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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant / /
Filed by a party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNITED INDUSTRIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
OPT.CO INC.
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the Appropriate Box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPY
1997 ANNUAL MEETING OF STOCKHOLDERS
OF
UNITED INDUSTRIAL CORPORATION
PROXY STATEMENT
OF
OPT.CO INC.
TO OUR FELLOW UNITED INDUSTRIAL CORPORATION STOCKHOLDERS:
United Industrial Corporation's ("United Industrial Corporation" or the
"Company") Annual Meeting of Stockholders ("Annual Meeting") is scheduled to
take place on May 13, 1997. OPT.CO INC. ("OPT.CO") is soliciting proxies in
favor of independent directors ("OPT.CO Nominees") committed to enhancing
stockholder value. Five years of poor operating performance has resulted in a
material loss in United Industrial Corporation's book value, stock price and
dividend return. The OPT.CO Nominees have devised a restructuring proposal that,
if adopted by the Board of your Company, is intended to result in improved
profitability, a higher corporate valuation and tangible strategic
opportunities. Accordingly, OPT.CO is soliciting your proxy in support of the
election of the OPT.CO Nominees named below under "Election of Directors" as
directors of United Industrial Corporation. This proxy statement and the
accompanying BLUE proxy card are first being sent to stockholders on or about
April 15, 1997.
The main elements of the proposed restructuring include:
1. ELIMINATION OF THE HOLDING COMPANY STRUCTURE: The Company's principal
operating subsidiaries, AAI Corporation ("AAI") and Detroit Stoker Company
("Detroit Stoker") are well established participants in their respective
industries. Re-establishing their independent identities can be expected to to
increase their visibility in the financial markets and, therefore, valuation.
2. TAX-FREE DISTRIBUTION OF INDUSTRIAL BUSINESSES: The OPT.CO Nominees
will propose the tax-free distribution to stockholders of United Industrial
Corporation's non-core industrial businesses (the "Spinoff"). The proposed
spinoff is an appropriate means of realizing stockholder value. This tactic is
intended to permit each stockholder to share in this increase, without incurring
unnecessary tax and transaction costs. Additionally, the spinoff minimizes the
risks of re-investing proceeds from asset sales.
3. ELIMINATION OF INTERLOCKING BOARD AND MANAGEMENT ARRANGEMENTS AND
ELIMINATION OF CLASSIFIED BOARD STRUCTURE: Four of the six current directors
are salaried employees of the Company. Four of the six current directors were
initially appointed, not elected to the Board. The Company nominees at this
year's annual meeting are employed by the Company and were originally appointed,
not elected, to your Board. Election of the OPT.CO Nominees will significantly
change the composition and enhance the independence of the Board. Additionally,
eliminating the Company's classified Board can be expected to increase
manangement's accountability and help safeguard stockholder interests.
4. REDUCTION OF OVERHEAD: The Company's New York City headquarters office
now operates as a very expensive accommodation for past and current directors.
The Company's executive management is located at its Hunt Valley, Maryland
offices. Maintaining an unneeded New York City location represents a significant
operating and tax expense. The OPT.CO Nominees believe that elimination of this
unnecessary expense will likely result in an immediate and material increase in
the Company's operating and net profit performance.
A comprehensive restructuring will require actions by a majority of the full
six-member Board. The election of the two OPT.CO Nominees will be an important
stimulus to this action, as their election will result in a meaningful change in
Board composition and because of the stockholder directive implicit in their
election. The election of the OPT.CO Nominees will result in a Board that has
four independent directors. The OPT.CO Nominees will, with cooperation from
existing independent directors, seek to adopt and implement the proposed
restructuring.
AT THE ANNUAL MEETING, OPT.CO WILL SEEK TO ELECT THE OPT.CO NOMINEES AS
DIRECTORS OF UNITED INDUSTRIAL CORPORATION. OPT.CO URGES YOU TO MARK, SIGN, DATE
AND RETURN THE ENCLOSED BLUE PROXY CARD TO VOTE FOR THE ELECTION OF THE OPT.CO
NOMINEES.
<PAGE>
BACKGROUND TO THE SOLICITATION
The operating performance of your Company has for the past several years
been characterized by stagnant sales, erratic profitability and fluctuating
dividends. The table immediately below illustrates how weak the performance has
been for the past five years.
UNITED INDUSTRIAL CORPORATION
5-YEAR SUMMARY
<TABLE>
<CAPTION>
BASE YEAR COMPOUND
1991 1992 1993 1994 1995 1996 RATE OF CHANGE
----------- ---------- ---------- ---------- ---------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMPANY RESULTS (000)
Net Sales...................... $ 258,012 $ 251,315 $ 252,993 $ 209,727 $ 227,398 $ 220,000 (3.1%)
Income (Loss).................. $ 11,523 7,179 2,353 5,212 888 6,404 (11.1%)
PER SHARE RETURNS
Earnings (Loss)................ $ 0.94 $ 0.58 $ 0.19 $ 0.43 $ 0.07 $ 0.52 (11.2%)
Cash Dividends Paid............ $ 0.64 0.64 0.44 0.28 0.26 0.28 (15.2%)
Book Value..................... $ 8.40 8.29 6.96 7.27 7.08 7.33 (2.7%)
</TABLE>
<TABLE>
<S> <C> <C>
NOTES 1991 Excludes claim settlement income ($3,007,000), termination benefit costs ($2,401,000) and prior
year tax charges, net of tax benefit.
1992 Excludes special termination benefit costs ($786,000), net of tax benefit.
1993 Excludes restructuring charge ($14,370,000) and effect of accounting change ($994,000), net of
tax benefit.
Includes losses resulting from revision of cost estimates ($17,833,000), net of tax benefit.
1994 Includes losses resulting from revision of cost estimates ($3,461,000), net of tax benefit.
1995 Includes losses resulting from revision of cost estimates ($6,059,000), net of tax benefit.
1996 Includes losses resulting from revision of cost estimates ($2,673,000), net of tax benefit.
</TABLE>
Source: Company Annual Reports
As a consequence, stockholders have suffered a material decline in the value
of their investment in the Company in both absolute terms and relative to a peer
group of similar companies.
The following graphs compare the stock price performance of United
Industrial Corporation with the stock price performance of the Standard & Poor's
500 Composite Stock Index ("S&P 500") and a constructed peer group ("Peer
Group") index of the common stock of six corporations deemed by Company
management to be substantially comparable to United Industrial Corporation. The
Peer Group is comprised of EDO Corporation, Whitehall Corporation, Moog
Incorporated, Sparton Corporation, Tech Sym Corporation and Watkins Johnson
Company.
<TABLE>
<CAPTION>
Table 1
EDGAR REPRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC
5-YEAR ABSOLUTE DECLINE
<S> <C>
United Industrial Corp S&P 500 Index Peer Group
Dec-91 100 100 100
Dec-92 104 107 103
Dec-93 56 118 126
Dec-94 53 115 143
Dec-95 63 156 208
Dec-96 64 192 219
</TABLE>
Table 2
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EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
5-YEAR RELATIVE
DECLINE
<S> <C> <C>
UIC/S&P500 UIC/Peer Group
Dec-91 100 100
Dec-92 97 101
Dec-93 48 45
Dec-94 46 37
Dec-95 41 30
Dec-96 33 29
</TABLE>
The data is based on price performance only. Dividends and other
distributions are not included. The Peer Group calculation is based on a simple
average of annual price changes and is not weighted by market capitalization.
Stock price data is based on monthly closing prices, as reported by S&P
Comstock. Relative performance is based on UIC price performance (numerator)
divided by S&P 500 and Peer Group price performance (respective denominator).
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RESTRUCTURING PLAN
OPT.CO is committed to revitalizing United Industrial Corporation and
allowing stockholders to realize the true value of their investment by spinning
off the Company's industrial businesses, thus transforming the Company's
subsidiaries into two independently financed and managed companies, each better
able to operate and achieve strong results in their respective businesses. The
restructuring plan proposed by OPT.CO and the benefits of such plan are
discussed below.
SPINOFF OF INDUSTRIAL BUSINESSES
The OPT.CO Nominees believe United Industrial Corporation's poor performance
is a consequence of a flawed business organization. OPT.CO believes the breadth
of business activities, including defense, industrial capital goods, commercial
aviation and public transportation, is inconsistent with the relatively modest
scale of each business. Management focus and accountability will be better
achieved by the narrower operational scope that will result from the proposed
restructuring.
THE OPT.CO NOMINEES WILL, IN COOPERATION WITH THE CURRENT INDEPENDENT
DIRECTORS, SEEK TO TAKE THE NECESSARY STEPS TO SPINOFF THE INDUSTRIAL
BUSINESSES AS SOON AS PRACTICAL AFTER THEY ARE ELECTED AND HAVE ASSUMED
OFFICE.
AAI CORPORATION SUSIDIARY
United Industrial Corporation's principal businesses are fundamentally
attractive. AAI's areas of expertise have value, both to national defense and
the Company's stockholders. AAI is a clear leader in unmanned vehicle
technology; the engineering systems group is well positioned to participate in
the privatization of a range of high level defense operations; the various
commercial aviation activities should register significant growth.
The defense industry is undergoing massive consolidation, with the leading
companies refining their program mix and redeploying capital. Program
competition is increasingly fierce and conducted by well-financed industry
competitors. In the face of these enormous changes, AAI remains passive. The
program mix has remained substantially unchanged since the mid-1980's. The only
significant attempts to change were largely failures and resulted in the
material charges to earnings recorded in 1993, 1994, 1995 and 1996.
The OPT.CO Nominees believe that AAI must have the ability to respond
strategically to the competitive environment. Failing to make necessary changes
will keep the Company bound to a stagnant opportunity set and an increasingly
limited customer base.
UPON ELECTION TO THE BOARD, THE OPT.CO NOMINEES WILL, IN COOPERATION WITH
THE INCUMBENT INDEPENDENT DIRECTORS, SEEK TO RETAIN THE SERVICES OF
INVESTMENT BANKING PROFESSIONALS FOR THE PURPOSE OF IDENTIFYING AND
EVALUATING STRATEGIC TRANSACTION OPPORTUNITIES THAT MAY BE AVAILABLE TO THE
COMPANY'S AAI CORPORATION SUBSIDIARY.
DETROIT STOKER COMPANY SUBSIDIARY
A similar analysis applies to Detroit Stoker Company, the Company's energy
systems subsidiary. Detroit Stoker is one of the preeminent companies in the
energy firing systems field. It provides well respected products in coal,
natural gas and waste-to-energy power generation systems, as well as fuel
metering devices.
Deregulation is having dramatic effect on the domestic power industry.
Worldwide spending for energy production equipment is exploding. Detroit Stoker
is a leading producer of power generation equipment. The waste-to-energy
business, which should benefit from increasingly stringent federal and state
environmental regulation, has very attractive growth opportunities.
In the face of these opportunities, Detroit Stoker continues to be led by
"interim management", according to the Company's 1996 annual report to
stockholders. The OPT.CO Nominees believe a
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dedicated Board with directly accountable and appropriately incentivized
management will be better able to devise a strategy that fosters profitable
growth.
UPON ELECTION TO THE BOARD, THE OPT.CO NOMINEES WILL, IN COOPERATION WITH
THE INCUMBENT INDEPENDENT DIRECTORS, SEEK TO CREATE AN INDEPENDENT BOARD TO
GOVERN THE DETROIT STOKER SUBSIDIARY.
BENEFITS OF THE RESTRUCTURING PLAN
Institutional investors are placing greater emphasis on specialized
companies with clearly defined growth strategies. The diversified corporate
model, of which United Industrial Corporation is a relic, is passe. The proposed
restructuring will attempt to align the Company's capital structure with
stockholder preferences. In addition to the operational benefits outlined above,
the OPT.CO Nominees believe the spinoff of the industrial operations will
enhance the Company's investment appeal, which is anticipated to result in a
lower cost of investment capital and higher returns to stockholders.
There can be no assurance, however, that the proposed restructuring plan
will be implemented, and if implemented, that it will result in the benefits
described herein.
MANAGEMENT'S INADEQUATE RESPONSE
United Industrial Corporation's management, in a December 5, 1996 letter to
stockholders, articulated a divestment strategy. The plan appears to involve
selling the industrial businesses and reinvesting the proceeds in AAI
activities. This plan is inadequate for several reasons:
1. INCURRING CAPITAL GAINS TAX AT THE HOLDING COMPANY LEVEL UNNECESSARILY
PENALIZES STOCKHOLDERS. The plan would result in capital gains tax liability at
the United Industrial Corporation level. A tax-free distribution or ESOP-type
transaction would be preferable because it would not result in similar tax
liabilities.
2. MANAGEMENT'S ACQUISITION RECORD IS NOT ENCOURAGING. During the
1992-1996 period, the Company entered several new businesses. Certain of these
transactions are stark failures; others remain, at best, promising.
3. BOARD COMMITMENT IS SUSPECT. Despite numerous public statements, there
is no tangible evidence that United Industrial Corporation will be meaningfully
changed. This skepticism is supported by the comfortable employment arrangements
enjoyed by certain Board members.
Based on the corporate record, OPT.CO and the OPT.CO Nominees believe
stockholders have good reason to question whether the incumbent Board will
implement a meaningful transformation of the Company.
CORPORATE GOVERNANCE
OPT.CO is committed to improving the corporate governance practices at your
Company. Accordingly, OPT.CO is soliciting your proxy in support of the election
of the OPT.CO Nominees named below under "Election of Directors" as directors of
United Industrial Corporation.
THE ELECTION OF THE OPT.CO NOMINEES WILL IMMEDIATELY TRANSFORM THE
COMPOSITION OF THE BOARD OF UNITED INDUSTRIAL CORPORATION. INDEPENDENT
DIRECTORS, INCLUDING CERTAIN INCUMBENTS, WILL COMPRISE A MAJORITY OF THE
BOARD.
The OPT.CO Nominees believe that the low relative valuation of the Company
is related to the composition of the current Board of Directors. A majority of
the current Board members are employed by the Company, a fact which discourages
both strategic and institutional investors. In addition, maintaining the New
York City headquarters office, a significant and non-productive overhead and tax
expense to the Company, further diminishes investor respect.
UPON ELECTION TO THE BOARD, THE OPT.CO NOMINEES WILL, IN COOPERATION WITH
THE INCUMBENT INDEPENDENT DIRECTORS, SEEK THE PROMPT ELIMINATION OF THE NEW
YORK CITY HEADQUARTERS OFFICE.
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The OPT.CO Nominees believe that United Industrial Corporation's valuation
is further depressed by the non-responsive character of the Company's investor
relations and communication policies. The Company is reported to have a policy
barring stockholders and investment analysts from visiting its operating
locations. As a result of its policies, United Industrial Corporation is nearly
unique among New York Stock Exchange listed companies in the total absence of
published brokerage research about the Company. In addition, directory
information publishers routinely disseminate incomplete and inaccurate
information about the Company.
The OPT.CO Nominees believe that public companies have an affirmative
obligation to assist stockholders and institutional investors by providing them
with timely and accurate information.
THE OPT.CO NOMINEES WILL, IN COOPERATION WITH THE CURRENT INDEPENDENT
DIRECTORS, SEEK TO ASSIST THE COMPANY IN DEVISING AN UP-TO-DATE INVESTOR
RELATIONS AND COMMUNICATION STRATEGY CONSISTENT WITH CONTEMPORARY CORPORATE
GOVERNANCE STANDARDS.
The OPT.CO Nominees also support the elimination of the classified Board of
Directors, as proposed by a stockholder of the Company. The OPT.CO Nominees
believe that directors are most responsive to stockholders when the entire Board
of Directors stands for election at each annual meeting of stockholders. The
OPT.CO Nominees believe that this will improve corporate governance at United
Industrial Corporation by making your Board responsive to your wishes.
MANAGEMENT PLANS
Upon election to the Board, at least one of the OPT.CO Nominees will seek
membership on the compensation committee. This is especially significant because
at the 1996 Annual Meeting, stockholders approved a material expansion of the
Company's Stock Option Plan. The participation of an OPT.CO Nominee on the
compensation committee will help ensure that option grants and other
compensation agreements are consistent with the enhancement of stockholder
value.
FINANCIAL PLANS
Apart from accomplishing the spinoff and revising any financial arrangements
attendant thereto, the OPT.CO Nominees do not have specific plans with respect
to the financial management of the Company. They note, however, that United
Industrial Corporation's cash flow is substantial and that the Company's
financial position is relatively un-leveraged.
The OPT.CO Nominees are experienced with financial techniques that can
contribute to increasing stockholder value, including liquidation of marginal
and unprofitable lines of business, merger or acquisition of related businesses
and company stock repurchases. The OPT.CO Nominees will, in conjunction with the
incumbent Board, management and investment banking professionals, seek to
actively review these options to enhance stockholder value.
PROPOSALS TO BE CONSIDERED AT THE ANNUAL MEETING
ITEM 1--ELECTION OF DIRECTORS
The OPT.CO Nominees believe their collective experience in business
development, investment management, investment banking and corporate board
service will enable them to make important contributions to the governance of
your Company. The OPT.CO Nominees listed below have furnished the following
information regarding their principal occupation or employment and certain other
matters.
THE OPT.CO NOMINEES FOR DIRECTORS:
DAVID A. LANG, age 47, is currently President of OPT.CO INC. (since
1991), a New York-based private investment company. Mr. Lang is also
President of Deep Creek TeleServices Company LLC, a business development
company formed in 1997 and located in Oakland, Maryland (since its 1997
formation). He is a Director of Informedix, Inc., a development-stage
medical electronics
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company in Rockville, Maryland (since 1989) and he was Vice-President and
of Faneuil Research Ltd., a market research company (1993-1995).
Mr. Lang has extensive knowledge about United Industrial Corporation. He
was previously affiliated with Lehman Brothers Kuhn Loeb Inc.
(1981-1988), during which time he monitored United Industrial
Corporation's activities and visited key operating sites. Mr. Lang is a
past-president of the Aerospace Analysts Society of New York.
ALAN S. PARSOW, age 47, a private investor, is currently the sole General
Partner of Parsow Partnership, Ltd. and Elkhorn Partners L.P., both
Nebraska investment limited partnerships (since 1989), and Vice-President
of Parsow's Fashions for Men, a specialty retailer (since 1980). He is
currently a Director of CACI International Inc.(since 1992) and of the
Republic Funds Group (since 1987).
OPT.CO STRONGLY RECOMMENDS A VOTE FOR THE ELECTION OF THE OPT.CO NOMINEES. A
VOTE FOR THE ELECTION OF THE OPT.CO NOMINEES WILL PROVIDE YOU WITH A BOARD OF
DIRECTORS COMMITTED TO STOCKHOLDER VALUE.
OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
According to the Company's proxy statement, the Company is soliciting
proxies with respect to proposals other than the election of directors. Please
refer to the Company's proxy statement for a detailed discussion of these
proposals, including various arguments in favor of and against such proposals.
These proposals are itemized below.
ITEM 2--APPROVAL OF 1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
At the Annual Meeting, the stockholders will be asked to approve the 1996
Stock Option Plan For Nonemployee Directors. OPT.CO believes the Plan is an
appropriate and cost-effective means of attracting and retaining qualified
directors, as well as linking director compensation with returns to
stockholders.
OPT.CO RECOMMENDS A VOTE FOR THIS PROPOSAL.
ITEM 3--RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
At the Annual Meeting, the stockholders will again be asked to ratify the
appointment of Ernst & Young LLP as United Industrial Corporation's independent
auditors for the year ending December 31, 1997.
OPT.CO RECOMMENDS A VOTE FOR THIS PROPOSAL.
ITEM 4-- STOCKHOLDER PROPOSAL CONCERNING ELIMINATION OF A CLASSIFIED BOARD OF
DIRECTORS
At the Annual Meeting, the stockholders will be asked to vote on the
following stockholder proposal:
"RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to
declassify the Board of Directors so that all directors are elected
annually, such declassification to be effected in a manner that does not
affect the unexpired terms of directors previously elected."
OPT.CO BELIEVES THAT THIS PROPOSAL IS CONSISTENT WITH THE PROPOSED
RESTRUCTURING PLAN AND RECOMMENDS A VOTE FOR THIS PROPOSAL.
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ITEM 5-- STOCKHOLDER PROPOSAL CONCERNING ENGAGEMENT OF AN INVESTMENT BANKER
At the Annual Meeting, the stockholders will be asked to vote on the
following stockholder proposal:
"RESOLVED, that the shareholders of the Company recommend and deem it
desirable and in their best interest that the Board of Directors
immediately engage the services of a nationally recognized investment
banker to explore all alternatives to enhance the value of the Company.
These alternatives should include, but are not limited to, the possible
sale, merger or other transaction involving the Company."
OPT.CO BELIEVES THAT THIS PROPOSAL IS CONSISTENT WITH THE PROPOSED
RESTRUCTURING PLAN AND RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER PROPOSALS
Except as set forth above, OPT.CO is not aware of any proposals to be
brought before the Annual Meeting. SHOULD OTHER PROPOSALS BE BROUGHT BEFORE THE
ANNUAL MEETING, THE PERSONS NAMED ON THE BLUE PROXY CARD WILL VOTE ON SUCH
PROPOSALS BASED ON THE INTERESTS OF THE STOCKHOLDERS, AS DETERMINED BY THEM IN
THEIR SOLE DISCRETION.
VOTING PROCEDURES
This proxy statement and the accompanying BLUE proxy card are being
furnished by OPT.CO in connection with the solicitation of proxies by OPT.CO, to
be used at the 1997 Annual Meeting. The Annual Meeting will be held on May 13,
1997 at the Park Lane Hotel (Ballroom Suite, 2nd floor) located at 36 Central
Park South, New York, New York at 10:00 A.M. local time and at any adjournments,
postponements or rescheduling thereof. The Company's principal executive offices
are located at 18 East 48th Street New York, New York 10017.
The holders of a majority of the outstanding shares of common stock present
in person or represented by proxy will constitute a quorum for the Annual
Meeting. For purposes of the Annual Meeting, except for the election of
directors, which requires a plurality vote, the affirmative vote of a majority
of shares present in person or represented by proxy at the meeting is required
for the matter to be deemed an act of the stockholders. With respect to
abstentions, the shares are considered present at the meeting for the particular
matter, but since they are not affirmative votes for the matter, they will have
the same effect as votes against the matter. With respect to broker non-votes,
the shares are not considered present at the meeting for the particular matter
as to which the broker withheld its vote. Consequently, broker non-votes are not
counted with respect of the matter, but they do have the practical effect of
reducing the number of affirmative votes required to achieve a majority for such
matter by reducing the total number of shares from which the majority is
calculated.
The record date for determining stockholders entitled to notice of and to
vote at the Annual Meeting is March 27, 1997 (the "Record Date"). Except as
noted below with respect to the election of directors, stockholders of record at
the close of business on the Record Date will be entitled to one vote at the
Annual Meeting for each share of common stock. According to the Company's proxy
statement, there were 12,175,543 shares of common stock outstanding on the
Record Date.
Two directors are to be elected at the Annual Meeting to hold office until
the Annual Meeting in the year 2000 and until their successors are elected and
qualified. The nominees proposed and recommended by OPT.CO are David A. Lang and
Alan S. Parsow. Although OPT.CO has no reason to believe that either of the
OPT.CO Nominees will be unable to serve as directors, if either of the OPT.CO
Nominees are not available, the persons named in the BLUE proxy card (the
"Proxyholders") will vote for the election of such other persons as they deem in
the best interests of the stockholders.
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Directors are elected by a plurality of the shares present in person or
represented by proxy at the Annual Meeting. Stockholders have cumulative voting
rights with respect to the election of directors. Under cumulative voting, each
stockholder is entitled to the same number of votes per share as the number of
directors to be elected (for purposes of this election, two votes per share). A
stockholder may cast all such votes for a single nominee or distribute them
between the nominees, as he or she wishes, either by so marking the ballot at
the Annual Meeting or by specific voting instructions with a signed proxy card
sent to Deep Creek TeleServices Company LLC, OPT.CO's Information Agent, or the
Secretary of the Company. Unless authority to vote for one of the nominees for
director is withheld, it is the intention of the Proxyholders to cumulate the
votes represented by the proxies in such manner as to ensure the election of at
least one of the OPT.CO Nominees.
PROXY PROCEDURES
IN ORDER FOR YOUR VIEWS TO BE REPRESENTED AT THE ANNUAL MEETING, PLEASE
MARK, SIGN, DATE AND RETURN THE ENCLOSED BLUE PROXY CARD AND RETURN IT TO
OPT.CO, C/O DEEP CREEK TELESERVICES COMPANY LLC IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE.
The accompanying BLUE proxy card will be voted at the Annual Meeting in
accordance with your instructions on such card. You may vote for or withhold
authority to vote for the OPT.CO Nominees and for or against, or abstain from
voting on each of Items 2, 3, 4 and 5 described above by marking the proper box
on the BLUE proxy card.
IF YOU HAVE SIGNED THE BLUE PROXY CARD AND NO MARKING IS MADE, YOU WILL BE
DEEMED TO HAVE GIVEN A DIRECTION TO VOTE THE COMMON STOCK REPRESENTED BY THE
BLUE PROXY CARD FOR THE OPT.CO NOMINEES CUMULATED AS DETERMINED BY THE
PROXYHOLDERS IN THEIR SOLE DISCRETION AND FOR ITEMS 2, 3, 4 AND 5 AND TO VOTE ON
ANY OTHER PROPOSALS BROUGHT BEFORE THE ANNUAL MEETING BASED ON THE INTERESTS OF
THE STOCKHOLDERS, AS DETERMINED BY THE PROXYHOLDERS IN THEIR SOLE DISCRETION.
OPT.CO URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY UNITED INDUSTRIAL
CORPORATION. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PROXY BY
DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY FOR THE
ANNUAL MEETING TO OPT.CO C/O DEEP CREEK TELESERVICES COMPANY, 581 MAIN
STREET, WOODBRIDGE, NEW JERSEY 07095, OR TO THE SECRETARY OF THE COMPANY, OR
BY VOTING IN PERSON AT THE ANNUAL MEETING.
Only holders of record as of the close of business on the Record Date will
be entitled to vote. If you were a stockholder of record on the Record Date, you
will retain your voting rights for the Annual Meeting even if you sell such
shares after the Record Date. Accordingly, it is important that you vote the
shares held by you on the Record Date, or grant a proxy to vote such shares on
the BLUE proxy card, even if you sell such shares after the Record Date.
If any of your shares are held in the name of a brokerage firm, bank, bank
nominee or other institution on the Record Date, only it can vote such shares
and only upon receipt of your specific instructions. Accordingly, please contact
the person responsible for your account and instruct that person to execute the
BLUE proxy card on your behalf.
SOLICITATION OF PROXIES
Solicitation of proxies may be made by OPT.CO INC., the OPT.CO Nominees and
certain of its affiliates, none of whom will receive additional compensation for
such solicitation, except for compensation paid to Deep Creek TeleServices
Company LLC as outlined below. Proxies may be solicited by mail, courier
service, advertisement, telephone, telecopier, other electronic media and in
person and by request to brokers, dealers and other stockholders to forward
proxy solicitation materials to beneficial owners of United Industrial
Corporation stock. Certain information about officers and employees of OPT.CO
and/or its affiliates, who may also assist in soliciting proxies, is set forth
in the attached Schedule II.
9
<PAGE>
In addition, OPT.CO has retained Deep Creek TeleServices Company LLC to
assist in the solicitation, for which Deep Creek TeleServices Company LLC is to
receive a fee of $90,000, plus reimbursement for its reasonable out-of-pocket
expenses. OPT.CO has also agreed to indemnify Deep Creek TeleServices Company
LLC against certain liabilities and expenses, including certain liabilities and
expenses under the Federal securities laws.
Mr. David A. Lang, the President and sole stockholder of OPT.CO, is the
controlling member of Deep Creek TeleServices Company LLC. The ability of Deep
Creek TeleServices Company LLC to assist in the solicitation relies
substantially on Mr. Lang's initiative and experience. The cost of this
solicitation will initially be borne by OPT.CO. OPT.CO intends to seek
reimbursement of the fees and expenses incurred in connection with this
solicitation from the Company.
SECURITY OWNERSHIP OF OPT.CO NOMINEES
As of March 27, 1997, OPT.CO and the OPT.CO Nominees beneficially owned an
aggregate of 13,000 shares of common stock, representing less than 1% of the
outstanding shares of common stock. OPT.CO Nominees intend to vote such shares
FOR the election of the OPT.CO Nominees.
Certain additional information relating to, among other things, the
ownership, purchase and sale of securities of the Company by the OPT.CO Nominees
and their respective associates is set forth in Schedule I hereto.
ADDITIONAL INFORMATION
Certain information regarding United Industrial Corporation common stock
held by its directors, officers, nominees, management and 5% stockholders is
contained in United Industrial Corporation's proxy statement and is incorporated
herein by reference. Information concerning the date by which proposals of
security holders intended to be presented at the next annual meeting of
stockholders of United Industrial Corporation must be received by United
Industrial Corporation for inclusion in its 1998 proxy statement and form of
proxy for that meeting is also contained in United Industrial Corporation's
proxy statement and is incorporated herein by reference. OPT.CO assumes no
responsibility for the accuracy or completeness of any information contained
herein which is based upon, or incorporated by reference to United Industrial
Corporation's proxy statement.
OPT.CO INC.
APRIL 15, 1997
10
<PAGE>
SCHEDULE I
SHARES OF UNITED INDUSTRIAL CORPORATION COMMON STOCK HELD BY OPT.CO, OPT.CO
NOMINEES AND CERTAIN OTHER PERSONS WHO ARE OR MAY BE PARTICIPANTS IN THIS
SOLICITATION:
<TABLE>
<CAPTION>
DATE PURCHASED SOLD
- ------------------------------------ ----------- ---------
<S> <C> <C>
OPT.CO INC.
03/05/97 1,500
DAVID A. LANG
11/28/95 1,000
12/01/95 4,000
08/15/96 1,000
10/30/96 1,000
01/06/97 1,000
03/18/97 1,000
ALAN S. PARSOW
01/20/97 2,500
</TABLE>
SCHEDULE II
INFORMATION CONCERNING OPT.CO, THE OPT.CO NOMINEES AND OTHER PARTICIPANTS.
The following table sets forth the name and the present principal occupation
or employment (indicated by asterisk), and the name, principal business and
address of any corporation or other organization which may be deemed
participants in the solicitation.
<TABLE>
<CAPTION>
AGE AT
NAME AND PRINCIPAL DEC. 31, PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS 1996 EMPLOYMENT
- --------------------------------------------------- ------------- ------------------------------------------------------
<S> <C> <C>
David A. Lang...................................... 47 President of OPT.CO INC.,* a private investment
250 West 94th Street company (since 1991); President of Deep Creek
New York, NY 10025 TeleServices Company LLC, a business development
company (since its 1997 formation); Director of
Informedix, Inc., a development-stage medical
electronics company (since 1989); Vice-President of
Faneuil Research Ltd., a market research company
(1993-1995)
Alan S. Parsow..................................... 47 Private Investor, General Partner of Parsow
2222 Skyline Drive Partnership, Ltd. and Elkhorn Partners L.P.,* both
Elkhorn, Nebraska 68022 Nebraska investment limited partnerships (since 1989);
Vice-President of Parsow's Fashions for Men (since
1980); Director of CACI International Inc. (since
1992); Director of Republic Funds Group (since 1987)
OPT.CO INC......................................... A private investment company
250 West 94th Street
New York, NY 10025
Deep Creek TeleServices Company LLC................ A consulting and teleservicing company
Suite 201
300 Industrial Drive
Oakland, MD 21550
</TABLE>
11
<PAGE>
IMPORTANT
1. If your shares are held in your own name, please mark, date and mail the
enclosed BLUE proxy card to our Information Agent, Deep Creek TeleServices
Company LLC in the postage-paid envelope provided.
2. If your shares are held in the name of a brokerage firm, bank nominee or
other institution, only it can vote such shares and only upon receipt of your
specific instructions. Accordingly, you should contact the person responsible
for your account and give instructions for a BLUE proxy card to be signed
representing your shares.
3. If you have already submitted a proxy to United Industrial Corporation
for the Annual Meeting, you may change your vote to a vote FOR the election of
the OPT.CO Nominees by marking, signing, dating and returning the enclosed BLUE
proxy card for the Annual Meeting, which must be dated after any proxy you may
have submitted to United Industrial Corporation. ONLY YOUR LATEST DATED PROXY
FOR THE ANNUAL MEETING WILL COUNT AT SUCH MEETING.
If you have further questions or require any assistance, please contact
DEEP CREEK TELESERVICES COMPANY LLC
Toll free: 800 235-5837
12
<PAGE>
PRELIMINARY COPY
UNITED INDUSTRIAL CORPORATION
THIS PROXY IS SOLICITED BY OPT.CO INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS,
MAY 13, 1997
BLUE PROXY CARD
The undersigned hereby appoints David A. Lang and Alan S. Parsow or any one
of them, as proxies or proxy for the undersigned, each with full power of
substitution and resubstitution, to attend the 1997 Annual Meeting of
Stockholders and any adjournments or postponements thereof and to vote as
designated below, all the shares of common stock of United Industrial
Corporation held of record by the undersigned on March 27, 1997. IF NO MARKING
IS MADE, THIS PROXY WILL BE DEEMED A DIRECTION TO VOTE FOR THE OPT.CO NOMINEES
IN ITEM 1 AND TO CUMULATE VOTES AMONG THE OPT.CO NOMINEES AS DETERMINED BY THE
PROXIES IN THEIR SOLE DISCRETION, AND FOR THE PROPOSALS IN ITEMS 2, 3, 4 AND 5.
IN THEIR DISCRETION, THE PROXIES ARE HEREBY AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE POSTAGE PAID
ENVELOPE ENCLOSED.
(TO BE SIGNED AND DATED BELOW)
/X/ PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE. OPT.CO RECOMMENDS A VOTE FOR
ITEMS 1, 2, 3, 4 AND 5.
1. ELECTION OF OPT.CO NOMINEES DAVID A. LANG AND ALAN S. PARSOW AS DIRECTORS
WHOSE TERMS EXPIRE IN THE YEAR 2000.
/ / FOR both nominees cumulated among them as determined by the proxies in
their sole discretion
/ / FOR, except vote withheld from the following nominee:
------------------
/ / WITHHELD authority from both nominees listed above.
2. APPROVAL OF 1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
4. STOCKHOLDER PROPOSAL CONCERNING ELIMINATION OF A CLASSIFIED BOARD OF
DIRECTORS
/ / FOR / / AGAINST / / ABSTAIN
5. STOCKHOLDER PROPOSAL CONCERNING ENGAGEMENT OF AN INVESTMENT BANKER
/ / FOR / / AGAINST / / ABSTAIN
Please sign exactly as your name appears on this proxy. Joint owners should
each sign individually. If signing as attorney, executor, administrator trustee
or guardian, please include your full title. Corporate proxies should be signed
by an authorized officer.
<TABLE>
<S> <C>
Date:
Signature(s):
Signature(s):
Titles, if any:
</TABLE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE POSTAGE PAID
ENVELOPE ENCLOSED.
<PAGE>
OPT.CO INC
250 West 94th Street
New York, NY 10025
- --------------------------------------------------------------------------------
UNITED INDUSTRIAL CORPORATION PROXY CONTEST
OPT.CO WILL NOMINATE INDEPENDENT DIRECTORS AT MAY 13 ANNUAL MEETING
FOR IMMEDIATE RELEASE TUESDAY, APRIL 15, 1997
Contact: David A. Lang
OPT.CO INC.
212-666-0586
NEW YORK CITY--OPT.CO INC., a private investment company located in New York
City announced today that it will propose independent candidates as directors of
United Industrial Corporation at the May 13, 1997 Annual Meeting. The nominees
are committed to a restructuring program to enhance shareholder value.
United Industrial Corporation (symbol UIC) is a New York Stock Exchange-listed
diversified company with activities in defense and commercial aviation, as well
as transportation and energy production equipment. For 1996, total sales were
$220 million compared with $227 million in the previous year. OPT.CO has filed a
Proxy Statement with the Securities and Exchange Commission outlining a proposed
corporate restructuring. The proposal calls for transforming the Company's two
principal subsidiaries, AAI Corporation and Detroit Stoker Company, into two
independently financed and managed companies, each better able to achieve strong
results and improved valuation in their respective industries.
OPT.CO's SEC filing identifies its proposed nominees, David A. Lang, President
of OPT.CO and Alan S. Parsow, General Partner of Parsow Partnership Ltd. and
Elkhorn Partners, both private investment limited partnerships.
According to Mr. Lang, "United Industrial's record speaks for itself. Over the
past five years, the Company has registered negative growth in sales, earnings,
book value and dividends. The stock of the Company has performed correspondingly
and is 36% below where it was five years ago." Mr. Lang adds that the peer group
of companies selected for comparison by UIC management has more than doubled in
value over the same 5-year period.
Mr. Lang attributes the poor performance to Board complacency, noting that four
of the six directors are employed by the Company and at least four were
originally appointed, not elected, to the Board. "The Company's nominal
headquarters is in New York City, despite the fact that management is located in
Hunt Valley, Maryland. The New York City office is an unneeded and wasteful
expense that, in my opinion, serves only as an accomodation for past and current
directors. The election of Alan and myself will change that", said Mr. Lang.
The filed Proxy Statement points out that the OPT.CO nominees own only 13,000
shares of UIC stock, less than 1% of the outstanding stock and are not, at this
date, allied to any investment group. "Clearly, we are competing on the basis of
the failures of the current Board and the logic of our restructuring plan. We
are confident that stockholders, particularly institutional investors, will
examine and support our proposal on the merits", said Mr. Parsow.
Since UIC Board terms are staggered, the nominees recognize they will need to
work cooperatively with the incumbent directors. Mr. Parsow notes that "My
experience, particularly as a director of CACI International Inc. is that
minority directors can have a constructive influence and can energize management
to achieve their own goals, as well as the stockholder goal of making money. We
intend to make that happen."
END
<PAGE>
OPT.CO INC.
250 West 94th Street
New York, New York 10025
- --------------------------------------------------------------------------------
APRIL 15, 1997
RE: ELECTION OF INDEPENDENT DIRECTORS OF UNITED INDUSTRIAL CORPORATION
TO MY FELLOW UNITED INDUSTRIAL CORPORATION STOCKHOLDERS:
Let me state the obvious--our Company is poorly managed and change is needed.
Sales, earnings and dividends all show significant declines over the past 5
years and the performance in 1995 and 1996 has done nothing to reverse the
negative trend. The consequence for us, as stockholders, has been a loss in the
value of our investment. All this has occurred during a period when
aerospace-related equities have out-performed an already impressive bull market!
Despite its lack of growth, UIC's business mix is largely unchanged (apart from
the forced exit from the simulator business and the questionable participation
in the public transport market). Despite the poor financial performance,
management is substantially unchanged (and has been rewarded by a material
expansion of a Company Stock Option Plan benefiting management). If the
incumbent Board of Directors has its way, the Board will also be unchanged.
This makes no sense. I have undertaken to do something about it. I have joined
with Alan S. Parsow in seeking election to the UIC Board. Alan and I are
confident our election can have a significant impact on Company strategy and
operations. We have experience as directors of public companies and have a broad
understanding of the government contracting business. Most important, our
election will send a message to the Board, to management and to the investment
community that past performance is not satisfactory and that the Company must do
better.
And the Company can do better. I have devised a restructuring plan that is
intended to have immediate and long term effect on Company profitability and
growth. The plan, which is further described in the enclosed OPT.CO Proxy
Statement, calls for the elimination of UIC's holding company structure, the
tax-free distribution of unrelated businesses, the elimination of interlocking
board-management relationships, elimination of the classified Board structure
and the reduction of overhead primarily through elimination of the superfluous
New York City headquarters.
Your vote in support of the "OPT.CO Nominees" (Alan and myself) can have a
dramatic effect on the Company. Our election will change the composition of the
Board from a self-perpetuating, insider-dominated group to a Board in which
independent directors comprise a majority. Our election will deliver to the
Company a stockholder-endorsed mandate for substantive change in the
organization of the business. And, perhaps above all, our election will infuse
the Board with a commitment to enhancing stockholder value rather than a passive
acceptance of the status quo.
UIC'S ANNUAL MEETING IS SET FOR MAY 13, 1997. TO BE COUNTED AT
THAT MEETING, I URGE YOU TO MARK, SIGN, DATE AND RETURN THE
ENCLOSED BLUE PROXY CARD TO VOTE FOR THE ELECTION OF THE OPT.CO
NOMINEES.
Please don't hesitate to contact me through Deep Creek TeleServices Company, our
information agent, if you have any questions or require assistance in this
matter. DCTC can be called at 301-334-6474 or, by fax, at 301-334-6467.
Sincerely,
David A. Lang
President
