SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
--- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File # 1-4252
UIC 401(K) RETIREMENT SAVINGS PLAN
(Full title of the plan)
UNITED INDUSTRIAL CORPORATION
(Name of the issuer of the securities held pursuant to the plan)
United Industrial Corporation
570 Lexington Avenue
New York, New York 10022
(Address of principal executive office)
REQUIRED INFORMATION
Item 4.
- -------
The financial statements and schedules of the UIC 401(k)
Retirement Savings Plan for the year ended December 31, 2002 (attached).
Exhibits
- --------
23.1 Consent of Ernst & Young LLP
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
UIC 401(k) Retirement Savings Plan
Audited Financial Statements and Supplemental Schedule
Year ended December 31, 2002
CONTENTS
Report of Independent Auditors................................................1
Audited Financial Statements
Statements of Net Assets Available for Benefits...............................2
Statement of Changes in Net Assets Available for Benefits.....................3
Notes to Financial Statements.................................................4
Schedule
Schedule H, Line 4i--Schedule of Assets (Held At End of Year)................10
Report of Independent Auditors
Administrative Committee
UIC 401(k) Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits
of the UIC 401(k) Retirement Savings Plan as of December 31, 2002 and 2001, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2002. These financial statements are the responsibility
of the Plan'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 net assets available for benefits of the Plan at
December 31, 2002 and 2001 and the changes in its net assets available for
benefits for the year ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2002 is presented for the purpose of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Harrisburg, Pennsylvania
June 16, 2003
1
UIC 401(k) Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2002 2001
--------------------------------
ASSETS
Investments $ 89,164,391 $ 94,629,620
Employer contribution receivable 146,389 156,776
Due from broker - 51,057
--------------------------------
Net assets available for benefits $ 89,310,780 $ 94,837,453
================================
See accompanying notes.
2
UIC 401(k) Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 2002
ADDITIONS
Investment income (loss):
Net realized and unrealized depreciation in aggregate fair
value of investments $(14,555,904)
Interest and dividends 1,820,251
---------------
(12,735,653)
Contributions:
Employee 7,651,066
Employer 3,903,647
Rollovers 484,053
---------------
12,038,766
---------------
Total additions, net (696,887)
DEDUCTIONS
Benefit payments 4,829,786
---------------
Net decrease (5,526,673)
Net assets available for benefits at beginning of year 94,837,453
---------------
Net assets available for benefits at end of year $ 89,310,780
===============
See accompanying notes.
3
UIC 401(k) Retirement Savings Plan
Notes to Financial Statements
December 31, 2002
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the UIC 401(k) Retirement Savings Plan (the Plan)
have been prepared on the accrual basis of accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in mutual funds are reported at current redemption value.
Investments in common stocks, including the United Industrial Corporation Common
Stock (UIC Stock Fund), are reported at fair value, based on published market
prices. United States Government securities traded on a national securities
exchange are valued at the last reported sales price on the last business day of
the plan year; listed securities for which no sale was reported on that date are
valued at the average of the last reported bid and ask prices. Participant loans
represent the outstanding principal balances of the loans and are valued at
cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
The UIC Stock Fund (the Fund) is tracked on a unitized basis. The Fund consists
of UIC common stock and funds held in the Fidelity Cash Reserves Fund sufficient
to meet the Fund's daily cash needs. Unitizing the Fund allows for daily trades.
The value of a unit reflects the combined market value of UIC common stock and
the cash investments held by the Fund. At December 31, 2002, 126,252 units were
outstanding with a value of $17.73 per unit (78,361 units were outstanding with
a value of $18.48 per unit at December 31, 2001).
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
that affect amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
4
UIC 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN
GENERAL
The Plan is a defined contribution plan. The purpose of the Plan is to encourage
employees to save regularly and to provide additional funds upon retirement.
United Industrial Corporation (the Company or Employer) is the named fiduciary,
which controls and manages the operations of the Plan and acts as Administrator.
The Plan is subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA).
Additional information about the Plan and the vesting and benefit provisions is
contained in the Plan Document. Copies are available from the Company's Human
Resources department.
ELIGIBILITY
Full-time employees are eligible to participate in the Plan at anytime,
following attainment of age 18. Part-time employees who have attained the age of
18 are eligible to participate in the Plan upon completion of 1,000 hours of
service during their first 12 months of employment. If 1,000 hours of service
are not completed during the first 12 months of employment, a part-time employee
may participate when they have completed 1,000 hours of service during a Plan
year.
CONTRIBUTIONS
Effective August 1, 2002, participating employees contribute to the Plan through
payroll deductions in amounts of at least 1% and no more than 17% of their
earnings, up to the annual Internal Revenue Service (IRS) limit. Prior to August
1, 2002, participating employees contributed to the Plan a minimum of 2% of
earnings up to the annual IRS limit. Contributions to the Plan are invested in
accordance with the participants' elections. All employee contributions to the
Plan are immediately vested.
Effective January 1, 2001, Employer matching contributions are based on the
participants' years of service, and range between 3% and 8% of employee
compensation. Prior to January 1, 2001, Employer matching contributions were
equal to the lesser of 50% of the employees' contributions or 4% of employee
compensation.
5
UIC 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
CONTRIBUTIONS (CONTINUED)
Effective January 1, 2001, participants are immediately 100% vested in employer
contributions. Prior to January 1, 2001, Employer contributions were vested
after five years of service. In 2002, certain participants' Employer
matching contributions are 50% of the employees' contributions up to 6% of
compensation. Additionally, these same participants who have at least one hour
of service during the year are eligible for an Employer contribution equal to 3%
of compensation plus 3% of compensation in excess of the Social Security taxable
wage base, as defined. This latter contribution amounted to approximately
$161,000 in 2002, of which approximately $146,000 is receivable at December 31,
2002.
Employer contributions for certain participants continue to vest according to a
five-year vesting schedule.
Upon enrollment, a participant may direct employee and employer contributions in
1% increments to any of the Plan's 14 investment fund options, one of which is a
self-directed brokerage account. Two investments options, the Templeton Foreign
A Fund and the Invesco Total Return Fund are frozen for any further
contributions. Generally, participants may change their investment options at
any time.
PAYMENT OF BENEFITS
Upon termination of service or attainment of 59 1/2 years of age, any
participant may elect to receive a lump-sum distribution equal to his or her
vested account balance. Participants may also receive hardship withdrawals,
subject to certain restrictions as defined in the Plan Document.
PARTICIPANT LOANS
Participants may borrow from their plan accounts up to 50% of their vested
account balance subject to a minimum of $1,000 and a maximum of $50,000. The
loans are secured by the balance in the participant's account and bear interest
at a rate determined by the Company. Principal and interest is paid ratably
through payroll deductions and must be repaid over a period not to exceed 60
months, except in the case of loans incurred for the purchase of a primary
residence where the term may be up to 15 years.
6
UIC 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
PARTICIPANT ACCOUNTS
Each participant account is credited with the participant's contributions and an
allocation of (a) the Employer's contributions and (b) investment income or
loss. Allocations are based on account balances. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
ADMINISTRATIVE EXPENSES
Administrative expenses associated with the Plan, including the amount paid to
Fidelity Management Trust Company for acting as trustee of the investments of
the Plan, were paid by the Company in 2002.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
3. INVESTMENTS
During 2002, the Plans' investments (including investments bought, sold, and
held during the year) depreciated in aggregate fair value as determined by
quoted market prices as follows:
Mutual funds $(14,322,781)
United Industrial Corporation common stock fund (86,117)
Other common stocks (147,006)
----------------
$(14,555,904)
================
7
UIC 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Investments that represent 5% or more of fair value of the Plans' net assets are
as follows:
2002 2001
-----------------------------
Fidelity Magellan Fund $ 27,138,513 $ 35,507,950
Fidelity Managed Income Portfolio 19,780,448 17,477,649
Fidelity Growth & Income Fund 12,121,861 14,100,271
Fidelity Contrafund 9,899,159 10,462,074
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated October 2, 2002, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the Code) and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
5. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
DECEMBER 31
2002 2001
----------------------------
Net assets available for benefits per the financial
statements $ 89,310,780 $ 94,837,453
Amounts allocated to withdrawn participants (260) -
----------------------------
Net assets available for benefits per the Form 5500 $ 89,310,520 $ 94,837,453
============================
8
UIC 401(k) Retirement Savings Plan
Notes to Financial Statements (continued)
5. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500 (CONTINUED)
The following is a reconciliation of the benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 2002:
Benefits paid to participants per the financial statements $ 4,829,786
Add: Amounts allocated to withdrawn participants at year end 260
---------------
Benefits paid to participants per the Form 5500 $ 4,830,046
===============
Amounts allocated to withdrawn participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
year-end but not yet paid.
9
UIC 401(k) Retirement Savings Plan
EIN: 95-2081809
Plan # 002
Schedule H, Line 4i--
Schedule of Assets (Held At End of Year)
December 31, 2002
DESCRIPTION OF INVESTMENT,
INCLUDING MATURITY DATE, RATE OF
IDENTITY OF ISSUE, BORROWER, LESSOR, OR SIMILAR PARTY INTEREST, COLLATERAL PAR OR
MATURITY VALUE COST** CURRENT VALUE
- ------------------------------------------------------- ---------------------------------- ----------------- -----------------
Mutual Funds
*Fidelity Magellan Fund 343,700 shares $ 27,138,513
*Fidelity Managed Income Portfolio 19,780,448 shares 19,780,448
*Fidelity Retirement Government Money Market Fund 3,065,995 shares 3,065,995
*Fidelity Growth & Income Fund 399,929 shares 12,121,861
*Fidelity Contrafund 256,455 shares 9,899,159
*Fidelity Investment Grade Bond Fund 417,392 shares 3,159,655
*Fidelity Diversified International Fund 40,293 shares 691,434
Alger Mid Cap Growth Fund 96,846 shares 1,015,916
*Fidelity Low Priced Stock Fund 149,415 shares 3,760,767
Invesco Total Return Fund 5,849 shares 122,247
Spartan US Equity Index 56,691 shares 1,765,909
Janus Balanced Fund 49,058 shares 877,160
Janus Mercury Fund 46,788 shares 690,593
Templeton Foreign A Fund 15,069 shares 125,225
------------------
84,214,882
Common Stock
*United Industrial Corporation Common Stock 134,682 shares 2,154,912
Money Market Fund
*Fidelity Cash Reserves Fund 84,203 shares 84,203
Other
Self-directed brokerage accounts 698,541
*Participant loans Interest rates from
6.75% - 11.50%; maturities to
November 2017 2,011,853
------------------
Total $ 89,164,391
==================
* Party- in-interest
**Historical cost has not been presented as all investments are participant
directed
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the 401(k) Committee of the United Industrial Corporation 401(k)
Retirement Savings Plan (the "Plan"), which administers the Plan, has duly
caused this annual report to be signed on its behalf by the undersigned,
hereunto duly authorized, on the 26th day of June, 2003.
By: /s/ James H. Perry
----------------------------
James H. Perry
Committee Member
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
23.1 Consent of Independent Auditors
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer