Exhibit 99.1
UNITED INDUSTRIAL CORPORATION
Contact: | Stuart F. Gray |
| Treasurer |
| (410) 628-8686 |
UNITED INDUSTRIAL REPORTS FOURTH QUARTER AND YEAR-END RESULTS
•Net Income of $10.4 Million on Revenue of $163.3 Million
in the Fourth Quarter of 2005
•Board of Directors Declares Dividend
HUNT VALLEY, MD, MARCH 10, 2006 – United Industrial Corporation (NYSE: UIC) (the “Company”) today reported its financial results for the quarter and the year ended December 31, 2005. The continuing operations of the Company consist of two business segments: Defense and Energy. The Company designs, produces, and supports defense systems. Its products and services include unmanned aircraft systems, training and simulation systems, automated aircraft test and maintenance equipment, armament systems, logistical and engineering services, and other leading-edge technology solutions for defense needs. The Company also manufactures combustion equipment for biomass and refuse fuels. The operations of the Defense and Energy segments are conducted principally through two wholly owned subsidiaries, AAI Corporation and its subsidiaries (“AAI”) and Detroit Stoker Company (“Detroit Stoker”), respectively.
Financial Results for the Quarter Ended December 31, 2005
Net sales from continuing operations increased 72% to $163.3 million from $95.2 million during the same period in 2004.
The gross margin percentage from continuing operations decreased to 24% from 27% during the same period in 2004.
Selling and administrative expenses from continuing operations increased 22% to $22.6 million from $18.6 million, during the same period in 2004, although as a percentage of sales, it decreased from 20% to 14%.
Operating income from continuing operations increased 197% to $16.8 million, or 10% of sales, from $6.0 million, or 6% of sales, during the same period in 2004.
Net income from continuing operations increased 205% to $10.1 million, or $0.75 per diluted share, from $3.3 million, or $0.26 per diluted share, during the same period in 2004.
Net income (including results of both continuing and discontinued operations) increased 110% to $10.4 million, or $0.77 per diluted share, from $5.0 million, or $0.39 per diluted share, during the same period in 2004.
Financial Results By Operating Segment for the Quarter Ended December 31, 2005 - Continuing Operations
Net sales from the Defense segment increased 71% to $151.6 million from $88.6 million during the same period in 2004. The growth was primarily due to increased production and greater logistical support on an increasing number of fielded Shadow 200® Tactical Unmanned Aircraft Systems (“Shadow 200 TUAS”), increased demand for Advanced Boresight Equipment (“ABE”) systems, additional volume in the Biological Detection Systems program, and the acquisition of ESL Defence Limited (“ESL”) in April 2005, an electronic warfare systems company based in the United Kingdom.
The Defense segment’s gross margin percentage decreased to 23% from 26% during the same period in 2004. The decrease is mainly due to volume of services type business.
Selling and administrative expenses from the Defense segment increased 45% to $20.3 million, or 13% of sales, from $14.0 million, or 16% of sales, during the same period in 2004. This increase was primarily due to higher costs to support the Defense segment’s growth, including selling and administrative expenses related to ESL.
Operating income from the Defense segment increased 71% to $13.8 million, or 9% of sales, from $8.1 million, or 9% of sales, during the same period in 2004.
Pretax income from the Defense segment increased 73% to $13.8 million from $8.0 million during the same period in 2004.
Net sales from the Energy segment increased 77% to $11.7 million from $6.6 million in the fourth quarter of 2004. The increase was primarily driven by higher demand for its alternative fuel products, such as coal and wood burning stokers in response to recent high and volatile prices for oil and natural gas. The Energy segment’s gross margin percentage increased to 48% from 40% during the same period in 2004, primarily resulting from the restructuring plan implemented in 2004. The Energy segment’s pretax income increased to $3.2 million from a pretax loss of $2.1 million during the same period in 2004. The increase in pretax income was due to the increased gross profit in 2005, and a $2.0 million pretax pension plan curtailment charge related to restructuring in the fourth quarter 2004.
Financial Results for the Year Ended December 31, 2005
Net sales from continuing operations increased 34% to $517.2 million from $385.1 million during the same period in 2004.
The gross margin percentage from continuing operations decreased to 24% from 25% during the same period in 2004.
Selling and administrative expenses from continuing operations increased 27% to $67.9 million from $53.4 million, during the same period in 2004, although as a percentage of sales, it decreased from 14% to 13%.
Operating income from continuing operations increased 39% to $56.7 million, or 11% of sales, from $40.8 million, or 11% of sales, during the same period in 2004.
Net interest expense increased to $2.6 million from $0.9 million during the same period in 2004.
Income from continuing operations before income taxes increased 55% to $61.9 million from $39.9 million during the same period in 2004.
Net income from continuing operations increased 55% to $40.4 million, or $2.85 per diluted share, from $26.1 million, or $1.94 per diluted share, during the same period in 2004.
Net income (including both continuing and discontinued operations) increased 53% to $41.0 million, or $2.89 per diluted share, from $26.8 million, or $1.99 per diluted share, during the same period in 2004.
Financial Results by Operating Segment for the Year Ended December 31, 2005 – Continuing Operations
Net sales from the Defense segment increased 35% to $480.2 million from $355.1 million during the same period in 2004. The increase of $125.1 million for the Defense segment was primarily due to the Shadow 200 TUAS program, including approximately $67.1 million higher net sales generated as the result of providing logistical support to an increasing number of fielded Shadow 200 TUAS in 2005, including deployed systems in Operation Iraqi Freedom, a full year of activity in 2005 related to the Biological Detection Systems program, increased demand for ABE systems, an increase in sales for the Lightweight Small Arms Technology program and the acquisition of ESL in the second quarter of 2005.
The Defense segment gross margin percentage decreased from 24% to 23% during the same period in 2004. The decrease in 2005 was primarily due to $6.9 million of gross profit recognized in 2004 as the result of the favorable resolutions of technical risks and achievements of production efficiencies experienced on the Shadow 200 TUAS program, offset in 2005 largely by performance efficiencies related to Shadow 200 TUAS logistics support activities and certain Test Systems programs.
Selling and administrative expenses from the Defense segment increased 39% to $58.8 million, from $42.3 million, during the same period in 2004 while remaining constant at approximately 12% of sales. The increase of $16.5 million
was primarily due to higher costs to support the Defense segment’s growth, including selling and administrative expenses incurred by ESL (acquired in April 2005).
Operating income from the Defense segment increased 26% to $51.4 million, or 11% of sales, from $40.6 million, or 11% of sales, during the same period in 2004.
Pretax income from the Defense segment increased 44% to $59.3 million from $41.2 million during the same period in 2004. The increase included a gain of $7.2 million from the sale of undeveloped property.
Net sales from the Energy segment increased 23% to $37.0 million, from $30.0 million during the same period in 2004. The increase was primarily driven by higher demand for its alternative fuel products in response to recent high and volatile prices for oil and natural gas.
The Energy segment’s gross margin percentage increased to 40% from 39% during the same period in 2004.
Selling and administrative expenses from the Energy segment decreased 17% to $9.0 million, or 24% of sales, from $10.8 million, or 36% of sales, during the same period in 2004. The decrease was primarily due to lower restructuring costs.
The Energy segment’s pretax income increased to $5.7 million from pretax income of $0.5 million during the same period in 2004.
Financial Results for Discontinued Operations
Income from the Company’s discontinued transportation operations in the fourth quarter of 2005 was $0.3 million, net of income taxes, or $0.02 per diluted share, compared to income of $1.6 million, net of income taxes, or $0.13 per diluted share, during the same period in 2004.
Income from the Company’s discontinued transportation operations for the year ended December 31, 2005 was $0.6 million, net of income taxes, or $0.04 per diluted share, as compared to income of $0.7 million, net of income taxes, or $0.05 per diluted share, during the same period in 2004.
Funded New Orders and Funded Backlog
During the fourth quarter of 2005, the Company received $139.7 million of funded new orders for products and services, a decrease of $12.8 million, or 8%, compared to $152.5 million during the same period in 2004, primarily due to the timing of TUAS production awards. The orders in 2005 included $130.6 million in the Defense segment and $9.1 million in the Energy segment.
During the year ended December 31, 2005, the Company received $623.7 million in funded new orders for products and services, an increase of $173.9 million, or 39%, compared to $449.8 million for the year ended December 31, 2004. The orders in 2005 included $584.6 million in the Defense segment and $39.1 million in the Energy segment.
Funded backlog for the Company’s continuing operations was $495.9 million at December 31, 2005, an increase of $108.0 million, or 28%, from $387.9 million at December 31, 2004.
The Company’s funded new orders in the fourth quarter of 2005 included the following awards in excess of $5.0 million:
Services
• $70.0 million for C-17 Maintenance Training Devices from the U.S. Air Force,
• $8.4 million incremental funding for Biological Detection Systems from the U.S. Army,
• $5.4 million of incremental funding for the third year of support for the T-45 Ground Based Training System from the U.S. Navy,
UAS
• $17.4 million for the continuation and expansion of our Shadow 200 TUAS logistical support activities for deployed Shadow 200 TUAS systems in Operation Iraqi Freedom from the U.S. Army,
Advanced Programs
• $5.5 million initial funding from the U.S. Army for Phase II of the Lightweight Small Arms Technology Program.
Dividend Declaration
The Company also announced today that its Board of Directors has declared a dividend of $0.10 a share on its Common Stock, payable March 27, 2006 to stockholders of record at the close of business on March 20, 2006.
Initiatives to Increase Shareholder Value
In late 2003, the Company began a program of strategic initiatives to maximize shareholder value. Since then the Company has completed many of these initiatives, including closing our New York headquarters office, selling excess assets, and focusing our efforts on the profitability and growth of our core Defense business. We have taken actions to improve capability and maximize operating efficiencies. These efforts have helped drive growth in our continuing operations that include a 66% increase in revenue to $517 million in 2005 from $311 million in 2003, a 158% increase in EBITDA to $73.7 million in 2005 from $28.6 million in 2003, and a funded backlog of $496 million at December 31, 2005, a record year-end milestone.
In the past two years, we have successfully eliminated losses in our discontinued transportation operation. The last remaining production contract has been completed and final obligations for this business operation will end in April 2006.
In late 2003 we also announced our intent to sell our Energy business, but also embarked in 2004 on an important restructuring process, completed in 2005, to improve operating efficiencies. These changes contributed to improved performance in the second half of 2005. We continue to pursue a buyer for our Energy business. However, at the present time, no assurances can be given regarding whether the business will be sold or the timing or proceeds from any such sale.
Additionally, since late 2003, the Company’s board of directors has authorized stock repurchase programs to enhance shareholder value, which have resulted in the repurchase of 2,929,072 shares of the Company’s common stock for a total of $80.8 million, for an average price per share of $27.59.
Finally, we also announced our intention to consider select acquisitions to complement our organic growth. To that end we issued $120 million of 3.75% Convertible Senior Notes in 2004 and negotiated a new syndicated $100 million credit facility in 2005, both of which are planned to support acquisitions and general corporate purposes.
In April 2005, our AAI Corporation subsidiary acquired ESL Defence Limited for approximately $10 million in cash. ESL, a U.K. company that specializes in electronic warfare systems testing, training, and development, complements our existing electronic warfare test and training products. This business was immediately accretive to earnings. We continue to seek acquisition opportunities to grow our core Defense business effectively and efficiently in order to deliver enhanced shareholder value.
Conference Call Webcast
The Company will hold a simultaneous conference call and audio Webcast on Friday, March 10, 2006, at 10:00 a.m. (EST), to discuss its financial results for the quarter and year ended December 31, 2005. A live webcast of the call will be accessible for all interested parties in the Investor Relations section on the Company’s website, www.unitedindustrial.com, or on www.streetevents.com. Following the call, the webcast will be archived for a period of approximately three months and available at www.unitedindustrial.com or at www.streetevents.com.
United Industrial Corporation designs, produces, and supports defense systems. Its products and services include unmanned aircraft systems, training and simulation systems, automated aircraft test and maintenance equipment, armament systems, logistical and engineering services, and other leading-edge technology solutions for defense needs. The Company also manufactures combustion equipment for biomass and refuse fuels.
Use of Non-GAAP Measures
In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”), management believes that providing Income from Continuing Operations Before Special Items, a non-GAAP measure, is meaningful to investors because it provides insight with respect to ongoing operating results of the Company. Special items include significant charges or credits that are important to understanding the Company’s ongoing operations. The Company also discloses EBITDA (earnings before interest, taxes, depreciation, and amortization), which is a non-GAAP measure. In addition, the Company discloses Free Cash Flow, a non-GAAP measure, which equals net cash provided by operating activities less net cash used in acquiring property and equipment, net of retirements. The Company believes Free Cash Flow is used by some investors, analysts, lenders and other parties to measure the Company’s performance over time. Management believes that providing this additional information is useful to understanding the Company’s ability to meet capital expenditures and working capital requirements and to better assess and understand operating performance. It allows investors, analysts, lenders and other parties to better evaluate the Company’s financial performance and prospects in the same manner as management. Because the Company’s methods for calculating such non-GAAP measures may differ from other companies’ methods, such non-GAAP measures presented may not be comparable to similarly titled measures reported by other companies. Such measures are not recognized in accordance with GAAP, and the Company does not intend for this information to be considered in isolation or as a substitute for GAAP measures. Reconciliations from non-GAAP reported measures described in this press release to GAAP reported results are provided in the financial tables attached to this press release.
Forward-Looking Information
Except for the historical information contained herein, information set forth in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and variations of such words and similar expressions that indicate future events and trends are intended to identify such forward-looking statements which include, but are not limited to, projections of revenues, earnings, segment performance, cash flows and contract awards. These forward-looking statements are subject to risks and uncertainties, which could cause the Company’s actual results or performance to differ materially from those expressed or implied in such statements. The Company makes no commitment to update any forward-looking statement or to disclose any facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statement. For additional information about the Company and its various risk factors, please see the Company’s most recent Annual Report on Form 10-K and other documents as filed with the Securities and Exchange Commission.
United Industrial Corporation & Subsidiaries
Consolidated Earnings Per Share
(Unaudited)
Basic earnings per share for all periods presented was computed by dividing net earnings for the respective period by the weighted average number of shares of the Company’s par value $1.00 per share common stock (“Common Stock”) outstanding during the period. Diluted earnings per share was computed by dividing (i) net earnings during the period, adjusted to add back the after-tax interest charges incurred on the Company’s $120,000,000 aggregate principal amount of 3.75% convertible senior notes due September 15, 2024 (“3.75% Convertible Senior Notes”), by (ii) the weighted average number of shares of Common Stock outstanding during the period, adjusted to add the weighted average number of potential dilutive common shares that would have been outstanding upon the assumed exercise of stock options and conversion of the 3.75% Convertible Senior Notes for Common Stock. Diluted earnings per share for the fourth quarter of 2004 did not include 3,058,356 potential dilutive shares for the assumed conversion of the 3.75% Convertible Senior Notes as their inclusion would be anti-dilutive.
Basic and diluted earnings per share amounts for continuing operations were computed as follows:
| | Three Months Ended December 31, | |
| | 2005 | | 2004 | |
(Dollars in thousands, except per
share data) | | Earnings | | Shares | | Per
Share | | Earnings | | Shares | | Per
Share | |
| | | | | | | | | | | | | |
Basic Earnings Per Share | | | | | | | | | | | | | |
Income from continuing operations | | $ | 10,120 | | 11,286,878 | | $ | 0.90 | | $ | 3,313 | | 12,215,827 | | $ | 0.27 | |
| | | | | | | | | | | | | |
Effect of Dilutive Securities | | | | | | | | | | | | | |
Stock Options | | — | | 372,609 | | | | — | | 552,542 | | | |
3.75% Convertible Senior Notes | | 954 | | 3,058,356 | | | | — | | — | | | |
Diluted Earnings Per Share | | | | | | | | | | | | | |
Income from continuing operations | | $ | 11,074 | | 14,717,843 | | $ | 0.75 | | $ | 3,313 | | 12,768,369 | | $ | 0.26 | |
| | Year Ended December 31, | |
| | 2005 | | 2004 | |
(Dollars in thousands, except per
share data) | | Earnings | | Shares | | Per
Share | | Earnings | | Shares | | Per
Share | |
| | | | | | | | | | | | | |
Basic Earnings Per Share | | | | | | | | | | | | | |
Income from continuing operations | | $ | 40,359 | | 11,829,851 | | $ | 3.41 | | $ | 26,102 | | 12,771,659 | | $ | 2.04 | |
| | | | | | | | | | | | | |
Effect of Dilutive Securities | | | | | | | | | | | | | |
Stock Options | | — | | 447,029 | | | | — | | 410,201 | | | |
3.75% Convertible Senior Notes | | 3,378 | | 3,058,356 | | | | 1,177 | | 894,110 | | | |
Diluted Earnings Per Share | | | | | | | | | | | | | |
Income from continuing operations | | $ | 43,737 | | 15,335,236 | | $ | 2.85 | | $ | 27,279 | | 14,075,970 | | $ | 1.94 | |
| | Three Months Ended | | Year Ended | |
| | December 31, | | December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
Basic earnings (loss) per share: | | | | | | | | | |
Income from continuing operations before special items | | $ | 0.92 | | $ | 0.47 | | $ | 3.16 | | $ | 2.27 | |
Special items: | | | | | | | | | |
Restructuring charges | | — | | (0.15 | ) | (0.12 | ) | (0.15 | ) |
Impairment of long-lived assets | | (0.02 | ) | (0.05 | ) | (0.02 | ) | (0.04 | ) |
Revenue adjustment | | — | | — | | — | | (0.04 | ) |
Gain on sale of property | | — | | — | | 0.39 | | — | |
Income from continuing operations | | 0.90 | | 0.27 | | 3.41 | | 2.04 | |
Income from discontinued operations | | 0.02 | | 0.13 | | 0.05 | | 0.06 | |
Net income | | $ | 0.92 | | $ | 0.40 | | $ | 3.46 | | $ | 2.10 | |
| | | | | | | | | |
Weighted average number of basic shares outstanding | | 11, 286,878 | | 12,215,827 | | 11,829,851 | | 12,771,659 | |
| | | | | | | | | |
Diluted earnings (loss) per share: | | | | | | | | | |
Income from continuing operations before special items | | $ | 0.76 | | $ | 0.45 | | $ | 2.65 | | $ | 2.15 | |
Special items: | | | | | | | | | |
Restructuring charges | | — | | (0.15 | ) | (0.09 | ) | (0.13 | ) |
Impairment of long-lived assets | | (0.01 | ) | (0.04 | ) | (0.01 | ) | (0.04 | ) |
Revenue adjustment | | — | | — | | — | | (0.04 | ) |
Gain on sale of property | | — | | — | | 0.30 | | — | |
Income from continuing operations | | 0.75 | | 0.26 | | 2.85 | | 1.94 | |
| | | | | | | | | |
Income from discontinued operations | | 0.02 | | 0.13 | | 0.04 | | 0.05 | |
Net income | | $ | 0.77 | | $ | 0.39 | | $ | 2.89 | | $ | 1.99 | |
| | | | | | | | | |
Weighted average number of diluted shares Outstanding | | 14,717,843 | | 12,768,369 | | 15,335,236 | | 14,075,970 | |
United Industrial Corporation & Subsidiaries
Consolidated Statements of Operations
(Dollars in Thousands)
(Unaudited)
| | Three Months Ended | | 2005 vs 2004 | |
| | December 31, | | Increase/(Decrease) | |
| | 2005 | | 2004 | | Amount | | % | |
Net sales | | $ | 163,275 | | $ | 95,157 | | $ | 68,118 | | 71.6 | |
Cost of sales | | 123,447 | | 69,509 | | 53,938 | | 77.6 | |
Gross profit | | 39,828 | | 25,648 | | 14,180 | | 55.3 | |
Selling and administrative expenses | | 22,640 | | 18,568 | | 4,072 | | 21.9 | |
Other operating (expense), net | | (409 | ) | (1,425 | ) | 1,016 | | (71.3 | ) |
Total operating income | | 16,779 | | 5,655 | | 11,124 | | 196.7 | |
Non-operating income and (expense) | | | | | | | | | |
Interest income | | 994 | | 550 | | 444 | | 80.7 | |
Interest expense | | (1,442 | ) | (1,496 | ) | 54 | | (3.7 | ) |
Income from equity investment in joint venture | | 30 | | 22 | | 8 | | 36.4 | |
Other income, net | | (304 | ) | (244 | ) | (60 | ) | 24.6 | |
| | (722 | ) | (1,168 | ) | 446 | | 38.2 | |
| | | | | | | | | |
Income from continuing operations before taxes | | 16,057 | | 4,487 | | 11,570 | | 257.9 | |
Provision for income taxes | | (5,937 | ) | (1,174 | ) | (4,763 | ) | 405.7 | |
Income from continuing operations | | 10,120 | | 3,313 | | 6,807 | | 205.5 | |
Income from discontinued operations, net of taxes | | 294 | | 1,637 | | (1,343 | ) | (82.0 | ) |
Net income | | 10,414 | | 4,950 | | 5,464 | | 110.4 | |
| | | | | | | | | |
Add (deduct) special items, net of tax: | | | | | | | | | |
Restructuring charges | | 32 | | 1,858 | | (1,826 | ) | (98.3 | ) |
Impairment of long-lived assets | | 177 | | 560 | | (383 | ) | (68.4 | ) |
Income from discontinued operations | | (294 | ) | (1,637 | ) | 1,343 | | 82.0 | |
| | | | | | | | | |
Net income before special items and discontinued operations | | $ | 10,329 | | $ | 5,731 | | $ | 4,598 | | 80.2 | |
| | Year Ended | | 2005 vs 2004 | |
| | December 31, | | Increase/(Decrease) | |
| | 2005 | | 2004 | | Amount | | % | |
Net sales | | $ | 517,153 | | $ | 385,084 | | 132,069 | | 34.3 | |
Cost of sales | | 391,363 | | 289,138 | | 102,225 | | 35.4 | |
Gross profit | | 125,790 | | 95,946 | | 29,844 | | 31.1 | |
Selling and administrative expenses | | 67,908 | | 53,414 | | 14,494 | | 27.1 | |
Other operating (expense), net | | (1,213 | ) | (1,698 | ) | 485 | | 28.6 | |
Total operating income | | 56,669 | | 40,834 | | 15,835 | | 38.8 | |
Non-operating income and (expense) | | | | | | | | | |
Interest income | | 3,473 | | 831 | | 2,642 | | 317.9 | |
Interest expense | | (6,084 | ) | (1,776 | ) | (4,308 | ) | (242.5 | ) |
Gain on sale of property | | 7,152 | | — | | 7,152 | | 100.0 | |
Income from equity investment in joint venture | | 196 | | 97 | | 99 | | 102.1 | |
Other income (expenses), net | | 492 | | (84 | ) | 576 | | 685.7 | |
| | 5,229 | | (932 | ) | 6,161 | | 661.1 | |
| | | | | | | | | |
Income from continuing operations before income taxes | | 61,898 | | 39,902 | | 21,996 | | 55.1 | |
Provision for income taxes | | (21,539 | ) | (13,800 | ) | (7,739 | ) | 56.1 | |
Income from continuing operations | | 40,359 | | 26,102 | | 14,257 | | 54.6 | |
Income from discontinued operations, net of income taxes | | 599 | | 698 | | (99 | ) | (14.2 | ) |
Net income | | 40,958 | | 26,800 | | 14,158 | | 52.8 | |
| | | | | | | | | |
Add (deduct) special items, net of tax: | | | | | | | | | |
Restructuring charges | | 1,437 | | 1,858 | | (421 | ) | (22.7 | ) |
Impairment of long-lived assets | | 177 | | 560 | | (383 | ) | (68.4 | ) |
Revenue adjustment | | — | | 507 | | (507 | ) | (100.0 | ) |
Gain on sale of property | | (4,649 | ) | — | | (4,649 | ) | (100.0 | ) |
Income from discontinued operations | | (599 | ) | (698 | ) | 99 | | 14.2 | |
| | | | | | | | | |
Net income before special items and discontinued operations | | $ | 37,324 | | $ | 29,027 | | $ | 8,297 | | 28.6 | |
| | | | | | | | | | | | |
United Industrial Corporation & Subsidiaries
Results By Operating Segment
(Dollars in Thousands)
(Unaudited)
| | Three Months Ended | | Year Ended | |
| | December 31, | | December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
Net sales | | | | | | | | | |
Defense | | $ | 151,601 | | $ | 88,550 | | $ | 480,187 | | $ | 355,060 | |
Energy | | 11,674 | | 6,607 | | 36,966 | | 30,024 | |
| | $ | 163,275 | | $ | 95,157 | | $ | 517,153 | | $ | 385,084 | |
| | | | | | | | | |
Pretax income (loss) from continuing operations: | | | | | | | | | |
Defense | | $ | 13,829 | | $ | 8,009 | | $ | 59,282 | | $ | 41,201 | |
Energy | | 3,217 | | (2,105 | ) | 5,695 | | 543 | |
Other | | (989 | ) | (1,417 | ) | (3,079 | ) | (1,842 | ) |
| | $ | 16,057 | | $ | 4,487 | | $ | 61,898 | | $ | 39,902 | |
| | | | | | | | | |
Funded New Orders | | | | | | | | | |
Defense | | $ | 130,583 | | $ | 146,289 | | $ | 584,560 | | $ | 417,376 | |
Energy | | 9,092 | | 6,166 | | 39,124 | | 32,439 | |
| | $ | 139,675 | | $ | 152,455 | | $ | 623,684 | | $ | 449,815 | |
| | | | | | | | | |
| | | | December 31, | | | | December 31, | |
| | | | 2005 | | | | 2004 | |
Funded backlog | | | | | | | | | |
Defense | | | | $ | 487,366 | | | | $ | 380,622 | |
Energy | | | | 8,499 | | | | 7,296 | |
| | | | $ | 495,865 | | | | $ | 387,918 | |
United Industrial Corporation & Subsidiaries
Non-GAAP Results By Operating Segment
(Dollars in Thousands)
(Unaudited)
| | Three Months Ended
December 31, | | Year Ended
December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | | 2003 | |
Non-GAAP income from continuing operations before tax excluding special items | | | | | | | | | | | |
Defense | | $ | 14,126 | | $ | 9,771 | | $ | 54,355 | | $ | 43,743 | | $ | 23,182 | |
Energy | | 3,242 | | (147 | ) | 5,953 | | 2,501 | | 2,695 | |
Other | | (989 | ) | (1,417 | ) | (3,079 | ) | (1,842 | ) | (1,459 | ) |
| | 16,379 | | 8,207 | | 57,229 | | 44,402 | | 24,418 | |
Add (deduct) special items | | | | | | | | | | | |
Defense | | | | | | | | | | | |
Restructuring charges | | (24 | ) | (900 | ) | (1,952 | ) | (900 | ) | — | |
Impairment of long-lived assets | | (273 | ) | (861 | ) | (273 | ) | (861 | ) | — | |
Gain on sale of property | | — | | — | | 7,152 | | — | | — | |
Revenue adjustment | | — | | — | | — | | (780 | ) | — | |
Energy | | | | | | | | | | | |
Restructuring charges | | (25 | ) | (1,959 | ) | (258 | ) | (1,959 | ) | — | |
Other | | | | | | | | | | | |
New York office closure costs | | — | | — | | — | | — | | (901 | ) |
GAAP income from continuing operations before tax | | $ | 16,057 | | $ | 4,487 | | $ | 61,898 | | $ | 39,902 | | $ | 23,517 | |
| | | | | | | | | | | |
EBITDA (continuing operations): | | | | | | | | | | | |
Defense | | $ | 16,491 | | $ | 9,652 | | $ | 67,769 | | $ | 46,251 | | $ | 26,573 | |
Energy | | 3,156 | | (2,026 | ) | 5,693 | | 861 | | 3,084 | |
Other | | (193 | ) | (496 | ) | 264 | | (419 | ) | (1,096 | ) |
| | 19,454 | | 7,130 | | 73,726 | | 46,693 | | 28,561 | |
Add (deduct): | | | | | | | | | | | |
Depreciation and amortization | | (2,949 | ) | (1,697 | ) | (9,217 | ) | (5,846 | ) | (5,415 | ) |
Interest (expense) income, net | | (448 | ) | (946 | ) | (2,611 | ) | (945 | ) | 371 | |
Provision for income taxes | | (5,937 | ) | (1,174 | ) | (21,539 | ) | (13,800 | ) | (8,411 | ) |
Income from continuing operations | | $ | 10,120 | | $ | 3,313 | | $ | 40,359 | | $ | 26,102 | | $ | 15,106 | |
| | Three Months Ended
December 31, | | Year Ended
December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | | 2003 | |
Free cash flow: | | | | | | | | | | | |
Cash provided by operating activities of continuing operations | | $ | 25,134 | | $ | 20,346 | | $ | 55,772 | | $ | 25,263 | | $ | 40,385 | |
Purchases of property and equipment | | (7,080 | ) | (6,764 | ) | (25,358 | ) | (9,628 | ) | (6,213 | ) |
Proceeds from sale of property | | — | | — | | 7,555 | | — | | — | |
Cash used in discontinued operations | | (145 | ) | (702 | ) | (3,563 | ) | (4,753 | ) | (7,946 | ) |
Free cash flow | | $ | 17,909 | | $ | 12,880 | | $ | 34,406 | | $ | 10,882 | | $ | 26,226 | |
United Industrial Corporation & Subsidiaries
Consolidated Balance Sheets
(Dollars in Thousands)
| | December 31,
2005 | | December 31,
2004 | |
ASSETS | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 77,496 | | $ | 80,679 | |
Marketable equitable securities | | 11,617 | | — | |
Securities pledged to creditors | | — | | 124,626 | |
Deposits and restricted cash | | 4,810 | | 33,845 | |
Trade receivables, net | | 69,284 | | 46,658 | |
Inventories | | 23,603 | | 34,639 | |
Prepaid expenses and other current assets | | 9,244 | | 12,465 | |
Assets of discontinued operations | | 12,428 | | 14,366 | |
Total current assets | | 208,482 | | 347,278 | |
Deferred income taxes | | 12,835 | | 13,930 | |
Intangible assets | | 7,946 | | 4,061 | |
Goodwill | | 3,607 | | — | |
Other assets | | 6,602 | | 7,892 | |
Insurance receivable – asbestos litigation | | 20,186 | | 20,343 | |
Property and equipment, net | | 44,743 | | 27,645 | |
Total assets | | $ | 304,401 | | $ | 421,149 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | |
Current liabilities: | | | | | |
Current portion of long-term debt | | $ | 964 | | $ | 958 | |
Payable under securities loan agreements | | — | | 124,619 | |
Accounts payable | | 25,787 | | 21,664 | |
Accrued employee compensation and taxes | | 17,290 | | 13,706 | |
Other current liabilities | | 20,147 | | 14,942 | |
Liabilities of discontinued operations | | 13,287 | | 19,387 | |
Total current liabilities | | 77,475 | | 195,276 | |
Long-term debt | | 120,723 | | 122,000 | |
Post-retirement benefit obligation, other than pension | | 19,409 | | 20,813 | |
Minimum pension liability | | 28,448 | | 17,513 | |
Accrual for asbestos litigation | | 31,450 | | 31,852 | |
Other long-term liabilities | | 1,374 | | 2,129 | |
Total liabilities | | 278,879 | | 389,583 | |
Shareholders’ equity: | | | | | |
Preferred stock, par value $1.00 per share; 1,000,000 shares authorized; none issued and outstanding | | — | | — | |
Common stock, par value $1.00 per share; 30,000,000 shares authorized; 11,279,379 and 12,291,951 shares outstanding at December 31, 2005 and December 31, 2004, respectively (net of shares held in treasury) | | 14,374 | | 14,374 | |
Additional capital | | 83,799 | | 84,296 | |
Retained earnings | | 39,724 | | 3,499 | |
Treasury stock, at cost, 3,094,769 and 2,082,197 shares at December 31, 2005 and December 31, 2004, respectively | | (76,868 | ) | (40,019 | ) |
Accumulated other comprehensive loss, net of tax | | (35,507 | ) | (30,584 | ) |
Total shareholders’ equity | | 25,522 | | 31,566 | |
Total liabilities and shareholders’ equity | | $ | 304,401 | | $ | 421,149 | |
United Industrial Corporation & Subsidiaries
Statements of Consolidated Cash Flows
(Dollars in Thousands)
(Unaudited)
| | Year ended
December 31, | |
| | 2005 | | 2004 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net income | | $ | 40,958 | | $ | 26,800 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
Income from discontinued operations, net of tax | | (599 | ) | (698 | ) |
Debt issuance cost and deferred financing fees | | 1,096 | | 286 | |
Depreciation and amortization | | 9,217 | | 5,846 | |
Curtailment charge for post-retirement benefits | | — | | 1,959 | |
Impairment of long-lived assets | | 273 | | 861 | |
Provision for asbestos litigation | | (245 | ) | 231 | |
Gain on sale of property | | (7,152 | ) | — | |
Deferred income taxes | | 3,115 | | 1,132 | |
Income from equity investment in joint venture | | (196 | ) | (97 | ) |
Other, net | | (792 | ) | 213 | |
Changes in operating assets and liabilities: | | | | | |
Increase in trade receivables | | (21,761 | ) | (13,268 | ) |
Decrease (increase) in inventories | | 11,717 | | (17,671 | ) |
Decrease (increase) in prepaid expenses and other current assets | | 2,101 | | (1,743 | ) |
(Decrease) increase in customer advances | | (4,674 | ) | 2,974 | |
Increase in accounts payable, accruals, and other current liabilities | | 22,714 | | 18,438 | |
Net cash provided by operating activities from continuing operations | | 55,772 | | 25,263 | |
Net cash used in operating activities by discontinued operations | | (3,563 | ) | (4,753 | ) |
Net cash provided by operating activities | | 52,209 | | 20,510 | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
Purchase of property and equipment | | (25,358 | ) | (9,628 | ) |
Purchase of available-for-sale securities | | — | | (124,619 | ) |
Proceeds from sale of available-for-sale securities | | 124,626 | | — | |
Purchase of marketable equitable securities | | (12,596 | ) | — | |
Business acquisition, net of cash acquired | | (9,883 | ) | — | |
Proceeds from sale of property | | 7,555 | | 150 | |
Net cash provided by (used in) investing activities | | 84,344 | | (134,097 | ) |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
Proceeds from issuance of long-term debt | | — | | 120,000 | |
Cash received in securities lending transactions | | — | | 124,619 | |
Debt issuance fees paid | | — | | (4,376 | ) |
Repayment of long-term debt | | (1,271 | ) | (915 | ) |
Repayment of collateral received in securities lending transaction | | (124,619 | ) | — | |
Proceeds from exercise of stock options | | 1,812 | | 4,580 | |
Decrease in deposits and restricted cash | | 29,035 | | (33,845 | ) |
Purchases of treasury shares | | (39,960 | ) | (34,842 | ) |
Dividends paid | | (4,733 | ) | (5,093 | ) |
Net cash (used in) provided by financing activities | | (139,736 | ) | 170,128 | |
| | | | | |
(Decrease) increase in cash and cash equivalents | | (3,183 | ) | 56,541 | |
Cash and cash equivalents at beginning of period | | 80,679 | | 24,138 | |
Cash and cash equivalents at end of period | | $ | 77,496 | | $ | 80,679 | |
