AAI Corp. parent calls company's sale possible

Hunt Valley defense firm generates most of United Industrial's business

April 09, 2002|By Robert Little | Robert Little,SUN STAFF

United Industrial Corp., the parent company of Hunt Valley-based AAI Corp., announced yesterday that it is "evaluating alternatives to enhance shareholder value" - including a possible sale of the company.

AAI, which manufactures unmanned aircraft and training simulators for the military, accounts for roughly 85 percent of its parent company's business. United Industrial has long considered AAI its core enterprise and has tried to sell off unrelated businesses in the past.

But yesterday's disclosure, including an announcement that the company had hired the investment banking firm Wachovia Corp. as an adviser last year, was the first indication that AAI, too, is for sale.

United Industrial Vice President Susan Fein Zawel would not say why the possible sale was disclosed yesterday, except to say that the timing was "based on current information that's available."

"Part of our strategic plan has been to explore alternatives that would enhance shareholder value," Zawel said. "Based on current information that's available, the board felt that it was appropriate to make this announcement right now."

United Industrial announced two weeks ago that it would sell contracts with mass transit agencies in New Jersey and Maryland for $21.4 million, part of its effort to leave the business of building and overhauling transportation equipment.

But the defense and aerospace businesses at AAI have long been considered the company's greatest potential for growth.

Last week the Army agreed to pay $22.3 million for five of the company's Shadow unmanned aircraft, used for reconnaissance and surveillance. United Industrial officials said they expect as many as 31 more Shadow aircraft to be purchased in the next three years, new business worth more than $150 million.

Last month AAI won a $9.1 million contract to develop C-17 aircraft simulators for the Mississippi National Guard. The award was the latest installment in an Air Force program worth $186.4 million, company officials said.

AAI employs about 900 people, mostly in Maryland.

United Industrial announced 2001 net income last week of $15.8 million, compared with $15 million the year before. Its revenue from continuing operations was $238.5 million, compared with $236.3 million in 2000.

Shares of United Industrial rose 60 cents yesterday to close at $22.90 on the New York Stock Exchange. Shares have nearly doubled in the past year.

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