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UNOVA, INC. INDEX TO ANNUAL REPORT ON FORM 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2001

or

Commission file number 001-13279

UNOVA, INC.

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (818) 992-3000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    / /

On February 28, 2002, the aggregate market value of the Registrant's voting stock held by non-affiliates was $324.8 million.

On February 28, 2002, there were 58,094,935 shares of Common Stock outstanding, exclusive of treasury shares.

UNOVA, INC.
INDEX TO ANNUAL REPORT
ON FORM 10-K

PART I

ITEM 1. BUSINESS

General

UNOVA, Inc. and subsidiaries (the "Company" or "UNOVA") is an industrial technologies company providing global customers with solutions for improving their efficiency and productivity. The Company has three reportable segments, Automated Data Systems ("ADS"), Integrated Production Systems ("IPS") and Advanced Manufacturing Equipment ("AME"). Segments are determined principally on the basis of their products and services. The ADS segment comprises the Company's wholly owned subsidiary Intermec Technologies Corporation ("Intermec"). The IPS segment comprises the Lamb Machining Systems division, the Lamb Body & Assembly Systems division and the Landis Grinding Systems division. The AME segment comprises the Cincinnati Machine division. For evaluation purposes, the Company aggregates the IPS and AME reportable segments into the Industrial Automation Systems ("IAS") business. For the years ended December 31, 2001, 2000 and 1999, UNOVA reported revenues of $1,528.6 million, $1,837.8 million, and $2,108.7 million, respectively.

The Company became an independent public company upon the distribution of its common stock to the shareholders of Western Atlas Inc. ("WAI") on October 31, 1997. The Company is a Delaware corporation and its headquarters are located in Woodland Hills, California.

See Note K to the consolidated financial statements for financial information by reportable segment and by geographical area.

Products and Services

Automated Data Systems Segment

Intermec products and services include mobile computing solutions for the field worker, automated data collection systems for on-premises and site-based workers, wireless network systems for wireless enablement of an enterprise, and barcode label and printing solutions. These systems, solutions and services enable Intermec's customers to more efficiently and effectively manage their supply chains and fulfillment activities. ADS accounted for 43%, 40% and 41% of the Company's consolidated revenues in 2001, 2000 and 1999, respectively. In June 2000, the ADS segment sold its Amtech Transportation Systems operations ("Amtech"). Amtech revenues were $42.3 million for the six months ended June 30, 2000 and $78.2 million for the year ended December 31, 1999.

Major Intermec offices and manufacturing facilities are located in the states of Washington, Iowa, and Ohio; and internationally in the United Kingdom, the Netherlands, Sweden and France.

Scanners and Data Collection Systems:    Intermec develops bar code scanning and data collection products that are used primarily by non-office workers such as warehouse, delivery, manufacturing and other employees who operate outside the typical office environment. Product applications include work force automation; tracking of work in process and finished goods inventory through manufacturing, distribution and other commercial operations; and total asset visibility and real-time monitoring of inventory levels and order status to improve productivity, quality and responsiveness. The information collected, managed and exchanged by workers in these applications is often the most critical and the most susceptible to errors or omissions due to illegible handwriting, inaccurate keystrokes, or overlooked transactions. The ability to efficiently capture and wirelessly transmit information real time means more streamlined business processes. Automating these business processes is key to consistent customer service and fulfillment execution. In addition, Intermec technologies are increasingly used for automating information exchange within supply chains and facilitating shipment and fulfillment of orders. Intermec's scanning and data collection products include rugged wireless handheld computers and terminals, wand scanners, imagers, charge-couple devices (CCD), and badge and laser scanners. They are able to read or collect data and

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move that data directly into standard ERP (Enterprise Resource Planning), WMS (Warehouse Management Systems) and other business applications. The Company also manufactures a large number of industrial handheld terminals for use in warehouses and industrial environments.

Intermec is a leader in the production of next generation item-tracking technology called RFID (radio frequency identification). Intermec markets a complete range of RFID tags, readers and related equipment, and services under the Intellitag trade name. RFID wirelessly communicates important product information between a tracking device, called an interrogator, and inexpensive "tags" comprising a computer chip and its antenna encased in a protective covering. RFID tags are programmed to contain identification, serial numbers, history and other attributes. Certain RFID tags, such as Intermec's Intellitag, contain read/write memory to allow updates and tag reuse. Unlike laser scanned bar codes, Intermec's RFID tags do not require "line of sight" to be read. As many as 40 Intellitag RFID tags can be read simultaneously at distances up to 10 feet. Companies have expressed interest in using RFID technology as a tool to track pallets and individual items through their entire supply chain or as a security application. Intermec is working through alliances and with other companies to broaden customer access and create standards support.

Enterprise Wireless Networks Products & Services:    Intermec is a market leader in developing wireless Local Area Network ("LAN") software, systems and services. It was the first to provide a network architecture that allows customers to use multiple radio technologies within one LAN system. Starting in the early 1980s, the Company installed digital communication between mobile computers and host servers within industrial workspaces such as warehouses, distribution centers, factories and large outdoor facilities. In 1998, the Institute for Electronic and Electrical Engineering (IEEE) promulgated a new standard for high-speed network communication via wireless radio signal. The 802.11b standard allows customers to purchase interoperable digital radios for client computing devices. In the years since the standard was established, several large network equipment vendors have begun selling 802.11b wireless LAN systems, increasing penetration for this technology among office workers and in public spaces such as hotels, restaurants and airports.

Intermec's core customers in industrial and warehousing markets purchase the Company's wireless systems primarily because these systems are much easier to implement and administer than competitive brands. Further, Intermec has a long history of success serving these markets. Finally, customers in these markets are motivated in part by their belief that the Company's systems are extremely rugged and reliable, and that reliability will prevent failures and downtime in the customer's operation. Intermec supports all major radio technologies, including synthesized UHF, 900 MHz, 802.11b, 802.11a and Bluetooth. Radio independence allows customers to choose the most efficient radio technology for their facilities. This freedom resolves data rate, transmission speed and range issues and creates a reliable communications environment. Intermec is a member of the Wireless Ethernet Compatibility Alliance ("WECA") initiative, which provides open standards for wireless networking. Intermec's new MobileLAN® system allows customers to migrate from today's 802.11b technology to tomorrow's 802.11a, while preserving much of the current wireless infrastructure. The MobileLAN access™ 2106 access point is the first to include the 802.11a high data rate standard—a five-fold increase over 802.11b data rate speeds—allowing deployment of multimedia and other high-bandwidth applications. The Company also created wireless LAN products that specifically address the security needs of its customers. Based on IEEE 802.11i and 802.1x security standards, MobileLAN secure™ is an integrated security solution for wireless LANs that builds standards-based security capabilities into all components of the wireless LAN, including access points, authentication server software and network interface cards. Intermec's tiered wireless access point product line cost-effectively addresses diverse wireless applications found in an enterprise—both in and out of the office.

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Mobile Computing Solutions:    The Company is a leader in delivering automated solutions comprising ruggedized hand-held and truck-mounted mobile computing systems and local area and wide-area wireless and wired data communication systems. The Company also develops and delivers handheld computer application software for designated markets and applications as well as communication and server systems to integrate the information into customers' enterprise management systems. Data capture devices and specialized peripherals and printer solutions are a part of the provided solution. To assist with the automation of business processes, Intermec provides extensive professional services, such as installation, maintenance, site security and systems integration. Intermec's comprehensive line of hand-held and vehicle-mounted computers combine Microsoft Windows®, Windows® CE and Pocket PC® capability with scanning and IP (Internet Protocol) based data communication abilities. Intermec's family of products ranges from low-cost, hand-held batch and wireless data collection devices to sophisticated pen-based computers with extensive wired and wireless network capabilities. Intermec's "open systems" design philosophy delivers maximum product flexibility to customers with diverse application requirements. In combination with wireless communications, these mobile systems enable remote workers to have access to centralized computer applications and databases, to automate business processes to the point of transaction and to send and receive information on a real-time basis. This results in improved productivity, efficiency and accuracy of information. Intermec offers mobile computing application software that provides work force automation, customer level sales ordering, pricing and forecasting, and account settlement. Other software products manage work order dispatching, total field asset visibility, real-time proof of delivery, and other critical customer information. The Company has approximately 20 years of experience in developing both hardware and software for mobile computing in the direct store delivery, or DSD market. This experience gives the Company insights that it believes are essential in developing and producing successful product offerings in other mobile computing markets such as field service and logistics operators.

Bar Code Label and Printing Solutions:    The Company's line of flexible "on demand" bar code printers ranges from low-cost, light- to heavy-duty industrial models that accommodate a wide array of printing widths, materials and label configurations. These printers attach directly to enterprise networks. A variety of specialty printers provides custom capabilities including color printing, a global language enabler and high resolution (400 DPI) printing that ensures sharp fonts and precise graphics, even on extremely small labels such as those used by the electronics industry. In 2001, the Company introduced a number of important hardware innovations including the Printer Application Server™ that makes the bar code label printer a "computer-replacement" terminal that handles basic information requests from a host system without a PC. Intermec also introduced a new high-resolution bar code printer, the EasyCoder™ 3400e, which delivers high-speed output for medium-duty applications in shipping, receiving, logistics and manufacturing.

Intermec's media products include pressure-sensitive bar code labels and thermal transfer ribbons to customers worldwide. Intermec's media products emphasize service and value-added technologies, such as the design and manufacture of specialized labels to meet customer requirements for extreme environments such as clean rooms, chemical baths and high humidity.

Technologies/Trends: Intermec is consistently broadening the application of wireless networking, data capture and mobile computing by developing or integrating new technologies into its products. Recent examples include new high-speed wireless networking products such as 802.11a wireless LAN technology, new rugged Windows CE and Pocket PC based computers, short range radio systems such as "Bluetooth", and low cost, miniature CCD scan engines and new devices that use the Internet to simplify the management of wireless networks. Intermec continues to invest in and develop standards-based, low-cost RFID products for supply chain applications such as source tagging, shipping labels and pallet tags with embedded electronic memory chips that can be reprogrammed via low-power radio signals. Intermec has

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also developed a complete range of products based on its RFID technology, comprising labels, printers, and scanners. A prominent industry organization serving the automotive sector recently approved a new standard for RFID that is based upon certain of the Company's communications protocols for RFID. These standards manage communications between a host computer and an RFID tag. This new standard is expected to be used in systems that will allow tire manufacturers and auto companies to track individual tires as they are manufactured, distributed and installed on new cars and trucks manufactured in North America. Intermec plans to offer its new technology for integration with existing automatic identification and data capture solutions such as bar code, mobile computing and other enterprise-wide information systems.

Industrial Automation Systems

Industrial Automation Systems is a leading developer of value-added manufacturing technologies and products that span the production cycle from process engineering and design to systems integration. The Integrated Production Systems segment serves primarily the global automotive, off-road vehicle and diesel engine industries. The Advanced Manufacturing Equipment segment serves the aerospace, industrial components, heavy equipment and general job shop markets.

The Company's IAS operations comprise the following divisions: Lamb Machining Systems, Lamb Body & Assembly Systems, Landis Grinding Systems, and Cincinnati Machine.

Major IAS offices and production facilities are located in Illinois, Michigan, Ohio and Pennsylvania and internationally in Canada, the United Kingdom and Germany.

Integrated Production Systems Segment

To create an integrated manufacturing solution, many of the segment's products and systems are sold in combination, including metal cutting solutions, precision grinding machines or assembly and testing systems. By working closely with customers, especially in the product design and engineering phase, the Company is able to design manufacturing processes that reduce capital requirements, lower lifecycle costs, eliminate costly shop floor programming and improve productivity by reducing downtime during operations.

Major industrial manufacturers use one or more of the Company's dedicated and flexible/modular systems to make the following products: powertrain components such as engine blocks, heads, connecting rods, camshafts and crankshafts as well as transmission parts and chassis components (steering knuckles, rear-axle housings and brake calibers); automotive and truck welding and assembly systems.

Metal Cutting:    Manufacturing solutions designed and integrated by the Company range from stand-alone machines for light-duty, general-purpose metalworking, to complete, turnkey manufacturing solutions for heavy-duty or high-volume metal cutting operations. Product lines include machining centers, non-synchronous, ring- or dial-transfer systems for low-volume requirements; modular, flexible systems for medium-volume production requirements; and dedicated modular transfer lines for high-volume production. Through its Assembly and Test Systems operations, the Company also designs and builds specialized assembly and/or testing equipment and systems for a variety of automotive manufacturing and other industries. Metal cutting accounted for 23%, 27% and 26% of the Company's consolidated revenues in 2001, 2000 and 1999, respectively.

Precision Grinding and Abrasives.    The Company is an innovator of cylindrical grinding products and processes that improve accuracy and reliability in critical mechanical parts. For example, precision-ground camshafts and cam lobes for internal combustion engines translate into improved engine durability and performance, with lower emissions and better fuel economies. Precision-ground air compressor pistons

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result in lower friction and energy consumption in air conditioning systems. Superabrasive grinding wheels, electronic controls, high-precision, maintenance-free hydrostatic bearings and other state-of-the-art grinding technologies enable today's car manufacturers to machine parts with precision measured in the sub-micron range. Research into the processing of new materials also has resulted in the development of ultra-high-precision grinding and finishing techniques. These advances are being applied to requirements of the microelectronics, computer, aerospace and optics industries for the manufacture of materials such as composites, silicon, glass and ceramics. Precision Grinding and Abrasives accounted for 14%, 12% and 11% of the Company's consolidated revenues in 2001, 2000 and 1999, respectively.

Auto Body Assembly Systems.    The Company designs and integrates automated systems to form, assemble and weld high-quality auto and truck bodies as well as other industrial products. Robotic systems are integrated with high-precision holding and alignment fixtures and high-volume welding equipment to produce components and subassemblies. Proprietary processes have been developed specifically to assemble doors, hoods and trunk lids, which historically represent the most critical "fit and finish" manufacturing parts of car bodies. Using 3-D computer simulations, the Company has established one of the broadest process and tool design capabilities in the industry. Tool design and advanced process/product development are now linked into the product engineering process, reducing costs and risks for automotive customers long before their programs move into the capital investment stage. Body and Assembly Systems accounted for 7%, 7% and 8% of the Company's consolidated revenues in 2001, 2000 and 1999, respectively.

Advanced Manufacturing Equipment Segment

The Company's AME segment offers CNC machine tools, such as horizontal and vertical machining centers, 5-axis and 5-sided machining centers, modular machining cells, turning centers, specialized machine tools and advanced composites processing systems. The AME segment serves a broad range of industrial customers but is best known for machines which are used by defense, commercial and general aviation aircraft manufacturers to make airframes, rockets, or spacecraft components (vertical stabilizers, missile casings and fuselages). Through its CINCINNATI PLUS™ life cycle support program, the Company provides customers with the most comprehensive services offered in the industry today, including service parts, field service, training, auxiliary services and rebuild/retrofit. Acquired in October of 1998, Advanced Manufacturing Equipment accounted for 13%, 14% and 14% of the Company's consolidated revenues in 2001, 2000 and 1999, respectively.

Technologies/Trends.    The IAS businesses continue to develop manufacturing technologies to broaden their product offerings and respond to automotive customers' needs to lower costs, improve fuel consumption and decrease car emissions. New "agile" machining centers and flexible fixturing systems have been introduced, or are under development, to reduce fixed costs for high-volume machining. Introduced in 2001, the Bobcat™ horizontal machining center is designed to optimize milling and drilling of aluminum and magnesium workpieces. The Bobcat employs a "hybrid kinematic" design to achieve velocity and acceleration comparable to that of linear motor machines at less cost and with equal accuracy. The Company is also continuing to advance its capabilities for processing advanced materials such as aluminum alloys, titanium, compact graphite iron (CGI) and composites.

Business Strategy

The Company's strategy is to develop products, processes and services that help improve productivity and efficiency in a variety of manufacturing, distribution, retail, field service and logistics applications. Each of the Company's segments offers single products as well as integrated solutions to their customers. Future

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growth in these businesses is expected to result from expansion of the Company's existing operations and customer base.

Automated Data Systems Segment

In the ADS market, the integration of Internet e-commerce and real-time information driven by the increasing demand for more efficient and effective fulfillment systems has created increased opportunities and demand for technologies that improve levels of service and responsiveness.

Warehouses and logistics operations already rely on wireless networks and handheld and mobile computers to transmit inventory data to central host computers. When information is updated real time, customers have greater visibility to their current business operations, avoiding inventory shortages and improving customer service by providing more accurate shipping and delivery information. As competition places more pressure on customers for faster operational performance, they typically upgrade their supply chain "execution" technologies to improve financial measures such as inventory and asset turnover, and customer satisfaction standards, such as delivery speed, in-stock availability and order accuracy.

The Company plans to emphasize its product development and market activities in the areas of wireless communications, mobile computers and technologies for supply-chain execution to capitalize on expected strong demand and long-term overall market growth.

Industrial Automation Systems

For the IAS businesses, the Company plans to continue developing its existing customer base by seeking a greater role in customer projects by continuing its emphasis on product development and by expanding its international activities. The ongoing development of the Company's systems and solutions activities will depend primarily on the application of new technologies and products to maintain its position in this technology-driven market. The Company believes it has the necessary technical expertise to achieve this goal.

In recent years, cost-cutting and quality requirements in the automotive industry have strengthened the Company's relationships with its customers. Carmakers have expressed a long-term strategy of consolidating their supplier base, favoring those companies that demonstrate superior engineering expertise, global integration, and the ability to manage large-scale projects. These market-driven changes also have forced many smaller competitors to withdraw from the market or to reduce their participation. The Company has made a number of organizational changes and believes those actions have positioned it to take advantage of these trends. Further, major automakers have announced plans to outsource the production of engine and transmission components to third-party suppliers. These third-party part suppliers, representing new customers to IAS, are most interested in machining and assembly systems that have a great deal of flexibility. In the last four years, the Company has developed significant engineering competencies in the design of "flexible systems" and believes it is well positioned to supply the machining and assembly equipment needs of these new third-party part suppliers.

Markets and Customers

Automated Data Systems Segment

Because automated data systems represent technologies that can be utilized by a company of any size, including small systems that can be installed at very low cost, the market is extensive. Market growth is driven by the global need for technologies and solutions that improve quality, productivity, and cost-efficiency in business and government, particularly through logistics automation, supply chain execution, ERP and e-commerce solutions. Worldwide coverage is accomplished through a dedicated sales and

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service organization in conjunction with resellers and independent software vendors, indirect channel partners and distributors.

Through its application of technologies in the manufacturing, warehouse-distribution, transportation, retail (including direct store and destination delivery), health care, government, field service and utilities markets, ADS maintains a strong position in the global AIDC (Automated Information and Data Collection) market.

ADS sells and services its products through multiple sales and distribution channels: a direct field sales force that concentrates on large or complex systems sales, premier value-added resellers that offer applications-specific solutions, and alliances with major systems integrators and distributors. ADS' direct sales organization serves customers from offices throughout the Americas and Europe and in some selected countries outside these regions. Indirect sales channels include long-time exclusive and non-exclusive relationships with value-added distributors and master resellers.

Although the majority of ADS sales are made through indirect sales channels, no individual value-added distributor or reseller is material to the Company's consolidated revenues. ADS also maintains contact with customers and prospective users by having established user forums for automated data systems applications and technologies.

The mobile computing systems market comprises several applications, such as route accounting for the distribution and package/parcel delivery industries, sales merchandising, remote delivery and field service. These applications are generally used in the consumer products, food, beverage, wholesale, parcel delivery, freight, field service, and home service industries.

Manufacturing applications include the collection and communication of information related to receipt of materials, work in process, finished goods inventory and other functions throughout the manufacturing process. Warehousing and distribution center applications involve the collection and communication of information related to receiving materials to be stored, storage locations, materials retrieval and shipping. Retail applications include the automation of shelf label maintenance and product shipping and receiving functions.

Additional international sales opportunities exist in countries where mobile computing practices and other applications are similar to those in the U.S. The extent of wireless systems opportunities in any particular country is based on the level of industrialization, the status of bar coding implementation, and the wireless regulatory environment for wireless communication technologies. The major markets for printers are manufacturing, distribution, warehousing, transportation, health care, government, and other services.

Industrial Automation Systems

The Company participates in the automotive, aerospace and general manufacturing markets. Investments by automotive customers are driven by model changes, competitive pressures, government regulations such as emission and fuel efficiency standards, and by the customers' own internal spending cycles. Investments by aerospace customers are primarily driven by commercial and defense aircraft new product development programs. Investments in diesel engine manufacturing are influenced by the infrastructure needs of emerging industrial nations and by the efficiency benefits diesel engines offer for heavy and light trucks and utility vehicles. The automotive, aerospace and general machine tool markets tend to be cyclical and dependent on manufacturing capacity utilization rates.

Customers for the Company's Integrated Production Systems products are the major auto and diesel manufacturers and their Tier One suppliers. Although the passenger car and light truck industries continue

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to represent this division's largest market, business from diesel engine manufacturers has grown in recent years.

The Company believes that future growth in the IPS and AME segments will be dependent on their ability to market their full range of products and services to their combined customer base and to expand into other industrial manufacturing markets. This strategy is supported by the Company's global management structure that provides for unified marketing and product support of each primary business on a global basis.

A substantial part of the IPS segment's total revenue is currently generated by worldwide automotive and diesel engine industry purchases of automated manufacturing systems, including integrated machining, body welding and assembly and precision grinding systems. U.S. and Canadian auto and auto-related manufacturers currently account for the majority of IPS sales. The remainder of sales represents products manufactured and sold in Europe and those exported from the Company's production facilities, mostly for installation in Latin America and Asia.

Both IAS segments' revenues are influenced by the capital investment plans of customers. These plans are typically strategic and long-range, driven by customers' competitive product issues as well as environmental issues related to compliance with emissions. Typically, short-term business cycles, such as monthly product sales, do not permanently interrupt capital investment decisions of major automotive customers. However, periods of economic uncertainty such as the current environment in North America can cause customer decision-makers to slow the pace of capital equipment orders as they assess their strategic direction.

Recent major customers include U.S.-based Boeing Corporation, Briggs & Stratton, Caterpillar, Cummins, DaimlerChrysler, Department of the Navy, Ford, General Motors, Navistar, Northrop Grumman, Parker Hannifin, and Raytheon; and Western Europe-based Airbus Espana, Alenia Aerospasio, Bombardier Shorts Brothers, BMW, British Aerospace, DaimlerChrysler, Fiat, Ford/Jaguar, Peugeot, Renault, Volkswagen, Volvo and the European subsidiaries of the large U.S. manufacturers. The Company has also won major equipment contracts for the "transplant" manufacturing facilities of foreign automakers, including both European and Japanese, and also serves the automotive components manufacturing market.

Competition

Strong competition exists in both the domestic and international markets for the Company's products and services. Products are sold and projects are won in the marketplace based on delivery, price, technology, productivity, reliability and service. International competition is also impacted by changes in foreign currency exchange rates.

Automated Data Systems Segment

The market for AIDC/mobile computing systems is highly fragmented. Based on independent market surveys, management believes that Intermec is one of the largest participants measured by revenues. The other major participant is Symbol Technologies, which acquired Telxon in 2000. Intermec also faces strong competition for single product lines from specialized suppliers, like Zebra, for printers.

The market for mobile computing and RF products is highly competitive and rapidly changing. Some firms, including Fujitsu and Casio, manufacture and market hand-held systems for route accounting applications. In addition, a number of firms manufacture and market radio-linked data communication products, including LXE, Symbol and Teklogix. Consumer personal digital assistants (PDAs) from suppliers such as Palm, Handspring, Compaq and Hewlett Packard are potential competitors for certain low-end, light-duty enterprise computing applications. Companies such as Cisco and Lucent Technologies compete

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in the wireless network business. On the printer side, Intermec faces competition from Zebra, Datamax and many others, depending on the geographic area.

Intermec competes primarily on the basis of its technology: integrated solutions, open-systems architecture, networking and communications expertise, and applications software. Other attributes, such as level of sales and support services, and product functionality, performance, ruggedness and overall quality, are important for market success.

Industrial Automation Systems

While product quality and innovation are key competitive factors to win market share, pricing is a major decision point in the global market for Integrated Productions Systems and Advanced Manufacturing Equipment. IAS' strength is its ability to design reliable and efficient manufacturing processes and combine them with cost-effective machining solutions for customers in order to win orders amid strong competition.

The North American and European market for high-volume production systems for engines and transmissions is divided among several major competitors and numerous smaller participants. Major competitors are Ingersoll Milling (North America), Thyssen, Heller, Grob-Werke and Ex-Cello (each from Germany) and NTC (Japan).

In the body welding and assembly systems market, the Company is faced with competitors that are involved in a broad range of assembly equipment and other competitors that provide "niche" machines. Primary competitors include PICO (Comau), Valiant, and Utica in North America; Thyssen, FFT, Kuka, and Comau in Europe.

In the worldwide market for high-precision grinding of engine parts, the Company has achieved a strong market position through innovative products that improve customer efficiency while reducing their capital costs. Major competitors are the foreign companies Koyo and Toyoda in Japan; the Schleifring Group and Junker in Germany; and Giustina in Italy.

In each of its different product markets, Advanced Manufacturing Equipment faces separate competitors such as Ingersoll Milling (North America), Henry Line (Canada) and Forrest Line (France) in aerospace systems, Makino and Mazak (both Japan) in horizontal systems, and Fadal/Thyssen (North America), Haas (North America), Okuma (Japan) and Mori Seiki (Japan) in the market for lower-end vertical machining and turning centers or "value" machines.

Research and Development

Company-wide expenditures on research and development activities amounted to $66.3 million, $69.7 million and $74.1 million, substantially all of which was sponsored by the Company, in the years ended December 31, 2001, 2000 and 1999, respectively.

Patents and Trademarks

Over a period of years, the Company has secured a large number of patents, trademarks and copyrights relating to its manufactured products. These patents, trademarks and copyrights have been of value in the growth of the Company's business and may continue to be of value in the future. However, the Company's business generally is not dependent upon the protection of any patent, patent application or patent license agreement, or group thereof, and would not be materially affected by the expiration thereof.

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Seasonality; Backlog

Sales backlog was $386 million, $581 million and $856 million at December 31, 2001, 2000 and 1999, respectively. The operations of the Company are not seasonal to any appreciable degree. The majority of the Company's backlog is concentrated in the IAS segments. The ADS market typically operates without a significant backlog of firm orders and does not consider backlog to be a relevant measure of future sales.

Employees

At December 31, 2001, the Company had 6,709 full-time employees, of which 2,801 are engaged in the ADS segment, 2,684 in the IPS segment, 1,174 in the AME segment, and 50 in corporate and shared services.

Environmental and Regulatory Matters

During 2002, the amounts incurred to comply with federal, state and local legislation pertaining to environmental standards did not have a material effect upon the capital expenditures or earnings of the Company.

Radio emissions are the subject of governmental regulation in all countries in which the Company currently conducts business. In North America, both the Canadian and U.S. governments publish relevant regulations, and changes to these regulations are made only after public discussion. In some countries regulatory changes can be introduced with little or no grace period for implementing the specified changes. Furthermore, there is little consistency among the regulations of various countries outside North America, and future regulatory changes in North America are possible. These conditions introduce uncertainty into the product planning process and could have an adverse effect on the AIDC/Mobile Computing business.

Raw Materials

The Company uses a wide variety of raw materials in the manufacture of its products and obtains such raw materials from a variety of suppliers. In general, raw materials used are available from numerous alternative sources. As is customary for its industry, the Company's ADS segment at various times enters into certain single-source component part supply agreements. Management believes these agreements will be renewed in the ordinary course of business.

ITEM 2. PROPERTIES

The Company's executive offices, in owned premises, are at 21900 Burbank Boulevard, Woodland Hills, California. Its principal plants and offices have an aggregate floor area of approximately 5,479,912 square feet, of which 4,662,237 square feet (85%) are located in the United States, and 817,675 square feet (15%) are located outside of the United States, primarily in the United Kingdom, Germany and Canada.

These properties are used by the business segments as follows (in square feet):

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Approximately 4,167,290 square feet (76%) of the principal plant, office and commercial floor area is owned by the Company, and the balance is held under lease.

The Company's plants and offices in the United States are situated in 19 locations in the following states (in square feet):

The above-mentioned facilities are in satisfactory condition and suitable for the particular purposes for which they were acquired or constructed and are adequate for present operations.

The foregoing information excludes Company-held properties leased to others and also excludes plants or offices which, when added to all other of the Company's plants and offices in the same city, have a total floor area of less than 50,000 square feet.

ITEM 3. LEGAL PROCEEDINGS

The Company is currently, and is from time to time, subject to claims and suits arising in the ordinary course of its business. Although the results of litigation proceedings cannot be predicted with certainty, the Company believes that the ultimate resolution of these proceedings will not have a material adverse effect on the Company's financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters have been submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year ended December 31, 2001.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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ITEM 6. SELECTED FINANCIAL DATA

UNOVA, INC.

^(A)

Reflects the acquisitions of Norand Corporation (March 1997), United Barcode Industries (April 1997), Amtech (July 1998) and Cincinnati Machine (October 1998) and the disposition of Amtech (June 2000).

^(B)

Selling, general and administrative costs include allocated charges from Western Atlas of $13.5 million for the year ended December 31, 1997. The year ended December 31, 1997 includes charges of $211.5 million, or $3.91 per share, for the value of acquired in-process research and development activities resulting from acquisitions made during the year.

^(C)

Information related to goodwill impairment, special charges and other income is included in Note F to the consolidated financial statements. Other income for the year ended December 31, 1998 represents a gain on the sale of real estate.

^(D)

Interest expense includes allocated charges from Western Atlas of $12.0 million for the year ended December 31, 1997.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The Company has three reportable segments, Automated Data Systems ("ADS"), Integrated Production Systems ("IPS") and Advanced Manufacturing Equipment ("AME"). Segments are determined principally on the basis of their products and services. The ADS segment comprises the Company's wholly owned subsidiary Intermec Technologies Corporation ("Intermec"). The IPS segment comprises the Lamb Machining Systems division, the Lamb Body & Assembly Systems division and the Landis Grinding Systems division. The AME segment comprises the Cincinnati Machine division. For evaluation purposes, the Company aggregates the IPS and AME reportable segments into the Industrial Automation Systems ("IAS") business. Sales and service revenues and segment operating profit (loss) for the years ended December 31, 2001, 2000 and 1999 were as follows (millions of dollars):

^(A)

Includes Amtech through June 2000.

^(B)

Excludes goodwill impairment, special charges and other income.

Year Ended December 31, 2001 Compared to 2000

Sales and Service Revenues and Segment Operating Profit (Loss)

Total sales and service revenues for the year ended December 31, 2001 were $1,528.6 million, a decrease of $309.2 million, or 17%, compared with the prior year. Before goodwill impairment, special charges and other income, the Company reported total segment operating profit of $13.1 million for the year ended December 31, 2001 compared to total segment operating loss of $50.1 million for the prior year.

Results for 2000 include the ADS segment's Amtech transportation systems operations ("Amtech") which were sold in June 2000.

Automated Data Systems:    ADS segment revenues were $655.1 million for the year ended December 31, 2001 compared with $725.3 million for the prior year, which included Amtech revenues of $41.4 million. Excluding Amtech, ADS revenues decreased 4% from the prior year. The decrease is due to weakness in the ADS segment's markets with 84% of the decline attributable to North America. By product line, the largest percentage decrease occurred for printer & media products, followed by systems & solutions products, and service. During the second quarter 2001, the Company settled a dispute with Compaq

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Computer Corporation regarding the Company's battery power-management patents. Accordingly, ADS revenues for the year ended December 31, 2001 include significant royalty income. The specific terms of the settlement are confidential.

The ADS segment reported an operating loss of $14.8 million for the year ended December 31, 2001, before goodwill impairment and special charges, compared to an operating loss of $87.8 million for the prior year. The operating loss for 2001 includes fourth quarter severance charges of $8.0 million related to a reduction in Intermec's global workforce. The improvement in operating profit reflects significant reductions in selling, general and administrative expenses and higher product and service gross margin percentages, offset partially by the impact on operating profit due to the lower revenue level. Compared to 2000, product and service gross margins have improved by approximately two percentage points largely as a result of efficiencies within the service organization. The 2001 results reflect significant gross margin contributed by royalties.

During 2001, the ADS segment recorded a third quarter charge for non-cash goodwill and other long-lived asset impairments of $230.6 million and a fourth quarter charge for the closure of a facility of $7.4 million. See discussion under the heading "Goodwill Impairment and Special Charges" below.

Integrated Production Systems:    IPS segment revenues for the year ended December 31, 2001 were $668.1 million, a decrease of $187.1 million, or 22% from the prior year. The revenue decline reflects a global decline in capital spending primarily by the North American automotive industry. Despite the revenue declines, operating profit as a percentage of sales increased to 7.5% for the year ended December 31, 2001, compared to 5.2% for the prior year. In general, this improvement reflects better overall contract margins and an improved balance of business between the segment's U.S. and U.K. grinding operations. High installation and integration costs in 2000 for the IPS U.S. operations were substantially reduced in 2001 resulting in higher operating margins for IPS core U.S. operations. However, the benefit was offset by losses incurred by other non-core U.S. operations. These non-core operations were closed in 2001. IPS operating profit for 2001 also reflects significant improvement at its European operations driven by higher sales volume for the U.K. grinding operations and substantially reduced losses for its German subsidiary. IPS operating profit for 2001 includes inventory and accounts receivable write-downs of $7.0 million relating to closed operations and fourth quarter severance charges of $6.5 million related to the reduction in its North American workforce.

Revenue declines have necessitated cost reduction actions. During 2001, the IPS segment closed three underperforming operations and one underutilized facility. These actions resulted in aggregate charges of $44.8 million, including $31.0 million of impaired goodwill. See discussion under the heading "Goodwill Impairment and Special Charges" below.

Integrated Production Systems backlog decreased from $448.0 million at December 31, 2000 to $276.2 million at December 31, 2001. This 38% decline in backlog is driven largely by major weakness in capital spending by the North American automotive and related customers. The Company does not expect these conditions to improve in the near term, indicating projected lower IPS revenue performance for 2002.

Advanced Manufacturing Equipment:    AME revenues decreased $51.9 million, or 20%, to $205.4 million for the year ended December 31, 2001. The decrease in revenues reflects continued weakness in the domestic aerospace-related and general machine tool markets. Before goodwill impairment and special charges, the segment reported an operating loss of $22.0 million for the year ended December 31, 2001 compared to an operating loss of $6.7 million for the prior year. The operating losses for 2001 and 2000 include fourth quarter severance charges of $10.1 million and $4.8 million, respectively, related to reductions in the segment's U.S. workforce. AME revenues continue a trend of decline. Weak domestic

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machine tool markets, particularly the aerospace related component, were further impacted by the declining national economy. Revenue declines and the related reduction in contributed gross margin have resulted in increased operating losses in 2001. Backlog decreased to $57.7 million at December 31, 2001 from $66.9 million at December 31, 2000.

During the third quarter 2001, the AME segment recorded non-cash goodwill and other long-lived assets impairments of $25.4 million. During the fourth quarter 2001, the segment recorded charges of $8.7 million to exit certain of its vertically integrated manufacturing activities and consolidate facilities. These amounts are reported as goodwill impairment and special charges. See discussion under the heading "Goodwill Impairment and Special Charges" below.

The Company does not expect near-term improvement in the AME revenue trend, resulting in projected lower revenues for 2002.

Costs and Expenses

Cost of sales and service decreased $308.6 million to $1,118.0 million for the year ended December 31, 2001 from $1,426.6 million for the year ended December 31, 2000. Cost of sales and service as a percentage of sales improved to 73.1% for the year ended December 31, 2001 compared to 77.6% for the prior year. The decrease in cost of sales reflects the lower sales volume in 2001 and improved gross margins for both the ADS and IPS segments.

Selling, general and administrative ("SG&A") expense decreased $56.4 million to $373.8 million for the year ended December 31, 2001 from $430.2 million for the year ended December 31, 2000. The 2001 reductions in SG&A are principally the result of lower Intermec spending.

The decrease in depreciation and amortization expense of $10.1 million to $57.2 million for the year ended December 31, 2001 from $67.3 million for the prior year reflects the impact of lower capital expenditures and the write-off of goodwill and long-lived assets in 2001.

Net interest expense was $29.9 million and $30.6 million for the years ended December 31, 2001 and 2000, respectively. The decrease was attributable to lower outstanding debt during the year, partially offset by the effect of higher interest rates on the Company's outstanding borrowings.

Goodwill Impairment and Special Charges

Goodwill and Long-Lived Asset Impairment.    In the third quarter 2001, growing evidence of a recessionary environment, intensified by the September 11 attacks, caused the Company to have a less favorable revenue outlook. Accordingly, the Company assessed whether these effects resulted in impairment of its goodwill and long-lived assets to be held and used. Due primarily to this poor market outlook and uncertainty as to its impact on the Company's results, the Company recorded non-cash charges to write off remaining goodwill associated with its ADS and AME segments of $222.0 million and $15.6 million, respectively. Additional non-cash charges of $8.6 million and $9.8 million were recorded to reduce the book value of ADS and AME property, plant and equipment, respectively, to their estimated fair values. The estimated fair value of these long-lived assets, including goodwill, was computed based on discounted expected future cash flows from the related operations.

Facilities Closures and Consolidations.    Throughout 2001, the Company undertook a series of actions to close underutilized or underperforming operations and facilities. In connection with these actions, related goodwill and long-lived assets were tested for impairment on a to-be-disposed-of basis. The fair value of long-lived assets to be disposed of was estimated based on the current market value of similar assets. These

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actions resulted in charges for severance, plant closure costs, and impairment of long-lived assets as follows.

During the second quarter 2001, the IPS segment initiated closure of substantially all of its R&B Machine Tool Company and MM&E Inc. facilities. Certain remaining manufacturing activities were consolidated into other IPS units. This action, which was substantially complete at December 31, 2001, resulted in the accrual of severance costs for 217 employees totaling $3.0 million and other plant closure costs of $1.6 million. The related review of goodwill and long-lived assets for impairment resulted in a non-cash goodwill impairment charge of $31.0 million. The estimated fair value of goodwill was computed based on discounted expected future cash flows from remaining operations.

During the third quarter of 2001, the IPS segment initiated closure of its underutilized Hebron Kentucky facility. This action, which was substantially complete as of December 31, 2001, resulted in the accrual of severance costs for 88 employees totaling $1.2 million and other plant closure costs of $0.4 million.

During the fourth quarter 2001, the IPS segment initiated closure of its Modern Prototype operations. This action, which was substantially complete at December 31, 2001, resulted in the accrual of severance costs for 39 employees totaling $0.9 million and other plant closure costs of $2.4 million. The related review of long-lived assets to be disposed of for impairment resulted in property, plant and equipment impairment charges of $4.3 million.

During the fourth quarter 2001, the AME segment initiated a plan to reduce vertical integration in its manufacturing processes and consolidate plant facilities. The plan includes outsourcing of certain manufacturing activities, termination of employees, and the disposition of plant and equipment by a combination of sale and abandonment. This action, which is expected to be substantially complete by December 31, 2002, resulted in the accrual of severance costs for 75 employees totaling $1.5 million and other plant closure costs of $1.8 million. As of December 31, 2001, amounts paid and charged against these accruals were not material. The related review of long-lived assets to be disposed of for impairment resulted in plant and equipment impairment charges of $5.5 million.

During the fourth quarter 2001, the ADS segment initiated a plan to eliminate certain engineering activities, terminate related employees and close a leased facility. This action, which is expected to be complete by December 31, 2002, resulted in the accrual of severance costs for 42 employees totaling $1.5 million and lease termination and other closure costs of $5.9 million. As of December 31, 2001, amounts paid and charged against these accruals were not material.

Other Income

Other income for the year ended December 31, 2001 represents the second quarter gain of $75.1 million related to the reversion of surplus pension plan assets (see discussion under the heading "Liquidity and Capital Resources"). Other income for the year ended December 31, 2000 of $44.7 million represents the gain from the sale of the ADS segment's Amtech transportation systems operations.

Income Taxes

Income taxes for the year ended December 31, 2001 reflects the impact of nondeductible goodwill impairment and nondeductible excise taxes on the reversion of surplus pension plan assets.

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Year Ended December 31, 2000 Compared to 1999

Sales and Service Revenues and Segment Operating Profit (Loss)

Total sales and service revenues for the year ended December 31, 2000 were $1,837.8 million, a decrease of $270.9 million, or 13%, compared with the prior year. The Company reported total segment operating loss of $50.1 million for the year ended December 31, 2000 compared to total segment operating profit of $118.9 million for the prior year.

Automated Data Systems:    ADS segment sales decreased $151.9 million, or 17%, for the year ended December 31, 2000 compared with the prior year. The decrease in revenue reflects the sale of the segment's Amtech operations in June 2000 and lower sales volume for the Company's Intermec subsidiary. Average quarterly revenue for Amtech was $20 million. The Intermec sales decline was caused primarily by weakness in the Direct Store Delivery (DSD) market and sales force disruption as the Company's Intermec subsidiary shifted from a geographic sales orientation to a named-account/vertical marketing structure. As a result, Intermec did not participate in the industry's overall market growth.

The ADS segment reported an operating loss of $87.8 million for the year ended December 31, 2000 compared to operating profit of $26.4 million for the prior year. The significant operating losses during 2000 were due primarily to lower Intermec gross profits that were insufficient to absorb selling, general and administrative expenses. Intermec gross profits were impacted by lower sales volume and by a shift in the product mix in 2000 to products with lower margins. In addition, actions taken by Intermec for workforce reductions, consolidation of manufacturing facilities and sales and field service offices, and product rationalization resulted in fourth quarter adjustments of $22.1 million.

Integrated Production Systems:    IPS segment revenues for the year ended December 31, 2000 were $855.2 million, a decrease of $81.3 million, or 9% from the prior year. The revenue decline is primarily due to the impact of lower capital spending by domestic automakers and to a lesser extent the impact of currency translation of foreign sales. Related operating profit decreased $42.4 million, or 49%, for the year ended December 31, 2000 compared with the prior year. The IPS operating profit decline was attributed to higher installation and integration costs later in 2000 for the segment's machining systems operations and foreign losses incurred during the first half of 2000 due to unabsorbed costs. Integrated Production Systems backlog decreased from $627.7 million at December 31, 1999 to $448.0 million at December 31, 2000. Backlog at the end of 1999 was at a record high level and included significant multi-year contracts, whereas backlog at December 31, 2000 comprised nearer-term deliveries and reflects the slowing of automotive markets.

Advanced Manufacturing Equipment:    AME revenues decreased $37.7 million, or 13%, to $257.3 million for the year ended December 31, 2000. The decrease in revenues reflected continued weakness in the domestic aerospace-related general machine tool market. The segment reported an operating loss of $6.7 million for the year ended December 31, 2000 compared to operating profit of $5.7 million for the prior year. The loss for 2000 was due primarily to lower domestic sales and backlog levels and the corresponding impact on margins due to unabsorbed fixed costs. In addition, AME recorded $4.8 million in employee severance related expenses in the fourth quarter of 2000. Backlog decreased from $102.5 million at December 31, 1999 to $66.9 million at December 31, 2000.

Costs and Expenses

Cost of sales and service decreased $74.7 million to $1,426.6 million for the year ended December 31, 2000 from $1,501.0 million for the year ended December 31, 1999. Cost of sales as a percentage of sales increased to 77.6% for the year ended December 31, 2000 compared to 71.2% for the prior year. The

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increase in cost of sales as a percentage of sales was due to the above-mentioned factors contributing to fluctuations in segment operating profit (loss), primarily underabsorbed manufacturing overhead, lower sales volume and fourth quarter 2000 adjustments.

Selling, general and administrative ("SG&A") expense decreased $24.2 million from $454.5 million for the year ended December 31, 1999 to $430.2 million for the year ended December 31, 2000, due to lower selling expenses, primarily at Intermec, offset partially by additional costs for accounts receivable securitization. The Company's accounts receivable securitization agreements were in place for the full year in 2000 compared to six months in 1999. Lower revenue levels resulted in SG&A, as a percentage of sales, increasing from 21.6% in 1999 to 23.4% in 2000.

Depreciation and amortization of $67.3 million for the year ended December 31, 2000 is consistent with $66.0 million for the prior year, due to no significant net changes in the Company's fixed assets, goodwill and intangible assets.

Net interest expense was $30.6 million and $38.0 million for the years ended December 31, 2000 and 1999, respectively. The decrease was attributable to lower outstanding debt during the year, partially offset by the effect of increased interest rates.

Other Income

Other income of $44.7 million represents a one-time gain from the sale of Amtech in June 2000. The Company acquired Amtech in June 1998. The net assets and results of operations for Amtech are not material to the consolidated financial statements for all periods presented.

Foreign Currency Transactions

The Company is subject to the effects of international currency fluctuations due to the global nature of its operations. Currency transaction net losses of $2.8 million, $0.0 million and $3.0 million are included in cost of sales and service for the years ended December 31, 2001, 2000 and 1999. It is not possible to predict the Company's exposure to foreign currency fluctuations beyond the near term because revenues generated from particular foreign jurisdictions vary widely over time.

For fiscal year 2001, the Company derived approximately 32% of its revenues from non-U.S. customers. At December 31, 2001, long-lived assets attributable to foreign countries comprised 15% of total assets. As the largest components of these foreign assets are attributable to European nations, primarily the United Kingdom, Germany, and Sweden, the exposure of long-lived assets to foreign currency fluctuations or expropriations is not significant.

Liquidity and Capital Resources

Cash and cash equivalents decreased from $106.8 million at December 31, 2000 to $103.7 million at December 31, 2001. Total debt decreased from $448.9 million at December 31, 2000 to $281.5 million at December 31, 2001. Net debt, defined as total debt less cash and cash equivalents, was reduced to $177.8 million at December 31, 2001 from $342.1 million at December 31, 2000. The $164.3 million decrease in net debt reflects $122.0 million of cash received from the reversion of surplus pension plan assets and $132.8 million of cash flow generated from normal operations, offset by cash used of $90.5 million to terminate the Company's account receivable securitization agreements.

On July 12, 2001, the Company entered into two secured long-term credit facilities with aggregate committed capacity of up to $275 million: a $200 million asset-based revolving credit facility (the "Revolving Facility") and a $75 million secured term loan (the "Term Loan"). In conjunction with the new

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facilities, the Company refinanced and terminated its $400 million secured credit facility and related agreements.

The Revolving Facility is maintained with a syndicate of lenders and matures on July 11, 2004. Borrowing availability is subject to a Borrowing Base calculation, as defined in the agreement, based on eligible levels of accounts receivable