<PAGE>
SCHEDULE 14 A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (AMendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential for Use of the
or Commission Only (as permitted
/ / Definitive Proxy Statement by Rule 14a-6(e)(2))
/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)
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(Name of Person(s) Filing Proxy Statement if other than the 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 registraton statement no.:
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(3) Filing party:
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(4) Date filed:
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[LETTERHEAD OF UNITED INDUSTRIAL CORPORATION]
April 10, 1997
Dear United Industrial Shareholder:
We are writing to you regarding an important matter concerning your
investment in United Industrial.
You may receive proxy materials from David Lang and Alan Parsow, small
shareholders of United Industrial (together they own 13,000 shares, or 0.1
percent of the outstanding stock) who seek to elect themselves to your
Board of Directors. We feel strongly that Messrs. Lang and Parsow do not
deserve your support. The Board believes these individuals are acting in a
manner contrary to the interests of all United Industrial shareholders.
SINCE NEW DIRECTORS AND THE MANAGEMENT TEAM LED BY DICK ERKENEFF TOOK
CHARGE OF THE COMPANY'S STRATEGIC DIRECTION A LITTLE OVER A YEAR AGO, YOUR
COMPANY HAS EXPERIENCED SIGNIFICANT IMPROVEMENTS IN ITS FINANCIAL
PERFORMANCE AND STOCK PRICE. YOUR BOARD IS STRONGLY COMMITTED TO FOLLOWING
THROUGH ON THE SUBSEQUENT STAGES OF A CAREFULLY CONCEIVED, PROVEN BUSINESS
PROGRAM, IN ORDER TO FURTHER ENHANCE THE VALUE OF YOUR INVESTMENT. WE URGE
YOU, ONCE YOU HAVE REVIEWED THE ASPECTS OF THE BUSINESS PROGRAM OUTLINED
BELOW AND ITS DEMONSTRATED SUCCESS, TO PROTECT YOUR INVESTMENT BY SIGNING,
DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD TODAY.
UNITED INDUSTRIAL HAS UNDERGONE SEVERAL IMPORTANT CHANGES:
o A MAJOR TRANSFORMATION OF THE BOARD OF DIRECTORS, including the
addition of highly qualified outside individuals with specific
industry-related experience and a new Chairman who is also from
outside the Company. Only two of United Industrial's six Directors
are also employees - - Dick Erkeneff, the Chief Executive Officer,
and Susan Fein Zawel, Vice President - Corporate Communications,
Associate General Counsel and Secretary. Ms. Fein Zawel and
members of her family own in the aggregate approximately 18
percent of the Company.
o A REVAMPING OF THE MANAGEMENT TEAMS at both the corporate and AAI
levels. The Company has assembled a team with significant
expertise managing a dynamic technology company, directing
resources with discipline and intelligence to promising areas of
new growth.
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o THE DEVELOPMENT OF A COMPREHENSIVE STRATEGIC BUSINESS PLAN to
provide substantial returns to shareholders through the
divestiture of non-core operations, select acquisitions in core
areas of defense, engineering, and transportation technology, and
pursuit of growth opportunities in promising overseas markets. As
part of this effort, we are reengineering our business processes
to channel our resources most efficiently. In addition, we
retained a management consulting firm to assist in our program and
are working to implement certain of their recommendations.
Further, in the fall of 1996 we engaged an investment banker to
actively pursue a non-core divestiture.
o THE TAKING OF DECISIVE ACTION TO RESOLVE PAST PROBLEMS. The new
Board felt it was imperative to settle as quickly as possible a
long-standing dispute with the U.S. Navy over the SH-60 Helicopter
Simulator Visual Upgrade Program, so that our attention and
resources could be better focused on more productive programs and
new opportunities. This dispute was settled last November and the
contract is being wound down without the possibility of further
losses.
AS A RESULT OF THESE INITIATIVES, THE COMPANY'S FINANCIAL PERFORMANCE HAS
IMPROVED DRAMATICALLY:
o Since December 29, 1995, the last trading day of that year and
shortly after major changes in our Board and management took
effect, the price of United Industrial stock has increased by 28.3
percent, from $5.75 to $7.375 as of April 9, 1997 while providing
a dividend yield of approximately 3.5 percent.
o Net income and operating income increased significantly during 1996.
o We raised the quarterly dividend in early 1997 from 5 cents per
share to 7 cents per share, reflecting the strong performance and
our confidence in United Industrial's new strategy.
o We are generating strong results in our core defense and
technology businesses. During the first quarter of 1997, we won a
number of significant contracts that will contribute to future
growth.
Your Board strongly believes that United Industrial's new strategic plan
provides the best way for you to realize value for your shares. We have an
experienced, dedicated team in place and a successful track record that
shows we know what we are doing and are wasting no time in delivering
meaningful results. We are fully committed to achieving long-term growth
and increased value for our shareholders.
In contrast, the costly proxy contest Messrs. Lang and Parsow have embarked
upon raises serious questions as to their real agenda. With such a slight
ownership stake, can they truly have the best interests of all shareholders
in mind? In our view, neither Mr. Lang nor Mr. Parsow is an appropriate
candidate to serve as a Director of United Industrial based on experience
or expertise. Moreover, their decision to pursue this course of action,
which will be costly to the Company and time consuming for management, is
contrary to our fundamental goal: the creation of value for all
shareholders.
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WE URGE YOU TO SUPPORT THE INCUMBENT TEAM THAT CAN BUILD ON THE POSITIVE
RESULTS OF THE PAST 15 MONTHS. VOTE FOR MANAGEMENT'S TWO NOMINEES, HAROLD
GELB AND SUSAN FEIN ZAWEL, ON THE ENCLOSED WHITE PROXY CARD AND RETURN IT
IN THE ENCLOSED ENVELOPE.
Sincerely,
/s/ Harold S. Gelb /s/ Richard R. Erkeneff
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Harold S. Gelb Richard R. Erkeneff
Chairman of the Board President and Chief Executive Officer
The directors of the Company and certain officers of the Company are or may
be considered participants in the solicitation of proxies on behalf of the
Board of Directors of the Company. Certain information with respect to such
persons and information with respect to the Company's expenses are set
forth in Annex A hereto.
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IMPORTANT
If your shares of Common Stock are held in the name of a bank or brokerage firm,
only that firm can execute a proxy card on your behalf.
Please contact the person responsible for your account
and instruct them to execute a WHITE proxy as soon as possible.
Your Board of Directors recommends a vote
FOR ITEMS 1, 2 AND 3 AND A VOTE AGAINST ITEMS 4 AND 5.
If you have questions or need assistance in voting your shares, please
contact the firm assisting us in the solicitation of proxies:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL FREE: 1-800-223-2064
BANKS & BROKERS CALL: 212-440-9800
<PAGE>
Information Concerning Participants
The following table sets forth the name, business address and beneficial
ownership of securities of the Company, with respect to each director and
certain officers who may be considered participants in the solicitation of
proxies on behalf of the Board of Directors of the Company.
Shares of Common
Stock
Beneficially Owned
Name Business Address as of March 1, 1997
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Edward C. Aldridge, Jr. The Aerospace Corporation 5,000
2350 East El Segundo Blvd.
El Segundo, CA 90245
Howard M. Bloch N/A 44,758
Richard R. Erkeneff AAI Corporation 76,804(1)
P.O. Box 126
Hunt Valley, MD 21030
Harold S. Gelb 45 Rockefeller Plaza 5,000
Suite 1701
New York, NY 10111
James H. Perry AAI Corporation 7,087(1)
P.O. Box 126
Hunt Valley, MD 21030
E. Donald Shapiro The New York Law School 15,000
57 Worth Street
New York, NY 10013
Robert W. Worthing AAI Corporation 14,967(1)(2)
P.O. Box 126
Hunt Valley, MD 21030
Susan Fein Zawel United Industrial Corporation 340,191(1)(3)
18 East 48th Street
New York, NY 10017
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(1) Includes shares which the following persons have the right to acquire within
60 days through the exercise of stock options: Mr. Erkeneff, 68,000 shares;
Mr. Perry, 4,000 shares; Mr. Worthing, 7,000 shares; and Ms. Fein Zawel,
5,334 shares.
(2) Does not include 500 shares of Common Stock owned by Mr. Worthing's spouse,
as to which he disclaims beneficial ownership.
(3) Includes shares of Common Stock owned as follows: 216,114 shares owned by
Ms. Fein Zawel, her spouse and minor children and 118,743 shares owned by
Fein Investing Properties, Inc., of which Ms. Fein Zawel and her minor
children are shareholders.
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None of the Participants has purchased or sold securities of the Company since
March 1, 1995 except as follows:
Mr. Aldridge acquired 2,000 shares of the Company's Common Stock on May 29,
1996, 1,000 shares of the Company's Common Stock on December 10, 1996 and 2,000
shares of the Company's Common Stock on December 11, 1996.
Mr. Erkeneff acquired 4,000 shares of the Company's Common Stock on November 28,
1995. Also, during the past two years, Mr. Erkeneff has acquired shares of
Common Stock through regular payroll deduction purchases and dividend
reinvestment under the United Industrial Corporation 401(K) Retirement Savings
Plan (the "401(K) Plan").
Mr. Gelb acquired 5,000 shares of the Company's Common Stock on December 5,
1995.
During the past two years, Mr. Perry has acquired shares of Common Stock through
regular payroll deduction purchases and dividend reinvestment under the 401(K)
Plan.
Mr. Shapiro acquired 10,000 shares of the Company's Common Stock on December 10,
1996 and 5,000 shares of the Company's Common Stock on December 11, 1996.
Ms. Fein Zawel acquired 22,000 shares of the Company's Common Stock on November
22, 1995 and 4,800 shares of the Company's Common Stock on December 4, 1995. Ms.
Fein Zawel also acquired 1,000 shares of the Company's Common Stock on March 20,
1997 as custodian for her son, Peter.
Mr. Worthing acquired 1,000 shares of the Company's Common Stock on June 27,
1995, 1,000 shares of the Company's Common Stock on November 22, 1995, 500
shares of the Company's Common Stock on November 28, 1995, and 600 shares of the
Company's Common Stock on January 2, 1997. Also, during the past two years, Mr.
Worthing has acquired shares of Common Stock through regular payroll deduction
purchases and dividend reinvestment under the 401(K) Plan.
Except as disclosed herein and in the Proxy Statement, to the knowledge of the
Company, none of the foregoing persons owns of record any securities of the
Company which are not also beneficially owned by them nor do they beneficially
own, directly or indirectly, any securities of any parent or subsidiary of the
Company. Except for the information disclosed herein and in the Proxy Statement,
to the knowledge of the Company, none of the foregoing persons nor any associate
of such persons is or has been, within the past year, a party to any contract,
arrangement or understanding with any person with respect to any securities of
the Company, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies. Except
for information disclosed herein and in the Proxy Statement, to the knowledge of
the Company, none of the foregoing persons nor any associate of such persons has
any arrangement or understanding with any person with respect to any future
employment by the Company or its affiliates or any future transactions to which
the Company or any of its affiliates will or may be a party, nor any material
interest, direct or indirect, in any transaction which has occurred since
January 1, 1996 or any currently proposed transaction, or series of similar
transactions, to which the Company or any of its affiliates was or is to be a
party and in which the amount involved exceeds $60,000.
AAI made an interest free loan of $80,000 to Mr. Erkeneff on December 1, 1993,
which loan remains outstanding. The loan is required to be repaid upon the sale
of Mr. Erkeneff's former residence. The loan was made in connection with Mr.
Erkeneff's commencement of employment at AAI.
James H. Perry is the Chief Financial Officer and Treasurer of the Company. Mr.
Perry is employed by the Company pursuant to an employment agreement that
provides he be paid a salary at the annual rate of $125,000
2
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and participate in all life insurance, medical, retirement, pension or profit
sharing, disability or other employee benefit plans generally made available to
other executive officers of the Company. The employment agreement terminates on
December 1, 1999, unless Mr. Perry's employment is terminated prior thereto by
the Company for cause. Pursuant to the employment agreement, Mr. Perry is
eligible to receive annual discretionary bonuses as may be granted by the
Company's Board of Directors.
In addition to the solicitation of proxies by use of the mails, proxies may also
be solicited by the Company and its directors, officers and employees (who will
receive no compensation therefor in addition to their regular salaries) by
telephone, telegram, facsimile transmission and other electronic communication
methods or personal interview. The Company will reimburse banks and brokers who
hold shares of the Company's stock in their name or custody, or in the name of
nominees for others, for their out-of-pocket expenses incurred in forwarding
copies of the proxy materials to those persons for whom they hold such shares.
The Company has retained Georgeson & Company Inc. ("Georgeson") to assist in the
solicitation of proxies. Pursuant to the Company's agreement with Georgeson,
they will provide various proxy advisory and solicitation services for the
Company at a cost of $75,000, plus reasonable out-of-pocket expenses. It is
expected that Georgeson will use approximately 75 persons in such solicitation.
Although no precise estimate can be made at this time, the Company estimates
that if Messrs. Lang and Parsow solicit proxies, the aggregate amount to be
spent by the Company in connection with the solicitation of proxies by the
Company will be approximately $500,000, of which approximately $71,000 has been
incurred to date. This amount includes the fees payable to Georgeson but
excludes (i) the salaries and fees of regular officers, directors and employees
of the Company and (ii) the normal expenses of an uncontested election. The
aggregate amount to be spent will vary depending on, among other things, the
nature and extent of any litigation relating to the proxy contest.
3
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UNITED INDUSTRIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 13, 1997
The undersigned hereby appoints Edward C. Aldridge, Jr., Richard R. Erkeneff and
E. Donald Shapiro or any of them, attorneys and proxies with full power of
substitution in each of them, in the name, place and stead of the undersigned to
vote as proxy all the stock of the undersigned in United Industrial Corporation.
The shares represented by this proxy will be voted for proposals 1 through 3,
against proposals 4 and 5 and in accordance with item 6 if no instruction to the
contrary is indicated, or if no instruction is given.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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/X/ PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
1. Election of the following nominees as set forth in the proxy statement
/ / FOR the nominees listed below (except as marked to the contrary below)
/ / WITHHELD AUTHORITY to vote for all nominees listed herein: Harold S. Gelb
and Susan Fein Zawel
For, except vote withheld from the following nominee(s).
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2. To consider and act upon a proposal to approve the Company's 1996 Stock
Option Plan for Nonemployee Directors
/ / FOR / / AGAINST / / ABSTAIN
3. To consider and act upon a proposal to ratify the appointment of Ernst &
Young LLP as independent auditors of the Company for 1997.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5
4. To consider and act upon a proposal by a certain stockholder with respect to
a classified board of directors, if brought before the meeting.
/ / FOR / / AGAINST / / ABSTAIN
5. To consider and act upon a proposal by a certain stockholder with respect to
the engagement of an investment banker, if brought before the meeting.
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion, to act upon such other matters as may properly come
before the meeting or any adjournment thereof.
Please mark, sign, date and return this proxy in the enclosed envelope.
(Note: Please sign exactly as your name
appears hereon. Executors,
Administrators, Trustees, etc. should so
indicate when signing, giving full title
as such. If signer is a corporation,
execute in full corporate name by
authorized officer. If shares held in
the name of two or more persons, all
should sign.)
________________________________________
Dated: Signature
________________________________________
Dated: Signature if held jointly
