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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): October 3, 1997
UNITED INDUSTRIAL CORPORATION
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(Exact Name of Registrant as Specified in its Charter
Delaware
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(State or Other Jurisdiction of Incorporation)
1-4252 95-2081809
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(Commission File Number) (I.R.S. Employer Identification No.)
18 East 48th Street
New York, New York 10017
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(Address of Principal Executive Offices) (Zip Code)
(212) 752-8787
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(Registrant's Telephone Number, Including Area Code)
Unchanged
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 3, 1997, United Industrial Corporation (the
"Company") completed the sale of all of the capital stock of AAI Systems
Management, Inc. ("SMI"), an indirect wholly-owned subsidiary of the Company, to
All Weather, Inc. (the "Purchaser"), a holding company formed by Ridge Capital,
Northstar Capital and the management team of SMI. SMI was directly owned by the
Company's AAI Corporation subsidiary. The purchase price was $18.5 million in
cash and a five-year subordinated note in the principal amount of $2.375
million. The purchase price was determined based upon arm's-length negotiations
between the Company and the Purchaser. SMI is primarily engaged in the automated
weather and environmental reporting systems business.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The following pro forma financial statements of the
Company are filed herewith:
1. Pro forma Consolidated Balance Sheet as of
June 30, 1997.
2. Pro forma Consolidated Statements of
Operations for the six months ended June 30,
1997 and the year ended December 31, 1996.
(c) Exhibits
2. Stock Purchase Agreement between All Weather, Inc.
and AAI Corporation, dated September 30, 1997.
99. Press release of the Company dated October 3, 1997.
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The following unaudited pro forma consolidated condensed
financial statements give effect to the sale of the 100% stock interest in SMI
on October 3, 1997 by AAI Corporation, a wholly-owned subsidiary of the Company.
The unaudited pro forma consolidated condensed statement of income data give
effect to the sale as if it had occurred on the first day of the periods
presented while the unaudited pro forma consolidated condensed balance sheet
data give effect to the sale as if it had occurred on June 30, 1997. These pro
forma financial statements are based on estimates and assumptions set forth
below and in the notes to such statements which include pro forma adjustments.
The pro forma financial statements have been prepared utilizing the historical
financial statements of the Company and should be read in conjunction with the
historical financial statements and accompanying notes included in the Company's
1996 Annual Report on Form 10-K and on Form 10-Q for the quarter ended June 30,
1997.
These pro forma financial statements do not purport to be
indicative of the results that actually would have been achieved if this
disposition had been effected on the dates indicated or of the results that may
be obtained in the future.
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF JUNE 30, 1997
(Dollars in Thousands)
Pro Forma
As Reported Adjustments Pro Forma
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ASSETS
Current Assets
Cash & cash equivalents $7,863 $12,302 (1) $20,165
Trade receivables 35,127 (4,986)(2) 30,141
Inventories
Finished goods & work in process 26,529 (356)(2) 26,173
Materials & supplies 4,174 (438)(2) 3,736
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30,703 (794) 29,909
Deferred income taxes 6,262 6,262
Prepaid expenses & other current assets 1,133 (50)(2) 1,083
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Total Current Assets 81,088 6,472 87,560
Other assets 37,836 2,375 (1) 40,211
Property & equipment - less allowance
for depreciation 40,787 (438)(2) 40,349
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$159,711 $8,409 $168,120
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities
Accounts payable $6,932 ($1,376)(2) $5,556
Accrued employee compensation & taxes 8,190 (427)(2) 7,763
Customer Advances 3,748 (297)(2) 3,451
Federal income taxes 638 638
Other liabilities 6,098 6,098
Provision for contract losses 7,549 7,549
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Total Current Liabilities 33,155 (2,100) 31,055
Long-term liabilities, less current maturities 2,654 2,654
Deferred income taxes 9,753 9,753
Deferred gain 2,375 (3) 2,375
Postretirement benefits other than pensions 22,250 22,250
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67,812 275 68,087
SHAREHOLDERS' EQUITY
Common stock $1.00 par value
Authorized - 15,000,000 shares; outstanding
12,173,743, net of shares in treasury 14,374 14,374
Additional capital 90,186 90,186
Retained earnings 4,605 8,134 (3) 12,739
Treasury stock, at cost, 2,200,405 shares (17,266) (17,266)
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91,899 8,134 100,033
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$159,711 $8,409 $168,120
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(Dollars in Thousands, except per share data)
Pro Forma
As Reported Adjustments Pro Forma
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Net sales $114,093 ($18,063)(4) $96,030
Operating costs & expenses
Cost of sales 87,122 (14,024)(4) 73,098
Selling & administrative 21,360 (2,235)(4) 19,125
Other expense 12 12
Interest expense 591 (6) (89)(5) 502
Interest income (478) (7) (478)
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108,607 (16,348) 92,259
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Income before income taxes 5,486 (1,715) 3,771
Income taxes 2,053 (642)(4) 1,411
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Net income $3,433 ($1,073) $2,360
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Net income per common share $0.28 $0.19
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Average number of common shares outstanding 12,328,204 12,328,204
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in Thousands, except per share data)
Pro forma
As Reported Adjustments Pro Forma
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Net sales $220,822 ($37,000)(4) $183,822
Operating costs & expenses
Cost of sales 168,315 (29,721)(4) 138,594
Selling & administrative 40,847 (4,479)(4) 36,368
Gain on sale of assets (1,135) (1,135)
Other expense, net 1,190 1,190
Interest expense 1,997 (1,064)(5) 933
Interest income (1,033) (1,033)
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210,181 (35,264) 174,917
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Income before income taxes 10,641 (1,736) 8,905
Income taxes 4,237 (691)(4) 3,546
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Net income $6,404 ($1,045) $5,359
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Net income per common share $0.52 $0.44
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Average number of common shares outstanding 12,211,319 12,211,319
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NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Reflects transaction proceeds of $18.5 million in cash less related
expenses and income taxes on gain ($775 thousand and $5.423 million,
respectively) and a five year subordinated note for $2.375 million.
(2) Reflects the elimination of the balance sheet of SMI.
(3) Reflects the following:
($000)
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Proceeds from sale of stock less related expenses $20,100
Less:
Recognition of deferred gain 2,375
Book basis of investment in SMI 4,168
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6,543
Estimated gain before income taxes 13,557
Income taxes 5,423
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Estimated net gain $8,134
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The footnoted item reflects the gain on the transaction, net of expenses
and income taxes, of $8.134 million and a deferred gain of $2.375
million related to the subordinated note receivable. Receipt of the note
can be expected, but such receipt remains uncertain.
(4) Reflects elimination of SMI's operations.
(5) Reflects the reduction of the Company's interest expense attributable to
the use of net cash received to reduce the amount outstanding under the
long term note purchase agreement. The reduction of interest expense is
computed using a weighted average rate of 8.65%.
(6) Included in interest expense is a prepayment penalty and a write-off of
deferred financing costs ($366 thousand and $118 thousand,
respectively) related to the repayment of long term debt.
(7) Interest income does not include any pro forma adjustment for investment
earnings on the net cash proceeds from the sale of SMI.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNITED INDUSTRIAL CORPORATION
Dated: October 17, 1997 By: /s/ James H. Perry
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Name: James H. Perry
Title: Treasurer
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EXHIBIT INDEX
Exhibit
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Stock Purchase Agreement between All Weather, Inc.
and AAI Corporation, dated September 30, 1997
Press release of the Company dated October 3, 1997
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