-----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, JLXJNDrtOc97mB4yVA0raGBV7BkC/mIxvp/MfNExthov7iA1kylDZaJnJnam27cC Oti1K1YqUUjYgoU/aOpoiA== 0000909518-98-000541.txt : 19980817 0000909518-98-000541.hdr.sgml : 19980817 ACCESSION NUMBER: 0000909518-98-000541 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 98687500 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 10Q FOR PERIOD END 06-30-1998 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 June 30, 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. 12,372,963 shares of common stock as of August 3, 1998. UNITED INDUSTRIAL CORPORATION INDEX ----- Page # ------ Part I - Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets - Unaudited June 30, 1998 and December 31, 1997 1 Consolidated Condensed Statements of Operations - Three Months and Six Months Ended June 30, 1998 and 1997 2 Consolidated Condensed Statements of Cash Flows Six Months Ended June 30, 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 8 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in Thousands) JUNE 30 DECEMBER 31 1998 1997 --------- ----------- (Unaudited) ASSETS - ------ Current Assets Cash & cash equivalents $ 30,281 $ 23,098 Marketable securities 5,471 6,102 Trade receivables 36,687 27,819 Inventories Finished goods & work-in-process 19,592 28,551 Materials & supplies 3,689 3,239 -------- -------- 23,281 31,790 Assets held for sale - 12,516 Deferred income taxes 4,942 4,982 Prepaid expenses & other current assets 12,473 11,282 -------- -------- Total Current Assets 113,135 117,589 Other assets 40,994 40,126 Property & equipment - less allowances for depreciation (1998-$80,289; 1997-$77,307) 27,670 25,576 -------- -------- $181,799 $183,291 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities Accounts payable $ 5,568 $ 7,604 Accrued employee compensation & taxes 7,831 7,777 Customer advances 5,099 3,542 Federal income taxes (1,606) 630 Current portion of long-term debt - 1,250 Other liabilities 17,576 13,134 Provision for contract losses 5,833 5,776 -------- -------- Total Current Liabilities 40,301 39,713 Long-term liabilities (less current maturities) 4,235 9,508 Deferred income taxes 9,874 9,690 Postretirement benefits other than pensions 22,656 22,356 Shareholders' Equity Common stock $1.00 par value Authorized - 30,000,000 shares; outstanding 12,352,859 and 12,249,309 shares - 1998 and 1997 (net of shares in treasury) 14,374 14,374 Additional capital 89,677 89,929 Retained earnings 16,325 14,165 Treasury stock, at cost, 2,021,289 shares at 1998 and 2,124,839 shares at 1997 (15,643) (16,444) -------- -------- 104,733 102,024 -------- -------- $181,799 $183,291 ======== ======== See accompanying notes 1 UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended June 30 June 30 ------------------ ---------------- (Unaudited) 1998 1997 1998 1997 ----- ---- ---- ---- Net sales $ 49,940 $ 55,649 $ 97,167 $114,093 Operating costs & expenses Cost of sales 37,578 41,854 71,231 87,122 Selling & administrative 9,584 11,549 19,959 21,360 Other (income) expense (222) (359) (313) 12 Interest expense 11 81 119 591 Interest income (870) (143) (1,445) (478) -------- -------- -------- -------- 46,081 52,982 89,551 108,607 -------- -------- -------- -------- Income before income taxes 3,859 2,667 7,616 5,486 Income taxes 1,561 997 2,995 2,053 -------- -------- -------- -------- Net income $ 2,298 $ 1,670 $ 4,621 $ 3,433 ======== ======== ======== ======== Net earnings per share Basic $ .19 $ .14 $ .38 $ .28 ===== ===== ===== ===== Diluted $ .18 $ .14 $ .36 $ .28 ===== ===== ===== =====
See accompanying notes 2 UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Thousands)
SIX MONTHS ENDED JUNE 30 ------------------------ (Unaudited) 1998 1997 -------- ------- OPERATING ACTIVITIES - -------------------- Net income $ 4,621 $ 3,434 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,207 4,998 Deferred income taxes 224 (40) Decrease in Federal income tax (2,236) (325) Increase (decrease) in contract loss provision 57 (1,617) Changes in operating assets and liabilities (3,700) 7,060 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 3,173 13,510 INVESTING ACTIVITIES - -------------------- Decrease in marketable securities 631 - Purchase of property and equipment (5,538) (3,357) Proceeds from sale of assets 18,683 - Increase in other assets - net (1,631) (700) -------- -------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 12,145 (4,057) FINANCING ACTIVITIES - -------------------- (Decrease) increase in long-term liabilities (494) 425 Payments on long-term debt & borrowings (5,729) (13,750) Dividends (2,460) (1,705) Proceeds from exercise of stock options 548 13 -------- -------- NET CASH USED IN FINANCING ACTIVITIES (8,135) (15,017) -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,183 (5,564) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 23,098 13,427 -------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,281 $ 7,863 ======== ========
See accompanying notes 3 UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES Notes to Consolidated Condensed Financial Statements June 30, 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 six month period ended June 30, 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 August 31, 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 - --------------------- Consolidated net sales during the second quarter of 1998 decreased $5,709,000 or 10% to $49,940,000 from $55,649,000 in the second quarter of 1997. However, the Company's Weather Systems and Plastics businesses (together the "Disposed Businesses") which were sold in the third quarter of 1997 accounted for sales of $11,776,000 during the 1997 second quarter. Excluding the 1997 4 sales related to the Disposed Businesses, net sales increased $6,067,000 or 14%. The Defense segment (excluding $10,111,000 of second quarter 1997 sales from the Disposed Weather business) accounted for an increase of $7,708,000 which was partially offset by a $1,641,000 decrease in sales in the Company's Energy segment. The increase in the Defense segment was attributable to a general increase in volume. In the Energy segment, a reduction in renewal parts orders primarily caused that decrease. For the six months ended June 30, 1998 net sales totaled $97,167,000 which was $16,926,000 or 15% less than the $114,093,000 recorded during the like period in 1997. However, the Disposed Businesses accounted for $21,384,000 in net sales during the first half of 1997. Excluding the 1997 sales related to the Disposed Businesses, net sales increased $4,458,000 or 5%. The Defense segment (excluding $18,063,000 of first half 1997 sales from the Disposed Weather business) accounted for an increase of $5,085,000 which was partially offset by a $627,000 decrease in sales in the Company's Energy segment. The increase in the Defense segment was attributable to a general increase in volume, but was partially offset by the timing of work effort on certain contracts during the first quarter of 1998. During that period, the commencement of work on new contracts did not coincide with the completion of other programs. In the Energy segment, a reduction in renewal parts orders primarily caused that decrease. The backlog at June 30, 1998 was $216,000,000, an increase of $20,000,000 or 10% from the June 30, 1997 backlog of $196,000,000 (excluding $18,000,000 related to the Disposed Businesses) and an increase of $28,000,000 or 15% from the December 31, 1997 backlog of $188,000,000. The gross margin percentage for the three months ended June 30, 1998 was 24.8% and was essentially unchanged from the second quarter of 1997. Excluding the Disposed Businesses, the 1997 gross margin percentage would have been 26.5% or 1.7% greater than the corresponding period in 1998. The decrease during 1998 was due to a 0.7% reduction from 23.5% to 22.8% in the Defense segment resulting from product mix and a 2.3% reduction from 37.0% to 34.7% in the Energy segment generally caused by lower volume. The gross margin percentage during the first half of 1998 increased 3.1% to 26.7% from 23.6% during the first six months of 1997. Excluding the Disposed Businesses, the 1997 gross margin percentage would have been 24.6% or 2.1% less than the corresponding period in 1998. The Defense segment's contribution was a 2.9% increase in gross margin percentage from 21.5% in 1997 to 24.4% in 1998 primarily due to the product mix. The Energy segment experienced a 0.4% decline in gross margin percentage due to its reduced volume. Selling and administrative expenses for the three months ended June 30, 1998 decreased $1,965,000 or 17% to $9,584,000 from $11,549,000 during the same period in 1997. The Disposed Businesses accounted for $1,242,000 of the decline. The balance of the decline was substantially generated in the Defense segment, but partially offset by the timing of certain corporate costs. The Defense segment benefitted from lower research and development costs generally due to timing and other cost savings measures. During the first half of 1998 selling and administrative expenses decreased $1,401,000 or nearly 7% to $19,959,000 from $21,360,000 during the like period in 1997. The Disposed Businesses produced a reduction of $2,416,000, however this was partially offset by the higher corporate costs incurred during the second quarter and higher Defense segment research and 5 development, and bid and proposal costs incurred during the first three months of 1998. Other expense (income), net was income of $313,000 in the first six months of 1998 and expense of $12,000 in the same period in 1997. The increase in income of $325,000 was primarily due to the recognition of profits on assets previously sold and an increase in performance of joint ventures. For the first six months of 1998 compared to the same period in 1997, interest expense decreased by $472,000 due to reduced borrowings and partially offset by interest payments on prior years taxes. Interest income increased by $967,000 due to increased investments. Net income increased by 37.6% to $2,298,000 or $.18 per diluted share, in the second quarter of 1998, compared to net income of $1,670,000, or $.14 per diluted share, in the same period of 1997. The improvement was primarily attributable to lower selling and administrative expenses and increased interest income. Excluding the net income generated by the Disposed Businesses of $572,000, or $.05 per diluted share, in the second quarter of 1997, net income increased by $1,200,000, or 109.3%, in the second quarter of 1998. Net income increased by 34.6% to $4,621,000 or $.36 per diluted share, in the six month period ended June 30, 1998, compared to net income of $3,433,000, or $.28 per diluted share, in the same period in 1997. The improvement was primarily attributable to increased gross margin, lower interest expense, increased other income, and increased interest income. Excluding net income generated by the Disposed Businesses of $1,070,000, or $.09 per diluted share, in the first six months of 1997, net income increased by $2,258,000, or 95.6%, in the first six months of 1998. Below is a proforma statement of operations for June 30, 1997 excluding the three month and six month operations of the Disposed Businesses (Dollars in thousands, except per share data): Proforma June 30, 1997 ------------------------- 3 Months 6 Months -------- -------- Net sales $43,873 $92,709 Operating costs and expenses Cost of sales 32,247 69,877 Selling and administrative 10,307 18,944 Other (income) expense (346) 37 Interest expense 75 579 Interest income (143) (478) ------- ------- 42,140 88,959 ------- ------- Income before income taxes 1,733 3,750 Income taxes 635 1,387 ------- ------- Net income $ 1,098 $ 2,363 ======= ======= Diluted earnings per share - proforma $ .09 $ .19 ===== ===== 6 Liquidity and Capital Resources - ------------------------------- Cash and cash equivalents increased by $7,183,000, and marketable securities decreased by $631,000 from December 31, 1997. The sale of assets net of related facilities improvements, offset by payment of debt of $5,729,000, principally contributed to the increase in cash. 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. Year 2000 - --------- The Company has developed a plan to modify its information technology to be ready for the year 2000 and has begun converting critical data processing systems. The Company currently expects the project to be substantially complete by early 1999. The Company does not expect this project to have a material effect on its operations or financial condition. Contingent Matters - ------------------ Reference is made to Item 3. Legal Proceedings, in the Annual Report on Form 10-K for the year ended December 31, 1997 which is incorporated herein by reference. 7 PART II - OTHER INFORMATION UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Annual Meeting of Stockholders of the Registrant was held on May 12, 1998. (b) Edward C. Aldridge, Jr. and Joseph S. Schneider were elected directors at the meeting, for terms ending in 2001. The incumbent directors whose terms of office continued after the meeting are Richard R. Erkeneff, E. Donald Shapiro, Harold S. Gelb, and Susan Fein Zawel. (c) Voting for the election of directors of the Registrant: WITHHELD(including FOR broker non-votes) --- ----------------- Edward C. Aldridge, Jr. 10,739,517 489,315 Joseph S. Schneider 10,741,189 487,643 Other Matters: 10,821,201 shares were voted in favor of the proposal to ratify the appointment of Ernst & Young LLP as independent auditors of the Registrant for 1998 with 343,232 shares voted against, 64,399 abstentions and no broker non-votes. 9,617,036 shares were voted in favor of amending the 1994 Stock Option Plan with 1,434,017 shares voted against, 177,779 abstentions and no broker non-votes. 10,347,410 shares were voted in favor of amending the Company's Restated Certificate of Incorporation with 545,790 shares voted against, 335,632 abstentions and no broker non-votes. Reference is made to the Registrant's Proxy Statement dated March 26, 1998 for its 1998 Annual Meeting for additional information concerning the matters voted on at the meeting. 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 June 30, 1998. 8 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 August 13, 1998 By: /s/ James H. Perry -------------------------------- James H. Perry Chief Financial Officer Vice President and Treasurer 9 UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES INDEX OF EXHIBITS FILED HEREWITH Exhibit No. Page - ----------- ---- 11 Computation of Earnings Per Share 10 27 Financial Data Schedule 12 10 EX-11 2 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 Six Months Ended June 30 June 30 ------------------ ----------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net income $2,298,000 $1,670,000 $4,621,000 $3,433,000 ========== ========== ========== ========== Basic earnings per share: Weighted average shares 12,325,530 12,176,443 12,289,947 12,175,693 ========== ========== ========== ========== Effect of dilutive securities: Employee and non-employee director stock options 338,837 193,469 388,980 151,311 ======= ======= ======= ======= Diluted earnings per share: Adjusted weighted-average and assumed conversions 12,664,367 12,369,912 12,678,927 12,327,004 ========== ========== ========== ========== Basic earnings per share $ .19 $ .14 $ .38 $ .28 ====== ====== ====== ====== Diluted earnings per share $ .18 $ .14 $ .36 $ .28 ====== ====== ====== ====== - ---------------------------------------------------------------------------------------
11 EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JUN-30-1998 30,281 5,471 36,687 0 23,281 113,135 107,959 80,289 181,799 40,301 4,235 0 0 14,374 90,359 181,799 97,167 98,925 71,231 91,190 0 0 119 7,616 2,995 4,621 0 0 0 4,621 .38 .36
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