SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Fee Required) For the fiscal year ended
December 31, 1994
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required) For the transition period from
___________ to ___________
Commission file number: 1-4252
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UNITED INDUSTRIAL CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 95-2081809
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(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) No.)
18 East 48th Street, New York, N.Y. 10017
(212) 752-8787
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(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days. Yes [x] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statement incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [x].
Aggregate market value of the voting stock (which consists solely of shares
of Common Stock) held by non-affiliates of the registrant as of March 1,
1995, computed by reference to the closing sale price of the registrant's
Common Stock on the New York Stock Exchange on such date: $52,364,460.
Number of shares of the registrant's Common Stock outstanding
as of March 1, 1995: 12,167,493.
DOCUMENTS INCORPORATED BY REFERENCE:
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1. Certain portions of the registrant's Annual Report to Shareholders for
the fiscal year ended December 31, 1994 are incorporated by reference into
Parts I and II of this report.
2. Certain portions of the registrant's definitive Proxy Statement to be
filed pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, in connection with the Annual Meeting of Stockholders of the
registrant to be held on May 8, 1995 are incorporated by reference into
Part III of this report.
PART I
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ITEM 1. BUSINESS
United Industrial Corporation ("United" or the "Company") was
incorporated under the laws of the State of Delaware on September 14,
1959 under the name Topp Industries Corporation. On December 31,
1959, the name of the corporation was changed to United Industrial
Corporation.
The operations of United consist of three principal industry segments:
defense, energy systems and plastic products, conducted through four
wholly-owned subsidiaries.
Defense
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AAI Corporation
AAI Corporation ("AAI") is engaged in research, development and
manufacture in the following major areas: (1) training and simulation
systems; (2) automatic test equipment for electronic systems and
components; (3) ordnance systems; (4) mechanical support systems for
industrial, military, and marine applications; (5) unmanned air
vehicle systems; (6) automated weather monitoring systems; and (7)
transportation systems. Since its inception, AAI's business has been
primarily in support of the U.S. Department of Defense ("DOD"). Since
1990, the Company has emphasized diversification into other markets to
reduce its dependence on the DOD. The United States defense budget
has been significantly reduced in recent years and this trend is
expected to continue. While 1993 sales were similar to 1992, the 1994
sales decreased $46 million from 1993, primarily in DOD. In 1994
approximately 74% of the sales volume of AAI consisted of research,
development and production of military items under defense contracts.
Certain of the contracts currently being worked on by AAI involve
testing systems for U.S. Navy aircraft, training equipment for the
U.S. Air Force and U.S. Navy, and weapons handling systems for the
U.S. Army.
The balance of AAI's business consists of work performed in the non-
Department of Defense markets. These areas include hydraulic test
equipment, transportation equipment and weather systems. AAI was
awarded a contract for 1,096 weather systems to be installed in
certain government airports throughout the country. In 1994, 145
weather systems were installed bringing total systems installed since
inception of the contract to 530.
Because of the variety of its activities, it is not possible to state
precisely the competitive position of AAI with respect to each of its
product lines. In the area of training and simulation systems, AAI is
one of approximately ten leading organizations developing equipment
for the U.S. Government. AAI's ability to obtain orders for training
and simulation systems is dependent principally on the ability,
expertise and training of its employees and the level of funding by
the DOD and foreign military users. A number of large and small
companies produce automatic test equipment. In the area of weapons and
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munitions, AAI ranks high among approximately ten companies
engaged in development work. However, AAI's production activity in
this field is less significant. AAI began working in the Unmanned Air
Vehicle business in 1986. The Company produced the highly successful
Pioneer Unmanned Air Vehicle employed by the United States during
Operation Desert Storm, and presently is pursuing contracts with
foreign countries. AAI is one of several large and small competitors
in this field.
On January 16, 1992, AAI acquired, through a newly-formed subsidiary
AAI/ACL Technologies, Inc. ("AAI/ACL"), substantially all of the
assets and business of ACL Technologies, Inc., a manufacturer of
hydraulic test equipment principally for the commercial airline
market. Business results of AAI/ACL have been less than anticipated
because of the continued unfavorable economic situation of the
commercial airline industry in the U.S. and worldwide.
On March 29, 1993, the Company's Board of Directors approved a plan of
reorganization and restructuring whereby, in light of existing
circumstances such as the declining Department of Defense budget and
the continuing financial problems of the airline industry and in order
to position itself for both short and long-term growth, it took a one-
time restructuring charge. The charge covered the anticipated cost of
organizational and product-line changes, the consolidation of
facilities, and work force reductions of approximately 300
in AAI and its four subsidiaries. The non-recurring charge of $22.5
million ($14,370,00 or $1.17 per share, net of tax benefit) was taken
during 1993. As at December 31, 1993, the restructuring program was
substantially completed. During 1994, $750,000 was expended. A major
portion of the charge resulted from the discontinuance of operations
of AAI/MICROFLITE. AAI/MICROFLITE, acquired in 1991, was formerly the
commercial division of Singer-Link Corporation, a manufacturer of
flight simulators and training devices for commercial aircraft. All
of the remaining assets of AAI/MICROFLITE were sold in 1994.
AAI's administrative offices and the major part of its manufacturing
and engineering facilities are located in Hunt Valley, Maryland.
Symtron Systems, Inc.
On January 18, 1994, the Company acquired all of the outstanding
shares of Symtron Systems, Inc. ("Symtron"), a producer of fire
fighter training simulators for the government, military and
commercial markets. The purchase price consisted of initial cash
payments of $2,000,000, assumption of certain liabilities of
approximately $5,900,000 and contingent payments, not to exceed
$1,000,000, based on the net worth at specified dates and future
profits on contracts existing at the acquisition date. The maximum of
such payments were earned and payable to the sellers at March 31,
1995. Additionally, contingent amounts are payable if certain pretax
profits, as defined in the purchase agreement, are earned for each of
the years in the five year period ending December 31, 1998. Funds
generated from operations and an existing line of credit were utilized
to finance the purchase of Symtron.
The acquisition was accounted for as a purchase, and accordingly,
the operations of Symtron are included in the Company's 1994 financial
statements. In 1994 approximately 71% of the sales volume of Symtron
consisted of production for commercial customers. The main office and
plant of Symtron are located in Fair Lawn, New Jersey.
Energy Systems
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Detroit Stoker Company
Detroit Stoker Company ("Detroit Stoker") is engaged in the
manufacture and sale of industrial stokers, combustion systems,
pneumatic and hydraulic conveying systems, waste to energy incinerator
equipment, rotary seal feeders, shredders, grapples, and replacement
parts. Its products are used for industrial power and municipal power
plants, utility plants, heating of hospitals, universities and other
types of public buildings and municipal and industrial incineration
plants. Principal customers include public utilities, manufacturing
and industrial plants, universities, pulp and paper mills and sugar
mills. Its waste to energy equipment is used extensively for public
and private plants burning municipal solid waste as fuel. The primary
raw materials used by Detroit Stoker are iron and steel, which are
available from many sources. The main office and plant of Detroit
Stoker are located in Monroe, Michigan.
The products of Detroit Stoker compete with those of several other
manufacturers. Detroit Stoker is presently marketing a liquid and
gaseous fuel burning product line with low emissions for the power
industry, primarily for boiler applications. Potential customers
would consist of original boiler manufacturers and institutions as
well as all major industrial manufacturers. Competition is based upon
many factors including price, service and performance and competitive
bidding.
Its Material Handling division is engaged in the manufacture and sale
of mechanical conveyors and miscellaneous auxiliary equipment. Its
conveyor products are used by industrial, utility and processing
plants to mechanically convey bulk materials. The primary raw
materials used are iron and steel, which are available from many
sources. This division competes with several other manufacturers of
similar equipment.
Midwest Metallurgical Laboratory, Inc. ("Midwest"), a subsidiary of
Detroit Stoker, is a foundry engaged in the manufacture of grey and
ductile iron, stainless steel and special alloyed iron castings.
Approximately 85% of the sales of Midwest are to Detroit Stoker.
Midwest's plant is located in Marshall, Michigan.
Plastic Products
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Neo Products Co.
Neo Products Co. ("Neo") engineers and fabricates thermoplastic
products to the specifications submitted by its customers. Neo also
manufactures items for point of purchase display advertising and
consumer products related primarily to infants, food service equipment
for a major airline and fuel tank reservoirs for the auto industry.
Sales to customers of items for point of purchase display advertising
represented approximately 28% of sales in 1994. These sales
principally consisted of display racks and trays. Sales of consumer
end use items represented 57% of sales in 1994. These sales primarily
included infant seats, carrier cradles, chairs and waste baskets.
Sales to the auto industry represented approximately 11% of sales in
1994. The largest customer of Neo accounted for approximately 39% of
sales in 1994 compared to 32% and 19% in 1993 and 1992, respectively.
Neo's main office and plant are located in Chicago, Illinois.
Neo is engaged in the highly competitive field of thermoplastic
fabrication. Neo's operations are in potential and actual competition
with fabrication facilities of some of its own customers as well as
other thermoplastic fabricators. Neo has improved its competitive
position by increasing the size of its larger injection molding
presses to accommodate larger size molded parts. Although it is not
possible to estimate the position of Neo among competitors in this
field, it is believed to hold less than 1% market share. The primary
raw material used by Neo is plastic resin, which is available from
many sources.
For additional information concerning United's subsidiaries reference
is made to information set forth in the sections entitled "AAI
Corporation", "Symtron Systems, Inc.", "Detroit Stoker Company" and
"Neo Products Company" commencing on page 5, of United's 1994 Annual
Report to Shareholders (the "Annual Report"), which sections are
incorporated herein by reference.
General
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Employees
As of March 1, 1995 United and its subsidiaries had approximately
1,900 employees. Approximately 220 of these employees are represented
by several unions under contracts expiring between March 1996 and
January 1998. United considers its employee relationships to be
satisfactory.
Patents
United and its subsidiaries own more than 100 United States patents
relating to various products, including stokers, marine equipment,
ordnance and electronic equipment, and fire
fighter trainers. In addition, United has numerous pending applications
for patents. There is no assurance as to how many patents will be issued
pursuant to these pending applications. The applications relate to a wide
variety of fields, including automation control systems, ordnance devices,
and electronic developments. No patent is considered to be of material
importance to United.
Research and Development
During 1994, 1993 and 1992, the subsidiaries of United (exclusive of
AAI) expended approximately $ 98,031, $126,300 and $90,400,
respectively, on the development of new products and the improvement
of existing products. All of the programs and the funds to support
such programs are sponsored by the subsidiary involved. In addition
to the above amount, AAI is substantially engaged in research and
development for the U.S. Government.
Backlog
The backlog of orders by industry segment at December 31, 1993 and
1994 was as follows:
1993 1994
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Defense $204,225,000 $211,751,000
Energy Systems 2,711,000 4,627,000
Plastic Products 1,331,000 1,281,000
The increase in the backlog for the defense segment was primarily due
to increased orders in the non-defense markets. The increase in
backlog for energy systems was due to the increased level of new
contracts being awarded. Except for approximately $90,951,000 of
research and development backlog, substantially all of the backlog
orders at December 31, 1994 are expected to be filled in 1995.
Government Contracts
No single customer other than the U.S. Government, principally the
Department of Defense, accounted for 10% or more of net sales during
the year. Sales to the Government normally carry a lesser margin of
profit than commercial sales and may be subject to price
redetermination under certain circumstances. Contracts for such sales
can be terminated for the convenience of the Government.
Financial Information Relating to Industry Segments
For financial information with respect to industry segments of United,
reference is made to the information set forth in Note 12 of the Notes
to Financial Statements included in Item 8 of this Report, which Note
is incorporated herein by reference.
Foreign Operations and Export Sales
United and its subsidiaries have no significant foreign operations.
During 1993 export sales by United and its subsidiaries amounted to
approximately $31,258,000. Export sales in 1994 and 1992 amounted
to less than 10% of net sales for these years.
ITEM 2. PROPERTIES
United maintains executive and administrative offices at leased
premises at 18 East 48th Street, New York, N.Y., which lease expires
in December 1996. The following is a tabulation of the principal
properties owned or leased by United's subsidiaries as at March 1,
1995.
Approximate
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Principal Area Owned
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Location Use In Square Feet or Leased
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1510 East First Machine 194,910 Owned in fee
Street shop, steel floor space
Monroe, MI fabrication, on 14.4
engineering acres of
and sales land (East
facilities Building)
of Detroit
Stoker
1426 East First Assembly, 101,000 Owned in fee
St. shipping and floor space
Monroe, MI administrative on 2.2
facilities acres of
of Detroit land (West
Stoker Building)
15290 Fifteen Foundry, 59,386 Owned in fee
Mile Road Midwest floor space
Marshall, MI Metallurgical on 28.4
acres of
land
Industry Lane Manufacturing, 770,918 Owned in fee
Cockeysville, MD engineering floor space
and on 92 acres
administrative of land
facilities
of AAI
Approximate
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Principal Area Owned
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Location Use In Square Feet or Leased
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Gilroy Road Additional 66,400 Leased to
Hunt Valley, MD manufacturing (Building 200) April 22,
and 1999
engineering
facilities
of AAI
1701 Pollitt Administrative, 60,000 Leased to
Drive engineering June 30,
Fair Lawn, NJ and 2001
manufacturing
facilities
of Symtrom
1505 E. Warner Manufacturing, 145,000 Leased to
Avenue engineering Jan. 31,
Santa Ana, CA and 1997
administrative
facilities
of ACL
Technologies
2801 Manufacturing, 71,142 Leased to
Professional engineering July 31,
Parkway and 1996
Ocoee, FL administrative
facilities
of AAI
1035 Semoran Sales office 400 Leased to
Blvd. for Feb. 28,
Winter Park, FL Symtron 1997
5400 S. Kilbourn Manufacturing 45,000 Owned in fee
Avenue and
Chicago, IL administrative
facilities
of Neo
For information with respect to obligations for lease rentals, see
Note 8 of the Notes to Financial Statements in the Annual Report,
which Note is incorporated herein by reference. United considers
its properties to be suitable and adequate for its present needs.
The properties are being fully utilized.
ITEM 3. LEGAL PROCEEDINGS
On December 27, 1989, the Company was named in an administrative order
filed by the Arizona Attorney General's Office seeking the Company's
response to alleged environmental
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contamination at property located on West Osborn Street in Phoenix,
Arizona (the "West Osborn property"), that the State alleges formerly was
owned by the Company. The Arizona Attorney General's Office and the
Arizona Department of Environmental Quality have contended that
contamination from the West Osborn property, as well as other properties
nearby, has contributed to a groundwater contamination. In 1990, the
Company challenged the administrative order and it was withdrawn.
Subsequently, the Arizona Attorney General's Office and the Arizona
Department of Environmental Quality named the Company and several other
parties on a draft consent order holding the Company and the parties
jointly and severally liable for the costs of investigating alleged
environment contamination at the West Osborn property and for the payment
of certain additional past and future investigative costs. During 1991,
the Company negotiated with Arizona officials over the scope of the
consent decree, although the Company does not presently believe nor has it
conceded to the State or to any other party that it bears any
liability for the costs of responding to any contamination at the West
Osborn property. These negotiations were not producing results and
thus were terminated. The draft consent order seeks work and payments
totalling approximately $1 to $2 million from all of the allegedly
involved parties. On May 18, 1993, the State of Arizona filed suit
against the Company in the U.S. District Court of Arizona seeking the
recovery of investigative costs, injunctive relief to require the
Company to perform a Remedial Investigation and Feasibility Study, and
ultimately to require the remediation of alleged soil and ground-water
contamination. The State has since brought in co-defendants whose
operations at the site were substantially larger than those of the
Company. This case is the subject of active discovery by the Company.
The Company intends to vigorously contest these actions and believes
that the resolution of these actions will not be material to the
Company.
On February 11, 1992 a complaint was filed against the Company and ten
other named and ten unnamed entities in the Maricopa County Superior
Court of Arizona by seven individuals seeking to represent a class. A
class in excess of 10,000 was originally alleged. The plaintiffs have
amended their complaint to separate the larger property damage and
medical monitoring classes into smaller subclasses based on geographic
location and alleged exposure to solvents. In the process of
amendment, the overall sizes of the respective classes have been
significantly reduced. This suit alleges that the members of the
class have been exposed to contaminated groundwater in the
Phoenix/Scottsdale, Arizona area and suffer increased risk of disease
and other physical effects. They also assert property damages under
various theories; seek to have certain scientific studies performed
concerning health risks, preventative measures and long-term effects;
and seek incidental and consequential damages, punitive damages and an
injunction against actions causing further exposures. The property
and medical classes recently were certified. The Company has joined
with the other defendants and appealed the class certification issue
to the Arizona Supreme Court. The Company intends to vigorously
contest these actions and believes that the resolution of these
actions will not be material to the Company.
Three additional lawsuits were filed on April 7, 1993, December 20,
1993, and June 10, 1994 in the Maricopa County Superior Court of
Arizona. These matters allege personal
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injury and wrongful death by multiple plaintiffs arising from the
alleged contamination in the Phoenix/Scottsdale, Arizona area.
The Company intends to aggressively defend against these claims,
however, at this time, no estimate can be made as to the amount or
range of potential loss, if any, to the Company with respect to these
matters. In comparison to the other defendants, the operations of
the Company were very limited in time and size.
In January 1993, Detroit Stoker was named as a third-party defendant
in four lawsuits pending in the United States District Court for the
Northern District of Ohio. The third-party plaintiffs that have sued
Detroit Stoker are ship owners that have in turn been sued by Great Lakes
maritime workers who claim to have suffered injuries and disease as a
result of alleged exposure to asbestos while working aboard the ships.
The ship owners claim that Detroit Stoker and other suppliers to the ship
owners furnished products, supplies or components of the ships that
contained asbestos. These cases are currently inactive pending their
transfer to the national multi-district asbestos docket in the United
States District Court in Philadelphia. Detroit Stoker intends to
aggressively defend these claims, however, at this time, no estimate can
be made as to the amount or range of potential loss, if any, to Detroit
Stoker with respect to this action.
Detroit Stoker was notified in March 1992 by the Michigan Department
of Natural Resources ("MDNR") that it is a potentially responsible
party in connection with the clean-up of a former industrial landfill
located in Port of Monroe, Michigan. MDNR is treating the Port of
Monroe landfill site as a contaminated facility within the meaning of
the Michigan Environmental Response Act ("MERA"), MCLA section 299.601
et seq. Under MERA, if a release or a potential release of a
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discarded hazardous substance is or may be injurious to the
environment or to the public health, safety, or welfare, MDNR is
empowered to undertake or compel investigation and response activities
in order to alleviate any contamination threat. Detroit Stoker
intends to aggressively defend these claims, however, at this time, no
estimate can be made as to the amount or range of potential loss, if
any, to Detroit Stoker with respect to this action.
Turpin Wachter Associates, Inc. ("TWAI") commenced an action against
AAI Systems Management, Inc. ("SMI") before the American Arbitration
Association in December 1993 alleging that SMI was required to
exercise options awarding TWAI further work under a subcontract
relating to the Navy fire fighter. In December 1994, TWAI was awarded
$117,000.
Peak Oilfield Service Corp. ("Peak") sued SMI in the United States
District Court for the District of Alaska in December, 1993, alleging
that SMI interfered with an implied contract between SMI's
subcontractor and Peak. In March 1994, full settlement was reached in
this matter which consisted of the payment of $170,000 to the
plaintiff.
There are various other lawsuits and claims, including other
environmental matters, pending against United. In the opinion of
United's management based in part on advice of counsel,
none of these other actions will have a materially adverse effect on
the consolidated financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Annual elections are held in May to elect officers for the ensuing
year. Interim elections are held as required. Except as otherwise
indicated, each executive officer has held his current position for
the past five years.
Age at
Name Position, Office December 31, 1994
---- ---------------- -----------------
Bernard Fein* -- Chairman of the Board (since 1961) and President 86
(1961 - March 26, 1995) of the Company
P. David Bocksch** -- President and Chief Executive Officer of the Company 51
(effective March 27, 1995); Managing Partner of
Dalexis Partners, Inc., a management consulting
firm (1987 - March 26, 1995); President and Chief
Executive Officer of MicroFrame, Inc., a data
communications security firm (October 1993 to
December 1994); President and Chief Executive
Officer of Monroe System for Business, Inc., an
office equipment and contract services company
(June 1991 to September 1993); Senior Vice President
of Alliance Capital Management, L.P., a pension
fund manager and investment advisor (1989 to May 1991)
Howard M. Bloch* -- Vice President of the Company (since May 1993); 67
Treasurer of the Company (1972 - November 1994);
Secretary of the Company (1987 - April 1994)
James H. Perry -- Treasurer of the Company (since December 1994); 33
Senior Manager at Ernst & Young LLP (October 1992 -
November 1994); Manager at Ernst & Young LLP
(1988 - September 1992)
Susan Fein Zawel -- General Counsel (January 1992 - May 1994) and 40
Secretary (since May 1994) of the Company;
Part-time practice of law in public service sector
(1989 - 1991)
Richard R. Erkeneff -- President of AAI (since October 1993); Senior Vice 59
President of the Aerospace Group at McDonnell
Douglas Corporation (December 1992 - November 1993);
President and Chief Executive Vice President of
McDonnell Douglas Electronic Systems Company
(1988 - October 1992)
Michael A. Schillaci -- President, Neo Plastics (since 1987) 47
<FN>
* Member of the Company's Board of Directors
** Nominee to the Company's Board of Directors
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PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS
Reference is made to the information set forth in Note 15 of the Notes
to Financial Statements included in Item 8 of this Report concerning
dividends, stock prices, stock listing and record holders, which
information is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to the information set forth in the sections
entitled "Ten-Year Financial Data" on pages 37 and 38 of the Annual
Report and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" commencing on page 39 of the
Annual Report, which sections are incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Reference is made to the information set forth in the section entitled
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" commencing on page 39 of the Annual Report,
which section is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of independent auditors and consolidated financial
statements included on pages 13 through 36 of the Annual Report are
incorporated herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
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PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the definitive proxy statement
involving the election of directors in connection with the Annual
Meeting of Stockholders of United to be held on May 8, 1995 (the
"Proxy Statement"), which section (other than the Compensation
Committee Report and Performance Graph) is incorporated herein by
reference. The Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days after December 31, 1994,
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended.
The information required with respect to executive officers is set
forth in Part I of this report under the heading "Executive Officers
of the Registrant," pursuant to instruction 3 to paragraph (b) of Item
401 of Regulation S-K.
ITEM 11. EXECUTIVE COMPENSATION
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the Proxy Statement, which section
(other than the Compensation Committee Report and Performance Graph)
is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Reference is made to the information to be set forth in the section
entitled "Voting Rights" and "Security Ownership of Management" in the
Proxy Statement, which sections are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Reference is made to the information to be set forth in the section
entitled "Election of Directors" in the Proxy Statement, which section
(other than the Compensation Committee Report and Performance Graph)
is incorporated herein by reference.
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PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) Financial Statements:
See Financial Statements Index included in Item 8 of this
Report.
(2) Financial Statement Schedules:
FINANCIAL STATEMENT SCHEDULES
INDEX
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Page No.
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Independent Auditors Report F-3
Schedule I Condensed Financial Information of Registrant F-4
Schedule II Valuation and Qualifying Accounts F-9
(3) Exhibits:
(3)(a)- Restated Certificate of Incorporation of United (1).
(3)(b)- By-Laws of United (incorporated by reference to
United's Annual Report on Form 10-K for the year ended
December 31, 1989).
(3)(c)- Amendment to By-Laws of United as of September 19, 1994.
(10)(a)- United Industrial Corporation 1994 Stock Option Plan (1).
(10)(b)- Purchase Agreement, dated January 18, 1994, between
United and Symtron Systems, Inc. (1).
(10)(c)- Note Purchase Agreement (the "Note Agreement") dated as
of July 15, 1992 among AAI Corporation ("AAI") and
Principal Mutual Life Insurance Company, The Travelers
Insurance Company and The Travelers Indemnity Company of
Rhode Island (the "Purchasers") (2).
(10)(d)- Guaranty Agreement (the "Note Guaranty") dated as of
July 15, 1992 by United in favor of the Purchasers (2).
(10)(e)- Amendment No. 1 dated July 15, 1993 to the Note
Agreement (3).
(10)(f)- Amendment No. 1 dated July 15, 1993 to the Note
Guaranty (3).
(10)(g)- Amendment No. 2 to Note Agreement dated as of December
20, 1993 among AAI and the Purchasers.
(10)(h)- Amendment No. 3 to Note Agreement dated as of October
13, 1994 among AAI and the Purchasers (4).
(10)(i)- Amendment No. 2 to the Note Guaranty (4).
(10)(j)- Credit Agreement dated as of October 13, 1994 among AAI
Corporation, the Lenders parties thereto and First
Fidelity Bank, National Association as Agent (the
"Agent") and Issuing Bank (4).
(10)(k)- Pledge and Security Agreement dated as of October 13,
1994 by AAI in favor of the Agent (4).
(10)(l)- Pledge and Security Agreement dated as of October 13,
1994 by the Company in favor of the Agent (4).
(10)(m)- Security Agreement dated as of October 13, 1994 between
AAI and the Agent (4).
(10)(n)- Security Agreement dated as of October 13, 1994 between
each subsidiary of AAI, certain subsidiaries of the
Company and the Agent (4).
(10)(o)- Guaranty dated as of October 13, 1994 by the Company
and certain of its subsidiaries and by each subsidiary
of AAI in favor of the Agent(4).
(10)(p)- Employment Agreement, dated September 20, 1993, between
AAI and Richard R. Erkeneff (1).
(10)(q)- Employment Agreement, dated March 16, 1995, between
United and P. David Bocksch.
(11) - Computation of Earnings Per Share.
(13) - United's 1994 Annual Report to Shareholders.
(21) - Subsidiaries of United.
(23) - Consent of Independent Auditors
(27) - Financial Data Schedule
-----------------------
(1) Incorporated by reference to United's Annual Report on Form
10-K for the year ended December 31, 1993.
(2) Incorporated by reference to United's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1992.
(3) Incorporated by reference to United's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.
(4) Incorporated by reference to United's Annual Report on Form
10-K for the year ended December 31,1994.
(b)- Reports on Form 8-K - United did not file any reports on Form 8-K
during the quarter ended December 31, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
UNITED INDUSTRIAL CORPORATION
(Registrant)
By: /s/ Bernard Fein
-------------------------------
Bernard Fein, President
Date: March 24, 1995
---------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
Name Date
---- ----
/s/ Bernard Fein March 24, 1995
---------------------------------
Bernard Fein, President, Chairman
of the Board and Director
(Principal Executive Officer)
/s/ Howard M. Bloch March 24, 1995
--------------------------------
Howard M. Bloch, Vice President,
and Director (Principal Financial and
Accounting Officer)
/s/ Maurice Rosenthal March 24, 1995
--------------------------------
Maurice L. Rosenthal, Director
/s/ Myron Simons March 24, 1995
--------------------------------
Myron Simons, Director
/s/ Rick S. Bierman March 24, 1995
--------------------------------
Rick S. Bierman, Director
Annual Report on Form 10-K
Item 14(a) (1) and (2), (c) and (d)
List of Financial Statements and Financial Statement Schedules
Certain Exhibits
Financial Statement Schedules
Year ended December 31, 1994
United Industrial Corporation
New York, New York
NYFS11...:\95\78495\0001\1196\LST3285W.45B
Form 10-K Item 14(a) (1) and (2)
United Industrial Corporation and Subsidiaries
List of Financial Statements and Financial Statement Schedules
The following consolidated financial statements of United Industrial
Corporation and subsidiaries, included in the annual report of the
registrant to its shareholders for the year ended December 31, 1994,
are incorporated by reference in Item 8:
Consolidated Balance Sheets December 31, 1994 and 1993
Consolidated Statements of Operations
Years Ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows
Years Ended December 31, 1994, 1993 and 1992
Notes to Financial Statements
The following consolidated financial statement schedules of United
Industrial Corporation and subsidiaries are included in Item 14(d):
Schedule I Condensed Financial Information of Registrant
Schedule II Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable and,
therefore, have been omitted.
F-2
Report of Independent Auditors
Board of Directors and Shareholders
United Industrial Corporation
We have audited the accompanying consolidated balance sheets of United
Industrial Corporation and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of operations and cash
flows for each of the three years in the period ended December 31,
1994. Our audits also included the financial statement schedules
listed in the Index at Item 14(a). These financial statements and
schedules are the responsibility of the company s management. Our
responsibility is to express an opinion on these financial statements
and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of United Industrial Corporation and subsidiaries
at December 31, 1994 and 1993 and the consolidated results of their
operations and their cash flows for each of the three years in the
period ended December 31, 1994 in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 28, 1995
F-3
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INDUSTRIAL CORPORATION
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS) DECEMBER 31
1994 1993
------ ------
ASSETS
Current assets:
Cash and cash equivalents $ 5,635 $ 1,941
Recoverable income taxes - 3,618
Prepaid expenses and other
current assets 208 940
Deferred income taxes 3,169 5,303
---------- ---------
Total current assets $ 9,012 $ 11,802
Equipment 325 256
Less allowances for
depreciation (240) (231)
--------- --------
85 25
Other assets (principally
investments in and amounts
due from wholly-owned
subsidiaries) 165,370 125,834
--------- ---------
$ 174,467 $ 137,661
========= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities, including
notes payable of $3,000 $ 6,899 $ 7,515
Income taxes 3,333 -
--------- ---------
Total current liabilities 10,232 7,515
Deferred income taxes 9,228 8,280
Other liabilities (principally
amount due to wholly-owned
subsidiaries) 66,586 36,512
Shareholders' equity:
Common Stock 14,374 14,374
Other shareholders'
equity 74,047 70,980
--------- ---------
88,421 85,354
--------- ---------
$ 174,467 $ 137,661
========= =========
See notes to condensed financial statements of registrant.
F-4
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INDUSTRIAL CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31
1994 1993 1992
-------- -------- --------
Management fees from
wholly-owned
subsidiaries $ 2,064 $ 2,571 $ 2,485
Other revenue (expense)-
net 150 41 (21)
-------- --------- --------
2,214 2,612 2,464
Expenses:
Administrative expenses 3,247 4,590 1,571
Interest income (1,292) (364) (926)
Interest expense 4,708 2,110 2,460
-------- --------- --------
6,663 6,336 3,105
======== ========= ========
Loss before income taxes
and equity in net income
of subsidiaries (4,449) (3,724) (641)
Income tax (benefit) (1,639) (933) (195)
-------- --------- --------
Loss before equity in net
income of subsidiaries (2,810) (2,791) (446)
Equity in net income
(loss) of subsidiaries 8,022 (8,232) 6,839
-------- --------- --------
Net income (loss) $ (5,212) $ (11,023) $ 6,393
======== ========= ========
Dividends paid by
subsidiaries to Parent $ - $ 1,500 $ -
======== ========= ========
See notes to condensed financial statements of registrant.
F-5
Schedule I - Condensed Financial Information of Registrant
United Industrial Corporation
Condensed Statements of Cash Flows
(DOLLARS IN THOUSANDS) YEAR ENDED DECEMBER 31
1994 1993 1992
------ ------ ------
Operating activities:
Net income (loss) $ 5,212 $ (11,023) $ 6,393
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 9 33 34
Deferred income taxes (441) (680) -
Undistributed (earnings) loss of
subsidiaries (8,022) 9,732 (6,839)
Changes in operating assets and
liabilities:
Income taxes 6,951 (3,618) -
Prepaid expenses and other
current assets 732 (939) 662
Current liabilities (616) (2,912) 1,613
Accounts with wholly-owned
subsidiaries 3,037 21,874 6,542
-------- --------- --------
Net cash provided by operating
activities 6,862 12,467 8,405
-------- --------- --------
Investing activities:
Purchase of property and equipment (69) - -
(Increase) decrease in intercompany
receivables due to transfer of
deferred taxes from wholly-owned
subsidiaries (3,523) 24,109 5,328
Increase (decrease) in deferred
taxes resulting from transfer
from wholly-owned subsidiaries 3,523 (24,109) (5,328)
Other, net (53) - -
-------- --------- --------
Net cash used in investing
activities (122) - -
-------- --------- --------
F-6
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
UNITED INDUSTRIAL CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (continued)
(DOLLARS IN THOUSANDS) Year Ended December 31
1994 1993 1992
------ ------ ------
Financing activities:
Proceeds from borrowings $ 12,000 $ 9,000 $ 23,000
Payments on borrowings (12,000) (16,000) (24,000)
Dividends paid (2,571) (4,290) (7,845)
Purchase of treasury shares (475) - -
Proceeds from exercise of stock
options - - 57
-------- -------- --------
Net cash used in financing activities
(3,046) (11,290) (8,788)
Increase (decrease) in cash and cash -------- -------- ---------
equivalents
Cash and cash equivalents at 3,694 1,177 (383)
beginning of year
1,941 764 1,147
Cash and cash equivalents at end of -------- -------- ---------
year
$ 5,635 $ 1,941 $ 764
======== ======== =========
See notes to condensed financial statements of registrant.
F-7
A. ACCOUNTING POLICIES
BASIS OF PRESENTATION
In the parent-company-only financial statements, the Company's
investment in subsidiaries is stated at cost plus equity
in undistributed earnings of subsidiaries since date of acquisition.
The Company's share of net income of its unconsolidated subsidiaries
is reflected using the equity method. Parent-company-only financial
statements should be read in conjunction with the Company's
consolidated financial statements.
Certain amounts in the prior years have been reclassified to conform
to the current year's classification.
B. EQUITY IN NET INCOME (LOSS) OF SUBSIDIARIES
In 1993, included in the equity in net loss of subsidiaries is a
restructuring charge of $22,500,000 ($14,370,000, net of tax benefit)
regarding the Company s defense industry subsidiary. A major portion
of the charge resulted from the termination of the operations of
AAI/MICROFLITE, a manufacturer of flight simulators and training
devices, due to a lack of new orders. Also, in 1993 the Company
changed its method of accounting for postretirement benefits other
than pensions and income taxes. The implementation of these accounting
changes resulted in a cumulative effect charge against income of
$12,890,000, net of tax benefit and a cumulative effect of $13,884,000
which reduced the 1993 net loss, respectively. Consequently, the net
cumulative effect of these accounting changes resulted in a $994,000
reduction of the net loss in 1993.
F-8
Schedule II Valuation and Qualifying Accounts
United Industrial Corporation and Subsidiaries
December 31, 1994
COL. A COL. B COL. C COL. D COL. E
(1) (2)
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING OF COSTS AND ACCOUNTS DEDUCTIONS END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE (DESCRIBE) PERIOD
----------- ------ -------- -------- ---------- ------
Year ended December 31, 1994:
Deducted from asset account:
Allowance for doubtful accounts $ 418,000 $ 50,000 (B) $ 368,000
========== =============== ==========
Product warranty liability $ 800,000 $ 275,000 (B) $ 525,000
========== =============== ==========
Year ended December 31, 1993:
Deducted from asset account:
Allowance for doubtful accounts $ 476,000 $ 41,000 $ 99,000 (A) $ 418,000
========== =========== =============== ==========
Product warranty liability $ 950,000 $ 150,000 (B) $ 800,000
========== =========== =============== ==========
Year ended December 31, 1992:
Deducted from asset account:
Allowance for doubtful accounts $ 560,000 $ 13,000 $ 141,000 (C) $ 238,000 (B) $ 476,000
========== =========== =============== =============== ==========
Product warranty liability $ 850,000 $ 100,000 $ 950,000
========== =========== ==========
<FN>
(A) -- Uncollectible accounts written off, net of recoveries.
(B) -- Reduction of valuation account.
(C) -- Applicable to acquired business.
F-9
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT PAGE
----------- ------- ----
(3)(a)- Restated Certificate of Incorporation of United (1).
(3)(b)- By-Laws of United (incorporated by reference to
United's Annual Report on Form 10-K for the year
ended December 31, 1989).
(3)(c)- Amendment to By-Laws of United as of September 19,
1994.
(10)(a)- United Industrial Corporation 1994 Stock Option
Plan (1).
(10)(b)- Purchase Agreement, dated January 18, 1994, between
United and Symtron Systems, Inc. (1).
(10)(c)- Note Purchase Agreement (the "Note Agreement")
dated as of July 15, 1992 among AAI Corporation
("AAI") and Principal Mutual Life Insurance Company,
The Travelers Insurance Company and The Travelers
Indemnity Company of Rhode Island (the
"Purchasers") (2).
(10)(d)- Guaranty Agreement (the "Note Guaranty") dated
as of July 15, 1992 by United in favor of the
Purchasers (2).
(10)(e)- Amendment No. 1 dated July 15, 1993 to the Note
Agreement (3).
(10)(f)- Amendment No. 1 dated July 15, 1993 to the Note
Guaranty (3).
(10)(g)- Amendment No. 2 to Note Agreement dated as of
December 20, 1993 among AAI and the Purchasers.
(10)(h)- Amendment No. 3 to Note Agreement dated as of
October 13, 1994 among AAI and the Purchasers (4).
(10)(i)- Amendment No. 2 to the Note Guaranty (4).
(10)(j)- Credit Agreement dated as of October 13, 1994
among AAI Corporation, the Lenders parties thereto
and First Fidelity Bank, National Association as
Agent (the "Agent") and Issuing Bank (4).
(10)(k)- Pledge and Security Agreement dated as of
October 13, 1994 by AAI in favor of the Agent (4).
(10)(l)- Pledge and Security Agreement dated as of
October 13, 1994 by the Company in favor of the
Agent (4).
(10)(m)- Security Agreement dated as of October 13, 1994
between AAI and the Agent (4).
(10)(n)- Security Agreement dated as of October 13, 1994
between each subsidiary of AAI, certain
subsidiaries of the Company and the Agent (4).
(10)(o)- Guaranty dated as of October 13, 1994 by the
Company and certain of its subsidiaries and by
each subsidiary of AAI in favor of the Agent (4).
(10)(p)- Employment Agreement, dated September 20, 1993,
between AAI and Richard R. Erkeneff (1).
(10)(q)- Employment Agreement, dated March 16, 1995,
between United and P. David Bocksch.
(11) - Computation of Earnings Per Share.
(13) - United's 1994 Annual Report to Shareholders.
(21) - Subsidiaries of United.
(23) - Consent of Independent Auditors
(27) - Financial Data Schedule
-----------------------
(1) Incorporated by reference to United's Annual Report on Form
10-K for the year ended December 31, 1993.
(2) Incorporated by reference to United's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1992.
(3) Incorporated by reference to United's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.
(4) Incorporated by reference to United's Annual Report on Form
10-K for the year ended December 31,1994.