EXHIBIT 99.1
UNITED INDUSTRIAL CORPORATION
570 LEXINGTON AVENUE, NEW YORK, NY 10022
CONTACT: JAMES H. PERRY
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(410) 628-8786
UNITED INDUSTRIAL REPORTS FIRST QUARTER RESULTS
-----------------------------------------------
NEW YORK, NY, MAY 14, 2003 - United Industrial Corporation (NYSE: UIC) today
announced its financial results for the first quarter ended March 31, 2003.
Revenue, and income figures from continuing operations include the results of
the Company's Defense and Energy and Other segments only. The results of the
Company's remaining transportation operations have been reported as discontinued
operations.
FIRST QUARTER RESULTS
For the first quarter of 2003, the Company's income from continuing operations
increased 59% to $1.6 million, or $.12 per diluted share, from $1.0 million, or
$.08 per diluted share, in the 2002 first quarter. The Company noted that the
2003 first quarter results include non-cash pension expense of $1.5 million
($951,000 net of tax), or $.07 per diluted share, and asbestos related
consulting and legal fees of $242,000 ($158,000 net of tax), or $.01 per diluted
share. The first quarter 2002 results include non-cash pension income of
$224,000 ($145,000 net of tax), or $.01 per diluted share. The decrease in
pension results is primarily due to downward trends in the securities market and
interest rates. Also included in the first quarter of 2002 was a pre-tax charge
of $2.7 million ($1.7 million net of tax), or $.12 per diluted share, related to
the closing of the Company's foundry operations at its Detroit Stoker subsidiary
and an insurance recovery of $271,000 ($176,000 net of tax), or $.01 per diluted
share. Excluding the asbestos related items in 2003, the pension performance in
both years, and the insurance recovery and foundry closure costs in 2002, income
from continuing operations increased 12% in the 2003 first quarter to $4,214,000
($2,747,000 net of tax), or $ .20 per diluted share, from $3,762,000 ($2,442,000
net of tax), or $.18 per diluted share in the year ago quarter.
Revenues from continuing operations for the first quarter rose 27.4% to $72.4
million from $56.9 million in the first quarter last year.
"United Industrial has gotten off to a solid start in 2003," said Richard R.
Erkeneff, President and Chief Executive Officer. "While pension expense
negatively impacted bottom-line results, we made good operating progress on a
number of fronts as demonstrated by the 27.4% increase in revenue and $66.0
million in new bookings achieved during the quarter. With these bookings,
backlog reached $294.1 million at quarter-end versus $228.8 million a year ago.
We saw particular strength in our Unmanned Aerial Vehicle and Simulation and
Test systems businesses, which are benefiting from the U.S. military's increased
investment in new technologies and systems."
Mr. Erkeneff also noted that the Company is optimistic that results for the
balance of the year will continue to improve based on higher anticipated profit
margins on certain contracts. Under Company policy, the Company recognizes lower
profit margins during early stages of performance, affecting certain contracts
that generated significant sales during the first quarter.
The Company's discontinued transportation operations reported a loss in the
first quarter of 2003 of $974,000, or a loss of $.07 per diluted share, compared
to a loss of $12.3 million, or a loss of $.90 per diluted share, in the first
quarter last year. The 2002 results include a provision of $4.9 million, or $.36
per diluted share, for estimated losses on the San Francisco MUNI contract
primarily incurred by Electric Transit, Inc., the Company's joint venture with
SKODA, a Czech Republic firm, and a provision of $6.6 million, or $.49 per
diluted share, related to the sale and close out of the Company's transportation
overhaul contracts.
OPERATING HIGHLIGHTS
Mr. Erkeneff continued, "United Industrial's core defense and aerospace
businesses continue to demonstrate outstanding capabilities in meeting the most
advanced needs of the U.S. military and other customers for the 21st century.
From more flexible deployment needs to increased intelligence and surveillance
requirements, critical changes are reshaping our nation's Armed Forces, and we
remain well positioned to capitalize on a broad range of these trends.
"The achievements of our Unmanned Aerial Vehicle (UAV) business underscore our
success in remaining well-attuned to forward trends in the defense sector.
Positive momentum continued this quarter for the next-generation Tactical
Unmanned Aerial Vehicle (TUAV) program that we are developing for the U.S. Army,
with the award of a Basic Ordering Agreement (BOA) contract for a wide range of
supplies and services in support of the TUAV program. Under this contract, which
is valid for three years, up to $25 million of procurements can be ordered. In
addition, we also received a $2 million contract for a number of developmental
engineering projects in connection with this program.
"Equally important, our TUAV program's significance continues to grow in
connection with global current events. We received a $3.4 million contract in
support of TUAV operations outside the continental United States, and an
additional $2 million of funding to support America's War on Terrorism. The
increasing importance of UAV technology for the U.S. military, combined with the
receipt of our $86.1 million full-rate production contract at the end of last
year, gives us confidence that this program will remain a primary growth
platform for our Company for years to come.
"In Simulation and Test systems, we continued to win new business and drive
growth through our work on the Joint Service Electronic Combat Systems Tester
(JSECST), the Department of Defense's (DoD) program to develop a standard
flight-line electronic warfare test system for all branches of the military.
This quarter, we were awarded a contract for approximately $16 million from
2
the U.S. Navy for additional JSECST systems in support of a broad range of Navy
and Marine Corps aircraft, as well as spare parts and data, bringing the total
value of this contract to $124 million and a backlog of $65.5 million.
Additionally, we received $1.6 million from the U.S. Air Force for a follow-on
contract for the development of a JSECST test program set for a variety of major
aircraft, such as the F-15 and F-16.
"The shipboard training area of our Simulation and Test business also continues
to grow through our combination of products and services that both generate
consistent demand and offer unmatched expertise. During the quarter, we received
a $3.6 million contract for the production of Air Traffic Control (ATC) Radar
stimulators - a variant of our Generic Navy Stimulator Simulator (GNSS) - for
the U.S. Navy's Battle Force Tactical Trainer (BFTT) program. With this latest
contract award, we will have produced 396 GNSS units in support of this program.
We also were awarded a $1.1 million modification to our Guided Missile
Maintenance Platform (GMMP) contract with the U.S. Navy, for a total contract
value of $12.7 million. This contract provides for the installation of a number
of upgrades to the system, and clears the way for final system fielding later
this year.
"Other key highlights in defense systems included the delivery of 87 test
program sets to Marabun Corporation in Japan for use by the Japanese Maritime
Self Defense Force in support of the P-3C Orion aircraft, under a $3.6 million
contract, and our completion of an agreement with Patria Hagglunds for a
technology license to sell, develop and produce in the U.S. and Canada an
advanced twin-barrel mortar system that will increase the organic fire support
of U.S. Army Infantry units. Further, we are pleased with the continuing market
penetration of our Advanced Boresighting Equipment (ABE). During the quarter, we
received a $ .7 million order from EADS Deutschland in support of the
Eurofighter 2000 aircraft, further expanding our involvement with this key
platform. We also successfully completed compatibility tests and delivery to BAE
Systems of our ABE systems valued at $1.5 million for the NIMROD aircraft in the
United Kingdom, and provided the requisite maintenance training.
"ACL Technologies, our hydraulic, fuel and pneumatic testing business, is making
steady progress on its F-16 Maintenance Depot contract in Egypt, now valued at
$49.6 million with $1.2 million in backlog. This program has continued to grow
in scope and is expected to remain a key contributor to this business in the
future. We also received an order from Naval Air Warfare Center-Lakehurst for
five additional pump housing module test stands, under a $1.2 million contract.
"Results in our Engineering Support Inc. (ESI) operations continue to be driven
by our flagship C-17 Maintenance Training program. During the quarter, we
received $18.2 million in new bookings to support the upgrade of three suites of
trainers for the Mississippi Air National Guard, including systems engineering
3
and program management. This program is now valued in excess of $226 million
with a backlog of $52.6 million and continues to provide United Industrial with
exciting opportunities.
"Detroit Stoker, our energy systems subsidiary, achieved strong results in both
its Renewal and Generic Parts businesses, including significant orders from
customers in British Columbia and Florida. Contract orders for engineered
upgrades also continued at a solid pace, reflecting customers' ongoing interest
in improving operating efficiencies and lowering plant operating costs through
Detroit Stoker's innovative and value-added equipment. Global market
fundamentals for Detroit Stoker's biomass combustion systems remain positive
based on further international directives to produce `green electricity' from
renewable fuels," Mr. Erkeneff concluded.
USE OF NON-GAAP MEASURES
In addition to disclosing financial results that are determined in accordance
with generally accepted accounting principles (GAAP), Management believes that
providing Pro forma Earnings from Continuing Operations, a NON-GAAP MEASURE, is
meaningful to investors because it provides insight with respect to ongoing
operating results of the Company. Special items included in the Pro forma
results represent significant charges or credits that are important to
understanding the Company's ongoing operations. The Company also discloses
EBITDAP (earnings before interest, taxes, depreciation, amortization, and
pension results), which is likewise a NON-GAAP MEASURE. Management believes that
providing this additional information is useful to understanding the Company's
ability to meet capital expenditures and working capital requirements and to
better assess and understand operating performance. Such measurements are not
recognized in accordance with GAAP and United Industrial Corporation does not
intend for this information to be considered in isolation or as a substitute for
GAAP measures.
The Company will hold a conference call today, May 14, 2003 at 10:00 A.M. (ET)
to discuss its financial results for the first quarter of 2003. A live webcast
of the call will be accessible for all interested parties on the Company's
website, www.unitedindustrial.com, in the Investor Relations section, or on
www.vcall.com. Following the call, the webcast will be archived for a period of
two weeks and available at www.unitedindustrial.com, or at www.vcall.com.
UNITED INDUSTRIAL CORPORATION is a company focused on the design and production
of defense systems. Its products and services include unmanned aerial vehicles,
test and simulation systems, automated aircraft test and maintenance equipment
and logistical/engineering services. The Company also 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, and Quarterly Report on Form
10-Q as filed with the Securities and Exchange Commission.
For more information, please visit United Industrial's web site at
http://www.unitedindustrial.com.
-------------------------------
# # #
4
United Industrial Corporation and Subsidiaries
FINANCIAL HIGHLIGHTS:
Three Months Ended
December 31
-----------
(unaudited)
2003 2002
---- ----
Net Sales From
Continuing Operations $ 72,442,000 $ 56,867,000
Income From
Continuing Operations $ 1,638,000(1) $ 1,031,000(2)
Loss From
Discontinued Operations ($ 974,000) ($ 12,260,000)
Net Income (Loss) $ 664,000 ($ 11,229,000)
============= =============
Basic Earnings Per Share:
Income From
Continuing Operations $.13(1) $.08(2)
Loss From
Discontinued Operations ($.08) ($.95)
Net Income (Loss) $.05 ($.87)
Diluted Earnings Per Share:
Income From
Continuing Operations $.12(1) $.08(2)
Loss From
Discontinued Operations ($.07) ($.90)
Net Income (Loss) $.05 ($.82)
Weighted average shares outstanding:
Basic 13,068,000 12,971,000
============= =============
Diluted 13,685,000 13,621,000
============= =============
(1) Includes pension plan expense of $951,000 or $.07 per diluted share
and asbestos related expense of $158,000 or $.01 per diluted share.
(2) Includes a restructuring charge of $1.7 million, or $.12 per diluted
share; pension plan income of $145,000 or $.01 per diluted share;
income from insurance recovery of $176,000 or $.01 per diluted share.
5
United Industrial Corporation and Subsidiaries
Segment Data
(Dollars in thousands)
Three Months Ended
March 31,
---------------------------------------
2003 2002
------------------- ------------------
(unaudited)
NET SALES:
Defense $65,475 $49,241
Energy 6,967 7,626
Total $72,442 $56,867
SEGMENT PROFIT (LOSS)
Defense $2,190 $3,630
Energy 751 (1,880)
Other (428) (162)
Total $2,513 $1,588
(Expenses) income included in Segment profit above:
Defense
Pension (expense) income ($1,595) $125
Insurance recovery 271
Energy
Restructuring costs (2,669)
Asbestos related expense 242
Pension income 136 99
6
United Industrial Corporation and Subsidiaries
Calculation of EBITDAP
(Dollars in thousands)
Three Months Ended
March 31,
-----------------------------------------------
2003 2002
---------------------- ----------------------
(unaudited)
Earnings from continuing operations
before income taxes $2,513 $1,588
Net interest expense 16 285
Depreciation and amortization 1,277 3,662
Non-cash pension expense (income) 1,459 (224)
EBITDAP (non-GAAP measure) $5,265 $5,311
EBITDAP is defined as earnings before interest, taxes, depreciation,
amortization and pension results
7
United Industrial Corporation and Subsidiaries
Reconciliation for GAAP to Pro Forma Earnings
Before Income Taxes for Continuing Operations
(Dollars in thousands)
Three Months Ended
March 31,
-----------------------------------------------
2003 2002
---------------------- ----------------------
(unaudited)
GAAP earnings from continuing operations
before income taxes $2,513 $1,588
Plus:Asbestos related expense 242
Plus:Restructuring charge 2,669
Plus:Pension expense 1,459
Less:Pension income (224)
Less:Income from insurance recovery (271)
Pro forma earnings from continuing operations
before income taxes (non-GAAP measure) $4,214 $3,762
GAAP AND PRO FORMA RESULTS
THE FOLLOWING TABLE PROVIDES A RECONCILIATION OF UIC'S GAAP TO PRO FORMA
EARNINGS PER DILUTED SHARE FOR CONTINUING OPERATIONS
Three Months Ended
March 31,
-----------------------------------------------
2003 2002
---------------------- ----------------------
(unaudited)
GAAP earnings per diluted share from
continuing operations $0.12 $0.08
Plus:Asbestos related expense 0.01
Plus:Restructuring charge 0.12
Plus:Pension expense 0.07
Less:Pension income (0.01)
Less:Income from insurance recovery (0.01)
Pro forma earnings per diluted share from
continuing operations (non-GAAP measure) $0.20 $0.18
8