U.S. Marine Corps Begins Transitioning to Combat-Proven Shadow® Tactical Unmanned Aircraft Systems after 20 Years with Pioneer Systems

HUNT VALLEY, Maryland, July 19, 2007 — United Industrial Corporation (NYSE: UIC) announced today that its AAI Corporation subsidiary has begun training U.S. Marine Corps personnel to fly and maintain Shadow tactical unmanned aircraft systems (TUAS) in preparation for the service’s transition later this year to the Shadow surveillance, reconnaissance, and intelligence-gathering system.

            The Marine Corps has decided to retire its Pioneer unmanned aircraft systems, which have supported its ground forces for more than 20 years, including significant current action in Operation Iraqi Freedom.

            The new Shadow TUAS replacing the Pioneers have won military acclaim in deployment with U.S. Army units in Iraq for more than four years, and more recently in Operation Enduring Freedom in Afghanistan.

             In 1999, the U.S. Army selected AAI to be the prime contractor for its tactical unmanned aircraft system -- the Shadow 200, which is designated by the Army as the RQ-7B.

            The U.S. Army, Navy, and Marine Corps have initiated a joint procurement strategy designed to leverage existing contracts and acquisition efficiencies, as well as reduce total life cycle cost of ownership.

            Under this plan, the Marine Corps intends to transfer procurement funds to the Army, which manages the Shadow TUAS program, to enable the Marines to acquire two new Shadow production systems from AAI, the prime contractor for Shadow.

            In addition, AAI has been awarded a $3.8 million contract from the U.S. Army to provide training services to the U.S. Marine Corps in connection with their transition to the Shadow TUAS.  This performance-based logistics contract designates $3.4 million for transition training for U.S. Marine Corps personnel and $415,000 for development of the Shadow training program.

            The training contract is administered by the U.S. Army in coordination with U.S Navy and Marine Corps personnel.

            The two Marine Corps units scheduled to receive the Shadow systems are the renowned VMU-1 “Watchdogs” based at 29 Palms, Calif., and the VMU-2 “Night Owls” based at Cherry Point, N.C.

            “The men and women of AAI are extremely proud that the U. S. Marine Corps selected our highly regarded Shadow tactical unmanned aircraft systems to support expeditionary forces,” said Steven E. Reid, AAI’s vice president of unmanned aircraft systems.

            “History has shown that unmanned aircraft are extremely effective and life-saving systems on the battlefield and in urban environments in support of expeditionary units,” Reid added. “The Marines were the first U.S. ground forces to prove the value of unmanned aircraft in tactical operations in the mid-1980s.  It’s appropriate that the Marines have now chosen the most modern tactical unmanned aircraft system for their next combat missions.” 

            In Iraq and Afghanistan, Shadow-equipped units of the U.S. Army and National Guard have recorded a combined total of more than 180,000 flight hours and 37,000 sorties in support of combat operations. In all worldwide operations, Shadows have registered in excess of 200,000 flight hours and 49,000 sorties.

            Pioneer unmanned aircraft systems were produced by Pioneer UAV, Inc., a company owned equally by AAI Corporation and Israel Aerospace Industries, Ltd.  

 

            United Industrial Corporation designs, produces, and supports aerospace and defense systems through its wholly owned subsidiary, AAI Corporation, and AAI Corporation’s direct and indirect wholly owned subsidiaries, AAI Services Corporation, Aerosonde Pty Ltd, Aerosonde North America Incorporated, ESL Defence Limited, McTurbine Inc., and Symtx, Inc. Its high-technology products and services include unmanned aircraft systems, training and simulation systems, automated aerospace test and maintenance equipment, armament systems, aviation ground support equipment, logistical and engineering services, and maintenance, repair, and overhaul activities.           

            For more information, visit www.unitedindustrial.com and www.aaicorp.com.

 Except for the historical information contained herein, information set forth in this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and variations of such words and similar expressions that indicate future events and trends 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. The company makes no commitment to update any forward-looking statement or to disclose any facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statement. For additional information about the company and its various risk factors, please see the company’s most recent annual report on Form 10-K and other documents as filed with the Securities and Exchange Commission.   

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