227 47,893 33,653 44,028 0 0 108 3,757 1,434 2,323 0 0 0 2,323 .19 .18
-----END PRIVACY-ENHANCED MESSAGE-----