Mail Stop 6010
November 2, 2005
Mr. Frederick M. Strader
President and Chief Executive Officer
United Industrial Corporation
124 Industry Lane
Hunt Valley, Maryland 21030
Re: United Industrial Corporation
Form 10-K for the Fiscal Year Ended December 31, 2004
Filed March 16, 2005
Form 10-Q for the Quarterly Period Ended June 30, 2005
File No. 1-4252
Dear Mr. Strader:
We have reviewed your filings and response letter dated
October
13, 2005 and have the following comments. In some of our
comments,
we may ask you to provide us with information so we may better
understand your disclosure. After reviewing this information, we
may
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for the Fiscal Year Ended December 31, 2004
Item 8. Financial Statements and Supplementary Data, page 48
Note 17. Discontinued Transportation Operation, page 86
1. Please refer to prior comment 1 from our August 22, 2005
letter.
Please respond to the following comments:
* Please tell us and disclose in future filings when you adopted
the
formal plan to abandon the transportation business segment and
whether that plan consisted of a liquidation or "runoff" of your
operations because you are obligated by regulation or contract to
provide services even though you have ceased to accept new
business.
* Tell us and disclose in future filings when you ceased to accept
new business.
* Please tell us and revise future filings to disclose, for any
periods in which the residual operations of the discontinued
operations are material, summarized financial information of the
operating results (e.g., revenues, costs of revenues, other
expenses)
and material elements of charges and credits to income recognized
currently to adjust the estimate of loss recognized at the
measurement date.
Note 18. Investments in Unconsolidated Investees, page 87
2. Please refer to prior comment 2 from our August 22, 2005 letter
with respect to the application of FIN 46(R). Per your response
you
should consolidate ETI for financial reporting purposes under FIN
46(R). If true, please revise your financial statements to
properly
account for ETI under FIN 46(R), or provide to us your analysis of
why the current presentation is appropriate under U.S. GAAP. The
current discussion in your response does not appear to address all
relevant considerations of the differences in both quantitative
and
qualitative factors, including presentation and disclosures, in
consolidating ETI versus reflecting the investment under the
equity
method.
3. Please refer to prior comment 2 from our August 22, 2005 letter
with respect to the presentation of financial statements for your
equity investee under Rule 3-09. Please respond to the following
comments:
* Please note that you should evaluate the significance of your
investment for each period presented to determine what financial
statements may be required under Rule 3-09. Also, the separate
financial statements are required to be audited only for those
years
in which either the first or third condition set forth in Rule 1-
02(w), substituting 20 percent for 10 percent, is met. Refer to
Rule
3-09(b) of Regulation S-X. Please provide us with your
significance
tests for 2002 and 2003.
* We note that your calculation for 2004 reflects income from ETI
of
$2.3 million. Since the calculation should only reflect your
equity
in the income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in
accounting
principle of ETI, and since you state that ETI is a discontinued
operation, please explain what the $2.3 million represents.
* Please reconcile the investment in ETI of $51.9 million per your
response to your financial statements.
Form 10-Q for the Quarterly Period Ended June 30, 2005
Item 1. Financial Statements, page 2
Consolidated Statements of Operations, page 3
4. Please refer to prior comment 3 from our August 22, 2005
letter.
Please note that paragraph 45 of SFAS 144 specifically includes
both
gains and losses. As such, if the gain you recognized of $7.2
million in the six months ended June 30, 2005 was for the sale of
a
long-lived asset (disposal group) and not a component of an
entity,
you should include the gain within your income from operations in
accordance with paragraph 45 of SFAS 144, as amended by paragraph
9(n) of SFAS 145. Please note that if you would classify losses
related to this asset in operations under paragraph 45 of SFAS
144,
you would also classify gains similarly. Alternatively, tell us
and
disclose in future filings why paragraph 45 of SFAS 144 is not
applicable and why the current classification is appropriate.
Please
cite the accounting literature upon which you relied.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your responses to our
comments.
You may contact Praveen Kartholy, Staff Accountant at
202.551.3778 or me at 202.551.3604 if you have questions regarding
these comments and related matters. You may also contact Michele
Gohlke, Branch Chief at 202.551.3327.
Sincerely,
Kate Tillan
Assistant Chief Accountant
Frederick M. Strader
United Industrial Corporation
November 2, 2005
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