SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2003.
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(No Fee Required) For the transition period from to .
Commission file number: 1-4252
UNITED INDUSTRIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware | 95-2081809 | |||||
---|---|---|---|---|---|---|
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
124 Industry Lane
Hunt Valley, Maryland 21030
(410) 628-3500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Name of Each Exchange on Which Registered | |||||
Common Stock, $1.00 par value | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
DOCUMENTS INCORPORATED BY REFERENCE:
1. | Certain portions of the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, in connection with the registrant’s 2004 Annual Meeting of Shareholders are incorporated by reference into Part III of this report. |
UNITED INDUSTRIAL CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
Caption | Page | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
PART I | ||||||||||
Item 1. | Business | 1 | ||||||||
Item 2. | Properties | 5 | ||||||||
Item 3. | Legal Proceedings | 7 | ||||||||
Item 4. | Submission of Matters to a Vote of Security Holders | 7 | ||||||||
Special Item | Executive Officers of the Registrant | 7 | ||||||||
PART II | ||||||||||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities | 8 | ||||||||
Item 6. | Selected Financial Data | 9 | ||||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 | ||||||||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 25 | ||||||||
Item 8. | Financial Statements and Supplementary Data | 27 | ||||||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 56 | ||||||||
Item 9A. | Controls and Procedures | 56 | ||||||||
PART III | ||||||||||
Item 10. | Directors and Executive Officers of the Registrant | 57 | ||||||||
Item 11. | Executive Compensation | 57 | ||||||||
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 57 | ||||||||
Item 13. | Certain Relationships and Related Transactions | 58 | ||||||||
Item 14. | Principal Accounting Fees and Services | 58 | ||||||||
PART IV | ||||||||||
Item 15. | Exhibits, Financial Statement Schedules and Reports on Form 8-K | 59 |
ii
PART I
Forward-Looking Statements and Important Factors
ITEM 1. BUSINESS
Defense Segment
• | The Shadow 200 Tactical Unmanned Aerial Vehicle (“TUAV”) system, the U.S. Army’s TUAV platform |
• | The AN/USM-670 Joint Services Electronic Combat Systems Tester (“JSECST”), which is employed by all U.S. military branches to ensure optimal airborne electronic warfare operations |
1
• | Permanently installed radar stimulator/simulators for naval ships |
• | Specialized engineering and logistics services for the defense and aerospace industry like those designed by the Company to increase the flexibility and mobility of the U.S. Air Force’s C-17 aircraft Maintenance Training System |
2
Energy Segment
3
Transportation
General
4
2003 | 2002 | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense segment | $ | 318,307,000 | $296,117,000 | |||||||||||
Energy segment | $ | 4,880,000 | $ 5,299,000 |
ITEM 2. PROPERTIES
5
Location | Principal Use | Approximate Area | Owned or Leased | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
1510 East First Street Monroe, MI | Machine shop, steel fabrication, engineering and sales facilities of Detroit Stoker | 194,910 sq.ft. floor space on 14.4 acres of land (East Building) | Owned in fee | |||||||||||
1426 East First Street Monroe, MI | Assembly, shipping and administrative facilities of Detroit Stoker | 101,000 sq.ft. floor space on 2.2 acres of land (West Building) | Owned in fee | |||||||||||
Industry Lane Hunt Valley, MD | Manufacturing, engineering and administrative facilities of AAI | 429,750 sq.ft. floor space on 64 acres of land | Owned in fee | |||||||||||
318 Clubhouse Road Hunt Valley, MD | Office space | 22,400 sq.ft. | Leased to May 31, 2009 | |||||||||||
300 Clubhouse Road Hunt Valley, MD | Manufacturing, engineering and administrative facilities of AAI | 82,400 sq.ft. | Leased to April 30, 2005 | |||||||||||
3200 Enterprise Street Brea, CA | Manufacturing, engineering and administrative facilities of ACL Technologies | 131,500 sq.ft. | Leased to April 2009 | |||||||||||
1213 Jefferson Davis Highway Arlington, VA 22202 | Office space | 2,200 sq.ft. | Leased to February 28, 2006 | |||||||||||
1601 Paseo San Luis Sierra Vista, AZ | Office space | 3,400 sq.ft. | Leased to June 30, 2007 | |||||||||||
13501 Ingenuity Drive Orlando, FL | Office space | 2,000 sq.ft. | Leased to February 28, 2005 | |||||||||||
4141 Colonel Glenn Hwy Beavercreek, OH | Office space | 1,500 sq.ft. | Leased to July 31, 2004 | |||||||||||
555 Sparkman Drive Huntsville, AL | Office space | 2,700 sq.ft. | Leased to January 14, 2005 | |||||||||||
Kenai, AK | Training school | Approximately 1 acre of land | Leased to November 6, 2027 | |||||||||||
2850 West 5th North Street Summerville, SC | Office space | 15,100 sq.ft. | Leased to October 31, 2004 | |||||||||||
2745 West 5th North Street Summerville, SC | Warehouse | 12,000 sq.ft. | Leased to November 30, 2005 | |||||||||||
1327 West 2550 South Ogden, UT | Office space and light manufacturing | 7,500 sq.ft. | Leased to August 1, 2004 | |||||||||||
2735 West 5th North Street Summerville, SC | Assembly and administrative facility of AAI | 59,000 sq.ft. | Leased to December 31, 2006 |
6
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
SPECIAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT
Name | Position | Age | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Frederick M. Strader | President and Chief Executive Officer of the Company (since August 2003); President (since January 2003) and Chief Executive Officer (since August 2003) of AAI; Chief Operating Officer of AAI (January 2003 to August 2003); Executive Vice President of AAI, and Vice President and General Manager of AAI’s Defense Systems unit and Engineering Services unit (May 2001 to December 2002); Vice President of United Defense LP, Armament Systems Division (1994 to April 2001), a designer and producer of large caliber armaments for the Navy, Army and Marine Corps. | 50 | ||||||||
Robert W. Worthing | Vice President and General Counsel (since July 1995) and Corporate Secretary (since October 2003) of the Company; General Counsel of AAI (since April 1992). | 58 | ||||||||
James H. Perry | Vice President (since May 1998), Chief Financial Officer (since October 1995) and Treasurer (since December 1994) of the Company; Chief Financial Officer and Treasurer (since July 2000) and Vice President (since 1997) of AAI. | 42 |
7
PART II
ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER REPURCHASES OF EQUITY SECURITIES |
March 31, | June 30, | September 30, | December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 | ||||||||||||||||||
Low | $ | 11.36 | $ | 12.10 | $ | 14.80 | $ | 15.90 | ||||||||||
High | $ | 16.15 | $ | 16.90 | $ | 17.86 | $ | 18.25 | ||||||||||
2002 | ||||||||||||||||||
Low | $ | 15.04 | $ | 21.30 | $ | 16.60 | $ | 12.02 | ||||||||||
High | $ | 22.96 | $ | 26.05 | $ | 23.90 | $ | 21.00 |
Dividend Policy
Repurchases of Equity Securities
ISSUER PURCHASES OF EQUITY SECURITIES
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
November 21, 2003–November 30, 2003 | 286,000 | $ | 16.80 | 286,000 | $ | 5,195,200 | ||||||||||||
December 1, 2003–December 31, 2003 | 71,600 | $ | 17.20 | 71,600 | $ | 3,963,603 | ||||||||||||
January 1, 2004–January 31, 2004 | 218,500 | $ | 18.14 | 218,500 | $ | 1,182 | ||||||||||||
Total | 576,100 | $ | 17.36 | 576,100 | $ | 1,182 |
8
ITEM 6. SELECTED FINANCIAL DATA
Five-Year Selected Financial Data
Year Ended December 31, | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands, except per share data) | 2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||
Operating Data | |||||||||||||||||||||||
Continuing Operations | |||||||||||||||||||||||
Net Sales | $ | 310,947 | $ | 258,767 | $ | 238,495 | $ | 236,283 | $ | 207,683 | |||||||||||||
Operating Costs | 287,690 | 253,394 | 217,844 | 213,900 | 187,749 | ||||||||||||||||||
Interest (Income) Expense—net | (371 | ) | 716 | (601 | ) | (1,469 | ) | (1,903 | ) | ||||||||||||||
Income Before Income Taxes | 23,517 | 4,438 | 22,011 | 32,861 | 22,210 | ||||||||||||||||||
Income Taxes | 8,411 | 574 | 7,383 | 11,675 | 7,712 | ||||||||||||||||||
Income from Continuing Operations | 15,106 | 3,864 | 14,628 | 21,186 | 14,498 | ||||||||||||||||||
Loss From Discontinued Operations | (20,947 | ) | (42,941 | ) | (9,265 | ) | (13,407 | ) | (8,221 | ) | |||||||||||||
Net (Loss) Income | (5,841 | ) | (39,077 | ) | 5,363 | 7,779 | 6,277 | ||||||||||||||||
Basic Earnings (Loss) per Share | |||||||||||||||||||||||
Income From Continuing Operations | 1.14 | 0.30 | 1.15 | 1.71 | 1.18 | ||||||||||||||||||
Loss From Discontinued Operations | (1.58 | ) | (3.30 | ) | (0.73 | ) | (1.08 | ) | (0.67 | ) | |||||||||||||
Net (Loss) Income | (0.44 | ) | (3.00 | ) | 0.42 | 0.63 | 0.51 | ||||||||||||||||
Diluted Earnings (Loss) per Share | |||||||||||||||||||||||
Income From Continuing Operations | 1.10 | 0.28 | 1.10 | 1.68 | 1.16 | ||||||||||||||||||
Loss From Discontinued Operations | (1.53 | ) | (3.13 | ) | (0.70 | ) | (1.06 | ) | (0.66 | ) | |||||||||||||
Net (Loss) Income | (0.43 | ) | (2.85 | ) | 0.40 | 0.62 | 0.50 | ||||||||||||||||
Cash Dividends Paid on Common Stock | 5,315 | 3,912 | 5,069 | 4,954 | 4,910 | ||||||||||||||||||
Cash Dividends Declared per Common Share | $ | 0.40 | $ | 0.30 | $ | 0.40 | $ | 0.40 | $ | 0.40 | |||||||||||||
Shares Outstanding as of Year End (in thousands) | 13,267 | 13,068 | 12,872 | 12,435 | 12,294 | ||||||||||||||||||
Financial Position | |||||||||||||||||||||||
Total Assets | $ | 151,168 | $ | 159,245 | $ | 253,575 | $ | 249,435 | $ | 202,842 | |||||||||||||
Property and Equipment—Continuing Operations | 22,216 | 21,196 | 24,514 | 28,581 | 32,329 | ||||||||||||||||||
Shareholders’ Equity | 40,947 | 47,631 | 120,344 | 114,893 | 111,055 | ||||||||||||||||||
Shareholders’ Equity per Share | 3.09 | 3.64 | 9.35 | 9.24 | 9.03 | ||||||||||||||||||
Financial Ratios | |||||||||||||||||||||||
Return on Shareholders’ Equity (Net Income) | — | % | — | % | 4.5 | % | 6.8 | % | 5.7 | % | |||||||||||||
Income from Continuing Operations as a Percentage of Sales | 4.9 | % | 1.5 | % | 6.1 | % | 9.0 | % | 7.0 | % | |||||||||||||
Statistical Data—Continuing Operations | |||||||||||||||||||||||
Funded Sales Backlog as of Year End | $ | 323,000 | $ | 301,000 | $ | 207,000 | $ | 195,000 | $ | 158,000 | |||||||||||||
Capital Expenditures | 6,213 | 5,219 | 2,028 | 4,921 | 10,563 | ||||||||||||||||||
Depreciation and Amortization | 5,415 | 8,763 | 6,413 | 8,086 | 6,780 | ||||||||||||||||||
Number of Employees | 1,600 | 1,600 | 1,500 | 1,400 | 1,500 |
9
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Management Overview
Defense
Energy
Discontinued Transportation Operations
10
and has been unable to fund its obligations to ETI pursuant to the shareholders’ agreement. The Company believes it has provided for ETI’s estimated MUNI program losses through completion.
Results of Operations
Year Ended December 31, 2003 Compared With Year Ended December 31, 2002
2003 | 2002 | Increase/(Decrease) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 282,425,000 | $ | 229,215,000 | $ | 53,210,000 | 23.2 | % | |||||||||||
Energy | 28,522,000 | 29,552,000 | (1,030,000 | ) | (3.5 | %) | |||||||||||||
Total | $ | 310,947,000 | $ | 258,767,000 | $ | 52,180,000 | 20.2 | % |
11
2003 | % of Sales | 2002 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 55,312,000 | 19.6 | % | $ | 47,589,000 | 20.8 | % | $ | 7,723,000 | 16.2 | % | |||||||||||||||
Energy | 12,046,000 | 42.2 | % | 8,528,000 | 28.9 | % | 3,518,000 | 41.3 | % | ||||||||||||||||||
Total | $ | 67,358,000 | 21.7 | % | $ | 56,117,000 | 21.7 | % | $ | 11,241,000 | 20.0 | % |
2003 | % of Sales | 2002 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 34,408,000 | 12.2 | % | $ | 30,411,000 | 13.3 | % | $ | 3,997,000 | 13.1 | % | |||||||||||||||
Energy | 7,618,000 | 26.7 | % | 6,769,000 | 22.9 | % | 849,000 | 12.5 | % | ||||||||||||||||||
Other | 691,000 | — | % | 1,352,000 | — | % | (661,000 | ) | (48.9 | %) | |||||||||||||||||
Total | $ | 42,717,000 | 13.7 | % | $ | 38,532,000 | 14.9 | % | $ | 4,185,000 | 10.9 | % |
12
2003 | % of Sales | 2002 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 429,000 | 0.2 | % | $ | 506,000 | 0.2 | % | $ | (77,000 | ) | (15.2 | %) | ||||||||||||||
Energy | — | 0.0 | % | 425,000 | 1.4 | % | (425,000 | ) | (100.0 | %) | |||||||||||||||||
Other | 238,000 | — | % | (228,000 | ) | — | % | 466,000 | 204.4 | % | |||||||||||||||||
Total | $ | 667,000 | 0.2 | % | $ | 703,000 | 0.3 | % | $ | (36,000 | ) | (5.1 | %) |
2003 | % of Sales | 2002 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 21,980,000 | 7.8 | % | $ | 17,113,000 | 7.5 | % | $ | 4,867,000 | 28.4 | % | |||||||||||||||
Energy | 3,897,000 | 13.7 | % | (10,108,000 | ) | (34.2 | %) | 14,005,000 | 138.6 | % | |||||||||||||||||
Other | (2,360,000 | ) | — | % | (2,567,000 | ) | — | % | 207,000 | 8.1 | % | ||||||||||||||||
Total | $ | 23,517,000 | 7.6 | % | $ | 4,438,000 | 1.7 | % | $ | 19,079,000 | 429.9 | % |
13
income after taxes from continuing operations was primarily due to the increase in sales and the reduction in the asbestos litigation expense, partially offset by increases in the pension expenses and the expense related to the closing of the New York City office. In 2003, the asbestos litigation expense, net of tax, was $465,000, the expenses related to the closing of the New York City office, net of tax, was $595,000 and the net pension expenses, net of tax, were $3,932,000. In 2002, the asbestos litigation expense, net of tax, was $7,330,000, the expenses related to the closing of Midwest, net of tax, was $3,100,000 and the net pension expenses, net of tax, were $911,000.
14
given, however, as to the actual amount of the Company’s liability concerning ETI’s obligation to complete its MUNI contract and exit the discontinued operations.
2003 | 2002 | Increase/(Decrease) | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Minimum Pension Liability | $ | 6,755,000 | $ | 8,276,000 | $ | (1,521,000 | ) | |||||||
Accumulated Other Comprehensive Loss | $ | 42,284,000 | $ | 49,595,000 | $ | (7,311,000 | ) | |||||||
Less Deferred Tax Benefit | (14,172,000 | ) | (17,333,000 | ) | 3,161,000 | |||||||||
$ | 28,112,000 | $ | 32,262,000 | $ | (4,150,000 | ) | ||||||||
Intangible Pension Asset | $ | 4,085,000 | $ | 4,268,000 | $ | (183,000 | ) |
Year Ended December 31, 2002 Compared With Year Ended December 31, 2001
2002 | 2001 | Increase/(Decrease) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 229,215,000 | $ | 208,575,000 | $ | 20,640,000 | 9.9 | % | |||||||||||
Energy | 29,552,000 | 29,920,000 | (368,000 | ) | (1.2 | %) | |||||||||||||
Total | $ | 258,767,000 | $ | 238,495,000 | $ | 20,272,000 | 8.5 | % |
15
2002 | % of Sales | 2001 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 47,589,000 | 20.8 | % | $ | 43,966,000 | 21.1 | % | $ | 3,623,000 | 8.2 | % | |||||||||||||||
Energy | 8,528,000 | 28.9 | % | 9,999,000 | 33.4 | % | (1,471,000 | ) | (14.7 | %) | |||||||||||||||||
Total | $ | 56,117,000 | 21.7 | % | $ | 53,965,000 | 22.6 | % | $ | 2,152,000 | 4.0 | % |
2002 | % of Sales | 2001 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 30,411,000 | 13.3 | % | $ | 25,650,000 | 12.3 | % | $ | 4,761,000 | 18.6 | % | |||||||||||||||
Energy | 6,769,000 | 22.9 | % | 7,252,000 | 24.2 | % | (483,000 | ) | (6.7 | %) | |||||||||||||||||
Other | 1,352,000 | — | % | (22,000 | ) | — | % | 1,374,000 | 6,245.5 | % | |||||||||||||||||
Total | $ | 38,532,000 | 14.9 | % | $ | 32,880,000 | 13.8 | % | $ | 5,652,000 | 17.2 | % |
2002 | % of Sales | 2001 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 506,000 | 0.2 | % | $ | 646,000 | 0.3 | % | $ | (140,000 | ) | 21.7 | % | ||||||||||||||
Energy | 425,000 | 1.4 | % | — | 0.0 | % | 425,000 | — | % | ||||||||||||||||||
Other | (228,000 | ) | — | % | (212,000 | ) | — | % | (16,000 | ) | (7.5 | %) | |||||||||||||||
Total | $ | 703,000 | 0.3 | % | $ | 434,000 | 1.5 | % | $ | 269,000 | 62.0 | % |
16
2002 | % of Sales | 2001 | % of Sales | Increase/(Decrease) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Defense | $ | 17,113,000 | 7.5 | % | $ | 18,422,000 | 8.8 | % | $ | (1,309,000 | ) | (7.1 | %) | ||||||||||||||
Energy | (10,108,000 | ) | (34.2 | %) | 3,042,000 | 10.2 | % | (13,150,000 | ) | (432.3 | %) | ||||||||||||||||
Other | (2,567,000 | ) | — | % | 547,000 | — | % | (3,114,000 | ) | (569.3 | %) | ||||||||||||||||
Total | $ | 4,438,000 | 1.7 | % | $ | 22,011,000 | 9.2 | % | $ | (17,573,000 | ) | (79.8 | %) |
17
Corporation and the Maryland Transit Administration, as well as related assets and liabilities, to ALSTOM. The transaction closed on July 26, 2002. Also included in the 2002 pre-tax loss was an increase of $7,818,000 in estimated costs to complete contracts, $4,799,000 of general and administrative expenses, and $5,376,000 of other disposition costs related to the conveyed contracts. Further, the Company recorded a pre-tax provision of $9,296,000 related to its 35% equity share of estimated losses by ETI, which AAI (a Company subsidiary) owns jointly with Skoda, a.s. In addition, although ETI is owned 35% by AAI and 65% by Skoda, during 2002 the discontinued transportation operation recorded 100% of the ETI loss. AAI and the Company have agreed to partially indemnify the surety for certain of ETI’s performance and payment obligations under the MUNI contract and these potential indemnity obligations exceed the amount of the losses recorded. These indemnity obligations are described in further detail in Note 16 to the Financial Statements included in Item 8 of this Annual Report. The additional losses recorded by the Company for Skoda’s 65% share of ETI ‘s pre-tax losses totaled $17,264,000 during 2002.
Liquidity and Capital Resources
18
19
Payments due by period | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Contractual Obligations | Total | Less than 1 year | 1–3 years | 3–5 years | More than 5 years | ||||||||||||||||||
Long Term Debt | — | — | — | — | — | ||||||||||||||||||
Capital Lease Obligations | — | — | — | — | — | ||||||||||||||||||
Operating Leases | $ | 8,812,000 | $ | 2,996,000 | $ | 3,281,000 | $ | 2,193,000 | $ | 342,000 | |||||||||||||
Purchase Obligations | 1,064,000 | 1,064,000 | — | — | — | ||||||||||||||||||
Severance Obligations | 605,000 | 605,000 | — | — | — | ||||||||||||||||||
Other Long Term Liabilities | — | — | — | — | — | ||||||||||||||||||
Total | $ | 10,481,000 | $ | 4,665,000 | $ | 3,281,000 | $ | 2,193,000 | $ | 342,000 |
Restructuring Charges
Contingent Matters
20
performance guarantees could have a material adverse effect on the Company’s results of operations, liquidity or financial position. The Company monitors the progress of its partners and subcontractors and does not believe that their performance will adversely affect these contracts as of December 31, 2003. No assurances can be given, however, as to the Company’s liability if the Company’s partners or subcontractors are unable to perform their obligations.
Other Contingent Matters
Critical Accounting Policies
21
New Accounting Pronouncements
Risk Factors
The Company depends on government contracts for substantially all of its sales.
22
As a U.S. Government contractor, the Company is subject to a number of procurement rules and regulations.
The Company’s businesses could be adversely affected by a negative audit by the U.S. Government.
The Company’s revenues will be adversely affected if the Company fails to receive renewal or follow-on contracts.
Cost over-runs on the Company’s contracts could subject it to losses and adversely affect its future business.
23
affect its financial condition. Cost over-runs also may adversely affect the Company’s ability to sustain existing programs and obtain future contract awards.
Failure to perform by one of the Company’s subcontractors, partners or suppliers could materially and adversely affect the Company’s performance and the Company’s ability to obtain future business.
The Company operates in highly competitive and rapidly changing markets.
24
the progress of its partners and subcontractors and does not believe that their performance will adversely affect these contracts as of December 31, 2003. No assurances can be given, however, as to the Company’s liability if the Company’s partners or subcontractors are unable to perform their obligations.
The Company and its subsidiaries are subject to asbestos-related and environmental litigation and other liabilities.
Although the Company accounts for its transportation business as a discontinued operation, the Company remains subject to significant obligations in connection with such operations.
The Company’s level of returns on pension plan assets could affect the Company’s earnings in future periods.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
25
of three years to hedge contract payments scheduled to be received within three years. The aggregate notional value of this contract was $1,500,000, with an aggregate loss of $96,000 based on fair market value. The second contract is for the delivery of Euros in 2004 has a notional value totaling $2,250,000, with an aggregate loss of $336,000 based on fair market value. Both of these have been recorded in income.
26
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | |||||||||
Assets | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 24,138 | $ | 3,635 | |||||||
Trade receivables | |||||||||||
U.S. Government | 24,570 | 26,540 | |||||||||
Other, less allowance for doubtful accounts of $556 and $235 for 2003 and 2002, respectively | �� | 8,807 | 11,148 | ||||||||
33,377 | 37,688 | ||||||||||
Federal income tax receivable | — | 15,509 | |||||||||
Inventories | 16,968 | 20,951 | |||||||||
Prepaid expenses and other assets | 2,660 | 1,351 | |||||||||
Deferred income taxes | 6,757 | 4,528 | |||||||||
Assets of discontinued operations | 6,139 | 15,092 | |||||||||
Total Current Assets | 90,039 | 98,754 | |||||||||
Deferred income taxes | 10,886 | 11,531 | |||||||||
Other assets | 7,710 | 7,421 | |||||||||
Insurance receivable—asbestos litigation | 20,317 | 20,343 | |||||||||
Property and equipment | |||||||||||
Land | 459 | 459 | |||||||||
Buildings and improvements | 38,020 | 35,244 | |||||||||
Machinery and equipment | 68,394 | 67,002 | |||||||||
Furniture and fixtures | 4,715 | 4,891 | |||||||||
111,588 | 107,596 | ||||||||||
Less: Allowance for depreciation and amortization | 89,372 | 86,400 | |||||||||
22,216 | 21,196 | ||||||||||
Total Assets | $ | 151,168 | $ | 159,245 | |||||||
Liabilities and Shareholders’ Equity | |||||||||||
Current Liabilities | |||||||||||
Accounts payable | $ | 10,117 | $ | 11,711 | |||||||
Accrued employee compensation and taxes | 11,920 | 12,043 | |||||||||
Customer advances | 2,452 | 6,211 | |||||||||
Reserve for contract losses | 1,681 | 2,050 | |||||||||
Other liabilities | 5,654 | 3,682 | |||||||||
Liabilities of discontinued operations | 16,611 | 12,563 | |||||||||
Total Current Liabilities | 48,435 | 48,260 | |||||||||
Minimum pension liability | 6,755 | 8,276 | |||||||||
Post retirement benefits other than pensions | 21,970 | 22,361 | |||||||||
Reserve for asbestos litigation | 31,595 | 31,852 | |||||||||
Other liabilities | 1,466 | 865 | |||||||||
Shareholders’ equity | |||||||||||
Common stock—par value $1.00 per share Authorized shares 30,000,000; Issued 14,374,148 shares; Outstanding 13,267,218 shares in 2003 and 13,067,918 shares in 2002 | 14,374 | 14,374 | |||||||||
Additional capital | 88,125 | 92,085 | |||||||||
Retained deficit | (22,095 | ) | (16,254 | ) | |||||||
Cost of shares in treasury: | |||||||||||
1,106,930 shares in 2003 and 1,306,230 shares in 2002 | (11,345 | ) | (10,312 | ) | |||||||
Accumulated other comprehensive loss | (28,112 | ) | (32,262) | ||||||||
Total Shareholders’ Equity | 40,947 | 47,631 | |||||||||
Total Liabilities and Shareholders’ Equity | $ | 151,168 | $ | 159,245 |
See notes to consolidated financial statements.
27
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, except per share amounts)
Twelve Months Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2001 | |||||||||||||
Net sales | $ | 310,947 | $ | 258,767 | $ | 238,495 | |||||||||
Cost of sales | 243,589 | 202,650 | 184,530 | ||||||||||||
Gross profit | 67,358 | 56,117 | 53,965 | ||||||||||||
Selling & administrative expenses | 42,717 | 38,532 | 32,880 | ||||||||||||
Asbestos litigation provision—net | 717 | 11,509 | — | ||||||||||||
Other operating expenses—net | 667 | 703 | 434 | ||||||||||||
Total operating income | 23,257 | 5,373 | 20,651 | ||||||||||||
Non-operating income and (expense) | |||||||||||||||
Interest income | 463 | 127 | 618 | ||||||||||||
Other income | 389 | 64 | 1,085 | ||||||||||||
Equity in net income of joint venture | 57 | 99 | 86 | ||||||||||||
Interest expense | (92 | ) | (843 | ) | (17 | ) | |||||||||
Other expenses | (557 | ) | (382 | ) | (412 | ) | |||||||||
260 | (935 | ) | 1,360 | ||||||||||||
Income from continuing operations before income taxes | 23,517 | 4,438 | 22,011 | ||||||||||||
Provision for income taxes | |||||||||||||||
Federal current | 9,274 | 5,432 | 8,145 | ||||||||||||
Federal deferred | (1,525 | ) | (4,933 | ) | (152 | ) | |||||||||
State | 662 | 75 | (610 | ) | |||||||||||
Total income taxes | 8,411 | 574 | 7,383 | ||||||||||||
Income from continuing operations | 15,106 | 3,864 | 14,628 | ||||||||||||
Loss from discontinued operations—net of income tax benefit of $11,274, $23,112 and $5,621 for 2003, 2002 and 2001, respectively | (20,947 | ) | (42,941 | ) | (9,265 | ) | |||||||||
Net (loss) income | $ | (5,841 | ) | $ | (39,077 | ) | $ | 5,363 | |||||||
Basic earnings per share: | |||||||||||||||
Income from continuing operations | $ | 1.14 | $ | 0.30 | $ | 1.15 | |||||||||
Loss from discontinued operations | $ | (1.58 | ) | $ | (3.30 | ) | $ | (0.73 | ) | ||||||
Net (loss) income | $ | (0.44 | ) | $ | (3.00 | ) | $ | 0.42 | |||||||
Diluted earnings per share: | |||||||||||||||
Income from continuing operations | $ | 1.10 | $ | 0.28 | $ | 1.10 | |||||||||
Loss from discontinued operations | $ | (1.53 | ) | $ | (3.13 | ) | $ | (0.70 | ) | ||||||
Net (loss) income | $ | (0.43 | ) | $ | (2.85 | ) | $ | 0.40 |
See notes to consolidated financial statements.
28
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Twelve Months Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | 2001 | |||||||||||||
OPERATING ACTIVITIES | |||||||||||||||
Net (loss) income | $ | (5,841 | ) | $ | (39,077 | ) | $ | 5,363 | |||||||
Adjustments to reconcile net (loss) income to net cash provided by (used for) operating activities: | |||||||||||||||
Loss from discontinued operations, net of income tax benefit | 20,947 | 42,941 | 9,265 | ||||||||||||
Net asbestos litigation expense | — | 11,509 | — | ||||||||||||
Pension expense (income), net | 6,119 | 1,321 | (2,385 | ) | |||||||||||
Income tax refund | 16,822 | — | — | ||||||||||||
Depreciation and amortization | 5,415 | 8,763 | 6,413 | ||||||||||||
Noncash compensation charge | — | — | 346 | ||||||||||||
Deferred income taxes | (1,525 | ) | (4,933 | ) | 152 | ||||||||||
Equity in net income of joint venture | (57 | ) | (99 | ) | (86 | ) | |||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Decrease in trade receivables | 4,311 | 87 | 12,443 | ||||||||||||
Decrease (increase) in inventories | 3,983 | (4,763 | ) | 11,792 | |||||||||||
(Increase) decrease in prepaid expenses and other current assets | (1,309 | ) | 404 | 1,223 | |||||||||||
Decrease in customer advances | (3,759 | ) | (831 | ) | (2,329 | ) | |||||||||
(Decrease) increase in accounts payable, accruals and other current liabilities | (1,427 | ) | 7,054 | 5,665 | |||||||||||
Other—net | (2,844 | ) | 490 | (4,692 | ) | ||||||||||
Net Cash Provided by Continuing Operations | 40,835 | 22,866 | 43,170 | ||||||||||||
Net Cash Used for Discontinued Operations, exclusive of income taxes | (7,946 | ) | (37,806 | ) | (45,459 | ) | |||||||||
Net Cash Provided by (Used for) Operating Activities | 32,889 | (14,940 | ) | (2,289 | ) | ||||||||||
INVESTING ACTIVITIES | |||||||||||||||
Proceeds from sale of assets for discontinued operations | — | 20,756 | — | ||||||||||||
Increase in amount due from investee for discontinued operations | (2,122 | ) | (3,648 | ) | (2,986 | ) | |||||||||
Repayment of advances by investee of discontinued operations | 2,122 | 1,917 | 2,730 | ||||||||||||
Purchase of property and equipment | (6,213 | ) | (5,219 | ) | (2,028 | ) | |||||||||
Capital expenditures of discontinued operations | — | — | (2,610 | ) | |||||||||||
Repayment of advances and dividend received by investee | — | 1,360 | 2,300 | ||||||||||||
Net Cash (Used for) Provided by Investing Activities | (6,213 | ) | 15,166 | (2,594 | ) | ||||||||||
FINANCING ACTIVITIES | |||||||||||||||
Proceeds from exercise of stock options | 5,178 | 1,825 | 4,063 | ||||||||||||
Dividends | (5,315 | ) | (3,912 | ) | (5,069 | ) | |||||||||
Purchase of treasury shares | (6,036 | ) | — | — | |||||||||||
Proceeds from borrowings | — | — | 6,300 | ||||||||||||
Payments on long term debt and financing | — | — | (6,300 | ) | |||||||||||
Net Cash Used for Financing Activities | (6,173 | ) | (2,087 | ) | (1,006 | ) | |||||||||
Increase (decrease) in cash and cash equivalents | 20,503 | (1,861 | ) | (5,889 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 3,635 | 5,496 | 11,385 | ||||||||||||
Cash and cash equivalents at end of period | $ | 24,138 | $ | 3,635 | $ | 5,496 |
See notes to consolidated financial statements.
29
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Operations
Note 2. Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
30
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
31
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
reconciliation of net earnings and related proforma income and income per common share from continuing operations is as follows:
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands, except per share amounts) | 2003 | 2002 | 2001 | ||||||||||||
Income from continuing operations: | |||||||||||||||
As reported | $ | 15,106 | $ | 3,864 | $ | 14,628 | |||||||||
Total employee stock compensation expense determined under fair value method, net of tax | (716 | ) | (785 | ) | (746 | ) | |||||||||
Proforma | $ | 14,390 | $ | 3,079 | $ | 13,882 | |||||||||
Income per common share from continuing operations: | |||||||||||||||
As reported: | |||||||||||||||
Basic | $ | 1.14 | $ | 0.30 | $ | 1.15 | |||||||||
Diluted | $ | 1.10 | $ | 0.28 | $ | 1.10 | |||||||||
Proforma: | |||||||||||||||
Basic | $ | 1.09 | $ | 0.24 | $ | 1.09 | |||||||||
Diluted | $ | 1.05 | $ | 0.23 | $ | 1.04 |
32
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
33
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 3. Trade Receivables
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | |||||||||
Amounts billed | $ | 8,348 | $ | 10,179 | |||||||
Unbilled recoverable costs and earned fees | 15,963 | 15,676 | |||||||||
Retainage per contract provisions | 259 | 685 | |||||||||
$ | 24,570 | $ | 26,540 |
Note 4. Inventories
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | |||||||||
Finished goods and work in progress | $ | 3,136 | $ | 6,151 | |||||||
Costs and earnings related to long-term contracts | 55,984 | 65,031 | |||||||||
Deduct progress payments related to long-term contracts | (43,218 | ) | (51,667 | ) | |||||||
Costs and earnings in excess of billings | 12,766 | 13,364 | |||||||||
Total finished goods and work in progress | 15,902 | 19,515 | |||||||||
Materials and supplies | 1,066 | 1,436 | |||||||||
$ | 16,968 | $ | 20,951 |
Note 5. Other Assets
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | |||||||||
Intangible pension asset | $ | 4,085 | $ | 4,268 | |||||||
Patents and other intangible assets, net | 718 | 940 | |||||||||
Other | 2,907 | 2,213 | |||||||||
$ | 7,710 | $ | 7,421 |
34
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 6. Long-Term Debt and Credit Arrangements
Note 7. Stock Options
35
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Shares in thousands) | Number of Shares | Weighted Average Exercise Price | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Balance at January 1, 2001 | 1,764 | $ | 9.17 | |||||||
Granted | 349 | 13.37 | ||||||||
Exercised | (436 | ) | 9.31 | |||||||
Cancelled | (128 | ) | 8.88 | |||||||
Balance at December 31, 2001 | 1,549 | 10.10 | ||||||||
Granted | 170 | 19.25 | ||||||||
Exercised | (195 | ) | 9.36 | |||||||
Cancelled | (1 | ) | 8.71 | |||||||
Balance at December 31, 2002 | 1,523 | 11.22 | ||||||||
Granted | 155 | 16.71 | ||||||||
Exercised | (555 | ) | 9.32 | |||||||
Cancelled | (14 | ) | 10.81 | |||||||
Balance at December 31, 2003 | 1,109 | $ | 12.94 |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Shares in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Exercisable | 770 | 1,070 | 977 | ||||||||||||
Available for future grants | 264 | 105 | 274 |
(Shares in thousands) | Shares | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Range of Exercise Prices | Exercisable | Outstanding | |||||||||
$ 4.50 to $ 7.00 | 39 | 39 | |||||||||
$7.50 to $ 9.81 | 332 | 332 | |||||||||
$10.25 to $13.00 | 237 | 308 | |||||||||
$13.99 to $20.12 | 162 | 430 | |||||||||
770 | 1,109 |
Note 8. Leases
36
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 9. Changes in Shareholders’ Equity
(Dollars in thousands) | Common Shares Outstanding | Common Stock | Additional Capital | Retained Earnings (Deficit) | Treasury Stock | Accumulated other Comprehensive Loss | Shareholders’ Equity | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance, January 1, 2001 | 12,435 | $ | 14,374 | $ | 89,384 | $ | 26,441 | $ | (15,306 | ) | $ | 114,893 | ||||||||||||||||||
Net income | 5,363 | 5,363 | ||||||||||||||||||||||||||||
Cash dividends declared ($0.40 per share) | (5,069 | ) | (5,069 | ) | ||||||||||||||||||||||||||
Stock options exercised | 436 | 624 | 3,439 | 4,063 | ||||||||||||||||||||||||||
Noncash compensation | 638 | 638 | ||||||||||||||||||||||||||||
Stock options, tax benefit | 448 | 448 | ||||||||||||||||||||||||||||
Employee awards | 1 | 8 | 8 | |||||||||||||||||||||||||||
Balance, December 31, 2001 | 12,872 | 14,374 | 91,094 | 26,735 | (11,859 | ) | 120,344 | |||||||||||||||||||||||
Net (loss) | (39,077 | ) | (39,077 | ) | ||||||||||||||||||||||||||
Minimum pension liability, net of tax benefit of $17,333 | (32,262 | ) | (32,262 | ) | ||||||||||||||||||||||||||
Total comprehensive loss | (71,339 | ) | ||||||||||||||||||||||||||||
Cash dividends declared ($0.30 per share) | (3,912 | ) | (3,912 | ) | ||||||||||||||||||||||||||
Stock options exercised | 195 | 287 | 1,538 | 1,825 | ||||||||||||||||||||||||||
Stock options, tax benefit | 692 | 692 | ||||||||||||||||||||||||||||
Employee awards | 1 | 12 | 9 | 21 | ||||||||||||||||||||||||||
Balance, December 31, 2002 | 13,068 | 14,374 | 92,085 | (16,254 | ) | (10,312 | ) | (32,262 | ) | 47,631 | ||||||||||||||||||||
Net (loss) | (5,841 | ) | (5,841 | ) | ||||||||||||||||||||||||||
Minimum pension liability, net of tax expense of $3,161 | 4,150 | 4,150 | ||||||||||||||||||||||||||||
Total comprehensive loss | (1,691 | ) | ||||||||||||||||||||||||||||
Cash dividends declared ($0.40 per share) | (5,315 | ) | (5,315 | ) | ||||||||||||||||||||||||||
Stock options exercised | 555 | 187 | 4,991 | 5,178 | ||||||||||||||||||||||||||
Stock options, tax benefit | 1,162 | 1,162 | ||||||||||||||||||||||||||||
Treasury stock purchases | (358 | ) | (6,036 | ) | (6,036 | ) | ||||||||||||||||||||||||
Employee awards | 2 | 6 | 12 | 18 | ||||||||||||||||||||||||||
Balance, December 31, 2003 | 13,267 | $ | 14,374 | $ | 88,125 | $ | (22,095 | ) | $ | (11,345 | ) | $ | (28,112 | ) | $ | 40,947 |
The exercise of stock options that have been granted under the Company’s various stock option plans give rise to compensation which is includable in the taxable income of the applicable employees and deductible by the Company for federal and state income tax purposes. Such compensation results from increases in the fair market value of the Company’s common stock subsequent to the date of grant of the applicable exercised stock options and, accordingly, in accordance with Accounting Principles Board Opinion No. 25, such compensation is not recognized as an expense for financial accounting purposes and the related tax benefits are recorded directly in Additional Capital.
Note 10. UIC Stock Repurchase
37
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 11. Pensions and Other Postretirement Benefits
Percentages of Plan Assets | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Target Allocation | At December 31 | ||||||||||||||
Plan Assets | 2004 | 2003 | 2002 | ||||||||||||
Equity Securities | 55–65% | 65 | % | 46 | % | ||||||||||
Debt Securities | 35–45% | 33 | % | 52 | % | ||||||||||
Real Estate | 0% | 0 | % | 0 | % | ||||||||||
Other | 0–5% | 2 | % | 2 | % | ||||||||||
Total | 100% | 100 | % | 100 | % |
38
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2003 | 2002 | |||||||||||||||
Change in Benefit Obligation | |||||||||||||||||||
Benefit obligation at beginning of year | $ | 155,753 | $ | 148,864 | $ | 23,636 | $ | 23,555 | |||||||||||
Service cost | 2,679 | 2,579 | 179 | �� | 320 | ||||||||||||||
Interest cost | 10,369 | 10,521 | 1,587 | 1,647 | |||||||||||||||
Amendments | — | 19 | — | (437 | ) | ||||||||||||||
Settlements | — | — | — | (216 | ) | ||||||||||||||
Actuarial loss | 12,178 | 5,611 | 1,394 | 1,035 | |||||||||||||||
Plan participant’s contributions | — | — | 590 | 293 | |||||||||||||||
Benefits paid | (10,934 | ) | (11,841 | ) | (2,742 | ) | (2,561 | ) | |||||||||||
Benefit obligation at end of year | 170,045 | 155,753 | 24,644 | 23,636 | |||||||||||||||
Change in Plan Assets | |||||||||||||||||||
Fair value of plan assets at beginning of year | $ | 139,019 | $ | 161,268 | — | — | |||||||||||||
Actual return on plan assets | 25,712 | (10,408 | ) | — | — | ||||||||||||||
Administrative expenses | — | — | (62 | ) | — | ||||||||||||||
Participant contributions | — | — | 590 | 293 | |||||||||||||||
Employer contributions | 118 | — | 2,214 | 2,268 | |||||||||||||||
Benefits paid | (10,934 | ) | (11,841 | ) | (2,742 | ) | (2,561 | ) | |||||||||||
Fair value of plan assets at end of year | 153,915 | 139,019 | — | — | |||||||||||||||
(Underfunded) funded status of plans | (16,130 | ) | (16,734 | ) | (24,644 | ) | (23,636 | ) | |||||||||||
Unrecognized net transition obligation asset | — | (4 | ) | — | — | ||||||||||||||
Unrecognized net actuarial loss | 51,659 | 58,057 | 2,996 | 1,637 | |||||||||||||||
Unrecognized prior service cost | 4,085 | 4,268 | (322 | ) | (362 | ) | |||||||||||||
Net amount recognized | $ | 39,614 | $ | 45,587 | $ | (21,970 | ) | $ | (22,361 | ) |
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2003 | 2002 | |||||||||||||||
Accrued benefit liability | $ | (6,755 | ) | $ | (8,276 | ) | $ | (21,970 | ) | $ | (22,361 | ) | |||||||
Intangible asset | 4,085 | 4,268 | N/A | N/A | |||||||||||||||
Accumulated other comprehensive loss | 42,284 | 49,595 | N/A | N/A | |||||||||||||||
Net amount recognized | $ | 39,614 | $ | 45,587 | $ | (21,970 | ) | $ | (22,361 | ) |
39
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Weighted-average Assumptions Used to Determine Benefit Obligations
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2003 | 2002 | |||||||||||||||
Discount rate | 6.25% | 6.75% | 6.25% | 6.75% | |||||||||||||||
Rate of compensation increase | 4% | 4% | N/A | N/A | |||||||||||||||
Current healthcare trend rate* | N/A | N/A | 7.00%/5.91%* | 7.50%/6.81%* | |||||||||||||||
Ultimate healthcare trend rate | N/A | N/A | 5.00% | 5.00% | |||||||||||||||
Years of ultimate healthcare trend rate* | N/A | N/A | 2008/2005* | 2008/2005* |
* | defense/energy segments, respectively |
Net periodic benefit costs include the following components:
Components of Net Periodic Benefit Cost
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | 2003 | 2002 | 2001 | |||||||||||||||||||||
Service cost | $ | 2,679 | $ | 2,579 | $ | 1,981 | $ | 179 | $ | 320 | $ | 360 | |||||||||||||||
Interest cost | 10,369 | 10,521 | 10,361 | 1,587 | 1,647 | 1,651 | |||||||||||||||||||||
Expected return on plan assets | (11,339 | ) | (13,321 | ) | (14,835 | ) | — | — | — | ||||||||||||||||||
Amortization of prior service cost | 183 | 183 | 196 | (41 | ) | 10 | 18 | ||||||||||||||||||||
Amortization of unrecognized | |||||||||||||||||||||||||||
transition assets | (4 | ) | (88 | ) | (88 | ) | — | — | — | ||||||||||||||||||
Amortization of net loss (gain) | 4,427 | 1,625 | — | 93 | — | — | |||||||||||||||||||||
Settlement—curtailment | — | — | — | — | (287 | ) | (1,933 | ) | |||||||||||||||||||
Benefit cost (income) | $ | 6,315 | $ | 1,499 | $ | (2,385 | ) | $ | 1,818 | $ | 1,690 | $ | 96 |
Weighted-average Assumptions Used to Determine Net Periodic Benefit Cost for Year
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | 2003 | 2002 | 2001 | |||||||||||||||||||||
Discount rate | 6.75% | 7.25%/ 7.50%1 | 7.50%/ 8.00%1 | 6.75% | 7.25%/ 7.50%1 | 7.50%/ 7.75%1 | |||||||||||||||||||||
Expected return on plan assets | 8.50% | 8.50%/ 10.00%1 | 8.50%/ 10.00%1 | N/A | N/A | N/A | |||||||||||||||||||||
Rate of compensation increase | 4.00% | 4.00% | 4.00% | N/A | N/A | N/A | |||||||||||||||||||||
Current healthcare trend rate | N/A | N/A | N/A | 7.50%/ 6.81%1 | 8.00%/ 7.72%1 | 5.25%/4.00%/ 8.46%2 | |||||||||||||||||||||
Ultimate healthcare trend rate | N/A | N/A | N/A | 5.00% | 5.00%/ 5.50%1 | 5.25%/4.00%/ 6.50%2 | |||||||||||||||||||||
Years of ultimate healthcare trend rate | N/A | N/A | N/A | 2008/20051 | 2008/20051 | 2001/20051 |
1 | UIC/Detroit Stoker |
2 | UIC Medical/UIC Dental/Detroit Stoker |
40
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
1-percent point | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Increase | Decrease | |||||||||
Effect on total of service and interest cost components in 2003 | $ | 41,192 | $ | (41,187 | ) | ||||||
Effect on postretirement benefit obligation as of December 31, 2003 | $ | 383,746 | $ | (382,339 | ) |
Defined Contribution Plans
Note 12. Industry Segment Data
(Dollars in thousands) | Defense | Energy | Other | Reconciliations | Totals | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year Ended December 31, 2003 | ||||||||||||||||||||||
Net sales | $ | 282,425 | $ | 28,522 | $ | — | $ | — | $ | 310,947 | ||||||||||||
Equity profit in joint venture | 57 | — | — | — | 57 | |||||||||||||||||
Interest income | 1,565 | 53 | 361 | (1,518 | ) | 463 | ||||||||||||||||
Interest expense | 92 | 60 | 1,458 | (1,518 | ) | 92 | ||||||||||||||||
Depreciation and amortization expense | 4,866 | 382 | 167 | — | 5,415 | |||||||||||||||||
Segment profit (loss) | 21,980 | 3,897 | (2,360 | ) | — | 23,517 | ||||||||||||||||
Segment assets | 125,646 | 42,345 | 62,970 | (79,793 | ) | 151,168 | ||||||||||||||||
Capital expenditures | 5,992 | 221 | — | — | 6,213 |
41
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in thousands) | Defense | Energy | Other | Reconciliations | Totals | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year Ended December 31, 2002 | ||||||||||||||||||||||
Net sales | $ | 229,215 | $ | 29,552 | $ | — | $ | — | $ | 258,767 | ||||||||||||
Equity profit in joint venture | 99 | — | — | — | 99 | |||||||||||||||||
Interest income | 1,124 | 25 | 234 | (1,256 | ) | 127 | ||||||||||||||||
Interest expense | 776 | 27 | 1,296 | (1,256 | ) | 843 | ||||||||||||||||
Depreciation and amortization expense | 4,730 | 3,967 | 66 | — | 8,763 | |||||||||||||||||
Segment profit (loss) | 17,113 | (10,108 | ) | (2,567 | ) | — | 4,438 | |||||||||||||||
Segment assets | 134,426 | 39,290 | 109,958 | (124,429 | ) | 159,245 | ||||||||||||||||
Capital expenditures | 4,963 | 256 | — | — | 5,219 | |||||||||||||||||
Year Ended December 31, 2001 | ||||||||||||||||||||||
Net sales | $ | 208,575 | $ | 29,920 | $ | — | $ | — | $ | 238,495 | ||||||||||||
Equity profit in joint venture | 86 | — | — | — | 86 | |||||||||||||||||
Interest income | 1,223 | 107 | 265 | (977 | ) | 618 | ||||||||||||||||
Interest expense | 232 | — | 762 | (977 | ) | 17 | ||||||||||||||||
Depreciation and amortization expense | 5,589 | 755 | 69 | — | 6,413 | |||||||||||||||||
Segment profit | 18,422 | 3,042 | 547 | — | 22,011 | |||||||||||||||||
Segment assets | 120,735 | 32,379 | 128,878 | (28,417 | ) | 253,575 | ||||||||||||||||
Capital expenditures | 1,601 | 426 | 1 | — | 2,028 |
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Assets | |||||||||||||||
Total assets for reportable segments | $ | 230,961 | $ | 283,674 | $ | 281,992 | |||||||||
Elimination of intercompany tax receivable | (8,948 | ) | — | — | |||||||||||
Elimination of intercompany receivable | (383 | ) | (21,719 | ) | — | ||||||||||
Reclassification of receivables from ETI | — | — | (1,828 | ) | |||||||||||
Assets of discontinued operations | 6,139 | 15,092 | 109,734 | ||||||||||||
Elimination of investment in consolidated subsidiaries | (61,024 | ) | (98,157 | ) | (126,413 | ) | |||||||||
Reclassification of deferred tax liabilities | (15,578 | ) | (19,645 | ) | (9,910 | ) | |||||||||
Total consolidated assets | $ | 151,168 | $ | 159,245 | $ | 253,575 | |||||||||
Other Significant Items | |||||||||||||||
Elimination of intercompany interest | $ | 1,518 | $ | 1,256 | $ | 977 |
Segment profit (loss) includes research and development costs amounting to $5,013,000 in 2003, $4,588,000 in 2002 and $5,520,000 in 2001, principally in the defense segment.
Note 13. Income Taxes
42
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in thousands) | 2003 | 2002 | 2001 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Federal income taxes at statutory rate | $ | 7,996 | $ | 1,508 | $ | 7,884 | ||||||||
State and local income taxes, net of federal income tax benefit (including a reduction of $651 in 2001 of a $1,000 tax reserve established in 1997) | 434 | 50 | (519 | ) | ||||||||||
Non-taxable income | (412 | ) | (772 | ) | — | |||||||||
Other—net | 393 | (212 | ) | 18 | ||||||||||
Income Taxes—Continuing Operations | $ | 8,411 | $ | 574 | $ | 7,383 |
Deferred income tax balances:
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | |||||||||
Deferred Tax Assets | |||||||||||
Net Operating Loss and credit carry forwards | $ | 2,560 | $ | 990 | |||||||
Asbestos litigation reserve | 4,100 | 4,179 | |||||||||
Pension plans | 442 | 660 | |||||||||
Losses on long-term contracts not currently deductible | 2,422 | 2,298 | |||||||||
Postretirement benefits and other employee benefits other than pensions | 7,899 | 7,683 | |||||||||
Product warranty and other provisions | 933 | 1,097 | |||||||||
Vacation pay accruals | 1,252 | 1,007 | |||||||||
Other | 676 | 249 | |||||||||
Total Deferred Tax Assets | 20,284 | 18,163 | |||||||||
Valuation allowance for deferred tax assets | (1,200 | ) | (990 | ) | |||||||
Net deferred tax assets | 19,084 | 17,173 | |||||||||
Deferred Tax Liabilities | |||||||||||
Tax over book depreciation | (898 | ) | (435 | ) | |||||||
Other | (543 | ) | (679 | ) | |||||||
Total Deferred Tax Liability | (1,441 | ) | (1,114 | ) | |||||||
Net Deferred Tax Asset | $ | 17,643 | $ | 16,059 | |||||||
The net deferred tax asset is classified as follows: | |||||||||||
Net current deferred income tax assets | $ | 6,757 | $ | 4,528 | |||||||
Net noncurrent deferred income tax assets | $ | 10,886 | $ | 11,531 |
43
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 14. Other Operating Expenses, Net, Other Income, Net, and Other Expenses
Year Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Other Operating Expenses, Net | |||||||||||||||
Change in deferred compensation liability | $ | 238 | $ | (232 | ) | $ | (212 | ) | |||||||
Amortization of intangibles | 222 | 226 | 318 | ||||||||||||
Amortization of facility consolidation costs | 302 | 284 | 328 | ||||||||||||
Expenses related to the closing of an indirect subsidiary | — | 425 | — | ||||||||||||
Other | (95 | ) | — | — | |||||||||||
Total other operating expenses, net | $ | 667 | $ | 703 | $ | 434 | |||||||||
Other Income, Net | |||||||||||||||
Insurance recovery—net | $ | 34 | $ | — | $ | 842 | |||||||||
Royalties and commissions | 70 | 13 | 127 | ||||||||||||
Exchange rate fluctuations | 122 | — | — | ||||||||||||
Rental income | 56 | — | — | ||||||||||||
Other | 107 | 51 | 116 | ||||||||||||
Total Other Income, net | $ | 389 | $ | 64 | $ | 1,085 | |||||||||
Other Expenses | |||||||||||||||
Exchange rate fluctuations | $ | — | $ | — | $ | 182 | |||||||||
Uncollectible interest receivable | 214 | — | — | ||||||||||||
Write-off of proposed acquisition costs | — | — | 159 | ||||||||||||
Professional fees for environmental remediation | 334 | 309 | — | ||||||||||||
Miscellaneous items | 9 | 73 | 71 | ||||||||||||
Total Other Expense | $ | 557 | $ | 382 | $ | 412 |
Note 15. Selected Quarterly Data (Unaudited)
2003 Quarter | 2002 Quarter | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollar amounts in thousands, except per share data and stock prices) | 4th | 3rd | 2nd | 1st | 4th | 3rd | 2nd | 1st | ||||||||||||||||||||||||||
Net sales from continuing operations | $ | 83,195 | $ | 69,273 | $ | 86,037 | $ | 72,442 | $ | 69,463 | $ | 67,109 | $ | 65,328 | $ | 56,867 | ||||||||||||||||||
Gross profit from continuing operations | 20,267 | 15,540 | 17,505 | 14,046 | 18,288 | 15,406 | 11,618 | 10,805 | ||||||||||||||||||||||||||
Income (loss) from continuing operations | 6,473 | 2,801 | 4,194 | 1,638 | (3,312 | ) | 4,462 | 1,683 | 1,031 | |||||||||||||||||||||||||
Loss from discontinued operations | (1,936 | ) | (16,751 | ) | (1,286 | ) | (974 | ) | (16,407 | ) | (1,844 | ) | (12,430 | ) | (12,260 | ) | ||||||||||||||||||
Net income (loss) | 4,537 | (13,950 | ) | 2,908 | 664 | (19,719 | ) | 2,618 | (10,747 | ) | (11,229 | ) | ||||||||||||||||||||||
Basic earnings (loss) per share: | ||||||||||||||||||||||||||||||||||
Continuing operations | $ | 0.48 | $ | 0.21 | $ | 0.32 | $ | 0.13 | $ | (0.25 | ) | $ | 0.34 | $ | 0.13 | $ | 0.08 | |||||||||||||||||
Discontinued operations | (0.14 | ) | (1.26 | ) | (0.10 | ) | (0.08 | ) | (1.26 | ) | (0.14 | ) | (0.96 | ) | (0.95 | ) | ||||||||||||||||||
Net income (loss) | 0.34 | (1.05 | ) | 0.22 | 0.05 | (1.51 | ) | 0.20 | (0.83 | ) | (0.87 | ) | ||||||||||||||||||||||
Diluted earnings (loss) per share | ||||||||||||||||||||||||||||||||||
Continuing operations | 0.47 | 0.21 | 0.31 | 0.12 | (0.25 | ) | 0.32 | 0.12 | 0.08 | |||||||||||||||||||||||||
Discontinued operations | (0.14 | ) | (1.23 | ) | (0.09 | ) | (0.07 | ) | (1.26 | ) | (0.13 | ) | (0.90 | ) | (0.90 | ) | ||||||||||||||||||
Net income (loss) | 0.33 | (1.03 | ) | 0.21 | 0.05 | (1.51 | ) | 0.19 | (0.78 | ) | (0.82 | ) | ||||||||||||||||||||||
Dividends declared per share | 0.10 | 0.10 | 0.10 | 0.10 | 0.10 | 0.10 | — | 0.10 | ||||||||||||||||||||||||||
Stock Prices: | ||||||||||||||||||||||||||||||||||
High | $ | 18.25 | $ | 17.86 | $ | 16.90 | $ | 16.15 | $ | 21.00 | $ | 23.90 | $ | 26.05 | $ | 22.96 | ||||||||||||||||||
Low | $ | 15.90 | $ | 14.80 | $ | 12.10 | $ | 11.36 | $ | 12.02 | $ | 16.60 | $ | 21.30 | $ | 15.04 |
44
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Note 16. Commitments and Contingencies
Asbestos
Defenses
Settlements
45
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Insurance Coverage
Quantitative Claims Information
46
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
December 31, | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2003 | 2002 | ||||||||||
Insurance receivables for asbestos related liabilities | $ | 20,317,000 | $ | 20,343,000 | |||||||
Asbestos-related liabilities | $ | 31,595,000 | $ | 31,852,000 |
47
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
of operations in a particular reporting period, asbestos claims should not have a material adverse effect on the Company’s long term financial condition, liquidity or results of operations. No assurances can be given, however, as to the actual amount of the Company’s and Detroit Stoker’s liability for such present and future claims or insurance recoveries, and the differences from estimated amounts could be material.
Reform Legislation
State of Arizona Department of Environmental Quality v. UIC, et al.
Michigan Department of Natural Resources
Other Performance Guarantees
48
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
including partners and subcontractors. If the Company is unable to meet these performance obligations, the performance guarantees could have a material adverse effect on product margins and the Company’s results of operations, liquidity or financial position. The Company monitors the progress of its partners and subcontractors and does not believe that their performance will adversely affect these contracts as of December 31, 2003. No assurances can be given, however, as to the Company’s liability if the Company’s partners or subcontractors are unable to perform their obligations.
Discontinued Transportation Operations Performance and Payment Indemnity Obligations
49
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
$16,171,000 and $17,264,000 during 2003 and 2002, respectively. Since January 1, 2002, AAI has recorded $33,435,000 of losses related to ETI that represent Skoda’s 65% share. If Skoda continues to fail to provide ETI with additional funding, or if ETI is unable to meet its performance or payment obligations, the AAI indemnification obligations to the surety could have a material adverse effect on the Company’s results of operations, liquidity and/or financial condition. For this reason, AAI monitors the progress of ETI, the Skoda subcontractors, and ETI’s other subcontractors.
50
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Other Lawsuits and Claims
Note 17. Discontinued Transportation Operation
Year Ended December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Sales | $ | 13,204 | $ | 27,447 | $ | 47,439 | |||||||||
Loss before income taxes | $ | (32,221 | ) | $ | (66,053 | ) | $ | (14,886 | ) | ||||||
Income tax benefit | (11,274 | ) | (23,112 | ) | (5,621 | ) | |||||||||
Net loss from discontinued operations | $ | (20,947 | ) | $ | (42,941 | ) | $ | (9,265 | ) |
Year Ended December 31, | |||||||||||||||
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Net cash, after tax, used for discontinued operations | |||||||||||||||
Net loss | $ | (20,947 | ) | $ | (42,941 | ) | $ | (9,265 | ) | ||||||
Loss on sale of assets | — | 21,500 | — | ||||||||||||
Decrease (increase) in trade receivable | 908 | 16,473 | (9,772 | ) | |||||||||||
Decrease (increase) in inventories | 9,003 | (5,104 | ) | (21,974 | ) | ||||||||||
(Decrease) increase in customer advances | (1,087 | ) | (4,556 | ) | 491 | ||||||||||
Decrease in income taxes | (958 | ) | (22,641 | ) | (5,380 | ) | |||||||||
(Decrease) increase in accounts payable | |||||||||||||||
and other current liabilities | (1,733 | ) | (5,785 | ) | 14 | ||||||||||
Increase other | 6,868 | 5,248 | 427 | ||||||||||||
Net cash, after tax, used for discontinued operations | $ | (7,946 | ) | $ | (37,806 | ) | $ | (45,459 | ) |
51
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
Assets and liabilities of the discontinued operations were as follows:
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Assets | |||||||||||||||
Trade receivables from ETI | $ | 39,322 | $ | 25,961 | $ | 20,895 | |||||||||
Less allowances | (39,322 | ) | (25,053 | ) | (1,673 | ) | |||||||||
Inventories | 10 | 9,013 | 73,236 | ||||||||||||
Prepaid expenses and other current assets | 51 | 51 | 51 | ||||||||||||
Deferred taxes | 5,028 | 4,070 | 7,497 | ||||||||||||
Investment in ETI | 1,050 | 1,050 | 1,050 | ||||||||||||
Other receivables from ETI | 9,111 | 2,935 | 1,205 | ||||||||||||
Less allowances | (9,111 | ) | (2,935 | ) | (1,205 | ) | |||||||||
Property and equipment | — | — | 5,800 | ||||||||||||
Total Assets | $ | 6,139 | $ | 15,092 | $ | 106,856 | |||||||||
Liabilities | |||||||||||||||
Accounts payable | $ | 376 | $ | 1,674 | $ | 7,118 | |||||||||
Accrued employee compensation and taxes | 617 | 1,052 | 1,393 | ||||||||||||
Customer advances | — | 1,087 | 35,983 | ||||||||||||
Provision for contract losses | 11,266 | 1,450 | 6,522 | ||||||||||||
Other | 4,352 | 7,300 | 6,511 | ||||||||||||
Total Liabilities | $ | 16,611 | $ | 12,563 | $ | 57,527 |
The Company has provided for ETI’s inability to pay the trade receivables from ETI ($39,322,000 in 2003, relating to AAI’s subcontract on the MUNI program) and the other receivables from ETI ($9,111,000 in 2003, relating to AAI’s secunded services arrangement) as part of its recognition of 100% of ETI’s losses.
Note 18. Investment in Unconsolidated Investees
Discontinued Transportation Operations
(Dollars in thousands) | 2003 | 2002 | 2001 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sales | $ | 15,040 | $ | 13,614 | $ | 29,975 | ||||||||
Cost of sales | 15,040 | 20,175 | 31,351 | |||||||||||
Gross loss | $ | — | $ | (6,561 | ) | $ | (1,376 | ) | ||||||
Cash drain | $ | (4,357 | ) | $ | (11,729 | ) | $ | (8,946 | ) |
52
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
by the Company) related to the net loss of ETI and the estimated losses of ETI through completion of the remaining contract. This loss included a provision of $9,296,000 related to the Company’s 35% equity share of estimated losses by ETI, and a $17,264,000 provision related to the 65% equity share of Skoda of ETI’s estimated losses, again for the reasons specified in Note 16 above. The transportation operation recorded a loss of $180,000 in 2001 related to its equity interest in the net loss of ETI.
December 31, | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2003 | 2002 | 2001 | ||||||||||||
Current Assets | $ | 13,032 | $ | 72,542 | $ | 131,794 | |||||||||
Plant Property and Equipment and Other Assets | 193 | 1,482 | 3,058 | ||||||||||||
Current Liabilities | 83,708 | 119,627 | 152,070 | ||||||||||||
Net Sales | 82,828 | 64,766 | 14,580 | ||||||||||||
Gross Loss | (24,879 | ) | (28,388 | ) | (514 | ) | |||||||||
Net Loss | $ | (24,879 | ) | $ | (28,388 | ) | $ | (514 | ) |
Continuing Operations
Note 19. Earnings per Share
2003 | 2002 | 2001 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Basic Weighted Average Shares | 13,219,000 | 13,021,000 | 12,697,000 | |||||||||||
Effect of Dilutive securities: | ||||||||||||||
Employee and non-employee director stock options | 443,000 | 677,000 | 592,000 | |||||||||||
Diluted Weighted Average Shares | 13,662,000 | 13,698,000 | 13,289,000 | |||||||||||
Basic Earnings (Loss) per Share: | ||||||||||||||
Income from continuing operations | $ | 1.14 | $ | 0.30 | $ | 1.15 | ||||||||
Loss from discontinued operations | (1.58 | ) | (3.30 | ) | (0.73 | ) | ||||||||
Net (loss) income | (0.44 | ) | (3.00 | ) | 0.42 | |||||||||
Diluted Earnings (Loss) per Share: | ||||||||||||||
Income from continuing operations | 1.10 | 0.28 | 1.10 | |||||||||||
Loss from discontinued operations | (1.53 | ) | (3.13 | ) | (0.70 | ) | ||||||||
Net (Loss) income | $ | (0.43 | ) | $ | (2.85 | ) | $ | 0.40 |
Note 20. Restructuring Charge
53
UNITED INDUSTRIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS—(Continued)
54
Report of Independent Auditors
Board of Directors and Shareholders
United Industrial Corporation
Hunt Valley, Maryland
We have audited the accompanying consolidated balance sheets of United Industrial Corporation and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations and cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of United Industrial Corporation and subsidiaries at December 31, 2003 and 2002, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
March 10, 2004
Harrisburg, Pennsylvania
55
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. CONTROLS AND PROCEDURES
56
PART III
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Securities Authorized for Issuance Under Equity Compensation Plans
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) | (b) | (c) | ||||||||||||
Equity compensation plans approved by security holders | 1,109,300 | $ | 12.94 | 263,517 | ||||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||||
Total | 1,109,300 | $ | 12.94 | 263,517 |
Reference is made to the information to be set forth in the section entitled “Voting Rights” and “Security Ownership of Management” in the proxy statement, which sections are incorporated herein by reference.
57
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
58
PART IV
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K |
(a) | (1) and (2) – The response to this portion of Item 15 is submitted as a separate section of this report entitled “List of Financial Statements and Financial Statement Schedules”. |
(3) | Exhibits | |||||
(3)(a)(i) – | Restated Certificate of Incorporation of United (1). | |||||
(3)(a)(ii) – | Certificate of Amendment of Restated Certificate of Incorporation of United (2). | |||||
(3)(b) – | Amended and Restated By-Laws of United (3). | |||||
(10)(a) – | United Industrial Corporation 1994 Stock Option Plan, as amended (4). | |||||
(10)(b) – | United Industrial Corporation 1996 Stock Option Plan for Nonemployee Directors (5). | |||||
(10)(c) – | Loan and Security Agreement dated as of June 28, 2001 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender (the “Loan Agreement”) (6). | |||||
(10)(d) – | Pledge Agreement dated as of June 28, 2001 among United and certain of its subsidiaries, as Pledgors, and Fleet Capital Corporation, as Lender (6). | |||||
(10)(e) – | Waiver, Amendment and Consent Agreement dated as of March 6, 2002 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (7). | |||||
(10)(f) – | Second Amendment and Consent Agreement dated as of June 28, 2002 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (8). | |||||
(10)(g) – | Third Amendment and Waiver Agreement dated as of March 21, 2003 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (9). | |||||
(10)(h) – | Fourth Amendment dated as of March 31, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (10). | |||||
(10)(i) – | Fifth Amendment dated as of September 30, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (10). | |||||
(10)(j) – | Letter from Fleet Capital Corporation to the Company dated November 12, 2003, amending the Loan Agreement (10). | |||||
(10)(k) – | Sixth Amendment dated as of November 17, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement. | |||||
(10)(l) – | Seventh Amendment dated as of December 31, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement. | |||||
(10)(m) – | Employment Agreement dated as of June 18, 2003 between the Company and Frederick M. Strader (11). | |||||
(10)(n) – | Employment Agreement, dated December 8, 1998, between United and Richard R. Erkeneff (1). | |||||
(10)(o) – | Amendment No. 1 dated as of June 1, 2001 to the Employment Agreement dated as of December 8, 1998 by and between United and Richard R. Erkeneff (6). | |||||
(10)(p) – | Amendment No. 2 and Amendment No. 3 dated as of December 20, 2002 to the Employment Agreement dated as of December 8, 1998 by and between United and Richard R. Erkeneff (9). | |||||
(10)(q) – | Employment Agreement, dated March 3, 2000, between United and Susan Fein Zawel (12). | |||||
(10)(r) – | Amendment to Employment Agreement, dated January 2, 2003, between United and Susan Fein Zawel (9). | |||||
(10)(s) – | Employment Agreement, dated March 3, 2000, between United and Robert Worthing (12). | |||||
(10)(t) – | Success Bonus Agreement, dated April 10, 2002, between United and Robert Worthing (13). |
59
(10)(u) – | Amendment to Employment Agreement, dated January 2, 2003, between United and Robert Worthing (9). | |||||
(10)(v) – | Employment Agreement, dated March 3, 2000, between United and James H. Perry (12). | |||||
(10)(w) – | Success Bonus Agreement, dated April 10, 2002, between United and James H. Perry (13). | |||||
(10)(x) – | Amendment to Employment Agreement, dated January 2, 2003, between United and James H. Perry (9). | |||||
(10)(y) – | Master Agreement, dated as of March 27, 2002, between ALSTOM Transportation Inc. and AAI Corporation (7). | |||||
(10)(z) – | Amendment to Master Agreement, dated as of July 26, 2002, between ALSTOM Transportation Inc. and AAI Corporation (14). | |||||
(14) – | United’s Code of Ethics for the Chief Executive Officer, Chief Financial Officer and certain other Senior Officers — available on United’s website at http://www.unitedindustrial.com. | |||||
(21) – | Subsidiaries of United. | |||||
(23) – | Consent of Independent Auditors. | |||||
(31.1) – | Certification of Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
(31.2) – | Certification of Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
(32.1) – | Certification of the Chief Executive Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||
(32.2) – | Certification of the Chief Financial Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(1) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 1998. |
(2) | Incorporated by reference to United’s Registration Statement Form S-8 filed with the Securities and Exchange Commission on July 21, 1998. |
(3) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 1995. |
(4) | Incorporated by reference to United’s Registration Statement on Form S-8, filed with the Securities and Exchange Commission on November 20, 2003. |
(5) | Incorporated by reference to United’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 26, 1997. |
(6) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001. |
(7) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 2001. |
(8) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002. |
(9) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 2002. |
(10) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. |
(11) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003. |
(12) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 1999. |
(13) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002. |
(14) | Incorporated by reference to United’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 12, 2002. |
(b) | Reports on Form 8-K |
60
Annual Report on Form 10-K
Item 15(a) (1) and (2)
List of Financial Statements and Financial Statement Schedules
Certain Exhibits
Financial Statement Schedules
Year ended December 31, 2003
United Industrial Corporation
Hunt Valley, Maryland
61
Form 10-K—Item 15(a) (1) and (2)
UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
List of Financial Statements and Financial Statement Schedules
Consolidated Balance Sheets—December 31, 2003 and 2002 | ||||||
Consolidated Statements of Operations— Years Ended December 31, 2003, 2002 and 2001 | ||||||
Consolidated Statements of Cash Flows Years Ended December 31, 2003, 2002 and 2001 | ||||||
Notes to Financial Statements |
62
REPORT OF INDEPENDENT AUDITORS
We have audited the consolidated financial statements of United Industrial Corporation and subsidiaries as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and have issued our report thereon dated March 10, 2004. Our audits also included the financial statement schedule listed in Item 15(a) of this Annual Report (Form 10-K). This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.
/s/ Ernst & Young LLP
March 10, 2004
Harrisburg, Pennsylvania
63
Schedule II—Valuation and Qualifying Accounts
United Industrial Corporation and Subsidiaries
December 31, 2003
Col. A | Col. B | Col. C | Col. D | Col. E | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Description | Balance at Beginning of Period | (1) Charged to Costs and Expenses | (2) Charged to Other Accounts (Describe) | Deductions (Describe) | Balance at End of Period | ||||||||||||||||||
Year ended December 31, 2003: Deducted from asset accounts: | |||||||||||||||||||||||
Allowance for doubtful accounts | $ | 235,000 | $ | 321,000 | $ | 556,000 | |||||||||||||||||
Product warranty liability | $ | 960,000 | $ | 120,000 | (A) | $ | 840,000 | ||||||||||||||||
Year ended December 31, 2002: Deducted from asset account: | |||||||||||||||||||||||
Allowance for doubtful accounts | $ | 235,000 | $ | 235,000 | |||||||||||||||||||
Product warranty liability | $ | 1,650,000 | $ | 566,000 | $ | 1,256,000 | (A) | $ | 960,000 | ||||||||||||||
Year ended December 31, 2001: Deducted from asset account: | |||||||||||||||||||||||
Allowance for doubtful accounts | $ | 235,000 | $ | 235,000 | |||||||||||||||||||
Product warranty liability | $ | 5,154,000 | $ | 3,504,000 | (A) | $ | 1,650,000 |
(A) | Product warranty expenditures. |
64
SIGNATURES
UNITED INDUSTRIAL CORPORATION (Registrant) | ||||||||||
By:/s/ Frederick M. Strader Frederick M. Strader, President | ||||||||||
Date:March 12, 2004 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Name | Date | |||||
---|---|---|---|---|---|---|
/s/ Warren G. Lichtenstein Warren G. Lichtenstein, Chairman of the Board and Director | March 12, 2004 | |||||
/s/ Thomas A. Corcoran Thomas A. Corcoran, Director | March 12, 2004 | |||||
/s/ Richard R. Erkeneff Richard R. Erkeneff, Director | March 12, 2004 | |||||
/s/ Glen Kassan Glen Kassan, Director | March 12, 2004 | |||||
/s/ Robert F. Mehmel Robert F. Mehmel, Director | March 12, 2004 | |||||
/s/ Joseph S. Schneider Joseph S. Schneider, Director | March 12, 2004 | |||||
/s/ Frederick M. Strader Frederick M. Strader, President and Chief Executive Officer | March 12, 2004 | |||||
/s/ James H. Perry James H. Perry, Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | March 12, 2004 |
65
EXHIBIT INDEX
(3)(a)(i) – | Restated Certificate of Incorporation of United (1). | |||||
(3)(a)(ii) – | Certificate of Amendment of Restated Certificate of Incorporation of United (2). | |||||
(3)(b) – | Amended and Restated By-Laws of United (3). | |||||
(10)(a) – | United Industrial Corporation 1994 Stock Option Plan, as amended (4). | |||||
(10)(b) – | United Industrial Corporation 1996 Stock Option Plan for Nonemployee Directors (5). | |||||
(10)(c) – | Loan and Security Agreement dated as of June 28, 2001 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender (the “Loan Agreement”) (6). | |||||
(10)(d) – | Pledge Agreement dated as of June 28, 2001 among United and certain of its subsidiaries, as Pledgors, and Fleet Capital Corporation, as Lender (6). | |||||
(10)(e) – | Waiver, Amendment and Consent Agreement dated as of March 6, 2002 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (7). | |||||
(10)(f) – | Second Amendment and Consent Agreement dated as of June 28, 2002 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (8). | |||||
(10)(g) – | Third Amendment and Waiver Agreement dated as of March 21, 2003 among United and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (9). | |||||
(10)(h) – | Fourth Amendment dated as of March 31, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (10). | |||||
(10)(i) – | Fifth Amendment dated as of September 30, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement (10). | |||||
(10)(j) – | Letter from Fleet Capital Corporation to the Company dated November 12, 2003, amending the Loan Agreement (10). | |||||
(10)(k) – | Sixth Amendment dated as of November 17, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement. | |||||
(10)(l) – | Seventh Amendment dated as of December 31, 2003 among the Company and certain of its subsidiaries, as Borrowers, and Fleet Capital Corporation, as Lender, to the Loan Agreement. | |||||
(10)(m) – | Employment Agreement dated as of June 18, 2003 between the Company and Frederick M. Strader (11). | |||||
(10)(n) – | Employment Agreement, dated December 8, 1998, between United and Richard R. Erkeneff (1). | |||||
(10)(o) – | Amendment No. 1 dated as of June 1, 2001 to the Employment Agreement dated as of December 8, 1998 by and between United and Richard R. Erkeneff (6). | |||||
(10)(p) – | Amendment No. 2 and Amendment No. 3 dated as of December 20, 2002 to the Employment Agreement dated as of December 8, 1998 by and between United and Richard R. Erkeneff (9). | |||||
(10)(q) – | Employment Agreement, dated March 3, 2000, between United and Susan Fein Zawel (12). | |||||
(10)(r) – | Amendment to Employment Agreement, dated January 2, 2003, between United and Susan Fein Zawel (9). | |||||
(10)(s) – | Employment Agreement, dated March 3, 2000, between United and Robert Worthing (12). | |||||
(10)(t) – | Success Bonus Agreement, dated April 10, 2002, between United and Robert Worthing (13). | |||||
(10)(u) – | Amendment to Employment Agreement, dated January 2, 2003, between United and Robert Worthing (9). |
66
(10)(v) – | Employment Agreement, dated March 3, 2000, between United and James H. Perry (12). | |||||
(10)(w) – | Success Bonus Agreement, dated April 10, 2002, between United and James H. Perry (13). | |||||
(10)(x) – | Amendment to Employment Agreement, dated January 2, 2003, between United and James H. Perry (9). | |||||
(10)(y) – | Master Agreement, dated as of March 27, 2002, between ALSTOM Transportation Inc. and AAI Corporation (7). | |||||
(10)(z) – | Amendment to Master Agreement, dated as of July 26, 2002, between ALSTOM Transportation Inc. and AAI Corporation (14). | |||||
(14) – | United’s Code of Ethics for the Chief Executive Officer, Chief Financial Officer and certain other Senior Officers — available on United’s website at http://www.unitedindustrial.com. | |||||
(21) – | Subsidiaries of United. | |||||
(23) – | Consent of Independent Auditors. | |||||
(31.1) – | Certification of Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
(31.2) – | Certification of Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
(32.1) – | Certification of the Chief Executive Officer of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(1) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 1998. |
(2) | Incorporated by reference to United’s Registration Statement Form S-8 filed with the Securities and Exchange Commission on July 21, 1998. |
(3) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 1995. |
(4) | Incorporated by reference to United’s Registration Statement on Form S-8, filed with the Securities and Exchange Commission on November 20, 2003. |
(5) | Incorporated by reference to United’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on June 26, 1997. |
(6) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2001. |
(7) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 2001. |
(8) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002. |
(9) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 2002. |
(10) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. |
(11) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003. |
(12) | Incorporated by reference to United’s Annual Report on Form 10-K for the year ended December 31, 1999. |
(13) | Incorporated by reference to United’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002. |
(14) | Incorporated by reference to United’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 12, 2002. |
67