10-Q 1 e10-q.txt FORM 10-Q 1 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 June 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-13279 UNOVA, INC. (Exact name of registrant as specified in its charter) DELAWARE 95-4647021 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 21900 BURBANK BOULEVARD WOODLAND HILLS, CALIFORNIA 91367-7418 WWW.UNOVA.COM (Zip Code) (Address of principal executive offices and internet site) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 992-3000 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 [ ] On July 31, 2000 there were 55,938,760 shares of Common Stock outstanding, exclusive of treasury shares. Page 1 of 15 2 UNOVA, INC. INDEX REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2000
PAGE NUMBER PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Consolidated Statements of Operations (unaudited) Six months ended June 30, 2000 and 1999.................. 3 Consolidated Statements of Operations (unaudited) Three Months Ended June 30, 2000 and 1999................. 4 Consolidated Balance Sheets (unaudited) June 30, 2000 and December 31, 1999 ...................... 5 Consolidated Statements of Cash Flows (unaudited) Six Months Ended June 30, 2000 and 1999................... 6 Notes to Consolidated Financial Statements (unaudited)..... 7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 10 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K............................. 14 Signatures 15
2 3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS UNOVA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, --------------------------------- 2000 1999 ------------ ------------ Sales and Service Revenues ................... $ 965,059 $ 987,831 ------------ ------------ Costs and Expenses Cost of sales and service ................ 733,271 703,335 Selling, general and administrative ...... 204,404 221,436 Depreciation and amortization ............ 34,832 32,714 Interest, net ............................ 15,781 19,005 ------------ ------------ Total Costs and Expenses ............... 988,288 976,490 ------------ ------------ Other Income, Net ............................ 40,186 ------------ Earnings before Taxes on Income .............. 16,957 11,341 Taxes on Income .............................. (1,187) (4,536) ------------ ------------ Net Earnings ................................. $ 15,770 $ 6,805 ============ ============ Basic and Diluted Earnings per Share ......... $ 0.28 $ 0.12 ============ ============ Shares Used in Computing Basic Earnings per Share ....................... 55,555,421 54,944,359 Shares Used in Computing Diluted Earnings per Share ....................... 55,555,676 54,947,033
See accompanying notes to consolidated financial statements. 3 4 UNOVA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)
THREE MONTHS ENDED JUNE 30, --------------------------------- 2000 1999 ------------ ------------ Sales and Service Revenues .................. $ 480,232 $ 494,431 ------------ ------------ Costs and Expenses Cost of sales and service ............... 369,886 351,026 Selling, general and administrative ..... 106,789 111,768 Depreciation and amortization ........... 17,813 16,131 Interest, net ........................... 8,169 9,923 ------------ ------------ Total Costs and Expenses .............. 502,657 488,848 ------------ ------------ Other Income, Net ........................... 40,186 ------------ Earnings before Taxes on Income ............. 17,761 5,583 Taxes on Income ............................. (1,497) (2,233) ------------ ------------ Net Earnings ................................ $ 16,264 $ 3,350 ============ ============ Basic and Diluted Earnings per Share ........ $ 0.29 $ 0.06 ============ ============ Shares Used in Computing Basic Earnings per Share ...................... 55,558,069 54,945,613 Shares Used in Computing Diluted Earnings per Share ...................... 55,558,578 54,950,064
See accompanying notes to consolidated financial statements. 4 5 UNOVA, INC. CONSOLIDATED BALANCE SHEETS (thousands of dollars) (unaudited) ASSETS
JUNE 30, DECEMBER 31, 2000 1999 ----------- ----------- Current Assets Cash and cash equivalents .................................... $ 7,059 $ 25,239 Accounts receivable, net ..................................... 472,040 596,885 Inventories, net of progress billings ........................ 263,430 310,175 Deferred tax assets .......................................... 159,100 158,170 Other current assets ......................................... 21,911 19,873 ----------- ----------- Total Current Assets ...................................... 923,540 1,110,342 ----------- ----------- Property, Plant and Equipment, at Cost ............................ 462,448 472,229 Less Accumulated Depreciation ..................................... (212,768) (201,330) ----------- ----------- Property, Plant and Equipment, Net ........................... 249,680 270,899 ----------- ----------- Goodwill and Other Intangibles, Net ............................... 378,295 399,131 ----------- ----------- Other Assets ...................................................... 130,332 123,167 ----------- ----------- Total Assets ...................................................... $ 1,681,847 $ 1,903,539 =========== ===========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
JUNE 30, DECEMBER 31, 2000 1999 ----------- ----------- Current Liabilities Accounts payable and accrued expenses ........................ $ 332,513 $ 509,188 Payroll and related expenses ................................. 83,795 89,309 Notes payable and current portion of long-term obligations ... 14,316 64,002 ----------- ----------- Total Current Liabilities ................................. 430,624 662,499 ----------- ----------- Long-term Obligations ............................................. 365,317 365,386 ----------- ----------- Deferred Tax Liabilities .......................................... 47,457 44,777 ----------- ----------- Other Long-term Liabilities ....................................... 96,006 99,577 ----------- ----------- Commitments and Contingencies...................................... Shareholders' Investment Common stock ................................................. 559 556 Additional paid-in capital ................................... 655,820 652,157 Retained earnings ............................................ 107,030 91,260 Accumulated other comprehensive loss - cumulative currency translation adjustment ................ (20,966) (12,673) ----------- ----------- Total Shareholders' Investment ............................ 742,443 731,300 ----------- ----------- Total Liabilities and Shareholders' Investment .................... $ 1,681,847 $ 1,903,539 =========== ===========
See accompanying notes to consolidated financial statements. 5 6 UNOVA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands of dollars) (unaudited)
SIX MONTHS ENDED JUNE 30, --------------------------- 2000 1999 --------- --------- Cash and Cash Equivalents at Beginning of Period ................ $ 25,239 $ 17,708 --------- --------- Cash Flows from Operating Activities: Net earnings ............................................... 15,770 6,805 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Gain on sale of business ................................ (44,686) Depreciation and amortization ........................... 34,832 32,714 Change in prepaid pension costs, net .................... (8,258) (8,554) Deferred taxes .......................................... (1,880) (10,326) Proceeds from the sale of accounts receivable ........... 82,000 Changes in operating assets and liabilities: Accounts receivable ................................... 108,254 (13,530) Inventories ........................................... 33,038 30,342 Other current assets .................................. 6,166 2,645 Accounts payable and accrued expenses ................. (176,430) (87,814) Payroll and related expenses .......................... (7,480) (6,721) Other operating activities .............................. (5,273) 5,722 --------- --------- Net Cash Provided by (Used in) Operating Activities ... (45,947) 33,283 --------- --------- Cash Flows from Investing Activities: Proceeds from sale of business ............................. 88,000 Capital expenditures ....................................... (19,376) (35,220) Other investing activities ................................. 6,350 9,044 --------- --------- Net Cash Provided by (Used in) Investing Activities ... 74,974 (26,176) --------- --------- Cash Flows from Financing Activities: Net decrease in notes payable and credit facilities ........ (49,776) (16,731) Other financing activities ................................. 2,569 3,189 --------- --------- Net Cash Used in Financing Activities ................. (47,207) (13,542) --------- --------- Resulting Decrease in Cash and Cash Equivalents ................. (18,180) (6,435) --------- --------- Cash and Cash Equivalents at End of Period ...................... $ 7,059 $ 11,273 ========= ========= Supplemental disclosure of cash flow information: Interest paid .............................................. $ 16,161 $ 19,885 Income taxes paid (refunded) ............................... $ 2,844 $ (274)
See accompanying notes to consolidated financial statements. 6 7 UNOVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. UNOVA, Inc. and subsidiaries ("UNOVA" or the "Company") became an independent public company on October 31, 1997 (the "Distribution Date"), when all of the UNOVA common stock was distributed to holders of common stock of Western Atlas Inc. ("WAI"), in the form of a dividend (the "Distribution"). Every WAI shareholder of record on October 24, 1997 was entitled to receive one share of UNOVA common stock for each WAI share of common stock held. The amounts included in this report are unaudited; however in the opinion of management, all adjustments necessary for a fair presentation of results of operations, financial position and cash flows for the stated periods have been included. These adjustments are of a normal recurring nature. It is suggested that these consolidated financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The results of operations for the interim periods presented are not necessarily indicative of operating results for the entire year. 2. Inventories, net of progress billings consisted of the following (thousands of dollars):
June 30, December 31, 2000 1999 --------- --------- Raw materials and work in process ...... $ 272,357 $ 289,656 Finished goods ......................... 28,002 44,336 Less progress billings ................. (36,929) (23,817) --------- --------- Inventories, net of progress billings .. $ 263,430 $ 310,175 ========= =========
3. Interest, net was composed of the following (thousands of dollars):
Six Months Ended Three Months Ended June 30, June 30, ------------------------- ------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Interest expense ...... $ 16,977 $ 19,519 $ 8,592 $ 9,931 Interest income ....... (1,196) (514) (423) (8) -------- -------- -------- -------- Interest, net ......... $ 15,781 $ 19,005 $ 8,169 $ 9,923 ======== ======== ======== ========
4. Basic earnings per share is calculated using the weighted average number of common shares outstanding and issuable for the applicable period. Diluted earnings per share is computed using basic weighted average shares plus the dilutive effect of outstanding stock options using the "treasury stock" method. 7 8 UNOVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. (continued) Shares used for basic and diluted earnings per share were computed as follows:
Six Months Ended Three Months Ended June 30, June 30, ---------------------------- ---------------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Basic weighted average shares ...... 55,555,421 54,944,359 55,558,069 54,945,613 Dilutive effect of stock options ... 255 2,674 509 4,451 ---------- ---------- ---------- ---------- Diluted weighted average shares .... 55,555,676 54,947,033 55,558,578 54,950,064 ========== ========== ========== ==========
At June 30, 2000 and 1999, Company employees and directors held options to purchase 5,502,620 and 3,957,100 shares, respectively, of Company common stock that were antidilutive to the diluted earnings per share computation. These options could become dilutive in future periods if the average market price of the Company's common stock exceeds the exercise price of the outstanding options. 5. The Company's comprehensive income (loss) amounts were computed as follows (thousands of dollars):
Six Months Ended Three Months Ended June 30, June 30, ------------------------- ------------------------- 2000 1999 2000 1999 -------- -------- -------- -------- Net earnings ........................... $ 15,770 $ 6,805 $ 16,264 $ 3,350 Change in equity due to foreign currency translation adjustments .... (8,293) (7,965) (5,659) (3,854) -------- -------- -------- -------- Comprehensive income (loss) ............ $ 7,477 $ (1,160) $ 10,605 $ (504) ======== ======== ======== ========
6. The Company operates in two primary businesses: Automated Data Systems ("ADS") and Industrial Automation Systems ("IAS"). The IAS businesses are further disaggregated into two reportable segments based on their respective markets: Integrated Production Systems and Advanced Manufacturing Equipment. The Company uses operating profit, which is defined as earnings before taxes on income and net interest expense, to evaluate performance. Corporate and other amounts include corporate operating costs and currency transaction gains and losses. There were no material intersegment transactions. 8 9 UNOVA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. (continued) (Millions of Dollars)
Integrated Advanced Automated Production Manufacturing Corporate Data Systems Systems Equipment and Other Total ------------ ---------- ------------- --------- ------ Six Months Ended June 30: Sales ........................ 2000 $399.0 $429.7 $136.4 $965.1 1999 418.4 413.6 155.8 987.8 Operating profit (loss) ...... 2000 22.4(a) 23.4 3.5 $(16.6) 32.7 1999 10.3 32.7 1.5 (14.2) 30.3 Three Months Ended June 30: Sales ........................ 2000 189.4 222.5 68.3 480.2 1999 210.4 210.6 73.4 494.4 Operating profit (loss) ...... 2000 18.0(a) 15.3 1.2 (8.6) 25.9 1999 2.7 20.8 (0.5) (7.5) 15.5
(a) includes net other income of $40.2 million 7. The Company leases executive offices that are located in a building owned by the UNOVA Master Trust, an entity which holds the assets of the Company's primary U.S. pension plans. Rental expense under the provisions of this lease was $0.5 million and $0.3 million for the six and three month periods ended June 30, 2000, respectively. Rental expense for the six and three month periods ended June 30, 1999 was $0.4 million and $0.2 million, respectively. 8. Net other income of $40.2 million is comprised of a one-time gain from the sale of the ADS segment's Amtech transportation systems operations ("Amtech"), partially offset by severance charges related to the ADS segment's North American manufacturing activities. In June 2000, the Company sold Amtech and received preliminary cash proceeds of approximately $88 million. The net assets and results of operations of Amtech are not material to the Company's consolidated financial statements for all periods presented. 9. During the second quarter of 2000 the Company significantly reduced its annual effective tax rate to reflect the recognition of expected tax benefits from previously incurred losses. 9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company operates in two primary businesses: Automated Data Systems ("ADS") and Industrial Automation Systems ("IAS"). The IAS businesses are further disaggregated into two reportable segments based on their respective markets: Integrated Production Systems ("IPS") and Advanced Manufacturing Equipment ("AME"). Sales and service revenues and segment operating profit (loss) for the six and three months ended June 30, 2000 and 1999 were as follows:
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, 2000 1999 2000 1999 -------------------------- ------------------------------ (thousands of dollars) (thousands of dollars) Sales and Service Revenues Automated Data Systems ................. $ 399,018 $ 418,426 $ 189,465 $ 210,441 Industrial Automation Systems: Integrated Production Systems ....... 429,686 413,561 222,516 210,615 Advanced Manufacturing Equipment .... 136,355 155,844 68,251 73,375 --------- --------- --------- --------- Total Sales and Service Revenues ....... $ 965,059 $ 987,831 $ 480,232 $ 494,431 ========= ========= ========= ========= Segment Operating Profit (Loss) Automated Data Systems ................. $(17,788)(a) $ 10,315 $ (22,219)(a) $ 2,665 Industrial Automation Systems: Integrated Production Systems ....... 23,425 32,716 15,312 20,816 Advanced Manufacturing Equipment .... 3,510 1,462 1,243 (520) --------- --------- --------- --------- Segment Operating Profit (Loss) ........ $ 9,147 $ 44,493 $ (5,664) $ 22,961 ========= ========= ========= ========= (a) excludes net other income of $40,186
Sales and Service Revenues and Segment Operating Profit Total sales and service revenues for the six months ended June 30, 2000 were $965.1 million, a decrease of $22.8 million, or 2%, from the corresponding prior year period. Total segment operating profit of $9.1 million for the six months ended June 30, 2000 represents a decrease of $35.3 million, or 79%, compared to the corresponding prior year period. For the three months ended June 30, 2000, total sales and service revenues of $480.2 million represents a decrease of $14.2 million, or 3%, compared with the corresponding prior year quarter. For the three months ended June 30, 2000, the Company reported a total segment operating loss of $5.7 million compared to total segment operating profit of $23.0 million for the corresponding prior year quarter. Automated Data Systems: ADS segment revenues decreased $19.4 million, or 5%, for the six months ended June 30, 2000, and $21.0 million, or 10%, for the three months ended June 30, 2000, compared to the corresponding prior year periods. The sales decline was caused primarily by continuing weakness in the Direct Store Delivery (DSD) market and sales force disruption as the Company's Intermec subsidiary shifts from a geographic sales orientation to a named-account/vertical marketing structure. As a result of its 1999 ERP system issues and current sales force disruption, Intermec has not participated in its overall market growth. For the six and three month periods ended June 30, 2000, ADS reported segment operating losses of $17.8 million and $22.2 million, respectively, compared to segment operating profit of $10.3 million and $2.7 million in the corresponding prior year periods. The significant operating loss for the 2000 second quarter was primarily a result of lower sales volume which contributed less margin to cover reduced overhead and selling, general and administrative expenses. 10 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Integrated Production Systems: IPS segment revenues increased $16.1 million, or 4%, and $11.9 million, or 6%, for the six and three month periods ended June 30, 2000, respectively, compared to the corresponding prior year periods. Strong domestic activity for the segment's engineering and design products and precision grinding systems was the primary contributor to revenue growth for the first half of 2000. Domestic revenue growth was partially offset by declines in foreign sales due to weakness in UK markets. Related operating profit decreased $9.3 million, or 28%, for the six months ended June 30, 2000, and $5.5 million, or 26%, for the three months ended June 30, 2000 compared with the corresponding prior year periods. The IPS operating profit decline was attributed to operating losses incurred at foreign operations due to unabsorbed costs. IPS backlog decreased from $627.7 million at December 31, 1999 to $546.8 million at June 30, 2000 due to an increase in project delays by automotive customers. The Company believes that the decline in backlog may indicate an overall softness in its automotive related markets. Advanced Manufacturing Equipment: AME segment revenues decreased $19.5 million, or 13%, and $5.1 million, or 7%, for the six and three month periods ended June 30, 2000, compared to the corresponding prior year periods, respectively. The decrease in revenues reflects continued weakness in the general machine tool market. AME reported operating profit of $3.5 million for the six months ended June 30, 2000, compared to $1.5 million for the corresponding prior year period. For the 2000 second quarter, AME reported operating profit of $1.2 million compared to an operating loss of $0.5 million for the second quarter of 1999. AME achieved marginal operating profits, despite the revenue decline, due to 1999 headcount reductions and cost structure improvements. AME backlog decreased from $102.5 million at December 31, 1999 to $81.5 million at June 30, 2000. Costs and Expenses Cost of sales increased $30.0 million to $733.3 million for the six months ended June 30, 2000 from $703.3 million for the six months ended June 30, 1999. Cost of sales increased $18.9 million to $369.9 million for the three months ended June 30, 2000 from $351.0 million for the three months ended June 30, 1999. Cost of sales as a percentage of sales increased to 76% and 77% for the six and three month periods ended June 30, 2000, respectively, from 71% in each of the corresponding periods in the prior year due to the above-mentioned factors contributing to fluctuations in revenue and operating profit. Selling, general and administrative expenses ("SG&A") decreased $17.0 million to $204.4 million for the six months ended June 30, 2000, from $221.4 million for the six months ended June 30, 1999. SG&A decreased $5.0 million to $106.8 million for the three months ended June 30, 1999, from $111.8 million for the three months ended June 30, 1999. The decrease in SG&A was due primarily to the decline in sales from the prior year. SG&A as a percentage of sales was 21% and 22% for the six and three months periods ended June 30, 2000, respectively. For the six and three months periods ended June 30, 1999, SG&A as a percentage of sales was 22% and 23%, respectively. Depreciation and amortization expense increased to $34.8 million and $17.8 million for the six and three months ended June 30, 2000 from $32.7 million and $16.1 million for the corresponding periods in the prior year due to an increase in the machinery and equipment component of fixed assets. Net interest expense was $15.8 million and $19.0 million for the six months ended June 30, 2000 and 1999, respectively, and $8.2 million and $9.9 million for the three months ended June 30, 2000 and 1999, respectively. The decrease was attributable to lower outstanding debt during the six months and three months ended June 30, 2000 as compared to the same periods in 1999, partially offset by the effect of increased interest rates. 11 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Other Income, Net Net other income of $40.2 million is comprised of a one-time gain from the sale of the ADS segment's Amtech transportation systems operations ("Amtech"), partially offset by severance charges related to the ADS segment's North American manufacturing activities. In June 2000, the Company sold Amtech and received preliminary cash proceeds of approximately $88 million. The net assets and results of operations of Amtech are not material to the Company's consolidated financial statements for all periods presented. Taxes on Income During the second quarter of 2000 the Company significantly reduced its annual effective tax rate to reflect the recognition of expected tax benefits from previously incurred losses. LIQUIDITY AND CAPITAL RESOURCES Cash and marketable securities decreased to $7.1 million at June 30, 2000 from $25.2 million at December 31, 1999. Total debt decreased to $379.6 million at June 30, 2000 from $429.4 million at December 31, 1999. Proceeds from the sale of Amtech were used to reduce outstanding debt incurred for the normal capital expenditures and working capital needs of the company. The Company maintains two unsecured committed variable-rate credit facilities with banks from which it may borrow up to $500.0 million. Outstanding borrowings under these facilities were $150.0 million at June 30, 2000. The Company sells interests in a revolving pool of its trade accounts receivable to a financial institution which issues short-term debt backed by receivables acquired in similar transactions. At June 30, 2000 and December 31, 1999 net proceeds of $100.0 million have been reflected as a reduction of accounts receivable on the consolidated balance sheet. Costs associated with the asset securitization agreements are $3.3 million for the six months ended June 30, 2000 and $1.7 million for the three months ended June 30, 2000 and are classified as selling, general and administrative expenses. During the second quarter of 2000, the Company engaged Credit Suisse First Boston to analyze and advise management on strategic alternatives to accelerate value generation for the Company's stakeholders. The Company believes that cash flow from operations, along with available borrowing capacity, will be adequate to meet anticipated working capital and capital expenditure requirements for the next 12 months. 12 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) NEW ACCOUNTING PRONOUNCEMENTS In June 2000, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101B, Second Amendment - Revenue Recognition in Financial Statements, that defers the effective date of Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, until no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company believes the adoption of SAB 101 will not have a material impact on its revenue recognition practices. In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133 (an amendment of FASB Statement No. 133). Under the provisions of this statement, the effective date of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS No. 133"), is deferred to fiscal years beginning after June 15, 2000. The Company is currently evaluating the impact of adopting SFAS No. 133. FORWARD-LOOKING STATEMENTS The Company cautions readers that included in this quarterly report are certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on management's beliefs as well as on assumptions made by and information currently available to management. They include, but are not limited to, statements about market outlook, the Company's ability to meet its working capital and capital expenditure requirements, future available borrowing capacity, the impact of new accounting pronouncements, and the Company's ability to implement any strategic alternatives it may choose to accelerate value generation for its stakeholders. Such forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which could cause the Company's future results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. This report should be read in conjunction with the Company's Annual Report on Form 10-K which contains a fuller discussion of such risks, uncertainties, and assumptions. Readers are cautioned not to place undue reliance on forward-looking statements. The Company disclaims any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 13 14 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Reports on Form 8-K: No reports on Form 8-K have been filed by the Registrant during the quarter ended June 30, 2000. (b) See Exhibit Index included herein on page E-1. 14 15 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. UNOVA, INC. (Registrant) By /s/ Michael E. Keane --------------------------------- Michael E. Keane Senior Vice President and Chief Financial Officer August 10, 2000 15 16 UNOVA, INC. INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT ----------- ---------------------- 2.1 Amended and Restated Purchase and Sale Agreement dated August 20, 1998, between UNOVA, Inc., UNOVA Industrial Automation Systems, Inc., and UNOVA UK Limited, on the one hand, and Cincinnati Milacron Inc., on the other hand, filed on October 2, 1998 as Exhibit 2 to the Company's Current Report on Form 8-K, and incorporated herein by reference. 3.1 Certificate of Incorporation of UNOVA, Inc., filed on October 22, 1997 as Exhibit 3A to Amendment No. 2 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference. 3.2 By-laws of UNOVA, Inc., as amended on February 5, 1999, filed as Exhibit 3.2 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference. 4.1 $400,000,000 Credit Agreement dated September 24, 1997, among UNOVA, Inc., the Banks listed therein, and Morgan Guaranty Trust Company of New York, as Agent (the "$400,000,000 Credit Agreement"), filed on October 1, 1997 as Exhibit 10M to Amendment No. 1 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference. 4.2 Amendment No. 1 to the $400,000,000 Credit Agreement, dated January 15, 1998, filed as Exhibit 4.4 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference. 4.3 Amendment No. 2 to the $400,000,000 Credit Agreement, dated May 15, 1998, filed as Exhibit 4.7 to the Company's June 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference. 4.4 Amendment No. 3 to the $400,000,000 Credit Agreement, dated September 24, 1998, filed as Exhibit 4.8 to the Company's September 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference. 4.5 Amendment No. 4 to the $400,000,000 Credit Agreement dated November 24, 1999, filed as Exhibit 4.5 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 4.6 Rights Agreement dated September 24, 1997, between UNOVA, Inc. and The Chase Manhattan Bank, as Rights Agent, to which is annexed the form of Right Certificate as Exhibit A, filed on October 22, 1997 as Exhibit 3C to Amendment No. 2 to the Company's Registration Statement on Form 10 No. 001-13279, and incorporated herein by reference. 4.7 Indenture dated as of March 11, 1998 between the Company and The First National Bank of Chicago, Trustee, providing for the issuance of securities in series, filed as Exhibit 4.5 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference.
E-1 17 INDEX TO EXHIBITS (CONTINUED) 4.8 Form of 6.875% Notes due March 15, 2005 issued by the Company under such indenture, filed as Exhibit 4.6 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference. 4.9 Form of 7.00% Notes due March 15, 2008 issued by the Company under such indenture, filed as Exhibit 4.7 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference. 4.10 $100,000,000 Credit Agreement dated January 13, 1999, among UNOVA, Inc., the Banks listed therein, and Morgan Guaranty Trust Company of New York, as Agent, filed as Exhibit 4.9 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference. 4.11 Amended and Restated Credit Agreement (364 Day Agreement), among UNOVA, Inc., the banks listed therein, and Morgan Guaranty Trust Company of New York, as agent, dated December 1, 1999, filed as Exhibit 4.11 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. Instruments defining the rights of holders of other long-term debt of the Company are not filed as exhibits because the amount of debt authorized under any such instrument does not exceed 10% of the total assets of the Company and its consolidated subsidiaries. The Company hereby undertakes to furnish a copy of any such instrument to the Commission upon request. 4.12 Transfer and Administration Agreement dated June 18, 1999, among Enterprise Funding Corporation, as Company, KCH Funding, L.L.C., as Transferor, UNOVA, Inc., Individually and as Servicer, and Nationsbank, N.A., as Lead Arranger, Agent and Bank Investor (the "Transfer and Administration Agreement"), filed as Exhibit 4.10 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference. 4.13 Amendment No. 1 to the Transfer and Administration Agreement dated September 15, 1999, filed as Exhibit 4.13 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 4.14 Amendment No. 2 to the Transfer and Administration Agreement dated December 15, 1999, filed as Exhibit 4.14 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 4.15 Amendment No. 3 to the Transfer and Administration Agreement dated June 16, 2000.* 4.16 Receivables Purchase Agreement dated June 18, 1999, between UNOVA, Inc., as Seller, and KCH Funding, L.L.C., as Purchaser (the "Receivables Purchase Agreement"), filed as Exhibit 4.11 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference. 4.17 Amendment No.1 to the Receivable Purchase Agreement dated December 15, 1999, filed as exhibit 4.16 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference.
E-2 18 INDEX TO EXHIBITS (CONTINUED) 4.18 Originator Receivables Purchase Agreement dated June 18, 1999, among UNOVA Industrial Automation Systems, Inc. and Intermec Technologies Corporation, as Sellers, and UNOVA, Inc., as Purchaser, filed as Exhibit 4.12 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.1 Distribution and Indemnity Agreement dated October 31, 1997, between Western Atlas Inc. and UNOVA, Inc, filed as Exhibit 10.1 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.2 Tax Sharing Agreement dated October 31, 1997, between Western Atlas Inc., and UNOVA, Inc., filed as Exhibit 10.2 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.3 Employee Benefits Agreement dated October 31, 1997, between Western Atlas Inc., and UNOVA, Inc., filed as Exhibit 10.3 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.4 Intellectual Property Agreement dated October 31, 1997, between Western Atlas Inc., and UNOVA, Inc., filed as Exhibit 10.4 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.5 Form of Change of Control Employment Agreements with Alton J. Brann, Michael E. Keane, Larry D. Brady and certain other officers of the Company, filed as Exhibit 10.5 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.6 Amendment to the Form of Change of Control Employment Agreements with Alton J. Brann, Larry D. Brady, Michael E. Keane and certain other officers of the Company, filed as Exhibit 10.6 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 10.7 Form of Change of Control Employment Agreement with certain officers of the Company, filed as Exhibit 10.7 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 10.8 UNOVA, Inc. Director Stock Option and Fee Plan, filed as Exhibit 10.7 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.9 Amendment No. 1 to the UNOVA, Inc. Director Stock Option and Fee Plan filed as Exhibit 10.13 to the Company's September 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.10 UNOVA, Inc. Restoration Plan, filed on August 18, 1997 as Exhibit 10I to the Company's Registration Statement on Form 10 No. 001-13279 and incorporated herein by reference. 10.11 UNOVA, Inc. Supplemental Executive Retirement Plan, filed on October 1, 1997 as Exhibit 10H to Amendment No. 1 to the Company's Registration Statement on Form 10 No. 001-13279 and incorporated herein by reference.
E-3 19 INDEX TO EXHIBITS (CONTINUED) 10.12 Amendment No. 1 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated September 23, 1998, filed as Exhibit 10.22 to the Company's September 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.13 Amendment No. 2 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated March 11, 1999, filed as Exhibit 10.15 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference. 10.14 Amendment No. 3 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated March 15, 2000, filed as Exhibit 10.20 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 10.15 Amendment No. 4 to UNOVA, Inc. Supplemental Executive Retirement Plan, dated July 11, 2000.* 10.16 Supplemental Retirement Agreement between UNOVA, Inc. and Alton J. Brann, filed on October 1, 1997 as Exhibit 10L to Amendment No. 1 to the Company's Registration Statement on Form 10 No. 001-13279 and incorporated herein by reference. 10.17 Amendment No. 1 to Supplemental Retirement Agreement between UNOVA, Inc. and Alton J. Brann, dated September 23, 1998, filed as Exhibit 10.21 to the Company's September 30, 1998 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.18 Amendment No. 2 to Supplemental Executive Retirement Agreement between UNOVA, Inc. and Alton J. Brann, dated March 11, 1999, filed as Exhibit 10.18 to the Company's 1998 Annual Report on Form 10-K, and incorporated herein by reference. 10.19 Amendment No. 3 to Supplemental Executive Retirement Agreement between UNOVA, Inc. and Alton J. Brann, dated March 15, 2000, filed as Exhibit 10.24 to the Company's March 31, 2000 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.20 Supplemental Executive Retirement Plan between UNOVA, Inc. and Larry D. Brady dated March 15, 2000, filed as Exhibit 10.25 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 10.21 UNOVA, Inc. 1997 Stock Incentive Plan, filed as Exhibit 10.12 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.22 UNOVA, Inc. Executive Severance Plan (As Amended November 18, 1999), filed as Exhibit 10.31 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 10.23 Board resolution dated July 25, 2000 amending the UNOVA, Inc. Executive Severance Plan.*
E-4 20 INDEX TO EXHIBITS (CONTINUED) 10.24 Form of Promissory Notes in favor of the Company given by certain officers and key employees, filed as Exhibit 10.14 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.25 Board resolution dated September 24, 1997 establishing the UNOVA, Inc. Incentive Loan Program, filed as Exhibit 10.15 to the Company's September 30, 1997 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.26 UNOVA, Inc. Executive Survivor Benefit Plan, filed as Exhibit 10.17 to the Company's 1997 Annual Report on Form 10-K, and incorporated herein by reference. 10.27 UNOVA, Inc. 1999 Stock Incentive Plan, filed as Annex A to the Company's definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 7, 1999 (the "1999 Proxy Statement"), and incorporated herein by reference. 10.28 UNOVA, Inc. Management Incentive Compensation Plan, filed as Annex B to the Company's 1999 Proxy Statement, and incorporated herein by reference. 10.29 UNOVA, Inc. Group Executive Medical Benefit Plan, filed as Exhibit 10.37 to the Company's 1999 Annual Report on Form 10-K, and incorporated herein by reference. 10.30 Letter Offering Employment to Larry D. Brady as President and Chief Operating Officer of UNOVA, Inc., as accepted by Mr. Brady on June 16, 1999 ("Brady Employment Offer"), filed as Exhibit 10.32 to the Company's June 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.31 Agreement of Amendment dated June 22, 2000, to Brady Employment offer.* 10.32 Restricted Stock Agreement between UNOVA, Inc. and Larry D. Brady, filed as Exhibit 10.34 to the Company's September 30, 1999 Quarterly Report on Form 10-Q, and incorporated herein by reference. 10.33 Amendment No. 1 to the Restricted Stock Agreement between UNOVA, Inc. and Larry D. Brady, dated June 22, 2000.* 27 Financial Data Schedule (filed only electronically with the Securities and Exchange Commission). * * Copies of these documents are included in this Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission.
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