United Defense to Acquire United States Marine Repair

United Defense Industries has agreed to acquire closeiy held United States Marine Repair, Inc., a provider of non-nuclear ship repair, modernization, overhaul and conversion services to the United States Navy, for $316 million.

Based in Norfolk, Va., United States Marine Repair serves defense and commercial customers at six strategically located ship repair operations in the major ports of Norfolk, Va.; San Diego, San Francisco and San Pedro, Calif.; Pearl Harbor, Hawaii; and Ingleside, Texas. In addition to the company's primary customer, the U.S. Navy, its current customers include the Military Sealift Command, the U.S. Army, the Maritime Administration, the U.S. Coast Guard, and commercial cruise lines such as Holland-America and Royal Caribbean. In the 12-month period ended March 31, 2002, United States Marine Repair reported revenue of $431.7 million, net income of $12.3 million and adjusted EBITDA of $47.8 million.

"This transaction balances and diversifies United Defense's portfolio, gives us a strategic growth platform and expands our mission to support the U.S.

Navy with superior technology and services," said United Defense president and CEO Tom Rabaut. "As the leader in non-nuclear ship repair and modernization, United States Marine Repair brings a track record of excellence, expertise and on-time delivery. This acquisition is an ideal fit that complements United Defense's current programs for the U.S. Navy." Rabaut said United Defense expects this transaction to be immediately accretive to earnings in the second half of 2002 in the range of approximately 5 to 10 percent annually. United Defense expects the acquisition to add approximately $200 million in incremental revenue in 2002, all in the second half of the year, Rabaut added.

United Defense initiated acquisition discussions in March 2002 after United States Marine Repair filed a registration statement with the Securities and Exchange Commission for an initial public offering of its common stock. As a result of the transaction, United States Marine Repair will withdraw the S-l registration.

"This acquisition reflects our long-term strategy to increase revenue, profits and shareholder value by expanding our role as a leading systems integrator and prime contractor for the U.S. Department of Defense and allied militaries," Rabaut said. "Naval ship modernization is a national defense priority.

Adding United States Marine Repair enhances our company's ability to offer full life cycle support for Navy ship repair, maintenance and modernization programs, just as we do on many Army programs today." United Defense plans to retain the management of United States Marine Repair and the company's employees. A1 Krekich will continue as CEO of United States Marine Repair, which will become a business unit of United Defense Industries.

Maritime Reporter Magazine, page 10, Jun 2002

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