10-K 1 0001.txt FORM 10-K ================================================================================ 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, 2000. 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 ------ 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 a definitive proxy or information statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K |_|. [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 9, 2001, computed by reference to the closing sale price of the registrant's Common Stock on the New York Stock Exchange on such date: $162,272,289. On March 9, 2001, the registrant had outstanding 12,444,638 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, 2000 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 8, 2001 are incorporated by reference into Part III of this report. [Cover page 2 of 2 pages] PART I 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; the ability to negotiate financing arrangements with lenders; 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. ITEM 1. BUSINESS At December 31, 2000, the operations of United Industrial Corporation ("United") consist of three principal business segments: defense, transportation and energy systems, principally conducted through two wholly-owned subsidiaries. Defense AAI Corporation AAI Corporation ("AAI") is engaged in engineering, development and manufacturing in the following major areas: (1) unmanned aerial vehicle systems; (2) automatic test equipment for electronic systems and components; (3) training and simulation systems; (4) ordnance systems; and (5) mechanical support systems for industrial, military, and marine applications. AAI also provides engineering and maintenance services. 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. In 2000 approximately 73% of the sales volume of AAI consisted of research, development and production of military items under domestic defense contracts compared to 79% in 1999. Certain of the contracts currently being worked on by AAI involve unmanned aerial vehicles for the U.S. Army, testing systems for U.S. military aircraft and training equipment for the U.S. Air Force and U.S. Navy. International defense contracts including foreign military sales through the U.S. government, accounted for 20.0% of Company sales in 2000 as compared to 15.8% in 1999. 2 These contracts generally related to unmanned aerial vehicle systems and weapon training systems for foreign governments. The balance of AAI's non-transportation business consists of work performed in the non-defense markets, principally fluid 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 Aerial Vehicle ("UAV") business in 1986. In 1999 the Company was awarded a contract to provide the next generation of tactical UAV's to the U.S. Army. The Company also produces the highly successful Pioneer Unmanned Aerial Vehicle employed by the United States during Operation Desert Storm and in the 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. On September 29, 2000, the Company sold all of the capital stock of Symtron Systems, Inc. Energy Systems Detroit Stoker Company Detroit Stoker Company ("Detroit Stoker") is a leading supplier of stokers and related combustion equipment for the production of steam used in heating, industrial processing and electric power generation around the world. Detroit Stoker offers a full line of stokers for burning bituminous and lignite coals as well as biomass, municipal solid waste and industrial by-products. Detroit Stoker also provides auxiliary equipment and services including fuel feed and ash removal systems, gas/oil burners and complete aftermarket services for its products. Principal markets include Pulp and Paper, Public Utilities, Independent Power Producers, Industrial manufacturing, Institutional and Cogeneration facilities. The products of Detroit Stoker compete with those of several other manufacturers. Competition is based on several factors including price, features and performance. Detroit Stoker's waste to energy technology is used extensively in both public and private plants that generate steam and power from municipal waste. Its solid fuel combustion technologies are particularly well suited for biomass fuels that generate power from waste products such as bark, sugar cane husks, sawdust, sunflower hulls, and poultry litter. The combustion of biomass fuels 3 is gaining worldwide popularity, as it does not contribute to global warming. Detroit Stoker exports its products to Europe, Asia, South America and Australia, and is a market leader in North America. Detroit Stoker's globalization strategy is to further expand both its customer and supplier base in each of these regions. Detroit Stoker's administrative offices and its principal manufacturing operations are located in Monroe, Michigan. Detroit Stoker also operates a foundry through a subsidiary (Midwest Metallurgical Laboratory, Inc.) in Marshall, Michigan. The foundry is engaged in the manufacture of grey and ductile iron, stainless steel and special alloy iron castings that are principally used in Detroit Stoker's products. 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. ETI is an unconsolidated affiliate of AAI and accordingly, AAI records its equity share of income or loss in ETI. Under these contracts which are valued at $32 million and $187 million, respectively, AAI has received subcontracts of $9.4 million and $63.6 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 2000 Annual Report to Shareholders (the "Annual Report"), which letter is incorporated herein by reference. Reference is also made to the information set forth in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report, which section is incorporated herein by reference. General Employees As of March 1, 2001 United and its subsidiaries had approximately 1,700 employees. Approximately 107 of these employees are represented by two unions under contracts expiring 4 between July 2003 and January 2004. 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 electronic, ordnance and marine equipment and stokers. In addition, United has 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 ordnance devices, ground support equipment and electronic developments. No patent is considered to be of material importance to United. Research and Development During 2000, 1999 and 1998, the subsidiaries of United (exclusive of AAI) expended approximately $166,000, $117,000 and $201,000, 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, 2000 and 1999 was as follows: 2000 1999 ---- ---- Defense $190,161,000 $153,048,000 Energy Systems 4,633,000 4,750,000 Transportation 219,176,000 135,018,000 Except for approximately $155,000,000, substantially all of the backlog orders at December 31, 2000 are expected to be filled in 2001. 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. 5 Foreign Operations and Export Sales United and its subsidiaries have no significant foreign operations. During 2000, 1999 and 1998 export sales by United and its subsidiaries amounted to approximately $57,110.00, $42,120,000 and $40,994,000, 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 23, 2001.
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 November Lexington Park, MD 30, 2001 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 Leased to: Hunt Valley, MD administrative facilities of AAI 317,831 October 31, 2003 22,410 November 30, 2003 3200 Enterprise Street Manufacturing, engineering and 131,544 Leased to April Brea, CA administrative facilities 2009 of ACL Technologies 1213 Jefferson Davis Highway Office Space 2,200 Leased to February Arlington, VA 22202 28, 2006
6 For information with respect to obligations for lease rentals, see Note 9 to the 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 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's financial position, results of operations or cash flows. 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. 7
Age at Name Position, Office December 31, 2000 ---- ---------------- ----------------- Richard R. Erkeneff* -- President of the Company (since October 1995) and AAI 65 (since November 1993). Robert Worthing -- Vice President and General Counsel of the Company (since 55 July 1995); General Counsel of AAI (since April 1992). Susan Fein Zawel* -- Vice President, Corporate Communications and Associate 46 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 39 (since October 1995) and Treasurer (since December 1994) of the Company; Vice President, Chief Financial Officer and Treasurer of AAI (since July 2000).
-------------------- * Member of the Company's Board of Directors 8 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 15 to the 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 section entitled "Five-Year Financial Data" in 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" in 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" in 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 in the Annual Report are incorporated herein by reference. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 9 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 8, 2001 (the "Proxy Statement"), which section (other than the Compensation Committee Report, Audit 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, 2000, 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, Audit 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, Audit Committee Report and Performance Graph) is incorporated herein by reference. 10 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 (1). (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)- 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) (the "Loan Agreement") by and among First Union Commercial Corporation and the Company, AAI Corporation, AAI Engineering Support, Inc., AAI/ACL Technologies, Inc., Detroit Stoker Company, Midwest Metallurgical Laboratory, Inc., and AAI MICROFLITE Simulation International Corporation (5). (10)(c)(1)- First Amendment to Loan Agreement. (10)(c)(2)- Second Amendment to Loan Agreement. (10)(c)(3)- Third Amendment to Loan Agreement (8). (10)(c)(4)- Fourth Amendment to Loan Agreement (9). (10)(c)(5)- Fifth Amendment to Loan Agreement. (10)(c)(6)- Sixth Amendment to Loan Agreement. (10)(d)- Revolving Note dated as of June 11, 1997 made payable to the order of First Union Commercial Corporation (the "Revolving Note"). (10)(d)(1)- First Amendment to Revolving Note (8). (10)(d)(2)- Second Amendment to Revolving Note. (10)(d)(3)- Third Amendment to Revolving Note. (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). 11 (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 (1). (10)(k)- Employment Agreement, dated March 3, 2000, between United and Susan Fein Zawel (7). (10)(l)- Employment Agreement, dated March 3, 2000, between United and Robert Worthing (7). (10)(m)- Employment Agreement, dated March 3, 2000, between United and James H. Perry (7). (13)- United's 2000 Annual Report to Shareholders. (21)- Subsidiaries of United. (23)- Consent of Independent Auditors. (1) Incorporated by reference to United's Annual Report on Form 10-K for the year ended December 31, 1998. (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 Annual Report on Form 10-K for the year ended December 31, 1999. (8) Incorporated by reference to United's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000. (9) Incorporated by reference to United's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. (b) Reports on Form 8-K - United filed one Current Report on Form 8-K during the quarter ended December 31, 2000, relating to the sale of Symtron Systems, Inc., dated September 29, 2000. 12 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, 2000 United Industrial Corporation New York, New York F-1 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, 2000, are incorporated by reference in Item 8: Consolidated Balance Sheets--December 31, 2000 and 1999 Consolidated Statements of Operations-- Years Ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows Years Ended December 31, 2000, 1999 and 1998 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, 2000 and 1999, and for each of the three years in the period ended December 31, 2000, and have issued our report thereon dated February 28, 2001. 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. /s/ ERNST & YOUNG LLP New York, New York February 28, 2001 F-3 Schedule II -- Valuation and Qualifying Accounts United Industrial Corporation and Subsidiaries December 31, 2000
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, 2000: Deducted from asset account: Allowance for doubtful accounts $ 235,000 $ 235,000 ========== ========== Product warranty liability $5,600,000 $1,300,000(B) $1,746,000(C) $5,154,000 ========== ========== ========== ========== Year ended December 31, 1999: Deducted from asset accounts: Allowance for doubtful accounts $ 235,000 $ 235,000 ========== ========== Product warranty liability $ 640,000 $5,000,000(B) $ 40,000(C) $5,600,000 ========== ========== ========== ========== Year ended December 31, 1998: Deducted from asset account: Allowance for doubtful accounts $ 240,000 $ 5,000(A) $ 235,000 ========== ========== ========== Product warranty liability $1,072,000 $ 432,000(C) $ 640,000 ========== ========== ==========
(A) Write-off of uncollectible amounts. (B) In February 2000, the Company was informed of a warranty issue by one of its customers. Based upon this information, the Company recorded a $5 million provision for the estimate of the future warranty costs to be incurred. This amount was recorded in the fourth quarter of 1999. In 2000 this provision was increased by $1.3 million. (C) Product warranty expenditures. F-4 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 22, 2001 ----------------------------------- 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 22, 2001 -------------------------------------------- Harold S. Gelb, Chairman of the Board and Director /s/ Joseph S. Schneider March 22, 2001 -------------------------------------------- Joseph S. Schneider, Director /s/ Richard R. Erkeneff March 22, 2001 -------------------------------------------- Richard R. Erkeneff, President and Chief Executive Officer and Director /s/ Edward C. Aldridge, Jr. March 22, 2001 -------------------------------------------- Edward C. Aldridge, Jr., Director /s/ E. Donald Shapiro March 22, 2001 -------------------------------------------- E. Donald Shapiro, Director /s/ Susan Fein Zawel March 22, 2001 -------------------------------------------- Susan Fein Zawel, Vice President and Director /s/ James H. Perry March 22, 2001 -------------------------------------------- James H. Perry, Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) EXHIBIT INDEX Exhibit No. (3)(a)- Restated Certificate of Incorporation of United (1). (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)- 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) (the "Loan Agreement") by and among First Union Commercial Corporation and the Company, AAI Corporation, AAI Engineering Support, Inc., AAI/ACL Technologies, Inc., Detroit Stoker Company, Midwest Metallurgical Laboratory, Inc., and AAI MICROFLITE Simulation International Corporation (5). (10)(c)(1)- First Amendment to Loan Agreement. (10)(c)(2)- Second Amendment to Loan Agreement. (10)(c)(3)- Third Amendment to Loan Agreement (8). (10)(c)(4)- Fourth Amendment to Loan Agreement (9). (10)(c)(5)- Fifth Amendment to Loan Agreement. (10)(c)(6)- Sixth Amendment to Loan Agreement. (10)(d)- Revolving Note dated as of June 11, 1997 made payable to the order of First Union Commercial Corporation (the "Revolving Note"). (10)(d)(1)- First Amendment to Revolving Note (8). (10)(d)(2)- Second Amendment to Revolving Note. (10)(d)(3)- Third Amendment to Revolving Note. (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 (1). (10)(k)- Employment Agreement, dated March 3, 2000, between United and Susan Fein Zawel (7). (10)(l)- Employment Agreement, dated March 3, 2000, between United and Robert Worthing (7). (10)(m)- Employment Agreement, dated March 3, 2000, between United and James H. Perry (7). (13)- United's 2000 Annual Report to Shareholders. (21)- Subsidiaries of United. (23)- Consent of Independent Auditors. (1) Incorporated by reference to United's Annual Report on Form 10-K for the year ended December 31, 1998. (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 Annual Report on Form 10-K for the year ended December 31, 1999. (8) Incorporated by reference to United's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000. (9) Incorporated by reference to United's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.