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 STRONG SECOND QUARTER RESULTS
-------------------------------------------------------
--Second Quarter Net Income from Continuing Operations Increased 149.3%
on Revenue Gain of 31.7%--
New York, NY, August 1, 2003 - United Industrial Corporation (NYSE: UIC) today
announced strong financial results for the second quarter and six-month period
ended June 30, 2003. Revenue and income figures from continuing operations
include the results of the Company's Defense, Energy and Other Segments only.
The results of the Company's remaining transportation operations have been
reported as discontinued operations.
SECOND QUARTER RESULTS
For the second quarter of 2003, the Company's net income from continuing
operations increased 149.3% to $4.2 million, or $0.31 per diluted share, from
$1.7 million, or $0.12 per diluted share, in the second quarter last year. The
second quarter 2003 results include non-cash pension expense of $1.5 million
($975,000, net of tax), or $0.07 per diluted share, and asbestos consulting and
legal fees related to liability and insurance studies conducted for the Company
concerning the Company's asbestos matter of $425,000 ($276,000, net of tax), or
$0.02 per diluted share. The second quarter 2002 results include non-cash
pension expense of $582,000 ($384,000, net of tax), or $0.03 per diluted share.
The increase in pension-related expense is primarily due to the downward trend
in the securities markets and interest rates as of the pension plan's most
recent measurement date of December 31, 2002. Also included in the second
quarter 2002 results was a pre-tax charge of $1.2 million ($800,000 net of tax),
or $0.06 per diluted share, related to the closing of the Company's foundry
operations at its Detroit Stoker subsidiary. Excluding the asbestos related
items in 2003, the pension performance in both years, and the foundry closing
costs in 2002, income from continuing operations nearly doubled in the 2003
second quarter to $8.4 million ($5.5 million, net of tax), or $0.40 per diluted
share, from $4.3 million ($2.8 million, net of tax), or $0.20 per diluted share,
in the second quarter of 2002.
Revenues from continuing operations for the second quarter increased $20.7
million or 31.7% to $86.0 million from $65.3 million in the year-ago quarter.
Frederick Strader, President and Chief Executive Officer, commented, "United
Industrial generated a strong second quarter highlighted by significant revenue
and earnings gains and clear operating achievements. We continue to be
successful in expanding key programs in our core defense business, and our
products are distinguishing themselves with customers, including an exceptional
performance by our unmanned aerial vehicles in Operation Iraqi Freedom.
Profitability for the quarter also benefited from margins on greater sales
volume and on certain key contracts that are now well into their production
phase. With new bookings for the quarter totaling $114.5 million and total
backlog for continuing operations at $257.2 million at quarter-end as well as a
new order for $37.7 million related to our successful C-17 Maintenance Trainer
program awarded after the quarter closed, we are excited about United
Industrial's prospects and are focused on optimizing our potential as a leader
in key niches of the defense marketplace."
In accordance with the planned closure of its discontinued transportation
operations, the Company reported a net loss in the second quarter of 2003 of
$1.3 million, or a loss of $.09 per diluted share, compared to a net loss of
$12.4 million, or a loss of $.90 per diluted share, in the second quarter last
year. The 2002 pretax results include a provision of $12.8 million related to
the sale of the Company's two overhaul contracts with the New Jersey Transit
Corporation and the Maryland Transit Administration, completed on July 26, 2002.
Also included in the 2002 pretax loss was approximately $1.2 million in
estimated costs to complete the Company's remaining transportation contracts,
$800,000 of general and administrative expenses, $2.1 million of other costs
related to the disposal of the conveyed contracts, and a $2.2 million provision
related to 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.
OPERATING HIGHLIGHTS
Mr. Strader continued, "A major driver of the Company's growth continues to be
our industry-leading Unmanned Aerial Vehicle (UAV) business. We have made
excellent progress on our next-generation Tactical UAV (TUAV) program for the
U.S. Army, and the scope and scale of this important program continues to
expand. During the quarter, we achieved new bookings totaling $17.0 million
related to our TUAV program, spanning production, logistics, development,
training and other services. Notably, both our Shadow TUAV and our Pioneer UAV
are being successfully deployed in Operation Iraqi Freedom, providing valuable
surveillance and reconnaissance capabilities and mission support.
"We expect the U.S. military's demand for UAV systems to remain strong, at the
same time, we are actively seeking opportunities to grow our UAV business in
overseas markets. During the quarter, we received new orders totaling $1.5
million from two international customers, and we are encouraged by the solid
interest we are seeing in our product offerings.
"In Simulation and Test Systems, our Joint Services Electronic Combat Systems
Tester program continues to be a major contributor to our performance. As the
standard flight-line electronic warfare test system for all branches of the
military, this system offers tremendous potential for us to expand our presence
supporting a wide range of aircraft across service lines. In fact, during the
quarter, the U.S. Army selected our JSECST system to support Special Operations'
MH-47 and MH-60 helicopters outfitted with the AN/ALQ-211 Suite of Integrated RF
Countermeasures (SIRFC), the first U.S. Army program to use our JSECST systems
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and paving the way for our technology to be used on additional SIRFC-protected
aircraft. We also continue to move ahead on our JSECST work for the U.S. Air
Force and Navy, completing key test requirements and commencing field shipments
under our contract now valued at $125 million.
"ACL Technologies, our hydraulic, fuel and pneumatic testing business,
continues to make solid headway on its program for the new F-16 maintenance
depot for the Egyptian Air Force. During the quarter, we received an additional
contract award for the construction of a Surface Treatment Facility and
Integration at the depot, bringing the total value of this contract to $50.8
million with $1.2 million in backlog and reinforcing ACL's role as a major
player in supplying overhaul and maintenance facilities in support of the F-16
and other aircraft. We also won a new contract from the U.S. Air Force for the
delivery of two portable Coolanol Conditioning Carts to support the radar system
for the B2 aircraft.
"Our engineering and maintenance services business, Engineering Support Inc.,
turned in another good performance this quarter, primarily reflecting the
ongoing success of our flagship C-17 maintenance training system program, now
valued at $237.8 million with $51.8 million in backlog. During the quarter, we
received new bookings of $10.1 million on this contract, covering a variety of
changes and additional services. Other highlights this quarter included a $2.0
million contract award for logistics and field service support of the TUAV
program including deployment in the Middle East, a $484,000 award for continued
support of the Federal Highway Administration's Highway Simulator, and $469,000
in new bookings at ESI's Utah Technical Center, where we provide logistics and
training services. With these bookings, the Utah Technical Center, now in its
third year of operation, did $1.1 million in revenue in the first half of 2003,
up significantly from the first half of last year.
"Detroit Stoker, our energy systems subsidiary, benefited this quarter from
strong sales of renewal parts and a number of significant contract orders. These
include three new stokers for installation in the United States, Australia and
Germany, all of which utilize environmentally friendly fuel sources to generate
power. The German project is the fourth in a succession of recent stokers we
have provided to this market, and is consistent with German policy to promote
renewable energy sources," Mr. Strader concluded.
FIRST HALF RESULTS
For the first six months of 2003, the Company's net income from continuing
operations increased 114.9% to $5.8 million, or $0.43 per diluted share, from
$2.7 million, or $0.20 per diluted share, in the first half of 2002. The 2003
six-month results include non-cash pension expense of $3.0 million ($1.9
million, net of tax), or $0.14 per diluted share, and asbestos related
consulting and legal fees of $667,000 ($434,000, net of tax), or $0.03 per
diluted share. The 2002 six-month results include non-cash pension expense of
$358,000 ($236,000, net of tax), or $0.01 per diluted share. Also included in
the 2002 results were a pre-tax charge of $3.8 million ($2.5 million, net of
tax), or $0.18 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 $0.01 per diluted share. Excluding the
asbestos related items in 2003, the pension performance in both years, and the
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foundry closing costs and insurance recovery in 2002, income from continuing
operations in the first half of 2003 was $12.6 million ($8.2 million, net of
tax), or $0.60 per diluted share, an increase of 56.1% from $8.0 million ($5.3
million, net of tax), or $0.38 per diluted share, in the comparable period of
2002.
Revenues from continuing operations for the 2003 six-month period increased
$36.3 million or 29.7% to $158.5 million from $122.2 million in the first half
of 2002.
The Company's discontinued transportation operations reported a net loss in the
six-month period of 2003 of $2.3 million, or a loss of $0.17 per diluted share,
compared to a loss of $24.7 million, or a loss of $1.80 per diluted share, in
the same period last year. The 2002 pretax results include a provision of $21.5
million related to the above-mentioned sale of the Company's overhaul contracts.
Also included in the 2002 pretax loss was approximately $2.4 million in
estimated costs to complete the Company's remaining transportation contracts,
$1.6 million of general and administrative expenses, $3.6 million of other costs
related to the disposal of the conveyed contracts, and a $8.9 million provision
related to estimated losses on the San Francisco MUNI contract primarily
incurred by Electric Transit, Inc.
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, August 1, 2003, at 10:00 a.m.
(ET) to discuss its financial results for the second 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.streetevents.com. Following the call, the webcast will be archived for
a period of two weeks and available at www.unitedindustrial.com, or at
www.streetevents.com.
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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.
# # #
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FINANCIAL HIGHLIGHTS:
- -----------------------------------------------------------------
(Dollars and Share Amounts in Thousands,Except per Share Amounts)
Three Months Ended Six Months Ended
June 30 June 30
--------------------------------- ---------------------------------
2003 2002 2003 2002
(unaudited)
Net Sales From
Continuing Operations $86,037 $ 65,328 $158,479 $122,195
======== ======== ======== ========
Income From
Continuing Operations $ 4,194 $ 1,683 $ 5,832 $ 2,714
======== ======== ======== ========
Loss From
Discontinued Operations $ (1,286) $(12,430) $ (2,260) $(24,690)
======== ======== ======== ========
Net Income (Loss) $ 2,908 $(10,747) $ 3,572 $(21,976)
======== ======== ======== ========
Basic Earnings per share:
Income From
Continuing Operations $ 0.32 $ 0 .13 $ 0.45 $ 0.21
======== ======== ======== ========
Loss From
Discontinued Operations $ (0.10) $ (0.96) $ (0.17) $ (1.90)
======== ======== ======== ========
Net Income (Loss) $ 0.22 $ (0.83) $ 0.27 $ (1.69)
======== ======== ======== ========
Diluted Earnings per share:
Income From
Continuing Operations $ 0.31 $ 0.12 $ 0.43 $ 0.20
======== ======== ======== ========
Loss From
Discontinued Operations $ (0.09) $ (0.90) $ (0.17) $ (1.80)
======== ======== ======== ========
Net Income (Loss) $ 0.21 $ (0.78) $ 0.26 $ (1.60)
======== ======== ======== ========
Weighted average shares outstanding:
Basic 13,140 13,025 13,104 12,998
======== ======== ======== ========
Diluted 13,677 13,830 13,681 13,726
======== ======== ======== ========
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United Industrial Corporation and Subsidiaries
Consolidated Condensed Balance Sheet
(Dollars in Thousands)
JUNE 30 DECEMBER 31
2003 2002
---- ----
(UNAUDITED)
ASSETS
Current Assets
Cash and cash equivalents $ 5,384 $ 3,635
Trade receivables 35,324 37,688
Inventories 33,571 20,951
Federal income taxes receivable - 15,509
Assets of discontinued operations 19,865 14,042
Other current assets 7,454 5,879
---------- ----------
Total current assets 101,598 97,704
Insurance receivable - asbestos litigation 20,343 20,343
Property & equipment - net 21,817 21,196
Other non-current assets 19,041 18,952
---------- ----------
Total assets $ 162,799 $ 158,195
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities of discontinued operations $ 8,191 $ 11,513
Other current liabilities 38,886 35,697
Other long-term liabilities 23,072 23,226
Minimum pension liability 11,234 8,276
Reserve for asbestos litigation 31,767 31,852
---------- ----------
Total Liabilities 113,150 110,564
Shareholders' equity 49,649 47,631
---------- ----------
$ 162,799 $ 158,195
========== ==========
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United Industrial Corporation and Subsidiaries
SEGMENT DATA
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30 June 30
------------------------------ ------------------------------
2003 2002 2003 2002
---- ---- ---- ----
(unaudited) (unaudited)
Net Sales:
Defense $78,415 $57,788 $143,890 $107,029
Energy 7,622 7,540 14,589 15,166
Total $86,037 $65,328 $158,479 $122,195
Segment profit (loss)
Defense $6,117 $2,777 $8,307 $6,407
Energy 805 87 1,556 (1,793)
Other (436) (351) (864) (513)
Total $6,486 $2,513 $8,999 $4,101
(Expenses) income included in Segment profit above:
Defense
Pension expense ($1,635) ($1,325) ($3,230) ($1,200)
Insurance recovery - - - $ 271
Energy
Restructuring costs - ($1,172) - ($3,841)
Asbestos related expense ($425) - ($667) -
Pension income $135 $743 $271 $842
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
GAAP AND PRO FORMA RESULTS
THE FOLLOWING TABLE PROVIDES A RECONCILIATION OF UIC'S GAAP TO PRO FORMA
EARNINGS PER DILUTED SHARE FROM CONTINUING OPERATIONS
(Dollars in Thousands)
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- -----------------------------
2003 2002 2003 2002
---- ---- ---- ----
(unaudited) (unaudited)
GAAP earnings from continuing operations
before income taxes $6,486 $2,513 $8,999 $4,101
Plus: Asbestos related expense 425 - 667 -
Plus: Restructuring charge - 1,172 - 3,841
Plus: Pension expense 1,635 1,325 3,230 1,200
Less: Pension income (135) (743) (271) (842)
Less: Income from insurance recovery - - - (271)
Pro forma earnings from continuing operations
before income taxes (non-GAAP measure) $8,411 $4,267 $12,625 $8,029
UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
GAAP AND PRO FORMA RESULTS
THE FOLLOWING TABLE PROVIDES A RECONCILIATION OF UIC'S GAAP TO PRO FORMA
EARNINGS PER DILUTED SHARE FROM CONTINUING OPERATIONS
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- -----------------------------
2003 2002 2003 2002
---- ---- ---- ----
(unaudited) (unaudited)
GAAP earnings per diluted share from
continuing operations $0.31 $0.12 $0.43 $0.20
Plus: Asbestos related expense 0.02 - 0.03 -
Plus: Restructuring charge - 0.06 - 0.18
Plus: Pension expense 0.08 0.06 0.15 0.06
Less: Pension income (0.01) (0.03) (0.01) (0.05)
Less: Income from insurance recovery - - - (0.01)
Pro forma earnings per diluted share from
continuing operations (non-GAAP measure) $0.40 $0.21 $0.60 $0.38
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United Industrial Corporation and Subsidiaries
Reconciliation of Net Cash from Operating Activities from
Continuing Operation to EBITDAP from Continuing Operations
(Dollars in Thousands)
Six Months Ended
June 30
2003 2002
---- ----
(unaudited)
Net cash provided by operating
activities from continuing operations $ 17,826 $ 909
Equity in income of investee company 9 57
Other cash flow changes related to
operating activities 10,369 8,547
Continuing operations tax refund,
resulting from discontinued operations
losses (16,822) -
Income taxes 3,167 1,387
Interest income, net (16) 377
Restructuring charge - (421)
--------- ---------
EBITDAP from continuing operations (non-GAAP measure) $ 14,533 $ 10,856
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