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July 3, 2002

United Defense completes USMR acquisition

United Defense Industries has completed its acquisition of United States Marine Repair, Inc. for $316 million. United Defense financed the acquisition by amending its existing credit facility to borrow an additional $300 million, and using cash on hand for the balance.

United States Marine Repair, based in Norfolk, Va., is the leading provider of non-nuclear ship repair, modernization, overhaul and conversion services to the U.S. Navy.

"This acquisition expands our vital mission to support the U.S. Navy with superior technology and services. ItŐs also a strategic growth platform because Naval ship modernization is a national defense priority," said United Defense president and CEO Tom Rabaut. "This strengthens our company and gives us a more balanced and diversified defense portfolio."

Rabaut reiterated that he expects the acquisition to be 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. United Defense is retaining the management and employees of United States Marine Repair.

United States Marine Repair has ship repair operations in Norfolk, Va.; San Diego, San Francisco and San Pedro, Calif.; Pearl Harbor, Hawaii; and Ingleside, Texas. 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.

United Defense acquired United States Marine Repair from affiliates of the Carlyle Group. The Carlyle Group holds approximately 49 percent of the fully- diluted shares outstanding of United Defense, which became a public company in December 2001. Rabaut emphasized that United Defense took steps to ensure an objective review of the acquisition. Carlyle executives who serve on United Defense's Board of Directors were excluded from the company process of negotiating and authorizing the transaction. Merrill Lynch also provided a fairness opinion to United Defense's Board of Directors.

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