United Defense Reports Strong Fourth Quarter and 2002
Results
4Q Net Income Rises to 84 Cents Per Basic Share
4Q Revenue Up 29 Percent

Contact:
Jayne Schmitt, Investor Relations
jayne.schmitt@udlp.com
(703) 312-6122

Doug Coffey, Media
doug.coffey@udlp.com
(703) 312-6121

Consolidated Statement of Earnings

ARLINGTON, VA, January 27, 2003 - United Defense Industries (NYSE:UDI) ) today reported sharply higher revenues and earnings for the fourth quarter ended December 31, 2002.

The strong results for the fourth quarter and the full year reflected increased profitability due to superb program execution, new orders from the U.S. Army, U.S. Navy and military allies around the world, and the positive impact of the Company's acquisition of United States Marine Repair (USMR) on July 2, 2002.

Fourth-quarter revenue rose almost 29 percent to $521.2 million from $404.6 million in 2001. USMR, whose major customer is the U.S. Navy, generated the majority of the growth in fourth-quarter sales.

Fourth-quarter net income rose to $43.2 million, or $0.84 per basic share, from $6.0 million, or $0.14 per basic share, in the year-earlier quarter. The fourth quarter of 2001 included non-recurring costs of $17.5 million associated with the initial public offering of United Defense common stock in December 2001.

In the fourth quarter of 2002, new orders of $473 million maintained United Defense's fully funded backlog at just under $2 billion. The new orders included $171 million in domestic and international naval ordnance systems orders and $141 million in new orders for USMR, which continued its strong performance as America's largest non-nuclear ship repair, modernization, overhaul and conversion company.

United Defense generated nearly $95 million in cash flow in the fourth quarter of 2002. During the fourth quarter of 2002, the Company also paid down an additional $50 million of debt to reduce its total debt to $590 million as of Dec. 31, 2002.

"United Defense capped our first year as a public company with robust fourth-quarter and full-year results that reflected the fundamental strength of our two profitable business sectors - Defense Systems and Ship Repair and Maintenance," said President and Chief Executive officer Tom Rabaut. "The acquisition of USMR transformed our company in the second half of 2002 by balancing and diversifying our portfolio and expanding our relationship with the U.S. Navy, and our Defense Systems businesses continued to win new contracts because of our ability to deliver superb program execution and proven technology that gives the U.S. Armed Forces and military allies a potent advantage."

In the fourth quarter of 2002, USMR was awarded two multi-year, multi-ship U.S. Navy contracts that could exceed $89 million if all options are exercised. The contracts are for LSD-41 and LSD-48 class ships, and for maintenance of the USS Seattle fast combat support ship. Separately, USMR won two contracts totaling more than $30 million to refurbish the USS John F. Kennedy, a U.S. Navy aircraft carrier.

During the fourth quarter, major new contracts included the following:

• A $49.4 million contract from the U.S. Army to remanufacture 33 Bradley A2 Operation Desert Storm vehicles.
• A $44 million contract from the U.S. Navy for the production of Mk 41 vertical launching system subassemblies, services and spares.
• A contract for the initial design, production and testing of the advanced gun system engineering models for the U.S. Navy's new DD(X) destroyer. The engineering development model phase would be valued at about $300 million for fiscal years 2003-2005, assuming that Congress continues to fund the program.
• A contract modification from the U.S. Navy, worth more than $40 million, for further production of Mk 45 naval guns.
• An agreement with the U.S. Army to design and fabricate a new product, 145 "opposing force" vehicles to be used at the U.S. Army training centers. The base contract award with options is for $136 million.

United Defense was selected by the Defense Advanced Research Projects Agency and the U.S. Army to be part of cooperative design team with General Dynamics to develop and integrate the manned ground combat vehicle platforms for the U.S. Army's Future Combat System. The partnership takes advantage of United Defense's 50 years of experience in designing and building combat vehicles for the U.S. Army. This partnership, under the direction of the Lead System Integrator team of Boeing and SAIC, continues United Defense's leading position in the development of advanced combat vehicles.

2002 Full-Year Results
In the twelve months ended December 31, 2002, United Defense's net income rose to $134.6 million, or $2.62 per basic share, from $8.8 million, or $0.21 per basic share after extraordinary items in the 2001 period. This improvement was driven by an increase of revenue of 31 percent to $1.73 billion from $1.32 billion in 2001. USMR accounted for almost two-thirds of the revenue growth. Excluding sales from USMR, revenue increased 11 percent for the twelve-month period. The 2002 results were also favorably impacted by the reversal of the company's $50 million valuation allowance against deferred tax assets that reduced the tax provision. In 2003, taxes will be fully provided on income.

About United Defense
United Defense is a leader in the design, development and production of combat vehicles, artillery, naval guns, missile launchers and precision munitions used by the U.S. Department of Defense and allies worldwide, and is America's largest non-nuclear ship repair, modernization and conversion company. To learn more about United Defense Industries, Inc., visit http://www.uniteddefense.com.

Forward-Looking Statements
Information in this release may involve guidance, expectations, beliefs, plans, intentions or strategies regarding the future. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to United Defense Industries, Inc. as of the date of the release, and we assume no obligation to update any such forward-looking statements. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations. Numerous factors could cause or contribute to such differences. Please refer to the Company's Quarterly Report on Form 10Q for the quarter ended September 30, 2002, and in our other reports filed from time to time with the Securities and Exchange Commission for a further discussion of the factors and risks associated with our business.