SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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                          UNITED INDUSTRIAL CORPORATION
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)


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UNITED INDUSTRIAL CORPORATION
570 LEXINGTON AVENUE, NEW YORK, NY 10022

CONTACT: SUSAN FEIN ZAWEL
         VICE PRESIDENT CORPORATE COMMUNICATIONS
         (212) 752-8787


            UNITED INDUSTRIAL URGES SHAREHOLDERS TO ELECT THE BOARD'S
                     HIGHLY QUALIFIED NOMINEES AS DIRECTORS

      --COMPANY IS IN ACTIVE DUE DILIGENCE SESSIONS WITH POTENTIAL BUYERS--

New York, NY, September 26, 2002 - United Industrial Corporation (NYSE: UIC)
today sent the following letter to its shareholders, urging them to vote for the
Board's two nominees, Richard R. Erkeneff and Paul J. ("Page") Hoeper, for
reelection as Directors. United Industrial's Annual Meeting is scheduled for
October 4, 2002 at 10:00 a.m. (EDT).

Harold Gelb, Chairman of the Board, commented, "We strongly believe that the
reelection of Dick Erkeneff, our President and CEO, and Page Hoeper, a prominent
defense industry leader, is in the best interests of all United Industrial
shareholders. Based on their experience and industry contacts, Dick and Page are
eminently qualified to lead the Company forward and through its sales process.
Currently, we are actively involved in discussions and due diligence sessions
with prospective purchasers, and we believe that the failure to reelect either
Dick or Page could disrupt the sales process."



September 25, 2002

Dear United Industrial Shareholder:

United Industrial's Annual Meeting of Shareholders, scheduled for October 4,
2002, is fast approaching. Your vote this year is particularly important. Steel
Partners II, L.P., a dissident shareholder that owns 10% of the Company's
outstanding stock, has waged a proxy contest to elect a second Steel Partners
employee to your Board. If elected, Steel Partners' nominee would replace either
your Company's experienced CEO, Dick Erkeneff, or Paul J. ("Page") Hoeper, a
former Assistant Secretary of the Army and Deputy Under Secretary of Defense. If
successful, Steel Partners would control one-third of your six-member Board,
since Warren Lichtenstein, the head of Steel Partners, is already a Director.

We believe that the outcome of this year's election will have important
consequences for the Company and its shareholders. That's why we want to make
sure you are familiar with the backgrounds of our nominees, and what's at stake.



WE THINK THE CHOICE IS CLEAR:

1. Your Board's nominees, Dick Erkeneff and Page Hoeper, two experienced defense
industry executives--one of whom, Dick, has led the Company in creating
substantial shareholder value--and both of whom are actively engaged in current
efforts to sell the Company.
                                       or

2. Steel Partners' nominee, an employee of Steel Partners with no apparent
defense industry experience.

TO SHOW YOUR SUPPORT FOR DICK ERKENEFF AND PAGE HOEPER, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PAID ENVELOPE TODAY.

                  THE EXCELLENT QUALIFICATIONS OF DICK ERKENEFF
                                 AND PAGE HOEPER

As seasoned defense industry professionals, Dick Erkeneff and Page Hoeper
are eminently qualified to lead the Company forward and through its sales
process. Given the nature of the defense industry, we believe it is particularly
important that the Company's negotiating efforts be led by individuals who
understand the value of its products to the U.S. Defense Department and can
articulate this value to strategic buyers. Here's a snapshot of each of our
nominee's experience in the defense industry:

                                  DICK ERKENEFF
                                  -------------

YEARS OF DEFENSE INDUSTRY EXPERIENCE: 44
DEFENSE-RELATED EXPERIENCE:

         o        President and CEO of United Industrial since 1995 and
                  President and CEO of AAI Corporation, the Company's primary
                  subsidiary, since 1993. Since Mr. Erkeneff became President
                  and CEO of United Industrial, the Company's stock price has
                  appreciated approximately 235% from $5.87 on October 20, 1995
                  to $19.81 on September 24, 2002.

         o        35-year career with McDonnell Douglas Corporation, including
                  as President of McDonnell Douglas Electronic Systems Company
                  and Senior Vice President of Defense and Electronic Systems
                  for McDonnell Douglas Aerospace.

DEFENSE INDUSTRY AFFILIATIONS:

         o        Mr. Erkeneff serves as Trustee of the National Defense
                  Industrial Association.

         o        He represents AAI Corporation on the Aerospace Industries
                  Association.

         o        He is a member of the Association of the United States Army,
                  the Air Force Association, and the Navy League of the United
                  States.


                                       2

                                   PAGE HOEPER
                                   -----------

YEARS OF DEFENSE INDUSTRY EXPERIENCE: 20
DEFENSE-RELATED EXPERIENCE:

         o        Assistant Secretary of the Army (Acquisition, Logistics and
                  Technology), The Army Acquisition Executive and Science
                  Advisor to the Secretary of the Army, May 1998-January 2001.

         o        Deputy Under Secretary of Defense (International & Commercial
                  Programs), May 1996-May 1998.

         o        Consultant to the Army Science Board, 2001-2002.

         o        Consultant to the Defense Science Board, 1993-1995.

         o        Proprietor, Northshore Consultants, involving consultation on
                  technology, economic, policy and defense matters, 1984-1994.

DEFENSE-RELATED HONORS:

         o        Department of the Army Decoration for Distinguished Civilian
                  Service, 2001.

         o        Secretary of Defense Medal for Outstanding Public Service,
                  2001.

         o        The President's Award (the Biddle Medal) for contributions to
                  the Association of the U.S. Army, 2000.

         o        Defense Award for Outstanding Achievement, 1997.

         o        Secretary of Defense Medal for Outstanding Public Service,
                  1996.


IN CONTRAST, STEEL PARTNERS' NOMINEE IS AN EMPLOYEE OF STEEL PARTNERS. HE HAS NO
APPARENT DEFENSE INDUSTRY EXPERIENCE.

                      WHY YOU SHOULD VOTE--WHAT'S AT STAKE

Over the years, your Board has worked diligently to increase shareholder value.
And, we have been successful. Since October 20, 1995, United Industrial's stock
price has appreciated by 235%. We believe that a sale of the Company may now be
in the best interests of shareholders. We are working with Wachovia Securities
toward this goal, and, at this time, we are actively engaged in discussions and
due diligence sessions with potential acquirers.

The election of Steel Partners' nominee would result in the replacement of one
of our candidates on the Board, which we believe could disrupt the sales
process:

o        Dick Erkeneff is leading the Company's due diligence sessions with
         prospective purchasers. If Dick were not reelected to the Board, his
         credibility with these parties could be seriously undermined.

o        Page Hoeper is using his expertise and industry contacts to market the
         Company to prospective purchasers.


                                       3

o        We believe that the replacement of either Dick or Page on the Board
         could hurt us at the negotiating table, by sending the wrong signal to
         prospective buyers regarding the stability of the Company's leadership
         team.

ALTHOUGH THERE CAN BE NO ASSURANCE, WE BELIEVE THAT THE BEST PRICE FOR THE
COMPANY AND THE GREATEST VALUE FOR SHAREHOLDERS CAN BE ACHIEVED BY ALLOWING THE
CURRENT SALES PROCESS TO CONTINUE FORWARD UNINTERRUPTED, UNDER THE LEADERSHIP OF
DICK ERKENEFF AND PAGE HOEPER.

                         VOTE THE WHITE PROXY CARD TODAY

SEND A MESSAGE THAT YOU SUPPORT YOUR BOARD'S EFFORTS. Based on their experience,
Dick Erkeneff and Page Hoeper are, in our opinion, the best candidates to lead
the Company forward and through its sales process.

We urge you to make your voice heard by returning the enclosed WHITE proxy card
with a vote FOR the Board' s highly qualified nominees, Dick Erkeneff and Page
Hoeper. If you have already returned a proxy card and wish to change your vote,
you can do so by signing, dating and returning the enclosed WHITE proxy card. If
you have any questions, please contact our proxy solicitors, Innisfree M&A,
toll-free at (877) 266-1890.

Thank you for your support.


/s/ Harold S. Gelb           /s/ Susan Fein Zawel        /s/ Joseph S. Schneider
Harold S. Gelb               Susan Fein Zawel            Joseph S. Schneider


            /s/ Richard R. Erkeneff           /s/ Paul J. Hoeper
            Richard R. Erkeneff               Paul J. Hoeper


UNITED INDUSTRIAL CORPORATION is a company focused on the design and production
of defense, training and energy systems. Its products include unmanned aerial
vehicles, training and simulation systems, and automated aircraft test and
maintenance equipment. The Company also offers logistical/engineering services
for government -owned equipment and manufactures combustion equipment for
biomass and refuse fuels.

Except for the historical information contained herein, information set forth in
this news release may contain forward-looking statements 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, reference is made to the
Company's most recent Annual Report on Form 10-K as filed with the Securities
and Exchange Commission.

             FOR MORE INFORMATION, PLEASE VISIT UNITED INDUSTRIAL'S
                     WEB SITE AT WWW. UNITEDINDUSTRIAL.COM

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