- Board of Directors Declares Dividend HUNT VALLEY, Md., Aug. 10
/PRNewswire-FirstCall/ -- United Industrial Corporation (NYSE:UIC)
today reported financial results for its second quarter ended June
30, 2007. The company designs, produces and supports aerospace and
defense systems through its wholly owned subsidiary, AAI
Corporation, and AAI Corporation's direct and indirect wholly owned
subsidiaries, AAI Services Corporation, Aerosonde Pty Ltd,
Aerosonde North America Incorporated, ESL Defence Limited,
McTurbine Inc. and Symtx, Inc. Its high-technology products and
services include unmanned aircraft systems, training and simulation
systems, automated aerospace test and maintenance equipment,
armament systems, aviation ground support equipment, logistical and
engineering services, and maintenance, repair and overhaul
activities. On December 29, 2006, United Industrial divested its
energy segment, which consisted of Detroit Stoker Company, as part
of the company's ongoing strategy to focus on its core defense
business. The former energy segment was previously reported as part
of continuing operations and is now included in discontinued
operations. Accordingly, the historical results of operations and
financial position of the discontinued energy operation reflected
in the Consolidated Statements of Operations and Cash Flows for the
three and six month periods ended on June 30, 2006 are included in
discontinued operations and discussed separately in the information
that follows. Financial Results for the Second Quarter Ended June
30, 2007 Net sales for the second quarter of 2007 increased 33.3%
to $183.2 million from $137.4 million during the same period in
2006. The growth in net sales includes $18.0 million related to
acquisitions made by the company in 2006, $8.6 million of increased
sales for the Unmanned Aircraft Systems ("UAS") One System(R)
ground control station including greater developmental efforts
supporting the Extended Range Multi-Purpose UAS program and
production of One System Remote Video Terminals, an increase of
$5.7 million in logistical support for an increasing number of
fielded Shadow(R) 200 Tactical Unmanned Aircraft Systems ("Shadow
200 TUAS"), $5.6 million increased volume on aircraft Maintenance
Training Device ("MTD") programs, a $2.1 million increase in
engineering activities primarily related to new UAS initiatives, a
$1.5 million increase in the Shadow 200 TUAS production program,
and other increases of $4.3 million. Operating margin for the
second quarter of 2007 was 9.6%, 0.1 of a percentage point greater
than during the second quarter of 2006. This increase includes
favorable performance on fixed price production contracts and lower
non-cash pension expense, partially offset by higher intangible
asset amortization resulting from acquisitions made during the
second half of 2006, and a cost overrun of $1.3 million (largely
due to penalties for late deliveries) on a particular Training
system fixed price contract nearing completion. Net income from
continuing operations for the second quarter of 2007 increased
24.7% to $10.4 million, or $0.82 per diluted share, from $8.4
million, or $0.60 per diluted share, during the same period in
2006. Net income, including results of both continuing and
discontinued operations, for the second quarter of 2007 decreased
1.2% to $10.1 million, or $0.80 per diluted share, from $10.3
million, or $0.72 per diluted share, during the same period in
2006. Financial Results for the Six Months Ended June 30, 2007 Net
sales for the six months ended June 30, 2007 increased 29.3% to
$344.0 million from $266.1 million during the same period in 2006.
The growth in net sales includes $36.5 million related to
acquisitions made by the company in 2006, $16.1 million of
increased sales for the UAS One System ground control station
including greater developmental efforts supporting the Extended
Range Multi-Purpose UAS program and production of One System Remote
Video Terminals, a $15.5 million increase due to increased volume
on aircraft MTD programs, a $10.7 million increase in logistical
support for an increasing number of fielded Shadow 200 TUAS, a $4.1
million increase in UAS engineering activities, and $8.2 million in
other increases. These increases were partially offset by a
decrease of $13.2 million in the Shadow 200 TUAS production
program, primarily due to the timing of material requirements in
the first quarter of 2007. Operating margin for the first six
months of 2007 was 10.0%, 0.1 of a percentage point greater than
during the first six months of 2006. This increase includes
favorable performance on fixed price production contracts and lower
non-cash pension expense, partially offset by higher intangible
asset amortization resulting from acquisitions made during the
second half of 2006, a cost overrun of $1.3 million (largely due to
penalties for late deliveries) on a particular Training system
fixed price contract nearing completion, higher non-cash long-term
incentive compensation, and lower award fee income due to the
timing of recognizing such award fees for the Biological Detection
Systems ("BDS") program. Net income from continuing operations for
the six months ended June 30, 2007 increased 27.7% to $20.4
million, or $1.57 per diluted share, from $16.0 million, or $1.20
per diluted share, during the same period in 2006. Net income,
including results of both continuing and discontinued operations,
for the six months ended June 30, 2007 increased 2.7% to $19.3
million, or $1.49 per diluted share, from $18.8 million, or $1.39
per diluted share, during the same period in 2006. Financial
Results for Discontinued Operations The company recorded a loss,
net of tax benefit, from discontinued operations for the second
quarter of 2007 of $0.3 million and income, net of tax provision,
for the second quarter of 2006 of $1.9 million including $2.2
million from the discontinued energy segment that was divested on
December 29, 2006. The company recorded a loss, net of tax benefit,
from discontinued operations for the six months ended June 30, 2007
of $1.1 million and income, net of tax provision, for the six
months ended June 30, 2006 of $2.8 million including $3.4 million
from the company's discontinued energy segment. The loss for the
three and six months ended June 30, 2007 was primarily attributable
to on-going litigation costs involving AAI's claims under a labor
and materials bond. Funded New Orders and Funded Backlog During the
second quarter of 2007, the company received $144.5 million of
funded new orders for products and services, a decrease of $107.7
million, or 42.7%, compared to $252.2 million of funded new orders
during the same period in 2006. During the six months ended June
30, 2007, the company received $360.2 million of funded new orders
for products and services, a decrease of $59.1 million, or 14.1%,
compared to $419.3 million during the same period in 2006. The
decrease in funded new orders in 2007 compared to 2006 primarily
reflects the timing of new orders for Shadow 200 TUAS production
and logistical support for fielded Shadow 200 TUAS. The company
does not expect this decrease to represent a trend for future
funded new orders. Funded backlog for the company's continuing
operations was $678.5 million at June 30, 2007, an increase of
$16.3 million, or 2.5%, from $662.2 million at December 31, 2006.
The company's funded new orders for the second quarter of 2007
included the following awards: Unmanned Aircraft Systems -- $39.2
million additional funding from the U.S. Army for four additional
Shadow 200 TUAS; -- $27.3 million from the U.S. Army for
continuation of the performance-based logistical support activities
for delivered Shadow 200 TUAS; -- $12.0 million from the U.S. Army
for Shadow 200 TUAS performance-based logistics engineering
services; -- $7.3 million from the U.S. Army to convert TUAS ground
control stations to a common configuration; -- $7.3 million from
General Atomics for the Extended Range Multi-Purpose Unmanned
Aircraft System ground control station development program; -- $4.8
million from the U.S. Army for TUAS One System Remote Video
Terminal Contractor Logistics Support; Services and Logistics --
$4.5 million from the U.S. Army for logistics support of the joint
service Biological Detection Systems program. Dividend Declaration
The company also announced today that its Board of Directors has
declared a dividend of $0.10 per share on its common stock, payable
August 27, 2007 to shareholders of record at the close of business
on August 20, 2007. Share Purchase Plan On May 11, 2007, United
Industrial's Board of Directors authorized a stock purchase plan
for up to $50 million. The Board also authorized an additional $50
million of stock purchases for a total of $100 million, contingent
on the company executing an amended or new credit facility of at
least $200 million in capacity. An amendment and restatement of the
existing credit facility was completed on May 31, 2007, increasing
the capacity of the facility to $200 million. During the second
quarter, United Industrial purchased 577,544 shares of Common Stock
at an average market price of $59.39. At June 30, 2007, $65.7
million remained available under the stock purchase plan.
Conference Call Webcast The company will hold a simultaneous
conference call and audio Webcast on Friday, August 10, 2007, at
10:00 a.m. (EDT), to discuss financial results for its second
quarter ended June 30, 2007. 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) from continuing
operations, 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 from continuing operations and Free Cash Flow from
continuing operations 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, 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. All information in this press release is as of
August 10, 2007. 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 common stock,
par value $1.00 per share ("Common Stock") outstanding during the
period. Diluted earnings per share was computed by dividing net
earnings during the period, adjusted to add back the after-tax
interest and other charges related to the company's $120.0 million
aggregate principal amount of 3.75% Convertible Senior Notes due
September 15, 2024 ("3.75% Convertible Senior Notes"), by the
weighted average number of shares of Common Stock outstanding
during the period, adjusted to add the weighted average number of
potential dilutive shares of Common Stock 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 June 30, 2007 2006 (Dollars in thousands, Per Per
except per share data) Earnings Shares Share Earnings Shares Share
Basic Earnings Per Share: Income from continuing operations $10,415
10,278,225 $1.01 $8,352 11,400,448 $0.73 Effect of Dilutive
Securities: Stock Options -- 399,728 -- 399,259 3.75% Convertible
Senior Notes 863 3,058,356 492 3,058,356 Diluted Earnings Per
Share: Income from continuing operations $11,278 13,736,309 $0.82
$8,844 14,858,063 $0.60 Six Months Ended June 30, 2007 2006
(Dollars in thousands, Per Per except per share data) Earnings
Shares Share Earnings Shares Share Basic Earnings Per Share: Income
from continuing operations $20,440 10,683,366 $1.91 $16,004
11,345,420 $1.41 Effect of Dilutive Securities: Stock Options --
392,076 -- 416,578 3.75% Convertible Senior Notes 1,740 3,058,356
1,802 3,058,356 Diluted Earnings Per Share: Income from continuing
operations $22,180 14,133,798 $1.57 $17,806 14,820,354 $1.20 United
Industrial Corporation & Subsidiaries Consolidated Statements
of Operations (Dollars in Thousands) (Unaudited) Three Months Ended
2007 vs 2006 June 30, Increase/(Decrease) 2007 2006 Amount % Net
sales $183,170 $137,400 $45,770 33.3 % Operating costs and expenses
(165,527) (124,360) (41,167) 33.1 Operating income 17,643 13,040
4,603 35.3 Non-operating income and (expense): Interest income 243
908 (665) (73.2) Interest expense (1,646) (1,442) (204) 14.1 Other
income, net 291 753 (462) (61.4) (1,112) 219 (1,331) (607.8) Income
from continuing operations before income taxes 16,531 13,259 3,272
24.7 Provision for income taxes (6,116) (4,907) (1,209) 24.6 Income
from continuing operations 10,415 8,352 2,063 24.7 (Loss) income
from discontinued operations, net of income tax (provision) benefit
(282) 1,907 (2,189) (114.8) Net income $10,133 $10,259 $(126)
(1.2)% Six Months Ended 2007 vs 2006 June 30, Increase/(Decrease)
2007 2006 Amount % Net sales $344,016 $266,101 $77,915 29.3 %
Operating costs and expenses (309,627) (239,656) (69,971) 29.2
Operating income 34,389 26,445 7,944 30.0 Non-operating income and
(expense): Interest income 785 1,833 (1,048) (57.2) Interest
expense (3,089) (2,825) (264) 9.3 Other income, net 368 168 200
119.0 (1,936) (824) (1,112) (135.0) Income from continuing
operations before income taxes 32,453 25,621 6,832 26.7 Provision
for income taxes (12,013) (9,617) (2,396) 24.9 Income from
continuing operations 20,440 16,004 4,436 27.7 (Loss) income from
discontinued operations, net of income tax (provision) benefit
(1,112) 2,823 (3,935) (139.4) Net income $19,328 $18,827 $501 2.7 %
United Industrial Corporation And Subsidiaries Consolidated
Condensed Balance Sheets (Dollars in Thousands) June 30, December
31, 2007 2006 (Unaudited) ASSETS Current assets: Cash and cash
equivalents $1,633 $39,158 Accounts receivable, net 64,020 71,503
Note receivable 833 833 Inventories 86,948 73,700 Prepaid expenses
and other current assets 10,963 10,102 Assets of discontinued
operations 11,791 11,996 Total current assets 176,188 207,292
Marketable equity securities 5,474 11,392 Deferred income taxes,
net of valuation allowance 3,423 4,073 Note receivable 3,967 4,167
Intangible assets, net 30,538 27,894 Goodwill 47,060 51,314 Other
assets 5,825 5,466 Property and equipment, net 45,995 47,042 Total
assets $318,470 $358,640 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Current portion of long-term debt $17 $2,896
Accounts payable 43,351 39,578 Accrued employee compensation and
taxes 18,648 17,506 Customer advances 22,007 32,393 Borrowings
under revolving credit facility 25,473 -- Post-retirement benefit
obligation other 2,118 2,118 than pension Other current liabilities
13,010 13,988 Liabilities of discontinued operations 12,529 12,113
Total current liabilities 137,153 120,592 Long-term debt 120,022
120,030 Post-retirement benefit obligation other than pension
13,539 14,052 Unfunded status of pension liability 36,617 37,830
Other liabilities 3,492 2,837 Total liabilities 310,823 295,341
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; 9,954,867 and 11,320,095 shares outstanding at June 30,
2007 and December 31, 2006, respectively (net of shares in
treasury) 14,374 14,374 Additional capital 87,989 86,471 Retained
earnings 99,662 82,337 Treasury stock, at cost; 4,419,281 and
3,054,053 shares at June 30, 2007 and December 31, 2006,
respectively (156,237) (78,505) Accumulated other comprehensive
loss, net of income tax (38,141) (41,378) Total shareholders'
equity 7,647 63,299 Total liabilities and shareholders' equity
$318,470 $358,640 United Industrial Corporation & Subsidiaries
Statements of Consolidated Cash Flows (Dollars in Thousands)
(Unaudited) Six Months Ended June 30, 2007 2006 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $19,328 $18,827 Adjustments to
reconcile net income to net cash provided by operating activities:
Loss (income) from discontinued operations, net of income tax
benefit (provision) 1,112 (2,823) Amortization of debt issuance
cost and deferred financing costs 610 644 Depreciation and
amortization 7,427 5,354 Stock-based compensation 1,634 1,144
Deferred income tax benefit (329) (573) Excess tax benefit from
stock-based compensation (169) (1,059) Other, net (159) 133 Changes
in operating assets and liabilities (11,601) (5,061) Net cash
provided by operating activities from continuing operations 17,853
16,586 Net cash (used in) provided by operating activities from
discontinued operations (491) 1,730 Net cash provided by operating
activities 17,362 18,316 CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (4,346) (3,484) Proceeds from
sale of marketable equity securities 6,651 -- Collections of note
receivable 200 -- Business acquisition, net of cash acquired --
(6,556) Net cash provided by (used in) investing activities from
continuing operations 2,505 (10,040) Net cash used in investing
activities from discontinued operations -- (42) Net cash provided
by (used in) investing activities 2,505 (10,082) CASH FLOWS FROM
FINANCING ACTIVITIES: Borrowings under revolving credit facility
25,473 -- Repayment of long-term debt (2,887) (642) Decrease in
deposits and restricted cash -- 4,810 Proceeds from exercise of
stock options 960 2,414 Excess tax benefit from stock-based
compensation 169 1,059 Dividends paid (2,130) (2,270) Purchase of
treasury shares (78,977) -- Net cash (used in) provided by
financing activities (57,392) 5,371 (Decrease) increase in cash and
cash equivalents (37,525) 13,605 Cash and cash equivalents at
beginning of period 39,158 77,496 (1) Cash and cash equivalents at
end of period $1,633 $91,101 (2) (1) Includes cash reported in
assets held for sale of $14,363 at January 1, 2006. (2) Includes
cash reported in assets held for sale of $17,460 at June 30, 2006.
United Industrial Corporation & Subsidiaries Non-GAAP Financial
Data from Continuing Operations (Dollars in Thousands) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2007 2006
2007 2006 EBITDA $21,420 $16,380 $42,184 $31,967 Deduct:
Depreciation and amortization (3,486) (2,587) (7,427) (5,354)
Interest expense, net (1,403) (534) (2,304) (992) Provision for
income taxes (6,116) (4,907) (12,013) (9,617) Income from
continuing operations $10,415 $8,352 $20,440 $16,004 Three Months
Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Free
cash flow Cash provided by operating activities $6,041 $10,433
$17,853 $16,586 Purchases of property and equipment (2,154) (2,031)
(4,346) (3,484) Free cash flow $3,887 $8,402 $13,507 $13,102
DATASOURCE: United Industrial Corporation CONTACT: Stuart F. Gray,
Treasurer of United Industrial Corporation, +1-410-628-8686 Web
site: http://www.unitedindustrial.com/ http://www.earnings.com/
Company News On-Call: http://www.prnewswire.com/comp/113559.html
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United Industrial (NYSE:UIC)
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United Industrial (NYSE:UIC)
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