Board of Directors Declares Dividend HUNT VALLEY, Md., May 8
/PRNewswire-FirstCall/ -- United Industrial Corporation (NYSE:UIC)
(the "Company") today reported financial results for its first
quarter ended March 31, 2006. The continuing operations of the
Company consist of two business segments: Defense and Energy. The
Company designs, produces, and supports defense systems. Its
products and services include unmanned aircraft systems, training
and simulation systems, automated aircraft test and maintenance
equipment, armament systems, logistical and engineering services,
and other leading edge technology solutions for defense needs. The
Company also manufactures combustion equipment for biomass and
refuse fuels. The operations of the Defense and Energy segments are
conducted principally through two wholly owned subsidiaries, AAI
Corporation and its subsidiaries ("AAI") and Detroit Stoker Company
("Detroit Stoker"), respectively. Financial Results for the First
Quarter Ended March 31, 2006 Net sales from continuing operations
increased 28.0% to $137.6 million from $107.5 million during the
same period in 2005. Operating income from continuing operations
increased 23.5% to $15.1 million, or 11.0% of sales, from $12.2
million, or 11.4% of sales, during the same period in 2005. Net
income from continuing operations decreased 29.9% to $8.9 million,
or $0.69 per diluted share, from $12.6 million, or $0.84 per
diluted share, during the same period in 2005. The first quarter of
2005 included a gain on sale of undeveloped property of $4.7
million, net of tax, or $0.29 per diluted share. In the first
quarter of 2006, net income included the effect of expensing stock
option compensation of $0.4 million, net of tax, or $0.02 per
diluted share. In addition, other expense included a $0.4 million,
net of tax, increase in the fair value of an embedded derivative
related to the $120 million 3.75% Convertible Notes issued in
September 2004, which had no impact on earnings per diluted share.
Net income (including results of both continuing and discontinued
operations) decreased 32.4% to $8.6 million, or $0.67 per diluted
share, from $12.7 million, or $0.84 per diluted share, during the
same period in 2005. Financial Results By Operating Segment for the
First Quarter Ended March 31, 2006 - Continuing Operations Net
sales from the Defense segment increased 28.5% to $128.7 million
from $100.2 million during the same period in 2005. The growth was
primarily due to $14.5 million greater logistical support for an
increasing number of fielded Shadow 200(R) Tactical Unmanned
Aircraft Systems ("TUAS"), a $10.1 million increase in production
of these systems, and $2.9 million generated by ESL Defence
Limited, an electronic warfare systems company based in the United
Kingdom, acquired in April 2005. Operating income from the Defense
segment increased 12.7% to $13.7 million, or 10.6% of sales, from
$12.1 million, or 12.1% of sales, during the same period in 2005.
The decrease in the operating margin was largely due to an increase
in the level of services-based sales, that generally earn lower
margins, resulting primarily from higher logistical support for
fielded Shadow 200 TUAS. Further, the first quarter of 2005
experienced higher margins due to production efficiencies realized
on the initial full-rate production contract for the Shadow 200
TUAS and the favorable Joint Service Electronic Combat Systems
Tester ("JSECST") production program. These contracts were
completed in 2005. Also contributing to the lower margin in 2006
was higher pension expense of $0.7 million, due generally to
greater employment and a lower discount rate. Net sales from the
Energy segment increased 20.7% to $8.9 million from $7.4 million in
the first quarter of 2005. The increase was primarily driven by
higher demand for its alternative fuel products, such as coal and
wood burning stokers, in response to recent high and volatile
prices for oil and natural gas. The Energy segment's operating
income increased to $1.7 million from $0.1 million during the same
period in 2005. The increase in operating income was due to
increased sales and profit margins in 2006. The improved margins
were a result of the restructuring activities in 2005. Financial
Results for Discontinued Operations The loss from the Company's
discontinued transportation operations in the first quarter of 2006
was $287,000, net of tax benefit, or $0.02 per diluted share,
compared to income of $48,000, net of tax, or $0.00 per diluted
share, during the same period in 2005. With respect to its
investment in Electric Transit, Inc. (ETI) as of April 2006, the
Company's AAI subsidiary satisfied all remaining guaranty
obligations with the majority of remaining expenses attributable to
ongoing litigation involving AAI's recovery of payments (and other
claims) under a labor and materials bond. Funded New Orders and
Funded Backlog During the first quarter of 2006, the Company
received $183.2 million of funded new orders for products and
services, an increase of $87.4 million, or 91.2%, compared to $95.8
million during the same period in 2005. The orders in 2006 included
$167.1 million in the Defense segment and $16.1 million in the
Energy segment. Funded backlog for the Company's continuing
operations was $541.4 million at March 31, 2006, an increase of
$45.5 million, or 9.2%, from $495.9 million at December 31, 2005.
The Company's funded new orders in the first quarter of 2006
included among others the following awards: Unmanned Aircraft
Systems (UAS) - $68.5 million for the continuation and expansion of
the Shadow 200 TUAS logistical support activities for delivered
Shadow 200 TUAS systems including systems deployed in Operation
Iraqi Freedom; - $15.0 million for the Extended Range Multi Purpose
Unmanned Aircraft Systems Design and Development program; - $7.3
million for TUAS Engineering Services; Services - $37.1 million for
F-22 Raptor Maintenance Training Devices; - $5.7 million for
Biological Detection Systems modifications; Test - $5.6 million for
JSECST Lot 4 production. Recent New Orders - In early May, the
Company received a fully funded $87 million order from its U.S.
Army customer for the fourth consecutive full-rate production
contract for nine additional Shadow 200 TUAS. - In early May, the
Company also received a $105 million order from its U.S. Army
customer, of which $67.6 million has been funded, to continue
providing logistics support for the 43 Shadow systems currently
fielded, as well as the refurbishment of systems returning from
deployment. Dividend Declaration The Company also announced today
that its Board of Directors has declared a dividend of $0.10 a
share on its Common Stock, payable May 25, 2006 to stockholders of
record at the close of business on May 18, 2006. Conference Call
Webcast The Company will hold a simultaneous conference call and
audio Webcast on Monday, May 8, 2006, at 10:00 a.m. (ET), to
discuss financial results for its first quarter ended March 31,
2006. A live webcast of the call will be accessible for all
interested parties in the Investor Relations section on the
Company's website, http://www.unitedindustrial.com/, or on
http://www.earnings.com/. Following the call, the webcast will be
archived for a period of approximately three months and available
at http://www.unitedindustrial.com/ or at http://www.earnings.com/.
Use of Non-GAAP Measures In addition to disclosing financial
results that are determined in accordance with accounting
principles generally accepted in the United States of America
("GAAP"), the Company discloses EBITDA (earnings before interest,
taxes, depreciation, and amortization), which is a non-GAAP
measure. In addition, the Company discloses Free Cash Flow, a
non-GAAP measure, which equals net cash provided by operating
activities less net cash used in acquiring property and equipment,
net of retirements. The Company believes EBITDA and Free Cash Flow
are used by some investors, analysts, lenders and other parties to
measure the Company's performance over time. Management believes
that providing this additional information is useful to
understanding the Company's ability to meet capital expenditures
and working capital requirements and to better assess and
understand operating performance. The measures allow investors,
analysts, lenders and other parties to better evaluate the
Company's financial performance and prospects in the same manner as
management. Because the Company's methods for calculating such
non-GAAP measures may differ from other companies' methods, such
non-GAAP measures presented may not be comparable to similarly
titled measures reported by other companies. Such measures are not
recognized in accordance with GAAP, and the Company does not intend
for this information to be considered in isolation or as a
substitute for GAAP measures. Reconciliations from non-GAAP
reported measures described in this press release to GAAP reported
results are provided in the financial tables attached to this press
release. Forward-Looking Information Except for the historical
information contained herein, information set forth in this press
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
"expects," "anticipates," "intends," "plans," "believes,"
"estimates," and variations of such words and similar expressions
that indicate future events and trends 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. The Company makes no
commitment to update any forward- looking statement or to disclose
any facts, events, or circumstances after the date hereof that may
affect the accuracy of any forward-looking statement. For
additional information about the Company and its various risk
factors, please see the Company's most recent Annual Report on Form
10-K and other documents as filed with the Securities and Exchange
Commission. United Industrial Corporation & Subsidiaries
Consolidated Earnings Per Share (Unaudited) Basic earnings per
share for all periods presented was computed by dividing net
earnings for the respective period by the weighted average number
of shares of the Company's par value $1.00 per share common stock
("Common Stock") outstanding during the period. Diluted earnings
per share was computed by dividing (i) net earnings during the
period, adjusted to add back the after-tax interest charges
incurred on the Company's $120,000,000 aggregate principal amount
of 3.75% convertible senior notes due September 15, 2024 ("3.75%
Convertible Senior Notes"), by (ii) the weighted average number of
shares of Common Stock outstanding during the period, adjusted to
add the weighted average number of potential dilutive common shares
that would have been outstanding upon the assumed exercise of stock
options using the treasury stock method and conversion of the 3.75%
Convertible Senior Notes for Common Stock. Basic and diluted
earnings per share amounts for continuing operations were computed
as follows: Three Months Ended March 31, 2006 2005 (Dollars in
thousands, except per share data) Per Per Earnings Shares Share
Earnings Shares Share Basic Earnings Per Share Income from
continuing operations $8,855 11,289,402 $0.78 $12,624 12,316,153
$1.03 Effect of Dilutive Securities Stock Options -- 429,694 --
443,849 3.75% Convertible Senior Notes 1,310 3,058,356 606
3,058,356 Diluted Earnings Per Share Income from continuing
operations $10,165 14,777,452 $0.69 $13,230 15,818,358 $0.84 United
Industrial Corporation & Subsidiaries Consolidated Statements
of Operations (Dollars in Thousands) (Unaudited) Three Months Ended
2006 vs 2005 March 31, Increase/(Decrease) 2006 2005 Amount % Net
sales $137,619 $107,548 $30,071 28.0 Operating costs and expenses
122,507 95,310 27,197 28.5 Total operating income 15,112 12,238
2,874 23.5 Non-operating income and (expense) Interest income 1,089
1,051 38 3.6 Interest expense (1,383) (1,828) 445 24.3 Gain on sale
of property -- 7,152 (7,152) (100.0) Income from equity investment
in joint venture 45 14 31 221.4 Other income, net (620) 622 (1,242)
(199.7) (869) 7,011 (7,880) (112.4) Income from continuing
operations before taxes 14,243 19,249 (5,006) (26.0) Provision for
income taxes (5,388) (6,625) 1,237 18.7 Income from continuing
operations 8,855 12,624 (3,769) (29.9) Income from discontinued
operations, net of taxes (287) 48 (335) (697.9) Net income $8,568
$12,672 $(4,104) (32.4) United Industrial Corporation &
Subsidiaries Consolidated Balance Sheets (Dollars in Thousands)
March 31, December 31, 2006 2005 (unaudited) ASSETS Current assets:
Cash and cash equivalents $86,713 $77,496 Marketable equitable
securities 14,692 11,617 Deposits and restricted cash 2,515 4,810
Trade receivables, net 71,659 69,284 Inventories 33,611 23,603
Prepaid expenses and other current assets 8,533 9,244 Assets of
discontinued operations 12,496 12,428 Total current assets 230,219
208,482 Deferred income taxes 12,771 12,835 Intangible assets 7,824
7,946 Goodwill 3,646 3,607 Other assets 6,223 6,602 Insurance
receivable - asbestos litigation 20,186 20,186 Property and
equipment, net 43,317 44,743 Total assets $324,186 $304,401
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current
portion of long-term debt $988 $964 Accounts payable 29,940 25,787
Accrued employee compensation and taxes 16,675 17,290 Other current
liabilities 22,636 20,147 Liabilities of discontinued operations
13,136 13,287 Total current liabilities 83,375 77,475 Long-term
debt 120,378 120,723 Post-retirement benefit obligation, other than
pension 19,121 19,409 Minimum pension liability 30,437 28,448
Accrual for asbestos obligations 31,450 31,450 Other long-term
liabilities 2,011 1,374 Total liabilities 286,772 278,879
Shareholders' equity: Preferred stock, par value $1.00 per share;
1,000,000 shares authorized; none issued and outstanding -- --
Common stock, par value $1.00 per share; 30,000,000 shares
authorized; 11,355,543 and 11,279,379 shares outstanding at March
31, 2006, and December 31, 2005, respectively (net of shares held
in treasury) 14,374 14,374 Additional capital 84,255 83,799
Retained earnings 47,163 39,724 Treasury stock, at cost, 3,018,605
and 3,094,769 shares at March 31, 2006 and December 31, 2005,
respectively (74,976) (76,868) Accumulated other comprehensive
loss, net of tax (33,402) (35,507) Total shareholders' equity
37,414 25,522 Total liabilities and shareholders' equity $324,186
$304,401 United Industrial Corporation & Subsidiaries
Statements of Consolidated Cash Flows (Dollars in Thousands)
(Unaudited) Three Months Ended March 31, 2006 2005 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $8,568 $12,672 Adjustments to
reconcile net income to net cash provided by operating activities:
Loss (income) from discontinued operations, net of tax 287 (48)
Debt issuance cost and deferred financing fees 309 244 Depreciation
and amortization 2,814 1,944 Stock based compensation 362 -- Gain
on sale of property (7,152) Deferred income taxes (131) 2,833
Income from equity investment in joint venture (45) (14) Excess tax
benefit from stock based compensation (764) -- Other, net 40 (276)
Changes in operating assets and liabilities: Increase in trade
receivables (2,375) (3,839) (Increase) decrease in inventories
(9,758) 9,623 (Increase) decrease in prepaid expenses and other
current assets (43) 3,278 Increase (decrease) in accounts payable,
accruals, and other current liabilities 9,092 (2,739) Net cash
provided by operating activities from continuing operations 8,356
16,526 Net cash used in operating activities by discontinued
operations (506) (2,738) Net cash provided by operating activities
7,850 13,788 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of
property and equipment (1,466) (7,994) Proceeds from sale of
available for sale securities -- 124,619 Proceeds from sale of
property -- 7,555 Net cash (used in) provided by investing
activities (1,466) 124,180 CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (321) (334) Repayment of collateral
received in securities lending transaction -- (124,619) Proceeds
from exercise of stock options 1,222 344 Excess tax benefit from
stock based compensation 764 Decrease in deposits and restricted
cash 2,295 29,047 Dividends paid (1,127) (1,233) Net cash provided
by (used in) financing activities 2,833 (96,795) Increase in cash
and cash equivalents 9,217 41,173 Cash and cash equivalents at
beginning of period 77,496 80,679 Cash and cash equivalents at end
of period $86,713 $121,852 United Industrial Corporation &
Subsidiaries Results By Operating Segment (Dollars in Thousands)
(Unaudited) Three Months Ended March 31, 2006 2005 Net sales
Defense $128,701 $100,157 Energy 8,918 7,391 $137,619 $107,548
Operating income (loss) from continuing operations: Defense $13,655
$12,118 Energy 1,707 104 Other (250) 16 $15,112 $12,238 Funded New
Orders Defense $167,078 $85,563 Energy 16,144 10,269 $183,222
$95,832 March 31, December 31, 2006 2005 Funded backlog Defense
$525,743 $487,366 Energy 15,705 8,499 $541,448 $495,865 United
Industrial Corporation & Subsidiaries Non-GAAP Financial Data
(Dollars in Thousands) (Unaudited) Three Months Ended March 31,
2006 2005 EBITDA (continuing operations): Defense $16,482 $21,309
Energy 1,749 211 Other (880) 450 17,351 21,970 Add (deduct):
Depreciation and amortization (2,814) (1,944) Interest (expense)
income, net (294) (777) Provision for income taxes (5,388) (6,625)
Income from continuing operations $8,855 $12,624 Three Months Ended
March 31, 2006 2005 Free cash flow (continuing operations): Cash
provided by operating activities $8,356 $16,526 Purchases of
property and equipment (1,466) (7,994) Proceeds from sale of
property -- 7,555 Free cash flow continuing operations $6,890
$16,087 DATASOURCE: United Industrial Corporation CONTACT: Stuart
F. Gray, Treasurer of United Industrial Corporation,
+1-410-628-8686 Web site: http://www.unitedindustrial.com/ Company
News On-Call: http://www.prnewswire.com/comp/113559.html
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United Industrial (NYSE:UIC)
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