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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998.

[_] 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

UNITED INDUSTRIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 95-2081809
- -------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)

570 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 752-8787
- --------------------------------------------------------------------------------
(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
- ----------------------------- ----------------------------------

COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act:

NONE
- --------------------------------------------------------------------------------
(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 (or for such shorter period that the
registrant was required to file such reports), 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].

[Cover page 1 of 2 pages]

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 15, 1999,
computed by reference to the closing sale price of the registrant's Common Stock
on the New York Stock Exchange on such date: $123,730,626. On March 15, 1999,
the registrant had outstanding 12,264,013 shares of Common Stock, par value
$1.00 per share, which is the registrant's only class of common stock.

DOCUMENTS INCORPORATED BY REFERENCE:

1. Certain portions of the registrant's Annual Report to Shareholders for
the fiscal year ended December 31, 1998 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 Shareholders
of the registrant to be held on May 11, 1999 are incorporated by
reference into Part III of this report.

[Cover page 2 of 2 pages]

PART I

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.

At December 31, 1998, the operations of United consist of three principal
business segments: defense, transportation and energy systems, and related
products conducted through three wholly-owned subsidiaries.

Forward Looking Information

This Annual Report contains "forward looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward looking
statements are based on management's expectations, estimates, projections and
assumptions. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "estimates," and variations of such words and similar expressions
are intended to identify such forward looking statements which include, but are
not limited to, projections of revenues, earnings, segment performance, cash
flows and contract awards. These forward looking statements are 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. These
risks and uncertainties include, but are not limited to, the following: the
Company's successful execution of internal performance plans; performance issues
with key suppliers, subcontractors and business partners; legal proceedings;
product demand and market acceptance risks; the effect of economic conditions;
the impact of competitive products and pricing; product development,
commercialization and technological difficulties; capacity and supply
constraints or difficulties; legislative or regulatory actions impacting the
Company's energy segment and transportation business; changing priorities or
reductions in the U.S. government defense budget; contract continuation and
future contract awards; and U.S. and international military budget constraints
and determinations.

Defense

AAI Corporation

AAI Corporation ("AAI") is engaged in engineering, development and manufacture
in the following major areas: (1) training and simulation systems; (2) automatic
test equipment for electronic systems and components; (3) unmanned air vehicle
systems; (4) ordnance systems; and (5) mechanical support systems for
industrial, military, and marine applications. 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. In 1998 approximately 70% of the sales volume of AAI consisted of
research, development and production of military items under domestic defense
contracts compared to 57% in 1997. 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. International defense contracts accounted for 14% of sales in
1998 as compared to 15% in 1997. These contracts generally related to unmanned
air vehicle systems and weapon training systems for foreign governments. The
balance of AAI's business consists of work performed in the non-defense markets.
These areas include hydraulic test equipment.

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 that compete with AAI for
market share. In the area of weapons and munitions, AAI ranks among
approximately ten leading companies engaged in development work. However, AAI's
production activity in this field is less significant. AAI began development in
the Unmanned Air Vehicle ("UAV") business in 1986. The Company produces the
highly successful Pioneer Unmanned Air Vehicle employed by the United States
during Operation Desert Storm, and in conflicts in Somalia and Bosnia. In
addition, AAI has other UAV systems and products which it markets
internationally. AAI is one of several large and small competitors in this
field.

AAI's administrative offices and its principal manufacturing and engineering
facilities are located in Hunt Valley, Maryland.

Symtron Systems, Inc.

Symtron Systems, Inc. ("Symtron") is a world leader in the development and sale
of advanced, computer controlled, gas fueled, live fire, firefighter training
systems for public and private industry. Symtron started development of its
computer controlled, live fire, firefighter training systems under an initial
contract with the U.S. Army in 1978. It was purchased by United in 1994.
Contingent purchase price 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 ended December 31, 1998. Included in general and administrative
expenses in 1998, 1997 and 1996 are such contingent payments totaling $265,000,
$723,000 and $254,000, respectively. Furthermore, in 1995 the Company recorded a
$1,000,000 contingent payment based on profits on contracts existing at the
acquisition date and the net worth of Symtron at specified dates which was
likewise classified as general and administrative expense. Symtron's 1998 sales
consisted of production for military and commercial customers. The main office
and plant of Symtron are located in Fair Lawn, New Jersey. In the international
markets, Symtron is faced with significant competition from several small firms.

Energy Systems

Detroit Stoker Company

Detroit Stoker Company ("Detroit Stoker") is engaged in the design, manufacture
and sale of industrial stokers, gas/oil burners, municipal solid waste
combustion systems for waste to energy plants, rotary seal feeders for the
metering of fuel to fluidized bed combustors and handling of granular materials,

replacement parts, construction services and aftermarket services. Its products
are used for the generation of process steam and electric power in a wide range
of industrial and municipal applications. Principal customers include pulp and
paper mills, public utilities, independent power producers (non-utility
generators), industrial manufacturing plants, universities and sugar mills. Its
waste to energy technology is used extensively in both public and private plants
which generate steam and power from municipal waste. Its solid fuel combustion
technologies are particularly well suited to the burning of biomass fuels. 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 for these products consist of original
boiler manufacturers as well as all major industrial and institutional energy
consumers. Competition is based on several factors including price, features and
performance.

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 alloy iron castings. The majority of the sales of
Midwest are to Detroit Stoker. Midwest's plant and offices are located in
Marshall, Michigan.

Transportation

AAI Transportation Systems, a division of AAI, is engaged in the manufacturing
and integration of transit systems primarily for municipal customers within the
United States. Its products and services are focused in overhaul, fabrication,
assembly and systems integration.

Electric Transit, Inc. (ETI), a corporation owned 35% by AAI and 65% by Skoda, a
Czech Republic firm, has become one of the domestic market leaders in
manufacturing electric trolley buses. It has won contracts in both Dayton, Ohio
for the Miami Valley Regional Transit Authority and the city and county of San
Francisco, the only such contracts awarded in the United States since 1994. ETI
is an unconsolidated affiliate of AAI and accordingly, AAI records its equity
share of income or loss in ETI. However, under these contracts which are valued
at $32 million and $168 million, respectively, AAI has received subcontracts of
$9.6 million and $53 million, respectively.

In addition to its electric trolley bus business, AAI performs overhaul and
remanufacturing work for a variety of transit customers and produces an
assortment of transit equipment including fabricated trucks for both heavy and
light railcars.

The products and services of Transportation Systems compete with those of
several other larger as well as smaller manufacturers. The main office and
operating facilities are located in Hunt Valley, Maryland.

For additional information concerning United's subsidiaries reference is made to
information set forth in the Letter to Shareholders contained in United's 1998
Annual Report to Shareholders (the "Annual Report"), which letter is
incorporated herein by reference.

General

Employees

As of March 1, 1999 United and its subsidiaries had approximately 1,800
employees. Approximately 133 of these employees are represented by several
unions under contracts expiring between July 2000 and January 2001. 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 firefighter 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 1998, 1997 and 1996 the subsidiaries of United (exclusive of AAI)
expended approximately $201,000, $144,000 and $639,000, 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 engaged in research and
development primarily for the U.S. Government.

Backlog

The backlog of orders by industry segment at December 31, 1998 and 1997 was as
follows:

1998 1997
---- ----

Defense $146,634,000 $121,891,000
Energy Systems 9,334,000 9,016,000
Transportation 53,860,000 57,309,000

Except for approximately $77,000,000, substantially all of the backlog orders at
December 31, 1998 are expected to be filled in 1999.

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
U.S. 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 U.S.
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 1998,
1997 and 1996 export sales by United and its subsidiaries amounted to
approximately $40,994,000, $41,832,000 and $28,458,000, respectively.

ITEM 2. PROPERTIES

United maintains executive and administrative offices at leased premises at 570
Lexington Avenue, New York, N.Y., which lease expires in August 2008. The
following is a tabulation of the principal properties owned or leased by
United's subsidiaries as at March 25, 1999.

Approximate
Area Owned
Location Principal Use in Square Feet or Leased
- -------- ------------- -------------- ---------

1510 East First Street Machine shop, steel fabrication, 194,910 floor space Owned in fee
Monroe, MI engineering and sales facilities of on 14.4 acres of land
Detroit Stoker (East Building)

1426 East First Street Assembly, shipping and administrative 101,000 floor space Owned in fee
Monroe, MI facilities of Detroit Stoker on 2.2 acres of land
(West Building)

15290 Fifteen Mile Road Foundry, 59,386 floor space Owned in fee
Marshall, MI Midwest Metallurgical on 28.4 acres of land

2735 W Fifth Assembly and Administrative Facility 59,000 Leased to
North Street of AAI November 30, 2002
Summerville, SC

21945 Three Noch Road Office Space of AAI 1,100 Leased to May 31,
Lexington Park, MD 2000

562 A&B North Dixie Blvd. Office Space of AAI 6,000 Leased to
Radcliffe, KY April 30, 1999

Approximate
Area Owned
Location Principal Use in Square Feet or Leased
- -------- ------------- -------------- ---------

Industry Lane Manufacturing, engineering and 429,750 floor space Owned in fee
Hunt Valley, MD administrative facilities of AAI on 64 acres of land

Clubhouse Road Manufacturing, engineering and 148,000 Leased to
Hunt Valley, MD administrative facilities of AAI October 31, 2003

1701 Pollitt Drive Administrative, engineering and 30,000 Leased to June 30,
Fair Lawn, NJ manufacturing facilities 2001
of Symtron
1505 East Warner Avenue Manufacturing, engineering and 103,200 Leased to
Santa Ana, CA administrative facilities September 30, 1999
of ACL Technologies
1035 Semoran Boulevard Sublet 900 Leased to April
Winter Park, FL 30, 1999

For information with respect to obligations for lease rentals, see Note 9 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 substantially utilized.

ITEM 3. LEGAL PROCEEDINGS

The Company, along with numerous other parties, has been named in five tort
actions in Maricopa County Superior Court relating to environmental matters
based on allegations partially related to a predecessor's operation of a small
facility at a site in the State of Arizona that manufactured semi-conductors
between 1959 and 1960. All such operations of the Company were sold by 1961.
These tort actions seek recovery for personal injury and property damage among
other damages based on exposure to solvents allegedly released at the site.

These suits allege that the plaintiffs 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 Company recently reached a written agreement in principle to settle all of
these matters with the plaintiffs for, among other items, a cash payment of

$4,250,000. The settlement is subject to formal execution of a settlement
agreement and approval by the Superior Court of Maricopa County.

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").
Under MERA, if a release or a potential release of a 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. 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.

The Company is involved in various other lawsuits and claims, including certain
other environmental matters, arising out of the normal course of its business.
In the opinion of management, the ultimate amount of liability, if any, under
pending litigation, including claims described above, will not have a materially
adverse effect on 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, 1998
---- ---------------- -----------------

Richard R. Erkeneff* -- President of the Company (since October 1995) and AAI 63
(since November 1993).

Robert Worthing -- Vice President and General Counsel of the Company (since 53
July, 1995); General Counsel of AAI (since April, 1992).

Susan Fein Zawel* -- Vice President, Corporate Communications and Associate 44
General Counsel (since June 1995), Secretary (since May
1994) and Counsel (1992 to 1995) of the Company.

James H. Perry -- Vice President (since May 1998), Chief Financial Officer 37
(since October, 1995) and Treasurer (since December 1994)
of the Company; and Senior Manager
(October 1992 to November 1994) at Ernst & Young LLP, an
accounting firm.

- --------------------
* Member of the Company's Board of Directors

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS

Reference is made to the information set forth in Note 14 of the Notes to
Financial Statements included in Item 8 of this Report concerning dividends,
stock prices, stock listing and number of 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
"Five-Year Financial Data" on page 49 of the Annual Report, which section is
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 23 of the Annual Report, which section is
incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Reference is made to the information regarding Quantitative and Qualitative
Disclosures About Market Risk contained in the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
commencing on page 23 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 29 through 47 of the Annual Report are incorporated herein by
reference.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

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 Shareholders of United to
be held on May 11, 1999 (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, 1998, 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

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) (1) and (2) - The response to this portion of Item 14 is submitted as a
separate section of this report entitled "List of Financial
Statements and Financial Statement Schedules".

(3) Exhibits:

(3)(a)- Restated Certificate of Incorporation of United.

(3)(b)- Amended and Restated By-Laws of United (2).

(10)(a)- United Industrial Corporation 1994 Stock Option Plan, as
amended (3).

(10)(b) United Industrial Corporation 1996 Stock Option Plan for
Nonemployee Directors (4).

(10)(c)- Purchase Agreement, dated January 18, 1994, between
United and Symtron Systems, Inc. (1).

(10)(d)- Revolving Line of Credit Loan Agreement, Term Loan
Agreement and Security Agreement dated as of June 11,
1997 (amending and restating Credit Agreement dated as
of October 13, 1994) by and among First Union Commercial
Corporation and the Company, AAI Corporation, AAI
Engineering Support, Inc., AAI Systems Management, Inc.,
AAI/ACL Technologies, Inc., Detroit Stoker Company,
Midwest Metallurgical Laboratory, Inc., Neo Products
Co., Symtron Systems, Inc., UIC-Del. Corporation and AAI
MICROFLITE Simulation International Corporation (5).

(10)(e)- Pledge and Security Agreement dated as of October 13,
1994 by AAI in favor of the Agent (6).

(10)(f)- Pledge and Security Agreement dated as of October 13,
1994 by the Company in favor of the Agent (6).

(10)(g)- Security Agreement dated as of October 13, 1994 between
AAI and the Agent (6).

(10)(h)- Security Agreement dated as of October 13, 1994 between
each subsidiary of AAI, certain subsidiaries of the
Company and the Agent (6).

(10)(i)- 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 (6).

(10)(j)- Employment Agreement dated December 8, 1998, between
United and Richard R. Erkeneff.

(10)(k)- Employment Agreement, dated January 8, 1996, between
United and Susan Fein Zawel (the "Zawel Employment
Agreement") (2).

(10)(l)- Amendment dated as of January 11, 1999, between United
and Susan Fein Zawel to the Zawel Employment Agreement.

(10)(m)- Employment Agreement, dated February 9, 1996, between
United and James H. Perry (the "Perry Employment
Agreement") (2).

(10)(n)- Amendment dated as of September 29, 1996, between United
and James H. Perry to the Perry Employment Agreement
(7).

(10)(o)- Stock Purchase Agreement between All Weather, Inc. and
AAI Corporation dated September 30, 1997 (8).

(11)- Computation of Earnings Per Share.

(13)- United's 1998 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, filed
with the Securities and Exchange Commission on March 31,
1994, File No. 1-4252.

(2) Incorporated by reference to United's Annual Report on
Form 10-K for the year ended December 31, 1995.

(3) Incorporated by reference to United's Registration
Statement on Form S-8, filed with the Securities and
Exchange Commission on January 10, 1997.

(4) Incorporated by reference to United's Registration
Statement on Form S-8 filed with the Securities and
Exchange Commission on June 26, 1997.

(5) Incorporated by reference to United's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997.

(6) Incorporated by reference to United's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994.

(7) Incorporated by reference to United's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1996.

(8) Incorporated by reference to United's Current Report on
Form 8-K filed on October 17, 1997.

(b) - Reports on Form 8-K - United did not file any
reports on Form 8-K during the quarter ended December 31,
1998.

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/ Richard R. Erkeneff
-------------------------------------
Richard R. Erkeneff, President

Date: March 30, 1999
-----------------------------------

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/ Harold S. Gelb March 30, 1999
- -----------------------------------------------
Harold S. Gelb,
Chairman of the Board and Director

/s/ Joseph S. Schneider March 30, 1999
- -----------------------------------------------
Joseph S. Schneider, Director

/s/ Richard R. Erkeneff March 30, 1999
- -----------------------------------------------
Richard R. Erkeneff, President and
Chief Executive Officer and Director

/s/ Edward C. Aldridge, Jr. March 30, 1999
- -----------------------------------------------
Edward C. Aldridge, Jr., Director

/s/ E. Donald Shapiro March 30, 1999
- -----------------------------------------------
E. Donald Shapiro, Director

/s/ Susan Fein Zawel March 30, 1999
- -----------------------------------------------
Susan Fein Zawel,
Vice President and Director

/s/ James H. Perry March 30, 1999
- -----------------------------------------------
James H. Perry,
Vice President, Treasurer and
Chief Financial Officer (Principal
Financial and Accounting Officer)

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, 1998

United Industrial Corporation

New York, New York

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, 1998, are incorporated by reference
in Item 8:

Consolidated Balance Sheets--December 31, 1998 and 1997

Consolidated Statements of Operations--
Years Ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows
Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements

The following consolidated financial statement schedule of United Industrial
Corporation and subsidiaries is included in Item 14(d):

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

We have audited the consolidated financial statements of United Industrial
Corporation and subsidiaries as of December 31, 1998 and 1997, and for each of
the three years in the period ended December 31, 1998, and have issued our
report thereon dated March 2, 1999. Our audits also included the financial
statement schedule listed in Item 14(d) of this Annual Report (Form 10-K). This
schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

New York, New York
March 2, 1999

F-3

Schedule II -- Valuation and Qualifying Accounts

United Industrial Corporation and Subsidiaries

December 31, 1998

COL. A COL. B COL. C COL. D COL. E
(1) (2)
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER ACCOUNTS DEDUCTIONS END OF
DESCRIPTION OF PERIOD EXPENSES (DESCRIBE) (DESCRIBE) PERIOD
----------- --------- -------- ---------- ---------- ------

YEAR ENDED DECEMBER 31, 1998:
Deducted from asset account:
Allowance for doubtful accounts $ 240,000 $ 5,000 (B) $ 235,000
========= =========== =========
Product warranty liability $1,072,000 $ 432,000 (B) $ 640,000
========== ============= =========

Year ended December 31, 1997:
Deducted from asset account:
Allowance for doubtful accounts $ 245,000 $ 5,000(B) $ 240,000
========= ========== =========

Product warranty liability $ 579,000 $ 493,000 $1,072,000
========= ========= ==========

Year ended December 31, 1996:
Deducted from asset accounts:
Allowance for doubtful accounts $ 310,000 $ 65,000 (A) $ 245,000
========= ============ =========
Product warranty liability $ 650,000 $ 71,000 (B) $ 579,000
========= ============ =========

(A) Uncollectible accounts written off, net of recoveries.

(B) Reduction of valuation account.

F-4

EXHIBIT INDEX

Exhibit No.
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