AAI's parent reports 16% decline in 2Q earnings

United Industrial's sales climb 9.5% to $119 million as defense contracts grow

July 30, 2005|By Paul Adams | Paul Adams,SUN STAFF

The Hunt Valley parent company of AAI Corp., maker of unmanned aerial vehicles deployed in Iraq, reported a nearly 17 percent decrease in second-quarter net income despite a sales increase. The company also said it landed a new $129 million order from the Army.

Net income for United Industrial Corp. was $8.4 million, or 61 cents per diluted share, down from $10.1 million, or 77 cents per share, for the second quarter last year. Sales climbed 9.5 percent to $119.9 million for the three months that ended June 30, up from $109.6 million for the second quarter of 2004.

The decline in net income came as the company spent more on sales and continued to transform its manufacturing processes to increase production. Selling and administrative expenses climbed to $17.3 million, or 14.4 percent of sales, compared with $12 million, or $10.9 percent of sales, in the second quarter last year.

The new Army contract is for 12 additional Shadow Tactical Unmanned Aerial Vehicle systems. Together, the systems will include 48 air vehicles, 24 ground control stations and related support equipment. The units will be delivered over the next 18 months, the company said.

The Shadow and other unmanned aerial vehicles have gained status in the Iraq war and the war on terror as the Pentagon attempts to transform the military with new technologies. The Shadow systems have flown more than 9,300 sorties and logged 37,000 flight hours in support of troops in Iraq.

"This order for additional Shadow systems is another major endorsement of the tactical and strategic impact that Shadow air vehicles and ground control stations provide to U.S. Army and National Guard forces," said Frederick M. Strader, the company's president and chief executive officer.

Shares of United Industrial closed yesterday at $36.98, down 2 cents.

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